5.8
9,070
9,369
9,968
Revenue
+8
543
+6
631
EBIT 1
Mercedes-Benz Vans
+5
+2
+1
-6
682
Return on sales (in %) 1
6.8
6.7
137
139
68
thereof capitalized
-11
371
329
293
Research and development expenditure²
+6
223
288
304
Investment in property, plant and equipment
6.0
+3
-51
27 117577
461,954
+15
1,695
31,389
31,473
32,389
Revenue
1,637
Return on sales (in %) 1
1,878
Daimler Trucks
+33
98,020
96,895
129,106
Employees (December 31) ³
EBIT 1
5.2
5.4
Investment in property, plant and equipment
180
79
484,211
79,020
82,743
Employees (December 31)³
495,668
Unit sales
34
thereof capitalized
1,197
1,171
1,188
Research and development expenditure²
989
839
788
80,519
+10
Unit sales
270,144
New business
Revenue
EBIT 1
Daimler Financial Services
+0
16,901
1,387
16,603
Employees (December 31)
-2
32,088
33,705
33,162
Unit sales
16,631
1,268
1,293
+9
23
Investment in property, plant and equipment
+18
79,986
83,539
98,967
Contract volume
+18
38,076
40,533
47,912
+10
13,550
14,522
15,991
+267
294,594
23
11
Revenue
+59
-221
124
197
EBIT 1
4,218
Daimler Buses
14,916
14,838
15,782
Employees (December 31) ³
+9
252,418
+6
4,105
3,929
+3
thereof capitalized
-3
222
187
182
Research and development expenditure²
+38
82
76
105
Investment in property, plant and equipment
-5.6
3.0
4.7
Return on sales (in %) 1
3
19
1,451,569
1,722,561
4,827
4,975
4,844
Investment in property, plant and equipment
-4
17,880
-3
19,453
Other markets
+24
10,782
10,705
13,294
thereof China
18,679
Research and development expenditure²
5,680
5,489
10,815
10,752
EBIT 3
+13
1,452
4,842
5,479
Free cash flow of the industrial business
-11
1,465
1,284
1,148
thereof capitalized
+3
5,644
+20
8,820
25,126
29,446
43,722
Western Europe
114,297
117,982
129,872
Revenue
41,123
% change
14/13
2012
2013
2014
Daimler Group
Key Figures.
Amounts in millions of euros
39,377
+101
+6
thereof Germany
Asia
+16
27,233
28,597
33,310
thereof United States
+15
31,914
32,925
38,025
NAFTA
+1
19,722
20,227
20,449
24,481
1,565,563
-1
4,416
Return on sales (in %)
+14
61,660
64,307
73,584
Revenue
8.0
+46
4,006
5,853
EBIT 1
Mercedes-Benz Cars
% change
14/13
4,391
6.2
7.1
Investment in property, plant and equipment
Unit sales
-3
1,125
1,063
1,035
thereof capitalized
+6
3,863
3,808
4,025
Research and development expenditure²
-2
3,495
3,710
3,621
2012
Value added 3
2013
Amounts in millions of euros
Total dividend
+2
6.02
6.40
6.51
Earnings per share (in €) 3
2,621
-16
8,720
7,290
Net profit 3
-25
4,300
5,921
6,830
2,407
2,349
+9
Divisions.
Daimler's Divisions >
Facts and Figures 2014 >
Cover photo: Mercedes-Benz Future Truck 2025.
The Future Truck 2025 provides a glimpse of the
future of goods transport. It conserves resources,
reduces emissions, maximizes traffic safety and
increases connectivity in road traffic. This spectacular
study from Mercedes-Benz is far more than a distant
vision: It is planned to put the truck on the road within
ten years. Many of its technological components are
already available and ready for use. The brain of the
Future Truck 2025 is the "Highway Pilot," whose fasci-
nating capabilities were demonstrated in autonomous
driving on the autobahn in July 2014. The complete
design and technology study had its world premiere at
the IAA Commercial Vehicles Show in 2014.
3 For the year 2012, the figures have been adjusted, primarily for effects arising from application of the amended version of IAS 19.
2 For the year 2013, the figures have been adjusted due to reclassifications within functional costs.
1 Adjusted for the effects of currency translation, revenue increased by 12%.
+2
275,087
274,616
+9
2.20
2.25
2.45
279,972
Employees (December 31)
Dividend per share (in €)
2014
Annual Report 2014.
23
Employees (December 31)
182
Corporate Governance Report
44
The Board of Management
181
Corporate Governance Code
Report of the Supervisory Board
43
Declaration of compliance with the German
179
Integrity and Compliance
88
38
Chairman's Letter
A To Our Shareholders
46
The Supervisory Board
52
B| Combined Management Report
194
Consolidated Statement of Financial Position
193
Income/Loss
Consolidated Statement of Comprehensive
64
Objectives and Strategy
192
190
E| Consolidated Financial Statements
Consolidated Statement of Income
60
Daimler and the Capital Market
54
Highlights of 2014
176
Corporate Profile
Report of the Audit Committee
D Corporate Governance
152
C | The Divisions
1
Clean. Safe. Connected.
Contents.
Daimler Truck Financial
Mercedes-Benz Cars
Mercedes-Benz Financial
moovel
Mercedes-Benz Bank
Financial Services
Daimler
SETRA
Mercedes-Benz
CAR
154
Clean.
3
36
The Future Has Begun.
171
Daimler Financial Services
25
Connected.
168
Daimler Buses
165
Mercedes-Benz Vans
13
Safe.
ABS
160
Daimler Trucks
174
Daimler Buses
Economic Conditions and Business Development
Liquidity and Capital Resources
Cross-reference within the Annual Report
Refers to additional information on the Internet
Refers to an illustration or a table in the Annual Report
Information guidance system
146
Outlook
Refers to a Daimler publication
132
292
International Representative Offices
129
Takeover-Relevant Information and Explanation
290
List of Charts and Tables
Risk and Opportunity Report
ABS
Clean. Safe. Connected.
2
1 S 500 PLUG-IN HYBRID: fuel consumption in 1/100 km combined 2.8; CO2 emissions in g/km combined 65;
electricity consumption in kWh/100 km 13.5.
S&RDS
Exemplary efficiency = superior performance. Daimler offers proof of this equation with the
S 500 PLUG-IN HYBRID', a model that once again underscores the Group's leading role in
the electrification of premium vehicles. The new luxury sedan from Mercedes-Benz makes a
big impression not only with its state-of-the-art hybrid concept but also with the innovations
and exclusive appointment details of the S-Class. The centerpiece of the model's plug-in
technology is a new high-voltage lithium-ion battery that can be charged externally - using
a household power socket, for example. The first luxury sedan certified as belonging to the
"three liters per 100 km" category is the third hybrid in the S-Class series and a further key
element on the road to emission-free mobility. The first S 500 PLUG-IN HYBRID' models
were delivered to customers in 2014.
A pioneer for efficiency.
First plug-in hybrid with the three-pointed star: the S 500 PLUG-IN HYBRID'.
Daimler | Clean. Safe. Connected.
PLUG-IN HYBRID
was incorporated into the new Mercedes-Benz S 500 PLUG-IN HYBRID'.
This automobile sets benchmarks for efficiency, dynamic handling
and comfort.
Inspired by F1. Knowledge gained with the Formula 1 drive system
3
Clean mobility. Daimler is on the "road
to emission-free driving." To this end,
we have created an environmental road-
map that focuses on further efficiency
enhancements to combustion engines,
needs-based hybridization and locally
emission-free electric vehicles with
batteries or fuel cells.
Daimler | Clean. Safe. Connected.
Clean.
That's the future of the automobile -
and that's what we stand for at Daimler.
As a pioneer of automotive engineering,
we are continually working to shape
the future of mobility. Our thoughts and
actions are guided by the principle of
sustainability. We have already reached
many milestones on the road to emission-
free and accident-free driving. Intelligent
connectivity offers us additional and
completely new opportunities to shape
the mobility of tomorrow. We plan to
use these new technologies to keep our
loyal customers satisfied, gain new
markets and customers, continue along
our path of profitable growth and create
sustained value.
Clean. Safe.
Connected.
118
Profitability
Remuneration Report
Index
95
Financial Position
88
82
198
Notes to the Consolidated Financial Statements
F| Further Information
77
Consolidated Statement of Changes in Equity
72
195
Consolidated Statement of Cash Flows
70
RN
196
282
Daimler AG
Responsibility Statement
117
Events after the Reporting Period
288
Glossary
116
Overall Assesssment of the Economic Situation
286
Ten Year Summary
101
Sustainability
285
Independent Auditors' Report
98
(condensed version according to HGB)
284
289
+21
FREIGHTLINER
BHARATBENZ
292
1,029
12,159
16,955
Revenue (in millions of euros)
4
Employees
1,502
1
1
14
1
Production locations
NAFTA
Sales outlets
7,268
21,357
190
499
2,630
729
Revenue (in millions of euros)
2
639
Sales outlets
2
1
2
1
Production locations
Latin America (excluding Mexico)
7,963
1,646
450
14,802
980
2,690
6,488
Sales
Organization
Automotive
Businesses
Daimler
Buses
Vans
Cars
Mercedes-Benz
Europe
Daimler
Financial
Services
Daimler Worldwide.
3 As of 2014, including the numbers of employees previously counted under "Sales & Marketing Organization."
1 For the year 2012, the figures have been adjusted, primarily for effects arising from application of the amended version of IAS 19.
2 For the year 2013, the figures have been adjusted due to reclassifications within functional costs.
+10
7,779
8,107
8,878
see page 111
Daimler Mercedes-Benz
Trucks
Production locations
30
4,039
7
3
7
11
13,868
34,830
111,633
Employees
7,817
9,962
30,595
Revenue (in millions of euros)
Sales outlets
5,095
Mercedes-Benz
323
136
190
636
329
2
260
1,534
733
Employees
41
Revenue (in millions of euros)
Production locations
Australia/Oceania
1,248
754
125
90
13,693
Sales outlets
237
33
194
BUILT BUSES
WESTERN STAR
FUSO
W
Mercedes-Benz Vans
FREIGHTLINER
Mercedes-Benz
Daimler Trucks
smart
MAYBACH
AMG
Mercedes-Benz
Mercedes-Benz Cars
The employees previously reported under "Sales & Marketing Organization" are included in the employee numbers for the respective divisions
as of 2014.
Notes: Unconsolidated revenue of each division (segment revenue).
3,901
Employees
Employees
5,901
1,417
Revenue (in millions of euros)
1
384
Sales outlets
1
1,092
1
Production locations
Africa
427
1,289
1,674
11,376
1
131
88
226
22,385
Revenue (in millions of euros)
9
2,162
Sales outlets
2
3
2
Production locations
Asia
268
17
1,158
5,435
Employees
302
DAIMLER
Financial income improved by €0.9 billion to €3.6 billion,
primarily due to higher net income from investments in subsid-
iaries and associated companies. That increase was mainly
the result of the sale of our 50% equity interest in Rolls-Royce
Power Systems Holding GmbH to Rolls-Royce Holdings plc.
Distributable profit
Cash flows from financing activities resulted in a net cash
outflow of €3.2 billion (2013: €1.3 billion). The increased
outflow is explained by the lower volume of external financing
liabilities entered into compared with the previous year.
Intragroup (cash) liabilities to subsidiaries in the context of
the central finance and liquidity management decreased
compared with 2013 at a lower rate. Cash flows from financing
activities include the payment of the dividend for the year
2013 in an amount of €2.4 billion.
B.37
Balance sheet structure of Daimler AG
Equity increased compared with December 31, 2013 by
€1.4 billion to €37.1 billion. This change primarily resulted
from the net profit for 2014, of which, in accordance with
Section 58 Subsection 2 of the German Stock Corporation Act
(AktG), €1.2 billion was transferred to retained earnings.
The equity ratio at December 31, 2014 was 43.5% (December 31,
2013: 41.9%).
Provisions decreased compared with December 31, 2013
by €0.8 billion to €11.9 billion. This primarily reflects lower
provisions for pensions and similar obligations resulting from
the extraordinary contribution of €2.4 billion to the pension
plan assets. There was an opposing effect, however, mainly due
to the increase in the expenses relating to the ongoing anti-
trust investigation by the European manufacturers of commer-
cial vehicles, an increase in personnel and social-security
obligations and the sales-related increase in provisions for
warranty claims.
Liabilities decreased by €0.7 billion to €35.8 billion.
This change is mainly related to liabilities to subsidiaries
(minus €2.6 billion). Financing liabilities increased by
€1.9 billion, however.
In millions of euros
Dec. 31,
2014
Dec. 31,
2013
Assets
Non-current assets
Cash flows from investing activities resulted in a net cash
outflow of €1.3 billion in 2014 (2013: €7.1 billion). The lower
cash outflow was the result of lower net investment in securities.
Another factor is that investments in financial assets also
decreased. The sale of the equity interest in Rolls-Royce Power
Systems Holding GmbH had a positive impact on cash flows
from investing activities.
43,772
7,846
+51
5,477
8,277
Other assets
-4
6,241
5,987
Other financial assets
-6
7,066
Inventories
99
2,407
2,621
-6,243
General administrative expenses
-1,885
-1,779
Other operating income, net
1,122
1,497
Operating profit
1,359
823
Financial income
3,635
2,687
Profit from ordinary activities
4,994
3,510
Income tax expense/benefit
Net profit
-1,223
203
3,771
3,713
Transfer to retained earnings
-1,150
-1,306
Total assets
6,634
-6,518
Marketable debt securities
11,053
Dec. 31,
Dec. 31,
Consolidated statement of financial position
B.34
The increase in total assets is primarily due to the growth of
the financial services business, higher inventories and higher
levels of other assets. On the liabilities side of the balance
sheet, there were increases in particular in financing liabilities,
provisions and other financial liabilities. Current assets
account for 41% of the balance sheet total, which is close to
the prior-year level of 42%. Current liabilities account for 35%
of the balance sheet total, as at the end of the previous year.
The balance sheet total increased compared with December 31,
2013 from €168.5 billion to €189.6 billion; adjusted for the
effects of currency translation, the increase amounted to €14.0
billion. Daimler Financial Services accounts for €105.5 billion
of the balance sheet total (2013: €89.4 billion); this is equivalent
to 56% of the Daimler Group's total assets (2013: 53%).
B❘ Combined Management Report | Liquidity and Capital Resources | Financial Position
Financial Position.
168,518
Receivables, securities and other assets
29,985
2014
Cash and cash equivalents
3,399
41,230
44,748
6,682
28,869
4,718
40,269
Prepaid expenses
256
85,258
259
85,276
Equity and liabilities
Share capital
3,070
3,069
(conditional capital €500 million)
Capital reserve
Current assets
2013
In millions of euros
Assets
9,667
+11
7,803
8,634
Trade receivables
Cash and cash equivalents
+20
17,349
20,864
-33
3,432
2,294
+20
78,930
94,729
+6
21,779
23,182
Property, plant and equipment
Equipment on operating leases
and receivables from financial
services
-0
9,388
9,367
% change
14/13
Equity-method investments
Inventories
Intangible assets
-13
-68,183
-75,307
Cost of sales (including R&D expenses)
Selling expenses
Intangible assets of €9.4 billion include €7.2 billion of
capitalized development costs (2013: €7.3 billion) and, as in
the previous year, €0.7 billion of goodwill. Mercedes-Benz
Cars accounts for 69% of the development costs and Daimler
Trucks accounts for 22%. Capitalized development costs
amounted to €1.1 billion (2013: €1.3 billion), and account
for 20.2% of the Group's total research and development
expenditure (2013: 23.4%) see page 103.
Investment in property, plant and equipment
was higher than depreciation and caused property, plant and
equipment to rise to €23.2 billion (2013: €21.8 billion). In 2014,
€4.8 billion (2013: €5.0 billion) was invested worldwide, in
particular at our production and assembly sites for new products
and technologies and for the expansion and modernization
of production facilities. The sites in Germany accounted
for €3.1 billion of the capital expenditure (2013: €3.2 billion).
Total equity and liabilities
95
Equipment on operating leases and receivables from
financial services increased to a total of €94.7 billion (2013:
€78.9 billion). The increase was primarily caused by the
higher level of new business at Daimler Financial Services.
In addition, there was an increase due to effects of currency
translation in an amount of €5.0 billion. The growth reflects
the successful course of business, especially in the United
States. Above-average growth was also achieved in the sales-
financing business in China and other Asian countries, as
well as in Turkey. In Europe, the leasing and sales-financing
business grew by 11%. The proportion of total assets of 50%
is above the prior-year level (47%).
Equity-method investments of €2.3 billion (2013: €3.4 billion)
primarily comprise the carrying amounts of our equity inter-
ests in Beijing Benz Automotive Co., Ltd. and BAIC Motor
Corporation Ltd. in the car business and Beijing Foton Daimler
Automotive Co., Ltd. and Kamaz OAO in the truck business.
The decrease compared with the end of 2013 is the result of
selling the 50% equity interest in RRPSH to Rolls-Royce Holdings
plc in the third quarter of 2014.
B.35
Balance sheet structure Daimler Group
In billions of euros
Assets
Non-current assets
+13
Current assets
113 98
43 45
67 78
11
77 71
16 18
59 67
190 169 169 190
2013
2014
Equity and liabilities
Equity
Non-current liabilities
of which: Liquidity
168,518
189,635
+31
+13
Equity and liabilities
Equity
44,584
43,363
+3
Provisions
28,393
23,098
+23
Financing liabilities
86,689
77,738
+12
see page 92
Trade payables
10,178
9,086
+12
Other financial liabilities
10,706
8,276
+29
Other liabilities
9,085
6,957
Current liabilities
Inventories increased from €17.3 billion to €20.9 billion, equiva-
lent to 11% of total assets (2013: 10%). Adjusted for currency
effects, there was an increase of €2.9 billion, partially due to the
launch of new models and a larger number of model variants
as well as the expected positive development of unit sales.
This resulted primarily at the Mercedes-Benz Cars and Daimler
Trucks divisions in increased stocks of finished and unfinished
goods in Germany, China and the United States.
Trade receivables increased by €0.8 billion to €8.6 billion.
The Mercedes-Benz Cars division accounts for 45% of these
receivables and the Daimler Trucks division accounts for 32%.
Cash and cash equivalents decreased compared with
the end of 2013 by €1.4 billion to €9.7 billion. The decrease
amounted to €1.7 billion after adjusting for exchange-rate
effects.
B❘ Combined Management Report | Daimler AG
Cost of sales increased by 10% to €75.3 billion. Increases
in unit sales and expenses for new technologies and products
led to higher cost of sales. Research and development
expenses, which are included in cost of sales, were higher
than in the previous year at €4.9 billion (2013: €4.7 billion);
as a proportion of revenue, they amounted to 5.8% (2013: 6.2%).
Research and development expenses were primarily related
to the renewal and expansion of the product portfolio, especially
with regard to the model series of the E-Class, the SUVs
and the compact class. In addition, we are continuously work-
ing on new generations of engines and alternative drive
systems. At the end of the year, approximately 17,000 people
were employed in the area of research and development.
Selling expenses increased by €0.3 billion to €6.5 billion.
This was primarily due to higher expenses for personnel
and marketing. As a proportion of revenue, selling expenses
decreased from 8.3% to 7.7%.
General administrative expenses of €1.9 billion were
slightly above the prior-year level (2013: €1.8 billion).
In relation to revenue, they amounted to 2.2% (2013: 2.4%).
Other operating income amounted to €1.1 billion (2013:
€1.5 billion). The change compared with the previous year was
mainly the result of higher expenses in connection with the
ongoing antitrust investigation by the EU Commission of Euro-
pean manufacturers of commercial vehicles. 7 B.36
The income tax expense amounted to €1.2 billion (2013
income tax benefit of €0.2 billion). In 2013, high tax benefits
were included in connection with the tax assessment of
previous years. The non-recurring of those tax benefits and
a higher income tax expense for 2014 due to the improved
profit before income taxes led to the increase in the income
tax expense compared to prior year.
Net profit increased from €3.7 billion to €3.8 billion.
This development primarily reflects the improved operating
profit and the increased financial income. Due in particular
to the higher than forecast operating profit, net profit is above
the level that was originally expected.
The economic situation of Daimler AG primarily results from
its business operations and those of its subsidiaries. Daimler AG
participates in the operating results of its subsidiaries through
distributions. The economic situation of Daimler AG is therefore
fundamentally the same as that of the Daimler Group, which
is described in the chapter "Overall Assessment of the Economic
Situation."
see pages 116f
Financial position, liquidity and capital resources
The balance sheet total of €85.3 billion is at the level
of a year earlier.
Non-current assets decreased by €1.0 billion to €43.8 billion
in 2014, primarily due to the lower amount of financial assets.
This mainly reflects the sale of our 50% equity interest in Rolls-
Royce Power Systems Holding GmbH to Rolls-Royce Holdings
plc. Investments in property plant and equipment (approximately
€2.5 billion excluding leased assets) mainly comprised invest-
ments for the production of the C-, E- and S-Class, as well as
investments in engine and transmission projects.
Inventories increased by €1.1 billion to €7.8 billion at
December 31, 2014. The increase was mainly related to finished
goods and raw materials and manufacturing supplies, as
well as unfinished goods to a lower extent, and was caused
by the high production volume.
Receivables, securities and other assets increased com-
pared with December 31, 2013 by €1.1 billion to €30.0 billion.
The main reason for this development was growth in receiv-
ables of €0.9 billion. Cash and cash equivalents decreased
by €1.3 billion to €3.4 billion, partially due to the extraordinary
contribution to pension plan assets of €2.4 billion.
Gross liquidity - defined as cash and cash equivalents
and other marketable securities of €8.6 billion was lower
than a year earlier (2013: €9.3 billion).
Cash provided by operating activities amounted to €3.2 billion
at the end of 2014 (2013: €6.0 billion). The decrease primarily
reflects significantly higher contributions to pension plan assets
as well as higher inventory growth. There was an opposing,
positive effect on the cash flow from the increased operating
profit in 2014.
B.36
Condensed statement of income of Daimler AG
In millions of euros
2014
2013
Revenue
83,947
75,531
1 Unit sales relate solely to new vehicles. The unit sales of Daimler AG
include vehicles invoiced to companies of the Group which have
not yet been sold on to external customers by those companies.
Vehicle sales by production companies of the Daimler Group are
not counted in the unit sales of Daimler AG.
11,480
98
in 2014 with an 86% increase in unit sales to 129,000 vehicles¹.
Compact cars posted sales growth of 22% to 486,000 units¹.
Due to lifecycle reasons, unit sales in the E-Class segment were
lower than in the previous year.
Marketable debt securities decreased compared with
December 31, 2013 from €7.1 billion to €6.6 billion. Those assets
include debt instruments that are allocated to liquidity,
most of which are publicly traded. They generally have an
external rating of A or better.
Other financial assets decreased from €6.2 billion to
€6.0 billion. They primarily consist of the investments in Renault
and Nissan and derivative financial instruments, as well as
loans and other receivables due from third parties.
Other assets of €8.3 billion (2013: €5.5 billion) primarily
comprise deferred tax assets and tax refund claims. The
increase in deferred tax assets primarily relates to non-profit
effects from pensions and similar obligations as well as
from derivative financial instruments.
The Group's equity increased compared with December 31,
2013 from €43.4 billion to €44.6 billion. Equity attributable to
the shareholders of Daimler AG increased to €43.7 billion
(2013: €42.7 billion). Net profit of €7.3 billion see page 85
and positive currency translation effects of €1.8 billion led
to the increase in equity. There were negative effects on equity,
however, from the distribution of the dividend for financial
year 2013 to the shareholders of Daimler AG (€2.4 billion),
actuarial losses from defined benefit pension plans (€3.7 billion)
and the remeasurement of derivative financial instruments
(€1.9 billion). Compared to the 3% increase of equity, the balance
sheet total disproportionately increased by 13%. Due to the
above described effects, the Group's equity ratio of 22.1% was
below the level of the end of 2013 (24.3%); the equity ratio for
the industrial business was 40.8% (2013: 43.4%). It is necessary
to consider that the equity ratios at the end of 2013 and
2014 are adjusted for the paid and proposed dividend payments.
96
B | Combined Management Report | Financial Position
Provisions increased to €28.4 billion (2013: €23.1 billion);
as a proportion of the balance sheet total, they amounted
to 15%, which is above the prior-year level of 14%. They primarily
comprise provisions for pensions and similar obligations
of €12.8 billion (2013: €9.9 billion), which mainly consist of the
difference between the present value of defined benefit
pension obligations of €30.1 billion (2013: €23.2 billion) and
the fair value of the pension plan assets applied to finance
those obligations of €18.6 billion (2013: €14.7 billion). The fall
in discount rates, especially for the German plans from 3.4%
at December 31, 2013 to 1.9% at December 31, 2014, led to an
increase in the present value of the defined benefit pension
obligations. This effect was partially offset by the extraordinary
contribution of €2.5 billion to the German pension plan assets.
Provisions also relate to liabilities from income taxes of €1.6
billion (2013: €1.3 billion) as well as from product warranties of
€5.0 billion (2013: €4.7 billion), from personnel and social
costs of €3.9 billion (2013: €3.2 billion) and other provisions of
€5.0 billion (2013: €4.0 billion). Of the change in other provi-
sions, €0.6 billion is accounted for by an increase in the provision
relating to the EU Commission's investigation of European
truck manufacturers.
Financing liabilities of €86.7 billion were above the level of
December 31, 2013 (€77.7 billion). As well as currency effects
of €3.4 billion, the increase primarily reflects the refinancing
of the growing leasing and sales-financing business. 50% of the
financing liabilities are accounted for by bonds, 26% by liabili-
ties to financial institutions, 13% by deposits in the direct banking
business and 7% by liabilities from ABS transactions.
Trade payables increased to €10.2 billion due to the higher
volume of business (2013: €9.1 billion). The Mercedes-Benz Cars
division accounts for 61% of those payables and the Daimler
Trucks division accounts for 26%.
Other financial liabilities amounted to €10.7 billion (2013:
€8.3 billion). They mainly consist of liabilities from derivative
financial instruments, residual value guarantees, accrued inter-
est expenses on financing liabilities, deposits received and
liabilities from wages and salaries. The increase after adjusting
for exchange-rate effects (€1.6 billion) is primarily related
to derivative financial instruments.
Other liabilities of €9.1 billion (2013: €7.0 billion) primarily
comprise deferred income, tax liabilities and deferred taxes.
The increase mainly results from deferred income (€1.4 billion).
Further information on the assets presented in the statement
of financial position and on the Group's equity and liabilities
is provided in the Consolidated Statement of Financial Position
see page 192, the Consolidated Statement of Changes
in Equity
see page 194 and the related notes in the Notes
to the Consolidated Financial Statements.
97
Daimler AG
Condensed version according to the German Commercial Code (HGB)
In addition to reporting on the Daimler Group, in this chapter,
we also describe the development of Daimler AG.
Daimler AG is the parent company of the Daimler Group and
is domiciled in Stuttgart. Its principal business activities com-
prise the development, production and distribution of cars,
vans and trucks in Germany and the management of the activi-
ties of the Daimler Group.
The vehicles are produced at the domestic plants of Daimler
AG as well as under contract-manufacturing agreements by
domestic and foreign subsidiaries and by producers of special
vehicles. Daimler AG distributes its products through its own
sales network of 32 German sales-and-service centers, through
foreign sales subsidiaries and through third parties.
The annual financial statements of Daimler AG are prepared
in accordance with the German Commercial Code (HGB).
The consolidated financial statements are prepared in accor-
dance with the International Financial Reporting Standards
(IFRS). This results in some differences with regard to recog-
nition and measurement, primarily relating to intangible
assets, provisions, financial instruments, the leasing business
and deferred taxes.
The main performance indicators for Daimler AG are
unit sales, revenue and net profit.
Profitability
Profit from ordinary activities reported by Daimler AG for 2014
amounts to €5.0 billion (2013: €3.5 billion). The development
of earnings reflects the growth in operating profit of €0.6 billion
to €1.4 billion and the increase in financial income of €0.9
billion to €3.6 billion. 7 B.36
Revenue increased, as forecast in the previous year, due
to higher unit sales of vehicles and components by €8.4 billion
to €83.9 billion. In the car business, revenue thus rose by
14% to €63.0 billion. Also with trucks and vans, revenue increased
for the same reason by 3% to €20.9 billion.
The earnings achieved by the car business in 2014 were
significantly higher than in the previous year. The development
of earnings was influenced by ongoing growth in unit sales
in Europe, Asia and the United States as well as an improved
model mix. The main growth drivers were the S-Class and
our expanded range of compact cars. There were opposing,
negative effects from expenditure to enhance products'
attractiveness and for new technologies and products, amongst
other factors. Unit sales in the car business increased by 9%
to 1,576,000 vehicles' in the year under review. Of the various
model series, the S-Class segment was extremely successful
Earnings from trucks and vans were higher than in 2013. Sales
of trucks reached 92,000 units¹ (2013: 105,000). Sales of vans
increased by 11% to 281,000 units¹.
11,477
189,635
19,891
a new product development center in Fuzhou. This facility,
which is the first Mercedes-Benz Vans product development
center outside Germany, has a design and calculation
department, proving grounds, test labs and component
and complete-vehicle test rigs.
Along with our internal activities, we also maintain close
contacts with external research institutions. For example,
we work together with various renowned research institutes
and participate in international exchange programs for
up-and-coming scientists.
Targeted involvement of the supplier industry. In order
to reach our ambitious goals, we also cooperate very closely
with research and development units from the supplier
industry. Daimler must be closely meshed with supplier com-
panies in order to deal with the rapid pace of technological
change in the automotive industry and the need to quickly bring
new technologies to market. Strong partners from the sup-
plier industry are also indispensable for our efforts to develop
and offer new concepts for future mobility. As part of our
joint research and development work, we ensure that the Group
retains the key technological expertise it needs in order
to keep our brands distinct and to safeguard the future of the
automobile in general.
102
B| Combined Management Report | Sustainability
Intellectual property rights secure our leadership in
technology and innovation. Carl Benz invented and patented
the automobile in 1886. Since then, we have refined auto-
mobiles with more than 100,000 patents. In the year 2014, a
total of 2,049 new ideas were registered for patents (2013:
2,078). These patent applications secure not only scope for the
application of innovative technologies, but also the exclusivity
of our innovations. Inventions are identified and protected at all
of our sites in the global research and development network -
especially in Germany, China, Japan, the United States and India.
In addition to industrial property rights, unique visual aspects
of our products are protected with over 6,400 designs registered
in 2014 (2013: 6,100). Furthermore, with a portfolio of more
than 32,900 trademarks (2013: 32,500), we protect the renowned
and valuable Mercedes-Benz brand, the three-pointed
star and all other product brands in each relevant market.
€5.7 billion for research and development. We want
to continue shaping mobility through our pioneering innovations
in the coming years. As we had already announced in Annual
Report 2013, we once again invested the very large amount
of €5.7 billion in research and development work in 2014
(2013: €5.5 billion). Of that amount, €1.1 billion (2013: €1.3 billion)
was capitalized as development costs, which amounts to
a capitalization rate of 20% (2013: 23%). The amortization
of capitalized research and development expenditure totaled
€1.2 billion during the year under review (2013: €1.1 billion).
With a rate of 4.4% (2013: 4.7%), research and development
expenditure also remained at a high level in comparison
with revenue. Research in the reporting year focused on new
vehicle models, extremely fuel-efficient and environmentally
friendly drive systems and new safety technologies. We made
improvements in all of the main areas that help further
increase our vehicles' efficiency - ranging from innovative
drive-system concepts to energy management, aerodynamics
and lightweight engineering.
The most important development projects at Mercedes-Benz
Cars were the successor models of the E-Class and M-Class,
as well as our new generation of compact cars. In addition, we
continually invest in new low-emission engines, alternative
drive systems and innovative safety technologies. Mercedes-
Benz Cars spent a total of €4.0 billion on research and devel-
opment in 2014, surpassing the high level of expenditure in 2013
(€3.8 billion). Daimler Trucks invested €1.2 billion in research
and development projects (2013: €1.2 billion). The focus there
was on new medium-duty and heavy-duty engines as well as
on the successor generations of existing products. R & D expen-
diture at Mercedes-Benz Vans mainly for ongoing product
enhancement measures, as well as efforts to further reduce
emissions and increase fuel efficiency. Daimler Buses pri-
marily focused its development activities on new products, the
fulfillment of new emissions standards and the creation
of alternative drive systems. Around half of our research and
development expenditure is applied for the development
of green technologies. 7 B.38 7 B.39
B.38
Research and development expenditure
In billions of euros
total
thereof capitalized
LLLLL
6
5
4
3
2
1
0
2010
2011
2012
2013
2014
B.39
Research and development expenditure by division
Our international research and development network.
Our global research and development network comprises
21 locations in ten countries. Our biggest facilities are
in Sindelfingen and Stuttgart-Untertürkheim in Germany.
Approximately 120 people are currently employed in
Sunnyvale, California, the headquarters of our research facili-
ties in North America. Other important research locations
in North America are Long Beach, California; Portland, Oregon;
and Redford, Michigan. Our most important locations in Asia
are our facility in Bangalore, India; the Global Hybrid Center
in Kawasaki, Japan; and our research and development
center in Beijing. With its approximately 2,000 employees,
Mercedes-Benz Research and Development India (MBRDI)
is Daimler's largest research and development center outside
Germany. In November 2014, Daimler Greater China Ltd.
opened a new research and development center in China,
thereby expanding the existing R&D network in Beijing.
The Advanced Design Studio is the most important component
of the new center and it also serves as the Group's new
design hub in Asia. Its primary task is to provide Chinese cus-
tomers with an even more intense Mercedes-Benz brand
experience. Some 500 highly qualified engineers and designers
will work at the new Mercedes-Benz research and develop-
ment center in China in the future. In 2013, our van joint venture
in China, Fujian Benz Automotive Corporation, opened
The expertise, creativity and drive of our employees in research
and development are key factors behind our vehicles' market
success. At the end of 2014, Daimler employed 21,700 men and
women at its research and development units (2013: 21,300)
A total of 14,000 employees (2013: 13,600) worked at Group
Research & Mercedes-Benz Cars Development, 5,500 (2013:
5,600) at Daimler Trucks, 1,000 (2013: 1,000) at Mercedes-Benz
Vans and 1,100 (2013: 1,100) at Daimler Buses. Around 4,600
researchers and development engineers (2013: 4,400) worked
outside Germany.
Research and development as key success factors.
Research and development have always played a key role at
Daimler. Our researchers anticipate trends, customer wishes
and the requirements of the mobility of the future, and our
development engineers systematically implement these ideas
in products that are ready for series production. Our goal
is to offer our customers fascinating products and customized
solutions for need-oriented, safe and sustainable mobility.
Our technology portfolio and our key areas of expertise are
oriented toward this objective.
Research and development
Deferred income
35,791
544
85,258
3,405
9,214
12,619
5,352
31,111
36,463
493
85,276
100
Risks and opportunities
The business development of Daimler AG is fundamentally sub-
ject to the same risks and opportunities as the Daimler Group.
Daimler AG generally participates in the risks of its subsidiaries
and associated companies in line with the percentage of each
holding. The risks are described in the "Risk and Opportunity
Report." see pages 132 ff For Daimler AG, we assess the
probability of occurrence of the risks connected with pension
plans as high. These risks increase along with a decreasing
discount rate. Charges may additionally arise from relations with
subsidiaries and associated companies in connection with
statutory or contractual obligations (in particular with regard
to financing).
Outlook
Due to the interrelations between Daimler AG and its subsid-
iaries and the relative size of Daimler AG within the Group,
we refer to the statements in the "Outlook" chapter, which also
largely reflect our expectations for the parent company.
see pages 146 ff Daimler AG expects to post a significantly
lower net profit in the year 2015 than in 2014. That decrease
will primarily be caused by the expected higher expense from
provisions for pensions and similar obligations, which in turn
is the result of the ongoing low level of market interest rates.
In addition, the restructuring of our sales-and-service
centers in Germany is connected with substantial charges
on our operating profit in 2015.
Sustainability.
B | Combined Management Report | Daimler AG | Sustainability
Sustainability at Daimler
2014
Our view of sustainability. For us, sustainability means
conducting business responsibly to ensure long-term success
in harmony with the environment and society. We are moving
toward our goals by making sustainability a firmly integrated
aspect of our operations and by requiring and promoting a strong
sense of responsibility for sustainable operations among all of
our managers and employees throughout the Group. We include
our business partners in this process and conduct a dialogue
on these issues with our stakeholders. Our management struc-
tures, processes and systems are designed in accordance
with this concept of sustainability. As one of the world's foremost
automakers, Daimler clearly occupies a leading position
in the area of sustainability.
Our sustainability strategy has six core aspects ("dimensions
of responsibility"), to which relevant areas have been assigned
where action needs to be taken. We have linked them with
targets and target indicators. Together, all of our goals and
targets serve as the basis for our medium- to long-term
Sustainability Program 2020, which we use to measure our
performance, although we also wish our performance to
be judged externally. Sustainability Program 2020 also defines
the areas in which we plan to take action in the coming years.
For example, we aim to further reduce pollutants and emissions,
further enhance the safety of our vehicles, and further expand
and more systematically structure our efforts to protect human
rights. We also seek to improve our dialogue with our suppliers
and dealers and to further strengthen our social commitment.
Our business activities are also strongly guided by the ten
principles of the UN Global Compact, to which we are firmly
committed as a founding member. We are also a member
of the Global Compact LEAD Group. Our internal principles
and guidelines are based on this international reference frame-
work as well as on other international principles.
-
We are committed to both legal and ethical standards and
we must ensure that these standards are adhered to around
the world by our business partners and suppliers as well.
Road traffic is one of the causes of CO2 and pollutant
emissions. As an automobile manufacturer, we work to promote
sustainable mobility solutions and have demonstrated our
innovative capability with regard to environmental and resource
protection and safety.
Our operations impact the environment, and this is especially
the case in vehicle production. We therefore employ a
consistent system of environmental management in order
to minimize this impact.
As an employer, we have a responsibility to ensure fair and
attractive working conditions for our 280,000 employees
worldwide.
As a corporate citizen, we seek to contribute to the common
good beyond the level of our business operations, and
we utilize our special expertise in order to achieve this goal.
Group-wide sustainability management. At Daimler,
sustainability is thematically and organizationally embedded
in our Group-wide corporate governance activities.
see pages 182 ff The Corporate Sustainability Board (CSB)
is the central management body for all sustainability-related
issues. The operational work is conducted by the Corporate
Sustainability Office, which is staffed by representatives of the
specialist departments and divisions. Since 2011, we have
been using the Sustainability Scorecard as a tool for steering
our efforts to meet key sustainability targets. The scorecard
uses a color-coded system either to display the success of quan-
titative indicators and qualitative objectives or to show that
action needs to be taken. This allows targeted measures to be
taken with the direct involvement of corporate management.
101
Comprehensive reporting on sustainability. In 2014,
Daimler published its tenth Group-wide sustainability report.
The report provides a detailed and comprehensive sustain-
ability balance sheet for the previous financial year and
is supplemented by an interactive online sustainability report
that contains more detailed and extensive information.
④daimler.com/sustainability
The new sustainability report on financial year 2014 will be
presented at Daimler's Annual Shareholders' Meeting in early
April 2015. The report was drawn up in line with the Global
Reporting Initiative (GRI) guidelines 4.0. In this context, Daimler
specifically highlights all of the company's key sustainability-
related issues. This applies in particular to focal topics such as
further reductions in the fuel consumption of our vehicles
through hybridization, for example, as well as our attractiveness
as an employer, our activities in China and the company's
mobility concepts. In addition, we report on specific issues
such as the remanufacturing of used engines, the further
expansion of initiatives related to integrity and compliance, and
efforts to boost employee commitment to sustainability-
related issues.
Our sustainability strategy. We have developed a Group-wide
sustainability strategy to enable us to meet the requirements
associated with sustainability, and we systematically pursue the
sustainability goals we have set for ourselves. This strategy
is embedded in our corporate strategy, which is based on our
four core values of passion, respect, integrity and discipline.
We can only ensure sustained profitability and society's accep-
tance of our business activities if we take into account the
impact all of our business processes have on the environment
and society, and if we align our business targets with envi-
ronmental and social requirements.
2013
14/13
In millions of euros
-51
Daimler Buses
182
187
-3
thereof capitalized
11
3
+267
103
Innovation and safety
Innovations for the mobility of the future. The greatest
possible customer utility, the most stringent safety standards,
maximum environmental compatibility and efficiency - we
rely on innovative concepts and environmentally sound product
development to help us achieve all of those goals simultane-
ously. Our innovations range from pioneering vehicle and drive-
system technologies to intelligent lightweight engineering
concepts and sophisticated assistance systems that can prevent
accidents. Over recent years in particular, we have made
tremendous progress on the road to accident and emission-free
driving. We have a greater range of electric vehicles on the
road than any other automaker and we also set standards for
safety. We have established a leading position in the area
of autonomous driving in particular, and we plan to further
strengthen this position.
On the road to emission-free mobility. Finite oil reserves,
population growth - especially in urban centers - and the
unabated demand for mobility require new solutions for all
aspects of transport. Our goal is to safeguard mobility
for the generations to come. We therefore strive to offer our
customers safe and efficient low-emission vehicles and
associated services. Our vision for the future is to establish
a mix of drive systems that reflect market demands. Our
"Road to Emission-free Driving" initiative defines the key
development approaches for creating extremely fuel-
efficient and environmentally friendly drive-system tech-
nologies at all of our divisions:
139
1. We continue to enhance our vehicles with state-of-the-art
internal combustion engines that we are optimizing to
achieve significantly lower fuel consumption and emissions.
2. We are achieving further perceptible increases in efficiency
through customized hybridization, i.e. the combination
of combustion engines and electric motors.
During the year under review, new products and technologies
once again enabled us to make substantial progress on the
"Road to Emission-free Driving." The examples on the following
pages show how this is happening.
Efficient cars and commercial vehicles with internal combus-
tion engines. Much of our research and development work
continues to focus on making our cars and commercial vehicles
with internal combustion engines even more efficient. This
is largely made possible by engines with low displacement and
turbochargers, as well as by lightweight engineering, aerody-
namic improvements, tires with low roll resistance, demand-
appropriate energy management and an automatic start-stop
function. A good example of this is the new C-Class, which we
began to deliver to customers in April 2014. The improvements
we made to the vehicle body, as well as to the model's engines
and auxiliary systems, have significantly decreased fuel
consumption, by as much as 32% in some cases. We are exploit-
ing additional potential through intelligent and customized
hybridization. For example, the most fuel-efficient C-Class model
at present the C 300 BlueTEC HYBRID¹ – consumes only
3.6 liters of diesel per 100 kilometers (NEDC combined) and
has CO2 emissions of just 94 grams per kilometer. The most
economical variant of the new updated B-Class - the B 180 CDI
BlueEFFICIENCY Edition² - boasts fuel-consumption and
emission figures that are just as low.
We have also further reduced the fuel consumption of the most
recent additions to our range of trucks. Our new Actros,
Arocs, Antos and Atego series and the heavy-duty Freightliner
Cascadia Evolution in the United States, and the new FUSO
Super Great V are all the cleanest and most economical trucks
in their respective classes. In addition, our new buses are
making a huge impression with outstanding fuel efficiency.
see page 109
B.40
Road to emission-free mobility
104
Optimizing our vehicles
with modern conventional
powertrains
Hybridization for further
increase in efficiency
Locally emission-free
driving with electric
vehicles powered by
fuel cells or batteries
Energy for the future
Clean fuels for internal combustion engines
Energy sources for locally emission-free driving
3. Our electric vehicles, powered by batteries or fuel cells,
are making locally emission-free driving possible. 7 B.40
Liabilities
68
-11
% change
Daimler Group
5,680
5,489
+3
thereof capitalized
1,148
1,284
-11
Mercedes-Benz Cars
4,025
3,808
+6
thereof capitalized
thereof capitalized
1,063
-3
Daimler Trucks
1,188
Retained earnings
+1
thereof capitalized
34
79
-57
Mercedes-Benz Vans
293
329
1,035
5,412
30,379
1,171
11,861
Other liabilities
10,470
Other provisions
1,391
Provisions for pensions and similar obligations
35,701
37,062
Equity
Trade payables
2,407
Distributable profit
18,748
2,621
Provisions
In order to address the challenges resulting from the aging
of our workforce, we launched and successfully continued numer-
ous projects and activities at our German locations in 2014.
They included measures for improving workplace ergonomics
as well as concepts for work organization, personnel allo-
cation management, health management and human resources
development and management.
In 2013, Daimler introduced a new human resources concept
that takes advantage of the experience of the company's
retired employees. These "senior experts" as they are called,
can voluntarily return to the company for a temporary period
when specific departments need their services for a time.
The experience we have gained so far shows that the program
is extremely popular with both the senior experts and the
departments. The expert pool now comprises approximately
400 retirees with a combined 12,000 years or so of experience.
Number of years at Daimler. The average number of years
Daimler employees have worked for the company was close to the
prior-year level at 16.1 years (2013: 16.2 years). In Germany,
employees had worked for the Group for an average of 19.4 years
at the end of 2014 (2013: 19.2 years). The comparative figure
for Daimler AG was 19.8 years (2013: 19.5 years). Daimler
employees outside Germany had worked for the Group for an
average of 11.0 years (2013: 11.3 years).
Diversity management activities. The statement "Daimler's
success. Your benefit. Our responsibility." underscores the
importance of diversity management as a strategic factor of
success at Daimler. Our goal is to create and use mixed teams
to encourage our creativity and progress in all areas so that
we can all shape the future of Daimler together. Our various
diversity management measures help make our managers
in particular more aware of the importance of diversity. These
measures also teach diversity skills and help generate new
ideas for the daily work environment.
Our participation in Germany's Diversity Day, which was initiated
by the German Diversity Charter in 2013, also underscores
our commitment to, and appreciation of, diversity in our company.
The various skills and expertise of our employees enable us
as a global company to meet the ever more varied requirements
and wishes of our customers around the world.
Increased proportion of women employees. Our instru-
ments for supporting the targeted promotion of women include
flexible working-time models, childcare facilities close to
the workplace and special mentoring programs. Daimler has
committed itself to increasing the proportion of women in
senior management positions to 20% by 2020. The proportion
of women in such positions has continually risen over the
last few years to reach 14.1% at the end of 2014 (2013: 12.7%).
Because we are a technologically oriented company, the targets
take into account sector-specific conditions and women's
current share of our workforce. At the Daimler Group, the propor-
tion of women in the total worldwide workforce increased
to 16.8% (2013: 16.3%). At Daimler AG, women accounted for
14.9% of all employees at the end of the year under review
(2013: 14.6%).
CO2 emissions in g/km: combined 159-147
Slight increase in average age of our employees. The
average age of our global workforce in 2014 was 42.4 years
(2013: 42.3). Our employees in Germany were 43.8 years
old on average (2013: 43.5). Employees who are 50 years old
or older currently make up about 36% of our permanent
workforce at Daimler AG. On the basis of current assumptions,
this proportion will rise to about 50% over the next ten years.
16,603
+0
Daimler Financial Services
Group Functions & Services
8,878
8,107
+10
26,832
Employee qualification. We provide our staff with training
and continuing education opportunities throughout their entire
careers. Our range of qualification measures includes practical
training courses, seminars, workshops, specialist conferences
and instruction through digital media. In Germany alone,
we spent €121 million on the training and qualification of our
employees in the year under review (2013: €107 million).
On average, every employee spent 4.1 days in qualification
courses in 2014 (2013: 4.1 days).
Sales & Marketing Organization
Other
6,698
111
We have combined in-house services worldwide in shared service
centers in order to further improve the quality and efficiency
of our administrative functions and various services. These shared
services include financial processes as well as HR, IT and
development tasks, sales functions, and certain location-specific
services. Some of the shared service centers are not con-
solidated because they do not affect our profitability, cash flow
or financial position; those companies employed more than
6,000 men and women at the end of 2014.
The Group's workforce also does not include the employees
of companies that we manage together with Chinese partners;
at December 31, 2014, they numbered 20,600 people.
High level of profit sharing. On the basis of the company
agreement on profit sharing valid for 2013 and 2014, all eligible
employees at Daimler AG subject to collective bargaining
agreements were paid an amount of €2,541 for the 2013 financial
year. Group management also decided to pay out a one-time
bonus of €500 as an expression of gratitude to our employees
for their special commitment. The full participation in the
company's success - €3,041 - was paid out in April 2014.
The eligible employees of Daimler AG in Germany will also
receive a performance participation bonus for the company's
very positive business development in financial year 2014.
The amount of the profit-sharing payout, which was determined
on the basis of the valid company agreement, totals €4,350.
The increase from the prior year is a result of the significant
increase in earnings at the divisions used for the profit-
sharing calculation: Mercedes-Benz Cars, Daimler Trucks and
Mercedes-Benz Vans. Employees will receive their profit-
sharing payout in April 2015.
52,455
112
Daimler Health Check. Holistic health management has
been a top priority at Daimler for many years now. Along with
the extensive measures established at all plants, Daimler
also launched an initial pilot program for its new Health Check
system at three selected locations in 2013. The Health Check
system, which was agreed upon with the General Works Council,
is offered to all employees subject to collective bargaining
agreements. Participation is voluntary and employees can join
up once every three years.
Securing young talent. Daimler takes a holistic approach to
securing young talent. For example, our Genius initiative
enables children and teenagers to gain valuable information
about technologies of the future and professions in the auto-
motive industry. ④genius-community.com School leavers can
apply to participate in a technical or commercial apprentice-
ship at one of our locations or to study at the Cooperative State
University in Baden-Württemberg. After completing their
college degrees, they can directly join our company or launch
their careers at Daimler by taking part in our global CAReer
training program.
3 S 500 PLUG-IN HYBRID: fuel consumption in 1/100 km: combined: 2.8;
CO2 emissions in g/km: combined 65;
2 B 180 BlueEFFICIENCY Edition: fuel consumption in l/100 km: urban 4.3,
extra-urban 3.2, combined 3.6; CO2 emissions in g/km: combined 94
1 C 300 BlueTEC HYBRID: fuel consumption in 1/100 km: urban 4.1-3.9,
extra-urban 3.9-3.4, combined 4.0-3.6; CO₂ emissions in g/km:
combined 104-94
Another new feature in the Mercedes-Benz S 500 PLUG-IN
HYBRID³ is the so-called haptic gas pedal, which gives drivers
a double impulse signal to indicate when they should take
their foot off the gas in order to coast the vehicle and recover
energy. When the vehicle is in the pure electric mode, the
system can tell the driver when it is time to engage the combus-
tion engine. The current energy flow is shown in the instru-
ment cluster and on a central display in all operating modes
if the customer chooses to activate this function.
see pages 8 ff
road ahead. "Intelligent HYBRID” is the only predictive operating
strategy in existence to engage not only when a destination
is programmed into the navigation system, but also when the
destination-guidance feature is inactive. In this case, the
system bases the probability the vehicle will stay on its current
route on the type of road it is traveling on.
Intelligent energy management for hybrid vehicles. The
engineers who develop new hybrid models are benefiting more
and more from cooperation with our successful Formula 1
racing team, which also uses high-tech hybrid drive to save
on fuel. The synergies here benefit both production vehicles
and race cars. Many hybrid vehicles fail to take on energy when
driving downhill because their high-voltage batteries are often
too fully charged at the wrong moment to absorb the additional
energy recovered in such situations. The "Intelligent HYBRID"
operating strategy that Mercedes-Benz utilizes in the S-Class
and will use in other models in the future ensures that the
high-voltage battery remains in a charging stage that allows all
the possibilities offered by energy recovery on a given road
and terrain to be fully exploited. If the battery is too fully charged,
the electric motor automatically supports the combustion
engine in order to allow the battery to discharge to a level that
enables it to fully absorb the anticipated amount of recovered
energy. The system uses data from the COMAND Online navi-
gation system to calculate the recovery potential along the
The S 500 PLUG-IN HYBRID³ joins the S 400 HYBRID4 and
the S 300 BlueTEC HYBRID5 as the third hybrid model in
the S Class series. We will launch a total of ten plug-in hybrid
cars in the period until 2017. It will be possible to recharge
all these models batteries' also from external power sources.
First plug-in hybrid with the star. The first certified "three-liter"
luxury sedan in the world marks yet another milestone on the
road to emission-free mobility. The new Mercedes-Benz S 500
PLUG-IN HYBRID³ combines an ultramodern hybrid drive
concept with the unique innovations and luxurious appointments
typical of the S-Class. This long-wheelbase sedan, which we
began to deliver to customers in October 2014, makes a huge
impression with its exceptionally dynamic handling and
efficiency. see pages 4ff
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113
Contributions to political parties. In 2014, we once again
supported democratic parties solely in Germany, donating
a total of €320,000. The distribution of the contributions
remained unchanged: The CDU and SPD parties each received
€100,000 while the FDP, the CSU and BÜNDNIS 90/DIE
GRÜNEN each received €40,000.
Transparency and control. The donation and sponsorship
committee controls all of our donations and sponsorship
activities worldwide. The committee bases its decisions on our
donation and sponsorship guidelines, and we also create
transparency with the help of our donation and sponsorship
database. Regular communication actions help employees
adhere to the guidelines and also make them aware of the risks
associated with donations and sponsorship activities.
In 2014, we spent almost €60 million on donations to nonprofit
institutions and on sponsorships of socially beneficial projects.
This does not include our foundations and corporate volunteering
activities, or self-initiated projects.
Continued high degree of social involvement. Our global
presence offers us the opportunity to help shape the social
environment and promote an intercultural dialogue in the places
where we do business around the world. We concentrate
here on areas where we can have an impact through our role
as a "good neighbor." We also participate in projects to
which we can contribute our specific knowledge and core areas
of expertise as an automobile manufacturer. Our activities
focus on the following areas: support for science, education,
traffic safety, the environment, the arts and culture, com-
munity projects, charitable projects, projects for which our
employees volunteer, and projects for promoting dialogue
and understanding.
Social responsibility
The Health Check focuses on early detection of risk factors
and support for employees interested in maintaining their
personal health. Employees can also select a "health counselor"
to help them achieve their individual health goals and stay
healthy over the long term.
16,631
Award for Daimler Financial Services. Daimler's Financial
Services division was named one of the 25 best international
employers worldwide by the independent Great Place to
Work Institute in 2014. This makes Daimler Financial Services
the first German company ever to finish that high in this
ranking of the world's most attractive employers. In the most
recent survey conducted for the ranking, nine out of ten
Daimler Financial Services employees described their company
as a great place to work. Like the rest of the Group, Daimler
Financial Services is expressly committed to a corporate culture
founded in values such as trust, personal responsibility,
openness to new ideas and, last but not least, enjoyment
of one's work.
Overall, the results of the survey were similar to those of recent
years. For example, employee commitment remains above
average when compared with external benchmarks. The careful
and detailed analysis of the results began in early December.
The analysis will identify areas where action can be taken in order
to achieve sustained improvements for the benefit of the
Group and its employees.
Successful employee survey. We conducted a Group-wide
employee survey once again in 2014. Nearly 260,000 employees
in more than 40 countries were invited to participate in the
survey and express their opinions to us between mid-September
and the beginning of October. The very high participation
rate of 70% underscores our employees' interest and their will-
ingness to actively help shape the further development
of the company.
We had 8,346 apprentices and trainees worldwide at the end
of 2014 (2013: 8,630). A total of 1,990 young people began
their vocational training at Daimler in Germany during the year
under review (2013: 2,014). The number of people we train
and subsequently hire is based solely on the Group's needs and
its future development. In 2014, 89% of Daimler trainees
were hired after completing their apprenticeships (2013: 89%).
Daimler launched a new employer image campaign in October
2014. The campaign creates the conditions necessary to ensure
a uniform and recognizable presence in the global recruitment
market, and it also improves our image as an attractive employer.
The campaign targets high-school and university students,
university graduates and experienced professionals as well.
A total of 20 different motifs with 48 variations were developed
for these target groups; all of the motifs and variations feature
male and female Daimler employees of different ages and back-
grounds. Each motif also highlights one or more products
from the Daimler Group.
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+6
14,838
15,782
The consumption of diesel fuel can also be greatly reduced
by hybrid technology - particularly in vans and trucks used
for distribution transportation. For example, the FUSO Canter
Eco Hybrid consumes up to 23% less fuel than a comparable
diesel truck, depending on use, and the Freightliner M2e Hybrid
consumes up to 30% less fuel than a conventional diesel-
powered M2 106. No other commercial vehicle manufacturer
has more experience or has done more testing in the areas
of alternative drive systems and electric mobility. We also have
the most extensive lineup of series-production vehicles in this
field, ranging from vans and trucks to buses. There are more than
1.2 million environmentally friendly Daimler commercial
vehicles equipped with SCR technology on the road worldwide,
as well as a further 21,000 vehicles with alternative drive
technology.
In Europe, we aim to reduce the fuel consumption of our truck
fleet by an average of 20% between 2005 and 2020. Compared
with the year 2005, we already achieved a reduction of 10%
in fuel consumption and CO2 emissions with the launch of the
new Actros model series in 2011, and we are working system-
atically on achieving the next 10%.
Actros wins the "Fuel Duel." The Actros once again demon-
strated its outstanding fuel economy during the year under
review by beating the competition in “Fuel Duel” fleet trials.
The Mercedes-Benz brand claim for the Actros in the com-
petition was that the model is the most fuel-efficient truck
and would therefore consume less fuel than the most eco-
nomical truck in the other fleets participating in the "Fuel Duel."
The Actros took part in just under 600 fuel duels in 2014 and
emerged as the winner more than 90% of the time. On average,
the Actros was 11% more fuel-efficient than comparable
rival models.
Economical super trucks. We utilize highly efficient
powertrains and sophisticated aerodynamic features in our
North American semi-trucks (Class 8) in order to reduce
their fuel consumption and CO2 emissions. This is true of the
new Western Star 5700XE as well. The truck's front end and
its chassis and cab paneling were aerodynamically redesigned
in a manner that significantly lowered air resistance. The
model is also equipped with a new integrated Detroit Diesel
powertrain featuring a DD15 engine that operates at a lower
revolutions as well as a DT12 automated transmission and a par-
ticularly fuel-saving rear axle. The individual measures and
especially the finely tuned overall package have led to a reduc-
tion in fuel consumption of nearly 15% as compared to the
reference vehicle, a Western Star 4900 FE.
Through its use of further refined technologies, Daimler
has also succeeded in meeting the targets of a research project
organized by the US Department of Energy. Our test vehicle
achieved the required efficiency gains in 2014 for both the entire
tractor-trailer and engine efficiency. Daimler was able to
demonstrate engine efficiency of more than 50% on a test rig,
and during two test drives on a highway the tractor-trailer
combination displayed up to 61% greater overall efficiency
compared with the base vehicle from 2009.
Award for climate protection and environmental manage-
ment. At the 2014 CDP Climate Leadership Award Conference
in Munich, CDP (formerly the Carbon Disclosure Project)
acknowledged Daimler AG as the leader in its sector for the
automotive industry. The company received the award for
its outstanding commitment and exemplary transparency in
addressing climate change and achieved the maximum
possible score of 100 in the Climate Disclosure Leadership
Index (CDLI). Daimler also received the highest possible
performance rating of “A” for the measures it has introduced,
the progress it has already made and its planned strategies
for reducing CO2 emissions. One of the things the CDP honored
Daimler for was the fact that the company has reduced the
CO2 emissions of its new car fleet in Europe by more than 20%
over the last five years. Along with its continual improvements
to individual vehicle models, the Group's efficient production,
including the environmentally friendly generation of electricity,
also contributes to its positive performance.
During the year under review, Daimler AG was also once
again very successful in the manufacturer rankings of the
motoring association Verkehrsclub Deutschland (VCD).
VCD cited the company's open information policy and its early
compliance with the more extensive particulate thresholds
for direct-injection gasoline engines, which do not go into effect
until 2017, as important factors in its decision to name
Daimler the most environmentally friendly manufacturer in 2014.
Lower weight, more recyclates and more natural materials.
We want to make our vehicles lighter and further reduce the
environmental impact of the materials used in their production.
To achieve these goals, we are using new lightweight materials
and components. In addition, we are increasingly utilizing renew-
able resources and recycled materials. Intelligent lightweight
construction can reduce the weight of a vehicle without compro-
mising safety and comfort. Along with material selection,
component design and manufacturing technology also play a key
role in lightweight engineering. Not every material is suitable
for every component. At 35%, the bodywork accounts for the
largest portion of a vehicle's total weight. After that comes
the running gear at 25%, the comfort and safety equipment
at 20% and the engine and transmission also at 20%. The
most effective way to reduce vehicle weight is therefore to
focus on the body.
For example, the innovative aluminum hybrid body for the
new C-Class is approximately 70 kilograms lighter than a conven-
tional body made of steel. In total, we were able to reduce
the vehicle's weight by almost 100 kilograms compared with
the previous model. The share of aluminum used for the
vehicle body increased to nearly 50%, compared with less
than 10% with the predecessor model.
110
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Extensive recyclability of old vehicles. To make our vehicles
more environmentally friendly, we are reducing our auto-
mobiles' emissions and the resources they consume over their
entire lifecycle. We therefore pay close attention to creating
a recycling-friendly design already at the development stage.
Up to 85% of the materials in all Mercedes-Benz models are
recyclable and as much as 95% of the materials are reusable.
This means we were in compliance with the new EU recycling
directive before it even went into effect at the beginning of 2015.
Other proven elements of our recycling concept are the
resale of inspected and certified used parts, the remanufactur-
ing of parts and the MeRSy Recycling Management workshop
disposal system.
Avoiding waste. In the area of waste management, Daimler
believes that recycling and the prevention of waste are better
than disposal. Accordingly, the reconditioning and reuse
of raw, process and operating materials has been standard
practice at our plants for many years. In order to avoid the
creation of waste from the outset, we use innovative techno-
logical processes and environmentally focused production
planning. Waste materials that are unavoidable are generally
recycled. As a result, the recycling rate for waste at our plants
is over 85% on average. At some plants, almost 100% of the
waste is now recycled, meaning that waste destined for landfills
has been almost completely eliminated.
As we systematically pursue our environmental protection
activities, we rely on comprehensive environmental manage-
ment systems. Today, more than 98% of our employees
worldwide work in plants whose environmental management
systems have been certified as conforming to the ISO 14001
or EMAS environmental standards.
Extensive measures for environmental protection in pro-
duction. In recent years, we have been able to limit the
energy consumption, CO2 emissions, production-related solvent
emissions and noise at our plants with the help of environmen-
tally friendly production processes. As a result, energy consump-
tion during the period 2010 - 2014 increased by only 5.4%
to 10.9 million megawatt-hours, which was well below the rate
of production growth. During the same period, CO 2 emissions
actually decreased by 6.0% to a total of 3.3 million metric tons,
thanks to a transition to energy sources that produce less
CO2. Our ongoing energy-saving projects enabled us to more
than offset the additional energy consumption that resulted
from the significant increase in production in 2014. Energy
consumption in the reporting year therefore decreased by 1.9%
from the prior year, and CO2 emissions actually decreased by
2.6%. With resource-conserving technology such as circulation
systems, water consumption rose by only about 6.2% between
2010 and 2014, well below the rate of production growth. Despite
the aforementioned increase in production, the savings mea-
sures taken meant that it was actually possible to reduce water
consumption by almost 3% compared to the prior year.
USA
Brazil
10.1%
4.1%
4.4%
8.2%
12.9%
In 2013, we also set a new benchmark for fuel efficiency
in the North American truck market with the launch of our
new heavy-duty Freightliner Cascadia Evolution. Thanks to
its improved aerodynamics and its new Detroit DD15 engine
equipped with proven Daimler BLUETEC exhaust technology,
the new heavy-duty truck consumes 7% less fuel than the
predecessor model. This was measured and confirmed by an
independent agency in the course of a one-week test drive
across the United States.
Europe, excluding Germany
Germany
Employees at 12/31/2014
By region
B.45
Due to reorganization within the context of the Customer
Dedication initiative, the employees previously reported under
"Sales & Marketing Organization" are included in the employee
numbers for the respective divisions as of 2014. However, this
does not apply to the Group's own sales and service centers
in Germany and the global logistics center in Germersheim, whose
employees are included under "Group Functions & Services"
as of 2014. Workforce numbers in all divisions increased com-
pared with the previous year. 71 B.46
Slight increase in number of employees. On December 31,
2014, the Daimler Group employed a total of 279,972 men and
women. Due to the high demand for our products, the work-
force grew by 2% compared with the end of 2013. At the begin-
ning of 2014, we had anticipated that the workforce would
remain stable. The number of employees in Germany increased
to 168,909 (2013: 167,447) and employee numbers also rose
in the United States, to 22,833 (2013: 20,993). At the end of 2014,
Daimler employed 12,313 men and women in Brazil (2013:
14,091) and 11,400 (2013: 11,275) in Japan. 7 B.45. Our consol-
idated subsidiaries in China had a total headcount of 2,664
at the end of the year (2013: 1,966). At the end of the reporting
year, the parent company Daimler AG employed a total of
151,524 men and women (2013: 150,605).
Workforce
60.3%
electricity consumption in kWh/100 km: 13.5
109
2014
Mercedes-Benz Vans
Daimler Buses
+5
79,020
82,743
+33
96,895
129,106
+2
274,616
279,972
Daimler Group
Mercedes-Benz Cars
% change
Employees (December 31)
14/13
2013
2014
Daimler Trucks
134
2013
140
2012
150
2011
129
158
g/km
Year
B.44
CO2 emissions
2014
2013
Employees by division
2010
4 S 400 HYBRID: fuel consumption in l/100 km: urban 7.4-6.6,
extra-urban 6.5-6.1, combined 6.8-6.3;
B.46
5 S 300 BlueTEC HYBRID: fuel consumption in I/100 km: urban 4.8-4.7,
extra-urban 4.6-4.3, combined 4.7-4.4; CO2 emissions in g/km:
combined 124-115
170
160
g/km
Average CO2 emissions of the new car fleet of Mercedes-Benz Cars
in the EU
B.43
CO2 emissions in g/km: combined 109-99
2 E 300 BlueTEC HYBRID: fuel consumption in I/100 km: urban 4.1-3.9,
extra-urban 4.1-3.8, combined 4.1-3.8;
electricity consumption in kWh/100 km: 13.5
1 S 500 PLUG-IN HYBRID: fuel consumption in 1/100 km: combined: 2.8;
CO2 emissions in g/km (combined): 65;
Economical and low-emission commercial vehicles. We
have also continuously reduced emissions of CO2 and pollutants
from our commercial vehicles in recent years. Along with the
introduction of BLUETEC technology, these reductions have been
achieved through more efficient new engines, the Mercedes
PowerShift 3 automated transmission fitted as standard equip-
ment, axle ratios better suited to specific needs and improve-
ments to tires and aerodynamics. Daimler was also the first
manufacturer to offer its entire European product range in
a Euro VI version well before those new emissions standards
went into effect in January 2014. This development began in
2011 with the launch of the new Actros for long-distance road
haulage. It was followed in 2012 by the Antos for heavy-duty
distribution transportation. In 2013, we introduced the Arocs
for the construction sector and the Atego for light-duty
distribution transportation. We completed our Mercedes-Benz
Trucks product offensive with the Mercedes-Benz Unimog
and Mercedes-Benz Econic special vehicles, which have been
rolling off the assembly line in Wörth equipped with BLUETEC 6
technology since the fourth quarter of 2013. Despite complex
exhaust-gas treatment, our new Euro VI engines consume up
to 5% less fuel than the predecessor Euro V engines. We are
also leading the way with the introduction of the latest exhaust
technology in the bus sector. All Mercedes-Benz and Setra
model series are now available with Euro VI technology.
We plan to use innovative technologies for locally emission-free
mobility and, more importantly, new hybrid models, in order
to further reduce the fuel consumption and CO2 emissions of
our cars. Our goal is to reduce the CO2 emissions of our
new-vehicle fleet in the European Union to 125 g/km by 2016.
We have also continuously reduced the pollutant emissions
of our cars in recent years - by more than 80% since 1995 and
by over 20% in the past five years. Thanks to BLUETEC tech-
nology, we are a world leader for diesel vehicles. Automobiles
equipped with this technology conform to the strictest emis-
sions standards and are the cleanest diesel cars in the world.
Japan
Other
These include the new S 500 PLUG-IN HYBRID¹. With certified
fuel consumption of 2.8 l/100 km and emissions of 65 g
of CO2/km, the model is the most efficient vehicle in its seg-
ment and therefore also bears the best efficiency label of A+.
Further reductions in cars' CO₂ emissions. Daimler makes
great efforts to reduce the fuel consumption of its vehicles
while enhancing their performance - and thus increasing driving
enjoyment and safety reserves. With a fleet average of
129 g/km (2013: 134 g/km), we once again significantly reduced
the average CO2 emissions of the cars we sell in the European
Union in 2014. This achievement was due to the further optimi-
zation of our BlueEFFICIENCY measures, the success of our
efficient hybrid drive and extremely fuel-efficient new models.
Over the past five years, we have reduced the CO2 emissions
of our cars by more than 19%. More than 60 Mercedes-Benz
models emit less than 120 g CO2/km, and more than 90
models have received A+ or A energy efficiency labels. 71 B.43
Environmentally responsible product development. A
vehicle's environmental impact is largely predetermined
in the first stages of development. The earlier environmentally
responsible product development (Design for Environment,
DfE) is integrated into the development process, the more effi-
ciently it can help minimize the impact on the environment.
The continual improvement of our products' environmental
compatibility is therefore a major requirement when setting
product specifications. Our DfE experts are involved in all stages
of the vehicle development process as a cross-functional
team. We also systematically integrate our product design pro-
cesses into our environmental and quality management
systems in accordance with ISO 14001 and ISO 9001. Mercedes-
Benz has been in full compliance with the relevant standard
- ISO 14006 - since 2012. Mercedes-Benz has also been certified
according to ISO TR 14062, the standard for environmentally
oriented product development, since 2005. It was the first auto-
maker in the world to achieve this certification.
€2.8 billion for environmental protection. In 2014, we
continued to energetically pursue the goal of conserving
resources and reducing all relevant emissions. We kept a close
eye on the impact of all our processes, ranging from vehicle
development and production to recycling and environmentally
friendly disposal. Our expenditure for environmental pro-
tection fell temporarily from €2.9 billion to €2.8 billion in 2014,
mainly as a result of powertrain model cycles.
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108
A comprehensive approach to environmental protection.
Protecting the environment is a primary corporate objective
of the Daimler Group. Environmental protection is not separate
from other objectives at Daimler; instead, it is an integral
component of a corporate strategy aimed at long-term value
creation. For Daimler, a focus on the highest possible product
quality includes compliance with stringent environmental
standards and the sparing use of vital natural resources. Our
measures for manufacturing environmentally friendly prod-
ucts therefore take the entire product lifecycle into account -
from design, production and product use all the way to
disposal and recycling. The environmental and energy-related
guidelines approved by the Board of Management define the
environmental and energy-related policy of the Daimler Group.
This expresses our commitment to integrated environmental
protection that begins with the underlying factors that have
an impact on the environment, assesses the environmental
effects of production processes and products in advance, and
takes these findings into account in corporate decision-making.
Environmental protection
New emergency braking system for touring coaches.
In recent years, the Mercedes-Benz Travego high-deck touring
coach has been setting standards for safety technology.
The latest world first in the Travego is Active Brake Assist 3
(ABA 3). The predecessor generation, ABA 2, was already able
to initiate a braking maneuver when the danger of a collision
with slower vehicles ahead or with stationary obstacles existed.
The new ABA 3 can do even more. For example, it is able to
initiate automatic emergency braking when stationary obstacles
are encountered. New legislation requires that all touring
coaches newly registered as of November 2015 be equipped
with an emergency braking assistance system. These require-
ments will also be further tightened beginning in the fall
of 2018. The Travego with ABA 3 can already do more today
than the regulations for 2018 will require.
Blind Spot Assist for trucks. Collisions during turns occur
very frequently and usually cause serious damage. This
is especially true when trucks and unprotected pedestrians or
cyclists are involved. Blind Spot Assist from Mercedes-Benz
helps prevent such collisions by reliably warning truck drivers
of potential danger during turns in situations where visibility
is limited. Organizations such as the German Insurance Associa-
tion (GDV) estimate that Blind Spot Assist can prevent around
half of all accidents that involve trucks and pedestrians or cyclists.
As a result, the number of associated fatalities could fall by
nearly one third. The heart of Blind Spot Assist is a radar sensor
mounted in front of the truck's rear axle on the passenger
side of the vehicle. The system is arranged in such a way that
it covers the entire length of a semi-trailer truck or a truck
and trailer combination. The area monitored even extends forward
to two meters in front of the truck. The driver is given a visual
signal if a moving object is detected in the monitored area at the
side of the truck. If there is the risk of a collision, additional
visual and audible warnings are issued. Visual and audible warn-
ings are also issued if the sensors detect a stationary obstacle
such as a traffic light or street light in the tracking pattern of the
truck during the process of turning. This comprehensive
support for the driver occurs over the entire speed range of the
truck from a standstill to the permitted maximum speed.
PRE-SAFE® expanded to include important new functions.
Ten years ago, Mercedes-Benz presented a groundbreaking
safety-technology concept in the form of the PRE-SAFE® antici-
patory occupant protection system, which has been continu-
ously further developed ever since. New important components
were also added in 2014. These new PRE-SAFE® functions
can help prevent accidents with pedestrians and rear-end colli-
sions in city traffic, defuse dangerous situations caused by
traffic coming from behind, and enhance the protection offered
by seatbelts. The PRE-SAFE® Brake can now also detect
pedestrians and initiate an autonomous braking maneuver to
avoid a collision at speeds up to 50 km/h. PRE-SAFE® PLUS
can recognize an imminent rear-end collision and warn cars
behind by rapidly flashing the rear hazard lights. If the danger
of a collision persists, the system can also firmly apply the brakes
to the stationary car and thus minimize the risk of whiplash
by reducing the forward jolt caused by the impact. In addition,
the autonomous braking feature to protect against collisions with
vehicles ahead has also been significantly improved.
Science funding. Sustainable development cannot be
achieved without the targeted funding of science, research
and technology worldwide. The international exchange
of knowledge and the funding of innovations are key drivers
of developments here. We therefore support universities,
research institutes and interdisciplinary scientific projects
around the globe. We have consolidated these activities
in foundations.
150
140
130
120
114
For example, Daimler supports a renaturing project conducted
by the Global Nature Fund that is helping to protect endan-
gered mangroves in India, Sri Lanka, Cambodia and Thailand.
Among other things, the project has restored more than
100 hectares of severely damaged mangrove forests. This not
only preserves biodiversity in the forests, it also ensures they
can do their job of storing CO₂ and protecting the surrounding
area against floods. The project also teaches the local popu-
lation about environmental protection measures and provides
it with alternative sources of income.
Nature conservation. We share responsibility for preserving
the diversity of natural habitats for future generations.
That is why we have been supporting the projects and initia-
tives of environmental organizations around the world for
many years now, as we help to make sure the Earth remains
a place worth living in.
Since 2001, our MobileKids program has taught more than
1 million children worldwide how to stay safe in road traffic.
We believe that safe mobility and accident prevention should
be a given for children and adults in their daily lives. That
is why our traffic safety courses are conducted in a playful and
engaging manner. Besides teaching safe behavior as pedes-
trians, cyclists or passengers in vehicles, our training courses
also teach proper behavior in the public transport system.
mobilekids.net/de-EN
Traffic safety. As we move along the "road to accident-free
driving," we are utilizing assistance systems to ease the burden
on drivers and to protect and support them in dangerous
situations. More importantly, we also seek to ensure that every-
one on streets and roads remains safe. We pursue this goal
with traffic-education projects for schoolchildren and safety
training programs for adults, for example.
Together with the women's organization CYDD, we are also
helping socially disadvantaged young women learn technical
professions in Turkey. The award winning project “Each Girl
is a Star" offers young women between the ages of 15 and 18
a four-year training program with an internship at Mercedes-
Benz Turkey or at dealerships or supplier companies. In view
of the project's success, we have also expanded it to include
a university scholarship program.
Education. Improving access to education is one of the most
lasting investments to the benefit of society and also our
company. Education creates opportunities and opens doors to
a future full of possibilities. That is why we fund numerous
education projects around the world that promote interest in and
passion for science and technology, as well as the ability to
look beyond the working world and remain open to new ideas.
4%
Political Dialog
Science/Technology/Environment 12%
8%
Intelligent Drive in the new C-Class. Ensuring the highest
degree of safety for everyone - this is the stated goal
of Mercedes-Benz. That is why within the framework of the
Mercedes-Benz Intelligent Drive program, we equipped
the new C-Class with many of the new assistance systems
with expanded features that celebrated their world premiere
in the S-Class and E-Class. Although the European NCAP
(New Car Assessment Program) crash tests were more extensive
and stringent in 2014 than in the previous year, the new
Mercedes-Benz C-Class passed them with flying colors. The
model thus received the best rating of five stars for occupant
safety, child safety, pedestrian protection and its assistance
systems. The Mercedes-Benz C-Class also received the
Euro NCAP Advanced Reward for two of its safety systems:
ATTENTION ASSIST, which detects signs of driver fatigue,
and the PRE SAFE® anticipatory occupant protection system.
The Mercedes-Benz GLA compact SUV and the V-Class
underwent NCAP tests as well and also received top marks.
18%
Education
Arts & Culture
Charity/Community
Donations and sponsoring in 2014
B.47
english
The Association for German Science, the Daimler and
Benz Foundation and the Daimler foundation are using the
MINTernational program with the goal of making the MINT
subjects (mathematics, information technology, natural sciences
and technology) more international in Germany. An inter-
national competition honors colleges and universities that have
developed particularly innovative concepts for preparing
MINT students in Germany for the world market on the one
hand, and for getting the best students from abroad to come
study in Germany on the other. The first award-winning institu-
tions received a total of €500,000 to help them implement
their concepts. stifterverband.org/ueber_den_stifterverband/
The Daimler and Benz Foundation, for example, is endowed
with €125 million. It is investing approximately €1.5 million
in the "Villa Ladenburg" project, in which a team composed
of more than 20 researchers is studying the individual and
social impact that self-driving vehicles will have in the future.
daimler-benz-stiftung.de/cms/en
2012
2011
2010
58%
Our "road to accident-free driving." Vehicle safety is
one of our core areas of expertise and a key component of
our product strategy. An important chapter in the history
of vehicle safety actually began 75 years ago when the engineer
Béla Barényi joined the former Daimler-Benz AG. Mercedes-
Benz has been shaping the development of safety systems ever
since that time. Many of the company's innovations, especially
those for protecting vehicle occupants and other road users, have
saved countless lives. Our vision of accident-free driving will
continue to motivate us to make mobility as safe as possible
for everyone in the future.
see pages 4ff The E 300 BlueTEC Hybrid is also very fuel-
efficient². The car combines a 150-kW four-cylinder diesel engine
with a 20-kW electric motor and consumes only 3.8 liters/
100 km on average. That corresponds to CO2 emissions of
99 grams per kilometer.
Vehicle to Vehicle Communication
Wi-Fi Range 500 m (1,640 ft)
The Mercedes-Benz B-Class F-CELL4 is manufactured under
series production conditions. Customers in Europe and the
United States have been driving the model under normal every-
day conditions since 2010. Daimler's fuel-cell fleet, which
together with a large number of research cars now totals more
than 300 vehicles, has clocked up well over nine million
kilometers of driving to date. Our engineers continue to use the
results of studies on how they operate to identify additional
optimization potential and to make corresponding improvements
in the development of the next generation of fuel-cell vehicles.
Daimler is still working with the clear goal of manufacturing and
marketing competitive fuel-cell vehicles in 2017.
Fuel cell endurance test. In October 2014, a B-Class
F-CELL4 from Mercedes-Benz's current fuel-cell fleet set
a new endurance record after being driven for more than
300,000 kilometers in totally normal conditions. This test, which
had never before been conducted anywhere in the world,
shows that fuel-cell vehicles also operate reliably under extreme
stress and can be driven for many years. Daimler AG was
presented with the "f-cell Award 2014” for the record-setting
test, which marked the third time the company has won
this fuel cell innovation competition.
In China, we launched the first electric car of the DENZA
brand in September 2014. We jointly developed, and now locally
produce, this innovative model with our partner BYD. The
DENZA fully lives up to its promise to be the safest, most reliable
and most sophisticated electric vehicle from and for China.
With its range of up to 300 kilometers, the DENZA is the perfect
automobile for daily use. Thanks to a wheelbase that corre-
sponds to that of a Mercedes-Benz E-Class, this electric car
is also able to offer plenty of legroom in the back as well,
not to mention cargo volume of 460 liters. As a result of its
outstanding safety concept, the DENZA was also the first
electric vehicle to receive five stars in a crash test for China's
new-car assessment program (NCAP).
The new B-Class Electric Drive5 was initially launched in the
US market in 2014 and was later introduced in Germany
as well in November. The model sets standards for compact
electric vehicles in terms of comfort, quality and safety.
Its quiet, locally emission-free operation is made possible by
a 132 kW electric motor, which delivers its maximum torque
of 340 Nm as soon as the driver presses the gas pedal. That is
about the same as the amount of torque provided by a state-
of-the-art three-liter gasoline engine. Energy for the electric drive
system is supplied by a powerful lithium-ion battery, which
is located in the "energy space" of the car's underbody, where
it is safely protected and takes up little room. This setup
is also what allows the five-seater to maintain the famously
spacious interior and cargo area of the conventional B-Class.
To extend the car's range, its top speed is electronically limited
to 160 km/h. The vehicle has a range of about 200 kilometers,
depending on the driving cycle.
The smart fortwo electric drive¹ is now available in 18 markets
worldwide and is also one of the best-selling electric cars
in Germany. More than 1,300 e-smarts are also being used
around the clock in various cities as part of our innovative
car2go mobility service.
A unique spectrum of electrically powered vehicles. Our
spectrum of electric vehicles ranges from cars to vans, light
trucks and buses. The following is a list of electric Daimler
vehicles currently on the road: the smart fortwo electric drive',
the A-Class E-CELL², the SLS AMG Coupe Electric Drive³,
the B-Class F-CELL4, the B-Class Electric Drive 5 and, in the
commercial vehicle segment, the Vito E-CELL, the Mercedes-
Benz Citaro FuelCELL Hybrid, the FUSO Canter E-CELL
and the Freightliner Custom Chassis MT E-CELL All-Electric.
105
→ Charging of the HV battery for
future electric motoring
Electric operation is not possible
→ The HV battery is charged via the
combustion engine
CHARGE
Autonomous driving in the United States. In September 2014,
Mercedes-Benz became one of the first automakers to receive
permission to test autonomously driving vehicles on public roads
in California. Since October 2014, Daimler has also been using
the largest test site in the United States - the Concord Naval
Weapons Station (CNWS) - for conducting additional tests
with this forward-looking technology. Self-driving vehicles can
be safely tested in Concord, California, even in particularly
dangerous conditions and situations. Nevertheless, our research
here continues to focus on tests under real-life conditions.
Our research activities in the United States are designed to pro-
mote the development of autonomous driving worldwide,
as the road infrastructure in the United States differs from that
in Germany in many ways. For example, streets, roads and
highways in Germany are generally narrower than in the United
States, where lanes are also wider and some major highways
can have six or even eight lanes. Traffic lights in the United States
are also mounted on the other side of the intersection from
where the vehicle is standing. In addition, merging traffic is more
common in the United States, which also has four-way stop
signs that give the right of way to the first vehicle that arrives
at the intersection. The knowledge Mercedes-Benz gains
in the US is helping the brand take significant steps forward
with the development of autonomous driving technology.
→ Preservation of the HV battery
capacity for future electric
motoring
→ The current charge status is
maintained
E-SAVE
→ Maximum availability of electric
motoring
→ Metering of electric output via the
haptic accelerator pedal
(variable pressure point)
→ Pure electric operation
E-MODE
→ Optimum use of combustion
engine and electric motor
→ Electric operation or driving with
the combustion engine is possible
→ Automatic selection of drive type
HYBRID
Intelligent operating strategy: Operating modes
B.41
107
In 2013, Daimler impressively demonstrated in Germany that
autonomous driving is already technologically possible even
in complex urban and rural traffic situations: In August 2013, the
Mercedes-Benz S 500 INTELLIGENT DRIVE - a new S-Class
equipped with technology close to series production - drove
completely autonomously along the roughly 100-kilometer
historical route once traveled by Bertha Benz from Mannheim
to Pforzheim.
→ Limited electric operation is
possible
mercedes-benz.com/en/mercedes-me/
Intelligent automobile connectivity. Digitization has long
since become a normal part of our lives. Today's automobiles
are also "always on" and intelligently connected. Mercedes-
Benz brought the Internet into the automobile many years ago;
now it is connecting the car itself to the Web. Beginning with
the new C-Class station wagon, our "Mercedes connect me"
system has enabled us to successively equip our models with
a state-of-the-art communication module that makes it possible
for our customers to access their vehicle anytime and from
anywhere via their smartphone, tablet or any other computer.
This communication module also allows traffic information
to be called up in the vehicle in real time and ensures rapid
assistance in the event of an accident.
Vehicle to Infrastructure Communication
Wi-Fi | Range 500 m (1,640 ft)
Highway Pilot | On
170 | Range 60 m (197 ft)
130 | Range 70 m (230 ft)
Lateral Radar on both sides
18 | Range 250 m (820 ft)
Full Range Radar
45 Range 100 m (328 ft)
Front Stereo Camera
Autonomous driving with the Mercedes-Benz Highway Pilot
B.42
Short Range Radar
4 B-Class F-CELL: H₂ consumption in kg/100 km: 0.97;
CO2 emissions in g/km: 0.0
106
5 B-Class Electric Drive: electricity consumption in kWh/100 km: 16.6;
CO2 emissions in g/km: 0.0
B| Combined Management Report | Sustainability
It goes without saying that safe and comfortable operation
was a top priority in the development of all of our new info-
tainment systems. That's because minimal driver distraction
and a high degree of user-friendliness are more important
to us than the integration of technical gimmicks.
F 015 Luxury in Motion. In early January 2015, Mercedes-Benz
presented the new research vehicle "F 015 Luxury in Motion"
at the International Consumer Electronics Show (CES) in Las
Vegas. The autonomously driving luxury sedan shows how
the automobile is being transformed from a vehicle into a space
for private relaxation. With a very roomy lounge-style interior,
the F 015 raises the aspects of comfort and luxury to a new level.
A key idea of the research vehicle is the continuous exchange
of information between car, occupants and the outside world.
This takes place with the help of six displays harmoniously
integrated into the dashboard as well as the sides and rear of
the passenger compartment. The occupants can interact
with the connected car intuitively using gestures, eye movements
or the high-definition touch screen. And the F 015 Luxury
in Motion is in touch with its environment using laser projection
and LED signals, and thus becomes an interactive partner
Naturally, we also paid close attention to data protection
from the very beginning. The car of the future will increasingly
become a digital companion, which means data always has
to be just as safe and secure as the vehicle and its occupants.
We therefore refer to our approach here as "Privacy by Design,"
by which we mean that data protection is given top priority as
early as the design stage for networked services.
World premiere of the future of truck transportation.
From a vision to reality - the spectacular Mercedes-Benz Future
Truck 2025 study, which was presented at the IAA Commercial
Vehicles show in September 2014, offers a visually fascinating
and technically feasible preview of the long-distance trucks
of tomorrow. In ten years, trucks could be driving autonomously
on highways, which would be good for the economy and society.
Such a development would boost transport efficiency, make
driving safer for everyone, and further reduce fuel consumption
and CO2 emissions. Mercedes-Benz therefore continues to
link existing assistance systems with improved sensor technology
in its "Highway Pilot" system, which has already made auto-
nomous driving at realistic speeds on highways a reality today.
see pages 14ff
1 smart fortwo electric drive: electricity consumption in kWh/100 km: 15.1;
CO2 emissions in g/km: 0.0
2 A-Class E-CELL: electricity consumption in kWh/100 km: 17.5;
CO2 emissions in g/km: 0.0
3 SLS AMG Coupe Electric Drive: electricity consumption in kWh/100 km:
26.8; CO2 emissions in g/km: 0.0
in road traffic. The research vehicle sets standards also in
terms of its drive system: Its total range under electric power
with fuel cells is approximately 1,100 kilometers. Approxi-
mately 200 km can be driven under battery power and 900 km
with electricity from the fuel cells. see pages 36f
Prof. Dr. Thomas Weber
736
3,537
1,199
30,433
736
20,765
2013
3,749
1,2983
775
2014
866
758
Total
652
18,444
1,233
3,295
2013
715
626
626
27,031
1,200
3,167
2014
2013
652
423
Individual entitlements, service costs and present values for members of the Board of Management
5,808
6,070
220
223
Retirement pension expense (service costs)
4,657
0
1,972
1,846
4,532
0
1,846 1,919
2,875
220
0
1,130
2,750
0
1,161
1,130
30
225
2014
156
Andreas Renschler¹
6,579
1,214
220
Total remuneration
Total limit¹ for components of remuneration
9,798
Hubertus Troska
2014
314
3,321
2013
272
2,488
Bodo Uebber
2014
275
1 Total limit = maximum amount for financial year 2014 → 1.5 times (Dr. Zetsche)/1.9 times target remuneration 2014 (base salary, target annual bonus,
value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
5,066
4,971
5,728
1,071
3,043
2013
5,384
852
2,645 2,711
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in 2014
223
156
2013
8,788
Commitments upon early termination of service. In the
case of early termination of a service contract without an
important reason, Board of Management service contracts
include commitments to payment of the base salary and
provision of a company car until the end of the original service
period at a maximum. Such persons are only entitled to
payment of the annual bonus pro rata for the period until the
end of the contract of service or of the Board of Management
membership takes effect. Entitlement to payment of the
performance-related component of remuneration with a long-
term incentive effect that has already been allocated is
defined by the conditions of the respective plans. To the extent
that the payments described above are subject to the provi-
sions of the so-called severance cap of the German Corporate
Governance Code, their total including fringe benefits is
limited to double the annual remuneration and may not exceed
the total remuneration for the remaining period of the
service contract.
B | Combined Management Report | Remuneration Report
122
Service costs for pension obligations according to IFRS
amounted to €2.8 million in 2014 (2013: €2.5 million). The present
value of the total defined benefit obligation according to IFRS
amounted to €80.5 million at December 31, 2014 (December 31,
2013: €70.1 million). Taking age and period of service into
account, the individual entitlements, service costs and present
values are shown in the table. 7 B.50
Departing Board of Management members with pension
agreements modified as of the beginning of 2006 receive, for
the period between the end of the last contract period and
reaching the age of 60, payments in the amounts of the pension
commitments granted as described in the previous section.
Departing Board of Management members are also provided
with a company car, in some case for a defined period. These
payments are made until the age of 60, possibly reduced due
to other sources of income, and are subject to annual per-
centage increases described above in the explanation of these
pension agreements.
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse or
dependent children is/are entitled to the full committed amount
in the case of the pension capital system, and to the credit
amount reached plus an imputed amount until the age of 62 in
the case of the Daimler Pensions Plan. If a Board of Manage-
ment member passes away after retiring for reason of age, in the
case of payment of twelve annual installments, the heirs are
entitled to the remaining present value. In the case of a pension
with benefits for surviving dependents, the spouse/registered
partner or dependent children is/are entitled to 60% of
the discounted terminal value (pension capital), or the spouse/
registered partner is entitled to 60% of the actual pension
(Daimler Pensions Plan).
- as an annuity with annual increases (Pension Capital 3.5%
or in accordance with applicable law; Daimler Pensions Plan
in accordance with applicable law).
- in twelve annual installments, whereby interest accrues
on each partial amount until it is paid out (Pension Capital
6% or 5%; Daimler Pensions Plan in accordance with
applicable law);
- as a single amount;
Payments under the pension capital system and the Daimler
Pensions Plan can be made in three ways:
The benefit from the pension plan is payable to surviving
Board of Management members at the earliest at the age of 62,
irrespective of their age upon retirement. If a member of the
Board of Management retires due to disability, the benefit
is paid as a disability pension, irrespective of their age upon
retirement.
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as for
executives: the "Daimler Pensions Plan." As before, the new
retirement benefit system features the payment of annual contri-
butions by Daimler, but is oriented towards the capital market.
Daimler makes a commitment to guarantee the total of contribu-
tions paid, which are invested in the capital market according
to a precautionary investment concept. The Supervisory Board
of Daimler AG has approved the application of this system
for all members of the Board of Management newly appointed
since 2012. The amount of the annual contributions results
from a fixed percentage of the base salary and the total annual
bonus for the respective financial year calculated as of the
balance sheet date. This percentage is 15%. This calculation
takes into consideration the targeted level of retirement
provision for each Board of Management member - also accord-
ing to the period of membership - and the resulting annual
and long-term expense for the Company. The contributions
to retirement provision are granted until the age of 62.
Effective as of January 1, 2006, we replaced the pension
agreements of the Board of Management members with a new
arrangement, the so-called pension capital system. Under
this system, each Board of Management member is credited
with a capital component each year. This capital component
comprises an amount equal to 15% of the sum of the Board of
Management member's fixed base salary and the actual
annual bonus, multiplied by an age factor equivalent to a rate
of return of 6% until 2015 and 5% as of 2016 (Wolfgang
Bernhard and Wilfried Porth: 5% for all years). These contribu-
tions to pension plans are granted only until the age of 60.
The benefit from the pension plan is payable to surviving Board
of Management members at the earliest at the age of 60, also
if retirement is before 60. If a member of the Board of Manage-
ment retires due to disability, the benefit is paid as a disability
pension, also before the age of 60.
Retirement provision. The pension agreements of some Board
of Management members include a commitment to an annual
retirement pension, calculated as a proportion of the former base
salary and depending on the number of years of service.
Those pension rights were granted until 2005 and remain valid;
the same procedure was applied for the relevant hierarchy
level for Wilfried Porth for the period before his membership
of the Board of Management. The pension rights have been
frozen at that level, however. Payments of these retirement pen-
sions start upon request when the term of service ends at or
after the age of 60, or are paid as disability pensions if the term
of service ends before the age of 60 due to disability. The
respective agreements provide for 3.5% annual increases start-
ing when benefits are received (with the exception that
Wilfried Porth's benefits are adjusted in accordance with appli-
cable law). The agreements include a provision by which a
spouse of a deceased Board of Management member is entitled
to 60% of that member's pension. That amount can increase by
up to 30 percentage points depending on the number of depen-
dent children.
Commitments upon termination of service
121
1 PPSP 2014 taking into account supervisory board remuneration of €62,707 (2013: €85,734).
2 Board of Management remuneration granted until January 28, 2014 (supervisory board remuneration 2013: €35,646).
3 PPSP 2014 taking into account supervisory board remuneration of €89,391 (2013: €152,197).
30,228
10,884
251,359
6,070
28,532
10,134
153,912
5,808
Sideline activities of Board of Management members.
The members of the Board of Management should accept
management board or supervisory board positions and/or any
other administrative or honorary functions outside the Group
only to a limited extent. Furthermore, they require the consent
of the Supervisory Board before commencing any sideline
activities. This ensures that neither the time required nor the
remuneration paid for such activities leads to any conflict
with the members' duties to the Group. Insofar as such sideline
activities are memberships of other statutory supervisory
boards or comparable boards of business enterprises, they
are disclosed in the notes to the annual company financial
statements of Daimler AG and on our website. In general, Board
of Management members have no right to separate remuner-
ation for board positions held at other companies of the Group.
6,782
7,204
Loans to members of the Board of Management.
In 2014, no advances or loans were made to members
of the Board of Management of Daimler AG.
B.50
220
2014
Wilfried Porth
1,774
401
2013
2,565
380
2014
Dr. Wolfgang Bernhard
29,896
1.050
2013
39,238
827
1,050
2014
Dr. Dieter Zetsche
In thousands of euros
of obligations
(for pension,
pension capital and
Daimler Pensions Plan)
Present value²
(for pension,
pension capital and
Daimler Pensions Plan)
Service cost
Annual pension
(as regulated
until 2005)
as of age 60
250
Payments made to former members of the Board of Manage-
ment of Daimler AG and their survivors. Payments made
in 2014 to former members of the Board of Management
of Daimler AG and their survivors amounted to €16.8 million
(2013: €14.6 million). Pension provisions for former members
of the Board of Management and their survivors amounted
to €263.0 million at December 31, 2014 (2013: €217.0 million).
2,877
300
Long-term variable remuneration (plan period of 4 years)
Total
2,171
2,171
2,171
2,159
163
163
163
90
163
805
163
151
Taxable non-cash benefits and other fringe benefits
Total
779
779
779
715
2,008
2,008
2,008
163
942
942
942
Long-term variable remuneration (plan period of 4 years)
916
0
390
358
2,360
0
1,004
1,004
Deferral (50% of annual bonus, medium-term)
775
916
0
390
358
2,360
0
1,004
1,004
(50% of annual bonus, short-term)
Annual variable remuneration
2,008
Base salary
max.
Jan. 1 Dec. 31,
min.
1 Mr. Renschler pro rata until January 28, 2014.
80,514
70,106
2,459
2,031
2,780
2,006
2013
2014
Total
12,454
9,444
676
14,148
2013
275
714
10,127
Prof. Dr. Thomas Weber
2014
300
333
2013
2 The sharp increase in the present values is primarily due to the decrease in the relevant discount rate.
Dr. Hohmann-Dennhardt has no entitlement to a company retirement benefit.
2,825
123
pursuant to the requirements of the German Corporate
Governance Code
2014
2013
max.
Jan. 1 Dec. 31,
Jan. 1 Dec. 31,
min.
2014
2013
Jan. 1 Dec. 31,
Dr. Wolfgang Bernhard
Daimler Trucks and Buses
Head of Mercedes-Benz Cars
Chairman of the Board of Management and
Dr. Dieter Zetsche
In thousands of euros
Benefits granted
B.51
the half of the annual bonus payable in 2014 for 2013
at the value with target achievement of 100%,
the half of the share-based component of the annual
bonus payable in 2015 for 2013 at the value with target
achievement of 100%,
the taxable non-cash benefits and other fringe benefits
in 2013,
- the base salary in 2013,
is calculated from:
The total of "benefits granted" for financial year 2013
The following tables show for each individual member of
the Board of Management on the one hand the benefits granted
for the financial year and on the other hand the payments
made in or for the financial year and the retirement pension
expense in or for the financial year in accordance with the
recommendations of Clause 4.2.5 paragraph 3 of the German
Corporate Governance Code.
Details of Board of Management remuneration in 2014
2,902
0
6,875
852
799
Total
93
93
93
93
94
94
94
84
Taxable non-cash benefits and other fringe benefits
758
758
758
715
758
758
758
715
Base salary
852
max
852
851
891
0
379
358
891
0
379
358
Deferral (50% of annual bonus, medium-term)
891
0
379
358
891
0
379
358
(50% of annual bonus, short-term)
Annual variable remuneration
851
851
808
426
Jan. 1 Dec. 31,
min
2013
380
380
380
401
827
827
827
Retirement pension expense (service costs)
4,742
0
2,008
1,846
11,595
0
4,910
4,833
Total
2.910
0
1,228
1,130
Total remuneration
2014
Total limit¹ for components of remuneration
granted in 2014
- Taxable non-cash benefits and other fringe benefits
max
Jan. 1 Dec. 31,
Jan. 1 Dec. 31,
min
2014
2013
Jan. 1 Dec. 31,
HR & Labor Relations Director and
Mercedes-Benz Vans
Wilfried Porth
5,172
Dr. Christine Hohmann-Dennhardt
Integrity & Legal Affairs
10,149
6,064
1,322
3,330
3,052
14,593
2,998
7,908
6,992
In thousands of euros
- Retirement pension expense (service costs)
Excluding
901
124
Bodo Uebber
Board of Management remuneration in 2014
B | Combined Management Report | Remuneration Report
120
Appropriateness of Board of Management remuneration.
In accordance with Section 87 of the German Stock Corporation
Act (AktG), the Supervisory Board of Daimler AG once again
had an assessment of the system of Board of Management remu-
neration carried out by an external remuneration expert in
2014. The result was that the remuneration system as described
above was confirmed as being in conformance with the require-
ments of applicable law. The remuneration system was approved
as described by the Annual Shareholders' Meeting in 2014
with an approval ratio of 96.8%.
Guidelines for share ownership. As a supplement to these
three components of remuneration, "Stock Ownership
Guidelines" exist for the Board of Management. These guide-
lines require the members of the Board of Management to
invest a portion of their private assets in Daimler shares over
several years and to hold those shares until the end of their
Board of Management membership. The number of shares to be
held was set in 2005 when the Performance Phantom Share
Plan was introduced in relation to double the then annual base
salary for each ordinary member of the Board of Management
and triple the then annual base salary for the Chairman of the
Board of Management. In fulfillment of the guidelines, up to
25% of the gross remuneration out of each Performance Phantom
Share Plan is generally to be used to acquire ordinary shares
in the Company, but the required shares can also be acquired
in other ways.
For all PPSP of 2015 and following years, an additional limit
on target achievement was agreed upon for the reference
parameter return on sales. In the case of target achievement
between 195% and 200%, an additional comparison is made
on the basis of the return on sales achieved in absolute terms.
If the actual return on sales for the automotive business is
below the strategic target (currently 9%) in the third year of the
performance period, target achievement is limited to 195%.
The value of the phantom shares to be paid out depends
on target achievement measured according to the criteria
described above and on the share price relevant for the
payout. This share price is limited to 2.5 times the share price
at the beginning of the plan. In addition, the amount to be
paid out is limited to 2.5 times the absolute euro amount spec-
ified at the beginning of the plan, which is relevant for the
preliminary number of phantom shares allocated. This maximum
amount includes the dividend equivalent paid out during the
four-year plan period. In the agreements on the inclusion maxi-
mum amounts of remuneration in their current contracts
of service effective as of January 1, 2014, the members of the
Board of Management also agreed to the application of this
limit to the dividend equivalents not yet due at that time from
plans issued before January 1, 2014 and still running.
During the four-year period between the allocation of the
preliminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
Value of the phantom shares on payout:
It may also be zero.
0 to 200%, that is, the plan has an upper limit.
Range of possible target achievement:
Board of Management remuneration in 2014 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB). The total remuneration granted by Group com-
panies (excluding retirement benefit commitments) to the mem-
bers of the Board of Management of Daimler AG is calculated
as the total of the amounts of
for 2014, approximately 1.3 to 1.6 times the base salary.
Value upon allocation:
50% relates to the Group's return on sales in a three-year
comparison with a newly defined group of competitors
comprising all listed vehicle manufacturers with an automotive
proportion of more than 70% by revenue and an investment-
grade credit rating (BMW, Ford, Fuji Heavy, Honda, Hyundai,
Isuzu, Mazda, Nissan, Paccar, Toyota, Volvo and Volkswagen).
For the measurement of this success criterion, the com-
petitors' average return on sales is calculated over a period
of three years. Target achievement of 100% only occurs
when the average return on sales of the Daimler reaches 105%
of the average return on sales of the group of competitors.
Target achievement occurs to the extent to which Daimler's
return on sales deviates by a maximum of +/-2 percentage
points from 105% of the calculated average of the competitors.
So target achievement of 200% occurs if Daimler's return
on sales exceeds 105% of the average of the competitors
by 2 percentage points or more. And target achievement of 0%
occurs if Daimler's return on sales is 2 percentage points
or more lower than 105% of the calculated average of the
competitors. In the deviation range of +/- 2 percentage points,
target achievement varies in proportional to the deviation.
50% relates to the new "relative share performance,"
i.e. the development of Daimler's share price in a three-year
comparison with the development of a share-price index
for the defined group of competitors. If the development of
Daimler's share price (in percent) is the same as of the
index (in percent), target achievement is deemed to be 100%.
If the development of Daimler's share price (in percent)
is 50 percentage points or more below (above) the develop-
ment of the index, target achievement is deemed to be
0% (200%). In the deviation range of +/- 50 percentage points,
target achievement varies in proportional to the deviation.
Reference parameters for Plan 2014:
The Performance Phantom Share Plan (PPSP) is a variable
element of remuneration with long-term incentive effects.
At the beginning of the plan, the Supervisory Board specifies
an absolute amount in euros in the context of setting the
individual annual target remuneration. This amount is divided
by the relevant average price of Daimler shares calculated
over a long period of time, which results in the preliminary
number of phantom shares allocated. Also at the beginning
of the plan, performance targets are set for a period of three
years (performance period). Depending on the achievement
of these performance targets with a possible range of 0% to 200%,
after three years, the phantom shares allocated at the begin-
ning of the plan are converted into the final number of phantom
shares allocated. After another plan year has elapsed, the
amount to be paid out is calculated from this final number
of phantom shares and the applicable share price at that time.
The share price relevant for the payout under this plan is
also relevant for allocating the preliminary number of phantom
shares for the plan newly issued in the respective year.
119
The total amount to be paid out from the annual bonus is
limited to 2.35 times the base salary of the respective financial
year. In the agreements on the inclusion maximum amounts
of remuneration in their current contracts of service effective
as of January 1, 2014, the members of the Board of Manage-
ment also agreed to the application of this percentage limit to
the annual bonus payments for the years 2012 and 2013,
which at that time had not yet been paid out.
In 2014, further individual targets were agreed upon with
the Board of Management with regard to the development
and sustained function of the compliance management
system. The complete or partial non-achievement of individual
compliance targets can be reflected by a deduction of up to
25% from the individual target achievement. However, the com-
pliance targets cannot result in any increase in individual
target achievement, even in the case of full accomplishment.
The Supervisory Board has the possibility, with the degree
of target achievement calculated from the primary reference
parameters, to take account of the personal performance
of the individual Board of Management members with an addition
or deduction of up to 25% on the basis of the agreed individual
targets. In addition, an amount of up to 10 percent can be added
or deducted, depending on the key figures/assessment basis
determined in advance. Since 2012, non-financial targets have
been used as a basis for assessment. For the past financial
year, those targets were employee satisfaction, diversity,
customer satisfaction/product quality, and the further devel-
opment and permanent establishment of the corporate
value of integrity.
0 to 200%, that is, the annual bonus due to EBIT achievement
has an upper limit of double the base salary and may also
be zero (see below). Both primary reference parameters, each
of which relates to half of the annual bonus, can vary between
0% and 200%. For the primary reference parameter relating
to half of the annual bonus "comparison of actual EBIT in the
financial year with EBIT targeted for the financial year," the
limits of the unchanged possible range of 0% to 200% are defined
as of 2014 by a deviation of +/- three percent of the prior-year
revenue (previously two percent). For the other primary reference
parameter, which also relates to half of the annual bonus,
"comparison of actual EBIT in the financial year with actual EBIT
in the prior year," the limits of the unchanged possible range
of 0% to 200% continue to be defined by a deviation of +/- two
percent of the prior-year revenue.
Range of possible target achievement:
Amount with 100% target achievement (target annual bonus):
In the year 2014, 100% of the base salary.
- 50% relates to a comparison of actual EBIT in 2014
with actual EBIT in 2013.
Determined annually by the Supervisory Board;
50% relates to a comparison of actual EBIT in 2014
with EBIT targeted for 2014.
- the base salary in 2014,
- the half of the medium-term share-based component
8
93
93
Wilfried Porth
84
94
Dr. Christine Hohmann-Dennhardt
90
163
Dr. Wolfgang Bernhard
151
163
- the half of the annual bonus for 2014 payable in 2015
and measured as of the end of the reporting period,
Dr. Dieter Zetsche
2014
Andreas Renschler¹
In thousands of euros
Non-cash benefits and other fringe benefits
B.49
The granting of non-cash benefits in kind, primarily the
reimbursement of expenses for security precautions and the
provision of company cars, resulted in taxable benefits for
the members of the Board of Management in 2014 as shown
in table B.49.
remuneration (annual bonus with deferral), and €10.1 million
was variable performance-related remuneration granted
in 2014 with a long-term incentive effect (2013: €10.9 million).
7 B.48
The remuneration of the Board of Management for the year 2014
amounts to €29.9 million (2013: €32.1 million). Of that total,
€8.2 million was fixed, that is, non-performance-related remuner-
ation (2013: €9.1 million), €11.6 million (2013: €12.1 million)
was short- and medium-term variable performance-related
For both of the share-based components - the second 50%
of the annual bonus and the PPSP with a long-term orien-
tation - the amounts actually paid out can deviate significantly
from the values described depending on the development of
the Daimler share price and on the achievement of the relevant
target parameters. Upward deviation is possible only as far
as the maximum limits described above. Both components can
also be zero.
- the taxable non-cash benefits in 2014.
- the value of the long-term share-based remuneration
at the time when granted in 2014, and
of the annual bonus for 2014 payable in 2016 with its value
at the end of the reporting period (entitlement depending
on the development of Daimler's share price compared with
the Dow Jones STOXX Auto Index),
2013
Primary reference parameters:
The annual bonus is variable remuneration, the level of which
is primarily linked to the operating profit of the Daimler Group
(EBIT). For the past financial year, the annual bonus was also
linked to the target for the respective financial year determined
by the Supervisory Board (derived from the level of return
targeted for the medium term and the growth targets), the actual
result compared with the prior year, the individual performance
of the Board of Management members and the achievement
of compliance targets. In addition, qualitative targets are defined
and included.
The base salary is fixed remuneration relating to the entire year,
oriented towards the area of responsibility of each Board of
Management member and paid out in twelve monthly installments.
A core element of our profitable growth strategy is the wide-
ranging product offensive at all divisions, with which we
are winning new customers and developing additional markets.
Mercedes-Benz Cars currently has the youngest and most
attractive product portfolio of all time, which we upgraded in
2014 with the new C-Class, the new compact sport-utility
vehicle GLA and the new S-Class Coupe. In addition, the smart
brand started a new era with the launch of the two all-new
models fortwo and forfour. Furthermore, we had the premiere
in November 2014 of our new sub-brand Mercedes-Maybach
and the first automobile of this new and especially exclusive
brand. At Daimler Trucks and Daimler Buses, we have almost
completely renewed our product range and engines in recent
years. The most important new models in 2014 included the
Actros and Arocs heavy-duty trucks, the new FUSO Super Great V
and the new Western Star 5700XE at the truck division, as
well as the large articulated bus Mercedes-Benz CapaCity L
at the bus division. The Mercedes-Benz Vans division also
continued with its product offensive; its important new models
were the Vito goods van and the V-Class multipurpose vehicle.
B❘ Combined Management Report | Overall Assessment of the Economic Situation | Events after the Reporting Period
116
We want our shareholders to participate appropriately in
the earnings achieved by Daimler in 2014. At the Annual Share-
holders' Meeting on April 1, 2015, the Board of Management
and the Supervisory Board will therefore propose an increase
in the dividend to €2.45 per share (prior year: €2.25). With
this decision, we are also expressing our confidence about the
ongoing course of business.
In line with the ongoing high level of earnings, we continue
to have very sound key financial metrics. At year-end,
the Group's overall equity ratio was 22.1% (2013: 24.3%) and
the equity ratio of the industrial business was 40.8% (2013:
43.4%). The equity ratios decreased because the balance sheet
total increased at a much higher rate (+13%) than equity
(+3%). Our net liquidity of the industrial business increased
to the very high level of €17.0 billion (2013: €13.8 billion).
The free cash flow of the industrial business - the parameter
we use to measure financial strength - reached the high
level of €5.2 billion after adjusting for special items
(2013: €3.2 billion), and is thus significantly higher than
the proposed dividend distribution.
As a result of the positive development of earnings, we once
again achieved a very good return on net assets of 18.8%
(2013: 22.6%). We therefore earned significantly more than our
cost of capital also in 2014. This is reflected by our value
added, which remained at the high level of €4.4 billion (2013:
€5.9 billion) due to the positive development of our business
operations. The sole reason for the decrease compared with
the previous year is that the positive special effect from the
sale of our EADS shares in 2013 was significantly higher than
the effects from the sales of our shares in Rolls-Royce
Power Systems Holding GmbH (RRSPH) and Tesla in 2014.
With "Fit for Leadership" at Mercedes-Benz Cars, "Daimler
Trucks #1" at Daimler Trucks, "Performance Vans" at
Mercedes-Benz Vans and "GLOBE 2013" at Daimler Buses,
we achieved total contributions to earnings of approximately
€4 billion by the end of 2014. The programs included measures
taken for sustained improvements in cost structures as well as
additional business activities. The full impact of these programs
will be reflected in 2015.
As we had expected, operating profit (EBIT) from the ongoing
business of €10.1 billion was significantly higher than in the
previous year (€8.0 billion). Key positive factors were the favor-
able product mix at Mercedes-Benz Cars and the increasing
impact of the measures taken to increase efficiency, which we
have implemented in all divisions.
We significantly increased our unit sales by 8% to 2.5 million
passenger cars and commercial vehicles despite difficult
conditions in some major markets. Thanks to numerous new and
successful products, Mercedes-Benz Cars and Mercedes-Benz
Vans set new records for unit sales. Daimler Trucks achieved
a small increase. Only Daimler Buses did not quite match
its unit sales of the previous year due to the market weakness
in Latin America. Driven by the generally very positive develop-
ment of the automotive business, the Daimler Financial Services
division also expanded significantly in the reporting period.
The Group's revenue therefore also grew significantly: - by 10%
to €129.9 billion; adjusted for exchange-rate effects, there
was actually an increase of 12%.
We continued and accelerated along our growth path in the
year under review. We are on schedule with the implementation
of our efficiency programs and our new products are extremely
well received in their markets. As a result, we were able to achieve
most of the targets we had set for the year 2014.
In the opinion of the Board of Management, the Daimler Group's
economic situation is very satisfactory at the time of publica-
tion of this Annual Report. In recent years, we have implemented
our strategy effectively and with great determination. That is
now beginning to pay off and is reflected by the results of our
operations in 2014.
Overall Assessment of the Economic Situation.
We once again demonstrated our technological leadership
in 2014 in terms of the fuel efficiency, safety and connectivity
of our vehicles. With innovative drive systems and highly
economical model versions, we were once again able to signifi-
cantly reduce the average CO2 emissions of the cars we
sell in the European Union from 134 grams per kilometer
to 129 g/km.
115
Dialogue and understanding. Openness and tolerance are
important pillars of our corporate culture. As a company that
operates around the world, we support projects and institu-
tions that promote intercultural dialogue in the interest of mutual
understanding and the peaceful coexistence of cultures.
We also support initiatives for the strengthening of democracy.
The Day of Caring in 2014 once again attracted more than
2,300 Daimler Financial Services employees from around the
globe, who came together to jointly help charitable institutions
for a whole day. The climax of these activities was the Week of
Caring in the United States and Canada, which took place
for the second time: Some 1,100 employees spent a whole week
working on charitable projects at more than 30 different
organizations.
In the ProCent initiative, for example, Daimler employees volun-
tarily donate the cent amounts of their net salaries to socially
beneficial projects. The company matches every cent donated
and collects the money in a support fund. In accordance with
the suggestions of its employees, Daimler then uses this money
to support environmental and social projects all over the
world. In 2014, we provided 188 projects with more than €1
million in funding in this manner.
Employee commitment. We not only act responsibly around
the world as a company, we also support our employees'
efforts to help communities and promote the common good all
around the globe. Countless initiatives demonstrate just how
seriously our employees take their responsibility, and how willing
they are to offer others opportunities they would normally
never have.
The "Ekukhanyeni” project helps severely impoverished people
in a town near Johannesburg, South Africa. Mercedes-Benz
South Africa has been supporting the initiative, which has built
a daycare center and an elementary school, since 2010.
These days, "Ekukhanyeni” is also promoting the establishment
of more natural farming techniques, as well as managing
landscape planning, the energy supply and the expansion
of local infrastructure.
Following two aid transport projects for Syrian refugees in 2013,
Daimler continued its Syria aid in 2014. In a joint initiative
of employees and the company, approximately €250,000 was
collected. For the flights to Erbil in North Iraq organized by
"Wings of Help - Luftfahrt ohne Grenzen e. V." (an association
endeavoring to provide cross-border air transport), we
supplied tents, blankets, medicine and other relief goods.
Following the devastating floods in the Balkans, Daimler quickly
donated €250,000 in May 2014 for the people affected in the
region. The donation was given to Caritas International, which
used it to provide emergency assistance and to fund the
necessary repair work. Daimler and the General Works Council
also launched an employee donation drive that enabled us
to give Caritas an additional €20,000.
Communities and charitable projects. For us, a global
presence also means global responsibility. This is why
we support the communities in which we operate as well as
numerous aid projects all over the world. Our efforts here
go beyond assisting in the aftermath of natural or manmade
disasters. We also initiate long-term projects designed to
help people help themselves.
With its museums, libraries, archives and research institutes,
the Prussian Cultural Heritage Foundation is one of the biggest
cultural and scientific institutions in the world. We support
the foundation's strategic goals in order to make an effective
contribution to strengthening the role of culture in society.
We are mainly interested here in increasing awareness of the
foundation's cultural heritage and the work done by its
museums, and we also support new concepts for bringing
more culture to communities.
Among other ways, we support the arts and culture through
the Daimler Art Collection, which was established in 1977
and now includes some 2,600 works by 700 artists. In general,
our activities focus on the promotion of regional culture
in the areas of the fine arts, jazz, classical music and film.
The arts and culture. A rich cultural life and a vibrant
art scene foster creativity and innovation. It is therefore very
important to us to support the arts and culture.
B| Combined Management Report | Sustainability
More information on the projects promoted by the Group and
the activities related to our social commitment can be found
in the Daimler Sustainability Report and on our website under
"Sustainability." daimler.com/sustainability
The new research vehicle F 015 stands in equal measures for
clean, safe and connected, and thus for the future of the
automobile. We have achieved a competitive advantage above
all in the field of autonomous driving with the Mercedes-Benz
S 500 INTELLIGENT DRIVE and the Future Truck 2025. These
research vehicles show that fully autonomous driving can
soon become reality on our roads in the foreseeable future.
see page 167 and pages 36f
We effectively expanded our worldwide network of production
sites and research facilities in 2014, placing our future growth
on a broad regional basis. We will expand our production capaci-
ties above all in China, India and the United States. In parallel,
substantial investment in our plants in Germany demonstrates
that they continue to play a key role as competence centers
for our international network.
From a sound financial basis, we invest more than €10 billion
each year in property, plant and equipment as well as in
research and development - in new products, in new techno-
logies and in our sites. And for the coming years, we have
actually planned even higher amounts.
The individual components of the remuneration system
are as follows:
The maximum amounts of remuneration of the members
of the Board of Management were set as of financial year 2014
at 1.9 times the target remuneration for its members and
1.5 times the target remuneration for its Chairman. The target
remuneration consists of the base salary, the target annual
bonus and the grant value of the PPSP, excluding fringe benefits
and retirement benefit commitments. With the inclusion of
fringe benefits and retirement benefit commitments from the
respective financial years, the maximum limit of total remu-
neration increases by these amounts. The possible cap on the
amount exceeding the maximum limit takes place with
the payment of the PPSP issued in the relevant financial year,
i.e. for the year 2014, with payment of the PPSP in 2018.
The maximum amounts of remuneration of the members
of the Board of Management are limited, both overall and with
regard to the variable components, in accordance with the
recommendation included in the German Corporate Governance
Code in 2013. Effective January 1, 2014, the members of
the Board of Management agreed to the inclusion of such limits
in their current contracts of service.
As before, only 50% of the annual bonus is paid out in the March
of the following year. The other 50% is paid out a year later
with the application of a bonus-malus rule (so-called deferral),
depending on the development of the Daimler share price
compared with an automotive index (Dow Jones STOXX Auto
Index) see pages 22 f, which Daimler AG uses as a bench-
mark for the relative share-price development. Both the delayed
payout of the portion of the annual bonus (with the use of the
bonus-malus rule) and the variable component of remuneration
from the PPSP with its link to additional, ambitious compara-
tive parameters and to the share price reflect the recommenda-
tions of the German Corporate Governance Code and give
due consideration to both positive and negative developments.
The system of Board of Management remuneration in 2014.
The fixed base salary and the annual bonus continue to com-
prise approximately 29% of the target remuneration, while the
variable component of remuneration with a long-term incentive
effect (PPSP) makes up approximately 42% of the target remu-
neration. The base salary was increased by an average of 5%,
for the first time since 2011. Changes were also made to
the range of possible target achievement for the annual bonus
and to the reference parameters of the PPSP. The reference
parameters of the annual bonus and the range of possible target
achievement for the PPSP remained unchanged.
B | Combined Management Report | Remuneration Report
118
After the end of each year, target achievement is measured
and the actual remuneration is then calculated by the Presidential
Committee and submitted to the Supervisory Board for its
approval.
In this way, the individual base and target remuneration and
the relevant performance parameters are set by the beginning
of each year.
For the long-term variable component of remuneration, the
so-called Performance Phantom Share Plan (PPSP) the Super-
visory Board sets an amount to be granted for the upcoming
financial year in the form of an absolute amount in euros and
sets the related performance targets.
On the basis of the approved remuneration system, the Super-
visory Board decides at the beginning of the year on the base
and target remuneration for the individual members of the Board
of Management and decides on the success parameters
relevant for the annual bonus in the coming year. Furthermore,
individual goals are decided upon for each member of the
Board of Management for the respective areas of personal
responsibility; those goals are then taken into consideration
after the end of the financial year when the annual bonus
is decided upon by the Supervisory Board.
In carrying out this review, the Presidential Committee and the
Supervisory Board consult independent external advisors,
above all to facilitate a comparison with remuneration systems
common in the market. If the review results in a need for
changes to the remuneration system for the Board of Manage-
ment, the Presidential Committee submits the relevant
proposals to the entire Supervisory Board for its approval.
The vertical comparison focuses on the ratio of Board of
Management remuneration to the remuneration of the senior
executives and the entire workforce of Daimler AG in Germany,
also with regard to development over time. For this purpose,
the Supervisory Board has defined the group of senior executives
with the use of the Company's internal levels of hierarchy.
and the target remuneration consisting of base salary,
annual bonus and long-term variable remuneration, also with
consideration of entitlement to a retirement pension and
fringe benefits.
- the relative weighting of the components, that is, the
relationship between the fixed base salary and the short-
term and long-term variable components
- the effects of the individual fixed and variable components,
that is, the methods behind them and their reference
parameters, and
Practical implementation. For each upcoming financial year,
the Presidential Committee at first prepares a review by the
Supervisory Board of the system and level of remuneration on
the basis of a comparison with competitors. The main focus
is on checking for appropriateness, based on a horizontal and
vertical comparison. In the horizontal comparison, the follow-
ing aspects are given particular attention in relation to a group
of comparable companies in Germany:
Goals. The remuneration system for the Board of Management
aims to remunerate its members commensurately with their
areas of activity and responsibility and in compliance with appli-
cable law. The adequate combination of non-performance-
related and performance-related components of remuneration
is designed to create an incentive to secure the Group's long-
term success. The fixed component of remuneration is paid as
a base salary; the variable components intended to reflect,
clearly and directly, the joint and individual performance of the
members of the Board of Management as well as the long-
term performance of the Group. The interests of all stakeholders,
in particular those of the shareholders as the owners of the
Company and those of the employees, are harmonized through
the focus on the Group's long-term success.
Principles of Board of Management remuneration
The Remuneration Report summarizes the principles that
are applied to determine the remuneration of the Board
of Management of Daimler AG, and explains both the level
and the structure of its members' remuneration. It also
describes the principles and level of remuneration of the
Supervisory Board.
Remuneration Report.
117
Since the end of the 2014 financial year, there have been no
further occurrences that are of major significance for Daimler.
The course of business in the first weeks of 2015 confirms the
statements made in the "Outlook" section of this Annual Report.
Reporting Period.
Events after the
in the future of the Group. We therefore look to the coming
years with great confidence and continue to aim for further
profitable growth.
We are on the right track with our growth strategies, the
efficiency programs and the high levels of investment
511
431
2014
Hubertus Troska
608
608
715
2013
3,213
1,1511
18,159
652
758
2014
Wilfried Porth
3,025
1,130
25,458
590
590
715
2013
3,185
1,161
17,370
633
633
758
2014
25,458
1,044
2,975
Andreas Renschler²
3,025
1,130
25,458
590
590
715
2013
3,223
1,161
17,370
652
652
Dr. Christine Hohmann-Dennhardt
758
3,227
1,226
28,420
623
623
755
2013
156
47
47
62
2014
2014
3,025
652
25,458
Dr. Dieter Zetsche
(2014: at share price €66.83)
(2013: at share price €44.39)
Number Value when granted
Medium-term
Total
Long-term variable remuneration
(PPSP)
Short and medium-term variable
remuneration (annual bonus)
Short-term
Base salary
In thousands of euros
Board of Management remuneration in 2014
2014
B.48
Prof. Dr. Thomas Weber
Total
Bodo Uebber
Hubertus Troska²
1,854
1,405
210
121
1,130
332
603
1 Board of Management remuneration granted until January 28, 2014.
2 For the fulfillment of disclosure obligations pursuant to Section 285 No.
9a of the German Commercial Code (HGB), this amount is reduced by
€139,000 for the year 2014. The corresponding fringe benefits were grant-
ed and borne by a subsidiary and are thus not included in the amounts to
be disclosed in the annual financial statements of the parent company,
Daimler AG.
2,008
112
1,727
1,727
590
590
2013
3,347
1,228
18,380
670
670
779
2014
715
8,247
2,825
63,643
1,707
1,707
Dr. Wolfgang Bernhard
2,008
2013
43,424
8,364
2,902
2014
2013
Jan. 1 Dec. 31,
Chairman of the Board of Management and
Head of Mercedes-Benz Cars
Dr. Wolfgang Bernhard
Daimler Trucks and Buses
Dr. Dieter Zetsche
In thousands of euros
Jan. 1 Dec. 31,
Jan. 1 Dec. 31,
2013
2,008
2014
Base salary
2,008
715
779
Taxable non-cash benefits and other fringe benefits
151
Payments made
90
163
Jan. 1 Dec. 31,
B.52
-
(as defined by German tax law), and
163
1 Total limit = maximum amount for financial year 2014 → 1.5 times (Dr. Zetsche)/1.9 times target remuneration 2014 (base salary, target annual bonus,
value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
5,100
5,922
5,914
1,212
3,203
3,267
7,317
2 In 2014, Board of Management remuneration granted until January 28, 2014.
125
The total of "payments made" for financial year 2013
is calculated from:
the base salary in 2013,
-
the taxable non-cash benefits and other fringe benefits
in 2013,
- the half of the annual bonus payable in 2014 for 2013
at the value as of the end of the reporting period,
- the half of the share-based annual bonus paid in 2013 for 2011,
the value of the long-term share-based payment (PPSP 2009)
paid in 2013,
the dividend equivalent of the current PPSP
(2010, 2011, 2012 and 2013) paid in 2013,
- the value of stock options 2004 when exercised
- the retirement pension expense in 2013 (service costs in 2013).
Total
In the Board of Management and the Audit Committee
of the Supervisory Board of Daimler AG, regular reports are
given regarding the current risk situation and the effective-
ness, functions and appropriateness of the internal control and
risk management system. Furthermore, the responsible
managers regularly discuss the risks of business operations
with the Board of Management.
2,171
96
111
195
44
78
150
154
60
61
261
140
56
1,909
134
The development of the US economy will be decisively impacted
by how the planned exit from the expansive monetary policy is
further managed and whether - as hoped - investors and conum-
ers boost the rate of growth. After such a long phase of very
low interest rates, an increase in interest rates could have a
profound effect on economic recovery and slow down
the pace of growth. This would also affect the housing market
and its recovery, along with other sectors. Although the
Federal Reserve could attempt to counteract any negative impact
through its monetary policy, it has little room to maneuver
here, which means the effectiveness of such possible measures
would be limited. Such an event would have significant con-
sequences because the Daimler Group (and especially the
Mercedes-Benz Cars and Daimler Trucks divisions) generates a
considerable volume of its unit sales in the United States, and
diminished growth could also spread to other regions. However,
if investment activity in the United States is more dynamic than
previously assumed, this could result in substantially stronger
growth. The resulting increased employment and income
effects would boost the demand for the automotive divisions.
Economic risks and opportunities are linked with assumptions
and forecasts on the general development of the individual
topics. Overall, economic risks for the business environment
have tended to increase slightly compared with the prior
year and the opportunities for an improvement of the world
economy have declined slightly.
With regard to the world economy, Daimler along with the
majority of economic research institutes anticipates a slight
acceleration of growth in 2015. Economic developments in
2014 are described in detail in the "Economic Conditions and
Business Development" section of this Management Report;
growth assumptions for 2015 are explained in the "Outlook"
section see page 146
Economic risks and opportunities. Economic risks and
opportunities constitute the framework for the risks and oppor-
tunities listed in the following categories and are integrated
as premises into the quantification of these risks and opportuni-
ties. Overall economic conditions have a significant influence
on automobile sales markets, and their development is one of
the Group's major risks and opportunities.
The following section describes in detail the industry and
business risks of the Daimler Group. A quantification of these
risks and opportunities is shown in table 7 B.55.
Industry and business risks and opportunities
143
2,770
7,524
744
805
942
Annual variable remuneration (50% of annual bonus, short-term)
1,707
1,727
590
670
Deferral (50% of annual bonus, medium-term)
1,834
1,583
653
564
Long-term variable remuneration
Payment of PPSP 2009
Payment of PPSP 2010
Dividend equivalent PPSP 2010
Dividend equivalent PPSP 2011
Dividend equivalent PPSP 2012
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2014
5,117
2,159
In addition, risks and opportunities that are not yet known
about or classified as not material can influence profitability,
cash flows and financial position.
4,199
- Retirement pension expense (service costs)
1,130
-
-
1,262
Long-term variable remuneration (plan period of 4 years)
Total
891
0
379
358
73
0
31
378
Deferral (50% of annual bonus, medium-term)
891
0
379
358
73
0
31
1,161
0
2,750
2,018
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in 2014
Total limit¹ for components of remuneration
Total remuneration
314
314
314
272
378
30
30
423
Retirement pension expense (service costs)
4,532
0
1,919
1,846
146
0
62
30
(50% of annual bonus, short-term)
Annual variable remuneration
1,189
Jan. 1 Dec. 31,
min.
2014
2013
max.
Jan. 1 Dec. 31,
Jan. 1 Jan. 28,
min.
2014
Jan. 1 Dec. 31,
2013
Hubertus Troska
Greater China
Andreas Renschler²
max.
In thousands of euros
- the retirement pension expense in 2014
(service costs in 2014).
- the value when granted in 2014 of the long-term share-based
remuneration (payable in 2018), and
the half of the share-based annual bonus payable in 2016
for 2014 at the value with target achievement of 100%,
at the value with target achievement of 100%,
the half of the annual bonus payable in 2015 for 2014
- the taxable non-cash benefits for the year 2014,
- the base salary for 2014,
The total of "benefits granted" for financial year 2014
is calculated from
(service cost in 2013).
the value of the long-term share-based remuneration
at the time when granted in 2013 (payable in 2017) and
- the retirement pension expense in 2013
Benefits granted
In thousands of euros
Base salary
62
1,189
1,189
1,318
70
70
70
1,266
431
431
431
755
603
8
8
511
Taxable non-cash benefits and other fringe benefits
Total
758
758
758
715
62
62
8
3,909
3,707
100
1,200
3,288
0
1,388
1,351
Long-term variable remuneration (plan period of 4 years)
891
0
379
358
1,060
0
451
433
Deferral (50% of annual bonus, medium-term)
891
0
379
358
1,060
0
1,233
0
2,920
Total
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in 2014
Total limit¹ for components of remuneration
Total remuneration
333
333
333
426
676
451
676
714
Retirement pension expense (service costs)
4,702
0
1,991
1,916
5,408
0
2,290
2,217
676
433
(50% of annual bonus, short-term)
Annual variable remuneration
Base salary
max
min
2014
2013
max
Jan. 1 Dec. 31,
Jan. 1 Dec. 31,
Jan. 1 Dec. 31,
min
2014
866
2013
Prof. Dr. Thomas Weber
Group Research &
Mercedes-Benz Cars Development
Finance & Controlling and
Daimler Financial Services
Bodo Uebber
4,971
233
6,035
1,503
3,422
3,436
246
Jan. 1 Dec. 31,
162
901
901
879
879
879
925
1,233
1,233
1,233
978
Total
121
901
121
210
332
332
332
112
Taxable non-cash benefits and other fringe benefits
758
758
758
715
121
The Audit Committee of the Supervisory Board is responsible
for monitoring the internal control and risk management
system. The Internal Auditing department monitors whether the
statutory conditions and the Group's internal guidelines are
adhered to in the Group's entire monitoring and risk management
system. If required, measures are then initiated in cooperation
with the relevant management. The external auditors audit the
system for the early identification of risks that is integrated
in the risk management system for its fundamental suitability
to identify risks threatening the existence of the Group; in
addition, they report to the Supervisory Board on any significant
weaknesses that have been discovered in the internal control
and risk management system.
The following section describes in detail the risks and oppor-
tunities that can have a significant influence on the profit-
ability, cash flows and financial position of the Daimler Group.
In general, the reporting of risks and opportunities takes
place for the individual segments. If no segment is explicitly
mentioned, the risks and opportunities described relate
to all divisions.
98
Member of the Supervisory Board and the Nomination Committee
152,800
Member of the Supervisory Board and the Nomination Committee
Joe Kaeser
Andrea Jung
Jörg Hofmann¹
Petraea Heynike
Dr. Jürgen Hambrecht
Dr. Bernd Bohr
Dr. Clemens Börsig
Sari Baldauf
Dr. Paul Achleitner
312,567
Member of the Supervisory Board and the Audit Committee, Deputy Chairman of the Supervisory
Board, the Presidential Committee and the Audit Committee (each since May 1, 2014)
Michael Brecht¹
448,500
126,511
Chairman of the Supervisory Board, the Presidential Committee and the Nomination Committee
Deputy Chairman of the Supervisory Board, the Presidential Committee and the Audit Committee
(each until 30 April, 2014)
Erich Klemm¹
Dr. Manfred Bischoff
Total in 2014
Function(s) remunerated
155,000
Member of the Supervisory Board and the Audit Committee (Chairman of the Audit Committee
since April 9, 2014)
238,190
Member of the Supervisory Board (since April 9, 2014)
173,474
Member of the Supervisory Board and the Audit Committee (since May 1, 2014)
Dr. Sabine Maaßen¹
83,848
Member of the Supervisory Board (since May 1, 2014)
129,900
Member of the Supervisory Board
Jürgen Langer¹
Ergun Lümali¹
35,848
Member of the Supervisory Board (until April 9, 2014)
In euros
Gerard Kleisterlee
Member of the Supervisory Board and the Audit Committee (since April 9, 2014)
128,800
Member of the Supervisory Board
183,400
Member of the Supervisory Board and of the Presidential Committee
128,800
Member of the Supervisory Board
183,400
Member of the Supervisory Board and of the Presidential Committee
93,281
139,371
Name
Supervisory Board remuneration
B.53
64
73
72
83
47
93
53
111
125
3,194
65
3,598
2,447
Retirement pension expense (service costs)
Total
Exercise of stock options 2004
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2012
Dividend equivalent PPSP 2011
Dividend equivalent PPSP 2010
Payment of PPSP 2010
2,172
Wolfgang Nieke¹
67
59
Loans to members of the Supervisory Board. No advances
or loans were made to members of the Supervisory Board
of Daimler AG in 2014.
The remuneration of all the activities of the members
of the Supervisory Board of Daimler AG in the year 2014
was thus €3.6 million (2013: €3.0 million).
No remuneration was paid for services provided personally
beyond the aforementioned board and committee activities,
in particular for advisory or agency services, except for the
remuneration paid to the members of the Supervisory Board
representing the employees in accordance with their contracts
of employment.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend. The individual
remuneration of the members of the Supervisory Board is
shown in table 7 B.53.
Supervisory Board remuneration in 2014. The remuneration
of the Supervisory Board is determined by the Shareholders'
Meeting of Daimler AG and is governed by the Company's Articles
of Incorporation. The regulations for Supervisory Board remu-
neration approved by the Annual Shareholders' Meeting in April
2014 and effective for the financial year beginning on January 1,
2014 specify that the members of the Supervisory Board
receive, in addition to the refund of their expenses and the cost
of any value-added tax incurred by them in performance
of their office, fixed remuneration of €120,000. The Chairman
of the Supervisory Board receives an additional €240,000
and the Deputy Chairman of the Supervisory Board receives an
additional €120,000. The members of the Audit Committee
are paid an additional €60,000, the members of the Presidential
Committee are paid an additional €48,000 and the members
of the other committees of the Supervisory Board are paid an
additional €24,000; an exception is the Chairman of the
Audit Committee, who is paid an additional €120,000. Payments
are made for activities in a maximum of three committees;
any persons who are members of more than three such commit-
tees receive payments for the three most highly paid func-
tions. Members of a Supervisory Board committee are only enti-
tled to remuneration for such membership if the committee
has actually convened to fulfill its duties in the respective year.
Remuneration of the Supervisory Board
127
1 In 2014, Board of Management remuneration granted until January 28, 2014.
5,852
5,480
68
7,270
Total remuneration
4,640
333
4,129
426
676
5,361
4,291
714
397
41
47
61
5,983
Payment of PPSP 2009
Valter Sanches²
Elke Tönjes-Werner¹
≥ €1 billion
Impact
< €1 billion
< €500 million
Impact
Impact
€500 million ≤
Possible impact
€0 ≤
Category
Low
Medium
High
0% < Probability of occurrence ≤ 33%
33%< Probability of occurrence ≤ 66%
Probability of occurrence < 100%
66%<
Low
Medium
High
Probability of occurrence
Category
Assessment of probability of occurrence and possible impact
B.54
The Daimler Group's divisions are exposed to a large number
of risks which are directly linked with business activities.
A risk is understood as the danger that events or actions prevent
the Group or one of its divisions from achieving its targets.
It is also important for the Daimler Group to identify opportuni-
ties so that they can be utilized as part of Daimler's business
activities, thus securing and enhancing the Daimler Group's
competitiveness. An opportunity is understood as the possi-
bility to surpass the planned targets as a result of events, devel-
opments or actions. The divisions have direct responsibility
for recognizing and managing entrepreneurial risks and oppor-
tunities at an early stage. As part of the strategy process,
risks related to the planned long-term development and oppor-
tunities for further profitable growth are identified and inte-
grated into the decision-making process. In order to identify
risks and opportunities at an early stage and to assess and
deal with them consistently, Daimler applies effective manage-
ment and control systems, which are integrated into a risk
management system and an opportunity management system.
Opportunities and risks are not offset. The two systems are
described below.
Risk and Opportunity Report.
131
An agreement between Daimler and Robert Bosch GmbH
relating to the joint establishment and joint operation
of EM-motive GmbH for the development and production
of traction and transmission-integrated electric motors
as well as parts and components for such motors for auto-
motive applications and for the sale of those articles to
the Robert Bosch Group and the Daimler Group. If Daimler
should become controlled by a competitor of Robert
Bosch GmbH, Robert Bosch GmbH has the right to terminate
the consortium agreement without prior notice and to
acquire all the shares in the joint venture held by Daimler
at a fair market price.
- An agreement relating to the establishment of a joint venture
with Beiqi Foton Motor Co., Ltd. for the purpose of producing
and distributing heavy-duty and medium-duty trucks of the
Auman brand. This agreement gives Beiqi Foton Motor Co., Ltd.
the right of termination in the case that one of its competitors
acquires more than 25% of the equity or assets of Daimler AG
or becomes able to influence the decisions of its Board of
Management.
An agreement with BAIC Motor Co., Ltd., relating to a jointly
held company for the production and distribution of cars of
the Mercedes-Benz brand in China, by which BAIC Motor Co.,
Ltd. is given the right to terminate or exercise a put or call
option in the case that a third party acquires one third or more
of the voting rights in Daimler AG.
Risk and opportunity management system
The risk management system with regard to material risks
and existence-threatening risks is integrated into the value-
based management and planning system of the Daimler Group.
It is an integral part of the overall planning, management
and reporting process in the relevant legal entities, divisions
and corporate functions. The risk management system is
intended to systematically and continually identify, assess,
control, monitor and document material risks and risks
threatening Daimler's existence, in order to secure the achieve-
ment of corporate goals and to enhance risk awareness
at the Group.
Opportunity management system at the Daimler Group
is derived from the risk management system. The objective
of opportunity management is to recognize at an early stage
the possible opportunities arising in business activities as
a result of positive developments, and to utilize them as opti-
mally as possible for the Group by taking appropriate measures.
Taking advantage of opportunities may lead to overachieve
planned goals.
Risk assessment in principal is carried out for a two-year planning
period, although Daimler also identifies and monitors risks
related to a longer period in the discussions for the derivation
of medium-term and strategic goals. Within the context of
the strategic and operational planning, relevant and feasible
opportunities are identified in addition to risks. Those oppor-
tunities are considered that are possible but which have not
yet been included in the planning. The reporting of risks
and opportunities in the management report in principal refer
to a period of one year.
However, responsibility for operational risk management for
risks threatening the existence of the Group and for the control
and risk management processes with regard to the corporate
accounting process remains directly with the divisions, corporate
functions and legal entities. The measures taken by the
GRMC ensure that relevant risks and any existing process weak-
nesses in the corporate accounting process are identified
and eliminated as early as possible.
- The GRMC defines and shapes the framework conditions
with regard to the organization, methods, processes and
systems that are needed to ensure a functioning, Group-wide,
and thorough control and risk management system.
The GRMC regularly reviews the effectiveness and function-
ality of the installed control and risk management processes.
Minimum requirements can be laid down in terms of the
design of the control processes and of risk management
and corrective measures can be initiated as necessary
or appropriate to eliminate any system failings or weaknesses
exposed.
The organizational embedding and monitoring of risk
management takes place through the risk management orga-
nization established at the Group. As previously described in
the "Risk management system" section with regard to material
risks and risks threatening Daimler's existence, the divisions,
corporate functions and legal entities inquire about the specific
risks at regular intervals. This information is passed on to
Corporate Risk Management, which processes the information
and provides it to the Board of Management and the Super-
visory Board as well as to the Group Risk Management Commit-
tee (GRMC). In order to ensure the complete presentation
and assessment not only of material risks and risks threatening
the existence of the Group, but also of the control and risk
process with regard to the corporate accounting process,
Daimler has established the Group Risk Management Committee.
It is composed of representatives of the areas of Finance &
Controlling, Accounting, Legal Affairs and Compliance, and is
chaired by the Board of Management Member for Finance &
Controlling and Daimler Financial Services. The Internal Audit-
ing department contributes material findings on the internal
control and risk management system. In addition to fundamental
issues, the committee has the following tasks:
133
We systematically assess the effectiveness of the internal
control system with regard to the corporate accounting process.
The first step consists of risk analysis and definition of control.
Significant risks are identified relating to the process of corporate
accounting and financial reporting in the main legal entities
and corporate functions. The controls required are then defined
and documented in accordance with Group-wide guidelines.
Random samples are regularly tested to assess the effectiveness
of the controls. Those tests constitute the basis for self-
assessment of the appropriate magnitude and effectiveness
of the controls. The results of this self-assessment are
documented and reported in a global IT system. Any weaknesses
recognized are eliminated with consideration of their potential
effects. At the end of the annual cycle, the selected legal entities
and corporate functions confirm the effectiveness of the
internal control and risk management system with regard to the
corporate accounting process. The Board of Management
and the Audit Committee of the Supervisory Board are regularly
informed about the main control weaknesses and about the
effectiveness of the control mechanisms installed. However,
the internal control and risk management system for the
accounting process cannot ensure with absolute certainty that
material false statements are avoided in accounting.
the "four-eyes principle" (dual accountability) in the context
of preparing financial statements, and authorization
and access rules exist for relevant IT accounting systems.
processes exist for the segregation of duties and for
of financial reporting;
processes exist to guarantee the completeness
- issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
and supply of a small van, the use of an existing architecture
for compact cars, the joint development of components
for a new architecture for compact cars, the joint production
of Infiniti and Mercedes-Benz compact vehicles in a 50:50
joint venture in Mexico and the predevelopment of a hydrogen
tank system. A change of control is deemed to occur at a
threshold of 50% of the voting rights of the company in question
or upon authorization to appoint a majority of the members
of its managing board. In the case of termination of coopera-
tion in the area of the development of small cars due to a
change of control in the early phase of the cooperation, the
party affected by the change of control would be obliged
to bear its share of the costs of the development of shared
components even if the development were terminated for
that party.
for and properly eliminated;
the Group's uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
The internal control and risk management system with
regard to the accounting process has the goal of ensuring
the correctness and effectiveness of accounting and financial
reporting. It is designed in line with the internationally recog-
nized framework for internal control systems of the Committee
of Sponsoring Organizations of the Treadway Commission
(COSO Internal Control - Integrated Framework), is continually
developed further and is an integral part of the accounting
and financial reporting process in all relevant legal entities
and corporate functions. The system includes principles and
procedures as well as preventive and detective controls.
Among other things, it is regularly checked that
Risk controlling at the Daimler Group takes place at the level
of the divisions based on individual risks. If the impact of
an individual risk exceeds the amount of €2 billion, this risk
is described separately in the Management Report. To the
extent not otherwise presented, even in the case of simultane-
ous occurrence of all individual risks in a risk category,
the Group does not expect any effect in this category of more
than €3 billion.
Corporate risk management regularly reports on the identified
risks and opportunities to the Board of Management and
the Supervisory Board. As well as the regular reporting, there
is also an internal reporting obligation within the Group
for risks arising unexpectedly.
The tasks of the employees responsible for risk and opportunity
management include, in addition to identification and assess-
ment, the development of measures and the initiation of such
measures where appropriate, whereby the goal of such
measures is to avoid, reduce or counteract risks. The utilization
or enhancement of an opportunity, and its partial or full imple-
mentation, also require the application of specific measures.
The standard approach here is to assess the cost-effectiveness
of the measures before they are implemented. The develop-
ment of all the risks and opportunities of the individual entities
and of the related countermeasures that have been initiated
are continually monitored.
Quantification of each risk and opportunity category in
the Management Report summarizes the individual risks and
opportunities for each category. The category descriptions
include the explaination of important changes in comparison
to the prior year.
Risk assessment takes place on the basis of the probability
of occurrence and the possible impact of the risk according
to the categories low, medium and high. These categories also
apply to the potential impact of opportunities, although an
analysis of the probability of occurrence is not conducted here.
When assessing the impact of a risk, the effect before mea-
sures in relation to EBIT is considered. At the Daimler Group,
risks below €500 million are categorized as low, between
€500 million and €1 billion as medium and above €1 billion
as high. Risk management is based on the principle of com-
pleteness. This means that at the level of the individual entities,
all specific risks flow into the risk management process.
General uncertainties without clear indication of a possible
effect on earnings are monitored in the internal control system
(ICS). The assessment of the dimensions of the probability
of occurrence and possible impact is based on the categories
shown in table 7 B.54.
B❘ Combined Management Report | Risk and Opportunity Report
132
In the context of its operational planning, Daimler uses appropri-
ate risk and opportunity categories to identify and assess
risks and opportunities for the divisions and operating units,
important associated companies, joint ventures, joint oper-
ations and the corporate departments. The scope of consolida-
tion for risk and opportunity management corresponds to
the scope of consolidation of the consolidated financial state-
ments and goes even beyond if necessary.
transactions within the Group are fully accounted
- A master cooperation agreement on wide-ranging strategic
cooperation with Renault S. A., Renault-Nissan B.V. and
Nissan Motor Co., Ltd. in connection with cross-shareholdings.
The Renault-Nissan Alliance received an equity interest of
3.1% in Daimler AG and Daimler AG received equity interests
of 3.1% in each of Renault S. A. and Nissan Motor Co., Ltd.
In the case of a change of control of one of the parties to the
agreement, each of the other parties has the right to ter-
minate the agreement. A change of control as defined by the
master cooperation agreement occurs if a third party or
several third parties acting jointly acquire, legally or econom-
ically, directly or indirectly, at least 50% of the voting rights
in the company in question or are authorized to appoint
a majority of the members of its managing board. Under the
master cooperation agreement, several cooperation agree-
ments were concluded between Daimler AG on the one side
and Renault and/or Nissan on the other, which provide
for the right of termination for a party to the agreement in the
case of a change of control of another party. These agree-
ments primarily concern a new architecture for small cars,
the shared use and development of fuel-efficient diesel
and gasoline engines and transmissions, the development
Guarantees and securities for credit agreements of con-
solidated subsidiaries for a total amount of €577 million,
which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
- An agreement concerning the acquisition of a majority
(50.1%) of AFCC Automotive Fuel Cell Cooperation Corp.,
which has the purpose of further developing fuel cells
for automotive applications and making them marketable.
In the case of a change of control of Daimler AG, the agree-
ment provides for the right of termination by the other main
shareholder, Ford Motor Company. Control as defined
by this agreement is the beneficial ownership of the majority
of the voting rights and the resulting right to appoint
the majority of the members of the Board of Management.
- a cooperation agreement with Ford and Nissan concerning
the joint predevelopment of a fuel-cell system. In the event
of a change of control of one of the parties to the agreement,
the agreement provides for the right of termination for
the other parties. A change of control is deemed to occur
at a threshold of 50% of the voting rights of the company
in question or upon authorization to appoint the majority
of the members of its managing board.
of €2.5 billion, which the lenders are entitled to terminate
if Daimler AG becomes a subsidiary of another company
or comes under the control of one person or several persons
acting jointly.
128
2 Mr. Sanches has directed that his board remuneration is to be paid to the Hans-Böckler Foundation.
1 The employee representatives have stated that their board remuneration is to be transferred to the Hans-Böckler Foundation,
in accordance with the guidelines of the German Trade Union Federation.
Dr. Frank Weber
129,900
71,696
Member of the Supervisory Board and Chairman of the Audit Committee (each until 9 April, 2014)
Member of the Supervisory Board
Dr. h. c. Bernhard Walter
35,848
Member of the Supervisory Board (until April 9, 2014)
B❘ Combined Management Report | Remuneration Report | Takeover-Relevant Information and Explanation
129,900
129,900
Member of the Supervisory Board
129,900
Member of the Supervisory Board
92,181
Member of the Supervisory Board (since April 9, 2014)
Dr. Bernd Pischetsrieder
129,900
Member of the Supervisory Board
Lloyd G. Trotter
Member of the Supervisory Board
Jörg Spies¹
Takeover-Relevant Information and Explanation.
Composition of share capital. The share capital of Daimler
AG amounts to approximately €3,070 million at December 31,
2014. It is divided into 1,069,837,447 registered shares of
no par value. With the exception of treasury shares, from which
the Company does not have any rights, all shares confer equal
rights to their holders. Each share confers the right to one vote
and, with the possible exception of any new shares that are
not yet entitled to a dividend, to an equal share of the profits.
The rights and obligations arising from the shares are derived
from the provisions of applicable law. There were no treasury
shares at December 31, 2014.
- Credit agreements with lenders for a total amount
- A non-utilized syndicated credit line in a total amount
of €9 billion, which the lenders are entitled to terminate
if Daimler AG becomes a subsidiary of another company
or comes under the control of one person or several persons
acting jointly.
Material agreements taking effect in the event of a change
of control. Daimler AG has concluded various material agree-
ments, as listed below, that include clauses regulating the
possible event of a change of control, as can occur as a result
of a takeover bid:
B❘ Combined Management Report | Takeover-Relevant Information and Explanation
130
Accordingly, the share capital was conditionally increased
by up to €500 million (Conditional Capital 2010). No use
has yet been made of this authorization to issue convertible
bonds and/or bonds with warrants.
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the
consent of the Supervisory Board to exclude shareholders' sub-
scription rights to the bonds with conversion or warrant
rights to shares in Daimler AG. The bonds can also be issued by
direct or indirect majority-owned subsidiaries of Daimler AG.
- to grant the owners/lenders of those bonds conversion
or option rights to new, registered shares of no par value
in Daimler AG with a corresponding amount of the share
capital of up to €500 million, in accordance with the terms
and conditions of those convertible bonds or bonds with
warrants.
The Board of Management was authorized by resolution
of the Annual Shareholders' Meeting held on April 14, 2010,
with the consent of the Supervisory Board during the period
until April 13, 2015 to issue convertible bonds and/or bonds
with warrants or a combination of those instruments, once
or several times, in a total nominal amount of up to €10 billion
with a maximum term of ten years, and
By resolution of the Annual Shareholders' Meeting held on
April 9, 2014, the Board of Management was authorized with
the consent of the Supervisory Board to increase the share
capital of Daimler AG in the period until April 8, 2019, wholly
or in partial amounts, on one or several occasions, by up
to €1 billion by issuing new registered shares of no par value
in exchange for cash or non-cash contributions, and with
the consent of the Supervisory Board under certain conditions
and within defined limits to exclude shareholders' subscription
rights (Approved Capital 2014). Approved Capital 2014 replaces
Approved Capital 2009, which was limited until April 7, 2014
and had not been utilized. No use has yet been made of Approved
Capital 2014.
(Report pursuant to Section 315 Subsection 4 and Section 289 Subsection 4 of the German Commercial Code (HGB))
Authorization of the Board of Management to issue or
buy back shares. By resolution of the Annual Shareholders'
Meeting of April 14, 2010, the Board of Management was
authorized with the consent of the Supervisory Board during
the period until April 13, 2015 to acquire the Company's
own shares for all legal purposes, in particular for certain defined
purposes, up to a maximum of 10% of the share capital at
the time of the resolution of the Annual Shareholders' Meeting.
The purchase of the Company's own shares is allowed, inter
alia, for the following purposes: for the purposes of canceling
them, offering them to third parties in connection with a
corporate merger or acquisition, disposing of them in another
way than through the stock exchange, offering them to all
shareholders, or serving the stock option plan created in or
before 2004 (whose last exercise period expired on March 31,
2014, however). The Company's own shares in a volume of up
to 5% of the share capital existing at the time of the resolution
of the Annual Shareholders' Meeting can also be acquired with
the application of derivative financial instruments, whereby
the period of the individual option may not exceed 18 months.
No use has yet been made of this authorization.
In accordance with Article 5 of the Articles of Incorporation,
the Board of Management has at least two members. The number
of members is decided by the Supervisory Board. Pursuant
to Section 84 Subsection 2 of the German Stock Corporation Act
(AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required member
of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German
Stock Corporation Act (AktG). Pursuant to Section 84 Subsec-
tion 3 of the German Stock Corporation Act (AktG), the
Supervisory Board can revoke the appointment of a member
of the Board of Management and of the Chairman of the
Board of Management if there is an important reason to do so.
129
Pursuant to Section 31 Subsection 2 of the German Codeter-
mination Act (MitbestG), the Supervisory Board appoints
the members of the Board of Management with a majority com-
prising at least two thirds of its members' votes. If no such
majority is obtained, the Mediation Committee of the Super-
visory Board has to make a suggestion for the appointment
within one month of the vote by the Supervisory Board. The
Supervisory Board then appoints the members of the Board
of Management with a majority of its members' votes. If no
such majority is obtained, voting is repeated and the Chairman
of the Board of Management then has two votes. The same
procedure applies for dismissals of members of the Board of
Management.
a maximum period of office of five years. However, the Super-
visory Board of Daimler AG has decided generally to limit
the initial appointment of members of the Board of Management
to three years. Reappointment or the extension of a period
of office is permissible, in each case for a maximum of five years.
Provisions of applicable law and of the Articles of Incor-
poration concerning the appointment and dismissal
of members of the Board of Management and amendments
to the Articles of Incorporation. Members of the Board
of Management are appointed and dismissed on the basis of
Sections 84 and 85 of the German Stock Corporation Act
(AktG) and Section 31 of the German Codetermination Act
(MitbestG). In accordance with Section 84 of the German
Stock Corporation Act (AktG), the members of the Board of
Management are appointed by the Supervisory Board for
change of control of the issuer of the shares in question.
Following the acquisition of their equity interests in Daimler,
each of Renault S. A. and Nissan Motor Co., Ltd. has stated
in its voting-rights notification issued pursuant to Sections 21ff
of the German Securities Trading Act (WpHG) that the Daimler
shares held by the other company are to be allocated to it pursu-
ant to Section 22 Subsection 2 of the German Securities
Trading Act (WpHG) (coordinated action).
On April 7, 2010, Daimler AG and the Renault-Nissan Alliance
signed a master cooperation agreement on wide-ranging
strategic cooperation and a cross-shareholding. Renault S. A.
and Nissan Motor Co., Ltd. each received an equity interest
of 1.55% in Daimler AG, and Daimler AG received equity interests
of 3.1% in each of Renault S. A. and Nissan Motor Co., Ltd.
Due to an increase in the total number of outstanding shares
of Daimler AG following the exercise of stock options, each
shareholding in Daimler of Renault S. A. and Nissan Motor Co.,
Ltd. amounted to 1.54% at December 31, 2014. For the duration
of the master cooperation agreement or for a period of five
years (whichever is the shorter), without the prior consent of
the other party, i) Daimler AG may not transfer its shares in
Renault S. A. and Nissan Motor Co., Ltd. to a third party, and ii)
Renault S. A. and Nissan Motor Co., Ltd. may not transfer their
shares in Daimler AG to a third party. Transfers to third parties
that are not competitors of one of the issuers of the shares
in question are exempted from this prohibition under certain
circumstances, including the case of internal corporate
transfers, transfers related to a takeover offer from a third party
for the shares of one of the other parties, or the case of a
Shares acquired by employees within the context of the
employee share program may not be disposed of until the end
of the following year. Eligible participants in the Performance
Phantom Share Plans are obliged by the Plans' terms and con-
ditions and by the Stock Ownership Guidelines to acquire
Daimler shares with a part of their Plan income up to a defined
target volume and to hold them for the duration of their
employment at the Daimler Group.
Risks and opportunities
Restrictions on voting rights and on the transfer of shares.
The Company does not have any rights from treasury shares.
In the cases described in Section 136 of the German Stock
Corporation Act (AktG), the voting rights of treasury shares are
nullified by law.
Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended
by a resolution of a Shareholders' Meeting. Unless otherwise
required by applicable law, resolutions of the Annual Share-
holders' Meeting - with the exception of elections - are passed
pursuant to Section 133 of the German Stock Corporation
Act (AktG) and Article 16 Paragraph 1 of the Articles of Incor-
poration with a simple majority of the votes cast and if
required with a simple majority of the share capital represented.
Pursuant to Section 179 Subsection 2 of the German Stock
Corporation Act (AktG), any amendment to the purpose of the
Company requires a 75% majority of the share capital repre-
sented at the Shareholders' Meeting; no use is made in the Arti-
cles of Incorporation of the possibility to stipulate a larger
majority of the share capital. Amendments to the Articles of
Incorporation that only affect the wording can be decided
upon by the Supervisory Board in accordance with Article 7
Paragraph 2 of the Articles of Incorporation. Pursuant to
Section 181 Subsection 3 of the German Stock Corporation
Act (AktG), amendments to the Articles of Incorporation
take effect upon being entered in the Commercial Register.
57
Long-term variable remuneration
653
56
57
56
61
60
61
60
78
44
68
39
105
3,009
1,693
B | Combined Management Report | Remuneration Report
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2012
Dividend equivalent PPSP 2011
Dividend equivalent PPSP 2010
Payment of PPSP 2010
Payment of PPSP 2009
57
39
41
Exercise of stock options 2004
Payments made
The caps possible to ensure the total maximum amount shown
in the table of benefits granted in the year 2014 are imple-
mented with the payout of PPSP 2014, which constitutes the
last payment to be made of the components of remuneration
granted in 2014. For the year 2014, therefore, the possible cap
would take place in 2018, the year that PPSP 2014 is paid out.
- the retirement pension expense in 2014 (service costs in 2014).
- the dividend equivalent of the current PPSP
(2011, 2012, 2013 and 2014) paid in 2014, and
- the half of the share-based annual bonus paid in 2014 for 2012,
- the amount of the long-term share-based remuneration
(PPSP 2010) paid in 2014,
- the half of the annual bonus payable in 2015 for 2014
at the value as of the end of the reporting period,
- the taxable non-cash benefits and other fringe benefits
in 2014,
- the base salary in 2014,
The total of "payments made" for financial year 2014
is calculated from:
B | Combined Management Report | Remuneration Report
Long-term variable remuneration
126
4,234
2,294
2,100
Total remuneration
4,462
220
3,203
223
Retirement pension expense (service costs)
1,442
1,301
Total
5,533
564
637
584
Jan. 1 Dec. 31,
Jan. 1 Dec. 31,
Mercedes-Benz Vans
HR & Labor Relations Director and
Wilfried Porth
5,563
3,449
Dr. Christine Hohmann-Dennhardt
Integrity & Legal
14,422
13,674
2013
In thousands of euros
4,241
380
2,243
401
827
Retirement pension expense (service costs)
11,424
11,515
Total
2,195
Exercise of stock options 2004
41
Total remuneration
In thousands of euros
2014
Jan. 1 Dec. 31,
2014
556
Deferral (50% of annual bonus, medium-term)
652
608
633
590
Annual variable remuneration (50% of annual bonus, short-term)
851
808
852
Jan. 1 Dec. 31,
2013
799
93
93
94
84
Taxable non-cash benefits and other fringe benefits
758
715
758
715
Base salary
Total
544
Andreas Renschler¹
Jan. 1 Dec. 31,
2013
Jan. 1 Dec. 31, Jan. 1 Dec. 31,
2013
Mercedes-Benz Cars Development
Group Research &
Prof. Dr. Thomas Weber
Finance & Controlling and
Daimler Financial Services
Bodo Uebber
In thousands of euros
3,566
3,159
742
5,862
Total remuneration
2,063
314
272
30
423
Retirement pension expense (service costs)
1,569
642
4,173
Total
2014
Jan. 1 Dec. 31,
2013
Jan. 1 Dec. 31,
2014
Base salary
707
791
Deferral (50% of annual bonus, medium-term)
652
626
775
736
Annual variable remuneration (50% of annual bonus, short-term)
879
925
298
1,233
Total
121
210
332
112
Taxable non-cash benefits and other fringe benefits
758
715
901
866
978
Exercise of stock options 2004
39
57
590
47
623
Annual variable remuneration (50% of annual bonus, short-term)
1,189
1,318
70
1,266
431
603
652
8
Taxable non-cash benefits and other fringe benefits
Total
758
715
62
755
Base salary
Jan. 1 Dec. 31,
2014
Jan. 1 Dec. 31,
2013
2014
Jan. 1 Dec. 31,
511
Hubertus Troska
Greater China
Deferral (50% of annual bonus, medium-term)
595
56
25
25
32
18
43
1,231
837
Dividend equivalent PPSP 2014
63
672
67
117
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2012
Dividend equivalent PPSP 2011
Dividend equivalent PPSP 2010
Payment of PPSP 2010
2,284
Payment of PPSP 2009
Long-term variable remuneration
27
49
Dividend equivalent PPSP 2014
Company-specific risks and opportunities
In general, there is also the possibility that the overall market,
or regional conditions, for the automotive industry will develop
better than assumed in the internal forecasts upon which the
Group's target planning is based. This includes positive devia-
tions from planning premises - for example, if planned sales
support measures do not have to be fully utilized. Other oppor-
tunities can be exploited through the creation of additional
production capacities at the divisions. The existing market
opportunities for the divisions of the Daimler Group can only
be utilized if production activities are organized accordingly
and the gaps between demand and supply can be recognized
and covered in time. This could require increases in production
volumes. The Mercedes-Benz Cars division sees a market
opportunity for sales of additional vehicles in various model
series. The possibility of higher unit sales of vehicles exists
in the Daimler Trucks segment as a result of improved market
developments or changed conditions in the market. Additional
market opportunities have also been identified by Daimler Buses.
The measures that could be taken by the Daimler Group to
utilize this potential opportunity include a combination of local
sales and marketing activities and central strategic product
and capacity planning.
Information technology risks
Production and technology risks
and political framework
Medium
High
and political framework
Low
135
Personnel risks
The conflict between Russia and Ukraine has led to an
additional risk for the development of the world economy
since 2014. This risk has increased macroeconomic uncertainty
and had a negative effect on the business climate and con-
sumer confidence. An escalation of the crisis and the resulting
tightening of sanctions and counter-sanctions would have a
massive negative impact on the economy in Europe especially,
whereby the exact scope of this effect is very difficult to pre-
dict. It is conceivable that such an escalation would negatively
impact oil prices as well through a higher risk premium, and
it would also dampen the mood, and demand, in markets that
depend on oil. Furthermore, the consequences of a possible
debt default by Russia or of failure to service due debts cannot
be predicted.
Moreover, a too-rapid rise in interest rates in the United States
would not only negatively affect the US economy but also lead
to a renewed sell-off on stock markets in particularly sensitive
emerging markets. The tapering of bond purchases by the
US Federal Reserve already triggered unrest in the financial
markets in 2014. Long-term interest rates increased and
there were capital outflows and currency devaluations in the
emerging markets. In some countries, this also resulted
in additional inflationary pressure, which, in combination with
a more restrictive interest policy, reduced the potential for
growth. If a possible decrease of liquidity in the US in 2015 leads
to more substantial effects, this could significantly reduce
GDP growth through the chain of cause and effect described
above, especially in the emerging markets. Increased volatility
in the financial markets would also dampen investor and
consumer confidence, with an impact on the global economy.
In addition, tensions resulting from exchange rate volatility
and possible manipulations carried out to preserve global
competitiveness could lead to an increase in protectionist
measures and a type of "devaluation race." This would put
a substantial strain on world trade and threaten future growth.
General market risks and opportunities. The risks and
opportunities for the development of automotive markets
are strongly affected by the situation of the global economy
as described above.
The assessment of market risks and opportunities is
connected with assumptions and forecasts about the overall
development of markets in the various regions. The potential
effects of the risks on the development of the Daimler Group's
unit sales are included in risk scenarios. The danger of wors-
ening market developments or changed market conditions,
especially due to the macroeconomic environment and political
or economic uncertainties, generally exists for all divisions
of the Daimler Group. The only differences between the divisions
have to do with their varying regional focus of activities.
Markets and competitors are continuously analyzed and moni-
tored; if necessary, specific marketing and sale programs
are implemented. Due to the competitive pressure in the auto-
motive markets, Daimler regularly adapts production and
cost structures to the changing conditions. Clear strategies
have been formulated for all divisions. Each division consis-
tently pursues the goal of growing profitably and increasing
its efficiency.
Some dealers and vehicle importers are in a difficult financial
situation. As a result, supporting actions may become neces-
sary, whereby such actions would negatively impact the profit-
ability, cash flows and financial position of the automotive
segments. For this reason, the financial situations of strategically
relevant dealerships are continually monitored.
In addition to these issues affecting all segments, segment-
specific risks also exist. In the Mercedes-Benz Cars and
Daimler Trucks divisions, these include increasing competi-
tive and price pressure. A change within the framework
of a product's lifecycle bears the risk of a negative volume effect
in relation to the anticipated sales volumes. In addition,
aggressive pricing policies, the introduction of new products
by competitors and price pressure related to the aftersales
business could make it impossible to enforce targeted prices.
To a lesser extent, the same also applies to sales volumes at
the divisions Mercedes-Benz Vans and Daimler Buses. Depending
on the magnitude of regional unit sales, various measures
are taken to support weaker markets. They include the use of
new sales channels, actions designed to strengthen brand
awareness and brand loyalty, as well as sales and marketing
campaigns. These measures are also applied to safeguard
business in the area of aftersales. Daimler also operates various
programs to boost sales through the use of financial incen-
tives. Corresponding measures taken to support the segments'
unit sales would adversely affect the projected earnings.
136
B❘ Combined Management Report | Risk and Opportunity Report
Further risks and opportunities at Mercedes-Benz Cars relate
to the development of the used-car market. As part of
the established residual-value management process, certain
assumptions are made on the local and corporate levels
regarding the expected level of prices, on which basis the cars
returned in the leasing business are valued. If general market
developments lead to a negative or positive deviation from the
assumptions, there is a risk of lower residual values or an
opportunity of higher residual values of used cars. Depending
on the region and the current market situation, the measures
taken generally include continuous market monitoring as well
as, if required, price-setting strategies or sales promotions
designed to regulate vehicle inventories. The quality of market
forecasts is verified by periodic comparisons of internal
and external sources. If necessary, the set residual values are
adjusted and refined with regard to methods, processes
and systems for determining such values.
The conflict in Syria, which has heated up as a result of the
offensive of the "Islamic State" (IS), is threatening the stability
of the region, especially in neighboring Iraq. Although most
Iraqi oil production facilities are located in regions not controlled
by IS, concerns still remain that Iraqi oil deliveries could be
interrupted or that the armed conflict in Syria could spill over
into other areas. An abrupt increase in oil prices brought about
by an attack on oil refineries could endanger the recovery in
fragile European economies or in the United States, and could
also negatively affect emerging markets that depend on oil
imports. The effect on the world's stock markets would also
be noticeable, and this could undermine investment and con-
sumer confidence on a broad scale. However, if oil prices remain
on such a low level for a long time, this could present a
significant growth opportunity for the world economy due
to purchasing power.
Low
Low
Medium
High
Production and technology opportunities
The following section deals with the financial risks and
opportunities of the Daimler Group. Risks and opportunities
can have a negative or positive effect, respectively, on the
profitability, cash flows and financial position of the Daimler
Group. The probability of occurrence and possible impact
of these risks and opportunities is presented in table 7 B.57.
Financial risks and opportunities
141
The development of production capacities and the acquisition
of equity interests in the Chinese market are particularly exposed
to risks due to the uncertain nature of market development
in China. Efficient production processes are established to deal
with and reduce quality risks in the Chinese market. Further-
more, dependencies between contracting parties and possible
changes to political and legal conditions in China must be
included in the local decision-making processes. In view of the
tense situation in Russia and Ukraine, the Group is also paying
closer attention to affected equity interests and joint ventures
in those countries.
Daimler generally bears a proportionate share of the risks and
opportunities of its equity interests. The possible risks include
negative financial developments and delays in the set-up of
development and production structures in equity interests and
joint ventures, all of which can negatively impact the achieve-
ment of growth targets in the affected segments. Risks exist in
connection with equity interests in the segments Mercedes-
Benz Cars, Daimler Trucks and Mercedes-Benz Vans. The cases
involved are subject to a continuous monitoring process so
that an equity interest can be promptly supported if required
and its profitability can be ensured. The recoverable value
of investments is also continually monitored.
Risks and opportunities related to equity interests and
joint ventures. Cooperation with partners in associated
companies, joint ventures, joint operations and other types
of partnerships is of central importance for Daimler. Along
with ensuring better access to growth markets and new tech-
nologies, equity interests and joint ventures help us exploit
synergies and improve cost structures and thus enable us to
successfully respond to competitive pressures in the auto-
motive industry.
Competition for highly qualified staff and management is still
very intense in the industry and the regions in which we operate.
The future success of the Daimler Group also depends on the
magnitude to which we succeed over the long term in recruiting,
integrating and retaining executives, engineers and other spe-
cialists. The human resources instruments take such personnel
risks into consideration, while contributing toward the recruit-
ment and retention of staff with high potential and expertise and
ensuring transparency with regard to the resources of the
Daimler Group. One focus of human resources management
is the targeted personnel development and further training
of the workforce. Employees benefit for example from the range
of courses offered by the Daimler Corporate Academy and
from the transparency created by LEAD, the uniform worldwide
performance and potential management system. Because of
demographic developments, the Group has to cope with changes
relating to an aging workforce and has to secure a sufficient
number of qualified young persons with the potential to become
the next generation of highly skilled specialists and execu-
tives. We address this issue by taking appropriate measures
in the area of generation management. There is no segment-
specific assessment of the human resources risk because the
described risks are not related to any specific business
segment but are valid for all segments. If this risk materializes,
depending on the size of the personnel shortage, an impact
on the Group's activities and thus also on the earnings of the
Daimler Group is to be expected. Due to upcoming collective
bargaining negotiations, the category of personnel risks displays
a higher possible impact and probability of occurrence as
compared to the prior year.
Furthermore, work groups create processes and instruments
to produce new business ideas and to establish interdepart-
mental cooperation. In this context, an online community exists
in the area of business innovation to which suggestions for
discussions can be submitted, which all employees can assess
and develop further.
To support this process, the Daimler Group has established an
ideas management system through which employees can
submit ideas and suggestions for improvements. The processing
of the information received by this system and the integration
of ideas in an assessment process carried out by experts and
persons in charge of the respective processes is supported by
the established IT system "idee.com." This is intended to ensure
the systematic and sustained promotion of employees' ideas
and suggestions for improvement.
Personnel risks and opportunities. Daimler's success is
highly dependent on employees and their expertise. With their
ideas and suggestions, they are involved in their respective
activities and working processes and thus contribute consider-
ably every day to improvements and innovations.
Information technology risks and opportunities. Information
technology plays a crucial role for the Daimler Group's busi-
ness processes. Storing and exchanging data in a timely, com-
plete and correct manner is of key importance for a global
group such as Daimler. Appropriately secure IT systems and
a reliable IT infrastructure must be used in order to protect
information. Risks that could result in the interruption of busi-
ness processes due to the failure of IT systems or which
could cause the loss or corruption of data are therefore identi-
fied and evaluated over the entire lifecycles of applications
and IT systems. Daimler has defined suitable measures for risk
avoidance and limitation of damage. These measures are
continually adapted to changing circumstances. For example,
the Group minimizes potential interruptions of operating
routines in the data centers by means of mirrored data sets,
decentralized data storage, outsourced archiving, high-
availability computers and appropriate emergency plans. An IT
security operations center coordinates potential danger
from cybercrime and hacker attacks. Daimler utilizes various
preventive and corrective measures in order to meet the
growing demands placed on the confidentiality, integrity and
availability of data. Despite all the precautionary measures
taken, Daimler cannot completely rule out the possibility that
IT disturbances will arise and have a negative impact on the
Group's business processes. The impact and probability of occur-
rence of IT risks remain unchanged compared to the prior year.
B❘ Combined Management Report | Risk and Opportunity Report
140
Opportunities related to equity interests and joint ventures Low
Personnel opportunities
High
Medium
Low
Risks related to equity interests and joint ventures
Information technology opportunities
As the target achievement of the Daimler Financial Services
division is closely connected with the development of business
in the automotive divisions, the existing volume risks and
opportunities are also reflected in the Daimler Financial
Services segment. In this context, Daimler Financial Services
participates in marketing expenses, especially for advertising
campaigns.
The general market-risk situation remains unchanged
compared to the prior year in terms of impact and probability
of occurrence. The assessment of the impact of opportunities
has been slightly lowered as compared to the previous year,
because current business activities have already exploited the
opportunities identified in the prior year.
Risks and opportunities relating to the leasing and sales
financing business. In connection with the sale of vehicles,
Daimler also offers its customers a wide range of financing
possibilities - primarily leasing and financing the Group's prod-
ucts. The resulting risks for the Daimler Financial Services
segment are mainly due to borrowers' worsening creditworthi-
ness, so that receivables might not be recoverable in whole
or in part due to customers' insolvency (default risk or credit
risk). Daimler counteracts credit risks by means of appropriate
market analyses, creditworthiness checks on the basis of
standardized scoring and rating methods, and the collateraliza-
tion of receivables. Other risks connected with the leasing
and sales-financing business involve the possibility of increased
refinancing costs due to potential changes in interest rates.
An adjustment of credit conditions for customers in the leasing
and sales-financing business due to higher refinancing costs
could reduce the new business and contract volume of Daimler
Financial Services, also reducing the unit sales of the auto-
motive divisions. Risks and opportunities could also arise from
a lack of matching maturities with the refinancing. The
risk of mismatching maturities is minimized by coordinating
the refinancing with the periods of financing agreements,
from the perspective of interest rates as well as liquidity. Any
remaining risks of changes in interest rates are managed
with the application of derivative financial instruments. Further
information on credit risks and the Group's risk-minimizing
actions is provided in Note 32 of the Notes to the Conso-
lidated Financial Statements. With regard to the leasing
business, the automotive divisions also have a residual-value
risk resulting from the risks associated with the development
of used-vehicle prices.
Procurement market risks and opportunities. Procurement
market risks arise for the automotive divisions in particular
from fluctuations in prices of raw materials. There are also minor
risks that result from dependency on certain materials and
capacity bottlenecks caused by supplier delivery failures.
In general, the possible impact of risks related to the procure-
ment market, especially resulting from increases in raw-
material prices, has changed from “medium” to “high." As was
the case in the previous year, only small opportunities are
anticipated in the raw-material markets.
139
Company-specific risks and opportunities
The following section deals with the company-specific risks
and opportunities of the Daimler Group. A quantification
of these risks and opportunities is shown in table 7 B.56.
Production and technology risks and opportunities. Key
success factors for achieving the desired level of prices for
the products of the Daimler Group, and hence for the achieve-
ment of the corporate goals, are the brand image, design and
quality of the products - and thus their acceptance by custom-
ers - as well as technical features based on innovative research
and development. Convincing solutions, which for example
promote accident-free driving or further improve our vehicles'
fuel consumption and emissions (e.g. diesel-hybrid or electric
vehicles), are of key importance for safe and sustainable mobility.
Due to growing technical complexity, continually rising require-
ments in terms of emissions, fuel consumption and safety,
and the Daimler Group's goal of meeting and steadily raising its
quality standards, product manufacturing in the various auto-
motive divisions is subject to production and technology risks.
The demanding combination of requirements, complexity
and quality can lead to higher advance expenditure and thus
also to an adverse impact on the automotive segment's
profitability. One of the associated risks is that development
expenditure cannot later flow directly into the end product
if the solution is not ideally usable for the customer or proves
not to be marketable.
In addition, the launch of new products is generally connected
with high investment and can lead to a short-term decline in
production volume during the initial production phase. In order
to achieve a very high level of quality, which is one of the key
factors for a customer's decision to buy a product of the Daimler
Group, it is necessary to make investments in new products
and technologies that sometimes exceed the originally planned
scope. This cost overrun would then reduce the anticipated
earnings from the launch of a new model series or product gen-
eration. These automotive segments are affected, which are
currently launching new products or that are planning to do so, in
some cases in conformance with specific regional conditions.
Impact
Opportunity category
Impact
of occurrence
Risk category
Probability
B.56
Innovations and technology opportunities from the advanced
and future-oriented design of our product range are incorporated
into the strategic product planning of the automotive divisions.
Within the framework of a continuous process, it is constantly
reviewed whether the production level can be increased
by means of shift models, the worldwide production network,
investment projects or more flexible production equipment.
The opportunities reported on in the previous year and the
measures planned in that context for the optimization of
production capacities have been realized and continue to have
a positive effect in the area of production.
Production and technology risks continue to have a low proba-
bility of occurrence due to preventive measures. However,
because of the continually high number of new product launches,
the potential impact of such risks remains on the same level.
Warranty and goodwill claims can arise when the quality
of the products does not meet customers' expectations, when
a regulation is not fully complied with, or when support is
not provided in the required form in connection with product
problems and product care. The Daimler Group works contin-
ually and intensively to maintain product quality at a very high
level, even given the growing product complexity, in order
to avoid the danger of making corrections to end products and
to supply customers with the best possible products. Further-
more, processes are implemented at the Daimler Group to regu-
larly obtain customers' opinions on the support provided so
that our service and customer satisfaction can be continuously
improved.
Product components also have to be available at the right time.
Bottlenecks could also be caused by interruptions in the
supply chain. In order to avoid bottleneck situations, priority
is given to the regular maintenance of production equipment
and to avoid capacity bottlenecks by means of foresighted plan-
ning. In addition, supply chains and the availability and quality
of products are continuously monitored within the context of
managing the entire value chain. Risks in this area are to be
avoided through the continuous modernization of production
equipment and facilities.
In principle, there is also a danger that due to problems with
or the failure of production equipment or a production
plant, it might not be possible to maintain the planned level
of production, and that would consequently generate costs.
Such risks mainly exist for the Mercedes-Benz Cars division.
As a precaution, spare parts are held available for the
production plants that are at risk.
144
Daimler has increased the local value added in order to adapt
to the requirements of industrial policy and has thus taken
appropriate action in good time. The increasing proximity of the
production sites to local markets and consideration of, among
other things, logistical and other advantages result in opportu-
nities in terms of utilizing those markets' potential.
In principle, the Group's operating and financial risk exposures
underlying the financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. currency
exposures), risks and opportunities exist equally, while with
the asymmetrical risk and opportunity profiles (e.g. credit and
country exposures), the risks outweigh the opportunities.
Furthermore, the danger exists that individual countries will
attempt to defend their competitiveness in the world's markets
by resorting to interventionist and protectionist actions.
Particularly in China and the markets of developing countries
and emerging economies, we are increasingly faced with
tendencies to limit imports or at least reduce the rate of growth
of imports, and to attract direct foreign investment by means
of appropriate industrial policies. Furthermore, a tendency
of tightening the regulatory environment in general and
in particular with regard to competition law is to be observed.
Daimler continually monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in the
process of product development. The biggest challenge in the
coming years will be to offer an appropriate range of drive
systems and the right product portfolio in each market, while
fulfilling customers' wishes, internal financial targets and
statutory requirements. With an optimal product portfolio and
market-launch strategy, competitive advantages may also arise.
During the reporting year, raw material prices developed
in a varied manner and were marked by a high level of volatil-
ity. Due to almost completely unchanged macroeconomic
conditions, we expect to see price fluctuations with uncertain
and uneven trends in the near future. On the one hand, raw-
material markets are strongly impacted by political crises and
uncertainties - combined with possible supply bottlenecks -
as well as by a volatile demand for specific raw materials. On the
other hand, this is offset by the notably less dynamic growth
of the Chinese industry and the renewed slightly below-average
growth of the world economy to date. Vehicle manufacturers
are generally limited in their ability to pass on the higher costs
of commodities and other materials in higher prices for their
products because of the strong competitive pressure in the inter-
national automotive markets. A drastic increase in raw
material prices would at least temporarily result in a consider-
able reduction in economic growth.
137
Daimler continues to counteract procurement risks by
means of targeted commodity and supplier risk management.
The Group attempts to reduce its dependency on individual
materials in the context of commodity management by making
appropriate technological progress, for example. Daimler
protects itself against the volatility of raw material prices by
entering into long-term supply agreements, which make
short-term risks for material supplies and the effects of price
fluctuations more calculable. Furthermore, the Group makes
limited and targeted use of derivative price-hedging instruments
for certain metals in order to reduce the impact of price
fluctuations.
Supplier risk management aims to identify suppliers'
potential financial difficulties at an early stage and to initiate
suitable countermeasures. Even though the crisis of recent
years is over, the situation of some of the suppliers remains
difficult due to the tough competitive pressure. This has
necessitated individual or joint support actions by vehicle manu-
facturers to ensure their production and sales. In the context
of supplier risk management, regular reporting dates are set for
suppliers for which we have received early warning signals
and made a corresponding internal assessment. On these dates,
the suppliers report key performance indicators to Daimler
and decisions are made concerning any required support actions.
Risks and opportunities related to the legal and political
framework. The risks and opportunities from the legal and
political framework also have a considerable impact on Daimler's
future business success. Regulations concerning vehicles'
emissions, fuel consumption and safety play a particularly
important role. Complying with these varied and often
diverging regulations all over the world requires strenuous
efforts on the part of the automotive industry. We expect
to expend an even larger proportion of the research and devel-
opment budget in the future to ensure the fulfillment of these
regulations. The probability of the occurrence of a risk increased
from low in the prior year to medium in the reporting year;
the assessment of possible impact remains unchanged at high.
Many countries have already implemented stricter
regulations to reduce vehicles' emissions and fuel
consumption, or are now doing so.
The Mercedes-Benz Cars segment faces risks in China in
particular, as the Chinese authorities have defined fleet average
fuel consumption as of 2015 of 6.9 liters per 100 kilometers
(approximately 160 g CO2/km) as the industry's target for new
cars. The legislative process for addressing the period 2016-
2020 has not yet been concluded. Failure to meet the fleet target
could prevent new vehicles from being registered in the
country. For the year 2020, the current five-year plan stipulates
a new, very demanding target of 5.01/100 km (approximately
117 g CO2/km); discussions on the final version for the target are
now being conducted as part of the final phase of the legis-
lative process.
Regulations concerning the CO2 emissions of new cars are
also quite demanding in the European Union. For 2015,
all new cars in Europe will have to meet a fleet CO2 average
of 129 g CO2/km following a transition period. The relevant
limit for Daimler depends on the portfolio of cars we sell in the
European Union and is derived from vehicle weight. For 2020,
new cars in Europe will have to meet a fleet CO2 average of
95 g CO2/km. The new regulation will apply to 100% of the fleet
in 2021 following a one-year transition period. Daimler will have
to pay penalties if it exceeds its limits. The planned elimina-
tion of the NEDC (New European Driving Cycle) and its replace-
ment with the WLTP (Worldwide harmonized Light vehicles
Test Procedures) is also creating uncertainty, as there has been
no final decision on introduction dates, the conditions asso-
ciated with the new test cycle, or the continuation of the fleet
targets. According to present knowledge, the WLTP will
make it difficult to achieve CO2 targets beginning in 2020.
In Germany are considerations to change the taxation
of company cars in order to make it dependent on vehicle
emissions. This could cause fleet customers to switch
over to smaller and more fuel-efficient cars.
Legislation in the United States on greenhouse gases and fuel
consumption stipulates that new car fleets in the United States
may only emit an average of 163 grams of CO2 per mile as of
2025 (approximately 100 grams CO2 per kilometer). These new
regulations will require an average annual reduction in CO2
emissions as of 2017 amounting to 5% for cars and 3.5% in the
beginning for SUVs and pickups (this rather lower rate applies
until 2022). This will impact the German premium manufacturers
and thus also the Mercedes-Benz Cars division harder than
the US manufacturers, for example. As a result of strong demand
for large, powerful engines in the United States as well as
Canada, financial penalties cannot be ruled out.
Similar legislation exists or is being prepared in many other
countries, for example in Japan, South Korea, India, Canada,
Switzerland, Mexico, Saudi Arabia, Brazil and Australia.
138
B❘ Combined Management Report | Risk and Opportunity Report
Daimler gives these targets due consideration in its product
planning. The increasingly ambitious targets require significant
shares of plug-in hybrids or cars with other types of electric
drive. The market success of these drive systems is greatly influ-
enced by regional market conditions, for example the battery-
charging infrastructure and state support. But as market condi-
tions cannot be predicted with certainty, a residual risk exists.
Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive a type approval if their air-conditioning
units are filled with a refrigerant that meets certain criteria with
regard to climate friendliness. The directive calls for an intro-
ductory period until December 31, 2016 for such refrigerants
to be used in all new vehicles. Mercedes-Benz Cars had origi-
nally planned to use the refrigerant R1234yf in its new vehicle
models as early as possible and therefore did not intend to
make use of this transitional period. However, due to the safety
risks identified by Mercedes-Benz Cars in the summer of 2012,
Daimler is not using the new refrigerant R1234yf in its vehicles
at the moment and has started with the development of safe
alternatives. At present, the Group does not assume that this
will result in any significant effects on its profitability, cash
flows or financial position.
Strict regulations for the reduction of vehicles' emissions
and fuel consumption also create potential risks for the
Daimler Trucks division. For example, legislation was passed
in Japan in 2006 and in the United States in 2011 for the
reduction of greenhouse-gas emissions and fuel consumption
by heavy-duty commercial vehicles. In China, legislation has
been drafted which is likely to affect exports to that country and
require additional expenditure as of 2015. The European
Commission is currently working on methods for measuring
the CO2 emissions of heavy-duty commercial vehicles that
will probably have to be applied as of 2017. We have to assume
that the statutory limits will be very difficult to meet in some
countries. Very demanding regulations for CO2 emissions are also
planned, or else have been approved for light commercial
vehicles. This will present a long-term challenge for Mercedes-
Benz Vans especially, because the division primarily serves
the heavy segment of N1 vehicles. The European fleet of N1
vehicles may not emit an average of more than 175 g CO2/km
as of 2017 and not more than 147 g CO2/km as of 2020;
penalty payments may otherwise be imposed.
Daimler currently does not anticipate any additional risks
though worldwide statutory safety regulations due
to the Group's long-standing strong focus on vehicle safety.
In addition to emission, consumption and safety regulations,
traffic-policy restrictions for the reduction of traffic jams,
noise and pollution are becoming increasingly important in cities
and urban areas of the European Union and other regions
of the world. Drastic measures are increasingly being taken,
such as general vehicle-registration restrictions like those
in Beijing, Guangzhou or Shanghai. These can have a dampening
effect on the development of unit sales, especially in the growth
markets. Pressure to reduce personal transport is also being
applied in European cities through increasing measures, such as
restrictions on vehicles in inner cities, congestion charges and
other types of road-use fees. This stimulates demand for mobility
services including car sharing services. In order to utilize
the resulting opportunities, Daimler is present in the market
with the provision of mobility services (e.g. car2go, moovel).
The position of the Daimler Group in key foreign markets could
also be affected by an increase in bilateral free-trade agree-
ments, at least to the extent to which the European Union fails
to reach similar agreements with the markets in question.
Daimler is generally exposed to risks and opportunities from
changes in market-prices such as currency exchange rates,
interest rates, commodity prices and share prices. Market-price
changes can have a negative or positive influence on the
Group's profitability, cash flows and financial position. Daimler
manages and monitors market-price risks and opportunities
primarily in the context of its operational business and financing
activities, and applies derivative financial instruments for
hedging purposes where needed, whereby both market-price
risks and opportunities are limited.
Medium
Exchange rate risks and opportunities. The Daimler Group's
global orientation implies that its business operations and
financial transactions are connected with risks and opportunities
of foreign exchange rates against the euro, especially for
the US dollar and other currencies such as currencies of growth
markets. An exchange rate risk or opportunity arises in busi-
ness operations primarily when revenue is generated in a
currency different from that of the related costs (transaction
risk). This applies in particular to the Mercedes-Benz Cars
division, as a major portion of its revenue is generated in foreign
currencies, while most of its production costs are incurred
in euros. The Daimler Trucks division is also exposed to such
transaction risks, but to a lesser degree because of its world-
wide production network. Currency risk exposures are succes-
sively hedged against with suitable financial instruments
(predominantly currency-forwards and options) in accordance
with exchange rate expectations, which are constantly reviewed,
whereby both risks and opportunities are limited. Exchange
rate risks and opportunities also exist in connection with the
translation into euros of the net assets, revenues and
expenses of the companies of the Group outside the euro zone
(translation risk); these risks are not generally hedged.
In addition, the Group is exposed to credit and country-related
risks. As part of the risk management process, Daimler
regularly assesses these risks by considering changes in key
economic indicators and market information. Pension plan
assets to cover retirement and healthcare benefits (market
sensitive investments including equities and interest-bearing
securities) are not included in the following analysis.
Low
Low
General market opportunities
Opportunities relating to leasing
and sales financing
Medium
Low
Procurement market risks
Medium
High
Procurement market opportunities
Low
Risks relating to the legal
Risks and opportunities relating to pension plans. Daimler
has pension benefit obligations, and, to a lesser degree,
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pensions obligations
less plan assets constitutes the balance total or funded status
for these employee benefit plans. The valuation of the pension
obligations and the calculation of net pension expense are based
on certain assumptions. Even small changes in these assump-
tions, such as a change in the discount rate, could have a negative
or positive effect on the funded status in the current financial
year or could lead to changes in the periodic net pension expense
in the following financial year. The market value of plan assets
is determined to a large degree by developments in the capital
markets. Unfavorable or favorable developments, especially
relating to equity prices and fixed-interest securities, could
reduce or increase the value of plan assets. The large majority
of the fixed-interest securities in the plan assets have an
investment grade rating; a large portion of these are government
bonds with very good ratings. Further information on the
pension plans and their risks is provided in Note 22 of the
Notes to the Consolidated Financial Statements.
in
Further information on financial risks, risk-limiting measures
and the management of these risks is provided in ①Note 32
of the Notes to the Consolidated Financial Statements.
Information on the Group's financial instruments is provided
Note 31.
Country risks. Daimler is exposed to country risks that primarily
result from cross-border financing for Group companies or
customers, as well as from investments in subsidiaries and joint
ventures. Country risks also arise from cross-border cash
deposits at financial institutions. The Group addresses these
risks by setting country limits (e.g. for cross-border financing
of customers and for hard-currency portfolios from financial
services companies) and through investment-protection insur-
ance against political risks in high-risk countries. Daimler
also has an internal rating system that divides all countries
in which it operates into risk categories.
Credit risks. The Group is exposed to credit risks which result
primarily from its financial services activities and from the
operations of its vehicle business. Credit risks also arise from
the Group's liquid assets. The following statements pertain
to risks arising from the Group's liquid assets; risks related to
leasing and sales financing are addressed on page 137.
Should defaults occur, this would negatively affect the Group's
financial position, cash flows and profitability. In recent years,
the limit methodology for exposures with financial institutions
has been continually further developed in order to counteract
the diminished creditworthiness of the banking sector since the
financial crisis. In connection with investment decisions,
priority is placed on the borrower's very high creditworthiness
and on balanced risk diversification. Most liquid assets
are held in investments with an external rating of A or better.
Liquidity risks. Because of the current capital resources and
the existing funding facilities, we do not present the liquidity
risk in table 7 B.57.
Commodity price risks and opportunities. As already
described in the section on procurement market risks, the
Group's business operations are exposed to changes in the
prices of consignments and raw materials. The Group addresses
these procurement risks by means of concerted commodity
and supplier risk management. To a minor degree, derivative
financial instruments are used to reduce the Group's market
price risks related to the purchase of certain metals.
High
Equity price risks and opportunities. As of December 31,
2014, the only shares that Daimler holds are shares that
are classified as long-term investments (especially Nissan and
Renault) or that are included in the consolidated financial
statements using the equity method (primarily BAIC Motor and
Kamaz). The Group does not include these investments in
a market price risk analysis. For more information on equity
risks and opportunities, please see the section "Risks and
opportunities related to equity interests and joint ventures."
Medium
Impact
Although the final result of any such litigation may influence
the Group's earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely
to have a sustained effect on the Group's cash flows, financial
position or profitability. Further information on legal proceed-
ings is provided in Note 29 of the Notes to the Consolidated
Financial Statements.
Adverse decisions in one or more of these proceedings
could require us to pay substantial compensatory and punitive
damages or undertake service actions, recall campaigns
or other costly actions. Some of these proceedings may have
an impact on the Group's reputation. It is possible, as these
proceedings are connected with a large degree of uncertainty,
that after the final resolution of litigation, some of the provisions
we have recognized for legal proceedings could prove to be
insufficient. As a result, substantial additional expenditures
may arise. This also applies to legal proceedings for which
the Group has seen no requirement to recognize a provision.
Legal risks. Various legal proceedings, claims and govern-
ment investigations (legal proceedings) are pending against
Daimler AG and its subsidiaries on a wide range of topics,
including vehicle safety, emissions, fuel economy, financial
services, dealer, supplier and other contractual relationships,
intellectual property rights, warranty claims, environmental
matters, legal proceedings relating to competition law and share-
holder litigation. Product-related litigation involves claims
alleging faults in vehicles, some of which have been made as
class actions.
Risks from guarantees. The issue of guarantees results
in liability risks for the Group. For example, Daimler holds an
equity interest in the system for recording and charging
tolls for the use of highways in Germany by commercial vehicles.
The operation of the electronic toll-collection system is the
responsibility of the operator company, Toll Collect GmbH, in
which Daimler holds a 45% stake and which is included in
the consolidated financial statements using the equity method
of accounting. In addition to Daimler's membership of the Toll
Collect consortium and its equity interest in Toll Collect GmbH,
risks also arise from guarantees that Daimler has assumed
with the other partners in the Toll Collect consortium (Deutsche
Telekom AG and Cofiroute S.A.) supporting obligations of
Toll Collect GmbH toward the Federal Republic of Germany
in connection with the toll system and a call option of the
Federal Republic of Germany. Claims could be made under those
guarantees if toll revenue is lost for technical reasons, if
certain contractually defined performance parameters are not
fulfilled, if additional claims are made by the Federal Republic
of Germany, if the final operating permit is not granted, if Toll
Collect GmbH fails to meet contractual obligations, if it fails to
have the required equipment available, or if the Federal Republic
of Germany takes over Toll Collect GmbH. The maximum loss
risk for the Group from these risks can be substantial. Additional
information is provided in Note 29 (Legal proceedings)
and Note 30 (Financial guarantees, contingent liabilities
and other financial commitments) of the Notes to the
Consolidated Financial Statements.
The Group remains exposed to risks from guarantees and legal
risks. Provisions are recognized for those risks if and to the
extent that they are likely to be utilized and the amounts of the
obligations can be reasonably estimated.
Risks from guarantees and legal risks
Opportunities relating to the legal
Risks and opportunities from changes in credit ratings.
Daimler's creditworthiness is assessed by the rating agencies
Standard & Poor's Rating Services, Moody's Investors Service,
Fitch Ratings and DBRS. There are risks and opportunities in con-
nection with potential downgrades or upgrades to credit rat-
ings by these rating agencies. Downgrades could have a negative
impact on the Group's financing if such a downgrade leads
to an increase in the costs for external financing or otherwise
restrict the Group's ability to obtain financing. A credit rating
downgrade could also damage the company's reputation or
discourage investment in Daimler AG. A risk to the credit rating
of the Daimler Group could also arise if the earnings and cash
flows anticipated from the Group's growth could not be realized.
Credit rating upgrades could lead to lower borrowing costs
for the Group and also facilitate its access to financing sources
on the money and capital markets. If the positive development
of the Group should continue and its cash flow and profitability
should also develop positively, opportunities could arise for
an upgrade of the credit rating on the part of the rating agencies.
143
B❘ Combined Management Report | Risk and Opportunity Report
If there is no continuation of the required consolidation of state
budgets and reform efforts in the countries of the European
Monetary Union (EMU), this could cause renewed turmoil in the
financial markets, leading to increasing refinancing costs
through rising capital-market interest rates, and thus jeopardiz-
ing the already fragile economic recovery. Further effects
could be triggered by the debate about a Greek exit, which
recently flared up again. This could lead to greater uncertainty
and volatility in the financial markets. The extremely low rate
of inflation harbors an additional risk in that a long-lasting and
broad-based fall in prices would constitute a considerable
threat to the economic recovery of the EMU and make it even
more difficult for the debt-ridden countries in the euro zone
to finance their remaining debt. The European market continues
to be very important for Daimler across all divisions; for
the Mercedes-Benz Cars and Mercedes-Benz Vans divisions,
it is in fact still the biggest sales market. An opportunity
that is difficult to assess can be seen in a significantly improved
economic development in the euro zone. If countries such as
Italy and France implement reform measures more quickly and
decisively than has so far been assumed, economic growth
could also accelerate. That would benefit the development
of investment and demand for motor vehicles in the important
European market.
One risk of a significant obstacle to growth in Japan - namely
the second stage of the value-added tax hike from 8% to 10%,
which had been planned for October 2015 - was eliminated
at the end of 2014 with the announcement that the tax increase
was to be postponed until 2017. Apart from that, the failure
of the country's expansive monetary and fiscal policy and the
lack of structural reforms could trigger a growth slowdown
in Japan, although this should be regarded as only a regionally
limited risk. A slowdown of growth could lead to lower demand
for cars and trucks, which in turn could negatively affect the
Mercedes-Benz Cars and Daimler Trucks divisions, for which
Japan is an important sales market. A regionally limited oppor-
tunity exists in the possibility of a distinct acceleration of eco-
nomic growth in Japan. This could be caused by a significant
increase in investment activity, resulting from the targeted
structural reforms and the expansive monetary and fiscal policies
that have already been initiated. The Mercedes-Benz Cars
and Daimler Trucks divisions could then benefit from this positive
development.
Due to the significant growth of the country's importance
in recent years, an economic slump in China would present
a considerable risk for the world economy. The extremely
high level of debt in the economy as a whole and the high level
of investment in the construction industry have considerably
increased the risk of an abrupt adjustment in the real estate
market or a banking-sector crisis. China is now a key sales
market for the Mercedes-Benz Cars and Mercedes-Benz Vans
divisions in particular, which means any disruptions caused
by the above-mentioned risks could result in lower-than-planned
growth in unit sales. On the other hand, we see a further
opportunity in an even stronger development of the Chinese
economy. This could be triggered by the reform measures taking
rapid effect, accompanied by increased consumption.
Strong growth in overall economic consumption would create
additional opportunities for the divisions mentioned above.
Another risk is to be seen in a renewed weakening of growth
in major emerging markets. There were disappointing develop-
ments already during 2013 and 2014, especially in major
economies such as India, Russia and Brazil, although other
countries such as Indonesia and Turkey also developed below
their possibilities. A combination of weak growth and high
interest rates increases the risk of a rising number of defaults,
especially in view of the substantial expansion of credit in
some cases over the past few years. As Daimler is already very
active in these countries or their markets play a strategic
role, such a scenario represents a risk. An opportunity is to be
seen in the implementation of reforms occurring in important
emerging economies. If structural reforms are quickly and consis-
tently carried out in countries such as India, Russia and Brazil,
flows of global capital into these countries would increase again,
resulting in new scope for growth.
B.55
Industry and business risks and opportunities
Risk category
Probability of occurrence Impact
Opportunity category
General market risks
Interest rate risks and opportunities. Daimler employs a
variety of interest-rate sensitive financial instruments to manage
the cash requirements of its business operations on a day-
to-day basis. Most of these financial instruments are held in
connection with the financial services business of Daimler
Financial Services, whose policy is generally to perform a term-
congruent refinancing. However, to a limited extent, the
funding does not match in terms of maturities and interest rates,
which gives rise to the risk of changes in interest rates. The
funding activities of the industrial business and the financial
services business are coordinated at Group level. Derivative
interest rate instruments such as interest rate swaps and forward
rate agreements are used to achieve the desired interest
rate maturities and asset/liability structures (asset and liability
management).
Risks relating to leasing
and sales financing
Low
Impact
Low
Low
Commodity price risks
Interest rate opportunities
Low
Low
B.57
Commodity price opportunities
Financial risks and opportunities
Probability
Exchange rate opportunities
High
B❘ Combined Management Report | Risk and Opportunity Report
Interest rate risks
Exchange rate risks
Impact
Opportunity category
Risk category
High
of occurrence
Low
Opportunities relating to pension plans
High
Low
Low
Low
Low
Opportunities from changes in credit ratings
Low
High
Risks relating to pension plans
Country opportunities
Low
Low
Country risks
Credit opportunities
Low
Low
Credit risks
142
Risks from changes in credit ratings
The anticipated development of earnings in the automotive
divisions will have a positive impact also on the free cash flow
of the industrial business in 2015. When comparing with
2014, it is necessary to consider that the free cash flow from
the industrial business was boosted in 2014 by a total amount
of €3 billion due to special effects from the sale of our shares
in Rolls-Royce Power Systems Holding GmbH and Tesla.
On the other hand, there were cash outflows of €2.5 billion
for the extraordinary contribution to the German pension
Free cash flow and liquidity
plan assets and of €0.3 billion for the settlement of a healthcare
plan in North America. In the year 2015, we expect a free
cash flow from the industrial business in a significantly higher
amount than the dividend payment in 2015 of €2.6 billion.
As we will continue and intensify our investment offensive, we
assume that the free cash flow will be significantly lower
than in 2014 (€5.5 billion).
For the year 2015, we aim to have liquidity available in a
volume appropriate to the general risk situation in the financial
markets and to Daimler's risk profile. When measuring the
level of liquidity, we give due consideration to possible refinanc-
ing risks caused for example by temporary distortions in the
financial markets. We continue to assume, however, that we
will have very good access to the capital markets and bank
markets also in the year 2015. We want to cover our funding
needs in the planning period primarily by means of bonds,
commercial paper, bank loans, customer deposits in the direct
banking business and the securitization of receivables in the
financial services business; the focus will be on bonds and loans
from globally and locally active banks. In view of the very
good liquidity situation of the international capital markets
and our strong creditworthiness, we expect a continuation
of very attractive refinancing conditions in 2015. An additional
goal is to continue securing a high degree of financial flexibility.
In order to achieve our ambitious growth targets, we will expand
our product range in the coming years and develop additional
production and distribution capacities. We also want to make
sure that we can play a leading role in the far-reaching tech-
nological transformation of the automotive industry. For this
purpose, we will once again slightly increase our already
very high investment in property, plant and equipment in the
year 2015. Above all, the Mercedes-Benz Cars and Daimler
Trucks divisions will account for this increase, whereas we expect
a lower volume of capital expenditure at the Mercedes-Benz
Vans division than in the previous year. In addition to capital
expenditure, we are developing our position in the emerging
markets by means of targeted financial investments in our
holdings. That includes the expansion of our car production
capacities in China, together with our partner BAIC.
149
At the Mercedes-Benz Cars division, the focus of capital
expenditure will be on renewing and expanding our product range.
The most important projects include the new E-Class family,
additional versions of the C-Class and the new SUVs. Sub-
stantial investment is planned also for the modernization and
expansion of our German production sites as competence
centers, as well as for the expansion of our international pro-
duction network. After completing its Euro VI product offensive,
Daimler Trucks will mainly invest in successor generations
of existing products, the expansion and modernization of the
plants, and new global component projects in 2015. At
Mercedes-Benz Vans, the focus will be on further developing
the existing model range, expanding the sales-and-service
organization and establishing production of the Sprinter in the
United States. Key projects at Daimler Buses are advance
expenditures for new models and product enhancements and
the new bus plant in India.
Revenue and earnings
On the basis of the anticipated market development, the
aforementioned factors and the planning of our divisions,
we assume that Group EBIT from the ongoing business will
increase significantly once again in 2015.
With regard to exchange rates, the US dollar is likely to
strengthen, which will be generally positive for us, but the
ongoing weakness of the Japanese yen and of the
currencies of major emerging economies will probably
continue to have a negative impact on our earnings.
The expansion of our international sales activities and the
restructuring of our sales-and-service centers in Germany
are also connected with substantial expenditure in 2015.
There will be opposing effects, however, from the ongoing
high expenditure for our model offensive, for innovative
technologies and for the expansion and modernization of
our worldwide production facilities.
With the programs "Fit for Leadership" at Mercedes-Benz Cars,
"Daimler Trucks #1" at Daimler Trucks, "Performance Vans"
at Mercedes-Benz Vans and "GLOBE 2013" at Daimler Buses,
we achieved total profit contributions of approximately
€4 billion by the end of 2014, by taking measures for sustained
improvements in cost structures as well as through additional
business activities. The full effect of these programs will be
reflected in 2015. In addition to these measures for improved
cost structures with short-term effects, we are taking mea-
sures in all divisions for the long-term structural optimization
of our business system. We are increasingly standardizing
and modularizing our production processes throughout the
Group, for example with the intelligent use of vehicle plat-
forms to achieve further cost advantages. These structural mea-
sures will have a positive impact on earnings already in 2015.
The growth in unit sales and revenue that we anticipate
will have a positive impact on earnings in 2015. Additional
profit contributions will come from the efficiency programs
that we have implemented in all divisions.
Without exception, our divisions currently benefit from a very
attractive and particularly competitive product range, which
has been expanded and consistently renewed in recent years.
We therefore assume that Daimler will profit to an above-
average extent from the slight revival of automotive markets
that we expect for 2015, and will be able to strengthen its
position in important markets. At Mercedes-Benz Cars, addi-
tional growth in 2015 will be driven above all by the new
C-Class, the extremely successful S-Class models, the new
GLA and CLA Shooting Brake compact models and the
new smart models fortwo and forfour. The other automotive
divisions are extremely well positioned with their products,
and Daimler Financial Services' new business will profit from
the growth in unit sales of passengers cars and commercial
vehicles. The revenue growth we anticipate is therefore likely
to be supported by all divisions. In absolute terms, Mercedes-
Benz Cars and Daimler Trucks will deliver the biggest con-
tributions. In regional terms, we expect the highest growth
rates in Asia and North America, but our business volumes
should expand also in the other regions. In particular in China,
we are creating the right conditions for further growth with
new sales outlets and additional production capacities, and
we are expanding our production plants also in India and
North America.
We assume that the Daimler Group's revenue will grow
significantly in 2015.
Dividend
On the basis of our assumptions concerning the develop-
ment of automotive markets and the divisions' planning,
we expect the Daimler Group to achieve further significant
growth in total unit sales in 2015.
For the individual divisions, we have set ourselves the following
targets for EBIT from the ongoing business in the year 2015:
Mercedes-Benz Cars: significantly above the prior-year level,
Daimler Trucks: significantly above the prior-year level,
Mercedes-Benz Vans: significantly above the prior-year level,
Daimler Buses: slightly below the prior-year level, and
Daimler Financial Services: slightly above the prior-year level.
At the Annual Shareholders' Meeting on April 1, 2015, the
Board of Management and the Supervisory Board will propose
an increase in the dividend to €2.45 per share (prior year:
€2.25). With this proposal, we are letting our shareholders
participate in the Company's success while expressing our
confidence about the ongoing course of business. We aim to
achieve a sustainable dividend development also in the
coming years. In setting the dividend, our target is to distribute
approximately 40% of the net profit attributable to Daimler
shareholders.
154-159
With our research and development activities, our goal is
to further strengthen Daimler's competitive position against the
backdrop of upcoming technological challenges. We want to
create competitive advantages above all by means of innovative
solutions for low emissions and safe mobility - in the fields
of autonomous driving or hybrid drive for example. In addition,
we intend to utilize the growth opportunities offered by world-
wide automotive markets with new and attractive products. In
order to achieve these goals, we will once again significantly
increase our expenditure for research and development in 2015.
Key projects at Mercedes-Benz Cars include the successor
generation of the E-Class and the new SUVs. In addition, we will
invest considerable amounts in new low-emission and fuel-
efficient engines, alternative drive systems and innovative safety
technologies. Research and development spending is likely
to rise also at Daimler Trucks in 2015. As before, the main areas
here are the successor generations for existing products as
well as developing and adapting new engine generations with
which we will further reduce fuel consumption and fulfill
increasingly strict emission regulations. Also at Mercedes-Benz
Vans and Daimler Buses, an important area of research
and development is to meet future emission standards and
to increase fuel efficiency. At Daimler Buses, alternative
drive systems also play an important role and at Mercedes-
Benz Vans the further development of engines.
Daimler Financial Services aims to achieve further profitable
growth in the coming years. For the year 2015, we anticipate
significant growth in both new business and contract volume.
This will result from the growth offensives of the automotive
divisions, the specific targeting of younger customers, the expan-
sion of business especially in Asia, and the further develop-
ment of our online sales channels. We will continue to grow also
with the flexible car-sharing model, car2go, and will system-
atically expand our range of mobility services under the umbrella
of moovel.
"Fit for Leadership" successfully implemented
New C-Class - dynamic and premium
Unit sales and revenue at record levels
Mercedes-Benz Cars
C | The Divisions | Contents
C | The Divisions.
152
Daimler's divisions performed very well in what was still a difficult market last year.
We consistently renewed our product range, and we were able to enter additional
markets and market segments with new models. At the same time, we further
improved the efficiency of our processes. In order to create the right conditions for
future growth, we modernized and expanded our worldwide production network.
We thrill customers
with new products.
Research and development
151
Forward-looking statements:
For these reasons, we look to the year 2015 with great
confidence. Everything indicates that we will proceed along
our growth path. We anticipate significant increases in
unit sales, revenue and earnings from the ongoing business.
We have implemented our strategy consistently and with great
determination in recent years, and this is now beginning to
pay off. Our new vehicle models are extremely well received by
our customers. We are strengthening our market position
worldwide and increasing our presence in the growth markets.
The signs point towards growth in all divisions, and we are
on schedule with our efficiency improvements. Furthermore,
we are underscoring our technological leadership with pio-
neering innovations in the fields of safety, efficient drive systems
and autonomous driving. In recent years, we have created
the right conditions for further growth, and above all for profit-
able growth, and we will continue consistently to follow the
course we have taken.
Overall statement on future development
have implemented at all divisions in recent years will now take
full effect. The medium- and long-term programs for structural
improvements of our business processes should facilitate further
efficiency progress. Against this backdrop, we assume that
we will be able to achieve our ambitious growth targets with
only slight workforce growth. Additional jobs are likely to
be created at companies that we operate together with Chinese
partners and whose employees are not included in the
figures for the Daimler Group.
Due to the generally very favorable business development
that we expect for 2015, production volumes will continue rising.
At the same time, the efficiency-enhancing measures we
Workforce
B❘ Combined Management Report | Outlook
150
This document contains forward-looking statements that reflect our current
views about future events. The words "anticipate," "assume," "believe,"
"estimate," "expect," "intend," "may," "can," "could," "plan," "project," "should"
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline
of demand in our most important markets; a worsening of the sovereign-debt
crisis in the euro zone; an increase in political tension in Eastern Europe;
a deterioration of our refinancing possibilities on the credit and financial
markets; events of force majeure including natural disasters, epidemics,
acts of terrorism, political unrest, industrial accidents and their effects on our
sales, purchasing, production or financial services activities; changes in
currency exchange rates; a shift in consumer preferences towards smaller,
lower-margin vehicles; a possible lack of acceptance of our products or
services which limits our ability to achieve prices and adequately utilize our
production capacities; price increases for fuel or raw materials; disruption
of production due to shortages of materials, labor strikes or supplier insol-
vencies; a decline in resale prices of used vehicles; the effective imple-
mentation of cost-reduction and efficiency-optimization measures; the business
outlook for companies in which we hold a significant equity interest; the
successful implementation of strategic cooperations and joint ventures;
changes in laws, regulations and government policies, particularly those
relating to vehicle emissions, fuel economy and safety; the resolution of pending
official investigations and the conclusion of pending or threatened future
legal proceedings; and other risks and uncertainties, some of which we describe
under the heading "Risk and Opportunity Report" in this Annual Report.
If any of these risks and uncertainties materializes or if the assumptions under-
lying any of our forward-looking statements prove to be incorrect, the actual
results may be materially different from those we express or imply by such
statements. We do not intend or assume any obligation to update these
forward-looking statements since they are based solely on the circumstances
at the date of publication.
Daimler Buses assumes that it will be able to defend its
market leadership in its core markets for buses above 8 tons
with innovative and high-quality new products. For the year
2015, we anticipate a slight increase in total unit sales. This is
based on the assumption of a stable development of unit sales
in Europe and Latin America and rising unit sales in Mexico.
Investment
148
Economic developments in China continue to be of key impor-
tance for the world economy. It is still important that the
structurally necessary deceleration of economic growth takes
place as a controlled process. With assumed GDP growth of
between 6.5% and 7%, China's economy would expand at a lower
rate than in 2014, but would still make the biggest individual
contribution to global growth. Only moderate improvements are
expected for other major emerging economies with the excep-
tion of those in Asia. The prospects for economic growth remain
rather weak in particular in South America and Eastern Europe.
A special case in this context is Russia, where economic
conditions have meanwhile deteriorated so seriously that most
analysts now anticipate a sharp recession in 2015.
B❘ Combined Management Report | Outlook
146
The economy of the European Monetary Union (EMU) has not yet
accelerated significantly at the beginning of 2015. This has
been prevented by the dampening impact of low levels of lending,
continued worries about deflation and ongoing uncertainty
concerning the Ukraine conflict. Additional factors are the con-
siderable structural problems of large economies such as
France and Italy and the continuation of the sovereign-debt
problem. But due to the low price of crude oil, the significantly
weaker euro, ongoing favorable refinancing conditions and
the extremely expansive monetary policy of the European Central
Bank, growth in gross domestic product in the magnitude of
1% should be achieved. The German economy should probably
develop slightly better than the average for the EMU.
The economic outlook for Japan is much less favorable, however.
Although the second stage of the increase in value-added
tax that was originally planned for the fall was postponed, the
growth rate expected in 2015 is only about 1%.
The US economy should once again deliver a significant
contribution to global growth. The prospects there for private
consumption and investment are very favorable in view of
the positive development of the labor market and the upturn
in industrial production. If fiscal-policy friction can be avoided,
growth in economic output of about 3% is achievable for the
United States.
At the beginning of 2015, the world economy is on a path
of moderate growth. As in 2014, the upward trend this year
is likely to be primarily driven by the advanced economies.
The emerging economies are not expected to post an increase
in their overall growth rate, however.
The world economy
Our assessments for the year 2015 are based on the assump-
tion of stable economic conditions and the expectation that
the upward trend of worldwide demand for motor vehicles will
continue. The development we have outlined is subject to
various opportunities and risks, which are explained in detail
in the Risk and Opportunity Report.
see pages 132 ff
The statements made in the Outlook chapter are generally
based on the operational planning of Daimler AG as approved
by the Board of Management and the Supervisory Board in
December 2014. This planning is based on the premises we set
regarding the economic situation and the development of the
automotive markets. It involves assessments made by Daimler,
which are based on relevant analyses by various renowned
economic research institutes, international organizations and
industry associations, as well as on the internal market
analyses of our sales companies. The prospects for our future
business development as presented here reflect the targets
of our divisions as well as the opportunities and risks presented
by the anticipated market conditions and the competitive
situation. We are constantly adjusting our expectations, however,
taking into account the latest forecasts on the development
of the world economy and of automotive markets, as well as our
recent business development. The statements made below
are based on the knowledge available to us in February 2015.
Outlook.
145
The Group's overall risk and opportunity situation is the sum
of the individual risks and opportunities presented. The risk
situation of the Daimler Group has not changed significantly from
the prior year. Most of the opportunities cited last year were
effectively realized. The associated measures that have been
implemented continue to have a positive effect on the Group's
earnings. Current planning takes identified opportunities into
account. Daimler is confident that due to the established risk
and opportunity management system, risks and opportunities
will continue to be recognized at an early stage in the future
and that the current risk situation can be successfully managed,
as well as opportunities effectively utilized.
In order to obtain an overall picture, Corporate Risk Manage-
ment collates the information described on risks from the
individual organizational units. There are no discernible risks
that either alone or in combination with other risks could
endanger the continued existence of the Group. But since consid-
erable economic and industry risks still exist, setbacks on
the way to regularly achieving growth and profitability targets
cannot be completely ruled out. The aforementioned oppor-
tunities represent both potentials and challenges for the Daimler
Group. By effectively and flexibly focusing the production pro-
gram and sales activities on changing conditions, the divisions
of the Daimler Group strive to secure or surpass their respective
targets and plans. As far as it can be influenced by the Daimler
Group and if measures prove to be economical, the Group takes
appropriate action to realize the potential of its opportunities.
In addition to the risks described above, there are risks
that affect the reputation of the Daimler Group as a whole.
Public interest is focused on Daimler's position with regard
to issues such as ethics and sustainability. Furthermore, cus-
tomers and capital markets are interested in how the Group
reacts to the technological challenges of the future and how we
succeed in offering up-to-date and technologically leading
products in the markets. As one of the fundamental principles
of entrepreneurial activity, Daimler places particular priority
on adherence to applicable law and ethical standards. In addi-
tion, a secure approach to sensitive data is a precondition
for doing business with customers and suppliers in a trusting
and cooperative environment. The Group takes extensive
measures in order to ensure risks that may arise in this context
with an impact on the reputation of the Daimler Group are
subject to well-regulated internal controls.
The Group's overall risk situation is the sum of the individual
risks of all risk categories for the divisions and the corporate
functions and legal entities. In addition to the risk categories
described above, unpredictable events, such as natural disas-
ters or terrorist attacks, are possible, and these can disturb
production and business processes. This could adversely affect
consumer confidence and could cause production interrup-
tions due to supplier problems and intensified security measures
at national borders. In this context, Daimler also considers
risks from earthquakes (especially in Asia), weather-related
damage and political instability in sales regions. In the case
of natural disasters, emergency plans are developed to allow
the resumption of business activities. In addition, further
protective measures are established and, if possible, insurance
coverage is obtained. Other smaller risks relate to project
and process risks as well as the implementation of organizational
changes and possible resource shortages. In order to avoid
or minimize these risks, measures are defined for each individual
case and must be implemented accordingly. Risks relating
to compliance are addressed in the risk management process
and continually monitored. Regular courses of training are
designed to prevent compliance violations. Further opportunities
that can have a positive impact on the Group's net income
arise from efficiency programs at the divisions and, to a minor
extent, potential compensation payments for occured
natural disasters.
Overall assessment of the risk and opportunity situation
B❘ Combined Management Report | Risk and Opportunity Report
Daimler Buses
In total, global economic output could expand by
approximately 3% in 2015.
With regard to the currencies important for our business,
we continue to anticipate sharp exchange-rate fluctuations
in 2015. Compared with average exchange rates in the year
2014 (USD/€: 1.33; GBP/€: 0.81), we expect the US dollar to
strengthen while the British pound should remain fairly stable
against the euro. With regard to the Japanese yen (average for
2014: 140 yen/euro) and exchange rates important to us of
various emerging markets, we anticipate increased volatility.
In order to counteract the risks arising for our business
as a result of the still very volatile exchange rates, we conduct
hedging transactions as far as this makes sense for the
various currencies. For the year 2015, we have hedged more
than 70% of the exchange-rate risks as of mid-February.
Automotive markets
we intend to expand our presence in China in the market seg-
ment we address there.
Mercedes-Benz Vans plans to achieve significant growth
in unit sales in 2015. Above all in Europe, our core market, we
anticipate significant increases in sales of medium-sized
and large vans. This development is likely to be primarily driven
by the new products Vito and V-Class, which are now fully
available following their launch in 2014. In the context of our
"Mercedes-Benz Vans goes global" strategy for the division,
we will launch the Vito also in North and South America in 2015,
stimulating additional demand there. We aim to achieve further
growth in those markets also with the Sprinter, which we will
produce also in North America in the future. Furthermore,
In the NAFTA region, we assume that in line with the expected
market development, our unit sales will once again be higher than
in the previous year. The new and successful products should
safeguard our market leadership in the region. Unit sales in Asia
are also likely to develop positively overall. In Indonesia, one
of our main markets in Asia, we expect unit sales to recover after
the decrease in 2014. In India, the further expansion of our
dealer network should facilitate significant growth in unit sales.
In addition, the expanded range of FUSO vehicles produced
in India can be expected to stimulate additional sales growth
in Asia and Africa. In Japan, however, growth rates are likely
to decrease significantly.
Daimler Trucks anticipates a significant increase in unit sales
in 2015. In Western Europe, demand is likely to be dampened
by the continuation of weak economic growth, leading to unit
sales in the magnitude of the previous year. But we believe
we will be able to defend our very good market position with
our fuel-efficient products, high customer acceptance and a
flexible production network. In Turkey, we anticipate significant
sales being brought forward to 2015 due to the introduction
of Euro VI emission regulations in 2016. In Brazil, the ongoing
lack of economic growth and less favorable financing condi-
tions are likely to dampen overall demand, so we have to expect
falling unit sales in that market. In the medium term, however,
Brazil will continue to be an important market for us. We are
therefore continuing to invest in our local products and our
production sites in São Bernardo do Campo and Juiz de Fora.
Furthermore, we will continue our optimization program in
Brazil, thus further increasing the efficiency of our facilities there.
From a regional perspective, we expect the Asian markets to
make major contributions to our growth in unit sales in 2015.
In China, we are continuing the expansion of our sales organi-
zation and of local production capacities, thus creating the
right conditions for further growth. But unit sales will increase
also in North America as a result of our new models, and
we intend to profit to an above-average extent from the slight
revival of demand expected in Western Europe.
We anticipate significant growth in unit sales in 2015 also
for the smart brand. The new fortwo and forfour models have
been available in Europe since November 2014. Both of
these products will be launched in all key markets in 2015 and
will therefore contribute to the positive development of unit
sales at Mercedes-Benz Cars. As we had lacked a four-seat smart
model in recent years, we are now able to address completely
new target groups with the smart forfour.
Mercedes-Benz Cars will consistently follow its path of
growth in 2015 in the context of the "Mercedes-Benz 2020"
offensive. Overall, we intend to significantly increase our unit
sales and thus reach a new record. This is based on our cur-
rently very attractive and young model portfolio, which we will
expand with some additional new products in 2015. An impor-
tant contribution will come from the new C-Class, which is now
available in sedan and wagon versions in all markets. Further-
more, in the first seven months of 2015, we will launch four new
vehicles that have no predecessor model. The first automobiles
of our new and highly exclusive Mercedes-Maybach brand
are being delivered to customers already in February. They will
be followed by the fascinating sports car Mercedes-AMG GT,
the practical and stylish CLA Shooting Brake and the GLE Coupe,
a sporty SUV. Within the context of our product offensive,
we will also renew almost our entire range of SUVs in 2015,
thus stimulating additional demand.
Unit sales
We expect a slightly larger market volume for buses in Western
Europe in 2015 than in 2014. Demand for buses in Brazil is
likely to remain flat in 2015 following the significant decrease
in 2014.
B❘ Combined Management Report | Outlook
Overall, we expect a stable demand for vans in Europe in 2015.
That applies to medium-sized and large vehicles as well as
to small vans. For the United States, we expect moderate growth
in the market for large vans. In Latin America, we assume that
the market for large vans will stabilize following the significant
contraction in 2014. In China, we anticipate an ongoing revival
of demand in the market we address there.
147
Market conditions in Brazil are likely to remain difficult: Start-
ing from a low level, market volume is expected to decrease
again by roughly 10%. The Japanese market for light-, medium-
and heavy-duty trucks has shown strong growth in recent
years. But due to the economic slowdown, a slight market
contraction must be anticipated in 2015. In Indonesia, however,
market recovery and growth in a magnitude of 10% are
to be expected.
The NAFTA region once again promises to deliver the most
positive development. Most economic indicators suggest that
demand for trucks will remain strong there with expected
market growth in the magnitude of 10%. On the other hand,
prospects for the European market are significantly less
favorable due to the continuation of only hesitant economic
recovery. From today's perspective, demand is expected to
remain only in the region of the relatively weak prior-year level.
The world market for medium- and heavy-duty trucks is likely
to expand slightly in 2015 after the significant demand down-
turn in the previous year. However, market developments will
remain disparate at the regional level.
The major emerging markets are likely to show varying devel-
opments in 2015. A significant recovery of demand for cars
is anticipated in India. In Russia, however, a further significant
drop in sales of cars must be assumed due to the worsening
economic crisis there.
The Japanese car market has been at an artificially high level
for several years due to various special effects. This is expected
to be corrected in 2015 with a moderate decrease in demand.
A continued demand upturn is to be anticipated for Western
Europe. Due to the continuation of weak economic expansion,
however, only slight growth in demand for cars is expected,
although the market is currently at a relatively low level. The
growth rates forecast for the individual markets are more
uniform than in 2014, although the countries have significantly
different starting situations. The market of the United Kingdom
should expand again slightly from its already high level, while
little growth is to be expected in France despite the relatively
weak level of car sales in the previous year. The German car
market is also likely to expand at a comparatively low rate
to a volume of just over 3 million units.
We once again expect China to deliver the biggest contribution
by far to the expansion of global car sales. Substantial growth
seems possible yet again for the world's biggest car market.
The US market should also continue its solid development.
Although sales figures are meanwhile back to the pre-crisis level
and thus close to market saturation, slight growth is expected
once again in 2015. With sales of more than 16.7 million units,
more cars and light trucks should be sold than since the
year 2005.
As a result of the rather subdued economic outlook,
growth in global demand for cars of approximately 4%
is expected in 2015.
The severe recession in Russia will continue to depress the
market, so demand should fall sharply once again. In India,
however, a significant market recovery is expected due
to slightly improved economic prospects. The market outlook
for China is connected with uncertainty. The introduction
of the CN4 emission standards (similar to Euro IV) on January
1, 2015 is likely to depress demand. We currently anticipate
a market volume in 2015 of slightly below the previous year.
- Impressive technology and design of new smart models
Numerous awards for Mercedes-Benz
Foundations laid for further growth in China
"Best Customer Experience” pushed forward
+6
- CO2 emissions reduced to an average of 129 g/km
EBIT significantly above prior-year level at €5.9 billion
(2013: €4.0 billion)
363
357
+2
E-/CLS-Class
329
332
C-/SLK-Class
-1
SLS/Maybach
125
71
+75
M-/R-/GLK-/GL-/
G-Class
S-/CL-/SL-Class/
342
+23
472
C.02
Unit sales by Mercedes-Benz Cars
in thousands
2014
2013
- Extensive investment in worldwide production network
World champions in Formula 1
384
14/13
% change
Record unit sales and revenue. The Mercedes-Benz Cars
division, comprising the Mercedes-Benz and smart brands
as well as the Mercedes-AMG and Mercedes-Maybach sub-
brands, once again accelerated its pace of growth in the year
under review. Unit sales rose by 10% to the new record level
of 1,722,600 vehicles. The increase in revenue was even more
substantial at plus 14% to €73.6 billion. 7 C.01 We also con-
tinually improved our profitability as the year progressed with
EBIT rising by 46% to €5.9 billion. Our very positive overall
business development was largely due to the launch of several
new and attractive products. The efficiency measures of
our "Fit for Leadership" program also had a positive impact
on earnings.
Fit for Leadership. "Fit for Leadership" is a key element of
our "Mercedes-Benz 2020" growth strategy. In the short term,
the
program combines existing efficiency-boosting measures
and identifies additional efficiency potential. Over the long
term, it will optimize the Mercedes-Benz business system and
create the structures necessary to achieve the growth defined
by Mercedes-Benz 2020. By the end of 2014, Fit for Leadership
measures had achieved a sustainable cost-structure improve-
ment of approximately €2 billion. Beginning in 2015, these savings
will be fully reflected in our earnings. We have thus success-
fully completed the first phase of the program as planned. Sub-
stantial progress was made on the optimization of production
and the reduction of material costs and fixed costs, for example.
We systematically identified the technical and structural poten-
tial for optimization, and we also made a considerable impact
on material costs by applying new procedures for awarding
contracts to suppliers. The second phase of the program will
focus more strongly on long-term structural changes. Our goal
here is to further improve the competitiveness of Mercedes-
Benz Cars over the long term. This will require us to holistically
adjust the Mercedes-Benz Cars business system to changing
conditions, such as the globalization of sales and production
structures and changes in the product mix.
Mercedes-Benz
1,630
1,467
thereof A-/B-/CLA-/GLA-Class
+11
+33
323
smart
+8
thereof United States
344
319
+8
China
363
293
+23
Japan
61
54
+14
154
239
+6
391
-3
92
98
-6
Mercedes-Benz Cars
1,723
1,566
NAFTA
+10
669
640
+4
thereof Germany
272
280
thereof Western Europe
96,895
+46
+14
Employees (December 31)
employers worldwide
171-173
EBIT significantly above prior-year level at €1.4 billion
(2013: €1.3 billion)
Mercedes-Benz Vans
Unit sales at record level
165-167
Award received as one of best 25 international
- Earnings development supported by measures from
V-Class redefines the multipurpose vehicle
129,106
EBIT significantly above prior-year level at €682 million
(2013: €631 million)
153
Mercedes-Benz Cars.
Mercedes-Benz Cars celebrated yet another record year in 2014. Unit sales and revenue increased
once again and earnings were significantly higher than in the previous year. We also improved
our position in many markets. New models such as the C-Class, the GLA compact SUV, the S-Class
coupe and the Mercedes-Maybach further enhanced the appeal of the Mercedes-Benz brand.
In addition, the smart brand successfully entered a new era with its new fortwo and forfour models.
We expanded our production capacities around the world in the year under review, thereby
laying the foundations for future growth.
"Performance Vans" program
C.01
Expansion of digital sales channels
Number of automotive insurance policies higher
than ever before
Daimler Trucks
Unit sales at highest level since 2006
160-164
- Far-reaching implementation of "Daimler Trucks #1"
New products presented: Actros and Arocs heavy-duty
tractor units, Western Star 5700XE, FUSO Super Great V
Strong fuel efficiency and very competitive running
costs ensure high customer acceptance
Record unit sales and renewed market leadership
in NAFTA region
- Further cooperation between MFTBC and Nissan Motor
EBIT significantly above prior-year level at €1.9 billion
(2013: €1.6 billion)
More than one million customers at moovel
168-170
Strong unit sales of complete buses
program take effect
Mercedes-Benz Citaro is best-selling bus of all time
Numerous major international orders received
EBIT significantly above prior-year level at €197 million
(2013: €124 million)
Daimler Financial Services
3.3 million vehicles financed or leased for
the first time
Measures from "GLOBE 2013" growth and efficiency
Mercedes-Benz Cars
New Vito sets standards in mid-size van segment
"Mercedes-Benz Vans goes global" growth strategy
forms basis for long-term growth
2013
4,025
3,808
thereof capitalized
1,035
2014
-3
development expenditure
Production
1,588,658
+10
Unit sales
1,722,561
1,565,563
+10
1,754,115
Research and
1,063
3,710
-2
14/13
% change
EBIT
5,853
Revenue
73,584
4,006
64,307
Amounts in millions of euros
8.0
6.2
Investment in property, plant and
equipment
3,621
Return on sales (in %)
Daimler's MFTBC commercial vehicle subsidiary expands
cooperation. Daimler's Mitsubishi Fuso Truck and Bus
Corporation (MFTBC) commercial vehicle subsidiary in Japan
intensified its cooperation with Nissan Motor Co. Ltd (Nissan)
during the year under review. The two companies signed
a contract in October 2014 covering the delivery of vans. Nissan
will deliver the vans as complete vehicles, which will then
be sold to commercial FUSO brand customers in export markets.
Under the terms of the contract, Nissan is supplying its
NV350 Urvan to MFTBC, which began selling the model as the
FUSO Canter Van in the Middle East in late 2014. The new
agreement supplements an existing strategic partnership
between MFTBC and Nissan in Japan, in which MFTBC supplies
its light-duty truck platform to Nissan and receives Nissan's
light-duty truck platform in return. In addition, MFTBC has been
supplying light-duty trucks to UD Trucks Corporation since
September 2014. These vehicles are also based on FUSO's
light-duty truck platform and are marketed in Japan under
the name "Kazet."
Sale of RRPSH shares. In the first quarter of 2014, the
Board of Management and the Supervisory Board of Daimler AG
made the decision to transfer the company's 50% interest in
Rolls-Royce Power Systems Holding GmbH (RRPSH) to its joint
venture partner, Rolls-Royce Holdings plc (Rolls-Royce).
Following this decision, Daimler exercised a put option for its
stake in RRPSH that had been agreed on with Rolls-Royce
in 2011. The sale of Daimler's shares in RRPSH was completed
in August 2014 and generated proceeds for Daimler of
€2.4 billion.
Expanded product range for the newest brand: BharatBenz presented the 4928TT and 4023TT semi-trailer tractors in 2014.
163
Successful cooperation with our partner in China. Daimler AG
has a 50% interest in Beijing Foton Daimler Automotive Co.,
Ltd. (BFDA), a joint venture it operates with Beiqi Foton Motor Co,
Ltd. Production of medium- and heavy-duty Auman brand
trucks began in China in mid-2012. The partnership safeguards
Daimler Trucks' presence in the important Chinese truck
market. Sales of Auman brand trucks declined for market reasons
by 4% to 99,200 units in 2014. More than 230,000 Auman
trucks have already been sold since the beginning of the joint
venture.
Strong presence with new products. Daimler Trucks
unveiled new models around the globe in 2014 following the
successful introduction of its Euro VI fleet in the previous
few years. The Euro VI offensive was concluded in the first
quarter of 2014 with the launch of the Actros and Arocs
(SLT) heavy-haulage vehicles. These customized trucks can
pull up to 250 metric tons and are often over 50 meters
long. The vehicles are built at the Mercedes-Benz plant in
Molsheim, France.
The new Western Star 5700XE was presented in the fall
of 2014 and will be available to our North American customers
in 2015. Numerous new aerodynamic features reduce air
resistance and thus also improve fuel economy. The best fuel-
efficiency performance is achieved when the models are
equipped with an integrated powertrain from Daimler Trucks.
The interaction of the Detroit brand engine, axles and DT12
automatic transmission with a highly intelligent powertrain
management system ensures the highest efficiency.
Successful IAA Commercial Vehicles. Daimler Trucks
presented numerous vehicle world premieres, an extensive
range of services and the spectacular Mercedes-Benz
Future Truck 2025 at the 65th IAA Commercial Vehicles show
in Hanover in September 2014. The Future Truck 2025 auto-
nomously driving vehicle is a key component of the transporta-
tion system of the future. The Future Truck 2025 conserves
resources, reduces emissions of all types, ensures the highest
degree of safety and improves connectivity on the road.
Radar sensors and camera systems make it possible for the
Future Truck 2025 to drive autonomously without any
need for communication with other vehicles or a control center.
Mercedes-Benz has combined all the necessary technology
in its highly intelligent Highway Pilot system, which is similar
to an airplane autopilot. Back in July 2014, we presented the
pioneering technologies in the Future Truck 2025 to the world
by sending the vehicle on its very first journey on a stretch
of autobahn near the city of Magdeburg. A detailed description
of the Future Truck and its world premiere is presented on
pages 14 ff of this Annual Report.
Daimler Trucks has launched new products in Europe, North
America and Japan, and the division's product offensive is
successful also in emerging markets. In early 2014, we added
new semitrailers and a construction and mining truck to
the BharatBenz product range in India. The next highlight was
unveiled in the third quarter - the BharatBenz 3143, which
is scheduled to go into series production in the second half
of 2015. BharatBenz is the first Indian brand to offer trucks
in the segment with engines of over 400 horsepower, which has
so far been dominated by European brands. The vehicles
from the FUSO FI and FJ model series are another good example
of Daimler Trucks' growing global presence. These medium-
and heavy-duty trucks from the Japanese brand are also manu-
factured by Daimler India Commercial Vehicles (DICV) in
Chennai. From there, they are exported to promising markets
in Southeast Asia and Africa.
The Future Truck 2025 presented at the IAA Commercial Vehicles
featured a new exterior and interior design, as well as numer-
ous product innovations. They include the new Blind Spot Assist
safety system, which Daimler will begin mass-producing
in the coming years. We are thus underscoring our leading role
in the area of active safety as we continue along the road to
accident-free driving. Blind Spot Assist's radar sensors monitor
both sides of the truck and warn of the presence of other
road users that the driver cannot see.
Customer tests with the FUSO Canter E-Cell. FUSO is a
trailblazer in the field of "green" drive systems for light commer-
cial vehicles. The first fully electric light truck, which is being
produced in a small-batch series, is completely emission-free
and makes virtually no noise. This Canter E-Cell for the European
market is built at the plant in Tramagal, Portugal. The first
of these E-Cell trucks were delivered to customers for testing
in July 2014. The tests under normal operating conditions
are scheduled to run for one year. The handover of the vehicles
to Portuguese customers marked yet another highlight in
the anniversary year of the Tramagal plant, which began manu-
facturing trucks 50 years ago.
164
484,211
Employees (December 31)
495,668
Our product range in Japan has been expanded to include
the new FUSO Super Great V heavy-duty truck. This vehicle also
sets standards for economy. Its lower fuel consumption is
made possible by an optimized 6R10 engine with tried-and-tested
and continually refined technology based on our Heavy-Duty
Engine Platform, as well as by a newly developed asymmetrical
turbocharger. The new Super Great V is also the only truck
whose full model range already beats by up to 5% the require-
ments of the FES fuel efficiency standards that will take
effect in Japan in 2015.
due to the sharply contracting market in that country, our sales
declined by 10% to 58,300 units. On the other hand, our
sales in India rose to 10,300 units in the year under review
(2013: 6,500) despite a slightly contracting market in that
country. Our attractive product portfolio in India, which already
comprises more than a dozen models, is sold through a net-
work of approximately 80 dealerships in the country. This sales
network is to be expanded further in 2015.
+2
+2
The overall development of unit sales in Asia was positive
Amounts in millions of euros
Daimler Trucks
C.03
Daimler Trucks is consolidating its position as a technology leader. The year 2014 was marked
by the launch of numerous new models and groundbreaking technologies, with the biggest
highlight being the presentation of the autonomously driving Mercedes-Benz Future Truck 2025.
In the year under review, a strong product portfolio and positive market developments in the
NAFTA region and Japan resulted in the highest unit sales for Daimler Trucks since 2006. Our strategy,
which is based on the three pillars of technology leadership, global presence and intelligent
platforms, continues to pay off. It puts us in a strong competitive position in our core markets and
allows us to successfully expand into new markets and market segments. Our strategy thus
enabled us to overcome challenges in Europe and Latin America and to achieve successful results
in full-year 2014.
Daimler Trucks.
159
Further reduction of CO2 emissions. Our new engines
and extremely fuel-efficient model variants once again enabled
us to substantially reduce the average CO2 emissions of the
cars we sold in the European Union in 2014 - this time from
134 grams per kilometer to 129 g/km. That achievement was
made possible in large part by our new compact-class models
and our efficient hybrid drive systems. Our goal is to reduce
the average CO2 emissions of our new-vehicle fleet in the Euro-
pean Union to 125 g/km by 2016.
see pages 109f
Formula 1 champions. Thanks to innovative hybrid technology
and an outstanding team effort, MERCEDES AMG PETRONAS
was able to win the 2014 Formula 1 Constructors' Championship
by a wide margin. Our two drivers also dominated nearly every
race. Lewis Hamilton finished the season as the world champion
with Nico Rosberg taking second place. The hybrid drive in
the F1 W05 Hybrid championship car was the most efficient and
successful drive system in the competition. That was one
of the main reasons why the season was such a huge success
for MERCEDES AMG PETRONAS. In a total of 19 races, the
team captured 16 victories (11 of which were 1-2 finishes),
31 podium finishes and 18 pole positions. Because the new
Formula 1 regulations focus on fuel efficiency, we can now
use the knowledge we have gained with lightweight design and
hybrid technology in our race cars to further improve our
production vehicles.
Expansion of the global production network. In order to
meet the targets of our 2020 growth strategy, we are creating
additional capacities worldwide and continually refining our
flexible and highly efficient production network. The numerous
investment decisions that have been made regarding our
plants in Germany underscore their importance as centers of
expertise. For example, we invested more than €3 billion in
the modernization and restructuring of our car and engine plants
in Germany in 2014. We are also expanding our vehicle pro-
duction capacities in the United States and China. A new logistics
center is being built in Speyer, Germany, to enable us to effi-
ciently and flexibly manage the growing material flows in our
global production network. This center will serve as a hub for
delivery of components to our car plants in China, South Africa
and the United States. The new C-Class is our first model
to be manufactured on four different continents simultaneously.
It took only six months to launch production of the vehicle
first in Bremen and then in East London (South Africa), Tusca-
loosa (USA) and finally Beijing, where the long-wheelbase
version of the C-Class is built. As the lead plant, Bremen manages
the global production of the C-Class, including everything
from tooling strategies to training for staff from the international
manufacturing locations, as well as product quality specifica-
tions. This guarantees top quality from the very beginning at all
production facilities.
is the "Mercedes me" service brand, which was presented for
the first time in March 2014. "Mercedes me" allows easy
access to existing and future services from the brand and
is available around the clock at www.mercedes.me.
The new service brand has already been launched in 15 countries
and is adapted to the local range of services in each market.
see pages 30f
An important component of Best Customer Experience
A sports car in its purest form: The new Mercedes-AMG GT offers racetrack performance with great everyday practicality for enthusiasts.
S.MB 1053
C | The Divisions | Mercedes-Benz Cars
158
Progressive and unmistakable: The new CLA Shooting Brake perfectly combines the emotion of a coupe with the intelligence of a shooting brake.
S.MB 5080
2014
2013
14/13
% change
+15
1,171
1,188
development expenditure
Research and
plant and equipment
Investment in property,
5.2
5.8
Best Customer Experience. The Best Customer Experience
program is designed to ensure completely personalized
service for customers - from the initial contact to advice, test
drives, purchases and aftersales services. Our goal here is
to make Mercedes-Benz even more attractive to new contem-
porary-minded target groups, while at the same time main-
taining the brand loyalty of established customers. To this end,
Mercedes-Benz utilizes a multichannel approach that flexibly
links a large number of different sales formats, thereby supple-
menting the services offered at traditional Mercedes-Benz
showrooms. In late 2013, the brand became the first premium
manufacturer to launch an online sales channel for new
vehicles. The system is operated in a pilot project in cooperation
with the Hamburg sales-and-service center. The pilot project
was extended to Warsaw at the beginning of 2014. An analysis
of the test-drive appointments made revealed that the online
sales channel mainly attracted young people.
Return on sales (in %)
32,389
Revenue
1,878
EBIT
-6
839
788
+3
1,637
31,473
+1
brand, according to a study conducted by the Center of Auto-
motive Management (CAM) and the Pricewaterhouse Coopers
(PwC) corporate consulting firm.
Numerous awards for Mercedes-Benz. The Mercedes-Benz
The new C-Class sedan celebrated its successful launch
in Europe in March 2014. The model has been available also
as a wagon version since September 2014. The wagon
shines with a clear yet emotive and sporty design, innovative
technology, flexibility and greater cargo volume than the
predecessor model.
The new C-Class - dynamic and premium. Mercedes-Benz
sets the benchmark in the premium mid-range segment with its
all-new C-Class. The C-Class sets efficiency standards in its
class, thanks to an intelligent lightweight design concept, excel-
lent aerodynamics and new economical engines. Numerous
new assistance systems provide the highest levels of safety, while
a new chassis ensures exemplary ride and driving comfort as
well as agile handling. In terms of appearance, the new C-Class
adopts a progressive approach with its clear yet emotive
design and its high-class interior. Many other innovations and
appointment details underscore the sedan's comfort and
refined sportiness. All in all, the perceived quality of the new
C-Class feels like an "upgrade to a higher class."
The main contributions to the growth in unit sales came from
the S-Class, our compact cars and the new C-Class models.
A total of 471,700 customers opted to buy a vehicle of the
A-Class, B-Class, CLA-Class or the new GLA-Class series during
the year under review, representing an increase of 23% over the
previous year. The sedans and wagons of the E-Class remained
very popular and unit sales of those models increased by 2%
to 252,300 vehicles. Total sales of 329,000 units in the E-Class
segment almost matched the high prior-year level. Mercedes-
Benz further improved its position in the global market for luxury
vehicles. A total of 125,100 vehicles in the S-Class segment
were sold in 2014 (+75%), more than ever before in the long and
successful history of that model series. Business with our
SUVs remained very positive, with sales rising to the new record
level of 341,500 vehicles (+6%). The C-Class performed
extremely well in the year of its model changeover. Unit sales
totaled 362,700 vehicles (+2%) despite the fact that the new
C-Class models did not become available in all core markets
until October 2014.
Mercedes-Benz also performed very well overall in a volatile
market environment in Europe. Growth was particularly strong
in Spain (+35%), the United Kingdom (+13%) and France (+9%).
Unit sales in Western Europe were up 6% from the prior year,
although they did fall slightly in Germany. We set a new record
in the United States with sales of 334,000 vehicles (+8%).
We continued to grow in China, where sales increased by 25%
to 275,000 units. We recorded significant increases in
unit sales also in Japan (+15%), India (+14%) and Brazil (+6%).
Record unit sales for Mercedes-Benz. Unit sales of the
Mercedes-Benz brand increased by 11% to 1,630,100 vehicles
in 2014. This is the fourth consecutive year in which the brand
has set a new record. 7 C.02 Despite difficult conditions in
several markets, the pace of growth increased slightly compared
with the previous year due to the launch of attractive new
models. We were able to improve our market position in China
in particular.
C | The Divisions | Mercedes-Benz Cars
The new Mercedes-Benz S-Class coupe: breathtaking design and refined sportiness.
SMB 2018
14/13
2013
2014
in thousands
Unit sales by Daimler Trucks
C.04
+5
79,020
82,743
The new models have been extremely well received by our
customers and the trade press. A total of 219,400 new C-Class
vehicles were delivered to customers in 2014.
The new Mercedes-Benz GLA - an all-round talent. The
SUV from our new compact-model family combines superior
everyday driving performance with off-road mobility. Its
flexible interior and high-quality appointments showing loving
attention to detail clearly position the GLA as a premium
compact SUV. The new GLA rounds out the extensive range
of Mercedes-Benz SUVs, and is the fourth of a total of five
new compact models from the brand. Deliveries of the GLA to
customers began in March 2014. The fifth compact model,
the CLA Shooting Brake, will be available as of March 2015.
155
The new S-Class coupe - stylistically self-assured with
refined sportiness. The new S-Class coupe, which has
been available since September 2014, combines the classic
proportions of a large, sporty coupe with modern luxury and
forward-looking technology. As a worldwide first, the S-Class
coupe can be optionally equipped with the MAGIC BODY
CONTROL suspension system, which features a curve tilting
function.
157
2 smart fortwo electric drive: electricity consumption in kWh/100 km 15.1;
CO2 emissions in g/km 0.0.
1 Mercedes-Maybach S 600: fuel consumption in l/100 km urban 16.9,
extra-urban 8.7, combined 11.7; CO2 emissions in g/km combined 274.
Additional sales momentum has been generated in China
since September 2014 by the C-Class long-wheelbase version,
which is produced in and for China. This car was developed
especially for the Chinese market and offers rear passengers
about 80 millimeters more legroom. High-quality materials
and precisely defined details lend the interior a feeling of modern
luxury.
world for car dealership staff in Shanghai in July 2014. In addition,
a new Mercedes-Benz Research & Development Center began
operating in Beijing in November 2014, and will enable us to meet
the requirements and expectations of our Chinese customers
more effectively. We intensified the cooperation with our Chinese
partner BAIC Motor Corporation during the year under review.
As a result, annual capacity at Beijing Benz Automotive Co., Ltd.
(BBAC) will be more than doubled to over 200,000 units by 2015.
Foundations laid for further growth in China. During the
reporting year, we created the conditions necessary for further
growth in China with the launch of nine new models, as well
as by strengthening our sales network and making extensive
investments in our local production and research locations.
The consolidation of marketing and sales activities under the roof
of a highly effective single organization, which began in 2013,
was successfully completed in the year under review. We also
added over 100 new sales outlets in more than 50 cities to
our sales network in China, which now comprises a total of nearly
450 dealerships. In order to ensure that we can staff our
growing sales organization with highly qualified employees,
we opened Mercedes-Benz's biggest training center in the
Despite being in its last year prior to a model changeover,
smart was able to keep unit sales relatively stable at 92,500 cars
in the year under review (2013: 98,200). The smart fortwo
electric drive² remained very successful in the electric-car
market.
They include a reinforced tridion safety cell, comprehensive
airbag solutions and assistance systems normally reserved
for premium vehicles. The new fortwo and forfour models have
been available in Europe since November 2014; additional
markets will follow in 2015.
brand was once again the recipient of numerous awards in
2014. The brand was honored not only on the basis of traditional
criteria such as safety, comfort, value stability and environ-
mental compatibility, but also for its innovative spirit and the
fascinating design of its vehicles. For example, readers of
Auto Zeitung selected Mercedes-Benz models as the vehicles
with the best design in three categories. The GLA topped
the SUV category while the new C-Class took top honors among
sedans and was also voted the best vehicle overall. Readers
who participated in the voting for the AUTO BILD Design Award
chose models from Mercedes-Benz as Germany's most
beautiful cars in five out of six categories. Among the winners
here was the new S-Class coupe; the C-Class was named
overall Design Champion in this competition as well. In the voting
for the World Luxury Car, 69 top journalists from 22 countries
selected the S-Class as the best luxury car in the world.
Mercedes-Benz was once again named the most valuable Euro-
pean brand and the most valuable premium automotive brand
in the world in the Interbrand rankings for Best Global Brands
2014. Mercedes-Benz is also the most innovative automobile
SWMB 107
C | The Divisions | Mercedes-Benz Cars
156
Nearly all aspects of the smart fortwo have been improved and it now promises even more fun in the city with many innovative details.
S.MB 1018
New smart models - a new era begins. In July 2014, the
smart brand unveiled two completely new models to the
international media and the global public. The smart fortwo
retains its uncompromising "shortness" of 2.69 meters,
while the 3.49-meter forfour combines typical smart attributes
with a feeling of great roominess and clever cargo loading
options. The suspension system takes its cue from the technol-
ogy used in the larger Mercedes model series; its roughly
ten-centimeter wider track has led to a clear improvement in
handling compared with the predecessor model. The smart
fortwo's turning circle of 6.95 meters is the best in the world,
while the forfour also boasts outstanding agility with a turning
circle of 8.65 meters. The two are thus ideally prepared for
the demands of urban driving. Customized infotainment options
and clever connectivity solutions leave nothing to be desired,
and the new smart models make a huge impression also with
a range of safety features that set new standards in the
brand's market segment.
Mercedes-AMG: driving performance for sports car
enthusiasts. The new Mercedes-AMG GT celebrated its world
premiere in September 2014. This model marks the entry of
the sports car and high-performance brand from Mercedes-
Benz Cars into a new top-class sports-car segment that it had
not previously occupied. This automobile, the second sports car
that Mercedes-AMG has developed entirely on its own, under-
scores the brand's successful history. Entry into the compact
class and expansion of the model range to include additional
4MATIC and S models have enabled Mercedes-AMG to attract
new customer groups in both new and established markets.
Within the framework of the AMG Green Performance Strat-
egy, fleet fuel consumption has been reduced by 35% over the
past five years with the help of an extensive range of technical
modifications. New engine technologies and comprehensive
lightweight design have made the AMG models, which
already boast some of the lowest emissions in their respective
segments, even more efficient than before.
Mercedes-Maybach premieres. In November 2014, our
new Mercedes-Maybach sub-brand and the first model from
this new and exceptionally exclusive brand - the Mercedes-
Maybach S 600¹ - celebrated their world premiere simultane-
ously in the United States and China. Mercedes-Maybach
stands for prestigious exclusivity and is aimed at particularly
discerning customers. With the combination of the very
highest exclusivity, unparalleled comfort and state-of-the-art
technology, the new Mercedes-Maybach S 600¹ represents
the absolute pinnacle of the top-of-the-line automobile segment.
The Mercedes-Maybach S 600¹ also offers a new dimension
in seat comfort and relaxation. Thanks to extensive noise-
insulation measures, this is the quietest production limousine
in the world for passengers in the rear.
The B-Class: better than ever before. After sales of more
than 350,000 units of the B-Class since its market launch
in 2011, we have given the compact sports tourer a significant
upgrade both inside and out. Five efficient diesel models
with fuel consumption ranging from 3.6 to 5.0 1/100 km, four
efficient gasoline models with fuel consumption ranging from
5.4 to 6.61/100 km, alternative drive systems (electrical and
natural gas), and the optional 4MATIC all-wheel drive system
ensure a unique selection in the model's segment. The sports
tourer sets the standard in its class also with a drag coef-
ficient of less than 0.25. The first new B-Class models were
delivered in December 2014.
The new C-Class wagon is a lifestyle automobile that combines dynamic design, high-class interior and innovative technology.
in 2014, but the situation varied greatly from region to region.
Whereas unit sales grew in Japan and India, they decreased
in Indonesia. Sales in Japan rose by 14% to 43,900 units.
The increase was particularly noticeable in the first quarter
of 2014, as many customers chose to purchase trucks before
the increase in VAT that went into effect on April 1, 2014.
This was followed by a period of very small increases in unit
sales. Nevertheless, the decline in sales that was anticipated
by some market observers did not materialize. We successfully
defended our market share and achieved an overall share of
the Japanese truck market of 20.1% (2013: 20.2%). We increased
our market share in Indonesia to 47.4% (2013: 46.9%). But
thereof capitalized
79
-4
103
99
BFDA (Auman Trucks)
Additional information:
-10
65
58
Indonesia
+14
38
44
ཟུ|
thereof Japan
+3
163
167
Total (including BFDA)
595
588
+1
C | The Divisions | Daimler Trucks
162
Our market share of 37.2% in the NAFTA region (2013: 38.2%)
once again made us the undisputed market leader in the
segment for Class 6-8 trucks. Sales in the region rose to the
record level of 161,500 units, which represents an increase
of 19% over the previous year. The Freightliner Cascadia Evolu-
tion, which was added to the product range in 2013 and
is a benchmark for fuel efficiency, made a major contribution
to our sales success in the region. Our customers in North
America have come to increasingly appreciate the benefits
of a fully integrated heavy-duty powertrain from a single
source. Engines, axles and transmissions are all from Daimler
Trucks, which ensures optimally coordinated drive-system
components. The expansion of production of the DT12 trans-
mission to North America, which is planned for the end
of 2015, will mark yet another milestone in the further devel-
opment of our global and flexible production network.
Our unit sales in Latin America fell significantly due to the
lack of economic growth in that region. In our main market there,
Brazil, sales declined by 17% to 32,200 units. Weak economic
growth significantly curbed procurement throughout the market.
In this difficult environment, we were able to increase the
market share of our medium- and heavy-duty Mercedes-Benz
trucks to 25.8% (2013: 24.7%). We will make major investments
in our production facilities and products in the coming years
in order to ensure we remain competitive in this strategically
important market and are able to react flexibly to future
changes.
Sales success in North America: the Freightliner Cascadia Evolution with a highly efficient powertrain and low fuel consumption.
161
The fact that Mercedes-Benz products are extremely popular
is demonstrated by our top position in the segment for medium-
and heavy-duty trucks in Western Europe, where despite
a difficult market environment, we were able to record a slight
increase in market share to 24.4% (2013: 24.1%). At 57,400 units,
sales in Western Europe were down 13% from the previous
year. The truck market in the region was negatively affected by
sluggish economic growth and the introduction of the Euro VI
emission standards at the beginning of 2014. The negative
development was particularly noticeable in the fourth quarter,
as unit sales in Q4 2013 had been boosted by purchases
brought forward prior to the introduction of Euro VI. At 33,900
units, sales in Eastern Europe were lower than in the prior
year. The increase in unit sales in Turkey to the record level of
22,200 vehicles could not offset declines in our other Eastern
European markets. The ongoing difficult political and economic
situation in Russia led to a substantial decline in sales in that
market.
Outstanding product acceptance thanks to low total cost
of ownership. Daimler Trucks once again increased its unit
sales in 2014. At 495,700 units, sales were at their highest level
since 2006. The high degree of market acceptance for our
products is largely due to the fact that Daimler Trucks consis-
tently focuses on customer requirements - as evidenced
by an extremely competitive total cost of ownership, which
is the most important factor in our customers' purchasing
decisions. Improving fuel efficiency is therefore a top priority
in all regions. The Euro VI Actros in Europe, the Freightliner
Cascadia Evolution in North America and the FUSO Super Great V
in Japan are all trendsetters for fuel economy.
Asia
The systematic alignment of Daimler Trucks' business activities
in Asia is also creating benefits. Our new Asia Business Model
has led to extensive cooperation between development, produc-
tion and sales units, which in turn has allowed us to exploit
synergy and growth potential at our Japanese and Indian subsid-
iaries. For example, Daimler Trucks is now benefiting more
from growth opportunities in the up-and-coming markets of
Southeast Asia and Africa by supplying them with medium-
and heavy-duty FUSO brand trucks made in India. With the start
of production of the left-hand-drive versions and the Euro IV
and Euro V versions, these vehicles can also be exported to the
Middle East and Latin America.
Powerhouse with the star: The Mercedes-Benz SLT - as an Actros or Arocs variant - can pull extra-heavy loads weighing up to 250 metric tons.
6 LT4963
Keeea
C | The Divisions | Daimler Trucks
160
The goal of Daimler Trucks #1 is to improve the competitiveness
and profitability of Daimler Trucks on a sustained basis. All
units at the division have been working continually to increase
their unit sales and efficiency since the start of the program.
To this end, numerous measures have been defined and imple-
mented along the entire value chain in all regions. This has
enabled us to achieve substantial reductions in production,
material and fixed costs worldwide. Moreover, our product
offensive and the systematic development of new markets have
allowed us to exploit additional growth potential.
Daimler Trucks #1 on course to achieve its targets.
The Daimler Trucks #1 excellence program was successfully
continued during the year under review. More than 10,000
program initiatives had been implemented worldwide by the
end of 2014. The program target of €1.6 billion will be achieved
in 2015, when the measures will have been in effect for a
full year.
Growth in unit sales, revenue and earnings. Daimler Trucks
was able to increase its unit sales by 2% to 495,700 units in 2014.
Revenue also rose, increasing to €32.4 billion (2013: €31.5
billion). At €1.9 billion, EBIT was well above the figure for the prior
year. The earnings figure includes charges of €149 million
related to workforce adjustments in Brazil and Germany as well
as charges from the impairment of the carrying amount of
the investment in Kamaz. The year under review was marked
by very different developments in individual regions. A poor
economic outlook and uncertainties associated with upcoming
elections negatively impacted unit sales especially in Latin
America and Indonesia. The truck market in Europe was notice-
ably affected by the introduction of the Euro VI emission
standards at the beginning of 2014. Moreover, sales in the region
were influenced by sluggish economic growth and the political
situation in Eastern Europe. The situation was completely differ-
ent in North America and Japan, as Daimler Trucks benefited
from high demand for commercial vehicles in both markets.
In addition, earnings were positively affected by the successful
measures implemented within the framework of the Daimler
Trucks #1 efficiency and growth program.
Division-wide strategic initiatives for utilizing global synergy
potential were also launched successfully during the year under
review. One result of Daimler Trucks #1 is our newly estab-
lished module management system, with which initial economies
of scale were achieved in pilot projects for multiple brands.
This development was supported by organizational consolidation
that has led to optimal coordination with the Development
and Procurement departments.
34
-17
32
33
29
thereof Germany
-13
66
57
Western Europe
+2
484
496
Total
% change
Unit sales
490,280
497,710
Production
-57
-13
United Kingdom
8
9
thereof Brazil
-21
59
47
Latin America (excluding Mexico)
+20
118
142
39
thereof United States
135
161
NAFTA
-37
9
6
France
-14
+19
C | The Divisions | Daimler Trucks | Mercedes-Benz Vans
4,218
Mercedes-Benz Vans set a new record for unit sales in 2014 and recorded double-digit growth
in both its core region of Western Europe and the United States. We successfully continued
our product offensive in the year under review and upgraded our products in the mid-size van
segment. Mercedes-Benz Vans sets benchmarks for customer focus, engineering, design and
sustainability with its new V-Class multipurpose vehicle, as well as with the Vito, which is tailored
to the needs of commercial customers. Thanks to our innovative products and further efficiency
improvements, Mercedes-Benz Vans was once again able to record an increase in earnings in the
year under review. We are continuing with our "Mercedes-Benz Vans goes global" growth strategy.
Mexico
3,633
2,959
+17
+23
Latin America (excluding Mexico)
17,614
19,118
Asia
1,117
1,704
3,241
3,210
-8
-34
+1
168
OFNECTEL
7
CAPACITY L
MA. EV 175
C | The Divisions | Daimler Buses
SETRA
7C510
Upper picture: The Setra TopClass 500 is fitted with the TopSky Panorama glass roof and offers passengers exceptional space and comfort.
Lower picture: Plenty of space - the large-capacity articulated bus Mercedes-Benz CapaCity L offers a solution for urban traffic problems
with space for 191 passengers.
169
Mercedes-Benz and Setra present new products and
new brand messages. At the IAA Commercial Vehicles trade
fair, Mercedes-Benz and Setra not only unveiled numerous
new products and model variants, but also presented new brand
messages. The Citaro G articulated bus is now available
with the compact, horizontally installed OM 936 h six-cylinder
in-line engine. The Mercedes-Benz Travego premium high-
decker comes with the new Active Brake Assist 3 (ABA 3) system,
which enables it to initiate an automatic emergency braking
maneuver also when obstacles are stationary. Mercedes-Benz
presented its "The standard for buses" brand claim at the
IAA. The perfection, aesthetic appeal and fascination of buses
from the Setra brand are reflected in its new brand claim
"The Sign of Excellence." Setra has expanded its ComfortClass
500 coach series to include two new vehicle lengths for high-
decker (HD) versions. The brand has also placed the Comfort-
Class 500 series in a whole new segment through the addition
of two middle-decker (MD) buses. This offers customers a cost-
effective and flexible entry into the premium coach program
of the Setra brand. Daimler Buses has also completed its Euro
VI-compliant chassis program with the addition of the three-
axle Mercedes-Benz OC 500 RF chassis for intercity buses and
coaches.
Mercedes-Benz Citaro and Setra TopClass 500 receive
international awards. During the year under review, the
Mercedes-Benz Citaro Euro VI city bus received the Green Bus
Award 2014 for the lowest fuel consumption in comparative
tests. The Citaro also beat its rivals in the International Bus &
Coach Competition (IBC). Meanwhile, the Setra TopClass 500
received the Red Dot Award Product Design 2014 from an inter-
national panel of experts, who cited the coach's high-quality
interior as well as its comfort and elegance as the main reasons
for their selection. The TopClass 500 was named Coach of
the Year 2014 also in Madrid, where the award panel was par-
ticularly impressed by the design concept for the exclusive
long-distance coach, which combines the most modern luxury
features with great efficiency. In addition, the TopClass 500
won the International Bus Planner Sustainability Prize 2015 for
its intelligent Predictive Powertrain Control (PPC) system.
Mercedes-Benz Citaro is best-selling city bus of all time.
Mercedes-Benz delivered its 40,000th Citaro city bus during
the year under review, making the Citaro the best-selling
bus of all time. At the same time, sales of Mercedes-Benz mini-
buses passed the 20,000 mark. The 3,000th regular-service
Mercedes-Benz bus equipped with the economical Euro VI engine
generation was delivered in December 2014.
Mercedes-Benz CapaCity L - a new high-capacity articu-
lated bus - offers a solution for urban traffic problems.
Daimler Buses has responded to transport problems in large
cities with its new Mercedes-Benz Capa City L, which is
21 meters long and can accommodate up to 191 passengers.
It thus provides ideal transport capacities for applications
in worldwide bus rapid transit (BRT) systems.
Smooth urban traffic flows with bus rapid transit sustainable
mobility concept. Bus rapid transit systems attracted atten-
tion from around the globe during the 2014 World Cup in Brazil.
Such systems ensured smooth and efficient transport to and
from stadiums at nine of the 12 World Cup venues - but people
in Brazil also rely on them all year round. More than 170 BRT
systems are currently operating on all continents around the
world. For transport operators, the main advantages of BRT
systems are their low planning and construction costs and their
relatively short implementation times and great adaptability.
Daimler Buses therefore has a specialized team that helps cities
and customers design optimal BRT systems. For example,
a forum in Tokyo organized by Daimler Buses and Mitsubishi
Fuso Truck and Bus Corporation in October 2014 provided
customers, municipal authorities and the media with information
on bus rapid transit systems.
2,440
2,865
thereof Germany
+13
Production
31,485
Mercedes-Benz Vans.
-9
Unit sales
33,162
33,705
-2
Employees (December 31)
16,631
16,603
+0
C.08
Major international contracts. The RATP Group, which
provides public transport services in the Paris metropolitan area,
opted to purchase 199 Mercedes-Benz Citaro buses following
a Europe-wide invitation to tender. The transport authority of the
city of Basel in Switzerland ordered 106 new Mercedes-Benz
Citaros as rigid and articulated versions. Singapore also likes the
best-selling city bus, as evidenced by the fact that the local
transport operator, SBS Transit, ordered 250 Mercedes-Benz
Citaros in the year under review. Daimler will deliver 105
Mercedes-Benz Conecto articulated buses to the IETT public
transport company in Istanbul. A total of 300 23-meter long
0500 UAD CapaChassis were delivered to São Paulo in 2014,
while Estrella Blanca in Mexico purchased 250 Mercedes-Benz
Paradiso 1200 touring coaches.
Unit sales by Daimler Buses
2013
14/13
% change
+38
14/13
% change
-2
Earnings significantly above prior-year level. Sales of
33,200 buses and bus chassis worldwide by Daimler Buses
in 2014 did not quite match the prior-year figure (2013: 33,700).
Nevertheless, the division was able to significantly expand
its leading position in its core markets for buses with a gross
vehicle weight of over 8 metric tons. 7 C.07 Business with
complete buses in Western Europe improved considerably from
the previous year. At €4.2 billion, revenue was slightly above
the level of 2013 (€4.1 billion). Success with sales of complete
buses and further efficiency improvements resulted in a
substantial increase in EBIT to €197 million (2013: €124 million).
The earnings increase was largely due to the fact that mea-
sures associated with the GLOBE 2013 growth and efficiency
program had their full effect during the reporting year. The
division actually exceeded the GLOBE 2013 earnings improve-
ment target of €200 million.
Varied business development in core regions. In Western
Europe, the Daimler Buses brands Mercedes-Benz and Setra
offer not only a complete range of city buses, intercity buses and
coaches, but also bus chassis. Thanks to a significant improve-
ment in our complete bus business, sales in the region increased
by 13% to 7,600 units. Daimler Buses also further expanded
its leading position in Western Europe with its market share
reaching an all-time high of 34.4% (2013: 30.9%). This reflects
the very positive response to the new city-bus generation
Citaro and the new Setra TopClass 500 and ComfortClass 500.
High demand for our Mercedes-Benz buses had a very positive
effect on our sales in Germany, which rose by 17% to 2,900 units.
In addition, the coach segment was positively impacted by
the growing business of long-distance bus services. Our market
share in Germany expanded significantly to 57.1% (2013:
51.2%). In Turkey, we recorded sales of 700 units (2013: 1,200).
This market-related sales decline had been previously antici-
pated. The market in Latin America (excluding Mexico) deterio-
rated significantly due to the region's difficult economic situa-
tion. Sales of Mercedes-Benz bus chassis in the region fell by 8%
to 17,600 units. Nonetheless, we were able to significantly
expand our leading position in Latin America to a market share
of 48.6% (2013: 41.6%). At 3,600 units, sales in Mexico were
significantly higher than in the previous year.
Total
33,162
33,705
Western Europe
7,557
6,714
2014
-3
+267
Cornerstone laid for bus plant in India. Following the
successful integration of its bus business into Daimler India
Commercial Vehicles (DICV) in 2013, the company laid the
cornerstone for a new bus plant in India during the year under
review. Daimler is investing approximately €50 million in
the new production facility, which is being built at the DICV
site in Chennai. The plant is scheduled to be completed
in the second quarter of 2015. Its product range will include
front-engine buses from the BharatBenz brand that are tailored
to the specific needs of the volume bus market in India.
Existing rear-engine chassis for the premium bus segment will
also be localized under the Mercedes-Benz brand name.
C | The Divisions | Daimler Buses | Daimler Financial Services
8,107
+10
171
Start
E88
CAR2GO
I'd like to go
from hungry
to Shake Shack
now
Upper picture: Online or in direct dialog - customers of Daimler Financial Services can gain information on financing
and leasing offers conveniently on all channels.
Lower picture: Everyone can find the right mode of transport for his or her needs with the new moovel app.
172
Let's moovel!
174
Daimler's Board of Management and Supervisory Board are committed
to the principles of good corporate governance. All of our activities are
based on responsible, transparent and sustainable management.
We act responsibly
and sustainably.
173
Toll Collect system expanded. The automatic system for
truck-toll collection on German autobahns and selected
highways continued to operate smoothly and reliably in 2014.
Approximately 818,000 onboard devices for automatic toll
collection were in operation at the end of the year, and a total
of 28.0 billion kilometers driven was recorded. Daimler Financial
Services holds a 45% equity interest in the Toll Collect con-
sortium. In December 2014, the German federal government
renewed the Toll Collect operating contract for another three
years and also commissioned Toll Collect to expand the system
to cover an additional 1,100 kilometers of federal highways in
Germany, as well as trucks with a gross vehicle weight of between
7.5 and 12 metric tons. The Federal Republic of Germany
has collected a total of €39 billion in tolls since Toll Collect
went into operation at the beginning of 2005.
Daimler Financial Services among the world's best employ-
ers. Daimler Financial Services is the first German company
to make it into the highly competitive ranking of the "25 World's
Best Multinational Workplaces 2014." The independent Great
Place to Work Institute compiles a ranking of the world's most
attractive employers every year. The institute's most recent
employee survey, whose results were used for the ranking,
found that nine out of ten staff members at Daimler Financial
Services think the company is a great place to work.
The moovel app was also successfully expanded in 2014.
With moovel, all registered customers can use the platform
to find the best transport option for their individual needs;
they can then book and purchase tickets directly with the moovel
app. The mytaxi service and the complete range of services
offered by the Deutsche Bahn railway company are fully inte-
grated into the moovel app. Train tickets are made available
in the app as QR codes, for example, so there is no longer any
need to print tickets. In September 2014, moovel acquired
Intelligent Apps GmbH, which offers the mytaxi taxi service app,
and also took over the mobility platform provider RideScout
LLC in the United States.
moovel with more than a million customers. Daimler
Financial Services continued to develop its business operations
in the area of innovative mobility services in 2014. At the
end of the year, more than one million customers were registered
with the moovel Group for the first time - 86% more than in
2013. With the car2go brand, moovel is the clear market leader
for flexible short-term car rentals. In late November, a new
system was launched that allows car2go customers to use
a smartphone app to open any one of nearly 13,000 vehicles
that were available at 29 locations at the end of the year.
According to Mutabor Brand Report 2014, car2go is now number
four in the ranking of the most innovative mobility brands.
The car2go black brand introduced in 2014 is attracting new
customer groups. At the end of the year, it became possible
to rent and drive Mercedes-Benz B-Class vehicles from car2go
black not only within cities but also between the cities
Berlin, Frankfurt am Main, Hamburg, Stuttgart and Cologne.
Stable business with fleet customers. In 2014, Daimler
Financial Services once again supported its fleet customers with
the financing and management of their vehicles and fleet.
Daimler Fleet Management had a total of 305,000 contracts with
clients in Europe on its books at the end of 2014, representing
an increase of 1% over the previous year. With 140,000 contracts,
new business was up by 6% compared with 2013. During the
first quarter of 2014, Daimler Fleet Management expanded its
range of services for fleet customers to include a new Corpo-
rate Carsharing program that allows employees to easily reserve
vehicles from their company's fleet online for both business
and private use. The introduction of innovative products such
as the new xFleet customer reporting system and the Fleet
app for fleet managers and drivers of company cars is helping
Daimler Fleet Management expand its position as a provider
of integrated solutions for commercial customers.
More automotive insurance policies brokered than ever
before. In the year under review, Daimler Financial Services
set a new record by brokering approximately 1.4 million
automotive insurance policies, an increase of 10% over the prior
year. The demand for our insurance policies was particularly
dynamic in China, where six out of ten Mercedes-Benz cars were
once again delivered with an insurance policy brokered by
us. Our cooperation with major insurance companies offers
Mercedes customers the opportunity to receive attractive
insurance conditions for their vehicles and to have their auto-
mobiles repaired at authorized service centers if they are
damaged.
New business in Africa & Asia-Pacific region up 44%. New
business in the Africa & Asia-Pacific region increased by 44%
on the previous year, to €8.1 billion. Business development was
especially strong in China (+128%), India (+66%) and South
Korea (+66%). At the end of 2014, contract volume in the region
totaled €15.4 billion, which corresponds to a 32% increase
over the previous year. Adjusted for exchange-rate effects, the
increase amounted to 24%.
C | The Divisions | Daimler Financial Services
8,878
+21
19
23
Daimler Financial Services.
The number of cars and commercial vehicles financed or leased by Daimler Financial Services
reached a new all-time high of more than 3.3 million in 2014. New records were also set for new
business and contract volume, and the number of brokered automotive insurance policies was
higher than ever before as well. The mobility subsidiary moovel, which provides services including
car2go flexible car-sharing, broke the one-million customer mark for the first time ever at the
end of the year under review. Daimler Financial Services was named one of the 25 best international
employers worldwide by the independent Great Place to Work institute.
Number of financed and leased vehicles reaches new
record. During the year under review, Daimler Financial
Services concluded 1.3 million new financing and leasing
contracts worth a total of €47.9 billion. The total value of
all new contracts therefore rose by 18%. More than 3.3 million
financed or leased vehicles were on the books at the end
of 2014; this corresponds to an 18% increase in contract volume
to €99.0 billion. Adjusted for exchange-rate effects, the
increase amounted to 12%. EBIT rose to a new high of €1,387
million (2013: €1,268 million). 7 C.09
New business in Europe up 11%. During the year under
review, Daimler Financial Services concluded approximately
690,000 new financing and leasing contracts worth €21.6
billion (+11%) in the Europe region. High rates of growth were
recorded in Turkey (+30%) and the United Kingdom (+14%).
In Germany, Mercedes-Benz Bank's new business increased
by 8% to €9.9 billion; the volume of deposits in the direct
banking business totaled €10.8 billion at the end of the year
(-4%). Daimler Financial Services' contract volume in
Europe rose by 8% to €40.4 billion.
Growth of 18% in the Americas. Daimler Financial Services was
able to record an increase over the high level of new business
of the previous year in the Americas region, where the company
brokered about 437,700 new financing and leasing contracts
worth €18.2 billion in 2014 (+18%). Strong growth was recorded
in the United States (+21%) and Brazil (+18%). Total contract
volume in the Americas rose by 25% to €43.1 billion. Adjusted
for exchange-rate effects, the increase amounted to 12%.
C.09
Daimler Financial Services
2014
2013
14/13
Amounts in millions of euros
% change
EBIT
170
Revenue
Contract volume
Investment in property,
plant and equipment
Employees (December 31)
1,387
1,268
+9
15,991
14,522
+10
47,912
40,533
+18
98,967
83,539
+18
New business
3
34,467
thereof capitalized
Production
299,008
270,675
+10
294,594
270,144
+9
Employees (December 31)
15,782
14,838
+6
Unit sales
C.06
Unit sales by Mercedes-Benz Vans
Total
Western Europe
2014
2013
14/13
% change
294,594
270,144
+9
190,019
169,175
11
thereof Germany
79,898
-51
139
68
thereof capitalized
Unit sales, revenue and earnings above prior-year levels.
Mercedes-Benz Vans set a new sales record in 2014, with
deliveries rising by 9% to 294,600 units. At €10.0 billion, revenue
was also higher than in the previous year (2013: €9.4 billion).
EBIT of €682 million was 8% higher than in 2013. Earnings were
impacted by the very positive sales development, as well
as by the measures implemented within the framework of the
Performance Vans efficiency program. Those measures
included the introduction of more efficient production processes
following the ramp-up of new products, the optimization
of material use and the consistent utilization of the potential
offered by the European and North American van markets.
7 C.05
Continued growth. Mercedes-Benz Vans sold 294,600 vehicles
worldwide in 2014. This figure marks a new sales record
and an increase of 9% from the prior year. Our Sprinter, Vito and
Citan vans are targeted mainly at commercial customers,
while the Viano and V-Class models are designed primarily for
private use. Unit sales in Western Europe, our most important
market, rose by 12% to 190,000 vans in the year under review.
The southern European markets experienced an especially
strong comeback last year. Mercedes-Benz Vans sold 20,700
units of the Citan city van in Western Europe in 2014 (2013:
17,700). Sales of mid-size and large vans rose by 12% to 169,400
units. Growth was particularly strong in our German home
market (+12%), where we also set a new sales record. Despite
a difficult market environment in Eastern Europe, Mercedes-Benz
Vans was able to increase its sales in that region to 30,800
units (+14%). This figure includes 6,700 Sprinter Classic models
that were built and sold in Russia. The success story of our
Sprinter continues in United States as well. With sales of 25,800
vehicles (2013: 22,800), we increased our market share in the
United States to the new record level of 8.9%. At 12,800 units,
sales in China were slightly above the prior-year level. Sales
in Latin America declined by 18% to 16,100 units due to the diffi-
cult economic situation in that region.
C.05
Mercedes-Benz Vans
2014
2013
14/13
Amounts in millions of euros
% change
EBIT
682
631
+8
71,520
Revenue
9,369
+6
Return on sales (in %)
Investment in property,
plant and equipment
6.8
6.7
304
288
+6
Research and
development expenditure
293
329
-11
9,968
+12
+12
30,758
in mid-August 2014 and has been available on the market
since October. Mercedes-Benz Vans invested around €190 million
in the Vitoria plant to prepare it for the model changeover.
The money was spent mainly on the modernization and reorga-
nization of the plant's body shop, paint shop and assembly
area. Following its application with the Sprinter, the division is
now utilizing its "Mercedes-Benz Vans goes global" strategy
with the Vito. As a result, the vehicle will be launched in North
and South America in 2015.
Long-term production strategy defined for next-generation
Sprinter. The Sprinter is ready for the future. In October 2014,
the company decided to invest a substantial amount of money
in the production of the new Sprinter generation. Mercedes-Benz
Vans - the only manufacturer of large vans in Germany - will
also produce the next generation of the Sprinter in Düsseldorf
and Ludwigsfelde. Mercedes-Benz Vans will invest a total
of €450 million in the modernization of the two plants in order
to safeguard their future competitiveness. The Mercedes-Benz
Sprinter is the global market leader in the large-van segment
and is delivered to customers in some 130 countries around the
world. This makes the Sprinter a key pillar of the "Mercedes-
Benz Vans goes global" growth strategy, which aims to exploit
additional sales potential in growth markets outside Europe.
Because of the sharply rising demand for large vans in the North
American market, Mercedes-Benz Vans has decided to
manufacture the next generation of the Sprinter in North
America as well.
Eastern Europe
Daimler Buses.
As the leading bus manufacturer in its core markets of Western Europe and Latin America,
Daimler Buses focuses on supplying innovative and environmentally responsible products that
meet its customers' business requirements. Higher sales of complete buses and progress
made with additional efficiency measures led to a significant increase in earnings in 2014.
A decline in demand for bus chassis in Latin America due to difficult market conditions
in the region had a negative effect on unit sales, especially in the second half of the year.
During the year under review, we once again improved our product portfolio with some
important innovations.
C.07
Daimler Buses
Amounts in millions of euros
2014
2013
EBIT
197
124
Revenue
4,105
+59
+3
Return on sales (in %)
4.7
3.0
Investment in property,
plant and equipment
105
76
Research and
development expenditure
182
187
The new Vito: The second global van from Mercedes-Benz
Vans. The second major product highlight at Mercedes-Benz
Vans in 2014 was the launch of the new Mercedes-Benz Vito,
which sets new standards in the mid-size van segment. At its
world premiere in Berlin at the end of July 2014, Mercedes-Benz
Vans presented the versatile van in the range of 2.5-3.2 metric
tons gross vehicle weight to the public for the first time. The new
Vito offers a whole range of outstanding features. For one
thing, it is the first vehicle in its class to be available with a choice
of three different drive systems (rear, front and all-wheel drive)
so that it can meet all customer requirements. The model also
boasts a high payload and efficient engines. A Vito equipped
with our BlueEFFICIENCY package achieves average fuel con-
sumption of only 5.7 liters per 100 kilometers - no competitor
can beat that. The Vito also features numerous innovative
safety and assistance systems including Crosswind Assist,
ATTENTION ASSIST, ADAPTIVE ESP and the Tire Pressure
Monitoring System, all of which come as standard equipment.
In addition, the Vito Tourer has allowed us to reposition our-
selves in the passenger-transport segment, for which we have
created our own model family with three equipment variants.
The new Vito went into production at our plant in Vitoria, Spain,
The new Marco Polo: the perfect combination of leisure
and daily use. The all-new Marco Polo camper van lays down
a new marker in its segment and stands apart from its rivals
with cutting-edge design, maximum functionality and perfect
suitability for daily use. The camper van is equipped with
a kitchen, a wardrobe and extremely comfortable beds, and
can accommodate up to four people. With its compact body
and outstanding technology, the Marco Polo offers the same
dynamic, comfortable and economical ride as a Mercedes-
Benz passenger car. The model can also easily be driven into
any standard parking garage or car wash. Exemplary safety
is ensured by numerous innovative driver assistance systems.
The Marco Polo is very popular among customers, as evidenced
by the fact that it was voted Compact Camper Van of the Year
2015 by readers of the Promobil trade journal. This distinction
is awarded by the magazine every year.
167
S.MB 2038
26,876
+14
United States
25,832
22,802
+13
Latin America (excluding Mexico)
16,063
19,580
The Mercedes-Benz Sprinter: the undisputed number one in its class.
China
Other markets
12,837
12,705
+1
-18
19,006
S.MB 2099
19,085
S.MB 2098
166
Extreme efficiency, exemplary safety and unique comfort: Mercedes-Benz redefines the multipurpose vehicle with the V-Class.
S.MB2102
C | The Divisions | Mercedes-Benz Vans
itself apart from the competition also with its wide range
The benchmark for multipurpose vehicles: the new
Mercedes-Benz V-Class. The new Mercedes-Benz V-Class -
the outstanding multipurpose vehicle with the three-pointed
star marks yet another milestone in our global growth strategy.
With this vehicle, Mercedes-Benz Vans redefines the MPV
and sets new standards in the segment both aesthetically and
technologically. The model's design follows the new design
idiom for Mercedes-Benz cars and ensures that the V-Class
stands out visually from the crowd as it communicates
a sense of modern luxury. This design convinced the panel
of judges for the Red Dot Award, which is one of the world's
biggest competitions for design quality. The panel selected
the V-Class for its product-design award. The V-Class sets
We sold a total of 186,300 Sprinter vehicles worldwide during
the year under review; this marks an increase of 12% over the
previous year and a new record as well. Despite model change-
overs, we were still able to significantly surpass the previous
year's sales figure in the segment for mid-size vans (including
the new V-Class) with sales of 86,000 units (2013: 80,900).
Demand for the Citan city van rose by 10% to 22,100 units in
the year under review.
165
+0
of assistance systems combining safety and comfort.
They include the Crosswind Assist and Attention Assist systems
as standard equipment and the optional Active Parking Assist.
A completely new feature is a state-of-the-art multimedia system
with a touchpad for operating all telematics functions. The
V-Class makes a big impression also with its generous space
and versatile seating and loading configurations. Access to
a second loading level is obtained through a separately opening
rear window for easy loading and unloading. In addition,
state-of-the-art turbo-diesel engines with extremely low fuel
consumption ensure optimal efficiency. The new V-Class
focuses on three customer groups: families, people who partici-
pate in a lot of leisure activities involving extensive sports
and outdoor equipment, and operators of luxury VIP shuttles
or hotel shuttles. The new V-Class celebrated its world premiere
in January 2014 and went into production in early March 2014
at our plant in Vitoria, Spain. The model has been available since
the end of May.
Other markets
Compliance
The main principles applied in our corporate governance
- Composition and mode of operation of the Board
of Management and of the Supervisory Board and its
committees
179-180
Culture of integrity
Integrity and Compliance
182-189
Corporate Governance Report
176-178
Report of the Audit Committee
Compliance is an essential element of integrity culture at
Daimler. For us, it is only natural that we adhere to all relevant
legislation, voluntary commitments and internal rules, and
that we act in accordance with ethical principles. We place the
utmost priority on complying with all applicable anti-corruption
regulations and on maintaining and promoting fair competition.
We have set this out in binding form in our Integrity Code,
and we intend to permanently establish integrity and compliance
as fixed components of our value chain.
Compliance management system (CMS) as a foundation.
Our CMS is based on national and international standards and
helps us to ensure that we conduct ourselves in conformance
with applicable laws and regulations in our day-to-day business.
We continually review the effectiveness of the system (through
our internal audits as well), and we adjust it to worldwide devel-
opments, changed risks and new legal requirements. In this
way, we continuously improve its efficiency and effectiveness.
In 2014, for example, we developed new processes for exam-
ining and complying with international sanctions and we also
expanded measures for preventing money laundering in goods
trading and the inadvertent financing of terrorist organizations.
Dr. Clemens Börsig, Chairman of the Audit Committee.
176
In a meeting in early February 2014, the Audit Committee
dealt with the preliminary figures of the annual company financial
statements and the annual consolidated financial statements
for the year 2013, as well as with the proposal on the appropri-
ation of profits made by the Board of Management. The
preliminary key figures and the proposal on the appropriation
of profits were published at the Annual Press Conference
on February 6, 2014.
The six meetings of the Audit Committee in 2014 were attended
by, in addition to the members of the Committee, the Chairman
of the Supervisory Board, the Chairman of the Board of Manage-
ment, the members of the Board of Management responsible
for Finance and Controlling and for Integrity and Legal Affairs, and
the external auditors. The heads of specialist departments and
other experts were also present for the appropriate items of the
agenda. In addition, the Chairman of the Audit Committee
held regular individual discussions, for example with the external
auditors, the members of the Board of Management respon-
sible for Finance and Controlling and for Integrity and Legal
Affairs, and, if required, the heads of the specialist depart-
ments. The Chairman of the Audit Committee informed the
Supervisory Board about the activities of the Committee
and about the contents of its meetings and discussions in the
following Supervisory Board meetings.
As independent members of the Audit Committee, both the
Chairman of the Committee, Dr. Clemens Börsig, and Joe Kaeser
have expertise in the field of financial reporting, as well as
special knowledge and experience in the application of accoun-
ting principles and methods of internal control. The same
applied to Dr. Bernhard Walter, who was the Chairman of the
Audit Committee until April 9, 2014.
On April 30, 2014, Erich Klemm stepped down from the Super-
visory Board and thus also from his position as Deputy Chairman
of the Audit Committee. Effective as of May 1, 2014, the
Supervisory Board elected Dr. Sabine Maassen to the Audit
Committee as a member representing the employees. Further-
more, the members of the Audit Committee elected Michael
Brecht as the Deputy Chairman of the Committee. As a result,
the Audit Committee was fully and properly constituted.
Following the departure of Dr. Bernhard Walter on April 9,
2014, in its constitutive meeting after the Annual Shareholders'
Meeting, the newly elected Supervisory Board elected
Joe Kaeser as a member of the Audit Committee representing
the shareholders. Subsequently, the members of the Audit
Committee elected Dr. Clemens Börsig, a member of the Audit
Committee since 2007, as the new Chairman of the Committee.
Several personnel changes occurred in the Audit Committee
in 2014. The longstanding Chairman of the Audit Committee,
Dr. Bernhard Walter, stepped down from the Supervisory Board
as of the end of the Annual Shareholders' Meeting on April 9,
2014. Dr. Bernhard Walter had been a member of the Audit Com-
mittee since 1998 and its Chairman since 2004. Dr. Bernhard
Walter passed away in January 2015 at the age of 72. With deep
appreciation and remembrance, the Audit Committee bids
farewell to its former Chairman, who had a major influence
on the Committee over many years with his great prudence
and experience.
After the external auditors are elected by the Annual Share-
holders' Meeting, the Audit Committee engages the external
auditors to conduct the annual audit and the auditors' review
of interim financial statements, determines the important audit
issues and negotiates the audit fees with the external auditors.
On the basis of applicable law, the German Corporate Gover-
nance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals primarily
with questions of financial reporting. In addition, it deals with
the annual audit and reviews the qualifications and independence
of the external auditors. Furthermore, it discusses the effec-
tiveness and functional capabilities of the risk management
system, the internal control system, the internal auditing system
and compliance management.
Dear Shareholders,
Report of the Audit Committee.
D❘ Corporate Governance | Report of the Audit Committee
175
Risk management and financial reporting
and the Supervisory Board, directors' dealings
Shares held by the Board of Management
Shareholders and the Annual Shareholders' Meeting
-
D&O insurance deductible for the Supervisory Board
181
- Targets for the composition of the Supervisory Board
-
with the German Corporate Governance Code
Supervisory Board of Daimler AG of Compliance
Declaration by the Board of Management and the
- Corporate governance statement
Antitrust law
In another meeting in February 2014 the Audit Committee
reviewed and discussed in detail the annual company financial
statements, the annual consolidated financial statements and
the combined management report for Daimler AG and the
Daimler Group for the year 2013, each of which had been issued
with an unqualified audit opinion by the external auditors, as
well as the proposal on the appropriation of profits. Following
an intensive review and discussion, the Audit Committee
recommended that the Supervisory Board approve the annual
financial statements and the combined management report,
and on this basis adopt the recommendation of the Board of
Management to pay a dividend of €2.25 per share entitled
to a dividend. Furthermore, the Audit Committee approved the
Report of the Audit Committee for the year 2013. Also in this
meeting, the Audit Committee discussed the report on the fees
paid to the external auditors in the year 2013 for auditing
and non-auditing services. The Audit Committee also decided
to recommend to the Supervisory Board, and subsequently
to the Annual Shareholders' Meeting, that KPMG be engaged
to conduct the annual external audit and the external auditors'
review of interim financial reports for financial year 2014;
the results of the independence review and the discussion of
the quality of the external audit were taken into consideration.
Subject to the outcome of voting by the Annual Shareholders'
Meeting, the Committee also discussed the proposal for the
fees to be agreed upon with the external auditors for financial
year 2014. Finally, the Audit Committee dealt with the draft
agenda for the 2014 Annual Shareholders' Meeting and with
the annual audit plan of the Internal Auditing department
for the year 2014.
In its meeting in early June 2014, the Audit Committee discussed
the Group's internal control and risk management system,
and dealt in particular with its changes and further develop-
ment. As well as the area of financial reporting, the internal
control system also includes the functions of internal auditing
and compliance management. Furthermore, the Committee
received a report on the non-auditing services provided by the
external auditors. In this meeting, the important audit issues
for the external audit of the reporting period and the framework
of approval for engaging the external auditors to provide non-
audit services were also determined. In addition, this meeting
was used to analyze the external audit for the year 2013.
Compliance
Whereas previous external training programs were designed
solely for business partners and suppliers, the Academy marks
the first time we've offered a seminar for compliance officers
from companies active in all different sectors. The seminar also
seeks to create a platform for exchanging experiences related
to compliance trends and challenges.
179
Many of the participants at these conferences asked us about
our experience with issues related to compliance. For this
reason, we decided to offer a practical seminar on compliance -
the Daimler Compliance Academy. The first seminar took
place in April 2014 in Germany.
An expert dialogue that extends beyond Daimler. In 2014,
we held two specialist conferences in order to promote a
dialogue with society on key issues related to integrity. First,
various stakeholder groups attended the "Automobile on
the Data Highway" conference organized by the Corporate Data
Protection department. At the conference, guests from the
worlds of business and industry, science, politics and public
administration, as well as representatives of various media
companies and associations, discussed the various aspects
of data protection with speakers and other representatives
from Daimler. The participants all agreed that this dialogue should
be continued. At the "Responsible Sponsorship" conference,
experts from business and industry, the political realm, the
scientific community and the world of sports spoke with special-
ists from Daimler about integrity in sponsorship.
External perspective through the Advisory Board. The
Advisory Board for Integrity and Corporate Responsibility that
we established in September 2012 with external experts from
various fields accompanies the integrity process at Daimler with
a constructively critical approach. In 2014, the Board once
again met three times to exchange information and opinions
on current topics with representatives of the Company.
Managers as a role model. Our Integrity Code also defines
the expectations that Daimler has of its managers. Due to their
role of setting an example, they have a special responsibility
for the culture of integrity at Daimler. All manager-training semi-
nars also include modules that address the topic of integrity.
In addition, integrity and compliance are important criteria in the
annual target agreements and in assessing the target achieve-
ment of our managers.
In 2013, we rolled out a new course of web-based training
for more than 100,000 employees that clearly communicates
our principles of behavior and our shared understanding
of values. Just under 40,000 additional employees from various
levels of the hierarchy completed a comprehensive web-
based training program on integrity, compliance and legal
issues in 2014.
Training and communication. In September 2014, we intro-
duced an online game known as "Monster Mission." The game
increases employee awareness of the principles contained
in the Integrity Code by simulating typical everyday decision-
making situations, and leads players to examine specific
integrity-related issues. Employees from all over the globe can
access the game anytime via the intranet and the extranet.
The Integrity Code also forms the basis for the range of training
courses we offer on integrity and compliance. Depending on
the risk and the target group, we use classroom training or web-
based training sessions. In this way we are helping to per-
manently anchor ethical and compliant behavior at the Group.
The most important result of our dialogue is our Integrity
Code. The Code, which is based on a shared understanding
of values that is derived from our dialogue with employees,
lays out the principles for our everyday business conduct. Such
principles include fairness, responsibility, mutual respect,
transparency, openness, legal compliance and the honoring
of rights. The Code is valid throughout the Group and is
available in 22 languages. An intranet guide has been prepared
for the application of the Code in everyday situations, pro-
viding answers to the most frequently asked questions. A team
of experts is also available to answer questions on all aspects
of the Code.
We employ a broad range of measures that enable us to conduct
a dialogue with our employees in order to foster a culture
of integrity at the company. The regular exchange of opinions
on questions of integrity brought about by this dialogue is
an integral component of our everyday working life.
Integrity is one of our four corporate values, which form
the foundations for our business activities. We are convinced
that doing business ethically brings us sustained success,
and is also good for society as a whole. As a group of companies
with global operations, we accept responsibility and want
to be a pioneer in terms of ethical business conduct. Integrity
is a permanent component of our corporate culture. The further
development and permanent establishment of integrity is
therefore also a component of the target agreements for Board
of Management remuneration. Our business activities are also
strongly guided by the ten principles of the UN Global Compact,
of which Daimler is a founding member. We are also a member
of the Global Compact LEAD Group.
In the meetings during 2014 relating to the quarterly results,
the Audit Committee discussed the interim financial reports
before their publication with the Board of Management and
with the external auditors engaged to carry out the auditors'
review of interim financial statements. Each quarter, the
Committee also dealt with notifications concerning possible
violations of rules submitted by employees and third parties
confidentially and if desired anonymously (if compatible with
local data-protection law) to the Company's own whistleblower
system, the BPO (Business Practices Office), which then
processed them. In addition, the Committee received reports
from the Group Compliance, Legal and Corporate Audit
departments.
A culture of integrity
D❘ Corporate Governance | Report of the Audit Committee | Integrity and Compliance
178
Dr. Clemens Börsig
Chairman
The Audit Committee
Analysis of compliance risks. In 2014, we once again assessed
the compliance risks of all our business units. Both qualitative
and quantitative indicators were assessed, including the respec-
tive business model, business environment and type of
contracting-party relationship. The results of this analysis are
the basis for risk management. Together with the business
units, we define measures to be taken to minimize risks. One
focus of our activities is on sales companies in high-risk
countries. The responsibility for implementing and monitoring
these measures lies within the management of each busi-
ness unit, which cooperates closely with the Group Compliance
department.
As in previous years, the Audit Committee once again conducted
a self-evaluation of its own activities in 2014. The positive
results of this efficiency review were presented and discussed
in the meeting in mid-February 2015. This did not result in
any need for action with regard to the Committee's tasks, or with
regard to the content, frequency or procedure of its meetings.
Also in this meeting, the Audit Committee discussed the report
on the fees paid to the external auditors in the year 2014 for
auditing and non-auditing services. Taking into consideration the
results of the independence review, the Audit Committee
decided to recommend to the Supervisory Board, and subse-
quently to the Annual Shareholders' Meeting, that KPMG be
engaged to conduct the annual external audit and the external
auditors' review of interim financial reports for financial year
2015. Amongst other things, the Audit Committee based this
recommendation on the very good results of the analysis of
the quality of the external audit of financial year 2013 carried out
by the Audit Committee in May 2014. Subject to the election
of the proposed external auditors by the Annual Shareholders'
Meeting, the Committee approved the fees to be agreed upon
with the external auditors for the year 2015. Finally, within the
framework of its responsibility, the Audit Committee dealt
with the draft agenda for the 2015 Annual Shareholders' Meeting
and the annual audit plan for 2015 of the Internal Auditing
department.
In another meeting in mid-February 2015, the Audit Committee
dealt with the annual company financial statements, the annual
consolidated financial statements and the combined manage-
ment report for Daimler AG and the Daimler Group for the year
2014, which had been issued with an unqualified audit opinion
by the external auditors, as well as with the proposal on the
appropriation of profit; thereby the external auditors reported
on the results of their audit and were available to answer
supplementary questions and to provide additional information.
The audit reports on the company and consolidated financial
statements and on the internal control system (ICS), the report
on the risk management system for the year 2014, the Annual
Report 2014 and important issues related to financial reporting
were discussed with the external auditors. Following an inten-
sive review and discussion, the Audit Committee recommended
that the Supervisory Board approve the annual financial state-
ments and the combined management report, and on this basis
as before adopt the recommendation of the Board of Manage-
ment to pay a dividend of €2.45 per share entitled to a dividend.
Furthermore, the Audit Committee approved the Report of
the Audit Committee for the year 2014.
In a meeting in early February 2015, the Audit Committee
dealt with the preliminary figures of the annual company financial
statements and the annual consolidated financial statements
for the year 2014, as well as with the proposal on the appro-
priation of profits made by the Board of Management. The
preliminary key figures and the proposal on the appropriation
of profits were published at the Annual Press Conference
on February 5, 2015.
In the meeting held in July 2014, the Audit Committee received
the annual report from the Group's Data Protection Officer and
was informed about the main topics and current developments
in the field of data protection. In its meeting in October 2014,
the Committee dealt with a report on the implementation of the
EU Audit Directive and after discussing a proposal by the
Board of Management on that subject, made a recommendation
to the Supervisory Board to restructure the real-estate
portfolio in Germany.
177
Also in the meeting in June 2013, the Audit Committee dealt
with new developments in accounting and financial reporting
and other audit-relevant areas. Furthermore, the Committee
was informed in detail about the Group's legal system and legal
risk reporting, and received a report on the current status
of financial market regulation and its impact on Group Treasury.
Integrity and Compliance.
Strengthening our worldwide structures. Our Compliance
Organization is structured along the lines of our divisions.
This structure has proved its worth and enables us to offer
effective support and advice to the divisions. Among other
things, the organization consists of divisional and regional com-
pliance officers. In addition, local compliance managers
throughout the world make sure that our standards are observed.
In order to guarantee the divisional and regional compliance
officers' independence from the divisions, the officers report
directly to the Chief Compliance Officer. The latter reports
directly to the Member of the Board of Management for Integrity
and Legal Affairs and to the Chairman of the Supervisory Board.
We offer specific training courses to ensure compliance staff
members remain up to date on the repeated changes made
to laws and regulations. All new compliance employees also
receive comprehensive orientation through a practical com-
pliance seminar.
Whistleblower system. Our whistleblower system BPO
(Business Practices Office) serves as a valuable source
The Board of Management manages Daimler AG and the
Daimler Group. With the consent of the Supervisory Board,
the Board of Management determines the Group's strategic
focus, defines the corporate goals and makes decisions concern-
ing operational planning issues. The members of the Board
of Management must represent the interests of the Company
and share responsibility for managing the Group's entire
business. Irrespective of this overall responsibility, the indi-
vidual members of the Board of Management manage
their allocated areas on their own responsibility and within
the framework of their instructions. Affairs of fundamental
or great importance that affect the areas of responsibility of
several Board of Management members are handled by the
Board as a whole, which must approve all associated decisions.
The Chairman of the Board of Management coordinates
the work of the Board of Management.
The Board of Management prepares the consolidated interim
reports, the annual company financial statements of Daimler AG,
and the annual consolidated financial statements and the
management report of the Company and the Group. It ensures
that the provisions of applicable law, official regulations and
the Group's internal guidelines are adhered to, and works to make
sure that the companies of the Group comply with those rules
and regulations. The tasks of the Board of Management also
include establishing and monitoring an appropriate and efficient
risk management system.
For certain types of transaction of fundamental importance
defined by the Supervisory Board, the Board of Management
requires the consent of the Supervisory Board. At regular
intervals, the Board of Management reports to the Supervisory
Board on corporate strategy, corporate planning, profitability,
business development and the situation of the Group, as well as
on the internal control system, the risk management system
and compliance. The Supervisory Board has specified the infor-
mation and reporting duties of the Board of Management.
The Board of Management has also given itself a set
of rules of procedure, which can be viewed on our website
daimler.com/dai/rop. Those rules describe
at
for example the procedure to be observed when passing
resolutions and ways to avoid conflicts of interest.
The Board of Management has not formed any committees.
D.01
Governance structure
Shareholders (Annual Meeting of shareholders)
Election of shareholder representatives to the Supervisory Board
Supervisory Board (10 shareholder and 10 employee representatives),
Nomination Committee, Audit Committee, Presidential Committee,
Mediation Committee
Report. No member of the Board of Management is a member
of more than three supervisory boards of listed companies
outside the Daimler Group or of similar boards or committees
with comparable requirements of companies outside the
Daimler Group.
Appointments, monitoring, consulting
183
The Board of Management has committed to diversity manage-
ment as a strategic factor of success that safeguards the
future of the company, with the signed statement: Promote
diversity. Create links. Shape the future.
When making appointments to executive positions at the
Group, the Board of Management thus gives due consideration
to the issue of diversity, with regard for example to the criteria
of age, internationality and gender. The management of teams
with a varied makeup requires a conscious approach to the
teams' inherent diversity. A key element of our approach here
is therefore to make managers more aware of the importance
of diversity. For this purpose, we also use mentoring programs,
communication activities, conferences, workshops and
e-learning tools. By continually addressing diversity manage-
ment issues, we help further develop our corporate culture.
A key area of action is the targeted promotion of women,
by means for example of flexible working-time arrangements,
company nurseries and special mentoring programs for
women. The proportion of women in executive positions was
14.1% at the end of 2014 (2013: 12.7%) and is to be increased
to 20% by 2020.
On December 11, 2014, the German federal cabinet decided
on a revised draft of legislation for equal participation by women
and men in executive positions. The new law is to take effect
as soon as possible but the legislative procedure has not yet
been concluded. According to the draft bill, the management
boards of listed companies or companies subject to Germany's
system of codetermination will have to set a target for the
proportion of women at both levels below the management
board by June 30, 2015 at the latest. If the proportion of
women at the time when this target is set is below 30%, the
target may not be lower than the proportion already reached.
At the same time, a period is to be set for the achievement
of the target. The first period may not be longer than two years.
The Board of Management will pass a resolution on this
target after the new law takes effect.
Supervisory Board. In accordance with the German Code-
termination Act (MitbestG), the Supervisory Board of Daimler AG
comprises 20 members. Half of them are elected by the
shareholders at the Annual Meeting. The other half comprises
members who are elected by the Company's employees
who work in Germany. Information on the individual members
of the Supervisory Board is available on the Internet at
daimler.com/dai/supervisoryboard and on pages 52f
of this Annual Report. The members representing the
shareholders and the members representing the employees
are equally obliged by law to act in the Company's best
interests.
The Supervisory Board monitors and advises the Board
of Management with regard to its management of the Company.
At regular intervals, the Supervisory Board receives reports
from the Board of Management on the Group's strategy, corpo-
rate planning, revenue development, profitability, business
development and general situation, as well as on the internal
control system, the risk management system and compliance.
The Supervisory Board has retained the right of approval for
transactions of fundamental importance. Furthermore, the
Supervisory Board has specified the information and reporting
duties of the Board of Management to the Supervisory Board,
to the Audit Committee and - between the meetings of the
Supervisory Board - to the Chairman of the Supervisory Board.
The Supervisory Board's duties include appointing and recalling
the members of the Board of Management. Initial appoint-
ments are usually made for a period of three years. In connection
with the composition of the Board of Management, the Super-
visory Board pays attention not only to the members' appro-
priate specialist qualifications, with due consideration
of the Group's international operations, but also to diversity.
This applies in particular to age, nationality, gender and
other personal characteristics.
The draft of legislation of December 11, 2014 for equal partic-
ipation by women and men in executive positions calls for the
supervisory boards of listed companies or companies subject
to German law on codetermination to set a target for the propor-
tion of women in the management board by June 30, 2015
at the latest. If the proportion of women at the time when this
target is set is below 30%, the target may not be lower than
the proportion already reached. At the same time, a period is
to be set for the achievement of the target. The first period
may not be longer than two years. Since January 1, 2015, the
Board of Management has had eight members again. It has
one female member, Dr. Hohmann-Dennhardt, so the current
proportion is 12.5%. The Supervisory Board will pass a reso-
lution on a target for women in the Board of Management after
the new law takes effect.
The Supervisory Board also decides on the system of remuner-
ation for the Board of Management, reviews it regularly and
determines the individual remuneration of each member of the
Board of Management with consideration of the ratio of Board
of Management remuneration to the remuneration of the senior
executives and the workforce as a whole, also with regard
to development over time. For this comparison, the Supervisory
Board has defined the senior executives by applying Daimler's
internal terminology for the hierarchical levels and has defined
the workforce of Daimler AG in Germany as the relevant work-
force. For the individual Board of Management remuneration in
total and with regard to its variable components, the Super-
visory Board has set upper limits taking effect as of January 1,
2014. Further information on Board of Management remuner-
ation can be found in the Remuneration Report of this Annual
Report.
pages 118ff
184
Board of Management
Board of Management. The Board of Management of
Daimler AG had seven members at December 31, 2014 and
was expanded to eight members as of Janaury 1, 2015.
Information on their areas of responsibility and their curricula
vitae are posted on our website at ④ daimler.com/dai/bom.
The members of the Board of Management and their areas of
responsibility are also listed on
pages 44f of this Annual
Daimler AG is obliged by the German Stock Corporation Act
(AktG) to apply a dual management system featuring strict
separation between the Board of Management and the Super-
visory Board (two-tier board). Accordingly, the Board of
Management manages the company while the Supervisory
Board monitors and advises the Board of Management.
No person may be a member of the two boards at the same time.
Composition and mode of operation of the
Board of Management, the Supervisory Board
and its committees 7 D.01
of information on possible risks and specific violations of rules.
It's therefore an important instrument for good corporate
governance, and it also helps prevent damage to our Company's
reputation.
Our whistleblower system receives information on misconduct
from employees and from external parties worldwide, around
the clock, through various reporting channels and - if allowed
by local law - also anonymously. The prerequisites for the
acceptance of a whistleblower system are that it is organized
in a fair manner, that it follows the principle of proportionality,
and that the whistleblowers and the other parties involved are
equally protected. We laid down these criteria in a corporate
policy with worldwide validity in 2013. Since February 1, 2012,
we have also commissioned an independent lawyer as a
neutral intermediary in Germany. This intermediary also accepts
information on violations of rules and, due to his or her pro-
fessional duty of discretion, is obliged to maintain confidentiality.
Cooperation with our business partners. We regard our
business partners' integrity and behavior in conformance with
regulations as an indispensable precondition for trusting
cooperation. In the selection of our direct business partners,
we ensure that they comply with the law and observe ethical
principles. We offer our business partners target group-focused
training programs in line with the specific risks they face.
In addition, we have clearly formulated the expectations we have
of our business partners in the brochure "Ethical Business.
Our Shared Responsibility." We reserve the right to terminate
our cooperation with business partners who fail to conform
to our standards.
Antitrust law
Our Group-wide antitrust-compliance program, which is oriented
towards national and international standards, helps us to
ensure adherence to antitrust laws in our business operations.
By assessing qualitative and quantitative factors, we system-
atically analyze the antitrust risks of all our business units. The
results of this analysis form the basis for our risk management
and for the definition of the measures to be taken to counteract
any risks related to antitrust law. We help our employees
to recognize situations that might be critical from an antitrust
perspective and to act in compliance with regulations in their
daily work by means of training courses as well as written advice
and practical examples. Our employees also have access at
all times to an advisory hotline especially established by the Legal
department for questions on antitrust and cartel matters.
Our antitrust-compliance program defines a binding Daimler
standard on how matters of competition law are to be assessed
internally. In this context, we focus in particular on the strict
standards of the European antitrust authorities and courts.
Our standard is the basis for effective implementation of the
program and allows us, guided and supported by our Legal
department, to ensure a uniform level of compliance and advice
throughout the Group. We regularly review our antitrust
compliance program in order to continually adapt it to worldwide
developments, new legal requirements and changing risks,
and to constantly improve its effectiveness.
180
D | Corporate Governance | Integrity and Compliance | Declaration of compliance
Declaration by the Board of Management and
Supervisory Board of Daimler AG pursuant
to Section 161 of the German Stock Corporation
Act (AktG) regarding the German Corporate
Governance Code.
Daimler AG satisfies the recommendations of the German
Corporate Governance Code Commission in the Code version
dated June 24, 2014, since their publication by the Federal
Ministry of Justice in the official section of the Federal Gazette
on September 30, 2014 with the exception of Clause 3.8
Paragraph 3 (D & O insurance deductible for the Supervisory
Board) and one deviation from Clause 5.4.1 Paragraph 2
(concrete objectives for the composition of the Supervisory
Board), which was declared as a precautionary measure,
and will continue to observe the recommendations with the
aforesaid deviations. Since the issuance of the last compliance
declaration in December 2013, Daimler AG has observed the
recommendations of the German Corporate Governance Code
in the version dated May 13, 2013 with the aforementioned
exceptions and the deviation from Clause 4.2.3 Paragraph 2
sentence 6 (upper limits for the remuneration of the members
of the Board of Management and its variable remuneration
components) declared as a precautionary measure in the last
compliance declaration for the period until December 31, 2013.
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3). As in previous years, the Directors'
& Officers' liability insurance (D & O insurance) also contains
a provision for a deductible for the members of the Supervisory
Board, which is appropriate in the view of Daimler AG. How-
ever, this deductible does not correspond to the legally required
deductible for members of the Board of Management in the
amount of at least 10% of the damage up to at least one and
a half of the fixed annual remuneration. Since the remu-
neration structure of the Supervisory Board is limited to fixed
remuneration without performance bonus components,
setting a deductible for Supervisory Board members in the
amount of 1.5 times the fixed annual remuneration would
have a disproportionate economic impact when compared with
the members of the Board of Management, whose compen-
sation consists of fixed and performance bonus components.
Specific objectives for the composition of the Supervisory
Board (Clause 5.4.1 Paragraph 2). The Supervisory Board
has limited its target objective for its composition regarding
the number of independent members of the Supervisory
Board and in consideration of potential conflicts of interest
to the appointments for the shareholders' side in the light
of the German Co-Determination Act and due to the lack of
influence on the appointments for the employee side.
The deviation from clause 4.2.3 Pargraph 2 sentence 6, which
was declared as a precautionary measure in the compliance
declaration of December 2013, (maximum amounts for the over-
all remuneration and variable remuneration components
of the Board of Management) ceased to apply effective from
January 1, 2014, when the members of the Board of Man-
agement approved the inclusion of the upper limits specified
in clause 4.2.3 Paragraph 2 sentence 6 of the Code in their
current service agreements.
Stuttgart, December 2014
For the Supervisory Board
Dr. Manfred Bischoff
Chairman
For the Board of Management
Dr. Dieter Zetsche
Chairman
181
Corporate Governance Report.
Good corporate governance is a reflection of the responsible management of a company.
The Board of Management and the Supervisory Board aim to align the Group's management
and supervision with nationally and internationally recognized standards in order to secure
sustainable value creation at the Daimler Group with its strong traditions.
The main principles applied in our corporate governance
German Corporate Governance Code. The legal framework
for the corporate governance of Daimler AG is provided by
German law, in particular the Stock Corporation Act (AktG), the
Codetermination Act (MitbestG) and legislation concerning
capital markets, as well as by the Company's Articles of Incor-
poration. The German Corporate Governance Code gives
recommendations and makes suggestions for the details of this
framework. These were neither altered nor supplemented
during the year under review. The Government Commission for
the German Corporate Governance Code merely refined in
the Code appendix the description of the recommended sample
charts for depicting board of management remuneration and
then published this revised description in the German Federal
Gazette on September 30, 2014.
There is no statutory duty to follow the standards contained
in the recommendations and suggestions of the Code. However,
according to the principle of comply or explain, the Board
of Management and the Supervisory Board of Daimler AG are
obliged by Section 161 of the German Stock Corporation Act
(AktG) to make a declaration of compliance with regard to the
recommendations of the German Corporate Governance
Code and to disclose and justify any deviations from the Code's
recommendations. With the exceptions disclosed and justified
in the declaration of compliance of December 2014, Daimler AG
has followed and continues to follow the recommendations
of the German Corporate Governance Code. The declaration of
compliance is printed on page 181 of this Annual Report
and can also be accessed on our website at daimler.com/
dai/gcgc. Previous, no longer applicable declarations of
compliance from the past five years, and the current German
Corporate Governance Code are also available there.
Daimler AG has followed and continues to follow the suggestions
of the Code with just one exception: Deviating from the sug-
gestion in Clause 2.3.4, the Annual Shareholders' Meeting is not
transmitted in its entirety on the Internet, but only until the
end of the report by the Board of Management, in order to protect
the character of the Annual Shareholders' Meeting as a meet-
ing attended by our shareholders in person. An additional factor
is that continuing the broadcast after that point, in particular
broadcasting comments made by individual shareholders, could
impair the discussion between shareholders and management,
and might also be construed as an unjustified infringement
of shareholders' privacy rights. When considering this matter, the
interests of transmission do not automatically take prece-
dence over shareholders' privacy rights. This is reflected by the
statutory requirement for the entire transmission to have a
legal basis in the Company's Articles of Incorporation or in the
rules of procedure for shareholders' meetings.
The principles guiding our conduct. Additional relevant
principles of corporate governance that go beyond the legal
requirements but are applied throughout the Group are our
Standards of Business Conduct. They are composed of several
documents and policies and are based on the company values
of passion, respect, integrity and discipline. These standards
serve as a frame of reference at Daimler that helps ensure
behavior in conformance with applicable regulations and the
principles of integrity.
Integrity Code. The Integrity Code defines the principles
of behavior and guidelines for everyday conduct at Daimler.
This applies to interpersonal conduct within the company
as well as conduct toward customers and business partners.
Fairness, responsibility and compliance with legislation
are key principles in this context. The Integrity Code is based
on a shared understanding of values, which was developed
together with the Daimler employees. In addition to general
principles of behavior, it includes requirements and regula-
tions concerning the protection of human rights, dealing with
conflicts of interest and preventing all forms of corruption.
182
D | Corporate Governance | Corporate Governance Report
The "Principles of Social Responsibility" also form part
of the Integrity Code. They are binding for the entire Group.
In the Principles of Social Responsibility, Daimler commits
itself to the principles of the UN Global Compact and thus to
internationally recognized human and workers' rights, such
as the prohibition of child labor and forced labor, as well as
freedom of association and sustainable protection of the
environment. Daimler also commits itself to guaranteeing equal
opportunities and adhering to the principle of “equal pay
for equal work." The Integrity Code is available on the Internet
at daimler.com/dai/iac.
Business Partner Brochure. For Daimler, ethical conduct
is a prerequisite for trusting cooperation. We have formulated
our ethical principles and the expectations we have of our
business partners in the brochure "Ethical Business. Our Shared
Responsibility." More than 63,000 external partners have
received the brochure worldwide - for example, all suppliers,
joint-venture partners, dealers, and marketing and sponsoring
partners. The Business Partner Brochure is also available
on the Internet at daimler.com/dai/iac.
D❘ Corporate Governance | Contents
Stuttgart, February 2015
D | Corporate Governance.
Unrealized gains/losses from
11
23,182
21,779
23,125
21,732
165
57
99
47
Property, plant and equipment
Equipment on operating leases
33,050
28,160
14,374
13,207
18,676
14,953
Equity-method investments
13
12
9,289
9,202
9,388
The accompanying notes are an integral part of these consolidated financial statements.
193
Consolidated Statement of Financial Position.
E.03
In millions of euros
Consolidated
Industrial Business Daimler Financial Services
(unaudited additional
(unaudited additional
information)
information)
Note
At December 31,
2014
2013
2014
At December 31,
2013
At December 31,
2014
2013
Assets
Intangible assets
10
9,367
2,294
3,432
2,264
3,419
-767
4,774
4,290
Deferred tax assets
9
4,124
1,829
3,610
1,348
514
481
Other assets
17
555
531
-2,178
-1,818
2,733
2,349
-1,140
1 See Note 20 for other information on comprehensive income/loss.
3,523
16
30
13
Receivables from financial services
14
34,910
27,769
-49
-29
34,959
27,798
Marketable debt securities
15
1,374
1,666
6
6
1,368
1,660
Other financial assets
3,634
Total non-current assets
1,859
9,153
-61
40
93
93
Taxes on unrealized gains/losses
and on reclassifications
-56
-43
-21
-13
investments (after tax)
11
11
16
-11
27
Items that may be reclassified to profit/loss
124
Unrealized gains/losses from equity-method
Reclassifications to profit and loss (pre-tax)
11
11
-253
-248
-248
Taxes on unrealized gains/losses
and on reclassifications
800
800
-338
-338
Unrealized gains/losses from derivative
financial instruments (after tax)
-1,886
-1,885
-1
802
803
Unrealized gains/losses from equity-method
investments
Unrealized gains/losses (pre-tax)
69
55
-685
-666
-3,696
1,119
1,119
Items that will not be reclassified to profit/loss
-3,696
-3,696
1,118
1,118
Other comprehensive income/loss, net of taxes
-3,572
-3,627
55
433
452
-19
Total comprehensive income
3,718
3,335
383
-3,696
7,294
obligations (after tax)
-372
-19
Actuarial gains/losses on equity-method
investments (pre-tax)
-1
-1
Taxes on actuarial gains/losses on equity-method
investments
Actuarial gains/losses on equity-method investments
(after tax)
-1
-1
Actuarial gains/losses from pensions and similar
obligations (pre-tax)
-5,378
-5,378
1,491
1,491
Taxes on actuarial gains/losses from pensions
and similar obligations
1,682
1,682
-372
Actuarial gains/losses from pensions and similar
112,490
98,077
49,214
5,152
122
118
Financing liabilities
24
50,399
44,746
10,325
6,590
13,542
31,204
Other financial liabilities
25
2,644
1,701
2,231
1,575
413
40,074
5,270
6,712
23
Total equity
20
44,584
Provisions for pensions and similar obligations
22
12,806
Provisions for income taxes
851
43,363
9,869
823
36,967
12,630
36,767
9,726
7,617
176
6,596
143
850
823
1
Provisions for other risks
Deferred tax liabilities
9
1,070
892
24
36,290
18
66,047
9,086
517
6,619
32,992
14
34,123
9,852
679
6,830
15
3
31,816
8,778
43,954
34,231
326
308
438
6,230
78
79
437
389
-13,518
-12,218
49,808
Financing liabilities
42,680
683
757
7,267
Provisions for other risks
-1,618
-1,300
2,688
126
2,192
Deferred income
26
3,581
2,728
3,101
2,283
480
445
Other liabilities
27
14
Total non-current liabilities
Trade payables
78,077
10,178
Provisions for income taxes
23
919
Non-controlling interests
43,665
-25
-14
26,794
23,015
Cash and cash equivalents
9,667
11,053
8,341
9,845
1,326
1,208
Marketable debt securities
15
Other financial assets
Other assets
Total current assets
16
17
567
23,001
5,260
26,769
Receivables from financial services
46,387
63,276
51,690
Inventories
18
20,864
17,349
20,004
16,648
860
701
Trade receivables
19
8,634
7,803
7,824
7,208
810
595
14
-253
5,400
5,297
37,680
105,454
89,370
Equity and liabilities
Share capital
Capital reserve
Retained earnings
3,070
3,069
11,906
11,850
28,487
27,628
202
133
Other reserves
Treasury shares
Equity attributable to shareholders
of Daimler AG
42,178
5,150
32,761
79,148
168,518
110
103
2,353
2,718
-7,099
-6,670
9,452
9,388
3,598
3,117
772
447
2,826
2,670
77,145
70,441
34,967
Total assets
189,635
84,181
45,210
Reclassifications to profit and loss (pre-tax)
1,389
6
1,759
1,530
1,676
1,467
83
63
Other operating expense
Other operating income
6
-399
-1,139
-380
-21
-19
Profit/loss on equity method investments, net
13
897
-1,160
-4,205
-4,532
-4,205
5
-11,534
-11,050
-11,103
-10,589
-431
-461
General administrative expenses
5
-3,329
-3,188
-2,693
-2,660
-636
-528
Research and non-capitalized
development costs
5
-4,532
3,345
912
3,344
-15
-6
Profit before income taxes²
Income taxes
Net profit
thereof profit attributable to
non-controlling interests
thereof profit attributable to
shareholders of Daimler AG
10,173
10,139
8,794
8,877
1,379
1,262
9
-2,883
-1,419
7. Other financial income/expense, net
243
27. Other liabilities
214
-8
Selling expenses
-878
-884
1
Other financial expense, net
7
458
-349
445
-342
13
-7
Interest income
8
145
212
145
212
-
Interest expense
8
-715
-707
6. Other operating income and expense
2,219
22,908
264
14. Receivables from financial services
226
34. Capital management
269
15. Marketable debt securities
228
35. Earnings per share
33. Segment reporting
269
228
36. Related party relationships
270
17. Other assets
229
37. Remuneration of the members
18. Inventories
229
16. Other financial assets
221
13. Equity-method investments
256
244
8. Interest income and interest expense
214
29. Legal proceedings
244
9. Income taxes
215
30. Financial guarantees, contingent liabilities
10. Intangible assets
218
and other financial obligations
245
11. Property, plant and equipment
220
31. Financial instruments
248
12. Equipment on operating leases
220
32. Management of financial risks
of the Board of Management and
19. Trade receivables
230
the Supervisory Board
Revenue
Cost of sales
4
129,872
117,982
113,881
103,460
15,991
5
-101,688
-92,855
-88,091
-80,552
-13,597
14,522
-12,303
Gross profit
28,184
25,127
25,790
In millions of euros
2,394
2014
2014
271
20. Equity
230
38. Principal accountant fees
272
21. Share-based payment
232
39. Additional information
272
191
Consolidated Statement of Income.
E.01
Consolidated
Industrial Business Daimler Financial Services
(unaudited additional
information)
(unaudited additional
information)
20131
2014
20131
Note
20131
243
26. Deferred income
212
Daimler
Shareholders
Non-
controlling
Daimler
Shareholders
Non-
controlling
Group
of Daimler AG
In millions of euros
interests
of Daimler AG
interests
2014
2014
2014
2013
2013
2013
Group
E.02
Consolidated Statement of Comprehensive
Income/Loss¹.
E❘ Consolidated Financial Statements | Consolidated Statement of Income | Consolidated Statement of Comprehensive Income
6,407
8,003
883
717
328
1,878
6,962
6,842
Earnings per share (in euros)
for profit attributable
to shareholders of Daimler AG
Basic
35
Diluted
6.51
6.51
6.40
6.40
1 Information related to reclassification within functional expenses is presented in Note 1.
2 The reconciliation of Group EBIT to profit before income taxes is presented in Note 33.
The accompanying notes are an integral part of these consolidated financial statements.
192
Net profit
7,290
6,962
328
and on reclassifications
-6
-6
-6
-6
Unrealized gains/losses from financial assets
available-for-sale (after tax)
199
199
28
27
1
Unrealized gains/losses from derivative
financial instruments
Unrealized gains/losses (pre-tax)
-2,433
-2,432
-1
1,388
Taxes on unrealized gains/losses
8,720
-1
1
8,720
6,842
1,878
28. Consolidated statement of cash flows
currency translation adjustments
1,800
1,744
56
-1,531
-1,485
-46
Unrealized gains/losses from financial assets
available-for-sale
Unrealized gains/losses (pre-tax)
205
205
Reclassifications to profit and loss (pre-tax)
35
34
-1
7,290
-545
-496
193
Income/Loss
Consolidated Statement of Comprehensive
192
Consolidated Statement of Income
E| Consolidated Financial Statements.
E | Consolidated Financial Statements | Contents
190
The Consolidated Financial Statements presented as follows have been prepared in
accordance with the International Financial Reporting Standards (IFRS), as adopted
by the European Union (EU). They also comply with additional requirements set forth
in Section 315a (1) of the German Commercial Code (HGB).
financial basis.
We have a sound
189
The corporate governance statement to be issued pursuant
to Section 289a of the German Commercial Code (HGB)
is published simultaneously with the Annual Report including
the Corporate Governance Report at ④ daimler.com/dai/dsr
and can be accessed there.
Corporate governance statement
Risk management at the Group. Daimler has a risk
management system commensurate with its size and position
as a company with global operations. see pages 132 ff
The risk management system is one component of the overall
planning, controlling and reporting process. Its goal is to
enable the company's management to recognize significant risks
at an early stage and to initiate appropriate countermeasures
in a timely manner. The Supervisory Board deals with the risk
management system in particular with regard to the approval
of the operational planning. The Audit Committee discusses at
least once a year the effectiveness and functionality of the
risk management system with the Board of Management and the
external auditors. In addition, the Audit Committee regularly
deals with the risk report. The Chairman of the Supervisory Board
has regular contacts with the Board of Management to discuss
not only the Group's strategy and business development but also
the issue of risk management. The Corporate Audit depart-
ment monitors adherence to the legal framework and Group
standards by means of targeted audits and initiates appro-
priate actions as required.
Risk management and financial reporting
Interim reports for the Daimler Group are prepared in accordance
with IFRS for interim reporting, as adopted by the European
Union, as well as, with regard to the interim management reports,
the applicable provisions of the German Securities Trading
Act (WpHG). Interim financial reports are reviewed by the external
auditors elected by the Annual Shareholders' Meeting.
Accounting policies. The consolidated financial statements
of the Daimler Group are prepared in accordance with the Inter-
national Financial Reporting Standards (IFRS), as adopted
by the European Union, and with the supplementary standards
to be applied according to Section 315a Subsection 1 of
the German Commercial Code (HGB). Details of the IFRS are
provided in this Annual Report in the Notes to the Conso-
lidated Financial Statements. See Note 1 of the Notes to
the Consolidated Financial Statements. The annual financial
statements of Daimler AG, which is the parent company, are
prepared in accordance with the accounting standards of
the German Commercial Code (HGB). Both sets of financial state-
ments are audited by a firm of accountants elected by the
Annual Shareholders' Meeting to conduct the external audit.
Members of the Board of Management and the Supervisory Board
and, pursuant to the provisions of Section 15a of the German
Securities Trading Act (WpHG), persons in a close relationship
with the aforementioned persons, are obliged to notify the
Bundesanstalt für Finanzdienstleistungsaufsicht (the German
financial services supervisory authority) and Daimler AG
of any transactions involving shares of Daimler AG or related
financial instruments, so-called directors' dealings. Daimler AG
is obliged to disclose such transactions without delay after
being notified of them. No transactions as defined by Section 15a
of the German Securities Trading Act (WpHG) took place
in 2014. Current information is published on our website at
daimler.com/dai/dd/en.
Consolidated Statement of Financial Position
As of December 31, 2014, the members of the Board of Manage-
ment held a total of 0.26 million shares or options on shares
of Daimler AG (0.025% of the shares issued). At the same date,
members of the Supervisory Board held a total of 0.02 million
shares or options on shares of Daimler AG (0.002% of the shares
issued).
194
195
5. Functional costs
243
25. Other financial liabilities
212
4. Revenue
242
24. Financing liabilities
211
3. Consolidated Group
241
234
22. Pensions and similar obligations
23. Provisions for other risks
209
2. Accounting estimates and assessments
198
198
Notes to the Consolidated Financial Statements
1. Significant accounting policies
196
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
-1
Directors' Dealings
188
The Chairman of the Supervisory Board, Dr. Manfred Bischoff,
is a former member of the Board of Management. After
stepping down from the Board of Management in December
2003, he was first elected to the Supervisory Board after
a cooling-off period of more than two years in April 2006, and
was first elected as the Chairman of the Supervisory Board
after a cooling-off period of more than three years in April 2007.
One member of the Supervisory Board is a member of the
board of management of a listed company. Excluding his mem-
bership of that company's board of management, he is a
member of no more than three supervisory boards of listed
companies or similar company boards or committees with
comparable requirements, including his membership of the
Supervisory Board of Daimler AG. No member of the Super-
visory Board is a member of a board of, or advises, a significant
competitor. The members of the Supervisory Board attend
in their own responsibility such courses of training and further
training as might be necessary for the performance of their
tasks and are supported by the Company in doing so. Daimler AG
offers courses of further training to the members of its Super-
visory Board as required. Possible contents of such courses
include subjects of technological and economic developments,
accounting and financial reporting, internal control and risk
management systems, compliance, new legislation and board
of management remuneration.
With regard to appropriate participation of women and
on the basis of the Daimler Group's targets, the Supervisory
Board has resolved that at least 20% of all members of
the Supervisory Board are to be women. In addition, at least
30% of the Supervisory Board members representing the
shareholders should be female. These targets have already
been met. With Sari Baldauf, Petraea Heynike and Andrea Jung,
30% of the members on the shareholders' side are women.
With the members on the employees' side, Dr. Sabine Maaßen
and Elke Tönjes-Werner, the proportion of women on the
entire Supervisory Board is 25%. The draft of legislation for
equal participation by women and men in executive posi-
tions of December 11, 2014 calls for the supervisory boards
of listed companies subject to German law on parity code-
termination to have a binding gender ratio of at least 30%
women for new appointments as of 2016. The ratio is to
apply to the entire supervisory board. If the side of the super-
visory board representing the shareholders or the side
representing the employees objects to the chairman of the
supervisory board about the application of the ratio to
the entire supervisory board, the minimum ratio is to apply
separately to the shareholders' side and to the employees'
side for that election. If the draft legislation becomes law, the
target set by the Supervisory Board for appropriate partic-
ipation by women will be replaced by the requirements of
the new law.
The rules of procedure of the Supervisory Board stipulate
that candidates for election as representatives of the
shareholders who are to hold the position for a full period
of office should generally not be over the age of 72 at the
time of the election. This is intended to ensure a broad range
of potential Supervisory Board candidates and also to allow
reelection. None of the members of the Supervisory Board
currently in office who were proposed and elected for
a full period of office exceeded the applicable general age
limit at the time of his or her election.
In order to ensure the independent advice and supervision
of the Board of Management by the Supervisory Board, the
rules of procedure of the Supervisory Board already stipulate
that more than half of the members of the Supervisory
Board representing the shareholders are to be independent
as defined by the German Corporate Governance Code
and that no person may be a member of the Supervisory
Board who is a member of a board of, or advises, a signi-
ficant competitor of the Daimler Group. At present, there are
no indications for any of the members of the Supervisory
Board representing the shareholders that relevant relationships
or circumstances exist that would compromise their inde-
pendence. In particular, this is not the case with their relation-
ships or circumstances vis-a-vis the Company, the Board of
Management or other Supervisory Board members. No mem-
ber of the Supervisory Board is a member of a board of,
or advises, a significant competitor.
whose specific details could cause a conflict of interests.
As described in the report of the Supervisory Board on
O page 49 of this Annual Report, there was one isolated
individual case in a particular situation during the reporting
period where there might have been the appearance of a
potential conflict of interest during a specific vote. As a highly
precautionary measure, the Supervisory Board member
in question in these cases refrained from taking part in the
discussions and the voting process regarding the issue
that may have led to a conflict of interest. With this exception,
there were no instances of a potential conflict of interest
that might have affected a shareholder representative on the
Supervisory Board.
⚫ a business or personal relationship to the Company
or its boards
neither an advisory nor a board function for a customer,
supplier, creditor, or other third party nor
At least half of the members of the Supervisory Board
representing the shareholders should have
185
In order to ensure sufficient internationality, for example
through many years of international experience, the Super-
visory Board set a target in 2010 of a proportion of at least
40% of international members representing the shareholders,
and the resulting proportion of the entire Supervisory Board
of at least 20%. Until the Annual Shareholders' Meeting held
in 2014, this target was significantly overachieved, irrespec-
tive of the many years of international experience of a great
majority of the members representing the shareholders,
due to the international origins of Dr. Paul Achleitner, Sari
Baldauf, Petraea Heynike, Andrea Jung, Gerard Kleisterlee
and Lloyd G. Trotter on the shareholders' side (60%) and
Valter Sanches on the employers' side, resulting in an inter-
national proportion of more than 30% for the entire Super-
visory Board. Following the end of the Annual Shareholders'
Meeting on April 9, 2014, two members on the share-
holders' side with international origins stepped down from
the Supervisory Board: Gerard Kleisterlee and Lloyd G.
Trotter. As a result, the proportion of Supervisory Board mem-
bers representing the shareholders with international origins
decreased to 40% on the shareholders side and 20% of the
entire Supervisory Board. As a precautionary measure and
in order to maintain flexibility with future appointments,
the Supervisory Board has decided to adjust the target for
its own composition with regard to securing appropriate
internationality, for example through many years of interna-
tional experience, to at least 30% international members
representing the shareholders and a resulting proportion
of 15% of the entire Supervisory Board. Irrespective of
the many years of international experience of a great majority
of the members representing the shareholders, the new
target is currently significantly overachieved due to the inter-
national origins of Dr. Paul Achleitner, Sari Baldauf, Petraea
Heynike and Andrea Jung on the shareholders' side (40%) and
Valter Sanches on the employers' side, resulting in an
international proportion of more than 20% for the entire
Supervisory Board.
-
With regard to its own composition, the Supervisory Board has
set the following goals, which, while considering the Group's
specific situation, also consider the international activities of the
Group, potential conflicts of interest, the number of inde-
pendent Supervisory Board members, an age limit to be set, and
diversity, and allow for the appropriate participation of women.
The Supervisory Board is to be composed so that its members
together dispose of the knowledge, skills and specialist
experience that are required for the proper execution of their
tasks. Proposals by the Supervisory Board of candidates for
election by the Shareholders' Meeting as members representing
the shareholders of Daimler AG, for which the Nomination
Committee makes recommendations, take not only the require-
ments of applicable law, the Articles of Incorporation and
the German Corporate Governance Code into consideration,
but also a list of criteria of qualifications and experience.
They include for example market knowledge in the regions impor-
tant to Daimler, expertise in the management of technologies
and experience in certain management functions. Other impor-
tant conditions for productive work in the Supervisory Board
and for being able to properly supervise and advise the Board
of Management are the members' personality and integrity
as well as individual diversity with regard to age, internationality,
gender and other personal characteristics.
Meetings of the Supervisory Board are regularly prepared in
separate discussions of the members representing the employees
and of the members representing the shareholders with the
members of the Board of Management. Each Supervisory Board
meeting includes a so-called executive session for discussions
of the Supervisory Board in the absence of the members of the
Board of Management.
The Supervisory Board has given itself a set of rules of proce-
dure, which regulate not only its duties and responsibilities
and the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. The rules of procedure
of the Supervisory Board can be viewed on our website at
daimler.com/dai/rop.
The Supervisory Board reviews the annual company financial
statements, the annual consolidated financial statements and
the management report of the Company and the Group, as
well as the proposal for the appropriation of distributable profits.
Following discussions with the external auditors and taking
into consideration the audit reports of the external auditors
and the results of the review by the Audit Committee, the
Supervisory Board states whether, after the final results of its
own review, any objections are to be raised. If that is not the
case, the Supervisory Board approves the financial statements
and the management reports. Upon being approved, the
annual company financial statements are adopted. The Super-
visory Board reports to the Annual Shareholders' Meeting
on the results of its own review and on the manner and scope
of its supervision of the Board of Management during the
previous financial year. The Report of the Supervisory Board
for the year 2014 is available on pages 46 ff of this
Annual Report and on the Internet at daimler.com/dai/sbc.
D | Corporate Governance | Corporate Governance Report
-2,387
-874
186
D | Corporate Governance | Corporate Governance Report
D | Corporate Governance | Corporate Governance Report
of the Supervisory Board. The Supervisory Board has formed
four committees, which perform to the extent legally permis-
sible the tasks assigned to them in the name of and on behalf
of the entire Supervisory Board: the Presidential Committee,
the Nomination Committee, the Audit Committee and the Medi-
ation Committee. The committee chairpersons report to the
entire Supervisory Board on the committees' work at the latest
in the meeting of the Supervisory Board following each com-
mittee meeting. The Supervisory Board has issued rules of pro-
cedure for each of its committees. These rules of procedure
can be viewed on our website at daimler.com/dai/rop, as
well as information on the current composition of these
committees daimler.com/dai/sbc, which is also available
page 53 of this Annual Report.
In addition to other methods of communication, we also make
extensive use of the Company's website. All of the important
information disclosed in 2014, including annual and interim
reports, press releases, voting rights notifications from major
shareholders, presentations, and audio recordings of analyst
and investor events and conference calls, as well as the financial
calendar, can be found at ④ daimler.com/investors. All the
dates of important disclosures such as annual reports and interim
reports and the date of the Annual Shareholders' Meeting
are announced in advance in the financial calendar. The financial
calendar is also printed inside the back cover of this Annual
Report. Disclosures are made in English as well as in German.
We maintain close contacts with our shareholders in the context
of our comprehensive investor relations and public relations
activities. We regularly and comprehensively inform our share-
holders, financial analysts, shareholder associations, the
media and the interested public about the situation of the Group,
and inform them without delay about any significant changes
in its business.
Deviating from the suggestions in Clause 2.3.4 of the German
Corporate Governance Code, the Annual Shareholders'
Meeting is not transmitted in its entirety on the Internet, but
only until the end of the report by the Board of Management.
The influence of the Annual Shareholders' Meeting on
the management of the Company is limited by law, however.
The Shareholders' Meeting can only make management
decisions if it is requested to do so by the Board of Management.
Among other matters, the Annual Shareholders' Meeting
decides on the appropriation of distributable profits, the ratifi-
cation of the actions of the members of the Board of Manage-
ment and of the Supervisory Board, the election of the external
auditors, the election of the members of the Supervisory
Board representing the shareholders and the remuneration
of the Supervisory Board. The Annual Meeting also makes other
decisions, especially on amendments to the Articles of Incor-
poration, capital measures and the approval of certain inter-
company agreements. Shareholders can submit counter-
motions on resolutions proposed by the Board of Management
and the Supervisory Board and, within the provisions of appli-
cable law, can challenge resolutions passed by the Annual Share-
holders' Meeting in a court of law.
The Company's shareholders exercise their membership rights,
in particular their information and voting rights, at the Share-
holders' Meeting. Each share in Daimler AG entitles its owner
to one vote. There are no multiple voting rights, preferred
stock, or maximum voting rights at Daimler AG. Documents and
information relating to the Annual Shareholders' Meeting can
be found on our website at ④ daimler.com/ir/am. The Annual
Shareholders' Meeting is generally held within four months
of the end of a financial year. The Company facilitates the per-
sonal exercise of the shareholders' rights and proxy voting
in a variety of ways, such as by appointing proxies who are strictly
bound by the shareholders' voting instructions and who
can be contacted also during the Annual Shareholders' Meeting.
Absentee voting is also possible. It is possible to authorize
the Daimler-appointed proxies and give them voting instructions
or to cast absentee votes by using the so-called e-service
for shareholders.
Shareholders and the Annual Shareholders' Meeting
Mediation Committee. The Mediation Committee is composed
of the Chairman of the Supervisory Board and his Deputy,
as well as one member of the Supervisory Board representing
the employees and one member of the Supervisory Board
representing the shareholders, each elected with a majority of
the votes cast. It is formed solely to perform the functions
laid down in Section 31 Subsection 3 of the German Code-
termination Act (MitbestG). Accordingly, the Mediation Commit-
tee has the task of making proposals on the appointment
of members of the Board of Management if in the first vote the
majority required for the appointment of a Board of Manage-
ment member of two thirds of the members of the Supervisory
Board is not achieved.
Finally, the Audit Committee approves services that are not
directly related to the annual audit provided by the firm of
external auditors or its affiliates to Daimler AG or to companies
of the Daimler Group.
The Audit Committee discusses with the Board of Manage-
ment the interim reports on the first quarter, first half and first
nine months of the year before they are published. On the
basis of the report of the external auditors, the Audit Committee
reviews the annual company financial statements and the
annual consolidated financial statements, as well as the manage-
ment report of the Company and the Group, and discusses
them with the external auditors. The responsible auditor at
KPMG AG Wirtschaftsprüfungsgesellschaft, the company
of auditors commissioned to carry out the external audit, is
Dr. Axel Thümler. The Audit Committee makes a proposal
to the Supervisory Board on the adoption of the annual company
financial statements of Daimler AG, on the approval of the
annual consolidated financial statements and on the appropria-
tion of profits. The Committee also makes recommendations
for the proposal on the election of external auditors, assesses
those auditors' suitability and independence, and, after the
external auditors are elected by the Annual Meeting, it engages
them to conduct the annual audit of the company and conso-
lidated financial statements and to review the interim reports,
negotiates an audit fee, and determines the focus of the
annual audit. The external auditors report to the Audit Committee
on all accounting matters that might be regarded as critical
and on any material weaknesses of the internal control and risk
management system with regard to accounting that might
be discovered during the audit.
187
The Audit Committee deals with the supervision of the account-
ing process and the annual external audit, the risk and com-
pliance management system, and the internal control and audit-
ing system. At least once a year, it discusses with the Board
of Management the effectiveness and functionality of the risk
management system, the internal control and auditing system
and the compliance management system. It regularly receives
reports on the work of the Internal Auditing department and
the Compliance Organization. At least four times a year, the Audit
Committee receives a report from the Business Practices
Office on complaints and information about any breaches of
guidelines or criminal offenses on the part of high-level
executives. It regularly receives information about the handling
of these complaints and notifications.
The Chairman of the Audit Committee, Dr. Clemens Börsig,
fulfills the criteria for independence. Dr. Clemens Börsig and
the new member of the Audit Committee, Joe Kaeser, have
expertise in the field of financial reporting and special knowledge
and experience in the application of accounting principles
and internal methods of control. Dr. h.c. Bernhard Walter, the
Chairman of the Audit Committee until he stepped down
from the Supervisory Board in April 2014, also fulfilled the
requirements of independence and of expertise and long
experience in the stated fields. With great sadness and gratitude,
the Supervisory Board bids farewell to Dr. Walter, who
passed away in January 2015.
Audit Committee. The Audit Committee is composed of four
members, who are elected by a majority of the votes cast on
the relevant resolution of the Supervisory Board. The Chairman
of the Supervisory Board is not simultaneously the Chairman
of the Audit Committee.
Nomination Committee. The Nomination Committee is com-
posed of at least three members, who are elected by a majority
of the votes cast by the members of the Supervisory Board
representing the shareholders. It is the only Supervisory Board
Committee comprised solely of members representing the
shareholders and makes recommendations to the Supervisory
Board concerning persons to be proposed for election as
members of the Supervisory Board representing the shareholders
at the Annual Shareholders' Meeting. In doing so, the Nomi-
nation Committee takes into consideration the requirements
of the German Corporate Governance Code and the rules of
procedure of the Supervisory Board, as well as the specific goals
that the Supervisory Board has set for its own composition.
Furthermore, it defines the requirements for each specific posi-
tion to be occupied.
In addition, the Presidential Committee decides on questions
of corporate governance, on which it also makes recommenda-
tions to the Supervisory Board. It supports and advises the
Chairman of the Supervisory Board and his Deputy, and prepares
the meetings of the Supervisory Board.
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of the
Board of Management and is responsible for their contractual
affairs. It submits proposals to the Supervisory Board on
the design of the remuneration system for the Board of Manage-
ment and on the appropriate total individual remuneration
of its members. In this context, it follows the relevant recom-
mendations of the German Corporate Governance Code.
The Presidential Committee also decides on the granting of
approval for sideline activities of the members of the Board
of Management, reports to the Supervisory Board regularly and
without delay on consents it has issued and once a year
submits to the Supervisory Board for its approval a complete
list of the sideline activities of each member of the Board
of Management.
Presidential Committee. The Presidential Committee is
composed of the Chairman of the Supervisory Board, his Deputy,
and two other members, who are elected by a majority of the
votes cast on the relevant resolution of the Supervisory Board.
on
Composition and mode of operation of the committees
Other financial liabilities
214
Deferred income
2,007
27
517
1,351
1,674
1,868
2,413
1,451
26
1,778
1,864
4,797
6,198
6,575
8,062
25
Other liabilities
1,376
739
631
194
The accompanying notes are an integral part of these consolidated financial statements.
89,370
105,454
1,189
84,181
168,518
189,635
48,543
79,148
10,565
13,091
59,108
66,974
Total equity and liabilities
Total current liabilities
262
53,883
Charge status passive
Reduction of charge status Partial electric urban motoring
30
70
100
2 h
The high-voltage battery of the S 500 PLUG-IN HYBRID¹ can be recharged
in just two hours - using a wallbox (400V/16A), for example. In the future,
inductive charging technology will make it possible to recharge batteries
without cables or sockets, as shown above.
Route-based operating strategy.
Limited electric motoring possible
Daimler | Clean. Safe. Connected.
WITHOUT
Route guidance
WITH
50
Navigation "Hybrid" "+"
Preparation of charge status
Electric urban motoxing
Efficiency at the push of a button. The intelligent strategy employed in the
S 500 PLUG-IN HYBRID' enables automatic selection of the ideal combination
of combustion engine and electric motor based on the battery-charge state, the
traffic situation or the route ahead, depending on the driver's preference. Inter-
action between the hybrid drive components can also be regulated manually.
The route-based operating strategy selects for the driver an operating sequence
optimally aligned with the route ahead. Once the destination has been entered
Electric motoring to DESTINATION
Preparation of charge status
into the COMAND Online navigation system, battery charging and discharging
processes are selected to ensure optimal energy utilization throughout the trip.
One of the goals of the operating strategy is to use the energy in the battery
going uphill and then recharge the battery through recuperation on downhill
stretches. In addition, the operating system will charge the battery as much
possible before the vehicle reaches a city so as to ensure the car can drive
electrically and emission-free on city streets. COMAND Online also provides
predictive data on route profiles and speed limits.
9
10
Our environmental roadmap.
Milestones on the way to emission-free mobility.
3 S 300 BlueTEC HYBRID: fuel consumption in I/100 km urban 4.8-4.7/extra-urban 4.6-4.3/combined 4.7-4.4;
CO2 emissions in g/km combined 124-115.
Route guidance
CO2 emissions in g/km combined 159-147.
S.RASS
1 S 500 PLUG-IN HYBRID: fuel consumption in l/100 km combined 2.8; CO2 emissions in g/km combined 65;
electricity consumption in kWh/100 km 13.5.
"The S 500 PLUG-IN HYBRID¹ is not only the most efficient
hybrid in the luxury segment but also the most intelligent.
Its predictive operating strategy regulates the interaction
between the electric motor and the combustion engine and
adjusts it in line with the traffic situation, the route ahead
and the battery-charge state."
From left to right: Dr. Uwe Keller (Project Manager Hybrid Drive), Thomas Ulrich (Hybrid System Testing),
Harald Maurer (Head of S-Class Testing)
PLUG-IN HYBRI
KP- TOAM
PLUG-IN HYBRID
03:33
Daimler | Clean. Safe. Connected.
Daimler | Clean. Safe. Connected.
2.81
per 100 km
The S 500 PLUG-IN HYBRID¹ delivers pure driving
pleasure with an impressive system output of 325 kW
(442 hp), exemplary fuel consumption of 2.8 liters/100 km
and CO2 emissions of 65 g/km.
2 S 400 HYBRID: fuel consumption in l/100 km urban 7.4-6.6/extra-urban 6.5-6.1/combined 6.8-6.3;
A+
efficiency class
1 S 500 PLUG-IN HYBRID: fuel consumption in l/100 km combined 2.8; CO2 emissions in g/km combined 65;
electricity consumption in kWh/100 km 13.5.
7
8
We are electrifying the premium segment. The S 500
PLUG-IN HYBRID¹ is a further milestone in Daimler's
hybrid strategy. Following the S 400 HYBRID2 and
the S 300 BlueTEC HYBRID³, this extraordinary luxury
sedan embodies the ultimate in hybrid technology.
Green light for environmentally friendly hybrids. Daimler is
shaping future mobility by combining combustion engines with
electric drive systems. Hybrid concepts help reduce fuel con-
sumption and enhance performance. Hybrids also use braking
energy to generate electricity to charge the vehicle's battery;
this offers the greatest potential for lower fuel consumption.
In the S 500 PLUG-IN HYBRID', an innovative high-voltage
lithium-ion battery and a state-of-the-art braking energy recov-
ery system ensure maximum energy recuperation.
Forward-looking plug-in hybrids. Along with braking energy
recuperation, the groundbreaking S 500 PLUG-IN HYBRID¹
also features an onboard charger that enables the vehicle to
be recharged using a wallbox or any conventional household
socket. The next step on the road to the perfect plug-in hybrid
will be inductive wireless charging.
Pioneer for a sustainable hybrid strategy. In 2009, we
introduced the Mercedes-Benz S 400 HYBRID² - the world's
first hybrid production vehicle with a lithium-ion battery.
For quite some time, this predecessor of the S 500 PLUG-IN
HYBRID¹ was the most economical luxury sedan with a gaso-
line engine. With worldwide sales of approximately 20,000
units, it was also the most successful hybrid in its class.
Now Daimler is continuing its hybrid offensive. All in all,
we plan to launch ten plug-in hybrid models on the market
by 2017.
140 km/h
With a top speed of 140 km/h in the pure
electric driving mode, these vehicles will
make upper-range driving performance a
reality in the hybrid segment.
Use of the electric motor significantly reduces
both fuel consumption and CO2 emissions.
The model's top efficiency class rating of A+ is
therefore well deserved.
We are optimizing our combustion engines.
The most effective way to reduce fuel consumption and
emissions is to systematically improve the efficiency
of combustion engines, because they will be the backbone
of mobility also in the future.
We are improving efficiency through hybridization.
By combining combustion engines with electric motors,
we are achieving further significant reductions in fuel
consumption and emissions. We're doing this with our
modular hybrid system for cars and commercial vehicles.
We are a pioneer for emission-free drive systems.
Our electric vehicles with batteries or fuel cells ensure
not only locally emission-free mobility but also pure driving
pleasure.
Efficient technologies inspired by motorsport. Learn more about our new
developments and how they are being implemented in Mercedes-Benz
production vehicles.
Safe.
ABS
Daimler | Clean. Safe. Connected.
Safe mobility. Billions of people are on
the move worldwide every day. Daimler
is working to make the mobility of the
future as safe as possible for all of them.
Our primary goal is to ensure that acci-
dents never happen to begin with. As
a pioneer in the field of safety, we are
moving forward on the "road to accident-
free driving."
13
14
Daimler | Clean. Safe. Connected.
The first journey taken by a self-driving truck: the Mercedes-Benz Future Truck 2025.
Hands off the wheel.
At the wheel here is the technology of the future, which is already a reality at Daimler
today. At the IAA Commercial Vehicles 2014, the Mercedes-Benz Future Truck 2025
study offered a visually fascinating and technically feasible preview of the future of freight
transport. The Future Truck 2025 marks a revolution in road freight transport, traffic
infrastructure, the truck-driving profession and the freight forwarding industry, and is thus
a key component of the transport system of tomorrow. The vehicle was designed
← www.mercedes-benz.com/en/mercedes-benz/efficiency
to ensure the highest degree of road safety and efficiency, and it will also help to further
reduce fuel consumption. Thanks to the "Highway Pilot" with networked sensors
and cameras, the driver can simply turn control of the truck over to an autonomous
high-tech system. This capability was successfully demonstrated by a
prototype on the autobahn.
The spectacular world
premiere of the Highway
Pilot system on the A14
highway in Germany.
15
16
Outstanding safety. The eye-catching appearance of the Mercedes-Benz Future Truck 2025 underscores the
vehicle's unique technological capabilities. The self-driving truck also marks a major step away from traditional
trucks and towards the autonomous transport vehicles of tomorrow. With its aerodynamically optimized design,
the truck's cab exudes maximum calm and power. Cameras have replaced the exterior mirrors, and classic
elements such as headlights seem to be missing at first glance. LED lamps in the bumpers light up after the engine
is started, indicating that the Future Truck 2025 is ready to roll. The truck's lights turn white when the prototype
is driven manually. When the truck is driving autonomously, the color of the lights changes to a pulsating blue to
clearly indicate the vehicle's operating mode to other road users.
Innovative design for the cockpit as well. Displays, a touchpad and a tablet computer replace familiar instruments
and switches in the Future Truck 2025. Long-haulage trucks from Mercedes-Benz already feature a visual separation
between living and driving areas. In the future, the cab will also include a workplace for autonomous driving phases.
It will be possible to move the seat back completely and turn it 45 degrees to face into the cab space.
The Highway Pilot keeps the truck in its lane more precisely
than any driver can. When it is driving autonomously, the
Future Truck 2025 will enable drivers to work in a completely
new way.
17
DAIMLER
18
A revolution on the road. In the summer of 2014, auto industry
specialists and journalists from around the world witnessed
the cutting-edge capabilities of the Highway Pilot in a camou-
flaged prototype of the Future Truck 2025. Although a driver
was sitting at the steering wheel, the Highway Pilot drove the
vehicle all by itself.
Video.
Clean mobility requires an intelligent combination
of combustion engine, hybrid and electric drive.
In line with our claim to leadership in green tech-
nologies, we continue to develop and produce
different kinds of vehicles with customized drive-
systems. That's how we are meeting the mobility
requirements of today and tomorrow in all areas
of road transport.
Daimler | Clean. Safe. Connected.
12
On the road efficiently and emission free.
By 2017
10 new plug-in hybrid models. Within the framework of Daimler's comprehensive hybrid strategy,
Mercedes-Benz will launch a total of ten vehicles with plug-in hybrid technology by 2017.
2014
CO₂
2012
S 500 PLUG-IN-HYBRID¹. The world's first certified "three liters per 100 km" luxury sedan achieves fuel
consumption values that were considered unattainable in the upper-range segment just a few years ago.
This record efficiency requires no sacrifices in terms of performance, comfort or vehicle range.
B-Class Electric Drive². The first premium electric vehicle in the compact segment was initially intro-
duced in the US and then in Europe. The Mercedes of electric cars offers the comfort, quality and safety
that are typical of vehicles with the star.
129 g/km CO2 emissions. The highest levels of efficiency in all segments. We have reduced the CO₂
emissions of our fleet of vehicles sold in Europe to 129 g/km. More than 100 Mercedes-Benz models
have an efficiency class rating of A+ or A and over 60 models emit less than 120 g CO2/km.
Euro VI commercial vehicle fleet. Innovative drive systems continually make our trucks, vans and buses
even cleaner and more economical and efficient. Daimler was the first manufacturer to offer a complete
range of Euro VI commercial vehicles - even before the new emission standards went into effect.
E 300 BlueTEC HYBRID³. The forward-looking combination of a four-cylinder diesel engine and an electric
motor makes this E-Class one of the most efficient models in its segment - and a milestone in terms of
economy, sustainability and comfort.
smart fortwo electric drive4. The third generation of the environmentally friendly city car celebrates its
premiere. Today, the smart electric drive is on the road in 18 countries worldwide and is in constant use in
the car2go car-sharing program. It's also available as a convertible - the only electric one on the market.
U
2013
Electricity
Petrol & Diesel
5 B-Class F-CELL: H₂ consumption in kg/100 km 0.97; CO₂ emissions in g/km 0.0.
4 smart fortwo electric drive: electricity consumption in kWh/100 km 15.1; CO, emissions in g/km 0.0.
2 B-Class Electric Drive: electricity consumption in kWh/100 km weighted 17.9-6.6; CO₂ emissions combined 0 g/km.
3 E 300 BlueTEC HYBRID: fuel consumption in l/100 km urban 4.1-3.9/extra-urban 4.1-3.8/combined 4.1-3.8;
CO2 emissions in g/km combined 109-99.
11
1 S 500 PLUG-IN HYBRID: fuel consumption in 1/100 km combined 2.8; CO₂ emissions in g/km combined 65;
electricity consumption in kWh/100 km 13.5.
Mercedes-Benz Actros. It's the most economical and therefore most environmentally friendly truck in
its class. So it's not surprising that the Actros made history with fuel consumption of 25 1/100 km during
the 10,000-km "Record Run."
B-Class F-Cell³. During the Mercedes-Benz F-CELL World Drive, three electric cars equipped with fuel
cells ready for series production clocked up 30,923 km in 125 days. This emission-free "journey around
the world” impressively demonstrated the technology's suitability for everyday use.
2011
Hydrogen
H₁₂
323
on cash and cash equivalents
Net increase/decrease in cash and cash equivalents
Effect of foreign exchange rate changes
4,978
7,237
8,760
-3,382
-6,486
-4,978
2,274
Cash provided by/used for financing activities
6,491
-6,491
Internal equity and financing transactions
-1,386
9
9
3,855
-254
57
9,887
-206
11,053
in subsidiaries without loss of control
9,667
of the period
Cash and cash equivalents at the end
1,109
1,208
9,845
10,996
of the period
Cash and cash equivalents at the beginning
99
118
-42
-1,504
-48
-7
330
Proceeds from disposals of interests
2,240
-10
-2,349
-2,407
-2,349
-2,407
Dividend paid to shareholders of Daimler AG
-21,344
-22,792
22,300
23,643
15,302
-10,643
-11,858
-31,987
-34,650
13,711
37,602
37,354
8,341
Dividends paid to non-controlling interests
-158
-269
-156
-73
-10
Acquisition of non-controlling interests in subsidiaries
-24
-26
-24
-26
Acquisition of treasury shares
-73
5
96
29
101
42
Proceeds from the issuance of share capital
-1
-2
-268
13
9,845
Capital increase/Issue of new shares
1,208
6,962
Net profit
261
-969
27,628
11,850
3,069
Balance at January 1, 2014
261
-969
27,628
11,850
3,069
Balance at December 31, 2013
-227
Other
-23
Other comprehensive income/loss before taxes
Changes in ownership interests in subsidiaries
-5,378
205
54
Other
Issue and disposal of treasury shares
-
Acquisition of treasury shares
2
1
Additions to long-term financing liabilities
Repayment of long-term financing liabilities
-2,407
Dividends
199
1,744
3,266
Total comprehensive income/loss
-6
1,682
Deferred taxes on other comprehensive income
1,744
1,326
Issue and disposal of treasury shares
Capital increase/Issue of new shares
22,017
12,026
3,063
Balance at January 1, 2013
assets
available
for sale
Financial
Currency
translation
Retained
earnings²
reserves
Capital
Share
capital
In millions of euros
E.05
Consolidated Statement of Changes in Equity¹.
195
The accompanying notes are an integral part of these consolidated financial statements.
1 See Note 28 for other information on consolidated statements of cash flows.
516
Acquisition of treasury shares
234
6,842
72
6
2
Share-based payment
-2,349
Dividends
27
-1,485
7,960
Total comprehensive income/loss
-6
-372
Deferred taxes on other comprehensive income
33
-1,485
1,490
Other comprehensive income/loss before taxes
Net profit
1,299
3,285
-454
845
610
853
Trade payables
62
-176
-757
-430
-695
-606
Trade receivables
-117
-34
-475
-2,734
-592
-2,768
602
Inventories
8
Receivables from financial services
1,950
819
1,032
Other operating assets and liabilities
-2,727
-2,795
-263
-24
-2,990
-2,819
Vehicles on operating leases
-5,601
-7,151
267
-914
-5,334
-8,065
8
213
Change in operating assets and liabilities
-1,053
10,173
Depreciation and amortization/impairments
Profit before income taxes
2013
2014
2013
2014
2013
2014
information)
Daimler Financial Services
(unaudited additional
Industrial Business
(unaudited additional
information)
Consolidated
In millions of euros
E.04
Consolidated Statement of Cash Flows¹.
E| Consolidated Financial Statements | Consolidated Statement of Financial Position | Consolidated Statement of Cash Flows
10,139
193
8,794
1,379
193
-1,053
Gains (-)/losses on disposals of assets
35
48
-3,380
-898
-3,345
-850
Other non-cash expense and income
25
35
4,343
4,964
4,368
4,999
1,262
8,877
1,407
290
-2,170
3,476
4,991
3,834
Proceeds from sales of marketable debt securities
-494
-60
-6,072
-3,281
-6,566
-3,341
Acquisition of marketable debt securities
1
-
2,413
3,098
2,414
3,098
4,524
Proceeds from disposals of share property
358
Other
722
845
2,129
Change in short-term financing liabilities
-62
178
-6,767
-2,887
-6,829
-2,709
Cash provided by/used for investing activities
16
-11
12
-19
28
-30
467
Income taxes paid
-5
-964
-4,956
-4,821
-4,975
-4,844
Additions to property, plant and equipment
-7,028
-8,813
10,313
7,539
Balance at December 31, 2014
-1,274
Cash provided by/used for operating activities
-265
-340
-1,044
-1,830
-1,309
-23
-81
-19
-1,463
-91
-969
-172
Investments in share property
10
15
170
194
180
209
equipment and intangible assets
Proceeds from disposals of property, plant and
-38
-20
-1,894
-1,443
-1,932
Additions to intangible assets
3,070
11,053
28,487
An exception to the aforementioned principles is made
for Daimler Financial Services. In this case, interest income
and expense and gains or losses from derivative financial
instruments are disclosed under revenue and cost of sales
respectively.
Income taxes. Income taxes are comprised of current income
taxes and deferred taxes.
Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period. In
addition, current income taxes presented for the period include
adjustments for uncertain tax payments or tax refunds for
periods not yet finally assessed including interest expense and
penalties on the underpayment of taxes. For the case that
amounts included in the tax return might not be realized (uncer-
tain tax positions), a provision for income taxes is recognized.
The amount is based on the best possible assessment of the
expected tax payment. Tax refund claims from uncertain
tax positions are recognized when it is predominantly likely
and thus reasonably expected that they can be realized.
Only in the case of tax loss carryforwards or unused tax credits,
no provision for taxes or tax claim is recognized for these
uncertain tax positions. Instead the deferred tax assets
for the unused tax loss carryforwards or tax credits are
to be adjusted.
Changes in deferred tax assets and liabilities are generally
recognized through profit and loss in deferred taxes in the
consolidated statement of income, except for changes recognized
in other comprehensive income/loss or directly in equity.
Deferred tax assets or liabilities are calculated on the basis
of temporary differences between the tax basis and the financial
reporting of assets and liabilities including differences from
consolidation, on unused tax loss carryforwards and unused
tax credits. Measurement is based on the tax rates expected
to be effective in the period in which an asset is recognized or
a liability is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the reporting date
or are soon to be enacted. Daimler recognizes a valuation
allowance for deferred tax assets when it is unlikely that a corre-
sponding amount of future taxable profit will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be utilized. Deferred tax
liabilities for taxable temporary differences in connection with
investments in subsidiaries, branches, associates and interests
in joint arrangements are not recognized if the Group is able
to control the timing of the reversal of the temporary difference
and it is probable that the temporary difference will not
reverse in the foreseeable future.
Earnings per share. Basic earnings per share are calculated
by dividing profit attributable to shareholders of Daimler AG
by the weighted average number of shares outstanding. Diluted
earnings per share in 2013 additionally reflect the potential
dilution that would occur if all stock option plans were exercised.
No stock options existed at December 31, 2014.
Intangible assets. Intangible assets acquired are measured
at cost less accumulated amortization. If necessary, accumulated
impairment losses are recognized.
Intangible assets with indefinite lives are reviewed annually
to determine whether indefinite-life assessment continues
to be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Intangible assets other than development costs with finite useful
lives are generally amortized on a straight-line basis over their
useful lives (three to ten years) and are tested for impairment
whenever there is an indication that the intangible asset may
be impaired. The amortization period for intangible assets
with finite useful lives is reviewed at least at each year-end.
Changes in expected useful lives are treated as changes in
accounting estimates. The amortization expense on intangible
assets with finite useful lives is recorded in functional costs.
203
Goodwill. For acquisitions, goodwill represents the excess
of the consideration transferred over the fair values assigned
to the identifiable assets proportionally acquired and liabilities
assumed. Goodwill is accounted for at the subsidiaries in
the functional currency of those subsidiaries.
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree's identifiable assets, which are measured
at fair value.
Property, plant and equipment. Property, plant and equipment
are measured at acquisition or manufacturing costs less
accumulated depreciation. If necessary, accumulated impair-
ment losses are recognized.
The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisition
or manufacturing costs include the estimated costs, if any,
of dismantling and removing the item and restoring the site.
Property, plant and equipment are depreciated over the useful
lives as shown in table 7 E.09.
Leasing. Leasing includes all arrangements that transfer
the right to use a specified asset for a stated period of time
in return for a payment, even if the right to use such asset
is not explicitly described in an arrangement. The Group is a
lessee of property, plant and equipment and a lessor of its
products. It is evaluated on the basis of the risks and rewards
of a leased asset whether the ownership of the leased asset
is attributed to the lessee (finance lease) or to the lessor (oper-
ating lease).
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS 38 are
met. Subsequent to initial recognition, the asset is carried at cost
less accumulated amortization and accumulated impairment
losses. Capitalized development costs include all direct costs
and allocable overheads and are amortized on a straight-line
basis over the expected product life cycle (a maximum of ten
years). Amortization of capitalized development costs is an
element of manufacturing costs and is allocated to those vehicles
and components by which they were generated and is included
in cost of sales when the inventory (vehicles) is sold.
E.09
202
Furthermore, income and expenses from equity interests are
included in other financial income/expense, net, if such
income or expenses are not presented under equity-method
investments.
7.6824 59.7160
1.3206
1.3062
1.3242
1.3610
0.8511 121.7900
0.8506 129.0700
0.8545 131.0200
0.8407 136.4800
8.2209 40.1518
8.0376 41.3464
8.1111 43.4394
8.2903
44.2920
201
Accounting policies
Revenue recognition. Revenue from sales of vehicles, service
parts and other related products is recognized when the risks
and rewards of ownership of the goods are transferred to the
customer, the amount of revenue can be estimated reliably and
collectability is reasonably assured. Revenue is recognized
net of sales reductions such as cash discounts and sales incen-
tives granted.
Interest income and interest expense. Interest income
and interest expense include interest income from investments
in securities, cash and cash equivalents as well as interest
expense from liabilities. Furthermore, interest and changes in
fair values related to interest rate hedging activities as well
as income and expense resulting from the allocation of premiums
and discounts are included. The interest components of
defined benefit pension obligations and other similar obligations
as well as of the plan assets available to cover these obliga-
tions are also presented in this line item.
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competition
and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates.
The Group offers extended, separately priced warranties
for certain products. Revenue from these contracts is deferred
and recognized over the contract period in proportion to the
costs expected to be incurred based on historical information.
In circumstances in which there is insufficient historical
information, income from extended warranty contracts is recog-
nized on a straight-line basis. A loss on these contracts is
recognized in the current period if the sum of the expected costs
for services under the contract exceeds unearned revenue.
For transactions with multiple deliverables, such as when
vehicles are sold with free or reduced-in-price service programs,
the Group allocates revenue to the various elements based
on their estimated fair values.
Research and non-capitalized development costs. Expen-
diture for research and development that does not meet
the conditions for capitalization according to IAS 38 Intangible
Assets is expensed as incurred.
11,906
Borrowing costs. Borrowing costs are expensed as incurred
unless they are directly attributable to the acquisition, construc-
tion or production of a qualifying asset and are therefore
part of the cost of that asset. Depreciation of the capitalized
borrowing costs is presented within cost of sales.
Government grants. Government grants related to assets
are deducted from the carrying amount of the asset and
are recognized in profit or loss over the life of a depreciable
asset as a reduced depreciation expense. Government grants
which compensate the Group for expenses are recognized
as other operating income in the same period as the expenses
themselves.
Profit/loss from equity-method investments. This item
includes all income and expenses in connection with investments
accounted for using the equity method. In addition to the
prorated profits and losses from financial investments, it also
includes profits and losses resulting from the sale of equity
interests or the remeasurement of equity interests following
a loss of significant influence. Daimler's share of dilution
gains and losses occurring if the Group or other owners do not
participate in capital increases of companies in which shares
are held and accounted for using the equity method are also
included in profit/loss from equity-method investments.
This item also includes losses and/or gains on the impairment
of investments' carrying amounts or on the reversal of such
impairments.
Other financial income/expense, net. Other financial
income/expense, net includes all income and expense from
financial transactions which are not included in interest
income and/or interest expense, and for Daimler Financial
Services are not included in revenue and/or cost of sales.
For example, expense from the compounding of interest on
provisions for other risks is recorded in this line item.
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services business
at Daimler Financial Services. The revenue from the rental
and leasing business results from operating leases and is recog-
nized on a straight-line basis over the periods of the contracts.
In addition, sales revenue is generated at the end of lease
contracts from the subsequent sale of the vehicles. Revenue
from receivables from financial services is recognized using
the effective interest method. When loans are issued below
market rates, related receivables are recognized at present
value and revenue is reduced for the interest incentive granted.
If subsidized leasing fees are agreed upon in connection
with finance leases, revenue from the sale of a vehicle is reduced
by the amount of the interest incentive granted.
0.7891 142.7500
Useful lives of property, plant and equipment
Technical equipment and machinery
In May 2014, the IASB published IFRS 15 Revenue from Contracts
with Customers. It replaces existing guidance for revenue
recognition, including IAS 18 Revenue, IAS 11 Construction
Contracts and IFRIC 13 Customer Loyalty Programmes.
The new standard defines a comprehensive framework for
determining whether, in which amount and at which date
revenue is recognized. The new standard specifies a uniform,
five-step model for revenue recognition, which is generally
to be applied to all contracts with customers. Disclosure require-
ments are also extended. Subject to being endorsed by the
EU, application of IFRS 15 is mandatory for reporting periods
beginning on or after January 1, 2017. Early adoption is per-
mitted. Investigation of the effects on the consolidated financial
statements of adopting IFRS 15 has not yet been completed.
IFRSS issued but neither EU endorsed nor yet adopted.
In July 2014, the IASB published IFRS 9 Financial Instruments,
which shall supersede IAS 39. IFRS 9 deals with the classifi-
cation, recognition and measurement (including impairment) of
financial instruments as well as with regulations for general
hedge accounting. With IFRS 9, additional notes will be required,
as specified by the revised IFRS 7 Financial Instruments -
Disclosures. Subject to being endorsed by the EU, application
of IFRS 9 is mandatory for reporting periods beginning on or
after January 1, 2018. Early adoption is permitted. Investigation
of the effects on the consolidated financial statements of
adopting IFRS 9 has not yet been completed.
All other IFRSS with mandatory initial application in
the EU as of January 1, 2014 had no significant impact
on the consolidated financial statements.
IFRS 12 Disclosure of Interests in Other Entities provides
guidance on disclosure requirements for interests in other
entities by combining existing disclosure requirements
from several standards in IFRS 12. See Notes 3 and 13 for
further information on extended disclosure requirements.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
198
IFRS 11 Joint Arrangements provides new guidance on account-
ing for joint arrangements. The standard supersedes IAS 31
Interests in Joint Ventures as well as SIC-13 Jointly Controlled
Entities - Non-Monetary Contributions by Ventures. In the
future, it has to be decided whether a joint operation or a joint
venture exists. In a joint venture, the parties that have joint
control have rights to the net assets. Interests in a joint venture
are to be accounted for as an investment using the equity
method. This does not affect Daimler due to the fact that joint
ventures were already accounted for using the equity method
in the past. A joint operation exists if the parties that have joint
control have rights to the assets and obligations for the liabili-
ties. In this case, the proportionate assets, liabilities, revenues
and expenses have to be recognized. As of the reporting date,
six joint operations exist, which have no material effect on the
consolidated financial statements.
IFRS 10 Consolidated Financial Statements supersedes consol-
idation rules in IAS 27 Consolidated and Separate Financial
Statements as well as SIC-12 Consolidation - Special Purpose
Entities. IFRS 10 establishes a single consolidation model
based on control that applies to all entities. According to the
new model, control exists if the parent company has the power
of decision over the subsidiary based on voting rights or other
rights, if it participates in positive and negative variable returns
from the subsidiary, and if it can affect these returns by its power
of decision. The Group companies were analyzed based on
the new control concept. As a result, two companies were reclas-
sified. These companies are exclusively companies with sub-
ordinate importance for the Group and for the presentation of
a true and fair view of its profitability, liquidity and capital
resources and financial position due to their inactive or minor
business activities. Therefore, these companies are not con-
solidated and hence have no effect on the consolidated financial
statements.
Subject to EU endorsement of these standards, which are
then to be adopted in future periods, Daimler does not currently
plan to apply these standards earlier. Other IFRSS issued but
not EU endorsed are not expected to have a significant impact
on the Group's profitability, liquidity and capital resources
or financial position.
IFRSS issued, EU endorsed and initially adopted in the
reporting period. In May 2011, the IASB issued three new
standards that provide guidance with respect to accounting
for investments of the reporting entity in other entities. Daimler
applies the new consolidation standards as of the mandatory
effective date for IFRS users in the EU of January 1, 2014 on a
retrospective basis.
Basis of preparation
The Board of Management authorized the consolidated
financial statements for publication on February 13, 2015.
The consolidated financial statements of Daimler AG are
presented in euros (€). Unless otherwise stated, all amounts
are stated in millions of euros. All figures shown are rounded
in accordance with standard business rounding principles.
Daimler AG is a stock corporation organized under the laws
of the Federal Republic of Germany. The company is entered
in the Commercial Register of the Stuttgart District Court
under No. HRB 19360 and its registered office is located at
Mercedesstraße 137, 70327 Stuttgart, Germany.
The consolidated financial statements of Daimler AG and
its subsidiaries ("Daimler” or “the Group") have been prepared
in accordance with Section 315a of the German Commercial
Code (HGB) and comply with the International Financial Report-
ing Standards (IFRS) as adopted by the European Union (EU).
General information
1. Significant accounting policies
Notes to the Consolidated Financial Statements.
Applied IFRSS. The accounting policies applied in the
consolidated financial statements comply with the IFRSS
required to be applied in the EU as of December 31, 2014.
Buildings and site improvements
Presentation. Presentation in the consolidated statement
of financial position differentiates between current and
non-current assets and liabilities. Assets and liabilities are
classified as current if they are expected to be realized
or settled within one year or within a longer and normal operating
cycle. Deferred tax assets and liabilities as well as assets
and provisions for pensions and similar obligations are generally
presented as non-current items.
Commercial practices with respect to certain products
manufactured by the Group necessitate that sales financing,
including leasing alternatives, be made available to the Group's
customers. Accordingly, the Group's consolidated financial
statements are significantly influenced by the activities of its
financial services business.
Other equipment, factory and office equipment
10 to 50 years
6 to 25 years
3 to 30 years
Daimler as lessee. In the case of an operating lease, the lease
payments or rental payments are immediately expensed.
Assets carries as finance leases are measured at the beginning
of the (lease) contract at the lower of the present value of
the minimum lease payments and the fair value of the leased
object, and in the following periods less accumulated depre-
ciation and other accumulated fair-value impairments. Depreci-
ation is on a straight-line basis; residual values of the assets
are given due consideration. Payment obligations resulting
from future lease payments are discounted and disclosed
under financing liabilities.
Sale and lease back. The same accounting principles apply
to assets if Daimler sells such assets and leases them back
from the buyer.
Daimler as lessor. Operating leases relate to vehicles that
the Group produces itself and leases to third parties or vehicles
that the Group sells and guarantees to buy back or guarantees
a residual value. These vehicles are capitalized at (depreciated)
cost of production under leased equipment in the industrial
business and are depreciated over the contract term on a
straight-line basis with consideration of the expected residual
values. Changes in the expected residual values lead either to
prospective adjustments of the scheduled depreciation or to an
impairment if necessary.
The consolidated statement of income is presented using
the cost-of-sales method.
Operating leases also relate to Group products that Daimler
Financial Services acquires from non-Group dealers or other
third parties and leases to end customers. These vehicles
are presented at (depreciated) cost of acquisition under leased
equipment in the Daimler Financial Services segment. If these
vehicles are subsidized, the subsidies are deducted from the cost
of acquisition. After revenue is received from the sale to inde-
pendent dealers, these vehicles generate revenue from lease pay-
ments and subsequent resale on the basis of the leasing
contracts. The revenue received from the sale of these vehicles
to the dealers is estimated by the Group as being of the mag-
nitude of the addition to leased equipment at Daimler Financial
Services. In 2014, additions to leased equipment at Daimler
Financial Services amounted to approximately €9 billion (2013:
approximately €8 billion).
204
E.06
There are no effects on net profit, basic and diluted earnings
per share or Group equity.
Table 71 E.07 shows the effects on the consolidated statement
of income in 2014 if the original allocation of the cost
centers to the individual functional costs had been retained.
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group's proportionate share of the
results of operations is included in Daimler's consolidated
financial statements with a one to three-month time lag. Adjust-
ments are made for all significant events or transactions
that occur during the time lag (see also Note 13).
199
Reclassifications within functional costs. In the course
of the organizational focus of the divisions on their customers
and markets, corporate functions in each country are being
streamlined and functional departments are being aligned more
closely with the needs of the divisions. In this context,
Daimler has reviewed the allocation of the cost centers in the
headquarters functions to the individual functional costs.
As a result, amongst other changes, IT services and personnel
expenses have been reclassified from general administrative
expenses to the other functional costs.
To enhance readers' understanding of the Group's profitability,
liquidity and capital resources and financial position, unaudited
information with respect to the Group's industrial and financial
services business activities (Daimler Financial Services) is
provided in addition to the audited consolidated financial state-
ments. Such information, however, is not required by IFRS
and is not intended to, and does not represent the separate IFRS
profitability, liquidity and capital resources and financial
position of the Group's industrial or financial services business
activities. Eliminations of the effects of transactions between
the industrial and financial services businesses have generally
been allocated to the industrial business columns.
In the case of finance leases, the Group presents the receivables
in amount of the net investment of the lease agreements
under receivables from financial services. The net investment
of a lease agreement is the gross investment (future minimum
lease payments and non-guaranteed residual value) discounted
at the rate upon which the lease agreement is based.
1.2498
Fourth quarter
8.3576 48.0425
8.5438 47.9415
8.1734 48.0583
Selling expenses
101,688
Cost of sales
2014
previous
classifi-
cation
In millions of euros
2014 Reclassifi-
changed cations
Effects of retention of original presentation of functional costs
E.07
11,534
4,205
4,101
development costs
Research and non-capitalized
92,855
11,050
3,188
398
175
-677
3,865
General administrative expenses
10,875
104
Selling expenses
General administrative expenses
-461
-204
787
For entities over which Daimler has joint control together with
a partner (joint arrangements), it has to be decided if a joint
operation or a joint venture exists. In a joint venture, the parties
that have joint control of the arrangement have rights to
the net assets of the arrangement. For joint ventures, the equity
method has to be applied. A joint operation exists when the
jointly controlling parties have direct rights to the assets and
obligations for the liabilities. In this case, the prorated assets
and liabilities and the prorated income and expenses are gener-
ally to be recognized. As the joint operations recognized
at the end of the reporting period have no significant impact
on the consolidated financial statements, they continue
to be accounted for using the equity method.
Investments in associated companies, joint ventures or
joint operations. An associated company is an entity over
which the Group has significant influence. Significant influence
is the power to participate in the financial and operating policy
decisions of the investee. Associated companies are generally
accounted for using the equity method.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
200
owners.
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler's percentage ownership without loss
of control are accounted for as an equity transaction between
Business combinations are accounted for using the purchase
method.
The financial statements of consolidated subsidiaries which
are included in the consolidated financial statements are
generally prepared as of the reporting date of the consolidated
financial statements. The financial statements of Daimler AG
and its subsidiaries included in the consolidated financial state-
ments are prepared using uniform recognition and measure-
ment principles. All intercompany assets and liabilities, equity,
income and expenses as well as cash flows from transactions
between consolidated entities are entirely eliminated in the
course of the consolidation process.
3,329
Structured entities which are controlled also have to be con-
solidated. Accordingly, the assets and liabilities remain in
the consolidated statement of financial position. Structured
entities are entities which have been designed so that voting
or similar rights are not relevant in deciding who controls the
entity. This is the case for example if voting rights relate
to administrative tasks only and the relevant activities are
directed by means of contractual arrangements.
Measurement. The consolidated financial statements have
been prepared on the historical cost basis with the exception
of certain items such as available-for-sale financial assets,
derivative financial instruments, hedged items, and pensions
and similar obligations. The measurement models applied
to those exceptions are described below.
4,410
-122
4,532
Foreign currency translation. Transactions in foreign currency
are translated at the relevant foreign exchange rates prevailing
at the transaction date. In subsequent periods, assets and
liabilities denominated in foreign currency are translated into
euros using period-end exchange rates; gains and losses
from this measurement are recognized in profit and loss (except
for gains and losses resulting from the translation of available-
for-sale equity instruments, which are recognized in other com-
prehensive income/loss).
development costs
Research and non-capitalized
101,227
11,330
4,116
Principles of consolidation. The consolidated financial
statements include the financial statements of Daimler AG
and the financial statements of all subsidiaries, including
structured entities which are directly or indirectly controlled
by Daimler AG. Control exists if the parent company has
the power of decision over a subsidiary based on voting rights
or other rights, if it participates in positive and negative
variable returns from a subsidiary, and if it can affect these
returns by its power of decision.
92,457
Cost of sales
2013
changed
1.2141
0.7789 145.2300
7.5358
72.3370
1.3791
0.8337
144.7200
8.3491
rate on December 31
45.3246
during the respective period
First quarter
1.3696
Second quarter
1.3711
Third quarter
1.3256
0.8279 140.8000
0.8147 140.0000
0.7938 137.7500
Average exchange rates
Average exchange
1€ =
RUB
2013 Reclassifi-
disclosed cations
In millions of euros
Effects of reclassifications within functional costs
Assets and liabilities of foreign companies for which the
functional currency is not the euro are translated into euros
using period-end exchange rates. The translation adjustments
are presented in other comprehensive income/loss. The
components of equity are translated using historical rates.
The statements of income and cash flows are translated
into euros using average exchange rates during the respective
periods.
The exchange rates of the US dollar, the British pound,
the Japanese yen, the Chinese renminbi and the Russian ruble
- the most significant foreign currencies for Daimler - were
as shown in table 7 E.08.
E.08
Exchange rates
2014
2013
USD
1€ =
GBP
1€ =
JPY
1€ =
CNY
1€ =
RUB
1€ =
USD
1€ =
GBP
1€ =
JPY
1€ =
CNY
1€ =
197
Balance at December 31, 2014
Table 71 E.06 shows the effects of the retrospective change
of the allocation to the individual functional costs on the
consolidated statement of income in 2013.
Subsidiaries measured at amortized cost. Subsidiaries,
associated companies, joint ventures and joint operations
whose business is non-active or of low volume and that are
not material for the Group and the fair presentation of financial
position, liquidity and capital resources, and profitability
are generally measured at amortized cost in the consolidated
financial statements.
Issue and disposal of treasury shares
-158
3,718
-2,565
3
20
23
-26
-26
-26
26
26
-
26
54
Changes in ownership interests in subsidiaries
-1,032
43,665
919
-9
44,584
45
Other
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Capital increase/Issue of new shares.
Share-based payment
-1
-227
94
-133
-2,407
383
3,335
11
-1,885
2,476
-
2,476
800
-6,048
55
-6,103
11
-2,685
Net profit
7,290
328
Other
853
-12
42,680
683
43,363
Dividends
Balance at December 31, 2013
-12
42,680
683
43,363
Balance at January 1, 2014
6,962
853
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Acquisition of treasury shares
24
-2,456
39,330
1,425
Other comprehensive income/loss before taxes
-1
50
In millions of euros
Total
equity
Non-
controlling
interests
of Daimler AG
share
method
instruments
shareholders
Treasury
financial using the equity
Equity
attributable to
accounted for
775
460
1 See Note 20 for other information on changes in equity.
2 Retained earnings also include items that will not be reclassified to profit or loss. Actuarial losses from pensions and similar obligations amount to
€8,892 million net of tax in 2014 (2013: €5,196 million net of tax).
The accompanying notes are an integral part of these consolidated financial statements.
196
6,842
Other reserves
may be reclassified
in profit/loss
E❘ Consolidated Financial Statements | Consolidated Statement of Changes in Equity
Share of
investments
Derivative
items that
1,878
37,905
Balance at January 1, 2013
Net profit
-2,433
-23
24
24
-24
-24
-24
85
7
78
2
8,720
-2,618
-269
-2,349
2
1,859
1,141
32
9,153
-6
1,205
-338
-43
1,211
-13
-772
803
-11
7,294
-759
129,872
214
Expense of goods sold
In millions of euros
2013
2014
Cost of sales
E.12
117,982
382
In 2014, miscellaneous other financial income/expense,
Sales of other services
59
45
Table 7 E.19 shows the components of interest income
and interest expense.
19
26
Other miscellaneous income
487
486
1,759
1,530
E.17
Other operating expense
Rental income, not relating to sales financing
Reimbursements under insurance policies
2014
In millions of euros
Losses on sales of property, plant and equipment
-120
97,003
80,186
15,073
128,883
83,343
16,147
Mercedes-Benz Vans
Daimler Trucks
Mercedes-Benz Cars
2013
2014
Other miscellaneous expense includes losses from disposals
of current assets, changes in other provisions (partially in
connection with legal proceedings) and additional miscellaneous
items. The line item includes an addition of €600 million to the
provision for EU Commission antitrust proceedings concerning
European commercial vehicle manufacturers.
Further information on the impairment of property, plant and
equipment is provided in Note 5.
2013
The composition of other operating expense is shown
in table 7 E.17.
47
Gains on sales of property, plant and equipment
Other operating income
E.16
6,477
275,384
279,857
Other
52,151
Sales and marketing
26,471
Group functions and services
Table 71E.18 shows the components of other financial
income/expense, net.
16,557
7,937
8,594
63
Daimler Financial Services
Daimler Buses
7. Other financial income/expense, net
2014
2013
In millions of euros
8. Interest income and interest expense
Income from costs recharged to third parties
1,039
840
Government grants and subsidies
92
86
16,419
434
Government grants and subsidies mainly comprise reimburse-
ments relating to current part-time early retirement contracts
and subsidies for alternative drive systems.
The composition of other operating income is shown
in table E.16.
211
Acquisitions and disposals of equity-method investments
Disposals in the year 2014
RRPSH. In the first quarter of 2014, the Board of Management
and the Supervisory Board of Daimler AG decided to sell the
50% equity interest in Rolls-Royce Power Systems Holding GmbH
(RRPSH) to the partner Rolls-Royce Holdings plc (Rolls-Royce).
For that purpose, Daimler exercised a put option on its stake
in RRPSH that had been agreed upon with Rolls-Royce in 2011.
The transaction was closed in the third quarter of 2014 and
the agreed purchase price of €2,433 million was received.
The gain on the sale amounted to €1,006 million. In addition,
the measurement of the put option resulted in an expense
of €118 million in the first quarter of 2014 (2013: €60 million).
Tesla. In the fourth quarter of 2014, the Group sold its 4%
equity interest in Tesla Motors, Inc. (Tesla) and prematurely
terminated the related hedging instrument. In the second
quarter of 2014, the remeasurement of the Tesla shares after
the end of Daimler's significant influence on Tesla led to
a non-cash gain of €718 million. An expense of approximately
€124 million and a cash inflow of €625 million resulted
from the hedging instrument and the sale of the equity interest.
A gain of €594 million resulted in total.
Acquisitions and disposals in the year 2013
BAIC Motor. In 2013, BAIC Motor Corporation Ltd. (BAIC
Motor) issued new shares to Daimler representing a 12%
equity interest for a price of €627 million (including transaction
costs). At the same time, BAIC Motor increased its equity
interest in the joint venture Beijing Benz Automotive Co., Ltd.
(BBAC) by 1% to 51%; Daimler increased its equity interest in
the jointly owned sales company Beijing Mercedes-Benz Sales
Service Co., Ltd. also by 1% to 51%.
EADS. In 2013, Daimler sold its equity interest in the European
Aeronautic Defence and Space Company EADS N.V. (since
January 2, 2014: Airbus Group N.V.) and lost its significant
influence on that company.
See Note 13 for further information on the associated
companies accounted for using the equity method.
4. Revenue
Table 71 E.11 shows the composition of revenue at Group level.
Revenue by segment 7 E.87 and region 7 E.89 is presented
in Note 33.
474
E.11
net includes income from the disposal of the 50% equity interest
in RRPSH of €1,006 million (2013: €0 million) as well as
income from the disposal of the Tesla shares of €88 million
(2013: €0 million). It also includes expenses of €118 million
(2013: €60 million) from the measurement of the RRPSH put
option and of €212 million (2013: €23 million) from hedging
the Tesla share price. In 2013, a loss of €140 million on the sale
of the remaining EADS shares is disclosed.
2014
2013
Sales of goods
Rental and leasing business
114,013
12,245
103,594
10,966
Interest from the financial services
business at Daimler Financial Services
3,180
3,040
Revenue
Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.
470
15
6. Other operating income and expense
Average number of employees
E.15
Information on the total remuneration of the current and
former members of the Board of Management and the current
members of the Supervisory Board is provided in Note 37.
-88
Impairment on property, plant and equipment
-93
Other miscellaneous expenses
-947
-311
-1,160
-399
16
Associated companies accounted for using
the equity method
12
Germany
-
International
9
9
Joint operations, joint ventures and associated
companies accounted for at (amortized) cost
Germany
30
29
15
13
International
12
In millions of euros
Provisions for optimization programs¹
Depreciation of equipment on operating leases
Cash effects resulting from the optimization programs
are mainly expected until the end of 2017.
Cost of sales
Selling expenses
-95
-71
-33
-14
General administrative expenses
-43
-50
E.14.
Research and non-capitalized development costs
-13
Other operating expenses
-93
-10
3
-277
-155
Other operating income
213
Personnel expenses and average number of employees.
Personnel expenses included in the consolidated statement
of income amounted to €19,607 million in 2014 (2013: €18,753
million). The average numbers of people employed are shown
in table 7 E.15.
Due to the organizational focus of the divisions on their
customers and markets, the numbers of employees previously
reported under sales and marketing are included in the
respective divisions in 2014. This does not apply, however,
to the Group's own sales-and-service centers in Germany
and the logistics center in Germersheim, whose employees are
included under group functions and services as of 2014.
The employees previously shown under Other are also included
herein.
-13
In addition to the impairments of property, plant and equipment
mentioned above, the expenses listed in table 7 E.13 primarily
relate to personnel measures and are included in the line
items within the consolidated statement of income as shown
in table
Table 71E.13 shows the effects of the optimization programs
on the key figures of the segments.
Recoverable amounts of cash-generating units and equity-
method investments. In the context of impairment tests
for non-financial assets, estimates have to be made to determine
the recoverable amounts of cash-generating units. Assump-
tions have to be made in particular with regard to future cash
inflows and outflows for the planning period and the following
periods. The estimates include assumptions regarding future
market share and the growth of the respective markets as well
as regarding the products' profitability. On the basis of the
impairment tests carried out in 2014, the recoverable amounts
are substantially larger than the net assets of the Group's
cash-generating units.
Acquisitions and disposals of consolidated subsidiaries.
The increase in the number of consolidated subsidiaries also
includes additions due to the Group's internal restructuring,
which had no effect on the balance sheet total or on net profit.
-91,574
to approximately 1% of the Group's revenue and net profit.
The aggregate balance sheet totals of the subsidiaries,
associated companies, joint ventures and joint operations
accounted for at amortized cost whose business is non-active
or of low volume and which are not material for the Group
and the fair presentation of its profitability, liquidity and capital
resources and financial position would amount to approxi-
mately 1% of the Group's balance sheet total; the aggregate
revenues and the aggregate net profit would amount
Composition of the Group. Table 7 E.10 shows the
composition of the Group.
3. Consolidated Group
At December 31,
2013
2014
Composition of the Group
E.10
At the reporting date, the Group has business relationships with
18 controlled structured entities, of which 16 are fully consoli-
dated. In addition, the Group has relationships with 5 non-con-
trolled structured entities. The unconsolidated structured
entities are not material for the Group's profitability, liquidity
and capital resources and financial position.
Structured entities. The structured entities of the Group
are rental companies and asset-backed-securities (ABS) com-
panies. The purpose of the rental companies primarily is the
acquisition, renting and management of assets. The ABS com-
panies are primarily used for the Group's refinancing. The
assets transferred to structured entities usually result from the
Group's leasing and sales financing business. Those entities
refinance the purchase price by issuing securities.
Income taxes. The calculation of income taxes of Daimler AG
and its subsidiaries is based on the legislation and regulations
applicable in the various countries. Due to their complexity,
the tax items presented in the financial statements are possibly
subject to different interpretation by taxpayers on the one
hand and local tax authorities on the other. For the calculation
of deferred tax assets, assumptions have to be made regarding
future taxable income and the time of realization of the
deferred tax assets. In this context, Daimler takes into consid-
eration, among other things, the projected earnings from
business operations, the effects on earnings of the reversal
of taxable temporary differences, and realizable tax strategies.
As future business developments are uncertain and are some-
times beyond Daimler's control, the assumptions to be made
in connection with accounting for deferred tax assets are
connected with a substantial degree of uncertainty. On each
balance sheet date, Daimler carries out impairment tests on
deferred tax assets on the basis of the planned taxable income
in future financial years; if Daimler assesses that the prob-
ability of future tax advantages being partially or fully unrealized
is more than 50%, the deferred tax assets are impaired.
Further information is provided in Note 9.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
210
Pensions and similar obligations. The calculation of provisions
for pensions and similar obligations and the related pension
cost are based on various mathematical models. The calculations
are subject to various assumptions on matters such as current
actuarially developed probabilities (e.g. discount factors and cost-
of-living increases), future fluctuations with regard to age
and period of service, and experience with the probability
of occurrence of pension payments, annuities or lump sums.
As a result of changed market or economic conditions, the
probabilities on which the influencing factors are based, may
differ from current developments. The financial effects
of deviations of the main factors are calculated with the use
of sensitivity analyses. See Note 22 for further information.
Legal proceedings. Various legal proceedings, claims and
governmental investigations are pending against Daimler AG
and its subsidiaries on a wide range of topics. Adverse
decisions in one or more of those proceedings could require
us to pay substantial compensatory and punitive damages
or to undertake service actions, recall campaigns or other costly
actions. Litigation and governmental investigations often
involve complex legal issues and are connected with a high
degree of uncertainty. Accordingly, the assessment of whether
an obligation exists on the balance sheet date as a result
of an event in the past, and whether a future cash outflow is likely
and the obligation can be reliably estimated, largely depends
on estimations by the management. Daimler regularly evaluates
the current stage of legal proceedings, also with the involve-
ment of external legal counsel. It is therefore possible that the
amounts of provisions for pending or potential litigation will
have to be adjusted due to future developments. Changes in
estimates and premises can have a material effect on the
Group's future profitability. It is also possible that provisions
accrued for some legal proceedings may turn out to be
insufficient once such proceedings have ended. Daimler may
also become liable for payments in legal proceedings no
provisions were established for. Although the final resolution
of any such proceedings could have a material effect on
Daimler's operating results and cash flows for a particular report-
ing period, Daimler believes that it should not materially
affect the Group's financial position.
Further information on provisions for other risks is provided
in Note 23.
The Group provides various types of product warranties
depending on the type of product and market conditions.
Provisions for product warranties are generally recognized
when vehicles are sold, upon lease inception, or when new
warranty programs are initiated. Based on historical warranty
claim experience, assumptions have to be made on the type
and extent of future warranty claims and customer goodwill,
as well as on possible recall or buyback campaigns for each
model series. In addition, the estimates also include assump-
tions on the amounts of potential repair costs per vehicle
and the effects of possible time or mileage limits. The provisions
are regularly adjusted to reflect new information.
Product warranties. The recognition and measurement
of provisions for product warranties is generally connected
with estimates.
The Group regularly estimates the risk of default on receivables
from financial services. Many factors are taken into consid-
eration in this context, including historical loss experience, the
size and composition of certain portfolios, current economic
events and conditions and the estimated fair values and adequacy
of collateral. Changes in economic conditions can lead to
changes in our customers' creditworthiness and to changes in
used vehicle prices, which would have a direct effect on the
market values of the vehicles assigned as collateral. Changes
to the estimation and assessment of these factors influence
the allowance for credit losses with a resulting impact on the
Group's net profit. See also Notes 14 and 32 for further
information.
Collectability of receivables from financial services.
209
Recoverable amount of equipment on operating leases.
Daimler regularly reviews the factors determining the values of
its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases, which
constitute a substantial part of the expected future cash
flows from leased assets. In this context, assumptions have to
be made regarding the future supply of and demand for vehicles,
as well as the development of vehicle prices. Those assumptions
are determined either by qualified estimates or by publications
provided by expert third parties; qualified estimates are based,
as far as they are publicly available, on external data with con-
sideration of internally available additional information such as
historical experience of price developments and recent sale
prices. The residual values thus determined serve as a basis for
systematic depreciation; changes in residual values lead
either to prospective adjustments of the systematic deprecia-
tion or, in the case of a significant drop in expected residual
values, to impairment. If systematic depreciation is prospec-
tively adjusted, changes in estimates of residual values do not
have a direct effect but are equally distributed over the remain-
ing periods of the lease contracts.
When objective evidence of impairment is present, estimates
and assessments also have to be made to determine the
recoverable amount of an equity method financial investment.
The determination of the recoverable amount is based on
assumptions regarding future business developments for the
determination of the expected future cash flows of that
financial investment. See Note 13 for the presentation of carry-
ing amounts and fair values of equity-method financial
investments in listed companies.
In the consolidated financial statements, to a certain degree,
estimates, assessments and assumptions have to be made
which can affect the amounts and reporting of assets and liabili-
ties, the reporting of contingent assets and liabilities on the
balance sheet date and the amounts of income and expense
reported for the period. The major items affected by such
estimates, assessments and assumptions are described as
follows. Actual amounts may differ from the estimates.
Changes in the estimates, assessments and assumptions can
have a material impact on the consolidated financial statements.
Germany
2. Accounting estimates and assessments
Liability awards are measured at fair value at each balance sheet
date until settlement and are classified as provisions. The
profit or loss of the period equals the addition to and/or the
reversal of the provision during the reporting period and
the dividend equivalent paid during the period, and is included
in the functional costs.
Impairment of financial assets. At each reporting date,
the carrying amounts of financial assets other than those
to be measured at fair value through profit or loss are assessed
to determine whether there is objective evidence of impair-
ment. Objective evidence may exist for example if a debtor is
facing serious financial difficulties or there is a substantial
change in the debtor's technological, economic, legal or market
environment. For quoted equity instruments, a significant or
prolonged decline in fair value is additional objective evidence
of possible impairment. Daimler has defined criteria for the
significance and duration of a decline in fair value. A decline
in fair value is deemed significant if it exceeds 20% of the
carrying amount of the investment; a decline is deemed prolonged
if the carrying amount exceeds the fair value for a period
longer than nine months.
Cash and cash equivalents. Cash and cash equivalents consist
primarily of cash on hand, checks and demand deposits at
banks, as well as debt instruments and certificates of deposits
with a remaining term when acquired of up to three months,
which are not subject to any material value fluctuations. Cash
and cash equivalents correspond with the classification in
the consolidated statement of cash flows.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
206
After initial measurement, available-for-sale financial assets are
measured at fair value, with unrealized gains or losses being
recognized in other comprehensive income/loss. If objective
evidence of impairment exists or if changes occur in the fair
value of a debt instrument resulting from currency fluctuations,
these changes are recognized in profit or loss. Upon disposal
of financial assets, the accumulated gains and losses recognized
in other comprehensive income/loss resulting from measure-
ment at fair value are recognized in profit or loss. If a reliable
estimate cannot be made of the fair value of an unquoted
equity instrument, such as an investment in a German limited
liability company, this instrument is measured at cost (less
any impairment losses). Interest earned on available-for-sale
financial assets is generally reported as interest income
using the effective interest method. Dividends are recognized
in profit or loss when the right of payment has been established.
Available-for-sale financial assets. Available-for-sale financial
assets are non-derivative financial assets that are designated
as available for sale or that are not classified in any of the
preceding categories. This category includes equity instruments
and debt instruments such as government bonds, corporate
bonds and commercial papers.
Loans and receivables. Loans and receivables are non-derivative
financial assets with fixed or determinable payments that
are not quoted in an active market, such as receivables from
financial services or trade receivables. After initial recognition,
loans and receivables are subsequently carried at amortized
cost using the effective interest method less any impairment
losses. Gains and losses are recognized in the statement
of income when the loans and receivables are impaired or derec-
ognized. Interest effects on the application of the effective
interest method are also recognized in profit or loss.
Derivatives, including embedded derivatives separated from
the host contract, which are not classified as hedging instruments
in hedge accounting, as well as shares and marketable debt
securities acquired for the purpose of selling in the near term
are classified as held for trading. Gains or losses on these
financial assets are recognized in profit or loss.
Financial assets at fair value through profit or loss. Financial
assets at fair value through profit or loss include those
financial assets designated as held for trading.
Financial assets. Financial assets primarily comprise
receivables from financial services, trade receivables,
receivables from banks, cash on hand, derivative financial
assets and marketable securities and investments.
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IAS 39 Financial Instruments: Recognition
and Measurement. Transaction costs directly attributable
to acquisition or issuance are considered by determining
the carrying amount if the financial instruments are not mea-
sured at fair value through profit or loss.
Loans and receivables. If there are objective indications that
the value of a loan or receivable has to be impaired, the
amount of the impairment loss is measured as the difference
between the carrying amount of the asset and the present
value of expected future cash flows (excluding expected future
credit losses that have not yet been incurred), discounted
at the original effective interest rate of the financial asset.
The amount of the impairment loss is recognized in profit or loss.
Financial instruments. A financial instrument is any contract
that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity. Financial instru-
ments in the form of financial assets and financial liabilities
are generally presented separately. Financial instruments are
recognized as soon as Daimler becomes a party to the con-
tractual provisions of the financial instrument. In the case of
purchases or sales of financial assets through the regular
market, Daimler uses the transaction date as the date of initial
recognition or derecognition.
as held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is
reversed, this reversal is restricted to the impairment loss
previously recognized for the assets or disposal group
concerned. The Group generally discloses these assets or
disposal groups separately in the consolidated statement
of financial position.
Non-current assets held for sale and disposal groups.
The Group classifies non-current assets or disposal groups
205
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist
or may have decreased. If this is the case, Daimler records
a partial or entire reversal of the impairment; the carrying amount
is thereby increased to its recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of depreciation)
had no impairment loss been recognized in prior years.
The recoverable amount is the higher of fair value less costs
of disposal and value in use. For cash-generating units, which
at Daimler correspond to the reportable segments, Daimler
in a first step determines the respective recoverable amount
as value in use and compares it with the respective carrying
amount (including goodwill). Value in use is measured by
discounting expected future cash flows from the continuing
use of the cash-generating units using a risk-adjusted interest
rate. Future cash flows are determined on the basis of the
long-term planning, which is approved by the Board of Manage-
ment and which is valid at the date when the impairment test
is conducted. This planning is based on expectations regarding
future market share, the growth of the respective markets
as well as the products' profitability. The multi-year planning
comprises a planning horizon until 2021 and therefore mainly
covers the product life cycles of our automotive business. The
rounded risk-adjusted interest rates used to discount cash
flows, which are calculated for each segment, are currently
unchanged from the previous year at 8% after taxes for the
cash-generating units of the industrial business and 9% after
taxes for Daimler Financial Services. Whereas the discount
rate for Daimler Financial Services represents the cost of equity,
the risk-adjusted interest rate for the cash-generating units
of the industrial business is based on the weighted average cost
of capital (WACC). These are calculated based on the capital
asset pricing model (CAPM) taking into account current market
expectations. In calculating the risk-adjusted interest rate
for impairment test purposes, specific peer group information
for beta factors, capital structure data and cost of debt are
used. Periods not covered by the forecast are taken into account
by recognizing a residual value (terminal value), which generally
does not consider any growth rates. In addition, several
sensitivity analyses are conducted. These show that even in
case of more unfavorable premises for main influencing factors
with respect to the original planning, no need for impairment
exists. If value in use is lower than the carrying amount, fair value
less costs of disposal is additionally calculated to determine
the recoverable amount.
Impairment of non-current non-financial assets. Daimler
assesses at each reporting date whether there is an indi-
cation that an asset may be impaired. If such indication exists,
Daimler estimates the recoverable amount of the asset.
The recoverable amount is determined for each individual asset
unless the asset generates cash inflows that are not largely
independent of those from other assets or groups of assets
(cash-generating units). In addition, goodwill and other
intangible assets with indefinite useful lives are tested annually
for impairment; this takes place at the level of the cash-
generating units. If the carrying amount of an asset or of a cash-
generating unit exceeds the recoverable amount, an impair-
ment loss is recognized for the difference.
Interim gains or losses (to be eliminated) from transactions
with companies accounted for at-equity are recognized
through profit and loss with corresponding adjustments of
the investments' carrying amounts.
Daimler reviews on each balance-sheet date whether there
is any objective indication of impairments of equity-method
investments. If such indications exist, the Group determines the
impairment loss to be recognized. If the carrying amount
exceeds the recoverable amount of an investment, the carrying
amount is written down to the recoverable amount. The recov-
erable amount is the greater of fair value less costs to sell and
value in use. An impairment or impairment reversal is recog-
nized in the consolidated statement of income under income/
loss on equity-method investments; this also includes any
gains and/or losses on the sale of equity-method investments.
a positive difference between cost of acquisition and Daimler's
share of the fair values of the identifiable assets and liabilities
of the associated company or joint venture are determined and
recognized as investor level goodwill. The goodwill is included
in the carrying amount of the equity-method investment. With
step acquisition of an equity interest by which significant
influence or joint control is achieved for the first time, the invest-
ment is generally accounted for on the basis of IFRS 3 Business
Combinations. This means that the previously held equity
interest is remeasured on the date of acquisition; any resulting
gain or loss is recognized through profit and loss. If an equity
interest in an existing associated company is increased without
any resulting change in significant influence, goodwill is deter-
mined only for the additionally acquired interest; the previous
investment is not remeasured at fair value.
Equity-method investments. On the date of acquisition,
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Inventories. Inventories are measured at the lower of cost and
net realizable value. The net realizable value is the estimated
selling price less any remaining costs to sell. The cost of
inventories is generally based on the specific identification
method and includes costs incurred in acquiring the inventories
and bringing them to their existing location and condition.
Costs for large numbers of inventories that are interchangeable
are allocated under the average cost formula. In the case
of manufactured inventories and work in progress, cost also
includes production overheads based on normal capacity.
If, in a subsequent reporting period, the amount of the
impairment loss decreases and the decrease can be attributed
objectively to an event occurring after the impairment was
recognized, the impairment loss recorded in prior periods is
reversed and recognized in profit or loss.
In most cases, an impairment loss on loans and receivables
(e.g. receivables from financial services including finance lease
receivables and trade receivables) is recorded using allowance
accounts. The decision to account for credit risks using an
allowance account or by directly reducing the receivable depends
on the estimated probability of the loss of receivables.
Available-for-sale financial assets. If an available-for-sale financial
asset is impaired, the difference between its cost (net of
any principal payment and amortization) and its current fair
value (less any impairment loss previously recognized in the
statement of income) is reclassified from other comprehensive
income/loss to the statement of income. Reversals with
respect to equity instruments classified as available for sale are
recognized in other comprehensive income/loss. Reversals
of impairment losses on debt instruments are recognized
through the statement of income if the increase in fair value of
the instrument can be objectively attributed to an event occur-
ring after the impairment losses were recognized in the conso-
lidated statement of income.
Share-based payment. Share-based payment comprises
cash-settled liability awards.
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed
by a segment or business unit or the manner in which business
is conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the
termination of agreements with suppliers and dealers.
Restructuring provisions are recognized when the Group has
a detailed formal plan that has either commenced imple-
mentation or been announced.
Daimler records the fair value of an asset retirement obligation
from the period in which the obligation is incurred.
A provision for expected warranty costs is recognized when
a product is sold, upon lease inception, or when a new
warranty program is initiated. Estimates for accrued warranty
costs are primarily based on historical experience.
Provisions for other risks. A provision is recognized when
a liability to third parties has been incurred, an outflow
of resources is probable and the amount of the obligation can
be reasonably estimated. The amount recognized as a provi-
sion represents the best estimate of the obligation at the balance
sheet date. Provisions with an original maturity of more than
one year are discounted to the present value of the expenditures
expected to settle the obligation at the end of the reporting
period. Provisions are regularly reviewed and adjusted as further
information becomes available or circumstances change.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
208
occurs.
Gains or losses on the curtailment or settlement of a defined
benefit plan are recognized when the curtailment or settlement
The discount factors used to calculate the present values
of defined benefit pension obligations are to be determined
by reference to market yields at the end of the reporting period
on high-quality corporate bonds in the respective markets.
For very long maturities, there are no high-quality corporate
bonds available as a benchmark. The respective discount
factors are estimated by extrapolating current market rates
along the yield curve.
(net pension obligation or net pension assets) accrues interest
at the discount rate used as a basis for the measurement of
the gross pension obligation. The resulting net interest expense
or income is recognized in profit and loss under interest
expense or interest income in the consolidated statement of
income. The other expenses resulting from pension obligations
and other post-employment benefit obligations (medical care),
which mainly result from entitlements acquired during
the year under review, are taken into consideration in the
functional costs in the consolidated statement of income.
The balance of defined benefit plans for pensions and other
post-employment benefit obligations and plan assets
Pensions and similar obligations. The measurement of
defined benefit plans for pensions and other post-employment
benefit obligations (medical care) in accordance with IAS 19
Employee Benefits is based on the projected unit credit method.
Plan assets invested to cover defined benefit pension obliga-
tions and other post-employment benefit obligations (medical
care) are measured at fair value and offset against the corre-
sponding obligations. For the valuation of defined benefit plans,
differences between actuarial assumptions used and actual
developments as well as changes in actuarial assumptions
result in actuarial gains and losses, which have a direct impact
on the consolidated statement of financial position or on the
consolidated statement of income.
If derivative financial instruments do not or no longer qualify
for hedge accounting because the qualifying criteria for
hedge accounting are not or are no longer met, the derivative
financial instruments are classified as held for trading and
are measured at fair value through profit or loss.
Changes in the fair value of derivative financial instruments are
recognized periodically in either profit or loss or other compre-
hensive income/loss, depending on whether the derivative
is designated as a hedge of changes in fair value or cash flows.
For fair value hedges, changes in the fair value of the hedged
item and the derivative are recognized in profit or loss. For cash
flow hedges, fair value changes in the effective portion of
the hedging instrument after taxes are recognized in other
comprehensive income/loss. Amounts recognized in other
comprehensive income/loss are reclassified to the statement
of income when the hedged underlying transaction affects
the statement of income. The ineffective portions of fair value
changes are recognized in profit or loss.
If the requirements for hedge accounting set out in IAS 39 are
met, Daimler designates and documents the hedge relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the fair
value of a recognized asset or liability or an unrecognized firm
commitment is hedged. In a cash flow hedge, the variability
of cash flows to be received or paid from expected transactions
related to a recognized asset or liability or a highly probable
forecast transaction are hedged. The documentation of the hedg-
ing relationship includes the objectives and strategy of risk
management, the type of hedging relationship, the nature of the
risk being hedged, the identification of the hedging instrument
and the hedged item, as well as a description of the method used
to assess hedge effectiveness. Hedging transactions are
expected to be highly effective in achieving offsetting risks
from changes in fair value or cash flows and are regularly
assessed to determine that they have actually been highly
effective throughout the financial reporting periods for which
they are designated.
Derivative financial instruments are measured at fair value
upon initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive
or negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option pricing models. Deriva-
tives are presented as assets if their fair value is positive
and as liabilities if the fair value is negative.
207
if an analysis shows that the economic characteristics and risks
of embedded derivatives are not closely related to those
of the host contract.
Embedded derivatives are separated from the host contract,
which is not measured at fair value through profit or loss,
Derivative financial instruments and hedge accounting.
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its commercial business
or refinancing activities. These are mainly interest rate risks,
currency risks and commodity price risks.
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives, (including embedded
derivatives separated from the host contract) which are not
used as hedging instruments in hedge accounting, are classified
as held for trading. Gains or losses on liabilities held for trading
are recognized in profit or loss.
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured
at amortized cost using the effective interest method.
Financial liabilities. Financial liabilities primarily include
trade payables, liabilities to banks, bonds, derivative financial
liabilities and other liabilities.
Offsetting financial instruments. Financial assets and
financial liabilities are offset and the net amount is presented
in the consolidated statement of financial position provided
that an enforceable right currently exists to offset the amounts
involved, and there is an intention either to carry out the
offsetting on a net basis or to settle a liability when the related
asset is sold.
Presentation in the consolidated statement of cash flows.
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash used for investing activities.
Consolidated subsidiaries
A detailed list of the companies included in the consolidated
financial statements and of the equity investments of Daimler AG
pursuant to Sections 285 und 313 of the German Commercial
Code (HGB) is provided in the statement of investments. Further
information is provided in Note 39.
320
In millions of euros
Mercedes-Benz Cars
EBIT
Cash flow
Provisions for optimization programs¹
Daimler Trucks
EBIT
Cash flow
-81
-5
-165
2013
-116
-50
Provisions for optimization programs¹
6
64
Mercedes-Benz Vans
EBIT
Cash flow
-17
-1
327
Daimler Buses
EBIT
-170
2014
Optimization programs
E.13
-5,049
-83,377
-4,376
Refinancing costs at
Daimler Financial Services
-1,443
-1,578
Impairment losses on receivables from
financial services
-433
Other cost of sales
-3,189
-101,688
-416
-3,108
-92,855
212
5. Functional costs
Cost of sales. Items included in cost of sales are shown
in table E.12.
Amortization expense of capitalized development costs in
the amount of €1,212 million (2013: €1,134 million) is presented
in expense of goods sold.
Selling expenses. In 2014, selling expenses amounted
to €11,534 million (2013: €11,050 million). Selling expenses
include direct selling costs as well as selling overhead
expenses and consist of personnel expenses, material costs
and other selling costs.
General administrative expenses. General administrative
expenses amounted to €3,329 million in 2014 (2013: €3,188
million) and comprise expenses which were not attributable
to production, sales or research and development functions,
including personnel expenses, depreciation and amortization
on fixed and intangible assets, and other administrative costs.
Research and non-capitalized development costs.
Research and non-capitalized development costs were €4,532
million in 2014 (2013: €4,205 million) and primarily comprise
personnel expenses and material costs.
Optimization programs. Measures and programs with
implementation costs that materially impacted EBIT of the
segments are briefly described below.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
In the course of the organizational focus on the divisions,
Daimler started a restructuring program for its sales organization
in Germany in 2014. Selected sales-and-service centers and
outlets are being combined into car and commercial vehicles
outlets in order to steadily increase the profitability of
Daimler's own dealer activities in the highly competitive German
market. In addition, the restructuring program includes the
plan to sell selected operations of the Group's current sales
network, primarily by the end of 2015. Due to their minor
impact on the Group's profitability, liquidity and capital resources
and financial position, assets and liabilities held for sale are
not presented separately in the consolidated statement of finan-
cial position. At December 31, 2014, this disposal group's
assets amounted to €300 million and its liabilities amounted
to €27 million. Measurement at fair value less cost to sell
led to an impairment of property, plant and equipment in an
amount of €93 million, which affected all automotive
segments, but mainly the Mercedes-Benz Cars segment.
For these restructuring measures, the Group anticipates further
negative effects on earnings of up to €0.5 billion in 2015
and 2016.
Moreover, in January 2013, Daimler Trucks announced work-
force adjustments as part of its goal of increasing its profitability
by stronger utilization of efficiencies. In the administrative
area in Brazil, a voluntary redundancy program was launched
in the first quarter of 2013 leading to a reduction of approxi-
mately 1,000 jobs. In April 2014, Daimler Trucks announced
the continuation of the workforce adjustments in Brazil with
the start of a voluntary program that led to a reduction of about
1,500 jobs in 2014, mostly in the production area. These
workforce adjustments also affected Daimler Buses to a small
extent.
Cash flow
-14
Provisions for optimization programs¹
-25
-39
3
5
International
0
0
Germany
3
5
Subsidiaries accounted for using
the equity method
57
3
47
35
33
Germany
92
80
Unconsolidated subsidiaries
271
267
International
49
60
International
3
Joint operations accounted for
using the equity method
1
-39
13
36
1 Amounts of provisions for optimization programs as of December 31.
E.14
Income and expenses associated with optimization programs
2014
2013
In millions of euros
Germany
The Group anticipates further expenses of up to €50 million
in 2015 for these optimization programs at Daimler Trucks.
Finally, EBIT at Daimler Buses in 2013 included expenses
related to the optimization measures started in Western
Europe and North America in 2012. This optimization program
was successfully completed by the end of 2013.
In addition, in non-productive areas in Germany, a reduction
of approximately 800 jobs is planned for which a program
was started in May 2013, based on socially acceptable voluntary
measures, that was continued in 2014.
10
1
International
11
2
Joint ventures accounted for using
the equity method
2
15
Germany
3
4
International
13
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate for the year 2014 to the balance sheet date
September 30 (for the year 2013 to the balance sheet date December 31).
224
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date September 30.
In order to consolidate the company without a time lag, adjustments are made as of December 31, which are included in line item Other.
Figures for the statement of income relate to the period from October 1 to September 30.
3 Kamaz:
Figures for BAIC Motor are based on local GAAP.
Figures for the statement of income relate for the year 2014 to the period of January 1 to September 30
(for the year 2013 to the period of January 1 to December 31).
-772
1 BBAC:
Property, plant and equipment
-1,639
292
13,868
-1,081
12,787
-2,195
-175
-1,442
Equipment on operating leases
-6,053
-4,940
Inventories
-50
-72
Receivables from financial services
-736
-656
Other financial assets
-352
-249
Other assets
-189
-98
Provisions for pensions and similar obligations
-872
-1,604
Other provisions
-177
-159
Other
-232
-260
Deferred tax liabilities, gross
-12,535
-2,162
-73
Other intangible assets
Development costs
15,589
59
367
Equipment on operating leases
1,273
1,131
Inventories
752
603
Receivables from financial services
275
275
Other financial assets
4,349
3,406
-11,850
Tax loss carryforwards and unused tax credits
3,542
Provisions for pensions and similar obligations
958
818
Other provisions
2,313
Liabilities
1,384
Deferred income
Other
Valuation allowances
1,186
315
16,507
-918
1,862
614
899
Deferred tax assets, gross
3,323
52
327
Deferred tax assets, net
937
-198
3,054
937
2014
2013
Income tax expense
Income tax expense/benefit
recorded in other reserves
-2,883
-1,419
2,511
5,609
8,120
21,779
2,272
5,366
7,350
6,791
6,942
1 Primarily changes from currency translation.
Carrying amount at December 31, 2014
Carrying amount at December 31, 2013
40,700
10
17,277
14,959
8,454
Balance at December 31, 2014
700
-1
352
241
4
-372
1,682
-338
Deferred tax assets and deferred tax liabilities are offset if the
deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority and if there is the right
to set off current tax assets against current tax liabilities.
In the presentation of deferred tax assets and liabilities in the
consolidated statement of financial position, no difference
is made between current and non-current. In the consolidated
statement of financial position, deferred tax assets and
liabilities are presented as shown in table 7 E.24.
In respect of each type of temporary difference and in respect
of each type of unutilized tax loss carryforwards and unutilized
tax credits, the deferred tax assets and liabilities before offset
are summarized in table 7 E.25.
The development of deferred tax assets, net, is shown
in table 7 E.26.
Including the items recognized in other comprehensive
income/loss (including items from equity-method investments),
the expense for income taxes is comprised as shown
in table 7 E.27.
In the consolidated statement of financial position, the valuation
allowances on deferred tax assets, which are mainly attribut-
able to foreign companies, decreased by €163 million compared
to December 31, 2013. On the one hand, this is a result of
the reversal of valuation allowances of €276 million recorded
in net profit. On the other hand, an increase of the valuation
allowance was recognized in equity, mainly due to currency
translation.
At December 31, 2014, the valuation allowance on deferred tax
assets relates, among other things, to corporate income
tax loss carryforwards (€484 million), tax loss carryforwards
in connection with capital losses (€10 million) and tax credits
(€11 million). €20 million of the deferred tax assets for corporate
income tax loss carryforwards adjusted by a valuation allow-
ance relates to tax loss carryforwards which expire at various
dates from 2018 through 2019, €152 million relates to tax
loss carryforwards which expire at various dates from 2020
through 2024, €49 million relates to tax loss carryforwards
which expire at various dates from 2025 through 2034 and
€263 million relates to tax loss carryforwards which can
be carried forward indefinitely. The deferred tax assets on loss
carryforwards connected with capital losses were partly
reduced by valuation allowances because the carryforward
periods of those losses are limited and can only be utilized
with future capital gains. The tax loss carryforwards connected
with capital losses expire at the end of 2016. Of the tax credit
carryforwards adjusted by a valuation allowance, €5 million expire
at various dates from 2015 through 2018 and €4 million expire
at various dates from 2020 through 2034; €2 million relates
to tax credits which can be carried forward indefinitely.
216
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Furthermore, the valuation allowance primarily relates to
temporary differences as well as net operating losses for state
and local taxes at the US companies. Daimler believes that
it is more likely than not that those deferred tax assets cannot
be utilized. In 2014 and prior years, the Group had tax losses
at several subsidiaries in several countries. After offsetting the
deferred tax assets with deferred tax liabilities, the deferred
tax assets not subject to valuation allowances amounted to
€466 million for those subsidiaries. Daimler believes it is more
likely than not that future taxable income will be sufficient
to allow utilization of the deferred tax assets. Daimler's current
estimate of the amount of deferred tax assets that is considered
realizable may change in the future, necessitating higher or
lower valuation allowances.
The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group
did not recognize deferred tax liabilities on retained earnings
of non-German subsidiaries of €21,242 million (2013: €16,419
million). If earnings are paid out as dividends, an amount of 5%
would be taxed under German taxation rules and, if applicable,
with non-German withholding tax. Additionally, income tax conse-
quences may arise if the dividends first have to be distributed
by a non-German subsidiary to a non-German holding company.
Normally, the distribution would lead to an additional income
tax expense. It is not practicable to estimate the amount of tax-
able temporary differences for these undistributed foreign
earnings.
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of
jurisdictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed for
all open tax years. As a result of future adjudications or changes
in the opinions of the fiscal authorities, it cannot be ruled
out that Daimler might receive tax refunds for previous years.
E.26
Change of deferred tax assets, net
2014
3,054
2013
Deferred tax assets, net as of January 1
Deferred tax expense
937
2,465
-363
-614
Change in deferred tax expense/benefit
on financial assets available-for-sale included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on derivative financial instruments included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on actuarial gains/losses from defined benefit
pension plans
Other changes¹
Deferred tax assets, net as of December 31
1 Primarily effects from currency translation.
E.27
Tax expense in equity
In millions of euros
-6
-6
800
In millions of euros
108
Property, plant and equipment
In millions of euros
E.20
Profit before income taxes
2014
2013
In millions of euros
German companies
Non-German companies
2,960
5,630
7,213
4,509
10,173
10,139
E.21
Components of income taxes
2014
2013
In millions of euros
Current taxes
German companies
-1,125
202
Non-German companies
-1,395
-1,007
Deferred taxes
German companies
242
-180
Non-German companies
-884
-715
-529
-365
2014
2013
In millions of euros
Expense from compounding of provisions and effects
of changes in discount rates¹
-353
-95
Miscellaneous other financial income/expense, net
811
-254
458
-349
1 Excluding the expense from compounding provisions for pensions and
similar obligations.
E.19
Interest income and interest expense
-605
2014
In millions of euros
Interest income
Net interest income on the net assets of defined
benefit pension plans
3
2
Interest and similar income
142
210
145
212
Interest expense
Net interest expense on the net obligation
from defined benefit pension plans
Interest and similar expense
-350
-355
2013
Intangible assets
-434
-1,419
276
143
Tax-free income and non-deductible expenses
-44
1,546
Other
10
-77
Actual income tax expense
-2,883
-1,419
E.24
Deferred tax assets and liabilities
In millions of euros
At December 31,
2014
2013
Deferred tax assets
4,124
1,829
Deferred tax liabilities
-1,070
-892
Deferred tax assets, net
3,054
937
E.25
Split of tax assets and liabilities before offset
At December 31,
2014
2013
on deferred tax assets
Change of valuation allowance
-10
-21
E.22
Components of deferred tax expense
In millions of euros
2014
2013
Deferred taxes
-363
-614
due to temporary differences
-44
-710
due to tax loss carryforwards and tax credits
-319
96
-2,883
215
Reconciliation of expected income tax expense
to actual income tax expense
2014
2013
In millions of euros
Expected income tax expense
Foreign tax rate differential
-3,034
-91
-3,024
-51
Trade tax rate differential
21
54
Tax law changes
E.23
Other changes¹
-1,913
-970
Reclassifications
1,507
286
1,221
Additions
6,482
1,632
4,590
260
Balance at December 31, 2013
-160
-107
-40
-13
Other changes¹
-783
-116
-667
Disposals
Reclassifications
1,380
242
1,138
6,045
1,613
4,159
273
Additions
Balance at January 1, 2013
Disposals
Other changes¹
Balance at December 31, 2014
-911
Cost of sales
2013
2014
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
In millions of euros
Amortization expense for intangible assets
in the consolidated statement of income
E.29
9,367
1,382
7,245
740
9,388
1,397
7,310
Amortization/impairment
681
2 Including capitalized borrowing costs on development costs.
1 Primarily changes from currency translation.
Carrying amount at December 31, 2014
Carrying amount at December 31, 2013
7,054
1,869
4,908
277
115
90
8
17
-1,050
-139
218
Selling expenses
-1,143
158
16,421
12,153
14,930
2,609
11,319
1,002
Total
assets
(acquired)
(internally
generated)²
costs Other intangible
Goodwill
(acquired)
Development
Disposals
Reclassifications
Other additions
Additions due to business combinations
Balance at January 1, 2013
Acquisition or manufacturing costs
In millions of euros
Intangible assets
E.28
in the amount of €58 million (2013: €60 million), which related
only to capitalized development costs. In 2014, borrowing
costs in the amount of €7 million (2013: €17 million) were capital-
ized; amortization amounted to €9 million (2013: €4 million).
The base for the calculation of borrowing costs was an average
cost of debt of 0.7% (2013: 0.9%).
At December 31, 2014, intangible assets include capitalized
borrowing costs on qualified assets according to IAS 23
Table 7 E.29 shows the line items of the consolidated
statement of income in which total amortization expense
for intangible assets is included.
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet been
completed (carrying amount at December 31, 2014: €1,935
million; 2013: €1,913 million). In addition, other intangible
assets with a carrying amount at December 31, 2014 of €264
million (2013: €275 million) are not amortizable. Other non-
amortizable intangible assets are trademarks with indefinite
useful lives, which relate to the Daimler Trucks segment as
well as distribution rights of Mercedes-Benz Cars with indefinite
useful lives. The Group plans to continue to use these assets
unchanged.
At December 31, 2014, goodwill of €421 million (2013:
€392 million) relates to the Daimler Trucks segment
and of €192 million (2013: €188 million) relates to the
Mercedes-Benz Cars segment.
Intangible assets developed as shown in table 7 E.28.
10. Intangible assets
217
-2,191
-407
1,301
682
1,983
-678
1,017
Balance at December 31, 2014
93
10
55
Other changes¹
-231
-912
Disposals
Reclassifications
1,470
315
1,155
Other additions
3,251
66
21
Additions due to business combinations
15,870
3,029
11,900
941
Balance at December 31, 2013
-242
-139
-42
-61
Other changes¹
-801
-123
45
1,344
92
1,319
30
1
15,438
14,237
7,968
Additions
Balance at January 1, 2013
Depreciation/impairment
63,882
2,521
1,125
49
461
22,886
23,079
15,396
Balance at December 31, 2014
362
253
Other changes¹
-2,186
-32
-1,066
-930
-158
Disposals
9
-2,036
568
1,239
238
258
1,070
1,664
37,644
2,992
-825
-118
Disposals
-108
108
Reclassifications
3,501
10
1,861
1,210
420
Additions²
38,412
1
Reclassifications
16,142
8,044
Balance at December 31, 2013
.
-692
-335
-207
-150
Other changes¹
-1,532
-625
-875
-32
Disposals
Reclassifications
14,225
4,743
2,267
1,415
58,243
2,260
20,282
20,760
14,941
Total
in progress
equipment
office and construction
and equipment
Advance
payments
relating to plant
factory and
equipment,
Other
Other additions
Additions due to business acquisitions
Acquisition or manufacturing costs
In millions of euros
Technical
equipment
and machinery
Land, leasehold
improvements and
buildings including
buildings on land
owned by others
Property, plant and equipment
E.30
1,380
1,507
6
30
Research and non-capitalized development costs
25
41
General administrative expenses
Balance at January 1, 2013
Other financial income/expense, net
Reclassifications
1,181
833
228
Other additions
Additions due to business acquisitions
60,191
2,273
21,508
21,575
14,835
Balance at December 31, 2013
-1,376
-127
-463
-339
218
-447
-1,748
-27
-700
-945
-76
Disposals
-13
-1,666
536
918
199
5,085
1,833
1,853
Other changes¹
E.18
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German com-
panies and tax-free results of our equity-method investments.
Moreover, the line item includes tax-free gains realized on
the sale of RRPSH in 2014 and on the sale and remeasurement
of EADS shares in 2013 as well as non-deductible expenses
in connection with the EU commission's ongoing antitrust pro-
ceedings concerning European commercial vehicle manu-
facturers in 2014. Furthermore, in 2013, the line item also
includes tax benefits relating to tax assessments of prior
years. The tax benefits relating to tax assessments of prior
years consist of the current tax benefits recognized for
prior periods as well as partly offsetting deferred tax expenses
recognized for prior periods.
In 2014 and 2013, the Group released valuation allowances
on deferred tax assets of foreign subsidiaries. The resulting
tax benefits are included in the line item change of valuation
allowance on deferred tax assets.
852
38
730
15.0
10.1
49.0
Total
Others
Kamaz
BAIC Motor
BBAC
RRPSH
EADS
2 Including investor-level adjustments.
1 Proportionate stock market prices.
Dividends to Daimler
Equity result²
Equity investment²
Stock market price¹
Equity interest (in %)
At December 31, 2013
Dividends to Daimler
Equity result²
Equity investment²
Stock market price¹
Equity interest (in %)
At December 31, 2014
686
In millions of euros
71
13
101
71
3.469
-86
12
84
62
3.397
3.029
145
155
595
640
1.494
121
15.0
12.0
49.0
50.0
1
10
92
1,795
864
716
-32
34
133
186
23
Key figures on interests in associated companies accounted for using the equity method
1 Including investor-level adjustments.
At December 31, 2014
In millions of euros
Summarized carrying amounts and profits/losses from equity-method investments
E.33
Table 7 E.34 presents key figures on interests in associated
companies accounted for using the equity method in the
Group's consolidated financial statements.
Table 71 E.33 shows the carrying amounts and profits/losses
from equity-method investments.
13. Equity-method investments
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Minimum lease payments. Non-cancelable future lease
payments to Daimler for equipment on operating leases are
due as presented in table 7 E.32.
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
The development of equipment on operating leases is shown
in table 7 E.31.
12. Equipment on operating leases
220
9,681
11,780
112
48
later than 5 years
4,877
4,692
5,990
between one and five years
5,742
within one year
Maturity
2013
At December 31,
2014
In millions of euros
Equity investment¹
E.34
Equity result¹
Joint
3,345
1
5
-130
3,469
Equity result¹
3,432
5
40
358
3,029
Equity investment¹
At December 31, 2013
897
2
5
26
864
2,294
7
44
448
1,795
Total
Subsidiaries
Joint
operations
ventures
Associated
companies
2
221
Airbus Group N.V. (formerly EADS). The Group reported its
investment in and its proportionate share in the profits and
losses of the European Aeronautic Defence and Space Company
EADS N.V. (EADS), a global leader in aerospace, defense and
related services, in the reconciliation of total segments' assets
to Group assets and total segments' EBIT to Group EBIT,
respectively, in the segment reporting.
6,071
1,406
1,894
Equity (including non-controlling interest)
673
476
4,405
6,586
1,168
3,484
Current liabilities
2,476
210
2,539
1,784
214
584
Non-current liabilities
1,016
685
4,001
4,314
740
2,648
Current assets
971
595
5,325
8,268
594
Equity (excluding non-controlling interests)
155
71
595
686
640
852
Carrying amount of equity-method investment
-1
-22
-15
6
Other
6
4
77
86
-49
-76
Unrealized profit (-)/loss (+) on sales to/purchases from
Goodwill
|8
150
89
533
594
689
928
attributable to the Group
1,025
10,127
2,048
3,314
BBAC1
In millions of euros
Summarized IFRS financial information on significant associated companies
accounted for using the equity method
E.35
Table 7 E.35 shows summarized IFRS financial information
after purchase price allocation for the significant associated
companies which were the basis for equity-method accounting
in the Group's consolidated financial statements
223
In 2014, the Group recognized an impairment loss of €30 million
with respect to its investment in Kamaz. The loss is included
in the line item profit/loss on equity-method investments, net.
In 2010, the Group and the European Bank for Reconstruction
and Development (EBRD) agreed to increase their strategic
investment in Kamaz. Daimler increased its equity interest
in Kamaz to 15%. Of that interest, 4% was legally held by EBRD,
but Daimler was deemed to be the economic owner of those
shares due to the equity-method measurement. In October
2014, Daimler agreed with EBRD to take over the remaining 4%
interest. With this step, Daimler has raised its investment
in Kamaz to 15% also in legal terms.
Kamaz. Daimler and the Russian truck manufacturer Kamaz
OAO (Kamaz) have signed a license agreement to produce Axor
and Atego driver's cabs as well as delivery contracts for cabs,
engines and axles for trucks and buses of the Russian company
within the framework of their strategic partnership. Resulting
from its agreed representation on the board of directors of Kamaz
and its significant contractual rights as a minority shareholder,
the Group can exercise significant influence on Kamaz. Therefore,
the Group accounts for its equity interest in Kamaz using
the equity method; the investment and the proportionate share
in the profit and loss of Kamaz are allocated to the Daimler
Trucks segment.
in an associate, to be accounted for using the equity-method.
The effect of dilution was not material.
On December 19, 2014, BAIC Motor successfully placed its
equity securities for trading on the Hong Kong Stock Exchange,
also with the issue of new shares. As a result, Daimler's
interest in BAIC Motor was diluted from 12.0% to 10.1%. Daimler
continues to classify this investment as an investment
BAIC Motor. BAIC Motor Corporation Ltd. (BAIC Motor)
is the passenger car division of BAIC Group, one of the leading
automotive companies in China. Directly or via subsidiaries,
BAIC Motor is engaged in the business of researching, developing,
manufacturing, selling, marketing and servicing automotive
vehicles and related parts and components and all related
services. On November 18, 2013, BAIC Motor issued new
shares to Daimler representing a 12% equity interest in BAIC
Motor for a purchase price of €627 million including trans-
action costs. Due to Daimler's representation on the board of
directors of BAIC Motor and other contractual arrangements,
the Group classifies this investment as an investment in an asso-
ciate, to be accounted for using the equity-method; in the
segment reporting, the investment's carrying amount and its
proportionate share of profit or loss are presented in the
reconciliation of total segment's assets to Group assets and total
segments' EBIT to Group EBIT, respectively. In December 2013
and in June 2014, the shareholders of BAIC Motor decided
to pay a dividend. The portions of €23 million and €10 million
attributable to Daimler decreased the investments carrying
amounts accordingly. The effects on the consolidated financial
statements resulting from allocating the purchase price to
the identifiable assets and liabilities are not material.
In addition, Daimler plans to contribute equity of €0.3 billion
according to its shareholding ratio to BBAC in 2015.
Additional funds needed by BBAC to finance its investment
will be directly raised in the capital markets by BBAC.
BBAC. Beijing Benz Automotive Co., Ltd. (BBAC) was founded
by Daimler Greater China Ltd. (DGRC), Daimler AG und BAIC
Motor Corporation Ltd. (BAIC Motor) as a joint venture. BBAC
produces and distributes Mercedes-Benz passenger cars and
spare parts in China. In 2013, Daimler participated in a capital
increase and made a payment of approximately €160 million.
The Chinese partner BAIC Motor participated with the same
amount. On November 18, 2013, BAIC Motor increased its
stake in BBAC by 1% to 51% by way of a capital increase in which
Daimler did not participate. As a result of this transaction,
Daimler's equity interest in BBAC decreased to 49% and the
Group classified the investment in BBAC as an associated
company; the company had been accounted for as a joint venture
until the end of the third quarter of 2013. The effect of the
change of status of BBAC was not material; the investment in
BBAC continues to be accounted for using the equity method.
The investment and the proportionate share in the results
of BBAC are allocated to the Mercedes-Benz Cars segment.
In March 2014, Daimler decided to sell its 50% equity interest
in the investment in RRPSH to its partner Rolls-Royce. For
that purpose, Daimler exercised the put option on its stake in
RRPSH that was agreed upon with Rolls-Royce in 2011. The
carrying amount of the equity interest of €1,415 million, which
was allocated to the Daimler Trucks segment, was reclassified
to assets held for sale. Measurement using the equity method
was ended. The proportionate share in the results of RRPSH
was allocated to the Daimler Trucks segment. In mid-April 2014,
the sale price of €2,433 million was agreed upon. The trans-
action was consummated on August 26, 2014, when antitrust
law and foreign-trade law approvals had been obtained; the
board members and management representatives from Daimler
in RRPSH companies resigned. The proceeds of the sale of
€1,006 million are classified as other financial result and, in the
segment reporting, are presented in the reconciliation of
total segments' EBIT to Group EBIT.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
222
In 2011, Rolls-Royce granted Daimler the right to exercise
a put option on the shares it held in RRPSH at a price which
generally hedged Daimler's investment in RRPSH. Starting
on January 1, 2013, the put option had a duration of six years.
On December 31, 2013, the value of this option was €118
million. The option was recognized as an asset to be measured
at fair value through profit or loss. The change in the fair value
of the option during 2013 resulted in an expense of €60 million,
which was recognized in other financial expense, net. The
carrying amount of this option, which was presented under
other financial assets, as well as changes in its fair value
were recognized in the segment reporting as corporate items
in the reconciliation to Group figures. Further details of the
put option are provided in Note 31.
The objections to the decision were withdrawn because the
appellant's representatives and RRPSH agreed to an out-of-court
settlement. The minority shareholders of Tognum AG, whose
shares were transferred to RRPSH in the context of the "squeeze-
out" under German takeover law, and the former shareholders
of Tognum AG, who accepted the compensation of the control
and profit and loss transfer agreement effective December 19,
2012, received compensation of €31.61 per share pursuant to
the out-of-court settlement.
The decision of the regional court of Frankfurt am Main
of November 15, 2011 to transfer Tognum AG shares which
are not already owned by RRPSH in return for compensation
(a “squeeze-out" under German takeover law) took effect
in March 2013 and RRPSH has held 100% of Tognum's shares
since then.
On January 1, 2013, Rolls-Royce assumed, as contractually
agreed, control over RRPSH and RRPSH was included as
a subsidiary in the consolidated financial statements of Rolls-
Royce. Daimler continued to exercise significant influence
on Tognum through its equity interest in RRPSH.
On September 25, 2012, the dependent company RRPS,
formerly Tognum AG (Tognum) and the controlling company
RRPSH concluded a control and profit and loss transfer
agreement, resulting in Tognum subordinating the management
of its company under the control of RRPSH and committing
to transfer its entire profits to RRPSH. On November 15, 2012,
Tognum's shareholders' meeting approved the control and
profit and loss transfer agreement, which was then entered in
the commercial register on December 19, 2012.
RRPSH/RRPS (formerly Tognum AG). Rolls-Royce Power
Systems Holding GmbH (RRPSH) and its subsidiary Rolls-Royce
Power Systems AG (RRPS) operate in development, manu-
facturing, distribution and service, in particular in the fields
of reciprocating engines, energy generation and other
engines and related components. RRPSH and its subsidiary
procure engines, other parts and services from Daimler AG.
of 2013. This resulted in income of €44 million disclosed within
other financial expenses, net, for the year 2013.
On April 16, 2013, the Group announced that it would sell its
remaining stake of approximately 7.4% in EADS through an
accelerated placement procedure. The sale, which took place
on April 17, 2013, at an offer price of €37 per EADS share, led
to an additional expense of €184 million in Group EBIT in 2013.
The additional expense was disclosed within other financial
expenses, net, and resulted from the fall in the EADS share price
since April 2, 2013. The sale generated a cash inflow of
€2,239 million in 2013. Following the conclusion of the trans-
action, Daimler no longer holds any shares in EADS. Moreover,
in 2013, the Group entered into cash-settled contracts with
both Goldman Sachs and Morgan Stanley, which allowed a limited
upside participation in the EADS share price until the end
On March 27, 2013, the Extraordinary Shareholders' Meeting
of EADS approved the new management and shareholder
structure. Subsequently, the shareholders' pact concluded
in 2000 was dissolved and replaced with a new shareholders'
pact without the participation of Daimler on April 2, 2013.
At the same time, EADS shares which were previously held
by Daimler but were economically allocable to the Dedalus
investors were transferred to the Dedalus investors. With the
dissolution of the previous shareholders' pact, Daimler lost
its significant influence on EADS. As a result of that loss and
of the transfer of the EADS shares to the Dedalus investors,
the EADS shares were remeasured through profit or loss at the
then higher stock-market price of EADS shares on April 2,
2013. Overall, this resulted in income of €3,356 million, which
was recognized in Group EBIT in 2013. Of that amount,
€1,669 million was allocable to Daimler shareholders and
€1,687 million was allocable to the Dedalus investors. The
income of €3,356 million was disclosed within equity-method
investments and was therefore solely a book gain with no
impact on cash. Furthermore, income of €41 million resulted
from measurement using the equity method, thereof
€34 million in the first quarter of 2013 and €7 million in the
second quarter of 2013.
At December 31, 2012 Daimler disclosed an equity interest
of approximately 14.9% in EADS. Because of the agreed
participation rights in the Supervisory Board, Daimler was able
to exercise significant influence on EADS. The 14.9% interest
in EADS was held by a subsidiary of Daimler which in 2007 issued
equity interests to investors in exchange for cash. As a result
of that transaction, the Group reported a non-controlling inter-
est in its consolidated statement of financial position repre-
senting the investor's ownership ("Dedalus-investors") of the
consolidated subsidiary that issued the equity interest. At
December 31, 2012, the amount reported as non-controlling
interest reflected the investor's 50% share in the net assets
of that subsidiary.
BAIC Motor²
Kamaz³
2014
2013
Non-current assets
Information on the statement of financial position and
reconciliation to equity-method carrying amounts
100
4
359
384
192
310
1
-5
Total comprehensive income
-
99
Maturity of minimum lease payments for equipment on operating leases
2,620
1,667
359
384
5,211
4,490
192
310
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
Other comprehensive income/loss
5,767
Revenue
Information on the statement of income
2013
2014
2013
2014
2,124
9
E.32
At December 31, 2014, equipment on operating leases with
a carrying amount of €4,367 million is pledged as security
for liabilities from ABS transactions related to a securitization
transaction of future lease payments on operating leases
and related vehicles (2013: €5,084 million) (see also Note 24).
33,050
11. Property, plant and equipment
Property, plant and equipment developed as shown
in table E.30.
In 2014, government grants of €47 million (2013: €34 million)
were deducted from property, plant and equipment.
Property, plant and equipment include buildings, technical
equipment and other equipment capitalized under finance
lease arrangements with a carrying amount of €238 million
(2013: €262 million). In 2014, additions to and depreciation
expense on assets under finance lease arrangements
amounted to €19 million (2013: €17 million) and €40 million
(2013: €67 million), respectively.
Acquisition or manufacturing costs
-975
Balance at January 1, 2013
Additions due to business combinations
Other additions
15,953
Reclassifications
Disposals
Other changes¹
32,345
-12,458
13
In millions of euros
Table 71 E.23 shows a reconciliation of expected income
tax expense to actual income tax expense determined using
the unchanged applicable German combined statutory tax
rate of 29.825%.
For German companies, in 2014 and 2013, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
a solidarity tax surcharge of 5.5% on each year's federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes
in both years amounted to 29.825%. For non-German com-
panies, the deferred taxes at period-end were calculated using
the tax rates of the respective countries.
The deferred tax expense is comprised of the components
shown in table 7 E.22.
The current tax expense includes tax benefits at German
and foreign companies of €53 million (2013: €1,038 million)
recognized for prior periods.
Table 7 E.21 shows the components of income taxes.
Profit before income taxes in Germany includes profit/loss
from equity-method investments if the equity interests in
those companies are held by German companies.
Profit before income taxes is comprised as shown
in table 7 E.20.
9. Income taxes
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
1 Primarily changes from currency translation.
23,182
2 Includes impairments of property, plant and equipment of €93 million in connection with the planned disposal of selected sites
of the Group's own sales network.
219
E.31
Equipment on operating leases
Balance at December 31, 2013
34,878
289
Other additions
Balance at December 31, 2013
6,718
Additions
5,049
Carrying amount at December 31, 2014
28,160
-212
Carrying amount at December 31, 2013
452
-4,341
Additions due to business combinations
Disposals
Other changes¹
Balance at December 31, 2014
Reclassifications
Other changes¹
7,878
Disposals
-9
Disposals
-3,733
Reclassifications
-14,479
Other changes¹
2,486
18,052
40,928
Depreciation/impairment
Balance at January 1, 2013
Additions
Reclassifications
4,376
Balance at December 31, 2014
6,287
483
Unguaranteed residual values
482
7,568
4,667
14,820
571
12,717
9,104
1,796
46
2,273
367
56
2,219
Gross investment
5,628
10,848
617
1,744
5,145
50,770
Total
51,641
Allowances for doubtful accounts
-408
Carrying amount, net
26,769
-513
34,910
-921
61,679
-390
23,001
-481
27,769
-871
17,093
Contractual future lease payments
E.38
In millions of euros
At December 31, 2014
<1 year
1 year up
to 5 years
> 5 years
At December 31, 2013.
1 year up
Total
<1 year
to 5 years
> 5 years
Maturities of the finance lease contracts
5,034
38
538
In millions of euros
At December 31,
2014
2013
Credit risks included in receivables from financial services
E.40
871
921
-62
3
Currency translation and other changes
Balance at December 31
-137
Receivables, neither past due
-166
-273
-208
405
421
938
871
Amounts written off
Charged to costs and expenses
Balance at January 1
In millions of euros
Reversals
nor impaired individually
58,142
47,264
14,936
Unearned finance income
-544
-995
-102
-1,641
-489
-889
-85
-1,463
28,250
42
90 to 119 days
59
75
60 to 89 days
266
330
30 to 59 days
1,479
1,517
less than 30 days
Receivables past due, not impaired individually
9,364
23,391
1,723
35,423
-150
-372
-5
-208
-159
Allowances for doubtful accounts
13,473
453
8,475
4,545
15,452
-213
515
5,084
Gross carrying amount
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Other minor equity-method investments. The Group's
investment in Tesla Motors, Inc. (Tesla) was included in other
minor equity-method investments in associated companies.
In 2013, the Group realized a dilution gain of €11 million due
to a capital increase in which Daimler did not take part. The
equity interest in Tesla amounted to 4% at December 31, 2013;
the fair value and carrying amount of the investment were
€531 million and €13 million at that time. Due to its represen-
tation on the board of directors, participation in decision-
making processes and jointly conducted projects, the Group
was able to exercise significant influence on Tesla. Therefore,
the Group accounted for its equity interest in Tesla using the
equity method. Since the annual shareholders' meeting of
Tesla on June 3, 2014, no representative of Daimler has been
a member of the Board of Directors. Therefore, Daimler's
significant influence on Tesla ended on the day of the annual
shareholders' meeting. After that, the equity interest was
recognized until it was sold as a financial asset available for sale
at fair value based on the stock-market price. The difference
between the first-time fair value measurement on June 3, 2014
using the stock-market price and the carrying amount measured
by applying the equity method resulted in a non-cash gain of
€718 million affecting Group EBIT in the second quarter of 2014.
The gain was presented under equity-method investments.
On December 31, 2013 the carrying amount was assigned to the
Mercedes-Benz Cars segment. The investment was sold in
the fourth quarter of 2014. The gain on the remeasurement and
sale of the Tesla shares is presented in the segment reporting
in the reconciliation of total segments' EBIT to Group EBIT. Further
information is provided in Note 33.
In addition, the equity-method profits and losses of other minor
investments mainly contain startup losses at several com-
panies in the area of alternative drive systems (2014: €34 million;
2013: €205 million), which are allocated to the Mercedes-Benz
Cars segment. Impairments of investments of €30 million
(2013: €174 million) are included in those amounts.
In 2012, an impairment loss was recognized on the investment
in the joint venture Fujian Benz Automotive Co. Ltd. (FBAC);
in the second quarter of 2014, the impairment was reversed
based on improved profit expectations, leading to a gain
of €61 million. FBAC received a capital increase of €24 million
in the third quarter of 2014. The investment and the propor-
tionate share in the profits and losses of FBAC are allocated
to the Mercedes-Benz Vans segment.
In the first quarter of 2014, a capital increase of €34 million took
place at the joint venture Shenzen BYD Daimler New Tech-
nology Co. Ltd. (SBDNT). On April 4, 2014, Daimler provided
a joint and separate liability guarantee to external banks
which agreed to provide a syndicated loan facility to SBDNT.
The guarantee provided by Daimler amounts to maximum
of CNY 750 million (approximately €100 million) and equates
to the Group's share in the loan granted to SBDNT based
on its 50% equity interest in SBDNT. The carrying amount of the
investment in SBDNT is allocated to the Mercedes-Benz
Cars segment.
In March 2014, Daimler acquired the 50.1% of the shares
in Li-Tec Battery GmbH (Li-Tec), which had previously
been held by Evonik Degussa GmbH (Evonik), and therefore
became the sole owner of the company. The effects
on the consolidated financial statements are not material.
Daimler does not recognize losses in relation with equity-
method investments of €60 million (2013: €0 million)
as Daimler is not obliged to compensate these losses.
Table 71 E.36 shows summarized aggregated financial
information for the other minor equity-method investments
after purchase price allocation and on a pro rata basis.
Further information on equity-method investments is provided
in Notes 3 and 36.
9,853
-15
-378
Carrying amount, net
2013
2014
Changes in the allowance account for receivables from financial services
E.39
Within the context of the ongoing concentration on the auto-
motive business, Daimler Financial Services sold a non-
automotive asset that was subject to finance lease contracts
in 2014. This resulted in a cash inflow of €69 million (2013:
€48 million). The pre-tax income from this transaction in 2014
amounted to €45 million (2013: €11 million), and was allocated
to the EBIT of the Daimler Financial Services segment.
At December 31, 2014, receivables from financial services with
a carrying amount of €3,068 million (2013: €3,007 million)
were pledged as collateral for liabilities from ABS transactions
(see also Note 24).
Further information on financial risks and nature of risks
is provided in Note 32.
Receivables not subject to an individual impairment
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
Credit risks. Table 7 E.40 provides an overview of credit
risks included in receivables from financial services.
The total expense from the impairment of receivables
from financial services amounted to €433 million in 2014
(2013: €416 million).
Allowances. Changes in the allowance account for receivables
from financial services are shown in table 7 E.39.
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for
operating activities in the consolidated statement of cash
flows.
Maturities of the finance lease contracts are shown
in table E.38.
At December 31, 2014, finance-lease contracts included
non-automotive assets from contracts of the financial services
business with third parties (leveraged leases) in the amount
of €365 million (December 31, 2013: €455 million).
Receivables from finance-lease contracts consist of receiv-
ables from leasing contracts for which all substantial risks
and rewards incidental to the leasing objects are transferred
to the lessee.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
226
13,095
438
8,262
4,395
15,080
510
9,645
4,925
E.36
62,600
Summarized aggregated financial information on minor
equity-method investments
Summarized aggregated financial information (pro rata)
At December 31, 2013
Non-current
Total
In millions of euros
Sales financing with customers
10,307
22,852
33,159
9,065
17,599
26,664
Sales financing with dealers
11,786
Current
2,203
9,781
11,504
Finance-lease contracts
5,084
10,368
15,452
4,545
8,928
13,473
Gross carrying amount
27,177
13,989
At December 31, 2014
Non-current
Total
Current
Receivables from financial services
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
Other comprehensive income/loss
Total comprehensive income/loss
Associated companies
Joint ventures
2014
2013
2014
2013
-9
-85
-25
7
-2
1
7
-11
-84
-25
225
14. Receivables from financial services
Table 71 E.37 shows the components of receivables from
financial services.
Types of receivables. Receivables from sales financing with
customers include receivables from credit financing for
customers who purchased their vehicle either from a dealer
or directly from Daimler.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group's
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily used vehicles traded
in by dealers' customer or real estate such as dealers' show-
rooms.
In millions of euros
E.37
Accordingly, the share capital is conditionally increased
116
Expenses in the consolidated statement of income resulting from
share-based payments to current members of the Board of Management
E.49
In the event of exercise, the Group generally issued ordinary
shares.
Stock Option Plans. In April 2000, the Annual Shareholders'
Meeting approved the Daimler Stock Option Plan (SOP), which
granted stock options for the purchase of Daimler ordinary
shares to eligible employees. Options granted under the SOP
were exercisable at a reference price per Daimler ordinary
share, which was determined in advance, plus a 20% premium.
The options became exercisable in equal installments at
the earliest on the second and third anniversaries of the date
of grant. All unexercised options expired ten years after
the date of grant. If the market price per Daimler ordinary share
on the date of exercise was at least 20% higher than the
reference price, the holder was entitled to receive a cash pay-
ment equal to the original exercise premium of 20%. No new
stock options were granted after 2004. The last SOP plan 2004
expired on March 31, 2014. All unexercised rights expired.
The Group recognizes a provision for awarding the PPSP in
the consolidated statement of financial position. Since payment
per vested phantom share depends on the quoted price of
Daimler's ordinary shares, that quoted price essentially repre-
sents the fair value of each phantom share. The proportionate
remuneration expenses from the PPSP recognized in the
individual years are determined on the price of Daimler ordinary
shares and the estimated target achievement.
The number of phantom shares that vest of the PPSP granted
in 2014 will be based on the relative share performance, which
measures the development of the price of a share price index
based on a competitor group including Daimler, and the return
on sales (ROS) compared with benchmarks oriented towards
competitors. Special rules apply for the members of the Board
of Management: Daimler's RoS must be not equal to but
higher than that of the competitors in order to achieve the same
target achievement as the other plan participants.
on net assets derived from internal targets and return on sales
compared with benchmarks oriented towards competitors.
Determination of the number of phantom shares that vest
of the existing PPSP 2011 to 2013 is based on return
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
232
of Management also includes the dividend equivalents
paid out after January 1, 2014.
Performance Phantom Share Plans. In 2014, the Group
adopted a Performance Phantom Share Plan (PPSP),
similar to those used from 2005 to 2013, under which eligible
employees are granted phantom shares entitling them to
receive cash payments after four years. During the four-year
period between the allocation of the preliminary phantom
shares and the payout of the plan at the end of the term,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
The amount of cash paid to eligible employees at the end
of the holding period is based on the number of vested
phantom shares (determined over a three-year performance
period) multiplied by the quoted price of Daimler's ordinary
shares (calculated as an average price over a specified period
at the end of the four-year plan period). The vesting period
is therefore four years. For the plans granted as of 2009,
the quoted price of Daimler's ordinary shares to be used for
the payout is limited to 2.5 times the Daimler share price
at the date of grant. For the plans granted as of the beginning
of 2012, the payout for the members of the Board of Manage-
ment is also limited to 2.5 times the allotment value used to
determine the preliminary number of phantom shares.
The limitation of the payout for the members of the Board
The details shown in table 7 E.49 do not represent any paid
or committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2014 can be found in the
Remuneration Report. Management Report from page 118
Table 71 E.49 shows expenses in the consolidated statement
of income resulting from the rights of current members
of the Board of Management.
The pre-tax effects of share-based payment arrangements
for the executive managers of the Group and the members
of the Board of Management of Daimler AG on the consolidated
statement of income and consolidated statement of financial
position are shown in table 7 E.48.
for which according to the recommendations of the German
Corporate Governance Code - the Presidential Committee
can impose a limit or reserve the right to impose a limit
in the event of exceptional and unpredictable developments
were measured at their intrinsic values as of balance
sheet date. The options were exercised completely in 2013.
-
Options granted to the Board of Management in 2004
355
375
-259
-179
11
2014
12
Dr. Dieter Zetsche
2013
2013
-0.7
-0.6
-0.7
-1.9
-1.8
of the annual bonus
Medium-term component
-1.6
-4.4
-2.5
-2.5
-2.3
-4.2
-2.5
-10.9
-6.1
SOP
PPSP
Wilfried Porth
2013
2014
2013
2014
Dr. Wolfgang Bernhard Dr. Christine Hohmann-Dennhardt
2014
In millions of euros
-0.6
-7
Management
554
969
Receivables past due, not impaired individually
less than 30 days
5,536
5,270
Receivables neither past due nor impaired
individually
60 to 89 days
In millions of euros
At December 31,
2014
2013
Credit risks included in trade receivables
E.46
In the line item unrealized gains/losses from equity-method
investments, the amounts for 2014 include unrealized gains
from currency translation of €11 million before taxes and after
taxes (amounts attributable to shareholders of Daimler AG
only). In 2013, the line item includes the following components
(amounts attributable to shareholders of Daimler AG only):
unrealized losses from currency translation of €80 million before
and after taxes, unrealized losses from financial assets avail-
able-for-sale of €41 million before taxes and €38 million after
taxes, and unrealized gains from derivative financial instru-
ments of €153 million before taxes and €107 million after taxes.
unrealized gains/losses from currency translation of the financial
statements of the consolidated foreign companies and accu-
mulated unrealized gains/losses on the measurement of financial
assets available-for-sale, derivative financial instruments and
equity-method investments.
Other reserves. Other reserves comprise accumulated
Dividends. Under the German Stock Corporation Act (AktG),
the dividend is paid out of the distributable profit reported
in the annual financial statements of Daimler AG (parent
company only) in accordance with the German Commercial
Code (HGB). For the year ended December 31, 2014, the
Daimler management will propose to the shareholders at the
Annual Shareholders' Meeting to pay out €2,621 million
of the distributable profit of Daimler AG as a dividend to the
shareholders, equivalent to €2.45 per no-par-value share
entitled to a dividend (2013: €2,407 million and €2.25
per no-par-value share entitled to a dividend respectively).
Retained earnings. Retained earnings comprise the
accumulated net profits and losses of all companies included
in Daimler's consolidated financial statements, less any
profits distributed. In addition, the effects of remeasuring
defined benefit plans as well as the related deferred taxes
are presented within retained earnings.
Capital reserves. Capital reserves primarily comprise premiums
arising on the issue of shares as well as expenses relating
to the exercise of stock option plans and the issue of employee
shares, effects from changes in ownership interests in con-
solidated entities and related transaction costs.
Employee share purchase plan. In 2014, 0.4 million Daimler
shares representing €1.1 million or 0.04% of the share capital
were purchased for a price of €26 million and reissued
to employees (2013: 0.5 million Daimler shares representing
€1.5 million or 0.05% of the share capital were purchased
for a price of €24 million).
As was the case at December 31, 2013, no treasury shares
are held by Daimler AG at December 31, 2014.
Treasury shares. By resolution of the Annual Shareholders'
Meeting held on April 14, 2010, the Board of Management,
with the consent of the Supervisory Board, was authorized until
April 13, 2015 to acquire treasury shares for all legal purposes
in a volume up to 10% of the share capital issued as of the day
of the resolution. The authorization applies for example to
the purchase of shares for the purpose of cancellation, for using
them for business combinations or to acquire companies,
or for disposal in other ways than through the stock exchange
or by offering them to all shareholders. This authorization
was not exercised in the reporting period.
Stock option plan. The Stock option plan initiated in 2004
expired on March 31, 2014. Of the 0.2 million options granting
subscription rights to new shares representing €0.6 million
of the share capital remaining from this plan on December 31,
2013, 0.1 million options granting subscription rights to
new shares representing €0.2 million of the share capital were
exercised in 2014. The remaining options that had not been
exercised by March 31, 2014 expired on that date.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
230
30 to 59 days
-6
151
42
of annual bonus of the
members of the Board of
344
363
2013
2014
In millions of shares
Development of shares issued
E.47
7,803
8,634
1,464
2,106
Receivables impaired individually
Carrying amount, net
803
1,258
Total
76
78
120 days or more
24
18
90 to 119 days
36
113
-0.7
-0.7
Andreas Renschler¹
PPSP
SOP
Medium-term component
-173
-250
-2
43.57
0.2
43.57
0.2
37.33
-0.3
43.57
-0.1
42.62
-2.2
120 days or more
43.57
-0.1
42.24
2.7
43.57
0.2
Number of
stock options exercise price in
in millions euros per share
In millions of euros
Average
at December 31,
2014
2013
2014
-1
Shares outstanding/issued on January 1
1,070
1,068
Shares repurchased in the share buyback
program and not cancelled (previous years)
Reissued shares to employees in the
employee share purchase plan
Creation of new shares by exercise
of stock options
2
Shares outstanding/issued on December 31
1,070
1,070
1
231
21. Share-based payment
As of December 31, 2014, the Group has the 2011-2014
Performance Phantom Share Plans (PPSP) outstanding. The
PPSP are cash-settled share-based payment instruments
and are measured at their respective fair values at the balance
sheet date. The PPSP are paid out at the end of the stipulated
holding period; earlier, pro-rated payoff is possible in the case
of benefits leaving the Group only if certain defined con-
ditions are met. PPSP 2010 was paid out as planned in the first
quarter of 2014.
Moreover, 50% of the annual bonus of the members of the
Board of Management is paid out after a waiting period
of one year. The actual payout is determined by the development
of Daimler shares compared to an automobile related index
(Auto-STOXX). The fair value of this medium-term annual bonus,
which depends on this development, is measured by using
the intrinsic value at the reporting date.
In 2014, rights from Stock Option Plan (SOP) 2004 also existed.
The exercisable stock options granted in 2004 were equity-
settled share-based payment instruments and were measured
at fair value at the date of grant. The unexercised rights
from Stock Option Plan 2004 expired on March 31, 2014.
E.48
Effects of share-based payment
Provision
Expense
2013
2013
stock options exercise price in
in millions
euros per share
2014
Average
of the annual bonus
Medium-term component
SOP
-0.1
-4.6
-2.6
-5.2
-2.9
-2.2
-1.6
-4.9
-0.2
PPSP
In millions of euros
Prof. Dr. Thomas Weber
2014
2013
2013
2014
2013
2014
2013
2014
Bodo Uebber
Hubertus Troska
-0.1
-0.7
-0.7
-0.6
Number of
234
Exercisable at end of year
Outstanding at end of year
Disposals/Forfeited
Exercised
Balance at beginning of year
Development of the stock options issued
E.50
The Group's main German and non-German pension plans
are described below.
Provisions for pension obligations are made for defined
commitments to active and former employees of the Daimler
Group and their survivors. The defined benefit pension
plans provided by Daimler generally vary according to the
economic, tax and legal circumstances of the country
concerned. Most of the defined benefit pension plans also
provide benefits in the case of invalidity and death.
by an amount of up to €500 million (Conditional Capital 2010).
The authorization to issue convertible and/or warrant bonds
has not yet been utilized.
Defined benefit pension plans
Table 7 E.51 shows the composition of provisions for pension
benefit plans and similar obligations.
22. Pensions and similar obligations
The stock options issued to active members of the Board of
Management were exercised completely in 2013. The members
of the Board of Management Dr. Dieter Zetsche and Prof. Dr.
Thomas Weber each exercised 0.1 million options. The depart-
ing board member Andreas Renschler, who stepped down
from the Board of Management as of January 28, 2014, exercised
fewer than 0.1 million stock options in 2013. The average
exercise price was €43.57 per share. The members of the
Board of Management Dr. Wolfgang Bernhard, Dr. Christine
Hohmann-Dennhardt, Wilfried Porth, Hubertus Troska
and Bodo Uebber had no outstanding or exercisable option
rights in the year 2013.
The weighted average share price of Daimler ordinary shares
during the exercise period was €66.40 (2013: €48.83).
Table 71 E.50 shows the development of the stock options
issued.
233
1 Stepped down from the Board of Management as of January 28, 2014. Amounts are included pro rata for 2014.
-0.7
-0.7
-0.8
-0.8
At the Daimler Group, defined benefit pension obligations
exist as well as, to a smaller extent, defined contribution
pension obligations, specific to the various countries.
In addition, healthcare benefit obligations are recognized
outside Germany.
a total face value of up to €10.0 billion and a maturity of no more
than ten years. The Board of Management is allowed to grant
the holders of these bonds conversion or warrant rights for new
registered no-par-value shares in Daimler AG with an allocable
portion of the share capital of up to €500 million in accordance
with the details defined in the terms and conditions of the
bonds. Among other things, the Board of Management was
authorized with the consent of the Supervisory Board to
exclude shareholders' subscription rights for the bonds with
conversion or warrant rights for new registered no-par-
value shares in Daimler AG under certain conditions and
within defined limits. The bonds can also be issued by
majority-owned direct or indirect subsidiaries of Daimler AG.
Table 71 E.02 shows the details of changes in other reserves
in other comprehensive income/loss.
22
1,707
21
1,686
2,212
2,190
685
35
650
557
40
517
Reimbursements due to other tax refunds
Reimbursements due to income tax refunds
Total
Reimbursements due to the Medicare Act (USA)
Other expected reimbursements
At December 31, 2013
Non-current
At December 31, 2014
Non-current
Total
Current
In millions of euros
Other assets
E.42
The carrying amount of inventories recognized during the period
by taking possession of collateral held as security amounted
to €91 million at December 31, 2014 (2013: €60 million). Those
assets are utilized in the context of the normal business cycle.
Based on the requirement to provide collateral for certain
vested employee benefits in Germany, the value of company
cars included in inventories at Daimler AG in an amount
of €609 million at December 31, 2014 (2013: €627 million)
was pledged as collateral to the Daimler Pension Trust e.V.
The amount of write-down of inventories to net realizable
value recognized as expense in cost of sales was €391 million
in 2014 (2013: €311 million). Inventories that are expected
to be turned over after more than twelve months amounted
to €977 million at December 31, 2014 (2013: €798 million)
and are primarily spare parts.
Inventories are comprised as shown in table 7 E.43.
18. Inventories
Other expected reimbursements predominantly relate to
recovery claims from our suppliers in connection with issued
product warranties.
in table E.42.
Non-financial other assets are comprised as shown
17. Other assets
Current
81
81
108
2013
At December 31,
2014
Inventories
E.43
3,648
531
3,117
4,153
555
3,598
463
116
347
558
136
422
Others
108
175
146
321
138
104
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
242
294
130
424
296
147
443
Prepaid expenses
228
6,241
3,523
2,269
2,269
thereof equity instruments recognized at fair value through profit or loss
Available-for-sale financial assets
At December 31, 2013
Total
Current Non-current
Total
At December 31, 2014
Current Non-current
In millions of euros
Other financial assets
E.41
Further information on other financial assets is provided
in Note 31.
As of December 31, 2013, other receivables and financial
assets included a loan (including accumulated interest)
to Chrysler LLC of US $2.2 billion, which was fully impaired.
It was derecognized in 2014.
At December 31, 2014, receivables with a carrying amount
of €302 million (2013: €198 million) were pledged as collateral
for liabilities from ABS transactions (see also Note 24).
Financial assets recognized at fair value through profit
or loss relate exclusively to derivative financial instruments
which are not used in hedge accounting.
In 2014, equity instruments measured at cost with a carrying
amount of €1 million were sold (2013: €37 million). The gains
realized on the sales were €5 million in 2014 (2013: €15 million).
As of December 31, 2014, the Group did not generally intend
to dispose of any of the reported equity instruments.
The line item other financial assets presented in the
consolidated statement of financial position is comprised
of the classes shown in table 7 E.41.
Total
2,080
2,015
Receivables impaired individually
Carrying amount, net
1,457
1,491
2,052
61,679
227
15. Marketable debt securities
The marketable debt securities with a carrying amount of
€6,634 million (2013: €7,066 million) are part of the Group's
liquidity management and comprise debt instruments
classified as available-for-sale. When a short-term liquidity
requirement is covered with quoted securities, those
securities are presented as current assets.
At December 31, 2014, a pool of marketable debt securities
with a carrying amount of €204 million (2013: €204 million)
was pledged as collateral, almost exclusively for liabilities
to financial institutions.
Further information on marketable debt securities is provided
in Note 31.
16. Other financial assets
50,770
In millions of euros
2,052
1,647
2,718
5,987
3,634
2,353
2,136
505
1,631
2,325
588
1,737
350
269
81
97
55
42
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
1,452
1,452
thereof equity instruments carried at cost
622
622
600
1,647
600
574
722
1,296
1,006
697
1,703
Derivative financial instruments used in hedge accounting
173
Raw materials and manufacturing supplies
2,011
-397
Net carrying amount
8,634
7,803
E.45
Changes in the allowance account for trade receivables
2014
2013
In millions of euros
Balance at January 1
397
402
Charged to costs and expenses
66
-412
Amounts written off
-59
Currency translation and other changes
8
-12
Balance at December 31
412
397
20. Equity
See also the consolidated statement of changes in equity
71 E.05.
Share capital. The share capital is divided into no-par-value
shares. All shares are fully paid up. Each share confers
the right to one vote at the Annual Shareholders' Meeting
of Daimler AG and, if applicable, with the exception of any
new shares potentially not entitled to dividends, to an equal
portion of the profits as defined by the dividend distribution
decided upon at the Annual Shareholders' Meeting. Each share
represents a proportionate amount of approximately €2.87
of the share capital. See 7 E.47 for the development of shares
issued or outstanding.
Approved capital. The Annual Shareholders' Meeting held on
April 9, 2014, once again authorized the Board of Management,
with the consent of the Supervisory Board, to increase the
share capital of Daimler AG in the period until April 8, 2019 by
a total of €1.0 billion in one lump sum or by separate partial
amounts at different times by issuing new, registered no-par-value
shares in exchange for cash and/or non-cash contributions
(Approved Capital 2014). The new shares are generally to be
offered to the shareholders for subscription (also by way
of indirect subscription pursuant to Section 186 Subsection 5
Sentence 1 of the German Stock Corporation Act (AktG)).
Among other things, the Board of Management was authorized
with the consent of the Supervisory Board to exclude
shareholders' subscription rights under certain conditions
and within defined limits.
Approved Capital 2014 replaces Approved Capital 2009,
which was limited until April 7, 2014 and had not been utilized.
Approved Capital 2014 has not yet been issued.
Conditional capital. By resolution of the Annual Meeting
on April 14, 2010, the Board of Management was authorized,
with the consent of the Supervisory Board, until April 13,
2015 to issue once or several times convertible and/or warrant
bonds or a combination of these instruments ("bonds") with
2,409
-66
Allowances for doubtful accounts
73
9,046
Trade receivables are comprised as shown in table 7 E.44.
19. Trade receivables
229
20,864
35
107
At December 31, 2014, €78 million of the trade receivables
mature after more than one year (2013: €116 million).
Advance payments to suppliers
15,412
Finished goods, parts and products held for resale
2,275
2,936
8,200
Work in progress
13,028
Allowances. Table 71 E.45 shows changes in the allowance
account for trade receivables.
17,349
At December 31,
2014
2013
The total expense from the impairment of trade receivables
amounted to €130 million in 2014 (2013: €105 million).
In millions of euros
Trade receivables
Gross carrying amount
Further information on financial risk and types of risk
is provided in Note 32.
Receivables not subject to an individual impairment
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
Credit risks. Table 7 E.46 provides an overview of credit risks
included in trade receivables.
E.44
9
-1,136
-41
-32
Actuarial gains (-)/losses from experience adjustments
-244
-892
in financial assumptions
-437
5,629
5,867
-14
-71
57
Actuarial gains (-)/losses from changes
121
238
121
-841
6,003
-144
-829
-691
-138
-697
69
Pension benefits paid
Actuarial gains (-)/losses
3
22
Past service cost, curtailments and settlements
-187
-842
-1,029
316
5,687
19
99
plans
in demographic assumptions
Current service cost
20,698
23,943
2,920
20,310
23,230
Present value of the defined benefit obligation
at January 1
527
plans
plans
Non-German
-527
German
Non-German
German
plans
Current service cost
Total
437
90
548
Actuarial gains (-)/losses from changes
4
52
56
2
55
57
Contributions by plan participants
120
635
755
143
679
822
Interest cost
3,245
95
453
168
-90
4.5
-453
-71
-74
Research and non-capitalized development costs
-43
-51
General administrative expenses
-121
Interest income
-106
-313
-318
Cost of sales
2013
2014
In millions of euros
Net periodic pension cost within the consolidated statement of income
Selling expenses
3
2
Interest expense
3.9
3.4
1.8
1.9
1.8
Expected increase in cost of living¹
Discount rates
In percent
At December 31,
2013
2014
2013
2014
Non-German plans
German plans
At December 31,
Significant factors for the calculation of pension benefit obligations
E.56
-293
-839
-838
-292
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
-548
E.55
-133
Total
At December 31, 2013
German Non-German
plans
plans
In millions of euros
Sensitivity for discount rates
+ 0.25%
-1,210
-1,080
At December 31, 2014
German Non-German
plans
plans
-130
Currency exchange-rate changes and other changes
-19
-22
Past service cost, curtailments and settlements
-95
1 For German plans, expected increases in cost of living may affect - depending on the design of the pension plan - the obligation
to the Group's current employees as well as retirees and their survivors. For most non-German plans, expected increases in cost of living
do not have a material impact on the amount of the obligation.
-720
-800
Total
Sensitivity analysis for the present value of the defined benefit obligation
-3
-706
-839
-132
-706
-838
2
2
3
3
Net interest income
-40
-253
-293
-42
-292
Net interest expense
E.57
238
307
134
301
49
5
54
Securitized bonds
447
1,501
1,948
1,066
566
4,372
Corporate bonds
191
42
233
156
44
3,806
1,009
57
Bonds
2,300
12,078
14,378
Total exchange-traded instruments
Alternative investments²
4
1
5
1
-5
-4
Other exchange-traded instruments¹
1,147
7,216
8,363
1,473
8,219
9,692
200
12,657
Corporate bonds in other currencies
574
443
443
Government bonds in other currencies
308
628
936
414
329
555
Government bonds in USD
6
4,078
4,084
1
3,853
3,854
969
329
Government bonds
5,266
829
404
1,521
1,925
Corporate bonds in USD
1
885
886
6
2,241
2,247
Corporate bonds in EUR
643
4,706
5,349
858
4,408
255
Government bonds in EUR
10,815
674
in the consolidated statement of income are shown in table
7 E.54.
Pension cost. The components of pension cost included
237
2 Alternative investments mainly comprise private equity.
1 Includes derivative financial instruments which could have a negative fair value at the balance sheet date.
96
96
Table 7 E.55 shows the line items within the consolidated
statement of income in which the net periodic pension cost
is included.
88
thereof fair value of self-used plan assets
3
3
7
7
financial instruments
thereof fair value of own transferable
88
Measurement assumptions. The measurement date for the
Group's defined benefit pension obligations and plan assets
is generally December 31. The measurement date for the Group's
net periodic pension cost is generally January 1. The assump-
tions used to calculate the defined benefit obligations vary
according to the economic conditions of the countries in which
the pension plans are situated.
Calculation of the defined benefit obligation uses life expectancy
for the German plans is based on the 2005 G mortality tables
of K. Heubeck. For Non-German plans, comparable country-
specific calculation methods are used.
Table 7 E.56 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
German
plans
Total
Non-German
plans
German
plans
Total
2013
2014
In millions of euros
Pension cost
E.54
The weighted average duration of the defined benefit
obligations is shown in table 7 E.58.
Effect on future cash flows. Daimler currently plans to make
contributions of €0.7 billion to its pension plans for the
year 2015; the final amount is usually set in the fourth quarter
of a financial year. In addition, the Group expects to make
pension benefit payments of €0.9 billion in 2015.
For the calculation of the sensitivity of life expectancy, by
means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
was achieved.
The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as important.
This means that if there is a simultaneous change in several
parameters, the individual results cannot be summed
due to correlation effects. With a change in the parameters,
the sensitivities shown cannot be used to derive a linear
development of the defined benefit obligation.
main actuarial assumptions would affect the present value
of the defined benefit pension obligations as shown
in table 7 E.57.
Sensitivity analysis. An increase or decrease in the
Discount rates for German and non-German pension plans
are determined annually as of December 31 on the basis
of high-quality corporate bonds with maturities and currencies
matching those of the pension payments.
2,080
1,842
12,588
2,608
408
496
104
410
514
Plan assets at December 31
Total non-exchange-traded instruments
88
Cash and cash equivalents
Real estate
98
-80
592
690
107
567
Other non-exchange-traded instruments¹
-123
-154
31
15,973
18,581
238
1,773
2,011
308
3,895
4,203
45
695
740
66
3,072
3,138
7
78
85
14,668
6
691
4,289
-123
-650
-773
Pension benefits paid
5
52
57
-763
4
57
Contributions by plan participants
89
448
537
136
2,975
53
-641
-122
Currency exchange-rate changes and other changes
thereof recognized in other assets
Funded status
73
-11,546
2,080
12,588
14,668
2,608
15,973
18,581
Fair value of plan assets at December 31
-102
6
-96
217
7
224
3,111
thereof recognized in provisions for pensions
and similar obligations
Contributions by the employer
580
12,588
14,668
533
Interest income from plan assets
at January 1
Fair value of plan assets
2,920
20,310
2,080
23,230
26,496
30,127
at December 31
Present value of the defined benefit obligation
-219
5
-214
3,631
14,207
12,143
2,064
726
294
1,000
1,294
63
199
262
190
571
761
Actual return on plan assets
Actuarial gains
83
381
464
104
429
146
3,598
-11,619
-1,096
955
Consumer goods
71
408
479
87
416
788
503
65
322
387
94
367
461
Healthcare
Industrials
167
865
732
826
3,864
4,690
Equities
88
88
64
64
Others
98
538
636
128
650
778
Information technology and telecommunication services.
133
861
-10,523
995
925
Composition of pension plan assets
E.53
The investment strategy is reviewed regularly and adjusted
if deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed
of representatives of the Finance and Human Resources depart-
ments. Several pension plans use dedicated liability driven
investment approaches to take the structure of pension obliga-
tions into account in the investment process.
Market prices are available for equities and bonds due
to their listing in active markets. Most of the bonds
have investment grade ratings. They include government
bonds of very good creditworthiness.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
236
62
2014
62
-7,722
-8,562
-1,023
73
-10,523
-902
-7,722
-8,624
-840
2013
Total
German
plans
1,097
102
737
839
114
718
832
Financials
Energy, commodities and utilities
In millions of euros
plans
plans
Total
plans
Non-German
German
Non-German
172
Sensitivity for discount rates
-250
1,270
Liabilities from wages and salaries
1,791
934
857
1,912
1,024
888
Liabilities from residual value guarantees
413
263
150
359
885
131
value through profit or loss
Financial liabilities recognized at fair
395
217
178
2,317
908
1,409
in hedge accounting
At December 31, 2013
Non-current
Total
Current
Total
228
27
912
744
1,221
6,247
8,030
1,605
6,425
Miscellaneous other financial liabilities
3,399
154
3,245
3,614
162
3,452
Other
617
109
508
792
392
400
Deposits received
893
893
800
800
Accrued interest expenses
768
24
At December 31, 2014
Non-current
7,468
Current
In millions of euros
261
231
later than five years
160
149
between one and five years.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
German plans. Most employees in Germany have defined
benefit pension plans; most of the pension plans for the active
workforce are based on individual retirement benefit accounts,
to which the company makes annual contributions. The amount
of the contributions for employees paid according to wage-
tariff agreements depends on the tariff classification in the
respective year, and for executives it depends on their respective
income. For the commitments to retirement benefits made
until 2011, the contributions continue to be converted into capital
components and credited to the individual pension account
with the application of fixed factors related to each employee's
age. The conversion factors include a fixed value increase.
The pension plans were newly structured for new entrants
in 2011 to reduce the risks associated with defined benefit plans.
New entrants now benefit from value increases of the contri-
butions through an investment fund with a special lifecycle model.
The company guarantees at a minimum the value of the con-
tributions paid in. Pension payments are made either as a life
annuity, twelve annual installments, or a single lump sum.
In addition, previously concluded defined benefit plans exist
which primarily depend on employees' wage-tariff classification
upon transition into the benefit phase and which foresee
a life annuity.
As well as the employer-financed pension plans granted
by German companies, the employees of some companies
are also offered various earnings-conversion models.
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by assets invested in long-term
outsourced funds. Contractual trust arrangements (CTA) exist
between Daimler AG as well as some subsidiaries in Germany and
the Daimler Pension Trust e.V. The Daimler Pension Trust e.V.
acts as a collateral trust fund.
436
In Germany, there are no statutory or regulatory minimum
funding requirements.
Risks from defined benefit pension plans. The general
requirements with regard to retirement benefit models are laid
down in the Pension Policy, which has Group-wide validity.
Accordingly, the committed benefits are intended to contribute
to additional financial security during retirement, and in the
case of death or invalidity to be capable of being planned and
fulfilled by the respective company of the Group and to
have a low-risk structure. In addition, a committee exists that
approves new pension plans and amendments to existing
pension plans as well as guidelines relating to company retire-
ment benefits.
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obli-
gations result at the Daimler Group in particular from changes
in financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most
of the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
The fair value of plan assets is predominantly determined by the
situation on the capital markets. Unfavorable developments,
especially of equity prices and fixed-interest securities, could
reduce that fair value. The diversification of fund assets, the
engagement of asset managers using quantitative and qualitative
analyses, and the continual monitoring of performance and
risk help to reduce associated investment risk. The Group regu-
larly makes additional contributions to the plan assets in order
to cover future obligations from defined benefit pension plans.
In addition, the Group made an extraordinary contribution
of €2.5 billion in 2014 to sustainably strengthen the German
plan assets.
As a general principle, it is the Group's objective to design
new pension plans as defined benefit plans based on capital
components or on annual contributions, or as defined
contribution plans.
E.51
Compositions of provisions for pension benefit plans
and similar obligations
In millions of euros
2014
December 31,
2013
Provision for pension benefits
11,619
8,624
Non-German plans. Significant plans exist primarily in the
United States and Japan. They comprise plans relating
to final salaries as well as plans relating to salary based com-
ponents. Most of the obligations outside Germany from
defined benefit pension plans are funded by assets outplaced
into long-term investment funds.
474
151
1575
Other financial liabilities
E.63
Table 71 E.65 shows the composition of other liabilities.
27. Other liabilities
The composition of deferred income is shown in table 7 E.64.
26. Deferred income
Further information on other financial liabilities is provided
in Note 31.
Financial liabilities recognized at fair value through profit
or loss relate exclusively to derivative financial instruments
which are not used in hedge accounting.
The composition of other financial liabilities is shown
in table 7 E.63.
25. Other financial liabilities
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
242
310
285
164
167
152
94
79
104
93
56
56
39
40
14
16
Derivative financial instruments used
8,062
2,644
10,706
In millions of euros
Changes in other operating assets and liabilities
E.66
Cash provided by/used for operating activities.
Changes in other operating assets and liabilities are shown
in table 7 E.66.
Calculation of funds. At December 31, 2014, cash and
cash equivalents included restricted funds of €112 million
(2013: €69 million). The restricted funds primarily relate
to subsidiaries where exchange controls apply so that the Group
has restricted access to the funds.
28. Consolidated statement of cash flows
243
1,469
18
1,451
2,021
14
2014
2,007
4
259
306
2
304
Miscellaneous other liabilities
1,013
2
193
12
181
1,011
162
1,553
263
2013
573
131
Provisions
Non-German
Various legal proceedings, claims and governmental inves-
tigations (legal proceedings) are pending against Daimler AG
and its subsidiaries on a wide range of topics, including
vehicle safety, emissions, fuel economy, financial services,
dealer, supplier and other contractual relationships, intellectual
property rights, product warranties, environmental matters,
antitrust matters and shareholder matters. Legal proceedings
relating to products deal with claims on account of alleged
vehicle defects. Some of these claims are asserted by way
of class action suits. Adverse decisions in one or more of these
proceedings could require us to pay substantial compensatory
and punitive damages or undertake service actions, recall cam-
paigns or other costly actions.
29. Legal proceedings
144
-385
172
244
171
Dividends received
-445
136
Interest received
Interest paid
In millions of euros
2013
2014
Cash flows included in cash provided by/used for operating activities
E.67
Cash provided by financing activities. Cash provided
by financing activities includes cash flows from hedging
the currency risks of financial liabilities. In 2014, cash
provided by financing activities included payments for the
reduction of the outstanding finance lease liabilities
of €46 million (2013: €52 million).
The line item other non-cash expense and income within
the reconciliation of profit before income taxes to cash provided
by/used for operating activities primarily included the effect
of the remeasurement of the Tesla shares (see Note 13).
Table 71 E.67 shows cash flows included in cash provided
by/used for operating activities.
The decrease in provisions in the reporting year mainly resulted
from provisions for pensions and similar obligations primarily
due to an extraordinary contribution to the German pension fund
assets. Contrary effects were caused by the addition to the
provision for the EU Commission's antitrust proceedings concern-
ing European commercial vehicle manufacturers and the
increase in the provision for personnel costs. In the prior year,
the change in the provisions was primarily influenced by the
increases in provisions for dealer incentives and for personnel
costs.
2,240
1,032
1,536
1,581
Miscellaneous other assets and liabilities
-838
289
Financial instruments
1
1,552
Other tax liabilities
11
Deferral of advance rental payments received
1,044
743
301
1,236
866
370
Deferral of sales revenue received from sales
with residual-value guarantees
2,308
1,331
977
3,151
1,935
1,216
Deferral of revenue from multi-year service
and maintenance agreements
Total
At December 31, 2013
Non-current
Current
Total
At December 31, 2014
Non-current
Current
In millions of euros
Deferred income and prepaid expenses
E.64
8,276
1,701
6,575
from operating lease arrangements
Provision for other post-employment benefits
581
1,047
151
Income tax liabilities
Total
At December 31, 2013
Non-current
Current
Total
At December 31, 2014
Non-current
Current
In millions of euros
Other liabilities
E.65
4,596
2,728
1,868
5,994
3,581
2,413
657
321
336
560
314
246
Other deferred income
587
333
254
466
1,187
1,245
12,806
In millions of euros
Provisions for other risks
E.60
Further information on other provisions for other risks
is provided in Notes 5 and 29.
Other. Provisions for other risks include obligations for expected
reductions in revenue already recognized such as bonuses,
discounts and other price reduction commitments. They also
include expected costs in connection with liability and litigation
risks, provisions for optimization programs, provisions for
environmental protection risks, as well as provisions for other
taxes and various other risks which cannot be allocated
to other categories.
Personnel and social costs. Provisions for personnel
and social costs primarily comprise expected expenses
of the Group for employee anniversary bonuses, profit
sharing arrangements and management bonuses as well as
early retirement and partial retirement plans. The additions
recorded to the provisions for profit sharing and management
bonuses in the reporting year usually result in cash outflows
in the following year. The cash outflow for non-current provisions
for personnel and social costs is primarily expected within
a period until 2025.
Product warranties. Daimler issues various types of product
warranties, under which it generally guarantees the perfor-
mance of products delivered and services rendered for a certain
period. The provision for these product warranties covers
expected costs for legal and contractual warranty claims as well
as expected costs for policy coverage, recall campaigns and
buyback commitments. The provision for buyback commitments
represents the expected costs related to the Group's obligation
under certain conditions to repurchase vehicles from customers.
Buybacks may occur for a number of reasons including litiga-
tion, compliance with laws and regulations in a particular region
and customer satisfaction issues. The utilization date of product
warranties depends on the incidence of the warranty claims
and can span the entire term of the product warranties. The cash
outflow for non-current product warranties is principally
expected within a period until 2017.
The development of provisions for other risks is summarized
in table E.60.
23. Provisions for other risks
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
240
In May 2014, Daimler Trucks North America LLC and the
United Auto Workers union (UAW) entered into an agreement
to settle a healthcare plan as part of a collective bargaining
agreement. As a result of this agreement, the obligation to the
active eligible employees was settled in the fourth quarter
of 2014. The resulting cash outflow from this transaction was
approximately €0.3 billion. The transfer of the obligation
to the retirees is subject to US court approval. The approval was
received in December 2014 and became legally binding
with expiration of the deadline for notices of appeal at the end
of January 2015. The cash outflow from this transaction
(approximately €0.1 billion) will occur in the first quarter of 2015.
The settlement has no material impact on the Group's con-
solidated statement of income or on the EBIT of Daimler Trucks.
Product
warranties
Significant risks for other post-employment benefits (medical
care) relate to rising healthcare costs and lower contributions
to those costs from the public sector. In addition, these
plans are subject to the usual risks for defined benefit plans,
in particular the risk of changes in discount rates.
Other post-employment benefits
Multi-employer plans. Daimler participates in some collectively
bargained defined benefit pension plans maintained by more
than one employer. The Group presents several of these plans
in its consolidated financial statements as defined contribution
plans because the information required to use defined benefit
accounting is not available in a timely manner or in sufficient
detail. The Group cannot exercise direct control over such
plans and the plan trustees have no legal obligation to share
information directly with participating employers. Higher
contributions by the Group to such a pension plan could be
required in particular when an underfunded status exceeds
a specific level. Exit from such a plan can lead to the companies
involved having to offset the potential future shortfall relating
to their share of the plan. Furthermore, the possibility exists
that Daimler can be liable for other participants' obligations.
At December 31, 2014, the Group does not anticipate significant
costs from the existing collective plans of multiple employers;
no exit from any of these plans is intended.
-92
-51
121
-1,137
-1,106
87
1,258
1,193
2013
2014
post-employment benefits
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment health
care benefits with defined entitlements, which have to be
accounted for as defined benefit plans. These obligations are
funded to a small extent through reimbursement rights
and plan assets. Table 7 E.59 shows key data for other post-
employment benefits
Personnel and
social costs
Other
Total
-270
Reversals
-5,538
-1,882
-1,474
-2,182
Utilizations
7,672
3,088
1,967
2,617
Additions
5,270
1,213
1,732
2,325
thereof non-current
6,619
2,738
1,501
2,380
thereof current
11,889
3,951
3,233
4,705
Balance at December 31, 2013
Net periodic cost for other
Funded status
reimbursement rights
Fair value of plan assets and
480
520
+ 1 year
Sensitivity for life expectancy
-10
-90
-100
-10
-120
-130
- 0.10%
in cost of living
Sensitivity for expected increase
90
100
10
10
110
120
+ 0.10%
in cost of living
Sensitivity for expected increase
100
760
860
130
1,140
40
-46
360
Sensitivity for life expectancy
Present value of defined benefit obligations
In millions of euros
Key data for other post-employment benefits
E.59
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2014, the total cost from defined contri-
bution plans amounted to €1.4 billion (2013: €1.3 billion). Of
those payments, €1.3 billion (2013: €1.2 billion) was related to
governmental pension plans.
Defined contribution pension plans
239
16
16
Non-German plans
16
17
German plans
in years
2013
2014
benefit obligations
Weighted average duration of the defined
E.58
위의원
-10
-380
-390
40
-500
-540
- 1 year
350
- 0.25%
-325
Addition of accrued interest and effects of changes in discount rates
44,746
32,992
1,121
535
586
1,216
86,689
50,399
36,290
714
502
Loans, other financing liabilities
310
77,738
271
285
245
40
Liabilities from finance leases
6,131
2,653
3,478
5,989
1,875
4,114
Liabilities from ABS transactions
11,257
39
E.62
Reconciliation of minimum lease payments to liabilities
from finance lease arrangements
9,869
235
Reconciliation of the net obligation from defined benefit
pension plans. The development of the relevant factors is
shown in table 7 E.52.
Composition of plan assets. Plan assets and income from
plan assets are used solely to pay pension benefits and
to administer the plans. The composition of the Group's pension
plan assets is shown in table 7 E.53.
E.52
Present value of defined benefit pension obligations and fair value of plan assets
In millions of euros
2014
2013
Total
53
56
within one year
「
Maturity
2014
2013
2014
2013
2014
Interest included in future
minimum lease payments
at December 31,
at December 31,
Future minimum
lease payments
2013
Liabilities from finance
lease arrangements
at December 31,
In millions of euros
2,718
8,539
10,853
2,503
The composition of financing liabilities is shown
24. Financing liabilities
241
6,712
2,012
2,135
2,565
thereof non-current
7,267
3,038
1,806
2,423
thereof current
13,979
5,050
3,941
4,988
Balance at December 31, 2014
244
181
-23
86
Currency translation and other changes
353
37
284
32
in table 7 E.61.
-641
Liabilities from finance leases relate primarily to leases
of property, plant and equipment which transfer substantially
all risks and rewards to the Group as lessee. Future minimum
lease payments under finance leases amounted to €436 million
at December 31, 2014 (2013: €474 million). The reconciliation
of future minimum lease payments from finance lease arrange-
ments to the corresponding liabilities is shown in table 71 E.62.
Financing liabilities
8,350
Deposits in the direct banking business
19,089
8,916
10,173
22,893
11,792
11,101
Liabilities to financial institutions
1,086
1,086
2,277
8
2,269
Commercial paper
38,744
29,653
9,091
43,176
33,262
9,914
Notes/bonds
At December 31, 2013
Non-current
Total
Current
At December 31, 2014
Non-current
Total
Current
In millions of euros
E.61
plans
In connection with its production programs, Daimler has
committed to purchase various volumes of parts and
components over extended periods. The Group also has entered
into service arrangements for the provision of future services.
In addition, the Group has committed to purchase or invest in
the construction and maintenance of production facilities.
Amounts under the latter arrangements represent commitments
to purchase plant or equipment in the future.
In millions of euros
4,922
1,223
6,145
4,495
35,161
39,656
42,642
36,384
51,115
Level 33
At December 31, 2013
Level 22
5,996
37,680
5,996
37,680
thereof other financing liabilities
thereof liabilities from ABS transactions
4,842
39,525
44,367
thereof bonds
48,518
39,525
88,043
Financing liabilities
Financial liabilities measured at cost
62,057
Receivables from financial services
Financial assets measured at cost
33,225
33,225
1 Fair value measurement of these assets and liabilities is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement of these assets and liabilities is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
3 Fair value measurement of these assets and liabilities is based on inputs for which no observable market data is available.
7,066
6,634
Marketable debt securities
47,614
57,558
Loans and receivables
2,136
2,325
Other receivables and assets
7,803
8,634
Trade receivables
37,675
51,115
46,599
At December 31,
2014
2013
Assets
In millions of euros
Carrying amounts of financial instruments presented
according to IAS 39 measurement categories
E.76
Net gains on financial liabilities measured at cost mainly
include gains and losses from the measurement of liabilities
denominated in foreign currencies.
Net losses on loans and receivables mainly include impairment
losses that are charged to cost of sales, selling expenses
and other financial income/expense, net. Foreign currency
gains and losses are also included.
Net gains on available-for-sale financial assets mainly include
income from the measurement of equity interests as well as
realized gains from their disposal.
Net losses of financial assets and liabilities recognized
at fair value through profit or loss primarily include gains
and losses attributable to changes in market value.
Table 7 E.77 shows the net gains or losses of financial
instruments included in the consolidated statement of income
(excluding derivative financial instruments used in hedge
accounting).
Net gains or losses
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
252
Receivables from financial services¹
62,057
Level 11
Total
413
413
359
359
at fair value through profit or loss
Derivative financial instruments
used in hedge accounting
Financial liabilities measured
Liabilities measured at fair value
118
4,189
6,264
10,571
3,516
6,158
2,317
2,676
1,703
1,296
1,296
9,674
Derivative financial instruments
used in hedge accounting
118
232
350
97
97
at fair value through profit or loss
Financial assets measured
2,248
4,818
7,066
1,703
2,269
2,317
2,676
808
At December 31, 2014
Level 22
Level 33
Level 11
Total
In millions of euros
Measurement hierarchy of financial assets and liabilities not measured at fair value
E.75
The carrying amounts of financial instruments presented
according to IAS 39 measurement categories are shown in
table 7 E.76.
Table 7 E.75 shows into which measurement hierarchy
(according to IFRS 13) the fair values of the financial assets and
liabilities are classified which are not measured at fair value
in the consolidated statement of financial position.
251
118
Balance at December 31
-60
-118
395
income/expense, net
178
118
Balance at January 1
In millions of euros
2013
2014
through profit or loss classified as level 3
Development of financial assets recognized at fair value
E.74
3 Fair value measurement of these assets and liabilities is based on inputs for which no observable market data is available.
1 Fair value measurement of these assets and liabilities is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement of these assets and liabilities is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
808
395
Losses recognized in other financial
2,118
2,052
8,903
-2,433
Revenue
Reclassifications of pre-tax gains/losses from equity
to the statement of income
E.82
Unrealized gains/losses
In millions of euros
2013
2014
Unrealized gains/losses from cash flow hedges
E.81
413
-552
Net gains/losses from underlying transactions
-386
553
Net gains/losses from hedging instruments
In millions of euros
2013
2014
Net gains/losses from fair value hedges
13
118
1,177
-29
-1,527
535
At December 31,
2014
2013
2,964
-1,977
1,388
2014
2013
340
E.69
254
The maturities of the interest rate hedges and cross currency
interest rate hedges as well as of the commodity hedges corre-
spond with those of the underlying transactions. The realization
of the underlying transactions of the cash flow hedges is
expected to correspond with the maturities of the hedging
transactions shown in table 7 E.83. As of December 31, 2014,
Daimler utilized derivative instruments with a maximum
maturity of 36 months (2013: 36 months) as hedges for currency
risks arising from future transactions.
In 2014, the discontinuation of cash flow hedges as a result
of non-realizable hedged items resulted in losses of €6 million
(2013: €8 million).
Net profit for 2014 includes net losses (before income taxes)
of €17 million (2013: €7 million) attributable to the ineffective-
ness of derivative financial instruments entered into for
hedging purposes (hedge-ineffectiveness).
Table 71 E.82 provides an overview of the reclassifications
of pre-tax gains/losses from equity to the statement of income
for the period.
Unrealized pre-tax gains and losses on the measurement
of derivatives, which are recognized in other comprehensive
income, are shown in table 7 E.81.
for hedging currency risks, interest rate risks and commodity
price risks.
Cash flow hedges. The Group uses cash flow hedges
and the changes in the value of the underlying transactions
are shown in table 7 E.80.
Net gains and losses from these hedging instruments
Fair value hedges. The Group uses fair value hedges primarily
for hedging interest rate risks.
Fair values of hedging instruments. Table 7 E.79 shows
the fair values of hedging instruments at the end of the reporting
period.
3,089
-1,666
Use of derivatives. The Group uses derivative financial
instruments exclusively for hedging financial risks that arise
from its commercial business or refinancing activities. These
are mainly interest rate risks, currency risks and commodity
price risks. For these hedging purposes, the Group mainly uses
currency forward transactions, cross currency interest rate
swaps, interest rate swaps, options and commodity forwards.
See Note 1 for qualitative descriptions of accounting for
financial instruments (including derivative financial instruments).
Total interest income and total interest expense for financial
assets or financial liabilities that are not measured at fair value
through profit or loss are shown in table 7 E.78.
Total interest income and total interest expense
248
248
-2
-2
Interest expense
Interest income
Cost of sales
-36
-90
286
Information on derivative financial instruments
2013
2014
E.80
3 This does not include liabilities from finance leases of €285 million
These figures comprise financial instruments that are not used in hedge
accounting.
2 Financial instruments classified as held for trading purposes.
1 This does not include lease receivables of €15,080 million as of
December 31, 2014 (2013: €13,095 million) as these are not assigned
to an IAS 39 measurement category.
as these financial instruments are not assigned to an IAS 39 measurement
category.
The table above does not include cash and cash equivalents or the carrying
amounts of derivative financial instruments used in hedge accounting
413
359
through profit or loss²
Financial liabilities recognized at fair value
93,902
104,528
7,388
as of December 31, 2014 (2013: €310 million) as these are not assigned
to an IAS 39 measurement category.
7,946
86,404
9,086
10,178
Financial liabilities measured at cost
Other financial liabilities4
Financing liabilities³
Trade payables
Liabilities
Other financial assets
350
97
Financial assets recognized at fair value
through profit or loss²
9,118
77,428
Available-for-sale financial assets
4 This does not include liabilities from financial guarantees of €84 million
as of December 31, 2014 (2013: €80 million) as these are not assigned
to an IAS 39 measurement category.
Net gains/losses
Hedges of net investments in foreign operations
Cash flow hedges
Fair value hedges
In millions of euros
Fair values of hedging instruments
E.79
Total interest expense
Total interest income
In millions of euros
Total interest income and total interest expense
E.78
253
1 Financial instruments classified as held for trading; these amounts relate
to financial instruments that are not used in hedge accounting.
E.77
74
Financial liabilities measured at cost
-598
-210
Loans and receivables
90
235
Available-for-sale financial assets
-218
-578
Financial assets and liabilities recognized
at fair value through profit or loss¹
2013
2014
In millions of euros
124
4,516
79,026
thereof marketable debt securities
Trade payables. Due to the short maturities of these financial
instruments, it is assumed that their fair values are equal
to the carrying amounts.
Financing liabilities. The fair values of bonds, loans,
commercial paper, deposits in the direct banking business
and liabilities from ABS transactions are calculated as the
present values of the estimated future cash flows. Market inter-
est rates for the appropriate terms are used for discounting.
Other receivables and assets are carried at amortized cost.
Because of the predominantly short maturities of these financial
instruments, it is assumed that the fair values approximate
the carrying amounts.
derivative interest rate hedging contracts; the fair values
of interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows using the market interest rates appropriate
to the remaining terms of the financial instruments.
derivative commodity hedging contracts; the fair values
of commodity hedging contracts (e.g. commodity forwards)
are determined on the basis of current reference prices
with consideration of forward premiums and discounts.
Financial assets recognized at fair value through profit or loss
include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
- derivative currency hedging contracts; the fair values
of cross currency interest rate swaps are determined on
the basis of the discounted estimated future cash flows using
market interest rates appropriate to the remaining terms
of the financial instruments. The valuation of currency forwards
is based on market quotes of forward curves; currency
options were measured using price quotations or option
pricing models using market data.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
248
- equity interests measured at cost; fair values could not be
determined for these financial instruments because no stock
exchange or market prices are available. These equity inter-
ests comprise investments in non-listed companies for
which no objective evidence existed at the balance sheet date
that these assets were impaired and whose fair values
cannot be determined with sufficient reliability. It is assumed
that the fair values approximate the carrying amounts.
debt and equity instruments measured at fair value; these
instruments were measured using quoted market prices
at December 31. Otherwise, the fair value measurement of
these debt and equity instruments is based on inputs that
are either directly or indirectly observable on active markets.
Equity instruments measured at fair value predominantly
comprise the investments in Nissan Motor Co., Ltd. (Nissan)
and Renault SA (Renault).
Marketable debt securities and other financial assets.
Financial assets available-for-sale include:
Trade receivables and cash and cash equivalents.
Due to the short terms of these financial instruments,
it is assumed that their fair values are equal to the carrying
amounts.
The discounting is based on the current interest rates
at which similar loans with identical terms could have been
obtained as of December 31, 2014 and December 31, 2013.
Receivables from financial services. The fair values of
receivables from financial services with variable interest rates
are estimated to be equal to the respective carrying amounts
because the interest rates agreed and those available in the
market do not significantly differ. The fair values of receivables
from financial services with fixed interest rates are determined
on the basis of discounted expected future cash flows.
The fair values of financial instruments were calculated
on the basis of market information available on the balance
sheet date. The following methods and premises were used:
Table 71 E.71 shows the carrying amounts and fair values of the
Group's financial instruments. The fair value of a financial
instrument is the price at which a party would accept the rights
and/or obligations of that financial instrument from another
independent party. Given the varying influencing factors, the
reported fair values can only be viewed as indicators
of the prices that may actually be achieved on the market.
Carrying amounts and fair values of financial instruments
31. Financial instruments
572
1,980
2,157
629
later than five years
376
1,032
1,112
between one and five years
416
within one year
Maturity
E.71
Carrying amounts and fair values of financial instruments
In millions of euros
At December 31, 2014
Carrying
Available-for-sale financial assets
Other financial assets
7,066
7,066
6,634
6,634
11,053
11,053
9,667
9,667
7,803
7,803
8,634
In millions of euros
8,634
50,770
62,057
61,679
Available-for-sale financial assets
Marketable debt securities
Cash and cash equivalents
Trade receivables
Receivables from financial services
Financial assets
Fair value
At December 31, 2013
Carrying
amount
Fair value
amount
51,115
At December 31,
2014
2013
Future minimum lease payments under
long-term rental and lease agreements
E.70
Guarantees under buyback commitments represent arrange-
ments whereby the Group guarantees specified trade-in or resale
values for sold vehicles. Such guarantees provide the holder
with the right to return purchased vehicles to the Group, the right
being primarily contingent on the future purchase of vehicles
or services. The provisions recognized in connection with these
buyback commitments, amounted to €58 million at December 31,
2014 (2013: €43 million). Residual value guarantees related
to arrangements for which revenue recognition is precluded due
to the Group's obligation to repurchase assets sold to unre-
lated guaranteed parties are included in other financial liabilities.
E.68
Composition of contingent liabilities
In millions of euros
At December 31,
2014
2013
Guarantees under buyback commitments
Other contingent liabilities
1,208
383
974
1,591
370
1,344
Other contingent liabilities comprise contingent liabilities
which constitute other guarantees as well as miscellaneous
contingent liabilities which do not constitute other guarantees.
At December 31, 2014, the best estimate for potential obli-
gations from other guarantees for which no provisions had yet
been recognized was €34 million (2013: €42 million). The
miscellaneous contingent liabilities which do not constitute other
guarantees primarily comprise potential obligations from
other tax and customs duty risks; the best estimate for potential
obligations at December 31, 2014 amounts to €349 million
(2013: €328 million).
In 2002, our subsidiary Daimler Financial Services AG, Deutsche
Telekom AG and Compagnie Financière et Industrielle des
Autoroutes S.A. (Cofiroute) entered into a consortium agreement
in order to jointly develop, install and operate under a contract
with the Federal Republic of Germany (operating agreement)
of the financial effects of contingent liabilities at December 31.
a system for the electronic collection of tolls for all commercial
vehicles over 12 tons GVW using German highways. Daimler
Financial Services AG and Deutsche Telekom AG each hold a 45%
equity interest and Cofiroute holds the remaining 10% equity
interest in both the consortium (Toll Collect GbR) and the joint
venture company (Toll Collect GmbH) (together Toll Collect).
Failure to perform various obligations under the operating
agreement may result in penalties, additional revenue
reductions and damage claims that could become significant
over time.
However, penalties and revenue reductions are capped at
€150 million per year until the final operating permit has been
issued and at €100 million per year following the issuance
of the final operating permit. These cap amounts are subject
to a 3% increase for every year of operation.
246
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Beginning in June 2006, the Federal Republic of Germany began
reducing monthly payments to Toll Collect GmbH by €8 million
in partial set-off against amounts claimed in the arbitration
proceeding referred to below. This offsetting may require the
consortium members to provide additional operating funds
to Toll Collect GmbH.
The operating agreement calls for the submission of all disputes
related to the toll collection system to arbitration. The Federal
Republic of Germany has initiated arbitration proceedings against
Daimler Financial Services AG, Deutsche Telekom AG and
the consortium. According to the statement of claims received
in August 2005, the Federal Republic of Germany is seeking
damages including contractual penalties and reimbursement
of lost revenue that allegedly arose from delays in the oper-
ability of the toll collection system. See Note 29 for additional
information.
Each of the consortium members (including Daimler Financial
Services AG) has provided guarantees supporting the
obligations of Toll Collect GmbH towards the Federal Republic
of Germany relating to the completion and operation of the
toll collection system, which are subject to specific triggering
events. In addition, Daimler AG has guaranteed bank loans
obtained by Toll Collect GmbH. The guarantees are described
in detail below:
Guarantee of bank loans. Daimler AG issued a guarantee
to third parties up to a maximum amount of €100 million for
bank loans which could be obtained by Toll Collect GmbH.
This amount represents the Group's 50% share of Toll Collect
GmbH's external financing guaranteed by its shareholders.
- Equity maintenance undertaking. The consortium members
have the obligation to contribute, on a joint and several
basis, additional funds to Toll Collect GmbH as may be
necessary for Toll Collect GmbH to maintain a minimum equity
(based on German Commercial Code accounting principles)
of 15% of total assets (a so-called “equity maintenance
undertaking"). This obligation will terminate on August 31,
2015, when the operating agreement expires, or earlier
if the agreement is terminated. Such obligation may arise
if Toll Collect GmbH is subject to revenue reductions caused
by underperformance, if the Federal Republic of Germany
is successful in claiming lost revenue against Toll Collect GmbH
for any period the system was not fully operational, or if
Toll Collect GmbH incurs penalties that may become payable
under the above mentioned agreements. If such penalties,
revenue reductions or other events reduce Toll Collect GmbH's
equity to a level below the minimum equity percentage
agreed upon, the consortium members are obligated to fund
Toll Collect GmbH's operations to the extent necessary
to reach the required minimum equity.
Cofiroute's risks and obligations are limited to €70 million.
Daimler Financial Services AG and Deutsche Telekom AG
are jointly obliged to indemnify Cofiroute for amounts exceeding
this limitation.
While Daimler's maximum future obligation resulting from
the guarantee of the bank loan can be determined (2014:
€100 million), the Group is unable to reasonably estimate the
amount or range of amounts of possible loss resulting from
the financial guarantee in form of the equity maintenance under-
taking due to the various uncertainties described above,
although it could be material. Only the guarantee for the bank
loan is included in the above disclosures for financial
guarantees.
Obligations from product warranties and extended product
warranties are not included in the above disclosures.
See Note 23 for provisions relating to such obligations.
Other financial obligations. The composition of other
financial obligations is shown in Table 71 E.69.
According to the operating agreement, the toll collection
system had to be operational no later than August 31, 2003.
After a delay of the launch date of the toll collection system,
which resulted in a loss of revenue for Toll Collect and in pay-
ments of contractual penalties for delays, the toll collection
system was introduced on January 1, 2005 with on-board units
that allowed for slightly less than full technical performance
in accordance with the technical specification (phase 1).
On January 1, 2006, the toll collection system was installed and
started to operate with full effectiveness as specified in
the operating agreement (phase 2). On December 20, 2005,
Toll Collect GmbH received a preliminary operating permit
as specified in the operating agreement. Toll Collect GmbH
expects to receive the final operating permit, and continues
to operate the toll collection system under the preliminary
operating permit in the interim.
2,269
Contingent liabilities. Table 7 E.68 shows estimates
Financial guarantees. Financial guarantees principally
represent contractual arrangements. These guarantees generally
provide that in the event of default or non-payment by the
primary debtor, the Group will be required to settle such financial
obligations. The maximum potential obligation resulting from
these guarantees amounted to €786 million at December 31,
2014 (2013: €772 million) and includes liabilities recognized
in the amount of €84 million (2013: €80 million). These amounts
include financial guarantees, which the Group issued for the
benefit of Chrysler in connection with the Chrysler transactions
entered into in 2007 and 2009. At December 31, 2014, these
guarantees amounted to €0.3 billion. For a portion of these
financial guarantees, Chrysler provided collateral of €0.2 billion
to an escrow account.
as obligations in connection with cooperation agreements.
Miscellaneous other financial commitments primarily comprise
financial obligations to make payments in connection with
capital contributions to be made into the share capital of uncon-
solidated subsidiaries or associated companies as well
not been utilized as of that date. An overview of the maturities
of irrevocable credit commitments is shown in table 7 E.85
in Note 32.
In addition, the Group had issued irrevocable loan commitments
as of December 31, 2014. These loan commitments had
The Group has additional other financial obligations resulting
from non-cancelable long-term rental agreements and operating
leases for property, plant and equipment; the contracts
partially include renewal or repurchase options and escalation
clauses. In 2014, Daimler recognized as expense rental
payments of €517 million (2013: €501 million). Table 7 E.70
provides an overview of when future minimum lease payments
under non-cancelable long-term rental and lease agreements
fall due (nominal amounts).
247
14,615
15,564
1,356
2,318
1,508
1,320
1,980
245
2,157
9,769
At December 31,
2014
2013
Other miscellaneous financial commitments
Commitments from purchasing contracts
Long-term rental and leasing agreements
Irrevocable credit commitments
6,634
Composition of other financial obligations
(nominal amounts)
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
In mid-January 2011, the European Commission carried out
antitrust investigations of European commercial vehicle
manufacturers, including Daimler AG. If antitrust infringements
are discovered, the European Commission can impose con-
siderable fines depending on the gravity of the infringement.
In November 2014, the European Commission served Daimler
with its statement of objections which, from the European
Commission's perspective, further explains and legally evaluates
the relevant facts. Resulting from knowledge gained from
access to essential documents of the European Commission's
file, Daimler AG, in December 2014, decided to increase
provisions by €600 million. Daimler is taking the Commission's
initial suspicion very seriously and is also - parallel to the
Commission's investigations - carrying out its own extensive
internal investigation to clarify the underlying circumstances.
The company is cooperating with the authorities but will at the
same time - while stating the company's legal view - safeguard
its rights in the further proceedings and is also reviewing
all of its procedural options. In accordance with IAS 37.92, the
Group does not provide further information on this antitrust
investigation and the associated risk for the Group, especially
with regard to the measures taken in this context, in order
not to impair the outcome of the proceeding.
The Federal Republic of Germany initiated arbitration proceed-
ings against Daimler Financial Services AG, Deutsche Telekom
AG and Toll Collect GbR and submitted its statement of claims
in August 2005. It seeks damages, contractual penalties and
the transfer of intellectual property rights to Toll Collect GmbH.
In particular, the Federal Republic of Germany is claiming
- lost revenue of €3.33 billion for the period September 1, 2003
through December 31, 2004 plus interest at 5% per annum
above the respective base rate since submission of claims
(an amount of €2 billion as at the date of September 29, 2014),
and contractual penalties of approximately €1.65 billion
through July 31, 2005 plus interest at 5% per annum above
the respective base rate since submission of claims
(an amount of €225 million as at the date of September 29,
2014),
- plus refinancing costs of €196 million.
Since, among other things, some of the contractual penalties are
dependent on time and further claims for contractual penalties
have been asserted by the Federal Republic of Germany,
the amount claimed as contractual penalties may increase.
The defendants submitted their response to the statement
of claims on June 30, 2006. The Federal Republic of Germany
delivered its reply to the arbitrators on February 15, 2007,
and the defendants delivered their rebuttal on October 1, 2007
(see also Note 30). The arbitrators held the first hearing on
June 16 and 17, 2008. Additional briefs from the claimant and
the defendants have been filed since then. A hearing of
witnesses and experts took place between December 6 and 14,
2010. The parties submitted further written statements
on July 15 and November 15, 2011. After the Tribunal's President
resigned for personal reasons as of March 30, 2012, the new
President was determined by the Administrative Court in Berlin
as of October 29, 2012. The arbitrators held further hearings
in May and October 2014. In accordance with IAS 37.92,
no further information is disclosed regarding the arbitration
proceedings and the related risks to the company, in particular
regarding the measures taken by the company, in order to
prevent negative effects on the proceedings. Daimler believes
the claims of the Federal Republic of Germany are without
merit and will continue to defend itself vigorously.
The Group recognizes provisions in connection with pending
or threatened proceedings to the extent that a loss is probable
and can be reasonably estimated. Such provisions are
reflected in the Group's consolidated financial statements and
are based on estimates. Risks resulting from legal proceed-
ings, however, sometimes cannot be assessed reliably or only
to a limited extent. Consequently, provisions accrued for
some legal proceedings may turn out to be insufficient once such
proceedings have ended. Daimler may also become liable
for payments in legal proceedings no provisions were established
for. Although the final resolution of any such proceedings
could have a material effect on Daimler's operating results and
cash flows for a particular reporting period, Daimler believes
that it should not materially affect the Group's financial position.
30. Financial guarantees, contingent liabilities
and other financial obligations
9,771
2,269
In millions of euros
2,052
-206
-206
808
2,053
723
2,006
-670
-670
1,393
2,676
Other financial liabilities
Other financial assets
Net amounts
master netting
arrangement
subject to a
Amounts
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments that are included in
hedge accounting and financial assets measured at fair value through profit or loss (see Note 16).
Gross and net
amounts of
financial instru-
ments in the
balance sheet
Net amounts
Amounts
subject to a
master netting
arrangement
ments in the
balance sheet
Gross and net
amounts of
financial instru-
At December 31, 2014
In millions of euros
Disclosure for recognized financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
E.72
the necessity of reclassification between the measurement
hierarchies.
At the end of each reporting period, Daimler reviews
into measurement hierarchies of financial assets and liabilities
measured at fair value (according to IFRS 13).
Table 71 E.73 provides an overview of the classification
Table 7 E.72 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements
as well as the possible financial effects of netting in accor-
dance with the master netting arrangements.
At December 31, 2013
Offsetting of financial instruments. The Group concludes
derivative transactions in accordance with the master netting
arrangements (framework agreement) of the International
Swaps and Derivatives Association (ISDA) and other appropriate
national framework agreements. However, these arrange-
ments do not meet the criteria for netting in the consolidated
statement of financial position according to IAS 32.42, as they
allow netting only in the case of future events such as default
or insolvency on the part of the Group or the counterparty.
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments that are included in
hedge accounting and financial liabilities measured at fair value through profit or loss (see Note 25).
250
2,052
6
1,446
1,452
5
1,642
1,647
thereof equity instruments
2,254
6,264
8,518
2,123
6,158
1,847
602
8,281
Available-for-sale financial assets
At December 31, 2013
Level 22 Level 33
Level 11
Total
At December 31, 2014
Level 22
Level 33
Level 11
Total
Measurement hierarchy of financial assets and liabilities measured at fair value
E.73
The financial assets shown as classified as level 3 and
presented in table 7 E.74 consist solely of Daimler's option
to sell the shares it held in RRPSH to Rolls-Royce (see also
Note 13). Daimler sold its shares in RRPSH to Rolls-Royce
in 2014. The option was exercised and derecognized through
profit or loss.
The development of financial assets recognized at fair
value through profit or loss and classified as Level 3 is shown
in table 7 E.74.
For the determination of the credit risk from derivative
financial instruments which are allocated to the Level 2
measurement hierarchy, the exception described in
IFRS 13.48 (portfolios managed on basis of net exposure)
is applied.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Financial assets available for sale
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
In millions of euros
249
82,933
92,979
92,601
2,136
2,136
2,325
2,325
Other receivables and assets
1,703
1,703
1,296
1,296
Derivative financial instruments used in hedge accounting
83,278
350
97
97
Financial assets recognized at fair value through profit or loss
600
600
622
622
thereof equity instruments measured at cost
1,452
1,452
1,647
Other financial liabilities. Financial liabilities recognized
at fair value through profit or loss comprise derivative financial
instruments not used in hedge accounting. For information
regarding these financial instruments as well as derivative
financial instruments used in hedge accounting, see the notes
above under marketable debt securities and other financial
assets.
thereof equity instruments measured at fair value
350
Financial liabilities
1,647
86,689
96,388
95,100
Financing liabilities
108,927
107,573
7,468
7,468
8,030
395
395
2,317
2,317
Derivative financial instruments used in hedge accounting
Miscellaneous other financial liabilities
413
413
8,030
359
359
77,738
79,026
Trade payables
10,178
88,043
10,178
9,086
9,086
Other financial liabilities
Financial liabilities recognized at fair value through profit or loss
9,979
22
of the Daimler Financial Services segment
243
109
249
Irrevocable loan commitments
469
Miscellaneous other financial liabilities excluding
5,625
7,230
accrued interest
32
10,146
Trade payables4
and of Daimler AG5
10,178
535
Financial guarantees
1 The amounts were calculated as follows:
786
260
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
5 The maximum available amounts are stated.
4 The cash outflows of trade payables are undiscounted.
3 The undiscounted sum of the net cash outflows of the derivative financial instruments is shown for the respective year. For individual periods,
this may also include negative cash flows from derivatives with an overall positive fair value.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
(b) The cash flows of floating interest financial instruments are estimated on the basis of forward rates.
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler can
be required to pay. The customer deposits of Mercedes-Benz Bank are considered in this analysis to mature within the first year.
4,226
24
10,244
4,472
7,494
14,697
113
172
249
21,107
786
57,351
786
115,365
1,320
6,994
79
2017
13,698
Daimler manages market risks to minimize the impact
of fluctuations in foreign exchange rates, interest rates and
commodity prices on the results of the Group and its
segments. The Group calculates its overall exposure to these
market risks to provide the basis for hedging decisions,
which include the selection of hedging instruments and the
determination of hedging volumes and the corresponding
periods. Decisions regarding the management of market risks
resulting from fluctuations in foreign exchange rates, interest
rates (asset-/liability management) and commodity prices are
regularly made by the relevant Daimler risk management
committees.
The global nature of its businesses exposes Daimler to
significant market risks resulting from fluctuations in foreign
currency exchange rates and interest rates. In addition,
the Group is exposed to market risks in terms of commodity
price risk associated with its business operations, which
the Group hedges partially through derivative financial instru-
ments. The Group is also exposed to equity price risk in
connection with its investments in listed companies (including
Nissan, Renault, BAIC Motor and Kamaz). If these market
risks materialize, they will adversely affect the Group's profit-
ability, liquidity and capital resources and financial position.
Finance market risks
Table 7 E.85 provides an overview of how the future liquidity
situation of the Group is affected by the cash flows from
liabilities and financial guarantees as of December 31, 2014.
259
Daimler manages these risks via country exposure limits
(e.g. for export credits or for hard currency portfolios of financial
services entities) and via insurance of equity investments in
high-risk countries. An internal rating system serves as a basis
for Daimler's risk-oriented country exposure management;
it assigns all countries to risk classes, with consideration of
external ratings and capital market indications of country risks.
Daimler is exposed to country risk mainly resulting from
cross-border funding of Group companies and customers
as well as cross-border capital investments at Group
companies and joint ventures. Additionally, country risk also
arises from cross-border investments of liquid assets with
financial institutions.
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the
respective country, e.g. resulting from sovereign measures
such as expropriation or interdiction of foreign currency
transfers.
Country risk
Information on the Group's financing liabilities is also provided
in Note 24.
From an operating point of view, the management of the Group's
liquidity exposures is centralized by a daily cash pooling
process. This process enables Daimler to manage its liquidity
surplus and liquidity requirements according to the actual
needs of the Group and each subsidiary. The Group's short-term
and mid-term liquidity management takes into account the
maturities of financial assets and financial liabilities and estimates
of cash flows from the operating business.
At December 31, 2014, the Group had short-term and long-term
credit lines totaling €41.7 billion, of which €17.2 billion were
not utilized. These credit lines include a syndicated €9.0 billion
credit facility of Daimler AG with five year tenor and two
extension options of two years in total which was signed with
a syndicate of international banks in September 2013.
In 2014, Daimler exercised the option to extend the credit
line by a further year until 2019. This syndicated facility
serves as a back-up for commercial paper drawings and provides
funds for general corporate purposes. At December 31, 2014,
this facility had not been utilized.
At December 31, 2014, liquidity amounted to €16.3 billion
(2013: €18.1 billion). In 2014, significant cash inflows resulted
from the positive contributions to earnings by the automotive
segments and from the sale of the RRPSH and Tesla shares
(see Note 3). Cash outflows mainly resulted from refinancing
the portfolio growth of the leasing and sales financing activities
of Daimler Financial Services, as well as from the unscheduled
contribution to the German pension plan assets (see Note 22).
The funds raised are used to finance working capital and
capital expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accor-
dance with internal guidelines, the refunding of the lease and
financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from
financial services.
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending
on funding requirements and market conditions, Daimler issues
commercial paper, bonds and financial instruments secured
by receivables in various currencies. In 2014, Daimler had very
good access to the money and capital markets. Bank credit
lines are also used to cover financing requirements. Potential
downgrades of our credit ratings could have a negative
impact on the Group's financing.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
In addition, customer deposits at Mercedes-Benz Bank
are used as a further source of refinancing.
As part of its risk management system, Daimler employs value
at risk. In performing these analyses, Daimler quantifies its
market risk exposure to changes in foreign currency exchange
rates and interest rates on a regular basis by predicting the
potential loss over a target time horizon (holding period) and
confidence level.
The value at risk calculations employed:
- express potential losses in fair values,
and
- assume a 99% confidence level and a holding period
of five days.
19,445
1,095
1,858
3,359
Derivative financial instruments³
38,150
92,492
Financing liabilities²
In millions of euros
281
≥ 2020
2018
2016
2015
Total
Liquidity runoff for liabilities and financial guarantees¹
E.85
When calculating the value at risk by using the variance-
covariance approach, Daimler first computes the current
market value of the Group's financial instruments portfolio.
Then the sensitivity of the portfolio value to changes in the
relevant market risk factors, such as particular foreign
currency exchange rates or interest rates of specific maturities,
is quantified. Based on expected volatilities and correlations
of these market risk factors, which are obtained from the Risk-
Metrics™ dataset, a statistical distribution of potential
changes in the portfolio value at the end of the holding period
is computed. The loss which is reached or exceeded with
a probability of only 1% can be derived from this calculation
and represents the value at risk.
Daimler calculates the value at risk for exchange rate and
interest rate risk according to the variance-covariance
approach. The value at risk calculation method for commodity
hedging instruments is based on a Monte Carlo simulation.
2019
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors over the holding period.
The changes in market risk factors indicate a possible change
in the portfolio value. Running multiple repetitions of this simu-
lation leads to a distribution of portfolio value changes. The
value at risk can be determined based on this distribution
as the portfolio value loss which is reached or exceeded with
a probability of 1%.
High
Exchange rate risk. Transaction risk and currency risk
management. The global nature of Daimler's businesses exposes
cash flows and earnings to risks arising from fluctuations
in exchange rates. These risks primarily relate to fluctuations
between the US dollar and the euro, which also apply to the
export of vehicles to China and between the British pound and
the euro.
Value at risk for exchange rate risk, interest rate risk and commodity price risk
In millions of euros
Period-end
Low
2014
Average
2013
Period-end
High
E.86
Low
Exchange rate risk
(from derivative financial instruments)
731
731
370
494
442
784
Average
386
Equity price risk. Daimler predominantly holds investments
in shares of companies which are classified as long-term
investments, such as Nissan or Renault, or which are accounted
for using the equity method, such as BAIC Motor or Kamaz.
Therefore, the Group does not include these investments in a
market risk assessment.
Table 71 E.86 shows the period-end, high, low and average
value at risk figures of the commodity price risk for the 2014
and 2013 portfolio of derivative financial instruments used
to hedge raw material price risk. Average exposure has been
computed on an end-of-quarter basis. The transactions
underlying the derivative financial instruments are not included
in the value at risk presentation. See also table 7 E.83
for the nominal values of derivative commodity price hedges
at the balance sheet date.
Daimler manages its liquidity by holding adequate volumes
of liquid assets and by maintaining syndicated credit facilities
in addition to the cash inflows generated by its operating
business. Additionally, the possibility to securitize receivables
of financial services business (ABS transactions) also reduces
the Group's liquidity risk. Liquid assets comprise cash and cash
equivalents as well as debt instruments classified as held
for sale. The Group can dispose of these liquid assets at short
notice.
261
The hedged position of the operating vehicle businesses
is influenced by the amount of derivative currency contracts
held. The derivative financial instruments used to cover
foreign currency exposure are primarily forward foreign exchange
contracts and currency options. Daimler's guidelines call
for a mixture of these instruments depending on the assessment
of market conditions. Value at risk is used to measure the
exchange rate risk inherent in these derivative financial instru-
ments.
Table 71 E.86 shows the period-end, high, low and average
value at risk figures of the exchange rate risk for the 2014 and
2013 portfolios of derivative financial instruments, which
were entered into primarily in connection with the operative
vehicle businesses. Average exposure has been computed
on an end-of-quarter basis. The offsetting transactions under-
lying the derivative financial instruments are not included
in the following value at risk presentation. See also table 7 E.83
for the nominal volumes on the balance sheet date of deriva-
tive currency instruments entered into to hedge the currency
risk from forecasted transactions.
In 2014, the development of the value at risk from foreign
currency hedging was mainly driven by changes in the nominal
volume and by the increased foreign currency volatilities at
year end.
The Group's investments in liquid assets or refinancing
activities generally are not allowed to result in currency risk.
Transaction risks arising from liquid assets or payables
in foreign currencies that result from the Group's investment
or refinancing on money and capital markets are generally
hedged against currency risks at the time of investing or
refinancing in accordance with Daimler's internal guidelines.
The Group uses appropriate derivative financial instruments
(e.g. cross currency interest rate swaps) to hedge against
currency risk.
Since currency risks arising from the Group's investment
refinancing in foreign currencies and the respective hedging
transactions principally offset each other, these financial
instruments are not included in the value at risk calculation
presented.
Effects of currency translation. For purposes of Daimler's
consolidated financial statements, the income and expenses
and the assets and liabilities of subsidiaries located outside
the euro zone are converted into euros. Therefore, period-
to-period changes in average exchange rates may cause trans-
lation effects that have a significant impact on, for example,
revenue, segment result (EBIT) and assets and liabilities of the
Group. Unlike exchange rate transaction risk, exchange rate
translation risk does not necessarily affect future cash flows.
The Group's equity position reflects changes in book values
caused by exchange rates. In general Daimler does not hedge
against exchange rate translation risk.
Compared to the previous year, the value at risk of commodity
derivatives has increased. The main reasons for this
development were rising volatilities and for platinum an
increase in the nominal hedge volume.
Interest rate risk. Daimler uses a variety of interest rate
sensitive financial instruments to manage the liquidity needs
of its day-to-day operations. A substantial volume of
interest rate sensitive assets and liabilities results from the
leasing and sales financing business operated by the Daimler
Financial Services segment. The Daimler Financial Services
companies enter into transactions with customers that primarily
result in fixed-rate receivables. Daimler's general policy is to
match funding in terms of maturities and interest rates wherever
economically feasible. However, for a limited portion of
the receivables portfolio in selected and developed markets,
the Group does not match funding in terms of maturities
in order to take advantage of market opportunities. As a result,
Daimler is exposed to risks due to changes in interest rates.
In this regard, the Group is not exposed to any liquidity risks.
Derivative financial instruments are also used in conjunction
with the refinancing related to the industrial business.
Daimler coordinates the funding activities of the industrial
and financial services businesses at the Group level.
Table 7 E.86 shows the period-end, high, low and average
value at risk figures of the interest rate risk for the 2014
and 2013 portfolio of interest rate sensitive financial instruments
and derivative financial instruments of the Group, including
the derivative financial instruments of the leasing and sales
financing business. In this respect, the table shows the
interest rate risk regarding the unhedged position of interest
rate sensitive financial instruments. The average values
have been computed on an end-of-quarter basis.
In the course of 2014, changes of the value at risk for interest
rate sensitive financial instruments were primarily determined
by the development of interest rate volatilities.
262
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Commodity price risk. Daimler is exposed to the risk
of changes in commodity prices in connection with procuring
raw materials and manufacturing supplies used in production.
A small portion of the raw material price risk, primarily relating
to forecasted procurement of certain metals, is mitigated
with the use of derivative financial instruments.
For precious metals, central commodity management shows
an unhedged position of 32% of the forecasted commodity
purchases at year-end 2014 for calendar year 2015. The corre-
sponding figure at year-end 2013 was 27% for calendar year
2014.
An asset/liability committee consisting of members of the
Daimler Financial Services segment and the Corporate
Treasury department manages the interest rate risk relating
to Daimler's leasing and financing activities by setting
targets for the interest rate risk position. The Treasury Risk
Management department and the local Daimler Financial
Services companies are jointly responsible for achieving these
targets. As separate functions, the Daimler Financial Services
Risk Management and the Daimler Financial Services Control-
ling & Reporting department monitors target achievement
on a monthly basis. In order to achieve the targeted interest
rate risk positions in terms of maturities and interest rate
fixing periods, Daimler also uses derivative financial instruments
such as interest rate swaps. Daimler assesses its interest
rate risk position by comparing assets and liabilities for corre-
sponding maturities, including the impact of the relevant
derivative financial instruments.
Oriented towards the risk management standards of the
international banking industry, Daimler maintains its financial
controlling system independent of operating Corporate
Treasury and with a separate reporting line.
527
36
The Daimler Financial Services segment supports the sales
of the Group's vehicle segments worldwide. Its product
portfolio mainly comprises tailored financing and leasing pack-
ages for customers and dealers. The segment also provides
services such as insurance, fleet management, investment
products and credit cards, as well as various mobility services.
Management and reporting systems. The Group's manage-
ment reporting and controlling systems principally use
accounting policies that are the same as those described in
Note 1 in the summary of significant accounting policies
according to IFRS.
The Group measures the performance of its operating segments
through a measure of segment profit or loss which is referred
to as "EBIT" in our management and reporting system.
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income and expense, and our share of profit/
loss from equity-method investments, net, as well as other
financial income/expense, net. Although amortization of
capitalized borrowing costs is included in cost of sales, it is not
included in EBIT.
Intersegment revenue is generally recorded at values that
approximate third-party selling prices.
Segment assets principally comprise all assets. The industrial
business segments' assets exclude income tax assets, assets
from defined benefit pension plans and other post-employment
benefit plans, and certain financial assets (including liquidity).
Segment liabilities principally comprise all liabilities. The industrial
business segments' liabilities exclude income tax liabilities,
liabilities from defined benefit pension plans and other post-
employment benefit plans, and certain financial liabilities
(including financing liabilities).
Daimler Financial Services' performance is measured
on the basis of return on equity, which is the usual procedure
in the banking business.
The vehicle segments develop and manufacture passenger
cars and off-road vehicles, trucks, vans and buses. Mercedes-
Benz Cars sells passenger cars and off-road vehicles under
the Mercedes-Benz brand and small cars under the smart brand.
Daimler Trucks distributes its trucks under the brand names
Mercedes-Benz, Freightliner, FUSO, Western Star, Thomas Built
Buses and BharatBenz. The vans of the Mercedes-Benz Vans
segment are primarily sold under the brand name Mercedes-Benz
and also under the Freightliner brand. Daimler Buses sells
completely built-up buses under the brand names Mercedes-Benz
and Setra. In addition, Daimler Buses produces and sells bus
chassis. The vehicle segments also sell related spare parts and
accessories.
The residual value risks associated with the Group's operating
leases and finance lease receivables are generally borne by
the vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Financial Services; the terms vary
by vehicle segment and geographic region.
Capital expenditures for property, plant and equipment and
intangible assets reflect the cash effective additions to these
property, plant and equipment and intangible assets as far
as they do not relate to capitalized borrowing costs, goodwill
and finance leases.
Depreciation and amortization may also include impairments
as far as they do not relate to goodwill.
Amortization of capitalized borrowing costs is not included
in the amortization of intangible assets or depreciation
of property, plant and equipment since it is not considered
as part of EBIT.
264
The Group's targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally limited
by uncertainty related to cash flows that lie far in the future;
on the other hand, it may also be limited by the fact that appro-
priate currency contracts are not available. This reference
model aims to protect the Group from unfavorable movements
in exchange rates while preserving some flexibility to partici-
pate in favorable developments. Based on this reference model
and depending on the market outlook, the FXCo determines
the hedging horizon, which usually varies from one to three years,
as well as the average hedge ratios. Reflecting the character
of the underlying risks, the hedge ratios decrease with increasing
maturities. At year-end 2014, foreign exchange management
showed an unhedged position in the automotive business for the
underlying forecasted cash flows in US dollars in calendar
year 2015 of 21% and for the underlying forecasted cash flows
in British pounds in calendar year 2015 of 23%. The corre-
sponding figures at year-end 2013 for calendar year 2014 were
35% for US dollars and 26% for British pounds. The lower
unhedged US dollar position compared to the previous year
contributes to a lower exposure of cash flows to currency
risk with respect to the US dollar.
In order to mitigate the impact of currency exchange rate
fluctuations for the operating business (future transactions),
Daimler continually assesses its exposure to exchange rate
risks and hedges a portion of those risks by using derivative
financial instruments. Daimler's Foreign Exchange Committee
(FXCO) manages the Group's exchange rate risk and its hedging
transactions through currency derivatives. The FXCo consists
of representatives of the relevant segments and central functions.
The Corporate Treasury department aggregate foreign
currency exposures from Daimler's subsidiaries and operative
units and carries out the FXCo's decisions concerning foreign
currency hedging through transactions with international financial
institutions. Risk Controlling regularly informs the Board of
Management of the actions taken by Corporate Treasury based
on the FXCo's decisions.
Cash inflows and outflows of the business segments are offset
if they are denominated in the same currency. This means
that the exchange rate risk resulting from revenue generated
in a particular currency can be offset by costs in the same
currency, even if the revenue arises from a transaction indepen-
dent of that in which the costs are incurred. As a result,
only the net exposure is subject to transaction risk. In addition,
natural hedging opportunities exist to the extent that currency
exposures of the operating businesses of individual segments
offset each other at Group level, thereby reducing overall
currency exposure. These natural hedges eliminate the need
for hedging to the extent of the matched exposures. To provide
an additional natural hedge against any remaining transaction
risk exposure, Daimler generally strives to increase cash outflows
in the same currencies in which the Group has a net excess
inflow.
In the operating vehicle business, the Group's exchange rate risk
primarily arises when revenue is generated in a currency that
is different from the currency in which the costs of generating
the revenue are incurred (transaction risk). When the revenue
is converted into the currency in which the costs are incurred,
it may be inadequate to cover the costs if the value of the
currency in which the revenue is generated declined in the interim
relative to the value of the currency in which the costs were
incurred. This risk exposure primarily affects the Mercedes-Benz
Cars segment, which generates a major portion of its revenue
in foreign currencies and incurs manufacturing costs primarily
in euros. The Daimler Trucks segment is also subject to
transaction risk, but to a lesser extent because of its global
production network. The Mercedes-Benz Vans and Daimler
Buses segments are also directly exposed to transaction risk,
but only to a minor degree compared to the Mercedes-Benz
Cars and Daimler Trucks segments. In addition, the Group
is indirectly exposed to transaction risk from its equity-method
investments.
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
Interest rate risk
Reportable segments. The reportable segments of the
Group are Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans, Daimler Buses and Daimler Financial Services. The
segments are largely organized and managed separately accord-
ing to nature of products and services provided, brands,
distribution channels and profile of customers.
263
39
30
36
37
59
28
42
Commodity price risk
33. Segment reporting
(from derivative financial instruments)
38
25
25
32
24
38
24
32
38
Liquidity risk comprises the risk that a company cannot meet
its financial obligations in full.
Maturity
≤1 year
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
5,513
5,511
2
5,747
Cross currency interest rate swaps
Liquidity risk
5,803
2,246
3,557
4,776
thereof cash flow hedges
2,137
843
1,294
1,305
thereof fair value hedges
2,926
Forward exchange contracts
Nominal values
>1 year
Nominal values
39,559
86,826
Total nominal values of derivative financial instruments
1,059
thereof cash flow hedges
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Hedges of net investments in foreign operations. Daimler
also partially hedges the foreign currency risk of selected
investments with the application of derivative financial instru-
ments.
Nominal values of derivative financial instruments.
1,264
Table 7 E.83 shows the nominal values of derivative financial
instruments entered into for the purpose of hedging currency
risks, interest rate risks and commodity price risks that arise
from the Group's operating and/or financing activities.
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments are still
hedging financial risks from the operating business. A hedging
instrument is terminated if the hedged item no longer exists
or is no longer expected to occur.
Explanations of the hedging of exchange rate risks, interest
rate risks and commodity price risks can be found in Note 32
in the sub-item finance market risk.
E.83
Nominal values of derivative financial instruments
In millions of euros
Hedging of currency risks from receivables/liabilities
At December 31, 2014 At December 31, 2013
Maturity
Hedging transactions for which the effects from the measure-
ment of the hedging instrument and the underlying trans-
action to a large extent offset each other in the consolidated
statement of income mostly not classify for hedge accounting.
47,267
1,662
Hedging of currency risks from forecasted transactions
1,305
thereof cash flow hedges
1,389
801
659
1,460
Forward commodity contracts
Hedging of commodity price risks from forecasted transactions
22,775
3,837
29,656
26,797
750
23,208
5,087
897
4,176
27,384
1,647
31,884
thereof fair value hedges
540
765
Hedging of interest rate risks from receivables/liabilities
1,898
Forward exchange contracts and currency options
41,621
25,511
16,110
30,439
thereof cash flow hedges
39,873
23,813
2,541
16,060
Hedging of currency risks of net investments in foreign operations
Currency swaps
545
545
thereof hedging of net investments in foreign operations
545
545
1,898
29,525
73,905
Interest rate swaps
44,962
Liquid assets. Liquid assets consist of cash and cash equiva-
lents and marketable debt securities classified as available-
for-sale. With the investment of liquid assets, banks and issuers
of securities are selected very carefully and diversified in
accordance with a limit system. In the past years, the limit
methodology was continuously enhanced to counteract
the decline of the creditworthiness of the banking sector in
the course of the financial crisis. Additionally, liquid assets
are increasingly also held at financial institutions outside Europe
with high creditworthiness and as bonds issued by German
federal states. At the same time, the Group has increased the
number of financial institutions with which investments
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
256
The maximum risk positions of financial assets which are
generally subject to credit risk are equal to their carrying
amounts (without consideration of collateral, if available).
Table 7 E.84 shows the maximum risk positions.
Credit risk is the risk of economic loss arising from a counter-
party's failure to repay or service debt in accordance with
the contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditwor-
thiness as well as concentration risks.
Credit risk
Any market sensitive instruments including equity and debt
securities that the plan assets hold to finance pension and
other post-employment healthcare benefits are not included
in the following quantitative and qualitative analysis. See
Note 22 for additional information on Daimler's pension and
other post-employment benefits.
The Group manages and monitors these risks primarily through
its operating and financing activities and, if required, through
the use of derivative financial instruments. Daimler uses deriv-
ative financial instruments exclusively for hedging financial
risks that arise from its commercial business or refinancing
activities. Without these derivative financial instruments,
the Group would be exposed to higher financial risks (additional
information on financial instruments and especially on the
nominal values of the derivative financial instruments used is
included in Note 31). Daimler regularly evaluates its financial
risks with due consideration of changes in key economic indi-
cators and up-to-date market information.
Daimler has established guidelines for risk controlling procedures
and for the use of financial instruments, including a clear
segregation of duties with regard to financial activities, settle-
ment, accounting and the related controlling. The guidelines
upon which the Group's risk management processes for financial
risks are based are designed to identify and analyze these
risks throughout the Group, to set appropriate risk limits and
controls and to monitor the risks by means of reliable and
up-to-date administrative and information systems. The guide-
lines and systems are regularly reviewed and adjusted to
changes in markets and products.
2,136
are made. In connection with investment decisions, priority is
placed on the borrower's very high creditworthiness and
on balanced risk diversification. The limits and their utilizations
are reassessed continuously. In this assessment Daimler also
considers the credit risk assessment of its counterparties by the
capital markets. In line with the Group's risk policy, most
liquid assets are held in investments with an external rating
of "A" or better.
2,325
financial assets
Other receivables and
350
1,508
97
1,320
30
Loan commitments
16
(assets only)
not used in hedge accounting
Derivative financial instruments
16
1,703
Receivables from financial services. Daimler's financing
and leasing activities are primarily focused on supporting
the sales of the Group's automotive products. As a consequence
of these activities, the Group is exposed to credit risk, which
is monitored and managed based on defined standards, guide-
lines and procedures. Daimler Financial Services manages
its credit risk irrespective of whether it is related to a financing
contract or to an operating lease or a finance lease contract.
For this reason, statements concerning the credit risk of Daimler
Financial Services refer to the entire financing and leasing
business, unless specified otherwise.
In addition, the Daimler Financial Services segment is exposed
to credit risk from irrevocable loan commitments to retailers
and end customers. At December 31, 2014, irrevocable loan
commitments of Daimler Financial Services amounted to
€1,306 million (2013: €1,407 million), of which €772 million
had a maturity of less than one year (2013: €1,004 million),
€249 million had maturities between one and three years
(2013: €244 million), €172 million had maturities between
three and four years (2013: €83 million) and €113 million had
maturities between four and five years (2013: €76 million).
258
Other receivables and financial assets. With respect
to other receivables and financial assets in 2014 and 2013,
Daimler is exposed to credit risk only to a small extent.
Derivative financial instruments. The Group uses derivative
financial instruments exclusively for hedging financial risks
that arise from its commercial business or refinancing activities.
Daimler manages its credit risk exposure in connection
with derivative financial instruments through a limit system,
which is based on the review of each counterparty's financial
strength. This system limits and diversifies the credit risk.
As a result, Daimler is exposed to credit risk only to a small
extent with respect to its derivative financial instruments.
In accordance with the Group's risk policy, most derivatives
are contracted with counterparties which have an external
rating of "A" or better.
Further information on trade receivables and the status
of impairments recognized is provided in Note 19.
Appropriate provisions are recognized for the risks inherent
in trade receivables. For this purpose, all receivables are
regularly reviewed and impairments are recognized if there
is any objective indication of non-performance or other
contractual violations. In general, substantial individual receiv-
ables and receivables whose realizability is jeopardized are
assessed individually. In addition, taking country-specific risks
and any collateral into consideration, the other receivables
are grouped by similarity of contract and tested for impairment
collectively. One important factor for the definition of the
impairment to be recognized is the respective country risk.
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
first-class bank guarantees and
letters of credit.
credit insurances,
Depending on the creditworthiness of the general distribution
companies, Daimler usually establishes credit limits and limits
credit risks with the following types of collateral:
For trade receivables from export business, Daimler also
evaluates each general distribution company's creditworthiness
by means of an internal rating process and its country risk.
In this context, the year-end financial statements and other
relevant information on the general distribution companies
such as payment history are used and assessed.
Exposure to credit risk from financing and lease activities
is monitored based on the portfolio subject to credit risk.
The portfolio subject to credit risk is an internal control quantity
that consists of wholesale and retail receivables from financial
services and the portion of the operating lease portfolio that
is subject to credit risk. Receivables from financial services
comprise claims arising from finance lease contracts and
repayment claims from financing loans. The operating lease
portfolio is reported under equipment on operating leases
in the Group's consolidated financial statements. Overdue lease
payments from operating lease contracts are recognized
in trade receivables.
A significant part of the trade receivables from each country's
domestic business is secured by various country-specific
types of collateral. This collateral includes conditional sales,
guarantees and sureties as well as mortgages and cash
deposits. In order to prevent the credit risk Daimler assesses
the credit worthiness of the counterparties.
Further details on receivables from financial services and the
balance of the recorded impairments are provided in Note 14.
Impairment losses have remained at the favorable low level
of the previous year in a globally stable risk situation.
If, in connection with contracts, a worsening of payment behavior
or other causes of a need for impairment are recognized,
collection procedures are initiated by claims management
to obtain the overdue payments of the customer, to take
possession of the asset financed or leased or, alternatively,
to renegotiate the impaired contract. Restructuring policies
and practices are based on the indicators or criteria which, in
the judgment of local management, indicate that repayment
will probably continue and that the total proceeds expected
to be derived from the renegotiated contract exceed the
expected proceeds to be derived from repossession and
remarketing.
Within the framework of testing for impairment, existing
collateral is generally given due consideration. In that context,
any excess collateral of individual customers is not netted
off with insufficient collateral of other customers. The maximum
credit risk is limited by the fair value of collateral (e.g. financed
vehicles).
Loans and finance lease receivables related to retail or
small business customers are grouped into homogeneous pools
and collectively assessed for impairment. Impairments are
required for example if there are adverse changes in the payment
status of the borrowers included in the pool, adverse changes
in expected loss frequency and severity, and adverse changes
in economic conditions.
257
Significant loans and leases to corporate customers are tested
individually for impairment. An individual loan or lease is
considered impaired when there is objective evidence that the
Group will be unable to collect all amounts due as specified
by the contractual terms. Examples of objective evidence that
loans or lease receivables may be impaired include the
following factors: significant financial difficulty of the borrower,
a rising probability that the borrower will become bankrupt,
delinquency in his installment payments, and restructured or
renegotiated contracts to avoid immediate default.
Scoring systems are applied for the assessment of the default
risk of retail and small business customers. Corporate
customers are evaluated using internal rating instruments.
Both evaluation processes use external credit bureau
data if available. The scoring and rating results as well as the
availability of security and other risk mitigation instruments,
such as advance payments, guarantees and, to a lower extent,
residual debt insurances, are essential elements for credit
decisions.
With respect to its financing and lease activities, the Group
holds collateral for customer transactions. The value of
collateral generally depends on the amount of the financed
assets. The financed vehicles usually serve as collateral.
Furthermore, Daimler Financial Services mitigates the credit
risk from financing and lease activities, for example through
advance payments from customers.
The Daimler Financial Services segment has guidelines setting
the framework for effective risk management at a global as
well as at a local level. In particular, these rules deal with mini-
mum requirements for all risk-relevant credit processes,
the definition of financing products offered, the evaluation
of customer quality, requests for collateral as well as the
treatment of unsecured loans and non-performing claims.
The limitation of concentration risks is implemented primarily
by means of global limits, which refer to single customer
exposures. As of December 31, 2014, exposure to the biggest
15 customers did not exceed 4.0% (2013: 4.1%) of the total
portfolio.
Trade receivables. Trade receivables are mostly receivables
from worldwide sales activities of vehicles and spare parts.
The credit risk from trade receivables encompasses the default
risk of customers, e.g. dealers and general distribution
companies, as well as other corporate and private customers.
Daimler manages its credit risk from trade receivables
using appropriate IT applications and databases on the basis
of internal guidelines which have to be followed globally.
thereof cash flow hedges
1,296
(assets only)
Maximum risk positions of financial assets and loan commitments
E.84
As a result of its businesses and the global nature of its
operations, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An equity
price risk results from investments in listed companies
(including Nissan, Renault, BAIC Motor and Kamaz). In addition,
the Group is exposed to credit risks from its leasing and
financing activities and from its operating business (trade receiv-
ables). With regard to the leasing and financing activities,
credit risks arise from operating lease contracts, finance lease
contracts and financing contracts. Furthermore, the Group
is exposed to liquidity and country risks relating to its credit and
market risks or a deterioration of its operating business or
financial market disturbances. If these financial risks materialize,
they could adversely affect Daimler's profitability, liquidity
and capital resources and financial position.
General information on financial risks
32. Management of financial risks
255
In millions of euros
16
5,440
30,310
thereof fair value hedges
35,726
18,869
26,093
24,870
Maximum
25,316
Maximum
risk position
2013
See also risk position
Note
2014
Trade receivables
19
8,634
50,770
7,803
61,679
Derivative financial instruments
services
Receivables from financial
18,119
used in hedge accounting
16,301
Liquid assets
14
6,842
6,842
Dilutive effects on net profit
6,962
In millions of shares
of shares outstanding - diluted
1,069.8
1,068.8
0.3
1,069.8
1,069.1
269
36. Related party relationships
Related parties are deemed to be associated companies,
joint ventures, joint operations and unconsolidated subsidiaries,
as well as persons who exercise a significant influence on
the financial and business policy of the Daimler Group. The latter
category includes all persons in key positions and their close
family members. At the Daimler Group, those persons are the
members of the Board of Management and of the Supervisory
Board.
Most of the goods and services supplied within the ordinary
course of business between the Group and related parties
comprise transactions with associated companies, joint ventures
and joint operations, and are shown in table 7 E.92.
6,962
Remuneration granted to the members of the Board
Weighted average number
of shares outstanding - basic
Dilutive effect of stock options
Weighted average number
Profit attributable to shareholders
of Daimler AG - diluted
713
Significant transactions of goods and services also
took place with Rolls-Royce Power Systems AG (RRPS),
which is a subsidiary of RRPSH.
Joint operations
4
6
191
195
1651
134
1,9861
646
Joint ventures
12
16
569
726
54
25
28
48
225
37. Remuneration of the members of the Board
of Management and the Supervisory Board
of the Board of Management and of the Supervisory
Board is disclosed on an individual basis in the Remuneration
Report, which is part of the Management Report.
Management Report from page 118
Information regarding the remuneration of the members
The payments made in 2014 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €16.8 million (2013: €14.6 million). The pension provisions
for former members of the Board of Management and their
survivors amounted to €263.0 million as of December 31, 2014
(2013: €217.0 million).
No advance payments or loans were made to members of
the Board of Management or to the members of the Supervisory
Board of Daimler AG.
See Note 37 for information on the remuneration
of board members.
Board of Management and Supervisory Board members and
close family members of these board members may also
purchase goods and services from Daimler AG or its subsidiaries
as customers. When such business relationships exist, trans-
actions are concluded on the basis of customary market condi-
tions.
Board members. Throughout the world, the Group has
business relationships with numerous entities that are customers
and/or suppliers of the Group. Those customers and/or
suppliers include companies that have a connection with some
of the members of the Board of Management or of the Super-
visory Board and close family members of these board members
of Daimler AG or its subsidiaries.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
270
1 Includes transactions with BBAC until September 30, 2013
50
22
43
44
221
1,685
2,093
thereof BBAC
and other income
and services
and services
Purchases of goods
Sales of goods
Transactions with related parties
E.92
Contributions to plan assets. In 2014 and 2013, the Group
made contributions of €3,121 million and €560 million to
its external funds to cover pension and other post-employment
benefits. See also Note 22 for further information.
of the significant associated companies and joint ventures,
as well as significant transaction, in the year 2014.
Note 13 provides details of the business operations
Joint operations. Joint operations primarily relate to significant
business transactions with Beijing Mercedes-Benz Sales
Service Co., Ltd. (BMBS), which provides advisory and other
services relating to marketing, sales and distribution in
the Chinese market.
In connection with its 45% equity interest in Toll Collect GmbH,
Daimler has issued guarantees which are not shown in table
7 E.92 (€100 million at December 31, 2014 and €100 million
at December 31, 2013).
Until the end of March 2013, further significant sales and pur-
chases of goods and services were related to Mercedes-Benz
Österreich Vertriebsgesellschaft, which distributes vehicles
and spare parts of the Group. In March 2013, the remaining
shares of the entity were acquired together with other Pappas
Group entities.
Joint ventures. In the prior year, transactions with joint
ventures predominantly related to the business relationship
with BBAC (see information in the section on associated
companies). Furthermore, significant sales of goods and services
took place with Fujian Benz Automotive Co. Ltd. (FBAC) as
well as with Mercedes-Benz Trucks Vostok OOO and Fuso Kamaz
Trucks Rus Ltd., joint ventures established with Kamaz OAO,
another of the Group's associated companies.
The purchases of goods and services shown in table 7 E.92
were primarily from MBtech Group GmbH & Co. KGaA
(MBtech Group). MBtech Group develops, integrates and tests
components, systems, modules and vehicles worldwide.
and other expense
2014
In millions of euros
2013
61
65
764
417
316
1,184
2,433
Associated companies. A large proportion of the Group's sales
of goods and services with associated companies as well as
receivables results from business relations with Beijing Benz
Automotive Co., Ltd. (BBAC). In December 2013, the share-
holders of BBAC decided to pay a dividend, of which €101 million
is attributable to Daimler. The related receivable is included
in table 7 E.92. As described under Note 13, in the third quarter
of 2013, BAIC Motor increased its stake in the joint venture
BBAC by 1% to 51%. As a result of this transaction, Daimler's
equity interest in BBAC decreased to 49% and the Group
classified the investment in BBAC as an associated company;
the company had been accounted for as a joint venture
until the end of the third quarter of 2013.
Associated companies
2013
2014
2013
at December 31,
Payables
Receivables
2014
at December 31,
2014
2013
Profit attributable to shareholders
of Daimler AG - basic
100.00
2014
9,550
10,168
2,778
2,496
Asia
29,446
24,481
1,859
1,667
Other American countries
thereof China
10,705
79
41
Other countries
13,844
13,613
2,282
129,872
117,982
13,294
65,599
14,839
28,597
of Management and the Supervisory Board who were active
as of December 31, 2014, affected net profit for the year
ended December 31 as shown in table 71 E.93.
In millions of euros
Revenue
Non-current assets
2014
2013
2014
2013
Western Europe
18,161
43,722
40,519
38,371
thereof Germany
20,449
20,227
32,882
32,070
United States
33,310
41,123
1,954
59,327
268
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
7,154
6,607
Net assets of the segments
36,305
36,451
Equity method investments²
618
638
Assets and liabilities from income taxes³
Other corporate items and eliminations³
Net assets Daimler Group
Daimler Financial Services¹
2,700
1,156
1,080
40,779
40,648
1 Equity
2 Unless allocated to the segments
3 Industrial business
E.91
Earnings per share
In millions of euros
2,479
1,068
982
1,547
34. Capital management
"Net assets" and "value added” represent the basis for capital
management at Daimler. The assets and liabilities of the
segments in accordance with IFRS provide the basis for the
determination of net assets at Group level. The industrial
segments are accountable for the operational net assets; all
assets, liabilities and provisions which they are responsible
for in day-to-day operations are therefore allocated to them.
Performance measurement at Daimler Financial Services
is on an equity basis, in line with the usual practice in the
banking business. Net assets at Group level additionally
include assets and liabilities from income taxes as well as
other corporate items and eliminations.
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are
calculated as an average of the net assets at the beginning
and the end of the quarter and are shown in table 7 E.90.
The cost of capital of the Group's average net assets is reflected
in "value added." Value added shows the extent to which the
Group achieves or exceeds the minimum return requirements
of the shareholders and creditors, thus creating additional
value. The required rate of return on net assets, and thus the
cost of capital, are derived from the minimum rates of return
that investors expect on their invested capital. The Group's cost
of capital comprises the cost of equity as well as the costs
of debt and pension obligations of the industrial business;
in addition, the expected returns on liquidity and on the plan
assets of the pension funds of the industrial business are
considered with the opposite sign. In the reporting period, the
cost of capital used for our internal capital management
amounted to 8% after taxes.
The objective of capital management is to increase value added
among other things by optimizing the cost of capital. This is
achieved on the one hand by the management of the net assets,
for instance by optimizing working capital, which is within the
operational responsibility of the segments. In addition, taking
into account legal regulations, Daimler strives to optimize
the costs and risks of its capital structure and, consequently,
the cost of capital, with due consideration of applicable law.
Examples of this include a balanced relationship between equity
and financial liabilities as well as an appropriate level of
liquidity, oriented towards the operational requirements.
35. Earnings per share
The calculation of basic and diluted earnings per share
for net profit attributable to shareholders of Daimler AG
is shown in table 7 E.91.
E.90
Average net assets
In millions of euros
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
2014
2013
Mercedes-Benz Cars
17,114
16,658
9,313
10,571
1,742
2013
Expenses for variable remuneration with long-term incentive
effect, as shown in table 7 E.93, result from the ongoing
measurement at fair value at each balance sheet date of all
rights granted and not yet due under the Performance
Phantom Share Plans (PPSP). In the previous year, the stock
options granted in 2004 were measured at their intrinsic
value. These rights were fully exercised by the members of the
Board of Management in the year 2013. In 2014, the active
members of the Board of Management were granted 153,912
(2013: 251,359) phantom shares in connection with the
PPSP; the fair value of these phantom shares at the grant
date was €10.1 million (2013: €10.9 million). According to
Section 314 Subsection 1 Number 6a of the German Commercial
Code (HGB) the overall remuneration granted to the members
of the Board of Management, excluding service cost resulting
from entitlements to post-employment benefits, amounted
to €29.9 million (2013: €32.1 million). See Note 21 for additional
information on share-based payment of the members of
the Board of Management.
thereof KPMG AG
E.93
89,370
13
166,061
2,836
2,457
596
168,518
3,432
Segment liabilities
28,917
11,005
3,987
2,403
82,774
129,086
3,256
6
-3,931
Additions to non-current assets
11,110
1,960
1,196
384
8,301
22,951
70
23,021
thereof investments in
intangible assets
1,533
125,155
166
2
706
thereof profit/loss from
equity-method investments
-127
69
3
1
1
-53
3,398
3,345
thereof expenses from
compounding of provisions and
2,109
changes in discount rates
-20
-8
-3
-5
-93
-2
-95
Segment assets
46,752
21,105
5,578
thereof equity method investments
-57
10,815
189
38
1,376
1,376
thereof depreciation of property,
plant and equipment
1,972
784
151
72
14
2,993
-1
2,992
11
267
Reconciliation to Group figures
In millions of euros
2014
2013
3.397
1
10,815
Reconciliations. Reconciliations of the total segment
amounts to the respective items included in the consolidated
financial statements are shown in table 7 E.88.
Other corporate items in the reconciliation of the total segments'
profit to Group EBIT. In 2014, the line item other corporate items
comprises expenses of €600 million in connection with the
ongoing EU Commission antitrust proceedings concerning
European commercial vehicle manufacturers as well as further
expenses in connection with legal proceedings. This line
item also includes expenses of €212 million from the hedging
of the Tesla share price (2013: €0 million) and income of
€88 million from the sale of the Tesla shares (2013: €0 million),
as well as expenses of €118 million from the measurement
of the RRPSH put option (2013: €60 million). In the prior year,
a loss of €140 million was disclosed in connection with
the disposal of the remaining shares in EADS, which was
reported within other financial income/expense, net.
Revenue and non-current assets by region. Revenue
from external customers and non-current assets by region
are shown in table 7 E.89.
Total of segments' profit (EBIT)
E.88
6
23
65
1,932
1,932
thereof investments in property,
plant and equipment
3,710
839
288
76
19
4,932
43
4,975
65
Depreciation and amortization
3,857
1,457
375
200
2,824
8,713
35
8,748
thereof amortization
of intangible assets
961
316
of non-current assets
9,997
3,149
1,268
13
20
1,463
1,463
thereof investments in property,
plant and equipment
3,621
788
304
105
23
4,841
115
3
Depreciation and amortization
of non-current assets¹
4,562
1,435
452
225
3,368
10,042
15
10,057
thereof amortization
of intangible assets
4,844
thereof depreciation of property,
77
intangible assets
119
38
11
Beijing, PR China
187,042
1,616
2,593
678
189,635
2,294
Segment liabilities
34,811
12,131
4,349
2,622
1,238
97,837
-6,699
145,051
Additions to non-current assets
10,949
1,896
1,004
507
9,899
24,255
10
24,265
thereof investments in
151,750
7,666
plant and equipment¹
284
61,883
29,431
9,021
4,044
Intersegment revenue
2,424
2,042
348
61
Total revenue
64,307
31,473
External revenue
9,369
13,603
919
14,522
117,982
117,982
5,794
123,776
-5,794
-5,794
117,982
Segment profit (EBIT)
4,006
1,637
631
124
4,105
1,086
2013
ciliation dated Group
93
15
20
1,498
1,498
2,446
766
197
75
14
3,498
3
In millions of euros
3,501
266
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
Daimler
Buses
Daimler
Financial
Services
Total
Segments
Recon-
Consoli-
1 Includes impairments of property, plant and equipment of €93 million from the planned sale of selected sites of the Group's sales network, of which
€64 million relates to Mercedes-Benz Cars, €13 million to Daimler Trucks, €14 million to Mercedes-Benz Vans and €2 million to Daimler Buses.
7,666
Result from the disposal of the
investment in RRPSH
Prague, Czech Republic
100.00
Kobbegem-Asse, Belgium
100.00
Wiener Neudorf, Austria
EvoBus France S.A.S.
EvoBus Danmark A/S
EvoBus Ceská republika s.r.o.
EvoBus Belgium N.V.
EvoBus Austria GmbH
100.00
Coventry, United Kingdom
100.00
EvoBus (U.K.) Ltd.
Kloten, Switzerland
7,8
1,130
100.00
Stuttgart, Germany
7
100.00
Kirchheim unter Teck, Germany
100.00
San Juan Ixtacala, Mexico
100.00
Toluca, Mexico
100.00
11
Koege, Denmark
Sarcelles, France
Freightliner Holding Ltd.
Freightliner Custom Chassis Corporation
100.00
Vetlanda, Sweden
100.00
Mem Martins, Portugal
100.00
Wolica, Poland
EvoBus Sverige AB
EvoBus Portugal, S.A.
EvoBus Polska Sp. z o.o.
100.00
100.00
Nijkerk, Netherlands
100.00
Bomporto, Italy
100.00
Sámano, Spain
7,8
173
100.00
Kirchheim unter Teck, Germany
EvoBus Italia S.p.A.
EvoBus Ibérica, S.A.
EvoBus GmbH
100.00
EvoBus Nederland B.V.
Freightliner Ltd.
17
100.00
Ladson, USA
67.55
Hong Kong, PR China
115
599
100.00
Milton Keynes, United Kingdom
100.00
Farmington Hills, USA
100.00
Farmington Hills, USA
100.00
100.00
Farmington Hills, USA
100.00
Portland, USA
11
1,013
2,035
100.00
Portland, USA
100.00
Seoul, South Korea
11
15
60
100.00
60
Montvale, USA
Mexico City, Mexico
Detroit, USA
11
158
182
100.00
Detroit, USA
100.00
Farmington Hills, USA
100.00
Mexico City, Mexico
39
1,620
100.00
100.00
7,8
100.00
Berlin, Germany
7,8
3,697
100.00
Schönefeld, Germany
7,8
8,815
100.00
Stuttgart, Germany
100.00
Madrid, Spain
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 1 OHG
Gaffney, USA
Total of segments' assets
187,042
166,061
Carrying amount of
equity-method investments³
678
596
Income tax assets4
4,028
1,939
Unallocated financial assets
(including liquidity) and
10,139
assets from pensions and
13,886
14,560
Other corporate items and eliminations
-15,999
-14,638
Group assets
189,635
168,518
Total of segments' liabilities
Income tax liabilities4
151,750
129,086
similar obligations4
47
10,173
-884
1,006
Equity-method investments
Remeasurement of the
investment in Tesla
718
Remeasurement and sale of the
investment in EADS
Other income from
equity-method investments¹
Other corporate items
Eliminations
28
Profit before income taxes
-1,039
42
82
Group EBIT
10,752
Amortization of capitalized
borrowing costs²
-9
-4
Interest income
145
212
Interest expense
-715
-331
61
Unallocated financial liabilities
and liabilities from pensions and
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 3 OHG
7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
7
27
1,769
100.00
Schönefeld, Germany
100.00
11
62
100.00
Portland, USA
11
18
51
100.00
Calgary, Canada
11
70
35
100.00
-16
340
4
7
similar obligations4
Other corporate items and eliminations
Group liabilities
9,661
11,551
-16,407
-15,543
145,051
125,155
1 Mainly comprises the Group's proportionate share of profits and losses
of BAIC Motor.
2 Amortization of capitalized borrowing costs is not considered in the
internal performance measure "EBIT" but is included in cost of sales.
3 Mainly comprises the carrying amount of the investment in BAIC Motor.
4 Industrial business.
274
Alpha 6 OHG
7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 5 OHG
7
20
20
584
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 4 OHG
100.00
Singapore, Singapore
EvoBus (Schweiz) AG
EHG Elektroholding GmbH
São Paulo, Brazil
100.00
440
40
São Paulo, Brazil
100.00
Wilmington, USA
100.00
653
587
Milton Keynes, United Kingdom
100.00
100.00
São Bernardo do Campo, Brazil
Vancouver, Canada
100.00
Copenhagen, Denmark
100.00
Leinfelden-Echterdingen, Germany
100.00
6
-11
car2go Europe GmbH
Leinfelden-Echterdingen, Germany
75.00
72
100.00
-13
Atlantis Industria, Republic of South Africa
car2go Danmark A/S
Daimler Trucks. In January 2013, Daimler Trucks decided
on workforce adjustments in Germany and Brazil, which were
continued in 2014. Expenses recorded in this regard and
for the restructuring of the Group's sales organization amounted
to €165 million in 2014 (2013: €116 million). In 2014, the
optimization programs led to a cash outflow of €170 million
(2013: €50 million) (see also Note 5).
Mercedes-Benz Vans. In 2014, profit/loss from equity-
method investments for the segment Mercedes-Benz Vans
includes the reversal of an impairment on the investment
in FBAC of €61 million (2013: €0 million). In addition, the
restructuring of the Group's sales organization affected
Mercedes-Benz Vans by an amount of €17 million.
Daimler Buses. Expenses from the measures described
under Daimler Trucks and from the restructuring of the Group's
sales organization impacted Daimler Buses in 2014 with a
total amount of €14 million. In the previous year, the expenses
of €39 million included effects from the optimization programs
in Western Europe and North America (see also Note 5).
Daimler Financial Services. The interest income and interest
expenses of Daimler Financial Services are included in revenue
and cost of sales, and are presented in Notes 4 and 5.
Table 7 E.87 presents segment information as of and
for the years ended December 31, 2014 and 2013.
265
E.87
Segment information
Daimler
Mercedes-
Daimler
Mercedes-
car2go Deutschland GmbH
Daimler
Total
Recon-
Consoli-
Benz Cars
Trucks
Benz Vans
Buses
Services Segments
ciliation dated Group
Brooklands Estates Management Limited
Campo Largo Comercio de Veículos e Peças Ltda.
car2go Canada Ltd.
Financial
Mercedes-Benz Cars. In 2014, in the segment Mercedes-Benz
Cars the restructuring of the Group's sales organization had an
effect of €81 million (see also Note 5). Furthermore, the segment
profit of Mercedes-Benz Cars includes in profit/loss from
equity-method investments an impairment of €30 million
(2013: €174 million) on an investment in the area of alternative
drive systems.
car2go Italia S.R.L.
car2go Nederland B.V.
100.00
Farmington Hills, USA
100.00
Farmington Hills, USA
100.00
52.00
100.00
100.00
Oriskany, USA
100.00
Daimler Buses North America Ltd.
Daimler Buses North Carolina LLC
Farmington Hills, USA
Mississauga, Canada
Oriskany, USA
100.00
Daimler Canada Finance Inc.
Daimler Canada Investments Company
Daimler Capital Services LLC
Daimler Colombia S. A.
Daimler Export and Trade Finance GmbH
Daimler Finance North America LLC
Daimler Financial Services AG
Daimler Financial Services India Private Limited
Daimler Financial Services Japan Co., Ltd.
Daimler Financial Services México, S. de R.L. de C.V.
100.00
car2go N.A. LLC
100.00
7,8
car2go Österreich GmbH
car2go Sverige AB
car2go UK Ltd.
CARS Technik & Logistik GmbH
CLIDET NO 1048 (Proprietary) Limited
Conemaugh Hydroelectric Projects, Inc.
Coventry Lane Holdings, L.L.C.
DAF Investments, Ltd.
Daimler AC Leasing, d.o.o.
Daimler Australia/Pacific Pty. Ltd.
Daimler Automotive de Venezuela C.A.
Daimler Buses North America Inc.
Ljubljana, Slovenia
Melbourne, Australia
Valencia, Venezuela
Milan, Italy
Centurion, Republic of South Africa
100.00
100.00
21
-18
Utrecht, Netherlands
100.00
Vienna, Austria
100.00
Kista, Sweden
100.00
Milton Keynes, United Kingdom
Wiedemar, Germany
100.00
100.00
Wilmington, USA
Information related to geographic areas. With respect
to information about geographical regions, revenue is allocated
to countries based on the location of the customer; non-current
assets are presented according to the physical location of
these assets.
Reconciliation also includes corporate projects and equity
interests not allocated to the segments. If the Group hedges
investments in associated companies for strategic reasons,
the related financial assets and earnings effects are generally
not allocated to the segments.
The effects of certain legal proceedings are excluded from
the operative results and liabilities of the segments if such
items are not indicative of the segments' performance, since
their related results of operations may be distorted by the
amount and the irregular nature of such events. This may also
be the case for items that refer to more than one reportable
segment.
271
38. Principal accountant fees
The shareholders of Daimler AG elected KPMG AG Wirtschafts-
prüfungsgesellschaft as the external auditor at the Annual
Shareholders' Meeting held on April 9, 2014. The fees paid for
services provided by KPMG AG Wirtschaftsprüfungsgesell-
schaft and companies of the worldwide KPMG group are shown
in table E.94.
The annual audit fees are for the audit of the consolidated
financial statements and the company financial statements
of Daimler AG and all subsidiaries included in the Group's
consolidated financial statements. Fees for other attestation
services include in particular the review of the interim IFRS
financial statements (2014: €5 million; 2013: €5 million) and
fees relating to the audit of the internal control system
(2014: €3 million; 2013: €3 million). The remaining fees primar-
ily relate to project-related reviews performed in the context
of the introduction of IT systems, attestation services in connec-
tion with capital market actions, other assurance services
and, to a small extent, voluntary audits.
E.94
Accountant fees
In millions of euros
Audit of financial statements
Mississauga, Canada
Wirtschaftsprüfungsgesellschaft
2014
2013
67.9
24
24
10
10
2
2
10
10
Other attestation services
14
13
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
24
Tax consulting
47.3
3.6
Remuneration of the members of the Board of Management
and the Supervisory Board
In millions of euros
Remuneration granted to the members
of the Board of Management
Fixed remuneration
Short-term variable remuneration
2014
2013
8.2
9.1
5.8
6.1
6.2
3.0
6.6
Variable remuneration with
a long-term incentive effect
20.7
40.6
Post-employment benefits (service cost)
2.8
2.5
Termination benefits
43.7
64.9
Remuneration granted to the members
of the Supervisory Board
Mid-term variable remuneration
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
1
for the year ended December 31, 2013.
3 Based on national consolidated financial statements
for the year ended March 31, 2014.
586
2,896
4 Excluding non-controlling interests.
272
E.96
Statement of investments of Daimler AG
Name of the Company
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Domicile, Country
1 As of December 31, 2014.
Capital
share
Net income Footnote
in %1
in millions
of €
(loss) in
millions of €
I. Consolidated subsidiaries
Atlantis Foundries (Pty.) Ltd.
Banco Mercedes-Benz do Brasil S.A.
Belerofonte Empreendimentos Imobiliários Ltda.
BlackStar InvestCo LLC
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Reconciliation. Reconciliation includes corporate items
for which headquarters are responsible. Transactions between
the segments are eliminated in the context of consolidation
and the eliminated amounts are included in the reconciliation.
Equity
Net profit in millions of euros4
2 Based on IFRS consolidated financial statements
30,464
2
Other services
4
3
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
E.95
Third-party companies
Name of the company
4
2
44
42
Nissan Motor
Renault SA² Company Ltd.³
The Audit Committee of the Supervisory Board of Daimler AG
prepares a recommendation each year on the election of
the auditor it has classified as independent. The independent
auditor is then elected by the Annual Shareholders' Meeting
of Daimler AG on the basis of the recommendation of the Super-
visory Board. After the external auditor is appointed by the
Supervisory Board of Daimler AG, the Audit Committee approves
the conditions, scope and fees for the audit services, the
review of the interim consolidated financial statements and
the audit of the internal control system.
For all other permissible attestation services and other
services (so-called non-audit services), the Audit Committee
has implemented an approval process to monitor the inde-
pendence of the external auditor, which regulates the principles
and procedures of an advance approval of non-audit services
by means of a clearly defined catalogue of services.
39. Additional information
German Corporate Governance Code. The Board of
Management and the Supervisory Board of Daimler AG have
issued a declaration pursuant to Section 161 of the
German Stock Corporation Act (AktG) and have made it perma-
nent available to their shareholders on Daimler's website at
http://www.daimler.com/company/corporate-
governance/company-declarations/declaration-to-161-aktg.
Third-party companies. At December 31, 2014, the Group
was a shareholder of the companies included in table 7 E.95
that meet the criteria of a significant third-party company
as defined by the German Corporate Governance Code.
Information on investments. The statement of investments
of Daimler AG pursuant to Sections 285 and 313 of the
German Commercial Code (HGB) is presented in table 7 E.96.
Information on equity and earnings and information on
investments pursuant to Section 285 No. 11 fourth part of the
Sentence and/or Section 313 Subsection 2 No. 4 Sentence 2
of the HGB is omitted pursuant to Section 286 Subsection 3
Sentence 1 No. 1 and/or Section 313 Subsection 2 No. 4
Sentence 3 of the HGB to the extent that such information is
of minor relevance for a fair presentation of the profitability,
liquidity and capital resources and financial position of Daimler
AG. In addition, the statement of investments (footnote 7)
indicates which consolidated companies make use of the exemp-
tion pursuant to Section 264 Subsection 3 and/or Section
264b of the HGB. The consolidated financial statements
of Daimler AG release those subsidiaries from the requirements
that would otherwise apply.
Boulogne-Billancourt,
Headquarters of the company
Equity interest in %1
France
3.1
Tokyo,
Japan
3.1
Total equity in millions of euros4
22,837
Daimler Financial Services, S.A. de C.V., S.O.F.O.M., E.N.R.
The members of the Supervisory Board are solely granted
short-term benefits for their board and committee activities,
except for remuneration and other benefits paid to those
members representing the employees in accordance with their
contracts of employment. No remuneration was paid for
services provided personally beyond board and committee
activities, in particular for advisory or agency services,
in 2014 or 2013.
Daimler Fleet Management GmbH
Daimler Fleet Management South Africa (Pty.) Ltd.
3,445
7,8
Mexico City, Mexico
100.00
Mexico City, Mexico
100.00
387
56
11
Farmington Hills, USA
100.00
Daimler Nederland B.V.
100.00
Utrecht, Netherlands
833
3
11
273
Name of the Company
Domicile, Country
Capital
share
Equity
Net income
Footnote
in millions
(loss) in
100.00
in %¹
11
15,163
100.00
177
-164
12
Farmington Hills, USA
100.00
Stuttgart, Germany
100.00
7,8
Daimler Insurance Services Japan Co., Ltd.
Tokyo, Japan
100.00
-54
Daimler Insurance Services UK Limited
100.00
Daimler International Finance B.V.
Utrecht, Netherlands
100.00
27
-10
10
Daimler Investments US Corporation
Daimler Luft- und Raumfahrt Holding AG
Daimler Manufactura, S. de R.L. de C.V.
Daimler Mexico, S.A. de C.V.
Daimler Motors Investments LLC
Montvale, USA
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
Chennai, India
of €
Daimler North America Corporation
7,8
Farmington Hills, USA
100.00
DAIMLER SERVICIOS CORPORATIVOS MEXICO
Mexico City, Mexico
100.00
S. DE R.L. DE C.V.
Daimler South East Asia Pte. Ltd.
Daimler Trucks and Buses (China) Ltd.
Daimler Trucks Canada Ltd.
Daimler Trucks Korea Ltd.
Daimler Trucks North America LLC
100.00
Daimler Trucks Remarketing Corporation
Daimler Trust Leasing Conduit LLC
Daimler Trust Leasing LLC
Daimler UK Limited
Daimler Vans Hong Kong Limited
Daimler Vans Manufacturing, LLC
Daimler Vans USA, LLC
Daimler Vehículos Comerciales Mexico S. de R.L. de C.V.
Daimler Vermögens- und Beteiligungsgesellschaft mbH
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Daimler Vorsorge und Versicherungsdienst GmbH
Daimspain S.L.
Daiprodco Mexico S. de R.L. de C.V.
DCS UTI LLC, Mercedes Series
Detroit Diesel Corporation
Detroit Diesel Remanufacturing LLC
Detroit Diesel Remanufacturing Mexicana, S. de R.L. de C.V.
Detroit Diesel-Allison de Mexico, S. de R.L. de C.V.
Deutsche Accumotive GmbH & Co. KG
Daimler Trust Holdings LLC
millions of €
Berlin, Germany
Luxembourg, Luxembourg
Daimler North America Finance Corporation
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Daimler Parts Brand GmbH
Daimler Re Brokers GmbH
Daimler Re Insurance S.A. Luxembourg
Daimler Real Estate GmbH
Daimler Retail Receivables LLC
Beijing, PR China
Montvale, USA
Newark, USA
100.00
5,308
827
100.00
11
36,917
342
11
100.00
85
20
Stuttgart, Germany
100.00
7,8
Bremen, Germany
74.90
7,8
100.00
245
889
100.00
1,076
15,991
6,278
-6,278
136,150
-6,278
129,872
Segment profit (EBIT)
5,853
1,878
682
197
1,387
4,218
9,997
10,752
thereof profit/loss from
equity-method investments
103
-1
63
1
-15
151
746
897
thereof expenses from
755
compounding of provisions and
9,968
73,584
Daimler Fleet Management UK Limited
Mexico City, Mexico
Mexico City, Mexico
Montreal, Canada
100.00
203
11
Halifax, Canada
100.00
Farmington Hills, USA
100.00
Bogota D.C., Colombia
32,389
In millions of euros
External revenue
70,899
30,302
9,601
Intersegment revenue
2,685
2,087
367
4,155
63
14,915
129,872
129,872
2014
changes in discount rates
-247
-70
11
10
100.00
100.00
Stuttgart, Germany
100.00
1
7, 8, 10
Singapore, Singapore
100.00
Centurion, Republic of South Africa
65.00
55
29
Milton Keynes, United Kingdom
100.00
Daimler Fleet Services A.S.
Daimler FleetBoard GmbH
Istanbul, Turkey
100.00
Daimler Greater China Ltd.
Daimler India Commercial Vehicles Private Limited
Daimler Insurance Agency LLC
Daimler Insurance Services GmbH
Stuttgart, Germany
Beijing, PR China
100.00
7,8
10
100.00
Kawasaki, Japan
100.00
-20
-11
-4
-352
-1
-353
Segment assets
51,950
thereof equity method investments
936
20,181
545
5,895
97
3,562
105,454
8
30
100.00
Berlin, Germany
100.00
7,8
Wilmington, USA
100.00
Stuttgart, Germany
100.00
1,715
7, 8, 10
Chennai, India
Daimler Fleet Management Singapore Pte. Ltd.
Total revenue
E.89
Revenue and non-current assets by region
100.00
Madrid, Spain
100.00
Centurion, Republic of South Africa
100.00
Rome, Italy
100.00
Bucharest, Romania
100.00
Mercedes-Benz Russia SAO
Moscow, Russian Federation
100.00
169
21
10
Mercedes-Benz Schweiz AG
Mercedes-Benz Service Leasing SRL
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Services Malaysia Sdn Bhd
22
Mercedes-Benz Servizi Assicurativi Italia S.p.A.
98
Milton Keynes, United Kingdom
Warsaw, Poland
100.00
51
17
Mem Martins, Portugal
100.00
88
19
Mercedes-Benz Renting, S.A.
Mercedes-Benz Research & Development North America, Inc.
Mercedes-Benz Retail Group UK Limited
Mercedes-Benz Retail, S.A.
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Romania S.R.L.
Alcobendas, Spain
100.00
Sunnyvale, USA
100.00
100.00
Bucharest, Romania
Alcobendas, Spain
Petaling Jaya, Malaysia
39
10
Mercedes-Benz Taiwan Ltd.
Mercedes-Benz Technical Center Nederland B.V.
Mercedes-Benz Türk A.S.
Mercedes-Benz U.S. International, Inc.
Taipei, Taiwan
51.00
118
61
Nijkerk, Netherlands
Istanbul, Turkey
Vance, USA
100.00
66.91
930
244
11
100.00
163
100.00
100.00
Malmö, Sweden
38
Rome, Italy
Schlieren, Switzerland
100.00
157
62
100.00
100.00
100.00
100.00
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
Istanbul, Turkey
100.00
Mercedes-Benz Sosnowiec Sp. z o.o.
Sosnowiec, Poland
100.00
Mercedes-Benz South Africa Ltd
Pretoria, Republic of South Africa
100.00
652
Mercedes-Benz Sverige AB
Le Port-Marly, France
Mercedes-Benz Portugal, S.A.
Mercedes-Benz Polska Sp. z.0.0
Milton Keynes, United Kingdom
100.00
100.00
Taipei, Taiwan
100.00
Stuttgart, Germany
100.00
7,8
Ludwigsfelde, Germany
100.00
14
7,8
Luxembourg, Luxembourg
90.00
Lyon, France
100.00
Kuala Lumpur, Malaysia
51.00
32
Mercedes-Benz Financial Services UK Limited
43
100.00
18
100.00
Mercedes-Benz Financial Services Rus 000
Mercedes-Benz Financial Services Schweiz AG
Mercedes-Benz Financial Services Singapore Ltd.
Moscow, Russian Federation
100.00
Schlieren, Switzerland
100.00
72
14
Singapore, Singapore
85.00
Mercedes-Benz Financial Services Slovakia s.r.o.
Mercedes-Benz Financial Services South Africa (Pty) Ltd
Mercedes-Benz Financial Services Taiwan Ltd.
Bratislava, Slovakia
75.00
Centurion, Republic of South Africa
100.00
119
Taipei, Taiwan
38
New York, USA
Bangkok, Thailand
7,8
7,8
Molsheim, France
100.00
Mercedes-Benz Nederland B.V.
Mercedes-Benz New Zealand Ltd
Utrecht, Netherlands
100.00
179
11
10
Auckland, New Zealand
100.00
34
11
Mercedes-Benz Ninove N.V.
Ninove, Belgium
100.00
Mercedes-Benz Paris SAS
100.00
100.00
Stuttgart, Germany
Dortmund, Germany
100.00
Kecskemét, Hungary
100.00
229
64
11
Wilmington, USA
0.00
4
Mexico City, Mexico
100.00
15
12
Mercedes-Benz Milano S.p.A.
Milan, Italy
100.00
Mercedes-Benz Minibus GmbH
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
Mercedes-Benz Molsheim S.A.S.
100.00
11
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Warsaw, Poland
Tramagal, Portugal
100.00
Leinfelden-Echterdingen, Germany
100.00
12
7,8
Farmington Hills, USA
100.00
100.00
Jacksonville, USA
Barcelona, Spain
100.00
Erembodegem, Belgium
100.00
Mechelen, Belgium
100.00
Kirchheim unter Teck, Germany
100.00
100.00
Logan Township, USA
10
218
Ho Chi Minh City, Vietnam
70.00
42
12
Warsaw, Poland
100.00
Waterloo, Belgium
100.00
Wavre, Belgium
100.00
Wemmel, Belgium
100.00
Farmington Hills, USA
100.00
Toronto, Canada
100.00
Kawasaki, Japan
89.29
614
Paris, France
Detroit, USA
100.00
100.00
-
7,8
São Bernardo do Campo, Brazil
100.00
301
3
Portland, USA
100.00
-538
-2
11
100.00
Prague, Czech Republic
100.00
Wiesbaden, Germany
Woodstock, Canada
100.00
7,8
100.00
100.00
100.00
Berlin, Germany
30
100.00
100.00
100.00
Austin, USA
100.00
Bryanston, Republic of South Africa
62.62
Portland, USA
100.00
Mississauga, Canada
100.00
Oriskany, USA
100.00
Luxembourg, Luxembourg
0.00
4
Hambach, France
100.00
53
11
Fenouillet, France
100.00
Herblay, France
(loss) in
in %1
of €
millions of €
Mercedes-Benz V.I. Toulouse SAS
Mercedes-Benz Vietnam Ltd.
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz Waterloo S.A.
Mercedes-Benz Wavre S.A.
Mercedes-Benz Wemmel N.V.
Mercedes-Benz Wholesale Receivables LLC
MFTA Canada, Inc.
Mitsubishi Fuso Truck and Bus Corporation
Mitsubishi Fuso Truck of America, Inc.
MITSUBISHI TRUCKS EUROPE -
Sociedade Europeia de Automóveis, S.A.
moovel GmbH
Multistate LIHTC Holdings III Limited Partnership
MVSA COMPANY, INC.
in millions
myTaxi Iberia SL
Net income
Capital
share
100.00
Mercedes-Benz UK Limited
Milton Keynes, United Kingdom
100.00
213
-20
Mercedes-Benz USA, LLC
Montvale, USA
100.00
236
196
=
11
277
Name of the Company
Mercedes-Benz V.I. Lille SAS
Mercedes-Benz V.I. Lyon SAS
Mercedes-Benz V.I. Paris Ile de France SAS
Domicile, Country
Equity
Mem Martins, Portugal
N.V. Mercedes-Benz Aalst
NuCellSys GmbH
Thomas Built Buses of Canada Limited
Thomas Built Buses, Inc.
Tróia Empreendimentos Imobiliários Ltda
Trona Cogeneration Corporation
Western Star Trucks Sales, Inc
3218095 Nova Scotia Company
6353 Sunset Boulevard, Inc.
II. Unconsolidated subsidiaries²
AEG do Brasil Produtos Eletricos e Eletronicos Ltda.
AEG Olympia Office GmbH
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Automotive Training & Consulting GmbH
Brefa Bremsen- und Fahrzeugdienst AG (in Liquidation)
Cúspide GmbH
Daimler AG & Co. Anlagenverwaltung OHG
Daimler Culture Development Co., Ltd.
Daimler Financial Services UK Trustees Ltd.
Daimler FleetBoard UK Ltd.
Daimler Group Services Berlin GmbH
278
Footnote
Vendeville, France
Genas, France
100.00
100.00
Taunus-Auto-Verkaufs GmbH
N.V. Mercedes-Benz Mechelen
Sumperská správa majetku k.s.
Sterling Truck Corporation
ogotrac S.A.S.
Outer Drive Holdings LLC
P.T. Mercedes-Benz Distribution Indonesia
P.T. Mercedes-Benz Indonesia
P.T. Star Engines Indonesia
Renting del Pacífico S.A.C.
RideScout LLC
Sandown Motor Holdings (Pty) Ltd
SelecTrucks of America LLC
Jakarta, Indonesia
Bogor, Indonesia
Bogor, Indonesia
Lima, Peru
SelecTrucks of Toronto, Inc.
Setra of North America, Inc.
Silver Arrow S.A.
smart France S.A.S.
smart Vertriebs gmbh
Starexport Trading S.A.
Suffolk Leasing, Inc.
100.00
Auckland, New Zealand
11
Mercedes-Benz (Yangzhou) Parts Distribution Co., Ltd.
Yangzhou, PR China
100.00
Mercedes-Benz Accessories GmbH
Stuttgart, Germany
100.00
5
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekt Franken KG
103
Schönefeld, Germany
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekt Germersheim Betriebsvorrichtungen OHG
Schönefeld, Germany
99.00
7,8
4,9
4, 6, 9
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekt Germersheim KG
Schönefeld, Germany
90.00
171
100.00
Bangkok, Thailand
100.00
7,8
Mercedes AMG High Performance Powertrains Ltd
Mercedes-AMG GmbH
Brixworth, United Kingdom
100.00
106
11
Affalterbach, Germany
100.00
21
7,8
Mercedes-Benz - Aluguer de Veículos, Unipessoal Lda.
Mercedes-Benz (China) Ltd.
Mem Martins, Portugal
100.00
Beijing, PR China
75.00
1,920
1,501
Mercedes-Benz (Thailand) Limited
99.00
4,6
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekt Südwest KG
Schönefeld, Germany
Mercedes-Benz Asia GmbH
Stuttgart, Germany
100.00
7,8
Mercedes-Benz Australia/Pacific Pty Ltd
Melbourne, Australia
100.00
395
51
11
Mercedes-Benz Auto Finance Ltd.
Beijing, PR China
100.00
475
36
Mercedes-Benz Auto Lease Trust 2013-A
Mercedes-Benz Auto Lease Trust 2013-B
Wilmington, USA
0.00
10
Arnstadt, Germany
66
100.00
99.00
4,6
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekte Baden-Baden und Dresden OHG
Düsseldorf, Germany
100.00
4,9
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekte Leipzig und Magdeburg KG
Düsseldorf, Germany
100.00
4
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekt Rhein-Main OHG
Schönefeld, Germany
90.00
4
Mercedes-Benz Antwerpen N.V.
Antwerp, Belgium
100.00
Mercedes-Benz Argentina S.A.
Buenos Aires, Argentina
182
MDC Technology GmbH
7,8
8
Schönefeld, Germany
100.00
325
1
7
Epsilon OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
1,002
2
7
Gamma 1 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
7
Gamma 2 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
Delta OHG
1
Name of the Company
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Domicile, Country
Capital
share
in %1
Equity
in millions
of €
Net income Footnote
(loss) in
millions of €
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
271
1
7
Beta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
420
7
4
100.00
Gamma 3 OHG
Hamburg, Germany
100.00
Farmington Hills, USA
100.00
São Paulo, Brazil
100.00
Zwartkop, Republic of South Africa
100.00
Kamenz, Germany
100.00
7,8
Mississauga, Canada
100.00
Stuttgart, Germany
100.00
7,8
MDC Power GmbH
Kölleda, Germany
100.00
7,8
7
100.00
MBV Projektmanagement AG
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co.
Schönefeld, Germany
100.00
145
15
7,9
OHG
Grundstücksverwaltungsgesellschaft Henne-Unimog
Schönefeld, Germany
100.00
7
GmbH & Co. OHG
Henne-Unimog GmbH
Intelligent Apps GmbH
Intrepid Insurance Company
Invema Assessoria Empresarial Ltda
Koppieview Property (Pty) Ltd
Li-Tec Battery GmbH
MBarc Credit Canada Inc.
Kirchheim-Heimstetten, Germany
Wilmington, USA
0.00
4
Mercedes-Benz Drogenbos N.V.
Mercedes-Benz Espana, S.A.
São Bernardo do Campo, Brazil
100.00
786
-155
Drogenbos, Belgium
100.00
Alcobendas, Spain
99.96
402
60
Mercedes-Benz Finance China Ltd.
Mercedes-Benz Finance Co., Ltd.
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Financial Services Hellas Vehicle
Sales and Rental SA
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services Italia SpA
Mercedes-Benz Financial Services Korea Ltd.
Mercedes-Benz Financial Services Nederland B.V.
Mercedes-Benz Financial Services New Zealand Ltd
Mercedes-Benz do Brasil Ltda.
Mercedes-Benz Financial Services Portugal -
Instituição Financeira de Crédito S.A.
100.00
100.00
Mercedes-Benz CPH A/S
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Mercedes-Benz Danmark A/S
Mercedes-Benz Dealer Bedrijven B.V.
Mercedes-Benz Desarrollo de Mercados, S. de R.L. de C.V.
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
São Paulo, Brazil
99.98
Villeneuve-Loubet, France
100.00
Horsholm, Denmark
100.00
Budapest, Hungary
100.00
Copenhagen, Denmark
100.00
The Hague, Netherlands
100.00
Mexico City, Mexico
São Paulo, Brazil
Mercedes-Benz Corretora de Seguros Ltda
Mercedes-Benz Côte d'Azur SAS
Hong Kong, PR China
Tokyo, Japan
Montigny-le-Bretonneux, France
100.00
234
15
Kifissia, Greece
100.00
Hong Kong, PR China
80.00
Rome, Italy
100.00
Seoul, South Korea
80.00
107
13
10
Utrecht, Netherlands
100.00
72
21
100.00
100.00
Alcobendas, Spain
64
90.00
144
18
Melbourne, Australia
100.00
134
28
11
Salzburg, Austria
100.00
Brussels, Belgium
100.00
Mississauga, Canada
100.00
184
63
11
Prague, Czech Republic
100.00
13
High Point, USA
100.00
Mercedes-Benz Compañía Financiera Argentina S.A.
100.00
90
17
10
Berlin, Germany
100.00
Saarbrücken, Germany
100.00
7,8
275
Name of the Company
Domicile, Country
Capital
Equity
Net income
share
in millions
(loss) in
in %¹
Moscow, Russian Federation
of €
100.00
8, 10
Mercedes-Benz Auto Lease Trust 2014-A
Mercedes-Benz Auto Receivables Trust 2012-1
Mercedes-Benz Auto Receivables Trust 2013-1
Mercedes-Benz Auto Receivables Trust 2014-1
Mercedes-Benz Bank AG
Mercedes-Benz Bank Polska S.A.
Mercedes-Benz Bank Rus 000
Mercedes-Benz Bank Service Center GmbH
Mercedes-Benz Banking Service GmbH
Wilmington, USA
0.00
4
Wilmington, USA
0.00
4
Wilmington, USA
0.00
4
Wilmington, USA
0.00
4
Stuttgart, Germany
100.00
1,416
Warsaw, Poland
Buenos Aires, Argentina
millions of €
Mercedes-Benz Belgium Luxembourg S.A.
Prague, Czech Republic
Alcobendas, Spain
Berlin, Germany
Moscow, Russian Federation
100.00
100.00
100.00
100.00
1
7, 8, 10
Mercedes-Benz CharterWay S.A.S.
Le Chesnay, France
100.00
Mercedes-Benz CharterWay S.r.l.
Trento, Italy
100.00
Mercedes-Benz Comercial, Unipessoal Lda.
Mem Martins, Portugal
100.00
Gesellschaft mit beschränkter Haftung
Footnote
Mercedes-Benz CharterWay
Mercedes-Benz Ceská republika s.r.o.
Mercedes-Benz Bordeaux S.A.S.
Brussels, Belgium
100.00
93
23
Begles, France
100.00
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Budapest, Hungary
100.00
Mercedes-Benz Brooklands Limited
Milton Keynes, United Kingdom
100.00
Mercedes-Benz Canada Inc.
Toronto, Canada
100.00
27
59
Mercedes-Benz Capital Rus 000
Mercedes-Benz CharterWay España, S.A.
100.00
Farmington Hills, USA
29
Equity
Net income Footnote
in millions
in %1
of €
(loss) in
millions of €
Esslingen am Neckar, Germany
26.57
Berlin, Germany
20.00
Budapest, Hungary
33.33
San Francisco, USA
18.15
Berlin, Germany
18.37
Berlin, Germany
Capital
share
20.00
Toyo Kotsu Co., Ltd.
STARCAM s.r.o.
Gottapark, Inc.
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
INPRO Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH
Institut für angewandte Systemtechnik Bremen GmbH
Juffali Industrial Products Company
Lackzentrum Bielefeld GmbH
Laureus World Sports Awards Limited
MBtech Verwaltungs-GmbH
Mercedes-Benz Buses Central Asia GmbH
Mercedes-Benz Lackzentrum Dresden GmbH
Mercedes-Benz Starmark I/S
MFTB Taiwan Co., Ltd.
Motor Coach Holdings, LP
National Automobile Industry Company Ltd.
Omuta Unso Co., Ltd.
PDB - Partnership for Dummy Technology and
Biomechanics GbR
Reva SAS
Vejle, Denmark
Taipei, Taiwan
smart-BRABUS GmbH
tiramizoo GmbH
Bremen, Germany
26.25
Jeddah, Saudi Arabia
9
Cunac, France
34.00
Bottrop, Germany
50.00
Most, Czech Republic
51.00
Munich, Germany
13.86
Sannoseki, Japan
28.20
1 Share pursuant to Section 16 of the German Stock Corporation Act (AktG)
2 As the impact of these companies is not material for the consolidated financial statements,
they are not consolidated and not accounted for using the equity method.
3 Joint control due to economic circumstances
4 Control due to economic circumstances
5 Control of the investment of the assets. No consolidation of the assets due to the contractual situation
6 In liquidation
20.00
Ingolstadt, Germany
33.51
Omuta, Japan
0.00
3
Bielefeld, Germany
33.33
London, United Kingdom
50.00
Sindelfingen, Germany
35.00
EvoBus Hungária Kereskedelmi Kft.
Stuttgart, Germany
Dresden, Germany
36.00
50.00
33.40
New York, USA
10.00
Jeddah, Saudi Arabia
26.00
50.00
European Center for Information and Communication
Technologies - EICT GmbH
Esslinger Wohnungsbau GmbH
Domicile, Country
Beijing, PR China
10.08
Beijing Benz Automotive Co., Ltd.
Beijing, PR China
49.00
1,895
310
11
Blacklane GmbH
Berlin, Germany
63
FlixBus GmbH
Munich, Germany
5.68
FUSO LAND TRANSPORT Co.Ltd.
Kawasaki, Japan
21.67
BAIC Motor Corporation Ltd.
VI. Associated companies accounted for using the equity method
13
-129
Council Bluffs, USA
50.00
Shenzhen BYD Daimler New Technology Co., Ltd.
Shenzhen, PR China
50.00
193
-10
10
KAMAZ OAO
TASIAP GmbH
60.00
Toll Collect GbR
Berlin, Germany
45.00
Toll Collect GmbH
Berlin, Germany
45.00
490
Stuttgart, Germany
7 Qualification for Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB)
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
MV Agusta Motor S.p.A.
Burnaby, Canada
25.00
9
33.00
Beijing, PR China
51.00
carpooling.com GmbH
COBUS Industries GmbH
Egyptian-German Automotive Co. (EGA) S.A.E.
Munich, Germany
Wiesbaden, Germany
37.32
40.82
6th of October City, Egypt
26.00
280
Name of the Company
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Weissach, Germany
Beijing Mercedes-Benz Sales Service Co., Ltd.
BDF IP Holdings Ltd.
VII. Joint operations, joint ventures and associated companies accounted for at (amortized) cost²
ADA Abgaszentrum der Automobilindustrie GbR
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
P.T. Krama Yudha Tiga Berlian Motors
Naberezhnye Chelny,
15.00
Russian Federation
Yokohama, Japan
43.83
Sindelfingen, Germany
MBtech Group GmbH & Co. KGaA
35.00
25.00
Okayama City, Japan
50.00
Jakarta, Indonesia
18.00
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
Jakarta, Indonesia
32.28
Varese, Italy
8 Profit and loss transfer agreement with Daimler AG (direct or indirect)
9 Daimler AG is unlimited partner
10 Financial statements 2013
Mercedes-Benz Insurance Services Nederland B.V.
Mercedes-Benz Insurance Services Taiwan Ltd.
Bucharest, Romania
100.00
Utrecht, Netherlands
100.00
Taipei, Taiwan
100.00
Mercedes-Benz Italia S.p.A.
Rome, Italy
100.00
189
40
Mercedes-Benz Japan Co., Ltd.
Tokyo, Japan
100.00
341
Mercedes-Benz Insurance Broker SRL
12
24
123
100.00
Hong Kong, PR China
100.00
61
26
276
Name of the Company
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
33
Domicile, Country
Equity
in millions
Net income Footnote
in %1
of €
(loss) in
millions of €
Mercedes-Benz India Private Limited
Pune, India
100.00
Capital
share
Kifissia, Greece
10
Seoul, South Korea
Mercedes-Benz Luxembourg S.A.
Mercedes-Benz Malaysia Sdn. Bhd.
Mercedes-Benz Manhattan, Inc.
Mercedes-Benz Manufacturing (Thailand) Limited
Mercedes-Benz Manufacturing Hungary Kft.
Mercedes-Benz Mexico, S. de R.L. de C.V.
Stuttgart, Germany
100.00
36
7, 8, 10
Zagreb, Croatia
100.00
Bucharest, Romania
100.00
Budapest, Hungary
100.00
Warsaw, Poland
Mercedes-Benz Ludwigsfelde GmbH
Mercedes-Benz Leasing Taiwan Ltd.
Mercedes-Benz Leasing Treuhand GmbH
Mercedes-Benz Leasing Hrvatska d.o.o.
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing Kft.
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Leasing GmbH
51.00
146
73
Mercedes-Benz Leasing (Thailand) Co., Ltd.
Bangkok, Thailand
100.00
-
-
Mercedes-Benz Korea Limited
Mercedes-Benz Leasing Co., Ltd.
100.00
16
-12
Mercedes-Benz Leasing do Brasil Arrendamento
Mercantil S.A.
Barueri, Brazil
100.00
Mercedes-Benz Lyon S.A.S.
Mercedes-Benz Master Owner Trust
Beijing, PR China
SelecTrucks of Omaha LLC
-99
60.00
290
292
F❘ Further Information | Contents
283
Responsibility Statement.
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group, and the
Group management report, which has been combined with
the management report for DAG, includes a fair review
of the development and performance of the business and
the position of the Group, together with a description
of the principal opportunities and risks associated with the
expected development of the Group.
Stuttgart, February 13, 2015
Dil A
Dieter Zetsche
Christine Hohmann-Dennhardt
Golfgang Bernhard
Wolfgang Bernhard
Auflavo
Ola Källenius
Wiltried Pasth
Wilfried Porth
Huberten Di
289
International Representative Offices
List of Charts and Tables
Index
11 Financial Statements according to IFRS
12 Financial statements April 1, 2013 - March 31, 2014
13 Financial statements September 1, 2013 - August 31, 2014
14 Financial statements November 1, 2012 - October 31, 2013
281
We pursue a
sustainable and sound
dividend policy.
At the Annual Shareholders' Meeting to be held on April 1, 2015, the Board
of Management and the Supervisory Board will therefore propose an increase
in the dividend to €2.45 per share (prior year: €2.25). With this proposal,
we are expressing our confidence about the future business development.
282
Hubertus Troska
F❘ Further Information.
Responsibility Statement
284
Independent Auditors' Report
285
Ten-Year Summary
286
Glossary
288
F|
-112
Bodo сесси
T W
100.00
167
51
Malmö, Sweden
100.00
Mercedes-Benz France S.A.S.
Mercedes-Benz Gent N.V.
Montigny le Bretonneux, France
100.00
320
29
Gent, Belgium
100.00
Mercedes-Benz Grand Prix Ltd.
Mercedes-Benz Hellas S.A.
Mercedes-Benz Hong Kong Limited
Brackley, United Kingdom
Istanbul, Turkey
100.00
Istanbul, Turkey
100.00
Thomas Weber
284
405
97
10
Mercedes-Benz Financial Services USA LLC
Mercedes-Benz Finans Danmark A/S
Mercedes-Benz Finans Sverige AB
Mercedes-Benz Finansal Kiralama Türk A.S.
Bodo Uebber
Mercedes-Benz Finansman Türk A.S.
Farmington Hills, USA
100.00
1,781
349
11
Copenhagen, Denmark
100.00
Malmö, Sweden
Mercedes-Benz Försäljnings AB
50.00
17.13
SelecTrucks of Los Angeles LLC
100.00
Stuttgart, Germany
100.00
1,181
-61
5, 14
São Paulo, Brazil
100.00
Kirchheim unter Teck, Germany
100.00
Le Port, France
94.33
Moscow, Russian Federation
100.00
Stuttgart, Germany
100.00
100.00
Milton Keynes, United Kingdom
100.00
100.00
8
Böblingen, Germany
100.00
8
Dubai, United Arab Emirates
100.00
Stuttgart, Germany
100.00
8
Stuttgart, Germany
100.00
8
Farmington Hills, USA
100.00
Horsholm, Denmark
100.00
Ulm, Germany
100.00
Milton Keynes, United Kingdom
9
Arvidsjaur, Sweden
100.00
8
Budapest, Hungary
100.00
Mercedes-Benz Museum GmbH
Stuttgart, Germany
100.00
8
Mercedes-Benz Österreich GmbH
Mercedes-Benz Project Consult GmbH
Mercedes-Benz Research and Development India
Private Limited
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz Solihull Ltd.
Salzburg, Austria
100.00
Stuttgart, Germany
100.00
100.00
Gaggenau, Germany
Mercedes-Benz Hungária Kft.
Mercedes-Benz GastroService GmbH
Milton Keynes, United Kingdom
100.00
Neuhausen auf den Fildern, Germany
100.00
Fontana, USA
Milan, Italy
100.00
São Bernardo do Campo, Brazil
Schönefeld, Germany
100.00
Maastricht, Netherlands
100.00
Mercedes-Benz Egypt S.A.E.
Cairo, Egypt
100.00
Mercedes-Benz G GmbH
Raaba, Austria
100.00
Mercedes-Benz Customer Assistance Center Maastricht N.V.
São Paulo, Brazil
Mercedes-Benz Adm. Consorcios Ltda.
MB Relationship Marketing S.r.l.
Niederzier, Germany
100.00
6
Stuttgart, Germany
100.00
Ludwigsfelde, Germany
100.00
9
Beijing, PR China
50.00
4
Milton Keynes, United Kingdom
100.00
Tamworth, United Kingdom
100.00
Berlin, Germany
100.00
8
100.00
Stuttgart, Germany
8
11
São Paulo, Brazil
100.00
Farmington Hills, USA
100.00
Portland, USA
100.00
Halifax, Canada
8
100.00
100.00
São Paulo, Brazil
100.00
Stuttgart, Germany
100.00
8
Berlin, Germany
100.00
Hollywood, USA
8
Name of the Company
Domicile, Country
Daimler Protics GmbH
Daimler Purchasing Coordination Corp.
Daimler Starmark A/S
Daimler TSS GmbH
Daimler UK Share Trustee Ltd.
Daimler UK Trustees Limited
Daimler Unterstützungskasse GmbH
Deméter Empreendimentos Imobiliários Ltda.
Deutsche Accumotive Verwaltungs-GmbH
EvoBus Reunion S. A.
EvoBus Russland 000
Fünfte Vermögensverwaltungsgesellschaft Zeus mbH
Gemini-Tur Excursoes Passagens e Turismo Ltda.
Grundstücksverwaltungsgesellschaft
Taunus-Auto-Verkaufs-GmbH & Co. OHG
Lapland Car Test Aktiebolag
Legend Investments Ltd.
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
Daimler Mitarbeiter Wohnfinanz GmbH
Daimler Middle East & Levant FZE
Daimler IT Retail GmbH
100.00
Capital
share
in %1
Equity
Net income Footnote
in millions
of €
(loss) in
millions of €
Daimler Group Services Madrid, S.A.
Daimler Group Services Philippines, Inc.
E | Consolidated Financial Statements | Notes to the Consolidated Financial Statements
Daimler Grund Services GmbH
100.00
Cebu City, Philippines
99.99
Schönefeld, Germany
100.00
7,8
Daimler International Assignment Services USA, LLC
Farmington Hills, USA
San Sebastián de los Reyes, Spain
Bangalore, India
8
24
Schlieren, Switzerland
51.00
Vermögensverwaltungsgesellschaft Daimler Atlanta mbH
Woking Motors Limited
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
100.00
Stuttgart, Germany
100.00
8
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
III. Subsidiaries accounted for using the equity method
Auto Testing Company, Inc.
100.00
Mercedes-Benz Capital Services NV
MBtech Auto Testing Properties L.L.C.
IV. Joint operations accounted for using the equity method
AFCC Automotive Fuel Cell Cooperation Corp.
T.O.C. (Schweiz) AG
EM-motive GmbH
100.00
Maribor, Slovenia
Erfurt, Germany
100.00
8
Stuttgart, Germany
100.00
Mauá, Brazil
100.00
Stuttgart, Germany
100.00
8
Sebes, Romania
100.00
Cairo, Egypt
99.50
STAR TRANSMISSION SRL
STARKOM d.o.o.
Cugir, Romania
100.00
North America Fuel Systems Remanufacturing LLC
Laredo, USA
100.00
Vienna, Austria
50.00
Fujian Benz Automotive Co., Ltd.
Fuzhou, PR China
50.00
Mercedes-Benz Trucks Vostok Holding GmbH
Vienna, Austria
50.00
Polomex, S.A. de C.V.
Garcia, Mexico
26.00
SelecTrucks of Atlanta LLC
McDonough, USA
50.00
SelecTrucks of Houston LLC
Houston, USA
50.00
FKT Holding GmbH
10
23
660
Buenos Aires, Argentina
71.30
Laredo, USA
100.00
Brussels, Belgium
100.00
Laredo, USA
100.00
Star Egypt For Import LLC
Burnaby, Canada
Hildesheim, Germany
50.00
Kentwood, USA
50.00
V. Joint ventures accounted for using the equity method
Beijing Foton Daimler Automotive Co., Ltd
Beijing, PR China
50.00
50.10
Star Assembly SRL
Circulo Cerrado S.A. de Ahorro para Fines Determinados
DRIVEtest LLC
SelecTrucks Comércio de Veículos Ltda
51.00
Kleinostheim, Germany
51.00
Toyama, Japan
100.00
Monarch Cars (Tamworth) Ltd.
Montajes y Estampaciones Metálicas, S.L.
MYTAXI POLSKA SPÓLKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
myTaxi Swiss GmbH
myTaxi UG
myTaxi UK Ltd.
Milton Keynes, United Kingdom
100.00
Esparraguera, Spain
51.00
MORA Grundstücks-Verwaltungsgesellschaft mbH & Co. KG
Kleinostheim, Germany
8
100.00
100.00
10
Bratislava, Slovakia
51.00
Milton Keynes, United Kingdom
100.00
Mercedes-Benz Srbija i Crna Gora d.o.o.
Siebte Vermögensverwaltungsgesellschaft DVB mbH
Mercedes-Benz Vertrieb PKW GmbH
Warsaw, Poland
Belgrade, Serbia
Valencia, Venezuela
100.00
Mercedes-Benz Vertriebsgesellschaft mbH
MercedesService Card Beteiligungsgesellschaft mbH
MercedesService Card GmbH & Co. KG
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
Stuttgart, Germany
Berlin, Germany
100.00
Grünwald, Germany
Mercedes-Benz Venezuela S.A.
4
88.89
Chur, Switzerland
100.00
279
Name of the Company
Domicile, Country
Capital
Equity
Bicester, United Kingdom
Net income
share
in millions
(loss) in
of €
millions of €
Russ & Janot GmbH
Ruth Verwaltungsgesellschaft mbH
100.00
Footnote
100.00
in %1
Ring Garage AG Chur
Schönefeld, Germany
Zurich, Switzerland
100.00
Hamburg, Germany
100.00
London, United Kingdom
100.00
myTaxi USA Inc.
100.00
100.00
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
PABCO Co., Ltd.
Stuttgart, Germany
100.00
Ebina, Japan
100.00
Porcher & Meffert Grundstücksgesellschaft mbH & Co.
Stuttgart OHG
Washington D.C., USA
R.T.C. Management Company Limited
Consolidated Financial Statements
291
286
196
Corporate Governance
Highway Pilot
107
109
D.01 Governance structure
183
B.44 CO2 emissions
109
International Representative Offices.
111
B.43 Average CO2 emissions of the new car fleet
of Mercedes-Benz Cars in the EU
B.45 Employees at 12/31/2014 by region
China, Beijing
Tel. +86 10 8417 3452
Fax +86 10 8417 3523
Australia, Melbourne
Tel. +61 39 566 6644
Fax +61 39 566 6210
Germany, Berlin
B.46 Employees by division
Tel. +49 30 2594 1111
Fax +49 30 2594 1109
Tel. +33 1 3005 8595
Fax +33 1 3005 9276
France, Paris
Egypt, Cairo
Czech Republic, Prague
Tel. +42 0 2710 77705
Fax +42 0 2710 77702
Croatia, Zagreb
Tel. +385 1 344 1251
Fax +385 1 344 1258
Colombia, Bogotá
Tel. +57 1 4236 700
Fax +57 1 4124 016
Canada, Toronto
Tel. +1 416 847 7500
Fax +1 416 425 0598
Brazil, São Paulo
Tel. +55 11 4173 7171
Fax +55 11 4173 7118
Tel. +32 2 724 1315
Fax +32 2 724 1558
Brussels
Belgium/Luxembourg,
Austria, Salzburg
Tel. +43 662 447 8212
Fax +43 662 447 8334
Argentina, Buenos Aires
Tel. +54 11 4808 8719
Fax +54 11 4808 8702
111
Further Information
114
128
F.01
Ten Year Summary
Risk and Opportunity Report
B.54 Assessment of probability of occurrence
and possible impact
132
B.55 Industry and business risks and opportunities
B.56 Company-specific risks and opportunities
B.57 Financial risks and opportunities
135
140
142
193
194
Great Britain, Milton Keynes
Tel. +44 190 8245 940
Fax +44 190 8245 802
195
B.53 Supervisory Board remuneration
B.47 Donations and sponsoring in 2014
126 127
124-125
E.01 Consolidated Statement of Income
192
Remuneration Report
B.48 Board of Management remuneration in 2014
B.49 Non-cash benefits and other fringe benefits
121
121
B.50 Individual entitlements, service costs
and present values for members of the
Board of Management
E.02 Consolidated Statement of Comprehensive
Income/Loss
E.03 Consolidated Statement of Financial Position
E.04 Consolidated Statement of Cash Flows
E.05 Consolidated Statement of Changes in Equity
Tables E.06 to E.96 in the Notes to the Consolidated
Financial Statements
see contents on page 191
123
B.51 Benefits granted
B.52 Payments made
Greece, Kifissia
Tel. +30 210 629 6700
Fax +30 210 629 6710
4.08
India, Pune
Tel. +91 2135 673 800
Fax +91 2135 673 951
(German, English)
Brochure: Company Profile
(German, English)
The aforementioned publications can be requested from:
Daimler AG, Investor Relations, HPC 0324
70546 Stuttgart, Germany
Phone +49 711 17 92262
Fax +49 711 17 92287
order.print@daimler.com
DAIMLER
DAIMLER
PLUG IN HYBRID
Sustainability Report 2014.
Corporate profile 2015.
④ daimler.com/ir/reports
daimler.com/downloads/en
FSC
Sustainability Report
www.fsc.org
(German, English)
(German, English)
Taiwan, Taipei
Tel. +886 2 2715 9696
Fax +886 2 2719 2776
Thailand, Bangkok
Tel. +66 2614 8800
Fax +66 2676 5550
Turkey, Istanbul
Tel. +90 212 867 3330
Fax +90 212 867 4518
United Arab Emirates, Dubai
Tel. +97 14 8075 202
Fax +97 14 8833 201
USA, Washington
Tel. +1 202 649 4501
Fax +1 202 649 4503
Venezuela, Valencia
Tel. +58 241 3008 110
Fax +58 241 8341 199
Vietnam, Ho Chi Minh City
Tel. +848 3588 9100
Fax +848 3895 8714
292
Internet, Information, Addresses.
Information on the Internet. Special information on our shares
and earnings development can be found in the "Investor Relations"
section of our website. ④daimler.com It includes the Group's
annual and interim reports and the company financial statements
of Daimler AG. You can also find topical reports, presentations,
an overview of various key figures, information on our share price
and other services.
daimler.com/investors
Publications for our shareholders:
Annual Report
Interim Reports for the 1st, 2nd and 3rd quarters
Hungary, Kecskemét
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MIX
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Romania, Bucharest
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Portugal, Mem Martins
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Tel. +48 22 312 7200
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Poland, Warsaw
Netherlands, Utrecht
Tel. +31 3024 7 1258
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Mexico, Mexico City
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Malaysia, Kuala Lumpur
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Korea, Seoul
Japan, Tokyo
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Italy, Rome
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Paper from
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Daimler AG
70546 Stuttgart
Phone +49 711 17 0
Fax +49 711 17 22244
www.daimler.com
www.daimler.mobi
Investor Relations
Phone +49 711 17 95277
+49 711 17 92261
+49 711 17 95256
Fax +49 711 17 94075
ir.dai@daimler.com
The paper used for this Annual Report was
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responsibly and comply with the regulations
of the Forest Stewardship Council.
Daimler AG
Mercedesstr. 137
70327 Stuttgart
Germany
www.daimler.com
www.daimler.mobi
B.42 Autonomous driving with the Mercedes-Benz
Spain, Madrid
South Africa, Pretoria
Tel. +27 43 7062 100
Fax +27 43 7062 202
Singapore, Singapore
Tel. +65 6849 8321
Fax +65 6849 8493
105
Tel. +34 91 484 6161
Fax +34 91 484 6019
104
2010
2011
2012
2013
2014
6,480 5,874 4,247 3,559 2,423 3,653 4,158
7,363 7,169 4,146 3,023 3,264
3,364
3,575
4,827 4,975
4,067 4,368
4,844
4,999
11,032 14,337 7,146
10,961
-10,237 -15,857 26,479 -4,812 -8,950
-1,284 2,396 -25,204 -2,915
1,057 -7,551
2,423 2,679 7,637 -3,915 2,706 5,432
-786
8,544
-313
-696
-6,537
5,842
989
2009
-1,100 3,285 -1,274
-8,864 -6,829 -2,709
11,506
1,452
5,479
43.14 46.80 66.50
1,014.7 1,022.1 1,037.8
50.73
33.92
26.70 37.23
957.7 1,003.8 1,050.8 1,066.0 1,066.8 1,068.8 1,069.8
41.32
62.90
68.97
1,017.7 1,027.3 1,047.3
959.9
1,003.8 1,051.5 1,067.1 1,067.1 1,069.1 1,069.8
Ratings
Credit rating, long-term
3,855 2,274
4,842
2008
2007
2006
24.3
42.7
24.7
42.6
26.5
45.8
26.3
22.7
24.3
22.1
46.4
39.8
43.4
40.8
96,823 90,452 47,998 47,313 49,456 44,738 51,940 65,016 66,047 78,077
95,232 89,836 48,866
8,016 9,861 12,912
48,313 48,584 39,187
52,182 47,538 53,139 54,855 58,716 59,108 66,974
3,106 7,285 11,938 11,981 11,508 13,834 16,953
31,466 31,778 29,338 31,426 37,521 40,648 40,779
Amounts in millions of euros
From the statements of cash flows 1
Investments in property,
plant and equipment
Depreciation and amortization
Cash provided by (used for)
operating activities
investing activities
financing activities
Free cash flow of the industrial business
From the stock exchanges
Share price at year-end (€)
Average shares outstanding (in millions)
Average diluted shares outstanding
(in millions)
F❘ Further Information | Ten Year Summary
2005
Standard & Poor's
BBB
BBB
BBB+
A (low)
A (low) A (low)
A (low)
A (low)
A (low)
Average annual number of employees
1 Until August 3, 2007, including Chrysler.
296,109 277,771 271,704 274,330 258,628 258,120 267,274 274,605 275,384 279,857
2 For the year 2012, the figures have been adjusted, primarily for effects arising from application of the amended version of IAS 19.
3 The figure for 2013 has been adjusted due to reclassifications within functional costs.
287
Glossary.
BlueEFFICIENCY. Efficiency packages for saving fuel.
They include measures taken inside engines, bodywork
weight reductions, tires with low roll resistance, aerodynamic
improvements, the ECO start-stop function etc. As a
result, fuel consumption can be reduced by more than 20%.
BLUETEC. A combination of inner-engine measures to
reduce emissions and treat exhaust gases. It improves diesel
engines' efficiency for cars and commercial vehicles by opti-
mizing their combustion, and reduces their emissions with SCR
catalysts.
BRIC. This abbreviation stands for the four countries of Brazil,
Russia, India and China.
Compliance. By the term compliance, we understand
adherence to all laws, rules, regulations and voluntary com-
mitments, as well as the related internal guidelines and
policies in connection with all activities of the Daimler Group.
Consolidated Group. The consolidated Group is the total
of all those companies that are included in the consolidated
financial statements.
Corporate governance. The term corporate governance
applies to the proper management and supervision of a company.
The structure of corporate governance at Daimler AG is
determined by Germany's Stock Corporation Act (AktG), Code-
termination Act (MitbestG) and capital-market legislation.
Cost of capital. The cost of capital is the product of the
average amount of capital employed and the cost-of-capital
rate. The cost-of-capital rate is derived from the investors'
required rate of return. see page 76
CSR - corporate social responsibility. A collective term
for the social responsibility assumed by companies, including
economic, environmental and social aspects.
EBIT. Earnings before interest and taxes are the measure
of operating profit before taxes.
see pages 82 ff
Equity method. Accounting and valuation method for
shareholdings in associated companies and joint ventures.
Fair value. The amount for which an asset or liability
could be exchanged in an arm's length transaction between
knowledgeable and willing parties who are independent
of each other.
Goodwill. Goodwill represents the excess of the cost of an
acquired business over the fair values assigned to the separately
identifiable assets acquired and liabilities assumed.
Hybrid drive. Hybrid drive systems combine internal-combustion
engines with electric motors, which can be operated sepa-
rately or together depending on the type of vehicle and driving
situation.
IFRS - International Financial Reporting Standards. The
IFRS are a set of standards and interpretations for companies'
external accounting and financial reporting developed by
an independent private-sector committee, the International
Accounting Standards Board (IASB).
Integrity Code. The "Integrity Code" has been in effect since
November 2012. It defines the principles of behavior and
guidelines for everyday conduct that are applicable at Daimler.
Fairness, responsibility and compliance with legislation are
key principles in this context.
INTELLIGENT DRIVE. With this new technology from
Mercedes-Benz, thanks to improved environment sensors,
intelligent assistance systems analyze complex situations
and recognize potential dangers in road traffic even better.
Lithium-ion batteries. They are at the heart of future electric
drive systems. Compared with conventional batteries, lithium-
ion batteries are considerably smaller and feature significantly
higher power density, short charging times and long lives.
NEDC - New European Driving Cycle. A measuring method
used in Europe for the objective assessment of vehicles'
fuel consumption.
A (low)
26.9
43.7
A (low) A (low)
DBRS
A-
BBB+
BBB+
BBB+
A-
A-
A-
B.41 Intelligent operating strategy: Operating modes
A3
Baa1
A3
A3
A3
A3
A3
A3
A3
A3
Fitch
BBB+
BBB+
A-
A-
BBB+
BBB+
A-
A-
A-
A-
A (low)
288
27.1
16.5
From the statements of income
Revenue
Personnel expenses 1,2
Research and development expenditure³
thereof capitalized
Operating profit/EBIT2
Operating margin (%) 2
95,209 99,222 101,569 98,469 78,924 97,761 106,540 114,297 117,982 129,872
24,650 23,574 20,256 15,066 13,928 16,454 17,424 18,002 18,753 19,607
3,928 3,733
4,148 4,442 4,181 4,849 5,634 5,644 5,489 5,680
591
715
1,387 1,285 1,373
2,873 4,992
2,730 -1,513 7,274
5.0
2.8
-1.9
7.4
3.0
990
8,710
8.6
1,460
8,755
8.2
1,465
8,820
7.7
1,284
10,815
9.2
1,148
10,752
8.3
2014
Income/Profit (loss) before income taxes
2,426
4,902
9,181
2,795
-2,298 6,628
8,449 8,116
10,139
10,173
Net operating income/
Net operating profit (loss) 2
4,834
4,032
as % of net assets (RONA) 2
and extraordinary items²
2013
2012
2011
F❘ Further Information | Responsibility Statement | Independent Auditor's Report
Independent Auditor's Report.
Report on the Consolidated Financial Statements. We have
audited the accompanying consolidated financial statements
of Daimler AG, Stuttgart, and its subsidiaries, which comprise
the consolidated statement of income, the consolidated
statement of comprehensive income/loss, the consolidated
statement of financial position, the consolidated statement
of cash flows the consolidated statement of changes in equity
and notes to the consolidated financial statements for the
financial year from January 1 to December 31, 2014.
Board of Management's Responsibility for the Consoli-
dated Financial Statements. The Board of Management
of Daimler AG is responsible for the preparation of these con-
solidated financial statements. This responsibility includes
preparing these consolidated financial statements in accordance
with IFRSS as adopted by the EU, and the additional require-
ments of German law pursuant to Section 315a (1) of the German
Commercial Code (HGB), to give a true and fair view of the
net assets, financial position and results of operations of the
group in accordance with these requirements. The Board
of Management is also responsible for the internal controls
that the Board of Management determines are necessary
to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to
fraud or error.
Auditor's Responsibility. Our responsibility is to express
an opinion on these consolidated financial statements based
on our audit. We conducted our audit in accordance with
Section 317 HGB and the German generally accepted standards
for the audit of financial statements promulgated by the
German Institute of Public Auditors (IDW) as well as in supple-
mentary compliance with International Standards on Auditing
(ISA). Accordingly, we are required to comply with ethical require-
ments and plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements
are free from material misstatement.
An audit involves performing audit procedures to obtain audit
evidence about the amounts and disclosures in the consoli-
dated financial statements. The selection of audit procedures
depends on the auditor's professional judgment. This includes
the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error.
In assessing those risks, the auditor considers the internal
control system relevant to the entity's preparation of the con-
solidated financial statements that give a true and fair view.
The aim of this is to plan and perform audit procedures that
are appropriate in the given circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
Group's internal control system. An audit also includes eval-
uating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board
of Management, as well as evaluating the overall presentation
of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Audit Opinion. Pursuant to Section 322 (3) sentence 1 HGB,
we state that our audit of the consolidated financial statements
has not led to any reservations.
In our opinion, based on the findings of our audit, the con-
solidated financial statements comply in all material respects
with IFRSS as adopted by the EU and the additional require-
ments of German commercial law pursuant to Section 315a (1)
HGB and give a true and fair view of the net assets and finan-
cial position of the Group as at December 31, 2014 as well
as the results of operations for the financial year then ended,
in accordance with these requirements.
Report on the Combined Management Report. We have
audited the accompanying group management report of
Daimler AG, which is combined with the management report
of the company for the financial year from January 1 to
December 31, 2014. The Board of Management of Daimler AG
is responsible for the preparation of this combined manage-
ment report in compliance with the applicable requirements
of German commercial law pursuant to Section 315a (1) HGB.
We conducted our audit in accordance with Section 317 (2) HGB
and the German generally accepted standards for the audit
of financial statements promulgated by the German Institute
of Public Auditors (IDW). Accordingly, we are required to
plan and perform the audit of the combined management report
to obtain reasonable assurance about whether the combined
management report is consistent with the consolidated financial
statements and the audit findings, and as a whole provides
a suitable view of the Group's position and suitably presents
the opportunities and risks of future development.
Pursuant to Section 322 (3) sentence 1 HGB, we state
that our audit of the combined management report has not
led to any reservations.
In our opinion, based on the findings of our audit of the
consolidated financial statements and combined management
report, the combined management report is consistent with
the consolidated financial statements, and as a whole provides
a suitable view of the Group's position and suitably presents
the opportunities and risks of future development.
Stuttgart, February 13, 2015
KPMG AG Wirtschaftsprüfungsgesellschaft
سا
Becker
Wirtschaftsprüfer
Picass
Dr. Thümler
Wirtschaftsprüfer
285
Ten Year Summary.
F.01
Amounts in millions of euros
2005
2006
2007
2008
2009
2010
10.0
8.3
4,123
10.5
Net income/Net profit (loss) 2
0.60
0
0.00
4.28
1,971 2,346
1.85
2.20
5.31
6.02
2,349 2,407
2.20
2.25
6.40
6.51
2,621
2.45
From the statements of financial position
Property, plant and equipment
Leased equipment
Other non-current assets 2
Inventories
Liquid assets
Other current assets
Total assets 2
Shareholders' equity2
thereof share capital
Equity ratio Group (%) 2
Equity ratio industrial business (%) 2
Non-current liabilities 2
Current liabilities 2
Net liquidity industrial business
Net assets (average) 2
286
35,295 32,747 14,650 16,087
15,965 17,593 19,180
20,599 21,779 23,182
34,236 36,949 19,638 18,672 18,532 19,925 22,811 26,058 28,160 33,050
76,200 67,507 39,686 42,077 40,044 41,309 45,023 48,947 48,138 56,258
19,699 18,396 14,086 16,805 12,845 14,544 17,081 17,720 17,349 20,864
8,063 8,409 15,631 6,912 9,800 10,903 9,576 10,996 11,053 9,667
54,519 53,626 31,403 31,672 31,635 31,556 34,461 38,742 42,039 46,614
228,012 217,634 135,094 132,225 128,821 135,830 148,132 163,062 168,518 189,635
35,957 37,346 38,230 32,730 31,827 37,953 41,337 39,330 43,363 44,584
2,647
2,673 2,766 2,768 3,045 3,058 3,060 3,063 3,069 3,070
15.1
2.00
23.7
1.50
1,928
Net income per share (€)/
4,215
3,783 3,985
1,370
4.4
1,414
-2,102 5,120
-6.6 17.5
-2,644 4,674
6,240 7,302 9,173
19.9 19.6 22.6
6,029 6,830 8,720
7,678
18.8
7,290
4.09
3.66
3.83
1.41
-2.63
4.28
5.32
6.02
6.40
6.51
Net profit (loss) per share (€) 2
Diluted net income per share (€)/
Diluted net profit (loss) per share (€) 2
Switzerland, Schlieren
Tel. +41 44 755 8800
Fax +41 44 755 8242
3.64
3.80
1.40
-2.63
Total dividend
Dividend per share (€)
1,527 1,542
1.50
556
Index.
Moody's
Corporate Profile
83
82
62
62
B.18 Reconciliation of Group EBIT to profit before
A.08 Shareholder structure as of December 31, 2014
By region
Consolidated statement of income
83
B.17
62
Return on equity
B.16
A.07 Shareholder structure as of December 31, 2014
By type of shareholder
B. 15 Return on sales
62
A.06 Stock-exchange data for Daimler shares
62
B.14 Special items affecting EBIT
83
84
B.23 Net assets of the Daimler Group at year-end
65
A.09 Strategic Pillars of Growth
87
Net assets (average)
B.22
86
84
B.21 Value added
86
B.20 Reconciliation to net operating profit
86
Dividend per share
B. 19
84
income taxes
Objectives and Strategy
87
62
61
B.08
Rear cover
79
Unit sales structure of Mercedes-Benz Cars
B.07
Front cover
Facts and Figures 2014 (enclosed brochure)
Daimler Worldwide
Unit sales structure of Daimler Trucks
78
B.06
Front cover
Divisions
77
B.05 Economic growth
Front cover
Key Figures
Global automotive markets
B.13 Development of earnings
79
Market share
A.04 Share price index
B.12 EBIT by segment
61
A.03 Daimler share price (high/low), 2014
60
A.02 Key figures per share
Profitability
B.09
60
A.01 Development of Daimler's share price and
81
B.11 Revenue by division
Daimler and the Capital Market
81
B.10 Consolidated revenue by region
80
of major indices
Economic Conditions and Business Development
A. 10 Investment in property, plant and equipment
2015-2016
。。
C.04 Unit sales by Daimler Trucks
160
154
Unit sales by Mercedes-Benz Cars
Daimler Trucks
C.03
C.02
100
160
B.37 Balance sheet structure of Daimler AG
Mercedes-Benz Cars
C.01
99
Condensed statement of income of Daimler AG
B.36
The Divisions
Daimler AG
154
F❘ Further Information | List of Charts and Tables
Sustainability
165
B.40 Road to emission-free mobility
171
Daimler Financial Services
C.09
103
by division
168
C.05 Mercedes-Benz Vans
Unit sales by Daimler Buses
168
Daimler Buses
C.07
103
B.38 Research and development expenditure
B.39 Research and development expenditure
165
C.06 Unit sales by Mercedes-Benz Vans
C.08
69
96
B.34 Consolidated statement of financial position
B.35 Balance sheet structure Daimler Group
73
72
B.01 Consolidated revenue by division
B.02 Daimler Group structure 2014
91
90
90
B.25 Free cash flow of the industrial business
B.26 Net liquidity of the industrial business
B.27 Net debt of the Daimler Group
B.03
89
B.24 Condensed consolidated statement
Liquidity and Capital Resources
69 69
A.13 Research and development expenditure
2015 - 2016
A.12 Research and development expenditure
A.11 Investment in property, plant and equipment 69
of cash flows
95
Calculation of value added
B.04 Cost of capital
Financial Position
290
94
93
93
92
2002
75
B.33 Credit ratings
B.32
B.31 Refinancing instruments
76
92
91
B.28 Other financial obligations (nominal amounts)
B.29 Investment in property, plant and equipment
B.30 Investment in property, plant and equipment
by division
2356
Benchmark emissions
Cover
A.05 Key figures for Daimler shares
289
66, 149, 154, 160f, 165, 168
82ff
82 ff
61,86
49, 174 ff
211 ff
179f
104 ff
130f
89 ff, 99 f, 195
62,93
92f, 150
62f, 188f
14 ff, 106
Financial income
Fuel cells
Goodwill
Hybrid drive
Income taxes
EBIT
Efficiency programs
Earnings per share (EPS)
Dividend
List of Charts and Tables.
F❘ Further Information | Glossary | Index
Net assets. Net assets represent the capital employed
by the Group and the industrial divisions. The relevant capital
basis for Daimler Financial Services is equity capital.
see page 76
Net operating profit. Net operating profit is the relevant
parameter for measuring the Group's operating performance
after taxes.
Rating. An assessment of a company's creditworthiness
issued by a rating agency.
ROE - return on equity. The profitability of Daimler Financial
Services is measured by return on equity. ROE is defined as
the quotient of EBIT and shareholders' equity.
84ff, 99, 214
ROS - return on sales. The profitability of the industrial
divisions is measured by return on sales. ROS is defined as
the quotient of EBIT and revenue.
Value at risk. This measures the potential future loss (related
to market value) for a given portfolio in a certain period and for
which there is a certain probability that it will not be exceeded.
Annual Shareholders' Meeting
Autonomous driving
Bonds
Capital expenditure
Cash flows
Change of control
CO2 reductions
Compliance
Consolidated Group
Value added. Value added indicates the extent to which oper-
ating profit exceeds the cost of capital. When value added is
positive, return on net assets is higher than the cost of capital.
see pages 75f
106
Corporate governance
84 ff, 99, 215 ff
88f, 97, 234 ff
74f
82 ff, 98f
94
118ff
84
76, 83f, 154, 160, 165, 168, 171
83 ff, 193
264ff
60 ff, 129f
64ff
101 ff
79f, 154, 160, 165, 168
204ff
4ff, 104ff
86f
95 ff, 100, 230 ff
86f
81, 154, 160, 165, 168, 171, 212
179f
179f, 182
285
89 ff, 242ff
Investor Relations
Liabilities
Net assets
Net profit
Pension obligations
Profitability
Ratings
Remuneration system
Revenue
Portfolio changes
ROE return on equity
ROS return on sales
Segment reporting
Shareholders' equity
Shares
Strategy
Sustainability
Unit sales
Value added
63
Independent auditors' report
Integrity
Integrity Code
Crosswind
Assist
Crosswind Assist enhances driving safety and eases the
strain on drivers. Crosswind Assist is yet another safety
system with which Daimler is setting new standards in the van
segment. Since 2013, Mercedes-Benz has been the only van
manufacturer to offer such a system as standard in a Sprinter-
class van. Last year, it also became the first automaker to offer
it in a Vito-class model. The system's sensors register the
effect side wind gusts have on the vehicle when it is crossing
bridges or passing other cars, for example. ESP (Electronic
Stability Program) then brakes the wheels facing the wind
gust. This significantly reduces sideways movement and
noticeably eases the strain on drivers. The feeling of safety
and comfort is thus enhanced and inappropriate driver reac-
tions in heavy winds are prevented.
וי
100
A positive trend: Despite the fact that
road freight transport has increased,
accidents involving trucks have declined
sharply thanks to state-of-the-art
assistance systems whose development
is being driven by Daimler in particular.
120
140
Active Brake Assist ABA 3: emergency braking for station-
ary obstacles as well. A sudden obstacle after a curve, a
sudden traffic jam - such hazards require extreme alertness
on the part of truck or bus drivers, as well as the ability to
respond quickly. ABA 3 can save lives in such situations,
including the lives of other road users. That's why as of late
2015, legislation will require all newly registered coaches to
be equipped with an emergency braking assistance system.
The Mercedes-Benz Travego Safety Coach is the world's first
coach to be equipped with the latest generation of Active
Brake Assist before the legislation goes into effect. The
predecessor generation, ABA 2, was already able to initiate a
braking maneuver when there was a risk of a collision with
slower vehicles ahead or with stationary obstacles. The new
Active Brake Assist 3 prevents imminent collisions with a
stationary object by automatically bringing the vehicle to a
standstill. This forward-looking safety technology from Daim-
ler helps to prevent accidents and significantly reduce the
severity of those accidents that do occur.
in its lane even in heavy winds.
intervention
160
-3.0°C
16:46
Crosswind Assist keeps the van safely
21
Our road to accident-free driving.
Blind Spot Assist is an important step on the road to the
transport system of the future and underscores our role as
a pioneer for achieving the highest degree of safety in road
transport.
22
10
Blind Spot Assist makes turns and lane changes even
safer. Now that assistance systems can prevent, lessen or
warn of accidents that could result from rear-end collisions
or a truck veering off the road, researchers have turned their
attention to potential dangers that arise during turns. Whether
it's cyclists or pedestrians - things can get dangerous for
other road users if truck drivers can't see them. The innova-
tive Blind Spot Assist system from Mercedes-Benz uses radar
sensors to monitor the entire side of the truck and can reliably
warn drivers of potential hazards during turns. In addition,
the system monitors the tracking pattern of the semitrailer
during a turn and will issue a warning if its sensors detect a
stationary obstacle such as a set of traffic lights. Blind Spot
Assist also supports drivers when they change lanes. Follow-
ing extensive practical testing, Blind Spot Assist will go into
series production sometime in the next few years.
17:40
Assist warns drivers of the presence of
other road users when the truck makes a
turn. The system is yet another milestone
on the "road to accident-free driving."
32
Milestones on the way to accident-free driving.
Seeing, hearing, getting one's bearings: Our vehicles are already linked to
the digital world in a manner that lends them senses, leading to noticeably
greater comfort and safety and a better quality of life. Our first step here
was Intelligent Drive, which brings all of our assistance systems together.
The pioneering autonomous journeys made by the S 500 INTELLIGENT DRIVE
and the Future Truck 2025 were further milestones in networked mobility.
The use of augmented reality will enable Daimler to open up new dimensions
in driving in the future as well.
33
Daimler | Clean. Safe. Connected.
"Avoidance of human error at the wheel will reduce danger and
accidents. Traffic will flow more calculably and safely. The traffic
system will become more flexible and infrastructure will be
utilized more effectively. The Future Truck 2025 will facilitate
a quantum leap in terms of safety and efficiency."
Hans Luft, Daimler Wörth plant, Truck Testing
Daimler | Clean. Safe. Connected.
Highway Pilot activated - technology takes the wheel. It's
a vision that the automotive pioneer Daimler has put on the
road. Back in 2013, Mercedes-Benz Cars became the world's
first automaker to prove that autonomous driving is possible
in cities and on country roads with the Mercedes-Benz S 500
INTELLIGENT DRIVE research vehicle. That car's groundbreak-
ing technology was also incorporated into the Mercedes-Benz
Future Truck 2025. In a further milestone for autonomous
driving systems, the fascinating technology in the Future Truck
2025 demonstrated its capabilities in real traffic situations in
the summer of 2014. This success was particularly noteworthy
because it was achieved with existing and near-production
technologies such as Proximity Control Assist and Active
Brake Assist.
as order scheduling, checking e-mails and reserving parking
spaces. This revolutionary achievement was made possible by
the Highway Pilot system. The "brain" of the Future Truck 2025
consists of radar sensors, a stereo camera, three-dimensional
maps and a system that allows the truck to communicate with
other road users and road infrastructure.
The Future Truck 2025 pays attention and makes space.
After the driver turns on the highly intelligent system, he or
she can let go of the steering wheel. The long-haulage truck
continues to travel at the desired speed, maintains a safe
distance to the vehicle ahead and stays precisely in its lane.
The Future Truck 2025 also reacts to unanticipated events.
For example, it smoothly adjusts its speed if the traffic ahead
slows down or comes to a halt. If an emergency vehicle ap-
proaches from the rear, the truck automatically moves over
to make space and then returns to the center of the lane.
Still, even in the cockpit of the future, the driver remains com-
pletely in control. For example, he or she can disengage the
Highway Pilot and resume control of the vehicle at any time by
hitting the brake or the gas pedal or simply pushing a button.
19
Onboard co-pilots.
Daimler has always been a trailblazer for
innovative safety systems in trucks, vans
and buses. Numerous electronic assistance
systems support drivers, regulate vehicle
speed or autonomously initiate emergency
braking maneuvers. Revolutionary technolo-
gies such as the Highway Pilot rely on the
seamless combination of tried and tested
systems.
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20
Sending an important signal: Blind Spot
On the road today in the truck of tomorrow. A route of
around 30 kilometers with alternating stretches of open
road and slow-moving traffic. Just a normal trip? Far from it,
as the journey was taken by a camouflaged prototype of the
Mercedes-Benz Future Truck 2025, which drove itself along
the A14 highway near Magdeburg in Germany. During the trip,
the "driver" did everything but drive, performing tasks such
Daimler | Clean. Safe. Connected.
Daimler | Clean. Safe. Connected.
-
Active Lane Keeping Assist. This system was initially introduced in upper-range Mercedes-Benz models.
It engages whenever the driver inadvertently drives onto a continuous line to the right or left of the vehicle.
It keeps the vehicle in its lane by autonomously braking the wheels on the other side of the vehicle while
simultaneously warning the driver with a visual signal and an acoustic alarm.
23
Redefining safe driving.
Safety will remain extremely important in the
future as well. For this reason, we are focusing
on driver assistance systems and autonomous
driving functions up to and including the ground-
breaking use of real-time digital information
via augmented reality systems. In this way, we
are making the interaction between our vehicles
and their drivers more intuitive, more personal
and safer.
24
24
www.daimler.com/technology-and-innovation
Safer driving without any sacrifice of comfort or driving pleasure.
You can learn more about autonomous driving and Intelligent Drive here.
Active Blind Spot Assist. This system supports safe lane changes. If the system detects a vehicle in the
exterior mirror's blind spot, it first issues a visual warning and an acoustic signal. If the driver fails to react,
the system will then brake the vehicle autonomously.
Augmented reality is transforming windshields into
intelligently networked displays that provide additional
digital information about actual conditions on the
route ahead of the vehicle. Drivers can focus on other
important matters and arrive at their destination in a
more relaxed state.
Networked mobility. Life and the
working world are becoming more
mobile and more digital. At the same
time, flexible and economical forms of
mobility are needed. Daimler is meeting
the requirements of its customers
and defining a new digital driving culture
with state-of-the-art information
technologies, online communication
systems and automotive services.
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Daimler | Clean. Safe. Connected.
CAR
260
CAR
2GO
Connected.
An integrated safety concept. Avoiding danger,
permanently easing the strain on drivers, providing active
assistance in difficult situations and offering optimal
protection to all road users – these are the four pillars
of our "road to accident-free driving."
2010
Active Brake Assist ABA 3 in trucks. The third-generation emergency braking assistance system
brings the Mercedes-Benz Antos and Actros trucks to a standstill to prevent collisions also with stationary
obstacles. This either completely prevents rear-end collisions or else reduces their severity.
A safety pioneer. We don't just build automobiles,
we also continually enhance safety with innovative
protection systems. Daimler engineers are often ahead
of their time in this field.
Intelligent vehicle systems and autonomous driving.
We equip vehicles with “senses” by connecting various
systems to ensure comprehensive protection for vehicle
occupants and all other road users.
By 2017
2015
Further advances in autonomous driving. Step by step, partially autonomous driving will become
possible also at higher speeds. Further steps will incorporate overtaking procedures and highly
autonomous highway driving. Autonomous parking functions will also be available and the prospect
of parking without anyone sitting in the vehicle will be within reach.
Blind Spot Assist. This driver assistance system reliably warns truck drivers of potential hazards during
turns in critical situations where visibility is limited. This important innovation is also one of the safety
technologies included in the Future Truck 2025.
Active Brake Assist ABA 3 in buses. The latest generation of the emergency braking assistance system
also initiates an automatic emergency braking maneuver when it encounters stationary obstacles.
The Mercedes-Benz Travego Safety Coach is equipped with this system and thus ensures greater safety
than is required by current legislation.
2014
Collision Prevention Assist. The new B-Class is the only vehicle in the compact segment worldwide
that comes with a radar-based collision warning system with an adaptive braking assistance feature.
The system protects against rear-end collisions at speeds of between 30 and 250 km/h. The B-Class
thus sets a new standard for safety in its segment.
EDGE
MULTIBEAM LED headlights. In its new CLS-Class model, the trailblazing Mercedes-Benz brand
offers a precision LED matrix module that provides even better light quality and even greater safety
at night.
Highway Pilot. Networked assistance systems and improved radar sensors enable this system to carry
out the world's first autonomous truck journey at normal speeds and in realistic highway traffic situations.
S 500 INTELLIGENT DRIVE. Mercedes-Benz becomes the world's first automaker to send a self-driving
test vehicle into 21st-century traffic along the historical route once driven by Bertha Benz.
DISTRONIC PLUS with Steering Assist and Stop & Go Pilot. Introduced for the first time in the new
S-Class, the assistance system helps to maintain a safe distance to the vehicle in front and a position in
the center of the lane. This substantially eases the burden on the driver, especially on long stretches and
when driving in slow-moving traffic.
Crosswind Assist. Reduces the sideways movement caused by strong wind gusts and has been standard
equipment in the new Mercedes-Benz Sprinter since the large van's market launch, making the Sprinter
unique in its segment.
2012
2011
2!5
2013
VIENNA <<<
The best for me. Mercedes me is dedicated to this principle
and therefore links a unique range of customized services
and thrilling experiences with the private and working worlds
of our customers.
Daimler is leading the way here, for example by organizing the first
"Connected Driving and Data Protection" specialist conference, which
attracted well-known representatives from business, science, associa-
tions and government agencies for an exchange of ideas in the fall
of 2014.
An employee from the dealership picks up the
car at my office. I'll still be able to get to my
meeting with customers without any problems,
though.
7:45 a.m.
My B-Class is being serviced today. Mercedes assist me
has ensured that the whole process will run smoothly
from the beginning. The dealership has reminded me of my
appointment-just one more thing I don't have to worry
about remembering.
5:00 p.m.
After the meeting, I decide on the spur of the moment
to take a taxi so that I can look through some documents
again in peace and quiet. I use the moovel smartphone
app to order a car from mytaxi, and I can also pay for
the trip with my phone afterwards.
Daimler | Clean. Safe. Connected.
5:45 p.m.
10:15 a.m.
I arrive back at my office and shortly afterwards
someone from the dealership shows up to bring
my car back. Now I can leave the office in my
freshly serviced B-Class.
10:30 a.m.
The smart that I booked with car2go is already
waiting for me a block away. As a registered
user, I can simply get in and go. The best thing
about all this is that I can use a smartphone app
to open the blue-and-white smart fortwo that's
waiting for me.
6:15 p.m.
I get into the car, plug in my iPhone, put on my
favorite songs and take off! COMAND online tells
me there's a minor traffic jam at the train station,
so I'm able to avoid it.
11:10 a.m.
I park my car2go at a charging station right near
my business partner's office. That's it - I'm done!
The station will recharge the battery for the next
user - without me having to pay anything. I walk the
rest of the way, enjoy the sunshine and call a friend
I'd like to meet this evening.
electric are
SED
TA
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Smooveler
Navi
Audio Tel Video System
COMAND Online
CAR2GO
Google
en Favoriten
anlegen
Digital DriveStyle made by Daimler: mobile and online.
This is my way!
Seamless mobility.
Welcome
Mobility means personal freedom and a good quality of life. More and more people, especially
in rapidly growing cities and regions, want to be able to move around comfortably in a climate-
friendly manner. Customizable transport solutions that can be compared and accessed via the
Internet are very much in demand. And drivers also want to be "always on" while on the road -
so that they can call up traffic information in real-time or communicate with friends and business
partners, for example.
Because Daimler aims to actively shape the mobility of the future, we align our forward-looking
technologies with the needs of our customers.
Among other things, we are working to connect vehicles with one another, with traffic infra-
structure, with the services we offer and with other mobility service providers. Together with
well-known partners, we are also looking to establish the infrastructure necessary for efficient
networked mobility. As an industry trailblazer, we are opening up new perspectives for mobility
and helping people reach their destinations as efficiently and conveniently as possible.
Xmytaxi
R RIDESCOUTTH
As varied and flexible as the lives of our customers:
our innovative portfolio for networked mobility.
27
to the digital
lifestyle.
Whether it's a traffic jam that appears suddenly behind a curve, or black ice up ahead, Car-to-X systems enable data sharing between vehicles
and infrastructure. Drivers thus receive extremely precise information about hazards in their direct vicinity and some distance away.
7:30 p.m.
space near a popular shopping area. I'm meet-
ing a friend and we're going for a stroll.
The first Mercedes me store opened in the summer of 2014 in the vibrant
Inner Alster Lake section of Hamburg. The store presents interactive brand
and product experiences on an area of 550 square meters. Visitors can obtain
information about the Mercedes-Benz brand, vehicle models and services by
using touchscreens and configuration tools or through conversations with staff
members. The store's centerpiece is a lounge and bistro area, and the facility
also features an exhibition space for art exhibits, readings and concerts.
Plans call for the number of such Mercedes-Benz stores in exclusive inner-city
locations to be significantly increased between now and 2020.
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DISTANCE 137 m
Daimler | Clean. Safe. Connected.
WIND 5
CINEMA
Mercedes me premiered at the 2014 Geneva Motor Show as a completely new
type of automotive service. It allows customers and other people interested in
the brand to discover the exciting aspects of the personalized Mercedes-Benz
world wherever and whenever they want to.
SHOPFING
>>> PARIS >
Augmented reality provides drivers with more information
in the right place and at the right time. Directional arrow
signs that appear in front of the vehicle, superimposed house
numbers, information about available parking spaces or local
places of interest - navigation can be easy and fun, even if
you're in an unfamiliar city. Augmented reality (AR) opens up
new possibilities for reducing the strain on drivers even further
while also offering them a more enjoyable driving experience.
Onboard computers and sensors use geopositioning and Inter-
net data to enhance the driver's field of vision by projecting
relevant digital information onto the windshield in real-time.
Networked assistance systems are one component of AR that
is already available in Mercedes-Benz production cars.
Car-to-X expands drivers' horizons - and makes overall
traffic flows smoother and safer. Daimler recognized the
enormous potential of Car-to-X communication at an early
stage and has been a driving force behind the development of
this technology for some years. As a result, we have launched
various research projects and are participating in the impor-
tant Car-to-X communication projects worldwide. As a founder
member of the Car 2 Car Communication Consortium, we
are working to create a car-to-car communication system
standardized throughout Europe. In addition, we are a project
leader in field tests of car-to-X communication in practical
use, and thus a pioneer of complete-coverage data exchange
systems.
Trailblazer for
a new era of
intelligent mobility.
Top priority: data protection in connected vehicles.
Connected services and intelligent traffic systems use information from
the vehicle's surroundings as well as data relating to the road ahead.
All of this data has to be protected to ensure the safety of the driver and
the vehicle.
In the connected vehicle, we see data protection as customer protection.
This is why we prioritize our customers' freedom of decision: We inform
customers through various media about which data is used for which
purposes, and offer them the possibility to decide for themselves whether
to pass on their data or not. Daimler has extremely high standards also
with regard to data security: We protect data and vehicle systems against
manipulation and misuse at a high level of IT technology in order to keep
ahead of all conceivable dangers.
666 ROUTE
My B-Class shows me the way to a parking
First Mercedes me store in Hamburg. Mobility meets lifestyle.
Daimler | Clean. Safe. Connected.
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Making the mobile lifestyle even better:
Mercedes me.
In an effort to meet the individual requirements of our customers, we
develop innovative services that make access to the fascinating world of
Mercedes even more personal and attractive. For example, Mercedes me
brings together all current and future services related to our automobiles -
everything from vehicle purchases and financing to maintenance and
flexible mobility solutions. All of these services can be accessed via
a digital platform on the Internet or physically in our unconventional
Mercedes me stores.
Mercedes me
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Mercedes connect me enables people to connect with their
own vehicle at any time and from any location. All that's needed
is a mobile-phone connection, which is established via an
integrated communication module. The module is a standard
feature in selected Mercedes-Benz models. The services include
accident, maintenance and breakdown management, an emer-
gency call system, and telediagnosis. An optional feature allows
a smartphone to be used to turn on the car heater, localize the
parked vehicle and display how much fuel there is in the tank.
Mercedes assist me is a personalized and customized service
for Mercedes-Benz drivers. Among other things, it ensures
online access to customer service centers around the clock,
and includes an automatic appointment-scheduling feature.
Mercedes finance me simplifies access to the tailored auto-
motive financial services provided by Daimler Financial Services.
The portfolio offered ranges from flexible financing solutions
to personalized leasing plans and the right insurance policy for
every customer's dream car.
Mercedes inspire me offers an interesting look at research
and development at Mercedes-Benz and also presents reports
on innovations and mobility solutions. Customers can join a
community to learn about new ideas and to formulate their own,
and they can also talk with experts or obtain support. More
and more services and experiences are being developed for
Mercedes inspire me that go beyond traditional vehicle-related
issues to include events, travel and lifestyle topics.
www.mercedes.me/en
Vonmang
D
D
Mercedes move me offers access to intelligent mobility solu-
tions. The moovel mobility app links up various mobility options
from different service providers and shows customers the
best way to get from A to B. Our own services such as car2go,
car2go black and the mytaxi ordering service are supplemented
by strategic partnerships with other mobility service providers
like as the Flixbus long-distance bus company.
facebook
هر
Dieter Zetsche
Than holders,
Daimler | Chairman's Letter
Stuttgart, February 2015
"In the coming years, we want to further strengthen what has traditionally
differentiated Daimler from the competition: exceptional quality and technological
leadership. At the same time, we intend to achieve a level of profitability that is
unprecedented at this company."
We are on track.
37
and transform the automobile into
Find out how autonomous driving will change our society
mobile living space.
www.mercedes-benz.com/en/
mercedes-benz/innovation/
Daimler | The Future Has Begun.
The F 015 Luxury in Motion brings today's drivers many of the aspects of the personal mobility of tomorrow.
The visionary research vehicle is our response to a rapidly changing world in which the most coveted luxuries
will be private space and time for oneself. The autonomously driving luxury sedan of the future will become a
valuable personal retreat in the urban traffic environment. During a trip, passengers are able to relax, talk or
work in four lounge chairs arranged in pairs facing each other. The ability to continually exchange information
between the vehicle, passengers and the outside world ensures a high level of safety and a fascinating degree
of comfort. Equipped with a forward-looking F-CELL PLUG-IN HYBRID drive system, the F 015 Luxury in Motion
has an operating radius of approximately 1,100 kilometers that can be driven fully electrically without any
local emissions.
Has Begun.
The Future
Harbinger of a mobility revolution: Mercedes-Benz F 015 Luxury in Motion.
The research vehicle uses light signals and voice
output to communicate with passengers and other
road users, thus becoming a social partner in the
traffic environment.
The crosswalk is a laser projection from the F 015.
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Socially connected and always up to date on the road.
Scan the QR code to learn more about this topic.
In last year's season, our Silver Arrows won everything that was to be won in
Formula 1 racing: the drivers' championship and the constructors' championship.
That's a fantastic achievement - for which our drivers and our engineers in
Brackley, Brixworth and Stuttgart worked with great determination and perse-
verance. But it isn't just our motorsport colleagues who in recent years have
made good progress step by step, but the entire Daimler Group.
2014 was a very good year for Daimler. That is to the credit of our approxi-
mately 280,000 employees around the world, and they have therefore earned
the special gratitude of the entire Board of Management. Never before have
so many customers decided in favor of our vehicles: We sold more than
2.5 million of them. As a result, we generated total revenue of 129.9 billion
10 percent more than in the previous year. The Group's EBIT
amounted to 10.8 billion euros. And our EBIT from the ongoing business
increased at almost three times the rate of revenue growth to 10.1 billion
euros. So we achieved what we promised you: profitable growth.
euros
-
Sincerely yours,
The bottom line is that also in the coming years, we want to further streng-
then what has traditionally differentiated Daimler from the competition, excep-
tional quality and technological leadership for example. At the same time,
we aim to reach a level of profitability that is unprecedented at this company.
To get there, we are implementing structural changes in all our divisions.
This will give us more “water under the keel” to secure our growth strategy
over the long term also against headwinds. And it will also make sure we
have the financial resources to continue investing in what we do best and where
it pays off the best: in fascinating products and technologies.
moovel is also a kind of platform, with which we utilize the opportunities on the
interface between mobility and mobile Internet. Using the app, it is possible
not only to compare various mobility options such as car2go, bus, train or taxi,
but also to book them and pay for them. Just recently, the use of moovel
was extended to business trips. Our mobility services already have a customer
base of significantly more than one million customers.
China is an important market also for Daimler Trucks: Together with our
Chinese partner Foton and the truck brand Auman, we intend to grow rapidly
there in the coming years. In India, we will expand our product portfolio
in the second half of the year with a new BharatBenz heavy-duty truck. We are
systematically developing our platform strategy in order to protect our
globally leading position. In the past, the platform concept mainly focused on
the powertrain - we are now applying it to the entire vehicle.
41
By the end of this year, Mercedes-Benz Cars will launch a total of eight new
or upgraded car models, half of which will be SUVs, including the new GLE Coupe.
China will continue to play a major role for our profitable growth. We want
to increase our unit sales there to well over 300,000 cars - two thirds of them
will also be produced in China in the coming years.
All of these achievements are the result of a clear strategy and its consistent
implementation. And we will continue in exactly the same way in 2015.
For Daimler Financial Services, 2014 was the most successful year yet. We
concluded more new financing agreements than ever before. Our car-sharing
provider car2go is the market leader and is already profitable at some of its
locations. For Daimler, car sharing is not just a concept, but a business model.
DFS is also first class as an employer: In the “Great Place to Work” study,
our financial services division is the first German company to be ranked amongst
the world's top 25 employers.
We can also be satisfied with the development of Daimler Buses. The measures
taken for more growth and efficiency are showing their effects. We were able to
raise the division's earnings forecast as the year progressed. We significantly
surpassed the EBIT of 2013 already after the first three quarters of the year –
although unit sales did not quite match the prior-year level.
mobility-services-and-connectivity
the travel and leisure vehicles of the Marco Polo product series on the market.
On the commercial side, the new Vito was launched. The attractive product
range brought the vans division record unit sales of 295,000 vehicles, an
increase of 9 percent compared with 2013.
Daimler Chairman's Letter
40
a new sales network. Our next step is to enter the Indian bus market, which is
why we are investing in a new bus plant in Chennai, to be completed in 2015.
At Daimler Trucks, we are today more broadly and strongly positioned than
ever before with our six own brands and 54 models. In addition, we have
trucks that we produce and distribute in joint ventures with local partners.
This allows us to offer appropriate products to our customers in every region
of the world. The most exciting new vehicles from Daimler Trucks last year
definitely included the Mercedes-Benz Future Truck 2025: This study demon-
strates how autonomous driving will revolutionize goods transport - it will
become safer, more efficient and more connected. In business terms, the
year 2014 differed widely from region to region for Daimler Trucks. In Europe
and Latin America, political uncertainty had a negative impact on market
development. But we profited from very good demand for trucks in Japan and
North America. In India, we have built up a new brand within a very short time
under the name BharatBenz – with new products, a new production site and
But 2014 was also the year of smart at Daimler. Two new models were presented
simultaneously: the fortwo and the forfour. smart retains its unique maneu-
verability, but it is now even more comfortable and even safer. The new smart
models are also a good demonstration of our cooperation with Renault-Nissan.
They show that synergies in development and an absolutely independent auto-
mobile character are not incompatible.
sold more S-Class automobiles in 2014 than ever before in the history of
this model series. We focused last year not only on the new products,
but also on the expansion of our international production network. Our new
C-Class was a milestone in this respect: In less than six months, we started
production of this car on four continents. It is now produced in parallel in
Germany, the United States, South Africa and China.
39
Mercedes-Benz Cars made the main contribution to last year's excellent results.
With unit sales of 1.72 million vehicles, we sold more cars than ever before.
This is our fourth record year in succession. Our compact cars were an impor-
tant driver of unit sales - thanks also to the new GLA. In addition, we also
At the Annual Shareholders' Meeting, the Board of Management and the
Supervisory Board will propose an increase in the dividend to 2.45 euros per
share. With this proposal, we are letting our shareholders participate in
the company's success and at the same time expressing our confidence that
Daimler can achieve even more.
The focus at Mercedes-Benz Vans in 2014 was on the launch of the new genera-
tion of mid-size vans. For private customers, we put the new V-Class and
www.daimler.com/technology-and-innovation/
We are shaping the mobility of the future with passion
and an innovative spirit to ensure that people can get
to their destinations in a convenient, economical and
environmentally friendly manner. Our vehicles and
mobility concepts skillfully bring together the require-
ments of our customers with the complete range of
options available in the digital world.
Mobilizing people and cities.
Daimler and the Capital Market
60
Objectives and Strategy
64
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43
The Board of Management.
Dieter Zetsche | 61
Chairman of the Board of Management
Head of Mercedes-Benz Cars
Appointed until December 2016
Wolfgang Bernhard | 54
Daimler Trucks and Buses
Appointed until February 2018
0000
0000
Christine Hohmann-Dennhardt | 64
Integrity and Legal Affairs
Appointed until February 2017
Wilfried Porth | 56
Human Resources and Labor Relations Director &
Mercedes-Benz Vans
Appointed until April 2017
44
54
Highlights of 2014
52
mobility concepts.
all audio, telephone, and navigation functions.
Integrated multimedia system with Internet access for
of commercial vehicles. COMAND Online
services for the procurement, servicing and management
travel times, costs and fuel consumption. CharterWay
FleetBoard Telematics system for managing transport,
vehicles and between vehicles and traffic infrastructure.
car2go black Fully automated, smartphone-based car-sharing
system with Mercedes-Benz cars in the pilot cities of Berlin and
Hamburg. mytaxi The taxi-ordering app enables a direct connection
between taxi driver and passenger. car2go Flexible urban mobility
made by Daimler – now operating at 29 locations worldwide. moovel
combines the mobility services of various companies in one app.
Car-to-X communication Wireless exchange of data among
The Supervisory Board
Pioneering
42
A | To Our Shareholders | Contents
We implement our
strategy effectively.
In recent years, we have implemented our strategy consistently and with great
determination. Step by step, we are putting the individual components together
into a coherent whole. Our new vehicle models are extremely successful in
their markets. The signs are pointing towards growth at all of our divisions, and
we are on schedule with our efficiency-enhancing programs. In addition, we
have strengthened our leading position in the areas of safety and fuel efficiency
as well as with autonomous driving. On this basis, we intend to continue our
profitable growth in the coming years.
A | To Our Shareholders.
The Board of Management
44
Report of the Supervisory Board
46
34
=4
Report of the Supervisory Board.
Dear Shareholders, the Supervisory Board dealt in detail with the strategic and operational
development of the Daimler Group in nine meetings during the 2014 financial year.
IOR Istituto per le Opere de Religione (Vatican Bank)
(since April 9, 2014)
Vevey
Petraea Heynike
Trumpf GmbH + Co. KG - Chairman
Fuchs Petrolub SE - Chairman
Other supervisory board memberships/directorships:
BASF SE Chairman
Chairman of the Supervisory Board of BASF SE
Ludwigshafen
Dr. Jürgen Hambrecht
Emerson Electric Co.
Bayer AG
Other supervisory board memberships/directorships:
Linde AG
of Deutsche Bank Foundation
Chairman of the Board of Directors
Frankfurt am Main
Dr. Clemens Börsig
Formel D GmbH
Other supervisory board memberships/directorships:
of Robert Bosch GmbH
Former Member of the Management Board
Stuttgart
Dr. Bernd Bohr
AkzoNobel N.V.
Deutsche Telekom AG
Former Executive Vice President and General Manager
of the Networks Business Group of Nokia Corporation
Other supervisory board memberships/directorships:
Fortum Oyj - Chairwoman
Sari Baldauf
Helsinki
Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Deutsche Bank AG - Chairman
Bayer AG
Dr. Paul Achleitner
Munich
Deputy Chairman of the Supervisory Board of Daimler AG
Chairman of the General Works Council, Daimler Group
and Daimler AG; Chairman of the Works Council,
Gaggenau Plant, Daimler AG;
Former Executive Vice President of the Executive Board
of Nestlé S.A.
Other supervisory board memberships/directorships:
Schulich School of Business
Aiglon College
Climate and Land Use Alliance
Other supervisory board memberships/directorships:
ThyssenKrupp AG
General Counsel of the German Metalworkers' Union
(IG Metall)
Frankfurt am Main
Dr. Sabine Maaßen*
Deputy Chairman of the General Works Council of Daimler AG
(since May 1, 2014)
Chairman of the Works Council at the Sindelfingen Plant;
Sindelfingen
Ergun Lümali*
(up to and including December 31, 2014)
Dealership, Daimler AG
Chairman of the Works Council of the Frankfurt/Offenbach
Frankfurt am Main
Jürgen Langer*
A | To Our Shareholders | The Supervisory Board
Gaggenau
52
Allianz Deutschland AG
Other supervisory board memberships/directorships:
(since April 9, 2014)
Chairman of the Board of Management of Siemens AG
Munich
Joe Kaeser
General Electric Company
Other supervisory board memberships/directorships:
Apple Inc.
President and Chief Executive Officer of Grameen America,
Inc.
New York
Andrea Jung
Vice Chairman of the German Metalworkers' Union (IG Metall)
Other supervisory board memberships/directorships:
Robert Bosch GmbH
Frankfurt am Main
Jörg Hofmann*
NXP Semiconductors N.V.
Michael Brecht*
UniCredit S.p.A.
SMS GmbH
A | To Our Shareholders | Report of the Supervisory Board
The Board of Management informed the Supervisory Board
with the use of monthly reports and risk reports about the most
important indicators of business development and existing
risks, and submitted the interim financial reports to the Super-
visory Board. Deviations from the planning were explained
in detail to the Supervisory Board. The Supervisory Board was
kept fully informed of specific matters also between its
meetings. In addition, the Chairman of the Board of Manage-
ment informed the Chairman of the Supervisory Board in
regular discussions about important developments and about
those matters that were to be submitted to the Supervisory
Board to pass resolutions on or to take note of.
As required in individual cases, for example in cases of special
urgency, the members were requested to pass resolutions
in writing, following consultation with its Chairman. For the
preparation of such proposed resolutions, comprehensive and
conclusive documentation was distributed to the members
of the Supervisory Board. Furthermore, the members of the
Board of Management were available for a bilateral exchange
of opinions and to answer any questions.
Topics discussed at the Supervisory Board meetings
in the year 2014. In the meeting of the Supervisory Board held
on January 28, 2014, the personnel changes in the Board
of Management explained on page 50 were discussed
and decided upon.
In a meeting attended by the external auditors in early
February 2014, the preliminary key figures of the annual com-
pany and consolidated financial statements for 2013 and the
dividend proposal to be made at the 2014 Annual Shareholders'
Meeting were discussed. The preliminary key figures for the
year 2013 and the proposal on the appropriation of profit were
announced at the Annual Press Conference on February 6, 2014.
In the Supervisory Board meeting held on February 18, 2014,
the Supervisory Board first decided on the personnel changes
in the Board of Management described on page 50.
Subsequently, it dealt with the annual company financial state-
ments, the annual consolidated financial statements and the
combined management report for Daimler AG and the Daimler
Group, each of which had been issued with an unqualified
audit opinion by the external auditors, as well as with the reports
of the Audit Committee and the Supervisory Board, the cor-
porate governance report, the remuneration report and the pro-
posal on the appropriation of profit. In preparation, the mem-
bers of the Supervisory Board were provided with comprehensive
documentation. The Audit Committee and the Supervisory
Board dealt with those documents in detail and discussed them
intensively in the presence of the external auditors. Following
the final results of the review by the Audit Committee and its
own review, the Supervisory Board declared its agreement
with the results of the audit carried out by the external auditors,
determined that no objections were to be raised, and approved
the financial statements and the combined management
report as presented by the Board of Management. The company
financial statements of Daimler AG for the year 2013 were
thereby adopted. On this basis, the Supervisory Board consented
to the proposal made by the Board of Management on the
appropriation of distributable profit. In addition, the Supervisory
Board approved the Report of the Supervisory Board, the
Corporate Governance Report and the Remuneration Report,
as well as its proposed decisions on the items of the agenda
for the 2014 Annual Shareholders' Meeting.
47
Also in the meeting on February 18, 2014, the Supervisory Board
received detailed information on the topic of "Future Mobility."
Some of the main aspects of this topic were urbanization, demo-
graphic developments, the digital revolution and autonomous
driving. Furthermore, the Supervisory Board approved a capital
increase for the Group subsidiary Daimler India Commercial
Vehicles. Finally, it dealt with aspects of Board of Management
remuneration and approved the other board memberships
and sideline activities of the members of the Board of Manage-
ment as presented in the meeting.
On March 7, 2014, the Supervisory Board discussed and
approved the transfer to the partner Rolls-Royce Holdings plc.
of the 50% equity interest held by Daimler AG in Rolls-Royce
Power Systems Holding GmbH.
One of the items on the agenda of the Annual Shareholders'
Meeting held on April 9, 2014 was the election of three members
of the Supervisory Board representing the shareholders.
In its constitutive meeting straight after the Annual Sharehold-
ers' Meeting, the Supervisory Board elected Joe Kaeser
as a member of the Audit Committee. This and other decisions
on the composition of the committee are presented on
page 50 under "Personnel changes in the Supervisory
Board."
In another meeting at the end of April 2014, the Supervisory
Board consented to the expansion of the cooperation with
Nissan in the compact-car segment. Amongst other things,
it approved investments in a joint production facility with
Nissan in Mexico. Subsequently, the Supervisory Board decided
on the successor to Erich Klemm in the positions of Deputy
Chairman of the Supervisory Board and member of the commit-
tees of the Supervisory Board. Details are provided on
page 50 under "Personnel changes in the Supervisory
Board."
In June, the Supervisory Board passed a resolution in written
circulated form on the provision of health care for the active
and retired employees of a US company of the Group, Daimler
Trucks North America.
Following discussion of the course of business and the results
of the second quarter, in its meeting in July, the Supervisory
Board received detailed information on the current development
of Daimler in China and subsequently consented to a capital
increase at the Chinese subsidiary Mercedes-Benz Auto Finance
Ltd. In this meeting, the Supervisory Board also discussed
an extension of the strategic cooperation with Renault-Nissan
and approved that project. The Supervisory Board also dealt
with the agenda of its strategy workshop in 2014.
During the two-day strategy workshop at the Mercedes-Benz
plant in Bremen, as in the previous strategy meetings, the
Supervisory Board received information on the strategic goals
of Daimler AG and the divisions, as well as on the stage of
their implementation so far. The starting point was an assessment
of the markets and the automotive environment in the year
2025. The Supervisory Board dealt in detail with the expected
changes in structural conditions, in particular in the areas
of geopolitics and industrial policy, emission legislation and
sustainability in the automotive industry. Other important
subjects for discussion included connectivity, autonomous
driving, big data and the challenges of so-called Industry 4.0.
On the basis of the future scenario deemed to be likely,
the Supervisory Board then dealt with the Group's objective
for the year 2025 and - derived from that the objectives
of the various divisions. The main points for discussion included
the objectives of the divisions Daimler Trucks and Daimler
Buses as well as Mercedes-Benz Cars. In connection with Daimler
Trucks and Buses, the topics discussed were model policy,
production network, new competitors from the emerging mar-
kets, opportunities in new sales markets and emission-free
driving for city buses. With regard to Mercedes-Benz Cars, the
discussions focused on the product portfolio and platform
strategy, the global production network, material-cost efficiency
and supplier quality, innovation strategy and the Best
Customer Experience program.
Dr. Manfred Bischoff, Chairman of the Supervisory Board.
In October 2014, the Supervisory Board consented in written
circulated form to the termination of the hedge of the price
of the shares held in Tesla and to the sale of those shares.
In another resolution passed in written circulated form in October,
the Supervisory Board decided on the basis of a recommen-
dation by the Audit Committee on the restructuring of the real-
estate portfolio in Germany and consented to the planned
project.
48
A | To Our Shareholders | Report of the Supervisory Board
Also in the meeting in December, on the basis of a recom-
mendation by the Nomination Committee, the members
of the Supervisory Board representing the shareholders decided
to propose to the Annual Shareholders' Meeting that Dr. Paul
Achleitner be reelected to the Supervisory Board with effect as
of the end of the Annual Shareholders' Meeting held on April 1,
2015 and until the end of the Annual Shareholders' Meeting that
decides on ratification of the actions in the year 2019. Other
topics dealt with in the December meeting were corporate gover-
nance, as detailed below, and Board of Management remu-
neration in light of the recommendations of the German Corpo-
rate Governance Code. Finally, the Supervisory Board dealt
with the probable main topics of the year 2015.
Corporate governance. During the year 2014, the Supervisory
Board was continually occupied with standards of good
corporate governance.
The Supervisory Board is convinced that effective work in
the Supervisory Board in terms of good corporate governance
requires two things: On the one hand, its members must have
high levels of specialist expertise. On the other hand, diversity
amongst the members in terms of internationality, gender,
experience and cultural background must reflect the Group's
size and internationality. Both of these requirements are
fulfilled at Daimler. For the purpose of appropriate participation
by women and to secure appropriate internationality amongst
its members, the Supervisory Board has set itself targets in
accordance with the recommendations of the German Corporate
Governance Code, which the Nomination Committee takes
into consideration with its recommendations to the Supervisory
Board as does the Supervisory Board itself with the election
proposals that it makes to the Annual Shareholders' Meeting.
Details of the Supervisory Board's targets and of the stage
of target achievement are presented on pages 182 ff. of the
Corporate Governance Report.
The members of the Supervisory Board of Daimler AG are obliged
to disclose conflicts of interest - especially those that might
arise due to an advisory or board function for a customer, sup-
plier or creditor of Daimler or for other third parties - to the
entire Supervisory Board. In fulfilment of the relevant recommen-
dations of the German Corporate Governance Code, the Super-
visory Board provides information on any conflicts of interest that
occur and on how they were dealt with in its report to the
Annual Shareholders' Meeting.
There were no indications of any actual conflicts of interest in
2014. Purely as a precaution, in light of her well-known member-
ship of the board of directors of General Electric Company,
Andrea Jung did not participate on March 7, 2014 in the consul-
tations and resolution on the sale to the partner Rolls-Royce
Holdings plc. of Daimler's 50% equity interest in Rolls-Royce
Power Systems Holding GmbH, in order to avoid any possible
conflict of interest. Apart from that, there were no indications
of any potential conflicts of interest during the reporting
period.
In its meetings in July and December, the Supervisory Board
slightly updated the wording of the rules of procedure of the
Supervisory Board and its committees, and in December
approved the 2014 declaration of compliance with the German
Corporate Governance Code pursuant to Section 161 of the
German Stock Corporation Act (AktG). With the exceptions
explained in the declaration, all the recommendations of the Code
have been complied with and continue to be complied with.
The Supervisory Board arranged for an externally moderated
efficiency review to be carried out in 2014, thus fulfilling
the requirements of its rules of procedure and of the German
Corporate Governance Code. The results of the efficiency
review, with which the Supervisory Board dealt intensively
in its meeting in mid-February 2015, confirm that there is
very good and constructive collaboration within the Supervisory
Board and with the Board of Management.
Corporate Governance at Daimler is described in detail in the
Corporate Governance Report on pages 182 ff and in the
Remuneration Report on pages 118 ff of this Annual Report.
Report on the work of the committees
The Presidential Committee convened five times last year.
It dealt primarily with corporate governance topics and questions
of remuneration, as well as with personnel matters of the
Board of Management. As in previous years, compliance targets
constituted part of the individual target agreements of the
members of the Board of Management. Once again, additional
non-financial targets were also included as criteria in the
target agreements. For the past financial year, they were in the
areas of employee and customer satisfaction, diversity,
and the further development and permanent establishment
of integrity.
The Audit Committee met six times in 2014. Details of those
meetings are provided in a separate report of that committee.
see pages 176 ff
In the meeting held in December 2014, the Supervisory Board
first decided on the changes in the Board of Management
described on page 50. Subsequently, the Supervisory Board
dealt in detail on the basis of comprehensive documentation
with the operational planning for the years 2015 and 2016. This
included discussion of existing opportunities and risks as well
as the Group's risk management. Subsequently, the Supervisory
Board dealt with the optimization of the sales network and
the structure of Daimler's own sales-and-service centers in
Germany, and consented to the sale of some of those centers.
In addition, the Supervisory Board approved contributions
to the German pension fund assets to secure the employees'
retirement benefits.
Wolfgang Nieke*
46
Cooperation between the Supervisory Board and the
Board of Management. The meetings of the Supervisory Board
featured intensive and open exchanges of information and
opinions. The Supervisory Board arranged an executive session
in each of its meetings to be able to discuss topics in the
absence of the Board of Management. No member of the Super-
visory Board attended fewer than half of the meetings in the
past financial year.
Other supervisory board memberships/directorships:
Airbus Group N.V.
Chairman of the Supervisory Board of Daimler AG
Munich
Dr. Manfred Bischoff
The Supervisory Board.
51
Dr. Manfred Bischoff
Chairman
The Supervisory Board
Stuttgart, February 2015
Appreciation. The Supervisory Board thanks all of the employ-
ees and the management of the Daimler Group for their personal
contributions to the successful year 2014. With all best wishes
for the future, the Supervisory Board also expresses its warmest
thanks to the departed members Gerard Kleisterlee, Erich
Klemm, Jürgen Langer and Lloyd G. Trotter. With great sad-
ness and gratitude, the Supervisory Board bids farewell to
Dr. Bernhard Walter as the longstanding Chairman of the Audit
Committee, who passed away in January 2015. Dr. Bernhard
Walter has had a lasting positive impact on the Company through
his work. Special thanks for his great commitment to the
benefit of the Company are also due to Erich Klemm as the
Deputy Chairman of the Supervisory Board and its committees.
The Audit Committee and the Supervisory Board dealt with those
documents in detail and discussed them intensively in the
presence of the responsible external auditors, who reported
on the results of their audit and were available to answer
supplementary questions and to provide additional information.
Following the final results of the review by the Audit Com-
mittee and its own review, the Supervisory Board declared
its agreement with the results of the audit by the external
auditors; it determined that no objections were to be raised
and approved the financial statements and the combined
management report as presented by the Board of Management.
The company financial statements of Daimler AG for the
year 2014 were thereby adopted. On this basis, the Supervisory
Board consented to the proposal made by the Board of
Management on the appropriation of distributable profit.
Furthermore, it approved the report of the Supervisory Board,
the corporate governance report and the remuneration
report, as well as its own proposed decisions on the items
of the agenda for the 2015 Annual Shareholders' Meeting.
In the meeting on February 13, 2015, the Supervisory Board
dealt with the annual company financial statements, the annual
consolidated financial statements and the combined manage-
ment report for Daimler AG and the Daimler Group, each of which
had been issued with an unqualified audit opinion by the
external auditors, as well as with the reports of the Audit Com-
mittee and the Supervisory Board, the corporate governance
report, the remuneration report and the proposal on the appro-
priation of profit. In preparation, the members of the Super-
visory Board had been provided with comprehensive documen-
tation including the Annual Report with the consolidated
financial statements according to IFRS, the combined manage-
ment report for Daimler AG and the Daimler Group, the
corporate governance report and the remuneration report, the
annual company financial statements of Daimler AG, the
proposal of the Board of Management on the appropriation
of profit, the audit reports of KPMG on the annual company
financial statements of Daimler AG and the consolidated
financial statements, each including the combined management
report, as well as drafts of the reports of the Supervisory
Board and of the Audit Committee.
A | To Our Shareholders | Report of the Supervisory Board
50
The members of the Supervisory Board regularly prepared
for upcoming resolutions on the basis of documentation that
had been provided in advance by the Board of Management.
They were supported by the relevant committees and intensively
discussed the actions and transactions upon which decisions
were to be taken with the Board of Management. The members
of the Supervisory Board attended such courses of training
and further training regarded as necessary for the performance
of their tasks. In this context, the meetings of the Supervisory
Board dealt with issues of fundamental importance for the Group
such as the macroeconomic situation of key sales markets
or new products and forward-looking technologies. In addition,
the Supervisory Board meetings were regularly prepared in
separate discussions with the members of the Board of Manage-
ment of the members representing the employees and the
members representing the shareholders.
In a meeting in early February 2015 attended by the external
auditors, the Supervisory Board discussed the preliminary
key figures of the annual company and consolidated financial
statements for 2014 and the dividend proposal to be made
at the 2015 Annual Shareholders' Meeting. The preliminary key
figures for the year 2014 were announced at the Annual
Press Conference on February 5, 2015.
In the Supervisory Board meeting on February 13, 2015,
Hubertus Troska was reappointed as a member of the
Board of Management of Daimler AG with responsibility
for "Greater China" for a further five years with effect
as of January 1, 2016.
In its meeting on December 11, 2014, the Supervisory Board
decided to expand the Board of Management and to appoint
Ola Källenius as a new member with responsibility for Sales
Mercedes-Benz Cars for a period of three years with effect
as of January 1, 2015, and to adjust the schedule of responsi-
bilities accordingly.
In the Supervisory Board meeting on February 18, 2014,
Bodo Uebber's appointment as the member of the Board
of Management of Daimler AG with responsibility for
Finance & Controlling and Daimler Financial Services was
extended for a further five years as of January 1, 2015.
Personnel changes in the Board of Management. In the
Supervisory Board meeting held on January 28, 2014, the
appointment of Andreas Renschler as a member of the Board
of Management was terminated by mutual agreement.
Andreas Renschler was released of his duties as of that date.
Also in that meeting, the Supervisory Board decided that
responsibility for the area of Manufacturing and Procurement
Mercedes-Benz Cars in the Board of Management of Daimler AG
would be transferred until further notice to its Chairman,
Dr. Dieter Zetsche, in his position as Head of the Mercedes-
Benz Cars division. Responsibility for the Mercedes-Benz
Vans division was allocated to Wilfried Porth.
Jürgen Langer stepped down from the Supervisory Board as
of December 31, 2014. With effect as of January 1, 2015
Michael Bettag was appointed by the court to the Supervisory
Board as his successor representing the employees.
On April 30, 2014, Erich Klemm stepped down from his positions
as a member and Deputy Chairman of the Supervisory Board.
Ergun Lümali had already been elected to replace Erich Klemm
in the election of members of the Supervisory Board repre-
senting the employees held in 2013. Ergun Lümali therefore
became a member of the Supervisory Board as of May 1, 2014
without the need for another election or resolution. Due to
the departure of Erich Klemm, his successors in the positions
of Deputy Chairman and member of the committees had to
be elected. Effective as of May 1, 2014, the Supervisory Board
elected Michael Brecht as its Deputy Chairman. Michael
Brecht succeeds to Erich Klemm also as a member and Deputy
Chairman of the Mediation Committee and the Presidential
Committee. The Supervisory Board elected Dr. Sabine Maaßen
to the Audit Committee as Erich Klemm's successor repre-
senting the employees with effect as of May 1, 2014. The mem-
bers of the Audit Committee elected Michael Brecht as the
Chairman of that Committee.
After the departure of Dr. Bernhard Walter as a member and
the longstanding Chairman of the Audit Committee, in its
constitutive meeting straight after the Annual Shareholders'
Meeting, the Supervisory Board elected Joe Kaeser as a
member of the Audit Committee representing the shareholders.
Furthermore, the members of the Audit Committee elected
Dr. Clemens Börsig as the Chairman of that Committee.
Personnel changes in the Supervisory Board. With effect as
of the end of the Annual Shareholders' Meeting on April 9, 2014,
Gerard Kleisterlee, Lloyd G. Trotter and Dr. Bernhard Walter
stepped down from the Supervisory Board. The Annual Share-
holders' Meeting elected Dr. Bernd Bohr, Joe Kaeser and
Dr. Bernd Pischetsrieder as members of the Supervisory Board
representing the shareholders until the end of the Annual
Shareholders' Meeting that decides on ratification of the actions
for the year 2018. The election proposals made by the Super-
visory Board to the Annual Shareholders' Meeting were based
on recommendations made by the Nomination Committee.
The chairmen of the committees informed the members of the
Supervisory Board about the activities of the committees and
their decisions, in each case in the Supervisory Board meeting
following such decisions.
As in previous years, the Mediation Committee, a body
required by the provisions of the German Codetermination Act
(MitbestG), had no occasion to take any action in 2014.
49
In the year 2014, the Supervisory Board performed its tasks
as defined by the law, the Articles of Incorporation and the
rules of procedure, and continually advised and supervised the
Board of Management on the management of the company.
It examined whether the annual company financial statements,
the annual consolidated financial statements, the combined
management report for the Company and the Group, and the
other financial reporting were in conformance with the appli-
cable requirements. In addition, the Supervisory Board passed
resolutions on numerous business matters for which its con-
sent was required following careful reviews and consultations.
Those matters included investment planning, capital changes
at companies of the Group, investments, divestments and the
conclusion of contracts with particular importance for the
Group. The Board of Management informed the Supervisory
Board about a large number of transactions not requiring
the Supervisory Board's consent and the two boards discussed
those matters together, for example the further development
of strategic programs in the various divisions and the status
of various cooperation projects. Together with the Board
of Management, the Supervisory Board held intensive and
detailed discussions on the information and assessments
that were material for its decisions and recommendations.
During the reporting period, the Board of Management
regularly informed the Supervisory Board about all significant
key financials of the Group and the divisions. In addition, it
continually provided information to on important topics such
as return on equity and the Group's liquidity situation, the
development of sales and procurement markets, the general
economic situation in the main sales markets and develop-
ments in the area of financial services. The Supervisory Board
dealt in detail also with the share-price development and its
causes as well as with the expected effects of strategic projects
on the share-price development. Additional topics included
the further development of the product portfolio and securing
the Group's long-term competitiveness. Furthermore, the
Supervisory Board dealt with fundamental questions of corporate
planning including financial, investment, sales and personnel
planning, current developments at companies of the Group,
revenue development, the situation of the Company and the
divisions, and the ongoing implementation of measures
to secure future-oriented, sustainable mobility.
The positive results of the growth strategy implemented by
the Board of Management and expressly supported by the Super-
visory Board increasingly became very apparent: Daimler
successfully continued along its path of profitable growth in
financial year 2014. The newly presented products were
extremely well received by the market and the broad geograph-
ical spread of our activities had a very positive and stabilizing
effect, especially in the commercial vehicles business. Daimler
made further good progress also in the important Chinese
market. The Group's unit sales and revenue reached new historic
records. As announced in early 2014, earnings from the
ongoing business increased significantly. This was due also
to the successful implementation of the efficiency programs
at all the divisions, which significantly improved the cost
position. In addition, the adjustment of the investment port-
folio with the sale of the equity interests in Rolls-Royce Power
Systems Holding GmbH and Tesla Motors, Inc. resulted in
substantial capital gains and cash inflows, which were applied
to further strengthen the Group's core business.
Audit of the 2014 company and consolidated financial state-
ments. The financial statements of Daimler AG and the com-
bined management report for the Company and the Group for
2014 were duly audited by KPMG AG, Wirtschaftsprüfungs-
gesellschaft, Berlin, and were given an unqualified audit opinion.
The same applies to the consolidated financial statements
for 2014 prepared according to IFRS.
The Nomination Committee convened twice in 2013. Among
other matters, it prepared recommendations for the Supervisory
Board's proposals to the Annual Shareholders' Meeting 2014
on candidates for election. The election proposals give due con-
sideration not only to the defined qualifications for the specific
position, but also to the recommendations of the German
Corporate Governance Code. The Nomination Committee had
already made its recommendations in 2013 for the election
proposals to be made to the Annual Shareholders' Meeting
in 2014.
Stuttgart
Dr. Bernd Pischetsrieder
HO
ETRONAS
B
HO
Ganz Deuter Nationalmannser
1954, 1974, 1990, 2014!
54
ETRONAS
Machton
Determination
pays off!
53
* Representative of the employees
Sari Baldauf
Dr. Paul Achleitner
Dr. Manfred Bischoff - Chairman
Nomination Committee
Dr. Sabine Maaßen*
Highlights of 2014.
Joe Kaeser
2014
CONSTRUCTORS
CHALINIC
(retired on April 9, 2014)
Committees of the Supervisory Board:
Committee pursuant to Section 27 Subsection 3
of the German Codetermination Act (MitbestG)
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Dr. Jürgen Hambrecht
Jörg Hofmann*
Presidential Committee
A | To Our Shareholders | The Board of Management
Hubertus Troska | 54
Greater China
2014 WORLD
Appointed until December 2020
Finance & Controlling, Daimler Financial Services
Appointed until December 2019
Thomas Weber | 60
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG
Since January 1, 2015:
Ola Källenius | 45
Mercedes-Benz Cars Marketing & Sales
Appointed until December 2017
45
Bodo Uebber | 55
Michael Brecht*
Group Research & Mercedes-Benz Cars Development
Appointed until December 2016
Audit Committee
Sindelfingen
Dr. Frank Weber*
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG
Bremen
Elke Tönjes-Werner*
Chairman of the Works Council, Headquarters, Daimler AG
Stuttgart
Jörg Spies*
Director of Communications of the Metalworkers' Union ABC;
President of the Fundação Sociedade Comunicação,
Cultura e Trabalho (Foundation Society of Communications,
Culture and Work)
São Paulo
Valter Sanches*
Dr. Clemens Börsig - Chairman
Other supervisory board memberships/directorships:
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München - Chairman
Tetra-Laval International S.A. Group
(since April 9, 2014)
in München
Chairman of the Supervisory Board of the Münchener
Rückversicherungs-Gesellschaft, Aktiengesellschaft
Munich
Director of the Press Shop, Sindelfingen Plant, Daimler AG;
Chairman of the Management Representatives Committee,
Daimler Group
Appointed by resolution of the local district court
44
Michael Bettag*
Dr. h.c. Bernhard Walter
with effect from January 1, 2015:
Frankfurt am Main
Former Spokesman of the Board of Management
of Dresdner Bank AG
Dr. Jürgen Hambrecht
Jörg Hofmann*
Former Vice Chairman General Electric; President & CEO
of the General Electric Group's Industrial Division;
Managing Partner, Founder, GenNx360 Capital Partners
(retired on April 9, 2014)
Plainville
Dr. Manfred Bischoff - Chairman
Michael Brecht*
(retired on April 30, 2014)
Chairman of the General Works Council, Daimler Group
and Daimler AG; Deputy Chairman of the Supervisory Board
of Daimler AG
Erich Klemm*
Sindelfingen
Former President and CEO of Royal Philips Electronics N.V.
(retired on April 9, 2014)
Gerard Kleisterlee
Amsterdam
Retired from the Supervisory Board:
Nuremberg
Lloyd G. Trotter
Chairman of the Works Council of the Nuremberg Dealership,
Daimler AG
Q3
57
Daimler on course for profitable growth. In the second
quarter of 2014, the company once again sets new records for
sales and revenue and significantly increases its operating
profit from ongoing business operations. The outlook for full-
year 2014 remains positive.
car2go launches cross-border service. Since the end of 2012,
car2go member-card holders in Germany have been able
to rent more than 3,500 smart fortwo vehicles at seven car2go
locations in Germany. Eleven European locations now allow
car2go members from other countries to use the service.
Daimler shares its compliance expertise with other compa-
nies. The first-ever Daimler Compliance Academy meets with
a great response. More than 50 representatives of companies
from various sectors participate in the academy seminar in
April 2014. The seminar offers an interactive platform for sharing
experiences related to compliance trends and discussing
the challenges compliance officers face.
Dividend of €2.25. During the Annual Shareholders' Meeting
in Berlin, Daimler AG shareholders approve the distribution
of a dividend of €2.25 per share for the year 2013 (prior year:
€2.20). The total dividend payout amounts to €2,407 million.
Daimler Mobility Services becomes moovel GmbH. The
umbrella company for the car2go, car2go black and moovel
mobility services is renamed moovel GmbH. With this step,
Daimler underscores the importance of the mobility platform,
as well as its strong customer focus. The moovel mobility
app already offers its users a central access portal for
numerous mobility services with various modes of transport.
World premiere of new smart models. smart presents its
two all-new city cars: fortwo and forfour. The new models
retain the tried-and-tested rear-engine concept but offer more
of everything - more comfort, more safety and more driving
pleasure in the city.
Partnership with Renault-Nissan expanded. The Renault-
Nissan Alliance and Daimler AG decide to significantly expand
their cooperation through the joint development of premium
compact cars and the joint production of vehicles in Mexico.
A newly established 50-50 joint venture will be responsible for
building and operating a new manufacturing facility in Aguas-
calientes in the northern part of central Mexico. After the initial
launch phase, the new plant will be ramped up to an annual
capacity of 300,000 units.
Daimler presents an autonomously driving truck. The
Mercedes-Benz Future Truck 2025 is equipped with the
extremely intelligent Highway Pilot assistance system, which
enables it to drive completely autonomously at speeds of up
to 85 km/h on a highway. With this autonomous vehicle, Daimler
is once again highlighting the pioneering role it plays in inno-
vative technologies as it ushers in a new era of truck transport.
edes-AMG GT
The new Western Star 5700XE is presented. This truck
combines Western Star's legendary styling and reliable durability
with excellent fuel economy as well as Daimler's tried and
tested aerodynamic features. The 5700XE will go into produc-
tion in Cleveland, North Carolina (USA) in 2015.
Specialist symposiums on connected driving and data
protection and sponsorship. Daimler creates new platforms
for dialogue between society and industry with its "Automobile
on the Data Highway" and "Responsible Sponsorship" specialist
symposiums. In this manner, the company promotes an
interdisciplinary and constructively critical exchange with
its stakeholders.
40-year partnership with Kuwait. The Kuwait Investment
Authority (KIA) has been an investor in Daimler for the past
40 years. During this time, Kuwait has become Daimler's most
reliable partner, despite the various ups and downs in the
company's history. KIA currently owns 6.8% of the company's
shares, making it Daimler's largest shareholder. The anni-
versary of the launch of the partnership is celebrated at a cere-
mony in Stuttgart.
Production launch for DENZA in China. The first units
of Daimler's DENZA electric vehicle roll off the production line
at Shenzhen BYD Daimler New Technology Co., Ltd. (BDNT)
in China. The successful production launch marks yet another
cooperation milestone for Daimler and its Chinese partner
Build Your Dreams (BYD). The DENZA fully lives up to its promise
to be the safest, most reliable and most sophisticated electric
vehicle from and for China.
Daimler Employee Survey 2014. Some 260,000 staff members
from more than 40 countries take part in the Daimler Employee
Survey between September 15 and October 3, 2014. The survey
is an instrument for eliciting employee opinions on important
topics related to the work environment and the management situ-
ation. The results are used to develop measures for improving
the organization.
Public premiere for the Vito. The new Vito is presented
to a global audience in Berlin. In order to better serve commer-
cial customers, the model is available for the first time in
three drive system variants. It also boasts a high payload and
outstanding safety.
Daimler Trucks celebrates a production milestone in China.
Beijing Foton Daimler Automotive Co., Ltd. (BFDA), a 50-50
joint venture between Daimler and the Chinese truck manufac-
turer Foton Motor, achieves a major milestone when the
150,000th unit of the jointly produced Auman brand truck
rolls off the assembly line.
58
A | To Our Shareholders | Highlights of 2014
Q4
World premiere of the Mercedes-AMG GT. The new
Mercedes-AMG GT stands for pure driving pleasure and breath-
taking design. Agile, sporty and dynamic - that's the only way
to describe the second sports car developed fully independently
by Mercedes-AMG. It's uncompromising on the racetrack, yet
also suitable for everyday use.
moovel
World Premiere
18:09
64
A | To Our Shareholders | Highlights of 2014
This applies not only to the world of sports but also to companies such as Daimler.
We accompanied the German soccer team along their way to winning the World Cup in 2014. Mercedes-
Benz's impressive victory in the Formula 1 Championship racing series also reflects our great deter-
mination. All signs point to growth at all of our divisions. We are on schedule with the implementation
of our efficiency programs and our new vehicle models have met with an outstanding response on
the market. Our groundbreaking innovations in the areas of safety, fuel efficiency and autonomous driving
have made a huge impression as well. The components of our strategy are coalescing into a coherent
whole. We will consistently pursue this strategy.
oupé
Eurycal Parties
$600
C250 Edition 1
MINL
Mercedes-Benz
55
Q1
Mercedes-Benz presents the new C-Class in Detroit.
The all-new C-Class is the highlight of the auto show presen-
tation. The C-Class sets efficiency benchmarks in its class,
thanks to an intelligent lightweight design concept, excellent
aerodynamics and new, economical engines. Numerous
new assistance systems ensure the highest degree of safety.
"Mercedes me" is presented in Geneva. Mercedes-Benz
presents its new "Mercedes me" service brand on the eve of the
84th International Motor Show in Geneva. This new umbrella
brand combines existing and future service offerings, making
them easily accessible at any time on a digital platform
on the Internet.
-
World premiere of the new S-Class coupe. A stylistically
confident appearance, exclusive appointments and sophisticated
sportiness the new Mercedes-Benz S-Class coupe at the
Geneva Motor Show. The model's curve tilting function also
marks a world premiere. The lateral acceleration that acts
upon vehicle occupants is reduced in a manner similar to what
occurs when a motorcycle leans into a steep curve. The new
curve tilting function thus enhances driving pleasure and comfort
on country roads especially.
Daimler begins building a new bus plant in India. Daimler
is investing some €50 million in a bus plant to be built on an
area of roughly 113,000 square meters at the site of an existing
truck manufacturing facility in Chennai. The product range
will include front-engine buses from the BharatBenz brand that
are tailored to the specific needs of the volume bus market
in India.
Daimler to sell its stake in Rolls-Royce Power Systems.
Daimler announces its intention to sell its 50% interest in Rolls-
Royce Power Systems (RRPS, formerly Tognum) to its partner
Rolls-Royce. On the basis of long-term supply agreements,
Daimler will remain a key supplier of heavy-duty and medium-duty
diesel engines to RRPS. Daimler will use the €2.4 billion in
income it expects from the sale to strengthen the Group's core
business.
Daimler issues first corporate bond in China. Daimler
becomes the first foreign company to issue a bond in China.
The so-called panda bond has a volume of 500 million
renminbi (approximately €60 million) and a term of one year.
The bond issue provides Daimler with an additional source
of financing for its rapidly expanding business activities in China.
New service: Corporate car-sharing. Daimler Fleet Manage-
ment, a provider of fleet-management and fleet-leasing
services, will expand its range of services to include corporate
car-sharing for fleet customers. The new mobility solution will
allow corporate fleets to be used more efficiently.
56
Mercedes
The New C-Class
MI TROVI
OVUNQUE
A | To Our Shareholders | Highlights of 2014
Q2
T
The new V-Class rolls off the line. The first new V-Class is
built at the Mercedes-Benz plant in Vitoria, Spain. The production
launch of the new model marks the achievement of a further
milestone in the Mercedes-Benz Vans growth strategy. The new
V-Class combines the functionality of a van with the typical
strengths of Mercedes-Benz cars - everything from emotive
design and high-quality interior appointments to exemplary
safety features and fuel-efficient driving pleasure.
Sustainability is another key principle of our actions. For us,
sustainability means conducting business responsibly to
ensure long-term success in harmony with the environment
and society.
New FUSO trucks for Indonesia. The product range in
Indonesia has been expanded with trucks of the new medium-
and heavy-duty series FUSO FI and FUSO FJ. The new FUSO
models are produced in Chennai, India, and are intended to
further strengthen the Group's market leadership in Indonesia.
7.74%
Dow Jones Euro STOXX 50
3.46%
3.23%
Long-term credit ratings
Standard & Poor's
Moody's
Fitch
DBRS
A.06
Stock-exchange data for Daimler shares
A-
A-
A3
A3
A-
A (low)
A (low)
A-
ISIN
DE0007100000
German Securities Identification Number
Stock-exchange symbol
Reuters ticker symbol
Bloomberg ticker symbol
8.51%
A.07
DAX 30
0.9
80
12/31/13 2/28/14 4/30/14 6/30/14 8/31/14 10/31/14 12/31/14
Daimler AG
Dow Jones STOXX Auto Index
DAX
61
A.05
Key figures for Daimler shares
Share capital (in millions of euros)
End of 2014
End of 2013
3,070
1,069.8
3,069
1,069.8
14/13
% change
+0
+0
0
Number of shares (in millions)
Market capitalization
(in billions of euros)
73.8
67.3
+10
Number of shareholders (in millions)
0.9
Weighting in share indices
85
Shareholder structure as of December 31, 2014
Kuwait Investment Authority
Employee share purchase plan implemented once again.
Staff members entitled to purchase employee shares were able
to once again do so in March 2014. As was the case in the
prior year, the employees received a discount as well as bonus
shares. At 15.4%, the participation rate was lower than in
2013 (19.2%). This was probably due in part to the significantly
higher share price compared to the previous year. A total
of 26,600 employees took part in the program. Those staff
members purchased a total of 390,000 shares.
Annual Shareholders' Meeting once again sparks consider-
able visitor interest. Approximately 5,500 shareholders
(2013: 5,000) attended the Annual Shareholders' Meeting
at the International Congress Center (ICC) in Berlin on April 9,
2014. At 39.25%, a much higher proportion of equity capital
was represented at the meeting than in the previous year (2013:
29.3% both figures include actual attendees and share-
holders who voted by absentee ballot). A large majority of the
shareholders approved each of the agenda points proposed
by the company's management. Among other things, the meet-
ing's participants elected Dr. Bernd Bohr, Joe Kaeser and
Dr. Bernd Pischetsrieder to the Supervisory Board as represen-
tatives of the shareholders for five years. All of the documents
and information regarding the Annual Shareholders' Meeting can
be found at daimler.com/ir/am2014. In the exhibition
areas of the ICC, Daimler presented its technological expertise
and broad product range with a focus on the new C-Class
and the S-Class coupe.
62
A | To Our Shareholders | Daimler and the Capital Market
Continuation of comprehensive investor relations activ-
ities. In 2014, we once again provided institutional investors,
analysts, rating agencies and private investors with timely
information regarding the company's business development.
We organized road shows for institutional investors and
analysts in the finance capitals of Europe, North America, Asia
and Australia. We also held many one-on-one meetings at
investor conferences. This was especially the case at the inter-
national motor shows in Geneva and Paris. We regularly
reported on our quarterly results in conference calls and web-
casts. The presentations can be seen on our website at
daimler.com/ir/event/e.
The talks with analysts and investors focused on the latest earn-
ings expectations for 2014, as well as on the business devel-
opment and profitability of the individual divisions and regions.
Daimler also organized a technology-focused capital-market
event at the beginning of July. During that event, Daimler sent
its Mercedes-Benz Future Truck 2025 on a drive along a
cordoned-off section of autobahn near the city of Magdeburg
in order to demonstrate how autonomous driving will change
the nature of freight transport in the future. Autonomous driving
involves the targeted and automated operation of a vehicle
under normal traffic conditions without the intervention of
a human driver. The feedback and the media response to the
event were extremely positive. During a capital-market day
held in Beijing in September, Daimler presented its strategy and
position in the key Chinese market with presentations,
discussions and plant tours. The audio recordings and charts
and illustrations from that event are available at
daimler.com/ir/event/e.
Online offers are well-established on many channels.
The broad range of information that we offer online is provided
by our well-established presence at Odaimler.com and via
our social-media activities. The informative and attractive print
version and the innovative, high-content online version of
the Annual Report 2013 led to several prestigious national and
international awards in 2014. The contents of the 2013 online
annual report and of the three 2014 online interim reports were
provided not only for desktop computers but also optimized
for tablet computers and smartphones. In this way, we are
responding to the growing number of users of mobile devices.
Number of online shareholders remains at a high level.
Our shareholders continue to take good advantage of our
provision of personalized electronic information and communica-
tion. Approximately 84,000 shareholders no longer received
the invitation and agenda for the Annual Shareholders' Meeting
by post but instead by e-mail in 2014. We would like to thank
those shareholders for helping to protect the environment and
cut costs. As was the case in the past, those shareholders once
again had the opportunity to win attractive prizes in a lottery.
Access to the e-service for shareholders and additional informa-
tion can be found at https://register.daimler.com.
Refinancing benefits from a high level of capital-market
liquidity and a good rating. The ongoing expansionary
monetary policies at central banks also impacted bond markets
during the year under review. As a result of the high level
of liquidity, companies with investment-grade ratings saw their
risk premiums decline once again compared to the prior year,
which was also to the benefit of Daimler.
In 2014, Daimler primarily covered its refinancing needs by
issuing bonds. A large proportion of these bonds were sold
as benchmark bond issues (bonds with high nominal volumes)
in euro and US-dollar markets. In the US capital market,
for example, Daimler Finance North America LLC issued bonds
worth a total of $4.65 billion in March and August 2014. The
bonds had terms of three, five, seven or ten years. In addition,
Daimler AG issued euro bonds in benchmark format with
a total volume of €1.25 billion and terms of eight and ten years.
In 2014, Daimler AG also became the first foreign company
to issue bonds in China (so-called Panda bonds). Furthermore,
many smaller bonds were issued by the Daimler Group in
a variety of currencies in the euro market as well as in Mexico,
Brazil, Argentina, South Africa, Thailand and South Korea.
At the end of 2014, companies of the Daimler Group had
issued bonds that were still outstanding in a volume of €43.2
billion (2013: €38.7 billion). Besides raising funds through
the issuance of bonds, Daimler also issued a small volume
of commercial paper in 2014.
Daimler also conducted several asset-backed security (ABS)
transactions in the United States, Canada and Germany during
the reporting year. In the United States, for example, the
company generated a refinancing volume US$3.1 billion through
two issuances. A further C$0.5 billion was placed in Canada
directly with investors for the first time. In addition, Mercedes-
Benz Bank used the Silver Arrow Platform to sell ABS bonds
to European investors once again. This issuance had a total
volume of €1.0 billion.
63
Objectives and Strategy.
As the inventor of the automobile, we believe it is our mission and our duty to shape future mobility
in a safe and sustainable manner with outstanding products and services and trend-setting tech-
nologies. We strive to attain the leading position in all of our business. Our goals are to be the leader
in technology and innovation, to inspire our customers, and to continue to grow profitably with
first-class teams. In this way, we intend to continually increase our enterprise value. We have defined
four strategic areas of growth for the Group, which we will focus on in the coming years.
Four objectives
Technology leadership and innovation. We set standards
for technology and innovation. We want our products from
all divisions to be the industry leaders when it comes to safety,
autonomous driving with cars and commercial vehicles, and
green technologies. Here, we exploit the potential generated
by joint research activities throughout the Group and, where
possible, we also utilize shared systems and solutions. We also
seek to be the leader in the use of digital technologies, both
in our products and as channels for maintaining contact with
our customers.
Delighted customers. Our leading brands in all divisions
create added value for our customers. We aim to finish at the
top of all relevant customer-satisfaction rankings and con-
vince customers with our outstanding quality. For that purpose,
we create interfaces for sales and aftersales processes that
ensure we can maintain contact with customers at all times.
We also offer our customers tailored transport and mobility
services.
Best teams. We work in teams whose diversity in terms
of gender, nationality and age is extremely important to us.
Our employees are proud to work at Daimler, and we're
also one of the employers most sought after by job applicants.
Our core corporate values - passion, respect, integrity and
discipline-form the basis of our actions. Integrity is particularly
important to our company. It's one of the key principles that
stand behind our actions, and it guides our dealings with respect
to the company and its employees, business partners and
customers. We are firmly convinced that conducting business
with integrity makes us more successful over the long term
and is also good for society as a whole.
Profitable growth. We have set ourselves the goal of achiev-
ing a return on sales of 9% (EBIT in relation to revenue) on
average for the automotive business. This overall figure is based
on the return targets for the individual divisions, which we
intend to achieve on a sustained basis. These targets are 10%
for Mercedes-Benz Cars, 8% for Daimler Trucks, 9% for
Mercedes-Benz Vans and 6% for Daimler Buses. For Daimler
Financial Services, we've set a return on equity target of 17%.
The "Mercedes-Benz 2020" growth strategy is designed to
ensure that our Mercedes-Benz Cars division will be playing
the leading role in the premium segment by the end of the
decade. We also plan to further enhance the smart brand's
pioneering role in urban mobility. In addition, we want to further
strengthen Daimler Trucks' position as the leading truck
manufacturer in the global truck business. With the help of its
"Mercedes-Benz Vans goes global" strategy, Mercedes-Benz
Vans is aiming to achieve further profitable growth outside its
established markets and segments as well. Daimler Buses
will further strengthen its leading position in the segment for
buses above eight metric tons gross vehicle weight. Daimler
Financial Services plans to position itself as the best captive
financial services provider and will continue to grow in line
with our automotive business, as well as in the area of mobility
services.
In order to safeguard our profitability under difficult market
conditions as well, we are adapting our business system in
a way that will enable us to react quickly and flexibly to market
fluctuations and create value as close to our markets as
possible.
Daimler shares' weighting in major indices rose further during
the reporting year as a result of the overall share price increase.
With a weighting of 8.51% (2013: 7.74%), Daimler was ranked
third in the German DAX 30 index at the end of 2014. 7 A.05
In the Dow Jones Euro STOXX 50 index, our shares had a
weighting of 3.46% (2013: 3.23%), which put it in seventh place.
Daimler shares are listed on the stock exchanges in Frankfurt
and Stuttgart. A total volume of 957 million shares were traded
in Germany in 2014 (2013: 1,029 million). Daimler shares are
also increasingly being traded on multilateral trading platforms
and in the over-the-counter market.
By type of shareholder
Institutional investors hold a total of 74% of our equity capital
while private investors own 16%. Approximately 60% of our
capital is in the hands of European investors and around 27%
is held by US investors. 7 A.08
The aforementioned voting-rights notifications and the
notifications relating to other financial instruments
prescribed by law since 2012 are published on the Internet
at daimler.com/investor-relations/daimler-shares/
6.8%
Renault-Nissan
SMB 1015
Institutional investors
73.7%
Retail investors
16.4%
A.08
Shareholder structure as of December 31, 2014
By region
Germany
33.7%
Europe, excluding Germany
26.6%
USA
26.9%
Kuwait
6.8%
Asia
5.6%
Rest of the world
0.4%
710000
DAI
DAIGN.DE
DAI:GR
0
In April 2014, we received notifications of voting rights also
from UBS AG, DekaBank Deutsche Girozentrale and Commerz-
bank AG. According to those statements, the banks' directly
or indirectly held voting rights in Daimler had risen above the
3% limit in the run-up to our Annual Shareholders' Meeting,
before dropping significantly below that limit again in the two
weeks that followed. In January 2014, Deutsche Bank AG
notified us that its voting rights in Daimler had risen above
the 3% reporting limit for a brief period and then once again
dropped below that limit and back to 0.02% on January 28, 2014.
shareholder-structure.
90
3.1%
100
16,291
+7
Dow Jones STOXX Auto Index
501
482
+4
A.02
Key figures per share
Amounts in euros
2014
2013
17,451
+10
% change
+2
New all-time highs on the world's stock markets. Global
stock markets remained volatile in 2014 and markets in some
regions finished the year with substantial gains. In general,
the markets benefited from the continued availability of liquidity
from the major central banks, as well as from interest rates
that remained low.
The development of global stock markets over the first three
months of the year was relatively uneven and marked by
major fluctuation. The markets were impacted during this
phase by the Federal Reserve's tapering of monthly bond
purchases beginning in January 2014. Other influencing factors
were turbulence in key emerging markets and political tensions.
Following this initial phase, global markets resumed their
upward trend, although this positive development was inter-
mittently interrupted by increasing concerns regarding the
escalation of the crisis in Ukraine. The announcement by the
European Central Bank (ECB) that it would implement further
monetary measures to counteract deflationary tendencies and
the weak development of credit volume in the euro zone
had a particularly positive effect on investors. The DAX reached
record highs during this phase in the middle of the year.
Stock-market sentiment was negatively impacted in the subse-
quent phase by geopolitical tensions and concerns about
the pace of economic growth in Europe. European markets thus
went into a significant decline during the summer months.
But it did not take long for the markets to recover, and many
sectors were able to recoup at least some of their previous
share-price losses. In all likelihood, this positive development
was primarily driven by the ECB's announcement that it would
implement further monetary support measures. Share prices
then declined again at the beginning of the fourth quarter
due to renewed concerns regarding global economic activity
and growth. However, this development was counteracted
by the publication of largely solid third-quarter corporate results,
as well as by expectations of a continuation of the expan-
sionary monetary policy in Europe. As a result, stock markets
developed positively throughout the remainder of the fourth
quarter. In this environment - and despite the discontinuation
of bond purchases by the Federal Reserve in October 2014 -
many indices either reached new all-time highs or came close
to breaking long-standing records during the last two
months of the year.
Net profit
6.51
6.40
Net profit (diluted)
14/13
Nikkei
+8
17,823
95
Mercedes-Benz is the most valuable premium automotive
brand. Mercedes-Benz moves up to 10th place in the rankings
for Best Global Brands 2014 compiled by the Interbrand
consulting firm in the United States, making it the only European
company to reach the top 10 in the list of the 100 most valu-
able brands.
Daimler restructures cooperation with Tesla. Daimler
decides to reorganize its cooperation with Tesla Motors Inc.
and sell its roughly 4% stake in the company. The sale
generates proceeds of approximately €600 million, which
will be used to strengthen business operations. Cooperation
with Tesla will nevertheless remain an important part of
Daimler's activities in the field of electric mobility in the future.
A new international employer image campaign is launched.
"That's Us" is the slogan for Daimler's new employer image
campaign, which puts the company's employees in the spotlight.
The international campaign is directed at potential job
applicants from all over the world.
Mercedes-Maybach celebrates its world premiere. Our
new Mercedes-Maybach sub-brand and the first model from
this exclusive brand celebrate their world premiere simul-
taneously in the United States and China. Mercedes-Maybach
stands for prestigious exclusivity and is aimed at highly
sophisticated customers.
Formula 1 World Championship. MERCEDES AMG PETRONAS
wins the Constructors' Championship by a wide margin.
Mercedes driver Lewis Hamilton is crowned World Champion
after the final race in Abu Dhabi, while Nico Rosberg finishes
the season in second place.
€2.5 billion for the company pension fund. The Daimler
Supervisory Board decides to make an extraordinary contribution
of €2.5 billion to the company pension fund in Germany.
This additional funding will give employees more security and
also have a positive impact on the Group's interest income
in the future.
59
Daimler and the Capital Market.
Daimler's share price increased by 10% over the course of the year and thus once again
outperformed the DAX and the Dow Jones STOXX Auto Index. Numerous stock indices reached
all-time highs and central banks continued their expansionary monetary policies. The Board
of Management and the Supervisory Board propose an increased dividend of €2.45 per share
(prior year: €2.25). We offer investors and analysts a comprehensive range of investor relations
services. Daimler took advantage of the high level of liquidity on international capital markets
to refinance its operations at attractive terms.
A.01
Development of Daimler's share price and of major indices
End of 2014 End of 2013
14/13
% change
Daimler share price (in euros)
68.97
62.90
DAX 30
9,806
9,552
Dow Jones Euro STOXX 50
3,146
3,109
+3
+1
Dow Jones Industrial Average
6.51
6.40
16,577
Dividend
Daimler's share price thus increased by 10% over the course
of the year, outperforming the Dow Jones STOXX Auto Index
(+4%) and the DAX (+3%). When the dividend payout of €2.25
per share is included, our shareholders saw the value of their
investment rise by 13%.
After a quiet start to the year 2015, significant share-price
increases occurred later in January, especially in the European
stock markets. The announcement of the ECB program to
buy government bonds caused the DAX to climb to a new all-
time high. Daimler's shares were listed at €80.48 at the
end of January, which is 17% above the closing price at the
end of 2014 and the highest price in more than 15 years.
Dividend of €2.45. 7 A.02 The Board of Management and
the Supervisory Board will recommend a dividend of €2.45
(2013: €2.25) per share at the Annual Shareholders' Meeting
on April 1, 2015. With this proposal, we are letting our share-
holders participate in the company's financial success while also
expressing our confidence about the ongoing course of
business. The total dividend will amount to €2,621 million
(2013: €2,407 million).
A broad shareholder structure. 7 A.07 Daimler continues
to have a broad shareholder base of approximately 900,000
shareholders. The Kuwait Investment Authority (KIA) currently
owns 6.8% of the company's stock, making it Daimler AG's
largest single shareholder. In September 2014, Daimler AG and
KIA held a ceremony to celebrate their 40-year partnership.
The Renault-Nissan Alliance continues to hold 3.1% of Daimler's
shares.
BlackRock Inc., New York, still holds a stake above the 5%
reporting limit as defined by Germany's Securities Trading Act
(WPHG). In December 2014, BlackRock notified us that it
held 5.03% of Daimler's shares on December 23.
The Norwegian Finance Ministry informed us that at the
beginning of April 2014, the shares held by Norges Bank, Oslo,
had dropped below the reporting limit of 3% as stipulated by
Section 21 of the WpHG. On April 24, 2014, this limit was once
again exceeded, and the bank held 3.17% of the voting rights
in Daimler as of that date.
A.03
Daimler share price (high/low), 2014
In euros
80
75
65
60
55
50
45
1/14 2/14 3/14 4/14 5/14 6/14 7/14 8/14 9/14 10/14 11/14 12/14
A.04
Share price index
130
125
120
115
110
+2
105
As of mid-October, Daimler shares then benefited from
a more favorable stock-market environment and from the solid
development of our business operations. Our share price
increased again substantially until the end of the financial year
and closed at €68.97 on December 30. At the end of the
year, the company had a market capitalization of €73.8 billion.
However, in the weeks that followed, political conflicts
and a disappointing economic outlook for Europe once again
dampened the mood on stock markets. Many investors
temporarily dropped out of the market and moved into less
risky types of investment. Cyclical securities such as auto-
motive stocks performed particularly poorly in this environment,
with our share price reaching its low point of the year at
€56.01 on October 10.
70
Daimler share price up by 10% over the year. Financial
markets responded very favorably to the publication of the
Daimler Group's results for 2013 and the recommendation
that the dividend be increased to €2.25 per share. This helped
the share price to rise by 9% in the first quarter of 2014 alone.
2.45
2.25
On April 4, 2014, the Daimler share price stood at €71.14.
This was the highest price for the year and also the highest
value for Daimler shares in more than seven years. However,
the Daimler share price did not remain unaffected by the
subsequent growing concerns regarding the escalation of the
Ukraine crisis. It was only after the ECB announced that
it would implement measures to counteract the weak develop-
ment of credit volume in the euro zone that our share price
began to rise again significantly in line with general market devel-
opments. The share price remained above €70 in June and
early July.
+9
Equity (December 31)
40.81
39.90
+2
Xetra price at year end¹
62.90
+10
Highest¹
71.14
68.97
1 Closing prices
+13
Lowest¹
56.01
the Dow Jones Euro STOXX 50, rose by 1% in 2014. The leading
German index, the DAX, performed slightly better, rising
by 3%. The DAX broke the 10,000 mark for the first time ever
in July 2014 and reached a new all-time high of 10,087 on
December 5. In the United States, the Dow Jones rose by 8%
during the year, while Japan's Nikkei index gained 7%. 7 A.01
38.65
+45
The index of the most important shares in the euro zone,
60
60
A | To Our Shareholders | Daimler and the Capital Market
63.15
3.7
0.5
Mercedes-Benz Cars
11.1
3.6
8.1
0.3
0.8
0.8
2.3
4.8
0.1
0.1
5.0
4%
Daimler Group
Amounts in billions of euros
2013 actual 2014 actual 2015-2016
Investment in property, plant and equipment
A.11
Daimler Buses
0.3%
Daimler Financial Services
2%
Mercedes-Benz Vans
Daimler Trucks
0.2
21%
Daimler Trucks
Daimler Financial Services
4.0
0.02
1.2
73%
Daimler Trucks
9.7
3.8
Mercedes-Benz Cars
13.3
5.7
5.5
Daimler Group
Amounts in billions of euros
2013 actual 2014 actual 2015-2016
0
0.02
Research and development expenditure
3%
Daimler Buses
6%
Mercedes-Benz Vans
18%
Daimler Trucks
73%
Mercedes-Benz Cars
Research and development expenditure 2015 - 2016
In %
A.12
Daimler Buses
Mercedes-Benz Vans
0.03
A.13
Mercedes-Benz Cars
A | To Our Shareholders | Objectives and Strategy
Investment in property, plant and equipment 2015 - 2016
Daimler Buses will focus over the next few years on achieving
further growth and efficiency gains. To this end, we not only
plan to increase sales of Mercedes-Benz and Setra brand buses;
we also want to grow globally through new innovative services.
The Daimler Buses product range stands out through its great
fuel efficiency, economy, environmental friendliness and safety.
The conversion of our model program to the Euro VI standard
makes us the leader in fuel economy today. In 2015, we will
once again set new standards with the introduction of the new
emergency braking system Active Brake Assist (ABA 3) in
the Mercedes-Benz Travego coach and the new Setra Series 500
coaches. The Setra MultiClass product range has been
extended with low-entry long-distance buses which combine
economy and functionality. With the new Mercedes-Benz
Citaro G articulated bus and the Mercedes-Benz CapaCity L,
we also offer bus variants that can transport large numbers
of people. This means that we can supply vehicles with ideal
passenger capacities for worldwide Bus Rapid Transit
(BRT) systems.
Mercedes-Benz Vans will support our planned worldwide
growth with new products and technologies. The launch
of the new generation of our flagship model in the large van
segment, the Mercedes-Benz Sprinter, in 2013, and the
introduction of the new Vito for commercial customers in 2014
have put us in a very good position for future success with
our van products. In addition, we plan to benefit more strongly
from growing demand in the NAFTA region through the
launch of the Vito and the expansion of local production of the
Sprinter. In 2014, we also launched the V-Class - a model
whose name and product concept both signal a move toward
the car segment. In this manner, it establishes the new
segment of premium full-size MPVs.
Our Daimler Trucks #1 program is designed to secure our
profitability targets on a sustained basis. The program's effi-
ciency target of €1.6 billion will take full effect as of 2015.
However, we also aim to further increase our unit sales and
revenue. We have started a large number of initiatives
relating to sales of new vehicles as well as aftersales, and we
see major opportunities also in the area of truck-related
services. At the same time, our interdepartmental initiatives
are improving interaction between the various business
units and functions, and this allows us to more effectively utilize
the potential offered by our global position. An important
step in this direction was the consolidation of parts of our Asian
business activities into the integrated "Asia Business Model"
approach. Here, cooperation on product development, produc-
tion and sales between Mitsubishi Fuso Truck and Bus Cor-
poration and Daimler India Commercial Vehicles can generate
synergies and additional growth in Asia and Africa.
Daimler Trucks continues to rely on its technology leadership
and global presence. Our intelligent use of platforms enables us
to deliver tailor-made systems and technologies to our cus-
tomers worldwide, even as we exploit our economies of scale
to the greatest extent possible. Our approach here is to supply
innovative cutting-edge technologies to the core markets
of the triad (Western Europe, North America, Japan), utilize our
traditional and proven technologies in markets such as Brazil,
China and Russia, and supply markets in India, Africa and certain
Asian countries with simple and locally produced technologies.
Our current product range at Daimler Trucks is stronger and
more extensive than ever before. In Europe, we have launched
a true heavyweight on the market in the form of the SLT,
which has a gross combination weight of 250 metric tons. The
Western Star 5700XE in North America and the FUSO Super
Great V in Japan are two additional models we presented in 2014
that return impressive fuel economy compared with the
competition. We plan to use local value creation in key sales
markets in order to expand our global position.
The smart brand - with the new smart fortwo and forfour
models - will enable us to maintain our claim of having the
"best brand for urban mobility” and also allow us to improve
our position in the electric-mobility segment.
In order to achieve sustained profitable growth, we have
supplemented the "Mercedes-Benz 2020" growth strategy
with the "Fit for Leadership" program. Fit for Leadership
has improved our cost structure by a total of €2 billion over
the last two years. However, Fit for Leadership also includes
a structural component that's designed to gear our business
system toward growth and make it more flexible and com-
petitive. Along with the module strategy and the reorganization
of the international production network, this will also be
achieved by the restructuring of the sales organization in
Germany.
65
We will continue to implement our successful module strategy.
This will allow us to successfully manage the increasing
complexity resulting from additional model variants, as well
as ever-shorter innovation cycles and the expansion of our
international production network. By increasing the level of stan-
dardization and modularization at our manufacturing plants,
we are reducing our investment requirements and fixed costs.
The classification of lead and partner plants is safeguarding
both the transfer of knowledge and the high quality standards
associated with "Made by Mercedes" worldwide. For example,
we succeeded in launching production of the new C-Class at four
plants on four continents in less than six months. This marked
a major milestone in global production management. We continue
to consistently enhance our brands through the creation
of new products and the expansion of existing model series.
In this process "The Best" expresses the overall ambition
of the Mercedes-Benz brand. We are making increasing use of
digital media in the area of customer relations. New sales
formats, such as mobile sales pavilions, create meeting points
that enable us to establish contact with new customers
as well.
With a comprehensive model offensive, we will renew and
extend the product range of Mercedes-Benz Cars in all seg-
ments. Within the framework of the growth strategy that we
approved in 2012, we will launch more than 30 new car models
between 2012 and 2020. Almost half of those new products
have no predecessor model in the current product portfolio; we
already launched two of them in 2014: the GLA Coupe and
the long-wheelbase C-Class for the Chinese market. In 2015,
we will expand our product range with, for example, the
Mercedes-Maybach, the CLA Shooting Brake, the Mercedes-
AMG GT and the GLE Coupe, and we will present two addi-
tional models of the S-Class. Furthermore we will also renew
almost our entire range of SUVs.
Strengthening our core business. The foundations for a strong
core business are first-rate products, competitive cost struc-
tures and a customer-focused organization. In order to prepare
ourselves for growth and a stronger customer focus, we are
aligning our organizational structure more strongly with the indi-
vidual divisions and consolidating our sales and service
activities to ensure quality customer service throughout the
entire vehicle lifecycle.
- push forward decisively with the development of connectivity
and new mobility concepts.
- take the lead with green technologies and safety, and
- continue growing in new markets,
Daimler Financial Services is also focused on profitable
growth. The division will continue to grow in line with the
model and market offensives for cars and commercial vehicles.
It will also further expand its product range in the areas of
financing, leasing, insurance and mobility services. More than
four out of ten vehicles from the Daimler Group are already
financed or leased by Daimler Financial Services. The company
is also focusing on the expanded use of digital sales channels
and more extensive networking with the vehicle divisions.
Daimler Financial Services has combined all of its mobility
services for individual customers into a single company
known as moovel GmbH.
- further strengthen our core business,
We plan to achieve our goals in four strategic growth areas.
71 A.09
Four strategic growth areas
The four Strategic Growth Areas at Daimler
Driving ahead with
connectivity and
mobility concepts
in Green
Technologies
and Safety
Leading
in New
Markets
Core Business
Growing
Strengthening
Strategic Pillars of Growth
A.09
1.2
We will
In %
Daimler Financial Services' excellent ranking in employer
attractiveness surveys in 2014 serves as further motivation for
the company to maintain its employees' high level of satis-
faction and to remain very appealing to external job applicants.
66
A.10
Most of our outlay for research and development is used for new
products and innovative drive systems and safety technolo-
gies. Between 2012 and 2020, we will launch more than 30 new
car models and will also systematically further develop our
range of commercial vehicles. In addition, we intend to continue
significantly reducing our vehicles' fuel consumption, and
thus their CO2 emissions, for example with the use of innovative
hybrid drive systems. We will also continue to set standards
in the areas of safety and autonomous driving for cars and com-
mercial vehicles.
see pages 104f
The investment in property, plant and equipment will mainly
be used to prepare for the production launches of our new
models, to modernize and realign our manufacturing facilities
in Germany, to expand local production in growth markets
and to enhance our sales organization.
see page 92
In the coming years, we will continue to move ahead system-
atically with our investment offensive in order to implement
our growth strategy through the introduction of new products,
new technologies and state-of-the-art manufacturing capac-
ities. We will therefore invest approximately €11 billion in prop-
erty, plant and equipment in 2015 and 2016, as well as more
than €13 billion in research and development projects. 7 A.10
to A.13
Extensive investment in the future of the company
A | To Our Shareholders | Objectives and Strategy
68
We're also extending our digital services for trucks. For example,
the "Detroit Virtual Technician" in North America makes it
possible for the customer service center operated by our engine
and powertrain manufacturer, Detroit, to analyze engine
data, diagnose problems and arrange the provision of needed
services.
The second part of our approach for exploiting the business
potential offered by digital technologies involves testing
and expanding our range of innovative services, especially those
based on increased digitization and networking. For example,
the "Mercedes me" service brand brings together at a single
digital Web platform all existing and future services for our
customers. Among other things, "Mercedes me" includes the
new "Mercedes connect me" package of services, which
can be accessed using an integrated communications module
in the vehicle. Services here include accident, breakdown
and maintenance management and telediagnosis. The rollout
began in 2014 in the C-Class station wagon and the new-
generation B-Class.
Driving ahead with connectivity and new mobility concepts.
Approximately 60% of the world's population will be living in
cities within ten years' time. Digital technologies are changing
products and services and impacting the entire value chain
of our company in a manner that was previously unimaginable.
This is creating new business opportunities for Daimler, and
we intend to exploit this potential in two ways. First, we are
further expanding our range of mobility services. These include
various mobility concepts for private, business and public
transport applications - for example, car2go, CharterWay, Bus
Rapid Transit (BRT) and the “moovel" intermodal mobility plat-
form. moovel offers our customers the opportunity to optimally
combine various private and public mobility services and
book these via a single payment system. We continue to expand
our first and most successful mobility service, car2go, on
an international scale and use it as an integral component of
moovel. By the end of 2014, car2go was established in
29 locations in Europe and North America and moovel had more
than one million customers for its mobility services for the
first time. We have consolidated our business activities with
innovative mobility services into a single company known
as moovel GmbH within the Daimler Financial Services division.
We are also safeguarding and expanding our activities in this
area though the acquisition of the mobility services provider
RideScout LLC in the United States and of Intelligent Apps
GmbH, which offers the mytaxi mobility service. As a result
of these acquisitions, moovel is expanding its presence
in the international mobility services market and accelerating
the global development of this growth sector.
We will also further strengthen our position as a pioneer in the
development of active and passive safety systems for cars
and commercial vehicles. Our goal here is to offer the highest
degree of safety in all our model series. The new C-Class
station wagon launched in 2014 is equipped with new assistance
systems from the S-Class and E-Class. Moreover, these
systems have been expanded to include important new features.
We're also a leader when it comes to safety in smaller models.
For example, the new-generation B-Class comes with COLLISION
PREVENTION ASSIST PLUS as standard equipment. This
system can reduce the number of severe rear-end collisions by
up to 30% as compared to vehicles without a similar system.
The S 500 INTELLIGENT DRIVE research car marks a milestone
on the road to autonomous driving, which we want to make
a reality in a series-production vehicle by the end of this decade.
The Mercedes-Benz Future Truck 2025 marks a step forward
toward making autonomous driving a reality with trucks as well;
this would improve safety on major highways. Already today,
the new Blind Spot Assist system helps prevent collisions when
a vehicle makes a turn, and Active Brake Assist 3 brings the
vehicle to a standstill when it encounters stationary obstacles.
We intend to reduce the fuel consumption of our fleet of trucks
in Europe by 20% between 2005 and 2020. We've already
achieved a 10% reduction in fuel consumption and CO2 emissions
as compared with 2005 through the launch of the new Actros
series in 2011, and we're now working hard to achieve the
remaining 10%.
We continue to lower the fuel consumption of our trucks and
buses as well. Compliance with the Euro VI emission standard
that went into effect for trucks and buses in 2014 required
the use of complex exhaust-gas treatment technologies, which,
by themselves, led to an increase in fuel consumption. How-
ever, with the help of various measures, such as improved engine
efficiency and vehicle aerodynamics, we were able to offset
this effect and actually lower the average fuel consumption in
2014. The Actros, for example, demonstrated the pioneering
role it plays in fuel efficiency in numerous fuel economy tests.
We also continually work to further reduce the fuel consumption
through the use of fuel efficiency technologies such as the
innovative Predictive Powertrain Control (PPC) assistance system.
The Freightliner Cascadia Evolution is currently the most
fuel-efficient heavy-duty truck on the North American market.
We have also achieved fuel savings of as much as 8% with
our new Euro VI bus models. We are the world leader for hybrid
technologies in commercial vehicles. The Canter Eco Hybrid,
for example, boasts fuel savings of as much as 23%, and owners
are able to recoup the additional cost for the hybrid model
in just a few years. With the emission-free FUSO Canter E-CELL,
which is being tested by customers, we are already responding
to the challenges that will be brought about by more restrictive
emission standards in metropolitan areas in the future.
Growing in new markets. Growth in global automobile
demand will take place mainly in markets outside of Europe,
North America and Japan in the coming years. While we
continue to strengthen our position in traditional markets,
we also want to expand in Brazil, Russia, India and China
especially, as well as in other emerging markets.
67
Hydrogen consumption in kg/100 km: 0.97; CO₂ emissions in g/km: 0.0
2 B-Class F-CELL
Fuel consumption in l/100 km (combined): 2.8; CO2 emissions in g/km
(combined): 65; Electricity consumption in kWh/100 km: 13.5
1 S 500 PLUG-IN HYBRID
Certain new C-Class models consume approximately 30% less
fuel than their predecessors. The S 500 PLUG-IN HYBRID¹
combines the performance of an eight-cylinder engine with the
fuel economy of a small car and can drive up to 33 km com-
pletely emission-free. Consistent hybridization is an important
component of the drive-system strategy at Mercedes-Benz
Cars. We plan to launch a total of ten new plug-in hybrid models
in the period 2014-2017. We expanded our range of series-
produced electric vehicles in 2014 to include the new electric
B-Class for the United States and Europe. The Denza brand
gives us an electric vehicle exclusively for the Chinese market.
Together with Ford and our strategic cooperation partner,
Nissan, we continue to move ahead with the commercialization
of fuel cell vehicles. In the fall of 2014, a B-Class F-CELL²
from the current Mercedes-Benz fuel cell fleet demonstrated
that fuel cell vehicles are suitable for mass production, as
the model was driven for 300,000 kilometers under normal
conditions, thereby setting a new endurance record. We are
cooperating with leading industrial companies on the expansion
of the hydrogen filling station network in Germany in order
to set up the infrastructure needed for fuel cell vehicles.
Leading in "green" technologies and safety. Our goal
as a pioneer of automotive engineering is to make the future
of mobility safe and sustainable. Different mobility needs
require the use of different drive-system solutions. Our portfolio
here ranges from optimized internal combustion engines to
hybrid drives and locally emission-free driving solutions. In 2014,
we were able to reduce the CO2 emissions of newly registered
vehicles from Mercedes-Benz Cars in the European Union to an
average of 129 g/km. Our overall objective is to reduce the
CO2 emissions of our new car fleet in the European Union to an
average of 125 g/km by 2016.
Our expansion measures extend beyond the BRIC nations
o other growth markets outside the triad.
The Daimler Financial Services division is steadily expanding
its business activities in line with the growth strategies
of the automotive divisions. The division now offers leasing and
financing models tailored to specific regions. In China, for
example, Daimler Financial Services is supporting the vehicle
business with new and flexible financing models that are
especially designed to meet the requirements of younger and
more trend-conscious Chinese customers.
Daimler Trucks has been successfully manufacturing trucks
in India under the new BharatBenz brand name since June
2012. In 2013, we also began building FUSO-brand trucks for
export at the Chennai plant. The FUSO trucks built in India
are mainly aimed at other price-sensitive markets in Asia and
Africa. Daimler Buses has integrated its local business activities
into Daimler India Commercial Vehicles and will establish
local bus manufacturing operations in India in 2015. The expan-
sion of our international production network is being accom-
panied by measures to strengthen our international research
and development network in India as well.
In Russia, Europe's biggest truck market, we are continuing
cooperation with our partner Kamaz. The previously separate
"Mercedes-Benz Trucks Vostok” (MBTV) and "Fuso Kamaz
Trucks Rus" (FKTR) joint ventures will be merged into a new
company in the future. Since the second half of 2013,
Mercedes-Benz Vans has been manufacturing the Sprinter
Classic in Russia in cooperation with the commercial
vehicle manufacturer GAZ.
We will begin manufacturing the C-Class and the GLA for
the local market in Brazil in 2016. Daimler Trucks is investing
in the modernization of its product range in Brazil in order
to further improve its strong market position over the medium
term. Our two production plants (São Bernardo do Campo
and Juiz de Fora) are also being modernized.
In order to reach Mercedes-Benz Cars' sales targets, we are
intensifying our local activities, particularly in China, Brazil and
India. We are increasing production capacities in China for
model series that are already manufactured locally. We manu-
facture the GLK SUV in China, as well as the long-wheelbase
version of the E-Class. During the year under review, we also
began producing the long-wheelbase version of the new
C-Class in China. We will begin local production of the new GLA
compact SUV in China in the spring of 2015. We opened a
new production plant for four-cylinder engines in China back
in November 2013. In order to serve the promising electric-
vehicle segment in China, we joined forces with the Chinese
battery and vehicle manufacturer BYD to develop a battery-
electric automobile. This electric vehicle was launched in China
in 2014 under the DENZA brand name. Our activities in the
field of medium-duty and heavy-duty trucks in China focus
on cooperation with our partner Foton. Mercedes-Benz Vans
manufactures the Vito, Viano and Sprinter models for the
Chinese market in cooperation with Fujian Benz Automotive
Corporation. We are continuing our internationalization
strategy for the research and development unit with a new
R&D center in Beijing, which will employ around 500 men
and women in the future. We also further expanded our dealer-
ship network in China in 2014 and opened our biggest
training center in the world for car-dealership employees.
A | To Our Shareholders | Objectives and Strategy
40
2.4
0.3
0.3
Business model
Daimler can look back on a tradition covering more than
125 years
- a tradition that extends back to Gottlieb Daimler
and Carl Benz, the inventors of the automobile, and features
pioneering achievements in automotive engineering. Today, the
Daimler Group is a globally leading vehicle manufacturer
with an unparalleled range of premium automobiles, trucks,
vans and buses. The product portfolio is rounded out by
a range of tailored financial services and mobility services.
Daimler AG is the parent company of the Daimler Group and
is domiciled in Stuttgart (Mercedesstraße 137, 70327 Stuttgart,
Germany). The main business of Daimler AG is the devel-
opment, production and distribution of cars, trucks and vans
in Germany and the management of the Daimler Group.
The management reports for Daimler AG and for the Daimler
Group are combined in this management report.
With its strong brands, Daimler is active in nearly all the countries
of the world. The Group has production facilities in a total
of 19 countries and more than 8,500 sales centers worldwide.
The global networking of research and development activities
and of production and sales locations gives Daimler consider-
able advantages in the international competitive field and
also offers additional growth opportunities. In addition, we can
apply our innovative drive and safety technologies in a broad
portfolio of vehicles while utilizing experience and expertise
from all parts of the Group.
B.01
Consolidated revenue by division
Mercedes-Benz Cars
55%
Daimler Trucks
23%
Mercedes-Benz Vans
Corporate Profile.
7%
3%
Daimler Financial Services
12%
In 2014, Daimler increased its revenue by 10% to €129.9 billion.
The individual divisions contributed to this total as follows:
Mercedes-Benz Cars 55%, Daimler Trucks 23%, Mercedes-Benz
Vans 7%, Daimler Buses 3% and Daimler Financial Services
12%. At the end of 2014, Daimler employed a total workforce
of approximately 280,000 people worldwide.
The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium vehicles of the
Mercedes-Benz brand and its Mercedes-AMG and Mercedes-
Maybach sub-brands. These vehicles range from the compact
models of the A-Class and B-Class to various sport utility
vehicles, roadsters, coupes and convertibles, and S-Class luxury
sedans. Additional products are the high-quality small cars
of the smart brand. The main country of manufacture is Germany,
but the division also has production facilities in the United
States, China, France, Hungary, Romania, South Africa, India,
Vietnam and Indonesia. Since August 2013, the A-Class has
also been produced for us by Valmet Automotive in Finland.
All in all, Mercedes-Benz Cars has 18 production sites worldwide
at present. In the medium term, we anticipate significant
growth in worldwide demand for automobiles and above-average
growth in the premium car segment. In order to ensure we
can exploit this potential, we are creating additional production
capacities, especially at Beijing Benz Automotive Co., Ltd.
(BBAC) in China and at our plants in the United States and India.
We will also expand our global production network with a
new plant in Brazil, where we plan to produce the next genera-
tion of the C-Class as well as the GLA compact SUV for
the local market starting in 2016. The most important markets
for Mercedes-Benz Cars in 2014 were Germany with 16%
of unit sales, the other markets of Western Europe (23%), the
United States (20%) and China (17%).
As the biggest globally active manufacturer of trucks above
6 metric tons gross vehicle weight, Daimler Trucks develops
and produces vehicles in a global network under the brands
Mercedes-Benz, Freightliner, Western Star, FUSO and Bharat-
Benz. The division's 27 production facilities are located in
the NAFTA region (14, thereof 11 in the United States and 3 in
Mexico), Europe (7), Asia (3), South America (2) and Africa (1).
In China, Beijing Foton Daimler Automotive Co., Ltd. (BFDA),
a joint venture with our Chinese partner Beiqi Foton Motor Co.,
Ltd., has been producing trucks under the Auman brand name
since July 2012. Daimler Trucks' product range includes light,
72
B| Combined Management Report | Corporate Profile
Mercedes-Benz
The product range of the Mercedes-Benz Vans division
in the segment for medium-sized and large vans comprises
the Sprinter and Vito series. Our portfolio is rounded out at
the lower end by the Mercedes Benz Citan city van, the addition
of which makes us a full-range supplier in the van market.
In 2014, we also introduced the new V-Class, which is a new
multi-purpose vehicle (MPV). We continue to manufacture
the Viano in China for private customers. Mercedes-Benz Vans
has manufacturing facilities at a total of nine locations in
Germany, Spain, the United States and Argentina, as well as
in China within the framework of the Fujian Benz Automotive Co.,
Ltd. joint venture, and in France in the context of the strategic
alliance with Renault-Nissan. The Mercedes-Benz Sprinter
Classic is produced under license by our partner GAZ in Russia.
The most important markets for vans at the moment are in
Western Europe, which accounts for 65% of unit sales. As part
of the "Mercedes-Benz Vans goes global" business strategy,
we are also increasingly developing the growth markets
of South America and Asia, as well as the Russian van market,
through appropriate distribution and production activities in
those regions. We plan to more effectively exploit the potential
of the expanding North American van market in the future
through local production of the Sprinter and the introduction
of the Vito. The Sprinter is sold in the United States not
only as a Mercedes-Benz vehicle but also under the Freight-
liner brand name.
The Daimler Buses division with its brands Mercedes-Benz
and Setra is the undisputed industry leader in its core markets
in the segment for buses above 8 metric tons. The division's
product range comprises city and intercity buses, coaches and
bus chassis. The largest of the division's 13 production sites
are located in Germany, France, Spain, Turkey, Argentina, Brazil
and Mexico. During the year under review, we also laid the
cornerstone for a new bus plant in India that will begin operating
in 2015. Daimler Buses generated 23% of its revenue in Western
Europe and 53% in Latin America (excluding Mexico) in 2014.
While we mainly sell complete buses in Europe, our business
in Latin America, Mexico, Africa and Asia is focused on the
production and distribution of bus chassis.
Daimler Buses
The Daimler Financial Services division supports the sales
of the Daimler Group's automotive brands in 40 countries.
Its product portfolio primarily consists of tailored financing and
leasing packages for customers and dealers, but it also pro-
vides insurance, fleet management services, investment prod-
ucts and credit cards, as well as various mobility services
such as the "moovel" mobility platform, the "mytaxi" app and
the flexible car2go car-sharing concept. The main areas of
the division's activities are Western Europe and North America,
and increasingly Asia as well. During the year under review,
Daimler Financial Services financed or leased more than four
out of ten vehicles sold by the Daimler Group. The division's
contract volume of €99.0 billion covers more than 3.3 million
vehicles. Daimler Financial Services also holds a 45% interest
in the Toll Collect consortium, which operates an electronic road-
charging system for trucks on highways in Germany.
71
151
146
Risks and opportunities
100
The world economy
146
Outlook
100
Automotive markets
147
Unit sales
148
151
Revenue and earnings
Free cash flow and liquidity
150
Dividend
150
Investment
150
Research and development
150
Workforce
Overall statement on future development
555
149
Outlook
Daimler is also active in the global automotive industry and
related sectors through a broad network of subsidiaries, holdings
and partnerships. The statement of investments of Daimler AG
in accordance with Section 313 of the German Commercial Code
(HGB) can be found in Note 39 of the Notes to the Con-
solidated Financial Statements.
Daimler Group structure 2014
Daimler had already deepened its strategic partnership
with BAIC in November 2013 with the acquisition of a 12% equity
interest in BAIC Motor, the car division of the BAIC Group.
BAIC Motor has been listed on the Hong Kong Stock Exchange
since December 2014.
Strategic partnership in China strengthened. Also in
March 2014, Daimler AG and its Chinese partner Beijing Auto-
motive Industry Corporation (BAIC) signed an agreement to
increase production capacities at Beijing Benz Automotive Co.,
Ltd. (BBAC). This move will lead to a further expansion of our
activities in China and will also strengthen our strategic partner-
ship with BAIC. Around €4 billion is currently being invested
at BBAC, with €1 billion earmarked for the expansion of local
car and engine production capacity alone through 2015. The
existing annual capacity at BBAC for production of the C-Class,
E-Class and GLK will be more than doubled to over 200,000
units by the end of 2015. This figure also includes the GLA com-
pact SUV, which BBAC will begin manufacturing in 2015.
Daimler sells its interest in Rolls-Royce Power Systems
Holding. In March 2014, the Board of Management and
the Supervisory Board of Daimler AG decided to exercise an
option to sell the Company's interest in Rolls-Royce Power
Systems Holding (RRPSH) to the other shareholder. Rolls-Royce's
acquisition of Daimler's shares will allow it to strengthen
the company by integrating additional Rolls-Royce activities and
technologies into it. On the basis of long-term supply agree-
ments, Daimler will remain a key supplier of heavy-duty and
medium-duty diesel engines to Rolls-Royce Power Systems.
Daimler also plans to further expand its business activities with
engines and drive systems for professional non-bus and
non-truck (off-highway) applications. The transaction generated
proceeds of €2.4 billion for Daimler in the third quarter.
Daimler will use these funds to strengthen the Group's core
business.
By means of targeted investments and future-oriented partner-
ships, we strengthened our core business and utilized addi-
tional growth potential in 2014. At the same time, we focused
on the continuous further development of our existing busi-
ness portfolio.
Portfolio changes and strategic partnerships
73
CAR
2GO
moovel
Daimler Truck Financial
Mercedes-Benz Financial
SETRA
moovel GmbH consolidates mobility services. In April 2014,
the umbrella company for the car2go, car2go black and moovel
mobility services was renamed as moovel GmbH. The moovel
mobility app offers users a central access portal for numerous
mobility services. The app's features were expanded in 2014
and moovel also began offering the app in additional cities both
in Germany and abroad during the year under review. moovel
has also teamed up with new partners, which gives customers
even more choices for getting where they need to go. The
renaming underscores the importance of the mobility platform,
as well as its strong customer focus.
Mercedes-Benz Bank
FREIGHTLINER
Mercedes-Benz
BHARATBENZ
BUILT BUSES
WESTERN STAR
M
FUSO
smart
MAYBACH
FREIGHTLINER
AMG
Mercedes-Benz
B.02
In September 2014, moovel completely acquired Intelligent
Apps GmbH, which offers the mytaxi service, and also took
over the US mobility services provider RideScout LLC. mytaxi
is the world's first app that directly links passengers and
taxi drivers. moovel GmbH has had an interest in mytaxi since
the beginning of 2012. RideScout is the well known provider
of the leading mobility app in North America. RideScout offers an
app-based mobility platform that shows customers in nearly
70 cities in North America the best way to get to their destina-
tions. With the acquisition of RideScout, moovel is strength-
ening its presence in the international mobility services market
and accelerating its global development.
Additional capacities for transmission production. As part
of our efforts to accommodate the increasing demand for
automatic transmissions, we laid the cornerstone in April 2014
for a new assembly plant to be operated by our Star Trans-
mission subsidiary in Romania. This additional capacity in Sebes
will supplement existing transmission activities at the Unter-
türkheim plant, where the new nine-speed 9G-TRONIC automatic
transmission from Mercedes-Benz will go into production
in 2016.
Mercedes-Benz
Daimler Trucks
Mercedes-Benz
Daimler Buses
Daimler
Cars
Vans
Financial Services
Revenue
€73.6 billion
€32.4 billion
Daimler takes over battery manufacturing activities.
In April 2014, Daimler AG and Evonik Industries AG reorganized
their electric mobility activities in Kamenz and Kirchheim
unter Teck. Daimler has now acquired the shares of Li-Tec
Battery GmbH previously held by Evonik (50.1%), as well as
Evonik's stake in Deutsche ACCUmotive GmbH & Co. KG (10%).
This makes it the sole shareholder in both companies. With
the increasing concentration of battery-cell production at several
large specialist companies, and as a result of extreme price
competition between major manufacturers, battery cells have
now become an inexpensive mass product. Given this situa-
tion, it no longer makes any economic sense for us to manufac-
ture battery cells for specific use in automotive applications.
We have therefore decided to discontinue production of cells
at Li-Tec at the end of 2015. Nevertheless, the development
of complete battery systems still requires the type of extremely
specific expertise that we have accumulated over the past
few years and will to continue to utilize in the future. As a result,
Deutsche ACCUmotive will significantly expand its lithium-ion
battery production capacity in Kamenz. We will invest approxi-
mately €100 million in this expansion over the next few years.
€10.0 billion
€16.0 billion
Employees 129,106
Mercedes-Benz Vans
82,743
15,782
16,631
8,878
Brands
74
An important milestone in 2014 was the market launch
of the first vehicles fully co-developed from scratch: the new
Renault Twingo and the new smart fortwo and forfour models.
The smart fortwo is built at the smart plant in Hambach, France,
while the Renault Twingo and smart forfour are manufactured
at the Renault plant in Novo Mesto, Slovenia. The Renault
Twingo was launched in Europe in September; the smart fortwo
and smart forfour followed in November.
Cooperation with Renault-Nissan expanded. Cooperation
between Daimler and Renault-Nissan remains very successful.
The number of joint projects has increased fourfold, from three
to 12, since the partnership commenced in 2010.
€4.2 billion
99
medium and heavy-duty trucks for local and long-distance
deliveries and construction sites, as well as special vehicles
used mainly in municipal applications. Due to close links
in terms of production technology, the division's product range
also includes the buses of the Thomas Built Buses and FUSO
brands. Daimler Trucks' most important sales markets in 2014
were Asia, with 34% of unit sales, the NAFTA region (33%),
Western Europe (12%) and Latin America excluding Mexico (9%).
98
102
Innovation and safety
104
Environmental protection
108
Workforce
111
Social responsibility
113
Financial position, liquidity and capital resources
Economic Conditions and Business Development
101
77
77
Automotive markets
78
Business development
7786
Overall Assessment of the Economic Situation
116
79
Events after the Reporting Period
117
Profitability
The world economy
82
Sustainability at Daimler
Research and development
Sustainability
0.3
0.8
Daimler Buses
0.2
0.2
0.4
69
We set new standards
with pioneering
innovations.
The year 2014 was generally very successful for Daimler. We once again significantly
increased our unit sales and revenue, and we were also able to continuously improve
the Group's profitability. We thrilled our customers with numerous new products.
With pioneering innovations, we set new standards above all with the safety and
environmental compatibility of our vehicles. In the year 2015, we will continue our
growth offensive and further improve the efficiency of our processes.
70
70
101
B | Combined Management Report | Contents
Corporate Profile
72
Business model
72
Portfolio changes and strategic partnerships
74
Performance measurement system
75
Corporate governance statement
76
2256
B | Combined Management Report.
EBIT
Mercedes-Benz
Consolidated statement of income
Industry and business risks and opportunities
94
Credit ratings
134
Risks and opportunities
92
132
Risk and opportunity management system
92
132
Risk and Opportunity Report
134
91
Investment
Other financial obligations, financial guarantees
and contingent liabilities
89
Cash flows
129
Takeover-Relevant Information and Explanation
88
Liquidity and Capital Resources
88
Principles and objectives of financial management
82
INN
Company-specific risks and opportunities
Refinancing
Financial risks and opportunities
85
140
118
Dividend
86
Net operating profit
Principles of Board of Management remuneration
Board of Management remuneration in 2014
118
121
Value added
86
Commitments upon termination of service
Remuneration of the Supervisory Board
86
128
142
Financial Position
122
95
96
Risks from guarantees and legal risks
Remuneration Report
Overall assessment of the risk and opportunity
situation
145
Daimler AG (condensed version according to HGB)
Profitability
98
144
+5,9
Buses over 8 metric tons Brazil
49.7
44.1
+5.6
1 Based on estimates in certain markets.
Order situation. The Mercedes-Benz Cars, Daimler Trucks,
Mercedes-Benz Vans and Daimler Buses divisions produce
vehicles predominantly to order in accordance with customers'
specifications. While doing so, we flexibly adjust production
numbers to changing levels of demand. Overall, the order situa-
tion of the Daimler Group developed very positively in 2014.
Due to strong demand in the United States and China in partic-
ular, the number of orders placed with Mercedes-Benz Cars
was once again higher than the high level of orders recorded
in the prior year. This was driven on the product side primarily
by the models from the new compact class, the continued
strong success of our SUVs, the new S-Class and, in the second
half of the year, the new C-Class as well. Due to the stable
demand, we also increased our production volumes substan-
tially. Nevertheless, the order backlog at the end of 2014
was higher than a year before. Order levels at Daimler Trucks
were generally stable despite the difficult situation in various
markets. This stability was largely a result of high demand in the
NAFTA region, as well our attractive product range. The total
number of orders received by Daimler Trucks in 2014 and the
order backlog at year-end were both significantly higher than
in the previous year.
Through Beijing Foton Daimler Automotive Co., Ltd. (BFDA),
a joint venture with our Chinese partner Foton, we are repre-
sented in the Chinese truck market with locally produced
vehicles. In the year under review, BFDA sold 99,200 Auman
brand trucks (2013: 103,300), which are not included in the
Daimler Group's unit sales. see pages 160ff
Mercedes-Benz Vans sold 294,600 vehicles worldwide
in 2014. This figure marks a new sales record and an increase
of 9% from the prior year. Our Sprinter, Vito and Citan vans
are targeted mainly at commercial customers, while the Viano
and new V-Class models are designed primarily for private
use. Unit sales in Western Europe, our most important market,
rose by 12% to 190,000 vans. This positive development was
largely due to a strong comeback in southern European markets,
although we also set a new record in Germany with sales
of 79,900 units (2013: 71,500). Despite a difficult market envi-
ronment in Eastern Europe, Mercedes-Benz Vans once again
increased its sales in the region, this time by 14% to 30,800 units.
This figure includes 6,700 Sprinter Classic models that were
built and sold in Russia. The success story of our Sprinter contin-
ues in the United States as well. With unit sales of 25,800
(2013: 22,800), we increased our market share to the record
level of 8.9%. At 12,800 units, sales in China were slightly
above the prior-year level. Sales in Latin America declined by
18% to 16,100 units due to the difficult economic situation
in the region. We sold a total of 186,300 Sprinters worldwide
during the year under review, setting a new record (+12%).
Despite model changeovers, we were still able to significantly
surpass the prior-year figure in the segment for mid-size
vans (including the new V-Class) with sales of 86,000 units
(2013: 80,900). Sales of the Mercedes-Benz Citan totaled
22,100 units (+10%). see pages 165 ff
Daimler Buses sold 33,200 buses and chassis of the
Mercedes-Benz and Setra brands worldwide in 2014, not quite
equaling the prior-year level (2013: 33,700). However, we
significantly extended our market leadership in our core markets
in the segment for buses above 8 metric tons. Our business
with complete buses in Western Europe developed well. Due to
the very positive response to the new city-bus generation
Citaro and the new Setra TopClass 500 and ComfortClass 500,
our unit sales increased by 13% to 7,600 buses (2013: 6,700),
while our market share in Western Europe reached an all-time
high of 34.4% (2013: 30.9%). In Germany, our unit sales also
increased by a double-digit rate of 17% and our market share
of 57.1% was significantly higher than in 2013. At 17,600 units,
sales in Latin America were down significantly from the prior year
(19,100). This negative development was largely due to the
generally weak economy. Nevertheless, we were able to strongly
expand our already leading market share in the region to
48.6% (2013: 41.6%). At 3,600 units, sales in Mexico were signif-
icantly higher than in the prior year. see pages 168ff
B❘ Combined Management Report | Economic Conditions and Business Development
Business at Daimler Financial Services developed very
positively in the year under review, with the division once
again setting new records. As we had forecast in the Annual
Report 2013, worldwide contract volume grew substantially,
reaching the new record level of €99.0 billion (+18%). Adjusted
for exchange rate effects, the increase amounted to 12%.
As expected, new business also increased significantly, by 18%
to €47.9 billion. Growth here was driven by all regions. During
the year under review, Daimler Financial Services once again
supported a large number of companies with the financing
and management of their vehicles and fleets. A total of 305,000
contracts with fleet clients were on the books at the end
of 2014, an increase of 1% from the prior year. We significantly
expanded our business in the field of insurance as well.
At 1.4 million, the number of automotive policies we brokered
was higher than ever before (+10%). We continued to enhance
our business with innovative mobility services during the
year under review. The mobility subsidiary moovel had passed
the mark of one million customers by the end of the year.
With the flexible car-sharing model car2go, moovel was oper-
ating in 29 locations in Europe and North America by the
end of 2014. car2go is thus the clear market leader for flexible
short-term car rentals. see pages 171ff
Overall business development in Asia was positive, but
the situation varied from region to region. Whereas unit sales
increased in Japan and India, they declined in Indonesia.
Nevertheless, we were able to improve our market position
in both Japan and Indonesia, and we also gained market
share in India with our BharatBenz trucks in what was generally
a weak market. All in all, our sales in Asia increased by 3%
to 167,200 units.
80
3.2
57.1
Revenue. The Daimler Group increased its total revenue
in the year 2014 by 10% to €129.9 billion; adjusted for exchange
rate effects, the increase amounted to 12%. This means that,
as we had expected at the beginning of 2014, our dynamic
growth accelerated further thanks to the success of our new
vehicle models. As we had forecast in the Annual Report 2013,
the divisions Mercedes-Benz Cars (+14%), Mercedes-Benz
Vans (+6%) and Daimler Financial Services (+10%) increased their
business volumes by significant margins. Daimer Trucks and
Daimler Buses also achieved slight revenue growth. However,
the revenue of €32.4 billion (2013: €31.5 billion) recorded by
Daimler Trucks was not quite at the level we had aimed for, due
in particular to the weak Japanese yen. The bus and trucks
divisions were also negatively affected by the difficult situation
of the markets in Latin America and Eastern Europe.
+46
+0.3
Small vans Western Europe
3.2
Large vans USA
8.9
8.4
0.0
+0.5
Daimler Buses
Buses over 8 metric tons Western Europe
34.4
30.9
+3.5
thereof Germany
51.2
In regional terms, Daimler achieved revenue growth in
Western Europe (+6% to €43.7 billion), in the NAFTA region
(+15% to €38.0 billion) and in Asia (+20% to €29.4 billion).
117,982
Revenue by division
Profitability.
81
(excl. Germany)
Other markets
Asia
Western Europe NAFTA region
EBIT
Germany
5
10
15
20
25
30
0
35
The Daimler Group achieved EBIT of €10.8 billion in 2014
(2013: €10.8 billion), with significant increases across all
divisions in total. Compared to the previous year, there was
a negative impact on Group EBIT, however, caused by a
lower contribution from the reconciliation of segment EBIT
to Group EBIT. 7 B.12 7 B.13
Gains recognized on the disposal of shares in Rolls-Royce Power
Systems Holding GmbH (RRPSH) and on the remeasurement
and sale of shares in Tesla Motors Inc. (Tesla) (less the loss on
the related share-price hedges) boosted earnings by a total of
€1,482 million. Expenses connected with the EU Commission's
ongoing antitrust investigation of European manufacturers of
commercial vehicles reduced earnings by €600 million. In the
previous year, the remeasurement and sale of the remaining 7.4%
of EADS shares resulted in a gain of €3,223 million.
4,006
5,853
Mercedes-Benz Cars
EBIT from ongoing business
2013
14/13
% change
2014
% change
This result was positively affected in particular by the new
S-Class in its first full year, the expanded range of compact
automobiles and better pricing at Mercedes-Benz Cars. At
Daimler Trucks, increased unit sales in the NAFTA region were
the main factor contributing to the significant earnings
improvement in 2014. The earnings posted by Mercedes-Benz
Vans were also significantly higher than in the previous year,
due in particular to the very positive development of unit sales.
Daimler Buses achieved significantly improved earnings pri-
marily due to strong unit sales of complete buses and a positive
product mix in Western Europe. Daimler Financial Services
was also able to significantly surpass its prior-year earnings
as a result of increased contract volume. In all divisions,
the increasing impact of the implemented efficiency programs
had a positive impact on operating profit. The development
of currency exchange rates had a negative impact on earnings,
however.
In millions of euros
2013
2014
EBIT by segment
B.12
The Mercedes-Benz Cars and Daimler Trucks divisions signif-
icantly increased their EBIT from the ongoing business in 2014
and thus met the forecasts made in Annual Report 2013.
The same applies to the Mercedes-Benz Vans division, which
achieved EBIT from the ongoing business at the prior-year
level. However, the earnings of the Daimler Buses and Daimler
Financial Services divisions developed better than we had
expected at the beginning of 2014. We had anticipated a slight
improvement at Daimler Buses and stabilization at the prior-
year level at Daimler Financial Services. We adjusted those
assessments upwards as the year progressed in the context
of our quarterly reporting.
Due to the favorable business development in all divisions,
Daimler was able to significantly exceed its prior-year EBIT from
the ongoing business of €8.0 billion, achieving €10.1 billion
in 2014, which is in line with our expectations as stated in the
Outlook section of Annual Report 2013. 71 B.12
EBIT
14/13
B.11
40
2012
32,389
Daimler Trucks
+14
64,307
73,584
Mercedes-Benz Cars
31,473
+10
Daimler Group
% change
In millions of euros
14/13
2013
2014
129,872
2013
+3
9,968
2010
2011
In billions of euros
Consolidated revenue by region
B.10
+10
14,522
Mercedes-Benz Vans
15,991
+3
4,105
4,218
Daimler Buses
+6
9,369
Daimler Financial Services
2014
33%
26.5
Asia
28%
Other markets
10%
B.08
Unit sales structure of Daimler Trucks
Western Europe
Latin America
NAFTA
Asia
12%
9%
5,964
34%
23%
Other markets
0
0
79
At 33,900 units, sales in Eastern Europe were 5% lower than
in the prior year. Here, the increase in unit sales in Turkey
to the record level of 22,200 vehicles could not offset declines
in our other markets, especially Russia. Sales in Latin America
fell significantly due to a lack of dynamic growth. Our main market
in the region - Brazil - was strongly impacted by this, and
unit sales in the country therefore declined by 17% to 32,200
vehicles. Nonetheless, we were able to increase our market
share in the medium-duty and heavy-duty segment to 25.8%
(2013: 24.7%).
Our market share of 37.2% in the NAFTA region (2013: 38.2%)
once again made us the undisputed market leader in the
segment for Class 6-8 medium-duty and heavy-duty trucks.
Sales in the region rose by 19% to the record level of
161,500 units. The Freightliner Cascadia Evolution, which
was added to the product portfolio in March 2013,
played a major role in our sales success in North America.
B.09
Market share¹
In %
2014
2013
14/13
Change in
% points
12%
Mercedes-Benz Cars
39%
5%
Automotive Industry (VDA),
various institutions, S/DM
B❘ Combined Management Report | Economic Conditions and Business Development
Business development
Unit sales. As was previously forecast in the Annual Report
2013, Daimler recorded a substantial overall increase in unit
sales in 2014. Sales of more than 2.5 million vehicles were
8% higher than in the prior year. This growth was largely driven
by Mercedes-Benz Cars (+10%) and Mercedes-Benz Vans (+9%).
These divisions thus enabled the Group to fulfill the forecasts
it made at the beginning of the year. The 2% increase in unit
sales at Daimler Trucks was lower than we originally expected,
mainly due to the weak state of the markets in Western Europe
and Latin America. At the beginning of the year, we expected
to see a significant increase in bus sales. However, unit
sales for full-year 2014 were slightly below the prior-year level.
This development was primarily caused by the weakness
of Latin American markets, which we did not foresee at the
beginning of 2014.
The Mercedes-Benz Cars division once again posted a new
record with unit sales of 1,722,600 vehicles in the year under
review (2013: 1,565,600). Our very positive overall business
development throughout the year was largely due to the launch
of several new and attractive products. The Mercedes-Benz
brand increased its unit sales by 11% to the record level
of 1,630,100 vehicles in 2014. We significantly improved our
position in China in particular, as well as gaining market
share in various regions.
In Europe, Mercedes-Benz performed very well overall in
a volatile market environment. Particularly strong growth was
recorded in Spain (+35%), the UK (+13%) and France (+9%).
Sales in Western Europe were up 6% from the prior year, although
sales in Germany did fall slightly by 2%. With unit sales of
334,000 (+8%), Mercedes-Benz sold more vehicles in the United
States than ever before. Growth accelerated in China, where
sales rose by 25% to 275,000 units. We also recorded significant
sales increases in Japan (+15%), India (+14%) and Brazil (+6%).
Our sales growth was driven primarily by the S-Class, our com-
pact models and the new C-Class models. A total of 471,700
customers (+23%) opted to buy a vehicle from the A-Class,
B-Class, CLA-Class or new GLA-Class series during the year
under review. E-Class vehicles also remained very popular;
sales of 329,000 units of that model almost equaled the prior-
year figure. Mercedes-Benz also further strengthened its
leading position in the global market for luxury vehicles. A total
of 125,100 cars were sold in the S-Class segment (+75%)
during the year under review - more than ever before in the long
history of that model series. Business with our SUVs also
developed very positively, with sales of these models increasing
to the record level of 341,500 vehicles (+6%). The C-Class
models also performed extremely well in a year marked by
a model changeover. Unit sales totaled 362,700 automobiles
(+2%) although the new C-Class was not available in all
core markets until October 2014. 7 B.07
With sales of 92,500 units (-6%), developments at smart
during the model changeover year remained relatively stable.
see pages 154 ff
Daimler Trucks was able to slightly increase its unit sales
in a market environment that differed greatly from region
to region in 2014. Deliveries of heavy, medium and light-duty
trucks, as well as buses of the Thomas Built Buses and
FUSO brands, totaled 495,700 units in the year under review
(2013: 484,200). We thus achieved the highest level of sales
since 2006 and we remain the biggest global manufacturer
of trucks above 6 metric tons gross vehicle weight. 7 B.08
The high degree of market acceptance of our trucks is due in
large part to their extremely competitive total cost of owner-
ship, which is the most important factor in our customers'
purchasing decisions. That is why fuel efficiency is a top priority
in all regions. The Euro VI Actros in Europe, the Freightliner
Cascadia Evolution in North America and the FUSO Super Great V
in Japan are all at the forefront in terms of fuel economy.
In Western Europe, we increased our market share slightly to
24.4% (2013: 24.1%) in a difficult market environment. However,
at 57,400 units, sales were 13% lower than in the previous
year. This was due not only to advance purchases made in 2013
prior to the introduction of the Euro VI emission standard,
but also to the generally sluggish economy in the region during
the year under review. 7 B.09
Western Europe
NAFTA
B.07
A-/B-/CLA-/GLA-Class
C-/SLK-Class
28%
21%
E-/CLS-Class
19%
S-/CL-/SL-Class/SLS/Maybach
7%
M-/R-/GLK-/GL-/G-Class
20%
smart
Unit sales structure of Mercedes-Benz Cars
Western Europe
5.5
5.6
Medium-duty trucks NAFTA region
(Classes 6 and 7)
40.3
43.1
-2.8
Medium-duty and heavy-duty trucks Brazil
25.8
24.7
+1.1
Trucks Japan
20.1
-0.1
20.2
Medium-duty and heavy-duty trucks India
5.0
3.0
+2.0
Mercedes-Benz Vans
Medium-sized and large vans
Western Europe
18.2
17.8
+0.4
thereof Germany
-0.1
36.0
35.9
Heavy-duty trucks NAFTA region (Class 8)
thereof Germany
9.7
10.3
-0.1
-0.6
United States
2.1
2.1
1.5
1.3
0.0
+0.2
1.3
1.2
+0.1
China
Japan
Daimler Trucks
Medium-duty and heavy-duty trucks
Western Europe
24.4
24.1
+0.3
thereof Germany
39.8
39.7
+0.1
26.2
4,180
+61
Daimler Trucks
25,127
Selling expenses
-11,534
-11,050
+4
General administrative expenses
-3,329
-3,188
+4
Research and non-capitalized
development costs
-4,532
-4,205
28,184
+8
1,759
1,530
Other operating expense
-1,160
-399
+15
+191
Share of profit from equity-method
investments, net
897
3,345
-73
Other financial expense, net
458
Other operating income
-349
Gross profit
-101,688
Daimler
Buses
83
B.16
Return on equity
Daimler Financial Services
In %
30
3225
20
15
10
5
0
117,982
-92,855
2010
2012
2013
B.17
Consolidated statement of income
In millions of euros
2014
20131
2014
14/13
% change
+10
+10
+12
Revenue
129,872
Cost of sales
2011
Interest income
145
212
Group EBIT
10,752
10,815
Amortization of capitalized borrowing costs¹
-9
Interest income
145
-4
212
Interest expense
-715
-884
Profit before income taxes
10,173
In millions of euros
10,139
Mercedes-Benz Vans posted EBIT of €682 million in 2014,
a significant improvement on its prior-year earnings
of €631 million. The division's return on sales increased
to 6.8% from 6.7% in 2013. 71 B.15
Operating profit reflects the very positive development of unit
sales, especially in Europe and the NAFTA region. Earnings
were negatively impacted, however, by research and develop-
ment expenditure for new products and by expenses for the
market launch of the new V-Class multipurpose vehicle and the
new Vito; currency effects had an additional negative impact
on earnings. EBIT increased by €61 million following the reversal
of an impairment previously recognized on an investment
in the joint venture Fujian Benz Automotive Corporation (FBAC).
Daimler Buses significantly increased its EBIT to €197 million
in 2014 (2013: €124 million). The division's return on sales was
4.7% (2013: 3.0%). 7 B.15
This earnings improvement resulted primarily from increased
unit sales of complete buses and a positive product mix in
Western Europe, as well as from further efficiency progress
with "GLOBE 2013" and positive exchange rate effects. There
was an opposing, negative impact from lower unit sales of bus
chassis in Latin America. Although the economic situation
in Brazil and Argentina was difficult and, as had been expected,
the Turkish market contracted, profitability improved signifi-
cantly compared with the previous year. Expenses for reposition-
ing the division's business amounted to €12 million in 2014
(2013: €39 million).
Daimler Financial Services posted EBIT of €1,387 million,
significantly surpassing its prior-year earnings (2013: €1,268
million). The division's equity ratio was 19.4% (2013: 19.2%).
7 B.16
This development was primarily due to the increased contract
volume and the ongoing positive development of risk costs,
whereby currency effects and additional expenses in connection
with business expansion were more than offset.
The reconciliation of the divisions' EBIT to Group EBIT
comprises gains and/or losses at the corporate level and the
effects on earnings of eliminating intra-group transactions
between the divisions.
Items at the corporate level resulted in income of €713 million
(2013: €3,067 million), primarily related to our equity interests
in RRPSH and Tesla in 2014. The sale of Daimler's shares in
RRPSH resulted in a gain of €1,006 million while the remeasure-
ment of the put option resulted in an expense of €118 million.
In connection with our investment in Tesla, the loss of significant
influence on that company meant that the Tesla shares had
to be remeasured, resulting in a gain of €718 million. The hedge
of Tesla's share price and the sale of those shares resulted
in total expenses of €124 million. Items at the corporate level
also include expenses of €600 million related to the ongoing
antitrust investigations of European manufacturers of commer-
cial vehicles by the EU Commission. In 2013, earnings were
impacted in particular by Daimler's exit from the former EADS
shareholder pact in April 2013. This resulted in a gain of
84
Source: German Association of the
1 Amortization of capitalized borrowing costs is not included in the internal
performance measure EBIT, but is a component of cost of sales.
2013
2014
Reconciliation of Group EBIT to profit before income taxes
-32
Interest expense
-715
-884
-19
Profit before income taxes
10,173
10,139
+0
Income taxes
-2,883
-1,419
+103
Net profit
7,290
8,720
-16
thereof
attributable to non-controlling
interests
328
1,878
-83
attributable to
shareholders of Daimler AG
6,962
6,842
1 The figures for 2013 have been adjusted due to restructuring within
functional costs. Further information is provided in Note 1 of the Notes
to the Consolidated Financial Statements.
B.18
+2
Vans
Mercedes-Benz
Daimler
Trucks
Cars
Daimler Group
10,752
10,815
-1
10,146
8,004
+27
82
B| Combined Management Report | Profitability
The significant earnings improvement at Daimler Buses
resulted primarily from increased unit sales of complete buses.
The main factor behind the increased earnings at Daimler
Financial Services was the very positive development of new
business in combination with lower risk costs.
The special items affecting earnings in the years 2014
and 2013 are listed in table 7 B.14.
Mercedes-Benz Cars posted EBIT of €5,853 million, which is
significantly higher than the prior-year figure of €4,006 million.
The division's return on sales was 8.0% (2013: 6.2%). 7 B.15
The development of earnings primarily reflects the ongoing
growth in unit sales, especially in Asia, Europe and the United
States. This was due in particular to the new S-Class in its
first full year and the expanded range of compact automobiles.
Mercedes-Benz Cars also improved its earnings as a result
of better pricing and the efficiency program "Fit for Leadership".
Adverse effects on earnings resulted from expenses for the
enhancement of products' attractiveness, capacity expansions
and advance expenditure for new technologies and vehicles.
In addition, currency translation had a negative impact. EBIT also
include impairments of €30 million recognized on investments
in the area of alternative drive systems.
9
All the automotive divisions were also affected by the
restructuring of Daimler's own sales organization in Germany
by a total of €116 million. In this context, we refer to
the information provided in Note 5 of the Notes to the
Consolidated Financial Statements.
Significantly higher unit sales in the NAFTA region and Japan
made a major contribution to the earnings improvement in 2014.
Lower warranty costs and the successful efficiency and
growth program "Daimler Trucks #1" also had positive effects.
Unit sales and EBIT were adversely influenced in 2014 by the
weak economic situation in Latin America and Europe, as well
as by the after-effects of the introduction of Euro VI emission
regulations at the beginning of 2014. Currency effects and
expenses of €149 million for workforce adjustments in the con-
text of optimization programs in Brazil and Germany also had
a negative impact. EBIT also includes an expense of €30 million
from the impairment of the carrying value of the investment
in Kamaz. An additional factor is that there was no longer
a contribution to earnings from RRPSH following the execution
of the put option.
B.13
Development of earnings
In billions of euros
12
10
8
6
4
2
H
EBIT
Daimler Trucks achieved EBIT of €1,878 million (2013: €1,637
million), which is significantly higher than the prior-year figure.
The division's return on sales was 5.8% (2013: 5.2%). 7 B.15
-127
-76
3,149
1,878
1,637
+15
2,073
1,753
+18
Mercedes-Benz Vans
682
631
+8
638
631
+1
Daimler Buses
197
124
+59
211
163
+29
Daimler Financial Services
1,387
1,268
+9
1,387
1,268
+9
Reconciliation
755
Net profit (loss)
+43
0
2011
Sale of shares in RRPSH
+1,006
Measurement of put option for RRPSH
Remeasurement of Tesla shares
-118
-60
+718
Sale of Tesla shares and hedge of Tesla
share price
-124
-23
Expenses related to EU antitrust proceedings
Remeasurement and sale of remaining shares
in EADS
-600
+3,223
B.15
Reconciliation
Return on sales
2010
2011
2012
2014
2013
12
9
6
3
0
-3
-6
-9
Mercedes-Benz
In %
-2
Restructuring of sales organization in Germany
-39
2012
2013
2014
B.14
Special items affecting EBIT
In millions of euros
Mercedes-Benz Cars
of alternative drive systems
2014
2013
Impairment of investments in the area
-30
-174
Restructuring of sales organization in Germany
-81
Daimler Trucks
Workforce adjustments
-149
-116
Impairment of investment in Kamaz
-30
Restructuring of sales organization in Germany
-16
Mercedes-Benz Vans
Reversal of impairment of investment in
Fujian Benz Automotive Corp. Ltd.
Restructuring of sales organization in Germany
-17
Daimler Buses
Business repositioning
-12
2010
78
thereof
1 Cars segment includes light trucks
Cost of capital
2014
2013
Return on sales. As one of the main factors influencing value
added, return on sales is of particular importance for assess-
ing the industrial divisions' profitability. The combination
of return on sales and net assets' productivity results in return
on net assets (RONA). If RONA exceeds the cost of capital,
value is created for our shareholders. The profitability measure
for Daimler Financial Services is not return on sales, but
return on equity, in line with the usual practice in the banking
business.
Key performance indicators. The important financial
indicators for measuring our operating financial performance,
in addition to EBIT and revenue, are the free cash flow of the
industrial business, investment, and research and development
expenditure. Along with the indicators of financial perfor-
mance, we also use various non-financial indicators to help us
manage the Group. Of particular importance in this respect
are the unit sales of our automotive divisions, which we use as
the basis for our capacity and human resources planning,
and workforce numbers.
Furthermore, within the context of our sustainability manage-
ment, we use other non-financial indicators such as the
CO2 emissions of our vehicle fleet and the energy and water
consumption of our production sites. Non-financial indicators
are also used to determine the compensation for our Board
of Management members. In addition, integrity and compliance
are important criteria used in annual goal agreements for
our managers, as well as in target-achievement assessments.
Details of the development of non-financial performance
indicators can be found in the chapters "Economic Condi-
tions and Business Development" and "Sustainability."
see pages 77 ff and pages 101 ff For "Integrity and
Compliance,"
see pages 179 ff
Corporate governance statement
The corporate governance statement to be issued pursuant
to Section 289a of the German Commercial Code (HGB)
can be viewed on the Internet at daimler.com/corpgov/en.
Pursuant to Section 317 Subsection 2 Sentence 3 of the
HGB, the contents of the statement pursuant to Section 289a
of the HGB are not included in the audit carried out by the
external auditors.
In percent
Group, after taxes
B.04
Industrial business, before taxes
Daimler Financial Services, before taxes
13
823
8
12
13
76
B | Combined Management Report | Corporate Profile | Economic Conditions and Business Development
Economic Conditions
and Business Development.
The world economy
12
Cost of capital. The required rate of return on net assets, and
hence the cost of capital, is derived from the minimum rates
of return that investors expect on their invested capital. The cost
of capital of the Group and the industrial divisions comprises
the cost of equity as well as the costs of debt and pension obli-
gations of the industrial business. The expected returns on
liquidity and plan assets of the pension funds of the industrial
business are considered with the opposite sign. The cost of
equity is calculated according to the capital asset pricing model
(CAPM), using the interest rate for long-term risk-free secu-
rities (such as German government bonds) plus a risk premium
reflecting the specific risks of an investment in Daimler shares.
While the cost of debt is derived from the required rate of
return for obligations entered into by the Group with external
lenders, the cost of capital for pension obligations and the
anticipated return from plan assets are calculated on the basis
of discount rates used in accordance with IFRS. The expected
return on liquidity is based on money market interest rates.
The Group's cost of capital is the weighted average of the indi-
vidually required or expected rates of return. During the
reporting period, the cost of capital amounted to 8% after taxes.
For the industrial divisions, the cost of capital amounted
to 12% before taxes; for Daimler Financial Services, a cost
of equity of 13% before taxes was applied. 7 B.04
Net assets. Net assets represent the basis for the investors'
required return. The industrial divisions are accountable for the
net operating assets; all assets, liabilities and provisions which
they are responsible for in day-to-day operations are therefore
allocated to them. Performance measurement at Daimler
Financial Services is on an equity basis, in line with the usual
practice in the banking business. Net assets at the Group
level include the net operating assets of the industrial divisions
and the equity of Daimler Financial Services, as well as assets
and liabilities from income taxes and other reconciliation items
which cannot be allocated to the divisions. Average annual
net assets are calculated from average quarterly net assets.
see page 87
75
2 Medium- and heavy-duty trucks
B| Combined Management Report | Corporate Profile
In June, joint production of a two-liter, turbocharged four-
cylinder gasoline engine began at a new plant in Tennessee
in the United States. The engines, which are built at the
Infiniti Decherd Powertrain facility, will initially be used in the
Infiniti Q50 sports sedan for the European market and in the
Mercedes-Benz C-Class. When fully ramped up, the new plant
will have a production capacity of 250,000 units each year.
Also in June 2014, Renault-Nissan and Daimler AG announced
an agreement covering the development of premium compact
cars and the joint production of vehicles in Mexico. A new
50:50 joint venture is responsible for building and operating
a new manufacturing facility in Aguascalientes, Mexico.
The new plant is being constructed at a site in the direct vicinity
of an existing Nissan facility. After the production launch, the
new plant will be ramped up to an annual capacity of 300,000
units. Production is scheduled to begin with Infiniti models
in 2017. The plant will start manufacturing Mercedes-Benz brand
vehicles in 2018.
In the van segment, Daimler's Mitsubishi Fuso Truck and
Bus Corporation (MFTBC) and Nissan Motor Co. Ltd. signed
a contract in October 2014 covering the supply of finished
commercial vans for export. Under the terms of the contract,
Nissan is supplying its "NV350 Urvan” (GVW: 3.5 metric
tons) to Mitsubishi Fuso, which has been selling the model as
the "Canter Van" in the Middle East since the end of 2014.
Cooperation with Tesla restructured. Daimler reorganized
its cooperation with Tesla Motors Inc. in October. Within the
framework of this restructuring, we terminated the share-price
hedge initiated at the end of 2013 and sold our stake of
approximately 4% in Tesla. The partnership and cooperation
with Tesla do not require us to have a financial interest in
the company. The sale of our Tesla shares generated proceeds
of approximately €0.6 billion, which will be used to strengthen
business operations. Cooperation with Tesla will nevertheless
remain an important part of Daimler's activities in the field
of electric mobility in the future.
Interest in MV Agusta. In October 2014, Mercedes-AMG
and the motorcycle manufacturer MV Agusta signed a cooper-
ation agreement that will create a long-term partnership.
The two brands, which have long traditions and histories, will
cooperate in the area of sales and marketing. After the
agreement was approved by the responsible antitrust author-
ities, Mercedes-AMG GmbH acquired a 25% interest in
MV Agusta S.p.A. in November 2014.
Performance measurement system
Financial performance measures. The financial performance
measures used at Daimler are oriented toward our investors'
interests and expectations and provide the foundation for our
value-based management.
Value added. Value added is a key element of our performance
measurement system, which is applied at both the Group and
the divisional levels. It is calculated as the difference between
operating profit and the cost of capital of average net assets.
Alternatively, the value added of the industrial divisions can be
determined using the main value drivers of return on sales
(quotient of EBIT and revenue) and net assets' productivity
(quotient of revenue and net assets). 7 B.03
During the year 2014, value added amounted to €4.4 billion
(2013: €5.9 billion). The quantitative development of value
added and the other financial performance measures is
explained in the "Profitability” chapter. see pages 86f
The use of a combination of return on sales and net assets'
productivity within the context of a strategy of profitable
revenue growth provides the basis for positive development
of value added. Value added shows the extent to which the
Group and its divisions achieve or exceed the minimum return
requirements of shareholders and creditors, thus creating
additional value.
Profit measure. The measure of operating profit at the
divisional level is EBIT, which is calculated before interest and
income taxes. EBIT hence reflects the divisions' profit and
loss responsibility. The operating profit measure used at the
Group level is net operating profit. It comprises the EBIT
of the divisions as well as profit and loss effects for which the
divisions are not held responsible. The latter include income
taxes and other reconciliation items. 7 B.12 on page 82
B.03
Calculation of value added
Net assets
Value added
Profit measure
Cost of
capital (%)
Cost of capital
Value
added
Return on
sales
Net assets
productivity
Cost of
capital (%)
× Net assets
With a real rate of growth of 2.7%, the world economy failed
to fulfill our hopes for a more noticeable acceleration of
economic expansion. As was the case in the two previous years,
growth was also once again lower than the long-term trend.
7 B.05 This development was mainly due to ongoing weak
demand in the European Monetary Union and the difficult
economic situation in several important emerging markets.
Prices on the global financial markets fluctuated greatly
throughout the year. This was also the case with raw material
prices, which declined noticeably in the second half of the
year, especially for crude oil.
The economies of the industrialized countries were somewhat
more dynamic than in the prior year. Taken together, the real
gross domestic product (GDP) of these countries rose by approxi-
mately 1.7%. A particularly pleasing development during the
year under review was the dynamic economic growth recorded
in the United States, whose economy grew by significantly
more than 3% in the period following a weather-related decline
in the first quarter. If not for the negative basis effect from
the first quarter, overall economic growth in the United States
in full-year 2014 would have been higher than the recorded
figure of approximately 2.5%. Economic growth in Japan was
impacted during the year under review by the significant
increase in the country's value-added tax at the beginning
of the second quarter, which caused consumers to bring
purchases forward before the tax hike. All in all, the Japanese
economy grew by less than a half percent in 2014.
X
Bank intensified its expansionary monetary policies throughout
the year in response to ongoing deflation concerns and the
low amount of lending in the euro zone.
Global automotive markets
Unit sales growth rates 2014 in %
20
15
10
5050
Passenger cars
Commercial vehicles
-5
-10
-15
-20
Total
Western
Europe region 1,2
Asia
South
America
Eastern
Europe
With few exceptions, sluggish economic development
also had a negative impact on global demand for medium-
duty and heavy-duty trucks. Global market volume de-
creased by approximately 5% in 2014.
The key North American market was able to clearly buck the
negative trend, however. Thanks to solid economic growth
in the United States in particular, demand for Class 6-8 trucks
increased by 13% in North America during the year under
review. The Japanese market also performed well. Demand for
light-, medium- and heavy-duty trucks in Japan was seemingly
unaffected by the value-added tax increase and exceeded
the prior-year level by approximately 17%. However, FUSO's
biggest sales market, Indonesia, contracted by more than
15% compared with 2013.
In Europe, demand for medium-duty and heavy-duty trucks
was well below the prior-year level. The truck market in Europe
contracted by roughly 8% due to the negative effects of new
emission regulations (Euro VI) and the ongoing relative overall
sluggishness of the region's economies. The market in Brazil
was subject to great pressure in the year under review. Here,
a markedly weak economy and less favorable financing terms
within the framework of the government's FINAME program
led to a 10% decline in demand.
The market in India, on the other hand, stabilized over the
course of 2014, with the overall sales volume declining only
slightly from the prior year. This was in marked contrast
to the double-digit decreases that the market had suffered in
previous years. The drop in demand in Russia was severe,
however. According to recent forecasts, the economic crisis
in the country caused the truck market to contract by more
than 20%. Developments in China - the world's largest truck-
sales market – were negatively impacted by the controlled
slowdown of economic growth and various regulatory measures.
Total demand was significantly lower than in 2013. The expected
effect of purchases being brought forward before the intro-
duction of stricter emission regulations in January 2015 hardly
materialized.
After two years of declining demand, the van market in Western
Europe expanded again in 2014, with growth of 6% in the
market volume for medium-sized and large vans. Demand for
small vans also increased by 6%. Significant market recovery
was observed in the countries of Southern European in particular.
The market for large vans in the United States also expanded,
while demand in the van segment that we specifically address
in China also increased slightly. However, the unfavorable
situation in Latin America led to a sharp decline in the market
for large vans in that region.
The Western European market for buses did not match the
already weak level of the previous year. The German coach
segment was positively impacted by the expansion of long-
distance bus services in the country. Demand for buses in
Eastern Europe was well below the prior-year level, however.
This negative development was largely due to the market
contraction in Turkey, which we had anticipated. At the same
time, the difficult economic situation in Brazil and Argentina
led to a sharp decline in the bus market volume in Latin America
as well.
Whereas growth in English-speaking countries was quite
robust (the British economy also experienced dynamic growth
of 2.6%), the European Monetary Union lagged well behind
in comparison. Although the euro zone was able to recover
from the recession of the prior year, economic growth still
failed to reach 1% there in 2014. This was largely due to the
sluggishness of the euro zone's larger economies such as
France and Italy, as well as the fact that the German economy
was barely able to generate any momentum in the second
half of the year. By contrast, countries plagued by recession
in recent years, such as Spain, Ireland and Portugal, developed
favorably in the year under review. The European Central
B.06
Sales in Japan developed more positively than had been antici-
pated at the beginning of the year, with full-year sales rising
slightly despite the value-added tax increase. With the exception
of China, the most important emerging markets were char-
acterized by difficult market conditions that were in some cases
caused by very weak economies. India recorded the best per-
formance here, as the market became somewhat more vibrant
in the second half of 2014 so that car sales ended up slightly
exceeding the figure recorded in the prior year. The car markets
in Brazil and Russia contracted significantly, however.
NAFTA
The Chinese and US markets once again made the biggest
contribution to the growth in global car sales during the year
under review. Car demand in China grew by approximately
10%. With a total sales volume of approximately 18 million units,
China was able to strengthen its position as the world's
largest automobile market. Sales also developed very positively
in the United States, where demand for cars and light trucks
rose by nearly 6% to roughly 16.4 million units - the highest
market volume since before the great financial crisis of 2006.
The overall pace of economic growth in the emerging markets
slowed once again in 2014. Growth in these markets amounted
to approximately 4% in an environment marked by rising infla-
tion and in some cases dramatic currency devaluations. Whereas
the slowdown in China associated with economic restructuring
measures led to growth of 7.4%, which was in line with expecta-
tions, developments in countries such as Brazil, Argentina,
South Africa and Russia were particularly disappointing. In the
case of Russia, the conflict with Ukraine and the associated
economic sanctions as well as the drastic fall in the oil price put
an additional strain on the economy.
After several years marked in some cases by sharply contracting
markets, demand for cars in Western Europe once again rose
in 2014. The region was thus able to make a positive contribution
to the development of the global car market. All in all, demand
increased by nearly 5% over the prior year, although the develop-
ment of individual markets varied greatly. Formerly crisis-
ridden countries such as Spain and Portugal displayed clear
signs of recovery and recorded double-digit sales increases.
At the opposite end of the spectrum was the Netherlands, whose
car market contracted by approximately 7%. Among the core
markets, the UK once again displayed a particularly positive devel-
opment, posting an increase of more than 9% in the year
under review. Germany and Italy recorded moderate gains
over the prior year, while the market in France stagnated.
In this global economic environment, exchange rates were
volatile, in some cases very much so. For example, the euro
fluctuated against the US dollar over the year in a range
from $1.21 to $1.40. At the end of 2014, the euro stood at $1.21,
which was nearly 12% lower than the exchange rate at the
beginning of the year. The fluctuation of the Japanese yen against
the euro was once again very pronounced within a corridor
of ¥134 to ¥150. By the end of 2014, the euro was close to the
level of the previous year. The euro closed the year with a loss
of approximately 7% against the British pound, with rather less
volatility between the two currencies during 2014. While the
euro gained 55% against the Russian ruble in 2014, it was slightly
weaker (-1%) against the Brazilian real at the end of 2014,
with high volatility during the year.
B.05
Economic growth
Gross domestic product, growth rates in %
6
5
3
2
1
0
-1
4
Source: IHS Global Insight, S/DM
Automotive markets
Total
77
Eastern
Europe
2013
2014
The continued moderate growth of the world economy was
also reflected by slower growth in global demand for cars.
In a situation marked by very significant differences between
regions, the global car market only expanded by approximately
3.5%, which was somewhat lower than what we had originally
expected. 7 B.06
South
Asia
NAFTA
Western
Europe
America
1 Total equity
B.23
40,779
40,648
+0
2 To the extent not allocated to the segments
3 Industrial business
2013
Inventories
In millions of euros
Net assets of the industrial business
Intangible assets
2014
14/13
% change
Daimler Group
Net assets of the Daimler Group at year-end
Other reconciliation³
+8
1,080
Daimler Financial Services¹
Net assets of the divisions
Equity-method investments²
Assets and liabilities from
income taxes³
9,144
7,154
6,607
36,305
36,451
+7
-0
638
-3
2,700
2,479
+9
1,156
618
9,228
3,981
Property, plant and equipment
Leased assets
-8,778
+12
Less other assets and liabilities
Assets and liabilities
-22,438
-15,983
+40
-9,852
from income taxes
Total equity
+112
of Daimler Financial Services
7,617
6,596
+15
-8
1,878
-1
+18
-13,420
23,125
21,732
+6
14,374
13,207
+9
-11,382
20,004
+20
Trade receivables
7,824
7,208
+9
Less provisions for other risks
Less trade payables
16,648
1,068
2013
Daimler Buses
Mercedes-Benz Cars
3,799
2,007
Daimler Trucks
761
369
5,921
+89
+106
473
445
+6
Daimler Buses
79
-4
Mercedes-Benz Vans
Daimler Financial Services
4,416
In millions of euros
-1,642
+87
Net operating profit
755
3,149
-76
Daimler Group
7,678
-16
1 Adjusted for tax effects on interest income/expense and amortization
of capitalized borrowing costs.
B.21
Value added
2014
Net assets
9,173
982
457
+12
2013
14/13
% change
Mercedes-Benz Cars
17,114
16,658
+3
2014
Daimler Trucks
10,571
-12
Mercedes-Benz Vans
1,742
1,547
+13
9,313
409
In millions of euros
Daimler Financial Services' value added of €0.5 billion was
higher than in 2013. The division's return on equity amounted
to 19.4% (2013: 19.2%). The development of value added primarily
reflects the increase in EBIT due to the growth in contract
volume and the ongoing positive development of risk costs.
Average equity rose by €0.5 billion to €7.2 billion.
86
Table B.20 shows the reconciliation of the EBIT of the
divisions to net operating profit. In addition to the EBIT
of the divisions, net operating profit also includes earnings
effects for which the divisions are not accountable
such as income taxes and other reconciliation items.
14/13
% change
-25
Value added
Net assets (average)
As described in the "Performance measurement system"
section of the "Corporate Profile" chapter in table
The Group's value added amounted to €4.4 billion in 2014
(2013: €5.9 billion), representing a return on net assets of
18.8% (2013: 22.6%). This was once again substantially higher
than the minimum required rate of return of 8%. Value added
in the previous year was influenced in particular by the remea-
surement and the sale of the remaining EADS shares. 2014
was also affected by special items from the sale of the 50%
equity interest in RRPSH and from the remeasurement
and sale of the Tesla shares. Adjusted for these one-time
effects, the Group's value added increased in 2014 primarily
due to the favorable business development of all divisions.
B| Combined Management Report | Profitability
The value added of Mercedes-Benz Cars increased by
€1.8 billion to €3.8 billion. This was mainly the result of the
positive development of earnings caused by the ongoing
growth in unit sales, the expanded product range and the posi-
tive efficiency measures of the "Fit for Leadership" program.
There were opposing, negative effects on value added from
expenses relating to the enhancement of products' attrac-
tiveness, capacity expansions and advance expenditure for new
technologies and vehicles. The division's average net assets
increased only slightly by €0.5 billion.
Value added at Daimler Trucks more than doubled compared
with the previous year and reached €0.8 billion. This was due not
only to higher earnings resulting from significant growth in
unit sales in the NAFTA region and Japan, lower warranty costs
and the successful implementation of the "Daimler Trucks #1"
growth and efficiency program, but also to the reduction in
average net assets following the sale of the 50% equity interest
in the associated company RRPSH.
Mercedes-Benz Vans' value added of €0.5 billion was
slightly higher than in 2013. Higher earnings were achieved
due in particular to the very positive development of unit
sales. On the other hand, average net assets increased
by €0.2 billion to €1.7 billion, primarily as a result of increased
fixed assets and the rise in the carrying value of Daimler's
interest in the Chinese joint venture FBAC following the reversal
of a previous impairment.
The Daimler Buses division achieved positive value added
of €79 million in 2014 (2013: negative €4 million). This was
mainly the result of improved earnings due to increased unit
sales of complete buses and the positive product mix, as
well as ongoing efficiency progress. Average net assets slightly
decreased by €86 million and made a minor contribution
to the increase in value added.
7 B.03, the cost of capital is the result of net assets and cost
of capital expressed as a percentage, which is subtracted
from earnings in order to calculate value added. The tables
7 B.21 and 7 B.22 show value added and net assets for
the Group and for the individual divisions. Table 7 B.23 shows
how net assets are derived from the consolidated statement
of financial position.
40,359
90
+0
Dec. 31,
2013
14/13
Change
Cash and cash equivalents
8,341
9,845
-1,504
Dec. 31,
2014
Marketable debt securities
5,303
Liquidity
13,497
15,148
Financing liabilities
3,193
5,156
-1,324
In millions of euros
B.26
-2,774
+3,880
Change in marketable
debt securities
-195
Other adjustments¹
1,022
Net liquidity of the industrial business
1,548
-252
5,479
4,842
Free cash flow
of the industrial business
+637
1 The effects from the financing of the Group's own dealerships, which are
reflected in cash provided by operating activities, are eliminated under
other adjustments.
-1,743
+1,274
10,313
-6,767
-147
-1,651
+4,517
hedges for financing liabilities
Net debt at Group level, which primarily results from the refi-
nancing of the leasing and sales-financing business, increased
by €10.5 billion compared with December 31, 2013. 7 B.27
The contingent liabilities principally constitute buyback obli-
gations. At December 31, 2014, the best possible estimate
for the loss risk from these guarantees amounted to €1.2 billion
(2013: €1.0 billion). Warranty and goodwill commitments
(product guarantees) provided by the Group in connection with
its vehicle sales are not included in the contingent liabilities.
Contingent liabilities also include other contingent liabilities.
The best possible estimate for potential expenses from the
other contingent liabilities is €0.4 billion (December 31, 2013:
€0.4 billion).
B.27
Net debt of the Daimler Group
In millions of euros
Dec. 31,
Compared with December 31, 2013, the net liquidity of the
industrial business increased from €13.8 billion to €17.0 billion.
The increase mainly reflects the positive free cash flow.
Dividend payments to the shareholders of Daimler AG and
to minority interests of subsidiaries reduced net liquidity
by €2.6 billion. The adoption of the refinancing of the Group's
own dealerships by the industrial business was offset by
the positive currency effects.
2014
14/13
Change
Cash and cash equivalents
Marketable debt securities
9,667
11,053
-1,386
Dec. 31,
2013
Market valuation and currency
To the extent that the Group's internal refinancing of the financial
services business is provided by the companies of the indus-
trial business, this amount is deducted in the calculation of the
net debt of the industrial business. At December 31, 2014,
the Group's internal refinancing was of a higher volume than
the financing liabilities originally taken on in the industrial
business due to the application of the industrial business's own
financial resources. This resulted in a positive value for the
financing liabilities of the industrial business, thus increasing
net liquidity, so the net liquidity of the industrial business
exceeds the gross liquidity presented here.
The net liquidity of the industrial business 7 B.26 is calcu-
lated as the total amount as shown in the statement of financial
position of cash, cash equivalents and marketable debt
securities included in liquidity management, less the currency-
hedged nominal amounts of financing liabilities.
263
10
Financing liabilities (nominal)
3,456
Net liquidity
16,953
B | Combined Management Report | Liquidity and Capital Resources
-1,314
13,834
Other adjustments relate to additions to property, plant and
equipment that are allocated to the Group as their beneficial
owner due to the form of their underlying lease contracts.
Furthermore, adjustments are made for the effects of financing
dealerships within the Group. In addition, the calculation of
the free cash flow includes those cash flows to be shown under
cash from financing activities in connection with the acquisi-
tion or sale of interests in subsidiaries without loss of control.
The free cash flow of the industrial business amounted to
€5.5 billion in 2014. The sale of the shares in RRPSH and Tesla
contributed €3.0 billion of that amount. On the other hand,
the free cash flow of the industrial business was reduced by
the cash outflows for the extraordinary contribution to the
German pension fund assets of €2.5 billion and for the settle-
ment of a healthcare plan in the United States. Adjusted
for these special effects, the free cash flow of the industrial
business amounted to €5.2 billion.
The positive contributions to earnings from the automotive
divisions were reduced by the increase in working capital,
defined as the net change in inventories, trade receivables
and trade payables, in a total amount of €2.3 billion. This
included positive effects from the sale of trade receivables
to Daimler Financial Services by companies in the industrial
business. The positive development of other operating assets
and liabilities was related to the business expansion and is
primarily due to payments received from sales with service and
maintenance contracts and sales with residual-value guaran-
tees. In addition, high expenses for dealer bonuses and provisions
are considered. There were opposing, negative effects from
ongoing high investments in property, plant and equipment and
intangible assets, as well as from income taxes and interest
payments.
At the beginning of 2014, we expected the free cash flow to
be significantly below prior-year level. However, when comparing
with the previous year, it is necessary to consider that the
free cash flow in both years included effects from acquisitions
and disposals of equity interests. In 2013, the sale of the
shares in EADS led to a cash inflow of €2.3 billion while the
acquisition of the equity interest in BAIC Motor resulted in
a cash outflow of €0.6 billion. After adjusting for special effects,
the free cash flow of the industrial business of €5.2 billion
in the year 2014 was significantly higher than the previous year
value of €3.2 billion, in line with our forecast as adjusted
during the year.
The increase in the free cash flow adjusted for special effects
of €2.0 billion to €5.2 billion reflects the positive business devel-
opment and was primarily due to higher profit contributions
from the automotive divisions. The higher inventory increase
due to realization of the growth strategy was not offset
by the development of trade receivables and payables. Positive
effects resulted from the development of other operating
assets and liabilities.
+253
+4,770
+3,119
40,354
-2,887
7,539
B.24
Condensed consolidated statement of cash flows
In millions of euros
2014
2013
14/13
Change
Cash used for investing activities 7 B.24 amounted to
€2.7 billion (2013: €6.8 billion). The change compared with the
prior-year period resulted primarily from acquisitions and
disposals of securities in the context of liquidity management.
Those transactions resulted in a net cash inflow in 2014,
whereas acquisitions of securities significantly exceeded dispos-
als in the previous year. In addition, lower investments in
intangible assets had a positive impact. Investments in property,
plant and equipment for the ramp-up of new products and
for the expansion of production capacities were slightly below
the high level of recent years. Both years were affected by
proceeds from the sale of equity interests. In August 2014, the
sale of the shares in RRPSH was concluded and a capital
gain of €2.4 billion was recognized. In October 2014, the sale
of shares in Tesla and the termination of the related share-
price hedge led to a cash inflow of €0.6 billion. In 2013, cash
used for investing activities was significantly affected by the
sale of the remaining shares in EADS (€2.3 billion); there were
opposing, negative effects of €0.6 billion from the acquisition
of a 12% equity interest in BAIC Motor Corporation Ltd. (BAIC
Motor) and of €0.2 billion from the capital increase at
Beijing Benz Automotive Co., Ltd. (BBAC).
Cash and cash equivalents
11,053
10,996
+57
Cash used for/provided
by operating activities
-1,274
at beginning of period
3,285
Cash used for/provided by operating activities 7 B.24
resulted in a cash outflow of €1.3 billion in 2014 (2013: cash
inflow of €3.3 billion). This decrease was mainly caused by
the realization of the growth strategy. Working capital increased
at a higher rate than in the prior-year period due to the higher
inventory increase. Growth in new business in leasing and sales
financing surpassed the high level of the prior-year period
by €2.6 billion. An additional factor is that the positive business
development in 2014 led to higher income-tax payments.
Furthermore, there was a cash outflow of €2.5 billion for the
extraordinary contribution to the German pension fund assets.
These effects were partially offset by the higher result from
ongoing business which did not include the lower measurement
effects compared to the prior-year period. In 2014, they
were related to RRPSH and Tesla with a total of €0,4 billion
and in 2013 to EADS with €3,4 billion.
Further information on the management of market-price
risk, credit-default and liquidity risk is provided in Note 32
of the Notes to the Consolidated Financial Statements.
87
40
Liquidity and Capital Resources.
Principles and objectives of financial management
Financial management at Daimler consists of capital structure
management, cash and liquidity management, pension asset
management, market-price risk management (foreign exchange
rates, interest rates, commodity prices) and credit and finan-
cial country risk management. Worldwide financial management
is performed within the framework of legal requirements
consistently for all Group entities by Treasury. Financial manage-
ment operates within a framework of guidelines, limits and
benchmarks, and on the operational level is organizationally
separate from other financial functions such as settlement,
financial controlling, reporting and accounting.
Capital structure management designs the capital structure
for the Group and its subsidiaries. Decisions regarding the
capitalization of financial services companies - as well as pro-
duction, sales and financing companies - are based on the
principles of cost-optimized and risk-optimized liquidity and
capital resources. In addition, it is necessary to comply
with restrictions on capital transactions and on the transfer
of capital and currencies.
Cash flows
Liquidity management ensures the Group's ability to meet
its payment obligations at any time. For this purpose, liquidity
planning provides information about all cash flows from
operating and financial activities in a rolling plan. The resulting
financial requirements are covered by the use of appropriate
instruments for liquidity management (e.g. bank credits,
commercial papers, notes); liquidity surpluses are invested
in the money market or the capital market to optimize risk
and return. Our goal is to ensure the level of liquidity regarded
as necessary at optimal costs. Besides operational liquidity,
Daimler keeps additional liquidity reserves which are available
in the short term. Those additional financial resources
include a pool of receivables from the financial services busi-
ness which are available for securitization in the capital
market, as well as a contractually confirmed syndicated credit
facility with a volume of €9 billion.
Management of market price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the results of the divisions and
the Group. The Group's overall exposure to these market-price
risks is determined to provide a basis for hedging decisions,
which include the definition of hedging volumes and correspond-
ing periods, as well as the selection of hedging instruments.
Decisions regarding the management of risks resulting from
fluctuations in foreign exchange rates and commodity prices,
as well as decisions on asset/liability management (liquidity and
interest rates), are regularly made by the relevant committees.
Management of pension assets includes the investment
of pension assets to cover the corresponding pension obliga-
tions. Pension assets are held in separate pension funds and
are thus not available for general business purposes. The funds
are allocated to different asset classes such as equities,
fixed-interest securities, alternative investments and real estate,
depending on the expected development of pension obliga-
tions and with the help of a process for risk-return optimization.
The performance of asset management is measured by com-
paring with defined reference indices. Local custodians of the
pension funds are responsible for the risk management
of the individual pension funds. The Global Pension Committee
limits these risks by means of Group-wide binding guidelines
whereby applicable laws are given due consideration. Additional
information on pension plans and similar obligations is
provided in Note 22 of the Notes to the Consolidated
Financial Statements.
88
B| Combined Management Report | Liquidity and Capital Resources
The risk volume that is subject to credit risk management
includes all of Daimler's worldwide creditor positions with
financial institutions, issuers of securities and customers in the
financial services business and the automotive business.
Credit risks with financial institutions and issuers of securities
arise primarily from investments executed as part of our
liquidity management and from trading in derivative financial
instruments. The management of these credit risks is mainly
based on an internal limit system that reflects the creditworthi-
ness of the respective financial institution or issuer. The credit
risk with customers of our automotive business relates to con-
tracted dealerships and general agencies, other corporate
customers and retail customers. In connection with the export
business, general agencies that according to our creditwor-
thiness analysis are not sufficiently creditworthy are generally
required to provide collateral such as first-class bank guaran-
tees. The credit risk with end customers in the financial services
business is managed by Daimler Financial Services on the basis
of a standardized risk management process. In this process,
minimum requirements are defined for the sales-financing and
leasing business and standards are set for credit processes
as well as for the identification, measurement and management
of risks. Key elements for the management of credit risks
are appropriate creditworthiness assessments, supported
by statistical analyses and evaluation methods, as well
as structured portfolio analysis and portfolio monitoring.
Financial country risk management includes various aspects:
the risk from investments in subsidiaries and joint ventures,
the risk from the cross-border financing of Group companies
in risk countries and the risk from direct sales to customers
in those countries. The Credit Committee sets country limits for
this cross-border financing. Daimler has an internal rating
system that divides all countries in which it operates into risk
categories. Equity capital transactions in risk countries
are hedged against political risks with the use of investment-
protection insurance such as the German government's invest-
ment guarantees. Some cross-border receivables due from
customers are protected with the use of export-credit insurance,
first-class bank guarantees and letters of credit. In addition,
a committee sets and restricts the level of hard-currency credits
granted to financial services companies in risk countries.
Cash management determines the Group's cash require-
ments and surpluses. The number of external bank trans-
actions is minimized by the Group's internal netting of cash
requirements and surpluses. Netting is done by means
of cash-concentration or cash-pooling procedures. Daimler
has established standardized processes and systems to
manage its bank accounts, internal cash-clearing accounts
and the execution of automated payment transactions.
Cash used for investing activities
-4,559
for investing activities
-3,074
06
Cash provided by financing activities 7 B.24 amounted
to €2.3 billion (2013: €3.9 billion). The decrease resulted almost
solely from the change in financing liabilities.
Cash and cash equivalents decreased compared with
December 31, 2013 by €1.4 billion, after taking currency
translation into account. Total liquidity, which also
includes marketable debt securities, decreased by €1.8
billion to €16.3 billion.
The parameter used by Daimler to measure the financial
capability of the Group's industrial business is the free cash
flow of the industrial business 7 B.25, which is derived
from the reported cash flows from operating and investing
activities. The cash flows from the acquisition and sale of
marketable debt securities included in cash flows from invest-
ing activities are deducted, as those securities are allocated
to liquidity and changes in them are thus not a part of the free
cash flow.
89
B.25
In millions of euros
2014
2013
14/13
Change
Cash provided by
operating activities
Free cash flow of the industrial business
Cash used
-1,386
9,667
-2,709
-6,829
+4,120
Cash provided by
financing activities
2,274
11,053
3,855
Effect of exchange-rate changes
on cash and cash equivalents
323
-254
+577
Cash and cash equivalents
at end of period
-1,581
Net operating profit
B.22
Income taxes¹
Carrying values
Dec. 31,
Refinancing instruments
B.31
Detailed information on the amounts and terms of financing
liabilities is provided in Notes 24 and 32 of the Notes
to the Consolidated Financial Statements. Note 32 also
provides information on the maturities of the other financial
liabilities.
At December 31, 2014, the total of financial liabilities
shown in the consolidated statement of financial position
amounted to €86,689 million (2013: €77,738 million).
The carrying values of the main refinancing instruments and
the weighted average interest rates are shown in table 7 B.31.
At December 31, 2014, they are mainly denominated in
the following currencies: 43% in euros, 26% in US dollars, 4% in
Brazilian real, 3% in Japanese yen and 4% in Canadian dollars.
2014
At the end of 2014, Daimler had short- and long-term credit
lines totaling €41.7 billion (2013: €35.4 billion), of which
€17.2 billion was not utilized (2012: €15.0 billion). They include
a syndicated credit facility arranged in September 2013 with
a consortium of international banks with a volume of €9 billion.
Bank credit was another important source of refinancing
in 2014. Funds were provided not only by large, globally active
banks, but increasingly also by a number of local banks.
The lenders included supranational banks such as the European
Investment Bank and the Brazilian Development Bank (BNDES).
In this way, we continued our diversification in refinancing
through banks.
Furthermore, several asset-backed securities (ABS) transactions
were carried out in the United States, Canada and Germany.
In the United States for example, two emissions generated
a refinancing volume totaling US$3.1 billion. Bonds in a volume
of CAN$0.5 billion were issued in Canada, and were for the
first time placed directly with investors. In addition, Mercedes-
Benz Bank once again sold ABS bonds in a volume of €1.0 billion
to European investors through its Silver Arrow Platform.
In addition, Daimler issued small volumes of commercial
papers in 2014.
Refinancing was facilitated by high capital-market liquidity
as well as by Daimler's good credit ratings. The continuation
of expansive monetary policies by the central banks had
a significant impact on the situation of the bond markets also
in 2014. The high volumes of available liquidity meant that
risk premiums for companies with investment-grade ratings
fell once again compared with the previous year; this was
to the benefit also of Daimler.
As the first international corporation, Daimler AG placed
bonds in the domestic capital market of the People's Republic
of China, so-called panda bonds. In addition, a large number
of smaller bonds were issued in various currencies in the euro
market, as well as in Mexico, Brazil, Argentina, South Africa,
Thailand and South Korea.
In 2014, the Group covered its refinancing requirements mainly
through the issuance of bonds. A large proportion of those
bonds were placed in the form of so-called benchmark emissions
(bonds with high nominal volumes) in the US dollar and euro
market. B.32
In order to secure sufficient financial flexibility, in September
2013, Daimler concluded a €9 billion syndicated credit facility
with a consortium of international banks with a maturity of five
years and two extension options of two years in total. This
provides the Group with financial flexibility until the year 2020.
More than 40 European, American and Asian banks partici-
pated in the consortium. Daimler does not intend to utilize the
credit line. In 2014, Daimler exercised the option to extend
the facility by another year until 2019. All the banks in the con-
sortium participated in the extension.
B | Combined Management Report | Liquidity and Capital Resources
Average interest rates
Dec. 31,
Dec. 31,
2013
in %
22,893
3.32
3.08
1,086
2,277
2.02
Dec. 31,
2014
1.11
49,165
2.14
1.68
Notes/bonds and
liabilities from ABS
transactions
Commercial paper
Liabilities to financial
institutions
in millions of euros
2013
44,875
19,089
92
0.1
Mercedes-Benz Vans
2.7
2.4
in % of revenue
-6
839
304
788
5.8
4.9
in % of revenue
-2
3,710
3,621
Daimler Trucks
0.1
288
in % of revenue
in % of revenue
+21
19
23
Daimler Financial Services
1.9
+6
2.5
+38
76
105
Daimler Buses
3.1
3.0
in % of revenue
Mercedes-Benz Cars
Deposits in the direct
banking business
1.54
A-
A3
A3
A-
A-
End of 2013
A (low)
End of 2014
Fitch
Moody's
Standard & Poor's
Short-term credit ratings
DBRS
Fitch
DBRS
Moody's
A-
P-2
94
The short-term credit ratings of all four rating agencies
remained unchanged in 2014.
a stable trend. DBRS referred to the improved financial perfor-
mance of Mercedes-Benz Cars and Daimler Trucks reflecting
those divisions' product offensives, as well as the implementa-
tion of their cost-reduction activities, which are expected to
contribute substantially to expanding the Group's profit margins
in the future.
The Canadian credit agency DBRS confirmed on October 24,
2014, its long-term rating for Daimler AG at A (low) with
On July 7, 2014, Fitch Ratings (Fitch) also emphasized Daimler's
wide geographical and product diversification, and confirmed
its long-term issuer default rating of A- with a stable outlook.
The heavy product pipeline was assessed as having a positive
impact on the credit rating. However, high capital expenditure
and investment in research and development were regarded
as constraining factors. Fitch believes that Daimler enjoys
adequate headroom in its ratings with regard to the relevant
financial metrics.
On November 27, 2014, Standard & Poor's Ratings Services
(S&P) published a report on Daimler AG in which it confirmed
our long-term corporate credit rating at A- as well as the
stable outlook. In S&P's terminology, the rating is the result
of a "satisfactory” business risk and a “minimal” financial
risk. The business risk is partially a reflection of the Group's
exposure to cyclical demand for cars, trucks and other vehicles.
The financial risk profile is supported by the Group's strong
financial metrics.
A (low)
On December 19, 2014, Moody's Investors Service (Moody's)
confirmed its long-term credit rating for Daimler AG of A3
with a stable outlook. Moody's referred to the highly valued
premium brand Mercedes-Benz, the positioning of Daimler
Trucks as the global market leader in the truck business, the
strong positions of Mercedes-Benz Vans and Daimler Buses
in their respective market segments, and the credit metrics
which place the Group well within its rating category.
R-1 (low)
R-1 (low)
F2
P-2
A-2
A-2
F2
1.06
Standard & Poor's
Credit ratings
US$1,500 million
Jan. 2022
Jan. 2014
€750 million
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler AG
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler AG
Mar. 2014
Issuer
Month of
emission
Volume
Benchmark emissions
B.32
11,257
10,853
Maturity
Other reconciliation
Mar. 2017
Mar. 2014
July 2014
B.33
Daimler's credit ratings remained unchanged in 2014.
Daimler AG therefore has comparable ratings at the level of
A- with all four of the credit-rating agencies it has engaged.
The outlook for the ratings is assessed as "stable" by all four
agencies. 7 B.33
Credit ratings
93
Aug. 2024
Aug. 2014
US$650 million
€500 million
US$500 million
Aug. 2014
US$500 million
Aug. 2017
Aug. 2014
US$1,500 million
Mar. 2021
July 2024
Sept. 2019
-3
Long-term credit ratings
3.7
2.20
2.20
2.25
2.45
2.50
1.85
In euros
2.00
1.00
0.50
0
2010
2011
2012
1.50
2013
Dividend per share
85
The elimination of intra-group transactions resulted
in income of €42 million in 2014 (2013: €82 million).
The reconciliation of Group EBIT to profit before income
taxes is shown in table 7 B.18.
Consolidated statement of income
The Group's total revenue increased by 10.1% to €129.9 billion
in 2014; adjusted for exchange rate effects, it increased by
12.1%. The revenue growth primarily reflects the strong demand
for the products of Mercedes-Benz Cars, especially in Asia,
Europe and the United States. Further information on the devel-
opment of revenue is provided in the "Business development"
section of this Management Report. 7 B.17
Cost of sales amounted to €101.7 billion in 2014, increasing
by approximately 9.5% compared with the previous year.
The rise in cost of sales was caused by higher business volumes
and consequentially higher material expenses. Personnel
expenses and depreciation of leased equipment and property,
plant and equipment also increased. Overall, cost of sales
increased at a lower rate than revenue, so gross profit in rela-
tion to revenue increased to 21.7% (2013: 21.3%). Further
information on cost of sales is provided in Note 5 of the
Notes to the Consolidated Financial Statements. 7 B.17
Due to the growth in unit sales, selling expenses increased
by €0.5 billion to €11.5 billion. The main factors here were
higher expenses for marketing and personnel. As a percentage
of revenue, selling expenses decreased from 9.4% to 8.9%.
7 B.17
B.19
General administrative expenses of €3.3 billion were slightly
above the level of the previous year (2013: €3.2 billion), mainly
driven by higher IT and personnel expenses. As a percentage
of revenue, general administrative expenses decreased slightly
to 2.6% (2013: 2.7%). 71 B.17
Other operating income increased to €1.8 billion (2013:
€1.5 billion) and other operating expense rose significantly
this year to €1.2 billion (2013: €0.4 billion), due in particular
to expenses of €0.6 billion related to the ongoing antitrust inves-
tigations of European manufacturers of commercial vehicles
by the EU Commission. Further information on the composition
of other operating income and expense is provided in
Note 6 of the Notes to the Consolidated Financial State-
ments. B.17
In 2014, our share of profit from equity-method invest-
ments decreased to €0.9 billion (2013: €3.3 billion). Both years
were affected by large gains relating to the loss of significant
influence on companies which were previously accounted for
using the equity method. In 2014, Daimler lost its significant
influence on Tesla; the subsequent remeasurement of our Tesla
shares resulted in a gain of €0.7 billion. In 2013, Daimler
lost its significant influence on EADS, which resulted in a gain
of €3.4 billion. 7 B.17
Other financial expense/income improved from an expense
of €0.3 billion to income of €0.5 billion. This was primarily
due to the disposal of the RRPSH shares, which resulted in a
gain of €1.0 billion in 2014. 7 B.17
Net interest expense improved to €0.6 billion (2013: €0.7
billion). Expenses in connection with pension and healthcare
benefits were at the prior-year level. Other interest expense
improved due to lower costs of maintaining adequate liquidity
following the successive expiry of refinancing at high interest
rates. There was an opposing effect from lower income from
cash deposits and from the remeasurement of interest-rate
hedges. 7 B.17
The tax expense of €2.9 billion entered under income-tax
expense is €1.5 billion higher than in 2013. The effective
tax rate for 2014 was 28.3% (2013: 14.0%). In 2014, a gain was
recognized on the sale of the RRPSH shares that was largely
tax free. In connection with the ongoing antitrust investigations
of European manufacturers of commercial vehicles by the
EU Commission, expenses arose that were not tax deductible.
In 2013, the gain on the remeasurement and sale of Daimler's
EADS shares was largely tax free. Adjusted for those gains and
losses, earnings subject to normal income taxes increased
in 2014 compared with the previous year, which led to a corre-
spondingly higher tax expense. Additional factors were that
gains were recognized on the reversal of impairments of deferred
tax assets in 2014 and that there were high tax benefits in
connection with the tax assessment of previous years in 2013.
7 B.17
Research and non-capitalized development costs increased
by €0.3 billion to €4.5 billion in 2014. They were mainly related
to the development of new models, advance expenditure for the
renewal of existing models and the further development of
fuel-efficient and environmentally friendly drive systems and
safety technologies. As a proportion of revenue, research
and non-capitalized development costs slightly decreased from
3.6% to 3.5%. Further information on the Group's research
and development costs is provided in the “Research and devel-
opment" section of the "Sustainability” chapter of this
Management Report. 7 B.17
€3.2 billion, mainly due to the remeasurement of the shares
following the loss of significant influence on EADS (€3.4 billion).
In addition, until that date, items at the corporate level also
included the proportionate earnings of the equity-method invest-
ment in EADS. Further information on the sale of the shares
in RRPSH and Tesla and of the EADS shares in 2013 is provided
in Note 13 of the Notes to the Consolidated Financial
Statements.
2014
Reconciliation to net operating profit
+8
Daimler Buses
197
124
+59
Daimler Financial Services
631
1,387
+9
EBIT of the divisions
9,997
7,666
+30
4,975
4.2
1,268
B.20
682
+15
In millions of euros
2014
2013
Net profit for the year amounts to €7.3 billion (2013: €8.7
billion). Net profit of €0.3 billion is attributable to non-controlling
interests (2013: €1.9 billion); a large portion of the prior-year
amount is related to the remeasurement of the EADS shares.
Net profit attributable to the shareholders of Daimler AG
amounts to €7.0 billion (2013: €6.8 billion), representing earnings
per share of €6.51 (2013: €6.40). 71 B.17
The calculation of earnings per share (basic) is based on
an average number of outstanding shares of 1,069.8 million
(2013: 1,068.8 million).
14/13
% change
Mercedes-Benz Vans
+46
At the Annual Shareholders' Meeting on April 1, 2015, the
Board of Management and the Supervisory Board will propose
an increase in the dividend to €2.45 per share (prior year:
€2.25). With this proposal, we are letting our shareholders
participate in the Company's success while expressing our
confidence about the ongoing course of business. The total
dividend will thus amount to €2,621 million (prior year:
€2,407 million) and the distribution ratio will be 37.6% of the
net profit attributable to the Daimler shareholders
(prior year: 35.2%). 7 B.19
Mercedes-Benz Cars
5,853
4,006
Daimler Trucks
1,878
Dividend
B | Combined Management Report | Profitability
1,637
7,066
In addition to capital expenditure on property, plant and
equipment, we also invested amounts in associated companies
and joint ventures in 2014.
At Mercedes-Benz Cars, investment in property, plant and
equipment of €3.6 billion was almost at the prior-year level.
The most important projects included the models of the new
C-Class, which has been in production since 2014 in Bremen
as well as in Tuscaloosa, Beijing and East London. Another
focus of investment was on new sport-utility vehicles. We also
made substantial investments in the modernization and
realignment of our German production plants as competence
centers, as well as in the expansion of our production
capacities in the United States. The main areas of investment
at Daimler Trucks were for new products such as the Western
Star 5700XE, the new FUSO Super Great V and the new Actros
and Arocs heavy-duty tractor units (SLT). In addition, progress
was made with various projects for the global standardization
of engines and other major components. As in the previous
year, total investment in property, plant and equipment at
Daimler Trucks amounted to €0.8 billion. At the Mercedes-Benz
Vans division, the focus of investment was on the new Viano
multipurpose vehicle and the next generation of the Vito.
The main investments at Daimler Buses in 2014 were in new
products and the modernization of production facilities.
43210
5
In billions of euros
Investment in property, plant and equipment
Furthermore, we capitalized development costs of €1.1 billion
in 2014 (2013: €1.3 billion); this is presented under intangible
assets.
see page 103
B.29
Investment
91
14,615
15,564
Other financial obligations
1,356
Investment still on high level. In the context of our growth
strategy, we aim to make good use of the opportunities
presented by international automotive markets. This requires
substantial investment in new products and new technologies
as well as in the expansion of our worldwide production net-
work. In 2014, we therefore once again invested a very high
amount of €4.8 billion in property, plant and equipment (2013:
€5.0 billion). However, we did not quite reach the investment
volume that we planned in the previous year and announced
in Annual Report 2013. This was partially due to the very
efficient application of our financial resources and the postpone-
ment of some investment projects. As of December 31, 2014,
no material financial obligations exist in connection with future
investment in property, plant and equipment.
2,318
2010
2012
in % of revenue
4,844
6,634
Daimler Group
Various issue programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €35 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market programs
exist, significantly smaller than the EMTN program. However,
in markets such as Mexico, Argentina, South Africa, Thailand and
South Korea. Capital-market programs allow flexible, repeated
access to the capital markets.
The funds raised by Daimler in the year 2014 primarily
served to refinance the leasing and sales-financing business.
For that purpose, Daimler made use of a broad spectrum of
various financing instruments in various currencies and markets.
They include bank credits, commercial papers in the money
market, bonds with medium and long maturities, customer
deposits at Mercedes-Benz Bank and the securitization of receiv-
ables from customers in the financial services business
(asset backed securities, ABS).
2011
Refinancing
2013
2014
Investment in property, plant and equipment by division
B.30
2014
2013
14/13
% change
Miscellaneous other financial obligations
In millions of euros
1,320
-77,741
-59,622
-70,118
-86,419
-3
270
Market valuation and currency
hedges for financing liabilities
Financing liabilities (nominal)
Net debt
-8,951
-77,738
Financing liabilities
-1,818
18,119
1,508
-432
16,301
Liquidity
+273
-8,678
-10,496
Other financial obligations, financial guarantees
and contingent liabilities
-86,689
9,771
1,980
Irrevocable loan obligations
Non-terminable rental and
leasing agreements
9,769
Obligations from purchasing agreements
In millions of euros
2,157
Dec. 31,
2014
Other financial obligations (nominal amounts)
B.28
Within the context of financial guarantees, Daimler generally
guarantees the settlement of the payment obligations of the
main debtor vis-à-vis the holder of the guarantee. The maximum
potential obligation resulting from these guarantees amounts
to €0.8 billion at December 31, 2014 (end of 2013: €0.8 billion);
liabilities recognized in this context amount to €0.1 billion
at the end of the year (end of 2013: €0.1 billion). In connection
with the Chrysler transaction entered into 2007 and 2009,
Daimler provides guarantees for Chrysler obligations; at
December 31, 2014, those guarantees amounted to €0.3 billion,
whereby Chrysler provided €0.2 billion on an escrow account
as collateral for the guaranteed obligations. Another financial
guarantee of €0.1 billion relates to bank loans of Toll Collect
GmbH, the operator company of the toll-collection system for
trucks in Germany. Other risks arise from an additional
guarantee that the Group provided for obligations of Toll Collect
GmbH to the Federal Republic of Germany. This guarantee
is related to the completion and operation of the toll-collection
system. A claim on this guarantee could primarily arise if for
technical reasons toll revenue is lost or if certain contractually
defined parameters are not fulfilled, if the Federal Republic
of Germany makes additional claims or if the final operating
permit is not granted. Furthermore, arbitration proceedings have
been initiated against the Group. The maximum obligation
that could result from this guarantee is substantial, but cannot
be reliably estimated.
In the context of its ordinary business operations, the Group
has entered into other financial obligations in addition
to the liabilities shown in the consolidated balance sheet at
December 31, 2014. Table 7 B.28 provides an overview of
the nominal amounts of other financial obligations. With regard
to their maturities, we refer to Note 30 (Financial guaran-
tees, contingent liabilities and other financial commitments) and
Note 32 (Management of financial risks) of the Notes
to the Consolidated Financial Statements.
Dec. 31,
2013
Leading
158
Innovative
4
Mercedes-Benz Cars
14
Digital
Daimler Trucks
166
160
SETRA
mytaxi
1
Innovative. Digital. Leading.
Contents
BHARATBENZ
CAR
260
moovel
Dim Truck Financial
Mer Financial
Mere Bank
26
Daimler Financial Services
C | The Divisions
Mercedes-Benz Vans
182
Daimler Buses
54
Corporate Governance Report
FREIGHTLINER
The Supervisory Board
187
Corporate Governance Code
48
Report of the Supervisory Board
Declaration of Compliance with the German
46
The Board of Management
171
185
Report of the Audit Committee
45
A | To Our Shareholders
180
D | Corporate Governance
40
40
Chairman's Letter
177
Daimler Financial Services
174
Integrity and Compliance
FUSO
57,891
Mercedes me
40,533
47,912
+19
14,522
15,991
18,962
+17
1,268
1,387
1,619
New business
Revenue
EBIT
Daimler Financial Services
+4
16,603
17,473
18,147
-15
33,705
33,162
188
28,081
+21
Contract volume
116,727
98,967
MAYBACH
AMG
OUR BRANDS AND DIVISIONS
WESTERN STAR
M
smar
Ο
Daimler Buses
Mercedes-Benz Vans
Daimler Trucks
Mercedes-Benz Cars
FREIGHTLINER
1 For the year 2013, the figures have been adjusted due to reclassifications within functional costs.
2 As of 2014, including the numbers of employees previously counted under “Sales & Marketing Organization.”
8,107
8,878
9,975
Employees (December 31)
+30
19
23
30
Investment in property, plant and equipment
+18
83,539
+12
Highlights of 2015
Information guidance system
Daimler and the Capital Market
Daimler continues to move ahead with its transformation from an automotive
company into a networked mobility services provider. Our moovel mobility
concept, the Mercedes me service brand, the She's Mercedes inspiration plat-
form and car-to-x communication are helping us meet the changing demands
of our customers and enabling us to enter new markets. Digitization is also well
under way along the entire value chain. Our aim here is to make our processes
more efficient, to continue growing and to take the lead with regard to sales,
revenue and profitability.
As the inventor of the automobile and one of the world's most innovative vehicle
manufacturers, Daimler is shaping the future of mobility. Our vehicles and services
make us a pioneer in the industry, and we are systematically increasing our lead.
For example, we are already making autonomous driving and pioneering drive sys-
tem technologies a reality today with world firsts such as the new Mercedes-Benz
E-Class, the Freightliner Inspiration Truck and the F 015 Luxury in Motion.
3
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
Digital
Leading
Innovative
Refers to a Daimler publication
Cross-reference within the Annual Report
Refers to additional information on the Internet
Refers to an illustration or a table in the Annual Report
292
Daimler Worldwide
290
List of Charts and Tables
152
Outlook
289
Index
138
Risk and Opportunity Report
288
Glossary
135
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
5
Innovative
Our forerunners of the coming
mobility revolution
+18
88
showcar a trendsetter for urban mobility.
a clear and sensuous design that make the Vision Tokyo
It's not just the autonomous driving features but also
Extensive legal and ethical questions need to be
clarified as we move along the path to autonomous
driving. Daimler is promoting a broad-based dialogue
about this topic. The Daimler Sustainability Dialogue
and the symposium on the legal and ethical issues
associated with autonomous driving are just two
examples of the numerous measures that are already
under way. Daimler also supports interdisciplinary
research in order to provide a scientific framework
for this topic and promote further social discourse.
Daimler is conducting a dialogue
about autonomous driving
Special zones for autonomous vehicles might be created in
urban centers, enabling inner-city spaces to be reclaimed
as vehicles park themselves on the outskirts of the cities.
The "car-friendly" city will thus become a "people-friendly"
city, without having to sacrifice personal mobility with
automobiles.
Intelligent partners in urban traffic situations
The autonomous driving features of the F 015 and the
Vision Tokyo not only offer drivers and passengers added
value, they also create entirely new possibilities for design-
ing urban infrastructures. Because they can communicate
with the world outside, they are perfectly aligned with the
shared spaces that will become more and more widespread
in the future. Here, people and machines share the road
and cooperatively manage their movements in a constant
flow of traffic.
This Mercedes-Benz show car is designed for Generation Z,
whose members were born after 1995 and therefore grew
up with the new digital media. Automobiles have a different
type of significance for this generation: Cars are viewed as
both a means of transportation and a digital companion.
Our Vision Tokyo goes even further than that, however, as
the vehicle is able to learn more about its occupants and
their preferences with every trip, and also uses innovative
algorithms to continue developing itself over time.
Urban transformer: The Mercedes-Benz Vision Tokyo
Our autonomously driving Vision Tokyo also offers an
unprecedented spatial experience. With its futuristic
design language and spacious lounge atmosphere in the
interior, the vehicle is young, luxurious and progressive-
and in this manner expresses its reverence for the trendy
metropolis that is Tokyo.
and Explanation
"Our forward-looking answers for
a rapidly changing world"
Our innovative technologies enable the establishment of a
completely new relationship between people and automo-
biles, whereby autonomous driving plays a major role. The
driver always decides how fast the F 015 should go, and on
which routes. However, drivers can also take their hands off
the wheel and let the vehicle's intelligent systems do the
work when traffic gets heavy, driving gets monotonous, or
something needs to be done that the driver can't do - for
example, a 360-degree check of the vehicle's surroundings.
The self-driving research vehicle from Mercedes-Benz
was designed with the future in mind and offers an optimal
automobile experience - including everything from an
expressive body design to outstanding interior features
and cutting-edge technology. The exterior displays a
monolithic character, but the intelligent F 015 Luxury in
Motion is anything but unapproachable. It uses LED light
modules to communicate with the outside world. It can
recognize pedestrians and is helpful and accommodating-
for example when it projects a virtual crosswalk onto the
street. It also sends other vehicles information on traffic
conditions ahead.
Please take a seat - we are about to
travel to the "City of the Future." In our
scenario, urban centers are becoming
increasingly dense and autonomous
driving has long since become the
norm. Cities are dynamic and con-
gested and people would like to have
more time, privacy and individuality.
The Mercedes-Benz F 015, with all
of its various facets, can meet these
demands.
Daimler has been a pioneer and a driving force behind the devel-
opment of personal mobility for 130 years now. Our company's
founders, Carl Benz and Gottlieb Daimler, were strongly motivated
by a passion for invention - and also today, innovation remains
the most important factor behind our success. Our visionary ideas
and groundbreaking developments have put us on the path to
emission-free, accident-free and connected mobility - and are also
creating significant added value for our customers.
"The visionary F 015 Luxury in Motion is driving
technology developments, as well as the social
discourse on mobility and the design of urban
spaces. The needs of people are an important part
of Daimler's culture of innovation: People are at
the center of all our developments."
The dream of autonomous driving
can now be experienced
Driving into the future - we put
visionary vehicles on the road
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 7
Hyoutube.com/
Baby, you can drive my car
The Mercedes-Benz campaign
offers a look at our vision of
autonomous driving.
Autonomous driving is one of the biggest innovations since the
invention of the automobile. The Mercedes-Benz F 015 Luxury
in Motion demonstrates how vehicles will be transformed into a
personal refuge in the future. In the "City of the Future," the auton-
omously driving research vehicle becomes a luxurious lounge.
When switched to the self-driving mode, our Vision Tokyo becomes
a "chill-out zone" amidst the hectic city traffic. Our customers are
already using partially autonomous features today in Mercedes-Benz
S-Class, E-Class and C-Class models. We are systematically enhanc-
ing these technologies and thus moving closer to making autono-
mous driving a reality.
Vehicles will become quality-time machines for people
Whether driving away, merging into traffic, maintaining a
safe distance, steering, braking, overtaking, or parking -
the F 015 Luxury in Motion can do it all, and do it brilliantly.
Putting the luxury sedan in the autonomous mode frees
up space in many different ways. For example, drivers and
passengers are able to relax, talk, or work in comfort in
four rotatable lounge chairs arranged in pairs opposite one
another. With its lounge-like atmosphere and the possibil-
ities it provides for creating a digitally connected envi-
ronment, the vehicle's interior offers modern luxury and
enhances the quality of life of its occupants.
56
286
Takeover-Relevant Information
2008
Financial Position
Liquidity and Capital Resources
Profitability
Development
200
Consolidated Statement of Financial Position
Economic Conditions and Business
199
Income/Loss
74
Corporate Profile
Consolidated Statement of Comprehensive
198
Consolidated Statement of Income
72
B| Combined Management Report
196
Statements
E| Consolidated Financial
66
Objectives and Strategy
62
79
Consolidated Statement of Cash Flows
201
85
285
Independent Auditors' Report
122
Remuneration Report
284
Responsibility Statement
121
Events after the Reporting Period
120
Overall Assessment of the Economic Situation
282
Ten Year Summary
F❘ Further Information
Sustainability
102
(condensed version according to HGB)
Daimler AG
204
Statements
99
Notes to the Consolidated Financial
91
202
Consolidated Statement of Changes in Equity
105
3
watch?v=-PRiaUTal9M
13
Employees (December 31)
Dividend per share (in €)
+33
2,407
2,621
3,477
Total dividend
+21
6.40
6.51
7.87
Earnings per share (in €)
+19
8,720
7,290
8,711
Net profit
+29
5,921
4,416
5,675
Value added
+23
10,815
10,752
13,186
EBIT
-28
4,842
3.25
284,015
2.45
2.25
+33
Return on sales (in %)
+14
64,307
73,584
83,809
Revenue
+35
4,006
5,853
7,926
EBIT
% change
15/14
2013
5,479
2014
Mercedes-Benz Cars
€ amounts in millions
Divisions
Daimler at a Glance >
Daimler's Divisions >
Mercedes-Benz Concept IAA: Digital Transformer
Digital, innovative, leading - those properties are also
embodied by the Mercedes-Benz Concept IAA (Intelligent
Aerodynamic Automobile). The study combines world-
class aerodynamics with a drag coefficient of 0.19 and the
irresistible design of an expressive coupe. At the touch
of a button or automatically at speeds of 80 km/h and above,
the four-door coupe is transformed into an aerodynamic
world record holder: Eight segments emerge from the rear
of the car; front flaps in the front fender protrude outwards
and rearwards; the wheel rims change their concavity
and the louvre in the front fender moves back. The design
and aerodynamic shape of the Concept IAA would not
have been possible without systematic digital connectivity.
Cover photo
Apr 2015
DAIMLER
2 For the year 2013, the figure has been adjusted due to reclassifications within functional costs.
1 Adjusted for the effects of currency translation, revenue increased by 9%.
+1
274,616
279,972
2015
3,960
Free cash flow of the industrial business
+57
32,925
38,025
47,653
NAFTA
+8
20,227
20,449
22,001
thereof Germany
+13
41,123
43,722
49,570
Western Europe
+25
+151
129,872
149,467
Revenue
% change
15/14
2013
2014
2015
€ amounts in millions
Daimler Group
Key Figures
Annual Report 2015
DAIMLER
11
117,982
9.5
thereof United States
33,310
1,148
1,804
thereof capitalized
+16
5,489
5,680
6,564
Research and development expenditure²
+5
4,975
4,844
5,075
Investment in property, plant and equipment
-1
41,920
19,453
18,500
Other markets
+10
10,705
13,294
14,684
thereof China
+15
24,481
29,446
33,744
Asia
+26
28,597
18,679
8.0
1,284
Investment in property, plant and equipment
270,144
294,594
321,017
Unit sales
+125
139
68
153
thereof capitalized
+31
329
293
384
Research and development expenditure ¹
-34
288
304
202
Investment in property, plant and equipment
6.7
6.8
7.7
Return on sales (in %)
+15
9,369
9,968
11,473
Revenue
+29
+9
22,639
21,598
14,838
+1
6.2
187
182
184
-1
76
105
104
3.0
4.7
5.2
-2
4,105
631
4,218
+9
124
197
214
Employees (December 31)²
Unit sales
thereof capitalized
Research and development expenditure¹
Investment in property, plant and equipment
Return on sales (in %)
Revenue
EBIT
Daimler Buses
+5
4.113
682
Employees (December 31) 2
EBIT
+37
1,637
1,878
2,576
Revenue
EBIT
Daimler Trucks
+1
96,895
135,553
136,941
Employees (December 31) 2
1,565,563
1,722,561
2,001,438
Unit sales
+56
3,629
3,621
880
3,710
+0
Research and development expenditure1
37,578
4,711
3,808
+17
thereof capitalized
1,612
1,035
1,063
4,025
32,389
+16
31,473
Mercedes-Benz Vans
79,020
87,628
86,391
Employees (December 31) 2
+1
484,211
495,668
502,478
Unit sales
-24
79
+9
1,171
1,188
34
-1
thereof capitalized
+16
26
Return on sales (in %)
6.9
5.8
Investment in property, plant and equipment
5.2
788
839
+41
Research and development expenditure 1
1,293
1,110
544
35,791
Deferred income
595
35,752
88,285
Sustainability
85,258
Outlook
Due to the interrelations between Daimler AG and its subsi-
diaries and the relative size of Daimler AG within the Group,
we refer to the statements in the "Outlook” chapter, which
largely reflect our expectations also for the parent company.
This includes the statements on unit sales and revenue.
pages 152 ff For the year 2016, we plan for Daimler AG to
achieve a net profit significantly higher than in 2015. Due
to the expected legislation with regard to discount rates for
retirement benefit obligations, we anticipate a lower interest
expense. The related increase in financial income will be partially
offset by a decrease in income from investments in subsi-
diaries and associated companies.
Liabilities
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY 105
Sustainability at Daimler
38,196
30,379
13,742
Other liabilities
5,412
5,098
Trade payables
11,861
Provisions
10,470
11,811
Other provisions
1,391
1,931
37,062
Provisions for pensions and similar obligations
Our view of sustainability
30,654
For us, sustainability means conducting business responsibly
to ensure long-term success in harmony with the environment
and society. We are moving toward our goals by making
sustainability a firmly integrated aspect of our operations and
by requiring and promoting a strong sense of responsibility
for sustainable operations among all of our managers and
employees throughout the Group. We include our business
partners in this process and conduct a dialogue on these issues
with our stakeholders. Our management structures, processes
and systems are designed in accordance with this concept
of sustainability. All of our behavior is based on legality and
integrity. As one of the world's foremost automakers, Daimler
has a clear claim to leadership in the field of sustainability.
In billions of euros
We have developed a Group-wide sustainability strategy to
enable us to meet the requirements associated with sustain-
ability, and we systematically pursue the sustainability goals
we have set for ourselves. This strategy is embedded in our
corporate strategy, which is based on our four core values
of passion, respect, integrity and discipline. We can only ensure
sustained profitability and society's acceptance of our business
activities if we take into account the impact all of our business
processes have on the environment and society, and if we align
our business targets with environmental and social requirements.
Targeted involvement of the supplier industry
In order to achieve our ambitious goals, we also cooperate very
closely with research and development units from the supplier
industry. Daimler must be closely intermeshed with supplier
companies in order to deal with the rapid pace of technological
change in the automotive industry and the need to quickly bring
new technologies to market maturity. Such cooperation is all
the more important in light of the increasing digitization of pro-
cesses throughout all stages of the value chain. Strong part-
ners from the supplier industry are also indispensable for our
efforts to develop and offer new concepts for future mobility.
As part of our joint research and development work, we ensure
that the Group maintains the key technological expertise it
needs in order to keep our brands distinct and to safeguard the
future of the automobile in general.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY 107
Intellectual property rights secure our leadership
in technology and innovation
We invented the automobile: On January 29, 1886, Carl Benz
registered a patent for a "vehicle powered by a gas engine." In
the 130 years since then, we have refined automobiles with
more than 100,000 patents and set standards that point the
way toward emission-free, accident-free and autonomous
driving. We continued this tradition in 2015 by registering a
total of approximately 2,000 new ideas for patents as in the
previous year. These patents are important to the company for
two reasons. First of all, they enable exclusivity - i.e. the use
of such innovations solely in our products. Secondly, the patents
secure Daimler a certain amount of "freedom of action"
i.e. they prevent restrictive third-party patents from limiting
Daimler's scope of operations. In addition to industrial prop-
erty rights, which safeguard our innovations for future mobility
over the long term, the unique visual aspects of our products
are protected with over 9,000 designs registered in 2015 (2014:
6,400). The significant increase is primarily due to the expan-
sion of our product portfolio, but is also the result of a method
change in registration. Furthermore, with a portfolio of more
than 31,300 trademarks worldwide (2014: 32,900), we protect
the renowned and valuable Mercedes-Benz brand, the three-
pointed star and all of our other product brands in each rele-
vant market. The decrease is mainly due to portfolio
rationalization.
€6.6 billion for research and development
Along with our internal activities, we also maintain close con-
tacts with external research institutions. For example, we
work together with various renowned research institutes around
the world and participate in international exchange programs
for up-and-coming scientists.
We want to continue shaping mobility through our pioneering
innovations in the coming years while moving ahead with digiti-
zation throughout the entire Group. We therefore increased
our very high level of investment in research and development
of €5.7 billion in 2014 to €6.6 billion in 2015. Of that amount,
€1.8 billion (2014: €1.1 billion) was capitalized as development
costs, which amounts to a capitalization rate of 27% (2014: 20%).
The amortization of capitalized research and development
expenditure totaled €1.2 billion during the year under review
(2014: €1.2 billion). With a rate of 4.4% (2014: 4.4%), research
and development expenditure also remained at a high level in
comparison with revenue. Research in the reporting year
focused on new vehicle models, extremely fuel-efficient and
environmentally friendly drive systems, new safety techno-
logies, autonomous driving systems and the digital networking
of our products.
as well as on the successor generations of existing products.
R&D expenditure at Mercedes-Benz Vans focused mainly on
ongoing product enhancement measures, the new Sprinter gener-
ation and the development of a new mid-size pickup. Daimler
Buses primarily focused its development activities on new prod-
ucts, the fulfillment of new emissions standards and the cre-
ation of alternative drive systems. 7 B.38 7 B.39
B.38
Research and development expenditure
7
Equity
6
The most important development projects at Mercedes-Benz
Cars were the new models of the E-Class, the new SUVs and
the new generation of compact cars. In addition, we continually
invest in new low-emission engines, alternative drive systems
and innovative safety technologies. Mercedes-Benz Cars spent
a total of €4.7 billion on research and development in 2015,
which once again marked a significant increase from the prior
year's figure (€4.0 billion). Daimler Trucks invested €1.3 billion
in research and development projects (2014: €1.2 billion). The
focus there was on new medium-duty and heavy-duty engines
Our sustainability strategy
Our international research and development network
Our global research and development network comprises 23
locations in eleven countries. Our biggest facilities are in
Sindelfingen and Stuttgart-Untertürkheim in Germany. A new
facility for an ultramodern testing and technology center is
now under construction in Immendingen. We started test oper-
ations there in October 2015. We are investing approximately
€200 million in Immendingen, where 300 new jobs will be cre-
ated. Approximately 200 people are currently employed in
Sunnyvale, California, the headquarters of our research facili-
ties in North America. Other important research locations in
North America are Long Beach and Carlsbad, California;
Portland, Oregon; and Redford, Michigan. Our most important
locations in Asia are our facilities in Bangalore and Pune, India;
the Global Hybrid Center in Kawasaki, Japan; and our research
and development center in Beijing. With its nearly 2,900 employ-
ees, Mercedes-Benz Research and Development India (MBRDI,
with headquarters in Bangalore) is Daimler's largest research
and development center outside Germany. In November 2014,
Daimler Greater China Ltd. opened a new research and devel-
opment center in China, thereby expanding the existing R&D
network in Beijing. The Advanced Design Studio is the most
important component of the new center and also serves as
the Group's design hub in Asia. At the end of 2015, approximately
500 highly qualified engineers and designers were employed
at the Mercedes-Benz research and development center in
Beijing. Back in 2013, our van joint venture in China, Fujian
Benz Automotive Corporation, opened a new product develop-
ment center in Fuzhou. This facility, which is the first Mercedes-
Benz Vans product development center outside Germany, has
a design and calculation department, proving grounds, test
labs and component and complete-vehicle test rigs.
Research and development as key success factors
Research and development have always played a key role
at Daimler. Our researchers anticipate trends, customer wishes
and the requirements of the mobility of the future, and our
development engineers systematically implement these ideas
in products that are ready for series production. Our goal is
to offer our customers fascinating products and customized
solutions for needs-oriented, safe and sustainable mobility.
Our technology portfolio and our key areas of expertise are
focused on this objective.
Our sustainability strategy has six core aspects ("dimensions
of responsibility"), to which relevant areas have been assigned
where action needs to be taken. We have linked them with
targets and target indicators. Together, all of our goals and
targets serve as the basis for our medium- to long-term
Sustainability Program, which we use to measure our perfor-
mance, although we wish our performance to be judged
externally as well. Our "Sustainability Program" also defines
the areas in which we plan to take action in the coming
years. For example, we aim to further reduce pollutants and
emissions, further enhance the safety of our vehicles, and
further expand and more systematically structure our efforts
to protect human rights. We also seek to improve our
dialogue with our suppliers and dealers and to further strengthen
our social commitment.
Our business activities are also strongly guided by the ten
principles of the UN Global Compact, to which we are firmly
committed as a founding member. We are also a member
of the Global Compact LEAD Group. Our internal principles and
guidelines are based on this international reference frame-
work as well as on other international principles.
We are committed to both legal and ethical standards and
must ensure that these standards are adhered to around
the world also by our business partners and suppliers.
Road traffic is one of the causes of CO2 and pollutant
emissions. As an automobile manufacturer, we work to pro-
mote sustainable mobility solutions and have demonstrated
our innovative capability with regard to environmental and
resource protection and safety.
Our operations impact the environment, and this is especially
the case in vehicle production. We therefore employ a
consistent system of environmental management in order
to minimize this impact.
As an employer, we have a responsibility to ensure fair and
attractive working conditions for our more than 284,000
employees worldwide.
As a corporate citizen, we seek to contribute to the common
good beyond the level of our business operations, and
we utilize our special expertise in order to achieve this goal.
The expertise, creativity and drive of our employees in research
and development are key factors behind our vehicles' market
success. At the end of 2015, Daimler employed 23,300 men
and women at its research and development units (2014:
21,700). A total of 15,500 of those employees (2014: 14,000)
worked at Group Research & Mercedes-Benz Cars Develop-
ment, 5,500 (2014: 5,500) at Daimler Trucks, 1,100 (2014:
1,000) at Mercedes-Benz Vans and 1,200 (2014: 1,100) at
Daimler Buses. Around 5,100 researchers and development
engineers (2014: 4,600) worked outside Germany.
Group-wide sustainability management
106
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
Comprehensive reporting on sustainability
The new sustainability report on financial year 2015 will be
presented at Daimler's Annual Shareholders' Meeting in early
April 2016. The report will be published exclusively in digital
form for the first time, which means it will be available for
viewing at any time on the Daimler corporate website. The
report provides a detailed and comprehensive sustainability
balance sheet for the previous financial year. All of the key
facts and figures will also be published in a brochure.
daimler.com/sustainability
The new sustainability report was drawn up in line with the
Global Reporting Initiative (GRI) guidelines “4.0 - Comprehensive."
In this context, Daimler specifically highlights all of the com-
pany's key sustainability-related issues. This applies in particular
to current focal topics such as further reductions in the emis-
sions of our vehicles, our position on the introduction of new
test cycles in Europe and our extensive activities to assist
refugees. We also focus on those issues that our periodic materi-
ality analyses have determined to be of great importance to
our stakeholders and ourselves. These include our activities to
protect human rights, measures to further reduce the CO2
emissions of our vehicles and the development of innovative
vehicle and drive-system technologies.
Research and development
At Daimler, sustainability is thematically and organizationally
embedded in our Group-wide corporate governance activities.
pages 180 ff The Corporate Sustainability Board (CSB) is
the central management body for all sustainability-related issues.
The operational work is conducted by the Corporate Sustain-
ability Office, which is staffed by representatives of the specialist
departments and divisions. Since 2011, we have been using
the Sustainability Scorecard as a tool for steering our efforts
to meet key sustainability targets. The scorecard uses a
color-coded system either to display the success of quantitative
indicators and qualitative objectives or to show that action
needs to be taken. This allows targeted measures to be taken
with the direct involvement of corporate management.
2,621
9,085
Distributable profit
28,393
26,145
Provisions
+23
44,584
54,624
-8
Equity and liabilities
Equity
189,635
217,166
-1
8,277
8,209
Other assets
+15
+25
Financing liabilities
Trade payables
86,689
5
189,635
217,166
Total equity and liabilities
+36
12,347
101,142
+15
12,360
Other financial liabilities
Other liabilities
+4
10,178
10,548
+17
10,706
3,477
5,987
The business development of Daimler AG is fundamentally
subject to the same risks and opportunities as that of the
Daimler Group. Daimler AG generally participates in the risks
of its subsidiaries and associated companies in line with
the percentage of each holding. The risks and opportunities
are described in the "Risk and Opportunity Report."
Prepaid expenses
257
88,285
256
85,258
Equity and liabilities
Share capital
3,070
3,399
41,230
3,070
Capital reserve
11,480
11,480
Retained earnings
20,169
19,891
(conditional capital €500 million)
Risks and opportunities
48,769
1,925
pages 138 ff For Daimler AG, we assess the probability of
occurrence of the risks and opportunities connected with
pension plans as high. These risks and opportunities increase
along with a change in the discount rate. Risks may addi-
tionally arise from relations with subsidiaries and associated
companies in connection with statutory or contractual
obligations (in particular with regard to financing).
B.37
Balance sheet structure of Daimler AG
In millions of euros
Dec. 31,
2015
Dec. 31,
2014
Current assets
Assets
Inventories
39,259
8,503
Receivables, securities and other assets
38,341
43,772
7,846
29,985
Cash and cash equivalents
Non-current assets
4
153
1
B.33
Credit ratings
Long-term credit rating
Standard & Poor's
Moody's
Fitch
DBRS
Short-term credit rating
Standard & Poor's
Moody's
Fitch
DBRS
End of 2015
End of 2014
A-
A-
A3
On February 11, 2015, Moody's Investors Service (Moody's)
changed its outlook for Daimler's A3 long-term rating from
"stable" to "positive." Moody's justified this change with the
expectation of a positive sales development in the next 12 to
18 months, which will strengthen our company's credit profile
in combination with the ongoing efficiency measures. Moody's
pointed out that the financial profile of the Daimler Group has
improved in recent years on the basis of a successful business
development. The implementation of the positive outlook as an
upgrade of the rating depends on the extent to which Daimler
can sustain its strong operating performance in view of the
heterogeneous development of the world economy.
R-1 (low)
R-1 (low)
F2
F2
P-2
In the year 2015, the outlook for the long-term credit rating of
Daimler AG as assessed by Moody's improved from "stable" to
"positive." Otherwise, our credit ratings remained unchanged.
Daimler AG therefore has comparable ratings at the level of A-
with all four of the credit-rating agencies it has engaged. The
outlook for the ratings is assessed as "stable" by S&P, Fitch
and DBRS. 71 B.33
A-2
P-2
A-
A (low)
A (low)
A-
A3
A-2
Credit ratings
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
98
-24
Mercedes-Benz Vans
thereof capitalized
Daimler Buses
thereof capitalized
384
293
+31
+15
34
68
184
182
+1
13
11
+18
+125
Standard & Poor's Ratings Services (S&P) published a report
on Daimler AG on November 27, 2015 in which it affirmed the
corporate long-term credit rating of A- and the stable outlook.
In the terminology of S&P, the rating reflects the satisfactory
business and minimal financial risk profiles. Amongst other
factors, the business risk reflects the cyclical development of
the automotive markets. The financial risk is an indicator of the
Group's financial strength. In the assessment of S&P, Daimler's
ongoing positive business development is subject to the risk of
weakening demand for motor vehicles in some markets.
26
+9
thereof capitalized
1,804
1,148
+57
Mercedes-Benz Cars
4,711
thereof capitalized
4,025
thereof capitalized
Daimler Trucks
1,612
1,035
+56
1,293
1,188
+17
Fitch Ratings (Fitch) also affirmed its long-term issuer default
rating of A- with a stable outlook for Daimler AG. Fitch referred
to the Group's solid business profile and the strengthening of
key financial metrics. In addition, Fitch praised Daimler's wide
geographical and product diversification as well as its leading
positions in the markets for premium cars, trucks, vans and
buses. Fitch stated that Daimler enjoys adequate headroom
with its present rating.
The Canadian agency DBRS most recently confirmed the
long-term credit rating of Daimler AG at A (low) with a stable
outlook in November 2015. DBRS pointed out that Daimler's
business performance had resulted in further improved
profitability. This reflects the product offensive at Mercedes-Benz
Cars as well as the ongoing cost-reduction activities. The
rather favorable market conditions (in aggregate) are regarded
as another driver of the positive sales development. DBRS
referred in particular to the sales successes of Mercedes-Benz
Cars in China and Daimler Trucks in North America.
The short-term credit ratings of all four rating agencies
remained unchanged in 2015.
5,680
+16
7,454
+25
6,634
8,273
6,564
Marketable debt securities
Other financial assets
9,667
9,936
Cash and cash equivalents
+5
8,634
9,054
+3
Trade receivables
Daimler Group
% change
total
thereof capitalized
LLLLL
0
2011
2012
In millions of euros
2013
2015
B.39
Research and development expenditure by division
2015
2014
15/14
2014
3
2
+14
23,760
% change
15/14
2014
Dec. 31,
Dec. 31,
2015
Consolidated statement of financial position
In millions of euros
B.34
Property, plant and equipment
Intangible assets of €10.1 billion include €7.8 billion of capitalized
development costs (2014: €7.2 billion) and, as in the previous
year, €0.7 billion of goodwill. Mercedes-Benz Cars accounts for
73% (2014: 69%) and Daimler Trucks for 18% (2014: 22%) of the
develoment costs. Capitalized development costs amounted to
€1.8 billion (2014: €1.1 billion), and account for 27% of the
Group's total research and development expenditure (2014: 20%)
page 107.
The increase in total assets is primarily due to the growth of
the financial services business and higher inventories. On the
liabilities side of the balance sheet, there were increases in
particular in financing liabilities and shareholders' equity. Cur-
rent assets account for 42% of the balance sheet total, which
is above the prior-year level of 41%. Current liabilities account
for 35% of the balance sheet total, as at the end of previous
year.
The balance sheet total increased compared with December
31, 2014 from €189.6 billion to €217.2 billion; adjusted for
the effects of currency translation, the increase amounted to
€23.2 billion. Daimler Financial Services accounts for €123.9
billion of the balance sheet total (2014: €105.5 billion); this is
equivalent to 57% of the Daimler Group's total assets (2014:
56%).
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 99
Financial Position
page 95 rose to €24.3
billion (2014: €23.2 billion). In 2015, €5.1 billion was invested
worldwide (2014: €4.8 billion), in particular at our production
and assembly sites for new products and technologies and for
the expansion and modernization of production facilities.
The sites in Germany accounted for €3.3 billion of the capital
expenditure (2014: €3.1 billion).
20,864
Assets
Property, plant and equipment
Equipment on operating leases
and receivables from financial
services
+58
2,294
3,633
Equity-method investments
Inventories
+19
94,729
Intangible assets
112,456
23,182
24,322
+7
9,367
10,069
Total assets
+5
100 B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
Income tax expense
B.35
Other operating income, net
-1,885
-1,969
General administrative expenses
-6,518
-6,695
-75,307
-91,733
Cost of sales (including R&D expenses)
Selling expenses
83,947
101,537
Revenue
2014
2015
In millions of euros
Condensed statement of income of Daimler AG
B.36
Cash provided by operating activities amounted to €6.6
billion at the end of 2015 (2014: €3.2 billion). The increase
primarily reflects lower contributions to pension plan assets.
Additional factors behind the increase are lower inventory
growth than in the previous year and increased operating profit
in 2015.
Gross liquidity - defined as cash and cash equivalents and
other marketable securities of €7.8 billion was lower than a
year earlier (2014: €8.6 billion).
Receivables, securities and other assets increased compared
with December 31, 2014 by €8.4 billion to €38.3 billion. The
main reason for this development was growth in receivables
due from subsidiaries of €6.6 billion. Cash and cash equiva-
lents decreased by €1.5 billion to €1.9 billion, partially due to
the extraordinary contribution to German pension plan assets
of €0.9 billion.
Inventories increased by €0.7 billion to €8.5 billion at
December 31, 2015. The increase is mainly related to finished
and unfinished goods in connection with the higher pro-
duction volumes.
Non-current assets decreased by €4.5 billion to €39.3 billion
in 2015, primarily due to the lower amount of financial assets.
This mainly reflects the merger of Daimler Luft- und Raumfahrt
Holding AG into Daimler AG. Investments in property plant
and equipment (excluding leased assets, approximately €2.6
billion) mainly comprise investments for the production of
the C-, E- and S-Class, as well as investments in engine and
transmission projects.
The balance sheet total of €88.3 billion is €3.0 billion higher
than at year-end 2014.
resources
Financial position, liquidity and capital
1,441
The economic situation of Daimler AG primarily results from
its business operations and those of its subsidiaries. Daimler AG
participates in the operating results of its subsidiaries through
profit distributions. The economic situation of Daimler AG is
therefore fundamentally the same as that of the Daimler Group,
which is described in the chapter "Overall Assessment of the
Economic Situation."
pages 120 f
1,122
2,581
Equipment on operating leases and receivables from financial
services increased to a total of €112.5 billion (2014: €94.7
billion). The increase was primarily caused by the higher level
of new business at Daimler Financial Services. In addition,
there was an increase due to the effects of currency translation
in an amount of €3.3 billion. The growth reflects the successful
course of business, especially in the United States. Above-aver-
age growth was achieved in the sales-financing business also
in China and other Asian countries, as well as in Turkey. The
leasing and sales-financing business as a proportion of total
assets of 52% is above the prior-year level (50%).
Liabilities of €35.8 billion were at the prior-year level.
Provisions increased compared with December 31, 2014 by
€1.9 billion to €13.7 billion. This primarily reflects the sales-
related increase in provisions for warranty claims. The increase
also resulted from provisions for pensions and similar obliga-
tions, which were affected by the lower discount rate. There
was an opposing, reducing effect from the extraordinary
contribution of €0.9 billion to the German pension plan assets.
An additional factor is that there were higher personnel
and social-security obligations than in the previous year.
Equity increased compared with December 31, 2014 by €1.1
billion to €38.2 billion. This change primarily resulted from
the net profit for 2015, of which, in accordance with Section 58
Subsection 2 of the German Stock Corporation Act (AktG),
€0.3 billion was transferred to retained earnings. The equity
ratio at December 31, 2015 was 43.3% (December 31, 2014:
43.5%).
Cash flows from investing activities resulted in a net cash
outflow of €4.2 billion in 2015 (2014: €1.3 billion). The increased
cash outflow was the result of higher net investment in
financial assets. An additional factor is that the sale of the
equity interest in Rolls-Royce Power Systems Holding GmbH
had a positive impact on cash flows from investing activities in
the previous year.
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
104
2,621
3,477
Distributable profit
-1,150
-278
Transfer to retained earnings
3,771
3,755
Net profit
-1,223
-900
4,994
4,655
Profit from ordinary activities
3,635
2,074
Financial income
1,359
Operating profit
Net profit of €3.8 billion was at the prior-year level. The higher
than forecast operating profit was partially offset by opposing
effects in financial income. Net profit is therefore significantly
higher than the amount originally expected.
Cash flows from financing activities resulted in a net cash
outflow of €3.9 billion (2014: €3.2 billion). The increased
outflow is the result of the higher increase than in 2014 in
receivables due from subsidiaries from the Group's internal
transactions in connection with central finance and liquidity
management. There was an opposing effect from the
increase compared with the previous year in external financing
liabilities. Cash flows from financing activities include the
payment of the dividend for the year 2014 in an amount of
€2.6 billion.
Financial income decreased by €1.5 billion to €2.1 billion,
primarily due to interest income/expense. The decrease mainly
reflects the higher interest expense relating to retirement
benefit obligations, which was caused by the lower discount
rate. Interest income/expense was also influenced by lower
income from pension plan assets.
Other assets of €8.2 billion (2014: €8.3 billion) primarily com-
prise deferred tax assets and tax refund claims.
Other financial assets increased from €6.0 billion to €7.5 billion.
They primarily consist of the investments in Renault and Nissan
and derivative financial instruments, as well as loans and other
receivables due from third parties. Amongst other things, the
increase was caused by higher stock-market prices of Renault
and Nissan shares.
Marketable debt securities increased compared with December
31, 2014 from €6.6 billion to €8.3 billion. Those assets include
debt instruments that are allocated to liquidity, most of which
are traded in active markets. They generally have an external
rating of A or better.
Cash and cash equivalents increased compared with the end
of 2014 by €0.3 billion to €9.9 billion.
Trade receivables increased by €0.4 billion to €9.1 billion. The
Mercedes-Benz Cars division accounts for 45% of these
receivables and the Daimler Trucks division accounts for 32%.
Inventories increased from €20.9 billion to €23.8 billion,
equivalent to 11% of total assets, as in the prior year. Adjusted
for currency effects, there was an increase of €2.6 billion, par-
tially due to the launch of new models and a larger number of
model versions, as well as the expected positive development
of unit sales. This resulted primarily at the Mercedes-Benz Cars
and Daimler Trucks divisions in increased stocks of finished
and unfinished goods in Germany and the United States.
Equity-method investments of €3.6 billion (2014: €2.3 billion)
primarily comprise the carrying amounts of our equity inter-
ests in Beijing Benz Automotive Co. Ltd. (BBAC), BAIC Motor
Corporation Ltd., Beijing Foton Daimler Automotive Co. Ltd.
and Kamaz PAO. In addition, the investment in the digital map-
ping provider HERE (There Holding B.V.) in December 2015 has
been recognized. The increase was also caused by the positive
proportionate share of the profit and the capital increase at
BBAC.
190 217
18 16
217 190
of which: Liquidity
Current liabilities
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 101
Current assets
92 77
Non-current liabilities
78 85
Equity and liabilities
Equity
45 55
125 113
2014
2015
Assets
In billions of euros
The income tax expense amounts to €0.9 billion (2014: €1.2
billion). In 2015, the figure includes high tax benefits of €0.7
billion connected with the tax assessment of previous years.
Despite a higher tax expense for the year 2015 as a result
of the improved operating profit, these tax benefits led to a
reduction in the effective income tax expense compared
with 2014.
Balance sheet structure Daimler Group
67 77
The Group's equity increased compared with December 31,
2014 from €44.6 billion to €54.6 billion. Equity attributable to
the shareholders of Daimler AG increased to €53.6 billion
(2014: €43.7 billion). The increase in equity was the result of
the net profit of €8.7 billion page 88, actuarial gains from
defined benefit pension plans recognized in retained earnings of
€2.7 billion, positive currency translation effects of €1.4 billion
and a gain of €0.7 billion on the measurement of financial assets
available for sale. There were negative effects on equity,
however, from the distribution of the dividend for financial year
2014 to the shareholders of Daimler AG (€2.6 billion) and the
remeasurement of derivative financial instruments (€0.6 billion).
Compared to the 15% increase in the balance sheet total, there
was a disproportionately high increase in equity of 23%. Due to
the effects described above, the Group's equity ratio of 23.6%
was above the level at the end of 2014 (22.1%); the equity ratio
for the industrial business was 44.2% (2014: 40.8%). It is nec-
essary to consider that the equity ratios at the end of 2014 and
2015 are adjusted for the paid and proposed dividend pay-
ments.
Non-current assets
Financing liabilities of €101.1 billion were above the level of
December 31, 2014 (€86.7 billion). As well as currency effects
of €1.4 billion, the increase primarily reflects the refinancing of
the growing leasing and sales-financing business. 51% of the
financing liabilities are accounted for by bonds, 27% by liabilities
to financial institutions, 10% by deposits in the direct banking
business and 7% by liabilities from ABS transactions.
Provisions decreased to €26.1 billion (2014: €28.4 billion); as
a proportion of the balance sheet total, they amounted to 12%
(2014: 15%). They primarily comprise provisions for pensions and
similar obligations of €8.7 billion (2014: €12.8 billion), which
mainly consist of the difference between the present value of
defined benefit pension obligations of €27.6 billion (2014:
€30.1 billion) and the fair value of the pension plan assets applied
to finance those obligations of €20.2 billion (2014: €18.6 bil-
lion). The rise in discount rates, especially for German plans
from 1.9% at December 31, 2014 to 2.6% at December 31,
2015, led to a decrease in the present value of the defined ben-
efit pension obligations. This effect was strengthened by the
extraordinary contribution of €1.2 billion to German and US
pension plan assets. Provisions also relate to liabilities from
income taxes of €1.7 billion (2014: €1.6 billion), from product
warranties of €5.7 billion (2014: €5.0 billion) and from per-
sonnel and social costs of €4.4 billion (2014: €3.9 billion), as
well as other provisions of €5.8 billion (2014: €5.1 billion).
Selling expenses increased by €0.2 billion to €6.7 billion. This
was primarily due to higher expenses for marketing and out-
bound shipping. As a proportion of revenue, selling expenses
decreased from 7.8% to 6.6%.
B | COMBINED MANAGEMENT REPORT | DAIMLER AG 103
General administrative expenses of €2.0 billion were slightly
above the prior-year level (2014: €1.9 billion). In relation to
revenue, they amounted to 1.9% (2014: 2.2%).
1 Unit sales relate solely to new vehicles. The unit sales of Daimler AG
include vehicles invoiced to companies of the Group which have not yet
been sold on to external customers by those companies. Vehicle sales
by production companies of the Daimler Group to external customers and
subsidiaries of Daimler AG are not counted in unit sales.
Revenue increased, as forecast in the previous year, due to
higher unit sales of vehicles and components by €17.6 billion to
€101.5 billion. In the car business, revenue thus rose by 24%
to €77.9 billion. Also with trucks and vans, higher unit sales of
vehicles and components led to an increase in revenue of
13% to €23.6 billion.
Profit from ordinary activities reported by Daimler AG for
2015 amounts to €4.7 billion (2014: €5.0 billion). The develop-
ment of earnings reflects the increase in operating profit of
€1.2 billion to €2.6 billion and the decrease in financial income
of €1.5 billion to €2.1 billion. 7 B.36
Profitability
Cost of sales increased by 22% to €91.7 billion. Increases in
unit sales and expenses for new products and technologies led
to higher cost of sales. Research and development expenses,
which are included in cost of sales, were higher than in the
previous year at €5.6 billion (2014: €4.9 billion); as a proportion
of revenue, they amounted to 5.5% (2014: 5.8%). Research
and development expenses were primarily related to the renewal
and expansion of the product portfolio, especially with regard
to the model series of the E-Class, the SUVs and the compact
class. In addition, we are continuously working on new genera-
tions of engines and alternative drive systems. At the end of the
year, approximately 18,000 people were employed in the
area of research and development.
Other operating income amounted to €1.4 billion (2014: €1.1
billion). As part of the organizational focus on the divisions,
a restructuring program for the German sales organization was
started in 2014. In that context, individual selected locations
of the Group's own sales network in Germany were sold in 2015.
The income and expenses from the sale of the individual sales
locations, in particular the expenses for personnel actions, result
in a net expense of €0.2 billion. In the previous year, there
had been a negative impact of €0.6 billion from expenses in
connection with the antitrust investigations of European
manufacturers of commercial vehicles by the EU Commission.
71 B.36
The earnings achieved by the car business in 2015 were signi-
ficantly higher than in the previous year. The development
of earnings was influenced by ongoing growth in unit sales in
Europe, the United States and Asia. There were opposing,
negative effects from expenditure for new products and techno-
logies, amongst other factors. Unit sales in the car business
increased by 14% to 1,790,000 vehicles' in the year under review.
Of the various model series, the new C-Class was extremely
successful in 2015 with a 29% increase in unit sales to 375,000
vehicles'. SUVs (including the GLA) posted sales growth of
19% to 455,000 units¹.
The main performance indicators for Daimler AG are unit
sales, revenue and net profit.
The annual financial statements of Daimler AG are prepared in
accordance with the German Commercial Code (HGB). The
consolidated financial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS),
as adopted by the European Union (EU). This results in some
differences with regard to recognition and measurement,
primarily relating to intangible assets, provisions, financial
instruments, the leasing business and deferred taxes.
Earnings from trucks and vans were significantly higher than in
2014. Sales of trucks increased by 11% to 102,000 units¹. Sales
of vans increased by 12% to 314,000 units¹.
Daimler AG is the parent company of the Daimler Group and
is domiciled in Stuttgart. Its principal business activities
comprise the development, production and distribution of cars,
vans and trucks in Germany and the management of the
activities of the Daimler Group.
Trade payables increased to €10.5 billion due to the higher
volume of business (2014: €10.2 billion). The Mercedes-Benz
Cars division accounts for 61% of those payables and the Daimler
Trucks division accounts for 27%.
Other financial liabilities of €12.4 billion (2014: €10.7 billion)
mainly consist of liabilities from derivative financial instru-
ments, residual value guarantees, accrued interest on financing
liabilities, deposits received and liabilities from wages and
salaries. The increase of €1.2 billion after adjusting for exchange-
rate effects is due to derivative financial instruments, among
other things.
Other liabilities of €12.3 billion (2014: €9.1 billion) primarily
comprise deferred income, tax liabilities and deferred taxes.
The increase mainly results from the increase in deferred
income of €1.7 billion, which resulted from a higher volume of
service and maintenance contracts.
The vehicles are produced at the domestic plants of Daimler AG,
as well as under contract-manufacturing agreements by
domestic and foreign subsidiaries and by producers of special
vehicles. Daimler AG distributes its products through its
own sales-and-service network, which is organized in seven
regional centers for cars and seven for commercial vehicles,
through foreign sales subsidiaries and through third parties.
page 200, the Consolidated Statement of Changes in
Equity page 202 and the related notes in the Notes to the
Consolidated Financial Statements.
Further information on the assets presented in the statement of
financial position and on the Group's equity and liabilities is
provided in the Consolidated Statement of Financial Position
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
Daimler AG
Condensed version according to the German Commercial Code (HGB)
In addition to reporting on the Daimler Group, in this chapter,
we also describe the development of Daimler AG.
102
150
123
160
129
134
140
150
g/km
Average CO2 emissions of the new car fleet of Mercedes-Benz Cars
in the EU
B.41
-
€2.8 billion for environmental protection
A comprehensive approach to environmental protection
Protecting the environment is a primary corporate objective of
the Daimler Group. Environmental protection is not separate
from other objectives at Daimler; instead, it is an integral com-
ponent of a corporate strategy aimed at long-term value
creation. Our measures for manufacturing environmentally
friendly products take the entire product lifecycle into
account - from design, production and product use all the way
to disposal and recycling. The environmental and energy-
related guidelines approved by the Board of Management define
the environmental and energy-related policy of the Daimler
Group. This expresses our commitment to integrated environ-
mental protection that begins with the underlying factors
that have an impact on the environment, assesses the environ-
mental effects of production processes and products in
advance, and takes these findings into account in corporate
decision-making.
Environmental protection
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112
The future E-Class opens up new dimensions in headlight tech-
nology. The model's MULTIBEAM LED headlights are now
equipped with 84 high-performance LEDS rather than the pre-
vious 24. This means the headlights in the new E-Class enable
the resolution of the light pattern to be increased by a factor of
3.5. Other road users can therefore now be protected more
precisely against blinding, and back-glare can be more effectively
avoided as well. This new dimension of precision in light
distribution makes it possible to use the partial high-beams
longer, thereby increasing safety even further. Drivers also
benefit from improved illumination of the road. The MULTIBEAM
LED headlights have partial high-beam light output up to 2.5
times greater than that of most systems on the market today.
The completely freely configurable high-resolution light
distribution has made it possible for the first time to implement
all high- and low-beam functions of the Intelligent Light System
in an entirely digital mode in the new E-Class. As a world first,
the dynamic cornering light function is now purely electronic.
In addition, a broad range of new, adaptive light functions is
possible, which will make driving at night and in inclement
weather even safer for both the driver and other road users.
High-resolution LED headlights
With this goal in mind, Daimler researchers achieved a break-
through within the framework of the UR:BAN research initiative.
Using "scene labeling," a camera-based system automatically
classifies completely unknown situations and thus detects all
objects that might be of importance to driver assistance
systems from cyclists to pedestrians and wheelchair users.
Daimler researchers showed their system thousands of photos
from various German cities. In these photos, they had manually
and precisely labeled 25 different object classes, such as
vehicles, cyclists, pedestrians, streets, sidewalks, buildings, poles
and trees. The system used these examples to teach itself
how to correctly classify completely unknown images automati-
cally, and thus detect all important objects for driver assis-
tance systems even if such objects are largely hidden or far away.
Such abilities are made possible by powerful computers that
are artificially networked in a manner similar to the neural
networks in the human brain. The result is known as a deep
neural network. Scene labeling transforms the camera from a
simple measuring system into an interpretive system as
versatile as the interaction between the human eye and brain.
The tremendous increase in computing power in recent
years is bringing us closer to the day when vehicles will be able
to see their surroundings in the same way humans do, and
are also able to correctly understand complex situations in city
traffic. In other words, the vision of autonomous and accident-
free driving is becoming more and more of a reality.
UR:BAN: New assistance systems for city driving
Cross traffic, cyclists, crossing pedestrians (perhaps totally
engrossed in their smartphones), children playing - city
traffic places demands on drivers in many different situations,
while at the same time harboring many dangers as well. So
there is plenty of scope for assistance systems that support
drivers and also make driving in cities safer and less stressful.
In addition, the new Mercedes-Benz E-Class is the first
series-produced car worldwide to receive a test license for
autonomous driving in the US federal state of Nevada. For
the first time and punctually for the main trade fair for consumer
electronics, the CES in Las Vegas, three series-produced
E-Class cars were approved in January 2016.
pages 30 ff
New standards for safety, comfort and stress reduction will
also be set once again when the new E-Class is launched in the
spring with new driver assistance systems, car-to-X communi-
cation technology and innovative safety systems. For example,
the new assistance systems package will enable partially
autonomous driving on highways and secondary roads and
make it possible to automatically move a vehicle in and out
of tight parking spaces using a smartphone app without any-
one inside the car. An autonomous braking feature will also
reduce the risk of an accident in a greater number of situations
than before. In addition, the Active Lane Change Assist system
will make autonomous lane changes possible for the first time
(e.g. for overtaking). Car to-X communication systems provide
timely warnings of dangers ahead and state-of-the-art radio
technology transforms the smartphone into a car key.
In 2015, we continued to energetically pursue the goal of con-
serving resources and reducing all relevant emissions. We
kept a close eye on the impact of all our processes, ranging
from vehicle development and production to recycling and
environmentally friendly disposal. Our expenditure for environ-
mental protection remained nearly unchanged at €2.8 billion.
140
Daimler makes great efforts to reduce the fuel consumption of
its vehicles while enhancing their performance - and thus
increasing driving enjoyment and safety reserves. With a fleet
average of 123 g/km (2014: 129 g/km), we once again signifi-
cantly reduced the average CO2 emissions of the cars we sell
in the European Union in 2015. We were thus ahead of sched-
ule in achieving our goal of reducing the CO2 emissions of our
new-vehicle fleet in the European Union to 125 g/km by 2016.
Our achievements here were due to the further optimization of
our BlueEFFICIENCY measures and the success of our efficient
hybrid drive systems and extremely fuel-efficient new models.
We have reduced the CO2 emissions of our cars by 18% since
2011 and by 40% within just two vehicle generations. More
than 68 Mercedes-Benz models emit less than 120g CO2/km
and more than 108 models have received A+ or A energy effi-
ciency labels. 7 B.41
120
114
Daimler Trucks conducted the series of tests in cooperation with
leading German logistics companies. Typical payloads were
transported in typical ways along typical routes under realistic
conditions. The tests were supervised in detail by the inde-
pendent DEKRA testing organization, which defined the test
conditions, carried out the measurements and evaluated
the results. One of the key results was that the two Mercedes-
Benz Actros standard semitrailer combinations that were
optimized for the Efficiency Run each consumed around 12%
to 14% less fuel than the standard semitrailer combinations
from the participating logistics companies. The Efficiency Run
also examined the potential of long combination vehicles -
with a clear result here as well: In the test, a long combination
vehicle displayed fuel consumption that was around 17%
lower than that of the standard semitrailer combination used
in volume-based transport.
Double-digit reductions in the fuel consumption and thus the CO₂
emissions of modern truck combinations can be achieved by
using equipment and systems already available on the market.
This was demonstrated by a practical test whose results
Daimler Trucks presented in Berlin in October 2015. The field
test, which was known as the “Efficiency Run,” has major
implications in terms of achieving CO₂ targets for road freight
transport. That is because the Efficiency Run showed that
fuel consumption, and therefore also CO2 emissions, can be
significantly reduced - and at a lower cost as well - if opti-
mization efforts focus not just on the engine but also on the
vehicle as a whole. In other words, this integrated approach
addresses the trailer, tires and fuel in addition to the tractor,
although it focuses on actual driving operation, infrastructure
and fleet modernization as well. The Efficiency Run demonstrated
that the integrated approach does in fact work.
The components used in our research and test vehicles are
gradually being put into series production, which means
partially autonomous driving is already a reality in our produc-
tion vehicles. For example, the basic elements of the auto-
nomous vehicle system in the Freightliner Inspiration Truck
have already been successfully implemented in the Freightliner
Cascadia Evolution model, thousands of which are shaping the
image of America's road freight transport. In the form of the
DISTRONIC proximity cruise control system installed in many
of our Mercedes-Benz vehicles, the DRIVE PILOT can not only
automatically maintain a proper distance to vehicles ahead but
can also safely follow them at speeds of up to 210 km/h. The
system supports drivers during steering and evasive maneuvers
as well.
Integrated approach reduces CO2 emissions on
long-distance truck journeys
In Europe, we plan to reduce the fuel consumption of our truck
fleet by an average of 20% over the period of 2005 to 2020.
We are confident that we will achieve this ambitious target and
took a further step in that direction with the introduction of
the new generation of the OM 471 heavy-duty engine in 2015.
At the end of 2015, we completed a series of customer tests with
eight FUSO Canter E-Cell models in Portugal. Depending on
body type and payload, the Canter diesel truck can travel 100 km
on approximately 14 liters of diesel, while the FUSO Canter
E-Cell requires around 48 kWh of electricity for the same
distance. Based on the current cost of diesel fuel and elec-
tricity in Portugal, the Canter E-CELL offers operating cost
savings of more than 60% compared with a diesel truck.
The consumption of diesel fuel can also be greatly reduced by
hybrid technology - particularly in vans and trucks used for
distribution transportation. For example, the FUSO Canter Eco
Hybrid consumes up to 23% less fuel than a comparable diesel
truck, depending on use, and the Freightliner M2e Hybrid con-
sumes up to 30% less fuel than a conventional diesel-powered
M2 106. No other commercial vehicle manufacturer has more
experience in the areas of alternative drive systems and
electric mobility. We also have the most extensive lineup of
vehicles in this field, ranging from vans and trucks to buses.
We are also leading the way with the introduction of the latest
exhaust technology in the bus sector. For example, all Mercedes-
Benz and Setra model series were made available with Euro VI
technology at a very early stage. A further reduction in the fuel
consumption of our already efficient buses will be achieved
through the use of the new generation of the OM 471 engine in
buses as well.
page 35
Our trucks also set the standards for fuel efficiency in North
America, where production of the new Western Star 5700 XE
was launched in May 2015. The truck stands out through its
sophisticated aerodynamic features and is also equipped with
a new highly efficient powertrain from our Detroit brand.
The Western Star 5700 XE consumes nearly 15% less fuel
than a comparable truck.
Natural-gas engines also offer outstanding possibilities for
reducing fuel consumption and emissions. Daimler Trucks has
therefore supplemented its EURO VI engine family with the
new environmentally friendly M 936 G natural gas engine. The
new engine's CO2 emissions are up to 20% lower than those
of diesel engines and can be reduced even further with the use
of biogas.
Economical and low-emission commercial vehicles
In recent years, we have also continuously reduced the fuel
consumption of our commercial vehicles as well as their
emissions of CO2 and pollutants. Daimler was the first manu-
facturer to switch its entire European product range to Euro VI
before that new emissions standard went into effect in January
2014. Mercedes-Benz is achieving further efficiency gains with
the latest generation of the Mercedes-Benz OM 471 heavy-
duty engine, whose fuel consumption is up to 3% lower than
that of the predecessor unit, while the new engine also offers
higher torque and better driving performance. An Actros
semitrailer tractor equipped with this engine can save around
1,100 liters of fuel per year when driven over a distance of
130,000 km, which corresponds to a roughly three-ton reduc-
tion in annual CO2 emissions. The new engine is being used
in the heavy-duty Actros, Antos and Arocs trucks and puts all
of those models amongst the most efficient trucks in their
respective segments. Over the last four years, the fuel con-
sumption of our heavy-duty Actros truck has been reduced
by 13%, thanks in large part to the introduction of the new
model as a Euro VI truck, the use of the Predictive Powertrain
Control (PPC) cruise control system and the launch of the new
engine generation. Moreover, these savings were achieved
despite the fact that the truck is now more powerful than before
and produces lower levels of pollutant emissions. By com-
parison, long-term fuel-efficiency progress in the commercial
vehicle sector normally amounts to between 1.0% and 1.5%
per year.
113
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We plan to use innovative technologies for locally emission-free
mobility, and in particular new hybrid models, in order to
further reduce the fuel consumption and CO2 emissions of our
cars. We have also continuously reduced the pollutant emis-
sions of our cars in recent years and have been able to meet
new emission requirements in advance - and ahead of our
competitors. At Mercedes-Benz, we were one of the first manu-
facturers to begin in 2009 with the introduction of the EURO 6
technology, which was not obligatory until September 2015.
Our BLUETEC technology and sustainable SCR exhaust treat-
ment technology make us a world leader for reducing diesel-
vehicle emissions. The cars with this equipment already
comply with the strictest emission standards. In addition, we
are continually further developing our emission control
systems. The next generation of cutting-edge diesel engines
will soon be launched and will be pioneers by fulfilling new
legislative requirements in advance in Europe.
Further reductions in cars' CO2 emissions
A vehicle's environmental impact is largely predetermined in
the first stages of development. The earlier that environmen-
tally responsible product development (design for environment,
DfE) is integrated into the development process, the more
efficiently it can help minimize the impact on the environment.
The continual improvement of our products' environmental
compatibility is therefore a major requirement when setting
product specifications. Our DfE experts are involved in all
stages of the vehicle development process as a cross-functional
team. We also systematically integrate our product design
processes into our environmental and quality management
systems in accordance with ISO 14001 and ISO 9001.
Mercedes-Benz has been in full compliance with the relevant
standard ISO 14006 - since 2012. Mercedes-Benz has
also been certified according to ISO TR 14062, the standard
for environmentally oriented product development, since
2005. It was the first automaker in the world to achieve this
certification.
Environmentally responsible product development
2015
2014
2013
2012
2011
100
110
130
During the year under review, we made tremendous progress
on the road to series production of autonomously driving
vehicles, thereby underscoring our technological lead in this
area. The milestones for passenger cars in this respect were
the F 015 Luxury in Motion and Vision Tokyo research vehicles.
With regard to trucks, we received permission to test the
Highway Pilot on public roads in both the United States and
Germany. We put the autonomously driving Freightliner
Inspiration Truck on the road in the United States last May, and
the first partially autonomous production truck had its pre-
miere on a Germany highway in October. The latter vehicle is
an Actros equipped with the intelligent Highway Pilot system.
Additional plug-in hybrids with the star
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Energy sources for locally emission-free driving
Clean fuels for internal combustion engines
Energy for the future
Locally emission-free
driving with electric
vehicles powered by
fuel cells or batteries
Hybridization for further
increase in efficiency
with modern conventional
powertrains
Optimizing our vehicles
Road to emission-free mobility
B.40
We are systematically pursuing our approach to emission-free
driving along the entire value chain. To this end, we are
addressing all relevant aspects and exploiting potential at
all development units for everything from lightweight
engineering to optimized aerodynamics, the use of clean and
efficient fuels, the creation of electric drive systems and
the implementation of sustainable mobility concepts. We also
view emissions as a holistic issue and are therefore examining
ways to reduce other types of emissions besides pollutants -
e.g. noise.
3. Our electric vehicles, powered by batteries or fuel cells, are
making locally emission-free driving possible. 7 B.40
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY 109
1. We continue to enhance our vehicles with state-of-the-art
internal combustion engines that we are optimizing to
achieve significantly lower fuel consumption and emissions.
2. We are achieving further significant increases in efficiency
through customized hybridization, i.e. the combination of
combustion engines and electric motors.
Our "road to emission-free mobility"
MULTIBEAM headlights in the CLS and the overall concept of
the CLA Shooting Brake, which leads the way in its segment
by combining the beauty of a coupe with the practical benefits
of a station wagon. Daimler came out on top in the "Alternative
Drive Systems" category as a result of the S-Class and C-Class
plug-in hybrids and the all-electric B-Class.
Mercedes-Benz beat out the competition with its 578 individual
innovations and 183 world firsts. The outstanding innovations
cited include DISTRONIC PLUS with Stop&Go Pilot, the economi-
cal hybrid drive system in the S-Class and the MAGIC BODY
CONTROL suspension. Innovations highlighted in the "Most
Innovative Premium Brand” category included the curve
tilting technology in the S-Class Coupe, the 24-pixel LED
In April 2015, both Daimler and Mercedes-Benz received awards
for their innovative capability as a result of an extensive study
conducted by the Center of Automotive Management (CAM)
and the Pricewaterhouse Coopers (PwC) corporate consulting
firm. The study found that Mercedes-Benz is the most innovative
premium automobile brand with the greatest number of world
firsts. Mercedes-Benz also received a special award as the
"Most Innovative Brand in the Last Decade." Daimler was
named "Most Innovative Group" in the category "Alternative
Drive Systems."
Daimler and Mercedes-Benz receive awards for their
innovative capability
The greatest possible customer utility, the most stringent safety
standards, maximum environmental compatibility and effi-
ciency - we rely on innovative concepts and environmentally
sound product development to help us achieve all of those
goals simultaneously. Our innovations range from pioneering
vehicle and drive-system technologies to intelligent light-
weight engineering concepts, innovative comfort features and
sophisticated assistance systems that can prevent accidents.
Over recent years in particular, we have made tremendous pro-
gress on the road to accident-free and emission-free driving.
We have a greater range of electric vehicles on the road than
any other automaker and we also set standards for safety.
We have established a leading position in the area of autonomous
driving in particular, and we plan to further strengthen this
position.
Innovations for the mobility of the future
Innovation and safety
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108
Our goal is to safeguard mobility for the generations to come.
We therefore strive to offer our customers vehicles and ser-
vices that are safe and efficient and produce low emissions
along the entire value chain. Our "Road to Emission-free
Driving" initiative defines the key development approaches for
creating new extremely fuel-efficient and environmentally
friendly drive-system technologies at all of our automotive
divisions:
Trailblazing advances on the road to autonomous
and accident-free driving pages 4ff
Efficient cars and commercial vehicles with internal
combustion engines
We have also further reduced the fuel consumption of our
range of commercial vehicles, thanks to the most recent
additions and the use of new engines. Our Actros, Arocs, Antos
and Atego series, the heavy-duty Freightliner Cascadia
Evolution in the United States and the FUSO Super Great V
are amongst the cleanest and most economical trucks in
their respective classes - and our new buses also boast out-
standing fuel consumption figures.
pages 113 f
Vehicle safety is one of our core areas of expertise and a key
component of our product strategy. An important chapter in
the history of vehicle safety actually began 75 years ago when
the engineer Béla Barényi joined the former Daimler-Benz AG.
Mercedes-Benz has been shaping the development of safety
systems ever since that time. Many of the company's inno-
vations, especially those for protecting vehicle occupants and
other road users, have saved countless lives. Our vision
of accident-free driving will continue to motivate us to make
mobility as safe as possible for everyone in the future.
Our "road to accident-free driving"
Under the motto "E-mobility thought to the end," the world's
largest second-use battery storage unit at the moment will
begin operating in early 2016 within the framework of a joint
venture in Lünen, Germany, in which we are participating.
The unit will be marketed in Germany's primary energy balanc-
ing sector. The joint venture partners Daimler, The Mobility
House, GETEC and REMONDIS cover the entire battery value
creation and recycling chain with their project - from the
manufacture and reprocessing of battery systems at the Daimler
subsidiary ACCUMOTIVE, the corresponding range of electric
and plug-in hybrid vehicles from Daimler AG, and the installation
and marketing of stationary battery storage units in the
energy markets by The Mobility House and GETEC, through to
the recycling of the battery systems at the end of their life-
cycle and the feeding of the valuable raw materials back into
the production cycle, which REMONDIS will be responsible for.
With their 2nd-use battery storage project, the four partners
are also demonstrating that the lifecycle of a plug-in or
electric vehicle battery does not end after its automotive appli-
cation. Instead, battery systems remain fully operational after
this point, as the low levels of power loss are only of minor
importance when used in stationary storage operations. It is
estimated that such a unit can operate efficiently in a station-
ary application for at least another ten years. This approach
demonstrably improves the environmental performance of
electric vehicles and also helps make electric mobility more
economically efficient.
In mid-2015, Daimler entered the sector for stationary energy
storage devices with its wholly owned ACCUMOTIVE subsidiary.
The underlying concept was developed by Daimler Business
Innovation and involves both private and commercial use of
such devices. For private applications, up to eight battery
modules can be combined into an energy storage device with a
capacity of 20 kWh. Households that have their own photo-
voltaic system can use the devices for interim storage of surplus
electricity with virtually no losses. The new stationary energy
storage devices will be launched on the market in early 2016.
The systems for commercial and industrial use can be scaled
as desired. Large stationary energy storage devices can be used
to stabilize grids or provide support during peak demand.
The first industrial-scale lithium-ion storage device is already
online and is operated by two Daimler partners: The Mobility
House AG and GETEC Energie AG.
Entry into the sector for stationary battery
storage devices
With the establishment of their H2 MOBILITY Deutschland
GmbH & Co. KG joint venture, the companies Air Liquide, Daimler,
Linde, OMV, Shell and Total have set the stage for the phased
expansion of a nationwide hydrogen filling station network in
Germany. Plans call for approximately 400 stations to be built
in Germany by 2023 with a total investment of approximately
€400 million. H2 MOBILITY, which has its headquarters in
Berlin, has already started operations and is preparing the first
phase of its plan of action, which will involve the rapid instal-
lation of an initial group of 100 filling stations over the next few
years. The success of fuel-cell drive systems powered by
hydrogen depends to a large extent on the establishment of
a filling station infrastructure, which H2 MOBILITY will now
create. Daimler is convinced that fuel-cell drive systems pow-
ered by hydrogen offer great potential. In particular, their
long range and short refilling times lead to extensive benefits
as an alternative to battery-electric drive for vehicles that
travel long distances. Our F 015 Luxury in Motion and Vision
Tokyo research vehicles offer a preview of the future of fuel-
cell technology. These vehicles are equipped with the innova-
tive F-CELL PLUG-IN HYBRID system - a combination of an
electric motor and a fuel cell that achieves an emission-free
range of up to 1,100 km.
Fuel-cell infrastructure
New natural gas drive systems for urban buses
With its new Citaro NGT urban bus, Mercedes-Benz is now
offering an attractive alternative to the diesel-powered Citaro.
The Citaro NGT (Natural Gas Technology) stands out with
its low-noise operation and lower CO2 emissions, both of which
offer key benefits in congested inner cities. The Citaro NGT
also makes a convincing argument with its low weight and
associated high passenger capacity, as well as through its
engine's strong power delivery, low fuel consumption and long
maintenance intervals. The Citaro NGT's new high-tech
natural gas engine is extremely efficient. In combination with
the intelligent operation of its auxiliary systems, the vehicle
offers potential fuel savings of 15% to 20% compared to the pre-
decessor model. Even greater fuel savings can be achieved
through the use of an optional energy recovery module. Mercedes-
Benz offers the new drive-system variant as a Citaro NGT
solo bus and a Citaro G NGT articulated bus. The Citaro NGT
can be operated with either natural gas or renewable natural
gas, in which case the Citaro NGT becomes a virtually CO2-
neutral bus.
Clean, quiet and efficient:
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110
Much of our research and development work focuses on
making our cars and commercial vehicles with internal combus-
tion engines even more efficient. This is largely made possible
by engines with low displacement and turbochargers, as well
as by lightweight engineering, aerodynamic improvements,
tires with low rolling resistance, demand-appropriate energy
management and an automatic start-stop function. In parti-
cular, our new SUVs that were launched in 2015 displayed sig-
nificantly higher fuel efficiency. This was made possible by
modified or new drive systems, outstanding aerodynamics and
intelligent lightweight design. For example, the new GLC SUV
boasts up to 19% lower fuel consumption and CO2 emissions
compared with predecessor models with the same engine
output, despite its improved driving performance. The most
fuel-efficient Mercedes-Benz passenger car with a combustion
engine is currently the A 180 d BlueEFFICIENCY Edition', which
boasts average diesel consumption of only 3.5 liters per 100 km.
We are exploiting additional emission-reduction potential
through intelligent and customized hybridization.
5 GLC 350 e 4MATIC: fuel consumption in 1/100 km: combined 2.7-2.5;
CO2 emissions in g/km: combined 64-59;
electricity consumption in kWh/100 km: 15.2-13.9
4 GLE 500 e 4MATIC: fuel consumption in I/100 km: combined 3.3;
CO2 emissions in g/km: combined 78;
electricity consumption in kWh/100 km: 11.3-11.0
3 C 350 e: fuel consumption in l/100 km: combined 2.4-2.1;
CO2 emissions in g/km: combined 54-48;
2 S 500 e: fuel consumption in l/100 km: combined 2.8;
CO2 emissions in g/km: combined 65;
electricity consumption in kWh/100 km: 13.5
CO2 emissions in g/km: combined 89;
electricity consumption in kWh/100 km: 13.5
1 A 180 d BlueEFFICIENCY Edition: fuel consumption in l/100 km:
urban 3.9 extra-urban 3.2 / combined 3.5;
In the period up until 2017, we will launch a total of ten plug-in
hybrid cars whose batteries can also be charged via the normal
power grid. This Mercedes-Benz plug-in hybrid offensive will
be accompanied over the next several years by the launch of
additional fully electric vehicles. For example, the new electric
smart will be introduced in 2016 - for the first time as a four-
seater as well. In addition, we are currently developing a con-
cept for an overarching vehicle architecture for electric cars with
a range of 400-500 km. And on the basis of the Mercedes-
Benz GLC, we will launch an innovative fuel-cell vehicle with a
long range and quick refueling as a series-produced model.
Daimler also continues to invest heavily in the expansion of its
battery expertise, which underscores the company's firm
commitment to electric mobility and its holistic approach to
sustainability.
In the spring of 2016, Mercedes-Benz will begin offering a plug-
in hybrid in the compact SUV segment: the GLC 350 e 4MATIC5
combines agile all-wheel driving pleasure with minimal con-
sumption and emission values. The mid-size SUV has a top
speed of 235 km/h and emits just 59 to 64 g CO2/km; these
are new top figures for its segment.
The new GLE 500 e 4MATIC4 is the first Mercedes-Benz SUV
equipped with a plug-in hybrid drive. The model combines the
performance and comfort of a V8 engine with the fuel con-
sumption of a "three-liter vehicle" and the versatility of a premium
SUV. Its drive-system components include a direct-injection
BlueDIRECT V6 gasoline engine with an output of 245 kW (333 hp)
and a hybrid module with an electrical output of 85 kW (116 hp).
Along with the impressive acceleration enabled by a boost func-
tion, the innovative drive system allows for purely electric
driving at speeds of up to 130 km/h, optimized energy recov-
ery made possible by an intelligent operating strategy, and
comfort features such as pre-entry climate control in both sum-
mer and winter.
The Mercedes-Benz C 350 e³ makes an excellent impression
both as a sedan and a wagon through its exceptionally dynamic
handling and efficiency. It can also be driven in the pure elec-
tric mode, and thus locally emission-free, for a distance of
31 kilometers. The model has a drive-system output of 205 kW
(279 hp) and system torque of 600 Nm. The C 350 e³ thus dis-
plays the driving performance of a sports car, even as it
boasts certified fuel consumption of between 2.4 and 2.1 liters
per 100 km as a sedan or station wagon (depending on the
equipment features installed). The fuel consumption figures
correspond to CO2 emissions of just 54-48 g/km. Indepen-
dent monitors from the TÜV Süd inspection agency have now
the Mercedes-Benz C 350 e³: The new plug-in-hybrid meets
all the requirements for environmentally sound product develop-
ment in accordance with the ISO TR 14062 standard. This
certification is based on a comprehensive life cycle assessment
of the model in which every environmentally relevant detail
is documented.
Following the launch in October 2014 of the S 500 e² - the
world's first certified "three-liter" luxury sedan - we continued
our hybrid offensive with the introduction of additional models
in 2015.
electricity consumption in kWh/100 km: 16.0
Innovative SuperTruck
Daimler Group
Compliance with legal emission-measurement stipulations
After reports surfaced or manipulation by a competitor in the
fulfillment of emission regulations, doubts began to arise
concerning the emission and fuel consumption figures reported
by other automakers. Daimler repudiates any allegations of
manipulation. In particular, Daimler does not use and has never
used any so-called “defeat device" that illegally restricts the
effectiveness of emission control systems. This applies to all
of our diesel and gasoline engines. Our engines comply with
all applicable laws and regulations. We also preclude any irreg-
ularities when measuring the CO2 emissions of our vehicles.
Furthermore, we draw attention to the fact, that several envi-
ronmental authorities in Europe and in the USA have made
requests for test results. Some requests were answered without
any findings whereas other discussions still continue.
Mobile working
Employees are increasingly demanding more flexible working
hours in line with the requirements of a modern lifestyle.
In response to this development, Daimler's executive manage-
ment launched an initiative in 2015 together with the Group's
General Works Council, the IG Metall trade union and the Fraun-
hofer Institute. This initiative featured surveys and brought
together managers and employees for a broad dialogue that
resulted in the creation of a framework of rules and limitations
for mobile work. The goal here is to incorporate the knowledge
thus gained into a new Group-wide agreement and thus make
Daimler an even more attractive employer.
We regularly conduct employee surveys to determine how sat-
isfied our employees are and the extent to which they identify
with the company. The feedback we receive helps us improve
our organization and further develop our management culture.
Our level of employee commitment is well above the global aver-
age as determined by benchmark studies. The results of the
2014 employee survey were carefully analyzed and used to iden-
tify areas where action was subsequently taken to achieve
sustained improvements for the benefit of the Group and its
employees. The next Group-wide employee survey will be
conducted in 2016.
High degree of employee commitment
We continually strive to further enhance our appeal as an
employer - both within the company and externally on the job
market. Our employees receive market-rate wages and salaries
and additional benefits, such as company pension plans, which
also conform to market practices. We also let our employees
share in our success. For example, in April 2016 eligible employ-
ees of Daimler AG will receive a profit-sharing payout of up to
€5,650 for financial year 2015 - the highest such payout in the
company's history. In April 2015, we issued a profit-sharing
payout of €4,350 for financial year 2014.
Attractive compensation
The average number of years our employees have worked
for Daimler was close to the prior-year level at 16.0 years
(2014: 16.1 years). In Germany, employees had worked for
the Group for an average of 19.4 years at the end of 2015
(2014: 19.4 years). The comparative figure for Daimler AG was
19.9 years (2014: 19.8 years). Daimler employees outside
Germany had worked for the Group for an average of 10.9
years (2014: 11.0 years).
Number of years at Daimler
The Group's workforce also does not include the employees
of companies that we manage together with Chinese partners;
on December 31, 2015, they numbered approximately 19,000
people.
Around the world, we have combined in-house services such
as those for financial processes, HR, IT and development
tasks, sales functions and certain location-specific services
into shared service centers. Some of the shared service
centers are not consolidated because they do not affect our
profitability, cash flow or financial position; those companies
employed more than 6,800 men and women at the end of 2015.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
We are continually working on further increasing efficiency in
road freight transport also in the United States. In March,
for example, Daimler Trucks North America presented its Super-
Truck concept vehicle at the Mid America Trucking Show 2015.
Thanks to its pioneering technology, the SuperTruck program
operated by Daimler Trucks North America (DTNA) has
achieved transport efficiency improvements of 115% (measured
in ton-miles per gallon). As a result, DTNA far exceeded the
efficiency improvement target of 50% set by the US Department
of Energy (DOE). Indeed, Daimler Trucks North America
exceeded all expectations in the DOE program and achieved
the best result of all four participating truck manufacturers.
In honor of its outstanding performance, Daimler was presented
with the Department of Energy's "Distinguished Achievement
Award." Some of the solutions developed within the framework
of the SuperTruck program are already being used as standard
components in Freightliner and Detroit products. The combina-
tion of proven and forward-looking technologies that DTNA
utilized in the DOE project allowed the truck manufacturer to
highlight solutions that are technically possible. One of the
most important initiatives was the optimal alignment of the
tractor and semitrailer, which DTNA developed as a unified
system for the first time in the project. Individual energy-efficient
tires with low rolling resistance, as well as sophisticated
aerodynamic features for the trailer, also made a major contri-
bution to the increase in efficiency achieved.
+12
8,842
9,922
Other
+12
8,878
9,975
Daimler Financial Services
+4
17,473
18,147
Daimler Buses
Extension of Safeguarding the Future
at Daimler agreement
An agreement was reached in the summer of 2015 to extend
the Group-wide Safeguarding the Future at Daimler agreement.
The agreement includes measures designed to improve com-
petitiveness and flexibility, and it also excludes the possibility
of layoffs for employees at Daimler AG in Germany until
December 31, 2020. The basis for the extension was the local
transformation plans that were agreed upon beforehand at
Daimler AG plants. These plans also include investment com-
mitments. They will enable us to utilize market opportunities,
respond flexibly to demand fluctuations and quickly increase
the workforce as needed.
Diversity management
The statement "Daimler's success. Your benefit. Our responsi-
bility." underscores the importance of diversity management
as a strategic factor for success at Daimler. The various skills,
expertise and composition of our workforce enable us as a
global company to effectively reflect the diversity of our cus-
tomers, suppliers and shareholders around the world.
In 2015, we spent around €60 million on donations to nonprofit
institutions and on sponsorships of socially beneficial projects.
This does not include our foundations, corporate volunteering
activities or self-initiated projects.
We concentrate here on areas where we can have an impact
through our role as a "good neighbor." We also participate in
projects to which we can contribute our specific knowledge
and core areas of expertise as an automobile manufacturer.
Our activities focus on the following areas: support for science,
education, traffic safety, the environment, the arts and culture,
community projects, charitable projects, projects for which our
employees volunteer, and projects for promoting dialogue
and understanding. 7 B.44
Our global presence offers us the opportunity to help shape the
social environment and promote an intercultural dialogue in
the places where we do business around the world. We and our
employees participate together in many charitable projects
that help address major challenges in society.
Responsible business activity
Social responsibility
page 119.
Daimler believes it has a responsibility to help with efforts to
assist refugees. In order to support the professional integration
of refugees into the German labor market, Daimler is offering
14-week "bridge internships" for several hundred refugees in
the coming years. After a successful pilot phase with 40
"bridge interns," the project will be expanded to the number of
300 additional places within the first half of 2016. The 14-week
"bridge internships" are being carried out in close cooperation
with the Federal Employment Agency and local job centers in
Germany. The latter organizations are also responsible for
selecting those refugees who have the best chance of being
granted residency. The internships include alternating days of
German language instruction and production work. A total
of 50 additional trainee positions for refugees are also being
offered at various Group locations in Germany in the coming
years. For information on other assistance activities:
Assistance for refugees
Measures for lifelong learning, such as the Daimler Academic
Programs for active employees, enable us to enhance the
qualifications of our employees and improve their performance
and innovative capability throughout their entire careers.
We provide our staff with training and continuing education
opportunities throughout their entire careers. Our range
of qualification measures includes practical training courses,
seminars, workshops, specialist conferences and instruction
through digital media. In Germany alone, we spent €126 million
on the training and qualification of our employees in the year
under review (2014: €121 million). On average, every employee
spent four days on qualification courses in 2015 (2014: four
days).
Employee qualification
+5
We had 8,307 apprentices and trainees worldwide at the end
of 2015 (2014: 8,346). A total of 1,871 young people began
their vocational training at Daimler in Germany during the year
under review (2014: 1,990). The number of people we train
and subsequently hire is based solely on the Group's needs and
its future development. In 2015, 84% of Daimler trainees
were hired after completing their apprenticeships (2014: 89%).
Securing young talent
The Daimler Senior Experts program allows experienced retired
employees to return to the company for a temporary period.
Around 300 senior experts have participated in the program
since it was launched, with most of them helping out in pro-
duction, development and IT departments. More than 600
interested former Daimler employees have set up senior
expert profiles that list their areas of expertise and experience.
In the fall of 2015, executive management and the General Works
Council signed a basic agreement on generation management
at the Group. The components of the agreement form the frame-
work of Daimler's strategy for addressing the demographic
transformation. The main aspects here include health, work
arrangements, leadership, learning and human resources
development. The associated measures are designed to help
maintain the health and performance capabilities of both
young and old employees, while promoting cooperation across
all age groups. Examples include extensive health programs
and measures to ensure ergonomic workstations.
Basic agreement on generation management
The average age of our global workforce in 2015 was 42.5
years (2014: 42.4). Our employees in Germany were 44.0 years
old on average (2014: 43.8). Employees who are 50 years old
or older currently make up about 37% of our permanent work-
force at Daimler AG. On the basis of current assumptions,
this proportion will rise to about 50% over the next eight years.
Slight increase in average age of our employees
117
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
In this context, we consider not only the new legislation for
equal participation of women and men in management
positions. Already in 2006, Daimler committed to raising the
proportion of women in senior executive positions at the
Group to 20% by the year 2020. The proportion of women in
such positions has continually risen over recent years to
reach 15.4% at the end of 2015 (2014: 14.1%). Because we are a
technologically oriented company, the targets take into
account sector-specific conditions and women's current share
of our workforce. At the Daimler Group, the proportion of
women in the total worldwide workforce increased to 17.3%
(2014: 16.8%). At Daimler AG, women accounted for 15.2% of all
employees at the end of the year under review (2014: 14.9%).
Our instruments for supporting the targeted promotion of
women include special mentoring programs, special seminars
for women, and women's networks. We also support both
men and women who are managing a career and a family through
numerous company agreements, flexible working time
models, daycare services and sabbaticals.
Increased proportion of women employees
Daimler takes a holistic approach to securing young talent. For
example, for five years now, our Genius initiative has been
enabling children and teenagers to gain valuable information
about technologies of the future and professions in the auto-
motive industry. page 118 School leavers can apply to par-
ticipate in a technical or commercial apprenticeship at one
of our locations or to study at the Cooperative State University
of Baden-Württemberg. After completing their college degrees,
they can directly join our company or launch their careers at
Daimler by taking part in our global CAReer training program.
21,598
116
Mercedes-Benz Vans
Employees at 12/31/2015
By region
B.42
Workforce numbers in nearly all divisions increased compared
with the previous year. Growth primarily took place at Daimler
Financial Services, Daimler Buses and Mercedes-Benz Vans.
7 B.43 Within the context of the Customer Dedication initiative,
the employees previously reported under "Sales & Marketing
Organization" were included in the employee numbers for the
respective divisions for the years 2014 and 2015. Since the
end of 2015, this has also applied to the Group's own sales and
service centers in Germany and the global logistics center in
Germersheim, whose employees are now grouped under Mercedes-
Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler
Buses. The figures for comparison from 2014 have been adjusted
to reflect these changes.
At December 31, 2015, the Daimler Group employed a total of
284,015 men and women. Due to the high demand for our
products, the workforce grew by 1% compared with the end of
2014. We had anticipated that the workforce would grow
slightly at the beginning of 2015. The number of employees in
Germany increased to 170,454 (2014: 168,909) and employee
numbers also rose in the United States, to 24,607 (2014: 22,833).
At the end of 2015, Daimler employed 11,669 men and
women in Brazil (2014: 12,313) and 11,002 (2014: 11,400) in Japan.
71 B.42 Our consolidated subsidiaries in China had a total
headcount of 3,155 at the end of the year (2014: 2,664). At the
end of the reporting year, the parent company Daimler AG
employed a total of 151,183 men and women (2014: 151,524).
Slight increase in number of employees
The workforce
and noise at our plants with the help of environmentally friendly
production processes. As a result, energy consumption during
the period 2011-2015 increased by only 4.5% to 10.9 million
megawatt-hours, which was well below the rate of production
growth. During the same period, CO 2 emissions decreased by
6.1% to a total of 3.2 million metric tons. Our ongoing energy-
saving projects enabled us to counteract the additional energy
consumption and CO2 emissions increase that resulted from
the rise in production in 2015. Energy consumption per manu-
factured vehicle (car) in the reporting year decreased by 5.5%
from the prior year, and CO2 emissions declined by 5.7%. With
resource-conserving technology such as circulation systems,
water consumption rose by slightly less than 1.1% between 2011
and 2015, which was well below the rate of production growth.
In relation to the number of vehicles we manufactured, we
were able to reduce water consumption by 2.2% compared
with the prior year.
In recent years, we have been able to limit the energy consump-
tion, CO2 emissions, production-related solvent emissions
Extensive measures for environmental protection
in production
As we systematically pursue our environmental protection
activities, we rely on comprehensive environmental manage-
ment systems. Today, more than 98% of our employees
worldwide work in plants whose environmental management
systems have been certified as conforming to the ISO 14001
or EMAS environmental standards.
In the area of waste management, Daimler believes that recy-
cling and the prevention of waste are better than disposal.
Accordingly, the reconditioning and reuse of raw, process and
operating materials has been standard practice at our plants
for many years. In order to avoid the creation of waste from the
outset, we use innovative technological processes and environ-
mentally focused production planning. Waste materials that are
unavoidable are generally recycled. As a result, the recycling
rate for waste at our plants is approximately 91% on average.
At some plants, almost 100% of the waste is now recycled,
meaning that waste destined for landfills has been almost com-
pletely eliminated.
22,639
Other proven elements of our recycling concept are the resale
of inspected and certified used parts, the remanufacturing
of parts and the MeRSy Recycling Management workshop dis-
posal system.
To make our vehicles more environmentally friendly, we are
reducing our automobiles' emissions and the resources they
consume over their entire lifecycle. We therefore pay close
attention to creating a recycling-friendly design already at the
development stage. Up to 85% of the materials in all Mercedes-
Benz models are recyclable and as much as 95% of the materials
are reusable. This means we were in compliance with the new
EU recycling directive before it even went into effect in 2015.
Extensive recyclability of old vehicles
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY 115
The safety requirements of customers and the high safety
standards at Mercedes-Benz will thus continue to be met in
the future. The system also enables the Group to make a
further contribution to climate protection.
Despite the extraordinarily short time available to develop CO₂
air conditioning systems for its top models, Mercedes-Benz
will be able to achieve the high level of quality it is striving to
attain. However, it will not be possible to equip the brand's
entire fleet with such systems by the cut-off date for the new
EU directive of January 1, 2017. So in order to ensure that all
other model series comply with the EU regulations on time, we
have developed safe solutions for using the R1234yf synthetic
refrigerant. As is generally well known, this refrigerant has a
different ignition potential than the R134a refrigerant previ-
ously used in the automotive industry. In order to continue to
offer our customers the same high degree of safety in the
future, we have developed a comprehensive package of vehi-
cle-specific measures that will ensure typical Mercedes-Benz
safety in those models in which R1234yf is used. These mea-
sures, which will be implemented as needed, include a
special protection component system for various vehicle con-
figurations. In the event of a frontal collision, this system,
which has since been patented, ensures that the refrigerant
and air mixture remains separate from the hot components
in the engine compartment and that the latter are also very
effectively cooled. This is made possible by the use of a gas
generator that sprays the protective gas argon onto the hot
surfaces, thus protecting against fire.
The use of CO2 as a refrigerant requires the redevelopment of
key components. CO₂ air conditioners operate at a pressure
of over 100 bar, which is around ten times the operating pressure
of previously used systems. For this reason, all the compo-
nents, as well as hoses and seals and gaskets, will have to be
newly developed. To this end, Mercedes-Benz has worked
with all other German automakers and numerous supplier com-
panies on the creation of new standards in the automotive
standards committee of the German Association of the Auto-
motive Industry (VDA). These new DIN specifications, which
can be viewed by the public, will also offer other companies
the chance to launch short-term development activities in
this area. Mercedes-Benz has taken on a pioneering role here
and has become the first automaker to commission not
only development work on CO2 air conditioning systems and
their components but also production orders.
In 2017, S-Class and E-Class models in Europe will become the
first production cars in the world to be equipped with CO2 air
conditioning systems. By making this move, Mercedes-Benz
will go beyond the climate protection requirements of the EU.
Because of their ability to produce a large amount of cold air
very quickly, CO2 air conditioners can create a comfortable
interior atmosphere in a short time, even when it is very hot
outside. The units are also very environmentally friendly,
which makes them the ideal sustainable premium solution
among climate control systems.
CO₂ air conditioners in production cars as of 2017
The fuel-consumption data provided by manufacturers is based
on the legally stipulated NEDC test cycle, which is conducted
in a laboratory. However, because conditions in real driving sit-
uations generally differ from those in such labs, actual fuel
consumption values can deviate from reported values. Daimler
strongly supports the introduction of the WLTP (Worldwide
Harmonized Light Vehicles Test Procedure) as a replacement
for the NEDC that would ensure only minor deviations between
actual and reported fuel consumption figures.
In addition, we actively support the efforts being undertaken in
Germany and on the European level to introduce new testing
procedures that measure emissions during actual driving oper-
ations (Real Driving Emissions - RDE).
Germany
60.0%
Avoiding waste
13.3%
Europe, excluding Germany
-1
87,628
86,391
Daimler Trucks
+1
+1
279,972
284,015
136,941
Mercedes-Benz Cars
% change
Employees (December 31)
135,553
2014
USA
15/14
8.7%
4.1%
10.0%
3.9%
Japan
Other
B.43
Employees by division
2015
Brazil
Andreas Renschler¹
Wilfried Porth
93
107
189
163
94
97
Dr. Christine Hohmann-Dennhardt
90
781
Ola Källenius
Hubertus Troska²
2 For the fulfillment of disclosure obligations pursuant to Section 285 No. 9a
431
Bodo Uebber
188
332
Prof. Dr. Thomas Weber
127
121
Total
1,439
1,405
1 Board of Management remuneration paid until January 28, 2014.
of the German Commercial Code (HGB), this amount is reduced by €170,820
for the year 2015 (2014: €139,000). The corresponding fringe benefits
were granted and borne by a subsidiary and are thus not included in the
amounts to be disclosed in the annual financial statements of the parent
company, Daimler AG.
Dr. Wolfgang Bernhard
493
163
- 50% relates to the Group's return on sales in a three-year
comparison with a group of competitors comprising all listed
vehicle manufacturers with an automotive proportion of
more than 70% by revenue and an investment-grade credit
rating (BMW, Ford, Fuji Heavy, Honda, Hyundai, Isuzu,
Mazda, Nissan, Paccar, Suzuki, Toyota, Volvo and Volkswagen).
For the measurement of this success criterion, the com-
petitors' average return on sales is calculated over a period
of three years. Target achievement occurs to the extent to
which Daimler's return on sales deviates by a maximum of +/-2
percentage points from 105% of the calculated average of
the competitors. Target achievement of 100% only occurs when
the average return on sales of the Daimler Group reaches
105% of the average return on sales of the group of competi-
tors. So target achievement of 200% occurs if Daimler's
return on sales exceeds 105% of the average of the competitors
by 2 percentage points or more. An additional limitation will
be implemented starting with PPSP 2015: If a target achieve-
ment of between 195% and 200% occurs in the third year
of the performance period, the maximum target achievement
calculated from the reference parameter of return on sales
compared to the reference group will only be deemed to be
200% if the actual return on sales for Daimler's automotive
business reaches at least the strategic target for return on
sales (currently 9%). Otherwise, target achievement will
be limited to 195%.
Dr. Dieter Zetsche
base salary
(non-performance-related)
paid out in twelve monthly
installments
approx. 29%
124
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.48
Annual bonus - short- and medium-term
performance-related remuneration page 124
short- and medium-term
The base salary is fixed remuneration relating to the entire
year, oriented towards the area of responsibility of each
Board of Management member and paid out in twelve monthly
installments. 7 B.47
performance-related
approx. 29%
annual bonus 2015
= target bonus
target bonus
=100% of base
salary 2015
x overall target achievement
target achievement EBIT
time of payment of annual bonus 2015
+/- target achievement "individual targets"
+/- target achievement "non-financial targets"
- target achievement "compliance targets"
overall target achievement
50% of annual bonus in March of the year after the reporting year (2016)
50% of annual bonus (deferral) = in March of the second year after the reporting year (2017)
amount paid out = 50% of annual bonus x "relative share performance"
1 Depending on the development of the Daimler share price compared with the Dow Jones STOXX Auto Index.
components
B.49
The individual components of the remuneration system
are as follows:
page 123
approx. 29%
approx. 29%
approx. 42%
Maximum limit of total remuneration¹ 2015
Chairman of the Board of Management
Members of the Board of Management
Base salary in 2015
1.5 times the target
remuneration¹
1.9 times the target
remuneration¹
base salary - fixed - oriented towards the area of responsibility
+ target bonus = 100% of the 2015 base salary
Base salary in 2015
+ annual bonus for 2015
(50% paid out in 2016 + 50% in 2017)
+ PPSP payment for 2015 (in 2019)
incl. dividend equivalent payments
Total remuneration¹ in 2015
The possible cap on the amount exceeding the maximum limit takes
place with the payment of the PPSP for 2015 in 2019.
1 Excluding fringe benefits and retirement benefit commitments in all cases.
B.47
Base salary-fixed
+ PPSP value when granted for 2015
Target remuneration' in 2015
Annual bonus in 2015
dependent upon
EBIT target achievement
in
The total amount to be paid out from the annual bonus
is limited to 2.35 times the base salary of the respective
financial year.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
125
B.50
Performance Phantom Share Plan (PPSP)
- long-term performance-related remuneration
long-term performance-related
remuneration
Also in 2015, further qualitative targets were agreed upon
with the individual members of the Board of Management with
regard to the development and sustained function of the
compliance management system. The complete or partial non-
achievement of these individual compliance targets can be
reflected by a deduction of up to 25% from the individual target
achievement. However, the compliance targets cannot result
any increase in individual target achievement, even in the case
of full accomplishment.
approx. 42%
price of Daimler shares when issued
after expiry of third plan year
pages 125 f
preliminary number of phantom shares
(virtual shares)
three-year dividend entitlement
preliminary number of phantom shares x performance factor
= final number of phantom shares, dividend entitlement in fourth year
after expiry of fourth plan year
final number of phantom shares x Daimler share price at end of plan
= amount paid out
amount when granted in euros page 125
The Supervisory Board may take account of the personal
performance of the individual Board of Management members
with an addition or deduction of up to 25% on the basis of the
agreed individual targets, with the degree of target achievement
calculated from the primary reference parameters. In addition,
an amount of up to 10 percent can be added or deducted,
depending on the key figures/assessment basis determined in
advance. Since 2012, non-financial targets have been used
as a basis for assessment of the latter component. For the past
financial year, those targets were the further development
and permanent establishment of the corporate value of integrity,
as well as diversity and the maintenance and enhancement
of a high level of employee satisfaction and product quality.
revenue.
For the other primary reference parameter, which also relates
to half of the annual bonus, "comparison of actual EBIT in
the financial year with actual EBIT in the prior year," the limits
of the unchanged possible range of 0% to 200% continue to
be defined by a deviation of +/- two percent of the prior-year
Range of possible target achievement:
0% - 200%
Target achievement: "individual targets"
Range of possible target achievement:
-25% - +25%
Target achievement: "non-financial
targets"
Range of possible target achievement:
-10% +10%
Target achievement: "compliance targets"
Range of possible target achievement:
-25% -0%
- 50% relates to a comparison
of actual EBIT in 2015 with
EBIT targeted for 2015
- 50% relates to a comparison
of actual EBIT in 2015 with
actual EBIT in 2014
Individual target agreements
in 2015
For 2015: Further develop-
ment and permanent estab-
lishment of the corporate
value of integrity, as well as
diversity and the maintenance
and enhancement of a high
level of employee satisfaction
and product quality.
Compliance
agreements in 2015
Maximum target achievement (total cap): 235% of the target bonus
The annual bonus is variable remuneration, the level of which
is primarily linked to the operating profit of the Daimler Group
(EBIT). For the past financial year, the annual bonus was linked
to the target for the financial year determined by the Supervisory
Board (derived from the level of return targeted for the medium
term and the growth targets), the actual result compared with the
prior year, the individual performance of the Board of Man-
agement members and the achievement of compliance targets.
In addition, qualitative targets are defined and included. With
the actual-actual comparison, achievement of EBIT at the prior-
year level constitutes target achievement of 100%. With the
target-actual comparison, the particularly ambitious definition
of the targeted EBIT that is oriented towards the competition
constitutes target achievement of 150%. 7 B.48 7 B.49
Primary reference parameters:
50% relates to a comparison of actual EBIT in 2015
with EBIT targeted for 2015.
-50% relates to a comparison of actual EBIT in 2015
with actual EBIT in 2014.
Amount with 100% target achievement
(target annual bonus):
In 2015, this is equivalent to the respective base salary.
Range of possible target achievement:
0% to 200%, that is, the annual bonus due to EBIT achievement
has an upper limit of double the base salary and may also be zero
(see below). Both primary reference parameters, each of which
relates to half of the annual bonus, can vary between 0% and
200%. For the primary reference parameter relating to half
of the annual bonus, "comparison of actual EBIT in the financial
year with EBIT targeted for the financial year," the limits of
the unchanged possible range of 0% to 200% are defined as
of 2014 by a deviation of +/- three percent of the prior-year
revenue (previously two percent).
B.46
Time of payment of Performance Phantom Share Plan 2015 in February of the year 2019
long-term performance-related
components
(non-performance-related)
For example, Daimler supports the wetland restoration project
of the NABU nature conservation organization in Baden-
Württemberg. The goal of the project is the renaturation of
damaged moors and bogs. Such wetlands currently occupy
only 3% of the earth's surface but store nearly one third of all
the carbon that remains trapped in the earth. Moors transform
CO2 from the atmosphere into long-lasting peat and are thus
the best natural carbon sinks.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
119
The arts and culture
A rich cultural life and a vibrant art scene foster creativity
and innovation. It is therefore very important to us to support
culture and the arts.
As early as 1977, the company laid the cornerstone for its
Daimler Art Collection, which now includes some 2,600 works.
In 2015, the Daimler Art Collection presented newly acquired
Chinese works of art at two exhibitions in Berlin. The works of
the Chinese artists offer a unique insight into a fascinating
country with a culture that is thousands of years old.
However, we do not focus solely on the visual arts, as Daimler
also supports the German Music Council, the largest cultural
association in Germany, through the Group's funding of Germa-
ny's Federal Youth Orchestra. We also support art and culture
outside Germany, such as the "Moscow meets Friends" music
festival in Russia and the "Emerging Artist Award," which is
jointly presented by Daimler Financial Services and the renowned
Cranbrook Academy in the United States.
Communities and charitable projects
Against the backdrop of the current refugee crisis in Germany,
Daimler has launched a variety of aid initiatives to provide
rapid assistance to refugees non-bureaucratically, thus send-
ing a message of respect and tolerance.
We share responsibility for preserving the diversity of natural
habitats for future generations. That is why we have been
supporting the projects and initiatives of environmental organi-
zations around the world for many years now, as we help to
make sure the earth remains a place worth living in.
Daimler has actually been involved in refugee assistance pro-
grams for a long time now. For example, since 2013, Daimler
and the Wings of Help relief organization have sent three con-
voys with supplies for Syrian refugee camps in Turkey, and
the partners have also sent two aid shipments by plane to north-
ern Iraq. We have also contributed €100,000 annually for
three years to the city of Stuttgart's "Welcome Fund." We have
donated a further €100,000 to refugee assistance projects
sponsored by a community organization in Sindelfingen. In
addition, we donated €1 million to the "Bild hilft e. V. - Ein
Herz für Kinder" child refugee aid association. We finance German
courses for refugees, collect food donations from Daimler
cafeterias and provide aid organizations with an "assistance
fleet" of Mercedes-Benz vehicles.
In order to support the smooth integration of refugees into the
German labor market, Daimler also began offering "bridge
internships" for refugees in November 2015. For additional
information,
page 117.
Employee commitment
The efforts of our employees to help communities and promote
the common good around the globe manifest themselves
in countless initiatives that go beyond the refugee assistance
campaigns. These initiatives demonstrate just how seriously
our employees take their responsibility, and how willing they
are to offer opportunities to people at the very fringes of
society.
In the ProCent initiative, for example, Daimler employees vol-
untarily donate the cent amounts of their net salaries to
socially beneficial projects. The company matches every cent
donated. Approximately €1 million was collected in this
manner in 2015.
The largest single donation to date was €57,000 for a project
in South Africa known as "A fence for more freedom." With the
help of ProCent, an orphanage being built in Cape Town was
secured against attacks with a fence in order to protect children
and youths. The orphanage will offer around 120 children a
place to grow up in a family-like group atmosphere, and will
also provide them with medical care and education.
Dialogue and understanding
As a company that operates around the world, we support
projects and institutions that promote intercultural dialogue
in the interest of mutual understanding and the peaceful
coexistence of cultures. We also support initiatives for the
strengthening of democracy.
The East Jerusalem Emergency Response Network, which is
being built by the Jerusalem Foundation with our assistance,
will provide effective assistance to the people of Jerusalem in
emergencies. The goals of the Jerusalem Foundation are to
improve the quality of life of residents of Jerusalem, break down
the barriers between the different religious and ethnic groups
and create a just society for everyone.
More information on the projects promoted by the Group and
the activities related to our social commitment can be found
in the Daimler Sustainability Report and on our website under
"Sustainability." daimler.com/sustainability
We also assist efforts to integrate refugees and support the
individual campaigns of our employees. For example, our staff
members donated more than €300,000 to refugee assistance
projects and we doubled that amount to €601,332, which was
then given to the refugee aid section of the German Red Cross.
The fundraising campaign was initiated by the company manage-
ment and the General Works Council in Germany.
120
Nature conservation
As we move along the "road to accident-free driving," we are
utilizing assistance systems to ease the burden on drivers and
to protect and support them in dangerous situations. More
importantly, we also seek to ensure that everyone on streets
and roads remains safe. We pursue this goal with traffic-edu-
cation projects for schoolchildren and safety training programs
for adults, for example.
118
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY
In 2015, we once again supported political parties in Germany,
donating a total of €320,000. As in the prior year, the CDU and
SPD parties each received €100,000 while the FDP, the CSU
and BÜNDNIS 90/DIE GRÜNEN each received €40,000.
Science funding
Sustainable development cannot be achieved without the tar-
geted funding of science, research and technology worldwide.
The international sharing of knowledge and the funding of inno-
vations are key drivers of developments here. We therefore
support universities, research institutes and interdisciplinary
scientific projects around the globe. We have consolidated
these activities in foundations.
The Daimler and Benz Foundation, for example, is endowed
with €125 million. This foundation promotes the in-depth
scientific examination and study of research ideas in the areas
of environmental protection and technical safety. It also
supports a think tank that will address mobility issues and
examine the impact and socially relevant aspects of auto-
nomous driving. daimler-benz-stiftung.de
"Electrified commercial vehicle drive concepts" is the working
title of a professorship that is being established at the Depart-
ment of Automotive Engineering at Esslingen University of Applied
Sciences. The endowed professorship is being funded by the
Daimler Fund in the Donors' Association, with a view to the pro-
motion of forward-looking research into electric drive systems
for commercial vehicles in the future. H④ stifterverband.org
B.44
Donations and sponsoring in 2015
Back in 2001, Daimler launched its Mobile Kids initiative. Since
then, a standardized concept that can be adjusted in line
with the situation in different countries has playfully taught more
than 1.2 million children worldwide how to recognize and
avoid danger in road traffic. The initiative also makes parents
and teachers aware of the importance of accident prevention
and supports them through the provision of information and
relevant materials. mobilekids.net
Charity/Community
Education
71%
5%
14%
Science/Technology/Environment 10%
e
Education
Providing more people with access to education is one of the
most lasting investments to the benefit of society and also
our company. The numerous education projects we fund around
the world promote interest in and passion for science and
technology, as well as the ability to look beyond the working
world and remain open to new ideas. The projects we support
also promote equal opportunities.
"Genius - Daimler's young knowledge community" celebrated its
fifth anniversary in 2015. The goal of this education initiative
is to get children and teenagers interested in technology and
the natural sciences, thus counteracting the trend of waning
interest in these subjects on the part of young people. Efforts
here focus especially on girls, as women remain underrepre-
sented in technical professions. The initiative also includes an
expert team that develops technical and practical teaching
materials on the subject of automotive technologies.
genius-community.com
Traffic safety
Arts & Culture
B❘ COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION
Overall Assessment of the Economic Situation
In the opinion of the Board of Management, the Daimler Group's
economic situation is thoroughly satisfactory at the time of
publication of this Annual Report. In recent years, we have imple-
mented our strategy effectively and with great determination.
This already led us onto a stable and profitable growth path in
the year 2014, along which we progressed further in 2015.
We significantly increased our revenue, unit sales and earnings
- although we were confronted by difficult conditions in some
markets. With new products and tailored services, we performed
better than our competitors in many areas, allowing us to
increase our market share. At the same time, we strengthened
our leading position in key technologies with pioneering inno-
vations, and systematically pushed forward with the digitization
of the Group at all levels and in all divisions.
- the effects of the individual fixed and variable components,
that is, the methods behind them and their reference
parameters;
- the relative weighting of the components, that is,
the relationship between the fixed base salary and the
short-term and long-term variable components; and
the target remuneration consisting of base salary, annual
bonus and long-term variable remuneration, also with
consideration of entitlement to a retirement pension and
fringe benefits.
The vertical comparison focuses on the ratio of Board of
Management remuneration to the remuneration of the senior
executives and the entire workforce of Daimler AG in Germany,
also with regard to development over time. The Supervisory
Board has defined the group of senior executives for this purpose.
In carrying out this review, the Presidential Committee and the
Supervisory Board consult independent external advisors,
above all to facilitate a comparison with remuneration systems
common in the market. If the review results in a need for
changes to the remuneration system for the Board of Manage-
ment, the Presidential Committee submits the relevant
proposals to the entire Supervisory Board for its approval.
On the basis of the approved remuneration system, the
Supervisory Board decides at the beginning of the year on
the base and target remuneration for the individual members
of the Board of Management and decides on the success
parameters relevant to the annual bonus in the coming year.
Furthermore, individual goals are decided upon for each
member of the Board of Management for the respective areas
of personal responsibility; those goals are then taken into
consideration after the end of the financial year when the annual
bonus is decided upon by the Supervisory Board.
For the long-term variable component of remuneration,
the so-called Performance Phantom Share Plan (PPSP), the
Supervisory Board sets an amount to be granted for the
upcoming financial year in the form of an absolute amount
in euros and sets the related performance targets.
In this way, the individual base and target remuneration and
the relevant performance parameters are set by the beginning
of each
year.
After the end of each year, target achievement is measured
and the actual remuneration is then calculated by the
Presidential Committee and submitted to the Supervisory
Board for its approval.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
For each upcoming financial year, the Presidential Committee
at first prepares a review by the Supervisory Board of the
system and level of remuneration on the basis of a comparison
with competitors. The main focus is on checking for appro-
priateness, based on a horizontal and a vertical comparison.
In the horizontal comparison, the following aspects are
given particular attention in relation to a group of comparable
companies in Germany:
123
With regard to the PPSP, an additional limitation of the target
achievement for the reference parameter return on sales
was decided upon for plans from 2015 onwards, if the strategic
target for return on sales (currently 9%) is not achieved.
As before, only 50% of the annual bonus is paid out in the
March of the following year. The other 50% is paid out a year
later (deferral) with the application of a bonus-malus rule,
depending on the development of the Daimler share price com-
pared with an automotive index (Dow Jones STOXX Auto Index)
pages 63f, which Daimler AG uses as a benchmark for the
relative share-price development. Both the delayed payout
of the portion of the annual bonus (with the use of the bonus-
malus rule) and the variable component of remuneration
from the PPSP with its link to additional, ambitious comparative
parameters and to the share price reflect the recommenda-
tions of the German Corporate Governance Code and give due
consideration to both positive and negative developments.
The maximum amounts of remuneration of the members
of the Board of Management are limited, both overall and with
regard to the variable components, in accordance with the
recommendation included in the German Corporate Governance
Code in 2013. Effective January 1, 2014, the members of the
Board of Management agreed to the inclusion of such limits in
their current contracts of service.
The maximum amounts of remuneration of the members
of the Board of Management were set as of financial year 2015
at 1.9 times the target remuneration for its members and
1.5 times the target remuneration for its Chairman. The target
remuneration consists of the base salary, the target annual
bonus and the grant value of the PPSP, excluding fringe benefits
and retirement benefit commitments. With the inclusion
of fringe benefits and retirement benefit commitments from
the respective financial year, the maximum limit of total
remuneration increases by these amounts. The possible cap
on the amount exceeding the maximum limit takes place
with the payment of the PPSP issued in the relevant financial
year, i.e. for the year 2015, with payment of the PPSP in 2019.
71 B.46
B.45
Remuneration structure
Target remuneration consists of non-performance-related
and performance-related components:
base salary
The system of Board of Management remuneration in 2015
The fixed base salary and the annual bonus each continue to
comprise approximately 29% of the target remuneration, while
the variable component of remuneration with a long-term
incentive effect (PPSP) makes up approximately 42% of the target
remuneration. The base salary was increased by an average
of 3% in the reporting year. 7 B.45
Practical implementation
The remuneration system for the Board of Management aims
to remunerate its members commensurately with their areas
of activity and responsibility and in compliance with applicable
law. The adequate combination of non-performance-related
and performance-related components of remuneration is
designed to create an incentive to secure the Group's long-term
success. The fixed component of remuneration is paid as a
base salary; the variable components are intended to reflect,
clearly and directly, the joint and individual performance of
the members of the Board of Management as well as the long-
term performance of the Group. The interests of all stake-
holders, in particular those of the shareholders as the owners
of the Company and those of the employees, are harmonized
through the focus on the Group's long-term success.
Goals
Awards for our innovative strength, for our attractiveness as an
employer and for our new products and services are indicators
of the positive momentum we now have. The appeal of our core
brand Mercedes-Benz was significantly enhanced worldwide as
a result not only of new and especially attractive products
but also of outstanding quality. This allows us to address new
markets as well as new and younger customer groups. For
this purpose, we make use also of digital forms of customer
contact and new sales formats, for example with the new
Mercedes me sub-brand.
We significantly increased our unit sales by 12% to 2.9 million
passenger cars and commercial vehicles despite difficult condi-
tions in some major markets. Thanks to numerous new and
successful products, Mercedes-Benz Cars and Mercedes-Benz
Vans set new records for unit sales and Daimler Trucks also
achieved a small increase, although the market situation in two
key markets (Brazil and Indonesia) was extraordinary difficult.
Only Daimler Buses did not quite match its unit sales of the pre-
vious year due to the market weakness in Latin America.
Driven by the positive development of the automotive business,
the Daimler Financial Services division also expanded signi-
ficantly in the reporting period. The Group's revenue therefore
also grew significantly - by 15% to €149.5 billion. Adjusted
for exchange-rate effects, there was an increase of 9%.
We made significant progress in 2015 also in terms of the
profitability of our business. Operating profit (EBIT) from the
ongoing business of €13.8 billion was 36% above the prior-
year level (€10.1 billion). This was primarily due to the Mercedes-
Benz Cars and Daimler Trucks divisions, but Mercedes Benz
Vans and Daimler Financial Services also significantly increased
their EBIT. At Mercedes-Benz Cars, the return on sales from
the ongoing business for the first time reached the division's
target of 10%, and Daimler Financial Services' return on equity
of 18.3% was once again above its target (17%). We laid a corner-
stone for this positive development with the efficiency pro-
grams that we implemented in all divisions in recent years. By
the end of 2014, we achieved a total contribution to earnings
of approximately €4 billion through sustained improvements
in cost structures as well as additional business activities.
The full impact of these programs was reflected for the first time
in the year 2015. In addition to these measures with short-
term effects, we are implementing fundamental initiatives for
the long-term and structural optimization of business systems
in all divisions.
As a result of the positive development of earnings, we once
again achieved a very good return on net assets of 21.6%
(2014: 18.8%). We therefore once again earned substantially
more than our targeted minimum return on capital employed
(8%). This is reflected by our value added, which increased very
significantly to €5.7 billion (2014: €4.4 billion).
In line with the ongoing high level of earnings, we continue to
have very sound key financial metrics. At year-end, the Group's
overall equity ratio rose to 23.6% (2014: 22.1%) and the equity
ratio of the industrial business was 44.2% (2014: 40.8%). The net
liquidity of the industrial business increased to €18.6 billion
(2014: €17.0 billion), although we made an extraordinary contri-
bution of €1.2 billion to the pension fund assets in Germany
and the United States and applied €0.7 billion for the acquisition
of the digital mapping business HERE. At €5.9 billion, the free
cash flow of the industrial business - the parameter we use to
measure financial strength - was once again higher than in the
previous year after adjusting for special items (2014: €5.2 billion),
and is thus significantly higher than the proposed dividend
distribution.
B❘ COMBINED MANAGEMENT REPORT | EVENTS AFTER THE REPORTING PERIOD 121
We want our shareholders to participate appropriately in the
earnings achieved by Daimler in 2015. At the Annual Share-
holders' Meeting on April 6, 2016, the Board of Management
and the Supervisory Board will therefore propose an increase
in the dividend to €3.25 per share (prior year: €2.45). With this
decision, we are also expressing our confidence about the
ongoing course of business. The dividend distribution will thus
rise to €3.5 billion (prior year €2.6 billion), which is by a large
margin the highest amount paid out in the Company's history.
The generally very positive business development strengthens
our financial basis on a broad front and thus improves our
ability to invest substantial amounts to secure our successful
future and to finance those investments from our own resources.
In the year under review, we invested more than €13 billion in
property, plant and equipment, associated companies and joint
ventures, research and development for new products, new
technologies and digitization, and the expansion of our global
production network. And even higher amounts are planned
for the coming years.
The high levels of research and development expenditure
in recent years are already paying off. This is shown not only
by our current business development, but also by the fact
that we are playing a pioneering role in key technologies that
are crucial for the future of individual mobility. This applies
to powertrain technology, traffic safety and digital connectivity,
and in particular also to autonomous driving. Two milestones
were the research vehicles F 015 Luxury in Motion and Vision
Tokyo in the area of passenger cars. In the area of trucks,
we have official approval in both the United States and Germany
for road tests of our Highway Pilots. ①pages 10f The com-
ponents from our research and test vehicles are gradually being
applied in series production. Partially autonomous driving is
therefore already reality for our cars and our trucks. And we will
go one step further with the new E-Class, which will be
launched in the spring.
We once again demonstrated our technology leadership in 2015
in the fields of fuel efficiency, safety and vehicle connectivity.
With innovative powertrains and highly economical model
versions, we reduced the average CO2 emissions of the cars
we sell in the European Union to 123 grams per kilometer.
We thus achieved the goal we had set of 125 g/km by 2016
ahead of time. This was due in particular to our highly efficient
new models as well as our first four plug-in hybrids.
pages 12 f
A key element of our growth strategy is the systematic digi-
tization of our products and processes - in all divisions,
along the entire value chain and with a focus on the customer.
The intelligent networking of the entire value chain enables
us to shorten the development processes and to make production
processes more flexible and marketing and sales processes
more direct. New patterns of thought and action are required
for the digital transformation at the Group. Our goal is to
combine the speed and risk culture of the digital industry with
Daimler's perfection and innovative strength.
We are extremely well positioned for the upcoming challenges
with our growth strategies, our digitization offensive and the high
levels of investment in the future of the Group. We are on a
stable growth path, which we will continue to follow system-
atically. We therefore look to the coming years with great
confidence and continue to aim for further profitable growth.
Events after the
Reporting Period
In February 2016, Daimler AG announced a recall of vehicles
for precautionary reasons due to defective airbags from the
manufacturer Takata. The resulting expense of €0.3 billion has
been recognized in the consolidated financial statements for
the year 2015.
Since the end of the 2015 financial year, there have been no
further occurrences that are of major significance for Daimler.
The course of business in the first weeks of 2016 confirms
the statements made in the "Outlook" section of this Annual
Report.
122
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Remuneration Report
The Remuneration Report summarizes the principles that are
applied to determine the remuneration of the Board of Manage-
ment of Daimler AG, and explains both the level and the
structure of its members' remuneration. It also describes the
principles and level of remuneration of the Supervisory Board.
Principles of Board of Management
remuneration
short- and medium-term
performance-related
components
B.51
PPSP 2015
dependent upon
2015
2014
62
47
47
156
Hubertus Troska
2015
781
Andreas Renschler²
890
14,837
1,237
3,798
2014
758
652
652
17,370
1,161
890
3,223
3,213
18,159
2015
781
890
890
14,837
1,237
3,798
2014
Wilfried Porth
1,1511
2015
890
890
15,512
1,293
3,854
2014
758
652
652
781
Bodo Uebber
2015
928
1,233
3,295
Total
2015
2014
7,665
8,697
6,782
5,808
8,697
5,808
18,444
147,170
153,912
37,327
10,134
28,532
1 PPSP 2014 taking into account board remuneration of €62,707.
2 Board of Management remuneration paid until January 28, 2014.
3 PPSP 2014 taking into account board remuneration of €89,391.
B.53
Taxable non-cash benefits and other fringe benefits
In thousands of euros
2015
2014
12,268
652
652
758
1,058
1,058
17,737
1,478
4,522
2014
901
775
775
20,765
1,2983
3,749
Prof. Dr. Thomas Weber
2015
781
890
890
15,754
1,313
3,874
2014
Ola Källenius
3,185
1,161
17,370
Value of the phantom shares on payout:
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
The value of the phantom shares to be paid out depends on
target achievement measured according to the criteria
described above and on the share price relevant to the payout.
This share price is limited to 2.5 times the share price at the
beginning of the plan. In addition, the amount to be paid out
is limited to 2.5 times the absolute euro amount specified
at the beginning of the plan, which is relevant to the preliminary
number of phantom shares allocated. This maximum amount
includes the dividend equivalent paid out during the four-year
plan period. In the agreements on the inclusion of maximum
amounts of remuneration in their current contracts of service
effective as of January 1, 2014, the members of the Board of
Management also agreed to the application of this limit to the
dividend equivalents not yet due at that time from plans
issued before January 1, 2014 and still running.
Guidelines for share ownership
As a supplement to these three components of remuneration,
"Stock Ownership Guidelines” exist for the Board of
Management. These guidelines require the members of the
Board of Management to invest a portion of their private
assets in Daimler shares over several years and to hold those
shares until the end of their Board of Management member-
ship. The number of shares (between 20,000 and 75,000) to be
held was set in 2005 when the Performance Phantom Share
Plan was introduced in relation to double the then annual base
salary of each ordinary member of the Board of Management
and triple the then annual base salary of the Chairman of the
Board of Management. In fulfillment of the guidelines, up
to 25% of the gross remuneration out of each Performance
Phantom Share Plan is generally to be used to acquire
ordinary shares in the Company, but the required shares
can also be acquired in other ways.
Appropriateness of Board of Management remuneration
In accordance with Section 87 of the German Stock Corpora-
tion Act (AktG), the Supervisory Board of Daimler AG once
again had an assessment of the system of Board of Management
remuneration carried out by an external remuneration expert
in 2015. The result was that the remuneration system as
described above was confirmed as being in conformance with
the requirements of applicable law. The remuneration system
was approved as described by the Annual Shareholders' Meeting
in 2014 with an approval ratio of 96.8%.
Board of Management remuneration in 2015
Board of Management remuneration in 2015 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
0% to 200%, that is, the plan has an upper limit. It may also
be zero.
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the
Board of Management of Daimler AG is calculated as the total
of the amounts of
the base salary in 2015,
the half of the annual bonus for 2015 payable in 2016 and
measured as of the end of the reporting period,
the half of the medium-term share-based component
of the annual bonus for 2015 payable in 2017 with its value
at the end of the reporting period (entitlement depending
on the development of Daimler's share price compared with
the Dow Jones STOXX Auto Index),
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2015, and
- the taxable non-cash benefits in 2015.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 127
For both of the share-based components - the second 50% of
the annual bonus and the PPSP with a long-term orientation - the
amounts actually paid out can deviate significantly from the
values described depending on the development of the Daimler
share price and the achievement of the relevant target param-
eters. Upward deviation is possible only as far as the maximum
limits described above. Both components can also be zero.
The remuneration of the Board of Management for the year 2015
amounts to €38.8 million (2014: €29.9 million). Of that total,
€9.1 million was fixed, that is, non-performance-related remuner-
ation (2014: €8.2 million), €17.4 million (2014: €11.6 million)
was short- and medium-term variable performance-related
remuneration (annual bonus with deferral), and €12.3 million
was variable performance-related remuneration granted in 2015
with a long-term incentive effect (2014: €10.1 million). 7 B.52
The granting of non-cash benefits in kind, primarily the
reimbursement of expenses for security precautions and the
provision of company cars, resulted in taxable benefits
for the members of the Board of Management in 2015 as
shown in table 7 B.53.
-
Bandwidth of possible target achievement:
Determined annually by the Supervisory Board; for 2015,
approximately 1.3 to 1.5 times the base salary.
Value upon allocation:
Development of performance -50% relates to the "return on sales"
factors
Development of the Daimler
share price
achieved in a three-year comparison with
the defined group of competitors
O page 126
Bandwidth of possible target achievement:
0% - 200%¹
- 50% relates to the "relative share perfor-
mance," i.e. the development of Daimler's
share price in a three-year comparison
with the development of a share-price in-
dex for the defined group of competitors.
Bandwidth of possible target achievement:
0% - 200%
Price when issued and price at the end of
the plan period
Bandwidth of possible price development:
maximum of 2.5 times the issue price
Maximum performance development (total cap):
2.5 times the amount granted
(including dividend equivalent payments throughout the plan period)
Stock ownership guidelines
Share purchase obligation of up to 25% of the gross remuneration until the
defined number of shares (between 20,000 and 75,000) have been pur-
chased (shares to be held until the end of term of service)
1 Maximum of 195% if, in the event of target achievement of 195% - 200%,
the strategic return target of 9% has not been reached.
The Performance Phantom Share Plan (PPSP) is a variable
element of remuneration with long-term incentive effects.
At the beginning of the plan, the Supervisory Board specifies
a grant value (absolute amount in euros) in the context of
setting the individual annual target remuneration. This amount
is divided by the relevant average price of Daimler shares
calculated over a predefined long period of time, which results
in the preliminary number of phantom shares allocated. Also
at the beginning of the plan, performance targets are set for a
period of three years (performance period). Depending on
the achievement of these performance targets with a possible
range of 0% to 200%, after three years, the phantom shares
allocated at the beginning of the plan are converted into the final
number of phantom shares allocated. After another plan year
has elapsed, the amount to be paid out is calculated from this
final number of phantom shares and the applicable share
price at that time. The share price relevant to the payout under
this plan is also relevant to allocating the preliminary number
of phantom shares for the plan newly issued in the respective
year. 7 B.50 7 B.51
126
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Reference parameters for Plan 2015:
Target achievement of 0% occurs if Daimler's return on sales
is 2 percentage points or more lower than 105% of the
calculated average of the competitors. In the deviation range
of +/- 2 percentage points, target achievement varies in
proportion to the deviation.
50% relates to "relative share performance," i.e. the develop-
ment of Daimler's share price in a three-year comparison
with the development of a share-price index for the defined
group of competitors. If the development of Daimler's share
price (in percent) is the same as of the index (in percent), target
achievement is deemed to be 100%. If the development
of Daimler's share price (in percent) is 50 percentage points
or more below (above) the development of the index, target
achievement is deemed to be 0% (200%). In the deviation range
of +/- 50 percentage points, target achievement varies in
proportion to the deviation.
B.52
148
Board of Management remuneration in 2015
Base salary
1,381
4,083
2014
779
670
670
18,380
1,228
3,347
16,564
Dr. Christine
851
14,837
1,237
3,720
Hohmann-Dennhardt
2014
758
633
633
2015
939
939
824
Short and medium-term variable
remuneration (annual bonus)
Short-term Medium-term
Number
Long-term variable remuneration
(PPSP)
Value when granted
(2015: at share price €83.35)
(2014: at share price €66.83)
Total
Dr. Dieter Zetsche
2015
2,008
2,289
2,289
37,092
3,092
9,678
2014
2,008
1,727
1,727
43,424
2,902
8,364
Dr. Wolfgang Bernhard
2015
In thousands of euros
8
851
Annual variable remuneration
852
878
970
Annual variable remuneration (50% of annual bonus, short-term)
633
851
890
Deferral (50% of annual bonus, medium-term)
584
626
Long-term variable remuneration
Payment of PPSP 2010
Payment of PPSP 2011
2,246
268
Dividend equivalent PPSP 2011
68
Dividend equivalent PPSP 2012
61
122
15
Dividend equivalent PPSP 2013
57
62
8
Total
189
97
94
62
98
106
41
45
91
41
11,424
827
11,171
1,044
4,241
380
4,401
448
14,422
Dividend equivalent PPSP 2014
14,371
5,763
In thousands of euros
Dr. Christine Hohmann-Dennhardt
Integrity & Legal Affairs
Ola Källenius
Mercedes-Benz Cars Marketing & Sales
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
2015
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
2015
Base salary
758
781
781
Taxable non-cash benefits and other fringe benefits
5,563
57
39
12
Jan. 1 Jan. 28, Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
2014
2015
Base salary
758
781
62
758
781
Taxable non-cash benefits and other fringe benefits
93
107
8
431
493
Total
851
888
70
1,189
1.274
Annual variable remuneration (50% of annual bonus, short-term)
652
890
47
652
2015
Jan. 1 Dec. 31, Jan. 1 Dec. 31,
2014
Hubertus Troska
Greater China
HR and Labor Relations Director,
IT & Mercedes-Benz Vans
Dividend equivalent PPSP 2015
36
36
Total
1,442
3,986
1,229
Retirement pension expense (service costs)
117
Total remuneration
2,294
4,864
43
2,316
The total of "payments made" for financial year 2015
is calculated from:
- the base salary in 2015,
- the taxable non-cash benefits and other fringe benefits
in 2015,
- the half of the annual bonus payable in 2016 for 2015
at the value as of the end of the reporting period,
the half of the share-based annual bonus paid in 2015
for 2013,
- the amount of the long-term share-based remuneration
(PPSP 2011) paid in 2015,
- the dividend equivalent of the current PPSP
(2012, 2013, 2014 and 2015) paid in 2015, and
the retirement pension expense in 2015
(service costs in 2015).
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for the reporting year 2015 are
implemented with the payout of PPSP 2015, which constitutes
the last payment to be made of the components of remuneration
granted in 2015. For the year 2015, therefore, the possible
cap would take place in 2019, the year that PPSP 2015 is paid out.
Payments made
In thousands of euros
Wilfried Porth
Andreas Renschler¹
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 133
890
156
122
Total remuneration
4,199
4,356 1,950 7,418
3,203 3,422 1,327 6,085
Total limit¹ for components of remuneration
granted in the reporting year
5,922
6,025
5,100
5,187
Excluding
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
2 In 2014, Board of Managemenrt remuneration paid until January 28, 2014.
132
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
The total of "payments made" for financial year 2014
is calculated from:
-
the base salary in 2014,
-
the taxable non-cash benefits and other fringe benefits
in 2014,
- the half of the annual bonus payable in 2015 for 2014 at the
value as of the end of the reporting period in financial year 2014,
the half of the share-based annual bonus paid in 2014
for 2012,
0 2,920
0 4,758
419 419
419
333
834
Deferral (50% of annual bonus, medium-term)
451
464
0
1,090
379
391
0
919
Long-term variable remuneration
(plan period of 4 years)
1,388 1,478
- the value of the long-term share-based remuneration
(PPSP 2010) paid in 2014,
0
1,233
1,313
Total
2,290 2,406
0
5,468
1,991
2,095
Retirement pension expense (service costs)
676
834
834
3,288
143
the dividend equivalent of the current PPSP
(2011, 2012, 2013 and 2014) paid in 2014, and
the retirement pension expense in 2014
The caps possible to ensure the total maximum amount shown
in the table of benefits granted in the year 2014 are implemented
with the payout of PPSP 2014, which constitutes the last pay-
ment to be made of the components of remuneration granted
in 2014. For the year 2014, therefore, the possible cap would
take place in 2018, the year that PPSP 2014 is paid out.
Deferral (50% of annual bonus, medium-term)
1,583
1,809
564
626
Long-term variable remuneration
Payment of PPSP 2010
Payment of PPSP 2011
Dividend equivalent PPSP 2011
Dividend equivalent PPSP 2012
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Total
Retirement pension expense (service costs)
Total remuneration
7,524
2,770
6,416
2,566
195
78
154
304
61
939
670
2,289
1,727
B.56
Payments made
In thousands of euros
Dr. Dieter Zetsche
Chairman of the Board of Management,
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Head of Mercedes-Benz Cars
Jan. 1 Dec. 31, Jan. 1 Dec. 31,
2014
2015
Jan. 1 Dec. 31, Jan. 1 Dec. 31,
2014
2015
Base salary
2,008
(service costs in 2014).
2,008
824
Taxable non-cash benefits and other fringe benefits
163
148
163
90
Total
2,171
2,156
942
914
Annual variable remuneration (50% of annual bonus, short-term)
779
Deferral (50% of annual bonus, medium-term)
564
645
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Dr. Paul Achleitner
Sari Baldauf
Michael Bettag¹
Dr. Clemens Börsig
Dr. Bernd Bohr
Dr. Jürgen Hambrecht
Petraea Heynike
Jörg Hofmann¹
Andrea Jung
Joe Kaeser
Ergun Lümali¹
Dr. Sabine Maaßen¹
Wolfgang Nieke¹
Dr. Bernd Pischetsrieder
Valter Sanches²
Jörg Spies¹
Elke Tönjes-Werner¹
Dr. Frank Weber
Roman Zitzelsberger¹
Member of the Supervisory Board (since November 4, 2015)
and of the Presidential Committee (since December 9, 2015)
1 The employee representatives have stated that their board remuneration is to be transferred to the Hans-Böckler Foundation,
in accordance with the guidelines of the German Trade Union Federation.
2 Mr. Sanches has directed that he receive no remuneration and that his board remuneration is to be paid to the Hans-Böckler Foundation.
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board
Total remuneration
7,270
7,172
5,852
5,885
1 In 2014, Board of Management remuneration paid until January 28, 2014.
134
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Remuneration of the Supervisory Board
Supervisory Board remuneration in 2015
The remuneration of the Supervisory Board is determined by
the Annual Shareholders' Meeting of Daimler AG and is governed
by the Company's Articles of Incorporation. The regulations
for Supervisory Board remuneration approved by the Annual
Shareholders' Meeting in April 2014 and effective for the
financial year beginning on January 1, 2014 specify that the
members of the Supervisory Board receive, in addition to
the refund of their expenses and the cost of any value-added tax
incurred by them in performance of their office, fixed remu-
neration of €120,000. The Chairman of the Supervisory Board
receives an additional €240,000 and the Deputy Chairman
of the Supervisory Board receives an additional €120,000. The
members of the Audit Committee are paid an additional
€60,000, the members of the Presidential Committee are paid
an additional €48,000 and the members of the other committees
of the Supervisory Board are paid an additional €24,000; an
exception is the Chairman of the Audit Committee, who is paid
an additional €120,000. Payments are made for activities in
a maximum of three committees; any persons who are members
of more than three such committees receive payments for
the three most highly paid functions. Members of a Supervisory
Board committee are only entitled to remuneration for such
membership if the committee has actually convened to fulfill
its duties in the respective year.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend.
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board (since January 1, 2015)
The individual remuneration of the members of the
Supervisory Board is shown in table 7 B.57.
The remuneration of all the activities of the members
of the Supervisory Board of Daimler AG in the year 2015
was thus €3.5 million (2014: €3.6 million).
Loans to members of the Supervisory Board
No advances or loans were made to members of the
Supervisory Board of Daimler AG in 2015.
B.57
Supervisory Board remuneration
Name
In euros
Function(s) remunerated
Total in 2015
Dr. Manfred Bischoff
Michael Brecht¹
Chairman of the Supervisory Board, the Presidential Committee and the Nomination Committee
Member of the Supervisory Board and the Audit Committee, Deputy Chairman of the Supervisory
Board, the Presidential Committee and the Audit Committee
447,400
368,900
In financial year 2015, no remuneration was paid for services
provided personally beyond the aforementioned board and
committee activities, in particular for advisory or agency services,
except for the remuneration paid to the members of the
Supervisory Board representing the employees in accordance
with their contracts.
419
152,800
127,700
Members of the Board of Management are appointed and dis-
missed on the basis of Sections 84 and 85 of the German
Stock Corporation Act (AktG) and Section 31 of the German
Codetermination Act (MitbestG). In accordance with Section 84
of the German Stock Corporation Act (AktG), the members of
the Board of Management are appointed by the Supervisory
Board for a maximum period of office of five years. However,
the Supervisory Board of Daimler AG has decided generally to
limit the initial appointment of members of the Board of
Management to three years. Reappointment or the extension
of a period of office is permissible, in each case for a maximum
of five years.
Pursuant to Section 31 Subsection 2 of the German Code-
termination Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority com-
prising at least two thirds of its members' votes. If no such
majority is obtained, the Mediation Committee of the Supervisory
Board has to make a suggestion for the appointment within
one month of the vote by the Supervisory Board. The Supervisory
Board then appoints the members of the Board of Manage-
ment with a majority of its members' votes. If no such majority
is obtained, voting is repeated and the Chairman of the Super-
visory Board then has two votes. The same procedure applies
for dismissals of members of the Board of Management.
In accordance with Section 5 of the Articles of Incorporation,
the Board of Management has at least two members. The number
of members is decided by the Supervisory Board. Pursuant to
Section 84 Subsection 2 of the German Stock Corporation Act
(AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required member
of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German Stock
Corporation Act (AktG). Pursuant to Section 84 Subsection 3
of the German Stock Corporation Act (AktG), the Supervisory
Board can revoke the appointment of a member of the Board
of Management and of the Chairman of the Board of Manage-
ment if there is an important reason to do so.
136
B | COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended by a
resolution of an Annual Shareholders' Meeting. Unless other-
wise required by applicable law, resolutions of the Annual
Shareholders' Meeting - with the exception of elections - are
passed pursuant to Section 133 of the German Stock Corporation
Act (AktG) and Article 16 Subsection 1 of the Articles of Incorpo-
ration with a simple majority of the votes cast and if required
with a simple majority of the share capital represented.
Pursuant to Section 179 Subsection 2 of the German Stock
Corporation Act (AktG), any amendment to the purpose of
the Company requires a 75% majority of the share capital
represented at the Shareholders' Meeting; no use is made in the
Articles of Incorporation of the possibility to stipulate a larger
majority of the share capital. Amendments to the Articles
of Incorporation that only affect the wording can be decided
upon by the Supervisory Board in accordance with Section 7
Subsection 2 of the Articles of Incorporation. Pursuant to
Section 181 Subsection 3 of the German Stock Corporation Act
(AktG), amendments to the Articles of Incorporation take effect
upon being entered in the Commercial Register.
Authorization of the Board of Management to issue
or buy back shares
By resolution of the Annual Shareholders' Meeting of April 14,
2010, the Board of Management was authorized during the period
until April 13, 2015 to acquire the Company's own shares, and
to apply derivative financial instruments for this purpose as
well. This authorization was rescinded by resolution of the
Annual Shareholders' Meeting of April 1, 2015 and replaced by
a new authorization that allows the Company to acquire its
own shares during the period until March 31, 2020 for all legal
purposes in a volume of up to 10% of the share capital at the
time of the resolution of the Annual Shareholders' Meeting.
The shares can be used, under the exclusion of shareholders'
subscription rights, for, among other things, corporate mergers
and acquisitions or else can be sold for cash to third parties
at a price that is not significantly below the market price at the
time of the sale. The shares can also be used to service debt
on convertible bonds and/or bonds with warrants, or else issued
to employees of the Company and employees and members of
executive bodies of affiliated companies pursuant to Section 15 ff.
of the German Stock Corporation Act (AktG). The Company's
own shares can also be canceled.
In addition, the Board of Management is authorized under
other defined circumstances and with the consent of the Super-
visory Board to exclude shareholders' subscription rights. The
Company's own shares in a volume of up to 5% of the share
capital existing at the time of the resolution of the Annual
Shareholders' Meeting can also be acquired with the application
of derivative financial instruments (put or call options, forwards
or a combination of these financial instruments), whereby the
terms of the derivatives may not exceed 18 months and must
be terminated on March 31, 2020.
No use was made of this authorization to acquire the Company's
own shares during the reporting period.
By resolution of the Annual Shareholders' Meeting held on
April 9, 2014, the Board of Management was authorized with
the consent of the Supervisory Board to increase the share
capital of Daimler AG in the period until April 8, 2019, wholly or
in partial amounts, on one or several occasions, by up to
€1 billion by issuing new registered shares of no par value in
exchange for cash or non-cash contributions, and with the
consent of the Supervisory Board under certain conditions and
within defined limits to exclude shareholders' subscription
rights (Approved Capital 2014). No use has yet been made of
Approved Capital 2014.
The Company was authorized by resolution of the Annual
Shareholders' Meeting held on April 14, 2010, to issue convert-
ible bonds and/or bonds with warrants during the period until
April 13, 2015. The Company made no use of this authorization,
which was rescinded by resolution of the Annual Shareholders'
Meeting of April 1, 2015 and replaced by a new authorization.
It authorizes the Board of Management with the consent of the
Supervisory Board to issue during the period until March 31,
2020 convertible bonds and/or bonds with warrants or a com-
bination of those instruments (commercial papers) in a total
nominal amount of up to €10 billion with a maximum term of
ten years, and to grant the owners/lenders of those bonds
conversion or option rights to new, registered shares of no par
value in Daimler AG with a corresponding amount of the share
capital of up to €500 million, in accordance with the terms and
conditions of those convertible bonds or bonds with warrants.
The bonds may be issued in exchange for consideration in
cash, but also for consideration in kind, in particular for a partici-
pation in other companies. The respective terms and conditions
may also provide for mandatory conversion or an obligation to
exercise the option rights. The bonds can be issued once or
several times, wholly or in installments, or simultaneously in
various tranches. They can also be issued by companies affili-
ated with Daimler AG pursuant to Section 15 ff. of the German
Stock Corporation Act (AktG).
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the con-
sent of the Supervisory Board to exclude shareholders' sub-
scription rights to the bonds. No use has yet been made of this
new authorization to issue convertible bonds and/or bonds
with warrants.
In order to service the debt of the convertible bonds and/or
bonds with warrants issued as a result of the authorization, the
Annual Shareholders' Meeting of April 1, 2015 also approved a
conditional increase in the share capital of up to €500 million
(Conditional Capital 2015). Conditional Capital 2010 was
rescinded.
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
137
Material agreements taking effect in the event of a change
of control
Daimler AG has concluded various material agreements, as
listed below, that include clauses regulating the possible event
of a change of control, as can occur as a result of a takeover bid:
- A non-utilized syndicated credit line in a total amount of €9
billion, which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
- Credit agreements with lenders for a total amount of €2.8
billion, which the lenders are entitled to terminate if Daimler
AG becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
Guarantees and securities for credit agreements of consoli-
dated subsidiaries for a total amount of €562 million, which
the lenders are entitled to terminate if Daimler AG becomes
a subsidiary of another company or comes under the control
of one person or several persons acting jointly.
- An agreement concerning the acquisition of a majority
(50.1%) of AFCC Automotive Fuel Cell Cooperation Corp.,
which has the purpose of further developing fuel cells for
automotive applications and making them marketable. In the
case of a change of control of Daimler AG, the agreement
provides for the right of termination by the other main share-
holder, Ford Motor Company. Control as defined by this
agreement is the beneficial ownership of the majority of the
voting rights and the resulting right to appoint the majority
of the members of the Board of Management.
- A cooperation agreement with Ford concerning the joint
predevelopment of a fuel-cell system. In the event of a
change of control of one of the parties to the agreement,
the agreement provides for the right of termination for the
other parties. A change of control is deemed to occur at a
threshold of 50% of the voting rights of the company in ques-
tion or upon authorization to appoint the majority of the
members of its managing board.
- A master cooperation agreement on wide-ranging strategic
cooperation with Renault S.A., Renault-Nissan B.V. and Nissan
Motor Co., Ltd. in connection with cross-shareholdings. The
Renault-Nissan Alliance received an equity interest of 3.1% in
Daimler AG and Daimler AG received equity interests of 3.1%
in each of Renault S.A. and Nissan Motor Co., Ltd. In the case
of a change of control of one of the parties to the agreement,
each of the other parties has the right to terminate the
agreement. A change of control as defined by the master
cooperation agreement occurs if a third party or several third
parties acting jointly acquire, legally or economically,
directly or indirectly, at least 50% of the voting rights in the
company in question or are authorized to appoint a majority
of the members of its managing board. Under the master
cooperation agreement, several cooperation agreements
were concluded between Daimler AG on the one side and
Renault and/or Nissan on the other, which provide for the
right of termination for a party to the agreement in the case
of a change of control of another party. These agreements
primarily concern a new architecture for small cars, the shared
use and development of fuel-efficient diesel and gasoline
engines and transmissions, the development and supply of a
small urban delivery van, the development, production and
supply of pickups, the use of an existing architecture for com-
pact cars, the joint development of components for a new
architecture for compact cars, and the joint production of
Infiniti and Mercedes-Benz compact vehicles in a 50-50 joint
venture in Mexico. A change of control is deemed to occur at
a threshold of 50% of the voting rights of the company in
question or upon authorization to appoint a majority of the
members of its managing board. In the case of termination of
cooperation in the area of the development of small cars due
to a change of control in the early phase of the cooperation,
the party affected by the change of control would be obliged
to bear its share of the costs of the development of shared
components even if the development were terminated for that
party.
An agreement with BAIC Motor Co., Ltd., relating to a jointly
held company for the production and distribution of cars of
the Mercedes-Benz brand in China, by which BAIC Motor Co.,
Ltd. is given the right to terminate or exercise a put or call
option in the case that a third party acquires one third or
more of the voting rights in Daimler AG.
An agreement relating to the establishment of a joint venture
with Beiqi Foton Motor Co., Ltd. for the purpose of producing
and distributing heavy-duty and medium-duty trucks of the
Auman brand. This agreement gives Beiqi Foton Motor Co.,
Ltd. the right of termination in the case that one of its
competitors acquires more than 25% of the equity or assets
of Daimler AG or becomes able to influence the decisions of
its Board of Management.
Provisions of applicable law and of the Articles of Incorpo-
ration concerning the appointment and dismissal of
members of the Board of Management and amendments
to the Articles of Incorporation
Shares acquired by employees within the context of the employee
share program may not be disposed of until the end of the fol-
lowing year. Eligible participants in the Performance Phantom
Share Plans are obliged by the Plans' terms and conditions
and by the Stock Ownership Guidelines to acquire Daimler
shares with a part of their Plan income up to a defined target
volume and to hold them for the duration of their employment
at the Daimler Group.
Restrictions on voting rights and on the transfer of shares
The Company does not have any rights from treasury shares.
In the cases described in Section 136 of the German Stock
Corporation Act (AktG), the voting rights of treasury shares
are nullified by law.
The share capital of Daimler AG amounted to approximately
€3,070 million as of December 31, 2015. It is divided into
1,069,837,447 registered shares, each of which accounts for
approximately €2.87 of equity capital. Pursuant to Section 67
Subsection 2 of the German Stock Corporation Act, only those
persons registered as shareholders in the share register are
considered to be shareholders of the Company. With the ex-
ception of treasury shares, from which the Company does not
have any rights, all shares confer equal rights to their holders.
Each share confers the right to one vote and, with the possible
exception of any new shares that are not yet entitled to a divi-
dend, to an equal share of the profits in accordance with the
dividend payout approved by the Annual Shareholders' Meeting.
The rights and obligations arising from the shares are derived
from the provisions of applicable law, in particular Sections 12,
53 aff, 118 ff and 186 of the German Stock Corporation Act.
There were no treasury shares as of December 31, 2015.
Member of the Supervisory Board and the Audit Committee
(Chairman of the Audit Committee)
253,200
127,700
Member of the Supervisory Board and of the Presidential Committee
182,300
127,700
Member of the Supervisory Board and of the Presidential Committee (each until October 31, 2015)
Member of the Supervisory Board
149,823
127,700
Member of the Supervisory Board and the Audit Committee
192,100
127,700
152,800
Member of the Supervisory Board and the Audit Committee
127,700
127,700
127,700
127,700
127,700
127,700
20,168
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Takeover-Relevant Information and Explanation
(Report pursuant to Section 315 Subsection 4 and Section 289 Subsection 4 of the German Commercial Code (HGB))
135
Composition of share capital
194,300
333
834
676
36
Total
4,462
4,367
Retirement pension expense (service costs)
220
281
642
30
2,063
2,757
314
342
Total remuneration
In thousands of euros
5,533
5,536
742
3,566
4,373
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
Prof. Dr. Thomas Weber
Group Research &
Mercedes-Benz Cars Development
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
2015
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
2014
38
Dividend equivalent PPSP 2015
43
39
595
27
626
Long-term variable remuneration
Payment of PPSP 2010
3,009
1,231
Payment of PPSP 2011
2,566
1,050
Dividend equivalent PPSP 2011
78
2015
32
61
122
25
50
Dividend equivalent PPSP 2013
57
62
57
62
Dividend equivalent PPSP 2014
41
44
Dividend equivalent PPSP 2012
Base salary
901
928
Dividend equivalent PPSP 2015
Total
Retirement pension expense (service costs)
3,194
3,068
2,725
93
83
73
146
65
129
Dividend equivalent PPSP 2014
68
61
66
47
51
41
45
43
39
5,361
5,222
4,640
4,558
75
919
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2011
758
781
Taxable non-cash benefits and other fringe benefits
332
188
121
127
Total
1,233
1,116
879
908
Dividend equivalent PPSP 2012
Annual variable remuneration (50% of annual bonus, short-term)
1,058
652
890
Deferral (50% of annual bonus, medium-term)
707
781
544
664
Long-term variable remuneration
Payment of PPSP 2010
3,598
Payment of PPSP 2011
775
- An agreement between Daimler and Robert Bosch GmbH
relating to the joint establishment and joint operation of EM-
motive GmbH for the development and production of traction
and transmission-integrated electric motors as well as parts
and components for such motors for automotive applications
and for the sale of those articles to the Robert Bosch Group
and the Daimler Group. If Daimler should become controlled
by a competitor of Robert Bosch GmbH, Robert Bosch GmbH
has the right to terminate the consortium agreement without
prior notice and to acquire all the shares in the joint venture
held by Daimler at a fair market price.
0
379
Annual variable remuneration
(50% of annual bonus, short-term)
1,004
1,004
0
2,360
390
412
0
968
Deferral (50% of annual bonus, medium-term)
1,004
1,004
0
2,360
390
412
0
968
Long-term variable remuneration
(plan period of 4 years)
2,902
3,092
0
6,875
914
914
914
942
max.
In thousands of euros
Base salary
Taxable non-cash benefits
and other fringe benefits
Total
2,008
2,008
2,008
2,008
779
824
1,228
824
163
148
148
148
163
90
90
90
2,171
2,156
2,156
2,156
824
Jan. 1 Dec. 31,
min.
1,381
3,070
10,149
5,172
5,464
Dr. Christine Hohmann-Dennhardt
Integrity & Legal Affairs
Ola Källenius
Mercedes-Benz Cars Marketing & Sales
Jan. 1 Dec. 31,
2014
2015
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
min.
max.
2014
2015
Jan. 1 Dec. 31,
min.
max.
In thousands of euros
Base salary
758
781
781
781
781
781
781
Taxable non-cash benefits
and other fringe benefits
Total
94
10,149
6,368
1,362
3,330 3,567
Total
4,910
5,100
0
11,595
2,008
2,205
0
5,006
Retirement pension expense (service costs)
827
1,044
0
1,044
380
448
448
448
Total remuneration
Total limit¹ for components of remuneration
granted in the reporting year
Excluding
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
7,908
8,300
3,200 14,795
1,044
97
2015
max.
1,050
1,050
1,044
37,925
827
39,238
Dr. Wolfgang Bernhard
2015
448
2,491
2014
380
2,565
Ola Källenius
2015
117
1,690
2014
Wilfried Porth
2015
156
281
8,070
2014
156
220
2014
2015
Dr. Dieter Zetsche
(for pension,
pension capital and
Daimler Pensions Plan)
128
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Commitments upon termination of service
Retirement provision
The pension agreements of some Board of Management members
include a commitment to an annual retirement pension, cal-
culated as a proportion of the former base salary and depending
on the number of years of service. Those pension rights were
granted until 2005 and remain valid; the same procedure was
applied for the relevant hierarchy level for Wilfried Porth for
the period before his membership of the Board of Management.
The pension rights have been frozen at that level, however.
Payments of these retirement pensions start upon request when
the term of service ends at or after the age of 60, or are paid
as disability pensions if the term of service ends before the age
of 60 due to disability. The respective agreements provide
for 3.5% annual increases starting when benefits are received
(with the exception that Wilfried Porth's benefits are adjusted
in accordance with applicable law). The agreements include
a provision by which a spouse of a deceased Board of Man-
agement member is entitled to 60% of that member's pension.
That amount can increase by up to 30 percentage points
depending on the number of dependent children.
Effective as of January 1, 2006, the pension agreements of the
Board of Management members were replaced by a new
arrangement, the “pension capital system". Under this system,
each Board of Management member is credited with a capital
component each year. This capital component comprises an
amount equal to 15% of the sum of the Board of Management
member's fixed base salary and the actual annual bonus, multi-
plied by an age factor equivalent to a rate of return of 6% until
2015 and 5% as of 2016 (Wolfgang Bernhard and Wilfried Porth:
5% for all years). These contributions to pension plans are
granted only until the age of 60. The benefit from the pension
plan is payable to surviving Board of Management members
at the earliest at the age of 60, even if retirement is before 60.
If a member of the Board of Management retires due to dis-
ability, the benefit is paid as a disability pension, even before
the age of 60.
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as
for executives: the "Daimler Pensions Plan." As before, the
new retirement benefit system features the payment of annual
contributions by Daimler, but is oriented toward the capital
market. Daimler makes a commitment to guarantee the total
of contributions paid, which are invested in the capital market
according to a precautionary investment concept. The Super-
visory Board of Daimler AG has approved the application of
this new system for all members of the Board of Management
newly appointed since 2012. The amount of the annual con-
tributions results from a fixed percentage of the base salary
and the total annual bonus for the respective financial year
calculated as of the balance sheet date. This percentage is 15%.
This calculation takes into consideration the targeted level
of retirement provision for each Board of Management member
- also according to the period of membership - and the result-
ing annual and long-term expense for the Company. The contri-
butions to retirement provision are granted until the age of 62.
The benefit from the pension plan is payable to surviving Board
of Management members at the earliest at the age of 62,
irrespective of their age upon retirement. If a member of the
Board of Management retires due to disability, the benefit
is paid as a disability pension, irrespective of his or her age
upon retirement.
Payments under the pension capital system and the
Daimler Pensions Plan can be made in three ways:
- as a single amount;
- in twelve annual installments, whereby interest accrues
on each partial amount from the time payments commence
until the payout is complete (Pension Capital 6% or 5%;
Daimler Pensions Plan in accordance with applicable law);
- as an annuity with annual increases (Pension Capital 3.5%
or in accordance with applicable law; Daimler Pensions Plan
in accordance with applicable law).
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse/
registered partner or dependent children is/are entitled to
the full committed amount in the case of the pension capital
system, and to the credit amount reached plus an imputed
amount until the age of 62 in the case of the Daimler Pensions
Plan. If a Board of Management member passes away after
retiring for reason of age, in the case of payment of twelve
annual installments, the heirs are entitled to the remaining
present value. In the case of a pension with benefits for surviving
dependents, the spouse/registered partner or dependent
children is/are entitled to 60% of the discounted terminal value
(pension capital), or the spouse/registered partner is entitled
to 60% of the actual pension (Daimler Pensions Plan).
Departing Board of Management members with pension
agreements modified as of the beginning of 2006 receive, for
the period between the end of the last contract period and
reaching the age of 60, payments in the amounts of the pension
commitments granted as described in the previous section.
Departing Board of Management members are also provided with
a company car, in some cases for a defined period. These
payments are made until the age of 60, possibly reduced due
to other sources of income, and are subject to annual per-
centage increases described above in the explanation of these
pension agreements.
8,788
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 129
Commitments upon early termination of service
In the case of early termination without an important reason,
Board of Management service contracts include commitments
to payment of the base salary and provision of a company car
until the end of the original service period at a maximum. Such
persons are only entitled to payment of the annual bonus
pro rata for the period until the end of the contract of service
or of the Board of Management membership takes effect.
Entitlement to payment of the performance-related component
of remuneration with a long-term incentive effect that has
already been allocated is defined by the conditions of the respec-
tive plans. To the extent that the payments described above
are subject to the provisions of the so-called severance cap
of the German Corporate Governance Code, their total including
fringe benefits is limited to double the annual remuneration
and may not exceed the total remuneration for the remaining
period of the service contract.
Sideline activities of Board of Management members
The members of the Board of Management should accept
management board or supervisory board positions and/or any
other administrative or honorary functions outside the Group
only to a limited extent. Furthermore, they require the consent
of the Supervisory Board before commencing any sideline
activities. This ensures that neither the time required nor the
remuneration paid for such activities leads to any conflict
with the members' duties to the Group. Insofar as such sideline
activities are memberships of other statutory supervisory
boards or comparable boards of business enterprises, they are
disclosed in the notes to the annual company financial state-
ments of Daimler AG and on our website. In general, Board of
Management members have no right to separate remuneration
for board positions held at other companies of the Group.
Loans to members of the Board of Management
In 2015, no advances or loans were made to members
of the Board of Management of Daimler AG.
Payments made to former members of the Board
of Management of Daimler AG and their survivors
Payments made in 2015 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €15.5 million (2014: €16.8 million). Pension provisions
for former members of the Board of Management and their
survivors amounted to €235.2 million as of December 31, 2015
(2014: €263.0 million).
B.54
Individual entitlements, service costs and present values for members of the Board of Management
In thousands of euros
Annual pension
(as regulated until 2005)
as of age 60
Service cost
(for pension,
pension capital and
Daimler Pensions Plan)
Present value² of
obligations
Service costs for pension obligations according to IFRS amounted
to €3.5 million in 2015 (2014: €2.8 million). The present value
of the total defined benefit obligation according to IFRS amounted
to €80.0 million as of December 31, 2015 (December 31, 2014:
€80.5 million). Taking age and period of service into account, the
individual entitlements, service costs and present values are
shown in the table. 7 B.54
Jan. 1 Dec. 31, Jan. 1 - Dec. 31,
min.
2014
Andreas Renschler¹
2014
1,781
3,485
80,051
2,006
2,780
80,514
1 Mr. Renschler proportionately until January 28, 2014.
2 The amounts of the present values are primarily due to the low level of the relevant discount rate.
Dr. Hohmann-Dennhardt has no entitlement to a company retirement benefit.
130
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Details of Board of Management remuneration in 2015
pursuant to the requirements of the German Corporate
Governance Code
The following tables show for each individual member of
the Board of Management on the one hand the benefits granted
for the financial year and on the other hand the payments
made in or for the reporting year and the retirement pension
expense in or for the reporting year in accordance with the
recommendations of Clause 4.2.5 paragraph 3 of the German
Corporate Governance Code.
The total of "benefits granted" for financial year 2014
is calculated from
-
the base salary in 2014,
the taxable non-cash benefits and other fringe benefits
in 2014,
the half of the annual bonus payable in 2015 for 2014
at the value for target achievement of 100%,
the half of the share-based annual bonus payable in 2016
for 2014 at the value for target achievement of 100%,
B.55
Benefits granted
Dr. Dieter Zetsche
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Jan. 1 Dec. 31,
2014
2015
2014
2015
Total
12,454
225
30
Hubertus Troska
2015
342
3,159
2014
314
3,321
Bodo Uebber
2015
275
2015
834
2014
275
676
14,148
Prof. Dr. Thomas Weber
2015
300
419
12,178
2014
300
333
14,538
97
97
189
2,750
Total
1,972 2,075
0
4,713
62
1,919 2,019
0
4,588
Retirement pension expense (service costs)
220
281
281
281
30
314
342
342
342
Total remuneration
3,043
3,244 1,169
5,882
162
3,422
0
1,237
1,161
2,875
Annual variable remuneration
(50% of annual bonus, short-term)
379
391
0
919
31
379
391
0
919
Deferral (50% of annual bonus, medium-term)
3,635
379
0
919
31
379
391
0
919
Long-term variable remuneration
(plan period of 4 years)
1,214
1,293
0
391
1,274
1,616 6,204
5,066
781
781
Taxable non-cash benefits
and other fringe benefits
Total
332
188
188
188
121
127
127
127
1,233 1,116 1,116
1,116
879
908
908
908
Annual variable remuneration
(50% of annual bonus, short-term)
451
464
0
1,090
781
758
928
928
5,153
233
4,971
5,058
Excluding
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
Prof. Dr. Thomas Weber
Group Research &
Mercedes-Benz Cars Development
Jan. 1 Dec. 31,
Total limit¹ for components of remuneration
granted in the reporting year
2014
Jan. 1 Dec. 31,
min.
Jan. 1 Dec. 31,
Jan. 1 Dec. 31,
max.
2014
2015
min.
max.
In thousands of euros
Base salary
901
928
2015
1,274 1,274
1,189
70
2,750
1,237
0
2,750
Total
1,919
2,019
0
4,588
2,019
0
4,588
Retirement pension expense (service costs)
117
117
117
2,771
2,897
878
5,466
3,106
1,087
5,675
Total remuneration
Total limit for components of remuneration
0
1,237
1,161
(plan period of 4 years)
189
189
852
878
878
878
970
970
970
(50% of annual bonus, short-term)
379
391
granted in the reporting year
0
391
0
919
Deferral (50% of annual bonus, medium-term)
379
391
0
919
391
0
919
Long-term variable remuneration
919
4,971
Excluding
- Taxable non-cash benefits and other fringe benefits
2014
Jan. 1 Dec. 31,
2014
2015
Jan. 1 Dec. 31,
min.
max.
758
781
781
781
62
758
781
max.
781
93
107
107
107
431
493
493
493
851
888
888
888
781
391
Jan. 1 - Jan. 28,
2015
- Retirement pension expense (service costs)
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
5,058
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
5,058
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 131
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2014 (payable in 2018), and
the retirement pension expense in 2014 (service costs in
2014).
The total of "benefits granted” for financial year 2015
is calculated from:
-
the base salary in 2015,
- the taxable non-cash benefits and other fringe benefits
in 2015,
the half of the annual bonus payable in 2016 for 2015
at the value for target achievement of 100%,
Jan. 1 Dec. 31,
min.
the half of the share-based annual bonus payable in 2017
for 2015 at the value for target achievement of 100%,
the value when granted in 2015 (payable in 2019) of the
long-term share-based remuneration (PPSP), and
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits
and other fringe benefits
Total
Wilfried Porth Andreas Renschler²
HR and Labor Relations Director,
Hubertus Troska
Greater China
IT & Mercedes-Benz Vans
Jan. 1 Dec. 31,
2014
– the retirement pension expense in 2015 (service costs
in 2015).
- An agreement between Daimler AG, BMW AG and Audi AG
relating to the acquisition of the companies of the HERE Group
and the associated establishment of There Holding B.V. In
the event of a change of control of one of the parties to the
agreement, the agreement obligates the party in question to
offer its shares in There Holding B.V. to the other parties to
the agreement (shareholders). If none of the other parties
acquire these shares, the agreement gives them the right to
dissolve There Holding B.V.
8
As the target achievement of the Daimler Financial Services
division is closely connected with the development of business
in the automotive divisions, the existing volume risks
and opportunities are also reflected in the Daimler Financial
Services segment. In this context, Daimler Financial Services
contributes towards marketing expenses, especially for adver-
tising campaigns.
The tasks of the employees responsible for risk and opportunity
management include, besides identification and assessment,
the development of measures and the initiation of such measures,
if necessary. The objective of such measures is to avoid, reduce
or transfer risks. The utilization or enhancement of an opportunity,
and its partial or full implementation, also require measures
to be taken. The cost-effectiveness of a measure is assessed
before its implementation. The development of all risks and
opportunities of the individual entities and of the related counter-
measures that have been initiated are continually monitored.
Risk and opportunity controlling at the Daimler Group takes place
at the level of the divisions based on individual risks and
opportunities.
The internal control and risk management system with
regard to the accounting process has the objective of ensuring
the correctness and effectiveness of accounting and financial
reporting. It is designed in line with the internationally recognized
framework for internal control systems of the Committee of
Sponsoring Organizations of the Treadway Commission (COSO
Internal Control - Integrated Framework), is continually devel-
oped further and is an integral part of the accounting and financial
reporting process in all relevant legal entities and corporate
functions. The system includes principles and procedures as well
as preventive and detective controls. Among other things,
it is regularly checked, if
the Group's uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
- transactions within the Group are fully accounted
for and properly eliminated;
- issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
processes are established to guarantee the completeness
of financial reporting;
processes are established for the segregation of duties and
for the "four-eyes principle" (dual accountability) in the
context of preparing financial statements and authorization
and access rules exist for relevant IT accounting systems.
The effectiveness of the internal control system is systematically
assessed with regard to the corporate accounting process.
The first step consists of a risk analysis and the definition of
control. Significant risks are identified relating to the process
of corporate accounting and financial reporting in the main legal
entities and corporate functions. The controls required are
then defined and documented in accordance with Group-wide
guidelines. Random samples are regularly tested to assess
the effectiveness of the controls. Those tests constitute the basis
for self-assessment of the appropriate magnitude and effec-
tiveness of the controls. The results of this self-assessment are
documented and reported in a global IT system. Identified
weaknesses are eliminated with consideration of their potential
effects. At the end of the annual cycle, the selected legal
entities and corporate functions confirm the effectiveness of the
internal control and risk management system with regard to
the corporate accounting process. The Board of Management
and the Audit Committee of the Supervisory Board are
regularly informed about the main control weaknesses and the
effectiveness of the control mechanisms installed. However,
the internal control and risk management system for the account-
ing process cannot ensure with absolute certainty that material
false statements in accounting are avoided.
The organizational embedding and monitoring of risk
and opportunity management takes place through the risk
management organization established at the Group. The
divisions, corporate functions and legal entities are asked
to report about concrete risks and opportunities at regular
intervals. This information is passed on to Corporate Risk
Management, which processes the information and provides
it to the Board of Management and the Supervisory Board
as well as to the Group Risk Management Committee (GRMC).
140
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
In order to ensure the complete presentation and assessment
of material risks and risks threatening the existence of the Group,
as well as the control and risk processes with regard to the
corporate accounting process, Daimler has established the Group
Risk Management Committee. It is composed of represen-
tatives of Finance & Controlling, Accounting, Legal and Group
Compliance, and is chaired by the Board of Management
Member for Finance & Controlling and Daimler Financial Services.
The internal auditing department contributes material
findings on the internal control and risk management system.
In addition to dealing with fundamental issues, the committee
has the following tasks:
The GRMC defines and designs the framework conditions
with regard to the organization, methods, processes and
systems that are needed to ensure a functional, group-wide
and holistic control and risk management system.
The GRMC regularly reviews the effectiveness and functionality
of the installed control and risk management processes.
Minimum requirements can be laid down in terms of the design
of the control processes and of risk management and neces-
sary and appropriate measures can be initiated to eliminate any
system failings or weaknesses identified. The measures
taken by the GRMC ensure that relevant risks and process
weaknesses that might exist are identified and eliminated
as early as possible.
However, responsibility for operational risk management
and for the control and risk management processes with
regard to the corporate accounting process remains directly
with the divisions, corporate functions and legal entities.
The scope of consolidation for risk and opportunity management
corresponds to the scope of consolidation of the consolidated
financial statements and goes beyond that if necessary. The risks
and opportunities of the divisions and operating units, impor-
tant associated companies, joint ventures, joint operations and
the corporate departments are included.
Reports regarding the current risk situation and the effective-
ness, functionality and appropriateness of the internal
control and risk management system are regularly presented
to the Board of Management and to the Audit Committee
of the Supervisory Board of Daimler AG. Furthermore, the respon-
sible managers regularly discuss the risks of business opera-
tions with the Board of Management.
The quantification of each risk and opportunity category in the
Management Report summarizes the individual risks and
opportunities for each category. If the impact of an individual
risk exceeds the amount of €2 billion, this risk is described
separately in the Management Report. If not otherwise presented,
even in the case of simultaneous occurrence of all individual
risks in a risk category, the Group does not expect any effect
in this category of more than €3 billion. In the context of
describing the risk and opportunity categories, significant
changes in comparison to the prior year are explained.
At the Daimler Group, risks below €500 million are categorized
as low, between €500 million and €1 billion as medium and above
€1 billion as high. Risk management is based on the principle
of completeness. This means that at the level of the individual
entities, all concrete risks enter the risk management process.
General uncertainties without any clear indication of a possible
effect on earnings are monitored by the internal control system
(ICS). The assessment of the dimensions probability of occur-
rence and possible impact is based on the levels shown
in table
mented.
< €500 million
< €1 billion
Level
Low
Possible impact
€0 <
Medium
€500 million ≤
High
Impact
Impact
Impact
≥ €1 billion
Risk and opportunity management system
The risk management system with regard to material and
existence-threatening risks is integrated into the value-based
management and planning system of the Daimler Group.
It is an integral part of the overall planning, management and
reporting process in the legal entities, divisions and corporate
functions. The risk management system is intended to system-
atically and continually identify, assess, control, monitor and
report material risks and risks threatening Daimler's existence,
in order to ensure the achievement of corporate targets and
to enhance risk awareness at the Group.
The opportunity management system at the Daimler Group
is derived from the risk management system. The objective
of opportunity management is to recognize the possible oppor-
tunities arising in business activities as a result of positive
developments at an early stage and to utilize them as optimally
as possible for the Group by taking appropriate measures.
Taking advantage of opportunities may lead to an overachieve-
ment of planned goals. Opportunity management considers
those opportunities that are relevant and implementable, but
which have not yet been included in any planning.
In the context of operational planning, risks and opportunities
with consideration of appropriate risk and opportunity
categories are identified and assessed generally for a two-year
planning period. Furthermore, the discussions for the deriva-
tion of mid-term and strategic targets in the context of strategic
planning include the identification and assessment of risks
and opportunities relating to a longer period. The reporting of
risks and opportunities in the Management Report generally
relates to a period of one year. Besides the reporting at specific
times and with reference to the described periods, risk and
opportunity management is established as a continuous task
within the Group. In addition to the regular reporting, there
is also an internal reporting obligation within the Group for risks
with reporting relevance arising unexpectedly. The Group's
central corporate risk management regularly reports the identi-
fied risks and opportunities to the Board of Management
and the Supervisory Board.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 139
Risk assessment takes place on the basis of the probability
of occurrence and the possible impact of the risk according
to the levels low, medium and high. These levels also apply
to the potential impact of opportunities. An analysis of the
probability of occurrence is not conducted here. When assess-
ing the impact of a risk, the effect in relation to EBIT is
basically considered.
B.58 and is conducted before measures are imple-
The Audit Committee of the Supervisory Board is responsible
for monitoring the internal control and risk management
system. The internal auditing department monitors whether
the statutory conditions and the Group's internal guidelines are
adhered to in the Group's monitoring and risk management
system. If required, measures are then initiated in cooperation
with the respective management. External auditors audit
the system for the early identification of risks that is integrated
in the risk management system for its general suitability to
identify risks threatening the existence of the Group; in addition,
they report to the Supervisory Board on any significant
weaknesses that have been recognized in the internal control
and risk management system.
Risks and opportunities
The following section describes the risks and opportunities that
can have a significant influence on the profitability, cash
flows and financial position of the Daimler Group. In general,
the reporting of risks and opportunities takes place for
the individual segments. If no segment is explicitly mentioned,
the risks and opportunities described relate to all the
automotive divisions.
Probability of occurrence Impact
Opportunity category
Impact
Medium
Low
Low
High
General market opportunities
High
Opportunities relating to leasing
Low
and sales financing
Low
High
Procurement market opportunities
Risks relating to the legal
and political framework
Procurement market risks
Risks relating to leasing
and sales financing
General market risks
In addition, risks and opportunities that are not yet known
or classified as not material can influence profitability, cash
flows and financial position.
Industry and business risks and opportunities
The following section describes the industry and business
risks and opportunities of the Daimler Group. A quantification
of these risks and opportunities is shown in table 7 B.59.
Economic risks and opportunities
Economic risks and opportunities constitute the framework
for the risks and opportunities listed in the following categories
and are integrated as premises into the quantification of
these risks and opportunities. Overall economic conditions have
a significant influence on automobile sales markets. Their
development is one of the Group's major risks and opportunities.
Like the majority of economic research institutes, Daimler
expects the world economy to remain within its rather below-
average growth corridor of 2.5 to 3.0% in 2016. Economic
developments in 2015 are described in detail in the "Economic
Conditions and Business Development" section of this
Management Report; growth assumptions for 2016 are explained
in the "Outlook" section pages 79 ff and 152 ff.
Economic risks and opportunities are linked with assumptions
and forecasts on the general development of the individual
subjects. Overall, economic risks for the business environment
have tended to increase compared with the previous year,
and the opportunities for an improvement of the world economy
have slightly decreased.
0% < Probability of occurrence ≤ 33%
33% < Probability of occurrence ≤ 66%
66%< Probability of occurrence < 100%
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 141
If there is no continuation of the required consolidation of state
budgets and of reform efforts in the countries of the European
Monetary Union (EWU), this could cause renewed turmoil in the
financial markets, leading to increasing refinancing costs
through rising capital-market interest rates and thus jeopardizing
the still only moderate economic recovery. The extremely low
rate of inflation harbors an additional risk in that a long-lasting
and broad-based fall in prices would constitute a considerable
threat to the economic recovery of the EMU and make it even
more difficult for the debt-ridden countries of the euro zone to
finance their debts. Furthermore, there is concern that the very
expansive monetary policy of the European Central Bank could
further increase the danger of speculative bubbles in the stock
and bond markets. Major turbulence in the financial markets
would directly impact the economic outlook. Although the agree-
ment reached between Greece and its creditors in the summer
of 2015 reduced the direct risk of Greece's exit from the euro
zone, that risk is by no means completely removed. A return
to that discussion could lead to renewed uncertainty and volatility
in the financial markets. A new factor is the risk of the United
Kingdom's exit from the European Union. This would have signifi-
cantly larger economic effects, whereby a major portion of
the risk would relate to the UK itself. The possible burden on the
British economy would be immense. The European market
continues to be very important for Daimler across all divisions;
for the Mercedes-Benz Cars and Mercedes-Benz Vans divi-
sions, it is in fact still the biggest sales market. An opportunity
that is difficult to assess can be seen in a significantly improved
economic development in the euro zone. If countries such as
Italy and France implement reform measures more quickly and
decisively than has so far been assumed, economic growth
could also accelerate. That would benefit the development of
investment and demand for motor vehicles in the important
European market.
In Japan, the failure of the country's expansive monetary and
fiscal policy and the lack of structural reforms could trigger a
significant growth slowdown or recession, although this should
be regarded as a regionally limited risk. A slowdown of eco-
nomic growth could lead to lower demand for cars and trucks,
which in turn could negatively affect the Mercedes-Benz Cars
and Daimler Trucks divisions, for which Japan is an important
sales market. A regionally limited opportunity exists in the
possibility of a distinct acceleration of economic growth in Japan.
This could be caused by a significant increase in investment
activity, resulting from the targeted structural reforms and the
expansive monetary and fiscal policies that have already
been initiated. The Mercedes-Benz Cars and Daimler Trucks
divisions could then benefit from this positive development.
Due to China's enormous importance as a growth driver for the
world economy in recent years, an economic downturn in
China would represent a considerable risk to the world economy.
The stock-market slumps in the summer of 2015 and at the
beginning of 2016, the volatile development of the real-estate
sector along with falling exports and increasing capital out-
flows are indicators of structural weaknesses. If these structural
problems become more severe than currently assumed and
the growth slowdown turns out to be more pronounced as
a consequence, the world economy would cool off significantly.
Another factor is the significant risk inherent in the enormous
growth in debt that has been observed since the global financial
crisis, especially in the corporate sector. If the growth slow-
down results in an excessive increase in credit defaults, this could
lead to turbulences in the banking sector and the financial
markets. China is now a key sales market for the Mercedes-Benz
Cars and Mercedes-Benz Vans divisions in particular, which
means that any disruptions caused by the aforementioned risks
could result in lower-than-planned growth in unit sales. In addi-
tion, a drop in demand in China would further exacerbate the fall
in the price of oil and other raw materials, with extremely
disadvantageous effects for raw-material exporting countries
worldwide. This would have a massive negative impact on
B.59
Industry and business risks and opportunities
Risk category
The ongoing growth dynamism of the US economy will be
mainly determined by reactions to the first increases in interest
rates by the central bank after such a long phase of extremely
low rates. Excessively fast increases in interest rates by the
US Federal Reserve (Fed) would have a significantly negative
impact on the US economy. Rising interest on loans could reverse
the recovery of the real-estate market and dampen companies'
investments. If the weakening of industrial activity that was to
be observed as of mid-2015 exacerbates, there will be a
perceptible impact on the growth of the US economy in 2016.
If the recovery of the labor market falters or if wages rise
more slowly than currently assumed, there will be negative conse-
quences for private consumption, which is now the main
driver of US economic growth. Political uncertainty in advance
of the presidential election in 2016 could also impact con-
sumer and investor confidence. Although the Fed could coun-
teract significantly weakening growth through its monetary
policy, it would have little scope for action in this field, so the
effectiveness of the potential measures would be limited.
A possible renewed wave of expansive measures would also
further increase the danger of speculative bubbles. Such a
development would have significant consequences because
the Daimler Group (especially the Mercedes-Benz Cars and
Daimler Trucks divisions) generates a considerable volume of its
unit sales in the United States and diminished growth could
also spread to other regions. However, if investment activity
in the United States turns out to be significantly more dynamic
than previously assumed, this could result in substantially
stronger growth. The resulting increased employment and income
effects could boost demand for all the automotive divisions.
Low
Probability of occurrence
Level
Production and technology opportunities
Information technology opportunities
Medium
Low
Information technology risks
High
Low
Production and technology risks
Impact
Opportunity category
Impact
Probability of occurrence
Risk category
Company-specific risks and opportunities
B.60
Production and technology risks and opportunities
Key success factors for achieving the desired level of prices
for the products of the Daimler Group, and hence for the
achievement of corporate goals, are the brand image, design
and quality of the products - and thus their acceptance by
customers - as well as technical features based on innovative
research and development. Convincing solutions, which for
example promote accident-free driving or further improve our
vehicles' fuel consumption and emissions (e.g. diesel-hybrid
or electric vehicles), are of key importance for safe and sustain-
able mobility. Due to growing technical complexity, continually
rising requirements in terms of emissions, fuel consumption
and safety, and the Daimler Group's goal of meeting and
steadily raising its quality standards, product development
and manufacturing in the various automotive divisions are
subject to production and technology risks.
Personnel risks
The following section deals with the company-specific risks
and opportunities of the Daimler Group. A quantification
of these risks and opportunities is shown in table 7 B.60.
Medium
Personnel opportunities
Further risks and opportunities at Mercedes-Benz Cars and
Daimler Trucks relate to the development of the used vehicle
markets and thus to the residual values of the vehicles pro-
duced. As part of the established residual-value management
process, certain assumptions are made at the local and
corporate levels regarding the expected level of prices, on which
basis the cars returned in the leasing business are valued.
If general market developments lead to a negative or positive
deviation from the assumptions, there is a risk of lower residual
values or an opportunity of higher residual values of used cars.
Depending on the region and the current market situation, the
measures taken generally include continuous market monitoring
as well as, if required, price-setting strategies or sales pro-
motions designed to regulate vehicle inventories. The quality
of market forecasts is verified by periodic comparisons of
internal and external sources. If necessary, the set residual values
are adjusted and refined with regard to methods, processes
and systems for determining such values.
Information and technology risks and opportunities
The digitization strategy that is systematically pursued at
Daimler offers new possibilities for enhancing customer benefits
and enterprise value. However, it includes risks from the
increasing dependency of products and business processes
on IT. In addition, specific risks exist due to the use and avail-
ability of new technologies in connection with digitization, which
for example can affect the products, their use or the opera-
tional business. It is still essential for a global company like
Daimler that information is maintained and exchanged in
real time, comprehensively and correctly. Appropriately secure
IT systems and a reliable IT infrastructure must be used in
order to protect information. Risks that could result in the inter-
ruption of business processes due to the failure of IT systems
or which could cause the loss or corruption of data are therefore
identified and evaluated over the entire lifecycles of applica-
tions and IT systems. Daimler has defined suitable measures for
risk avoidance and limitation of damage. These measures are
continually adapted to changing circumstances. For example,
the Group minimizes potential interruptions of operating
routines in the data centers by means of mirrored data sets,
decentralized data storage, outsourced archiving, high-
availability computers and appropriate emergency plans. An IT-
security operations center coordinates potential danger from
cyber crime and hacker attacks. Daimler utilizes various preven-
tive and corrective measures in order to meet the growing
demands placed on the confidentiality, integrity and availability
of data. Necessary precautions are taken also for the protec-
tion of the products and services of the Daimler Group. Despite
all the precautionary measures taken, Daimler cannot com-
pletely rule out the possibility that IT disturbances will arise and
have a negative impact on the Group's business processes.
The impact and probability of occurrence of IT risks remain
unchanged compared to the prior year.
Production and technology risks continue to have a low
probability of occurrence due to preventive measures. However,
because of the continually high number of new product
launches, the potential impact of such risks remains at the
same level.
Warranty and goodwill claims can arise when the quality
of the products of the automotive divisions does not meet
customers' expectations, when a regulation is not fully complied
with, or when support is not provided in the required form in
connection with product problems and product care. The Daimler
Group works continually and intensively to maintain product
quality at a very high level, even given the growing product com-
plexity, in order to avoid the danger of making corrections to
end products and in order to supply customers with the best pos-
sible products. Furthermore, processes are implemented at
the Daimler Group to regularly obtain customers' opinions on the
support provided so that our service and customer satisfaction
can be continuously improved.
Insufficient availability of vehicle components at the right
time and difficulties or interruptions in the supply chain, possibly
caused by regional restrictions, can lead to bottlenecks. In
order to avoid such bottleneck situations, priority is given to
foresighted capacity planning. In addition, supply chains and
the availability and quality of products are continuously monitored
within the context of managing the entire value chain. The
ongoing modernization of the production plants, supplier man-
agement and other monitoring activities help to prevent
risks in this area.
In principle, there is also a danger that due to infrastructure
problems, the failure of production equipment or a production
plant or in the external supply of energy, it might not be
possible to maintain the planned level of production, and that
would consequently generate costs. Such risks mainly exist
for the Mercedes-Benz Cars segment. The production equipment
is regularly maintained and as a precaution, spare parts are
held available for the production plants that might be at risk.
Innovation and technology opportunities for the progressive
and future-oriented design of the product range flow into the
strategic product planning of the automotive divisions.
In the context of a continuous process, checks are regularly
carried out as to whether the level of production can be
increased by means of shift work, the worldwide production
network, investment projects or more flexible production
facilities. In order to safeguard the long-term future orientation
of the Daimler Group's production facilities with regard to
the diversity of the product portfolio and in order to develop
additional production capacities to allow Daimler to grasp
the opportunities that are presented, continuous modernization,
expansion, construction and restructuring are carried out
at the locations of the Daimler Group and its joint ventures and
joint operations. The execution of modernization actions
and the launch of new products are generally connected with
high investments. Guidelines or delays in the ramp-up phase
of a new model or in connection with a product's lifecycle can
lead to a short-term reduction in production volumes. In order
to achieve a very high level of quality, which is one of the key
factors for a customer's decision to buy a product of the
Daimler Group, it is necessary to make investments in new prod-
ucts and technologies that sometimes exceed the originally
planned scope. This cost overrun would then reduce the antici-
pated earnings from the launch of a new model series or
product generation. Those automotive segments are affected
which are currently launching new products or planning to do
so, or carrying out related production expansions and modifi-
cations, in some cases in conformance with specific regional
conditions. In particular, the creation and expansion of production
capacities in the Chinese market is connected with risks due
to the uncertain market development. The establishment of effi-
cient production processes serves to manage quality risks
there. Furthermore, dependencies between contractual partners
and possible changes in the conditions in China must be
included in the local decision-making process.
147
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Low
Opportunities related to equity interests
and joint ventures
and joint ventures
Medium
Medium
Risks related to equity interests
High
Company-specific risks and opportunities
In order to adapt to these requirements, Daimler has already
increased its local value added in major markets, and has thus
taken appropriate action in good time. On the basis of increasing
proximity to the markets of our production locations, however,
further opportunities also exist for the Daimler Group such as
logistical advantages or opportunities relating to the utilization
of market potentials.
Furthermore, the danger exists that individual countries will
attempt to defend and improve their competitiveness in the
world's markets by resorting to interventionist and protection-
ist actions. Particularly in China and the markets of develop-
ing countries and emerging economies, tendencies are increas-
ingly observed to limit growth in imports, for example by
making certification processes more difficult, and to attract
direct foreign investment by means of appropriate industrial
policies. Furthermore, a tendency towards stricter competition
law is also to be observed.
Risks and opportunities related to the legal
In connection with a further decrease in unit sales in major
emerging markets, the Daimler Trucks division in particular
is faced with the risk that Daimler will require a significantly
lower volume of components from suppliers than originally
planned. This would result in underutilization of production
capacities for the suppliers. If fixed costs were no longer
covered, there would be the risk of suppliers demanding com-
pensation payments.
Supplier risk management aims to identify potential financial
difficulties for suppliers at an early stage and to initiate suitable
countermeasures. Even though the crisis of recent years is
over, the situation of some of the suppliers remains difficult
due to tough competitive pressure. This has necessitated
individual or joint support actions by vehicle manufacturers
to safeguard their production and sales. In the context of
supplier risk management, regular reporting dates are set for
suppliers for which we have received early warning signals
and made corresponding internal assessments. On these dates,
the suppliers report key performance indicators to Daimler
and decisions are made concerning any required support actions.
Raw-material prices primarily remained constant with some
falls during 2015 and featured moderate volatility. The weaker
euro against the dollar at the beginning of the year had a major
impact on all raw materials priced in US dollars. Due to almost
completely unchanged macroeconomic conditions, price fluc-
tuations are expected with uncertain and uneven trends in
the near future. On the one hand, raw-material markets can be
strongly impacted by political crises and uncertainties - combined
with possible supply bottlenecks - as well as by volatile
demand for specific raw materials; this increases the risk from
raw-material prices for the individual automotive segments.
On the other hand, the automotive segments' procurement oper-
ations profit from both the significantly lower dynamism of
Chinese industry and from the anticipated continuation of slightly
below-average growth of the world economy. Vehicle manu-
facturers are generally limited in their ability to pass on the higher
costs of commodities and other materials in the form of
higher prices for their products because of strong competitive
pressure in the international automotive markets. A drastic
increase in raw-material prices would at least temporarily result
in a considerable reduction in economic growth.
Procurement market risks and opportunities
Procurement market risks arise for the automotive divisions
in particular from fluctuations in prices of raw materials.
There are also risks of capacity bottlenecks caused by supplier
delivery failures as well as risks of insufficient utilization of
production capacities at suppliers. In general, the possible impact
of risks related to the procurement market continues to be
assessed as "high". The risk situation relating to the probability
of occurrence decreased slightly compared with the previous
year and is now assessed as “low”. As in the previous year, only
minor opportunities are anticipated in the raw-material markets.
In connection with the sale of vehicles, Daimler also offers its
customers a wide range of financing possibilities - primarily
leasing and financing the Group's products. The resulting risks
for the Daimler Financial Services segment are mainly due
to borrowers' worsening creditworthiness, so that receivables
might not be recoverable in whole or in part due to customers'
insolvency (default risk or credit risk). Daimler counteracts
credit risks by means of creditworthiness checks on the basis
of standardized scoring and rating methods and the collateral-
ization of receivables, as well as state-of-the-art risk man-
agement with a firm focus on monitoring both internal and macro-
economic leading indicators. Other risks associated with the
leasing and sales-financing business involve the possibility of
increased refinancing costs due to changes in interest rates
(interest-rate risk). An adjustment of credit conditions for cus-
tomers in the leasing and sales-financing business due to
higher refinancing costs could reduce the new business and
contract volume of Daimler Financial Services, also reducing
the unit sales of the automotive divisions. Risks and opportunities
also arise from a lack of matching maturities with refinancing.
The risk of mismatching maturities is minimized by coordinat-
ing the refinancing with the periods of financing agreements,
from the perspective of interest rates as well as liquidity. Any
remaining risks from changes in interest rates are managed
by the use of derivative financial instruments. Further information
on credit risks and the Group's risk-minimizing actions is pro-
vided in Note 32 of the Notes to the Consolidated Financial
Statements. With regard to the leasing business, the auto-
motive divisions also have a residual-value risk resulting from
the risks associated with the development of used-vehicle
prices. The extent of the risks and opportunities and the proba-
bility of occurrence of the risks relating to the leasing and
sales-financing business continue to be assessed as low.
Risks and opportunities relating to the leasing
and sales-financing business
144 B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
The impact of the risks continues to be assessed as "high".
Due to market volatility, the overall market risk increases to more
than €3 billion. The impact of opportunities has risen, due in
particular to market opportunities in the Mercedes-Benz Cars
segment.
138
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Risk and Opportunity Report
The Daimler Group's divisions are exposed to a large number
of risks that are directly linked with business activities.
A risk is understood as the danger that events, developments
or actions will prevent the Group or one of its divisions from
achieving its targets. It is also important for the Daimler Group
to identify opportunities so that they can be utilized as part of
Daimler's business activities, thus safeguarding and enhancing
the Daimler Group's competitiveness. An opportunity is under-
stood as the possibility to surpass the planned targets as a result
of events, developments or actions. The divisions have direct
responsibility for recognizing and managing business risks and
opportunities at an early stage. As part of the strategy pro-
cess, risks related to the planned long-term development and
opportunities for further profitable growth are identified and
integrated into the decision-making process. In order to identify
risks and opportunities at an early stage and to assess and
manage them consistently, Daimler applies effective management
and control systems, which are integrated into a risk and
opportunity management system. Risks and opportunities are
not offset. The system is described below.
B.58
Assessment of probability of occurrence and possible impact
and political framework
The risks and opportunities from the legal and political frame-
work also have a considerable impact on Daimler's future
business success. Regulations concerning vehicles' emissions,
fuel consumption and safety play a particularly important
role. Complying with these varied and often diverging regulations
all over the world requires strenuous efforts on the part of the
automotive industry. In the future, we expect to spend an even
larger proportion of the research and development budget to
ensure the fulfillment of these regulations. The probability of risks'
occurrence has not changed compared with the previous
year and is assessed as "medium"; the assessment of possible
impact remains unchanged at “high”.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 145
Many countries have already implemented stricter regulations
to reduce vehicles' emissions and fuel consumption, or are
currently doing so.
The position of the Daimler Group in key foreign markets could
also be affected by an increase in bilateral trade agreements.
If bilateral agreements are concluded without the involvement
of the European Union or without the conclusion of equivalent
agreements by the EU, the position of the Daimler Group could
be significantly impacted. At the same time, however, this could
also result in opportunities for the Daimler Group if the EU
concludes agreements with markets which have no similar agree-
ments with other important competitive markets.
Daimler continually monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in the
process of product development. The biggest challenge in the
coming years will be to offer an appropriate range of drive
systems and the right product portfolio in each market, while
fulfilling customers' wishes, internal financial targets and
statutory requirements. With an optimal product portfolio and
market-launch strategy, competitive advantages may also arise.
In addition to emission, fuel consumption and safety regulations,
traffic-policy restrictions for the reduction of traffic jams,
noise and pollution are becoming increasingly important in cities
and urban areas of the European Union and other regions of
the world. Drastic measures are increasingly being taken such
as general vehicle-registration restrictions like those in Beijing,
Guangzhou or Shanghai. This can have a dampening effect on
the development of unit sales, especially in growth markets.
Pressure to reduce personal transport is also being applied in
European cities through increasing measures such as restric-
tions or bans on vehicles in inner cities, as well as congestion
charges and other types of road-use fees. This stimulates
demand for mobility services, including car sharing services. In
order to utilize the resulting opportunities, Daimler is present
in the market with the provision of innovative mobility services
(e.g. car2go, moovel, RideScout and mytaxi).
Daimler currently does not anticipate any additional risks from
worldwide statutory safety regulations due to the Group's
longstanding strong focus on vehicle safety.
ing on methods for measuring the CO2 emissions of heavy-
duty commercial vehicles that will probably have to be applied
as of 2018. We have to assume that the statutory limits will
be very difficult to meet in some countries. Very demanding
regulations for CO2 emissions are also planned or have been
approved for light commercial vehicles. This will present
a long-term challenge for Mercedes-Benz Vans in particular,
because the division primarily serves the heavy segment
of N1 vehicles. The European fleet of N1 vehicles may not emit
an average of more than 175 g CO2/km as of 2017 and not
more than 147 g CO2/km as of 2020; penalty payments may
otherwise be imposed. In the United States, Mercedes-Benz
Vans is affected to varying degrees by fuel-consumption and
greenhouse-gas regulations for both light-duty and heavy-
duty vehicles. The stricter limits planned for the years 2021
to 2027 will also affect Mercedes-Benz Vans.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
146
Low
Medium
High
Strict regulations for the reduction of vehicles' emissions and fuel
consumption create potential risks also for the Daimler Trucks
division. For example, legislation was passed in Japan in 2006 and
in the United States in 2011 for the reduction of greenhouse-
gas emissions and fuel consumption by heavy-duty commercial
vehicles. In the United States, a draft was proposed in July
for fuel-consumption and greenhouse-gas legislation, which will
probably have to be complied with starting in the period of
2021 to 2027. As the legislation will not be passed until mid-2016,
the consequences for Daimler Trucks cannot yet be fully
assessed. In China, legislation has been drafted which is likely
to affect exports to that country and require additional expen-
diture as of 2017. The European Commission is currently work-
In 2015, the diesel technology that is important in particular
for the achievement of the challenging CO₂ targets in the EU
came under pressure due to air-quality problems in cities
(failure to meet NOx limits) and increasingly due to competitors'
irregularities in the fulfilment of emission tests. In this environ-
ment, large parts of the Real Driving Emission (RDE) legislation
has been or is being introduced. This has led to very ambitious
legislation, which will require very complex exhaust-gas aftertreat-
ment as of 2017. It remains to be seen to what extent the nega-
tive headlines and the threat of driving bans on diesel vehicles
have unsettled customers with resulting shifts in the drive-
system portfolio (fewer diesel and more gasoline engines).
If such a shift occurs over the long term, additional measures
will have to be taken to meet the CO2 fleet limits as of 2020.
We draw attention to the fact that several environmental autho-
rities in Europe and in the USA have made requests for test
results. Some requests were answered without any findings
whereas other discussions still continue.
Daimler gives these targets due consideration in its product plan-
ning. The increasingly ambitious targets require significant
proportions of plug-in hybrids or cars with other types of electric
drive. The market success of these drive systems is greatly
influenced by regional market conditions, for example the battery-
charging infrastructure and state support. But as market condi-
tions cannot be predicted with certainty, a residual risk exists.
Similar legislation exists or is being prepared in many other
countries, for example in Japan, South Korea, India, Canada,
Switzerland, Mexico, Saudi Arabia, Brazil and Australia.
Legislation in the United States on greenhouse gases and fuel
consumption stipulates that new car fleets in the United States
may only emit an average of 163 grams of CO2 per mile as of
2025 (approximately 100 grams CO2 per kilometer). These new
regulations will require an average annual reduction in CO2
emissions as of 2017 amounting to 5% for cars and 3.5% at first
for SUVs and pickups (this rather lower rate applies until 2022).
This will impact the German premium manufacturers and
thus also the Mercedes-Benz Cars division harder than the US
manufacturers, for example. As a result of strong demand for
large, powerful engines in the United States as well as Canada,
financial penalties cannot be ruled out.
In Germany, there have been considerations of stimulating
the hitherto sluggish sales of electric vehicles with a government
program. The concepts for incentives for car buyers include a
discussion of financing. This involves the risk that conventional
vehicles would suffer a higher burden in the form of a new
registration fee for the financing of incentives (also depending
on CO2 emissions). This also applies to the taxation of com-
pany cars, which could cause fleet customers to switch over
to smaller and more fuel-efficient cars.
Regulations concerning the CO2 emissions of new cars are
challenging also in the European Union. As of 2020, fleet-average
CO2 emissions of 95 g CO2/km are to be achieved across the
industry. The new regulation will apply to 100% of the fleet in 2021
following a one-year transition period. Daimler will suffer
penalties if it exceeds the limits resulting from the average fleet
vehicle weight (€95 per g CO2/km and vehicle). In addition,
the planned replacement of the NEDC (New European Driving
Cycle) with the WLTP (Worldwide Harmonized Light Vehicles
Test Procedure) is creating uncertainty, as neither the date
for the introduction of the WLTP nor the conditions for converting
from WLTP to NEDC figures to check the NEDC fleet target
(by foreseeably 2020) or the continuation of fleet targets in WLTP
figures (from foreseeably 2021) has been finally set. Based
on current information, the changeover to the WLTP will make
it more difficult to meet CO2 targets as of 2020.
The Mercedes-Benz Cars segment faces risks in China in
particular, as the Chinese authorities have defined fleet fuel
consumption as of 2020 of 5.0 liters per 100 kilometers
(approximately 117 g CO2/km) as the industry's target for new
cars. For the year 2025, China has communicated in the
context of its "Made in China 2025" strategy an industry target
of 4.01/100 km (about 94 g CO2/km). If the manufacturer-
specific fleet targets are exceeded, there is the danger that
vehicles may not be granted type approval or may be barred
from the market. In addition, new emission legislation are
currently being discussed (China 6 and Beijing 6). A significant
tightening of the current legislation is expected.
Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive type approval if their air-conditioning
units are filled with a refrigerant that meets certain criteria with
regard to climate friendliness. For vehicles produced on the
basis of type approvals granted previously, the directive allows
a period of transition until December 31, 2016. Mercedes-Benz
vehicles will fully comply with these legal requirements as of
January 1, 2017 through the application of CO2 air-conditioning
and the refrigerant R1234yf in combination with a specially
developed safety device that will be used depending on each
vehicle's configuration. In December 2015, the EU Commission
decided to file a lawsuit with the European Court of Justice
(ECJ) against the Federal Republic of Germany. The Commission
sees a contravention of the type-approval directive by the
German authorities. At present, the Group does not assume
that this will result in material effects on profitability, cash
flows or financial position.
Opportunities relating to the legal
-
High
The Daimler Group's successful product portfolio is one
of the factors behind the advantageous positioning compared
to the competitors. A possible increase in competition and
price pressure is another area of risk that affects all the auto-
motive segments. Aggressive pricing policies, the introduction
of new products by competitors or price pressure related to the
aftersales business could make it impossible to achieve the
targeted prices. This might result in lower revenue or could mean
that the effect of cost-reduction programs is not fully reflected
in earnings. The extent of such risks is oriented towards a divi-
sion's sales volume. Depending on the volume of regional unit
sales, various measures are taken to support weaker markets.
They include the use of new sales channels, actions designed
to strengthen brand awareness and brand loyalty, and sales and
marketing campaigns. These measures can also be applied
to safeguard business in the area of aftersales. Daimler also
operates various programs to boost sales through the use
of financial incentives for customers. Corresponding measures
taken to support the segments' unit sales would adversely
affect the projected revenue. Continuous monitoring of competi-
tors is carried out in order to recognize such risks at an early
stage. Opportunities can arise in this context if sales-promotion
activities already planned do not have to be applied in full.
Some dealers and vehicle importers are in a difficult financial
situation. As a result, supporting actions may become neces-
sary to ensure the viability of such business partners. The sources
of the risks lay in the respective risk environments. Supporting
actions would negatively impact the profitability, cash flows and
financial position of the automotive segments. For this reason,
the financial situations of strategically relevant dealerships and
vehicle importers are continually monitored. Risks of this kind
exist for dealers and vehicle importers of the Mercedes-Benz
Cars, Daimler Trucks and Mercedes-Benz Vans divisions.
Existing uncertainties with regard to market developments
can also mean that the overall market or regional conditions for
the automotive industry might develop better than assumed
in the internal forecasts and the premises upon which the Group's
target planning is based. Due to strong demand, in particular
for vehicles of various series of the Mercedes-Benz Cars division,
market opportunities are conceivable that could be utilized
by creating additional production capacities or increasing the
divisions' production volumes. The possibility of higher unit
sales of vehicles exists in the Daimler Trucks segment as a result
of improved market developments or changed conditions in
the market. Further market opportunities have been identified
by the Mercedes-Benz Vans and Daimler Buses divisions.
However, the existing market opportunities of the divisions of
the Daimler Group can only be utilized if production and the
corresponding regional conditions can be focused accordingly
and gaps between demand and supply are recognized and
covered in good time. The measures that could be taken by the
Daimler Group to utilize potential opportunities include a
combination of local sales and marketing activities, central stra-
tegic product and capacity planning, and the adjustment
of production and cost structures to the changing conditions.
The assessment of market risks and opportunities is associ-
ated with assumptions and forecasts about the overall develop-
ment of markets in the various regions in which the Daimler
Group is active. The potential effects of the risks on the devel-
opment of the Daimler Group's unit sales are included in
risk scenarios. The danger of worsening market developments
or changed market conditions, especially due to the partially
unstable macroeconomic environment and political or business
uncertainties, generally exists for all divisions of the Daimler
Group and can cause changes relating to the planned unit sales
and inventories. Differences between the divisions exist due
to variations in their regional focus of activities. The development
of the markets is continuously analyzed and monitored by the
divisions; if necessary, specific marketing and sales programs
are implemented. Clear strategies have been formulated for
each division in order to ensure profitable growth and efficiency
progress.
The risks and opportunities for the development of automotive
markets are strongly affected by the situation of the global
economy as described above.
General market risks and opportunities
On the global financial markets, a market environment with
relatively low liquidity could lead to significant market corrections
and phases of extreme volatility, for example when market
expectations with regard to central bank activities in the United
States or Europe are not fulfilled. Such developments could
impact the worldwide investment climate and have a negative
effect on the global economy. In addition, tensions resulting
from exchange-rate volatility and possible manipulations carried
out to preserve global competitiveness could lead to an
increase in protectionist measures and a type of "devaluation
race." This would put a substantial strain on world trade
and threaten future growth.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 143
The conflict between Russia and Ukraine has led to an addi-
tional risk for the development of the world economy since
2014. This risk has increased macroeconomic uncertainty and
has had a negative effect on the business climate and con-
sumer confidence. An escalation of the crisis and the resulting
tightening of sanctions and counter-sanctions would have a
massive negative impact on the economy, especially in Europe,
whereby the exact extent of this effect is very difficult to pre-
dict. It is conceivable that such an escalation would negatively
impact oil prices through a higher risk premium, and it would
also dampen sentiment and demand in markets that are highly
dependent on oil imports. Furthermore, the consequences of
a possible debt default by Russia or of its failure to service due
debts cannot be predicted.
The conflict in Syria, which has heated up as a result of the
offensive of the "Islamic State" (IS), is threatening the stability
of the region, especially in neighboring Iraq. The severance of
diplomatic relations between Iran and Saudi Arabia is increasing
the tension in the region and reducing the chance of a settle-
ment of the current conflicts. Although most Iraqi oil production
facilities are located in regions not controlled by IS, concerns
still remain that Iraqi oil deliveries could be interrupted or that
the armed conflict in Syria could spill over into other areas.
An abrupt increase in oil prices brought about by an attack on
oil refineries could endanger the recovery in fragile European
economies or in the United States and could also negatively affect
emerging markets that depend on oil imports. However, if oil
prices remain at such a low level for a long time, this could
present a significant growth opportunity for the world economy
due to increased purchasing power. An additional factor is that
recent terror attacks by IS have shown that the conflict can no
longer be regarded as a regional risk. Should further attacks
or assassinations in Europe lead to a shock of uncertainty, invest-
ment and consumer confidence could be severely undermined
with a resulting impact on the real economy. In addition, state
spending for such purposes as coping with the refugee crisis
and for security actions could lead to rising fiscal deficits
in Europe. However, the suspension of the sanctions imposed
on Iran represents an opportunity. The resumption of eco-
nomic relations and an enormous need to catch up after the
end of the sanctions offer great growth potential in which
the divisions Mercedes-Benz Cars and above all Daimler Trucks
can participate.
and political framework
Low
142
Medium
demand for the automotive divisions in these regions. On the
other hand, a further opportunity is seen in an even stronger
development of the Chinese economy. This could be triggered
by the expansive monetary and fiscal policies taking rapid
effect, accompanied by a significant increase in consumption.
Strong growth in overall economic consumption would create
additional opportunities for the aforementioned divisions.
Another risk is to be seen in a renewed weakening of growth
in the emerging markets. There have been disappointing
developments in recent years, especially in major economies
such as Russia and Brazil, although other countries such as
Indonesia and Turkey have also developed below their possibili-
ties. A combination of weak growth and high interest-rates
increases the risk of a rising number of defaults in those coun-
tries, especially in view of the substantial expansion of credit
in some cases over the past few years. A further drop in the price
of raw materials along with the interest-rate increase in the
United States could lead to renewed substantial capital outflows,
especially in raw-material exporting emerging countries. This
would worsen financing conditions above all in the emerging
markets, which are very dependent on foreign capital due to
their high current-account deficits and have high rates of foreign
debt. Financial-market turbulences going as far as currency
crises would be possible consequences and could have a massive
impact on the economies of the affected countries. As Daimler
is already very active in these countries or their markets play
a strategic role, this would have significantly negative effects
on the Group's prospective unit sales. An opportunity is to be
seen in the implementation of reforms occurring in important
emerging economies. If structural reforms are quickly and con-
sistently carried out in countries such as India or Indonesia,
flows of global capital into these countries would increase again,
resulting in new scope for growth. Furthermore, reduced
uncertainty in the international financial markets following the
first rise in interest rates in the United States could have
positive effects, especially on the economies of the emerging
markets.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 149
Daimler employs a variety of interest-rate sensitive financial
instruments to manage the cash requirements of its business
operations on a day-to-day basis. Most of these financial
instruments are held in connection with the financial services
business of Daimler Financial Services, whose policy is gener-
ally to perform term-congruent refinancing. However, to a limited
extent, the funding does not match in terms of maturities and
interest rates, which gives rise to the risk of changes in interest
rates. The funding activities of the industrial business and
the financial services business are coordinated at Group level.
Derivative interest rate instruments such as interest rate
swaps are used to achieve the desired interest rate maturities
and asset/liability structures (asset and liability management).
Interest rate risks and opportunities
The Daimler Group's global orientation implies that its business
operations and financial transactions are connected with risks
and opportunities of foreign exchange rates against the euro,
especially for the US dollar, the Chinese renminbi, the British
pound and other currencies such as currencies of growth markets.
An exchange rate risk or opportunity arises in business opera-
tions primarily when revenue is generated in a currency different
from that of the related costs (transaction risk). This applies in
particular to the Mercedes-Benz Cars division, as a major portion
of its revenue is generated in foreign currencies while most
of its production costs are denominated in euros. The Daimler
Trucks division is also exposed to such transaction risks, but
to a lesser degree because of its worldwide production network.
Currency risk exposures are successively hedged with suitable
financial instruments (predominantly currency-forwards and
options) in accordance with exchange rate expectations, which
are constantly reviewed, whereby both risks and opportunities
are limited. Exchange rate risks and opportunities also exist in
connection with the translation into euros of the net assets,
revenues and expenses of the companies of the Group outside
the euro zone (translation risk); these risks are not generally
hedged.
Exchange rate risks and opportunities
In addition, the Group is exposed to credit and country-related
risks. As part of the risk management process, Daimler regularly
assesses these risks by considering changes in key economic
indicators and market information. Pension plan assets to cover
retirement and healthcare benefits (market sensitive invest-
ments including equities and interest-bearing securities) are not
included in the following analysis.
Daimler is generally exposed to risks and opportunities from
changes in market prices such as currency exchange rates,
interest rates, commodity prices and share prices. Market-price
changes can have a negative or positive influence on the
Group's profitability, cash flows and financial position. Daimler
manages and monitors market-price risks and opportunities
primarily in the context of its operational business and financing
activities, and applies derivative financial instruments for
hedging purposes where needed, whereby both market-price
risks and opportunities are limited.
Equity price risks and opportunities
To support this process, the Daimler Group has established an
ideas management system through which employees can
submit ideas and suggestions for improvements. The processing
of the information received by this system and the integration
of ideas in an assessment process carried out by experts and
persons in charge of the respective processes is supported by
the established IT system "idee.com". This is intended to ensure
the systematic and sustained promotion of employees' ideas
and suggestions for improvement.
Financial risks and opportunities
Daimler generally bears a proportionate share of the risks and
opportunities of its associated companies, joint ventures and
joint operations. The possible risks include negative financial
developments and delays in setting up development and pro-
duction structures in equity interests and joint ventures, which
can negatively impact the achievement of growth targets in
the affected segments. The related risks and opportunities are
allocated to the respective risk and opportunity category in
the Management Report. The remeasurement of an associated
company, joint venture or joint operation can result in risks
and opportunities relating to the corresponding carrying value
for the segment to which it is allocated. A disposal or the busi-
ness situation of an associated company, joint venture or joint
operation can also cause financial obligations or expected
revenue might not materialize. Risks from associated companies,
joint ventures and joint operations exist in the Mercedes-Benz
Cars, Daimler Trucks and Mercedes-Benz Vans segments, as well
as in the associated companies, joint ventures and joint opera-
tions directly allocated to the Group. All associated companies,
joint ventures and joint operations are subject to a continuous
monitoring process so that they can be promptly supported if
required and their profitability can be ensured. The recoverable
value of investments is also continually monitored. Due to cur-
rent developments in worldwide equity markets, the probability
of occurrence of these risks has increased compared to the
previous year from "low" to "medium".
Cooperation with partners in associated companies, joint
ventures and joint operations and other types of partnerships
is of key importance for Daimler. Along with ensuring better
access to growth markets and new technologies, equity interests
and joint ventures help us exploit synergies and improve
cost structures and thus enable us to successfully respond
to competitive pressures in the automotive industry.
Risks and opportunities related to associated companies,
joint ventures and joint operations
Competition for highly qualified staff and management is still very
intense in the industry and the regions in which we operate.
The future success of the Daimler Group also depends on the
magnitude to which we succeed over the long term in recruiting,
integrating and retaining specialist employees. The established
human resources instruments take such personnel risks into
consideration, while contributing toward the recruitment and
retention of staff with high potential and expertise and ensuring
transparency with regard to the resources of the Daimler Group.
One focus of human resources management is the targeted
personnel development and further training of the workforce.
Employees benefit for example from the range of courses
offered by the Daimler Corporate Academy and from the trans-
parency created by a uniform worldwide performance and
potential management system. Due to demographic develop-
ments, the Group has to cope with changes relating to an aging
workforce and has to secure a sufficient number of qualified
young persons with the potential to become the next generation
of highly skilled specialists and executives. We address this
issue by taking appropriate measures in the area of generation
management. If this risk materializes, depending on the size
of the personnel shortage, an impact is to be expected on the
Group's activities and thus also on the earnings of the Daimler
Group. Further risks exist in the context of collective bargaining
negotiations concerning wages and general conditions. There
is no segment-specific assessment of the human resources risk
because the described risks are not related to any specific
business segment, but are valid for all segments. The category
of personnel risks is unchanged compared with the previous
year with regard to their impact and probability of occurrence.
Furthermore, workgroups create processes and instruments to
produce new business ideas and to establish inter-departmental
cooperation. In this context, an online community exists in
the area of business innovation to which suggestions for dis-
cussions can be submitted, which all employees can assess
and develop further.
The Group is subject to equity price risks in connection
withits listed associated companies and joint ventures. As of
December 31, 2015, the only shares that Daimler holds are
shares that are classified as long-term investments (especially
Nissan and Renault) or that are included in the consolidated
financial statements using the equity method (primarily BAIC
Motor). The Group does not include these investments in a
market-price risk analysis. The section "Risks and opportunities
related to associated companies, joint ventures and joint
operations" provides more information on equity risks and
opportunities.
Daimler's success is highly dependent on its employees and
their expertise. With their ideas and suggestions, they are
involved in their respective activities and working processes
and thus contribute considerably every day to improvements
and innovations.
The following section deals with the financial risks and
opportunities of the Daimler Group. Risks and opportunities
can have a negative or positive effect, respectively, on the
profitability, cash flows and financial position of the Daimler
Group. The probability of occurrence and possible impact
of these risks and opportunities is presented in table 7 B.61.
Commodity price risks and opportunities
Opportunity category
Credit risks
Low
Low
Commodity price risks
Interest rate opportunities
Low
Low
Interest rate risks
Exchange rate opportunities
High
Low
Exchange rate risks
Impact
Personnel risks and opportunities
Impact
Probability of occurrence
Risk category
Financial risks and opportunities
B.61
The Group is exposed to credit risks which result primarily from
its financial services activities and from the operations of its
vehicle business. Credit risks also arise from the Group's liquid
assets. The following statements pertain to risks arising from
the Group's liquid assets; risks related to leasing and sales financ-
ing are addressed on page 144. Should defaults occur,
this would negatively affect the Group's financial position, cash
As already described in the section "Procurement market
risks and opportunities", the Group's business operations are
exposed to changes in the prices of consignments and raw
materials. The Group addresses these procurement risks by
means of concerted commodity and supplier risk management.
To a minor degree, derivative financial instruments are used
to reduce the Group's market-price risks related to the purchase
of certain metals.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
On the basis of the anticipated market development, the
aforementioned factors and the planning of our divisions, we
assume that Group EBIT from the ongoing business will
increase slightly in 2016.
Without exception, our divisions currently have a very attractive
and particularly competitive product range, which has been
expanded and consistently renewed in recent years. We there-
fore assume that Daimler will profit to an above-average
extent from the slight growth in global demand for automobiles
that we expect for 2016, and will be able to strengthen its posi-
tion in important markets. At Mercedes-Benz Cars, additional
growth this year will be driven above all by the new SUVs and
the new E-Class models. The other automotive divisions are
also extremely well positioned with their products, and
Daimler Financial Services' new business will profit from further
growth in unit sales. We anticipate significant revenue growth
at Mercedes-Benz Cars and Mercedes-Benz Vans and expect
Daimler Trucks and Daimler Buses to post revenue in the
magnitude of the previous year. We assume that the Daimler
Financial Services division will slightly increase its revenue.
With our research and development activities, our goal is to
further strengthen Daimler's competitive position against the
backdrop of upcoming technological challenges. We want to
create competitive advantages above all by means of innovative
solutions for low emissions and safe mobility - for example in
the fields of autonomous driving, hybrid drive, electric mobility
with batteries and fuel cells, and the connectivity of our
vehicles and services. In addition, we intend to utilize the growth
opportunities offered by worldwide automotive markets with
new and attractive products. In order to achieve these goals,
we will once again significantly increase our total expenditure
for research and development in 2016. At Mercedes-Benz Cars,
a large part of that expenditure will flow into the renewal
and expansion of our model range. In addition, we will invest
considerable amounts in new low-emission and fuel-efficient
engines, alternative drive systems, the connectivity of our vehi-
cles and innovative safety technologies. At Daimler Trucks,
the focus will be on activities in the areas of emmission standards
and fuel efficiency, as well as expenditure for tailored products
and technologies for the Brazilian market and for the FUSO
product portfolio. Also at Mercedes-Benz Vans and Daimler
Buses, an important area of research and development is to
meet future emission standards and to increase fuel efficiency.
One focus at Mercedes-Benz Vans will be on the connectivity
of products and processes, and alternative drive systems will
play an important role at Daimler Buses.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
157
The workforce
Due to the growth in unit sales and revenue that we expect for
2016, production volumes will continue rising. At the same
time, the efficiency-enhancing measures we have implemented
at all divisions in recent years will now take full effect. The
medium- and long-term programs for structural improvements
of our business processes should facilitate further efficiency
progress. Against this backdrop, we assume that we will be able
to achieve our ambitious growth targets with only slight work-
force growth. Additional jobs are likely to be created at compa-
nies that we operate together with Chinese partners and
whose employees are not included in the figures for the Daimler
Group.
Overall statement on future development
We have implemented our strategy with great determination in
recent years, thus creating the basis for further growth:
-
We are very well positioned in our markets with innovative
products and services. We are increasingly succeeding in
addressing new target groups and utilizing additional market
potential.
In the technologies that are decisive for the future of individual
mobility, we have achieved a competitive advantage with
pioneering innovations.
Also in the field of drive systems, we meanwhile set the
standards with our cars and commercial vehicles. For example,
we reduced the average CO2 emissions of the cars we sell
in the European Union to 123 g/km in 2015, thus achieving the
target set for 2016 of 125 g/km ahead of time. With new
and highly efficient engines and the particularly economical
plug-in hybrids and new electric vehicles, we will significantly
reduce CO2 emissions in the coming years.
- We have assumed a leading role in the automotive industry
with the digitization of our products and processes.
- With the efficiency programs that have been implemented in
all divisions in recent years, we have improved our cost
structures on a sustained basis. On that basis, we are taking
measures for the long-term and structural optimization
of the business system, which will facilitate further efficiency
gains in the coming years.
We have continuously expanded our worldwide production
network in recent years, thus creating the right conditions
for further growth.
- We have significantly increased our investment in the future
of the Company on the basis of sound finances.
Against this backdrop, we look to the year 2016 with confidence.
Everything indicates that we will continue along our growth
path. We anticipate higher unit sales, revenue and earnings than
in the previous year.
Forward-looking statements:
This document contains forward-looking statements that reflect our current
views about future events. The words "anticipate," "assume," "believe,"
"estimate," "expect," "intend," "may," "can," "could,” “plan,” “project,” “should”
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline
of demand in our most important markets; a worsening of the sovereign-debt
crisis in the euro zone; an increase in political tension in Eastern Europe;
a deterioration of our refinancing possibilities on the credit and financial mar-
kets; events of force majeure including natural disasters, acts of terrorism,
political unrest, armed conflicts, industrial accidents and their effects on our
sales, purchasing, production or financial services activities; changes in
currency exchange rates; a shift in consumer preferences towards smaller,
lower-margin vehicles; a possible lack of acceptance of our products or
services which limits our ability to achieve prices and adequately utilize our
production capacities; price increases for fuel or raw materials; disruption
of production due to shortages of materials, labor strikes or supplier insol-
vencies; a decline in resale prices of used vehicles; the effective implemen-
tation of cost-reduction and efficiency-optimization measures; the business
outlook for companies in which we hold a significant equity interest; the
successful implementation of strategic cooperations and joint ventures;
changes in laws, regulations and government policies, particularly those
relating to vehicle emissions, fuel economy and safety; the resolution of
pending government investigations and the conclusion of pending or
threatened future legal proceedings; and other risks and uncertainties,
some of which we describe under the heading "Risk and Opportunity
Report" in this Annual Report. If any of these risks and uncertainties materi-
alizes or if the assumptions underlying any of our forward-looking state-
ments prove to be incorrect, the actual results may be materially different
from those we express or imply by such statements. We do not intend or
assume any obligation to update these forward-looking statements since
they are based solely on the circumstances at the date of publication.
148
Research and development
We assume that the Daimler Group's revenue will grow slightly
in 2016. Daimler will therefore continue along its growth path.
The most positive aspect is the ongoing growth in unit sales by
the automotive divisions.
ness.
We aim to achieve a sustainable dividend development also
in the coming years. In setting the dividend, our target is
to distribute approximately 40% of the net profit attributable
to Daimler shareholders.
In regional terms, we expect the highest growth rates in Asia
and Western Europe, but our business volumes should expand
also in the other regions. In particular in China, we have
created the right conditions for further growth with new sales
outlets and additional production capacities. But the continuing
growth in unit sales in China will have a disproportionately
low impact on revenue growth, as the share of local production
will increase. Our Chinese associated company Beijing Benz
Automotive China (BBAC) is included in our consolidated finan-
cial statements using the equity method of accounting.
The growth in unit sales and revenue that we anticipate will
have a positive impact on earnings in 2016.
We have laid the foundations for a lasting high level of earnings
with the programs "Fit for Leadership" at Mercedes-Benz Cars,
"Daimler Trucks #1" at Daimler Trucks, "Performance Vans" at
Mercedes-Benz Vans and "GLOBE 2013” at Daimler Buses.
With these programs, we achieved total profit contributions of
approximately €4 billion by the end of 2014, by taking mea-
sures for sustained improvements in cost structures as well as
through additional business activities. The full effect of these
programs was already reflected in 2015. In addition to these
measures for improved cost structures with short-term
effects, we are taking measures in all divisions for the long-term
structural optimization of our business system. In all divisions,
we are standardizing and modularizing our production processes,
for example with the intelligent use of vehicle platforms to
achieve further cost advantages. In parallel, we are pushing
forward with digital connectivity: in all divisions and along
the entire value chain - from development to production to sales
and service. This gives us additional scope to become faster,
more flexible and more efficient - for the benefit of our customers.
These long-term structural measures already had a positive
impact on earnings in 2015, and will facilitate further efficiency
gains in the coming years.
There will be opposing effects, however, from the ongoing high
expenditure for our model offensive, for innovative technologies
for the digitization of our products and processes, and for the
expansion and modernization of our worldwide production
facilities. As a result, our expenditure aimed at securing our
successful future will once again be higher in 2016 than in
the previous year.
page 71
After the development of currency exchange rates had an over-
all very positive impact on revenue and earnings in the year
2015, this effect is likely to be significantly less pronounced in
2016. Last year, the appreciation of the US dollar and some
other currencies such as the Chinese renminbi led to positive
exchange-rate effects. There were also some significant
negative effects, in particular from the depreciation of the
Russian ruble.
Commodity price opportunities
For the individual divisions, we have set ourselves the following
targets for EBIT from the ongoing business in the year 2016:
Mercedes-Benz Cars: slightly above the prior-year level,
Daimler Trucks: at the prior-year level,
-
Mercedes-Benz Vans: slightly above the prior-year level,
Daimler Buses: slightly above the prior-year level, and
Daimler Financial Services: slightly above the prior-year level.
156 B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
Free cash flow and liquidity
The anticipated development of earnings in the automotive
divisions will have a positive impact on the free cash flow of
the industrial business also in 2016. With regard to the free
cash flow in the year 2015, it is necessary to consider that it
was affected by extraordinary contributions to the German
and American pension plan assets of €1.2 billion as well as by
the acquisition of stakes in the digital mapping business,
HERE, and in the US telematics provider, Zonar Systems, in a
total amount of €0.7 billion. As we will continue and intensify our
investment offensive in products and technologies, the free
cash flow of the industrial business adjusted for special items
should be significantly lower in 2016 than the comparable
amount of €5.9 billion in 2015. We assume, however, that it will
be significantly higher than the dividend distribution in the
year 2016.
For the year 2016, we aim to have liquidity available in a volume
appropriate to the general risk situation in the financial mar-
kets and to Daimler's risk profile. When measuring the level of
liquidity, we give due consideration to possible refinancing
risks caused for example by temporary distortions in the finan-
cial markets. We continue to assume, however, that we will
have very good access to the capital markets and bank markets
also in the year 2016. We want to cover our funding needs in
the planning period primarily by means of bonds, commercial
paper, bank loans, customer deposits in the direct banking
business and the securitization of receivables in the financial
services business; the focus will be on bonds and loans
from globally and locally active banks. In view of the very good
liquidity situation of the international capital markets and
our strong creditworthiness, we expect a continuation of very
attractive refinancing conditions in 2016. An additional goal
is to continue securing a high degree of financial flexibility.
Investment
In order to achieve our ambitious growth targets, we will expand
our product range in the coming years and develop additional
production and distribution capacities. We also want to make
sure that we can play a leading role in the far-reaching
technological transformation of the automotive industry. This
applies in particular to the digital connectivity of our products
and processes along the entire value chain. For this purpose,
we will once again significantly increase our already very high
investment in property, plant and equipment in the year 2016.
The Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz
Vans divisions will account for this increase. In addition to capital
expenditure, we are developing our position in the emerging
markets by means of targeted financial investments in our hold-
ings. That includes the expansion of our car production
capacities in China, together with our partner BAIC.
At the Mercedes-Benz Cars division, we will significantly
increase our capital expenditure in 2016. The most important
projects include the new E-Class family, the successor
models to the current compact class and new gasoline and
diesel engines. Substantial investment is planned also for
the expansion of our German production sites as competence
centers, as well as for the expansion of our international pro-
duction network. Daimler Trucks will mainly invest in successor
generations of existing products, the expansion and modern-
ization of the plants, and new global component projects in 2016.
At Mercedes-Benz Vans, the focus will be on further deve-
loping the existing model range, expanding the sales-and-service
organization and establishing production of the Sprinter in
the United States. Key projects at Daimler Buses are advance
expenditures for new models and product enhancements
and the new bus plant in India.
Dividend
At the Annual Shareholders' Meeting on April 6, 2016, the
Board of Management and the Supervisory Board will propose
an increase in the dividend to €3.25 per share (prior year:
€2.45). This represents a total distribution of €3.5 billion (prior
year: €2.6 billion) and is by far the highest dividend paid out
in the Company's history. With this proposal, we are letting our
shareholders participate in the Company's success while
expressing our confidence about the ongoing course of busi-
High
In principle, the Group's operating and financial risk exposures
underlying the financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. cur-
rency exposures), risks and opportunities exist equally, while with
the asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the opportunities.
Low
In Japan, a stabilization of demand is expected following the
significant market correction of the previous year. The outlook
for the large emerging markets remains mixed. Market growth
in India should accelerate again, whereas the ongoing recession
in Russia will most likely result in a further decrease in car
sales.
In the US market for cars and light trucks, only slight growth
is to be expected after the all-time high in the reporting year.
We anticipate slight market growth also for the market of
Western Europe. While little growth is likely in the core
markets of Germany and the United Kingdom, considerable
catch-up potential exists in other markets such as Italy.
Low
According to current estimates, global demand for cars in
the year 2016 is likely to increase again by between 3 and 4%
from its high level of 2015. Growth rates in the traditional
markets of the United States and Western Europe will probably
be significantly lower than the substantial growth of recent
years. But the Chinese market should expand significantly
once again, thus making the largest contribution to worldwide
growth.
Automotive markets
In order to counteract the risks arising for our business as a
result of still very volatile exchange rates, we conduct hedging
transactions as far as this makes sense for the various
currencies. For the year 2016, we have hedged approximately
80% of the exchange-rate risks as of mid-February.
In total, global economic output in 2016 is unlikely to exceed
the rather below-average growth corridor of 2.5 to 3%. With
regard to the currencies important for our business, we con-
tinue to anticipate significant exchange-rate fluctuations in
2016.
very pronounced in those countries. This applies in particular
to Brazil, and to a lesser extent also to Russia. But as many
other emerging markets remain significantly below their long-
term expansion potential, the growth of these economies
will remain limited and will be only slightly stronger than in 2015.
The development of China continues to be of key importance
for the world economy. Despite current uncertainty with regard
to the Chinese stock market and the development of the
currency exchange rate, most analysts assume that a sudden
slump in growth dynamism (“hard landing") can be avoided.
However, the ongoing economic restructuring - away from high
investment and towards more consumption - will entail rather
lower growth rates of about 6.5%. Due to the renewed fall in raw-
material prices at the beginning of 2016, the economic
situation of all emerging markets that rely on exports of raw
materials remains critical. Recessive tendencies are still
153
B | COMBINED MANAGEMENT REPORT | OUTLOOK
The economy of the European Monetary Union (EMU) should
continue its recovery in 2016. The main drivers are likely to be
the latest once again more expansive - monetary policy
measures of the European Central Bank, the comparatively weak
euro, rising real incomes and ongoing support from low raw-
material prices. To what extent the dominant political events such
as the refugee crisis and the ongoing uncertainty surrounding
the Ukraine conflict will affect economic prospects in Europe
cannot yet be assessed at the beginning of 2016. It is currently
assumed that the EMU could achieve economic growth in the
magnitude of 1.5 to 2%. Growth expectations for the German
economy are within a similar corridor. With growth of more than
2%, the British economy should expand again significantly,
despite the debate about its continued membership of the
European Union.
The outlook for the Japanese economy is significantly less
positive. In order to achieve the projected GDP growth of just
over 1%, it is above all necessary for private consumption to
increase following its decrease in 2015.
Current leading indicators suggest that the US economy will
continue the upswing that has now lasted for six years. This
outlook is based on the continuation of solid domestic demand
and above all the robust growth of private consumption, and
should not be altered by the fact that the US Federal Reserve has
emerged from the phase of zero interest rates. The majority
of analysts therefore expect growth in gross domestic product
(GDP) of 2 to 2.5%.
At the beginning of 2016, the world economy is continuing
along a path of moderate growth. The solid growth of the
advanced economies continues to be one of the key drivers of
the global economy. But for the first time in five years, the
emerging markets might also be able to support the upward
trend with their aggregate growth rate.
The world economy
Our assessments for the year 2016 are based on the assumption
of generally stable economic conditions and the expectation
that the upward trend of the global economy and of worldwide
demand for motor vehicles will continue. The development
we have outlined is subject to various opportunities and risks,
which are explained in detail in the Risk and Opportunity
Report.
pages 138 ff
The statements made in the Outlook chapter are generally
based on the operational planning of Daimler AG as approved
by the Board of Management and the Supervisory Board in
December 2015. This planning is based on the premises we set
regarding the economic situation and the development of the
automotive markets. It involves assessments made by Daimler,
which are based on relevant analyses by various renowned
economic research institutes, international organizations and
industry associations, as well as on the internal market
analyses of our sales companies. The prospects for our future
business development as presented here reflect the targets
of our divisions as well as the opportunities and risks presented
by the anticipated market conditions and the competitive
situation. We are constantly adjusting our expectations, however,
taking into account the latest forecasts on the development
of the world economy and automotive markets, as well as our
recent business development. The statements made below
are based on the information available to us in February 2016.
Outlook
Demand for medium- and heavy-duty trucks in the markets
relevant for Daimler should be slightly below the prior-year
volume in 2016.
B | COMBINED MANAGEMENT REPORT | OUTLOOK
In the North American truck market, the gradual weakening
of the industrial sector is likely to have an impact. From today's
perspective, demand for Classes 6-8 trucks is likely to decrease
by approximately 10%. But the European market so far seems
to be fairly unaffected by the uncertain development of the
world economy and should continue its recovery with slight
growth this year.
Demand in Japan for light-, medium- and heavy-duty trucks is
likely to be relatively solid. In a rather sluggish economic
environment, the market volume should be at about the prior-
year level. The Indonesian truck market is expected to
stabilize at the low level of 2015. In India, further significant
growth in the segment of medium- and heavy-duty trucks
is anticipated.
Revenue and earnings
On the basis of our assumptions concerning the development
of automotive markets and the divisions' planning, we expect
the Daimler Group to achieve further significant growth in
total unit sales in 2016. However, the rate of growth is likely
to be rather lower than in 2015, which featured exceptional
dynamism.
Daimler Financial Services aims to achieve further growth in
the coming years. For the year 2016, we anticipate slight
growth in new business and further growth in contract volume.
This will be driven by the growth offensives of the automotive
divisions. In addition, we are utilizing new market potential
especially in Asia, and applying new and digital possibilities
for customer contacts – in particular by systematically further
developing our online sales channels. We see good growth
opportunities also in the field of innovative mobility services,
where we are active with the brands car2go, moovel, Ridescout
and mytaxi, as well as with investments in the companies
Blacklane and Mein Fernbus FlixBus.
B | COMBINED MANAGEMENT REPORT | OUTLOOK 155
Daimler Buses assumes that it will be able to defend its
market leadership in its core markets for buses above 8 tons
with innovative and high-quality new products. For the year
2016, we anticipate total unit sales at the prior-year level. This
is based on the assumption of moderate growth in unit sales
in Europe. Following the significant decrease in Brazil in 2015,
we expect another fall in unit sales in 2016. An ongoing
positive development of unit sales is expected in Mexico.
Mercedes-Benz Vans plans to achieve significant growth in
unit sales in 2016. We anticipate significant increases in
sales of vans in Europe, our core market. In the context of our
strategy for the division, "Mercedes-Benz Vans goes global,"
we launched the Vito also in North America and Latin America
in 2015. This will stimulate additional demand in those markets
also in 2016. And we aim to achieve additional growth with the
Sprinter, which we will produce also in North America in the
future. Furthermore, we will launch the V-Class multipurpose
vehicle and the Vito commercial van in China, thus expanding
our presence in the market segments we address there.
In Japan and Indonesia, unit sales are likely to be of the same
magnitude as in 2015. In India, we should increase our unit
sales with our very well-positioned product portfolio. And we
will generate additional unit sales in Asia and Africa with
the expanded range of FUSO vehicles produced in India.
In the NAFTA region, we expect unit sales below the high level
of the previous year in a contracting market. With our modern
product range in combination with the strong components
of our Detroit brand, we can ideally satisfy our customers'
requirements and safeguard our market leadership. We
assume, that we will increase the proportion of our own engines
and transmissions installed in the trucks sold.
In Brazil, we anticipate a further drop in vehicle deliveries
following last year's market slump. The lack of economic growth
and unfavorable financing conditions are likely to impact
our business also in 2016. For the sustained strengthening
of Daimler Trucks' competitiveness in Brazil, we will invest
approximately €500 million by 2018 in tailored products, inno-
vative technologies and the optimization of our production
network.
Daimler Trucks anticipates unit sales in 2016 at the level of
the previous year. We expect to sell slightly more vehicles
in Western Europe than in 2015. In Turkey, however, a significant
decrease in unit sales is likely, mainly due to purchases
brought forward to 2015 because of the Euro VI emissions
standard that came into effect also in Turkey at the beginning
of 2016.
From a regional perspective, we expect the Asian markets to be
particularly strong growth drivers of our growth in unit sales
in 2016. In the year 2015, China was for the first time the biggest
sales market for Mercedes-Benz. Following strong growth of
41% in 2015, we intend to expand further in 2016, above all with
the models that we produce locally. But our growth rate in
China will be more moderate this year. Last year, we expanded
the dealer network to approximately 500 dealerships. Our
local production capacities were also expanded. In addition to
the C- and E-Class, production of two SUV models (the GLA
and the GLC) started in 2015. We will achieve further growth with
our new models also in North America, and we intend to profit
to an above-average degree from the ongoing revival of demand
expected for Western Europe.
We expect significant growth in unit sales also from the smart
brand in 2016. This will be assisted by the new smart fortwo
convertible, which had its world premiere at last year's Frank-
furt Motor Show. Delivery of the first cars of this model will
start in March 2016. And in the summer, the new BRABUS
models of the fortwo and forfour with a sporty profile and
more powerful engines will be in the showrooms.
Our new models will supply major growth impetus also in the
year 2016. In 2015, the "year of the SUVS," the Mercedes-Benz
brand renewed almost its full range of SUVs with four new or
upgraded models. In March 2016, the new generation of the
luxurious GLS SUV will be in the showrooms as the successor
to the GL. We anticipate additional growth impetus from the
new E-Class in 2016. Mercedes-Benz is taking a further step
along the way to accident-free and autonomous driving with
the world's most intelligent business sedan. And our new
dream cars such as the C-Class coupe and the S-Class con-
vertible, as well as the new SL and SLC generations, will also
contribute towards the ongoing success of the Mercedes-Benz
brand. Furthermore, we will launch some more plug-in hybrid
models in 2016, which combine outstanding driving performance
with the fuel consumption of a small car. Vehicles with plug-in
hybrid technology are an important component of our strategy
for emission-free driving. For this reason, we will successively
increase the number of models with plug-in hybrid drive systems
in the coming months. In 2017, a total of ten Mercedes-Benz
plug-in hybrid models will be on the market.
Mercedes-Benz Cars will continue its "Mercedes-Benz 2020"
growth strategy in 2016. Overall, we intend to significantly
increase our unit sales and thus reach a new record level. This
is based on our very attractive and young model portfolio,
which we will expand with some additional new products. The
diversity of models is greater than ever before and the
attractiveness of the Mercedes-Benz brand has been signifi-
cantly enhanced. This allows us to continually establish new
concepts for individual customer communication, and thus to
address new markets and younger target groups. In line with
its "Best Customer Experience" sales and marketing strategy,
Mercedes-Benz is focusing even more on the wishes and
requirements of women. The new, holistic initiative is centered
on the "She's Mercedes" inspiration platform.
Unit sales
B | COMBINED MANAGEMENT REPORT | OUTLOOK
154
We expect a slightly larger market volume for buses in West-
ern Europe in 2016 than in 2015. Following the significant drop
in demand for buses in Brazil, we anticipate further market
contraction in 2016.
We expect a slight increase in demand for mid-size and large
vans in Western Europe in 2016 and stable demand for
small vans. For the United States, we also anticipate moderate
growth in the market for large vans. In Latin America,
however, we expect further substantial contraction in the
market for large vans, while in China, we expect more lively
demand in the market we address there.
The Brazilian market shows no signs of improvement. Due to
the ongoing economic recession and the continuation of
relatively unfavorable financing conditions, we have to antici-
pate further market contraction in the magnitude of 10%. The
situation in the Russian market will remain difficult, so demand
there can only be expected at about the prior-year level.
Demand in China is likely to be impacted by the growth slow-
down in the manufacturing sector. From today's perspective,
only a moderate market recovery can be anticipated.
152
However, much of the expected growth in China will be the
result of government stimulus. Against the backdrop of the
pronounced weak phase that the Chinese market went through
last summer, the government halved the sales tax on cars
with engines of up to 1.6 liters displacement in October. After
this measure already resulted in a visible improvement in
the later months of 2015, a positive effect is to be expected
also in 2016.
Low
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 151
Issuing guarantees results in liability risks for the Group.
For example, Daimler holds an equity interest in the system
for recording and charging tolls for the use of highways in
Germany by commercial vehicles. The operation of the electronic
toll-collection system is the responsibility of the operator
company, Toll Collect GmbH, in which Daimler holds a 45% stake
and which is included in the consolidated financial statements
using the equity method of accounting. In addition to Daimler's
membership of the Toll Collect consortium and its equity
interest in Toll Collect GmbH, risks also arise from guarantees
that Daimler Financial Services AG has assumed with the
other partners in the Toll Collect consortium (Deutsche
Telekom AG and Cofiroute S.A.) supporting obligations of Toll
Collect GmbH toward the Federal Republic of Germany in
connection with the toll system and a call option of the Federal
Republic of Germany. Claims could be made under those
guarantees if toll revenue is lost for technical reasons, if certain
contractually defined performance parameters are not ful-
filled, if additional claims are made by the Federal Republic of
Germany, if the final operating permit is not granted, if Toll
Collect GmbH fails to meet contractual obligations, if it fails
to have the required equipment available, or if the Federal
Republic of Germany takes over Toll Collect GmbH. The maximum
loss risk for the Group from these risks can be substantial.
Additional information is provided in Note 29 (Legal proceed-
ings) and Note 30 (Financial guarantees, contingent
liabilities and other financial commitments) of the Notes to
the Consolidated Financial Statements.
Risks from guarantees
The Group continues to be exposed to risks from guarantees
and legal risks. Provisions are recognized for those risks if and
insofar as that they are likely to be utilized and the amounts
of the obligations can be reasonably estimated. In 2015, the risk
and opportunity management system was expanded to include
tax risks. No quantitative assessment of tax risks is carried out.
Risks from guarantees, legal and tax risks
Risks and opportunities relating to pension plans
Daimler has pension benefit obligations, and to a lesser degree,
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pension obligations less
plan assets constitutes the balance total or funded status
for these employee benefit plans. The valuation of the pension
obligations and the calculation of net pension expense are
based on certain assumptions. Even small changes in these
assumptions such as a change in the discount rate could
have a negative or positive effect on the funded status in the
current financial year or could lead to changes in the periodic
net pension expense in the following financial year. The market
value of plan assets is determined to a large degree by devel-
opments in the capital markets. Unfavorable or favorable devel-
opments, especially relating to equity prices and fixed-interest
securities, could reduce or increase the value of plan assets. The
recently increased volatility of financial markets raises the
risks and opportunities relating to the valuation of both pension
obligations and plan assets. The legal situation in connection
with pension plans can in some countries lead to payment obli-
gations if underfunding of the plans in those countries has
to be offset. Further information on the pension plans and their
risks is provided in Note 22 of the Notes to the Consoli-
dated Financial Statements.
Further information on financial risks, risk-limiting measures
and the management of these risks is provided in Note 32
of the Notes to the Consolidated Financial Statements.
Information on the Group's financial instruments is provided
in Note 31 of the Notes to the Consolidated Financial
Statements.
Daimler is exposed to country risks that primarily result from
cross-border financing for Group companies or customers
as well as from investments in subsidiaries and joint ventures.
Country risks also arise from cross-border cash deposits at
financial institutions. The Group addresses these risks by setting
country limits (e.g. for cross-border financing of customers
and for hard-currency portfolios from financial services compa-
nies) and through investment-protection insurance against
political risks in high-risk countries. Daimler also has an internal
rating system that divides all countries in which it operates
into risk categories.
Country risks
flows and profitability. In recent years, the limit methodology
for exposures with financial institutions has been continually
further developed in order to counteract the diminished
creditworthiness of the banking sector since the financial crisis.
In connection with investment decisions, priority is placed
on the borrower's very high creditworthiness and on balanced
risk diversification. Most liquid assets are held in investments
with an external rating of A or better.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
150
Low
Opportunities from changes in credit ratings
Legal risks
Low
Risks from changes in credit ratings
High
Opportunities relating to pension plans
High
Low
Risks relating to pension plans
Country opportunities
Low
Low
Country risks
Credit opportunities
Daimler is confident that due to the risk and opportunity
management system established at the Group, risks and oppor-
tunities will continue to be recognized at an early stage in the
future, the current risk situation will be successfully managed,
and opportunities will be effectively utilized.
Low
Credit risks
Low
Various legal proceedings, claims and government investigations
(legal proceedings) are pending against Daimler AG and its
subsidiaries on a wide range of topics, including vehicle safety,
emissions, fuel economy, financial services, dealer, supplier
and other contractual relationships, intellectual property rights,
warranty claims, environmental matters, legal proceedings
relating to competition law and shareholder litigation. Product-
related litigation involves claims alleging faults in vehicles,
some of which have been made as class actions. If the outcome
of such legal proceedings is detrimental to Daimler, the Group
may be required to pay substantial compensatory and punitive
damages or to undertake service actions, recall campaigns
or other costly actions.
Risks and opportunities from changes in credit ratings
Daimler's creditworthiness is assessed by the rating agencies
Standard & Poor's Rating Services, Moody's Investors Service,
Fitch Ratings and DBRS. There are risks and opportunities
in connection with potential downgrades or upgrades to credit
ratings by these rating agencies. Downgrades could have a
negative impact on the Group's financing if such a downgrade
leads to an increase in the costs for external financing or
otherwise restrict the Group's ability to obtain financing. A credit
rating downgrade could also damage the company's reputation
or discourage investment in Daimler AG. A risk to the credit rating
of the Daimler Group could also arise if the earnings and cash
flows anticipated from the Group's growth could not be realized.
Credit rating upgrades could lead to lower borrowing costs
for the Group and also facilitate its access to financing sources
on the money and capital markets. If the positive development
of the Group should continue and its cash flow and profitability
should also develop positively, opportunities could arise for
an upgrade of the credit rating on the part of the rating agencies.
Although the final result of any such litigation may influence
the Group's earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely
to have a sustainable effect on the Group's cash flows, financial
position or profitability. Further information on legal proceed-
ings is provided in Note 29 of the Notes to the Consolidated
Financial Statements.
In order to obtain an overall picture, Corporate Risk Manage-
ment collates the information described on risks from the
individual organizational units. The overall situation with regard
to the Group's risks and opportunities is the aggregate of the
individual risks and opportunities presented. The situation of the
Daimler Group has not changed significantly compared with
the previous year. No risks are currently recognizable that either
alone or in combination with other risks could endanger the
continued existence of the Group. But since considerable eco-
nomic and industry risks still exist, setbacks on the way to
regularly achieving growth and profitability targets cannot be
completely ruled out. The aforementioned opportunities
represent potential as well as challenges for the Daimler Group.
By effectively and flexibly focusing the production program
and sales activities on changing conditions, the divisions
of the Daimler Group strive to secure or surpass their respective
targets and plans. As far as it lays within the control of the
Daimler Group and if measures prove to be financially viable,
the Group takes appropriate action to realize the potential
of its opportunities. Most of the opportunities mentioned last
year were effectively realized. The associated measures
that have been implemented have a sustainable positive effect
on the Group's earnings.
In addition to the risks described above, there are risks that
affect the reputation of the Daimler Group as a whole. Public
interest is focused on Daimler's position with regard to issues
such as ethics and sustainability. Furthermore, customers
and capital markets are interested in how the Group reacts to the
technological challenges of the future and how it succeeds in
offering up-to-date and technologically leading products in the
markets. As one of the fundamental principles of business
activity, Daimler places particular priority on adherence to appli-
cable law and ethical standards. In addition, a secure approach
to sensitive data is a precondition for doing business with custom-
ers and suppliers in a trusting and cooperative environment.
The Group's overall risk situation is the sum of the individual
risks of all risk categories for the divisions, the corporate
functions and the legal entities. In addition to the risk categories
described above, unpredictable events that can disturb pro-
duction and business processes are possible, such as natural
disasters, political instability or terrorist attacks. Therefore,
emergency plans are prepared to allow the resumption of busi-
ness operations, precautionary measures are taken and insur-
ance policies are arranged, if possible. Risks relating to compli-
ance are addressed in the risk management process and are
continually monitored. Regular training courses are carried out
to prevent compliance violations.
Some of these proceedings may have an impact on the Group's
reputation. As these proceedings are connected with a large
degree of uncertainty, it is possible that after the final resolution
of litigation, some of the provisions we have recognized for
legal proceedings could prove to be insufficient. As a result, sub-
stantial additional expenditures may arise. This also applies to
legal proceedings for which the Group has seen no requirement
to recognize a provision.
Any changes or interventions by the fiscal authorities are
continuously monitored by the Tax department and measures
are taken if required.
Daimler AG and its subsidiaries operate in many countries world-
wide and are therefore subject to numerous differing statutory
provisions and tax audits. Within the Group, the tax assessments
of several years are not yet final. Changes in local tax legisla-
tion and court verdicts, and differing interpretations by the fiscal
authorities in the various jurisdictions - especially in the field
of cross-border transactions - can lead to negative effects on
the Group's net profit and cash flows.
Tax risks
Overall assessment of the risk and
opportunity situation
Mercedes-Benz Cars
(excluding GLA)
470
C-Class
+10
387
425
thereof: A-/B-Class
1,880
1,630
2,001
+31
Mercedes-Benz
Mercedes-Benz sold a total of 678,200 vehicles in Western
Europe in 2015, an increase of 11% from the previous year.
Growth was particularly strong in Spain (+24%), the United
Kingdom (+17%) and Italy (+16%). Sales in Germany increased by
4% to 259,200 units. Sales development was also positive
in the NAFTA region, where we set new records in the United
States (+5%), Canada (+23%) and Mexico (+10%). Despite difficult
market conditions, sales rose by 41% in China, where we
significantly outperformed the market as a whole. We recorded
substantial increases in unit sales also in Japan (+13%),
South Korea (+30%), India (+31%), Brazil (+67%) and Turkey (+35%).
Mercedes-Benz once again posts record unit sales
Unit sales of the Mercedes-Benz brand rose to the new record
level of 1,880,100 vehicles in 2015. 7 C.02 Despite difficult
conditions in several markets, the pace of growth increased
significantly once again compared with the previous year,
as sales grew by 15% (2014: 11%). We are the number one manu-
facturer in the premium segment in Germany as well as in
Canada and Japan. We also significantly improved our position
in China in the year under review.
The Mercedes-Benz Cars division, comprising the Mercedes-
Benz brand with the Mercedes-AMG, Mercedes-Maybach and
Mercedes me sub-brands as well as the smart brand, once
again accelerated its pace of profitable growth in the year under
review. We increased our unit sales for the sixth year in
succession and our sales of 2,001,400 vehicles (+16%) put us
above the two-million mark for the first time in our history.
7 C.01 We were able to gain market share in nearly all regions.
Revenue increased by 14% to €83.8 billion. We also signifi-
cantly improved our profitability compared with the previous
year, with EBIT rising by 35% to €7.9 billion. In addition, we
reached our target for return on sales in the ongoing business.
Our very positive overall business development throughout
the year was largely due to our new products, in particular the
new C-Class and our attractive SUVs.
Records for unit sales, revenue and earnings
+15
92
29
smart
15/14
% change
342
+38
E-Class
306
329
-7
S-Class
121
106
-8
SUVS (including GLA)
543
426
+27
Sports cars
31
-4
115
+35
+14
Mercedes-Benz Cars continued to grow profitably in 2015 in a very dynamic manner. Unit sales,
revenue and earnings increased once again, and we also reached our target for return on sales
in the ongoing business. Numerous new models enabled us to significantly increase our market
share in nearly all regions. China is now our biggest market, and unit sales in China rose by 37% in
the year under review. The very good business year we enjoyed in 2015 was rounded out by numerous
awards for our vehicles and an extremely successful motorsport season. We further expanded
our global production network in the year under review, thereby creating the conditions necessary
for future growth.
2014
+0
3,621
3,629
and equipment
Investment in property, plant
8.0
9.5
5,853
73,584
Research and
83,809
Return on sales (in %)
Revenue
EBIT
€ amounts in millions
2014
2015
Mercedes-Benz Cars
C.01
7,926
development expenditure
4,711
4,025
2015
in thousands
Unit sales Mercedes-Benz Cars
C.02
+1
136,941
Employees (December 31)
+17
+16
1,722,561
2,001,438
Unit sales
1,754,115
2,059,823
Production
+17
+56
1,035
1,612
1,723
thereof capitalized
15/14
% change
+16
135,553
773
€ amounts in millions
2014
2015
Daimler Trucks
C.03
Daimler Trucks is shaping the future of transportation. In 2015 Daimler Trucks once again impres-
sively demonstrated its leading role as a truck manufacturer with its strategy based on the three
pillars of technology leadership, global presence and intelligent platforms. In May 2015, the state of
Nevada approved our Freightliner Inspiration Truck for road use, making it the first autonomously
driving truck to receive this kind of certification anywhere in the world. Just five months later, we
tested the first autonomously driving series-production truck on public roads in Germany. With our
successful products and supported by positive market developments in the NAFTA region and Europe,
we further increased our unit sales to more than 500,000 vehicles, setting a major milestone in
our sales development.
Daimler Trucks
C | THE DIVISIONS | DAIMLER TRUCKS
166
page 112
1 smart fortwo cabrio electric drive: electricity consumption
in kWh/100 km 15.1; CO2 emissions in g/km 0.0.
Our new engines and extremely fuel-efficient model variants
enabled us to substantially reduce the average CO2 emissions
of the cars we sold in the European Union in 2015 - from 129
grams per kilometer to 123 g/km. This means we have achieved
our 2016 target of 125 g/km ahead of schedule. That achieve-
ment was made possible in large part by our new compact-class
models, the new and significantly more economical C-Class
models and our efficient hybrid drive systems.
Further reduction of CO2 emissions
Most successful motorsport year in the Company's history
MERCEDES AMG PETRONAS captured both the Drivers' and
the Constructors' Championship in the Formula 1 racing series
for the second consecutive year. The key to the team's success
was once again the hybrid drive of the F1 W06 Hybrid champion-
ship car - the most efficient and successful drive system in
the competition. World champion Lewis Hamilton and second-
place finisher Nico Rosberg dominated nearly every Formula 1
race in 2015. Mercedes-Benz was also very successful in the
popular German DTM touring car series, in which our driver
Pascal Wehrlein became the youngest champion of all time at
the tender age of 20. Taking our victories in the Formula 3
European Championship and the ADAC GT Masters into account
as well, we succeeded in winning the drivers' championship
in every racing series we took part in last year, something that
has never been done before throughout the long history of
motorsports at Mercedes-Benz. Our efforts here paid off for
Daimler in the form of significant image enhancement and
the extensive publicity provided by the races. We can also gain
valuable experience with the hybrid technologies and light-
weight designs that we use in our motorsports activities, and
this experience flows into our series development and
production operations.
Within the framework of the "Best Customer Experience"
marketing and sales strategy, Mercedes-Benz is aligning its
sales and marketing organization with changing customer
requirements. The goal is to address new target groups while
maintaining the brand loyalty of established customers.
To this end, Mercedes-Benz is utilizing new sales channels
and digital portals as innovative interfaces with the brand.
The multichannel approach links different sales formats with
digital elements, thereby supplementing the services offered
at traditional Mercedes-Benz showrooms. The centerpiece
of Best Customer Experience is Mercedes me ④ mercedes.me.
This platform is also the name of a new chain of stores
Mercedes-Benz has opened in inner-city locations. A total of
five Mercedes me Stores have opened around the world
since 2014. New temporary formats such as special events
and pop-up stores have also been created, and more than
1,800 sales employees have received training in the new retail
formats. The year 2015 also marked the launch of the "She's
Mercedes" initiative, which is designed to help Mercedes-Benz
address women in a targeted manner and significantly increase
its proportion of female customers over the medium term. Along
with the provision of a new community and inspiration plat-
form, the initiative also includes networking dinners, training
programs for sales personnel and measures to increase
the proportion of women in the sales workforce. pages 18f
Best Customer Experience
S-Class and the C-Class as the best cars of the year in their
respective categories. Mercedes-Benz was very successful
in the World Car Awards as well. The C-Class took home the
coveted title "2015 World Car of the Year" and the S-Class
coupe and Mercedes-AMG GT won in their respective categories.
Our vehicles also proved their worth once again when it comes
to value stability: The S-Class, C-Class, CLA, GLA and smart
fortwo cabrio electric drive¹ were named the best vehicles in
their respective classes in terms of value stability by Focus
Online and the Bähr & Fess Forecast market research institute.
EBIT
2,576
Revenue
37,578
506,663
Production
+9
-24
34
1,188
1,293
26
thereof capitalized
development expenditure
The Mercedes-Benz CLA Shooting Brake appeals with superb driving dynamics, a unique space concept and great everyday practicality.
Research and
+41
788
1,110
Investment in property, plant,
5.8
6.9
Return on sales (in %)
1,878
32,389
and equipment
Unit sales
C | THE DIVISIONS | MERCEDES-BENZ CARS 165
IS HA 4564
-
Mercedes-Benz Vans
Wide range of innovative mobility services
car2go expands further and has 1.2 million customers
EBIT significantly above prior-year level at €1.6 billion
(2014: €1.4 billion)
Renewed increase in number of automotive insurance
policies brokered
177-179
Growth in all regions
3.7 million vehicles financed or leased for the
first time
Daimler Financial Services
(2014: €1.9 billion)
– EBIT significantly above prior-year level at €2.6 billion
Test of integrated approach to CO₂ reduction in
large-scale field test
- Implementation of platform strategy with local
production of DT12 transmissions in Detroit
Global market presence expanded with new
regional centers
- Start of production of Western Star 5700 XE,
BharatBenz 3143 and new OM 471 engine generation
Two world premieres in the field of autonomously
driving trucks
Worldwide unit sales of more than 500,000 trucks
Record unit sales and extension of market leadership
in NAFTA region
166 - 170
Daimler Trucks
Unit sales and revenue at record levels
- Sprinter successfull also in the year of its 20th
anniversary
Vito and Sprinter vans drive growth
Second generation in great shape: The Mercedes-Benz GLC with sensuous clarity and modern SUV esthetics and a classic off-road stance.
S.UN 2530
The Mercedes-Benz brand once again made a big impression
on award juries and readers of various automotive magazines
in 2015. The outstanding design of Mercedes-Benz vehicles led
to many awards, including three first-place finishes for the
CLA Shooting Brake, the GLE coupe and the Mercedes-AMG GT
in the Auto Bild Design Award competition - and an impressive
sixth consecutive overall victory in this contest. The fact that
the most beautiful automobiles are built by Mercedes-Benz is
also underscored by awards for the GLE coupe and the
Mercedes-AMG GT, as well as the Autonis readers' design brand
of the year award from the magazine auto motor sport. The
SUV models from Mercedes-Benz also performed well in award
competitions in 2015. The brand's SUVs were nominated ten
times in six categories and came out on top six times. In addition,
more than 110,000 readers of auto motor sport chose the
Mercedes-Benz wins numerous awards
be able to address customer requirements in the country
in an even more targeted manner in the future. During the year
under review, we significantly improved our market position
in China, especially in comparison with our main competitors.
All in all, we were able to increase sales of Mercedes-Benz
brand vehicles by 41% to 387,400 units, although the overall
car market grew at a much slower pace. Additional sales
momentum was generated in China by our new SUVs, as well
as by the new C-Class, which along with a long-wheelbase
variant is now also available in a sporty version with the short
wheelbase. A total of 250,200 of the vehicles we sold in
China during the reporting year were manufactured locally at
facilities operated by our BBAC joint venture (2014: 145,500).
In 2015, we renewed and expanded our range of products for
customers in China by offering 15 new or updated model
series. Important new products here are the GLA and GLE SUVs,
the Mercedes-Maybach and the new smart models. We also
added more than 50 new sales outlets to our sales network in
China, which now comprises approximately 500 dealerships
nationwide. With the start of compact-vehicle production in the
form of the GLA, the plant in Beijing has become the only
Mercedes-Benz facility in the world to manufacture both front
and rear-drive car models, as well as engines, at one site.
In October 2015, we began producing an additional volume
series the GLC SUV - for the local market in China. Our
new research and development center in China ensures we will
Mercedes-Benz Cars
C❘ THE DIVISIONS | MERCEDES-BENZ CARS
LAT
160
foundation for further long-term growth
"Mercedes-Benz Vans goes global" growth strategy lays
Portfolio expansion with a new pickup
Marco Polo enjoys great popularity
of success
V-Class multipurpose vehicle continues on its path
171-173
Mid-size van Vito enters new markets
EBIT significantly above prior-year level at €880 million
(2014: €682 million)
502,478
497,710
495,668
+2
44
46
thereof Japan
-12
167
148
Asia
-49
32
16
thereof Brazil
-35
47
31
Latin America (excluding Mexico)
+18
142
+4
Indonesia
32
58
In the NAFTA region, Daimler Trucks saw sales rise by 19% to
the record level of 191,900 units. We further extended our
market leadership in the Classes 6-8 last year, increasing our
market share to 39.4% (2014: 37.2%). The sales growth was
due to our outstanding products as well as the good market
development last year. In May 2015, we started production
of the new Western Star 5700 XE in Cleveland, North Carolina.
This semitrailer tractor features sophisticated aerodynamics
and is equipped with the new, highly efficient Detroit powertrain.
It consumes nearly 15% less fuel than a comparable vehicle.
Daimler Trucks saw sales drop sharply in Latin America, due
primarily to the severe market contraction in Brazil. The Brazilian
market was also weakened by the continued worsening of
the financing possibilities offered by the government's FINAME
program. The weakness of Brazil, our main market in the region,
caused sales to fall to 16,400 units (2014: 32,200). In this chal-
lenging environment, we were able to slightly increase our
market share of Brazil's medium-duty and heavy-duty segments
to 26.7% (2014: 25.8%). In order to permanently strengthen
Daimler Trucks' competitiveness in Brazil, between 2014 and
2018, we will invest approximately €500 million in products,
technology and services that are tailored to the needs of the
Brazilian market. To this end, we further optimized the comfort,
fuel economy and total cost of ownership of the locally produced
truck models Accelo, Atego, Axor and Actros.
In Western Europe, we increased our sales by 13% to 64,800
units. Unit sales became more dynamic as the year progressed.
Our Mercedes-Benz brand maintained its market lead in the
medium-duty and heavy-duty segments with a share of 22.5%
(2014: 24.4%). As a result of advance purchases before the
tougher EURO VI emissions standard comes into effect in 2016,
sales amounted to 24,900 units in Turkey, thus surpassing
the previous year's high level (2014: 22,200 units) despite the
country's weakening economic development and the uncertain
political situation in the region. The market nevertheless lost
significant momentum in the second half of the year. Demand
decreased substantially in Russia due to the country's ongoing
difficult economic situation.
in Pretoria (South Africa) for Southern Africa. The regional cen-
ter for Southeast Asia will follow in Singapore in March. These
new regional centers will put us in even closer proximity to our
markets and customers, allowing us to respond more quickly
to their needs. We have also achieved another milestone in the
implementation of our platform strategy. In November, our
facility in Detroit began producing the automated Detroit Trans-
mission 12 (DT12) for the North American market.
FREIGH
C | THE DIVISIONS | DAIMLER TRUCKS 167
Freightliner Inspiration Truck: the first autonomously driving truck with US road approval.
10010
167
-4
572
Total (including BFDA)
-30
99
69
BFDA (Auman Trucks)
For information purposes:
-45
595
thereof United States
+19
161
More than 500,000 trucks sold in 2015
In 2015, Daimler Trucks increased its unit sales by 1% to
502,500 vehicles, the highest number since 2006. Revenue
grew by 16% to €37.6 billion (2014: €32.4 billion). Daimler
Trucks faced a regionally very diverse market environment in
2015. Demand for trucks rose strongly once again in the
NAFTA region last year. Truck demand increased also in Europe,
thanks to a robust economic recovery and the purchase
of more replacement vehicles. In Japan, sales of commercial
vehicles were at the solid level of the previous year, whereas
the demand in India increased compared with the previous year.
The weak and uncertain economic situation in Brazil almost
halved the country's truck market. The Indonesian truck market
also contracted significantly. In this market environment,
Daimler Trucks increased its EBIT very significantly to the new
record of €2.6 billion (2014: €1.9 billion). The division's return
on sales rose to 6.9% (2014: 5.8%).
a heterogeneous market environment
Very successful business developments in
+1
15/14
Change in %
+37
+16
15/14
Change in %
The number of 502,500 trucks sold in 2015 shows that our
strategy based on the three pillars of technology leadership,
global market presence and intelligent platforms is paying off.
We have assumed a leading role for autonomously driving
trucks. We continue to be well positioned as the market leaders
in the NAFTA region and Western Europe, and we have further
strengthened our position in the emerging markets. In October,
we opened our first regional center. Located in Dubai, it is the
first of six such centers that will be set up all over the world to
focus on sales and aftersales activities for Daimler Trucks.
The center in Dubai manages activities in 19 countries in the
Middle East and North Africa. In February 2016, two more
regional centers will be opened: in Kenya for Central Africa and
2014
In thousands
Unit sales of Daimler Trucks
C.04
-1
87,628
86,391
Employees (December 31)
+1
2015
Roadmap presented for alternative drive systems
EBIT slightly above prior-year level at €214 million
(2014: €197 million)
Total
496
192
NAFTA
+26
6
7
France
+12
8
502
9
+10
29
32
thereof Germany
+13
57
65
Western Europe
United Kingdom
thereof Western Europe
CLA Shooting Brake: Space for something new
The CLA Shooting Brake became the fifth member of our
successful family of compact models in March 2015. The CLA
Shooting Brake stands for a completely new vehicle concept
that combines a progressive, sporty design with versatile
spaciousness. The high quality of the interior is underscored
by the use of the same design idiom that makes the exterior
so special, as well as by carefully selected high-end materials.
The new smart fortwo cabrio converts at the touch of a button from a closed two-seater into a cabriolet with a completely open roof.
We inspire with new products and
pioneering technologies
S.MA 2052
15 new models for the Chinese market
Mercedes-Benz aims for top quality at all production locations
and also seeks to ensure it can respond quickly to market
fluctuations and changed customer requirements. Within the
framework of Industry 4.0, we are working intensely on the
creation of "smart factories" that stand out through their resource
efficiency, as well as their ability to make rapid adjustments
and integrate customers and partners into value creation pro-
cesses. Connected production systems, a completely digital
process chain, the intelligent use of production data and new
models for human-machine cooperation will make manu-
facturing even more flexible and efficient in the future. At the
same time, we are optimizing our employees' workstations
on the basis of ergonomic criteria and creating the conditions
necessary for successful intergeneration cooperation in
our production organization.
C | THE DIVISIONS | MERCEDES-BENZ CARS
164
3 Mercedes-AMG C 63 Coupe: fuel consumption in l/100 km urban 11.9-11.4/
extra-urban 7.1-6.9/combined 8.9-8.6; CO2 emissions in g/km combined
209-200.
2 Mercedes-Maybach Pullman: fuel consumption in l/100 km urban 18.0/
extra-urban 9.2/combined 2.9; CO2 emissions in g/km combined 299.
Daimler's divisions developed very positively overall in the year under review and
further increased their profitability. We developed additional markets and market
segments with numerous new vehicle models and innovative service offerings.
At the same time, we pushed forward with the digitization of our business at all levels.
In order to create the right conditions for future growth, we modernized and
expanded our worldwide production network.
1 Mercedes-Maybach S 600: fuel consumption in l/100 km urban 16.9/
extra-urban 8.7/combined 11.7; CO2 emissions in g/km combined 274.
Expansion of the global production network
A third model - the smart convertible - was then launched
at the end of 2015. The open-top two-seater celebrated its world
premiere in September 2015 at the Frankfurt Motor Show and
deliveries began in the first quarter of 2016. The only genuine
convertible in its segment, it can transform itself from a closed
two-seater into a car with a large foldable roof or a completely
open-top convertible with just the push of a button and when
traveling at any velocity - even at top speed. The flexibility offered
by this "tritop" roof is exceptional in this vehicle segment.
We also significantly improved safety features once again and
have made the convertible more robust than the coupe in
critical areas. Among other things, torsional stiffness has been
improved by around 15% compared with the previous model.
As is the case with the smart fortwo, advanced assistance sys-
tems previously reserved for more upper-range vehicles have
been installed to help prevent accidents. The new smart convert-
ible also makes a big impression with its compact dimensions
and unparalleled small turning circle.
The new smart fortwo and forfour models, deliveries of which
started in Europe in late 2014, were also launched in China,
the United States and Japan in the reporting year. Total sales of
smart-brand vehicles increased by 31% to 121,300 units in 2015.
to drive a smart
The smart convertible - the most exclusive way
163
C | THE DIVISIONS | MERCEDES-BENZ CARS
S.MB 1214
In order to meet the production targets of our 2020 growth
strategy, we are continually refining our flexible and highly
efficient production network. We have agreed with employee
representatives on transformation plans that are currently
being implemented at nearly all Mercedes-Benz manufacturing
plants in Germany. These plans will ensure the international
competitiveness of these facilities and also safeguard jobs at
the various locations. The billions of euros we are investing
here underscore the importance of our plants in Germany as
centers of expertise for global production. We are also expanding
our international production capacities. For example, we will
start building the C-Class and the GLA compact SUV at a new
car plant in Iracemápolis, Brazil, in 2016. In addition, Daimler
and the Renault-Nissan Alliance have laid the cornerstone
for a joint production facility in Aguascalientes, Mexico, where
Mercedes-Benz compact models will go into production in 2018.
Sales success and international awards at
Busworld Kortrijk 2015
C | The Divisions
159
Successful unit sales of complete buses
situation in Latin America
Business development affected by difficult economic
- CO2 emissions reduced to an average of 123 g/km
EBIT significantly above prior-year level at €7.9 billion
(2014: €5.9 billion)
Most successful motorsport year in Daimler's history
Expansion of global production network
"Best Customer Experience" pushed forward with
new sales formats
Foundation laid for further growth in China
C | THE DIVISIONS | CONTENTS
Numerous awards for Mercedes-Benz
Renewal and expansion of SUV range
Continuation of market leadership for buses with
gross vehicle weight over 8 tons
Acceleration of model offensive
Unit sales and revenue at record levels
174-176
Daimler Buses
160-165
Mercedes-Benz Cars
-
Mercedes-AMG: the sports-car and performance brand
The AMG brand claim of "Driving Performance" reflects the two
core competencies of Mercedes-AMG: the ability to provide
an unparalleled driving experience and the ability to serve as
a driving force in the high-performance segment. The AMG
sports-car brand enhances the fascination of Mercedes-Benz.
The brand's dynamic vehicles especially attract young and
sporty customers to the brand with the three-pointed star.
AMG models such as the new C 63 Coupe³ differ extensively
from their production-model cousins in terms of both engineering
and appearance, thus strengthening the authenticity of
the AMG brand. Mercedes-AMG is positioning itself even more
aggressively as a dynamic sports car and high-performance
brand with the GT, a sports car that was developed by
Mercedes-AMG completely on its own and clearly demonstrates
the innovation and development expertise in Affalterbach.
The numerous awards the AMG GT has received since its
premiere in 2014 underscore the success of this sports car,
which will be used as the basis for an entire model family.
True to its philosophy of performance with responsibility,
Mercedes-AMG is striving to become even more efficient
through new engine technologies and a comprehensive
lightweight design approach. AMG models already have some
of the lowest emissions in their respective segments.
Open for luxury: The S-Class convertible from Mercedes-Benz is a superlative dream car that stands for individual and timelessly exclusive mobility.
Mercedes-Maybach expands its range of models
Following the successful launch of the Mercedes-Maybach S 600¹
in November 2014, the second model from the new Mercedes-
Maybach sub-brand celebrated its world premiere at the Geneva
Motor Show in March 2015. Mercedes-Maybach stands for
prestigious exclusivity and is aimed at particularly status-
conscious customers. With its combination of the very highest
exclusivity, unparalleled comfort and state-of-the-art tech-
nology, the new Mercedes-Maybach Pullman² now assumes
the role of a clear top-of-the-line model. With a length of
6.50 meters, the vehicle offers enough space for a large and
luxurious club lounge in the rear that features numerous
amenities as standard equipment. The chauffeured limousine
Japan
+37
293
400
China
+4
344
359
thereof United States
+5
391
412
NAFTA
+9
272
296
thereof Germany
+16
669
69
thus meets the modern demand for the highest degree
of exclusivity and luxury. The four rear seats in the Mercedes-
Maybach Pullman² are arranged opposite one another.
These adjustable executive seats offer outstanding comfort.
61
1 Including model variants.
The new convertible is the sixth variant of the current S-Class
family and the first open-top luxury four-seater from Mercedes-
Benz since 1971. The elegant and sporty model celebrated its
world premiere at the Frankfurt Motor Show in September 2015.
With this vehicle, Mercedes-Benz can now boast of making the
world's most comfortable convertible. A unique level of climate
comfort is provided by the refined automatic draft shield system
AIRCAP, the AIRSCARF neck-level heating system, heated
armrests and a fully automatic intelligent climate control system.
The world's most comfortable convertible
Athletic and sporty: The clear and sensual design of the new
C-Class coupe makes a big impression on the road, while a
dynamically configured chassis forms the basis for agile handling
and driving pleasure. Among other things, this was made
possible by a weight-reducing lightweight design, excellent aero-
dynamics and high-performance yet efficient engines. New
assistance systems offer the highest degree of safety, and the
new C-Class coupe also sets new standards in its segment
with its high-end appeal and spacious interior. The model has
been delivered to customers since December 2015.
A new coupe for the C-Class family
C | THE DIVISIONS | MERCEDES-BENZ CARS
162
During the year under review, we also upgraded the GL,
which is our most spacious SUV. The new GLS, which will arrive
in showrooms in March 2016, underscores our position as
the manufacturer of the "S-Class among SUVs." The fully fledged
seven-seater combines luxury with impressive comfort,
agile handling and best-in-class safety.
+13
The GLC compact SUV, which had its world premiere in June 2015,
combines the utmost driving comfort with great sportiness.
Mercedes-Benz implemented an extensive package of measures
to significantly increase the GLC's energy efficiency and
performance. The fuel consumption of the GLC is as much as 19%
lower than of the GLK predecessor model, thanks in large
part to updated or completely new drive systems, outstanding
aerodynamics and intelligent lightweight engineering. In terms
of appearance, the vehicle body follows the clear design idiom
that was very successfully presented in the Concept GLC
Coupe show car in the spring of 2015. This design approach
will be used as a standard for future SUV families.
The new generation of the GLE is a completely reworked
version of the Mercedes-Benz bestseller in the SUV segment
(the former M-Class). The highlights of the new GLE include
a considerably more appealing front and rear as well as extensive
measures that enable new benchmarks for emissions and
drive systems. The all-new Mercedes-Benz GLE coupe com-
bines two very different vehicle segments in one model,
whereby its sporty coupe character is rather more dominant
The new SUVs: at home on any terrain
During the year under review, Mercedes-Benz Cars once again
expanded its range of models within the framework of its
"Mercedes-Benz 2020" growth strategy. The most wide-ranging
product portfolio in our history enabled us to attract new
customer groups and improve our market position vis-à-vis our
main competitors. The model offensive focused on SUVs in
2015. We renewed our range of vehicles in this growth segment
almost completely, and we also added the GLE coupe to
the portfolio. O pages 28f Other all-new additions are the
CLA Shooting Brake, the Mercedes-Benz AMG GT, another
exclusive Mercedes-Maybach model and the S-Class convertible,
which will be launched in the spring of 2016.
Model offensive accelerated
The main contributions to the growth in unit sales came
from the C-Class and our new SUVs. Our A-Class and B-Class
models also remained very popular, with sales of these cars
increasing by 10%. Including the CLA and CLA Shooting Brake,
a total of 425,000 units were delivered to customers. Our
C-Class models were particularly successful, with sales of these
vehicles increasing by 38% to 470,400 sedans, wagons and
coupes in the reporting year. The E-Class performed very well
in the last year before its model changeover, achieving unit
sales of 306,000 vehicles (-7%). The S-Class was once again
the best-selling luxury sedan in the world by far. In total we
sold 106,200 sedans and coupes of the S-Class (2014: 115,500).
Global sales in the SUV segment increased by 27% to 543,000
units. This positive development was mainly due to the new
GLC and GLE models and the success enjoyed by the GLA in the
Chinese market.
The sum total of its innovations makes the new Mercedes-Benz E-Class the most intelligent business sedan.
C | THE DIVISIONS | MERCEDES-BENZ CARS 161
SHV 2132
than the distinctive features of a robust SUV. The model stands
out both through its impressive handling and its attractive
exterior design. The GLE models were launched in the spring
of 2015 and have been very well received by our customers.
40,519
+5
31,466
C❘ THE DIVISIONS | DAIMLER TRUCKS
Latin America
(excluding Mexico)
China
30,758
+29
32,163
+11
79,898
Eight preproduction-series FUSO Canter E-Cells were tested by
selected customers in a one-year field test in Portugal. A data
analysis of the customer test showed that the operating costs
were reduced by 64% compared to those of a conventional
diesel truck. With ranges of over 100 kilometers, the Canter
E-Cells surpassed the average distance that many trucks
cover in light-duty distribution transport each day. The electri-
cally powered light trucks are locally emission-free and nearly
silent, making them well-suited for short-distance distribution
transport in inner cities.
Daimler Trucks studies and series vehicles win awards
Daimler Trucks North America received the US Department of
Energy's renowned Distinguished Achievement Award for the
results of its SuperTruck concept vehicle. The award-winning
truck shows how freight transportation on roads can be made
as environmentally compatible and fuel-efficient as possible in
the future. Meanwhile, the Mercedes-Benz Future Truck 2025
won the internationally renowned iF Design Award 2015. Last
year, the Mercedes-Benz Actros won the Green Truck Award,
which is presented by the editors of the magazines Trucker and
VerkehrsRundschau. The winners of this award are primarily
chosen on the basis of their fuel consumption, and thus also of
their CO2 emissions.
C | THE DIVISIONS | MERCEDES-BENZ VANS 171
Mercedes-Benz Vans
Mercedes-Benz Vans continued on its successful course of success from the previous year in 2015,
setting a new record for unit sales. Earnings also reached an all-time high at the division. Growth
was primarily driven by the Vito and Sprinter vans. Sales of the Sprinter were higher than ever before
in the model's 20-year production history. The market launch of the very successful mid-size
Vito van in North and South America marked yet another milestone in the implementation of our
"Mercedes-Benz Vans goes global" growth strategy. We consistently moved ahead with our
internationalization strategy also in the private customer segment, and were active in new sales
markets with our V-Class multipurpose vehicle and the camper van version of the Marco Polo.
This contributed to a significant increase in earnings at Mercedes-Benz Vans.
New records for unit sales, revenue and EBIT
Mercedes-Benz Vans set a new sales record in 2015, with an
increase of 9% to 321,000 units. At €11.5 billion, revenue was
also significantly higher than in the previous year (2014:
€10.0 billion). EBIT rose by 29% to the new record level of
€880 million. 7 C.05
Continued growth
Mercedes-Benz Vans' products remained successful also in
2015. Our Sprinter, Vito and Citan vans are targeted mainly at
commercial customers while the V-Class is designed primarily
for private use.
Unit sales in Western Europe, our most important market, rose
by 10% to 208,500 vans in the year under review. Particularly
significant increases were recorded in Sweden (+27%), Belgium
(+25%) and Switzerland (+17%), and Mercedes-Benz Vans
also posted strong growth in the key volume markets of Western
Europe. For example, we set a new sales record in Germany
with 88,400 units (2014: 79,900). Despite a difficult market en-
vironment in Eastern Europe, Mercedes-Benz Vans was able
to increase its sales in the region to 32,200 units, an increase
of 5% over the prior year.
Customer tests of the FUSO Canter E-Cell successfully
completed
Mercedes-Benz Vans remained on course for growth also in the
NAFTA region, where sales rose sharply to 40,500 units.
The success story of our Sprinter continues in the United States,
where we launched the Metris in the fourth quarter of 2015
Despite the difficult economic conditions in Latin America, we
were still able to sell 15,800 units in that region, which was
slightly lower than the number sold in the previous year (2014:
16,100). At 7,200 units, sales in China were significantly lower
than in the prior year (2014: 12,800), largely due to the upcom-
ing model changeover in the mid-size van segment. We sold
a total of 194,200 Sprinter vehicles worldwide during the year
under review (+4%), which marks a new record for sales of
large vans. Sales of mid-size vans were also significantly higher
than in the previous year, totaling 105,100 units (2014: 86,000).
C.05
Mercedes-Benz Vans
€ amounts in millions
2015
2014
15/14
% change
EBIT
page 173. Sales of 32,400 units in the United States (+25%)
marked a new record for the division. Sales in Canada increased
by 24% to 5,100 units.
Revenue
In the Efficiency Run practical test that was presented in October
2015, Daimler Trucks and three freight-forwarding companies
demonstrated that optimally coordinated truck combinations can
reduce fuel consumption and thus CO2 emissions by a double-
digit percentage, using systems that are already available on the
market. The vehicles were equipped with the Predictive Power-
train Control (PPC) cruise control system, which optimally coor-
dinates gear shifting with the route's topography. Weight-
optimized semitrailers and low-resistance tires were also used
in the field test. This integrated approach aims to optimize
not only the engine but also the entire truck transport system.
The two standard Mercedes-Benz Actros tractors that were
optimized for the Efficiency Run consumed about 12 to 14% less
fuel than a standard semitrailer tractor in the fleet of the freight-
forwarding company. The long truck that was also tested during
the Efficiency Run had an approximately 17% better fuel effi-
ciency in volume-based transportation than the test's standard
tractor and semitrailer. The test confirmed that two long
trucks can perform the transport tasks of three conventional
semitrailer trucks. DEKRA, a technical test organization,
accompanied the Efficiency Run and certified its results.
In addition to safety and efficiency, truck connectivity plays a
crucial role as the third pillar of Daimler Trucks' technology
strategy. A truck generates a large amount of data, which can
be usefully applied in many ways. For example, modern
telematics systems can already record and analyze how efficiently
a vehicle is operated and can communicate that to the driver
or owner. Many more possibilities will exist in the future. With
the help of data transmitted by trucks in real time, trucking
companies will be able to organize their overall logistics more
efficiently. It will enable them to shorten trucks' standing times,
optimize maintenance intervals and reduce fuel consumption. In
order to strengthen its technological expertise in this area,
Daimler Trucks has purchased a stake in Zonar Systems Inc.,
a leading developer and supplier of logistics, telematics and
connectivity solutions. Daimler Trucks North America and Zonar
will jointly launch applications that are tailored to the needs
of North American customers. The two companies have already
been partners for the past five years, cooperating, among
other things, on the development of the telematics solution
Detroit Connect page 22. This solution includes an onboard
diagnostic and fleet monitoring system and can determine the
cause of a fault message while the vehicle is still in motion.
This can reduce servicing-related downtimes and thus cut main-
tenance costs. Repair costs can sink by as much as 20% while
operating time can increase by 6%.
170
Mercedes-Benz Actros with Highway Pilot: premiere in 2015 for the first autonomously driving series-produced truck in Germany.
Hpi
S.PN1009
AUTRION
HP
Daimler Trucks is a pioneer for autonomous driving
As a globally positioned manufacturer, Daimler Trucks impres-
sively demonstrated in 2015 how intelligent technologies can
be rolled out for several brands and multiple markets in a very
short period of time. The autonomously driving vehicles from
Daimler Trucks are based on the series-production trucks used
in the respective markets. These trucks are equipped with the
Highway Pilot system, which is adapted to the specific market
conditions. The Highway Pilot encompasses a complex combi-
nation of cameras and radar systems along with lane-keeping
and collision-prevention functions that enable it to brake
and steer the vehicle and regulate its speed. We presented the
Highway Pilot to the public for the first time in 2014, when the
system enabled the Future Truck 2025 to complete a partially
autonomous drive on a cordoned-off section of an autobahn
near Magdeburg. Last year, Daimler Trucks then reached several
milestones on the road to achieving fully autonomous driving
page 10. In May 2015, the state of Nevada approved the
Freightliner Inspiration Truck for road use, making it the world's
first autonomously driving truck to receive this kind of certifica-
tion. The Inspiration Truck is based on the series-production
model Freightliner Cascadia. The vehicle is equipped with a
Highway Pilot that has been specially configured to operate in
American highway traffic. The first time we tested an autono-
mously driving series-production truck on public roads in
Germany was in October of last year. This premiere truck was
a series-production Mercedes-Benz Actros that was equipped
with the Highway Pilot in order to test autonomous driving on
public roads.
We continued to pursue our integrated powertrain strategy in
2015. We nearly doubled the rate of application of the DT12 au-
tomated transmission in the Freightliner Cascadia and Western
Star 5700 XE, so that approximately 40% of those models were
sold with the automated transmission in the United States and
Canada. In November, local production of the DT 12 transmission
for the North American market started in Detroit. As of 2018,
medium-duty engines for the NAFTA market will also be produced
in Detroit. We maintained the rate of application of our heavy-
duty engines in the United States and Canada at the high rate of
the previous year in a growing market. Just four years after
the launch of the Mercedes-Benz OM 471 heavy-duty engine,
Daimler Trucks presented the engine's next stage of develop-
ment in 2015 page 35. The latest generation of the EURO VI
engine is a part of the successful platform for heavy-duty
truck engines from Daimler Trucks. Compared to its predeces-
sor, the new engine reduces fuel consumption by up to 3%.
As a result, average fuel consumption has decreased by up
to 13% since 2011. The Euro VI engine family has also been
supplemented by the new, environmentally friendly M 936 G
natural-gas engine. This engine emits up to 20% less CO2
than a diesel engine and can reduce emissions even further if
biogas is used instead of natural gas.
We are consolidating our leading position in the field of safety
by introducing new assistance systems and further developing
the emergency-braking and lane-keeping assistants. One
of the systems we will launch in the near future is the turning
assistant. By detecting pedestrians, cyclists and stationary
obstacles, this system can prevent accidents and save lives,
especially in city traffic.
Integrated approach for maximum efficiency
C❘ THE DIVISIONS | DAIMLER TRUCKS 169
Presence in the world's largest truck market China
through our joint venture BFDA
Last year, Chennaiproduced FUSO trucks enabled us to enter
more than a dozen selected export markets, such as South Africa.
Further market entries are planned for 2016.
The Asian sales markets developed in widely diverse ways last
year. In Japan, we increased our unit sales by 4% to 45,600
vehicles. We expanded our market share, which now amounts to
20.8% of Japan's overall truck market (2014: 20.1%). In India,
we increased deliveries by 36%, selling a total of 14,000 trucks.
Our new BharatBenz vehicles allowed us to increase our
market share of the upper medium- and heavy-duty segments
to 7.3% (2014: 6.2%). The BharatBenz product range was ex-
panded further last year by the launch of the all-new BharatBenz
3143 heavy-duty truck, which is designed for use in mining
and on construction sites and is by far the most powerful locally
built truck for the Indian market with 430 horsepower. With a
gross vehicle weight of 48 tons and four-axle configuration, the
truck is perfectly tailored to the requirements of customers
in India, with its plentiful reserves of raw materials. Thanks to
the intelligent platform strategy, Daimler Trucks' engineers
developed the model in less than three years. Our sales in the
strongly contracting Indonesian market fell to 32,100 units
(2014: 58,300). However, our share of the total Indonesian truck
market increased to 48.0% (2014: 47.4%). In 2015, we continued
to work on our strategy of increasing Daimler Trucks' global market
presence. The Asian subsidiaries Mitsubishi Fuso Truck and
Bus Corp. (MFTBC), which is based in Kawasaki, and Daimler
India Commercial Vehicles (DICV), which is headquartered in
Chennai, are making an important contribution to this strategy.
000
BharatBenz 3143: by far the most powerful local truck for the Indian market with 430 horsepower.
BHARATBENZ
C | THE DIVISIONS | DAIMLER TRUCKS
168
Strategic focus on connectivity and digitization
Daimler AG owns 50% of Beijing Foton Daimler Automotive Co.,
Ltd. (BFDA), a joint venture between Daimler and Beiqi Foton
Motor Co, Ltd. BFDA has been producing medium-duty and
heavy-duty Auman brand trucks since mid-2012. In 2015, sales
of medium- and heavy-duty trucks decreased by around 30%
in China, the world's biggest truck market by volume, due to the
country's weakening economy. BFDA with its Auman brand
was unable to avoid this development; its unit sales in 2015 thus
decreased for market-related reasons to 69,200 vehicles
(2014: 99,200). In order to profit from the Chinese volume market
in the medium term, we systematically pushed forward with
our cooperation with Foton/BFDA in 2015. Following the suc-
cessful establishment of the OM 457 engine factory in our
joint venture, production of the heavy-duty Euro IV/V engine
starts in 2016. More than 300,000 Auman vehicles have been
sold since the joint venture was launched.
Return on sales (in %)
880
682
Employees (December 31)
22.639
21.598
+5
Unit sales
C.06
Unit sales by Mercedes-Benz Vans
Total
2015
+9
2014
321,017
294,594
+9
Western Europe
208,459
190,019
+10
thereof Germany
Eastern Europe
NAFTA
88,380
15/14
% change
294,594
321,017
+10
+29
11,473
9,968
+15
7.7
6.8
Investment in property, plant
and equipment
202
304
-34
Research and
development expenditure
thereof capitalized
Production
384
293
+31
153
68
+125
328,129
299,008
Leading position in the field of safety
Successful further development of our engine and
transmission strategy
1,117
7,178
+6
Citaro NGT
Citaro NGT
MA MB 014
C | THE DIVISIONS | DAIMLER BUSES
175
The Mercedes-Benz Citaro NGT (Natural Gas Technology) city bus convinces with its quiet operation and reduced CO2 emissions.
C
SETRA
LS3279
The TopClass 500 from the Setra brand offers a new travel feeling combining the highest levels of luxury and functionality.
176
C | THE DIVISIONS | DAIMLER BUSES
The ongoing economic difficulties in Latin America (excluding
Mexico) led to a significant further deterioration in the region,
with the Brazilian bus market reaching its lowest point for many
years in 2015. Sales of Mercedes-Benz bus chassis in Brazil fell
by 47% to 7,200 units. Nonetheless, we were able to signifi-
cantly expand our leading position in Brazil to a market share
of 52.5% (2014: 49.7%). At 4,000 units (2014: 3,600), sales
in Mexico were significantly higher than in the previous year.
Busworld Kortrijk 2015: New sales record and
international awards
-
For the second time in succession, Daimler Buses was extremely
successful at the oldest and most famous international bus
show, which takes place in Kortrijk, Belgium, every other year.
The number of buses sold increased once again following the
2013 event by approximately 70%, which made the total volume
significantly higher than the former record level. Sales actually
tripled compared with 2011. At Busworld, we presented the unique
complete range of products from Daimler Buses with its lead-
ing Mercedes-Benz and Setra brands. The presentation included
everything from minibuses to double-deckers, as well as a
wide range of services. Coaches from the Setra TopClass 500
series received several awards from European Coach & Bus
Week. The S 516 HDH high-decker bus was presented with the
"Grand Award Coach" and the judges also awarded the Setra
coach generation an "Ecology Label” and a “Styling & Design
Label" in recognition of the vehicles' high degree of environ-
mental compatibility and their appealing design. Both series also
received a "Special Mention 2015" prize from the "German
Design Award" organization at the beginning of the year. The
mid-decker coaches from the ComfortClass 500 series were
honored with the "Green Coach Award 2015” in Kortrijk. This
award has been presented by renowned trade journals to
coaches and city buses in alternating years since 2011. The
S 515 MD made a major impression here with its outstanding
economy and also by recording the lowest fuel consumption
on a test route.
3,241
3,421
Other markets
-8
33,162
Western Europe
7,757
7,557
thereof Germany
2,787
2,865
-3
New technologies set standards for efficiency and
environmental compatibility
Mexico
3,633
+9
Latin America (excluding Mexico)
11,909
17,614
-32
Asia
1,030
3,964
28,081
Daimler Buses is working to further improve the fuel efficiency
and environmental compatibility of its products through
the use of innovative technologies. The natural gas-powered
Mercedes-Benz Citaro NGT (Natural Gas Technology) city
bus presented in 2015 is equipped with the M 936 G Euro VI
natural gas engine, which makes it up to 20% more fuel-
efficient than the predecessor model. The natural gas engine
also boasts CO2 emissions that are as much as 10% lower
than the emissions of diesel engines. When powered by renew-
able natural gas, the Citaro NGT is also completely CO2-neutral.
In addition, the engine in the Citaro NGT makes less noise than
the quiet OM 936 diesel engine across the entire range of
engine speeds and the difference is noticeable. A new heavy-
duty engine is also now setting standards for coach operating
costs. Thanks to the new, highly efficient Mercedes-Benz OM 471
engine, which is used in three-axle premium buses from
Mercedes-Benz and Setra, fuel costs are down by as much
as 4%, even as handling has been made more dynamic.
Daimler Buses presented its roadmap for alternative drive
system technologies at the UITP (International Association of
Public Transport) World Congress and Exhibition. Along with
the further optimization of diesel powertrains, the division is
also focusing on developing the Citaro E-Cell and Citaro F-Cell
electric variants by 2020. Both models will be based on a mod-
ular electric vehicle platform. Additional measures here include
the development of a hybrid solution. With its Compact Hybrid,
Daimler Buses is pursuing a more simplified technical hybrid
approach. The result will not be a zero-emission vehicle but rather
one that achieves a substantial reduction in fuel consumption
compared with the already economical Euro VI diesel engines
with low additional costs for customers.
Contract volume
Investment in property, plant
and equipment
Employees (December 31)
116,727
98,967
+18
30
23
+30
9,975
8,878
+12
Nearly half of all delivered vehicles are financed
or leased by Daimler Financial Services
During the year under review, Daimler Financial Services
concluded 1.5 million new financing and leasing contracts worth
a total of €57.9 billion. The total value of all new contracts
rose by 21% compared with the prior year. As a result, the sales
and leasing activities at Daimler Financial Services supported
approximately half of all new-vehicle sales by our automotive
divisions in 2015. More than 3.7 million financed or leased
vehicles were on the books at the end of 2015; this corresponds
to an 18% increase in contract volume to €116.7 billion.
Adjusted for exchange-rate effects, the increase amounted
to 14%. EBIT rose to a new high of €1,619 million (2014:
€1,387 million). 7 C.09
New business in Europe increases
During the year under review, Daimler Financial Services
concluded 766,399 new financing and leasing contracts worth
€24.6 billion (+14%) in the Europe region. Particularly high
rates of growth were recorded in Spain (+43%) and Italy (+30%).
In Germany, Mercedes-Benz Bank's new business increased
by 8% to €10.7 billion; the volume of deposits in the direct bank-
ing business totaled €10.4 billion (-3%). In order to further
expand its market presence, Daimler Financial Services acquired
Welcome Bank GmbH in Austria, which was previously part
of Wiesenthal Autohandels AG. Welcome Bank GmbH has been
operating in Austria as Mercedes-Benz Bank GmbH since
the end of October 2015. During the year under review, Daimler
Financial Services' contract volume in Europe rose by 13%
to €45.6 billion.
EBIT
Revenue
15,750
+21
47,912
57,891
New business
New bus plants facilitate entry into growth markets
In autumn 2015, series production operations were launched
at the Chennai bus plant in India, which opened in mid-2015.
The new facility gives Daimler Buses the opportunity to profit
from the tremendous growth potential offered by the Indian
market. The plant builds BharatBenz-brand front-engine buses
for the volume market in India, with bodies produced by the
British bus manufacturer Wrightbus. Mercedes-Benz rear-engine
buses are available for the premium segment. The new plant in
India has an initial production capacity of 1,500 units each year.
However, this annual capacity can be expanded to as many as
4,000 units. The first buses and bus chassis have already been
delivered to Indian customers as well as for export. A total of
€50 million has been invested in the facility in India to date. We
also opened a new bus chassis assembly plant in Funza,
near Bogotá, in Colombia. Daimler Buses is thus preparing for
the growing demand for buses and efficient mobility solutions
in that region.
Number 1 for safety technology in Europe
Daimler Buses is implementing a comprehensive integrated
safety concept for Mercedes-Benz and Setra buses. This con-
cept meets the highest possible demands in terms of safety
and also involves continual further developments in all areas.
The integrated safety concept comprises several components.
Its central component consists of a large number of innovative
safety features that are employed in line with the vehicle in
question and the way it is to be used, whereby the general ob-
jective is to continually improve active and passive safety.
Features range from driver assistance systems to fire alarm
devices in all buses as standard. Since November 2015, the
EU has required that all newly registered coaches be equipped
with emergency braking and lane-changing assistance systems.
Daimler Buses has been equipping coaches with its Lane Keep-
ing Assist system for nine years now, while Active Brake Assist
has been available for six years. The latest version of the latter
system - Active Break Assist 3 (ABA 3) - can initiate automatic
emergency braking and bring the coach to a standstill when it
encounters stationary obstacles ahead. Our vehicles also
already come with other assistance systems such as proximity
cruise control and Attention Assist. In addition, the Articulation
Turntable Controller (ATC) developed by Mercedes-Benz for the
Citaro G and CapaCity L articulated buses sets a new standard
for articulated bus handling and safety. Our safety technology
portfolio at Daimler Buses is rounded out by various safety
training courses and programs.
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES 177
Daimler Financial Services
The number of cars and commercial vehicles financed or leased by Daimler Financial Services
reached a new all-time high of more than 3.7 million at the end of 2015. New business and
contract volume also rose sharply, and the combination of sales financing and brokered automotive
insurance policies gained in importance as well. During the year under review, we also further
expanded our range of innovative mobility solutions.
C.09
Daimler Financial Services
Roadmap for alternative drive systems
2015
15/14
Amounts in millions of euros
% change
1,619
1,387
18,962
15,991
+17
+19
2014
-2
Total
Varied business development in core regions
A new chapter in the V-Class success story
The Mercedes-Benz V-Class was presented to the Japanese
public at the Tokyo Motor Show in 2015 and has been available
in Japan since January 2016. The multipurpose vehicle's launch
in Japan marks its entry into a second major right-hand drive
market after the UK. The MPV was also featured at the Dubai
International Motor Show in November 2015 and will be
launched in the United Arab Emirates and other markets in the
Middle East in the spring of 2016. The V-Class is now sold at
Mercedes-Benz passenger car and commercial vehicle dealer-
ships in more than 90 countries. Beginning in the spring of
2016, additional sales momentum should be generated by the
introduction of new equipment features such as the AMG Line
and the segment's largest panoramic roof.
Mercedes-Benz Vans on course for success in the
camper van market
Mercedes-Benz Vans is expanding its presence in the camper
van market as well. The Marco Polo and Marco Polo ACTIVITY
models have become quite successful just one year after their
market launch, as evidenced by the great demand for the two
vehicles. The popularity of the Marco Polo has also led to awards
from two trade journals. Readers of promobil named the Marco
Polo "Compact Camper Van of the Year" for the second consec-
utive time in 2015, while readers of AUTO BILD REISEMOBIL
put the compact camper van in first place, leading to an award
as "Das Goldene AUTO BILD Reisemobil 2015" at the end
of August. The V-Class and the Vito are also conquering the
market for customized extensions and body types for compact
camper vans by serving as attractive base vehicles. More and
more camper van manufacturers are relying on the two premium
models, both of which feature an all-new pop-up roof.
Portfolio expansion with a new pickup
We will expand our product range into a very promising segment
before the end of the decade by becoming the first premium
manufacturer to build a pickup truck. Within the framework of
our "Mercedes-Benz Vans goes global" strategy, a pickup is
the ideal vehicle for achieving a targeted expansion of our at-
tractive range of products on an international scale. In the
pickup segment as well, we will stand out through an unmistak-
able design and all of our typical brand attributes with regard
to safety, comfort, powertrain quality and high value. Versatile
pickups that boast a high degree of all-round quality and a
payload capacity of around one ton are very popular around the
world and thus offer solid sales potential. The initial target
markets for the new model will be Latin America, South Africa,
Australia and Europe.
Awards for the Mercedes-Benz Sprinter and Vito
Mercedes-Benz Vans gained a double victory in the competition
"CEP Van of the Year 2015." The vehicles were assessed by
a panel of experts from the courier, express and postal sectors
(CEP). The Vito 111 CDI and the Sprinter 316 CDI succeeded
against strong competition. The new Mercedes-Benz Vito took
first place in the category "Vans up to 3.0 tons" and the
Mercedes-Benz Sprinter defended its top position of recent
years in the category "Vans up to 3.5 tons."
The Vito is the second global van from Mercedes-Benz Vans,
following the Sprinter. After its market launch in Europe
in 2014, the mid-size van was introduced in North America in
October 2015 under the name Metris. With its attractive
design and wide range of variants, the model sets new stan-
dards in its segment. The Metris also stands out with its high
payload and efficient engines. The new van expands the Mercedes-
Benz Vans product program below the Sprinter and is thus able
to meet various customer requirements in the North American
market. An important area of application involves parcel deliv-
eries in connection with the growing online retail sector. Vito
models for the Latin American market are built at the Mercedes-
Benz Centro Industrial Juan Manuel Fangio plant near the capital
of Argentina, Buenos Aires. We also offer the Vito Tourer -
a Vito variant designed especially for passenger transport that
optimally meets the demand for shuttle buses and taxis, and
can also be used by limousine companies.
174
Daimler Buses
As the leading bus manufacturer in its core markets of Western Europe and Latin America, Daimler
Buses focuses on supplying innovative and environmentally responsible products that meet its
customers' business requirements. During the year under review, we enhanced our wide-ranging
product portfolio. Business development in 2015 was once again negatively affected by the difficult
economic situation in Latin America, which led to a decrease in unit sales and revenue. Nevertheless,
we were able to increase our earnings slightly compared with the previous year.
C.07
Daimler Buses
2015
2014
€ amounts in millions
EBIT
C | THE DIVISIONS | DAIMLER BUSES
214
Mercedes-Benz Vans goes global: Vito successfully
launched in new markets
The specialist for professional passenger transport: The compact Vito Tourer convinces with maximum versatility, comfort and quality.
12,837
-44
Other markets
16,948
13,451
+26
172
C | THE DIVISIONS | MERCEDES-BENZ VANS
173
|
An icon turns 20: the Sprinter remains a bestseller
and a guarantee of success
In September, we celebrated the Sprinter's 20th year of pro-
duction at the van plant in Düsseldorf. In 1995, the Mercedes-
Benz Sprinter established the large-van segment that still
bears its name - a segment it has continued to shape ever since.
The Sprinter is now on the road in more than 130 countries
and has been sold more than 2.9 million times. The model is thus
one of the most successful commercial vehicles of all time
and one of the bestsellers in the Daimler product portfolio. The
high level of versatility within the model series is very popular
with our customers around the world: The large premium van
comes in three different wheelbase lengths and cargo space
heights, and four different body lengths. The model is also
available as an all-wheel drive van as an option. Trailblazing
technical innovations have repeatedly made their debut in the
Sprinter throughout the model's history. For example, we were
the first van manufacturer to introduce the ABS anti-lock brak-
ing system in 1995, and we followed that up with the inclusion
of the Electronic Stability Program (ESP) in 2002. Mercedes-Benz
Vans achieved a further pioneering milestone in 2006 with the
introduction of Adaptive ESP as standard equipment. The inno-
vative system takes into account the current weight and center
of gravity of the vehicle. Both generations of ESP led to a dra-
matic decline in accidents. The latest Sprinter also comes with
Crosswind Assist as a further innovation. Along with our efforts
to enhance safety, we are also committed to optimizing fuel con-
sumption and reducing emissions in the large van segment.
Thanks to our current efficiency package, the Sprinter boasts
official standard consumption of 6.1 liters per 100 km.
In order to improve our long-term cost position and meet the
demand for the Sprinter in North America, which has been rising
for several years now, we will build a new Mercedes-Benz Vans
production plant in Charleston, in the US federal state of South
Carolina. The facility will enable us to supply customers in
North America with the next-generation Sprinter more rapidly
and in a more individualized manner. Mercedes-Benz Vans will
invest roughly half a billion dollars in the new van plant in the next
several years. Construction is scheduled to begin in 2016. The
facility in Charleston will boast a completely new body shop, a
paint shop and a final assembly area. With this new plant, we
are continuing the development of our global production network
and achieving a new milestone for our "Mercedes-Benz Vans
goes global" growth strategy.
S.MB 2089
Mercedes-Benz Sprinter: In the year of its 20th anniversary, it set a new record for unit sales and is one of the most successful commercial vehicles of all time.
C | THE DIVISIONS | MERCEDES-BENZ VANS
S&MB 3061
Sales of Vito models for the commercial segment rose by 23%
to 74,400 vehicles. Sales of the Mercedes-Benz Citan totaled
21,700 units (2014: 22,100). The V-Class multipurpose vehicle
remains very appealing to our customers; sales of the model
rose by 20% to 30,700 units.
In Western Europe, the Daimler Buses brands Mercedes-Benz
and Setra offer not only a complete range of city buses,
intercity buses and coaches, but also bus chassis. Thanks to
an improvement in our complete bus business, sales in the
region increased by 3% to 7,800 units. As a result, Daimler Buses
maintained its leading position in Western Europe with a mar-
ket share of 30.9% (2014: 34.4%), although this share was lower
than the record figure achieved in 2014. Strong demand for
our Mercedes-Benz and Setra buses - particularly in the coach
segment had a positive effect on our sales in Germany,
where the coach segment also benefited from the continued
expansion of long-distance bus services. However, the de-
crease in demand for city buses compared with the extraordi-
narily high level of demand in the prior year led to a decrease
in bus sales in Germany to 2,800 units (2014: 2,900). Sales in
Turkey rose by 32% to 1,000 units; this positive development
Iwas mainly due to a substantial increase in coach sales in the
country.
Revenue
197
4,218
Unit sales
28,081
33,162
-15
Employees (December 31)
18,147
17,473
+4
-8
C.08
2015
2014
15/14
% change
-2
15/14
% change
-15
+3
Earnings slightly above prior-year level
Daimler Buses sold 28,100 buses and bus chassis worldwide in
2015 (2014: 33,200). This significant decrease in unit sales
was largely due to the ongoing poor economic situation in Brazil.
Nevertheless, the division was able to maintain its clear lead-
ing position in its core markets for buses with a gross vehicle
weight of over 8 metric tons. 71 C.07 Business with complete
buses in Western Europe developed favorably during the year
under review, with sales increasing from the prior-year level. At
€4.1 billion, revenue was slightly lower than in 2014 (€4.2 billion).
Success with sales of complete buses and a favorable product
mix in Western Europe more than offset the lower unit sales in
Latin America, resulting in a slight increase in EBIT to €214 million
(2014: €197 million).
Unit sales by Daimler Buses
4,113
16,063
29,092
+9
Return on sales (in %)
5.2
4.7
Investment in property, plant
and equipment
104
105
31,485
-1
development expenditure
184
182
thereof capitalized
13
11
+1
+18
Production
Research and
Daimler Financial Services offers a broad range of innovative
mobility solutions. During the year under review, the division
also further expanded its services in this area. The number
of customers using the car2go car-sharing system increased
to 1.2 million in 2015, thereby enabling car2go to maintain
its position as the world's leading car-sharing company. car2go
was also launched in Turin and Madrid in 2015; at the end
of the year, the Group-owned company was operating at 31
locations. We also further developed our moovel app in 2015,
which allows customers in Germany to compare various mobility
and transport-mode options and then choose the best way
to get from point A to point B. The app can also be used to book
and directly pay for services provided by companies such
as car2go, Flinkster, mytaxi and the Deutsche Bahn railway
company. In the fourth quarter of 2015, moovel in Stuttgart
became the first provider to allow users to book and pay for
online tickets for journeys by a public transport operator.
RideScout in North America, which is also a Daimler company,
acquired the US startup GlobeSherpa at the end of the
second quarter of 2015. GlobeSherpa is an upcoming US
provider in the field of mobile ticketing and is currently present
in San Francisco, Portland, Chicago and several other cities.
The mytaxi app allows customers to locate, book and pay for
a taxi using their smartphones. The app's great popularity
led to its launch in Milan, Seville, Valencia, Krakow and Lisbon
during the year under review. mytaxi was thus in use in 40
cities at the end of 2015. Daimler also has an equity interest
in Mein Fernbus FlixBus GmbH and in the Blacklane profes-
sional driver service.
Mobility services expanded further
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
individual discussions, for example with the external auditors,
the members of the Board of Management responsible for
Finance and Controlling and for Integrity and Legal Affairs, and,
if required, the heads of the specialist departments. Such
individual discussions were mainly held to prepare for the next
committee meetings.
The Audit Committee met six times in financial year 2015.
All of those meetings were also attended by the Chairman
of the Supervisory Board, Dr. Manfred Bischoff, as a permanent
guest. The meetings were also attended by the Chairman
of the Board of Management, the members of the Board
of Management responsible for Finance and Controlling and
for Integrity and Legal Affairs, and the external auditors.
The heads of specialist departments such as those for account-
ing, auditing, compliance and law, as well as other experts,
were also present for the appropriate items of the agenda.
In addition, the Chairman of the Audit Committee held regular
Meetings and participants
Following several personnel changes that occurred in the
prior year, the makeup of the four-member Audit Committee
remained unchanged in 2015. Audit Committee Chairman
Dr. Clemens Börsig and Joe Kaeser served as the shareholder
representatives. Both are independent and have expertise
in the field of financial reporting, as well as special knowledge
and experience in the application of methods of internal
control. During financial year 2015, the employees were repre-
sented on the Audit Committee by Michael Brecht as the
Deputy Chairman of the Committee and by Dr. Sabine Maaßen.
Equal representation
On the basis of applicable law, the German Corporate Gover-
nance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals primarily
with questions of accounting and financial reporting. In addi-
tion, it deals with the annual audit and reviews the qualifications
and independence of the external auditors. Furthermore, it
discusses the effectiveness and functional capabilities of the
risk management system, the internal control system, the
internal auditing system and compliance management. After
the external auditors are elected by the Annual Shareholders'
Meeting, the Audit Committee engages the external auditors
to conduct the annual audit and the auditors' review of interim
financial statements, determines the important audit issues
and negotiates the audit fees with the external auditors.
Responsibility
Reporting to the Supervisory Board
As Chairman of the Audit Committee, I am pleased to report
to you on the tasks and activities performed by that body in
financial year 2015.
Report of the Audit Committee
182
187
D&O insurance deductible for the Supervisory Board
- Targets for the composition of the Supervisory Board
Declaration by the Board of Management
and the Supervisory Board of Daimler AG
of Compliance with the German Corporate
Governance Code
Shares and Share Transactions by Board of
Management and Supervisory Board members
Risk management and financial reporting
Corporate governance statement
Shareholders and the Annual Shareholders' Meeting
Dear Shareholders,
The Chairman of the Audit Committee informed the Supervisory
Board about the activities of the Committee and about the
contents of its meetings and discussions in the following Super-
visory Board meetings.
Topics in 2015
In a meeting on February 4, 2015, the Audit Committee dealt
with the preliminary figures of the annual company financial
statements and the annual consolidated financial statements
for the year 2014, as well as with the proposal on the appro-
priation of profits made by the Board of Management. Follow-
ing an in-depth review, the Audit Committee took positive
note of the presented figures and determined that no objections
could be made to their proposed publication. The Committee
further recommended that the Supervisory Board adopt the same
view. The preliminary key figures for financial year 2014 and
the proposal on the appropriation of profits were published at
the Annual Press Conference on the next day (February 5,
2015).
During the year under review, Daimler Financial Services
brokered 1.8 million insurance policies - an increase of 25%
compared with the prior year. Our insurance business
continued to be particularly successful in China, where an
average of 75% of Daimler vehicles were delivered with
an insurance policy brokered by us.
As in previous years, the Audit Committee once again con-
ducted a self-evaluation of its own activities in 2015. The very
positive results of this efficiency review were presented and
discussed in the meeting in mid-February 2016. This did not
result in any need for action with regard to the Committee's
tasks, or with regard to the content, frequency or procedure
of its meetings.
Efficiency review
Also in this meeting, the Audit Committee discussed the report
on the total fees paid to the external auditors in the year 2015.
The Audit Committee also decided to recommend to the Super-
visory Board, and subsequently to the Annual Shareholders'
Meeting, that KPMG be engaged to conduct the annual exter-
nal audit and the external auditors' review of interim financial
reports for financial year 2016; the results of the independence
review and the discussion of the quality of the external audit
were taken into consideration. Subject to the outcome of voting
by the Annual Shareholders' Meeting, the Committee also
discussed the proposal for the fees to be agreed upon with
the external auditors for financial year 2016. Finally, within
the framework of its responsibility, the Audit Committee dealt
with the draft agenda for the 2016 Annual Shareholders'
Meeting and the annual audit plan for 2016 of the Internal
Auditing department.
In another meeting on February 16, 2016, the Audit Committee
reviewed and discussed in detail the annual company financial
statements, the annual consolidated financial statements and
the combined management report for Daimler AG and the
Daimler Group for the year 2015, each of which had been issued
with an unqualified auditor's opinion by the external auditors,
as well as the proposal on the appropriation of profits. At the
meeting, the external auditors reported on the results of their
audit and were available to answer supplementary questions
and to provide additional information. The audit reports on
the company and consolidated financial statements and on the
internal control system (ICS), the report on the risk manage-
ment system for the year 2015, the Annual Report 2015 and
important issues related to financial reporting were discussed
with the external auditors. Following an intensive review
and discussion, the Audit Committee recommended that the
Supervisory Board approve the annual financial statements
and the combined management report, and on this basis adopt
the recommendation of the Board of Management to pay a
dividend of €3.25 per share entitled to a dividend. Furthermore,
the Audit Committee approved the Report of the Audit
Committee for the year 2015.
In a meeting held on February 3, 2016, the Audit Committee
dealt with the preliminary figures of the annual company
financial statements and the annual consolidated financial
statements for the year 2015, as well as with the proposal
on the appropriation of profits made by the Board of Manage-
ment. Following an in-depth review, the Audit Committee
took positive note of the presented figures and determined that
no objections could be made to their proposed publication.
The Committee further recommended that the Supervisory Board
adopt the same view. The preliminary key figures and the
proposal on the appropriation of profits were published at the
Annual Press Conference on February 4, 2016.
In the meeting held on October 21, 2015, the Committee dealt
with, among other things, current activities in the Compliance
department and was informed in particular about measures
designed to ensure the permanent establishment of the elements
of the Compliance Management System and the improvement
of specific processes.
In the meeting held on July 22, 2015, the Audit Committee
received the annual report from the Group's Data Protection
Officer and was informed about the main topics and current
developments in the field of data protection. Here, the members
of the Committee addressed, for example, the data protection
principles for connected vehicles and data protection at the
Mercedes me online platform, which is designed to reconcile
the needs of data security and customer-friendly operation.
Also in the meeting on June 18, 2015, the Audit Committee dealt
with new developments in accounting and financial reporting
and other audit-relevant areas. Furthermore, the Committee
was informed in detail about the Group Legal System and Group
Legal Risk Reporting. Finally, the Committee was informed
in detail about the leasing business model and also discussed
with the Board of Management and the representatives
of the specialist departments issues related to residual-value
management and associated accounting processes.
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
184
In its meeting on June 18, 2015, the Audit Committee discussed
the Group's risk management system, and dealt in particular
with its changes and further development. It also discussed the
methods and processes of, and possible changes to, the
internal control system, which along with accounting also encom-
passes the internal auditing and compliance management
functions. Furthermore, the Committee received a report
on the non-auditing services provided by the external auditors.
In this meeting, the important audit issues for the external
audit of the reporting period and the framework of approval for
engaging the external auditors to provide non-audit services
were also determined. In addition, this meeting was used to dis-
cuss the results of the internal quality analysis of the external
audit for the year 2014.
In the meetings during 2015 relating to the quarterly results,
the Audit Committee discussed the interim financial reports
before their publication with the Board of Management and
with the external auditors engaged to carry out the auditors'
review of interim financial statements. In addition, the Commit-
tee received reports from the Compliance, Legal and Corpo-
rate Audit departments. In this connection, the Audit Commit-
tee dealt, for example, with the current status of pending
legal proceedings and with measures taken by the Company to
prevent money laundering and to ensure a review of sanction
lists. In addition, the Audit Committee dealt with notifications
concerning possible violations of rules submitted by employees
and third parties to the Company's own whistleblower system,
the BPO (Business Practices Office).
Also in this meeting, the Audit Committee discussed the report
on the fees paid to the external auditors in the year 2014 for
auditing and non-auditing services. Taking into consideration
the results of the independence review, the Audit Committee
decided to recommend to the Supervisory Board, and subse-
quently to the Annual Shareholders' Meeting, that KPMG be
engaged to conduct the annual external audit and the external
auditors' review of interim financial reports for financial year
2015. Among other things, the Audit Committee based this rec-
ommendation on the very good results of the analysis of the
quality of the external audit of financial year 2013 carried out
by the Audit Committee in May 2014. Subject to the election
of the proposed external auditors by the Annual Shareholders'
Meeting, the Committee discussed the proposal for the fees
to be agreed upon with the external auditors for financial year
2015. Finally, within the framework of its responsibility, the
Audit Committee dealt with the draft agenda for the 2015 Annual
Shareholders' Meeting and the annual audit plan for 2015 of
the Corporate Auditing department.
issues related to financial reporting were discussed with the
external auditors. Following an intensive review and discussion,
the Audit Committee recommended that the Supervisory
Board approve the annual financial statements and the com-
bined management report, and on this basis adopt the
recommendation of the Board of Management to pay a dividend
of €2.45 per share entitled to a dividend. Furthermore, the
Audit Committee approved the Report of the Audit Committee
for the year 2014.
Dr. Clemens Börsig, Chairman of the Audit Committee
In another meeting held on February 13, 2015, the Audit Com-
mittee dealt with the annual company financial statements,
the annual consolidated financial statements and the combined
management report for Daimler AG and the Daimler Group
for the year 2014, which had been issued with an unqualified
auditor's opinion by the external auditors, as well as with the
proposal on the appropriation of profits. At the meeting, the
external auditors reported on the results of their audit and
were available to answer supplementary questions and to pro-
vide additional information. The audit reports on the com-
pany and consolidated financial statements and on the internal
control system (ICS), the report on the risk management sys-
tem for the year 2014, the Annual Report 2014 and important
Germany's law on the equal participation of women
and men in executive positions
Stuttgart, February 2016
committees of the Supervisory Board
Management and the Supervisory Board
PER NOMES
1254
The automatic system for truck-toll collection on German
autobahns and selected federal highways continued to operate
smoothly and reliably in 2015. The system recorded a total
of 29.7 billion kilometers driven. Daimler Financial Services
holds a 45% equity interest in the Toll Collect consortium.
On July 1, 2015, the Toll Collect system was expanded to cover
additional federal highways in Germany, and on October 1
it was extended to include trucks with a gross vehicle weight
of 7.5 metric tons and above. The Federal Republic of Germany
has collected a total of €44 billion in tolls since Toll Collect
went into operation at the beginning of 2005.
Toll Collect system successfully expanded
The foundation of these and other successes is formed by
our highly motivated employees, nine out of ten of whom
stated in the independent Great Place to Work Institute global
survey that Daimler Financial Services is a great employer.
Focus on customer and employee satisfaction
Customer and employee satisfaction is a top priority at Daimler
Financial Services. In 2015, independent surveys once again
showed that we are a leader in numerous countries with regard
to customers' and dealers' assessments of our service quality.
In the United States, for example, Mercedes-Benz Financial
Services finished top in three categories of a J. D. Power study
of dealer satisfaction, whereby more than two thirds of the
dealers surveyed reported that they planned to further increase
the share of business they conduct with Mercedes-Benz
Financial Services USA due to the exceptional customer focus
of the company's sales staff. During the year under review,
Mercedes-Benz Financial Services was once again named the
most popular partner for auto dealerships also in the UK.
In 2015, Daimler Financial Services once again supported
its fleet customers with the financing and management of their
vehicles and fleets. Daimler Fleet Management concluded a
total of 152,000 new contracts with commercial clients in 2015,
representing an increase of 9% over the previous year. A total
of 310,000 contracts were on the books in Europe at the end
of December 2015 - an increase of 1.5% over the previous
year. The demand for comprehensive mobility concepts for
use with company fleets increased during the year under
review, and fleet services for smaller companies with less than
50 vehicles were also expanded.
Fleet business expanded
P
179
178
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
Daimler Financial Services satisfies its customers' requirements with excellent service and tailored financing, leasing and insurance offers.
Continued expansion in North America
Daimler Financial Services was able to record an increase
over the high level of new business of the previous year also in
the Americas region, where the company brokered 456,365
new financing and leasing contracts worth €22.0 billion in 2015
(+21%). The decrease in new business in Brazil that resulted
from the difficult economic situation in the country was offset
by significant gains in the United States (+28%) and Mexico
(+31%), leading to an overall increase in contract volume in the
Americas of 18% to €50.8 billion.
Increase in new business in Africa & Asia-Pacific region
New business in the Africa & Asia-Pacific region increased over
the previous year by 39% to €11.3 billion. Business develop-
ment was especially strong in India (+91%), China (+66%) and
South Korea (+53%). With a contract volume of €6.9 billion,
China became the fourth-largest market for Daimler Financial
Services in the year under review. At the end of 2015, contract
volume in the Africa & Asia-Pacific region totaled €20.2 billion,
which corresponds to a 32% increase over the previous year.
Growth in the insurance business
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
A new approach to mobility: With car2go, moovel and mytaxi, we are making personal transport more connected, flexible and intelligent.
S.MB 2540
We act responsibly and sustainably
The main principles applied in our corporate governance
Composition and mode of operation of the Board of
185 - 186
188 - 195
Corporate Governance Report
182-184
D❘ CORPORATE GOVERNANCE | CONTENTS 181
Antitrust law
-
Compliance
Culture of integrity
Integrity and Compliance
- Topics dealt with
Meetings and participants
Responsibilities and composition
Report of the Audit Committee
D | Corporate Governance
The Board of Management and the Supervisory Board of Daimler
are committed to the principles of good corporate governance.
All of our actions take place within the framework of responsible,
transparent and sustainable corporate governance.
Composition and mode of operation of the
The Audit Committee
Topics in 2016
Dr. Clemens Börsig
Chairman
Daimler takes appropriate measures to ensure that the legal
sanctions specified by legislation are observed. Effective
and efficient implementation has been ensured here by the
introduction of a global system-based standard process.
Systematic minimization of compliance risks
We systematically analyze and assess the compliance risks of
all our business units every year. The results of this analysis
form the basis of our risk management. One focus of our risk
minimization activities is on sales companies in high-risk
countries. The responsibility for implementing and monitoring
the associated measures lies with the management of each
company, which cooperates closely with the Group Compliance
department.
Effective compliance structures
Our Compliance Organization is structured along the lines of
our divisions. This structure enables us to offer effective
support and advice to the individual divisions. For this purpose,
the organization consists of divisional and regional compliance
officers. In addition, local compliance managers throughout
the world make sure that our standards are observed. The
divisional and regional compliance officers report directly to
the Chief Compliance Officer. This ensures the divisional and
regional compliance officers' independence from the divisions.
The Chief Compliance Officer reports directly to the Member
of the Board of Management for Integrity and Legal Affairs and
to the Chairman of the Supervisory Board.
We offer target group-specific training courses within our inte-
grated training program in order to ensure compliance staff
members remain up to date on the continual changes made to
laws and regulations.
Whistleblower system BPO (Business Practices Office)
The BPO is the organization where Daimler employees and
external whistleblowers can report misconduct anywhere in
the world. The office is available to receive information around
the clock and if allowed by local law - also anonymously.
This system enables us to learn about potential risks and specific
violations at an early stage and thus prevent damage to the
company and its reputation. Our globally valid corporate policy
in this area ensures a fair and sensitive approach that takes
into consideration the principle of proportionality and also gives
protection to both whistleblowers and affected parties. In
Germany, reports to the BPO can also be submitted via a “neutral
intermediary" - an independent attorney who, due to her oath
of professional secrecy, is obliged to maintain confidentiality.
Compliance at our business partners
We regard our business partners' integrity and behavior in con-
formity with regulations as an indispensable precondition
for trusting cooperation. In the selection of our direct business
partners, we make sure that they comply with the law and
observe ethical principles. Within the framework of our integrated
training program, we also offer our business partners special
training courses on integrity and compliance in line with the
specific risks they face. We reserve the right to terminate our
cooperation with business partners who fail to conform to our
standards. For the expectations we place on our business
partners, see also ④daimler.com/sus/obr.
Sharing experience of compliance in practice
We have designed the Daimler Compliance Academy as an
annual practical seminar that creates a platform for sharing
experience of compliance trends and challenges. The seminar,
which took place for the second time in 2015, is directed at
compliance professionals from all industries.
Antitrust law
Consistent compliance with sanction lists
Our Group-wide antitrust-compliance program, which is oriented
toward national and international standards, helps us to ensure
adherence to antitrust laws in our business operations. By assess-
ing qualitative and quantitative factors, we systematically
analyze the antitrust risks of all our business units. The results
of this analysis form the basis of our risk management and
of the definition of the measures to be taken to counteract any
risks related to antitrust law.
D❘ CORPORATE GOVERNANCE | DECLARATION OF COMPLIANCE 187
Declaration by the Board of Management and
Supervisory Board of Daimler AG pursuant
to Section 161 of the German Stock Corporation
Act (AktG) regarding the German Corporate
Governance Code
Daimler AG satisfies the recommendations of the German
Corporate Governance Code published in the official section
of the German Federal Gazette on June 12, 2015 in the Code
version dated May 5, 2015, with the exception of Clause 3.8
Paragraph 3 (D&O insurance deductible for the Supervisory
Board) and one deviation from Clause 5.4.1 Paragraph 2 (Spe-
cific objectives for the composition of the Supervisory Board),
which was declared as a precautionary measure, and will con-
tinue to observe the recommendations with the aforesaid
deviations. Since the issuance of the last compliance declara-
tion in December 2014, Daimler AG has observed the recom-
mendations of the German Corporate Governance Code in the
version dated June 24, 2014, published on September 30,
2014, with the aforementioned exceptions.
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3)
As in previous years, the Directors' & Officers' liability insurance
(D&O insurance) also contains a provision for a deductible
for the members of the Supervisory Board, which is appropriate
in the view of Daimler AG. However, this deductible does not
correspond to the legally required deductible for members of
the Board of Management in the amount of at least 10% of
the damage up to at least one and a half of the fixed annual
remuneration. Since the remuneration structure of the
Supervisory Board is limited to fixed remuneration without
performance bonus components, setting a deductible for
Supervisory Board members in the amount of 1.5 times the
fixed annual remuneration would have a disproportionate
economic impact when compared with the members of the
Board of Management, whose compensation consists of
fixed and performance bonus components.
Specific objectives for the composition of the Supervisory
Board (Clause 5.4.1 Paragraph 2)
ming.
Daimler AG is in conformity with the new recommendation for
a limit on the duration of membership in the Supervisory Board
contained in Clause 5.4.1 Paragraph 2 of the new version of
the German Corporate Governance Code, dated May 5, 2015,
since the determination of such a limit with a Supervisory
Board resolution dated December 9, 2015.
Stuttgart, December 2015
For the Supervisory Board
Dr. Manfred Bischoff
Chairman
For the Board of Management
Dr. Dieter Zetsche
Chairman
We help our employees to recognize situations that might
be critical from an antitrust perspective and to act in compliance
with regulations in their daily work by means of training
courses, as well as with written advice and practical examples.
Our employees also have access to an advisory hotline estab-
lished by the Legal department for questions on antitrust and
cartel matters. Our antitrust-compliance program defines a
binding Daimler standard on how matters of competition law
are to be assessed internally. In this context, we focus in par-
ticular on the strict standards of the European antitrust author-
ities and courts. Our standard is the basis for effective imple-
mentation of the program and allows us, guided and supported
by our Legal department, to ensure a uniform level of compli-
ance and advice throughout the Group. We regularly review our
antitrust-compliance program in order to continually adapt it
to worldwide developments, new legal requirements and changing
risks, and to constantly improve its effectiveness.
This policy is designed to prevent money laundering and the
financing of terrorism in the trade with goods. It forms the
basis for ensuring that legislation in various countries is com-
plied with throughout the Group. The Chief Compliance
Officer serves as the anti-money laundering officer of Daimler AG.
A center of competence supports the Chief Compliance Officer
with the management and coordination of money-laundering
prevention measures in the goods trade.
The Supervisory Board has limited its target objective for its
composition regarding the number of independent members of
the Supervisory Board and in consideration of potential con-
flicts of interest to the appointments for the shareholders' side
in the light of the German Co-Determination Act and due to
the lack of influence on the appointments for the employee side.
Our CMS is based on national and international standards and
supports us in ensuring compliant behavior in our daily busi-
ness. We continually review the effectiveness of the system,
and we adjust it to worldwide developments, changed risks
and new legal requirements. In this way, we improve its efficiency
and effectiveness.
"Anti-Money Laundering Policy"
Integrity and Compliance
D | CORPORATE GOVERNANCE | INTEGRITY AND COMPLIANCE
A culture of integrity
Integrity is one of our four corporate values, which form the
foundation of our business activities. We are convinced that
doing business ethically brings us sustained success and is
also good for society as a whole. As a group of companies
with global operations, we accept responsibility and want to be
a pioneer in terms of ethical business conduct. The further
development and permanent establishment of such ethical
conduct is an important task and therefore a component of
the target agreements for Board of Management remuneration.
Our business activities are also strongly guided by the ten
principles of the UN Global Compact, of which Daimler is a
founding member. We are also a member of the Global
Compact LEAD Group.
In order to further develop a culture of integrity at the company,
we also began conducting a continual dialogue with our
employees in 2011. Integrity cannot be dictated from above;
this is why the regular sharing of opinions on questions of
integrity is an integral component of our everyday working life.
We regularly address integrity issues in our internal media
and make extensive integrity-related materials available on the
intranet for use by all our business units.
Integrity Code
The Integrity Code is a result of our dialogue with employees.
The Code, which is based on a shared understanding of values
agreed upon with our employees, lays out the principles for
our everyday business conduct. Such principles include fairness,
responsibility, mutual respect, transparency, openness, legal
compliance and the honoring of rights. The Code is valid through-
out the Group and is available in 23 languages. A guide has
been prepared to support the application of the Code in every-
day situations, providing answers to the most frequently
asked questions.
Contact and advice center
In March 2015, we launched the "Infopoint Integrity" for the
employees at our locations in Germany. The team offers advice
on integrity-related issues in the daily work environment
and puts employees in touch with the right contact partner if
necessary.
Communicating with employees
By means of innovative dialog formats, our employees are
encouraged to discuss the issue of integrity. For example,
executives can use a toolbox to initiate discussions about
185
Extensive training program
integrity in their departments. Furthermore, more than 55,000
employees worldwide have participated in our online game
"Monster Mission" since September 2014. The game increases
employee awareness of the principles contained in the
Integrity Code by simulating specific everyday work situations
in which ethical behavior is required.
Daimler acts in conformance with ethical principles and adheres
to all relevant legislation, internal rules and voluntary commit-
ments. We place the utmost priority on complying with all appli-
cable anti-corruption regulations and on maintaining and
promoting fair competition, as is set out in our Integrity Code.
D | CORPORATE GOVERNANCE | INTEGRITY AND COMPLIANCE
186
We also promote discussions of issues of current importance
to the company through our meetings with stakeholders.
To this end, we organized a conference in 2015 under the head-
ing of "Autonomous Driving, Law and Ethics."
Compliance
Our Integrity Code also defines requirements for managers, who
serve as role models and have a special responsibility for
the culture of integrity. All training seminars for new managers
therefore also include modules that address the topic of
integrity. In addition, integrity and compliance are important
criteria in the annual target agreements and in assessing
the target achievement of our managers.
Requirements for managers
The Integrity Code also forms the foundation of the range of
training courses we offer. Our integrated training program is
defined on the basis of an annual planning cycle that starts with
a needs analysis, extends through the implementation of the
program and ends with a feedback and monitoring process.
Among other things, the program addresses the topics of integ-
rity, compliance, data protection and antitrust law. Depending
on the risk and the target group, we use classroom training or
web-based training sessions. Our training measures help ensure
that ethical and compliant behavior remain firmly and sustain-
ably anchored within the Group. They also help employees deal
with specific questions in their day-to-day business. Basic web-
based training in integrity, compliance and legal issues is offered
to our employees via the intranet. Every newly hired Daimler
employee must complete this training session as part of a
"Welcome Package” when they join the company. About
50,000 employees from various levels of the hierarchy partici-
pated in this training program in 2015.
Advisory Board for Integrity and Corporate Responsibility
The Advisory Board consists of independent external experts
from the fields of science, business, politics and journalism,
and from non-governmental organizations. The Advisory Board
regularly collects information on the company's activities,
conducts discussions with company representatives and monitors
the integrity process at Daimler in a constructively critical banner.
Compliance management system (CMS)
Corporate Governance Report
188 D❘ CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
232
265
272
39. Additional information
234
21. Share-based payment
272
38. Principal accountant fees
19. Trade receivables
271
the Supervisory Board
232
of the Board of Management and
231
18. Inventories
37. Remuneration of the members
Good corporate governance is a precondition for and a reflection of the responsible management
of a company. The Board of Management and the Supervisory Board aim to align the Group's
management and supervision with nationally and internationally recognized standards in order
to secure sustainable value creation and success at the Daimler Group with its strong traditions.
230
20. Equity
The main principles applied in our corporate
governance
Composition and mode of operation of the
Board of Management and the Supervisory
Board 7 D.01
The legal framework for the corporate governance of Daimler AG
is provided by German law, in particular the Stock Corporation
Act (AktG), the Codetermination Act (MitbestG) and legislation
concerning capital markets, as well as by the Company's
Articles of Incorporation. The German Corporate Governance
Code gives recommendations and makes suggestions for
the details of this framework. These recommendations and
suggestions are regularly reviewed by the Government
Commission for the German Corporate Governance Code. In
the reporting year, this review caused the Code to be revised
as of May 5, 2015. This revised description of the Code was
published in the German Federal Gazette on June 12, 2015.
Governance structure
D.01
For certain types of transaction of fundamental importance as
defined by the Supervisory Board, the Board of Management
requires the consent of the Supervisory Board. At regular inter-
vals, the Board of Management reports to the Supervisory
Board on corporate strategy, corporate planning, profitability,
business development and the situation of the Group, as well
as on the internal control system, the risk management system
and compliance. The Supervisory Board has specified the
information and reporting duties of the Board of Management.
The Board of Management prepares the Group's interim reports,
the annual company financial statements of Daimler AG, the
annual consolidated financial statements, and the combined
management report of the Company and the Group. It
ensures that the provisions of applicable law, official regula-
tions and the Group's internal guidelines are adhered to,
and works to make sure that the companies of the Group com-
ply with those rules and regulations. The tasks of the Board
of Management also include establishing and monitoring an
appropriate and efficient risk management system.
The members of the Board of Management must represent
the interests of the Company and share responsibility for manag-
ing the Group's entire business. Irrespective of this overall
responsibility, the individual members of the Board of Manage-
ment manage their allocated areas on their own responsibility
and within the framework of the instructions approved by the
entire Board of Management. Affairs of fundamental or great
importance that affect the areas of responsibility of several Board
of Management members are dealt with by the Board as a
whole, which must approve all related decisions. The Chairman
of the Board of Management coordinates the work of the
Board of Management.
of Management and their areas of responsibility are also listed
on page 46 of this Annual Report. No member of the Board
of Management is a member of more than three supervisory
boards of listed companies outside the Daimler Group or of
similar boards or committees with comparable requirements of
companies outside the Daimler Group. The Board of Manage-
ment manages Daimler AG and the Daimler Group. With the
consent of the Supervisory Board, the Board of Management
determines the Group's strategic focus, defines the corporate
goals and makes decisions concerning operational planning
issues.
Information on the areas of responsibility and curricula vitae
of the Board of Management members are posted on our web-
site at daimler.com/dai/bom. The members of the Board
In accordance with the Articles of Incorporation of Daimler AG,
the Board of Management has at least two members. The
precise number of Board of Management members is determined
by the Supervisory Board. The Board of Management had
eight members on December 31, 2015. In accordance with the
German law requiring women and men to be equally repre-
sented in executive positions, the Supervisory Board has defined
a target for the proportion of women on the Board of Manage-
ment as well as a deadline when this target must be met. The
details are described in a separate section:
pages 193 f
Board of Management
German Corporate Governance Code
Daimler AG is obliged by the German Stock Corporation Act
(AktG) to apply a dual management system featuring strict
personal and functional separation between the Board of
Management and the Supervisory Board (two-tier board).
Accordingly, the Board of Management manages the company
while the Supervisory Board monitors and advises the Board
of Management. No person may be a member of the two boards
at the same time.
Expectations on our business partners
The "Principles of Social Responsibility" also form part of the
Integrity Code. They are binding for the entire Group. In the
Principles of Social Responsibility, Daimler commits itself to
the principles of the UN Global Compact and thus to inter-
nationally recognized human and workers' rights, such as the
prohibition of child labor and forced labor, as well as freedom
of association and sustainable protection of the environment.
Daimler also commits itself to guaranteeing equal oppor-
tunities and adhering to the principle of “equal pay for equal
work." The Integrity Code is available on the Internet at
daimler.com/dai/caag.
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT 189
The Integrity Code defines the principles of behavior and guide-
lines for everyday conduct at Daimler. This applies to inter-
personal conduct within the company as well as conduct toward
customers and business partners. Fairness, responsibility
and compliance with legislation are key principles in this context.
The Integrity Code is based on a shared understanding of
values, which was developed together with the Daimler employ-
ees. In addition to general principles of behavior, it includes
requirements and regulations concerning the protection of human
rights, dealing with conflicts of interest and preventing all
forms of corruption.
Integrity Code
The principles guiding our conduct
Additional relevant principles of corporate governance that go
beyond the legal requirements but are applied throughout the
Group are our Standards of Business Conduct. They are com-
posed of several documents and policies and are based on the
company values of passion, respect, integrity and discipline.
These standards serve as a frame of reference at Daimler that
helps ensure behavior in conformity with applicable regula-
tions and the principles of integrity.
Daimler AG has followed and continues to follow the suggestions
of the Code with just one exception: Deviating from the sug-
gestion in Clause 2.3.3, which stipulates that companies should
enable shareholders to view the Annual Shareholders' Meeting
with modern communications media such as the Internet, the
Annual Shareholders' Meeting is not transmitted in its entirety
on the Internet, but only until the end of the report by the Board
of Management, in order to protect the character of the
Annual Shareholders' Meeting as a meeting attended by our
shareholders in person. An additional factor is that continuing
the broadcast after that point, in particular broadcasting com-
ments made by individual shareholders, could impair the dis-
cussion between shareholders and management, and might
also be construed as an unjustified infringement of share-
holders' privacy rights. When considering this matter, the inter-
ests of transmission do not automatically take precedence
over shareholders' privacy rights. This is reflected by the statu-
tory requirement for the entire transmission to have a legal
basis in the Company's Articles of Incorporation or in the rules
of procedure for the Annual Shareholders' Meeting.
daimler.com/dai/gcgc. Previous, no longer applicable dec-
larations of compliance from the past five years, and the
current German Corporate Governance Code are also available
there.
There is no statutory duty to follow the standards contained in
the recommendations and suggestions of the Code. However,
according to the principle of comply or explain, the Board of
Management and the Supervisory Board of Daimler AG are
obliged by Section 161 of the German Stock Corporation Act
(AktG) to make a declaration of compliance with regard to
the recommendations of the German Corporate Governance
Code and to disclose and justify any deviations from the
Code's recommendations. With the exceptions disclosed and
justified in the declaration of compliance of December 2015,
Daimler AG has followed and continues to follow the recom-
mendations of the German Corporate Governance Code.
The declaration of compliance is printed on page 187 of this
Annual Report and can also be accessed on our website at
For Daimler, acting with integrity is a basic prerequisite for
trusting cooperation. When selecting our direct business part-
ners, we ensure that they comply with the law and follow
ethical principles. For the expectations we place on our busi-
ness partners, see also daimler.com/sus/obr.
17. Other assets
33. Segment reporting
36. Related party relationships
198
Consolidated Statement
of Comprehensive Income/Loss
199
Consolidated Statement
of Financial Position
200
Consolidated Statement of Cash Flows
Consolidated Statement of Income
201
of Changes in Equity
202
Notes to the Consolidated Financial
Statements
204
1. Significant accounting policies
204
22. Pensions and similar obligations
Consolidated Statement
197
E | CONSOLIDATED FINANCIAL STATEMENTS | CONTENTS
The Consolidated Financial Statements presented as follows have been prepared
in accordance with the International Financial Reporting Standards (IFRS), as
adopted by the European Union (EU). They also comply with additional requirements
set forth in Section 315a (1) of the German Commercial Code (HGB).
We maintain close contacts with our shareholders in the con-
text of our comprehensive investor relations and public rela-
tions activities. We regularly and comprehensively inform our
shareholders, financial analysts, shareholder associations,
the media and the interested public about the situation of the
Group, and inform them without delay about any significant
changes in its business.
In addition to other methods of communication, we also make
extensive use of the Company's website. All of the important
information disclosed in 2015, including annual and interim
reports, press releases, voting rights notifications from major
shareholders, presentations, and audio recordings of analyst
and investor events and conference calls, as well as the
financial calendar, can be found at H daimler.com/investors.
All the dates of important disclosures such as annual reports
and interim reports and the dates of the Annual Shareholders'
Meeting, the annual press conference and the analyst confer-
ences are announced in advance in the financial calendar. The
financial calendar is also included in this Annual Report as a
bookmark. Disclosures are made in English as well as in German.
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
195
Shares and share transactions by Board of
Management and Supervisory Board members
As of December 31, 2015, the members of the Board of
Management held a total of 0.25 million shares or options on
shares of Daimler AG (0.024% of the shares issued). On
the same date, the members of the Supervisory Board held a
total of 0.02 million shares or options on shares of Daimler AG
(0.002% of the shares issued).
Risk management and financial reporting
pages 138 ff
Risk management at the Group
Daimler has a risk management system
commensurate with its size and position as a company with
global operations. The risk management system is one
component of the overall planning, controlling and reporting
process. Its goal is to enable the company's management
to recognize significant risks at an early stage and to initiate
appropriate countermeasures in a timely manner. The Super-
visory Board deals with the risk management system in partic-
ular with regard to the approval of the operational planning.
The Audit Committee discusses at least once a year the
effectiveness and functionality of the risk management system
with the Board of Management and the external auditors.
In addition, the Audit Committee regularly deals with the risk
report. The Chairman of the Supervisory Board has regular
contacts with the Board of Management to discuss not only
the Group's strategy and business development, but also
the issue of risk management. The Internal Auditing depart-
ment monitors adherence to the legal framework and
Group standards by means of targeted audits and initiates
appropriate actions as required.
Accounting policies
The consolidated financial statements of the Daimler Group
are prepared in accordance with the International Financial
Reporting Standards (IFRS), as adopted by the European
Union, and with the supplementary standards to be applied
according to Section 315a Subsection 1 of the German
Commercial Code (HGB). Details of the IFRS are provided
in this Annual Report in the Notes to the Consolidated
Financial Statements.
Note 1 of the Notes to the Consolidated Financial State-
ments. The annual financial statements of Daimler AG, which is
the parent company, are prepared in accordance with the
accounting standards of the German Commercial Code (HGB).
Both sets of financial statements are audited by a firm of
accountants elected by the Annual Shareholders' Meeting to
conduct the external audit.
Interim reports for the Daimler Group are prepared in accor-
dance with IFRS for interim reporting, as adopted by the Euro-
pean Union, as well as with regard to the interim management
reports prepared in accordance with the applicable provisions
of the German Securities Trading Act (WpHG). Interim finan-
cial reports are reviewed by the external auditors elected by
the Annual Shareholders' Meeting.
Corporate governance statement
The corporate governance statement to be issued pursuant
to Section 289a of the German Commercial Code (HGB) is
published simultaneously with the Annual Report including
the Corporate Governance Report at ④ daimler.com/dai/dsr
and can be accessed there.
S.MB 2098
S.MB 2091
SMB 2038
We have a sound
financial basis
236
2. Accounting estimates and assessments
214
23. Provisions for other risks
223
11. Property, plant and equipment
248
and other financial obligations
222
10. Intangible assets
30. Financial guarantees, contingent liabilities
219
247
29. Legal proceedings
219
8. Interest income and interest expense
9. Income Taxes
246
28. Consolidated statement of cash flows
219
7. Other financial income/expense, net
245
27. Other liabilities
218
31. Financial instruments
The influence of the Annual Shareholders' Meeting on the
management of the Company is limited by law, however. The
Annual Shareholders' Meeting can only make management
decisions if it is requested to do so by the Board of Management.
250
224
243
3. Consolidated Group
215
24. Financing liabilities
244
4. Revenue
216
25. Other financial liabilities
245
5. Functional costs
217
26. Deferred income
245
6. Other operating income and expense
270
225
13. Equity-method investments
258
32. Management of financial risks
12. Equipment on operating leases
Among other matters, the Annual Shareholders' Meeting
decides on the appropriation of distributable profits, the ratifi-
cation of the actions of the members of the Board of Manage-
ment and of the Supervisory Board, the election of the external
auditors, the election of the members of the Supervisory
Board representing the shareholders and the remuneration of
the Supervisory Board. The Annual Shareholders' Meeting
also makes other decisions, especially on amendments to the
Articles of Incorporation, capital measures and the approval
of certain intercompany agreements. Shareholders can submit
countermotions on resolutions proposed by the Board of
Management and the Supervisory Board and, within the provi-
sions of applicable law, can challenge resolutions passed by
the Annual Shareholders' Meeting in a court of law.
E| Consolidated Financial Statements
Shareholders and the Annual Shareholders'
Meeting
16. Other financial assets
The Board of Management has not formed any committees.
230
The shareholders exercise their membership rights, in parti-
cular their information and voting rights, at the Annual
Shareholders' Meeting. Each share in Daimler AG entitles
its owner to one vote. There are no multiple voting rights,
preferred stock or maximum voting rights at Daimler AG. Docu-
ments and information relating to the Annual Shareholders'
Meeting can be found on our website at daimler.com/ir/am.
The Annual Shareholders' Meeting is generally held within
four months of the end of a financial year. The Company facili-
tates the personal exercise of the shareholders' rights and
proxy voting in a variety of ways, such as by appointing proxies
who are strictly bound by the shareholders' voting instructions
and who can be contacted also during the Annual Sharehold-
ers' Meeting. Absentee voting is also possible. It is possible
to authorize the Daimler-appointed proxies and give them voting
instructions or to cast absentee votes by using the so-called
e-service for shareholders.
The Board of Management has committed to diversity manage-
ment as a strategic factor of success that safeguards the
future of the company, with the signed statement: "Promote
diversity. Create links. Shape the future."
The targeted advancement of women had been a key area of
action of Daimler's diversity management even before Ger-
many's law on the equal participation of women and men in
executive positions came into force. Among other things,
the Company promotes this goal with flexible working-time
arrangements, company-owned daycare centers and special
mentoring programs. To meet the new legal requirements, the
Board of Management has defined targets and deadlines for
the proportion of women at the two management levels below
the Board of Management. The details are described in a sepa-
rate section. Independently of the legal requirements, Daimler
continues to affirm the goal it already set itself in 2006 of
increasing the proportion of women in executive positions at
the Group to 20% by 2020. At the end of 2015, this proportion
amounted to about 15% (2014: 14.1%).
When making appointments to executive positions at the
Group, the Board of Management also gives due consideration
to age and internationality. The management of teams with a
varied makeup requires a conscious approach to the teams'
inherent diversity. A key element of our approach here is there-
fore to make executives more aware of the importance of
diversity. For this purpose, we also use mentoring programs,
communication activities, conferences, workshops and
e-learning tools. By continually addressing diversity manage-
ment issues, we help to further develop our corporate culture.
Supervisory Board
In accordance with the German Codetermination Act (MitbestG),
the Supervisory Board of Daimler AG comprises 20 members.
Half of them are elected by the shareholders at the Annual
Shareholders' Meeting. The other half comprises members
who are elected by the Company's employees who work in
Germany. The members representing the shareholders and
the members representing the employees are equally obliged
by law to act in the Company's best interests.
Information on the individual members of the Supervisory
Board is available on the Internet at ④ daimler.com/dai/
supervisoryboard and on pages 54 f of this Annual Report.
The Supervisory Board is to be composed so that its members
together dispose of the knowledge, skills and specialist
experience that are required for the proper execution of their
tasks. Proposals by the Supervisory Board of candidates
for election by the Annual Shareholders' Meeting as members
representing the shareholders of Daimler AG, for which the
Nomination Committee makes recommendations, take into
consideration not only the requirements of applicable law,
the Articles of Incorporation and the German Corporate Gover-
nance Code, but also a list of criteria of qualifications and
experience. They include, for example, market knowledge in
the regions particularly important to Daimler, expertise in
the management of technologies and experience in certain
management functions. Other important conditions for pro-
ductive work in the Supervisory Board and for being able to
properly supervise and advise the Board of Management
are the members' personality and integrity, as well as individual
diversity with regard to age, internationality, gender and
other personal characteristics.
In addition to Germany's new legal requirements for equal par-
ticipation by women and men in executive positions, the
Supervisory Board has also taken the recommendations of
the German Corporate Governance Code into account
with regard to the Board's composition and has therefore
set itself the following goals:
In order to ensure sufficient internationality, for example
through many years of international experience, the Supervi-
sory Board has set a target of a proportion of at least 30%
of international members representing the shareholders, and
the resulting proportion of the entire Supervisory Board of
at least 15%. Irrespective of the many years of international
experience of a great majority of the members representing
the shareholders, this target is currently significantly over-
achieved due to the international origins of Dr. Paul Achleitner,
Sari Baldauf, Petraea Heynike and Andrea Jung on the share-
holders' side (40%) and Valter Sanches on the employees'
entire Supervisory Board.
At least half of the members of the Supervisory Board
representing the shareholders should have
neither an advisory nor a board function for a customer,
supplier, creditor, or other third party nor
The Board of Management has also given itself a set of rules
of procedure, which can be viewed on our website at
④daimler.com/dai/rop. Those rules describe, for example,
the procedure to be observed when passing resolutions
and ways to avoid conflicts of interest.
or its boards
whose specific details could cause a conflict of interests.
During the reporting period, there were no instances of an
actual or a potential conflict of interest that might have affected
a shareholder representative on the Supervisory Board.
269
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
35. Earnings per share
15. Marketable debt securities
D❘ CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
190
8 members
Board of Management
the actions of
ratifies
appoints,
advises and
monitors
20 members
reports
reports
Supervisory Board
actions of
elects members
representing the
shareholders,
ratifies the
reports
Annual Shareholders' Meeting
14. Receivables from financial services
229
34. Capital management
269
230
191
⚫ a business or personal relationship to the Company
The rules of procedure of the Supervisory Board stipulate
that candidates for election as members of the Supervisory
Board who are to hold the position for a full period of office
should generally not be over the age of 72 at the time of their
election. In specifying this age limit, the Supervisory Board
has intentionally refrained from stipulating a strict upper age
limit and instead decided in favor of a flexible general limit
that ensures each individual case is appropriately assessed,
the
range of potential Supervisory Board candidates is
sufficiently broad and members can be reelected. After care-
ful consideration, the Supervisory Board took advantage
of its decision-making freedom to nominate Dr. Manfred
Bischoff to be elected for another full term to the Super-
visory Board at the Annual Shareholders' Meeting in 2016.
This decision was based on a number of factors, including
the very positive assessment of Dr. Bischoff's dedicated ser-
vice by the other members of the Supervisory Board as
well as his successful and constructively critical cooperation
with the Board of Management and the fact that his nomi-
nation would signalize stability and continuity at Daimler. In
addition, the nomination aims to maintain the different
areas of expertise of the Supervisory Board's members and
ensure that the body has a balanced age structure. None
of the other members of the Supervisory Board exceeded
the applicable general age limit at the time of his or her
election. This applies to Petraea Heynike as well, who is
also nominated for reelection to the Supervisory Board for
a full term at the Annual Shareholders' Meeting in 2016.
In accordance with the new recommendation of the German
Corporate Governance Code as revised on May 5, 2015,
the Supervisory Board decided on December 9, 2015, to
impose a general limit on the length of time a person
can be a member of the Board. As a result, only candidates
who have not yet been members of the Supervisory Board
for three full terms of office at the time of their election should
generally be nominated for membership of the Supervisory
Board for a full term of office. This general length of service
on the Supervisory Board has not been exceeded by
Dr. Manfred Bischoff and Petraea Heynike, are nominated for
reelection at the Annual Shareholders' Meeting in 2016.
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
193
Nomination Committee
The Nomination Committee is composed of at least three
members, who are elected by a majority of the votes cast by
the members of the Supervisory Board representing the
shareholders. It is the only Supervisory Board Committee that
consists solely of members representing the shareholders,
and makes recommendations to the Supervisory Board concern-
ing persons to be proposed for election as members of the
Supervisory Board representing the shareholders at the Annual
Shareholders' Meeting. In doing so, the Nomination Committee
takes into consideration the requirements of the new German
law regulating equal participation of women and men in exe-
cutive positions, the German Corporate Governance Code and
the rules of procedure of the Supervisory Board, as well as
the specific goals that the Supervisory Board has set for its own
composition. Furthermore, it defines the requirements for
each specific position to be occupied.
Audit Committee
The Audit Committee is composed of four members, who are
elected by a majority of the votes cast on the relevant resolu-
tion of the Supervisory Board. The Chairman of the Supervi-
sory Board is not simultaneously the Chairman of the Audit
Committee.
Both the Chairman of the Audit Committee, Dr. Clemens Börsig,
and the other shareholder representative on the Audit
Committee, Joe Kaeser, fulfill the criteria for independence
and have expertise in the field of financial reporting, as
well as special knowledge and experience in the application
of accounting principles and methods of internal control.
The Audit Committee deals with the supervision of the account-
ing process and the annual external audit. At least once a year,
it discusses with the Board of Management the effectiveness
and functionality of the risk management system, the internal
control and auditing system and the compliance management
system. It regularly receives reports on the work of the
Internal Auditing department and the Compliance Organization.
At least four times a year, the Audit Committee receives a
report from the Business Practices Office on complaints and
information about any breaches of regulations or guidelines
by high-level executives. It regularly receives information about
the handling of these complaints and notifications.
The Audit Committee discusses with the Board of Management
the interim reports on the first quarter, first half and first
nine months of the year before they are published. On the basis
of the report of the external auditors, the Audit Committee
reviews the annual company financial statements and the annual
consolidated financial statements, as well as the combined
management report of the Company and the Group, and dis-
cusses them with the external auditors. Since 2014, the
responsible auditor at KPMG AG Wirtschaftsprüfungsgesell-
schaft, the company of auditors commissioned to carry
out the external audit 2015, has been Dr. Axel Thümler. The
Audit Committee makes a proposal to the Supervisory
Board on the adoption of the annual company financial state-
ments of Daimler AG, on the approval of the annual consoli-
dated financial statements and on the appropriation of profits.
The Committee also makes recommendations for the proposal
on the election of external auditors, assesses those auditors'
suitability and independence, and, after the external auditors
are elected by the Annual Shareholders' Meeting, it engages
them to conduct the annual audit of the company and consoli-
dated financial statements and to review the interim reports,
negotiates an audit fee and determines the focus of the annual
audit. The external auditors report to the Audit Committee
on all accounting matters that might be regarded as critical and
on any material weaknesses of the internal control and risk
management system with regard to accounting that might be
discovered during the audit.
In addition, the Presidential Committee decides on questions
of corporate governance, on which it also makes recommenda-
tions to the Supervisory Board. It supports and advises the
Chairman of the Supervisory Board and his Deputy, and pre-
pares the meetings of the Supervisory Board within the
limits of its responsibilities.
Finally, the Audit Committee approves services that are not
directly related to the annual audit and which are provided
by the firm of external auditors or its affiliates to Daimler AG
or to companies of the Daimler Group.
The Mediation Committee is composed of the Chairman of the
Supervisory Board and his Deputy, as well as one member
of the Supervisory Board representing the employees and one
member of the Supervisory Board representing the share-
holders, each elected with a majority of the votes cast. It is
formed solely to perform the functions laid down in Section 31
Subsection 3 of the German Codetermination Act (MitbestG).
Accordingly, the Mediation Committee has the task of making
proposals on the appointment of members of the Board of
Management if in the first vote the majority required for the
appointment of a Board of Management member of two thirds
of the members of the Supervisory Board is not achieved.
As in previous years, the Mediation Committee did not have
to take any action in financial year 2015.
Germany's law on the equal participation of
women and men in executive positions
Germany's law on the equal participation of women and men in
executive positions went into effect on May 1, 2015. According
to this law, the supervisory boards of listed companies or com-
panies subject to Germany's system of codetermination have
to set a target for the proportion of women in the board of man-
agement. The board of management of such a company has
to set a target for the proportion of women at the two manage-
ment levels below that of the board of management. If the
proportions of women at the time when these targets are set
by the board of management and the supervisory board are
below 30%, the targets may not be lower than the proportions
already reached. At the same time that the targets are set,
the boards have to set periods for their achievement, which may
not be longer than five years. In the first step, targets had to
be set by no later than September 30, 2015, and deadlines fixed
for no later than June 30, 2017.
194
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
To meet these legal requirements, the Supervisory Board
of Daimler AG passed a resolution on April 28, 2015 that the
target figure for the proportion of women in the Board of
Management of Daimler AG would be 12.5% (the same as the
status quo at the time when the resolution was passed),
while the deadline would be December 31, 2016. Dr. Christine
Hohmann-Dennhardt stepped down from the Board of
Management at the end of December 31, 2015. She was suc-
ceeded on January 1, 2016, by Renata Jungo Brüngger. As
a result, women continue to account for 12.5% of the Board
of Management members.
On June 23, 2015, the Board of Management passed a resolu-
tion stipulating a target of 6.5% women for the first manage-
ment level below the Board of Management of Daimler AG (the
actual proportion was 5.3% at the time of the resolution) and
of 10.0% for the second management level below the Board of
Management (the actual proportion was 9.9% at the time of
the resolution). The Board of Management also set December 31,
2016 as the deadline for both of these targets.
For companies such as Daimler AG that have supervisory
boards in which shareholders and employees are equally repre-
sented, the new law on the equal participation of women and
men in executive positions stipulates a proportion of women
of at least 30% when vacant supervisory board positions are
filled, beginning in 2016. This requirement has to be fulfilled
by the Supervisory Board as a whole. If the side of the Super-
visory Board representing the shareholders or the side repre-
senting the employees objects to the Chairman of the Super-
visory Board about the application of the ratio to the entire
Supervisory Board, the minimum ratio is to apply separately
to the shareholders' side and to the employees' side for that
election.
On December 31, 2015, 30% of the shareholder representatives
in the Supervisory Board of Daimler AG were women (Sari
Baldauf, Andrea Jung and Petraea Heynike). On that date, 20%
of the employee representatives on the Supervisory Board
were women (Dr. Sabine Maaßen and Elke Tönjes-Werner). In
its meeting on October 1, 2015, the Supervisory Board con-
sidered its nominations for the election at the Annual Share-
holders' Meeting 2016 and came to the conclusion that the
shareholders and employees should achieve the legally required
share of women board members separately. This step became
necessary because the shareholder representatives declared
that they object to the Supervisory Board's combined com-
pliance with the legally required gender ratio. Thereafter, the
Supervisory Board decided to nominate Dr. Manfred Bischoff
and Petraea Heynike for reelection to the Supervisory Board
during the Annual Shareholders' Meeting 2016. If they are
reelected, the shareholder side will continue to fulfill the legally
required gender ratio. The next election of employee represen-
tatives to the Supervisory Board will take place in 2018.
Mediation Committee
In order to ensure the independent advice and supervision
of the Board of Management by the Supervisory Board, the
rules of procedure of the Supervisory Board already stipu-
late that more than half of the members of the Supervisory
Board representing the shareholders are to be independent
as defined by the German Corporate Governance Code and
that no person may be a member of the Supervisory Board
who is a member of a board of, or advises, a significant com-
petitor of the Daimler Group. At present, there are no
indications for any of the members of the Supervisory Board
representing the shareholders that relevant relationships
or circumstances exist that would compromise their inde-
pendence. In particular, this is not the case with their rela-
tionships or circumstances vis-a-vis the Company, the Board
of Management or other Supervisory Board members. No
member of the Supervisory Board is a member of a board of,
or advises, a significant competitor.
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of
the Board of Management, whereby it especially takes into
account the requirements of the position to be filled as
well as the Supervisory Board's target for the proportion of
women in the Board of Management. It submits proposals
to the Supervisory Board on the design of the remuneration
system for the Board of Management and on the appropriate
total individual remuneration of its members. In this context,
it follows the relevant recommendations of the German
Corporate Governance Code. The Presidential Committee is
also responsible for the Board of Management members'
contractual affairs. In addition, it decides on the granting of
approval for sideline activities of the members of the Board
of Management, reports to the Supervisory Board regularly
and without delay on consents it has issued and once a
year submits to the Supervisory Board for its approval a com-
plete list of the sideline activities of each member of the
Board of Management.
The Supervisory Board has formed four committees, which
perform to the extent legally permissible the tasks assigned to
them in the name of and on behalf of the entire Supervisory
Board: the Presidential Committee, the Nomination Committee,
the Audit Committee and the Mediation Committee. The
committee chairpersons report to the entire Supervisory Board
on the committees' work at the latest in the meeting of the
Supervisory Board following each committee meeting. The Super-
visory Board has issued rules of procedure for each of its
committees. These rules of procedure can be viewed on our
website at daimler.com/dai/rop. Information on the
current composition of these committees can be viewed at
daimler.com/dai/sbc and is also available on
The Supervisory Board has given itself a set of rules of proce-
dure, which regulate not only its duties and responsibilities
and the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. The rules of procedure
of the Supervisory Board can be viewed on our website at
daimler.com/dai/rop.
of this Annual Report.
Presidential Committee
The Supervisory Board reviews the annual company financial
statements, the annual consolidated financial statements and
the combined management report of the Company and the
Group, as well as the proposal for the appropriation of distri-
butable profits. Following discussions with the external
auditors and taking into consideration the audit reports of the
external auditors and the results of the review by the Audit
Committee, the Supervisory Board states whether, after the
final results of its own review, any objections are to be raised.
If that is not the case, the Supervisory Board approves the
financial statements and the combined management report.
Upon being approved, the annual company financial statements
are adopted. The Supervisory Board reports to the Annual
Shareholders' Meeting on the results of its own review and on
the manner and scope of its supervision of the Board of
Management during the previous financial year. The Report
of the Supervisory Board for the year 2015 is available on
pages 48 ff of this Annual Report and on the Internet at
daimler.com/dai/supervisoryboard.
The Supervisory Board also decides on the system of remuner-
ation for the Board of Management, reviews it regularly and
determines the individual remuneration of each member of the
Board of Management with consideration of the ratio of Board
of Management remuneration to the remuneration of the senior
executives and the workforce as a whole, also with regard to
development over time. For this comparison, the Supervisory
Board has defined the senior executives by applying Daimler's
internal terminology for the hierarchical levels and has defined
the workforce of Daimler AG in Germany as the relevant work-
force. For the individual Board of Management remuneration in
total and with regard to its variable components, the Super-
visory Board has set upper limits taking effect as of January 1,
2014. Further information on Board of Management remunera-
tion can be found in the Remuneration Report of this Annual
Report pages 122 ff
In accordance with German law requiring women and men to
be equally represented in executive positions, the Supervisory
Board has defined a target for the proportion of women in
the Board of Management as well as a deadline when this target
must be met. The details are described in a separate section.
Composition and mode of operation of
the committees of the Supervisory Board
page 55
192
The Supervisory Board's duties include appointing and recalling
the members of the Board of Management. Initial appoint-
ments are usually made for a period of three years. In connec-
tion with the composition of the Board of Management, the
Supervisory Board pays attention not only to the members'
appropriate specialist qualifications, with due consideration
of the Group's international operations, but also to diversity.
This applies in particular to age, nationality and other per-
sonal characteristics.
The Supervisory Board monitors and advises the Board of
Management with regard to its management of the Company.
At regular intervals, the Board of Management reports to the
Supervisory Board on corporate strategy, corporate planning,
profitability, business development and the situation of the
Group, as well as on the internal control system, the risk man-
agement system and compliance. The Supervisory Board has
retained the right of approval for transactions of fundamental
importance. Furthermore, the Supervisory Board has specified
the information and reporting duties of the Board of Manage-
ment to the Supervisory Board, to the Audit Committee and
- between the meetings of the Supervisory Board - to the Chair-
man of the Supervisory Board.
The Chairman of the Supervisory Board, Dr. Manfred Bischoff,
is a former member of the Board of Management. After
stepping down from the Board of Management in December
2003, he was first elected to the Supervisory Board after
a cooling-off period of more than two years in April 2006, and
was first elected as the Chairman of the Supervisory Board
after a cooling-off period of more than three years in April 2007.
One member of the Supervisory Board is a member of the
board of management of a listed company. Excluding his mem-
bership of that company's board of management, he is a
member of no more than three supervisory boards of listed
companies or similar company boards or committees with
comparable requirements, including his membership of the
Supervisory Board of Daimler AG. No member of the Super-
visory Board is a member of a board of, or advises, a significant
competitor. The members of the Supervisory Board attend
on their own responsibility such courses of training and further
training as might be necessary for the performance of their
tasks and are supported by the Company in doing so. Daimler AG
offers courses of further training to the members of its
Supervisory Board as required. Possible contents of such courses
include the subjects technological and economic develop-
ments, accounting and financial reporting, internal control and
risk management systems, compliance, corporate governance,
new legislation and board of management remuneration.
In accordance with another new recommendation of the Code
as revised on May 5, 2015, the Supervisory Board made sure
when it nominated Dr. Manfred Bischoff and Petraea Heynike
for reelection that they will be able to continue to devote the
time required as known to them from their previous mandate
in the Supervisory Board.
The Presidential Committee is composed of the Chairman of
the Supervisory Board, his Deputy and two other members,
who are elected by a majority of the votes cast on the relevant
resolution of the Supervisory Board.
D | CORPORATE GOVERNANCE | CORPORATE GOVERNANCE REPORT
Meetings of the Supervisory Board are regularly prepared in
separate discussions of the members representing the employ-
ees and of the members representing the shareholders with
the members of the Board of Management. Each Supervisory
Board meeting includes an executive session for discussions
of the Supervisory Board in the absence of the members of the
Board of Management. The Supervisory Board members can
also take part in the meetings by means of conference calls or
video conferences. However, this is generally not the case.
Doors locked/unlocked?
Everything's okay!
Mercedes me allows completely personalized access to the
exclusive Mercedes-Benz brand world. This digital platform
offers mobility, connectivity and financial services, but also
inspiration for travel, lifestyle and entertainment.
Linked to the world of existing and
potential customers
Mercedes me is all about connecting with customers
digitally. The focus is on the personal lifestyle and mobility
needs of each and every user - regardless of whether
they drive a Mercedes-Benz, use car2go, Mercedes-Benz
Rent, or moovel, or own a vehicle from a non-Group
brand. Daimler has been setting the standard for person-
alized customer service with Mercedes me since 2014.
Mercedes me allows Daimler to address people on the
Internet and in the real world. Users can decide for them-
selves which Mercedes me services they want to take
advantage of, and when and where. This could be at home
on the couch via tablet computer, on vacation using a
smartphone, at Mercedes me stores, or at a "Discover me"
lifestyle event.
Discovering the world of financial services
from Daimler
Mercedes me is also the perfect gateway to the world
of Daimler Financial Services. Our product finder and
payments calculator point the way to customized financing
solutions and allow customers to obtain their vehicle in the
manner that best fits their financial situation. For example,
we give customers the freedom to choose the size of their
down payment and the duration of their contract. This,
in turn, gives them a say in determining their monthly
payments. Those who are interested in driving the latest
models can take advantage of our flexible leasing offers.
Naturally, Mercedes me can also help customers find the
right insurance policy for their dream car. We have coop-
erated with partners in the insurance business to develop
automotive insurance solutions that offer full protection and
guarantee that damaged vehicles are always repaired by
specialists in accordance with the manufacturer's instruc-
tions. Mobility services from Daimler, such as car2go
and moovel, can also be accessed quickly and easily via
Mercedes me.
pages 20f
Mercedes me app: real-time access to vehicles
The free Mercedes me app offers even greater utility, as it
allows customers to call up a whole range of vehicle status
data, or remotely turn on the heat and lock or unlock car
doors when on the road. The app also enables convenient
door-to-door navigation, which along with the driving route
also includes the distance that has to be walked to the
parked vehicle.
of Mercedes-Benz
Fascinating products, services and events: Customers can take
Mercedes-Benz with them wherever they go by simply logging on.
Daimler is a pioneer in new service concepts for offering exciting
experiences that go far beyond the automobile.
Fuel tank status? Heat on/off?
The Mercedes me app can be used
to send vehicle information to
Apple Watches, iPhones and Android
smartphones.
Simple. Always. Everywhere - car2go
Dashing around the city and getting where you need to
go flexibly: With car2go, that's as simple as using a cell
phone, as the system is not only online, but also utilizes
smartphones as the central interface for finding and
booking a vehicle, unlocking and locking it, and paying for
it - all with just one device. More than two thirds of all
car2go rentals are already transacted in this manner. This
shows just how much acceptance the app enjoys among
our customers as a "car key," and it also demonstrates
that we're on the right track.
"Tell me about your lifestyle and
I'll show you the perfect vehicle."
STANIS
moovel & car2go
Individual mobility concepts.
for people on the move
People are increasingly using multiple
modes of transport to get around and
they also want to be able to organize
their trips while on the go. moovel and
car2go offer successful solutions for
this new mobility culture.
Search, book, go - moovel
moovel has made Daimler a pioneer for innovative urban
mobility services. The free moovel app allows users to
compare the travel times and costs for various modes
of transport and then to select an optimal route for their
trip and in many cases also to pay for it using their
smartphones.
moovel's partners are car2go, Flinkster, mytaxi, Taxi-Ruf,
Mietfahrräder, public transport operators and Deutsche
Bahn (German Railways).
Die nachsten Events
car2go has made Daimler the market leader for free-
floating car-sharing systems that operate without rental
stations. With its fleet of around 14,500 smart fortwo vehi-
cles (including 1,600 battery-electric cars) at 31 locations
in Europe and North America, car2go is now the world's
biggest car-sharing company. A car2go vehicle is now
rented once every 1.4 seconds by one of the company's
more than 1.2 million customers. Following a successful
test phase, car2go will also be rolled out in a Chinese city
for the first time in the spring of 2016.
Startups aren't the only companies that can adapt
dynamically to market requirements. With moovel,
Daimler has shown how a company's core business
can be expanded to include innovative digital busi-
ness operations. This success was honored at the
2015 DLD digital conference in Munich with a Focus
Digital Star Award. In addition, moovel partner mytaxi
was named "Digital Company of the Year" at the
German Digital Award 2015 event in Berlin.
moovel - the mobility app
for your city
moovel allows you to find the
available mobility services and to
get to your destination easily.
moovel.com/en/DE
DAIMLER INNOVATIVE. DIGITAL. LEADING. 21
The city is full of
exciting places.
Rediscovering the world
Digital awards for moovel
and mytaxi
connect.mercedes.me
Unterwegs im neuen GLC
017
She's Mercedes & lifestyle configurator
Up close and personal
with customers
Daimler is charting new territory in addressing custom-
ers with its exclusive She's Mercedes platform and the
innovative Mercedes-Benz vehicle configurator, which
reflects each customer's individual lifestyle.
She's Mercedes connects and inspires
Daimler is addressing the wishes and requirements of women more extensively
by offering women customized products and services in both the digital and
real worlds. There's good reason for this, as women are playing a key role in the
expanding global automotive market.
She's Mercedes is the title of an initiative that specifically addresses women
and combines an Internet platform with exclusive event formats at various loca-
tions. All activities focus on dialog. For example, the She's Mercedes network
enables women to communicate, develop new ideas and establish new contacts.
Mercedes-Benz also uses She's Mercedes to make women more familiar with the
brand and to learn more about women's mobility needs.
Quick and easy configuration of Mercedes-Benz models
Mercedes-Benz is also integrating an all-new vehicle configurator into the online
world. The goal here is to make the process of choosing a vehicle as simple
as possible, even for those who aren't enthusiastic about technology. To this end,
customers create a profile of their preferences regarding architecture, music,
travel, sports and home life. They then receive five model and equipment variant
recommendations that correspond to these preferences and can be used to
further customize the suggested vehicles.
Ana Kras-Sty Gestares
The lifestyle configurator has been available in Germany since the end of 2015
and will be successively introduced at country-specific Mercedes-Benz websites
worldwide as an alternative to the traditional vehicle configurator.
The networking and inspiration
platform for strong and confident
women.
H mercedes-benz.com/en/
mercedes-me/inspiration/she/
Zaki Ibrahim: Kreativer Flow mit
Baby im Arm
B
Ober den Balenekt zwischen musschen
Schandrang und engagierter Muttermole
Information & emotion
Mercedes me
Intelligent Drive next level
Because the car of the future will increasingly
become a digital companion, it will have to be safe
and secure not only on the road. Data will have to be
processed securely as well. After all, data protection
is also customer protection. Daimler therefore has
clear principles and targeted measures to ensure
data is protected. We protect our customers, their
vehicles and their data by taking our principles of
transparency, personal autonomy and data security
into account as early as the vehicle development
stage.
Daimler took the first step toward a self-driving truck
in 2014, when Mercedes-Benz presented the Future
Truck 2025 on a closed-off highway section near the city
of Magdeburg. The vehicle then successfully and easily
completed the world's first autonomous truck journey.
204010
manufacturer to receive such permission. The licenses
were issued for two Freightliner Inspiration Trucks, which
are now demonstrating in normal operations how their
Highway Pilot technology benefits society, the environ-
ment and the economy.
The Inspiration Truck is based on the Freightliner Cascadia
Evolution production model in the United States; the only
difference is the inclusion of the Highway Pilot, which
operates with radar sensors, a stereo camera and assis-
tance systems such as Adaptive Cruise Control, Active
Brake Assist and Active Lane Keeping Assist. The Highway
Pilot can thus take over operation of the 505 horsepower
truck and control its speed, braking and steering.
Autonomous trucks offer added value in terms
of efficiency, safety and economy
Drivers can relax when the Inspiration Truck drives
autonomously - and this is very helpful on long trips
along routes that are monotonous, which is generally
what drivers have to deal with today. With regard to
the benefits of autonomous driving, optimal gear shifting
and braking reduce both fuel consumption and CO₂
emissions, and also increase safety.
The dawn of a new age of mobility: Solutions from
today for the transportation needs of tomorrow
The intelligent Highway Pilot system is now being
tested on German roads as well. Daimler sent a clear
signal in October 2015 with the maiden journey of the
company's first autonomous series-production truck -
a Mercedes-Benz Actros - on the A8 autobahn in
Germany. This type of testing in real traffic conditions
marks another important step on the path to a market-
ready product and to safe and sustainable road freight
transport in the future.
in long-distance transport are econ-
omy, safety and efficiency. With the
Freightliner Inspiration Truck and the
Actros with Highway Pilot, we have
demonstrated that autonomously
driving trucks can take us a major step
forward in all these areas. The innova-
tive vehicles from Daimler Trucks will
revolutionize road freight transport
in the years ahead.
Narrow headlights with blue LED bands on the front sides and
the radiator grille. Within the spectacular body of the Inspiration
Truck lies innovative Highway Pilot technology.
Plug-in hybrids
The best of both worlds
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 13
Autonomous driving systems make
-
traffic smoother and vehicles more an-
ticipatory and thus safer as well. As
we work on such systems, we continue
to focus on clean drive-system tech-
nologies. Our environmental roadmap
and hybrid offensive have put Daimler
on the path to emission-free mobility.
Daimler's environmental roadmap focuses consistently on
further efficiency enhancements to combustion engines,
needs-based hybridization and locally emission-free electric
vehicles with batteries and fuel cells. We take the entire
environmental performance of our vehicles into account -
from production to operation to recycling. The effectiveness
of our sustainable development work is impressively under-
scored by the award we received as the "Most Innovative
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 11
source of inspiration. The top priorities highways, making Daimler Trucks the world's first vehicle
Revolutionary technology on public highways
We achieved the next milestone in May 2015, when
the US state of Nevada granted Daimler Trucks a license
to operate self-driving heavy-duty trucks on public
This vision could soon become a
reality - one also made possible by
our customers, who serve as our
5200
S.MB 1052
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 9
The C-Class Coupe stands out with a sporty profile
and assistance systems that enable partially
autonomous driving. The new E-Class takes a step
into the future as well. pages 30 ff
Relax as you are safely driven
to your destination
When will we see the first self-driving
series-production cars on the road?
It's not possible to answer this question
today because the development of
autonomous driving also depends on
decisions made by politicians. As a
pioneer in automotive engineering,
Daimler has already created the tech-
nological basis for autonomous driving,
as many current Mercedes-Benz
models
S-Class
from the C-Class to the
are capable of partially
autonomous driving today.
As early as 2013, the near-production Mercedes-Benz
S 500 INTELLIGENT DRIVE already impressively demon-
strated that autonomous driving is possible in normal
traffic by driving an approximately 100-kilometer route
from Mannheim to Pforzheim completely autonomously.
Partially autonomous driving on highways and secondary
roads and in cities, autonomous braking in critical situations
and active support during evasive maneuvers - all of this is
now an everyday occurrence, thanks to the expanded Intel-
ligent Drive assistance package from Mercedes-Benz. The
benefits provided by innovations that will pave the way for
autonomous driving in the future can already be experienced
in the S-Class and the brand-new C-Class Coupe.
Partially autonomous driving with greater comfort,
less stress and more safety for everyone on the road
With its athletic and clear sensuous design, the
Mercedes-Benz C-Class Coupe offers exciting new
features that make it stand out in road traffic. The model
also comes with numerous safety and assistance systems
based on the Intelligent Drive concept. Standard equip-
ment includes, for example, ATTENTION ASSIST, which
issues a warning when the driver becomes inattentive
or fatigued, and COLLISION PREVENTION ASSIST PLUS,
which can help prevent accidents.
Assistants that think and steer
Many other "co-pilot" features are available as options.
for example, DISTRONIC PLUS with Steering Assist, as well
as the Stop & Go Pilot. Thanks to its intelligent technology,
the C-Class Coupe can not only automatically maintain a
proper distance to vehicles ahead but also follow them at
such a distance at a speed of up to 200 km/h. The "dis-
tance pilot" makes things easier for drivers by accelerating
and braking as needed in normal operations. The BAS
PLUS Active Brake Assist system warns drivers of impend-
ing collisions and other dangers, helps with emergency
braking maneuvers and automatically brakes the vehicle if
necessary.
The new E-Class takes safety, comfort
and driver stress reduction to a new level
With Intelligent Drive next level, we are raising the bar once
again in the new Mercedes-Benz E-Class. Daimler has
taken the next step on the road to autonomous driving with
innovations such as remote-controlled automated parking,
emergency steering assistance and an emergency braking
system for sudden traffic jams. O pages 30 ff
Highway Pilot activated!
Autonomous driving —
safe and efficient
Group" in the "Alternative Drive Systems" category of the
Automotive INNOVATIONS Award 2015 competition.
18 DAIMLER | INNOVATIVE. DIGITAL. LEADING.
An extra boost for the new era of mobility
The Mercedes-Benz F 015 Luxury in Motion research
vehicle and the Mercedes-Benz Vision Tokyo show car are
not only sensations in terms of their autonomous driving
technology; they also display superior performance with
regard to their drive systems. Both vehicles are equipped
with the innovative F-CELL PLUG-IN HYBRID system, which
combines an electric motor with an extremely powerful
high-voltage battery and fuel cells to achieve an emission-
free range of approximately 1,100 kilometers, thus pointing
the way far into the future.
road to locally emission-free vehicles. They combine the
advantages of two technologies in a manner that allows
our customers to drive in the all-electric mode in the city
and benefit from the range of the combustion engine on
long trips.
Intelligent data networking is creating completely new possibilities for
the automotive industry. With a digital process chain extending from
research and development to production and sales, the digital era is
already well under way at Daimler. We are a pioneer in this transforma-
tion process, in which we are using digitization to develop innovative
vehicles and services and improve the work environment. In doing so,
we are speeding up profitable processes and the creation of new auto-
motive concepts that will enrich the future of mobility.
Much more than just the complete
networking of the automobile.
What will the world in which Daimler
does business be like in the near
future? One thing is certain, namely
that digitization has long since become
a part of normal daily life - and the
options available for data networking
are already enabling us to transform
each and every part of our company.
As a premium automobile manufacturer, we also seek to be
a leader in digitization and to actively exploit the tremen-
dous opportunities offered by the Internet and connectivity
in general. Daimler has already transformed itself from a
leading automotive company into a mobility services pro-
vider and we continue to pick up the pace on the road to
the mobility of the future.
The digital transformation has been firmly established
throughout the company and is now a part of our core
business. This transformation has been given the same
strategic importance as green technologies and our
measures for growing in new markets.
The digitization process is being supported by the
DigitalLife@Daimler initiative, which we're using to develop
strategies and implement projects that will lead to the
digital transformation of all our business units. We are
focusing on two questions here: What do our customers
perceive directly, and what do they perceive indirectly?
We are answering the first question by examining how
customers experience our products and how we establish
and maintain relationships with them. With regard to the
second question, we are digitizing our processes in order
to create the basis for meeting customer requirements
more flexibly and economically with innovative products.
"The Internet and connectivity
will result in major changes to our
products and processes - and in
the way we work together."
Completely connected - we are
designing the digital future
Digital data model of the Concept IAA:
Through state-of-the-art CAD, 300 digital prototypes
DAIMLER INNOVATIVE. DIGITAL. LEADING. 17
Digitization of customer relationships -
we're always where our customers are
Virtual communication channels, social media formats
and online communities are ideal platforms for a lively
exchange between Daimler and its customers - anytime,
anywhere. The Mercedes me portal and the Mercedes me
app allow anyone to become part of the fascinating world
of Mercedes-Benz. This benefits everyone. Interested
parties can contact us at any time, from anywhere, and
customers always have online access to their vehicle data.
We always have our finger on the pulse of the market and
can therefore ideally align our premium products with the
dynamic requirements of our customers. Opages 18f
Digital business models - fascination through
innovation and state-of-the-art products
Automobile production is our core area of expertise, which
we are now expanding with the help of digital technologies
such as those for autonomous driving or accident-free driv-
ing, as well as systems that continue to merge navigation,
entertainment and vehicle operation functions. Connected
services such as our moovel mobility platform and car2go
car-sharing system are also key business areas. And these
achievements are only the beginning! pages 20f
Digitization of the value chain - the key to meeting
customer requirements efficiently and individually
Customer requirements around the globe are becoming
more varied and complex, and this is affecting the entire
product lifecycle - from vehicle design, development
and production all the way to delivery and the provision
of associated services. The thorough networking of our
processes helps ensure that our products can be designed
in a more individual manner and that their production is
more flexible and efficient. Opages 23f
Preparing employees for the digital world and giving
them the freedom to develop innovative ideas!
Shorter lines of communication and an ongoing creative
dialogue across business units and hierarchies: Digital
networking is also improving the work environment at our
company. Daimler employees around the world can now
exchange information and generate ideas for future mobil-
ity in internal social networks, through projects, by means
of open-space technologies and at events. In this manner,
we are strengthening the independent entrepreneurial
spirit at our company, as well as its culture of innovation.
→ page 25
Daimler is moving ahead
with vehicle connectivity and
data protection
were created, of which the most aerodynamic version
was implemented. Opage 23
connectivity/
daimler.com/innovation/
Discover new forms of connectivity.
Ten new plug-in hybrid models by 2017
The successful plug-in hybrid models from Mercedes-Benz
combine the highest degree of dynamic performance
and comfort with the economy of a compact car. In 2015,
we presented additional models as pioneers of the Daimler
hybrid offensive. Their fuel consumption ranges from
3.3 liters per 100 kilometers for the GLE 500 e 4MATIC¹ to
an outstanding 2.1 l/100 km in the most efficient model,
the C 350 e². A total of ten forward-looking plug-in hybrid
models with the three-pointed star will be launched by 2017.
1 GLE 500 e 4MATIC: fuel consumption in liters/100 km
combined: 3.3; CO2 emissions in g/km combined: 78;
electricity consumption in kWh/100 km: 16.0
2 C 350 e: fuel consumption in liters/100 km combined: 2.4-2.1;
CO₂ emissions in g/km combined: 54-48; electricity
consumption in kWh/100 km: 11.3-11.0
Fit for the future. Batteries are installed in our hybrid vehicles
by robots and people working together. This ensures more flexible
and ergonomic production.
14
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
21°0
DIFFUSE A/C
Connected to the digital driving
culture of the future
22°C
The automobile has always been a symbol of personal freedom -
and people today are "always on" and want to remain online in their
vehicles as well. Our visionary F 015 research vehicle offers just
one example of how a continual dialogue can be maintained between
vehicles, passengers and the surrounding environment. We are
already integrating our product portfolio into the digital world of our
customers and linking navigation, infotainment and vehicle operation
systems. Mercedes me connects people, experiences and services,
and intelligent "co-drivers” in Mercedes-Benz models ensure out-
standing safety and comfort. In line with its pioneering role, Daimler
is achieving new milestones and inspiring its customers with Intelli-
gent Drive next Level, car-to-x technologies and many other digital
services and systems. pages 30 ff
000.0
Digital
Fully networked
We are already using high-tech hybrid systems in all pro-
duction models from the Mercedes-Benz C-Class upwards.
Plug-in hybrid systems represent a key technology on the
CA
Wireless technologies and GPS ensure that vehicles and
services can be flexibly linked with one another and used
in those locations where the customer happens to need
them. Welcome to the sharing society! Our moovel mobility
platform and the car2go free-floating car-sharing system
are pointing the way to the future.
54
equipment and intangible assets
Proceeds from disposals of property, plant and
-20
-75
-1,443
-2,186
-1,463
-2,261
Additions to intangible assets
-23
-30
-4,821
-5,045
-4,844
-5,075
Additions to property, plant and equipment
-8,813
495
209
480
194
for certain products. Revenue from these contracts is deferred
and recognized over the contract period in proportion to the
costs expected to be incurred based on historical information.
In circumstances in which there is insufficient historical infor-
mation, income from extended warranty contracts is recognized
on a straight-line basis. A loss on these contracts is recog-
nized in the current period if the sum of the expected costs
for services under the contract exceeds unearned revenue.
For multiple-element arrangements, such as when vehicles
are sold with free or reduced-in-price maintenance programs
or with free online services, the Group allocates revenue
to the various elements based on their estimated fair values.
Research and non-capitalized development costs
Expenditure for research and development that does not
meet the conditions for capitalization according to IAS 38
Intangible Assets is expensed as incurred.
Borrowing costs
Borrowing costs are expensed as incurred unless they
are directly attributable to the acquisition, construction or
production of a qualifying asset and are therefore part
of the cost of that asset. Depreciation of the capitalized
borrowing costs is presented within cost of sales.
Government grants
Government grants related to assets are deducted from
the carrying amount of the asset and are recognized in
earnings over the life of a depreciable asset as a reduced
depreciation expense. Government grants which compensate
the Group for expenses are recognized as other operating
income in the same period as the expenses themselves.
Profit/loss from equity-method investments
This item includes all income and expenses in connection
with investments accounted for using the equity method.
In addition to the prorated profits and losses from financial
investments, it also includes profits and losses resulting
from the sale of equity interests or the remeasurement of
equity interests following a loss of significant influence.
Daimler's share of dilution gains and losses occurring if the
Group or other owners do not participate in capital increases
of companies in which shares are held and accounted for
using the equity method are also included in profit/loss from
equity-method investments. This item also includes losses
on the impairment of an investment's carrying amounts and/or
gains on the reversal of such impairments.
-11,513
Other financial income/expense, net
Furthermore, income and expenses from equity interests are
included in other financial income/expense, net, if such
income or expenses are not presented under equity-method
investments.
Interest income and interest expense
Interest income and interest expense include interest income
from investments in securities, cash and cash equivalents as
well as interest expense from liabilities. Furthermore, interest
and changes in fair values related to interest rate hedging
activities as well as income and expense resulting from the
allocation of premiums and discounts are included. The interest
components of defined benefit pension obligations and
other similar obligations as well as of the plan assets available
to cover these obligations are also presented in this line item.
An exception to the aforementioned principles is made
for Daimler Financial Services. In this case, interest income
and expense and gains or losses from derivative financial
instruments are disclosed under revenue and cost of sales
respectively.
Income taxes
Income taxes are comprised of current income taxes and
deferred taxes.
Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period. In addition,
current income taxes presented for the period include adjust-
ments for uncertain tax payments or tax refunds for periods
not yet finally assessed including interest expense and penalties
on the underpayment of taxes. For the case that amounts
included in the tax return might not be realized (uncertain tax
positions), a provision for income taxes is recognized. The
amount is based on the best possible assessment of the expected
tax payment. Tax refund claims from uncertain tax positions
are recognized when it is predominantly likely and thus reason-
ably expected that they can be realized. Only in the case
of tax loss carryforwards or unused tax credits, no provision
for taxes or tax claim is recognized for these uncertain tax
positions. Instead, the deferred tax assets for the unused tax
loss carryforwards or tax credits are to be adjusted.
Changes in deferred tax assets and liabilities are generally
recognized through profit and loss in deferred taxes in the
consolidated statement of income, except for changes recognized
in other comprehensive income/loss or directly in equity.
Other financial income/expense, net includes all income
and expense from financial transactions which are not included
in interest income and/or interest expense, and for Daimler
Financial Services are not included in revenue and/or cost of
sales. For example, expense from the compounding of interest
on provisions for other risks is recorded in this line item.
The Group offers extended, separately priced warranties
7,539
-1,274
Vehicles on operating leases
-7,151
-10,284
-914
33
-8,065
-10,251
Receivables from financial services
8
31
845
111
853
142
Trade payables
-176
-12
-3,924
-2,819
-135
-24
222
Cash provided by/used for operating activities
-340
142
-1,830
-2,715
-2,170
-2,573
11,735
Income taxes paid/refunded
663
819
1,534
1,032
2,197
Other operating assets and liabilities
-2,795
-3,789
213
207
|
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For entities over which Daimler has joint control together
with a partner (joint arrangements), it has to be decided
if a joint operation or a joint venture exists. In a joint venture,
the parties that have joint control of the arrangement have
rights to the net assets of the arrangement. For joint ventures,
the equity method has to be applied. A joint operation exists
when the jointly controlling parties have direct rights to the
assets and obligations for the liabilities. In this case, the prorated
assets and liabilities and the prorated income and expenses
are generally to be recognized. As the joint operations recognized
at the end of the reporting period have no significant impact
on the consolidated financial statements, they are accounted
for using the equity method.
206
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group's proportionate share of
the results of operations is included in Daimler's consolidated
financial statements with a one to three-month time lag.
Adjustments are made for all significant events or transactions
that occur during the time lag (see also Note 13).
Subsidiaries measured at amortized cost
Subsidiaries, associated companies, joint ventures and joint
operations whose business is non-active or of low volume
and that are not material for the Group and the fair presentation
of financial position, liquidity and capital resources, and
profitability are generally measured at amortized cost in the
consolidated financial statements.
Foreign currency translation
Transactions in foreign currency are translated at the relevant
foreign exchange rates prevailing at the transaction date.
In subsequent periods, assets and liabilities denominated in
foreign currency are translated into euros using period-end
exchange rates; gains and losses from this measurement
are recognized in profit and loss (except for gains and losses
resulting from the translation of available-for-sale equity
instruments, which are recognized in other comprehensive
income/loss).
Assets and liabilities of foreign companies for which the
functional currency is not the euro are translated into euros
using period-end exchange rates. The translation adjustments
are presented in other comprehensive income/loss. The
components of equity are translated using historical rates.
The statements of income and cash flows are translated
into euros using average exchange rates during the respective
periods.
The exchange rates of the US dollar, the British pound, the
Japanese yen, the Chinese renminbi and the Russian ruble
- the most significant foreign currencies for Daimler - were
as shown in table 7 E.06.
Accounting policies
Revenue recognition
Revenue from sales of vehicles, service parts and other related
products is recognized when the risks and rewards of owner-
ship of the goods are transferred to the customer, the amount
of revenue can be estimated reliably and collectability is rea-
sonably assured. Revenue is recognized net of sales reductions
such as cash discounts and sales incentives granted.
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competition
and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates.
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services
business at Daimler Financial Services. The revenue from the
rental and leasing business results from operating leases
and is recognized on a straight-line basis over the periods
of the contracts. In addition, sales revenue is generated
at the end of lease contracts from the subsequent sale of the
vehicles. Revenue from receivables from financial services
is recognized using the effective interest method. When loans
are issued below market rates, related receivables are recog-
nized at present value and revenue is reduced for the interest
incentive granted. If subsidized leasing fees are agreed upon
in connection with finance leases, revenue from the sale of
a vehicle is reduced by the amount of the interest incentive
granted.
E.06
Exchange rates
An associated company is an entity over which the Group
has significant influence. Significant influence is the power
to participate in the financial and operating policy decisions
of the investee. Associated companies are generally accounted
for using the equity method.
Investments in associated companies,
joint ventures or joint operations
owners.
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler's percentage ownership without loss
of control are accounted for as an equity transaction between
share
Equity
attributable to
shareholders
of Daimler AG
Non-
controlling
interests
Total
equity
9,872
117
205
Subject to EU endorsement of these standards, which are then
to be adopted in future periods, Daimler does not currently
plan to apply these standards earlier. Other IFRSS issued but
not EU endorsed are not expected to have a significant impact
on the Group's profitability, liquidity and capital resources
or financial position.
Presentation
USD
1€ =
Presentation in the consolidated statement of financial position
differentiates between current and non-current assets and
liabilities. Assets and liabilities are classified as current if they
are expected to be realized or settled within one year or within
a longer and normal operating cycle. Deferred tax assets
and liabilities as well as assets and provisions for pensions
and similar obligations are generally presented as non-current
items.
The Group's consolidated financial statements are significantly
influenced by the activities of its financial services business.
To enhance readers' understanding of the Group's profitability,
liquidity and capital resources and financial position, unaudited
information with respect to the Group's industrial and financial
services business activities (Daimler Financial Services) is
provided in addition to the audited consolidated financial state-
ments. Such information is not required by IFRS and is not
intended to, and does not represent the separate IFRS profit-
ability, liquidity and capital resources and financial position
of the Group's industrial or financial services business activities.
Eliminations of the effects of transactions between the
industrial and financial services businesses have generally
been allocated to the industrial business columns.
Measurement
The consolidated financial statements have been prepared
on the historical cost basis with the exception of certain items
such as available-for-sale financial assets, derivative financial
instruments, hedged items, and pensions and similar obligations.
The measurement models applied to those exceptions are
described below.
Principles of consolidation
The consolidated financial statements include the financial
statements of Daimler AG and the financial statements of
all subsidiaries, including structured entities which are directly
or indirectly controlled by Daimler AG. Control exists if the
parent company has the power of decision over a subsidiary
based on voting rights or other rights, if it participates in
positive and negative variable returns from a subsidiary, and
if it can affect these returns by its power of decision.
Structured entities which are controlled also have to be
consolidated. Accordingly, the assets and liabilities remain in
the consolidated statement of financial position. Structured
entities are entities which have been designed so that voting
or similar rights are not relevant in deciding who controls
the entity. This is the case for example if voting rights relate
to administrative tasks only and the relevant activities are
directed by means of contractual arrangements.
The financial statements of consolidated subsidiaries which
are included in the consolidated financial statements are
generally prepared as of the reporting date of the consolidated
financial statements. The financial statements of Daimler AG
and its subsidiaries included in the consolidated financial
statements are prepared using uniform recognition and mea-
surement principles. All intercompany assets and liabilities,
equity, income and expenses as well as cash flows from trans-
actions between consolidated entities are entirely eliminated
in the course of the consolidation process.
Business combinations are accounted for using the purchase
method.
The consolidated statement of income is presented using
the cost-of-sales method.
GBP
1€ =
JPY
1€ =
CNY
1€ =
during the respective period
First quarter
1.1261
Second quarter
1.1053
Third quarter
1.1116
Fourth quarter
Average exchange rates
1.0953
7.0231 70.9608
6.8572 58.2187
7.0083 70.3033
7.0003 72.4051
1.3696
1.3711
1.3256
1.2498
0.8279 140.8000
0.8147 140.0000
8.3576 48.0425
8.5438 47.9415
0.7938 137.7500
0.7891 142.7500
8.1734 48.0583
7.6824 59.7160
0.7434 134.1200
0.7211 134.2900
0.7173 135.8600
0.7220 132.9500
-430
72.3370
0.7789 145.2300
2015
RUB
2014
USD
GBP
1€ =
1€ =
1€ =
JPY
1€ =
7.5358
CNY
1€ =
1€ =
Average exchange
rate on December 31
1.0887
0.7340 131.0700
7.0608
80.6736
1.2141
RUB
method
-193
-205
Provisions for other risks
78,077
10,178
757
777
Provisions for income taxes
85,461
10,548
Trade payables
Total non-current liabilities
14
30
14
30
27
Other liabilities
480
707
3,101
4,144
Financing liabilities
Other financial liabilities
Deferred income
Other liabilities
437
506
78
68
679
6,830
-13,518
326
366
43,954
3,581
46,130
39,331
10,182
709
9,204
-21,417
36,290
41,311
24
7,267
9,710
23
22222
34,123
9,852
62,728
4,851
Deferred income
Financing liabilities
122
126
1
1
850
6,590
5,994
6,712
6,120
23
Provisions for other risks
874
851
875
Provisions for income taxes
176
7,617
24
59,831
50,399
18,805
413
2,688
3,578
-1,618
-1,363
1,070
2,215
9
Deferred tax liabilities
26
575
2,301
2,644
2,876
25
Other financial liabilities
40,074
41,026
10,325
2,231
49,808
25
9,484
35
68
4,964
5,316
4,999
5,384
Depreciation and amortization/impairments
1,379
1,613
8,794
11,131
10,173
12,744
Profit before income taxes
2014
2015
2014
Other non-cash expense and income
-450
-850
-522
Trade receivables
-34
-16
-2,734
-2,597
-2,768
-2,613
Inventories
2015
Change in operating assets and liabilities
-1,053
-228
-1,053
-229
Gains (-)/losses (+) on disposals of assets
48
72
-898
-1
2014
2015
information)
840
1,376
1,523
2,007
2,363
27
739
1,002
631
1,674
2,413
2,888
26
1,864
2,351
6,198
7,133
8,062
1,886
-606
Total current liabilities
66,974
Daimler Financial Services
(unaudited additional
Industrial Business
(unaudited additional
information)
Consolidated
In millions of euros
E.04
Consolidated Statement of Cash Flows¹
E❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CASH FLOWS 201
The accompanying notes are an integral part of these consolidated financial statements.
77,081
105,454
67,861
123,863
84,181
93,303
189,635
217,166
Total equity and liabilities
13,091
9,220
53,883
instruments
Treasury
financial using the equity
-6,103
11
-2,685
Net profit
7,290
328
6,962
Balance at January 1, 2014
43,363
683
42,680
-12
853
In millions of euros
Investments in shareholdings
-1,223
-172
55
-6,048
Other comprehensive income/loss before taxes
800
-26
Capital increase/Issue of new shares
Dividends
Total comprehensive income/loss
23
20
3
-2,565
-1,179
-158
3,718
383
3,335
11
-1,885
Deferred taxes on other comprehensive income
2,476
2,476
-2,407
-26
-91
-81
-20
-19
-19
-11
Cash provided by/used for investing activities
-9,722
-2,709
-9,936
-2,887
214
178
Change in short-term financing liabilities
Additions to long-term financing liabilities
36
2,129
-157
722
193
-30
-39
358
250
Proceeds from disposals of shareholdings
39
3,098
-89
3,098
128
Acquisition of marketable debt securities
-4,101
-44
-3,341
-3,281
-11
-60
Proceeds from sales of marketable debt securities
Other
2,443
3,834
2,193
3,476
-4,090
-26
Acquisition of treasury shares
26
-3
279
-3
4,390
73
4,463
-308
-1
-309
-
12,506
359
12,865
-2,621
-274
-2,895
68
-926
-647
Net profit
8,711
-9
45
Other
-1,032
-1
43,665
919
44,584
68
Balance at December 31, 2014
-1
43,665
919
44,584
Balance at January 1, 2015
-
8,424
287
-1,032
-27
-27
-27
1. Significant accounting policies
General information
The consolidated financial statements of Daimler AG and
its subsidiaries ("Daimler” or “the Group") have been prepared
in accordance with Section 315a of the German Commercial
Code (HGB) and comply with the International Financial Report-
ing Standards (IFRS) as adopted by the European Union (EU).
Daimler AG is a stock corporation organized under the laws
of the Federal Republic of Germany. The Company is entered
in the Commercial Register of the Stuttgart District Court
under No. HRB 19360 and its registered office is located at
Mercedesstraße 137, 70327 Stuttgart, Germany.
The consolidated financial statements of Daimler AG are
presented in euros (€). Unless otherwise stated, all amounts
are stated in millions of euros. All figures shown are rounded
in accordance with standard business rounding principles.
The Board of Management authorized the consolidated
financial statements for publication on February 16, 2016.
Basis of preparation
Applied IFRSS
Notes to the Consolidated Financial Statements
The accounting policies applied in the consolidated financial
statements comply with the IFRSS required to be applied in the
EU as of December 31, 2015.
in the reporting period
IFRSS with mandatory initial application in the EU as of
January 1, 2015 had no significant impact on the consolidated
financial statements.
IFRSS issued but neither EU endorsed nor yet adopted
In July 2014, the IASB published IFRS 9 Financial Instruments,
which shall supersede IAS 39. IFRS 9 deals with the classi-
fication, recognition and measurement (including impairment)
of financial instruments as well as with regulations for
general hedge accounting. With IFRS 9, additional notes will
be required, as specified by the revised IFRS 7 Financial
Instruments - Disclosures. Subject to being endorsed by the
EU, application of IFRS 9 is mandatory for reporting periods
beginning on or after January 1, 2018. Early adoption is permitted.
Investigation of the effects on the consolidated financial
statements of adopting IFRS 9 has not yet been completed.
In May 2014, the IASB published IFRS 15 Revenue from Contracts
with Customers. It replaces existing guidance for revenue
recognition, including IAS 18 Revenue, IAS 11 Construction
Contracts and IFRIC 13 Customer Loyalty Programmes.
The new standard defines a comprehensive framework for
determining whether, in which amount and at which date
revenue is recognized. The new standard specifies a uniform,
five-step model for revenue recognition, which is generally
to be applied to all contracts with customers. Subject to being
endorsed by the EU, application of IFRS 15 is mandatory
for reporting periods beginning on or after January 1, 2018.
Early adoption is permitted. Investigation of the effects on
the consolidated financial statements of adopting IFRS 15 has
not yet been completed. Effects on Daimler may occur, in
particular with regard to the date of revenue recognition for
multiple-element arrangements. Disclosure requirements
are also extended. From today's perspective, the application
of IFRS 15 is not expected to have any major impact on the
Group's profitability, liquidity and capital resources or financial
position.
The final standard IFRS 16 Leases was published by the IASB
on January 13, 2016. The changes resulting from this new
standard mainly affect lessee accounting and generally require
lessees to recognize assets and liabilities for all leases.
The exact effects still have to be analyzed.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
26
26
IFRSS issued, EU endorsed and initially adopted
1,407
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Balance at December 31, 2015
27
27
-
27
11
-9
2
Other
204
-1,679
53,561
1,063
54,624
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
-4
54,332
37,354
21,647
1,744
199
Dividends
-2,407
Capital increase/Issue of new shares
1
2
Acquisition of treasury shares
Issue and disposal of treasury shares
Other
Balance at December 31, 2014
54
3,070
11,906
28,487
775
460
3,266
Total comprehensive income/loss
-6
1,682
reserves
Retained
earnings²
Currency
translation
Financial
assets
available
for sale
Balance at January 1, 2014
3,069
11,850
Balance at January 1, 2015
27,628
261
Net profit
6,962
Other comprehensive income/loss before taxes
-5,378
1,744
205
Deferred taxes on other comprehensive income
-969
Net profit
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
11
11,917
36,991
2,145
1,121
1 See Note 20 Equity for other information on changes in equity.
2 Retained earnings also include items that will not be reclassified to the consolidated income statement. Actuarial losses from pensions and similar
obligations amount to €6,191 million net of tax in 2015 (2014: €8,892 million net of tax).
The accompanying notes are an integral part of these consolidated financial statements.
3,070
Other reserves
may be reclassified
in profit/loss
E | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
203
Share of
investments
Derivative
accounted for
items that
capital
Balance at December 31, 2015
Acquisition of treasury shares
Total comprehensive income/loss
Dividends
3,070
11,906
28,487
775
460
8,424
Issue and disposal of treasury shares
Other
3,280
669
-579
-8
11,125
1,370
661
-2,621
Capital increase/Issue of new shares
1,370
Issue and disposal of treasury shares
Capital
In millions of euros
Proceeds from the issue of share capital
89
42
27
29
62
13
Acquisition of treasury shares
-27
-26
-27
-26
Acquisition of non-controlling interests in subsidiaries
-10
-10
Internal equity and financing transactions
-7,152
-2
-10
-156
-264
13,711
32,685
23,643
Repayment of long-term financing liabilities
-41,904
-34,650
-13,375
-11,858
-6,491
-28,529
Dividend paid to shareholders of Daimler AG
-2,621
-2,407
-2,621
-2,407
Dividends paid to non-controlling interests
-274
-158
-22,792
7,152
Cash provided by/used for financing activities
9,631
11,053
8,341
9,845
1,326
1,208
Cash and cash equivalents at end of period
9,936
9,667
9,667
8,369
1,567
1,326
1 See Note 28 for other information on consolidated statements of cash flows.
The accompanying notes are an integral part of these consolidated financial statements.
202
E❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Statement of Changes in Equity¹
E.05
8,341
Share
Cash and cash equivalents at beginning of period
241
2,274
-1,922
-6,486
11,553
6,491
8,760
Effect of foreign exchange rate changes
on cash and cash equivalents
138
118
323
330
-13
-7
Net increase/decrease in cash and cash equivalents
269
-1,386
28
-1,504
151
36,967
12,630
42,178
12,806
E.02
In millions of euros
Daimler
Shareholders
Group of Daimler AG
Non-
controlling
interests
Daimler
Shareholders
Non-
controlling
Group
of Daimler AG
interests
2015
2015
2015
2014
2014
2014
Net profit
8,711
8,424
287
7,290
6,962
328
Income/Loss¹
Consolidated Statement of Comprehensive
E | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS 199
The accompanying notes are an integral part of these consolidated financial statements.
-4,033
-2,883
-3,488
-2,387
-545
-496
8,711
7,290
7,643
6,407
1,068
883
Unrealized gains/losses from
287
8,424
6,962
Earnings per share (in euros)
for profit attributable
to shareholders of Daimler AG
35
Basic
Diluted
7.87
7.87
6.51
6.51
1 The reconciliation of Group EBIT to profit before income taxes is presented in Note 33.
328
currency translation adjustments
1,437
1,370
5
Reclassifications to profit and loss (pre-tax)
2,849
2,849
-2,433
-253
-2,432
-253
Taxes on unrealized gains/losses
and on reclassifications
278
279
-1
800
-3,775
800
financial instruments (after tax)
-643
-647
4
-1,886
-1,885
Unrealized gains/losses from equity-method
investments
Unrealized gains/losses (pre-tax)
-3
-3
11
Unrealized gains/losses from derivative
9
-3,770
financial instruments
67
1,800
1,744
56
Unrealized gains/losses from financial assets
available-for-sale
Unrealized gains/losses (pre-tax)
670
669
1
205
205
Unrealized gains/losses (pre-tax)
Taxes on unrealized gains/losses
-8
-8
-6
-6
Unrealized gains/losses from financial assets
available-for-sale (after tax)
662
661
1
199
199
Unrealized gains/losses from derivative
and on reclassifications
1,379
1,613
8,794
15,991
-13,597
Gross profit
31,797
28,184
28,983
25,790
2,814
2,394
Selling expenses
5
-12,147
-11,534
-16,148
-11,577
-570
-431
General administrative expenses
5
-3,710
-3,329
-2,993
-2,693
-717
-636
Research and non-capitalized
development costs
-11,103
5
-88,091
113,881
8,546
15
198
E | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF INCOME
Consolidated Statement of Income
E.01
Consolidated
Industrial Business Daimler Financial Services
(unaudited additional
information)
(unaudited additional
information)
2014
2015
2014
18,962
Note
2014
2015
In millions of euros
Revenue
Cost of sales
4
149,467
129,872
5
-117,670
-101,688
130,505
-101,522
2015
11
-4,760
-4,760
445
-5
13
Interest income
8
170
145
169
145
1
Interest expense
8
-22
-602
-595
-707
-7
-8
Profit before income taxes¹
Income taxes
Net profit
thereof profit attributable to
non-controlling interests
thereof profit attributable to
shareholders of Daimler AG
12,744
10,173
11,131
-715
-4,532
458
7
-4,532
Other operating income
6
2,114
1,759
1,982
1,676
132
83
Other operating expense
6
-555
-27
-1,160
-1,139
-25
-21
Profit/loss on equity method investments, net
13
464
897
474
912
-10
-15
Other financial income/expense, net
-530
Unrealized gains/losses from equity-method
15
-3
19
9,054
8,634
8,215
7,824
839
810
Receivables from financial services
14
35,155
26,769
-24
Trade receivables
-25
26,794
Cash and cash equivalents
9,936
9,667
8,369
8,341
1,567
1,326
Marketable debt securities
15
7,125
5,260
35,179
6,998
860
20,004
3,284
4,124
2,747
3,610
537
514
Other assets
17
654
555
-2,371
-2,178
898
3,025
Total non-current assets
125,319
112,490
53,366
49,214
71,953
63,276
Inventories
18
23,760
20,864
22,862
2,733
9
5,150
110
Retained earnings
3,070
3,070
11,917
11,906
36,991
28,487
1,583
202
Other reserves
Treasury shares
Equity attributable to shareholders
Capital reserve
of Daimler AG
Non-controlling interests
1,063
43,665
919
Total equity
20
54,624
44,584
44,752
Provisions for pensions and similar obligations
22
8,663
investments (after tax)
53,561
127
Share capital
105,454
Other financial assets
Other assets
Total current assets
16
2,546
2,353
-7,435
-7,099
9,981
9,452
17
4,271
Equity and liabilities
3,598
772
2,826
91,847
77,145
39,937
Total assets
217,166
189,635
93,303
34,967
84,181
51,910
123,863
952
Deferred tax assets
3,319
5,444
2,701
-3,696
-3,696
Other comprehensive income/loss, net of taxes
4,154
4,082
72
-3,572
-3,627
55
Total comprehensive income
12,865
2,701
12,506
3,718
3,335
383
1 See Note 20 for other information on comprehensive income/loss.
The accompanying notes are an integral part of these consolidated financial statements.
200
E❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Statement of Financial Position
E.03
In millions of euros
Consolidated
Industrial Business Daimler Financial Services
(unaudited additional
(unaudited additional
information)
information)
359
Note
Items that will not be reclassified to profit/loss
-3,696
11
-3
4,774
11
Items that may be reclassified to profit/loss
1,453
1,381
72
124
69
55
Actuarial gains/losses from pensions and similar
-3,696
obligations (pre-tax)
3,280
-5,378
-5,378
Taxes on actuarial gains/losses from pensions
and similar obligations
-579
-579
1,682
Actuarial gains/losses from pensions and similar
obligations (after tax)
2,701
2,701
3,280
At December 31,
2015
2014
1,682
At December 31,
2014
2,294
3,610
2,264
23
-1,140
30
Receivables from financial services
14
38,359
34,910
-58
-49
3,633
38,417
15
1,148
1,374
6
1,147
1,368
Other financial assets
16
4,908
2015
3,634
-536
34,959
13
Marketable debt securities
57
18,676
2015
2014
Equity-method investments
At December 31,
Assets
Intangible assets
10
10,069
9,847
9,202
222
165
Property, plant and equipment
9,367
24,322
15,864
14,374
11
33,050
38,942
Equipment on operating leases
12
23,125
24,262
23,182
23,078
60
E.10
3,180
129,872
149,467
Cost of sales
3,853
447
114,013
12,245
business at Daimler Financial Services
Interest from the financial services
14,462
Revenue from the rental and leasing business
In millions of euros
Revenue from sales of goods
130,705
Revenue frome sales of other services
Expense of goods sold
Impairment losses on receivables from
2015
Disposals of consolidated subsidiaries
2014
-433
-3,189
-101,688
-117,670
-502
-3,913
Other cost of sales
financial services
Depreciation of equipment on operating leases
Daimler Financial Services
-1,443
-1,666
-91,574
-5,049
-5,946
-105,643
2014
434
Refinancing costs at
2015
10
Revenue
Germany
12
14
Associated companies accounted for using
the equity method
9
International
3
3
4
13
13
the equity method
Joint ventures accounted for using
2
Disposals in 2015
2
Germany
In millions of euros
International
23a
E.09
At the reporting date, the Group has business relationships
with 11 (2014: 18) controlled structured entities, of which
9 (2014: 16) are fully consolidated. In addition, the Group
has relationships with 5 (2014: 5) non-controlled structured
entities. The unconsolidated structured entities are not
material for the Group's profitability, liquidity and capital
resources and financial position.
The structured entities of the Group are rental companies
and asset-backed-securities (ABS) companies. The purpose
of the rental companies primarily is the acquisition, renting
and management of assets. The ABS companies are primarily
used for the Group's refinancing. The assets transferred
to structured entities usually result from the Group's leasing
and sales financing business. Those entities refinance the
purchase price by issuing securities.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
216
470
470
11
15
International
15
15
Germany
30
29
Joint operations, joint ventures and associated
companies accounted for at (amortized) cost
14
In 2015, Daimler decided to sell its equity interest in Atlantis
Foundries (Pty.) Ltd., which had been allocated to the
Daimler Trucks segment, to Neue Halberg-Guss GmbH.
The disposal led to an expense of €61 million.
6
Acquisitions in 2015
Mercedes-Benz Vans
21
Provisions for optimization programs¹
-170
-64
Cash flow
-165
-105
EBIT
Daimler Trucks
82
Provisions for optimization programs¹
-5
180
Cash flow
EBIT
-29
-17
Cash flow
International
1 Amounts of provisions for optimization programs as of December 31.
13
2
-25
-1
-14
-81
-4
Cash flow
EBIT
Daimler Buses
19
Provisions for optimization programs¹
-1
5
Provisions for optimization programs¹
-64
EBIT
Mercedes-Benz Cars
Cost of sales
5. Functional costs
217
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Revenue by segment 7 E.84 and region 7 E.86 is presented
in Note 33.
Table 71 E.09 shows the composition of revenue at Group level.
4. Revenue
Items included in cost of sales are shown in table 7 E.10.
See Note 13 for further information on the companies
accounted for using the equity method
In March 2014, the Board of Management and the Supervisory
Board of Daimler AG decided to sell the 50% equity interest
in Rolls-Royce Power Systems Holding GmbH (RRPSH) to
the partner Rolls-Royce Holdings plc (Rolls-Royce). For that
purpose, Daimler exercised a put option on its stake in RRPSH.
The measurement of the put option resulted in an expense
of €118 million. The agreed purchase price of €2,433 million
was received in August 2014. The gain on the sale amounted
to €1,006 million.
Disposals in 2014
THBV is accounted for in the consolidated financial statements
of Daimler AG as an associated company using the equity
method, and is allocated to the Mercedes-Benz Cars segment.
Effective as of December 4, 2015, There Acquisition B. V.,
a 100% subsidiary of THBV, acquired the mapping provider HERE
from Nokia Corporation for a purchase price of €2,602 million
subject to any further purchase price adjustments. The acqui-
sition was financed by capital contributions of €2,000 million
and by bank loans taken out by There Acquisition B.V. of €602
million. As of January 29, 2016, There Acquisition B.V. was
renamed into HERE International B.V.
a capital contribution of €668 million.
of the company. Each of the shareholders provided
There Holding B. V. (THBV) was founded in 2015;
Daimler, Audi and BMW each hold 33.3% of the shares
In 2014, the Group sold its 4% equity interest in Tesla
Motors, Inc. (Tesla) and prematurely terminated the related
hedging instrument. The remeasurement of the Tesla
shares after the end of Daimler's significant influence on
Tesla led to a non-cash gain of €718 million. An expense
of approximately €124 million and a cash inflow of €625 million
resulted from the hedging instrument and the sale of
the equity interest. A gain of €594 million resulted in total.
Acquisitions and disposals of equity-method investments
Amortization expense of capitalized development costs in
the amount of €1,245 million (2014: €1,212 million) is presented
in expense of goods sold.
In 2015, selling expenses amounted to €12,147 million
(2014: €11,534 million). Selling expenses include direct selling
costs as well as selling overhead expenses and consist of
personnel expenses, material costs and other selling costs.
In millions of euros
2014
2015
Optimization programs
E.11
Table E.11 shows the effects of the optimization programs
on the key figures of the segments.
In addition, in non-productive areas of Daimler Trucks in
Germany, a program based on socially acceptable voluntary
measures that ran between May 2013 and December 2014
was continued in the third quarter of 2015 and led in total to a
reduction of approximately 700 jobs as of December 31, 2015.
Selling expenses
In January 2013, Daimler Trucks announced workforce
adjustments as part of its goal of increasing its profitability
by stronger utilization of efficiencies. In Brazil, a redundancy
program was launched in the first quarter of 2013. This program
has led to a reduction of approximately 3,200 jobs in the
administrative and productive areas as of December 31, 2015,
mostly through voluntary severance agreements. These work-
force adjustments also affected Daimler Buses to a small extent.
the Mercedes-Benz Cars segment. In the reporting period 2015,
these measures had resulted in a net expense of €144 million.
In the course of the organizational focus on the divisions,
Daimler started a restructuring program for its sales organiza-
tion in Germany in 2014. Selected sales-and-service centers
and outlets are being combined into car and commercial-vehicle
outlets in order to steadily increase the profitability of
Daimler's own dealer activities in the highly competitive German
market. In addition, in 2015, the Group initiated programs
to restructure its sales organization abroad. These restructuring
programs also include the sale of selected operations of
the Group's current sales network in Germany and abroad.
The programs affect all automotive segments, but mainly
Measures and programs with implementation costs that
materially impacted EBIT of the segments are briefly described
below.
Optimization programs
Research and non-capitalized development costs
Research and non-capitalized development costs were
€4,760 million in 2015 (2014: €4,532 million) and primarily
comprise personnel expenses and material costs.
General administrative expenses amounted to €3,710 million
in 2015 (2014: €3,329 million) and comprise expenses
which were not attributable to production, sales or research
and development functions, including personnel expenses,
depreciation and amortization on fixed and intangible assets,
and other administrative costs.
General administrative expenses
At December 31, 2015, the disposal group's assets for the
German locations amounted to €248 million (December 31,
2014: €300 million) and its liabilities amounted to €12 million
(December 31, 2014: €27 million). Due to their minor impact
on the Group's profitability, liquidity and capital resources, and
financial position, the assets and liabilities held for sale are
not presented separately in the consolidated statement of finan-
cial position. Measurement at fair value less cost to sell
led to an impairment of property, plant and equipment in 2014
in an amount of €93 million. Daimler already sold parts
of the disposal group in 2015. In 2016, the Group anticipates
further negative effects on earnings of up to €0.1 billion
in Germany.
1
Structured entities
Germany
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. Financial instruments in the
form of financial assets and financial liabilities are generally
presented separately. Financial instruments are recognized
as soon as Daimler becomes a party to the contractual provi-
sions of the financial instrument. In the case of purchases
or sales of financial assets through the regular market, Daimler
uses the transaction date as the date of initial recognition
or derecognition.
Financial instruments
Inventories are measured at the lower of acquisition or
manufacturing cost and net realizable value. The net realizable
value is the estimated selling price less any remaining costs
to sell. The acquisition or manufacturing costs of inventories
are generally based on the specific identification method and
include costs incurred in acquiring the inventories and bringing
them to their existing location and condition. Costs for large
numbers of inventories that are interchangeable are allocated
under the average cost formula. In the case of manufactured
inventories and work in progress, acquisition or manufacturing
cost also includes production overheads based
on normal capacity.
Inventories
Non-current assets held for sale and disposal groups
The Group classifies non-current assets or disposal groups
as held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is
reversed, this reversal is restricted to the impairment loss
previously recognized for the assets or disposal group
concerned. The Group generally discloses these assets or
disposal groups separately in the consolidated statement
of financial position.
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist
or may have decreased. If this is the case, Daimler records
a partial or entire reversal of the impairment; the carrying amount
is thereby increased to its recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of depreciation)
had no impairment loss been recognized in prior years.
The recoverable amount is the higher of fair value less costs
of disposal and value in use. For cash-generating units, which
at Daimler correspond to the reportable segments, Daimler
in a first step determines the respective recoverable amount
as value in use and compares it with the respective carrying
amount (including goodwill). Value in use is measured by discount-
ing expected future cash flows from the continuing use of
the cash-generating units using a risk-adjusted interest rate.
Future cash flows are determined on the basis of the long-term
planning, which is approved by the Board of Management
and which is valid at the date when the impairment test is con-
ducted. This planning is based on expectations regarding
future market share, the growth of the respective markets as
well as the products' profitability. The multi-year planning
comprises a planning horizon until 2022 and therefore mainly
covers the product life cycles of our automotive business.
The rounded risk-adjusted interest rates used to discount cash
flows, which are calculated for each segment, are currently
unchanged from the previous year at 8% after taxes for the cash-
generating units of the industrial business and 9% after taxes
for Daimler Financial Services. Whereas the discount rate for
Daimler Financial Services represents the cost of equity,
the risk-adjusted interest rate for the cash-generating units
of the industrial business is based on the weighted average
cost of capital (WACC). These are calculated based on the capital
asset pricing model (CAPM) taking into account current
market expectations. In calculating the risk-adjusted interest
rate for impairment test purposes, specific peer group infor-
mation for beta factors, capital structure data and cost of debt
are used. Periods not covered by the forecast are taken into
account by recognizing a residual value (terminal value), which
generally does not consider any growth rates. In addition,
several sensitivity analyses are conducted. These show that
even in case of more unfavorable premises for main influenc-
ing factors with respect to the original planning, no need
for impairment exists. If value in use is lower than the carrying
amount, fair value less costs of disposal is additionally
calculated to determine the recoverable amount.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Daimler assesses at each reporting date whether there is an
indication that an asset may be impaired. If such indication
exists, Daimler estimates the recoverable amount of the asset.
The recoverable amount is determined for each individual
asset unless the asset generates cash inflows that are not
largely independent of those from other assets or groups
of assets (cash-generating units). In addition, goodwill and
other intangible assets with indefinite useful lives are tested
annually for impairment; this takes place at the level of the
cash-generating units. If the carrying amount of an asset
or of a cash-generating unit exceeds the recoverable amount,
an impairment loss is recognized for the difference.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
210
Interim gains or losses (to be eliminated) from transactions
with companies accounted for at-equity are recognized
through profit and loss with corresponding adjustments
of the investments' carrying amounts.
Daimler reviews on each balance-sheet date whether there
is any objective indication of impairments of equity-method
investments. If such indications exist, the Group determines
the impairment loss to be recognized. If the carrying amount
exceeds the recoverable amount of an investment, the carrying
amount is written down to the recoverable amount. The recov-
erable amount is the greater of fair value less costs to sell and
value in use. An impairment or impairment reversal is recog-
nized in the consolidated statement of income under income/
loss on equity-method investments; this also includes any
gains and/or losses on the sale of equity-method investments.
On the date of acquisition, a positive difference between cost
of acquisition and Daimler's share of the fair values of the
identifiable assets and liabilities of the associated company
or joint venture are determined and recognized as investor
level goodwill. The goodwill is included in the carrying amount
of the equity-method investment. With step acquisition of
an equity interest by which significant influence or joint control
is achieved for the first time, the investment is generally
accounted for on the basis of IFRS 3 Business Combinations.
This means that the previously held equity interest is remeasured
on the date of acquisition; any resulting gain or loss is recog-
nized through profit and loss. If an equity interest in an existing
associated company is increased without any resulting change
in significant influence, goodwill is determined only for the
additionally acquired interest; the previous investment is not
remeasured at fair value.
Equity-method investments
In the case of finance leases, the Group presents the receiv-
ables in amount of the net investment of the lease agreements
under receivables from financial services. The net investment
of a lease agreement is the gross investment (future minimum
lease payments and non-guaranteed residual value) discounted
at the rate upon which the lease agreement is based.
Impairment of non-current non-financial assets
Operating leases also relate to Group products that Daimler
Financial Services acquires from non-Group dealers or other
third parties and leases to end customers. These vehicles
are presented at (depreciated) cost of acquisition under leased
equipment in the Daimler Financial Services segment. If these
vehicles are subsidized, the subsidies are deducted from the cost
of acquisition. After revenue is received from the sale to inde-
pendent dealers, these vehicles generate revenue from lease
payments and subsequent resale on the basis of the separate
leasing contracts. The revenue received from the sale of these
vehicles to the dealers is estimated by the Group as being of
the magnitude of the addition to leased equipment at Daimler
Financial Services. In 2015, additions to leased equipment
at Daimler Financial Services amounted to approximately
€12 billion (2014: approximately €9 billion).
211
Financial assets
Financial assets and financial liabilities are offset and the net
amount is presented in the consolidated statement of financial
position provided that an enforceable right currently exists
to offset the amounts involved, and there is an intention either
to carry out the offsetting on a net basis or to settle a liability
when the related asset is sold.
Available-for-sale financial assets. If an available-for-sale
financial asset is impaired, the difference between its cost
(net of any principal payment and amortization) and its current
fair value (less any impairment loss previously recognized
in the statement of income) is reclassified from other compre-
hensive income/loss to the statement of income. Reversals
with respect to equity instruments classified as available for
sale are recognized in other comprehensive income/loss.
Reversals of impairment losses on debt instruments are recog-
nized through the statement of income if the increase in fair
value of the instrument can be objectively attributed to an event
occurring after the impairment losses were recognized in
the consolidated statement of income.
In most cases, an impairment loss on loans and receivables
(e.g. receivables from financial services including finance
lease receivables and trade receivables) is recorded using
allowance accounts. The decision to account for credit
risks using an allowance account or by directly reducing the
receivable depends on the estimated probability of the
loss of receivables.
If, in a subsequent reporting period, the amount of the
impairment loss decreases and the decrease can be attributed
objectively to an event occurring after the impairment was
recognized, the impairment loss recorded in prior periods is
reversed and recognized in profit or loss.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
212
Loans and receivables. If there are objective indications that
the value of a loan or receivable has to be impaired, the
amount of the impairment loss is measured as the difference
between the carrying amount of the asset and the present
value of expected future cash flows (excluding expected future
credit losses that have not yet been incurred), discounted
at the original effective interest rate of the financial asset. The
amount of the impairment loss is recognized in profit or loss.
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IAS 39 Financial Instruments: Recognition
and Measurement. Transaction costs directly attributable
to acquisition or issuance are considered by determining
the carrying amount if the financial instruments are not mea-
sured at fair value through profit or loss.
At each reporting date, the carrying amounts of financial
assets other than those to be measured at fair value through
profit or loss are assessed to determine whether there is
objective evidence of impairment. Objective evidence may exist
for example if a debtor is facing serious financial difficulties
or there is a substantial change in the debtor's technological,
economic, legal or market environment. For quoted equity
instruments, a significant or prolonged decline in fair value
is additional objective evidence of possible impairment.
Daimler has defined criteria for the significance and duration
of a decline in fair value. A decline in fair value is deemed
significant if it exceeds 20% of the carrying amount of the invest-
ment; a decline is deemed prolonged if the carrying amount
exceeds the fair value for a period longer than nine months.
Cash and cash equivalents. Cash and cash equivalents consist
primarily of cash on hand, checks and demand deposits at
banks, as well as debt instruments and certificates of deposits
with a remaining term when acquired of up to three months,
which are not subject to any material value fluctuations.
Cash and cash equivalents correspond with the classification
in the consolidated statement of cash flows.
After initial measurement, available-for-sale financial assets are
measured at fair value, with unrealized gains or losses being
recognized in other comprehensive income/loss. If objective
evidence of impairment exists or if changes occur in the fair
value of a debt instrument resulting from currency fluctuations,
these changes are recognized in profit or loss. Upon disposal
of financial assets, the accumulated gains and losses recognized
in other comprehensive income/loss resulting from measure-
ment at fair value are recognized in profit or loss. If a reliable
estimate cannot be made of the fair value of an unquoted
equity instrument, such as an investment in a German limited
liability company, this instrument is measured at cost (less
any impairment losses). Interest earned on available-for-sale
financial assets is generally reported as interest income
using the effective interest method. Dividends are recognized
in profit or loss when the right of payment has been established.
Available-for-sale financial assets. Available-for-sale financial
assets are non-derivative financial assets that are designated
as available for sale or that are not classified in any of the
preceding categories. This category includes equity instruments
and debt instruments such as government bonds, corporate
bonds and commercial papers.
Loans and receivables. Loans and receivables are non-
derivative financial assets with fixed or determinable payments
that are not quoted in an active market, such as receivables
from financial services or trade receivables. After initial recog-
nition, loans and receivables are subsequently carried at
amortized cost using the effective interest method less any
impairment losses. Gains and losses are recognized in the
statement of income when the loans and receivables are impaired
or derecognized. Interest effects on the application of the
effective interest method are also recognized in profit or loss.
Derivatives, including embedded derivatives separated from
the host contract, which are not classified as hedging instruments
in hedge accounting, as well as shares and marketable debt
securities acquired for the purpose of selling in the near term
are classified as held for trading. Gains or losses on these
financial assets are recognized in profit or loss.
Financial assets at fair value through profit or loss.
Financial assets at fair value through profit or loss include
those financial assets designated as held for trading.
Financial assets primarily comprise receivables from financial
services, trade receivables, receivables from banks, cash
on hand, derivative financial assets and marketable securities
and financial investments.
Impairment of financial assets
Financial liabilities
Operating leases relate to vehicles that the Group produces
itself and leases to third parties or vehicles that the Group
sells and guarantees to buy back or guarantees a residual value.
These vehicles are capitalized at (depreciated) cost of pro-
duction under leased equipment in the industrial business and
are depreciated over the contract term on a straight-line basis
with consideration of the expected residual values. Changes in
the expected residual values lead either to prospective adjust-
ments of the scheduled depreciation or to an impairment loss
if necessary.
The same accounting principles apply to assets if Daimler
sells such assets and leases them back from the buyer.
6 to 25 years
10 to 50 years
Technical equipment and machinery
Buildings and site improvements
Useful lives of property, plant and equipment
E.07
Intangible assets with indefinite lives are reviewed annually
to determine whether indefinite-life assessment continues
to be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
Other equipment, factory and office equipment
If necessary, accumulated impairment losses are recognized.
Intangible assets
Basic earnings per share are calculated by dividing profit
attributable to shareholders of Daimler AG by the weighted
average number of shares outstanding. As nothing occurred
in the years 2015 and 2014 that resulted in any dilution, diluted
earnings per share were the same as basic earnings per share
in those years.
Earnings per share
Deferred tax assets or liabilities are calculated on the basis
of temporary differences between the tax basis and the financial
reporting of assets and liabilities including differences from
consolidation, on unused tax loss carryforwards and unused
tax credits. Measurement is based on the tax rates expected
to be effective in the period in which an asset is recognized or
a liability is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the reporting date
or are soon to be enacted. Daimler recognizes a valuation
allowance for deferred tax assets when it is unlikely that a corre-
sponding amount of future taxable profit will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be utilized. Deferred tax
liabilities for taxable temporary differences in connection with
investments in subsidiaries, branches, associates and interests
in joint arrangements are not recognized if the Group is able
to control the timing of the reversal of the temporary difference
and it is probable that the temporary difference will not
reverse in the foreseeable future.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
208
1
Intangible assets acquired are measured at acquisition
or manufacturing cost less accumulated amortization.
Daimler as lessor
3 to 30 years
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS 38 are
met. Subsequent to initial recognition, the asset is carried
at cost less accumulated amortization and accumulated impair-
ment losses. Capitalized development costs include all direct
costs and allocable overheads and are amortized on a straight-
line basis over the expected product life cycle (a maximum
of ten years). Amortization of capitalized development costs is
an element of manufacturing costs and is allocated to those
vehicles and components by which they were generated and is
included in cost of sales when the inventory (vehicles) is sold.
Sale and lease back
Assets carried as finance leases are measured at the beginning
of the (lease) contract at the lower of the present value of
the minimum lease payments and the fair value of the leased
object, and in the following periods less accumulated depre-
ciation and other accumulated impairment losses. Depreciation
is on a straight-line basis; residual values of the assets are
given due consideration. Payment obligations resulting from
future lease payments are discounted and disclosed under
financing liabilities.
In the case of an operating lease, the lease payments
or rental payments are immediately expensed.
Daimler as lessee
Leasing includes all arrangements that transfer the right
to use a specified asset for a stated period of time in return
for a payment, even if the right to use such asset is not
explicitly described in an arrangement. The Group is a lessee
of property, plant and equipment and a lessor of its products.
It is evaluated on the basis of the risks and rewards of a leased
asset whether the ownership of the leased asset is attributed
to the lessee (finance lease) or to the lessor (operating lease).
Leasing
209
Intangible assets other than development costs with finite
useful lives are generally amortized on a straight-line basis
over their useful lives (three to ten years) and are tested for
impairment whenever there is an indication that the intangible
asset may be impaired. The amortization period for intangible
assets with finite useful lives is reviewed at least at each year-end.
Changes in expected useful lives are treated as changes in
accounting estimates. The amortization expense on intangible
assets with finite useful lives is recorded in functional costs.
|
Property, plant and equipment are depreciated over the useful
lives as shown in table 7 E.07.
The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisition
or manufacturing costs include the estimated costs, if any,
of dismantling and removing the item and restoring the site.
Property, plant and equipment are measured at acquisition
or manufacturing costs less accumulated depreciation.
If necessary, accumulated impairment losses are recognized.
Property, plant and equipment
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree's identifiable assets, which are measured
at fair value.
For acquisitions, goodwill represents the excess of the consid-
eration transferred over the fair values assigned to the
identifiable assets proportionally acquired and liabilities
assumed. Goodwill is accounted for at the subsidiaries
in the functional currency of those subsidiaries.
Goodwill
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial liabilities primarily include trade payables,
liabilities to banks, bonds, derivative financial liabilities and
other liabilities.
Offsetting financial instruments
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives, (including embedded
derivatives separated from the host contract) which are
not used as hedging instruments in hedge accounting, are
classified as held for trading. Gains or losses on liabilities
held for trading are recognized in profit or loss.
59
327
329
Consolidated subsidiaries
Germany
At December 31,
2014
2015
Composition of the Group
60
E.08
The aggregate balance sheet totals of the subsidiaries, associ-
ated companies, joint ventures and joint operations accounted
for at amortized cost whose business is non-active or of low
volume and which are not material for the Group and the fair
presentation of its profitability, liquidity and capital resources
and financial position would amount to approximately 1% of the
Group's balance sheet total; the aggregate revenues and
the aggregate net profit would amount to approximately 1%
of the Group's revenue and net profit.
Table 71 E.08 shows the composition of the Group.
Composition of the Group
3. Consolidated Group
The calculation of income taxes of Daimler AG and its subsid-
iaries is based on the legislation and regulations applicable
in the various countries. Due to their complexity, the tax items
presented in the financial statements are possibly subject
to different interpretation by taxpayers on the one hand and
local tax authorities on the other hand. For the calculation
of deferred tax assets, assumptions have to be made regarding
future taxable income and the time of realization of the
deferred tax assets. In this context, Daimler takes into consid-
eration, among other things, the projected earnings from
business operations, the effects on earnings of the reversal
of taxable temporary differences, and realizable tax strategies.
As future business developments are uncertain and are
sometimes beyond Daimler's control, the assumptions to be
made in connection with accounting for deferred tax assets
are connected with a substantial degree of uncertainty. On each
balance sheet date, Daimler carries out impairment tests on
deferred tax assets on the basis of the planned taxable income
in future financial years; if Daimler assesses that the probability
of future tax advantages being partially or fully unrealized
is more than 50%, the deferred tax assets are impaired. Further
information is provided in Note 9.
Income taxes
The calculation of provisions for pensions and similar
obligations and the related pension cost are based on various
actuarial valuations. The calculations are subject to various
assumptions on matters such as current actuarially developed
probabilities (e.g. discount factors and cost-of-living increases),
future fluctuations with regard to age and period of service, and
experience with the probability of occurrence of pension
payments, annuities or lump sums. As a result of changed
market or economic conditions, the probabilities on which
the influencing factors are based, may differ from current devel-
opments. The financial effects of deviations of the main
factors are calculated with the use of sensitivity analyses.
See Note 22 for further information.
A detailed list of the companies included in the consolidated
financial statements and of the equity investments of
Daimler AG pursuant to Sections 285 und 313 of the German
Commercial Code (HGB) is provided in the statement
of investments. Further information is provided in Note 39.
Pensions and similar obligations
International
267
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured
at amortized cost using the effective interest method.
3
Joint operations accounted for
using the equity method
5
5
International
Germany
270
International
Subsidiaries accounted for using
the equity method
47
53
33
29
80
82
Unconsolidated subsidiaries
Germany
215
3
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A provision is recognized when a liability to third parties
has been incurred, an outflow of resources is probable and
the amount of the obligation can be reasonably estimated.
The amount recognized as a provision represents the best esti-
mate of the obligation at the balance sheet date. Provisions
with an original maturity of more than one year are discounted
to the present value of the expenditures expected to settle
the obligation at the end of the reporting period. Provisions
are regularly reviewed and adjusted as further information
becomes available or circumstances change.
Provisions for other risks
Gains or losses on the curtailment or settlement of a
defined benefit plan are recognized in profit or loss when
the curtailment or settlement occurs.
The discount factors used to calculate the present values
of defined benefit pension obligations are to be determined
by reference to market yields at the end of the reporting
period on high-quality corporate bonds in the respective markets.
For very long maturities, there are no high-quality corporate
bonds available as a benchmark. The respective discount
factors are estimated by extrapolating current market rates
along the yield curve.
The balance of defined benefit plans for pensions and other
post-employment benefits obligations and plan assets
(net pension obligation or net pension assets) accrues interest
at the discount rate used as a basis for the measurement of
the gross pension obligation. The resulting net interest expense
or income is recognized in profit and loss under interest
expense or interest income in the consolidated statement of
income. The other expenses resulting from pension obligations
and other post-employment benefit obligations (medical care),
which mainly result from entitlements acquired during the year
under review, are taken into consideration in the functional
costs in the consolidated statement of income.
|
Pensions and similar obligations
A provision for expected warranty costs is recognized when
a product is sold or when a new warranty program is initiated.
Estimates for accrued warranty costs are primarily based
on historical experience.
If derivative financial instruments do not or no longer qualify
for hedge accounting because the qualifying criteria for
hedge accounting are not or are no longer met, the derivative
financial instruments are classified as held for trading and
are measured at fair value through profit or loss.
213
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E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
If the requirements for hedge accounting set out in IAS 39 are
met, Daimler designates and documents the hedge relation-
ship from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the fair value
of a recognized asset or liability or an unrecognized firm com-
mitment is hedged. In a cash flow hedge, the variability of cash
flows to be received or paid from expected transactions related
to a recognized asset or liability or a highly probable forecast
transaction are hedged. The documentation of the hedging
relationship includes the objectives and strategy of risk manage-
ment, the type of hedging relationship, the nature of the risk
being hedged, the identification of the hedging instrument and
the hedged item, as well as a description of the method used
to assess hedge effectiveness. Hedging transactions are
expected to be highly effective in achieving offsetting risks from
changes in fair value or cash flows and are regularly assessed
to determine that they have actually been highly effective
throughout the financial reporting periods for which they are
designated.
Derivative financial instruments are measured at fair value
upon initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive
or negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option pricing models. Deriva-
tives are presented as assets if their fair value is positive and
as liabilities if the fair value is negative.
Embedded derivatives are separated from the host contract,
which is not measured at fair value through profit or loss,
if an analysis shows that the economic characteristics and
risks of embedded derivatives are not closely related to
those of the host contract.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments exclusively
for hedging financial risks that arise from its commercial
business or refinancing activities. These are mainly interest
rate risks, currency risks and commodity price risks.
Changes in the fair value of derivative financial instruments are
recognized periodically in either profit or loss or other com-
prehensive income/loss, depending on whether the derivative
is designated as a hedge of changes in fair value or cash flows.
For fair value hedges, changes in the fair value of the hedged
item and the derivative are recognized in profit or loss. For
cash flow hedges, fair value changes in the effective portion
of the hedging instrument after taxes are recognized in other
comprehensive income/loss. Amounts recognized in other
comprehensive income/loss are reclassified to the statement
of income when the hedged underlying transaction affects
the statement of income. The ineffective portions of fair value
changes are recognized in profit or loss.
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed by
a segment or business unit or the manner in which business
is conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the ter-
mination of agreements with suppliers and dealers. Restruc-
turing provisions are recognized when the Group has a detailed
formal plan that has either commenced implementation or
been announced.
The measurement of defined benefit plans for pensions and
other post-employment benefit obligations (medical care)
in accordance with IAS 19 Employee Benefits is based on the
projected unit credit method. Plan assets invested to cover
defined benefit pension obligations and other post-employment
benefit obligations (medical care) are measured at fair value
and offset against the corresponding obligations. For the valua-
tion of defined benefit plans, differences between actuarial
assumptions used and actual developments as well as changes
in actuarial assumptions result in actuarial gains and losses,
which have a direct impact on the consolidated statement
of financial position or on the consolidated statement of com-
prehensive income/loss.
Share-based payment comprises cash-settled liability awards.
Share-based payment
Legal proceedings
Further information on provisions for other risks is provided
in Note 23.
The Group provides various types of product warranties
depending on the type of product and market conditions.
Provisions for product warranties are generally recognized
when vehicles are sold or when new warranty programs are
initiated. Based on historical warranty claim experience,
assumptions have to be made on the type and extent of future
warranty claims and customer goodwill, as well as on possible
recall or buyback campaigns for each model series. In addition,
the estimates also include assumptions on the amounts
of potential repair costs per vehicle and the effects of possible
time or mileage limits. The provisions are regularly adjusted
to reflect new information.
The recognition and measurement of provisions for product
warranties is generally connected with estimates.
Product warranties
Collectability of receivables from financial services
The Group regularly estimates the risk of default on receivables
from financial services. Many factors are taken into consider-
ation in this context, including historical loss experience, the
size and composition of certain portfolios, current economic
events and conditions and the estimated fair values and adequacy
of collaterals. Changes in economic conditions can lead to
changes in our customers' creditworthiness and to changes
in used vehicle prices, which would have a direct effect
on the market values of the vehicles assigned as collateral.
Changes to the estimation and assessment of these factors
influence the allowance for credit losses with a resulting
impact on the Group's net profit. See also Notes 14 and 32
for further information.
Recoverable amount of equipment on operating leases
Daimler regularly reviews the factors determining the values
of its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases, which
constitute a substantial part of the expected future cash flows
from leased assets. In this context, assumptions have to be
made regarding the future supply of and demand for vehicles,
as well as the development of vehicle prices. Those assump-
tions are determined either by qualified estimates or by publi-
cations provided by expert third parties; qualified estimates
are based, as far as they are publicly available, on external data
with consideration of internally available additional information
such as historical experience of price developments and
recent sale prices. The residual values thus determined serve
as a basis for depreciation; changes in residual values lead
either to prospective adjustments of the depreciation or, in the
case of a significant decline in expected residual values, to
impairment. If depreciation is prospectively adjusted, changes
in estimates of residual values do not have a direct effect
but are equally distributed over the remaining periods of the
lease contracts.
Various legal proceedings, claims and governmental investiga-
tions are pending against Daimler AG and its subsidiaries
on a wide range of topics. If the outcome of such legal proceed-
ings is detrimental to Daimler, the Group may be required
to pay substantial compensatory and punitive damages or to
undertake service actions, recall campaigns or other costly
actions. Litigation and governmental investigations often involve
complex legal issues and are connected with a high degree
of uncertainty. Accordingly, the assessment of whether an obli-
gation exists on the balance sheet date as a result of an event
in the past, and whether a future cash outflow is likely and the
obligation can be reliably estimated, largely depends on
estimations by the management. Daimler regularly evaluates
the current stage of legal proceedings, also with the involve-
ment of external legal counsel. It is therefore possible that the
amounts of provisions for pending or potential litigation
will have to be adjusted due to future developments. Changes
in estimates and premises can have a material effect on the
Group's future profitability. It is also possible that provisions
accrued for some legal proceedings may turn out to be
insufficient once such proceedings have ended. Daimler may
also become liable for payments in legal proceedings no
provisions were established for. Although the final resolution
of any such proceedings could have a material effect on
Daimler's operating results and cash flows for a particular
reporting period, Daimler believes that it should not materially
affect the Group's financial position.
In the context of impairment tests for non-financial assets,
estimates have to be made to determine the recoverable
amounts of cash-generating units. Assumptions have to be made
in particular with regard to future cash inflows and outflows
for the planning period and the following periods. The estimates
include assumptions regarding future market share and the
growth of the respective markets as well as regarding the prod-
ucts' profitability. On the basis of the impairment tests
carried out in 2015, the recoverable amounts are substantially
larger than the net assets of the Group's cash-generating units.
Recoverable amounts of cash-generating units
and equity-method investments
In the consolidated financial statements, to a certain degree,
estimates, assessments and assumptions have to be made
which can affect the amounts and reporting of assets and liabili-
ties, the reporting of contingent assets and liabilities on the
balance sheet date and the amounts of income and expense
reported for the period. The major items affected by such
estimates, assessments and assumptions are described as
follows. Actual amounts may differ from the estimates.
Changes in the estimates, assessments and assumptions
can have a material impact on the consolidated financial
statements.
2. Accounting estimates and assessments
214 E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Presentation in the consolidated statement of cash flow
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash used for investing activities.
Liability awards are measured at fair value at each balance
sheet date until settlement and are classified as provisions.
The profit or loss of the period equals the addition to and/or
the reversal of the provision during the reporting period and
the dividend equivalent paid during the period, and is included
in the functional costs.
When objective evidence of impairment is present, estimates
and assessments also have to be made to determine the
recoverable amount of an equity method financial investment.
The determination of the recoverable amount is based on
assumptions regarding future business developments for
the determination of the expected future cash flows of that
financial investment. See Note 13 for the presentation
of carrying amounts and fair values of equity-method financial
investments in listed companies.
219
7. Other financial income/expense, net
Table 7 E.16 shows the components of other financial
income/expense, net.
In 2014, miscellaneous other financial income/expense, net
included income from the disposal of the 50% equity interest
in RRPSH of €1,006 million as well as income from the disposal
of the Tesla shares of €88 million. It also included in 2014
expenses of €118 million from the measurement of the RRPSH
put option and expenses of €212 million from hedging the
Tesla share price.
E.16
Other financial income/expense, net
In millions of euros
-20
2014
Income and expense from compounding of provisions
and effects of changes in discount rates¹
Miscellaneous other financial income/expense, net
-353
-7
811
-27
2015
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other miscellaneous expenses
Further information on expenses associated with optimization
programs is provided in Note 5.
-291
-947
-555
-1,160
Beside gains and/or losses from the sale of selected opera-
tions of the Group's current sales network, the EBIT effects
listed in table E.11 primarily relate to personnel measures
and are included in the line items within the consolidated
statement of income as shown in table 7 E.12.
Cash effects resulting from the optimization programs are
mainly expected until the end of 2017.
Personnel expenses and average number of employees
Personnel expenses included in the consolidated statement
of income amounted to €20,949 million in 2015 (2014: €19,607
million). The average numbers of people employed are shown
in table E.13.
Other miscellaneous expense includes losses from disposals
of current assets, changes in other provisions (partially in
connection with legal proceedings) and additional miscellaneous
items. In the previous year, the line item included an addition
of €600 million to the provision for EU Commission antitrust
proceedings concerning European commercial vehicle
manufacturers.
Due to the organizational focus of the divisions on their
customers and markets, the numbers of employees previously
reported under sales and marketing are included in the
respective divisions since 2014. Since the end of 2015, this
also applies to the Group's own sales and service centers in
Germany and the global logistics center in Germersheim,
whose employees are now grouped under Mercedes-Benz
Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses.
The figures for comparison for 2014 have been adjusted to
reflect these changes.
6. Other operating income and expense
The composition of other operating income is shown
in table 7 E.14.
Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.
Government grants and subsidies mainly comprise reimburse-
ments relating to current part-time early retirement contracts
and subsidies for alternative drive systems.
Gains on sales of property, plant and equipment include
gains of €87 million from the sale of real-estate properties
in the United States.
The composition of other operating expense is shown
in table
E.15.
Information on the total remuneration of the current and for-
mer members of the Board of Management and the current
members of the Supervisory Board is provided in Note 37.
458
Net interest income on the net assets of defined
benefit pension plans
8. Interest income and interest expense
170
145
Interest expense
Net interest expense on the net obligation
from defined benefit pension plans
-293
-350
Interest and similar expense
-309
-365
-602
-715
E.18
Profit before income taxes
2015
-93
142
167
Interest and similar income
3
Table 71 E.17 shows the components of interest income
and interest expense.
E.17
Interest income and interest expense
2015
2014
In millions of euros
9. Income Taxes
1 Excluding the expense from compounding provisions for pensions and
similar obligations.
Profit before income taxes is comprised as shown
in table
Profit before income taxes in Germany includes profit/loss
from equity-method investments if the equity interests in those
companies are held by German companies.
Table 7 E.19 shows the components of income taxes.
The current tax expense includes tax benefits at German
and foreign companies of €731 million (2014: €53 million)
recognized for prior periods.
The deferred tax expense is comprised of the components
shown in table 7 E.20.
For German companies, in 2015 and 2014, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
a solidarity tax surcharge of 5.5% on each year's federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes
in both years amounted to 29.825%. For non-German compa-
nies, the deferred taxes at period-end were calculated using the
tax rates of the respective countries.
Interest income
3
E.18.
2014
9,665
Expenses associated with optimization programs
-137
-93
Other operating income
110
-202
-277
E.13
Average number of employees
2015
2014
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
22,430
137,431 135,345
87,707 88,228
21,996
Other operating expenses
-13
-3
Research and non-capitalized development costs
218
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E.12
Income and expenses associated with optimization programs
In millions of euros
2015
2014
Daimler Buses
Cost of sales
-95
Selling expenses
-119
-33
General administrative expenses
-7
-43
-46
-137
17,755
Daimler Financial Services
Rental income not relating to sales financing
Other miscellaneous income
81
59
553
506
2,114
1,759
E.15
Other operating expense
In millions of euros
2015
2014
Losses on sales of property, plant and equipment
-127
-120
63
242
Gains on sales of property, plant and equipment
92
In millions of euros
8,594
Other
9,574
284,562
8,437
279,857
E.14
17,257
Other operating income
2015
2014
Income from costs recharged to third parties
1,131
1,039
Government grants and subsidies
107
In millions of euros
German companies
-44
2,960
752
Receivables from financial services
303
275
Other financial assets
4,984
4,349
Tax loss carryforwards and unused tax credits
2,693
3,323
Provisions for pensions and similar obligations
869
958
Other provisions
2,304
992
2,313
Inventories
1,178
-1,070
Deferred tax assets, net
1,069
3,054
E.23
Split of tax assets and liabilities before offset
In millions of euros
At December 31,
2015
2014
Intangible assets
Property, plant and equipment
52
409
52
327
Equipment on operating leases
1,273
Liabilities
1,645
1,384
-7,188
-6,053
Inventories
-63
-50
Receivables from financial services
-575
-736
Other financial assets
-363
-352
Other assets
-169
-189
Provisions for pensions and similar obligations
Equipment on operating leases
-1,639
-1,742
Property, plant and equipment
Deferred income
1,611
1,186
Other
331
315
17,371
-2,215
16,507
-988
Deferred tax assets, gross
16,383
Development costs
Other intangible assets
-2,317
-125
-918
15,589
-2,162
-73
Valuation allowances
Deferred tax liabilities
4,124
Deferred tax assets
242
Non-German companies
-1,113
-605
-4,033
-2,883
E.20
Components of deferred tax expense
In millions of euros
2015
2014
Deferred taxes
-1,557
-363
due to temporary differences
-444
German companies
Deferred taxes
-1,395
Non-German companies
7,764
7,213
12,744
10,173
E.19
Components of income taxes
-595
2015
In millions of euros
Current taxes
German companies
-918
-1,125
Non-German companies
-1,558
2014
4,980
due to tax loss carryforwards and tax credits
-319
on deferred tax assets
-147
276
Tax-free income and non-deductible expenses
41
-44
Other
5
Actual income tax expense
-4,033
E.22
Deferred tax assets and liabilities
In millions of euros
10
-2,883
At December 31,
2015
2014
Change of valuation allowance
-21
-49
Tax law changes
220
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E.21
Reconciliation of expected income tax expense
to actual income tax expense
In millions of euros
2015
-962
2014
Foreign tax rate differential
-3,801
-126
-3,034
-91
Trade tax rate differential
44
21
Expected income tax expense
3,284
-2,390
-108
1,005
310
862
Profit/loss from continuing operations
after taxes
2,124
1,435
5,211
11,336
5,767
9,575
Revenue
Information on the statement of income
Kamaz4
2014
2015
THBV³ (HERE)
2014
2015
BAIC Motor²
2014
2015
2014
384
2015
-30
Profit/loss from discontinued operations
after taxes
Current assets
595
443
3,115
10,127
12,072
3,314
4,139
Non-current assets
Information on the statement of financial position and
reconciliation to equity-method carrying amounts
4
-30
-5
384
1,005
310
862
Total comprehensive income
Other comprehensive income/loss
9
BBAC¹
227
In millions of euros
1
1,795
864
716
13
-32
186
71
38
15.0
10
34
133
686
852
730
10.1
49.0
2 Including investor-level adjustments.
1 Proportionate stock market prices.
92
3 The proportionate share of unaudited earnings of BAIC Motor Corporation Ltd. (BAIC Motor) is included in Daimler's consolidated financial statements
with a three-month time lag. As the investment was acquired in November 2013, Daimler's proportionate share of earnings for 2014 relates to the months
of December 2013 through September 2014. For 2015, earnings relate to the months of October 2014 through September 2015.
4 The proportionate share of earnings of There Holding B.V. (THBV) is included in Daimler's consolidated financial statements with a one-month time lag.
5 The dividend from BBAC (€208 million) was not paid out in the year 2015.
226 E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Summarized IFRS financial information on significant associated companies
accounted for using the equity method
E.33
after purchase price allocation for the significant associated
companies which were the basis for equity-method accounting
in the Group's consolidated financial statements.
Table 7 E.33 shows summarized IFRS financial information
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In March 2014, Daimler decided to sell its 50% equity interest
in the joint venture Rolls-Royce Power Systems Holding GmbH
(RRPSH) to its partner Rolls-Royce. To do so, Daimler exercised
a put option on its stake in RRPSH that was agreed upon with
Rolls-Royce in 2011; measurement using the equity method was
ended. Until then, the proportionate share of earnings had
been allocated to the Daimler Trucks segment. In mid-April 2014,
a sale price of €2,433 million was agreed upon. The trans-
action was consummated on August 26, 2014, when antitrust-
law and foreign-trade-law approvals had been obtained;
the board members and management representatives from
Daimler in RRPSH-companies stepped down from their
positions. The proceeds of the sale of €1,006 million were
classified as "Other financial result" and, in the segment
reporting, were presented in the reconciliation of total segments'
EBIT to Group EBIT.
RRPSH
In 2014, the Group recognized an impairment loss of €30 million
with respect to its investment in Kamaz. The loss was included
in the line item profit/loss on equity-method investments, net.
In 2010, the Group and the European Bank for Reconstruction
and Development (EBRD) agreed to increase their strategic
investment in Kamaz. Daimler increased its equity interest
in Kamaz to 15%. Of that interest, 4% was legally held by EBRD,
but Daimler was deemed to be the economic owner of those
shares due to the equity-method measurement. In October
2014, Daimler agreed with EBRD to take over the remaining 4%
interest. With this step, Daimler has raised its investment
in Kamaz to 15% also in legal terms.
4,232
Daimler and the Russian truck manufacturer Kamaz PAO (Kamaz)
have signed a license agreement to produce and use Axor,
Atego and Actros driver's cabs as well as delivery contracts for
cabs, engines and axles for trucks and buses of the Russian
company within the framework of their strategic partnership.
Resulting from its agreed representation on the board of
directors of Kamaz and its significant contractual rights as a
minority shareholder, the Group can exercise significant
influence on Kamaz. Therefore, the Group accounts for its
equity interest in Kamaz using the equity method; the
investment and the proportionate share in the profit and loss
of Kamaz are allocated to the Daimler Trucks segment.
There Holding B. V. is accounted for in the consolidated financial
statements of Daimler AG as an associated company using
the equity method, and is allocated to the Mercedes-Benz Cars
segment. Daimler's proportionate share of its profits and
losses is included with a one-month delay. No proportionate
share of profit or loss was included in Daimler's consolidated
financial statements for 2015 as the amount was not material.
Due to closeness in time to the balance sheet date, not
all hidden reserves and obligations could be finally identified.
Purchase price allocation is expected to be finalized in the
first quarter 2016.
Effective December 4, 2015, There Acquisition B. V., based in
Rijswijk, Netherlands, a 100% subsidiary of There Holding B. V.,
acquired the roadmap service HERE from Nokia Corporation
for a purchase price of €2,602 million, subject to possible further
price adjustments. HERE is one of the biggest manufacturers
of digital roadmaps for navigation systems worldwide. Future
expected high resolution maps will be one of the fundamentals
for future autonomous driving. The acquisition price was
funded by using cash contributions of €2,000 million and by
bank loans to There Acquisition B. V. of €602 million.
There Holding B.V. (THBV), based in Rijswijk, Netherlands,
was founded in 2015. Daimler, Audi and BMW each hold an
interest in the company of 33.3%. Each of the shareholders
has made a cash contribution to the company of €668 million.
THBV (HERE)
BAIC Motor Corporation Ltd. (BAIC Motor) is the passenger
car division of BAIC Group, one of the leading automotive
companies in China. Directly or via subsidiaries, BAIC Motor
is engaged in the business of researching, developing, manu-
facturing, selling, marketing and servicing of automotive vehicles
and related parts and components and all related services.
Due to Daimler's representation on the board of directors
of BAIC Motor and other contractual arrangements, the Group
classifies this investment as an investment in an associate,
to be accounted for using the equity-method; in the segment
reporting, the investment's carrying amount and its propor-
tionate share of profit or loss are presented in the reconciliation
of total segment's assets to Group assets and total segments'
EBIT to Group EBIT, respectively. On December 19, 2014,
BAIC Motor successfully placed its equity securities for trading
on the Hong Kong Stock Exchange, also with the issue of
new shares. As a result, Daimler's interest in BAIC Motor was
diluted from 12.0% to 10.1%. Daimler continues to classify
this investment as an investment in an associate, to be accounted
for using the equity-method. The effect of dilution was not
material. In the second quarter of 2015, the shareholders
of BAIC Motor decided to pay a dividend. The amount of
€34 million attributable to Daimler decreased the investment's
carrying amount accordingly.
BAIC Motor
In 2015, capital increases of €287 million took place at BBAC.
Daimler plans to contribute additional equity of €0.2 billion,
in accordance with its shareholding ratio, to BBAC in the next
years. In December 2015, the shareholders of BBAC declared a
dividend. The amount of €208 million attributable to Daimler
has decreased the investment's carrying amount accordingly.
Beijing Benz Automotive Co., Ltd. (BBAC) produces and
distributes Mercedes-Benz passenger cars and spare parts
in China. The investment and the proportionate share
in the results of BBAC are allocated to the Mercedes-Benz
Cars segment.
BBAC
Kamaz
2,648
7,028
4,314
4 Kamaz:
Daimler recognizes its proportionate share of the profits or losses of There Holding B.V. (THBV) with a one-month time lag. Figures for the statement
of financial position relate to the date of acquisition of HERE of December 4, 2015.
3 THBV:
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of September 30.
Figures for BAIC Motor are based on local GAAP.
For 2014 figures for the statement of income relate to the period of January 1 to September 30.
Figures for the statement of income for the year 2015 relate to the period of October 1, 2014 to September 30, 2015.
Daimler recognizes its proportionate share of the unaudited profits or losses of BAIC Motor Corporation Ltd. (BAIC Motor) with a three-month time lag.
As the equity interest in BAIC Motor was acquired in November 2013, the proportionate share of the profit/loss of BAIC Motor for the year 2014 relates
to the months of December 2013 and January through September 2014.
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
1 BBAC:
71
58
668
686
772
852
1,418
investment
Carrying amount of equity-method
-22
Figures for the statement of income relate to the period from October 1 to September 30.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date September 30.
In order to consolidate the company without a time lag, adjustments are made as of December 31, which are included in line item Other.
2,102
Disposals
-118
-825
-970
-1,913
Other changes¹
108
241
352
4
-1
Balance at December 31, 2014
8,454
14,959
17,277
10
40,700
Additions
335
1,358
700
Dividend payment to Daimler
3
4
476
503
384
6,586
8,095
3,484
4,903
Current liabilities
210
322
1,093
1,784
2,434
584
445
Non-current liabilities
685
747
365
Equity (including non-controlling interest)
3,023
1,894
8,571
Other
86
77
Goodwill
-76
-63
Unrealized profit (-)/loss (+) on sales to/
purchases from
89
55
6
668
691
928
1,481
interests) attributable to the Group
Equity (excluding non-controlling
594
365
2,003
6,071
594
Stock market price¹
Equity investment²
Equity result²
Equity interest (in %)
At December 31, 2014
Disposals
1
Reclassifications
21,636
Other additions
Additions due to business acquisitions
40,928
Balance at December 31, 2014
2,486
Other changes¹
-14,479
Disposals
Reclassifications
E.30.
for equipment on operating leases are due as presented
in table
Non-cancelable future lease payments to Daimler
Minimum lease payments
At December 31, 2015, equipment on operating leases with
a carrying amount of €5,404 million is pledged as security
for liabilities from ABS transactions related to a securitization
transaction of future lease payments on operating leases
and related vehicles (2014: €4,392 million) (see also Note 24).
The development of equipment on operating leases
is shown in table 7 E.29.
-16,637
Other changes¹
2,163
Balance at December 31, 2015
Carrying amount at December 31, 2014
Balance at December 31, 2015
Other changes¹
Disposals
Reclassifications
5,946
Additions
7,878
Balance at December 31, 2014
12. Equipment on operating leases
452
-4,341
Disposals
Reclassifications
5,049
6,718
Additions
Balance at January 1, 2014
Depreciation/impairment
48,091
Other changes¹
Carrying amount at December 31, 2015
-9
Other additions
15,548
8,506
170
1
216
-38
-9
Balance at December 31, 2015
Other changes¹
-1,636
-19
-612
-730
-275
Disposals
-
-1
1
Reclassifications
18,983
1
43,038
Carrying amount at December 31, 2014
Additions due to business acquisitions
34,878
Balance at January 1, 2014
Acquisition or manufacturing costs
In millions of euros
Equipment on operating leases
E.29
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
224
18,052
2 Includes impairments of €93 million in connection with the disposal of selected sites of the Group's own sales network.
24,322
2,845
5,790
23,182
2,511
5,609
8,120
8,430
6,942
7,257
Carrying amount at December 31, 2015
1 Primarily changes from currency translation.
108
1 Primarily changes from currency translation.
Maturity of minimum lease payments
for equipment on operating leases
Total
Others
RRPSH
Kamaz
THBV4 (HERE)
BAIC Motor³
BBAC
In millions of euros
Key figures on interests in associated companies accounted for using the equity method
E.32
1 Including investor-level adjustments.
2,294
897
7
2
5
26
864
Equity result¹
44
448
At December 31, 2015
Equity interest (in %)
49.0
10.1
34
208
Dividend payment to Daimler5
3,124
490
-19
-6
74
441
Equity result²
1,795
208
668
772
1,418
Equity investment²
47
705
Stock market price¹
15.0
33.3
58
E.30
Equity investment¹
3,633
464
14,306
48
64
later than 5 years
5,990
7,437
between one and five years
5,742
6,805
within one year
Maturity
2014
At December 31,
2015
38,942
33,050
9,149
398
-5,073
In millions of euros
11,780
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
225
13. Equity-method investments
8
-34
490
47
462
3,124
Total
Subsidiaries
Joint
operations
At December 31, 2014
ventures
Associated
companies
Equity result¹
Equity investment¹
At December 31, 2015
In millions of euros
Summarized carrying amounts and profits/losses from equity-method investments
E.31
Table 7 E.32 presents key figures on interests in associated
companies accounted for using the equity method in the
Group's consolidated financial statements.
Table 71 E.31 shows the carrying amounts and profits/losses
from equity-method investments.
Joint
3,804
9
222
3,029
15,870
45
66
1,155
315
1,470
-912
-231
55
10
93
1,017
12,153
3,251
11,900
16,421
941
21
assets
(acquired)
Reclassifications
Disposals
Other changes¹
Balance at December 31, 2014
Additions due to business combinations
Other additions
Reclassifications
Disposals
Other changes¹
Balance at December 31, 2015
Amortization/impairment
Development
Goodwill
(acquired)
(internally
generated)²
costs Other intangible
Total
25
25
1,815
1,221
286
1,507
Reclassifications
Disposals
-911
-139
-1,050
Other changes¹
17
8
90
115
Balance at December 31, 2014
277
Additions
6,482
1,632
4,590
458
2,273
-4
-1,018
-298
-1,320
2
Other additions
12
160
1,015
12,962
3,582
17,559
Balance at January 1, 2014
260
146
4,908
Additions due to business combinations
Acquisition or manufacturing costs
The development of deferred tax assets, net, is shown
in table E.24.
Including the items recognized in other comprehensive
income/loss (including items from equity-method investments),
the expense for income taxes is comprised as shown
in table 7 E.25.
In the consolidated statement of financial position, the valua-
tion allowances on deferred tax assets, which are mainly
attributable to foreign companies, increased by €70 million
compared to December 31, 2014. On the one hand, this is
a result of the additional valuation allowances of €147 million
recorded in net profit. On the other hand, a decrease
of the valuation allowance was recognized in equity, mainly
due to currency translation.
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
221
At December 31, 2015, the valuation allowance on deferred
tax assets relates, among other things, to corporate income tax
loss carryforwards (€590 million), tax loss carryforwards
in connection with capital losses (€19 million) and tax credits
(€27 million). €21 million of the deferred tax assets for cor-
porate income tax loss carryforwards adjusted by a valuation
allowance relates to tax loss carryforwards which expire
at various dates from 2018 through 2020, €189 million relates
to tax loss carryforwards which expire at various dates from
2021 through 2025, €4 million relates to tax loss carryforwards
which expire at various dates from 2031 through 2035 and
€376 million relates to tax loss carryforwards which can be
carried forward indefinitely. The deferred tax assets on loss
carryforwards connected with capital losses were reduced by
valuation allowances because the carryforward periods of
those losses are partly limited and can only be utilized with
future capital gains. Of the total amount of deferred tax assets
adjusted by valuation allowances, deferred tax assets in
connection with capital losses amounting to €4 million expire
in 2016; €15 million can be carried forward indefinitely.
Of the tax credit carryforwards adjusted by a valuation allow-
ance, €4 million expire at various dates from 2016 through
2020 and €21 million expire at various dates from 2021 through
2025; €2 million relates to tax credits which can be carried
forward indefinitely. Furthermore, the valuation allowance primar-
ily relates to temporary differences as well as net operating
losses for state and local taxes at the US companies. Daimler
believes that it is more likely than not that those deferred
tax assets cannot be utilized. In 2015 and prior years, the Group
had tax losses at several subsidiaries in several countries.
After offsetting the deferred tax assets with deferred tax liabili-
ties, the deferred tax assets not subject to valuation allow-
ances amounted to €191 million for those subsidiaries. Daimler
believes it is more likely than not that future taxable income
will be sufficient to allow utilization of the deferred tax assets.
Daimler's current estimate of the amount of deferred tax
assets that is considered realizable may change in the future,
necessitating higher or lower valuation allowances.
The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group did not
recognize deferred tax liabilities on retained earnings of non-
German subsidiaries of €27,005 million (2014: €21,242 million).
If earnings are paid out as dividends, an amount of 5% would
be taxed under German taxation rules and, if applicable, with
non-German withholding tax. Additionally, income tax conse-
quences may arise if the dividends first have to be distributed
by a non-German subsidiary to a non-German holding company.
Normally, the distribution would lead to an additional income
tax expense. It is not practicable to estimate the amount of tax-
able temporary differences for these undistributed foreign
earnings.
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of
jurisdictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed
for all open tax years. As a result of future adjudications
or changes in the opinions of the fiscal authorities, it cannot
be ruled out that Daimler might receive tax refunds for
previous years.
E.24
Change of deferred tax assets, net
In millions of euros
2015
2014
Deferred tax assets, net as of January 1
Deferred tax expense in the
financial statement of income
In respect of each type of temporary difference and in
respect of each type of unutilized tax loss carryforwards and
unutilized tax credits, the deferred tax assets and liabilities
before offset are summarized in table 7 E.23.
3,054
is made between current and non-current. In the consolidated
statement of financial position, deferred tax assets
and liabilities are presented as shown in table 7 E.22.
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German com-
panies and tax-free results of our equity-method investments.
Furthermore, in 2015, the line item also includes tax benefits
relating to tax assessments of prior years. The tax benefits
relating to tax assessments of prior years consist of the current
tax benefits recognized for prior periods as well as partly
offsetting deferred tax expenses recognized for prior periods.
Moreover, in 2014, the line item includes tax-free gains real-
ized on the sale of RRPSH as well as non-deductible expenses
in connection with the EU commission's ongoing antitrust
proceedings concerning European commercial vehicle manu-
facturers.
-872
Other provisions
-183
-177
Other
-199
-232
Deferred tax liabilities, gross
Deferred tax assets, net
-15,314
-12,535
1,069
3,054
Table 7 E.21 shows a reconciliation of expected income
tax expense to actual income tax expense determined using
the unchanged applicable German combined statutory tax
rate of 29.825%.
In 2015, the Group impaired deferred tax assets of foreign
subsidiaries while in 2014, the Group released valuation
allowances on deferred tax assets of foreign subsidiaries.
The resulting tax expenses and benefits are included in the
line item change of valuation allowance on deferred tax assets.
Deferred tax assets and deferred tax liabilities are offset
if the deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority and if there is the right
to set off current tax assets against current tax liabilities.
In the presentation of deferred tax assets and liabilities in the
consolidated statement of financial position, no difference
937
-1,557
-363
-2,883
-309
2,476
-4,342
-407
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. Intangible assets
Intangible assets developed as shown in table 71 E.26.
At December 31, 2015, goodwill of €425 million
(2014: €421 million) relates to the Daimler Trucks segment
and of €194 million (2014: €192 million) relates to the
Mercedes-Benz Cars segment.
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet
been completed (carrying amount at December 31, 2015:
€2,137 million; 2014: €1,935 million). In addition, other
intangible assets with a carrying amount at December 31, 2015
of €258 million (2014: €264 million) are not amortizable.
Other non-amortizable intangible assets are trademarks with
indefinite useful lives, which relate to the Daimler Trucks
segment, as well as distribution rights of Mercedes-Benz Cars
with indefinite useful lives. The Group plans to continue
to use these assets unchanged.
Table 7 E.27 shows the line items of the consolidated
statement of income in which total amortization expense
for intangible assets is included.
At December 31, 2015, intangible assets include capitalized
borrowing costs on qualified assets according to IAS 23 in
the amount of €59 million (2014: €58 million) which related only
to capitalized development costs. In 2015, borrowing costs
in the amount of €11 million (2014: €7 million) were capitalized;
amortization amounted to €10 million (2014: €9 million).
The basis for the calculation of borrowing costs was an aver-
age cost of debt of 0.7% (2014: 0.7%).
E.26
Intangible assets
In millions of euros
-4,033
2014
2015
3,054
Change in deferred tax expense/benefit
on financial assets available-for-sale included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on derivative financial instruments included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on actuarial gains/losses from defined benefit
pension plans
Other changes¹
Deferred tax assets, net as of December 31
1 Primarily effects from currency translation.
E.25
Tax expense in equity
In millions of euros
Income tax expense in the consolidated
financial statement of income
Income tax expense/benefit
recorded in other reserves
Balance at January 1, 2014
-8
278
800
-579
1,682
-119
4
1,069
-6
1,869
-1,143
158
Additions
253
362
461
49
1,125
Balance at December 31, 2014
15,396
23,079
22,886
2,521
63,882
Additions due to business acquisitions
Other additions
255
854
Other changes¹
1,521
-2,186
-1,066
Other additions
Reclassifications
Disposals
228
833
1,415
2,267
4,743
238
1,239
568
-2,036
9
-158
-930
-32
2,279
4,909
Reclassifications
384
67,360
Depreciation/impairment
Balance at January 1, 2014
8,044
14,225
16,142
1
38,412
Additions²
420
1,210
1,861
10
3,501
Reclassifications
2,846
15
259
24,773
23,978
302
7,054
793
-1,913
-1
Disposals
-334
60,191
-738
-56
-1,814
Other changes¹
144
-34
Balance at December 31, 2015
15,763
-686
2,273
817
21,575
Carrying amount at December 31, 2015
1 Primarily changes from currency translation.
2 Including capitalized borrowing costs on development costs.
740
7,245
1,382
9,367
727
7,789
1,553
10,069
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 223
11. Property, plant and equipment
Property, plant and equipment developed as shown
in table E.28.
In 2015, government grants of €192 million (2014: €47 million)
were deducted from property, plant and equipment.
Carrying amount at December 31, 2014
7,490
5,173
288
21,508
4
1,255
331
1,590
Reclassifications
Disposals
Property, plant and equipment also include buildings, technical
equipment and other equipment under finance lease arrange-
ments and thus deemed to be owned by the Group with a carrying
amount of €221 million (2014: €238 million). In 2015, additions
to and depreciation expense on assets under finance lease
arrangements amounted to €16 million (2014: €19 million) and
€39 million (2014: €40 million), respectively.
-4
-261
Other changes¹
Balance at December 31, 2015
11
9
90
-1,264
110
-999
E.27
2,029
Balance at January 1, 2014
14,835
Land, leasehold
improvements and
buildings including
buildings on land
owned by others
Technical
equipment
and machinery
In millions of euros
Acquisition or manufacturing costs
Additions due to business acquisitions
Other
equipment,
factory and
Advance
payments
relating to plant
and equipment
office and construction
equipment
in progress
Total
Amortization expense for intangible assets
E.28
1,507
Property, plant and equipment
4
in the consolidated statement of income
In millions of euros
Cost of sales
Selling expenses
General administrative expenses
2015
2014
1,590
1,344
73
1,434
92
44
41
Research and non-capitalized development costs
Other operating expense
35
30
In millions of euros
Current
13,561
At December 31, 2014
Non-current
Total
23,900
37,461
10,307
Sales financing with customers
22,852
-7
Sales financing with dealers
15,944
2,588
18,532
11,786
At December 31, 2015
Non-current
Total
2,203
13,989
Finance-lease contracts
33,159
Current
1
E.35
-85
6,166
-84
7
-1
7
-84
-84
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
229
14. Receivables from financial services
Table 7 E.35 shows the components of receivables
from financial services.
Types of receivables
Receivables from sales financing with customers include
receivables from credit financing for customers who purchased
their vehicle either from a dealer or directly from Daimler.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group's
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily used vehicles traded in
by dealers' customer or real estate such as dealers' showrooms.
Receivables from finance-lease contracts consist of receiv-
ables from leasing contracts for which all substantial risks
and rewards incidental to the leasing objects are transferred
to the lessee.
At December 31, 2015, finance-lease contracts included
non-automotive assets from contracts of the financial services
business with third parties (leveraged leases) in the amount
of €238 million (December 31, 2014: €365 million).
Maturities of the finance lease contracts are shown
in table 7 E.36.
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for
operating activities in the consolidated statement of cash flows.
Receivables from financial services
12,371
to 5 years
5,084
E.36
Maturities of the finance lease contracts
In millions of euros
At December 31, 2015
<1 year
1 year up
to 5 years
> 5 years
At December 31, 2014
1 year up
Total
<1 year
> 5 years
Total
Contractual future lease payments
6,315
Unguaranteed residual values
Gross investment
6
Unearned finance income
61,679
18,537
34,910
73,514
10,368
15,452
Gross carrying amount
35,671
38,859
74,530
27,177
35,423
62,600
Allowances for doubtful accounts
-516
-500
-1,016
-408
-513
-921
Net carrying amount
35,155
38,359
26,769
2014
-0.9
2014
In Germany, there are no statutory or regulatory minimum
funding requirements.
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by assets invested in long-term
outsourced funds. Contractual trust arrangements (CTA) exist
between Daimler AG as well as some subsidiaries in Germany and
the Daimler Pension Trust e.V. The Daimler Pension Trust e. V.
acts as a collateral trust fund.
As well as the employer-financed pension plans granted
by German companies, the employees of some companies
are also offered various earnings-conversion models.
In addition, previously concluded defined benefit plans exist
which primarily depend on employees' wage-tariff classification
upon transition into the benefit phase and which foresee
a life annuity.
Most employees in Germany have defined benefit pension
plans; most of the pension plans for the active workforce are
based on individual retirement benefit accounts, to which
the Company makes annual contributions. The amount of the
contributions for employees paid according to wage-tariff
agreements depends on the tariff classification in the respec-
tive year, and for executives it depends on their respective
income. For the commitments to retirement benefits made until
2011, the contributions continue to be converted into capital
components and credited to the individual pension account with
the application of fixed factors related to each employee's
age. The conversion factors include a fixed value increase.
The pension plans were newly structured for new entrants
in 2011 to reduce the risks associated with defined benefit plans.
New entrants now benefit from value increases of the con-
tributions through an investment fund with a special lifecycle
model. The Company guarantees at a minimum the value of
the contributions paid in. Pension payments are made either as
a life annuity, twelve annual installments, or a single lump sum.
German plans
237
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
43.57
-0.1
43.57
-0.1
43.57
0.2
euros per share
in millions
exercise price in
Average
2014
Non-German plans
Number of
stock options
Significant plans exist primarily in the United States and Japan.
They comprise plans relating to final salaries as well as plans
relating to salary based components. Most of the obligations
outside Germany from defined benefit pension plans are
funded by assets outplaced into long-term investment funds.
The general requirements with regard to retirement benefit
models are laid down in the Pension Policy, which has Group-wide
validity. Accordingly, the committed benefits are intended
to contribute to additional financial security during retirement,
and in the case of death or invalidity to be capable of being
planned and fulfilled by the respective company of the Group
and to have a low-risk structure. In addition, a committee
exists that approves new pension plans and amendments
to existing pension plans as well as guidelines relating
to company retirement benefits.
501
6,816
-650
228
12,806
8,663
1,187
1,129
Provision for other post-employment benefits
11,619
7,534
Provision for pension benefits
2014
2015
December 31,
In millions of euros
Composition of provisions for pensions
and similar obligations
E.48
As a general principle, it is the Group's objective to design
new pension plans as defined benefit plans based on capital
components or on annual contributions, or as defined
contribution plans.
The fair value of plan assets is predominantly determined by the
situation on the capital markets. Unfavorable developments,
especially of equity prices and fixed-interest securities, could
reduce that fair value. The diversification of fund assets, the
engagement of asset managers using quantitative and qualitative
analyses, and the continual monitoring of performance and
risk help to reduce associated investment risk. The Group regu-
larly makes additional contributions to the plan assets in
order to cover future obligations from defined benefit pension
plans. In addition, the Group made extraordinary contributions
of €1.0 billion in 2015 and €2.5 billion in 2014 to sustainably
strengthen the German plan assets. In 2015, an extraordinary
contribution of €0.2 billion was paid into the US pension
plan assets.
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obliga-
tions result at the Daimler Group in particular from changes
in financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most
of the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
Risks from defined benefit pension plans
2015
stock options exercise price in
in millions euros per share
Number of
The Group's investment in Tesla Motors, Inc. (Tesla) was included
in other minor equity-method investments in associated
companies. Since the Annual Shareholders' Meeting of Tesla
on June 3, 2014, no representative of Daimler has been a
member of Tesla's board of directors. Therefore, Daimler's signi-
ficant influence on Tesla ended on the day of the Annual
Shareholders' Meeting and until the date of sale, the equity
interest was recognized as a "financial asset available for sale"
at fair value based on the stock-market price. The difference
between the first-time fair value measurement on June 3, 2014
using the stock-market price and the carrying amount
measured by applying the equity method resulted in a non-cash
gain of €718 million affecting Group EBIT in 2014. The carrying
amount, which was previously assigned to the Mercedes-Benz
Cars segment, and the remeasurement gain have been
reallocated as corporate items in the reconciliation of total
segments' figures to Group figures in the segment reporting.
In 2015, an impairment of €17 million was recognized on an
investment allocated to the Mercedes-Benz Cars segment.
In addition, the equity-method results of the other minor
companies in 2014 included startup losses in the area of alter-
native drive systems of €34 million, which were allocated to
the Mercedes-Benz Cars segment. Impairments of investments
of €30 million were included in this amount.
Furthermore, the Group's equity-method investments include
its interest in the joint venture Fujian Benz Automotive Co.,
Ltd. (FBAC), which is allocated to the Mercedes-Benz Vans
segment. In 2012, an impairment loss was recognized
on the investment in FBAC; in the second quarter of 2014, the
impairment was reversed based on improved profit expecta-
tions, leading to a gain of €61 million. FBAC received a capital
increase of €18 million in the second quarter of 2015.
In April 2014, Daimler provided a joint and separate liability
guarantee to external banks which provided a syndicate loan
to the joint venture Shenzen BYD Daimler New Technology Co.
Ltd. (SBDNT). The agreement was signed in April 2014. The
guarantee provided by Daimler amounts to RMB 750 million
(approximately €106 million as of December 31, 2015) and
equates to the Group's share in the loan granted to SBDNT based
on its 50% equity interest in SBDNT. €94 million of this loan
had been utilized as of December 31, 2015. In December 2015,
Daimler decided to provide a shareholder loan to the joint
venture SBDNT of RMB 250 million (approximately €35 million).
€24 million of this loan had been utilized as of December 31,
2015. The carrying amount of the investment in SBDNT is
allocated to the Mercedes-Benz Cars segment.
In March 2014, Daimler acquired 50.1% of the shares in
Li-Tec Battery GmbH (Li-Tec), which had previously been held
by Evonik Degussa GmbH (Evonik), and therefore became
the sole owner of the company. The effects on the consolidated
financial statements were not material.
In 2015, Daimler disregarded losses in connection with equity-
method investments of €47 million (2014: €60 million) as
Daimler is not obliged to compensate these losses. The total of
disregarded losses adds up to €107 million (2014: €60 million).
Table 71 E.34 shows summarized aggregated financial
information for the other minor equity-method investments
after purchase price allocation and on a pro rata basis.
Further information on equity-method investments is provided
in Notes 3 and 36.
E.34
Summarized aggregated financial information on minor
equity-method investments
In millions of euros
Summarized aggregated financial information (pro rata)
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
Other comprehensive income/loss
Total comprehensive income/loss
Associated companies
Joint ventures
2015
Other minor equity-method investments
2015
Average
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 Stepped down from the Board of Management as of January 28, 2014. Amounts are included pro rata for 2014.
Exercisable at end of year
Outstanding at end of year
Disposals/Forfeited
Exercised
Balance at beginning of year
Development of the stock options issued
E.47
The Group's main German and non-German pension plans
are described below.
Provisions for pension obligations are made for defined commit-
ments to active and former employees of the Daimler Group
and their survivors. The defined benefit pension plans provided
by Daimler generally vary according to the economic, tax and
legal circumstances of the country concerned. Most of the
defined benefit pension plans also provide benefits in the case
of invalidity and death.
Defined benefit pension plans
At the Daimler Group, defined benefit pension obligations exist
as well as, to a smaller extent, defined contribution pension
obligations, specific to the various countries. In addition, health-
care benefit obligations are recognized outside Germany.
Table 7 E.48 shows the composition of provisions for pension
benefit plans and similar obligations.
22. Pensions and similar obligations
In 2014, the weighted average share price of Daimler
ordinary shares during the exercise period was €66.40.
Table 71 E.47 shows the development of the stock options
issued.
In April 2000, the Annual Shareholders' Meeting approved
the Daimler Stock Option Plans (SOP), which granted stock
options for the purchase of Daimler ordinary shares to eligible
employees. Options granted under the SOP were exercisable
at a reference price per Daimler ordinary share, which was deter-
mined in advance, plus a 20% premium. The options became
exercisable in equal installments at the earliest on the second
and third anniversaries of the date of grant. All unexercised
options expired ten years after the date of grant. If the market
price per Daimler ordinary share on the date of exercise
was at least 20% higher than the reference price, the holder
was entitled to receive a cash payment equal to the original
exercise premium of 20%. No new stock options were granted
after 2004. The last SOP plan 2004 forfeited on March 31, 2014.
All unexercised rights expired.
Stock option plans
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
236
2 Appointed to the Board of Management as of January 1, 2015.
11,308
1,954
407
18,030
1,367
Total
78
80
120 days or more
18
25
90 to 119 days
42
53
60 to 89 days
151
1,258
113
969
1,096
less than 30 days
Receivables past due, not impaired individually
5,270
5,554
individually
Receivables, neither past due nor impaired
2014
At December 31,
2015
In millions of euros
Credit risks included in trade receivables
30 to 59 days
Receivables impaired individually
2,133
2,106
The stock option plan initiated in 2004 expired on March 31, 2014.
Of the 0.2 million options granting subscription rights to new
shares representing €0.6 million of the share capital remaining
from this plan on January 1, 2014, 0.1 million options granting
subscription rights to new shares representing €0.2 million of
the share capital were exercised in 2014. The remaining options
that had not been exercised by March 31, 2014 expired on
that date.
Stock option plan
In order to fulfill the conditions of the above-mentioned autho-
rization, the Annual Shareholders' Meeting on April 1, 2015
also resolved to increase the share capital conditionally
by an amount of up to €500 million (Conditional Capital 2015).
Conditional Capital 2010 has been canceled.
This new authorization to issue convertible and/or warrant
bonds has not yet been utilized.
The resolution of the Annual Shareholders' Meeting on April 14,
2010 authorizing the Company until April 13, 2015 to issue
convertible and/or warrant bonds, which had not been utilized,
was replaced by a new authorization of the Annual Shareholders'
Meeting on April 1, 2015. From this the Board of Management
is authorized, with the consent of the Supervisory Board, until
March 31, 2020 to issue convertible and/or warrant bonds
or a combination of these instruments ("bonds") with a total
face value of up to €10.0 billion and a maturity of no more than
ten years. The Board of Management is allowed to grant the
holders of these bonds conversion or warrant rights for new
registered no-par-value shares in Daimler AG with an allocable
portion of the share capital of up to €500 million in accordance
with the details defined in the terms and conditions of the
bonds. The bonds can be offered in exchange for cash and/or
non-cash contributions, in particular for shares in other
companies. The terms and conditions of the bonds can include
warranty obligations or conversion obligations. The bonds
can be issued once or several times, wholly or in installments,
or simultaneously in various tranches as well by affiliates
of the Company within the meaning of Sections 15 et seq.
of the German Stock Corporation Act (AktG). Among other
things, the Board of Management was authorized to exclude
shareholders' subscription rights for the bonds under certain
conditions and within defined constraints with the consent
of the Supervisory Board.
Conditional capital
233
|
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Approved Capital 2009, which was limited until April 7, 2014
and had not been utilized is replaced by Approved Capital
2014, which has also not yet been utilized.
The Annual Shareholders' Meeting held on April 9, 2014,
authorized the Board of Management, with the consent
of the Supervisory Board, to increase the share capital of
Daimler AG in the period until April 8, 2019 by a total
of €1.0 billion in one lump sum or by separate partial amounts
at different times by issuing new, registered no-par-value
shares in exchange for cash and/or non-cash contributions
(Approved Capital 2014). The new shares are generally to
be offered to the shareholders for subscription (also by way
of indirect subscription pursuant to Section 186 Subsection 5
Sentence 1 of the German Stock Corporation Act (AktG)).
Among other things, the Board of Management was authorized
with the consent of the Supervisory Board to exclude
shareholders' subscription rights under certain conditions
and within defined limits.
Approved capital
at December 31, 2015 is 1,070 million, unchanged from
December 31, 2014.
in the number of shares outstanding/issued. The number
Since January 1, 2014, there was no material change
The share capital (authorized capital) is divided into
no-par-value shares. All shares are fully paid up. Each share
confers the right to one vote at the Annual Shareholders'
Meeting of Daimler AG and, if applicable, with the exception
of any new shares potentially not entitled to dividends,
to an equal portion of the profits as defined by the dividend
distribution decided upon at the Annual Shareholders'
Meeting. Each share represents a proportionate amount
of approximately €2.87 of the share capital.
Share capital
See also the consolidated statement of changes in equity
71 E.05.
20. Equity
Further information on financial risk and types of risk
is provided in Note 32.
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
Receivables not subject to an individual impairment
Table 7 E.44 provides an overview of credit risks included
in trade receivables.
Credit risks
8,634
9,054
Net carrying amount
E.44
Treasury shares
412
Balance at December 31
Table 71 E.43 shows changes in the allowance account
for trade receivables.
Allowances
At December 31, 2015, €67 million of the trade receivables
mature after more than one year (2014: €78 million).
Trade receivables are comprised as shown in table > E.42.
19. Trade receivables
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
232
20,864
23,760
107
137
Advance payments to suppliers
The total expense from the impairment of trade receivables
amounted to €109 million in 2015 (2014: €130 million).
15,412
Finished goods, parts and products held for resale
2,936
3,371
Work in progress
2,409
2,643
Raw materials and manufacturing supplies
In millions of euros
4,153
555
3,598
4,925
17,609
E.42
Trade receivables
In millions of euros
8
-6
Currency translation and other changes
-66
-80
Amounts written off
73
66
Charged to costs and expenses
397
412
Balance at January 1
In millions of euros
2014
2015
Changes in the allowance account for trade receivables
E.43
8,634
9,054
Net carrying amount
-412
-392
Allowances for doubtful accounts
9,046
9,446
Gross carrying amount
At December 31,
2015
2014
392
654
The authorization resolved by the Annual Meeting on April 14,
2010 to acquire treasury shares including the authorization
to use derivative financial instruments in this context until
April 13, 2015 has been canceled by resolution of the Annual
Shareholders' Meeting held on April 1, 2015 and has been
replaced by a new authorization. This authorizes the Company
until March 31, 2020 to acquire treasury shares in a volume
up to 10% of the share capital issued as of the day of the reso-
lution to be used for all legal purposes. The shares can be
used, amongst other things excluding shareholders' subscription
rights, for business combinations or to acquire companies
or to be sold to third parties for cash at a price that is not signifi-
cantly lower than the stock-exchange price of the Company's
shares. The acquired shares can also be used to fulfill obligations
from issued convertible bonds and/or bonds with warrants
and to be issued to employees of the Company and employees
and board members of the Company's affiliates pursuant
to Sections 15 et seq. of the German Stock Corporation Act
(AktG). The treasury shares can also be canceled.
The authorization to acquire treasury shares was not exercised
in the reporting period.
2014
2015
2014
2015
2014
2015
Andreas Renschler³
Wilfried Porth
Ola Källenius²
In millions of euros
-0.7
-0.9
PPSP
-0.7
-1.8
-2.3
Medium-term component of the annual bonus
-2.3
-2.4
-2.5
-2.4
-6.1
-6.0
PPSP
2014
2015
-0.9
-0.6
Medium-term component of the annual bonus
-0.9
-0.8
-1.1
-0.7
-0.9
Medium-term component of the annual bonus
-2.6
-2.5
-2.9
-2.9
-1.6
-1.9
PPSP
2014
Prof. Dr. Thomas Weber
2015
2014
2015
2014
2015
Bodo Uebber
Hubertus Troska
-0.1
-0.2
-0.7
-0.9
-2.5
-2.4
In millions of euros
2014
The Board of Management is further authorized, with the
consent of the Supervisory Board, to exclude shareholders'
subscription rights in other defined cases. In a volume up
to 5% of the share capital issued as of the day of the resolution,
the Company was authorized to acquire treasury shares
also by using derivatives (put options, call options, forward
purchases or a combination of these instruments), whereas the
term of a derivative must not exceed 18 months and must not
end later than March 31, 2020.
2015
2015
In 2014, rights from Stock Option Plan (SOP) 2004 also
existed. The exercisable stock options granted in 2004 were
equity-settled share-based payment instruments and were
measured at fair value at the date of grant. The unexercised
rights from Stock Option Plan 2004 expired on March 31, 2014.
Options granted to the Board of Management in 2004 for which
according to the recommendations of the German Corporate
Governance Code - the Presidential Committee can impose
a limit or reserve the right to impose a limit in the event of excep-
tional and unpredictable developments were measured at
their intrinsic values as of balance sheet date. The options
were exercised completely in 2013.
Moreover, 50% of the annual bonus of the members of
the Board of Management is paid out after a waiting period
of one year. The actual payout is determined by the devel-
opment of Daimler shares compared to an automobile related
index (Auto-STOXX). The fair value of this medium-term
annual bonus, which depends on this development, is mea-
sured by using the intrinsic value at the reporting date.
As of December 31, 2015, the Group has the 2012-2015
Performance Phantom Share Plans (PPSP) outstanding.
The PPSP are cash-settled share-based payment instruments
and are measured at their respective fair values at the balance
sheet date. The PPSP are paid out at the end of the stipulated
holding period; earlier, pro-rated payoff is possible in the case
of benefits leaving the Group only if certain defined conditions
are met. PPSP 2011 was paid out as planned in the first
quarter of 2015.
21. Share-based payment
In millions of euros
At December 31,
2015
2014
Expense
2014
2015
Provision
Effects of share-based payment
E.45
In the line item unrealized gains/losses from equity-method
investments, the amounts for 2015 include unrealized losses
from currency translation of €3 million before taxes and after
taxes (amounts attributable to shareholders of Daimler AG
only). In 2014, the line item includes unrealized gains from
currency translation of €11 million before taxes and after taxes
(amounts attributable to shareholders of Daimler AG only).
The pre-tax effects of share-based payment arrangements
for the executive managers of the Group and the members
of the Board of Management of Daimler AG on the consolidated
statement of income and consolidated statement of financial
position are shown in table 7 E.45.
Table 71 E.02 shows the details of changes in other reserves
in other comprehensive income/loss.
Other reserves
Under the German Stock Corporation Act (AktG), the dividend
is paid out of the distributable profit reported in the annual
financial statements of Daimler AG (parent company only)
in accordance with the German Commercial Code (HGB).
For the year ended December 31, 2015, the Daimler manage-
ment will propose to the shareholders at the Annual Share-
holders' Meeting to pay out €3,477 million of the distribut-
able profit of Daimler AG as a dividend to the shareholders,
equivalent to €3.25 per no-par-value share entitled to a dividend
(2014: €2,621 million and €2.45 per no-par-value share
entitled to a dividend respectively).
Dividend
Retained earnings comprise the accumulated net profits and
losses of all companies included in Daimler's consolidated
financial statements, less any profits distributed. In addition,
the effects of remeasuring defined benefit plans as well as
the related deferred taxes are presented within retained earnings.
Retained earnings
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
234
Capital reserves primarily comprise premiums arising on
the issue of shares as well as expenses relating to the exercise
of stock option plans and the issue of employee shares,
effects from changes in ownership interests in consolidated
entities and directly attributable related transaction costs.
Capital reserves
In 2015, 0.3 million Daimler shares representing €0.9 million
or 0.03% of the share capital were purchased for a price
of €27 million and reissued to employees (2014: 0.4 million
Daimler shares representing €1.1 million or 0.04% of
the share capital were purchased for a price of €26 million).
Employee share purchase plan
As was the case at December 31, 2014, no treasury shares
are held by Daimler AG at December 31, 2015.
Other reserves comprise accumulated unrealized gains/losses
from currency translation of the financial statements of the
consolidated foreign companies and accumulated unrealized
gains/losses on the measurement of financial assets available-
for-sale, derivative financial instruments and equity-method
investments.
Table 7 E.46 shows expenses in the consolidated
statement of income resulting from the rights of current
members of the Board of Management.
The details shown in table 7 E.46 do not represent any paid or
committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2015 can be found in the
Remuneration Report. Management Report from page 122
PPSP
Dr. Christine Hohmann-Dennhardt¹
Dr. Wolfgang Bernhard
Dr. Dieter Zetsche
In millions of euros
Expenses in the consolidated statement of income resulting from
share-based payments of current members of the Board of Management
E.46
The Group recognizes a provision for awarding the PPSP in
the consolidated statement of financial position. Since payment
per vested phantom share depends on the quoted price of
Daimler's ordinary shares, that quoted price essentially repre-
sents the fair value of each phantom share. The proportionate
remuneration expenses from the PPSP recognized in the individ-
ual years are determined on the price of Daimler ordinary
shares and the estimated target achievement.
The number of phantom shares that vest of the PPSPs granted
in 2014 and 2015 will be based on the relative share performance,
which measures the development of the price of a share price
index based on a competitor group including Daimler, and the
return on sales (ROS) compared with benchmarks oriented
towards competitors. Special rules apply for the members of
the Board of Management: Daimler's RoS must be not equal
to but higher than that of the competitors in order to achieve
the same target achievement as the other plan participants.
For the PPSP granted in 2015, an additional limit on target
achievement was agreed upon for the reference parameter RoS
for the members of the Board of Management. In the case
of target achievement between 195% and 200%, an additional
comparison is made on the basis of the RoS achieved in
absolute terms. If the actual RoS for the automotive business
is below the strategic target (currently 9%) in the third year
of the performance period, target achievement is limited to 195%.
Determination of the number of phantom shares that vest
of the existing PPSP 2012 to 2013 is based on return on
net assets derived from internal targets and return on sales
compared with benchmarks oriented towards competitors.
In 2015, the Group adopted a Performance Phantom Share
Plan (PPSP), similar to those used from 2005 to 2014, under
which eligible employees are granted phantom shares entitling
them to receive cash payments after four years. During the
four-year period between the allocation of the preliminary phan-
tom shares and the payout of the plan at the end of the term,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares. The
amount of cash paid to eligible employees at the end of the
holding period is based on the number of vested phantom
shares (determined over a three-year performance period)
multiplied by the quoted price of Daimler's ordinary shares
(calculated as an average price over a specified period at the
end of the four-year plan period). The vesting period is therefore
four years. For the plans granted as of 2009, the quoted price
of Daimler's ordinary shares to be used for the payout is limited
to 2.5 times the Daimler share price at the date of grant. For
the plans granted as of the beginning of 2012, the payout for
the members of the Board of Management is also limited to
2.5 times the allotment value used to determine the preliminary
number of phantom shares. The limitation of the payout for
the members of the Board of Management also includes the
dividend equivalents paid out after January 1, 2014.
Performance Phantom Share Plans
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 235
375
424
-179
-186
12
15
-6
-9
members of the Board of
Management
of annual bonus of the
Medium-term component
363
409
-173
-177
2014
-0.7
4,271
136
Balance at December 31
3
-41
Currency translation and other changes
-166
-152
Reversals
-208
-212
Amounts written off
421
500
1,016
Charged to costs and expenses
921
Balance at January 1
2014
2015
In millions of euros
for receivables from financial services
Changes in the allowance account
E.37
Further information on marketable debt securities
is provided in Note 31.
At December 31, 2015, a pool of marketable debt securities
with a carrying amount of €4 million (2014: €204 million)
was pledged as collateral, exclusively for liabilities to financial
institutions.
The marketable debt securities with a carrying amount
of €8,273 million (2014: €6,634 million) are part of the
Group's liquidity management and comprise debt instruments
classified as available-for-sale. When a short-term liquidity
requirement is covered with quoted securities, those securities
are presented as current assets.
15. Marketable debt securities
871
921
E.38
Credit risks included in receivables
Receivables impaired individually
2,080
2,028
Total
116
95
120 days or more
42
41
90 to 119 days
75
71
60 to 89 days
330
287
30 to 59 days
1,517
1,534
less than 30 days
Receivables past due, not impaired individually
58,142
69,746
nor impaired individually
Receivables, neither past due
At December 31,
2015
2014
In millions of euros
from financial services
Within the context of the ongoing concentration on the
automotive business, Daimler Financial Services sold
non-automotive assets that were subject to finance lease
contracts in 2015. This resulted in a cash inflow of
€73 million (2014: €69 million). In 2015, the sale of these
assets had no significant impact on the consolidated
statement of income and the EBIT of the Daimler Financial
Services segment (2014: €45 million).
At December 31, 2015, receivables from financial services with
a carrying amount of €4,048 million (2014: €3,068 million)
were pledged as collateral for liabilities from ABS transactions
(see also Note 24).
Further information on financial risks and nature of risks
is provided in Note 32.
Receivables not subject to an individual impairment
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
12,046
6,166
Gross carrying amount
-1,641
-102
-995
-544
-1,960
-94
-1,216
17,093
617
10,848
5,628
20,497
419
13,262
2,273
46
1,744
483
2,467
12
14,820
571
9,104
5,145
325
1,740
18,537
9,853
Table 71 E.38 provides an overview of credit risks included
in receivables from financial services.
Credit risks
The total expense from the impairment of receivables
from financial services amounted to €502 million in 2015
(2014: €433 million).
Changes in the allowance account for receivables from
financial services are shown in table 7 E.37.
Allowances
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
230
15,080
510
9,645
4,925
18,158
323
11,845
5,990
Net carrying amount
-372
-5
-208
-159
-379
-2
-201
-176
Allowances for doubtful accounts
15,452
515
5,084
558
1,457
73,514
670
2014
At December 31,
2015
Total
At December 31, 2014
Non-current
Current
Total
At December 31, 2015
Non-current
Current
Inventories
E.41
Others
26
Prepaid expenses
Reimbursements due to other tax refunds
Reimbursements due to income tax refunds
In millions of euros
Other assets
E.40
5,987
3,634
2,353
7,454
4,908
1 Appointment to the Board of Management ends on December 31, 2015.
2,325
Reimbursements due to the Medicare Act (USA)
Other expected reimbursements
696
517
40
422
810
264
546
424
130
294
529
87
442
321
146
175
349
157
192
81
81
68
68
2,212
22
2,190
2,473
52
2,421
557
588
Net carrying amount
1,737
854
Current Non-current
Total
Current Non-current
At December 31, 2015
In millions of euros
Other financial assets
E.39
The carrying amount of inventories recognized during
the period by taking possession of collateral held as security
amounted to €103 million at December 31, 2015 (2014:
€91 million). Those assets are utilized in the context of the
normal business cycle.
In addition, inventories with a carrying amount of
€235 million at December 31, 2015 (2014: €262 million)
were pledged as collateral for liabilities from ABS
transactions (see also Note 24).
Based on the requirement to provide collateral for certain
vested employee benefits in Germany, the value of company
cars included in inventories at Daimler AG in an amount
of €718 million at December 31, 2015 (2014: €609 million)
was pledged as collateral to the Daimler Pension Trust e.V.
The amount of write-down of inventories to net realizable
value recognized as expense in cost of sales was €501 million
in 2015 (2014: €391 million). Inventories that are expected
to be recovered or settled after more than twelve months
amounted to €930 million at December 31, 2015 (2014: €977
million) and are primarily spare parts.
Inventories are comprised as shown in table > E.41.
18. Inventories
231
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Other expected reimbursements predominantly relate
to recovery claims from our suppliers in connection with
issued product warranties.
in table E.40.
Non-financial other assets are comprised as shown
17. Other assets
Further information on other financial assets is provided
in Note 31.
At December 31, 2015, receivables with a carrying amount
of €633 million (2014: €302 million) were pledged as collateral
for liabilities (see also Note 24).
or loss relate exclusively to derivative financial instruments
which are not used in hedge accounting.
Financial assets recognized at fair value through profit
In 2015, equity instruments measured at cost with a carrying
amount of €3 million were sold (2014: €1 million). The gains
realized on the sales were €17 million in 2015 (2014: €5 million).
As of December 31, 2015, the Group did not generally intend
to dispose of any of the reported equity instruments.
The line item other financial assets presented in the
consolidated statement of financial position is comprised
as shown in table 7 E.39.
16. Other financial assets
61,679
At December 31, 2014
Total
2,839
Available-for-sale financial assets
3,049
1,985
97
55
42
203
39
164
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
1,296
722
574
1,363
966
397
Derivative financial instruments used in hedge accounting
622
622
746
746
1,647
1,647
2,303
2,303
thereof equity instruments recognized at fair value through profit or loss
thereof equity instruments carried at cost
2,269
2,269
3,049
2,546
238
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group recognizes provisions in connection with pending
or threatened proceedings to the extent a loss is probable and
can be reasonably estimated. Such provisions are reflected
in the Group's consolidated financial statements and are based
on estimates. Risks resulting from legal proceedings, however,
sometimes cannot be assessed reliably or only to a limited extent.
Consequently, provisions accrued for some legal proceedings
may turn out to be insufficient once such proceedings have
ended. Daimler may also become liable for payments in
legal proceedings no provisions were established for. Although
the final resolution of any such proceedings could materially
affect Daimler's operating results and cash flows for a particular
reporting period, Daimler believes that it should not exert
122
1,270
1,140
130
Sensitivity for expected increase
in cost of living
+ 0.10%
77
65
12
120
110
10
Sensitivity for expected increase
in cost of living
- 0.10%
-115
-104
-11
-130
-120
903
-10
1,025
Sensitivity for discount rates
3.9
1 For German Plans, expected increases in cost of living may affect - depending on the design of the pension plan - the obligation
to the Group's active employees as well as retirees and their survivors. For most non-German Plans, expected increases in cost of living
do not have a material impact on the amount of the obligation.
E.54
Sensitivity analysis for the present value of defined benefit pension obligation
Total
German
Plans
December 31, 2015
Non-German
Plans
Total
German
Plans
December 31, 2014
Non-German
Plans
In millions of euros
Sensitivity for discount rates
+ 0.25%
-1,032
-889
-143
-1,210
-1,080
-130
- 0.25%
4.1
Sensitivity for life expectancy
375
242
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Defined contribution pension plans
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2015, the total cost from defined contri-
bution plans amounted to €1.5 billion (2014: €1.4 billion).
Of those payments €1.4 billion (2014: €1.3 billion) was related
to governmental pension plans.
E.56
Key data for other post-employment benefits
In millions of euros
Present value of defined benefit obligations
Fair value of plan assets and
reimbursement rights
Funded status
Net periodic cost for other
post-employment benefits
2015
2014
1,129
1,193
87
68
-1,061
-1,106
16
+ 1 year
16
17
354
21
520
480
40
Sensitivity for life expectancy
- 1 year
-412
-359
-53
-540
-500
-40
E.55
Weighted average duration of the defined
benefit obligations
In years
2015
2014
German Plans
16
Non-German Plans
-21
1.9
1.8
Expected increase in cost of living¹
-114
-527
-437
-90
Past service cost, curtailments and settlements
3
-21
24
-22
-19
-3
Net interest expense
-245
-201
-44
-292
-250
-42
Net interest income
3
3
-602
3
-716
Plans
Discount rates for German and non-German pension plans
are determined annually as of December 31 on the basis
of high-quality corporate bonds with maturities and currencies
matching those of the pension payments.
Sensitivity analysis
An increase or decrease in the main actuarial assumptions
would affect the present value of the defined benefit pension
obligations as shown in table 7 E.54.
The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as important.
This means that if there is a simultaneous change in several
parameters, the individual results cannot be summed due to
correlation effects. With a change in the parameters, the
sensitivities shown cannot be used to derive a linear develop-
ment of the defined benefit obligation.
For the calculation of the sensitivity of life expectancy,
by means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
was achieved.
Effect on future cash flows
Daimler currently plans to make contributions of €0.6 billion
to its pension plans for the year 2016; the final amount is
usually set in the fourth quarter of a financial year. In addition,
the Group expects to make pension benefit payments of
€0.9 billion in 2016.
The weighted average duration of the defined benefit obliga-
tions is shown in table 7 E.55.
E.51
Pension cost
In millions of euros
2015
2014
Total
German
Plans
Non-German
Plans
Total
German
Plans
Non-German
Current service cost
2.6
1.7
3
-824
-21
Interest income
3
3
Interest expense
-245
-292
-955
-838
E.53
Significant factors for the calculation of pension benefit obligations
In percent
German Plans
Non-German Plans
At December 31,
At December 31,
2015
2014
2015
2014
Discount rates
Other operating expense
-955
-74
Research and non-capitalized development costs
-131
-838
-706
-132
E.52
Net periodic pension cost within
the consolidated statement of income
In millions of euros
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
241
2015
2014
Cost of sales
-402
-318
Selling expenses
-121
-106
General administrative expenses
-68
-51
-101
Table 7 E.53 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
-51
Daimler participates in some collectively bargained defined
benefit pension plans maintained by more than one employer.
The Group presents several of these plans in its consolidated
financial statements as defined contribution plans because the
information required to use defined benefit accounting is not
available in a timely manner or in sufficient detail. The Group
cannot exercise direct control over such plans and the plan
trustees have no legal obligation to share information directly
with participating employers. Higher contributions by the
Group to such a pension plan could be required in particular
when an underfunded status exceeds a specific level. Exit
from such a plan can lead to the companies involved having
to offset the potential future shortfall relating to their share
of the plan. Furthermore, the possibility exists that Daimler can
be liable for other participants' obligations. Compared with
the prior-year assessment, the extent of the risk has increased,
but at December 31, 2015, the risk to the Group continues
to be classified as very low. No exit from any of these plans
is intended.
43
220
263
40
245
285
Loans, other financing liabilities
841
41,311
445
59,831
1,286
101,142
502
714
36,290
50,399
1,216
86,689
E.59
Reconciliation of minimum lease payments to liabilities
from finance lease arrangements
In millions of euros
Liabilities from finance
lease arrangements
at December 31,
Liabilities from finance leases
Future minimum
lease payments
5,989
4,114
2,269
8
2,277
Liabilities to financial institutions
15,226
12,085
27,311
11,101
11,792
22,893
Deposits in the direct banking business
8,012
2,520
10,532
8,350
2,503
10,853
Liabilities from ABS transactions
3,990
3,388
7,378
1,875
2,961
Interest included in future
minimum lease payments
at December 31,
79
135
152
411
436
148
151
263
285
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
245
25. Other financial liabilities
The composition of other financial liabilities is shown
in table E.60.
Financial liabilities recognized at fair value through profit
or loss relate exclusively to derivative financial instruments
which are not used in hedge accounting.
Further information on other financial liabilities is provided
in Note 31.
26. Deferred income
The composition of deferred income is shown in table 7 E.61.
27. Other liabilities
Table 7 E.62 shows the composition of other liabilities.
E.60
65
at December 31,
231
later than five years
2015
2014
2015
2014
2015
2014
Maturity
within one year
56
56
13
16
43
40
between one and five years
155
149
70
56
85
93
200
Multi-employer plans
2,961
43,176
Currency translation and other changes
Balance at December 31, 2015
thereof current
thereof non-current
Product Personnel and
warranties
social costs
Other
Total
4,988
3,941
5,050
13,979
2,423
1,806
3,038
7,267
2,565
2,135
2,012
6,712
3,267
Addition of accrued interest and effects of changes in discount rates
2,334
Reversals
Additions
Other post-employment benefits
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment health
care benefits with defined entitlements, which have to be
accounted for as defined benefit plans. These obligations are
funded to a small extent through reimbursement rights
and plan assets. Table 71 E.56 shows key data for other post-
employment benefits.
Significant risks in connection with commitments for other
post-employment benefits (medical care) relate to rising
healthcare costs and lower contributions to those costs from
the public sector. In addition, these plans are subject to
the usual risks for defined benefit plans, in particular the risk
of changes in discount rates.
In May 2014, Daimler Trucks North America LLC and the
United Auto Workers union (UAW) entered into an agreement
to settle a healthcare plan as part of a collective bargaining
agreement. As a result of this agreement, the obligation to the
active eligible employees was settled in the fourth quarter
of 2014. The resulting cash outflow from this transaction was
approximately €0.3 billion. The transfer of the obligation to
the retirees was subject to US court approval. The approval was
received in December 2014 and became legally binding with
expiration of the deadline for notices of appeal at the end of
January 2015. The cash outflow from this transaction (approxi-
mately €0.1 billion) occurred in the first quarter of 2015. The
settlement has no material impact on the Group's consolidated
statement of income or on the EBIT of Daimler Trucks.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
243
23. Provisions for other risks
The development of provisions for other risks is summarized
in table 7 E.57.
Product warranties
Daimler issues various types of product warranties, under which
it generally guarantees the performance of products delivered
and services rendered for a certain period. The provision for
these product warranties covers expected costs for legal
and contractual warranty claims as well as expected costs for
policy coverage, recall campaigns and buyback commitments.
The provision for buyback commitments represents the expected
costs related to the Group's obligation under certain condi-
tions to repurchase vehicles from customers. Buybacks may
occur for a number of reasons including litigation, compliance
with laws and regulations in a particular region and customer
satisfaction issues. The utilization date of product warranties
depends on the incidence of the warranty claims and can
span the entire term of the product warranties. The cash out-
flow for non-current product warranties is principally
expected within a period until 2018.
Personnel and social costs
Provisions for personnel and social costs primarily comprise
expected expenses of the Group for employee anniversary
bonuses, profit sharing arrangements and management bonuses
as well as early retirement and partial retirement plans.
The additions recorded to the provisions for profit sharing
and management bonuses in the reporting year usually result
in cash outflows in the following year. The cash outflow
for non-current provisions for personnel and social costs is
primarily expected within a period until 2026.
Other
Provisions for other risks include obligations for expected reduc-
tions in revenue already recognized such as bonuses, discounts
and other price reduction commitments. They also include
expected costs in connection with liability and litigation risks,
provisions for optimization programs, provisions for environ-
mental protection risks, as well as provisions for other taxes and
various other risks which cannot be allocated to other categories.
Further information on other provisions for other risks
is provided in Notes 5 and 29.
E.57
Provisions for other risks
In millions of euros
Balance at December 31, 2014
thereof current
thereof non-current
Utilizations
Commercial paper
3,193
-2,448
873
6,120
244
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Financing liabilities
The composition of financing liabilities is shown
in table 7 E.58.
Liabilities from finance leases relate primarily to leases
of property, plant and equipment which transfer substantially
all risks and rewards to the Group as lessee. Future minimum
lease payments under finance leases amounted to €411 million
at December 31, 2015 (2014: €436 million). The reconciliation
of future minimum lease payments from finance lease arrange-
ments to the corresponding liabilities is shown in table 7 E.59.
E.58
Financing liabilities
In millions of euros
Current
At December 31, 2015
Non-current
Total
Current
At December 31, 2014
Non-current
Total
Notes/bonds
10,238
41,173
51,411
9,914
33,262
2,175
8,794
3,072
4,932
-1,769
-1,975
-6,192
-261
-71
-518
-850
23
-22
19
20
92
-49
36
79
5,661
4,364
5,805
15,830
2,589
2,189
9,710
Calculation of the defined benefit obligation uses life expectancy
for the German plans based on the 2005 G mortality tables
of K. Heubeck. For Non-German plans, comparable country-
specific calculation methods are used.
The measurement date for the Group's defined benefit
pension obligations and plan assets is generally December 31.
The measurement date for the Group's net periodic pension
cost is generally January 1. The assumptions used to calculate
the defined benefit obligations vary according to the economic
conditions of the countries in which the pension plans
are situated.
Measurement assumptions
571
190
318
308
10
1,294
1,000
294
Contributions by the employer
1,900
1,640
260
3,111
2,975
136
Contributions by plan participants
70
65
5
57
53
761
4
-101
Actual return on plan assets
27,640
23,803
3,837
30,127
26,496
3,631
Fair value of plan assets
at January 1
Interest income from plan assets
18,581
419
15,973
2,608
14,668
12,588
2,080
308
111
533
429
104
Actuarial gains/losses (-)
-101
at December 31
Settlements
-12
and similar obligations
-7,534
-6,497
-1,037
-11,619
-10,523
-1,096
-6,497
-917
120
-11,546
-10,523
-1,023
73
73
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 239
Market prices are available for equities and bonds due to their
listing in active markets. Most of the bonds have investment
grade ratings. They include government bonds of very good
creditworthiness.
The investment strategy is reviewed regularly and adjusted
if deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed
of representatives of the Finance and Human Resources depart-
ments. Several pension plans use dedicated liability driven
investment approaches to take the structure of pension obliga-
tions into account in the investment process.
E.50
Composition of plan assets
At December 31, 2015
German Non-German
thereof recognized in provisions for pensions
-12
thereof recognized in other assets
120
Pension benefits paid
-829
-688
-141
-773
-650
-123
Currency exchange-rate changes and other changes
198
8
190
Fair value of plan assets at December 31
20,226
17,306
2,920
224
18,581
7
217
15,973
2,608
-7,414
Funded status
Total
Present value of the defined benefit obligation
6
3,631
23,230
20,310
2,920
114
527
437
90
Interest cost
661
509
152
822
679
143
Contributions by plan participants
69
65
4
57
55
26,496
602
2
716
30,127
Reconciliation of the net obligation from
defined benefit pension plans
The development of the relevant factors is shown
in table E.49.
Composition of plan assets
Plan assets and income from plan assets are used solely to pay
pension benefits and to administer the plans. The composition
of the Group's pension plan assets is shown in table 7 E.50.
E.49
Present value of defined benefit pension obligations and fair value of plan assets
In millions of euros
2015
2014
German
Non-German
Total
Plans
Plans
Total
German
Plans
Non-German
Plans
Present value of the defined benefit obligation
at January 1
Current service cost
301
Actuarial gains (-)/losses from changes
-464
5,687
316
Past service cost, curtailments and settlements
-15
21
-36
22
19
3
Pension benefits paid
-894
-733
-161
-841
-697
-144
Currency exchange-rate changes and other changes
296
-9
305
307
6,003
in demographic assumptions
-172
-3,320
-435
-29
168
99
69
Actuarial gains (-)/losses from changes
in financial assumptions
-2,762
-2,614
-148
5,867
5,629
238
Actuarial gains (-)/losses from experience adjustments
-94
-99
5
-32
-41
9
Actuarial gains (-)/losses
-3,148
Plans
Plans
Total
2
1
1
-4
-5
1
Total exchange-traded instruments
17,177
14,557
2,620
14,378
12,078
2,300
Alternative investments²
616
507
109
675
567
108
Real estate
Other exchange-traded instruments¹
493
1,473
9,692
200
44
156
Corporate bonds
5,969
5,252
717
4,372
3,806
566
Securitized bonds
64
4
60
54
5
49
Bonds
10,795
9,075
1,720
8,219
184
395
514
17,306
2,920
18,581
15,973
2,608
thereof fair value of own transferable
financial instruments
thereof fair value of self-used plan assets
73
73
7
7
88
88
1 Includes derivative financial instruments which could have a negative fair value at the balance sheet date.
2 Alternative investments mainly comprise private equity.
240
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pension cost
The components of pension cost included in the consolidated
statement of income are shown in table 7 E.51.
Table 7 E.52 shows the line items within the consolidated
statement of income in which the net periodic pension cost
is included.
20,226
98
Fair value of plan assets
3,895
410
104
Other non-exchange-traded instruments¹
255
219
36
-124
-154
30
Cash and cash equivalents
1,685
1,628
57
3,138
3,072
66
Total non-exchange-traded instruments
3,049
2,749
300
4,203
308
21
205
Corporate bonds in other currencies
658
578
80
503
416
87
Consumer goods
1,440
1,220
220
955
788
167
Information technology and telecommunication services
1,229
1,071
158
778
650
128
Others
Industrials
50
94
461
At December 31, 2014
German Non-German
Plans
Plans
In millions of euros
Energy, commodities and utilities
Financials
896
799
97
832
718
114
1,466
1,269
197
1,097
925
172
Healthcare
641
544
97
367
50
64
64
Government bonds
4,762
3,819
943
5,266
4,408
858
Corporate bonds in EUR
2,603
2,594
9
2,247
2,241
6
Corporate bonds in USD
3,161
2,637
524
1,925
1,521
404
443
443
458
458
Equities
6,380
5,481
899
4,690
3,864
826
Government bonds in EUR
2,353
2,340
Other financial liabilities
13
3,853
1
Government bonds in USD
1,951
1,479
472
969
555
414
Government bonds in other currencies
3,854
In millions of euros
Derivative financial instruments used
in hedge accounting
1,800
21
1,821
151
1,552
11
162
1
1,553
Miscellaneous other liabilities
361
1
2,363
30
362
2,393
304
2
306
2,007
14
2,021
246
Other tax liabilities
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
210
202
278
585
246
314
560
2,888
4,851
7,739
2,413
3,581
5,994
E.62
Other liabilities
In millions of euros
Current
Total
Current
At December 31, 2014
Non-current
Total
At December 31, 2015
Non-current
Income tax liabilities
8
307
28. Consolidated statement of cash flows
At December 31, 2015, cash and cash equivalents included
restricted funds of €183 million (2014: €112 million).
The restricted funds primarily relate to subsidiaries where
exchange controls apply so that the Group has restricted
access to the funds.
Since, among other things, some of the contractual penalties
are dependent on time and further claims for contractual
penalties have been asserted by the Federal Republic of Germany,
the amount claimed as contractual penalties may increase.
The defendants submitted their response to the statement of
claims on June 30, 2006. The Federal Republic of Germany
delivered its reply to the arbitrators on February 15, 2007, and
the defendants delivered their rebuttal on October 1, 2007
(see also Note 30). The arbitrators held the first hearing
on June 16 and 17, 2008. Additional briefs from the claimant
and the defendants have been filed since then. A hearing
of witnesses and experts took place between December 6
and 14, 2010. The parties submitted further written statements
on July 15 and November 15, 2011. After the Tribunal's President
resigned for personal reasons as of March 30, 2012, the new
President was determined by the Administrative Court in Berlin
as of October 29, 2012. The arbitrators held further hearings
in May and October 2014 as well as in June 2015. In accordance
with IAS 37.92, no further information is disclosed regarding
the arbitration proceedings and the related risks to the Company,
in particular regarding the measures taken by the Company,
in order to prevent negative effects on the proceedings.
Daimler believes the claims of the Federal Republic of Germany
are without merit and will continue to defend itself vigorously.
lost revenue of €3.33 billion for the period September 1, 2003
through December 31, 2004 plus interest at 5% per annum
above the respective base rate since submission of claims
(an amount of €2 billion as at the date of September 29, 2014),
and contractual penalties of approximately €1.65 billion
through July 31, 2005 plus interest at 5% per annum above
the respective base rate since submission of claims (an amount
of €225 million as at the date of September 29, 2014),
-plus refinancing costs of €196 million.
-
is claiming
The Federal Republic of Germany initiated arbitration proceed-
ings against Daimler Financial Services AG, Deutsche Telekom
AG and Toll Collect GbR and submitted its statement of claims
in August 2005. It seeks damages, contractual penalties
and the transfer of intellectual property rights to Toll Collect
GmbH. In particular, the Federal Republic of Germany
In mid-January 2011, the European Commission carried out
anti-trust investigations of European commercial vehicle
manufacturers, including Daimler AG. If antitrust infringements
are discovered, the European Commission can impose con-
siderable fines depending on the gravity of the infringement.
In November 2014, the European Commission served Daimler
with its statement of objections which, from the European
Commission's perspective, further explains and legally evaluates
the relevant facts. Resulting from knowledge gained from
access to essential documents of the European Commission's
file, Daimler AG, in December 2014, decided to increase
provisions by €600 million. Daimler is taking the Commission's
investigation very seriously. The Company is cooperating
with the authorities but will at the same time - while stating the
Company's legal view - safeguard its rights in the further
proceedings and is also reviewing all of its procedural options.
In accordance with IAS 37.92, the Group does not provide
further information on this antitrust investigation and the asso-
ciated risk for the Group, especially with regard to the
measures taken in this context, in order not to impair the
outcome of the proceedings.
Various legal proceedings, claims and governmental investiga-
tions (legal proceedings) are pending against Daimler AG
and its subsidiaries on a wide range of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer,
supplier and other contractual relationships, intellectual property
rights, product warranties, environmental matters, antitrust
matters and shareholder matters. Legal proceedings relating
to products deal with claims on account of alleged vehicle
defects. Some of these claims are asserted by way of class
action suits. If the outcome of such legal proceedings is
detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages or to undertake
service actions, recall campaigns or other costly actions.
29. Legal proceedings
247
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
cash provided by financing activities included payments
for the reduction of the outstanding finance lease liabilities
of €48 million (2014: €46 million).
Cash provided by financing activities includes cash flows
from hedging the currency risks of financial liabilities. In 2015,
Cash provided by financing activities
The line item other non-cash expense and income within
the reconciliation of profit before income taxes to cash
provided by/used for operating activities in the reporting year
primarily comprises the Group's share in the profit/loss of
companies accounted for using the equity method. In the prior
year, the reconciling item mainly comprised the effect
from the remeasurement of the Tesla shares (see Note 13).
Table 71 E.64 shows cash flows included in cash provided
by/used for operating activities.
The change in financial instruments in comparison to the
prior year was mainly caused by measurement effects in fiscal
year 2014. The effects were primarily related to the hedging
instrument in connection with the disposal of the equity interest
in Tesla Motors, Inc. and the put option in connection with
the disposal of Rolls-Royce Power Systems Holding GmbH.
The increase in provisions in the reporting period resulted
from the provisions for warranties which were especially
affected by the recall in connection with Takata airbags. Fur-
thermore, there was a rise of the provisions for dealer incentives
and for personnel costs. Opposing effects resulted from the
decrease in the provisions for pensions and similar obligations
caused by extraordinary contributions to the German pension
assets in particular. The decrease in provisions in the prior
year was primarily influenced by an extraordinary contribution
to the German pension fund assets and was related to the pro-
visions for pensions and similar obligations. Furthermore, there
were opposing effects from the addition to the provision for the
EU Commission's antitrust proceedings concerning European
commercial vehicle manufacturers and the increase in the
provision for personnel costs.
171
135
a sustained influence on the Group's financial position.
Dividends received
136
Calculation of funds
152
-445
Cash provided by/used for operating activities
Changes in other operating assets and liabilities are shown
in table 7 E.63.
E.63
Changes in other operating assets and liabilities
In millions of euros
2015
2014
Provisions
564
-838
Financial instruments
-82
Miscellaneous other assets and liabilities
1,715
2,197
289
1,581
1,032
E.64
Cash flows included in cash provided by/used
for operating activities
In millions of euros
2015
Interest paid
-311
Interest received
Other deferred income
2014
466
1,024
1,912
Liabilities from wages and salaries
971
28
999
885
27
912
Accrued interest expenses
795
795
800
800
Deposits received
422
555
977
400
392
792
888
Other
2,104
960
At December 31, 2015
Non-current
Current
1,047
Total
Current
At December 31, 2014
Non-current
Total
2,203
917
3,120
1,409
908
2,317
Financial liabilities recognized at fair
value through profit or loss
113
263
228
131
359
Liabilities from residual value guarantees
1,144
3,983
150
4,102
Deferral of revenue from multi-year service
and maintenance agreements
1,336
2,983
4,319
1,216
1,935
3,151
Deferral of sales revenue received from sales
with residual-value guarantees
446
928
370
866
1,236
Deferral of advance rental payments received
from operating lease arrangements
799
581
119
662
1,461
Total
At December 31, 2014
Non-current
1,374
Total
3,614
Miscellaneous other financial liabilities
Current
162
7,131
1,846
6,425
1,605
8,030
3,452
9,484
8,977
12,360
8,062
2,644
10,706
At December 31, 2015
Non-current
E.61
Deferred income and prepaid expenses
Current
2,876
In millions of euros
The Group concludes derivative transactions in accordance
with the master netting arrangements (framework agreement)
of the International Swaps and Derivatives Association (ISDA)
and other appropriate national framework agreements. However,
these arrangements do not meet the criteria for netting in
the consolidated statement of financial position, as they allow
netting only in the case of future events such as default
or insolvency on the part of the Group or the counterparty.
Offsetting of financial instruments
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
Financial liabilities recognized at fair value through profit or loss
comprise derivative financial instruments not used in hedge
accounting. For information regarding these financial instruments
as well as derivative financial instruments used in hedge
accounting, see the notes above under marketable debt
securities and other financial assets.
Other financial liabilities
252
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
108,927
107,573
124,667
Table 71 E.69 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements
as well as the possible financial effects of netting in accor-
dance with the master netting arrangements.
124,050
8,030
Table 71 E.70 provides an overview of the classification
Other financial liabilities²
At the end of each reporting period, Daimler reviews
521
2,338
Net amounts
8,030
-1,045
-1,045
1,566
3,383
Amounts
subject to a
master netting
arrangement
into measurement hierarchies of financial assets and liabilities
measured at fair value (according to IFRS 13).
ments in the
balance sheet
At December 31, 2015
Other financial assets¹
In millions of euros
Disclosure for recognized financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
E.69
the necessity of reclassification between the measurement
hierarchies.
Gross and net
amounts of
financial instru-
8,977
101,142
Miscellaneous other financial liabilities
Financing liabilities
Financial liabilities
92,979
92,601
108,554
108,231
101,759
2,325
2,839
2,839
Other receivables and financial assets
1,296
At December 31, 2014
1,296
2,325
86,689
88,043
Trade payables
2,317
2,317
3,120
3,120
Derivative financial instruments used in hedge accounting
359
359
263
263
Financial liabilities recognized at fair value through profit or loss
Other financial liabilities
10,178
10,178
10,548
10,548
8,977
Gross and net
amounts of
financial instru-
ments in the
balance sheet
3,594
subject to a
203
at fair value through profit or loss
Financial assets measured
2,118
4,516
6,634
203
4,679
thereof marketable debt securities
5
1,642
1,647
6
2,297
8,273
97
97
Derivative financial instruments
used in hedge accounting
1,363
263
263
at fair value through profit or loss
Derivative financial instruments
used in hedge accounting
Financial liabilities measured
Liabilities measured at fair value
3,516
6,158
9,674
5,166
6,976
1,296
1,296
1,363
1,363
12,142
2,303
Amounts
measured at fair value
2,123
value through profit or loss and classified as Level 3 is shown
in table
The development of financial assets recognized at fair
financial instruments which are allocated to the Level 2
measurement hierarchy, portfolios managed on basis of net
exposure are applied.
For the determination of the credit risk from derivative
253
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E.71.
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial assets measured at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial liabilities measured at fair value through profit or loss (see Note 25).
-670
723
-670
1,393
2,676
Net amounts
master netting
arrangement
2,006
As of January 1, 2014, the financial assets shown as classified
as Level 3 and presented in table 7 E.71 consisted solely of
Daimler's option to sell the shares it held in RRPSH to Rolls-
Royce (see also Note 13). Daimler sold its shares in RRPSH to
Rolls-Royce in 2014. The option was exercised and derecognized
through profit or loss.
E.70
Measurement hierarchy of financial assets and liabilities measured at fair value
6,158
8,281
3,600
6,976
10,576
Financial assets available for sale
Financial assets measured at fair value
Level 33
At December 31, 2014
Level 22
Level 11
Total
At December 31, 2015
Level 22
Level 33
Level 11
Total
In millions of euros
thereof equity instruments
1,363
2,157
97
1,518
1,320
1,931
359
2,156
9,769
2,318
13,371
At December 31,
2015
Other miscellaneous financial commitments
Commitments from purchasing contracts
Long-term rental and leasing agreements
Irrevocable credit commitments
In millions of euros
Composition of other financial obligations
(nominal amounts)
E.66
2014
In connection with its production programs and the ongoing
expansion of its business activities, Daimler has signed addi-
tional agreements with suppliers in 2015 to purchase various
volumes of parts and components over extended periods.
The Group also has entered into further arrangements for the
provision of future services. In addition, the Group has committed
to purchase or invest in the construction and maintenance
of production facilities. At December 31, 2015, contractual com-
mitments for the acquisition of property, plant and equipment
amount to €2.2 billion.
18,976
250
later than five years
1,111
between one and five years
505
within one year
Maturity
15,564
At December 31,
2015
Future minimum lease payments under long-term rental
and lease agreements (nominal amounts)
E.67
Miscellaneous other financial commitments primarily comprise
financial obligations to make payments in connection with
capital contributions to be made into the share capital of uncon-
solidated subsidiaries or associated companies as well as
obligations in connection with cooperation agreements. In prior
year, commitments from purchasing contracts of €1.2 billion
were disclosed under other miscellaneous financial commitments.
In addition, the Group had issued irrevocable loan commitments
as of December 31, 2015. These loan commitments had
not been utilized as of that date. An overview of the maturities
of irrevocable credit commitments is shown in Table 7 E.82
in Note 32.
The Group has additional other financial obligations resulting
from non-cancelable long-term rental agreements and operating
leases for property, plant and equipment; the contracts
partially include renewal or repurchase options and escalation
clauses. In 2015, Daimler recognized as expense rental
payments of €491 million (2014: €517 million). Table 7 E.67
provides an overview of when future minimum lease payments
under non-cancelable long-term rental and lease agreements
fall due (nominal amounts).
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In millions of euros
The composition of other financial obligations is shown
in table 7 E.66.
Other financial obligations
Obligations from product warranties and extended
product warranties are not included in the above disclosures.
See Note 23 for provisions relating to such obligations.
1,560
Guarantees under buyback commitments
At December 31,
2015
2014
In millions of euros
Composition of contingent liabilities
E.65
1,208
Guarantees under buyback commitments represent arrange-
ments whereby the Group guarantees specified trade-in or
resale values for sold vehicles. Such guarantees provide the
holder with the right to return purchased vehicles to the Group,
the right being primarily contingent on the future purchase
of vehicles or services. The provisions recognized in connection
with these buyback commitments, amounted to €85 million
at December 31, 2015 (2014: €58 million). On the other hand,
residual value guarantees related to arrangements for which
revenue recognition is precluded due to the Group's obligation
to repurchase assets are included in other financial liabilities.
Contingent liabilities
Financial guarantees principally represent contractual
arrangements. These guarantees generally provide that in
the event of default or non-payment by the primary debtor,
the Group will be required to settle such financial obligations.
The maximum potential obligation resulting from these
guarantees amounted to €1,033 million at December 31, 2015
(2014: €786 million) and includes liabilities recognized in
the amount of €117 million (2014: €84 million). These amounts
include financial guarantees which the Group issued for the
benefit of Chrysler in connection with the Chrysler transactions
entered into in 2007 and 2009. At December 31, 2015, these
guarantees amounted to €0.3 billion. For a portion of these
financial guarantees, Chrysler provided collateral of €0.2 billion
to an escrow account.
Financial guarantees
30. Financial guarantees, contingent liabilities
and other financial obligations
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
248
Table 7 E.65 shows estimates of the financial effects
of contingent liabilities at December 31.
Other contingent liabilities
360
383
While Daimler's maximum future obligation resulting from
the guarantee of the bank loan can be determined (2015:
€100 million), the Group is unable to reasonably estimate the
amount or range of amounts of possible loss resulting from
the financial guarantee in form of the equity maintenance
undertaking due to the various uncertainties described above,
although it could be material. Only the guarantee for the
bank loan is included in the above disclosures for financial
guarantees.
Cofiroute's risks and obligations are limited to €70 million.
Daimler Financial Services AG and Deutsche Telekom AG
are jointly obliged to indemnify Cofiroute for amounts exceed-
ing this limitation.
Guarantee of bank loans. Daimler AG issued a guarantee
to third parties up to a maximum amount of €100 million for
bank loans which could be obtained by Toll Collect GmbH.
This amount represents the Group's 50% share of Toll Collect
GmbH's external financing guaranteed by its shareholders.
- Equity maintenance undertaking. The consortium members
have the obligation to contribute, on a joint and several basis,
additional funds to Toll Collect GmbH as may be necessary
for Toll Collect GmbH to maintain a minimum equity (based
on German Commercial Code accounting principles) of 15%
of total assets (a so-called “equity maintenance undertaking").
This obligation will terminate on August 31, 2018, when
the extended operating agreement expires, or earlier if the
agreement is terminated. Such obligation may arise if
Toll Collect GmbH is subject to revenue reductions caused
by underperformance, if the Federal Republic of Germany
is successful in claiming lost revenue against Toll Collect GmbH
for any period the system was not fully operational, or if
Toll Collect GmbH incurs penalties that may become payable
under the above mentioned agreements. If such penalties,
revenue reductions or other events reduce Toll Collect GmbH's
equity to a level below the minimum equity percentage
agreed upon, the consortium members are obligated to fund
Toll Collect GmbH's operations to the extent necessary
to reach the required minimum equity.
Each of the consortium members (including Daimler Financial
Services AG) has provided guarantees supporting the
obligations of Toll Collect GmbH towards the Federal Republic
of Germany relating to the completion and operation of the
toll collection system, which are subject to specific triggering
events. In addition, Daimler AG has guaranteed bank loans
obtained by Toll Collect GmbH. The guarantees are described
in detail below:
The operating agreement calls for the submission of all
disputes related to the toll collection system to arbitration.
The Federal Republic of Germany has initiated arbitration
proceedings against Daimler Financial Services AG, Deutsche
Telekom AG and the consortium. According to the statement
of claims received in August 2005, the Federal Republic of
Germany is seeking damages including contractual penalties
and reimbursement of lost revenue that allegedly arose
from delays in the operability of the toll collection system.
See Note 29 for additional information.
Beginning in June 2006, the Federal Republic of Germany
began reducing monthly payments to Toll Collect GmbH
by €8 million in partial set-off against amounts claimed in the
arbitration proceedings referred to below. This offsetting
may require the consortium members to provide additional
operating funds to Toll Collect GmbH.
249
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
However, penalties and revenue reductions are capped at
€150 million per year until the final operating permit has been
issued and at €100 million per year following the issuance
of the final operating permit. These cap amounts are subject
to a 3% increase for every year of operation.
Failure to perform various obligations under the operating
agreement may result in penalties, additional revenue
reductions and damage claims that could become significant
over time.
According to the operating agreement, the toll collection
system had to be operational no later than August 31, 2003.
After a delay of the launch date of the toll collection system,
which resulted in a loss of revenue for Toll Collect and in
payments of contractual penalties for delays, the toll collection
system was introduced on January 1, 2005 with on-board
units that allowed for slightly less than full technical performance
in accordance with the technical specification (phase 1).
On January 1, 2006, the toll collection system was installed
and started to operate with full effectiveness as specified
in the operating agreement (phase 2). On December 20, 2005,
Toll Collect GmbH received a preliminary operating permit
as specified in the operating agreement. Toll Collect GmbH
expects to receive the final operating permit, and continues
to operate the toll collection system under the preliminary
operating permit in the interim.
In 2002, our subsidiary Daimler Financial Services AG,
Deutsche Telekom AG and Compagnie Financière et Industrielle
des Autoroutes S.A. (Cofiroute) entered into a consortium
agreement in order to jointly develop, install and operate under
a contract with the Federal Republic of Germany (operating
agreement) a system for the electronic collection of tolls for all
commercial vehicles over 12 tons gross vehicle weight using
German highways. Daimler Financial Services AG and Deutsche
Telekom AG each hold a 45% equity interest and Cofiroute
holds the remaining 10% equity interest in both the consortium
(Toll Collect GbR) and the joint venture company (Toll Collect
GmbH) (together Toll Collect).
Other contingent liabilities comprise contingent liabilities
which constitute other guarantees as well as potential
obligations from other tax and customs duty risks. At Decem-
ber 31, 2015, the best estimate for potential obligations
from other contingent liabilities for which no provisions had
yet been recognized was €360 million (2014: €383 million).
1,591
1,920
540
2,156
2014
416
1,112
Other financial assets
6,634
6,634
8,273
8,273
9,667
Available-for-sale financial assets
9,667
9,936
8,634
8,634
9,054
9,054
62,057
9,936
3,049
3,049
2,269
97
203
203
Financial assets recognized at fair value through profit or loss
622
622
746
746
thereof equity instruments measured at cost
1,647
1,647
2,303
2,303
thereof equity instruments measured at fair value
2,269
61,679
Derivative financial instruments used in hedge accounting
73,837
Fair value
251
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
- equity interests measured at cost; fair values could not be
determined for these financial instruments because no
stock exchange or market prices are available. These equity
interests comprise investments in non-listed companies
for which no objective evidence existed at the balance sheet
date that these assets were impaired and whose fair values
cannot be determined with sufficient reliability. It is assumed
that the fair values approximate the carrying amounts.
debt and equity instruments measured at fair value; these
instruments were measured using quoted market prices
at December 31. Otherwise, the fair value measurement of
these debt and equity instruments is based on inputs that
are either directly or indirectly observable on active markets.
Equity instruments measured at fair value predominantly
comprise the investments in Nissan Motor Co., Ltd. (Nissan)
and Renault SA (Renault).
Marketable debt securities and other financial assets
Financial assets available-for-sale include:
Trade receivables and cash and cash equivalents
Due to the short terms of these financial instruments
and the fundamentally lower credit risk, it is assumed that
their fair values are equal to the carrying amounts.
Financial assets recognized at fair value through profit or loss
include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
- derivative currency hedging contracts; the fair values
of cross currency interest rate swaps are determined on the
basis of the discounted estimated future cash flows using
market interest rates appropriate to the remaining terms of
the financial instruments. The valuation of currency forwards
is based on market quotes of forward curves; currency
options were measured using price quotations or option
pricing models using market data.
The discounting is based on the current interest rates at
which similar loans with identical terms could have been
obtained as of December 31, 2015 and December 31, 2014.
Receivables from financial services
The fair values of financial instruments were calculated on
the basis of market information available on the balance sheet
date. The following methods and premises were used:
Table 7 E.68 shows the carrying amounts and fair values
of the respective classes of the Group's financial instruments.
The fair value of a financial instrument is the price at which
a party would accept the rights and/or obligations of that finan-
cial instrument from another independent party. Given the
varying influencing factors, the reported fair values can only
be viewed as indicators of the prices that may actually
be achieved on the market.
Carrying amounts and fair values of financial instruments
31. Financial instruments
629
2,157
The fair values of receivables from financial services with
variable interest rates are estimated to be equal to the respective
carrying amounts because the interest rates agreed and those
available in the market do not significantly differ. The fair values
of receivables from financial services with fixed interest
rates are determined on the basis of discounted expected
future cash flows.
derivative interest rate hedging contracts; the fair values
of interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows using the market interest rates appropriate
to the remaining terms of the financial instruments.
derivative commodity hedging contracts; the fair values
of commodity hedging contracts (e.g. commodity forwards)
are determined on the basis of current reference prices
with consideration of forward premiums and discounts.
Other receivables and assets are carried at amortized
cost. Because of the predominantly short maturities
of these financial instruments, it is assumed that the fair
values approximate the carrying amounts.
Financing liabilities
At December 31, 2014
Carrying
amount
Fair value
amount
Available-for-sale financial assets
Marketable debt securities
Cash and cash equivalents
Trade receivables
Receivables from financial services
Financial assets
In millions of euros
Carrying amounts and fair values of financial instruments
E.68
Due to the short maturities of these financial instruments,
it is assumed that their fair values are equal to the carrying
amounts.
Trade payables
The fair values of bonds, loans, commercial paper, deposits
in the direct banking business and liabilities from ABS transac-
tions are calculated as present values of the estimated future
cash flows. Market interest rates for the appropriate terms are
used for discounting.
73,514
3,120
3,383
6,634
3,120
3,383
Net profit for 2015 includes net losses (before income taxes)
of €9 million (2014: €17 million) attributable to the ineffective-
ness of derivative financial instruments entered into for
hedging purposes (hedge-ineffectiveness).
Table 71 E.79 provides an overview of the reclassifications
of pre-tax gains/losses from equity to the statement of income
for the period.
Unrealized pre-tax gains and losses on the measurement
of derivatives, which are recognized in other comprehensive
income, are shown in table 7 E.78.
The Group uses cash flow hedges for hedging currency risks,
interest rate risks and commodity price risks.
Cash flow hedges
Net gains and losses from these hedging instruments
and the changes in the value of the underlying transactions
are shown in table 7 E.77.
The Group uses fair value hedges primarily for hedging
interest rate risks.
Fair value hedges
Table 71 E.76 shows the fair values of hedging instruments
at the end of the reporting period.
Fair values of hedging instruments
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its commercial business
or refinancing activities. These are mainly interest rate risks,
currency risks and commodity price risks. For these hedging
purposes, the Group mainly uses currency forward transac-
tions, cross currency interest rate swaps, interest rate swaps,
options and commodity forwards.
Use of derivatives
Information on derivative financial instruments
See Note 1 for qualitative descriptions of accounting for financial
instruments (including derivative financial instruments).
Total interest income and total interest expense for financial
assets or financial liabilities that are not measured at fair value
through profit or loss are shown in table > E.75.
In 2015, the discontinuation of cash flow hedges as a result
of non-realizable hedged items resulted in losses of €21 million
(2014: €6 million).
The maturities of the interest rate hedges and cross currency
interest rate hedges as well as of the commodity hedges corre-
spond with those of the underlying transactions. The realization
of the underlying transactions of the cash flow hedges is
expected to correspond with the maturities of the hedging trans-
actions shown in table 7 E.80. As of December 31, 2015,
Daimler utilized derivative instruments with a maximum maturity
of 51 months (2014: 36 months) as hedges for currency
risks arising from future transactions.
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
257
thereof fair value hedges
thereof cash flow hedges
Cross currency interest rate swaps
Forward exchange contracts
Hedging of currency risks from receivables/liabilities
In millions of euros
Nominal values of derivative financial instruments
248
E.80
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments are still
hedging financial risks from the operating business. A hedging
instrument is terminated when the hedged item no longer
exists or is no longer expected to occur.
Hedging transactions for which the effects from the measurement
of the hedging instrument and the underlying transaction to
a large extent offset each other in the consolidated statement
of income mostly not classify for hedge accounting.
Table 7 E.80 shows the nominal values of derivative financial
instruments entered into for the purpose of hedging currency
risks, interest rate risks and commodity price risks that
arise from the Group's operating and/or financing activities.
Nominal values of derivative financial instruments
of selected investments with the application of derivative
financial instruments.
Daimler also partially hedges the foreign currency risk
Hedges of net investments in foreign operations
Explanations of the hedging of exchange rate risks, interest
rate risks and commodity price risks can be found in Note 32
in the sub-item finance market risk.
Hedging of currency risks from forecasted transactions
-2,857
-3
-552
65
553
-69
Net gains/losses from hedging instruments
Net gains/losses from underlying transactions
In millions of euros
2014
2015
-29
Net gains/losses from fair value hedges
E.77
Hedges of net investments in foreign operations
-1,527
-2,255
Cash flow hedges
E.78
Unrealized gains/losses from cash flow hedges
2015
2014
Interest expense
Interest income
Cost of sales
-90
340
-2,755
-99
2014
-2
2015
-3,770
Revenue
In millions of euros
Reclassifications of pre-tax gains/losses from equity
to the statement of income
E.79
Unrealized gains/losses
In millions of euros
-2,433
498
Forward exchange contracts and currency options
Hedging of currency risks of net investments in foreign operations
Currency swaps
1,460
783
605
1,388
Forward commodity contracts
Hedging of commodity price risks from forecasted transactions
27,384
1,647
2,305
26,281
3,490
29,771
thereof fair value hedges
799
3,104
thereof cash flow hedges
thereof cash flow hedges
1,231
484
747
30,310
26,409
3,867
30,276
thereof fair value hedges
44,962
28,143
31,884
28,666
thereof cash flow hedges
86,826
62,425
43,039
105,464
Total nominal values of derivative financial instruments
1,305
56,809
thereof cash flow hedges
34,004
39,322
5,803
4,226
1,965
6,191
5,513
7,073
7,073
Nominal values
> 1 year
Maturity
≤1 year
Nominal values
Maturity
At December 31, 2014
At December 31, 2015
2,560
850
1,710
2,137
Interest rate swaps
Hedging of interest rate risks from receivables/liabilities
thereof hedging of net investments in foreign operations
545
545
39,873
23,381
5,318
26,533
23,412
28,078
51,490
49,914
2,926
128
377
505
41,621
Fair value hedges
In millions of euros
535
4,842
39,525
44,367
48,518
39,525
88,043
62,057
7,390
42,338
7,390
42,338
thereof other financing liabilities
thereof liabilities from ABS transactions
6,496
45,535
52,031
thereof bonds
5,996
5,996
37,680
37,680
Receivables from financial services¹
Trade receivables
2014
At December 31,
2015
Assets
In millions of euros
Carrying amounts of financial instruments presented
according to IAS 39 measurement categories
E.73
56,224
Net gains on financial liabilities measured at (amortized) cost
mainly include gains and losses from currency translation.
Net gains on available-for-sale financial assets mainly include
income from the measurement of equity interests as well as
gains realized on their disposal.
Net gains and in the prior year net losses of financial assets
and liabilities recognized at fair value through profit or loss
primarily include gains and losses attributable to changes in
fair values.
Table 71 E.74 shows the net gains or losses of financial
instruments included in the consolidated statement of income
(excluding derivative financial instruments used in hedge
accounting).
Net gains or losses
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 255
3 Fair value measurement of these assets and liabilities is based on inputs for which no observable market data is available.
1 Fair value measurement of these assets and liabilities is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement of these assets and liabilities is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Net losses on loans and receivables mainly include impairment
losses that are charged to cost of sales, selling expenses
and other financial income/expense, net. Foreign currency
gains and losses are also included.
55,356
45,535
Financing liabilities
2014
2015
Balance at December 31
income/expense, net
Losses recognized in other financial
Balance at January 1
In millions of euros
through profit or loss classified as Level 3
Development of financial assets recognized at fair value
E.71
3 Fair value measurement of these assets and liabilities is based on inputs for which no observable market data is available.
1 Fair value measurement of these assets and liabilities is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement of these assets and liabilities is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
2,676
2,317
359
118
P-118
254
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Fair values of financial liabilities measured at cost
62,057
73,837
73,837
Fair values of financial assets measured at cost
Receivables from financial services
In millions of euros
At December 31, 2014
Level 22
Level 33
101,759
Level 11
At December 31, 2015
Level 22 Level 33
Level 11
Total
Measurement hierarchy of financial assets and liabilities not measured at fair value
E.72
The carrying amounts of financial instruments presented
according to IAS 39 measurement categories are shown in
table 7 E.73.
Table 71 E.72 shows into which measurement hierarchy
(according to IFRS 13) the fair values of the financial assets
and liabilities are classified which are not measured at
fair value in the consolidated statement of financial position.
Total
46,599
9,054
8,634
Financial liabilities measured at (amortized) cost
-210
-313
Loans and receivables
235
130
Available-for-sale financial assets
-578
197
Financial assets and liabilities recognized
at fair value through profit or loss¹
2014
2015
In millions of euros
Net gains/losses
E.74
103
124
1 Financial instruments classified as held for trading; these amounts relate
to financial instruments that are not used in hedge accounting.
At December 31,
2015
2014
-1,666
3,089
3,791
-1,799
2014
2015
Fair values of hedging instruments
4 This does not include liabilities from financial guarantees of €117 million
as of December 31, 2015 (2014: €84 million) as these are not assigned
to an IAS 39 measurement category.
E.76
Total interest income
In millions of euros
Total interest income and total interest expense
Total interest income and total interest expense
E.75
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
256
Total interest expense
as of December 31, 2015 (2014: €285 million) as these are not assigned
to an IAS 39 measurement category.
3 This does not include liabilities from finance leases of €263 million
These figures comprise financial instruments that are not used
in hedge accounting.
203
Financial assets measured at fair value
through profit or loss²
8,903
11,322
Available-for-sale financial assets
2,269
3,049
97
Other financial assets
Marketable debt securities
57,558
67,249
Loans and receivables
2,325
2,839
Other receivables and financial assets
8,273
2,317
2,676
Liabilities
Financing liabilities³
2 Financial instruments classified as held for trading purposes.
1 This does not include lease receivables of €18,158 million as of
December 31, 2015 (2014: €15,080 million) as these are not assigned
to an IAS 39 measurement category.
as these financial instruments are not assigned to an IAS 39 measurement
category.
The table above does not include cash and cash equivalents or the carrying
amounts of derivative financial instruments used in hedge accounting
359
263
104,528
Trade payables
120,287
7,946
8,860
86,404
100,879
10,178
10,548
Other financial liabilities4
Financial liabilities measured at (amortized) cost
Financial liabilities measured at fair value
through profit or loss
At December 31, 2015
Carrying
Depreciation and amortization
-15
32
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
265
33. Segment reporting
Reportable segments
The reportable segments of the Group are Mercedes-Benz Cars,
Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and
Daimler Financial Services. The segments are largely organized
and managed separately according to nature of products
and services provided, brands, distribution channels and profile
of customers.
The vehicle segments develop and manufacture passenger
cars, trucks, vans and buses. The Mercedes-Benz Cars segment
comprises premium vehicles of the Mercedes-Benz brand and
small cars under the smart brand, as well as the service brand
Mercedes me. Daimler Trucks distributes its trucks under the
brand names Mercedes-Benz, Freightliner, FUSO, Western Star,
Thomas Built Buses and BharatBenz. The vans of the
Mercedes-Benz Vans segment are primarily sold under the
brand name Mercedes-Benz and also under the Freightliner
brand. Daimler Buses sells completely built-up buses under the
brand names Mercedes-Benz and Setra. In addition, Daimler
Buses produces and sells bus chassis. The vehicle segments
also sell related spare parts and accessories.
The Daimler Financial Services segment supports the sales
of the Group's vehicle segments worldwide. Its product portfolio
mainly comprises tailored financing and leasing packages
for customers and dealers. The segment also provides services
such as fleet management, the brokering of automotive insur-
ance, banking services and various innovative mobility services
(under the brands moovel and car2go).
Management and reporting system
The Group's management reporting and controlling systems
principally use accounting policies that are the same
as those described in Note 1 in the summary of significant
accounting policies according to IFRS.
The Group measures the performance of its operating segments
through a measure of segment profit or loss which is referred
to as "EBIT" in our management and reporting system.
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income/expense, and our share of profit/loss
from equity-method investments, net, as well as other financial
income/expense, net. Although amortization of capitalized bor-
rowing costs is included in cost of sales, it is not included in EBIT.
Intersegment revenue is generally recorded at values that
approximate third-party selling prices.
Segment assets principally comprise all assets. The industrial
business segments' assets exclude income tax assets, assets
from defined benefit pension plans and other post-employment
benefit plans, and certain financial assets (including liquidity).
Segment liabilities principally comprise all liabilities. The indus-
trial business segments' liabilities exclude income tax liabilities,
liabilities from defined benefit pension plans and other
post-employment benefit plans, and certain financial liabilities
(including financing liabilities).
Daimler Financial Services' performance is measured
on the basis of return on equity, which is the usual procedure
in the banking business.
The residual value risks associated with the Group's operating
leases and finance lease receivables are generally borne by
the vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Financial Services; the terms vary
by vehicle segment and geographic region.
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
Capital expenditures for intangible assets and property, plant
and equipment reflect the cash effective additions to these
property, plant and equipment and intangible assets as far as
they do not relate to capitalized borrowing costs, goodwill and
finance leases.
Depreciation and amortization may also include impairments
as far as they do not relate to goodwill impairment as per
IAS 36.
Amortization of capitalized borrowing costs is not included
in the amortization of intangible assets or depreciation
of property, plant and equipment since it is not considered
as part of EBIT.
266
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation
Reconciliation includes corporate items for which headquarters
are responsible. Transactions between the segments are
eliminated in the context of consolidation and the eliminated
amounts are included in the reconciliation.
The effects of certain legal proceedings are excluded from
the operative results and liabilities of the segments if such items
are not indicative of the segments' performance, since their
related results of operations may be distorted by the amount
and the irregular nature of such events. This may also be the
case for items that refer to more than one reportable segment.
25
Reconciliation also includes corporate projects, profits and
losses on derivative financial transactions allocated to head-
quarters and equity interests not allocated to the segments.
If the Group hedges investments in associated companies
for strategic reasons, the related financial assets and earnings
effects are generally not allocated to the segments.
38
49
High
Low
2014
Average
Exchange rate risk
(from derivative financial instruments)
1,209
1,680
1,209
1,543
731
731
370
494
Interest rate risk
54
69
46
56
36
39
30
36
Commodity price risk
(from derivative financial instruments)
54
63
37
38
Period-end
Information related to geographic areas
Table 7 E.84 presents segment information as of and
for the years ended December 31, 2015 and 2014.
149,467
149,467
6,468
155,935
-6,468
-6,468
149,467
Segment profit (EBIT)
7,926
2,576
880
214
1,619
13,215
-29
13,186
thereof profit/loss from
equity-method investments
428
-16
-14
2
-10
390
74
464
thereof expenses from
compounding of provisions and
changes in discount rates
17,723
1,239
18,962
With respect to information about geographical regions,
revenue is allocated to countries based on the location
of the customer; non-current assets are presented according
to the physical location of these assets.
4,046
67
4,113
37,578
E.84
Segment information
Daimler
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Daimler
Financial
Total
Benz Vans
Buses
Services Segments
Recon-
ciliation
Daimler
Group
In millions of euros
2015
External revenue
80,956
35,613
11,129
Intersegment revenue
2,853
1,965
344
Total revenue
83,809
11,473
2015
Average
Low
High
233
119
30
Trade payables4
10,548
10,517
2
29
Miscellaneous other financial liabilities excluding
accrued interest
8,182
6,336
604
524
314
102
302
Irrevocable loan commitments
of the Daimler Financial Services segment
and of Daimler AG5
Financial guarantees
1,931
1,203
1,033
133,773
1,033
65,469
25,772
329
379
1,099
4,552
At December 31, 2015, liquidity amounted to €18.2 billion
(2014: €16.3 billion). In 2015, significant cash inflows resulted
from the positive contributions to earnings by the automotive
segments. Cash outflows mainly resulted from the portfolio
growth of the leasing and sales financing activities of Daimler
Financial Services, as well as from the increased investment
offensive. Furthermore, cash outflows resulted from the unsched-
uled contributions to the German and US pension plan assets
(see Note 22), as well as from the purchase of the digital map
business HERE, which took place in December 2015.
From an operating point of view, the management of the Group's
liquidity exposures is centralized by a daily cash pooling pro-
cess. This process enables Daimler to manage its liquidity surplus
and liquidity requirements according to the actual needs
of the Group and each subsidiary. The Group's short-term and
mid-term liquidity management takes into account the matur-
ities of financial assets and financial liabilities and estimates
of cash flows from the operating business.
Table 71 E.82 provides an overview of how the future liquidity
situation of the Group is affected by the cash flows from
liabilities and financial guarantees as of December 31, 2015.
Information on the Group's financing liabilities is also
provided in Note 24.
Country risk
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the respective
country, e.g. resulting from sovereign measures such as
expropriation or interdiction of foreign currency transfers.
Daimler is exposed to country risk mainly resulting from cross-
border funding of Group companies and customers as well as
cross-border capital investments at Group companies and joint
ventures. Additionally, country risk also arises from cross-
border investments of liquid assets with financial institutions.
Daimler manages these risks via country exposure limits
(e.g. for export credits or for hard currency portfolios of financial
services entities) and via insurance of equity investments in
high-risk countries. An internal rating system serves as a basis
for Daimler's risk-oriented country exposure management;
it assigns all countries to risk classes, with consideration of
external ratings and capital market indications of country risks.
E.82
Liquidity runoff for liabilities and financial guarantees¹
In millions of euros
Total
2016
2017
2018
2019
2020
≥ 2021
Financing liabilities²
107,527
43,638
24,067
15,551
5,759
8,176
10,336
Derivative financial instruments³
2,742
228
92
29
In order to mitigate the impact of currency exchange rate
fluctuations for the operating business (future transactions),
Daimler continually assesses its exposure to exchange rate
risks and hedges a portion of those risks by using derivative
financial instruments. Daimler's Foreign Exchange Committee
(FXCO) manages the Group's exchange rate risk and its hedging
transactions through currency derivatives. The FXCo consists
of representatives of the relevant segments and central functions.
The Corporate Treasury department aggregates foreign cur-
rency exposures from Daimler's subsidiaries and operative units
and carries out the FXCo's decisions concerning foreign cur-
rency hedging through transactions with international financial
institutions. Risk Controlling regularly informs the Board of
Management of the actions taken by Corporate Treasury based
on the FXCo's decisions.
The Group's targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally limited
by uncertainty related to cash flows that lie far in the future;
on the other hand, it may also be limited by the fact that appro-
priate currency contracts are not available. This reference
model aims to protect the Group from unfavorable movements
in exchange rates while preserving some flexibility to partici-
pate in favorable developments. Based on this reference model
and depending on the market outlook, the FXCo determines
the hedging horizon, which usually varies from one to five years,
as well as the average hedge ratios. Reflecting the character
of the underlying risks, the hedge ratios decrease with increasing
maturities. At year-end 2015, foreign exchange management
showed an unhedged position in the automotive business for the
underlying forecasted cash flows in US dollars in calendar
year 2016 of 20%, for the underlying forecasted cash flows
in Chinese renminbi in calendar year 2016 of 22%, as well
as for the underlying forecasted cash flows in British pounds
in calendar year 2016 of 29%.
The hedged position of the operating vehicle businesses
is influenced by the amount of derivative currency contracts
held. The derivative financial instruments used to cover
foreign currency exposure are primarily forward foreign exchange
contracts and currency options. Daimler's guidelines call for
a mixture of these instruments depending on the assessment
of market conditions. Value at risk is used to measure
the exchange rate risk inherent in these derivative financial
instruments.
Table 7 E.83 shows the period-end, high, low and average
value at risk figures of the exchange rate risk for the 2015 and
2014 portfolios of derivative financial instruments, which
were entered into primarily in connection with the operative
vehicle businesses. Average exposure has been computed
on an end-of-quarter basis. The offsetting transactions under-
lying the derivative financial instruments are not included
in the following value at risk presentation. See also table 71 E.80
for the nominal volumes on the balance sheet date of deriv-
ative currency instruments entered into to hedge the currency
risk from forecasted transactions.
In 2015, the development of the value at risk from foreign
currency hedging was mainly driven by changes in the nominal
volume and by the increased foreign currency volatilities.
The Group's investments in liquid assets or refinancing activities
generally are not allowed to result in currency risk. Transaction
risks arising from liquid assets or payables in foreign currencies
that result from the Group's investment or refinancing on
money and capital markets are generally hedged against currency
risks at the time of investing or refinancing in accordance
with Daimler's internal guidelines. The Group uses appropriate
derivative financial instruments (e.g. cross currency interest
rate swaps) to hedge against currency risk.
Since currency risks arising from the Group's investment or
refinancing in foreign currencies and the respective hedging
transactions principally offset each other, these financial
instruments are not included in the value at risk calculation
presented.
Effects of currency translation. For purposes of Daimler's
consolidated financial statements, the income and expenses
and the assets and liabilities of subsidiaries located outside
the euro zone are converted into euros. Therefore, period-to-
period changes in average exchange rates may cause trans-
lation effects that have a significant impact on, for example,
revenue, segment results (EBIT) and assets and liabilities
of the Group. Unlike exchange rate transaction risk, exchange
rate translation risk does not necessarily affect future cash
flows. The Group's equity position reflects changes in book values
caused by exchange rates. In general, Daimler does not hedge
against exchange rate translation risk.
264
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Interest rate risk
Daimler uses a variety of interest rate sensitive financial
instruments to manage the liquidity needs of its day-to-day
operations. A substantial volume of interest rate sensitive
assets and liabilities results from the leasing and sales financing
business operated by the Daimler Financial Services segment.
The Daimler Financial Services companies enter into transactions
with customers that primarily result in fixed-rate receivables.
Daimler's general policy is to match funding in terms of maturities
and interest rates wherever economically feasible. However,
for a limited portion of the receivables portfolio in selected and
developed markets, the Group does not match funding in
terms of maturities in order to take advantage of market oppor-
tunities. As a result, Daimler is exposed to risks due to
changes in interest rates. In this regard, the Group is not
exposed to any liquidity risks.
An asset/liability committee consisting of members of the
Daimler Financial Services segment and the Corporate
Treasury department manages the interest rate risk relating
to Daimler's leasing and financing activities by setting
targets for the interest rate risk position. The Treasury Risk
Management department and the local Daimler Financial
Services companies are jointly responsible for achieving these
targets. As separate functions, the Daimler Financial Services
Risk Management and the Daimler Financial Services Controlling
& Reporting department monitors target achievement on a
monthly basis. In order to achieve the targeted interest rate
risk positions in terms of maturities and interest rate fixing
periods, Daimler also uses derivative financial instruments such
as interest rate swaps. Daimler assesses its interest rate risk
position by comparing assets and liabilities for corresponding
maturities, including the impact of the relevant derivative
financial instruments.
Derivative financial instruments are also used in conjunction
with the refinancing related to the industrial business.
Daimler coordinates the funding activities of the industrial
and financial services businesses at the Group level.
Table 71 E.83 shows the period-end, high, low and average value
at risk figures of the interest rate risk for the 2015 and 2014
portfolio of interest rate sensitive financial instruments and
derivative financial instruments of the Group, including the
financial instruments of the leasing and sales financing business.
In this respect, the table shows the interest rate risk regarding
the unhedged position of interest rate sensitive financial
instruments. The average values have been computed on an
end-of-quarter basis.
In the course of 2015, changes of the value at risk for interest
rate sensitive financial instruments were primarily determined
by the development of interest rate volatilities.
Commodity price risk
Daimler is exposed to the risk of changes in commodity prices
in connection with procuring raw materials and manufacturing
supplies used in production. A small portion of the raw material
price risk, primarily relating to forecasted procurement of
certain metals, is mitigated with the use of derivative financial
instruments.
For precious metals, central commodity management shows
an unhedged position of 23% of the forecasted commodity
purchases at year-end 2015 for calendar year 2016. The corre-
sponding figure at year-end 2014 was 32% for calendar
year 2015.
Table 7 E.83 shows the period-end, high, low and average
value at risk figures of the commodity price risk for the 2015
and 2014 portfolio of derivative financial instruments used
to hedge raw material price risk. Average exposure has been
computed on an end-of-quarter basis. The transactions
underlying the derivative financial instruments are not included
in the value at risk presentation. See also table 7 E.80
for the nominal values of derivative commodity price hedges
at the balance sheet date.
Compared to the previous year, the value at risk of commodity
derivatives has increased. The main reasons for this develop-
ment were rising volatilities for platinum and an increase in the
nominal hedge volume for palladium and aluminum.
Equity price risk
Daimler predominantly holds investments in shares of compa-
nies which are classified as long-term investments, such as
Nissan or Renault, or which are accounted for using the equity
method, such as BAIC Motor or Kamaz. Therefore, the Group
does not include these investments in a market risk assessment.
E.83
Value at risk for exchange rate risk, interest rate risk and commodity price risk
In millions of euros
Period-end
263
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E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash inflows and outflows of the business segments are offset
if they are denominated in the same currency. This means
that the exchange rate risk resulting from revenue generated
in a particular currency can be offset by costs in the same
currency, even if the revenue arises from a transaction indepen-
dent of that in which the costs are incurred. As a result,
only the net exposure is subject to transaction risk. In addition,
natural hedging opportunities exist to the extent that currency
exposures of the operating businesses of individual segments
offset each other partially at Group level, thereby reducing
overall currency exposure. These natural hedges eliminate the
need for hedging to the extent of the matched exposures.
To provide an additional natural hedge against any remaining
transaction risk exposure, Daimler generally strives to
increase cash outflows in the same currencies in which the
Group has a net excess inflow.
16,812
6,534
8,489
10,697
1 The amounts were calculated as follows:
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler can
be required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
(b) The cash flows of floating interest financial instruments are estimated on the basis of forward rates.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
3 The undiscounted sum of the net cash outflows of the derivative financial instruments is shown for the respective year. For individual peri-
ods, this may also include negative cash flows from derivatives with an overall positive fair value.
4 The cash outflows of trade payables are undiscounted.
5 The maximum available amounts are stated.
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
262
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13
Finance market risks
Daimler manages market risks to minimize the impact of
fluctuations in foreign exchange rates, interest rates and com-
modity prices on the results of the Group and its segments.
The Group calculates its overall exposure to these market risks
to provide the basis for hedging decisions, which include
the selection of hedging instruments and the determination of
hedging volumes and the corresponding periods. Decisions
regarding the management of market risks resulting from fluctu-
ations in foreign exchange rates, interest rates (asset-/liability
management) and commodity prices are regularly made by the
relevant Daimler risk management committees.
As part of its risk management system, Daimler employs value
at risk. In performing these analyses, Daimler quantifies its
market risk exposure to changes in foreign currency exchange
rates and interest rates on a regular basis by predicting the
potential loss over a target time horizon (holding period) and
confidence level.
The value at risk calculations employed:
-
express potential losses in fair values,
and
assume a 99% confidence level and a holding period
of five days.
Daimler calculates the value at risk for exchange rate and
interest rate risk according to the variance-covariance
approach. The value at risk calculation method for commodity
hedging instruments is based on a Monte Carlo simulation.
When calculating the value at risk by using the variance-
covariance approach, Daimler first computes the current market
value of the Group's financial instruments portfolio. Then
the sensitivity of the portfolio value to changes in the relevant
market risk factors, such as particular foreign currency exchange
rates or interest rates of specific maturities, is quantified.
Based on expected volatilities and correlations of these market
risk factors, which are obtained from the RiskMetricsTM data-
set, a statistical distribution of potential changes in the portfolio
value at the end of the holding period is computed. The loss
which is reached or exceeded with a probability of only 1% can
be derived from this calculation and represents the value at risk.
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors consistent with current
market volatilities. The changes in market risk factors allow
the calculation of a possible change in the portfolio value over
the holding period. Running multiple iterations of this simulation
leads to a distribution of portfolio value changes. The value at
risk can be determined based on this distribution as the portfolio
value loss which is reached or exceeded with a probability of 1%.
Oriented towards the risk management standards of the
international banking industry, Daimler maintains its financial
controlling unit independent of operating Corporate Treasury
and with a separate reporting line.
Exchange rate risk
Transaction risk and currency risk management. The global
nature of Daimler's businesses exposes cash flows and earnings
to risks arising from fluctuations in exchange rates. These
risks primarily relate to fluctuations between the euro and the
US dollar, the Chinese renminbi, and the British pound.
In the operating vehicle business, the Group's exchange rate risk
primarily arises when revenue is generated in a currency that
is different from the currency in which the costs of generating
the revenue are incurred (transaction risk). When the revenue
is converted into the currency in which the costs are incurred,
it may be inadequate to cover the costs if the value of the
currency in which the revenue is generated declined in the interim
relative to the value of the currency in which the costs were
incurred. This risk exposure primarily affects the Mercedes-Benz
Cars segment, which generates a major portion of its revenue
in foreign currencies and incurs manufacturing costs primarily
in euros. The Daimler Trucks segment is also subject to
transaction risk, but to a lesser extent because of its global
production network. The Mercedes-Benz Vans and Daimler
Buses segments are also directly exposed to transaction risk,
but only to a minor degree compared to the Mercedes-Benz
Cars and Daimler Trucks segments. In addition, the Group
is indirectly exposed to transaction risk from its equity-method
investments.
The global nature of its businesses exposes Daimler to significant
market risks resulting from fluctuations in foreign currency
exchange rates and interest rates. In addition, the Group is
exposed to market risks in terms of commodity price risk
associated with its business operations, which the Group hedges
partially through derivative financial instruments. The Group
is also exposed to equity price risk in connection with its invest-
ments in listed companies (including Nissan, Renault, BAIC
Motor and Kamaz). If these market risks materialize, they will
adversely affect the Group's profitability, liquidity and capital
resources and financial position.
-15
-7
-3
1,387
197
682
1,878
5,853
equity-method investments
thereof profit/loss from
Segment profit (EBIT)
129,872
-6,278
-6,278
6,278
136,150
129,872
129,872
14,915
1,076
15,991
63
4,218
9,968
32,389
73,584
Total revenue
367
2,087
2,685
Intersegment revenue
4,155
9,601
30,302
70,899
9,997
External revenue
755
103
189,635
2,593
187,042
105,454
3,562
5,895
20,181
51,950
Segment assets
-353
-1
-352
-4
-11
-20
-70
-247
changes in discount rates
compounding of provisions and
thereof expenses from
897
746
151
2,261
1
63
-1
10,752
2014
In millions of euros
Daimler
Group
plant and equipment
thereof depreciation of property,
1,580
1,580
53
14
106
285
1,122
of intangible assets
thereof amortization
11,340
17
11,323
4,182
251
481
1,559
4,850
of non-current assets
5,075
5,075
30
104
202
1,110
3,629
2,677
847
184
79
Recon-
ciliation
Services Segments
Buses
Benz Vans
Trucks
Total
Daimler
Financial
Daimler
Mercedes-
Daimler
Mercedes-
Benz Cars
The interest income and interest expenses of Daimler Financial
Services are included in revenue and cost of sales, and are
presented in Notes 4 and 5.
Daimler Financial Services
thereof carrying amounts of
In 2015, expenses from the restructuring of the Group's dealer
network impacted Daimler Buses in 2015 with an amount of
€4 million (see also Note 5). The prior-year amount of €14
million additionally included expenses for the measures
described under Daimler Trucks. Furthermore, income of €16
million resulted from the sale of the investment in New MCI
Holdings Inc.
In 2015, expenses of €40 million from a recall in connection
with Takata airbags had a negative effect on earnings.
Furthermore, expenses from the restructuring of the own
dealer network affected Mercedes-Benz Vans by an amount
of €29 million (2014: €17 million).
Mercedes-Benz Vans
In January 2013, Daimler Trucks decided on workforce adjust-
ments in Germany and Brazil, which were continued in 2015.
Expenses recorded in this regard and for the restructuring of
the own dealer network amounted to €105 million in 2015
(2014: €165 million). In 2015, the optimization programs led to
a cash outflow of €64 million (2014: €170 million) (see also
Note 5). Further expenses of €61 million resulted from the sale
of the investment in Atlantis Foundries (Pty) Ltd.
Daimler Trucks
In 2015, in Mercedes-Benz Cars segment, the restructuring
of the own dealer network had an effect of €-64 million
(2014: €-81 million). In 2015, the optimization programs
led to a cash inflow of €180 million (2014: €-5 million)
(see also Note 5). The division's earnings also include expenses
of €300 million from a recall in connection with Takata airbags
as well as expenses of €121 million for public-sector levies of
prior periods. Furthermore, Mercedes-Benz Cars segment
had an effect of €87 million from the sale of property in USA.
Mercedes-Benz Cars
267
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E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3,804
1
3,803
16
Daimler Buses
The funds raised are used to finance working capital and
capital expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accor-
dance with internal guidelines, the refunding of the lease and
financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from
financial services.
equity method investments
545
Additions to non-current assets
12,556
2,242
1,194
509
12,312
28,813
5
28,818
thereof investments in
intangible assets
1,815
67
288
16
75
2,261
1 Includes impairments of property, plant and equipment of €93 million from the sale of selected sites of the Group's sales network, of which
€64 million relates to Mercedes-Benz Cars, €13 million to Daimler Trucks, €14 million to Mercedes-Benz Vans and €2 million to Daimler Buses.
3,501
3
3,498
14
75
197
766
2,446
plant and equipment¹
162,542
thereof depreciation of property,
-12,146
113,991
-4
-16
-4
-20
Segment assets
58,965
21,290
6,311
3,562
123,863 213,991
3,175
217,166
thereof carrying amounts of
equity method investments
2,142
578
109
9
23
2,861
772
3,633
Segment liabilities
39,173
13,653
5,038
2,833
174,688
1,498
1,498
20
1,238
intangible assets
thereof investments in
24,265
10
24,255
9,899
507
1,004
1,896
10,949
Additions to non-current assets
145,051
-6,699
151,750
97,837
2,622
4,349
12,131
34,811
Segment liabilities
2,294
678
1,616
30
8
97
77
115
13
20
15
93
284
1,086
of intangible assets
thereof amortization
10,057
15
10,042
3,368
225
452
1,435
936
4,562
Depreciation and amortization
4,844
3
4,841
23
105
304
788
3,621
plant and equipment
thereof investments in property,
1,463
1,463
of non-current assets¹
261
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
In addition, customer deposits at Mercedes-Benz Bank
are used as a further source of refinancing.
9,054
61,679
8,634
Credit risk
Derivative financial instruments
used in hedge accounting
(assets only)
16
1,363
1,296
Derivative financial instruments
not used in hedge accounting
(assets only)
16
203
97
Loan commitments
30
1,931
1,320
19
Trade receivables
73,514
14
plant and equipment
258
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32. Management of financial risks
General information on financial risks
As a result of its businesses and the global nature of its opera-
tions, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An equity
price risk results from investments in listed companies (including
Nissan, Renault, BAIC Motor and Kamaz). In addition, the
Group is exposed to credit risks from its leasing and financing
activities and from its operating business (trade receivables).
With regard to the leasing and financing activities, credit risks
arise from operating lease contracts, finance lease contracts
and financing contracts. Furthermore, the Group is exposed to
liquidity and country risks relating to its credit and market
risks or a deterioration of its operating business or financial
market disturbances. If these financial risks materialize,
they could adversely affect Daimler's profitability, liquidity
and capital resources and financial position.
E.81
Maximum risk positions of financial assets and loan commitments
In millions of euros
Other receivables and
see also
Note
Maximum
risk position
2014
Daimler has established internal guidelines for risk controlling
procedures and for the use of financial instruments, including
a clear segregation of duties with regard to financial activities,
settlement, accounting and the related controlling. The guide-
lines upon which the Group's risk management processes for
financial risks are based are designed to identify and analyze
these risks throughout the Group, to set appropriate risk limits
and controls and to monitor the risks by means of reliable and
up-to-date administrative and information systems. The guide-
lines and systems are regularly reviewed and adjusted to
changes in markets and products.
The Group manages and monitors these risks primarily through
its operating and financing activities and, if required, through
the use of derivative financial instruments. Daimler uses deriv-
ative financial instruments exclusively for hedging financial
risks that arise from its commercial business or refinancing
activities. Without these derivative financial instruments,
the Group would be exposed to higher financial risks (additional
information on financial instruments and especially on the
nominal values of the derivative financial instruments used
is included in Note 31). Daimler regularly evaluates its financial
risks with due consideration of changes in key economic
indicators and up-to-date market information.
Any market sensitive instruments including equity and
debt securities that the plan assets hold to finance pension
and other post-employment healthcare benefits are not
included in the following quantitative and qualitative analysis.
See Note 22 for additional information on Daimler's pension
and other post-employment benefits.
Liquid assets
18,209
16,301
Receivables from financial
services
Maximum
risk position
2015
financial assets
thereof investments in property,
2,839
Trade receivables
Trade receivables are mostly receivables from worldwide sales
activities of vehicles and spare parts. The credit risk from
trade receivables encompasses the default risk of customers,
e.g. dealers and general distribution companies, as well
as other corporate and private customers. Daimler manages
its credit risk from trade receivables using appropriate IT
applications and databases on the basis of internal guidelines
which have to be followed globally.
A significant part of the trade receivables from each country's
domestic business is secured by various country-specific
types of collateral. This collateral includes conditional sales,
guarantees and sureties as well as mortgages and cash
deposits. In order to prevent the credit risk Daimler assesses
the creditworthiness of the counterparties.
For trade receivables from export business, Daimler also
evaluates each general distribution company's creditworthiness
by means of an internal rating process and its country risk.
In this context, the year-end financial statements and other
relevant information on the general distribution companies
such as payment history are used and assessed.
Depending on the creditworthiness of the general distribution
companies, Daimler usually establishes credit limits and limits
credit risks with the following types of collateral:
credit insurances,
first-class bank guarantees and
- letters of credit.
Appropriate provisions are recognized for the risks inherent in
trade receivables. For this purpose, all receivables are regularly
reviewed and impairments are recognized if there is any
objective indication of non-performance or other contractual
violations. In general, substantial individual receivables and
receivables whose realizability is jeopardized are assessed indi-
vidually. In addition, taking country-specific risks and any
collateral into consideration, the other receivables are grouped
by similarity of contract and tested for impairment collectively.
One important factor for the definition of the impairment to be
recognized is the respective country risk.
Further information on trade receivables and the status
of impairments recognized is provided in Note 19.
Derivative financial instruments
The Group uses derivative financial instruments exclusively
for hedging financial risks that arise from its commercial
business or refinancing activities. Daimler manages its credit
risk exposure in connection with derivative financial instru-
ments through a limit system, which is based on the review
of each counterparty's financial strength. This system limits
and diversifies the credit risk. As a result, Daimler is exposed
to credit risk only to a small extent with respect to its deriv-
ative financial instruments. In accordance with the Group's risk
policy, most derivatives are contracted with counterparties
which have an external rating of "A" or better.
Other receivables and financial assets
With respect to other receivables and financial assets
in 2015 and 2014, Daimler is exposed to credit risk only
to a small extent.
Liquidity risk
Liquidity risk comprises the risk that a company cannot meet
its financial obligations in full.
Daimler manages its liquidity by holding adequate volumes
of liquid assets and by maintaining syndicated credit facilities
in addition to the cash inflows generated by its operating
business. Additionally, the possibility to securitize receivables
of financial services business (ABS transactions) also reduces
the Group's liquidity risk. Liquid assets comprise cash and
cash equivalents as well as debt instruments classified as held
for sale. The Group can dispose of these liquid assets at
short notice.
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending
on funding requirements and market conditions, Daimler issues
commercial paper, bonds and financial instruments secured
by receivables in various currencies. In 2015, Daimler had very
good access to the money and capital markets. Bank credit
lines are also used to cover financing requirements. These credit
lines include a syndicated €9.0 billion credit facility of Daimler AG
with five year tenor and two extension options of one year
each which was signed with a syndicate of international banks
in September 2013. In 2014, Daimler had exercised the option
to extend the credit line by a further year until 2019. In 2015,
Daimler exercised the second extension option to extend the
credit line by a further year until 2020. This syndicated facility can
be used to finance general corporate purposes and serves as
a back-up for commercial paper drawings. At December 31, 2015,
this facility had not been utilized. Potential downgrades of
Daimler's credit ratings could have a negative impact on the
Group's financing.
16
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
260
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
The allowance ratio remained at the low level of the previous
year.
Credit risk is the risk of economic loss arising from a counter-
party's failure to repay or service debt in accordance with
the contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditworthi-
ness as well as concentration risks.
2,325
Further details on receivables from financial services and the
balance of the recorded impairments are provided in Note 14.
The maximum risk positions of financial assets which
are generally subject to credit risk are equal to their carrying
amounts (without consideration of collateral, if available).
Table 71 E.81 shows the maximum risk positions.
Liquid assets
Liquid assets consist of cash and cash equivalents and market-
able debt securities classified as available-for-sale. With the
investment of liquid assets, banks and issuers of securities
are selected very carefully and diversified in accordance with
a limit system. In the past years, the limit methodology was
continuously enhanced to counteract the decline of the credit-
worthiness of the banking sector in the course of the financial
crisis. Additionally, liquid assets are increasingly also held at
financial institutions outside Europe with high creditworthiness
and as bonds issued by German federal states. Furthermore
and due to the current business development, the Group also
temporarily holds high levels of liquidity in emerging markets.
At the same time, the Group has increased the number
of financial institutions with which investments are made.
In connection with investment decisions, priority is placed
259
on the borrower's very high creditworthiness and on balanced
risk diversification. The limits and their utilizations are
reassessed continuously. In this assessment, Daimler also
considers the credit risk assessment of its counterparties
by the capital markets. In line with the Group's risk policy, most
liquid assets are held in investments with an external rating
of "A" or better.
Receivables from financial services
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Loans and finance lease receivables related to retail or small
business customers are grouped into homogeneous pools and
collectively assessed for impairment. Impairments are required
for example if there are adverse changes in the payment status
of the borrowers included in the pool, adverse changes in
expected loss frequency and severity, and adverse changes
in economic conditions.
Exposure to credit risk from financing and lease activities
is monitored based on the portfolio subject to credit risk.
The portfolio subject to credit risk is an internal control quantity
that consists of wholesale and retail receivables from financial
services and the portion of the operating lease portfolio that
is subject to credit risk. Receivables from financial services
comprise claims arising from finance lease contracts and repay-
ment claims from financing loans. The operating lease port-
folio is reported under equipment on operating leases in the
Group's consolidated financial statements. Overdue lease
payments from operating lease contracts are recognized in
trade receivables.
In addition, the Daimler Financial Services segment is exposed
to credit risk from irrevocable loan commitments to retailers
and end customers. At December 31, 2015, irrevocable loan
commitments of Daimler Financial Services amounted to
€1,913 million (2014: €1,306 million), of which €1,186 million
had a maturity of less than one year (2014: €772 million),
€378 million had maturities between one and three years
(2014: €249 million), €228 million had maturities between
three and four years (2014: €172 million), €92 million had matur-
ities between four and five years (2014: €113 million) and €29
million had maturities later than five years (2014: €0 million).
The Daimler Financial Services segment has guidelines setting
the framework for effective risk management at a global
as well as at a local level. In particular, these rules deal with
minimum requirements for all risk-relevant credit processes,
the definition of financing products offered, the evaluation of
customer quality, requests for collateral as well as the treat-
ment of unsecured loans and non-performing claims. The limita-
tion of concentration risks is implemented primarily by means
of global limits, which refer to single customer exposures.
As of December 31, 2015, exposure to the biggest 15 customers
did not exceed 4.8% (2014: 4.0%) of the total portfolio.
With respect to its financing and lease activities, the Group
holds collateral for customer transactions. The value of collat-
eral generally depends on the amount of the financed assets.
The financed vehicles usually serve as collateral. Furthermore,
Daimler Financial Services mitigates the credit risk from
financing and lease activities, for example through advance
payments from customers.
Scoring systems are applied for the assessment of the default
risk of retail and small business customers. Corporate customers
are evaluated using internal rating instruments. Both evalua-
tion processes use external credit bureau data if available.
The scoring and rating results as well as the availability of secu-
rity and other risk mitigation instruments, such as advance
payments, guarantees and, to a lower extent, residual debt
insurances, are essential elements for credit decisions.
Significant loans and leases to corporate customers are tested
individually for impairment. An individual loan or lease is
considered impaired when there is objective evidence that the
Group will be unable to collect all amounts due as specified
by the contractual terms. Examples of objective evidence that
loans or lease receivables may be impaired include the following
factors: significant financial difficulty of the borrower, a rising
probability that the borrower will become bankrupt, delinquency
in his installment payments, and restructured or renegotiated
contracts to avoid immediate default.
Daimler's financing and leasing activities are primarily
focused on supporting the sales of the Group's automotive
products. As a consequence of these activities, the Group
is exposed to credit risk, which is monitored and managed based
on defined standards, guidelines and procedures. Daimler
Financial Services manages its credit risk irrespective of whether
it is related to a financing contract or to an operating lease or
a finance lease contract. For this reason, statements concerning
the credit risk of Daimler Financial Services refer to the entire
financing and leasing business, unless specified otherwise.
Within the framework of testing for impairment, existing
collateral is generally given due consideration. In that context,
any excess collateral of individual customers is not netted
off with insufficient collateral of other customers. The maxi-
mum credit risk is limited by the fair value of collateral
(e.g. financed vehicles).
If, in connection with contracts, a worsening of payment
behavior or other causes of a need for impairment are recognized,
collection procedures are initiated by claims management to
obtain the overdue payments of the customer, to take possession
of the asset financed or leased or, alternatively, to renegotiate
the impaired contract. Restructuring policies and practices are
based on the indicators or criteria which, in the judgment
of local management, indicate that repayment will probably
continue and that the total proceeds expected to be derived
from the renegotiated contract exceed the expected proceeds
to be derived from repossession and remarketing.
Moscow, Russian Federation
Prague, Czech Republic
Alcobendas, Spain
48
100.00
100.00
Gesellschaft mit beschränkter Haftung
Berlin, Germany
Mercedes-Benz CharterWay
share
Mercedes-Benz Ceská republika s.r.o.
Mercedes-Benz Capital Rus 000
millions of €
of €
in %1
Footnote
(loss) in
in millions
Net income
12
Mercedes-Benz CharterWay España, S.A.
100.00
Mercedes-Benz Dealer Bedrijven B.V.
13
Buenos Aires, Argentina
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
Mercedes-Benz Desarrollo de Mercados, S. de R.L. de C.V.
Equity
Mercedes-Benz Danmark A/S
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Mercedes-Benz CPH A/S
Mercedes-Benz Côte d'Azur SAS
Mercedes-Benz Compañía Financiera Argentina S.A.
Mercedes-Benz Corretora de Seguros Ltda
100.00
100.00
Bogota D.C., Colombia
100.00
Mem Martins, Portugal
Mercedes-Benz Comercial, Unipessoal Lda.
100.00
Trent, Italy
Mercedes-Benz CharterWay S.r.l.
100.00
Le Chesnay, France
Mercedes-Benz CharterWay S.A.S.
5,6
Mercedes-Benz Compania de Financiamiento Colombia S.A.
Capital
100.00
Name of the Company
Warsaw, Poland
Mercedes-Benz Banking Service GmbH
Mercedes-Benz Belgium Luxembourg S.A.
Mercedes-Benz Bank Service Center GmbH
Mercedes-Benz Bank Rus 000
Mercedes-Benz Bank Polska S.A.
100.00
Vienna, Austria
Mercedes-Benz Bank GmbH
6
1,732
100.00
Stuttgart, Germany
3
0.00
Wilmington, USA
Mercedes-Benz Bank AG
Mercedes-Benz Auto Receivables Trust 2015-1
3
0.00
Wilmington, USA
Mercedes-Benz Auto Receivables Trust 2014-1
100.00
Moscow, Russian Federation
100.00
Berlin, Germany
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
276
89
114
100.00
Toronto, Canada
100.00
Milton Keynes, United Kingdom
Mercedes-Benz Canada Inc.
Mercedes-Benz Brooklands Limited
Domicile, Country
100.00
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
100.00
Begles, France
Mercedes-Benz Bordeaux S.A.S.
5,6
15
100.00
Brussels, Belgium
100.00
Saarbrücken, Germany
100.00
Budapest, Hungary
São Paulo, Brazil
100.00
Villeneuve-Loubet, France
15
80.00
Hong Kong, China
100.00
Kifissia, Greece
20
358
100.00
Montigny-le-Bretonneux, France
100.00
Alcobendas, Spain
10
103
100.00
Prague, Czech Republic
15
66
233
100.00
Mississauga, Canada
100.00
Rome, Italy
100.00
212
12
94
100.00
Schlieren, Switzerland
100.00
Moscow, Russian Federation
Mercedes-Benz Financial Services Singapore Ltd.
Mercedes-Benz Financial Services Schweiz AG
Mercedes-Benz Financial Services Rus O00
15
100.00
Brussels, Belgium
Mem Martins, Portugal
Auckland, New Zealand
15
23
95
100.00
Utrecht, Netherlands
28
227
80.00
Seoul, South Korea
100.00
100.00
Salzburg, Austria
15
Mercedes-Benz Drogenbos N.V.
-279
1,081
3
São Bernardo do Campo, Brazil
Mercedes-Benz do Brasil Ltda.
100.00
São Paulo, Brazil
100.00
Mexico City, Mexico
Drogenbos, Belgium
100.00
15
23
174
100.00
Copenhagen, Denmark
100.00
Budapest, Hungary
100.00
Horsholm, Denmark
100.00
The Hague, Netherlands
99.98
100.00
Alcobendas, Spain
26
159
100.00
Melbourne, Australia
25
198
90.00
Tokyo, Japan
100.00
Hong Kong, China
Mercedes-Benz Espana, S.A.U.
Mercedes-Benz Financial Services Portugal -
Sociedade Financeira de Crédito S.A.
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services Hellas Vehicle
Sales and Rental SA
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Finance Co., Ltd.
Mercedes-Benz Finance China Ltd.
15
66
460
100.00
Mercedes-Benz Financial Services Italia SpA
Mercedes-Benz Financial Services Korea Ltd.
Mercedes-Benz Financial Services Nederland B.V.
Mercedes-Benz Financial Services New Zealand Ltd
0.00
100.00
3
5
15
170
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Delta OHG
5
23
23
187
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Beta OHG
5
35
151
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Epsilon OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
14
166
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co.
Gamma 3 OHG
5
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 7 OHG
Gamma 2 OHG
14
144
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 1 OHG
5
60
69
279
5
5,7
5
Schönefeld, Germany
48
48
403
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 3 OHG
5
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 2 OHG
5
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
5
334
2,097
100.00
15
55
Alpha 4 OHG
Name of the Company
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 6 OHG
5
13
215
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 5 OHG
5
100.00
34
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Net income Footnote
(loss) in
millions of €
of €
in %1
Equity
in millions
Capital
share
275
Domicile, Country
592
OHG
Grundstücksverwaltungsgesellschaft Henne-Unimog
Schönefeld, Germany
100.00
Antwerp, Belgium
Mercedes-Benz Antwerpen N.V.
3
5,6
100.00
Düsseldorf, Germany
Mercedes-Benz AG & Co. Grundstücksvermietung Objekte
Leipzig und Magdeburg KG
6
100.00
Stuttgart, Germany
100.00
Yangzhou, China
15
107
294
Bangkok, Thailand
15
627
2,048
75.00
Mercedes-Benz Argentina S.A.
Buenos Aires, Argentina
100.00
Mercedes-Benz Asia GmbH
0.00
Wilmington, USA
3
0.00
Wilmington, USA
3
0.00
Wilmington, USA
83
1,190
Beijing, China
100.00
147
538
100.00
Melbourne, Australia
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2014-A
Mercedes-Benz Auto Lease Trust 2015-A
Mercedes-Benz Auto Lease Trust 2015-B
Mercedes-Benz Auto Receivables Trust 2013-1
100.00
Utrecht, Netherlands
5,6
Stuttgart, Germany
Mercedes-Benz Assuradeuren B.V.
Beijing, China
100.00
Mem Martins, Portugal
Mercedes-Benz Accessories GmbH
Zwartkop, South Africa
100.00
São Paulo, Brazil
100.00
Farmington Hills, USA
5,6
31
100.00
Hamburg, Germany
5,6
100.00
100.00
MBarc Credit Canada Inc.
Li-Tec Battery GmbH
Koppieview Property (Pty) Ltd
Invema Assessoria Empresarial Ltda
Intrepid Insurance Company
Intelligent Apps GmbH
Henne-Unimog GmbH
GmbH & Co. OHG
5
100.00
Kirchheim-Heimstetten, Germany
Wilmington, USA
Kamenz, Germany
5,6
Mercedes-Benz (Yangzhou) Parts Distribution Co., Ltd.
Mercedes-Benz (Thailand) Limited
Mercedes-Benz - Aluguer de Veículos, Unipessoal Lda.
Mercedes-Benz (China) Ltd.
5,6
459
100.00
Affalterbach, Germany
13
108
100.00
100.00
Brixworth, United Kingdom
5,6
100.00
Arnstadt, Germany
MDC Technology GmbH
5,6
100.00
Kölleda, Germany
MDC Power GmbH
100.00
Mississauga, Canada
Mercedes AMG High Performance Powertrains Ltd
Mercedes-AMG GmbH
100.00
100.00
268
26
93
100.00
Beijing, China
100.00
Newark, USA
15
1,993
10,963
100.00
Wilmington, USA
2
836
100.00
Utrecht, Netherlands
EvoBus Nederland B.V.
EvoBus Italia S.p.A.
EvoBus Ibérica, S.A. (Sociedad Unipersonal)
EvoBus GmbH
EvoBus France S.A.S.
EvoBus Danmark A/S
Stuttgart, Germany
EvoBus Ceská republika s.r.o.
100.00
100.00
100.00
Mississauga, Canada
100.00
Beijing, China
91
214
100.00
Singapore, Singapore
100.00
Mexico City, Mexico
100.00
Farmington Hills, USA
5,6
100.00
Berlin, Germany
10
46
100.00
Luxembourg, Luxembourg
5,6
74.90
5,6
30
EvoBus Belgium N.V.
EvoBus (U.K.) Ltd.
Daimler Real Estate GmbH
Daimler Re Insurance S.A. Luxembourg
Daimler Re Brokers GmbH
Daimler Parts Brand GmbH
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Daimler North America Finance Corporation
Daimler North America Corporation
Daimler Nederland B.V.
Footnote
millions of €
of €
in %1
(loss) in
in millions
Net income
Equity
Capital
share
Domicile, Country
Name of the Company
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
274
Daimler Retail Receivables LLC
EvoBus Austria GmbH
DAIMLER SERVICIOS CORPORATIVOS MEXICO
Daimler South East Asia Pte. Ltd.
EvoBus (Schweiz) AG
EHG Elektroholding GmbH
Deutsche Accumotive GmbH & Co. KG
Detroit Diesel-Allison de Mexico, S. de R.L. de C.V.
Detroit Diesel Remanufacturing Mexicana, S. de R.L. de C.V.
Detroit Diesel Remanufacturing LLC
Detroit Diesel Corporation
DCS UTI LLC, Mercedes Series
Daiprodco Mexico S. de R.L. de C.V.
Daimler Vehículos Comerciales Mexico S. de R.L. de C.V.
Daimler Vermögens- und Beteiligungsgesellschaft mbH
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Daimler Vorsorge und Versicherungsdienst GmbH
Daimspain S.L.
Daimler Vans USA, LLC
Daimler Vans Manufacturing, LLC
Daimler Vans Hong Kong Limited
Daimler Trust Leasing LLC
Daimler UK Limited
Daimler Trust Leasing Conduit LLC
Daimler Trust Holdings LLC
Daimler Trucks Remarketing Corporation
Daimler Trucks North America LLC
Daimler Trucks Korea Ltd.
Daimler Trucks Canada Ltd.
Daimler Trucks and Buses (China) Ltd.
S. DE R.L. DE C.V.
100.00
65
Seoul, South Korea
Coventry, United Kingdom
100.00
Kloten, Switzerland
5,6
1,115
100.00
Stuttgart, Germany
5
-17
64
100.00
Kirchheim unter Teck, Germany
100.00
San Juan Ixtacala, Mexico
100.00
Toluca, Mexico
22
64
100.00
Detroit, USA
15
100.00
259
Wiener Neudorf, Austria
Kobbegem-Asse, Belgium
Wolica, Poland
EvoBus Sverige AB
EvoBus Portugal, S.A.
EvoBus Polska Sp. z o.o.
100.00
Nijkerk, Netherlands
100.00
Bomporto, Italy
100.00
Sámano, Spain
5,6
251
100.00
Kirchheim unter Teck, Germany
100.00
Sarcelles, France
100.00
Koege, Denmark
100.00
Prague, Czech Republic
100.00
100.00
15
193
Detroit, USA
Ladson, USA
67.55
Hong Kong, China
48
561
100.00
Milton Keynes, United Kingdom
100.00
Farmington Hills, USA
100.00
Farmington Hills, USA
100.00
Farmington Hills, USA
1,543
-10
100
100.00
Portland, USA
2,337
100.00
Portland, USA
100.00
100.00
100.00
Wilmington, USA
Mexico City, Mexico
100.00
Farmington Hills, USA
100.00
Mexico City, Mexico
48
2,308
100.00
Madrid, Spain
5,6
100.00
Berlin, Germany
5,6
3,866
100.00
Schönefeld, Germany
5, 6, 15
4,125
100.00
Stuttgart, Germany
15
100.00
100.00
100.00
Farmington Hills, USA
377
Farmington Hills, USA
100.00
Farmington Hills, USA
100.00
Centurion, South Africa
5,6
100.00
Wiedemar, Germany
100.00
Milton Keynes, United Kingdom
100.00
Stockholm, Sweden
100.00
Vienna, Austria
100.00
Utrecht, Netherlands
-24
12
100.00
Wilmington, USA
-10
100.00
2
Wilmington, USA
DAF Investments, Ltd.
239
100.00
100.00
15
16
34
100.00
100.00
100.00
Melbourne, Australia
52.00
Ljubljana, Slovenia
Valencia, Venezuela
Oriskany, USA
Toronto, Canada
Montreal, Canada
Daimler Canada Finance Inc.
Daimler Buses North America Ltd.
Daimler Buses North America Inc.
Daimler Automotive de Venezuela C.A.
Daimler Australia/Pacific Pty. Ltd.
Daimler AC Leasing, d.o.o.
100.00
Farmington Hills, USA
100.00
7
100.00
100.00
car2go Österreich GmbH
car2go Nederland B.V.
car2go N.A. LLC
car2go Italia S.R.L.
car2go Iberia S.L.
car2go Group GmbH
car2go Europe GmbH
car2go Deutschland GmbH
car2go Danmark A/S
car2go China Co., Ltd.
car2go Canada Ltd.
100.00
São Bernardo do Campo, Brazil
Campo Largo Comercio de Veículos e Peças Ltda.
100.00
Milton Keynes, United Kingdom
100.00
São Paulo, Brazil
15
22
337
car2go Sverige AB
Milan, Italy
car2go UK Ltd.
CLIDET NO 1048 (Proprietary) Limited
Madrid, Spain
5,6
100.00
Leinfelden-Echterdingen, Germany
75.00
Leinfelden-Echterdingen, Germany
-17
6
100.00
Leinfelden-Echterdingen, Germany
100.00
Copenhagen, Denmark
100.00
Beijing, China
-13
4
100.00
Vancouver, Canada
DA Investments Co. LLC
Coventry Lane Holdings, L.L.C.
Conemaugh Hydroelectric Projects, Inc.
CARS Technik & Logistik GmbH
12
Daimler Canada Investments Company
100.00
5,6
100.00
Schönefeld, Germany
361
1,373
100.00
Beijing, China
Daimler Insurance Services UK Limited
Daimler Insurance Services Japan Co., Ltd.
Daimler Insurance Services GmbH
Daimler Insurance Agency LLC
Daimler India Commercial Vehicles Private Limited
Daimler Grund Services GmbH
Daimler Greater China Ltd.
5,6
100.00
Stuttgart, Germany
100.00
Istanbul, Turkey
Daimler FleetBoard GmbH
Daimler Fleet Services A.S.
Chennai, India
100.00
100.00
-188
100.00
Mexico City, Mexico
100.00
Mexico City, Mexico
100.00
Wilmington, USA
Daimler Mexico, S.A. de C.V.
Daimler Motors Investments LLC
Daimler Manufactura, S. de R.L. de C.V.
Daimler Investments US Corporation
100.00
Utrecht, Netherlands
Daimler International Finance B.V.
100.00
Milton Keynes, United Kingdom
100.00
Tokyo, Japan
5,6
100.00
Stuttgart, Germany
100.00
Farmington Hills, USA
-120
Halifax, Canada
Milton Keynes, United Kingdom
Centurion, South Africa
1,894
100.00
Stuttgart, Germany
100.00
Wilmington, USA
5,6
100.00
Berlin, Germany
-10
13
100.00
Bogota D.C., Colombia
100.00
Farmington Hills, USA
Daimler Financial Services Japan Co., Ltd.
Daimler Financial Services India Private Limited
Daimler Financial Services AG
Daimler Finance North America LLC
Daimler Export and Trade Finance GmbH
Daimler Colombia S. A.
Daimler Capital Services LLC
5,6
65.00
Chennai, India
Kawasaki, Japan
Daimler Fleet Management South Africa (Pty.) Ltd.
Daimler Fleet Management UK Limited
100.00
Singapore, Singapore
Daimler Fleet Management Singapore Pte. Ltd.
5,6
20
100.00
Stuttgart, Germany
100.00
Mexico City, Mexico
Daimler Financial Services, S.A. de C.V., S.O.F.O.M., E.N.R.
Daimler Fleet Management GmbH
15
30
116
100.00
Mexico City, Mexico
Daimler Financial Services México, S. de R.L. de C.V.
15
14
86
100.00
100.00
São Paulo, Brazil
Mem Martins, Portugal
Vetlanda, Sweden
13,294
100
79
Other markets
18,500
18,679
3,042
2,983
149,467
129,872
73,333
65,599
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
269
34. Capital management
"Net assets" and "value added” represent the basis for capital
management at Daimler. The assets and liabilities of the
segments in accordance with IFRS provide the basis for the
determination of net assets at Group level. The industrial
segments are accountable for the operational net assets; all
assets, liabilities and provisions which they are responsible
for in day-to-day operations are therefore allocated to them.
Performance measurement at Daimler Financial Services is
on an equity basis, in line with the usual practice in the banking
business. Net assets at Group level additionally include
assets and liabilities from income taxes as well as other
corporate items and eliminations.
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are
calculated as an average of the net assets at the beginning
and the end of the quarter and are shown in table 7 E.87.
The cost of capital of the Group's average net assets is reflected
in value added. Value added shows the extent to which the
Group achieves or exceeds the minimum return requirements
of the shareholders and creditors, thus creating additional
value. The required rate of return on net assets, and thus the
cost of capital, are derived from the minimum rates of return
that investors expect on their invested capital. The Group's cost
of capital comprises the cost of equity as well as the costs
of debt and pension obligations of the industrial business; in
addition, the expected returns on liquidity and on the plan
assets of the pension funds of the industrial business are consid-
ered with the opposite sign. In the reporting period, the cost
of capital used for our internal capital management amounted
to 8% after taxes.
The objective of capital management is to increase value
added among other things by optimizing the cost of capital.
This is achieved on the one hand by the management of
the net assets, for instance by optimizing working capital, which
is within the operational responsibility of the segments.
In addition, taking into account legal regulations, Daimler strives
to optimize the costs and risks of its capital structure and,
consequently, the cost of capital, with due consideration
of applicable law. Examples of this include a balanced relation-
ship between equity and financial liabilities as well as an
appropriate level of liquidity, oriented towards the operational
requirements.
35. Earnings per share
14,684
The calculation of basic and diluted earnings per share is
based on net profit attributable to shareholders of Daimler AG.
Following the expiration of the stock option plan in 2014,
dilutive effects no longer exist. The profit attributable to share-
holders of Daimler AG (basic and diluted) amounts to
€8,424 million (2014: €6,962 million). The weighted average
number of shares outstanding (basic and diluted) amounts
to 1,069.8 million (2014: 1,069.8 million).
thereof China
2,161
43,722
44,025
40,519
thereof Germany
22,001
20,449
34,981
32,882
NAFTA
47,653
38,025
24,105
20,238
thereof United States
41,920
33,310
21,878
18,161
Asia
33,744
29,446
1,859
49,570
E.87
2015
1,156
41,644
40,779
Net assets of the segments
1 Equity
2 Unless allocated to the segments
3 Industrial business
270
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
36. Related party relationships
Related parties are deemed to be associated companies,
joint ventures, joint operations and unconsolidated subsidiaries,
as well as persons who exercise a significant influence
on the financial and business policy of the Daimler Group.
The latter category includes all persons in key positions
and their close family members. At the Daimler Group, those
persons are the members of the Board of Management
and of the Supervisory Board.
Most of the goods and services supplied within the ordinary
course of business between the Group and related parties
comprise transactions with associated companies, joint ventures
and joint operations, and are shown in table 7 E.88.
Associated companies
A large proportion of the Group's sales of goods and services
with associated companies as well as receivables results
from business relations with Beijing Benz Automotive Co., Ltd.
(BBAC). See Note 13 for further information on BBAC.
Until the sale of the company in 2014, significant transactions
of goods and services also took place with Rolls-Royce
Power Systems AG (RRPS), which is a subsidiary of RRPSH.
Further information on RRPSH is also provided in Note 13.
The purchases of goods and services shown in table 7 E.88
were primarily from MBtech Group GmbH & Co. KGaA
(MBtech Group). MBtech Group develops, integrates and tests
components, systems, modules and vehicles worldwide.
In 2015, the associated company BAIC Motor acquired a 35%
interest in the fully consolidated Mercedes-Benz Leasing Co.,
Ltd. (MBLC) in the context of a capital increase. Daimler
continues to be the main shareholder with an interest of 65%.
Joint ventures
Significant sales of goods and services took place with Fujian
Benz Automotive Co., Ltd. (FBAC), as well as with Mercedes-
Benz Trucks Vostok 000, a joint venture established with
Kamaz PAO, another of the Group's associated companies.
The Mercedes-Benz Trucks Vostok (MBTV) and Fuso Kamaz
Trucks Rus (FKTR) joint ventures, which had previously operated
separately, were merged in 2015 as Mercedes-Benz Trucks
Vostok (MBTV). MBTV was renamed into DAIMLER KAMAZ
RUS OOO (DK RUS) on January 21, 2016.
In connection with its 45% equity interest in Toll Collect GmbH,
Daimler has issued guarantees which are not shown in
table 7 E.88 (€100 million at December 31, 2015 and at
December 31, 2014).
Joint operations
Joint operations primarily relate to significant business trans-
actions with Beijing Mercedes-Benz Sales Service Co., Ltd.
(BMBS), which provides advisory and other services relating
to marketing, sales and distribution in the Chinese market.
839
Average net assets
2,700
618
2014
In millions of euros
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services¹
Mercedes-Benz Cars
17,045
17,114
7,974
9,313
1,479
1,742
906
982
8,859
7,154
36,263
36,305
Equity method investments²
Assets and liabilities from income taxes³
Other corporate items and eliminations³
Net assets Daimler Group
770
3,772
Note 13 provides details of the business operations of the
significant associated companies and joint ventures, as
well as significant transactions in the years 2015 and 2014.
Western Europe
2015
74
Other corporate items
-153
-1,039
Eliminations
50
42
Group EBIT
13,186
Amortization of capitalized
borrowing costs²
-10
-9
Interest income
170
145
Interest expense
-602
-715
Profit before income taxes
12,744
equity-method investments'
10,173
Other income from
Remeasurement of the
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E.85
Reconciliation to Group figures
In millions of euros
Total of segments' profit (EBIT)
Result from the disposal of the
2015
2014
13,215
9,997
1,006
718
28
10,752
Reconciliations
Reconciliations of the total segment amounts to the respective
items included in the consolidated financial statements are
shown in table 7 E.85.
In 2014, the line item other corporate items comprises
expenses of €600 million in connection with the ongoing EU
Commission antitrust proceedings concerning European
commercial vehicle manufacturers as well as further expenses
in connection with legal proceedings. This line item also
includes expenses of €212 million from the hedging of the Tesla
share price and income of €88 million from the sale of the
Tesla shares, as well as expenses of €118 million from the
measurement of the RRPSH put option.
Revenue and non-current assets by region
Revenue from external customers and non-current assets
by region are shown in table 7 E.86.
investment in RRPSH
Equity-method investments
investment in Tesla
2014
Total of segments' assets
187,042
Unallocated financial liabilities
and liabilities from pensions and
similar obligations4
Other corporate items and eliminations
Group liabilities
5,672
9,661
-18,101
-16,407
162,542
145,051
1 Mainly comprises the Group's proportionate share of profits and losses
of BAIC Motor.
2 Amortization of capitalized borrowing costs is not considered in the
internal performance measure "EBIT” but is included in cost of sales.
3 Mainly comprises the carrying amount of the investment in BAIC Motor.
4 Industrial business.
E.86
Revenue and non-current assets by region
In millions of euros
Revenue
Non-current assets
2015
2014
47
213,991
283
174,688
Carrying amount of
equity-method investments³
772
678
Income tax assets4
3,338
4,028
Unallocated financial assets
(including liquidity) and
assets from pensions and
similar obligations4
16,110
13,886
Other corporate items and eliminations
-17,045
-15,999
Group assets
217,166
189,635
Total of segments' liabilities
Income tax liabilities4
151,750
100.00
Contributions to plan assets
E.88
10
2
2
39. Additional information
German Corporate Governance Code
The Board of Management and the Supervisory Board
of Daimler AG have issued a declaration pursuant to
Section 161 of the German Stock Corporation Act (AktG)
and have made it permanent available to their shareholders
on Daimler's website at : http://www.daimler.com/
documents/company/corporate-governance/declarations/
daimler-declaration-en-12-2015.pdf.
Third-party companies
At December 31, 2015, the Group was a shareholder of the
companies included in table 7 E.91 that meet the criteria
of a significant third-party company as defined by the German
Corporate Governance Code
Information on investments
The statement of investments of Daimler AG pursuant to
Sections 285 and 313 of the German Commercial Code (HGB)
is presented in table 7 E.92. In prior years, for information
regarding equity and earnings, values from local financial state-
ments were generally used. As of the financial statements for
the year under review, IFRS values are used for fully consolidated
companies. The change to IFRS values allows a better com-
parison of the values. Information on equity and earnings and
information on investments pursuant to Section 285 No. 11
fourth part of the Sentence and/or Section 313 Subsection 2
No. 4 Sentence 2 of the HGB is omitted pursuant to Section
286 Subsection 3 Sentence No. 1 and/or Section 313
Subsection 2 No. 4 Sentence 3 of the HGB to the extent that
such information is of minor relevance for a fair presentation
of the profitability, liquidity and capital resources, and financial
position of Daimler AG. In addition, the statement of invest-
ments indicates which consolidated companies make use of
the exemption pursuant to Section 264 Subsection 3 of the
HGB and/or Section 264b of the HGB (footnote 5). The consoli-
dated financial statements of Daimler AG release those
subsidiaries from the requirements that would otherwise apply.
Wirtschaftsprüfungsgesellschaft
E.91
Third-party companies
Name of the company
Headquarters of the company
Equity interest (in %)¹
Total equity (in millions of euros) 4
Net profit (in millions of euros)4
10
4
12
54
Wirtschaftsprüfungsgesellschaft
4
In millions of euros
2015
2014
Audit of financial statements
25
24
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
10
10
Other attestation services
16
14
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Tax consulting
thereof KPMG AG
1
1
Other services
11
thereof KPMG AG
Accountant fees
44
Renault SA2 Company Ltd.³
Footnote
I. Consolidated subsidiaries
Auto Testing Company, Inc.
AutoGravity Corporation
Banco Mercedes-Benz do Brasil S.A.
Belerofonte Empreendimentos Imobiliários Ltda.
Brooklands Estates Management Limited
Wilmington, USA
Wilmington, USA
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
100.00
Portland, USA
84
24
100.00
Gaffney, USA
Alpha 1 OHG
Freightliner Custom Chassis Corporation
GlobeSherpa Inc.
100.00
(loss) in
millions of €
Nissan Motor
of €
Equity
in millions
Boulogne-Billancourt,
Tokyo,
France
3.1
Japan
3.1
24,476
37,491
1,890
3,300
1 As of December 31, 2015.
2 Based on IFRS consolidated financial statements
for the year ended December 31, 2014.
3 Based on national consolidated financial statements
for the year ended March 31, 2015.
4 Excluding non-controlling interests.
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 273
E.92
Statement of investments of Daimler AG
Name of the Company
Domicile, Country
Capital
share
in %1
Net income
In 2015 and 2014, the Group made contributions of
€1,902 million and €3,121 million to its external funds
to cover pension and other post-employment benefits.
See also Note 22 for further information.
E.90
The annual audit fees are for the audit of the consolidated
financial statements and the company financial statements
of Daimler AG and the subsidiaries included in the Group's
consolidated financial statements.
2,922
2,093
69
28
884
726
51
16
Joint ventures
497
646
91
134
158
195
8
6
Joint operations
31
25
281
thereof BBAC
221
65
764
Transactions with related parties
Sales of goods
Purchases of goods
and services
and services
and other income
and other expense
2015
In millions of euros
2014
2015
Receivables
2014
At December 31,
2015
2014
Payables
At December 31,
2015
2014
Associated companies
3,192
2,433
367
316
936
96
Fees for other attestation services include in particular the
review of the interim IFRS financial statements (2015:
€5 million; 2014: €5 million), the audit of the internal control
system (2015: €3 million; 2014: €3 million), as well as project-
related reviews connected with the annual financial statements
and performed in the context of the introduction and further
development of IT systems (2015: €6 million; 2014: €5 million).
47
35
6.2
Short-term variable remuneration
Mid-term variable remuneration
Variable remuneration with
a long-term incentive effect
21.1
20.7
Post-employment benefits (service cost)
Termination benefits
3.5
2.8
51.2
43.7
Remuneration of the Supervisory Board
3.5
3.6
54.7
47.3
272
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
38. Principal accountant fees
The shareholders of Daimler AG elected KPMG AG Wirt-
schaftsprüfungsgesellschaft as the external auditor
at the Annual Shareholders' Meeting held on April 1, 2015.
Table 7 E.90 shows the fees paid for services provided by
KPMG AG Wirtschaftsprüfungsgesellschaft and the companies
of the worldwide KPMG group.
8.8
44
5.8
8.2
22
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 271
Board members
Throughout the world, the Group has business relationships with
numerous entities that are customers and/or suppliers of
the Group. Those customers and/or suppliers include companies
that have a connection with some of the members of the
Board of Management or of the Supervisory Board and close
family members of these board members of Daimler AG
or its subsidiaries.
Board of Management and Supervisory Board members and
close family members of these board members may also
purchase goods and services from Daimler AG or its subsidiaries
as customers. When such business relationships exist,
transactions are concluded on the basis of customary market
conditions.
See Note 37 for information on the remuneration of board
members.
No advance payments or loans were made to members
of the Board of Management or to the members of the
Supervisory Board of Daimler AG.
The payments made in 2015 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €15.5 million (2014: €16.8 million). The pension provisions
for former members of the Board of Management and their
survivors amounted to €235.2 million as of December 31, 2015
(2014: €263.0 million).
Information regarding the remuneration of the members
of the Board of Management and of the Supervisory
Board is disclosed on an individual basis in the Remuneration
Report, which is part of the Management Report.
Management Report from page 122
E.89
37. Remuneration of the members of the Board
of Management and the Supervisory Board
Remuneration granted to the members of the Board
of Management and the Supervisory Board who were active
as of December 31, 2015, affected net profit for the year
ended December 31 as shown in table 71 E.89.
Expenses for variable remuneration with long-term incentive
effect, as shown in table 7 E.89, result from the ongoing
measurement at fair value at each balance sheet date of all rights
granted and not yet due under the Performance Phantom
Share Plans (PPSP). In 2015, the active members of the Board
of Management were granted 147,170 (2014: 153,912) phantom
shares in connection with the PPSP; the fair value of these
phantom shares at the grant date was €12.3 million (2014:
€10.1 million). According to Section 314 Subsection 1 Number 6a
of the German Commercial Code (HGB) the overall remu-
neration granted to the members of the Board of Management,
excluding service cost resulting from entitlements to post-
employment benefits, amounted to €38.8 million (2014: €29.9
million). See Note 21 for additional information on share-
based payment of the members of the Board of Management.
The members of the Supervisory Board are solely granted
short-term benefits for their board and committee activities,
except for remuneration and other benefits paid to those
members representing the employees in accordance with their
contracts of employment. No remuneration was paid for services
provided personally beyond board and committee activities,
in particular for advisory or agency services, in 2015 or 2014.
Remuneration of the members of the Board of Management
and the Supervisory Board
In millions of euros
Fixed remuneration
2015
2014
Remuneration of the Board of Management
9.1
8.7
Singapore, Singapore
Bremen, Germany
Mercedes-Benz USA, LLC
11
93
100.00
Mem Martins, Portugal
Mercedes-Benz Portugal, S.A.
15
28
15
73
Warsaw, Poland
Mercedes-Benz Polska Sp. z o.O.
100.00
Port-Marly, France
100.00
Salzburg, Austria
100.00
100.00
Ninove, Belgium
Mercedes-Benz Renting, S.A.
100.00
100.00
Rome, Italy
100.00
Centurion, South Africa
100.00
Madrid, Spain
100.00
Alcobendas, Spain
Milton Keynes, United Kingdom
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Mercedes-Benz Retail, S.A.
Mercedes-Benz Retail Group UK Limited
100.00
Wilmington, USA
Mercedes-Benz Research & Development North America, Inc.
Mercedes-Benz Romania S.R.L.
Bucharest, Romania
10
100.00
Mercedes-Benz Molsheim S.A.S.
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
Mercedes-Benz Minibus GmbH
100.00
Milan, Italy
Mercedes-Benz Milano S.p.A.
11
Dortmund, Germany
16
Mexico City, Mexico
3
-
0.00
Wilmington, USA
65
231
100.00
43
100.00
Stuttgart, Germany
Auckland, New Zealand
15
31
207
100.00
Utrecht, Netherlands
Mercedes-Benz Paris SAS
-
Mercedes-Benz Österreich GmbH
Mercedes-Benz New Zealand Ltd
Mercedes-Benz Nederland B.V.
100.00
Molsheim, France
5,6
5,6
4
100.00
Mercedes-Benz Ninove N.V.
100.00
100.00
Moscow, Russian Federation
Warsaw, Poland
Mercedes-Benz Ubezpieczenia Sp. z o.o.
89
223
100.00
Vance, USA
155
100.00
933
100.00
Istanbul, Turkey
Nijkerk, Netherlands
45
116
51.00
Taipei, Taiwan
66.91
Mercedes-Benz U.S. International, Inc.
Mercedes-Benz UK Limited
100.00
100.00
Herblay, France
Genas, France
Mercedes-Benz V.I. Paris Ile de France SAS
Mercedes-Benz V.I. Lyon SAS
100.00
Vendeville, France
Milton Keynes, United Kingdom
Mercedes-Benz V.I. Lille SAS
136
230
100.00
Wilmington, USA
15
61
236
15
Mercedes-Benz Russia AO
Mercedes-Benz Türk A.S.
Mercedes-Benz Taiwan Ltd.
100.00
Petaling Jaya, Malaysia
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Servizi Assicurativi Italia S.p.A.
100.00
Alcobendas, Spain
100.00
Bucharest, Romania
Rome, Italy
130
47
100.00
Schlieren, Switzerland
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Service Leasing S.R.L.
Mercedes-Benz Schweiz AG
120
100.00
156
Mercedes-Benz Technical Center Nederland B.V.
100.00
Istanbul, Turkey
15
27
62
100.00
Malmö, Sweden
Mercedes-Benz Sverige AB
15
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
109
100.00
Pretoria, South Africa
Mercedes-Benz South Africa Ltd
100.00
Sosnowiec, Poland
Mercedes-Benz Sosnowiec Sp. z o.o.
100.00
540
100.00
Kecskemét, Hungary
Mercedes-Benz Master Owner Trust
Mercedes-Benz Italia S.p.A.
Mercedes-Benz Japan Co., Ltd.
Mercedes-Benz Korea Limited
Mercedes-Benz Leasing (Thailand) Co., Ltd.
Mercedes-Benz Leasing Co., Ltd.
Rome, Italy
100.00
350
28
Footnote
15
100.00
528
123
Seoul, South Korea
51.00
182
72
Tokyo, Japan
Bangkok, Thailand
Net income
(loss) in
millions of €
in %1
47
Mercedes-Benz Insurance Broker S.R.L.
Mercedes-Benz Insurance Services Nederland B.V.
Mercedes-Benz Insurance Services Taiwan Ltd.
Voluntari, Romania
100.00
Utrecht, Netherlands
of €
100.00
100.00
Name of the Company
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
277
Domicile, Country
Capital
share
Equity
in millions
Taipei, Taiwan
212
100.00
65.00
Warsaw, Poland
100.00
15
15
15
Taipei, Taiwan
100.00
100.00
Stuttgart, Germany
5,6
Ludwigsfelde, Germany
100.00
41
5,6
Luxembourg, Luxembourg
90.00
100.00
Beijing, China
Budapest, Hungary
Bucharest, Romania
Mercedes-Benz Leasing do Brasil Arrendamento
Mercantil S.A.
Barueri, Brazil
100.00
Mercedes-Benz Lyon S.A.S.
Mercedes-Benz Leasing GmbH
Mercedes-Benz Leasing Hrvatska d.o.o.
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing Kft.
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Leasing Taiwan Ltd.
Mercedes-Benz Leasing Treuhand GmbH
Mercedes-Benz Ludwigsfelde GmbH
100.00
Mercedes-Benz Luxembourg S.A.
Mercedes-Benz Manhattan, Inc.
Stuttgart, Germany
100.00
511
5,6
Zagreb, Croatia
100.00
Mercedes-Benz Malaysia Sdn. Bhd.
Mercedes-Benz Mexico, S. de R.L. de C.V.
100.00
10
15
Mercedes-Benz Financial Services Taiwan Ltd.
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services USA LLC
Taipei, Taiwan
100.00
15
35
Milton Keynes, United Kingdom
692
146
15
Farmington Hills, USA
100.00
2,413
419
100.00
15
115
Centurion, South Africa
Mercedes-Benz Manufacturing Hungary Kft.
100.00
Bangkok, Thailand
Mercedes-Benz Manufacturing (Thailand) Limited
100.00
Wilmington, USA
130
100.00
150
Kuala Lumpur, Malaysia
85.00
15
Mercedes-Benz Financial Services Slovakia s.r.o.
Mercedes-Benz Financial Services South Africa (Pty) Ltd
Bratislava, Slovakia
75.00
51.00
Pune, India
Mercedes-Benz Finans Danmark A/S
Mercedes-Benz Finans Sverige AB
Copenhagen, Denmark
Montigny-le-Bretonneux, France
100.00
321
54
15
Gent, Belgium
100.00
Mercedes-Benz India Private Limited
Brackley, United Kingdom
-151
-44
Kifissia, Greece
100.00
Hong Kong, China
100.00
77
60.00
Mercedes-Benz Finansal Kiralama Türk A.S.
Mercedes-Benz Hong Kong Limited
Mercedes-Benz Grand Prix Ltd.
100.00
Malmö, Sweden
100.00
Istanbul, Turkey
100.00
Mercedes-Benz Finansman Türk A.S.
Istanbul, Turkey
Mercedes-Benz Hellas S.A.
100.00
37
15
Mercedes-Benz Försäljnings AB
Malmö, Sweden
100.00
Mercedes-Benz France S.A.S.
Mercedes-Benz Gent N.V.
182
Lyon, France
100.00
96.00
Biomechanics GbR
PDB Partnership for Dummy Technology and
Omuta Unso Co., Ltd.
National Automobile Industry Company Ltd.
MFTB Taiwan Co., Ltd.
MercedesService Card GmbH & Co. KG
Mercedes-Benz Starmark I/S
Mercedes-Benz Lackzentrum Dresden GmbH
Mercedes-Benz Buses Central Asia GmbH
MBtech Verwaltungs-GmbH
INPRO Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH
Institut für angewandte Systemtechnik Bremen GmbH
Juffali Industrial Products Company
Laureus World Sports Awards Limited
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
H2 Mobility Deutschland GmbH & Co. KG
Reva SAS
Footnote
of €
in %1
Equity
in millions
Capital
share
Domicile, Country
281
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
7
San Francisco, USA
18.09
33.33
Net income
(loss) in
millions of €
smart-BRABUS GmbH
Berlin, Germany
18.37
100.00
Ohmuta, Japan
26.00
Jeddah, Saudi Arabia
33.40
Taipei, Taiwan
51.00
Kleinostheim, Germany
50.00
Vejle, Denmark
36.00
Dresden, Germany
50.00
Stuttgart, Germany
35.00
Sindelfingen, Germany
50.00
London, United Kingdom
14
0.00
Jeddah, Saudi Arabia
26.25
Bremen, Germany
Berlin, Germany
20.00
2.90
Berlin, Germany
Budapest, Hungary
6
20.00
26.57
Okayamashi, Japan
8
-23
67
25.00
Varese, Italy
35.00
Sindelfingen, Germany
43.83
Yokohama, Japan
Russian Federation
15.00
50.00
Naberezhnye Chelny,
Kawasaki, Japan
5.52
Munich, Germany
17.13
Berlin, Germany
9
862
3,023
49.00
Beijing, China
10.08
Beijing, China
21.67
Jakarta, Indonesia
18.00
32.28
Esslingen am Neckar, Germany
50.00
40.82
51.00
33.00
25.00
Mexico City, Mexico
Wiesbaden, Germany
Burnaby, Canada
Beijing, China
Weissach, Germany
Communication Technologies - EICT GmbH
EvoBus Hungária Kereskedelmi Kft.
Gottapark, Inc.
European Center for Information and
Esslinger Wohnungsbau GmbH
Cooperation Manufacturing Plant Aguascalientes,
S.A.P.I de C.V.
COBUS Industries GmbH
Beijing Mercedes-Benz Sales Service Co., Ltd.
BDF IP Holdings Ltd.
VI. Joint operations, joint ventures and associated companies accounted for at (amortized) cost²
Abgaszentrum der Automobilindustrie GbR
Rijswijk, Netherlands
Seattle, USA
Jakarta, Indonesia
Zonar Systems, Inc.
There Holding B.V.
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
20.94
9, 16
2,003
33.33
Berlin, Germany
P.T. Krama Yudha Tiga Berlian Motors
Niederzier, Germany
4
Kirchheim unter Teck, Germany
100.00
São Paulo, Brazil
11, 13
30
1,211
100.00
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
100.00
6
Ulm, Germany
100.00
Horsholm, Denmark
100.00
Wilmington, USA
6
100.00
6
100.00
Stuttgart, Germany
100.00
Dubai, United Arab Emirates.
100.00
Stuttgart, Germany
100.00
Fujian Benz Automotive Co., Ltd.
STAR TRANSMISSION SRL
STARKOM d.o.o.
Cugir, Romania
Maribor, Slovenia
100.00
100.00
T.O.C. (Schweiz) AG
Schlieren, Switzerland
51.00
Vermögensverwaltungsgesellschaft Daimler Atlanta mbH
Woking Motors Limited
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
100.00
Stuttgart, Germany
100.00
Footnote
6
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
III. Joint operations accounted for using the equity method
AFCC Automotive Fuel Cell Cooperation Corp.
Le Port, France
North America Fuel Systems Remanufacturing LLC
IV. Joint ventures accounted for using the equity method
Beijing Foton Daimler Automotive Co., Ltd
Daimler Kamaz Trucks Holding GmbH
Enbase Power GmbH
Stuttgart, Germany
100.00
Legend Investments Ltd.
Fünfte Vermögensverwaltungsgesellschaft Zeus mbH
Gemini-Tur Excursoes Passagens e Turismo Ltda.
6
100.00
Berlin, Germany
100.00
Milton Keynes, United Kingdom
3
50.00
Beijing, China
Daimler Culture Development Co., Ltd.
Daimler Financial Services UK Trustees Ltd.
Daimler Group Services Berlin GmbH
100.00
Mexico City, Mexico
Daimler Compra y Manufactura Mexico S. de R.L. de C.V.
Name of the Company
100.00
Daimler Commercial Vehicles MENA FZE
100.00
Nairobi, Kenya
Daimler Commercial Vehicles Africa Ltd.
7
100.00
Ludwigsfelde, Germany
Daimler AG & Co. Anlagenverwaltung OHG
100.00
Stuttgart, Germany
71.30
Buenos Aires, Argentina
Dubai, United Arab Emirates
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
279
Domicile, Country
EvoBus Russland 000
Elfte Vermögensverwaltungsgesellschaft DVB mbH
EvoBus Reunion S. A.
Deméter Empreendimentos Imobiliários Ltda.
Deutsche Accumotive Verwaltungs-GmbH
Daimler Unterstützungskasse GmbH
Daimler UK Trustees Limited
Daimler UK Share Trustee Ltd.
Daimler TSS GmbH
Daimler Starmark A/S
Daimler Purchasing Coordination Corp.
Daimler Protics GmbH
Daimler Mitarbeiter Wohnfinanz GmbH
Daimler Middle East & Levant FZE
6
100.00
Böblingen, Germany
100.00
Wilmington, USA
Daimler International Assignment Services USA, LLC
Daimler IT Retail GmbH
100.00
San Sebastián de los Reyes, Spain
Daimler Group Services Madrid, S.A.U.
Footnote
Net income
(loss) in
millions of €
of €
in %1
Equity
in millions
Capital
share
Lapland Car Test Aktiebolag
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
MV Agusta Motor S.P.A.
MBtech Group GmbH & Co. KGaA
100.00
Logan Township, USA
100.00
Tramagal, Portugal
267
1,869
89.29
Kawasaki, Japan
100.00
Toronto, Canada
100.00
Farmington Hills, USA
15
100.00
100.00
Wavre, Belgium
100.00
Braine-l'Alleud, Belgium
100.00
Warsaw, Poland
21
86
70.00
Ho Chi Minh City, Vietnam
5,6
100.00
Wemmel, Belgium
Leinfelden-Echterdingen, Germany
100.00
52
100.00
Austin, USA
100.00
Lima, Peru
100.00
Bogor, Indonesia
100.00
Bogor, Indonesia
100.00
Jakarta, Indonesia
100.00
Paris, France
100.00
Kirchheim unter Teck, Germany
100.00
Mechelen, Belgium
100.00
Erembodegem, Belgium
100.00
Barcelona, Spain
100.00
Jacksonville, USA
100.00
Farmington Hills, USA
5,6
5,6
100.00
Stuttgart, Germany
Stuttgart, Germany
21
5,6
Stuttgart, Germany
Sandown Motor Holdings (Pty) Ltd
RideScout LLC
Renting del Pacífico S.A.C.
P.T. Star Engines Indonesia
P.T. Mercedes-Benz Indonesia
P.T. Mercedes-Benz Distribution Indonesia
ogotrac S.A.S.
NuCellSys GmbH
N.V. Mercedes-Benz Mechelen
N.V. Mercedes-Benz Aalst
myTaxi Iberia SL
MVSA COMPANY, INC.
SelecTrucks of America LLC
Multistate LIHTC Holdings III Limited Partnership
Mitsubishi Fuso Truck of America, Inc.
moovel GmbH
Mitsubishi Fuso Truck and Bus Corporation
MITSUBISHI FUSO TRUCK EUROPE -
Sociedade Europeia de Automóveis, S.A.
MFTA Canada, Inc.
Mercedes-Benz Wholesale Receivables LLC
Mercedes-Benz Wemmel N.V.
Mercedes-Benz Wavre S.A.
Mercedes-Benz Waterloo S.A.
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz V.I. Toulouse SAS
Mercedes-Benz Versicherung AG
Mercedes-Benz Vertrieb NFZ GmbH
Mercedes-Benz Vertrieb PKW GmbH
Mercedes-Benz Vietnam Ltd.
Name of the Company
E❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
278
moovel Group GmbH
SelecTrucks of Toronto, Inc.
Setra of North America, Inc.
Silver Arrow S.A.
6
100.00
Stuttgart, Germany
100.00
Fenouillet, France
Footnote
millions of €
of €
in %1
(loss) in
in millions
Net income
Equity
Capital
share
Domicile, Country
6353 Sunset Boulevard, Inc.
3218095 Nova Scotia Company
Western Star Trucks Sales, Inc
Trona Cogeneration Corporation
Tróia Empreendimentos Imobiliários Ltda
Thomas Built Buses, Inc.
Thomas Built Buses of Canada Limited
Sumperská správa majetku k.s.
Sterling Truck Corporation
Starexport Trading S.A.
smart Vertriebs gmbh
smart France S.A.S.
100.00
-14
Bryanston, South Africa
62.62
SelecTrucks of Houston Wholesale LLC
50.00
Houston, USA
SelecTrucks of Houston LLC
50.00
McDonough, USA
26.00
Garcia, Mexico
9
-28
218
50.00
Houston, USA
Fuzhou, China
Munich, Germany
50.00
Vienna, Austria
8
14
745
50.00
Beijing, China
9
13
39
50.00
25.10
50.00
SelecTrucks of Omaha LLC
Council Bluffs, USA
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
KAMAZ PAO
FUSO LAND TRANSPORT & Co. Ltd.
Flixbus GmbH
Blacklane GmbH
Beijing Benz Automotive Co., Ltd.
BAIC Motor Corporation Ltd.
V. Associated companies accounted for using the equity method
10
72
562
45.00
Berlin, Germany
Toll Collect GmbH
45.00
Berlin, Germany
Toll Collect GbR
60.00
Stuttgart, Germany
TASIAP GmbH
8
-26
253
50.00
Shenzhen, China
Shenzhen BYD Daimler New Technology Co., Ltd.
50.00
Kentwood, USA
50.00
Hildesheim, Germany
50.10
100.00
Prague, Czech Republic
-2
-602
100.00
Portland, USA
4
222
100.00
São Bernardo do Campo, Brazil
5,6
-
100.00
Berlin, Germany
18
71
100.00
Hambach, France
3
0.00
Luxembourg, Luxembourg
100.00
Oriskany, USA
100.00
Mississauga, Canada
100.00
Portland, USA
Calgary, Canada
99.50
100.00
100.00
Burnaby, Canada
6
SelecTrucks of Atlanta LLC
Polomex, S.A. de C.V.
Berlin, Germany
6
100.00
Stuttgart, Germany
100.00
São Paulo, Brazil
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Brefa Bremsen- und Fahrzeugdienst AG (in Liquidation)
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Cúspide GmbH
AEG do Brasil Produtos Eletricos e Eletronicos Ltda.
AEG Olympia Office GmbH
II. Unconsolidated subsidiaries²
100.00
Wilmington, USA
100.00
Halifax, Canada
14
-1
100.00
Portland, USA
100.00
Farmington Hills, USA
100.00
São Paulo, Brazil
19
58
High Point, USA
Cairo, Egypt
EM-motive GmbH
Sebes, Romania
Share price at year-end (€)
From the stock exchanges
3,960
5,479
9,631
-9,722
222
-696 -1,100 3,285 -1,274
-6,537 -8,864 -6,829 -2,709
5,842 11,506 3,855 2,274
989 1,452 4,842
8,544
-313
-7,551
5,432
14,337 7,146 -786 10,961
-15,857 26,479 -4,812 -8,950
2,396 -25,204 -2,915 1,057
2,679 7,637 -3,915 2,706
Free cash flow of the industrial business
financing activities
investing activities
operating activities
Cash provided by (used for)
5,075
5,384
3,653 4,158 4,827 4,975 4,844
3,364 3,575 4,067 4,368 4,999
4,247 3,559 2,423
4,146 3,023 3,264
5,874
7,169
Depreciation and amortization
plant and equipment
Investments in property,
From the statements of cash flows 1
2015
2014
2013
2012
2011
2010
Average shares outstanding (in millions)
Average diluted shares outstanding
(in millions)
46.80
66.50
26.70
A3
A3
A3
Baa1
Moody's
A-
A-
A-
A-
BBB+
BBB+
BBB+
A-
BBB+
2009
BBB
Credit rating, long-term
Ratings
1,067.1 1,069.1 1,069.8 1,069.8
1,051.5 1,067.1
1,003.8
1,027.3 1,047.3 959.9
1,022.1 1,037.8 957.7 1,003.8 1,050.8 1,066.0 1,066.8 1,068.8 1,069.8 1,069.8
77.58
68.97
62.90
41.32
33.92
50.73
37.23
Standard & Poor's
A3
2008
2006
Shareholders' equity2
Total assets 2
Other current assets
Liquid assets
Inventories
Other non-current assets²
Leased equipment
Property, plant and equipment
From the statements of financial position
3.25
3,477
2,621
2.45
2,346 2,349 2,407
2.20
2.20 2.25
1,971
1.85
0
0.00
0.60
2.00
1.50
Dividend per share (€)
556
1,928
1,542
Total dividend
7.87
6.51
6.40
6.02
5.31
4.28
thereof share capital
Equity ratio Group (%) 2
Equity ratio industrial business (%) 2
Non-current liabilities²
287
F | FURTHER INFORMATION | TEN YEAR SUMMARY
€ amounts in millions
9,861 12,912 3,106 7,285 11,938 11,981
48,584 39,187 31,466 31,778 29,338 31,426
89,836 48,866 52,182 47,538 53,139 54,855 58,716 59,108 66,974 77,081
11,508 13,834 16,953 18,580
37,521 40,648 40,779 41,644
49,456 44,738 51,940 65,016 66,047 78,077 85,461
90,452 47,998 47,313
44.2
40.8
43.4
39.8
46.4
45.8
42.6
2007
42.7
22.1
24.3
22.7
26.3
26.5
24.7
24.3
26.9
43.7
27.1
16.5
32,747 14,650 16,087 15,965 17,593 19,180 20,599 21,779 23,182 24,322
36,949 19,638 18,672 18,532 19,925 22,811 26,058 28,160 33,050 38,942
67,507 39,686 42,077 40,044 41,309 45,023 48,947 48,138 56,258 62,055
18,396 14,086 16,805 12,845 14,544 17,081 17,720 17,349 20,864 23,760
8,409 15,631 6,912 9,800 10,903 9,576 10,996 11,053 9,667 9,936
53,626 31,403 31,672 31,635 31,556 34,461 38,742 42,039 46,614 58,151
217,634 135,094 132,225 128,821 135,830 148,132 163,062 168,518 189,635 217,166
37,346 38,230 32,730 31,827 37,953 41,337 39,330 43,363 44,584 54,624
2,673 2,766 2,768 3,045 3,058 3,060 3,063 3,069 3,070 3,070
Net assets (average) 2
Net liquidity industrial business
Current liabilities²
23.6
-2.63
A3
A3
100.00
Gaggenau, Germany
100.00
6
Mercedes-Benz Group Services Philippines, Inc.
Cebu City, Philippines
99.99
Mercedes-Benz Hungária Kft.
Budapest, Hungary
100.00
Mercedes-Benz Museum GmbH
Stuttgart, Germany
100.00
6
Mercedes-Benz Parts Manufacturing & Services Ltd.
Shanghai, China
100.00
Mercedes-Benz Project Consult GmbH
Stuttgart, Germany
100.00
6
Mercedes-Benz Research and
Bangalore, India
100.00
39
15
12
Development India Private Limited
Mercedes-Benz Slovakia s.r.o.
Raaba, Austria
Mercedes-Benz GastroService GmbH
Mercedes-Benz G GmbH
100.00
Moscow, Russian Federation
100.00
Stuttgart, Germany
100.00
São Paulo, Brazil
100.00
Arvidsjaur, Sweden
100.00
Milton Keynes, United Kingdom
100.00
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
Neuhausen auf den Fildern, Germany
100.00
6
Bratislava, Slovakia
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekte Baden-Baden und Dresden OHG
Mercedes-Benz Consulting GmbH
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Düsseldorf, Germany
100.00
3,7
São Bernardo do Campo, Brazil
100.00
Stuttgart, Germany
100.00
6
Maastricht, Netherlands
100.00
Mercedes-Benz Egypt S.A.E.
Cairo, Egypt
Mercedes-Benz Adm. Consorcios Ltda.
A3
51.00
Mercedes-Benz Srbija i Crna Gora d.o.o.
100.00
100.00
2 For the year 2012, the figures have been adjusted, primarily for effects arising from application of the amended version of IAS 19.
3 For the year 2013, the figure has been adjusted due to reclassifications within functional costs.
277,771 271,704 274,330 258,628 258,120 267,274 274,605 275,384 279,857 284,562
1 Until August 3, 2007, including Chrysler.
Average annual number of employees
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low) A (low)
DBRS
A-
A-
A-
A-
A-
BBB+
BBB+
A-
A-
BBB+
Fitch
A3
A3
100.00
100.00
Lisbon, Portugal
51.00
Mercedes-Benz Venezuela S.A.
Milton Keynes, United Kingdom
100.00
Novi Beograd, Serbia
100.00
Valencia, Venezuela
100.00
Mercedes-Benz Vertriebsgesellschaft mbH
MercedesService Card Beteiligungsgesellschaft mbH
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
Monarch Cars (Tamworth) Ltd.
Montajes y Estampaciones Metálicas, S.L.
mytapp Portugal Unipessoal LDA
mytaxi Austria GmbH
Mercedes-Benz Solihull Ltd.
MYTAXI ITALIA S.R.L.
myTaxi Swiss GmbH
Vienna, Austria
Milan, Italy
Warsaw, Poland
Zurich, Switzerland
Berlin, Germany
100.00
Kleinostheim, Germany
51.00
Toyama, Japan
100.00
Milton Keynes, United Kingdom
100.00
Esparraguera, Spain
MYTAXI POLSKA SPÓLKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
100.00
1.40
3.64
11 Financial statements according to local GAAP November 1, 2013 October 31, 2014
10 Financial statements according to local GAAP September 1, 2014 - August 31, 2015
9 Financial statements according to IFRS
8 Financial statements according to local GAAP 2014
7 Daimler AG is unlimited partner
6 Profit and loss transfer agreement with Daimler AG (direct or indirect)
5 Qualification for Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB)
4 In liquidation
3 Control due to economic circumstances
they are not consolidated and not accounted for using the equity method.
2 As the impact of these companies is not material for the consolidated financial statements,
1 Share pursuant to Section 16 of the German Stock Corporation Act (AktG)
Munich, Germany
Sannoseki, Japan
Most, Czech Republic
Toyo Kotsu Co., Ltd.
tiramizoo GmbH
STARCAM s.r.o.
28.20
18.46
51.00
50.00
Bottrop, Germany
34.00
12 Financial statements according to local GAAP 2015
13 Control of the investment of the assets. No consolidation of the assets due to the contractual situation.
14 Joint control due to economic circumstances
15 Preconsolidating company
284
F❘ FURTHER INFORMATION | CONTENTS 283
292
Daimler Worldwide
290
List of Charts and Tables
289
Index
288
Glossary
286
Cunac, France
Ten Year Summary
Independent Auditors' Report
284
Responsibility Statement
F❘ Further Information
to €3.25 per share (prior year: €2.45). With the highest dividend payout in Daimler's
history we expressing our confidence about the ongoing course of business.
At the Annual Shareholders' Meeting on April 6, 2016, the Board of Management
and the Supervisory Board will therefore propose an increase in the dividend
sound dividend policy
We pursue a sustainable and
3.80
Daimler recognizes its proportionate share of the profits or losses of There Holding B.V. (THBV) with a one-month time lag.
16 The equity figure relates to the date of acquisition of HERE of December 4, 2015.
285
F❘ FURTHER INFORMATION | RESPONSIBILITY STATEMENT
20.00
33.51
280
E | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital
share
Equity
Net income
in millions
(loss) in
in %1
of €
millions of €
Ruth Verwaltungsgesellschaft mbH
SelecTrucks Comércio de Veículos Ltda
Siebte Vermögensverwaltungsgesellschaft DVB mbH
Star Assembly SRL
Star Egypt For Import LLC
Stuttgart, Germany
100.00
Mauá, Brazil
100.00
Stuttgart, Germany
100.00
100.00
Chur, Switzerland
88.89
Bicester, United Kingdom
myTaxi UG
myTaxi UK Ltd.
myTaxi USA Inc.
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
PABCO Co., Ltd.
Porcher & Meffert Grundstücksgesellschaft mbH & Co.
Stuttgart OHG
PT Fuso Trucks Indonesia
R.T.C. Management Company Limited
Ring Garage AG Chur
100.00
Hamburg, Germany
Ingolstadt, Germany
100.00
100.00
Washington D.C., USA
100.00
Stuttgart, Germany
100.00
Ebina, Japan
100.00
Schönefeld, Germany
100.00
Jakarta, Indonesia
100.00
London, United Kingdom
Responsibility Statement
S.W1765
Stuttgart, February 16, 2016
Net profit (loss) 2
as % of net assets (RONA) 2
Net operating profit (loss) 2
and extraordinary items²
Profit (loss) before income taxes
8.8
13,186
10,752
8.3
10,815
9.2
8,820
7.7
1,804
3,783
1,148
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group, and the
Group management report, which has been combined with
the management report for DAG, includes a fair review
of the development and performance of the business and
the position of the Group, together with a description
of the principal opportunities and risks associated with the
expected development of the Group.
5.0
Operating margin (%) 2
4,992
EBIT2
715
thereof capitalized
3,733
Research and development expenditure ³
1,2
Personnel expenses
99,222 101,569 98,469 78,924 97,761 106,540 114,297 117,982 129,872 149,467
23,574 20,256 15,066 13,928 16,454 17,424 18,002 18,753 19,607 20,949
4,148 4,442 4,181 4,849 5,634 5,644 5,489 5,680 6,564
990 1,387 1,285
1,373 1,460
1,465 1,284
8,710 2,730 -1,513 7,274 8,755
8.6
2.8
-1.9
7.4
8.2
Revenue
Net profit (loss) per share (€) 2
4,902 9,181 2,795
4,032 4,123 1,370
8.3
10.5
4.4
1,414
1.41
Diluted net profit (loss) per share (€) 2
7.87
6.51
6.40
6.02
5.32
4.28
-2.63
3.83
8,711
7,290
3.66
6,830 8,720
4,674
21.6
18.8
9,007
12,744
10,173
7,678
10,139
9,173
22.6
8,116
7,302
19.6
19.9
-2,298
6,628 8,449
-2,102 5,120 6,240
-6.6
17.5
-2,644
3,985
6,029
2015
Auditor's Responsibility
2013
F❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
Independent Auditor's Report
285
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial state-
ments of Daimler AG, Stuttgart, and its subsidiaries, which
comprise the consolidated statement of income, the consolidated
statement of comprehensive income/loss, the consolidated
statement of financial position, the consolidated statement
of cash flows, the consolidated statement of changes in equity
and notes to the consolidated financial statements for
the financial year from January 1 to December 31, 2015.
Board of Management's Responsibility for the
Consolidated Financial Statements
The Board of Management of Daimler AG is responsible
for the preparation of these consolidated financial statements.
This responsibility includes preparing these consolidated
financial statements in accordance with International Financial
Reporting Standards (IFRSS) as adopted by the EU, and the
supplementary requirements of German commercial law pursuant
to Section 315a (1) of the German Commercial Code (HGB),
to give a true and fair view of the net assets, financial position
and results of operations of the group in accordance with
these requirements. The Board of Management is also respon-
sible for the internal controls that the Board of Management
determines are necessary to enable the preparation of con-
solidated financial statements that are free from material
misstatement, whether due to fraud or error.
6
Our responsibility is to express an opinion on these conso-
lidated financial statements based on our audit. We conducted
our audit in accordance with Section 317 HGB and the German
generally accepted standards for the audit of financial state-
ments promulgated by the German Institute of Public Auditors
(IDW) as well as in supplementary compliance with International
Standards on Auditing (ISA). Accordingly, we are required to
comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the consoli-
dated financial statements are free from material misstatement.
An audit involves performing audit procedures to obtain audit
evidence about the amounts and disclosures in the consoli-
dated financial statements. The selection of audit procedures
depends on the auditor's professional judgment. This includes
the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error.
In assessing those risks, the auditor considers the internal
control system relevant to the entity's preparation of the con-
solidated financial statements that give a true and fair view.
The aim of this is to plan and perform audit procedures that
are appropriate in the given circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the
Group's internal control system. An audit also includes eval-
uating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board
of Management, as well as evaluating the overall presentation
of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Thomas Weber
Audit Opinion
In our opinion, based on the findings of our audit, the con-
solidated financial statements comply in all material respects
with IFRSS as adopted by the EU and the additional require-
ments of German commercial law pursuant to Section 315a (1)
HGB and give a true and fair view of the net assets and finan-
cial position of the Group as at December 31, 2015 as well
as the results of operations for the financial year then ended,
in accordance with these requirements.
Report on the Combined Management Report
We have audited the accompanying group management
report of Daimler AG, which is combined with the management
report of the company for the financial year from January 1
to December 31, 2015. The Board of Management of Daimler AG
is responsible for the preparation of this combined manage-
ment report in compliance with the applicable requirements
of German commercial law pursuant to Section 315a (1) HGB.
We are required to conduct our audit in accordance with
Section 317 (2) HGB and the German generally accepted stan-
dards for the audit of financial statements promulgated by
the German Institute of Public Auditors (IDW). Accordingly, we
are required to plan and perform the audit of the combined
management report to obtain reasonable assurance about
whether the combined management report is consistent
with the consolidated financial statements and the audit find-
ings, and as a whole provides a suitable view of the Group's
position and suitably presents the opportunities and risks
of future development.
Pursuant to Section 322 (3) sentence 1 HGB, we state
that our audit of the combined management report has not
led to any reservations.
In our opinion, based on the findings of our audit of the
consolidated financial statements and the combined management
report, the combined management report is consistent with
the consolidated financial statements, and as a whole provides
a suitable view of the Group's position and suitably presents
the opportunities and risks of future development.
Stuttgart, February 16, 2016
KPMG AG Wirtschaftsprüfungsgesellschaft
Becker
2014
Wirtschaftsprüfer
Dr. Thümler
Wirtschaftsprüfer
286
Pursuant to Section 322 (3) sentence 1 HGB, we state that
our audit of the consolidated financial statements has not led
to any reservations.
T W
Bodo Uebber
Bodo сессо
2012
2011
2010
2009
2008
2007
2006
From the statements of income
€ amounts in millions
F.01
Die
Dieter Zetsche
A
крафовитур
Renata Jungo Brüngger
Golfgang Bernhard
воданд
Wolfgang Bernhard
Au Paro
Ola Källenius
Wilfried Past
Wilfried Porth
Ten Year Summary
Huberten DZ
Hubertus Troska
F❘ FURTHER INFORMATION | TEN YEAR SUMMARY
308
425
388
1,362
25,956
6,227
298
135
Employees
3,216
14,012
38
2
-
2,248
9
1,147
1,455
Australia/Oceania
Production locations
Sales outlets
250
2
Revenue (in millions of euros)
Africa
Sales outlets
2
Production locations
1
1
Sales outlets
1
Revenue (in millions of euros)
1,424
1,181
201
92
308
Employees
4,202
603
160
84
195
Asia
Production locations
3
168
D.01 Governance structure
10,482
80
B.07 Unit sales structure of Mercedes-Benz Cars
82
B.08 Unit sales structure of Daimler Trucks
82
Daimler and the Capital Market
B.09
Market share
83
B.10 Consolidated revenue by region
B.06 Global automotive markets
84
84
A.01 Development of Daimler's share price and
of major indices
62
A.02 Key figures per share
62
A.03 Daimler share price (high/low), 2015
63
Profitability
A.04 Share price index
B.11 Revenue by division
63
Front cover
79
91ff, 244f
89 f
85ff, 198f
91 f, 101, 236 ff
76 f
85ff, 102 f
98
122ff
84, 160, 166, 171, 174, 177, 216
87
78, 86 f, 160, 166, 171, 174, 177
265ff
99 ff, 104, 232 ff
62 ff, 135 f
66ff
105 ff
Facts and Figures 2015 (enclosed brochure)
81ff, 160, 166, 171, 174
290
F❘ FURTHER INFORMATION | LIST OF CHARTS AND TABLES
List of Charts and Tables
Cover
Economic Conditions and
Business Development
Key Figures
Front cover
Divisions
Front cover
B.05 Economic growth
89 f
A.05 Key figures for Daimler shares
64
B.12 EBIT by segment
89
B.20
Reconciliation to net operating profit
A.09 Strategic focus areas
67
B.21
Value Added
A.10 Investment in property, plant and equipment
2016 - 2017
B.22 Net assets (average)
71
88
A.11
71
FR
B.23 Net assets of the Daimler Group at year-end
0 % % % 80%
89
89
90
90
2016-2017
71
Investment in property, plant and equipment
A.12 Research and development expenditure
Dividend per share
B.19
Objectives and Strategy
A.06 Stock-exchange data for Daimler shares
64
A.07 Shareholder structure as of December 31, 2015
By type of shareholder
B.13 Development of earnings
64
पु
B.14 Special items affecting EBIT
A.08 Shareholder structure as of December 31, 2015
By region
64
पु
B.15 Return on Sales
B.16 Return on Equity
B.17 Reconciliation of Group EBIT to profit before
88 80 80 89
85
86
86
87
87
income taxes
87
B.18
Consolidated statement of income
65
185 f, 188 f
185 f
285
Goodwill
Goodwill represents the excess of the cost of an acquired
business over the fair values assigned to the separately
identifiable assets acquired and liabilities assumed.
Hybrid drive
Hybrid drive systems combine internal-combustion engines
with electric motors, which can be operated separately
or together depending on the type of vehicle and driving
situation.
IFRS - International Financial Reporting Standards
The IFRS are a set of standards and interpretations for compa-
nies' external accounting and financial reporting developed
by an independent private-sector committee, the International
Accounting Standards Board (IASB).
Integrity Code
The "Integrity Code" has been in effect since November 2012.
It defines the principles of behavior and guidelines for everyday
conduct that are applicable at Daimler. Fairness, responsibility
and compliance with legislation are key principles in this context.
INTELLIGENT DRIVE
With this new technology from Mercedes-Benz, thanks to
improved environment sensors, intelligent assistance systems
analyze complex situations and recognize potential dangers
in road traffic even better.
Index
The amount for which an asset or liability could be exchanged
in an arm's length transaction between knowledgeable and
willing parties who are independent of each other.
F | FURTHER INFORMATION | GLOSSARY | INDEX
Lithium-ion batteries
They are at the heart of future electric drive systems.
Compared with conventional batteries, lithium-ion batteries
are considerably smaller and feature significantly higher
power density, short charging times and long lives.
NEDC - New European Driving Cycle
A measuring method used in Europe for the objective
assessment of vehicles' fuel consumption.
Net assets
Net assets represent the capital employed by the Group
and the industrial divisions. The relevant capital basis
for Daimler Financial Services is equity capital.
Net operating profit
page 90
Net operating profit is the relevant parameter for measuring
the Group's operating performance after taxes.
Rating
289
Fair value
Accounting and valuation method for shareholdings
in associated companies and joint ventures.
pages 85 ff
288
F | FURTHER INFORMATION | GLOSSARY
Glossary
BlueEFFICIENCY
Efficiency packages for saving fuel. They include measures
taken inside engines, bodywork weight reductions, tires with
low roll resistance, aerodynamic improvements, the ECO
start-stop function etc. As a result, fuel consumption can be
reduced by more than 20%.
BLUETEC
A combination of inner-engine measures to reduce emissions
and treat exhaust gases. It improves diesel engines' efficiency
for cars and commercial vehicles by optimizing their combustion,
and reduces their emissions with SCR catalysts.
BRIC
This abbreviation stands for the four countries of Brazil,
Russia, India and China.
Compliance
By the term compliance, we understand adherence to all laws,
rules, regulations and voluntary commitments, as well as the
related internal guidelines and policies in connection with all
activities of the Daimler Group.
Consolidated Group
The consolidated Group is the total of all those companies that
are included in the consolidated financial statements.
Corporate governance
The term corporate governance applies to the proper manage-
ment and supervision of a company. The structure of corporate
governance at Daimler AG is determined by Germany's Stock
Corporation Act (AktG), Codetermination Act (MitbestG) and
capital-market legislation.
Cost of capital
The cost of capital is the product of the average amount
of capital employed and the cost-of-capital rate. The cost-of-
capital rate is derived from the investors' required rate
of return.
page 78
CSR - corporate social responsibility
A collective term for the social responsibility assumed by com-
panies, including economic, environmental and social aspects.
EBIT
Earnings before interest and taxes are the measure
of operating profit before taxes.
Equity method
An assessment of a company's creditworthiness issued
by a rating agency.
Liquidity and Capital Resources
ROE - return on equity
ROS - return on sales
Remuneration system
Revenue
ROE return on equity
ROS return on sales
Segment reporting
Shareholders' equity
Shares
Strategy
Sustainability
Unit sales
Value added
64, 194
6ff, 111
65, 96 f
95 f, 156
92ff, 103 f, 201
137
Ratings
108 ff
215ff
51, 180ff
63,89
85ff
85 ff
77
88, 103, 219
110
204 ff, 208
108 ff
87, 103, 219 ff
185 f
Profitability
Portfolio changes
Pension obligations
The profitability of the industrial divisions is measured
by return on sales. ROS is defined as the quotient of EBIT
and revenue.
Value added
Value added indicates the extent to which operating profit
exceeds the cost of capital. When value added is positive,
return on net assets is higher than the cost of capital.
pages 88 f
Value at risk
This measures the potential future loss (related to market
value) for a given portfolio in a certain period and for which
there is a certain probability that it will not be exceeded.
Annual Shareholders' Meeting
Autonomous driving
Bonds
Capital expenditure
Cash flows
Change of control
CO₂ reductions
Compliance
Consolidated Group
Corporate governance
Dividend
Earnings per share (EPS)
EBIT
Efficiency programs
Financial income
Fuel cells
Goodwill
Hybrid drive
Income taxes
Independent auditors' report
Integrity
Integrity Code
Investor Relations
Liabilities
Net assets
Net profit
The profitability of Daimler Financial Services is measured
by return on equity. ROE is defined as the quotient of EBIT
and shareholders' equity.
1,816
A.13 Research and development expenditure
B.24 Condensed consolidated statement
286
292
B.57 Supervisory Board remuneration
134
292
F | FURTHER INFORMATION | DAIMLER WORLDWIDE
Daimler Worldwide
F.02
Mercedes-Benz
Cars
Daimler Worldwide
Sales
Daimler
Buses
Organization
Automotive
Businesses
Daimler
Financial
Services
Daimler Mercedes-Benz
Trucks
Europe
Production locations
Sales outlets
Revenue (in millions of euros)
34,214
Vans
10,815
F.02
B.56 Payments made
201
long-term performance-related remuneration
125
E.05 Consolidated Statement of Changes in Equity
202
B.51 PPSP 2015
125
B.52 Board of Management remuneration in 2015
B.53 Taxable non-cash benefits
127
Tables E.06 to E.92 in the Notes to the Consolidated
Financial Statements
132
page 197
127
B.54 Individual entitlements, service costs
and present values for members of the
Further Information
Board of Management
129
B.55 Benefits granted
130
F.01
Ten Year Summary
and other fringe benefits
8,852
Employees
121,321
22,893
398
472
1,825
Latin America (excluding Mexico)
Production locations
1
2
1
3
7,347
Sales outlets
-
634
3
Revenue (in millions of euros)
Employees
867
1,702
538
728
361
-
9,637
293
1,377
38,164
20,136
11
7
3
7
4,022
5,879
2,824
16,027
NAFTA
Production locations
Sales outlets
Revenue (in millions of euros)
Employees
1
14
1
1
1,525
4
19,646
17,066
200
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
E.04
B.50 Performance Phantom Share Plan (PPSP) -
8g
99
100
B.58 Assessment of probability of occurrence
and possible impact
138
Daimler AG
B.59 Industry and business risks and opportunities
B.60 Company-specific risks and opportunities
B.61 Financial risks and opportunities
141
146
149
Risk and Opportunity Report
B.36
104
The Divisions
C.01
Mercedes-Benz Cars
160
Sustainability
C.02
C.03
Unit sales by Mercedes-Benz Cars
Daimler Trucks
160
Condensed statement of income of Daimler AG 103
B.37 Balance sheet structure of Daimler AG
B.34 Consolidated statement of financial position
B.35 Balance sheet structure Daimler Group
Financial Position
291
of cash flows
92
Corporate Profile
B.01 Consolidated revenue by division
B.02 Daimler Group structure 2015
B.03
Calculation of value added
B.04 Cost of capital
74 75 77 78
B.25 Free cash flow of the industrial business
B.26 Net liquidity of the industrial business
B.27 Net debt of the Daimler Group
93
94
94
B.28 Other financial obligations (nominal amounts)
B.29 Investment in property, plant and equipment
B.30 Investment in property, plant and equipment
by division
94
95
95
B.31 Refinancing instruments
97
B.32
Benchmark issuances
B.33 Credit ratings
97
98
F❘ FURTHER INFORMATION | LIST OF CHARTS AND TABLES
166
71
B.38 Research and development expenditure
B.39 Research and development expenditure
C.04 Unit sales by Daimler Trucks
Corporate Governance
Revenue (in millions of euros)
189
Remuneration Report
B.45 Remuneration structure
123
Consolidated Financial Statements
B.46
Maximum limit of total remuneration 2015
123
118
B.47 Base salary - fixed
B.48 Annual bonus - short- and medium-term
E.01 Consolidated Statement of Income
E.02 Consolidated Statement of Comprehensive
198
performance-related remuneration
124
Income/Loss
199
B.49 Annual bonus in 2015
124
E.03
123
B.44 Donations and sponsoring in 2015
115
B.43 Employees by division
166
C.05 Mercedes-Benz Vans
171
by division
107
C.06
B.40 Road to emission-free mobility
108
C.07
Unit sales by Mercedes-Benz Vans
Daimler Buses
171
174
B.41 Average CO2 emissions of the new car fleet
C.08
Unit sales by Daimler Buses
174
of Mercedes-Benz Cars in the EU
112
C.09
Daimler Financial Services
177
B.42 Employees at 12/31/2015 by region
115
107
1,723
29
7,326
208
The aforementioned publications can be requested from:
Daimler AG, Investor Relations, HPC 0324
70546 Stuttgart, Germany
Phone +49 711 17 92262
Fax +49 711 17 92287
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Daimler Corporate Brochure - Ready to start up
(German, English)
70546 Stuttgart
Interim Reports for the 1st, 2nd and 3rd quarters
(German, English)
Responsibility - Focus Sustainability 2015
German, English)
37
234
Employees
494
237
91
196
Notes: Unconsolidated revenue of each division (segment revenue).
Internet, Information, Addresses
Information on the Internet
34
Special information on our shares and earnings development
can be found in the "Investor Relations" section of our website.
daimler.com It includes the Group's annual and interim
reports and the company financial statements of Daimler AG.
You can also find topical reports, presentations, an overview
of various key figures, information on our share price and other
services.
Responsibility
DAIMLER
Ready to start up
DAIMLER
Focus Sustainability 2015
(German, English)
Annual Report
Publications for our shareholders:
daimler.com/investors
Perfectly shaped: The aesthetic new SUV look
Sensual purity and modern aesthetic appeal paired with a
classic off-road look - that's the best way to describe the
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
S.MB 1286
"The E-Class is the core of the Mercedes-Benz
brand; it has always set the standard for business-
class vehicles. Now it's continuing this tradition
with numerous top-class innovations."
youtube.com/
watch?v=5Ax45-TDVbM
The SUV campaign uses imposing
images and famous people to present
the SUV family from Mercedes-Benz.
Off the beaten track
BODY Control ensures enhanced comfort on any terrain.
The models also feature state-of-the-art assistance
systems that underscore the high safety standards at
Mercedes-Benz.
Even safer and more comfortable and efficient
The new Mercedes-Benz SUVs set standards in terms of
technology as well. For example, an extensive package of
measures has significantly increased the energy efficien-
cy and performance of the SUV models. Depending on
a driver's personal preferences, the DYNAMIC SELECT
driving program provides individualized agility while AIR
design philosophy of the new generation of Mercedes-Benz
SUVs. The models' dynamic design elicits emotion, while
also making use of purist shapes. Our design concept also
employs precise lines and surfaces that convey a positive
sense of tension. This concept has also been applied to the
vehicle's sporty interior, which features high-quality mate-
rials and pioneering infotainment systems in the luxurious
atmosphere typical of the Mercedes-Benz brand.
The innovative GLE coupe expands our range of SUVs to
include a particularly sporty version that combines the
dynamics of a coupe with the bold appearance of an SUV.
The GLE will be followed in the spring of 2016 by our
flagship SUV - the GLS (formerly GL). With a total of six
models in all segments, Mercedes-Benz has a wider range
of SUVS in its portfolio than any other premium brand.
daimler.com/products/
"G" for Geländewagen (German for off-road vehicle) is
our designation for off-road expertise, and this has been
the case ever since we developed the G-Class - the first
off-road model with the three-pointed star. The DNA of the
original G-Class can still be found in all Mercedes-Benz
Are you ready for countless
adventures? The new generation
of SUVs from Mercedes-Benz
makes a thrilling impression with
a broad range of off-road features,
a new design and extraordinary
handling, comfort and safety.
Daimler stands for successful brands, outstanding passenger cars
and commercial vehicles and customized mobility and financial
services. Our product offensive has put us on course for profitable
growth, and we are already the leader in many vehicle segments.
We are also accelerating the pace with new fascinating models and
trailblazing technologies, which ensure that we continue to delight
our loyal customers while inspiring new customers to purchase
our products.
products for all lifestyles
Superior on any terrain:
"There's good reason for us to focus strongly on SUVs,
as these are fascinating automobiles in a market that
continues to expand around the world."
29
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
A perfect ride on any terrain
Mercedes-Benz SUV offensive
31
SUVs, which also bear the "G" designation in their names.
Following the compact GLA, the new GLC, the GLE (for-
merly the M-Class) and the new G-Class have been taking
the world by storm on and off the road since 2015.
The new Mercedes-Benz E-Class
The benefits are clear, as drivers are warned more quickly
of potential dangers, such as a sudden traffic jam around
a bend, a broken-down vehicle at the side of the road, a
construction site ahead, or heavy rain and icy roads. The
new E-Class acts as a both a receiver and a transmitter
here, as warnings are conveyed either automatically or by
the driver to the back-end system.
With the brand-new E-Class, the
inventor of the automobile is present-
ing the most advanced production
vehicle in the world. The business
sedan is the leader in terms of safety,
efficiency and vehicle intelligence.
Smartphone integration links the customer's lifestyle
with the features of a modern business sedan
The workplace and private sphere have now been joined
by the new E-Class as a third realm in which smartphones
play a special role. New technologies are enabling wireless
antenna connections and smartphone recharging. Drivers
or passengers can place their phone onto an inductive port,
which then connects the phone to the multimedia system
via the near field communication (NFC) protocol. Another
advantage is that NFC transforms smartphones into digital
car keys.
Best performance in
every segment
Experience the world of
Daimler products.
Back in 2013, Mercedes-Benz became the first manufac-
turer to introduce car-to-car connectivity in series-produc-
tion models through a retrofit solution. This has now been
followed by the launch of the world's first fully integrated
car-to-x solution as standard equipment in the new E-Class.
The cell-phone-supported exchange of information with
other vehicles enables the driver to "see around corners"
or "through obstacles," so to speak.
Car-to-x communication expands horizons
PRE-SAFE® Sound emits a brief noise via the vehicle's
sound system when the risk of a collision is identified.
This signal can trigger a protective reflex in the inner ear
and thus prepare the occupants' ears for the noise from
the anticipated collision.
PRE-SAFE® Impulse Side and PRE-SAFE® Sound
The PRE-SAFE® Impulse Side function is part of the PLUS
driver assistance package. If an imminent side collision is
detected, the function moves the driver or front passenger
as far away from the danger zone as possible.
If the driver deliberately or instinctively initiates an evasive
maneuver in a dangerous situation, this new feature sup-
ports the required steering movements and then helps the
driver straighten the vehicle's course again.
Pedestrian protection: Evasive Steering Assist
In the fast lane with Active Lane Change Assist
This new radar and camera-based subsystem of DRIVE
PILOT provides support during lane changes on multi-lane
roads. The driver simply engages the turn-indicator light for
at least two seconds, after which the new E-Class checks
the lane selected by the driver and then switches to it after
determining that it's safe to do so.
Another new development for reducing stress is the Speed
Limit Pilot, which can independently adjust the vehicle's
speed in line with speed limit signs detected by its camera
or speed limit information stored in the navigation system.
DRIVE PILOT automatically keeps the car at a proper
distance behind other vehicles on highways and secondary
roads, and for the first time - it can also follow vehicles
at a speed of up to 210 km/h. The driver thus no longer
needs to operate the brake or gas pedal and also receives
steering support from Steering Pilot - even in slight curves.
Another unique feature is that the system can continue
to intervene actively at speeds up to 130 km/h by taking
account of surrounding vehicles and parallel structures,
even if there are no visible lane markings. DRIVE PILOT
therefore makes driving easier, especially in traffic jams
or on congested roads.
DRIVE PILOT: a further technological step toward
autonomous driving
Highlights of the optional driver assistance package
include proven and extensively refined systems such as
Active Lane Keeping Assist, Active Blind Spot Assist
and PRE-SAFE® PLUS - as well as numerous groundbreak-
ing innovations that are bringing autonomous driving
within reach.
The new Mercedes-Benz E-Class comes with Active Brake
Assist as standard equipment. This system is able to warn
the driver of an impending crash situation, provide support
during emergency braking and, if necessary, automatically
brake the vehicle itself. It can detect other vehicles as well
as pedestrians crossing in front of the car. Also included as
standard are ATTENTION ASSIST with adjustable sensitivity
and Crosswind Assist.
Less stress and greater safety and driving pleasure:
next-generation driver-assistance package
As part of the Daimler hybrid offensive, we will also offer
a third-generation plug-in hybrid E-Class version that will
enable a 30-kilometer all-electric range for locally emission-
free driving. The combination of the four-cylinder gasoline
engine and the electric motor boasts the performance of a
sports car but consumes less fuel than a compact vehicle.
Lightweight engineering and record-setting aerodynamics
also do their part to ensure that the E-Class sets new stan-
dards for efficiency. pages 12f
Trailblazing engines open up new dimensions
of efficiency and dynamic performance
The engine variants for the business sedan are also ex-
tremely innovative. The new E-Class will be available with
either a four-cylinder gasoline engine or a new four-cylinder
diesel engine at market launch. Despite their smaller dis-
placement, the new diesel engines put more power on
the road, with fuel consumption that only a few and much
smaller cars have previously offered.
design with brilliant visual features underscores the fasci-
nating operation concept. Among other things, animations
make it easier for users to understand and thus directly
experience the assistance systems.
The new E-Class also features familiar control formats such
as a touchpad with controller, the LINGUATRONIC voice
command system and, for the first time, on/off switches
for certain driver assistance systems. An intelligent graphic
World premiere: infotainment control with swiping
The new E-Class also marks the premiere of touch-sensitive
controls on a steering wheel. These controls respond to
horizontal and vertical swiping movements - just like on
a smartphone. As a result, the entire infotainment system
can be operated intuitively and ergonomically, without the
driver having to take his or her hands off the steering wheel.
The E-Class interior equipped with the COMAND Online
system features two brilliant next-generation high-
resolution displays, each with a 12.3-inch screen diago-
nal. The displays seem to merge to form a widescreen
dashboard a central element that emphasizes the hori-
zontal alignment of the interior, consisting of a display
with virtual instruments in the driver's field of vision and
a display above the center console. The system also offers
a choice of three screen design styles: "Classic," "Sport"
and "Progressive."
Trendsetter in its segment: the digital
widescreen dashboard
The exterior of the new E-Class makes a stylish and power-
ful impression right from the start. The vehicle's doors.
can be opened using a smartphone as a key. The interior of
the new E-Class impressively combines the elegance of the
luxury class with cultivated sportiness. Its spacious interior
architecture and the finest materials and technologies
send a message of next-level design and set a benchmark
for today's business sedans.
The most intelligent business sedan
of our model offensive - and it demonstrates once again that
Daimler is pursuing the right strategy. Indeed, we are attracting
more customers than ever before with the youngest and broadest
product range in our history. We have completely renewed our
model lineup in the growing SUV market, and we are also setting
the standard for modern luxury, connectivity and autonomous
driving with our new Mercedes-Benz E-Class. In addition, we occupy
an outstanding position with our trucks, vans and buses, not least
due to their outstanding safety and efficiency. With the help of
exemplary products and technologies, we plan to stay ahead of the
competition also in the future.
working hand in hand
Premium in all sizes
The more dynamic the market, the greater the amount
of flexibility we need in production in order to respond
to changed customer requirements at short notice, for
example. The key to success here can be found in the link
between the physical and the digital world, in line with the
vision of Industry 4.0. The new Mercedes-Benz E-Class
impressively shows how the networking of the value chain
has become a reality at Daimler. The vehicle was shaped
by digital technology for everything from development to
production to sales.
Digital production: greater variety
and improved ergonomics
Digital prototypes: greater precision,
shorter innovation cycles, faster development
The outstanding characteristics of the Concept IAA are the
result of an almost completely digital development pro-
cess. State-of-the-art CAD techniques were used to create
300 digital prototypes; after that, the most aerodynamic
version was implemented in the record time of ten months.
The opportunities offered by digital prototyping for series
development are clear, as digital simulations and the use of
big data will, in the future, bring individual vehicles and the
newest technologies to life more quickly and economically
than ever before.
The Concept IAA (Intelligent Aerodynamic Automobile)
lets drivers experience the future at the push of a button.
Sophisticated improvements to the vehicle body have
transformed the four-door coupe into an aerodynamic
world champion with a drag coefficient (Cd value) of
only 0.19. This innovative concept from Daimler would
never have been possible without the digital networking
of various levels of the value chain.
The visionary Mercedes-Benz Concept IAA combines previously unattained
aerodynamic properties with a thrilling design - and the "Digital Transformer"
also shows just how far Daimler has progressed in terms of digitized vehicle
development and production.
Intelligent networking of humans
and machines
Concept IAA
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 23
"By linking our trucks with the cloud, we are enabling them
to become part of a complete logistics network."
Daimler Trucks is systematically continuing its activities
in the field of networked vehicle services through its
investment in Zonar Systems, a leading developer and
supplier of logistics, telematics and connectivity solutions.
In the future, Daimler Trucks North America and Zonar
will jointly launch applications for the US market. The two
companies have already been cooperating for five years
through the Virtual Technician and Detroit Connect. They
also share the same vision of providing optimal transport
logistics through intelligent networking.
Daimler Trucks promotes truck
connectivity with its investment
in Zonar Systems
A minor fault - or something more serious?
A flashing Check Engine light can mean
different things. Truckers in the United
States and Canada can rely on the
Virtual Technician from Detroit Connect
to determine the cause of the warning,
as a real-time recording of the engine's
technical data is sent to the Detroit Cus-
tomer Service Center for analysis whenever the
Check Engine light flashes. A recommendation
for action is sent to the driver, who can then
take the necessary steps. This remote diagno-
sis system reduces service-related downtime
and maintenance costs. Fleet operators thus
benefit from as much as 20 percent lower
repair costs and six percent higher vehicle
operation times.
Virtual Technician supports truckers
Detroit Connect enables trucks, drivers, fleet operators
and repair centers to share data. Detroit Connect is the
first telematics solution in the United States and Canada
that uses an onboard diagnosis and fleet monitoring
system to identify the causes of fault messages while the
vehicle is in motion. This telematics system from Daimler
Trucks has already been installed in over 150,000 vehicles.
Detroit Connect: remote diagnosis
and fleet monitoring
In addition, more than 5,000 FleetBoard customers are
now able to utilize the system's comprehensive app portfo-
lio for Android and iOS smartphones and tablet computers.
As a result, logistics company clients, fleet dispatchers,
drivers and subcontractors are all able to call up the data
they need quickly and flexibly, and from any location.
FleetBoard: efficient truck fleet management
Daimler FleetBoard is Europe's leading telematics service
provider for trucks, vans and buses. The system delivers
data about drivers, fleets and transport jobs. It also con-
nects logistics systems and creates transparency at all
levels. FleetBoard can determine the location of a vehicle
at any time, for example, and can also send and receive
data to and from vehicles. It also supports drivers on the
road with easily operated technical systems. The result is
optimized truck capacity utilization, lower fuel consump-
tion, greater vehicle availability and better economy than
ever before. FleetBoard is installed in nearly half of all new
trucks in Europe today.
Telematics services offer truck fleet operators many ben-
efits, such as reduced fuel consumption, greater vehicle
availability and lower maintenance costs. Daimler Trucks
offers the right solution for each market with FleetBoard
in Europe, South Africa and Brazil, and Detroit Connect in
the United States and Canada. Both systems have already
gained the trust of customers and serve as an ideal foun-
dation for developments in the future.
The telematics systems Detroit Connect and FleetBoard
are milestones on the way into the future, and for many
long-distance drivers are already part of their regular
working lives.
-
In addition to normal cargo, connected
trucks also deliver – “on the side”.
valuable data on the vehicle, its load,
the traffic and the weather. If this data
is sent to the cloud, it opens up com-
pletely new possibilities – for everyone
involved in logistics.
Digital services make for
optimal transport logistics
Detroit Connect & FleetBoard
The smart factory is a core component of the process
of digitization at our company. In the digital factory
of the future, production equipment, components and
the surrounding environment will all be linked with one
another and with the Internet. Even more importantly,
people and robots will work together, making production
more flexible and resource-efficient and ensuring even
more ergonomic conditions for employees.
The brand-new Mercedes-Benz GLS SUV is one of the highlights
10
TecFactory: new technologies for series production
Daimler is also setting the pace for innovative manufactur-
ing concepts. Such new processes are extensively tested
in the TecFactory before they make their way into series
production operations. For example, we were the first
automaker to recognize the potential offered by sensitive
robots and we are now testing such machines in the
Mercedes-Benz TecFactory.
Leading
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
26
"We use innovative formats
to promote a networked
job culture and a startup
mentality at the company."
udio
04137
Hackathons in India and Germany were supplemented
in the summer of 2015 by a hackathon staged by
Mercedes-Benz Research & Development North America
(MBRDNA) in one of the world's most creative regions -
Silicon Valley. More than 100 programmers and creative
individuals attended the three-day event for developing
apps that can be used in Mercedes-Benz vehicles.
MBRDNA headquarters is part of the global R&D network
and has been benefiting since 1995 from the inventive
spirit and unique culture of cooperation in Silicon Valley.
Hackathons without borders: across regions,
divisions and disciplines
DigitalLife Day: freedom for creativity and networking
The DigitalLife Day series of events enables us to conduct
a continual dialogue about the digital transformation and
prepare our employees for the future. In an effort to further
promote the spirit of innovation at the company, we are
combining our strengths as a global corporation even more
extensively with the qualities typical of a startup. Whether
it's a smartphone app for managing one's personal work-
life balance or the use of interactive data goggles at vehicle
repair centers - the concepts produced at the employee
idea competition during DigitalLife Day 2015 show just how
important inspiration from our workforce is for the success
of the company.
Step by step, we are developing a new digital work culture.
The formats we utilize here include the Daimler Connect
internal social network, discussion forums, idea competi-
tions, workshops and other events.
Daimler is taking the lead in the
digital age as well, and is creating
the conditions required for an agile
and connected organization. This
enables our employees to make full
use of their creativity.
25
25
A global company with
an entrepreneurial spirit
Freedom for developing new ideas
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
Ter Fabry
reduces the amount of strenuous overhead
work the employees have to do.
The "InCarRob" sits in the vehicle and
"With our vision of Industry 4.0, we are digitizing
the entire value creation process - from design
and development to production, sales and service."
State-of-the-art lightweight robots are enabling cooper-
ation between workers and machines - without any
protective barriers between them. The robots use
sensors to scan the immediate area, and they stop their
work whenever a person enters their radius of action.
Sometimes, direct contact between people and robots
is actually part of the system. For example, some robots
need to be tapped or have their arms moved in order to get
them to start working. Staff at the Mercedes-Benz plant
in Untertürkheim are already being assisted by the latest
generation of robots in the series production of dual-clutch
transmissions.
In and out of parking spaces by remote control
with the Remote Parking Pilot
Robots as colleagues: people and machines
This concept will be gradually implemented throughout
the Mercedes-Benz global production network. Numerous
smart-factory elements have also been incorporated into
manufacturing processes since the E-Class production
launch.
The new E-Class also makes another dream come true,
as it can be moved into and out of garages and parking
spaces via a smartphone, thereby making it easier for
occupants to enter and exit the vehicle.
HR innovation - Peninsula project: Mercedes-Benz
Vans benefits from the ideas of entrepreneurs
Since the fall of 2015, entrepreneurial experts have been
working with Daimler employees in a co-working office
in Berlin on the development of future-oriented solutions
for passenger and goods transport by van. At a location
known as the "Peninsula," far away from corporate struc-
tures, people from different professional backgrounds and
with different ways of thinking are cooperating to develop
valuable ideas for Mercedes-Benz Vans.
daimler.com/products/
specials/new-e-class/
Masterpiece of Intelligence
Special on the new E-Class.
MEER PR 5259
is once again significantly extending its lead in terms of efficiency.
Dining Experience Slovena 2015
eating in Fficiency
StreamSpain
9
$3905
With the latest generation of the OM 471 engine, the Mercedes-Benz Actros
reduce driver stress immensely and offer unprecedented
levels of safety and comfort. In addition, the intelligent
E-Class heralds a new era of vehicle digitization and
connectivity."
"Taken together, the pioneering assistance systems
S&W 2132
DAIMLER INNOVATIVE. DIGITAL. LEADING. 33
The built-in intelligence of the new E-Class also
marks a milestone on the road to the self-driving
automobile - for Mercedes-Benz and for the
automotive industry as a whole. Current proof:
As the first series-production vehicle worldwide,
the new E-Class received a permit for autonomous
test drives in everyday traffic in advance of the
CES in Las Vegas. Since January 2016, three pro-
duction sedans (not prototypes) have been operating
on interstate and state highways in Nevada in the
United States.
a test license for autonomously
driving vehicles
Ahead of the competition with
Further cost reductions of up to 4% for fuel and AdBlue
in Mercedes-Benz and Setra coaches.
Other ultramodern assistance systems are available in the
Marco Polo as options. These include Active Parking Assist,
a 360-degree camera, DISTRONIC PLUS proximity cruise
control, the COLLISION PREVENTION ASSIST distance warn-
ing system, Traffic Sign Assist with a wrong-way warning
function, Lane Keeping Assist, Blind Spot Assist, the LED
Intelligent Light System and Adaptive Highbeam Assist.
Additional optional assistance systems
The range of standard equipment in the Marco Polo is
exemplary and includes ATTENTION ASSIST, which detects
signs of driver fatigue, and Crosswind Assist, which can
reduce the negative impact of dangerous wind gusts by
supporting the driver by means of targeted braking - a
unique feature in the compact camper-van segment.
The Marco Polo, which is based on the Mercedes-Benz
V-Class multipurpose vehicle, perfectly combines leisure
and daily use. In addition, a total of 11 assistance systems
ensure a high level of safety with the help of state-of-the-
art radar, cameras and ultrasound sensors based on the
Mercedes-Benz Intelligent Drive concept.
whose technological similarity to Mercedes-Benz pas-
senger cars allows innovative technologies in cars
to be quickly transferred. This is also the case with the
Marco Polo and Marco Polo ACTIVITY models from
Mercedes-Benz Vans.
The Marco Polo is also the first camper van to demonstrate
exceptional occupant protection and installation stability
through participation in a crash test in addition to legally
required safety tests. During a collision at 56 km/h, the
vehicle structure was able to absorb all impact forces with-
out any deformations in the interior. All of the installations
also remained undamaged and the doors of the furniture in
the interior stayed closed.
The Marco Polo: exemplary safety confirmed by TÜV
The compact camper van combines maximum functionality
with style and aesthetic appeal. It also offers a level of
safety above and beyond the legal requirements - a fact
that was confirmed in August 2015, when Mercedes-Benz
Vans was presented with a seal of quality for Occupant
Protection in the Marco Polo by the TÜV Rheinland tech-
nical inspection agency. It is the first and, to date, only
camper van manufacturer to ever receive such an award.
Close cooperation between our automotive divisions and
between those divisions and Daimler Group Research have
given us a considerable edge over our competitors. This in
turn offers a major advantage, especially in terms of vans,
The PRE-SAFE® system familiar from passenger car models
is also available in the Marco Polo. This is the first time
such a system has been offered in the compact camper-van
segment. In the event of an impending collision, the system
ensures that the seat belts and airbags offer the best pos-
sible protection.
Safe feeling as standard: Marco Polo with unique
driver assistance systems
Mercedes-Benz Marco Polo
on track for success
+15%
S.MP 4475
S.MP 4470
The future is already taking shape
Daimler already brings to life today many of the aspects of the mobility of
tomorrow. Our fascinating vehicles, technologies and mobility concepts
perfectly combine the wishes of our customers with the options offered by
the digital world. We at Daimler have already achieved a great deal as we
move into the new era of intelligent mobility - and we still have a lot planned
as well. As a pioneer, we will continue to exploit our innovative capabilities
and the potential offered by further digitization in order to help shape the
future of the automobile at the cutting edge of our industry.
DAIMLER | INNOVATIVE. DIGITAL. LEADING.
39
A lot achieved -
more to come
Safety first: setting the pace and the standards
Our development work on safety systems takes into
account not only future legal requirements but also the
actual situation on roads and highways. This approach has
proven to be very successful, as our assistance systems
in vehicles with the star and those built by other Daimler
brands are virtually synonymous with top-class safety.
revenue growth
to €149.5 billion
+36%
The Marco Polo is extremely successful. Demand
for the camper van continues to rise and the model
has received awards from two trade journals. The
camper van took first place in the readers' choice
competition of AUTO BILD REISEMOBIL magazine
for the "Goldene AUTO BILD Reisemobil 2015"
award, while readers of promobil named it "Compact
Camper Van of the Year" in 2016, as they had in the
previous year.
Daimler already builds the world's safest vehicles - and
we still have plenty of ideas about how to make passenger
and road freight transport even safer in the future.
fuelduel.com/
Daimler's vision of accident-free
Whoever said ecology and economy
don't mix? Daimler is demonstrating
that they do with the latest generation
of the OM 471 engine. Thanks to its
second stage of innovation, the engine
is more efficient than ever before.
Whether it's vans, trucks or buses - economy is the top
priority for freight and passenger transport. Lower fuel
consumption and CO2 emissions are the key factors that
offer economic benefits for our customers - and added
value for society. That's why Daimler has significantly
reduced fuel consumption once again by systematically
optimizing its OM 471 engine.
Squaring the circle: even lower fuel consumption
and emissions despite improved performance
A revolution took place in 2011 in the form of the all-new
OM 471 engine from Mercedes-Benz. With 250,000 units
worldwide, it is the top-selling engine for our heavy-duty
commercial vehicles. Daimler has boosted efficiency even
further in the latest generation of the OM 471 engine,
which now ensures that the Mercedes-Benz Actros and the
premium coaches from Mercedes-Benz and Setra are even
cleaner and more economical, even as their engine output
has increased.
Second innovation stage is
even more efficient
Five output classes with fur-
ther optimized torque, the
second generation of the
X-Pulse fuel injection
system, a patented
exhaust gas recircula-
tion system and an
even more robust, low-
maintenance design -
numerous individual
measures have led to further optimization of the outstand-
ing attributes of the OM 471 heavy-duty engine in its latest
development stage, and operating costs are therefore
lower as well.
Maximum economy in the tough transport business
The progress that's been made is impressive. For example,
fuel consumption in the new-generation OM 471 has again
been considerably reduced – this time by up to 3%. The
average fuel consumption of the Mercedes-Benz Actros is
now as much as 13% lower than in 2011. By comparison,
fuel-saving progress normally amounts to 1.5% per year in
the commercial vehicle industry.
driving promotes the development of
outstanding safety technologies, and
the Marco Polo from Mercedes-Benz
Vans is no exception.
The outstanding fuel consumption offered by the Actros
long-distance truck not only pays off for our customers in
hard cash; it also once again underscores Daimler's tech-
nological expertise and innovative capability.
The Mercedes-Benz Actros proved to be the most efficient
truck in its class in Fuel Duels held with leading European
competitors. A total of 90 semitrailer trucks were driven
for nearly 9 million kilometers in 1,901 Fuel Duels in 22
countries in Europe. The Actros performed outstandingly,
coming out on top in more than 90 percent of the compar-
ative tests, with an average fuel consumption advantage
of 10.3%. At the end of 2015, the Actros began another
round of Fuel Duels with the new-generation OM 471 engine.
Fuel Duels: second round
Further information:
increase in EBIT
"The Mercedes-Benz Actros with the latest generation
of the OM 471 engine is designed for efficiency like
no other long-distance truck before it."
Mercedes-Benz Marco Polo
On the road with a safety pioneer
"Safety is one of the fundamental
brand values at Daimler."
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 37
Significantly more efficient – also in the highly
competitive Fuel Duels
from ongoing business
Stuttgart, February 2016
€3.25
44
CHAIRMAN'S LETTER
Our course for the years ahead is clear: We will further strengthen our core
business, grow worldwide, lead in terms of technology, and push forward
with the digitization of our products and services and along our entire value chain.
For this purpose, we will significantly increase our budget for research and
development and our capital expenditure in the next two years. We will do that
on the basis of sound finances and with the goal of sustainably strengthening
our future competitiveness. We need to safeguard the level of profitability we
have achieved over the long term and generally make the Group more robust.
As you can see, Daimler is moving at high speed in the right direction.
We look forward to continuing this journey with you, our shareholders.
Sincerely yours,
Die t
Dieter Zetsche
A | TO OUR SHAREHOLDERS | CONTENTS 45
We are steadily implementing
our strategy
We have set ourselves the goals of being the leaders in the area of technology
and innovation, of inspiring our customers and of continuing our profitable growth.
We intend to shape the safe and sustainable individual mobility of the future with
outstanding products and services and with pioneering innovations. In this way, we will
create value - for our shareholders, our customers, our employees and society in
general. To achieve that, we are pursuing a globally oriented technology and growth
strategy. We reached some major milestones in the year under review - financial
year 2015 was an overall success. That will be to the benefit also of our shareholders:
through a significantly higher dividend and an attractive share price.
A | To Our Shareholders
The Board of Management
46
Report of the Supervisory Board
48
The Supervisory Board
Highlights of 2015
54
56
Daimler and the Capital Market
62
Objectives and Strategy
66
For our commercial vehicles, a special focus in 2016 is the IAA Commercial
Vehicles Show in Hanover, where we will once again demonstrate our
technology leadership in the areas of connectivity, safety and efficiency.
We will also expand our global presence. Last October, the first of six
international regional centers was opened in Dubai. These centers will enhance
our proximity to customers and allow us to fully utilize the potential of
new growth markets in the future. We will also expand our platform strategy.
For example, we will launch our medium-duty engine family also in the
NAFTA region in 2016.
to €13.8 billion
Against this backdrop, the product offensive at Mercedes-Benz enters the next
phase. With the new E-Class, we have already had the year's most important
premiere. The most intelligent business sedan sets new standards for interior
design and autonomous driving. Another major feature of the year 2016
will be our "Dream Cars." Spread over the year, we will present a whole range
of highly emotive automobiles. In addition, the products that we launched
in 2015 will have their full market impact this year.
All of this success was made possible by our 284,000 employees and their
untiring efforts. On behalf of the entire Board of Management, I would like to
thank them for their excellent work.
proposed dividend
80 cents higher than in the prior year
123 g/km
average CO2 emissions
of cars in EU down by 6 g/km
E
Latest generation of the OM 471 engine
Dea
Thane holders,
CHAIRMAN'S LETTER 41
2015 was an extremely successful year for your company. We achieved a lot.
In Formula 1, for example, we won both the drivers' championship and the
constructors' title. Some people might think, “Great, but you already did that
the year before." That's right. And that's exactly what it's about. Getting
to the top is hard - staying at the top is even harder. But that is our ambition -
in motorsport and in our core business: We want to be in the lead on a
sustained basis.
-
Our numbers show that we have the potential to do that: 2.9 million customers
decided in favor of a vehicle from the Daimler Group last year – an absolute
record. And at 149.5 billion euros, our revenue was higher than ever before
as well. EBIT from the ongoing business increased by 36 percent to
13.8 billion euros. The bottom line is a net profit of 8.7 billion euros. At the
Annual Shareholders' Meeting, the Board of Management and the
Supervisory Board will therefore propose the distribution of the highest
dividend in our company's history.
How did the individual divisions contribute to these outstanding results?
42
CHAIRMAN'S LETTER
Mercedes-Benz Cars played a large part. With sales of more than two million
vehicles, we set our fifth consecutive record for unit sales. This means that
we were once again the world's strongest-growing premium brand. For the first
time, China was the most important market for Mercedes-Benz. Our multitude
of models is the key to this success. The main drivers of the sales growth were
the C-Class, our SUVs and the compact cars. In addition, we achieved our
profitability target of a ten-percent return on sales in 2015.
Daimler Trucks reached a major milestone in 2015 with sales of more than
500,000 vehicles. In regional terms, the development of the truck business
was very varied. The decrease in unit sales in the weak Latin American market
was offset by an exceptionally strong performance in North America.
We underscored our role as the leading truck manufacturer with milestones
in the field of autonomous driving. In Nevada, we received the very first
road approval for a truck driving autonomously. We also tested the first
autonomous series-production truck on a German autobahn.
At Mercedes-Benz Vans, the Sprinter in particular gave us reason to celebrate.
The bestseller not only had its twentieth anniversary in 2015, it also set a
new sales record. Another highlight was the market launch of the Vito in North
and South America. In total, we increased our unit sales of all van models
by nine percent last year.
Daimler Buses performed well in a difficult market environment, although
we did not quite match the unit sales of the previous year. In the future,
we intend to profit from the growth potential of the Indian market, and we have
already charted the course: After a construction period of just two years,
series production started in fall last year at our new bus plant in Chennai.
CHAIRMAN'S LETTER 43
Daimler Financial Services posted record levels of new business and contract
volume. Meanwhile, we finance or lease nearly half of all the vehicles we sell.
There is every indication that 2016 will also be a good year. Although the
world economy is growing only moderately and there are many challenges
ahead of us, the year is an opportunity for further improvement.
DAIMLER | INNOVATIVE. DIGITAL. LEADING. 35
Setting the pace for the most
efficient trucks and buses
Appointed until December 2017
The Supervisory Board was also informed about the preventive
measures taken by the Group in connection with antitrust-law
compliance and about the most important initiatives for the
creation of a future-oriented sales and marketing organization
for Mercedes-Benz Cars. Other items on the agenda were
the development of legislative conditions for the continuous
reduction of CO2 emissions and the ongoing development
of alternative drive systems at Daimler.
After that, the Supervisory Board experienced numerous
of the Group's topics for the future first hand under the heading
of "Objectives and digital transformation." The heads of
specialist departments used market stalls and exhibits to give
the members of the Supervisory Board and the Board of
Management direct insights into new products and technologies,
such as "Industry 4.0," "Transport systems of the future from
Mercedes-Benz Vans" and "Communication in the digital world."
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 51
Subsequently, the Supervisory Board received information
on the strategic goals of Daimler AG and the divisions, as well
as on the stage of their implementation so far. The starting
point was an assessment of the markets and the automotive
environment in the year 2025. The Supervisory Board dealt
in detail with the expected changes in structural conditions and
risks. Important points for discussion included the subjects
of the mobility of the future, connectivity and the digitization
of processes and systems along the entire value chain. After
that, the Supervisory Board discussed the key financial figures
and goals for the Group and the divisions. Other focuses of
the annual strategy meeting were the development of the Chinese
and Brazilian economies and the prospects for Daimler in
those two markets.
During a two-day strategy workshop at the Mercedes-Benz
plant in Sindelfingen in the fall of 2015, the Supervisory Board
was first informed, in connection with recent events, about
the impact of the emissions issue on a competitor in the German
automotive industry. In that context, the Supervisory Board
received a detailed presentation of the current situation in all
of the Group's automotive divisions, and ascertained that
no so-called defeat devices, which non-permissibly restrict
the effectiveness of exhaust-gas aftertreatment, are used
or have been used at Daimler.
Furthermore, in a joint meeting with the advisory board for
integrity and corporate responsibility, the Supervisory Board
dealt with, amongst other things, the Group's role in the field
of sustainability. The participants in the meeting discussed the
Group's international standards relating to working conditions,
the promotion of human rights and possibilities of making
a positive contribution to the development of society in certain
regions, as well as the Group's sustainability communication.
Following discussion of the course of business and the results
of the first half of 2015, in its meeting in July, the Supervisory
Board received detailed information on the business development
of Daimler Financial Services worldwide and in particular
in China, and subsequently approved a capital increase at
Mercedes-Benz Bank AG. The Supervisory Board also dealt
with the planned "Mercedes-Benz Stadium" sponsoring project
as an advertising and communication platform at the new
location of Mercedes-Benz USA in Atlanta, and approved the
project. Subsequently, the Supervisory Board received detailed
information on the planned joint acquisition of the HERE
digital mapping business from Nokia Corporation by Daimler,
Audi and BMW. Through the joint acquisition of HERE, it is
intended to create an open, independent and value-adding
platform for cloud-based maps and mobility services. The
Supervisory Board approved the project in written circulated
form in late July 2015.
Furthermore, the members of the Supervisory Board representing
the shareholders decided on October 1, 2015, on the basis
of recommendations by the members of the Nomination
Committee, to propose to the Annual Shareholders' Meeting
that Dr. Manfred Bischoff and Petraea Heynike be reelected
to the Supervisory Board with effect as of the end of the Annual
Shareholders' Meeting held on April 6, 2016 and until the
end of the Annual Shareholders' Meeting that decides on ratifi-
cation of their actions in the year 2020.
In another meeting at the end of April 2015, the Supervisory
Board dealt with the various aspects of the subject of sustain-
ability and its importance for the Group. The detailed discussion
covered the development of resource consumption and
improved energy efficiency in production, the sustainable further
development of the product portfolio and the implementation
of integrity at the Group, as well as the legal and ethical questions
arising in the context of autonomous driving. Subsequently,
the Supervisory Board received information on the status of the
strategic cooperation with Renault-Nissan with regard to
the expansion of the Mercedes-Benz product portfolio. Specific
details were discussed of the project to offer in the future a
Mercedes-Benz pickup with the brand's typical vehicle attributes
of safety, comfort and high quality. In addition, the Supervisory
Board discussed the strategy of the worldwide service and
spare-parts organization. Furthermore, the Supervisory Board
was occupied with the contents and possible legal conse-
quences for the Company of antitrust proceedings, as well as
the proportion of women in the Supervisory Board and the
Board of Management in the context of corporate governance
topics. The background was legislation for equal participation
of women and men in management positions, which came into
force in May 2015. For the composition of the Board of
Management, the Supervisory Board decided on a target for
the proportion of women of 12.5%, in line with the status
quo, which is to apply until December 31, 2016.
Subsequently, the Supervisory Board dealt with questions of
corporate governance and the subject of Board of Management
remuneration. In addition, approval was granted for the other
board memberships and sideline activities of the members of the
Board of Management that were presented in the meeting.
Also in the meeting on February 13, 2015, the Supervisory Board
received detailed information on the strategy for information
security at Daimler. This included the question of how the Group's
different IT systems identify and repel attacks by hackers.
The Supervisory Board also discussed the current status of the
most important legal proceedings such as the arbitration
proceedings with regard to Toll Collect or the EU antitrust pro-
ceedings against truck manufacturers. After that, the
Supervisory Board discussed the results of the efficiency audit
carried out in 2014, which once again confirmed the very
good and constructive cooperation within the Supervisory Board
and with the Board of Management. Suggestions for the
further optimization of the cooperation were effectively acted
upon and implemented during the year.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
50
In the Supervisory Board meeting held on February 13, 2015,
the Supervisory Board first decided on the personnel changes
in the Board of Management described on page 52.
Subsequently, it dealt with the annual company financial state-
ments, the annual consolidated financial statements and the
combined management report for Daimler AG and the Daimler
Group for the year 2014, each of which had been issued with
an unqualified audit opinion by the external auditors, as well as
with the reports of the Audit Committee and the Supervisory
Board, the corporate governance report, the remuneration report
and the proposal on the appropriation of profit. In preparation,
the members of the Supervisory Board were provided with com-
prehensive documentation. The Audit Committee and the
Supervisory Board dealt with those documents in detail and
discussed them intensively in the presence of the external
auditors, who reported on the results of their audit and were
available to answer supplementary questions and to provide
further information. Following the final results of the review by
the Audit Committee and its own review, the Supervisory
Board declared its agreement with the results of the audit carried
out by the external auditors. It determined that no objections
were to be raised and approved the financial statements and the
combined management report as presented by the Board of
Management. The company financial statements of Daimler AG
for the year 2014 were thereby adopted. On this basis, the
Supervisory Board consented to the proposal made by the Board
of Management on the appropriation of distributable profit.
In addition, the Supervisory Board approved the report of the
Supervisory Board, the corporate governance report and the
remuneration report, as well as its proposed decisions on the
items of the agenda for the 2015 Annual Shareholders' Meeting.
Topics dealt with by the Supervisory Board in the year 2015
In a meeting attended by the external auditors in early February
2015, the preliminary key figures of the annual company and
consolidated financial statements for 2014 and the dividend pro-
posal to be made at the 2015 Annual Shareholders' Meeting
were discussed. The preliminary key figures for the year 2014
and the proposal on the appropriation of profit were announced
at the Annual Press Conference on February 5, 2015.
As required in individual cases, for example in cases of special
urgency, the members were requested to pass resolutions
in writing, following consultation with the Chairman. For the
preparation of such proposed resolutions, comprehensive
and conclusive documentation was distributed to the members
of the Supervisory Board. Furthermore, the members of the
Board of Management were available for a bilateral exchange
of opinions and to answer any questions.
One of the items on the agenda of the Annual Shareholders' Meet-
ing held on April 1, 2015 was the reelection of Dr. Paul Achleitner
as a member of the Supervisory Board representing the
shareholders. After he was elected by the Annual Shareholders'
Meeting, the Supervisory Board reelected Dr. Paul Achleitner
as a member of the Nomination Committee.
The Board of Management informed the Supervisory Board with
the use of monthly reports and risk reports about the most
important indicators of business development and existing risks,
and submitted the interim financial reports to the Supervisory
Board. The Supervisory Board was kept fully informed of specific
matters also between its meetings. In addition, the Chairman
of the Board of Management informed the Chairman of the
Supervisory Board in regular discussions about important devel-
opments and about those matters that were to be submitted
to the Supervisory Board to pass resolutions on or to take note of.
At the beginning of the meeting held in December 2015, the
members of the Supervisory Board were occupied in the context
of a vehicle presentation with new vehicle models, design
studies and future-oriented technologies. Subsequently, the
Supervisory Board dealt with the departure of Dr. Christine
Hohmann-Dennhardt and the appointment of Renata Jungo
Brüngger to the Board of Management. In the further course
of the meeting, the Supervisory Board dealt in detail on the
basis of comprehensive documentation with the operational
planning for the years 2016 and 2017. This included discussion
of existing opportunities and risks as well as the Group's risk
management. In addition, the Supervisory Board approved
the capital increase for a company of the Group in Brazil
as well as a contribution to the German pension fund assets.
The Supervisory Board was also informed about the planned
expansion of transmission production at an existing Daimler
facility in Romania, and approved that project.
Corporate governance
Presidential Committee
Report on the work of the committees
pages 188 ff and in the
pages 122 ff of this Annual Report.
Corporate governance at Daimler is described in detail in the
corporate governance report on
remuneration report on
Also in December, the Supervisory Board approved the 2015
declaration of compliance with the German Corporate
Governance Code pursuant to Section 161 of the German Stock
Corporation Act (AktG). With the exceptions explained in the
declaration, all the recommendations of the Code have been
complied with and continue to be complied with.
In its meeting in December, the Supervisory Board updated
the rules of procedure of the Supervisory Board and its commit-
tees and decided on a limitation on the period of office in
the Supervisory Board in line with the new recommendation
of the German Corporate Governance Code of May 5, 2015.
This means that only such candidates are now generally to be
elected to the Supervisory Board for a full period of office that
have not already been members of the Supervisory Board for
three full statutory periods of office at the time of the election.
When it set this age limit, the Supervisory Board deliberately
decided against a strict age limit and in favor of a flexible rule
allowing the required scope for the appropriate assessment
of the circumstances of each individual case. The decision of
the Supervisory Board to propose to the Annual Shareholders'
Meeting the reelection to the Supervisory Board of Dr. Manfred
Bischoff for another full period of office was based, amongst
other things, on the very positive assessment of his service by
the other members, on the successful and constructive-critical
cooperation with the Board of Management, and on giving
a signal of stability and continuity. Furthermore, the election
proposal is intended to maintain the composition of the
Supervisory Board with regard to the various areas of expertise
of its members and to ensure a balanced age structure. All
other members of the Supervisory Board had not yet reached
the age limit at the time of their election. This applies also
to Ms. Heynike, who will also be proposed for reelection at the
Annual Shareholders' Meeting in 2016.
Other topics dealt with in the December meeting were corporate
governance and Board of Management remuneration in light
of the recommendations of the German Corporate Governance
Code. Finally, the Supervisory Board dealt with the probable
main topics of the year 2016. Following the meeting of the
Supervisory Board in December, the members of the Supervisory
Board received information on the current stage of legislative
developments in this field in the context of an optional corporate
governance session.
Therefore, in connection with its decision to propose the
reelection to the Supervisory Board of Dr. Manfred Bischoff
as a member representing the shareholders at the Annual
Shareholders' Meeting in 2016, the Supervisory Board also
dealt with the age limit for members, which is anchored in the
rules of procedure of the Supervisory Board in fulfilment of
the corresponding recommendation of the German Corporate
Governance Code. Accordingly, candidates are generally to
be proposed for election to the Supervisory Board for a full period
of office only if they are not older than 72 years at the time
of the election.
52
The Supervisory Board also recognizes the importance
for the composition of the Supervisory Board of an age limit
and a rule limiting the period of membership.
In the Supervisory Board of Daimler AG, the proportion of 30%
women is fulfilled on the shareholder side as of December 31,
2015 by the members Sari Baldauf, Andrea Jung and Petraea
Heynike. On the employee side, the proportion of women as of
that date is 20% with Dr. Sabine Maaßen and Elke Tönjes-
Werner. In its meeting on October 1, 2015, the Supervisory Board
dealt with the specific proposals for candidates for election
to be made at the Annual Shareholders' Meeting in 2016, and,
against this backdrop, stated that the shareholder side and
employee side should separately achieve the legally prescribed
proportion of women. The members representing the share-
holders stated that they object to the overall fulfilment of the
statutory gender quota. Subsequently, the Supervisory Board
decided to propose the reelection to the Supervisory Board of
Dr. Manfred Bischoff and Petraea Heynike at the Annual
Shareholders' Meeting in 2016. In the case that they are elected,
the statutory gender ratio will continue to be fulfilled on the
shareholder side. The next election to the Supervisory Board of
members representing the employees will take place in 2018.
For supervisory boards subject to parity codetermination, like
that of Daimler AG, legislation for equal participation by women
and men in executive positions prescribes a binding gender
ratio of at least 30% women to be implemented in the context
of new appointments as of 2016. The ratio is to apply to the
entire supervisory board. If the side of the supervisory board
representing the shareholders or the side representing the
employees objects to the chairman of the supervisory board
about the application of the ratio to the entire supervisory
board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
The Supervisory Board is convinced that effective work in
the Supervisory Board in terms of good corporate governance
requires two things: On the one hand, its members must
have high levels of specialist expertise. On the other hand,
diversity amongst the members in terms of internationality,
gender, experience and cultural background must reflect the
Group's size and internationality. Both of these requirements
are fulfilled at Daimler.
The members of the Supervisory Board of Daimler AG are
obliged to disclose conflicts of interest - especially those that
might arise due to an advisory or board function for a customer,
supplier or creditor of Daimler or for other third parties - to the
entire Supervisory Board. In fulfilment of the relevant recom-
mendations of the German Corporate Governance Code, the
Supervisory Board provides information on any conflicts of
interest that occur and on how they have been dealt with in its
report to the Annual Shareholders' Meeting. There were no
indications of any actual or potential conflicts of interest in 2015.
During the year 2015, the Supervisory Board was continually
occupied with standards of good corporate governance.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
The Presidential Committee convened six times last year. It dealt
primarily with corporate governance topics and questions of
remuneration, as well as with personnel matters of the Board
of Management. As in previous years, compliance targets
constituted part of the individual target agreements of the
members of the Board of Management. Once again, additional
non-financial targets were also included as criteria in the
target agreements. For the past financial year, they were the
further development and permanent establishment of integ-
rity, diversity, the maintenance and enhancement of a high level
of employee satisfaction, and high product quality.
The members of the Supervisory Board regularly prepared
for upcoming resolutions on the basis of documentation that
had been provided in advance by the Board of Management.
They were supported by the relevant committees and intensively
discussed the actions and transactions upon which decisions
were to be taken with the Board of Management. The members
of the Supervisory Board independently attended such courses
of training and further training regarded as necessary for the
performance of their tasks. In this context, in the meetings
of the Supervisory Board and in special training courses, they
dealt with issues of fundamental importance for the Group
such as the macroeconomic situation of key sales markets,
questions of corporate governance and changes in the legal
framework, and new products and forward-looking technologies.
In addition, the members representing the employees and
the members representing the shareholders regularly prepared
the Supervisory Board meetings in separate discussions, which
were attended by the members of the Board of Management.
Dr. Paul Achleitner
Munich
Audit Committee
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Presidential Committee
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
of the German Codetermination Act (MitbestG)
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Committee pursuant to Section 27 Subsection 3
Dr. Clemens Börsig - Chairman
Michael Brecht*
Committees of the Supervisory Board:
Frankfurt am Main
Jörg Hofmann*
Retired from the Supervisory Board:
Other supervisory board memberships/directorships:
Heidelberger Druckmaschinen AG
appointed until 2018
(since November 4, 2015)
District Manager Baden-Württemberg
First Chairman of the German Metalworkers' Union (IG Metall)
(retired on October 31, 2015))
Dr. Manfred Bischoff, Chairman of the Supervisory Board
Joe Kaeser
Nomination Committee
The vehicle boasts the highest levels of efficiency, safety and
connectivity. The basic elements of the autonomous vehicle
system in the Inspiration Truck are already being successfully
implemented in the Freightliner Cascadia Evolution.
The Freightliner Inspiration Truck is the first autonomously
driven truck licensed to operate on a public highway.
World premiere of the Freightliner Inspiration Truck
at Hoover Dam in May 2015
57
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015
INFINITE INSPIRATION
HOOVER DAM, MAY 5TH, 2015
Dr. Sabine Maaßen*
FREIGHTLINER INSPIRATION TRUCK
Daimler continued to implement its strategy of profitable growth at an accelerated
pace in 2015. The most important factor in the Group's success is our extremely
attractive and innovative range of products and services, which we expanded system-
atically during the year under review. We have further consolidated our leading
position in the areas of autonomous driving and mobility systems of the future, and
we have consistently moved ahead with digitization at all levels. Our success
in 2015 is also reflected by the numerous awards we received for our products,
as well as by our outstanding achievements in motor sports.
profitable growth
We have set the course for further
* Representative of the employees
Sari Baldauf
Dr. Paul Achleitner
Dr. Manfred Bischoff - Chairman
WORLD PREMIERE
Dieter Zetsche | 62
Chairman of the Board of Management,
Audit Committee
Nomination Committee
The Board of Management
48
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Report of the Supervisory Board
Dear Shareholders, the Supervisory Board dealt intensively and extensively with the strategic and
operational development of the Daimler Group in seven meetings during the 2015 financial year.
In the year 2015, the Supervisory Board performed its tasks
as defined by the law, the Articles of Incorporation and the rules
of procedure. It continually advised and supervised the Board
of Management on the management of the company. It examined
whether the annual company and consolidated financial
statements, the combined management report for the Company
and the Group, and the other financial reporting were in
conformance with the applicable requirements. In addition, it
approved numerous business matters for which its consent
was required following careful reviews and consultations. Those
matters included finance and investment planning, major
capital changes at companies of the Group, key individual invest-
ments and the conclusion of contracts with particular impor-
tance for the Group. The Board of Management informed the
Supervisory Board about a large number of other actions
and transactions and the two boards discussed those matters
together, for example the further development of strategic
programs in the various divisions and the status of various coop-
eration projects. Together with the Board of Management,
the Supervisory Board held intensive and detailed discussions
on the information and assessments that were material for
its decisions and recommendations.
During the reporting period, the Board of Management
regularly informed the Supervisory Board about all significant
key financials of the Group and the divisions. In addition, it
continually provided information to it on all fundamental questions
of corporate planning including finance, investment, sales
and personnel planning, current developments at the companies
of the Group, the development of revenue and the situation
of the Company and the divisions. In addition, the Board
of Management reported to the Supervisory Board continually
on the return on equity and the Group's liquidity situation,
the development of sales and procurement markets, the overall
economic situation and developments in the capital markets
and in the area of financial services. Additional topics included
the further development of the product portfolio, securing
the Group's long-term competitiveness and the ongoing imple-
mentation of the measures for safeguarding future-oriented
and sustainable mobility. The Supervisory Board also dealt in
detail with the development of the share price and the
related background as well as the expected impact of strategic
projects on the share price.
Appointed until February 2018
Daimler continued its profitable growth also in the year under
review. The strategy is expressly supported by the Supervisory
Board and is being implemented in a disciplined and successful
manner. New records were set in 2015 for unit sales, revenue
and earnings. Challenges resulting from partially very unfavorable
conditions in some markets were more than offset by successes
in other regions. The Group's financial strength and sound
balance sheet allow this growth strategy to be continued while
paying out an attractive dividend to our shareholders. The
model range was further expanded once again last year with
competitive products and innovative technologies. Structural
adjustments and ongoing efficiency improvements make the
business model more robust with regard to short- and long-
term changes in the business environment. As a result, we intend
to play a role in shaping the significant changes that our
industry is expected to go through in the coming years from
a position of strength. For this purpose, large volumes of advance
expenditure for the future will be made also in the coming
years. That includes investment in the core business and the
utilization of additional market potential, as well as the
development of new technologies, increasing digitization
and the development of innovative mobility services.
The meetings of the Supervisory Board featured open and inten-
sive exchanges of information and opinions. The Supervisory
Board arranged an executive session in each of its meetings
to be able to discuss topics in the absence of the Board of
Management. Participation in the meetings by the members
of the Supervisory Board was at a high level in the year 2015,
as in the previous years. All members of the Supervisory Board
participated in significantly more than half of the meetings
of the Supervisory Board and the committees of which they
are members in the year under review.
Chairman of the Works Council, Gaggenau Plant, Daimler AG;
Deputy Chairman of the Supervisory Board of Daimler AG
elected until 2018
Chairman of the General Works Council, Daimler Group
and Daimler AG;
Gaggenau
Michael Brecht*
Other supervisory board memberships/directorships:
Formel D GmbH
elected until 2019
Cooperation between the Supervisory Board
and the Board of Management
of Robert Bosch GmbH
Wolfgang Bernhard | 55
Daimler Trucks and Buses,
Finance & Controlling,
Ola Källenius | 46
Mercedes-Benz Cars
Marketing & Sales,
Renata Jungo Brüngger | 54
Integrity and Legal Affairs,
Appointed until December 2018
IT & Mercedes-Benz Vans,
Appointed until April 2017
of Labor Relations,
Human Resources and Director
Wilfried Porth | 57
Appointed until December 2016
Daimler Financial Services,
Appointed until December 2019
Cars Development,
Thomas Weber | 61
Appointed until December 2020
Greater China,
Hubertus Troska |55
A | TO OUR SHAREHOLDERS | THE BOARD OF MANAGEMENT 47
Head of Mercedes-Benz Cars,
Appointed until December 2019
Bodo Uebber | 56
Group Research & Mercedes-Benz
The Audit Committee met six times in 2015. Details of those
meetings are provided in a separate report of that committee.
pages 182 ff
Former Member of the Management Board
UniCredit S.p.A.
In the Supervisory Board meeting on February 16, 2016,
Dr. Dieter Zetsche was reappointed as the Chairman of the
Board of Management and Head of Mercedes-Benz Cars
for a further three years as of January 1, 2017. In addition, the
Supervisory Board decided in this meeting to assign Board of
Management responsibility for Group Research & Mercedes-Benz
Cars Development to Ola Källenius as of January 1, 2017.
He will thus succeed to Professor Dr. Thomas Weber, who will
step down from his position as a member of the Board of
Management of Daimler AG after 14 years when his contract
expires on December 31, 2016.
In its meeting on December 9, 2015, the Supervisory Board
appointed Renata Jungo Brüngger as a member of the Board
of Management of Daimler AG with responsibility for Integrity
and Legal Affairs for a period of three years as of January 1, 2016.
The appointment of Dr. Christine Hohmann-Dennhardt as a
member of the Board of Management ended on December 31,
2015. Dr. Hohmann-Dennhardt became a member of the
board of management of Volkswagen AG as of January 1, 2016.
In the Supervisory Board meeting on February 13, 2015,
the appointment of Hubertus Troska as a member of the
Board of Management of Daimler AG with responsibility
for Greater China was extended for another five years as
of January 1, 2016.
Personnel changes in the Board of Management
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 53
by the court to the Supervisory Board as a member representing
the employees, after Jörg Hofmann had stepped down from
the Supervisory Board as of October 31, 2015.
Audit of the 2015 company and consolidated financial
statements
On November 4, 2015, Roman Zitzelsberger was appointed
With effect as of January 1, 2015, Michael Bettag was appointed
by the court to the Supervisory Board as a member representing
the employees, after Jürgen Langer had stepped down from
the Supervisory Board as of December 31, 2014.
Personnel changes in the Supervisory Board
The chairmen of the committees informed the members of the
Supervisory Board about the activities of the committees and
their decisions, in each case in the Supervisory Board meeting
following those decisions.
German Metalworkers' Union (IG Metall),
As in previous years, the Mediation Committee, a body
required by the provisions of the German Codetermination Act
(MitbestG), had no occasion to take any action in 2015.
Mediation Committee
The members of the Nomination Committee prepared a recom-
mendation for the Supervisory Board's proposal to the Annual
Shareholders' Meeting in 2016 on the candidates for election
to the Supervisory Board. The proposal on the reelection of
Dr. Manfred Bischoff and Petraea Heynike take into consideration,
apart from the qualifications defined for each position, the
recommendations of the German Corporate Governance Code.
The Nomination Committee had already announced in 2014
that it would recommend the reelection of Dr. Paul Achleitner
to the Supervisory Board at the Annual Shareholders' Meeting
in 2015.
On April 1, 2015, the Annual Shareholders' Meeting elected
Dr. Paul Achleitner as a member of the Supervisory Board
representing the shareholders until the end of the Annual Share-
holders' Meeting that decides on ratification of the actions
for the year 2019. The election proposal made by the Supervisory
Board to the Annual Shareholders' Meeting was based
on a recommendation made by the Nomination Committee.
Dr. Bernd Bohr
Stuttgart
The financial statements of Daimler AG and the combined
management report for the Company and the Group for 2015
were duly audited by KPMG AG, Wirtschaftsprüfungsgesellschaft,
Berlin, and were given an unqualified audit opinion. The same
applies to the consolidated financial statements for 2015 prepared
according to IFRS.
In the meeting on February 16, 2016, the Supervisory Board dealt
with the annual company financial statements, the annual
consolidated financial statements and the combined management
report for Daimler AG and the Daimler Group, each of which
had been issued with an unqualified audit opinion by the exter-
nal auditors, as well as with the reports of the Audit Committee
and the Supervisory Board, the corporate governance report,
the remuneration report and the proposal on the appropriation
of profit. In preparation, the members of the Supervisory
Board had been provided with comprehensive documentation
including the Annual Report with the consolidated financial
statements according to IFRS, the combined management report
for Daimler AG and the Daimler Group, the corporate gover-
nance report and the remuneration report, the annual company
financial statements of Daimler AG, the proposal of the Board
of Management on the appropriation of profit, the audit reports
SMS Holding GmbH
Other supervisory board memberships/directorships:
Airbus Group N.V.
Chairman of the Supervisory Board of Daimler AG
elected until 2016
Munich
Dr. Manfred Bischoff
The Supervisory Board
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD
In a meeting in early February 2016 attended by the external
auditors, the Supervisory Board discussed the preliminary
key figures of the annual company and consolidated financial
statements for 2015 and the dividend proposal to be made
at the 2016 Annual Shareholders' Meeting. The preliminary key
figures for the year 2015 were announced at the Annual
Press Conference on February 4, 2016.
54
Seafred Riefe
The Supervisory Board
Stuttgart, February 2016
The Supervisory Board warmly thanks all of the employees and
the management of the Daimler Group for their committed
contributions to the successful year 2015. Special thanks are
due to Jörg Hofmann, who closely accompanied the Group
since 2008 with strong commitment and stepped down from
the Supervisory Board as of October 31, 2015. The Supervisory
Board also thanks Dr. Christine Hohmann-Dennhardt for the
very good work she did for Daimler AG.
Appreciation.
The Audit Committee and the Supervisory Board dealt with those
documents in detail and discussed them intensively in the
presence of the responsible external auditors, who reported
on the results of their audit and were available to answer
supplementary questions and to provide additional information.
Following the final results of the review by the Audit Committee
and its own review, the Supervisory Board declared its agreement
with the results of the audit by the external auditors; it deter-
mined that no objections were to be raised and approved the
financial statements and the combined management report
as presented by the Board of Management. The company financial
statements of Daimler AG for the year 2015 were thereby
adopted. On this basis, the Supervisory Board consented to
the proposal made by the Board of Management on the appro-
priation of distributable profit. Furthermore, it approved the
report of the Supervisory Board, the corporate governance
report and the remuneration report, as well as its own proposed
decisions on the items of the agenda for the 2016 Annual
Shareholders' Meeting.
of KPMG on the annual company financial statements of
Daimler AG and the consolidated financial statements, each
including the combined management report, as well as
drafts of the reports of the Supervisory Board and of the
Audit Committee.
Dr. Manfred Bischoff
Chairman
Stuttgart
Other supervisory board memberships/directorships:
Deutsche Bank AG - Chairman
Bayer AG
Chairman of the Works Council, Headquarters, Daimler AG
elected until 2018
Other supervisory board memberships/directorships:
BASF SE
Chairman
Fuchs Petrolub SE - Chairman
Trumpf GmbH + Co. KG - Chairman
Petraea Heynike
Vevey
Former Executive Vice President of the Executive Board
of Nestlé S.A.
Chairman of the Supervisory Board of BASF SE
elected until 2016
Schulich School of Business
Aiglon College
Climate and Land Use Alliance
Michael Bettag*
Nuremberg
Chairman of the Works Council of the Nuremberg Dealership,
Daimler AG
(since January 1, 2015)
Other supervisory board memberships/directorships:
Ludwigshafen
Dr. Jürgen Hambrecht
IOR Istituto per le Opere di Religione (Vatican Bank)
Roman Zitzelsberger*
Stuttgart
Jörg Spies*
Sari Baldauf
Helsinki
Former Executive Vice President and General Manager
of the Networks Business Group of Nokia Corporation
elected until 2018
Other supervisory board memberships/directorships:
Fortum OYjChairwoman
Deutsche Telekom AG
AkzoNobel N.V.
Dr. Clemens Börsig
Frankfurt am Main
Chairman of the Board of Directors
of Deutsche Bank Foundation
elected until 2017
Other supervisory board memberships/directorships:
Linde AG
Bayer AG
Emerson Electric Co.
appointed until 2018
Andrea Jung
elected until 2018
President and Chief Executive Officer of Grameen America, Inc.
elected until 2018
Munich
Dr. Bernd Pischetsrieder
elected until 2018
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG
Stuttgart
Wolfgang Nieke*
elected until 2018
(IG Metall)
General Counsel of the German Metalworkers' Union
Frankfurt am Main
Dr. Sabine Maaßen*
elected until 2018
Director of the Press Shop, Sindelfingen Plant, Daimler AG;
Chairman of the Management Representatives Committee,
Daimler Group
Sindelfingen
Dr. Frank Weber*
Deputy Chairman of the General Works Council of Daimler AG
elected until 2018
Chairman of the Supervisory Board of Deutsche Bank AG
elected until 2020
New York
Chairman of the Works Council at the Sindelfingen Plant;
Chairman of the Supervisory Board of the Münchener
Rückversicherungs-Gesellschaft, Aktiengesellschaft
in München
Other supervisory board memberships/directorships:
ThyssenKrupp AG
Other supervisory board memberships/directorships:
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München - Chairman
Tetra-Laval International S.A. Group
Other supervisory board memberships/directorships:
Apple Inc.
elected until 2019
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD 55
Joe Kaeser
Munich
Chairman of the Board of Management of Siemens AG
elected until 2019
Other supervisory board memberships/directorships:
Allianz Deutschland AG
NXP Semiconductors N.V.
Elke Tönjes-Werner*
Bremen
General Electric Company
elected until 2018
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG
São Paulo
Director of Communications of the Metalworkers' Union ABC;
President of the Fundação Sociedade Comunicação,
Cultura e Trabalho (Foundation Society of Communications,
Culture and Work);
International Secretary of the National Confederation of the
Metalworkers of CUT - CNM/CUT
Valter Sanches*
Sindelfingen
Ergun Lümali*
elected until 2018
(in billions of euros)
1,069.8
+12
73.8
83.0
Market capitalization
0
1,069.8
Number of shares (in millions)
Share capital (in millions of euros)
3,070
3,070
15/14
% change
End of 2015 End of 2014
Key figures for Daimler shares
A.05
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
Number of shareholders (in millions)
0
0.9
Growing
globally
0
64
Leading
in technology
Pushing
digitization
The four focus areas of the Daimler strategy
67
Strengthening our core business
We are strengthening our core business with innovative first-class
products, competitive structures, flexible processes and a
customer-oriented organization. We are continuing the model
offensive launched at Mercedes-Benz Cars in 2012 by devel-
oping additional models and attractive successor models in all
segments. We will launch more than 30 new car models between
2012 and 2020. Almost half of those new products have no
predecessor model in the current product portfolio. In 2015,
we expanded our product range with a Mercedes-Maybach
model, the Mercedes-AMG GT, the CLA Shooting Brake, and the
GLE coupe. The major highlight of 2016 will be the new E-Class,
whose innovative assistance and safety systems will take the
model a step further in the direction of autonomous driving.
In the S-Class segment, the S-Class convertible presented
at the Frankfurt Motor Show will be launched without a direct
predecessor, and additional attractive models will then follow.
We continue to forge ahead with our vehicle architecture and
module strategy. It allows us to successfully manage the increas-
ing complexity resulting from additional model variants, as
well as ever-shorter innovation cycles and the expansion of our
international production network. By increasing the level of
standardization and modularization at our manufacturing plants,
we are reducing our investment requirements and fixed costs.
The classification of lead and partner plants is safeguarding both
the transfer of knowledge and the high quality standards
associated with "Made by Mercedes" worldwide. Comprehensive
restructuring measures are helping to safeguard the future of
our German plants. To this end, we have also reached far-reaching
agreements with employee representatives in the areas
of products, expertise, vertical integration and employment.
In addition, plans call for the investment of €4.75 billion in our
facilities in Germany over the next few years. We will also
invest $1.3 billion in the expansion of our production operations
in the United States. We will open a new plant in Mexico with
our strategic partner Renault-Nissan and will begin producing
Mercedes-Benz compact vehicles there in 2018. We continue
to systematically enhance our brands through the creation of
new products and the expansion of existing model series.
Our "Best Customer Experience" initiative is designed to offer
our customers the best experience among all automakers.
All sales, service and financial services activities are aligned
with each other throughout the entire duration of the customer
relationship - right from the first contact. New sales formats
such as mobile sales pavilions and Mercedes me stores create
meeting points that enable us to establish contact with new
customers as well. With our state-of-the-art digital product
presentations, we are creating product experiences without
having to maintain a stock of all product variants in our show-
rooms. We are also developing Mercedes me into a central
platform and service brand.
page 18
The smart brand - with the smart fortwo, forfour and new
smart convertible models that will be launched in 2016 -
stands for outstanding urban mobility. The electric smart,
whose new version will be launched in 2016, will help
us enhance our position in the field of electric mobility.
Daimler Trucks relies on its technology leadership, global
presence and the intelligent use of platforms. Our platform
strategy enables us to deliver tailor-made systems and technol-
ogies to our customers worldwide, even as we exploit our
economies of scale to the greatest extent possible. For example,
we can offer innovative cutting-edge technologies to our core
markets of Western Europe, North America and Japan, as well
as traditional and proven technologies in markets such as
Brazil, China and Russia. We are also in a position to supply
markets in India, Africa and certain Asian countries with simpler
and locally produced technologies. Thanks to this strategy
and a broad range of products, Daimler Trucks occupies a very
good position in the competitive field. On this basis, we continue
to target sales of 700,000 units in the year 2020. In addition
to growth, Daimler Trucks also prioritizes further increases in
efficiency and the focus on its core business.
Standard & Poor's
Long-term credit ratings
3.46%
3.63%
Dow Jones Euro STOXX 50
8.51%
8.67%
DAX 30
Weighting in share indices
0.9
Dow Jones STOXX Auto Index
DAX
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 65
12/31/14 2/27/15 4/30/15 6/30/15 8/31/15 10/30/15 12/31/15
75
80
85
90
95
100
105
110
Daimler share price (high/low), 2015
In euros
A.03
The aforementioned and all other voting-rights notifications
as well as notifications of shareholdings pursuant to Germany's
Transparency Directive Implementation Act are published on
the Internet at daimler.com/investors/share/voting-rights.
Daimler continues to have a broad shareholder base of approxi-
mately 900,000 shareholders. The Kuwait Investment
Authority (KIA) currently owns 6.8% of the company's stock,
making it Daimler AG's largest single shareholder. The Renault-
Nissan Alliance continues to hold 3.1% of Daimler's shares.
BlackRock Inc., New York, still holds a stake above the 5%
reporting limit as defined by Germany's Securities Trading Act
(WPHG). In December 2015, BlackRock notified us that its
proportion of the voting rights was 6.12% on November 26.
The Norwegian Finance Ministry informed us that on October 26,
2015, the shares held by Norges Bank, Oslo, dropped below
the reporting limit of 3%. As of that date, the bank held 2.99%
of the voting rights in Daimler.
A broad shareholder structure 7 A.07
The Board of Management and the Supervisory Board will
recommend the payment of a dividend of €3.25 per share at the
Annual Shareholders' Meeting on April 6, 2016. We are thus
raising the dividend substantially once again (+33%), and letting
our shareholders participate in the company's financial
success. The total dividend will amount to €3,477 million
(2014: €2,621 million), which is by far the highest dividend
payout in Daimler's history.
Dividend of €3.25 7 A.02
Stock exchanges started the year 2016 with falling prices
worldwide. The main unsettling factors were concerns about
China, tension in the Middle East and the sharp fall in
commodity prices. At 9,798 at the end of January, the DAX
was 9% lower than at the end of 2015.
International stock markets then made substantial gains once
again in the fourth quarter, and our share price increased
at an above-average rate. Daimler shares closed at €77.58
on December 30. At the end of the year, the company had
a market capitalization of €83.0 billion (2014: €73.8 billion).
Daimler's share price thus increased by 12% over the course
of the year, outperforming the DAX (+10%) and in line with the
Dow Jones STOXX Auto Index (+13%). When the dividend
payout of €2.45 per share is included, our shareholders saw
the value of their investment rise by 16%.
Financial markets responded very favorably to the publication of
the Daimler Group's results for 2014, the positive outlook for
2015, and the recommendation that the dividend be increased
from €2.25 to €2.45 per share. This helped the share price
to rise considerably (by 30%) in the first quarter of 2015 alone.
On March 16, 2015, the Daimler share price reached €95.79.
This was the highest price for the year and also the highest value
for Daimler shares in several years. However, the Daimler share
price was also not immune to growing concerns regarding the
escalation of the Greek debt crisis, as well as the market
turbulence in China. Many investors pulled out of the market
for a short period in August, and automotive stocks were
significantly impacted by this development in light of the
importance of the Chinese market for vehicle manufacturers.
A short period of recovery followed in the run-up to the IAA
International Motor Show in Frankfurt, due in part to our solid
sales development throughout the summer months. Starting
in mid-September, reports regarding irregularities with diesel
emissions of a competitor's vehicles led to significant declines
in share prices also for other automakers and automotive
suppliers. In this situation, our share price reached its low
point of the year (€63.26) on September 29, 2015.
core business
70
Daimler AG
65
55
80
85
90
95
100
105
110
115
120
125
130
135
140
145
150
Share price index
A.04
1/15 2/15 3/15 4/15 5/15 6/15 7/15 8/15 9/15 10/1511/15 12/15
50
60
Strengthening
Institutional investors hold a total of 74% of our equity capital
while private investors own 16%. Approximately 65% of our
capital is in the hands of European investors and around 24%
is held by US investors. 7 A.08 Daimler shares' weighting
in major indices rose further during the reporting year as a result
of the overall share-price rise. With a weighting of 8.67%
(2014: 8.51%), Daimler was ranked second in the German DAX
30 index at the end of 2015. 7 A.05 In the Dow Jones Euro
STOXX 50 index, our shares had a weighting of 3.63% (2014:
3.46%), which put them in fifth place. Daimler shares are listed
on the stock exchanges in Frankfurt and Stuttgart. A total
volume of 1,188 million shares were traded in Germany in 2015
(2014: 957 million). Daimler shares are also increasingly
being traded on multilateral trading platforms and in the
over-the-counter market.
Strategic focus areas
73.7%
Retail investors
16.4%
A.08
Shareholder structure as of December 31, 2015
By region
Germany
32.5%
Institutional investors
Europe, excluding Germany
USA
23.9%
Kuwait
6.8%
Asia
4.1%
Rest of the world
0.3%
32.4%
3.1%
Renault-Nissan
6.8%
A.06
Stock-exchange data for Daimler shares
A-
A-
A3
A3
A-
A (low)
A-
A (low)
710000
ISIN
DE0007100000
German Securities Identification Number
Stock-exchange symbol
Reuters ticker symbol
Bloomberg ticker symbol
A.07
Shareholder structure as of December 31, 2015
By type of shareholder
Kuwait Investment Authority
DAI
DAIGN.DE
DAI:GR
0
Daimler share price up by 12% over the year
We set standards for technology and innovation. We want our
products from all the divisions to be industry leaders in terms
of safety, autonomous driving with cars and commercial vehicles,
and green technologies. We also seek to be the leader in the
use of digital technologies, both in our products and services
and as channels for maintaining contact with our customers.
We utilize the potential generated by Group-wide research
activities and predevelopment and, where possible, we make
use of standardized systems and solutions.
Delighted customers
Our leading brands in all the divisions create added value for our
customers. We aim to finish at the top of all relevant customer-
satisfaction rankings and convince customers with our outstand-
ing quality. For that purpose, we create interfaces for sales
and aftersales processes that ensure we can maintain contact
with customers at all times. We also offer our customers
tailored transport and mobility services.
Best teams
We work in teams whose diversity in terms of gender, nationality
and age is of great importance. Our employees are proud to
work at Daimler, and we are one of the employers most sought
after by job applicants. Our core corporate values - passion,
respect, integrity and discipline - form the basis of our actions.
Integrity is particularly important to our company. It is one
of the key principles that stand behind our actions, and it guides
our dealings with respect to the company and its employees,
business partners and customers. We are firmly convinced that
conducting business with integrity makes us more successful
over the long term and is also good for society as a whole.
pages 185f
Profitable growth
We intend to achieve an average return on sales (EBIT in relation
to revenue) for the automotive business of 9% on a sustained
basis. This overall figure is based on the return targets for the
individual divisions. These targets are 10% for Mercedes-Benz
Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and 6%
for Daimler Buses. For Daimler Financial Services, we have
set a target for return on equity of 17%.
The "Mercedes-Benz 2020" growth strategy is designed to
ensure that our Mercedes-Benz Cars division will play the leading
role in the premium segment worldwide by the end of the
decade. We also plan to further enhance the smart brand's
pioneering role in urban mobility. In addition, we want to
further strengthen Daimler Trucks' position as the leading truck
manufacturer in the global truck business. Mercedes-Benz
Vans aims to achieve further profitable growth with the help of
its "Mercedes-Benz Vans goes global" strategy. Daimler Buses
will further strengthen its leading position in the segment
for buses above eight metric tons gross vehicle weight. Daimler
Financial Services plans to maintain its position as the best
captive financial services provider; it will continue to grow in line
with our automotive business and also in the area of mobility
services.
In order to safeguard our profitability also under difficult market
conditions, we are adapting our business system in a way
that enables us to react quickly and flexibly to market fluctua-
tions and create value as near to our markets as possible.
Sustainability is a fixed element of our philosophy. For us,
sustainability means conducting business responsibly
to ensure long-term success in harmony with the environment
and society. pages 105 ff
Four strategic focus areas
We plan to achieve our goals through four strategic focus
areas. A.09
We will focus on
- strengthening our core business,
- growing globally,
- leading in technology
- pushing digitization.
A.09
Technology leadership and innovation
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Four objectives
Objectives and Strategy
Employee share purchase plan implemented once again
Staff members entitled to purchase employee shares were
able to do so once again in March 2015. As was the case
in the prior year, the employees received a discount as well
as bonus shares. At 11.7%, the participation rate was lower
than in 2014 (15.4%). A total of 20,400 employees took part
in the program (2014: 26,600), purchasing just under
300,000 shares (2014: 390,000).
Annual Shareholders' Meeting in a new venue with
an all-new Daimler corporate design
Our Annual Shareholders' Meeting took place for the first
time in the new CityCube in Berlin on April 1, 2015. The modern
building offered the perfect atmosphere for an elegant presen-
tation of the Group's new corporate design. Some 5,000 share-
holders (2014: 5,500) attended the meeting, despite very
stormy weather in Berlin. A total of 36.15% of the equity capital
was represented at the meeting (actual attendees and share-
holders who voted by absentee ballot). A large majority of the
shareholders approved each of the agenda points proposed
by the company's management. For example, the Annual
Shareholders' Meeting approved the highest dividend in the
company's history (€2.45 per share; 2014: €2.25) and reelected
Dr. Paul Achleitner, Chairman of the Supervisory Board of
Deutsche Bank AG, as a shareholder representative on the
Daimler AG Supervisory Board. All of the documents and
information regarding the Annual Shareholders' Meeting can be
found at daimler.com/investors/events/annual-meetings.
In the exhibition areas of the CityCube, Daimler presented its
technological expertise and broad range of products and
services. The presentation highlights included the F 015 research
vehicle, which points the way to the future of autonomous
driving with passenger cars and also attracted a lot of admiring
looks during the Annual Shareholders' Meeting. Our trainees
provided an insight into their work, and with "Mercedes me"
the Mercedes-Benz brand presented services in addition
to its products.
Moody's
Continuation of comprehensive investor relations
activities
In 2015, we once again provided institutional investors, analysts,
rating agencies and private investors with timely information
regarding the company's business development.
We organized road shows for institutional investors and analysts
in the finance capitals of Europe, North America, Asia and
Australia. We also held many one-on-one meetings at investor
conferences. This was especially the case at the international
motor shows in Geneva and Frankfurt. Sustainability-focused
investors were also able to meet and talk with company repre-
sentatives at events held at the IAA and at a conference in Paris
in November. We reported on our quarterly results in confer-
ence calls and webcasts. The presentations can be viewed on
our website at daimler.com/investors/events.
The talks with analysts and investors focused on the latest
earnings expectations for 2015, as well as on the business
development and profitability of the individual divisions and
regions. In addition, top-level managers from Mercedes-Benz
Cars discussed the strategies and goals of their division
during a capital market event held in June at our Mercedes-
AMG motor sports subsidiary in Affalterbach, Germany.
The audio recording and charts and illustrations from that event
are also available at daimler.com/investors/events.
Awards once again for the print and online versions
of the Annual Report
Annual Report 2014 was created in a pilot project that already
included elements of the new Corporate Design. The print
version in the new brushed silver look and the online version
with numerous additional features led to several prestigious
national and international awards for Annual Report 2014.
Daimler was also named the best listed company in Germany
in the "Investor's Darling" rankings of Manager Magazin,
which took into account reporting, investor relations activities
and capital market presence.
Corporate website with new software platform and layout
The broad range of information offered on our website at the
existing address ④ daimler.com was transferred to an entirely
new and more powerful software platform in November and
aligned with Daimler's new corporate design as well. In addition
to its many helpful features, the website has a responsive
layout that allows it to be displayed easily on any device in an
optimal size and format.
Number of online shareholders remains at a high level
Our shareholders continue to make good use of our range
of personalized electronic information and communication.
Approximately 84,000 shareholders once again received
the invitation and agenda for the Annual Shareholders' Meeting
by e-mail rather than by post in 2015. We would like to thank
those shareholders for helping to protect the environment and
cut costs. As was the case in the past, those shareholders
once again had the opportunity to win attractive prizes in a
lottery. Access to the e-service for shareholders and additional
information can be found at https://register.daimler.com.
Refinancing benefits from a high level of capital-market
liquidity and good ratings
The ongoing expansionary monetary policies at central banks
also impacted bond markets during the year under review.
As a result of the high level of liquidity, companies with
investment-grade ratings saw their risk premiums remain
at an attractive level despite volatile markets.
In 2015, Daimler primarily covered its refinancing needs by
issuing bonds. A large proportion of those bonds were sold
as benchmark bond issuances (bonds with high nominal volumes)
in euro and US-dollar markets. In the US capital market,
for example, Daimler Finance North America LLC issued bonds
worth a total of $9.5 billion in March, May and August 2015.
The bonds had terms of 18 months and two, three, five or ten
years. In addition, Daimler AG issued euro bonds in benchmark
format with a total volume of €1.5 billion and terms of two
and approximately four years. In 2015, Daimler AG also issued
bonds in the Chinese capital market (so-called Panda bonds)
worth a total of CNY 5.0 billion. Furthermore, many smaller bonds
were issued by the Daimler Group in a variety of currencies in
the euro market as well as in Mexico, Brazil, Argentina, Canada,
South Africa, Thailand and South Korea.
At the end of 2015, companies of the Daimler Group had
issued bonds that were still outstanding in a volume of
€51.4 billion (2014: €43.2 billion). Besides raising funds through
the issuance of bonds, Daimler also issued a small volume
of commercial paper in 2015.
Daimler also conducted several asset-backed security (ABS)
transactions in the United States, Canada and Germany during
the reporting year. In the United States, for example, the
company generated a refinancing volume of US$5.8 billion
through four issuances. A further C$0.4 billion was placed
in Canada. In addition, Mercedes-Benz Bank used the Silver
Arrow Platform to sell €1.0 billion in ABS bonds to European
investors once again.
66
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
As the inventor of the automobile, we believe it is our mission and our duty to shape future mobility
in a safe and sustainable manner, with outstanding products and services and trend-setting
technologies. We strive to attain the leading position in all of our business activities. Our goals are
to be the leader in technology and innovation, to inspire our customers and to continue to grow
profitably. In this way, we intend to continually increase our enterprise value. We plan to achieve
our goals by focusing our activities on four strategic areas in the coming years.
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 63
17,823
+13
Daimler and the Renault-Nissan Alliance lay the cornerstone
for a new joint venture production plant in Aguascalientes.
The facility will manufacture premium compact models from the
Mercedes-Benz and Infiniti brands. The first Mercedes-Benz
vehicles will roll off the assembly line in 2018.
Cornerstone laid in Mexico
The first bus built by the BharatBenz brand rolls off the produc-
tion line in Oragadam. The facility there is the only Daimler
manufacturing site that builds trucks, buses and engines from
Mercedes-Benz, BharatBenz and FUSO at one location.
Production of BharatBenz buses in India
Local production of the new Vito in Argentina and the model's
launch in that country's market is part of the "Mercedes-Benz
Vans goes global" growth strategy, whose goals are to further
increase the division's technology leadership, expand existing
activities and utilize new growth potential.
Vito now built in Argentina as well
"She's Mercedes" launched
Q3
60
60
smart
O
DAIMLER
李治
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015
Mercedes-Benz plans to address women in a more targeted
manner in the future, as they are the fastest-growing and most
influential group of customers. To this end, the brand with
the star launches the "She's Mercedes" inspiration platform.
Further reductions in heavy-duty truck fuel consumption
Daimler takes things to the next level four years after the intro-
duction of the OM 471 heavy-duty engine: The Mercedes-Benz
Actros further improves its efficiency with up to three percent
lower fuel consumption.
Strong signal sent to the workforce
The New
C-Class Coupe
The New
smart fortwo cabrio
Mercedes-Benz & smart at IAA 2015
Q4
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015 61
more time
N
O
W
TT
SV15079
1,000,000th Actros delivered from the Wörth plant
The Actros stands for maximum economy, safety and comfort.
The Actros demonstrates its efficiency advantages allover Europe
in the so-called Fuel Duel. The results of over 1,900 compar-
ative tests speak for themselves: more than 90% of all duels
won, and average fuel-consumption advantage of 10%.
Legal and ethical aspects of autonomous driving
Data protection experts, engineers, lawyers, politicians,
journalists, IT specialists and representatives of business and
industry gather in Frankfurt at Daimler's invitation during IAA
2015 to discuss open questions related to autonomous driving.
The focus is on legal, ethical and social aspects.
IAA 2015: The Mercedes Dream Car Collection
The "Mercedes Dream Car Collection" at the IAA International
Motor Show in Frankfurt features three world premieres:
the Concept IAA (Intelligent Aerodynamic Automobile), the
Mercedes-Benz S-Class convertible and the Mercedes-Benz
C-Class coupe. We also presented the new smart convertible
in Frankfurt.
1 Closing prices
HELLO
CHINA
The New
Daimler sets new records for revenue, unit sales and earnings
in the second quarter of 2015. EBIT from ongoing business
operations increases by 54% to €3.8 billion. The Group continues
to expect that it will achieve a significant increase in earnings
for full-year 2015 as well.
Daimler's wholly owned subsidiary in Colombia, Daimler
Colombia S.A., opens a new bus plant in the city of Funza
(near Bogotá) with a production capacity of 4,000 units per year.
Daimler Buses has built the plant in response to growing
demand for regular-service buses and efficient mobility solutions,
such as Bus Rapid Transit, in various cities in the region.
GLE coupe stars in Jurassic World
With the full integration of online tickets for buses, trams and
trains, moovel in Stuttgart is the first provider to offer a
genuine one-stop shop for urban mobility. Directly in the moovel
app, moovel users can book and pay for journeys with car2go,
Flinkster or mytaxi, as well as by German Railways or Stuttgart
public transport.
World premiere for moovel in Stuttgart
The world's biggest car-sharing company announces that it
will begin operating in the major city of Chongqing with a fleet
of several hundred smart fortwo models. This marks the entry
of car2go into the Asian market, whereby operations in Chongqing
will serve as a pilot project for expansion into other major
cities in Asia.
car2go launched in China
With its presentation of the autonomous F 015 Luxury in
Motion high-end sedan at the Consumer Electronics Show in
Las Vegas, Mercedes-Benz demonstrates how vehicles will
be transformed into personal retreats in the future. The extreme
interior spaciousness and lounge-like atmosphere of the F 015
take comfort and luxury to a new level.
The two main characters in Jurassic World rely on the off-road
capabilities of various Mercedes-Benz vehicles for their adven-
tures in the jungle - and especially on the new GLE Coupe, whose
production version is presented for the first time in the film.
World premiere in Las Vegas
Luxury in Motion
F015
World Premiere
Highlights of 2015
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015
58
Q1
Cornerstone laid for a new passenger car plant in Brazil
Mercedes-Benz expands its global production network:
A new passenger car manufacturing facility in Iracemápolis
(near São Paulo) will begin building C-Class models in the
first quarter of 2016; production of the compact GLA SUV will
start in the middle of the year.
New Metris van for the United States unveiled
New bus plant in Colombia
Truck connectivity in the United States
Daimler Trucks continues to expand its activities in the field
of connected services and to this end acquires an interest
in Zonar Systems Inc. in North America. The company is one
of the leading developers and suppliers of logistics, telematics
and connectivity solutions. The investment is a key milestone
on the path to completely networked vehicles and value-added
services for fleet operators and drivers.
Battery technology for stationary applications
Daimler's wholly owned ACCUMOTIVE subsidiary offers stationary
energy storage devices for private and commercial use.
Daimler plans to expand cooperation in this field with other
sales partners in Germany and around the world.
Daimler receives top marks in the current "trendence Graduate
Barometer." The company is named as one of the best employers
in Germany and finishes first in the categories "Innovation
of the Year" and "Best Career Website" (among automakers).
Top marks in employer ranking
Mercedes-Benz is the most innovative premium brand
Mercedes-Benz is the most innovative premium automobile
brand (greatest number of world firsts) according to an in-depth
study conducted by the Center of Automotive Management
(CAM) and the Pricewaterhouse Coopers (PwC) corporate
consulting firm. Mercedes-Benz also receives a special award
as the "Most Innovative Brand in the Last Decade."
The opening ceremony for the new Mercedes-Benz production
plant for compact cars at Beijing Benz Automotive Corporation
is a major milestone in the Mercedes-Benz strategy for China.
With the launch of GLA production in Beijing, Mercedes-Benz
now builds its successful compact vehicles at four locations.
GLA production launch in Beijing
The Daimler Annual Shareholders' Meeting takes place for
the first time in the new CityCube in Berlin, and is also the first
such meeting to be held with the Group's new Corporate
Design. During the meeting, some 5,000 shareholders approve
a dividend of €2.45 per share - the highest in the history
of the company.
Annual Shareholders' Meeting approves highest dividend
in the company's history
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2015 59
Q2
This is the motto for the celebration marking the 100th
anniversary of the Mercedes-Benz facility in Sindelfingen.
The official ceremony takes place in the new future-oriented
Technology Factory. This is where tools and machinery
will soon be developed for the Mercedes-Benz plants around
the world.
People who shape the future
The Metris - the US version of the new Vito - celebrates its
premiere at The Work Truck Show in Indianapolis. The Metris
went on sale at more than 200 US dealerships in October,
and is available in different versions as a panel van (for cargo)
and as a tourer (for passengers). The Metris joins the Sprinter
as the second van with the three-pointed star in the US market.
Daimler progresses as planned
S-Class Cabriolet
The "Safeguarding the Future" agreement at Daimler will be
extended until the end of 2020. The agreement is one of
the most extensive and important Group-wide agreements
for the workforce and has proved to be effective in difficult
times as well. It includes specific firm investment plans on the
part of Daimler and a commitment by employees to improve
efficiency and flexibility.
Daimler begins to offer internships to refugees
Some 40 refugees begin internships at the Stuttgart-
Untertürkheim site in a project being carried out in cooperation
with the Federal Employment Agency in Germany. Daimler
plans to train several hundred refugees in professions that will
enable them to work in various industrial sectors in Germany.
6.51
7.87
Net profit
The index of the most important shares in the euro zone, the
Dow Jones Euro STOXX 50, rose by 4% in 2015. The leading
German index, the DAX, performed significantly better, rising
by 10%. The DAX also broke through the 12,000 mark for the
first time ever in April 2015 and reached a new all-time high of
12,375 on April 10. In Japan, the Nikkei-Index climbed by
9% over the year, and in the United States, the Dow Jones
fell by 2% over the year. 7 A.01
European stock markets began the year 2015 with substantial
gains. The stock markets were boosted in particular by the
expansionary monetary policy of the ECB, which supplemented
its existing measures by initiating a government-bond pur-
chasing program (quantitative easing, QE) with a total volume
of €1.1 trillion. The DAX had risen by more than 25% by the
beginning of April, reaching record highs during that period.
Subsequently, however, the further escalation of the Greek
debt crisis had a negative impact on the development of the
index, as concerns surrounding the possible consequences
of a potential Greek exit from the euro zone led to increased
volatility. The share-price losses of companies with high export
volumes were slightly higher than those of the market as a
whole, as the euro was able to recover somewhat from its weak
position against the dollar. After share prices rose slightly
in July, developments on international markets were negatively
affected by reports of slower growth for China's economy,
turbulence on Chinese stock markets and uncertainties regarding
the interest-rate policy of the Federal Reserve in the United
States. As a result, share prices fell significantly in Europe and
the United States in August. Given the importance of the
Chinese market for vehicle manufacturers, automotive stocks
were significantly impacted by the aforementioned devel-
opments. There were also further concerns at the time that
economic growth in the United States might have already
peaked. But it did not take long for the markets to recover,
and many sectors were able to recoup at least some of their
previous share-price losses. The ongoing decline in oil prices
and disappointment related to the ECB's decision not to
expand its bond purchasing program led to very volatile share-
price movements in December.
Volatile year on global stock markets
Concept IAA
+21
+12
15/14
% change
Amounts in euros
2014
2015
Key figures per share
15/14
% change
3.25
2.45
+33
56.01
63.26
Lowest¹
+35
71.14
95.79
Highest¹
+12
68.97
77.58
Xetra price at year end¹
+23
40.81
50.06
Equity (December 31)
A.02
+13
Dividend
566
A.01
Global stock markets remained volatile in 2015 and markets in some regions finished the year
with substantial gains. European share prices benefited overall from the ongoing expansionary
monetary policy of the European Central Bank (ECB), as well as from low interest rates.
The Daimler share price increased by 12% over the course of the year and thus once again
outperformed the DAX. The Board of Management and the Supervisory Board propose
an increased dividend of €3.25 per share (prior year: €2.45).
Daimler and the Capital Market
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
62
The three partners acquire the digital mapping business operated
by HERE from Nokia Corporations, with equal shareholdings.
The move will ensure the availability of HERE products and
services as a permanently open, independent and value-added
platform for cloud-based map and mobility services.
Audi, BMW and Daimler successfully conclude HERE
acquisition
The new corporate design is intended to underscore Daimler's
premium claim worldwide even more effectively than before.
The shiny chrome Daimler corporate logo and the use of silver
as the new main design color convey a message of modernity,
elegance and cutting-edge technology, and also highlight the
Group's relationship with Mercedes-Benz, which is Daimler's
most valuable vehicle brand.
Daimler presents its new corporate design
With the establishment of their joint venture, H2 MOBILITY
Deutschland GmbH & Co. KG, the companies Air Liquide,
Daimler, Linde, OMV, Shell and Total have set the stage for
a phased expansion of the hydrogen filling station network
in Germany. Plans call for approximately 400 new stations
to be built in Germany by 2023.
Filling stations for fuel-cell vehicles
Most successful motorsport year in Daimler's history
MERCEDES AMG PETRONAS clinches both the Drivers' and the
Constructors' Championship in the Formula 1 series by a wide
margin before the season ends. World Champion Lewis Hamilton
and second-place finisher Nico Rosberg dominate nearly
every race in 2015. Mercedes-Benz also captures the Drivers'
Championship in the German DTM touring car series, with
Pascal Wehrlein becoming the youngest champion of all time
at the tender age of 20.
The milestone truck is a series-production Actros equipped
with the intelligent Highway Pilot system for testing autonomous
driving on public roads. The testing of a self-driving truck on
public roads in Germany is another milestone on the path to this
technology's market maturity - and to safe and sustainable
road freight transport in the future.
First autonomous series-production truck
on a German autobahn
501
Development of Daimler's share price and of major indices
End of 2015 End of 2014
Fitch
77.58
Daimler share price (in euros)
+9
17,451
19,034
+4
-2
DBRS
17,425
Dow Jones STOXX Auto Index
3,268
Dow Jones Euro STOXX 50
Dow Jones Industrial Average
Nikkei
+10
9,806
10,743
DAX 30
3,146
68.97
Net assets
X
Value added
Profit measure
Cost of
capital (%)
Cost of capital
X
Return on
sales
Net assets
productivity
Cost of
capital (%)
× Net assets
Calculation of value added
Value
added
B.03
Value added
Net assets
Sale of Atlantis Foundries (Pty.) Ltd.
Daimler Trucks also continually works to improve its competi-
tiveness. Within the framework of this strategy, a decision was
made at the end of February to sell the division's Atlantis
Foundries business in South Africa. The new owner is an estab-
lished supplier company that will continue to deliver cylinder
crankcases to Daimler. The transaction was completed at the
end of June 2015 after approval by the relevant authorities.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 77
Efficiency programs take full effect
With the programs "Fit for Leadership" at Mercedes-Benz Cars,
"Daimler Trucks #1" at Daimler Trucks, "Performance Vans"
at Mercedes-Benz Vans and "GLOBE 2013" at Daimler Buses,
we were able to achieve earnings contributions totaling
approximately €4 billion by the end of 2014 as a result of mea-
sures taken for the sustained improvement of cost structures,
as well as through additional business activities. As planned,
those programs had their full effect in 2015. Further efficiency
enhancements are currently being implemented in all divisions.
In addition, we are taking fundamental measures for the
long-term and structural optimization of the business system.
For example, the "Fit for Leadership Next Stage" follow-up
program was launched at Mercedes-Benz Cars in 2015. We are
also continuing the standardization and modularization of
production processes throughout the Group, making intelligent
use of vehicle platforms in order to generate additional cost
benefits, for example. In parallel, we are systematically moving
ahead with digital connectivity at all divisions and along the
entire value chain - from development and production to sales
and service. Among other things, this approach gives us addi-
tional scope to become faster and more flexible and efficient,
to the benefit of our customers. These long-term structural
measures already had a positive impact on earnings in 2015 and
will facilitate further efficiency gains in the coming years.
Performance measurement system
Net assets are the basis for the investors' required return.
The industrial divisions are accountable for the net operating
assets; all assets, liabilities and provisions which they are
responsible for in day-to-day operations are therefore allocated
to them. Performance measurement at Daimler Financial
Services is on an equity basis. Net assets at the Group level
include the net operating assets of the industrial divisions
and the equity of Daimler Financial Services, as well as assets
and liabilities from income taxes and other reconciliation
items that cannot be allocated to the divisions. Average annual
net assets are calculated from average quarterly net assets.
page 90
Financial performance measures
Value added is a key element of our performance measurement
system, which is applied at both the Group and the divisional
levels. It is calculated as the difference between operating profit
and the cost of capital of average net assets. Alternatively,
the value added of the industrial divisions can be determined
using the main value drivers of return on sales (quotient
of EBIT and revenue) and net assets' productivity (quotient
of revenue and net assets). 7 B.03
The use of a combination of return on sales and net assets'
productivity within the context of a strategy of profitable
revenue growth provides the basis for the positive development
of value added. Value added shows the extent to which the
Group and its divisions achieve or exceed the minimum return
requirements of shareholders and creditors, thus creating
additional value.
The quantitative development of value added and the
other financial performance measures is explained in the
"Profitability" chapter.
Profit measure
pages 85 ff
The measure of operating profit at the divisional level is EBIT
(earnings before interest and income taxes). EBIT thus reflects
the divisions' responsibility for profit and loss. The measure
of operating profit used at the Group level is net operating profit.
It comprises the EBIT of the divisions as well as profit and
loss effects for which the divisions are not held responsible.
The latter include income taxes and other reconciliation items.
7 B.12 on page 85
The financial performance measures used at Daimler are
oriented toward our investors' interests and expectations and
provide the foundation of our value-based management.
of the Economic Situation
1.1
We are continually optimizing our sales structures also
in other markets.
The workforce
115
Social responsibility
117
Economic Conditions and Business
Development
79
75
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
As the biggest globally active manufacturer of trucks above
6 metric tons gross vehicle weight, Daimler Trucks develops
and produces vehicles in a global network under the brands
Mercedes-Benz, Freightliner, Western Star, FUSO and BharatBenz.
The division's 26 production facilities are located in the
NAFTA region (14), Europe (7), Asia (3) and South America (2).
In China, Beijing Foton Daimler Automotive Co., Ltd. (BFDA),
a joint venture with our Chinese partner Beiqi Foton Motor Co.,
The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium vehicles of the
Mercedes-Benz brand and its Mercedes-AMG and Mercedes-
Maybach sub-brands. These vehicles range from the compact
models of the A-Class and B-Class to a highly varied program
of sport utility vehicles, roadsters, coupes and convertibles,
and S-Class luxury sedans. The portfolio is rounded out by the
new Mercedes me sub-brand and the high-quality small cars
of the smart brand. The main country of manufacture is Germany,
but the division also has production facilities in the United
States, China, France, Hungary, Romania, South Africa, India,
Vietnam and Indonesia, and at Valmet Automotive in Finland.
In the medium term, we anticipate significant growth in world-
wide demand for automobiles and above-average growth in
the premium car segment. In order to ensure that we can exploit
this potential, we are creating additional production capacities,
especially at Beijing Benz Automotive Co. (BBAC) in China and
at our plants in the United States and India. We will also
expand our global production network with a new plant in Brazil,
where we will produce the next generation of the C-Class
as well as the GLA compact SUV for the local market starting
in 2016. Together with our partner Renault-Nissan, we are
now establishing an assembly plant in Aguascalientes, Mexico,
which will also begin manufacturing compact vehicles of the
Mercedes-Benz brand in 2018. The most important markets for
Mercedes-Benz Cars in 2015 were China with 20% of unit
sales, the United States (18%), Germany (15%) and the other
markets of Western Europe (24%).
In 2015, Daimler increased its revenue by 15% to €149.5 billion.
The individual divisions contributed to this total as follows:
Mercedes-Benz Cars 54%, Daimler Trucks 24%, Mercedes-Benz
Vans 7%, Daimler Buses 3% and Daimler Financial Services 12%.
At the end of 2015, Daimler employed a total workforce of more
than 284,000 people worldwide.
12%
Daimler Financial Services
3%
Daimler Buses
7%
78
112
Environmental protection
77
Corporate Profile
74
Sustainability
105
Business model
Portfolio changes and strategic partnerships
Efficiency programs take full effect
Performance measurement system
Mercedes-Benz Vans
Corporate governance statement
74
76
Sustainability at Daimler
Research and development
105
106
77
Innovation and safety
108
ZO
24%
Daimler Trucks
54%
155
Revenue and earnings
104
Outlook
154
Unit sales
104
Risks and opportunities
Free cash flow and liquidity
153
103
Financial position, liquidity and capital resources
152
The world economy
102
Profitability
152
Outlook
Automotive markets
B | Combined Management Report
156
156
Mercedes-Benz Cars
Consolidated revenue by division
B.01
With its strong brands, Daimler is active in nearly all the countries
of the world. The Group has production facilities in a total
of 19 countries and more than 8,500 sales centers worldwide.
The global networking of research and development activities
and of production and sales locations gives Daimler considerable
advantages in the international competitive field and also
offers additional growth opportunities. In addition, we can apply
our innovative drive and safety technologies in a broad port-
folio of vehicles while utilizing experience and expertise from
all parts of the Group. This also helps us with the further
development of autonomous driving technology, an area in which
we play a pioneering role for both passenger cars and
commercial vehicles.
Daimler AG is the parent company of the Daimler Group and
is domiciled in Stuttgart (Mercedesstraße 137, 70327 Stuttgart,
Germany). The main business of Daimler AG is the develop-
ment, production and distribution of cars, trucks and vans in
Germany and the management of the Daimler Group. The
management reports for Daimler AG and for the Daimler Group
are combined in this management report.
Daimler can look back on a tradition covering 130 years - a tradi-
tion that extends back to Gottlieb Daimler and Carl Benz, the
inventors of the automobile, and features pioneering achieve-
ments in automotive engineering. Today, the Daimler Group
is a globally leading vehicle manufacturer with an unparalleled
range of premium automobiles, trucks, vans and buses. The
product portfolio is rounded out by a range of tailored financial
services and mobility services. Daimler seeks to play a leading
role in the digitization of products, services and processes in the
automotive industry.
Business model
Corporate Profile
Dividend
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
157
Overall statement on future development
157
The workforce
156
Research and development
156
Investment
74
102
B❘ COMBINED MANAGEMENT REPORT | CONTENTS 73
We are growing profitably
and sustainably
2014 actual 2015 actual 2016-2017
Amounts in billions of euros
Daimler Group
5.7
6.6
14.5
Mercedes-Benz Cars
4.0
4.7
10.7
Daimler Trucks
1.2
1.3
0.3
Mercedes-Benz Vans
2.7
1.1
Research and development expenditure
A.13
3%
5%
Daimler Buses
0.1
0.1
0.2
Daimler Financial Services
0.02
0.03
0.05
0.8
Extensive investment in the future
of the company
The investment in property, plant and equipment will mainly
be used to prepare for the production of our new models,
to modernize and realign our manufacturing facilities in Germany,
to expand local production in growth markets and to enhance
and restructure our sales organization. page 95
A.12
Research and development expenditure 2016 - 2017
In %
Mercedes-Benz Cars
74%
Daimler Trucks
18%
Mercedes-Benz Vans
Daimler Buses
In the coming years, we will continue to move ahead system-
atically with our investment offensive in order to implement
our growth strategy through the introduction of new products,
innovative technologies and state-of-the-art manufacturing
capacities. A large amount of our investment will be used for the
digitization of processes and products throughout the entire
company. We will therefore invest approximately €14 billion in
property, plant and equipment in 2016 and 2017, as well as
€14.5 billion in research and development projects. With
this plan, we are once again substantially increasing our
investment in order to safeguard the future of our company.
7 A.10 to A.13
Daimler Trucks
9.9
3.6
A.10
Most of our outlay for research and development is used for new
products, innovative drive and safety technologies, vehicle
connectivity systems and the further development of autonomous
driving technologies. Between 2012 and 2020, we will launch
more than 30 new car models and will also systematically further
develop our range of commercial vehicles. In addition, we
intend to continue significantly reducing our vehicles' fuel
consumption, and thus CO2 emissions, for example with the
use of innovative hybrid drive systems. We will also continue
to set standards in the areas of safety and autonomous driving
for cars and commercial vehicles. pages 6 ff and 107 ff
New ways of thinking and acting are required if the digital
transformation at our company is to be successful. We want
to get our employees enthusiastic about digital technologies
and strengthen our culture of innovation. We are addressing
digitization issues with the help of new innovation formats.
We are changing our structures and processes in order to ensure
we can optimally exploit the opportunities offered by digitiza-
tion. Our goal is to successfully combine the speed and
risk-taking culture of the digital sector with our company's
perfection and innovative capability. For us, digitization
is just as important as a strong core business and leadership
in technology.
The further digitization of core processes and the compre-
hensive expansion of digital services are also important goals
for the next few years at Daimler Financial Services.
Digitization along the entire value chain allows us to shorten
development times, design production processes more flexibly
and utilize marketing and sales channels in a more direct
manner. For example, the development time for the Concept
IAA (Intelligent Aerodynamic Automobile) presented at the
Frankfurt Motor Show in 2015 was shortened from one and
a half years to less than ten months. Industry 4.0 will digitize
factories through the use of systems for augmented reality,
virtual assembly or human-robot cooperation. The amount
of monotonous and strenuous work will be reduced as a result.
The intelligent use of continually increasing volumes of data,
along with the networking of all points in the value chain, will
enhance efficiency, improve quality, increase speed and make
the entire production process even more flexible. It is also no
longer possible to imagine marketing and customer-oriented
communication without digitization. Our social media channels
are already widespread and successful, for example. Concepts
such as the lifestyle configurator, temporary pop-up stores
and extra online sales channels help us directly address our
customers in an innovative manner - and gain new customers
as well.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 71
Digital technologies also offer us the opportunity to develop
new and innovative mobility concepts for private, business and
public transport applications. Examples here include car2go,
CharterWay, Bus Rapid Transit (BRT) and the “moovel" mobility
platform. car2go, which is our biggest business for private
mobility services and is managed by Daimler Financial Services,
is being further expanded around the world and linked with
the moovel range of services. By the end of 2015, car2go was
established at 31 locations in Europe and North America
and had well over a million customers. car2go is also one of the
biggest car-sharing companies for electric vehicles, with
all-electric fleets at four locations. moovel offers our customers
the opportunity to optimally combine various private and public
mobility services and book them through a payment system.
so that our products become part of an overall logistics system.
We are further expanding our Detroit Connect telematics
services in North America in cooperation with our strategic
partner Zonar Systems. We are further developing FleetBoard
in Europe, South Africa and Brazil, where the system is
now included in half of all our new trucks. The Mercedes-Benz
Vans and Daimler Buses divisions are also developing
integrated transport solutions and improving their fleet
management systems.
Investment in property, plant and equipment 2016 - 2017
In %
2.6
0.3
0.4
0.8
Daimler Buses
0.2
0.2
0.4
STUN 2921
Mercedes-Benz Vans
Daimler accelerated along its profitable growth path in the year 2015. Unit sales,
revenue and earnings were significantly higher than in the previous year. We inspired
our customers with numerous new products and improved Daimler's market position.
At the same time, we succeeded in putting pioneering innovations on the road, such
as autonomous driving and the new plug-in hybrids. We pressed forward with the
digitization of our products and processes throughout the Group. On the basis of sound
finances, we were once again able to invest very substantial amounts in our future,
thus creating the right conditions for further profitable growth.
Mercedes-Benz Cars
Daimler Trucks
3.6
Mercedes-Benz Cars
14.0
5.1
4.8
Daimler Group
Amounts in billions of euros
2015 actual 2016-2017
71%
2014 actual
A.11
0.4%
Daimler Financial Services
1%
Daimler Buses
8%
Mercedes-Benz Vans
20%
Investment in property, plant and equipment
according to HGB)
Daimler AG (condensed version
151
Mercedes-Benz
Daimler Trucks
Mercedes-Benz
Daimler Buses
Daimler
Cars
Vans
Financial Services
Revenue
€83.8 billion
€37.6 billion
€11.5 billion
€4.1 billion
€19.0 billion
Employees
136,941
86,391
Daimler Group structure 2015
B.02
The Daimler Financial Services division supports the sales
of the Daimler Group's automotive brands in more than
40 countries. Its product portfolio primarily consists of tailored
financing and leasing packages for customers and dealers,
but also insurance brokering, fleet management services, invest-
ment products and credit cards, as well as various mobility
services such as the "moovel" mobility platform, the "mytaxi"
app and the flexible car2go mobility concept. The main areas
of the division's activities are Western Europe and North America,
and increasingly Asia as well. During the year under review,
Daimler Financial Services financed or leased nearly 50% of the
vehicles sold by the Daimler Group. The division's contract
volume of €116.7 billion covers more than 3.7 million vehicles.
Daimler Financial Services also holds a 45% interest in the
Toll Collect consortium, which operates an electronic toll-
charging system for trucks on highways in Germany.
The Daimler Buses division with its brands Mercedes-Benz
and Setra is the undisputed industry leader in the segment
for buses above 8 metric tons in its core markets. The division's
product range comprises city and intercity buses, coaches
and bus chassis. The largest of the division's 14 production sites
are located in Germany, France, Spain, Turkey, Argentina,
Brazil and Mexico. In the year under review, a new bus plant
was opened at the production location in Chennai, India.
Front-engine buses are produced there to meet the requirements
of the Indian volume market with bodies from the British bus
manufacturer Wrightbus. Rear-engine buses for the premium
segment are built and sold under the Mercedes-Benz brand
name in India. Another new bus plant started production last year
in Funza near Bogotá, Colombia. In 2015, Daimler Buses
generated 58% of its revenue in Western Europe and 18%
in Latin America (excluding Mexico). While we mainly sell fully
equipped buses in Europe, our business in Latin America,
Mexico, Africa and Asia is focused on the production and
distribution of bus chassis.
Daimler Buses plans to grow in the emerging markets in the
coming years. Extensive potential for growth exists in Latin
America especially, and this potential can be utilized once the
markets in the region begin to recover. In India, Daimler Buses
has integrated its local business activities into the Daimler
India Commercial Vehicles (DICV) organization and also started
operations at a new plant in the country. Among other things,
Daimler Buses has set itself the goal of moving into the premium
bus segment in India.
Within the framework of its "Mercedes-Benz Vans goes global"
strategy, Mercedes-Benz Vans also plans to grow in new
markets. In order to meet the rising demand for our Sprinter in
North America and to improve our cost position over the long
term, a new production plant is being established in Charleston
in the US state of South Carolina. We also produce vans in
Argentina as well as in Russia with our partner GAZ. Alongside
the Sprinter, the Vito is meanwhile the second world van from
Mercedes-Benz Vans. Following the market launch in Europe
in 2014, the mid-size van was launched in October 2015 in Latin
America and under the name Metris also in North America.
For the Latin American market, the vehicle is also produced in
Argentina. The joint venture Fujian Benz Automotive Corporation
produces the models Vito, Viano and Sprinter for the Chinese
market. In 2016, the Viano will be there replaced with the new
V-Class, which should stimulate further growth. The entry
into the worldwide volume segment of mid-size pickups before
the end of the decade in cooperation with our strategic partner
Renault-Nissan is to be seen as a further step in the global
growth strategy.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 69
In order to fully utilize growth opportunities in the markets
of the future in Africa, Asia and Latin America, we are position-
ing ourselves even closer to the pulse of the market in these
regions with our new regional centers. They will concentrate
on sales and aftersales for commercial vehicles of the Daimler
brands. Following the opening of the first of six worldwide
regional centers in Dubai in October last year, more regional
centers will follow in the first quarter of 2016.
Our activities in the field of medium-duty and heavy-duty
trucks in China focus on cooperation with our partner Foton,
with which we produce Auman-brand trucks in our joint
venture Beijing Foton Daimler Automotive Co. Ltd. (BFDA).
Our goal for Daimler Trucks is to safeguard the division's strong
position in Europe and North and South America, and to
achieve significant growth in particular in the Asian markets
with Daimler Trucks Asia. Daimler Trucks Asia consists of
the two regional companies Mitsubishi Fuso Truck and Bus
Corporation (MFTBC) and Daimler India Commercial Vehicles
(DICV), which has been operating in India for several years.
The consolidation of these two companies under a joint manage-
ment system enables us to more effectively exploit market
potential in the region and also generate synergies. At DICV
in India, we build trucks of the BharatBenz brand as well
as FUSO trucks for export to external markets. The FUSO trucks
built in India are mainly aimed at price-sensitive markets
in Asia and Africa.
We will begin producing the C-Class and the GLA for the local
market in Brazil in 2016. In Mexico, Daimler and the Renault-
Nissan alliance have laid the foundation stone for a shared
production plant in Aguascalientes. The first Mercedes-Benz
vehicles should drive off the production lines there in 2018.
We have further expanded assembly capacity in India to include
the compact CLA-Class, which means that seven of the
nine volume models available in India are now assembled
locally in Pune.
22,639
In order to achieve Mercedes-Benz Cars' sales targets, we
are intensifying our local activities, particularly in China but
also in Brazil and India. We manufacture the GLK SUV in China,
and in late 2015 we began building its successor, the GLC,
there as well. We also produce the long-wheelbase version of
the E-Class, long and short versions of the C-Class and, since
mid-2015, the GLA compact SUV in China. Beginning in mid-2016,
the previous long-wheelbase version of the E-Class will be
replaced with a successor model. We opened a new production
plant for four-cylinder engines in China in late 2013, and this
facility has been gradually expanded since then. As of year-end
2015, we and our partner BAIC had invested a total of €4 billion
in the expansion of local car and engine production in China.
In the electric-vehicle segment, we joined forces with the Chinese
battery and vehicle manufacturer BYD to develop a battery-
electric automobile. This electric vehicle was launched in China
in 2014 under the DENZA brand name. We are continuing our
internationalization strategy for the research and development
unit with the expansion of the R&D center in Beijing. Our dealer-
ship network in China is now just as extensive as the networks
of our main competitors.
Growing on a global scale
Daimler Financial Services remains on course for growth.
Approximately half of all newly delivered passenger cars from
the Daimler Group worldwide are already financed or leased
by Daimler Financial Services. The division currently finances
3.7 million cars and commercial vehicles worldwide, and
plans to increase this figure in the future. At the same time, the
division will expand its product range in the areas of financing,
leasing, insurance and mobility services. The company is also
focusing on the expanded use of digital sales channels and
more extensive networking with the vehicle divisions. Daimler
Financial Services currently enjoys an excellent reputation
as an attractive employer, which serves as further motivation
for the company to maintain its employees' high level of
satisfaction and remain very appealing to external job appli-
cants in the future.
Daimler Buses will focus over the next few years on achieving
further growth and continual efficiency gains. Additional business
volume will be generated through increased sales of highly
attractive buses and bus chassis, as well as by a larger number
of more extensive services for buses. Our new Mercedes-Benz
Citaro NGT model is an urban regular-service bus powered by a
highly efficient natural-gas engine.
Mercedes-Benz Vans intends to strengthen its good market
position in Western Europe with tailored and technologically
leading products. For this purpose, the division is systematically
further developing its proven models Sprinter, Vito and Citan,
with which it primarily addresses commercial customers. The
focus is on the product features that are especially important
to customers: economy and safety. With the very successful
V-Class multipurpose vehicle, the Marco Polo models and the
Vito Tourer, Mercedes-Benz Vans is addressing additional
target groups. New markets are to be developed with these
models also in regional terms.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
68
Ltd., has been producing trucks under the Auman brand name
since 2012. Daimler Trucks' product range includes light-,
medium- and heavy-duty trucks for local and long-distance
deliveries and construction sites, as well as special vehicles
used mainly in municipal applications. Due to close links in terms
of production technology, the division's product range also
includes the buses of the Thomas Built Buses and FUSO brands.
Daimler Trucks' most important sales markets in 2015 were
the NAFTA region with 38% of unit sales, Asia (29%), Western
Europe (13%) and Latin America excluding Mexico (6%).
The product range of the Mercedes-Benz Vans division in
the segment for mid-size and large vans comprises the Sprinter
and Vito series. Our portfolio is rounded out at the lower
end by the Mercedes-Benz Citan city van, the addition of which
makes us a full-range supplier in the van market. In 2014,
we also launched the V-Class, which is a multi-purpose vehicle
(MPV). Mercedes-Benz Vans has manufacturing facilities at
a total of nine locations in Germany, Spain, the United States
and Argentina, as well as in China within the framework of
the Fujian Benz Automotive Co., Ltd. joint venture, and in France
in the context of the strategic alliance with Renault-Nissan.
The Mercedes-Benz Sprinter Classic is produced under license
by our partner GAZ in Russia. The most important markets
for vans at the moment are in Western Europe, which accounts
for 65% of unit sales. As part of the "Mercedes-Benz Vans goes
global" business strategy, we are also increasingly developing
the growth markets of South America and Asia, as well as
the Russian van market. In addition, we plan to more effectively
exploit the potential of the expanding North American van
market in the future, and to this end we expanded our range
of products in that market in 2015 by launching the Vito
under the name Metris. With our new production location for
the next-generation Sprinter in South Carolina in the United
States (construction to begin in 2016), we will also improve
our cost position in this major sales market.
Growth in global demand for automobiles will take place mainly
in Asia in the coming years. Although growth rates in China
will be more moderate in the next few years, we expect China
to permanently become the world's largest automobile
market over the next ten years. For Daimler, growing further
on a global scale means improving our strong position in
passenger car and commercial vehicle markets in Europe,
North America and Japan, while also fully exploiting growth
potential in Asia and various emerging markets.
18,147
9,975
Brands
mytaxi
76
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Daimler is also active in the global automotive industry
and related sectors through a broad network of subsidiaries,
associated companies, joint ventures and cooperations.
The statement of investments of Daimler AG in accordance with
Section 313 of the German Commercial Code (HGB) can
be found in O Note 39 of the Notes to the Consolidated
Financial Statements.
Portfolio changes and strategic partnerships
By means of targeted investments and future-oriented partner-
ships, we strengthened our core business and utilized addi-
tional growth potential in 2015. At the same time, we focused
on the continuous further development of our existing busi-
ness portfolio, as well as on improving our competitiveness in
our core business areas.
Entry into the digital map business
In August 2015, Audi, BMW and Daimler reached an agreement
with the Nokia Corporation on the acquisition of its HERE
subsidiary, which provides digital mapping and location-based
services. This move will ensure the availability of HERE products
and services as a permanently open, independent and value-
added platform for cloud-based map and mobility services.
Digital maps from HERE will serve as the foundation for the next
generation of mobility and location-based services, which in
turn will form the basis for new assistance systems and even-
tually fully automated vehicles. Such systems link highly
precise digital map data with real-time vehicle data in a manner
that enhances road safety and enables the introduction
of innovative products and services. The three partners have
acquired equal numbers of shares in HERE. The purchase
price of €2.6 billion was financed by capital contributions from
Audi, BMW and Daimler and partially by borrowing. Daimler's
capital contribution amounted to €0.7 billion. After receiving the
approval of the antitrust authorities, the transaction was
completed in December 2015.
CAR
2GO
Audi, BMW and Daimler plan for other investors to acquire
shares in HERE and to reduce their own stakes in HERE from
the current level of 33.3%.
Daimler and the Chinese automobile manufacturer BAIC Motor
Corporation plan to intensify their cooperation in the area
of financial services. To this end, Daimler AG and BAIC Motor
Corporation signed an agreement in March 2015. In line with
that agreement, BAIC Motor, which is the passenger car
division of the BAIC Group, has acquired 35% of Mercedes-Benz
Leasing Co., Ltd (MBLC) within the framework of a capital
increase. Daimler will retain its majority interest with 65% of
MBLC's shares. The transaction was completed at the beginning
of September 2015 after being approved by the relevant
authorities. The expansion of financial services is an important
factor for achieving growth in China in the future.
We once again expanded production capacities at Beijing
Benz Automotive Co., Ltd. (BBAC) in 2015. Another SUV
model for the Chinese market went into production there
in October the GLC - about six months after the start
of production of the compact GLA. In 2015, we produced
more than 200,000 vehicles locally at BBAC for the first
time in one year.
Production joint venture with Nissan launched in Mexico
Daimler and the Renault-Nissan Alliance have intensified
their cooperation five years after the launch of their strategic
partnership. In September, the two companies laid the corner-
stone for a new joint-venture production plant in Aguascalientes,
Mexico, known as COMPAS (Cooperation Manufacturing Plant
Aguascalientes), whose establishment had been agreed upon
back in June 2014. The new plant is being constructed at a site
in the direct vicinity of an existing Nissan facility. After the start
of production, the new plant will be ramped up to an annual
capacity of 300,000 units, which is expected to be achieved
by 2021. Production is scheduled to begin with Infiniti models
in 2017. The plant will start producing Mercedes-Benz brand
vehicles in 2018. The partners will invest a total of $1 billion
in the joint venture. Daimler and Renault-Nissan will also coop-
erate on the development of the next generation of premium
compact cars for the Mercedes-Benz and Infiniti brands.
Daimler acquires an interest in Zonar Systems
In June 2015, Daimler Trucks North America (DTNA) acquired
a minority interest in Zonar Systems Inc., which is one of
the leading developers and suppliers of logistics, telematics and
connectivity solutions. The investment is a key milestone
along the way to completely connected vehicles and value-added
services for truck fleet operators and drivers. DTNA and
Zonar will work together to launch tailored applications for
North American customers.
Reorganization of the sales system
Mercedes-Benz is restructuring its own sales organization
in Germany for the requirements of the future. The objective
is to ensure optimal customer care, to operate profitably
on a sustainable basis, and thus to protect jobs. In this context,
63 of the total 158 Daimler-owned sales locations were sold
in 2015. For 26 of the operations sold, the transfer of ownership
took place on January 1, 2016. The other transactions will
be concluded in 2016.
In addition, Daimler's own sales-and-service centers, which had
been organized in early 2015 as regional sales centers, eleven
for cars and eleven for trucks, have now been transitioned into
the planned target structure of seven regional sales centers
for cars and seven for trucks as of January 1, 2016. We are thus
consistently pursuing our strategy of a divisional orientation;
by focusing on the respective business we are ensuring optimal
customer care, the basis for secure jobs and adequate
profitability.
Expansion of the partnership with BAIC
The Daimler Financial Services division continues to expand
its business activities in line with the growth strategies of the
automotive divisions. The division offers leasing and financing
models tailored to specific regions. China especially offers
good opportunities for further substantial growth in the future.
Daimler Financial Services supports the worldwide sales of
Daimler vehicles in more than 40 countries, and will profit from
the growing unit sales in those markets.
moovel
Mercedes-Benz Financial
Mercedes-Benz
Mercedes-Benz
AMG
FREIGHTLINER
MAYBACH
smart
FUSO
M
Daimler Truck Financial
WESTERN STAR
BUILT BUSES
Mercedes me
BHARATBENZ
Mercedes-Benz
FREIGHTLINER
Mercedes-Benz
Mercedes-Benz Bank
SETRA
mas
Maintaining our technology leadership
As a pioneer of automotive engineering, we continue to expand
our leadership in the areas of drive system technology, safety,
autonomous driving and the connectivity of our vehicles. Regard-
less of whether our customers travel long distances, along
country roads, or mainly in cities - we offer the right drive system
solution for every user profile. Our portfolio ranges from opti-
mized internal combustion engines to hybrid drive and locally
emission-free solutions. In 2015, we were able to reduce
the average CO2 emissions of newly registered vehicles from
Mercedes-Benz Cars in the European Union from 129 grams
per kilometer to 123 g/km. This means we have achieved our
2016 target of 125 g/km ahead of schedule. Beginning in 2016,
our new E-Class will also help us achieve a further significant
reduction in fuel consumption and thus CO2 emissions, thanks
to its lightweight design, improved aerodynamics and highly
efficient combustion engines. Consistent hybridization is an
important component of the drive-system strategy at
Mercedes-Benz Cars. We plan to launch a total of ten plug-in
hybrid models in the period of 2014 through 2017. Our new
plug-in hybrid vehicles combine the highest levels of dynamic
handling and comfort with the fuel consumption of a small car,
and can drive up to 33 kilometers in purely electric mode - and
thus locally emission free. Fuel consumption here ranges from
3.3 liters per 100 kilometers for the GLE 500 e 4MATIC¹ to an
outstanding 2.1 l/100 km in the most efficient model, the
C 350 e². Our activities in the area of alternative drive systems
will focus on plug-in hybrids in the years ahead. However,
we are also a leader for purely electric mobility. For example,
we expanded our range of series-produced electric vehicles
in 2014 to include the new electric B-Class for the United States
and Europe. The DENZA brand gives us an electric vehicle
exclusively for the Chinese market. And we will launch the new
smart electric drive in 2016. In the medium term, another
battery-electric vehicle with a range of up to 500 kilometers
will be available. We are also pushing forward with fuel-cell
technology. In 2017, we will present the next vehicle generation
on the basis of our GLC.
91
ངས
135
Takeover-Relevant Information
and Explanation
91
Financial Position
Credit ratings
Refinancing
92
Investment
Other financial obligations, financial
Principles and objectives of financial management
Cash flows
Liquidity and Capital Resources
89
Value added
134
Remuneration of the Supervisory Board
89
guarantees and contingent liabilities
Net operating profit
Risk and Opportunity Report
10 10000
and opportunity situation
Overall assessment of the risk
99
150
Risks from guarantees, legal and tax risks
We are extending our range of digital services also at Daimler
Trucks. Connectivity will be a crucial factor for success in
the logistics sector in the future. Our goal is to be the leading
commercial vehicle manufacturer in terms of connectivity
Financial risks and opportunities
146
138
Company-specific risks and opportunities
140
Industry and business risks and opportunities
140
138
Risk and opportunity management system
Risks and opportunities
96
95
95
98
0.2
128
89
120
page 18
We continue to roll out connected vehicles at Mercedes-Benz
Cars. Mercedes me connect is now available in nearly all
model series and customers can access their vehicle online
at any time and from any location. Mercedes me is our digital
platform that brings together mobility, financing and other
services (connect, assist, move and finance), and also provides
information and news about the Mercedes-Benz brand
(inspire).
Digitization is changing the way we do things in a major way.
It is altering our products and services, our communication with
customers and the manner in which we create value at
Daimler. Digitization is also paving the way for new mobility
concepts. In order to remain on top as this transformation
proceeds, we are moving ahead with digitization at all levels and
along the entire value chain, while continuing to focus on
our customers. Our activities involve enhancing the connectivity
of our products, developing customer-focused digital services
and increasing digital communication with customers - starting
with the initial contact and extending through the entire
relationship. This approach offers our customers many benefits.
For example, connecting sales and production processes
enables us to respond to customer preferences more quickly,
individually and flexibly. We are also using digitization to
make our internal processes more efficient and to improve
their quality, while eliminating the need for our employees
to perform certain types of heavy physical labor.
Moving ahead with digitization
We are underscoring our leading position in the field of safety
also with new assistance systems and with the further devel-
opment of the emergency-braking and lane-keeping assistants.
And in the near future, we will launch the turning assistant on
the market. It can recognize pedestrians, cyclists and stationary
obstacles, thus preventing accidents in urban traffic and
saving lives.
In May 2015, Daimler Trucks received the world's first permit
for an autonomously driving truck on public roads for the
Freightliner Inspiration Truck in the US state of Nevada. And
since October 2015, the first autonomously driving series-
produced truck, a Mercedes-Benz Actros with Highway Pilot,
has been undergoing road tests in Germany. Autonomous
driving offers many advantages in particular for transporting
goods by road. It increases safety, as well as efficiency
as a result of optimal gear shifting, braking and accelerating.
We will also further strengthen our position as a pioneer in
the development of active and passive safety systems for cars
and commercial vehicles. Our goal here is to offer the highest
degree of safety in all our model series. The E-Class, which will
become available in the spring of 2016, marks a major step
forward on the path to autonomous and connected driving. The
new Intelligent Drive next Level system enables the vehicle
to follow traffic ahead in its lane at speeds of up to 210 km/h.
At speeds up to 130 km/h, the system can intervene even
without clearly visible lane markings and thus ease the burden
on drivers, especially in congested and slow-moving traffic.
Active Brake Assist can detect traffic approaching from the side
at an intersection, as well as traffic jams and pedestrians in
danger zones in front of the car. The system can warn drivers
of an impending collision and automatically initiate an emer-
gency braking maneuver if necessary. The S 500 INTELLIGENT
DRIVE research car and the Future Truck 2025 are both mile-
stones on the road to fully autonomous driving, which we want
to make a reality in a series-production car by the end of this
decade. In September 2015, we became the first automaker
to receive official permission to test autonomously driving
vehicles on public roads in California in the United States.
The world economy
We continue to safeguard our leading position with regard
to safety and assistance systems in all our automotive divisions.
In parallel, we are developing autonomous driving to series
maturity for cars and commercial vehicles.
pages 6ff
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
70
2 C 350 e: fuel consumption in l/100 km (combined): 2.4-2.1;
CO2 emissions in g/km (combined): 54-48;
electricity consumption in kWh/100 km: 11.3-11.0
electricity consumption in kWh/100 km: 16.0
1 GLE 500 e 4MATIC: fuel consumption in l/100 km (combined): 3.3;
CO2 emissions in g/km (combined): 78;
The Freightliner Cascadia Evolution is currently the most
fuel-efficient heavy-duty truck on the North American market.
We are the world leader for hybrid technologies in commercial
vehicles. The Canter Eco Hybrid for example boasts fuel savings
of as much as 23%, and owners are able to recoup the addi-
tional cost for the hybrid model in just a few years. A series of
customer tests with the emission-free FUSO Canter E-CELL
resulted in operating costs that were 64% lower than those for
a conventional diesel truck. We thus already have an effective
and reliable concept in place today that will enable us to meet
the requirements for urban delivery vehicles and address
the challenges that will be brought by more restrictive emission
standards in metropolitan areas in the future.
In Europe, we want to reduce the fuel consumption of our truck
fleet by an average of 20% over the period of 2005 to 2020.
We are confident that we will achieve this ambitious goal and
took a further step in that direction with the introduction of the
new generation of the OM471 heavy-duty truck engine in 2015.
In order to improve the fuel efficiency of commercial vehicles
as well, we are optimizing vehicles and powertrains at our
Daimler Trucks division. The Predictive Powertrain Control cruise
control system makes it possible for example to reduce diesel
fuel consumption by as much as 5%. The new generation of the
OM471 heavy-duty engine consumes up to 3% less fuel than
its predecessor. We conducted a field test with a comprehensively
optimized truck that was not only equipped with the new
engine but also featured an enhanced trailer as well as modified
tires and other key components. The CO2 emissions produced
by this vehicle were 12 to 14% lower than those generated by
its non-optimized counterpart.
We have also achieved fuel savings of as much as 8% with our
new Euro VI bus models. Use of the second-generation OM471
heavy-duty engine in the new Mercedes-Benz Travego has
led to a further reduction in fuel consumption and CO2 emissions
of approximately 4%. Daimler Buses is also focusing more
on alternative drive systems. The Mercedes-Benz Citaro NGT is
a new urban regular-service bus equipped with a natural-gas
engine. The model stands out through its low-noise operation
and lower CO2 emissions, both of which are very important
considerations in congested cities. The CO2/km emissions of
the Citaro NGT are between 15% and 20% lower than those
of the predecessor model. Daimler Buses also plans to launch
the Citaro E-CELL with a battery-electric drive and a new
model with fuel cells in the segment for locally emission-free
vehicles before the end of the decade.
Commitments upon termination of service
79
80
Dividend
126
Board of Management remuneration in 2015
88
Consolidated statement of income
122
Principles of Board of Management remuneration
85
Automotive markets
EBIT
Remuneration Report
85
Profitability
121
Events after the Reporting Period
1805
81
Business development
122
148
Overall Assessment
Daimler Trucks
EBIT
15/14
2015
% change
EBIT from ongoing business
2014
15/14
% change
Mercedes-Benz Cars
2014
7,926
+35
8,343
5,964
+40
2,576
1,878
5,853
2015
In millions of euros
EBIT by segment
Daimler Financial Services
18,962
15,991
+19
Profitability
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 85
EBIT
The Daimler Group achieved an EBIT of €13.2 billion in 2015
(2014: €10.8 billion). 7 B.12 71 B.13
The Mercedes-Benz Cars division in particular significantly sur-
passed its prior-year earnings as a result of further growth in
unit sales. This was primarily due to the new C-Class in its first
full year, as well as the expanded product range in the SUV
segment (including the GLA). Daimler Trucks and Mercedes-Benz
Vans significantly surpassed their prior-year earnings. Both
divisions achieved growth in unit sales mainly in the NAFTA
region and Europe. Daimler Buses achieved higher earnings
than in 2014. Daimler Financial Services once again significantly
surpassed its prior-year earnings, mainly as a result of its
increased contract volume.
The development of currency exchange rates and lower expenses
due to increased discount rates had a positive impact on oper-
ating profit. Also, the increasing effect of the implemented
efficiency measures contributed to higher EBIT.
Special items resulted in expenses for the Group in 2015. In
particular, expenses of €340 million from a recall in connec-
tion with Takata airbags at the Mercedes-Benz Cars and the
Mercedes-Benz Vans division, expenses connected with the
restructuring of the Group's own dealer network in a net amount
of €144 million across all automotive divisions and public-
sector levies related to prior periods of €121 million at the
Mercedes-Benz Cars division led to negative effects on
earnings.
The reconciliation of segment earnings to Group EBIT resulted
in significantly lower income than in the previous year. The
previous year was affected in particular by the income from the
disposal of the shares in Rolls-Royce Power Systems Holding
GmbH (RRPSH) and the remeasurement and sale of the shares
in Tesla Motors Inc. (Tesla) as well as the expenses from the
related hedging instruments totaling €1,482 million. Expenses
connected with the ongoing antitrust investigations of Euro-
pean truck manufacturers by the EU Commission reduced
earnings by €600 million in the previous year.
The special items affecting earnings in the years 2014 and 2015
are shown in table 7 B.14.
Due to the favorable business development in all divisions,
Daimler was able to significantly exceed its prior-year EBIT from
ongoing business of €10.1 billion, achieving €13.8 billion
in 2015, which is in line with our expectations as stated in the
Outlook section of Annual Report 2014. 7 B.12
B.12
+37
-2
2,742
+32
1,387
+17
Reconciliation
-29
755
-29
1,619
-127
Daimler Group
13,186
10,752
+23
13,829
10,146
-77
+17
1,387
1,619
Mercedes-Benz Vans
880
682
+29
952
638
+49
Daimler Buses
214
197
+9
202
211
-4
Daimler Financial Services
2,073
4,218
4,113
Daimler Buses
1 Based on estimates in certain markets.
84
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
Order situation
The Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans
and Daimler Buses divisions produce vehicles predominantly
to order in accordance with customers' specifications. In doing
so, we flexibly adjust production numbers to changing levels
of demand. Overall, the order situation of the Daimler Group
continued to develop very positively in 2015. Due to strong
demand in the United States and China in particular, the number
of orders placed with Mercedes-Benz Cars was once again
above the high level of orders recorded in the previous year.
This was driven on the product side primarily by the models
of the C-Class and the very successful new SUVs. Due to the
positive development of demand, we significantly increased
our production volumes. Nonetheless, the order backlog at the
end of 2015 was higher than a year before. At Daimler Trucks,
both orders received and order backlog at year-end were lower
than the high levels of the prior-year, which was positively
affected above all by the exceptionally high volume of orders
received in the NAFTA region in the fourth quarter. Another
factor is that orders in 2015 were negatively impacted by falling
demand in Indonesia and Latin America.
Revenue
+2.8
The Daimler Group increased its total revenue in the year
2015 by 15% to €149.5 billion; adjusted for exchange rate effects,
the increase amounted to 9%. This means that, as we had
expected at the beginning of 2015, our dynamic growth accel-
erated further thanks to the success of our new vehicle
models. The divisions Mercedes-Benz Cars (+14%), Daimler
Trucks (+16%) Mercedes-Benz Vans (+15%) and Daimler
Financial Services (+19%) all increased their business volumes
significantly. The factors behind this strong growth were the
market success of our products, as well as exchange-rate effects
especially at Daimler Trucks and Daimler Financial Services.
At Daimler Buses, revenue was 2% lower than in the previous year.
This was due to the negative impact of the market situation in
Latin America, which was even more unfavorable than expected
at the beginning of the year.
B.10
Consolidated revenue by region
In billions of euros
2011
2012
2013
2015
In regional terms, Daimler achieved revenue growth in
Western Europe (+13% to €49.6 billion), the NAFTA region
(+25% to €47.7 billion) and Asia (+15% to €33.7 billion).
49.7
52.5
-7.8
3.1
3.2
-0.1
8.7
8.9
-0.2
Daimler Buses
Buses over 8 metric tons
Western Europe
thereof Germany
Buses over 8 metric tons Brazil
30.9
34.4
-3.5
49.3
57.1
50
45
40
35
149,467
129,872
+15
Mercedes-Benz Cars
83,809
73,584
+14
Daimler Trucks
37,578
32,389
+16
Mercedes-Benz Vans
11,473
9,968
+15
Daimler Group
+36
% change
15/14
30
25
20
15
10
5
0
Germany
Western Europe NAFTA region
(excl. Germany)
Asia
Other markets
B.11
Revenue by division
2015
2014
In millions of euros
Small vans Western Europe
Large vans USA
86
B.13
2013
2015
2014
12
9
6
2011
2012
3
-3
-6
-9
B.16
Mercedes-Benz
Cars
0
In %
Return on Sales
B.15
The automotive divisions were also affected by a total expense
of €144 million from the restructuring of Daimler's own dealer-
ship network (2014: €116 million). In this context, we refer to
the information provided in Note 5 of the Notes to the Con-
solidated Financial Statements.
Daimler Trucks achieved EBIT of €2,576 million (2014: €1,878
million), which is significantly higher than the prior-year figure.
The division's return on sales increased to 6.9% (2014: 5.8%).
71 B.15
The positive development of earnings was primarily the result
of increased unit sales in the NAFTA region and Europe, the
realization of further efficiency improvements and positive
exchange-rate effects. There were negative impacts on earn-
ings from lower unit sales in Latin America and Indonesia, as
well as from higher expenses for warranties and customer
goodwill, the expansion of production capacities and advance
expenditure for new technologies and vehicles. EBIT also
includes expenses of €58 million for workforce actions in the
context of the ongoing optimization programs in Brazil and
Germany. Furthermore, the sale of Atlantis Foundries (Pty.) Ltd.
resulted in expenses of €61 million. The prior-year earnings
were reduced by expenses from the impairment of the equity-
method carrying value of the investment in Kamaz PAO.
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 87
Mercedes-Benz Vans posted EBIT of €880 million in 2015,
a significant improvement on its prior-year earnings of €682
million. The division's return on sales increased to 7.7% from
6.8% in 2014. 7 B.15
EBIT reflects the very positive development of unit sales, espe-
cially in Europe and in the NAFTA region. This was mainly due
to the very strong growth rates for the V-Class and the new Vito.
Improved material efficiency also had positive impact on earn-
ings, while expenses for warranties and customer goodwill affected
EBIT negatively. Additionally, expenses of €40 million from a
recall in connection with Takata airbags had a negative effect
on earnings. In the previous year, a gain on the reversal of an
impairment of the investment in the Chinese joint venture Fujian
Benz Automotive Corporation boosted EBIT by €61 million.
Daimler Buses increased its EBIT to €214 million in 2015
(2014: €197 million) and achieved a return on sales of 5.2%
(2014: 4.7%). 7 B.15
Positive effects resulted in particular from the good business
with complete buses with a positive product mix in Western
Europe as well as further efficiency improvements. The develop-
ment of earnings also benefited from positive exchange-rate
effects. On the other hand, the continuation of the difficult
economic situation in Latin America had a negative impact on
earnings. The division's EBIT includes a gain of €16 million on
the sale of the shares in MCI Holdings Inc.
In 2015, Daimler Financial Services posted EBIT of €1,619
million, significantly surpassing its prior-year earnings (2014:
€1,387 million). The division's return on equity was 18.3%
(2014: 19.4%). 7 B.16
The main reasons for this development were the increased
contract volume and positive exchange-rate effects, which
more than offset additional expenses in connection with the
expansion of business operations.
The reconciliation of the divisions' EBIT to Group EBIT com-
prises gains and/or losses at the corporate level and the
effects on earnings of eliminating intra-group transactions
between the divisions.
Items at the corporate level resulted in an expense of €79 million
(2014: income of €713 million). The income in the previous
year primarily resulted from our investments in RRPSH and Tesla.
In 2014, Daimler had a gain of €1,006 million from the sale of
the shares in RRPSH and an expense of €118 million from the
remeasurement of the put option on those shares. In connec-
tion with our investment in Tesla, the loss of significant influence
on that company meant that the Tesla shares had to be remea-
sured, resulting in a gain of €718 million. The hedge of Tesla's
share price and the sale of those shares resulted in total
expenses of €124 million in 2014. Items at the corporate level
also included expenses of €600 million related to the ongoing
antitrust investigations of European manufacturers of commercial
vehicles by the EU Commission.
The elimination of intra-group transactions resulted in income
of €50 million in 2015 (2014: €42 million).
The reconciliation of Group EBIT to profit before income taxes
is shown in table 7 B.17.
Daimler
Trucks
This very positive development primarily reflects the in-creased
unit sales of new vehicles. The main drivers were the new
C-Class, the compact cars and increased unit sales in the SUV
segment. Other positive effects on EBIT resulted from the
better pricing, efficiency measures and currency translation.
Negative effects resulted from expenses for the expansion of
production capacities and advance expenditure for new techno-
logies and vehicles. EBIT also includes expenses of €300 mil-
lion from a recall in connection with Takata airbags as well as
expenses for public-sector levies from prior periods of €121
million and expenses for the relocation of the Mercedes-Benz
USA, LLC headquarters caused expenses of €19 million. On
the other hand, EBIT includes a gain of €87 million on the sale
of real estate in the United States. EBIT in the previous year
included impairments of investments in the field of alternative
drive systems of €30 million.
Vans
Return on Equity
13,186
10,752
Amortization of capitalized borrowing costs'
Interest income
-10
-9
170
Group EBIT
145
-602
-715
Profit before income taxes
12,744
10,173
1 Amortization of capitalized borrowing costs is not included in the internal
performance measure EBIT, but is a component of cost of sales.
Interest expense
In millions of euros
2014
2015
Daimler Financial Services
In %
30
25
20
15
10
5
0
2011
2012
2013
2014
2015
B.17
Reconciliation of Group EBIT to profit before income taxes
Mercedes-Benz Daimler
Buses
Mercedes-Benz Cars posted EBIT of €7,926 million, which is
significantly higher than the prior-year figure of €5,853 million.
The division's return on sales increased to 9.5% (2014: 8.0%).
7 B.15
The Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz
Vans divisions significantly increased their EBIT from the
ongoing business in 2015 and thus met the forecasts made
in Annual Report 2014. Daimler Buses also fulfilled our expec-
tations with EBIT just under the prior-year level. The earnings
of Daimler Financial Services developed better than we had
forecasted at the beginning of the year. We had anticipated
a slight improvement at Daimler Financial Services compared
with the previous year. We adjusted those assessments upwards
as the year progressed in the context of our quarterly reporting,
as the division's contract volume increased faster than expected.
-124
Net profit (loss)
2015
2014
-300
+87
Public-sector levies related to prior periods
EBIT
-121
-64
-81
Relocation of MBUSA Headquarters
-19
Impairment of investments in the area
of alternative drive systems
-30
Restructuring of own dealer network
2015
Recall in connection with Takata airbags
Sale of real estate in the United States
Mercedes-Benz Cars
Development of earnings
In billions of euros
14
12
10
8
6 420
ונה
2011
2012
2013
2014
B.14
Special items affecting EBIT
In millions of euros
Daimler Trucks
Sale of investment in Atlantis Foundries
-61
Workforce adjustments
Sale of investment in New MCI Holdings Inc.
+16
Restructuring of own dealer network
-4
Business repositioning
-2
-12
Reconciliation
Sale of shares in RRPSH
Measurement of put option for RRPSH
+1,006
-118
+718
Remeasurement of Tesla shares
Sale of Tesla shares and hedge
of Tesla share price
Expenses related to EU antitrust proceedings
-600
Daimler Buses
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
+61
Reversal of impairment of
-58
-149
Restructuring of own dealer network
-47
-16
Impairment of investment in Kamaz
-30
Mercedes-Benz Vans
Recall in connection with Takata airbags
-40
Restructuring of own dealer network
-29
-17
Relocation of MBUSA Headquarters
-3
investment in FBAC
+0.6
2014
The required rate of return on net assets, and hence the cost
of capital, is derived from the minimum rates of return that
investors expect on their invested capital. The calculation of the
cost of capital for the Group and the industrial divisions takes
into consideration the cost of equity as well as the costs of debt
and the net pension obligations of the industrial business.
The expected returns on liquidity of the industrial business are
considered with the opposite sign. The cost of equity is calcu-
lated according to the capital asset pricing model (CAPM), using
the interest rate for long-term risk-free securities (such as
German government bonds) plus a risk premium reflecting the
specific risks of an investment in Daimler shares. While the cost
of debt is derived from the required rate of return for obliga-
tions entered into by the Group with external lenders, the cost
of capital for net pension obligations is calculated on the basis
of discount rates used in accordance with IFRS. The expected
return on liquidity is based on money market interest rates.
The Group's cost of capital is the weighted average of the indi-
vidually required or expected rates of return. During the reporting
period, the cost of capital amounted to 8% after taxes. For the
industrial divisions, the cost of capital amounted to 12% before
taxes; for Daimler Financial Services, a cost of equity of 13%
before taxes was applied. 7 B.04
In the NAFTA region, we were once again the market leader
for Class 6-8 medium- and heavy-duty trucks by a clear margin,
and actually extended our lead to gain a share of 39.4% (2014:
37.2%). Unit sales rose by 19% to the record number of 191,900
vehicles. This performance was facilitated by our outstanding
product portfolio and the favorable market development.
The Asian sales markets developed disparately in 2015. We
increased our unit sales and gained market share in both Japan
and India. The product portfolio of BharatBenz was expanded
once again last year with the BharatBenz 3143, which is designed
for use in mining and on construction sites. Our unit sales in
Indonesia decreased significantly, but we increased our market
share to 48.0% (2014: 47.4%). In total, we sold 147,700 trucks
in Asia (2014: 167,200).
Through Beijing Foton Daimler Automotive Co., Ltd. (BFDA), a
joint venture with our Chinese partner Foton, we are represented
in the Chinese truck market with locally produced vehicles of
the Auman brand. Unit sales of Auman trucks decreased by 30%
to 69,200 vehicles in the reporting period for market-related
reasons. These vehicles are not included in the Daimler Group's
unit sales. pages 166 ff
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 83
Mercedes-Benz Vans once again achieved record unit sales
in the year 2015, surpassing the prior-year figure by 9% with
sales of 321,000 vehicles. Our Sprinter, Vito and Citan vans are
targeted mainly at commercial customers, while the V-Class
is designed primarily for private use. Unit sales in Western Europe,
our most important market, rose by 10% to 208,500 vans;
market leadership for mid-size and large vans was clearly
defended with a share of 18.4% (2014: 18.2%). Nearly all volume
markets contributed to this success, and in Germany we
achieved a new record of 88,400 vehicles (2014: 79,900). Despite
a difficult market environment due to the economic situation,
unit sales in Eastern Europe increased by 5% to 32,200 vehicles.
Our vans continued their success in the United States, where
we set a new record with sales of 32,400 units (2014: 25,800).
Our share of the market for large vans was 8.7% (2014: 8.9%).
In Latin America, we sold 15,800 vans, almost equaling the
number sold in the previous year despite the difficult economic
situation there. In China, sales decreased significantly to
7,200 units (2014: 12,800), mainly because of the upcoming
model change for the mid-size vans. Overall, we sold the
record number of 194,200 Sprinter vans worldwide in 2015
(+4%). The Vito achieved growth of 23% to 74,400 vehicles
and the V-Class multipurpose vehicle was also very successful
with sales of 30,700 vehicles (+20%). Sales of the Mercedes-
Benz Citan totaled 21,700 units (2014: 22,100). O pages 171ff
Daimler Buses sold 28,100 buses and bus chassis worldwide in
2015. Compared with the previous year, this was a significant
decrease of 15%, but the division maintained its absolute market
leadership in our core markets in the segment for buses with a
gross vehicle weight above 8 tons. One positive aspect was the
ongoing strong demand for our complete buses in Western
Europe, where unit sales increased by 3% to 7,800 vehicles and
market share once again reached a very high level of 30.9%,
following the record level of 34.4% in 2014. In Germany, sales
of 2,800 units were 3% lower than in the previous year, which
was positively affected by unusually high demand for city buses
in the first half of 2014. In Latin America, we posted a significant
decrease in sales to 11,900 units (2014: 17,600). This devel-
opment was mainly due to the significant market slump caused
by the ongoing difficult economic situation, which particularly
affected Brazil, our most important market. Nonetheless, we
were able to strengthen significantly our leading market
position in Brazil with a market share of 52.5% (2014: 49.7%).
In Mexico, the number of 4,000 units sold was 9% higher
than in 2014.
pages 174ff
Business at Daimler Financial Services developed very
positively in the year under review. As we had forecast in Annual
Report 2014, worldwide contract volume grew substantially,
reaching the new record level of €116.7 billion (+18%). Adjusted
for exchange rate effects, the increase amounted to 14%.
As expected, new business also increased significantly, by 21%
to €57.9 billion. Significant growth was achieved in Europe (+14%)
as well as in the Americas region (+21%) and in the Africa &
Asia-Pacific region (+39%). We achieved significant growth also
in the insurance business in 2015, brokering a total of 1.8 million
insurance policies, which is 25% more than in 2014. Daimler
Financial Services supported numerous companies with the
financing and management of their vehicles and fleets last year.
At the end of 2015, the division had a total of 310,000 contracts
with fleet customers in Europe (+1.5%). We further developed our
business with innovative mobility services in the year under
review. Our car-sharing service, car2go, had more than 1.2 million
users at 31 locations in Europe and North America by the end
of the year. This makes car2go the market leader in the area of
flexible short-term car rentals. We also further developed the
moovel app, with which customers in Germany can find the best
way of traveling from A to B using all modes of transport, and
can directly book and pay providers such as car2go, Flinkster,
mytaxi and Deutsche Bahn (German Railways). At the beginning
of the third quarter, RideScout, another Daimler-owned
mobility platform in North America, acquired the US startup
GlobeSherpa, an upcoming US provider in the field of
mobile ticketing.
B.09
Market share¹
In Latin America, Daimler Trucks' unit sales decreased by 35%
to 30,500 vehicles, primarily due to the economic crisis
in our main market there, Brazil. Nonetheless, we succeeded
in increasing our market share in the medium- and heavy-duty
segment in Brazil to 26.7% (2014: 25.8%).
In %
2015
2014
15/14
Change in
% points
Mercedes-Benz Cars
Western Europe
Cost of capital
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
78
Japan
B.04
26.5
pages 177ff
In Western Europe, we increased our unit sales by 13% to 64,800
vehicles and defended our market leadership in the medium-
and heavy-duty segment with a market share of 22.5% (2014:
24.4%). As a result of purchases being brought forward before
the stricter Euro VI standard came into effect in 2016, the high
level of unit sales achieved in Turkey in 2014 was surpassed
with sales of 24,900 trucks in 2015 (2014: 22,200). Nonetheless,
sales became significantly less dynamic in the second half
of the year. In Russia, the continuation of the difficult economic
situation led to a significant drop in demand. 7 B.09
Daimler Trucks increased its unit sales by 1% in 2015 in a
regionally very disparate market environment. We sold a total
of 502,500 heavy-, medium- and light-duty trucks as well
as buses of the Thomas Built Buses and FUSO brands in the year
under review (2014: 495,700), so we continue to be the biggest
global manufacturer of trucks above 6 metric tons gross vehicle
weight. 7 B.08 Our strategy based on the three pillars of
technology leadership, global market presence and intelligent
platforms proved its worth once again in 2015. We have
taken a leading role for autonomously driving trucks. In the
new markets, we are increasing our customer focus and
thus further strengthening our position.
0
Sports Cars
2%
smart
6%
* including GLA
Western Europe
39%
NAFTA
20%
Asia
31%
Other markets
10%
B.08
Unit sales structure of Daimler Trucks
Western Europe
13%
Latin America
6%
NAFTA
38%
Asia
29%
Other markets
14%
27.1
thereof Germany
+0.2
18.2
39.8
36.9
thereof Germany
-1.9
24.4
22.5
Medium-duty and heavy-duty
trucks Western Europe
6.0
5.5
+0.5
thereof Germany
10.1
9.7
+0.4
2.0
2.1
-0.1
1.9
1.5
+0.4
1.6
1.3
+0.3
United States
China
-2.9
27%
Heavy-duty trucks NAFTA
39.3
18.4
Mercedes-Benz Vans
Mid-size and large vans
Western Europe
+1.1
6.2
7.3
Medium-duty and heavy-duty
trucks India
+0.6
47.4
48.0
Trucks Indonesia
+0.7
20.1
20.8
Trucks Japan
+0.9
25.8
26.7
Medium-duty and heavy-duty
trucks Brazil
-0.6
40.3
39.7
region (Classes 6 and 7)
Medium-duty trucks NAFTA
+3.4
35.9
region (Class 8)
SUVS*
Daimler Trucks
S-Class
B.05
Unlike the industrialized countries, the overall economic
growth of the emerging markets slowed down in the year under
review. It amounted to only about 3.3% (2014: 4.3%), and was
thus almost as low as most recently during the financial crisis
in the year 2009. The main reason was the repeated drop in
raw-material prices, which had a major impact above all on the
economic development of the raw-material exporting coun-
tries. Some economies such as Russia and Brazil were actually
in distinct recession. Another factor was substantial currency
depreciation in some major emerging economies. The slowdown
of growth in China to a rate of 6.9% was roughly as expected
so the country's economic restructuring fortunately continued
without a hard landing. However, the significant correction
of the Chinese stock market in the middle of the year triggered
considerable uncertainty in the global financial markets.
Although the Greece crisis resulted in considerable uncertainty,
especially in the first half of the year, the economy of the Euro-
pean Monetary Union (EMU) was one of the positive surprises
in 2015. Overall, the EMU seems to have achieved a growth
rate of about 1.5%. Low inflation, rising real incomes, low energy
prices, a weaker euro and the very expansive monetary policy
of the European Central Bank (ECB) were responsible for this
positive development. It was particularly pleasing that former
crisis countries such as Spain and Ireland posted some of the
highest growth rates. But the German economy was also
very robust with growth of 1.7%. The British economy delivered
a convincing performance, as in the previous years, with
expansion of 2.2%.
In a generally sluggish global economic environment, the
economies of the industrialized countries were rather more
dynamic than in the previous year. Overall, these countries'
real gross domestic product (GDP) grew by approximately 1.9%
(2014: 1.7%). The US economy once again proved to be a stable
cornerstone of the global economy. Supported by lively private
consumption and solid investment by companies, the United
States achieved overall economic growth of 2.4%. In Japan, the
economy revived slightly at the beginning of the year, but
then reverted to a rather weaker phase. Due only to the positive
start of the year, 2015 as a whole resulted in slight growth
of approximately 0.5%.
In the year under review, the world economy expanded at
a slightly lower rate than in the two previous years, once again
remaining below the long-term trend with real growth of about
2.5%. 71 B.05 This was primarily the result of the ongoing slow-
down and highly dissatisfactory economic developments in the
emerging markets. Global financial markets continued to feature
considerable interest-rate fluctuations during 2015. Prices
of industrial raw materials decreased significantly compared
with the previous year and were approximately 20% lower
than in 2014; the price of crude oil actually fell by nearly 50%.
and Business Development
Economic Conditions
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 79
Pursuant to Section 317 Subsection 2 Sentence 3 of the
German Commercial Code (HGB), the contents of the statement
pursuant to Section 289a of the HGB are not included in
the audit carried out by the external auditors.
10
The corporate governance statement to be issued pursuant
to Section 289a of the German Commercial Code (HGB)
can be seen on the Internet at ④daimler.com/corpgov/en.
Corporate governance statement
Details of the development of non-financial performance indi-
cators can be found in the chapters "Economic Conditions
and Business Development" and "Sustainability." pages 79 ff
and pages 105 ff. For "Integrity and Compliance," see pages
185 ff.
Furthermore, within the context of our sustainability manage-
ment, we use other non-financial indicators such as the
CO2 emissions of our vehicle fleet and the energy and water
consumption of our production sites. Non-financial indicators
are also used to determine the remuneration of our Board
of Management members. In addition, integrity and compliance
are important criteria used in annual goal agreements for
our managers, as well as in target-achievement assessments.
The important financial indicators for measuring our operating
financial performance, in addition to EBIT and revenue, are the
free cash flow of the industrial business, investment, and research
and development expenditure. Along with the indicators of
financial performance, we also use various non-financial indica-
tors to help us manage the Group. Of particular importance
in this respect are the unit sales of our automotive divisions,
which we use as the basis for our capacity and human
resources planning, and workforce numbers.
Key performance indicators
As one of the main factors influencing value added, return
on sales is of particular importance for assessing the industrial
divisions' profitability. The combination of return on sales and
net assets' productivity results in return on net assets (RONA).
If RONA exceeds the cost of capital, value is created for our
shareholders. The measure of profitability for Daimler Financial
Services is not return on sales, but return on equity.
Return on sales
13
12
23
13
Daimler Financial Services, before taxes
12
Industrial business, before taxes
Economic growth
8
Gross domestic product, growth rates in %
5
5%
15
20
Unit sales growth rates 2015 in %
Global automotive markets
B.06
In this partially very tense global economic environment,
currency exchange rates were very volatile. Against the US dollar,
the euro fluctuated between $1.05 and $1.21. At the end
of the year, the euro was about 10% weaker than a year earlier
at $1.09. Once again, the range of fluctuation of the euro to
the Japanese yen was quite substantial, with a corridor of 126
to 146 yen to the euro. By the end of the year, the euro had
fallen by 10% also against the yen. Against the British pound,
the euro ended the year with depreciation of approximately 6%.
The euro gained against some currencies such as the Turkish lira
and the Canadian dollar, in some cases by double-digit per-
centages, with the highest gain of over 30% against the Brazilian
real. Compared with the ruble, the euro had gained nearly
12% by the end of the year, with substantial volatility during
the year of between 53 and 82 rubles to the euro.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
80
Source: IHS Global Insight, S/DM
Eastern
Europe
2014
2015
America
South
Asia
NAFTA
Western
Europe
Total
-2
-1
0
1
2
3
4
6
Group, after taxes
The world economy
8
The Japanese car market contracted by approximately 10%,
after demand had been kept artificially high for several years
as a result of measures taken by the government. With the
exception of China, the major emerging markets displayed very
differing tendencies. The Indian market grew significantly
while demand for cars slumped in Brazil and Russia. Deep eco-
nomic recessions in both countries resulted in market slumps
of about 25% in Brazil and even 35% in Russia, thus dampening
the worldwide volume growth.
Worldwide demand for medium-duty and heavy-duty trucks
came under considerable pressure last year and fell by approx-
imately 11%. This decrease was also primarily due to the drastic
contraction of some major emerging markets, which was
not offset by the positive development of the North American
and European markets.
The North American market proved once again to be robust
in Classes 6-8 with overall growth of approximately 11%.
But a weakening of the market's dynamism was to be observed
as the year progressed, at first in industrial orders received
and towards the end of the year also in sales figures.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 81
The European market developed significantly better than
at the beginning of 2015. In a comparatively favorable economic
environment, it grew by approximately 17%. The Turkish market
weakened significantly following a positive start to the year, but
grew in the full year by approximately 9% due to purchases
brought forward because of the upcoming introduction of the
Euro VI emissions standard. On the other hand, demand for
trucks in Brazil slumped drastically because of the severe eco-
nomic recession, falling to about half the volume of 2014;
the market was additionally weakened towards the end of the
year by the continued worsening of financing possibilities
in the context of the government's FINAME program.
From Daimler's perspective, the main Asian markets were rather
mixed. The Japanese market for light-, medium- and heavy-
duty trucks remained close to its solid prior-year level despite
weak economic dynamism. Indonesia, however, was affected
by the growth slowdown in China and by falling raw-material
prices, which resulted in a contraction of 32% in the overall
truck market. Demand in India developed positively, with growth
of about 10% in the market for medium- and heavy-duty trucks.
With a drop of more than 40%, demand for trucks in Russia
decreased substantially due to the country's economic recession.
And China, the world's biggest truck market, contracted by
almost 30%.
Demand for vans in Western Europe continued to grow in 2015.
The market volume increased by 11% for mid-size and large
vans and by 8% for small vans. In particular, the markets of the
countries of southern Europe recovered significantly, and
distinct growth was apparent also in Germany. In the United
States, the market for large vans continued to develop very
positively with growth of 14%. In China, however, there was
significant contraction of the market segment we address
there. Due to the unfavorable economic situation, the market
for large vans in Latin America also contracted sharply.
The bus market of Western Europe significantly surpassed
its weak prior-year level. There was positive impetus in particular
from the coach segment, which profited from expansion
of the business of long-distance buses in Germany. Demand in
Eastern Europe was at the prior-year level, with support from
the growing coach segment in Turkey. As a result of the difficult
economic and political situation in Latin America, market
conditions there deteriorated significantly. In Brazil alone, market
volume decreased by 40% compared with 2014.
Business development
Unit sales
Daimler significantly increased its total unit sales in the year 2015,
as had been forecast in Annual Report 2014. Sales of approx-
imately 2.9 million vehicles surpassed the prior-year figure by 12%.
This growth was mainly driven by the Mercedes-Benz Cars
division (+16%) and to a lesser extent by the Mercedes-Benz
Vans division (+9%). The forecasts made at the beginning of
the year were therefore confirmed. At Daimler Trucks, growth
of just over 1% was lower than we had originally anticipated,
primarily due to the weak condition of markets in Latin America
and Indonesia. Unit sales of buses, which we had expected
to increase slightly at the beginning of the year, were significantly
below the prior-year level. This was mainly the result of the
very weak markets for bus chassis in Latin America.
The initial impression of the Chinese car market is still positive,
with growth of approximately 9% and the biggest contribution
in absolute terms to the increased worldwide volume. But these
figures conceal the significant period of weakness that the
market went through during the summer months. The Chinese
government finally initiated countermeasures, granting tax
reductions on the purchase of small cars with engine displace-
ment of up to 1.6 liters, which were subsequently responsible
for the aforementioned market growth.
The Mercedes-Benz Cars division once again accelerated along
its growth path in 2015, with 16% growth in unit sales to the
new record of 2,001,400 vehicles. The Mercedes-Benz brand
increased its unit sales by 15% to a record of 1,880,100 vehicles.
We are the number one in the premium segment in Germany as
well as in Canada and Japan. We also significantly improved
our position in China.
82
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
The increase in unit sales was primarily driven by the C-Class
and the new SUVs. But with growth of 10%, there was a contin-
uation of strong demand also for our A- and B-Class models:
Including the CLA and the CLA Shooting Brake, a total of 425,000
of those models were delivered. Our C-Class models were
especially successful, with 38% growth to sales of 470,400
sedans, wagons and coupes. The E-Class performed very well
in its last year before the model change with sales of 306,000
units (-7%). The S-Class was once again the best-selling luxury
sedan in the world by far. In total we sold 106,200 sedans
and coupes of the S-Class (2014: 115,500). In the SUV segment,
worldwide unit sales increased by 27% to 543,000 vehicles,
primarily driven by the new GLC and GLE models and the success
of the GLA in China. 7 B.07
With the new and very successful fortwo and forfour
models, the smart brand increased its unit sales by 31%
to 121,300 vehicles.
pages 160 ff
B.07
In percent
A-/B-Class
21%
C-Class
24%
E-Class
15%
In Western Europe, Mercedes-Benz sold a total of 678,200
vehicles, surpassing the prior-year number by 11%. Growth was
particularly strong in Spain (+24%), the United Kingdom (+17%)
and Italy (+16%). But also in Germany, we increased our unit sales
by 4% to 259,200 vehicles. Unit sales in NAFTA continued to
develop positively, with new records set in the United States (+5%)
as well as in Canada (+23%) and Mexico (+10%). In China, we
achieved growth of 41% - considerably stronger than the overall
market and our main competitors. We posted significant
growth also in Japan (+13%), South Korea (+30%), India (+31%),
Brazil (+67%) and Turkey (+35%).
From a very strong starting point, the US market grew again
by nearly 6%, surpassing its previous record from the year 2000
with sales of approximately 17.5 million cars and light trucks.
Demand in Western Europe also developed very positively.
The market recovery that had started in 2014 became more
dynamic and led to significant growth of about 9%. It must
be emphasized that this market growth took place on a broad
basis: double-digit growth was recorded in Spain and Italy while
the three major markets of Germany, the United Kingdom
and France each posted significant growth of between 6 and 7%.
Unit sales structure of Mercedes-Benz Cars
The continuation of below-average global economic dynamism
in the year 2015 was also reflected by the development of
global demand for cars. The increase of about 3% in demand
worldwide is to be regarded as quite solid with currently strong
markets, whereby regional differences were very substantial.
While China and the traditional markets of the United States and
Western Europe followed a relatively positive development,
demand was very weak in some major emerging markets. 71 B.06
2014
2015
Cost of capital
0
-5
-10
-15
-20
-25
-30
-35
-40
5
Western
Total
Source: German Association of the
Automotive Industry (VDA),
various institutions, S/DM
South
America¹
Passenger cars
Commercial vehicles
Automotive markets
Eastern
Europe
region¹
Europe
|
Asia
NAFTA
1 Cars segment includes light trucks
Less provisions for other risks
Less other assets and liabilities
-15,198
-13,420
+5
+13
Less trade payables
-10,182
-9,852
-24,353
458
+3
+9
Assets and liabilities
from income taxes
3,055
3,981
-23
Total equity of
7,824
Daimler Financial Services
-22,438
8,215
Property, plant and equipment
+14
9,872
Net assets of the Daimler Group at year-end
In millions of euros
2015
2014
15/14
% change
Net assets of the industrial business
Intangible assets
9,789
Trade receivables
9,144
24,262
23,125
Leased assets
15,864
14,374
+7
+5
+10
Inventories
22,862
20,004
6,634
7,617
-4,532
The value added of Mercedes-Benz Cars increased by €2.1
billion to €5.9 billion. This was mainly the result of the very
positive development of earnings reflected by the growth in
unit sales of new vehicles, better pricing, efficiency measures
and exchange-rate effects. There were offsetting effects on
value added from expenses from the expansion of production
capacities as well as from advance expenditure for new tech-
nologies and vehicles. The division's average net assets were
nearly unchanged.
222
for operating activities
Cash provided by/used
-1,386
11,053
9,667
at beginning of period
Cash and cash equivalents
In millions of euros
15/14
Change
-1,274
2014
Condensed consolidated statement of cash flows
B.24
The risk volume that is subject to credit risk management
includes all of Daimler's worldwide creditor positions with finan-
cial institutions, issuers of securities and customers in the
financial services business and the automotive business. Credit
risks with financial institutions and issuers of securities arise
primarily from investments executed as part of our liquidity man-
agement and from trading in derivative financial instruments.
The management of these credit risks is mainly based on an
internal limit system that reflects the creditworthiness of
the respective financial institution or issuer. The credit risk with
customers of our automotive business relates to contracted
dealerships and general agencies, other corporate customers
and retail customers. In connection with the export business,
general agencies that according to our creditworthiness analysis
are not sufficiently creditworthy are generally required to
provide collateral such as first-class bank guarantees. The credit
risk with end customers in the financial services business is
managed by Daimler Financial Services on the basis of a stan-
dardized risk management process. In this process, minimum
requirements are defined for the sales-financing and leasing
business and standards are set for credit processes as well
as for the identification, measurement and management of risks.
Key elements for the management of credit risks are appro-
priate creditworthiness assessments, supported by statistical
analyses and evaluation methods, as well as structured
portfolio analysis and portfolio monitoring.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
92
Management of pension assets includes the investment of
pension assets to cover the corresponding pension obligations.
Pension assets are held in separate pension funds and are
thus not available for general business purposes. The funds are
allocated to different asset classes such as equities, fixed-
interest securities, alternative investments and real estate,
depending on the expected development of pension obliga-
tions and with the help of a process for risk-return optimization.
The performance of asset management is measured by com-
paring with defined reference indices. Local custodians of the
pension funds are responsible for the risk management of
the individual pension funds. The Global Pension Committee
limits these risks by means of group-wide binding guidelines
whereby applicable laws are given due consideration. Additional
information on pension plans and similar obligations is
provided in Note 22 of the Notes to the Consolidated
Financial Statements.
Management of market price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the results of the divisions and
the Group. The Group's overall exposure to these market-price
risks is determined to provide a basis for hedging decisions,
which include the definition of hedging volumes and correspond-
ing periods, as well as the selection of hedging instruments.
Decisions regarding the management of risks resulting from
fluctuations in foreign exchange rates and commodity prices,
as well as decisions on asset/liability management (liquidity and
interest rates), are regularly made by the relevant committees.
Cash management determines the Group's cash requirements
and surpluses. The number of external bank transactions is
minimized by the Group's internal netting of cash requirements
and surpluses. Netting is done by means of cash-concentration
or cash-pooling procedures. Daimler has established standard-
ized processes and systems to manage its bank accounts,
internal cash-clearing accounts and the execution of automated
payment transactions.
Liquidity management ensures the Group's ability to meet
its payment obligations at any time. For this purpose, liquidity
planning provides information about all cash flows from
operating and financial activities in a rolling plan. The resulting
financial requirements are covered by the use of appropriate
instruments for liquidity management (e.g. bank credits, commer-
cial papers, notes); liquidity surpluses are invested in the
money market or the capital market to optimize risk and return.
Our goal is to ensure the level of liquidity regarded as neces-
sary at optimal costs. Besides operational liquidity, Daimler keeps
additional liquidity reserves which are available in the short
term. Those additional financial resources include a pool
of receivables from the financial services business which are
available for securitization in the capital market, as well
as a contractually confirmed syndicated credit facility with
a volume of €9 billion.
Capital structure management designs the capital structure
for the Group and its subsidiaries. Decisions regarding the
capitalization of financial services companies - as well as
production, sales and financing companies - are based on
the principles of cost-optimized and risk-optimized liquidity and
capital resources. In addition, it is necessary to comply
with restrictions on capital transactions and on the transfer
of capital and currencies.
2015
+1,496
Cash used for
investing activities
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 93
Cash used for investing activities 7 B.24 amounted to
€9.7 billion (2014: €2.7 billion). The change compared with the
prior-year period resulted primarily from acquisitions and
disposals of shares in companies. The prior-year period included
proceeds of €2.4 billion from the sale of RRPSH shares. Fur-
thermore, the sale of shares in Tesla and the termination of the
related share-price hedge led to a cash inflow of €0.6 billion.
On the other hand, the reporting period was affected in particular
by the capital increases carried out at our financial invest-
ments and the acquisition of shares in the digital mapping busi-
ness HERE in December 2015. Cash used for investing activi-
ties also reflects the increased investments in intangible assets
and property, plant and equipment. Furthermore, negative
effects resulted from acquisitions and disposals of securities
in the context of liquidity management. Those transactions
led to a net cash outflow in 2015, whereas disposals of securities
were higher than acquisitions in the previous year.
Cash used for/provided by operating activities 7 B.24
amounted to €0.2 billion in 2015 (2014: cash outflow of
€1.3 billion) and was affected in particular by the implementation
of our growth strategy. New business in leasing and sales
financing was €3.3 billion above the high level of the prior-year
period. Positive effects resulted from profit before income
taxes, which improved by €2.5 billion to €12.7 billion (2014:
€10.2 billion). Furthermore, there were impacts from the
higher tax refunds in 2015 from the final tax assessment of the
previous years. In addition, contributions to pension funds
were lower than in 2014. The prior-year period was affected by
cash outflows of €2.5 billion for the extraordinary contribution
to the German pension fund assets, whereas in the reporting
period, the extraordinary contributions in Germany and the
United States amounted to €1.2 billion.
Cash flows
Further information on the management of market-price
risk, credit-default and liquidity risk is provided in Note 32
of the Notes to the Consolidated Financial Statements.
Financial country risk management includes various aspects:
the risk from investments in subsidiaries and joint ventures,
the risk from the cross-border financing of Group companies
in risk countries and the risk from direct sales to customers
in those countries. Daimler has an internal rating system that
divides all countries in which it operates into risk categories.
Equity capital transactions in risk countries are hedged against
political risks with the use of investment protection insurance
such as the German government's investment guarantees. Some
cross-border receivables due from customers are protected
with the use of export credit insurance, first-class bank guaran-
tees and letters of credit. In addition, a committee sets and
restricts the level of hard-currency credits granted to financial
services companies in risk countries.
+269
9,667
9,936
at end of period
Cash and cash equivalents
-185
323
138
on cash and cash equivalents
Effect of exchange-rate changes
+7,357
2,274
9,631
financing activities
Cash provided by
-7,013
-9,722
Financial management at Daimler consists of capital structure
management, cash and liquidity management, pension asset
management, market-price risk management (foreign exchange
rates, interest rates, commodity prices) and credit and finan-
cial country risk management. Worldwide financial management
is performed within the framework of legal requirements con-
sistently for all Group entities by Treasury. Financial management
operates within a framework of guidelines, limits and bench-
marks, and on the operational level is organizationally separate
from other financial functions such as settlement, financial
controlling, reporting and accounting.
+30
Principles and objectives of financial
management
88
1,759
+5
+20
Other operating expense
-555
-1,160
-52
Share of profit from equity-method
investments, net
464
897
2,114
-48
-27
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 91
+9
40,359
44,186
Net Assets
Daimler Financial Services' value added of €0.5 billion was
close to the level of 2014. The division's return on equity
amounted to 18.3% (2014: 19.4%). The development of value
added primarily reflects the increase in EBIT due to growth in
contract volume and positive exchange-rate effects, which more
than offset additional expenses in connection with the expan-
sion of business operations. Average equity rose by €1.7 billion
to €8.9 billion.
The value added of the Daimler Buses division was €26 million
higher than in previous year and amounted to €105 million in
2015. This increase was primarily due to the development of
EBIT. Positive effects primarily resulted from the good business
with complete buses with a favorable product mix in Western
Europe, further efficiency improvements and positive exchange-
rate effects. Offsetting, negative effects came from the ongoing
difficult economic situation in Latin America. Compared to the
previous year, average net assets decreased by €76 million.
Mercedes-Benz Vans' value added increased by €0.2 billion
to €0.7 billion as a result of the significant improvement in
EBIT reflecting the very positive development of unit sales,
especially in Europe and in the NAFTA region. This was mainly
due to the very strong growth rates for the V-Class and the new
Vito. On the other hand, expenses for warranties and customer
goodwill affected EBIT negatively. Average net assets decreased
by €0.3 billion and also made a minor contribution to the
increase in value added.
Value added at Daimler Trucks was significantly higher than
in the previous year and reached €1.6 billion (2014: €0.8 billion).
This was due to higher earnings resulting from increased unit
sales in the NAFTA region and Europe, the realization of further
efficiency improvements and positive exchange-rate effects.
There were negative impacts on earnings from lower unit sales
in Latin America and Indonesia, as well as from higher expenses
for warranties and customer goodwill and for the expansion of
production capacities, and from advance expenditure for new
technologies and vehicles. In addition, the reduction in average
net assets resulting among other things from the sale of the
50% equity interest in the associated company RRPSH in 2014
also led to the increase in value added.
Other financial expense, net
Other operating income
-4,760
development costs
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
Consolidated statement of income
The Group's total revenue increased by 15.1% to €149.5 billion
in 2015; adjusted for exchange-rate effects, it increased by
9.0%. The revenue growth primarily reflects the strong demand
for our products in nearly all divisions. Further information on
the development of revenue is provided in the "Business
development" section of this Management Report. 7 B.18
Cost of sales amounted to €117.7 billion in 2015, increasing by
15.7% compared with the previous year. The rise in cost of
sales was caused by higher business volumes and consequentially
higher material expenses. Personnel expenses and deprecia-
tion of equipment on operating leases and of property, plant
and equipment also increased. Further information on cost
of sales is provided in Note 5 of the Notes to the Consoli-
dated Financial Statements. 7 B.18
Gross profit therefore increased by 12.8% overall.
B.18
Consolidated statement of income
In millions of euros
2015
2014
149,467 129,872
-117,670 -101,688
Revenue
Cost of sales
Gross profit
31,797
Selling expenses
-12,147
28,184
-11,534
General administrative expenses
-3,710
-3,329
+15
+16
+13
+5
+11
Research and non-capitalized
Liquidity and Capital Resources
-2,709
+29
3 Industrial business
At the Annual Shareholders' Meeting on April 6, 2016, the
Board of Management and the Supervisory Board will recommend
the payment of a dividend of €3.25 per share (2014: €2.45).
With this proposal, we are once again raising the dividend (by
33%) and letting our shareholders participate in the Company's
success. The total dividend will thus amount to €3,477 million
(prior year: €2,621 million) and the distribution ratio will be
41.3% of the net profit attributable to the Daimler shareholders
(prior year: 37.6%). 7 B.19
Dividend
Reconciliation to net operating profit
B.20
2015
2014
2013
2012
2011
Net operating profit
0
1.00
1.50
2.00
2.50
3.00
3.50
3.25
2.45
2.25
0.50
2.20
Table 7B.20 shows the reconciliation of the EBIT of the divisions
to net operating profit. In addition to the EBIT of the divisions,
net operating profit also includes earnings effects for which
the divisions are not accountable such as income taxes and
other reconciliation items.
Daimler Buses
Daimler Financial Services
EBIT of the divisions
+9
197
214
+29
682
880
Mercedes-Benz Vans
+37
In millions of euros
1,878
Daimler Trucks
+35
5,853
7,926
Mercedes-Benz Cars
% change
15/14
2014
2015
2,576
2.20
In euros
Dividend per share
+19
7,290
8,711
Net profit
+40
-2,883
-4,033
Income taxes
+25
thereof
10,173
Profit before income taxes
-16
-715
-602
Interest expense
+17
145
170
Interest income
12,744
attributable to non-controlling
interests
287
328
B.19
As described in the "Performance measurement system" sec-
tion of the "Corporate Profile" chapter in table 7 B.03, the
cost of capital is the result of net assets and cost of capital
expressed as a percentage, which is subtracted from earnings
in order to calculate value added. The tables 7 B.21 and
7 B.22 show value added and net assets for the Group and for
the individual divisions. Table 1 B.23 shows how net assets
are derived from the consolidated statement of financial position.
Value added
The calculation of earnings per share (basic) is based on an
unchanged average number of outstanding shares of 1,069.8
million.
Net profit for the year amounts to €8.7 billion (2014: €7.3
billion). Net profit of €0.3 billion is attributable to non-controlling
interests (2014: €0.3 billion). Net profit attributable to the
shareholders of Daimler AG amounts to €8.4 billion (2014:
€7.0 billion), representing earnings per share of €7.87 (2014:
€6.51). 7 B.18
The tax expense of €4.0 billion stated under income tax expense
is €1.1 billion higher than in 2014, mainly due to the improved
pretax income. The effective tax rate for 2015 was 31.6% (2014:
28.3%). In 2014, a gain was recognized on the sale of the
RRPSH shares that was largely tax free. But also expenses arose
that were not tax deductible in connection with the ongoing
antitrust investigations of European manufacturers of commer-
cial vehicles by the EU Commission. Therefore, the increase
in pretax income is mainly an increase in normally taxed earn-
ings, which led to a correspondingly higher tax expense. In
both years, the income tax expense was affected by additional
tax benefits and expenses. The year 2015 includes tax benefits
in connection with the tax assessment of previous years as well
as tax expenses due to valuation allowances on deferred tax
assets, while in the year 2014, gains were recognized on the
reversal of valuation allowances on deferred tax assets.
7 B.18
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 89
Net interest expense improved to €0.4 billion (2014: €0.6
billion). Expenses in connection with pension and healthcare
benefit obligations decreased, primarily due to lower applicable
interest rates. Other interest expense improved, mainly because
of the successive expiry of refinancing at high interest rates.
7 B.18
Other financial expense/income decreased from an income
of €458 million to an expense of €27 million. This was primar-
ily due to the disposal of the RRPSH shares, which resulted in
a gain of €1.0 billion in 2014. 7 B.18
In 2015, our share of profit from equity-method investments
decreased to €0.5 billion (2014: €0.9 billion). In 2014, Daimler
lost its significant influence on Tesla, which was previously
accounted for using the equity method; the subsequent remea-
surement of our Tesla shares resulted in a gain of €0.7 billion
in 2014. B.18
Other operating income increased to €2.1 billion (2014: €1.8
billion). Other operating expense decreased significantly to
€0.6 billion (2014: €1.2 billion), due in particular to expenses of
€0.6 billion in the previous year related to the ongoing antitrust
investigations of European manufacturers of commercial vehicles
by the EU Commission. Further information on the composition
of other operating income and expense is provided in > Note 6
of the Notes to the Consolidated Financial Statements. 7 B.18
Research and non-capitalized development costs increased
by €0.2 billion to €4.8 billion in 2015. They were mainly related
to the development of new models, advance expenditure for the
renewal of existing models and the further development of
fuel-efficient and environmentally friendly drive systems as well
as safety technologies and autonomous driving. As a propor-
tion of revenue, research and non-capitalized development costs
decreased from 3.5% to 3.2%. Further information on the
Group's research and development costs is provided in the
"Research and development" section of the ①"Sustain-
ability" chapter of this Management Report. 7 B.18
General administrative expenses of €3.7 billion were above
the level of the previous year (2014: €3.3 billion), mainly driven
by higher IT and personnel expenses. As a percentage of reve-
nue, general administrative expenses decreased slightly to 2.5%
(2014: 2.6%). 71 B.18
Due to the growth in unit sales, selling expenses increased by
€0.6 billion to €12.1 billion. The main factors here were higher
expenses for marketing and personnel. As a percentage of rev-
enue, selling expenses decreased from 8.9% to 8.1%. 7 B.18
+21
6,962
8,424
of Daimler AG
attributable to shareholders
thereof
-13
1,619
1,387
+17
13,215
982
906
Daimler Buses
-15
1,742
1,479
Mercedes-Benz Vans
-14
9,313
-8
7,974
-0
17,114
17,045
Mercedes-Benz Cars
-0
15/14
% change
In millions of euros
2014
2015
Daimler Trucks
Daimler Financial Services¹
8,859
7,154
2 To the extent not allocated to the segments
+2
40,779
41,644
1 Total equity
Daimler Group
+40
-27
2,700
1,156
839
Other reconciliation³
3,772
income taxes³
Assets and liabilities from
+25
618
770
Equity method investments²
36,305
36,263
Net assets of the divisions
+24
Net assets (average)
B.23
B.22
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
15/14
% change
In millions of euros
2014
2015
Value Added
B.21
1 Adjusted for tax effects on interest income/expense and amortization
of capitalized borrowing costs.
Net operating profit
Other reconciliation
Daimler Group
Income taxes¹
7,678
9,007
755
-29
+36
-3,074
-4,179
+32
9,997
+17
5,675
4,416
Cash provided by financing activities 7 B.24 amounted
to €9.6 billion (2014: €2.3 billion). The change resulted almost
solely from the renewed increase in financing liabilities.
There were opposing effects from increased dividend payments
to the shareholders of Daimler AG and to minority share-
holders of subsidiaries.
90
+2
457
467
Daimler Financial Services
+33
79
105
Daimler Buses
+49
473
703
Mercedes-Benz Vans
+113
761
1,619
Daimler Trucks
+55
3,799
5,881
Mercedes-Benz Cars
The Group's value added amounted to €5.7 billion in 2015 (2014:
€4.4 billion), representing a return on net assets of 21.6%
(2014: 18.8%). This was once again substantially higher than
the minimum required rate of return of 8%. The increase in
value added was primarily due to the rise in the divisions oper-
ating profits, partially offset by higher income taxes and to a
smaller extent offset by an increase in average net assets. Further-
more, value added in the previous year included the gains on
the sale of the 50% equity interest in RRPSH and the remea-
surement and sale of the Tesla shares.
Cash and cash equivalents increased by €0.3 billion compared
with December 31, 2014, after taking currency translation
effects into account. Total liquidity, which also includes market-
able debt securities, increased by €1.9 billion to €18.2 billion.
8,273
Other adjustments relate to additions to property, plant and
equipment that are allocated to the Group as their beneficial
owner due to the form of their underlying lease contracts.
Furthermore, adjustments are made for the effects of financing
dealerships within the Group. In addition, the calculation of
the free cash flow includes those cash flows to be shown under
cash from financing activities in connection with the acquisi-
tion or sale of interests in subsidiaries without loss of control.
Commercial paper
Liabilities to financial
institutions
Deposits in the direct
banking business
1.35
1.11
2,961
2,277
2.58
3.08
27,311
22,893
0.71
1.06
49,165
10,532
B.32
Benchmark issuances
Volume
Month of
emission
Maturity
Issuer
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler AG
Daimler AG
US$250 million
Mar. 2015
Mar. 2017
US$1,500 million
10,853
Mar. 2015
58,789
1.69
Refinancing
The funds raised by Daimler in the year 2015 primarily served
to refinance the leasing and sales-financing business. For that
purpose, Daimler made use of a broad spectrum of various
financing instruments in various currencies and markets. They
include bank credits, commercial papers in the money market,
bonds with medium and long maturities, customer deposits at
Mercedes-Benz Bank and the securitization of receivables
from customers in the financial services business (asset backed
securities, ABS).
Various issuance programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €35 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market programs
exist, which are significantly smaller than the EMTN program.
Capital-market programs allow flexible, repeated access to the
capital markets.
The continued expansive monetary policy of the central banks
also affected the situation in the bond markets in the reporting
period. The high volumes of available liquidity meant that risk
premiums for companies with investment-grade credit ratings
remained moderate despite increasingly volatile markets.
In 2015, the Group covered its refinancing requirements mainly
through the issuance of bonds. A large proportion of those
bonds were placed in the form of so-called benchmark emissions
(bonds with high nominal volumes) in the US dollar and euro
markets. B.32
In April and November, Daimler AG placed bonds in the domestic
capital market of the People's Republic of China, so-called
panda bonds, with a volume of CNY3.0 billion and CNY2.0 billion.
In addition, a large number of smaller bonds were issued in
various currencies in the euro market, as well as in Mexico,
Brazil, Argentina, Canada, South Africa, Thailand and South
Korea.
In addition, Daimler issued small volumes of commercial papers
in 2015.
Furthermore, several asset-backed securities (ABS) transac-
tions were carried out in the United States, Canada and
Germany. In the United States for example, five emissions gen-
erated a refinancing volume totaling US$5.8 billion. Bonds in
a volume of CAN$0.4 billion were issued in Canada. In addition,
Mercedes-Benz Bank once again sold ABS bonds in a volume
of €1.0 billion to European investors through its Silver Arrow
Platform.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 97
Bank credit was another important source of refinancing in
2015. Funds were provided not only by large, globally active
banks, but increasingly also by a number of local banks. The
lenders included supranational banks such as the European
Investment Bank and the Brazilian Development Bank (BNDES).
In this way, we continued our diversification in refinancing
through banks.
In order to secure sufficient financial flexibility, in September
2013, Daimler concluded a €9 billion syndicated credit facility
with a consortium of international banks with a maturity of five
years and two extension options of two years in total. This
provides the Group with financial flexibility until the year 2020.
More than 40 European, American and Asian banks partici-
pated in the consortium. Daimler does not intend to utilize the
credit line. In 2015, Daimler exercised the option to extend the
facility by another year until 2020. All the banks in the consortium
participated in the extension.
1.68
At the end of 2015, Daimler had not utilized short- and long-term
credit lines totaling €18.5 billion (2014: €17.2 billion). They
include a syndicated credit facility arranged in September 2013
with a consortium of international banks with a volume of €9
billion.
At December 31, 2015, the total of financial liabilities shown
in the consolidated statement of financial position amounted
to €101,142 million (2014: €86,689 million).
Detailed information on the amounts and terms of financing
liabilities is provided in Notes 24 and 32 of the Notes to
the Consolidated Financial Statements. Note 32 also provides
information on the maturities of the other financial liabilities.
B.31
Refinancing instruments
Average interest rates
Dec. 31,
2015
Dec. 31,
2014
Dec. 31,
2015
in %
Carrying values
Dec. 31,
2014
In millions of euros
Notes/bonds and
liabilities from
ABS transactions
The carrying values of the main refinancing instruments and
the weighted average interest rates are shown in table 7 B.31.
At December 31, 2015, they are mainly denominated in the fol-
lowing currencies: 40% in euros, 30% in US dollars, 6% in Chinese
renminbi, 5% in British pounds and 3% in Japanese yen.
Mar. 2018
US$1,250 million
Mar. 2015
Marketable debt securities
9,667
9,936
Cash and cash equivalents
Net debt at Group level, which primarily results from the
refinancing of the leasing and sales-financing business,
increased compared with December 31, 2014 from €70.1 billion
to €82.4 billion. 7 B.27
Compared with December 31, 2014, the net liquidity of the
industrial business increased from €17.0 billion to €18.6 billion.
The increase mainly reflects the positive free cash flow of
€4.0 billion. Opposing effects resulted from the dividend pay-
ments to the shareholders of Daimler AG (€2.6 billion) and to
minority interests of subsidiaries (€0.3 billion). Positive exchange-
rate effects were partially compensated by capital increases
in financial services companies and led in total to an increase
in net liquidity of €0.5 billion.
To the extent that the Group's internal refinancing of the
financial services business is provided by the companies of the
industrial business, this amount is deducted in the calculation
of the net debt of the industrial business. At December 31, 2015,
the Group's internal refinancing was of a higher volume than
the financing liabilities originally taken on in the industrial busi-
ness due to the application of the industrial business's own
financial resources. This resulted in a positive value for the financ-
ing liabilities of the industrial business, thus increasing net
liquidity, so the net liquidity of the industrial business exceeds
the gross liquidity presented here.
The net liquidity of the industrial business 7 B.26 is
calculated as the total amount as shown in the statement
of financial position of cash, cash equivalents and marketable
debt securities included in liquidity management, less the
currency-hedged nominal amounts of financing liabilities.
15/14
Change
-581
Dec. 31,
2014
Mar. 2020
Dec. 31,
2015
Net debt of the Daimler Group
B.27
+337
-244
+1,627
16,953
18,580
263
3,456
3,212
Financing liabilities (nominal)
Net liquidity
600
hedges for financing liabilities
Market valuation and currency
In millions of euros
Sep. 2017
Sep. 2015
Nov. 2015
€1,000 million
Mar. 2020
US$1,050 million
May 2015
May 2018
US$1,300 million
May 2015
May 2020
US$650 million
May 2015
May 2025
US$150 million
Aug. 2015
Feb. 2017
US$1,000 million
Aug. 2015
Aug. 2017
US$1,000 million
Aug. 2015
Aug. 2018
US$850 million
Aug. 2015
Aug. 2020
US$500 million
€500 million
Aug. 2015
Aug. 2025
Furthermore, we capitalized development costs of €1.8 billion
in 2015 (2014: €1.1 billion); this is presented under intangible
assets. S. 107
3,193
Together with Audi and BMW, we acquired the digital mapping
business HERE in 2015. The digital maps from HERE are the
basis for new assistance systems going as far as fully automated
driving. Daimler's share of the purchase price is approximately
€0.7 billion.
At Mercedes-Benz Cars, investment in property, plant and
equipment of €3.6 billion in 2015 was on prior year level. The
most important projects included the GLC and GLE SUVS and
the new E-Class family. We also made substantial investments
in the reorganization of our German production facilities as
competence centers and in the expansion of our international
production network. Following the completion of the Euro VI
product offensive, the main areas of investment at Daimler Trucks
in 2015 were to extend technological leadership and to adapt
production capacities to the high demand. Total investment in
property, plant and equipment at Daimler Trucks increased to
€1.1 billion. At the Mercedes-Benz Vans division, the focus of
investment was on the next-generation Sprinter, the new mid-
size pickup and production preparations for the new Vito in Latin
America. The main investments at Daimler Buses were in new
products and the modernization and expansion of the production
facilities.
Irrevocable loan obligations
1,931
1,320
Miscellaneous other financial obligations
1,518
2,318
Other financial obligations
18,976
15,564
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 95
Other financial obligations, financial guarantees
and contingent liabilities
2,157
In the context of its ordinary business operations, the
Group has entered into other financial obligations in addition
to the liabilities shown in the consolidated balance sheet at
December 31, 2015. Table B.28 provides an overview of the
nominal amounts of other financial obligations. With regard
to their maturities, we refer to Note 30 (Financial guarantees,
contingent liabilities and other financial commitments) and
Within the context of financial guarantees, Daimler generally
guarantees the settlement of the payment obligations of the
main debtor vis-à-vis the holder of the guarantee. The maximum
potential obligation resulting from these guarantees amounts
to €1.0 billion at December 31, 2015 (end of 2014: €0.8 billion);
liabilities recognized in this context amount to €0.1 billion
at the end of the year (end of 2014: €0.1 billion). In connection
with the Chrysler transactions entered into 2007 and 2009,
Daimler provides guarantees for Chrysler obligations; at
December 31, 2015, those guarantees amount to €0.3 billion,
whereby Chrysler provided €0.2 billion on an escrow account
as collateral for the guaranteed obligations. Another financial
guarantee of €0.1 billion relates to bank loans of Toll Collect
GmbH, the operator company of the toll-collection system
for trucks in Germany. Other risks arise from an additional
guarantee that Daimler Financial Services AG provided for
obligations of Toll Collect GmbH to the Federal Republic of
Germany. This guarantee is related to the completion and oper-
ation of the toll-collection system. A claim on this guarantee
could primarily arise if for technical reasons toll revenue is lost
or if certain contractually defined parameters are not fulfilled,
if the Federal Republic of Germany makes additional claims or
if the final operating permit is not granted. Furthermore,
arbitration proceedings have been initiated against Daimler
Financial Services AG. The maximum obligation that could
result from this guarantee for the Group is substantial, but
cannot be reliably estimated.
The contingent liabilities principally constitute buyback obliga-
tions. At December 31, 2015, the best possible estimate for
the loss risk from these guarantees amounted to €1.6 billion
(2014: €1.2 billion). Warranty and goodwill commitments
(product guarantees) provided by the Group in connection with
its vehicle sales are not included in the contingent liabilities.
Contingent liabilities also include other contingent liabilities.
The best possible estimate for potential expenses from the
other contingent liabilities is €0.4 billion (December 31, 2014:
€0.4 billion).
Investment
In the context of our growth strategy, we aim to make good
use of the opportunities presented by the global automotive
markets. At the same time, we intend to play a major role in
the fundamental technological change in the automotive industry,
and to assume a leading role with digitization. This requires
substantial investment in innovative products and new technolo-
gies as well as in the expansion of our worldwide production
network. In 2015, we therefore once again increased our invest-
ment in property, plant and equipment - as already announced
in Annual Report 2014 - from an already high level to €5.1 billion
(2014: €4.8 billion).
At December 31, 2015, financial obligations of €2.2 billion
exist in connection with future investments in property, plant
and equipment.
B.29
Investment in property, plant and equipment
In billions of euros
6
5
4
3
2
Note 32 (Management of financial risks) of the Notes to
the Consolidated Financial Statements.
1
2,156
9,769
Liquidity
18,209
16,301
Financing liabilities
-101,142
-86,689
+269
+1,639
+1,908
-14,453
Market valuation and currency
hedges for financing liabilities
583
270
Non-terminable rental and leasing agreements
Financing liabilities (nominal)
Net debt
-86,419
-82,350
-70,118
+313
-14,140
-12,232
B.28
Other financial obligations (nominal amounts)
In millions of euros
Dec. 31,
2015
Dec. 31,
2014
Obligations from purchasing agreements
13,371
-100,559
0
2011
2012
2.4
Mercedes-Benz Vans
202
304
-34
in % of revenue
1.8
3.0
Daimler Buses
104
105
3.0
-1
2.5
2.5
Daimler Financial Services
30
23
+30
in % of revenue
0.2
0.1
96
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
in % of revenue
+41
788
1,110
2013
2014
2015
B.30
Investment in property, plant and equipment by division
2015
2014
15/14
% change
In millions of euros
Daimler Group
in % of revenue
in % of revenue
Daimler Trucks
in % of revenue
5,075
4,844
+5
3.4
3.7
Mercedes-Benz Cars
3,629
3,621
+0
4.3
4.9
In addition to capital expenditure on property, plant and equip-
ment, we also invested in associated companies and joint ven-
tures in 2015.
The parameter used by Daimler to measure the financial
capability of the Group's industrial business is the free cash
flow of the industrial business 7 B.25, which is derived
from the reported cash flows from operating and investing activ-
ities. The cash flows from the acquisition and sale of market-
able debt securities included in cash flows from investing activi-
ties are deducted, as those securities are allocated to liquidity
and changes in them are thus not a part of the free cash flow.
15/14
% change
Liquidity
industrial business
3,960
5,479
-1,519
1 The effects from the financing of the Group's own dealerships, which
are reflected in cash provided by operating activities, are eliminated
under other adjustments.
94
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.26
In millions of euros
Dec. 31,
2015
Dec. 31,
2014
Free cash flow of the
15/14
Change
8,369
8,341
Marketable debt securities
6,999
5,156
+28
+1,843
15,368
13,497
+1,871
Financing liabilities
2,612
Cash and cash equivalents
-758
Net liquidity of the industrial business
264
The free cash flow of the industrial business amounted to
€4.0 billion in 2015. The cash outflow of €1.2 billion for the
extraordinary payments in the context of pension and health
care benefits in Germany and the United States reduced
the free cash flow of the industrial business. Furthermore, the
acquisition of shares in the digital mapping business HERE
had an influence of €0.7 billion. Adjusted for these special effects,
the free cash flow of the industrial business amounted to
€5.9 billion (2014: €5.2 billion).
At the beginning of 2015, we expected a free cash flow in
a significantly higher amount than the dividend payment
of €2.6 billion, but significantly lower than in the previous year
as a result of the intensified level of investments. Due to the
positive business development in the course of the year 2015,
we successively increased our free cash flow forecast during
the reporting period. With consideration of the acquisition of
HERE and the extraordinary contribution to pension plan
assets in the fourth quarter, the free cash flow in the reporting
period was lower than in the previous year. Adjusted for
these material special items, the free cash flow of the industrial
business amounted to €5.9 billion and significantly exceeded
the amount of €5.2 billion in the previous year.
The increase of €0.7 billion to €5.9 billion in the free cash
flow adjusted for special effects reflects the positive business
development, and was primarily the result of higher profit
contributions from the automotive divisions. Opposing effects
resulted from the higher increase in working capital, defined
as the net change in inventories, trade receivables and trade pay-
ables. In addition to the higher capital increases carried out
at our financial investments, the free cash flow of the industrial
business was especially reduced by higher investments in
intangible assets and property, plant and equipment. Higher
tax payments were another factor.
1,022
Free cash flow of the industrial business
In millions of euros
2015
2014
15/14
Change
Cash provided by
operating activities
11,735
7,539
B.25
Cash used for
+4,196
Other adjustments¹
+2,092
1,897
debt securities
-195
-7,049
-2,887
-9,936
investing activities
Change in marketable
1,948
thereof capitalized
37,578
2,380
33,187
35,707
Mercedes-Benz Vans
Employees (December 31)
Unit sales
Research and development expenditure
+2
Return on sales (in %)
EBIT
Revenue
Daimler Trucks
136,941
139,947
142,666
Employees (December 31)
2,576
Investment in property, plant and equipment
+8
+22
2015
5.9
+8
+1
86,391
+13
502,478
415,108
78,642
79,483
470,705
-21
6.7
26
1,293
1,265
57
45
1,322
-17
1,110
1,243
1,028
6.9
+5
2,001,438
83,809
2,373,527
57,891
89,284
94,695
9,207
EBIT
66
ALL OUR DIVISIONS.
AND SERVICE OFFENSIVE AT
99...THROUGH OUR PRODUCT
CORE
GROWTH IN OUR
CORE BUSINESS... 66
99 SYSTEMATIC
DAIMLER ANNUAL REPORT 2017 | #1 | CORE 5
The updated Mercedes-Benz S-Class defines milestones
on the road to autonomous driving thanks to its innovative
assistance systems, and thrills customers with its luxurious
driving comfort.
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
4
66
OF MOBILITY.
SHAPE THE FUTURE
... WE WANT TO
+6
8,112
7,926
+13
Unit sales
+19
1,612
2,008
2,388
thereof capitalized
+17
4,711
5,671
2,197,956
6,642
+17
3,629
4,147
4,843
Investment in property, plant and equipment
9.5
9.1
9.7
Return on sales (in %)
Research and development expenditure
+13
30
+15
thereof capitalized
310
238
153
+30
Unit sales
401,025
359,096
321,017
+12
Employees (December 31)
25,255
24,029
22,639
+5
Daimler Buses
Revenue
4,351
4,176
+28
384
442
565
Revenue
13,164
12,835
11,473
+3
EBIT
1,181
1,170
880
4,113
+1
9.0
9.1
7.7
Investment in property, plant and equipment
710
373
202
+90
Research and development expenditure
Return on sales (in %)
1,619
+4
243
26,226
28,081
+9
Employees (December 31)
18,292
17,899
18,147
+2
Daimler Financial Services
Revenue
EBIT
23,775
1,970
New business
70,721
Contract volume
139,907
20,660
1,739
61,810
132,565
18,962
28,676
Unit sales
+173
13
249
214
-2
Return on sales (in %)
5.6
6.0
5.2
Investment in property, plant and equipment
94
EBIT
97
-3
Research and development expenditure
194
202
184
-4
thereof capitalized
"
11
104
17/16
-
MANUFACTURER ... 66
→moovel
Daimler Truck Financial
Mercedes-Benz
Financial Services
Mercedes-Benz Bank
BHARATBENZ
SETRA
FREIGHTLINER
BHARATBENZ
WESTERN STAR
BUILT BUSES.
FUSO
Thamaa
CAR
2GO
FREIGHTLINER
EQ
Mercedes me
MAYBACH
AMG
Daimler AG is one of the world's most successful automobile companies. With its
divisions Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses
and Daimler Financial Services, the vehicle manufacturer is one of the biggest
suppliers of premium cars and is the largest producer of commercial vehicles with a
global reach. Daimler Financial Services provides financing, leasing, fleet management,
insurance, investment products and brokerage of credit cards, as well as innovative
mobility services. For more information: ④ daimler.com
+8
9,975
12,062
13,012
+16
30
37
smart
43
mytaxi
#1
Report of the Audit Committee
198
D Corporate Governance
54
SHAPING THE FUTURE
195
Daimler Financial Services
192
Daimler Buses
50
COMPANY
189
Contents
Mercedes-Benz Vans
CULTURE
184
Daimler Trucks
24
CASE
178
Mercedes-Benz Cars
4
CORE
176
C| The Divisions
1
44
Investment in property, plant and equipment
Employees (December 31)
+6
116,727
Net profit
10,864
8,784
+24
Earnings per share (in €)
9.84
7.97
+23
Dividend per share (in €)
3.65
3.25
+12
+14
Employees (December 31)
282,488
+2
1 Adjusted for the effects of currency translation, revenue increased by 8%.
Cover photo
The Concept EQA is the first fully electric
EQ concept car from Mercedes-Benz in the
compact segment. Excellent driving dynamics
are ensured by permanent all-wheel drive and
two electric motors, whose system output can
be increased to over 200 kW thanks to scalable
battery components. In combination with the
intelligent Mercedes-Benz operating strategy, the
Concept EQA offers a range of up to 400 kilometers,
depending on the battery capacity installed. The
highly efficient lithium-ion battery with pouch cells
is supplied by the Daimler subsidiary Deutsche
ACCUMOTIVE. The Concept EQA can be charged
via induction or wallbox and is also prepared for
rapid charging.
Daimler's Divisions >
The Divisions and Brands
€ amounts in millions
Mercedes-Benz Cars
Revenue
2017
2016
289,321
12,902
14,682
EBIT
+14
DAIMLER
Annual Report 2017
D
Key Figures
Daimler Group
€ amounts in millions
2017
2016
17/16
% change
Revenue
164,330
153,261
+71
Investment in property, plant and equipment
6,744
5,889
+15
Research and development expenditure
8,711
7,572
+15
Free cash flow of the industrial business
2,005
3,874
-48
200
Daimler is writing the next chapter of its success story. As a leading automo-
bile manufacturer, we continue to set the pace and shape the future. That's
because the mobility of tomorrow will be fundamentally different – because
our customers' expectations are becoming more diverse and more challeng-
ing in increasingly dynamic markets. To make sure Daimler stays in the lead,
we are focusing our activities in four strategic areas. That's how we aim to
strengthen our economic base through profitable growth in our global core
business: CORE. We are using our earning power to shape the radical trans-
formation of the automobile industry. To this end, we're investing in the
future-oriented CASE fields - Connected, Autonomous, Shared & Services
and Electric in order to strengthen our core business over the long term. To
support this transformation effectively, we are renewing our corporate culture
in cooperation with our employees: CULTURE. Through the new structure
that we envisage, we aim to make even better use of our opportunities in the
market: COMPANY. As a result of our activities in these four strategic areas,
we are becoming more effective, faster and more successful - on course for
a leading role at the next level of mobility.
Chairman's Letter
56
Glossary
334
Ten Year Summary
327
Independent Auditor's Report
326
Responsibility Statement
170
Outlook
155
Risk and Opportunity Report
324
336
G| Further Information
and Explanation
Takeover-Relevant Information
136
Remuneration Report
244
Statements
135
Events after the Reporting Period
Notes to the Consolidated Financial
Overall Assessment of the Economic Situation 134
242
Consolidated Statement of Changes in Equity
152
121
Index
Daimler Worldwide
#10
VEHICLE
99 AS A LEADING
ACTROS
DAIMLER ANNUAL REPORT 2017 | #1 | CORE CASE CULTURE COMPANY
2
structure
Future-oriented
COMPANY
corporate culture
transformation
Innovative, flexible
337
CULTURE
CASE
Strengthening
the base
CORE
EQA
#1
Refers to a Daimler publication
Cross-reference within the Annual Report
Refers to additional information on the Internet
Refers to an illustration or a table in the Annual Report
O
Information guidance system
338
Driving
Sustainability and Integrity
241
Consolidated Statement of Cash Flows
222
Employee issues
72
218
Environmental issues
216
Sustainability at Daimler
62
NONON
82
Objectives and Strategy
78
Social issues
Daimler and the Capital Market
70
The Supervisory Board
64
Report of the Supervisory Board
214
% change
61
The Board of Management
A | To Our Shareholders
203
Corporate Governance Report
Declaration on Corporate Governance,
Highlights of 2017
227
Compliance
229
118
(condensed version according to HGB)
240
Consolidated Statement of Financial Position
Daimler AG
239
Income/Loss
115
Financial Position
Consolidated Statement of Comprehensive
107
Liquidity and Capital Resources
238
Consolidated Statement of Income
101
Profitability
95
Development
236
F| Consolidated Financial
Statements
Economic Conditions and Business
90
Corporate Profile
B| Combined Management Report 88
234
Non-Financial Report
Statement on the review of the
56
E| Non-Financial Report
0.2
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
of the employees and those of the company. The key points
include the extension of the employment guarantee to the end
of 2029 ("Safeguarding the Future 2030") and measures that
will ensure nearly full funding of the company's pension obliga-
tions. With regard to balancing the interests of the employees
and those of the company, Daimler contributed €3 billion in liquid
funds to the pension plan assets of Daimler AG in the fourth
quarter of the year under review.
Daimler plans to invest a three-digit million euro amount in
the initial measures of this plan. None of the aspects of this
project involve cost-cutting or efficiency programs, and the
Group has no plans to reduce workforce numbers. Daimler AG
is also not planning to divest itself of individual business units.
The company will consult closely with employee representatives
throughout the project. It has already reached an agreement
in a position paper that addresses ways to balance the interests
Initial steps taken to strengthen the divisional structure
Daimler AG seeks to further focus and strengthen the business
structure of the Group by establishing legally independent enti-
ties. The plan calls for Mercedes-Benz Cars & Vans and Daimler
Trucks & Buses to become legally independent entities with
greater business responsibility alongside the legally independent
Daimler Financial Services division. This project is designed
to strengthen the divisions as they prepare for the future, so that
they can more effectively utilize the growth and earnings poten-
tial of their respective markets. Daimler's plan for safeguarding
the future of the company is based on three components:
maintaining and increasing business success, continuing to pre-
pare employees for the future, and keeping investors committed
to the company over the long term.
Important events
ViaVan joint venture with the US startup company Via
Mercedes-Benz Vans entered the ride-sharing sector in October
2017 through the establishment of the ViaVan joint venture
with the US startup company Via, which has its headquarters in
New York. Via's intelligent algorithm enables the creation of a
dynamic mass transportation system that supplements public
transport systems and reduces traffic volumes in cities. Tech-
nology from Via and engineering from Mercedes-Benz Vans thus
form a perfect combination for efficient, affordable and sus-
tainable ride-sharing services. Furthermore, Daimler acquired
an equity interest in Via Transportation Inc. in 2017.
During the year under review, we expanded our range of inno-
vative mobility services in a targeted manner. In August, the
moovel Group acquired the Hamburg startup Familonet, which
offers a locator app. Private car-sharing services have also
been expanded through the acquisition of a minority interest
in Turo, which is the leading peer-to-peer (P2P) marketplace
for vehicle rentals in the United States. Turo plans to enter the
German market in 2018. At the same time, Daimler integrated
its Croove private car-sharing platform into the Turo organization.
With the acquisition of flinc, the leading provider of door-to-
door ride-sharing services, Daimler added yet another compo-
nent to its portfolio of forward-looking mobility solutions.
Targeted investments in mobility services
Daimler's mytaxi subsidiary - Europe's leading taxi app -
acquired 100% of the Greek taxi app operator Taxibeat LTD in
February 2017. Through this acquisition, Daimler is investing
in the further development and expansion of urban mobility sys-
tems in Europe. Daimler will initially continue to use the Taxi-
beat brand name. In June 2017, Daimler also acquired a 100%
interest in Clever Taxi, the taxi app market leader in Romania.
As a result, mytaxi now operates in 11 European countries. In
the third quarter of 2017, we introduced a pooling service
known as mytaxi match, which allows several customers to share
a taxi. The pilot project for the service was launched in Warsaw.
mytaxi invests in international expansion
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 93
In January 2017, Daimler Financial Services acquired the elec-
tronic payment services provider PayCash Europe SA. With its
entry into the e-payment sector, Daimler is launching its own
electronic payment services provider under the brand name
"Mercedes pay". The "Mercedes pay" brand is a key component
of Daimler's mobility and digitization strategy. The new pay-
ment system underscores Daimler's goal, as a leading provider
of digital mobility services, of making its products and services
even more attractive.
Daimler launches e-payment business
In July 2017, the two partners also signed an agreement that
will further strengthen their cooperation within the framework
of the production joint venture Beijing Benz Automotive Co.,
Ltd. (BBAC). The companies plan to jointly invest around RMB
5 billion (approximately €655 million) in the production of
battery-electric Mercedes-Benz brand vehicles at the BBAC
manufacturing facility in Beijing. As part of this strategic
framework agreement, Daimler and BAIC Motor are to prepare
for the local production of battery-electric vehicles at BBAC
between now and 2020. The partners also intend to provide the
infrastructure needed for the local production of battery
cells in China, as well as the required research and development
capacities.
In June 2017, Daimler AG and its Chinese partner BAIC Group
signed a framework agreement that will strengthen their stra-
tegic cooperation through investments in the production of
vehicles with alternative drive systems in China. As part of the
investment agreement, Daimler intends to acquire a minority
share in Beijing Electric Vehicle Co., Ltd. (BJEV), a subsidiary of
the BAIC Group. The goal is to strengthen the strategic col-
laboration with BAIC on vehicles with alternative drive systems.
China is already the world's biggest market for electric vehicles.
Expansion of strategic partnership with BAIC
With the establishment of the IONITY joint venture in November
2017, the BMW Group, Daimler, Ford Motor Company and
Volkswagen with Audi and Porsche laid the foundation for the
creation of the most powerful charging network for electric
vehicles in Europe. The establishment and operation of approx-
imately 400 high-power charging (HPC) stations by 2020 will
be a major step toward enabling long-distance journeys with
electric vehicles, thus helping to establish these vehicles in
the market.
are networked via software and can be expanded as needed.
Along with hardware, the US market leader also provides its
customers with customized cloud-based solutions, ranging
from user-specific energy management systems to well-proven
payment services, and a mobile app for private customers
that provides innovative features previously unavailable in the
European market. Daimler and ChargePoint are systematically
pursuing the same goal: to promote the breakthrough of electric
mobility through the targeted expansion of infrastructure and
services. The strategic partnership of the two companies sup-
plements existing Daimler AG alliances and joint ventures
that are designed to build and expand an ecosystem for electric
mobility.
Intelligent charging solutions for electric mobility
Daimler AG became an investor in the American charging solu-
tions provider ChargePoint Inc. in March 2017. ChargePoint's
core areas of expertise include both the development and pro-
duction of innovative infrastructure solutions for electric
vehicles ranging from conventional AC (alternating current)
systems to ultra-fast DC (direct current) charging systems
with up to 400 kilowatts. All of the products from ChargePoint
In March 2017, the two companies entered into a development
agreement that will bring highly automated and driverless
driving to city streets by the beginning of the next decade. The
objective is to jointly develop software and algorithms for a
highly automated driving system. By introducing highly automated
and driverless driving in the urban environment, Bosch and
Daimler aim to improve the flow of traffic in cities, enhance
safety on the road and provide an important building block
for the traffic systems of the future.
This project will be continued in close consultation with the
employee representatives. Following the preparation of an
implementation plan and a final assessment, the actual imple-
mentation will have to be decided on by the Board of Manage-
ment and the Supervisory Board and approved by the Annual
Shareholders' Meeting. The goal is for the draft proposal on
the separation to be presented to the Annual Shareholders'
Meeting for its approval in 2019.
Cooperation with Bosch on the development of highly
automated and driverless driving
Performance measurement system
The financial performance measures used at Daimler are
oriented toward our investors' interests and expectations. They
provide the foundation for value-based management.
Profit measure
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
94
Net
assets
Cost of
capital (%)
Net assets
productivity
Return
on sales
Value
added
Cost of capital
Cost of
capital (%)
×
Net assets
Profit
measure
Value
added
Calculation of value added
B.03
Using a combination of return on sales and net assets' produc-
tivity within the context of a strategy of profitable revenue
growth provides a basis for the positive development of value
added. Value added shows the extent to which the Group
and its divisions achieve or exceed investors' minimum return
requirements, thus creating additional value. The quantitative
development of value added and the other financial performance
measures is explained in the "Profitability" chapter.
pages 105f
Value added is a key element of our performance measurement
system, which is applied at both the Group and the divisional
levels. It is calculated as the difference between operating profit
and the cost of capital of the average net assets. Alternatively,
the value added of the industrial divisions can be determined
using the main value drivers of return on sales (quotient of EBIT
and revenue) and net assets' productivity (quotient of revenue
and net assets). 7 B.03
Value added
Financial performance measures
The measure of operating profit at the divisional level is EBIT
(earnings before interest and income taxes). EBIT thus reflects
the divisions' responsibility for profit and loss. The measure
of operating profit that is used at the Group level is the net oper-
ating profit. It comprises the EBIT of the divisions as well as
profit and loss effects for which the divisions are not held respon-
sible. The latter include income taxes and other reconciliation
items. B.19 on page 105
By means of targeted investments and future-oriented partner-
ships, we strengthened our core business and made use of
additional growth potential in 2017. We also focused on contin-
uously developing our business portfolio and improving our
competitiveness in our core business areas. Our activities revolve
around the future-oriented strategic fields of Connected,
Autonomous, Shared & Services and Electric (CASE), all of which
will play a major role in shaping the future of mobility. In order
to strengthen our position in these areas, we forged ahead with
our partnerships and made a large number of investments
during the year under review. The most important projects are
briefly described below.
of the Notes to the Consolidated Financial Statements.
W
smart
FUSO
MAYBACH
SETRA
FREIGHTLINER
FREIGHTLINER
AMG
Brands
13,012
18,292
25,255
79,483
Employees 142,666
€23.8 billion
€4.4 billion
€13.2 billion
€35.7 billion
€94.7 billion
WESTERN STAR
Portfolio changes and strategic partnerships
Mercedes me
BUILT BUSES
Daimler is also active in the global automotive industry and
related sectors through a broad network of subsidiaries, asso-
ciated companies and joint operations. The statement of
investments of Daimler AG in accordance with Section 313 of the
German Commercial Code (HGB) can be found in Note 40
The Daimler Financial Services division supports the sales of
the Daimler Group's automotive brands in approximately 40
countries. Its product portfolio primarily consists of customized
financing and leasing packages for end customers and dealers.
It also includes insurance brokering, fleet management services,
investment products and credit cards, as well as various mobil-
ity services such as the moovel mobility platform, the mytaxi
app and car2go, the world's leading company for flexible car-
sharing services. The total number of users of our mobility ser-
vices increased to 17.8 million in 2017. During the year under
review, Daimler Financial Services financed or leased around
50% of the vehicles sold by Daimler. The division's contract
volume of €139.9 billion covers more than 4.8 million vehicles.
Daimler Financial Services also holds a 45% interest in the
Toll Collect consortium, which operates an electronic road-
charging system for trucks on highways in Germany.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
92
1.3
2.5
Mercedes-Benz Vans
0.4
0.6
0.9
mytaxi
2GO
moovel
Daimler Truck Financial
Mercedes-Benz
Financial Services
Mercedes-Benz Bank
BHARATBENZ
BHARATBENZ
EQ
Lomas
Revenue
Net assets
Cost of capital
86
17.8
Mercedes-Benz Cars
5.7
6.6
14.0
Daimler Trucks
1.3
Source: IHS Global Insight, own calculations
South
America
Asia
NAFTA
Europe
Total
-4
-3
-2
-1
0
7.6
1
Daimler Group
2017 2018 - 2019
0.7
0.7
Daimler Buses
0.1
0.1
0.3
Daimler Financial Services
Corporate
0.04
0.04
0.1
0.0
0.0
0.3
Adapting our corporate culture (CULTURE)
We are also addressing the cultural challenge associated with
the transformation of the automotive industry by adapting our
corporate culture accordingly. Together with our employees, we
have developed a new management culture within the frame-
work of the Leadership 2020 program. We support interdisciplin-
ary work that is pursued outside of hierarchical structures.
To this end, we enable new teams to be put together for limited
periods of time in order to work on specific projects (swarm-
ing). We also promote the development of innovations through
the use of modern techniques such as scrum and design think-
ing. With our Incubator, which is an internal startup concept for
employee ideas, as well as our STARTUP AUTOBAHN initiative,
we are supporting the development and implementation of new
business ideas and innovations from employees and external
partners. We develop digital solutions for our customers at our
divisions' digital units and at our digital hubs. In order to pro-
mote our employees' enthusiasm for digital technologies and
to enable them to use such technologies effectively, we create
learning programs that teach digital skills. We also promote
knowledge sharing through new event formats and platforms
such as our Social Intranet, blogs and communities. And we
offer hands-on experience with digital technologies during our
DigitalLife Days and road shows at our sites. This is how we
are cooperating with our employees to lay the foundations for
our company's cultural transformation.
A.10
A.11
Research and development expenditure
2016
Amounts in billions of euros
Net assets are the basis for the investors' required return. The
industrial divisions are accountable for the net operating assets;
all assets, liabilities and provisions for which they are respon-
sible in day-to-day operations are therefore allocated to them.
Performance measurement at Daimler Financial Services is
implemented on an equity basis. Net assets at the Group level
include the net operating assets of the industrial divisions
and the equity of Daimler Financial Services, as well as assets
and liabilities from income taxes and other reconciliation items
which cannot be allocated to the divisions. Average annual net
assets are calculated on the basis of average quarterly net
assets.
page 106
2
4
Industrial business, before taxes
8
8
Group, after taxes
2016
2017
In percent
Cost of capital
B.04
Pursuant to Section 317 Subsection 2 Sentence 6 of the German
Commercial Code (HGB), the purpose of the audit of the
statements pursuant to Section 289f Subsections 2 and 5 and
Section 315d of the HGB is limited to determining whether
such statements have actually been provided.
The corporate governance statement pursuant to Section 289f
and Section 315d of the German Commercial Code (HGB)
can be found in this Annual Report on pages 203 ff and can
also be viewed on the Internet at ④daimler.com/corpgov/en.
Corporate governance statement
Details of the development of non-financial performance
indicators can be found in the chapters "Economic Conditions
and Business Development" and "Non-Financial Report".
pages 95 ff and pages 214ff
Non-financial performance indicators are also used to deter-
mine the remuneration of our Board of Management members.
Important criteria for annual target achievement also include
integrity and compliance, employee satisfaction and the high
quality of our products.
The important financial indicators for measuring our operating
financial performance, in addition to EBIT and revenue, are
the free cash flow of the industrial business, investments, and
expenditure for research and development. Along with the
indicators of financial performance, we also use various non-
financial indicators to help us manage the Group. Of particular
importance in this respect are the unit sales of our automotive
divisions, which we also use as the basis for our capacity and
human resources planning and workforce numbers.
Key performance indicators
As one of the main factors influencing value added, return on
sales is of particular importance for assessing the industrial
divisions' profitability. The combination of net profitability and
net assets' productivity results in the return on net assets
(RONA). If RONA exceeds the cost of capital, value is created
for our shareholders. The measure of profitability for Daimler
Financial Services is not return on sales, but return on equity.
Return on sales
The required rate of return on net assets, and hence the cost of
capital, is derived from the minimum rates of return that inves-
tors expect on their invested capital. The cost of capital of the
Group and of the industrial divisions comprises the cost of
equity as well as the costs of debt and net pension obligations
of the industrial business. The expected returns on liquidity
of the industrial business are considered with the opposite sign.
The cost of equity is calculated according to the capital asset
pricing model (CAPM), using the interest rate for long-term risk-
free securities (such as German government bonds) plus a
risk premium reflecting the specific risks of an investment in
Daimler shares. Whereas the cost of debt is derived from the
required rate of return for obligations the Group enters into with
external lenders, the cost of capital for net pension obligations
is calculated on the basis of discount rates used in accordance
with IFRS. The expected return on liquidity is based on money-
market interest rates. The Group's cost of capital is the weighted
average of the individually required or expected rates of return.
During the year under review, the cost of capital amounted to
8% after taxes. For the industrial divisions, the cost of capital
amounted to 12% before taxes; for Daimler Financial Services,
a cost of equity of 13% before taxes was applied. 7 B.04
12
3
Daimler Financial Services, before taxes
23
5
6
2017
2016
Gross domestic product, growth rates in %
Economic growth
B.05
Currency exchange rates remained volatile despite the favorable
global economic environment. Against the US dollar, the euro
moved during the year between $1.03 and $1.21. At the end of
the year, the euro stood at $1.20, making it around 14% stronger
than at the end of 2016. The range of fluctuation of the Japanese
yen against the euro was 116 to 135. By the end of the year,
the euro had appreciated against the yen by about 9%. The British
pound once again fell against the euro (by approximately 3.5%),
but this decrease was not nearly as pronounced as the decrease
recorded in 2016. The euro also appreciated against other key
currencies such as the Russian ruble, the Brazilian real and the
Turkish lira, in some cases recording double-digit increases.
downturn in the prior year. The economies of Eastern Europe
also bounced back noticeably during the year under review.
The growth rate for the region more or less doubled, largely due
to the recovery of the Russian economy. Despite receiving less
support from fiscal and monetary policy, the Chinese economy
continued to benefit from previous measures in this regard,
and with a growth rate of 6.9%, China actually posted a slight
increase in growth compared with the prior year. The economic
situation in the Middle East remained problematic, with growth
clearly below the long-term trend.
With a real growth rate of just over 4.5%, the emerging markets
finally succeeded in overcoming the economic difficulties they
had experienced over the previous two years. The turnaround was
particularly pronounced in South America, which recorded slight
growth of just over 1% in 2017 after undergoing a substantial
The economy of the European Monetary Union was particularly
strong in the year under review: Growth of around 2.5%
represents a significant improvement on the figure for 2016.
This was largely due to a higher contribution from exports. The
European Central Bank (ECB) also supported this development
with its ongoing expansionary monetary policy in response to
low inflation rates. The German economy recorded above-average
growth (2.2%) in a long-term comparison for the fourth
consecutive year. Despite a significant decrease in private
consumption, the economy of the United Kingdom posted
GDP growth of 1.8%, so the economic impact of the Brexit
negotiations continued to be limited.
The industrialized countries also benefited from the favorable
global economic environment, as these nations increased their
growth rates to just over 2%. The US economy played a major
role here, posting growth in output of 2.5%, which was
significantly higher than the growth recorded in 2016. Increased
investment by companies following the decrease in 2016 served
as a key driver of growth, while private consumption remained
stable. Developments were very positive also in Japan, where
gross domestic product (GDP) rose by about 1.8%.
With real growth of more than 3% in the year under review, the
world economy had its strongest growth performance since
2011. B.05 Both the industrialized countries and the emerging
markets contributed to this positive development, as the
economic upturn was once again relatively broad-based and
synchronized for the first time in several years. During the year
under review, the economic situation of the emerging markets,
which accounted for nearly two thirds of global growth,
improved significantly. A key driver of this development was the
increase in prices for industrial raw materials, which were
approximately 20% higher on average compared with the pre-
vious year. The acceleration of global growth was even more
remarkable in view of the fact that the risks associated with
geopolitical developments remained relatively high.
The world economy
and Business Development
Economic Conditions
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 95
13
12
13
Daimler
Financial Services
Vans
Cars
101
136
Remuneration Report
Statement of income
EBIT
Profitability
97
Business development
135
Events after the Reporting Period
96
95
10
Automotive markets
The world economy
134
of the Economic Situation
95
Development
Principles of Board of Management remuneration
Overall Assessment
136
Board of Management remuneration in
Principles and objectives of financial management
Cash flows
152
and Explanation
107
Liquidity and Capital Resources
Takeover-Relevant Information
105
150
Remuneration of the Supervisory Board
105
142
Commitments upon termination of service
105
Value added
Net operating profit
Dividend
140
financial year 2017
103
101
107
Economic Conditions and Business
Integrity, compliance and legal responsibility
90
Corporate Profile
B | Combined Management Report
B❘ COMBINED MANAGEMENT REPORT | CONTENTS 89
Daimler achieved record levels of unit sales and revenue in the year 2017, and Group
EBIT also increased significantly. On the basis of solid finances and a strong core
business, we are focusing our businesses on the future: with outstanding vehicles
and services, with pioneering technologies and business models, with an innovative
and flexible corporate culture, and with an organization that meets the needs of the
markets' growing dynamism. In 2017, we invested more than €15 billion in the future
of the company, thus creating the right conditions for further profitable growth.
S.PU485
66
PROFITABLE GROWTH!
ALONG OUR PATH OF
99 WE ARE CONTINUING
Most of our expenditure for research and development flows
into new products. Important individual projects include the
successor models of the current compact-class cars, as well as
the GLS and GLE off-road vehicles and the new Sprinter. Other
focus areas at all of our automotive divisions include innovative
drive-system and safety technologies, vehicle connectivity and
the further development of autonomous driving. The plans also
call for substantial funds to be invested in our comprehensive
electric mobility offensive.
The investments in property, plant and equipment will mainly be
used to prepare for the production launches of our new models.
We will also use our investment to realign our manufacturing
facilities in Germany, increase local production in the growth
markets and expand our global production network for electric
vehicles and batteries.
In the coming years, we will continue to forge ahead with our
innovation offensive in order to implement our growth strategy
through the introduction of new products, innovative technolo-
gies and modern manufacturing capacities. The future-oriented
CASE fields (Connected, Autonomous, Shared & Services and
Electric) will play a key role here. We will invest almost €15 billion
in property, plant and equipment in 2018 and 2019, as well as
nearly €18 billion in research and development projects. With
this plan, we are once again increasing our investment in order
to safeguard the future of our company. 7 A.10 and A.11
Extensive investments in our company's future
By focusing on these goals and on our strategic focus areas
of CORE, CASE, CULTURE and COMPANY, we will successfully
transform our company from a leading automaker into a
leading provider of mobility services.
In order to respond appropriately to the highly dynamic devel-
opment of our industry, its markets, new competitors and new
technologies, we need to have an organization that enables
rapid and agile action. In our fourth strategic column, “Project
Future", we are working on how to transform our divisions
into legally independent entities to further focus and strengthen
the Group's divisional structure. It is intended to form three
legally independent three legally independent business units with
greater business responsibility under the shared roof and
overall management of Daimler AG. These new units would be
Mercedes-Benz Cars & Vans, Daimler Trucks & Buses and
Daimler Financial Services AG, which is already a successful
legally independent company. “Project Future” pursues the
goal of strengthening the divisions as they prepare for the future
so that they can more effectively exploit the growth and earn-
ings potential of their respective markets. The project will be
continued in close consultation with the employee representa-
tives. In this context, the main focus of a balance of interests
is on the extension of the employment guarantee until the
end of 2029. Following the preparation and final assessment of
an implementation plan, the Board of Management and the
Supervisory Board must make a decision to implement it and
the plan must be approved by the Shareholders' Meeting.
The goal is to present a draft proposal for the separations to the
Annual Shareholders' Meeting of Daimler AG in 2019.
Strengthening our divisional structure
(COMPANY)
0.4
0.2
90
132
Sustainability and Integrity
Business model
129
Social responsibility
94
Corporate governance statement
128
The workforce
93
Performance measurement system
122
Innovation, safety and environmental protection
93
Important events
121
Research and development
92
Portfolio changes and strategic partnerships
121
Sustainability at Daimler
90
121
Risk and Opportunity Report
155
109
Mercedes-Benz Cars
Consolidated revenue by division
B.01
Daimler AG is the parent company of the Daimler Group, and
has its headquarters in Stuttgart (Mercedesstraße 137, 70327
Stuttgart, Germany). The main business of Daimler AG is the
development, production and distribution of cars, trucks and
vans in Germany and the management of the Daimler Group.
The management reports for Daimler AG and for the Daimler
Group are combined in this management report.
Daimler can look back on a tradition covering more than 130
years a tradition that goes back to Gottlieb Daimler and Carl
Benz, the inventors of the automobile, and features pioneering
achievements in automotive engineering. Today, the Daimler
Group is a globally leading vehicle manufacturer with an unpar-
alleled range of premium automobiles, trucks, vans and buses.
Its product portfolio is rounded out by a range of customized
financial services and mobility services. Daimler's goal is to
continue playing a leading role in the development of products
and services for the future of mobility. The automotive industry
is in the process of a fundamental transformation, and we intend
to play a major role in promoting and shaping that change. With
our strong core business, we are creating the financial foundation
for our investments in the future-oriented fields of Connected,
Autonomous, Shared & Services (flexible use) and Electric -
"CASE" for short. Innovations from the future-oriented CASE
fields enable us to safeguard the attractiveness and profitability
of our core business.
Business model
Corporate Profile
90 B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
175
Overall statement on future development
175
The workforce
174
Research and development
174
Investment
174
Dividend
174
55.4%
Free cash flow and liquidity
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Mercedes-Benz
Daimler Trucks
Mercedes-Benz
Daimler Group structure 2017
B.02
The Daimler Buses division with its Mercedes-Benz and Setra
brands is the undisputed industry leader for buses above 8
metric tons in its most important traditional core markets: the
EU30 region, Brazil, Argentina and Mexico. The division's prod-
uct range comprises city and inter-city buses, touring coaches
and bus chassis. The largest of the division's 14 production
plants are located in Germany, France, Spain, Turkey, Argentina,
Brazil, Mexico and, since 2015, in India as well. In 2017,
Daimler Buses generated 67% of its revenue in the EU30 region
and 17% in Latin America (excluding Mexico). Whereas we
mainly sell complete buses in Europe, our business in Latin
America, Mexico, Africa and Asia focuses on the production
and distribution of bus chassis.
Polo camper vans and recreational vehicles. With the launch of
the Mercedes-Benz X-Class in November 2017, we became the
first premium manufacturer to introduce a model series in the
very promising segment of mid-size pickups. The Mercedes-Benz
Vans division has manufacturing facilities on four continents: in
Germany, Spain, the United States, Argentina, China and Russia.
The division is active in the Chinese market through a joint
venture, Fujian Benz Automotive Co., Ltd. The production of the
Citan and the Mercedes-Benz X-Class is part of the strategic
alliance with Renault-Nissan. In Russia, the Sprinter Classic is
built for Mercedes-Benz Vans by the GAZ and YaMZ companies.
The most important markets for vans at present are in the EU30
region, which accounts for 68% of unit sales, and the NAFTA
region (11% of unit sales in the year under review).
Mercedes-Benz Vans is a global supplier of a complete range
of vans and associated services. The division's product range
in the commercial vans segment comprises the Sprinter large
van, the Vito mid-size van (marketed as the “Metris" in the
United States) and the Mercedes-Benz Citan urban delivery van.
The range of Mercedes-Benz vans in the private-customer
segment consists of the V-Class full-size MPV and the Marco
As the world's largest manufacturer of trucks above 6 metric tons
gross vehicle weight, Daimler Trucks develops and produces
vehicles in a global network under the brands Mercedes-Benz,
Freightliner, Western Star, FUSO and BharatBenz. The division's
26 production facilities are located in the NAFTA region (14),
Europe (7), Asia (3) and South America (2). In China, Beijing Foton
Daimler Automotive Co., Ltd. (BFDA), a joint venture with our
Chinese partner Beiqi Foton Motor Co., Ltd., has been producing
trucks under the Auman brand name since 2012. Daimler
Trucks' product range includes light-, medium- and heavy-duty
trucks for long-distance, distribution and construction-site haul-
age, as well as special vehicles that are used mainly in municipal
applications. Due to close links in terms of production tech-
nology, the division's product range also includes buses of the
Thomas Built Buses and FUSO brands. In the future, Daimler
Trucks intends to offer vehicles with locally emission-free elec-
tric drive across the entire product portfolio: The product
portfolio will be supplemented with the FUSO eCanter for light-
duty distribution, fully electric trucks from the Mercedes-Benz
brand for heavy-duty distribution, the new product brand E-FUSO
and the fully electric school bus from Thomas Built Buses.
Daimler Trucks' most important sales markets in 2017 were the
NAFTA region with 35% of unit sales, Asia with 32% and the
EU30 region (European Union, Switzerland and Norway) with 17%.
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 91
The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium automobiles of the
Mercedes-Benz brand, the Mercedes-AMG high-performance
brand and the Mercedes-Maybach luxury brand. These auto-
mobiles range from compact models to a highly varied program
of off-road vehicles, roadsters, coupes and convertibles, as
well as S-Class luxury sedans. The portfolio is rounded out by
the Mercedes me brand and the high-quality small cars of
the smart brand. In 2016, we introduced the new EQ brand, which
consolidates all of our activities related to electric mobility.
The most important markets for Mercedes-Benz Cars in 2017
were China with 26% of unit sales, the United States (14%),
Germany (13%) and the other European markets (29%). Within the
framework of its growth strategy, the division continuously
refines its flexible and efficient production network consisting
of more than 30 plants on four continents. At the same time,
we are preparing our worldwide production network to meet the
requirements of electric mobility. We will manufacture our
future electric vehicles of the EQ product and technology brand
within the framework of normal series production, on the
same assembly lines that are used to produce vehicles with com-
bustion engines. In the future, our sites for the production of
electric vehicles will be our plants in Bremen, Sindelfingen and
Rastatt, Germany; Tuscaloosa, Alabama; and Hambach, France.
We will also manufacture electric vehicles for the Chinese mar-
ket at Beijing Benz Automotive Co., Ltd. (BBAC) in China. In the
future, Mercedes-Benz Cars will thus build electric vehicles at
six different locations. In parallel, we will expand our global
battery network to five sites on three continents.
In 2017, Daimler increased its revenue by 7% to €164.3 billion.
The Group's five divisions contributed to this total as follows:
Mercedes-Benz Cars 55%, Daimler Trucks 21%, Mercedes-Benz
Vans 8%, Daimler Buses 3% and Daimler Financial Services 13%.
At the end of 2017, Daimler employed a total workforce of more
than 289,000 people worldwide.
Thanks to its strong brands, Daimler is active in nearly all the
countries of the world. The Group has production facilities in a
total of 19 countries and more than 8,500 sales centers all
over the world. The global networking of its research and devel-
opment activities as well as its production facilities and sales
organizations gives Daimler considerable competitive advantages
internationally, and also offers additional growth opportunities.
13.5%
Daimler Financial Services
2.6%
Daimler Buses
7.7%
20.8%
173
Revenue and earnings
120
167
Risks from guarantees, legal and tax risks
Non-financial risks
164
163
Company-specific risks and opportunities
Financial risks and opportunities
114
Credit ratings
112
Refinancing
157
Industry and business risks and opportunities
111
Investment
157
155
Risk and opportunity management system
Risks and opportunities
110
other financial obligations
Financial guarantees, contingent liabilities and
168
Financial Position
115
Overall assessment of the risk
Outlook
172
Unit sales
120
Risks and opportunities
171
Automotive markets
119
Financial position, liquidity and capital resources
0.4
170
118
Profitability
170
Outlook
118
according to HGB)
Daimler AG (condensed version
169
and opportunity situation
The world economy
Mercedes-Benz Vans
8.7
1.0
11.0
4.8
4.1
Mercedes-Benz Cars
14.8
6.7
5.9
Daimler Group
Amounts in billions of euros
2017 2018 - 2019
Daimler Trucks
2016
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 87
Daimler Financial Services has been operating a system for
flexible car sharing with electric vehicles for about six years with
car2go, and we are the largest provider in the field of flexible,
electric car sharing. Of a total of 14,000 vehicles at 26 locations
worldwide, we have 1,400 electric vehicles and three all-electric
fleets in Stuttgart, Amsterdam and Madrid. car2go thus offers
millions of city dwellers an easy way to experience electric
cars for the first time. Furthermore, Daimler Financial Services
supports risk-free access to electric mobility through leasing
plans and overall packages for electric vehicles and accessories.
Daimler Buses is increasingly focusing on the development of
electric drive systems. In late 2018, the division plans to start
series production of a city bus with a fully electric drive system
on the basis of the Mercedes-Benz Citaro. The modular design
of the lithium-ion battery pack will allow individualized solutions
for various applications and requirements in urban transport.
The Mannheim plant shall be developed as the center for electric
mobility at Daimler Buses. In addition, Daimler Buses provides
comprehensive advice to its customers on the subject of electric
mobility with its "eMobility Consulting" initiative.
Mercedes-Benz Vans believes the future of delivery transport
will be increasingly electric, and it is making use of the modular
system employed by Mercedes-Benz Cars for electric vehicles.
Mercedes-Benz Vans plans the electrification of all its com-
mercial model series. The eVito will be available in the second
half of 2018 and the eSprinter is to follow in 2019.
Daimler Trucks is also focusing more strongly on vehicle elec-
trification. Worsening traffic congestion in urban distribution
transportation and more restrictions for vehicles with combus-
tion engines are making the development of alternative drive
systems also for commercial vehicles increasingly important.
As early as 2006, we started series production of the FUSO
Canter Eco Hybrid for the Japanese market. The FUSO eCanter
is our first light-duty series-produced truck with fully electric
drive; we delivered the first units to customers in 2017 and large-
scale production is to begin in 2019. With its Mercedes-Benz
Electric Truck concept vehicle, Daimler Trucks is demonstrating
the viability of all-electric transport. The E-FUSO Vision One
shows how electric mobility can be successfully launched also in
the heavy-duty truck segment. Daimler Trucks North America
is also working on an electric Freightliner eCascadia for long-
distance haulage. And Daimler Trucks' North American sub-
sidiary Thomas Built Buses has presented an all-electric school
bus that is to be launched in 2019.
2.4
Electric
Daimler Financial Services offers mobility services that make
the division a pioneer in the area of Shared & Services. We are
enlarging our customer base by expanding existing services
and creating additional services for new mobility segments. At
the same time, we are working both independently and with
partners to develop the core expertise we need to establish
new business with fleets of automated and autonomous vehi-
cle vehicles. With car2go, we are currently the world's leading
company for flexible car-sharing services. The Daimler subsid-
iary mytaxi is the leader in the taxi-ordering app market in
Europe, while moovel offers our customers a platform that
enables them to optimally compare, combine, book and pay for
various mobility services. With our strategic partner Via, we
are now testing flexible shuttle services and pooling concepts
that can complement local public transport systems. We plan
to continue growing in the business customer segment as well.
Mercedes-Benz Van Rental offers customers flexible rental
services for vans and commercial vehicles.
Shared & Services
With its Mercedes-Benz Future Bus with CityPilot, Daimler
Buses has demonstrated the highly advanced stage its
research has reached in the area of partially automated driving
on a BRT route (bus rapid transit) near Amsterdam. BRT sys-
tems are an important element of future urban mobility, and
already facilitate efficient, fast and cost-effective public trans-
port in many cities of the world.
Investments in property, plant and equipment
Daimler Buses
At Mercedes-Benz Cars, we have significantly expanded
our activities in the area of electric mobility. We believe that
by 2025, between 15% and 25% of our new vehicles will be
all-electric models. All of the electric vehicles and electric
mobility services offered to Mercedes-Benz Cars customers
have been consolidated under our new EQ brand, which stands
for "Electric Intelligence". We aim to offer more than ten
battery-electric models by 2022, and to this end we will invest
approximately €10 billion. Our modular and scalable electric-
vehicle platform will enable us to offer impressive designs and
a high degree of flexibility in terms of variants and models.
The EQC, a sporty SUV model, is to be launched in 2019. After
that, we aim to launch a new model every six to eight months.
In 2017, we presented a pre-series model of the new Mercedes-
Benz GLC F-CELL at the IAA, a fuel-cell vehicle with plug-in
hybrid technology. In addition to hydrogen, the purely electric
version of the popular SUV was also able to "fill up" with elec-
tricity. The smart brand plans to offer cars solely with electric
drive systems in Europe and North America by 2020; the
other regions are to follow a short time later. We are establish-
ing a production network to permit the flexible manufacture
of electric vehicles at all of our key production locations world-
wide. This is the only way to ensure that we can react fast
enough to fluctuations in demand.
1.2
B.19
-299
Reconciliation
+13
1,739
1,970
Daimler Financial Services
-2
249
243
+1
1,170
1,181
Mercedes-Benz Vans
+22
1,948
2,380
+13
8,112
9,207
Mercedes-Benz Cars
-316
+5
Daimler Group¹
14,682
2015 2016 2017
2014
2013
0
Net profit (loss)
EBIT
m
2
4
6
8
10
12
14
16
In billions of euros
Development of earnings
B.13
1 EBIT, the indicator of operating performance, comprises earnings
before interest income/expense and corporate income taxes.
The reconciliation of the Daimler Group's EBIT to earnings before
income taxes is included in Note 33 of the Notes to the Consolidated
Financial Statements.
+14
12,902
Daimler Buses
Daimler Trucks
% change
In millions of euros
40,459
thereof United States
+4
44,960
46,916
NAFTA region
+2
23,509
23,939
39,169
thereof Germany
63,417
68,437
Europe
(without
Germany)
NAFTA region Asia
Europe
'Germany
Regions
0
+8
+3
Asia
38,766
2016
2017
17/16
B.12
EBIT by segment
The Mercedes-Benz Cars division significantly increased its
EBIT in 2017 and thus met the forecasts made in Annual Report
2016. For the Daimler Trucks division, the EBIT forecast in
Annual Report 2016 was slightly below the prior-year figure. We
adjusted those assessments gradually upwards as the year
progressed in the context of our quarterly reporting, as the divi-
sion's unit sales increased faster than expected in some key
markets and as expenses for the fixed-cost optimization were
below our expectations. The earnings of Mercedes-Benz Vans
also developed better than we had forecast at the beginning of
the year. We had anticipated a significant decrease compared
with the previous year. As the year 2017 progressed, we adjusted
that assessment upwards in the context of our quarterly report-
ing to EBIT in the magnitude of the previous year, as the division's
unit sales increased faster than expected. Daimler Buses also
achieved EBIT at the prior-year level. It thus did not meet the
forecast made in Annual Report 2016 of EBIT slightly above the
prior-year level. Daimler Financial Services significantly increased
its EBIT and thus surpassed the forecast made in Annual
Report 2016.
The reconciliation of segment earnings to Group EBIT resulted
in income slightly above the prior-year level.
The development of earnings reflects primarily the very good
situation of unit sales in the automotive segments. Accordingly,
the Mercedes-Benz Cars division increased its earnings due in
particular to further growth in unit sales, especially of the SUV
models and the new E-Class. Daimler Trucks also significantly
improved its earnings compared with the previous year, mainly
due to increased unit sales in the NAFTA region and the sale
of real estate in Japan. Mercedes-Benz Vans and Daimler Buses
achieved EBIT at the prior-year level. EBIT at Daimler Financial
Services increased significantly. Exchange-rate effects had a net
positive impact on operating profit.
The Daimler Group achieved EBIT of €14.7 billion in 2017
(2016: €12.9 billion), which surpassed the prior-year figure
significantly. 7 B.12 71 B.13
EBIT
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
Profitability
+10
9,322
10,211
Other markets
+14
15,984
18,280
thereof China
+9
35,562
101
102
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
B.14
The Group's total revenue increased by 7.2% to €164.3 billion
in 2017; adjusted for exchange rate effects, it increased by
7.8%. The revenue growth primarily reflects the strong demand
for our products at Mercedes-Benz Cars and Daimler Trucks,
as well as the increased contract volume at Daimler Financial
Services. Further information on the development of revenue
is provided in the "Business development" section of this Com-
bined Management Report. B.17
Statement of income
The reconciliation of Group EBIT to profit before income taxes
is shown in table. 7 B.16
The elimination of intra-group transactions resulted in
expenses of €45 million in 2017 (2016: income of €17 million).
Items at the corporate level resulted in expenses of €254 million
(2016: €333 million). In 2017, this primarily comprises expenses
related to legal proceedings. On the other hand, the reversal of
an impairment of €240 million of Daimler's equity investment
in BAIC Motor had a positive effect on earnings. In the previous
year, there were expenses of €400 million in connection with
a legal proceeding, the impairment of €244 million of Daimler's
equity investment in BAIC Motor, and losses of €241 million
from currency transactions not allocated to business operations.
The gain of €605 million recognized on the contribution of the
Renault S.A.(Renault) and Nissan Motor Company Ltd.(Nissan)
shares into the German pension-plan assets did not offset
those expenses.
The reconciliation of the divisions' EBIT to Group EBIT com-
prises gains and/or losses at the corporate level and the effects
on earnings of eliminating intra-group transactions between
the divisions.
This positive development was the result of increased contract
volume and a further improvement in the cost-of-risk situation.
On the other hand, there were negative effects from a higher
interest-rate level, increased expenses for the expansion of
mobility services and the digitization of the business system.
Daimler Financial Services posted EBIT of €1,970 million
in 2017, thus significantly surpassing its prior-year earnings of
€1,739 million. The division's return on equity was 17.6%
(2016: 17.4%). 7 B.15
Further efficiency enhancements and higher unit sales in
Latin America almost offset the inflation-related cost increase
in Latin America and the negative exchange-rate effects.
Cost of sales amounted to €130.0 billion in 2017, increasing
by 7.2% compared with the previous year. The rise in cost
of sales was caused by higher business volumes and conse-
quentially higher material expenses. The higher material
expenses also reflect increased prices of raw materials. Per-
sonnel expenses and depreciation of equipment on operating
leases also increased. At Daimler Financial Services, the higher
interest-rate level led to higher refinancing costs. Cost of
sales also includes expenses for voluntary service activities
and expenses for a specific vehicle recall of €0.4 billion.
Further information on cost of sales is provided in Note 5 of
the Notes to the Consolidated Financial Statements. 7 B.17
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 103
EBIT was affected by higher expenses for product ramp-ups
and new technologies. Furthermore, earnings were reduced by
the termination of a contract-manufacturing arrangement.
These effects were offset by the positive development of unit
sales, especially in Europe, China and Latin America, and by
exchange-rate effects. Prior-year EBIT included expenses in
connection with Takata airbags (€83 million) and expenses
from a voluntary severance program at the Düsseldorf plant
(€38 million).
Mercedes-Benz Vans achieved EBIT in 2017 of €1,181 million,
similar to the prior-year level (2016: €1,170 million).
The division's return on sales was 9.0% (2016: 9.1%). 7 B.14
The positive development of earnings was primarily the result
of increased unit sales in the NAFTA region. EBIT was also
boosted by income from the sale of real estate at the Kawasaki
site in Japan (€267 million) and by efficiency improvements.
Higher expenses for raw materials and expenses of €172 million
for the fixed-cost optimization had a negative impact on EBIT.
Daimler Trucks' EBIT in the year 2017 of €2,380 million was
significantly above the prior-year figure of €1,948 million.
The division's return on sales was 6.7% (2016: 5.9%). 7 B.14
The positive earnings development primarily reflects the
increased unit sales of new vehicles. The main drivers were
the SUV segment and the new E-Class. Additional positive
effects on EBIT resulted from exchange-rate effects and income
of €183 million in connection with the remeasurement of the
investment in THERE Holding B.V. now using the equity method.
Negative effects resulted from advance expenditure for new
technologies and future vehicles and from expenses for the
expansion of production capacities. Higher expenses for raw
materials also had a negative impact on EBIT. Furthermore,
expenses for voluntary service activities and expenses for a
specific vehicle recall (€425 million) had a significant impact
on earnings. In the year 2016, EBIT included expenses in
connection with Takata airbags (€480 million) and expenses in
connection with remeasurement of inventories (€238 million).
The Mercedes-Benz Cars division posted EBIT of €9,207 million
in 2017, which is significantly above the prior-year figure of
€8,112 million. The division's return on sales was 9.7% (2016:
9.1%) 7 B.14
the internal performance measure EBIT, but is a component of
cost of sales.
1 Amortization of capitalized borrowing costs is not included in
12,574
The Daimler Buses division's EBIT of €243 million in 2017
(2016: €249 million) was at the high prior-year level. The return
on sales decreased slightly to 5.6% (2016: 6.0%). 7 B.14
Overall, gross profit of 20.9% was at the same level as in the
previous year.
Due to the growth in unit sales, selling expenses increased
by €0.7 billion to €13.0 billion and includes higher expenses for
marketing. As a percentage of revenue, selling expenses
decreased slightly from 8.0% to 7.9%. 71 B.17
General administrative expenses of €3.8 billion were above
the level of the previous year (2016: €3.4 billion). The increase
was mainly due to higher expenses for personnel and consulting.
As a percentage of revenue, general administrative expenses
increased slightly to 2.3% (2016: 2.2%). 71 B.17
Revenue
2016
2017
2016
2017
2016
2017
Daimler Financial
Services
Consolidated Industrial Business²
In millions of euros
Statement of income¹
B.17
The calculation of earnings per share (basic) is based
on an unchanged average number of outstanding shares
of 1,069.8 million.
Net profit for the year improved to €10.9 billion
(2016: €8.8 billion). Net profit of €0.3 billion is attributable to
non-controlling interests (2016: €0.3 billion). Net profit
attributable to the shareholders of Daimler AG amounts to
€10.5 billion (2016: €8.5 billion), representing an increase in
earnings per share to €9.84 (2016: €7.97). 71 B.17
The tax expense of €3.4 billion (2016: €3.8 billion) stated under
income tax expense decreased despite the increase in profit
before income taxes. The effective tax rate for 2017 was 24.0%
(2016: 30.1%). This was mainly a result of the law signed in
2017 for a comprehensive tax reform in the United States. Due
to the reduction in the nationwide federal corporate income
tax rate for US companies, the future net tax liabilities of the
US-subsidiaries of Daimler had to be remeasured with the new
tax rate. The remeasurement resulted in an income tax benefit
of €1.7 billion. Opposing the positive impact from the US tax
reform, tax expenses were recognized in 2017 in connection with
the interpretation of tax laws. 7 B.17
Net interest expense amounted to €0.4 billion
(2016: €0.3 billion). 71 B.17
Other financial expense/income worsened from income of
€0.3 billion to an expense of €0.2 billion. This significant change
is primarily the result of the gain of €0.6 billion recognized in
the previous year from the contribution of the equity interests
in Renault and Nissan at fair value into the German pension-
plan assets. Those gains were previously presented within other
comprehensive income/loss. 7 B.17
In 2017, our share of profit from equity-method investments
was significantly higher than the prior-year level at €1.5 billion
(2016: €0.5 billion). The increase was primarily due to improved
earnings at Beijing Benz Automotive Co. Ltd.(BBAC) and the
reversal of the impairment of €0.2 billion of the shares in BAIC
Motor (2016: negative impact from the impairment of €0.2 billion
of the investment in BAIC Motor). 7 B.17
Other operating income increased to €2.8 billion
(2016: €2.4 billion). This is primarily attributable to income of
€0.4 billion from the sale of property, plant and equipment.
Other operating expense decreased in the year 2017 to €1.0
billion (2016: €1.3 billion), due in particular to expenses con-
nected with a legal proceeding of €0.4 billion in 2016. Further
information on the composition of other operating income and
expense is provided in Note 6 of the Notes to the Consolidated
Financial Statements. 7 B.17
104 B | COMBINED MANAGEMENT REPORT | PROFITABILITY
Research and non-capitalized development costs increased
by €0.7 billion to €5.9 billion in 2017. They were mainly related
to the development of new models, advance expenditure for
the renewal of existing models, and the further development of
fuel-efficient and environmentally friendly drive systems, as
well as safety technologies, autonomous driving and the digital
connectivity of our products. As a proportion of revenue,
research and non-capitalized development costs increased from
3.4% to 3.6%. Further information on the Group's research
and development costs is provided in the "Research and devel-
opment" section of the "Sustainability” chapter of this
Combined Management Report. 7 B.17
14,301
5
Profit before income taxes
-582
15
Mercedes-Benz Daimler
Buses
In %
Daimler Financial Services
Return on Equity
B.15
Vans
Trucks
Cars
25
Mercedes-Benz Daimler
3
6
9
12
2017
2015
2016
2013
2014
In %
Return on Sales
0
20
5250
10
Interest expense
- 12
230
214
Interest income
-13
capitalized borrowing costs¹
Amortization of
12,902
14,682
Group EBIT
2016
In millions of euros
Reconciliation of Group EBIT to profit before income taxes
B.16
2017
2016
2015
2014
2013
0
5
-546
+15
20,660
23,775
B.18
Dividend per share
In euros
4.00
3.50
Net operating profit
Table B.19 shows the reconciliation of the EBIT of the divisions
to net operating profit. In addition to the EBIT of the divisions,
net operating profit also includes earnings effects for which the
divisions are not accountable, such as income taxes and other
reconciliation items.
3.00
2.50
In the light of the positive business development in 2017, the
Board of Management and the Supervisory Board will propose
to the Annual Shareholders' Meeting to be held on April 5,
2018 that the dividend per share for the 2017 financial year be
increased to €3.65 (prior year €3.25). This corresponds to a
total dividend distribution of €3.9 billion to our shareholders,
which is significantly above the high level of €3.5 billion dis-
tributed in the previous year. We aim to achieve a sustainable
dividend development also in the coming years. 7 B.18
2.00
1.00
0.50
+18
439
518
Daimler Financial Services
-12
143
126
1.50
Dividend
3.65
3.25
1,965
1,734
714
-555
2,679
1,179
thereof
attributable to
non-controlling interests
thereof
attributable to shareholders
of Daimler AG
339
258
10,525
8,526
1 The columns „,,Industrial business" and „Daimler Financial Services" represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Mercedes-Benz Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
B | COMBINED MANAGEMENT REPORT | PROFITABILITY 105
2.25
2.45
3.25
Daimler Buses
-7
962
895
-299
-9
-3,895
-3,555
Income taxes¹
Other reconciliation
Net operating profit
+13
13,218
14,981
+13
1,739
1,970
Daimler Financial Services
EBIT of the divisions
-2
249
243
0
2013
2014
2015
2016
2017
-316
10,840
-3,235
7,605
-5
9,007
Mercedes-Benz Vans
+46
935
1,369
Daimler Trucks
+17
5,431
6,330
Mercedes-Benz Cars
+38
5,243
7,246
Daimler Group
17/16
% change
In millions of euros
2016
2017
Value added
B.20
1 Adjusted for tax effects on interest income/expense and
amortization of capi-talized borrowing costs.
+24
11,127
Reconciliation to net operating profit
12,574 12,336
-3,790 -4,151
8,784 8,185
Net profit
Cost of sales
Value added
% change
In millions of euros
17/16
2016
Gross profit
Selling expenses
164,330 153,261 140,555 132,601
-129,999 -121,298 109,767 -103,600
34,331 31,963 30,788 29,001
-12,965 -12,226 -12,224 -11,577
As described in the "Performance measurement system" section
of the "Corporate Profile" chapter in chart 7 B.03, the cost of
capital is the result of net assets and cost of capital expressed
as a percentage, which is subtracted from earnings in order
to calculate value added. The tables 7 B.20 and 7 B.21 show
value added and net assets for the Group and for the individual
divisions. Table 7 B.22 shows how net assets are derived from
the consolidated statement of financial position.
23,775
-20,232
- 17,698
3,543
2,962
-741
-649
General administrative expenses
-3,809
-3,419 -2,816
-2,702
20,660
The Group's value added increased by €2.0 billion
to €7.2 billion in 2017, representing a return on net assets of
22.9% (2016: 19.1%). This was once again substantially higher
than the minimum required rate of return of 8%. The significant
increase in value added was mainly due to the growth in the
divisions' EBIT. In addition, a positive effect came from the
decrease in income-tax expenses caused by the reduction in
the nationwide federal corporate income tax rate for US com-
panies as a result of the law signed in 2017 for a comprehensive
tax reform in the United States. The increase in average net
assets was mainly attributable to higher investment in fixed
assets and had only a slight negative impact on value added.
Value added at Mercedes-Benz Cars increased by €0.9 billion
to €6.3 billion, primarily reflecting the positive earnings
development due to the increased sales of new vehicles, positive
exchange-rate effects and income in connection with the
remeasurement in the equity investment in THERE Holding B.V.
Opposing effects resulted from advance expenditure for new
technologies and future vehicles, expenses for the expansion of
production capacities and a disadvantageous development
of raw-material prices. Furthermore, expenses for voluntary ser-
vice activities and for a specific vehicle recall had a negative
impact on earnings. In the year 2016, EBIT included expenses in
connection with Takata airbags and expenses in connection
with the remeasurement of inventories. There was a slight neg-
ative impact on value added from the increase in average net
assets to €24.0 billion primarily caused by higher investments
in fixed assets.
Daimler Financial Services
+4
4,176
4,351
Daimler Buses
+3
12,835
13,164
Daimler Buses
+1
1,170
1,181
Mercedes-Benz Vans
+22
1,948
2,380
Daimler Trucks
+13
8,112
9,207
Mercedes-Benz Cars
-993
-717
Research and non-capitalized development costs
-5,938
275
-230
250
0
25
Interest income
214
230
214
229
1
Interest expense
-582
2017
-577
-540
-5
-6
Profit before income taxes
14,301
Income taxes
-230
-3,437
10,864
Other financial expense, net
1
-5,257 -5,938
-5,257
Other operating income
2,824
2,350
2,621
2,200
203
150
Other operating expense
-1,042
- 1,298
-999
-1,267
-43
-31
Share of profit from equity-method investments, net
1,498
502
1,497
503
-1
-546
2017
+8
2016
17/16
Change in % points
0
2017
in %
Market share¹
B.09
10%
Other markets
32%
Asia
35%
6%
17%
NAFTA
Latin America
EU30
Unit sales structure of Daimler Trucks
B.08
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
98
0
4%
Other markets
Mercedes-Benz Cars
36%
European Union
6.2
+0.3
20.7
21.0
trucks EU30
Medium- and heavy-duty
Daimler Trucks
0.0
1.7
1.7
Japan
+0.5
2.1
2.6
China
0.0
2.0
2.0
United States
+0.1
10.4
10.5
thereof Germany
+0.1
6.3
Asia
43%
17%
Europe
NAFTA
Europe
Total
-5
0
5
Developments in Daimler's most important Asian markets were
varied. The Japanese market for light-, medium- and heavy-
duty trucks was slightly larger than the solid volume of the prior
year (+1%). In India, on the other hand, demand for medium-
and heavy-duty trucks fell by about 10%. Here, the introduction
of new regulatory and tax measures during the year led to
uncertainty and weak demand that could not be offset in the
final months of 2017. Truck sales in China once again rose
sharply, largely due to the favorable economic situation and
regulatory measures that led many truck operators to
replace many older vehicles.
Demand in the EU30 region (European Union, Switzerland and
Norway) approximately maintained the solid market volume
of the previous year. Sales in Western Europe rose somewhat,
while markets in the EU states of Central and Eastern Europe
contracted slightly overall. Demand for trucks in Brazil stabilized
following the slight improvement of overall economic conditions
in the country. No significant recovery occurred in Brazil, how-
ever, so the market volume therefore only slightly surpassed
the very low level of the prior year. Following the severe mar-
ket slump in Turkey in 2016, demand improved during 2017, but
also here, the market was only slightly larger than the weak
volume of the previous year. The Russian market underwent
a strong recovery and expanded at a significantly double-digit
rate.
The pace of recovery on the North American market picked up
in the second half of the year. However, as demand in the first
half of the year was significantly lower than in the same period
of 2016, the full-year market volume in weight classes 6-8 was
only slightly higher (+1%) than in the previous year. Sales in the
heavy-duty Class 8 segment were at about the same level
as in 2016.
During the year under review, worldwide demand for medium-
and heavy-duty trucks gradually recovered from its previous
weak phase, and experienced an upswing as 2017 progressed.
It should be pointed out, however, that overall demand in the
full year in markets relevant to our operations was only slightly
above the prior-year level.
market demand remains at an unusually high level. Whereas
sales of SUVs and pickups increased once again, demand for
traditional sedans was relatively weak by comparison. The Japa-
nese market displayed a solid performance, with market volume
increasing by about 6%. Sales in India were significantly higher
than in the prior year. A recovery trend was observed in Brazil,
where the market expanded by just over 9%.
Passenger cars
Commercial vehicles
10
15
Unit sales growth rates 2017 in %
Global automotive markets
B.06
The US market volume for cars and light trucks decreased by
almost 2% and thus did not quite reach the record volume
of the prior year. Nevertheless, at just over 17 million units,
Car demand in Europe was slightly higher than in the previous
year. Following the recovery of recent years, the Western
European car market has now reached a solid level and was able
to record slight growth in 2017. Most of the Western European
core markets grew once again; only the UK car market suffered
a decrease (of approximately 6%) after reaching a record volume
in 2016. Sales in Germany were up by nearly 3% from the prior
year. The overall market situation in Eastern Europe improved
considerably. This was largely due to developments in the Russian
market, which posted a significant increase of approximately
12% after recording substantial contraction over the previous
four years.
Once again, the Chinese market made the biggest contribution
to the growth of the world market, although growth was
significantly lower than in previous years due to the very high
market volume in 2016. A substantial number of advance
purchases were made towards the end of the year because state
tax incentives for purchasers of cars with small engines ended
in January 2018, as had been previously announced, but market
growth for the full year was just over 3%.
Automotive markets
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
96
Mercedes-Benz Vans
NAFTA 1,2
Asia
South
America 1,2
1 Cars segment includes light trucks
2 Medium- and heavy-duty trucks
6%
1%
34%
3%
17%
21%
18%
* including GLA
S-Class
SUVS*
Sports Cars
smart
E-Class
A-/B-Class
C-Class
thereof Germany
Unit sales structure of Mercedes-Benz Cars
The growth was primarily driven by our new E-Class. After all
model variants became available, sales reached the new record
level of 398,200 units (+31%). Our off-road vehicles were also
very successful once again. Total unit sales in the SUV segment
increased by 16% to 823,000 vehicles. Demand for our C-Class
models also remained very strong, with sales of these vehicles
increasing slightly to 492,700 sedans, wagons, coupes and
convertibles in 2017. Unit sales of A- and B-Class models did not
quite reach the previous year's high level. Including the CLA
and CLA Shooting Brake, a total of 420,200 units were delivered.
Sales of the S-Class reached a total of 79,400 sedans, coupes
and convertibles. The upgraded S-Class generated additional
sales momentum in the second half of the year. 7 B.07
Unit sales in Europe increased by 5% to 911,700 vehicles.
Significant growth was achieved in the volume markets of
France (+9%), Italy (+9%), Spain (+8%) and the United Kingdom
(+4%), and we also increased our unit sales in Germany by 2%
to 282,600 vehicles. Mercedes-Benz continued its success in
China during the year under review. Unit sales in the country
rose by 28% to 595,200 vehicles – much faster growth than the
overall market and our most important competitors. We set
new records for unit sales also in other Asian markets - for
example in Thailand (+31%) India (+14%), South Korea (+9%)
and Taiwan (+7%). Total unit sales in the NAFTA region were at the
prior-year level. Here, sales increased significantly in Canada
and Mexico but decreased slightly in the United States as in
the market overall.
The Mercedes-Benz Cars division continued along its growth
path in the year under review. Unit sales rose by 8% to the new
record of 2,373,500 vehicles. The Mercedes-Benz brand
increased its unit sales by 9% to 2,238,000 vehicles and was once
again the strongest-selling premium brand in the automobile
industry. Mercedes-Benz is the number one brand in the premium
segment in Germany and numerous other key European
markets, as well as in the United States, Canada, South Korea
and Japan. In addition, we once again significantly improved
our position in China.
Daimler increased its total unit sales in the year 2017 by 9%
to 3.3 million vehicles, thus surpassing its growth target. The
Mercedes-Benz Cars and Mercedes-Benz Vans divisions
exceeded the forecasts made at the beginning of the year by
recording significant growth (8% and 12% respectively).
Daimler Trucks also posted a significant increase of 13% in unit
sales. At the beginning of the year, the division had anticipated
unit sales similar to those of the previous year. Our sales forecast
was successively adjusted as a result of more favorable
market developments in some markets important for us. As we
expected at the beginning of the year, unit sales at Daimler
Buses were also significantly higher than in the prior year (+9%).
Unit sales
Business development
Market volume for buses in the EU30 region was at the high
level of the previous year. The market recovery in Latin America
(excluding Mexico) led to a significant improvement in the bus
segment, especially in Brazil, where market volume increased by
10% after bottoming out in 2016. As a result of the ongoing
difficult situation in Turkey, domestic demand in that country
once again decreased significantly compared with the prior
year.
Demand for vans continued to develop positively in the EU30
region in 2017. Market volume for mid-size and large vans
increased by 9%, while demand for small vans rose by 3%. In
Germany as well, sales in the combined segment for mid-size
and large vans increased by 8%. Demand for large vans in the US
was slightly below the prior year's level. Demand in the segment
of the van market that we serve in China also decreased slightly.
The market for large vans in Latin America recovered strongly
from the low level of the previous year.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 97
various institutions
Source: German Association of the
Automotive Industry (VDA),
B.07
36.4
Global demand for cars continued to develop favorably in 2017,
with the worldwide market volume increasing for the eighth
consecutive year. While the previous high market volume led to
slower growth compared with the previous year, the increase of
more than 2% was nevertheless impressive. Once again, the
growth of the world market was primarily due to contributions
from the Chinese and Western European markets, while sales in
the United States decreased slightly. Key emerging markets
were able to overcome their weaknesses and developed in a
much more positive manner during the year under review.
71 B.06
-0.8
2013
Revenue by division and region
B.11
In billions of euros
Consolidated revenue by region
B.10
In regional terms, Daimler achieved revenue growth in Europe
(+8% to €68.4 billion), in the NAFTA region (+4% to €46.9 billion)
and in Asia (+9% to €38.8 billion).
In the year 2017, Daimler increased its total revenue by 7% to
€164.3 billion; adjusted for currency-translation effects,
revenue grew by 8%. This means we surpassed our expectations
from the beginning of the year. The divisions Mercedes-Benz
Cars (+6%) and Daimler Financial Services (+15%) increased their
business volumes by significant margins. The Daimler Trucks
division also recorded a significant increase in revenue of 8%,
primarily due to positive sales development in North America.
Exchange-rate effects had a negative impact on revenue. We had
originally expected a business volume similar to that of the
previous year. Revenue at Mercedes-Benz Vans (+3%) and Daimler
Buses (+4%) rose slightly. At Mercedes-Benz Vans, we had
only expected revenue to stabilize and unit sales to increase
slightly at the beginning of the year, because contract
manufacturing of vans for Volkswagen had been discontinued
at the end of 2016.
Revenue
The Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans
and Daimler Buses divisions produce vehicles predominantly
to order in accordance with customers' specifications. While
doing so, we flexibly adjust the production capacities for the
individual models to changing levels of demand. Due in particular
to strong demand in China and the European markets, the
number of orders placed with Mercedes-Benz Cars during the
year under review was once again above the high level of
orders recorded in the previous year. This was driven on the
product side primarily by the new E-Class, all variants of which
are now available, as well as by the continued strong success
of our off-road vehicles. Due to the positive development
of demand, we once again increased our production volumes.
Nonetheless, the order backlog at the end of 2017 was higher
than a year before. At Daimler Trucks, both orders received and
the order backlog at year-end were significantly higher than a
year earlier. This was primarily due to the revival of demand in
North America and Asia. We increased production volumes
mainly in the second half of the year in response to the higher
demand.
Order situation
100 B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
Business at Daimler Financial Services continued to develop
very positively in the year under review. As we had forecast in
the 2016 Annual Report, worldwide contract volume continued
to grow, reaching the new record level of 139.9 billion (+6%) in
2017. Adjusted for currency-translation effects, contract volume
increased by 12%. New business increased by 14% to €70.7
billion, growing at a much faster rate than we had anticipated at
the beginning of the year. Significant growth was recorded in
Europe (+15%), while new business in the Americas region was of
the prior-year magnitude (+1%). The growth of new business in
the Africa and Asia-Pacific region (excluding China) was once
again very dynamic at a rate of 16%. In China, new business
actually increased by 56%. In the insurance business, we bro-
kered approximately 2.1 million policies, representing an
increase of 20% compared with the prior year. In financial year
2017, Daimler Financial Services was active in fleet management
with the two brands Daimler Fleet Management and Athlon. In
Europe, Daimler Financial Services had a total of 383,300
contracts with fleet customers on its books at the end of 2017,
representing an increase of 6% compared with a year earlier.
Contract volume amounted to €6.4 billion. The total number of
registered users of our mobility services rose to 17.8 million
in the year under review. car2go increased its number of regis-
tered users to 3.0 million at the end of the year and thus
strengthened its position as the world's leader for flexible car
sharing. The app-based taxi-ordering service mytaxi is Europe's
biggest taxi network and also continued its growth in 2017; the
number of registered users rose by 85% to 11.1 million at the
end of the year. We further developed the moovel app, with which
customers in Germany can find the best way of traveling from
A to B using various modes of transport and can also directly
book and pay for services from providers such as car2go,
mytaxi and Deutsche Bahn (German Railways). With moovel
transit, moovel North America is the leading provider of mobile
ticket solutions for the apps of public transport companies in
the United States. The number of registered moovel users in
Germany and the United States had risen to 3.7 million by the
end of 2017 (2016: 2.2 million).
pages 195 ff
volume in Brazil grew by 10% after having bottomed out in 2016.
Sales of Mercedes-Benz bus chassis in Brazil rose by a double-
digit rate (+46%) to 7,200 units. We were also able to maintain
our leading market position in Brazil with a market share of
52.5% (2016: 58.4%). In Mexico, sales of 3,400 units (2016:
3,800) were significantly lower than in the previous year.
pages 192ff
Daimler Buses sold 28,700 buses and bus chassis worldwide in
2017 (2016: 26,200). The significant increase is due in particular
to the gradual recovery of the economy in Brazil. The division
maintained its clear market leadership in its most important
traditional markets (EU30, Brazil, Argentina and Mexico).
Continued high demand for complete buses meant that the
division achieved sales in the EU30 region of 8,700 units sold
in the year under review (2016: 8,800). At 28.4% (2016: 29.6%),
market share was once again at a very high level. Sales of
3,100 Mercedes-Benz and Setra buses in Germany were at
the prior year level (2016: 3,100), while the ongoing difficult
situation in Turkey resulted in a significant decrease in unit sales,
to 400 vehicles (2016: 600). The market situation in Latin
America (excluding Mexico) improved considerably; bus market
Mercedes-Benz Vans achieved record sales once again in
2017. Unit sales of 401,000 vehicles surpassed the prior-year
figure by 12%. Whereas we mainly focus on commercial
customers with the Sprinter, Vito and Citan models, the V-Class
is primarily designed for private use. With the X-Class, our
new mid-size pickup, we are addressing various customers for
both private and commercial applications. In the EU30 region,
which is our core region, we increased our unit sales by 9% to
273,300 vehicles, and we continue to be the market leader
for mid-size and large vans with a share of 16.7% (2016: 16.8%).
Double-digit growth was achieved in several European markets,
and the division also set a new record in Germany with sales
of 105,800 units (2016: 96,100). Sales in the NAFTA region
increased to 44,800 units (2016: 43,400) and the division's mar-
ket share for large vans in the United States reached 7.5% (2016:
7.6%). Business development was very favorable in Latin America,
where sales rose by 31% to 16,400 units. Unit sales in China
also increased significantly, by 75% to 23,800 vans. This devel-
opment was largely due to the success of the Vito and the
V-Class, both of which were launched in China in 2016. In total,
we sold 200,500 Sprinter vans worldwide (2016: 193,400) in the
reporting period, which was the last full year of the current model's
lifecycle. Vito sales rose significantly, by 21% to 111,800 units,
while sales of the Mercedes-Benz Citan reached 26,100 units
(2016: 24,900). The V-Class full-size MPV was very successful;
sales of 59,300 units surpassed the previous year's figure by 22%.
The X-Class also got off to a good start at the end of the year
with sales of 3,300 units.pages 189ff
In China, the world's biggest truck market, Daimler AG holds a
50% interest in Beijing Foton Daimler Automotive Co. Ltd. (BFDA),
a joint venture with Beiqi Foton Motor Co. Ltd. Medium- and
heavy-duty trucks of the Auman brand have been produced
there since 2012. In line with the significant recovery of the
Chinese truck market, Auman posted a substantial sales increase
to 112,400 units (2016: 77,800).
pages 184ff
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 99
We increased our sales in Asia by 18% to 148,600 trucks. At
44,800 units, sales in Japan were slightly lower than in the
previous year (46,400). Our FUSO brand achieved an overall
market share of 19.6% (2016: 20.4%) in Japan. The new Super
Great heavy-duty truck underscores our determination to further
strengthen our position in the Japanese truck market. Our
sales of 42,700 units in Indonesia were substantially higher than
in the prior year (28,000). Although the volume of the truck
market in India was below the prior-year level, we were able to
increase our sales in the fifth year since the establishment of
the BharatBenz brand to 16,700 trucks (2016: 13,100) and our
market share increased to 9.1% (2016: 6.8%). At 23,600 units
(2016: 17,600), our sales in the Middle East were also substan-
tially higher than the low prior-year level.
In the NAFTA region, we were able to record a significant
increase in sales to 165,000 units in the year under review
(2016: 145,700). We further increased our market share in
Classes 6-8 with a market share of 39.8% (2016: 39.3%). In
Class 8 for heavy-duty trucks, we once again achieved a
market share of 40.0% (2016: 40.0%). We also remained the
undisputed market leader in Classes 6-8. At the beginning
of 2017, we started production of the new Freightliner Cascadia,
which offers a number of new features for fuel efficiency,
connectivity and safety.
Our unit sales in Latin America increased to 30,500 from the
low level of 27,500 vehicles sold in 2016. With sales of 5,600
units (2016: 3,900), the market in Argentina made a major
contribution to this positive development. Sales in our main Latin
American market, Brazil, rose significantly to 13,400 units
(2016: 12,100). With our Mercedes-Benz trucks, we achieved a
market share of 27.6% in the medium- and heavy-duty
segments (2016: 29.8%).
In the EU30 region (European Union, Switzerland and Norway),
we sold 82,300 vehicles in the year under review, slightly
higher than the 79,800 sold in 2016. Our Mercedes-Benz brand
remained the market leader in the medium-duty and heavy-
duty segments, with a share of 21.0% (2016: 20.7%). Following
the slump in Turkey in 2016, we were able to significantly
increase our sales in the country to 11,800 units in the year under
review (2016: 9,300). Developments were also very positive
in Russia, where unit sales more than tripled to 8,000 trucks
(2016: 2,300). 7 B.09
Built Buses and FUSO brands in the year under review (2016:
415,100). Daimler Trucks continues to be the world's biggest
manufacturer of trucks above 6 tons. 71 B.08
2014
2015
2016
2017
In millions of euros
37.2
33,187
35,707
+6
89,284
94,695
Mercedes-Benz Cars
Divisions
10
15-
20
Unit sales by Daimler Trucks in 2017 were significantly higher
than in the previous year. In total, we delivered 470,700 heavy-,
medium- and light-duty trucks as well as buses of the Thomas
25
35
40
+7
153,261
164,330
Daimler Group
45
50
17/16
% change
2016
2017
30
The smart brand sold a total of 135,500 vehicles in 46 markets
worldwide in 2017. The smart was particularly popular in China,
which is now the smart brand's third-biggest sales market after
Germany and Italy. pages 178ff
Daimler Trucks
+1.5
-5.9
Mercedes-Benz Vans
+2.3
6.8
9.1
trucks India
Medium- and heavy-duty
-2.2
-0.8
20.4
19.6
Trucks Japan
29.8
27.6
trucks Brazil
Medium- and heavy-duty
+1.4
37.9
39.3
region (Classes 6 and 7)
Medium-duty trucks NAFTA
0.0
40.0
region (Class 8)
1 Based on estimates in certain markets.
Mid-size and large vans EU30
16.7
40.0
-0.1
58.4
52.5
16.8
Buses over 8 tons Brazil
50.1
51.6
thereof Germany
-1.2
29.6
28.4
Buses over 8 tons EU30
Daimler Buses
Heavy-duty trucks NAFTA
7.6
-0.1
27.3
27.3
0.0
Small vans EU30
thereof Germany
3.1
7.5
Large vans United States
0.0
3.1
2,385
Refinancing
Furthermore, we capitalized development costs of €2.8 billion
in 2017 (2016: €2.3 billion); this is presented under intangible
assets. page 264.
In addition to property, plant and equipment, we also invested
in associated companies and joint ventures in the reporting
period. Through targeted investments, we strengthened our
position especially in the area of mobility services and in the
development of a charging infrastructure for electric mobility.
Also in 2017, Daimler acquired an equity interest of 15% in LSH
Auto International Limited (LSHAI) for €0.3 billion. LSHAI is a
subsidiary of Lei Shing Hong Group and is one of the biggest
Mercedes-Benz dealers worldwide. With this transaction, the
two partners are strengthening their longstanding cooperation.
106
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
B.21
Net assets (average)
2017
17/16
In millions of euros
% change
The funds raised by Daimler in the year 2017 primarily served
to refinance the leasing and sales-financing business. For that
purpose, Daimler made use of a broad spectrum of various
financing instruments in various currencies and markets. They
include bank loans, commercial paper in the money market,
bonds with medium and long maturities, customer deposits at
Mercedes-Benz Bank, and the securitization of receivables
from customers in the financial services business (asset backed
securities).
23,975
22,345
+7
Daimler Trucks
8,421
8,448
-0
Mercedes-Benz Vans
2016
Mercedes-Benz Cars
In 2017, asset-backed securities (ABS) were issued in two new
countries in addition to the already established ABS platforms in
the United States, Canada, China and Germany.
The continued expansive monetary policy of the central banks
also affected the situation in the bond markets in the reporting
period. The high volumes of available liquidity meant that risk
premiums for companies with investment-grade credit ratings
remained moderate.
liabilities from
Notes/bonds and
1,739
In millions of euros
Carrying values
Dec. 31,
2016
in %
2017
Dec. 31,
Dec. 31,
2016
Average interest rates
Dec. 31,
2017
Refinancing instruments
B.29
Detailed information on the amounts and terms of financing
liabilities is provided in Note 24 and 32 of the Notes to the
Consolidated Financial Statements. Note 32 also provides
information on the maturities of the other financial liabilities.
At December 31, 2017, the total of financial liabilities shown
in the consolidated statement of financial position amounted to
€127,124 million (2016: €117,686 million).
The carrying values of the main refinancing instruments and the
weighted average interest rates are shown in table 7 B.29.
At December 31, 2017, they are mainly denominated in the fol-
lowing currencies: 43% in euros, 25% in US dollars, 8% in
Chinese renminbi, 4% in Canadian dollars, 4% in British pounds
and 3% in Japanese yen.
In order to secure sufficient financial flexibility, Daimler
concluded a €9 billion syndicated credit facility with a consor-
tium of international banks in September 2013. This provides
the Group with financial flexibility until the year 2020. More
than 40 European, American and Asian banks participated in
the consortium. Currently, Daimler does not intend to utilize the
credit line.
Bank credit was another important source of refinancing in
2017. Loans were provided by globally active banks as well as
by nationally operating banks. The lenders also included
supranational banks such as the European Investment Bank
and the Brazilian Development Bank (BNDES).
113
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
In the United Kingdom, ABS of GBP 0.4 billion were successfully
placed with investors, while the volume of the first transaction
in Australia was AUD 0.75 billion. In the United States, a total
refinancing volume of $4.7 billion was generated in 2017 in
three transactions, and CAD 0.4 billion was generated in a trans-
action in Canada. In addition, Mercedes-Benz Bank sold
€1.1 billion worth of ABS bonds to European investors through
the Silver Arrow platform. In China, two ABS transactions
with a total volume of CNY 10.2 billion were successfully placed.
Daimler also issued small volumes of commercial paper in 2017.
In the Chinese market, Daimler placed four so-called panda
bonds with a total volume of CNY 16.0 billion. In addition, a
large number of smaller bonds were issued in various currencies
and markets.
In the year under review, the Group covered its refinancing
requirements mainly through the issuance of bonds. A large
proportion of those bonds were placed in the form of so-called
benchmark emissions (bonds with high nominal volumes) in
the US dollar and euro markets. 7 B.30
Various issuance programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €50 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market programs
exist, which are significantly smaller than the EMTN program.
Capital-market programs allow flexible, repeated access to the
capital markets.
At the end of 2017, Daimler had not utilized short- and long-term
credit lines totaling €21.0 billion (2016: €18.1 billion). They
include the syndicated credit facility arranged in September
2013 with a consortium of international banks with a volume
of €9 billion.
1 Total equity.
Daimler Buses
3 To the extent not allocated to Daimler Financial Services.
B.22
Net assets of the Daimler Group at year-end
In millions of euros
2017
2016
17/16
% change
Net assets¹
Intangible assets
2 To the extent not allocated to the segments.
12,742
+14
Property, plant
and equipment
27,914
26,314
+6
Leased assets
18,711
ABS transactions
17,433
11,145
+3
47,054
48,514
978
887
+10
Daimler Financial Services¹
11,165
10,000
+12
Net assets of the divisions
46,924
43,419
+8
Equity method investments²
941
555
+70
Assets and liabilities from
income taxes³
2,141
Other reconciliation³
-1,492
3,372
-292
-37
+411
Daimler Group
+37
1.88
Financing liabilities
78,110
22,135
Liquidity
10,748
10,063
Marketable debt securities
10,981
12,072
Cash and cash equivalents
In millions of euros
Net debt at Group level, which primarily results from refinancing
the leasing and sales-financing business, increased compared
with December 31, 2016 from €95.9 billion to €105.2 billion.
7 B.26
21,729
Compared with December 31, 2016, the net liquidity of the
industrial business decreased from €19.7 billion to €16.6 billion.
The dividend payment to the shareholders of Daimler AG and
negative exchange-rate effects led to a decrease in net liquidity
that was only partially offset by the positive free cash flow.
The net liquidity of the industrial business 7 B.25 is
calculated as the total amount as shown in the statement of
financial position of cash, cash equivalents and the market-
able debt securities included in liquidity management, less the
currency-hedged nominal amounts of financing liabilities.
In 2017, the free cash flow of the Daimler Group led to a cash
outflow of €11.9 billion (2016: €9.3 billion). Besides the effects
of the free cash flow of the industrial business, the free cash flow
of the Daimler Group is mainly affected by the leasing and
sales-financing business of Daimler Financial Services. In the
prior-year period, there was an additional effect due to the
acquisition of 100% of the shares of Athlon, including the settle-
ment and assumption of Athlon's financing liabilities.
17/16
Change
Dec. 31,
2016
Dec. 31,
2017
Net debt of the Daimler Group
B.26
-3,300
-3,140
19,737
1,488
To the extent that the Group's internal refinancing of the finan-
cial services business is provided by the companies of the
industrial business, this amount is deducted in the calculation
of the net debt of the industrial business.
Financing liabilities
-127,124
- 117,686
+7
B.27
in Note 30 of the Notes to the Consolidated Financial
Statements.
Detailed information on financial guarantees, contingent
liabilities and other financial obligations are provided
In the context of its ordinary business operations, the Group
has also entered into other financial obligations in addition
to the liabilities shown in the consolidated balance sheet at
December 31, 2017.
The contingent liabilities principally constitute buyback obli-
gations. At December 31, 2017, the best possible estimate for
the loss risk from these guarantees amounted to €1.6 billion
(2016: €1.7 billion). The amounts of the buyback commitments
are close to the fair values of the vehicles to be taken back.
Warranty and goodwill commitments (product guarantees) pro-
vided by the Group in connection with its vehicle sales are
not included in the contingent liabilities. Other contingent liabil-
ities are also included. The best possible estimate for an
obligation from the other contingent liabilities is €0.6 billion
(2016: €0.3 billion).
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 111
Within the context of financial guarantees, Daimler generally
guarantees the settlement of the payment obligations of the
main debtor vis-à-vis the holder of the guarantee. The maximum
potential obligation resulting from these guarantees amounts
to €0.7 billion at December 31, 2017 (2016: €0.8 billion); the
liabilities recognized in this context amount to €0.1 billion at
the end of the year (2016: €0.2 billion). The financial guarantees
that the Group has issued relating to bank loans of Toll Collect
GmbH, the operator company for the electronic toll-collection
system in Germany, remain unchanged at €0.1 billion. For
information on risks arising from guarantees, we refer to our
Risk and Opportunity Report in the section "Risks from guaran-
tees, legal and tax risks".
Financial guarantees, contingent liabilities and
other financial obligations
The €1.9 billion decrease in the free cash flow to €2.0 billion
resulted primarily from the cash outflow for the extraordinary
contribution to the pension plan assets and the higher income
taxes paid. In addition, the free cash flow of the industrial busi-
ness was affected by increased investments in property, plant
and equipment and intangible assets and the acquisition of an
interest in LSHAI. Opposing effects were due to the positive
business performance and the development of operating leases
in the industrial business. A cash inflow of €0.8 billion resulted
from the dividend distributed by Beijing Benz Automotive Co.,
Ltd. and the sale of real estate in Japan led to a cash inflow of
€0.3 billion. The payment of the fine of €1.0 billion imposed on
Daimler by the European Commission in the context of the
settlement in the truck antitrust proceedings led to a cash out-
flow in the prior-year period.
-9,728
-9,322
- 117,625
-95,896
-127,353
-105,218
Net debt
(nominal)
Financing liabilities
-290
61
-229
for financing liabilities
currency hedges
Market valuation and
+1,091
-685
+406
-9,438
-1,812
16,597
1.64
Net liquidity
-249
The free cash flow of the industrial business amounted to
€2.0 billion in 2017 and was lower than the prior-year level
of €3.9 billion. The free cash flow of the industrial business
was thus in line with the adjusted forecast made in the Outlook
section of the Interim Report on the third quarter of 2017,
and was primarily influenced by the cash outflow of €3.0 billion
for the extraordinary contribution to the German pension
plan assets. Excluding this payment, which was announced in
the Outlook section of the Interim Report on the third quarter
of 2017, the free cash flow of the industrial business was signifi-
cantly higher than in the previous year and thus significantly
surpassed our forecast as adjusted during the year.
Other adjustments relate to non-cash additions to property,
plant and equipment that are allocated to the Group as their
beneficial owner due to the form of their underlying lease
contracts. Furthermore, adjustments are made for the effects
of financing dealerships within the Group. In addition, the
calculation of the free cash flow includes those cash flows to
be shown under cash from financing activities in connection
with the acquisition or sale of interests in subsidiaries without
loss of control.
The parameter used by Daimler to measure the financial capabil-
ity of the Group's industrial business is the free cash flow
of the industrial business 7 B.24, which is derived from the
reported cash flows from operating and investing activities.
The cash flows from the acquisition and sale of marketable debt
securities included in cash flows from investing activities
are deducted, as those securities are allocated to liquidity and
changes in them are thus not a part of the free cash flow.
Cash and cash equivalents increased by €1.1 billion compared
with December 31, 2016, after taking currency-translation
effects into account. Total liquidity, which also includes market-
able debt securities, increased by €0.4 billion to €22.1 billion.
0.65
0.42
29,674
34,555
2.96
3.09
110
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler AG
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler AG
Benchmark issuances
B.30
Deposits in the
direct banking
business
institutions
Commercial
paper
Liabilities
to financial
1,701
1,045
2.71
2.64
73,648
Issuer
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.25
Net liquidity of the industrial business
37
-212
for financing liabilities
currency hedges
Market valuation and
+764
-604
+160
-3,051
1,451
- 1,600
Financing liabilities
18,249
18,409
Liquidity
9,498
8,894
Marketable debt securities
8,751
9,515
Cash and cash equivalents
17/16
Change
In millions of euros
Dec. 31,
2016
2017
Dec. 31,
(nominal)
Inventories
9,936
24,426
Income taxes paid
- 1,455
- 1,272
-1,264 -1,356
-191
84
-1,592
-962
- 1,082
-697
Dividends received from equity-method investments
-510
1,288
757
1,159
581
129
176
-11,145 -6,848
200
194
-11,345
-265
Other operating assets and liabilities
Vehicles on operating leases
Receivables from financial services
Profit before income taxes
Depreciation and amortization/impairments
14,301
5,676
8,751
12,574 12,336 10,840
5,478 5,521 5,398
8,369
2,230
1,567
1,965
1,734
155
80
Other non-cash expense and income and
gains/losses on disposals of assets
-1,960
-1,110
-2,028
-1,141
68
31
Change in operating assets and liabilities
Inventories
Trade receivables
Trade payables
-7,042
Investment in property, plant and equipment
-3,681
642
-8,833
- 10,025
-8,720
-133
- 113
Investments in and disposals of shareholdings
-687
-3,905
-626
-216
- 10,158
-61
Acquisitions and sales of marketable debt securities
537
-2,330
435
-2,311
102
-19
Other
790
402
-3,689
Additions to property, plant and equipment and intangible assets
-153
-8,932
-13,619
- 132
-48
2,150
-644
1,650
-4,323
596
-4,077
500
843
103
842
103
1
-3,879
-2,950
-3,715
-2,797
-164
Cash used for/provided by operating activities
-1,652
3,711
11,967
12,643
-4,209
24,492
10,981
2016
+18
Daimler Trucks' value added was significantly higher than
in the previous year at €1.4 billion (2016: €0.9 billion). This
development was primarily the result of the positive development
of earnings due to increased unit sales in the NAFTA region,
the sale of real estate in Japan and efficiency improvements.
Higher expenses for raw materials and expenses for the fixed-
cost optimization had a negative impact on EBIT. Average net
assets were close to the prior-year level.
At Mercedes-Benz Vans, value added decreased by €0.1 billion
to €0.9 billion. This development was the result of the increase
in average net assets caused by higher investments in fixed
assets and higher inventories. Despite increasing expenses for
product ramp-ups and production material, as well as the
negative impact of the termination of a contract-manufacturing
arrangement, EBIT remained at the prior-year level due to the
positive development of unit sales.
The value added of the Daimler Buses division was slightly lower
than in the previous year at €126 million (2016: €143 million).
This primarily reflects the increase in average net assets due to
higher inventories. EBIT was at the high prior-year level, due
to further efficiency enhancements and increasing unit sales in
Latin America.
Daimler Financial Services' value added of €0.5 billion was
above the prior-year level at €0.4 billion. The division's return on
equity amounted to 17.6% (2016: 17.4%). The development of
value added primarily reflects the higher earnings resulting from
increased contract volume and a better cost-of-risk situation.
On the other hand, a higher interest-rate level, the expansion
of businesses activities and exchange-rate effects impacted
earnings negatively. In addition, average equity increased by
€0.1 billion.
Daimler Group
51,737
48,773
+6
1 To the extent not allocated to Daimler Financial Services.
10,448
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
Principles and objectives of financial
management
Financial management at Daimler consists of capital structure
management, cash and liquidity management, pension asset
management, market-price risk management (foreign exchange
rates, interest rates, commodity prices) and credit and finan-
cial country risk management. Worldwide financial management
is performed within the framework of legal requirements con-
sistently for all Group entities by Treasury. Financial management
operates within a framework of guidelines, limits and bench-
marks, and on the operational level is organizationally separate
from other financial functions such as settlement, financial
controlling, reporting and accounting.
Capital structure management designs the capital structure
for the Group and its subsidiaries. Decisions regarding the
capitalization of financial services companies - as well as pro-
duction, sales and financing companies - are based on the
principles of cost-optimized and risk-optimized liquidity and
capital resources. In addition, it is necessary to comply with
restrictions on capital transactions and on the transfer of capital
and currencies.
The purpose of liquidity management is to enable the Group
to meet its payment obligations at any time. For this pur-
pose, the Group records the cash flows from operating and
financial activities in a rolling plan. The resulting financial
requirements are covered by the use of appropriate instruments
for liquidity management (e.g. bank credits, commercial paper
and notes); liquidity surpluses are invested in the money market
or the capital market taking into account risk and return
expectations. The goal is to ensure the level of liquidity regarded
as necessary at optimal costs. Besides operational liquidity,
Daimler maintains additional liquidity reserves, which are avail-
able in the short term. Those additional financial resources
include a pool of receivables from the financial services business
which are available for securitization in the capital market, as
well as a contractually confirmed syndicated credit facility with
a volume of €9 billion.
Cash management determines the Group's cash requirements
and surpluses. Via cash-pooling procedures, liquidity is
centrally concentrated on bank accounts of Daimler in various
currencies. Most of the payments between Group companies
are made via internal clearing accounts, so that the number of
external cash flows is reduced to a minimum. Daimler has
established standardized processes and systems to manage
its bank accounts and internal cash-clearing accounts, and to
execute automated payment transactions.
Management of market price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the results of the divisions and the
Group. The Group's overall exposure to these market-price risks
is determined to provide a basis for hedging decisions, which
include the definition of hedging volumes and corresponding
periods, as well as the selection of hedging instruments.
Decisions regarding the management of risks resulting from fluc-
tuations in foreign exchange rates and commodity prices, as
well as decisions on asset/liability management (liquidity and
interest rates), are regularly made by the relevant committees.
Management of pension assets includes the investment of
pension assets to cover the corresponding pension obligations.
Pension assets are legally separated from the Group's assets
and are invested primarily in funds; pension assets are not
available for general business purposes. The funds are allocated
to different asset classes such as equities, fixed-interest
securities, alternative investments and real estate, depending
on the expected development of pension obligations and with
the help of a risk-return optimization. The performance of
asset management is measured by comparing with defined ref-
erence indices. Local custodians of the pension assets are
responsible for the risk management of the individual pension
assets. The Global Pension and Healthcare Committee limits
these risks by means of Group-wide binding guidelines. Addi-
tional information on pension plans and similar obligations is
provided in Note 22 of the Notes to the Consolidated Finan-
cial Statements.
108
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
107
12,378
Daimler Financial Services
Total equity of
+0
Trade receivables
9,737
8,977
+8
Less provisions
for other risks
-16,512
-15,325
+8
Less trade payables
-11,655
- 10,853
+7
Less other assets
and liabilities
-27,789 -26,727
+4
Assets and liabilities
from income taxes¹
1,719
2,935
-41
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at beginning of period
112
0.2
- 10,903
-9,425
-14,666
-9,518
Cash used for/provided by financing activities
Internal equity and financing transactions
Other transactions with shareholders
Dividends paid
Change in financing liabilities
Cash used for investing activities
-93
58
B.23
Condensed statement of cash flows'
In millions of euros
Consolidated Industrial Business² Daimler Financial
Services
2017
2016
2017
2016
2017
-1
-3,763
16,794
15,763
0.2
in % of revenue
+16
37
43
Daimler Financial Services
2.3
2.2
in % of revenue
-3
13,129
-76
62
-4
-4
-3,674
-3,723
-3,678
-3,727
5,887
7,818
9,876
8,976
At Mercedes-Benz Cars, investment in property, plant and
equipment of €4.8 billion in 2017 was significantly above the
prior-year level (2016: €4.1 billion). The most important
projects included the model upgrade of the S-Class and the
successor models in the compact class, as well as new
combustion engines and transmissions. We also made sub-
stantial investments in the reorganization of our German
production facilities as competence centers and in the expan-
sion of our international production network. At the same
time, we are preparing our worldwide production network for
electric mobility. The main areas of investment at Daimler
Trucks in 2017 were successor generations for existing prod-
ucts, new products, global component projects and the
optimization of the worldwide production network. Total invest-
ment in property, plant and equipment at Daimler Trucks
decreased to €1.0 billion (2016: €1.2 billion). At the Mercedes-
Benz Vans division, the focus of investment was on the next-
generation Sprinter in Germany and the United States. The main
investments at Daimler Buses in the reporting period were in
alternative drive systems, new products and the modernization
of the production network.
In billions of euros
Short-term credit rating
6
On November 29, 2017, the Canadian agency DBRS upgraded its
long-term rating for Daimler AG from A (low) to A, with a stable
outlook. DBRS stated that this change reflects the continually
improving earnings over the past number of years, which has
caused Daimler's financial risk assessment to strengthen to a
higher level.
The short-term ratings issued by S&P, Fitch and DBRS
remained unchanged in 2017.
Financial Position
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 115
The balance sheet total increased compared with December
31, 2016 from €243.0 billion to €255.6 billion; adjusted for
the effects of currency translation, the increase amounted to
€25.3 billion. Daimler Financial Services accounted for
€150.0 billion of the balance sheet total (2016: €141.8 billion),
equivalent to 59% of the Daimler Group's total assets
(2016: 58%).
The increase in total assets was primarily due to the growth
of the financial services business and higher trade receivables.
In addition, the higher volume of capital expenditure led to an
increase in intangible assets and property, plant and equipment.
On the liabilities side, the increased refinancing requirement
resulting from the portfolio growth led to increased financing
liabilities. Furthermore, there was an increase in shareholders'
equity. Current assets accounted for 42% of the balance sheet
total, which was at the prior-year level. Current liabilities
amounted to 34% of total equity and liabilities, which was slightly
below the prior-year level (2016: 35%).
Intangible assets of €13.7 billion (2016: €12.1 billion)
included €10.3 billion of capitalized development costs (2016:
€8.8 billion), €2.0 billion (2016: €1.4 billion) of franchises,
industrial property and similar rights, as well as €1.1 billion of
goodwill (2016: €1.2 billion). The Mercedes-Benz Car division
accounted for 79% (2016: 76%) and Daimler Trucks for 10%
(2016: 14%) of development costs. Capitalized development
costs amounted to €2.8 billion in 2017 (2016: €2.3 billion), and
accounted for 32% of the Group's total research and develop-
ment expenditure (2016: 31%) see page 264.
Property, plant and equipment see page 265 increased
to €28.0 billion (2016: €26.4 billion). In 2017, €6.7 billion
was invested worldwide (2016: €5.9 billion), in particular at our
production and assembly sites for new products and tech-
nologies and for the expansion and modernization of production
facilities. The sites in Germany accounted for €4.0 billion of
the capital expenditure (2016: €3.6 billion).
Equipment on operating leases and receivables from
financial services rose to a total of €133.5 billion
(2016: €127.4 billion). The increase adjusted for exchange-rate
effects of €14.5 billion was primarily caused by the higher
level of new business at Daimler Financial Services. The growth
in business operations reflected the successful course of
business, especially in Asia and Europe. The growth in the sales-
financing business was especially significant in China and
other Asian countries. The leasing and sales-financing business as
a proportion of total assets was at the prior-year level of 52%.
On September 15, 2017, S&P Global Ratings (S&P) also
confirmed its long-term corporate rating of A for Daimler AG
with reference to the leading position that the Group has
achieved in the automotive business. The rating agency referred
in particular to the strength of the Mercedes-Benz Cars
division. S&P assumes that Daimler will maintain its competitive
position in the coming years. Furthermore, S&P expects a
continuation of very good financial metrics. The business risk
of Daimler AG is assessed as "satisfactory" and the financial
risk as "minimal".
Equity-method investments of €4.8 billion (2016: €4.1 billion)
mainly comprised the carrying amounts of our equity interests
in Beijing Benz Automotive Co., Ltd., BAIC Motor Corporation Ltd.,
There Holding B.V. and LSH Auto International Limited. See
Note 13 of the Notes to the Consolidated Financial Statements
for further information.
Trade receivables amounted to €12.0 billion, which is above
the prior-year level of €10.6 billion. The Mercedes-Benz Cars
division accounted for 43% of these receivables and the Daimler
Trucks division accounted for 24%.
Cash and cash equivalents increased compared with the end
of 2016 by €1.1 billion to €12.1 billion.
Marketable debt securities decreased compared with
December 31, 2016 from €10.7 billion to €10.1 billion. Those
assets included the debt instruments that are allocated
to liquidity, most of which are traded in active markets. They
generally had an external rating of A or better.
12,009
-20
-6,233
-1,000
-111
-7,444
- 1,353
82
35
Inventories increased from €25.4 billion to €25.7 billion,
equivalent to 10% of total assets, and were thus at the prior-year
level. The increase adjusted for exchange-rate effects of
€1.4 billion applied to all automotive divisions.
On May 26, 2017, Fitch Ratings (Fitch) affirmed its long-term
issuer default rating of A- with a stable outlook for Daimler AG.
Fitch referred to Daimler's strong business profile and robust
credit metrics. In addition, Fitch mentioned the Group's wide geo-
graphic and business diversification as well as the strength-
ened profitability of the automotive divisions in recent years.
Fitch expects that increased technological convergence in
the fields of autonomous driving and electric mobility will provide
more synergies between the divisions in the medium term.
Daimler AG for the first time engaged the European rating agency
Scope Ratings (Scope) to issue a corporate rating. On April 27,
2017, Scope assigned an A rating for the creditworthiness of
Daimler AG and its financing companies. The short-term
rating was assessed as S-1 and the outlook as "stable". Scope
stated that its corporate rating reflects the company's track
record in recent years and Scope's expectation for a continua-
tion of the strong market positions held by the Daimler Group's
leading divisions, Mercedes-Benz Cars and Daimler Trucks.
Scope stated that its positive risk assessment was supported
by the Group's geographic diversification and the added
benefit from the captive finance business at Daimler Financial
Services. Furthermore, it assessed Daimler's financial risk
profile as very strong.
On February 3, 2017, Moody's Investors Service (Moody's)
upgraded its long-term rating for Daimler AG and its rated
subsidiaries from A3 to A2. It also upgraded its short-term rat-
ing from P-2 to P-1. The outlook was changed from "positive"
to "stable". The upgrade was explained with the robust opera-
tional performance in recent years as well as the successful
and ongoing product renewal program. As assessed by Moody's,
Daimler is well prepared to weather the future challenges
facing the automotive industry such as autonomous driving,
alternative drive systems, fuel consumption and emissions.
A3
A-
A-
A
A
A (low)
791
Standard & Poor's
A-1
A-1
Moody's
P-1
P-2
Fitch
F2
F2
Scope
S-1
R-1 (low)
R-1 (low)
DBRS
6,233
14,129
7,444
13,362
Effect of foreign exchange rate changes on cash and
cash equivalents
2016
17/16
Change
Cash provided by
operating activities
Cash used for
investing activities
Change in marketable
debt securities
Other adjustments
Free cash flow of the
industrial business
11,967
12,643
-676
-9,425
- 10,903
+1,478
-435
2,311
-2,746
-102
-177
+75
2,005
3,874
-1,869
Cash provided by financing activities 7 B.23 amounted to
€13.1 billion (2016: €12.0 billion). The increase was primarily
caused by higher net cash inflows from financing liabilities in the
context of refinancing the leasing and sales-financing business.
7
2017
A2
In millions of euros
B.24
Cash and cash equivalents at end of period
-868
12,072
-9
-778
-5
-90
-4
10,981
9,515
8,751
2,557
2,230
1 The columns "Industrial business«< and >>Daimler Financial Services" represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Mercedes-Benz Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
The risk volume that is subject to credit risk management
includes all of Daimler's worldwide creditor positions with
financial institutions, issuers of securities, and customers in
the financial services business and the automotive business.
Credit risks with financial institutions and issuers of securities
arise primarily from investments executed as part of our liquid-
ity management and from trading in derivative financial instru-
ments. The management of these credit risks is mainly based
on an internal limit system that reflects the creditworthiness of
the respective financial institution or issuer. The credit risk
with customers of our automotive business relates to contracted
dealerships and general agencies, other corporate customers
and retail customers. In connection with the export business,
general agencies that according to our creditworthiness
analyses are not sufficiently creditworthy are generally required
to provide collateral such as first-class bank guarantees. The
credit risk with end-customers in the financial services business
is managed by Daimler Financial Services on the basis of a
standardized risk management process. In this process, mini-
mum requirements are defined for the sales-financing and
leasing business and standards are set for credit processes as
well as for the identification, measurement and management
of risks. Key elements for the management of credit risks are
appropriate creditworthiness assessments, supported by
statistical risk-classification methods, as well as structured
portfolio analysis and portfolio monitoring.
Financial country risk management includes various aspects:
the risk from investments in subsidiaries and joint ventures,
the risk from the cross-border financing of Group companies in
risk countries, and the risk from direct sales to customers in
those countries. Daimler has an internal rating system that divides
all countries in which it operates into risk categories. With
equity capital transactions in risk countries, the Group hedges
against political risks with the use of investment protection
insurance such as the German government's investment guar-
antees. Risks from cross-border receivables are partially pro-
tected with the use of export credit insurance, letters of credit
and bank guarantees in favor of Daimler AG. In addition, a
committee sets and restricts the level of hard-currency credits
granted to financial services companies in risk countries.
Further information on the management of market-price
risk, credit-default and liquidity risk is provided in ①Note 32
of the Notes to the Consolidated Financial Statements.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 109
Cash flows
Cash used for/provided by operating activities 7 B.23
resulted in a cash outflow of €1.7 billion in 2017 (2016: cash
inflow of €3.7 billion). The decrease was primarily due to
effects from the leasing and sales-financing business. In addi-
tion, a cash outflow of €3.0 billion resulted from the extra-
ordinary contribution to the German pension plan assets. Cash
used for operating activities also reflects higher income taxes
paid. Opposing effects were due to the positive business per-
formance. A cash inflow of €0.8 billion resulted from the
dividend distributed by Beijing Benz Automotive Co., Ltd. The
payment of the fine of €1.0 billion imposed on Daimler by
the European Commission in the context of the settlement in
the truck antitrust proceedings led to a cash outflow in the
prior-year period.
Cash used for investing activities 7 B.23 amounted to
€9.5 billion (2016: €14.7 billion). The change compared with
the prior-year period resulted primarily from lower cash out-
flowsfor investments in shareholdings. The reporting period
was affected by the acquisition of an interest in LSH Auto
International Limited (LSHAI). In the prior-year period, the
acquisition of 100% of the shares of Athlon Car Lease Inter-
national B.V. (Athlon) and the settlement of financing liabilities
of Athlon led to cash outflows. Positive effects resulted from
acquisitions and disposals of securities in the context of liquid-
ity management. Those transactions led to a net cash inflow
in 2017, whereas acquisitions exceeded disposals in the previ-
ous year. The sale of real estate in Japan led to a cash inflow
of €0.3 billion. Cash used for investing activities also reflects
increased investments in property, plant and equipment and
intangible assets.
Free cash flow of the industrial business
A
344
End of 2016
5,889
3.8
+15
4,843
4,147
+17
5.1
4.6
Daimler Trucks
1,028
1,243
- 17
in % of revenue
2.9
3.7
Mercedes-Benz Vans
710
373
+90
in % of revenue
5.4
2.9
6,744
4.1
Daimler Buses
in % of revenue
Mercedes-Benz Cars
in % of revenue
A
5
4
3
2
1
0
2013
2014
2015
2016
2017
B.28
Investment in property, plant and equipment by division
2017
2016
16/15
% change
Investment
In the context of our strategy of strengthening our core business,
we aim to make good use of the opportunities presented by
the global automotive markets. At the same time, we intend to
play a major role in shaping the fundamental technological
change occurring in the automotive industry, and to assume a
leading role with the development of the future areas of CASE
(Connected, Autonomous, Shared & Services and Electric). This
requires substantial investment in innovative products and
new technologies, as well as in the expansion of our worldwide
production network. In 2017, we therefore once again signi-
ficantly increased our investment in property, plant and equip-
ment - as already announced in Annual Report 2016 - from
an already high level to €6.7 billion (2016: €5.9 billion).
At December 31, 2017, financial obligations of €4.0 billion
exist in connection with future investments in property, plant
and equipment.
Daimler Group
94
In millions of euros
11,460
Jan. 2022
Jul. 2024
Jul. 2029
Jul. 2037
Nov. 2027
Daimler Finance
North America LLC
US$1,500 million
Nov. 2017
Feb. 2021
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
Credit ratings
In financial year 2017, the long-term credit ratings of Daimler AG
were upgraded by the two rating agencies Moody's Investors
Service and DBRS from A3 to A2 and from A (low) to A respec-
tively. Concurrently, Moody's also upgraded the short-term
rating from P-2 to P-1. For the first time, Daimler received a
credit rating from the European rating agency Scope Ratings
AG. Scope assigned a corporate issuer rating of A and a stable
outlook to Daimler AG and its financing subsidiaries, with a
short-term rating of S-1. The other agencies did not change our
credit ratings compared with the previous year. At the end of
2017, the outlook for Daimler AG was assessed as "stable" by
all five of the agencies it has engaged. 7 B.31
B.31
Rating
Long-term credit rating
Standard & Poor's
Moody's
Fitch
Scope
97
End of 2017
DBRS
May 2017
Jun. 2017
Jun. 2017
Jun. 2017
Nov. 2017
US$250 million
€1,250 million
€1,500 million
€1,300 million
€1,000 million
114
US$850 million
Daimler AG
Maturity
US$1,400 million
Jan. 2017
Jan. 2020
Jan. 2017
Jan. 2022
US$750 million
€1,250 million
Volume
11,642
Jan. 2017
Feb. 2017
Feb. 2025
US$500 million
May 2017
Nov. 2018
US$1,250 million
May 2017
May 2020
Daimler AG
Daimler AG
Jan. 2027
Month of
emission
899
946
11,199
Receivables from financial services
12,098
13,735
Intangible assets
Property, plant and equipment
2016
12,789
27,981
17,433
27,914
26,314
67
67
Equipment on operating leases
47,714
46,942
18,711
29,003
29,509
2017
26,381
2016
Other assets
2016
85,787
9,499
242,988
255,605
Total assets
8,958
16,781
17,734
116
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
Other financial assets increased by €1.1 billion to €6.8 billion.
They primarily consisted of derivative financial instruments,
equity instruments in non-consolidated subsidiaries and other
investments, as well as loans and other receivables due from
third parties. The increase was primarily attributable to higher
positive fair values of currency derivatives.
Other assets of €9.0 billion (2016: €9.5 billion) primarily com-
prised deferred tax assets and tax refund claims. The decrease
in deferred tax assets primarily related to effects from the
measurement of derivatives not recognized in profit and loss.
The Group's equity increased compared with December 31,
2016 from €59.1 billion to €65.3 billion; adjusted for the effects
of currency translation, the increase amounted to €8.8 billion.
The increase in equity was mainly due to net profit of €10.9 billion
see page 104 and the remeasurement of derivative financial
instruments not recognized in profit and loss of €1.7 billion. The
increase was partially offset by the dividend of €3.5 billion paid
out to Daimler's shareholders and effects from currency trans-
lation of €2.7 billion. Equity attributable to the shareholders
of Daimler AG increased to €64.0 billion (2016: €58.0 billion).
In relation to the 5% increase in the balance sheet total, equity
increased by the disproportionally high rate of 10%. Due to the
effects described above, the Group's equity ratio of 24.0% was
above the level at the end of 2016 (22.9%); the equity ratio for
the industrial business was 46.4% (2016: 44.7%). It is necessary
to consider that the equity ratios at the end of 2016 and 2017
are adjusted for the paid and proposed dividend payments.
Provisions decreased from €26.8 billion to €24.6 billion; as
a proportion of the balance sheet total, they were slightly
below the prior-year level at 10% (2016: 11%). They primarily
comprised provisions for pensions and similar obligations
of €5.8 billion (2016: €9.0 billion), which mainly consists of the
difference between the present value of defined benefit
pension obligations of €31.7 billion (2016: €31.2 billion) and the
fair value of the pension-plan assets applied to finance those
obligations of €27.2 billion (2016: €23.4 billion). The decrease
in provisions for pensions and similar obligations is primarily
due to the extraordinary contribution of €3.0 billion into the
German pension plan assets. Provisions also related to liabili-
ties from income taxes of €1.6 billion (2016: €1.7 billion), from
product warranties of €6.7 billion (2016: €6.1 billion) and for
personnel and social costs of €4.4 billion (2016: €4.3 billion),
as well as other provisions of €6.2 billion (2016: €5.7 billion).
B.32
Statement of financial position'
in millions of euros
Assets
Consolidated
Industrial Business²
Daimler Financial
Services
At December 31,
At December 31,
At December 31,
2017
2017
80,507
990
-87
2,230
Marketable debt securities
10,063
10,748
8,894
9,498
1,169
1,250
thereof current
9,073
9,648
8,893
9,497
180
151
thereof non-current
-61
105,619
1,100
1
1
989
1,099
Other financial assets
6,801
5,736
2,557
- 109
8,751
10,981
85,896
80,594
Equity-method investments
4,818
4,098
4,670
4,043
148
55
Inventories
25,686
25,384
24,492
24,426
1,194
958
Trade receivables
11,990
10,614
9,737
8,977
2,253
1,637
Cash and cash equivalents
12,072
9,515
1,637
11,522
9,019
149,986
59 65
149 141
2016
2017
Non-current assets
Assets
Balance sheet structure Daimler Group
In billions of euros
B.33
Further information on the assets presented in the statement of
financial position and on the Group's equity and liabilities is
provided in the Consolidated Statement of Financial Position
see page 240, the Consolidated Statement of Changes in
Equity see page 242 and the related notes in the Notes to the
Consolidated Financial Statements.
Other liabilities of €14.6 billion (2016: €14.9 billion) primarily
comprise deferred income, tax liabilities and deferred taxes.
The tax reform in the United States affected the deferred tax
liability. This was offset in particular by an increase in
deferred income due to the expansion of business activity.
Other financial liabilities of €11.5 billion (2016: €12.9 billion)
mainly consisted of liabilities from residual-value guarantees,
liabilities from wages and salaries, deposits received and accrued
interest on financing liabilities. The decrease was primarily
caused by lower negative fair values of currency derivatives.
Trade payables increased to €12.5 billion due to the higher
volume of business (2016: €11.6 billion). The Mercedes-Benz Cars
division accounted for 63% of those payables and the Daimler
Trucks division accounted for 20%.
Equity and liabilities
Equity
Financing liabilities of €127.1 billion were above the prior-year
level (€117.7 billion). The increase of €16.2 billion adjusted for
exchange-rate effects was primarily due to the refinancing of the
growing leasing and sales-financing business. 53% of the
financing liabilities were accounted for by bonds, 27% by liabili-
ties to financial institutions, 9% by deposits in the direct
banking business and 9% by liabilities from ABS transactions.
B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Mercedes-Benz Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
1 The columns,,Industrial business" and „Daimler Financial Services" represent a business point of view.
141,842
149,986
101,146
105,619
242,988
255,605
Total equity and liabilities
7,277
117
99 103
- Non-current liabilities
107 102
Other operating expense, net amounted to €0.4 billion
(2016: €0.7 billion). The prior-year figure mainly comprised
expenses in connection with a legal proceeding. 7 B.34
General administrative expenses of €2.0 billion were
slightly above the prior-year level (2016: €1.8 billion). In relation
to revenue, they amounted to 1.8% (2016: 1.7%).
Selling expenses increased by €0.9 billion to €7.3 billion. This
was primarily due to higher expenses for marketing, commis-
sions and outgoing freight. As a proportion of revenue, selling
expenses increased from 6.0% to 6.5%.
119
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
Daimler AG slightly increased its unit sales in 2017, as had been
forecast in the previous year. Unit sales in the car business
increased by 3% to 1,870,000 vehicles¹. The SUV segment was
particularly successful in 2017, with a 16% increase in sales
to 639,000 units¹. The E-Class segment recorded growth of 11%
to 274,000 units¹. Due to the lifecycle of the C-Class, sales of
336,000 units in this segment were lower than in the previous
year (2016: 375,000). Sales of trucks amounted to 106,000
(2016: 101,000) units¹ and sales of vans increased by 5% to
357,000 units¹.
The development of profitability was affected in financial year
2017 by the decrease in operating profit by €0.7 billion to
€1.1 billion, as well as by the increase in financial income by
€0.4 billion to €5.9 billion. 7 B.34
Profitability
1 Unit sales relate solely to new vehicles. The unit sales of Daimler AG
include vehicles invoiced to companies of the Group which have not yet
been sold on to external customers by those companies. Vehicle sales
by production companies of the Daimler Group to external customers and
to subsidiaries of Daimler AG, as well as contract manufacturing by
Daimler AG are not counted in unit sales.
Cost of sales increased by 6% to €101.9 billion. Increases in
unit sales and expenses for new products and technologies led
to higher cost of sales. Research and development expenses,
which are included in cost of sales, were significantly higher than
in the previous year at €7.6 billion (2016: €6.6 billion); as a pro-
portion of revenue, they amounted to 6.8% (2016: 6.1%). Research
and development expenses were primarily related to the
renewal and expansion of the product portfolio, especially with
regard to the model series of the SUVs, the compact class
and the S-Class, as well as the successor model of the Sprinter.
In addition, work is continuing on new generations of engines,
alternative drive systems and the intensification of the module
strategy. At the end of the year, approximately 20,000 people
were employed in the area of research and development.
Revenue increased by €5.5 billion to €112.7 billion and was
thus higher than our expectations as stated in the "Outlook"
section of last year's Annual Report. Revenue in the car
business increased by 6% to €87.0 billion due to higher unit
sales of vehicles and components. Despite the termination
of a contract-manufacturing agreement, revenue in the com-
mercial-vehicle business increased by 1% to €25.7 billion.
The main performance indicators for Daimler AG are unit sales,
revenue and net profit.
The annual financial statements of Daimler AG are prepared in
accordance with the German Commercial Code (HGB). The
consolidated financial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS), as
adopted by the European Union (EU). This results in some differ-
ences with regard to recognition and measurement, primarily
relating to intangible assets, provisions, financial instruments,
the leasing business and deferred taxes.
The vehicles are produced at the domestic plants of Daimler
AG, as well as under contract-manufacturing agreements by
domestic and foreign subsidiaries and by producers of special
vehicles. Daimler AG distributes its products through its own
sales-and-service network, which is organized in seven regional
centers for cars and seven for commercial vehicles, through
foreign sales subsidiaries and through third parties.
Daimler AG is the parent company of the Daimler Group and is
domiciled in Stuttgart. Its principal business activities comprise
the development, production and distribution of cars, vans and
trucks in Germany and the management of the activities of the
Daimler Group.
In addition to reporting on the Daimler Group, the development
of Daimler AG is also described in this section.
Daimler AG
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
118
243 256
22 22
256 243
thereof liquidity
Current liabilities
Current assets
85 88
6,339
101,146
7,646
14,923
119,137
125,524
-1,451
1,600
117,686
127,124
Financing liabilities
1,042
1,026
25,768
23,591
thereof current
26,810
Provisions
10,448
12,378
48,685
52,936
59,133
65,314
Equity
Equity and liabilities
141,842
7,862
24,617
48,746
47,288
-19,435
14,554
Other liabilities
3,224
3,900
9,645
7,622
12,869
Other financial liabilities
714
819
10,853
11,655
11,567
12,474
Trade payables
51,369
57,343
19,029
21,035
70,398
78,378
thereof non-current
67,768
68,181
-20,480
8,215
Condensed version according to the German Commercial Code (HGB)
-10,933
Receivables, securities and other assets
Clean and efficient drive technology for buses
Daimler is also very advanced in terms of exhaust aftertreatment
technology for the bus sector. For example, all Mercedes-Benz
and Setra model series were made available with Euro VI tech-
nology at a very early stage. Despite the use of this complex
exhaust treatment technology, we were able to achieve a further
reduction in the fuel consumption of our already economical
buses with the application of the new Mercedes-Benz engines.
New FUSO Super Great truck sets efficiency standards
With the latest generation of the FUSO flagship, the world's
largest manufacturer of commercial vehicles is setting new
standards for efficiency, safety and connectivity in Japan. A
range of new technologies has reduced the truck's fuel consump-
tion by up to 15%. The powertrain components in the new FUSO
Super Great were taken from the current product platforms and
were only slightly adjusted to meet the specific requirements
of the Japanese market. Daimler Trucks' global platform strategy
enables consistent quality standards, cost benefits through
economies of scale, and flexibility in the utilization of production
capacity. The 10.7-liter OM470 engine used in the new FUSO
Super Great complies with the JP17 emission standard in Japan.
It also comes with the HDEP (Heavy Duty Engine Platform)
Fuel Efficiency Package and has been further optimized in terms
of fuel consumption, emission efficiency and payload compared
with the previous drivetrain. Deliveries to customers of the new
truck started in May 2017.
In Europe, we plan to reduce the fuel consumption of our truck
fleet by an average of 20% over the period of 2005 to 2020.
We are confident that we will achieve this ambitious target, and
we took a clear step in that direction with the introduction of
the new generation of the OM 471 heavy-duty truck engine in
2015 and the slightly smaller OM 470 in 2016.
Our trucks also set the standards for fuel efficiency in North
America, where we presented the Freightliner New Cascadia,
our flagship in North America, in the fall of 2016. The truck's
aerodynamic shape and state-of-the-art drivetrain components
have helped to reduce fuel consumption by up to 8% compared
to the predecessor model, the Cascadia Evolution, which was
already an extremely economical vehicle.
The fact that Mercedes-Benz provides its customers with
particularly fuel-efficient vehicles has been demonstrated by
the more than 4,000 comparison drives that had been carried
out throughout Europe by the end of 2017. In these comparison
drives, customers tested Mercedes-Benz trucks in their fleet
against vehicles manufactured by the main competitors. The
results speak for themselves: The Mercedes-Benz trucks came
out on top more than 90% of the time, with 11% lower fuel con-
sumption on average.
anticipatory cruise control system, our latest generation of
engines and the Actros with a second-generation drivetrain,
which we presented at the IAA Commercial Vehicles Show in
2016. The new drivetrain technologies will also be used in the
Antos and Arocs truck models.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
124
Energy sources for locally emission-free driving
Clean fuels for internal combustion engines
Energy for the future
Locally emission-free
driving with electric
vehicles powered by
batteries or fuel cells
Hybridization for further
increase in efficiency
with modern conventional
powertrains
Optimizing our vehicles
Road to emission-free mobility
B.38
In recent years, we have also continuously reduced the fuel
consumption of our commercial vehicles as well as their CO2
emissions. For example, since 2011, we have been able to
reduce the average fuel consumption of the Mercedes-Benz
Actros heavy-duty truck by a total of about 15% compared to
the proven Actros predecessor model through the introduction of
the new Euro VI model, the Predictive Powertrain Control (PPC)
Fuel-efficient trucks
Four more members of the all-new engine family made their
debut in 2017: an inline six-cylinder engine (diesel and gasoline
variants), a new four-cylinder gasoline engine and a new
biturbo V8. Forward-looking new technologies such as the
integrated starter-generator (ISG), the 48-volt electrical
system and the electric auxiliary compressor also had their
world premieres. The ISG is responsible for hybrid functions,
such as boost effect and energy recovery, and thus enables fuel
savings that were previously typical of high-voltage hybrid tech-
nology. Our new S-Class models, which have been delivered to
customers since mid-2017, are a particularly good example of
how we have been able to increase fuel efficiency even further.
For example, the Mercedes-Benz S 350 d 4MATIC (fuel con-
sumption in 1/100 km urban: 6.9-6.7/extra-urban: 5.0-4.8/
combined: 5.7-5.5; CO2 emissions, combined: 150-145 g/km)
with its new six-cylinder diesel engine consumes significantly
less fuel than its predecessor, despite higher output, while the
Mercedes-Benz S 450 4MATIC (fuel consumption in l/100 km
urban: 9.6-9.3/extra-urban: 6.0-5.6/combined: 7.3-7.0; CO₂
emissions, combined: 167–159 g/km) achieves outstanding fuel
efficiency with the newly developed M 256 six-cylinder
gasoline engine.
Biggest engine offensive in the history of Mercedes-Benz
The new OM 654 four-cylinder diesel engine, which was
launched in the new E-Class in 2016, is the first member of the
modular engine family that will be utilized across the product
range of Mercedes-Benz Cars and also at Mercedes-Benz Vans.
Several different output ratings are planned for the engine,
which will be installed either longitudinally or transversely in
vehicles with front, rear or all-wheel drive. In this way,
Mercedes-Benz intends to equip its range of diesel cars in
Europe with this engine generation by 2019.
Innovative vehicle and drive-system technologies from Daimler
demonstrate what we have already achieved in this regard.
The following examples illustrate our approach to the mobility
of the future.
We believe that combustion engines will continue to form
the backbone of personal mobility until electric vehicles can
achieve a breakthrough in the market. This is one of the main
reasons why we continue to invest in the improvement of com-
bustion engine technology, thus making a contribution to
reducing the fuel consumption and emissions of each and every
vehicle. At the same time, we have launched a broad-based
electric-mobility offensive at all of our divisions. We are pursuing
a holistic approach here. For example, along with partial and
fully electric drive systems, we are also investing in fast-charging
networks, hydrogen infrastructure and software solutions.
Our drive system strategy for reducing emissions has three
components. First, highly efficient combustion engines remain
part of the solution for us, and this applies to both gasoline
and diesel engines. We are also focusing on additional plug-in-
hybrid and electric vehicle models.
Our "Road to Emission-free Driving" initiative defines the primary
focal points for developing new, extremely fuel-efficient and
environmentally friendly drive-system technologies at all of our
automotive divisions. We are pursuing this approach along the
entire value chain. To this end, we are addressing all relevant
aspects and exploiting potential in all areas of development
for everything from lightweight engineering to optimized aero-
dynamics, the use of clean and efficient fuels, the creation of
electric drive systems, and the implementation of sustainable
mobility concepts.
Non-current assets
Assets
For example, various vehicle optimization measures have led
to further significant reductions in the fuel consumption of our
touring coaches equipped with the new OM 471 diesel engine,
despite higher performance.
The new Mercedes-Benz Tourismo coach is also much more
efficient than the predecessor model. Its fuel consumption was
reduced primarily through optimized aerodynamics and an
all-new and lighter body. New optional extras such as Predictive
Powertrain Control (PPC) and Eco Driver Feedback (EDF)
enable fuel consumption and thus emissions to be reduced even
further.
The Mercedes-Benz Citaro NGT with natural-gas drive is even
cleaner and quieter than the already efficient Citaro equipped
with the ultra-modern Euro VI diesel engine. Moreover, the Citaro
NGT's all-new M 936 natural-gas engine makes the bus the
benchmark in its segment. The Citaro NGT is also even more
efficient than its predecessor model - and when organic
natural gas is used, the vehicle is virtually CO2-neutral. In
parallel with the further optimization of the combustion
engine, the next step along the path into the future is the battery-
electric Mercedes-Benz Citaro - an all-electric city bus which
Daimler Buses plans to have ready for series production and on
the road by the end of 2018.
Comprehensive electric mobility offensive
107,310
3,462
Net defined-benefit plan asset
384
Prepaid expenses
60,764
Current assets
1,782
Cash and cash equivalents
49,516
42,700
9,466
Inventories
smart vision EQ fortwo: car sharing for the city of tomorrow
At the Frankfurt Motor Show in September 2017, the smart
brand presented the smart vision EQ fortwo, offering a preview
of car sharing in the future. The concept car is our vision of
the form future urban mobility might take. As a fully autonomous
vehicle connected in swarms with other cars in the fleet, the
smart vision EQ fortwo could move on its own through a city and
drive to locations where it is needed at a given time. The
electric car could be equipped with a 30kWh lithium-ion battery
that is recharged autonomously and inductively. It would do
this by driving to one of many hub stations located around a city.
The business development of Daimler AG is fundamentally sub-
ject to the same risks and opportunities as that of the Daimler
Group. Daimler AG generally participates in the risks of its sub-
sidiaries and associated companies in line with the percentage
of each holding. Risks and opportunities are described in the
"Risk and Opportunity Report”. O pages 155 ff Risks may
additionally arise from relations with subsidiaries and associated
companies in connection with statutory or contractual obli-
gations (in particular with regard to financing), as well as from
the impairment of investments in subsidiaries and associated
companies.
To date, fuel-cell vehicles from Mercedes-Benz, which include
the B-Class F-CELL and the Mercedes-Benz Citaro FuelCELL
Hybrid city bus, have driven more than 18 million kilometers
and have thus demonstrated the market maturity of this drive
configuration. The pre-series version of the GLC F-CELL repre-
sents a further milestone on the road to series-produced
fuel-cell vehicles. Market-specific sales concepts, including the
option of a rental model, are currently being evaluated.
The E 350 e also makes a big impression in other areas besides
driving. For example, during its lifecycle (material manufacture,
production, driving for 250,000 kilometers calculated with
certified consumption figures and recycling) and when the hybrid
model is charged externally with the European electricity mix,
the vehicle emits around 44% less CO2 than the predecessor
model, the E 350 CGI, which has comparable performance
data and a conventional engine. If the calculation is based on the
use of renewable energy for external charging, CO2 emissions
can be reduced by 63%. The picture is much the same in terms
of energy consumption, as the E 350 e consumes 31%/48%
less primary energy over all of its lifecycle phases.
E-Class plug-in hybrid impressive in environmental audit
In February 2017, the Mercedes-Benz E 350 e plug-in hybrid
model (fuel consumption in 1/100 km, combined: 2.1; CO2
emissions in g/km: 49; electricity consumption in kWh/100 km:
11.5) successfully completed the TÜV validation audit for the
German Environmental Certificate. This certificate is awarded
on the basis of a lifecycle assessment in which independent
experts at the TÜV Süd technical inspection authority assess the
integration of environmental aspects into the product design
and development process, as well as the environmental impact
of a car throughout its entire life cycle.
The use of 48-volt on-board electrical systems enables hybrid
functions ranging from energy recovery and boost effect to
initial acceleration and maneuvering in the all-electric mode.
This means that such functions can be used for the first time
without high-voltage components, which eliminates the need for
the additional safety equipment that normally has to be used
in high-voltage networks. This enables us to noticeably reduce
the fuel consumption of our high-volume models and to offer
customers greater agility and comfort.
Plug-in hybrid vehicles combine the best aspects of combustion
engines and electric drive systems. This helps to reduce overall
consumption and increase performance, as the electric motor is
used to take over from or support the combustion engine in
situations where the latter is less efficient. With eight plug-in
hybrid models, we already offer a broad range of plug-in hybrid
vehicles in the premium segment. Our powerful battery already
enables all-electric driving. The battery can be recharged
externally. The new S-Class with hybrid drive, which we plan to
launch in 2018, already has an all-electric range of up to 50
kilometers. We aim to achieve significantly longer ranges for
plug-in hybrids as technological advances are made. This will
enable our customers to drive locally emission-free to a very
large extent in everyday situations. In such a setup, the combus-
tion engine is used for longer distances, which means our plug-in
hybrids are perfect for any driving requirement. We believe that
plug-in hybrid technology will be extremely successful as we
move into the next decade, and that is why hybrid systems are
a key component of our drive-system strategy.
Broad range of plug-in hybrid cars
By 2022, Daimler intends to offer more than ten all-electric
models in the passenger-car segment alone: from the smart to
a large SUV. The first series-produced battery-electric model
under the EQ brand will be launched in the SUV segment before
the end of this decade. will be followed by a model initiative
that will gradually expand the product range of Mercedes-Benz
Cars with all-electric models. The new generation of electric
vehicles will be based on an architecture developed especially
for battery-electric models. This architecture is scalable in
every respect and can be used in all model series: Wheelbase
and track width as well as all other system components,
especially the battery, are variable thanks to the modular system.
on-board fast charger, it should be possible in the future to
charge an electric car in about ten minutes so that it can
drive another 100 kilometers.
125
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
With the Concept EQA study, Mercedes-Benz has shown
what an EQ model in the compact-car segment could look like.
In combination with the intelligent operating strategy from
Mercedes-Benz, the concept car achieves a range of approxi-
mately 400 kilometers. The Concept EQA provides a glimpse
of the technological future. It can be charged using a wall box and
is also prepared for rapid charging. Thanks to an integrated
Mercedes-Benz has consolidated all of its activities in the
area of electric mobility into the new EQ product brand. EQ
stands for Electric Intelligence, which in turn is derived from
the Mercedes-Benz brand values of emotion and intelligence.
EQ offers a comprehensive electric mobility ecosystem of
products, services, technologies and innovations. The new brand
was heralded by the near-production Concept EQ from 2016
and the compact Concept EQA, which was presented at the
Frankfurt Motor Show (IAA) in September 2017.
EQ - our electric mobility brand
Daimler launched a broad-based electric mobility offensive at all
of its divisions back in 2016. The models include new plug-in
hybrids from Mercedes-Benz Cars, new electric smart models,
the DENZA 400, which we developed with our partner BYD for
the Chinese market, the new FUSO eCanter and the new GLC
pre-series model with fuel cells, which we presented at the
Frankfurt Motor Show (IAA) in September 2017. The electric
mobility offensive also includes new concept vehicles that offer
a clear preview of the future of electric mobility: the Concept EQ,
the Concept EQA and the smart vision EQ fortwo, as well as
the Mercedes-Benz electric truck and the E-FUSO Vision One
truck - both for heavy-duty distribution transport.
Preproduction phase begins for the GLC F-CELL
With the unveiling of the two GLC F-CELL preproduction cars
at the Frankfurt Motor Show in 2017, Daimler presented yet
another milestone on the road to emission-free driving. The GLC
F-Cell is a fuel-cell electric car using a lithium-ion battery as an
additional energy source that can be externally charged by means
of plug-in technology. Intelligent interplay between the battery
and the fuel cells, as well as a short refueling time, will make the
GLC F-CELL a practical vehicle for long-distance travel in the
future. The preproduction model carries 4.4 kilograms of hydrogen
on board and produces enough energy to achieve a range of
more than 400 kilometers in the New European Driving Cycle
(NEDC). Daimler has developed a completely new fuel-cell
system for this world first. Compared to the B-Class F-CELL,
which has been on the market since 2010 (fuel consumption:
0.97 kg H₂/100 km; CO2 emissions, combined: 0 g/km), the
overall drive system offers around 40 percent more output.
The fuel-cell system is around 30 percent more compact than
before; it can be housed entirely in the engine compartment
for the first time, and is installed on the usual mounting points
like a conventional engine. In addition, the use of platinum in
the fuel cells has been reduced by 90 percent, which conserves
resources and also lowers system costs - without any com-
promises in terms of performance.
40,107
9,071
46,120
1,660
56,851
339
891
98,188
Risks and opportunities
- 11,045
Other operating expense, net
-1,844
-2,010
General administrative expenses
-6,454
-7,312
-96,271
-101,874
Cost of sales (including R&D expenses)
Selling expenses
107,178
112,685
Revenue
2016
2017
In millions of euros
Condensed income statement of Daimler AG
B.34
The net defined-benefit plan asset results from the fair value of
the special-purpose assets in excess of the settlement amount
of the pension obligations. The increase in financial year 2017
to €3.5 billon (2016: €0.9 billion) is primarily due to the extraor-
dinary contribution of €3.0 billion to the German pension plan
assets.
Gross liquidity - defined as cash and cash equivalents and
other marketable securities as well as fixed-term deposits
presented under other assets - of €9.6 billion was higher than
a year earlier (2016: €8.5 billion).
Receivables, securities and other assets increased compared
with December 31, 2016 by €3.4 billion to €49.5 billion. The
main reason for this development was growth of €2.3 billion in
receivables due from subsidiaries and associated companies,
as well as the increase in securities of €0.8 billion. Cash and
cash equivalents increased by €0.1 billion to €1.8 billion.
Inventories increased compared with December 31, 2016
by €0.4 billion to €9.5 billion. The increase is mainly related to
finished products and goods.
Non-current assets increased by €2.6 billion to €42.7 billion,
mainly due to the higher amounts of financial assets and fixed
assets. Investment in property, plant and equipment (excluding
leased assets, approximately €3.1 billion) mainly comprises
investments for the production of the new A-Class models and
the new Sprinter, as well as investments in engine and trans-
mission projects.
The balance sheet total of €107.3 billion is €9.1 billion higher
than at year-end 2016. 7 B.35
capital resources
Financial position, liquidity and
The economic situation of Daimler AG is primarily deter-
mined by its business operations and those of its subsidiaries.
Daimler AG participates in the operating results of its sub-
sidiaries through profit distributions. The economic situation of
Daimler AG is therefore fundamentally the same as that of
the Daimler Group, which is described in the chapter "Overall
Assessment of the Economic Situation".
page 134
Net profit decreased from €5.9 billion to €5.0 billion, and was
thus in line with the expectations stated in the "Outlook"
section of last year's Annual Report. The development primarily
reflects the lower operating profit as well as a higher income
tax expense. There was an opposing effect from the improved
financial income.
-355
-749
Operating profit
1,134
Provisions increased compared with December 31, 2016 by
€2.1 billion to €14.0 billion. This was primarily due to increased
obligations from sales transactions, provisions for warranty
obligations, and provisions relating to legal proceedings.
Equity increased in 2017 by €1.5 billion to €42.1 billion. This
change primarily resulted from the net profit for 2017, of which,
in accordance with Section 58 Subsection 2 of the German
Stock Corporation Act (AktG), €1.1 billion was transferred to
retained earnings. The equity ratio at December 31, 2017
was 39.2% (December 31, 2016: 41.3%). As stated in the notes to
the annual financial statements according to the German
Commercial Code (HGB), Daimler AG holds no treasury shares
at December 31, 2017.
Dec. 31,
2016
Dec. 31,
2017
In millions of euros
Balance sheet structure of Daimler AG
B.35
Cash flows from financing activities resulted in a net cash
outflow of €0.6 billion (2016: €2.7 billion). This is explained by
the reduction compared with the previous year in the cash out-
flow from the Group's internal transactions in connection with
central finance and liquidity management. There were oppos-
ing effects of reduced cash inflows from the lower assumption
of external financing liabilities than in the previous year. Cash
flows from financing activities include the payment of the divi-
dend for the year 2016 in an amount of €3.5 billion.
Cash flows from investing activities resulted in a net cash
outflow of €6.5 billion in 2017 (2016: €6.1 billion). The increase
is primarily a reflection of capital measures within financial
assets as well as increased investment in property, plant and
equipment. Positive effects resulted from acquisitions and
sales of securities within the framework of liquidity management.
Cash provided by operating activities amounted to
€7.2 billion in 2017 (2016: €8.5 billion). The decrease primarily
reflects higher cash-effective contributions to pension plan
assets, increased working capital and higher income tax pay-
ments. On the other hand, utilization of provisions was lower
than in the previous year.
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
120
3,477
Liabilities increased by €5.3 billion to €50.3 billion, primarily
due to increased financing liabilities, as well as trade payables.
3,905
-2,391
-1,077
Transfer to retained earnings
5,868
4,982
Net profit
-1,422
-2,018
Income taxes
5,430
5,866
Financial income
1,860
Distributable profit
The income tax expense amounts to €2.0 billion (2016:
€1.4 billion). The increase primarily reflects tax expenses for
prior periods relating to tax assessments of previous years.
The figure for 2016 includes tax benefits recognized for prior
periods.
Equity and liabilities
3,070
57
-21
Mercedes-Benz Vans
565
442
+28
thereof capitalized
310
238
+30
Daimler Buses
194
202
thereof capitalized
30
11
-4
+173
Patents ensure freedom of action and safeguard
our brands
On January 29, 1886, Carl Benz registered a patent for a "vehicle
powered by a gas engine". Since then, we have refined auto-
mobiles with more than 114,000 patents and have launched
pioneering innovations. We continued this tradition in 2017 by
registering nearly 1,900 new ideas for patents, with an increasing
focus on the CASE technologies. These patents are important
to the company primarily for two reasons: Firstly, the patents
secure Daimler a certain amount of "freedom of action" that
enables us to manufacture and sell our products around the world
and avoid legal conflicts with third parties. Secondly, they
enable "exclusivity", the goal of which is to establish exclusive
positioning of selected Daimler features on the market and
thus differentiate ourselves from the competition. In addition
to industrial property rights, which safeguard our innovations
for future mobility over the long term, the unique visual aspects
of our products are protected with more than 7,800 designs
registered in 2017 (2016: 9,100). The decrease primarily reflects
a review of our intellectual-property strategy. Our portfolio of
more than 35,800 trademarks worldwide (2016: 32,800), serves
to protect the Mercedes-Benz brand, our new EQ brand for
electric mobility and all our other product brands in each relevant
market.
€8.7 billion for research and development
We want to continue shaping mobility through our pioneering
innovations in the years ahead, while moving ahead with
digitization throughout the Group. As announced in our Annual
Report 2016, we therefore increased our very high level of
investment in research and development by 15% to €8.7 billion
in 2017. Of that amount, €2.8 billion (2016: €2.3 billion) was
capitalized as development costs, which amounts to a capitali-
zation rate of 32% (2016: 31%). The amortization of capitalized
research and development expenditure totaled €1.3 billion during
the year under review (2016: €1.3 billion). With a rate of
5.3% (2016: 4.9%), research and development expenditure also
remained at a high level in comparison with revenue. Research in
the year under review focused on new vehicle models, extremely
fuel-efficient and environmentally friendly drive systems, new
safety technologies, autonomous driving systems and the digital
connectivity of our products.
The most important development projects at Mercedes-Benz
Cars focused on the successor models of the GLS and GLE
off-road vehicles, the new compact class, the EQ electric brand
and the new generation of diesel and gasoline engines. We also
invested in vehicle connectivity and autonomous driving systems
and in the development of additional innovative safety tech-
nologies. Mercedes-Benz Cars spent a total of €6.6 billion on
research and development in 2017, which once again marked
a significant increase from the prior-year figure (€5.7 billion).
Daimler Trucks invested €1.3 billion in research and develop-
ment projects. The division's most important projects were in the
areas of emission standards and fuel efficiency, customized
products and technologies for important growth markets, and the
successor generations for existing products. R&D expenditure
at Mercedes-Benz Vans focused mainly on the new Sprinter
generation, the expansion of the portfolio in the form of the
new X-Class pickup, and the further development of the Vito and
the V-Class. Daimler Buses primarily focused its development
activities on new products, the fulfillment of future emissions
standards and measures to further reduce fuel consumption.
Alternative drive systems, in particular electrification technology,
also played a key role in our development activities during the
year under review.
7 B.36 7 B.37
Innovation, safety and environmental protection
Innovations for the future of mobility
We aim for the best possible customer utility, high standards of
safety, environmental compatibility and efficiency. In order to
work on achieving these goals in parallel, we rely on innovative
concepts and environmentally sound product development.
In this context, we are focusing on CASE - these four letters
stand for the four future-oriented strategic fields of connectivity
(Connected), autonomous driving (Autonomous), flexible use
and services (Shared & Services) and electric drive systems
(Electric). We are moving ahead consistently in all of these
areas at all of our divisions, and we are also linking them in an
intelligent way to create a comprehensive target concept for
our vehicles, services and business models. In this manner, we
are underlining our claim to play a dominant role in the
mobility of the future.
45
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
thereof capitalized
1,265
2015
Our "road to emission-free driving"
2016
2017
B.37
Research and development expenditure by division
2017
2016
17/16
% change
In millions of euros
Daimler Group
8,711
7,572
thereof capitalized
2,773
2,315
+15
+20
Mercedes-Benz Cars
6,642
5,671
+17
thereof capitalized
2,388
2,008
+19
Daimler Trucks
1,322
+5
Share capital
123
2013
Liabilities
38,935
43,838
Other liabilities
6,077
6,499
Trade payables
11,847
13,981
Provisions
11,847
13,981
Other provisions
40,587
42,092
Equity
3,477
3,905
Distributable profit
22,560
23,637
Retained earnings
11,480
11,480
Capital reserve
(Conditional capital €500 million)
3,070
50,337
2014
45,012
900
0
LLLLL
7
8
total
thereof capitalized
∞ 4654321
9
In billions of euros
Research and development expenditure
B.36
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
122
In order to achieve our ambitious goals, we also cooperate
very closely with research and development units in the supplier
industry. Daimler must be closely intermeshed with supplier
companies in order to deal with the rapid pace of technological
change in the automotive industry and the need to quickly
bring new technologies to market maturity. Such cooperation is
all the more important in light of the increasing digitization of
processes throughout all stages of the value chain. Strong part-
ners from the supplier industry are also essential for our
efforts to develop and offer new concepts for future mobility.
As part of our joint research and development work, we aim to
ensure that the Group retains the key technological expertise it
needs to maintain the uniqueness of our brands and safeguard
the future of the automobile in general.
Deferred income
Targeted involvement of the supplier industry
The expertise, creativity and motivation of our employees in
research and development are key factors behind our vehicles'
market success. At the end of 2017, Daimler employed 24,600
men and women at its research and development units around
the world (2016: 24,200). A total of 16,800 of those employees
(2016: 16,300) worked at Group Research & Mercedes-Benz Cars
Development, 5,300 (2016: 5,600) at Daimler Trucks, 1,300
(2016: 1,200) at Mercedes-Benz Vans and 1,200 (2016: 1,200) at
Daimler Buses. Around 5,200 researchers and development
engineers (2016: 5,400) worked outside Germany.
Research and development as key success factors
Research and development have always played a key role at
Daimler. Gottlieb Daimler and Carl Benz invented the automobile
more than 130 years ago. Today, we are shaping the future of
mobility. Our goal is to offer our customers fascinating products
and customized solutions for needs-oriented, safe and sus-
tainable mobility. Our technology portfolio and our key areas of
expertise are focused on this objective.
Research and development
The new Daimler Sustainability Report for financial year 2017
will available on the Group's website in late March 2018.
daimler.com/sustainability
Sustainability is one of the basic principles of our corporate
strategy as well as a benchmark for our success as a company.
As a vehicle manufacturer with global operations, we face
industry-specific challenges. To ensure that our business success
is sustainable, we need to exploit the associated opportunities
and minimize the risks. To this end, we have drawn up a Group-
wide sustainability strategy, which is part of our corporate
strategy and makes sustainability a fundamental corporate
principle. Additional information on sustainability at Daimler
can be found in the "Non-Financial Report" section of this Annual
Report pages 214ff. The "Non-Financial Report" is also
available on the Internet at daimler.com/nonfinancial-report.
Sustainability at Daimler
Sustainability and Integrity
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 121
Due to the interrelations between Daimler AG and its sub-
sidiaries and the relative size of Daimler AG within the Group,
we refer to the statements in the "Outlook" chapter, which
largely reflect our expectations also for the parent company.
pages 170 ff For financial year 2018, we expect Daimler
AG to achieve net profit at the level of 2017. This will result from
a higher planned operating profit and a lower income tax
expense, which will be offset by the anticipated decrease in
financial income. We expect Daimler AG to achieve unit sales
and revenue in 2018 at the prior-year level.
Outlook
98,188
107,310
742
Our international research and development network
Our global research and development network comprises
35 locations in 15 countries. Our biggest facilities are in
Sindelfingen and Stuttgart-Untertürkheim in Germany. Our most
important research facilities in North America are the US R&D
headquarters in Sunnyvale, California; in Long Beach, California;
in Portland, Oregon; and in Redford, Michigan. Our most
important facilities in Asia are in Bangalore, India; the Global
Hybrid Center in Kawasaki, Japan; and our research and
development center in Beijing. Mercedes-Benz Research &
Development India (MBRDI), with headquarters in Bangalore)
is Daimler's largest R&D center outside Germany. Activities at
MBRDI focus on digitization, simulations and data science.
Mercedes-Benz Research & Development China is also an
integral part of the Daimler Group's research network.
Among other things, it plays an important role in understanding
Chinese customers' expectations and local requirements.
Along with our internal activities, we also maintain close contacts
with external research institutions. For example, we work
together with various renowned research institutes around the
world and participate in international exchange programs for
next-generation scientists. In November 2017, we opened new
digital hubs in Tel Aviv and Seattle.
Financial income increased by €0.4 billion to €5.9 billion, pri-
marily due to improved income from investments in subsidi-
aries and associated companies. This mainly reflects increased
dividend distributions as well as lower impairments of invest-
ments in subsidiaries. On the other hand, financial income was
affected by increased interest expense relating to pensions.
This primarily resulted from a decrease in the discount rate. In
the previous year, there was a positive effect from a change
in the law on the calculation of the discount rate.
18,292
Daimler Buses
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Science & Technology &
Environment
Political dialog
14%
10%
69%
Charity & Community
Arts & Culture
Education
Donations and sponsoring in 2017
B.41
In India, Brazil and Mozambique, we are carrying out projects
with Caritas International that promote the sustainable use of
water resources. Climate change is threatening to make entire
tracts of land uninhabitable in those three countries. Project
workers are creating reliable water supply systems and providing
training and useful knowledge to local farmers. As a result,
the farmers can now cultivate plants that do not require addi-
tional irrigation, such as tamarind and passion fruit.
Another environmental project that Daimler is supporting in
cooperation with the Global Nature Fund is EcoKarst. The
objective of this project is to contribute to the protection and
sustainable economic development of seven protected karst
areas in the Danube region. The idea is to achieve a balance
between the maintenance and strengthening of ecosystems
and their sustainable use.
Worldwide
We want to help preserve the diversity of natural habitats for
future generations. For many years now, we have therefore been
supporting projects and initiatives carried out by environmental
organizations near our locations around the world. One such
project, which is being conducted in cooperation with the
Global Nature Fund, is helping to restore severely damaged
mangrove forests in Asia. Environmental protection measures
and specific funding programs – near our production location
in Chennai in southern India, for example - are being
implemented to get the local population extensively involved
in the project. The goal here is to work with local partner
organizations to restore the mangrove forests to their original
state and then ensure that they remain protected.
We support a wide variety of initiatives that strengthen the
communities at our locations. The integration of refugees is a
very important issue in Germany, for example. Here, we support
not only labor market integration with our “bridge internships",
but also the social integration of people who have been forced
to flee their homes. A key aspect here involves improving
access to education with programs such as our Genius knowledge
community and the Daimler Children's University in Sindelfingen.
For our locations
+5
25,255
Mercedes-Benz Vans
+1
78,642
79,483
Daimler Trucks
+2
6%
1%
Funding through foundations
Our activities in areas such as sports, science and research are
carried out under the auspices of foundations. For example,
we use the Daimler and Benz Foundation to fund interdisciplinary
research that addresses issues related to the interaction
between humans, the environment and technology. We also
support interdisciplinary research projects with the Daimler
Fund in the Donors' Association. This fund has helped create
several endowed professorships, such as the one for "Elec-
trified Commercial Vehicle Drive Systems" at Esslingen Univer-
sity of Applied Sciences, the junior endowed professorship for
"Sensor Merging and Tracking Driver Assistance Systems" at
Ulm University of Applied Sciences, and the junior endowed
professorship for “Digital Transformation" at Freie Universität
Berlin.
We conduct an ongoing open dialogue with our employees in
order to ensure that ethical behavior continues to be established
in the company's daily business. We regularly address integrity
issues in our internal media and make a wide range of materials
available to our business units. During the year under review,
we introduced an app that provides information on integrity,
compliance and legal affairs. We also place great value on
face-to-face discussions. For this reason, we regularly conduct
individually designed dialogue events with employees at all
levels of the hierarchy, as well as with external stakeholders.
These events are held both in Germany and at our locations
abroad.
Communication measures
Our "Infopoint Integrity" is available to our employees around
the world as a central contact and advice center. The Infopoint
team offers advice on integrity-related issues in the daily working
environment and puts employees in touch with the right contact
partner if necessary. A worldwide network of local compliance
and legal contact persons is also available to our employees.
page 138
Contact and advice center
In addition, integrity and compliance requirements are impor-
tant criteria for the target achievement of our executives.
They are also part of the agreed objectives for the remuneration
of the Board of Management.
Our Integrity Code also defines requirements for executives and
managers, who are expected to serve as role models in terms
of ethical behavior and to provide employees with orientation.
To help them optimally fulfill their responsibilities, the new
web-based Integrity@Work training program includes a manage-
ment module that is compulsory for all management staff and
which communicates a shared understanding of the role of our
executives and managers with regard to integrity, compliance
and the law. Furthermore, selected seminars during the training
of new managers and the further training of senior executives
include modules on the subject of integrity.
Requirements for management staff
Our Integrity Code forms the basis of our business conduct.
The Integrity Code is one of the most important results of the
employee dialogues we have been conducting since 2011. It is
based on a shared understanding of values agreed upon with our
employees, and it lays out the principles for our everyday
business conduct. These principles are based on compliance
with laws. They include fairness, responsibility, mutual respect,
transparency and openness. The Code applies for all employees
of Daimler AG and the Group and is available in 23 langua-
ges. A guide is available on the Group's intranet to support
the employees in their application of the Code in everyday
situations, providing answers to frequently asked questions.
daimler.com/sustainability/integrity/at-a-glance.html
The Integrity Management unit is responsible for the long-term
promotion of the culture of integrity at our company. The unit's
experts for change management, corporate-responsibility
management, training, consulting and communication develop
innovative and employee-focused approaches that promote a
culture of integrity at the company. These experts also support
disseminators throughout the Daimler organization in their
integrity-related activities. The unit's goal is to further establish
and maintain a common understanding of integrity in order to
reduce risks and help ensure the sustained success of the com-
pany. The Head of Integrity Management reports directly to
the member of the Board of Management responsible for Integ-
rity and Legal Affairs.
139,947
Organization of integrity management
13,012
Because of their strategic significance, we have combined the
responsibilities for integrity, compliance and legal affairs within
a single area headed by a member of the Board of Management.
This division supports the business divisions and units in their
efforts to ensure that these issues remain an integral com-
ponent of their organizations. We view integrity and compliance
as firm elements of our corporate culture that contribute to
our company's lasting success and are already a natural part of
our daily business. The basis for this is our Integrity Code,
which defines guidelines for our everyday business conduct,
offers our employees orientation, and helps them make the
right decisions even in difficult business situations. The Integrity
Code is supplemented by other in-house principles and
guidelines.
Organizationally established at the highest level
For Daimler, integrity, compliance and legal responsibility are
not merely abstract concepts - they are inseparable from our
daily business activities. That is because only those who act
responsibly can achieve sustained success over the long term.
For us, this involves more than just obeying laws, as we also
seek to align our activities with shared principles and values.
Integrity, compliance and legal responsibility
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
132
Further information on social matters can be found in the
Non-Financial Report of this Annual Report.
pages 227 ff
More information on the projects promoted by the Group and
the activities related to our social commitment can be found in
the Daimler Sustainability Report and on our website under
"Sustainability". ④daimler.com/sustainability
The Laureus Sport for Good Foundation uses sports to help
achieve sustained improvement of the lives of socially disad-
vantaged or sick children and teenagers. A large number of
children and teenagers around the world have participated in
Laureus sports projects and in this manner have been able to
discover their own strengths and potential for the first time.
For example, donations from the Laureus Sport for Good Foun-
dation were used to fund the Indigo Youth Movement project in
South Africa. Here, a camp was set up near Durban in which
young villagers were taught how to skateboard. The camp
community offers them a protected environment in which they
can develop greater self-confidence and learn how to improve
their lives.
Integrity is one of the four corporate values that form the
foundation of our business activities. For us, integrity means
acting in accordance with ethical principles. This also includes
our determination to ensure compliance with all applicable laws,
internal regulations and voluntary commitments. We expect all
of our employees and business partners to adhere to the princi-
ples of our culture of integrity out of a sense of conviction. Our
goal is to make integrity a permanent part of our corporate
culture.
142,666
Mercedes-Benz Cars
+2
The goals associated with our social commitment
As a group of companies with global operations, we regard it
as both our responsibility and our obligation to support social
progress around the world. That is because for us, business
success and social responsibility go hand in hand. As a company,
we strive to contribute to the advancement of society and to
effectively shape, help and promote its development in order to
create recognizable benefits.
Social responsibility
Further information on employee matters can be found in the
Non-Financial Report of this Annual Report.
pages 222 ff
Health management and occupational safety
Healthy and motivated employees are important for our
competitiveness. We therefore promote the health and safety
of our employees through numerous programs that focus on
adequate protective measures, ergonomics, the provision of
medical care, nutritional advice, individual exercise courses
and much more. Daimler has a separate function - the Health
& Safety department - that is dedicated to promoting and
ensuring occupational health and safety. This department
defines, coordinates and monitors all measures associated
with occupational safety, occupational healthcare and the
promotion of good health and a healthy lifestyle.
We support our staff with training and continuing education
opportunities throughout their entire careers in order to
safeguard the long-term innovative capability and outstanding
performance of our workforce. Our range of qualification
measures includes practical training courses, e-learning, semi-
nars, workshops, specialist conferences and financial support
for employees who conduct a course of study while continuing
to work.
Employee qualification
We had 8,097 apprentices and trainees throughout the Group
at the end of 2017 (2016: 7,960). Of that number, 4,409 were in
a training program at Daimler AG (2016: 4,824). A total of 1,278
young people began their vocational training at Daimler during
the year under review (2016: 1,662), and 1,197 of them were
hired after completing their apprenticeships (2016: 1,448).
Daimler takes a holistic approach to securing young talent.
Our "Genius" initiative gives children and teenagers valuable
insights into future technologies and information about jobs in
the automotive industry. Along with technical and commercial
apprenticeships and dual courses of study, we also conduct
various activities that address young talent. In addition, we offer
extensive possibilities to personally interact with the company
via social media, hackathons, competitions and internships.
After university students graduate, we offer them attractive
opportunities to join our company directly or launch their careers
at Daimler by taking part in our global CAReer training program.
Securing young talent
Further details are provided in the Corporate Governance
Report on pages 203 ff of this Annual Report.
In 2017, we spent more than €60 million on donations to non-
profit institutions and on sponsorships of socially beneficial
projects. This does not include our foundations and corporate
volunteering activities or self-initiated projects.
In order to fulfill the requirements of new legislation on the equal
participation of women and men in management positions,
the Board of Management has set targets for the proportion of
women at the two executive levels below the Board of Manage-
ment and a deadline for achieving those targets. In setting all
targets, we have taken industry-specific circumstances into
consideration.
The statement "diversity shapes our future" underscores the
importance of diversity management as a strategic factor for
success at Daimler. The various skills and talents of our work-
force enable us as a global company to effectively reflect the
diversity of our customers, suppliers and investors around the
world.
Diversity management
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
130
+7
9,909
10,613
Group Functions & Services
+8
12,062
Daimler's more than 289,000 employees from over 160 countries
provide the Group with a vibrant mixture of cultures and ways
of life. We have committed ourselves to raising the proportion
of women in senior management positions at the Group to 20%
by the year 2020. The proportion of women in such positions has
continually risen in recent years to reach 17.6% at the end of
2017 (2016: 16.7%). Our instruments for supporting the targeted
promotion of women include mentorships, special events and
training measures, as well as employee networks.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
DaimlerWeCare
We also initiate a variety of aid and assistance projects around
the globe. For example, we implement measures to strengthen
communities and promote education, science, the arts and
culture, and nature conservation, and we also support initiatives
that improve road safety. 7 B.41 All of these issues are
addressed in various projects organized and managed under
the DaimlerWeCare brand. Our approach here is based
on three pillars: "For our employees", "For our locations" and
"Worldwide".
282,488
289,321
17/16
% change
Employees (December 31)
2016
2017
Daimler Group
Employees by division
B.40
126
It is very important to us that our various locations and the
people who work there identify with our activities. We therefore
support the efforts of our employees to promote the common
good, and we also work to improve the social environment in the
communities where we operate. In this context, we focus on
the one hand on fields of action that arise from our role as a
"good neighbor". On the other hand, we are involved in projects
in which we can contribute specific expertise and our core
competencies as an automaker.
* excluding non-consolidated associated companies and joint ventures
9.8%
1.4%
24,029
China*
17,899
+2
The ProCent initiative is another example of our employees'
commitment to society. In this initiative, Daimler employees
voluntarily donate the cent amounts of their net salaries to
socially beneficial projects. The company matches every cent
that is donated. More than €800,000 was collected in this
manner in 2017. One of the recipients of donations from the
ProCent initiative in 2017 was the Spitalverein Offenburg
voluntary hospital aid association, which used a donation of
around €10,000 to help build a new 250-square-meter play-
ground for young patients at Ortenau Hospital in Offenburg-
Gengenbach.
Since 2006, Daimler Financial Services has been staging a
Day of Caring that focuses on non-profit projects that help local
communities. Under the motto "Offering help where help is
needed", thousands of employees around the world once again
rolled up their sleeves and lent a hand in 2017 by leaving their
offices and picking up a paintbrush, hammer or garden rake.
A wide variety of social institutions and initiatives were
supported - from hospitals and kindergartens to the SOS
Children's Villages organization.
For our employees
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 131
Other
133
A culture of integrity
Compliance and legal responsibility
Daimler makes great efforts to reduce the fuel consumption
of its vehicles while enhancing their performance — thus
increasing driving pleasure and safety reserves. As early as 2015,
we were able to reduce the CO2 emissions of newly registered
vehicles from Mercedes-Benz Cars in the EU to an average of
123 grams per kilometer. This means we achieved our 2016
target of 125 g/km ahead of schedule. We were able to maintain
123 g/km in 2016 as well, despite a shift in our sales structure
toward medium-sized and large automobiles. Emissions rose to
125 g/km in 2017, primarily due to a further increase in the
proportion of sales in the EU accounted for by vehicles with high
levels of optional equipment. More detailed information can
be found in the "Non-Financial Report" section of this Annual
Report.
pages 218ff
Plan for the future of diesel vehicles
We are convinced that diesel engines will continue to be a firm
element of the drive-system mix, not least due to their low CO₂
emissions. The public debate surrounding diesel engines is
leading to increasing uncertainty among customers, however.
For this reason, the Daimler Board of Management approved a
comprehensive plan for diesel engines in July 2017.
The plan calls for an expansion of the current voluntary service
measures for vehicles in customers' hands, as well as the rapid
market launch of a completely new diesel engine family. As early
as March 2017, Mercedes-Benz began offering its compact-
class customers an improvement in NOx emissions for one
engine variant. In order to effectively reduce the emissions
of other model series, the Daimler Board of Management decided
in July to extend the service measures to include more than
three million Mercedes-Benz vehicles. The measures are being
carried out for most Euro 5 and Euro 6 vehicles in Europe
and other markets in close cooperation with vehicle registration
authorities. Daimler is investing around €285 million in these
measures. The service measures are being implemented at no
charge to customers. The company is also carrying out
voluntary service measures for V-Class customers. Additional
measures were added to the package following a summit
meeting between the government and the automotive industry
in August 2017. Additional information on this topic can be
found in the "Non-Financial Report" section of this Annual
Report.
pages 218ff
Conservation of resources: Consistently high recyclability
To make our vehicles more environmentally friendly, we are
working to continuously reduce the resources our automobiles
consume over their entire lifecycles.
During vehicle development, we also prepare a recycling concept
in which all components and materials are examined with a
view to their suitability for the various stages of the recycling
process. As a result, all Mercedes-Benz car models are
85 percent recyclable and 95 percent recoverable.
The key aspects of our activities in this area are:
the resale of tested and certified used parts through
the Mercedes-Benz Used Parts Center,
the remanufacturing of used parts, and
the workshop waste disposal system MeRSy
(Mercedes-Benz Recycling System).
Environmental protection in production
Our commitment to the environment is an integral component
of our corporate strategy, which focuses on increasing the
value of the company over the long term. For this reason, we
have established environmental management systems at our
manufacturing facilities with the goal of ensuring that we can
produce our vehicles safely, efficiently, at a high level of quality
and in an environmentally friendly manner that complies with all
legal stipulations. We also carry out environmental risk
assessments at all production locations in which the Group has a
majority interest in the ownership structure. We have achieved
a high level of air quality control, climate protection and resource
conservation (in terms of water consumption, waste manage-
ment and soil conservation), and we maintain this high level with
the help of Daimler Group standards. The environmental and
energy-related guidelines approved by the Board of Management
define the environmental and energy-related policy of the
Daimler Group. The guidelines also express our commitment to
integrated environmental protection that begins with the
assessment of the causes of environment problems and takes
into account the environmental effects of production pro-
cesses and products as early as the planning and development
phases. Additional information on this topic can be found in
the "Non-Financial Report" section of this Annual Report.
pages 214ff
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 129
=
The workforce
On December 31, 2017, the Daimler Group employed a total
of 289,321 men and women (2016: 282,488). As was forecast
in Annual Report 2016, the number of employees increased
slightly (+2%). This increase was primarily a result of the positive
business situation throughout the Group. Workforce numbers
increased at all divisions in 2017. 71 B.40
The number of employees in Germany increased from
170,034 in 2016 to 172,089 in the year under review. Whereas
employee numbers rose in the United States to 23,513
(2016: 21,857), workforce numbers remained constant in Brazil
at 9,800 (2016: 9,782) and in Japan at 10,016 (2016: 10,535).
7 B.39 Our consolidated subsidiaries in China had a total of
4,099 employees at the end of the year (2016: 3,696). At the
end of the year under review, Daimler AG employed a total of
148,953 men and women (2016: 148,704).
Around the world, we have combined in-house services, such
as those for financial processes, human resources (HR), IT and
development tasks, sales functions and certain location-specific
services, into shared service centers. Some of the shared service
centers are not consolidated because they do not affect our
financial position, cash flow or profitability; those companies
employed around 10,000 men and women at the end of 2017.
The Group's total workforce also does not include the
employees of companies that we manage together with Chinese
partners; on December 31, 2017, they numbered approxi-
mately 19,900 people (2016: 19,500).
Human resources strategy
The key aims of our human resources strategy are to further
increase our attractiveness as an employer and to safeguard the
competitiveness of our workforce. Because our executives
should motivate their employees to achieve top performance,
it is crucial that we further develop our management culture and
establish outstanding leadership capabilities in our manage-
ment. In addition, we want to take on social responsibility and
let diversity flourish in our global company.
High attractiveness as an employer
Our activities and measures for enhancing our attractiveness
as an employer are designed to enable us to recruit and retain
a sufficient number of specialized employees and qualified
managers in the global competition for talented staff. Our
primary objectives here are to ensure attractive and fair
compensation and to establish and maintain a work culture that
enables outstanding performance and a high level of motivation
and satisfaction among our employees and management staff.
Today's living and working conditions require working times to
be flexibly organized in accordance with individual needs. Our
approach is therefore to challenge our employees to achieve
top performance and support their efforts to do so, rather than
focusing on their mere presence at work. For this reason,
we also seek to improve performance by helping employees
reconcile their professional and personal responsibilities.
B.39
Employees at 12/31/2017
By region
Germany
59.5%
Slight increase in the number of employees
Car CO2 emissions: 125 g/km
A vehicle's environmental impact is largely decided in the first
stages of development. The earlier we integrate environmentally
responsible product development (design for environment or DfE)
into the development process, the more efficiently we can
minimize the impact on the environment.
pages 218 ff
A comprehensive approach to environmental protection
Protecting the environment is a primary corporate objective
of the Daimler Group. Environmental protection is not separate
from other objectives at Daimler; instead, it is an integral
component of a corporate strategy aimed at long-term value
creation. The environmental and energy-related guidelines
approved by the Board of Management define the environmental
and energy-related policy of the Daimler Group. This expresses
our commitment to integrated environmental protection that
begins with the underlying factors with an impact on the
environment, assesses the environmental effects of production
processes and products in advance, and takes these findings
into account in corporate decision-making.
Vehicles not in use could store energy, and a bidirectional
charging system would allow cars with surplus energy to return
it to the power grid. In this manner, smart is assuming
responsibility for an important function for the energy transition.
Electric trucks for heavy-duty distribution transportation
In July 2016, we became one of the first commercial vehicle
manufacturer to present an all-electric truck for heavy-duty
distribution transportation. The planned key specifications of
this Mercedes-Benz vehicle are as follows: a battery output
of 212 kWh, a range of up to 200 kilometers and a payload of
12.8 metric tons with a gross vehicle weight of 26 metric tons.
Our electric truck concept met with a very positive response,
as evidenced by the many inquiries we received from our
customers after we presented the truck at the IAA Commercial
Vehicles Show in October 2016. We forged ahead with the
development, establishment and testing of our Customer Inno-
vation Fleet in 2017. In 2018, we intend to begin practical tests
of our Mercedes-Benz Electric Truck Innovation Fleet for heavy-
duty distribution transportation with customers under real-life
conditions. These tests will allow us to gain further knowledge
about logistics processes and operating costs with electric
trucks. The results will be incorporated into new business models
for all-electric trucks for heavy-duty distribution transportation
within cities.
All-electric trucks are a component of Daimler Trucks' com-
prehensive electric offensive, which includes the light-duty FUSO
eCanter, which we launched in a small production series on a
global scale in July 2017. The first 150 vehicles are destined for
selected customers in Europe, Japan and the United States.
We plan to deliver more than 500 of these trucks to customers
over the coming years. All the experience we gain with the small
production series will flow into the further development of the
battery-electric Canter, with plans for volume production to
begin in 2019. The eCanter can make a contribution to reducing
noise in large cities.
During the Tokyo Motor Show in October 2017, Daimler
announced that it will completely electrify its full range of FUSO
trucks and buses in the years ahead. With E-FUSO, we are
now the first truck manufacturer to launch a product brand for
electric mobility with trucks and buses. The E-FUSO Vision One,
which was presented for the first time in Tokyo, is a concept for
an all-electric heavy-duty truck with a GVW of approximately
23 metric tons and a payload of around 11 metric tons - which
is only two tons less than the payload of the diesel version.
With a battery capacity of 300 kWh, the E-FUSO Vision One has
a range of up to 350 kilometers. One potential application for
the electric heavy-duty truck is regional inner-city and intra-city
distribution. Growing customer interest, the development of
the necessary infrastructure, and new regulatory measures are
promoting the electrification of road transport. In this situation,
it may be possible to launch the series-produced version of the
E-FUSO Vision One within the next four years in highly developed
markets such as Japan or Europe.
In the future, Daimler plans to offer its commercial vehicle
customers a comprehensive lineup of battery-electric vehicles
ranging from vans and light trucks to heavy-duty distribution
trucks and electric city buses.
Electric vehicles from Mercedes-Benz Vans
Mercedes-Benz Vans plans to offer all of its commercial van
models with electric drive systems. This has already started
with the mid-size eVito, which has been available for ordering
since the end of November 2017; deliveries are scheduled to
start in the second half of 2018. The eVito is the second all-
electric production model from Mercedes-Benz Vans; the first
was the Vito E-Cell from 2010. With an installed battery capacity
of 41.4 kWh, the new eVito will have a range of up to 150 kilo-
meters. Even under unfavorable conditions, such as low outside
temperatures and with a full payload, the van will have a range
of up to 100 km. The mid-size van is thus perfect for inner-city
deliveries and other commercial operations, as well as for
passenger transport. The battery can be fully charged in around
six hours, and dynamic performance is ensured by an output
of 84 kW and torque of up to 300 Nm. In terms of top speed,
customers can choose between two options: The first is a
maximum speed of 80 km/h, which meets all requirements in
city traffic and metropolitan areas, while also conserving
energy and increasing the vehicle's range. If things need to move
faster, the customer can choose a top speed of up to 120 km/h.
The electric Vito is to be followed by the eSprinter in 2019; the
electric van product range will then be rounded out by the Citan.
The holistic electric drive strategy at Mercedes-Benz Vans
focuses not only on the electric van itself, but also on a tech-
nological ecosystem that is optimally aligned with customers'
business needs. This holistic strategy provides for an innovative
complete system solution that covers the entire value chain
for commercial applications. For this reason, strategic partners
and their sector expertise are being incorporated into the
development process at an early stage. One example of this is
our partnership with the Hermes logistics services company.
This partnership was launched with pilot programs in Hamburg
and Stuttgart at the beginning of 2018. After those programs
are completed, we want to spread the application of the electric
fleet, which is to be used for parcel deliveries and encompass
a total of 1,500 electric Vito and Sprinter vans by 2020, to other
urban areas. The strategic partnership also involves the joint
development of a concept for an efficient charging infrastructure
at Hermes logistics centers, as well as IT services to ensure
optimum management of the electric fleet.
Intelligent charging solutions for electric mobility
For the electrification of the drivetrain, we are employing a holis-
tic approach that includes both electric vehicles and a broad
range of services needed for electric mobility. Our approach
ranges from the provision of green electricity to intelligent
charging solutions for the home that include customized services
and home energy storage units operating in tandem with
photovoltaic units on roofs, for example.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 127
In March 2017, Daimler acquired an equity interest in the
American charging solutions provider, ChargePoint Inc. This
investment ensures the Group's access to other customer-
focused electric mobility services. ChargePoint offers solutions
for every segment of the electric mobility charging ecosystem,
which includes companies, the retail sector, public institutions,
fleet customers and private households. In terms of technology,
ChargePoint makes use of the standardized Combined Charging
System (CCS) in Europe, which will enable it to offer maximum
compatibility for future electric vehicle models of all brands.
With the establishment of the IONITY joint venture, the BMW
Group, Daimler, Ford Motor Company and the Volkswagen
Group with Audi and Porsche have laid the foundation for the
creation of the most effective rapid-charging network for
electric vehicles in Europe. The goal is to install about 400
rapid-charging stations along major routes in Europe by 2020.
Our vision of accident-free driving
Vehicle safety is one of our core areas of expertise and a key
component of our product strategy. The Mercedes-Benz brand
has been shaping the development of safety systems for
decades. The company's innovations, especially those for pro-
tecting vehicle occupants and other road users, have saved
countless lives. Today, Daimler continues to set standards with
regard to safety. Our vision of accident-free driving will
continue to motivate us to make mobility as safe as possible
for everyone in the future.
Partially automated driving in the upgraded S-Class
With the upgraded S-Class, Mercedes-Benz has taken a further
step toward autonomous driving. For example, new and modified
features have been added to the DISTRONIC active proximity
control and the Active Steering Assist systems. Another highlight
in the new S-Class is the route-based speed adaptation system,
which uses map and navigation data to control handling. With
these and other intelligent equipment features, the new luxury
sedan marks another major step toward autonomous driving.
Improved systems with a range of up to 250 meters enable
even more comfortable automated driving on all types of roads.
In addition, Mercedes-Benz uses Active Body Control with
ROAD SURFACE SCAN system and the CURVE curve-tilting func-
tion to improve ride comfort even further with the help of
intelligent sensors.
Cooperation with Bosch
During the year under review, we entered into a partnership with
Bosch that focuses on the joint development of software and
algorithms for a highly automated driving system. The objective
here is to bring highly automated and driverless driving to city
streets by the beginning of the next decade. The project com-
bines the comprehensive vehicle expertise of Daimler with the
system and hardware expertise of the world's biggest automotive
supplier. The resulting synergies are expected to lead to the
early series production of a safe and secure technology.
By introducing highly automated and driverless driving to the
urban environment, Bosch and Daimler aim to improve the flow
of traffic in cities, enhance safety on the road and provide an
important building block for the traffic system of the future.
Among other things, the technology will enhance the appeal
of car sharing. It will also allow people to make the best possible
use of their time in cars and will open up new mobility
opportunities for people without a driver's license, for example.
The main objective is to develop a production-ready system
that will enable cars to drive in highly automated mode in cities.
The idea here is that the vehicle should come to the driver,
rather than the other way round. Within a predefined area of a
city, customers will be able to order a car-sharing vehicle or
a robot taxi with their smartphones; the vehicle will then drive
driverless to the user's location.
X-ray vision for crash tests
The Mercedes-Benz Vehicle Safety unit is cooperating with
various partners from the fields of research and industry on the
use of ultra-fast X-ray technology to examine specific areas of
the vehicle body and the interior during a crash test. The X-ray
images can be combined with computer-aided simulation
models to improve the forecasting reliability of crash simulations.
In addition to analyzing the deformation of vehicle bodies and
components, the goal here is to develop alternative passenger
restraint concepts. Interdisciplinary teams in the project are
addressing the challenges of new mobility systems - for example,
the issue of passive safety in-conditionally automated driving
systems.
Active Brake Assist 4
An active emergency braking system with pedestrian recognition
that can prevent many accidents and protect more vulnerable
road users is being used for the first time in Mercedes-Benz
trucks. It will also be introduced in Mercedes-Benz and Setra
touring coaches in 2018. The new Active Brake Assist 4 (ABA 4)
system with pedestrian recognition uses acoustic and visual
signals to warn the driver of a potential collision with pedestrians,
in which case it also automatically triggers partial braking.
Active Brake Assist 4 with pedestrian recognition is based on
a new generation of radar technology that is also used in current
Mercedes-Benz car models. This electronically scanning multi-
mode system uses both long and short-range radar. The long-
range radar detects vehicles in multiple lanes and stationary
obstacles at a distance of up to 250 meters in a direct line in
front of the coach. It also registers single-track vehicles, such as
bicycles, at a distance of up to 160 meters, and pedestrians
at up to 80 meters. The short-range radar has a maximum range
of 70 meters and can even recognize pedestrians and vehicles
in front of the coach but at each side of it.
128
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Europe, excluding Germany
USA
We use various event formats to get employees to think about
integrity by approaching the issue from different perspectives.
At these events, we also increase the participants' awareness
of the importance of making ethical decisions. For example,
we conduct business simulations that enable employees to
experience and discuss the relevance of integrity to daily
business operations from a new viewpoint. The things we
focused on in 2017 included events that addressed the topic of
integrity in technical fields. We also have a network of integrity
contact persons who help the business units address specific
issues in a targeted manner. In addition, we produce target-
group-specific materials for managers who wish to raise aware-
ness of integrity and potential ethical dilemma situations in
their departments.
Daimler Financial Services
Events after the
Reporting Period
As a result of the positive development of earnings, we once
again achieved a very good return on net assets of 22.9%
(2016: 19.1%). We therefore once again earned substantially more
than our targeted minimum return on capital employed (8%).
This is reflected by our value added of €7.2 billion, which was
significantly higher than the prior-year figure (2016: €5.2 billion).
In line with the ongoing high level of earnings, we continue
to have very sound key financial metrics. This was confirmed
by the rating agencies in their publications during the year. In
early February 2017, Moody's raised Daimler's long-term credit
rating from A3 to A2 and the short-term rating from P-2 to P-1.
And in November 2017, the Canadian rating agency DBRS also
raised the long-term rating from A (low) to A.
The Group's overall equity ratio and the equity ratio of the indus-
trial business increased in the year under review to 24.0% and
46.4% respectively (2016: 22.9% and 44.7%). The net liquidity of
the industrial business decreased to €16.6 billion at the end
of 2017 (2016: €19.7 billion). This decrease is almost entirely
explained by an extraordinary contribution of €3 billion to the
German pension plan assets of Daimler AG. Mainly for the same
reason, the free cash flow of the industrial business - the
parameter we use to measure financial strength - decreased
to €2.0 billion (2016: €3.9 billion). Without this effect, at
€5.0 billion the free cash flow of the industrial business would
have been higher than in the previous year and higher than
the dividend distribution in the year 2017, despite a significant
increase to in advance expenditure for new products and tech-
nologies.
B | COMBINED MANAGEMENT REPORT | EVENTS AFTER THE REPORTING PERIOD
135
We want our shareholders to participate appropriately in the
very good level of earnings achieved by Daimler once again
in 2017. At the Annual Shareholders' Meeting on April 5, 2018,
the Board of Management and the Supervisory Board will
therefore propose a dividend of €3.65 per share (prior year:
€3.25). The dividend distribution will thus increase to the
record level of €3.9 billion (prior year: €3.5 billion).
On the basis of our profitable core business, we increased the
expenditure for securing our future in 2017 from an already very
high level by a total of €2.0 billion to €15.5 billion: €8.7 billion for
research and development (2016: €7.6 billion) and €6.7 billion for
investment in property, plant and equipment (2016: €5.9 billion).
The Daimler Group's operating profit (EBIT) of €14.7 billion
was significantly higher than in the previous year (€12.9 billion).
The divisions Mercedes-Benz Cars, Daimler Trucks and Daimler
Financial Services all achieved significant EBIT growth, while
Mercedes Benz Vans and Daimler Buses maintained their high
level of prior-year earnings. In the overall vehicle business, return
on sales we achieved our target value of 9%. Daimler Financial
Services' return on equity of 17.6% surpassed its target of 17%.
Brazil
Japan
3.5%
Since the end of the 2017 financial year, there have been no
further occurrences that are of major significance for Daimler.
The course of business in the first weeks of 2018 confirms the
statements made in the “Outlook" section of this Annual Report.
This substantial expenditure is necessary because we, as the
inventor of the automobile, intend to play a major role in shaping
the mobility of the future. To achieve this goal, we are increas-
ingly focusing on CASE - the four strategic areas for the future:
connected, autonomous, shared and services, and electric.
We intend to be leaders in each of these areas and to utilize
additional potential by linking up the four areas.
We see great growth opportunities in the area of electric
mobility in particular. By the year 2022, we aim to electrify each
segment across the entire Mercedes-Benz portfolio. Our goal
is to offer our customers at least one electrified alternative in
each segment - from the compact car to the large SUV. In total,
we plan to launch more than 50 electrified versions, including
more than ten fully electric vehicles, the plug-in hybrid versions
and the models with 48-volt technology. Under the new brand
EQ, which stands for electric intelligence, we offer Mercedes-
Benz Cars' customers both vehicles and services in connection
with electric mobility. We are progressing with electrification
also with our commercial vehicles. With the FUSO eCanter, our
first fully electric light-duty truck from a limited production
series, we started deliveries to customers in 2017; unlimited
large-series production is to start in 2019. The Mercedes-Benz
electric truck concept vehicle shows how fully electric transport
is possible with a gross vehicle weight of up to 26 tons. Electric
drive will soon be available also for vans from Mercedes-Benz:
The eVito will be available as of the second half of 2018 and
the eSprinter is to follow in 2019. And Daimler Buses plans to
put a fully electric bus on the road in 2018.
With the four strategic areas for action - CORE, CASE, CULTURE
and COMPANY - we have set the course for a successful
future. Against this backdrop, we look to the coming years with
great confidence, and aim to continue our profitable growth.
In order to successfully make the transition from vehicle pro-
ducer to full-range supplier of innovative mobility solutions,
we must adapt our company to face the new challenges. In doing
so, we aim to combine the flexibility and risk culture of the
digital industry with the perfection and innovativeness of our
company's strong traditions. Together with our workforce,
we are therefore developing a new and flexible corporate culture
under the roof of "Leadership 2020". In addition, we are work-
ing in "Project Future" on how we can change our divisions into
legally independent entities, in order to further focus and
strengthening the divisional structure of the Daimler Group.
3.4%
8.1%
or financed by Daimler, the Daimler Financial Services division
also continued to grow in 2017. The Daimler Group's revenue
therefore also increased significantly: by 7% to €164.3 billion.
Adjusted for exchange-rate effects, revenue actually grew by 8%.
In the year under review, we increased our unit sales to a total
of 3.3 million cars and commercial vehicles (2016: 3.0 million),
enabling us to further strengthen our market positon in the core
business. Thanks to numerous new and successful products,
Mercedes-Benz Cars and Mercedes-Benz Vans sold more vehicles
than ever before. The consistency of our growth path is dem-
onstrated by the fact that December 2017 was the 58th consec-
utive record month for sales to end-customers at Mercedes-
Benz Cars. The Daimler Trucks and Daimler Buses divisions also
significantly increased their unit sales. And driven above all
by the positive development of the automotive business and a
further increase in the proportion of those vehicles leased
Compliance is an indispensable part of the culture of integrity
at Daimler. For us, compliance means acting in accordance
with laws and regulations. Our objective here is to ensure that
all Daimler employees worldwide are always able to carry out
their work in a manner that is in compliance with applicable laws,
regulations, voluntary commitments and our basic values, as
is set out in binding form in our Integrity Code. Our compliance
activities focus on adhering to all applicable anti-corruption
regulations, the maintenance and promotion of fair competition,
adherence to legal and regulatory stipulations related to product
development, the observance of and respect for human rights,
compliance with data protection laws and our own data pro-
tection policy, adherence to sanctions and the prevention of
money laundering. Our Legal and Compliance department
advises and supports all of our corporate units worldwide with
regard to their business operations, processes and services,
in order to minimize legal and business risks.
Our Compliance Management System (CMS) serves
as the foundation
Our Compliance Management System (CMS) is designed to
prevent inappropriate or illegal behavior by Daimler and its
employees. The measures needed for this are defined by Group
Compliance and the Legal department in a process that also
takes the company's business requirements into account. Our
CMS consists of basic principles and measures that aim to
ensure compliant behavior throughout the company. The CMS
is based on national and international standards and is
applied on a global scale at all Daimler AG units and majority
holdings. The systematic minimization of compliance risks is
also extremely important, and for this reason we analyze and
assess the compliance risks of all our business units every year.
These analyses are based on centrally compiled information on
all business units; specific additional details are taken into
account in line with the given risk assessment. The results of the
analyses form the basis of our risk management.
14.3%
More detailed information on the Daimler Compliance Manage-
ment System can be found in the "Non-Financial Report"
section of this Annual Report.
pages 229 ff
In order to ensure an independent external assessment of
our Antitrust Compliance Program, KPMG AG Wirtschafts-
prüfungsgesellschaft audited the Compliance Management
System for antitrust law in accordance with the 980 standards
of the Institute of Public Auditors in Germany. This audit,
which was based on the principles of appropriateness and
effective implementation, was successfully completed at
the end of 2016.
134 B❘ COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION
Overall Assessment of the Economic Situation
In the opinion of the Board of Management, the Daimler Group's
economic situation continues to be very satisfactory at the
time of publication of this Annual Report. In recent years, we
have implemented our strategy effectively and with great
determination. This has led us onto a stable and profitable growth
path, along which we have made great progress, also in the
past year. We will continue along that path in order to remain
sustainably competitive and profitable. Against this backdrop,
we intend to take the lead in shaping the fundamental transfor-
mation process of the automotive industry.
For that purpose, we have prioritized four strategic areas for
action, which are closely interrelated:
1. CORE (strengthening the global core business)
2. CASE (leading in new future fields)
3. CULTURE (adapting the corporate culture)
4. COMPANY (strengthening the divisional structure)
We continue to expand our core business as a basis for us to
take a leading role in the new CASE areas. CORE and CASE are
inseparably connected and mutually dependent. In this context,
we need a corporate culture that strengthens and supports both
areas. In order to enhance our focus on markets and custom-
ers and to facilitate cooperation with other companies, we are
reviewing whether we should make our divisions even more
independent.
We succeeded in strengthening our core business also in the
year 2017, with significant increases in the Daimler Group's rev-
enue, unit sales and EBIT. The growth targets we announced at
the beginning of the year were in some cases actually surpassed.
Daimler Financial Services is a pioneer in the field of shared
and services with its mobility services. We invested in the
expansion of these businesses in 2017 and we aim to achieve
further growth with them. The total number of registered
users of our mobility services increased to 17.8 million at the
end of 2017. With car2go, Daimler is the world's leading
company for flexible car sharing. The Daimler subsidiary mytaxi
is the market leader for taxi-ordering apps in Europe, and
with moovel, we offer our customers a platform with which they
can optimally compare, combine, book and pay for various
mobility services.
With the upgraded S-Class, Mercedes-Benz has taken another
step towards automated driving. For example, Active Distance
Assist DISTRONIC and Active Steering Assist have been further
developed with new and modified functions. Daimler Trucks
also has a leading position in the field of autonomous driving.
Platooning concepts, electronically linking up several trucks
driving in a convoy, are gaining importance as an intermediate
stage. We successfully tested the system under real-life condi-
tions in Europe on several occasions in 2016, and we plan to test
platooning in real operation with fleet customers in the United
States as of 2018.
2,651
2016
248
2017
Ola Källenius
117
2016
938
245
2017
235
2,345
Wilfried Porth
2017
238
156
10,280
2016
156
247
9,597
Britta Seeger
Hubertus Troska
2017
122
1,072
2016
2017
282
654
163
2016
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 143
Payments of these retirement pensions start upon request
when the term of service ends at or after the age of 60, or are
paid as disability pensions if the term of service ends before
the age of 60 due to disability. The respective agreements pro-
vide for 3.5% annual increases starting when benefits are
Until the end of 2005, the pension agreements of Board
of Management members included a commitment to an annual
retirement pension, calculated as a proportion of the former
base salary and depending on the number of years of service;
an analogous implementation of this commitment for the
corresponding hierarchical level applied to Wilfried Porth for
the period prior to his serving as a member of the Board of
Management. Such pension claims remained in effect after the
conversion to the Pension Capital system but were frozen at
the level reached at the beginning of 2006.
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse/
registered partner or dependent children is/are entitled to the
full committed amount in the case of the Pension Capital
system, and to the credit amount reached plus an imputed
amount until the age of 62 in the case of the Daimler Pensions
Plan. If a Board of Management member passes away after
retiring for reason of age, in the case of payment of twelve
annual installments, the heirs are entitled to the remaining
present value. In the case of a pension with benefits for surviving
dependents, the spouse/registered partner or dependent
children is/are entitled to 60% of the discounted terminal value
(Pension Capital), or the spouse/registered partner is
entitled to 60% of the actual pension (Daimler Pensions Plan).
- in twelve annual installments, whereby interest accrues
on each partial amount from the time payments commence
until the payout is complete (Pension Capital 6% or 5%;
Daimler Pensions Plan in accordance with applicable law);
- as an annuity with annual increases (Pension Capital 3.5%
or in accordance with applicable law; Daimler Pensions Plan
in accordance with applicable law).
- as a single amount;
Payments under the Pension Capital system and the Daimler
Pensions Plan can be made in three ways:
Under this system, each Board of Management member is
credited with a capital component each year. This capital com-
ponent comprises an amount equal to 15% of the sum of
the Board of Management member's fixed base salary and the
total annual bonus for the respective financial year on the
balance sheet date, multiplied by an age factor equivalent to
a rate of return of 6% until 2015 and 5% as of 2016 (Wolfgang
Bernhard and Wilfried Porth: 5% for all years). These contribu-
tions to pension plans are granted only until the age of 60.
The benefit from the pension plan is payable to surviving Board
of Management members at the earliest at the age of 60,
irrespective of their age upon retirement. If a member of the
Board of Management retires due to disability, the benefit
is paid as a disability pension, even before the age of 60.
The Pension Capital system was used from the beginning of 2006
until the end of 2011. The pension agreements of active Board
of Management members that were valid until that time were
modified accordingly. All Board of Management members
newly appointed during that period were subject exclusively to
the Pension Capital system.
The Supervisory Board of Daimler AG has approved the appli-
cation of this system for all members of the Board of Manage-
ment newly appointed since 2012. The amount of the annual
contributions results from a fixed percentage of the base
salary and the total annual bonus for the respective financial
year calculated as of the balance sheet date. This percentage
is 15%. This calculation takes into consideration the targeted
level of retirement provision for each Board of Management
member - also according to the period of membership - and
the resulting annual and long-term expense for the Company.
The contributions to the retirement provision are granted until
the age of 62. The benefit from the pension plan is payable
to surviving Board of Management members at the earliest
at the age of 62, irrespective of their age upon retirement. If
a member of the Board of Management retires due to dis-
ability, the benefit is paid as a disability pension, even before
the age of 62.
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as
for executives: the "Daimler Pensions Plan". This retirement
benefit system features the payment of annual contributions
by Daimler, but is oriented toward the capital market. Daimler
makes a commitment to guarantee the total of contributions
paid, which are invested in the capital market according to a
precautionary investment concept.
Retirement provision
Commitments upon termination of service
The granting of non-cash benefits in kind, primarily the reim-
bursement of expenses for security precautions and the
provision of company cars, resulted in taxable benefits for
the members of the Board of Management in 2017 as
shown in table 7 B.52.
1 (2016: including an anniversary bonus of €418,464)
2 Board of Management remuneration paid until Feb. 10, 2017
3 Board of Management remuneration paid from March 1, 2017
4 For the fulfillment of disclosure obligations pursuant to Section 285
No. 9a of the German Commercial Code (HGB), this amount is
reduced by €197,508 for the year 2017 (2016: €208,136). The cor-
responding fringe benefits were granted and borne by a subsidiary
and are thus not included in the remuneration to be disclosed in
the annual financial statements of the parent company, Daimler AG.
2,347
1,703
Total
129
Prof. Dr. Thomas Weber
4,909
107
Bodo Uebber
635
470
received (with the exception that Wilfried Porth's benefits are
adjusted in accordance with applicable law). The agreements
include a provision by which a spouse of a deceased Board of
Management member is entitled to 60% of that member's
pension.
That amount can increase by up to 30 percentage points
depending on the number of dependent children.
Departing Board of Management members with pension agree-
ments (pension commitments) modified as of the beginning of
2006 receive, for the period between the end of the last contract
period and reaching the age of 60, payments in the amounts
of the pension commitments granted as described in the pre-
vious section. Departing Board of Management members are
also provided with a company car, in some cases for a defined
period. These payments are made until the age of 60, possibly
reduced due to other sources of income, and are subject to
annual percentage increases described above in the explanation
of these pension agreements.
Service costs for pension obligations according to IFRS amounted
to €2.0 million in financial year 2017 (2016: €2.8 million). The
present value of the total defined benefit obligation according
to IFRS amounted to €82.7 million as of December 31, 2017
(December 31, 2016: €95.7 million). Taking age and period of
service into account, the individual entitlements, service
costs and present values are shown in the table.
71 B.53
2,860
102
3,230
367
46
42,738
43,533
708
1,050
1,050
2017
Martin Daum³
2016
2017
Renata Jungo Brüngger
Dr. Wolfgang Bernhard²
2017
Dr. Dieter Zetsche
tions (for pension,
pension capital and
Daimler Pensions Plan)
Present value of obliga-
Service cost
(for pension, pension
capital and Daimler
Pensions Plan)
Annual pension
(as regulated until 2005)
as of age 60
In thousands of euros
Individual entitlements, service costs and present values for members of the Board of Management
B.53
In connection with the early termination of the Board of
Management membership of Dr. Wolfgang Bernhard by mutual
agreement, effective midnight on February 10, 2017, it was
agreed that the payments to be made by the Company pursuant
In the event of an early termination of the service contract, both
the short-term and the delayed medium-term component
(deferral) of the annual bonus, and the proceeds from the long-
term PPSP, are paid out not when the contract is terminated
but instead at the points in time agreed upon in the service
contract or in the terms and conditions of the PPSP plan.
Commitments upon early termination of service
In the case of early termination without an important reason,
Board of Management service contracts include commitments
to payment of the base salary and provision of a company car
until the end of the original service period at a maximum. Such
persons are only entitled to payment of the annual bonus pro
rata for the period until the end of the contract of service or of
the Board of Management membership takes effect. Entitle-
ment to payment of the performance-related component of
remuneration with a long-term incentive effect (PPSP) that
has already been allocated is defined by the conditions of the
respective plans. To the extent that the payments described
above are subject to the provisions of the so-called severance
cap of the German Corporate Governance Code, their total
including fringe benefits is limited to double the annual remu-
neration and may not exceed the total remuneration for the
remaining period of the service contract.
2016
2016
- the retirement pension expense in 2016 (service costs in 2016).
4,611
2017
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min.
2016
max.
2017
2016
Jan. 1 Dec. 31
Head of Mercedes-Benz Cars
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Chairman of the Board of Management,
Dr. Dieter Zetsche
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in the reporting year
Total limit¹ for components of remuneration
Total remuneration
Retirement pension expense (service costs)
Total
(plan period of 4 years)
Long-term variable remuneration
Jan. 1 - Feb. 10
min.
max.
2,008
2,008
Hubertus Troska4
1,004 1,004
412
0 2,360
1,004 1,004
618
167
167
2,626 2,175 2,175 2,175
101
101
101
(50% of annual bonus, medium-term)
955
9
9
131
167
92
92
92
824
2,008 2,008
9
239
(50% of annual bonus, short-term)
Deferral
Taxable non-cash benefits and
other fringe benefits
Total
1,481
1,781
2016
2017
Total
14,716
264
300
2016
2017
Prof. Dr. Thomas Weber
17,007
649
275
2016
17,263
690
275
2017
Bodo Uebber
1 The amounts of the present values are primarily due to the low level of the relevant discount rate.
2 Dr. Bernhard pro rata until Feb. 10, 2017
3 Mr. Daum pro rata from March 1, 2017
1,973
82,711
Base salary
In thousands of euros
Benefits granted
B.54
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2016 (payable in 2020), and
the half of the share-based annual bonus payable in 2018 for
2016 at the value for target achievement of 100%,
the taxable non-cash benefits and other fringe benefits in 2016,
the half of the annual bonus payable in 2017 for 2016 at the
value for target achievement of 100%,
the base salary in 2016,
The total of "benefits granted" for financial year 2016
is calculated from
Annual variable remuneration
The following tables show for each individual member of the
Board of Management on the one hand the benefits granted
for the financial year and on the other hand the payments
made in or for the reporting year and the retirement pension
expense in or for the year under review in accordance with
the recommendations of Clause 4.2.5 paragraph 3 of the German
Corporate Governance Code.
Payments made to former members of the Board of
Management of Daimler AG and their survivors
Payments made in 2017 to former members of the Board of
Management of Daimler AG and their survivors (including
payments made to Dr. Bernhard after termination of his Board
of Management membership) amounted to €19.0 million
(2016: €15.6 million). Pension provisions according to IFRS for
former members of the Board of Management and their
survivors amounted to €270.5 million as of December 31, 2017
(2016: €252.9 million).
In 2017, no advances or loans were made to members of the
Board of Management of Daimler AG.
Loans to members of the Board of Management
Sideline activities of Board of Management members
The members of the Board of Management should accept
management board or supervisory board positions and/or any
other administrative or honorary functions outside the Group
only to a limited extent. Furthermore, they require the consent
of the Supervisory Board before commencing any sideline
activities. This ensures that neither the time required nor the
remuneration paid for such activities leads to any conflict
with the members' duties to the Group. Insofar as such sideline
activities are memberships of other statutory supervisory
boards or comparable boards of business enterprises, they are
disclosed in the notes to the annual financial statements of
Daimler AG, which is published on our website. In general, Board
of Management members have no right to separate remuner-
ation for board positions held at other companies of the Group.
to the contract of service would continue to be granted until
the end of the original contract of service on February 28, 2018.
Accordingly, Dr. Bernhard receives a base salary of €869,744,
short-term variable remuneration of €721,430 (value at the con-
tract date to be paid in 2018), medium-term variable remuner-
ation of €721,430 (value at the contract date to be paid in 2019
with application of the bonus/malus rule), and fringe benefits
of €11,570. Service cost amounts to €365,244 (in accordance
with Section 285 No. 9a of the German Commercial Code (HGB)
€306,077). Entitlement relating to long-term variable remuner-
ation (PPSP) and the company pension are paid out pursuant
to the contractual provisions.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
144
95,693
2,826
Details of Board of Management remuneration in 2017
pursuant to the requirements of the German Corporate
Governance Code
366
50
171
Dr. Wolfgang Bernhard¹
7,610
2,570
40,838
1,516
1,516
2,008
2016
8,617
2,653
39,315
1,978
2017
1,978
2017
Dr. Dieter Zetsche
(2017: at share price €67.49)
(2016: at share price €62.94)
Medium-term
Number Value when granted
(annual bonus)
Total
Remuneration (PPSP)
Variable remuneration
Overall target
achievement
final number of
phantom shares
times share price
at end of plan
(amount paid out
in €)
Development of
Daimler share price
from beginning
until end of plan,
maximum 2.5 times
the issue price
(share price in €)
1 Amount paid out including dividend-equivalent
payments of PPSP 2013
2,008
92
90
90
781
2016
3,455
1,043
15,446
800
800
812
2017
Renata Jungo Brüngger
2016
3,054
1,043
15,446
667
667
677
2017
Martin Daum²
3,216
1,148
18,236
622
622
824
2016
272
Performance factor
0% - 200% (from
which is derived
the final number of
phantom shares
with the share price
at beginning of plan)
590
Grant value (from
which is derived
the preliminary
number of phantom
shares with the
share price at
beginning of plan)
Base salary
50
50%
75
base salary
100
125
150
Maximum
300
(deferral)
315%
350
short-term
+20% of the base salary
ACTUAL
achievement, the total cap¹ applies.
+5% of the base salary
50%
With more than 250% target
400
197% of the base salary
450
ACTUAL
Maximum 235% of the base salary
+ 10% of the base salary
+25% of the base salary
200
175 medium-term
25
0
50% medium-term
In thousands of euros
Board of Management remuneration in 2017
B.51
1 Positive target achievement of the defined performance criteria "unit-sales
development, revenue development, transformation in future technologies,
change in the corporate culture (Leadership 2020)"
Financial success
parameters 0% - 200%
Joint performance
+/- 25%
Non-financial success parameters
+/- 10%
targets -25% - 0% (not applied in 2017)
Non-achievement of compliance
0
0
100
50% short-term
100%
ACTUAL
150
base salary
ACTUAL
165 %
191% ACTUAL
200%
Maximum
172% of the
200
200% of the
250
(deferral)
250%
Short-term
Britta Seeger
590
1,028
10,204
151,157
7,667
7,667
7,784
2016
2017
Total
3,053
1,092
17,345
590
33,322
590
2016
2017
Dr. Thomas Weber
3,559
1,229
19,528
701
701
928
2016
4,057
1,246
781
7,665
5,789
5,789
146
Wilfried Porth
393
95
Ola Källenius
107
108
Renata Jungo Brüngger
235
Martin Daum³
131
9
Dr. Wolfgang Bernhard²
618
167
Dr. Dieter Zetsche¹
In thousands of euros
2016
2017
Taxable non-cash benefits and other fringe benefits
B.52
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
142
1 Board of Management remuneration paid until Feb. 10, 2017
2 Board of Management remuneration paid from March 1, 2017
29,441
10,198
162,033
18,464
16,336
932
947
781
2016
3,502
1,090
16,148
800
800
812
2017
Wilfried Porth
2,989
1,028
590
16,336
590
781
2016
3,455
1,043
15,446
800
800
812
2017
Ola Källenius
2,989
590
590
17,078
1,075
2017
Bodo Uebber
2,989
1,028
16,336
590
590
781
2016
3,455
1,043
15,446
800
800
812
2017
Hubertus Troska
2016
3,455
1,043
15,446
800
800
812
2017
Britta Seeger
3,036
932
2,360
1,014
446
Bandwidth of possible price development:
maximum of 2.5 times the issue price
Maximum performance development (total cap):
2.5 times the amount granted
(including dividend equivalent payments throughout the plan period)
Stock ownership guidelines
Share purchase obligation of up to 25% of the gross remuneration
until the defined number of shares (between 20,000 and 75,000) have
been purchased (shares to be held until the end of the term of service)
1 Maximum of 195% if, in the event of target achievement of 195% -
200%, the strategic return target of 9% has not been reached.
In this context, agreements were reached with the members of
the Board of Management allowing for the partial reduction or
complete elimination of the annual bonus for any member who
clearly violates our Integrity Code. If it is not possible to reduce
a future bonus payment, or a payment that has yet to be made,
the Board of Management member in question will be required
to pay back the amount of the bonus reduction. The Supervisory
Board has the final decision on all such bonus reductions.
The total amount to be paid out from the annual bonus is limited
to 2.35 times the base salary of the respective financial year.
The Performance Phantom Share Plan (PPSP) is a variable
element of remuneration with long-term incentive effects. At the
beginning of the plan, the Supervisory Board specifies a grant
value (absolute amount in euros) in the context of setting the
individual annual target remuneration. This amount is divided
by the relevant average price of Daimler shares calculated over
a predefined long period of time, which results in the prelimi-
nary number of phantom shares allocated. Also at the beginning
of the plan, performance targets are set for a period of three
years (performance period). Depending on the achievement of
these performance targets with a possible range of 0% to 200%,
after three years the phantom shares allocated at the beginning
of the plan are converted into the final number of phantom
shares allocated.
After another plan year has elapsed (retention period), the
amount to be paid out is calculated from this final number of
phantom shares and the applicable share price at that time.
The share price relevant for the payout under this plan is
also relevant for allocating the preliminary number of phantom
shares for the plan newly issued in the respective year.
7 B.47 7 B.48
Price when issued and price at the end of the
plan period
140
Performance parameters for Plan 2017:
- 50% relates to the Group's return on sales in a three-year
comparison with a group of competitors comprising all listed
vehicle manufacturers with an automotive component of
more than 70% by revenue and an investment-grade credit
rating (BMW, Ford, Fuji Heavy, Honda, Hyundai, Isuzu,
Kia, Mazda, Nissan, Paccar, Suzuki, Toyota, Volvo and Volks-
wagen). For the measurement of success, the competitors'
average return on sales is calculated over a period of three
years. Target achievement occurs to the extent to which
Daimler's return on sales deviates by a maximum of +/-2 per-
centage points from 105% of the calculated average of
the competitors.
- Target achievement of 100% only occurs when the aver-
age return on sales of the Daimler Group reaches 105% of
the average return on sales of the group of competitors.
Target achievement of 200% occurs if Daimler's return on
sales exceeds 105% of the average of the competitors
by 2 percentage points or more. An additional limitation
was implemented starting with PPSP 2015: If a target
achievement of between 195% and 200% occurs in the
third year of the performance period, the maximum
target achievement calculated from the performance
parameter of return on sales compared to the group of
competitors will only be deemed to be 200% if the actual
return on sales for Daimler's automotive business
reaches at least the strategic target for return on sales
(currently 9%). Otherwise, target achievement will be
limited to 195%.
- Target achievement of 0% occurs if Daimler's return
on sales is 2 percentage points or more lower. In
the deviation range of +/- 2 percentage points, target
achievement varies in proportion to the deviation.
50% relates to "relative share performance", i.e. the develop-
ment of Daimler's share price in a three-year comparison
with the development of a share-price index for the defined
group of competitors. If the development of Daimler's share
price (in percent) is the same as that of the index (in percent),
target achievement is deemed to be 100%. If the develop-
ment of Daimler's share price (in percent) is 50 percentage
points or more below (above) the development of the index,
target achievement is deemed to be 0% (200%). In the deviation
range of +/- 50 percentage points, target achievement varies
in proportion to the deviation.
Value upon allocation:
Determined annually by the Supervisory Board; for 2017,
approximately 1.4 times the base salary.
Range of possible target achievement:
0 to 200%, that is, the plan has an upper limit. It may also
be zero.
Value of the phantom shares on payout:
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
50% relates to the "relative share perfor-
mance", i.e. the development of Daimler's
share price in a three-year comparison
with the development of a share-price
index for the defined group of competitors.
Bandwidth of possible target achievement:
0% - 200%
Bandwidth of possible target achievement:
0% - 200%¹
50% relates to the "return on sales"
achieved in a three-year comparison with
the defined group of competitors
> page 140
B.47
Performance Phantom Share Plan (PPSP)
- long-term performance-related remuneration
long-term performance-related
remuneration
approx. 40%
amount when granted in euros page 139
price of Daimler shares when issued
after expiry of third plan year
page 139
= preliminary number
of phantom shares
(virtual shares)
three-year dividend entitlement
preliminary number of phantom shares × performance factor
= final number of phantom shares, dividend entitlement in fourth year
after expiry of fourth plan year
final number of phantom shares × Daimler share price at end of plan
= amount paid out
Time of payment of Performance Phantom Share Plan 2017
in February of the year 2021
B.48
PPSP 2017
dependent upon
Development of
performance factors
Development of the
Daimler share price
The value of the phantom shares to be paid out depends on
target achievement measured according to the criteria described
above and on the share price relevant for the payout. This
share price is limited to 2.5 times the share price at the beginning
of the plan. In addition, the amount to be paid out is limited to
2.5 times the absolute euro amount specified at the beginning
of the plan, which is relevant for the preliminary number of
phantom shares allocated. This maximum amount includes the
dividend equivalent paid out during the four-year plan period.
The terms governing the PPSP include a provision that allows for
the partial reduction or complete elimination of the annual
bonus for any member of the Board of Management who clearly
violates the Integrity Code that applies to all employees and
Board of Management members, or any other professional obli-
gations, prior to the payout of the plan proceeds. The Super-
visory Board has the final decision on all such bonus reductions.
412
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
Excluding
5,058
granted in the reporting year
Total limit¹ for components of remuneration
Total remuneration
5,271
5,153
5,176
6,023
1,240
3,142
3,056
5,813
3,010 1,155
3,219
282
282
282
247
248
248
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 139
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
500
As a supplement to these three components of remuneration,
"Stock Ownership Guidelines" exist for the Board of Manage-
ment. These guidelines require the members of the Board
of Management to invest a portion of their private assets in
Daimler shares over several years and to hold those shares
until the end of their Board of Management membership.
The number of shares to be held is set between 20,000 and
75,000. In fulfillment of the guidelines, up to 25% of the
gross remuneration out of each Performance Phantom Share
Plan is generally to be used to acquire ordinary shares in
the Company, but the required shares can also be acquired in
other ways.
Appropriateness of Board of Management remuneration
In accordance with Section 87 of the German Stock Corporation
Act (AktG), the Supervisory Board of Daimler AG once again
had an assessment of the system of Board of Management
remuneration carried out by an external remuneration
expert in 2017. The result was that the remuneration system
as described above was confirmed as being in conformance
with the requirements of applicable law. The remuneration sys-
tem was approved by the Annual Shareholders' Meeting in
2014 with an approval ratio of 96.8%.
Board of Management remuneration
in financial year 2017
Board of Management remuneration in 2017 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the
Board of Management of Daimler AG is calculated as the total of
the amounts of
-
the base salary in 2017,
the half of the annual bonus for 2017 payable in 2018 and
measured as of the end of the reporting period,
the half of the medium-term share-based component of
the annual bonus for 2017 payable in 2019 with its value
at the end of the reporting period (entitlement depending
on the development of Daimler's share price compared
with the Dow Jones STOXX Auto Index),
- the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2017, and
- the taxable non-cash benefits in 2017.
For both of the share-based components - the second 50% of
the annual bonus and the PPSP with a long-term orientation -
the amounts actually paid out can deviate significantly from the
values described depending on the development of the Daimler
share price and on the achievement of the relevant target param-
eters. Upward deviation is possible only as far as the maximum
limits described above. Both components can also be zero.
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 141
The possible limits with regard to the annual bonus and the
PPSP are shown in tables 7 B.49 and 7 B.50.
The total remuneration of the Board of Management for the finan-
cial year 2017 amounts to €35.0 million (2016: €31.8 million).
Of that total, €9.5 million was fixed, that is, non-performance-
related remuneration (2016: €10.0 million), €15.3 million
(2016: €11.6 million) was short-term and medium-term variable
performance-related remuneration (annual bonus with defer-
ral), and €10.2 million was variable performance-related remu-
neration granted in the financial year 2017 with a long-term
incentive effect (2016: €10.2 million). 7 B.51
B.49
Annual bonus
(short- and medium-term variable remuneration of the
Board of Management members active at year-end)
B.50
PPSP 2013 (paid in 2017)
(long-term variable remuneration 7 B.55)
Maximum
theoretically 500%
of the grant value
235
As was the case in previous years, further qualitative targets
were agreed upon with the individual members of the Board
of Management with regard to the sustained implementation
and embedment of the compliance management system. The
complete or partial non-achievement of individual compliance
targets can be reflected by a deduction of up to 25% from the
individual target achievement. However, the compliance targets
cannot result in any increase in individual target achievement,
even in the case of full accomplishment.
In addition, the Supervisory Board uses individual target
agreements as a basis for measuring the target achievement
for individual Board of Management members and then uses
this target achievement value to measure the overall target
achievement of the Board of Management as a whole. This
overall target achievement result can lead to an addition or
reduction of up to 25% from the degree of target achievement
as measured on the basis of the primary performance parame-
ters. Only in exceptional cases may the Supervisory Board
deviate from this overall performance assessment and make
individual additions or deductions within the range described
above. In addition, on the basis of the sustainability-related non-
financial targets for the Board of Management as a whole, an
amount of up to 10% can be added or deducted, depending on
the predefined key figures/assessment basis. The non-finan-
cial targets defined for 2017 were the further development and
permanent establishment of the corporate value of integrity,
the promotion of diversity in the sense of increasing the share
of women in management positions and the maintenance
and enhancement of a high level of employee satisfaction and
product quality.
For the other primary performance parameter, which also relates
to half of the annual bonus, "comparison of actual EBIT in
the financial year with actual EBIT in the prior year", the limits
of the unchanged possible range of 0 to 200% are defined
as a deviation of +/- 2% of the prior-year revenue.
Remuneration structure
Target remuneration consists of non-performance-related
and performance-related components:
base salary
(non-performance-related) approx. 30%
short- and medium-term
performance-related
components
long-term performance-related
components
B.43
approx. 30%
approx. 40%
Maximum limit of total remuneration¹ 2017
Chairman of the Board of Management
Members of the Board of Management
Base salary in 2017
1.5 times the target
remuneration¹
1.9 times the target
remuneration¹
+ target bonus = 100% of the 2017 base salary
+ PPSP value when granted for 2017
Target remuneration¹ in 2017
Base salary in 2017
+ annual bonus for 2017
(50% paid out in 2018 + 50% in 2019)
+ PPSP payment for 2017 (in 2021)
incl. dividend equivalent payments
Total remuneration¹ in 2017
B.42
The possible cap on the amount exceeding the maximum limit
takes place with the payment of the PPSP for 2017 in 2021.
1 Excluding fringe benefits and retirement benefit
commitments in all cases.
The base salary is fixed remuneration relating to the entire
year, oriented towards the area of responsibility of each Board
of Management member and paid out in twelve monthly
installments. 7 B.44
As in the prior year, the maximum amounts of remuneration
of the members of the Board of Management were set for
financial year 2017 at 1.9 times the target remuneration for its
members and 1.5 times the target remuneration for its Chair-
man. The target remuneration consists of the base salary, the
target annual bonus and the grant value of the PPSP, excluding
fringe benefits and retirement benefit commitments. With
the inclusion of fringe benefits and retirement benefit commit-
ments from the respective financial year, the maximum limit
of total remuneration increases by these amounts. The possible
cap on the amount exceeding the maximum limit takes place
with the payment of the PPSP issued in the relevant financial
year, i.e. for the year 2017, with payment of the PPSP in 2021.
7 B.43
136
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Remuneration Report
The Remuneration Report summarizes the principles that are
applied to determine the remuneration of the Board of Manage-
ment of Daimler AG, and explains both the level and the
structure of its members' remuneration. It also describes the
principles and level of remuneration of the Supervisory Board.
Principles of Board of Management
remuneration
Goals
The remuneration system for the Board of Management aims to
remunerate its members commensurately with their areas
of activity and responsibility and in compliance with applicable
law. The adequate combination of non-performance-related and
performance-related components of remuneration is designed to
create an incentive to secure the Group's long-term success.
The fixed component of remuneration is paid as a base salary;
the variable components are intended to reflect, clearly and
directly, the joint performance of the members of the Board of
Management as a whole, as well as the long-term performance
of the Group. The interests of all stakeholders, in particular those
of the shareholders as the owners of the Company and those of
the employees, are harmonized through the focus on the Group's
long-term success.
Practical implementation
For each upcoming financial year, the Presidential Committee
at first prepares a review by the Supervisory Board of the
system and level of remuneration on the basis of a comparison
with competitors. The main focus is on checking for appropri-
ateness, based on a horizontal and vertical comparison. In the
horizontal comparison, the following aspects are given particular
attention in relation to a group of comparable companies in
Germany:
-
the effects of the individual fixed and variable components,
that is, the methods behind them and their performance
parameters;
the relative weighting of the components, that is, the relation-
ship between the fixed base salary and the short-term and
long-term variable components;
and the target remuneration consisting of base salary, annual
bonus and long-term variable remuneration, also with con-
sideration of entitlement to a retirement pension and fringe
benefits.
The vertical comparison focuses on the ratio of Board of
Management remuneration to the remuneration of the senior
executives and the entire workforce of Daimler AG in Germany,
also in terms of development over time. The Supervisory Board
has defined the group of senior executives for this purpose.
In carrying out this review, the Presidential Committee and
the Supervisory Board consult independent external advisors.
If the review results in a need for changes to the remuneration
system for the Board of Management, the Presidential Com-
mittee submits the relevant proposals to the entire Supervisory
Board for its approval.
On the basis of the approved remuneration system, the Super-
visory Board decides at the beginning of the year on the base
and target remuneration for the individual members of the
Board of Management as well as on total remuneration limits.
It also decides on the relevant performance parameters and
the respective targets that are to be used in the bonus calcula-
tions for the upcoming financial year. Furthermore, individual
targets and compliance goals are decided upon for each member
of the Board of Management and additional non-financial goals
related to sustainability are drawn up for the Board of Manage-
ment as a whole. Both the individual goals, including the com-
pliance goals, and the non-financial goals for the Board of
Management as a whole are taken into consideration along with
the financial performance parameters after the end of the
financial year when the annual bonus is decided upon by the
Supervisory Board.
For the long-term variable component of remuneration, which
is referred to as the Performance Phantom Share Plan (PPSP),
the Supervisory Board sets an amount to be granted for the
upcoming financial year in the form of an absolute amount in
euros and sets the respective performance targets.
After the end of each year, the achievement of both financial and
non-financial targets by the Board of Management as a whole is
measured in order to determine the amount of the annual bonus.
The degree of achievement of individual targets by members
of the Board of Management is used as the basis for measuring
target achievement for the Board of Management as a whole.
The Presidential Committee then calculates the annual bonus and
submits its proposal to the Supervisory Board for its approval.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
The system of Board of Management remuneration in 2017
The fixed base salary and the annual bonus each comprise
approximately 30% of the target remuneration, while the variable
component of remuneration with a long-term incentive effect
(PPSP) makes up approximately 40% of the target remuneration.
7 B.42
As before, only 50% of the annual bonus is paid out in the
March of the following financial year. The other 50% is paid out
a year later (deferral) with the application of a bonus-malus
rule, depending on the development of the Daimler share price
compared with an automotive index (Dow Jones STOXX Auto
Index) pages 78f, which Daimler AG uses as a benchmark
for the relative share-price development. Both the delayed
payout of the portion of the annual bonus (with the use of the
bonus-malus rule) and the variable component of remuneration
from the PPSP with its link to additional, ambitious comparative
parameters and to the share price reflect the recommendations
of the German Corporate Governance Code and give due con-
sideration to both positive and negative business developments.
The maximum amounts of remuneration of Board of Manage-
ment members are limited, both overall and with regard to the
variable components.
The individual components of the remuneration system are
as follows:
248
B.44
base salary - fixed - oriented towards the area of responsibility
Annual bonus' in 2017
dependent upon
EBIT target achievement
Range of possible target achievement:
0% - 200%
Target achievement for the
Board of Management as a whole
(derived from individual targets)
Range of possible target achievement:
-25% - +25%
Target achievement for the
Board of Management as a whole:
non-financial targets
-50% relates to a compari-
son of actual EBIT in 2017
with EBIT targeted for 2017
-50% relates to a compari-
son of actual EBIT in 2017
with actual EBIT in 2016
Individual target agreements
in 2017
For 2017: Further development
and permanent establishment
of the corporate value of integ-
Range of possible target achievement: rity; diversity and the mainte-
-10% - +10%
Non-achievement of individual
compliance targets
Range of possible target achievement:
-25% -0%
Maximum target achievement
(total cap):
nance and enhancement of a
high level of employee satis-
faction and product quality.
Compliance agreements in
2017
235% of the target bonus
1 May be subject to retention or repayment claims
The annual bonus is variable remuneration, the level of
which is primarily linked to the operating profit of the Daimler
Group (EBIT). For the past financial year, the annual bonus
was also linked to the target for the financial year determined
by the Supervisory Board (derived from the level of return
targeted for the medium term and the growth targets), the actual
result compared with the prior year, the combined performance
of the Board of Management members, additional non-financial
sustainability-related targets for the Board of Management
as a whole and, as a possible individual reduction component,
the non-achievement of compliance targets. With the actual-
actual comparison, achievement of EBIT at the prior year level
constitutes target achievement of 100%. With the target-actual
comparison, the particularly ambitious definition of the targeted
EBIT that is oriented towards the competition constitutes
target achievement of 150%. 71 B.45 71 B.46
Primary reference parameters:
50% relates to a comparison of actual EBIT in 2017 with
EBIT targeted for 2017.
- 50% relates to a comparison of actual EBIT in 2017 with
actual EBIT in 2016.
Amount with 100% target achievement
(target annual bonus):
In 2017, this is equivalent to the respective base salary.
Range of possible target achievement:
0 to 200%, that is, the annual bonus due to EBIT achievement
has an upper limit of double the base salary and may also
be zero. Both primary performance parameters, each of which
relates to half of the bonus, can vary between 0% and 200%.
For the primary performance parameter defining 50% of the
annual bonus, "comparison of actual EBIT in the financial
year with the EBIT targeted for the financial year", the limits of
the unchanged possible range of 0 to 200% are defined as a
deviation of +/- 3% from prior-year revenue.
B.46
Base salary - fixed page 137
amount paid out = 50% of annual bonus × "relative share performance"¹
1 Depending on the development of the Daimler share price compared with the
Dow Jones STOXX Auto Index.
overall target achievement
base salary
(non-performance-related)
paid out in twelve monthly
installments
approx. 30%
137
138
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.45
Annual bonus - short- and medium-term
performance-related remuneration page 138
short- and medium-term
performance-related
components
approx. 30%
annual bonus 2017 = target bonus × overall target achievement
target bonus
= 100% of
base salary
2017
time of payment of annual bonus 2017
target achievement EBIT
+/- target achievement for the
Board of Management as a whole
(derived from individual targets)
+/- target achievement for the
Board of Management as a whole:
non-financial targets
- non-achievement of individual
compliance targets
50% of annual bonus in March of the year after the reporting year (2018)
50% of annual bonus (deferral) = in March of the second year after the
reporting year (2019)
235
Guidelines for share ownership
4,783
391
795
0
338
(50% of annual bonus, short-term)
Annual variable remuneration
920
920
920
888
406
912
912
108
108
108
107
235
235
235
Total
other fringe benefits
912
0
954
Deferral (50% of annual bonus,
0
1,810 1,855
4,340
0
1,719
Total
2,750
0
1,043
1,028
2,750
0
1,043
(plan period of 4 years)
Long-term variable remuneration
954
0
406
391
795
0
338
medium-term)
Taxable non-cash benefits and
Retirement pension expense (service costs)
812
812
10,224
10,149
147 363
239
3,294
2,175 13,895
7,912 6,836
46
46
46
367
216
0
92
1,972
1,148
0 7,000
0 11,720
2,570 2,653
4,578 4,661
708
108
0
46
0 108
46
5,464
4,658
348
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
781
677
677
677
max.
Jan. 1 Dec. 31
min.
2017
Jan. 1 Dec. 31
2016
max.
min.
2017
2016
March 1 Dec. 31
Jan. 1 Dec. 31
Renata Jungo Brüngger
Integrity & Legal Affairs
Daimler Trucks & Buses
Martin Daum
145
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Base salary
In thousands of euros
Benefits granted
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
- Retirement pension expense (service costs)
Retirement pension expense (service costs)
812
102
954
0
406
391
954
0
406
391
(50% of annual bonus, short-term)
Annual variable remuneration
958
958
958
952
907
907
907
1,174
Total
146
146
146
171
(50% of annual bonus, medium-term)
95
391
0
102
0
1,902
1,857
0 4,658
1,855
1,810
Total
2,875
0
1,090
1,075
2,750
0
1,043
1,028
(plan period of 4 years)
Long-term variable remuneration
954
0
406
391
954
406
95
Deferral
393
Benefits granted
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
- Retirement pension expense (service costs)
5,176
5,058
4,662
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in the reporting year
Total limit¹ for components of remuneration
5,823
1,165
3,020
2,815
5,354
2,733
Total remuneration
245
245
245
117
95
In thousands of euros
Ola Källenius
102
other fringe benefits
Taxable non-cash benefits and
812
812
812
781
812
Wilfried Porth
812
812
781
max.
Base salary
2017
2016
max.
Jan. 1 Dec. 31
Jan. 1 Dec. 31
min.
2017
2016
Jan. 1 Dec. 31
Vans
Group Research & Mercedes-Benz Cars HR and Labor Relations Director & Mercedes-Benz
Development
Jan. 1 Dec. 31
min.
0 4,658
Total
1,855
1,810
122
0
4,658
Retirement pension expense (service costs)
2,750
1,855
0
954
1,028
2,750
0
1,043
(plan period of 4 years)
Long-term variable remuneration
954
0
406
122
391
1,043
122
granted in the reporting year
238
Jan. 1 Dec. 31
Prof. Dr. Thomas Weber
Group Research &
Mercedes-Benz Cars Development
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
In thousands of euros
Benefits granted
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
- Retirement pension expense (service costs)
5,176
5,058
5,176
- Taxable non-cash benefits and other fringe benefits
Excluding
Total limit¹ for components of remuneration
6,178
1,520
3,375
3,465
1,300 5,958
3,155
Total remuneration
238
238
239
0
146 B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
(50% of annual bonus, medium-term)
812
812
781
812
812
812
max.
min.
2017
Jan. 1 Dec. 31
Jan. 1 Dec. 31
2016
max.
Greater China
Hubertus Troska
Mercedes-Benz Cars Marketing & Sales
Jan. 1 Dec. 31
min.
2017
2016
Jan. 1 Dec. 31
Britta Seeger
Base salary
In thousands of euros
Benefits granted
2016
812
Taxable non-cash benefits and
other fringe benefits
366
Deferral
954
0
406
391
954
0
406
(50% of annual bonus, short-term)
Annual variable remuneration
1,282
406
1,282
1,416
1,178
1,178
1,178
Total
470
470
470
635
366
366
1,282
2017
Total remuneration
max.
2016
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
2017
Deferral (50% of annual bonus, medium-term)
Payment of PPSP 2012
928
947
781
163
107
Long-term variable remuneration
2016
Jan. 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31
Development
122
239
4,330
238
4,581
5,850
Total remuneration
2,282
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Payments made
In thousands of euros
Prof. Dr. Thomas Weber
Bodo Uebber
Finance & Controlling,
Group Research &
Mercedes-Benz Cars
Daimler Financial Services
129
2,926
1,091
910
58
51
Dividend equivalent PPSP 2016
63
63
56
58
Dividend equivalent PPSP 2017
Total
4,921
5,147
4,302
Retirement pension expense (service costs)
649
60
Dividend equivalent PPSP 2015
60
73
701
932
590
775
1,005
652
3,068
2,725
Payment of PPSP 2013
2,956
Dividend equivalent PPSP 2013
189
168
Dividend equivalent PPSP 2014
67
1,054
982
50
50
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Base salary
Payment of PPSP 2012
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Total
Payment of PPSP 2013
In thousands of euros
Payments made
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
56
56
50
52
1,138
2,272
235
248
4,132
247
4,340
282
Total remuneration
2,547
3,427
5,331
5,580
Retirement pension expense (service costs)
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Britta Seeger¹
Mercedes-Benz Cars Marketing & Sales
846
1,369
123
2,472
-
158
2
56
61
2
48
48
5
53
53
652
690
800
800
Hubertus Troska
Greater China
Jan. 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31
2016
2017
2016
2017
812
781
812
366
635
470
1,178
1,416
1,282
590
264
Total remuneration
6,661
Restrictions on voting rights and on the transfer of shares
The Company does not have any rights from treasury shares.
In the cases described in Section 136 of the German Stock Cor-
poration Act (AktG), the voting rights of treasury shares are
nullified by law.
Shares acquired by employees within the context of the
employee share program may not be disposed of until the end
of the following year. Eligible participants in the Performance
Phantom Share Plans (PPSP) of Executive Level 1 and eligible
members of the Board of Management are obliged by the
Plans' terms and conditions and by the Stock Ownership Guide-
lines to acquire Daimler shares with a part of their Plan income
up to a defined target volume and to hold them for the duration
of their employment at the Daimler Group. For the other per-
sons eligible for PPSP, this obligation no longer applies since
payment of PPSP 2013 in February/March 2017.
Provisions of applicable law and of the Articles of
Incorporation concerning the appointment and dismissal of
members of the Board of Management and amendments
to the Articles of Incorporation
Members of the Board of Management are appointed and dis-
missed on the basis of Sections 84 and 85 of the German Stock
Corporation Act (AktG) and Section 31 of the German Code-
termination Act (MitbestG). In accordance with Section 84 of
the German Stock Corporation Act, the members of the Board
of Management are appointed by the Supervisory Board for a
maximum period of office of five years. However, the Super-
visory Board of Daimler AG has decided generally to limit the
initial appointment of members of the Board of Management
to three years. Reappointment or the extension of a period of
office is permissible, in each case for a maximum of five years.
Pursuant to Section 31 Subsection 2 of the German Code-
termination Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority com-
prising at least two thirds of its members' votes. If no such
majority is obtained, the Mediation Committee of the Super-
visory Board has to make a suggestion for the appointment
within one month of the vote by the Supervisory Board in
which the required majority was not reached. The Supervisory
Board then appoints the members of the Board of Management
with a majority of its members' votes. If no such majority is
obtained, voting is repeated and the Chairperson of the Super-
visory Board then has two votes. The same procedure applies
for dismissals of members of the Board of Management.
In accordance with Article 5 of the Articles of Incorporation,
the Board of Management has at least two members. The num-
ber of members is decided by the Supervisory Board. Pursuant
to Section 84 Subsection 2 of the German Stock Corporation Act
(AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required member
of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German Stock
Corporation Act (AktG). Pursuant to Section 84 Subsection 3 of
the German Stock Corporation Act (AktG), the Supervisory
Board can revoke the appointment of a member of the Board of
Management and of the Chairperson of the Board of Manage-
ment if there is an important reason to do so.
The share capital of Daimler AG amounted to approximately
€3,070 million at December 31, 2017. It is divided into
1,069,837,447 registered shares, each of which accounts for
approximately €2.87 of equity capital. Pursuant to Section 67
Subsection 2 of the German Stock Corporation Act (AktG), only
those persons registered as shareholders in the register of
shareholders are considered to be shareholders of the Company.
With the exception of treasury shares, from which the Com-
pany does not have any rights, all shares confer equal rights to
their holders. Each share confers the right to one vote and,
with the possible exception of any new shares that are not yet
entitled to a dividend, to an equal share of the profits in accor-
dance with the dividend payout approved by the Annual Share-
holders' Meeting. The rights and obligations arising from the
shares are derived from the provisions of applicable law, in par-
ticular Sections 12, 53a ff, 118 ff and 186 of the German Stock
Corporation Act. There were no treasury shares at December 31,
2017.
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended by
a resolution of an Annual Shareholders' Meeting. Unless other-
wise required by applicable law, resolutions of the Annual
Shareholders' Meeting - with the exception of elections - are
passed pursuant to Section 133 of the German Stock Corpo-
ration Act (AktG) and Article 16 Subsection 1 of the Articles of
Incorporation with a simple majority of the votes cast and if
required with a simple majority of the share capital represented.
Pursuant to Section 179 Subsection 2 of the German Stock
Corporation Act (AktG), any amendment to the purpose of the
Company requires a 75% majority of the share capital repre-
sented at the Shareholders' Meeting; no use is made in the
Articles of Incorporation of the possibility to stipulate a larger
majority of the share capital. Amendments to the Articles of
Incorporation that only affect the wording can be decided
upon by the Supervisory Board in accordance with Article 7
Subsection 2 of the Articles of Incorporation. Pursuant to
Section 181 Subsection 3 of the German Stock Corporation
Act (AktG), amendments to the Articles of Incorporation
take effect upon being entered in the Commercial Register.
Authorization of the Board of Management to issue or
buy back shares
By resolution of the Annual Shareholders' Meeting of April 1,
2015, the Company was authorized to acquire its own shares
during the period until March 31, 2020 for all legal purposes
in a volume of up to 10% of the share capital at the time of the
resolution of the Annual Shareholders' Meeting. The shares
can be used, under the exclusion of shareholders' subscription
rights, for, among other things, corporate mergers and acquisi-
tions or else can be sold for cash to third parties at a price that
is not significantly below the market price at the time of the
sale. The shares can also be used to service debt on convertible
bonds and/or bonds with warrants, or can be issued to employ-
ees of the Company and employees and members of executive
bodies of affiliated companies pursuant to Section 15 ff of
the German Stock Corporation Act (AktG). The Company's own
shares can also be canceled.
In addition, the Board of Management is authorized under other
defined circumstances and with the consent of the Super-
visory Board to exclude shareholders' subscription rights for
shares they acquire. The Company's own shares in a volume
of up to 5% of the share capital existing at the time of the reso-
lution of the Annual Shareholders' Meeting can also be
acquired with the application of derivative financial instruments
(put or call options, forwards or a combination of these finan-
cial instruments), whereby the terms of the derivatives may not
exceed 18 months and must be terminated on March 31, 2020,
at the latest.
No use was made of this authorization to acquire the
Company's own shares during the reporting period.
By resolution of the Annual Shareholders' Meeting held on
April 9, 2014, the Board of Management was authorized with
the consent of the Supervisory Board to increase the share
capital of Daimler AG in the period until April 8, 2019, wholly
or in partial amounts, on one or several occasions, by up to
€1 billion by issuing new registered shares of no par value in
exchange for cash or non-cash contributions, and with the
consent of the Supervisory Board under certain conditions and
within defined limits to exclude shareholders' subscription
rights (Approved Capital 2014). Subscription rights can, under
these defined conditions, be excluded in the event of a capital
increase through non-cash contributions for the purposes of
an acquisition, and in the case of a capital increase through
cash contributions, if the issue price of new shares is not sig-
nificantly below the market price at the time of the issue.
153
Composition of share capital
(Report pursuant to Section 315a Subsection 1 and Section 289a Subsection 1 of the German Commercial Code (HGB))
Takeover-Relevant Information and Explanation
Member of the Supervisory Board
153,900
Sibylle Wankel'
Member of the Supervisory Board
153,900
Dr. Frank Weber
Member of the Supervisory Board
153,900
Member of the Supervisory Board and the Presidential Committee
217,000
Roman Zitzelsberger¹
1 The employee representatives have stated that their board remuneration is to be transferred to the Hans-
Böckler Foundation, in accordance with the guidelines of the German Trade Union Federation.
2 Mr. Sanches has directed that he receive no remuneration and that his board remuneration is to be paid to
the Hans-Böckler Foundation.
152
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
No use has yet been made of Approved Capital 2014.
By resolution of the Annual Shareholders' Meeting held on
April 1, 2015, the Board of Management, with the consent of the
Supervisory Board, is authorized to issue during the period
until March 31, 2020 convertible bonds and/or bonds with war-
rants or a combination of those instruments (commercial
papers) in a total nominal amount of up to €10 billion with a
maximum term of ten years, and to grant the owners/lenders
ofthose bonds conversion or option rights to new, registered
shares of no par value in Daimler AG with a corresponding
amount of the share capital of up to €500 million, in accordance
with the terms and conditions of those convertible bonds or
bonds with warrants. The bonds may be issued in exchange for
consideration in cash, but also for consideration in kind, in
particular for a participation in other companies. The respective
terms and conditions may also provide for mandatory con-
version or an obligation to exercise the option rights. The bonds
can be issued once or several times, wholly or in installments,
or simultaneously in various tranches. They can also be issued
by companies affiliated with Daimler AG pursuant to Section
15 ff of the German Stock Corporation Act (AktG).
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the
consent of the Supervisory Board to exclude shareholders' sub-
scription rights to the bonds. Subscription rights can, under
these defined conditions, be excluded when bonds are issued
in exchange for non-cash contributions, particularly within
the framework of a merger or acquisition, and when bonds are
issued in exchange for cash contributions, if the issue price
is not significantly below the theoretical market price of the
bonds at the time of the issue. No use has yet been made of
this new authorization to issue convertible bonds and/or bonds
with warrants.
In order to service the debt of the convertible bonds and/or
bonds with warrants issued as a result of the authorization, the
Annual Shareholders' Meeting of April 1, 2015, also approved
a conditional increase in the share capital of up to €500 million
(Conditional Capital 2015).
B.57
Assessment of probability of occurrence/possible impact
Level
Low
Medium
High
Probability of occurrence
0% Probability of occurrence ≤ 33%
33% Probability of occurrence ≤ 66%
66% Probability of occurrence < 100%
Level
Low
Medium
High
Possible impact
€0 <
€500 million <
Impact
Impact
< €500 million
< €1 billion
Impact
> €1 billion
Risk and opportunity management system
The risk management system with regard to existence-
threatening and other material risks is integrated into the
value-based management and planning system of the Daimler
Group. It is an integral part of the overall planning, manage-
ment and reporting process in the legal entities, divisions and
corporate functions. The risk management system is intended
to systematically and continually identify, assess, control, moni-
tor and report risks threatening Daimler's existence and other
material risks, in order to support the achievement of corporate
targets and to enhance risk awareness at the Group.
The opportunity management system at the Daimler Group
is based on the risk management system. The objective of
opportunity management is to recognize the possible opportuni-
ties arising in business activities as a result of positive devel-
opments at an early stage, and to use them in the best possible
way for the Group by taking appropriate measures. By taking
advantage of opportunities, planned targets should be secured
or overachieved. Opportunity management considers relevant
and realizable opportunities that have not yet been included in
any planning.
In the context of operative planning, risks and opportunities -
with consideration of appropriate risk and opportunity catego-
ries are identified and assessed for a two-year planning
period. Furthermore, the discussions for the derivation of mid-
term and strategic targets in the context of strategic planning
include the identification and assessment of risks and opportu-
nities relating to a longer period. The reporting of risks and
opportunities in the Management Report generally relates to
a period of one year. Besides the reporting at specific times,
risk and opportunity management is established as a continuous
task within the Group. In addition to the regular reporting,
there is also an internal reporting obligation within the Group for
material risks arising unexpectedly. The central Group Risk
Management regularly reports the identified risks and opportu-
nities to the Board of Management and the Supervisory Board.
The Daimler Group is exposed to a large number of risks that
are directly linked with the business activities of its divisions or
which result from external influences. A risk is understood as
the danger that events, developments or actions will prevent the
Group or one of its divisions from achieving its targets. At the
same time, it is important for the Daimler Group to identify oppor-
tunities so that they can be utilized in the course of its busi-
ness activities, thus safeguarding and enhancing the Group's
competitiveness. An opportunity is understood as the possibil-
ity to safeguard or to surpass the planned targets of the Group or
a division as a result of events, developments or actions. The
divisions have direct responsibility for recognizing and manag-
ing business risks and opportunities at an early stage. As part
of the strategy process, risks related to the planned long-term
development and opportunities for further profitable growth
are identified and integrated into the decision-making process.
In order to identify business risks and opportunities at an early
stage and to assess and manage them consequently, effective
management and control systems, which are clustered into a
risk and opportunity management system, are applied. Risks and
opportunities are not offset. The system is described below.
Elke Tönjes-Werner¹
Risk and Opportunity Report
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
154 B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Material agreements taking effect in the event of a
change of control
Daimler AG has concluded various material agreements, as listed
below, that include clauses regulating the possible event of
a change of control, as can occur as a result of a takeover bid:
- A non-utilized syndicated credit line for a total amount
of €9 billion, which the lenders are entitled to terminate if
Daimler AG becomes a subsidiary of another company or
comes under the control of one person or several persons
acting jointly.
- Credit agreements with lenders for a total amount of
-
€2.0 billion, which the lenders are entitled to terminate if
Daimler AG becomes a subsidiary of another company or
comes under the control of one person or several persons
acting jointly.
Guarantees and securities for credit agreements of consoli-
dated subsidiaries for a total amount of €131 million, which
the lenders are entitled to terminate if Daimler AG becomes
a subsidiary of another company or comes under the control
of one person or several persons acting jointly.
- An agreement concerning the acquisition of a majority (50.1%)
of AFCC Automotive Fuel Cell Cooperation Corp., which has
the purpose of further developing fuel cells for automotive
applications and making them marketable. In the case of a
change of control of Daimler AG, the agreement provides for
the right of termination by the other main shareholder, Ford
Motor Company. Control as defined by this agreement is the
beneficial ownership of the majority of the voting rights and
the resulting right to appoint the majority of the members of
the Board of Management.
- A cooperation agreement with Ford concerning the joint
predevelopment of a fuel-cell system. In the event of a change
of control of one of the parties to the agreement, the agree-
ment provides for the right of termination for the other party. A
change of control is deemed to occur at a threshold of 50%
of the voting rights of the company in question or upon authori-
zation to appoint a majority of the members of its managing
board.
- A master cooperation agreement on wide-ranging strategic
cooperation with Renault S.A., Renault-Nissan B.V. and Nissan
Motor Co., Ltd. In the case of a change of control of one of
the parties to the agreement, each of the other parties has the
right to terminate the agreement. A change of control as
defined by the master cooperation agreement occurs if a third
party or several third parties acting jointly acquire, legally
or economically, directly or indirectly, at least 50% of the voting
rights in the company in question or are authorized to appoint
a majority of the members of its managing board. Under the
master cooperation agreement, several cooperation agree-
ments were concluded between Daimler AG on the one side
and Renault and/or Nissan on the other, which provide for
the right of termination for a party to the agreement in the case
of a change of control of another party. These agreements
primarily concern a new architecture for small cars, the shared
use and development of fuel-efficient diesel and gasoline
engines and transmissions, the development and supply of a
small urban delivery van, the development, production and
supply of pickups, the use of an existing architecture for com-
pact cars, and the joint production of Infiniti/Nissan and
Mercedes-Benz compact vehicles in a 50-50 joint venture in
Mexico. A change of control is deemed to occur at a thresh-
old of 50% of the voting rights of the company in question or
upon authorization to appoint a majority of the members of
its managing board. In the case of termination of cooperation
in the area of the development of small cars due to a change of
control in the early phase of the cooperation, the party affected
by the change of control would be obliged to bear its share
of the costs of the development of shared components even
if the development were terminated for that party.
- An agreement with BAIC Motor Co., Ltd. related to a jointly
held company for the production and distribution of cars of the
Mercedes-Benz brand in China, by which BAIC Motor Co.,
Ltd. is given the right to terminate the agreement or exercise
a put or call option in the case that a third party acquires
one third or more of the voting rights in Daimler AG.
- An agreement related to the establishment of a joint venture
with Beiqi Foton Motor Co., Ltd. for the purpose of producing
and distributing heavy-duty and medium-duty trucks of the
Auman brand. This agreement gives Beiqi Foton Motor Co., Ltd.
the right of termination in the case that one of its competitors
acquires more than 25% of the equity or assets of Daimler AG
or becomes able to influence the decisions of its Board of
Management.
- An agreement between Daimler and Robert Bosch GmbH
related to the joint establishment and joint operation of
EM-motive GmbH for the development and production of
traction and transmission-integrated electric motors as
well as parts and components for such motors for automotive
applications and for the sale of those articles to the Robert
Bosch Group and the Daimler Group. If Daimler should become
controlled by a competitor of Robert Bosch GmbH, Robert
Bosch GmbH has the right to terminate the consortium agree-
ment without prior notice and to acquire all the shares in
the joint venture held by Daimler at a fair market price.
- An agreement between Daimler AG, BMW AG and Audi AG
related to the acquisition of the companies of the HERE Group
and the associated establishment of There Holding B.V. In
the event of a change of control of one of the parties to the
agreement, the agreement obligates the party in question
to offer its shares in There Holding B.V. to the other parties to
the agreement (shareholders). A change of control of Daimler
AG occurs if a person gains control over Daimler AG, whereby
control is defined as (i) having control of more than 50% of
the voting rights, (ii) being able to control more than 50% of the
voting rights eligible to vote at the shareholders' meetings
on all or nearly all matters, or (iii) the right to determine the
majority of the members of the Board of Management or of
the Supervisory Board. A change of control also occurs if com-
petitors of the HERE Group or certain possible competitors
of the HERE Group in the technology industry acquire a share-
holding of at least 25% of Daimler AG. If none of the other
parties acquire these shares, the agreement gives them the
right to dissolve There Holding B.V.
155
53
153,900
Jörg Spies¹
Name
Function(s) remunerated
In euros
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 151
Jan. 1 - Dec. 31
min.
Dr. Manfred Bischoff
Supervisory Board remuneration
Michael Brecht'
Bader M. Al Saad
Sari Baldauf
Bettag, Michael¹
Dr. Clemens Börsig
Dr. Bernd Bohr
Dr. Jürgen Hambrecht
Dr. Paul Achleitner
B.56
No advances or loans were made to members of the Super-
visory Board of Daimler AG in 2017.
Loans to members of the Supervisory Board
6,891
5,476
2017
149
150
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Remuneration of the Supervisory Board
Supervisory Board remuneration in 2017
The remuneration of the Supervisory Board is determined by the
Annual Shareholders' Meeting of Daimler AG and is governed
by the Company's Articles of Incorporation. The new regulations
for Supervisory Board remuneration approved by the Annual
Shareholders' Meeting in March 2017 and effective for the finan-
cial year beginning on January 1, 2017 specify that the mem-
bers of the Supervisory Board receive, in addition to the refund
of their expenses and the cost of any value-added tax incurred
by them in performance of their office, fixed remuneration of
€144,000 after the conclusion of the financial year. The Chair-
man of the Supervisory Board receives an additional €288,000
and the Deputy Chairman of the Supervisory Board receives
an additional €144,000. The members of the Audit Committee are
paid an additional €72,000, the members of the Presidential
Committee are paid an additional €57,600 and the members of
the other committees of the Supervisory Board are paid an
additional €28,800; an exception is the Chairman of the Audit
Committee, who is paid an additional €144,000. Additional
payments are made for activities in a maximum of three com-
mittees; any persons who are members of more than three
such committees receive additional payments for the three most
highly paid functions. Members of a Supervisory Board com-
mittee are only entitled to remuneration for such membership
if the committee has actually convened to fulfill its duties in
the respective year.
In connection with the remuneration adjustment, all members
of the Supervisory Board have made a self-commitment to
purchase Company shares in the amount of 20% of their gross
annual salary (excluding committee remuneration and the
meeting fee) every year and to hold these shares until the end
of one year after they have left the Company's Supervisory
Board (voluntary obligation in accordance with the "comply or
explain" principle).
This does not apply to Supervisory Board members whose
Supervisory Board remuneration is subject in a mandatory
or voluntary manner to the guidelines of the German Trade
Union Confederation on the transfer of supervisory board
remuneration to the Hans Böckler Foundation, or to the same
extent is subject to a transfer to the employer or claim to
payment due to a service or employment contract. In the event
that a lower amount of the Supervisory Board remuneration
is transferred or credited, the voluntary commitment applies
to 20% of the amount not transferred or credited. With this
voluntary commitment, the members of the Supervisory Board
are expressing their focus on and commitment to the long-
term, sustainable success of the Company.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend. The meeting
fee is paid only once if several meetings of the Supervisory
Board and/or its committees are held on the same calendar day.
The individual remuneration of the members of the
Supervisory Board is shown in table. 7 B.56
In financial year 2017, no remuneration was paid for services
provided personally beyond the aforementioned board and com-
mittee activities, in particular for advisory or agency services,
except for the remuneration paid to the members of the Super-
visory Board representing the employees in accordance with
their contracts of employment.
The remuneration of all the activities of the members of the
Supervisory Board of Daimler AG in the year 2017 was thus
€4.2 million (2016: €3.5 million).
Petraea Heynike
Andrea Jung
Chairman of the Supervisory Board, the Presidential Committee and the
Nomination Committee
Deputy Chairman of the Supervisory Board, the Presidential Committee
and the Audit Committee
Joe Kaeser
Member of the Supervisory Board and the Audit Committee
230,300
Ergun Lümali¹
Member of the Supervisory Board and the Audit Committee
230,300
Wolfgang Nieke¹
Member of the Supervisory Board
153,900
Dr. Bernd Pischetsrieder
Member of the Supervisory Board
152,800
Valter Sanches²
Member of the Supervisory Board
150,600
152,800
Member of the Supervisory Board
Member of the Supervisory Board
215,900
Member of the Supervisory Board and the
Presidential Committee
Member of the Supervisory Board
536,000
436,300
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board (since March 29, 2017)
183,800
115,177
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board
184,900
153,900
Member of the Supervisory Board and Chairman of the Audit Committee
302,300
Member of the Supervisory Board (until March 29, 2017)
38,018
153,900
53
Total in 2017
50
the value of the long-term share-based remuneration
(PPSP 2013) paid in 2017,
the dividend equivalent of the current PPSP (2014, 2015,
2016 and 2017) paid in 2017, and
- the retirement pension expense in 2017 (service costs in 2017).
The caps possible to ensure the total maximum amount shown
in the table of benefits granted in financial year 2017 are
implemented with the payout of PPSP 2017, which constitutes the
last payment to be made of the components of remuneration
granted in financial year 2017. For financial year 2017, therefore,
the possible cap would take place in 2021, the year that PPSP
2017 is paid out.
B.55
Payments made
the half of the share-based annual bonus paid in 2017 for
2015 (deferral),
In thousands of euros
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2012
Base salary
the taxable non-cash benefits and other fringe benefits in 2017,
the half of the annual bonus payable in 2018 for 2017 at
the value as of the end of the reporting period,
-
The total of "payments made" for financial year 2017
is calculated from
the base salary in 2017,
- the taxable non-cash benefits and other fringe benefits in 2017,
- the half of the annual bonus payable in 2018 for 2017 at
the value for target achievement of 100%,
the half of the share-based annual bonus payable in 2019 for
2017 at the value for target achievement of 100%,
- the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2017 (payable in 2021), and
- the retirement pension expense in 2017 (service costs in 2017).
The total of "payments made" for financial year 2016
is calculated from
- the base salary in 2016,
-
the taxable non-cash benefits and other fringe benefits in 2016,
the half of the annual bonus payable in 2017 for 2016 at
the value as of the end of the reporting period in financial
year 2016,
the half of the share-based annual bonus paid in 2016 for
2014 (deferral),
- the value of the long-term share-based remuneration
(PPSP 2012) paid in 2016,
the dividend equivalent of the current PPSP (2013, 2014,
2015 and 2016) paid in 2016, and
- the retirement pension expense in 2016 (service costs in 2016).
The caps possible to ensure the total maximum amount shown
in the table of benefits granted in financial year 2016 are
implemented with the payout of PPSP 2016, which constitutes the
last payment to be made of the components of remuneration
granted in financial year 2016. For financial year 2016, therefore,
the possible cap would take place in 2020, the year that PPSP
2016 is paid out.
Dr. Dieter Zetsche
-
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
622
90
1,727
2,175
670
892
1,978
6,417
Payment of PPSP 2013
6,181
2,472
Dividend equivalent PPSP 2013
395
158
2,567
1,516
101
955
Jan. 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Feb. 10
2016
2017
2016
2017
2,008
2,008
824
92
618
167
131
9
2,626
2,175
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
is calculated from
The total of "benefits granted" for financial year 2017
147
1,054
1,054 1,054
910
Annual variable remuneration
(50% of annual bonus, short-term)
464
1,091
473
1,112
391
Deferral
(50% of annual bonus, medium-term)
464
473
0
Total
129
107
50
Jan. 1 Dec. 31
2016
2017
Jan. 1 Dec. 31
min.
max.
Base salary
928
947
947
947
781
Taxable non-cash benefits and
other fringe benefits
163
107
107
0
1,112
391
Long-term variable remuneration
3,897
3,936 1,744
7,256
3,048
Total limit¹ for components of remuneration
granted in the reporting year
6,025
6,095
5,187
Excluding
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Total remuneration
Dividend equivalent PPSP 2014
264
690
(plan period of 4 years)
1,229
1,246
0
3,288
1,092
Total
2,157
2,192
0
5,512
1,874
Retirement pension expense (service costs)
649
690
690
141
the base salary in 2017,
60
Long-term variable remuneration
Payment of PPSP 2012
Payment of PPSP 2013
Dividend equivalent PPSP 2013
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Deferral (50% of annual bonus, medium-term)
Dividend equivalent PPSP 2016
Total
Retirement pension expense (service costs)
Ola Källenius¹
Wilfried Porth
Mercedes-Benz Cars Development
Group Research & HR and Labor Relations Director
& Mercedes-Benz Vans
Dividend equivalent PPSP 2017
(50% of annual bonus, short-term)
Annual variable remuneration
Taxable non-cash benefits and other fringe benefits
Total
53
50
50
775
1,000
102
117
1,407
245
2,005
2,572
1,789
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Payments made
In thousands of euros
Base salary
Jan. 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31
2016
2017
2016
846
411
2,567
-
457
2,472
21
-
158
15
18
59
64
48
48
652
53
846
590
2017
781
812
781
812
393
95
171
146
1,174
907
952
958
590
800
152
19
800
7
13,043
5,512
3,601
148
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Payments made
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2012
13,784
Payment of PPSP 2013
Total remuneration
4,190
367
Dividend equivalent PPSP 2015
7
121
121
54
Dividend equivalent PPSP 2016
133
133
59
Dividend equivalent PPSP 2017
Total
10,450
10,868
Retirement pension expense (service costs)
708
3,454
46
Dividend equivalent PPSP 2013
128
Dividend equivalent PPSP 2015
108
912
888
920
667
590
107
800
-
22
22
8
Dividend equivalent PPSP 2014
9
320
235
488
812
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Total
Retirement pension expense (service costs)
Martin Daum¹
Daimler Trucks & Buses
Renata Jungo Brüngger¹
Integrity & Legal Affairs
Jan. 1 Dec. 31
17
677
2016
2017
2016
2017
March 1 Dec. 31 Jan. 1 - Dec. 31 Jan. 1 - Dec. 31
781
Potential effects of the risks on the development of unit sales
are included in risk scenarios. The risks can cause changes in
the planned business activities and the related vehicle sales and
inventories. In particular, the partially unstable macroeco-
nomic environment as well as political or economic uncertainty
could be causes in this context. Differences between the
divisions exist due to the partly varying regional focus of their
activities. Discussions about the future of diesel technology and
the related legal uncertainties are also responsible for changes
in customer demand, which can have a negative impact on
the sale of diesel vehicles and possibly also on earnings. The
development of markets, unit sales and inventories is conti-
nually analyzed and monitored by the divisions; if necessary,
specific marketing and sales programs are implemented. Clear
strategies have been formulated for each division for profitable
growth and efficient progress.
Volatilities with regard to market developments can also mean
that the overall market or regional conditions for the automo-
tive industry might develop better than assumed in the internal
forecasts and premises upon which the Group's target plan-
ning is based. This can lead to market opportunities. Opportu-
nities can also arise from an improvement in the competitive
situation or a positive development of demand for the divisions.
However, the existing market opportunities of the divisions
of the Daimler Group can only be utilized if production can be
aligned accordingly, and if this is enabled by regional condi-
tions. In addition, any gaps between demand and supply have
to be recognized and covered in good time. The measures
that could be initiated by the Daimler Group to utilize potential
opportunities include a combination of local sales and mar-
keting activities, as well as central strategic product and capacity
planning.
As the target achievement of the Daimler Financial Services
division is closely connected with the business development in
the automotive divisions, the existing volume risks and
opportunities are reflected in the Daimler Financial Services
segment.
Due to the partly difficult financial situation of some dealerships
and vehicle importers, support actions might become neces-
sary to ensure the performance of the business partners. The
sources of these risks lie in the respective risk environment.
Supporting actions would adversely affect the profitability, cash
flows and financial position of the automotive divisions. Further
risks may result from the dependency on certain dealerships. In
certain circumstances, relationships with new business partners
may have to be developed. The financial situation of strategi-
cally relevant dealerships and vehicle importers is continually
monitored. If required, payment conditions are adjusted and
additional guarantees are obtained. Risks of this kind exist for
dealerships and vehicle importers of the divisions Mercedes-
Benz Cars, Daimler Trucks and Mercedes-Benz Vans.
In addition, a residual-value risk from non-Daimler vehicles
exists for the Daimler Financial Services companies that operate
commercial fleet management and leasing management,
because most of those vehicles are not covered by manufactur-
ers' residual-value guarantees. Residual-value risk is taken
into account through a high level of diversification with regard to
brands, regions, customers and lease periods. Used-vehicle
prices are continually monitored both locally and centrally, so
that the residual-value risk from a drop in market prices can
be forecast in good time and suitable countermeasures may be
initiated.
Further risks at Mercedes-Benz Cars, Mercedes-Benz Vans and
Daimler Financial Services relate to the development of used
vehicle markets and thus to the residual values of the vehicles
produced. In particular, the uncertainty existing in connection
with diesel vehicles can have a negative impact on residual val-
ues. As part of the established residual-value management
process, certain assumptions are made at local and corporate
levels regarding the expected level of prices, based upon which
the cars to be returned in the leasing business are evaluated.
If changing market developments lead to a negative deviation
from assumptions, there is a risk of lower residual values of used
cars. Depending on the region and the current market situa-
tion, the measures taken generally include continuous market
monitoring as well as, if required, price-setting strategies or
sales promotion measures designed to regulate vehicle inven-
tories. The quality of market forecasts is verified by periodic
comparisons of internal and external sources, and, if required,
the determination of residual values is adjusted and further
developed with regard to methods, processes and systems.
On the other hand, opportunities can arise from a positive
development of residual values caused by a favorable market
environment for used vehicles as well as reductions in price
reductions granted on new vehicles.
160
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Despite increasing residual-value risks, the probability of
occurrence of general market risks across all segments has
decreased compared with the previous year from “medium”
to "low" as a result of the improved market positioning of the
automotive divisions compared with their competitors.
The successful product portfolio of the Daimler Group con-
tributes to its advantageous positioning compared with the
competitors. Possibly rising competitive and price pressure
above all affect the segments Mercedes-Benz Cars and Daimler
Trucks. Aggressive pricing policies, the introduction of new
products by competitors, or pricing pressure in the aftersales
business can make it more difficult to achieve expected prices.
This might result in lower revenue, the failure to achieve the
products' planned profitability, or lower market share. The
extent of such risks is related to the magnitude of a division's
sales volume. Continuous monitoring of competitors is carried
out in order to recognize these risks at an early stage. Depending
on the situation, product-specific and possibly regionally differ-
ent measures are taken to support weaker markets. They include
the use of new sales channels, actions designed to strengthen
brand awareness and brand loyalty as well as sales and mar-
keting campaigns. Daimler also applies various programs to
boost sales, which include financial incentives for customers.
159
Opportunities relating to the legal
and political framework
The risks and opportunities for the economic development
of automotive markets are strongly affected by the cyclical
situation of the global economy as described above. The
assessment of market risks and opportunities is linked to
assumptions and forecasts about the overall development
of markets in the regions in which the Daimler Group is active.
The possibility of markets developing better or worse than
assumed in the planning, or of changing market conditions,
generally exists for all divisions of the Daimler Group.
General market risks and opportunities
Further risks exist from geopolitical tension, such as between
Saudi Arabia and Iran or in North Korea, but countries like
Russia and Turkey also continue to represent considerable con-
flict potential. Should further terrorist attacks or assassina-
tions in Europe or other major economies lead to an additional
high degree of uncertainty, investment and consumer confi-
dence could be severely undermined with a resulting impact on
the real economy. In addition, an increase in terrorist attacks
would accelerate the already growing influx into populist parties,
thereby promoting isolationism and adversely affecting world
trade, with enormous costs to the world economy.
In view of the positive economic situation in many parts of the
world, including Europe and some major emerging markets,
the opportunity exists that the world economy will grow in 2018
at a higher rate than hitherto assumed. A stronger increase in
worldwide demand would support raw-material prices and would
have positive effects on raw-material exporters in South
America, the Middle East and Africa.
The prospects of the emerging markets remain stable compared
with the previous year, but continue to be connected with some
risks, primarily of an external nature. For example, a significant
increase in interest rates in the United States could cause
difficulties in particular for those emerging markets with high
current account deficits and high levels of foreign debt,
resulting in significant currency depreciation (e.g. Turkey, South
Africa and Brazil). Financial-market turbulences going as far as
currency crises would be possible consequences and could have
a massive impact on the economies of the affected countries.
Lower growth in world trade and lower raw-material prices (e.g.
a drop in the oil price) than currently forecast would have a
negative impact on growth for exporters of raw materials. As
Daimler is already very active in those countries, or their mar-
kets play a strategic role, this would have significantly negative
effects on the Group's prospective unit sales. However,
import-dependent economies such as India would benefit from
lower price levels. Furthermore, stronger growth in world
trade and higher raw-material prices would create positive impe-
tus in emerging markets that export raw materials, leading
to stronger economic growth and thus increased demand for
motor vehicles.
High
In Europe, political risks regarding the stability of the EU and the
monetary union have decreased somewhat since the results of
the elections in 2017. Nonetheless, separatist tendencies such
as in Catalonia or upcoming parliamentary elections in Italy
mean that a resurgence of the euro crisis cannot be ruled out.
In addition, there are still significant risks in the banking
sector of some member states and the volume of defaulting
loans is very high in some countries. Another crucial factor
for economic development in Europe is the ongoing progress of
the Brexit negotiations. Failure to reach an agreement could
have a negative impact on the business climate and thus on the
development of the British economy and to a lower extent the
euro zone, which would potentially make trading conditions more
difficult. The European market continues to be very important
for Daimler across all divisions; in fact, it is the biggest sales
market for the Mercedes-Benz Cars and Mercedes-Benz Vans
division. These risks exist along with opportunities for stronger
growth due to even stronger dynamism from consumption and
investment in the euro zone, which would also boost demand
for motor vehicles in the important European market.
market adjustments and phases of exceptional volatility in
the global financial markets. Such developments could have a
negative impact on the investment climate worldwide, with
negative effects on the world economy.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
158
Low
Risks and opportunities relating to the leasing and
sales-financing business
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Due to China's enormous importance as a growth driver for the
world economy in recent years, a downturn in China's economy
would represent a considerable risk to the world economy.
The enormous growth in debt that has been observed since the
global financial crisis, especially in the corporate sector, repre-
sents a significant risk. If the government's efforts to restrict
credit growth lead to a more significant growth slowdown than
currently expected, this would result in a perceptible cooling-off
for the world economy. Within China, a slowdown could result
in an excessive increase in credit defaults, which would then
lead to turbulence in the banking sector and the financial
markets. In particular for the Mercedes-Benz Cars division, for
which China is now the biggest individual sales market by a
large margin, the aforementioned risks could result in significant
negative effects on its unit sales. In addition, a drop in demand
in China would trigger another fall in the price of oil and other
(industrial) raw materials, with extremely disadvantageous
effects for raw-material exporting countries worldwide, especially
in Latin America, the Middle East and Sub-Saharan Africa.
This would have a negative impact on demand for the automotive
divisions in those regions. On the other hand, growth in 2018
could also turn out to be stronger than expected if the Chinese
government pursues less tight monetary and fiscal policies
than currently anticipated. The resulting stronger growth in over-
all economic consumption would create additional opportuni-
ties, especially for the Mercedes-Benz Cars division.
Strict regulations for the reduction of vehicles' emissions and
fuel consumption create potential risks also for the Daimler
Trucks and Daimler Buses divisions, because it will be hard
to fulfill the statutory requirements in some countries. For
example, legislation has been in effect in Japan since 2006 and
in the United States since 2011 on the reduction of greenhouse-
gas emissions and fuel consumption by heavy-duty commercial
vehicles. In China, fuel-consumption legislation was drafted
in 2017 which affects our exports of heavy-duty trucks to that
country with strict requirements as of 2019/2020. The Euro-
pean Commission is currently working on methods for measur-
ing the CO2 emissions of heavy-duty commercial vehicles that
will have to be applied as of 2019. It has also decided to present
a standard for limiting heavy-duty commercial vehicles' CO₂
emissions in the first half of 2018. We expect that the limits to
be confirmed by the EU Parliament and Council will have to be
met as of approximately 2025. Other countries such as India,
South Korea and Brazil are also working on draft proposals
for reducing the fuel consumption of heavy-duty commercial
vehicles.
An adjustment of credit conditions for customers in the leas-
ing and sales-financing business caused by higher refinancing
costs could reduce the new business and contract volume of
Daimler Financial Services, also reducing the unit sales of the
automotive divisions. Risks and opportunities also arise from
a lack of matching maturities with refinancing. The risk of mis-
matching maturities is minimized by coordinating refinancing
with the periods of financing agreements, from the perspective
of interest rates as well as liquidity. Any remaining risks from
changes in interest rates are managed by the use of derivative
financial instruments. Further information on credit risks and
the Group's risk-minimizing actions is provided in Note 32
of the Notes to the Consolidated Financial Statements.
B.59
Low
In order to adapt to these requirements, Daimler has already
increased its local value added in major markets, and has thus
taken appropriate action in good time. However, on the basis
of our production locations' increasing proximity to the various
markets, further opportunities also exist for the Daimler Group,
relating for example to the utilization of market potential or
logistical advantages.
Furthermore, the danger exists that individual countries will
attempt to defend and improve their competitiveness in the
world's markets by resorting to interventionist and protec-
tionist actions. This applies to the markets of developing
countries and emerging economies, but also to Europe, the
United States and China, and is manifested above all in the
form of local-content rules affecting the entire value chain. In
addition, attempts are being made to limit growth in imports
through barriers to market access such as by making certifi-
cation processes more difficult, delaying certification and
imposing other complicated customers procedures, while attract-
ing direct foreign investment by means of appropriate industrial
policies. Changes in tax subsidies or the like have the potential
to significantly influence the overall market development and
increase uncertainty in the planning process.
The position of the Daimler Group in key foreign markets could
also be affected by an increase in bilateral free-trade
agreements. If bilateral agreements are concluded without the
involvement of the European Union or without the conclusion
of equivalent agreements by the EU, the position of the Daimler
Group could be significantly impacted. At the same time, EU
free-trade agreements could also result in opportunities for the
Daimler Group vis-à-vis competitors in countries which are
not parties to such agreements.
Daimler continually monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in the
process of product development. The biggest challenge in the
coming years will be to offer an appropriate range of drive
systems and the right product portfolio in each market, while
fulfilling customers' wishes, internal financial targets and
statutory requirements. With an optimal product portfolio and
market-launch strategy, competitive advantages may also arise.
These discussions or bans on vehicles with conventional drive
systems can increase demand for vehicles with alternative drive
systems, especially for electric vehicles, as well as for mobility
services including car-sharing services. In order to utilize the
resulting opportunities, Daimler is present in the market with
the provision of innovative mobility services (including car2go,
moovel, mytaxi and Via).
In addition to the described emission and fuel-consumption
regulations, traffic-policy restrictions for the reduction of traffic
jams, noise and emissions are becoming increasingly impor-
tant in cities and urban areas worldwide. In China for example,
limited access to vehicle registration is continuing, and now
also imported plug-in hybrid vehicles are being specifically
excluded from access to registration (e. g. in Beijing, Guang-
zhou and Shenzhen). This development can have a dampening
effect on the development of unit sales, especially in growth
markets. Pressure to reduce personal transport is increasingly
being applied in European cities through discussions of bans
on vehicles entering or driving in inner cities, especially those
with diesel engines.
Very demanding regulations for CO2 emissions are also planned
or have been approved for light commercial vehicles. This will
present a challenge for Mercedes-Benz Vans, especially in the
long term. In the United States, Mercedes-Benz Vans is affected
to varying degrees by fuel-consumption and greenhouse-gas
regulations for both light-duty and heavy-duty vehicles. The
stricter limits planned for the years 2021 to 2027 will also affect
Mercedes-Benz Vans. The proposals presented by the EU
Commission in November 2017 for limiting the CO2 emissions of
light commercial vehicles, if confirmed by the EU Parliament
and Council, are very ambitious.
Furthermore, many countries such as China, India and Brazil are
working on the regulation of emissions, which will raise their
standards at least to the level of Euro VI limits. Daimler Trucks
and Daimler Buses will therefore have to apply the latest tech-
nologies in order to fulfill these requirements.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
162
Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive type approval if their air-conditioning units
are filled with a refrigerant that meets certain criteria with
regard to climate friendliness. For vehicles produced on the basis
of type approvals granted previously, the directive allowed a
period of transition until December 31, 2016. Mercedes-Benz
vehicles fully comply with these legal requirements as of
January 1, 2017 through the application of CO2 air-conditioning
and the refrigerant R1234yf in combination with a specially
developed safety device that will be used depending on each
vehicle's configuration. In December 2016, the EU Commission
initiated infringement proceedings against the Federal Republic
of Germany in the European Court of Justice (ECJ). The Com-
mission sees a contravention of the European type-approval
directive and of the Directive on emissions from air-condi-
tioning systems in motor vehicles by the German authorities.
In March 2017, Germany's Federal Motor Vehicle Transport
Authority issued Daimler AG with an injunction requiring the
changeover of those vehicles from the first half of 2013 in
which the previously used refrigerant R134a was used for reasons
of safety. Daimler considers the claim to be unfounded and
has filed an objection to the order. At present, the Group does
not assume that these issues will result in material effects on
its profitability, cash flows or financial position.
If the negative headlines on diesel engines and the threat of
driving bans on diesel vehicles were to unsettle customers,
resulting in lasting shifts in the drive-system portfolio (fewer
diesel and more gasoline engines), additional development and
production measures would have to be taken to meet the CO2
fleet limits applicable as of 2020. On the other hand, differenti-
ating bans in cities that privilege diesel vehicles with good
emission levels could result in competitive advantages for our
new 4 and 6-cylinder engines (OM 654 and OM 656) with their
very good exhaust emissions.
The Mercedes-Benz Cars segment faces risks with respect to
regulations on average fleet fuel consumption in the Chinese
market. In the European Union, the EU Commission made an
ambitious proposal in November 2017 on future regulations
concerning the CO2 emissions of new vehicles (period of 2021
to 2030). Legislation in the United States on greenhouse gases
and fuel consumption impacts German premium manufacturers
and thus also the Mercedes-Benz Cars division harder than
US manufacturers, for example. Similar legislation exists or is
being prepared in many other countries, as in Japan, South
Korea, India, Canada, Switzerland, Mexico, Saudi Arabia, Brazil
and Australia. Daimler gives these targets due consideration in
its product planning. The increasingly ambitious targets require
significant proportions of plug-in hybrids or cars with other
types of electric drive. The market success of these drive sys-
tems is greatly influenced by regional market conditions, for
example the battery-charging infrastructure and state support.
Many countries and regions have already implemented stricter
regulations to reduce vehicles' emissions and fuel con-
sumption or are currently preparing such laws. They relate for
example to the environmental impact of vehicles, including
emission levels, fuel economy and noise, as well as pollutants
from the emissions caused by the production facilities. Non-
compliance with regulations applicable in the various regions
might result in significant penalties and reputational harm
and in the case of violations of regulations concerning vehicles'
environmental compatibility, might even mean that vehicles
could not be or could no longer be registered in the relevant
markets. The cost of compliance with these regulations is
significant, especially for conventional engines, and Daimler
expects a significant increase in costs in this context.
The automotive industry is subject to extensive governmental
regulation worldwide. Risks and opportunities from the legal
and political framework have a considerable impact on Daimler's
future business success. Regulations concerning vehicles'
emissions, fuel consumption and certification play a partic-
ularly important role. Complying with these varied and often
diverging regulations all over the world requires strenuous efforts
on the part of the automotive industry. In the future, Daimler
expects to spend an even larger portion of its research and devel-
opment budget to ensure compliance with these regulations.
Nonetheless, it has been possible to reduce the assessment of
risks and opportunities related to the legal and political frame-
work to "low" for the probability of occurrence. This is mainly
because issues for the year 2018 have been taken into consid-
eration in the planning. The potential impact of the risks and
opportunities remains unchanged at "high."
Risks and opportunities related to the legal and
political framework
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 161
Due to the planned electrification of new model series and a
shift in customer demand from diesel to gasoline engines, the
Mercedes-Benz Cars segment in particular is faced with the
risk that Daimler will require changed volumes of components
from suppliers. This could result in over- or under-utilization
of production capacities for certain suppliers. If supplier can-
not cover their fixed costs, there is the risk that suppliers
could demand compensation payments. Necessary capacity
expansion at suppliers' plants could also require cost-effective
participation.
Supplier risk management aims to identify potential financial
bottlenecks for suppliers at an early stage and to initiate
suitable countermeasures. Although the crisis of recent years is
over, the situation of some of suppliers remains difficult due
to a high degree of competitive pressure. This has necessitated
individual or joint support actions by vehicle manufacturers to
safeguard their production and sales. In the context of supplier
risk management, regular reporting dates are set for suppliers
for which we have received early warning signals and made cor-
responding internal assessments. On those dates, the suppliers
report their key performance indicators to Daimler and decisions
are made concerning any required support actions.
Raw-material prices continued to feature significant volatility
in 2017. Due to almost completely unchanged macroeconomic
conditions, price fluctuations are expected with uncertain and
uneven trends in the near future. On the one hand, raw-material
markets can be impacted by political crises and uncertainties -
combined with possible supply bottlenecks - as well as by
volatile demand for specific raw materials; this increases the
risk from raw-material prices for the individual automotive
segments. Generally, the ability to pass on the higher costs of
commodities and other materials in the form of higher prices
for the manufactured vehicles is limited because of strong com-
petitive pressure in the international automotive markets.
Procurement market risks and opportunities
Procurement market risks arise for the automotive divisions in
particular from fluctuations in prices of raw materials and
energy. There are also risks of financial bottlenecks of suppliers
and of capacity bottlenecks caused by supplier delivery failures
or by insufficient utilization of production capacities at suppliers.
The risk situation relating to probability of occurrence and
impact has not changed compared with the previous year. Oppor-
tunities in the raw-material markets continue to exist due to
positive price developments for relevant raw materials. Com-
pared with the previous year, however, the extent of those
opportunities has decreased from “medium” to “low” as a result
of more pessimistic assumptions concerning the future develop-
ment of raw-material prices.
The extent of the risks and opportunities and the probability
of occurrence of the risks relating to the leasing and sales-
financing business continue to be assessed as low.
Possible regard residual-value risks for the automotive
divisions and the companies in the Daimler Financial Services
division that operate commercial fleet management and leas-
ing management are described in the section "General Market
Risks and Opportunities."
In connection with the sale of vehicles, Daimler offers its
customers a wide range of financing possibilities - primarily
of leasing and financing the Group's products. The resulting
risks for the Daimler Financial Services segment are mainly due
to borrowers' worsening creditworthiness, so receivables
might not be recoverable in whole or in part because of cus-
tomers' insolvency (default risk or credit risk). Daimler
counteracts credit risks by means of creditworthiness checks
on the basis of standardized scoring and rating methods and
the collateralization of receivables, as well as an effective risk
management with a firm focus on monitoring both internal
and macroeconomic leading indicators. Other risks associated
with the leasing and sales-financing business involve the
possibility of increased refinancing costs due to changes in
interest rates (interest rate risk).
and political framework
The Audit Committee of the Supervisory Board is responsible
for monitoring the internal control and risk management
system. The internal auditing department monitors whether
the statutory conditions and the Group's internal guidelines con-
cerning the internal control and risk management system of
the Group are adhered to. If required, measures are then initi-
ated in cooperation with the respective management. External
auditors audit the system for the early identification of risks
which is integrated in the risk management system for its
general suitability to identify risks threatening the existence of
the Group; in addition, they report to the Supervisory Board
on any significant weaknesses that have been recognized in the
internal control and risk management system.
Low
Industry and business risks and opportunities
In addition, risks and opportunities that are not yet known
or classified as not material can influence profitability, cash
flows and financial position.
The following section describes the risks and opportunities
that can have a significant influence on the profitability, cash
flows and financial position of the Daimler Group. In general,
the reporting of risks and opportunities takes place in relation
to the individual segments. If no segment is explicitly men-
tioned, the risks and opportunities described relate to all the
automotive divisions.
Risks and opportunities
Reports regarding the current risk situation and the effective-
ness, functionality and appropriateness of the internal control
and risk management system are regularly presented to the
Board of Management and to the Audit Committee of the Super-
visory Board of Daimler AG. Furthermore, the responsible
managers regularly discuss risks and opportunities out of busi-
ness operations with the Board of Management.
Responsibility for operational risk management and for the
risk management processes lies directly with the divisions,
corporate functions and legal entities.
157
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
In order to ensure the complete presentation and assessment
of existence-threatening and other material risks of the Group,
as well as the control and risk processes with regard to the
corporate accounting process, Daimler has established the
GRMC. It is composed of representatives of Accounting &
Financial Reporting, the Legal Department, Group Compliance
and Technical Compliance, and is chaired by the Board of
Management Member for Finance & Controlling/Daimler Finan-
cial Services. The internal auditing department contributes
material findings on the internal control and risk management
system.
The organizational embedding and monitoring of risk and
opportunity management takes place through the risk manage-
ment organization established at the Group. In this context,
the divisions, corporate functions and legal entities are requested
to report on concrete risks and opportunities at regular inter-
vals. This information is passed on to Group Risk Management,
which processes the information and provides it to the Board
of Management and the Supervisory Board as well as to the
Group Risk Management Committee (GRMC).
The effectiveness of the internal control system is systematically
assessed with regard to the corporate accounting process.
The first step consists of risk analysis and the definition of con-
trol. Significant risks are identified relating to the processes
of corporate accounting and financial reporting in the main legal
entities and corporate functions. The controls required are
then defined and documented in accordance with Group-wide
guidelines. Random samples are regularly tested to assess the
effectiveness of the controls. Those tests constitute the basis
for self-assessment of the appropriate magnitude and effec-
tiveness of the controls. The results of this self-assessment are
documented and reported in a Group-wide IT system. Identified
weaknesses are eliminated with consideration of their potential
effects. At the end of the annual cycle, the selected legal enti-
ties and corporate functions confirm the effectiveness of the
internal control and risk management system with regard to
the corporate accounting process. The Board of Management
and the Audit Committee of the Supervisory Board are regu-
larly informed about the main control weaknesses and the effec-
tiveness of the control mechanisms installed. However, the
internal control and risk management system for the accounting
process cannot ensure with absolute certainty that material
false statements in accounting are avoided.
- processes are established for the segregation of duties and
for the "four-eyes principle" (dual accountability) in the
context of preparing financial statements, and authorization
and access rules exist for relevant IT accounting systems.
- processes are established to guarantee the completeness
of financial reporting;
- issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
- transactions within the Group are accounted
for and properly eliminated;
the Group's uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
The system includes principles and procedures as well as
preventive and detective controls. Among other things, it is
regularly checked, if
The internal control and risk management system with
regard to the accounting process has the objective of ensuring
the correctness and effectiveness of accounting and financial
reporting. It is designed in line with the internationally recognized
framework for internal control systems of the Committee of
Sponsoring Organizations of the Treadway Commission (COSO
Internal Control - Integrated Framework), is continually devel-
oped further, and is an integral part of the accounting and
financial reporting processes in all relevant legal entities and
corporate functions.
The tasks of the employees responsible for risk and opportunity
management include, besides the identification and assess-
ment of risks and opportunities, the development of measures
and the initiation of such measures, if necessary. The objective
of such measures is to avoid, reduce or transfer risks. The utili-
zation or enhancement of an opportunity, and its partial or full
implementation, also require measures to be taken. The cost-
effectiveness of a measure is assessed before its implemen-
tation. The development of all risks and opportunities of the indi-
vidual entities and of the related measures that have been
initiated are continually monitored. The management activities
take place at the level of the divisions based on individual risks
and opportunities.
The scope of consolidation for risk and opportunity management
corresponds to the scope of consolidation of the consolidated
financial statements and goes beyond that if necessary. The risks
and opportunities of the divisions and operating units, impor-
tant associated companies, joint ventures, joint operations and
the corporate departments are included.
Risk management is based on the principle of completeness.
This means that at the level of the individual entities, all concrete
risks enter the risk management process. General uncertain-
ties without any clear indication of a possible effect on earnings
are monitored within the internal control system (ICS).
Group level, risks and opportunities below €500 million are
classified as low, between €500 million and €1 billion as medium,
and above €1 billion as high. For the quantification of each
risk and opportunity category in the Management Report, the
individual risks and opportunities are summarized for each cat-
egory. The assessment of the dimensions probability of occur-
rence and possible impact is based on the levels shown in table
7 B.57 and is conducted before measures are implemented. In
addition to the quantifiable risks and opportunities, risk man-
agement also considers qualitative risks and opportunities, which
primarily comprise those risks connected with aspects pre-
sented in the non-financial report. In the context of describing
the risk and opportunity categories, significant changes in
comparison to the prior year are explained.
Risk assessment takes place on the basis of probability of
occurrence and possible impact according to the levels low,
medium and high. These levels also apply to the possible
impact of opportunities. An analysis of the probability of occur-
rence is not considered here. When assessing the impact of
a risk or opportunity, its effect on EBIT is generally considered.
156 B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Company-specific risks and opportunities
The following section describes the industry and business
risks and opportunities of the Daimler Group. A quantification
of these risks and opportunities is shown in table 7 B.58.
Risks relating to the legal
Economic risks and opportunities
Like the majority of economic research institutes, Daimler
expects the world economy to grow by more than 3% once again
in 2018, following the perceptible acceleration of growth in
2017. Economic developments in 2017 are described in detail
in the "Economic Conditions and Business Development"
section of this Management Report; growth assumptions for
2018 are explained in the “Outlook" section
and 170 ff.
Procurement market opportunities
High
Low
Procurement market risks
Low
Opportunities relating to leasing
and sales financing
Low
Low
and sales financing
Risks relating to leasing
High
General market opportunities
High
Low
General market risks
Impact
Opportunity category
Impact
Probability
of occurrence
Risk category
Industry and business risks and opportunities
B.58
In the United States, the tax reform recently passed and a
generally more expansive fiscal policy could result in additional
impetus that has not previously been considered. If a signifi-
cantly more dynamic investment activity ensues there, leading
to stronger growth in combination with positive employment
and income effects, this could boost demand in all automotive
divisions. As the Daimler Group generates a substantial pro-
portion of its revenue in the United States, especially in the
Mercedes-Benz Cars, Daimler Trucks and Daimler Financial
Services divisions, these developments would have consider-
able consequences for the Group's success. Furthermore,
stronger growth in the United States would also have spillover
effects on the rest of the world. However, the disadvantages
of such an expansionary fiscal policy are a worsening of the debt
situation in the United States and the risk that the central
bank ("Fed") might feel forced to raise interest rates more sig-
nificantly than previously assumed in order to counteract
strong inflationary pressure. This would increase the existing
risks arising from the Fed's exit from its expansive monetary
policy and from the increase in the federal funds rates. As a
result, increasing lending rates could dampen the recovery
of the real-estate market and companies' propensity to invest.
There is also the risk of sharp falls in share prices triggering
a chain reaction on global stock markets, resulting in major
Economic risks and opportunities are linked with assumptions
and forecasts concerning general developments. The relation-
ship between risks and opportunities at the beginning of the
year 2018 is more balanced than in the previous year; however,
numerous risks continue to exist for the world economy.
pages 95 ff
Economic risks and opportunities constitute the framework for
the risks and opportunities listed in the following categories
and are integrated as premises into the quantification of these
risks and opportunities. Overall economic conditions have a
significant influence on vehicle sales markets and thus on the
Group's success.
Probability
Low
Impact
Commodity price opportunities
Low
Low
Commodity price risks
Interest rate opportunities
Low
Low
Interest rate risks
Exchange rate opportunities
High
Low
Exchange rate risks
Impact
Opportunity category
Impact
of occurrence
Risk category
Probability
Financial risks and opportunities
B.60
As already described in the section "Procurement market risks
and opportunities", the Group's business operations are
exposed to changes in the market prices of purchased parts,
components and raw materials. The Group addresses these
procurement risks by means of concerted commodity and sup-
plier risk management. To a minor degree, derivative financial
instruments are used to reduce the Group's market price risks
related to the purchase of certain metals.
Commodity price risks and opportunities
The Group is subject to equity price risks in connection with
its listed associated companies and joint ventures. As of
December 31, 2017, the only shares that Daimler holds are
shares that are included in the consolidated financial state-
ments using the equity method (primarily BAIC Motor). The
Group does not include these investments in a market price
risk analysis. The section "Risks and opportunities related to
associated companies, joint ventures and joint operations"
provides more information on equity risks and opportunities.
Equity price risks and opportunities
Changes in interest rates can create risks and opportunities
for business operations as well as for financial transactions.
Daimler employs a variety of interest-rate sensitive financial
instruments to manage the cash requirements of its business
operations on a day-to-day basis. Most of these financial instru-
ments are held in connection with the financial services busi-
ness of Daimler Financial Services, whose policy is generally
to perform term-congruent refinancing. However, to a limited
extent, the funding does not match in terms of maturities and
interest rates, which gives rise to the risk of changes in inter-
est rates. The funding activities of the industrial business and
the financial services business are coordinated at Group
level. Derivative interest rate instruments such as interest rate
swaps are used to achieve the desired interest rate maturities
and asset/liability structures (asset and liability management).
High
Interest rate risks and opportunities
Low
Low
Risk category
Low
Opportunities from changes in credit ratings
Low
Low
Risks from changes in credit ratings
High
Opportunities relating to pension plans
High
Low
Risks relating to pension plans
Opportunities of credit repayment requirements
Low
Low
Risks of credit repayment requirements
Opportunities of restricted capital-market access
Medium
Low
Risks of restricted capital-market access
Country opportunities
Low
Low
Country risks
Credit opportunities
Low
Credit risks
The Daimler Group's global orientation means that its business
operations and financial transactions are connected with risks
and opportunities related to fluctuations in currency exchange
rates. This applies in particular to fluctuations against the euro
of the US dollar, Chinese renminbi, British pound and other
currencies such as those of growth markets. An exchange rate
risk or opportunity arises in business operations primarily
when revenue is generated in a currency different from that of
the related costs (transaction risk). This applies in particular
to the Mercedes-Benz Cars division, as a major portion of its
revenue is generated in foreign currencies while most of its
production costs are denominated in euros. The Daimler Trucks
division is also exposed to such transaction risks, but to a
lesser degree because of its worldwide production network.
Regularly updated currency risk exposures are successively
hedged with suitable financial instruments (predominantly cur-
rency forwards and options) in accordance with exchange
rate expectations, which are continually reviewed, whereby both
risks and opportunities are limited. Any overcollateralization
caused by changes in exposure is generally reversed by suitable
measures without delay. Exchange rate risks and opportunities
also exist in connection with the translation into euros of the net
assets, revenues and expenses of the companies of the
Group outside the euro zone (translation risk); these risks are
not generally hedged.
of occurrence
In addition, the Group is exposed to credit and country-related
risks, risks of restricted access to capital markets and risks
of early credit repayment requirements. As part of the risk
management process, Daimler regularly assesses these risks
by considering changes in key economic indicators and market
information. Pension plan assets to cover retirement and
healthcare benefits (market-sensitive investments including
equities and interest-bearing securities) are not included in
the following analysis.
In principle, there is a danger that infrastructure problems or the
failure of production equipment or production plants may
cause internal bottlenecks that would consequently generate
costs. With the parallel failure of several production plants, the
resulting effects could accumulate. These risks mainly exist for
the Mercedes-Benz Cars segment. The production equipment
is continually maintained and modernized. As a precaution, spare
parts are held available or, if required, redundant machines
are purchased for the production plants that might be at risk.
In the context of product launches, the required parts and
equipment components have to be available. To avoid restrictions
in this context, the related processes are continually evaluated
and improved. In order to secure and enhance the long-term
future viability of production facilities, modernization, expan-
sion, construction and restructuring measures are carried out
as required. The execution of modernization activities and
the launch of new products are generally connected with high
investments. For example, stipulations, plant reconstruction
or delays in the ramp-up phase of an innovation or during a prod-
uct's lifecycle can lead to a short-term reduction in production
volumes. Those automotive segments are affected which are
currently launching a new product or have planned a related
production ramp up. In this context, it is also necessary to con-
sider dependencies between contractual and cooperation part-
ners, as well as possible changes in regional conditions, which
have to be included in the local decision-making process.
Production and technology risks and opportunities
Key success factors for achieving the desired level of prices
for the products of the Daimler Group - and hence for the
achievement of corporate targets - are brand image, design
and quality, and thus the acceptance of products by custom-
ers, as well as technical features based on innovative research
and development. Convincing solutions, which for example
support accident-free driving or further improve the products'
fuel consumption and emissions, such as hybrid or electric
vehicles, are of key importance for safe and sustainable mobil-
ity. Innovations and technology opportunities for the progres-
sive and future-oriented design of the product range flow into
the strategic product planning of the automotive divisions.
However, due to increasing technical complexity, the continu-
ally rising extent of requirements in terms of emissions, fuel
consumption and safety, as well as meeting and steadily raising
the Daimler Group's quality standards, product launches and
manufacturing in the automotive divisions are also subject to
production and technology risks.
The following section describes the company-specific risks
and opportunities of the Daimler Group. A quantification of
these risks and opportunities is shown in table 71 B.59.
Company-specific risks and opportunities
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B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Low
Opportunities related to equity interests
and joint ventures
Medium
Low
Risks related to equity interests
Production and technology opportunities
Information technology opportunities
Personnel opportunities
Low
Low
Personnel risks
Medium
Low
Information technology risks
High
Low
Production and technology risks
Impact
Opportunity category
Exchange rate risks and opportunities
Insufficient availability of vehicle components at the right time,
interruptions in the supply chain and possible interruptions in
supply by energy providers can lead to bottlenecks, especially
at the Mercedes-Benz Cars division. In order to avoid such
bottleneck situations, importance is placed upon being able
to compensate for capacity constraints through forward
planning. In addition, supply chains and the availability and qual-
ity of products are continuously monitored within the context
of managing the entire value chain. Supplier management is
undertaken for the prevention of risks with the aim of increas-
ing inventories in good time and building up alternative supply
lines, as required.
Warranty and goodwill cases could arise in the Daimler Group
if the quality of the products does not meet the requirements,
regulations are not fully complied with, or support cannot be
provided in the required form in connection with product prob-
lems and product care. Quality problems with components in
vehicles from external suppliers - as for example in connection
with the industry-wide problems with Takata airbags - can
require technical adjustments that can lead to considerable
expenses. Possible claims in connection with such risks are
examined and, if necessary, the appropriate measures are initi-
ated for the affected products. This can reduce the products'
profitability and generate follow-up costs. The Daimler Group
works continually and intensively to maintain product quality
at a very high level, along with growing product complexity, in
order to avoid the need for correction measures on end products
and thus to supply customers with the best possible products.
and joint ventures
Information technology risks and opportunities
The digitization strategy that is systematically pursued at
Daimler offers new possibilities for enhancing customer bene-
fits and enterprise value. However, it also includes risks from
the increasing IT dependency of products and business and pro-
duction processes. In addition, specific risks exist due to the
use and availability of new technologies in connection with digiti-
zation, which amongst others can affect the products, their
use, or business operations. In addition, risks from cybercrime
and hacker attacks cannot be ruled out.
165
The probability of occurrence and possible impact of produc-
tion and technology risks are unchanged compared with the
previous year across all segments.
Group's profitability, cash flows and financial position. Daimler
manages and monitors market price risks and opportunities
primarily in the context of its operational business and financing
activities, and applies derivative financial instruments for
hedging purposes where needed, thus limiting both market price
risks and opportunities.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Daimler is generally exposed to risks and opportunities from
changes in market prices such as currency exchange rates,
interest rates, commodity prices and share prices. Market price
changes can have a negative or positive influence on the
In principle, the Group's operating and financial risk exposures
underlying its financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. cur-
rency exposures), risks and opportunities exist equally, while
with the asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the opportunities.
The following section deals with the financial risks and oppor-
tunities of the Daimler Group. Risks and opportunities can have
a negative or positive effect on the profitability, cash flows
and financial position of the Daimler Group. The probability of
occurrence and possible impact of these risks and opportuni-
ties is presented in table 7 B.60.
Financial risks and opportunities
All associated companies, joint ventures and joint operations
are subject to a continuous monitoring process so that they
can be promptly supported if required and their profitability
can be ensured. The recoverable value of investments is also
continually monitored.
Risks and opportunities can arise from the remeasurement of an
associated company, joint venture or joint operation relating
to the corresponding carrying value for the segment to which it
is allocated. Furthermore, the business activities of an associ-
ated company, joint venture or joint operation, or a disposal or
acquisition of a stake in such an entity, could cause financial
obligations or an additional financing requirement, but could
also cause higher income or cash inflows in excess of the tar-
gets set. Such risks are also generally connected with startups
whose further development is not yet foreseeable. Risks exist
in the Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans and Daimler Financial Services segments, as well as in
the associated companies, joint ventures and joint operations
directly allocated to the Group.
The Daimler Group generally participates in the risks and
opportunities of associated companies, joint ventures and joint
operations in line with its ownership interest.
Cooperation with partners in associated companies, joint ven-
tures and joint operations and other types of partnership is of
key importance for Daimler. Along with ensuring better access
to growth markets and new technologies, these shareholdings
and partnerships help to utilize synergies and improve cost
structures in order to successfully respond to the competitive
situation in the automotive industry. Through investments in
startups, Daimler promotes innovative approaches in many areas
of the Group.
Risks and opportunities related to associated companies,
joint ventures and joint operations
Due to the development of the quoted portfolio and the increas-
ing, risky investments in startups, the possible impact of risks
in this category has increased compared with the previous year
from "low" to "medium." The probability of occurrence remains
unchanged.
Despite all precautionary measures, disturbances in information
processing and therefore negative impacts on the business
processes and on IT-based services cannot be completely ruled
Due to demographic developments, the Group has to cope with
changes relating to an aging workforce and has to secure a
sufficient number of qualified young persons with the potential
to become the next generation of highly skilled specialists
and executives. This issue is addressed by taking appropriate
measures in the area of generation management. If this risk
occurs, depending on the extent of the personnel shortage, an
impact is to be expected on the business activities and thus
also on the earnings of the Daimler Group.
Competition for highly qualified staff and management is still
very intense in the industry and the regions in which Daimler
operates. Future success also depends on the extent to which
the Daimler Group succeed over the long term in recruiting,
integrating and retaining specialist employees. The established
human resources instruments take such personnel risks into
consideration, while contributing toward the recruitment and
retention of staff with high potential and expertise and ensur-
ing transparency with regard to the resources of the Daimler
Group. One focus of human resources management is the
targeted personnel development and further training of the
workforce. Employees benefit for example from the range of
courses offered by the Daimler Corporate Academy and from
transparency in the context of performance management.
Management culture and principles are currently being further
developed in a Group-wide project.
The success of the Daimler Group is highly dependent on its
employees and their expertise. They are involved in their
respective activities and working processes with their ideas
and suggestions, and thus make significant contributions to
improvements and innovations every day.
Personnel risks and opportunities
The impact and probability of occurrence of IT risks remain
unchanged compared with the previous year.
out.
It is essential for a global company like Daimler AG that
information is available and can be exchanged in an up-to-date,
complete and correct form. Appropriately secure IT systems
and a reliable IT infrastructure must be used to protect informa-
tion. The Daimler Group intends to identify and evaluate risks
that could result in the interruption of business processes due
to the failure of IT systems or which could cause the loss or
corruption of data, over the entire lifecycle of applications and
IT systems.
Due to growing requirements concerning the confidentiality,
integrity and availability of data, Daimler has defined various
preventive and corrective measures so that the related risks
are minimized and possible damage is limited. These measures
are continually adapted to changing circumstances. For exam-
ple, the Group minimizes potential interruptions of operating
processes in data centers by means of mirrored data sets,
decentralized data storage, outsourced data backups and IT
systems designed for high availability. Emergency plans are
developed, employees are trained sensitized, and further tech-
nical and organizational precautions are taken in order to
maintain operating capability. Specific threats are analyzed and
countermeasures are coordinated at a central cyber security
center. The protection of products and services from danger
caused by hacking and cybercrime is continually developed.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
There is no segment-specific assessment of the human resources
risk because the described risks are not related to any specific
business segment, but are valid for all segments in the respective
regions. Overall, personnel risks are reduced compared to
the previous year in terms of impact from "medium" to "low". The
probability of occurrence remains unchanged.
164
Our divisions currently have very attractive product ranges,
which have been expanded and systematically renewed in
recent years. We therefore assume that Daimler will profit to
an above-average extent from the slight growth in global
demand for motor vehicles that we expect in the year 2018,
and will be able to strengthen or defend its position in major
markets. At Mercedes-Benz Cars, additional growth this year
will be primarily driven by the E-Class models, the GLC SUV,
the new convertible models and the new A-Class. On the other
hand, revenue growth will be dampened by the anticipated
development of exchange rates and lifecycle effects from some
car models, as well as by a changing sales structure. Mercedes-
Benz Cars therefore anticipates revenue in 2018 only at the
high prior-year level despite a slight increase in unit sales. Due
to generally positive expectations for markets and unit sales,
the Daimler Trucks division plans for slight revenue growth, while
the Mercedes-Benz Vans, Daimler Buses and Daimler Financial
Services divisions anticipate significant increases in revenue.
Mercedes-Benz Cars: at the prior-year level,
Daimler Trucks: significantly above the prior-year level,
Mercedes-Benz Vans: slightly below the prior-year level,
Daimler Buses: significantly above the prior-year level, and
Daimler Financial Services: at the prior-year level.
Revenue and earnings
We assume that the revenue of the Daimler Group will also
increase slightly in 2018, as a result of the overall positive
development of unit sales in the automotive divisions.
Exchange-rate effects are likely to have a rather negative
impact on the development of revenue in the year 2018.
This applies above all to our business in the NAFTA region.
In regional terms, we expect further slight growth in revenue
in Asia and Europe. In China, we have created the right con-
ditions for further growth with new sales outlets, additional
production capacities and a broad product range. However,
growth in unit sales in China will have a disproportionately low
impact on revenue growth, as the share of local production will
continue to increase. Our Chinese associated company, Beijing
Benz Automotive China (BBAC), is included in our consolidated
financial statements using the equity method of accounting.
The individual divisions have the following expectations for
EBIT in the year 2018:
We are standardizing and modularizing our production processes
throughout the Group. In this context, we are making intelli-
gent use of vehicle platforms, allowing us to achieve further
cost advantages. In parallel, we are pushing forward with digi-
tal connectivity: in all divisions and at all stages of the value
chain - from development to production to sales and service.
In this way, we are opening up additional scope to become
even faster, more flexible and more efficient - to the benefit of
our customers.
However, earnings will be reduced by the continuation of very
high expenditure: for our model offensive, for innovative tech-
nologies (especially for reducing fuel consumption and for elec-
trification), for the digitization of our products and processes,
and for the expansion and modernization of the worldwide pro-
duction capacities. As a result, our advance expenditure aimed
at securing a successful future will once again be substantially
higher in 2018 than in the previous year.
page 174
On the basis of the market developments we anticipate, the
aforementioned factors and the planning of our divisions, we
assume that Group EBIT in 2018 will be of the magnitude of the
previous year.
173
The growth in unit sales and revenue that we anticipate will
have a generally positive impact on earnings in 2018. We have
laid the foundations for a lasting high level of earnings with
various programs for improved profitability, which we already
implemented in the years 2013 to 2015. Since then, we have
continuously been taking further measures in all divisions for
the long-term and structural optimization of our business sys-
tem. At Mercedes-Benz Cars for example, we aim to achieve
further efficiency improvements in the context of the F4L (Fit
for Leadership) program. Daimler Trucks is also working contin-
uously on efficiency improvements with its optimization pro-
gram. In combination with the cost optimizations we have so far
planned and partially already implemented, we aim to achieve
profit-effective improvements for Daimler Trucks in an amount
of €1.4 billion by the end of 2018. These programs are expected
to become fully effective in the year 2019.
B | COMBINED MANAGEMENT REPORT | OUTLOOK
Unit sales
-
Daimler Financial Services aims to achieve ongoing growth in
the coming years. In 2018, we expect further growth in contract
volume. This will be primarily driven by the strong develop-
ment of new business in 2017, which should continue at the
same high level this year. We are utilizing new market poten-
tial above all in China, and by means of new and digital pos-
sibilities for customer contacts – in particular through the
systematic further development of our online sales channels.
We continue to see good growth opportunities in the field of
innovative mobility services, where we are active with the brands
car2go, moovel and mytaxi, as well as with equity interests in
Blacklane and FlixBus and various startup companies.
Daimler Buses assumes that it will be able to defend its mar-
ket leadership in its most important traditional core markets for
buses above 8 tons with innovative, future-oriented and high-
quality products. We expect total unit sales in 2018 to be signif-
icantly above the prior-year level. We assume that unit sales in
the EU30 region will increase perceptibly. After the significant
increase in unit sales in Latin America last year, we anticipate
a further significant recovery in 2018. A positive development of
unit sales is expected also in India.
Mercedes-Benz Vans plans to significantly increase its unit
sales in the year 2018. Growth is expected to be particularly
strong in China and the United States. We anticipate signifi-
cant growth also in the EU30 region, due not least to the new
X-Class. In the context of our "Mercedes-Benz Vans goes global"
strategy for the division, we have expanded our portfolio with
the Mercedes-Benz X-Class, a premium pickup for markets in
Europe, South Africa, Australia and New Zealand. In Latin
America, market launch is planned for the year 2019. We expect
additional growth in 2018 from the new Sprinter, which we will
produce also in North America in the future.
Daimler Trucks assumes that its total unit sales in 2018 will be
significantly higher than in the previous year, primarily due to
the perceptible recovery of major markets. In the NAFTA region,
we anticipate unit sales significantly higher than the prior-year
level as a result of the ongoing market recovery apparent since
the second quarter of 2017. In the EU30 region, we expect unit
sales to be in the magnitude of the previous year. In Brazil, we
assume that unit sales in 2018 will significantly surpass the
low level of 2017. With our attractive product portfolio in the
Indian market, we expect to significantly increase our unit sales
and to further strengthen our market position. Furthermore,
with the expanded range of FUSO vehicles from Indian produc-
tion, we have the opportunity to generate additional sales in
Asia, Africa and Latin America. Our unit sales in Indonesia
should grow significantly once again, and we expect to sell a
similar number of trucks in Japan as we did in 2017.
As of the year 2020, the smart brand intends to sell solely cars
with electric drive in Europe and North America, and the other
regions will follow. The new electric-drive models of the smart
fortwo, smart fortwo Cabrio and smart forfour (electricity con-
sumption combined: 13.1-12.9 kWh/100 km; CO2 emissions
combined: 0 g/km) combine the agility of a smart with locally
emission-free driving at an affordable price - the ideal combina-
tion for urban mobility.
We are systematically expanding our worldwide production net-
work for electric mobility. Under the new brand EQ, which
stands for "Electric Intelligence," we will offer not only vehicles
but also services in connection with electric mobility. By the
year 2022, we want to electrify each segment across the entire
Mercedes portfolio. Our goal is to offer our customers at least
one electrified alternative in each segment - from the compact
car to the large SUV. We plan to have a total of more than 50
electrified models by the year 2022. This will include more than
ten fully electric vehicles, the plug-in hybrids and the models
with 48-volt technology.
We are well positioned also with our SUVs, including the
upgraded GLA, which we launched in 2017. The new G-Class
will make its mark in this segment as of this spring, and the
GLC models should continue along their growth path. In addi-
tion, our sports-car and high-performance brand Mercedes-
AMG continues to be an important sales driver. More and more
customers are fascinated by the broad and appealing range
of automobiles offered by Mercedes-AMG, which we are con-
tinually expanding.
Mercedes-Benz will launch more than a dozen new and
upgraded automobiles in 2018. Sales should be boosted in par-
ticular by our E-Class and C-Class model families. And our new
generation of the compact cars, which will be launched with
the A-Class this spring, should have a positive impact on unit
sales. Our product range will become even more attractive as
a result of several model upgrades. Above all, the new S-Class
sedan, which has been delivered to customers also as a coupe
and convertible since the beginning of 2018, should stimulate
demand in the luxury segment. With the new CLS coupe, which
had its premiere at the Los Angeles Auto Show in 2017, we
intend to continue this model series' success story.
Mercedes-Benz Cars will continue along its growth path in
2018. We intend to slightly increase our total unit sales, thus
reaching a new record level. Growth is anticipated above all in
China. This expectation is based on our attractive and innova-
tive model portfolio, which is more diverse than ever before.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
172
At Mercedes-Benz Cars, positive effects will result from the
anticipated growth in unit sales. They will be offset, however,
by the significant increase in advance expenditure for new
products and technologies, a less favorable sales structure
and negative exchange-rate effects.
On the basis of our assumptions concerning the development
of automotive markets and the divisions' planning, we expect
the Daimler Group to slightly increase its total unit sales in
2018.
Both Daimler Trucks and Daimler Buses should profit from
rising unit sales and the efficiency-enhancing measures.
To enable us to react flexibly to the high dynamism of the
environment, markets, new competitors and technologies,
we need an organization that facilitates rapid and agile
action. In the context of "Project Future," we aim to further
focus Daimler's divisional structure, thus strengthening the
future viability of the various businesses (COMPANY).
Against the backdrop of high advance expenditure for the
Sprinter model change, higher costs from the production
ramp-up of the new models and negative exchange-rate effects,
Mercedes-Benz Vans anticipates a slight decrease in earn-
ings. The expected growth in unit sales is unlikely to fully offset
these negative effects.
This document contains forward-looking statements that reflect our current
views about future events. The words "anticipate," "assume,” “believe,” “esti-
mate," "expect," "intend," "may," "can," "could," "plan," "project," "should"
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline
of demand in our most important markets; a deterioration of our refinancing
possibilities on the credit and financial markets; events of force majeure
including natural disasters, acts of terrorism, political unrest, armed con-
flicts, industrial accidents and their effects on our sales, purchasing, produc-
tion or financial services activities; changes in currency exchange rates; a
shift in consumer preferences towards smaller, lower-margin vehicles; a pos-
sible lack of acceptance of our products or services which limits our ability to
achieve prices and adequately utilize our production capacities; price
increases for fuel or raw materials; disruption of production due to shortages
of materials, labor strikes or supplier insolvencies; a decline in resale prices
of used vehicles; the effective implementation of cost-reduction and effi-
ciency-optimization measures; the business outlook for companies in which
we hold a significant equity interest; the successful implementation of strate-
gic cooperations and joint ventures; changes in laws, regulations and govern-
ment policies, particularly those relating to vehicle emissions, fuel economy
and safety; the resolution of pending government investigations or of investi-
gations requested by governments and the conclusion of pending or threat-
ened future legal proceedings; and other risks and uncertainties, some of
which we describe under the heading "Risk and Opportunity Report" in this
Annual Report. If any of these risks and uncertainties materializes or if the
assumptions underlying any of our forward-looking statements prove to be
incorrect, the actual results may be materially different from those we
express or imply by such statements. We do not intend or assume any obliga-
tion to update these forward-looking statements since they are based solely
on the circumstances at the date of publication.
Forward-looking statements
With the four strategic areas for action - CORE, CASE, CUL-
TURE and COMPANY - we are setting the course for a successful
future, and we reached some important milestones in 2017.
Against this backdrop, we look to the year 2018 with confidence.
We expect both unit sales and revenue to be higher than in the
previous year, and should continue to achieve a high level of
earnings despite the high volume of expenditure to safeguard
our future.
We expect a market volume for buses in the magnitude of the
previous year in the EU30 region. The market situation in Latin
America will be influenced by the economic upturn in Argen-
tina and Brazil. Following the significant decline until 2016 and the
turnaround in 2017, we assume that the significant market
recovery will continue in 2018.
We are very well positioned in our markets with innovative
products and services. We are increasingly succeeding in
addressing new target groups, utilizing additional market
potential and strengthening our market position worldwide.
With the efficiency programs that have been implemented
in all divisions in recent years, we have improved our cost
structures on a sustained basis and thus laid the founda-
tions for a high level of profitability. We are currently taking
further measures in all divisions for the long-term and
structural optimization of the business system. In this way, we
are strengthening our core business (CORE) and creating the
financial basis to invest in the future of the company.
We will therefore significantly increase our advance expendi-
ture for new products and technologies once again in 2018.
Especially in the strategic, future-oriented areas of connectiv-
ity, autonomous driving, flexible use and services, and electric
drive, as well as by intelligently linking up those areas (CASE),
we will therefore play a leading role also in the future.
Together with the workforce, we are developing a new leader-
ship culture under the heading of "Leadership 2020" that will
allow us to successfully shape our future. In this way, we are
meeting the challenges of the digital world and creating the
basis for cultural changes at the Group (CULTURE).
-
-
-
At the end of the 2017 financial year, we continue to be on a
path of stable and profitable growth. We will consistently imple-
ment our strategy also in the coming years, thus creating the
basis for further growth.
Overall statement on future development
Due to the growth in unit sales and revenue we anticipate,
production volumes will continue rising in 2018. At the same
time, the efficiency-enhancing measures we have implemented
at all divisions in recent years are now taking effect. The
medium- and long-term measures we have taken for structural
improvements in our business processes should facilitate
further efficiency progress. Against this backdrop, we assume
that we will be able to achieve our growth targets with only
slight workforce growth. Additional jobs will be created in par-
ticular through the expansion of our international production
network, as well as in the area of research and development
for projects in the future areas of electric mobility and digiti-
zation. Companies that we operate together with Chinese
partners and whose employees are not included in the figures
for the Daimler Group are also likely to recruit additional
employees.
The workforce
175
Daimler Financial Services assumes that its earnings will
develop positively as a result of further growth in contract vol-
ume and the optimization of business processes. Increased
investment in new businesses and the advance of digitization,
as well as higher interest rates and exchange-rate effects, will
probably have a negative impact on earnings.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
Research and development
Following the significant increase in the year 2017, capital
expenditure at Mercedes-Benz Cars will increase again in
2018. This is primarily due to the product offensive and the
expansion of production capacities. The most important proj-
ects include the successor models of the current compact
class, the C-Class, the product ramp-up of the new GLE and
GLS, and the new gasoline and diesel engines of the new
engine series. Substantial investment is planned also for the
realignment of our German production sites, for the expan-
sion of our international production network, and for the
worldwide production network for electric mobility. Daimler
Trucks will mainly invest in successor generations of existing
products, in new products, in global component projects, in
the optimization of its worldwide production network and in
the new Daimler Trucks Campus. At Mercedes-Benz Vans, the
focus of capital expenditure will be on production of the next
generation of the Sprinter in Germany and the United States.
Key projects at Daimler Buses are improvements in the pro-
duction network and advance expenditure for new models, in
particular for the development of an electrically powered city
bus.
again significantly increase our investment in property, plant
and equipment in the year 2018.
In order to achieve our ambitious growth targets, we will sys-
tematically expand our product range in the coming years.
At the same time, we want to be able to play a leading role in
the far-reaching technological transformation of the automo-
tive industry. This applies in particular to the increasing elec-
trification of our product portfolio and to the digital connec-
tivity of our products and processes along the entire value chain.
By intelligently connecting the constantly growing volumes
of data, we will create efficiency advantages, improve our
product quality and facilitate the ongoing flexibilization of the
production process. Against this backdrop, we will once
Investment
We aim to maintain a sustainable dividend development also
in the coming years. In setting the dividend, our target is
generally to distribute approximately 40% of the net profit
attributable to Daimler shareholders.
At the Annual Shareholders' Meeting on April 5, 2018, the Board
of Management and the Supervisory Board will propose an
increased dividend of €3.65 per share for the year 2017 (prior
year: €3.25). This represents a total distribution of €3.9 billion
(prior year: €3.5 billion). With this proposal, our shareholders
are participating in the Company's success.
Dividend
For the year 2018, we aim to have liquidity available in a vol-
ume appropriate to the general risk situation in the financial
markets and to Daimler's risk profile. When measuring the
level of liquidity, we give due consideration to possible refi-
nancing risks caused for example by temporary distortions in
the financial markets. We continue to assume, however, that
we will have very good access to the capital markets and the
bank market also in the year 2018. We aim to cover our fund-
ing needs in the planning period primarily by means of bonds,
commercial paper, bank loans, customer deposits in the
direct banking business and the securitization of receivables
in the financial services business; the focus will be on bonds
and loans from globally and locally active banks. In view of
the very good liquidity situation of the international capital
markets and our strong creditworthiness, we expect a contin-
uation of very attractive refinancing conditions in 2018. An
additional goal is to continue securing a high degree of finan-
cial flexibility.
The anticipated development of earnings in the automotive
divisions will have a positive impact on the free cash flow of
the industrial business. There will be a negative effect, how-
ever, from the further increase in advance expenditure for
new products and technologies. Under these conditions, we
assume that the free cash flow of the industrial business
should be significantly higher than in the previous year and
also higher than the dividend distribution planned in 2018. It
must be taken into consideration, however, that the free
cash flow of the industrial business in 2017 was reduced by an
extraordinary contribution of €3 billion to the German pen-
sion fund assets.
Free cash flow and liquidity
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
174
With our research and development activities, our goal is to fur-
ther strengthen Daimler's competitive position against the
backdrop of upcoming technological challenges. We want to
create competitive advantages above all by means of innovative
solutions for low emissions and safe mobility. In addition, we
intend to utilize the growth opportunities offered by worldwide
automotive markets with new and attractive products. We are
increasingly focusing on the strategic areas for the future of
connectivity, autonomous driving, flexible use and services, and
electric drive. We aim to occupy a leading position in these
areas, both individually and by linking them up intelligently. In
order to achieve our goals, we will once again slightly increase
our total expenditure for research and development in 2018. At
Mercedes-Benz Cars, a large part of that expenditure will flow
into the renewal and expansion of our model range. The divi-
sion's most important projects are the successor models of the
compact cars, the GLE and GLS SUVs, and the new C-Class.
We are also working hard on new, low-emission combustion
engines, electric mobility, the connectivity of our vehicles, and
innovative safety technologies for autonomous driving. At Daim-
ler Trucks, the focus will be on activities in the areas of fuel effi-
ciency and emission reductions, as well as expenditure for tai-
lored products and technologies for important growth markets.
The topics of electric mobility, connectivity and automated
driving also play an increasingly important role. Key projects
at Mercedes-Benz Vans are the successor generation of the
Sprinter and the further development of the Vito and V-Class.
Furthermore, Mercedes-Benz Vans is pushing forward with the
electrification of its commercial model series. Another impor-
tant topic is the connectivity of products and processes, espe-
cially the innovative connectivity solution, Mercedes PRO. An
important area of research and development at Daimler Buses
is to meet future emission standards and to increase fuel effi-
ciency. Also at Daimler Buses, other focus areas are alternative
drive systems, electrification and connectivity.
In the EU30 region in 2018, we expect slight market growth
for small vans, for the combined segment of mid-size and
large vans, and for the segment of mid-size pickups. In the
United States, demand for large vans should be slightly
stronger than in the previous year. The market for large vans
in Latin America should continue its recovery in 2018. In
China, we also expect a significant recovery of demand in
the market we address there.
The overall view of the Group's risk and opportunity situation is
the sum of the described individual risks and opportunities of all
risk and opportunity categories for the divisions, the corporate
functions and the legal entities.
In an ongoing favorable economic environment, we assume
that demand in the EU30 region (European Union, Switzerland
and Norway) will maintain the robust market volume of the previ-
ous year. After the long weakness of demand of recent years in
Brazil, it is to be expected that a somewhat livelier economic
recovery will also bring about significant growth of the truck
market, although from a very low level. The Turkish market
should also grow significantly from its present low level. In Rus-
sia, we expect further significant growth in demand for trucks.
As a company with worldwide activities, Daimler AG is at the
focus of public interest. In this context, the relevant stake-
holders' perception is of crucial importance and can affect the
reputation of the entire Daimler Group page 214 "Non-
Financial Report." A key role in the public's current perception
is played by the company's approach to environmental,
employee and social matters, fighting corruption and bribery,
and respecting human rights.
Non-financial risks
Although the final result of any such litigation may influence
the Group's earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely to
have a sustained effect on the Group's cash flows, financial
position or profitability. Further information on legal proceed-
ings is provided in Note 29 of the Notes to the Consoli-
dated Financial Statements.
As legal proceedings are fraught with a large degree of uncer-
tainty, it is possible that after their final resolution, some of
the provisions we have recognized for them could prove to be
insufficient. As a result, substantial additional expenditures
may arise. This also applies to legal proceedings for which the
Group has seen no requirement to recognize a provision.
investigation, it cannot be ruled out that the various authorities
might reach the conclusion that Mercedes-Benz diesel vehicles
have similar functionalities. The inquiries and investigations as
well as the replies to the governmental information requests
and our internal investigation are still ongoing and open; hence,
Daimler cannot predict the outcome at this time. If these or
other inquiries, investigations, legal actions and/or proceedings
result in unfavorable findings, an unfavorable outcome or
otherwise develop unfavorably, Daimler could be subject to
significant monetary penalties, remediation requirements,
vehicle recalls, process improvements, mitigation measures and
the early termination of promotional loans, and/or other sanc-
tions, measures and actions, including further investigations by
these or other authorities and additional litigations. The occur-
rence of the aforementioned events in whole or in part could
cause significant collateral damage including reputational
harm. In addition, Daimler's ability to defend itself in litigations
could be impaired by unfavorable findings, results or develop-
ments in any of the governmental information requests, inquiries,
investigations, legal actions and proceedings discussed above.
Therefore, it cannot be ruled out that the risks discussed above
may materially adversely impact our profitability, cash flows
and financial situation.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
168
Currently, Daimler is subject to governmental information
requests, inquiries and investigations as well as litigation relat-
ing to environmental, securities, criminal, antitrust and other
laws and regulations in connection with diesel exhaust emissions.
Several federal and state authorities and institutions worldwide
have inquired about and/or are investigating test results, the
emission control systems used in Mercedes-Benz diesel vehi-
cles and/or Daimler's interaction with the relevant federal and
state authorities as well as related legal issues and implications,
including, but not limited to, under applicable environmental,
securities, criminal and antitrust laws. These authorities include,
amongst others, the U.S. Department of Justice ("DOJ"), which
has requested that Daimler conduct an internal investigation, the
U.S. Environmental Protection Agency ("EPA"), the California
Air Resources Board ("CARB") and other US state authorities,
the U.S. Securities and Exchange Commission ("SEC"), the
European Commission, with which Daimler has filed a leniency
application, as well as national cartel authorities and other
authorities of various foreign states as well as the German Fed-
eral Financial Supervisory Authority ("BaFin") and the German
Federal Motor Transport Authority ("KBA”). The Stuttgart district
attorney's office is conducting criminal investigation proceed-
ings against Daimler employees on the suspicion of fraud and
criminal advertising, and searched the premises of Daimler at
several locations in Germany. Further, Daimler comprehensively
responded to the diesel emissions committee of inquiry of the
German Parliament. Daimler continues to fully cooperate with
the authorities and institutions. Irrespective of such coopera-
tion by Daimler, it is possible that further civil and criminal inves-
tigative and enforcement actions and measures relating to
Daimler and/or its employees will be taken, such as subpoenas,
i.e. legal instructions issued under penalty of law in the pro-
cess of taking evidence, or other requests for documentation,
testimony or other information, further search warrants, a
notice of violation or an increased formalization of the govern-
mental proceedings. Additionally, delays in obtaining regulatory
approvals necessary to introduce new or recertify existing diesel
models could occur. In light of the notices of violation that were
issued by US environmental authorities to another vehicle manu-
facturer in January of 2017 and the related complaint filed by the
United States against such manufacturer in May 2017, identifying
functionalities, apparently including functionalities that are com-
mon in diesel vehicles, as undisclosed Auxiliary Emission Control
Devices (AECDs) and, in some unspecified cases, as imper-
missible, and in light of the ongoing governmental information
requests, inquiries and investigations, and our own internal
The automotive industry is subject to extensive governmental
regulations worldwide. Laws in various jurisdictions regulate
occupant safety and the environmental impact of vehicles,
including emission levels, fuel economy and noise, as well as
the pollutants generated by the plants where vehicles are
produced. Noncompliance with regulations applicable in the
different regions could result in significant penalties and
reputational harm or the inability to sell vehicles in the rele-
vant markets. The cost of compliance with these regulations
is significant, and in this context, Daimler expects a significant
increase in such costs.
Various legal proceedings, claims and government investigations
(legal proceedings) are pending against Daimler AG and its
subsidiaries on a large number of topics, including vehicle safety,
emissions, fuel economy, financial services, dealer, supplier
and other contractual relationships, intellectual property rights,
warranty claims, environmental matters, antitrust matters
(including actions for damages) and shareholder litigation. Prod-
uct-related litigation involves claims alleging faults in vehicles,
some of which have been made as class actions. If the outcome
of such legal proceedings is detrimental to Daimler, the Group
may be required to pay substantial compensatory and punitive
damages or to undertake service actions, recall campaigns,
monetary penalties or other costly actions. Some of these legal
proceedings may have an impact on the Group's reputation.
Legal risks
Issuing guarantees results in liability risks for the Group. For
example, Daimler holds an equity interest in the road-charging
system in Germany, which records the use of autobahns and
selected federal highways by commercial vehicles and charges
tolls accordingly. The operation of the electronic toll-collection
system is the responsibility of the operator company, Toll Collect
GmbH, in which Daimler holds a 45% stake through Daimler
Financial Services AG and which is included in the consolidated
financial statements using the equity method of accounting. In
addition to Daimler's membership of the Toll Collect consortium
and its equity interest in Toll Collect GmbH, risks also arise
from guarantees that Daimler Financial Services AG has assumed
with the other partners in the Toll Collect consortium (Deutsche
Telekom AG and Cofiroute S.A.) supporting obligations of Toll
Collect GmbH toward the Federal Republic of Germany. These
guarantees are connected with the toll system and a call option
of the Federal Republic of Germany, i.e. the possibility of the
Federal Republic of Germany to take over the shares in Toll
Collect GmbH. Claims could be made under those guarantees if
toll revenue is lost for technical reasons, if certain contractually
defined performance parameters are not fulfilled, if additional
claims are made by the Federal Republic of Germany, if the
final operating permit is not granted, if Toll Collect GmbH fails to
meet contractual obligations, if it fails to have the required equip-
ment available, or if the Federal Republic of Germany takes over
Toll Collect GmbH. The maximum loss risk for the Group from
these risks can be substantial. Additional information is provided
in Note 29 (Legal proceedings) and Note 30 (Financial
guarantees, contingent liabilities and other financial obligations)
of the Notes to the Consolidated Financial Statements.
Risks from guarantees
The Group continues to be exposed to risks from guarantees
as well as legal risks and tax risks. Provisions are recognized
for those risks if and insofar as they are likely to be utilized
and the amounts of the obligations can be reasonably estimated.
No quantitative assessment of these risks is carried out.
Risks from guarantees, legal and tax risks
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 167
Risks and opportunities from changes in credit ratings
Daimler's creditworthiness is assessed by the rating agencies
S&P Global Ratings, Moody's Investors Service, Fitch Ratings,
Scope Ratings and DBRS. Risks and opportunities exist in con-
nection with potential downgrades or upgrades to credit ratings
by these rating agencies. Downgrades could have a negative
impact on the Group's financing if such a downgrade leads to
an increase in the costs for external financing or restricts the
Group's ability to obtain financing. A credit rating downgrade
could also damage the company's reputation or discourage inves-
tors from investing in Daimler AG. A risk to the credit rating of
the Daimler Group could also arise if the earnings and cash flows
anticipated from the Group's growth could not be realized.
Credit rating upgrades could lead to lower borrowing costs for
the Group and also facilitate its access to financing sources
in the money and capital markets. If the positive development
of the Group continues and its cash flow and profitability also
develop positively, opportunities could arise for an upgrade of
the credit rating on the part of the rating agencies.
Risks and opportunities relating to pension plans
Daimler has pension benefit obligations and to a lesser degree
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pension obligations less
plan assets constitutes the carrying amount or funded status
of those employee benefit plans. The measurement of pension
obligations and the calculation of net pension expense are
based on certain assumptions. Even small changes in those
assumptions such as a change in the discount rate could
have a negative or positive effect on the funded status and
Group equity in the current financial year, or could lead to
changes in the periodic net pension expense in the following
financial year. The fair value of plan assets is determined to
a large degree by developments in the capital markets. Unfa-
vorable or favorable developments, especially relating to
equity prices and fixed-interest securities, can reduce or increase
the carrying value of plan assets. The currently increased volatil-
ity of financial markets raises the risks and opportunities relating
to the measurement of both pension obligations and plan
assets. The structure of pension obligations is taken into con-
sideration with the determination of the investment strategy
for the plan assets in order to reduce fluctuations of the funded
status. A change in the composition of pension assets can
have an additional positive or negative impact on the fair value
of the plan assets. Further information on the pension plans
and their risks is provided in O Note 22 of the Notes to the
Consolidated Financial Statements.
Further information on financial risks, risk-limiting measures
and the management of these risks is provided in Note 32
of the Notes to the Consolidated Financial Statements.
Information on the Group's financial instruments is provided
in Note 31 of the Notes to the Consolidated Financial
Statements.
Daimler may be required to make premature repayment of
special-purpose loans in the case of adverse results of ongoing
legal proceedings. It is to be expected that the resulting refi-
nancing requirement will have to be concluded at a higher cost.
Risks of credit repayment requirements
Risks of restricted access to capital markets
Daimler covers its refinancing needs, among other things, by
means of borrowing in the capital markets. Access to capital
markets in individual countries may be limited by government
regulations or by a temporary lack of absorption capacity. In
addition, pending legal proceedings as well as Daimler's own
business policy considerations may temporarily prevent the
company from covering any liquidity requirements by means of
borrowing in the capital markets.
Country risks
The Group is exposed to credit risks which result primarily
from its financial services activities and from the operations of
its vehicle business. Credit risks also arise from the Group's
liquid assets. The following statements pertain to risks arising
from the Group's liquid assets; risks related to leasing and
sales financing are addressed on page 160. Should defaults
occur, this would adversely affect the Group's financial position,
cash flows and profitability. In recent years, the limit method-
ology for exposures with financial institutions has been contin-
ually further developed in order to counteract the diminished
creditworthiness of the banking sector since the financial crisis.
In connection with investment decisions, priority is placed on
the borrowers' very high creditworthiness and on balanced risk
diversification. Most liquid assets are held in investments with
an external rating of "A" or better.
Credit risks
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
166
Risks arise above all in connection with the public debate about
diesel vehicles and the related fundamental reconsideration
of methods for measuring emissions. Due to the replacement of
the NEDC (New European Driving Cycle) with the new measur-
ing method WLTP (Worldwide Harmonized Light Vehicles Test
Procedure), the fleet CO2 average has worsened. In light of
today's knowledge, this would make it more difficult to achieve
the CO2 targets as of 2020. Furthermore, there has been some
pressure in the past two years on diesel technology, which is
important for compliance with the challenging CO₂ targets in
the EU, because of air-quality problems in cities (exceeding the
NOx limits). For this reason, the Real Driving Emissions (RDE)
legislation entered into force in the EU in July 2017. Complying
with emission limits under real driving conditions (on the road
and not, as previously, only on the test bench) is very ambitious
legislation that since September 2017 has required very
complex technology for exhaust-gas aftertreatment, as well as
detailed documentation. The current public focus on vehicle
emissions as well as their measurement and impact on people
and the environment jeopardizes the reputation of the automo-
tive industry and in particular of the diesel engine, and could
result in damage to Daimler's reputation. With the develop-
ment of a new generation of diesel engines, Daimler has found
a convincing technical solution with regard to reducing emis-
sions and will successively introduce this innovation throughout
the product range.
The most important Asian markets from Daimler's perspective
are likely to present a varied picture in 2018. In the Japanese
market for light-, medium- and heavy-duty trucks, we anticipate
a slight market correction at an ongoing solid level. We expect
a positive development of the Indonesian truck market. In India,
demand for medium- and heavy-duty trucks should recover
significantly from the market contraction of 2017. In the Chi-
nese market, a significant correction is to be expected following
the extremely high volume of the previous year.
Tax risks
Any changes or interventions by the fiscal authorities are
continuously monitored by the tax department and measures
are taken if required.
In the NAFTA region, a cyclical recovery of the truck market is
to be expected and we anticipate a significant increase in overall
sales in weight classes 6-8.
Thanks to the continuation of a positive investment climate
worldwide, overall demand for medium- and heavy-duty
trucks should increase significantly in most of the regions
relevant to us.
The Chinese car market continues to be significantly affected
by regulatory conditions. At the beginning of the year, the tax
rate on purchases of cars with small engines (up to 1.6 liters)
was raised back to its normal level of 10%. As this led to pur-
chases being brought forward to late 2017, more moderate
demand is to be expected in the first months of this year. In
full-year 2018, the Chinese market should expand slightly
nonetheless. In Japan, we assume that the car market will
undergo a slight downward correction, but demand in India
should continue to grow significantly.
In Europe, we expect a slight increase in overall car sales. As
the market volume in Western Europe is now above average
again, we expect demand to remain fairly stable. In Eastern
Europe, however, a significant increase in sales volumes is
anticipated primarily due to the ongoing recovery of the Rus-
sian market. The US market for cars and light trucks should
maintain its high level of approximately 17 million units sold.
Despite the favorable economic outlook, we believe a further
increase is unlikely because the market can be regarded as
being fairly saturated at this level.
In 2018, worldwide demand for cars is likely to increase again
from an already high level. According to current forecasts, slight
growth of approximately 2% is to be expected. Slight market
growth is expected once again in Europe and China. The US
market will be similar to its prior-year volume and the recovery
of demand in the emerging markets should continue.
Automotive markets
Overall, the world economy should grow in 2018 by significantly
more than 3%, a similarly favorable rate of expansion as in the
previous year.
South American economies. But with anticipated GDP growth
of 2 to 2.5%, South America remains below its potential. The
further stabilization of raw-material prices should help the
countries of the Middle East, but their expected growth rates
of just under 3% remain below average for that region.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK 171
The emerging economies should achieve aggregate growth in
output of just over 4.5% in 2018, as in the previous year and
thus in line with their long-term trend. The prospects of the Chi-
nese economy, based on its very robust development in the
year 2017, are favorable for this year as well. However, due to
reduced state economic stimulus and rather more restrictive
lending, most analysts anticipate a slight decrease in growth
to about 6.5%. While the economies of Central and Eastern
Europe will probably not quite match their strong growth of the
previous year, an acceleration of growth is expected for the
The growth prospects of the Japanese economy also remain
relatively stable. Although growth in private consumption and
investment should weaken slightly, an increase in gross domes-
tic product (GDP) of between 1 and 1.5% is expected.
In the United States, the available leading indicators point
towards a continuation of the economy's solid upswing. In
view of stable domestic demand, moderate inflation and low
unemployment, the US Federal Reserve is likely to maintain
its slightly restrictive monetary policy with only small inter-
est-rate rises. In connection with stimulus from the tax
reform passed in late 2017, this could result in overall growth of
just above 2.5%, and thus slight acceleration compared with 2017.
Most economic indicators suggest that the economy of the
European Monetary Union (EMU) will grow at an above-average
rate also in 2018. On the basis of robust domestic demand and
a solid contribution from foreign trade, economic growth of close
to 2.5% should be possible. The European Central Bank will
make use of the favorable economic outlook to gradually cut
back its very expansive monetary policy of recent years. This
applies in particular to the probable phasing out of the exten-
sive bond-buying program. From today's perspective, however,
increases in key interest rates are not yet on the agenda. Growth
prospects for the German economy are also positive and it
could expand by 2.5% this year. As the year 2018 will probably
continue to be impacted by uncertainty relating to the EU exit
conditions for the United Kingdom, the British economy is
likely to continue its rather moderate development, an economic
slump in the UK is unlikely.
At the beginning of 2018, the world economy continues to
develop with solid growth. We assume that this dynamism will
also continue as the year progresses. Growth prospects for
both the advanced economies and the emerging markets are
similarly positive as they were last year.
The world economy
Our assessments for the year 2018 are based on the assumption
of generally stable economic conditions and the expectation
that the positive trend of the global economy and of worldwide
demand for motor vehicles will continue. The development
we have outlined is subject to various opportunities and risks,
which are explained in detail in the Risk and Opportunity
Report.
pages 155 ff
The statements made in the Outlook chapter are based on the
operational planning of Daimler AG as approved by the Board
of Management and the Supervisory Board in December 2017.
That planning is based on the premises we set regarding the
economic situation and the development of automotive markets.
It involves assessments made by Daimler, which are based on
relevant analyses by various renowned economic research insti-
tutes, international organizations and industry associations, as
well as on the internal market analyses of our sales companies.
The prospects for our future business development as presented
here reflect the targets of our divisions as well as the opportunities
and risks presented by the anticipated market conditions and
the competitive situation during the planning period. Against this
backdrop, we adjust our expectations for business development
to reflect updated forecasts for the development of the various
automotive markets. The statements made below are based on
the facts known to us at the beginning of 2018.
Outlook
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
170
In order to recognize risks and opportunities at an early stage
and to deal successfully with the current risk and opportunity
situation, the established risk and opportunity management
system is continually monitored and further developed.
be influenced by the Daimler Group and provided that the
required measures are financially viable, the Group takes appro-
priate action to realize those opportunities.
Compared with the previous year, risks from associated com-
panies, joint ventures and joint operations have increased as a
result of increasing in risky investments in startups. However,
the overall view of the Daimler Group's risk and opportunity
situation remains essentially unchanged. No risks are recogniz-
able neither on the balance sheet date nor at the time of
preparing the consolidated financial statements – that either
alone or in combination with other risks could endanger the
continued existence of the Group. But since considerable eco-
nomic and industry risks still exist, setbacks on the way to sus-
tainably achieving growth and profitability targets cannot be
completely ruled out. New competitors in the IT sector for exam-
ple and the Group's current strategy, among other things in
connection with electric mobility, pose further challenges for
the Daimler Group and are connected with risks and opportuni-
ties. By effectively and flexibly focusing production and sales
activities on changing conditions, the divisions of the Daimler
Group strive to utilize the opportunities offered so that they can
fulfill or surpass their respective targets and plans. As far as can
-
As well as the risk categories described above, unpredictable
events such as natural disasters, political instability or terrorist
attacks can disturb production and business processes. Emer-
gency plans are therefore prepared to allow the resumption of
business operations as soon as possible. As far as possible,
precautionary measures are taken and insurance policies are
arranged. Risks relating to compliance are also included in the
risk management process and are continually monitored. Regular
training courses are carried out to prevent compliance viola-
tions. In addition to the described risks, other risks can occur
that adversely affect the public perception and therefore the
reputation of the Daimler Group. Public interest is focused on
Daimler's position with regard to individual issues in the fields
of sustainability, integrity and social responsibility. Furthermore,
customers, business partners and capital markets are inter-
ested in how the Group reacts to the technological challenges
of the future, how it succeeds in offering up-to-date and tech-
nologically leading products in the markets, and how business
operations take place under the given conditions. As one of
the fundamental principles of business activity, Daimler places
particular priority - also in the selection of suppliers - on
adherence to applicable laws and ethical standards. Furthermore,
the secure handling of sensitive data is a precondition for
business relationships with customers and suppliers in a trusting
and cooperative environment.
Overall assessment of the risk and
opportunity situation
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 169
Daimler AG and its subsidiaries operate in many countries
worldwide and are therefore subject to numerous different
statutory provisions and tax audits. Any changes in legislation
and jurisdiction, as well as different interpretations of the law
by the fiscal authorities - especially in the field of cross-border
transactions, may be subject to considerable uncertainty. It
is therefore possible that the provisions recognized will not be
sufficient, which could have negative effects on the Group's
net profit and cash flows.
Daimler is exposed to country risks that primarily result from
cross-border financing or collateralization for Group companies
or customers (e. g. Turkey), from investments in subsidiaries
and joint ventures, and from cross-border trade receivables (e.g.
China). Country risks also arise from cross-border cash depos-
its with financial institutions. The Group addresses these risks
by setting country limits (e.g. for cross-border financing of
customers and for hard-currency portfolios from financial ser-
vices companies) and through investment-protection insurance
against political risks in high-risk countries. Daimler also has
an internal rating system that divides all countries in which it
operates into risk categories.
-21
Ongoing growth
25
Sports cars
+16
712
823
SUVs¹
-6
84
79
27
S-Class
304
398
E-Class
+1
490
493
C-Class
-3
435
+31
-10
smart
136
347
338
thereof United States
-1
406
403
NAFTA region
+2
314
320
Thereof Germany
+3
980
1,014
thereof Europe
+8
2,198
2,374
Mercedes-Benz Cars
-6
144
420
thereof A-/B-Class
+9
2,054
development expenditure
Research and
+17
4,147
4,843
plant and equipment
Investment in property,
9.1
9.7
Return on sales (in %)
+6
+13
89,284
8,112
94,695
9,207
EBIT
Revenue
17/16
% change
€ amounts in millions
2016
2017
Mercedes-Benz Cars
C.01
6,642
-3
5,671
thereof capitalized
2,238
Mercedes-Benz
17/16
% change
in thousands
2016
2017
Unit sales Mercedes-Benz Cars
C.02
+2
142,666 139,947
Employees (December 31)
+8
2,373,527 2,197,956
Unit sales
+8
2,235,352
2,411,378
Production
+19
2,008
2,388
+17
Asia
859
715
Daimler Trucks
C | THE DIVISIONS | DAIMLER TRUCKS
184
Mercedes-AMG Petronas Motorsport captured both the
Drivers' and the Constructors' World Championship in the For-
mula 1 racing series for the fourth consecutive year in 2017.
A special aspect of this achievement is that the team was able
to defend its titles despite the extensive changes made to
Formula 1 regulations. Last year marked the fourth time that
Lewis Hamilton has won the Drivers' Championship. And
with the Mercedes-AMG Project ONE show car at the Frankfurt
Motor Show, we presented for the first time a car that could
bring Formula 1 hybrid technology from the racetrack to the
road. Mercedes-AMG Motorsport also recorded six victories
and 14 podium finishes in 18 races in the German DTM touring
car series. As part of the strategic repositioning of our motor-
sports activities, we have decided to end our participation in
the DTM series after the 2018 season and to participate in
Formula E in the future. This will enable us to demonstrate the
performance capability of our intelligent battery-electric
drive systems in a motorsports setting as well, and it will add
an emotional component to the EQ brand. Participation in
motorsports is an important factor of success for Daimler - not
just in terms of the significant image enhancement and exten-
sive publicity provided by the races, but also with regard to
the valuable experience we gain through the use of hybrid tech-
nologies and lightweight designs in our motorsports activities.
#4TheTeam: success in motorsports
The Mercedes-Benz brand's "She's Mercedes" initiative spe-
cifically addresses women with the aim of making the brand
more appealing to women and increasing the proportion of
female customers. Along with community and inspiration plat-
forms, the initiative also offers training for sales staff and
seeks to increase the number of women in sales positions.
O page 32
An important component of Best Customer Experience is
the "Mercedes me" digital ecosystem, which enables personal-
ized interaction with the Mercedes-Benz brand. This makes
customer contact with Mercedes-Benz more individualized,
convenient and transparent. For example, customers can
use Mercedes me to obtain information on and utilize services
for mobility, connectivity, customer support, financing and
lifestyle. Mercedes me is now used by more than one million
satisfied customers in 36 markets.
page 32
loyalty of established customers. Our BCE program thus sys-
tematically focuses on customers and their need for personal
assistance at every point of contact with the brand, its prod-
ucts and its services. To this end, Mercedes-Benz is using new
sales channels and digital portals as innovative interfaces with
the brand. Various sales formats, such as those using new digi-
tal channels, supplement the services offered at traditional
Mercedes-Benz dealerships and showrooms.
FOUR WINS.
FOR 
YOU.
Lewis Hamilton celebrates the fourth consecutive win for Mercedes-AMG Petronas Motorsport in Kuala Lumpur.
Winners of both the Drivers' and the Constructors' World Championship in Formula 1 racing:
C | THE DIVISIONS | MERCEDES-BENZ CARS 183
An icon is reinvented: The new Mercedes-Benz G-Class is better than ever for either on- or off-road driving.
SG 1008
"Best Customer Experience" (BCE) is a global sales and market-
ing program at the Mercedes-Benz Cars division. The key
drivers of our growth strategy are innovative products and entry
into new markets and market segments. The program seeks
to more strongly align the division's sales and marketing organi-
zation with changing customer wishes and requirements and
in this manner to generate additional growth. Our goal here is to
make the Mercedes-Benz brand more attractive to new and
also younger target groups while also strengthening the brand
Best Customer Experience
As early as 2016, Mercedes-Benz began offering diesel vehicles
that were able to meet the Real Driving Emissions (RDE) limits
that went into effect in the EU in 2017. This achievement was
made possible by an all-new modular family of efficient and
clean diesel engines. In the future, this modular engine family
will be utilized across the entire product range of Mercedes-
Benz Cars and also at Mercedes-Benz Vans. The new engines'
exemplary emissions have also been confirmed by measure-
ments conducted at independent institutes.
Comprehensive plan for the future of diesel engines
We are convinced that diesel engines will continue to be an
integral part of the drive-system mix, not least due to their low
CO2 emissions. The debate surrounding diesel engines is
leading to increasing uncertainty among customers, however.
For this reason, the Daimler AG Board of Management approved
a comprehensive plan for the future of diesel engines in July
2017. The plan calls for a massive expansion of the current vol-
untary service measures for vehicles in customers' hands, as
well as the rapid market launch of a completely new family of
diesel engines.
At the same time, we are preparing our worldwide production
network for the requirements associated with electric mobility.
We will manufacture our future electric vehicles from the EQ
product and technology brand within the framework of normal
series production on the same lines used to produce vehicles
with combustion engines. In the future, our production locations
for electric vehicles will be our plants in Bremen, Sindelfingen
and Rastatt, as well as in Tuscaloosa, Alabama, and Hambach.
We will also manufacture electric vehicles for the Chinese
market at Beijing Benz Automotive Co., Ltd. (BBAC). Mercedes-
Benz Cars will thus build electric vehicles at six locations in
the future. At the same time, we will expand our global battery
network to five sites on three continents. In the spring of 2017,
the foundation stone was laid for a second battery production
facility in Kamenz. BBAC will supply the Chinese market with
appropriate batteries, and battery production plants will be
added to our manufacturing facilities in Untertürkheim (Stuttgart)
and Tuscaloosa. With these and other measures, Mercedes-
Benz Cars is using new technologies to strengthen its strategic
approach to shape the future of mobility.
In the year under review, our manufacturing facilities continued
to build vehicles without interruption throughout the summer
months in order to meet the ongoing high demand for our models
on global markets. Within the framework of its growth strategy,
the Mercedes-Benz Cars division is continually further develop-
ing its flexible and efficient production network with more than
30 locations on four continents. In 2017, for example, we laid
the foundation stone for a new engine plant in Jawor, Poland,
and began building a new vehicle manufacturing facility near
Moscow in Russia.
Global production network for electric mobility
Our Daimler Trucks division achieved significant growth in both unit sales and earnings in 2017.
In all that we do, our focus is on our customers. In order to offer them our best products and solu-
tions, we work continuously on innovations. Our focus is on trucks that are efficient and electric,
safe, automated and connected. In order to best meet the needs of our customers in the various
regions, we are further expanding our presence in our core markets and in new markets. Using
global platforms, our engineers worldwide develop outstanding technologies and utilize economies
of scale and the advantage of speed. Our corporate culture is the foundation for the implemen-
tation of our strategy: Across national borders and departmental boundaries, we at Daimler Trucks
collaborate entrepreneurially, internationally and openly.
182 C | THE DIVISIONS | MERCEDES-BENZ CARS
C.03
2017
45
thereof capitalized
1,265
1,322
development expenditure
Research and
-17
1,243
1,028
plant, and equipment
Investment in property,
5.9
6.7
Return on sales (in %)
+8
+22
33,187
1,948
35,707
2,380
EBIT
Revenue
€ amounts in millions
2016
Daimler Trucks
Mercedes-Benz Cars continued to grow profitably in 2017. Unit sales and revenue increased signi-
ficantly once again and earnings before interest and taxes reached a record level, despite the con-
siderable advance investment we made in our product offensive and new technologies. Our most
important new model in the year under review was the upgraded S-Class. We also continued our
dream car initiative with new attractive coupes and convertibles. In addition, we offered a preview
of our upcoming electric-mobility offensive and the future of mobility by presenting the EQA and
smart vision EQ fortwo concept vehicles at the Frankfurt Motor Show.
All in all, we were able to increase sales of Mercedes-Benz
brand vehicles in China to the new record level of 595,200 units,
an increase of 28% from the prior year. More than two thirds
of the vehicles we sold in China during the reporting year were
manufactured locally at facilities operated by our BBAC joint
venture.
Sustainable development with local partners is crucial for con-
tinuing our business success in China. The signing of two
framework agreements has further strengthened cooperation
between Daimler and BAIC Motor in their production joint
venture, Beijing Benz Automotive Co., Ltd. (BBAC). Daimler and
BAIC Motor are jointly investing in the production of battery-
electric vehicles in Beijing and in the construction of a new
battery factory that will further pave the way for the launch
of vehicles equipped with alternative drive systems. In this way,
we are creating the foundation for further sustainable growth
and continued success in the future for Daimler in China, which
is now by far the world's biggest automotive market.
The E-Class family was renewed entirely within one year and
fully rounded out in 2017 with the addition of a coupe and a
convertible model. The new E-Class coupe combines expres-
sive coupe proportions, a clear and sensuous design, and long-
distance comfort for four occupants with the beauty and clas-
sic virtues of a gran turismo. The new E-Class convertible has
been thrilling customers in Europe and the United States since
September 2017. At once both hot and cool, the vehicle's
design idiom represents beauty and intelligence. We also
unveiled the coupe and convertible models of the updated
S-Class in both their series-production and AMG versions at
the Frankfurt Motor Show in September 2017. These models
benefit from extensive new features that were introduced in
the sedan - for example extensively enhanced driver assis-
tance systems, the state-of-the-art widescreen dashboard, a
new-generation steering wheel and the holistic ENERGIZING
comfort control system.
Dream car initiative continues
electric additional compressor also had their world premieres
in the new S-Class. The ISG is responsible for hybrid functions
such as power boost and energy recovery, and thus enables
fuel savings that were previously achieved only by high-voltage
hybrid technology. The improved third-generation plug-in-
hybrid system is now available in the S-Class for the first time.
With a significant increase in battery capacity to 13.3 kWh,
the use of state-of-the-art lithium-ion technology and an opti-
mized operating strategy, ranges for all-electric driving of
over 50 kilometers (NEDC) can be achieved.
In April 2017, the upgraded S-Class with numerous innovations
had its world premiere at Auto Shanghai. One of the highlights
was an all-new and highly efficient engine program featuring a
range of new technologies for electrification of the powertrain.
In addition, the Intelligent Drive system has taken another step
along the road to driverless driving. For example, new and
modified features have been added to the DISTRONIC active
proximity control system and Active Steering Assist. Forward-
looking new technologies such as the integrated starter
generator (ISG) with a 48-volt onboard power system and the
World premiere of the upgraded S-Class
Since 2012, "Fit for Leadership" has served as the central
component of our strategy for shaping the future of Mercedes-
Benz Cars. Fit for Leadership utilizes a holistic approach that
aims to achieve continuous growth, to establish competitive
structures and to improve efficiency on an ongoing basis.
The program is being systematically pursued. With the further
development of program activities in the context of Fit for
Leadership 4.0, we aim to achieve an additional efficiency
improvement of €4 billion by the year 2025. This should
also help to offset the high advance expenditure in the future
for the impending technological transformation and to
safeguard the division's return on sales in the corridor of
8-10% over the long term.
Fit for Leadership 4.0
The growth was primarily driven by our new E-Class. After all
model variants became available, sales reached the new record
level of 398,200 units (+31%). Our off-road vehicles were also
very successful once again. All in all, sales in the SUV segment
increased by 16% to 823,000 units. Demand for our C-Class
models also remained very strong, with sales of these vehicles
increasing slightly to 492,700 sedans, wagons, coupes and
convertibles in 2017. Unit sales of A-Class and B-Class models
did not quite reach the previous year's high level. Including
the CLA and CLA Shooting Brake, a total of 420,200 units were
delivered to customers. Unit sales of the S-Class totaled
79,400 sedans, coupes and convertibles. The upgraded S-Class
generated additional sales momentum in the second half of
the year.
179
S&A 233
A perfect combination of performance and design: the AMG version of the E-Class convertible.
C❘ THE DIVISIONS | MERCEDES-BENZ CARS
Mercedes-Benz increased its unit sales in Europe by 5% to
911,700 vehicles in 2017. Substantial growth was achieved in
the volume markets of France (+9%), Italy (+9%), Spain (+8%)
and the United Kingdom (+4%), and we also increased our unit
sales in Germany by 2% to 282,600 vehicles. Mercedes-Benz
continued its success in China during the year under review.
Unit sales in the country rose by 28% to 595,200 vehicles,
which means we significantly outperformed both the market as
a whole and our most important competitors. We also set new
records for unit sales in other Asian markets - for example in
Thailand (+31%), India (+14%), South Korea (+9%) and Taiwan
(+7%). Total unit sales in the NAFTA region were at the prior-year
level: Sales increased significantly in Canada and Mexico but
decreased slightly in the United States and the NAFTA market
overall.
Mercedes-Benz once again posts record unit sales
The Mercedes-Benz brand set a new record once again in
2017, with unit sales increasing by 9% to 2,238,000 vehicles.
7 C.02 The Mercedes-Benz brand therefore not only grew
significantly faster than the global car markets, it was once
again the premium brand with the highest unit sales in the
automotive industry. The Mercedes-Benz brand is the number
one manufacturer in the premium segment in Germany,
numerous other core European markets, the United States,
Canada, South Korea and Japan. We also significantly
improved our position in China once again in the year under
review.
The Mercedes-Benz Cars division consists of the Mercedes-
Benz brand with the Mercedes-AMG, Mercedes-Maybach and
Mercedes me sub-brands, as well as the smart brand and
the new EQ brand for electric mobility. The division continued
along its path of profitable growth in the year under review,
with unit sales increasing by 8% to the new record level of
2,373,500 vehicles and revenue rising by 6% to €94.7 billion.
7 C.01 Mercedes-Benz Cars was able to improve its market
position in nearly all regions. And despite considerable advance
investment in our product offensive and new technologies,
we were able to increase EBIT by 13% to €9.2 billion.
1 Including the GLA
+27
488
619
thereof China
+20
pages 10f
With the upgraded Mercedes-Benz S-Class presented at Auto
Shanghai in April 2017, we have opened up a new dimension of
driving also in China.
EQ - the brand for electric mobility
180
Strengthened partnership in China
The smart brand sold a total of 135,500 vehicles in 46 markets
worldwide in 2017. The smart was particularly popular in
China, which is now its third-biggest sales market after Germany
and Italy.
The range of services offered for the smart brand is being
continuously expanded. One example is “smart ready to drop."
This service, which is offered in cooperation with various
logistics companies, enables parcels to be delivered to the trunk
of a customer's car and also allows for the pick-up of returns
using the same system."smart ready to share" enables car shar-
ing in closed groups - e.g. within a family, between friends
or at small companies - in an extremely user-friendly manner
with the help of an app that eliminates the need to hand over
keys to the next user.
With its "smart vision EQ fortwo" concept car, the brand pre-
sented its vision of the future of urban mobility at the 2017
Frankfurt Motor Show. This car-sharing concept vehicle, which
is of course both electric and fully automated, illustrates the
future possibilities for personalized and highly flexible public
transport with maximum efficiency. page 33
bined: 0 g/km) combine the agility of a smart with locally
emission-free driving at an affordable price - the ideal combi-
nation for urban mobility.
Concept for future mobility: The smart vision EQ fortwo is the first fully automated sharing concept car for the city of the future.
181
C | THE DIVISIONS | MERCEDES-BENZ CARS
|
Las Vegas Blvd
smart
plende hollywood cal
MATILACLE MELE 
SHOPS
DO
AMG provides a preview of alternative drive concepts with the four-door hybrid show car Mercedes-AMG GT Concept.
At the Frankfurt Motor Show in September 2017, Daimler
announced that the smart brand plans to sell solely smart models
with electric drive systems in Europe and North America
starting in 2020. The other regions will then follow soon after-
wards. The new electric drive models - the smart fortwo,
smart fortwo convertible and smart forfour (electricity consump-
tion combined: 13.1-12.9 kWh/100 km; CO2 emissions com-
smart: focus on electric mobility
The sports-car and high-performance brand from Mercedes-
Benz finished the year of its 50th anniversary with a new
record: For the first time, the brand sold significantly more
than 100,000 units.
Mercedes-AMG: the sports-car and performance brand
The brand claim of "Driving Performance" reflects the two
core competencies of Mercedes-AMG: the ability to provide an
unparalleled driving experience and the ability to serve as a
driving force in the high-performance segment. The Mercedes-
AMG sports-car brand enhances the fascination of Mercedes-
Benz with nearly 60 models. The brand's dynamic vehicles espe-
cially attract young and sporty customers to the brand with
the three-pointed star. Mercedes-AMG models differ greatly from
their series-produced cousins in terms of both engineering
and appearance, thus strengthening the authenticity and distinc-
tive identity of the Mercedes-AMG brand. The Mercedes-AMG
Project ONE concept vehicle marks yet another milestone in the
strategic further development of Mercedes AMG as a sports-
car and high-performance brand. The two-seat hypercar brings
state-of-the-art and efficient Formula 1 hybrid technology
from the racetrack to the road in virtually identical form for the
first time ever. Together with the four-door AMG GT Concept,
the Mercedes-AMG Project ONE offers yet another preview of
how AMG will use its high-performance hybrid-drive strategy
to define driving performance in the future.
Mercedes-Maybach: perfection blended with exclusivity
Mercedes-Maybach stands for the highest levels of exclusivity
and individuality. The luxury brand, which was launched in
November 2014, combines the perfection of the Mercedes-Benz
S-Class with the exclusivity of a Maybach. The Mercedes-
Maybach S 600 Pullman launched in early 2016 (fuel consump-
tion in l/100 km urban: 19.6 / extra-urban: 10.3 / combined:
13.6; CO2 emissions in g/km combined: 314) has a face-to-face
seating configuration and is a clear top-of-the-line model.
The brand's first convertible was launched in the spring of 2017
as a limited edition of 300 units. A preview of the form the
luxury brand might take in the future is offered by the concept
cars Vision Mercedes-Maybach 6 and Vision Mercedes-
Maybach 6 Cabriolet - a sensational coupe and a luxurious
convertible.
Daimler plans to offer more than ten all-electric models in the
passenger-car segment alone by 2022 - from the smart to the
large SUV. The first battery-electric series-produced model
from the EQ brand will be launched in the SUV segment before
the end of this decade. It will be followed by a model offensive
that will gradually supplement the product range of Mercedes-
Benz Cars with purely electric models. The new generation
of electric vehicles will be based on an architecture developed
especially for battery-electric models, which in every respect
shall be scalable and suitable for use in all model series: Wheel-
base and track width as well as all other system components,
especially the batteries, will be variable thanks to the modular
system.
and safety is an electric all-wheel drive system with axle-vari-
able torque distribution and a battery installed deep inside
the vehicle floor between the axles. In combination with the
intelligent operating strategy from Mercedes-Benz, the Con-
cept EQA is able to achieve a range of up to 400 km, depending
on the installed battery capacity.
C | THE DIVISIONS | MERCEDES-BENZ CARS
In 2016, Mercedes-Benz consolidated all of its activities in the
area of electric mobility into a new product and technology
brand known as EQ. The new brand was heralded by the near-
production Concept EQ in 2016 and the compact Concept
EQA presented at the Frankfurt Motor Show in September 2017.
The Concept EQA is equipped with an electric motor on both
the front and rear axles. It has a total output of more than 200 kW
and maximum torque of over 500 Nm. It takes only around
five seconds for the electric vehicle to accelerate from 0 to
100 km/h. The basis of the vehicle's outstanding handling
57
Mercedes-Benz Cars
178
France
8
8
+2
NAFTA region
165
+12
146
C❘ THE DIVISIONS | MERCEDES-BENZ CARS
140
122
+15
Latin America (excluding Mexico)
31
+13
27
8
United Kingdom
Daimler Trucks significantly increased its unit sales to the number
of 470,700 vehicles in 2017 (2016: 415,100). Revenue of €35.7
billion was also significantly higher than in the previous year
(2016: €33.2 billion). Overall, Daimler Trucks had little tailwind
from its relevant markets last year, but nonetheless significantly
increased its EBIT to €2.4 billion (2016: €1.9 billion). We have
taken an important step with the ongoing optimization of fixed
costs, especially at the Mercedes-Benz brand, in order to
bring Daimler Trucks up to the targeted level of profitability in the
coming years. Together with the cost optimizations previously
planned, some of which have already been implemented, we
aim to achieve improvements for Daimler Trucks with a direct
impact on earnings in an amount of €1.4 billion by the end of
2018. Our goal is for these measures to become fully effective
in the year 2019.
Unit sales significantly higher than in the previous year
Our total unit sales of 470,700 vehicles were 13% higher than
the prior-year number of trucks sold. In the EU30 region
(European Union, Switzerland and Norway), we sold 82,300
vehicles in 2017, which is slightly above the prior-year level
(2016: 79,800). Our Mercedes-Benz brand maintained its market
leadership in the medium- and heavy-duty segment with a
share of 21.0% (2016: 20.7%). Sales of 31,700 units in Germany
were in the magnitude of the prior-year level (2016: 31,500).
In Turkey, we achieved significant sales growth after the weak
development of the previous year and sold 11,800 units (2016:
9,300). The local Daimler company had its 50th anniversary in
the summer of 2017. The sales organization for Turkey, the
local product development department for trucks and buses,
and the plants in Aksaray (trucks) and Hoşdere (buses) are
organized under the roof of Mercedes-Benz Türk. The sales
development was positive also in Russia, where we more
than tripled our sales to 8,000 units (2016: 2,300).
Total
471
415
+13
9
EU30
80
+3
thereof Germany
32
31
+1
82
Positive business development with only moderate market
dynamism
+11
13
+44
Total (including BFDA)
583
493
+18
C | THE DIVISIONS | DAIMLER TRUCKS
78
185
Driving Experterna Pronage
004
Road efficiency: The Mercedes-Benz Actros provided evidence of its fuel efficiency at the event Driving Experience Portugal 2017.
Our sales of 30,500 trucks in Latin America were above the
low level of the previous year (2016: 27,500). There was a
significant contribution from the positive sales development in
Argentina, where 5,600 units were sold (2016: 3,900). In
Brazil, the region's main market, we increased our sales signifi-
cantly to 13,400 vehicles (2016: 12,100). With our trucks of
the Mercedes-Benz brand, we achieved a share of 27.6% in the
medium- and heavy-duty segment (2016: 29.8%). In the next
five years, we will invest approximately €600 million in Brazil in
the modernization of the product lineup, in digital services and
in the two plants in São Bernardo do Campo and Juiz de Fora.
Both those plants are to meet the highest production stan-
dards by 2022, making them even more competitive.
The positive development of unit sales in the NAFTA region made
a major contribution to our growth, especially in the second
half of the year. We were able to significantly increase our sales
to 165,000 units (2016: 145,700). We further increased our
market share in weight classes 6-8 to 39.8% (2016: 39.3%) and
in heavy-duty class 8 we once again achieved a market share
of 40.0% (2016: 40.0%). In classes 6-8, we continued to be the
undisputed market leader. The new Freightliner Cascadia has
been in production since the beginning of 2017 and is equipped
with our integrated powertrain. Approximately 95% of our
heavy-duty engines in our trucks in the United States and Canada
meanwhile stem from our own engine platform. We were able
to increase the proportion of Freightliner Cascadia and Western
Star 5700 XE trucks with the DT12 automated transmission to
approximately 75% in the United States and Canada. Local pro-
duction of the medium-duty DD8 engine started in Detroit in
late 2017, marking a further milestone of our platform strategy.
Production of the DD5 engine will follow in 2018.
We increased our truck sales in Asia by 18% to 148,600 units.
In Japan, our sales of 44,800 trucks were slightly below
the prior-year level (2016: 46,400). Our FUSO brand achieved
a 19.6% share of the overall Japanese truck market (2016:
20.4%). The new heavy-duty Super Great truck underscores
our ambition to further expand our position in the Japanese
market and sets new standards for efficiency, safety and con-
nectivity. The new FUSO flagship, like the latest heavy-duty
trucks from Freightliner and Mercedes-Benz, utilizes compo-
nents from our global platform strategy such as the common
powertrain and standardized electric/electronics architecture. In
Indonesia, our sales of 42,700 units were significantly higher
than in the previous year (2016: 28,000). The first Mercedes-
Benz truck drove off the assembly line at our Indonesian
assembly plant in Wanaherang. Daimler Trucks will produce
heavy-duty Mercedes-Benz trucks for the Indonesian market
there, so we will be present in Indonesia with the two brands
FUSO and Mercedes-Benz in the future. In the Middle East,
our sales of 23,600 trucks last year were significantly higher
than the low prior-year volume (2016: 17,600).
Leading in Road F
thereof Brazil
112
For information purposes:
12
+11
Asia
149
125
+18
BFDA (Auman Trucks)
thereof Japan
46
-3
Indonesia
43
28
+53
45
17/16
Change in %
thereof United States
17/16
Change in %
New connectivity solutions for the logistics industry
Truck platooning on public highways in the United States
Connected Mercedes-Benz Arocs in driverless test
operation
Presentation of the fully electric school bus from Thomas
Built Buses
FUSO eCanter is the first fully electric light-duty truck in
series production from Daimler Trucks
Presentation in Japan of E-FUSO, the Group's own product
brand for electric trucks and buses
Daimler Financial Services
184-188
EBIT significantly above prior-year level at €2.4 billion (2016:
€1.9 billion)
Significant increase in unit sales
EBIT of €243 million at prior-year level (2016: €249 million)
First customer for Mercedes-Benz Citaro fully electric city
bus
Strategic cooperation for on-demand mobility
Market leadership defended in most important traditional
core markets above eight tons gross vehicle weight
Positive development of business with bus chassis in Brazil
Presentation of new Mercedes-Benz Tourismo and
Setra S 531 DT double-decker
192-194
Significant growth in unit sales
Daimler Trucks
Daimler Buses
195-197
Europe-wide growth of fleet business
EBIT of €1.2 billion at prior-year level (2016: €1.2 billion)
- First results from adVANce future initiative
eVito in the ecosystem for electrification
- Expansion of Marco Polo family with new HORIZON
189-191
Market launch of Mercedes-Benz X-Class
New records for new business and contract volume
Further increase in number of automotive insurance policies
brokered
+5
Unit sales at record level
Mercedes-Benz Vans
EBIT significantly above prior-year level at €2.0 billion (2016:
€1.7 billion)
- Toll4Europe operates Europe-wide road-charging system for
trucks
mytaxi continues its expansion and now has 120,000 regis-
tered taxi drivers in 70 cities
Successful progress with digitization of financial services
Expanded range of innovative mobility services
car2go upgrades its fleet and expands its range of services
moovel offers mobile-ticketing app for transportation
companies
Growth driven by V-Class and Vito
EBIT significantly above prior-year level at €9.2 billion
(2016: €8.1 billion)
First details of new Sprinter
Production
+16
Unit sales
470,705
415,108
+13
Employees (December 31)
411,265
79,483
+1
C.04
In thousands
2017
2016
Comprehensive future plan for diesel engines
Mercedes wins drivers' and constructors' world
championships in Formula 1
78,642
476,325
Unit sales of Daimler Trucks
WE CONVINCE WITH
INNOVATIVE VEHICLES
S&C 257
smart focuses on electric mobility
Deepened partnership in China
World premiere of upgraded Mercedes-Benz S-Class
Continuation of dream-car offensive
Mercedes-Benz Cars achieves record unit sales once again
178-183
-
Mercedes-AMG achieves six-digit unit sales for the first time
Mercedes-Benz Cars
177
C | THE DIVISIONS | CONTENTS
C | The Divisions
The divisions of the Daimler Group developed extremely successfully in the year 2017,
and in some cases significantly surpassed their growth targets. The Mercedes-Benz
Cars and Mercedes-Benz Vans divisions set new records for unit sales, thanks to
numerous new and successful products. The Daimler Trucks and Daimler Buses divi-
sions also significantly increased their unit sales. Due to the positive development of
the automotive business, the Daimler Financial Services division also continued its
steady growth. And we further improved the Group's market position with innovative
products and services.
66
-
AND SERVICES!
The special qualities of Mercedes-Benz SUVs impress
customers, both on and off the road. With seven models
in all classes, Mercedes-Benz is extremely well positioned
all over the world in the growing market for off-road vehicles.
Our model offensive is paying off: Customers are thrilled
by these vehicles' superb SUV aesthetics and outstanding
technology. We're delivering more GLA, GLC, GLC Coupe,
GLE, GLE Coupe, GLS and G-Class vehicles than ever before.
The SUVs with the star are posting double-digit sales
growth that puts them in a top spot in this global growth
segment. These are good reasons to continue closely
watching our off-road vehicles – because they're setting
the pace for Daimler.
H
S.X1563
SUV2500
The dynamic GLC Coupe, which delights
buyers all over the world, is an especially
popular product.
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
10
DREAM CAR
WITH A STAR
The minimalistic styling of the sporty
and elegant E-Class coupe typifies the
sophistication of Mercedes-Benz design.
The GLA became an overnight success
in the compact SUV segment, which it
shaped and redefined.
TERRAIN
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
S.61050
The new edition of the Mercedes-Benz G-Class
represents the biggest transformation in the
success story of this off-road legend - and yet
it remains true to itself.
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
8
daimler.com/products
6
CORE
Strengthening the base
Sustainable earning power in our automotive
core business is our economic foundation —
and the basis for the investments we need to
make in the future. That's why Daimler plans
to systematically expand its global strategy for
success in all of its divisions. Our fascinating
premium cars and our successful trucks, vans
and buses are all shaping our course of prof-
itable growth. The customized financing and
leasing products of Daimler Financial Services
support our successful core business all over
the world. In addition to our traditional markets,
the Asia region and China in particular will
continue to play a key role. Thanks to our glob-
ally organized, flexible production network and
our optimal customer orientation, we continue
along our successful path.
www
MERCEDES-BENZ:
NO.1 AMONG
PREMIUM VEHICLES
Roadsters, convertibles and coupes from Mercedes-Benz make customers' hearts
beat faster. Dream cars such as the legendary gullwing model are part of the myth of the
Mercedes-Benz brand. Today, we offer dream cars that meet a wide range of expectations
and are available in all classes. Now more than ever before, the Mercedes-Benz star stands
for state-of-the-art luxury and outstanding diversity. It symbolizes success: Mercedes-Benz
roadsters, convertibles and coupes are coveted all over the world. The dream car family
includes the SL, the SLC and the C-Class convertible as an entry-level model from the world
of Mercedes-Benz convertibles, as well as the luxurious S-Class four-seat open convertible.
The special highlights of our portfolio also include the Mercedes-Maybach convertible and
the E-Class coupe.
CONFIDENT
ON EVERY
S.GT 558
SEL
in the hand-finishing section of the Mercedes-Benz
plant in Sindelfingen.
Thanks to the ongoing optimization of its
powertrain and aerodynamics, the Actros is
posting ever better fuel economy.
Low total Cost Greater Sex Maine
Driving Experience Portugal 27
Leading in Road Fficiency
DAIMLER ANNUAL REPORT 2017 | #1 | CORE 15
The 75th anniversary of Freightliner and the 50th
of Western Star: Two significant birthdays that
underline Daimler Trucks' strong market position
in North America.
With the new generation of the FUSO flagship
truck, the Super Great, Daimler Trucks aims to
further expand its market position in Japan.
④ daimler.com/products/trucks
Ever since the truck was invented 120 years ago,
Daimler Trucks has been the pioneer in the sector -
and it continues to gain ground. As the world's
number one company in the truck business, we focus
our strengths for our customers' benefit - with the
optimal experience, know-how and positioning for
providing attractive products and services. Our success
is based on six strong vehicle brands under the roof of
Daimler Trucks. We aim to continue shaping the logistics
business with these brands in the future. We offer
customized applications and pioneering truck technolo-
gies all over the world. For example, since early 2017,
we have been offering the new Freightliner Cascadia in
the North American market and the new FUSO Super
Great to customers in Japan. At the beginning of 2017, we
launched production of the new Freightliner Cascadia,
which is equipped with our integrated powertrain.
Components of the global Daimler Trucks platform
strategy are installed in all of our new heavy-duty
trucks from Mercedes-Benz, Freightliner and FUSO.
Our standardized architecture for electric and electronic
systems is yet another success factor that makes us
the leader in the global truck market.
GLOBAL LEADERS
DAIMLER TRUCKS:
④daimler-financialservices.com/en
WORLD-
CLASS
FINANCIAL
SERVICES
Daimler Financial Services.
Half of all the new vehicles we sell today
are either financed or leased through
More and more satisfied customers:
WORLD DRIVE
INTELLIGENTI
sales of Mercedes-Benz cars in China more
than doubled.
Strong demand: Between 2013 and 2017,
Mercedes-Benz is breaking sales records in the booming markets of Asia. The brand
with the star is the most frequently registered premium brand in many countries all over
the globe. Especially in the Asia-Pacific region, Mercedes-Benz vehicles are bestsellers. The
Group delivered more cars in this region last year than ever before. As the world's biggest
market and a source of considerable growth, China has played a key role in this outstanding
result. Our coveted premium vehicles are also very popular in South Korea and India and
are setting new sales records there. We are already producing many vehicles locally in this
region. For example, we've produced more than one million vehicles to date at our plant in
Beijing. We've more than tripled our sales in China in just four years. Many new models are
now celebrating their premieres in Asia. That's yet another way Daimler recognizes the major
role played by its successful markets in Asia, where it remains on course in the passing lane.
GROWTH MARKET
HIGH SPEED
IN CHINA'S
12 DAIMLER ANNUAL REPORT 2017 | #1 | CORE
convertible defines the luxury of the future.
Through its sensual and emotional design and
technical innovations, the Vision Mercedes-Maybach 6
The breathtaking coupes and roadsters from the
Mercedes-AMG GT model series are manufactured
Customized financing and leasing products accelerate
our automotive business. One of the most important factors
behind our success is our attractive and innovative range
of services around vehicle financing and insurance. Daimler
Financial Services has posted record figures for many years.
We aim to systematically pursue our strategy of profitable
growth at high speed in the future. Daimler Financial Services
finances or leases half of all the new vehicles sold worldwide
by the Daimler Group - and our international portfolio contin-
ues to grow. In 2017 DFS increased the number of its new
leasing and financing contracts by 14 percent, once again
setting a new record. It's clear that in the future, Daimler's
automotive core business will stay in the fast lane.
Premium vehicles from Mercedes-Benz thrill our customers worldwide - unstoppably. Premium
automobiles form the basis of our core business. That's why Mercedes-Benz now has a larger and more
diverse model portfolio than ever before. With their pioneering design and innovative technologies,
Mercedes-Benz vehicles fascinate customers all over the world. The cars with the star are setting sales
records and leading the worldwide premium segment. The new E-Class and the upgraded S-Class from
Mercedes-Benz are playing a key role in this success. Daimler is operating from a position of strength
and is stepping up its pace. Until the end of this decade, it will launch numerous new car models on the
market. Many of them have no predecessor in the Group's current product range. We are expanding our
international production network and our flexible modular strategy in order to achieve our long-term goal
of efficient manufacturing for sustainable growth.
9,837
EU30
thereof Germany
401,025 359,096
273,297 249,860
105,781 96,130
+12
+9
+10
NAFTA
44,815
Total
43,354
thereof United States
34,158
33,749
+1
Latin America
(excluding Mexico)
16,378
+3
12,497
17/16
% change
2017
Production
405,129
368,574
+10
Unit sales
401,025
2016
359,096
Employees (December 31)
25,255
24,029
+5
C.06
Unit sales by Mercedes-Benz Vans
+12
+30
+31
33,641
C | THE DIVISIONS | MERCEDES-BENZ VANS
Driving the electric future
The new electric Vito
The Mercedes-Benz eVito has been available to order since November 2017, with deliveries to commence in the second half of 2018.
191
New HORIZON added to the Marco Polo family
SPU 1253E
In January 2017, Mercedes-Benz Vans added a new member to
its range of compact camper vans. Following the Marco Polo
and the Marco Polo ACTIVITY, our product range is now supple-
mented by the new Marco Polo HORIZON. Thanks to its ver-
satile seating configuration offering up to seven seats and five
beds, the Marco Polo HORIZON combines maximum function-
ality with the high-quality design of the V-Class. The compact
new camper van from Mercedes-Benz is geared toward trend-
conscious adventurers who are looking for a versatile and func-
tional vehicle for short vacation trips and outdoor activities,
but also appreciate a stylish image.
With its future-oriented “adVANce" initiative, Mercedes-Benz
Vans is evolving from a manufacturer of globally successful
vans into a provider of holistic system solutions for the trans-
portation of goods and passengers. The division is thus
playinga pioneering role in its sector. We aim to develop new
business models and tailored solutions that are adapted to
our customers' respective sectors.
In November 2017, Mercedes-Benz Vans provided information on
its plans to offer all of its commercial van models with electric
drive systems. This has already started with the mid-size eVito,
which has been available to order since the announcement
was made. Deliveries of the eVito will begin in the second half
of 2018, followed by the eSprinter in 2019. The product range
will be rounded out by the Citan. The electric-drive strategy of
Mercedes-Benz Vans focuses not only on the electric van itself,
but also on a technological ecosystem that is optimally aligned
with customers' business needs. Here, the division is taking
a holistic approach based on five pillars ("Holistic Ecosystem",
"Sector Focus", "Cost Effectiveness", "Co-Creation" and
"Technology Transfer") in order to create an innovative integrated
system solution. This solution covers the entire value chain
for commercial applications. Customer co-creation plays a key
role in product development, so strategic partners and their
sector expertise are being incorporated into the development
process. Hermes, a provider of logistics services, is a good
example of that. In early 2018, Hermes and Mercedes-Benz Vans
will launch the partnership they agreed upon in the spring
of 2017 with a pilot phase in Hamburg and Stuttgart. After the
projects are completed, we will expand the electric fleet to a
total of 1,500 electric Vito and Sprinter vans by 2020, and launch
it for parcel deliveries in other metropolitan areas. The
strategic partnership also involves the joint development of a
concept for an efficient charging infrastructure at Hermes
logistics centers, as well as IT services to ensure optimal man-
agement of the electric fleet. The two partners also plan to
develop integrated system solutions to boost the efficiency of
the entire delivery process. They are also working together to
create additional efficiency drivers, such as intelligent systems
for the cargo space that will enable the vehicle to be loaded
and unloaded faster.
In July 2017, Mercedes-Benz Vans Mobility GmbH launched
its first mobility service in the German market. Called Mercedes-
Benz Van Rental, this innovative and highly flexible rental
service from the Daimler subsidiary is mainly targeted at com-
mercial van customers. In addition, Mercedes-Benz Vans is
entering the business of shared mobility and ride sharing. To
this end, the Vans division teamed up with the successful US
startup Via to create the ViaVan joint venture for the European
market. The new ridesharing service will be launched in a
major European city in early 2018. After that, the service will
be gradually expanded to other cities.
Mercedes-Benz Vans is also studying new delivery models,
including the combination of vans and drones. For example, the
division cooperated with the US drone system developer
Matternet and the Swiss online marketplace siroop to run a
three-week pilot project in Zürich during the year under
review. The project involved the use of vans and drones for the
efficient on-demand delivery of e-commerce products.
192
Full speed ahead: first concrete results of the
future-oriented "adVANce" initiative
Asia
The new Mercedes-Benz X-Class is the first pickup from a premium manufacturer.
Mercedes-Benz Vans is the only manufacturer of full-size vans
that continues to produce in Germany. In this context,
Mercedes-Benz Vans is investing a total of €450 million in the
lead plant of the global Sprinter production network in
Düsseldorf, and in the Sprinter plant in Ludwigsfelde. The bat-
tery-electric Sprinter will be produced in Düsseldorf, and
this location will serve as the global competence center for the
electric-drive Sprinter. In 2017, the plant in González Catán
near Buenos Aires, Argentina, also began making preparations
for production of the new Sprinter. The division will invest
US$150 million in this facility and will create more than 500
additional jobs there. At the same time, construction of the
new Sprinter plant in North Charleston, South Carolina, con-
tinues to progress. Mercedes-Benz Vans is investing roughly
half a billion dollars in the new plant and will create up to 1,300
jobs there.
22,526
+49
23,801
13,636
+75
32,894 30,859
S.MB 4702
+7
190
C❘ THE DIVISIONS | MERCEDES-BENZ VANS
Mercedes-Benz Vans invests in its future
Mercedes-Benz Vans is continuing the successful implementa-
tion of its "Mercedes-Benz Vans goes global" growth strategy.
At the same time, we have laid the foundation for further growth
in the future. Building on its strong position, Mercedes-Benz
Vans announced in February 2017 that it would invest a total of
over €2.0 billion in 2017 and 2018 alone. This money is being
used to expand and update the division's product range and to
establish new services. The investments particularly focus on
the new Mercedes-Benz X-Class and the new Sprinter, as well as
on innovative holistic solutions for the vehicles from Mercedes-
Benz Vans.
Market launch of the Mercedes-Benz X-Class
Mercedes-Benz Vans has been delivering the new X-Class, the
first pickup from a premium automaker, to customers in Europe
since late 2017. South Africa and Australia will follow in early
2018 and we plan to launch the model in Argentina and Brazil
in 2019. The mid-size pickup segment is global in scope, is a
volume market and is set to grow further. The X-Class has room
for
up to five people. It augments the strengths of a mid-size
pickup with the typical properties of the Mercedes-Benz brand:
dynamic handling, comfort, great design, high safety, good
connectivity and a comprehensive range of customization options.
Customers can choose between three variants, rear-wheel
drive, engageable all-wheel drive or permanent all-wheel drive
(permanent all-wheel drive as of mid-2018), a six-speed
manual or seven-speed automatic transmission, and a diverse
range of accessories developed by Mercedes-Benz.
Preview of the new Sprinter: The transformation of a
vehicle into an integrated system solution
Mercedes-Benz Vans will launch the new Sprinter in Europe in
the second quarter of 2018, with other markets to follow
successively. The division already announced specific details
of the new full-size van in 2017. The new Sprinter will be
fully connected in order to be a part of the Internet of things.
In addition, the vehicle's unique scalability, electric drive
system and customized hardware solutions for the cargo space,
as well as a combination of van-sharing and rental services,
will make it the first integrated system solution from Mercedes-
Benz Vans. These innovations are integrated solely on the
basis of each customer's sector-specific needs, and they sig-
nificantly ease the daily work of drivers and fleet managers.
thereof China
Other markets
C | THE DIVISIONS | DAIMLER BUSES
238
thereof capitalized
188
C❘ THE DIVISIONS | DAIMLER TRUCKS
Connected Mercedes-Benz Arocs trucks in driverless
test operation
Daimler Trucks continues to work on reducing the burden on
drivers by means of automated driving in normal road traffic,
while enhancing safety on highways and freeways. In parallel,
Daimler Trucks is also testing driverless vehicles in closed-off
areas. This offers further potential, for example to significantly
increase customers' productivity. Fitted with a Remote Truck
Interface (RTI), which in the technological context will be devel-
oped for automated driving, four Mercedes-Benz Arocs trucks
demonstrated a new dimension of snow removal on an airfield.
Using the RTI, all vehicles are fully connected with telematics
systems and can either lead or follow in a convoy. Vehicle func-
tions can be controlled remotely and thus allow the truck con-
voy to be driven from outside the driver's cab. Following vehicles
in the convoy can therefore be used to clear snow in driverless
mode. The project was initiated in close collaboration between
the Daimler innovation incubator Lab1886, Daimler Trucks and
Fraport AG.
New connectivity solutions for the logistics sector
and truck servicing
The Truck Data Center forms the basis for our truck-related
digital services and is installed in vehicles from all Daimler
Trucks brands as a key component of the platform strategy.
The connectivity module receives truck data, evaluates it and
communicates with the infrastructure, other vehicles and
other logistics participants. Using linked connectivity solutions
from Fleetboard, Detroit Connect and Truckonnect that
are tailored to local customers' needs, logistics companies
receive extensive insights and useful analyses for their fleets,
as well as access to new digital connectivity services. Big data
and technology offer new potential for significantly increasing
the profitability of the logistics sector. Using a variety of new
apps, it is possible to display relevant information such as
fleet utilization, vehicle position, cost-savings potential, fuel
consumption and driving-style evaluation. And for the opti-
mization of vehicle servicing, Daimler Trucks last year launched
a new digital service: Mercedes-Benz Uptime. This connects
the truck with the Mercedes-Benz service organization and the
transport company, thus facilitating significantly better
plannability and higher efficiency through maximum vehicle
availability. Unplanned repairs can be avoided to a great
extent and scheduled workshop visits can be further optimized.
The new Freightliner Cascadia features impressive fuel efficiency, connectivity and safety.
Customer Fleet
G
Mercedes-Benz Uptime
The Truck Data Center connectivity module will be the brain of the connected truck across the Daimler Trucks brands.
Mercedes-Benz
Service
C | THE DIVISIONS | MERCEDES-BENZ VANS 189
Mercedes-Benz Vans
R
-
H
Truck platooning on public highways in the United States
In the past financial year, Daimler Trucks was the first truck
manufacturer to test digitally connected trucks on public high-
ways in the United States. This so-called platooning makes
use of connectivity and partially automated driving to reduce the
gaps between trucks on the road, and can result in better
fuel efficiency, easier work for the drivers and enhanced safety.
Tests with three Mercedes-Benz Actros trucks driving in par-
tially automated mode and connected had previously been car-
ried out in Germany in 2016. Daimler Trucks North America
(DTNA) linked two Freightliner New Cascadia trucks with the
use of Wi-Fi-based V2V communication in connection with
driver-assistance systems featured in the new Cascadia under
the product name Detroit Assurance 4.0. They include Adap-
tive Cruise Control, Lane Departure Assist and Active Brake
Assist 4. DTNA is thus responding to growing customer inter-
est in solutions for automated and connected driving in trucks.
Together with fleet customers in the United States, DTNA is
examining the impact of platooning solutions on fleet operations.
ECANTER
POWERED BY
POSITIVE
The FUSO eCanter is our first light-duty truck from series production with purely electric drive.
In India, the first half of the year was affected by weaker demand
in connection with regulatory and tax changes. Although the
Indian truck market contracted compared with the previous year,
we were able to significantly increase our unit sales to 16,700
BharatBenz trucks in the fifth year since the brand was launched
and our market share grew to 9.1% (2016: 13,100 and 6.8%).
This development was aided by, among other things, the new
emission standard Bharat Stage IV, which our BharatBenz
truck already fulfilled before it was introduced in April 2017.
Meanwhile, more than 60,000 BharatBenz trucks are on the
roads in India and a further 14,000 trucks have been exported
from there to more than 40 other markets in Asia, Latin
America and Africa.
Presence in important growth regions
In China, the world's biggest truck market, Daimler AG has a 50%
stake in Beijing Foton Daimler Automotive Co. Ltd.(BFDA), a
joint venture with Beiqi Foton Motor Co. Ltd. Medium- and heavy-
duty trucks of the Auman brand have been produced there
since 2012. Along with the significant market recovery in China,
sales of 112,400 Auman trucks were significantly higher than
in the previous year (2016: 77,800). More than 460,000 Auman
trucks have been sold since the joint venture was established.
In Iran, Mercedes-Benz Trucks signed a framework agreement
on a joint venture with the Iran Khodro Industrial Group in 2017.
This creates a basis for future sales and aftersales activities for
The trucks were previously tested on the new DTNA test grounds
in the desert of Oregon. This new facility with an area of over
35 hectares allows our vehicles to be tested for the NAFTA region
under difficult climatic conditions. Test drives of automated
vehicles are also to be carried out there.
Mercedes-Benz trucks in Iran. In addition, Daimler Trucks
signed a supply agreement for the FUSO brand with Mayan, a
company of the Mammut Group. The supply of FUSO trucks
to customers in Iran started in 2017.
Mercedes-Benz presented a fully electric heavy-duty truck for
distribution transport already in 2016. Last year, we launched
the new Japanese product brand, E-FUSO, a separate brand
for electric trucks and buses. It is planned to have an additional
electric version of each FUSO truck and bus model in the com-
ing years. With the presentation of the new fully electric E-FUSO
Vision One heavy-duty truck for inner-city and regional distri-
bution transport, we are underscoring our claim to be a pioneer
in the field of electric commercial vehicles. The Vision One
has a battery capacity of 300 kWh and a range of up to 350 kilo-
meters. We intend to launch the series-produced version of
the heavy-duty distribution trucks from FUSO in mature markets
in four years.
page 34 In New York last September, we
handed over the FUSO eCanter to customers including United
Parcels Services (UPS). According to our market knowledge,
this is the world's first fully electric light-duty truck from series
production. In Europe and Japan, other leading logistics pro-
viders were among the first customers of the small-series pro-
duction. They will use the fully electric light-duty truck for
various tasks in urban delivery transport. In the coming years,
IHULY
YBG
ФОЛ
C | THE DIVISIONS | DAIMLER TRUCKS
187
we plan to deliver 500 trucks of this generation to selected
customers. Large-scale series production will probably begin in
2019. The development of the vehicle benefited from extensive
experience gained from several customer test phases in Portugal
and Germany. Production of the eCanter models for Europe
and the United States started in Tramagal, Portugal in July 2017.
The trucks for Japan are produced in Kawasaki, where the
first rapid-charging station for electric trucks in the Japanese
market has been in operation since May. Thomas Built Buses,
a subsidiary of Daimler Trucks North America, presented a fully
electric school bus in September, which is to go into produc-
tion in 2019. The 160 kWh battery should allow a range of up to
160 kilometers and the range can be extended with additional
battery modules if required. With the development of the Saf-T-
Liner C2 electric bus, Thomas Built Buses profited significantly
from the electric-drive expertise within the Daimler Group. In
parallel with its activities on the vehicle side, Daimler Trucks
invested last year in the Israeli company StoreDot Ltd. and
agreed with it on a strategic partnership. Store Dot is a pioneer
for nanotechnology materials and is one of the leading com-
panies for electric-charging systems and energy-storage mate-
rials. The main area of cooperation is the rapid charging of
batteries to provide customers with better vehicle utilization.
Electrification has top priority
310
Mercedes-Benz Vans continued on its successful course of recent years, with a new record for
unit sales in 2017. At €1.2 billion, EBIT remained at the high level of the previous year. Growth was
mainly driven by the mid-size segment with the Vito van and the V-Class full-size MPV. We con-
tinued our "Mercedes-Benz Vans goes global" growth strategy by expanding our product range to
include the X-Class – the first pickup from a premium manufacturer. Mercedes-Benz Vans' future-
oriented "adVANce" initiative delivered its first concrete results, and the division is systematically
forging ahead with its transformation from a vehicle manufacturer into a supplier of transportation
and mobility solutions for cargo and passengers. Among other things, Mercedes-Benz Vans plans
to electrify its commercial fleet, beginning with the Vito in the second half of 2018.
Mercedes-Benz Vans set a new sales record once again in
financial year 2017, with an increase of 12% to 401,000 units.
At €13.2 billion, revenue was also higher than in the previous
year (2016: €12.8 billion). EBIT reached €1,181 million and was
thus at the high prior-year level.
+1
Return on sales (in %)
9.0
9.1
Investment in property,
plant and equipment
1,170
710
+90
Research and development
expenditure
565
442
+28
373
New record for unit sales
+3
13,164
1,181
Continued growth
Mercedes-Benz Vans' products remained very successful in
financial year 2017. Our Sprinter, Vito and Citan vans are
tailored mainly to commercial customers, while the V-Class
is designed primarily for private use. The X-Class is targeted
at a variety of private and commercial customers.
Unit sales in the EU30 region, our core market, rose by 9% to
273,300 vans in the year under review. The markets grew
at double-digit rates for example in the United Kingdom (+12%),
Spain (+10%), Italy (+13%), Poland (+17%), Switzerland (+10%)
and Austria (+14%). Mercedes-Benz Vans posted substantial
growth (+10%) also in its important German market. We also set
a new record in Germany of 105,800 units sold (2016: 96,100).
Unit sales developed favorably also in Turkey (+14%) and
Russia (+6%).
Mercedes-Benz Vans continued to grow also in the NAFTA
region, where sales rose to 44,800 units (2016: 43,400).
This included a new record of 34,200 units sold in the United
States (2016: 33,700).
Sales developed very favorably in Latin America, increasing sig-
nificantly by 31% to 16,400 units. Sales in China once again
rose sharply (+75%) compared with the prior year, driven by
the new models launched in the mid-size segment in 2016.
We sold a total of 200,500 units of the Sprinter worldwide in
2017 (2016: 193,400), which was the last full year of the current
model's life cycle. The successor generation of the Sprinter
is already set for market launch in the first half of 2018. Sales
of vehicles in the mid-size segment were significantly higher
than in the previous year, totaling 171,100 units in 2017 (2016:
140,800). Sales also rose in the commercial segment, with
Vito sales increasing significantly by 21% to 111,800 vehicles.
Meanwhile, sales of the Mercedes-Benz Citan reached 26,100
units (2016: 24,900). Sales of the V-Class full size MPV rose by
12,835
22% to 59,300 units in the year under review. The X-Class also
got off to a good start at the end of the year, with sales totaling
3,300 units.
Mercedes-Benz Vans
2017
2016
€ amounts in millions
17/16
% change
Revenue
EBIT
C.05
C | THE DIVISIONS | DAIMLER TRUCKS
Daimler Buses
C.07
The countdown for our electric city bus has begun
By the end of 2018, Daimler Buses plans to begin series pro-
duction of a city bus with fully electric drive based on the
Mercedes-Benz Citaro. The battery-electric Citaro has already
undergone an extensive cycle of testing and test drives. Its
prototypes have successfully completed a winter test cycle
under below-zero conditions at the Arctic Circle and a summer
test cycle under very high temperatures. The cycles are being
followed by endurance testing and detailed fine tuning. The
bus has reached such a degree of maturity that the brand is
already participating in invitations to tender. The first state-
ment of intent for the purchase of this electric city bus was
already signed at the end of 2017. As a result, we plan to
deliver the first buses starting in late 2018 and to put them into
operation in a customer-oriented vehicle testing program.
The new Setra S 531 DT double-decker bus continues our
coach offensive. Thanks to improved aerodynamics, it consumes
significantly less fuel than its predecessor. In addition, it is
equipped as standard with an emergency braking system with
obstacle and pedestrian recognition, and Sideguard Assist
for taking the blind spot into account is offered as an optional
extra.
Outstanding new touring coaches: the Mercedes-Benz
Tourismo and the Setra double-decker S 531 DT
Another focus area of the product offensive was the new
version of the successful Mercedes-Benz Tourismo touring
coach. New assistance and safety systems such as Active
Brake Assist 4 (ABA4) with pedestrian detection make the new
Tourismo even safer. Fuel consumption continues to fall,
thanks to its optimized aerodynamics and the further improve-
ment of its chassis compared with the predecessor model.
With four model variants, the new Mercedes-Benz Tourismo
addresses the wide range of customer needs in the coach
segment. The product offensive is also paying off in the grow-
ing intercity-bus business.
The benchmark: the new Mercedes-Benz Citaro hybrid
In the year under review, Daimler Buses continued its model
offensive with the Mercedes-Benz Citaro hybrid and other
models. Hybrid drive is available for many model variants of
the best-selling Citaro city bus, including the natural-gas-
powered Citaro NGT. Hybrid drive, together with the new elec-
tro-hydraulic steering system, further reduces the fuel
consumption of the conventional Citaro, which is already highly
efficient, depending on the vehicle's application and speci-
fications. The further reduced fuel consumption quickly pays
off for transport companies, and society and the environment
benefit from the decrease in emissions.
C | THE DIVISIONS | DAIMLER BUSES
194
Furthermore, Daimler Buses is conducting the "eMobility
Consulting" initiative to advise its customers on issues related
to electric mobility. In this context, we work together with our
customers to analyze each specific starting situation and use it
as a basis for developing a holistic system with the highest
possible proportion of electric mobility. In the process, we con-
sider not only the vehicles themselves but also the charging
infrastructure, the operating plan and the service concepts.
NU-5324
193
C | THE DIVISIONS | DAIMLER BUSES
The Setra S 531 DT double-decker is the biggest and most comfortable coach from Daimler Buses.
Economic, safe, comfortable and functional: the new Mercedes-Benz Tourismo RHD high-decker coach.
MANFU180
In the EU30 region, the Daimler Buses brands Mercedes-Benz
and Setra offer a full range of city buses, intercity buses and
touring coaches, as well as bus chassis. Due to the continued
high demand for our complete buses, unit sales in this region
amounted to 8,700, remaining roughly at the high level of the
prior year (2016: 8,800 units). Daimler Buses maintained its
leading market position in the EU30 region with a market share
of 28.4% (2016: 29.6%). At 3,100 units, sales in Germany were
at the same level as in the previous year. Sales of 400 units in
Turkey were significantly lower than in the prior year (2016:
600) due to the country's economic situation, which remains
difficult. The market situation in Latin America (excluding
Mexico) improved considerably on account of the gradually
recovering market in Brazil. The bus market volume in Brazil
grew by 10% in the year under review after having bottomed
out in 2016. Sales of Mercedes-Benz bus chassis in Brazil
rose by 46% to 7,200 units. We were able to maintain our lead-
ing market position in Brazil with a market share of 52.5%
(2016: 58.4%). In India, we continued along our growth path and
increased our sales to 900 units (2016: 500). At 3,400 units,
sales in Mexico were significantly lower than in the previous
year (2016: 3,800).
ETRA
Varied business development in the core regions
New bus models for the African market
Daimler Buses is launching two new bus models on the market
in Kenya. Both bus models will be manufactured for the local
market in cooperation with the division's local sales partner
DT Dobie Kenya in Nairobi. The Mercedes-Benz 917 city bus
was designed for city, school and shuttle operation, and the
Mercedes-Benz 1730 is ideal for long-distance routes.
Daimler Buses receives many major orders
The Americas: new business at prior-year level
Daimler Financial Services brokered 444,600 new financing
and leasing contracts worth €21.8 billion in the Americas
region in 2017 (+1%). The volume of new business developed
very well in Brazil (+28%) and Canada (+8%). Contract volume
in the Americas region of €50.7 billion at December 31, 2017
was lower than at the end of 2016 (-6%). Adjusted for exchange-
rate effects, contract volume increased by 6%.
Significant increase in new business in Europe
During the year under review, Daimler Financial Services
concluded 967,600 new financing and leasing contracts worth
€31.1 billion in the Europe region (+15%). Especially high
rates of growth were recorded in Russia (+51%), Italy (+29%)
and Spain (+28%). In Germany, Mercedes-Benz Bank's new
business increased by 9% to €12.9 billion. Daimler Financial
Services' total contract volume in Europe rose by 12% to
€59.7 billion.
Daimler Financial Services concluded 1.9 million new financing
and leasing contracts worth a total of €70.7 billion in 2017.
The total value of all new contracts rose by 14% compared with
the prior year. About half of all new-vehicle sales by our auto-
motive divisions in 2017 were supported by sales financing from
Daimler Financial Services. A total of more than 4.8 million
financed or leased vehicles were on the books at the end of
2017 with a total contract volume of €139.9 billion; this repre-
sents a 6% increase compared with the end of 2016. Adjusted
for exchange-rate effects, contract volume increased by 12%.
EBIT rose to a new high of €1,970 million (2016: €1,739 million).
71 C.09
Half of all Daimler vehicles delivered to customers are
financed or leased
The number of cars and commercial vehicles financed or leased by Daimler Financial Services
reached a new all-time high of more than 4.8 million at the end of financial year 2017. Record figures
were also posted for new business and contract volume, and EBIT set a new benchmark as well.
The combination of sales financing with brokered automotive insurance policies continued to gain
importance. The division's range of innovative mobility services was further expanded. Today,
services such as car2go, moovel and mytaxi are used by 17.8 million customers all over the world.
In 2017, the digitization of financial services was also successfully expanded with the Mercedes Pay
electronic payment system and the AutoGravity financing app.
195
The new umbrella brand Omniplus On for all digital
services
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
Award-winning products from Daimler Buses
At the Busworld international buses trade fair in Kortrijk,
Belgium, Daimler Buses was honored with five awards. The
panel of experts granting the Busworld Awards honored the
Mercedes-Benz Tourismo M and Citaro hybrid bus models with
two awards each. And the Setra S 516 HD touring coach in
the ComfortClass received the Sustainable Bus Award for 2018
from the international panel of judges.
Daimler Buses has become a strategic investor in the Berlin-
based mobility service CleverShuttle. Through a minority hold-
ing, the division is entering into a strategic cooperation for
mobility on demand - in other words, mobility services that are
designed to flexibly meet customer demand.
Strategic cooperation with CleverShuttle for mobility on
demand
As part of a new target vision, Daimler Buses is making its
production network in Europe fit for the future. Within this con-
text, in the years ahead, we aim to invest approximately €340
million in optimized structures and more efficient processes in
the manufacturing network, as well as in the implementation
of the CASE strategy at Daimler Buses.
A future package to enhance efficiency in production and
the implementation of CASE
In the year under review, Daimler Buses received a large number
of major orders. The local transportation authority in Riyadh,
Saudi Arabia, ordered more than 600 Mercedes-Benz Citaro
buses the biggest single order for Mercedes-Benz Citaro
city buses in the history of Daimler Buses. Two major orders
were concluded in Poland: 80 Mercedes-Benz Conecto buses
for Warsaw and 60 Mercedes-Benz Citaro buses for the local
transport operator in Wrocław. In addition, EMT Madrid
ordered an additional 300 vehicles. A framework agreement
was signed with the Italian transport operator AGI for 300
buses, and another contract with BusItalia covered a total of
950 vehicles.
Daimler Financial Services
Strong growth in Africa & Asia-Pacific region and China
New business in the Africa & Asia-Pacific region (excluding China)
increased sharply once again compared with the prior year,
by 16% to €8.4 billion. Business growth was especially strong in
South Korea (+30%) and Japan (+19%). At the end of 2017,
contract volume in the Africa & Asia-Pacific region (excluding
China) totaled €17.2 billion, representing a 7% increase over
the previous year. New business also increased significantly in
China: 300,300 new leasing and financing contracts worth
€9.5 billion were concluded in 2017 (+56%). At the end of 2017,
contract volume in China amounted to €12.2 billion - an
increase of 39% compared with the end of 2016.
Daimler Buses sold 28,700 buses and bus chassis worldwide in
financial year 2017 (2016: 26,200). The significant increase
was due in particular to the gradual recovery of the economy in
Brazil. The division thus maintained its clear market leadership
in its most important traditional core markets (EU30, Brazil,
Argentina and Mexico). Sales of complete buses in the EU30
region were at the same high level as in the previous year.
Revenue grew by 4% and EBIT of €243 million was at the prior-
year level (2016: €249 million).
-27
Latin America
-0
3,063
3,057
thereof Germany
-2
(excluding Mexico)
+9
8,687
EU30
28,676
Total
17/16
% change
+2
26,226
8,838
Earnings at the prior-year level
12,740
thereof Brazil
2,012
1,461
Other markets
+33
1,759
2,348
+30
Asia
3,780
3,440
Mexico
+46
4,937
7,201
-9
In 2017, business development at Daimler Buses was strongly influenced by the recovering
economic conditions in Latin America and a significant sales increase in India. Lower demand for
our buses in Turkey had a negative impact. Our earnings, which were at the very good level of
the previous year, enabled us to achieve a 5.6% return on sales. As the market leader in its most
important traditional core markets, Daimler Buses focuses on innovative and pioneering city
buses and coaches. In 2017, Daimler Buses once again presented itself as a future-oriented manu-
facturer with new products and digital services, a “future package” for our production network,
and the implementation of the CASE strategy.
Further growth in the insurance business
Daimler Financial Services brokered approximately 2.1 million
insurance policies in 2017 - an increase of 20% compared
with the prior year. A new telematics-based insurance rate was
developed in 2017 and successfully launched in France,
Belgium and Germany. Since it started operations in 2016, the
warranty insurer Mercedes-Benz Versicherung AG, has
established itself in the German market very successfully
and continued to grow in financial year 2017.
Daimler Financial Services
6.0
Investment in property,
plant and equipment
Research and
development expenditure
194
5.6
202
thereof capitalized
30
11
+173
Production
28,518
-4
26,180
Return on sales (in %)
249
Daimler Buses
2017
2016
€ amounts in millions
17/16
% change
94
-2
97
Revenue
4,351
4,176
+4
EBIT
243
-3
C.09
Unit sales
26,226
61,810
+13
1,739
+15
20,660
23,775
1,970
70,721
139,907
+14
Contract volume
EBIT
Revenue
€ amounts in millions
17/16
% change
2016
2017
New business
28,676
132,565
Investment in property,
plant and equipment
+9
+9
Employees (December 31)
18,292
17,899
C.08
Unit sales by Daimler Buses
+6
2017
Employees (December 31)
+8
+16
37
12,062
13,012
43
2016
186
Starting in 2018, we plan to consolidate our digital services for
buses under the umbrella brand Omniplus On in a single portal.
For example, the Uptime feature continuously monitors and
analyzes the vehicle systems and indicates when maintenance
or repair is needed. The Driver's App supports the communi-
cation of drivers and companies and helps them carry out the
required pre-departure checks. The Remote Bus feature pro-
vides essential data. Thanks to these features, our customers
have a wide variety of information available to them for sup-
porting the efficient deployment of their fleets.
Corporate government in practice
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
203
Declaration on Corporate Governance,
Corporate Governance Report
The declaration on corporate governance pursuant to Section 289 f and Section 315 d of the Ger-
man Commercial Code (HGB) has been combined for Daimler AG and the Daimler Group as well
as with the Corporate Governance Report. The following statements thus apply to Daimler AG and
the Daimler Group insofar as not otherwise stated. The declaration on corporate governance,
which is combined with the corporate governance report, can also be viewed on the Internet at
daimler.com/dai/gcgc. Pursuant to Section 317 Subsection 2 Sentence 6 of the German Com-
mercial Code (HGB), the purpose of the audit of the contents of the statements pursuant to Sec-
tion 289 f Subsections 2 and 5 and Section 315 d of the HGB is limited to determining whether such
statements have actually been provided.
Declaration by the Board of Management and
Supervisory Board of Daimler AG pursuant to
Section 161 of the German Stock Corporation
Act (AktG) regarding the German Corporate
Governance Code
Daimler AG satisfies the recommendations of the German
Corporate Governance Code published in the official section
of the German Federal Gazette on April 24, 2017 in the Code
version dated February 7, 2017, with the exception of Clause
3.8 Paragraph 3 (D & O insurance deductible for the Supervi-
sory Board) and will continue to observe the recommendations
with the aforesaid deviation. Since the issuance of the last
compliance declaration in December 2016, Daimler AG has
observed the recommendations of the German Corporate
Governance Code in the version dated May 5, 2015, published
on June 12, 2015, with the aforementioned exception as well
as with a deviation from Clause 5.4.1 Paragraph 2 (Specific
objectives for the composition of the Supervisory Board) de-
clared as a precautionary measure.
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3)
Chairman
As in previous years, the Directors' & Officers' liability insurance
(D&O insurance) also contains a provision for a deductible for
the members of the Supervisory Board, which is appropriate in
the view of Daimler AG. However, this deductible does not cor-
respond to the legally required deductible for members of the
Board of Management in the amount of at least 10% of the dam-
age up to at least one and a half of the fixed annual remu-
neration. Since the remuneration structure of the Supervisory
Board is limited to function-related fixed remuneration without
performance bonus components, setting a deductible for Su-
pervisory Board members in the amount of 1.5 times the fixed
annual remuneration would have a disproportionate economic
impact when compared with the members of the Board of
Management, whose compensation consists of fixed and per-
formance bonus components.
Stuttgart, December 2017
For the Supervisory Board
Dr. Manfred Bischoff
Chairman
For the Board of
Management
Dr. Dieter Zetsche
Chairman
This declaration and previous, no longer applicable, declara-
tions of compliance from the past five years are also available
at our website at daimler.com/dai/gcgc.
204
The deviation from Clause 5.4.1 Paragraph 2, declared as pre-
cautionary measure in the compliance declaration dated Decem-
ber 2016, namely the specific objectives for the composition
of the Supervisory Board has ceased to apply from December
2017. The Supervisory Board has set a target objective for its
composition regarding the number of independent members of
the Supervisory Board and in consideration of potential con-
flicts of interest no longer to the appointments for the share-
holders' side only, but in the light of the German Co-Determi-
nation Act also for the entire Supervisory Board.
Dr. Clemens Börsig
Жилно приз
The Audit Committee
report and the recommendation of the Board of Management
to pay a dividend of €3.25 per share entitled to a dividend.
Furthermore, the Audit Committee approved the Report of the
Audit Committee for the financial year 2016.
Also in this meeting, the Audit Committee discussed the report
on the total fees paid to the external auditors in the financial year
2016 for auditing and non-auditing services. The Audit Com-
mittee also decided to recommend to the Supervisory Board,
and subsequently to the Annual Shareholders' Meeting, that
KPMG be engaged to conduct the annual external audit and the
external auditors' review of interim financial reports for the
financial year 2017 and also to conduct the external auditors'
review of interim financial reports for the financial year 2018
in the period leading up to the Annual Shareholders' Meeting in
2018. The Audit Committee based this recommendation on the
quality of the annual audit and the results of the independence
review, for which no indications of partiality or a threat to inde-
pendence were found. Subject to the election of the proposed
external auditors by the Annual Shareholders' Meeting, the Audit
Committee also discussed the proposal to be made regarding
the fees to be agreed upon with the external auditors for the
financial year 2017. Finally, within the framework of its respon-
sibility, the Audit Committee dealt with the draft agenda for the
2017 Annual Shareholders' Meeting and the annual audit plan
for 2017 of the Internal Auditing department.
In the meetings during 2017 related to the quarterly results, the
Audit Committee discussed the interim financial reports before
their publication with the Board of Management and with the
external auditors engaged to carry out the auditors' review of
interim financial statements. In addition, the Committee received
reports from the Internal Auditing, Group Compliance and Legal
departments. In this connection, the Board of Management
reported regularly to the Audit Committee, on the current status
of the main legal proceedings, in particular also on the requests,
inquiries, investigations and proceedings in connection with
the issue of diesel exhaust emissions. In addition, the Audit
Committee dealt with notifications concerning possible viola-
tions of rules submitted by employees and third parties to
the Group's own whistleblower system BPO (Business Prac-
tices Office).
In April 2017, the Audit Committee approved the fees agreed
upon with the external auditors for the financial year 2017 after
the Annual Shareholders' Meeting made its decision on March
29, 2017 regarding the election of the proposed external audi-
tors for the annual financial statements and the consolidated
financial statements.
In its meeting in June 2017, the Audit Committee was informed
of a recent development regarding searches of Daimler AG
premises conducted by the Stuttgart State Attorney's Office
within the framework of its investigation of known and unknown
employees of Daimler AG. The Audit Committee then dis-
cussed the Group's risk management system and dealt in par-
ticular with its changes and further development. It also dis-
cussed the methods and processes of, and possible changes
to, the internal control system, which along with accounting
also encompasses the internal auditing function and the com-
pliance management system. In addition, the Audit Committee
was informed about the Group Legal System and Group Legal
Risk Reporting. Furthermore, the Committee received a report
on the non-auditing services provided by the external auditors.
In this meeting, the Committee also defined key audit issues
for the external audit of the financial year 2017, including new
requirements for the audit opinion as well as planning measures
for the external audit for 2017 and the framework of approval
for engaging the external auditors to provide non-audit services.
In addition, the Committee extensively addressed the status of
implementation of the EU Audit Reform at Daimler. In this con-
nection, the Committee congruently aligned the period for the
approval framework for engaging the external auditors to pro-
vide non-audit services with the financial year, thus enhancing
202
D❘ CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
the legally required transparency at the Group. This meeting
was also used to discuss the results of the internal quality
analysis of the external audit for the financial year 2016.
Also in the meeting in June 2017, the Audit Committee dealt
in depth with the impact that implementation of the EU CSR
Directive will have on reporting at Daimler and on the disclo-
sure of non-financial information. Furthermore, the Committee
was informed of new developments in accounting and financial
reporting, such as the new financial accounting standards IFRS
9 (Financial Instruments) and IFRS 15 (Revenue Recognition),
and other audit-relevant areas such as tax law. The Committee
also received detailed information on the audit from the Finan-
cial Reporting Enforcement Panel (Deutsche Prüfstelle für Rech-
nungslegung), which did not result in any objections. Finally,
the Audit Committee took note of a report on pension manage-
ment and of another on current tax issues, and also discussed
with the Board of Management the annual report produced by
the Group's Data Protection Officer.
In the meeting held in July 2017, the Audit Committee dealt
mainly with the second-quarter results and the risk report. Along
with production and technology risks, the Committee members
also discussed the possible effects of software retrofitting of
Mercedes-Benz diesel vehicles in Europe, the comprehensive
plan for diesel engines approved by the Board of Management
in July 2017, and the risks stemming from current legal issues.
In the meeting held in October 2017, the Audit Committee dealt
with the interim financial report for the third quarter of 2017
and the quarterly reports from the Internal Auditing, Group
Compliance and Legal departments. The Committee also once
again discussed the effects of the EU CSR Directive on non-
financial reporting at Daimler.
Company and consolidated financial statements 2017
In the meeting held on January 31, 2018, the Audit Committee
dealt with the preliminary figures of the annual financial state-
ments and the annual consolidated financial statements for the
year 2017, as well as with the proposal on the appropriation of
profits made by the Board of Management. Following an in-depth
review, the Audit Committee took positive note of the presented
figures and determined that no objections were to be made to
their proposed publication. The Committee further recommended
that the Supervisory Board, which met immediately thereafter,
adopt the same view. The preliminary key figures and the proposal
on the appropriation of profits were announced at the Annual
Press Conference on February 1, 2018.
In another meeting held on February 9, 2018, the Audit Com-
mittee reviewed and discussed in detail the annual financial
statements, the consolidated financial statements and the
combined management report for Daimler AG and the Daimler
Group for the financial year 2017, each of which had been
issued with an unqualified auditor's opinion by the external
auditors, as well as the proposal on the appropriation of profits
and the non-financial report. At the meeting, the external audi-
tors reported on the results of their audit and the voluntary
audit of the non-financial report within the framework of a lim-
ited assurance engagement and were also available to answer
supplementary questions and to provide additional information.
The audit reports on the annual financial statements and con-
solidated financial statements (including the particularly impor-
tant audit issues in the audit opinions) and on the internal con-
trol system (ICS), the report on the risk management system
(RMS) for the year 2017, the Annual Report 2017, and impor-
tant issues related to financial reporting were discussed with
the external auditors. Following an in-depth review and discus-
sion, the Audit Committee recommended that the Supervisory
Board approve the financial statements, the combined manage-
ment report, the declaration on corporate governance included
in the corporate governance report, the non-financial report,
and the recommendation of the Board of Management to pay a
dividend of €3.65 per share entitled to a dividend. Further-
more, the Audit Committee approved the Report of the Audit
Committee for the financial year 2017.
Efficiency review
As in previous years, the Audit Committee once again conducted
a self-evaluation of its own activities in 2017 on the basis of an
extensive company-specific questionnaire. The results of this
efficiency review were once again very positive and were pre-
sented and discussed in the meeting on February 9, 2018. This
did not result in any need for action with regard to the Commit-
tee's tasks, or with regard to the content, frequency or proce-
dure of its meetings.
Stuttgart, February 2018
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
201
The main principles applied in our corporate
governance
The principles guiding our conduct
reports
reports
elects members
representing the
shareholders,
ratifies the
actions of
Supervisory Board
20 members
reports
appoints,
advises and
monitors
Annual Shareholders' Meeting
Board of Management
ratifies
the actions of
Composition and mode of operation of the
Board of Management > D.01
Daimler AG is obliged by the German Stock Corporation Act
(AktG) to apply a dual management system featuring strict per-
sonal and functional separation between the Board of Manage-
ment and the Supervisory Board (two-tier board). Accordingly,
the Board of Management manages the company while the Su-
pervisory Board monitors and advises the Board of Management.
Board of Management
In accordance with the Articles of Incorporation of Daimler AG,
the Board of Management has at least two members. The pre-
cise number of Board of Management members is determined
by the Supervisory Board. The Board of Management had eight
members on December 31, 2017. In accordance with the Ger-
man law requiring equal participation of women and men in ex-
ecutive positions, the Supervisory Board has defined a target
for the proportion of women on the Board of Management and
a deadline for achieving this target. The details are described
in a separate section: page 209. With regard to the compo-
sition of the Board of Management, the Supervisory Board has
also adopted a diversity concept that is embedded in an overall
requirements profile. The details of this concept are also de-
scribed in a separate section: page 210.
German Corporate Governance Code
8 members
Governance structure
D.01
Information on the areas of responsibility and the curricula vi-
tae of the Board of Management members are posted on the
Daimler AG website at daimler.com/dai/bom. The members
of the Board of Management and their areas of responsibility
are also listed on pages 62 f of the Annual Report 2017.
Our business conduct is based on Group-wide standards that go
beyond the requirements of relevant legislation and the Ger-
man Corporate Governance Code. These standards are based
on the four corporate values integrity, respect, passion and
discipline. In order to achieve viable and thus sustainable busi-
ness success on this basis, our goal is to ensure that our activi-
ties are in harmony with the environment and society. This is
due to the fact that we as one of the world's leading automak-
ers also strive to be a leader in sustainability. We have defined
the most important principles in our Integrity Code, which
serves as a frame of reference for compliant and ethical con-
duct in everyday activities for all employees at Daimler AG and
the Group.
Integrity Code
Our Integrity Code is based on a shared understanding of val-
ues, which we developed together with our employees. The
Code defines our principles of behavior in daily business. This
applies to interpersonal conduct within the company as well
as conduct toward customers and business partners. The key
principles here include fairness and responsibility on the basis
of compliance with applicable laws. In addition to general prin-
ciples of behavior, the Code includes requirements and regu-
lations concerning respect for and the protection of human
rights and the handling of conflicts of interest. It also prohibits
all forms of corruption. The Integrity Code applies to all em-
ployees at Daimler AG and the Group. The Integrity Code is
available on the Internet at daimler.com/dai/caag.
We have also reached agreement on "Principles of Social Re-
sponsibility" with the World Employee Committee. These princi-
ples apply throughout Daimler AG and the entire Group. In the
Principles of Social Responsibility, Daimler commits itself to the
principles of the UN Global Compact and thus to internation-
ally recognized human and workers' rights, the proscription of
child labor and forced labor, freedom of association and sus-
tainable protection of the environment. Daimler also commits
itself to guaranteeing equal opportunities and adhering to the
principle of "equal pay for equal work."
Expectations for our business partners
We also require our business partners to adhere to compliance
stipulations because we regard our business partners' integrity
and behavior in conformity with regulations as an indispens-
able prerequisite for trusting cooperation. When selecting our
direct business partners, we therefore pay close attention that
they comply with the law, follow ethical principles and do the
same themselves towards other partners in the supply chain.
For the expectations we place on our business partners, see
also daimler.com/sus/obr.
Risk management at the Group
Daimler has a risk management system commensurate with
its size and position as a company with global operations,
pages 155 ff of the Annual Report 2017. The risk manage-
ment system is one component of the overall planning, control-
ling and reporting process. Its goal is to enable the company's
management to recognize significant risks at an early stage
and to initiate appropriate countermeasures in a timely man-
ner. At least once a year, the Audit Committee discusses the
effectiveness and functionality of the risk management system
with the Board of Management. The Chairman of the Audit
Committee reports to the Supervisory Board on the commit-
tee's work at the latest in the meeting of the Supervisory
Board following each committee meeting. The Supervisory
Board also deals with the risk management system on the
occasion of the approval of the operational planning and the
audit of the annual company and consolidated financial state-
ments. In addition, the Board of Management regularly informs
the Audit Committee and the Supervisory Board of the most
important risks facing the company and the Group as a whole.
The Chairman of the Supervisory Board has regular contacts
between Supervisory Board meetings with the Board of Man-
agement, and in particular with the Chairman of the Board of
Management, to discuss not only the Group's strategy and
business development but also the issue of risk management.
The Internal Auditing department monitors adherence to the
legal framework and to Group standards by means of targeted
audits and initiates appropriate actions as required.
Accounting and the external audit
Daimler prepares its consolidated financial statements and
interim financial reports in accordance with the International
Financial Reporting Standards (IFRS), as adopted by the Euro-
pean Union. The annual financial statements of Daimler AG are
prepared in accordance with the accounting standards of the
German Commercial Code (HGB). Daimler prepares both half-
yearly and quarterly financial reports. The annual financial
statements and consolidated financial statements of Daimler
AG are audited by the external auditor; interim financial reports
are also reviewed by an external auditor. The consolidated fi-
nancial statements and the Group management report shall be
made publicly accessible via the Company's website within 90
days from the end of the reporting year; the interim financial
reports shall be made publicly accessible in the same manner
within 45 days from the end of the reporting period.
Based on the recommendation of the Audit Committee, the
Supervisory Board submits a decision proposal to the Share-
holders' Meeting for the election of the external auditors for
the annual financial statements, the external auditors for the
consolidated financial statements and the auditors for the
external auditors' review of interim financial reports. At the
Shareholders' Meeting on March 29, 2017, KPMG AG
Wirtschaftsprüfungsgesellschaft, Berlin was elected to conduct
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
205
the audit of the annual financial statements and the consoli-
dated financial statements, and the external auditors' review of
interim financial reports, for the financial year 2017, as well as
the external auditors' review of interim financial reports for the
financial year 2018 in the period leading up to the Sharehold-
ers' Meeting in 2018. Since 2014, the responsible auditor com-
missioned to carry out the external audit has been Dr. Axel
Thümler. KPMG AG Wirtschaftsprüfungsgesellschaft has been
conducting the audit of the annual financial statements and
the annual consolidated financial statements of Daimler AG
since the 1998 financial year.
Prior to issuing its recommendation to the Shareholders' Meet-
ing, the Audit Committee of the Supervisory Board obtained a
declaration from the external auditor under consideration. The
external auditor was requested to state whether any business,
financial, personal or other relationships existed between the
external auditor and its bodies and audit managers on the one
hand, and the Company and the members of its bodies on the
other, which could justify concerns regarding a conflict of in-
terest. Further, the external auditor was asked to describe the
nature of any such relationships that may have in fact existed.
This statement also described the extent to which other services
were performed for the Daimler Group in the previous year
or had been contractually agreed upon for the following year.
The Audit Committee instructed the external auditor to imme-
diately inform the Committee Chairman of any indications of
partiality or grounds for exclusion uncovered during the audit
or the auditors' review of interim financial statements, and of
all key findings and events relevant to the tasks of the Supervi-
sory Board, particularly findings or events related to suspected
irregularities in accounting. The Audit Committee also reached
an agreement with the external auditor stipulating that the ex-
ternal auditor would inform the Audit Committee, and make a
note in the audit report, of any facts uncovered during the an-
nual audit that would reveal inaccuracies in the Board of Man-
agement's and the Supervisory Board's declaration of compli-
ance with the German Corporate Governance Code.
Beyond the legal requirements of German securities, codeter-
mination and capital market legislation, Daimler AG has
followed and continues to follow the recommendations of the
German Corporate Covernance Code ("Code") with the excep-
tions disclosed and justified in the declaration of compliance.
Daimler AG has also followed and continues to follow the sug-
gestions of the Code with just one exception: Deviating from the
suggestion in Clause 2.3.3, which stipulates that companies
should enable shareholders to view the Shareholders' Meeting
with modern communications media such as the Internet, the
Shareholders' Meeting is not transmitted in its entirety on the
Internet, but only until the end of the report by the Board of
Management, in order to protect the character of the Share-
holders' Meeting as a meeting attended by our shareholders in
person. An additional factor is that continuing the broadcast
after that point, in particular broadcasting comments made by
individual shareholders, could impair the discussion between
shareholders and management.
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
German Corporate Governance Code
In another meeting held on February 10, 2017, the Audit Com-
mittee dealt with the annual financial statements, the consoli-
dated financial statements and the combined management
report for Daimler AG and the Daimler Group for the financial
year 2016, each of which had been issued with an unqualified
auditor's opinion by the external auditors, as well as with the
proposal on the appropriation of profits. At the meeting, the
external auditors reported on the results of their audit and were
available to answer supplementary questions and to provide
additional information. The audit reports on the annual company
and consolidated financial statements and on the internal
control system (ICS), the report on the risk management system
(RMS) for the year 2016, Annual Report 2016 and important
issues related to accounting were discussed with the external
auditors. Following an in-depth review and discussion, the
Audit Committee recommended that the Supervisory Board
approve the financial statements, the combined management
world with regard to customers' and dealers' assessments
of our service quality. In the United States, Mercedes-Benz
Financial Services once again finished at the top of three
categories in a J.D. Power study of dealer satisfaction. The foun-
dation of these and many other successes is formed by our
highly motivated employees. In the independent worldwide Great
Place to Work Institute survey to determine the world's best
employers, Daimler Financial Services was listed - in 2016 for
example among the top ranks in many countries.
Focus on customer and employee satisfaction
Customer and employee satisfaction is a top priority at Daimler
Financial Services. In 2017, independent surveys once again
showed that we are a leader in numerous countries around the
In 2017, Daimler Financial Services was active in the fleet-
management business with Daimler Fleet Management and
Athlon. In Europe, a total of 383,300 contracts with fleet
customers were on the books at the end of 2017, representing
an increase of 6% compared with a year earlier. Contract
volume amounted to €6.4 billion. Mercedes-Benz Connectivity
Services GmbH has been offering fleets and business cus-
tomers connectivity services for telematics-based fleet
management under the brand "connect business” since
April 2017.
Growth of fleet business in Europe
A total of 17.8 million customers are registered for Daimler
mobility services, which are offered in more than 100 cities in
Europe, China and the Americas. In addition to car2go, moovel
and mytaxi, Daimler Mobility Services also has holdings in inno-
vative mobility services companies all over the world, including
Blacklane and Flixbus. In 2017, Daimler Mobility Services acquired
an interest in Turo, which is the US market leader in peer-to-
peer car sharing, and in the ride-sharing service Via, as well as
in Careem, a ride-sharing service based in Dubai. It also
completely took over flinc, the first ride-sharing platform for
short trips, which was founded in Darmstadt.
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES 197
In 2017, mytaxi further expanded and consolidated its position
as Europe's biggest taxi app through its successful merger with
Hailo and its acquisition of Taxibeat and Clever Taxi. mytaxi's
geographic coverage was expanded to the United Kingdom, Ire-
land, Greece and Romania, which means that it now operates
in 11 European countries. It has also entered two rapidly grow-
ing markets in South America (Peru and Chile). mytaxi now
has 120,000 registered taxi drivers in 70 cities. The number of
registered mytaxi users increased compared with the end of
2016 by 85% to 11.1 million.
Toll4Europe collects truck tolls all over Europe
The Toll Collect automatic system for truck-toll collection on
German autobahns and selected federal highways continued
to operate smoothly and reliably in 2017. The system recorded a
total of 33.6 billion kilometers driven in the year under review.
Daimler Financial Services holds a 45% interest in the Toll Col-
lect consortium. The Federal Republic of Germany has collected
a total of more than €53 billion in tolls since Toll Collect went
into operation at the beginning of 2005. Toll Collect is also
preparing to extend toll collection to all federal highways, which,
as planned by the German government, is to start on July 1,
2018. In addition, Daimler has held a 30% share in the European
Electronic Toll Service (EETS) since April 2017 and has founded
the joint venture Toll4Europe together with T-Systems (55%) and
DKV (15%). The new service is scheduled to begin in the sec-
ond half of 2018. The objective is to offer a one-stop shop for
truck-toll payment, with tolls charged by means of an onboard
unit and Europe-wide invoicing.
companies all over the world. In the United States, mobile
ticketing applications from moovel are now used by 16 trans-
portation companies. That makes moovel North America the
leading provider of mobile ticketing technology for US local
public transportation apps. In May 2017, moovel teamed up with
the public transportation provider in Karlsruhe (KVV) to launch
the joint mobility app "KVV.mobil powered by moovel." KVV
tickets can be booked and paid for directly via the app. In
addition, the app shows users available rental bicycles and
vehicles from the car-sharing company Stadtmobil. The number
of registered app users in Germany and the United States
had risen to 3.7 million by the end of 2017 (2016: 2.2 million). In
August 2017, moovel also acquired the Hamburg-based com-
pany Familonet GmbH, the provider of the location-messenger
app Familonet. The acquisition of this startup, which has
received numerous awards, enables moovel to apply the com-
pany's expertise in the areas of geofencing and localization.
In 2017, car2go upgraded its worldwide fleets with new vehicle
models. In Europe and North America, it added more Mercedes-
Benz vehicles to its fleets; in Stuttgart, the fleet was supple-
mented with B-Class electric drive vehicles; and in Italy, the
fleets were augmented for the first time with smart forfour
cars. At the same time, the car2go services were technically
refined and simplified for the customers. Thanks to the intro-
duction of online validation of driver's licenses, customers in
all markets can now register online from start to finish and
use car2go services immediately. In addition, with the option of
hourly packages, car2go is offering its customers affordable
and stress-free long-term rental conditions.
Daimler Financial Services once again expanded its range of
innovative mobility services in 2017. The number of registered
users of the car2go car-sharing service increased to more
than 3.0 million, enabling car2go to maintain its position as the
world's leading flexible car-sharing company.
Mobility services on the right track
True to the motto "Mobility at your fingertips," Daimler Financial Services is a leading provider of digital mobility services.
9
8-003740
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
The moovel app also underwent further development in 2017.
moovel enables customers in Germany to compare various
mobility and transport-system options and then choose the
best way to get from point A to point B. The app can also be
used to book and directly pay for services provided by compa-
nies such as car2go, mytaxi and Deutsche Bahn. With the
introduction of the moovel transit product portfolio, the moovel
Group is offering "white label" solutions for transportation
Daimler Financial Services customers can conveniently find out about financing and leasing offers on all channels - online or in a direct discussion.
"
WE ACT
Dr. Clemens Börsig, Chairman of the Audit Committee
D & O insurance deductible for the Supervisory Board
203-213
Corporate Governance Code
Declaration of compliance with the German
Corporate Governance Report
Declaration on Corporate Governance,
- Topics dealt with
Meetings and participants
Responsibilities and composition
200 - 202
Report of the Audit Committee
D | Corporate Governance
The Board of Management and the Supervisory Board of Daimler AG
are committed to the principles of good corporate governance.
Our actions take place within the framework of responsible, transparent
and sustainable córporate governance.
MA MB 180
66
RESPONSIBLY AND
SUSTAINABLY!
196
Principles of our actions
-
Guidelines for behaving with integrity
Shareholders and the Shareholders' Meeting
D | CORPORATE GOVERNANCE | CONTENTS 199
200
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Report of the Audit Committee
Dear Shareholders,
Responsibility
On the basis of applicable law, the German Corporate Gover-
nance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals primarily
with questions of accounting, financial reporting and non-
financial reporting. In addition, it deals with the annual audit
and reviews the qualifications and independence of the exter-
nal auditors. Furthermore, it discusses the effectiveness and
functional capabilities of the risk management system, the
internal control system, the internal auditing system and the
compliance management system. After the external auditors
are elected by the Annual Shareholders' Meeting, the Audit
Committee engages the external auditors to conduct the annual
audit and the auditors' review of interim financial statements,
determines the important audit issues and negotiates the audit
fees with the external auditors.
Equal representation
Audit Committee Chairman Dr. Clemens Börsig and Joe Kaeser
served as the shareholder representatives on the Audit Com-
mittee in financial year 2017. Both are independent and have
expertise in the field of financial reporting, as well as special
knowledge of and experience in the auditing of financial state-
ments and the application of methods of internal control. Dur-
ing financial year 2017, the employees were represented on the
Audit Committee by Michael Brecht as the Deputy Chairman
of the Committee and by Ergun Lümali.
Meetings and participants
The Audit Committee met six times in financial year 2017. All of
these meetings were also attended by the Chairman of the
Supervisory Board, Dr. Manfred Bischoff, as a permanent guest.
The other permanent participants in the meetings were the
Chairman of the Board of Management, the members of the
Board of Management responsible for Finance and Controlling
and for Integrity and Legal Affairs, and the external auditors.
The heads of specialist departments such as Accounting, Inter-
nal Auditing, Group Compliance and Legal were also present to
report on individual items of the agenda.
In addition, the Chairman of the Audit Committee held regular
individual discussions, for example with the external auditors,
the members of the Board of Management responsible for
Finance and Controlling and for Integrity and Legal Affairs, the
head of Internal Auditing and, if required, further heads of the
relevant specialist departments. Such individual discussions
were mainly held to prepare for the next committee meetings.
Reporting to the Supervisory Board
The Chairman of the Audit Committee informed the Supervisory
Board about the activities of the Committee and about the
contents of its meetings and discussions in the following Super-
visory Board meetings.
Topics in 2017
In the meeting held on February 1, 2017, the Audit Committee
dealt with the preliminary figures of the annual financial state-
ments and the annual consolidated financial statements for the
year 2016, as well as with the proposal on the appropriation
of profits made by the Board of Management. Following an in-
depth review, the Audit Committee took positive note of the
presented figures and determined that no objections were to
be made to their proposed publication. The Committee further
recommended that the Supervisory Board, which met immedi-
ately thereafter, adopt the same view. The preliminary key
figures and the proposal on the appropriation of profits were
announced at the Annual Press Conference on February 2, 2017.
Supervisory Board
Board of Management
As Chairman of the Audit Committee, I am very pleased to
report to you on the tasks and activities performed by that
body in financial year 2017.
Board of Management
Overall requirements for the composition of the Board of
Management and Supervisory Board
Risk management at the Group
Accounting principles
Composition and mode of operation of the
Board of Management
CASE Steering Committee
Diversity
What we expect of our business partners
Composition and mode of operation of the
Supervisory Board
Presidential Committee
Nomination Committee
Audit Committee
Mediation Committee
Law for the equal participation of women and men
in executive positions
Supervisory Board and its Committees
On the following pages, we publish for the first time a non-financial report in
accordance with Sections 289b - 289e, 315b and c of the German Commercial
Code (HGB). This report applies to Daimler AG and to the Daimler Group. It contains
the main information on the aspects of environmental, employee and social matters,
combating corruption and bribery, and respect for human rights.
BECOMING INCREASINGLY IMPORTANT
FOR THE GROUP'S SUCCESS!
99 NON-FINANCIAL FACTORS ARE
227
We maintain close contacts with our shareholders in the context
of our comprehensive investor relations and public relations
activities. We regularly and comprehensively inform our share-
holders, financial analysts, shareholder associations, the media
and the interested public about the situation of the Group and
inform them without delay about any significant changes in its
business. Within reasonable limits, the Chairman of the Supervi-
sory Board is also prepared to talk to investors about specific
Supervisory Board issues.
66
The shareholders exercise their membership rights, in particular
their information and voting rights, at the Shareholders' Meet-
ing. Each share in Daimler AG entitles its owner to one vote.
There are no multiple voting rights, preferred voting rights, or
maximum voting rights at Daimler AG. Documents and informa-
tion related to the Shareholders' Meeting can be found on our
website at daimler.com/ir/am. The Shareholders' Meeting
is generally held within four months of the end of a financial year.
The Company facilitates the personal exercise of the share-
holders' rights and proxy voting in a variety of ways, such as by
appointing Company proxies who are strictly bound by the
shareholders' voting instructions and who are available during
the Shareholders' Meeting. Absentee voting is also possible. It
is possible to authorize the Daimler-appointed proxies and give
them voting instructions or to cast absentee votes by using the
e-service for shareholders.
In addition to other methods of communication, we also make
extensive use of the Company's website for our investor rela-
tions activities. All of the important information disclosed in 2017,
including annual and interim reports, press releases, voting
rights notifications from major shareholders, presentations, and
audio recordings of analyst and investor events and confer-
ence calls, as well as the financial calendar, can be found at
daimler.com/investors. All the dates of important disclo-
sures such as annual reports and interim reports and the dates
of the Shareholders' Meeting, the annual press conference and
the analyst conferences are announced in advance in the fi-
nancial calendar. The financial calendar can also be found inside
the rear cover of this Annual Report.
E| Non-Financial Report
Stakeholder dialogue
Our Sustainability Strategy 2030
Sustainable corporate governance
Sustainability in our supply chain
E | NON-FINANCIAL REPORT | CONTENTS 215
216
Social issues
227
216
Shareholders and the Shareholders' Meeting
Sustainability at Daimler
Proposals by the Supervisory Board of candidates for election
by the Shareholders' Meeting as Supervisory Board members
representing the shareholders of Daimler AG, for which the
Nomination Committee makes recommendations, shall in the
future take into consideration not only the requirements of
applicable law, the Articles of Incorporation and the German
Corporate Governance Code, but also the aspects described
above and aim at fulfilling the overall requirements profile for
the Supervisory Board as a whole. On the basis of a target pro-
file that takes into account specific qualification requirements
and the above-mentioned criteria, the Nomination Committee
creates a shortlist of available candidates with whom it conducts
structured discussions in which it also determines whether the
candidate in question will have sufficient time available to per-
form his or her duties on the Supervisory Board with due care.
The Nomination Committee then recommends a candidate to
the Supervisory Board for its approval and includes an explana-
tion of its recommendation. The foundation for Supervisory
Board decisions regarding election proposals to the Sharehold-
ers' Meeting is always the Company's interests under consid-
eration of all circumstances in each individual case.
whose specific design could cause a conflict of interests.
213
217
• nor a business or personal relationship to the company or
its boards
Under the premise that the performance of Supervisory Board
duties as an employee representative does not by itself
constitute a potential conflict of interest as defined by the
German Corporate Governance Code, the requirements de-
scribed here shall also be met by at least 15 members of the
Supervisory Board in the future.
212
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
As described in the report of the Supervisory Board on
pages 64 ff of the Annual Report 2017, there were indi-
vidual cases concerning three Supervisory Board members
in particular situations during the reporting period where
there might have been the appearance of a potential conflict
of interest at the time a Board of Management report was
submitted to the Supervisory Board. The Supervisory Board
members in question in these cases refrained from being
present during the presentation of a Board of Management
report regarding the issue that might have been affected by
a potential conflict of interest.
As a result, in the case of at least half of the shareholder rep-
resentatives on the Supervisory Board and at least 15 mem-
bers of the entire Supervisory Board, there were no indications
of a potential conflict of interest during the reporting period
based on the premise described above. No actual instances
of conflicts of interest were reported during financial year
2017.
- In order to ensure the independent advice to, and supervi-
sion of, the Board of Management by the Supervisory Board,
the rules of procedure of the Supervisory Board stipulate
that more than half of the members of the Supervisory Board
representing the shareholders are to be independent as de-
fined by the German Corporate Governance Code and that
no person may be a member of the Supervisory Board who is
a member of a board of, or advises, a significant competitor
of the Daimler Group.
Under the premise that the performance of Supervisory Board
duties as an employee representative does not by itself call
into question the independence of such an employee repre-
sentative as defined by the German Corporate Governance
Code, at least 15 members of the Supervisory Board are also
to be independent in the future. In addition, the Supervisory
Board may not include more than two former members of the
Board of Management of Daimler AG or anyone who is a
member of a board of, or advises, a significant competitor of
the Daimler Group.
Under the premise described above, there are, in the view of
the Supervisory Board, at present no indications for any of
the members of the Supervisory Board that relevant relation-
ships or circumstances exist, in particular with the Company,
members of the Board of Management or other Supervisory
Board members, that could be construed as a substantial
and permanent conflict of interest that would compromise
their independence. No member of the Supervisory Board is
a member of a board of, or advises, a significant competitor.
With regard to Supervisory Board member Bader Al Saad,
the Supervisory Board takes the view that his function as a
member of the Executive Committee of the Board of Direc-
tors of Kuwait Investment Authority does not compromise his
independence within the meaning of the German Corporate
Governance Code. The German Corporate Governance Code
does not contain a conclusive definition of independence but
instead presents examples of circumstances that would call
the independence of a Supervisory Board member into ques-
tion. Within the meaning of the German Corporate Governance
Code, a Supervisory Board member is to be considered non-
independent if he or she has a personal or business relation-
ship with the Company, its governing bodies, a controlling
shareholder or a company affiliated with a controlling share-
holder that may cause a substantial and not merely tempo-
rary conflict of interest. It is the responsibility of the Supervi-
sory Board to evaluate the independence of its members on
the basis of such criteria. The Kuwait Investment Authority is
not a controlling shareholder of Daimler AG that could attain
an effective majority at an Shareholders' Meeting. No other
discernible circumstances exist that might call into question
the independence of Bader Al Saad.
The Chairman of the Supervisory Board, Dr. Manfred
Bischoff, is a former member of the Board of Management.
The rules of procedure of the Supervisory Board also define a
general time limit for Supervisory Board membership. As a
result, only candidates who have not yet been members of the
Supervisory Board for three full terms of office at the time of
their election should generally be nominated for membership
of the Supervisory Board for a full term of office. This general
length of service on the Supervisory Board has not been ex-
ceeded by any current member, and the candidates Sari
Baldauf, Dr. Jürgen Hambrecht and Marie Wieck nominated
for election at the Shareholders' Meeting in 2018 also meet
this requirement.
Candidates for membership of the Supervisory Board and
members of the Supervisory Board must have sufficient time
available to perform their duties. They must also be willing
and able to dedicate themselves to their tasks and participate
in all courses of training and further training that might be
necessary for the performance of their tasks. Prior to issuing
its recommendations, the Supervisory Board determines
whether the candidate in question will have sufficient time
available to perform his or her duties on the Supervisory
Board.
- In order to ensure compliance with the associated recommen-
dation in the German Corporate Governance Code, the rules
of procedure already stipulate that no member of the Super-
visory Board who is also a member of the board of manage-
ment of a listed company may hold more than three member-
ships on supervisory boards of listed companies (including
his or her membership of the Supervisory Board of Daimler AG)
or on bodies of other companies with similar requirements
outside of the group of his Board of Management member-
ship. One member of the Supervisory Board is a member of
the board of management of a listed company, but has not
exceeded the maximum number of memberships.
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
In the case of Supervisory Board members who are not also
members of the board of management of a listed company,
the legal limit of membership of ten statutorily constituted
supervisory boards applies, whereby chairmanship of a super-
visory board counts double. In order to ensure that members
of the Supervisory Board have sufficient time to fulfill their
mandate, Supervisory Board members who are not also mem-
bers of the board of management of a listed company shall in
the future generally be permitted membership of a maximum
of eight supervisory boards (including that of Daimler AG),
whereby chairmanship of a supervisory board counts double.
This maximum number was not exceeded by any member of
the Supervisory Board during the reporting year.
Political dialogue and representation of interests
Health management and safety at work
217
Mobility services
221
Other compliance issues
233
Employee issues
222
Statement on the review of the
Non-Financial Report
234
Partnership with the employees
223
High attractiveness as an employer
223
A competitive workforce
224
226
The information provided in this report is presented in conformity with the GRI Stan-
dards of the Global Reporting Initiative, insofar as this complies with applicable law.
Some aspects are presented in accordance with internal guidelines and definitions.
neither an advisory nor a board function for a customer,
supplier, creditor, or other third party,
232
Human rights compliance
221
Environmental protection in production
Compliance
229
Environmental issues
218
Our Compliance Management System
229
Climate protection
218
228
Anticorruption compliance
Clean air
219
Antitrust compliance
231
Conservation of resources
221
Technical compliance
232
231
.
The Board of Management prepares the consolidated interim
reports, the annual company financial statements of Daimler
AG, the annual consolidated financial statements, and the
combined management report of the Company and the Group,
as well as the separate combined non-financial report pro-
duced for Daimler AG and the Group. It ensures that the provi-
sions of applicable law, official regulations and the Group's
internal guidelines are adhered to, and works to make sure that
the companies of the Group comply with those rules and regu-
lations. The Board of Management has also established an ade-
quate compliance management system that takes into account
the Company's risk situation. The main features of this system
are described on pages 229 ff of the Annual Report 2017.
Such features include the Company's whistleblower system, the
BPO (Business Practices Office), which enables Daimler em-
ployees and external whistleblowers to report misconduct any-
where in the world. The tasks of the Board of Management
also include establishing and monitoring an appropriate and effi-
cient risk management system.
- In order to ensure sufficient internationality, for example by
means of many years of international experience, the Super-
visory Board has set a target of a proportion of at least 30%
of international members representing the shareholders, and
the resulting proportion of at least 15% of the entire Supervi-
sory Board. Irrespective of the many years of international
experience of a large majority of the shareholder representa-
tives on the Supervisory Board, this target is currently signifi-
cantly overachieved with 30% for the entire Supervisory
Board due to the international origins of Bader Al Saad, Sari
Baldauf, Petraea Heynike, Andrea Jung and Dr. Paul Achleitner
on the shareholders' side (50%) and Valter Sanches on the
employees' side.
The members of the Supervisory Board attend on their own re-
sponsibility courses of training and further training that might
be necessary for the performance of their tasks and are sup-
ported by the Company in doing so. Such courses may address
corporate governance, changes brought about by new legisla-
tion, or the launch of new products and pioneering technolo-
gies, for example. New members of the Supervisory Board are
offered an "Onboarding” program that gives them the opportu-
nity to exchange views with members of the Board of Manage-
ment and other executives on current issues related to the var-
ious areas of responsibility of the Board of Management, and
thus obtain an overview of important topics at the Company.
The Supervisory Board monitors and advises the Board of Man-
agement with regard to its management of the Company. At
regular intervals, the Board of Management reports to the Su-
pervisory Board on corporate strategy, corporate planning,
revenue development, profitability, business development and
the situation of the Group, as well as on the internal control
system, the risk management system and the compliance man-
agement system. The Supervisory Board has retained the right
of approval for transactions of fundamental importance. Fur-
thermore, the Supervisory Board has specified the information
and reporting duties of the Board of Management to the Super-
visory Board, to the Audit Committee and – between the meet-
ings of the Supervisory Board – to the Chairman of the Super-
visory Board.
The Supervisory Board's duties include appointing and recalling
the members of the Board of Management. Initial appointments
are usually made for a period of three years. In accordance with
the German law requiring equal participation of women and
men in executive positions, the Supervisory Board has defined
a target for the proportion of women on the Board of Manage-
ment and a deadline for achieving this target. The details are
described in a separate section: page 209. With regard to
the composition of the Board of Management, the Supervisory
Board has also adopted a diversity concept that is embedded i
n an overall requirements profile. The details of this concept are
also described in a separate section:
page 210
The Supervisory Board decides on the system of remuneration
for the Board of Management, reviews it regularly and deter-
mines the total individual remuneration of each member of the
Board of Management with consideration of the ratio of Board
of Management remuneration to the remuneration of the se-
nior executives and the workforce as a whole, also with regard
to development over time. For this comparison, the Supervi-
sory Board has defined the senior executives by applying Daim-
ler's internal terminology for the hierarchical levels and has de-
fined the workforce of Daimler AG in Germany as the relevant
workforce. Variable components of remuneration are generally
based on an assessment period that lasts several years and is
essentially future-oriented. Multi-year variable remuneration
components are not paid out until they come due. The Supervi-
sory Board has set upper limits for the individual Board of Man-
agement remuneration in total and with regard to its variable
components. Further information on Board of Management re-
muneration can be found in the Remuneration Report on
pages 136 ff of the Annual Report 2017.
The Supervisory Board reviews the annual financial state-
ments, the annual consolidated financial statements and the
combined management report of the Company and the Group,
as well as the proposal for the appropriation of distributable
profits. Following discussions with the external auditors and
taking into consideration the audit reports of the external audi-
tors and the results of the review by the Audit Committee, the
Supervisory Board states whether, after the final results of its
own review, any objections are to be raised. If that is not the
case, the Supervisory Board approves the financial statements
and the combined management report. Upon being approved,
the annual financial statements are adopted. The Supervisory
Board reports to the Shareholders' Meeting on the results of
its own review and on the manner and scope of its supervision
of the Board of Management during the previous financial year.
The Report of the Supervisory Board for the year 2017 is avail-
able on
pages 64 ff of the Annual Report 2017 and on the
Internet at daimler.com/dai/sb.
For financial year 2017, Daimler AG produced for the first time
a separate combined non-financial report for the Company and
the Group in accordance with the requirements of legislation
for implementing an EU CSR directive in Germany. The Supervi-
sory Board commissioned an external audit of this non-financial
report within the framework of a limited assurance engagement
and then approved the report after consulting with the external
auditor and examining the report itself.
208
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
The Supervisory Board has given itself a set of rules of proce-
dure, which regulate not only its duties and responsibilities
and the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. The rules of procedure of
the Supervisory Board can be viewed on our website at
daimler.com/dai/rop
Meetings of the Supervisory Board are regularly prepared in
separate discussions of the members representing the employ-
ees and of the members representing the shareholders with
the members of the Board of Management. Each Supervisory
Board meeting included a so-called executive session for dis-
cussions of the Supervisory Board in the absence of the mem-
bers of the Board of Management. The Supervisory Board
members can also take part in the meetings by means of con-
ference calls or video conferences. However, this is generally
not the case.
The Supervisory Board has formed four committees, which
perform to the extent legally permissible the tasks assigned to
them in the name of and on behalf of the entire Supervisory
Board. The committee chairpersons report to the entire Super-
visory Board on the committees' work at the latest in the meet-
ing of the Supervisory Board following each committee meet-
ing. The Supervisory Board has issued rules of procedure for
each of its committees. Those rules of procedure can be viewed
on our website at ④ daimler.com/dai/rop. Information on the
current composition of these committees can be viewed at
daimler.com/dai/sbc and is also available on
of the Annual Report 2017.
Presidential Committee
page 71
The Presidential Committee is composed of the Chairman of
the Supervisory Board, his Deputy, and two other members,
who are elected by a majority of the votes cast on the relevant
resolution of the Supervisory Board.
The Supervisory Board is to be composed so that its members
together are knowledgeable about the business sector in which
the Company operates and also dispose of the knowledge,
skills and specialist experience that are required for the proper
execution of their tasks. According to the law on the equal par-
ticipation of women and men in management positions, at least
30% of the members of the Supervisory Board of Daimler AG
must be women and at least 30% must be men. The details are
described in a separate section: page 209. With regard to
its composition on the basis of the further development of the
existing catalog of criteria for selecting Supervisory Board can-
didates, and with consideration of the targets that have already
been defined for the Supervisory Board's composition, the
Supervisory Board has also created an overall requirements
profile combining a skills profile and a diversity concept for the
entire Supervisory Board. The details of the overall requirements
profile are also described in a separate section: O pages 211
ff. Proposals by the Supervisory Board of candidates for elec-
tion by the Shareholders' Meeting as members representing the
shareholders of Daimler AG, for which the Nomination Commit-
tee makes recommendations, aim at fulfilling the overall
requirements profile of the Supervisory Board as a whole.
Information on major functions and curricula vitae of the mem-
bers of the Supervisory Board aside from their positions on
the Supervisory Board of Daimler AG are posted on our web-
site at daimler.com/dai/sb and can also be found on
pages 70f of the Annual Report 2017.
In accordance with the German Codetermination Act (MitbestG),
the Supervisory Board of Daimler AG comprises 20 members.
Half of them are elected by the shareholders at the Sharehold-
ers' Meeting. The other half comprises members who are
elected by the Group's employees who work in Germany. The
members representing the shareholders and the members
representing the employees are equally obliged by law to act in
the Company's best interests.
Supervisory Board
206
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
The Board of Management manages Daimler AG and the Daimler
Group. With the consent of the Supervisory Board, the Board
of Management determines the Group's strategic focus, defines
the corporate goals, and makes decisions concerning opera-
tional planning issues. The members of the Board of Manage-
ment are bound to the interests of the Company and share
responsibility for managing the Group's entire business.
Irrespective of this overall responsibility, the individual mem-
bers of the Board of Management manage their allocated areas
on their own responsibility and within the framework of the in-
structions approved by the entire Board of Management. Spe-
cific issues defined by the Board of Management as a whole
are dealt with by the Board as a whole, which must approve all
related decisions. The Chairman of the Board of Management
coordinates the work of the Board of Management.
Information on our business model page 90 ff of the Annual Report 2017 and on
non-financial risks connected with the aspects presented in this report (Risk and
Opportunity Report pages 167, 168 of the Annual Report 2017) is provided in the
Combined Management Report in the Annual Report 2017.
For certain types of transactions of fundamental importance
as defined by the Supervisory Board, the Board of Manage-
ment requires the prior consent of the Supervisory Board. At
regular intervals, the Board of Management reports to the
Supervisory Board on corporate strategy, corporate planning,
profitability, business development and the situation of the
Group, as well as on the internal control system, the risk man-
agement system and the compliance management system. The
Supervisory Board has specified the information and reporting
duties of the Board of Management.
The Board of Management has also given itself a set of
rules of procedure, which can be seen on our website at
daimler.com/dai/rop. Those rules describe, for example,
the procedure to be observed when passing resolutions and
ways to avoid conflicts of interest.
CASE Steering Committee
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of the
Board of Management, whereby it takes into account the over-
all requirements profile it has defined, including the diversity
concept, for the position to be filled, as well as the Supervisory
Board's target for the proportion of women on the Board of
Management. It submits proposals to the Supervisory Board
on the design of the remuneration system for the Board of
Management and on the appropriate total individual remunera-
tion of its members. In this context, it follows the relevant
recommendations of the German Corporate Governance Code.
The Presidential Committee is also responsible for the Board
of Management members' contractual affairs. In addition, it
decides on the granting of approval for sideline activities of the
members of the Board of Management, reports to the Supervi-
sory Board regularly and without delay on consents it has is-
sued, and once a year submits to the Supervisory Board for its
approval a complete list of the sideline activities of each mem-
ber of the Board of Management.
The Board of Management has formed a Steering Committee
consisting of Board of Management members to address the
future-oriented CASE topics of connectivity (Connected), driv-
erless driving (Autonomous), flexible use and services (Shared
& Services) and electric drive systems (Electric). The responsi-
bilities of the Board of Management as a whole, in particular
those regarding the catalog of issues that require its approval,
as well as the areas of responsibility of individual Board mem-
bers, remain unchanged despite the creation of the
Committee.
Within the framework of the strategic approach adopted by the
Board of Management, the Steering Committee defines the
management model and the strategic guidelines for CASE. The
Board of Management has defined rules of procedure for the
Steering Committee. The Committee can make changes to
these rules on its own authority, provided such changes do not
affect the steering model.
Along with the composition of the Steering Committee, the
responsibilities of its Chairman, the responsibility for the rules
of procedure and the options available for establishing other
CASE bodies below the Steering Committee, the rules of pro-
cedure of the Steering Committee also define the structure
and format of Committee meetings and the adoption of resolu-
tions, as well as the rules on reporting to the Board of Manage-
ment of Daimler AG.
Diversity
Diversity management has been part of the corporate strategy
of Daimler since 2005. We rely on the diversity of our employees
and the differences between them because such differences
form the foundation of an effective and successful company.
The aim of our activities is to bring together the right people
to tackle our challenges, create a work culture that promotes
the performance, motivation and satisfaction of our employees
and managers, and help attract new target groups to our prod-
ucts and services. Our activities for shaping diversity at Daimler
focus on three areas: best mix, work culture and customer in-
teraction. With our measures, activities and initiatives for every-
thing from training formats for employees and managers to
workshops, conferences, guidelines and target group-specific
communication and awareness-raising measures, our diversity
management system makes a major contribution to the further
development of our corporate culture.
Targeted support for women on the basis of the best-mix prin-
ciple was a central component of our diversity management
activities even before the legislation on the equal participation
of women and men in management positions went into effect.
Such support has also included and continues to include flexi-
ble working-time arrangements, company nurseries and spe-
cial mentoring programs for women. To meet the new legal re-
quirements, the Board of Management has defined targets for
the proportion of women at the two management levels below
the Board of Management and a deadline for achieving those
targets. The details are described in a separate section. Inde-
pendently of the legal requirements, Daimler continues to af-
firm the goal it already set itself in 2006 of increasing the pro-
portion of women in executive positions at the Group to 20%
by 2020. At the end of 2017, this proportion amounted to 17.6%
(2016: 16.7%).
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
207
Composition and mode of operation of the
Supervisory Board and its committees
The Steering Committee consists of the Chairman of the Board
of Management, who is also responsible for Mercedes-Benz
Cars, as well as the members of the Board of Management re-
sponsible for Finance & Controlling/Daimler Financial Services,
Mercedes-Benz Cars Marketing & Sales and Group Research &
Mercedes-Benz Cars Development. The Chairman of the Board
of Management is also the Chairman of the Steering Commit-
tee. In line with the Committee's structure as described above,
the members of the Steering Committee on December 31,
2017, were Dr. Dieter Zetsche (Chairman), Bodo Uebber, Britta
Seeger and Ola Källenius.
- At least half of the members of the Supervisory Board repre-
senting the shareholders should have
In addition, the Presidential Committee decides on questions
of corporate governance, on which it also makes recommenda-
tions to the Supervisory Board. It supports and advises the
Chairman of the Supervisory Board and his Deputy and pre-
pares the meetings of the Supervisory Board within the limits
of its responsibilities.
The Nomination Committee is composed of at least three
members, who are elected by a majority of the votes cast by
the members of the Supervisory Board representing the share-
holders. It is the only Supervisory Board Committee consisting
solely of members representing the shareholders and makes
recommendations to the Supervisory Board concerning per-
sons to be proposed for election as members of the Supervisory
Board representing the shareholders at the Shareholders'
Meeting. In doing so, the Nomination Committee takes into
consideration the requirements of the German law regulating
equal participation of women and men in executive positions,
the recommendations of the German Corporate Governance
Code and the specific goals that the Supervisory Board has set
for its own composition. The recommendations made by the
Nomination Committee aim at fulfilling the overall requirements
profile - including the skills profile for the entire Supervisory
Board.
The requirements profile for the Board of Management of Daimler
AG aims at a Board of Management as diverse, mutually sup-
portive and effective as possible. The Board of Management as
a whole should possess the knowledge, skills and experience
required for the proper execution of its tasks and be composed
of members whose varied personal backgrounds and experi-
ences embody the desired management philosophy. Decisions
regarding appointments to the Board of Management are al-
ways governed by the Company's interests under consideration
of all circumstances in each individual case.
The requirements profile for the Board of Management includes
in particular the following aspects, which are to be taken into
account as far as possible when making decisions on appoint-
ments to the Board of Management:
The members of the Board of Management should have dif-
ferent educational and professional backgrounds, whereby
at least two members should have a technical background.
With Dr. Dieter Zetsche and Wilfried Porth, the Board of Man-
agement currently has two members who are engineers.
Bodo Uebber is an industrial engineer. Since taking over as
Head of Group Research & Mercedes-Benz Cars Develop-
ment on January 1, 2017, Ola Källenius has sustainably dis-
played the expertise he acquired in various technical man-
agement positions throughout the Company.
- In order to meet the requirements of the German law requir-
ing equal participation of women and men in executive posi-
tions, the Supervisory Board defined on December 8, 2016,
a target of 12.5% for the proportion of women on the Board
of Management, with a deadline of December 31, 2020. This
means that of the eight current members of the Board of
Management, at least one member must be a woman. The
Board of Management currently has two female members,
Renata Jungo Brüngger and Britta Seeger. This means the
proportion of women on the Board of Management is cur-
rently 25%.
- In accordance with the recommendations of the German Cor-
porate Governance Code, the Supervisory Board has set
an age limit for members of the Board of Management. As a
rule, 62 years of age serves as orientation for age-related
discharge. When it set this age limit, the Supervisory Board
deliberately decided in favor of a flexible rule allowing the
required scope for the appropriate assessment of the circum-
stances of each individual case. Seven of the eight Board of
Management members are younger than the age limit. Dr. Di-
eter Zetsche was older than the age limit when he began his
current term of office in January 2017. The Supervisory Board
nevertheless reappointed Dr. Zetsche as Chairman of the
Board of Management in recognition of his being primarily re-
sponsible for the Company's successful strategy and its im-
plementation. This decision was taken in the best interest of
the Company in that it enables the continuation of leadership
at the top executive level that is needed to ensure the sus-
tained success of the Company.
- In addition, a sufficient generational mix among Board of
Management members is to be taken into account in appoint-
ment decisions in the future, whereby if possible at least
three members of the Board of Management should be 57
years of age or younger at the beginning of their respective
term of office. Five members of the Board of Management -
Renata Jungo Brüngger, Ola Källenius, Britta Seeger, Huber-
tus Troska and Bodo Uebber - currently meet this
requirement.
The composition of the Board of Management should also
take into account internationality in the sense of varied cul-
tural backgrounds or international experience through as-
signments abroad lasting several years, whereby if possible
at least one member of the Board of Management should
come from a country other than Germany. Irrespective of the
many years of international experience of a large majority of
members of the Board of Management, this target is cur-
rently overachieved due to the international origins of Renata
Jungo Brüngger and Ola Källenius.
The rules of procedure of the Board of Management stipulate
that no member of the Board of Management is a member of
more than three supervisory boards of listed companies out-
side the Daimler Group or of similar boards or committees at
companies outside the Daimler Group that have comparable
requirements. This stipulation has been met. The only listed
company in which Hubertus Troska is a member of a supervi-
sory board or similar board outside the Daimler Group is
BAIC Motor Corporation Ltd. His other board memberships
are at joint ventures that fall within his areas of
responsibility.
The aspects described above are to be taken into consideration
when making Board of Management appointments. On the basis
of a target profile that takes into account specific qualification
requirements and the above-mentioned criteria, the Presiden-
tial Committee creates a shortlist of available candidates whom
it interviews. It then recommends a candidate to the Super-
visory Board for its approval and includes an explanation of its
recommendation. Decisions regarding appointments to the
Board of Management are always governed by the Company's
interests under consideration of all circumstances in each indi-
vidual case.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 211
Supervisory Board
In accordance with applicable law, the Supervisory Board is
to be composed so that its members together are familiar with
the business sector in which the Company operates.
The requirements profile for the Supervisory Board of Daimler
AG aims at a Supervisory Board as diverse and mutually sup-
portive as possible. The Supervisory Board as a whole must
understand the Company's business model and also possess
the knowledge, skills and experience needed to properly exe-
cute its task of supervising and advising the Board of Manage-
ment, in particular specialized knowledge in the areas of fi-
nance, accounting, annual audits, risk management, methods
of internal control and compliance. The members of the Super-
visory Board should complement one another with regard to
their specialist knowledge and professional experience in such
a manner as to ensure that the Supervisory Board can utilize
the most broadly based wealth of experience and specific ex-
pertise possible when making decisions. The Supervisory
Board also views the diversity of its members in terms of age,
gender, internationality and other personal attributes as an im-
portant foundation for effective cooperation. The foundation
for Supervisory Board decisions regarding election proposals
to the Shareholders' Meeting is always the Company's inter-
ests under consideration of all circumstances in each individ-
ual case.
On the basis of the further development of the existing catalog
of criteria for selecting Supervisory Board candidates, and with
consideration of the targets that have already been defined for
the Supervisory Board's composition, the requirements profile
for the Supervisory Board includes the following aspects in
particular:
- The members of the Supervisory Board should have different
educational and professional backgrounds. At least five
members should have completed a vocational technical train-
ing or education program or possess specific technological
knowledge in fields such as information technology (including
digitization), chemistry, mechanical engineering or electrical
engineering. Decisions related to the composition of the Super-
visory Board should also take into account the fact that it
may be necessary to obtain new skills and knowledge in order
to be able to address product and market developments.
Irrespective of the specific knowledge acquired by many mem-
bers of the Supervisory Board in the above-mentioned areas,
Dr. Jürgen Hambrecht, Dr. Bernd Pischetsrieder and Dr. Frank
Weber (two shareholder representatives and one employee
representative) have related university degrees, while another
five employee representatives have completed vocational
training in the above-mentioned fields or similar areas.
- The rules of procedure of the Supervisory Board stipulate
that candidates for election who are to hold the position for a
full term of office should generally not be over the age of 72
at the time of the election. In specifying this age limit, the
Supervisory Board has intentionally refrained from stipulat-
ing a strict upper age limit and instead decided in favor of a
flexible general limit that leaves the scope to appropriately
assess each individual case, keeps the range of potential
Supervisory Board candidates sufficiently broad and allows
reelection. In deciding to propose Dr. Manfred Bischoff for
reelection as a shareholder representative on the Supervi-
sory Board to the Shareholders' Meeting in 2016, it used this
scope after careful consideration and proper assessment. All
other members of the Supervisory Board and the candidates
Sari Baldauf, Dr. Jürgen Hambrecht and Marie Wieck to be
proposed for election at the 2018 Shareholders' Meeting had
not or will have not reached the age limit at the time of their
election.
- A sufficient generational mix among Supervisory Board mem-
bers is now also to be taken into account in appointment
decisions. In the future, at least eight members of the Super-
visory Board should be 62 years of age or younger at the
time of their election or reelection. Among the current mem-
bers of the Supervisory Board, all except Petrae Heynicke,
Dr. Manfred Bischoff, Dr. Clemens Börsig, Dr. Jürgen Ham-
brecht and Dr. Bernd Pischetsrieder (i.e. 15 members) were 62
or younger at the time they were elected to their current term.
Board of Management
In terms of the composition of the Board of Management and
the Supervisory Board, Daimler AG utilizes diversity concepts
that focus on aspects such as age, gender, education and pro-
fessional background. For this reason, the Company was re-
quired to describe these concepts in its declaration on corpo-
rate governance for the first time for financial year 2017, and
to also explain the aims of the diversity concepts, the manner
in which they are implemented and the results achieved with
them in the financial year. The Supervisory Board has combined
the diversity concepts with the requirements of the German
law regulating equal participation of women and men in execu-
tive positions and the specific targets for the composition of
executive management bodies as defined by the recommenda-
tions of the German Corporate Governance Code. These com-
bined requirements are presented in the overall requirements
profiles for the composition of the Board of Management and
the Supervisory Board described below. The requirements pro-
files also serve as the basis for long-term succession planning.
Overall requirements profiles for the
composition of the Board of Management
and the Supervisory Board
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Audit Committee
The Audit Committee is composed of four members, who are
elected by a majority of the votes cast on the relevant resolu-
tion of the Supervisory Board. The Chairman of the Supervi-
sory Board is not simultaneously the Chairman or a member of
the Audit Committee. The Chairman of the Supervisory Board
attends the meetings of the Audit Committee as a guest.
Both the Chairman of the Audit Committee, Dr. Clemens Börsig,
and the other shareholder representative on the Audit Commit-
tee, Joe Kaeser, fulfill the criteria for independence and have
expertise in the field of accounting, as well as special knowl-
edge and experience with regard to auditing and methods of
internal control. Due to his work at Robert Bosch GmbH and
his long-standing membership of the Supervisory Board of
Daimler AG, Dr. Clemens Börsig is furthermore very familiar
with the automotive industry.
The Audit Committee deals with the supervision of the account-
ing and its process as well as with the annual external audit.
At least once a year, it discusses with the Board of Management
the effectiveness and functionality of the risk management
system, the internal control and auditing system and the com-
pliance management system. It regularly receives reports on
the work of the Internal Auditing department and the Compli-
ance Organization. At least four times a year, the Audit Com-
mittee receives a report from the whistleblower system BPO
(Business Practices Office) on complaints and information
about any breaches of regulations or guidelines by high-level
executives, as well as violations by other employees of the
regulations in a defined catalog of legal provisions. It regularly
receives information about the handling of these complaints
and notifications.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
209
The Audit Committee discusses with the Board of Management
the interim reports before they are published. On the basis of
the report of the external auditors, the Audit Committee re-
views the annual company financial statements and the annual
consolidated financial statements, as well as the management
report of the Company and the Group, and discusses them
with the external auditors. The Audit Committee makes a pro-
posal to the Supervisory Board on the adoption of the annual
company financial statements of Daimler AG, on the approval
of the annual consolidated financial statements, and on the ap-
propriation of profits. The Committee also makes recommen-
dations for the Supervisor Board's proposal on the election of
external auditors, assesses those auditors' suitability, qualifi-
cations and independence, and, after the external auditors are
elected by the Shareholders' Meeting, it engages them to con-
duct the audit of the annual company and consolidated finan-
cial statements and to review the interim reports, negotiates
an audit fee, and determines the focus of the annual audit. The
external auditors report to the Audit Committee on all account-
ing matters that might be regarded as critical and on any mate-
rial weaknesses of the internal control and risk management
system with regard to accounting that might be discovered
during the audit.
Finally, the Audit Committee approves permitted services that
are not directly related to the annual audit and which are pro-
vided by the firm of external auditors or its affiliates to Daimler
AG or to companies of the Daimler Group.
Nomination Committee
Mediation Committee
Germany's law on the equal participation of
women and men in executive positions
In accordance with the German law requiring equal participa-
tion of women and men in executive positions in both the pri-
vate and the public sector, the supervisory boards of listed
companies or companies subject to Germany's system of co-
determination have to set a target for the proportion of women
on the board of management. The board of management of
such a company has to set a target for the proportion of women
at the two management levels below that of the board of man-
agement. If the proportions of women at the time when these
targets are set by the Board of Management and the Supervi-
sory Board are below 30%, the targets may not be lower than
the proportions already reached. At the same time that the
targets are set, the boards have to set periods for their achieve-
ment, which may not be longer than five years.
On December 8, 2016, the Supervisory Board passed a resolu-
tion stipulating that the target figure for the proportion of women
on the Board of Management of Daimler AG would be 12.5%,
while the deadline would be December 31, 2020. As of Decem-
ber 31, 2017, the eight-member Board of Management in-
cluded two women, Renata Jungo Brüngger and Britta Seeger.
This means that women account for 25% of the Board of Man-
agement members.
On November 8, 2016, the Board of Management passed a
resolution stipulating a target of 15% women for both the first
and second management levels below the Board of Manage-
ment, with a deadline of December 31, 2020. At the time of the
resolution, the proportion of women in the first and second
management levels below the Board of Management was 8.0%
and 12.4% respectively. As of December 31, 2017, the propor-
tion of women at the first management level below the Board
of Management was 8.7%, at the second level it was 11.9%.
Since 2016, listed companies that have supervisory boards in
which shareholders and employees are equally represented
are required to have a proportion of at least 30% women and
30% men. This requirement has to be fulfilled by the Supervi-
sory Board as a whole. If the side of the Supervisory Board
representing the shareholders or the side representing the em-
ployees objects to the Chairman of the Supervisory Board
about the application of the ratio to the entire Supervisory
Board before the election, the minimum ratio is to apply sepa-
rately to the shareholders' side and to the employees' side for
that election.
On December 31, 2017, 30% of the shareholder representa-
tives in the Supervisory Board of Daimler AG were women (Sari
Baldauf, Andrea Jung and Petraea Heynike), while 70% were
men. On that date, 20% of the employee representatives on the
Supervisory Board were women (Elke Tönjes-Werner and Sib-
ylle Wankel), while 80% were men. In its meeting on December
7, 2017, the Supervisory Board considered its nominations for
the election at the Shareholders' Meeting 2018 and came to the
conclusion that the shareholders and employee representa-
tives should achieve the legally required share of women board
members separately. Before this background the shareholder
representatives declared that they object to the Supervisory
Board's joint fulfillment of the legally required gender ratio.
Thereafter, based on the recommendation of the Nomination
Committee, the Supervisory Board decided to nominate Sari
Baldauf as well as Dr. Jürgen Hambrecht again and Marie Wieck
for the first time for election to the Supervisory Board by the
Shareholders' Meeting in 2018. The legally required gender ra-
tio will be met on the shareholder representatives' side if these
persons are elected to the Supervisory Board, provided that no
other changes occur. The next election of employee represen-
tatives to the Supervisory Board will also take place in 2018.
Along with Daimler AG itself, there are other Group companies
subject to codetermination law. These companies have defined
their own targets for the proportion of women on their supervi-
sory boards, executive management bodies and the two levels
below the board or executive management level, and have also
set deadlines for target achievement. Relevant information
here has been published in accordance with applicable law.
210
The Mediation Committee is composed of the Chairman of the
Supervisory Board and his Deputy, as well as one member of
the Supervisory Board representing the employees and one
member elected with the majority of the votes cast of the Su-
pervisory Board members representing the shareholders. It is
formed solely to perform the functions laid down in Section 31
Subsection 3 of the German Codetermination Act (MitbestG).
Accordingly, the Mediation Committee has the task of making
proposals on the appointment of members of the Board of
Management if in the first vote the majority required for the
appointment of a Board of Management member of two thirds
of the members of the Supervisory Board is not achieved. As in
previous years, the Mediation Committee did not have to take
any action in 2017.
Further information on our sustainability activities can be found online at daimler.
com/sustainability and in our annual Sustainability Report, which can be downloaded
there as a PDF data file.
- The gender composition of the Supervisory Board meets the
requirements of Germany's law on the equal participation of
women and men in executive positions, which stipulates that
at least 30% of the members of the Supervisory Board must
be women and at least 30% must be men. This quota has
been binding for all new appointments since January 1, 2016.
The Supervisory Board currently has three women who rep-
resent shareholders and two women who represent employ-
ees. The proportion of women is thus 30% among the share-
holder representatives and 20% among the employee
representatives. The next election of employee representa-
tives to the Supervisory Board will take place in 2018.
224
Number of employee deaths as a result of
work-related accidents
0
2
Number of deaths of third-party employees
as a result of work-related accidents²
1
2
1 Coverage rate of Daimler production locations (Mercedes-Benz
Cars, Daimler Trucks, Daimler Buses, Mercedes-Benz Vans) world-
wide: >98%.
2 Unfortunately, a third-party employee suffered a fatal work-related
accidents in the United States in 2017.
111110
001001
0001
10110
ND
1101
10100 01010
4
1010
1
123
Share of women on the Supervisory Board
25.0
25.0
E.05
Accident figures¹
Incidence of accidents
Number of accidents (worldwide)
Incidence of accidents (worldwide, number
of work-related accidents that resulted in
at least one lost day per 1 million hour of
attendance)
Accident downtime
(worldwide, number of lost days
per 1 million hours of attendance)
2017 2016
2,766
3,444
Rate
7.5
9.4
106
Number of deaths as a result of work-
related accidents
12.5
1011 011
010
0 010
1 111
0 10
0
HR
001111001
1000001
00011
01111
10100
0101
100
001
0100
100
101
101
이
110 10
11 00
01 10
11
00
01
11
0
...ensure continuous
competiveness
Profitability
and we act as one team
Operational Excellence in HR
Digitalization
11000010
1001 101
0010 1101
011 01
01
25.0
8.1
8.7
110100
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
Flexible working arrangements
Today's living and working conditions require working times to
be flexibly organized in accordance with individual needs. Our
approach is therefore to challenge our employees to achieve top
performance and support their efforts to do so, rather than
focusing on their mere presence at work. For this reason, we also
seek to improve performance by helping employees and manag-
ers reconcile their professional and personal responsibilities.
We also boost employees' flexibility and self-determination by
giving them the opportunity for mobile working. An associated
company agreement has been in force at Daimler AG since
December 2016. The agreement gives employees the right to
mobile working if the task permits.
We also promote job sharing, in which two employees share
the same task/position and work together up to 60 hours per
week. This provides managers in particular with a means of
reconciling the needs of work and family.
Furthermore, company agreements at Daimler AG enable
employees to suspend their careers for several years for a qual-
ification program or a sabbatical or to provide home care -
with the promise that they can return to Daimler AG afterwards.
We encourage all employees who take parental leave to subse-
quently return to their jobs at the company because we value
their knowledge and experience. In Germany, we offer 710 places
in daycare centers in close proximity to our company locations
as well as more than 180 reserved places at cooperating facili-
ties. In addition, we cooperate with a third party that assists
employees in finding childcare providers.
In 2017, around 3,950 employees at Daimler AG availed them-
selves of the opportunity to take parental leave. Moreover,
around 500 employees took advantage of the opportunity to
take off work for a prolonged period. In mid-2017, more than
160 employees were working in job-sharing positions at the team
and department levels.
Leadership 2020 - further development of the
management culture
Our business is changing at a rapid pace. In order to remain
successful in the future, we are changing our management cul-
ture and the way we cooperate. This is why we launched the
Leadership 2020 initiative in 2016. Employees from more than
40 countries and all levels of management are currently work-
ing on Daimler's future management culture. Guidance is pro-
vided by new management principles that, among other things,
make the company faster and more flexible and boost its inno-
vative potential. Procedures, processes and structures are
being called into question and changed in eight "game chang-
ers." In its meetings, the Board of Management of Daimler AG
regularly discusses the initiative's progress and decides which
measures need to be taken.
Successful employee survey
Our Group-wide employee survey is a key indicator of where
we currently stand from the point of view of our employees,
and what we need to do to improve the company in the future.
In September 2016, nearly 263,000 employees in more than
40 countries were invited to participate in the survey and
express their opinions to us. The outstanding participation rate
of 76% underscores our employees' interest and their willing-
ness to actively help shape the further development of the
company. Overall, the results of the survey were much better
than those from previous years. Some of the production
facilities in certain countries identified areas of action for the
reconciliation of the needs of work and family, communication,
individual development opportunities and working conditions.
These topics are now being addressed during the follow-up
process. In 2018, we will reorganize the employee survey in
order to measure and promote the company's continued cul-
tural development.
Our employees' great loyalty to the company is also expressed
by the amount of time they have worked for Daimler. During
the year under review the average number of years our employ-
ees have worked for Daimler decreased slightly to 16.1 years
(2016: 16.3 years). In Germany, employees had worked for the
Group for an average of 19.5 years at the end of 2017 (2016:
19.5 years). The comparative figure for Daimler AG was 20.3
years (2016: 20.1 years). Daimler employees outside Germany
had worked for the Group for an average of 11.0 years (2016:
11.3 years). In 2017, our labor turnover amounted to 5.1% world-
wide (2016: 6.7%).
Working conditions are being increasingly influenced by work-
ing hours, workplaces, the work environment, the level of
employee empowerment and a state-of-the-art management
culture. The length of our employees' workweek is generally
regulated by the company or by a collective bargaining agree-
ment. In Germany, overtime is only performed within the
framework of a requirements planning forecast and has to be
approved by the employee representatives. In general, we
allocate working times in such a way that remuneration remains
stable even if the amount of work sometimes fluctuates. This
is made possible by a time-account system.
A competitive workforce
Modern working conditions
The general remuneration level is significantly above the legal
minimum wages that apply to many locations. In cases where
Daimler AG and its Group companies have signed collective
bargaining agreements, they often also offer voluntary benefits
that are agreed upon with the respective employees' associa-
tions. These benefits primarily consist of employer-funded retire-
ment contributions as well as profit-sharing agreements for
the respective company. For example, the eligible employees
of Daimler AG will receive a profit-sharing payout of €5,700
(2016: €5,400) for 2017. In addition, our employees can avail
themselves of a wide variety of sports facilities and social ame-
nities, ranging from daycare centers to the counseling service
for people in extreme situations.
Mission
Strategic
Pillar
Mission
Basic
E❘ NON-FINANCIAL REPORT | EMPLOYEE ISSUES
223
Partnership with the employees
We want to work together with our employees as partners,
respect their interests and get them involved in the company
by continuously providing them with information and enabling
them to participate in decision-making processes. To achieve
these goals, we are guided not only by the International Labor
Organization's (ILO) work and social standards but also by our
"Principles of Social Responsibility." In these principles, we
commit ourselves, among other things, to respect key employee
rights, ranging from the provision of equal opportunities to the
right to receive equal pay for equal work. Violations of these
principles can be reported to the whistleblower system BPO,
which adresses further investigations to the pertinent units.
Our employees have the right to organize themselves in labor
unions. We also ensure this right in countries in which freedom
of association is not legally protected. We work together con-
structively with the employee representatives and the trade
unions. Important partners here include the local works coun-
cils, the European Works Council and the World Employee
Committee (WEC). We have signed collective bargaining agree-
ments for all of the employees at Daimler AG, and this also
applies to the majority of our employees throughout the Group.
In a variety of committees, we regularly inform the employee
representatives about the economic situation and all of the key
changes at Daimler AG and the Group. We conclude agree-
ments with the respective workers' representative bodies con-
cerning the effects of our decisions on the employees. In Ger-
many, comprehensive regulations to this effect are contained
in the Works Council Constitution Act. We notify our employ-
ees about far-reaching changes early on.
One result of the ongoing dialogue between the corporate
management and the employees' association was the renewal
of the company-wide "Safeguarding the Future of Daimler"
agreement in 2015. This accord, which is valid until 2020,
enables the company to respond to the “future plan" agree-
ments that have been reached at many of the locations of
Daimler AG with concrete investment commitments, flexible
personnel assignment models and the possibility of selectively
increasing staffing requirements. As a result, we can make
use of market opportunities and better absorb fluctuations in
demand. The company-wide agreement essentially protects
all of the employees of Daimler AG in Germany from being laid
off until the end of 2020. The expansion of this Safeguarding
the Future agreement is also an integral part of the "Project
Future" and is being implemented in close cooperation with
the employee representatives. If “Project Future" is imple-
mented, Daimler AG's Safeguarding the Future agreement will
be extended until 2029, thus in principle excluding terminations
for operational reasons until December 31, 2029. Another key
point of this reconciliation of interests for the employees is the
nearly full funding of the pension obligations. With regard to
the latter, Daimler contributed €3 billion to Daimler AG's German
pension assets in the fourth quarter of the year under review.
High attractiveness as an employer
Our activities and measures for enhancing our attractiveness as
an employer are designed to enable us to recruit and retain a
sufficient number of specialized employees and qualified man-
agers in the competition for talented staff. Our primary objec-
tives here are to ensure attractive and fair compensation and
to establish and maintain a work culture that enables outstand-
ing performance and a high level of motivation and satisfaction
among our employees and managers.
Attractive and fair remuneration
We remunerate work in accordance with the same principles at
all our affiliates around the world. Our Corporate Compensa-
tion Policy, which is valid for all groups of employees, estab-
lishes the framework conditions and minimum requirements
for the design of the remuneration systems. Internal audits are
conducted on a random basis to make sure these conditions
and requirements are met. In our desire to offer salaries and
benefits that are customary in the industry and the respective
markets, we also give consideration to local market conditions
within the specified framework. The salaries are determined on
the basis of the employees' tasks and performance, and in
line with their qualifications and experience. In setting the remu-
neration of the employees we are not guided by gender or place
of origin, but exclusively by the employee's job and responsibility.
In 2017, the Group spent €18.2 billion (thereof Daimler AG:
€11.5 billion) on wages and salaries, €3.3 billion (thereof Daimler
AG: €1.8 billion) on social welfare services, and €0.7 billion
(thereof Daimler AG: €0.6 billion) on retirement benefits for a
workforce numbering 289,530 on average (thereof Daimler AG:
151,091).
We can only be successful if we have a skilled and high-per-
forming workforce. We therefore aim to continuously develop
our employees and make sure they stay competitive. We are
pursuing this goal by implementing measures in four overarch-
ing areas of action: diversity management, the securing of
young talent, qualification, and health management and occu-
pational safety.
Diversity management
Daimler promotes the diversity and heterogeneity of its
employees, because they serve as the basis of a high-perform-
ing company. As a result, diversity management is included in
our corporate strategy. The various skills and talents of our
workforce enable us as a global company to effectively reflect
the diversity of our customers, suppliers and investors around
the world.
15.5
Share of women in Level 4 management
positions (Daimler AG)
18.0
17.2
Women in senior management positions
Levels 1-3 (worldwide)
17.6
16.7
Share of women at the second
management level below that of the
Board of Management
(Daimler AG)
11.9
12.4
Share of women at the first management
level below that of the Board of Manage-
ment (Daimler AG)
Share of women on the Board of Manage-
ment
16.1
17.7
18.5
2016
Daimler's more than 289,000 employees from over 160 countries
provide the Group with a vibrant mixture of cultures and ways
of life. We utilize this diversity to put together optimized teams.
Most of our managers abroad come from the respective
regions. We promote the cultural diversity of our employees
with worldwide staff assignments, mentoring, intercultural
skills training and targeted recruiting measures. International
candidates account for more than one third of the people
recruited through our CAReer trainee program.
Our aim is to increase the share of women in management posi-
tions to 20% by the year 2020. More than 17% of our execu-
tives in middle and upper management currently are women.
For Daimler AG, we signed a company-wide agreement for
the advancement of women. It stipulates a target corridor for
the proportion of women in the total workforce, in vocational
training and in Level 4 and 5 management positions. In order to
achieve our goals, we have installed an ongoing internal report-
ing and planning system.
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES 225
The age differences at the company will rise in the future due to
the increase in the retirement age and the extension of peo-
ple's working lives. The average age of our global workforce in
2017 was 42.8 years (2016: 42.7). Our employees at Daimler
AG were 44.7 years old on average (2016: 44.5). Demographic
development will cause the average age to continue to rise in
the years ahead. However, the proportion of older employees
will decrease again over the long term because many baby
boomers will retire from the company. We consider this trans-
formation to be an opportunity, and we are adjusting the
framework conditions accordingly. Our generation management
system focuses on measures for maintaining the performance
and health of younger and older employees as well as for pro-
moting cooperation between people of different ages.
Once every quarter, the Board of Management discusses our
diversity management activities and the associated results.
We also hold discussions with external stakeholders as part of
our involvement in the Diversity Charter, of which we are a
founding member.
Securing young talent
Daimler takes a holistic approach to securing young talent.
Our "Genius" initiative gives children and teenagers valuable
insights into future technologies and information about jobs in
the automotive industry. Along with technical and commercial
apprenticeships and courses of study at the Cooperative Uni-
versity, we also conduct various activities that address young
talents. We offer extensive possibilities to personally interact
with the company via social media, hackathons, competitions
and internships. After completing their college degrees, gradu-
ates can directly join our company or launch their careers at
Daimler by taking part in our global CAReer training program.
110
In 2017 we hired 97 trainees through our CAReer program.
About 47% of the trainees were women and more than one third
were international participants.
At the end of 2017, we had 8,097 trainees throughout the Group
(2016: 7,960), 4,409 (2016: 4,824) of them at Daimler AG.
During the year under review, 1,278 (2016: 1,662) young people
began an apprenticeship at Daimler AG; 1,197 (2016: 1,448)
were hired after completing their apprenticeships. The costs
for vocational training for Daimler AG totaled €114 million in
2017 (2016: €110 million).
Programs such as "Facharbeiter im Fokus" and the new team
leader development program ensure that employees are exten-
sively qualified according to uniform standards. The participants
are given the opportunity to obtain good career prospects and
plan concrete development goals. Our company's sustained
success is closely linked to the high quality of our managers.
E.04
Share of women
In percent
Share of women (worldwide)
Share of women (Daimler AG)
2017
We recruit most of the young talent we need through our
industrial-technical and commercial apprenticeships and the
courses of study at the Cooperative University, which had
194 students in 2017.
Vision
011
01
The new WLTP test cycle
We are working hard to reduce the fuel consumption of our
vehicles. As early as 2015, we were able to reduce the CO2
emissions of newly registered vehicles from Mercedes-Benz
Cars in the EU to an average of 123 grams per kilometer.
This means we achieved our 2016 target of 125 g/km ahead
of schedule. In 2017, emissions rose slightly to 125 g/km
because of the shift in sales toward vehicles equipped with
higher-quality appointments.
CO2 emissions per car: 125 g/km
The actual values may deviate from the projected target values
because of various external factors such as alterations in the
sales structure, changes in the political framework conditions
or changes in the fuel consumption target values of the vehi-
cles that are still in the development phase. In case of a devia-
tion, the CO2 steering committee organizes an assessment
of various options and then decides on the measures to be
initiated. If the need for adjustment is especially urgent, the
process is escalated to the responsible managing body. From
a strategic standpoint, this process takes place over a period
of approximately ten years.
The fleet values for CO2 emissions are calculated on the basis
of the fuel economy figures of the vehicles available on the
market and the fuel economy specifications and prognoses for
vehicles that are still in the development phase. These values
are combined with the sales forecasts to arrive at the projected
fleet consumption values for CO2 emissions.
The key factors for determining the target values for fuel
consumption and CO2 emissions are the technological possi-
bilities, the legal requirements including the fleet targets for
fuel consumption, and customer wishes. The body responsible
for complying with these goals is the CO2 steering committee,
which is headed by the Board of Management member responsi-
ble for Group Research and Mercedes-Benz Cars Development.
In many markets there are fleet targets for the fuel consump-
tion and CO2 emissions of cars and light commercial vehicles -
in other words, overall targets for all the vehicles sold in a
given market. The corresponding controlling process for reach-
ing the CO2 fleet consumption target for Cars Europe (EU 28)
is shown as an example.
All of the divisions integrate all vehicle-related goals, including
those that are relevant to the environment, into their vehicle
development process according to a similar pattern. The chart
7 E.01 shows the Mercedes-Benz Development System (MDS)
as an example.
The CO2 process in vehicle development
In a committee situated directly below the Board of Manage-
ment level, the managers responsible for each vehicle model
series evaluate the results of this monitoring process and
decide on any necessary corrective measures. If corrections
are needed, the responsible member of the Board of Manage-
ment is included in the decision-making. If the situation con-
tinues to escalate, the managing body of the respective division
is also included.
For every vehicle model and every engine variant, we have cat-
alogues of specifications that define the characteristics and
target values that must be achieved. These specifications
include requirements concerning fuel consumption and emis-
sions limit values for CO2 and nitrogen oxides. During the
development process we regularly monitor compliance with
these specifications.
A vehicle's environmental impact is largely decided during the
first stages of its development. The earlier we integrate envi-
ronmentally responsible product development (Design for Envi-
ronment, DfE) into the development process, the more effi-
ciently we can minimize the impact on the environment.
Product development
Climate protection
Protecting the environment is a primary corporate objective of our Group. Environmental protection
is not separate from other objectives at Daimler; instead, it is an integral component of a corpo-
rate strategy aimed at long-term value creation. The environmental and energy-related guidelines
approved by the Board of Management define the environmental and energy-related policy of the
Daimler Group. They also express our commitment to integrated environmental protection that
addresses the underlying factors with an impact on the environment, assesses the environmental
effects of production processes and products in advance, and takes these findings into account in
corporate decision making.
Since September 2017, all of our new car models in Europe
have been certified according to the Worldwide Harmonized
Light Vehicles Test Procedure (WLTP). This test procedure
includes numerous changes compared to the previous New
European Driving Cycle (NEDC). The changes include higher
average and maximum speeds, more dynamic handling, gliding
inertial masses instead of inertia classes, a smaller standstill
Environmental Issues
E.01
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES 219
measures
Series
support
Principle suitability
Series production
suitability
Concept suitability
Testworthiness
Vehicle-specific integration and validation
Basic development of the overall
vehicle, validation modules
▼ H G F E D C BA
Job No. 1
Launch of Launch of
body-in-white production
production test
Approval of
specifications
Concept Initial
specifica- specifica-
tions
tions
start
Architecture Project
decision
Vehicle product creation process for individual vehicles
Customer appeal
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
In the year under review, reports were received concerning
suspected violations by suppliers of rules concerning working
conditions and the treatment of employees, which we are sys-
tematically investigating.
SDG 9 Industry, Innovation and Infrastructure
Through the advanced development of automated and auton-
omous driving and the expected benefits for safety and cli-
mate protection, we demonstrate the long-term potential of
digital innovations.
-
By developing and implementing a risk-based management
approach to respecting and upholding human rights in our
own units and our supply chain, we support the implementa-
tion of decent work as defined by SDG 8.
SDG 8 Decent Work and Economic Growth
Through our Sustainability Strategy 2030, we would like to
explicitly help to achieve the Sustainable Development Goals
(SDGs) that were approved by the United Nations in Septem-
ber 2015. Our four prioritized focal topics and the sustainabil-
ity-related activities that underlie them support the following
Sustainable Development Goals (SDGs) in particular:
4. Responsible conduct
3. Mobility services
2. Digitalization
In the year under review we involved the relevant stakeholders
in the restructuring of our sustainability strategy and reorga-
nized our priorities with the help of a multistage materiality
analysis. We have focused on the areas that are significantly
influenced by our business model and our value chain - areas
where we can actually bring about change. Our Sustainability
Strategy 2030 concentrates on four focal topics:
1. Vehicles
We believe that a long-term sustainability strategy and effec-
tive sustainability management are the preconditions for
ensuring that we remain one of the world's leading automobile
manufacturers in the future. As part of our Group-wide sus-
tainability strategy, we set targets and define target indicators.
Taken together, all of these targets form our comprehensive
target program for the medium and long terms.
Our Sustainability Strategy 2030
For Daimler, acting in line with the principles of sustainability means striving to achieve long-term
business success. Sustainability is a basic principle of our corporate strategy as well as a metric
for our success as a company. We aim to make our activities compatible with the interests of the
environment and society. One of our core tasks is to offer safe, fuel-efficient and low-emission
vehicles.
Sustainability at Daimler
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216
SDG 11 Sustainable Cities and Communities
218
As the global leader for flexible car sharing (car2go), we sup-
port the creation of sustainable urban spaces for traffic and
community life.
By significantly reducing and reinforcing the material cycles
of primary raw materials that are needed for our e-drive sys-
tem, we are setting the course for sustainable production
models in line with this SDG.
We have established a complaint-management process that
enables individuals to draw attention to possible human rights
violations at suppliers. In this context, we work together closely
with the world employee committee. We bring together all the
available information and take action only if the reports are
well-founded. The suppliers are requested to respond to the
accusations; after that, the responsible management commit-
tees assess the facts of the case and take the necessary mea-
sures. This can lead up to the termination of a business rela-
tionship. In addition to the complaint-management process,
information on misconduct can always be submitted to the
whistleblower system BPO established by Daimler.
O page 229
In the case of suppliers selected on a risk basis, our employees
ask specific questions during their on-site assessments con-
cerning compliance with sustainability standards. We also con-
duct a more thorough assessment whenever this is necessary.
To ensure that our direct suppliers comply with the sustainabil-
ity standards, we regularly conduct a risk analysis of our sup-
pliers according to country and product group. We use regular
database research to discover any violations of our sustainabil-
ity and compliance rules by our current suppliers. We system-
atically follow up all reports of violations. With the help of an
online survey, we also question our main suppliers about their
sustainability management and their communication of these
requirements to their upstream value chains. On the basis of the
results, we reach agreements with our suppliers on improving
their sustainability performance.
Our commitment to sustainable corporate management does
not end at the factory gates. We also urgently require our
direct suppliers all over the world to comply with our sustain-
ability standards. Moreover, we expect them to behave with
integrity and in conformity with all the applicable rules and
regulations. Our direct suppliers are subject to our Supplier
Sustainability Standards, which require, among other things,
compliance with wide-ranging environmental regulations and
respect for human rights. Our direct suppliers commit them-
selves to observing our sustainability standards, communicat-
ing them to their employees and passing them along to their
own supplier companies. We support them in these activities
by regularly providing them with information as well as training
and qualification measures.
Sustainability in our supply chain
The ten principles of the UN Global Compact provide a funda-
mental guideline for our business operations. As a founding
member and part of the LEAD group, we are strongly commit-
ted to the Global Compact. Our internal principles and guide-
lines are founded on this international frame of reference and
other international principles, including the Core Labor Stan-
dards of the International Labor Association (ILO) and the OECD
Guidelines for Multinational Enterprises.
Integrity, compliance and legal responsibility are the corner-
stones of our sustainable corporate governance and serve as
the basis of all our actions. Our Integrity Code defines the
guidelines for our daily business conduct, offers our employees
orientation and helps them make the right decisions even in
difficult business situations. The Integrity Code is supplemented
by other in-house principles and guidelines.
The Corporate Sustainability Board (CSB) is our central man-
agement body for all sustainability issues. The CSB is headed
by Renata Jungo Brüngger (the Board of Management member
responsible for Integrity and Legal Affairs) and Ola Källenius
(the Board of Management member responsible for Group
Research & Mercedes-Benz Cars Development). The opera-
tional work is done by the Corporate Sustainability Office
(CSO), which consists of representatives from the specialist
units and the business divisions.
Our sustainability objectives and their management are part of
our corporate governance system and are also incorporated
into the targets of our executives.
Sustainable corporate governance
217
E | NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER
The Daimler Sustainability Strategy 2030 determines the
structure of our sustainability management activities and our
annual sustainability reporting. In addition, when we identified
the key aspects to be addressed by this non-financial report,
we took the focal topics of our sustainability strategy as our
starting point. However, in some cases we emphasize different
aspects because of the divergent requirements set by the
standards and laws that are relevant to this report.
By setting ambitious targets for reducing the emissions of
our fleets, we are helping to protect the planet from the
effects of climate change.
SDG 13 Climate Change
SDG 12 - Responsible Consumption and Production
Functionality
= Quality gate
share of total fuel consumption, and consideration of optional
extras and the quiescent current requirement. Overall, these
changes are leading to more realistic, but also higher, fuel
economy values.
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222
In addition to our products' high level of environmental com-
patibility and our environmentally friendly and efficient produc-
tion processes, we also strive to provide innovative mobility
services on the road to emission-free driving. That's why we
have developed a range of pioneering mobility concepts and
are forging ahead with innovative approaches - from the car-
sharing provider car2go and the mobility platform moovel to
the taxi app mytaxi and our participation in the coach company
FlixBus and the Bus Rapid Transit (BRT) system. Recent addi-
tions to this list were the service portal Blacklane and Croove,
a car rental service operated by and for private individuals.
Mobility services
In 2017 we were also able to audit all the locations of the
Daimler Buses division. The most important results were in the
areas of rainwater pollution and rainwater drainage, as well as
the proper storage of hazardous substances.
In this way, all the production locations are being visited and
assessed in five-year cycles according to well-established and
standardized procedures. The results are reported to the plant
and divisional managements, and the Group annually assesses
the implementation of the recommendations for minimizing
risks at the locations. In this way, we are striving to enforce the
high environmental standards to which we have committed
ourselves at all of our production locations around the world.
In 1999 we developed a methodology for assessing environmen-
tal risks (environmental due diligence) as a tool for preventing
risks to the environment and complying with statutory require-
ments. We have applied this methodology throughout the
Group since 2000, both internally and also externally in connec-
tion with our acquisition plans. During this period we have
conducted three complete risk assessments at the Daimler
production plants of Mercedes-Benz Cars, Mercedes-Benz
Vans, Daimler Trucks and Daimler Buses. The results of these
assessments were reported to the management of the loca-
tions, and summaries were provided to the management of the
respective divisions. The fourth round of environmental risk
assessments began in 2014. A number of new risk aspects have
been integrated into the topic areas. Nonetheless, we have
not changed the methods or the tools, because we want these
results to be comparable with the results of the assessments
that have already been carried out. 71 E.02
Minimizing environmental risks
We conduct training sessions through the respective local
organizations. The important content of our training sessions
includes water pollution control, wastewater treatment,
emergency management in case of environmentally relevant
malfunctions, and the planning of plants and workplaces in
accordance with environmental protection principles.
The environmental measures are monitored by external audi-
tors (ISO 14001 certification, EMAS validation) and by internal
environmental risk assessments (the due diligence process).
Environmental protection measures at our production locations
are coordinated across business units by three regional com-
mittees (Germany/Europe, North and South America, and Asia)
that are centrally managed. These measures are regulated
in line with a Group guideline and organizational and technical
standards.
We have achieved a high level of air quality control, climate
protection and resource conservation (in terms of water con-
sumption, waste management and soil conservation). We
intend to maintain this high level with the help of the Daimler
Group standards. The environmental and energy-related
guidelines approved by the Board of Management define the
environmental and energy-related policy of the Daimler Group.
The guidelines also express our commitment to integrated
environmental protection. That begins with the assessment of
the causes of environment problems and takes into account
the environmental effects of production processes and products
as early as the planning and development phases.
Our commitment to the environment is an integral component
of our corporate strategy, which focuses on increasing the
value of the company over the long term. For this reason, we
have established environmental management systems at our
manufacturing locations with the goal of ensuring that we can
produce our vehicles safely, efficiently and at a high level of
quality in an environmentally friendly manner that complies with
all legal stipulations. We also carry out environmental risk
assessments at all production locations in which the Group has
a majority interest in the ownership structure.
Production-related environmental protection
the workshop waste disposal system MeRSy (Mercedes-Benz
Recycling System).
Employee Issues
- the remanufacturing of used parts, and
The success of Daimler AG and its subsidiaries is largely dependent on the skills and commitment of
our employees. More than 289,000 people promote our company's success worldwide by contributing
their concepts and ideas to their respective tasks and work processes and by helping to make
improvements and create innovations. Trusting relationships with employees are therefore more than
just an ethical and legal requirement for us – without them we would not be able to conduct our
business successfully.
In order to recruit, develop and retain highly qualified staff, we
are continuously striving to further improve our attractiveness
as an employer. Because our managers should motivate their
employees to achieve top performance, it is crucial that we
equip our managers with outstanding leadership skills. In addi-
tion, we want to take on social responsibility and let diversity
flourish in our global company.
100
11
& inspiring culture
...foster a diverse, empowering
...enable our management to shape
the framework of the future
Employer of choice
Excellent leadership
We provide innovative & efficient HR solutions to...
...attract, develop and retain
the right people
Competitive Workforce
Daimler - best Team
HR Strategy 2025
E.03
The main control tool we use is our HR Scorecard, which uses
key performance indicators concerning demographic develop-
ment, diversity and sick rates to provide information about the
sustainability of human resources measures and processes in
the individual areas of action.
A professional HR organization and efficient operating processes
form the basis for the implementation of these overarching
goals, from which we have derived key areas of action that are
linked to clearly defined objectives.
General figures regarding the development of our workforce
numbers can be found in the Employees section of the Man-
agement Report. page 129 f of the Annual Report 2017
The key aspects of our activities in the area of recycling are:
the resale of tested and certified used parts through the
Mercedes-Benz Used Parts Center (GTC),
During the development process of a vehicle, we prepare a recy-
cling concept for each vehicle model in which all of its compo-
nents and materials are examined with a view to their suitability
for the various stages of the recycling process. As a result, all
Mercedes-Benz car models are up to 85% recyclable and up to
95% recoverable.
To make our vehicles more environmentally friendly, we are
working to continuously reduce the resources our automobiles
consume over their entire life cycles.
Tours
Interviews
documents
Inspection of
Methodology for assessing environmental risks
E.02
E❘ NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
220
The RDE threshold values have applied since September 2017
to newly registered vehicle models. Starting in September
2019, they will apply to all new vehicles. During the first stage,
the Euro 6 threshold value for certification may be exceeded
by a factor of 2.1. During the second stage, which will start in
September 2020 or 2021, the Euro 6 threshold value may be
exceeded by a factor of 1.5.
In order to more accurately correlate exhaust gas emissions
from real-life driving operation with the threshold values of the
test cycle, a new mandatory testing process has been intro-
duced in Europe. Since the introduction of the Real Driving
Emissions (RDE) test procedure in September 2017, vehicles
must, among other things, have the number of particulates and
the concentration of nitrogen oxides determined with the help
of a mobile emission measurement system. The new testing
process supplements the mandatory exhaust gas tests that are
still conducted on test rigs.
New RDE emission legislation
Clean air
pages 124 ff of the Annual Report 2017
We continue to work hard to meet all statutory CO₂ require-
ments, including the very challenging EU limits for 2021. As
we often emphasize, the fulfillment of these challenging fleet
targets depends not only on offering appealing and highly
efficient products with electric drive systems, but also on our
customers' actual decisions to buy those models. In order to
optimally position ourselves in this respect, we are systemati-
cally changing over our product range to the latest engine
generations, and are also systematically electrifying our port-
folio with plug-in hybrids and all-electric vehicles.
In order to obtain data that is comparable, the fleet emissions
of the individual automakers are now being calculated back
from the certification values of the WLTP test cycle to the CO₂
fleet values of the New European Driving Cycle (NEDC). The
transition to WLTP basically means for all manufacturers that
the requirements regarding a fleet's fuel consumption, and
thus its CO2 emissions, have become much more stringent.
However, this transition did not yet have significant effects in
2017. By means of extensive investment in innovative drive
technologies and a comprehensive expansion of the product
range with more than 50 electrified models, Daimler/Mercedes-
Benz Cars is preparing to achieve the more stringent EU tar-
gets. At the same time, strong customer demand for SUVs is
leading to a shift of the structural mix towards mid-sized and
large automobiles, which presents us with a significant chal-
lenge to meet the targets of the European Union in 2021.
Topic areas
Feedback to plant management and divisional
management
Environmental management
Emissions into the atmosphere
Consistently high recyclability
Conservation of resources
221
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
Daimler is participating in the mobility fund that has been jointly
launched by the German government and German industry, in
line with our company's market share. This fund will primarily be
used to finance measures that improve traffic flows in inner cities.
Additional measures were added to this initiative for better air
quality following a summit meeting between the government
and the automotive industry in Berlin in August 2017. In order
to modernize the fleet of vehicles on the road effectively, we
are offering owners of Euro 1 to Euro 4 diesel cars an "environ-
ment bonus" of €2,000 if they trade in their vehicles for a new
Euro 6 diesel-powered car or a plug-in hybrid from Mercedes-
Benz. We are also supporting the introduction of vehicles that
meet the stricter emission limits of the RDE testing procedure.
We are convinced that diesel engines will continue to be an
integral part of the drive-system mix, not least due to their low
CO2 emissions. For this reason, the Daimler Board of Manage-
ment approved a comprehensive plan for the future of diesel
engines in July 2017. The plan calls for a massive expansion
of the previously introduced voluntary service measures for
vehicles already in customers' hands, as well as the rapid
market launch of a completely new diesel engine family. As early
as March 2017, Mercedes-Benz began offering its compact-
class customers an improvement in NOx emissions for one
engine variant. The company is also carrying out voluntary ser-
vice measures for V-Class customers. In order to effectively
lower the emissions of other model series, we decided in July
2017 to extend the service measures, which are free of charge
for our customers, to encompass more than three million
Mercedes-Benz vehicles at a cost of approximately €285 million.
The measures are being carried out for most Euro 5 and Euro 6
vehicles in Europe and other markets in close cooperation with
vehicle registration authorities.
10
Plan for the future of diesel vehicles
Our goal is to fulfill emission requirements as far in advance as
possible and to reduce potential risks for humans and environ-
ment. In order to comply with the tougher requirements of the
RDE regulations, we have had to make, and are still making,
extensive changes, at considerable expense, to the drivetrains
of our vehicles. Especially significant in this regard is the
exhaust gas aftertreatment near the engine. In the past, for
most of the vehicle models of many manufacturers, catalytic
converters and diesel particulate filter (DPF) systems were
mounted on the underbody of the vehicle, relatively far from
the engine. In the new Mercedes-Benz diesel engines, we
have successfully managed to position the entire exhaust gas
aftertreatment system extremely close to the engine. As a
result, the system is heated up very rapidly and doesn't quickly
cool off. As a result, the working temperature needed by the
system is reached considerably faster. This enables more effec-
tive exhaust gas aftertreatment and significantly reduces the
NOx emissions in stationary testing situations and also in the
RDE testing procedure in real-life driving operation.
High tech against pollutants
Dealing with hazardous materials
Soil/groundwater contamination
Waste management
Implementing
measures at the
plants
Discharge into bodies of water
As early as 2016, Mercedes-Benz began offering diesel vehi-
cles that were able to meet the Real Driving Emissions (RDE)
limit values long before they went into effect in the EU in 2017.
This achievement was made possible by an all-new modular
family of efficient and low-emission diesel engines. In the future,
this modular engine family will be utilized across the entire
product range of Mercedes-Benz Cars and also at Mercedes-
Benz Vans. The first engines of this family - the four-cylinder
OM654 and the six-cylinder OM656 – are already on the
road. The new engines' exemplary emission values have also
been validated by measurements conducted at independent
institutes.
101000101
0101111010
for the period from January 1 2017 to December 31, 2017, has
not been prepared, in all material respects in accordance with
§§ 315b and 315c in conjunction with 289b to 289e HGB. We
do not, however, issue a separate conclusion for each sustain-
ability disclosure. In a limited assurance engagement the evi-
dence gathering procedures are more limited than in a reason-
able assurance engagement and therefore less assurance
is obtained than in a reasonable assurance engagement. The
choice of audit procedures is subject to the auditor's own
judgement.
As a company with global operations, we have to deal with a
wide
range of political changes and decisions that impact our
business activities. In order to safeguard the future of the
Daimler Group, it is therefore important that we represent the
interests of our company in an open dialogue with govern-
ments, associations, organizations and various groups in society.
Conversely, such a dialogue also allows us to hear their con-
cerns and consider their interests.
232
E | NON-FINANCIAL REPORT | COMPLIANCE
Technical compliance
As part of our efforts to continuously improve our products,
technologies and organization, we repeatedly examine new
development possibilities and also optimize our processes.
This includes adjusting and improving our existing Compliance
Management System – for example in terms of compliance
with technical regulations.
-
In order to address the specific risks associated with the prod-
uct development process, we combined all existing systems
and additional measures and processes at Mercedes-Benz Cars
into a technical Compliance Management System (tCMS) dur-
ing the reporting year. This system includes fundamental princi-
ples and elements intended to ensure ethical conduct and
work processes throughout the Group and compliance with
applicable laws. Measures are currently under way to intro-
duce the tCMS at Mercedes-Benz Vans, Daimler Trucks and
Daimler Buses.
Our technical Compliance Management System helps create
clarity with regard to compliance with technical regulations
and also offers guidance with regard to these regulations, which
can be very complicated. These questions are jointly examined
and answered in an interdisciplinary process that takes into
account legal and technical criteria. The tCMS addresses both
the complexity of regulatory requirements and ongoing devel-
opments in the automotive industry.
Employees at Group Research and Development are supported
here by a network of disseminators - direct contact partners
for questions concerning technical compliance in their areas of
responsibility. This network of disseminators is being expanded
throughout the Group. We also employ various communication
measures to raise awareness among selected target groups.
Such measures include special dialogue events and guidelines
on integrity, compliance and legal considerations in the prod-
uct development process. For example, some 3,600 employees
at Mercedes-Benz Cars Development had taken part in class-
room training courses on technical compliance by the end of
2017.
Technical compliance is managed Group-wide by an internal
team consisting of employees with expertise in various fields,
such as development, legal affairs, integrity and compliance.
The Board of Management members responsible for Integrity
and Legal Affairs and Group Research and Development
receive regular reports on the status of the technical Compli-
ance Management System.
235
Daimler has been working on a company-specific approach to
human rights since 2008. In 2011 we began developing a sys-
tematic due diligence approach for our company, initially on
the basis of the Human Rights Compliance Assessments of the
Danish Institute for Human Rights. Since 2015, we have been
working with the Daimler Human Rights Respect System (HRRS),
which we developed ourselves with the specifsic requirements
of the company in mind.
The protection of human rights is also a key component of our
Group-wide sustainability strategy. We are committed to
proving to the greatest extent possible that these elementary
rights are respected and upheld throughout our organization,
our partners and by our suppliers as well. The UN Guiding Prin-
ciples on Business and Human Rights and Germany's National
Action Plan on Business and Human Rights define the associ-
ated principles and due diligence obligations. It is our aim to
fulfill these obligations and we are therefore gradually expand-
ing our Human Rights Respect System (HRRS) as our Due Dili-
gence Framework, including regular consultations with exter-
nal stakeholders. As a proactive risk management system
for human rights, the HRRS is designed with the aim to identify
and avoid systemic risks and potential negative impacts of
our business activities on human rights early on. The HRRS
thus primarily protects third parties and is aimed at exerting
its effect along at our supply chain as well. Along with rele-
vant legislation, we also focus on multinational initiatives and
frameworks, in particular the UN Guiding Principles on Busi-
ness and Human Rights and the principles of the UN Global
Compact. In line with the expectations regarding a human rights
policy expressed in these documents, we have clearly defined
what we expect from all of our employees and business partners.
These expectations are formulated in our Integrity Code, our
Supplier Sustainability Standards and our supplier agreements.
The responsibility for human rights issues lies with the Integrity
and Legal Affairs division. The HRRS, which orientates itself
on our Group-wide Compliance Management System (CMS),
utilizes a risk-based approach in its focus on Daimler majority
holdings (including production locations) and our supply chain.
Also part of the HRRS is the consultation and exchange with rights
holders, for example our employees and their representatives.
We continue to develop the HRRS and implement it step by
step. In the last two years, for example, we conducted two
HRRS pilot projects for Daimler majority-owned companies at
our international locations and, where necessary, initiated
improvements and also identified best practices for other loca-
tions. We were also able to further improve the system we
use to classify all Daimler majority holdings in terms of human
rights risks. We are working to firmly establish the HRRS for
Daimler majority-owned companies by 2020 at all our loca-
tions thereby supplementing the already existing decentralized
measures with a dedicatd system.
E | NON-FINANCIAL REPORT | COMPLIANCE 233
Due diligence with the Human Rights Respect System
The HRRS is designed to identify and avoid systemic risks and
possible negative effects of our business activities on human
rights early on. It consists of four steps that are to be applied
to Daimler majority-owned companies and the supply chain:
1. Identification of potential human rights risks (risk assess-
ment)
2. Definition, implementation and management of preventive
measures and countermeasures (program implementation)
3. Monitoring of the effectiveness of the measures, in particu-
lar at high-risk units and in supply chains that are at a high
risk of human rights violations (monitoring)
4. Periodic internal reporting on relevant issues, compliance
with external reporting requirements (reporting)
Identification of human rights risks at Daimler majority
holdings
The risk assessment is a two-step process. The first step
involves a categorization of the majority holdings on the basis
of predefined criteria, such as the risk situation in specific
countries and risks associated with specific business opera-
tions. In the second step, units that display a heightened
human rights risk are subject to an on-site assessment. To this
end, a modular approach was developed that makes it possible
to take into account fundamental human rights standards such
as those defined in the Universal Declaration of Human Rights
and the Core Labor Standards of the International Labor Orga-
nization (ILO).
In order to ensure an independent external assessment of our
Antitrust Compliance Program, KPMG AG Wirtschaftsprü-
fungsgesellschaft audited the Compliance Management System
for antitrust law in accordance with the 980 standard of the
Institute of Public Auditors in Germany. This audit, which was
based on the principles of appropriateness and effective imple-
mentation, was successfully completed at the end of 2016.
The results of our annual compliance risk analysis serve as the
basis for the formulation of measures that address antitrust
risks. The responsibility for designing, implementing and moni-
toring measures lies with each company's management. Man-
agers in turn cooperate closely with Integrity and Legal Affairs,
which also provides information on how to implement the mea-
sures effectively. The at-risk units in particular must regularly
systematically assess the adequacy and effectiveness of locally
implemented antitrust compliance measures. In addition, our
Legal and Corporate Audit departments conduct additional mon-
itoring activities at our company's units, as well as random
audits of at-risk units on the basis of a predefined audit plan
in order to ensure that antitrust laws are complied with and
internal processes are carried out properly. This helps us con-
tinuously improve the effectiveness of our Antitrust Compli-
ance Program and adapt it to global developments and new legal
requirements. The associated methods and processes are
being constantly refined and improved.
By means of an advisory hotline set up by our Legal depart-
ment, as well as guidelines and practical support, we help our
employees around the world recognize situations that might
be critical from an antitrust perspective, and also act in com-
pliance with regulations in their daily work, especially when
dealing with competitors, cooperating with dealers and general
agencies around the world, and participating in business asso-
ciation committees. In addition to Daimler's Legal department
and its specialist advisers, the Group's global units and their
employees can turn to legal advisers in local at-risk units, who
also ensure that our standards are consistently upheld. We
also utilize a variety of communication measures to make our
employees aware of the importance of competition and anti-
trust laws and issues.
Our Group-wide Antitrust Compliance Program is oriented to
national and international standards. The program establishes
a binding, globally valid Daimler standard that defines how
matters of competition law are to be assessed. The Daimler
standard is based on the standards of the European antitrust
authorities and courts. The objective of the Daimler standard is
a uniform level of compliance and advice in all countries and
thus compliance with all local and international antitrust laws.
Qualification
The Board of Management member responsible for human
resources regularly receives reports about the measures and
results of our training activities and the development paths of
the people who enter the company via our CAReer program.
That's why we focus especially on the development of talented
young managers. We validate young employees' leadership
potential in our PV44 in-house assessment center, which uses
a uniform standard for all of our locations.
226 E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
All of these training measures contribute to the permanent
establishment of ethical and compliant behavior at the company
and also help our employees deal with specific issues that can
occur at work. The same is true of the new Daimler app for
integrity, compliance and legal affairs. The app can be down-
loaded and used by all employees with an iOS company owned
device. Among other things, the app enables mobile access to
information on corruption prevention and antitrust law.
We have also further expanded our qualification and consulting
program for individuals who perform supervisory and manage-
ment functions. New members of executive bodies at companies
in which Daimler is the majority shareholder are given a com-
pact overview of key aspects of corporate governance via the
Corporate Governance Navigator, which is a target group-
focused program that supports them in their new role by pro-
viding information on their tasks and responsibilities, contact
partners, and units that deal with central issues addressed by
the Integrity and Legal Affairs division and adjacent units.
In addition to our internal training measures, our training pro-
gram also includes special courses on integrity and compli-
ance (including corruption prevention) that are offered to our
business partners in line with their specific risks. The courses
are offered as web-based training or classroom training ses-
sions. Daimler informs its business partners about the courses
and invites them to participate.
Monitoring and improvements
Every year, we review the effectiveness and efficiency of our
Compliance Management System and adapt it to global devel-
opments, changed risks and new legal requirements. We also
monitor important core processes during the year on the basis
of key performance indicators (KPIs) that include process dura-
tion and quality. To determine these indicators, we check, among
other things, whether formal requirements are met and all
information is complete. In addition, we analyze the knowledge
gained through independent internal and external assessments
and participate in selected benchmark studies. These activities
are used to define any required improvement measures, which
are implemented by the responsible units and departments and
then monitored on a regular basis. The relevant management
bodies continuously receive reports on these monitoring
activities.
In 2017 we used the experience gained with the pilot projects
to make adjustments to our previous two-step risk assessment
process. We also had external stakeholders verify the HRRS
in general and our risk assessment methodology in particular.
During this verification process, we were given valuable sug-
gestions for further adapting and expanding the system. We
are also currently developing an effective approach to program
implementation, monitoring and reporting.
E | NON-FINANCIAL REPORT | COMPLIANCE 231
Our divisional and regional compliance managers report to
the Chief Compliance Officer. This guarantees the compliance
managers' independence from the business divisions. The
Chief Compliance Officer and Group General Counsel report
directly to the Member of the Board of Management for Integrity
and Legal Affairs and to the Audit Committee of the Supervi-
sory Board. They also report four times each year to the Board
of Management of Daimler AG on matters such as the status of
the Compliance Management System and its further develop-
ment, the status of the whistleblower system and, if necessary,
on other topics. In addition, the Group General Counsel regu-
larly reports to the Antitrust Steering Committee and the
Group Risk Management Committee, to which the Chief Com-
pliance Officer also reports.
Important non-financial reporting topics
Eliminating corruption, preventing cartel arrangements and
ensuring compliance with technical regulations - we introduced
our Compliance Management System in order to address
exactly these issues, which are extremely important to us. Our
Group-wide approach to respecting and upholding human
rights is also based on the Daimler CMS.
Anti-corruption compliance
Daimler has committed itself to fighting corruption in its own
business activities. Along with complying with all applicable
laws, this also involves adhering to the rules of the OECD Con-
vention on Combating Bribery of Foreign Public Officials in
International Business Transactions (1997) and the United
Nations Convention against Corruption (2003). As a founding
member of the UN Global Compact and a part of its LEAD
Group, Daimler also seeks to ensure that not only the company
itself but also its business partners and customers act in
accordance with the principles of the UN Global Compact. The
most important goals here are to fight corruption around the
world in order to enable fair competition, eliminate the damage
corruption does to society and thus improve conditions for
everyone.
Our anti-corruption compliance program is based on our com-
prehensive Compliance Management System. The program
is globally valid and primarily consists of the following compo-
nents: integrated risk assessment, risk-based measures for
avoiding corruption in all business activities (e.g. reviews of
business partners and transactions), and special care in con-
tacts with authorities and public officials. Our risk-minimization
measures focus in particular on sales companies in high-risk
countries and business relationships with wholesalers and gen-
eral agencies worldwide.
The responsibility for implementing and monitoring measures
lies with each company's management, which cooperates
closely with the specialist units within Integrity and Legal Affairs.
Daimler places the same strict requirements on all of its activi-
ties around the world. In addition, we continuously improve our
methods and processes and use a variety of communication
measures to make our employees aware of the importance of
fighting corruption. Among other things, we released a film and
set up a separate website to address this issue during the year
under review. Further information on communication and train-
ing: page 230
Antitrust compliance
Involvement of company management
Identification of human rights risks in our
supply chain
Since 2008 we have defined our expectations towards our
suppliers regarding sustainability in our Supplier Sustainability
Standards. Stipulations concerning working conditions and
human rights are key components of these. In order to ensure
that we can meet our human-rights due-diligence obligations
even more systematically, we are gradually introducing the HRRS
in our supply chain as well. To this end, clear risk classifica-
tions for Daimler supply chains were developed in line with
specific product areas (e.g. production materials or services)
in 2017. This also includes minerals commonly associated with
conflicts. We are utilizing our risk-based approach in order to
determine which supplier products and at which stages of our
extensive supply chain we should take targeted and appropri-
ate measures beyond our direct suppliers.
Involvement at the executive level
E | NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
Mokler
Auditor
Dr. Thümler
Auditor
Wirtschaftsprüfungsgesellschaft
KPMG AG
Stuttgart, February 9, 2018
Our assignment for the Supervisory Board of Daimler AG,
Stuttgart, and professional liability is governed by the General
Conditions of Assignment for Wirtschaftsprüfer and
Wirtschaftsprüfungsgesellschaften (Allgemeine Auftragsbedin-
gungen für Wirtschaftsprüfer und Wirtschaftsprüfungsgesell-
schaften) in the version dated January 1, 2017 https://
kpmg.de/bescheinigungen/lib/aab_englisch.pdf. By reading
and using the information contained in this report, each recipi-
ent confirms notice of provisions of the General Conditions of
Assignment (including the limitation of our liability for negli-
gence to EUR 4 Mio as stipulated in No. 9) and accepts the
validity of the attached General Conditions of Assignment with
respect to us.
This report is issued for purposes of the Supervisory Board of
Daimler AG, Stuttgart, only. We assume no responsibility with
regard to any third parties.
Limited liability
We conducted our work in accordance with the International
Standard on Assurance En-gagements (ISAE) 3000 (Revised):
"Assurance Engagements other than Audits or Reviews of His-
torical Financial Information" published by IAASB. This Stan-
dard requires that we plan and perform the assurance engage-
ment to obtain limited assurance whether any matters have
come to our attention that cause us to believe that the Report
Based on the procedures performed and the evidence received
to obtain assurance, nothing has come to our attention that
causes us to believe that the Report of Daimler for the business
year from January 1 to December 31, 2017 is not prepared, in
all material respects, in accordance with §§ 315b and 315c in
conjunction with 289b to 289e HGB.
- Assessment of the overall presentation of the information
- Assessment of local data collection and reporting processes
and reliability of reported data via a sampling survey in Stutt-
gart and Mannheim (both Germany).
- Analytical evaluation of data and trends of quantitative infor-
mation which are reported by all sites on group level
- Evaluation of selected internal and external documents
- Interviews with employees on group level who are responsi-
ble for the collection of the information to concepts, due dili-
gence processes, results and risks, the conduction of internal
controls and the information consolidation
- Assessment of the design and implementation of systems
and processes for the collection, processing and monitoring
of information on environmental, employee and social mat-
ters, human rights, corruption and bribery, including data
consolidation
- A risk assessment, including a media research, of relevant
information about the sustainability performance of Daimler
in the reporting period
- Interviews with employees on group level who are responsi-
ble for the materiality analysis to get an understanding of the
process for identifying material topics and respective report
boundaries for Daimler
Within the scope of our engagement, we performed amongst
others the following procedures:
Conclusion
We provide our staff with training and continuing education
opportunities for their professional and personal development
throughout their careers. At least once a year, employees
discuss qualification topics with their managers and agree on
appropriate measures. The company agreement on qualifica-
tion regulates continuing education at Daimler AG. This agree-
ment also stipulates that employees can leave the company
for up to five years in order to learn additional skills and are
guaranteed that they can return. In 2017, around 370 employ-
ees availed themselves of this opportunity.
Our responsibility is to express a conclusion based on our
work performed of the Report within a limited assurance
engagement.
Our audit firm applies the legal provisions and professional
pronouncements for quality assurance, in particular the pro-
fessional code for German Public Auditors and Chartered
Accountants (in Germany) and the quality assurance standard
of the German Institute of Public Auditors (Institut der
Wirtschaftsprüfer, IDW) regarding quality assurance require-
ments in audit practice (IDW QS 1).
The member of the Board of Management responsible for Integ-
rity and Legal Affairs is regularly informed on human rights
activities at regular intervals. This is supplemented by regular
reports submitted to the Board of Management and the Corpo-
rate Sustainability Board (CSB), as well as to the Procurement
Council (PC) within the framework of our sustainability strategy.
Other compliance issues
It is very important to Daimler to minimize all legal and economic
risks. Along with the issues described above, our Compliance
Management System therefore also addresses other issues, such
as compliance with our data protection policy and data protec-
tion legislation, the prevention of money laundering and com-
pliance with sanctions lists.
Data protection compliance
The Corporate Data Protection department provides worldwide
support to all Group companies and helps ensure compliance
with data protection requirements. The Chief Officer Corporate
Data Protection is independent and reports directly to the Board
of Management member for Integrity and Legal Affairs. The
annual data protection report is submitted to the Supervisory
Board. Our Corporate Data Protection Policy creates Group-
wide standards for handling the data of employees, customers
and business partners, and also meets the requirements of
current European data protection laws. Preparations are now
under way for implementation of the new European data pro-
tection regulation that will go into effect in May 2018. The Cor-
porate Data Protection department is the point of contact for
data protection complaints. It also carries out checks and audits,
raises employees' awareness of data protection and advises
the relevant specialist departments. Product-related advice
focuses on data protection for connected vehicles and auto-
mated driving functions, as well as mobility services.
Anti-money laundering compliance
Our Anti-Money Laundering Policy is designed to prevent money
laundering and the financing of terrorism in the trade with
goods and in activities carried out by Daimler Financial Services.
It is meant to proving that legislation in various countries is
complied with throughout the Group, and that internal regula-
tions that go beyond such legislation are complied with as well.
The Chief Compliance Officer serves as the anti-money laun-
dering officer of Daimler AG as a distributor of goods. An Anti-
Money Laundering Policy of competence supports the Chief
Compliance Officer in the management and coordination of
money laundering prevention measures. The Divisional Compli-
ance Office Financial Services coordinates and supports the
implementation of the Anti-Money Laundering Policy at Daimler
Financial Services.
Sanctions compliance
We have introduced a risk-focused, system-based process at
relevant specialist departments and Daimler AG-controlled
holdings that ensures compliance with EU and US sanctions
and internal regulations. The Center of Competence CSL
(Checks against Sanctions Lists/Sanctions Compliance) pro-
vides implementation support to the relevant specialist depart-
ments and the Daimler AG-controlled holdings.
Practitioner's Responsibility
234
Independent Auditor's Report
Concerning a Limited Assurance Engagement
on the Non-Financial Group Reporting
To the Supervisory Board of Daimler AG,
Stuttgart
We have performed an independent limited assurance engage-
ment on the separate combined Non-Financial Report of
Daimler AG and the Group as well as the by reference qualified
parts "Business model”, “Legal risks” and “Non-Financial
risks" according to §§ 315b and 315c in conjunction with 289b
to 289e (further "Report") of Daimler AG, Stuttgart (further
"Daimler") for the business year from January 1 to December
31, 2017.
Management's Responsibility
The legal representatives of Daimler are responsible for the
preparation of the Report in accordance with §§ 315b and 315c
in conjunction with 289b to 289e HGB.
This responsibility of the legal representatives includes the selec-
tion and application of appropriate methods to prepare the
Non-Financial Report and the use of assumptions and estimates
for individual sustainability disclosures which are reasonable
under the given circumstances. Furthermore, the responsibility
includes designing, implementing and maintaining systems
and processes relevant for the preparation of the Non-Financial
Report in a way that is free of - intended or unintended -
material misstatements.
Independence and quality assurance on the part of the
auditing firm
We are independent from the company in accordance with the
requirements of independence and quality assurance set out
in legal provisions and professional pronouncements and have
fulfilled our additional professional obligations in accordance
with these requirements.
E❘ NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
Our production locations are responsible for the qualification
of managers and specialized employees in manufacturing. The
Global Training unit safeguards and increases the skills of our
employees at the Mercedes-Benz sales organization by having
700 trainers instruct about 200,000 participants each year at
100 training locations in 80 countries around the world. A total
of 1.2 million training courses are held each year. The Daimler
Corporate Academy program helps the Group develop a new
management culture and world of work. In 2017, the Corporate
Academy enabled a total of 63,000 specialized employees and
managers from more than 50 locations to develop themselves
further personally and professionally. At Daimler AG, we spent
€121 million on the training and qualification of our employees
in the year under review (2016: €122 million). On average,
every employee spent three days on qualification courses in
2017 (2016: three days).
Human rights compliance
We want to maintain our employees' health and physical well-
being for the long term. To this end, the Daimler Group has
uniform preventive healthcare standards in place worldwide.
- Membership in sustainability initiatives and
networks
- Local dialogue with residents and communi-
ties
- Dialogue concerning specific occasions and
projects
- Board of Management involvement in the
Ethics Commission on Automated and Con-
nected Driving (German Ministry of Transport
and Digital Infrastructure)
- New dialogue formats for future-oriented is-
sues: think tanks, hackathons, idea competi-
tions
Participation
- Stakeholder survey and materiality analysis
- Advisory Board for Integrity and Corporate
Responsibility
- Peer review within the framework of sustain-
ability initiatives such as the UN Global Com-
pact
- Consultation of stakeholders in thematic
working groups (environment, human rights
etc.)
- Daimler Supplier Portal
E❘ NON-FINANCIAL REPORT | COMPLIANCE 229
Compliance is an indispensable part of the culture of integrity at Daimler. For us, compliance means
acting in conformance with laws and regulations. Our objective here is to ensure that all Daimler
employees worldwide are always able to carry out their work in a manner that is in conformance
with applicable laws, regulations, voluntary commitments and our basic values, as set out in
binding form in our Integrity Code. Our activities focus on compliance with all applicable anti-corrup-
tion regulations, the maintenance and promotion of fair competition, adherence to legal and regu-
latory stipulations related to product development, respect for and preservation of human rights,
compliance with data protection laws, compliance with sanctions lists and the prevention of
money laundering.
Our Compliance Management System
Our Compliance Management System (CMS) consists of basic
principles and measures intended to ensure rule-based behavior
throughout the company. The CMS is based on national and
international standards and is applied on a global scale at all
Daimler AG units and majority holdings. The CMS consists of
seven elements that build on one another. 7 E.07
Our compliance values and goals
Our Compliance Management System (CMS) is designed to
help Daimler and its employees avoid inappropriate or illegal
behavior. The measures needed for this are defined by Group
Compliance and the Legal department in a process that also
takes the company's business requirements into account.
Our compliance organization
Group Compliance and the Legal department play a major role
in ensuring that applicable regulations are adhered to through-
out the Group. Our compliance organization is structured in a
divisional and regional manner, while our Legal department is
organized regionally and along the value chain. These structures
enable us to provide optimal support and advice to our divisions.
A contact person is made available to each function, division
and region. In addition, a global network of local contact persons
make sure that our standards are met throughout the Group
and also help local management at selected Daimler facilities
and sales companies implement our compliance program.
Compliance risks
We systematically pursue the goal of minimizing compliance
risks, and we analyze and assess the compliance risks of all
our business units every year. These analyses are based on
centrally compiled information on all business units and take
into account specific additional details in line with the given
risk assessment. The results of the analyses form the basis of
our risk management.
Compliance
Compliance program
- Conferences on social issues; debates
- Annual Daimler Sustainability Dialogue
(Germany/regions)
Our principles for political dialogue and communicating our
interests form the basis of responsible lobbying in compliance
with all laws and regulations. This also includes the idea of
maintaining neutrality when dealing with political parties and
representatives of interest groups.
The aim of our discussions with political decision-makers is
to achieve greater planning security and contribute our ideas
to processes of social change. We focus here on issues such
as vehicle safety, emission regulations, new mobility concepts
and electric mobility. Other important issues include trade policy,
location-specific matters, education and human resources policy.
The management guideline on Lobbying and Political Donations
governs, among other things, the use of lobbying instruments
and other methods for making our interests known in the political
realm. We represent the company's interests through dialogue
with decision-makers, including elected officials or politicians
who have been nominated for office, government officials, and
representatives of political interest groups, trade organizations,
business associations and government agencies. Participation
in specialized government committees and product sales to
ministries, government agencies and diplomatic missions are
part of our business operations and therefore not considered a
component of lobbying.
Our central coordinating body for political dialogue at the
national and international levels is the External Affairs and Public
Policy department, which falls under the responsibility of the
Chairman of the Board of Management. This department oper-
ates a global network with offices in Berlin, Brussels, Beijing,
Singapore, Stuttgart and Washington and also has corporate
representations in other key markets. In order to ensure that
political lobbying activities are coordinated, and also to avoid
political target groups being addressed in an uncoordinated
manner, employees in the External Affairs and Public Policy
department must be registered.
The Group-wide Lobbyists Register ensures that political lob-
bying is carried out in accordance with applicable regulations
and ethical standards. The register also helps us meet the reg-
istration requirements of public institutions.
As in previous years, Daimler AG made donations totaling
€320,000 to political parties in 2017. Of this total, the CDU
and SPD each received €100,000, and the FDP, CSU and
Bündnis 90/the Green Party €40,000 each. All donations to
political parties require a Board of Management resolution.
E.06
Sample stakeholder dialogue instruments
-Group-wide internal integrity dialogue
Information
(e.g. Daimler China Sustainability Report)
- Blogs and social media
- Intranet and internal communication
- Press and public relations work
- Plant tours, receptions,
Mercedes-Benz Museum
Health management and safety at the
workplace
- Environmental statements of the plants
Dialogue
- Annual Daimler Sustainability Report and
regional sustainability reports
Our compliance program comprises all the principles and mea-
sures designed to reduce compliance risks and prevent violations
of regulations and laws. The individual measures, which are
based on the knowledge gained through our systematic com-
pliance analyses, focus on the following aspects:
- Sustainability newsletter and magazines
A total of 95 new BPO cases were opened in 2017. During the
year under review, 96 cases were closed, 61 of them "with
merit," which means the initial suspicion was confirmed. Three
of these cases were categorized as "corruption."
228
We regularly receive inquiries from stakeholders concerning var-
ious sustainability-related topics. These inquiries are addressed
directly by specific specialist departments and units in a decen-
tralized manner. This approach brings our stakeholders closer
to our business operations and enables specialized knowledge
to be directly incorporated into the dialogue. Reports on stake-
holder inquiries are also presented in the meetings of our Sus-
tainability Board and Sustainability Office. These reports are
used to formulate key strategic policies for sustainability man-
agement. The Sustainability Board and the Sustainability Office
also serve as coordination centers for dialogue with our stake-
holders on interdisciplinary issues.
We also utilize online and print media, discussions with experts,
workshops, local and regional dialogue events and stakeholder
surveys for our dialogue with stakeholders. For example, as
part of the process for validating our new Sustainability Strat-
egy 2030, we once again conducted an extensive online survey
of our stakeholders in 2017. This survey basically confirmed
the prioritization of focus topics carried out within the frame-
work of our strategy process. Representatives from various
specialist units at Daimler-participate in associations, commit-
tees and sustainability initiatives such as the UN Global Com-
pact and econsense - Forum for Sustainable Development of
German Business. We also stage interdisciplinary conferences
as a way to conduct an active dialogue with stakeholders. One
example is the second specialist conference on ethics and the
legal situation with regard to autonomous driving, which was
held in October 2017.
The Advisory Board for Integrity and Corporate Responsi-
bility has been an important source of input for Daimler since
2012. The board's independent members from the fields of sci-
ence and business, as well as from civic organizations, utilize
an external point of view to offer critical and constructive sup-
port for the integrity and corporate responsibility process at
Daimler. Board members have extensive experience with issues
related to ethical conduct and transportation and environmen-
tal policy and contribute their different points of view to discus-
sions. The board holds regular meetings with members of the
Board of Management and other Daimler executives. During the
year under review, the Advisory Board also held a joint meet-
ing with the Board of Management and the Supervisory Board.
Meetings of the Advisory Board during the reporting year
focused on current topics and challenges, including ethical
aspects in connection with autonomous driving, methods
for measuring progress with regard to integrity, the current
debate on emissions, Daimler's approach to respecting human
rights, and the development of a management culture for the
digital age.
In order to discuss local challenges and promote the implemen-
tation of sustainability standards around the world, we organize
Daimler Sustainability Dialogue events in other countries as
well. Such dialogue events have been held in China, Japan, the
United States and Argentina. During the year under review,
external experts and stakeholders also attended the fifth Daimler
Sustainability Dialogue in Beijing, where they spoke to Daimler
representatives about environmental protection, economics,
human resources, and integrity and legal affairs.
In order to maintain effective relationships with our stakehold-
ers, we have defined areas of responsibility, communication
channels and dialogue formats that are valid throughout the
Daimler Group. Our Corporate Responsibility Management
department is responsible for establishing an institutionalized
and proactive dialogue with our stakeholders. This dialogue
is then coordinated by our Corporate Sustainability Board and
the Corporate Sustainability Office. The central format for
our stakeholder dialogue is the Daimler Sustainability Dialogue,
which has been held annually in Stuttgart since 2008 and
brings various stakeholder groups together with representa-
tives of our Board of Management and executive management.
Each Sustainability Dialogue event focuses on sharing ideas
in a variety of themed workshops. The Daimler representatives
obtain feedback from the external participants and work
together with the stakeholders to achieve agreed-upon targets
throughout the course of the year. They then report at the
event in the following year on the progress made in the interim.
We held our tenth Daimler Sustainability Dialogue in Stuttgart
during the year under review.
Dialogue at the Group level
We seek to engage with all stakeholders in order to share views
and experiences and discuss controversial issues in a con-
structive manner. Our goal here in every situation is to achieve
a fruitful dialogue that benefits all parties.
Stakeholder dialogue
E❘ NON-FINANCIAL REPORT | SOCIAL ISSUES
As a global automotive company, we operate in an environment that is subject to a variety of societal,
social and political influencing factors. In order to ensure we can continue operating effectively in
the future, we need to make our company's interests understandable to governments and society,
and also address the concerns of social groups. We therefore regularly share information with our
stakeholders and communicate our interests in an open and fair dialogue with governments and
political representatives.
227
E❘ NON-FINANCIAL REPORT | SOCIAL ISSUES
The Board of Management receives a Health & Safety report at
regular intervals and is, among other things, given monthly
updates about the frequency of accidents. A Group crisis unit,
in which the Board of Management is also involved, enables
Daimler to respond quickly to various incidents such as serious
accidents and pandemics.
Every organizational unit within the Daimler Group has to
approve and pursue occupational safety objectives on a regu-
lar basis in accordance with our globally valid occupational
health and safety guidelines and occupational safety strategy
and the results of internal audits and reviews. The content
and criteria of our internal occupational safety management
system correspond to the standards of BS OHSAS 18001 and
are regularly updated.
Occupational safety is firmly embedded at all levels of Daimler
and is addressed by an extensive portfolio of measures for
the prevention of work accidents, work-related illnesses and
occupational diseases. Our Center of Competence Safety cre-
ates the associated Group-wide guidelines. We have standard-
ized key occupational health and safety processes in order to
enable the creation and advancement of integrated processes
and systems. Every manager at Daimler is responsible for
ensuring that all internal guidelines and legal requirements for
occupational health and safety are complied with.
Company health promotion is aimed at motivating employees to
develop healthy lifestyles and reinforcing their sense of per-
sonal responsibility regarding health issues. This objective is
promoted worldwide with the help of campaigns, counseling
and qualification offerings, as well as therapeutic and rehabili-
tation measures. All of our plants in Germany have health cen-
ters on their premises or cooperate with health centers located
near the plants.
Our Health & Safety unit is responsible for occupational health
and safety, company health-promotion efforts, ergonomics,
counseling service and integration management. Health man-
agement and work safety are also governed by our risk man-
agement systems.
As part of Daimler AG's health management approach, we
develop and implement anticipatory solutions that range from
the job-related "Daimler GesundheitsCheck" and the ergo-
nomic design of workstations to the IT system that makes it
easier to permanently reintegrate employees suffering from
limitations imposed by their health.
The whistleblower system BPO (Business Practices Office)
enables Daimler employees and external whistleblowers to
report misconduct anywhere in the world. The BPO is available
around the clock to receive information that is sent by e-mail
or normal mail. Such information can also be provided to the
BPO by calling an external toll-free hotline or by filling out a
special form. Reports can be submitted anonymously if local
laws permit this. In Germany, reports to the BPO can also be
submitted via a neutral intermediary, who in this case is an inde-
pendent external attorney. The information provided to the
BPO enables us to learn about potential risks and specific vio-
lations and thus prevent damage to the company and its repu-
tation. A globally valid corporate policy aims to ensure a fair
and transparent approach that takes into account the principle
of proportionality for the affected parties, while also giving
protection to whistleblowers. In an effort to increase trust in
our whistleblower system and make it even better known
within the Group, we have established a continuous communi-
cation process that includes the periodic provision of informa-
tion to employees about the type and number of reported vio-
lations, as well as the staging of informational and dialogue
events at our locations.
Social Issues
Dialogue on the local and regional levels
We define stakeholders as individuals and organizations that
have legal, financial, ethical or ecological expectations regard-
ing Daimler. One of the criteria for identifying and weighting
stakeholders is the extent to which a person or group is affected
by our company's decisions or, conversely, can influence such
decisions. Our primary stakeholders are our employees, custom-
ers, creditors and shareholders, as well as our suppliers.
However, we also communicate regularly with civil groups such
as NGOs, as well as with analysts, professional associations,
trade unions, the media, scientists, politicians, municipalities and
residents and neighbors in the communities where we operate.
In connection with specific occasions and projects, we address
questions, concerns, criticism and suggestions made by stake-
holders at our locations and conduct an open-ended dialogue
with them. We also stage proactive dialogue and information
events on current topics. The results of all of our dialogue mea-
sures are incorporated into decision-making and decision-
implementation processes at the company.
E.07
We also engage in a dialogue with the stakeholders at our loca-
tions. One example here is our planned Testing and Technology
Center in Immendingen on the Danube. We sought to engage in
a dialogue with the people in the region and address their con-
cerns from the very beginning. Our Daimler Forum Immendingen
also makes it possible for local residents to obtain information
on the status of the project at any given time.
I. Compliance values
VII. Monitoring &
improvement
II. Compliance goals
VI. Communication &
training
III. Compliance
organization
V. Compliance
program
IV. Compliance risks
230
E | NON-FINANCIAL REPORT | COMPLIANCE
With regard to those cases that are closed “with merit," appro-
priate response measures are decided in line with the princi-
ples of proportionality and fairness. Such measures are only
taken if the investigation of the case in question leaves no
doubt of misconduct on the part of the accused individual(s).
Measures taken in 2017 included the issuing of verbal and writ-
ten warnings and final warnings, as well as seperation agree-
ments and extraordinary terminations. In some cases, there
were claims for damages, while in others those guilty of viola-
tions stepped down voluntarily.
Compliance on the part of our business partners. We also
require our business partners to adhere to clear compliance
requirements because we regard our business partners' integ-
rity and behavior in conformity with regulations as an indis-
pensable precondition for trusting cooperation. In the selec-
tion of our direct business partners, we therefore ensure that
they comply with the law and observe ethical principles. In
financial year 2017, we began reviewing our standardized pro-
cess for examining all of our business partners (Business Part-
ner Due Diligence Process) and implementing ongoing monitor-
ing measures to increase process effectiveness and efficiency.
Back in 2016, we published a "Compliance Awareness Module"
that can be made available to our business partners on request
and is designed to increase their awareness of the latest com-
pliance requirements. We also reserve the right to terminate
cooperation with business partners who fail to comply with our
standards. For the expectations we place on our business part-
ners, see also
daimler.com/nh/ugb.
Daimler Compliance Management System (CMS)
Our extensive training courses are based on our Integrity Code.
The integrated training program is defined on the basis of an
annual planning cycle that includes everything from a needs
analysis to the implementation of the program and a monitor-
ing process. Among other things, the program covers the top-
ics of integrity, compliance (including corruption prevention
and technical compliance), data protection and antitrust law.
Depending on the risk and the target group, we use classroom
training or digital learning techniques such as web-based train-
ing courses.
Communication and training
Every employee with e-mail access who works at a Daimler-
controlled company can participate in a web-based and target
group-focused training program consisting of several modules
- a basic module, a management module (for managers) and
expert modules on antitrust law, data protection, procurement,
sales, and non-cash rewards for employees etc. This program
is being continuously expanded in line with the requirements of
specific target groups.
With the exception of industrial employees, employees are
automatically assigned mandatory modules relevant to their
role and function. This ensures that each employee is given
exactly the modules needed for his or her line of work. These
training modules are assigned when an employee is hired, pro-
moted, or transferred to a position that involves a heightened
risk. This approach ensures that all personnel changes are
properly addressed. In general, the program must be repeated
every three years.
A new mandatory version of the training program was rolled
out at the end of the year under review. The web-based train-
ing courses are supplemented by classroom training sessions
that are conducted by central or local trainers. We provide our
internal trainer network with modular training documents and
materials for the methodical implementation of the courses.
Such materials include a guideline for trainers and explanatory
videos that can be used in a target group-specific manner in
accordance with the risks associated with the functions of the
participants. A total of approximately 96,300 employees from
various hierarchy levels attended a classroom training course
or participated in web-based training courses in 2017.
Political dialogue and representation of interests
Our integrated training program also includes target group-spe-
cific qualification measures that help staff at Group Compli-
ance and the Legal department address changes to regulations
and the legal framework. In addition, all new employees at both
departments attend a special practical seminar that offers a
comprehensive introduction to this topic.
3,327
2,589
25
70,398
78,378
6,632
9
7,192
23
966
1,046
9,034
5,767
59,133
24
2,402
24
26
65,314
99,398
11,567
560
751
23
-334
10,052
9,427
103,186
12,474
15
10
27
5,559
5,802
3,467
22
Provisions for income taxes
20
Provisions for other risks
Trade payables
Total non-current liabilities
Other liabilities
Deferred income
Deferred tax liabilities
Other financial liabilities
Financing liabilities
Provisions for other risks
Provisions for income taxes
Provisions for pensions and similar obligations
Total equity
Non-controlling interests
Equity attributable to shareholders of Daimler AG
48,746
Financing liabilities
22
Other financial liabilities
Other liabilities
1,183
1,291
57,950
64,023
2,342
1,529
40,794
47,682
11,744
11,742
3,070
3,070
The accompanying notes are an integral part of these consolidated financial statements.
Total equity and liabilities
Total current liabilities
Deferred income
47,288
-546
8,933
Income taxes paid
103
843
Dividends received from equity-method investments
2,150
-48
-4,209
-3,681
-6,848
-11,145
757
1,288
-962
-1,592
-1,272
-3,879
-1,455
-2,950
-1,652
Investments in shareholdings
-3,650
41
Acquisition of Athlon Car Lease International B.V.
366
812
Proceeds from disposals of property, plant and equipment and intangible assets
Treasury shares
-2,944
-3,414
Additions to intangible assets
-5,889
-6,744
Additions to property, plant and equipment
3,711
Cash used for/provided by operating activities
25
Other operating assets and liabilities
Receivables from financial services
F.04
Consolidated Statement of Cash Flows¹
241
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CASH FLOWS
242,988
255,605
84,457
87,105
2,438
2,672
27
3,444
3,668
26
9,542
In millions of euros
Vehicles on operating leases
2017
Profit before income taxes
Trade payables
Trade receivables
Inventories
Change in operating assets and liabilities
-46
-453
Gains (-)/losses (+) on disposals of assets
-1,064
-1,507
Other non-cash expense and income
5,478
5,676
12,574
14,301
Depreciation and amortization/impairments
2016
Other reserves
reserves
Capital reserves
-764
1
-763
1,745
25
9,587
267
9,854
-742
-3,477
-3,727
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
-35
-35
Changes in the consolidated group
-
56
56
-250
Capital increase/Issue of new shares
-247
-174
7.97
9.84
7.97
9.84
35
1 The reconciliation of Group EBIT to profit before income taxes is presented in Note 33.
Retained earnings
Basic
-73
8,526
258
339
8,784
10,864
-3,790
-3,437
9
25
10,525
-42
-42
-42
General information
The consolidated financial statements of Daimler AG and
its subsidiaries ("Daimler” or “the Group") have been prepared
in accordance with Section 315e of the German Commercial
Code (HGB) and comply with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
Daimler AG is a stock corporation organized under the laws
of the Federal Republic of Germany. The Company is entered
in the Commercial Register of the Stuttgart District Court
under No. HRB 19360 and its registered office is located at
Mercedesstraße 137, 70327 Stuttgart, Germany.
The consolidated financial statements of Daimler AG are
presented in euros (€). Unless otherwise stated, all amounts
are stated in millions of euros. All figures shown are rounded
in accordance with standard business rounding principles.
The Board of Management authorized the consolidated
financial statements for publication on February 9, 2018.
Basis of preparation
Applied IFRSS
The accounting policies applied in the consolidated financial
statements comply with the IFRSS required to be applied in the
EU as of December 31, 2017.
1. Significant accounting policies
IFRSS issued, EU endorsed and initially adopted
in the reporting period
IFRSS issued, EU endorsed and not yet adopted
In May 2014, the IASB published IFRS 15 Revenue from
Contracts with Customers. It replaces existing guidance
for revenue recognition, including IAS 18 Revenue, IAS 11
Construction Contracts and IFRIC 13 Customer Loyalty Pro-
grammes. The new standard lays down a comprehensive
framework for determining in which amount and at which date
revenue is recognized. The new standard specifies a uniform,
five-step model for revenue recognition, which is generally
to be applied to all contracts with customers. As a result
of IFRS 15, new items are introduced in the statement of financial
position: "Contract assets” and “Contract liabilities." These
items can arise through advance payment or advance delivery
at the contract level. In addition, disclosure requirements
are extended.
Application of IFRS 15 is mandatory at the latest for reporting
periods beginning on or after January 1, 2018. Early adoption
is permitted. Daimler will apply IFRS 15 for the first time for the
financial year beginning on January 1, 2018. Daimler plans for
retrospective first-time application so that the comparative
period is presented according to IFRS 15.
Effects on Daimler may occur in particular with regard to the
date of recognition of sales incentives and also with regard to
the sale of vehicles for which the Group enters into a repurchase
obligation or grants a residual-value guarantee. The latter are
currently reported as operating leases. Under IFRS 15, such
vehicle sales can necessitate the reporting of a sale with the
right of return. Additionally, the accounting of contract manu-
facturing may lead to effects. Under a contract manufacturing
agreement Daimler sells assets to a third-party manufacturer
from which Daimler buys back the manufactured products
after completion of the commissioned work. If the sale of the
assets is not accompanied by the transfer of control to the
third-party manufacturer no revenue will be recognized under
IFRS 15.
The statement of financial position will be affected in particular
by the separate presentation of "Contract liabilities."
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
245
Group-wide investigation of the effects on the consolidated
financial statements of adopting IFRS 15 has been completed.
The application of IFRS 15 is not expected to have any major
impact on the Group's profitability, liquidity and capital resources
or financial position. The preliminary opening balance for
January 1, 2017 will show an increase in equity of approximately
€0.1 billion compared to the figure disclosed as of December 31,
2016. The option that contracts concluded before January 1, 2017
need not be reassessed under IFRS 15 has been made use of.
However, the determination of the effects for the comparative
period 2017 has not yet been finalized at the time of publication
of the consolidated financial statements.
IFRSS with mandatory initial application in the EU as of
January 1, 2017 had no significant impact on the consolidated
financial statements.
Notes to the Consolidated Financial Statements
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
244
Acquisition of treasury shares
42
42
42
Issue and disposal of treasury shares
5
24
29
Changes in ownership interests in subsidiaries
-7
11
4
Other
1,208
9
64,023
1,291
65,314
Balance at December 31, 2017
The accompanying notes are an integral part of these consolidated financial statements.
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS
239
Consolidated Statement of Comprehensive
Income/Loss¹
126
123
-4
2,523
2,519
Unrealized gains/losses (pre-tax)
Derivative financial instruments
-1,068
-3
-1,068
13
14
Financial assets available-for-sale (after tax)
1
1
-3
-3
and on reclassifications
1
Reclassifications to profit and loss (pre-tax)
-36
-36
Unrealized gains/losses (pre-tax)
Equity-method investments
-2
1,142
1,140
-3
1,745
1,742
Derivative financial instruments (after tax)
1
-496
-495
1
-742
-741
and on reclassifications
Taxes on unrealized gains/losses
1,512
1,512
Taxes on unrealized gains/losses
The IASB published Amendments to IFRS 15 in April 2016.
These changes allow for transitional arrangements for modified
and fulfilled contracts, and clarify the identification of
performance obligations, principal-agent relationships, and
licenses. The application of these amendments is also not
expected to have any major impact on the Group's profitability,
liquidity and capital resources or financial position.
-621
-1
2016
2016
2016
2017
2017
2017
Non-
controlling
interests
of Daimler AG
Net profit
Group
Daimler
Non-
controlling
interests
of Daimler AG
Group
Shareholders
Daimler
In millions of euros
F.02
Shareholders
Currency translation adjustments
10,864
10,525
-1
Reclassifications to profit and loss (pre-tax)
-448
-448
1
17
18
Unrealized gains/losses (pre-tax)
Financial assets available-for-sale
-1
697
696
-68
-2,596
-2,664
258
8,526
8,784
339
-621
In July 2014, the IASB published IFRS 9 Financial Instruments,
which replaces IAS 39. IFRS 9 includes a uniform model for
classification and measurement methods (including impairments)
for financial instruments. It also includes regulations for
general hedge accounting. IFRS 9 requires additional notes
disclosure, resulting from the amendment to IFRS 7 Financial
Instruments - Disclosures.
Effects result above all from the fact that the new regulations for
recognizing impairments also include expected future losses,
whereas IAS 39 only requires the recognition of impairments that
have already occurred. Especially receivables from financial
services in the Daimler Financial Services segment are affected.
All equity instruments are to be measured at fair value, either
through profit or loss or at fair value through other comprehensive
income. If changes in carrying amounts are recognized in
other comprehensive income, they are no longer to be reclassified
to profit or loss when these instruments are sold. In addition,
some debt instruments will be measured at fair value through
profit or loss due to the new classification requirements of
IFRS 9. Possible effects can be in higher fluctuations in carrying
amounts and fluctuations in the income statement and/or
the statement of other comprehensive income.
275
39. Additional information
312
238
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF INCOME
Consolidated Statement of Income
F.01
In millions of euros
21. Share-based payment
Note
2016
Revenue
Cost of sales
4
164,330
153,261
5
-129,999
2017
312
38. Principal accountant fees
273
15. Marketable debt securities
271
35. Earnings per share
309
16. Other financial assets
271
36. Related party relationships
310
17. Other assets
272
37. Remuneration of the members of the
18. Inventories
272
Board of Management and the
19. Trade receivables
272
Supervisory Board
311
20. Equity
-121,298
309
Gross profit
31,963
Net profit
thereof profit attributable to non-controlling interests
thereof profit attributable to shareholders of Daimler AG
Earnings per share (in euros)
for profit attributable to shareholders of Daimler AG
6
-1,042
-1,298
13
Income taxes
1,498
7
-230
275
8
214
230
8
-582
502
Profit before income taxes¹
Interest expense
Interest income
Selling expenses
5
-12,965
-12,226
General administrative expenses
5
-3,809
-3,419
Research and non-capitalized development costs
5
-5,938
-5,257
Other operating income
6
2,824
2,350
Other operating expense
Profit/loss on equity-method investments, net
Other financial income/expense, net
34,331
25
34. Capital management
14. Receivables from financial services
Consolidated Statement of
of Comprehensive Income/Loss
239
Consolidated Statement of
Financial Position
240
Consolidated Statement of Cash Flows
241
238
Consolidated Statement of
242
Notes to the Consolidated Financial
Statements
244
1. Significant accounting policies
244
22. Pensions and similar obligations
276
Changes in Equity
Consolidated Statement of Income
F| Consolidated Financial Statements
237
Additional effects will result from the possibility to exclude
certain components of derivatives from designation to a hedge
relationship and to defer the changes in these components'
fair value in other comprehensive income. This change applies
for example to the fair value of options whose changes in
carrying amounts are regularly remeasured through profit and
loss during the term of the options according to IAS 39. The
newly introduced possibility to designate risk components of
non-financial hedged items will facilitate hedge accounting
for commodities.
Application of IFRS 9 is mandatory at the latest for reporting
periods beginning on or after January 1, 2018. Early adoption is
permitted. Daimler will apply IFRS 9 for the first time for the
financial year beginning on January 1, 2018. In compliance with
the transitional regulations, Daimler will not adjust the
prior-year figures and will present the accumulated transitional
effects in retained earnings. One exception to this is the
recognition through other comprehensive income of certain
undesignated components of derivatives, which is to be
applied retrospectively to the comparative figures. Examination
of the effects on the consolidated financial statements of
applying IFRS 9 with regard to classification and measurement,
impairment and hedge accounting indicates that no material
impact on the Group's profitability, liquidity and capital resources
or financial position is to be expected from the transition
to IFRS 9.
In January 2016, the IASB published IFRS 16 Leases, replacing
IAS 17 and IFRIC 4 and other interpretations. IFRS 16 abolishes
for lessees the previous classification of leasing agreements
as either operating or finance leases. Instead, IFRS 16 intro-
duces a single lessee accounting model, requiring lessees to
recognize assets for the right to use as well as leasing
liabilities for leases with a term of more than twelve months.
This means that leases that were previously not reported
in the statement of financial position will have to be reported
in the future - very similar to the current accounting of
finance leases. Lease accounting for lessors has been taken
over almost identically from IAS 17 into IFRS 16.
IFRS 16 is to be applied to annual reporting periods beginning
on or after January 1, 2019; early adoption is permitted if
IFRS 15 is already applied.
The effects on the consolidated financial statements of the
application of IFRS 16 are currently being examined. Daimler will
probably apply IFRS 16 for the first time for the financial year
beginning on January 1, 2019. Daimler currently plans, in com-
pliance with the transition regulations, not to adjust the prior-
year figures and to present the accumulated transitional effects
in retained earnings.
IFRSS issued but neither EU endorsed nor yet adopted
In May 2017, the IASB issued IFRS 17 Insurance Contracts.
IFRS 17 replaces the currently applicable IFRS 4. It establishes
more transparency and comparability with regard to the
recognition, measurement, presentation and disclosure of
insurance contracts with the insurer. The application of
IFRS 17 is mandatory for reporting periods beginning on or
after January 1, 2021. Early adoption is permitted. Daimler
currently does not expect any material impacts on the Group's
profitability, liquidity and capital resources or financial
position due to the application of IFRS 17. Early adoption is not
currently planned.
In addition, further standards and interpretations have been
approved which are not expected to have a material impact on
the consolidated financial statements.
Presentation
Presentation in the consolidated statement of financial position
differentiates between current and non-current assets and
liabilities. Assets and liabilities are classified as current if they
are expected to be realized or settled within one year or
within a longer and normal operating cycle. Deferred tax assets
and liabilities as well as assets and provisions for pensions
and similar obligations are generally presented as non-current
items.
The consolidated statement of income is presented using the
cost-of-sales method.
12,574
"
WE HAVE A SOUND
FINANCIAL BASIS!
66
The Consolidated Financial Statements presented as follows have
been prepared in accordance with the International Financial
Reporting Standards (IFRS) as adopted by the European Union (EU).
They also comply with additional requirements set forth in
Section 315e (paragraph 1) of the German Commercial Code (HGB).
S.MB 4713
F | CONSOLIDATED FINANCIAL STATEMENTS | CONTENTS
2. Accounting estimates and management judgments 255
3. Consolidated Group
270
23. Provisions for other risks
256
261
30. Financial guarantees, contingent liabilities
10. Intangible assets
264
and other financial obligations
287
11. Property, plant and equipment
265
9. Income taxes
31. Financial instruments
12. Equipment on operating leases
266
32. Management of financial risks
298
13. Equity-method investments
267
33. Segment reporting
305
290
286
29. Legal proceedings
260
24. Financing liabilities
283
4. Revenue
258
25. Other financial liabilities
284
5. Functional costs
258
26. Deferred income
284
6. Other operating income and expense
260
27. Other liabilities
284
7. Other financial income/expense, net
260
28. Consolidated statement of cash flows
285
8. Interest income and interest expense
282
25
Diluted
-12
Proceeds from disposals of shareholdings
418
79
Acquisition of marketable debt securities
-6,729
-7,724
Proceeds from sales of marketable debt securities
Other
748
Cash used for investing activities
5,394
36
-14,666
Change in short-term financing liabilities
751
503
Additions to long-term financing liabilities
Repayment of long-term financing liabilities
Dividend paid to shareholders of Daimler AG
7,266
-22
-9,518
Dividends paid to non-controlling interests
Actuarial gains/losses from pensions and
-127
9,854
Total comprehensive income
-3
-487
-490
-1,246
-1,246
-1,246
similar obligations (after tax)
-1,246
-72
-938
-1,010
Other comprehensive income/loss, net of taxes
-125
-127
Items that will not be reclassified to profit/loss
-125
نہ نہ نہ
Proceeds from the issue of share capital
Acquisition of treasury shares
Acquisition of non-controlling interests in subsidiaries
Cash and cash equivalents at beginning of period
10,981
9,936
Cash and cash equivalents at end of period
12,072
10,981
1 See note 28 for other information on consolidated statements of cash flows.
-12
1,045
The accompanying notes are an integral part of these consolidated financial statements.
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Statement of Changes in Equity1
F.05
In millions of euros
Share
Capital
capital
14,301
242
1,091
Net increase in cash and cash equivalents
-9
Cash provided by financing activities
63,116
50,723
-47,073
-35,463
-3,477
-3,477
-250
-201
114
65
-42
-38
-10
-103
13,129
12,009
Effect of foreign exchange rate changes on cash and cash equivalents
-868
9,587
267
8,294
8,039
37,626
39,374
14
Receivables from financial services
10,614
11,990
19
Trade receivables
Cash and cash equivalents
25,384
18
Inventories
140,936
148,870
Total non-current assets
667
1,145
17
25,686
12,072
10,981
Marketable debt securities
Share capital
Equity and liabilities
242,988
255,605
Total assets
102,052
106,735
4,962
4,960
17
2,837
3,580
16
9,648
9,073
15
Total current assets
Other assets
Other financial assets
3,870
Retained
earnings²
2,853
Other assets
11
Property, plant and equipment
12,098
13,735
10
Intangible assets
Assets
2016
27,981
At December 31,
2017
In millions of euros
F.03
Consolidated Statement of Financial Position
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
240
The accompanying notes are an integral part of these consolidated financial statements.
1 See Note 20 for other information on comprehensive income/loss.
255
Note
26,381
Equipment on operating leases
12
Deferred tax assets
2,899
3,221
16
Other financial assets
1,100
990
15
Marketable debt securities
42,881
46,413
14
Receivables from financial services
4,098
4,818
13
Equity-method investments
46,942
47,714
9
Currency
translation
-1,146
assets
available
for sale
may be reclassified
items that
Other reserves
The accompanying notes are an integral part of these consolidated financial statements.
2 Retained earnings also include items that will not be reclassified to the consolidated income statement.
Actuarial losses from pensions and similar obligations amount to €7,562 million net of tax in 2017 (2016: €7,437 million net of tax).
66
246
47,682
in profit/loss
11,742
5
3,070
1 See Note 20 for other information on changes in equity.
Balance at December 31, 2017
Other
Changes in ownership interests in subsidiaries
Issue and disposal of treasury shares
Acquisition of treasury shares
-7
Share of
investments
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 243
1,638
Balance at January 1, 2016
Net profit
8,784
258
8,526
1,063
8,526
53,561
-4
-1,679
In millions of euros
Total
equity
Non-
controlling
interests
Equity
attributable to
shareholders
of Daimler AG
Treasury
share
equity method
accounted
for using the
financial
instruments
Derivative
Capital increase/Issue of new shares
-12
13
10,400
-3,477
-35
Balance at December 31, 2016
-3
Other
-170
Changes in ownership interests in subsidiaries
Issue and disposal of treasury shares
Acquisition of treasury shares
Capital increase/Issue of new shares
3,070
-3,477
697
7,280
1
748
-1,069
697
-1,994
Financial
-1,068
11,744
40,794
2,842
Changes in the consolidated group
Dividends
Total comprehensive income/loss
-3
-19
Deferred taxes on other comprehensive income
16
-2,596
-106
Other comprehensive income/loss before taxes
10,525
Net profit
53
2,842
40,794
11,744
3,070
Balance at January 1, 2017
53
-2,596
-740
54,624
-744
Actuarial gains/losses from pensions and
similar obligations (pre-tax)
-108
-106
-2
-1,994
-1,994
Taxes on actuarial gains/losses from pensions
and similar obligations
-19
-19
748
2,487
Net profit
-4
339
10,525
Balance at January 1, 2017
59,133
-3
1,183
759
-70
Balance at January 1, 2016
Net profit
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
3,070
11,917
36,991
2,145
1,121
Equity-method investments (after tax)
25
25
-12
-12
Items that may be reclassified to profit/loss
-883
-813
756
57,950
10,864
-537
-38
-38
-38
35
-16
35
-3,678
-201
38
-3,477
255
8,039
-12
1,142
254
1
253
-496
8,294
38
38
35
Balance at December 31, 2016
Changes in ownership interests in subsidiaries
Issue and disposal of treasury shares
Acquisition of treasury shares
Capital increase/Issue of new shares
Dividends
Deferred taxes on other comprehensive income
Total comprehensive income/loss
-170
59,133
Other comprehensive income/loss before taxes
57,950
-16
-537
Other
-7
-4
-3
-135
1,183
Provisions for other risks
A provision is recognized when a liability to third parties
has been incurred, an outflow of resources is probable and
the amount of the obligation can be reasonably estimated.
The amount recognized as a provision represents the best
estimate of the obligation at the reporting date. Provisions
with an original maturity of more than one year are discounted
to the present value of the expenditures expected to settle
the obligation at the end of the reporting period. If the criteria
of the regulations on recognition and measurement of provi-
sions are not fulfilled and the possibility of a cash outflow upon
settlement is not unlikely, the item is to be presented as a
contingent liability, insofar as it is adequately measurable.
Provisions and contingent liabilities are regularly reviewed
and adjusted as further information becomes available or
circumstances change.
A provision for expected warranty costs is recognized when
a product is sold or when a new warranty program is initiated.
Estimates for accrued warranty costs are primarily based
on historical experience.
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed by
a segment or business unit or the manner in which business is
conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the
termination of agreements with suppliers and dealers.
Restructuring provisions are recognized when the Group
has a detailed formal plan that has either commenced
implementation or been announced.
Share-based payment
Share-based payment comprises cash-settled liability awards.
When objective evidence of impairment or impairment reversal
is present, estimates and assessments also have to be made
to determine the recoverable amount of an equity method
financial investment. The determination of the recoverable
amount is based on assumptions regarding future business
developments for the determination of the expected future
cash flows of that financial investment. See Note 13 for the
presentation of carrying amounts and fair values of equity-
method financial investments in listed companies.
Presentation in the consolidated statement of cash flows
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash provided by/used for investing activities.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 255
2. Accounting estimates and management
judgements
In the consolidated financial statements, to a certain degree,
estimates and management judgements have to be made
which can affect the amounts and reporting of assets and
liabilities, the reporting of contingent assets and liabilities on
the balance sheet date, and the amounts of income and
expense reported for the period. The major items affected
by such estimates and management judgements are described
as follows. Actual amounts may differ from the estimates.
Changes in the estimates and management judgements can
have a material impact on the consolidated financial statements.
Recoverable amounts of cash-generating units and
equity-method investments
In the context of impairment tests for non-financial assets,
estimates have to be made to determine the recoverable
amounts of cash-generating units. Assumptions have to be
made in particular with regard to future cash inflows and
outflows for the planning period and the following periods.
The estimates include assumptions regarding future market
share and the growth of the respective markets as well as
regarding the products' profitability. On the basis of the impair-
ment tests carried out in 2017, the recoverable amounts are
larger than the net assets of the Group's cash-generating units,
in most cases substantially larger.
Gains or losses on the curtailment or settlement of a defined
benefit plan are recognized in profit or loss when the curtail-
ment or settlement occurs.
Liability awards are measured at fair value at each balance
sheet date until settlement and are classified as provisions.
The profit or loss of the period equals the addition to and/or
the reversal of the provision during the reporting period and
the dividend equivalent paid during the period, and is included
in the functional costs.
The discount factors used to calculate the present values
of defined benefit pension obligations are to be determined
- with maturities and currencies matching the pension
payments by reference to market yields at the end of the
reporting period on high-quality corporate bonds in the
respective markets. For very long maturities, there are no
high-quality corporate bonds available as a benchmark.
The respective discount factors are estimated by extrapolating
current market rates along the yield curve.
If derivative financial instruments do not or no longer qualify
for hedge accounting because the qualifying criteria for hedge
accounting are not or are no longer met, the derivative
financial instruments are classified as held for trading and
are measured at fair value through profit or loss.
The balance of defined benefit plans for pensions and other
post-employment benefit obligations and plan assets (net
pension obligation or net pension assets) accrues interest
at the discount rate used as a basis for the measurement
of the gross pension obligation. The resulting net interest
expense or income is recognized in profit and loss under
interest expense or interest income in the consolidated state-
ment of income. The other expenses resulting from pension
obligations and other post-employment benefit obligations
(medical care), which mainly result from entitlements acquired
during the year under review, are taken into consideration in
the functional costs in the consolidated statement of income.
Average exchange rates
64.3000
7.3202
123.4000
0.8562
1.0541
7.8044 69.3920
0.8872 135.0100
during the respective period
1.1993
Average exchange
1€ =
RUB
CNY
1 € =
JPY
1 € =
GBP
1 € =
1 € =
1€ =
rate on December 31
First quarter
1.0648
Second quarter
Other financial income/expense, net includes all income
and expense from financial transactions which are not included
in interest income and/or interest expense, and for Daimler
Financial Services are not included in revenue and/or cost of
sales. For example, expense from the compounding of interest
on provisions for other risks is recorded in this line item.
This item includes all income and expenses in connection with
investments accounted for using the equity method. In addition
to the prorated profits and losses from financial investments,
it also includes profits and losses resulting from the sale of equity
interests or the remeasurement of equity interests following
a loss of significant influence. Daimler's share of dilution gains
and losses occurring if the Group or other owners do not
participate in capital increases of companies in which shares
are held and accounted for using the equity method are
also included in profit/loss from equity-method investments.
This item also includes losses on the impairment of an
investment's carrying amount and/or gains on the reversal
of such impairments.
Profit/loss from equity-method investments
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
248
7.2101 82.4506
7.3788 74.3348
7.4431 72.1154
7.3691 67.9975
0.7704 127.0000
0.7868 121.9500
0.8497 114.2900
0.8691 117.9200
1.0789
7.7899 68.8150
0.8875 132.9100
1.1776
Fourth quarter
1.1020
1.1292
1.1166
7.8340 69.2851
7.3353 62.5218
7.5597 63.1033
0.8601 121.0100
0.8611 122.5800
0.8978 130.3500
1.1746
Third quarter
1.1021
1 € =
1€ =
1 € =
USD
The exchange rates of the US dollar, the British pound, the
Japanese yen, the Chinese renminbi and the Russian ruble -
the most significant foreign currencies for Daimler - were as
shown in table 71 F.06.
Assets and liabilities of foreign companies for which the functional
currency is not the euro are translated into euros using
period-end exchange rates. The translation adjustments are
presented in other comprehensive income/loss. The
components of equity are translated using historical rates.
The statements of income and cash flows are translated
into euros using average exchange rates during the respective
periods.
Foreign currency translation
Transactions in foreign currency are translated at the relevant
foreign exchange rates prevailing at the transaction date.
In subsequent periods, assets and liabilities denominated in
foreign currency are translated using period-end exchange
rates; gains and losses from this measurement are recognized
in profit and loss (except for gains and losses resulting from
the translation of available-for-sale equity instruments, which
are recognized in other comprehensive income/loss).
Subsidiaries measured at amortized cost
Subsidiaries, associated companies, joint ventures and joint
operations whose business is non-active or of low volume and
that individually and in sum are not material for the Group
and the fair presentation of financial position, liquidity and
capital resources, and profitability are generally measured
at amortized cost in the consolidated financial statements.
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group's proportionate share of the
results of operations is included in Daimler's consolidated
financial statements with a one to three-month time lag.
Significant events or transactions are accounted for without
a time lag, however (see also Note 13).
For entities over which Daimler has joint control together with
a partner (joint arrangements), it is necessary to differentiate
whether a joint operation or a joint venture exists. In a joint ven-
ture, the parties that have joint control of the arrangement
have rights to the net assets of the arrangement. For joint ven-
tures, the equity method has to be applied. A joint operation
exists when the jointly controlling parties have direct rights to
the assets and obligations for the liabilities. In this case,
the prorated assets and liabilities and the prorated income and
expenses are generally to be recognized (proportionate
consolidation). Joint operations that have no significant impact
on the consolidated financial statements are generally
accounted for using the equity method.
An associated company is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the
investee. Associated companies are generally accounted for
using the equity method.
Investments in associated companies, joint ventures or
joint operations
owners.
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler's percentage ownership without loss of
control are accounted for as an equity transaction between
Business combinations are accounted for using the purchase
method.
The financial statements of consolidated subsidiaries which are
included in the consolidated financial statements are generally
prepared as of the reporting date of the consolidated financial
statements. The financial statements of Daimler AG and its
subsidiaries included in the consolidated financial statements
are prepared using uniform recognition and measurement
principles. All intercompany assets and liabilities, equity, income
and expenses as well as cash flows from transactions
between consolidated entities are entirely eliminated in the
course of the consolidation process.
Structured entities which are controlled also have to be consoli-
dated. Accordingly, the assets and liabilities remain in the
consolidated statement of financial position. Structured entities
are entities which have been designed so that voting or similar
rights are not relevant in deciding who controls the entity. This
is the case for example if voting rights relate to administrative
tasks only and the relevant activities are directed by means of
contractual arrangements.
The consolidated financial statements include the financial
statements of Daimler AG and the financial statements of all
subsidiaries, including structured entities which are directly
or indirectly controlled by Daimler AG. Control exists if the parent
company has the power of decision over a subsidiary based
on voting rights or other rights, if it participates in positive and
negative variable returns from a subsidiary, and if it can affect
these returns by its power of decision.
Principles of consolidation
The consolidated financial statements have been prepared on
the historical-cost basis with the exception of certain items
such as available-for-sale financial assets, derivative financial
instruments, hedged items, and pensions and similar obliga-
tions. The measurement models applied to those exceptions
are described below.
Measurement
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
246
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Furthermore, income and expenses from equity interests are
included in other financial income/expense, net, if such
income or expenses are not presented under equity-method
investments.
247
Revenue recognition
RUB
CNY
JPY
GBP
USD
1€ =
2016
2017
Exchange rates
F.06
Government grants related to assets are deducted from
the carrying amount of the asset and are recognized in
earnings over the life of a depreciable asset as a reduced
depreciation expense. Government grants which compensate
the Group for expenses are recognized as other operating
income in the same period as the expenses themselves.
Government grants
Borrowing costs are expensed as incurred unless they
are directly attributable to the acquisition, construction
or production of a qualifying asset and are therefore
part of the cost of that asset. Depreciation of the capitalized
borrowing costs is presented within cost of sales.
Borrowing costs
Research and non-capitalized development costs
Expenditure for research and development that does not meet
the conditions for capitalization according to IAS 38 Intangible
Assets is expensed as incurred.
For multiple-element arrangements, such as when vehicles are
sold with free or reduced-in-price maintenance programs or
with free online services, the Group allocates revenue to the
various elements based on their estimated fair values.
The Group offers extended, separately priced extended
warranties for certain products. Revenue from these contracts
is deferred and recognized over the contract period in pro-
portion to the costs expected to be incurred based on historical
information. In circumstances in which there is insufficient
historical information, income from extended warranty contracts
is recognized on a straight-line basis. A loss on these
contracts is recognized in the current period if the sum of the
expected costs for services under the contract exceeds
unearned revenue.
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services business
at Daimler Financial Services. The revenue from the rental
and leasing business results from operating leases and is recog-
nized on a straight-line basis over the periods of the contracts.
In addition, sales revenue is generated at the end of lease
contracts from the subsequent sale of the vehicles. Revenue
from receivables from financial services is recognized using
the effective interest method. When loans are issued below
market rates, related receivables are recognized at present
value and revenue is reduced for the interest incentive granted.
If subsidized leasing fees are agreed upon in connection with
finance leases, revenue from the sale of a vehicle is reduced by
the amount of the interest incentive granted.
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competition
and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates.
Revenue from sales of vehicles, service parts and other related
products is recognized when the risks and rewards of owner-
ship of the goods are transferred to the customer, the amount
of revenue can be estimated reliably and collectability is rea-
sonably assured. Revenue is recognized net of sales reductions
such as cash discounts and sales incentives granted.
Accounting policies
-
Interest income and interest expense
For the segment Daimler Financial Services interest income
and expense and gains or losses from derivative financial
instruments from financial services business are disclosed
under revenue and cost of sales respectively.
After initial measurement, available-for-sale financial assets are
measured at fair value, with unrealized gains or losses being
recognized in other comprehensive income/loss. If objective
evidence of impairment exists or if changes occur in the fair
value of a debt instrument resulting from currency fluctuations,
these changes are recognized in profit or loss. Upon disposal
of financial assets, the accumulated gains and losses recognized
in other comprehensive income/loss resulting from measure-
ment at fair value are recognized in profit or loss. If a reliable
estimate cannot be made of the fair value of an unquoted
equity instrument, such as an investment in a German limited
liability company, this instrument is measured at cost (less
any impairment losses). Interest earned on available-for-sale
financial assets is generally reported as interest income using
the effective interest method. Dividends are recognized in profit
or loss when the right of payment has been established.
Available-for-sale financial assets. Available-for-sale financial
assets are non-derivative financial assets that are designated
as available for sale or that are not classified in any of the
preceding categories. This category includes equity instruments
and debt instruments such as government bonds, corporate
bonds and commercial paper.
Loans and receivables. Loans and receivables are non-derivative
financial assets with fixed or determinable payments that
are not quoted in an active market, such as receivables from
financial services or trade receivables. After initial recognition,
loans and receivables are subsequently carried at amortized
cost using the effective interest method less any impairment
losses. Gains and losses are recognized in the statement of
income when the loans and receivables are impaired or derec-
ognized. Interest effects on the application of the effective
interest method are also recognized in profit or loss.
Derivatives, including embedded derivatives separated from
the host contract, which are not classified as hedging instru-
ments in hedge accounting, as well as shares and marketable
debt securities acquired for the purpose of selling in the near
term are classified as held for trading. Gains or losses on
these financial assets are recognized in profit or loss.
Financial assets at fair value through profit or loss. Financial
assets at fair value through profit or loss include those finan-
cial assets designated as held for trading.
Financial assets primarily comprise receivables from financial
services, trade receivables, receivables from banks, cash on
hand, derivative financial assets and marketable securities and
financial investments.
Financial assets
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash and cash equivalents. Cash and cash equivalents consist
primarily of cash on hand, checks and demand deposits at
banks, as well as debt instruments and certificates of deposits
with a remaining term when acquired of up to three months,
which are not subject to any material value fluctuations. Cash
and cash equivalents correspond with the classification in
the consolidated statement of cash flows.
252
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument
of another entity. Financial instruments in the form of financial
assets and financial liabilities are generally presented sepa-
rately. Financial instruments are recognized as soon as Daimler
becomes a party to the contractual provisions of the financial
instrument. In the case of purchases or sales of financial assets
through the regular market, Daimler uses the transaction date
as the date of initial recognition or derecognition.
Financial instruments
Inventories are measured at the lower of acquisition or manu-
facturing cost and net realizable value. The net realizable
value is the estimated selling price less estimated costs of
completion and estimated costs to sell. The acquisition or
manufacturing costs of inventories are generally based on the
specific identification method and include costs incurred in
acquiring the inventories and bringing them to their existing
location and condition. Costs for large numbers of inventories
that are interchangeable are allocated under the average cost
formula. In the case of manufactured inventories and work in
progress, acquisition or manufacturing cost also includes
production overheads based on normal capacity.
Inventories
Non-current assets held for sale and disposal groups
The Group classifies non-current assets or disposal groups as
held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is reversed.
This reversal is restricted to the impairment loss previously
recognized for the assets or disposal group concerned. The Group
generally discloses these assets or disposal groups separately
in the consolidated statement of financial position.
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist
or may be reversed. If this is the case, Daimler records a
partial or entire reversal of the impairment; the carrying amount
is thereby increased to the recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of depreciation)
had no impairment loss been recognized in prior years.
Value in use is measured by discounting expected future cash
flows from the continuing use of the cash-generating units
using a risk-adjusted interest rate. Future cash flows are deter-
mined on the basis of the long-term planning, which is
approved by the Management and which is valid at the date
when the impairment test is conducted. This planning is
based on expectations regarding future market share, the
general development of respective markets as well as the
products' profitability. The multi-year planning comprises a
planning horizon until 2025 and therefore mainly covers
the product life cycles of our automotive business. The rounded
risk-adjusted interest rates used to discount cash flows, which
are calculated for each cash-generating unit, are unchanged
from the previous year at 8% after taxes for the cash-gener-
ating units of the automotive business. For the cash-generating
unit Daimler Financial Services Classic, a risk-adjusted interest
rate of 9% after taxes is applied (unchanged from the previous
year); for Daimler Financial Services Mobility, the risk-adjusted
interest rate is 15% after taxes (2016: 14%). Whereas the discount
rate for the cash-generating unit Daimler Financial Services
Classic represents the cost of equity, the risk-adjusted interest
rate for the other cash-generating units is based on the
weighted average cost of capital (WACC). These are calculated
based on the capital asset pricing model (CAPM) taking into
account current market expectations. In calculating the risk-
adjusted interest rate for impairment test purposes, specific
peer group information is used for beta factors, capital-structure
data and cost of debt. Periods not covered by the forecast are
taken into account by recognizing a residual value (terminal value),
which generally does not consider any growth rates. In addi-
tion, several sensitivity analyses are conducted. These show
that generally even in the case of more unfavorable premises
for main influencing factors with respect to the original planning,
no need for impairment exists. If value in use is lower than the
carrying amount, fair value less costs of disposal is additionally
calculated to determine the recoverable amount.
251
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IAS 39 Financial Instruments: Recognition
and Measurement. Transaction costs directly attributable to
acquisition or issuance are considered by determining the
carrying amount if the financial instruments are not measured
at fair value through profit or loss.
Impairment of financial assets
At each reporting date, the carrying amounts of financial
assets other than those to be measured at fair value through
profit or loss are assessed to determine whether there is
objective evidence of impairment. Objective evidence may
exist for example if a debtor is facing serious financial
difficulties or there is a substantial change in the debtor's
technological, economic, legal or market environment. For
quoted equity instruments, a significant or prolonged decline
in fair value is additional objective evidence of possible
impairment. Daimler has defined criteria for the significance
and duration of a decline in fair value. A decline in fair value
is deemed significant if it exceeds 20% of the carrying amount
of the investment; a decline is deemed prolonged if the
carrying amount exceeds the fair value for a period longer
than nine months.
Loans and receivables. If there are objective indications that
the value of a loan or receivable has to be impaired, the
amount of the impairment loss is measured as the difference
between the carrying amount of the asset and the present
value of expected future cash flows (excluding expected future
credit losses that have not yet been incurred), discounted at
the original effective interest rate of the financial asset. The
amount of the impairment loss is recognized in profit or loss.
The measurement of defined benefit plans for pensions and
other post-employment benefit obligations (medical care)
in accordance with IAS 19 Employee Benefits is based on the
projected unit credit method. Plan assets invested to cover
defined benefit pension obligations and other post-employment
benefit obligations (medical care) are measured at fair value
and offset against the corresponding obligations. For the valuation
of defined benefit plans, differences between actuarial
assumptions used and actual developments as well as changes
in actuarial assumptions result in actuarial gains and losses,
which have a direct impact on the consolidated statement of
financial position or on the consolidated statement of com-
prehensive income/loss.
Pensions and similar obligations
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
254
Changes in the fair value of derivative financial instruments are
recognized periodically in either profit or loss or other com-
prehensive income/loss, depending on whether the derivative
is designated as a hedge of changes in fair value or cash flows.
For fair value hedges, changes in the fair value of the hedged item
and the derivative are recognized in profit or loss. For cash
flow hedges, fair value changes in the effective portion of the
hedging instrument after taxes are recognized in other
comprehensive income/loss. Amounts recognized in other
comprehensive income/loss are reclassified to the state-
ment of income when the hedged underlying transaction affects
the statement of income. The ineffective portions of fair value
changes are recognized in profit or loss.
If the requirements for hedge accounting set out in IAS 39 are
met, Daimler designates and documents the hedge relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the fair
value of a recognized asset or liability or an unrecognized firm
commitment is hedged. In a cash flow hedge, the variability
of cash flows to be received or paid from expected transactions
related to a recognized asset or liability or a highly probable
forecast transaction are hedged. The documentation of the
hedging relationship includes the objectives and strategy of
risk management, the type of hedging relationship, the nature
of the risk being hedged, the identification of the hedging
instrument and the hedged item, as well as a description of
the method used to assess hedge effectiveness. Hedging
transactions are expected to be highly effective in achieving
offsetting risks from changes in fair value or cash flows and
are regularly assessed to determine that they have actually been
highly effective throughout the financial reporting periods for
which they are designated.
Derivative financial instruments are measured at fair value upon
initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive or
negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option pricing models.
Derivatives are presented as assets if their fair value is positive
and as liabilities if the fair value is negative.
Embedded derivatives are separated from the host contract,
which is not measured at fair value through profit or loss,
if an analysis shows that the economic characteristics and risks
of embedded derivatives are not closely related to those of
the host contract.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its commercial business
or refinancing activities. These are mainly interest rate risks,
currency risks and commodity price risks.
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives (including embedded
derivatives separated from the host contract) which are not
used as hedging instruments in hedge accounting, are classified
as held for trading. Gains or losses on liabilities held for
trading are recognized in profit or loss.
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured
at amortized cost using the effective interest method.
Financial liabilities primarily include trade payables,
liabilities to banks, bonds, derivative financial liabilities
and other liabilities.
Financial liabilities
Financial assets and financial liabilities are offset and the net
amount is presented in the consolidated statement of financial
position provided that an enforceable right currently exists
to offset the amounts involved, and there is an intention either
to carry out the offsetting on a net basis or to settle a liability
when the related asset is sold.
Offsetting financial instruments
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 253
Available-for-sale financial assets. If an available-for-sale financial
asset is impaired, the difference between its cost (net of any
principal payment and amortization) and its current fair value
(less any impairment loss previously recognized in the
statement of income) is reclassified from other comprehensive
income/loss to the statement of income. Reversals with
respect to equity instruments classified as available for sale
are recognized in other comprehensive income/loss.
Reversals of impairment losses on debt instruments are recog-
nized through the statement of income if the increase in fair
value of the instrument can be objectively attributed to an event
occurring after the impairment losses were recognized in the
consolidated statement of income.
In most cases, an impairment loss on loans and receivables
(e.g. receivables from financial services including finance lease
receivables and trade receivables) is recorded using allowance
accounts. The decision to account for credit risks using an
allowance account or by directly reducing the receivable depends
on the estimated probability of the loss of receivables.
If, in a subsequent reporting period, the amount of the impairment
loss decreases and the decrease can be attributed objectively
to an event occurring after the impairment was recognized, the
impairment loss recorded in prior periods is reversed and
recognized in profit or loss.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
The recoverable amount is the higher of fair value less costs of
disposal and value in use. For cash-generating units, Daimler
in a first step determines the respective recoverable amount
as value in use and compares it with the respective carrying
amount (including goodwill). The cash-generating units are
generally defined as the reporting segments. At Daimler
Financial Services, impairment tests are carried out below the
segment level. There is a differentiation between the two
cash-generating units Daimler Financial Services Classic
(typical financial services business) and Daimler Financial
Services Mobility (innovative mobility services).
Impairment of non-current non-financial assets
Daimler assesses at each reporting date whether there is an
indication that an asset may be impaired or whether there is
an indication that a previously recognized impairment loss may
be reversed. If such indication exists, Daimler estimates the
recoverable amount of the asset. The recoverable amount is
determined for each individual asset unless the asset gener-
ates cash inflows that are not largely independent of those from
other assets or groups of assets (cash-generating units). In
addition, goodwill and other intangible assets with indefinite
useful lives are tested annually for impairment; this takes
place at the level of the cash-generating units. If the carrying
amount of an asset or of a cash-generating unit exceeds the
recoverable amount, an impairment loss is recognized for the
difference.
Gains or losses (to be eliminated) from transactions with com-
panies accounted for using the equity method are recognized
through profit and loss with corresponding adjustments of the
investments' carrying amounts.
Property, plant and equipment are measured at acquisition
or manufacturing costs less accumulated depreciation.
If necessary, accumulated impairment losses are recognized.
Property, plant and equipment
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree's identifiable assets, which are measured
at fair value.
For acquisitions, goodwill represents the excess of the con-
sideration transferred over the fair values assigned to the iden-
tifiable assets proportionally acquired and liabilities assumed.
Goodwill is accounted for at the subsidiaries in the functional
currency of those subsidiaries.
Goodwill
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS 38 are
met. Subsequent to initial recognition, the asset is carried at
cost less accumulated amortization and accumulated
impairment losses. Capitalized development costs include all
direct costs and allocable overheads and are amortized
on a straight-line basis over the expected product life cycle
(a maximum of ten years). Amortization of capitalized
development costs is an element of manufacturing costs and
is allocated to those vehicles and components by which
they were generated and is included in cost of sales when the
inventory (vehicles) is sold.
Intangible assets other than development costs with finite useful
lives are generally amortized on a straight-line basis over
their useful lives (three to ten years). The amortization period
for intangible assets with finite useful lives is reviewed at
least at each year-end. Changes in expected useful lives are
treated as changes in accounting estimates. The amortization
expense on intangible assets with finite useful lives is recorded
in functional costs.
Intangible assets with indefinite useful lives are reviewed annually
to determine whether indefinite-life assessment continues to
be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
Intangible assets are measured at acquisition or manufacturing
cost less accumulated amortization. If necessary, accumulated
impairment losses are recognized.
Intangible assets
Basic earnings per share are calculated by dividing profit
attributable to shareholders of Daimler AG by the weighted
average number of shares outstanding. As nothing occurred
in the years 2017 and 2016 that resulted in any dilution, diluted
earnings per share were the same as basic earnings per share
in those years.
Earnings per share
249
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets or liabilities are calculated on the basis
of temporary differences between the tax basis and the
financial reporting of assets and liabilities including differences
from consolidation, on unused tax loss carryforwards and
unused tax credits. Measurement is based on the tax rates
expected to be effective in the period in which an asset is
recognized or a liability is settled. For this purpose, the tax
rates and tax rules are used which have been enacted at the
reporting date or are soon to be enacted. Daimler recognizes
a valuation allowance for deferred tax assets when it is unlikely
that a corresponding amount of future taxable profit will be
available against which the deductible temporary differences,
tax loss carryforwards and tax credits can be utilized. Deferred
tax liabilities for taxable temporary differences in connection
with investments in subsidiaries, branches, associates and
interests in joint arrangements are not recognized if the Group
is able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Changes in deferred tax assets and liabilities are generally
recognized through profit and loss in deferred taxes in the
consolidated statement of income, except for changes recognized
in other comprehensive income/loss or directly in equity.
Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period.
In addition, current income taxes presented for the period
include adjustments for uncertain tax payments or tax
refunds for periods not yet finally assessed, including interest
expense and penalties on the underpayment of taxes.
For the case that amounts declared as expenses in the tax
returns might not be recognized (uncertain tax positions),
a provision for income taxes is recognized. The amount is based
on the best possible assessment of the expected tax payment.
Tax refund claims from uncertain tax positions are recognized
when it is predominantly likely and thus reasonably expected
that they can be realized. Only in the case of tax loss carry-
forwards or unused tax credits, no provision for taxes or tax claim
is recognized for these uncertain tax positions. Instead, the
deferred tax assets for the unused tax loss carryforwards or tax
credits are to be adjusted.
Income taxes are comprised of current income taxes and
deferred taxes.
Income taxes
The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisition
or manufacturing costs include the estimated costs, if any,
of dismantling and removing the item and restoring the site.
Interest income and interest expense include interest income
from investments in securities, cash and cash equivalents as
well as interest expense from liabilities. Furthermore, interest
and changes in fair values related to interest rate hedging
activities as well as income and expense resulting from the
allocation of premiums and discounts are included. The inter-
est components of defined benefit pension obligations and
other similar obligations as well as of the plan assets available
to cover these obligations are also presented in this line item.
Property, plant and equipment are depreciated over the useful
lives as shown in table 7 F.07.
Leasing includes all arrangements that transfer the right to use
a specified asset for a stated period of time in return for a
payment, even if the right to use such asset is not explicitly
described in an arrangement. The Group is a lessee of
property, plant and equipment and a lessor of its products.
It is evaluated on the basis of the risks and rewards of a
leased asset whether the ownership of the leased asset is
attributed to the lessee (finance lease) or to the lessor
(operating lease).
Daimler reviews on each reporting date whether there is any
objective indication of impairments or impairment reversals
of equity-method investments. If such indications exist, the Group
determines the impairment loss or reversal to be recognized.
If the carrying amount exceeds the recoverable amount of an
investment, the carrying amount is written down to the
recoverable amount. The recoverable amount is the greater of
fair value less costs to sell and value in use. An impairment
reversal is carried out if there is objective evidence for an impair-
ment reversal. If such an assessment is made, the recoverable
amount is remeasured. The amount of an impairment reversal
is limited to the amount by which an asset has been impaired.
On the date of acquisition, a positive difference between cost
of acquisition and Daimler's share of the fair values of the
identifiable assets and liabilities of the associated company
or joint venture is determined and recognized as investor
level goodwill. The goodwill is included in the carrying amount
of the equity-method investment. With step acquisition of
an equity interest by which significant influence or joint control
is achieved for the first time, the investment is generally
accounted for on the basis of IFRS 3 Business Combinations.
This means that the previously held equity interest is
remeasured on the date of acquisition; any resulting gain or
loss is recognized through profit and loss. If an equity
interest in an existing associated company is increased without
change in significant influence, goodwill is determined only
for the additionally acquired interest; the previous investment
is not remeasured at fair value.
Equity-method investments
In the case of finance leases, the Group presents the receivables
under receivables from financial services in an amount
corresponding to the net investment of the lease agreements.
The net investment of a lease agreement is the gross invest-
ment (future minimum lease payments and non-guaranteed
residual value) discounted at the rate upon which the lease
agreement is based.
Operating leases also relate to vehicles, primarily Group
products that Daimler Financial Services acquires from
non-Group dealers or other third parties and leases to end
customers. These vehicles are presented at (amortized)
cost of acquisition under leased equipment in the Daimler
Financial Services segment. If these vehicles are Group
products and are subsidized, the subsidies are deducted
from the cost of acquisition. After revenue is received
from the sale to independent dealers, these Group products
generate revenue from lease payments and subsequent
resale on the basis of the separate leasing contracts. The
revenue received from the sale of Group products to the
dealers is estimated by the Group as being of the magnitude
of the respective addition to leased equipment at Daimler
Financial Services. In 2017, additions to leased equipment from
these vehicles at Daimler Financial Services amounted to
approximately €13 billion (2016: approximately €13 billion).
Operating leases relate to vehicles that the Group produces
itself and leases to third parties or to vehicles that the Group
sells and grants a buy-back or residual-value guarantee.
These vehicles are capitalized at (depreciated) cost of production
under leased equipment in the vehicle segments and are
depreciated over the contract term on a straight-line basis with
consideration of the expected residual values. Changes in
the expected residual values lead either to prospective adjust-
ments of the scheduled depreciation or to an impairment
loss if necessary.
Daimler as lessor
The same accounting principles apply to assets if Daimler sells
such assets and leases them back from the buyer.
Sale and lease back
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
250
3 to 30 years
6 to 25 years
10 to 50 years
Useful lives of property, plant and equipment
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment
F.07
Assets carried as finance leases are measured at the beginning
of the (lease) contract at the lower of the present value of the
minimum lease payments and the fair value of the leased object,
and in the following periods less accumulated depreciation
and other accumulated impairment losses. Depreciation is on
a straight-line basis; residual values of the assets are given
due consideration. Payment obligations resulting from future
lease payments are discounted and disclosed under financing
liabilities.
In the case of an operating lease, the lease payments or
rental payments are expensed on a straight-line basis in the
consolidated statement of income.
Daimler as lessee
Leasing
Other financial income/expense, net
Recoverable amount of equipment on operating leases
Daimler regularly reviews the factors determining the values
of its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases,
which constitute a substantial part of the expected future cash
flows from leased assets. In this context, assumptions are
made regarding major influencing factors, such as the expected
number of returned vehicles, the latest remarketing results
and future vehicle model changes. Those assumptions are
determined either by qualified estimates or by publications
provided by expert third parties; qualified estimates are based,
as far as publicly available, on external data with consideration
of internally available additional information such as historical
experience of price developments and recent sale prices.
The residual values thus determined serve as a basis for depre-
ciation; changes in residual values lead either to prospective
adjustments of the depreciation or, in the case of a significant
decline in expected residual values, to impairment. If deprecia-
tion is prospectively adjusted, changes in estimates of residual
values do not have a direct effect but are equally distributed
over the remaining periods of the lease contracts.
Collectability of receivables from financial services
The Group regularly estimates the risk of default on receivables
from financial services. Many factors are taken into consider-
ation in this context, including historical loss experience, the
size and composition of certain portfolios, current economic
events and conditions and the estimated fair values and adequacy
of collaterals. Changes in economic conditions can lead to
changes in our customers' creditworthiness and to changes in
used-vehicle prices, which would have a direct effect on the
market values of the vehicles assigned as collateral. Changes
to the estimation and assessment of these factors influence
the allowance for credit losses with a resulting impact on the
Group's net profit. See also Notes 14 and 32 for further
information.
Product warranties
The recognition and measurement of provisions for product
warranties is generally connected with estimates.
The Group provides various types of product warranties depend-
ing on the type of product and market conditions. Provisions
for product warranties are generally recognized when vehicles
are sold or when new warranty programs are initiated. Based
on historical warranty claim experience, assumptions have to
be made on the type and extent of future warranty claims
and customer goodwill, as well as on possible recall campaigns
for each model series. These assessments are based on
experience of the frequency and extent of vehicle faults and
defects in the past. In addition, the estimates also include
assumptions on the amounts of potential repair costs per
vehicle and the effects of possible time or mileage limits. The
provisions are regularly adjusted to reflect new information.
Further information on provisions for other risks is provided in
Note 23.
Legal proceedings
Various legal proceedings, claims and governmental investiga-
tions are pending against Daimler AG and its subsidiaries on
a wide range of topics. If the outcome of such legal proceedings
is detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages, to undertake
service actions or recall campaigns, to pay fines or to carry
out other costly actions. Litigation and governmental investiga-
tions often involve complex legal issues and are connected
with a high degree of uncertainty. Accordingly, the assessment
of whether an obligation exists on the balance sheet date as
a result of an event in the past, and whether a future cash out-
flow is likely and the obligation can be reliably estimated,
largely depends on estimations by the management. Daimler
regularly evaluates the current stage of legal proceedings, also
with the involvement of external legal counsel. It is therefore
possible that the amounts of provisions for pending or potential
litigation will have to be adjusted due to future developments.
Changes in estimates and premises can have a material effect
on the Group's future profitability. It is also possible that
provisions accrued for some legal proceedings may turn out to
be insufficient once such proceedings have ended. Daimler
may also become liable for payments in legal proceedings no
provisions were established for. Although the final resolution
of any such proceedings could have a material effect on Daimler's
operating results and cash flows for a particular reporting
period, Daimler believes that it should not materially affect
the Group's financial position.
Further information on liability and litigation risks is provided
in Note 29.
1 Primarily changes from currency translation.
2016
Losses on sales of property,
plant and equipment
- 117
-925
-1,042
Expenses associated with
optimization programs
Other miscellaneous expenses
2017
-111
In millions of euros
743
F.15
2,350
2,824
-45
-1,142
741
Other miscellaneous income
94
133
programs
Income associated with optimization
126
Other operating expense
- 1,298
Miscellaneous other financial
Other financial income/expense, net
225
212
5
2
2016
2017
399
275
-169
-230
-124
-61
2016
2017
Interest and similar income
of defined benefit pension plans
Net interest income on the net assets
Interest income
In millions of euros
Interest income and interest expense
F.17
income/expense, net
149
Income and expense from compounding
and effects from changes in discount rates
of provisions for other risks
In millions of euros
F.16
to sales financing
Gains on sales of property,
24
24,823
81,810
80,155
140,591
143,586
Daimler Financial Services
Other
Daimler Buses
Mercedes-Benz Vans
Daimler Trucks
Mercedes-Benz Cars¹
2016
2017
Average number of employees
F.13
Other operating income
-196
-41
94
133
-45
Other operating expenses
-2
-38
23,763
17,978
17,937
12,621
385
plant and equipment
214
144
107
Government grants and subsidies
1,219
1,309
to third parties
Income from costs recharged
2016
Rental income not relating
2017
Other operating income
F.14
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
260
259
1 Including proportionally 1,203 employees from proportionately
consolidated companies in 2017 (2016: 337).
284,957
289,530
9,976
10,367
10,880
In millions of euros
230
Interest and similar expense
Net interest expense on the net obligation
from defined benefit pension plans
to actual income tax expense
Reconciliation of expected income tax expense
F.21
-660
-400
and tax credits
due to tax loss carryforwards
-44
972
due to temporary differences
-704
572
Deferred taxes
In millions of euros
2016
2017
Components of deferred tax expense/benefit
F.20
-549
-3,790
-3,437
973
Non-German companies
-155
In millions of euros
-401
2017
Expected income tax expense
-3,437
Actual income tax expense
34
35
Other
113
-632
expenses
Tax-free income and non-deductible
-225
-171
on deferred tax assets
Change of valuation allowance
48
1,624
Tax law changes
31
52
Trade tax rate differential
-3,750
-41
-80
Foreign tax rate differential
-4,265
2016
German companies
-1,396
- 1,690
-2,024
- 1,985
Profit before income taxes is comprised as shown in table
7 F.18.
9. Income taxes
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 261
Table 7 F.17 shows the components of interest income and
interest expense.
8. Interest income and interest expense
In 2016, miscellaneous other financial income included the
recognition of gains of €605 million from the contribution of
the shareholdings in Renault and Nissan to the German
pension plan assets at fair value. Those gains were presented
within other comprehensive income/loss until the transfer.
Table 71 F.16 shows the components of other financial income/
expense, net.
7. Other financial income/expense, net
Other miscellaneous expense primarily comprises losses from
disposals of current assets and changes in other provisions.
In 2016, other operating expense included expenses of €400
million connected with a lawsuit.
The composition of other operating expense is shown in table
7 F.15.
Further information on income and expenses associated with
optimization programs is provided in Note 5.
Gains on sales of property, plant and equipment include gains
of €267 million from the sale of real estate by Mitsubishi Fuso
Truck and Bus Corporation at the Kawasaki site in Japan.
Government grants and subsidies mainly comprise reimburse-
ments relating to current part-time early retirement contracts
and subsidies for alternative drive systems.
Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.
The composition of other operating income is shown in table
7 F.14.
6. Other operating income and expense
-546
-582
-319
-371
development costs
-227
-211
Profit before income taxes in Germany includes profit/loss
from equity-method investments if the equity interests in
those companies are held by German companies.
Table 7 F.19 shows the components of income taxes.
The current tax expense includes tax expenses at German and
foreign companies of €268 million (2016: tax benefits of €292
million) recognized for prior periods.
The deferred tax expense/benefit is comprised of the
components shown in table 71 F.20.
Non-German companies
Deferred taxes
German companies
Current taxes
In millions of euros
2016
2017
Components of income taxes
F.19
12,574
14,301
6,799
Interest expense
7,902
6,399
German companies
Non-German companies
In millions of euros
2016
2017
Profit before income taxes
F.18
Table 71 F.21 shows a reconciliation of expected income tax
expense to actual income tax expense determined using
the unchanged applicable German combined statutory tax
rate of 29.825%.
For non-German companies, the deferred taxes at period-end
were calculated using the tax rates of the respective countries.
a solidarity tax surcharge of 5.5% on each year's federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes
in both years amounted to 29.825%.
For German companies, in 2017 and 2016, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
5,775
Research and non-capitalized
-16
-27
other investments accounted
for at (amortized) cost
associated companies and substantial
Joint operations, joint ventures,
10
11
International
3
3
13
14
Associated companies accounted
for using the equity method
Germany
10
11
International
4
5
Germany
14
16
Joint ventures accounted for
using the equity method
2
2
1
32
1
26
13
15,997
18,394
leasing business
Revenue from the rental and
132,577
140,272
Revenue from sales of goods
Revenue by segment 7 F.81 and region 7 F.83 is presented in
Note 33.
Table 71 F.09 shows the composition of revenue at Group level.
4. Revenue
2016
2017
In millions of euros
Revenue
F.09
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
258
International
Germany
513
548
13
16
16
Germany
International
3
3
In May 2017, Daimler acquired for a purchase price of €0.3 bil-
lion an interest of 15% in LSH Auto International Limited
(LSHAI), which is responsible for the Mercedes-Benz retail
business of Lei Shing Hong Group. LSHAI, a subsidiary of Lei
Shing Hong Group, is one of the biggest Mercedes-Benz deal-
ers worldwide. See Note 13 for further information.
Equity-method investments
Daimler AG together with Nissan Motor Company Ltd. founded
the joint operation Cooperation Manufacturing Plant
Aguascalientes, S.A.P.I. de C.V. in Mexico in 2015. The company
has been producing cars for the Infiniti brand since November
2017. Production for the Mercedes-Benz brand will start in 2018.
Daimler and Nissan each hold a 50% interest in the company.
The joint operation has been accounted for using proportionate
consolidation since July 1, 2016. The company is allocated to
the Mercedes-Benz Cars segment.
Joint operations accounted for using proportionate
consolidation
Effective as of June 30, 2016, Daimler placed its 3.1% interest
in each of Renault S.A. (Renault) and Nissan Motor Company
Ltd. (Nissan) at the amount of the fair value (€1,800 million)
into the Daimler Pension Trust e.V. for the purpose of strength-
ening the German pension plan assets over the long term.
Before this transfer, the investments in Renault and Nissan
were presented under other financial assets. The investments
were measured at fair value, whereby unrecognized gains
were shown under other comprehensive income. The contribution
of the shares led to other financial income in an amount of
€605 million, which was shown in the reconciliation in 2016.
257
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On June 30, 2016, Daimler signed the agreements for the acquisi-
tion of 100% of the shares of Athlon Car Lease International
B.V. (Athlon), a subsidiary of the Dutch Rabobank Group. Athlon
is one of the leading providers of mobility solutions in Europe,
especially of leasing and fleet management for commercial
customers. The transaction was closed on December 1, 2016.
Upon closing, the purchase price of €1.1 billion was paid and
financial liabilities of the Athlon companies in an amount of
approximately €2.7 billion were settled. In 2017, Daimler
received total purchase price refunds of €41 million. Purchase-
price allocation was finalized in the fourth quarter of 2017.
In the context of allocated purchase-price difference of €637,
€402 million was allocated to goodwill, €311 million to
intangible assets and €6 million to other assets. €82 million
was accounted for by deferred tax liabilities.
Consolidated subsidiaries
At the reporting date, the Group has business relationships
with 24 (2016: 20) controlled structured entities, of which 22
(2016: 18) are fully consolidated. In addition, the Group has
relationships with 6 (2016: 5) non-controlled structured entities.
The unconsolidated structured entities are not material for
the Group's profitability, liquidity and capital resources and
financial position.
The structured entities of the Group are rental companies, asset-
backed-securities (ABS) companies and special funds. The
purpose of the rental companies primarily is the acquisition,
renting and management of assets. The ABS companies
are primarily used for the Group's refinancing. The assets
transferred to structured entities usually result from the
Group's leasing and sales financing business. Those entities
refinance the purchase price by issuing securities. The
special funds are set up in particular in order to diversify the
capital investment strategy.
Structured entities
A detailed list of the companies included in the consolidated
financial statements and of the equity investments of Daimler
Group pursuant to Section 313 of the German Commercial
Code (HGB) is provided in the statement of investments. Fur-
ther information is provided in Note 39.
The aggregate balance sheet totals of the subsidiaries, associ-
ated companies, joint ventures and joint operations accounted
for at amortized cost whose business is non-active or of low
volume and which are not material for the Group and the fair
presentation of its profitability, liquidity and capital resources
and financial position would amount to approximately 1% of the
Group's balance sheet total; the aggregate revenues and the
aggregate net profit would amount to approximately 1% of the
Group's revenue and net profit.
Table 71 F.08 shows the composition of the Group.
Composition of the Group
3. Consolidated Group
The calculation of income taxes of Daimler AG and its subsid-
iaries is based on the legislation and regulations applicable
in the various countries. Due to their complexity, the tax items
presented in the financial statements are possibly subject to
different interpretation by taxpayers on the one hand and local
tax authorities on the other hand. For the calculation of
deferred tax assets, assumptions have to be made regarding
future taxable income and the time of realization of the
deferred tax assets. In this context, Daimler takes into consid-
eration, among other things, the projected earnings from
business operations, the effects on earnings of the reversal of
taxable temporary differences, and realizable tax strategies.
As future business developments are uncertain and are some-
times beyond Daimler's control, the assumptions to be made
in connection with accounting for deferred tax assets are
connected with a substantial degree of uncertainty. On each
balance sheet date, Daimler carries out impairment tests on
deferred tax assets on the basis of the planned taxable income
in future financial years; if Daimler assesses that the proba-
bility of future tax advantages being partially or fully unrealized
is more than 50%, the deferred tax assets are impaired.
Further information is provided in Note 9.
Income taxes
The calculation of provisions for pensions and similar obligations
and the related pension cost are based on various actuarial
valuations. The calculations are subject to various assumptions
on matters such as current actuarially developed probabilities
(e.g. discount factors and cost-of-living increases), future
fluctuations with regard to age and period of service, and
experience with the probability of occurrence of pension
payments, annuities or lump sums. As a result of changed
market or economic conditions, the probabilities on which
the influencing factors are based, may differ from current
developments. The financial effects of deviations of the
main factors are calculated with the use of sensitivity analyses.
See Note 22 for further information.
Pensions and similar obligations
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
256
In January 2017, There Holding B.V. sold an equity interest
of 15% in HERE International B.V to Intel Holdings B.V. and
recognized a gain of €183 million in connection with the sale.
See Note 13 for further information.
F.08
Composition of the Group
2017
1
1
1
1
Joint operations accounted for
using the equity method
Joint operations accounted for
using proportionate consolidation
Germany
International
67
78
International
30
41
Interest from the financial services
Germany
119
Unconsolidated subsidiaries
297
299
International
62
64
359
363
Consolidated subsidiaries
Germany
At December 31,
2016
97
-8
business at Daimler Financial Services
4,146
Measures and programs with implementation costs that
materially impacted the EBIT of the segments are briefly
described below.
Optimization programs
Research and non-capitalized development costs
Research and non-capitalized development costs were €5,938
million in 2017 (2016: €5,257 million) and primarily comprise
personnel expenses and material costs.
General administrative expenses amounted to €3,809 million
in 2017 (2016: €3,419 million). They consist of expenses
which are not attributable to production, sales or research
and development functions, and comprise personnel
expenses, depreciation and amortization of fixed and
intangible assets, and other administrative costs.
General administrative expenses
In 2017, selling expenses amounted to €12,965 million (2016:
€12,226 million). Selling expenses consist of direct selling
costs as well as selling overhead expenses and comprise per-
sonnel expenses, material costs and other selling costs.
Selling expenses
Amortization expense of capitalized development costs in the
amount of €1,310 million (2016: €1,268 million) is presented
in expense of goods sold.
Items included in cost of sales are shown in table F.10.
Cost of sales
5. Functional costs
-3
2
-9
1
Cash flow
EBIT
Daimler Buses
3
2
Provisions for optimization programs¹
24
Cash flow
In the course of the organizational focus on the divisions,
programs for restructuring the Group's dealer network abroad
were initiated in 2015, involving the sale of selected Daimler-
owned dealerships. The restructuring was mainly completed in
2017. In the reporting period 2017, these measures resulted
in income of €133 million (2016: net expense of €58 million).
-49
At December 31, 2016, the disposal group's assets for those
dealerships abroad amounted to €240 million and its liabilities
amounted to €135 million. At December 31, 2017, only non-
significant assets and liabilities of the disposal group exist. Due
to their minor impact on the Group's financial position, the
assets and liabilities held for sale are not presented separately
in the consolidated statement of financial position.
1 Amounts of provisions for optimization programs
General administrative expenses
-108
-3,790
Selling expenses
-127
-93
Cost of sales
2016
2017
In millions of euros
Income and expenses associated with optimization programs
F.12
Information on the total remuneration of the current and
former members of the Board of Management and the current
members of the Supervisory Board is provided in Note 37.
Personnel expenses and average number of employees
Personnel expenses included in the consolidated statement of
income amounted to €22,186 million in 2017 (2016: €21,141
million). The personnel expenses are composed of wages and
salaries in the amount of €18,188 million (2016: €17,150 million),
social contributions in the amount of €3,292 million (2016:
€3,242 million) and expenses from pension obligations in the
amount of €706 million (2016: €749 million). The average
numbers of people employed are shown in table 7 F.13.
Cash effects resulting from the optimization programs are
expected in the years 2018 and 2019.
Beside gains and/or losses from the sale of selected operations
of the Group's current sales network, the EBIT effects listed
in table F.11 primarily relate to personnel measures and are
included in the line items within the consolidated statement
of income as shown in table 7 F.12.
F.11 shows the effects of the optimization programs
on the key figures of the segments.
Table
In the year 2016, Mercedes-Benz Vans initiated a socially
acceptable voluntary severance program for the Düsseldorf
plant. In 2016, the program led to an expense of €38 million.
In the reporting period 2017, this resulted in only a small
amount of expenses.
In the year 2016, a workforce-reduction program was
implemented in Brazil. That program resulted in expenses
of €91 million in the Daimler Trucks segment in 2016.
Daimler Trucks anticipates expenses in connection with the
optimization of fixed costs, especially at the Mercedes-Benz
brand, of approximately €0.2 billion, of which €172 million were
recognized in 2017. Due to the employee-transfer opportunities
within the Daimler Group, the expenses were lower than originally
assumed.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
as of December 31.
Provisions for optimization programs¹
13
EBIT
Mercedes-Benz Vans
-500
financial services
Impairment losses on receivables from
- 1,789
-2,187
Daimler Financial Services
Refinancing costs at
-6,652
-7,978
on operating leases
Depreciation of equipment
Expense of goods sold
-114,054 -107,925
2016
2017
In millions of euros
Cost of sales
F.10
153,261
164,330
541
1,055
Revenue from sales of other services
Other cost of sales
-5,280
-499
-4,433
-129,999
-105
-68
3
3
-17
- 160
Provisions for optimization programs¹
Cash flow
EBIT
Daimler Trucks
11
8
Provisions for optimization programs¹
4,609
253
Cash flow
-33
105
EBIT
Mercedes-Benz Cars
2016
2017
In millions of euros
Optimization programs
F.11
- 121,298
203
265
262
F.22
and equipment
factory and
relating to plant
equipment,
payments
Advance
Other
In millions of euros
Technical
equipment
and machinery
Land, leasehold
improvements and
buildings including
buildings on land
owned by others
Property, plant and equipment
F.28
1,600
1,768
10
1
36
48
Research and non-capitalized
development costs
Other operating expense
37
45
General administrative expenses
74
office and construction
equipment
in progress
Total
-379
-2,286
607
1,088
591
5,689
2,692
1,407
1,002
588
Disposals
89
Reclassifications
8
1
7
Additions due to business acquisitions
67,360
2,846
24,773
23,978
15,763
Balance at January 1, 2016
Acquisition or manufacturing costs
Other additions
Selling expenses
1,443
1,585
-147
-99
-26
-22
-889
-368
-521
Balance at December 31, 2017
Other changes¹
Disposals
Reclassifications
271
1,768
1,323
Additions
7,730
2,301
5,136
293
Balance at December 31, 2016
63
41
17
5
445
-670
5,912
8,462
2016
2017
Cost of sales
In millions of euros
Amortization expense for intangible assets
in the consolidated statement of income
F.27
Property, plant and equipment also include buildings, technical
equipment and other equipment under finance lease arrange-
ments and thus deemed to be owned by the Group with a carry-
ing amount at December 31, 2017 of €320 million (2016:
€178 million). In 2017, additions to and depreciation expense
on assets under finance lease arrangements amounted to
€204 million (2016: €7 million) and €34 million (2016: €40 million),
respectively.
In 2017, government grants of €50 million (2016: €151 million)
were deducted from property, plant and equipment.
in table F.28.
Property, plant and equipment developed as shown
11. Property, plant and equipment
2,279
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 Primarily changes from currency translation.
13,735
2,340
10,280
1,115
Carrying amount at December 31, 2017
12,098
2,083
8,827
1,188
Carrying amount at December 31, 2016
2 Including capitalized borrowing costs on development costs of €47 million (2016: €54 million).
Amortization amounted to €13 million (2016: €12 million).
Other changes¹
-742
-1,860
-1
Reclassifications
3,921
2,035
1,534
352
Additions
45,836
417
-1
220
20,618
16,469
8,749
Balance at December 31, 2016
138
60
Other changes¹
- 1,510
-649
-627
-234
Disposals
21
1
Disposals
-201
- 1,084
27,981
4,470
5,933
9,334
8,244
Carrying amount at December 31, 2017
26,381
3,489
5,730
9,155
8,007
-13
Carrying amount at December 31, 2016
21,465
16,630
8,743
Balance at December 31, 2017
-994
-549
-289
-156
Other changes¹
-1,925
-640
46,838
-8
Reclassifications
3,891
-2,347
803
985
559
Reclassifications
6,949
3,603
1,752
1,032
562
Other additions
Disposals
Additions due to business acquisitions
3,489
26,348
25,624
16,756
Balance at December 31, 2016
1,020
305
296
226
193
Other changes¹
72,217
-69
-415
-796
2,043
1,423
425
Additions
43,038
1
18,983
15,548
8,506
Balance at January 1, 2016
Depreciation/impairment
-1,173
74,819
27,398
25,964
Balance at December 31, 2017
- 1,840
-152
-709
-504
-475
Other changes¹
-2,507
- 123
4,470
-1,423
-89
- 1,334
Miscellaneous liabilities
-3,082
- 147
Other provisions
similar obligations
Provisions for pensions and
-68
-1,124
-620
-377
Miscellaneous assets
-1,302
Receivables from financial services
-55
Inventories
-7,919
-5,211
Equipment on operating leases
-1,013
17,134
-2,625
-274
-1,654
-1,574
Property, plant and equipment
-3,060
-127
15,612
Deferred tax assets, gross
-1,097
and tax credits
-226
Deferred tax liabilities, gross
-15,161
-2,098
-139
-210
-16,731
In millions of euros
2016
2017
Change of deferred tax assets, net
F.24
As a result of future adjudications or changes in the opinions of
the fiscal authorities, it cannot be ruled out that Daimler might
receive tax refunds for previous years.
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of
jurisdictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed
for all open tax years.
The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group did
not recognize deferred tax liabilities on retained earnings of
non-German subsidiaries of €28,733 million (2016: €28,750
million) which are intended to be reinvested. If those earnings
were paid out as dividends, an amount of 5% would be taxed
under German taxation rules and, if applicable, with non-German
withholding tax. Additionally, income tax consequences might
arise if the dividends first have to be distributed a non-German
subsidiary to a non-German holding company. Normally, the
distribution would lead to an additional income tax expense. It is
not practicable to estimate the amount of taxable temporary
differences for these undistributed foreign earnings.
At December 31, 2017, the valuation allowance on deferred tax
assets relates, among other things, to corporate income tax
loss carryforwards (€904 million). €12 million of the deferred
tax assets for corporate income tax loss carryforwards
adjusted by a valuation allowance relates to tax loss carry-
forwards which expire at various dates from 2018 through
2020, €258 million relates to tax loss carryforwards which
expire at various dates from 2021 through 2027, €17 million
relates to tax loss carryforwards which expire at various dates
from 2028 through 2037 and €617 million relates to tax loss
carryforwards which can be carried forward indefinitely. Further-
more, the valuation allowance primarily relates to temporary
differences at non-German companies as well as net operating
losses for state and local taxes at the US-companies. Daimler
believes that it is more likely than not that those deferred tax
assets cannot be utilized. In 2017 and prior years, the Group
had tax losses at several subsidiaries in several countries. After
offsetting the deferred tax assets with deferred tax liabilities,
the deferred tax assets not subject to valuation allowances
amounted to €135 million for those subsidiaries. Daimler
believes it is more likely than not that future taxable income will
be sufficient to allow utilization of the deferred tax assets.
Daimler's current estimate of the amount of deferred tax assets
that is considered realizable may change in the future, neces-
sitating higher or lower valuation allowances.
263
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
thereof on tax loss carryforwards
In the consolidated statement of financial position, the valuation
allowances on deferred tax assets, which are mainly attribut-
able to foreign companies, increased by €43 million compared
to December 31, 2016. This is primarily a result of the addi-
tional valuation allowances of €171 million recognized in net
profit. Furthermore, a decrease in the valuation allowance
was recognized in equity, mainly due to currency translation.
The development of deferred tax assets, net, is shown in table
71 F.24.
In respect of each type of temporary difference and in respect
of each type of unutilized tax loss carryforwards and unutilized
tax credits, the deferred tax assets and liabilities before offset
are summarized in table F.23.
Deferred tax assets and deferred tax liabilities are offset if the
deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority and if there is the right
to set off current tax assets against current tax liabilities. In
the presentation of deferred tax assets and liabilities in the
consolidated statement of financial position, no difference
is made between current and non-current. In the consolidated
statement of financial position, deferred tax assets and lia-
bilities are presented as shown in table 71 F.22.
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German com-
panies and tax-free results of our equity-method investments.
In 2016, tax-free gains recognized on the contribution of
our shares in Renault and Nissan into the German pension plan
assets are shown in this line item. Furthermore, in 2017, the
line item also includes tax expenses in connection with the
interpretation of tax laws. In 2016, tax benefits relating to
tax assessments of prior years are included in this line item.
In 2017 and 2016, the Group impaired deferred tax assets of
foreign subsidiaries. The resulting tax expenses are included in
the line item change of valuation allowance on deferred tax
assets.
The law signed in 2017 by the President of the United States of
America for a comprehensive tax reform ("H.R. 1/Tax Cuts
and Jobs Act"), includes the reduction of the nationwide federal
corporate income tax rate for US-companies from 35% to 21%,
starting on January 1, 2018. At yearend 2017, the reduction of
the federal corporate income tax rate required the remea-
surement of the deferred tax liabilities and deferred tax assets
of the US-subsidiaries of Daimler. The resulting tax benefit
of €1,668 million is included in the line item tax law changes.
403
Other intangible assets
Development costs
451
Deferred tax assets, net
Including the items recognized in other comprehensive income/
loss (including items from equity-method investments), the
expense for income taxes is comprised as shown in table 71 F.25.
- 1,248
-235
-194
thereof on temporary differences
340
134
Property, plant and equipment
51
48
Intangible assets
18,382
2016
At December 31,
2017
403
In millions of euros
Equipment on operating leases
Split of tax assets and liabilities before offset
451
Deferred tax assets, net
3,870
-3,467
-2,402
Deferred tax liabilities
2,853
Deferred tax assets
2016
At December 31,
2017
In millions of euros
Deferred tax assets and liabilities
F.23
Deferred tax assets, net as of January 1
Deferred tax expense/benefit in the
financial statement of income
2,319
Inventories
-1,291
Valuation allowances
16,903
891
2,348
1,518
1,702
2
671
1,861
931
1,332
2
Miscellaneous liabilities
Deferred income
Liabilities
Other provisions
and similar obligations
Provisions for pensions
1,798
2,256
and unused tax credits
Tax loss carryforwards
6,019
6,423
mainly other financial assets
Miscellaneous assets,
328
392
Receivables from financial services
1,129
977
1,813
403
1,069
Change in deferred tax expense/benefit on
financial assets available-for-sale included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on derivative financial instruments included
in other comprehensive income/loss
Change in deferred tax expense/benefit
on actuarial gains/losses from defined
benefit pension plans
Other changes¹
3,535
755
2,779
1
Other additions
25
16
9
Additions due to business combinations
-1,435
82
19,828
4,384
Reclassifications
13,963
Balance at December 31, 2016
52
13
17
Other changes¹
-100
- 1,335
Disposals
2,952
629
2,323
1,481
670
Disposals
-524
Disposals
Reclassifications
1,600
320
1,280
7,490
2,029
5,173
288
Additions
Balance at January 1, 2016
-34
Amortization/impairment
4,619
16,192
1,386
Balance at December 31, 2017
-237
- 140
-26
-71
Other changes¹
-954
-396
22,197
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
221
3,582
-3,790
-3,437
2016
2017
403
Income tax expense/benefit
recorded in other reserves
Income tax expense in the consolidated
financial statement of income
In millions of euros
Tax expense in equity
F.25
1 Additions to the scope of consolidation in the amount of
€-112 million are included in 2016. The other changes primarily
relate to effects from currency translation.
-763
-4,200
451
239
748
-19
-495
-741
1
-3
-704
572
as of December 31
Deferred tax assets, net
-216
17,559
254
-3,536
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12,962
1,015
449
Total
(acquired)
assets
Other intangible
(internally
generated)²
costs
(acquired)
Goodwill
Development
264
Reclassifications
Additions due to business combinations
Balance at January 1, 2016
Acquisition or manufacturing costs
In millions of euros
Intangible assets
F.26
Table 71 F.27 shows the line items of the consolidated statement
of income in which total amortization expense for intangible
assets is included.
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet been
completed (carrying amount at December 31, 2017: €5,086
million; 2016: €3,780 million). In addition, other intangible
assets with a carrying amount of €255 million (2016: €266 million)
are not amortizable. Other non-amortizable intangible assets
are distribution rights in the vehicle segments with indefinite
useful lives as well as trademarks in the Daimler Trucks seg-
ment with indefinite useful lives. The Group plans to continue
to use these assets unchanged.
At December 31, 2017, goodwill of €455 million (2016:
€480 million) relates to the Daimler Financial Services segment,
goodwill of €418 million (2016: €456 million) relates to the
Daimler Trucks segment and goodwill of €180 million (2016:
€185 million) relates to the Mercedes-Benz Cars segment.
Intangible assets developed as shown in table 71 F.26.
10. Intangible assets
Other additions
16,987
7,012
Table 71 F.33 shows summarized IFRS financial information
after purchase price allocation for the significant associated
companies which were the basis for equity-method accounting
in the Group's consolidated financial statements.
Associated companies
Summarized aggregated financial information (pro rata)
In millions of euros
Summarized aggregated financial information on minor
equity-method investments
F.34
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
Revenue at THBV relates to HERE; revenue for the year 2017 is solely for the month of January until the change in the consolidation of HERE at THBV.
Figures for the 2016 statement of income relate to the period of December 5, 2015 to December 31, 2016.
According to IFRS 5.34 the statement of income for 2016 was adjusted retrospectively.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of September 30.
3 THBV:
Daimler recognizes its proportionate share of the profits or losses of BAIC Motor Corporation Ltd. (BAIC Motor) with a three-month time lag.
Figures for the statement of income relate to the period of October 1 to September 30.
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
1 BBAC:
611
732
557
777
2,141
2,130
Carrying amount of equity-method investment
-237
4
-1
-1
Other
Joint ventures
74
2017
2017
rooms.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group's
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily used vehicles traded
in by dealers' customers or real estate such as dealers' show-
Receivables from sales financing with customers include
receivables from credit financing for customers who purchased
their vehicle either from a dealer or directly from Daimler.
Types of receivables
Table 71 F.35 shows the components of receivables from
financial services.
14. Receivables from financial services
270 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-28
-28
21
60
Total comprehensive income/loss
-1
-1
Other comprehensive income/loss
-
-
-28
-28
22
61
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
2016
2016
70
-
Equity-method goodwill
694
741
Non-current liabilities
2,802
592
289
10,005
10,140
6,520
7,058
Current assets
1,906
13,280
13,089
4,354
4,558
Non-current assets
and reconciliation to equity-method carrying amounts
Information on the statement of financial position
-171
364
1,285
1,752
1,428
3,077
2,333
1,044
Current liabilities
-9
-91
-93
Unrealized profit (-)/loss (+) on sales to/purchases from
611
732
720
712
2,233
2,224
attributable to the Group
Receivables from finance-lease contracts consist of receiv-
ables from leasing contracts for which all substantial risks
and rewards incidental to the leasing objects are transferred
to the lessee.
Equity (excluding non-controlling interests)
2,195
9,368
9,198
4,557
4,540
Equity (including non-controlling interest)
518
11,584
10,954
5,623
6,335
1,832
At December 31, 2017, finance-lease contracts included
non-automotive assets from contracts of the financial services
business with third parties (leveraged leases) in the amount
of €103 million (December 31, 2016: €165 million)
Maturities of the finance-lease contracts are shown
in table 71 F.36.
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for
operating activities in the consolidated statement of cash flows.
21,165
583
13,175
7,407
24,317
324
15,591
8,402
Contractual future lease payments
Total
> 5 years
1 year up
to 5 years
<1 year
Total
At December 31, 2016
> 5 years
1 year up
to 5 years
<1 year
At December 31, 2017
In millions of euros
Maturities of the finance lease contracts
F.36
80,507
Unguaranteed residual values
602
2,525
12
Gross carrying amount
-2,251
-89
- 1,374
-788
-2,706
-38
-1,640
-1,028
Unearned finance income
23,449
42,881
594
7,800
27,456
336
18,116
9,004
Gross investment
2,284
11
1,880
393
3,139
15,055
2,373
-1,054
-491
37,626
26,288
14,803
42,781
27,044
15,737
Sales financing with customers
In millions of euros
Total
At December 31, 2016
Non-current
Current
Total
At December 31, 2017
Non-current
Current
Receivables from financial services
F.35
At December 31, 2017, receivables from financial services with
a carrying amount of €6,049 million (December 31, 2016:
€5,909 million) were pledged as collateral for liabilities from
ABS transactions (see also Note 24).
Further information on financial risks and nature of risks
is provided in Note 32.
Receivables not subject to an individual impairment
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
Table 71 F.38 provides an overview of credit risks included
in receivables from financial services.
Credit risks
The total expense from the impairment of receivables
from financial services amounted to €500 million in 2017
(2016: €499 million).
Changes in the allowance account for receivables from financial
services are shown in table 71 F.37.
Allowances
41,091
Sales financing with dealers
16,065
3,061
-870
85,787
-466
46,413
39,374
Net carrying amount
-404
Allowances for doubtful accounts
81,561
43,444
38,117
86,657
46,879
-563
39,778
21,198
14,186
7,012
24,750
16,774
7,976
Finance-lease contracts
19,272
2,970
16,302
19,126
Gross carrying amount
Total comprehensive income/loss
-4
2
Table 71 F.31 shows the carrying amounts and profits/losses
from equity-method investments.
13. Equity-method investments
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.30.
Non-cancelable future lease payments to Daimler
for equipment on operating leases are due as presented
in table
Minimum lease payments
At December 31, 2017, equipment on operating leases with
a carrying amount of €8,684 million were pledged as security
for liabilities from ABS transactions related to a securitization
transaction of future lease payments on leased vehicles
(December 31, 2016: €7,465 million) (see also Note 24).
is shown in table 71 F.29.
The development of equipment on operating leases
12. Equipment on operating leases
16,029
16,600
63
71
later than five years
8,306
8,607
between one and five years
7,660
7,922
within one year
Maturity
2016
Table 71 F.32 presents key figures on interests in associated
companies accounted for using the equity method in the
Group's consolidated financial statements.
F.31
Summarized carrying amounts and profits/losses from equity-method investments
In millions of euros
4,098
48
468
3,582
1,498
-1
-42
1,541
4,818
36
500
At December 31,
2017
4,282
Joint
operations
ventures
Joint
Associated
companies
1 Including investor-level adjustments.
Equity result¹
Equity investment¹
At December 31, 2016
Equity result¹
Equity investment¹
At December 31, 2017
Total
485
In millions of euros
F.30
-3,446
Other changes¹
-19,657
Disposals
Reclassifications
25,292
Other additions
Additions due to business acquisitions
Balance at December 31, 2016
57,330
379
- 18,204
Other changes¹
Disposals
Reclassifications
48,091
3,560
23,504
Other additions
Additions due to business acquisitions
Balance at January 1, 2016
Acquisition or manufacturing costs
In millions of euros
Equipment on operating leases
F.29
Balance at December 31, 2017
59,519
Depreciation/impairment
Balance at January 1, 2016
1 Primarily changes from currency translation.
47,714
Carrying amount at December 31, 2017
46,942
Carrying amount at December 31, 2016
11,805
Balance at December 31, 2017
-657
Other changes¹
-5,904
Disposals
Maturity of minimum lease payments
for equipment on operating leases
Reclassifications
Additions
10,388
Balance at December 31, 2016
74
Other changes¹
-5,487
Disposals
Reclassifications
6,652
Additions
9,149
7,978
7,976
11
502
Summarized IFRS financial information on significant associated companies
accounted for using the equity method
F.33
Further information on equity-method investments is provided
in Notes 3 and 36.
Table 71 F.34 shows summarized aggregated financial
information for the other minor equity-method investments
after purchase price allocation and on a pro rata basis.
The equity-method result of joint ventures in 2017 includes
impairments of investments of €125 million.
269
|
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In 2017, minor equity-method investments include LSH Auto
International Limited (LSHAI). In the second quarter of
2017, Daimler acquired an interest of 15% in LSHAI, which is
responsible for the Mercedes-Benz retail business of Lei Shing
Hong Group. LSHAI, a subsidiary of Lei Shing Hong Group,
is one of the biggest Mercedes-Benz dealers worldwide. The
transaction was concluded after receiving the approval of
the relevant antitrust authorities on May 22, 2017. The purchase
price was €0.3 billion. Due to Daimler's possibility to exercise
a significant influence on the board of directors of LSHAI, as
well as other contractual agreements and significant supply
relations, the Group classifies this investment as an investment
in an associate, to be accounted for using the equity method;
in the segment reporting, the investment's carrying amount and
its proportionate share of profit or loss are presented in the
reconciliation of total segment's assets to Group assets and total
segments' EBIT to Group EBIT, respectively. Earnings of LSHAI
are included in Daimler's consolidated financial statements
with a three-month time lag.
Other minor equity-method investments
In December 2017, Daimler, Audi and BMW signed agreements
on the sale of shares in THBV. It was agreed to sell interests
of 5.9% in THBV to each of Robert Bosch Investment Nederland
B.V. and Continental Automotive Holding Netherlands B.V.
Both sales of shares involve equal numbers of shares currently
owned by Daimler, Audi and BMW. Due to the remeasure-
ment that already occurred in 2017 Daimler does not anticipate
any significant impact on earnings from these transactions.
Completion of the transactions is expected in the first quarter
of 2018, after receiving the approval of the relevant authorities.
Due to the minor importance for the Group's assets and liabilities,
there is no separate presentation in the statement of financial
position of non-current assets available for sale.
The transaction with Intel was concluded on January 31, 2017.
As a result, THBV now only has a significant influence on
HERE. Therefore, as of February 1, 2017, HERE is no longer fully
consolidated in the financial statements of THBV, but is
presented as an associated company using the equity method.
The change in the consolidation method led to the remea-
surement of the HERE shares at fair value in the first quarter
of 2017. The income of €183 million from this transaction
that is attributable to Daimler is included in profit/loss on
equity-method investments in the first quarter of 2017.
In December 2016, THBV signed agreements on the sale of
shares in its then 100% subsidiary, HERE. It was agreed to sell
a 15% shareholding to Intel Holdings B.V. (Intel) and a 10%
shareholding to a Chinese consortium consisting of NavInfo Co.
Ltd., Tencent Holdings Ltd. and GIC Private Ltd. However,
the transaction with the Chinese consortium was not com-
pleted. During a regulatory review process, the Chinese
consortium decided no longer to proceed with the transaction.
Effective December 4, 2015, HERE acquired the roadmap
service HERE from Nokia Corporation. HERE is one of the
biggest manufacturers of digital roadmaps for navigation
systems worldwide. Future expected high resolution maps will
be one of the fundamentals for future autonomous driving.
THBV is accounted for in the consolidated financial statements
of Daimler AG as an associated company using the equity
method, and is allocated to the Mercedes-Benz Cars segment.
In 2015, Daimler's proportionate share of its profits and
losses was included with a one-month time lag, which was
cancelled as of December 31, 2016.
There Holding B.V. (THBV) was founded in 2015. Daimler, Audi
and BMW each holds an interest in the company of 33.3%.
THBV holds an interest in HERE International B.V. (HERE).
THBV (HERE)
BAIC Motor Corporation Ltd. (BAIC Motor) is the passenger car
division of BAIC Group, one of the leading automotive
companies in China. Directly or via subsidiaries, BAIC Motor
is engaged in the business of researching, developing,
manufacturing, selling, marketing and servicing automotive
vehicles and related parts and components and all related
services. Due to Daimler's representation on the board of
directors of BAIC Motor and other contractual arrangements,
Daimler classifies this investment as an investment in an
associate, to be accounted for using the equity-method; in the
segment reporting, the investment's carrying amount and
its proportionate share of profit or loss are presented in the
reconciliation of total segment's assets to Group assets
and total segments' EBIT to Group EBIT, respectively. In the
first quarter of 2016, due to the lower stock-exchange
price, the Group recognized an impairment loss of €244 million
with respect to its investment in BAIC Motor. In the first
quarter of 2017, the impairment was fully reversed due to the
increased share price. The effect of the reversal amounts
to €240 million including minor currency effects. Both, the gain
and the loss are included in the line item profit/loss on equity-
method investments, net.
BAIC Motor
In the first quarter of 2017, the shareholders of BBAC
approved the payout of a dividend. The amount of €401 million
attributable to Daimler was paid out in the second quarter
of 2017 and decreased the carrying amount of the investment
accordingly. In the second quarter of 2017, the shareholders
of BBAC approved the payout of another dividend. The amount
of €733 million attributable to Daimler decreased the carrying
amount of the investment accordingly. The first half of that
dividend was paid out in August 2017. The second half will be
paid out in 2018.
In the first quarter of 2017, Beijing Benz Automotive Co., Ltd.
(BBAC) received a capital increase of €97 million from Daimler.
The capital increase took place through the contribution of
dividend receivables. Daimler plans to contribute equity of up to
€0.4 billion, in accordance with its shareholding ratio, to BBAC
in the coming years.
Beijing Benz Automotive Co., Ltd. (BBAC) produces and
distributes Mercedes-Benz passenger cars and spare parts
in China. The investment and the proportionate share
in the results of BBAC are allocated to the Mercedes-Benz
Cars segment.
BBAC
268 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In millions of euros
2017
BBAC¹
2016
2017
103
-21
23
Other comprehensive income/loss
-166
513
-
-1
-151
1,285
1,649
267
1,240
15,117
18,510
11,673
1,449
15,373
2,350
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
Revenue
Information on the statement of income
2016
2017
THBV³ (HERE)
BAIC Motor²
2016
71
6
4 The dividend from BBAC of €1,134 million was partly paid out in the year 2017 with an amount of €768 million.
16
1,143
Equity result²
4,282
643
732
777
2,130
Equity investment²
832
Stock market price¹
33.3
10.1
49.0
Equity interest (in %)
At December 31, 2017
In millions of euros
Total
Others
THBV (HERE)
BAIC Motor³
BBAC
Key figures on interests in associated companies accounted for using the equity-method
F.32
290
121
- 13
1,541
485
39
-56
-176
678
3,582
273
611
557
2,141
647
3 The proportionate share of earnings of BAIC Motor Corporation Ltd. (BAIC Motor) is included in Daimler's consolidated financial
statements with a three-month time lag.
33.3
49.0
2 Including investor-level adjustments.
1 Proportionate stock market prices.
Equity result²
Equity investment²
Stock market price¹
Equity interest (in %)
At December 31, 2016
29
1,134
Dividend payment to Daimler
10.1
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16,476
24,750
2,644
1,148
1,626
142
103
27
70
39
61
127
164
813
1,228
Net carrying amount
Receivables impaired individually
Total
120 days or more
90 to 119 days
not impaired individually
60 to 89 days
30 to 59 days
less than 30 days
Receivables past due,
2,385
7,081
11,990
274
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table 71 F.02 shows the details of changes in other reserves in
other comprehensive income/loss.
Other reserves comprise accumulated unrealized gains/losses
from currency translation of the financial statements of the
consolidated foreign companies and accumulated unrealized
gains/losses on the measurement of financial assets available-
for-sale, derivative financial instruments and equity-method
investments.
Other reserves
Under the German Stock Corporation Act (AktG), the dividend
is paid out of the distributable profit reported in the annual
financial statements of Daimler AG (parent company only) in
accordance with the German Commercial Code (HGB). For
the year ended December 31, 2017, the Daimler management
will propose to the shareholders at the Annual Shareholders'
Meeting to pay out €3,905 million of the distributable profit of
Daimler AG as a dividend to the shareholders, equivalent to
€3.65 per no-par-value share entitled to a dividend (2016:
€3,477 million and €3.25 per no-par-value share entitled
to a dividend respectively).
Dividend
Retained earnings comprise the accumulated net profits and
losses of all companies included in Daimler's consolidated
financial statements, less any profits distributed. In addition,
the effects of remeasuring defined benefit plans as well as the
related deferred taxes are presented within retained earnings.
Retained earnings
Capital reserves primarily comprise premiums arising on the
issue of shares as well as expenses relating to the exercise
of the up to 2014 exercisable stock option plans and the issue
of employee shares, effects from changes in ownership
interests in consolidated entities and directly attributable
related transaction costs.
Capital reserves
In 2017, 0.6 million Daimler shares representing €1.7 million
or 0.06% of the share capital were purchased for a price of €42
million and reissued to employees (2016: 0.6 million Daimler
shares representing €1.7 million or 0.05% of the share capital
were purchased for a price of €38 million).
Employee share purchase plan
As was the case at December 31, 2016, no treasury shares
are held by Daimler AG at December 31, 2017.
The authorization to acquire treasury shares was not exercised
in the reporting period.
The Board of Management is further authorized, with the consent
of the Supervisory Board, to exclude shareholders' subscription
rights.
In a volume up to 5% of the share capital issued as of the day of
the resolution, the Company was authorized to acquire treasury
shares also by using derivatives (put options, call options, forward
purchases or a combination of these instruments), whereas
the term of a derivative must not exceed 18 months and must
not end later than March 31, 2020.
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Company is authorized until March 31, 2020 to acquire
treasury shares in a volume up to 10% of the share capital issued
as of the day of the resolution to be used for all legal purposes.
The shares can be used, amongst other things excluding share-
holders' subscription rights, for business combinations or to
acquire companies or to be sold to third parties for cash at a
price that is not significantly lower than the stock-exchange price
of the Company's shares. The acquired shares can also be used
to fulfill obligations from issued convertible bonds and/or bonds
with warrants and to be issued to employees of the Company
and employees and board members of the Company's affiliates
pursuant to Sections 15 et seq. of the German Stock Corporation
Act (AktG). The treasury shares can also be canceled.
Treasury shares
In order to fulfill the conditions of the above-mentioned autho-
rization, the Annual Shareholders' Meeting on April 1, 2015
also resolved to increase the share capital conditionally by an
amount of up to €500 million (Conditional Capital 2015).
This authorization to issue convertible and/or warrant bonds
has not yet been utilized.
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Board of Management is authorized, with the
consent of the Supervisory Board, until March 31, 2020 to
issue convertible and/or warrant bonds or a combination
of these instruments ("bonds") with a total face value of up
to €10.0 billion and a maturity of no more than ten years.
The Board of Management is allowed to grant the holders of
these bonds conversion or warrant rights for new registered
no-par-value shares in Daimler AG with an allocable portion of
the share capital of up to €500 million in accordance with the
details defined in the terms and conditions of the bonds. The
bonds can be offered in exchange for cash and/or non-cash
contributions, in particular for shares in other companies. The
terms and conditions of the bonds can include warranty
obligations or conversion obligations. The bonds can be issued
once or several times, wholly or in installments, or simulta-
neously in various tranches as well by affiliates of the Company
within the meaning of Sections 15 et seq. of the German Stock
Corporation Act (AktG). Among other things, the Board of Man-
agement was authorized to exclude shareholders' subscription
rights for the bonds under certain conditions and within defined
constraints with the consent of the Supervisory Board.
Conditional capital
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10,614
7,720
Receivables, neither past due
nor impaired individually
In millions of euros
Allowances for doubtful accounts
Net carrying amount
10,954
12,290
Gross carrying amount
2016
At December 31,
2017
In millions of euros
Trade receivables
F.42
25,384
25,686
238
297
Advance payments to suppliers
18,609
19,361
held for resale
Finished goods, parts and products
3,814
3,373
Work in progress
2,723
2,655
-300
-340
11,990
10,614
2016
At December 31,
2017
Credit risks included in trade receivables
F.44
340
300
Balance at December 31
20
4
Currency translation and other changes
-62
275
-107
- 10
63
Charged to costs and expenses
392
340
Balance at January 1
2016
2017
In millions of euros
Changes in the allowance account for trade receivables
F.43
Amounts written off
21. Share-based payment
As of December 31, 2017, the Group has the 2014-2017
Performance Phantom Share Plans (PPSP) outstanding.
The PPSP are cash-settled share-based payment instruments
and are measured at their respective fair values at the balance
sheet date. The PPSP are paid out at the end of the stipulated
holding period; earlier, pro-rated payoff is possible in the case
of benefits leaving the Group only if certain defined conditions
are met. PPSP 2013 was paid out as planned in the first
quarter of 2017.
2016
2017
2016
2017
Bodo Uebber
Hubertus Troska
Britta Seeger³
-0.5
-0.7
-0.5
-0.7
-0.6
-0.7
of the annual bonus
Medium-term component
-1.6
-1.6
-0.7
-1.2
-0.5
-0.8
PPSP
In millions of euros
2017
2016
In millions of euros
PPSP
4 Appointment to the Board of Management ended on December 31, 2016.
3 Appointed to the Board of Management as of January 1, 2017.
2 Appointed to the Board of Management as of March 1, 2017.
1 Appointment to the Board of Management ended on February 10, 2017. Amounts are included pro rata for 2017.
-0.5
of the annual bonus
Medium-term component
-0.6
-0.9
-0.5
-0.7
2016
- 1.8
- 1.5
-1.6
- 1.6
PPSP
In millions of euros
2016
Prof. Dr. Thomas Weber4
2017
-0.8
of the annual bonus
Medium-term component
-0.4
- 1.9
Raw materials and manufacturing supplies
2017
2017
204
-67
14
13
-5
-7
-105
Medium-term compo-
nent of annual bonus of
the members of the
Board of Management
284
191
-62
-98
At December 31,
2017
2016
Expense
2016
2017
Provision
PPSP
In millions of euros
Effects of share-based payment
F.45
The details shown in table 7 F.46 do not represent any paid or
committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2017 can be found in the
Remuneration Report. Management Report from page 136
Table 71 F.46 shows expenses in the consolidated statement of
income resulting from the rights of current members of the
Board of Management.
The pre-tax effects of share-based payment arrangements for
the executive managers of the Group and the members of
the Board of Management of Daimler AG on the consolidated
statement of income and consolidated statement of financial
position are shown in table 7 F.45.
Moreover, 50% of the annual bonus of the members of the Board
of Management is paid out after a waiting period of one year.
The actual payout is determined by the development of Daimler
shares compared to an automobile related index (Auto-STOXX).
The fair value of this medium-term annual bonus, which depends
on this development, is measured by using the intrinsic value
at the reporting date.
298
F.46
Expenses in the consolidated statement of income resulting from
share-based payments of current members of the Board of Management
In millions of euros
2016
2017
Wilfried Porth
Ola Källenius
Renata Jungo Brüngger
-0.7
-0.6
- 1.4
-1.8
of the annual bonus
Medium-term component
2016
-0.8
-0.2
-3.8
-3.9
PPSP
Martin Daum²
2016
2017
2016
Dr. Wolfgang Bernhard¹
2017
2016
2017
Dr. Dieter Zetsche
-1.6
2016
At December 31,
2017
In millions of euros
2,645
Total
138
105
120 days or more
58
43
90 to 119 days
91
136
403
315
1,796
2,046
76,127
81,214
2016
At December 31,
2017
In millions of euros
Other financial assets
F.39
60 to 89 days
30 to 59 days
2,486
Receivables impaired individually
1,928
1,894
1,235
Derivative financial instruments used in hedge accounting
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
645
645
1,002
1,002
thereof equity instruments carried at cost
166
166
171
811
Receivables, neither past due
nor impaired individually
Receivables past due,
not impaired individually
less than 30 days
811
1,173
171
thereof equity instruments recognized at fair value
Available-for-sale financial assets
Total
Current Non-current
Total
At December 31, 2016
At December 31, 2017
Current Non-current
80,507
85,787
Net carrying amount
1,173
1,144
In millions of euros
F.38
The marketable debt securities with a carrying amount
of €10,063 million (2016: €10,748 million) are part of the
Group's liquidity management and comprise debt instruments
classified as available-for-sale. When a short-term liquidity
requirement is covered with quoted securities, those securities
are presented as current assets.
15. Marketable debt securities
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 271
-386
20,812
500
13,456
6,856
24,441
296
16,305
7,840
Net carrying amount
-5
-225
-156
-309
-2
-171
- 136
Allowances for doubtful accounts
21,198
505
13,681
Further information on marketable debt securities is provided
in Note 31.
F.37
Changes in the allowance account
for receivables from financial services
In millions of euros
Further information on other financial assets is provided
in Note 31.
At December 31, 2017, receivables with a carrying amount of
€511 million (2016: €648 million) were pledged as collateral for
liabilities (see also Note 24).
Financial assets measured at fair value through profit or loss
relate exclusively to derivative financial instruments which are
not used in hedge accounting.
The line item other financial assets presented in the
consolidated statement of financial position is comprised
as shown in table 71 F.39.
16. Other financial assets
1,054
870
Balance at December 31
18
- 100
Currency translation and other changes
Credit risks included in receivables
from financial services
-181
Reversals
-290
-265
Amounts written off
491
480
1,016
1,054
2016
2017
Balance at January 1
Additions
-299
298
2,379
1,077
744
112
632
Prepaid expenses
364
173
191
485
211
274
Other expected reimbursements
72
72
68
68
2,943
38
785
51
734
2,905
3,094
262
2,832
566
112
678
Others
Inventories
F.41
Approved Capital 2014 has not yet been utilized.
The Annual Shareholders' Meeting held on April 9, 2014
authorized the Board of Management, with the consent of the
Supervisory Board, to increase the share capital of Daimler AG
in the period until April 8, 2019 by a total of €1.0 billion in
one lump sum or by separate partial amounts at different times
by issuing new, registered no-par-value shares in exchange
for cash and/or non-cash contributions (Approved Capital 2014).
The new shares are generally to be offered to the shareholders
for subscription (also by way of indirect subscription pursuant
to Section 186 Subsection 5 Sentence 1 of the German Stock
Corporation Act (AktG)). Among other things, the Board of
Management was authorized with the consent of the Supervisory
Board to exclude shareholders' subscription rights under
certain conditions and within defined limits.
Approved capital
Since January 1, 2016, there has been no change in the number
of shares outstanding/issued. The number at December 31,
2017 is 1,070 million, unchanged from December 31, 2016.
The share capital (authorized capital) is divided into no-par-
value shares. All shares are fully paid up. Each share confers
the right to one vote at the Annual Shareholders' Meeting
of Daimler AG and, if applicable, with the exception of any new
shares potentially not entitled to dividends, to an equal portion
of the profits as defined by the dividend distribution decided
upon at the Annual Shareholders' Meeting. Each share
represents a proportionate amount of approximately €2.87
of the share capital.
Share capital
See also the consolidated statement of changes
in equity 7 F.05.
20. Equity
273
Reimbursements due to other tax refunds
Reimbursements due to the Medicare Act (USA)
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
667
4,962
6,105
1,145
4,960
787
221
566
955
243
712
5,629
653
759
510
Non-financial other assets are comprised as shown in table
7 F.40.
17. Other assets
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
272
5,736
2,899
2,837
6,801
3,221
3,580
3,089
986
2,103
3,167
876
2,291
106
25
81
82
28
54
1,730
Other expected reimbursements predominantly relate to
recovery claims from our suppliers in connection with issued
product warranties.
18. Inventories
Inventories are comprised as shown in table 7 F.41.
The amount of write-down of inventories to net realizable value
recognized as expense in cost of sales was €411 million in
2017 (2016: €842 million). Inventories that are expected to
be recovered or settled after more than twelve months
amounted to €954 million at December 31, 2017 (December
31, 2016: €974 million) and are primarily spare parts.
Reimbursements due to income tax refunds
Total
At December 31, 2016
Non-current
Current
At December 31, 2017
Non-current
Total
Current
In millions of euros
Other assets
F.40
is provided in Note 32.
Further information on financial risk and types of risk
249
assessment are grouped and subject to collective impairment
allowances to cover credit losses.
Table 71 F.44 provides an overview of credit risks included
in trade receivables.
Credit risks
The total expense from the impairment of trade receivables
amounted to €131 million in 2017 (2016: €97 million).
Table 71 F.43 shows changes in the allowance account for
trade receivables.
Allowances
At December 31, 2017, €38 million of the trade receivables
mature after more than one year (2016: €49 million).
Trade receivables are comprised as shown in table 7 F.42.
19. Trade receivables
The carrying amount of inventories recognized during the period
by taking possession of collateral held as security amounted
to €112 million at December 31, 2017 (December 31, 2016:
€126 million). Those assets are utilized in the context of normal
business operations.
In addition, inventories with a carrying amount of €419 million
at December 31, 2017 (December 31, 2016: €296 million)
were pledged as collateral for liabilities from ABS transactions
(see also Note 24).
As collateral for certain vested employee benefits in Germany,
the value of company cars and demonstration cars at
Mercedes-Benz Cars and Mercedes-Benz Vans included in
inventories at Daimler AG were pledged as collateral to the
Daimler Pension Trust e.V. in an amount of €1,033 million at
December 31, 2017 (December 31, 2016: €1,008 million).
Receivables not subject to an individual impairment
266
Dividend payment to Daimler
2
The weighted average duration of the defined benefit
obligations is shown in table 71 F.53.
Defined contribution pension plans
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2017, the total cost from defined contri-
bution plans amounted to €1.6 billion (2016: €1.5 billion).
Of those payments €1.5 billion (2016: €1.4 billion) was related
to governmental pension plans.
Multi-employer plans
Daimler participates in some collectively bargained defined
benefit pension plans maintained by more than one employer.
The Group presents several of these plans in its consolidated
financial statements as defined contribution plans because the
information required to use defined benefit accounting is not
available in a timely manner or in sufficient detail. The Group
cannot exercise direct control over such plans and the plan
trustees have no legal obligation to share information directly
with participating employers. Higher contributions by the
Group to such a pension plan could be required in particular
when an underfunded status exceeds a specific level. Exit
from such a plan can lead to the companies involved having
to offset the potential future shortfall relating to their share
of the plan. Furthermore, the possibility exists that Daimler
can be liable for other participants' obligations.
The multi-employer pension plans previously included a pension
plan in the NAFTA region, for which the information required
to use benefit accounting for defined benefit plans was available
for the first time in 2017. The company withdrew from the
plan by the end of November 2017. The settlement of the plan
resulted in a gain for Daimler Trucks of €117 million. The EBIT
effect is presented in cost of sales in the consolidated statement
of income. The present value of future financial obligations is
presented in provisions for other risks as of December 31, 2017.
As a result, multi-employer plans at the Daimler Group are
classified as not material at December 31, 2017.
Other post-employment benefits
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment health
care benefits with defined entitlements, which have to
be accounted for as defined benefit plans. These obligations
are funded to a small extent through reimbursement rights
and plan assets. Table 71 F.54 shows key data for other post-
employment benefits.
Significant risks in connection with commitments for other
post-employment benefits (medical care) relate to rising
healthcare costs and lower contributions to those costs from
the public sector. In addition, these plans are subject to the
usual risks for defined benefit plans, in particular the risk of
changes in discount rates.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
281
F.51
Significant factors for the calculation of pension benefit obligations
In percent
German Plans
At December 31,
Non-German Plans
Daimler currently plans to make contributions of €0.7 billion to
its pension plans for the year 2018; the final amount is
usually set in the fourth quarter of a financial year. In addition,
the Group expects to make pension benefit payments of
€1.0 billion in 2018.
2017
Effect on future cash flows
The calculations carried out by actuaries were done in isolation
for the evaluation parameters regarded as important. This
means that if there is a simultaneous change in several param-
eters, the individual results cannot be summed due to correla-
tion effects. With a change in the parameters, the sensitivities
shown cannot be used to derive a linear development of the
defined benefit obligation.
2
5
5
-729
-709
-20
-784
-662
-122
280
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Measurement assumptions
The measurement date for the Group's defined benefit pension
obligations and plan assets is generally December 31. The
measurement date for the Group's net periodic pension cost
is generally January 1. The assumptions used to calculate
the defined benefit obligations vary according to the economic
conditions of the countries in which the pension plans
are situated.
Calculation of the defined benefit obligation uses life
expectancy for the German plans based on the 2005 G
mortality tables of K. Heubeck. For non-German plans,
comparable country-specific calculation methods are used.
Table 7 F.51 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
Sensitivity analysis
An increase or decrease in the main actuarial assumptions
would affect the present value of the defined benefit pension
obligations as shown in table 71 F.52.
For the calculation of the sensitivity of life expectancy, by
means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
is achieved.
Net interest income
2016
At December 31,
2016
+ 0.25%
-1,184
-1,045
- 139
-1,193
-1,040
-153
-0.25%
1,308
1,113
195
1,247
1,090
157
Sensitivity for expected increases
in cost of living
+ 0.10%
109
Sensitivity for discount rates
Sensitivity for discount rates
2017
In millions of euros
December 31, 2016
Non-German
Discount rates
Expected increase in cost of living¹
1.8
1.7
1.9
1.7
3.7
3.9
1 For German Plans, expected increases in cost of living may affect - depending on the design of the pension plan - the obligation
to the Group's active employees as well as retirees and their survivors. For most non-German Plans, expected increases in cost of living
do not have a material impact on the amount of the obligation.
F.52
Sensitivity analysis for the present value of defined benefit pension obligation
Total
German
Plans
December 31, 2017
Non-German
Plans
Total
German
Plans
Plans
90
-43
- 173
3,952
46
893
853
40
Total non-exchange-traded instruments
5,465
5,154
311
2,117
1,840
277
Fair value of plan assets
27,215
24,197
3,018
23,384
3,998
20,315
Cash and cash equivalents
57
388
124
555
480
75
Real estate
537
436
101
570
450
120
Other non-exchange-traded instruments
418
378
40
99
42
- 130
3,069
financial instruments
Current service cost
-687
-591
-96
-601
-512
-89
Past service cost, curtailments and settlements
117
117
-15
-20
5
Net interest expense
-161
-118
-43
279
thereof fair value of own transferable
Plans
German
Plans
thereof fair value of self-used plan assets
50
276
50
64
64
1 Including the shares in Renault and Nissan in the amount of €2,010 (in 2016: €2,178) million.
2 Alternative investments mainly comprise private equity.
F.50
Pension cost
In millions of euros
2017
2016
Total
German
Plans
Non-German
Plans
Total
Non-German
19
105
83
35
11
61
Currency translation and other changes
-84
-85
-210
-379
Balance at December 31, 2017
6,654
4,425
6,165
17,244
thereof current
3,135
2,209
4,708
15
10,052
Compounding and effects from changes in discount rates
-578
3,590
2,079
963
6,632
Additions
3,414
2,379
4,179
9,972
Utilizations
-2,576
-2,030
-2,934
-7,540
Reversals
-217
-134
-929
thereof non-current
thereof non-current
2,216
13,820
49,260
63,080
Commercial paper
1,045
1,045
1,701
1,701
Liabilities to financial institutions
17,583
16,972
34,555
16,528
13,146
29,674
Deposits in the direct banking business
9,450
67,073
3,519
53,288
Notes/bonds
1,457
7,192
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
283
24. Financing liabilities
The composition of financing liabilities is shown
in table
F.48
Liabilities from finance leases relate to leases of property,
plant and equipment which transfer substantially all risks
and rewards to the Group as lessee. Future minimum lease
payments under finance leases amounted to €496 million
at December 31, 2017 (2016: €361 million). The reconciliation
of future minimum lease payments from finance lease arrange-
ments to the corresponding liabilities is shown in table 7 F.57.
F.56
Financing liabilities
In millions of euros
Current
At December 31, 2017
Non-current
Total
Current
At December 31, 2016
Non-current
Total
13,785
9,427
4,734
2,181
-366
-71
-448
-375
-73
F.53
Weighted average duration of the defined
benefit obligations
In years
2017
2016
German Plans
16
17
Non-German Plans
17
17
-437
F.54
- 1 year
68
22
Sensitivity for expected increases
in cost of living
-0.10%
- 107
-89
-18
- 120
- 100
-20
Sensitivity for life expectancy
+ 1 year
487
417
70
475
407
Sensitivity for life expectancy
Key data for other post-employment benefits
In millions of euros
2017
Other
Provisions for other risks include obligations for expected
reductions in revenue already recognized, such as bonuses,
discounts and other price reduction commitments. They also
include expected costs in connection with liability and litigation
risks as well as risks from legal proceedings, provisions for
optimization programs, provisions for environmental protection
risks, as well as provisions for other taxes and various other
risks which cannot be allocated to any other class of provision.
Further information on other provisions for other risks
is provided in Notes 5 and 29.
F.55
Provisions for other risks
In millions of euros
Product
warranties
Personnel and
social costs
Other
Total
Balance at December 31, 2016
6,102
4,260
5,697
16,059
thereof current
2,512
Provisions for personnel and social costs primarily comprise
expected expenses of the Group for employee anniversary
bonuses, profit sharing arrangements and management bonuses
as well as early retirement and partial retirement plans. The
additions recorded to the provisions for profit sharing and man-
agement bonuses in the reporting year usually result in cash
outflows in the following year. The cash outflow for non-current
provisions for personnel and social costs is primarily expected
within a period until 2028.
Personnel and social costs
Daimler issues various types of product warranties, under
which it generally guarantees the performance of products
delivered and services rendered for a certain period. The
provision for these product warranties covers expected costs
for legal and contractual warranty claims as well as expected
costs for goodwill consessions and recall campaigns. The
utilization date of product warranties depends on the incidence
of the warranty claims and can span the entire term of the
product warranties. The cash outflow for non-current product
warranties is principally expected within a period until 2020.
Product warranties
2016
Present value of defined
benefit obligations
1,142
1,187
Fair value of plan assets and
Funded status
reimbursement rights
512
Net periodic cost for other
68
- 1,074
72
-1,115
-71
-75
282 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. Provisions for other risks
The development of provisions for other risks is summarized
in table F.55.
post-employment benefits
2,010
Alternative investments²
18,475
582
465
117
Actuarial gains/losses (-)
996
541
455
994
830
164
Actual return on plan assets
1,485
918
567
1,576
1,295
281
112
Contributions by the employer
377
Interest income from plan assets
65
16
49
Present value of the defined benefit obligation
at December 31
31,744
27,746
3,998
31,173
26,982
4,191
Fair value of plan assets at January 1
23,384
20,315
3,069
20,226
17,306
2,920
489
-804
3,692
96
-494
16
-510
4
16
-12
Fair value of plan assets at December 31
27,215
24,197
3,018
23,384
20,315
3,069
Funded status
-4,529
-3,549
thereof recognized in other assets
Currency exchange-rate changes and other changes¹
3,596
- 163
-868
2,427
2,337
90
Contributions by plan participants
58
54
4
71
66
5
Settlements
-52
-52
Pension benefits paid
-910
-702
-208
-705
96
17
Currency exchange-rate changes and other changes¹
512
3,837
89
Interest cost
648
495
153
750
595
155
Contributions by plan participants
58
54
4
71
66
5
Actuarial gains (-)/losses from changes
23,803
in demographic assumptions
27,640
601
591
Present value of defined benefit pension obligations and fair value of plan assets
German
December 31, 2017
Non-German
Total
Plans
Plans
Total
German
Plans
December 31, 2016
Non-German
Plans
In millions of euros
Present value of the defined benefit obligation
at January 1
31,173
26,982
4,191
Current service cost
687
96
-787
-23
-10
704
3,015
2,718
297
Past service cost, curtailments and settlements
-117
-117
-37
20
-57
Pension benefits paid
-973
-744
-229
-932
-748
- 184
351
-13
1,055
26
-11
6
-17
Actuarial gains (-)/losses from changes
in financial assumptions
1,076
419
657
3,021
2,733
288
Actuarial gains (-)/losses from experience
adjustments
2
-55
57
5
-21
Actuarial gains (-)/losses
-980
96
-7,789
58
-6,667
to contribute to additional financial security during retirement,
and in the case of death or invalidity to be capable of being
planned and fulfilled by the respective company of the Group
and to have a low-risk structure. In addition, a committee
exists that approves new pension plans and amendments to
existing pension plans as well as guidelines relating to com-
pany retirement benefits.
The general requirements with regard to retirement benefit
models are laid down in the Pension Policy, which has Group-wide
validity. Accordingly, the committed benefits are intended
Risks from defined benefit pension plans
Significant plans exist primarily in the United States and Japan.
They comprise plans relating to final salaries as well as plans
relating to salary based components. Most of the obligations
outside Germany from defined benefit pension plans are
funded by assets outplaced into long-term investment funds.
Non-German plans
In Germany, there are no statutory or regulatory minimum
funding requirements.
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by assets invested in long-
term outsourced funds. Contractual trust arrangements (CTA)
exist between Daimler AG as well as some subsidiaries
in Germany and the Daimler Pension Trust e.V. The Daimler
Pension Trust e.V. acts as a collateral trust fund.
As well as the employer-financed pension plans granted
by German companies, the employees of some companies
are also offered various earnings-conversion models.
In addition, previously concluded defined benefit plans exist
which primarily depend on employees' wage-tariff classification
upon transition into the benefit phase and which foresee a life
annuity.
277
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Most employees in Germany have defined benefit pension
plans; most of the pension plans for the active workforce are
based on individual retirement benefit accounts, to which
the Company makes annual contributions. The amount of the
contributions for employees paid according to wage-tariff
agreements depends on the tariff classification in the respec-
tive year, and for executives it depends on their respective
income. For the commitments to retirement benefits made
until 2011, the contributions continue to be converted into
capital components and credited to the individual pension
account with the application of fixed factors related to each
employee's age. The conversion factors include a fixed value
increase. The pension plans were newly structured for new
entrants in 2011 to reduce the risks associated with defined
benefit plans. New entrants now benefit from value increases
of the contributions through an investment fund with a special
lifecycle model. The Company guarantees at a minimum the
value of the contributions paid in. Pension payments are made
either as a life annuity, twelve annual installments, or a single
lump sum.
German plans
The Group's main German and non-German pension plans
are described below.
Provisions for pension obligations are made for defined
commitments to active and former employees of the Daimler
Group and their survivors. The defined benefit pension plans
provided by Daimler generally vary according to the economic,
tax and legal circumstances of the country concerned. Most
of the defined benefit pension plans also provide benefits in the
case of invalidity and death.
Defined benefit pension plans
At the Daimler Group, defined benefit pension obligations exist
as well as, to a smaller extent, defined contribution pension
obligations, specific to the various countries. In addition,
healthcare benefit obligations are recognized outside Germany.
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obligations
result at the Daimler Group in particular from changes in
financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most
of the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
Table 71 F.47 shows the composition of provisions for pension
benefit plans and similar obligations.
The fair value of plan assets is predominantly determined by
the situation on the capital markets. Unfavorable develop-
ments, especially of equity prices and fixed-interest securities,
could reduce that fair value. The diversification of fund assets,
the engagement of asset managers using quantitative and
qualitative analyses, and the continual monitoring of performance
and risk help to reduce associated investment risk. The Group
regularly makes additional contributions to the plan assets
in order to cover future obligations from defined benefit pension
plans. Furthermore, in 2017, the Group made an extraordi-
nary contribution of €3.0 billion into the German pension plan
assets, in order to sustainably strengthen them. In 2016,
shares in Renault and Nissan with a fair value of €1.8 billion
were contributed to the German plan assets.
F.47
Composition of plan assets
The development of the relevant factors is shown in table
7 F.48.
defined benefit pension plans
Reconciliation of the net obligation from
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
278
9,034
5,767
1,187
1,142
7,847
4,625
Provision for pension benefits
Provision for other
post-employment benefits
December 31,
2016
2017
In millions of euros
Composition of provisions for pensions
and similar obligations
As a general principle, it is the Group's objective to design
new pension plans as defined benefit plans based on capital
components or on annual contributions, or as defined
contribution plans.
Plan assets and income from plan assets are used solely
to pay pension benefits and to administer the plans.
The composition of the Group's pension plan assets is
shown in table 7 F.49.
22. Pensions and similar obligations
The number of phantom shares that vest of the PPSPs granted
in 2014 to 2017 will be based on the relative share performance,
which measures the development of the price of a share price
index based on a competitor group including Daimler, and the
RoS compared with benchmarks oriented towards competitors.
Special rules apply for the members of the Board of Management:
Daimler's RoS must be not equal to but higher than that of
the competitors in order to achieve the same target achievement
as the other plan participants. For the PPSP granted in 2015
and until 2017, an additional limit on target achievement was
agreed upon for the reference parameter RoS for the members
of the Board of Management. In the case of target achievement
between 195% and 200%, an additional comparison is made on
the basis of the RoS achieved in absolute terms. If the actual
RoS for the automotive business is below the strategic target
(currently 9%) in the third year of the performance period,
target achievement is limited to 195%.
12,430
1,759
12,707
10,949
1,758
Other exchange-traded instruments
5
1
4
5
3
2
Total exchange-traded instruments
21,750
19,043
2,707
21,267
14,189
The Group recognizes a provision for awarding the PPSP in the
consolidated statement of financial position. Since payment
per vested phantom share depends on the quoted price of
Daimler's ordinary shares, that quoted price essentially
represents the fair value of each phantom share. The proportionate
remuneration expenses from the PPSP recognized in the
individual years are measured based on the price of Daimler
ordinary shares and the estimated target achievement.
Bonds
5
Determination of the number of phantom shares that vest of the
paid-out PPSP 2013 is based on return on net assets derived
from internal targets and return on sales (ROS) compared with
benchmarks oriented towards competitors.
In 2017, the Group adopted a Performance Phantom Share Plan
(PPSP), similar to those used in previous years, under which
eligible employees are granted phantom shares entitling them
to receive cash payments after four years. During the four-
year period between the allocation of the preliminary phantom
shares and the payout of the plan at the end of the term,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares. The
amount of cash paid to eligible employees at the end of the
holding period is based on the number of vested phantom
shares (determined over a three-year performance period)
multiplied by the quoted price of Daimler's ordinary shares
(calculated as an average price over a specified period at the
end of the four-year plan period). The vesting period is
therefore four years. For the existing plans, the quoted price
of Daimler's ordinary shares to be used for the payout is
limited to 2.5 times the Daimler share price at the date of grant.
Furthermore, the payout for the members of the Board of
Management is also limited to 2.5 times the allotment value
used to determine the preliminary number of phantom
shares. The limitation of the payout for the members of the
Board of Management also includes the dividend equivalent.
Performance Phantom Share Plans
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1,041
Corporate bonds
9,485
8,556
929
8,212
7,547
665
Securitized bonds
46
30
16
57
52
Market prices are available for equities and bonds due
to their listing in active markets. Most of the bonds
have investment grade ratings. They include government
bonds of very good creditworthiness.
3,397
4,438
At December 31, 2016
German Non-German
Plans
Plans
Energy, commodities and utilities
959
831
128
1,048
907
141
Financials
1,193
1,027
166
1,366
1,147
219
Healthcare
Total
547
Plans
Total
-1,122
58
thereof recognized in provisions for pensions
and similar obligations
-4,625
-3,549
- 1,076
-7,847
-6,667
- 1,180
1 Including reclassifications to provisions for other risks.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pension cost
The components of pension cost included in the consolidated
statement of income are shown in table > F.50.
F.49
Composition of plan assets
In millions of euros
At December 31, 2017
German Non-German
Plans
440
107
664
186
Others
46
46
43
43
Equities
7,556
6,612
944
8,555
7,523
1,032
Government bonds
4,658
3,844
814
981
1,167
195
932
559
105
Industrials¹
2,535
2,440
95
2,893
2,783
2,792
110
1,149
942
207
1,374
1,146
228
Technology and telecommunication
1,127
Consumer goods
11,460
F.56.
2,766
At December 31, 2016
Current
In millions of euros
Other liabilities
F.60
9,003
Total
5,559
9,470
5,802
3,668
695
336
359
3,444
Current
Non-current
Total
Miscellaneous other liabilities
1,793
1
314
10
304
1,792
1,872
1
1,871
Other tax liabilities
422
9
413
Income tax liabilities
At December 31, 2017
Non-current
1,154
388
558
Other deferred income
3,381
1,714
Deferral of revenue from multi-year service
and maintenance agreements
Total
Non-current
Current
5,095
Total
At December 31, 2017
Non-current
Current
In millions of euros
Deferred income
F.59
12,869
At December 31, 2016
1,748
3,450
5,198
1,662
823
839
1,724
900
824
from operating lease arrangements
Deferral of advance rental payments received
1,448
950
498
1,497
963
534
Deferral of sales revenue received from sales
with residual-value guarantees
596
3,327
-
342
Dividends received from
211
187
Interest received
-229
-304
equity-method investments
2016
Interest paid
In millions of euros
Cash flows included in cash used for/
provided by operating activities
F.62
2,150
-48
2017
843
103
Dividends received from
other shareholdings
8,876
Other changes
-325
-119
Fair value changes
-7,135
Obtaining or losing control of subsidiaries
Changes in foreign exchange rates
16,794
Cash flows
In millions of euros
2017
Changes in liabilities arising from financing activities
F.63
85
52
1,644
388
1,527
165
Cash used for/ provided by operating activities
Changes in other operating assets and liabilities
are shown in table 7 F.61.
At December 31, 2017 similar to the prior year, cash and cash
equivalents included restricted funds of less than €1 million.
Calculation of funds
28. Consolidated statement of cash flows
285
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The decrease in provisions in the reporting year mainly resulted
from provisions for pensions and similar obligations primarily
due to an extraordinary contribution to the German pension plan
assets.
2,453
2,438
2,682
10
2,672
346
4
15
Table 71 F.62 shows cash flows included in cash used for/
provided by operating activities.
The line item other non-cash expense and income within
the reconciliation of profit before income taxes to cash
provided by operating activities in the reporting year primarily
comprised the Group's share in the profit/loss of companies
accounted for using the equity method (see Note 13). In the
prior year, the reconciling item mainly comprised the Group's
share in the profit/loss of companies accounted for using the
equity method. An additional effect resulted from the income
related to the contribution of the shares of Renault S.A. and
Nissan Motor Company Ltd. into the pension plan assets.
Cash used for investing activities
- 108
341
- 1,467
2016
2017
Financial instruments
Provisions
In millions of euros
Changes in other operating assets and liabilities
F.61
Table 71 F.63 includes changes in liabilities arising from financing
activities, divided into cash and non-cash components, which
have to be prospectively disclosed starting January 1, 2017.
Cash provided by financing activities includes cash flows
from hedging the currency risks of financial liabilities. In 2017,
cash provided by financing activities included payments for the
reduction of outstanding finance lease liabilities of €39 million
(2016: €43 million).
Cash provided by financing activities
The consideration paid for the acquisition comprised the
purchase price amounting to €1,100 million and financing
liabilities settled upon finalizing the transaction in an
amount of €2,741 million. The consideration was reduced
by the acquired cash and cash equivalents amounting
to €191 million.
In the prior year the cash flow was affected by the acquisition
of Athlon Car Lease International B.V.
Miscellaneous other assets and liabilities
9,542
The investment strategy is reviewed regularly and adjusted
if deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed
of representatives of the Finance and Human Resources depart-
ments. The pension plan assets are generally oriented towards
the structure of the pension obligations.
2,589
150
between one and five years
30
27
12
12
161
42
within one year
Maturity
2016
2017
at December 31,
2016
2017
39
61
68
89
284
233
352
128
144
361
496
110
236
48
71
158
307
later than five years
93
2016
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2017
Interest included in future
minimum lease payments
203
30
352
325
27
Liabilities from finance leases
233
10,568
5,823
11,037
4,823
6,214
Liabilities from ABS transactions
11,642
4,745
Loans, other financing liabilities
642
960
lease payments
Future minimum
Liabilities from finance
lease arrangements
at December 31,
In millions of euros
Reconciliation of minimum lease payments to liabilities
from finance lease arrangements
F.57
117,686
788
278
70,398
47,288
127,124
78,378
48,746
510
1,602
at December 31,
25. Other financial liabilities
11,522
F.58.
539
496
Deposits received
883
883
905
1,035
905
1,155
48
1,107
1,317
25
1,292
Accrued interest expenses
477
556
1,033
8,933
10,220
2,097
8,123
10,715
2,012
8,703
The composition of other financial liabilities is shown
in table
4,857
263
4,594
5,133
231
4,902
Other
Liabilities from wages and salaries
2,292
Miscellaneous other financial liabilities
1,062
Total
At December 31, 2016
Non-current
Current
Total
At December 31, 2017
Non-current
Current
In millions of euros
Other financial liabilities
F.58
Table 71 F.60 shows the composition of other liabilities.
The composition of deferred income is shown in table
71 F.59.
26. Deferred income
Further information on other financial liabilities is provided
in Note 31.
Financial liabilities measured at fair value through profit
or loss relate exclusively to derivative financial instruments
which are not used in hedge accounting.
1,230
Derivative financial instruments used
in hedge accounting
168
27. Other liabilities
696
2,325
528
1,108
Liabilities from residual value guarantees
186
79
107
1,217
111
49
62
Financial liabilities recognized at fair
value through profit or loss
2,463
1,312
1,151
daimler.com/company/business-units/daimler-buses
Daimler Buses is still on the upswing, thanks to its pioneering
city buses and coaches with over eight tons gross vehicle
weight, its global positioning and its innovative mobility solu-
tions. Our full line of vehicles from the Mercedes-Benz, Setra
and BharatBenz brands covers a wide range of requirements. In
addition, our products impress customers through their safety,
efficiency and environmental friendliness. Our portfolio is rounded
out by the OMNIplus and BusStore service brands, our worldwide
workshop network and our comprehensive range of services -
everything that keeps Daimler's bus segment on the move.
Citaro hybrid
The Mercedes-Benz Citaro, our best-selling
city bus, is now also on the market in
a future-oriented hybrid variant.
DAIMLER ANNUAL REPORT 2017 | #1 | CORE
WORLDWIDE
SUCCESS
22
The Vito and the V-Class full-size MPV are also
pacesetters for the global growth strategy
of Mercedes-Benz Vans. The mid-size vans with
the star are exciting and impressing our customers
all over the world. The Mercedes-Benz Vito and the
V-Class are proving to be strong sales drivers with
sustained high growth rates. Their attractive design
and diverse variants are setting the benchmarks in
their respective segments. The versatile Vito mid-size
van combines spaciousness with high quality and
stands out through its great adaptability. For its part,
the V-Class combines the high-quality design of a
Mercedes-Benz car with the strengths of a mid-size
van. Mercedes-Benz Vans has been delivering Vito
and V-Class models in China, the world's largest auto-
mobile market, since 2016. Both vehicles are "Made
in China for China" and manufactured by our local
joint venture Fujian Benz Automotive Co., Ltd. (FBAC)
in Fuzhou.
RECORD
BREAKERS
DAIMLER ANNUAL REPORT 2017 | #1 | CORE 21
ON THE ROAD
Our city buses are also scoring points with their innovations.
For example, the hybrid drive of the Mercedes-Benz Citaro,
combined with its new electrohydraulic steering system, is further
reducing its fuel consumption. And our sales offensive in the
emerging markets is in full swing. Daimler Buses has launched two
new bus models on the market in Kenya, Cameroon and the Ivory
Coast. This is how Daimler Buses is responding in eastern and
central Africa to the growing demand for comfortable and safe
buses for passenger transportation. Our global production net-
work is also part of this campaign: The chassis for local assembly
come from our bus production plants in India and Brazil.
daimler.com/products/buses/mercedes-benz
④daimler.com/products/buses/setra
REDEFINING MOBILITY WITH
The new Setra S 531 DT double-decker bus
and the Setra TopClass 500 are now rounding
out our successful portfolio.
MUSEUM
24
DAIMLER ANNUAL REPORT 2017 | #1 | CASE 25
H
99 FUTURE VEHICLES WILL BE
CONNECTED, AUTONOMOUS,
ELECTRIC AND SHARED... 66
О НЕТВО
CASE
99...WE ARE BASICALLY
New V
Two coaches celebrate world premieres in the booming intercity
bus market. The year 2017 was a special one for Daimler Buses.
The new Setra S 531 DT double-decker bus and the Setra TopClass 500
impress with their efficiency, versatility, comfort and safety. The
Mercedes-Benz Tourismo RHD high-decker coach also celebrated its
premiere in 2017. It's impressing transportation companies, passengers
and drivers alike through its cost-effectiveness, safety, functionality
and high level of comfort.
EF
Mercedes-Benz is the world's first premium automaker in
the promising segment of mid-size pickups, represented
by the X-Class. The mid-size pickup segment is global in scope,
high-volume and set for further growth. Thanks to its typical
pickup strengths and Mercedes-Benz standards of design, com-
fort, safety and connectivity, the X-Class forms a bridge between
commercial and private use and between rural and urban appli-
cations. That makes it not only a commercial vehicle but also a
lifestyle and family vehicle. So the X-Class is adding a fourth
category to the Mercedes-Benz Vans portfolio - at the interface
between cars and commercial vehicles, where we're already
the van segment.
AN INTELLIGENT MIX.
VEHICLES FOR
EVERY MARKET
DAIMLER ANNUAL REPORT 2017 | #1 | CORE 17
In another milestone, Daimler Trucks has put more than 60,000 BharatBenz
trucks on the road in India in the five years since the brand's market launch.
As a world market leader with a global pres-
ence, Daimler Trucks is close to its customers.
We identify customer needs quickly and respond
to them with tailor-made solutions. That's why
we aim to expand our strong position in our core
markets and enter new markets as well. For exam-
ple, in 2012 Daimler Trucks launched BharatBenz,
its first brand specially tailored to the needs of
a specific market. Modern BharatBenz trucks
in weight classes between nine and 49 tons are
manufactured locally for the Indian market. At
our production plant in Wanaherang, Indonesia,
Mercedes-Benz trucks have been rolling off the
assembly line since 2017. In addition to FUSO
vehicles, Daimler Trucks will produce heavy-duty
trucks with the star for the Indonesian market
at this plant in the future. Daimler Trucks' FUSO
brand has occupied a very strong position in
Indonesia for more than 40 years. In China, the
world's biggest truck market, Daimler is also
stepping on the gas through Beijing Foton Daimler
Automotive (BFDA), its joint venture with Beiqi
Foton Motor. All in all, these are the ideal precondi-
tions for keeping Daimler Trucks in the forefront of
the international truck markets in the future.
④ daimler.com/company/business-units/
daimler-trucks
In 2017, Daimler and its partner Beiqi
Foton Motor produced more than
112,000 Auman brand mid-size and
heavy-duty trucks in China.
18 DAIMLER ANNUAL REPORT 2017 | #1 | CORE
A STRONG
VAN PORTFOLIO
A comprehensive product range is the engine of our
"Mercedes-Benz Vans goes global" strategy. Thanks to its
complete range of vans for private and commercial use,
Daimler is ideally positioned in the growing global van market.
The mid-size pickups, commercial vehicles, full-size MPVs and
travel and recreational vehicles from Mercedes-Benz stand
for reliability, quality and value retention all over the world. The
portfolio ranges from the X-Class to the Citan urban delivery van,
the mid-size Vito ("Metris" in the United States) and V-Class vans
including the Marco Polo models, and the large Sprinter van.
The Vito is a reliable partner for tradesmen,
a delivery van, a high-capacity taxi and an
emergency vehicle - a real all-rounder on
course for success in many sectors all over
the world.
enjoying success with the Vito and the V-Class. The X-Class
appeals to pickup owners who would like their vehicles to have
more of the qualities typical of cars. It also attracts customers
who have previously driven a car, a van or an SUV.
Mid-size vans with the star are a major pillar of Mercedes-Benz
Vans' success. The V-Class full-size MPV is a standout vehicle
for family, sports and recreational activities. It combines the func-
tionalities of traditional vans with the strengths of Mercedes-Benz
sedans. The new V-Class RISE was added to the line in 2017.
The Marco Polo travel and camper vans, which are based on the
V-Class and the Vito, have been especially successful. For the first
time, they are now also offered with right-hand drive in Australia
and the United Kingdom. Following the Marco Polo and the Marco
Polo ACTIVITY, the product family has been supplemented by the
compact Marco Polo HORIZON camper van since 2017.
daimler.com/products/camper-vans
The new Marco Polo HORIZON combines
functionality with high quality design -
and it's thrilling new customer groups.
Stylish and robust: Mercedes-Benz has
created the X-Class for a wide range of
customer groups all over the world.
S.MB 4704
S MB3098
SUCCESS
STORY
The Mercedes-Benz Sprinter established the market for large vans - and has broken records
ever since. More than 3.4 million units have been delivered to customers in over 130 countries to date.
That makes the Sprinter one of the most successful commercial vehicles of all time and a bestseller
in the Daimler product portfolio. In addition to its commercial applications, the Sprinter is playing an
increasingly important role in the growing market for camper vans. With the introduction of the fully
connected new Sprinter, Mercedes-Benz Vans is ushering in the age of the digital van and once again
reinventing the worldwide van segment. Through numerous innovations and even greater versatility, our
new large van offers customized solutions to a wide range of customers and sectors. In addition, the
new model generation equipped with new drive variations offers tailor-made solutions for the diverse
requirements of the growing camper van market.
daimler.com/company/business-units/mercedes-benz-vans
5E6244
The launch of the new Sprinter will begin in
the first half of 2018 in Europe, followed
by other markets. It will once again redefine
④ daimler.com/products/vans
66
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
Other receivables and financial assets
Marketable debt securities
73,398
76,503
Loans and receivables
3,089
3,167
Other receivables and financial assets
10,614
11,990
10,063
Trade receivables
61,346
Receivables from financial services¹
Assets
In millions of euros
2016
At December 31,
2017
according to IAS 39 measurement categories
Carrying amounts of financial instruments presented
F.70
59,695
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10,748
1,173
The table above does not include cash and cash equivalents
or the carrying amounts of derivative financial instruments
used in hedge accounting as these financial instruments are
not assigned to an IAS 39 measurement category.
186
111
Financial liabilities measured at fair value
through profit or loss²
139,071
149,820
(amortized) cost
Financial liabilities measured at
11,567
117,453
10,051
Other financial assets
12,474
126,772
10,574
106
82
Financing liabilities³
Trade payables
Liabilities
Financial assets measured at fair value
through profit or loss²
811
11,559
11,236
Available-for-sale financial assets
Other financial liabilities4
1 This does not include lease receivables of €24,441 million
as of December 31, 2017 (2016: €20,812 million) as these
are not assigned to an IAS 39 measurement category.
294
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
In millions of euros
Measurement hierarchy of financial assets and liabilities not measured at fair value
F.69
2,463
2,649
2,649
2,463
807
696
3 Fair value measurement is based on inputs for which no observable market data is available.
Total
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
186
186
111
111
at fair value through profit or loss
Derivative financial instruments
used in hedge accounting
Financial liabilities measured
Liabilities measured at fair value
7,586
5,164
696
807
3 Fair value measurement is based on inputs for which no observable market data is available.
Level 11
Total
44,037
9,577
9,144
62,758
118,929 56,171
63,944 54,800
10,948
1,371
44,037
48,934
781
128,437 58,496 69,941
68,422 57,715 10,707
11,081
10,300
48,934
thereof other financing liabilities
At December 31, 2017
Level 22 Level 33
thereof liabilities from ABS transactions
Fair values of financial liabilities measured at cost
Financing liabilities
80,851
80,851
86,136
86,136
Fair values of financial assets measured at cost
Receivables from financial services
Level 33
At December 31, 2016
Level 22
Level 11
thereof bonds
2 Financial instruments classified as held for trading purposes.
These figures comprise financial instruments that are not used
in hedge accounting.
3 This does not include liabilities from finance leases of €352 million
as of December 31, 2017 (2016: €233 million) as these are not
assigned to an IAS 39 measurement category.
4 This does not include liabilities from financial guarantees
of €141 million as of December 31, 2017 (2016: €169 million)
as these are not assigned to an IAS 39 measurement category.
-329
hedging instruments
Net gains/losses from
2016
2017
In millions of euros
Net gains/losses from fair value hedges
F.74
-157
-195
- 180
Hedges of net investments
-805
72
-68
1,751
Cash flow hedges
Fair value hedges
In millions of euros
2016
At December 31,
2017
in foreign operations
Fair values of hedging instruments
Net gains/losses from underlying
349
Other financial obligations
The Group has financial obligations resulting from
non-cancelable long-term rental agreements and operat-
ing leases for property, plant and equipment; the contracts
partially include renewal or purchase options and price-escalation
clauses. In 2017, Daimler recognized expense payments
from operating leases of €563 million (2016: €539 million).
Table 71 F.65 provides an overview of when future minimum
lease payments under non-cancelable long-term rental and
lease agreements fall due (nominal amounts).
Furthermore, other financial obligations exist from the
acquisition of intangible assets, property, plant
and equipment and lease property of €4,876 million (2016:
€3,977 million).
In addition, the Group had issued irrevocable loan
commitments as of December 31, 2017. These loan commit-
ments had not been utilized as of that date. An overview
of the maturities of irrevocable loan commitments is shown
in Table 7 F.79 in Note 32.
F.65
Future minimum lease payments under non-cancelable
long-term rental and lease agreements (nominal amounts)
In millions of euros
Maturity
not later than one year
transactions
At December 31,
2017
698
596
later than one year and not later
than five years
1,421
1,335
later than five years
890
597
187
2016
F.73
-1,932
4,166
Net gains and losses from these hedging instruments
and the changes in the value of the underlying transactions
are shown in table 71 F.74.
The Group uses fair value hedges primarily for hedging
interest rate risks.
Fair value hedges
Table 71 F.73 shows the fair values of hedging instruments
at the end of the reporting period.
Fair values of hedging instruments
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its commercial business
or refinancing activities. These are mainly interest rate risks,
currency risks and commodity price risks. For these hedging
purposes, the Group mainly uses currency forward transac-
tions, cross currency interest rate swaps, interest rate swaps,
options and commodity forwards.
Use of derivatives
Information on derivative financial instruments
See Note 1 for qualitative descriptions of accounting for
financial instruments (including derivative financial instruments).
F.71
Total interest income and total interest expense for financial
assets or financial liabilities that are not measured at
fair value through profit or loss are shown in table > F.72.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 295
Net gains/losses on financial liabilities measured at (amortized)
cost mainly include gains and losses from currency translation.
Net losses on loans and receivables mainly include impairment
losses that are charged to cost of sales, selling expenses
and other financial income/expense, net. Foreign currency
gains and losses are also included.
Net gains on available-for-sale financial assets mainly include
income from the measurement of equity interests as well as
gains realized on their disposal. In 2016, these gains primarily
comprise income of €605 million from the transfer of the
investments in Renault and Nissan into the Daimler Pension
Trust e.V. (see Note 3).
Net gains/losses of financial assets and liabilities measured
at fair value through profit or loss primarily include gains
and losses attributable to changes in fair values.
Table 71 F.71 shows the net gains or losses of financial
instruments included in the consolidated statement
of income (excluding derivative financial instruments
used in hedge accounting).
Net gains or losses
The carrying amounts of financial instruments presented
according to IAS 39 measurement categories are shown
in table 7 F.70.
Measurement categories
Total interest income and total interest expense
Net gains/losses
In millions of euros
Financial assets and liabilities recognized
at fair value through profit or loss¹
Available-for-sale financial assets
4,579
-2,415
Total interest income
Total interest expense
In millions of euros
2016
2017
Total interest income and total interest expense
F.72
1 Financial instruments classified as held for trading;
these amounts relate to financial instruments that are
not used in hedge accounting.
-165
-50
-346
-542
735
27
-229
131
2016
2017
at (amortized) cost
Financial liabilities measured
Loans and receivables
12,750
5,974
6,721
1,730
Trade payables
Financing liabilities
Cofiroute's risks and obligations are limited to €70 million.
Daimler Financial Services AG and Deutsche Telekom AG are
jointly obliged to indemnify Cofiroute for amounts exceeding
this limitation.
118,930
118,586
The fair values of financial instruments were calculated on
the basis of market information available on the balance
sheet date. The following methods and premises were used:
Receivables from financial services
The fair values of receivables from financial services with
variable interest rates are estimated to be equal to the
respective carrying amounts because the interest rates agreed
and those available in the market do not significantly differ.
The fair values of receivables from financial services with fixed
interest rates are determined on the basis of discounted
expected future cash flows.
F.66
127,124
12,474
Carrying amounts and fair values of financial instruments
Financial assets
Receivables from financial services
Trade receivables
Cash and cash equivalents
Marketable debt securities
Available-for-sale financial assets
At December 31, 2017
Carrying
amount
Fair value
In millions of euros
At December 31, 2016
Carrying
amount
128,437
118,929
10,715
2,463
2,463
Table 71 F.66 shows the carrying amounts and fair values
of the respective classes of the Group's financial instruments.
The fair value of a financial instrument is the price that
would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at
the measurement date. Given the varying influencing factors,
the reported fair values can only be viewed as indicators
of the prices that may actually be achieved on the market.
696
186
186
111
111
117,686
3,009
290
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31. Financial instruments
Carrying amounts and fair values of financial instruments
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Miscellaneous other financial liabilities
Other financial liabilities
11,567
11,567
12,474
2,528
Fair value
85,787
86,136
thereof equity instruments measured at cost
1,002
1,002
645
645
Financial assets recognized at fair value through profit or loss
82
82
106
166
106
2,379
2,379
1,730
127,062
126,713
3,089
3,089
3,167
3,167
Derivative financial instruments used in hedge accounting
166
171
171
80,507
80,851
11,990
11,990
10,614
10,614
12,072
12,072
10,981
10,981
10,063
10,063
10,748
10,748
Other financial assets
Available-for-sale financial assets
1,173
1,173
811
811
thereof equity instruments measured at fair value
10,715
1,730
151,120
10,220
142,122
10,914
3,513
6,721
10,234
Financial assets available-for-sale
Financial assets measured at fair value
At December 31, 2016
Level 22 Level 33
Level 11
Total
5,164
At December 31, 2017
Level 22
Level 33
Total
In millions of euros
Measurement hierarchy of financial assets and liabilities measured at fair value
F.68
293
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1,256
-1,393
443
Level 11
-1,393
5,750
measured at fair value
1,730
2,379
2,379
12,695
Derivative financial instruments
used in hedge accounting
106
106
82
82
at fair value through profit or loss
thereof equity instruments
Financial assets measured
5,071
93
166
10,748
3,448
65
106
6,615
10,063
thereof marketable debt securities
171
73
5,677
Net amounts
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial assets measured at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial liabilities measured at fair value through profit or loss (see Note 25).
1,836
2,649
292
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of
these financial instruments, it is assumed that the fair values
approximate the carrying amounts.
Financial liabilities measured at fair value through profit or loss
comprise derivative financial instruments not used in hedge
accounting. For information regarding these financial instruments
as well as derivative financial instruments used in hedge
accounting, see the notes above under marketable debt
securities and other financial assets.
Other financial liabilities
Due to the short maturities of these financial instruments,
it is assumed that their fair values are equal to the carrying
amounts.
Trade payables
The fair values of bonds, loans, commercial paper, deposits
in the direct banking business and liabilities from ABS transac-
tions are calculated as present values of the estimated future
cash flows. Market interest rates for the appropriate terms are
used for discounting.
Financing liabilities
Other receivables and assets are carried at amortized cost.
Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values
approximate the carrying amounts.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
derivative interest rate hedging contracts; the fair values
of interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows using the market interest rates appropriate
to the remaining terms of the financial instruments.
derivative commodity hedging contracts; the fair values of
commodity hedging contracts (e.g. commodity forwards)
are determined on the basis of current reference prices with
consideration of forward premiums and discounts.
equity interests measured at cost; fair values could not be
determined for these financial instruments because no
stock exchange or market prices are available. These equity
interests comprise investments in non-listed companies
for which no objective evidence existed at the balance sheet
date that these assets were impaired and whose fair values
cannot be determined with sufficient reliability. It is assumed
that the fair values approximate the carrying amounts of
these financial instruments. Daimler does not intend to sell the
equity interests which are presented at December 31, 2017.
- debt and equity instruments measured at fair value; these
instruments were measured using quoted market prices
at December 31. If quoted market prices were not available
for these debt and equity instruments the fair value
measurement is based on inputs that are either directly
or indirectly observable on active markets.
Marketable debt securities and other financial assets
Financial assets available-for-sale include:
Trade receivables and cash and cash equivalents
Due to the short terms of these financial instruments and the
fundamentally lower credit risk, it is assumed that their fair
values are equal to the carrying amounts.
at which similar loans with identical terms could have been
obtained as of December 31, 2017 and December 31, 2016.
The discounting is based on the current interest rates
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 291
143,365
10,220
Financial assets measured at fair value through profit or loss
include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
derivative currency hedging contracts; the fair values of cross
currency interest rate swaps are determined on the basis
of the discounted estimated future cash flows using market
interest rates appropriate to the remaining terms of the
financial instruments. The valuation of currency forwards
is based on market quotes of forward curves; currency
options were measured using option pricing models using
market data.
Offsetting of financial instruments
The Group concludes derivative transactions in accordance with
the master netting arrangements (framework agreement) of
the International Swaps and Derivatives Association (ISDA) and
other appropriate national framework agreements. However,
these arrangements do not meet the criteria for netting in the
consolidated statement of financial position, as they allow
netting only in the case of future events such as default or
insolvency on the part of the Group or the counterparty.
Table 71 F.67 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements
as well as the possible financial effects of netting in accor-
dance with the master netting arrangements.
1,895
241
-566
-566
2,461
807
Other financial liabilities²
Amounts
subject to a
master netting
arrangement
At December 31, 2016
Gross and net
amounts of
financial instru-
ments in the
balance sheet
Net amounts
Amounts
subject to a
master netting
arrangement
At December 31, 2017
ments in the
balance sheet
Gross and net
amounts of
financial instru-
Other financial assets¹
In millions of euros
Disclosure for recognized financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
F.67
Table 71 F.69 shows into which measurement hierarchy
(according to IFRS 13) the fair values of the financial assets
and liabilities are classified which are not measured at
fair value in the consolidated statement of financial position.
For the determination of the credit risk from derivative financial
instruments which are allocated to Level 2 measurement hierar-
chy, portfolios managed on basis of net exposure are applied.
At the end of each reporting period, Daimler reviews the neces-
sity of reclassification between the measurement hierarchies.
Table 7 F.68 provides an overview of the classification into
measurement hierarchies of financial assets and liabilities
measured at fair value (according to IFRS 13).
Measurement hierarchy
152,433
696
Financial liabilities
Guarantee of bank loans. Daimler AG issued a guarantee to
third parties up to a maximum amount of €100 million for
bank loans which could be obtained by Toll Collect GmbH.
This amount represents the Group's 50% share of Toll Collect
GmbH's external financing guaranteed by its shareholders.
Financial guarantees
30. Financial guarantees, contingent
liabilities and other financial obligations
The Group recognizes provisions in connection with pending
or threatened proceedings to the extent a loss is probable and
can be reasonably estimated. Such provisions are recognized
in the Group's consolidated financial statements and are based
on estimates. If quantifiable, contingent liabilities in connection
with legal proceedings are disclosed in the Group's consolidated
financial statements. Risks resulting from legal proceedings
sometimes cannot be assessed reliably or only to a limited
extent. Consequently, provisions recognized for some legal
proceedings may turn out to be insufficient once such
proceedings have ended. The Group may also become liable
for payments in legal proceedings for which no provisions
were recognized and/or contingent liabilities were disclosed.
Uncertainty exists with regard to the amounts or due dates
of possible cash outflows. Although the final resolution of any
such proceedings could materially affect Daimler's operating
results and cash flows for a particular reporting period, Daimler
believes that it should not exert a sustained influence on the
Group's financial position.
and the defendants have been filed since then. A hearing of
witnesses and experts took place between December 6 and
14, 2010. The parties submitted further written statements
on July 15 and November 15, 2011. After the Tribunal's President
resigned for personal reasons as of March 30, 2012, the new
President was determined by the Administrative Court in Berlin
as of October 29, 2012. In the meantime, further briefs were
exchanged and the arbitrators held further hearings in May and
October 2014, in June 2015 and June 2016 as well as in March,
July and September 2017. In the first half of 2017, the sharehold-
ers Deutsche Telekom AG and Daimler Financial Services AG
asserted counterclaims relating to breaches of duty by the
Federal Republic of Germany with regard to the delay in the start
of the toll system. Daimler considers the claims of the Federal
Republic of Germany to be without merit and will continue to
defend itself.
Since, among other things, some of the contractual penalties
are dependent on time and further claims for contractual
penalties have been asserted by the Federal Republic of Germany,
the amount claimed as contractual penalties may increase.
The defendants submitted their response to the statement of
claims on June 30, 2006. The Federal Republic of Germany
delivered its reply to the arbitrators on February 15, 2007, and
the defendants delivered their rebuttal on October 1, 2007
(see also Note 30). The arbitrators held the first hearing on
June 16 and 17, 2008. Additional briefs from the claimant
- lost revenue of €3.33 billion for the period September 1, 2003
through December 31, 2004 plus interest at 5% per annum
above the respective base rate since submission of claims (an
amount of €2 billion as at the date of September 29, 2014),
- contractual penalties of approximately €1.65 billion through
July 31, 2005 plus interest at 5% per annum above the
respective base rate since submission of claims (an amount
of €225 million as at the date of September 29, 2014) and
- refinancing costs of €196 million.
The Federal Republic of Germany initiated arbitration proceed-
ings against Daimler Financial Services AG, Deutsche Telekom
AG and Toll Collect GbR and submitted its statement of claims
in August 2005. It seeks damages, contractual penalties and the
transfer of intellectual property rights to Toll Collect GmbH.
In particular, the Federal Republic of Germany is claiming
As already reported, in August 2016, Mercedes-Benz Canada
(MB Canada) was added as a defendant to a putative nation-
wide class action pending in Ontario Superior Court. The main
allegation in the matter is that MB Canada, along with Takata
entities and many other companies that sold vehicles equipped
with Takata airbag inflators, was allegedly negligent in selling
such vehicles, purportedly not recalling them quickly enough,
and failing to provide an allegedly adequate replacement
airbag inflator. In addition, on June 28, 2017, Takata entities
along with Daimler AG and MBUSA were named as defendants
in a US nation-wide class action, which was filed in New Jersey
federal court and includes allegations that are similar to the
Canadian action. In the third quarter of 2017, the New Jersey
lawsuit was transferred to federal court in the Southern
District of Florida for consolidation with other multi-district
litigation proceedings. The previously reported lawsuit filed
by the State of New Mexico, which also made similar claims
against MBUSA and many other companies that sold vehicles
equipped with Takata airbag inflators, was dismissed without
prejudice on June 22, 2017. It may, however, be filed again
under specific conditions. Daimler AG continues to regard all
these lawsuits brought with regard to Mercedes-Benz vehi-
cles as being without merit, and the Daimler Group affiliates
respectively affected will further defend themselves against
the claims.
On June 23, 2016, the German Federal Cartel Office carried
out dawn raids at several car manufacturers and suppliers,
including Daimler AG, with regard to steel purchasing. Daimler
is cooperating in full with the authority. In accordance with
IAS 37.92, no further information is disclosed with respect to
whether, or to what extent, provisions have been recognized
and/or contingent liabilities have been disclosed, so as not to
prejudice Daimler AG's position.
recognized and/or contingent liabilities have been disclosed,
so as not to prejudice Daimler AG's position.
287
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Following the settlement decision by the European Commission
adopted on July 19, 2016, concluding the trucks antitrust
proceedings, Daimler AG faces customers' claims for damages
to a considerable degree. Respective legal actions have been
initiated in various states in and outside of Europe. Appropriate
legal remedies are taken to defend the company. In accor-
dance with IAS 37.92, no further information is disclosed with
respect to whether, or to what extent, provisions have been
In this context, Daimler AG may now disclose that it filed an
application for immunity from fines (leniency application) with
the European Commission some time ago. In late October
2017, the European Commission conducted preannounced
inspections with Daimler in Stuttgart (as well as further
inspections with other manufacturers) in order to further clarify
the facts of the case. Currently, it continues to be uncertain
whether the European Commission will initiate formal antitrust
proceedings. At present, Daimler does not expect this unquan-
tifiable contingent liability to have any material impact on its
profitability, cash flow and financial situation.
Starting on July 25, 2017, a number of class actions have
been filed in the United States and Canada against Daimler AG
and other manufacturers of automobiles as well as various
of their North American subsidiaries. Plaintiffs allege to have
suffered damages because defendants engaged in anticom-
petitive behavior relating to vehicle technology, costs, suppliers,
markets, and other competitive attributes, including diesel
emissions control technology, since the 1990s. On October 4,
2017, all pending US class actions were centralized in one pro-
ceeding by the Judicial Panel on Multidistrict Litigation and
transferred to the U.S. District Court for the Northern District
of California. Daimler AG and the other Daimler group affiliates
respectively affected regard the US and Canadian lawsuits
as being without merit, and will defend against the claims.
and/or Daimler's interaction with the relevant state and federal
authorities as well as related legal issues and implications,
including, but not limited to, under applicable environmental,
securities, criminal and antitrust laws. These authorities and
institutions include, among others, the U.S. Department of Justice
(DOJ), which in April 2016 requested that Daimler AG review
its certification and admissions processes related to exhaust
emissions of diesel vehicles in the United States by way of
an internal investigation in cooperation with the DOJ, the U.S.
Environmental Protection Agency (EPA), the California Air
Resources Board (CARB) and other US state authorities, the U.S.
Securities and Exchange Commission (SEC), the European
Commission, with which Daimler AG has filed a leniency applica-
tion, as well as national cartel authorities and other authorities
of various foreign states as well as the German Federal Financial
Supervisory Authority (BaFin) and the German Federal Motor
Transport Authority (KBA), the diesel emissions committee of
inquiry of the German Parliament and the Stuttgart district
attorney's office. The Stuttgart district attorney's office is con-
ducting criminal investigation proceedings against Daimler
employees concerning the suspicion of fraud and criminal
advertising, and searched the premises of Daimler at several
locations in Germany. Daimler continues to fully cooperate
with the DOJ and the other authorities and institutions. As these
inquiries, investigations and the replies to these information
requests as well as Daimler's internal investigation are ongoing,
we rely on IAS 37.92 in not disclosing any further information
on whether or not, or to what extent, provisions have been rec-
ognized and/or contingent liabilities have been disclosed.
Several state and federal authorities and institutions worldwide
have inquired about and/or are investigating test results, the
emission control systems used in Mercedes-Benz diesel vehicles
Another consumer class-action lawsuit against Daimler AG and
other companies of the Group containing similar allegations was
filed in Canada in April 2016. On June 29, 2017, the court granted
a procedural motion to certify certain issues for class treatment.
Daimler also regards this lawsuit as being without merit and will
defend against the claims. On July 14, 2017, an additional class
action was filed in the Superior Court of California, Los Angeles
County, against Daimler AG and other companies of the Group,
alleging similar claims as the existing US class action. That action
was removed to federal court and, on October 31, 2017, was
transferred to the District of New Jersey. On December 21, 2017
the parties stipulated to dismiss, without prejudice, that lawsuit. It
may be filed again under specific conditions, but Daimler also
regards this lawsuit as being without merit.
As already reported, several consumer class-action law-
suits were filed against Mercedes-Benz USA, LLC (MBUSA)
in federal courts in the United States in early 2016. The main
allegation was the use of devices that impermissibly impair
the effectiveness of emission control systems in reducing
nitrogen-oxide (NOx) emissions and which cause excessive
emissions from vehicles with diesel engines. In addition,
plaintiffs alleged that consumers were deliberately deceived
in connection with the advertising of Mercedes-Benz diesel
vehicles. Those consumer class actions were consolidated into
one class action pending against both Daimler AG and MBUSA
in the US District Court for the District of New Jersey, in which
the plaintiffs asserted various grounds for monetary relief on
behalf of a nation-wide class of persons or entities who owned
or leased certain models of Mercedes-Benz diesel vehicles as
of February 18, 2016. Daimler AG and MBUSA moved to dismiss
the lawsuit in its entirety. By order dated December 6, 2016,
the court granted Daimler AG's and MBUSA's motion to dismiss
and dismissed the lawsuit without prejudice, based on plain-
tiffs' failure to allege with sufficient specificity the advertising
that they contended had misled them. Plaintiffs subsequently
filed an amended class action complaint in the same court making
similar allegations. The amended complaint also adds as defen-
dants Robert Bosch LLC and Robert Bosch GmbH (collectively;
"Bosch"), and alleges that Daimler AG and MBUSA conspired
with Bosch to deceive US regulators and consumers. Daimler
AG and MBUSA view the lawsuit as being without merit and
will defend against the claims.
Various legal proceedings, claims and governmental investiga-
tions (legal proceedings) are pending against Daimler AG
and its subsidiaries on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer,
supplier and other contractual relationships, intellectual property
rights, product warranties, environmental matters, antitrust
matters (including actions for damages) and shareholder matters.
Legal proceedings relating to products deal with claims on
account of alleged vehicle defects. Some of these claims are
asserted by way of class action suits. If the outcome of
such legal proceedings is detrimental to Daimler, the Group
may be required to pay substantial compensatory and punitive
damages or to undertake service actions, recall campaigns,
monetary penalties or other costly actions. Some of these
proceedings may have an impact on the Group's reputation.
29. Legal proceedings
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
286
Obligations from product warranties and extended
product warranties are not included in the above disclosures.
See Note 23 for provisions relating to such obligations.
Equity maintenance undertaking. The consortium members
have the obligation to contribute, on a joint and several
basis, additional funds to Toll Collect GmbH as may be nec-
essary for Toll Collect GmbH to maintain a minimum equity
(based on German Commercial Code accounting principles)
of 15% of total assets (a so-called “equity maintenance
undertaking"). This obligation will terminate on August 31,
2018, when the extended operating agreement expires, or
earlier if the agreement is terminated. Such obligation may
arise if Toll Collect GmbH is subject to revenue reductions
caused by underperformance, if the Federal Republic of
Germany is successful in claiming lost revenue against
Toll Collect GmbH for any period the system was not fully
operational, or if Toll Collect GmbH incurs penalties that
may become payable under the above mentioned agree-
ments. If such penalties, revenue reductions or other
events reduce Toll Collect GmbH's equity to a level below the
minimum equity percentage agreed upon, the consortium
members are obligated to fund Toll Collect GmbH's opera-
tions to the extent necessary to reach the required minimum
equity.
Financial guarantees principally represent contractual arrange-
ments. These guarantees generally provide that in the event
of default or non-payment by the primary debtor, the Group will
be required to settle such financial obligations. The maximum
potential obligation resulting from these guarantees amounted
to €667 million at December 31, 2017 (2016: €784 million)
and includes liabilities recognized in the amount of €141 million
(2016: €169 million).
Contingent liabilities
While Daimler's maximum future obligation resulting from the
guarantee of the bank loan can be determined (2017: €100
million), the Group is unable to reasonably estimate the amount
or range of amounts of possible loss resulting from the financial
guarantee in form of the equity maintenance undertaking due
to the various uncertainties described above, although it could
be material. Only the guarantee for the bank loan is included in
the above disclosures for financial guarantees.
F.64
Each of the consortium members (including Daimler Financial
Services AG) has provided guarantees supporting the obli-
gations of Toll Collect GmbH towards the Federal Republic of
Germany relating to the completion and operation of the
toll collection system, which are subject to specific triggering
events. In addition, Daimler AG has guaranteed bank loans
obtained by Toll Collect GmbH. The guarantees are described
in detail below:
289
|
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The operating agreement calls for the submission of all disputes
related to the toll collection system to arbitration. The Federal
Republic of Germany has initiated arbitration proceedings against
Daimler Financial Services AG, Deutsche Telekom AG and the
consortium. According to the statement of claims received in
August 2005, the Federal Republic of Germany is seeking
damages including contractual penalties and reimbursement
of lost revenue that allegedly arose from delays in the oper-
ability of the toll collection system. See Note 29 for additional
information.
Beginning in June 2006, the Federal Republic of Germany began
reducing monthly payments to Toll Collect GmbH by €8 million
in partial set-off against amounts claimed in the arbitration
proceedings referred to below. This offsetting may require
the consortium members to provide additional operating funds
to Toll Collect GmbH.
However, penalties and revenue reductions are capped at
€150 million per year until the final operating permit has been
issued and at €100 million per year following the issuance of
the final operating permit. These cap amounts are subject to
a 3% increase for every year of operation.
Failure to perform various obligations under the operating
agreement may result in penalties, additional revenue
reductions and damage claims that could become significant
over time.
According to the operating agreement, the toll collection system
had to be operational no later than August 31, 2003. After
a delay of the launch date of the toll collection system, which
resulted in a loss of revenue for Toll Collect and in payments
of contractual penalties for delays, the toll collection system
was introduced on January 1, 2005 with on-board units that
allowed for slightly less than full technical performance in
accordance with the technical specification (phase 1). On
January 1, 2006, the toll collection system was installed and
started to operate with full effectiveness as specified in
the operating agreement (phase 2). On December 20, 2005,
Toll Collect GmbH received a preliminary operating permit
as specified in the operating agreement. Toll Collect GmbH
expects to receive the final operating permit, and continues
to operate the toll collection system under the preliminary
operating permit in the interim.
Furthermore, in 2002, our subsidiary Daimler Financial Services
AG, Deutsche Telekom AG and Compagnie Financière et Indus-
trielle des Autoroutes S.A. (Cofiroute) entered into a consortium
agreement in order to jointly develop, install and operate
under a contract with the Federal Republic of Germany (operating
agreement) a system for the electronic collection of tolls for
all commercial vehicles over 12 tons gross vehicle weight using
German highways. After concluding supplementary agreements
to the operating agreement with the Federal Republic of Germany
tolls are now charged for vehicles over 7.5 tons gross vehicle
weight and on specific sections of federal highways. Daimler
Financial Services AG and Deutsche Telekom AG each hold a
45% equity interest and Cofiroute holds the remaining 10% equity
interest in both the consortium (Toll Collect GbR) and the joint
venture company (Toll Collect GmbH) (together Toll Collect).
At December 31, 2017, the best estimate for potential obli-
gations from other contingent liabilities was €589 million
(2016: €268 million). Some contingent liabilities are not
quantifiable. This applies in particular to the assessment
of the legal risks arising from the class-action lawsuits
mentioned in Note 29.
Guarantees under buyback commitments represent
arrangements whereby the Group guarantees specified trade-in
or resale values for sold vehicles. Such guarantees provide the
holder with the right to return purchased vehicles to the Group,
the right being primarily contingent on the future purchase of
vehicles or services. The amounts of the buyback commitments
are close to the fair values of the vehicles to be taken back.
The provisions recognized in connection with these buyback
commitments, amounted to €125 million at December 31, 2017
(2016: €95 million). On the other hand, residual value guarantees
related to arrangements for which revenue recognition is
precluded due to the Group's obligation to repurchase assets
are included in other financial liabilities.
Table 7 F.64 shows estimates of the financial effects of
contingent liabilities at December 31, 2017.
288
Composition of contingent liabilities
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31,
2017
2016
Guarantees under buyback commitments
Other contingent liabilities
In millions of euros
1,726
589
268
2,197
1,994
1,608
Irrevocable loan commitments
160,542
667
Financial guarantees
1,894
1,894
and of Daimler AG5
of the Daimler Financial Services segment
264
9,810
285
447
863
7,798
accrued interest
Miscellaneous other financial liabilities excluding
1
2
17,586
107
153
667
74,144
1 The amounts were calculated as follows:
21,556
As part of its risk management system, Daimler employs value
at risk analyses. In performing these analyses, Daimler quanti-
fies its market risk due to changes in foreign currency
exchange rates and interest rates and certain commodity
prices on a regular basis by predicting the potential loss over a
target time horizon (holding period) and confidence level.
Daimler manages market risks to minimize the impact
of fluctuations in foreign exchange rates, interest rates and
commodity prices on the results of the Group and its
segments. The Group calculates its overall exposure to these
market risks to provide the basis for hedging decisions,
which include the selection of hedging instruments and the
determination of hedging volumes and the corresponding
periods. Decisions regarding the management of market risks
resulting from fluctuations in foreign exchange rates,
interest rates (asset-/liability management) and commodity
prices are regularly made by the relevant Daimler risk
management committees. Exposures are the basis of the
hedging strategies and are updated regularly.
The global nature of its businesses exposes Daimler to sig-
nificant market risks resulting from fluctuations in foreign
currency exchange rates and interest rates. In addition, the
Group is exposed to market risks in terms of commodity
price risk associated with its business operations, which the
Group hedges for certain metals partially through derivative
financial instruments. The Group is also exposed to equity
price risk in connection with its investments in listed com-
panies (including BAIC Motor). If these market risks materialize,
they will adversely affect the Group's profitability, liquidity
and capital resources and financial position.
Finance market risks
Daimler manages these risks via country exposure limits
(e.g. for export credits or for hard currency portfolios of financial
services entities) and via insurance of equity investments in
high-risk countries. An internal rating system serves as a basis
for Daimler's risk-oriented country exposure management;
it assigns all countries to risk classes, with consideration of
external ratings and capital market indications of country risks.
Daimler is exposed to country risk mainly resulting from
cross-border funding or collateralization of Group companies
and customers (for example, Turkey), from investments in
subsidiaries and joint ventures as well as from cross-border
trade receivables (for example, China). Country risks also
arise from cross-border cash deposits at financial institutions.
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the
respective country, e.g. resulting from sovereign measures
such as expropriation or interdiction of foreign currency
transfers.
Country risk
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
30,641
302
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
5 The maximum available amounts are stated.
4 The cash outflows of trade payables are undiscounted.
3 The undiscounted sum of the net cash outflows of the derivative financial instruments is shown for the respective year. For individual periods,
this may also include negative cash flows from derivatives with an overall positive fair value.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler can
be required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
(b) The cash flows of floating interest financial instruments are estimated on the basis of forward rates.
17,957
5,966
10,278
-4
5,813
2020
21,122
-15
301
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
Daimler manages its liquidity by holding adequate volumes
of liquid assets and by maintaining syndicated credit facilities
in addition to the cash inflows generated by its operating
business. Additionally, the possibility to securitize receivables
of financial services business (ABS transactions) also reduces
the Group's liquidity risk. Liquid assets comprise cash and
cash equivalents as well as debt instruments classified as held
for sale. The Group can dispose of these liquid assets at
short notice.
Liquidity risk comprises the risk that a company cannot
meet its financial obligations in full.
Liquidity risk
Other receivables and financial assets
With respect to other receivables and financial assets
in 2017 and 2016, Daimler is exposed to credit risk only
to a small extent.
The Group uses derivative financial instruments exclusively
for hedging financial risks that arise from its commercial
business or refinancing activities. Daimler manages its credit
risk exposure in connection with derivative financial instru-
ments through a limit system, which is based on the review
of each counterparty's financial strength. This system limits
and diversifies the credit risk. As a result, Daimler is exposed
to credit risk only to a small extent with respect to its derivative
financial instruments. In accordance with the Group's risk
policy, most derivatives are contracted with counterparties
which have an external rating of "A" or better.
Derivative financial instruments
Further information on trade receivables and the status
of impairments recognized is provided in Note 19.
Appropriate provisions are recognized for the risks inherent
in trade receivables. For this purpose, all receivables are
regularly reviewed and impairments are recognized if there
is any objective indication of non-performance or other
contractual violations. In general, substantial individual receiv-
ables and receivables whose realizability is jeopardized are
assessed individually. In addition, taking country-specific risks
and any collateral into consideration, the other receivables
are grouped by similarity of contract and tested for impairment
collectively. One important factor for the definition of the
impairment to be recognized is the respective country risk.
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
- letters of credit.
- first-class bank guarantees and
credit insurances,
and limits credit risks with the following types of collateral:
Depending on the creditworthiness of the general distribution
companies, Daimler usually establishes credit limits
For trade receivables from export business, Daimler also
evaluates each general distribution company's creditworthiness
by means of an internal rating process and its country risk.
In this context, the year-end financial statements and other
relevant information on the general distribution companies
such as payment history are used and assessed.
A significant part of the trade receivables from each country's
domestic business is secured by various country-specific
types of collateral. This collateral includes conditional sales,
guarantees and sureties as well as mortgages and cash
deposits. In order to prevent the credit risk Daimler assesses
the creditworthiness of the counterparties.
Trade receivables are mostly receivables from worldwide sales
activities of vehicles and spare parts. The credit risk from
trade receivables encompasses the default risk of customers,
e.g. dealers and general distribution companies, as well as
other corporate and private customers. Daimler manages its
credit risk from trade receivables using appropriate IT
applications and databases on the basis of internal guidelines
which have to be followed globally.
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending
on funding requirements and market conditions, Daimler issues
commercial paper, bonds and financial instruments secured
by receivables in various currencies. Bank credit lines are also
used to cover financing requirements. These credit lines
include a syndicated €9.0 billion credit facility of Daimler AG
which was signed with a syndicate of international banks
in September 2013 with a term until September 2020. This
syndicated facility can be used to finance general corporate
purposes and serves as a back-up for commercial paper draw-
ings. At December 31, 2017, this facility had not been utilized.
Potential downgrades of Daimler's credit ratings could have
a negative impact on the Group's financing.
In addition, customer deposits at Mercedes-Benz Bank
are used as a further source of refinancing.
The funds raised are used to finance working capital and
capital expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accord-
ance with internal guidelines, the refunding of the lease and
financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from financial
services.
At December 31, 2017, liquidity amounted to €22.1 billion (2016:
€21.7 billion). In 2017, significant cash inflows resulted from
the positive business development of the automotive business
segments. One cash inflow of €0.8 billion resulted from the
dividend distributed by Beijing Benz Automotive Co., Ltd. Cash
outflows resulted in particular from the portfolio growth of the
leasing and sales finance activities at Daimler Financial Services
as well as from the intensified investment offensive. In addition,
there were cash outflows of €3.0 billion for the extraordinary con-
tribution to the pension plan assets of Daimler AG.
29,656
110
12
51,156
170
12,459
12,474
Trade payables4
135,329
368
Derivative financial instruments³
Financing liabilities²
≥ 2023
2022
9,996
2021
2019
2018
Total
In millions of euros
Liquidity runoff for liabilities and financial guarantees¹
F.79
Information on the Group's financing liabilities is also
provided in Note 24.
Table 71 F.79 provides an overview of how the future liquidity
situation of the Group is affected by the cash flows from
liabilities and financial guarantees as of December 31, 2017.
From an operating point of view, the management of the Group's
liquidity exposures is centralized by a daily cash pooling pro-
cess. This process enables Daimler to manage its liquidity surplus
and liquidity requirements according to the actual needs
of the Group and each subsidiary. The Group's short-term
and mid-term liquidity management takes into account
the maturities of financial assets and financial liabilities and
estimates of cash flows from the operating business.
The value at risk calculations employed:
- express potential losses in fair values, and
assume a 99% confidence level and a holding period
of five days.
In order to mitigate the impact of currency exchange rate
fluctuations for the operating business (future transactions),
Daimler continually assesses its exposure to exchange rate
risks and hedges a portion of those risks by using derivative
financial instruments. Daimler's Foreign Exchange Committee
(FXCO) manages the Group's exchange rate risk and its hedging
transactions through currency derivatives. The FXCo consists
of representatives of the relevant segments and central functions.
The Corporate Treasury department aggregates foreign
currency exposures from Daimler's subsidiaries and operative
units and implements the FXCo's decisions concerning
foreign currency hedging through transactions with international
financial institutions. Any over-hedge caused by changes
in exposure is generally reversed by taking suitable measures
without delay.
When calculating the value at risk by using the variance-
covariance approach, Daimler first computes the current
market value of the Group's financial instruments portfolio.
Then the sensitivity of the portfolio value to changes in the
relevant market risk factors, such as particular foreign currency
exchange rates or interest rates of specific maturities, is
quantified. Based on volatilities and correlations of these market
risk factors, which are obtained from the RiskMetrics™
dataset, a statistical distribution of potential changes in the
portfolio value at the end of the holding period is computed.
The loss which is reached or exceeded with a probability of only
1% can be derived from this calculation and represents the
value at risk.
Daimler is exposed to the risk of changes in commodity prices
in connection with procuring raw materials and manufacturing
supplies used in production. A small portion of the raw material
price risk, primarily relating to forecasted procurement of
certain metals, is mitigated with the use of derivative financial
instruments.
Commodity price risk
In the course of 2017, changes of the value at risk of interest
rate sensitive financial instruments were primarily determined
by the development of interest rate volatilities.
Table 7F.80 shows the period-end, high, low and average
value at risk figures of the interest rate risk for the 2017 and
2016 portfolio of interest rate sensitive financial instruments
and derivative financial instruments of the Group, including the
financial instruments of the leasing and sales financing
business. In this respect, the table shows the interest rate risk
regarding the unhedged position of interest rate sensitive
financial instruments. The average values have been computed
on an end-of-quarter basis.
Derivative financial instruments are also used in conjunction
with the refinancing related to the automotive segments.
Daimler coordinates the funding activities of the automotive
and financial services businesses at the Group level.
fixing periods, Daimler also uses derivative financial instruments
such as interest rate swaps. Daimler assesses its interest
rate risk position by comparing assets and liabilities for corre-
sponding maturities, including the impact of the relevant
derivative financial instruments.
An asset/liability committee consisting of members of the
Daimler Financial Services segment and the Corporate
Treasury department manages the interest rate risk relating
to Daimler's leasing and financing activities by setting
targets for the interest rate risk position. The Treasury Risk
Management department and the local Daimler Financial
Services companies are jointly responsible for achieving these
targets. As separate functions, the Daimler Financial Services
Risk Management and the Daimler Financial Services Control-
ling & Reporting department monitors target achievement
on a monthly basis. In order to achieve the targeted interest
rate risk positions in terms of maturities and interest rate
Daimler uses a variety of interest rate sensitive financial
instruments to manage the liquidity needs of its day-to-day
operations. A substantial volume of interest rate sensitive
assets and liabilities results from the leasing and sales financ-
ing business operated by the Daimler Financial Services
segment. The Daimler Financial Services companies enter into
transactions with customers that primarily result in fixed-
rate receivables. Daimler's general policy is to match funding
in terms of maturities and interest rates wherever economically
feasible. However, for a limited portion of the receivables port-
folio in selected and developed markets, the Group does not
match funding in terms of maturities in order to take advantage
of market opportunities. As a result, Daimler is exposed to
risks due to changes in interest rates. In this regard, the Group
is not exposed to any liquidity risks.
Interest rate risk
For precious metals, central commodity management shows
an unhedged position of 38% of the forecasted commodity
purchases at year-end 2017 for calendar year 2018. The corre-
sponding figure at year-end 2016 was 27% for calendar
year 2017.
Effects of currency translation. For purposes of Daimler's
consolidated financial statements, the income and expenses
and the assets and liabilities of subsidiaries located outside
the euro zone are converted into euros. Therefore, period-to-
period changes in average exchange rates may cause trans-
lation effects that have a significant impact on, for example,
revenue, segment results (EBIT) and assets and liabilities
of the Group. Unlike exchange rate transaction risk, exchange
rate translation risk does not necessarily affect future cash
flows. The Group's equity position reflects changes in book
values caused by exchange rates. In general, Daimler does
not hedge against exchange rate translation risk.
The Group's investments in liquid assets or refinancing
activities generally are not allowed to result in currency risk.
Transaction risks arising from liquid assets or payables
in foreign currencies that result from the Group's investment
or refinancing on money and capital markets are generally
hedged against currency risks at the time of investing or refi-
nancing in accordance with Daimler's internal guidelines.
The Group uses appropriate derivative financial instruments
(e.g. cross currency interest rate swaps) to hedge against
currency risk.
In 2017, the development of the value at risk from foreign
currency hedging was mainly driven by changes of nominals
and foreign currency rate volatilities.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
304
39
34
==
44
1,182
62
Since currency risks arising from the Group's investment or
refinancing in foreign currencies and the respective hedging
transactions principally offset each other, these financial
instruments are not included in the value at risk calculation
presented.
42
Table 7 F.80 shows the period-end, high, low and average
value at risk figures of the commodity price risk for the 2017
and 2016 portfolio of derivative financial instruments used
to hedge raw material price risk. Average exposure has been
computed on an end-of-quarter basis. The transactions
underlying the derivative financial instruments are not included
in the value at risk presentation. See also table 7 F.77
for the nominal values of derivative commodity price hedges
at the balance sheet date.
Equity price risk
Amortization of capitalized borrowing costs is not included
in the amortization of intangible assets or depreciation
of property, plant and equipment since it is not considered
as part of EBIT.
Depreciation and amortization may also include impairments
as far as they do not relate to goodwill impairment pursuant
to IAS 36.
Capital expenditures for intangible assets and property, plant
and equipment reflect the cash-effective additions to these
intangible assets and property, plant and equipment as far as
they do not relate to capitalized borrowing costs, goodwill
or finance leases.
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
The residual value risks associated with the Group's operating
leases and finance lease receivables are generally borne by
the vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Financial Services; the terms vary
by vehicle segment and geographic region.
Daimler Financial Services' performance is measured
on the basis of return on equity, which is the usual procedure
in the banking business.
Segment assets principally comprise all assets. The vehicle seg-
ments' assets exclude income tax assets, assets from defined
benefit pension plans and other post-employment benefit plans,
and certain financial assets (including liquidity). Segment
liabilities principally comprise all liabilities. The vehicle segments'
liabilities exclude income tax liabilities, liabilities from defined
benefit pension plans and other post-employment benefit plans,
and certain financial liabilities (including financing liabilities).
Intersegment revenue is generally recorded at values that
approximate third-party selling prices.
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income/expense, and our share of profit/loss
from equity-method investments, net, as well as other financial
income/expense, net. Although amortization of capitalized
borrowing costs is included in cost of sales, it is not included
in EBIT.
Compared to the previous year, the value at risk of commodity
derivatives has decreased. The main reasons for this develop-
ment were the decrease in nominal hedge volumes and lower
commodity-price volatilities.
The Group measures the performance of its operating segments
through a measure of segment profit or loss which is referred
to as "EBIT" in our management and reporting system.
Management and reporting system
The Daimler Financial Services segment supports the sales
of the Group's vehicle segments worldwide. Its product portfolio
primarily comprises tailored financing and leasing packages
for end-customers and dealers, brokering of automotive insurance
and banking services. The segment also provides services
such as fleet management in Europe, which primarily takes
place through the Athlon brand, which was acquired in 2016.
Furthermore, Daimler Financial Services is active in the area
of innovative mobility services, in particular under the
brands moovel, mytaxi and car2go.
The vehicle segments develop and manufacture passenger
cars, trucks, vans and buses. The Mercedes-Benz Cars segment
comprises premium vehicles of the Mercedes-Benz brand
including the brands Mercedes-AMG and Mercedes-Maybach,
and small cars under the smart brand, as well as the brand
Mercedes me. Electric products will be marketed under the EQ
brand in the future. Daimler Trucks distributes its trucks under
the brand names Mercedes-Benz, Freightliner, Western Star,
FUSO and BharatBenz. Furthermore, buses under the brands
Thomas Built Buses and FUSO are included in the Daimler Trucks
range of products. The vans of the Mercedes-Benz Vans
segment are primarily sold under the brand name Mercedes-
Benz and also under the Freightliner brand. Daimler Buses
sells completely built-up buses under the brand names Mercedes-
Benz and Setra. In addition, Daimler Buses produces and
sells bus chassis. The vehicle segments also sell related spare
parts and accessories.
The reportable segments of the Group are Mercedes-Benz
Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and
Daimler Financial Services. The segments are largely organized
and managed separately, according to nature of products and
services provided, brands, distribution channels and profile
of customers.
Reportable segments
33. Segment reporting
305
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Daimler predominantly holds investments in shares of
companies which are classified as long-term investments
or which are accounted for using the equity method,
such as BAIC Motor. Therefore, the Group does not include
these investments in a market risk assessment.
The Group's management reporting and controlling systems
principally use accounting policies that are the same as those
described in Note 1 in the summary of significant accounting
policies according to IFRS.
Daimler calculates the value at risk for exchange rate and
interest rate risk according to the variance-covariance
approach. The value at risk calculation method for commodity
hedging instruments is based on a Monte Carlo simulation.
90
1,525
2017
Average
Low
High
Period-end
Value at risk for exchange rate risk, interest rate risk and commodity price risk
F.80
Table 7F.80 shows the period-end, high, low and average
value at risk figures of the exchange rate risk for the 2017 and
2016 portfolios of derivative financial instruments, which were
entered into primarily in connection with the operative vehicle
businesses. Average exposure has been computed on an
end-of-quarter basis. The offsetting transactions underlying
the derivative financial instruments are not included in the
following value at risk presentation. See also table > F.77 for
the nominal volumes on the balance sheet date of derivative
currency instruments entered into to hedge the currency risk
from forecasted transactions.
The hedged position of the operating vehicle businesses is
influenced by the amount of derivative currency contracts
held. The derivative financial instruments used to cover foreign
currency exposure are primarily forward foreign exchange
contracts and currency options. Daimler's guidelines call for a
mixture of these instruments depending on the assessment of
market conditions. Value at risk is used to measure the exchange
rate risk inherent in these derivative financial instruments.
The Group's targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally
limited by uncertainty related to cash flows that lie far in the
future; on the other hand, it may also be limited by the fact
that appropriate currency contracts are not available. This refer-
ence model aims to limit risks for the Group from unfavorable
movements in exchange rates while preserving some flexibility
to participate in favorable developments. Based on this refer-
ence model and depending on the market outlook, the FXCo
determines the hedging horizon, which usually varies from
one to five years, as well as the average hedge ratios. Reflec-
ting the character of the underlying risks, the hedge ratios
decrease with increasing maturities. At year-end 2017, foreign
exchange management showed an unhedged position in the
automotive business for the underlying forecasted cash flows
in US dollars in calendar year 2018 of 21%, for the underlying
forecasted cash flows in Chinese renminbi in calendar year 2018
of 22%, as well as for the underlying forecasted cash flows in
British pounds in calendar year 2018 of 28%.
Period-end
Risk Controlling regularly informs the Board of Management
of the actions taken by Corporate Treasury based on the FXCo's
decisions.
Cash inflows and outflows of the business segments are offset
if they are denominated in the same currency. This means
that the exchange rate risk resulting from revenue generated
in a particular currency can be offset by costs in the same
currency, even if these costs are not directly related to the
revenue. As a result, only the net exposure is subject to
transaction risk. The Group's currency exposure is reduced
by natural hedging to the extent that currency exposures
of the operating businesses of individual segments offset each
other partially at Group level, thereby reducing overall
currency exposure. These natural hedges eliminate the need
for hedging to the extent of the matched exposures. To
provide an additional natural hedge against any remaining
transaction risk exposure, Daimler generally strives to
increase cash outflows in the same currencies in which the
Group has a net excess inflow.
This risk exposure primarily affects the Mercedes-Benz Cars
segment, which generates a major portion of its revenue
in foreign currencies and incurs manufacturing costs primarily
in euros. The Daimler Trucks segment is also subject to
transaction risk, but to a lesser extent because of its global
production network. The Mercedes-Benz Vans and Daimler
Buses segments are also directly exposed to transaction risk,
but also only to a minor degree compared to the Mercedes-
Benz Cars segment. In addition, the Group is indirectly exposed
to transaction risk from its equity-method investments.
303
|
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Transaction risk and currency risk management. The global
nature of Daimler's businesses exposes cash flows and
earnings to risks arising from fluctuations in exchange rates.
These risks primarily relate to fluctuations between the
euro and the US dollar, the Chinese renminbi, the British pound
and other currencies such as currencies of growth markets.
In the operating vehicle business, the Group's exchange rate risk
primarily arises when revenue is generated in a currency that
is different from the currency in which the costs of generating
the revenue are incurred (transaction risk). When the revenue
is converted into the currency in which the costs are incurred,
it may be inadequate to cover the costs if the value of the
currency in which the revenue is generated declined in the
interim relative to the value of the currency in which the
costs were incurred.
Exchange rate risk
Oriented towards the risk management standards of the
international banking industry, Daimler maintains its financial
controlling unit independent of operating Corporate Treasury
and with a separate reporting line.
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors consistent with current
market volatilities. The changes in market risk factors allow the
calculation of a possible change in the portfolio value over
the holding period. Running multiple iterations of this simulation
leads to a distribution of portfolio value changes. The value
at risk can be determined based on this distribution as the
portfolio value loss which is reached or exceeded with a
probability of 1%.
Trade receivables
812
High
2016
Average
ཆེ ༄Ë
17
14
25
14
(from derivative financial instruments)
Commodity price risk
46
43
Low
48
Interest rate risk
912
815
779
877
779
(from derivative financial instruments)
Exchange rate risk
In millions of euros
43
Further details on receivables from financial services and the
balance of the recorded impairments are provided in Note 14.
Loan commitments
If, in connection with contracts, a worsening of payment
behavior or other causes of a need for impairment are recog-
nized, collection procedures are initiated by claims manage-
ment to obtain the overdue payments of the customer, to take
possession of the asset financed or leased or, alternatively,
to renegotiate the impaired contract. Restructuring policies and
practices are based on the indicators or criteria which, in
the judgment of local management, indicate that repayment will
probably continue and that the total proceeds expected to
be derived from the renegotiated contract exceed the expected
proceeds to be derived from repossession and remarketing.
3,238
6,020
3,658
2,153
5,811
3,380
3,380
5,921
8
6,259
6,267
Nominal values
At December 31, 2016
≤1 year
Nominal values
At December 31, 2017
Maturity
>1 year
Maturity
Hedging of currency risks from forecasted transactions
thereof fair value hedges
1,559
1,679
3,453
1,676
2,395
49,934
Interest rate swaps
Hedging of interest rate risks from receivables/liabilities
thereof hedging of net investments in foreign operations
Currency swaps
Hedging of currency risks of net investments in foreign operations
55,925
15,481
thereof cash flow hedges
30,061
thereof cash flow hedges
56,591
15,490
30,506
45,996
Forward exchange contracts and currency options
1,622
1,315
361
45,542
Cross currency interest rate swaps
thereof cash flow hedges
Forward exchange contracts
-1,423
-86
34
Cost of sales
-6
Revenue
2016
2017
In millions of euros
Reclassifications of pre-tax gains/losses from equity
to the statement of income
Interest income
125
2016
2017
F.76
Unrealized gains/losses
In millions of euros
Unrealized gains/losses from cash flow hedges
F.75
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
296
2,525
47,539
-
-1
Hedging of currency risks from receivables/liabilities
In millions of euros
Nominal values of derivative financial instruments
297
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.77
Explanations of the hedging of exchange rate risks, interest
rate risks and commodity price risks can be found in Note 32
in the sub-item finance market risk.
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments are still
hedging financial risks from the operating business. A hedging
instrument is terminated when the hedged item no longer
exists or is no longer expected to occur.
Hedging transactions for which the effects from the
measurement of the hedging instrument and the underlying
transaction to a large extent offset each other in the
consolidated statement of income mostly not classify
for hedge accounting.
Interest expense
Nominal values of derivative financial instruments
Table 71 F.77 shows the nominal values of derivative financial
instruments entered into for the purpose of hedging currency
risks, interest rate risks and commodity price risks that arise
from the Group's operating and/or financing activities.
The maturities of the interest rate hedges and cross currency
interest rate hedges as well as of the commodity hedges
correspond with those of the underlying transactions. The real-
ization of the underlying transactions of the cash flow hedges
is expected to correspond with the maturities of the hedging
transactions shown in table 7 F.77. As of December 31, 2017,
Daimler utilized derivative instruments with a maximum maturity
of 39 months (2016: 44 months) as hedges for currency risks
arising from future transactions.
Net profit for 2017 includes net gains (before income taxes)
of €11 million (2016: net losses (before income taxes) of
€8 million) attributable to the ineffectiveness of derivative
financial instruments entered into for hedging purposes
(hedge-ineffectiveness).
Table 71 F.76 provides an overview of the reclassifications
of pre-tax gains/losses from equity to the statement of income
for the period.
Unrealized pre-tax gains and losses on the measurement
of derivatives, which are recognized in other comprehensive
income, are shown in table 7 F.75.
The Group uses cash flow hedges for hedging currency
risks, interest rate risks and commodity price risks.
Cash flow hedges
-1,511
-2
27
Hedges of net investments in foreign operations
Daimler also partially hedges the foreign currency risk of
selected investments with the application of derivative or non-
derivative financial instruments.
thereof cash flow hedges
9,694
1,485
85,787
14
21,729
22,135
Liquid assets
Receivables from
financial services
Trade receivables
In millions of euros
Maximum
risk position
2016
Maximum
risk position
2017
see also
Note
19
Maximum risk positions of financial assets
and loan commitments
Within the framework of testing for impairment, existing
collateral is generally given due consideration. In that context,
any excess collateral of individual customers is not netted
off with insufficient collateral of other customers. The maxi-
mum credit risk is limited by the fair value of collateral
(e.g. financed vehicles).
Loans and finance lease receivables related to retail or small
business customers are grouped into homogeneous pools and
collectively assessed for impairment. Impairments are required
for example if there are adverse changes in the payment status
of the borrowers included in the pool, adverse changes in
expected loss frequency and severity, and adverse changes in
economic conditions.
Significant loans and leases to corporate customers are
tested individually for impairment. An individual loan or lease
is considered impaired when there is objective evidence that
the Group will be unable to collect all amounts due as specified
by the contractual terms. Examples of objective evidence that
loans or lease receivables may be impaired include the following
factors: significant financial difficulty of the borrower, a rising
probability that the borrower will become bankrupt, delinquency
in his installment payments, and restructured or renegotiated
contracts to avoid immediate default.
Scoring systems are applied for the assessment of the default
risk of retail and small business customers. Corporate customers
are evaluated using internal rating instruments. Both evaluation
processes use external credit bureau data if available. The scoring
and rating results as well as the availability of security and other
risk mitigation instruments, such as advance payments, guar-
antees and, to a lower extent, residual debt insurances, are
essential elements for credit decisions.
With respect to its financing and lease activities, the Group
holds collateral for customer transactions. The value of
collateral generally depends on the amount of the financed
assets. The financed vehicles usually serve as collateral.
Furthermore, Daimler Financial Services mitigates the credit
risk from financing and lease activities, for example through
advance payments from customers.
The Daimler Financial Services segment has guidelines setting
the framework for effective risk management at a global as
well as at a local level. In particular, these rules deal with mini-
mum requirements for all risk-relevant credit processes,
the definition of financing products offered, the evaluation
of customer quality, requests for collateral as well as the
treatment of unsecured loans and non-performing claims.
The limitation of concentration risks is implemented primarily
by means of global limits, which refer to single customer
exposures. As of December 31, 2017, exposure to the biggest
15 customers did not exceed 4.0% (2016: 5.4%) of the total
portfolio.
In addition, the Daimler Financial Services segment is exposed
to credit risk from irrevocable loan commitments to retailers
and end customers. At December 31, 2017, irrevocable loan
commitments of Daimler Financial Services amounted to
€1,880 million (2016: €1,493 million). These loan commitments
had a maturity of less than one year.
Exposure to credit risk from financing and lease activities
is monitored based on the portfolio subject to credit risk. The
portfolio subject to credit risk is an internal control quantity
that consists of wholesale and retail receivables from financial
services and the portion of the operating lease portfolio
that is subject to credit risk. Receivables from financial services
comprise claims arising from finance lease contracts and
repayment claims from financing loans. The operating lease
portfolio is reported under equipment on operating leases
in the Group's consolidated financial statements. Overdue lease
payments from operating lease contracts are recognized
in trade receivables.
299
F.78
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11,990
Derivative financial
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
300
in hedge accounting
(assets only)
3,089
3,167
16
financial assets
Other receivables and
106
1,502
10,614
1,894
82
16
instruments not used
Derivative financial
1,730
2,379
16
in hedge accounting
(assets only)
instruments used
30
The allowance ratio decreased compared to the already
low level of the previous year.
Daimler's financing and leasing activities are primarily focused
on supporting the sales of the Group's automotive products.
As a consequence of these activities, the Group is exposed to
credit risk, which is monitored and managed based on defined
standards, guidelines and procedures. Daimler manages its credit
risk irrespective of whether it is related to a financing contract
or to an operating lease or a finance lease contract. For this
reason, statements concerning the credit risk of Daimler
Financial Services refer to the entire financing and leasing
business, unless specified otherwise.
Liquid assets consist of cash and cash equivalents and market-
able debt securities classified as available-for-sale. With the
investment of liquid assets, banks and issuers of securities are
selected very carefully and diversified in accordance with a
limit system. In the recent years, the limit methodology was
continuously enhanced to counteract the decline of the
creditworthiness of the banking sector in the course of the
financial crisis. Liquid assets are mainly held at financial
institutions within and outside Europe with high creditworthi-
ness, as bonds issued by German federal states and as
money market funds. At the same time, the Group has increased
the number of financial institutions with which investments
are made. In connection with investment decisions, priority is
placed on the borrower's very high creditworthiness and on
balanced risk diversification. The limits and their utilizations
are reassessed continuously. In this assessment, Daimler
also considers the credit risk assessment of its counterparties
by the capital markets. In line with the Group's risk policy,
most liquid assets are held in investments with an external
rating of "A" or better.
41,808
108,750
Total nominal values of derivative financial instruments
959
246
403
649
thereof cash flow hedges
1,128
66,942
247
742
Forward commodity contracts
Hedging of commodity price risks from forecasted transactions
41,856
49,483
2,183
8,209
35,159
572
35,731
thereof fair value hedges
495
Receivables from financial services
119,143
62,503
Liquid assets
The maximum risk positions of financial assets which
are generally subject to credit risk are equal to their carrying
amounts (without consideration of collateral, if available).
Table 7 F.78 shows the maximum risk positions.
Credit risk is the risk of economic loss arising from a counter-
party's failure to repay or service debt in accordance with the
contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditworthi-
ness as well as concentration risks.
Credit risk
Any market sensitive instruments including equity and debt
securities that the plan assets hold to finance pension and other
post-employment healthcare benefits are not included in
the following quantitative and qualitative analysis. See Note 22
for additional information on Daimler's pension and other
post-employment benefits.
The Group manages and monitors these risks primarily
through its operating and financing activities and, if required,
through the use of derivative financial instruments. Daimler
uses derivative financial instruments exclusively for hedging
financial risks that arise from its commercial business or
refinancing activities. Without these derivative financial instru-
ments, the Group would be exposed to higher financial risks
(additional information on financial instruments and especially
on the nominal values of the derivative financial instruments
used is included in Note 31). Daimler regularly evaluates its
financial risks with due consideration of changes in key
economic indicators and up-to-date market information.
Daimler has established internal guidelines for risk controlling
procedures and for the use of financial instruments, including
a clear segregation of duties with regard to financial activities,
settlement, accounting and the related controlling. The guide-
lines upon which the Group's risk management processes for
financial risks are based are designed to identify and analyze
these risks throughout the Group, to set appropriate risk limits
and controls and to monitor the risks by means of reliable
and up-to-date administrative and information systems. The
guidelines and systems are regularly reviewed and adjusted
to changes in markets and products.
As a result of its businesses and the global nature of its opera-
tions, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An
equity price risk results from investments in listed companies
(especially BAIC Motor). In addition, the Group is exposed
to credit risks from its leasing and financing activities and from
its operating business (trade receivables). With regard to the
leasing and financing activities, credit risks arise from operating
lease contracts, finance lease contracts and financing
contracts. Furthermore, the Group is exposed to liquidity
and country risks relating to its credit and market risks
or a deterioration of its operating business or financial market
disturbances. If these financial risks materialize, they could
adversely affect Daimler's profitability, liquidity and capital
resources and financial position.
General information on financial risks
thereof cash flow hedges
32. Management of financial risks
298
43,478
36,474
933
37,407
thereof fair value hedges
62,520
25,615
36,888
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
80,507
1
306
5.2
12.4
13.1
2.0
2.8
38.6
7.0
36.9
4.2
3.5
42.8
40.4
1 Including the Board of Management remuneration paid
to Dr. Wolfgang Bernhard until February 10, 2017.
312
Remuneration of the Supervisory Board
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Mid-term variable remuneration
(50% of annual bonus, "deferral")
Variable remuneration with a
long-term incentive effect (PPSP)
Post-employment benefits (service cost)
Termination benefits
7.7
Remuneration of the members of the Board of Management
and the Supervisory Board
In millions of euros
20171
2016
37. Remuneration of the members of the Board
of Management and the Supervisory Board
Remuneration granted to the members of the Board of
Management and the Supervisory Board who were active
as of December 31, 2017, affected net profit for the year
ended December 31 as shown in table 7 F.86.
Expenses for variable remuneration of the Board of
Management with a long-term incentive effect, as shown in
table F.86, result from the ongoing measurement at
fair value at each balance sheet date of all rights granted
and not yet due under the Performance Phantom Share
Plans (PPSP), i.e. for the plans of the years 2014-2017. In 2017,
the active members of the Board of Management were
granted 151,157 (2016: 162,033) phantom shares in connection
with the PPSP; the fair value of these phantom shares at
the grant date was €10.2 million (2016: €10.2 million). See
Note 21 for additional information on share-based payment
of the members of the Board of Management.
5.8
According to Section 314 Subsection 1 Number 6a of the German
Commercial Code (HGB) the overall remuneration granted
to the members of the Board of Management, excluding service
cost resulting from entitlements to post-employment
benefits, amounted to €35.0 million (2016: €31.8 million).
Fixed remuneration
(base salary)
Short-term variable remuneration
(50% of annual bonus)
9.5
10.0
Remuneration of the Board of Management
F.86
38. Principal accountant fees
The review of the interim financial statements (2016: €5 million),
the audit of the accounting-related internal control system
(2016: €3 million), as well as additional audit services that
are caused by an audit or are made use of within an audit
such as for instance accounting-related IT and process audits
accompanying projects (2016: €5 million) have to be
assigned to Audit Services as of the 2017 financial year due
to underlying regulations.
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
1
1
Other Services
6
Tax Services
5
Wirtschaftsprüfungsgesellschaft
7
4
1
2
5
thereof KPMG AG
The shareholders of Daimler AG elected KPMG AG
Wirtschaftsprüfungsgesellschaft as the external auditor
at the Annual Shareholders' Meeting held on March 29,
2017. Table 71 F.87 shows the fees for services provided
by KPMG AG Wirtschaftsprüfungsgesellschaft and the
companies of the worldwide KPMG network to Daimler AG,
the subsidiaries and the joint operations that are
included in the Group's consolidated financial statements
for the respective reporting periods.
Wirtschaftsprüfungsgesellschaft
7
F.87
Accountant fees
2017
2016
In millions of euros
44
thereof KPMG AG
39
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
21
21
Other Attestation Services
9
Audit Services
Information regarding the remuneration of the members
of the Board of Management and of the Supervisory Board
is disclosed on an individual basis in the Remuneration
Report, which is part of the combined Management Report.
Management Report from page 136
The payments made in 2017 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €19.0 million (2016: €15.6 million). The pension provisions
for former members of the Board of Management and their
survivors amounted to €270.5 million as of December 31, 2017
(2016: €252.9 million).
No advance payments or loans were made or abated to
members of the Board of Management or to the members
of the Supervisory Board of Daimler AG in 2017.
428
2,827
1,233
253
89
thereof LSHAI¹
703
5,177
1,075
127
thereof BBAC
3,933
3,262
80
298
59
3,586
Associated companies
Purchases of goods
and services
and services
and other income
and other expense
2017
9,507
In millions of euros
2017
Receivables
2016
At December 31,2
2017
2016
Payables
At December 31,3
2017
2016
2016
1,673
1,178
65
1 Since the equity interest in LSHAI was acquired in May 2017, business relations with LSHAI are reported from June 2017 onward.
2 After write-downs totaling €52 million (2016: €51 million).
3 Including liabilities from default risks from guarantees for related parties.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
311
Joint operations
Joint operations primarily relate to significant business trans-
actions with Beijing Mercedes-Benz Sales Service Co., Ltd. and
EM-motive GmbH.
30
Note 13 provides details of the business operations of the
significant associated companies and joint ventures, as
well as significant transactions in the years 2017 and 2016.
In 2017 and 2016, the Group made contributions of €3,692 million
and €2,427 million to its external funds to cover pension and
other post-employment benefits. See also Note 22 for further
information.
Board members
Throughout the world, the Group has business relationships
with numerous entities that are customers and/or suppliers
of the Group. Those customers and/or suppliers include com-
panies that have a connection with some of the members
of the Board of Management or of the Supervisory Board and
close family members of those board members of Daimler AG
or of its subsidiaries.
Board of Management and Supervisory Board members and
close family members of those board members may also
purchase goods and services from Daimler AG or its subsidiar-
ies as customers. When such business relationships exist,
transactions are concluded on the basis of customary market
conditions.
See Note 37 for information on the remuneration
of board members.
The members of the Supervisory Board are solely granted
short-term fixed remuneration for their board and committee
activity, the amounts of which depend on their functions
in the Supervisory Board. With the exception of remuneration
paid to the members representing the employees in accordance
with their contracts of employment, no remuneration was paid
in 2017 for services provided personally beyond board and
committee activities, in particular for advisory or agency services.
Contributions to plan assets
54
38
28
27
Joint ventures
946
507
75
64
183
150
115
110
Joint operations
46
40
278
288
4
Sales of goods
60
The previous year's figures for Other Attestation Services have
been reduced accordingly. Other Attestation Services comprise
in particular audits in connection with non-accounting-related
IT systems and processes. Audits in connection with compliance
management systems, the issuance of comfort letters, non-
financial disclosures and reports as well as the application of
funds audits are also included.
100.00
car2go Europe GmbH
Leinfelden-Echterdingen, Germany
75.00
car2go Group GmbH
Leinfelden-Echterdingen, Germany
Leinfelden-Echterdingen, Germany
100.00
car2go Iberia S.L.U.
Madrid, Spain
100.00
car2go Italia S.R.L.
Milan, Italy
100.00
5
car2go N.A. LLC
car2go Deutschland GmbH
Beijing, China
100.00
80.00
São Paulo, Brazil
100.00
Brooklands Estates Management Limited
Milton Keynes, United Kingdom
100.00
100.00
São Bernardo do Campo, Brazil
100.00
car2go Canada Ltd.
Vancouver, Canada
100.00
car2go China Co., Ltd.
Campo Largo Comercio de Veículos e Peças Ltda.
100.00
car2go Nederland B.V.
100.00
100.00
Wilmington, USA
100.00
Melbourne, Australia
100.00
Valencia, Venezuela
Wilmington, USA
100.00
100.00
100.00
Halifax, Canada
100.00
Wilmington, USA
100.00
Oriskany, USA
Montreal, Canada
Wilmington, USA
100.00
100.00
Utrecht, Netherlands
100.00
12
CARS Technik & Logistik GmbH
CLIDET NO 1048 (Proprietary) Limited
Conemaugh Hydroelectric Projects, Inc.
DA Investments Co. LLC
Wilmington, USA
DAF Investments, Ltd.
Vienna, Austria
100.00
Wiedemar, Germany
100.00
5
Centurion, South Africa
Daimler Australia/Pacific Pty. Ltd.
Daimler Automotive de Venezuela C.A.
Daimler Buses North America Inc.
Daimler Canada Finance Inc.
Daimler Canada Investments Company
Daimler Capital Services LLC
Irvine, USA
Schlieren, Switzerland
Malmö, Sweden
Athlon Car Lease Portugal, Ida
Almere, Netherlands
100.00
Almere, Netherlands
100.00
Machelen, Belgium
Athlon Beheer International B.V.
Athlon Beheer Nederland B.V.
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
Athlon Car Lease Italy S.R.L.
Athlon Car Lease Nederland B.V.
Athlon Car Lease Polska Sp.z.o.o
100.00
100.00
Rome, Italy
100.00
Almere, Netherlands
100.00
Warsaw, Poland
Almere, Netherlands
100.00
I. Consolidated subsidiaries
Footnote
The tax advisory services primarily comprise tax advice
in conjunction with value-added tax.
Other Services were performed primarily in connection
with non-accounting-relevant processes, the implementation
of new standards and M&A activities.
39. Additional information
German Corporate Governance Code
The Board of Management and the Supervisory Board of
Daimler AG have issued a declaration pursuant to Section 161
of the German Stock Corporation Act (AktG) and have made
it permanently available to their shareholders on Daimler's
website at https://www.daimler.com/documents/
company/corporate-governance/declarations/daimler-
313
declaration-en-12-2017.pdf.
The statement of investments of the Daimler Group pursuant
to Section 313 Subsection 2 No. 1-6 of the German Commercial
Code (HGB) is presented in table 71 F.88. In general coopera-
tions without capital share are not reported. Information on
equity and earnings and information on investments pursuant
to Section 313 Subsection 2 No. 4 of the German Commercial
Code is omitted insofar as, pursuant to Section 313 Subsection 3
Sentence 4 of the HGB, such information is of minor rele-
vance for a fair presentation of the profitability, liquidity and
capital resources, and financial position of the Daimler
Group. In addition, the statement of investments indicates
which consolidated companies make use of the exemption
pursuant to Section 264 Subsection 3 of the HGB and/or
Section 264b of the HGB. The consolidated financial
statements of Daimler AG release those subsidiaries from
the requirements that would otherwise apply.
F.88
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Information on investments
Oeiras, Portugal
100.00
Athlon Car Lease Rental Services B.V.
Athlon Sweden AB
Athlon Switzerland AG
AutoGravity Corporation
Banco Mercedes-Benz do Brasil S.A.
Le Bourget, France
100.00
Athlon Rental Germany GmbH
Düsseldorf, Germany
Amsterdam, Netherlands
100.00
Machelen, Belgium
100.00
Düsseldorf, Germany
100.00
100.00
Athlon Mobility Consultancy N.V.
Athlon Mobility Consultancy B.V.
Athlon Germany GmbH
Almere, Netherlands
100.00
Athlon Car Lease Rental Services Belgium N.V.
Machelen, Belgium
100.00
Athlon Car Lease S.A.S.
Le Bourget, France
100.00
Athlon Car Lease Spain, S.A.
Barcelona, Spain
100.00
Athlon Dealerlease B.V.
Almere, Netherlands
100.00
Athlon France S.A.S.
53
Daimler Ceská republika Holding s.r.o.
Transactions with related parties
In connection with its 45% equity interest in Toll Collect GmbH,
Daimler has issued guarantees which are not shown in table
7 F.85 (€100 million at December 31, 2017 and at December
31, 2016).
1,588
thereof depreciation of property,
plant and equipment
2,799
802
196
1,588
75
3,890
1
3,891
308
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.82
18
Reconciliation to Group figures
62
16
of non-current assets
5,061
1,547
445
266
4,772
16
12,091
12,143
thereof amortization
of intangible assets
1,161
279
70
52
Depreciation and amortization
In millions of euros
2016
Amortization of capitalized
borrowing costs¹
- 13
Interest income
214
-12
230
12,902
Interest expense
-546
Profit before income taxes
14,301
12,574
Total of segments' assets
254,610
-582
2017
14,682
-45
17
Reconciliations
Reconciliations of the segment amounts to the respective
items included in the consolidated financial statements are
shown in table 7 F.82.
In 2017, the line item Equity-method investments comprises
the reversal of an impairment of €240 million of Daimler's equity
investment in BAIC Motor. In 2016, the impairment of €244
million of the equity investment in BAIC Motor had a negative
effect on EBIT. In addition, both years primarily comprise the
Group's proportionate share of profits and losses of BAIC Motor.
In 2017, the line item Other corporate items primarily comprises
expenses related to legal proceedings. In the year 2016,
expenses of €400 million related to a legal proceeding and
losses of €241 million from currency transactions not
allocated to business operations, affected the EBIT negatively.
On the other hand, income of €605 million from the contribution
of shares in Renault and Nissan to pension plan assets had a
positive effect on earnings.
Revenue and non-current assets by region
Group EBIT
Revenue from external customers and non-current assets
by region are shown in table 71 F.83.
Equity-method investments
14,981
256
Other corporate items
-510
13,218
-175
-158
Eliminations
Total of segments' profit (EBIT)
5,889
-8
5,897
22,110
7,351
3,841
141,842
240,168
2,820
65,024
242,988
equity-method investments
2,812
545
118
11
55
thereof carrying amounts of
3,541
Segment assets
4
-1
677
-175
502
thereof profit/loss from
compounding and effects
-124
from changes in discount rates
-82
-27
-10
-4
-5
-128
of provisions for other risks
557
4,098
Segment liabilities
2,272
121
457
18
76
2,944
intangible assets
2,944
plant and equipment
4,147
1,243
373
97
37
thereof investments in property,
thereof investments in
32,145
- 10
41,133
13,423
5,393
2,954
131,394
194,297
-10,442
183,855
Additions to non-current assets
14,289
2,403
1,526
476
13,461
32,155
240,168
F.85
Carrying amount of
1,060
The objective of capital management is to increase value added
among other things by optimizing the cost of capital. This is
achieved on the one hand by the management of the net assets,
for instance by optimizing working capital, which is within the
operational responsibility of the segments. In addition, taking
into account legal regulations, Daimler strives to optimize
the costs and risks of its capital structure and, consequently,
the cost of capital, with due consideration of applicable law.
Examples of this include a balanced relationship between equity
and financial liabilities as well as an appropriate level of
liquidity, oriented towards the operational requirements.
35. Earnings per share
The calculation of basic and diluted earnings per share is based
on net profit attributable to shareholders of Daimler AG.
Following the expiration of the stock option plan in 2014, dilutive
effects no longer exist. The profit attributable to shareholders
of Daimler AG (basic and diluted) amounts to €10,525 million
(2016: €8,526 million). The weighted average number of
shares outstanding (basic and diluted) amounts to 1,069.8 million
(2016: 1,069.8 million).
F.84
Average net assets
2017
The cost of capital of the Group's average net assets is reflected
in value added. Value added shows the extent to which the
Group achieves or exceeds the minimum return requirements
of the shareholders and creditors, thus creating additional
value. The required rate of return on net assets, and thus the
cost of capital, are derived from the minimum rates of return
that investors expect on their invested capital. The Group's cost
of capital comprises the cost of equity as well as the costs
of debt and pension obligations unless these are allocated to
Daimler Financial Services; in addition, the expected returns
on liquidity and on the plan assets of the pension funds which
are not allocated to Daimler Financial Services are considered
with the opposite sign. In the reporting period, the cost of capital
used for our internal capital management amounted to 8%
after taxes.
2016
Daimler Buses
Mercedes-Benz Cars
23,975
22,345
Daimler Trucks
8,421
In millions of euros
8,448
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are
calculated as an average of the net assets at the beginning and
the end of the quarter and are shown in table 7 F.84.
34. Capital management
15,984
166
140
Other markets
10,211
9,322
"Net assets" and "value added" represent the basis for capital
management at Daimler. The assets and liabilities of the
segments in accordance with IFRS provide the basis for the
determination of net assets at Group level. The vehicle segments
are accountable for the operational net assets; all assets,
liabilities and provisions which they are responsible for in day-
to-day operations are therefore allocated to them. Performance
measurement at Daimler Financial Services is on an equity basis,
in line with the usual practice in the banking business. Net
assets at Group level additionally include assets and liabilities
from income taxes as well as other corporate items and
eliminations.
1,827
164,330
153,261
89,430
85,421
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
309
1,987
18,280
Mercedes-Benz Vans
1,739
2 Unless allocated to the segments.
3 Unless allocated to Daimler Financial Services.
310
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
36. Related party relationships
Related parties are deemed to be associated companies, joint
ventures, joint operations and unconsolidated subsidiaries,
as well as persons who exercise a significant influence on the
financial and business policy of the Daimler Group. The latter
category includes all persons in key positions and their close
family members. At the Daimler Group, those persons are the
members of the Board of Management and of the Supervisory
Board.
1 Equity.
Most of the goods and services supplied within the ordinary
course of business between the Group and related parties
comprise transactions with associated companies, joint ven-
tures and joint operations, and are shown in table 7 F.85.
A large proportion of the Group's sales of goods and services
with associated companies as well as receivables relates to
business relations with LSH Auto International Limited (LSHAI)
and with Beijing Benz Automotive Co., Ltd. (BBAC). In 2017,
Daimler acquired a 15% stake in LSHAI. In the reporting period,
Daimler sold the Group's own Mercedes-Benz dealership
in Melbourne, Australia, to LSHAI.
The purchases of goods and services shown in table 7 F.85
were primarily from LSH Auto International Limited and
MBtech Group GmbH & Co. KGaA (MBtech Group). MBtech
Group develops, integrates and tests components,
systems, modules and vehicles worldwide.
Joint ventures
Significant sales of goods and services took place with Fujian
Benz Automotive Co., Ltd. (FBAC), as well as with DAIMLER
KAMAZ RUS O00, a company established with Kamaz PAO,
another of the Group's associated companies.
On November 7, 2016, the joint venture Shenzhen BYD Daimler
New Technology Co., Ltd. was renamed as Shenzhen DENZA
New Energy Automotive Co., Ltd. (DENZA).
DENZA is allocated to the Mercedes-Benz Cars segment.
Daimler provided guarantees in a total amount of RMB 1,250
million (€160 million) to external banks which provided two
loans to DENZA. As of December 31, 2017, loans amounting
to RMB 705 million (€90 million) were utilized. In addition,
Daimler provided a shareholder loan of RMB 250 million
(€32 million) to DENZA, which is fully utilized. In accordance
with its shareholding ratio, Daimler contributed additional
equity of RMB 500 million (€64 million) to DENZA in July 2017.
Associated companies
2,385
Assets and liabilities from income taxes³
Other corporate items and eliminations³
Net assets Daimler Group
Daimler Financial Services¹
Net assets of the segments
978
887
11,165
10,000
46,924
43,419
Equity-method investments²
941
2,141
3,372
-1,492
-292
48,514
47,054
555
thereof China
2,482
2,510
809
Unallocated financial liabilities
and liabilities from pensions and
similar obligations³
Other corporate items and eliminations
6,556
946
9,190
-20,441
190,291
183,855
Group liabilities
1 Amortization of capitalized borrowing costs is not considered
in the internal performance measure "EBIT" but is included
-22,065
in cost of sales.
194,297
Income tax liabilities³
Income tax assets³
2,665
557
3,744
Unallocated financial assets
(including liquidity) and
assets from pensions and
204,854
similar obligations³
Other corporate items and eliminations
19,550
-22,863 -21,031
Group assets
255,605
242,988
Total of segments' liabilities
20,133
2 In 2016 mainly comprises the carrying amount of the investment
in BAIC Motor and in 2017 mainly comprises the carrying amount
of the investments in BAIC Motor and LSHAI.
39,074
NAFTA region
46,916
44,960
25,510
26,898
42,998
thereof United States
39,169
22,623
24,118
Asia
38,766
35,562
40,459
23,509
23,939
thereof Germany
3 Unless allocated to Daimler Financial Services.
F.83
Revenue and non-current assets by region
In millions of euros
Revenue
Non-current assets
2017
2016
2017
2016
Europe
68,437
63,417
59,583
54,054
equity-method investments²
Prague, Czech Republic
car2go Österreich GmbH
Daimler Colombia S. A.
Segment profit (EBIT)
153,261
-6,881
-6,881
6,881
160,142
153,261
153,261
8,112
19,358
1,302
20,660
537
12,835
12,298
31,719
1,468
33,187
89,284
Total revenue
3,499
4,101
75
4,176
Intersegment revenue
1,948
249
Luxembourg, Luxembourg
0.00
3
Stuttgart, Germany
0.00
3
1,170
38
equity-method investments
thereof profit/loss from
12,902
-316
13,218
1,739
627
100.00
85,785
2016
In the year 2016, expenses of €83 million in connection with
Takata airbags had a negative effect on EBIT.
Mercedes-Benz Vans
In 2017, expenses of €172 million for fixed-cost optimizations
affected EBIT negatively. On the other hand, the sale of real
estate by Mitsubishi Fuso Truck and Bus Corporation at the
Kawasaki site in Japan increased earnings by €267 million.
In addition, the settlement of a pension plan in the NAFTA region
had a positive impact of €117 million on EBIT. In the year 2016,
expenses of €91 million resulted from Daimler Trucks' workforce
adjustments.
Daimler Trucks
307
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Daimler Buses
3,921
3,920
24
75
198
791
2,832
1
External revenue
In the reporting year, there were no significant issues
at the Daimler Buses segment.
The interest income and interest expense of Daimler Financial
Services are included in revenue and cost of sales, and are
presented in Notes 4 and 5.
In millions of euros
Daimler
Group
Recon-
ciliation
Services Segments
Buses
Benz Vans
Daimler Financial Services
Trucks
Financial
Daimler
Mercedes-
Daimler
Mercedes-
Benz Cars
Daimler
Total
plant and equipment
Zwartkop, South Africa
São Paulo, Brazil
5,8
Delta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
100.00
Epsilon OHG
Schönefeld, Germany
100.00
5,8
Gamma 1 OHG
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
100.00
Schönefeld, Germany
Beta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
Alpha 6 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
5,8
Alpha 7 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
100.00
100.00
5,8
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Interleasing Luxembourg S.A.
Invema Assessoria Empresarial Ltda
Koppieview Property (Pty) Ltd
LBBW AM - Daimler Re Insurance
LBBW AM-MBVEXW
Madrid, Spain
100.00
Intelligent Apps GmbH
London, United Kingdom
Amsterdam, Netherlands
0.00
Hamburg, Germany
78.98
Windhof, Luxembourg
100.00
100.00
Gamma 2 OHG
Highway 2015-I. B.V.
Hailo Network Iberia S.L.
Schönefeld, Germany
100.00
5,8
Gamma 3 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
Hailo Network IP Limited
100.00
Gamma 4 OHG
Grundstücksverwaltungsgesellschaft EvoBus
Schönefeld, Germany
100.00
5,8
GmbH & Co. OHG
5,8
thereof depreciation of property,
1,755
1
-3
1,198
equity-method investments
thereof profit/loss from
14,682
-299
43
14,981
243
1,181
2,380
9,207
Segment profit (EBIT)
164,330
1,970
-7,362
-7,362
3
1,242
Segment assets
-61
-61
-4
-2
-5
1
-17
of provisions for other risks
from changes in discount rates
compounding and effects
thereof profit/loss from
1,498
256
-33
70,191
7,362
171,692
164,330
Daimler
Trucks
Mercedes-
Benz Cars
Segment information
F.81
In the year 2017, Mercedes-Benz Cars segment's earnings
include expenses for voluntary service activities in
connection with a comprehensive plan for diesel engines
and expenses for a specific vehicle recall of in total
€425 million. On the other hand, the remeasurement of
the equity investment in THERE Holding B.V. had a
positive effect of €183 million on EBIT. In the year 2016,
expenses of €480 million in connection with Takata
airbags and of €238 million in connection with the remea-
surement of inventories impacted earnings negatively.
The optimization programs led to a cash inflow of €203
million (2016: €253 million) (see also Note 5).
Mercedes-Benz Cars
Mercedes-
Benz Vans
Table 71 F.81 presents segment information as of and
for the years ended December 31, 2017 and 2016.
Information related to geographic areas
Reconciliation also includes corporate projects, profits and
losses on derivative financial transactions allocated to head-
quarters and equity interests not allocated to the segments.
The effects of certain legal proceedings and compliance issues
are excluded from the operating results and liabilities of
the segments if such items are not indicative of the segments'
performance, since the related results of operations may be
distorted by the amount and the irregular nature of such events.
Reconciliation includes corporate items for which headquarters
are responsible. Transactions between the segments are
eliminated in the context of consolidation and the eliminated
amounts are included in the reconciliation.
Reconciliation
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
With respect to information about geographical regions,
revenue is allocated to countries based on the location
of the customer; non-current assets are presented according
to the physical location of these assets.
164,330
Daimler
Buses
Total
Segments
22,309
1,466
23,775
4,246
105
4,351
12,601
563
13,164
34,182
1,525
35,707
94,695
Total revenue
Daimler
Financial
Services
3,703
90,992
External revenue
2017
In millions of euros
Daimler
Group
Recon-
ciliation
Intersegment revenue
21,762
8,743
3,928
6,744
26
6,718
43
94
710
Depreciation and amortization
1,028
plant and equipment
thereof investments in property,
3,414
1
3,413
90
4,843
33
of non-current assets
1,540
1,754
131
18
84
291
1,230
5,334
of intangible assets
13,667
88
13,579
5,979
279
447
thereof amortization
525
97
2,668
4,818
1,060
3,758
148
9
180
Segment liabilities
491
equity-method investments
thereof carrying amounts of
255,605
995
254,610
149,986
2,930
44,610
13,903
5,761
intangible assets
thereof investments in
35,776
22
35,754
14,896
474
2,000
2,350
16,034
Additions to non-current assets
190,291
-14,563
137,608 204,854
2,972
Alpha 5 OHG
5,8
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
Daimler Motors Investments LLC
Daimler Nederland B.V.
Mexico City, Mexico
100.00
Leinfelden-Echterdingen, Germany
100.00
Daimler Mobility Services GmbH
5
100.00
Utrecht, Netherlands
100.00
Daimler Nederland Holding B.V.
Daimler North America Corporation
Daimler North America Finance Corporation
Wilmington, USA
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Daimler Mexico, S.A. de C.V.
Mexico City, Mexico
Wilmington, USA
100.00
Stuttgart, Germany
100.00
5
Tokyo, Japan
100.00
100.00
100.00
Utrecht, Netherlands
100.00
Wilmington, USA
100.00
Daimler Manufactura, S. de R.L. de C.V.
Milton Keynes, United Kingdom
100.00
Daimler Parts Brand GmbH
Wilmington, USA
Daimler Truck and Bus Australia Pacific Pty. Ltd.
Daimler Trucks and Buses (China) Ltd.
Luxembourg, Luxembourg
100.00
Berlin, Germany
100.00
Daimler South East Asia Pte. Ltd.
5
100.00
Mexico City, Mexico
100.00
Singapore, Singapore
100.00
Mulgrave, Australia
Farmington Hills, USA
Utrecht, Netherlands
DAIMLER SERVICIOS CORPORATIVOS MEXICO
S. DE R.L. DE C.V.
Daimler Real Estate GmbH
Newark, USA
100.00
100.00
100.00
100.00
100.00
Daimler Retail Receivables LLC
Stuttgart, Germany
5
Daimler Re Brokers GmbH
Bremen, Germany
74.90
5
Daimler Re Insurance S.A. Luxembourg
100.00
Chennai, India
5
100.00
100.00
5
Chennai, India
100.00
314
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Stuttgart, Germany
Name of the Company
Capital share
Footnote
in %1
Daimler Financial Services Japan Co., Ltd.
Kawasaki, Japan
100.00
Domicile, Country
Daimler Financial Services México, S. de R.L. de C.V.
100.00
100.00
Bogota D.C., Colombia
100.00
Daimler Compra y Manufactura Mexico
S. de R.L. de C.V.
Mexico City, Mexico
100.00
Daimler Export and Trade Finance GmbH
Singapore, Singapore
Daimler Finance North America LLC
Daimler Financial Services AG
Daimler Financial Services India Private Limited
Berlin, Germany
100.00
5
Wilmington, USA
Daimler Financial Services Africa & Asia Pacific Ltd.
Mexico City, Mexico
100.00
Daimler Financial Services,
Stuttgart, Germany
100.00
5
Daimler Greater China Ltd.
Daimler Grund Services GmbH
Daimler India Commercial Vehicles Private Limited
Daimler FleetBoard GmbH
Daimler Insurance Agency LLC
Daimler Insurance Services Japan Co., Ltd.
Daimler Insurance Services UK Limited
Daimler International Finance B.V.
Daimler Investments US Corporation
Beijing, China
100.00
Schönefeld, Germany
Daimler Insurance Services GmbH
100.00
Istanbul, Turkey
Daimler Fleet Services A.S.
Mexico City, Mexico
100.00
S.A. de C.V., S.O.F.O.M., E.N.R.
Daimler Fleet Management GmbH
Stuttgart, Germany
100.00
5
Daimler Fleet Management Singapore Pte. Ltd.
Singapore, Singapore
100.00
Daimler Fleet Management South Africa (Pty.) Ltd.
Daimler Fleet Management UK Limited
Centurion, South Africa
65.00
Milton Keynes, United Kingdom
100.00
100.00
Beijing, China
Beijing, China
Daimler Trucks Canada Ltd.
Kobbegem-Asse, Belgium
100.00
Prague, Czech Republic
100.00
Koege, Denmark
100.00
100.00
Sarcelles, France
Stuttgart, Germany
100.00
5
100.00
100.00
Bomporto, Italy
100.00
100.00
Wiener Neudorf, Austria
EvoBus Portugal, S.A.
100.00
EvoBus (U.K.) Ltd.
Coventry, United Kingdom
100.00
EvoBus Austria GmbH
EvoBus Belgium N.V.
EvoBus Sverige AB
EvoBus Ceská republika s.r.o.
EvoBus France S.A.S.U.
EvoBus GmbH
EvoBus Ibérica, S.A.U.
EvoBus Italia S.p.A.
EvoBus Nederland B.V.
EvoBus Polska Sp. z o.o.
EvoBus Danmark A/S
Kloten, Switzerland
Nijkerk, Netherlands
Wolica, Poland
100.00
5,8
Alpha 2 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
Schönefeld, Germany
5,8
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
5,8
Alpha 4 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 3 OHG
100.00
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
5,8
100.00
Mem Martins, Portugal
100.00
Vetlanda, Sweden
100.00
Freightliner Custom Chassis Corporation
Alpha 1 OHG
Gaffney, USA
Friesland Lease B.V.
Drachten, Netherlands
51.11
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Schönefeld, Germany
100.00
100.00
5
Sámano, Spain
Stuttgart, Germany
100.00
Daimler UK Limited
Daimler Vans Hong Kong Limited
Daimler Vans USA, LLC
Daimler Vehículos Comerciales Mexico
S. de R.L. de C.V.
Farmington Hills, USA
Daimler Vermögens- und Beteiligungsgesellschaft mbH
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Daimler Vorsorge und Versicherungsdienst GmbH
Daiprodco Mexico S. de R.L. de C.V.
Milton Keynes, United Kingdom
100.00
Hong Kong, China
Wilmington, USA
67.55
100.00
100.00
Mexico City, Mexico
Daimler Trust Leasing LLC
100.00
Wilmington, USA
Mississauga, Canada
100.00
Daimler Trucks Korea Ltd.
100.00
Daimler Trucks Remarketing Corporation
Daimler Trust Holdings LLC
Daimler Trust Leasing Conduit LLC
Portland, USA
Seoul, South Korea
100.00
Wilmington, USA
100.00
100.00
Farmington Hills, USA
100.00
Detroit Diesel Corporation
Detroit Diesel Remanufacturing LLC
Daimler Trucks North America LLC
100.00
315
Detroit Diesel Remanufacturing Mexicana,
S. de R.L. de C.V.
Detroit Diesel-Allison de Mexico, S. de R.L. de C.V.
Deutsche Accumotive GmbH & Co. KG
EHG Elektroholding GmbH
Footnote
EvoBus (Schweiz) AG
100.00
San Juan Ixtacala, Mexico
100.00
100.00
5
Stuttgart, Germany
Toluca, Mexico
Capital share
in %1
Kirchheim unter Teck, Germany
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Schönefeld, Germany
100.00
5
Berlin, Germany
100.00
5
5
100.00
Detroit, USA
100.00
Detroit, USA
100.00
Mexico City, Mexico
Name of the Company
Zonar Systems, Inc.
26.57
Esslingen am Neckar, Germany
40.82
Wiesbaden, Germany
5.39
8
51.00
25.00
33.00
Beijing, China
Berlin, Germany
Weissach, Germany
Campbell, USA
Burnaby, Canada
20.00
Budapest, Hungary
Sindelfingen, Germany
35.00
what3words Ltd.
50.00
London, United Kingdom
6
33.33
0.00
Berlin, Germany
2.90
18.37
18.09
33.33
San Francisco, USA
Berlin, Germany
Berlin, Germany
Jeddah, Saudi Arabia
Volocopter GmbH
Juffali Industrial Products Company
Verimi GmbH
Capital share
in %1
Kleinostheim, Germany
Footnote
VII. Joint operations, joint ventures, associated companies and substantial other investments accounted
for at (amortized) cost²
Abgaszentrum der Automobilindustrie GbR
BDF IP Holdings Ltd.
Beijing Mercedes-Benz Sales Service Co., Ltd.
ChargePoint Inc.
COBUS Industries GmbH
Esslinger Wohnungsbau GmbH
European Center for Information and Communication
Technologies - EICT GmbH
EvoBus Hungária Kereskedelmi Kft.
Gottapark, Inc.
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
VfB Stuttgart 1893 AG
H2 Mobility Deutschland GmbH & Co. KG
Laureus World Sports Awards Limited
MBtech Verwaltungs-GmbH
MercedesService Card GmbH & Co. KG
MFTB Taiwan Co., Ltd.
National Automobile Industry Company Ltd.
Omuta Unso Co., Ltd.
PDB Partnership for Dummy Technology and Biomechanics GbR
Rally Bus Corp.
smart-BRABUS GmbH
STARCAM s.r.o.
tiramizoo GmbH
Toll4Europe GmbH
Toyo Kotsu Co., Ltd.
Turo Inc.
inpro Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH
51.00
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
33.40
6 Joint control due to economic circumstances.
7 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
8 Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability.
Furthermore, Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability in MOST Cooperation GbR,
Karlsruhe (Germany).
323
99 WE PURSUE A
SUSTAINABLE AND SOUND
66
DIVIDEND POLICY!
TU
na
UN
At the Annual Shareholders' Meeting on April 5, 2018, the Board of Management
and the Supervisory Board will therefore propose the payment of an increased
dividend of €3.65 per share (prior year: €3.25). We aim to achieve a sustainable
dividend development also in the coming years. In setting the dividend, our
target is generally to distribute approximately 40% of the net profit attributable
to Daimler shareholders.
B
08
5 Qualification for exemption pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB).
G| Further Information
326
Independent Auditor's Report
327
Ten Year Summary
334
Glossary
336
Index
337
Daimler Worldwide
338
G | FURTHER INFORMATION | CONTENTS
325
Domicile, Country
Responsibility Statement
Taipei, Taiwan
4 In liquidation.
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG).
Jeddah, Saudi Arabia
26.00
Ohmuta, Japan
33.51
Ingolstadt, Germany
20.00
8
New York, USA
12.33
Bottrop, Germany
50.00
Most, Czech Republic
51.00
Munich, Germany
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies we refer to Note 1.
3 Control due to economic circumstances.
20.84
30.00
Sannoseki, Japan
28.20
San Francisco, USA
5.38
Berlin, Germany
11.11
Stuttgart, Germany
11.75
Bruchsal, Germany
10.17
Hinxworth, United Kingdom
Seattle, USA
13.38
19.42
Berlin, Germany
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
100.00
Okayamashi, Japan
Mercedes-Benz Versicherung AG
Berlin, Germany
100.00
Milton Keynes, United Kingdom
100.00
Wilmington, USA
100.00
Stuttgart, Germany
100.00
5
Name of the Company
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Footnote
Stuttgart, Germany
100.00
5
Stuttgart, Germany
Mercedes-Benz Vans, LLC
Mercedes-Benz Vans UK Limited
Mercedes-Benz Vans Mobility GmbH
100.00
66.91
Mercedes-Benz USA, LLC
Mercedes-Benz U.S. International, Inc.
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Mercedes-Benz V.I. Lyon SAS
Mercedes-Benz V.I. Paris Ile de France SAS
Mercedes-Benz Vans Australia Pacific Pty. Ltd.
Mercedes-Benz Vans España, S.L.U.
Warsaw, Poland
100.00
Wilmington, USA
Genas, France
Mulgrave, Australia
Vance, USA
100.00
100.00
100.00
100.00
100.00
100.00
Madrid, Spain
Wissous, France
Istanbul, Turkey
5
70.00
Logan Township, USA
100.00
moovel Group GmbH
moovel North America, LLC
Multifleet G.I.E
myTaxi Iberia SL
mytaxi Network Ireland Ltd.
mytaxi Network Ltd.
N.V. Mercedes-Benz Aalst
Stuttgart, Germany
100.00
5
Portland, USA
100.00
Le Bourget, France
Barcelona, Spain
Dublin, Ireland
50.10
8
Mitsubishi Fuso Truck of America, Inc.
Tramagal, Portugal
Kawasaki, Japan
Toronto, Canada
100.00
Braine-l'Alleud, Belgium
100.00
Wavre, Belgium
100.00
Wemmel, Belgium
100.00
Wilmington, USA
100.00
Ho Chi Minh City, Vietnam
Warsaw, Poland
100.00
100.00
Mercedes-Benz Vertrieb NFZ GmbH
Mercedes-Benz Vertrieb PKW GmbH
Mercedes-Benz Vietnam Ltd.
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz Waterloo S.A.
Mercedes-Benz Wavre S.A.
Mercedes-Benz Wemmel N.V.
Mercedes-Benz Wholesale Receivables LLC
MFTA Canada, Inc.
Mitsubishi Fuso Truck and Bus Corporation
MITSUBISHI FUSO TRUCK EUROPE -
Sociedade Europeia de Automóveis, S.A.
89.29
100.00
100.00
Mercedes-Benz Türk A.S.
Shanghai, China
100.00
Mercedes-Benz Polska Sp. z.o.o
Warsaw, Poland
100.00
Mercedes-Benz Portugal, S.A.
Mem Martins, Portugal
100.00
Mercedes-Benz PRAHA s.r.o.
Mercedes-Benz Renting, S.A.
Mercedes-Benz Research & Development
North America, Inc.
Prague, Czech Republic
100.00
Alcobendas, Spain
100.00
Wilmington, USA
100.00
Mercedes-Benz Retail Group UK Limited
Mercedes-Benz Parts Manufacturing & Services Ltd.
100.00
Milton Keynes, United Kingdom
100.00
Molsheim, France
100.00
Mercedes-Benz Nederland B.V.
Utrecht, Netherlands
100.00
Mercedes-Benz New Zealand Ltd
Auckland, New Zealand
100.00
Mercedes-Benz Ninove N.V.
Mercedes-Benz Retail, S.A.
Ninove, Belgium
Mercedes-Benz Österreich GmbH
Mercedes-Benz Paris SAS
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
Mercedes-Benz Parts Logistics UK Limited
Salzburg, Austria
100.00
Port-Marly, France
100.00
Azuqueca de Henares, Spain
100.00
Milton Keynes, United Kingdom
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Mercedes-Benz Romania S.R.L.
Petaling Jaya, Malaysia
100.00
Istanbul, Turkey
100.00
Sosnowiec, Poland
100.00
Mercedes-Benz South Africa Ltd
Mercedes-Benz Sverige AB
Mercedes-Benz Taiwan Ltd.
Mercedes-Benz Trucks España S.L.U.
Pretoria, South Africa
100.00
Malmö, Sweden
100.00
Taipei, Taiwan
51.00
Alcobendas, Spain
100.00
Mercedes-Benz Trucks UK Limited
Mercedes-Benz Sosnowiec Sp. z o.o.
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
100.00
Alcobendas, Spain
Milton Keynes, United Kingdom
100.00
Madrid, Spain
100.00
Centurion, South Africa
100.00
Rome, Italy
100.00
Bucharest, Romania
Mercedes-Benz Roma S.p.A.
100.00
Moscow, Russian Federation
100.00
Mercedes-Benz Schweiz AG
Schlieren, Switzerland
100.00
Mercedes-Benz Service Leasing S.R.L.
Bucharest, Romania
100.00
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Russia AO
100.00
London, United Kingdom
100.00
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Beat Chile SpA
car2go Belgium SPRL
car2go Danmark A/S
car2go Sverige AB
car2go UK Ltd.
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Clever Tech S.R.L.
Clever Tech Sud S.R.L.
Cúspide GmbH
Daimler AG & Co. Anlagenverwaltung OHG
Stuttgart, Germany
100.00
Berlin, Germany
100.00
Santiago, Chile
Brussels, Belgium
100.00
100.00
AEG Olympia Office GmbH
II. Unconsolidated subsidiaries²
in %1
Footnote
65.00
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
100.00
5
Western Star Trucks Sales, Inc
Portland, USA
100.00
Zuidlease B.V.
Copenhagen, Denmark
Sittard, Netherlands
3218095 Nova Scotia Company
Halifax, Canada
100.00
319
320
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
51.00
Le Bourget, France
100.00
100.00
100.00
Daimler Culture Development Co., Ltd.
Daimler Financial Services UK Trustees Ltd.
Beijing, China
50.00
3
Milton Keynes, United Kingdom
100.00
Daimler Gastronomie GmbH
Daimler Group Services Berlin GmbH
Esslingen am Neckar, Germany
100.00
Berlin, Germany
100.00
Daimler Group Services Madrid, S.A.U.
Daimler Innovation Technology (China) Co., Ltd.
Daimler International Assignment Services USA, LLC
Daimler Mitarbeiter Wohnfinanz GmbH
Daimler Parts Logistics Australia Pty. Ltd.
Singapore, Singapore
Daimler Commercial Vehicles South East Asia Pte. Ltd.
100.00
Dubai, United Arab Emirates
Milton Keynes, United Kingdom
100.00
Buenos Aires, Argentina
72.17
Bucharest, Romania
100.00
Bucharest, Romania
100.00
Stuttgart, Germany
Stockholm, Sweden
100.00
100.00
8
Daimler Commercial Vehicles (Thailand) Ltd.
Daimler Commercial Vehicles Africa Ltd.
Bangkok, Thailand
100.00
Nairobi, Kenya
100.00
Daimler Commercial Vehicles MENA FZE
Schönefeld, Germany
Ucafleet S.A.S
100.00
Wilmington, USA
62.62
Portland, USA
100.00
SelecTrucks of Toronto, Inc.
Setra of North America, Inc.
Name of the Company
100.00
Oriskany, USA
100.00
Silver Arrow Australia Trust 2017-1
SILVER ARROW CHINA 2016-1 Auto Loan Asset Backed
Notes Trust c/o CITIC Trust Co., Ltd.
Melbourne, Australia
0.00
3
Beijing, China
0.00
3
SILVER ARROW CHINA 2016-2 Auto Loan Asset Backed
Notes Trust c/o CITIC Trust Co., Ltd.
Beijing, China
Bryanston, South Africa
100.00
Lima, Peru
SelecTrucks of America LLC
Erembodegem, Belgium
100.00
N.V. Mercedes-Benz Mechelen
Mechelen, Belgium
100.00
NuCellSys GmbH
P.T. Mercedes-Benz Distribution Indonesia
P.T. Mercedes-Benz Indonesia
Kirchheim unter Teck, Germany
0.00
100.00
100.00
Bogor, Indonesia
100.00
P.T. Star Engines Indonesia
Bogor, Indonesia
100.00
4
Renting del Pacífico S.A.C.
Sandown Motor Holdings (Pty) Ltd
Jakarta, Indonesia
3
SILVER ARROW CHINA 2017-1 RETAIL AUTO LOAN ASSET
BACKED NOTES TRUST c/o CITIC TRUST CO., LTD.
Beijing, China
Star Assembly SRL
Sebes, Romania
100.00
Starexport Trading S.A.
São Bernardo do Campo, Brazil
100.00
Sterling Truck Corporation
Portland, USA
100.00
100.00
Sumperská správa majetku k.s.
100.00
8
Thomas Built Buses of Canada Limited
Calgary, Canada
100.00
Thomas Built Buses, Inc.
High Point, USA
100.00
Trona Cogeneration Corporation
Prague, Czech Republic
Mercedes-Benz Molsheim S.A.S.
Almere, Netherlands
5
0.00
3
SILVER ARROW CHINA 2017-2 RETAIL AUTO LOAN ASSET
BACKED NOTES TRUST c/o CITIC TRUST CO., LTD.
Beijing, China
0.00
3
Silver Arrow Lease Facility Trust
Wilmington, USA
0.00
Special Lease Systems (SLS) B.V
3
Luxembourg, Luxembourg
0.00
3
smart France S.A.S.
Hambach, France
100.00
smart Vertriebs gmbh
Berlin, Germany
100.00
Silver Arrow S.A.
5
100.00
Stuttgart, Germany
100.00
Warsaw, Poland
100.00
Moscow, Russian Federation
100.00
Berlin, Germany
100.00
5
Saarbrücken, Germany
100.00
5
Mercedes-Benz Belgium Luxembourg S.A.
Brussels, Belgium
100.00
Mercedes-Benz Bordeaux S.A.S.
Begles, France
100.00
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Budapest, Hungary
Salzburg, Austria
100.00
Stuttgart, Germany
Mercedes-Benz Banking Service GmbH
0.00
3
Wilmington, USA
0.00
3
Wilmington, USA
0.00
3
Mercedes-Benz Auto Receivables Trust 2015-1
Mercedes-Benz Auto Receivables Trust 2016-1
100.00
Wilmington, USA
3
Wilmington, USA
0.00
3
Mercedes-Benz Bank AG
Mercedes-Benz Bank GmbH
Mercedes-Benz Bank Polska S.A.
Mercedes-Benz Bank Rus 000
Mercedes-Benz Bank Service Center GmbH
0.00
Wilmington, USA
Mercedes-Benz Brooklands Limited
100.00
Mercedes-Benz Compañía Financiera Argentina S.A.
Mercedes-Benz Connectivity Services GmbH
Trent, Italy
100.00
Mem Martins, Portugal
100.00
Mercedes-Benz Corretora de Seguros Ltda
Buenos Aires, Argentina
Stuttgart, Germany
São Paulo, Brazil
100.00
100.00
5
99.98
Name of the Company
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Footnote
Mercedes-Benz Comercial, Unipessoal Lda.
Mercedes-Benz CharterWay S.r.l.
100.00
Montigny-le-Bretonneux, France
Mercedes-Benz Canada Inc.
Toronto, Canada
100.00
Mercedes-Benz Capital Rus O00
Moscow, Russian Federation
100.00
Mercedes-Benz Cars UK Limited
Mercedes-Benz Ceská republika s.r.o.
Mercedes-Benz CharterWay España, S.A.
Milton Keynes, United Kingdom
Mercedes-Benz CharterWay Gesellschaft
mit beschränkter Haftung
100.00
Prague, Czech Republic
100.00
Alcobendas, Spain
100.00
Berlin, Germany
100.00
5
Mercedes-Benz CharterWay S.A.S.
Milton Keynes, United Kingdom
3
0.00
Wilmington, USA
5
Mercedes AMG High Performance Powertrains Ltd
Brixworth, United Kingdom
100.00
Mercedes pay AG
Küsnacht, Switzerland
100.00
Mercedes pay S.A.
Luxembourg, Luxembourg
100.00
Mercedes-AMG GmbH
Affalterbach, Germany
100.00
5
Mercedes-Benz - Aluguer de Veículos, Unipessoal Lda.
Mem Martins, Portugal
100.00
Mercedes-Benz (China) Ltd.
Mercedes-Benz (Thailand) Limited
100.00
Arnstadt, Germany
MDC Technology GmbH
5
316
Name of the Company
Domicile, Country
Capital share
in %1
Footnote
Li-Tec Battery GmbH
Mascot Truck Parts Canada Ltd (2017)
Mascot US LLC
MBarc Credit Canada Inc.
Mercedes-Benz (Yangzhou) Parts Distribution Co., Ltd.
MDC Power GmbH
Mississauga, Canada
Wilmington, USA
Mississauga, Canada
100.00
5
100.00
100.00
100.00
Kölleda, Germany
100.00
Kamenz, Germany
Mercedes-Benz Accessories GmbH
Mercedes-Benz AG & Co. Grundstücksvermietung
Objekte Leipzig und Magdeburg KG
Mercedes-Benz Antwerpen N.V.
Melbourne, Australia
100.00
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2015-B
Mercedes-Benz Auto Lease Trust 2016-1
Beijing, China
100.00
Wilmington, USA
0.00
3
Wilmington, USA
100.00
0.00
Mercedes-Benz Auto Lease Trust 2016-2
Wilmington, USA
0.00
3
Mercedes-Benz Auto Lease Trust 2016-A
Wilmington, USA
0.00
3
Mercedes-Benz Auto Lease Trust 2016-B
Mercedes-Benz Auto Lease Trust 2017-A
Mercedes-Benz Auto Receivables Trust 2013-1
Mercedes-Benz Auto Receivables Trust 2014-1
3
Mercedes-Benz CPH A/S
Utrecht, Netherlands
Stuttgart, Germany
Mercedes-Benz Argentina S.A.
Mercedes-Benz Asia GmbH
Mercedes-Benz Assuradeuren B.V.
Mercedes-Benz Australia/Pacific Pty Ltd
Beijing, China
75.00
Bangkok, Thailand
100.00
Yangzhou, China
5
100.00
100.00
5
Düsseldorf, Germany
100.00
3
Antwerp, Belgium
100.00
Buenos Aires, Argentina
100.00
Stuttgart, Germany
Daimler Protics GmbH
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Mercedes-Benz Dealer Bedrijven B.V.
Mercedes-Benz Leasing (Thailand) Co., Ltd.
Bangkok, Thailand
100.00
Mercedes-Benz Leasing Co., Ltd.
Beijing, China
65.00
Mercedes-Benz Leasing do Brasil
Barueri, Brazil
100.00
Arrendamento Mercantil S.A.
Mercedes-Benz Leasing GmbH
Mercedes-Benz Leasing Hrvatska d.o.o.
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing Kft.
Mercedes-Benz Leasing Polska Sp. z o.o.
Stuttgart, Germany
100.00
5
Zagreb, Croatia
100.00
51.00
Seoul, South Korea
Mercedes-Benz Korea Limited
100.00
Kifissia, Greece
100.00
Hong Kong, China
100.00
Pune, India
100.00
Mercedes-Benz Insurance Broker S.R.L.
Mercedes-Benz Insurance Services Nederland B.V.
Mercedes-Benz Insurance Services Taiwan Ltd.
Bucharest, Romania
Voluntari, Romania
Utrecht, Netherlands
100.00
Taipei, Taiwan
100.00
Mercedes-Benz Italia S.p.A.
Rome, Italy
100.00
Mercedes-Benz Japan Co., Ltd.
Tokyo, Japan
100.00
Mercedes-Benz India Private Limited
100.00
100.00
100.00
Mercedes-Benz Manufacturing (Thailand) Limited
Bangkok, Thailand
100.00
Mercedes-Benz Manufacturing Hungary Kft.
Kecskemét, Hungary
100.00
Mercedes-Benz Master Owner Trust
Mercedes-Benz Mexico, S. de R.L. de C.V.
Mercedes-Benz Minibus GmbH
Wilmington, USA
0.00
3
Mexico City, Mexico
100.00
Dortmund, Germany
100.00
5
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
Wilmington, USA
Mercedes-Benz Manhattan, Inc.
51.00
Kuala Lumpur, Malaysia
Warsaw, Poland
100.00
317
318
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
in %1
Footnote
Budapest, Hungary
Mercedes-Benz Leasing Taiwan Ltd.
Mercedes-Benz Ludwigsfelde GmbH
Mercedes-Benz Malaysia Sdn. Bhd.
Taipei, Taiwan
100.00
Stuttgart, Germany
100.00
5
Ludwigsfelde, Germany
100.00
5
Mercedes-Benz Leasing Treuhand GmbH
Mercedes-Benz Hong Kong Limited
Mercedes-Benz Hellas S.A.
60.00
Drogenbos, Belgium
100.00
Alcobendas, Spain
100.00
90.00
100.00
100.00
100.00
Mississauga, Canada
100.00
Prague, Czech Republic
100.00
Alcobendas, Spain
100.00
Montigny-le-Bretonneux, France
100.00
80.00
100.00
80.00
100.00
São Bernardo do Campo, Brazil
100.00
São Paulo, Brazil
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
Mercedes-Benz do Brasil Ltda.
Mercedes-Benz Drogenbos N.V.
Mercedes-Benz Espana, S.A.U.
Mercedes-Benz Finance Co., Ltd.
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services Italia SpA
Mercedes-Benz Financial Services Korea Ltd.
Mercedes-Benz Financial Services Nederland B.V.
Mercedes-Benz Financial Services New Zealand Ltd
Mercedes-Benz Financial Services Portugal -
Sociedade Financeira de Crédito S.A.
Horsholm, Denmark
Utrecht, Netherlands
Tokyo, Japan
Salzburg, Austria
Brussels, Belgium
Hong Kong, China
Rome, Italy
Seoul, South Korea
100.00
Budapest, Hungary
Copenhagen, Denmark
100.00
100.00
The Hague, Netherlands
100.00
Melbourne, Australia
100.00
Auckland, New Zealand
100.00
Mercedes-Benz Finansal Kiralama Türk A.S.
Mercedes-Benz Finansman Türk A.S.
Mercedes-Benz Försäljnings AB
Copenhagen, Denmark
100.00
Malmö, Sweden
100.00
Istanbul, Turkey
100.00
Istanbul, Turkey
Mercedes-Benz Finans Danmark A/S
Mercedes-Benz Finans Sverige AB
100.00
100.00
Mercedes-Benz France S.A.S.
Mercedes-Benz Gent N.V.
Montigny-le-Bretonneux, France
100.00
Gent, Belgium
100.00
Mercedes-Benz Grand Prix Ltd.
Brackley, United Kingdom
Malmö, Sweden
Mercedes-Benz Danmark A/S
100.00
100.00
Mem Martins, Portugal
100.00
Mercedes-Benz Financial Services Rus 000
Mercedes-Benz Financial Services Schweiz AG
Moscow, Russian Federation
100.00
Schlieren, Switzerland
100.00
Mercedes-Benz Financial Services Slovakia s.r.o.
Wilmington, USA
Mercedes-Benz Financial Services South Africa (Pty) Ltd
75.00
Centurion, South Africa
100.00
Mercedes-Benz Financial Services Taiwan Ltd.
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services USA LLC
Taipei, Taiwan
100.00
Milton Keynes, United Kingdom
Bratislava, Slovakia
San Sebastián de los Reyes, Spain
Mississauga, Canada
Beijing, China
12.38
Hong Kong, China
Sindelfingen, Germany
IV. Joint operations accounted for using the equity method
AFCC Automotive Fuel Cell Cooperation Corp.
EM-motive GmbH
III. Joint operations accounted for using the equity method
Cooperation Manufacturing Plant Aguascalientes,
S.A.P.I de C.V.
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
trapoFit GmbH
Taxibeat Teknoloji Hizmetleri A.S.
Taxibeat Peru S.A.
Taxibeat Ltd. UK
T.O.C (Schweiz) AG
STARKOM d.o.o.
Star Transmission srl
Star Egypt For Import LLC
SportChassis LLC
SelecTrucks Comércio de Veículos Ltda
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
Ring Garage AG Chur
Name of the Company
322
Reva SAS
New York, USA
33.33
Rijswijk, Netherlands
32.28
There Holding B.V.
Via Transportation Inc.
Beijing, China
10.08
Beijing, China
Berlin, Germany
49.00
30.57
Munich, Germany
5.62
Paris, France
Kawasaki, Japan
Naberezhnye Chelny, Russian Federation
15.00
Yokohama, Japan
43.83
15.00
35.00
50.00
Jakarta, Indonesia
30.00
Jakarta, Indonesia
21.67
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
R.T.C. Management Company Limited
Porcher & Meffert Grundstücksgesellschaft mbH & Co.
Stuttgart OHG
100.00
myTaxi UK Ltd.
myTaxi UG
myTaxi Swiss GmbH
Stockholm, Sweden
Milan, Italy
Warsaw, Poland
Tel Aviv, Israel
Stuttgart, Germany
mytaxi Sweden AB
ODPOWIEDZIALNOSCIA
MYTAXI POLSKA SPÓLKA Z OGRANICZONA
MYTAXI ITALIA S.R.L.
mytaxi Austria GmbH
mytapp Portugal Unipessoal LDA
Montajes y Estampaciones Metálicas, S.L.
Monarch Cars (Tamworth) Ltd.
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
MercedesService Card Beteiligungsgesellschaft mbH
Mercedes-Benz.io GmbH
Mercedes-Benz Venezuela S.A.
Mercedes-Benz Vans Nederland B.V.
Zug, Switzerland
100.00
Hamburg, Germany
100.00
PABCO Co., Ltd.
ogotrac S.A.S.
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
myTaxi USA Inc.
8
100.00
100.00
100.00
Cunac, France
88.89
PT Daimler Commercial Vehicles Indonesia
Banbury, United Kingdom
Jakarta, Indonesia
Schönefeld, Germany
Ebina, Japan
100.00
100.00
Stuttgart, Germany
100.00
New York, USA
100.00
London, United Kingdom
100.00
P.T. Krama Yudha Tiga Berlian Motors
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
MBtech Group GmbH & Co. KGaA
100.00
Lima, Peru
100.00
Istanbul, Turkey
100.00
Chemnitz, Germany
100.00
Stuttgart, Germany
100.00
Mexico City, Mexico
50.00
Burnaby, Canada
50.10
Hildesheim, Germany
50.00
Kentwood, USA
50.00
Beijing, China
50.00
Vienna, Austria
50.00
London, United Kingdom
51.00
Schlieren, Switzerland
100.00
100.00
North America Fuel Systems Remanufacturing LLC
V. Joint ventures accounted for using the equity method
Beijing Foton Daimler Automotive Co., Ltd
Daimler Kamaz Trucks Holding GmbH
Domicile, Country
Capital share
in %1
Footnote
Chur, Switzerland
100.00
Enbase Power GmbH
Stuttgart, Germany
Mauá, Brazil
100.00
Clinton, USA
0.00
3
New Cairo, Egypt
99.50
Cugir, Romania
100.00
Maribor, Slovenia
100.00
Fujian Benz Automotive Co., Ltd.
Munich, Germany
25.10
Toll Collect GbR
Berlin, Germany
45.00
8
Toll Collect GmbH
Via Netherlands B.V.
Berlin, Germany
45.00
Amsterdam, Netherlands
50.00
60.00
Almere, Netherlands
Wagenplan B.V.
VI. Associated companies accounted for using the equity method
BAIC Motor Corporation Ltd.
Beijing Benz Automotive Co., Ltd.
BlackLane GmbH
FlixMobility GmbH
FUSO LAND TRANSPORT & Co. Ltd.
KAMAZ PAO
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
LSH Auto International Limited
50.00
Mercedes-Benz Vans Mobility S.L.
Stuttgart, Germany
50.00
Fuzhou, China
50.00
IONITY Holding GmbH & Co. KG
Polomex, S.A. de C.V.
SelecTrucks of Atlanta LLC
Munich, Germany
25.00
Garcia, Mexico
26.00
McDonough, USA
TASIAP GmbH
50.00
Houston, USA
50.00
SelecTrucks of Houston Wholesale LLC
Houston, USA
50.00
SelecTrucks of Omaha LLC
Council Bluffs, USA
50.00
Shenzhen DENZA New Energy Automotive Co. Ltd.
Shenzhen, China
SelecTrucks of Houston LLC
Mercedes-Benz Vans Ceská republika s.r.o
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Mercedes-Benz Trucks Ceská republika s.r.o.
100.00
Stuttgart, Germany
LEONIE TB AG
LEONIE PV DVB GmbH
LEONIE PV AG
100.00
Stuttgart, Germany
LEONIE FSM DVB GmbH
100.00
Stuttgart, Germany
LEONIE FS DVB GmbH
100.00
Stuttgart, Germany
LEONIE DMS DVB GmbH
100.00
Stuttgart, Germany
LEONIE CORP DVB GmbH
100.00
Mercedes-Benz Trucks Nederland B.V.
Legend Investments Ltd.
100.00
Arvidsjaur, Sweden
Lapland Car Test Aktiebolag
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Mercedes-Benz Energy Americas LLC
Mercedes-Benz Egypt S.A.E.
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Mercedes-Benz Consulting GmbH
Mercedes-Benz Commercial Vehicles Iran GmbH
Mercedes-Benz Cars Middle East FZE
Objekte Baden-Baden und Dresden OHG
Mercedes-Benz AG & Co. Grundstücksvermietung
Mercedes-Benz Adm. Consorcios Ltda.
321
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
100.00
Name of the Company
Berlin, Germany
100.00
Neuhausen auf den Fildern, Germany
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
MBition GmbH
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
LEONORE IP GmbH
LEONIE TB DVB GmbH
100.00
Mercedes-Benz Energy GmbH
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
100.00
Ulm, Germany
51.00
Taipei, Taiwan
Daimler UK Share Trustee Ltd.
Daimler TSS GmbH
Daimler Trucks Asia Taiwan Ltd.
100.00
Horsholm, Denmark
Daimler Starmark A/S
100.00
Wilmington, USA
Daimler Purchasing Coordination Corp.
100.00
Leinfelden-Echterdingen, Germany
100.00
Mulgrave, Australia
100.00
Stuttgart, Germany
100.00
Wilmington, USA
100.00
100.00
Daimler UK Trustees Limited
Milton Keynes, United Kingdom
100.00
Stuttgart, Germany
Fünfte Vermögensverwaltungsgesellschaft Zeus mbH
100.00
Darmstadt, Germany
FLINC GmbH
100.00
Hamburg, Germany
100.00
Moscow, Russian Federation
Familonet GmbH
EvoBus Russland OOO
LAB1886 GmbH
96.00
EvoBus Reunion S. A.
100.00
Stuttgart, Germany
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
100.00
Kirchheim unter Teck, Germany
Deutsche Accumotive Verwaltungs-GmbH
7
100.00
Stuttgart, Germany
Daimler Unterstützungskasse GmbH
Le Port, France
Mercedes-Benz ExTra LLC
Milton Keynes, United Kingdom
Capital share
in %1
100.00
Stuttgart, Germany
100.00
Valencia, Venezuela
100.00
Utrecht, Netherlands
100.00
Alcobendas, Spain
100.00
Prague, Czech Republic
100.00
Utrecht, Netherlands
100.00
Prague, Czech Republic
4
100.00
Novi Beograd, Serbia
100.00
Milton Keynes, United Kingdom
100.00
Bratislava, Slovakia
100.00
Bangalore, India
Kleinostheim, Germany
51.00
Toyama, Japan
100.00
Mercedes-Benz Srbija i Crna Gora d.o.o.u likvidaciji
Mercedes-Benz Solihull Ltd.
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz Research and Development India Private Limited
Domicile, Country
Mercedes-Benz Project Consult GmbH
Mercedes-Benz Parts Logistics Eastern Europe s.r.o.
Mercedes-Benz Manufacturing Rus Ltd
Mercedes-Benz Museum GmbH
Mercedes-Benz Manufacturing Poland sp. zo. o.
Mercedes-Benz IDC Europe S.A.S.
Mercedes-Benz Hungária Kft.
100.00
Mercedes-Benz Group Services Phils., Inc.
Mercedes-Benz Formula E Limited
100.00
100.00
100.00
Vienna, Austria
100.00
Lisbon, Portugal
51.00
Esparraguera, Spain
100.00
Milton Keynes, United Kingdom
Mercedes-Benz G GmbH
100.00
Mercedes-Benz Research & Development Tel Aviv Ltd.
100.00
Farmington Hills, USA
100.00
Kamenz, Germany
100.00
Wilmington, USA
100.00
New Cairo, Egypt
100.00
Maastricht, Netherlands
100.00
Leinfelden-Echterdingen, Germany
100.00
Stuttgart, Germany
Dubai, United Arab Emirates
3,8
100.00
100.00
São Bernardo do Campo, Brazil
Düsseldorf, Germany
100.00
Brackley, United Kingdom
Footnote
100.00
Montigny-le-Bretonneux, France
80.00
Warsaw, Poland
100.00
Stuttgart, Germany
100.00
Budapest, Hungary
100.00
Cebu City, Philippines
100.00
Raaba, Austria
100.00
100.00
Prague, Czech Republic
100.00
Moscow, Russian Federation
4,999
4,368
5,075
4,844
4,975
4,158 4,827
3,575 4,067
2,423 3,653
3,264
3,364
3,023
3,559
Depreciation and amortization
-786 10,961 8,544
-4,812 -8,950 -313
-2,915 1,057 -7,551
-3,915 2,706 5,432
-696 -1,100 3,285 -1,274 222 3,711 -1,652
-6,537 -8,864 -6,829 -2,709 -9,722 -14,666 -9,518
5,842 11,506 3,855
2,274 9,631 12,009 13,129
989 1,452 4,842 5,479 3,960 3,874 2,005
26.70 37.23 50.73 33.92 41.32 62.90
957.7 1,003.8 1,050.8 1,066.0 1,066.8 1,068.8
Average diluted shares outstanding
(in millions)
Average shares outstanding (in millions)
plant and equipment
Share price at year-end (€)
5,889 6,744
5,478 5,676
Cash provided by (used for)
operating activities
From the stock exchanges
investing activities
financing activities
Free cash flow of the industrial business
5,384
Investments in property,
22.7
2017
24.3
22.1
23.6
22.9
24.0
39.8
43.4
40.8
44.2
44.7
Net liquidity industrial business
Net assets (average) 1, 3
47,313 49,456 44,738 51,940 65,016 66,047 78,077 85,461 99,398 103,186
52,182 47,538 53,139 54,855 58,716 59,108 66,974 77,081 84,457 87,105
3,106 7,285 11,938 11,981 11,508 13,834 16,953 18,580 19,737 16,597
31,466 31,778 29,338 31,426 37,521 40,648 40,779 44,796 47,054 48,514
68.97 77.58 70.72 70.80
1,069.8 1,069.8 1,069.8 1,069.8
€ amounts in millions
G | FURTHER INFORMATION | TEN YEAR SUMMARY
2008
2009
2010
2011
2012
2013
2014
2015
2016
From the statements of cash flows
959.9
A3
1,051.5 1,067.1 1,067.1 1,069.1 1,069.8
A-
A-
A-
A-
A-
A-
DBRS
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A
A
Scope
Average annual number of employees
274,330 258,628 258,120 267,274 274,605 275,384 279,857 284,562 284,957 289,530
1 For the year 2012, the figures have been adjusted, primarily for effects arising from application of the amended version of IAS 19.
2 For the year 2013, the figure has been adjusted due to reclassifications within functional costs.
3 In the context of fine tuning the performance measurement system, the definition of net assets was adjusted with retroactive effect
as of 2015.
335
A-
1,003.8
BBB+
A-
1,069.8 1,069.8 1,069.8
Ratings
Credit rating, long-term
Standard & Poor's
A-
BBB+
BBB+
BBB+
A-
A-
A-
A-
A
A
Moody's
A3
A3
A3
A3
A3
A3
A3
A3
A2
Fitch
BBB+
26.3
46.4
46.4
26.5
The risk for the financial statements is that provisions for legal
proceedings are not set up or are inadequate.
The recognition and measurement of the provisions set up for
the legal proceedings are based on discretionary assessments
by the legal representatives.
The arbitration proceedings initiated in 2004 by the Federal
Republic of Germany in connection with the establishment and
operation of a toll system were filed among others against
Daimler Financial Services AG and its Toll Collect GbR invest-
ment. In the course of these arbitration proceedings, damages
due to lost toll revenue and contractual penalties due to violat-
ions of the contracts have been claimed.
d) Toll Collect
Daimler AG already filed an application for immunity ("leniency
application") some time ago with the European Commission in
this connection.
Since July 25, 2017 several class-action lawsuits have been
filed in the USA and in Canada against Daimler AG and other
automobile manufacturers and several of their North Ameri-
can subsidiaries. The plaintiffs claim to have suffered losses
because the defendants have engaged since the nineteen
nineties in anticompetitive behaviour with regard to motor
vehicle technology, costs, suppliers, markets and other anti-
competitive matters, including diesel exhaust cleansing tech-
nology. In the meantime all pending US class actions have
been centralized in one proceeding.
c) Antitrust and subsequent proceedings
Following the imposition of a fine by the European Commis-
sion against Daimler and other truck manufacturers in July
2016, truck customers have raised damage claims against
Daimler.
b) Class-action lawsuits NOx USA/Canada
Since the beginning of 2016, several consumer class-action
lawsuits have been filed against Mercedes-Benz USA, LLC
in federal courts in the USA, which have been combined to
form a single class-action lawsuit against Daimler AG and
Mercedes-Benz USA, LLC, and against Daimler AG and further
group companies in Canada. The main allegation is the use
of devices that impermissibly impair the effectiveness of emis-
sion control systems in reducing nitrogen-oxide (NOx) emissi-
ons and which cause excessive emissions from vehicles with
diesel engines, and the deliberate misleading of customers in
connection with advertising for Mercedes-Benz diesel vehicles.
Several state and federal authorities and institutions world-
wide have made inquiries and / or performed investigations.
The inquiries and investigations cover test results, the emis-
sion control systems used in Mercedes-Benz diesel vehicles
and Daimler's interaction with the relevant state and federal
authorities as well as related legal issues and implications,
including, but not limited to, under applicable environmental,
securities and criminal and antitrust laws.
a) Enquiries and investigations by the authorities on test results
and the use of emission control systems
Whether the recognition of a provision and, if so, in what
amount it is necessary on account of legal proceedings is
dependent to a high degree on estimates and assumptions by
the legal representatives. In view of this and the monetary
amounts involved with regard to the risks, the following legal pro-
ceedings of Daimler are in our opinion of particular importance.
Various legal proceedings, claims and governmental investiga-
tions and inquiries (legal proceedings) are pending against
Daimler on a wide range of topics, including for example vehicle
safety, emissions, fuel economy, financial services, dealer, sup-
plier and other contractual relationships, intellectual property
rights, product warranties, environmental matters, antitrust
matters (including actions for damages), criminal proceedings
against employees and shareholder matters. Legal procee-
dings relating to products deal with claims on account of alle-
ged vehicle defects. Some of these claims are asserted by way
of class action suits. If the outcome of such legal proceedings
is detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages or to under-
take service actions, recall campaigns, monetary penalties or
other costly actions and sanctions.
Our Audit Approach
The Financial Statement Risk
Accounting Treatment of legal proceedings
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
330
The calculation methods and the assumptions made are ap-
propriate.
Our Observations
Our audit procedures included among other things the evalua-
tion of the process to calculate the provision for product
warranties and the evaluation of the relevant assumptions and
their derivation for the measurement of the provisions. These
include primarily assumptions on expected susceptibility to
and the course of damage, and in addition the value of the
damage per vehicle based on the actual warranty, guarantee
and goodwill losses. We assessed the accuracy of the forecasts
of past warranty, guarantee and goodwill costs on the basis of
historical analyses. Furthermore, we examined wether updated
assessments of future repaid costs and procedures were taken
into account. We obtained an understanding for the underlying
quantities of vehicles through the actual unit sales.
Our Audit Approach
Significant uncertainty for the calculation of the provision ari-
ses with regard to the future loss event. The risk for the finan-
cial statements is that the provision is not properly measured.
The provision for product warranties amounts to € 6,654 million.
Daimler faces various claims under product guarantees or
grants various kinds of product warranties, which are entered
into for the error-free functioning of a Daimler product sold
or service rendered over a defined period of time. In order to
confirm or reassess future guarantee, warranty and goodwill
expenses, continuously updated information on the nature
and volume and the remedying of faults that have occurred is
recorded and analyzed at the level of the business unit, model
series, damage key and sales year.
The Financial Statement Risk
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Note 2 "Accounting estimates and management judgements".
Further information on the guarantees and product warranties
can be found in the notes to the consolidated financial state-
ments Note 23 "Provisions for other risks" and in the com-
ments in the combined management report on "Company-spe-
cific risks and opportunities - Warranty and goodwill cases".
Product Warranties
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Note 2 "Accounting estimates and management judgements".
Further information on the legal proceedings can be found in
the notes to the consolidated financial statements Note 29
"Legal proceedings" and in the comments in the combined
management report on “Risks from guarantees, legal and tax
risks - legal risks".
Our audit procedures comprised on the one hand an evaluation
of the process established by Daimler to ensure the recording,
the estimation of the outcome of the proceedings and the reflec-
tion in the balance sheet of the legal proceedings. On the other
hand, we held discussions with the internal legal department
and with further departments familiar with the matters under
dispute and Daimler's external advisors and attorneys, in order
to obtain explanations on the developments and the reasons
that had led to the respective estimations. Above that we have
reviewed the underlying documents and minutes. We were pro-
vided by Daimler with the estimation of the legal representati-
ves in the aforementioned areas in writing. External attorneys'
letters, which support the assessment of the risks by the legal
representatives, were obtained at the balance sheet date.
Finally, we evaluated the appropriateness of the description
in the notes to the consolidated financial statements of the
aforementioned legal proceedings.
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
-
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
G | FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
332
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Sec-
tion 317 HGB and the EU Audit Regulation and in compliance
with German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der Wirtschafts-
prüfer (IDW) and supplementary compliance with the ISAs will
always detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if, indivi-
dually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the
basis of these consolidated financial statements and this com-
bined management report.
Our objectives are to obtain reasonable assurance about whe-
ther the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error,
and whether the combined management report as a whole
provides an appropriate view of the Group's position and, in
all material respects, is consistent with the consolidated
financial statements and the knowledge obtained in the audit,
complies with the German legal requirements and appropria-
tely presents the opportunities and risks of future develop-
ment, as well as to issue an auditor's report that includes our
opinions on the consolidated financial statements and on the
combined management report.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements and of the Combined Management
Report
The supervisory board is responsible for overseeing the Group's
financial reporting process for the preparation of the consolida-
ted financial statements and of the combined management
report.
Furthermore, management is responsible for the preparation
of the combined management report that, as a whole, provides
an appropriate view of the Group`s position and is, in all
material respects, consistent with the consolidated financial
statements, complies with German legal requirements, and
appropriately presents the opportunities and risks of future
development. In addition, management is responsible for such
arrangements and measures (systems) as they have consid-
ered necessary to enable the preparation of a combined man-
agement report that is in accordance with the applicable Ger-
man legal requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the combined
management report.
In preparing the consolidated financial statements, management
is responsible for assessing the Group's ability to continue as a
going concern. They also have the responsibility for disclosing,
as applicable, matters related to going concern. In addition,
they are responsible for financial reporting based on the going
concern basis of accounting unless there is an intention to
liquidate the Group or to cease operations, or there is no reali-
stic alternative but to do so.
Management is responsible for the preparation of the consoli-
dated financial statements that comply, in all material respects,
with IFRSS as adopted by the EU and the additional require-
ments of German commercial law pursuant to Section 315e (1)
HGB and that the consolidated financial statements, in compli-
ance with these requirements, give a true and fair view of the
assets, liabilities, financial position, and financial performance of
the Group. In addition, management is responsible for such
internal control as they have determined necessary to enable
the preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
Responsibilities of Management and the Supervisory
Board for the Consolidated Financial Statements and the
Combined Management Report
As instructed, we have performed a separate business man-
agement review of the separate non-financial statement. Ple-
ase refer with regard to the nature, scope and results of this
business management review to our audit opinion dated
Februrary 9, 2018.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in
this regard.
otherwise appears to be materially misstated.
is materially inconsistent with the consolidated financial
statements, with the combined management report or our
knowledge obtained in the audit, or
In connection with our audit, our responsibility is to read the
other information and, in so doing, to consider whether the
other information
Our opinions on the consolidated financial statements and on
the combined management report do not cover the other infor-
mation, and consequently we do not express an opinion or any
other form of assurance conclusion thereon.
the remaining parts of the annual report, with the exception
of the audited consolidated financial statements and
combined management report and our auditor's report.
the non-financial statement and the corporate governance
statement, and
-
The other information comprises:
Management is responsible for the other information.
Other Information
The assumptions are appropriate.
Our Observations
331
Measurement of the Provision for
The methodical approach, the procedures and processes to
calculate the allowance and the assumptions and risk parame-
ters flowing into the measurement are appropriate for the
timely identification of credit risks and the establishment of
adequate allowances.
Our Observations
The main focus of our audit was the evaluation of the methodi-
cal approach in the determination of risk categories, default
probabilities and loss rates that are derived from historical
data. We obtained an understanding of this based on a risk-ori-
ented selection of credit portfolios. We satisfied ourselves with
regard to the appropriateness of significant risk parameters
based on the results of a validation performed by Daimler Finan-
cial Services and evaluated the adjustments of the parameters
to the current market situation. In addition, we satisfied our-
selves in conjunction with a conscious sample of audits of indi-
vidual cases that the risk classification is correct and that the
amount of the calculated specific allowance is appropriate.
Report on the Audit of the Consolidated Finan-
cial Statements and of the Combined Manage-
ment Report
To Daimler AG, Stuttgart
Independent Auditor's Report
327
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
Bodo Uebber
Bodo Cecco
Britta Seeger
Зміна кварт
Hubertus Troska
Huberten Diz
Wilfried Porth
Wilfried Paste
Ola Källenius
Auflaro
Martin Daum
alle +8 =
Renata Jungo Brüngger
2. родоводу
Dieter Zetsche
Dil A
Stuttgart, February 9, 2018
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the financial position,
cash flows and profit or loss of the Group, and the
Group management report, which has been combined with
the management report for DAG, includes a fair review
of the development and performance of the business and
the position of the Group, together with a description
of the principal opportunities and risks associated with the
expected development of the Group.
Responsibility Statement
G | FURTHER INFORMATION | RESPONSIBILITY STATEMENT
326
45.8
Opinions
Identify and assess the risks of material misstatements of
the consolidated financial statements and the combined
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinions. The risk of not detecting a
material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, for-
gery, , intentional omissions, misrepresentations, or the over-
ride of internal control.
We have audited the consolidated financial statements of
Daimler AG, Stuttgart, and its subsidiaries (the Group), which
comprise the consolidated statement of financial position as at
December 31, 2017, and the consolidated statement of income,
consolidated statement of comprehensive income/loss, con-
solidated statement of changes in equity and consolidated
statement of cash flows for the financial year from January 1 to
December 31, 2017, and notes to the consolidated financial
statements, including a summary of significant accounting
policies. In addition, we have audited the combined manage-
ment report of Daimler AG for the financial year from January 1
to December 31, 2017.
-
We audited the appropriateness and effectiveness of the inter-
nal control system with regard to the risk classification pro-
cess and the determination of the probability of defaults, the
loss rates and the allowances. To this end, we also evaluated
the relevant IT systems and internal procedures. In addition to
the audit by our IT specialists of the propriety of the systems
affected and related interfaces to ensure the completeness and
correctness of the data, the audit also included the audit of
automatic controls for data entry and data processing.
329
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
We obtained a comprehensive understanding of the develop-
ment of the portfolios, the associated counterparty default
risks and the processes for identifying, managing, monitoring
and measuring credit risks by inspecting analyses and risk
reports, and through interrogations and the review of guide-
lines and working instructions.
Our Audit Approach
The risk for the financial statements is that the credit-worthi-
ness of customers and future cash flows is misjudged or that
the calculation of the risk provision parameter is incorrect so
that allowances are not recognized or are insufficient.
The calculation of the allowances is based on various value-
determining factors such as the risk classification of the cus-
tomers, the definition of statistical default probabilities and
assumptions regarding future cash flows, the determination of
which includes to a high degree discretionary assessments
and uncertainties.
The receivables from financial services (€ 85,787 million) resul-
ting from the financing and leasing activities of the Group
include receivables from sales financing with customers, recei-
vables from sales financing with dealers and receivables from
finance lease contracts. The allowances on these receivables
amounted at the balance sheet date to € 870 million.
The Financial Statement Risk
Please refer with regard to the accounting policies and meth-
ods applied to the notes to the consolidated financial state-
ments Note 2 "Accounting estimates and management judge-
ments". Further information on allowances on receivables
from financial services can be found in the notes to the conso-
lidated financial statements Note 14 "Receivables from finan-
cial services and Note 32 "Management of financial risks" and
in the comments in the combined management report on
"Industry and business risks and opportunities".
Allowances on Receivables from
Financial Services
Our Observations
We audited the recoverability of the balance sheet caption
"Equipment on operating leases" based on Daimler's internal
portfolio allocation. The main focus of our risk-oriented audit
approach was addressed to those vehicles with an enhanced
impairment risk. We investigated and assessed the indications
assumed by the group for a possible requirement for the reco-
gnition on an impairment loss. We appraised Daimler's assess-
ment with regard to the residual values that can be achieved at
the end of the term of the leases. We also included vehicles
with diesel technology in this appraisal. In this connection, we
in particular critically reviewed the main influencing factors,
such as the expected number of returns from leasing, the cur-
rent remarketing results in order to assess the accuracy of the
estimates and future vehicle model changes. For significant
markets we furthermore also audited the consistency of the
assumptions made by Daimler with residual value forecasts by
independent expect third parties.
Our Audit Approach
The balance sheet caption “Equipment on operating leases"
(€ 47,714 million) comprises motor vehicles on operating lea-
ses. The impairment risk with regard to these vehicles is pri-
marily dependent on the residual value achievable at the end
of the lease. These future residual values depend on the situ-
ation in the used-vehicle markets prevailing when the vehicles
are returned. The future-oriented valuation is based on a
number of discretionary assumptions. The risk for the finan-
cial statements is that any impairment losses will not be
recognized or that the amounts recognized will be inadequate.
The Financial Statement Risk
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Note 1 "Significant accounting policies” and Note 2 "Accounting
estimates and management judgements". Further information
on the operating leases can be found in the notes to the consoli-
dated financial statements Note 12 "Equipment on operating
leases" and in the comments in the combined management
report on "Industry and business risks and opportunities".
Impairment Risk on Operating Leases
G | FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
328
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from January 1
to December 31, 2017. These matters were addressed in the
context of our audit of the consolidated financial statements
as a whole, and in forming our opinion thereon, we do not pro-
vide a separate opinion on these matters.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
We conducted our audit of the consolidated financial statements
and of the combined management report in accordance with
Section 317 HGB and the EU Audit Regulation No. 537/2014
(referred to subsequently as “EU Audit Regulation") and in
compliance with German Generally Accepted Standards for
Financial Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
We performed the audit of the consolidated financial state-
ments in supplementary compliance with the International
Standards on Auditing (ISAs). Our responsibilities under those
requirements, principles and standards are further described
in the "Auditor's Responsibilities for the Audit of the Consolida-
ted Financial Statements and of the Combined Management
Report" section of our auditor's report. We are independent of
the group entities in accordance with the requirements of Euro-
pean law and German commercial and professional law, and we
have fulfilled our other German professional responsibilities in
accordance with these requirements. In addition, in accordance
with Article 10 (2) point (f) of the EU Audit Regulation, we declare
that we have not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe that the evi-
dence we have obtained is sufficient and appropriate to pro-
vide a basis for our opinions on the consolidated financial state-
ments and on the combined management report.
Basis for the Opinions
Pursuant to Section 322 (3) sentence 1 HGB, we declare that
our audit has not led to any reservations relating to the legal
compliance of the consolidated financial statements and of the
combined management report.
the accompanying combined management report as a whole
provides an appropriate view of the Group's position. In all
material respects, this combined management report is con-
sistent with the consolidated financial statements, complies
with German legal requirements and appropriately presents
the opportunities and risks of future development.
the accompanying consolidated financial statements com-
ply, in all material respects, with the IFRSS as adopted by the
EU, and the additional requirements of German commercial
law pursuant to Section 315e (1) HGB [Handelsgesetzbuch:
German Commercial Code] and, in compliance with these
requirements, give a true and fair view of the assets, liabili-
ties, and financial position of the Group as at December 31,
2017, and of its financial performance for the financial year
from January 1 to December 31, 2017, and
In our opinion, on the basis of the knowledge obtained in the
audit,
Obtain an understanding of internal control relevant to
the audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the
audit of the combined management report in order to de-
sign audit procedures that are appropriate in the circum-
stances, but not for the purpose of expressing an opinion
on the effectiveness of these systems.
The assumptions and assessments providing the basis for the
valuation of the carrying amounts of "equipment on operating
leases" are appropriate.
Conclude on the appropriateness of management's use of
the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast signif-
icant doubt on the Group's ability to continue as a going
concern. If we conclude that a material uncertainty exists,
we are required to draw attention in the auditor's report to
the related disclosures in the consolidated financial state-
ments and in the combined management report or, if such
disclosures are inadequate, to modify our respective opini-
ons. Our conclusions are based on the audit evidence obtai-
ned up to the date of our auditor's report. However, future
events or conditions may cause the Group to cease to be
able to continue as a going concern.
6.51
6.40
6.02
5.31
4.28
1,971
1.85
0.00
0.60
Dividend per share (€)
0
556
Total dividend
-2.63
1.40
Diluted net profit (loss) per share (€)
9.84
7.97
7.87
6.51
6.40
6.02
5.32
4.28
-2.63
1.41
Net profit (loss) per share (€) 1
22.9
10,864
8.9
14,301
11,127
7.87
12,902
8.4
12,574
9,007
19.1
7.97
2,346 2,349 2,407 2,621
24.7
42.6
Evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made by
management and related disclosures.
42.7
24.3
2,768 3,045 3,058 3,060 3,063 3,069 3,070 3,070 3,070 3,070
16,087 15,965 17,593 19,180 20,599 21,779
18,672 18,532 19,925 22,811 26,058 28,160
42,077 40,044 41,309 45,023 48,947 48,138
16,805 12,845 14,544 17,081 17,720 17,349
6,912 9,800 10,903 9,576 10,996 11,053 9,667 9,936 10,981 12,072
31,672 31,635 31,556 34,461 38,742 42,039 46,614 58,151 65,687 68,977
132,225 128,821 135,830 148,132 163,062 168,518 189,635 217,166 242,988 255,605
32,730 31,827 37,953 41,337 39,330 43,363 44,584 54,624 59,133 65,314
23,182 24,322 26,381 27,981
33,050 38,942 46,942 47,714
56,258 62,055 67,613 73,175
20,864 23,760 25,384 25,686
Current liabilities 1
Non-current liabilities
Equity ratio industrial business (%) 1
Equity ratio Group (%) 1
thereof share capital
Shareholders' equity¹
Total assets
Other current assets
Liquid assets
Inventories
Other non-current assets 1
Leased equipment
Property, plant and equipment
From the statements of financial position
3.65
3,477 3,905
3.25
3,477
3.25
2.45
2.20
2.20
9.84
12,744
9,007
20.1
8,711 8,784
2.25
98,469 78,924 97,761 106,540 114,297 117,982 129,872 149,467 153,261 164,330
15,066 13,928 16,454 17,424 18,002 18,753 19,607 20,949 21,141 22,186
4,442 4,181 4,849 5,634 5,644 5,489 5,680 6,564 7,572 8,711
1,387 1,285 1,373 1,460 1,465 1,284
1,148 1,804 2,315 2,773
2,730 -1,513 7,274 8,755 8,820
10,815
10,752 13,186
14,682
2.8
-1.9
7.4
9.2
8.3
8.8
-2,298
10,139 10,173
1,370 -2,102
9,173 7,678
22.6
18.8
7,290
2010
2009
2008
€ amounts in millions
G.01
Ten Year Summary
G❘ FURTHER INFORMATION | TEN YEAR SUMMARY
334
G | FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 333
Dr. Thümler
Wirtschaftsprüfer
Wirtschaftsprüfer
Becker
KPMG AG Wirtschaftsprüfungsgesellschaft
German Public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is
Dr. Axel Thümler.
We declare that the opinions expressed in this auditor's report
are consistent with the additional report to the audit commit-
tee pursuant to Article 11 of the EU Audit Regulation (long-
form audit report).
We were elected as group auditor by the annual general mee-
ting on March 29, 2017. We were engaged by the supervisory
board on April 25, 2017. We have been the group auditor of
the Daimler AG without interruption since the financial year
1998.
Further Information pursuant to Article 10 of the EU Audit
Regulation
Other Legal and Regulatory Requirements
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated financial state-
ments of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report
unless law or regulation precludes public disclosure about the
matter.
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence
requirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, the related safeguards.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant defi-
ciencies in internal control that we identify during our audit.
Perform audit procedures on the prospective information
presented by management in the combined management
report. On the basis of sufficient appropriate audit evi-
dence, we evaluate, in particular, the significant assump-
tions used by management as a basis for the prospective
information, and evaluate the proper derivation of the pros-
pective information from these assumptions. We do not
express a separate opinion on the prospective information
and on the assumptions used as a basis. There is a substan-
tial unavoidable risk that future events will differ materially
from the prospective information.
Evaluate the consistency of the combined management
report with the consolidated financial statements, its con-
formity with (German) law, and the view of the Group's
position it provides.
Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and on the combined management
report. We are responsible for the direction, supervision and
performance of the group audit. We remain solely respon-
sible for our opinions.
8,720
-
Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclo-
sures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and
fair view of the assets, liabilities, financial position and
financial performance of the Group in compliance with
IFRSS as adopted by the EU and the additional requirements
of German commercial law pursuant to Section 315e (1) HGB.
2011
2012
Stuttgart, February 9, 2018
2014
6,029
4,674
2013
6,830
-2,644
1,414
Net profit (loss) 1
7.7
8,116
7,302
19.6
19.9
-6.6
4.4
as % of net assets (RONA) 1,3
6,240
5,120
17.5
Research and development expenditure²
thereof capitalized
2017
Net operating profit (loss) 1
From the statements of income
Revenue
Personnel expenses 1
EBIT 1
Operating margin (%) 1
2016
Profit (loss) before income taxes 1
2,795
2015
6,628
8.2
8,449
35ff, 196f
329 ff
24 ff, 82ff
132 ff, 229 ff
132
81
104, 261 ff
94, 134, 178, 184,189, 192
305ff
107, 276 ff
92f
90ff
101 ff, 238 f
104, 260
114
136 ff
100, 258
102
106
104, 238
24ff, 123ff
ROE return on equity
ROS return on sales
Segment reporting
Shareholders' equity
Shares
24 ff, 84
79, 105
78 ff, 309
Net profit
115 ff, 242
78ff, 152 f
Net assets
Pension obligations
Portfolio changes
Production
Profitability
Ratings
Remuneration system
Revenue
101 ff
Strategy
Workforce
80
81, 112f
111ff, 174
24 ff, 84ff
109 ff, 135, 173, 241
218ff
24 ff
132 ff, 229 ff
246f
64ff, 198 ff
Sustainability
Unit sales
Value added
82ff
9,798
97ff, 178, 184, 189, 192
3
7
Sales outlets
Revenue (in millions of euros)
40,426
11,226
3,081
Employees
124,565
35,808
22,231
15,774
3,940
Mobility services
54
7
121 ff, 214 ff
14
Trucks
93f, 105f
129 ff, 227 ff
338
G | FURTHER INFORMATION | DAIMLER WORLDWIDE
Daimler Worldwide
G.02
Europe
Mercedes-Benz
Cars
Vans
Daimler
Buses
Sales
Organization
Automotive
Businesses
Daimler
Financial
Services
Daimler Mercedes-Benz
Production locations
Investor Relations
The cost of capital is the product of the average amount
Integrity
Earnings before interest and taxes are the measure
of operating profit before taxes. pages 101ff
Equity method
Accounting and valuation method for shareholdings
in associated companies and joint ventures.
EU30
The region EU30 includes the 28 member states of the
European Union plus Norway and Switzerland.
Fair value
The amount for which an asset or liability could be exchanged
in an arm's length transaction between knowledgeable and
willing parties who are independent of each other.
Goodwill
Goodwill represents the excess of the cost of an acquired
business over the fair values assigned to the separately
identifiable assets acquired and liabilities assumed.
Hybrid drive
Hybrid drive systems combine internal-combustion engines
with electric motors, which can be operated separately
or together depending on the type of vehicle and driving
situation.
IFRS - International Financial Reporting Standards
The IFRS are a set of standards and interpretations for compa-
nies' external accounting and financial reporting developed
by an independent private-sector committee, the International
Accounting Standards Board (IASB).
Integrity Code
The "Integrity Code" has been in effect since November 2012.
It defines the principles of behavior and guidelines for everyday
conduct that are applicable at Daimler. Fairness, responsibility
and compliance with legislation are key principles in this context.
INTELLIGENT DRIVE
EBIT
With this new technology from Mercedes-Benz, thanks to
improved environment sensors, intelligent assistance systems
analyze complex situations and recognize potential dangers
in road traffic even better.
A collective term for the social responsibility assumed
by companies, including economic, environmental and
social aspects.
of capital employed and the cost-of-capital rate. The cost-of-
capital rate is derived from the investors' required rate
of return.
page 94
10,592
8,549
336
G | FURTHER INFORMATION | GLOSSARY
Glossary
BRIC
This abbreviation stands for the four countries of Brazil,
Russia, India and China.
CASE
Four strategic fields for the future of mobility: connectivity
(Connected), autonomous driving (Autonomous), flexible use
and services (Shared & Services), and electric drive systems
(Electric).
Compliance
By the term compliance, we understand adherence to all laws,
rules, regulations and voluntary commitments, as well as the
related internal guidelines and policies in connection with all
activities of the Daimler Group.
Consolidated Group
The consolidated Group is the total of all those companies that
are included in the consolidated financial statements.
Corporate governance
The term corporate governance applies to the proper manage-
ment and supervision of a company. The structure of corporate
governance at Daimler AG is determined by Germany's Stock
Corporation Act (AktG), Codetermination Act (MitbestG) and
capital-market legislation.
Cost of capital
CSR - corporate social responsibility
Integrity Code
Lithium-ion batteries
Index
Bonds
Capital expenditure
CASE
Cash flows
CO₂ reductions
Connectivity
Compliance
Consolidated Group
Corporate governance
Digitization
Dividend
Earnings per share (EPS)
EBIT
Electric mobility
Financial income
Income taxes
Independent auditor's report
Innovations
Annual Shareholders' Meeting
They are at the heart of future electric drive systems.
Compared with conventional batteries, lithium-ion batteries
are considerably smaller and feature significantly higher
power density, short charging times and long lives.
This measures the potential future loss (related to market
value) for a given portfolio in a certain period and for which
there is a certain probability that it will not be exceeded.
Value added indicates the extent to which operating profit
exceeds the cost of capital. When value added is positive,
return on net assets is higher than the cost of capital.
pages 105f
G❘ FURTHER INFORMATION | INDEX
337
NEDC - New European Driving Cycle
A measuring method used in Europe for the objective
assessment of vehicles' fuel consumption.
Net assets
Net assets represent the capital employed by the Group
and the industrial divisions. The relevant capital basis
for Daimler Financial Services is equity capital.
page 106
Rating
An assessment of a company's creditworthiness issued
by a rating agency.
RDE
Since September 2017, emissions of particulate matter, nitro-
gen oxides and other pollutants have had to be measured using
mobile equipment and the Real Driving Emissions (RDE) test.
page 219
ROE - return on equity
The profitability of Daimler Financial Services is measured
by return on equity. ROE is defined as the quotient of EBIT
and shareholders' equity.
ROS - return on sales
The profitability of the industrial divisions is measured
by return on sales. ROS is defined as the quotient of EBIT
and revenue.
Value added
Value at risk
NAFTA
page 44/45:
Sales outlets
Information on the Internet
Special information on our shares and earnings development
can be found in the "Investor Relations" section of our website.
daimler.com It includes the Group's annual and interim
reports and the company financial statements of Daimler AG.
You can also find topical reports, presentations, an overview
of various key figures, information on our share price and other
services.
daimler.com/investors
Financial Calendar 2018
Annual Shareholders' Meeting 2018
April 5, 2018
Interim Report Q1 2018
April 27, 2018
Interim Report Q2 2018
July 26, 2018
Interim Report Q3 2018
October 25, 2018
Publications for our shareholders:
Annual Report
(German, English)
Interim Reports for the 1st, 2nd and 3rd quarters
(German, English)
Responsibility - Focus Sustainability 2017
Internet, Information, Financial Calendar
(German, English)
Notes: Unconsolidated revenue of each division (segment revenue).
31
1,819
Australia/Oceania
Production locations
Sales outlets
253
2
Revenue (in millions of euros)
Employees
1,901
333
673
255
49
288
203
84
222
449
Daimler Corporate Brochure
daimler.com/ir/reports
MIX
Paper from
responsible sources
FSC® C016368
Daimler AG
70546 Stuttgart
Phone +49 711 17 0
Fax +49 711 17 22244
www.daimler.com
Investor Relations
Phone +49 711 17 95277
+49 711 17 92261
+49 711 17 95256
Fax +49 711 17 94075
ir.dai@daimler.com
The paper used for this Annual Report was
produced from cellulose sourced from
certified forestry companies that operate
responsibly and comply with the regulations
of the Forest Stewardship Council.
Daimler AG
Mercedesstraße 137
70327 Stuttgart
Germany
www.daimler.com
www.fsc.org
(German, English)
FSC
Fax +49 711 17 92287
order.print@daimler.com
daimler.com/downloads/en
As changes to the above dates cannot
be ruled out, it is advisable to check on
our website a short time in advance.
daimler.com/ir/calendar
The aforementioned publications can be requested from:
Daimler AG,
Investor Relations, HPC 0324
Picture credit
O&O Baukunst/Finest Images
page 53:
Jürgen Engel Architekten GmbH, Frankfurt
pages 54/55:
Concept and mobility vision:
Daimler AG, Future Innovation.
Realization by xoio GmbH on behalf of
Daimler AG
70546 Stuttgart, Germany
Phone +49 711 17 92262
ང༌
Production locations
62
3,768
713
490
10,438
1,922
2
2
1
3
688
2
1,037
1,699
521
734
290
837
21,507
7,866
9,383
1,522
Revenue (in millions of euros)
Employees
Latin America (excluding Mexico)
Production locations
Sales outlets
Revenue (in millions of euros)
Employees
1
14
1
1
1,516
4
20,226
14,822
280
13,601
2,023
335
Asia
Production locations
2
3
2
Sales outlets
2,409
9
Revenue (in millions of euros)
29,673
6,351
839
159
1,774
Employees
165
1,474
74
498
Africa
Production locations
1
1
Sales outlets
380
1
Revenue (in millions of euros)
1,413
936
229
58
381
Employees
3,780
142
DAIMLER ANNUAL REPORT 2017 | #1 | CASE 27
CASE
((101))
EQ: ELECTRIC
INTELLIGENCE
30
daimler.com/case/en
CASE these four letters are radically changing
mobility. Our new interactive website shows how
Daimler is reshaping the mobility of the future by
combining these four future fields.
Electric vehicles plus
a service infrastructure
will shape the future.
Electric
E
GO 3999
transportation options.
Reaching destinations
quickly and flexibly using
your own car and other
Shared & Services
S
Our electric offensive is taking off with the Concept EQA. The modular basic
architecture of our EQ technology and product brand can be individually varied to
suit SUVs, sedans and other lines. With its Concept EQA, Mercedes-Benz is now show-
ing what a compact EQ could look like. This concept vehicle has two electric motors
with a system performance of up to 200 kilowatts. Permanent all-wheel drive ensures
great handling. The battery-electric Concept EQA study achieves a range of about
400 kilometers thanks to its intelligent operating-mode strategy, and offers a techno-
logical vision of the electrified future. Its lithium-ion battery comes from the Daimler
subsidiary Accumotive. The Concept EQA can be charged by means of induction or a
wall box. It can also be used with fast-charging systems. As a result, the Concept EQA
from Daimler, the inventor of the automobile, embodies all the essentials of state-of-
the-art electric mobility.
self-driving vehicles.
Autonomous
A
support drivers and
communicate with their
surroundings.
Connected automobiles
Connected
C
hello
28 DAIMLER ANNUAL REPORT 2017 | #1 | CASE
④daimler.com/case/en
Connected, Autonomous, Shared & Services, Electric -
by connecting all the future-oriented CASE fields,
Daimler is transforming itself from an automaker to
a provider of mobility services. It's shaping “intuitive
mobility" with comfortable, user-friendly products
and services that are making our customers' mobility
and daily lives easier. For one thing, we are electri-
fying our cars, trucks, vans and buses. In the car
division alone, we intend to launch at least ten fully
electric models, ranging from the smart to the SUV,
by 2022. Connected vehicles and digital services are
already sales clinchers today. Through Mercedes me,
Mercedes PRO and Uptime, we offer our customers
comprehensive access to a wide range of brands and
services. Mobility services such as car2go, moovel,
mytaxi and the piloted on-demand ride-sharing service
ViaVan are becoming increasingly important. We're
also developing additional impetus through innova-
tion platforms such as the STARTUP AUTOBAHN
and Lab1886. The smart vision EQ fortwo is fully-
automated, customizable, communicative and
electric. In this concept vehicle, we have combined
all the CASE areas for the first time and exploited
the tremendous potential of this intelligent mix.
7:15
Driving transformation
Smoothly flowing traffic,
flexible logistics processes
and stress-free travel in
mercedes-benz.com/EQ/en
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
The EQ ecosystem is a trailblazer for comprehensive customer-oriented
electric mobility. EQ stands for "electric intelligence" and is derived from the
Mercedes-Benz brand values of emotion and intelligence. In 2019, we will launch
the first series-produced EQ model, the EQC. And in addition to electric vehicles,
we will also be offering much more: charging services and products ranging
from wall boxes to home energy-storage units. Seamless Charging is one vision
of how to recharge electric vehicles at public charging stations in the future. This
Mercedes me-based service would enable drivers to recharge their vehicles and
pay for this service anywhere. Through strategic partnerships with companies such
as the leading global charging solution provider ChargePoint, we are forging ahead
with the expansion of our intelligent EQ ecosystem. A further important step is
the founding of the IONITY joint venture for creating a public high-power charging
station infrastructure along the main traffic arteries of Europe.
Daimler is the first truck manufacturer to put a truck platoon on public highways in the United States.
Public interest in digitally connected trucks for road freight transport is growing. Trucks driving independently
behind one another can be linked together to form a partially automated truck platoon. This helps to enhance
safety, relieves strain on the drivers and improves fuel efficiency, thanks to shorter distances between the
vehicles. Following successful trials on test tracks, the regional regulatory authorities in the United States have
authorized Daimler Trucks North America (DTNA) to continue its platooning tests on public highways. To being
with, two Freightliner New Cascadia tractor-trailers are being paired. Digitally connected commercial vehicles
also perform well in off-road applications. In a trial near Frankfurt Airport, four connected Mercedes-Benz Arocs
semitrailer trucks showed how cost-efficient it is to clear an airfield with driverless vehicles - and how the
cutting-edge "Remote Truck Interface" technology from Daimler Trucks is opening up the road to the future.
PERFORMANCE BOOST
Daimler Trucks is setting the pace for our customers with the Truck Data Center and digital services.
Connectivity and digitization make it possible to use trucks more efficiently. In a pioneering move,
Mercedes-Benz Trucks is offering a smart network consisting of vehicles, Mercedes-Benz services and freight
companies - through Mercedes-Benz Uptime. When Uptime is in use, it monitors the vehicle systems in real
time and promptly warns of critical situations. The aim is to avoid breakdowns and unplanned repairs and
optimize scheduled trips to the workshop. Thanks to the new FleetBoard Manager app, Mercedes-Benz offers
quick entry into connectivity free of charge. This smartphone app enables users to call up information
about a vehicle fleet, such as capacity utilization, mileage, vehicle positions, fuel consumption and cost-saving
potential. The key element for both of these services as well as previously introduced solutions is the new
Truck Data Center – the "brain" of connected trucks. This connectivity module is based on internationally
standardized electric/electronic architecture. We are installing it across all brands at Daimler Trucks and
adapting it to regional customer needs.
TOTALLY CONNECTED
The new E-FUSO brand from Daimler is electrifying the entire FUSO product range.
People are increasingly calling for clean and quiet urban delivery traffic. In response, our
commercial vehicle subsidiary Mitsubishi Fuso Truck and Bus Corporation (MFTBC) is
putting the FUSO eCanter on the road. This light-duty eCanter is environmentally friendly
and cost-efficient, with an impressive range of up to 100 kilometers. The drive system
is powered by six high-voltage lithium-ion batteries. FUSO is taking advantage of many
Daimler partnerships to establish the eCanter in the market, including Mercedes-Benz
Energy as a supplier of local energy storage and the charging station provider ChargePoint.
MFTBC aims to fully electrify all of FUSO's truck series. The concept vehicle of the fully
electric E-FUSO Vision One heavy-duty truck with a range of up to 350 kilometers exempli-
fies our claim to be a pioneer in the segment of electric commercial vehicles.
IDEAS
ELECTRIFYING
The fully electric E-FUSO Vision One is a
future-oriented solution for the transportation
of heavy cargo in inner-city traffic.
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
34
000
No steering wheel, pedals or driving tasks: The
The smart vision EQ fortwo is flipping the switch to bring more flexibility and individuality to
local public transportation. Thanks to swarm intelligence and demand prediction, the fully automated
driving electric smart vision EQ fortwo picks up its customers wherever they wish. This concept car is
operated entirely via smartphone. Through the black panel grill at the front and the projection surfaces
along the sides, the smart vision EQ fortwo offers previously undreamed-of options for individualized car
sharing. Relieved of driving obligations, people inside the car can relax or chat with their fellow passen-
gers. The smart vision EQ fortwo is the first concept vehicle from Daimler to dispense with the steering
wheel and the gas and brake pedals. It's also the first vehicle in which we have installed all the future-
oriented features of CASE. This approach offers huge advantages to our customers: urban mobility with
the highest level of comfort, more individuality and a whole new form of communication.
smart vision EQ fortwo offers customers innovative
options for urban mobility in the future.
URBAN MOBILITY?
OUR CONCEPT
wwww
The Concept EQA combines electrifying
aesthetic appeal, driving pleasure, suitability
for daily use and safety.
OF THE FUTURE!
The intuitive and adaptive multimedia system
"MBUX Mercedes-Benz User Experience", which
will be standard equipment in the new A-Class,
is ushering in a new era of infotainment.
IN DIALOGUE
WITH YOUR CAR
www
mercedes-benz.com/en/mercedes-me
The digital service portal Mercedes me is now actively
used and appreciated by well over 1.5 million Mercedes me
customers in 36 countries.
Women in focus. Through the community and inspiration platforms of "She's Mercedes", we are emphasizing
our claim to be totally responsive to the wishes and needs of women customers - in areas ranging from sales
to communication and aftersales services. Through these platforms, Mercedes-Benz is engaging in a more
intensive dialogue with women and offering an even more impressive premium brand experience.
mercedes-benz.com/en/mercedes-me/inspiration/she
DAIMLER ANNUAL REPORT 2017 | #1 | CASE 33
Mercedes me transforms vehicles into mobile assistants.
Our personalized digital services in the areas of connectivity,
service, financing and mobility have been expanded further.
The "Digital Anticipation" service, which has been honored with
the German Award for Online Communication, supports our
customers from the time they buy a car until their new vehicle
is delivered. In Germany, customers can track the production
status of their new car in real time. It's an exclusive interactive
service that provides a completely new kind of brand experi-
ence. To make sure customers stay mobile even without their
Mercedes-Benz vehicle, the Mercedes me app is integrated
with moovel, mytaxi and car2go to provide mobility services
across the board. The Mercedes me connect service "In-Car
Office" enables customers to use certain office functions as
well as their own telephone and calendar data while they're on
the road. The "In Score" feature offers discounts of up to 20
percent on insurance premiums, depending on the customer's
personal driving style. And coming soon is the "Ask Mercedes"
app, a digital users' manual with an augmented reality function
and additional online services that will make our customers'
daily lives noticeably easier.
Delivers revolutionary concepts: With its fully automatic
cargo area, delivery drones and other innovations,
the intelligent Vision Van defines the requirements for the
networked delivery chains and vans of the future.
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
SUPPLIER
OF COMPLETE
SOLUTIONS
Mercedes-Benz Vans is offering customized sector solutions through adVANce.
Through the strategic initiative adVANce, Mercedes-Benz Vans is transforming itself
from an automobile manufacturer to a provider of holistic transport and mobility
solutions. adVANce comprises all of the CASE future fields. In five areas of innovation,
it will offer responses to the megatrends and central challenges in the transport sector.
At DIGITAL@VANS, the main focus is on connectivity and the digital networking of
vehicles. At SOLUTIONS@VANS, we develop hardware solutions that can make our
customers' daily business operations more efficient. Meanwhile, RENTAL@VANS is all
about innovative rental models, SHARING@VANS presents new concepts for local public
transport, and eDRIVE@VANS presents a comprehensive approach to electric mobility.
Mercedes-Benz Vans is developing innovative products and services - and once again
defining the route to the future of transportation.
Fleet managers are connected with all the vehicles
and drivers in their fleets via the web-based service
Mercedes PRO connect.
36
Mercedes PREL
moovel.com/de/en
AR
GO
DAIMLER ANNUAL REPORT 2017
PIONEERING
CONCEPTS
AGE
RINKS
R
KIT/WC
STARTUPAUTOBAHN
powered by PLUGANDPLAY
STAGE ↑
X +
DRINKS
Daimler's moovel is an operating system for urban
mobility. The smart connection of diverse means of
transportation is a trend of our time. Our moovel mobility
app offers access to a wide range of mobility services
and shows the duration and cost of trips made via local
public transport, car sharing, mytaxi, rental bicycle and the
Deutsche Bahn rail network. Most of these services can be
directly booked and paid for via the app. Over 3.7 million
customers in Germany and the United States use the moovel
app and moovel transit, a worldwide service from the
moovel Group which offers solutions that transit associa-
tions and companies can make available to their customers
under their own brand names. In the USA, moovel transit
is the market leader for mobile ticketing systems. More
than 22.3 million transactions were conducted via moovel
products in 2017.
EXIT/WC ↑
DAIMLER ANNUAL REPORT 2017 | #1 | CASE 43
Even more drive for Daimler innovations - thanks to the entrepreneurial spirit of the startup
community. We are forging ahead with new ideas for mobility, in many cases through our dialog
with young companies. Our points of entry include initiatives such as CASE Invest, Lab1886, Startup
Intelligence Center, DigitalLife@Daimler and STARTUP AUTOBAHN. As one of the leading European
startup accelerators in the fields of mobility and Production 4.0, STARTUP AUTOBAHN works with
established companies to support selected startups. Projects are rapidly advanced with space, a
hardware lab and a network of investors and mentors. Daimler and the other founding partners have
been joined by additional partners since 2016. A total of 41 startups conducting a large number of
pilot projects have completed the first two STARTUP AUTOBAHN programs in Stuttgart. One of the
first products to have been realized is the innovative address system "what3words," which makes
every location on earth unmistakably identifiable by means of three words. Mercedes-Benz is the
first auto manufacturer to use the system. In the third program at STARTUP AUTOBAHN, 34 young
tech companies are developing their projects to market maturity. STARTUP AUTOBAHN is also widely
established internationally: Alongside Stuttgart, startups are also being sought, sponsored and
supported in Beijing, Singapore and South Africa.
④daimler.com/innovation/venture/en
44
DAIMLER ANNUAL REPORT 2017 | #1 | CULTURE
DAIMLER ANNUAL REPORT 2017 | #1 | CULTURE 45
99 DAIMLER'S CULTURE IS BEING
TRANSFORMED TOO...
CULT
URE
99
...INTO A VALUE-ORIENTED,
EVEN MORE AGILE AND INNOVATIVE
WORK ENVIRONMENT.
66
66
IDEAS FOR
TOMORROW
car2go.com/de/en
CASE
FIND. BOOK. PAY.
Mercedes-Benz Vans is electrifying all of its commercial
van model series. It has already begun with the mid-size
eVito van, which has been available for ordering since
November 2017. Deliveries are scheduled to start in the
second half of 2018. The battery-electric Vito will be
followed by the eSprinter in 2019. The holistic electric drive
strategy eDRIVE@VANS focuses not only on the electric
van itself, but also on an ecosystem geared to provide eco-
nomic benefits to electrified fleets. The customized system
solutions, which will cover the entire value chain, include
a powerful and intelligent charging infrastructure, rental
vehicles, a driver training program for efficient vehicle use,
and connectivity solutions that will ensure optimal vehicle
capacity in relation to an individual vehicle's state of charge
and battery range, as well as route planning in real time.
Connected delivery processes for more efficiency in the
last mile. As part of the future-oriented adVANce initiative,
Mercedes-Benz Vans is combining vans with delivery drones
and delivery robots. In a pilot project, a Mercedes-Benz
Sprinter became a mobile loading and transport hub for
eight autonomously operating robots. The overall concept is
now being extensively tested in cooperation with logistics
companies. In the Vans & Drones pilot project in Zurich -
a world first-products that have been ordered online
are being delivered to customers by two drones and two
Mercedes-Benz Vito vans with integrated landing platforms.
Mercedes PRO takes service for the transport sector
to a new level. This online services platform provides
centralized access to existing professional services as well
as newly developed applications for daily operations. Here,
commercial customers can receive customizable holistic
solutions and services from Mercedes-Benz Vans. Plans
call for the step-by-step expansion of the range of offers to
include concepts that go far beyond traditional van features,
ranging from connectivity, mobility and transport solutions
to fleet and overall system solutions.
pro.mercedes-benz.com/uk/en
38
DAIMLER ANNUAL REPORT 2017 | #1 | CASE
EMISSION-FREE
car2go is an important part of Daimler's mobility
strategy. car2go makes Daimler a pioneer and market
leader in the field of flexible car sharing at 26 locations in
eight countries on three continents: Europe, North America
and Asia. In Europe and North America, car2go vehicles
can be taken across national borders. Today, almost three
million customers have access to the car2go fleet of more
than 14,000 smart and Mercedes-Benz vehicles. Customers
find, book and pay for car2go vehicles via their smartphones.
There are fully electric fleets with a total of 1,400 vehicles in
Stuttgart, Amsterdam and Madrid. That makes car2go one
of the biggest providers of electric car sharing. In April 2016,
car2go opened its first operation in the growth market of
China in the city of Chongqing. Demand for the 600 smart
fortwo vehicles at this car2go location developed rapidly
within just one year: 234,000 customers were using car2go
in Chongqing at the end of 2017. This makes Chongqing the
metropolis with the most car2go customers, ahead of cities
such as Berlin and Madrid.
Daimler Buses is shaping the future of mobility through innovative vehicles and novel
services. In a strategic partnership with the on-demand ride-sharing service CleverShuttle,
Daimler Buses will offer flexible solutions for on-demand mobility. This will enable transport
associations and companies to optimally adapt their services to passenger needs at any time.
1053
HA EV 1053
Series production of the fully electric
Mercedes-Benz Citaro will begin in
late 2018.
即行
GET IN AND
The countdown has started for the fully electric Mercedes-Benz Citaro. All over the
world, the demand for clean and economical local public transport is growing. That is giving an
additional boost to the development of our best-selling city bus, the Citaro. For Daimler Buses,
the logical next step after the Citaro hybrid will be the fully electric Citaro. The new model will
set milestones with its lithium-ion battery drive system and its modular battery package for
diverse applications in city traffic. In addition to a network for powering the vehicles at wall
sockets in the depots, Mercedes-Benz will also provide interim charging systems. A special
feature of the new bus model is thermal management of the climate control and drive systems.
The developers have significantly reduced the model's energy consumption, thus expanding its
range without having to enlarge the batteries. As a result, the new Mercedes-Benz Citaro will
run locally emission-free in cities - and in the local public transportation network of the future.
mytaxi.com/de/en
DRIVE OFF
The mytaxi app has revolutionized an entire industry. Taxi rides via mytaxi are simple
and efficient - from ordering the car to cashless payment and finally an evaluation of the
ride. mytaxi is the biggest service platform of its kind in Europe, with 70 million passen-
gers and 120,000 registered taxi drivers in over 70 cities in eleven European and two South
American countries. It's the leading app-based taxi broker, and as a result of its merger
with Hailo and Taxibeat, it now operates in Germany, Greece, the United Kingdom, Ireland,
Italy, Austria, Poland, Portugal, Spain and Sweden. Taxibeat also operates today in Peru
and Chile. The network also includes the Clever Taxi subsidiary in Romania.
→moovel
S.LT
Internjou.
Today, 11:20 16:15
mytaxi
Your journey begun.
Journey details
④ daimler-financialservices.com/en
Innovative mobility services from Daimler are on an upswing. Demand is increasing in the area
of future-oriented shared and services all over the world, especially in China. Our mobility services
provider, Daimler Financial Services, has a wide range of responses to every need – for example,
through the world's leading company for flexible car sharing, car2go, as well as moovel mobility services
and transport services ranging from Blacklane to our stake in Flixbus. Thanks to mytaxi, Daimler is the
leading app-based taxi broker in Europe. We've also become a full-service fleet management provider
for cars and vans in Europe through our acquisition of Athlon Car Lease. We aim to continue expanding
our mobility portfolio in the future. For example, our acquisition of shares in Turo is another step in our
expansion of peer-to-peer car sharing. And our investment in Via has made Mercedes-Benz Vans a
player in the field of on-demand ride sharing. In all of these ways, Daimler is using smartphone-based
mobility concepts to support the optimal use of existing transportation infrastructures on the way to
the flexible and environmentally friendly mobility of tomorrow.
CAR
2GO
patalimatı 11, Stat
Mercedes-Benz Mercedes-Benz
Cars
Vans
The planned new structure
Daimler Trucks & Buses
Mercedes-Benz Cars & Vans
Daimler AG
We continue to be a family under the roof of Daimler AG
④daimler.com/company/strategy
OF THE AUTOMOTIVE SECTOR.
PROJECT
FUTURE
DAIMLER ANNUAL REPORT 2017 | #1 | COMPANY
2
52
66
Daimler
Trucks
This is the right moment to prepare Daimler optimally for the future and to safeguard
our employees. New competitors, breakneck technological change and increasingly diverse
customer requirements – never before has the automotive sector changed so hard and fast.
To stay competitive, we want to continuously develop - technologically, culturally and struc-
turally. In the highly dynamic fields where we operate, we need an organization that enables
us to act fast and flexibly, with the power of a globally operating company. In "Project Future”,
we will strive to further focus and strengthen our structure. We are considering the forma-
tion of three legally independent business entities under the management of Daimler AG:
Mercedes-Benz Cars & Vans, Daimler Trucks & Buses and Daimler Financial Services AG,
which is already a successful legally independent company. This is how we want to create
the preconditions for optimally utilizing market potential - with new cooperation partners as
well - and to safeguard our employees at the Group.
pages 93 f
Daimler
Buses
Daimler Financial Services
Daimler
Mobility
Services
99...TO KEEP DAIMLER AT THE TOP
Call a Service
Cafe
112-tech
SEASIDE SUSHI
DAIMLER ANNUAL REPORT 2017 | #1 | CORE CASE CULTURE COMPANY 55
Daimler
Financial
Services
(31)
BUS
The next level of mobility will have many dimensions: People all over the
world want to be mobile in highly individual ways. Vehicles will be connected
and electric, drive autonomously and be shared with other individuals. As
one of the world's leading auto manufacturers, Daimler is already shaping
the mobility of tomorrow. Through the combination of our strategic fields of
action - CORE, CASE, CULTURE and COMPANY - we will systematically
write new chapters in our success story in the future.
A NEW ERA
OF MOBILITY
OUR GOAL:
TO PIONEER
DAIMLER
Through our future-oriented strategy, we aim to
boost our effectiveness and also set benchmarks in
the global mobility sector as a corporate family.
Car2go
66
COM
PANY
At Daimler, the expansion of our attractive core busi-
ness operations is inseparable from our systematic
development of the CASE fields. We want to safeguard
and enhance our corporate success through optimal
customer orientation and innovative business models.
To this end, we are establishing a corporate culture
that effectively supports transformation and keeps
Daimler on its successful path. Integrity, one of our
four corporate values, is its foundation. Together with
our employees, we have developed future-oriented
management principles and work methods within the
framework of the Leadership 2020 program. This is
how we can shape the mobility of the future from a
position of leadership, flexibly address ever-changing
customer requirements, and quickly establish our-
selves in new markets. State-of-the-art office environ-
ments support agile Group-wide cooperation through
the options offered by connectivity, communication
and collaboration.
OURSELVES...
46 DAIMLER ANNUAL REPORT 2017 | #1 | CULTURE
CULTURE
Innovative, flexible corporate culture
LEADERSHIP 2020
New forms of cooperation will make us even faster, more agile, and closer to our customers.
Daimler has shaped the automotive sector for more than 130 years. But the markets are becoming
increasingly fast-paced and focusing on customers even more than before. Daimler is adapting itself
to this fundamental transformation. That's because the more precisely we know our customers, the
faster we can react to their ever-changing requirements. The sooner we launch the right products on
the market, the more we distinguish ourselves from our competitors. And the more flexibly we react
to changes, the more effectively we can use trends to our advantage. We are shaping our future success
by means of a new kind of cooperation: one that is faster and more flexible and involves more sharing
and more innovation. An international Leadership 2020 team across hierarchies, locations and functions
is shaping the new culture at Daimler. In eight focus areas – the “game changers” – we are creating
completely new systems, processes and tools. Supported by a mandate from the Board of Management,
this process is also deliberately altering previous structures and work methods – in order to prepare
the way for a new era of mobility.
daimler.com/career/thats-us/leadership2020
48 DAIMLER ANNUAL REPORT 2017 | #1 | CULTURE
FREE SPACE FOR
INNOVATIONS!
This is where Daimler is enabling new forms
of cooperation and direct communication across
hierarchies and functions.
IAN
TEK
Today's modern work environments already offer us scope for future operations. To sup-
plement Leadership 2020 and our new work culture, we are developing our business premises
into future-oriented office environments. Traditional single-occupancy offices are giving way to
flexible, activity-oriented work settings. As a result of this reorganization, Daimler employees
can work flexibly in terms of their work space and work organization. They can take advantage
of all the potential offered by agile, project-related teamwork. We have transformed traditional
offices into state-of-the-art work environments in pilot projects at various locations such as
Mercedes-Benz in Sindelfingen and Daimler Financial Services at Pragsattel in Stuttgart. In the
future, we will launch pilot projects at the new Daimler Trucks campus in Leinfelden-Echterdingen
and the campus in Stuttgart-Vaihingen. Through these experiences and in line with the needs
of the dynamically changing world of work, we are continuously developing our "me@work"
concept. This is where we can implement the dynamic culture and values that we, the inventors
of the automobile, have embodied for over 130 years and will continue to embody in the future.
daimler.com/career/thats-us/daimler-as-an-employer
-2°
99 WE WANT TO REALIGN
DAIMLER ANNUAL REPORT 2017 | #1 | COMPANY 51
DAIMLER ANNUAL REPORT 2017 | #1 | COMPANY
DUCT!
50
TELM
The
50
Integrity is our motivation - for balanced economic, environmental and social results. Together with
passion, discipline and respect, integrity is one of our four corporate values at Daimler. In our understanding,
integrity includes compliance with laws and regulations, as well as fairness, responsibility, mutual respect,
openness and tolerance. Daimler's management culture is based on this understanding. Integrity is also the
basis of our respectful dealings with one another. It gives our employees orientation, even in difficult situa-
tions. That's especially important in times of change and transformation. Integrity and Leadership 2020 are
part of Daimler's DNA, and they are essential if we are to remain on our successful course in the future.
THE BASIS OF
OUR CONDUCT
INFRINET
www
daimler.com/sustainability/integrity
The Audit Committee and the Supervisory Board dealt with
those documents in detail and discussed them intensively in
the presence of the external auditors, who reported on the
results of their audit and were available to answer questions
and to provide further information. Following the final results
of the review by the Audit Committee and its own review, the
Supervisory Board declared its agreement with the results
of the audit carried out by the external auditors. It determined
that no objections were to be raised, approved the financial
statements and the combined management report as presented
by the Board of Management, and thus adopted the financial
statements for the year 2016. On this basis, the Supervisory
Board consented to the proposal made by the Board of
Management on the appropriation of distributable profit. In
addition, the Supervisory Board approved the report of the
Renata Jungo Brüngger | 56
Wilfried Porth | 59
A | TO OUR SHAREHOLDERS | THE BOARD OF MANAGEMENT 63
Group Research & Mercedes-Benz Cars Development,
Appointed until December 2022
In the Supervisory Board meeting held on February 10, 2017,
the Supervisory Board first decided on the personnel changes
in the Board of Management described on page 68.
Subsequently, it dealt with the annual company financial state-
ments, the annual consolidated financial statements and the
combined management report for Daimler AG and the Daimler
Group for the year 2016, each of which had been issued with
an unqualified audit opinion by the external auditors, as well as
with the reports of the Audit Committee and the Supervisory
Board, the declaration on corporate governance combined with
the corporate governance report, the remuneration report
and the proposal on the appropriation of profit. In preparation,
the members of the Supervisory Board were provided with
comprehensive documentation.
Ola Källenius | 48
Appointed until December 2023
Integrity and Legal Affairs,
Appointed until February 2022
Objectives and Strategy
Martin Daum | 58
Chairman of the Board of Management, Head of
Mercedes-Benz Cars, Appointed until December 2019
Dieter Zetsche | 64
The Board of Management
82
78
Daimler and the Capital Market
72
2016 and the dividend proposal to be made at the 2017 Annual
Shareholders' Meeting. The Supervisory Board determined
that no objections were to be raised to their publication. The
preliminary key figures for the year 2016 and the proposal on
the appropriation of profit were announced at the Annual Press
Conference on February 2, 2017.
Highlights of 2017
Daimler Trucks and Buses,
In its meeting on February 1, 2017, which was attended by
the external auditors, the Supervisory Board discussed, took
note of and approved the preliminary key figures of the
annual company and consolidated financial statements for
Greater China,
The members of the Supervisory Board and of the Board of
Management came together for the bilateral exchange of
opinions also outside the regular meetings. The Board of Manage-
ment informed the Supervisory Board with written reports
about the most important indicators of business development
and existing risks, and submitted the interim financial reports
to the Supervisory Board. The Supervisory Board was informed of
special occurrences also between the meetings.
Supervisory and advisory activities of the Supervisory
Board
Dear Shareholders, Daimler is a successful and strong company. Despite various challenges,
Daimler AG concluded financial year 2017 with excellent results once again and, as in the
previous years, with solid earnings. We can therefore strengthen our core business while
investing in new technologies and businesses. From a position of strength, the company
has initiated a far-reaching process of transformation. Daimler is actively shaping the future
of mobility.
Report of the Supervisory Board
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
64
Finance & Controlling, Daimler Financial Services,
Appointed until December 2019
Bodo Uebber | 58
Mercedes-Benz Cars Marketing & Sales,
Appointed until December 2019
Britta Seeger | 48
Appointed until December 2020
70
Hubertus Troska | 57
Human Resources and Director of Labor Relations,
Mercedes-Benz Vans, Appointed until April 2022
The Supervisory Board of Daimler AG fully performed its tasks as
defined by the law, the Company's Articles of Incorporation
and rules of procedure. The Supervisory Board continually advised
and supervised the Board of Management in the management
of the Company and provided support with strategically important
issues relating to the Group's further development. The
Supervisory Board examined whether the annual company and
consolidated financial statements, the combined management
report and the other financial reporting were in conformance with
the applicable requirements. In addition, it approved numerous
business matters for which its consent was required following
careful reviews and consultations. As well as approving the
further review and initiating the first preparatory measures for
the strengthening of the divisional structure by creating legally
independent entities in the context of further developing the
Daimler Group's structures, this also included finance and
investment planning, major equity measures at companies of
the Group, key individual investments and the conclusion of
contracts with particular importance for the Group. The Board
of Management informed the Supervisory Board about a
large number of further measures and business transactions,
and discussed them with it intensively and in detail, including
the comprehensive future plan for diesel engines, which was
approved by the Board of Management in July 2017. Finally, the
Board of Management reported continually to the Supervisory
Board on the current status of the main legal proceedings.
The Board of Management regularly informed the Supervisory
Board about all significant economic developments of the Group
and the divisions. It continually provided information to it on all
fundamental questions of corporate planning, including finance,
investment, sales and personnel planning, current developments
at the companies of the Group, the development of revenue,
the situation of the Company and the divisions, and legal risks.
Furthermore, the Board of Management reported to the
Supervisory Board continually on return on equity and the
Group's liquidity situation, the development of sales and
procurement markets, the overall economic situation, and
developments in the capital markets and the area of financial
services. Additional topics included the further development of
the product portfolio, securing the Group's long-term com-
petitiveness, and the ongoing implementation of measures for
safeguarding sustainable and future-oriented mobility. The
Supervisory Board also dealt in detail with the development of
the share price and the related background, as well as the
expected impact of strategic projects on the share price.
Daimler is a strong and successful company and systematically
pushed forward with the implementation of its strategy also in
financial year 2017. The Group's financial strength and sound
balance sheet allow our growth strategy to be continued
while paying out an attractive dividend to our shareholders.
In addition to the core business, we have summarized the
topics "Connected", "Autonomous", "Shared & Services", and
"Electric" under the acronym CASE. From a position of strength,
we have initiated a far-reaching transformation process in order
to be active in shaping the upcoming fundamental changes
facing the automotive industry in the coming years. For that
purpose, high levels of advance expenditure will be made in the
coming years. With the presentation of important products and
concept vehicles in 2017, Daimler demonstrated its strong
expertise in the core business and in the CASE areas. The Super-
visory Board and the Board of Management are convinced
that the new challenges require both a cultural change as well
as a changed structure. The cultural change has been
initiated with the involvement of all employee groups. Work is
now being done at all levels to implement that change in
order to be prepared for the challenges ahead of us. Daimler will
become faster, more flexible and more digital in order to
safeguard its future strength. For this purpose, a start has been
made with the review and initiation of the first preparatory
measures to strengthen the divisional structure by creating
legally independent entities. The Supervisory Board firmly
supports all of these steps.
Working culture and areas of Supervisory Board activity
In the year 2017, the Supervisory Board convened for nine
meetings. Participation in the meetings by the members of the
Supervisory Board was at a high level once again. All members
of the Supervisory Board participated in significantly more than
half of the meetings of the Supervisory Board and its com-
mittees of which they are members during the year under review.
The work of the Supervisory Board featured open and intensive
exchanges of information and opinions. The members of the
Supervisory Board regularly prepared for upcoming resolutions
with the use of documentation provided in advance by the Board
Dr. Manfred Bischoff, Chairman of the Supervisory Board
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 65
of Management. Furthermore, the members representing the
employees and the members representing the shareholders
regularly prepared the Supervisory Board meetings in separate
discussions, which were attended by members of the Board of
Management. The Supervisory Board was intensively supported
by its committees and the members of the Supervisory Board
intensively discussed the measures and business matters to be
decided upon with the Board of Management. For the meetings,
executive sessions were regularly arranged so that topics could
be discussed also in the absence of the Board of Management.
The members of the Supervisory Board independently attend
such courses of training and further training regarded as
necessary for the performance of their tasks, relating for exam-
ple to questions of corporate governance, changes in the
legal framework, new products and future-oriented technologies,
in which they are supported by the Company. In a special
onboarding program, new members of the Supervisory Board
have the opportunity to meet the members of the Board of
Management and other senior executives for a bilateral exchange
of opinions and information on the current topics of the various
Board of Management areas, allowing them to gain an overview
of the topics relevant to the Daimler Group.
The Supervisory Board
66
Report of the Supervisory Board
Daimler Financial Services has been delivering record results for many years
now, and it was the same in 2017. We lease or finance half of the vehicles we
sell. And we increasingly also broker suitable insurance policies: 20 percent
more in 2017 than in the previous year. The core business of DFS now also in-
cludes mobility services. Nearly 18 million people in more than 100 cities around
the world already use such services provided by Daimler: from flexible car
sharing to an app-based taxi service and mobile ticketing solutions for trans-
portation companies. And we plan to further strengthen this leading position.
The development of Daimler Buses benefited from the improved economic
situation in Latin America. We sold a total of 28,700 buses and bus chassis last
year, which is 9 percent more than in 2016. At the same time, we continued
our product offensive: With a new hybrid city bus, we would like to help make
public transportation even more efficient. And with two new coaches, we aim
to continue profiting from the growing long-distance bus market.
At Mercedes-Benz Vans, the year featured further strong growth. All model
series helped to achieve the fourth consecutive record year. Towards the end of
the year, we had the successful launch of the X-Class, the world's first pickup
from a premium manufacturer. In 2017, we also showed how we imagine the
transformation from a van producer into a provider of system solutions. That
ranges from ride-sharing projects to new delivery methods with vans and drones.
Daimler Trucks sold 471,000 vehicles in 2017 - significantly more than in the
previous year and significantly more than we had expected at the beginning
of the year. As overall demand from the markets was only moderate, that is a
strong performance, which was primarily driven by our positive business
development in the NAFTA region. With the efficiency activities we have initi-
ated, in particular at Mercedes-Benz Trucks, we have good prospects also of
reaching our targeted level of profitability in the medium term.
58 CHAIRMAN'S LETTER
Mercedes-Benz Cars remains on its path of profitable growth. In 2017, we
sold nearly 2.4 million cars an increase of 8 percent compared with the
prior year. Mercedes-Benz continues to be the leading premium brand and
further extended its lead over its direct competitors. A key reason for that
is our success in China. In 2017, unit sales by Mercedes-Benz in the world's
largest car market increased by 28 percent. This is the result of our hard
work in recent years. smart was also very popular in China in 2017. The strong
demand for the electric smart models is also very pleasing. Worldwide, the
brand sold 136,000 cars.
-
Let's have a look at the development of the individual divisions.
CHAIRMAN'S LETTER 59
64
Than holders,
Dea
CHAIRMAN'S LETTER 57
Stuttgart, February 2018
"With the four strategic areas
for action - CORE, CASE, CULTURE
and COMPANY - we are setting the
course for a successful future."
Press Feed
D
EQ
In 2017, Daimler once again succeeded in breaking its record of the previous
year. I would therefore like to thank everyone at Daimler for their great efforts
last year, as well as for their willingness and enthusiasm to actively push for-
ward with our company's transformation. I would also like to thank you. You
have placed your trust in our strategy. And you have given us the freedom
to act and the time to implement that strategy. And it has been worthwhile!
The results for 2017 show that our company is in excellent shape and highly
profitable. It stands for sustainable success in volatile times. We are proud of
that. But it's no reason to stand still. That's why we are pushing forward with
the transformation in all areas at Daimler.
In the year 2017, we sold more vehicles than ever before in our company's
history of more than 130 years, nearly 3.3 million altogether. Revenue reached
164.3 billion euros and was thus 7 percent higher than in the previous year.
EBIT increased by 14 percent to 14.7 billion euros. And at 9 percent, we achieved
our targeted return on sales in the automotive business. The bottom line is a
net profit of 10.9 billion euros. At the Annual Shareholders' Meeting, the Board
of Management and the Supervisory Board will propose the distribution of a
dividend of 3 euros and 65 cents per share.
We are making use of our technological expertise and the profitability of our
core business to vigorously tackle the major future issues of our industry.
We summarize them under the acronym CASE. It stands for a combination of
connectivity, autonomous driving, sharing and electric mobility. So it's about
nothing less than the reinvention of individual mobility. We showed what that
could look like at the Frankfurt Motor Show in the fall: The smart vision EQ
fortwo concept car that we presented there drives to you autonomously and
emission-free whenever you need it. Along the route, it suggests ride sharers
with similar destinations. It is constantly in contact with the other cars in the
fleet. Thanks to artificial intelligence, it drives in good time to where it will
be needed next. That might sound like science fiction. But in the early 2020s,
we at Mercedes-Benz want to put the first self-driving taxis on the roads.
The focus on our core business (CORE) is the foundation for our success
today. It is the financial backbone of Daimler and we will make it even stronger.
Above all, we are investing in new products. In the areas of cars alone, we will
launch a total of more than a dozen new models in 2018.
62
The Board of Management
A | To Our Shareholders
As the inventor of the automobile, we intend to shape the fundamental transformation
of the automotive industry from the forefront. With a strong core business (CORE),
we are creating the financial basis to invest in the future-oriented areas of connectivity,
autonomous driving, the flexible use of vehicles and services, and electric mobility
(CASE). In parallel, we are developing an innovation-friendly and flexible corporate
culture under the roof of Leadership 2020 (CULTURE). In addition, we started "Project
Future" in the year under review (COMPANY), with which we will strengthen the future
viability of our divisions. We reached some important milestones in the implementa-
tion of our strategy last year, and we were once again very successful in our business
operations. This is also to the benefit of our shareholders: in the form of an attractive
dividend and an attractive share price.
FOR A SUCCESSFUL FUTURE!
99 CORE, CASE, CULTURE, COMPANY:
WE HAVE SET THE COURSE
Dieter Zetsche
A | TO OUR SHAREHOLDERS | CONTENTS 61
Sincerely yours,
Together, we have seen three phases in the development of our company in the
past three years. The first phase was the restructuring. We focused on our core
competence, the production of motor vehicles. In the second phase, we wanted
to become the number one. We achieved that goal ahead of time and confirmed
it in 2017. We are now in the phase of shaping the future. Our ambition is un-
changed: Daimler belongs at the top. 132 years after the invention of the auto-
mobile, Daimler is once again a company on the move. And we will be delighted
if you continue to accompany us on this journey.
CORE, CASE, CULTURE and COMPANY. Those are the four fundamental ele-
ments of our future strategy. But another "C" is still missing: the customers -
our customers. They are at the center of everything. Because what convinces
our customers is also good for our employees, for our business partners and
for you, our shareholders.
We want to reflect the entrepreneurial spirit that we promote with Leadership
2020 also in the structure of the Daimler Group (COMPANY). Because an inner
attitude and the external image should complement each other. We would like
to strengthen individual responsibility in our organization while maintaining the
synergies that we have at Daimler.
CHAIRMAN'S LETTER
60
60
Working on the CASE topics requires of us a culture of openness (CULTURE).
We are working on that with Leadership 2020. We wanted to make the trans-
formation quickly tangible. That's why we focused right from the start on
changing processes, rules and tools. A new phase is now starting. We are
focusing on the basis of Leadership 2020: the principles according to which
we manage and work together. This is also a matter of the right inner attitude,
on cooperation or agile actions for example.
Die t
74
Highlights of 2017
The year 2017 was very successful for Daimler. We strengthened our core
business with attractive new products and services. Important new products
included the upgraded S-Class and the new X-Class from Mercedes-Benz,
the new FUSO Super Great and the new SETRA double-decker bus. We expanded
our business portfolio with targeted acquisitions and joint operations.
We made very good progress in the future strategic areas of connectivity,
autonomous driving, flexible use and services and above all with electric
mobility. Furthermore, we aim to strengthen Daimler's future viability with
a new divisional Group structure.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017
With its entry into the e-payment business, Daimler
will launch its own electronic payments service under
the "Mercedes pay" brand name.
Mercedes pay is a key component of
Daimler's mobility and digitization
strategy. The new payment system
demonstrates the goal of making
Daimler even more attractive as the
leading provider of digital mobility
services.
Daimler Financial Services acquires
PayCash Europe S.A.
Project ONE
Q1
Mercedes-AMG
On my way
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017 73
At the Frankfurt Motor Show, Mercedes-Benz presented pioneering solutions
for the mobility of the future. The Mercedes-AMG Project ONE show car with its
Formula 1 hybrid technology stands for the future of driving performance.
And the smart vision EQ fortwo offers an electric and fully automated solution
for highly efficient and flexible local transport.
wor
vision EQ fortwo
World Premi
smart
Trankfest
25
OU WA MSA
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ere
Startup culture at Daimler
smart
Daimler Financial Services invests in smartphone app
for auto financing
less cars on the road in urban environments by early in the
next decade. The project combines the overall vehicle expertise
of the world's leading premium carmaker with the system and
hardware expertise of the world's biggest automotive supplier.
New battery factory in Kamenz
Daimler takes a further step in its electric offensive by laying the
foundation stone for one of the largest and most modern battery
factories. The Group's second factory for lithium-ion batteries
is being built at the 100-percent subsidiary ACCUMOTIVE in
Kamenz with an investment of approximately €500 million.
€500m
-
+
World premiere of the upgraded S-Class in Shanghai
Offering a wide range of improvements, the upgraded S-Class
has its world premiere at Auto Shanghai. The highlights include
an all-new, highly efficient family of engines with various
new technologies for electrifying the drivetrain. Intelligent
drive takes a further step towards autonomous driving. And
in the interior, new standards are set for comfort and wellness
in the premium segment.
Bosch and Daimler are cooperating to
advance the development of highly
automated driving and driverless cars.
The joint development aims to put
highly automated driving and driver-
Bosch and Daimler cooperate on
highly automated driving in an
urban environment
Q2
Daimler expands its "Knowledge College" program, a series
of workshops for students, with a seminar on the subject
of startup culture at the Group. The company has the clear
goal of combining the strength of a global corporation with
the flexibility of the startup scene. Daimler is creating new
impetus to strengthen the entrepreneurial spirit at the
Group with numerous initiatives. For this purpose, it has
designed a new seminar at which students can acquire
startup know-how.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017 75
a constant dividend of €3.25 per share.
The Annual Shareholders' Meeting approves
The Truck Data Center facilitates the market launch of new
digital services from Mercedes-Benz Trucks: the revolutionary
service product Mercedes-Benz Uptime and the new Fleet-
Board Manager app. A precondition for both services is the
installation of the Truck Data Center, which will be the brain
of the connected truck across all brands at Daimler Trucks.
It communicates via Bluetooth, 3G mobile telephony or GPS
with the infrastructure, other vehicles and other parties involved
in the logistics process.
new digital services
Launch of Truck Data Center and
Hermes and Mercedes-Benz Vans agree on a strategic
partnership to electrify the parcel service's vehicle fleet.
The focus is on the economy, sus-
tainability and practicality of locally
emission-free delivery vans used
for the last mile. By 2020, Hermes
plans to use 1,500 Mercedes-Benz
electric vans of the Vito and Sprinter
model ranges in urban areas all over
Germany.
1,500 Mercedes-Benz Sprinter and Vito vans with
electric drive for Hermes
ChargePoint is regarded as the world's leading provider in the
segment of charging stations for electric vehicles, and is the
market leader in the United States. Expansion of the business
to the European market is planned. Strategic involvement in
ChargePoint is another important step in the spread of electric
mobility. The cooperation lays the foundation for a compre-
hensive, customer-oriented charging service.
Daimler invests in ChargePoint
Daimler Financial Services is continuing along its growth path
with digital finance and mobility services. With the finance
startup AutoGravity, which was founded in Irvine, California
in late 2015, Daimler Financial
Services is now starting the national
rollout in 46 federal states of the
USA. The customer-focused comparison
app for automobile purchase and
finance provides information on up to
four tailored and binding offers within
just a few minutes.
Approximately 6,200 shareholders
(2016: 5,500) come to the CityCube in
Berlin on March 29. The resolutions
proposed by the management are all
approved with large majorities. The
dividend payout amounts to €3,477
million and is the highest of the DAX
companies.
Sari Baldauf
Stuttgart
Dr. Manfred Bischoff - Chairman
Other supervisory board memberships/directorships:
SMS Holding GmbH
Chairman of the Supervisory Board of Daimler AG
elected until 2021
Munich
Dr. Manfred Bischoff
The Supervisory Board
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD
70
Dr. Manfred Bischoff
Chairman
Maped Rifl
Мара
The Supervisory Board
Stuttgart, February 2018
In addition, the Supervisory Board thanks Dr. Wolfgang Bernhard
for his successful work at the Group.
The Supervisory Board also thanks Dr. Bernd Bohr, who closely
supported the Daimler Group through his committed work in
the Supervisory Board and who stepped down as of March 29,
2017.
The Supervisory Board warmly thanks all of the employees
and the management of the Daimler Group for their committed
contributions to the very successful year 2017.
Appreciation
The Audit Committee and the Supervisory Board dealt with
those documents in detail and discussed them intensively in
the presence of the responsible external auditors, who reported
on the results of their audit and were available to answer
supplementary questions and to provide additional information.
Following the final results of the review by the Audit Committee
and its own review, the Supervisory Board declared its agreement
with the results of the audit by the external auditors; it
determined that no objections were to be raised and approved
the financial statements and the combined management report
as presented by the Board of Management. The company
financial statements of Daimler AG for the year 2017 were
thereby adopted. On this basis, the Supervisory Board consented
to the proposal made by the Board of Management on the
appropriation of distributable profit. Furthermore, it approved
the report of the Supervisory Board, the declaration on cor-
porate governance combined with corporate governance report,
the remuneration report and the non-financial report, as well
as its own proposed resolutions for the items of the agenda of
the 2018 Annual Shareholders' Meeting.
In the meeting held on February 9, 2018, the Supervisory Board
dealt with the annual company financial statements, the annual
consolidated financial statements and the combined manage-
ment report for Daimler AG and the Daimler Group, each of
which had been issued with an unqualified audit opinion by the
external auditors, as well as with the reports of the Audit Com-
Imittee and the Supervisory Board, the corporate government
statement combined with the corporate governance report, the
remuneration report, the proposal on the appropriation of profit
and the non-financial report, the latter prepared for the first time
and reviewed by the external auditors pursuant to ISAE 3000. In
preparation, the members of the Supervisory Board had been
provided with comprehensive documentation including the Annual
Report with the consolidated financial statements according to
IFRS, the combined management report for Daimler AG and the
Daimler Group, the declaration on corporate governance com-
bined with the corporate governance report, the remuneration
report, the non-financial report, the annual company financial
statements of Daimler AG, the proposal of the Board of Manage-
ment on the appropriation of profit, the audit reports of KPMG
on the annual company financial statements of Daimler AG and
the consolidated financial statements, each including the com-
bined management report, as well as drafts of the reports of the
Supervisory Board and of the Audit Committee.
In a meeting held on January 31, 2018 attended by the external
auditors, the Supervisory Board discussed, took note of and
approved the preliminary key figures of the annual company and
consolidated financial statements for 2017 and the the proposal
on the appropriation of profit to be made at the 2018 Annual
Shareholders' Meeting. The Supervisory Board determined that
no objections were to be made to their publication. The pre-
liminary key figures for the year 2017 as well as the proposal on
the appropriation of profit were announced at the Annual Press
Conference on February 1, 2018.
Michael Bettag*
Nuremberg
appointed until 2018
Chairman of the Works Council of the Nuremberg Dealership,
Daimler AG
Other supervisory board memberships/directorships:
Member of the Executive Committee of the Board of Directors
of Kuwait Investment Authority
Former Chairman and Managing Director of the Executive
Committee of the Board of Directors of Kuwait Investment
Authority
(since March 29, 2017)
elected until 2022
Kuwait
Bader M. Al Saad
Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Deutsche Bank AG - Chairman
Bayer AG
elected until 2020
Dr. Paul Achleitner
Munich
The financial statements of Daimler AG and the combined
management report for the Company and the Group for 2017
were duly audited by KPMG AG, Wirtschaftsprüfungsgesellschaft,
Berlin, and were given an unqualified audit opinion. The same
applies to the consolidated financial statements for 2017 pre-
pared according to IFRS.
Emerson Electric Co.
Other supervisory board memberships/directorships:
Bayer AG (until April 28, 2017)
Former Chairman of the Supervisory Board of Deutsche Bank
AG
elected until 2022
Frankfurt am Main
Dr. Clemens Börsig
Deputy Chairman of the Supervisory Board of Daimler AG;
Chairman of the General Works Council Daimler Group;
Chairman of the General Works Council Daimler AG;
Chairman of the Works Council, Gaggenau Plant, Daimler AG
elected until 2018
Gaggenau
Michael Brecht*
Linde AG
Dr. Jürgen Hambrecht
Ludwigshafen
Audit of the company and consolidated financial
statements
In the meeting in December 2017, the members of the Super-
visory Board representing the shareholders decided, on the
basis of a recommendation by the Nomination Committee, to
propose the election to the Supervisory Board of Sari Baldauf,
Dr. Jürgen Hambrecht and Marie Wieck at the Annual Share-
holders' Meeting in 2018.
Corporate Governance and declaration of compliance
During the year 2017, the Supervisory Board was continually
occupied with standards of good corporate governance.
Also in this meeting, the Supervisory Board dealt with various
equity contributions at companies of the Group, including at
Daimler India Commercial Vehicles Pvt. Ltd., and consented to
the plans. Subsequently, the Supervisory Board was informed
in detail on the status of the review and on the initiation of the
first preparatory measures to strengthen the divisional structure.
A further focus of the meeting was information on the current
legal issues, also with regard to the requests, inquiries,
investigations and legal proceedings in connection with the issue
of diesel exhaust emissions. In the further course of the
meeting, the Supervisory Board dealt with Leadership 2020
and the Personnel Strategy Digitalization, in particular the
initiatives relating to the recruitment of digital talent, employees'
digital qualification and the digitization of HR tools. Further-
more, the Supervisory Board approved the creation of a steering
committee for the CASE future topics composed of members
of the Board of Management. Other topics discussed at the
December meeting were corporate governance, also with regard
to the recommendations of the German Corporate Governance
Code, and Board of Management remuneration. Thereby,
the focus was on the qualifications profiles, including diversity
concepts, for the Board of Management as well as for the
Supervisory Board, which are explained on
pages 210 ff
of the declaration on corporate governance combined with
the corporate governance report. Finally, the Supervisory Board
dealt with the probable main topics of the year 2018 and
with the planning of a meeting of the Supervisory Board abroad
in 2018.
On the day before the meeting in December 2017, the members
of the Supervisory Board had the opportunity to participate
in a product presentation and to be informed about new vehicle
models, design studies and forward-oriented technologies.
In the context of the actual meeting on December 7, 2017, the
Supervisory Board dealt with, among other things, the imple-
mentation of non-financial reporting at Daimler resulting from the
EU CSR Directive, and in this context decided that KPMG should
be commissioned to carry out a voluntary review in the form of
a limited assurance. The Supervisory Board then decided on
the election proposals to be made to the Annual Shareholders'
Meeting in 2018 as described on page 68. During the
further course of the meeting, on the basis of comprehensive
documentation, the Supervisory Board discussed in detail and
approved the operational planning for the years 2018 and 2019.
This included discussion of existing opportunities and risks as
well as the Group's risk management.
Meeting on operational planning 2018/2019
At an extraordinary meeting held in mid-October 2017, the Super-
visory Board was informed about the current status of the
review of the future business structures at Daimler. In late
October, the Supervisory Board granted its consent to the
ongoing review and to the initiation of the first preparatory
measures for strengthening the divisional structure.
in detail about the current legal issues and about the subject of
technical compliance management at Daimler. Furthermore, the
members discussed the key financial metrics and the targets
for the Group and the divisions.
67
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Strategy meeting of the Supervisory Board
During a two-day strategy workshop held in Sindelfingen in late
September 2017, the Supervisory Board was informed about
the status of the transformation in relation to the individual
divisions. The Supervisory Board discussed with the Board of
Management about how, based on the existing core business
and the new businesses summarized under CASE, the future
challenges were to be mastered and the mobility of tomorrow
was to be shaped. The four areas of CASE - "Connected",
"Autonomous", "Shared & Services” and “Electric" - were dis-
cussed and it was explained with the use of examples where
Daimler currently stands in these areas. Information was pro-
vided inter alia with regard to "Connected” on mercedes.me
and the Fleetboard solutions, with regard to "Autonomous" among
other things on the cooperation between Daimler and Bosch,
and with regard to "Shared & Services" also on mobility services.
The discussion with the Board of Management with regard
to "Electric" focused on the EQ brand and brand strategy, as
well as on the transition to electric mobility. The members of
the Supervisory Board and the Board of Management, with
participation by the senior executives responsible for the
topics discussed, held a constructive and open dialog about how
Daimler will adapt to new challenges and which further
developments are imminent. The topic of the changing competi-
tive environment was also discussed. In the context of a vehicle
exhibition, various models were presented to the Supervisory
Board. In this meeting, the Supervisory Board was also informed
In a subsequent meeting of the Supervisory Board together with
the Advisory Board for Integrity and Corporate Responsibility,
the participants discussed the role of the Advisory Board as well
as the cultural change, which constitutes an important success
factor for Daimler, with the examples of Leadership 2020 and
integrity.
In the meeting in late July 2017, the Board of Management
informed the Supervisory Board about the review of the general
feasibility and the advantages and disadvantages of the
possibility of reflecting the divisional structure of the Group with
legally independent entities. Also in this meeting, the Super-
visory Board discussed in detail with the Board of Management
about the course of business and the results of the first half of
the year, and was informed in detail about current legal issues
and about the antitrust accusations made in the press against
the German automotive industry. Finally, also in this meeting, the
Supervisory Board dealt with and approved the new product
platform for construction vehicles from Western Star.
In another meeting held in late April 2017, the Supervisory Board
received detailed reports on current legal issues, also relating
to the requests, inquiries, investigations and court proceedings
in connection with the issue of diesel exhaust emissions.
Furthermore, the Supervisory Board was informed about current
business developments in China and Brazil and the respective
economic and political situations, and discussed those matters
in detail with the Board of Management.
Börsig was reelected to the Audit Committee and was
appointed as its Chairman.
The items on the agenda of the Annual Shareholders' Meeting
held on March 29, 2017 included the reelection of Dr. Clemens
Börsig and the election of Bader Mohammad Al Saad as members
of the Supervisory Board representing the shareholders. In
the subsequent meeting of the Supervisory Board, Dr. Clemens
In its meeting on February 10, 2017, the Supervisory Board dealt
also with questions of corporate governance and discussed the
results of the efficiency review carried out in financial year 2016,
which once again confirmed the very good and constructive
cooperation within the Supervisory Board and with the Board of
Management. There was no fundamental need for action or
change; however, some suggestions for further optimization were
made, which were implemented during the financial year.
Furthermore, the Supervisory Board dealt with matters pertain-
ing to the remuneration of the members of the Board of
Management and approved the memberships in other boards
and further external secondary employments of the members
of the Board of Management that were presented in the meeting.
Finally, the Supervisory Board addressed at this meeting once
again whether, in connection with the antitrust investigations of
the European Commission against truck manufacturers, claims
for compensation were to be made against former or current
members of the Board of Management. On the basis of the
reviews carried out so far and repeatedly updated by an inde-
pendent law firm, a further review by an independent legal
academic, as well as detailed discussions in the Supervisory
Board taking into account the welfare of the Company, the
Supervisory Board maintained its previous resolution, based
on the information available, that no such claims were to be
made at the present time. The grounds for this resolution did not
change in the further course of the year.
In connection with the adjustment of Supervisory Board
remuneration proposed at the Annual Shareholders' Meeting,
the Supervisory Board called for a self-commitment by the
members of the Supervisory Board to purchase Daimler shares.
In this self-commitment, the members of the Supervisory Board
state to the Supervisory Board that they will purchase shares
of the Company each year for 20% of their adjusted Supervisory
Board remuneration (excluding committee remuneration and
meeting fees and before taxes) and hold them at least until the
end of the year following their departure from the Supervisory
Board of the Company (self-commitment according to the
principle of comply or explain). This does not apply for members
of the Supervisory Board whose Supervisory Board remuneration
is transferred to the Hans-Böckler-Stiftung due to compulsory or
voluntary application of the guidelines of the German Federation
of Trade Unions, or is transferred to the member's employer due
to a contract of employment, or is credited to the member's
contractual remuneration entitlement. All members of the Super-
visory Board who are not subject to any of the described trans-
fer or credit arrangements made the self-commitment in 2017.
Supervisory Board, the corporate government statement
combined with the corporate governance report, and the
remuneration report, as well as its proposed decisions on
the items of the agenda for the 2017 Annual Shareholders'
Meeting.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
66
In its meeting in December 2017, the Supervisory Board
approved the 2017 declaration of compliance with the German
Corporate Governance Code pursuant to Section 161 of the
German Stock Corporation Act (AktG). With the exception
explained there, all the recommendations of the Code have
been complied with and continue to be complied with. In the
same meeting, the Supervisory Board updated the rules of
procedure for the Supervisory Board and its committees.
In accordance with good corporate governance, the members of
the Supervisory Board of Daimler AG are obliged to disclose
conflicts of interest - especially those that might arise due to an
advisory or board function for a customer, supplier or creditor
of Daimler, or for other third parties - to the entire Supervisory
Board.
There were no indications of any actual conflicts of interest in
2017. In order to avoid individual conflicts of interest, some
members of the Supervisory Board did not participate in dis-
cussions of certain items of the agendas in the year 2017: Dr.
Bernd Bohr, Dr. Jürgen Hambrecht and Dr. Bernd Pischetsrieder
left the room during the Supervisory Board meetings for dis-
cussion of the legal status report on the issue of diesel exhaust
emissions. As a result, in compliance with the goals of the
Supervisory Board, there were no potential conflicts of interest
during the year under review for at least half of the members
representing the shareholders and for at least 15 members of the
entire Supervisory Board.
Law for the equal participation of women and men in
management positions
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 69
In its extraordinary meeting in late February 2017, the Supervi-
sory Board appointed Martin Daum as a member of the Board
of Management with responsibility for "Daimler Trucks & Buses"
effective as of March 1, 2017 for a period of five years until
February 28, 2022.
In advance of this meeting, Dr. Wolfgang Bernhard, who had been
appointed as a member of the Board of Management with
responsibility for "Daimler Trucks & Buses" until February 2018,
stated that he would not be available for a contract extension.
The appointment of Dr. Wolfgang Bernhard was terminated as of
February 10, 2017. Until the appointment of his successor,
Dr. Dieter Zetsche, the Chairman of the Board of Management,
took charge of those divisions.
In the Supervisory Board meeting on February 10, 2017,
Ola Källenius was reappointed as a member of the Board of
Management Member with responsibility for "Group Research
and Mercedes-Benz Cars Development", effective from Janu-
ary 1, 2018 for a period of another five years.
On March 29, 2017, the Annual Shareholders' Meeting elected
Bader Mohammad Al Saad and Dr. Clemens Börsig as members
of the Supervisory Board representing the shareholders until the
end of the Annual Shareholders' Meeting that decides on
ratification of board members' actions for financial year 2021.
In the meetings in December 2016 and on February 10, 2017,
the members of the Supervisory Board representing the
shareholders decided, on the basis of a recommendation by
the Nomination Committee, to propose the election to the
Supervisory Board of Dr. Clemens Börsig and Bader Mohammad
Al Saad at the Annual Shareholders' Meeting in 2017. Dr. Bernd
Bohr had previously stated that in the interests of the Daimler
Group, he would step down from the Supervisory Board as of
the end of the Annual Shareholders' Meeting in 2017. The Super-
visory Board had stated its intention to propose Dr. Bernd
Bohr for reelection to the Supervisory Board within the next
two years.
Personnel changes in the Supervisory Board and the
Board of Management
There was no occasion to convene the Mediation Committee
in 2017.
In two meetings in 2017, the Nomination Committee prepared
recommendations for the Supervisory Board's proposals to
be made at the Annual Shareholders' Meeting in 2018 on the
candidates for election to the Supervisory Board. Among other
things, and taking into consideration all circumstances of each
individual case, the proposals are oriented towards the Daimler
Group's interests and aim to fulfill the overall qualifications
profile, including expertise profile and diversity concept, for
the entire Supervisory Board.
In the Supervisory Board meeting on February 9, 2018, Renata
Jungo Brüngger was reappointed to the Board of Management of
Daimler AG as the member responsible for "Integrity and Legal
Affairs" for further five years effective from January 1, 2019.
on
The Presidential Committee convened eight times last year.
It dealt primarily with corporate governance topics as well as
Board of Management matters concerning remuneration and
personnel. As in previous years, compliance targets constituted
part of the individual target agreements of the members of
the Board of Management. Once again, additional non-financial
targets were also included as criteria in the target agreements.
For the past financial year, they were the further development
and permanent establishment of the corporate value integrity,
diversity with regard to increasing the proportion of women in
management positions, the maintenance and enhancement of
a high level of employee satisfaction, and high product quality.
The work of the committees
Corporate governance at Daimler is described in detail in the
declaration on corporate governance combined with the
corporate governance report on pages 203 ff and in the
remuneration report on pages 136 ff of this Annual Report.
For the composition of the Board of Management, the Super-
visory Board set the target in December 2016 of at least 12.5%
women, which is applicable until December 31, 2020.
stated that they object to the overall fulfilment of the statutory
gender quota. Subsequently, based on the recommendation of
the Nomination Committee, the Supervisory Board decided to
nominate Sari Baldauf as well as Dr. Jürgen Hambrecht again and
Marie Wieck for the first time for election to the Supervisory
Board at the Annual Shareholders' Meeting in 2018. Marie Wieck
is a General Manager at IBM Blockchain. If the proposed
persons are elected, the statutory quota will be fulfilled on the
shareholders' side, insofar as no other changes occur. The
next election to the Supervisory Board of members representing
the employees will also take place in 2018.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
68
As of December 31, 2017, the Supervisory Board of Daimler AG is
composed of 30% women (the members Sari Baldauf, Andrea
Jung and Petraea Heynike) and 70% men. On the employees'
side, the proportions as of that date are 20% women (the
members Elke Tönjes-Werner and Sibylle Wankel) and 80% men.
In its meeting on December 7, 2017, the Supervisory Board
dealt with the specific proposals for candidates for election to
be made at the Annual Shareholders' Meeting in 2018 and,
against this backdrop, stated that the shareholders' side and
the employees' side should separately achieve the legally
prescribed proportion of women. The members representing the
shareholders and the members representing the employees
For supervisory boards of listed companies subject to parity
codetermination, like that of Daimler AG, the German Stock
Corporation Act prescribes a binding gender ratio of at least
30% women. The ratio is to apply to the entire supervisory
board. If the side of the supervisory board representing the
shareholders or the side representing the employees objects
to the chairman of the supervisory board before the election
about the application of the ratio to the entire supervisory
board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
The Audit Committee met six times in 2017. Details of those
meetings are provided in a separate report of that committee
pages 200 ff.
Dr. Paul Achleitner
elected until 2018
Other supervisory board memberships/directorships:
BASF SE
retired on March 29, 2017
Stuttgart
Dr. Bernd Bohr
Retired from the Supervisory Board:
General Secretary IndustriALL Global Union
elected until 2018
Geneva
Valter Sanches*
Tetra Laval Group
Other supervisory board memberships/directorships:
Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft
in München - Chairman
in München
Chairman of the Supervisory Board of the Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft
elected until 2019
Munich
Dr. Bernd Pischetsrieder
Other supervisory board memberships/directorships:
Heidelberger Druckmaschinen AG
Baden-Württemberg
German Metalworkers' Union (IG Metall), District Manager
appointed until 2018
Former Member of the Management Board of
Robert Bosch GmbH
Other supervisory board memberships/directorships:
Formula D GmbH
Jörg Spies*
Nomination Committee
Ergun Lümali*
Joe Kaeser
Michael Brecht*
Dr. Clemens Börsig - Chairman
Audit Committee
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Presidential Committee
Roman Zitzelsberger*
Stuttgart
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Committees of the Supervisory Board:
* Representative of the employees
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG
elected until 2018
Bremen
Elke Tönjes-Werner*
Chairman of the Works Council, Headquarters, Daimler AG
elected until 2018
Stuttgart
Committee pursuant to Section 27 Subsection 3
of the German Codetermination Act (MitbestG)
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Chairman of the Supervisory Board of BASF SE
Director of the Press Shop, Sindelfingen Plant, Daimler AG;
Chairman of the Management Representatives Committee,
Daimler Group
Sindelfingen
General Electric Company
President and Chief Executive Officer of Grameen America, Inc.
Other supervisory board memberships/directorships:
Apple Inc.
elected until 2018
New York
Andrea Jung
Other supervisory board memberships/directorships:
Chairwoman of the Supervisory Board of Fortum OYj
elected until 2018
Helsinki
Sari Baldauf
of Nestlé S.A.
Former Executive Vice President of the Executive Board
elected until 2021
Vevey
Petraea Heynike
Nyxoah SA (until December 31, 2017)
Trumpf GmbH + Co. KG - Chairman
Fuchs Petrolub SE - Chairman
Chairman
Deutsche Telekom AG
Fortum OYjChairwoman
Vexve Holding OY - Chairwoman
AkzoNobel N.V. (until December 1, 2017)
Dr. Frank Weber*
Other supervisory board memberships/directorships:
Siemens AG (until January 31, 2018)
General Counsel of the German Metalworkers' Union
(IG Metall)
appointed until 2018
Frankfurt am Main
Sibylle Wankel*
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG
elected until 2018
50
elected until 2018
Wolfgang Nieke*
elected until 2018
Sindelfingen
Ergun Lümali*
NXP Semiconductors N.V.
Chairman of the Board of Management of Siemens AG
elected until 2019
Munich
Joe Kaeser
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD 71
Chairman of the Works Council at the Sindelfingen Plant;
Deputy Chairman of the General Works Council of Daimler AG
50th record month in succession
Mercedes-Benz Cars sets an unprec-
edented series of records: It has now
increased its unit sales every month
for more than four years - without a
break. In April, unit sales grow com-
pared with the prior-year month for
the 50th month in succession.
Other supervisory board memberships/directorships:
Allianz Deutschland AG
World premiere for the Mercedes-Benz Tourismo RHD
With sales of more than 23,000 units, the Mercedes-Benz
Tourismo is the most successful coach from Daimler Buses
and a key driver for the division's success. The new model
sets standards for economy, comfort and safety. With its four
model versions and a broad spectrum of powertrains and
equipment, it covers diverse customer requirements in the
entire coach segment.
New FUSO Super Great for
the Japanese market
With the latest generation of the
FUSO flagship, the world's biggest
truck manufacturer sets new
standards in Japan for efficiency,
safety and connectivity. Through
the application of various new tech-
nologies, the new truck's fuel consumption can be reduced
by up to 15 percent. The FUSO Super Great makes full use of
Daimler Trucks' global platform strategy. This allows uniform
quality standards, cost advantages through economies of scale,
and flexibility in the utilization of production capacities.
Start of construction for new engine plant in Jawor, Poland
The engine plant in Jawor is designed to combine the latest
standards in the sector with Industry 4.0, and to be a benchmark
for engine production. As well as state-of-the-art machinery
and technology, it is also planned to utilize the potential of
digitization, for example with app-based systems in the areas
of human resources and energy management. Daimler is investing
approximately €500 million in the new production facility
for four-cylinder engines.
Foundation stone for new car plant in Russia
Mercedes-Benz starts the construction work for a new, fully
flexible car plant in the Moscow region,
which is due to go into operation in
2019. The production facility is planned
for maximum flexibility so that multiple
architectures can be assembled on one
line. A total of more than €250 million
is to be invested.
+0
-1
+14
1 Closing prices
Global stock markets significantly improve in 2017
Global stock markets started the year 2017 in an optimistic mood,
with many investors anticipating that the new administration in
the Unites States would implement measures to stimulate the
economy. In this environment, the key US stock-market indices
rose to all-time highs. At the same time, investors in automotive
stocks behaved in a very risk-averse manner. Following a short
phase of uncertainty prior to the presidential elections in France,
stock markets rose significantly at the end of April after the
first round of the elections. During this period, the German DAX
share index surpassed its previous record of 12,375 from the
year 2015. The positive development that followed was supported
by the ongoing expansionary monetary policy of the European
Central Bank (ECB) and a course of rather moderate interest-rate
increases in the United States on the part of the Federal
Reserve, which, as expected, raised base interest rates by 25
basis points in March and then again in June. Market volatility
increased in mid-August, partly due to the rising tension between
the US and North Korea. Automotive stocks were also subject
to major fluctuations in this environment, but markets as a whole
then recovered strongly once again in September. Along with
robust economic data and the strong US dollar, the prospect of
a new business-friendly government in Germany had a stimu-
lating effect on the German economy. During the rest of the year,
the global economic recovery and positive financial reporting
by European companies increased investors' propensity to
purchase shares. Many stock-market indices around the globe
reached all-time highs in the fourth quarter. Nevertheless,
expectations regarding the future behavior of central banks
worldwide remained very much on investors' minds.
The index of the most important shares in the euro zone, the
Dow Jones Euro STOXX 50, rose by 6% in 2017. The leading
German share index, the DAX, performed significantly better,
rising by 13%. The DAX also broke the 13,000 mark for the first
time ever in October 2017, and reached a new all-time high of
13,479 on November 3. In Japan, the Nikkei index also finished
the year with a significant increase, to 22,765 (+19%), its highest
level in several years. In the United States, the Dow Jones
reached an all-time high of 24,719 in December 2017 and re-
corded a 25% increase for the year as a whole.
Volatile development of Daimler share price
Automotive stocks were able to carry over their momentum from
the prior year in the early part of 2017, but this momentum
began to dissipate once again at the beginning of the second
quarter. Along with their general concern regarding the sus-
tainability of demand for cars in Western Europe, North America
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 79
and Japan, investors were also very much focused on the
further development of the Chinese car market after adjustments
to subsidies there in late 2016. The discussions regarding diesel
technology and ongoing litigation also had an increasingly
negative effect on automotive stocks. On the other hand, inves-
tors did recognize the fact that business continued to develop
favorably in the automotive industry. Nevertheless, automotive
stocks came under further pressure on global markets in the
months that followed. Discussions regarding the future of diesel
engines now spread to many other countries with a negative
impact on the entire sector, and thus on our share price as well.
Investors believe that the expansion of drivetrain electrification
in the coming years will lead to a high level of capital investment
and a comparatively lower level of profitability. Investors and
analysts also continued to pay close attention to the various
automotive markets during the year under review. The focus
here was on the development of the car market in the United
States, where a declining number of new registrations and
concerns about residual values led to increased uncertainty on
the capital market as to whether demand could be sustained.
In general, the appreciation of the euro against the dollar had
a negative effect on the shares of companies with a high pro-
portion of exports to dollar-based markets. In this situation,
the Daimler share price dropped to its lowest point of the year
2017 when it fell to €59.29 on July 31. Following the diesel
summit in Germany at the beginning of August, the debate on
diesel technology took on a more objective tone, and greater
clarity was also achieved regarding the measures planned by
the German federal government and automakers. This led to
greater investor confidence in the automotive sector, and many
investors took advantage of the favorable opportunity to
purchase automotive shares. Investors' new share-price ex-
pectations were also reinforced by the innovations presented
at the Frankfurt International Motor Show (IAA) and by the strate-
gic course adopted by the automotive industry. Our ongoing
product offensive and the solid financial results that we recorded
once again in the third quarter of 2017 led to further increases
in our share price in September and October. On November 3,
Daimler's share price reached €73.25, which was the highest
price for the year. The Daimler share closed at €70.80 on
December 29. At the end of the year, the company had a market
capitalization of €75.7 billion (2016: €75.7 billion). Daimler's
share price was thus at the same level as a year earlier year and
therefore failed to keep pace with the development of the
German share index DAX (+13%) and the Dow Jones STOXX Auto
Index (+13%). When the dividend payout of €3.25 per share is
included, our shareholders saw the value of their investment
increase by 5%. In the first few weeks of the year 2018 our
share price developed very positively. Daimler's shares were
listed at €73.73 at the end of January, which is 4% above the
closing price at the end of 2017.
shares, making it Daimler AG's largest individual shareholder. The
Renault-Nissan Alliance continues to hold 3.1% of Daimler's
shares. BlackRock Inc., New York, still holds a stake above the
5% reporting limit as defined by Germany's Securities Trading
Act (WpHG). In November 2017, BlackRock notified us that its
proportion of the voting rights was 5.95% on November 8, 2017.
In March 2017, Harris Associates L. P., Wilmington, notified us
that its proportion of the voting rights rose above the 3%
reporting limit to 3.01% on March 9, 2017.
The Board of Management and the Supervisory Board will
recommend an increased dividend payment of €3.65 per share
for financial year 2017 at the Annual Shareholders' Meeting
on April 5, 2018. The total dividend amount will thus reach the
new record level of €3,905 million (2016: €3,477 million).
A broad shareholder structure 7 A.07
Daimler continues to have a broad shareholder base of
approximately 0.9 million shareholders. Shareholder numbers
decreased slightly during the reporting year, particularly as
fewer private investors purchased our shares. The Kuwait Invest-
ment Authority (KIA) currently owns 6.8% of the company's
51.97
daimler.com/investors/share/
The aforementioned and all other voting-rights notifications are
published on the Internet at
voting-rights.
Institutional investors hold a total of 71% of our equity capital,
while private investors own 19%. Approximately 65% of our
capital is in the hands of European investors and around 23%
is held by US investors.
Dividend of €3.65 7 A.02
59.29
Highest¹
73.64
+23
Dividend
3.65
3.25
+12
Equity (December 31)
Lowest¹
59.84
+10
Xetra price at year end¹
70.80
70.72
A.03
73.25
54.17
Daimler share price (high/low), 2017
In euros
59
75
75
70
12/30/16 2/28/17 4/28/17 6/30/17 8/31/17 10/30/17 12/31/17
Daimler AG
Dow Jones STOXX Auto Index
DAX
80
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
A.05
Key figures for Daimler shares
End of 2017
End of 2016
17/16
% change
Share capital (in millions of
3,070
3,070
80
80
85
45
70
7.97
65
60
55
A.04
-
1/17 2/17 3/17 4/17 5/17 6/17 7/17 8/17 9/17 10/17 11/17 12/17
Share price index
120
115
110
105
100
95
90
9.84
2017
17/16
% change
At the Tokyo Motor Show, Daimler
Trucks announces the full electrification
of all truck and bus model series of
the FUSO brand in the coming years.
Daimler Trucks is thus the first
manufacturer with its own brand for electric trucks and buses.
The first fully electric FUSO eCanter trucks are delivered to
customers in December 2017.
400 R$
Investment in startup cooperation
Daimler Financial Services (DFS) presents its Startup
Intelligence Center (SIC) in Lisbon. This is where cooperative
ventures and partnerships are fostered with promising
mobility, fintech and insurtech startups. With the Startup
Intelligence Center, DFS is bringing together its various
activities in the area of innovation cooperation management.
Electric vans from Mercedes-Benz Vans
Daimler Trucks presents E-FUSO
and fully electric heavy truck
Vision One
Mercedes-Benz Vans plans to offer all of its commercial
vans with electric drive. This starts with the eVito, which can
be ordered as of November 2017 for delivery as of the second
half of 2018. Further model series are to follow as of 2019. In
addition to the actual vehicles, Mercedes-Benz Vans also offers
a technical ecosystem, for example with an intelligent charging
infrastructure for the vehicles' operation.
Thomas Built Buses, the subsidiary of Daimler Trucks North
America, presents the first fully electric school bus, which is to
go into series production in early 2019. With the development
of the "Saf-T-Liner C2 Electric Bus," Thomas Built Buses profited
significantly from the electric-vehicle expertise of Daimler.
SCHOOL BAS
JOOLEY
Lewis Hamilton
#4TheTeam
World Champion
Electric icons
C
The Board of Management and Supervisory Board decide
on initial steps to strengthen the divisional structure
Daimler is working on how the divisions can be changed into
legally independent entities. This "Project Future" is intended
to strengthen the business units' future viability so that growth
and earnings potential can be better utilized in the various
markets. The project is to be continued in close consultation with
the employee representatives. Subject to a final assessment,
the goal is to obtain approval for the new entities at the Annual
Shareholders' Meeting of Daimler AG in 2019.
IONITY facilitates electric mobility on long distances
With the establishment of the IONITY joint venture for the
development of a high-power charging (HPC) network for electric
vehicles, Daimler is in cooperation with other companies to set
the course for the installation of the largest fast-charging network
in Europe. The installation and operation of up to 400 fast-
charging stations by 2020 should guarantee electric mobility on
long journeys and accelerate its market acceptance.
Mercedes-Benz Vans founds joint venture ViaVan with
US startup Via
Mercedes-Benz Vans enters the ride-sharing market. For this
purpose, the van division of the Daimler Group has founded the
joint venture ViaVan with Via, a New York-based startup. The
technology from Via and the engineering from Mercedes-Benz
Vans form a perfect combination for efficient, cost-effective
and sustainable ride sharing.
Five years of BharatBenz
Daimler's Indian commercial-vehicle brand is on a successful
path. The vehicles are specially tailored for the Indian market and
the requirements of customers there. Meanwhile, BharatBenz
has delivered more than 60,000 BharatBenz trucks to customers
in India. In recent months, it achieved a double-digit market
share for the first time. The brand is well established among the
top 4 in the Indian market and is actually the number 3 in the
heavy-duty segment.
World premiere of the Mercedes-Benz X-Class
With the "Mercedes-Benz Vans goes global" strategy,
Mercedes-Benz Vans is entering a new market segment.
The Mercedes-Benz X-Class is the first pickup from a
premium manufacturer. The X-Class with space for up to five
persons supplements the traditional strengths of a
midsize pickup with the typical Mercedes-Benz characteristics
of driving dynamics, comfort, design, safety, connectivity
and comprehensive individualization.
Full speed ahead
into the future:
1,900 young people start their
vocational training at Daimler
Investing today in the qualified
1,900
personnel of tomorrow: In Germany alone, approximately 1,900
young people start their careers at 50 Daimler locations.
Dr. Dieter Zetsche visits the 279 new apprentices and students
on their first day at the Mercedes-Benz plant in Sindelfingen.
Daimler Board of Management decides on plan
for future diesel engines
The plan entails the massive expansion of the existing voluntary
service actions on vehicles in customers' hands, as well as
the rapid market launch of an all-new family of diesel engines.
This package is extended with additional measures on the
occasion of a summit meeting between politicians and repre-
sentatives of the automotive industry.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017 77
Q4
Daimler starts with four new modules at the proving
ground and technology center in Immendingen
With the operation of additional testing modules at the site in
Immendingen, Daimler is taking an important step towards the
mobility of the future. Test operations at the Daimler proving
ground and technology center start on the four testing modules:
urban environment, 4x4 ground, hill endurance, and the
"Bertha area," a proving ground for autonomous vehicles.
2000 2014 2015 2017
Net profit
Formula 1 World Champion for the fourth time
78
24,719
19,763
Nikkei
22,765
19,114
+13
+6
+25
+19
Dow Jones Industrial Average
Dow Jones STOXX Auto Index
543
+13
A.02
Amounts in euros
0
2016
615
3,291
3,504
Dow Jones Euro STOXX 50
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
Daimler and the Capital Market
Global stock markets significantly improved in 2017 and reached record levels in several regions.
Daimler's share price was volatile during 2017 and closed the year at the level of a year earlier.
The Board of Management and the Supervisory Board will propose to the Annual Shareholders'
Meeting that an increased dividend of €3.65 (2016: €3.25) per share be paid for 2017.
A.01
Development of Daimler's share price and of major indices
End of
2017
End of
2016
17/16
% change
Daimler share price (in euros)
70.80
70.72
+0
DAX 30
12,918
11,481
Lewis Hamilton wins the Formula 1 World Championship for
the fourth time and ensures that the Silver Arrows win the
Driver's World Championship for the fourth time in succession!
In addition, Mercedes-AMG Petronas Motorsport wins the
Constructors' World Championship by a large margin.
euros)
0
1,069.8
A cultural and organizational transformation for a
successful future
The increasingly dynamic developments and growing challenges
in the automotive sector require rapid innovation as well as
operations that are quick, agile, market-oriented and customer-
focused. We are systematically promoting new approaches to
vehicle development and interdisciplinary cooperation models.
We support and implement promising innovations that are
developed by our employees and external partners. We are also
safeguarding our transformation with new management tools
and team-oriented remuneration systems. We aim to change our
divisions into legally independent entities, thus further focus-
ing and strengthening the divisional structure of the Daimler
Group. With "Project Future", we are pursuing the goal of
strengthening the future viability of the divisions so that we can
better utilize the growth and earnings potential of the respec-
tive markets.
Integrity is extremely important for our company, especially as
we are undergoing a phase of fundamental transformation.
Integrity guides our dealings with respect to our company and
its employees, business partners and customers. We are firmly
convinced that conducting business with integrity provides us
with orientation in times of major transformation as well. It
makes us more successful over the long term - and it also ben-
efits society as a whole.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 83
Four strategic focus areas
We plan to achieve our goals through four strategic focus
areas:
are expanding our strong portfolio in the field of mobility
services. With our broad customer base and presence in all of
the relevant mobility segments, Daimler Mobility Services
already has a strong foundation for future success. We remain
on course for growth through innovative mobility services
and strong cooperation partners. We are also forging ahead with
the development of new mobility and transport services in the
commercial vehicle segment. In the field of electric mobility,
we are establishing an ecosystem of products and services
in order to make electric vehicles as convenient and pleasant to
use as those with combustion engines. We plan to offer the
best electric vehicles on the market in the coming years and to
significantly increase our market share in the sector. The
smart brand intends to offer solely cars with electric drive sys-
tems in Europe and North America as of 2020, with the other
regions to follow soon after. We also plan to become the leader in
the area of electric commercial vehicles for urban applications.
strengthening our global core business (CORE)
-leading in new future fields (CASE)
Strengthening our global core business (CORE)
Mercedes-Benz Cars will continue to implement its growth
strategy with the goal of safeguarding its leading position in the
global premium segment. We will inspire our customers with
our leading brands and outstanding products. New and innova-
tive models in the compact segment, a C-Class model upgrade
and new versions of our iconic G-Class series will be part of
this campaign. We are pursuing three different technological
approaches as we move ahead on the road to emission-free
driving: the further improvement of ultra-modern combustion
engines, hybridization, and locally emission-free vehicles
with batteries and fuel cells. One important lever for the improve-
ment of combustion engines is the full electrification of
the drivetrain through the use of new technologies such as the
integrated starter-generator (ISG) and the 48-volt electrical
system. Systematic hybridization is another important interim
solution on the road to emission-free mobility. We continue
to expand our range of currently eight hybrid vehicles on the
road. By 2022, we plan to offer at least one electrified option
in each segment, with more than 50 variants in total. This includes
more than ten fully electric vehicles, the plug-in hybrid versions,
and the models with 48-volt technology. We are systematically
implementing our architectural and modular strategy in order
to ensure that we can continue our model initiative efficiently,
rapidly and at a high level of quality. Our global development
network and the establishment of new technology centers and
digital hubs keep us close to our customers, our markets and
new technologies. We have also designed our global production
network to with the aim to achieve uniform standards and
the high quality of "Made by Mercedes" worldwide. Within the
framework of our growth strategy, we are expanding our pro-
duction network and thus improving our global competitiveness.
Our "Best Customer Experience" initiative is designed to
offer our customers the best experience compared to all other
automakers. All of our sales, service and financial services
activities are aligned with each other, from the first contact
throughout the entire duration of the customer relationship.
Depending on our customers' needs, we make use of physical
and digital channels for customer communication.
Our market position in China plays a key role in safeguarding our
market leadership. We have already transformed China into
thebiggest market for Mercedes-Benz cars, thanks to products
that are aligned with Chinese customers' requirements and
our establishment of local development and manufacturing
facilities. We want to strengthen this position even further.
In order to safeguard the future profitability of Mercedes-Benz
Cars, we intend to optimize the business system and processes
in the context of the "Fit for Leadership" efficiency program
with the goal of a further earnings improvement of €4 billion by
2025.
Daimler Trucks is focusing on global growth, technology leader-
ship and the continued implementation of its platform strat-
egy. In everything we do, we focus on our customers. We want
to safeguard our strong position in Europe and North America
and to grow in Brazil in line with the market recovery we expect
to see there. We will therefore invest in our product program
in Brazil during the coming years, as well as in vehicle connec-
tivity and the modernization of our plants in São Bernardo do
Campo and Juiz de Fora. We plan to achieve significant growth
in Asia. We launched assembly operations for the Mercedes-
Benz Axor in Indonesia in 2017, so that we will be present with
two strong brands in this Southeast Asian market. We are well
established in India with our local BharatBenz brand. Using this
good position as a starting point, we plan to further develop
through an updated product program as well as in export mar-
kets. Our platform strategy has generated substantial synergy
benefits for us as a vehicle manufacturer. Our customers also
benefit from this strategy, as it speeds up the broad availability
of technologies that are relevant for trucks.
- adapting our corporate culture (CULTURE), and
- strengthening our divisional structure (COMPANY).
Connected, Autonomous, Shared & Services and Electric:
Our goal is to play the leading role in each one of these future
fields and to generate additional potential by linking the four
fields together. We want to expand vehicle connectivity even
further, thus creating added value for our customers. We also
seek to be the leader in the use of digital technologies, both in
our products and services and along the entire value chain.
The digitization of our core processes is the key to our ability
to link individual customer needs with the technologies of
the future and with mobility requirements. We seek to play the
leading role in autonomous driving at all of our divisions.
This will result in the creation of new and attractive business
models for private car customers, fleet customers, and the
public transport and commercial cargo transport sectors. We
Leading in the CASE fields
We want all of our divisions to be the leaders in their business
segments. Our goal for Mercedes-Benz Cars is to play the
leading role in the worldwide premium segment over the long
term. We also aim to enhance the smart brand's pioneering
role in urban, electric mobility. Daimler Trucks intends to further
strengthen its position as the leading truck manufacturer in
the global truck business. Mercedes-Benz Vans is striving to
achieve further profitable growth with the help of its "Mercedes-
Benz Vans goes global" divisional strategy. Daimler Buses
wants to strengthen its leading position in the segment for buses
above eight metric tons gross vehicle weight. Daimler Financial
Services plans to maintain its position as the best captive finan-
cial and mobility services provider; it will continue to expand
its mobility services and continue growing in close cooperation
with our other divisions. Through our core business, we are
creating the financial foundation for investments in the future of
our company. To this end, we intend to achieve a 9% return
on sales (EBIT in relation to revenue) for the automotive business
on a sustained basis. This overall figure is based on the return
targets for the individual divisions: 8-10% for Mercedes-Benz
Cars, 8% for Daimler Trucks, 9% for Mercedes-Benz Vans and
6% for Daimler Buses. For Daimler Financial Services, we have
set a target of 17% for return on equity. In general, we want to
achieve profitable growth on a sustained basis, thus increasing
the value of our company.
Continuation of comprehensive investor relations activities
In 2017, we once again provided institutional investors, analysts,
rating agencies and private investors with timely information
regarding the company's business development. We organized
road shows for institutional investors and analysts in the
finance capitals of Europe, North America, Asia and Australia.
We also held many one-on-one meetings at investor
conferences. This was especially the case at the international
motor shows in Geneva and Frankfurt. Sustainability-focused
investors were also able to meet and talk with company
representatives at two events held at the IAA in Frankfurt and
at conferences in Frankfurt in February and in Paris in
November. We reported on our quarterly results in conference
calls and webcasts. The presentations can be viewed on our
website at daimler.com/investors/events/presentations.
The talks with analysts and investors focused on the latest
earnings expectations for 2017, as well as on business develop-
ments and the profitability of the individual divisions and
regions. In addition, top-level managers from Daimler Financial
Services discussed the strategies and goals for financial
services and mobility services at a capital market event held
in London in February. In September, numerous analysts and
investors attended an event in Sindelfingen, where Daimler pre-
sented an overview of the latest business developments and
offered a look at the future strategy of the Mercedes-Benz Cars
division with speeches, discussions and workshops. The audio
recordings and charts and illustrations from the events are avail-
able at daimler.com/investors/events/capital-market-days.
Awards once again for online version of the Annual Report
Our Annual Report, which boasted numerous additional features
for 2016 (annualreport2016.daimler.com), won prestigious
international awards once again in 2017, including the Stevie
Award. The online report also captured Gold at the 2016 LACP
Vision Awards.
Continual further development of the corporate website
Since December 2016, we have upgraded both the content and
the visuals of numerous sections of our Investor Relations site
at daimler.com/investors. Among other things, we have
introduced key-figure modules, information charts, detailed
explanations and quotes. A representative online user survey
revealed that visitors to the Investor Relations site are very
satisfied with what they find there. The survey also yielded
valuable information on user structure, information require-
ments and the potential for further improvement. The additional
optimization measures we implemented for Internet search
engines also now make it easier for users to find and access the
content they need.
Number of online shareholders remains at a high level
Our shareholders continue to make good use of our range of
personalized electronic information and communication. The
increase in online shareholders was particularly high in 2017,
as a total of 95,000 (2016: 86,500) shareholders received the
invitation and the agenda for the Annual Shareholders' Meeting
by e-mail rather than by post. We would like to thank those
shareholders for helping to protect the environment and cut
costs. As was the case in the past, those shareholders once
again had the opportunity to win attractive prizes in a lottery.
Access to the e-service for shareholders and additional in-
formation can be found at O https://register.daimler.com.
Refinancing benefits from high level of capital-market
liquidity and good ratings
Central banks' ongoing expansionary monetary policies also
impacted bond markets during the year under review. As a
result of the high level of liquidity, companies with investment-
grade ratings saw their risk premiums remain at a moderate
level.
In 2017, the Group primarily covered its refinancing needs by
issuing bonds. A large proportion of those bonds were sold as
benchmark bond issuances (bonds with high nominal volumes)
in euro and dollar markets. In the US capital market, for example,
Daimler Finance North America LLC issued bonds worth a
total of $6.5 billion in January, May and November 2017. The
bonds had terms of 18 months and three, five and ten years.
In addition, Daimler AG issued euro bonds in benchmark format
with a total volume of €6.3 billion and terms of seven, eight,
ten, 12 and 20 years. In 2017, Daimler AG also issued four
bonds in China (so-called Panda bonds) worth a total of
CNY 16.0 billion. Furthermore, many smaller bonds were issued
by the Daimler Group in a variety of currencies and markets.
At the end of 2017, Daimler Group companies had issued bonds
that were still outstanding in a volume of €67.1 billion (2016:
€63.1 billion). Besides raising funds through the issuance of
bonds, Daimler also issued a small volume of commercial
paper in 2017.
During the year under review, Daimler conducted asset-backed
security (ABS) transactions in two new countries in addition to
the existing ABS platforms in the United States, Canada, Germany
and China. In the United Kingdom, for example, GBP 0.4 billion
was successfully placed with investors, while the first transaction
in Australia had a volume of AUD 0.75 billion. In the United
States, the company generated a refinancing volume of $4.7
billion through three transactions in 2017; in Canada, a volume
of CAD 0.4 billion was generated in one transaction. In addition,
Mercedes-Benz Bank used the Silver Arrow Platform to sell
€1.1 billion in ABS bonds to European investors. And in China,
two ABS transactions were successfully conducted with a
total volume of CNY 10.2 billion.
82
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Objectives and Strategy
Today, the automotive industry is on the verge of a fundamental transformation. Four future-oriented
fields are set to radically change the nature of mobility: greater vehicle connectivity, advances in
autonomous driving, the development of digital mobility and transport services, and electric mobility.
Our goal as one of the leading vehicle manufacturers is to become a leading provider of mobility
services as well. To this end, we will further strengthen our core business and lead the way in these
four future-oriented fields. Our efforts will be supported by a cultural and organizational transfor-
mation. We have not lost sight of our overriding corporate objective: to achieve profitable growth and
increase the value of our company.
Our objectives
Number one in our core business
Fuel efficiency is a key selling point for commercial vehicles. In
order to improve fuel efficiency even further, we are continuously
developing new measures for vehicles and drivetrains. With a
number of measures, the new FUSO Super Great sets standards
in terms of efficiency. Additional measures for reducing the
fuel consumption of the Mercedes-Benz Actros and the new
Freightliner Cascadia are planned to be implemented in 2018
and 2019.
The Daimler Trucks division works continuously on improving
its efficiency. Levers in this regard are optimizing our production
network and supply chain, integrating new technologies and
reducing our product portfolio's complexity. We plan to optimize
our fixed costs by €400 million by the end of 2018 in order to
strengthen our competitiveness. This will be achieved through
a range of measures, including the restructuring and optimi-
zation of Mercedes-Benz Trucks' development, production and
sales organizations in Germany and Brazil. Together with the
cost optimizations previously planned, some of which have
already been implemented, we aim to achieve improvements for
Daimler Trucks with a direct impact on earnings in an amount
of €1.4 billion by the end of 2018. Our goal is for these measures
to become fully effective in the year 2019.
Mercedes-Benz Vans is pursuing three approaches with its
"Mercedes-Benz Vans goes global" strategy: the implementation
of market strategies for global expansion, the use of product
strategies for the further expansion and differentiation of its prod-
uct portfolio, and the adVANce future initiative, which bundles
the development and commercialization of customer-focused,
holistic transport and mobility solutions. Mercedes-Benz Vans
plans to continue to grow profitably and conquer new markets
in the future. The continued growth of online retail sales of
goods can be expected to lead to increased sales of commercial
vans in the future as well. Our product pipeline is in outstand-
ing shape with the new Mercedes-Benz X-Class - the first pre-
mium pickup from Mercedes-Benz Vans - and the new Sprinter,
which will be launched in 2018. We are modernizing our plants
in Ludwigsfelde and Düsseldorf in preparation for the new
Sprinter. Ludwigsfelde is also set to become our first fully con-
nected manufacturing facility. Our objective is to completely
digitize all of our van plants worldwide by 2025. We are also
building a new production plant in North Charleston, South
Carolina. This will expand our existing assembly operations and
support our growth on the North American market.
84
Innovations
Investments
New
business models
Strengthening global core business
CORE
Financial foundation for
investments in CASE
Forward-looking structure
COMPANY
can easily pay for our mobility and other services using their
smartphone. In this way, Daimler Financial Services is imple-
menting another stage of its "mobility at your fingertips" philoso-
phy. Furthermore, Mercedes-Benz Connectivity Services,
which was established in 2017, offers specialized connectivity
services for vehicle fleets, and the "Connect Business" brand
provides connectivity services for individual companies and large
fleets.
Autonomous
Our approach to autonomous driving is based on the use of
comprehensive safety and assistance systems combined with
vehicle connectivity technology and real-time digital maps.
We have demonstrated our leading position at Mercedes-Benz
Cars with the upgraded S-Class. Our driving assistance sys-
tems have been significantly expanded in many of their functions
and are currently regarded as the benchmark in the industry.
We are developing fully automated systems without a driver,
which can be used exclusively or shared with others. With our
research vehicle Mercedes-Benz F 015 Luxury in Motion, we
demonstrated at an early stage the kinds of technological and
social changes that this will bring about. The vehicle's fully
connected digital interior concept shows how people can use
the additional time that autonomous driving will make avail-
able to them. Our smart Vision EQ concept car offers another
preview of the future of shared and fully automated mobility.
In order to accelerate the development of autonomous driving,
we have launched a number of partnerships - for example
with HERE for high-resolution digital maps and with Bosch for
the joint development of technology for highly automated
and driverless driving. These new technologies can only be
rolled out on a broader scale if changes are made to the
current regulatory framework.
Daimler Trucks is consolidating its excellent position in the
area of safety through the further development of tried-and-
tested safety technologies. With the fourth-generation Active
Brake Assist system and Sideguard Assist - both of which fea-
ture pedestrian detection - Mercedes-Benz Trucks is one of
the leaders for active safety technology. We are also among the
technological pioneers with automated and autonomous
driving systems for trucks, which should lead to another step in
the improvement of transport safety and efficiency. Platoon-
ing - the electronic linking of several trucks - is becoming more
important as an interim step on the road to autonomous
driving for trucks. Daimler Trucks is one of the leaders for inno-
vative platooning concepts. In 2016, we successfully tested
our platooning system under real conditions in Europe. In 2017,
we were the first manufacturer to test digitally connected
trucks on public highways in the United States, and we also
want to test platooning under real conditions with our fleet
customers in the United States as of 2018.
Mercedes-Benz Vans is also benefiting from the further
development throughout the Group of safety and assistance
systems related to automated and autonomous driving. Our
plans here cover everything from automated and autonomous
cargo transport and passenger transport systems.
Connected, Autonomous,
Shared & Services, Electric
of local public transportation in the future. Daimler Financial
Services was also on hand at the Annual Shareholders Meeting
to present its mobility services, and Mercedes me and various
connectivity services were on display as well. Some of our
trainees were also at the meeting to provide an insight into their
work. The presentation of our program for the further develop-
ment of our corporate culture, Leadership 2020, showed how
Daimler is responding to the changes occurring with regard to
products, customer expectations and the working world.
CASE
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 85
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Daimler Buses continues to grow around the globe with the
help of its regional strategies and new products in the city bus
and touring coach segment. With its new flagship model, the
Setra double-decker coach, Daimler Buses aims to safeguard
its current market leadership in this market segment. And
with the new Citaro hybrid city bus, we want for the first time
anywhere in the world to offer hybrid technology as optional
equipment for a wide range of city buses with both diesel and
natural-gas engines, rather than in the form of stand-alone
models. The Daimler Buses European production network, which
has manufacturing locations in Germany, France, Spain and
the Czech Republic, is being reorganized to make it more efficient
and more competitive. Within the framework of this reorgani-
zation, the Mannheim plant is being expanded into the center of
competence for city buses and electric mobility. Meanwhile,
the plant in Neu-Ulm is being transformed into the center of
competence for touring coaches, connectivity and autonomous
driving. We are also strengthening our development expertise in
the fields of electric mobility and autonomous driving. Through
new regional centers, the production of school buses and fully
equipped buses in India and the use of the Brazilian production
location as a hub for exports to other countries in South America,
Africa and Asia, Daimler Buses continues to expand its inter-
national business operations, particularly in emerging markets.
The success of Daimler Buses is primarily the result of its
position as a global manufacturer and distributor of products
featuring cutting-edge technologies. As one of the leaders in
safety technology and with highly efficient vehicles, Daimler
Buses offers an impressive overall package of new and used
vehicles, service and maintenance contracts, financing plans
and new mobility solutions.
Daimler Financial Services plans to strengthen its core busi-
ness in the context of its "balanced STRATEGY", while also
investing in mobility and digitalization. Daimler Financial Services
will continue to grow in its core business areas of financing,
leasing and insurance by offering customized services and mak-
ing use of increasing vehicle connectivity. About half of all the
vehicles delivered by Daimler around the world today are either
financed or leased by Daimler Financial Services. At the end
of 2017 the division was financing or leasing 4.8 million cars and
commercial vehicles worldwide, and it plans to increase this
number in the future. Daimler Financial Services supports the
worldwide sales of Daimler vehicles in approximately 40
countries. In line with the motto “Engaging customers for life",
the division focuses on the highest possible degree of cus-
tomer satisfaction and on enhancing customer loyalty. This is
to be achieved by offering a holistic ecosystem and relevant
financing and mobility services - ideally throughout the custom-
er's entire life. In order to focus our business activities even
more effectively on the needs of existing and new customers, we
have expanded the Board of Management of Daimler Financial
Services with the position of Customer Experience Officer (CXO).
The division is also looking to completely digitize its business
processes in order to become an even faster and more efficient
organization.
Leading in new future fields (CASE)
As a pioneer of automotive engineering, we seek to be the
leader in all CASE fields (Connected, Autonomous, Shared &
Services, Electric), and to generate additional potential by
linking up these four fields.
Connected
Mercedes-Benz Cars customers experience connectivity
through the digital brand, Mercedes me. The digital platform of
the same name brings together all mobility, financing and other
services (connect, assist, move and finance), and also provides
information and news about the Mercedes-Benz brand (inspire).
Customers should be able to access their vehicles online at any
time and from any location. We are also digitalizing the value
chain in order to benefit from the full scope of connectivity. Such
digitization is the only way to effectively link individual cus-
tomer requirements with value-adding potential. And the smart
brand is offering a range of digital services for urban mobility
with "smart ready to ..."
Connectivity will be a crucial success factor also in the logistics
sector in the future. Truck connectivity plays an important
role at Daimler Trucks. Our goal is to create a seamless trans-
port logistics system with connected trucks and technologies
to ensure that all vehicles are ideally always fully loaded, with no
downtimes or waiting periods. Our new Truck Data Center
connectivity hardware is the foundation for such a logistics sys-
tem. The module records all internal truck data and serves
as the interface for external communication as well. With Fleet-
Board for Mercedes-Benz Trucks, Detroit Connect for Freight-
liner and Truckonnect for FUSO, we offer digital platforms in all
of the world's major regions on the basis of the Truck Data
Center. These platforms can be gradually expanded to include
additional services.
With its adVANce strategic initiative, Mercedes-Benz Vans is
underscoring its transformation from a pure vehicle manufac-
turer into a provider of holistic and customer-focused transport
and mobility solutions. Our Vision Van concept vehicle offers
a preview of future delivery transport. Thanks to full connectiv-
ity, the supply chain will be optimized down to the last mile.
Mercedes-Benz Vans Mobility GmbH, which was established
under the roof of Daimler Financial Services in 2017, puts us
at the center of a future business model between connectivity
and sharing, which will enable us to meet the growing demand
for flexible and innovative concepts for the utilization of our
vehicles. The new Mercedes PRO overarching service brand
brings together all commercial transport services on a digital
platform. Mercedes PRO connect is the first innovative con-
nectivity solution launched by this umbrella brand.
Connectivity at Daimler Buses also offers benefits for every-
one involved - for example, bus operators in terms of fleet
management and maintenance costs, bus drivers traveling their
routes, and passengers using the e-ticketing service. In 2018,
Daimler Buses will bring together all of its current and future
digital services for buses on its "OMNIplus ON” digital portal,
and will also launch a new preventive maintenance system known
as OMNIplus Uptime. The wide-ranging telematics services
from Fleetboard will also be integrated into the digital portal in
the future.
Daimler Financial Services aims to expand digital business
models in the area of financing and mobility services in the
context of its balancedSTRATEGY, and is utilizing connectivity to
further develop its services. For example, the InScore insurance
feature analyzes driving data by means of a factory-installed
telematic control unit. This allows customers who drive safely to
receive a discount of up to 20% on their insurance premium. With
Mercedes pay, our own electronic payment system, customers
A.09
Strategic focus areas
Innovative corporate culture
CULTURE
Leading in new future fields
Number of shares (in millions)
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 81
Employee share purchase plan implemented once again
Staff members entitled to purchase employee shares were
able to do so once again in March 2017. As was the case in the
previous year, price-reduced shares as well as bonus shares
were offered. At 19.8%, the participation rate in the year under
review was significantly higher than in previous years (2016:
11.7%). A total of 36,200 employees took part in the program
(2016: 34,500), which is the highest number since 2008. The
total number of shares purchased by employees also increased
substantially once again, from 576,000 in 2016 to approximately
604,000 (of which just under 54,400 were bonus shares) in the
year under review. The high degree of participation in the
employee share-purchase plan was likely due to the positive
outlook for the company, a high profit-sharing payout once
again, and the attractiveness of dividend yields in the current low
interest-rate environment.
Long-term credit ratings
Standard & Poor's
Moody's
Fitch
Scope
DBRS
3.18%
A
A2
A3
A-
A-
A
A
A
2.92%
Dow Jones Euro STOXX 50
7.52%
1,069.8
V-Class
Market capitalization
75.7
75.7
+0
(in billions of euros)
Number of shareholders
0.9
1.0
-10
(in millions)
Weighting in share indices
DAX 30
6.79%
A (low)-
A.06
Stock-exchange data for Daimler shares
ISIN
Europe, excluding Germany
30.9%
USA
22.8%
Kuwait
6.8%
Asia
2.9%
Rest of the world
2.1%
DE0007100000
710000
DAI
DAIGN.DE
DAI:GR
With a weighting of 6.79% (2016: 7.52%), Daimler was ranked
sixth in the German share index DAX30 at the end of 2017. In
the Dow Jones Euro STOXX 50 index, our shares had a weighting
of 2.92% (2016: 3.18%), which put Daimler in eleventh place.
Daimler shares are listed on the stock exchanges in Frankfurt
and Stuttgart. A total volume of 942 million shares were traded
in Germany in 2017 (2016: 1,210 million). Daimler shares are also
increasingly being traded on multilateral trading platforms
and in the over-the-counter market.
34.5%
Annual Shareholders' Meeting in the CityCube in Berlin
Our Annual Shareholders' Meeting was held on March 29, 2017 in
the CityCube in Berlin. Some 6,200 shareholders (2016: 5,500)
attended the meeting. A total of 49.18% (2016: 50.77%) of equity
capital was represented at the meeting (actual attendees and
shareholders who voted by absentee ballot). A large majority of
the shareholders approved each of the agenda points proposed
by the company's management. For example, the Annual Share-
holders' Meeting once again approved a very attractive dividend
of €3.25 per share (2016: €3.25) and reelected Dr. Clemens
Börsig as a member of the Supervisory Board of Daimler AG
representing the shareholders. At its subsequent meeting, the
Supervisory Board reelected Dr. Börsig to the Audit Committee,
which in turn elected Dr. Börsig as Chairman of the Audit
Committee. The Annual Shareholders' Meeting also elected
Bader Mohammad Al Saad, a member of the Executive Commit-
tee of the Board of Directors of Kuwait Investment Authority (KIA),
as a member of the Supervisory Board of Daimler AG represent-
ing the shareholders. The terms for both newly elected Super-
visory Board members will expire at the end of the Annual
Shareholders' Meeting held in 2022. Important documents and
information related to the Annual Shareholders' Meeting can be
found on the Internet at Odaimler.com/investors/events/
annual-meetings/2017. In the exhibition areas of the CityCube,
Daimler presented its technological expertise and a broad range
of products and services under the motto "Future Mobility." The
exhibition highlights showcased future mobility: Along with the
elegant Vision Mercedes Maybach 6 and the first model from the
EQ brand, as well as a Mercedes-Benz electric truck for heavy-
duty distribution transportation, the presentation also featured
the Vision Van, which attracted a great deal of attention. The
vehicle boasts a fully automated cargo compartment, integrated
drones for autonomous air deliveries and state-of-the-art
joystick control. The Mercedes-Benz Future Bus, a partially
automated city bus with the CityPilot system, offered a preview
Germany
A.08
German Securities
Identification Number
Stock exchange symbol
Reuters ticker symbol
Bloomberg ticker symbol
A.07
Shareholder structure as of December 31, 2017
By type of shareholder
Kuwait Investment Authority
6.8%
Renault-Nissan
3.1%
Institutional investors
71.2%
Retail investors
18.9%
Shareholder structure as of December 31, 2017
By region
New Setra double-decker bus continues coach initiative
World premiere of the Setra double-decker, the biggest and
most comfortable coach from Daimler Buses. As a result of
improved aerodynamics, it is significantly more fuel efficient
than its predecessor. In addition, it is equipped as standard
with an emergency braking system with obstacle and pedestrian
recognition, and Sideguard Assist for taking the blind spot
into account is offered as an optional extra.
Key figures per share
Daimler Buses makes its production network fit for
the future
Production of battery-electric vehicles in China
Daimler and BAIC agree to jointly invest €650 million in the
production of battery-electric Mercedes-Benz vehicles at the
local production facility of Beijing Benz Automotive Co. (BBAC)
in Beijing. As part of this strategic framework agreement, the
partner companies will prepare for the local production of
battery-electric vehicles at BBAC by 2020, and aim to establish
the required infrastructure as well as research and develop-
ment capacities in China.
Q3
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2017
76
In order to remain fit for the future at the sites in Europe,
management and works council agree on a future package for
efficiency enhancements in production. Furthermore, Daimler
Buses will continue shaping the future of mobility. Within this
context, in the years ahead, we aim to invest approximately
€340 million.
COMPANY
332
Events after the Reporting Period
119
Responsibility Statement
120
Research and development expenditure
334
Takeover-Relevant Information
Remuneration Report
6,962
+5
5,671
Independent Auditor's Report
thereof capitalized
2,269
2,388
2,008
-5
Unit sales
2,382,791
2,373,527
2,197,956
6,642
335
Ten-Year Summary
140
Radio
Phone
& Apps
Claire
km/h
40
0
THE POWER OF
Cross-reference to additional information within
the Annual Report
Refers to additional information on the Internet
Refers to an illustration or a table in the Annual Report
and Explanation
Information guidance system
Daimler Worldwide
345
Index
158
Outlook
344
Glossary
143
Risk and Opportunity Report
342
+0
346
Employees (December 31)
139,947
142,666
45
57
-11
Unit sales
517,335
470,705
415,108
+10
Employees (December 31)
82,953
79,483
78,642
+4
Mercedes-Benz Vans
Revenue
13,626
13,1611
12,835
+4
EBIT
312
1,1471
1,170
40
thereof capitalized
-2
1,265
Claire's Phone
+2
Daimler Trucks
Revenue
38,273
EBIT
2,753
35,755¹
2,3831
33,187
+7
1,948
145,436
+16
7.2
6.7
5.9
Investment in property, plant and equipment
1,105
1,028
1,243
+7
Research and development expenditure
1,295
1,322
Return on sales (in %)
FM
120 140
-73
-22
Net profit
7,582
10,6172
-29
Earnings per share (in €)
6.78
9.612
-29
Dividend per share (in €)
3.25
3.65
-11
Employees (December 31)
298,683
289,321
+3
1 Adjusted for the effects of currency translation, revenue increased by 4%.
2 The amounts have been adjusted due to first-time adoption of IFRS 15 and IFRS 9.
Further information is provided in Note 1 of the Notes to the Consolidated Financial Statements.
Cover photo
The EQC (combined electricity consumption: 22.2 kWh/100 km;
combined CO2 emissions: 0 g/km, preliminary figures)1 will be the first
Mercedes-Benz model of the EQ brand on the road. With its seamless,
clear design and brand-typical color accents, it is the pioneer of avant-
garde electro-aesthetics. In terms of quality, safety and comfort, the
EQC is the Mercedes-Benz among electric vehicles. It convinces in the
sum of its characteristics, in particular with its impressive driving
dynamics and a range of up to 450 kilometers according to NEDC.1
1 Figures on electricity consumption and CO2 emissions are provisional
and were determined by an external technical service and are non-
binding. Figures for range are also provisional and non-binding. An EU
type approval and certificate of conformity with official figures are
not yet available. Deviations between the figures stated and the official
figures are possible.
14,3482
11,132
EBIT
+45
Annual Report 2018
S.N 2931E
Key Figures
Daimler Group
€ amounts in millions
2018
2017
18/17
% change
Revenue
167,362
Daimler's Divisions >
164,1542
Investment in property, plant and equipment
7,534
6,744
+12
Research and development expenditure
9,107
8,711
+5
Free cash flow of the industrial business
2,898
2,005
+2
The Divisions and Brands
€ amounts in millions
Mercedes-Benz Cars
Mercedes me & Apps
B
20:30
Search
1000-
5
Claire
4
3
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
40
Prohe
Clare's Phone
km/h
1/100 km
0.0
240
1535
220
160.0
200
180
し
160
100
0
22.5°C
Radio
8
2018
2017
2016
18/17
% change
Revenue
93,103
94,351¹
89,284
-1
EBIT
FM
7,216
8,112
-18
Return on sales (in %)
7.8
9.4'
9.1
Investment in property, plant and equipment
CULTURE
÷ 21.0 ->
$21.0
ENGINE
8,843¹
Return on sales (in %)
9.1
8.71
188
Declaration on Corporate Governance,
Corporate Governance Report
191
Chairman's Letter
38
E | Non-Financial Report
202
A | To Our Shareholders
43
43
Sustainability at Daimler
204
Environmental Issues
206
The Board of Management
Employee Issues
210
44
Social Issues
215
Report of the Supervisory Board
46
Report of the Audit Committee
186
D | Corporate Governance
183
WESTERN STAR
BHARATBENZ
FREIGHTLINER
SETRA
BHARATBENZ
Mercedes-Benz Bank
Mercedes-Benz
Financial Services
Daimler Truck Financial
moovel
CAR
2GO
mytaxi
Compliance
Contents
C| The Divisions
Mercedes-Benz Cars
Daimler Trucks
Mercedes-Benz Vans
Daimler Buses
Daimler Financial Services
164
166
172
177
180
THE POWER OF
BUILT BUSES.
217
54
200
Consolidated Statement of Financial Position
230
Consolidated Statement of Cash Flows
231
91
Consolidated Statement of Changes in Equity
232
Notes to the Consolidated Financial
Daimler AG
Statements
234
(condensed version according to HGB)
102
Sustainability and Integrity
105
Overall Assessment of the Economic Situation
118
G | Further Information
+17
4,147
4,843
5,684
99
Financial Position
Liquidity and Capital Resources
85
Statement on the Review of the
Highlights of 2018
56
Non-Financial Report
224
Daimler and the Capital Market
62
Objectives and Strategy
66
F| Consolidated Financial
Statements
226
The Supervisory Board
B | Combined Management Report
Consolidated Statement of Income
228
Corporate Profile
74
Consolidated Statement of Comprehensive
Economic Conditions and Business
Income/Loss
229
Development
79
Profitability
72
FUSO
FREIGHTLINER
M
4,524¹
4,176
+0
EBIT
DAIMLER
265
2811
249
-6
Return on sales (in %)
5.9
6.21
6.0
Investment in property, plant and equipment
144
94
97
+53
Research and development expenditure
199
194
202
+3
4,529
Revenue
Daimler Buses
+4
Investment in property, plant and equipment
468
710
373
-34
Research and development expenditure
666
565
442
+18
thereof capitalized
thereof capitalized
176
238
-43
Unit sales
421,401
401,025
359,096
+5
Employees (December 31)
26,210
25,255
24,029
310
41
30
11
71,927
154,072
70,721
139,907
61,810
132,565
+2
+10
Investment in property, plant and equipment
64
43
37
+49
Employees (December 31)
Contract volume
14,070
12,062
+8
1 The amounts have been adjusted due to first-time adoption of IFRS 15 and IFRS 9.
Further information is provided in Note 1 of the Notes to the Consolidated Financial Statements.
2 At the Daimler Financial Services segment, the Group's internal revenue and cost of sales have been adjusted by the same amount.
These adjustments have been fully eliminated in the reconciliation.
Daimler AG is one of the world's most successful automotive companies. With its
divisions Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses
and Daimler Financial Services, Daimler is one of the biggest suppliers of premium
cars and the world's largest producer of trucks above 6 tons. Daimler Financial Services
provides financing, leasing, fleet management, investment products, brokerage of
insurance and credit cards, as well as innovative mobility services.
For more information: ④ daimler.com
AMG
MAYBACH
Mercedes me
EQ
smart
13,012
2.3
New business
17.7
+37
Unit sales
30,888
28,676
26,226
+8
Employees (December 31)
18,770
18,292
17,899
+3
17.4
Daimler Financial Services
26,269
24,530,2
20,660
+7
EBIT
1,384
1,970
1,739
-30
Return on equity (in %)
11.1
Revenue
CASE CORE
CUSTOMER
By means of this 5C strategy, we intend to offer the best customer
experiences and to continue along our successful path - also to
the benefit of our employees, partners and investors.
We are laying the groundwork for that with four components of our
strategy. They are our strong global CORE business, pioneering
innovations in the future-oriented areas of CASE (Connected,
Autonomous, Shared & Services, Electric), a flexible CULTURE
of cooperation, and the effective restructuring of our COMPANY.
Daimler is committed to shaping a new era of mobility in which
the focus is on the CUSTOMER. We aim to completely fulfill our
customers' changing requirements.
5
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
The Group's total revenue increased by 2.0% to €167.4 billion
in 2018; adjusted for exchange rate effects, it increased by
4.3%. The revenue growth primarily reflects an increase in sales
for our products at Daimler Trucks, as well as increased con-
tract volume at Daimler Financial Services. Further information
on the development of revenue is provided in the Business
Development section of this Combined Management Report.
7 B.17
The risk volume that is subject to credit risk management
includes all of Daimler's worldwide creditor positions with
financial institutions, issuers of securities, and customers in the
financial services business and the automotive business.
Credit risks with financial institutions and issuers of securities
arise primarily from investments executed as part of our
liquidity management and from trading in derivative financial
instruments. The management of these credit risks is mainly
based on an internal limit system that reflects the creditworthi-
ness of the respective financial institution or issuer. The credit
risk with customers of our automotive business relates to con-
tracted dealerships and general agencies, other corporate
customers and retail customers. In connection with the export
business, general agencies that according to our creditwor-
thiness analyses are not sufficiently creditworthy are generally
required to provide collateral such as first-class bank guaran-
tees. The credit risk with end-customers in the financial services
business is managed by Daimler Financial Services on the
basis of a standardized risk management process. In this pro-
cess, minimum requirements are defined for the sales-financ-
ing and leasing business and standards are set for credit pro-
cesses as well as for the identification, measurement and
management of risks. Key elements for the management of
credit risks are appropriate creditworthiness assessments,
supported by statistical risk-classification methods, as well as
structured portfolio analysis and portfolio monitoring.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 93
Financial country risk management includes various
aspects: the risk from investments in subsidiaries and joint
ventures, the risk from the cross-border financing of Group
companies in risk countries, and the risk from direct sales to
customers in those countries. Daimler has an internal rating
system that divides all countries in which it operates into risk
categories. With equity capital transactions of considerable
size in risk countries, the Group generally hedges against polit-
ical risks with the use of investment protection insurance
such as the German government's investment guarantees. Risks
from cross-border receivables are partially protected with
the use of export credit insurance, letters of credit and bank
guarantees in favor of Daimler AG. In addition, a committee
sets and restricts the level of hard-currency credits granted to
financial services companies in risk countries.
Further information on the management of market-price risk,
credit-default and liquidity risk is provided in
Note 33 of
the Notes to the Consolidated Financial Statements.
B.24
Free cash flow of the industrial business
Dec. 31,
2018
Cash provided by
operating activities
Cash used for
1 The columns "Industrial business" and "Daimler Financial Services" represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
3 The prior-year figures have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. Information on adjustments to
prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
Dec. 31,
2017
18/17
Change
12,915
11,967
+948
investing activities
-9,307
In millions of euros
2,557
-90
9,515
-4
13,226
13,129
-20
-5,127
-473
-20
10
82
-6,233
5,127
6,233
-1,000
13,699
14,129
133
15,853
-868
12,072
149
12,799
-778
-16
-9,425
3,054
+118
-435
-505
18/17
Change
Cash and cash equivalents
12,799
9,515
+3,284
Marketable debt securities
and similar investments
8,364
8,894
Liquidity
21,163
18,409
Financing liabilities
-4,771
-1,600
-530
+2,754
-3,171
Market valuation
and currency hedges for
financing liabilities
Dec. 31,
2017
2018
Dec. 31,
In millions of euros
-5
-70
-205
-102
-103
Free cash flow of the
industrial business
2,898
2,005
+893
Change in marketable
debt securities and
similar investments
Other adjustments
Cash flows
Cash used for investing activities 7 B.23 amounted to
€9.9 billion (2017: €9.5 billion). The change compared with the
prior year primarily resulted from increased investments in
property, plant and equipment. Opposing effects resulted from
lower cash outflows for the investments in shareholdings,
due to a prior year acquisition of an interest in LSH Auto Inter-
national Limited (LSHAI).
Cash provided by financing activities 7 B.23 amounted to
€13.2 billion (2017: €13.1 billion). The slight increase was
primarily caused by higher net cash inflows from financing
liabilities in the context of refinancing the leasing and sales-
financing business, as well as by making use of good conditions
in the international money and capital markets. Opposing
effects resulted from the increased dividend payment to share-
holders of Daimler AG.
Cash and cash equivalents increased by €3.8 billion compared
with December 31, 2017, after taking currency-translation
effects into account. Total liquidity, which also includes market-
able debt securities and similar investments, increased by
€3.3 billion to €25.4 billion.
The parameter used by Daimler to measure the financial capa-
bility of the Group's industrial business is the free cash flow
of the industrial business 7 B.24, which is derived from the
reported cash flows from operating and investing activities.
The cash flows from the acquisition and sale of marketable debt
securities and similar investments included in cash flows
from investing activities are deducted, as those securities are
allocated to liquidity and changes in them are thus not a part
of the free cash flow.
Other adjustments relate to non-cash additions to property,
plant and equipment that are allocated to the Group as their
beneficial owner due to the form of their underlying lease
contracts. Furthermore, effects from the financing of dealer-
ships and effects from internal deposits within the Group
are adjusted. In addition, the calculation of the free cash flow
includes those cash flows to be shown under cash from
financing activities in connection with the acquisition or sale
of interests in subsidiaries without loss of control.
94
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.25
Net liquidity of the industrial business
Cash used for/provided by operating activities 7 B.23
resulted in a cash inflow of €0.3 billion in 2018 (2017: cash out-
flow of €1.7 billion). The positive development was primarily
due to the prior-year cash outflow of €3.0 billion resulting from
the extraordinary contribution to the German pension plan
assets. This was supplemented by positive effects from the
leasing and sales-financing business. In addition, cash used
for/provided by operating activities reflects lower income taxes
paid, as well as a higher cash inflow due to dividends distrib-
uted by Beijing Benz Automotive Co., Ltd. Opposing effects were
due to the general business performance and the development
of working capital, reflecting in particular the stronger increase
in inventories. At Mercedes-Benz Cars and Mercedes-Benz
Vans, this resulted from the launch of new models and capacity
expansions in the NAFTA region, among other things. Further-
more, the temporary increase in inventories, due to delivery
delays was not fully reduced. The higher increase in inventories
at Daimler Trucks was partially due to higher sales expecta-
tions in the NAFTA region and in Europe.
-3,723
-10
-3,727
62
-11,345
-1,609 -3,304
1,208
877
210
1,067
1,019
-386
-2,817
-4,323
-190
596
1,380
843
1,304
842
76
1
-2,858
-3,879
-10,250
-67
-7
-10,257 -11,412
Change in financing liabilities
Dividends paid
Other transactions with shareholders
Internal equity and financing transactions
Cash used for/provided by financing activities
Effect of foreign exchange rate changes on cash
and cash equivalents
Cash and cash equivalents at end of period
-3,850 -1,455
-884 -1,597
1,694 1,259
-3,738
-1,698
-1,264
-191
-779
-1,087
-105
-510
1,723
1,130
-29
129
-112
-4,215
-3,715
-164
790
708
791
18
-1
-9,921
-9,518
-9,307
-9,425
-614
-93
17,456
16,794
8,889
8,976
8,567
7,818
-4,220
-104
726
102
-34
435
343
-1,652
12,915
11,967
-12,572
-13,619
-10,701 -10,158
-10,534
-10,025
-1,160
-167
-417
-687
14
-626
-431
-61
471
537
505
-133
-212
(nominal)
Financing liabilities
The Daimler Buses division's EBIT of €265 million in 2018 was
slightly below the prior-year level (2017: €281 million). Its
return on sales decreased slightly to 5.9% (2017: 6.2%). 71 B.14
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 87
The positive development of unit sales, especially in the NAFTA
region, China and Western Europe, had a positive impact on
EBIT. However, earnings were reduced by advance expenditure
for new technologies and future products and by expenses
for the Sprinter model change. Furthermore, EBIT was reduced
by expenses in connection with ongoing governmental pro-
ceedings and measures relating to diesel vehicles, by delivery
delays and by the remeasurement of assets in connection
with production capacities.
Mercedes-Benz Vans achieved EBIT in 2018 of €312 million,
significantly below the prior-year level (2017: €1,147 million).
The division's return on sales was 2.3% (2017: 8.7%). 71 B.14
The positive development of earnings was primarily the result of
increased unit sales in the NAFTA region as well as further
efficiency enhancements. Higher expenses for exchange-rate
effects and expenses for raw materials affected EBIT nega-
tively. Additional costs, mainly resulting from supply-chain
constraints, also had a negative impact on earnings. In the pre-
vious year, EBIT was boosted by €267 million due to income
from the sale of real estate by Mitsubishi Fuso Truck and Bus
Corporation in Japan. In addition, expenses of €172 million
related to fixed-cost optimization were included in the prior
year.
The Daimler Trucks division achieved EBIT in the
year 2018
of €2,753 million, which is significantly above the prior-year
figure of €2,383 million. The division's return on sales was 7.2%
(2017: 6.7%). 7 B.14
In the prior year, EBIT was reduced by expenses for voluntary
service activities and expenses for a specific vehicle recall
(€425 million). On the other hand, EBIT was boosted in the prior
year by income of €183 million in connection with a new
investor in HERE.
The negative earnings development reflects expenses in con-
nection with ongoing governmental proceedings and measures
relating to diesel vehicles. In addition, EBIT was also reduced
by advance expenditure for new technologies and vehicles, as
well as by weaker pricing. Unfavorable exchange-rate effects
and higher expenses for raw materials also affected earnings
adversely. On the other hand, a positive effect resulted from
the remeasurement at fair value (€111 million) of the investment
in Aston Martin Lagonda Global Holdings plc (Aston Martin).
The Mercedes-Benz Cars division posted EBIT of €7,216 million
in 2018, which is significantly below its prior-year earnings
of €8,843 million. The division's return on sales was 7.8% (2017:
9.4%). 71 B.14
Services was also unable to meet the forecast made in Annual
Report 2017 of earnings at the prior-year level, due to the
agreement reached to conclude the Toll Collect arbitration pro-
ceedings.
2 Amortization of capitalized borrowing costs is not included in
the internal performance measure EBIT, but is a component of
cost of sales.
1 The prior-year figures have been adjusted due to the effects of
the first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes to the Consolidated Financial Statements.
13,967
10,595
-582
-793
-13
214
271
-15
Higher unit sales only partially offset the product-mix and
inflation-related cost increase.
Profit before income taxes
Daimler Financial Services posted EBIT of €1,384 million
in 2018, significantly lower than in the previous year
(2017: €1,970 million). The division's return on equity was
11.1% (2017: 17.7%). 71 B.15
The reconciliation of the divisions' EBIT to Group EBIT
comprises gains and/or losses at the corporate level and the
effects on earnings of eliminating intra-group transactions
between the divisions.
in % of revenue
3.4
5.4
Daimler Buses
144
94
+53
in % of revenue
3.2
2.1
Daimler Financial Services
64
43
+49
in % of revenue
0.2
0.2
The elimination of intra-group transactions resulted in
expenses of €41 million in 2018 (2017: €44 million).
Items at the corporate level resulted in expenses of €757 million
(2017: €232 million). In both years, expenses connected
with legal proceedings are included. The increase was caused
by, among other things, higher expenses in connection with
the development of the divisional structure ("Project Future").
In addition, the impairment of Daimler's equity investment
in BAIC Motor Corporation Ltd. (BAIC Motor) by €150 million
impacted earnings negatively. On the other hand, the reversal
of the impairment of Daimler's equity investment in BAIC
Motor of €240 million had a positive effect on earnings in the
year 2017.
Due to the agreement reached to conclude the Toll Collect
arbitration proceedings, earnings were reduced by €418 million.
The increasing level of interest rates had a negative impact
on earnings. Rising cost of credit risks in individual markets
impacted earnings negatively in the still relatively stable
risk environment. Increased contract volume had a positive
impact on EBIT.
Interest expense
Interest income
capitalized borrowing costs²
Return on Equity
B.15
Vans
Trucks
Cars
Mercedes-Benz Daimler
0
3
6-
9
12
2016
2017
2014
2015
In %
Return on Sales
B.14
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
86
Statement of income
Daimler Financial Services
In %
2250
15
Amortization of
14,348
11,132
Group EBIT
In millions of euros
20171
2018
2018
Reconciliation of Group EBIT to profit before income taxes
-34
B.16
2018
20171
2016
Mercedes-Benz Daimler
Buses
2015
2014
0
5
10
1 The prior-year figures have been adjusted due to the effects of
the first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes to the Consolidated Financial Statements.
710
468
Mercedes-Benz Vans
and currency hedges for
financing liabilities
-97
-229
+132
Financing liabilities
(nominal)
Net debt
-144,999
-119,569
-127,353
-105,218
-17,646
-14,351
The free cash flow of the industrial business amounted to
€2.9 billion in 2018 and was significantly higher than the
prior-year figure of €2.0 billion; however, it did not exceed the
dividend payment for 2018 of €3.9 billion. The free cash
flow of the industrial business thus did not fully achieve all our
expected targets as stated in the Outlook section of Annual
Report 2017.
The €0.9 billion increase in the free cash flow to €2.9 billion
resulted primarily from the prior-year cash outflow for the
extraordinary contribution to the pension plan assets and the
lower income taxes paid in the current year. The increased
cash inflow also resulted from the dividends distributed by
Beijing Benz Automotive Co., Ltd. Furthermore, there were
lower cash outflows for the investments in shareholdings, due
to a prior year acquisition of an interest in LSHAI.
Opposing effects were due to the general business performance
and the development of working capital, reflecting in particular
the stronger increase in inventories. At Mercedes-Benz Cars
and Mercedes-Benz Vans, this resulted from the launch of new
models and capacity expansions in the NAFTA region, among
other things. Furthermore, the temporary increase in inventories,
due to delivery delays was not fully reduced. The higher
increase in inventories at Daimler Trucks was partially due to
higher sales expectations in the NAFTA region and in Europe.
In addition, higher investments in property, plant and equipment
affected the free cash flow of the industrial business.
In 2018, the free cash flow of the Daimler Group led to
a cash outflow of €10.2 billion (2017: €11.9 billion). Besides the
effects of the free cash flow of the industrial business, the
free cash flow of the Daimler Group is mainly affected by the
leasing and sales-financing business of Daimler Financial
Services.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 95
The net liquidity of the industrial business 7 B.25 is
calculated as the total amount as shown in the statement of
financial position of cash, cash equivalents and the market-
able debt securities and similar investments included in liquid-
ity management, less the currency-hedged nominal amounts
of financing liabilities.
To the extent that the Group's internal refinancing of the finan-
cial services business is provided by the companies of the
industrial business, this amount is deducted in the calculation
of the net debt of the industrial business.
Market valuation
-486
+3,295
-17,778
10,063
25,430
22,135
-144,902 -127,124
Financing liabilities
Cash used for investing activities
Net liquidity
-4,875
-1,812
16,288
16,597
-3,063
-309
B.26
Net debt of the Daimler Group
Compared with December 31, 2017, the net liquidity of the
industrial business remained almost unchanged at €16.3 billion.
The dividend payment to the shareholders of Daimler AG led
to a decrease in net liquidity, which was offset by the positive
free cash flow and positive exchange-rate effects.
In millions of euros
Dec. 31,
2017
18/17
Change
Cash and cash equivalents
15,853
12,072
+3,781
Marketable debt securities
and similar investments
9,577
Liquidity
Dec. 31,
2018
+108
Net debt at Group level, which primarily results from refinancing
the leasing and sales-financing business, increased compared
with December 31, 2017 by €14.4 billion to €119.6 billion.
71 B.26.
Investment in property, plant and equipment
Detailed information on contingent liabilities and other
financial obligations are provided in Note 31 of the Notes
to the Consolidated Financial Statements.
Daimler Group
in % of revenue
Mercedes-Benz Cars
7,534
4.5
6,744
4.1
+12
5,684
4,843
+17
in % of revenue
6.1
5.1
Daimler Trucks
1,105
1,028
+7
in % of revenue
2.9
2.9
In the context of its ordinary business operations, the Group
has also entered into other financial obligations in addition
to the liabilities shown in the consolidated balance sheet
at December 31, 2018. These financial obligations result from
non-cancelable long-term rental agreements and operating
leases, contractual commitments to acquire intangible assets,
property, plant and equipment and lease property, and irre-
vocable loan commitments.
At December 31, 2018, the best estimate for potential obliga-
tions from contingent liabilities is €0.8 billion (2017: €0.6 billion).
Contingent liabilities and other
financial obligations
In millions of euros
In billions of euros
8
7
6
5
4
3
2
1
0
B.27
2014
2016
2017
2018
B.28
Investment in property, plant and equipment by division
2018
2017
18/17
% change
2015
Other
0.50
Acquisitions and sales of marketable debt securities
339
10,278
1 The columns "Industrial business" and "Daimler Financial Services" represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
3 The prior-year figures have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. Information on adjustments to
prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
4 In 2017 at the Daimler Financial Services segment, in addition to the adjustment of prior-year figures due to IFRS 15, the Group's internal
revenue and cost of sales have been adjusted by the same amount. These adjustments have been fully eliminated in the reconciliation.
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 89
2.45
3.25
3.25
3.65
3.25
Dividend
In line with a sustainable dividend policy, Daimler sets the
dividend based on a distribution ratio of 40% of the net profit
attributable to Daimler shareholders. In the light of the
business development in 2018, the Board of Management and
the Supervisory Board will propose to the Annual Sharehold-
ers' Meeting to be held on May 22, 2019, that a dividend per
share of €3.25 (2017: €3.65) be distributed for financial year
2018. This corresponds to a total dividend distribution of €3.5
billion to our shareholders (2017: €3.9 billion). 7 B.18
B.18
Dividend per share
In euros
4.00
3.50
3.00
2.50
Net operating profit
333
7,249
thereof attributable to shareholders of Daimler AG
thereof attributable to non-controlling interests
2,679
-577
-5
-5
10,595
13,967
9,215
12,002
1,380
1,965
Table B.19 shows the reconciliation of the EBIT of the
divisions to net operating profit. In addition to the EBIT of
the divisions, net operating profit also includes earnings
effects for which the divisions are not accountable, such as
income taxes and other reconciliation items.
-3,013
-2,615
-4,064
-398
714
7,582
10,617
6,600
7,938
982
-3,350
-788
2.00
1.00
2,383
+16
Mercedes-Benz Vans
312
1,147
-73
Daimler Buses
265
281
-6
Daimler Financial Services
EBIT of the divisions
1,384
1,970
-30
11,930
14,624
-18
Income taxes¹
Other reconciliation
Net operating profit
2,753
Daimler Trucks
-18
8,843
The reconciliation of Group EBIT to profit before income taxes
is shown in table 7 B.16.
0
2014
2015
2016
2017
2018
B.19
Reconciliation to net operating profit
1.50
2018
18/17
In millions of euros
% change
Value added
As described in the Performance Measurement System section
of the Corporate Profile chapter in chart 7 B.03, the cost of
capital is the result of net assets and cost of capital expressed
as a percentage, which is subtracted from earnings in order
to calculate value added. Tables 7 B.20 and 7 B.21 show value
added and net assets for the Group and for the individual
divisions. Table 7 B.22 shows how net assets are derived from
the consolidated statement of financial position.
The Group's value added decreased by €3.3 billion to
€3.7 billion in 2018, representing a return on net assets of 14.8%
(2017: 22.5%). This was once again higher than the minimum
required rate of return of 8%. The significant decrease in value
added was mainly due to the development of the divisions'
EBIT. In addition, further negative effects resulted from the
increase in average net assets, mainly attributable to higher
investment in fixed assets and an increase in inventories.
Value added at Mercedes-Benz Cars of €4.1 billion was
significantly below the prior-year amount of €6.0 billion. This
was primarily due to the negative earnings development mainly
resulting from expenses in connection with ongoing govern-
mental proceedings and measures relating to diesel vehicles.
In addition, EBIT was also reduced by advance expenditure
for new technologies and vehicles, weaker pricing, unfavorable
exchange-rate effects and higher expenses for raw materials.
A positive effect resulted from the remeasurement at fair value
of the investment in Aston Martin Lagonda Global Holdings
plc. In the prior year, EBIT was reduced by expenses for voluntary
service activities and expenses for a specific vehicle recall.
On the other hand, income in connection with a new investor in
HERE affected EBIT positively in the prior year. An additional
negative impact on value added resulted from the increase in
average net assets to €26.3 billion primarily caused by higher
investments in fixed assets.
Mercedes-Benz Cars
7,216
2017
-582
-793
0
2018
Daimler Financial
Services
20173
Revenue4
Cost of sales4
Gross profit
167,362 164,154
-134,295 -129,626
33,067 34,528
141,093 139,624 26,269
-111,589 -108,640 -22,706
24,530
-20,986
29,504
30,984
3,563
3,544
Selling expenses
-13,067 -12,951
-12,174
-12,210
-893
-741
General administrative expenses
20173
2018
20173
2018
and similar investments
Cost of sales amounted to €134.3 billion in 2018, increasing
by 3.6% compared with the previous year. The rise in cost of
sales was caused by higher business volumes and consequen-
tially higher material expenses. The higher material expenses
also reflect increased prices of raw materials. At Daimler
Financial Services, the higher interest-rate level led to higher
refinancing costs. In the prior year, cost of sales included
expenses for voluntary service activities and expenses for a
specific vehicle recall of €0.4 billion. Further information
on cost of sales is provided in → Note 5 of the Notes to the
Consolidated Financial Statements. 7 B.17
Overall, gross profit in relation to revenue decreased from
21.0% to 19.8%.
Due to the growth in unit sales, selling expenses increased by
€0.1 billion to €13.1 billion. As a percentage of revenue, selling
expenses decreased slightly from 7.9% to 7.8%. 7 B.17
General administrative expenses of €4.0 billion were above
the level of the previous year (2017: €3.8 billion). The increase
was mainly due to higher expenses for consulting services and
personnel. As a percentage of revenue, general administrative
expenses increased slightly to 2.4% (2017: 2.3%). 71 B.17
Research and non-capitalized development costs increased
by €0.6 billion to €6.6 billion in 2018. They were mainly related
to the development of new models, advance expenditure for
the renewal of existing models, and the further development of
fuel-efficient and environmentally friendly drive systems, as
well as safety technologies, automated and autonomous driving
and the digital connectivity of our products. As a proportion
of revenue, research and non-capitalized development costs
increased from 3.6% to 3.9%. Further information on the
Group's research and development costs is provided in the
Research and Development section of the Sustainability
chapter of this Combined Management Report. 7 B.17
Other operating income of €2.3 billion is at the same level
as in previous year. In 2018, insurance compensation of
€0.2 billion is included. Income of €0.4 billion from the sale of
property, plant and equipment was included in 2017. Other
operating expense increased to €1.5 billion (2017: €1.0 billion),
mainly due to additions to other provisions. Further infor-
mation on the composition of other operating income and
expense is provided in Note 6 of the Notes to the
Consolidated Financial Statements. 7 B.17
88
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
-4,036
In 2018, our share of profit from equity-method investments
of €0.7 billion was significantly lower than the prior-year level
(2017: €1.5 billion). The decrease was on the one hand due to
the agreement reached with the German Federal Government
to conclude the Toll Collect arbitration proceedings. This agree-
ment had a negative impact on earnings of €0.4 billion in the
year 2018. Furthermore, in the year 2018, a negative impact
resulted from the impairment of €0.2 billion of the investment
in BAIC Motor (2017: positive impact from the reversal of
the impairment of €0.2 billion of the investment in BAIC Motor).
71 B.17
Net interest expense amounted to €0.5 billion (2017: €0.4 bil-
lion). Net expenses related to defined-benefit pension plans
improved primarily due to higher interest income resulting from
the extraordinary contribution of €3.0 billion to the pension
plan assets in 2017. Other interest expense increased mainly
because of higher refinancing costs. 7 B.17
The tax expense of €3.0 billion (2017: €3.3 billion) stated under
income tax expense decreased only insignificantly despite the
reduction in profit before income taxes. The effective tax rate
for 2018 was 28.4% (2017: 24.0%). The prior year included high
income tax benefits resulting from the comprehensive tax
reform in the United States. Due to the reduction in the nation-
wide federal corporate income tax rate for US companies,
the future net tax liabilities of the US-subsidiaries of Daimler
had to be remeasured with the new tax rate, resulting in an
income tax benefit of €1.6 billion. Opposing the positive impact
from the US tax reform, tax expenses were recognized in
2017 in connection with the interpretation of tax laws. 7 B.17
Net profit for the year 2018 of €7.6 billion (2017: €10.6 billion)
was significantly below the prior-year figure. Net profit of
€0.3 billion is attributable to non-controlling interests (2017:
€0.3 billion). Net profit attributable to the shareholders of
Daimler AG amounts to €7.2 billion (2017: €10.3 billion), repre-
senting a decrease in earnings per share to €6.78 (2017:
€9.61). 7 B.17
The calculation of earnings per share is based on
an unchanged average number of outstanding shares
of 1,069.8 million.
B.17
Statement of income¹
In millions of euros
Consolidated
Industrial Business²
Other financial expense/income increased from an expense
of €0.2 billion to income of €0.2 billion. This improvement is
partly the result of the gain of €0.1 billion included in the year
2018 due to the measurement at fair value of the interest in
Aston Martin. Furthermore, income in connection with deriva-
tive financial transactions also improved. 7 B.17
-3,808
-3,075
-2,815
1,497
-452
1
Other financial income/expense, net
210
-210
218
-209
-8
1,108
-1
Interest expense
Profit before income taxes
Income taxes
Net profit
271
214
270
214
1
Interest income
-3,169
1,498
Profit/loss on equity-method investments, net
-961
-993
Research and non-capitalized development costs
-6,581
-5,938
-6,581
-5,938
Other operating income
2,330
656
2,137
193
203
Other operating expense
-1,462
-1,043
-1,404
-1,000
-58
-43
2,056
-3,468
2,259
-798
+10
1 To the extent not allocated to Daimler Financial Services.
Daimler Trucks' value added was significantly higher than in
the previous year at €1.8 billion (2017: €1.4 billion). This
increase was primarily the result of the positive development
of earnings due to higher unit sales in the NAFTA region as
well as further efficiency enhancements. Higher expenses for
exchange-rate effects, higher expenses for raw materials
as well as additional costs, mainly resulting from supply-chain
constraints affected EBIT negatively. In the previous year,
EBIT included income from the sale of real estate at Mitsubishi
Fuso Truck and Bus Corporation in Japan as well as expenses
related to fixed cost optimization. Average net assets level
remains nearly unchanged.
At Mercedes-Benz Vans, value added significantly decreased
by €1.0 billion to negative €0.1 billion. Despite a growth in unit
sales, especially in the NAFTA region, in China and in Western
Europe, EBIT was negatively impacted by advance expenditure
for new technologies and future products, expenses for the
Sprinter model change, costs in connection with ongoing govern-
mental proceedings and measures taken for diesel vehicles,
expenses due to delivery delays and for the remeasurement of
assets in connection with production capacities. The increase
in average net assets due to higher investments in fixed assets
and higher inventories led to a further deterioration of value
added.
The value added of the Daimler Buses division was lower than
in the previous year at €117 million (2017: €149 million). This
primarily reflects the development of earnings. The decrease in
earnings due to the product mix and the inflation-related cost
increase was partially offset by higher unit sales. The reduction
in value added was also caused by the increase in average net
assets.
Daimler Financial Services' value added of minus €0.2 billion
was significantly under the prior-year level of plus €0.5 billion.
The division's return on equity amounted to 11.1% (2017: 17.7%).
The development of value added primarily reflects the decrease
in earnings of €0.6 billion. Earnings were significantly reduced
by the agreement reached to conclude the Toll Collect arbitra-
tion proceedings. The higher interest-rate level impacted EBIT
negatively. Rising cost of credit risks in individual markets
negatively impacted earnings in the still relatively stable risk
environment. On the other hand, increasing contract volume
had a positive impact on EBIT. The rise in average equity also
led to a further negative effect on value added.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 91
Liquidity and Capital Resources
Principles and objectives of
financial management
Financial management at Daimler consists of capital structure
management, cash and liquidity management, pension asset
management, market-price risk management (foreign exchange
rates, interest rates, commodity prices) and credit and finan-
cial country risk management. Worldwide financial management
is performed within the framework of legal requirements
consistently for all Group entities by Treasury. Financial manage-
ment operates within a framework of guidelines, limits and
benchmarks, and on the operational level is organizationally
separate from other financial functions such as settlement,
financial controlling, reporting and accounting.
Capital structure management designs the capital structure
for the Group and its subsidiaries. Decisions regarding the
capitalization of financial services companies - as well as pro-
duction, sales and financing companies - are based on the
principles of cost-optimized and risk-optimized liquidity and
capital resources. We also take care that restrictions on
capital transactions and on the transfer of capital and curren-
cies are complied with.
The purpose of liquidity management is to enable the Group
to meet its payment obligations at any time. For this purpose,
the Group records the cash flows from operating and financial
activities in a rolling plan. The resulting financial requirements
are covered by the use of appropriate instruments for liquidity
management (e.g. bank credit, commercial paper and notes);
liquidity surpluses are invested in the money market or the capi-
tal market taking into account risk and return expectations.
The goal is to ensure the level of liquidity regarded as necessary
at optimal costs. Besides operational liquidity, Daimler main-
tains additional liquidity reserves, which are available in the short
term. Those additional financial resources include a pool of
receivables from the financial services business which are avail-
able for securitization in the capital market, as well as a con-
tractually confirmed syndicated credit facility.
Cash management determines the Group's cash requirements
and surpluses. Via cash-pooling procedures, liquidity is
centrally concentrated on bank accounts of Daimler in various
currencies. Most of the payments between Group companies
are made via internal clearing accounts, so that the number of
external cash flows is reduced to a minimum. Daimler has
established standardized processes and systems to manage its
bank accounts and internal cash-clearing accounts, and to
execute automated payment transactions.
Management of market price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the earnings of the divisions and
the Group. The Group's overall exposure to these market-price
risks is determined to provide a basis for hedging decisions,
which include the definition of hedging volumes and correspond-
ing periods, as well as the selection of hedging instruments.
Starting in 2019, exposure to currency risks will be determined
for each segment. The hedging strategy is specified at the
Group level and uniformly implemented in the segments. Deci-
sions regarding the management of risks resulting from
fluctuations in foreign exchange rates and commodity prices, as
well as decisions on asset/liability management (liquidity and
interest rates), are regularly made by the relevant committees.
Management of pension assets includes the investment of
pension assets to cover the corresponding pension obligations.
Pension assets are legally separated from the Group's assets
and are invested primarily in funds; pension assets are not
available for general business purposes. The funds are allocated
to different asset classes such as equities, fixed-interest secu-
rities, alternative investments and real estate, depending on
the expected development of pension obligations and with the
help of a risk-return optimization. The performance of asset
management is measured by comparing with defined reference
indices. Local custodians of the pension assets are responsible
for the risk management of the individual pension assets. "The
Global Pension and Healthcare Committee" limits these risks
by means of Group-wide binding guidelines. Additional informa-
tion on pension plans and similar obligations is provided
in Note 22 of the Notes to the Consolidated Financial
Statements.
92
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.23
Condensed statement of cash flows¹
51,582
56,531
Daimler Group
+3
Less trade payables
13,872
30,859 27,914
18,509 18,071
28,096 24,492
10,545 9,742
-14,604 -14,031
-13,395 -11,632
12,742
+9
+11
+2
+15
+8
-4
-15
Less other assets
and liabilities
In millions of euros
-31,832 -29,861
Assets and liabilities
from income taxes¹
1,671
1,766
-5
Total equity
of Daimler Financial Services
12,810
12,379
-7
Consolidated
Industrial Business²
Daimler Financial
Services
Other non-cash expense and income and
gains/losses on disposals of assets
-1,050 -1,960
-1,557
-2,028
507
68
Change in operating assets and liabilities
Inventories
155
Trade receivables
Receivables from financial services
Vehicles on operating leases
Other operating assets and liabilities
Dividends received from equity-method investments
Income taxes paid
Cash used for/provided by operating activities
Additions to property, plant and equipment and intangible assets
+9
Investments in and disposals of shareholdings
Trade payables
Less provisions for other risks
128
6,177
2018
20173
2018
20173
2018
20173
Cash and cash equivalents at beginning of period
12,072 10,981
9,515
5,521
8,751
2,230
Profit before income taxes
10,595
13,967
12,002
1,380
1,965
Depreciation and amortization/impairments
6,305 5,676
2,557
Trade receivables
9,215
Leased assets
864
Daimler Buses
Daimler Financial Services
117
149
-21
-236
519
Daimler Trucks
90
-91
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
Net assets (average)
2018
2017
In millions of euros
18/17
% change
Mercedes-Benz Cars
26,289
23,705
+11
B.21
Daimler Trucks
Mercedes-Benz Vans
1,373
-276
-189
7,963
Inventories
10,880
-27
1 Adjusted for tax effects on interest income/expense and
amortization of capitalized borrowing costs.
B.20
Value Added
2018
+29
2017
18/17
% change
Daimler Group
3,658
7,004
-48
4,062
5,998
-32
1,765
In millions of euros
8,240
Mercedes-Benz Cars
-2
2,190
Other reconciliation³
-547
-1,435
-22
+62
Daimler Group
1 Total equity.
53,809 48,446
+11
1,707
2 To the extent not allocated to the segments.
Net assets of the Daimler Group at year-end
2018
2017
18/17
% change
Property, plant and equipment
8,417
In millions of euros
Intangible assets
Net assets¹
B.22
income taxes³
3 To the extent not allocated to Daimler Financial Services.
+13
+42
Daimler Buses
Assets and liabilities from
2,358
3,355
1,233
1,105
Mercedes-Benz Vans
Daimler Financial Services¹
12,466
+12
+12
941
1,066
Equity method investments²
+10
11,165
46,750
51,583
Net assets of the divisions
Current assets
Non-current assets
Assets
2017
2018
Balance sheet structure Daimler Group
In billions of euros
Financing liabilities of €144.9 billion were significantly above
the prior-year level (2017: €127.1 billion). The increase of
€17.5 billion adjusted for exchange-rate effects was primarily due
to the refinancing of the growing leasing and sales-financing
business and the utilization of favorable interest terms for refi-
nancing. 53% of the financing liabilities were accounted for
by bonds, 27% by liabilities to financial institutions, 8% by depos-
its in the direct banking business and 9% by liabilities from
ABS transactions.
B.33
Other financial liabilities of €10.0 billion (2017: €9.3 billion)
mainly consist of liabilities from residual-value guarantees,
liabilities from wages and salaries, deposits received and accrued
interest on financing liabilities. The increase was primarily
caused by higher negative fair values of derivative financial
instruments and by the liability caused by the Toll Collect
settlement.
Trade payables increased to €14.2 billion due to the higher
volume of business (2017: €12.5 billion). The Mercedes-Benz
Cars division accounts for 60% (2017: 63%) of those payables
and the Daimler Trucks division accounts for 24% (2017: 20%).
thereof liquidity
Equity and liabilities
Provisions increased from €22.1 billion to €24.4 billion;
as a proportion of the balance sheet total, they were at the prior-
year level at 9%. They primarily comprise provisions for pen-
sions and similar obligations of €7.4 billion (2017: €5.8 billion),
which mainly consists of the difference between the present
value of defined benefit pension obligations of €31.7 billion
(2017: €31.7 billion) and the fair value of the pension-plan assets
applied to finance those obligations of €25.5 billion (2017:
€27.2 billion). Provisions also relate to liabilities from income
taxes of €1.5 billion (2017: €1.6 billion), from product warran-
ties of €7.0 billion (2017: €6.7 billion) and for personnel and
social costs of €4.3 billion (2017: €4.4 billion), as well as other
provisions of €4.3 billion (2017: €3.6 billion).
165,316
The Group's equity increased compared with December 31,
2017 from €65.2 billion to €66.1 billion; adjusted for the effects
of currency translation, the increase amounts to €0.7 billion.
The increase in equity was mainly due to net profit of €7.6 billion
page 88 and the effects of currency translation of
€0.2 billion. The increase was partially offset by the dividend of
€3.9 billion paid out to Daimler's shareholders, the effect of
remeasurement of derivative financial instruments not recog-
nized in profit or loss of €1.3 billion, and actuarial losses from
defined benefit pension plans recognized in retained earnings
of €1.5 billion. Equity attributable to the shareholders of
Daimler AG increased to €64.7 billion (2017: €63.9 billion).
Total equity and liabilities
Liabilities held for sale
Equity
5,995
212
212
Equity increased by 1% and thus by a significantly lower pro-
portion than the increase in the balance sheet total of 10%.
Due to the effects described above, the Group's equity ratio
of 22.2% was below the level at the end of 2017 (24.0%);
the equity ratio for the industrial business was 42.8% (2017:
46.4%). It is necessary to consider the fact that the equity
ratios at the end of 2017 and 2018 are adjusted for the paid
and proposed dividend payments.
281,619
116,303
105,356
149,989
1 The columns "Industrial Business" and "Daimler Financial Services" represent a business point of view.
2 The industrial business comprises the vehicle segments Mercedes-Benz Cars, Mercedes-Benz Trucks, Mercedes-Benz Vans and Daimler Buses.
Intra-group eliminations between the industrial business and Daimler Financial Services are generally allocated to the industrial business.
3 The prior-year figures have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9. Information on adjustments to prior-year
figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 101
255,345
282
160 255
Daimler AG
255 66
General administrative expenses of €2.3 billion were
higher than in the previous year (2017: €2.0 billion). They include
costs in connection with Project Future amounting to
€0.2 billion. As a proportion of revenue, general administrative
expenses amounted to 2.0% (2017: 1.8%).
Selling expenses increased by €0.6 billion to €7.9 billion. This
was primarily due to higher expenses for freight, marketing
and sales systems. As a proportion of revenue, selling expenses
increased from 6.5% to 7.0%.
346
Cost of sales rose by 1% to €103.2 billion. The increase results
primarily from higher expenses for production materials and
purchased services. This was mainly due to higher expenses for
new products and technologies, expenses related to certifi-
cation according to the new WLTP (Worldwide Harmonized Light
Vehicles Test Procedure) standard and expenses for service
measures. Research and development expenses, which are
reported under cost of sales, were higher than in the previous
year at €8.1 billion (2017: €7.6 billion); as a proportion of
revenue, they amounted to 7.2% (2017: 6.8%). Research and
development expenses primarily related to the renewal and
expansion of the product portfolio, in particular electric vehicles
and the S-Class, C-Class, SUVs and the new Sprinter. In
addition, work is continuously being carried out on new engine
generations, alternative drive systems and the intensification
of the module strategy. At the end of the year, approximately
20,500 people were employed in the area of research and
development.
At €112.5 billion, revenue remained at the prior-year level
and in line with our expectations as stated in the Outlook
section of last year's Annual Report. Revenue in the car business
decreased by 4% to €83.8 billion due to lower vehicle sales.
Along with higher unit sales, revenue in the commercial-vehicle
business increased again by 12% to €28.7 billion.
Unit sales by Daimler AG in 2018 were slightly lower than in the
prior year and thus lower than our expectation as stated in
the Outlook section of last year's Annual Report. Sales of cars
decreased by 4% to 1,791,000 units¹. Due to starts of produc-
tion, sales decreased of the GLE-Class by 18% to 137,000 units¹
and of the B-Class by 21% to 62,000 units¹. Sales of 303,000
units of the C-Class were lower than in the previous year, par-
tially for lifecycle reasons (2017: 336,000 units¹). The GLC-
Class was extremely successful in 2018, with a sales increase
of 18% to 293,000 units¹. Truck sales increased by 6% to
112,000 units¹ and van sales rose by 8% to 386,000 units¹.
The development of profitability was affected in financial
year 2018 by the increase in financial income of €1.4 billion to
€7.3 billion, as well as by the decrease in operating profit of
€2.3 billion to €-1.2 billion. 7 B.34
Profitability
The main performance indicators for Daimler AG are unit sales,
revenue and net profit.
The annual financial statements of Daimler AG are prepared in
accordance with the German Commercial Code (HGB). The
consolidated financial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS),
as adopted by the European Union (EU). This results in some
differences with regard to recognition and measurement,
primarily relating to intangible assets, provisions, financial
instruments, the leasing business and deferred taxes.
The vehicles are produced at the domestic plants of Daimler AG,
as well as under contract-manufacturing agreements by
domestic and foreign subsidiaries and by producers of special
vehicles. Daimler AG distributes its products through its
own sales-and-service network, which is organized in seven
regional centers for cars and seven for commercial vehicles,
through foreign sales subsidiaries and through third parties.
Daimler AG is the parent company of the Daimler Group and its
headquarters are in Stuttgart. Its principal business activities
comprise the development, production and distribution of cars,
vans and trucks in Germany and the management of the activi-
ties of the Daimler Group.
In addition to reporting on the Daimler Group, the development
of Daimler AG is also described in this section.
Condensed version according to the German Commercial Code (HGB)
282
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
Further information on the assets presented in the statement
of financial position and on the Group's equity and liabilities
is provided in the Consolidated Statement of Financial Position
page 230, the Consolidated Statement of Changes in
Equity page 232 and the related notes in the Notes to the
Consolidated Financial Statements.
Other liabilities of €9.3 billion (2017: €8.0 billion) primarily
comprise deferred income, tax liabilities and deferred taxes.
The increase was primarily the result of higher deferred taxes.
Contract and refund liabilities of €12.5 billion are higher
than a year earlier (2017: €11.2 billion). They mainly comprise
deferred revenue from service and maintenance contracts
and extended warranties as well as obligations from sales trans-
actions in the scope of IFRS 15. Higher revenues from service
and maintenance contracts and extended warranties mainly led
to the increase in contract and refund liabilities.
25 22
Current liabilities
87
98
107
122
― Non-current liabilities
103
118
65
148
102
373
5,719
Financing liabilities
3,591
thereof current
125,524
140,131
1,600
4,771
127,124
144,902
1,026
12,379
12,810
1,137
21,110
23,269
22,136
24,406
Provisions
52,780
53,243
65,159
66,053
Equity
Equity and liabilities
149,989
165,316
105,356
116,303
255,345
281,619
The aforementioned functional costs include expenses in
the amount of €0.6 billion in connection with the transfer of
pension obligations and special-purpose assets to Daimler
Pensionsfonds AG.
Total assets
56,240
48,746
-20,993
-19,435
7,992
9,310
10,862
12,146
11,208
12,519
819
3,900
4,144
5,375
5,888
9,275
10,032
790
11,632
1,997
13,395
14,185
57,343
62,898
21,035
25,764
78,378
88,662
Other liabilities
Contract and refund liabilities
Other financial liabilities
Trade payables
thereof non-current
68,181
77,233
12,451
1 Unit sales relate solely to new vehicles. The unit sales of Daimler AG
include vehicles invoiced to companies of the Group which have not yet
been sold on to external customers by those companies. Vehicle sales
by production companies of the Daimler Group to external customers and
to subsidiaries of Daimler AG are not counted in unit sales.
Equity
Other operating expense, net amounted to €0.3 billion
(2017: €0.4 billion). Income from other periods increased, on the
other hand, expenses for legal proceedings had an impact.
7 B.34
Other provisions
838
similar obligations
Provisions for pensions and
11,480
23,637
3,905
42,092
43,209
25,182
3,477
Distributable profit
Retained earnings
11,480
Capital reserve
(Conditional capital €500 million)
3,070
3,070
Share capital
Equity and liabilities
3,462
107,310
117,160
Net defined-benefit plan asset
406
Prepaid expenses
1,782
60,764
61,662
Current assets
6,354
Cash and cash equivalents
42,700
9,466
49,516
44,784
Receivables, securities and other assets
15,595
Provisions
Trade payables
16,433
7,210
9,022
We are open to cooperation - worldwide. Our partners include
promising startups such as what3words and Anagog, as well
as suppliers such as Bosch, or, in selected fields, competitors
such as BMW. Some of our Chinese partners are Baidu, Alibaba
and Tsinghua University. We operate digital hubs as develop-
ment centers around the world, for example in Berlin, Seattle,
Lisbon and Tel Aviv.
Along with our internal activities, we also maintain close
contacts with external research institutions. For example, we
work together with various renowned research institutes
around the world and participate in international exchange
programs for next-generation scientists.
In September, we opened our new Test and Technology Center
in Immendingen. We have invested more than €200 million
in this new Daimler research location, which is located at a for-
mer military site and covers a total area of 520 hectares.
The center brings together our global vehicle testing activities.
Among other things, we will use the facility to develop alter-
native drive systems such as hybrid and electric vehicles of the
EQ product and technology brand, and to test future assis-
tance systems and automated driving functions.
Our international research and development network
With our global research and development network, we are pres-
ent in the key markets with direct proximity to our customers.
Our biggest facilities are in Sindelfingen and Stuttgart-Untertürk-
heim in Germany. Our most important research locations in
North America are the US R&D headquarters in Sunnyvale,
California (main facility); Long Beach, California; Portland, Ore-
gon; and Redford, Michigan. Our most important facilities in
Asia are in Bangalore, India; the Global Hybrid Center in Kawa-
saki, Japan; and our research and development center in
Beijing. Mercedes-Benz Research & Development India (MBRDI,
with headquarters in Bangalore) is Daimler's largest research
and development center outside Germany. Activities at MBRDI
focus on digitization, simulations and data science. In Novem-
ber 2018, we announced plans to build a Research and Develop-
ment Tech Center China with a total investment of approxi-
mately €145 million. This new center will further expand our
presence in what is now our biggest single market. It will
also be our second major R&D site in Beijing, following the
Mercedes-Benz R&D Center, which was established in 2014.
The new R&D Tech Center is scheduled to begin operating in
2020.
The expertise, creativity and drive of our employees in research
and development are key factors behind our vehicles' market
success. At the end of 2018, Daimler employed 25,600 men and
women at its research and development units around the
world (2017: 24,600). A total of 17,700 of those employees (2017:
16,800) worked at Group Research & Mercedes-Benz Cars
Development, 5,300 (2017: 5,300) at Daimler Trucks, 1,300
(2017: 1,300) at Mercedes-Benz Vans and 1,300 (2017: 1,200)
at Daimler Buses. Around 5,800 researchers and development
engineers (2017: 5,400) worked outside Germany.
Research and development as key success factors
Research and development have always played a key role
at Daimler. Gottlieb Daimler and Carl Benz invented the auto-
mobile more than 130 years ago. Today, we are shaping the
future of mobility. Our goal is to offer our customers fascinat-
ing products and customized solutions for needs-oriented,
safe and sustainable mobility. Our technology portfolio and
our key areas of expertise are focused on this objective.
Research & development
The new Daimler Sustainability Report for financial year 2018
will be available on the Group's website in late March 2019.
daimler.com/sustainability
daimler.com/nonfinancial-report.
Additional information on “Sustainability at Daimler" can
be found in the "Non-Financial Report" section of this Annual
Report. pages 202 ff The "Non-Financial Report" is also
available on the Internet at
Sustainability is one of the basic principles of our corporate
activities as well as a benchmark for our success as a company.
This approach means that we take advantage of the oppor-
tunities offered by sustainability for our business success while
including ecological and social impacts in these consider-
ations.
Sustainability at Daimler
Sustainability and Integrity
55,092
10,524
105
Following the approval of Project Future at the 2019 Annual
Shareholders' Meeting of Daimler AG, the car and van business
as well as the truck and bus business will be separated into
the legally independent entities Mercedes-Benz AG and Daimler
Truck AG. As a result, Daimler AG will not sell any vehicles in
the future. The remaining, significantly lower revenue will relate
to intra-Group charging for services. Mercedes-Benz AG and
Daimler Truck AG will each have a profit-and-loss-transfer agree-
ment with Daimler AG. We therefore expect net profit for
financial year 2019 to remain at the previous year's level.
Due to the interrelations between Daimler AG and its subsid-
iaries and the relative size of Daimler AG within the Group, we
refer to the statements in the Outlook chapter, which largely
reflect our expectations also for the parent company. We also
have adjusted the sensitivities for forecasting the unit sales,
revenue and net profit in accordance with the Group for Daimler
AG, effective with financial year 2019. pages 158 ff Exclud-
ing the effect of the planned separation as part of Project Future,
we expect Daimler AG to achieve net profit in 2019 at the level
of financial year 2018. We anticipate a higher operating profit
and lower financial income. In 2019, we expect Daimler AG
to achieve unit sales and revenue slightly above the prior-year
levels.
Outlook
900
107,310
117,160
1,076
Deferred income
50,337
56,442
Liabilities
43,838
49,232
Other liabilities
13,981
13,981
6,499
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
B | COMBINED MANAGEMENT REPORT | DAIMLER AG 103
Inventories
Assets
-2,010
-2,304
General administrative expenses
-7,312
-7,904
112,685
-101,874
112,491
-103,232
Cost of sales (including R&D expenditure)
Selling expenses
Revenue
2017
2018
In millions of euros
Condensed income statement of Daimler AG
B.34
Cash flows from financing activities resulted in a net cash
inflow of €5.5 billion (2017: outflow of €0.6 billion). The inflow is
explained by higher liabilities from the Group's internal trans-
actions in connection with central financial and liquidity manage-
ment. On the other hand, the decrease in external financing
liabilities resulted in higher cash outflows than in the previous
year. Cash flows from financing activities include the payment
of the dividend for the year 2017 in an amount of €3.9 billion.
Cash flows from investing activities resulted in a net cash
outflow of €14.7 billion in 2018 (2017: €6.5 billion). The increase
is primarily a reflection of restructuring within the Group in
the area of financial assets in connection with Project Future.
Positive effects resulted from acquisitions and sales of secu-
rities within the framework of liquidity management. Investments
in intangible assets and in property, plant and equipment
were at the prior-year level.
Cash provided by operating activities amounted to €13.8 bil-
lion in the 2018 financial year (2017: €7.2 billion). The increase
resulted in particular from higher dividends from subsidiaries
and lower receivables from the supply of goods and services to
Group companies. In addition, higher cash-effective contri-
butions were made to pension plan assets in the previous year.
Gross liquidity - defined as cash and cash equivalents and
other marketable securities as well as fixed-term deposits
presented under other assets - increased by €4.7 billion to
€14.3 billion on the balance sheet date. The main reason
for the increase in gross liquidity was the €4.6 billion increase
in cash and cash equivalents.
Receivables, securities and other assets decreased com-
pared with December 31, 2017 by €4.7 billion to €44.8 billion.
The main reason for this development was the lower level
of €5.4 billion in receivables due from subsidiaries, primarily
resulting from sales of receivables in foreign currencies in
the amount of €4.2 billion to a Group company during the year,
and the decrease of €0.4 billion in securities. However, other
assets increased by €1.0 billion. Cash and cash equivalents
rose by €4.6 billion to €6.4 billion.
by €1.0 billion to €10.5 billion. The increase is mainly related to
unfinished and finished products.
Inventories increased compared with December 31, 2017
Non-current assets increased during the year by €12.4 billion
to €55.1 billion, reflecting the €11.9 billion increase in financial
assets, which resulted primarily from internal restructuring
within the Group as part of Project Future. Furthermore, property,
plant and equipment increased by €0.4 billion to €9.5 billion.
Investments in property, plant and equipment (excluding leased
assets, approximately €3.0 billion) mainly relate to investments
in the production of the new S-, A- and B-Class models and the
new Sprinter, as well as investments in engine and trans-
mission projects.
The balance sheet total of €117.2 billion is €9.9 billion higher
than at the end of 2017. 71 B.35
resources
Financial position, liquidity and capital
The economic situation of Daimler AG is primarily deter-
mined by its business operations and those of its subsidiaries.
Daimler AG participates in the operating results of its sub-
sidiaries through profit distributions. The economic situation of
Daimler AG is therefore fundamentally the same as that of
the Daimler Group, which is described in the chapter Overall
Assessment of the Economic Situation.
page 118
Net profit amounts to €5.0 billion (2017: €5.0 billion), and
was thus in line with the expectations stated in the Outlook
section of last year's Annual Report.
The income tax expense amounts to €1.1 billion (2017:
€2.0 billion). The lower operating profit led to a lower income
tax expense. Furthermore, the prior-year figure included
high tax expenses from other periods.
Financial income increased by €1.4 billion to €7.3 billion. The
increase is primarily due to an increase of €4.6 billion in income
from investments in subsidiaries. On the other hand, financial
income was adversely affected by an increase of €3.2 billion in
interest expenses, primarily in connection with company
pensions. This was mainly due to significant higher interest
expenses as a result of the return on the special-purpose
assets, which was negative, unlike in the previous year, and
to expenses resulting from the proportionate transfer of
pension obligations and special-purpose assets to Daimler
Pensionsfonds AG. In addition, the measurement of pension
obligations also contributed to higher interest expenses.
Other operating expense, net
-292
-355
Operating profit
The business development of Daimler AG is fundamentally sub-
ject to the same risks and opportunities as that of the Daimler
Group. Daimler AG generally participates in the risks of its sub-
sidiaries and associated companies in line with the percentage
of each holding. Risks and opportunities are described in the
Risk and Opportunity Report. pages 143 ff Risks may addi-
tionally arise from relations with subsidiaries and associated
companies in connection with statutory or contractual obliga-
tions (in particular with regard to financing), as well as from
the impairment of investments in subsidiaries and associated
companies.
Risks and opportunities
384
Dec. 31,
2017
Dec. 31,
2018
In millions of euros
Balance sheet structure of Daimler AG
B.35
Liabilities increased by €6.1 billion to €56.4 billion. This
primarily reflects higher liabilities to subsidiaries and results in
particular from purchase-price obligations from the Group's
internal restructuring in connection with Project Future. On the
other hand, there were decreases in bonds and notes and
liabilities to banks.
Provisions for pensions and similar obligations amounted
to €0.8 billion at December 31, 2018 (2017: net defined-benefit
plan asset of €3.5 billion). The change is primarily attributable
to the transfer of pension obligations of €6.9 billion for retired
employees and their surviving dependents to Daimler Pen-
sionsfonds AG. To cover these pension obligations, special-pur-
pose assets of €8.2 billion were transferred to Daimler
Pensionsfonds AG. Additionally, the measurement of the pension
obligations and the negative return on the special-purpose
assets led to an increase in the provision.
Provisions increased compared with December 31, 2017 by
€2.4 billion to €16.4 billion. This resulted mainly from increased
provisions for pensions and similar obligations, increased
obligations in connection with sales transactions and warran-
ties, legal proceedings and higher personnel and social
provisions.
Equity increased in 2018 by €1.1 billion to €43.2 billion.
This change primarily resulted from the net profit for 2018, of
which, in accordance with Section 58 Subsection 2 of the
German Stock Corporation Act (AktG), €1.5 billion was trans-
ferred to retained earnings. The equity ratio at December 31,
2018 was 36.9% (December 31, 2017: 39.2%). As stated in the
notes to the annual financial statements according to the
German Commercial Code (HGB), Daimler AG holds no treasury
shares at December 31, 2018.
104 B | COMBINED MANAGEMENT REPORT | DAIMLER AG
3,905
Non-current assets
3,477
-1,077
-1,545
Transfer to retained earnings
4,982
5,022
Net profit
-2,018
-1,055
Income taxes
5,866
7,318
Financial income
1,134
-1,241
Distributable profit
9,649
531
29,489
Assets held for sale
Aug/2018 Apr/2024
€1,000 million
Daimler International
Finance B.V.
Aug/2021
Aug/2018
€1,500 million
Daimler International
Finance B.V.
Nov/2025
May 2018
€1,250 million
Daimler International
Finance B.V.
May 2022
May 2018
€1,000 million
Feb/2028
May 2018
US$300 million
May 2023
May 2018
US$1,000 million
May 2021
May 2018
US$1,700 million
May 2020
May 2018
€1,000 million
Apr/2018 Apr/2020
€500 million
Feb/2018 Feb/2028
Daimler International
Finance B.V.
Daimler Finance
North America LLC
US$500 million
Aug/2018 Feb/2027
US$1,750 million
Short-term credit rating
A
A
A
A
A-
A-
A2
A2
A
A
End of 2018 End of 2017
DBRS
Scope
Feb/2018 Feb/2023
Fitch
S&P
Long-term credit rating
Credit ratings
B.31
The short-term ratings of Daimler AG and its financing compa-
nies were unchanged with all five rating agencies in 2018.
The Canadian agency DBRS confirmed its issuer rating and
senior debt rating of Daimler AG at A with stable trends in
a press release on November 29, 2018. The confirmation of
the ratings from the previous year was based on a solid
business risk assessment with commensurate financial risk.
On December 19, 2018, S&P Global Ratings (S&P) also
affirmed its long-term corporate rating of A for Daimler AG and
underscored its leading position among the premium auto-
mobile and truck manufacturers. S&P assumes that Daimler will
be able to maintain its competitive position. In addition, S&P
anticipates the continuation of very good financial metrics. The
business risk of Daimler AG is assessed as "satisfactory" and
the financial risk as "minimal".
On May 23, 2018, Fitch Ratings (Fitch) once again affirmed
its long-term issuer default rating for Daimler AG of A- with
a stable outlook. Fitch stated that the rating reflects Daimler's
strong business profile and robust credit metrics. In addition,
Fitch pointed out the wide geographical and product diversifica-
tion of Daimler.
On June 14, 2018, the European agency Scope Ratings (Scope)
affirmed its issuer rating of A on Daimler AG and its financing
subsidiaries. Scope emphasized our company's track record in
recent years and expects that Daimler will continue to main-
tain the strong market positions held by Mercedes-Benz Cars
and Daimler Trucks. Furthermore, Scope assesses Daimler's
financial risk profile as very strong.
Moody's Investors Service (Moody's) affirmed its A2 long-term
rating for Daimler AG and its rated subsidiaries on February 9,
2018. Moody's pointed out that Daimler's credit metrics place
the Group solidly in the A2 rating category. The stable outlook
reflects Moody's expectation that Daimler's business setup has
the capacity to successfully meet the upcoming challenges in
the automobile markets.
In financial year 2018, the credit ratings of Daimler AG remained
unchanged with all the agencies we have engaged to provide
ratings. At the end of 2018, therefore, the outlook for Daimler AG
was assessed as "stable" by the five agencies listed below.
7 B.31
Credit ratings
98 B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
Nov/2018 Nov/2021
Moody's
S&P
US$675 million
US$1,700 million
Dec. 31,
Dec. 31,
2017
Notes/bonds and
liabilities from
ABS transactions
Refinancing instruments
B.29
Detailed information on the amounts and terms of financing
liabilities is provided in Note 24 and 33 of the Notes to
the Consolidated Financial Statements. ①Note 33 also pro-
vides information on the maturities of the other financial
liabilities.
At December 31, 2018, the total of financial liabilities shown
in the consolidated statement of financial position amounted to
€144.9 billion (2017: €127.1 billion).
The carrying values of the main refinancing instruments and
the weighted average interest rates are shown in table 7 B.29.
At December 31, 2018, they are mainly denominated in
the following currencies: 42% in euros, 25% in US dollars, 9%
in Chinese renminbi, 4% in British pounds, 3% in Canadian
dollars and 3% in Japanese yen.
At the end of 2018, Daimler had unutilized short- and long-term
credit lines totaling €26.8 billion (2017: €21.0 billion). They
include the credit facility arranged in July 2018 with a volume
of €11 billion.
In July 2018, Daimler successfully concluded negotiations
with a consortium of international banks for a new syndicated
credit facility with a volume raised from €9 billion to €11 billion.
With a term of five years, it grants Daimler additional financial
flexibility until 2023. The term can be extended to 2025.
Daimler does not intend to utilize the credit line.
Bank credit was another important source of refinancing in
2018. Loans were provided by globally active banks as well
as by nationally operating banks. The lenders also included
supranational banks such as the European Investment Bank
and the Brazilian Development Bank.
In 2018, asset-backed securities (ABS) were issued in the
United States, Canada, Germany, the United Kingdom and
China. In the United States, a total refinancing volume of USD
7.6 billion was generated in six transactions, and in Canada,
a volume of CAD 1.0 billion in two transactions. In addition,
Mercedes-Benz Bank sold an ABS bond worth €0.75 billion to
European investors via the Silver Arrow platform. In the
United Kingdom, GBP 0.4 billion was successfully placed with
investors. In China, two ABS transactions with a volume of
CNY 16.0 billion were successfully placed.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 97
Daimler also issued small volumes of commercial paper in
2018.
In the Chinese market, Daimler placed seven so-called panda
bonds with a total volume of CNY 16.0 billion. In addition, a
large number of smaller bonds were issued in various currencies
and markets.
In the year under review, the Group covered its refinancing
requirements mainly through the issuance of bonds. A large
proportion of those bonds were placed in the form of so-called
benchmark emissions (bonds with high nominal volumes) in
the US dollar and euro markets. 7 B.30
The monetary policy of the central banks also affected the
situation in the bond markets significantly in the reporting
period. The high volumes of available liquidity meant that risk
premiums for companies with investment-grade credit
ratings largely remained moderate.
Various issuance programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €60 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market programs
exist, which are significantly smaller than the EMTN program.
Capital-market programs allow flexible, repeated access to the
capital markets.
The funds raised by Daimler in the year 2018 primarily served
to refinance the leasing and sales-financing business. For that
purpose, Daimler made use of a broad spectrum of various
financing instruments in various currencies and markets. They
include bank loans, commercial paper in the money market,
bonds with medium and long maturities, customer deposits at
Mercedes-Benz Bank, and the securitization of receivables
from customers in the financial services business (asset backed
securities).
Refinancing
Furthermore, we capitalized development costs of €2.5 billion
in 2018 (2017: €2.8 billion); this is presented under intangible
assets.
page 262
In addition to property, plant and equipment, we also invested
in associated companies and joint ventures in the reporting
period. Through targeted investments, we strengthened our
position especially in the area of mobility services and in the
development of a charging infrastructure for electric mobility.
At Mercedes-Benz Cars, investment in property, plant and
equipment of €5.7 billion in 2018 was significantly above the
prior-year level (2017: €4.8 billion), primarily due to the ongoing
product offensive. The most important projects included the
successor generation of the current C-Class and the product
ramp-up of the new GLE sports utility vehicle. We also made
substantial investments in the reorganization of our German
production facilities as competence centers, in the expansion
of our international production network, and in the worldwide
production network for electric mobility. The main areas of
investment at Daimler Trucks in 2018 were successor genera-
tions for existing products, new products, global component
projects and the optimization of the worldwide production net-
work. Total investment in property, plant and equipment at
Daimler Trucks amounted to €1.1 billion (2017: €1.0 billion). At
the Mercedes-Benz Vans division, the focus of investment
was on production of the next-generation Sprinter in Germany
and the United States. The main investments at Daimler
Buses last year were in alternative drive systems, new products
and the modernization of the production network.
At December 31, 2018, financial obligations of €4.3 billion
exist in connection with future investments in property, plant
and equipment.
In the context of our strategy of strengthening our core business
and with the transformation of the automotive industry, we
aim to make good use of the opportunities presented by the
global automotive markets. In this context, we always focus
on the dynamically changing wishes of our customers. We
therefore intend to play a major role in shaping the fundamental
technological change taking place in the automotive industry,
and to assume a leading role with the development of the future
areas of CASE (Connected, Autonomous, Shared & Services
and Electric). This requires substantial investment in innovative
products and new technologies, as well as in the expansion of
our worldwide production network. In 2018, we therefore once
again significantly increased our investment in property, plant
and equipment - as already announced in Annual Report 2017 -
from an already high level to €7.5 billion (2017: €6.7 billion).
Investment
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
96
531
2018
Carrying values
Dec. 31,
2017
in %
In millions of euros
Jan/2018 Jan/2023
€750 million
Daimler International
Finance B.V.
US$625 million
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler International
Finance B.V.
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler International
Finance B.V.
Maturity
Month of
emission
Volume
Issuer
Benchmark issuances
11,460
11,774
0.42
Feb/2018 Feb/2021
0.58
39,400
3.09
3.73
B.30
Deposits in the
direct banking
business
1,045
2,835
2.64
1.13
Commercial paper
Liabilities to
financial
institutions
78,110
88,942
1.88
2.24
34,555
A-1
Average interest rates
Dec. 31,
2018
Moody's
12,072
15,853
Cash and cash equivalents
2,253
2,041
9,742
10,545
11,995
12,586
Trade receivables
1,194
1,393
24,492
28,096
25,686
Inventories
148
209
4,670
4,651
4,818
4,860
Equity-method investments
86,163
96,830
-109
-90
86,054
96,740
12,799
3,054
2,557
Marketable debt securities and similar investments
A-1
39
17,467
18,452
-10,661
-12,719
1,376
989
720
1
2
990
6,806
9,061
11,025
Other assets
5,733
Receivables from financial services
Other financial assets
thereof non-current
180
493
8,893
8,362
9,073
8,855
thereof current
1,169
1,213
8,894
8,364
10,063
9,577
722
67
29,003
9,515
18,071
See
Assets held for sale of €0.5 billion and liabilities held for sale
of €0.2 billion result from an agreement signed between
the Daimler Group and the BMW Group in March 2018 to merge
their business units for mobility services.
Other assets of €11.0 billion (2017: €9.1 billion) primarily com-
prise deferred tax assets and tax refund claims. The increase
in deferred tax assets is due among other things to effects from
the remeasurement of derivative financial instruments not
recognized in profit or loss.
Other financial assets decreased by €1.1 billion to €5.7 billion.
They primarily consist of derivative financial instruments,
equity and debt instruments, investments in non-consolidated
subsidiaries, and loans and other receivables due from third
parties. The decrease is primarily attributable to lower positive
fair values of currency derivatives.
Marketable debt securities and similar investments
decreased compared with December 31, 2017 from €10.1 billion
to €9.6 billion. Those assets include the debt instruments
that are allocated to liquidity, most of which are traded in active
markets. They generally have an external rating of A or better.
Cash and cash equivalents increased compared with the end
of 2017 by €3.8 billion to €15.9 billion.
100 B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
Trade receivables of €12.6 billion are above the prior-year
level of €12.0 billion. The Mercedes-Benz Cars division
accounts for 45% of these receivables (2017: 43%) and the
Daimler Trucks division accounts for 25% (2017: 24%).
Inventories increased from €25.7 billion to €29.5 billion,
equivalent to 10% of total assets, and were thus at the prior-year
level. The increase applies to all automotive divisions and
relates primarily to finished goods and work in process. At
Mercedes-Benz Cars and Mercedes-Benz Vans, higher
inventories were in particular due to the launch of new models
and increased production capacity in the NAFTA region.
The increase during the year caused by delivery delays was not
fully reduced in the last quarter. In addition, inventories
increased at Daimler Trucks due among other things to the
expected positive sales development in the NAFTA region
and in Europe.
See Note 13 of the Notes to the Consolidated Financial
Statements for further information.
Equity-method investments of €4.9 billion (2017: €4.8 billion)
mainly comprise the carrying amounts of our equity interests
in Beijing Benz Automotive Co., Ltd., BAIC Motor Corporation
Ltd. and There Holding B.V.
Equipment on operating leases and receivables from
financial services rose to a total of €146.2 billion (2017:
€133.1 billion). The increase adjusted for exchange-rate effects
of €12.3 billion was primarily caused by the higher level of new
business at Daimler Financial Services. The growth in business
operations with customers reflects the successful course
of business, especially in the NAFTA region, Asia and Western
Europe. The leasing and sales-financing business as a pro-
portion of total assets was at the prior-year level of 52%.
Property, plant and equipment page 263 increased
Intangible assets of €14.8 billion (2017: €13.7 billion) include
€11.3 billion of capitalized development costs (2017: €10.3 bil-
lion), €2.0 billion of franchises, industrial property and similar
rights (2017: €2.0 billion) and €1.1 billion of goodwill (2017:
€1.1 billion). The Mercedes-Benz Car division accounts for 81%
(2017: 79%) and Daimler Trucks accounts for 8% (2017: 10%)
of development costs. Capitalized development costs amount
to €2.5 billion in 2018 (2017: €2.8 billion) and account for
28% of the Group's total research and development expenditure
(2017: 32%).
page 262
Note 3 of the Notes to the Consolidated Financial
Statements for further information.
The increase in total assets is primarily due to the increased
volume of the financial services business, higher inventories,
and cash and cash equivalents. In addition, the higher volume
of capital expenditure led to an increase in intangible assets
and property, plant and equipment. On the liabilities side, the
increased refinancing requirement resulting from the port-
folio growth led to increased financing liabilities. Furthermore,
there was an increase in provisions and in trade liabilities.
Current assets accounted for 43% of the balance sheet total,
which was above the prior-year level (2017: 42%). Current
liabilities amounted to 35% of total equity and liabilities, which
was slightly above the prior-year level (2017: 34%).
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 99
Financial Position
R-1 (low)
R-1 (low)
DBRS
S-1
S-1
Scope
F2
F2
Fitch
P-1
30,967
P-1
The balance sheet total increased compared with December
31, 2017 from €255.3 billion to €281.6 billion; adjusted for
the effects of currency translation, the increase amounts to
€25.4 billion. Daimler Financial Services accounts for
€165.3 billion of the balance sheet total (2017: €150.0 billion),
equivalent to 59% of the Daimler Group's total assets
(2017: 59%).
B.32
to €30.9 billion (2017: €28.0 billion). In 2018, €7.5 billion was
invested worldwide (2017: €6.7 billion), in particular at our
production and assembly sites for new products and technolo-
gies and for the expansion and modernization of production
facilities. The sites in Germany accounted for €4.4 billion of the
capital expenditure (2017: €4.0 billion).
49,476
18,509
47,074
Condensed statement of financial position'
Equipment on operating leases
89
27,914
30,859
27,981
30,948
946
888
12,789
13,913
13,735
14,801
Property, plant and equipment
Assets
In millions of euros
Consolidated
Intangible assets
Daimler Financial
Services
At December 31,
At December 31,
2018
Industrial Business²
2018
20173
2018
At December 31,
20173
20173
Germany
Employees at 12/31/2018
By region
B.38
Daimler's nearly 300,000 employees from over 160 countries
provide the Group with a vibrant mixture of cultures and ways of
life. We have committed ourselves to raising the proportion
of women in senior management at the Group to at least 20%
by the year 2020. The proportion of women in such positions
has continually risen in recent years to reach 18.8% at the end
of 2018 (2017: 17.6%). Our instruments for supporting the
targeted promotion of women include mentoring, special events
and training courses, and employee networks.
The statement "Diversity shapes our future" underscores
the importance of diversity management as a strategic factor
for success at Daimler. Diversity management enables us
to reflect the diversity of our customers, suppliers and investors
around the world.
Diversity management
High attractiveness as an employer
Around the world, we have combined in-house services, such
as those for financial processes, human resources (HR), IT
and development tasks, sales functions and certain location-
specific services, into shared service centers. Some of the
shared service centers are not consolidated because they do
not affect our financial position, cash flow or profitability;
those companies employed approximately 11,900 men and
women at the end of 2018.
The key aims of our human resources strategy are to further
increase our appeal as an employer and to safeguard the com-
petitiveness of our workforce. Because our executives should
motivate their employees to achieve top performance, it is
crucial that we further develop our management culture and
establish outstanding leadership capabilities in our manage-
ment. In addition, we want to take on social responsibility and
let diversity flourish in our global company.
Human resources strategy
The Group's total workforce also does not include the employ-
ees of companies that we manage together with Chinese
partners; at December 31, 2018, they numbered approximately
19,900 people (2017: 19,900).
58.5%
Our activities and measures for enhancing our appeal as an
employer are designed to enable us to recruit and retain a
sufficient number of specialized employees and qualified man-
agers in the competition for talented staff. Our primary
objectives here are to ensure attractive and fair compensation
and to establish and maintain a work culture that promotes
outstanding performance and a high level of motivation and
satisfaction among our employees and management staff.
Today's living and working conditions require working times to
be flexibly organized in accordance with individual needs.
Our approach is therefore to challenge our employees to achieve
top performance and to support their efforts to do so, rather
than focusing on their mere presence at work. For this reason,
we also seek to improve performance by helping employees
reconcile their professional and personal responsibilities.
Europe, excluding Germany
Employees (December 31)
USA
8.8%
Brazil
3.5%
3.3%
1.5%
10.1%
Japan
China*
Other
* excluding non-consolidated associated companies and joint ventures
B.39
Employees by division
The number of employees in Germany increased
from 172,089 in 2017 to 174,663 in the year under review.
Whereas employee numbers rose in the United States to
26,310 (2017: 23,513) and in Brazil to 10,307 (2017:9,800),
the number of employees in Japan remained close to the
prior-year level at 9,918 (2017: 10,016). 7 B.38 Our consoli-
dated subsidiaries in China had a total of 4,424 employees
at the end of the year (2017: 4,099). At the end of the year
under review, Daimler AG employed a total of 149,797 men
and women (2017: 148,953).
14.3%
At December 31, 2018, the Daimler Group employed a total
of 298,683 men and women (2017: 289,321). As was forecast
in Annual Report 2017, the number of employees increased
slightly (+3%). This increase was primarily a result of the positive
overall business situation. Workforce numbers increased at
all divisions in 2018. 7 B.39
The new Mercedes-Benz Tourismo touring coach reduces
fuel consumption primarily through optimized aerodynamics
and the all-new and lighter body. Lower fuel consumption
and emissions are achieved also as a result of optional equip-
ment such as Predictive Powertrain Control (PPC) and Eco
Driver Feedback (EDF).
The workforce
Daimler Group
digital@Vans bundles innovative solutions in the field of digiti-
zation. Under the web-based brand Mercedes PRO, Mercedes-
Benz Vans combines all digital services and solutions for the
daily requirements of its customers, from small businesses to
major clients. For example, Mercedes PRO optimizes commu-
nication between fleet managers, vehicles and drivers. In addi-
tion, it enables the online control of vehicles and the retrieval
of vehicle information such as location, fuel level or maintenance
intervals almost in real time.
Efficient and clean drive technology for buses
Daimler has already made tremendous advances in terms of
exhaust treatment technology for the bus sector. For example,
all Mercedes-Benz and Setra model series were made available
with Euro VI technology at a very early stage. Despite the
application of this significantly more sophisticated exhaust treat-
ment technology, use of the new Mercedes-Benz engines
has enabled us to achieve a further reduction in fuel consump-
tion for our already economical vehicles, with a simultaneous
increase in engine output.
The Mercedes-Benz Citaro NGT with the all-new M 936
natural-gas engine also helps to make public transportation in
cities more environmentally friendly. The Citaro NGT is also
even more efficient than its predecessor model - and the CO2
balance is even better when biomethane is used.
Depending on the vehicle's use profile and specifications, the
new electrohydraulic steering system in the Mercedes-Benz
Citaro hybrid further improves on the fuel consumption of the
conventional Citaro, which is already highly efficient. Hybrid
drive is available for many model variants of the best-selling
Citaro city bus, including the natural gas-powered Citaro
NGT. The reductions in fuel consumption quickly pay off for
transport companies, and the environment and society
benefit from the decrease in emissions.
With the new all-electric Mercedes-Benz eCitaro, which had
its world premiere at the 2018 IAA Commercial Vehicles trade
fair, we now have in our portfolio a key component of environ-
mentally friendly local public transport with low-emission and
locally emission-free buses.
pages 20f
Innovative safety and assistance systems for buses
With new safety and assistance systems, we are showing that
safety has top priority also for our buses. Beginning in 2019,
the Active Brake Assist 4 emergency braking system will become
standard equipment in all Mercedes-Benz and Setra touring
coaches. The system warns drivers of potential collisions with
pedestrians and automatically initiates emergency braking
when it detects stationary or moving obstacles ahead of the
vehicle. Preventive Brake Assist - the first active emergency
braking assist system for city buses - will be available as an
option for the entire Mercedes-Benz Citaro model family
and the Mercedes-Benz Conecto starting in 2019. Sideguard
Assist, a radar-based turning assistant with pedestrian detec-
tion for buses, supports bus drivers during right turns, which
can be dangerous in certain situations. Sideguard Assist
is available for all variants of the Mercedes-Benz Citaro and
Tourismo and all Setra ComfortClass 500 and Top Class
500 Setra touring coaches.
A comprehensive approach to environmental protection
Protecting the environment is a primary corporate objective of
the Daimler Group. Environmental protection is not separate
from other objectives at Daimler; but is an integral component
of a corporate strategy aimed at long-term value creation.
The environmental and energy-related guidelines approved by
the Board of Management define the environmental and
energy-related policy of the Daimler Group. This expresses our
commitment to integrated environmental protection that
begins with the underlying factors with an impact on the envi-
ronment, assesses the environmental effects of production
processes and products in advance, and takes these findings
into account in corporate decision making.
A vehicle's environmental impact is largely determined during
the first stages of its development. The earlier we integrate
environmentally responsible product development (design for
the environment, DfE) into the development process, the more
efficiently we can minimize the impact on the environment.
pages 206 ff
112
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Car CO2 emissions
In the year under review, the average CO2 emissions of the
total fleet of Mercedes-Benz Cars in Europe (EU28 + Iceland)
increased to 132 g/km (NEDC) (2017: 125 g/km).
The transition for the individual vehicles from NEDC to WLTP
as the legally stipulated CO2 emission measurement cycle has
led to a significant increase in our fleet emission figures. At
the same time, the shift in sales from diesel to gasoline engines
and a further increase in sales of larger SUVs and all-wheel-
drive vehicles have contributed to a higher CO2 figure for our
fleet.
Because all vehicle models will be certified in accordance
with the WLTP by September 2019, we expect only a slightly
lower CO2 figure for our fleet in 2019 despite further prog-
ress with reducing our vehicles fuel consumption. In 2020,
vehicle electrification measures should contribute to a
substantial decrease in fleet CO2 emissions.
More detailed information can be found in the "Non-Financial
Report" section of this Annual Report.
pages 206ff
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 113
More detailed information can be found in the Non-Financial
Report section of this Annual Report. pages 206 ff
Another important aspect is climate protection at our pro-
duction plants. Mercedes-Benz Cars is setting the course for
green production in Germany and Europe. Plans call for all
manufacturing facilities in Germany to be supplied with CO2-
neutral energy by 2022. The preparations for the exclusive
use of green electricity for a climate friendly production in
Europe are already well advanced. Our vehicle and powertrain
factories in Bremen, Rastatt, Sindelfingen, Berlin, Hamburg,
Kamenz, Kölleda and Stuttgart-Untertürkheim buy electricity or
operate their own power plants. In the future, 100% of purchased
electricity is to come from verified renewable sources such
as wind and water power. This corresponds to about three quar-
ters of the total electricity requirements of our German plants.
The remainder is generated in our own highly efficient gas-fired
combined heat and power plants. We intend to offset the
resulting CO2 emissions through qualified compensation proj-
ects. This also applies to all other energy purchases by
the plants, such as natural gas for heating buildings or fuel for
transport within the plant grounds.
For this reason, we have established environmental manage-
ment systems at our manufacturing locations with the goal
of ensuring that we can produce our vehicles safely, efficiently
and at a high level of quality in an environmentally friendly
manner that complies with all legal stipulations. We also carry
out environmental risk assessments at all production facilities
in which the Group has a majority interest. We are striving for a
high level of air quality, climate protection and resource con-
servation (in terms of water consumption, waste management
and soil conservation), and we support this high level with the
help of Daimler Group's standards.
Daimler follows an integrated approach for its corporate
environmental protection measures. This approach begins
with the potential causes of environmental effects.
Environmental protection in production
Slight increase in the number of employees
the remanufacturing of used parts, and
the workshop waste disposal system MeRSy
(Mercedes-Benz Recycling System)
Resource conservation: consistently high recyclability
Evaluating the environmental compatibility of a vehicle requires
an analysis of the emissions and use of resources throughout
the entire lifecycle. During vehicle development, we also prepare
a recycling concept for every vehicle model. This concept
includes an analysis of the suitability of all components and
materials for the various stages of the recycling process.
As a result, all Mercedes-Benz car models are 85% recyclable
and 95% recoverable. The key aspects of our activities in
this area are:
Further information can be found in the "Non-Financial Report"
section of this Annual Report.
pages 206 ff
Following the coalition decision in early October 2018, Daimler
announced that it would also participate in a hardware retrofit
program for diesel vehicles in the defined key regions as part
of the concept of the German federal government for clean
air and securing individual mobility. Against this background,
Daimler is prepared to cover the costs of hardware retrofitting
up to a maximum amount of €3,000 for Mercedes-Benz custom-
ers with Euro 5 diesel vehicles in the core regions. The retrofit
hardware must be developed and offered by a third-party sup-
plier and approved by the German Federal Motor Transport
Authority. It must specifically entitle customers also to drive
on roads on which there are driving bans in certain cities.
Daimler's goal is to attain clarity in the interests of the custom-
ers about which third-party hardware solutions can be
offered and when.
Daimler supports the German government's concept for clean
air and safeguarding individual mobility. With an attractive
incentive program in the defined core regions, we are acceler-
ating the renewal of the country's stock of vehicles. Daimler
is thus making a significant contribution to the federal govern-
ment's concept of preventing any disadvantages for diesel
drivers.
After talks with the German Federal Ministry of Transport and
Digital Infrastructure (BMVI) in June 2018, and by order of
the German Federal Motor Transport Authority (KBA), Daimler is
carrying out a mandatory recall of approximately 690,000 vehi-
cles in Europe (including approximately 280,000 in Germany).
The great majority of these vehicles were already covered by
the voluntary service measures announced in July 2017. The
measures are being taken in close cooperation with the German
certification authorities.
Plan for the future of diesel vehicles
Our plan for the future of diesel vehicles includes the develop-
ment of software updates for a total of well over three million
customer-owned vehicles in Europe, of which well over one
million are located in Germany. With the software updates, we
will reduce NOx emissions by 25 to 30% on average for
these vehicles. This will be verified with the measurement
cycle agreed upon with the authorities (WLTC 1, 2, 3).
the resale of tested and certified used parts through the
Mercedes-Benz Used Parts Center (GTC),
Daimler Trucks
6%
2017
Social responsibility
The goals associated with our social commitment
Daimler operates all over the world. Achieving business success
while simultaneously shaping progress and contributing to
the improvement of the way we live together in society - for
us these goals go hand in hand and are of fundamental
importance. With this in mind, the activities related to our social
commitment are designed to achieve a sustained and visible
positive effect that promotes the common good.
In 2018, we spent approximately €66 million on donations
to non-profit institutions and the sponsorship of socially bene-
ficial projects. This does not include our foundations or
self-initiated projects.
DaimlerWeCare
"With our employees," "For our locations," "Worldwide" -
these three pillars form the foundation of our social commit-
ment. We encourage our employees to get involved in socially
beneficial projects and help improve the social environment in
the communities where we operate. We also aim to strengthen
communities, promote education, science, the arts and
culture, and nature conservation, and to support initiatives
such as Mobile Kids that improve road safety. 7 B.40
With our employees
ProCent is a good example of how our employees take the
initiative when it comes to social commitment. In this program,
Daimler employees voluntarily donate the cent amounts of
their net salaries, and Daimler matches every cent donated. The
total amount then goes into a support fund for socially
beneficial projects, which can be nominated by the employees.
In 2018, approximately 230 projects were approved in a
volume of more than €2 million. Within the framework of this
initiative, sanitary facilities were renovated and the construc-
tion of a new biogas plant was financed at the Shangri-La Inter-
national School near Kathmandu, Nepal, for example.
"Social Days," the "Day of Caring" and other hands-on cam-
paigns such as "Give a Smile" give our employees the opportu-
nity to participate in socially beneficial projects. During the
year under review, almost 1,300 employees in 43 different proj-
ects participated in the "Social Days." Employees from our
IT department participated in a socially beneficial project at an
organic farm in the German state of Rhineland-Palatinate in
September 2018. Together with the "Lebenshilfe Bad Dürkheim
e.V." charitable organization, these staff members helped
refurbish the farm's facilities in order to safeguard the jobs the
farm offers to people with disabilities. All of these activities
are for a good cause, and they also strengthen the motivation
of our employees as well as social cohesion within the
company.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 115
For our locations
We conduct a wide variety of projects that not only support
social development at our locations but also specifically
improve the quality of life there. Among those that benefited
from our activities in 2018 were the various charitable organi-
zations in Stuttgart to which we donated 45 smart EQ vehicles
within the framework of the project "Im E-insatz für meine
Stadt" ("E-mobility for my city") that we launched together with
the Stuttgart Civic Foundation. The vehicle donation was
intended to support civic engagement and locally emission-free
mobility for volunteer workers.
Worldwide
We initiate aid projects worldwide to help people determine the
course of their lives independently, on their own responsibility
and without material deprivation, and in this manner create a
better future for the generations to come. The "Water for Life"
cooperation project with Caritas International is an example
of an international charitable undertaking that extends across
three continents. The project is being carried out in semi-
desert regions in India, Brazil and Mozambique and supports
the sustainable utilization of existing water resources in order
to improve the living conditions of local populations. During
2018, we focused in particular on analyzing the results of the
project in Brazil and assessing the effectiveness of our fund-
ing activities there. Our project in Brazil helped families and
cooperatives adapt to difficult climatic conditions, test new
farming approaches and develop new marketing channels. On
the basis of our analyses, it is clear that the project is begin-
ning to bear fruit.
Further information on employee matters can be found in the
Non-Financial Report on pages 210 ff of this Annual Report.
Funding through foundations
The Daimler and Benz Foundation supports interdisciplinary
scientific dialog and research projects. The purpose of
the foundation is to examine and clarify the interrelationships
between humans, the environment and technology. The
foundation offers scholarships to outstanding young scientists,
and it also designs and implements innovative research
formats and organizes lecture series.
B.40
Donations and sponsoring in 2018
Charity & Community
75%
Arts & Culture
6%
Education
12%
Science & Technology &
Environment
Political dialogue
With Vision URBANETIC, Mercedes-Benz Vans is presenting
under autonomous@Vans a supplement to its electrification
solutions with a revolutionary mobility concept showing how
autonomous mobility might work in the future. Vision URBANETIC
removes the separation between passenger and goods trans-
port by utilizing an innovative body-switching approach that
enables the needs-based, sustainable and efficient movement
of people and goods. In this manner, Vision URBANETIC
meets the requirements of cities, companies from diverse sec-
tors, urban residents and travelers in an innovative way.
The concept reduces traffic flows, eases the strain on inner-city
infrastructure and helps improve the quality of life in cities.
pages 28f
1%
The Daimler Fund in the Donors' Association focuses on
structural problems related to research and teaching, as well as
on the engineering sciences and international and scientific
cooperation. Since 1993, it has helped establish 27 endowed
professorships/assistant professorships in Germany and
abroad.
Our foundations support projects around the world related to
science, research, technology, education and sports. The
Laureus Sport for Good Foundation uses sports to bring people
together. It primarily enables socially disadvantaged children
and teenagers to discover their potential through sports, and
thus creates opportunities for a better future. There are now
over 150 Laureus projects under way in more than 40 countries.
These projects have helped more than two million children
worldwide. One example is the Boxgirls Kenya project, in which
young socially disadvantaged girls from poor Nairobi neighbor-
hoods are taught martial arts in order to help them overcome
trauma and strengthen their self-confidence.
Health management and occupational safety
Healthy and motivated employees are important for our
competitiveness. We therefore promote the health and safety
of our employees through numerous programs that focus
on adequate protection measures, ergonomics, the provision
of medical care, nutritional advice, individual exercise courses
and much more. Our Health & Safety unit defines, coordinates
and monitors measures that promote and ensure occupational
health and safety at the company.
We provide our staff with training and continuing education
opportunities throughout their entire careers in order to
safeguard the long-term innovative capability and outstanding
performance of our workforce. Our range of qualification
measures includes practical training courses, e-learning courses,
seminars, workshops, specialist conferences and financial
support for employees who participate in a course of study
while continuing to work.
Employee qualification
18/17
% change
298,683 289,321
+3
Mercedes-Benz Cars
145,436 142,666
+2
82,953
79,483
+4
Mercedes-Benz Vans
26,210
25,255
+4
Daimler Buses
18,770
18,292
+3
Daimler takes a holistic approach to securing young talent. This
begins with programs for children and teenagers (in our
Genius initiative, for example) and extends to a broad range of
activities such as social media campaigns, hackathons, com-
petitions and internships that offer young talents the possibility
to get in touch and interact with the company. After university
students graduate, we offer them attractive possibilities to join
our company directly or launch their careers at Daimler by
taking part in our global training programs.
Securing young talent
Further details are provided in the "Declaration on Corporate
Governance, Corporate Governance Report" section on
pages 191ff of this Annual Report.
In order to fulfill the requirements of legislation regarding
the equal participation of women and men in management
positions, the Board of Management has set targets for the
proportion of women at the two management levels below the
Board of Management and a deadline for achieving those
targets. In setting all targets, we have taken industry-specific
circumstances into consideration.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
114
2018
+6
11,244
Group functions and services
+8
13,012
14,070
Daimler Financial Services
10,613
The eDrive@VANS strategy involves not only the electrification
of the vehicle fleet but also a customized overall system
solution for each individual fleet. This includes advice on vehicle
selection, assistance with tools such as the eVAN Ready app,
and an overview of the total cost of ownership. In addition, the
integration of an intelligent charging infrastructure concept
lays the foundation for conserving resources with a commercial
fleet while remaining economically competitive.
€9.1 billion for research and development
Mercedes-Benz Vans: innovative solutions
Mercedes-Benz Cars
6,962
6,642
+5
thereof capitalized
2,269
2,388
-5
Daimler Trucks
1,295
1,322
-2
thereof capitalized
40
-9
45
Mercedes-Benz Vans
666
565
+18
thereof capitalized
176
310
-43
Daimler Buses
199
194
41
30
+3
+37
-11
2,773
2,526
thereof capitalized
106
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
B.36
Research and development expenditure
In billions of euros
8
7
6
5
4
3
2
total
thereof capitalized
1
0
2014
+5
8,711
9,107
Daimler Group
18/17
% change
2017
thereof capitalized
2018
Research and development expenditure by division
B.37
2018
2017
2016
2015
In millions of euros
More than ever before, Mercedes-Benz Vans is making the
choice of a drivetrain dependent on customer utility. In addition
to vehicle technology, system weight, charging/refueling
time, range and profitability are also taken into consideration.
Mercedes-Benz Vans is expanding its eDrive@VANs strategy
with the fuel cell. Based on the example of a semi-integrated
travel van, the Concept Sprinter F-CELL showcases the full
spectrum of the typical advantages of a fuel cell, from a long
range to locally emission-free mobility. These attributes are
also extremely well suited for other applications, such as long
courier trips or small intercity buses.
Targeted involvement of the supplier industry
New strategy for brands and patents: everything under
one roof
2 Information on electricity consumption and CO2 emissions is provisional
and has been determined by an external technical service and is non-bind-
ing. Range figures are also provisional and non-binding. EU type approval
and a certificate of conformity with official figures are not yet available.
The figures given above may deviate from the official figures.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 109
Our "vision of accident-free driving"
Vehicle safety is one of our core areas of expertise and a
key component of our product strategy. Our vision of accident-
free driving will continue to motivate us to make mobility as
safe as possible for everyone in the future.
Starting with the new A-Class, which was launched in May
2018, our compact-class cars can be equipped with assistance
systems that provide cooperative support to the driver.
Such systems, which were previously only available in S-Class
vehicles, also include features that enable partially automated
driving. The high level of active safety achieved by our engineers,
which prevents accidents while simultaneously enhancing
comfort for drivers, is also demonstrated in the new GLE -
several Intelligent Drive functions in its Driving Assistance
Package are also leading the way beyond the SUV segment. For
example, the Stop-and-Go Assist system in the new GLE can
detect traffic jams early on, actively support the driver in stop-
and-go traffic up to a speed of approximately 60 km/h,
and also help create an emergency lane for rescue crews in the
event of an accident.
Good visibility means greater safety. MULTIBEAM LED head-
lights with Adaptive Highbeam Assist Plus are now available
throughout our entire product range. This assistance system can
control the LEDs in the headlamps individually and thus con-
tinuously adapt the range and shape of the light cone to the
given traffic situation. We are also currently testing the next
technological lighting leap in a small batch of Mercedes-
Maybach models being driven by customers: DIGITAL LIGHT.
This software-controlled light has high precision thanks to
its resolution of more than two million pixels, and is leading the
way in driver assistance, performance and communication.
Trucks and buses of the future
Our customers move the world: goods, people, ideas. Our
shared task at Daimler Trucks & Buses is to provide them with
the best possible support. We develop the vehicles and
services with which they can advance our society today and
tomorrow: efficiently, safely and reliably. To this end, we are
putting important new technologies into series production such
as electric drive systems and partially automated driving -
across brands, divisions and regions. In this way, we make goods
and passenger transportation even safer and more sustainable
worldwide, and our customers even more successful. We first
listen to our customers on the spot and then we develop the
right solutions.
Daimler Trucks: efficient and electric
The new Mercedes-Benz Actros had its world premiere in
September 2018. The Mercedes-Benz brand's flagship truck
for long-distance haulage applications takes efficiency for
business owners, comfort for drivers and safety for all road
users and pedestrians to new levels. Fuel consumption has
been further reduced compared to the predecessor model. For
better aerodynamics, the truck features new, aerodynamically
improved wind deflectors and, above all, the world's first mirror
camera in a series-production truck, which will replace large
exterior mirrors in the future. Thanks to its expanded map
material, the Predictive Powertrain Control (PPC) system for
cruise control and gear shifting can now also be used for
long-distance haulage on both secondary roads and major
highways.
The new Actros will also be offered with natural-gas drive in
the future. Significantly lower CO2 emissions when operating
on natural gas and a further significant improvement in the
CO2 balance when using biomethane, in addition to low noise
emissions and zero emissions of particulate matter from the
drive engine - with the new Actros NGT, Mercedes-Benz Trucks
offers the benefits of this alternative drive system.
Along with its efforts to increase the efficiency of conventional
drive systems, Daimler Trucks is also working on the devel-
opment of sustainable, all-electric, quiet and locally emission-
free commercial vehicles that offer outstanding benefits for
both customers and the environment. The company conducts
analyses to identify applications for which electric mobility
makes the most economic sense, in the interest of both the
company's shareholders and its customers. The year 2018
marked the first time that Daimler Trucks unveiled all-electric
trucks across all its vehicle segments, ranging from the FUSO
eCanter in the light-duty segment to the Freightliner eM2 in the
medium-duty segment and the Mercedes-Benz eActros,
Freightliner eCascadia and FUSO Vision One in the heavy-duty
segment. The FUSO eCanter and the Mercedes-Benz eActros
are currently being tested under real conditions by customers
in the United States, Europe and Japan. In December 2018,
Freightliner delivered its first Freightliner eM2 to a customer in
the United States. The Freightliner eCascadia and eM2 are
especially geared toward the requirements of customers who
use electric commercial vehicles on predefined local distri-
bution haulage routes that generally do not change.
In June 2018, we consolidated all electrification activities for
trucks and buses in the E-Mobility Group. The E-Mobility Group
defines the strategy for all electric components and for com-
plete electric vehicles across all brands and divisions. It is also
developing a globally standardized electric architecture similar
to the successful global platform strategy used for conventional
drive systems and major components. The employees work at
many locations throughout the company's worldwide network -
for example in Portland, Oregon, in the United States; in
Stuttgart, Germany; and in Kawasaki, Japan.
1 Information on fuel consumption, electricity consumption and CO₂
emissions is provisional and has been determined by an external technical
service for the certification procedure in accordance with the provisions
of the WLTP test procedure; the figures are non-binding and have been
correlated with NEDC values. EU type approval and a certificate of con-
formity with official figures are not yet available. The figures given above
may deviate from the official figures.
110
Daimler Trucks: safe and automated
The new Mercedes-Benz Actros also sets new standards in
terms of safety and partially automated driving. Just four years
after the presentation of the automated Mercedes-Benz Future
Truck 2025, the company is now putting a partially automated
(Level 2) driver assistance system into a series-production
truck for the first time ever. This new system, which is known as
Active Drive Assist, enables partially automated driving in all
speed ranges for the driver in a series-produced truck. The new
features here are active lateral guidance and the combination
of longitudinal and lateral guidance, which is made possible by
the fusion of radar and camera information. Active Drive Assist
enables interplay between the Proximity Control Assist system
with its stop-and-go function and Active Lane Keeping Assist.
Although the driver is still responsible for monitoring the traffic
situation, the system provides significant relief to him or her
and makes an important contribution to increasing road safety.
Starting in 2019, Daimler Trucks offers partially automated
driving (Level 2) to its Freightliner customers in North America
under the product name Detroit Assurance 5.0. Level 2 func-
tions are also to be available for customers in Asia in the FUSO
Super Great in 2019.
The Mercedes-Benz Actros also features the latest generation
of the Active Brake Assist emergency braking system. Active
Brake Assist 5 supports the driver when there is a danger of a
rear-end collision or a collision with a person crossing the road,
approaching the truck or walking in the truck's lane - with
automatic maximum braking if necessary. Active Brake Assist
5 also works with a combination of radar and a camera, which
allows it to monitor the space ahead of the vehicle and react
to persons on the road in an even more effective manner. Side-
guard Assist helps protect the most vulnerable road users -
cyclists and pedestrians. This system has been available since
the spring of 2018 in Mercedes-Benz Actros, Antos and
Arocs heavy-duty trucks, as well as in the Econic. It is also
now offered in Asia in the FUSO Super Great.
Daimler Trucks: reliable and connected
Commercial vehicles from Daimler Trucks & Buses need to be
reliable. Unnecessary downtime prevents customers from
conducting their business successfully, so vehicle reliability is
always the top priority. Before vehicles go into series pro-
duction, the company has already tested them over millions of
kilometers under the most difficult conditions around the
globe. Daimler also works continuously to increase the avail-
ability of its trucks and buses. Digitization and connectivity
play a decisive role here. Meanwhile, several hundred thousand
connected vehicles from Daimler are on the roads.
The Truck Data Center is the centerpiece of all the connectivity
solutions offered by Daimler Trucks. The Truck Data Center
receives data from the sensors and cameras in the truck and
analyzes this information for various applications. It also
serves as the interface for all connectivity services and is thus
responsible for the truck's external communications as well.
This connectivity module forms the technological foundation for
the Fleetboard and Mercedes-Benz Uptime connectivity ser-
vices and the telematics solutions offered by Detroit Connect
for the Freightliner brand and by Truckonnect for FUSO. Like
a modern smartphone, the Truck Data Center uses Bluetooth,
the mobile-telephony network or GPS to communicate with
the traffic infrastructure, with other vehicles and with further
systems involved in the logistics process. The Truck Data
Center creates a permanent connection between vehicles from
Daimler Trucks and the cloud, and makes the division's
trucks part of the Internet of things.
At the IAA Commercial Vehicles trade fair in September 2018,
Fleetboard unveiled the new customer interface that we plan
to offer to Fleetboard customers in the spring of 2019. The
improvement to the Fleetboard Cockpit involves the introduction
of a new, intuitive and web-based interface that clearly com-
bines all data from booked Fleetboard services. The refined and
free Fleetboard Driver app has been available for downloading in
the Apple App Store and the Google Play Store since July 2018.
With Mercedes-Benz Uptime, we are pursuing the clear goal
of permanently minimizing vehicle downtime and ensuring that
necessary downtime can be planned, to further increase
vehicle availability for customers. Constant communication by
all onboard connected systems generates several gigabytes
of data per truck every day, and this data can be used for vari-
ous vehicle diagnostics procedures. After collecting all of
the truck data, Mercedes-Benz Uptime can issue recommenda-
tions for service and repair center action to dealers within
240 seconds. This feature has, for example, substantially reduced
vehicle diagnostics times during initial service center tests
at the more than 1,500 Mercedes-Benz retail outlets in Europe
that have been certified to use Mercedes-Benz Uptime.
Similar connectivity solutions in the form of services from
Detroit Connect and Detroit Assurance are available for
Daimler Trucks customers in North America from Freight-
liner. FUSO now offers customers in Asia the Truckonnect
connectivity solution in its new Super Great truck.
Mercedes-Benz Vans: electric drive
Mercedes-Benz Vans plans to offer all its commercial van
model series with electric drive systems. The initial step was
taken with the launch of the mid-size eVito in November
2018. The eVito is the second all-electric production model
from Mercedes-Benz Vans; the first was the Vito E-Cell in
2010. With a range of 149-1891,2 kilometers, the mid-size van is
thus perfect for inner-city deliveries and other commercial
operations. The battery can be fully charged in about six hours.
In addition, customers can choose between two options with
regard to top speed: a maximum of 80 km/h for city traffic and
urban areas, while also conserving energy and increasing
the vehicle's range, or a maximum of 100 km/h or 120 km/h if
required for driving on highways. The electric Vito for goods
transport will be followed by the eVito Tourer for passenger
transport and the eSprinter in 2019.
1 Range depends on vehicle configuration, specially on the selection of
maximum speed limitation. Electricity consumption and range have been
calculated on the basis of Commission Regulation (EC) No 692/2008.
2 Actual range also depends on individual driving style, road and traffic
conditions, ambient temperature, use of air-conditioning/heating etc., and
may deviate from the stated figures.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 111
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Modern combustion engines remain indispensable
Combustion engines will continue to form the backbone of
global personal mobility for many years to come. This makes it
all the more important to further improve the efficiency and
environmental compatibility of combustion engines. As planned,
we continued and expanded our engine offensive in the year
under review. Our new highly efficient four and six-cylinder
engines are already available in diesel or gasoline versions in
numerous models.
We take a holistic view of electric mobility. In an effort to imple-
ment the recycling process chain and to safeguard future
raw-material supplies for electric mobility, Daimler AG is actively
involved in the research and development of new recycling
technologies. With the establishment of a wholly owned subsid-
iary Mercedes-Benz Energy GmbH, we are now focusing, for
example, on reusing batteries. After all, the lifecycle of a battery
does not have to end after it has done its job in a vehicle, as
the battery can be reused for stationary energy storage devices.
Battery systems that have yet to be installed in electric vehi-
cles and remain in stock as spare parts can also be used as
energy storage units. A large storage device consisting of
battery modules for electric vehicle applications went into
operation in Elverlingsen in the southern Westphalia region
of Germany at the end of June 2018. A total of 1,920 battery
modules are stored there as a "living spare parts depot" for
third-generation electric smart models.
smart is well on its way to becoming an all-electric brand
by 2020. The battery-electric smart models combine the agility
of the smart with locally emission-free driving - the ideal
combination for urban mobility.
term, the unique visual aspects of our products are protected
with over 7,500 designs registered in 2018 (2017: 7,800).
Our portfolio of nearly 36,300 trademark rights worldwide
(2017: 35,800) also serves to protect the Mercedes-Benz
brand, our new EQ brand for electric mobility, and all our other
brands in each relevant market.
In today's fast-paced digital world, it is no longer enough
simply to develop good ideas. For this reason, within the frame-
work of our "Project Future," we have taken the opportunity
to consolidate under one roof all topics and tasks relating to our
patents, our strong brands, our copyrights and the licenses
we issue to contract manufacturers. The result is the establish-
ment of the Daimler Brand & IP Management GmbH & Co. KG
subsidiary. This organizational unit will focus exclusively in the
future on the management, utilization, protection and asser-
tion of all intellectual and other property rights at the Daimler
Group.
We want to continue helping shape mobility through our pio-
neering innovations in the coming years while moving ahead
with digitization throughout the entire Group. As announced in
our Annual Report 2017, we therefore slightly increased our
very high level of investment in research and development to
€9.1 billion in 2018 (2017: €8.7 billion). Of that amount, €2.5
billion (2017: €2.8 billion) was capitalized as development costs,
which represents a capitalization rate of 28% (2017: 32%).
The amortization of capitalized research and development expen-
diture totaled €1.5 billion during the year under review (2017:
€1.3 billion). With a rate of 5.4% (2017: 5.3%), research and
development expenditure also remained at a high level in com-
parison with revenue. Research in the year under review
focused on new vehicle models, extremely fuel-efficient and
environmentally friendly drive systems, new safety tech-
nologies, automated and autonomous driving and the digital
connectivity of our products.
The most important development projects at Mercedes-Benz
Cars focused on the successor models of the current S-Class
and C-Class, as well as on the EQ electric brand. We are also
investing in low-emission combustion engines, vehicle connec-
tivity, automated and autonomous driving, and the development
of new innovative safety technologies. Mercedes-Benz Cars
spent a total of €7.0 billion on research and development in the
year under review (2017: €6.6 billion). Daimler Trucks invested
€1.3 billion in research and development projects, as in the
previous year. The division's most important projects were in
the areas of emission standards and fuel efficiency, as well
as customized products and technologies for important growth
markets. Forward-looking technologies for electric mobility,
connectivity, and automated and autonomous driving are also
becoming more important. R & D expenditure at Mercedes-
Benz Vans focused mainly on the new Sprinter generation and
the further development of the Vito and the V-Class. In addi-
tion, Mercedes-Benz Vans continued to forge ahead with the
electrification of its commercial model series. Daimler Buses
primarily focused its development activities on new products,
the fulfillment of future emissions standards and measures
to further reduce fuel consumption. Alternative drive systems,
in particular electrification technology and other forward-look-
ing projects related to automation functions and autonomous
driving also played a key role during the year under review.
7 B.36 71 B.37
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
107
Innovation, safety and environmental protection
New mobility is taking shape and is becoming a reality
The automotive industry is undergoing a profound transforma-
tion. As the inventor of the automobile and a provider of per-
sonal mobility solutions ranging from smart vehicles and the
broad range of Mercedes-Benz cars to vans, buses and trucks,
we seek to shape and lead this far-reaching transformation.
Our CASE corporate strategy focuses on the key fields decisive
for the future of mobility - connectivity (Connected), auto-
mated and autonomous driving (Autonomous), flexible use and
services (Shared & Services) and electric drive systems
(Electric). The combination of these four fields offers possibilities
for developing entirely new products and services for custom-
ers and making mobility as intuitive as possible. An autonomously
driving taxi that can be ordered using a smartphone offers a
good example of what we can expect to see here in the future.
In the meantime, our electric mobility offensive in the field
of cars is being consolidated under our new EQ technology and
product brand, which represents an important component
on the road to emission-free driving and an effective instrument
for achieving ever more ambitious global CO2 reduction
targets.
Connected: MBUX - Mercedes-Benz User Experience sets
standards
With regard to the key field of Connected, MBUX - Mercedes-
Benz User Experience - has been available for our customers
since the launch of the new A-Class. Thanks to artificial intelli-
gence, the all-new infotainment system has the ability to
learn; it can also be personalized and adjusts itself to users'
habits and preferences. It thus creates an emotive and
intuitive link between the vehicle and its driver. Its voice control
system with natural speech recognition can now be operated
in a more intuitive manner. The GLE will be the first model to
feature the Interior Assistant, which can recognize individual
hand and arm movements of the driver and the front passenger
and support their personal operating intentions and preferences.
The digital services from Mercedes me have long since begun
evolving into intelligent, personal and mobile assistants of
Mercedes-Benz drivers, and this fact is confirmed by the very
high customer activation rates for Mercedes me services.
Autonomous: From Stop-and-Go Assist to driverless cars
Connectivity also plays a key role in the development of auto-
mated driving functions. Today's driving assistance systems
already use live traffic information and data obtained from car2x
communication systems. Our goals here extend far beyond
such applications, however. The 2017/2018 Mercedes-Benz
Intelligent World Drive demonstrated that learning-enabled
systems play a key role in the development of autonomous driv-
ing applications for real road traffic, in line with the given
conditions in a country. In the Mercedes-Benz Intelligent World
Drive, a test vehicle based on the current S-Class completed
a demanding study trip on five continents in order to "learn"
from automated test drives in real traffic conditions. Whether
it was crosswalks on Chinese highways, making right turns from
the left-hand lane in Melbourne, Australia, or pedestrian traffic
on different types of roads in South Africa - on every continent
the S-Class faced challenges that will have an influence on
the way future automated and autonomous vehicles operate.
The next phase will take place in the city of San Jose, Califor-
nia, where Bosch and Daimler are creating a system for fully
automated autonomous driving (SAE Levels 4/5) and setting the
stage for other important developments. In the second half
of 2019, Bosch and Daimler plan to begin offering customers
a ride-hailing service with fully automated Mercedes-Benz
S-Class vehicles on selected routes. Daimler Financial Services
AG will operate and manage the test fleet and the app-based
mobility service.
Shared & Services: ideas for new mobility
The pilot project for fully automated driving in San Jose will
also demonstrate how mobility services from Daimler that
are already established, such as car sharing (car2go), ride
hailing (mytaxi) and multimodal platforms (moovel), can be
intelligently linked and used to shape the future of mobility.
Those who wish to share their private vehicle with friends or
colleagues can use the ready-to-share app function for smart
cars and the Mercedes me car-sharing app for Mercedes-Benz
cars. Both apps offer holistic solutions that make it possible
for customers to allow access to the vehicle for a predefined
group of users. Friends, family members or colleagues can
then easily book and borrow the vehicle for a specific period.
In mid-July 2018, an attractive subscription model started
under the Mercedes me brand at first as a pilot project in various
German cities. We offer interested customers the possibility
to flexibly select and drive up to 12 different vehicles within a
one-year period. So instead of owning just one car, those
who use the service can switch cars in line with their changing
situations or activities; for example, they can drive a con-
vertible in the summer or use an E-Class wagon for family trips.
The EQC (power consumption combined: 22.2 kWh/100 km;
CO2 emissions combined: 0 g/km, preliminary figures)², which
is the first all-electric SUV from Mercedes-Benz, had its world
premiere in Stockholm in early September. The model will
go into series production in 2019, after which, additional EQ
models will be launched in quick succession.
addition to its fuel cell. Intelligent interplay between the
battery and the fuel cell, as well as short refueling times, make
the GLC F-CELL a dynamic and practical vehicle for long-
distance travel. Two tanks with a carbon-fiber outer layer in the
vehicle floor hold 4.4 kg of hydrogen. Thanks to 700-bar tank
technology, the hydrogen tank can be refilled within just three
minutes as quickly as one is used to filling the tank of a
conventional car. With hydrogen consumption of approximately
1 kg/100 km, the GLC F-CELL achieves about 430 hydrogen-
powered kilometers¹ in the NEDC; in hybrid mode, up to 51 km¹
are added when the battery is fully charged. And driving
dynamics are ensured by an output of 155 kW.
The GLC F-CELL is another fully electric vehicle (hydrogen
consumption combined: 0.34 kg/100 km, CO₂ emissions com-
bined: 0 g/km, power consumption combined: 13.7 kWh/100
km)1. This SUV, which has been delivered to the first selected
customers since late 2018, can run on electricity as well as
hydrogen because it is equipped with a lithium-ion battery in
The third and fast-growing pillar on the road to emission-free
mobility is the all-electric drive system.
We have refined our intelligent drive management system in
order to further improve efficiency. The route-based operating-
mode strategy for hybrid and electric vehicles anticipates
the course of the road and the traffic situation. This also includes
radar-based recuperation, anticipatory route-based gear
shifting and operation strategy, and ECO Assist.
As the second pillar of its electrification strategy, Daimler is
currently launching new plug-in hybrid models from the C-Class
to the S-Class model series. Such hybrid variants are to be
made available also in the compact segment over the medium
term. Plug-in hybrids, which are marketed under the EQ Power
brand at Mercedes-Benz, represent a key technology on the
road to a locally emission-free future for the automobile. Such
vehicles offer customers the best of both worlds: They can be
driven in the all-electric mode in cities, while on long journeys,
customers benefit from the combustion engine's range. We are
also now combining highly efficient diesel engines with plug-in
hybrid technology for the first time.
In order to achieve our ambitious goals, we also cooperate very
closely with research and development units from the supplier
industry. Daimler must be closely intermeshed with supplier
companies in order to deal with the rapid pace of technological
change in the automotive industry and the need to quickly
bring new technologies to market maturity. Such cooperation is
all the more important in light of the increasing digitization
of processes throughout all stages of the value chain. Strong
partners from the supplier industry are also essential for our
efforts to develop and offer new concepts for future mobility.
As part of our joint research and development work, we aim
to ensure that the Group retains the key technological expertise
it needs in order to maintain the uniqueness of our brands
and to safeguard the future of the automobile in general.
Mercedes-Benz Cars is also a pioneer when it comes to the
introduction of the 48-volt electrical system. Integration of the
starter motor and generator and the electrification of auxiliary
assemblies are to gradually and systematically make their way
into the market to do more than just make cars more efficient,
as temporarily available torque (EQ boost) will also provide
additional thrust and enable "coasting" without CO2 emissions.
Drivers of all vehicles with electric drive systems benefit from
an intelligent and networked variant of the Mercedes-Benz
wallbox, which makes charging easier and also offers a range
of additional functions that can be accessed via a new app.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
108
EQ-optimized navigation always bases its calculation on the
fastest route while also taking into account the shortest
charging time. The route planning system also responds dynam-
ically to changes, while EQ-optimized navigation ensures that
Mercedes-Benz customers can easily find charging stations. In
addition, Mercedes me Charge gives customers convenient
access to the charging stations of numerous providers, includ-
ing those outside the country the vehicle is registered in. In
this context, customers also benefit from an integrated payment
function with simple billing features.
The EQ-specific content in MBUX includes the display of range,
charge level and energy flow. Drive programs, charging current
and departure time can also be controlled and set via MBUX.
The MBUX display also has a special EQ tile via which numerous
EQ features can be accessed.
Services related to electric mobility are starting to play a
special role. With Mercedes me, EQ offers extensive services
for electric mobility today and in the future. Auxiliary climate
control is one of the most important new services and features
available in the EQ models from Mercedes-Benz. It ensures
that the vehicle interior is already at the desired temperature
upon departure. The system can be programmed directly via
MBUX or via the Mercedes me app.
Electric: Mercedes-Benz and smart focus on EQ
Mercedes-Benz is forging ahead with the electrification of
its vehicles. Plans call for electrification of the entire Mercedes-
Benz portfolio by 2022, which means that various electric
alternatives are to be offered in every segment - from compact
cars to large SUVs. Well over 130 electric vehicle variants are
currently planned. Depending on customer preferences and
the expansion of the public infrastructure, all-electric vehicles
should account for 15 to 25% of our total car sales by 2025.
To that end, we plan to launch more than ten all-electric cars.
10
9
Without the protection and management of its patents, brands
and designs, Daimler could never have become as successful as
it is today. That is why we seek to effectively protect and
manage the Group's intellectual property and the innovations
that inspire our customers around the globe. In this manner,
we also intend to ensure the successful continuation of our tra-
dition that goes back more than 130 years. We upheld this
tradition in 2018 by registering almost 1,900 new ideas for pat-
ents, with an increasing focus on the CASE technologies.
In addition to industrial property rights, which are intended to
safeguard our innovations for future mobility over the long
Further information on social matters can be found in the
Non-Financial Report of this Annual Report. pages 215 ff
More information on the projects promoted by the Group and
the activities related to our social commitment can be found
in the Daimler Sustainability Report and on our website under
"Sustainability." daimler.com/sustainability
Primary reference parameters:
The annual bonus is variable remuneration, the level of which
is primarily linked to the operating profit of the Daimler
Group (EBIT). For the past financial year, the annual bonus was
also linked to the target for the financial year determined by
the Supervisory Board (derived from the level of return targeted
for the medium term and the growth targets), the actual result
compared with the prior year, the combined performance of the
Board of Management members, additional non-financial
sustainability-related targets for the Board of Management as
a whole and, as a possible individual reduction component,
the non-achievement of compliance targets. With the actual-
actual comparison, achievement of EBIT at the prior-year
level constitutes target achievement of 100%. With the target-
actual comparison, the particularly ambitious definition of
the targeted EBIT that is oriented towards the competition con-
stitutes target achievement of 150%. 7 B.45 7 B.46
1 May be subject to retention or repayment claims.
235% of the target bonus
and the maintenance and
enhancement of a high level
of employee satisfaction and
product quality.
Compliance agreements in
2018
Maximum target achievement
(total cap):
Range of possible target achievement:
-25% - 0%
Non-achievement of individual
compliance targets
Range of possible target achievement: value of integrity; diversity
-10% - +10%
For 2018: Further develop-
ment and permanent estab-
lishment of the corporate
- 50% relates to a comparison
of actual EBIT in 2018 with
actual EBIT in 2017
Individual target agreements
in 2018
of actual EBIT in 2018 with
EBIT targeted for 2018
50% relates to a comparison
Board of Management as a whole:
non-financial targets
Target achievement for the
Target achievement for the
Board of Management as a whole
(derived from individual targets)
Range of possible target achievement:
-25% - +25%
Range of possible target achievement:
0% - 200%
50% relates to a comparison of actual EBIT in 2018 with EBIT
targeted for 2018.
50% relates to a comparison of actual EBIT in 2018 with
actual EBIT in 2017.
Amount with 100% target achievement (target annual
bonus):
In 2018, this is equivalent to the respective base salary.
preliminary number of phantom shares × performance factor
three-year dividend entitlement
after expiry of third plan year
preliminary number
of phantom shares
(virtual shares)
price of Daimler shares when issued
amount when granted in euros page 123
page 123
approx. 40%
EBIT target achievement
remuneration
- long-term performance-related remuneration
Performance Phantom Share Plan (PPSP)
B.47
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 123
In addition, the Supervisory Board uses individual target agree-
ments as a basis for measuring the target achievement for indi-
vidual Board of Management members and then uses this target
achievement value to measure the overall target achieve-
ment of the Board of Management as a whole. This overall target
achievement result can lead to an addition or reduction of up
to 25% from the degree of target achievement as measured on
the basis of the primary performance parameters. Only in excep-
tional cases may the Supervisory Board deviate from this
overall performance assessment and make individual additions
or deductions within the range described above. In addition,
on the basis of the sustainability-related non-financial targets
for the Board of Management as a whole, an amount of up
to 10% can be added or deducted, depending on the predefined
key figures/assessment basis. The non-financial targets
defined for 2018 were the further development and permanent
establishment of the corporate value of integrity, the promo-
tion of diversity in the sense of increasing the share of women
in management positions and the maintenance and enhance-
ment of a high level of employee satisfaction and product quality.
For the other primary performance parameter, which also relates
to half of the annual bonus, “comparison of actual EBIT in the
financial year with actual EBIT in the prior year," the limits of the
unchanged possible range of 0 to 200% are defined as a devi-
ation of +/- 2% of the prior-year revenue.
0 to 200%, that is, the annual bonus due to EBIT achievement has
an upper limit of double the base salary and may also be zero.
Both primary performance parameters, each of which relates to
half of the bonus, can vary between 0% and 200%. For the pri-
mary performance parameter defining 50% of the annual bonus,
"comparison of actual EBIT in the financial year with the EBIT
targeted for the financial year," the limits of the unchanged
possible range of 0 to 200% are defined as a deviation of +/- 3%
from prior-year revenue.
Range of possible target achievement:
long-term performance-related
dependent upon
Annual bonus¹ 2018
B.46
approx. 30%
(non-performance-related)
paid out in twelve monthly
installments
base salary
base salary fixed - oriented towards the area of responsibility
Base salary - fixed page 121
B.44
1 Excluding fringe benefits and retirement benefit commitments in
all cases.
The possible cap on the amount exceeding the maximum limit
takes place with the payment of the PPSP for 2018 in 2022.
122
Total remuneration' in 2018
1.9 times the target
remuneration¹
1.5 times the target
remuneration¹
(50% paid out in 2019 + 50% in 2020)
+ annual bonus for 2018
Base salary in 2018
Target remuneration¹ 2018
+ PPSP value when granted for 2018
+ target bonus = 100% of the 2018 base salary
+ PPSP payment for 2018 (in 2022) incl. dividend equivalent
payments
= final number of phantom shares, dividend entitlement in fourth year
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Annual bonus - short- and medium-term
1 Depending on the development of the Daimler share price compared with the
STOXX Europe Auto Index.
amount paid out = 50% of annual bonus × "relative share performance"¹
50% of annual bonus in March of the year after the reporting year (2019)
50% of annual bonus (deferral) = in March of the second year after the
reporting year (2020)
overall target achievement
- non-achievement of individual
compliance targets
Board of Management as a whole:
non-financial targets
Board of Management as a whole
(derived from individual targets)
+/- target achievement for the
+/- target achievement for the
B.45
target achievement EBIT
= 100% of
base salary
2018
target bonus
annual bonus 2018 = target bonus × overall target achievement
approx. 30%
components
performance-related
short- and medium-term
performance-related remuneration page 122
time of payment of annual bonus 2018
after expiry of fourth plan year
final number of phantom shares × Daimler share price at end of plan
= amount paid out
Time of payment of Performance Phantom Share Plan 2018
in February of the year 2022
-10% - +10%
+
0% - 200%
50% payout after one year
50% deferral coupled with
share price perfor-
mance compared to
competitors
- Autonomous driving
Strategic/organizational/
structural contribution of
the Board of Management
- Electric driving/
Integrated services
- Digitalization/
Connectivity
- CASE ecosystem
Transformation targets
- Integrity targets
- Customer targets
Diversity targets
Non-financial targets
Employee targets
comparison
- EBIT targeted/actual
operational result
Financial targets
Strategic targets for the
Overview of the determination of the annual bonus from January 1, 2019
-25% - +25%
Maximally 235% (cap)
Further development of the remuneration
system effective as of January 1, 2019
Change to the annual bonus as a short-term and
medium-term component of the remuneration
The range of possible target achievement is between 0% and
200%. The lower limit of this range is 50% of the EBIT target
value; the upper limit is approximately 117% of the EBIT target
value. If the actually achieved EBIT value is at or under the
lower limit of the range, the target achievement degree is always
0%. The total absence of a bonus is therefore possible. If the
actually achieved EBIT value is at or above the upper limit of the
range, the target achievement degree is always 200%. The
range of target achievement develops linearly within the range.
7 B.50
The financial target is oriented toward the operating result of
the Daimler Group (EBIT). The target value of EBIT for each
financial year is derived on the basis of the desired medium-term
return, which is set by the Supervisory Board and is especially
ambitious, oriented toward the competitive environment, and
derived from the growth targets. The starting point of the cal-
culation is the revenue of financial year 2018 (to date: financial
year 2013).
150% for
EBIT target
0% for
50% EBIT target
EBIT
Accumulated growth
factor revenue
base 2018
Revenue
B.49
Financial target
100%
200%
Target achievement
Achievement of EBIT target results in 150% and is determined by
Financial target
B.50
71 B.49
At its meeting in December 2018, the Supervisory Board decided
to further develop the remuneration system for the Board of
Management in view of the fundamental technical changes in
our industry and the associated changes in the competitive
environment, as well as changing customer behavior, the need
for significant investments in new technologies, and the
expectations of our shareholders. The main focus was on the
implementation of the new corporate strategy: safeguarding
the Group's future by expanding our business model as an auto-
maker and a provider of mobility services. In times of com-
prehensive transformation, it is especially important to align the
incentives in the remuneration system with the necessary
investments in the future. In this connection, further aims were
to achieve a higher degree of transparency, reduce the com-
plexity of the methods used and more precisely define the col-
lective non-financial aims and criteria. The implementation
will affect the short-term and medium-term remuneration com-
ponent, the annual bonus. Because the Supervisory Board
and the Board of Management consider it important to have a
uniform basic incentive structure, the Board of Management
has also decided to make a corresponding adjustment for all
management levels. As a result, the short-term and medium-
term variable remuneration component (the annual bonus) for
the Board of Management and for managers will be calculated
according to uniform goals/criteria and a uniform system start-
ing with the 2019 financial year. This uniform approach is
already being used to calculate the long-term variable remuner-
ation component (Performance Phantom Share Plan = PPSP).
0%
125
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Appropriateness of Board of Management remuneration
In accordance with Section 87 of the German Stock Corpora-
tion Act (AktG), the Supervisory Board of Daimler AG once
again had an assessment of the system of Board of Manage-
ment remuneration carried out by an external remuneration
expert at the end of 2018. The result was that the remunera-
tion system as described above was confirmed as being in
conformance with the requirements of applicable law. The
remuneration system was approved by the Annual Sharehold-
ers' Meeting in 2014 with an approval ratio of 96.8%.
The Performance Phantom Share Plan (PPSP) is a variable ele-
ment of remuneration with long-term incentive effects. At the
beginning of the plan, the Supervisory Board specifies a grant
value (absolute amount in euros) in the context of setting the
individual annual target remuneration. This amount is divided
by the relevant average price of Daimler shares calculated
over a predefined long period of time, which results in the pre-
liminary number of phantom shares allocated.
The total amount to be paid out from the annual bonus is limited
to 2.35 times the base salary of the respective financial year.
In this context, agreements were reached with the members of
the Board of Management allowing for the partial reduction
or complete elimination of the annual bonus for any member
who clearly violates our Integrity Code. If it is not possible to
reduce a future bonus payment, or a payment that has yet to be
made, the Board of Management member in question will be
required to pay back the amount of the bonus reduction. The
Supervisory Board has the final decision on all such bonus
reductions.
As was the case in previous years, further qualitative targets
were agreed upon with the individual members of the Board of
Management with regard to the sustained implementation
and permanent establishment of the compliance management
system. The complete or partial non-achievement of individ-
ual compliance targets can be reflected by a deduction of up
to 25% from the individual target achievement. However, the
compliance targets cannot result in any increase in individual
target achievement, even in the case of full accomplishment.
1 Maximum of 195% if, in the event of target achievement of 195% -
200%, the strategic return target of 9% has not been reached.
Share purchase obligation of up to 25% of the gross remuneration
until the defined number of shares (between 20,000 and 75,000)
have been purchased (shares to be held until the end of the term of
service)
(including dividend equivalent payments throughout the plan period)
Stock ownership guidelines
Maximum performance development (total cap):
2.5 times the amount granted
Also at the beginning of the plan, performance targets are set for
a period of three years (performance period). Depending on
the achievement of these performance targets with a possible
range of 0% to 200%, after three years the phantom shares
allocated at the beginning of the plan are converted into the final
number of phantom shares allocated.
Bandwidth of possible price development:
maximum of 2.5 times the issue price
Bandwidth of possible target achievement:
0% - 200%
50% relates to the "relative share perfor-
mance", i.e. the performance of Daimler's
share in a three-year comparison with the
performance of the defined group of
competitors (index).
- 50% relates to the "return on sales” achieved
in a three-year comparison with the defined
group of competitors page 124
Bandwidth of possible target achievement:
0% - 200%¹
Development of the
Daimler share price
Development of
performance factors
dependent upon
PPSP 2018
B.48
Price when issued and price at the end of the
plan period
Base salary in 2018
After another plan year has elapsed (retention period), the amount
to be paid out is calculated from this final number of phantom
shares and the applicable share price at that time. The share
price relevant for the payout under this plan is also relevant
for allocating the preliminary number of phantom shares for the
plan newly issued in the respective year.
124
As a supplement to these three components of remuneration,
"Stock Ownership Guidelines" exist for the Board of Manage-
ment. These guidelines require the members of the Board of
Management to invest a portion of their private assets in
Daimler shares over several years and to hold those shares
until the end of their Board of Management membership. The
number of shares to be held is set between 20,000 and
75,000. In fulfillment of the guidelines, up to 25% of the gross
remuneration out of each Performance Phantom Share Plan
is generally to be used to acquire ordinary shares in the Com-
pany, but the required shares can also be acquired in other ways.
Guidelines for share ownership
The terms governing the PPSP include a provision that allows for
the partial reduction or complete elimination of the annual
bonus for any member of the Board of Management who clearly
violates the Integrity Code that applies to all employees and
Board of Management members, or any other professional obli-
gations, prior to the payout of the plan proceeds. The Supervi-
sory Board has the final decision on all such bonus reductions.
The value of the phantom shares to be paid out depends on
target achievement measured according to the criteria
described above and on the share price relevant for the pay-
out. This share price is limited to 2.5 times the share price
at the beginning of the plan. In addition, the amount to be paid
out is limited to 2.5 times the absolute euro amount specified
at the beginning of the plan, which is relevant for the preliminary
number of phantom shares allocated. This maximum amount
includes the dividend equivalent paid out during the four-year
plan period.
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
Value of the phantom shares on payout:
Determined annually by the Supervisory Board; for 2018,
approximately 1.4 times the base salary.
Value upon allocation:
7 B.47 71 B.48
zero.
Range of possible target achievement:
50% relates to "relative share performance”, i.e. the perfor-
mance of Daimler's share in a three-year comparison with
the performance of the defined group of competitors (index).
If the performance of Daimler's share (in percent) is the
same as that of the index (in percent), target achievement is
deemed to be 100%. If the performance of Daimler's share
(in percent) is 50 percentage points or more below (above) the
performance of the index, target achievement is deemed to be
0% (200%). In the deviation range of +/- 50 percentage points,
target achievement varies in proportion to the deviation.
- Target achievement of 0% occurs if Daimler's return on sales
is 2 percentage points or more lower. In the deviation
range of +/- 2 percentage points, target achievement var-
ies in proportion to the deviation.
- Target achievement of 100% only occurs when the average
return on sales of the Daimler Group reaches 105% of the
revenue-weighted average return on sales of the group of
competitors. Maximum target achievement of 200% occurs
if Daimler's return on sales exceeds 105% of the revenue-
weighted average of the competitors by 2 percentage
points or more. An additional limitation was implemented
starting with PPSP 2015: If a target achievement of
between 195% and 200% occurs, the maximum target
achievement calculated from the performance parameter
of return on sales compared to the group of competitors
will only be deemed to be 200% if the actual return on sales
for Daimler's automotive business reaches at least the
strategic target for return on sales (currently 9%) in the third
year of the performance period. Otherwise, target achieve-
ment will be limited to 195%.
-
50% relates to the Group's return on sales in a three-year
comparison with a group of competitors comprising listed
vehicle manufacturers with an automotive component of
more than 70% by revenue and an investment-grade credit
rating (BMW, Ford, GM, Honda, Hyundai, Isuzu, Kia, Mazda,
Nissan, Paccar, Subaru, Suzuki, Toyota, Volvo and Volkswa-
gen). For the measurement of success, the competitors'
average return on sales is calculated over a period of three
years. Target achievement occurs to the extent to which
Daimler's return on sales deviates by a maximum of +/-2
percentage points from 105% of the calculated average of
the competitors.
Performance parameters for Plan 2018:
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
0 to 200%, that is, the plan has an upper limit. It may also be
Members of the Board of Management
ROS
target
Maximum limit of total remuneration¹ 2018
Daimler Financial Services is continuously investing in the
development of a comprehensive mobility ecosystem. car2go
is a leading company for flexible car sharing. In the ride-hailing
segment, the Daimler subsidiary mytaxi is one of the leading
providers of app-based taxi services in Europe, and with
moovel, we offer our customers a platform with which they can
optimally compare, combine, book and pay for various
With the further development of autonomous driving, we rely
on the one hand on technical assistants and on the other hand
on automated systems that take customers from A to B with-
out a driver. Mercedes-Benz Cars has demonstrated its strong
position in the field of technical assistants with the S-Class.
On the other hand, we are developing automated systems that
can be used without a driver or can be shared with others.
We are progressing with electrification also with our commercial
vehicles. The Group is focusing on areas of application in
which e-mobility is also economical. In 2018, Daimler Trucks
for the first time presented all-electric trucks to the public
across all segments: from the FUSO eCanter in the light-duty
segment to the Freightliner eM2 in the medium-heavy
segment and the Mercedes-Benz eActros, Freightliner eCascadia
and FUSO Vision One in the heavy-duty segment. Mercedes-
Benz Vans plans to offer all its commercial model series with
electric drive. The first was the mid-size eVito, which has
been available since November 2018. With the new, all-electric
Mercedes-Benz eCitaro, which had its world premiere at the
IAA Commercial Vehicles trade fair in 2018, we have added an
important component to our portfolio for environmentally
friendly local public transport with low-emission and locally
emission-free buses.
We see great growth opportunities in the area of electric
mobility in particular. By the year 2022, the entire Mercedes-
Benz portfolio is to be electrified. This means that at least
one electrified alternative will be offered in each segment -
from compact cars to large SUVs. Significantly more than 130
electrified vehicle variants are planned. As well as all-electric
models, this will include plug-in hybrid versions and models
with 48-volt technology. By 2025, depending on the development
of the public infrastructure and customer preferences, 15 to
25% of the cars we sell are to be all-electric. To that end, we plan
to launch more than ten all-electric vehicles on the market.
To be able to implement our growth strategy with new products,
innovative technologies and modern production capacities,
we once again increased the advance expenditure to secure our
successful future, from an already very high level by a total of
€1.2 billion to €16.6 billion in the year under review: €9,1 billion
for research and development (2017: €8.7 billion) and €7.5
billion for property, plant and equipment (2017: €6.7 billion). In
the application of these funds, we are increasingly concen-
trating on the CASE future fields of connectivity (Connected),
automated and autonomous driving (Autonomous), flexible use
and services (Shared & Services) and electric drive systems
(Electric). We intend to be leaders in each of these areas and
to utilize additional potential by linking up the four areas. To that
end, we plan to launch more than ten all-electric cars.
measure financial strength - was €2.9 billion in 2018, which is
significantly higher than the prior-year figure of €2.0 billion.
However, it must be taken into consideration that the prior-year
figure was reduced by an extraordinary contribution of
€3 billion into the German pension plan assets of Daimler AG.
B❘ COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION 119
The Group's overall equity ratio and the equity ratio of the
industrial business reached 22.2% and 42.8% respectively in the
year under review (2017: 24.0% and 46.4%), and thus continued
to be at very solid levels. This also applies to the net liquidity of
the industrial business of €16.3 billion at the end of 2018,
which was almost unchanged from a year earlier. The free cash
flow of the industrial business - the parameter we use to
The fact that our key financial metrics remain very solid was
also confirmed by the rating agencies: Daimler AG's credit ratings
remained unchanged with the five rating agencies we
commissioned in the 2018 financial year. At the end of 2018,
Daimler's ratings were thus at a consistently high level with
a "stable" outlook.
As a result of the positive development of earnings, we again
achieved a very good return on net assets of 14.8% (2017:
22.5%). We therefore once again substantially surpassed our
target of 8% for the minimum return on capital employed.
Despite the decrease compared with the previous year, value
added of €3.7 billion shows that we created significant
value also in the year under review (2017: €7.0 billion).
We regard it as an ongoing task to strengthen the Group's
earning power and secure it in view of future challenges.
At Mercedes-Benz Cars, we further developed Fit for Leadership
as an efficiency program and firmly established it in the
organization. With Fit for Leadership, we aim to achieve further
improvements in earnings of €4 billion by 2025. Comparable
programs are running also in the other divisions.
The Daimler Group's operating profit (EBIT) of €11.1 billion was
significantly lower than in the previous year (€14.3 billion).
The Daimler Trucks division increased its EBIT significantly, while
the other divisions posted partially significant decreases. In
the overall vehicle business, our EBIT of 6.9% did not reach the
target corridor of 8-9%. Also at Daimler Financial Services,
our return on equity of 11.1% was significantly below the target
of 17%. This was partially due to expenses from the settlement
reached in the Toll Collect arbitration proceedings.
On this basis, the Group's revenue also increased, by 2% to the
record level of €167.4 billion. Adjusted for exchange-rate
effects, revenue grew by 4%.
Daimler Financial Services' business developed positively
once again in 2018. Worldwide contract volume continued to
grow and reached a new high of €154.1 billion (+10%).
In the year under review, Daimler sold a total of 3.4 million cars
and commercial vehicles (2017: 3.3 million), Contributions to
this growth came primarily from the divisions Daimler Trucks
(+10%), Mercedes-Benz Vans (+5%) and Daimler Buses (+8%).
The Mercedes-Benz Cars division also achieved record unit sales
with growth of 0.4% despite difficult conditions. Demand for
passenger cars of the Mercedes-Benz brand remained high;
however, the sales development was largely influenced by
lifecycle effects of various model series. Some additional factors
were increased tariffs in China on vehicles imported from the
United States, bottlenecks in the supply chain and the suspension
of deliveries of individual diesel models. Delays with vehicle
certification in some international markets also had an impact
on availability.
mobility services. In order to upscale rapidly for on-demand
mobility, the mobility services car sharing, ride hailing, parking,
charging and multimodality of today's Daimler Mobility
Services and the BMW Group are to be merged and strategically
expanded. To successfully transition from vehicle producer
to full-range supplier of innovative mobility solutions, we must
adapt our company to face new challenges. In doing so, we
aim to combine the flexibility and risk culture of the digital
industry with the perfection and innovativeness of our company's
strong traditions. Together with our workforce, we are therefore
developing a new and flexible corporate culture under the roof
of "Leadership 2020". In addition, we are working in "Project
Future" on further focusing and strengthening the divisional
structure of the Daimler Group.
We succeeded in strengthening our core business also in the
year 2018: Daimler again set records for unit sales and revenue,
and the Group's EBIT was at a high level despite difficult
conditions and special challenges in our business operations.
With the components CORE, CASE, CULTURE and COMPANY,
we are aligning the Group towards the customers' requirements
(CUSTOMER). In this way, we are setting the course for a
successful future. This is precisely why we can continue to look
forward to the coming years with great confidence.
Since the end of the 2018 financial year, there have been no
further occurrences that are of major significance for Daimler.
The course of business in the first weeks of 2019 confirms
the statements made in the "Outlook" section of this Annual
Report.
In the event of significant changes in the relationship between the
remuneration of the Board of Management and the comparison
groups the Supervisory Board establishes the causes, and in
the absence of objective reasons for the deviation adjusts the
remuneration of the Board of Management as necessary.
has defined the group of senior executives for this purpose. It
consists of the Executive Vice Presidents and the management
level 1 of Daimler AG in Germany.
The vertical comparison focuses on the ratio of Board of Manage-
ment remuneration to the remuneration of the senior execu-
tives and the entire workforce of Daimler AG in Germany, also
in terms of development over time. The Supervisory Board
and the target remuneration consisting of base salary,
annual bonus and long-term variable remuneration, also with
consideration of entitlement to a retirement pension and
fringe benefits.
the relative weighting of the components, that is, the rela-
tionship between the fixed base salary and the short-term
and long-term variable components;
the effects of the individual fixed and variable components,
that is, the methods behind them and their performance
parameters;
For each upcoming financial year, the Presidential Committee
at first prepares a review by the Supervisory Board of the
system and level of remuneration on the basis of a comparison
with competitors. The main focus is on checking for appropri-
ateness, based on a horizontal and a vertical comparison. In
the horizontal comparison, the following aspects are given
particular attention in relation to a group of comparable com-
panies in Germany:
Practical implementation
The remuneration system for the Board of Management aims
to remunerate its members commensurately with their areas
of activity and responsibility and in compliance with applicable
law. The adequate combination of non-performance-related
and performance-related components of remuneration is designed
to create an incentive to secure the Group's long-term suc-
cess. The fixed component of remuneration is paid as a base
salary; the variable components are intended to reflect, clearly
and directly, the joint performance of the members of the
Board of Management as a whole, as well as the long-term per-
formance of the Group. The interests of all stakeholders, in
particular those of the shareholders as the owners of the Com-
pany and those of the employees, are harmonized through the
focus on the Group's long-term success.
Goals
Principles of Board of Management remuneration
The Remuneration Report summarizes the principles that are
applied to determine the remuneration of the Board of Man-
agement of Daimler AG, and explains both the level and the
structure of its members' remuneration. It also describes the
principles and level of remuneration of the Supervisory Board.
Remuneration Report
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
120
Events after the
Reporting Period
In carrying out this review, the Presidential Committee and
the Supervisory Board consult independent external advisors.
The focus of our activities is on our fifth and most important C:
our customers (CUSTOMER). We are aligning our processes
and our organization with a strong customer focus and aim to
develop the best product and mobility solutions for and with
the customers.
-
Our Integrity Code also defines requirements for executives and
managers, who are expected to serve as role models in terms
of ethical behavior and to provide employees with orientation.
For optimal support with the fulfillment of their responsibilities,
they participate in a web-based Integrity@Work training pro-
gram that includes a management module compulsory for all
management staff. It explains in detail the role of executives
and managers at Daimler with regard to integrity, compliance
and applicable law. Furthermore, selected seminars designed
to enhance the qualifications and skills of our management staff
also include modules that focus on integrity.
Requirements for executives
Our Integrity Code forms the foundation of our business con-
duct. It is based on a shared understanding of values, which we
developed with our workforce in employee dialogs. It lays out
the principles governing our everyday business conduct. These
central principles include compliance with laws, as well as
fairness, responsibility, mutual respect, transparency and open-
ness. The Code is binding on all companies and employees
of the Daimler Group and is available in 23 languages. A guide is
available on the Group's intranet to support the employees
in their application of the Code in everyday situations, providing
answers to frequently asked questions. ④ daimler.com/
documents/sustainability/integrity/daimler-integritycode.pdf
Integrity Code
The task of Integrity Management is to support all departments
with the promotion and further development of the culture
of integrity at the Daimler Group. The unit's experts for change
management, corporate responsibility management, training,
consulting and communication develop innovative and
employee-focused approaches and formats that are designed
to strengthen the culture of integrity. These experts also
support disseminators throughout the Group with their integ-
rity-related activities. The unit's goal is to establish and
maintain a common understanding of integrity in order to reduce
risks and help ensure Daimler's sustained success. The Head
of Integrity Management reports directly to the member of the
Board of Management responsible for Integrity and Legal
Affairs.
Integrity management organization
During the year under review, we focused in particular on the
strategic further development of our culture of integrity, taking
recent developments in society into account as well. Imple-
mentation of the measures we derived as a result will begin in
2019. In 2018, we also designed and conducted a pilot survey
to assess the effectiveness of our integrity-related measures and
develop them further on this basis. Another survey to be
conducted in 2019 will build on our progress here and allow us to
target our activities toward specific groups and continuously
improve the programs we offer.
Integrity is one of the four corporate values that form the
foundation of our business activities. For us, integrity means
acting in accordance with ethical principles. We therefore
aim not only to comply with all applicable laws, internal regula-
tions and voluntary commitments, but also to live in accordance
with our corporate values and not to shy away from making
difficult decisions or addressing critical issues. We expect all of
our employees and business partners to adhere to the prin-
ciples of our culture of integrity out of a sense of conviction.
A culture of integrity
Organizationally established at the highest level
Because of their strategic significance, we have combined
the responsibilities for integrity, compliance and legal affairs
within a single Board of Management area. This Board of
Management area supports the divisions and units in their
efforts to ensure that those issues remain an integral com-
ponent of their organizations. We view integrity and compliance
as firm elements of our corporate culture and daily business
activities that contribute to our company's lasting success. The
basis for this is our Integrity Code, which defines guidelines
for our everyday business conduct, offers our employees orien-
tation, and helps them make the right decisions even in
difficult business situations. The Integrity Code is supplemented
by other in-house principles and guidelines.
For Daimler, integrity, compliance and legal responsibility
are inseparable from our daily business activities. We are con-
vinced that only those who act responsibly can achieve
sustained success over the long term. For us, this involves more
than just obeying laws, as we also seek to align our activities
with shared principles and values.
Integrity, compliance and legal affairs
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
116
Chairman of the Board of Management
Integrity and compliance requirements are important criteria
for the target achievement of our executives. They are also
part of the agreed objectives for the remuneration of the Board
of Management.
pages 120 ff
adapt the corporate culture (CULTURE) and
strengthen the divisional structure (COMPANY).
Contact and advice center
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
- lead in new fields of the future (CASE),
strengthen the global core business (CORE),
In order to achieve that goal, we have prioritized five com-
ponents, which are closely interlinked. Within the framework of
our 5C strategy, we want to
In the opinion of the Board of Management, the Daimler Group's
economic situation continues to be generally satisfactory at
the time of publication of this Annual Report, although overall
conditions for our business are significantly less favorable.
This development was not without an influence on our financial
success. Nonetheless, we continued to pursue our strategy
with great determination and also with the corresponding allo-
cation of funds. We will continue to follow the course we have
set in a disciplined manner in order to remain competitive in
the long term and to grow profitably. Our goal is clear: We aim
to continue to be a leading vehicle manufacturer while evolving
into a leading provider of sustainable mobility.
Overall Assessment of the Economic Situation
118 B❘ COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION
In order to ensure an independent external assessment
of our Antitrust Compliance Program, KPMG AG Wirtschafts-
prüfungsgesellschaft audited the Compliance Management
System for antitrust law in accordance with Audit Standard
980 of the Institute of Public Auditors in Germany. This
audit, which was based on the principles of appropriateness,
implementation and effectiveness, was already successfully
completed at the end of 2016.
page 217 ff
Our Compliance Management System (CMS) is designed to
prevent inappropriate or illegal behavior by Daimler and its
employees, and our culture of integrity serves as the foundation
for this approach. The measures needed for this are defined
by our compliance and legal affairs organizations in a process
that also takes business requirements into account. Our CMS
consists of basic principles and measures for the promotion of
compliant behavior throughout the Group. It is based on
national and international standards and is applied on a global
scale at all units and majority holdings of Daimler AG. The
systematic minimization of compliance risks is extremely impor-
tant here, and for this reason we analyze and assess the
compliance risks of all our business units every year. These
analyses are based on centrally compiled information on all
business units; specific additional details are taken into account
if necessary. The results of the analyses form the basis of
our risk management. More detailed information on the Daimler
Compliance Management System can be found in the Non-
Financial Report section of this Annual Report.
Our Compliance Management System (CMS) serves as
the foundation
Value-based compliance is an indispensable part of our daily
business activities at Daimler. For us, compliance means
acting in accordance with laws and regulations. Our objective
here is to ensure that all of our employees worldwide are
always able to carry out their work in a manner that is in com-
pliance with applicable laws, regulations, voluntary commit-
ments and our values, as set out in binding form in our Integ-
rity Code. Our compliance activities focus on complying
with all applicable anti-corruption regulations, the maintenance
and promotion of fair competition, adherence to legal and
regulatory stipulations regarding product development (tech-
nical compliance), respect for and the protection of human
rights, adherence to data protection laws, compliance with sanc-
tions and the prevention of money laundering. Our compliance
and legal organizations are designed to ensure that they can
advise and support all of our corporate units worldwide with
regard to their business operations, processes and services in
order to minimize legal and business risks.
Compliance and legal responsibility
We conduct an ongoing open dialog with our employees in
order to ensure that ethical behavior continues to be embedded
in the company's daily business. We regularly address integrity
issues in our internal media and make a wide range of materials
available to our business units - for example brochures, films
and an app that provides information on integrity, compliance
and legal affairs. We also place great value on face-to-face
discussions. For this reason, we regularly conduct individually
designed dialog sessions with employees at all levels of the
hierarchy, as well as with external stakeholders. These sessions
are held both in Germany and at our locations abroad.
Communication measures
117
Our "Infopoint Integrity" is available to our employees around
the world as a central contact and advice center. The Infopoint
team offers advice on integrity-related issues in the daily
working environment and puts employees in touch with the
right contact partner if necessary. A worldwide network of
local compliance and legal contact persons is also available to
our employees.
If the review results in a need for changes to the remuneration
system for the Board of Management, the Presidential Com-
mittee submits the relevant proposals to the entire Supervisory
Board for its approval.
We use various event formats to get employees to think about
integrity by approaching the issue from different perspectives.
At these events, we also increase the participants' awareness
of the importance of making ethical decisions. For example, we
present case studies that enable employees to experience and
discuss the relevance of integrity to daily business operations
from various viewpoints. We also have a network of integrity
contact persons who help the business units address specific
issues in a targeted manner. One of the things we focused on
in 2018 was dialog sessions that addressed the topic of techni-
cal integrity in the development departments of our various
divisions. We are also providing more support to our business
units with regard to ethical questions related to the respon-
sible use and management of data and the challenges associ-
ated with data-based business models.
base salary
Target remuneration consists of non-performance-related
and performance-related components:
The base salary is fixed remuneration relating to the entire year,
oriented towards the area of responsibility of each Board of
Management member and paid out in twelve monthly install-
ments. B.44
(non-performance-related) approx. 30%
short- and medium-term
performance-related
components
long-term performance-related
components
B.43
approx. 30%
The individual components of the remuneration system are as
follows:
As in the prior year, the maximum amounts of remuneration of
the members of the Board of Management were set for finan-
cial year 2018 at 1.9 times the target remuneration for its mem-
bers and 1.5 times the target remuneration for its Chairman.
The target remuneration consists of the base salary, the target
annual bonus and the grant value of the PPSP, excluding fringe
benefits and retirement benefit commitments. With the inclusion
of fringe benefits and retirement benefit commitments from
the respective financial year, the maximum limit of total remu-
neration increases by these amounts. The possible cap on
the amount exceeding the maximum limit takes place with the
payment of the PPSP issued in the relevant financial year, i.e.
for the year 2018, with payment of the PPSP in 2022. 7 B.43
The maximum amounts of remuneration of Board of Manage-
ment members are limited, both overall and with regard to the
variable components.
As before, only 50% of the annual bonus is paid out in the March
of the following financial year. The other 50% is paid out a year
later (deferral) with the application of a bonus-malus rule, depend-
ing on the development of the Daimler share price compared
with an automotive index (STOXX Europe Auto Index) page
62 ff, which Daimler AG uses as a benchmark for the relative
share-price development. Both the delayed payout of the por-
tion of the annual bonus (with the use of the bonus-malus
rule) and the variable component of remuneration from the
PPSP with its link to additional, ambitious comparative param-
eters and to the share price reflect the recommendations of
the German Corporate Governance Code and give due consid-
eration to both positive and negative business developments.
The system of Board of Management remuneration in 2018
The fixed base salary and the annual bonus each comprise
approximately 30% of the target remuneration, while the vari-
able component of remuneration with a long-term incentive
effect (PPSP) makes up approximately 40% of the target remu-
neration. B.42
All members of the Supervisory Board and thus all members of
the Presidential Committee are obligated, pursuant to the pro-
cedural rules of the Supervisory Board and its committees, to
disclose any conflicts of interest to the Supervisory Board.
For its part, in its report to the Annual Meeting the Supervisory
Board informs of any conflicts of interest that have arisen and
of how they have been dealt with (cf. Report of the Supervisory
Board page 46 ff of the Annual Report). In the case of
significant and not merely temporary conflicts of interest the
Supervisory Board member in question is required to resign.
Furthermore, the Supervisory Board has set targets for a mini-
mum number of independent members of the Supervisory
Board and of members without potential conflicts of interest.
Further details of the contents of and compliance with these
targets are provided in the Declaration on Corporate Gover-
nance, Corporate Governance Report on page 191ff of this
Annual Report.
Remuneration structure
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 121
For the long-term variable component of remuneration, which
is referred to as the Performance Phantom Share Plan (PPSP),
the Supervisory Board sets an amount to be granted for the
upcoming financial year in the form of an absolute amount in
euros and sets the respective performance targets.
After the end of each year, the achievement of, both financial and
non-financial targets by the Board of Management as a whole is
measured in order to determine the amount of the annual bonus.
The degree of achievement of individual targets by members of
the Board of Management is used as the basis for measuring
target achievement for the Board of Management as a whole.
The Presidential Committee then calculates the annual bonus and
submits its proposal to the Supervisory Board for its approval.
approx. 40%
B.42
On the basis of the approved remuneration system, the Super-
visory Board decides at the beginning of the year on the base
and target remuneration for the individual members of the Board
of Management as well as on total remuneration limits. It also
decides on the relevant performance parameters and the respec-
tive targets that are to be used in the bonus calculations for
the upcoming financial year. Furthermore, individual targets and
compliance goals are decided upon for each member of the
Board of Management and additional non-financial goals related
to sustainability are drawn up for the Board of Management
as a whole. Both the individual goals, including the compliance
goals, and the non-financial goals for the Board of Manage-
ment as a whole are taken into consideration along with the
financial performance parameters after the end of the financial
year when the annual bonus is decided upon by the Supervi-
sory Board.
Bodo Uebber
4,909
238
275
5,285
244
2018
Hubertus Troska
1,072
122
2018
2017
0 7,000
886
the taxable non-cash benefits and other fringe benefits in
2017,
the base salary in 2017,
The total of "benefits granted" for financial year 2017 is calcu-
lated from
The following tables show for each individual member of the
Board of Management on the one hand the benefits granted for
the financial year and on the other hand the payments made
in or for the reporting year and the retirement pension expense
in or for the year under review in accordance with the recom-
mendations of Clause 4.2.5 paragraph 3 of the German Corpo-
rate Governance Code.
Details of Board of Management remuneration in 2018
pursuant to the requirements of the German Corporate
Governance Code
132 B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
82,711
1,973
85,954
2,422
2017
3 2017: Mr. Daum pro rata from March 1, 2017.
1,481
1,481
2017
2018
Total
17,263
690
275
2017
18,387
1 The amounts of the present values are primarily due to the low level of the relevant discount rate.
2 2017: Dr. Bernhard pro rata until Feb. 10, 2017.
1,467
248
2018
Martin Daum³
46
2017
2018
Dr. Wolfgang Bernhard²
42,023
42,738
1,050
1,050
2017
2018
Dr. Dieter Zetsche
pension capital and
Daimler Pensions Plan)
Present value¹1 of
obligations (for pension,
Service cost
(for pension, pension
capital and Daimler
Pensions Plan)
Annual pension
(as regulated until 2005)
as of age 60
In thousands of euros
Individual entitlements, service costs and present values for members of the Board of Management
B.59
Payments made to former members of the Board of
Management of Daimler AG and their survivors
Payments made in 2018 to former members of the Board of
Management of Daimler AG and their survivors amounted to
€16.2 million (2017: €19.0 million). Pension provisions accord-
ing to IFRS for former members of the Board of Management
and their survivors amounted to €270.2 million as of December
31, 2018 (2017: €270.5 million).
In 2018, no advances or loans were made or abated to mem-
bers of the Board of Management of Daimler AG.
Loans to members of the Board of Management
Sideline activities of Board of Management members
The members of the Board of Management should accept man-
agement board or supervisory board positions and/or any
other administrative or honorary functions outside the Group only
to a limited extent. Furthermore, they require the consent of
the Supervisory Board before commencing any sideline activities.
This ensures that neither the time required nor the remunera-
tion paid for such activities leads to any conflict with the mem-
bers' duties to the Group. Insofar as such sideline activities
are memberships of other statutory supervisory boards or com-
parable boards of business enterprises, they are disclosed in
the notes to the annual financial statements of Daimler AG, which
is published on our website. In general, Board of Management
members have no right to separate remuneration for board
positions held at other companies of the Group.
In the event of an early termination of the service contract,
both the short-term and the delayed medium-term component
(deferral) of the annual bonus, and the proceeds from the
long-term PPSP, are paid out not when the contract is terminated
but instead at the points in time agreed upon in the service
contract or in the terms and conditions of the PPSP plan.
In the case of early termination without an important reason,
Board of Management service contracts include commitments
to payment of the base salary and provision of a company car
until the end of the original service period at a maximum. Such
persons are only entitled to payment of the annual bonus pro
rata for the period until the end of the contract of service or of
the Board of Management membership takes effect. Entitle-
ment to payment of the performance-related component of
remuneration with a long-term incentive effect (PPSP) that has
already been allocated is defined by the conditions of the
respective plans. To the extent that the payments described
above are subject to the provisions of the so-called severance
cap of the German Corporate Governance Code, their total
including fringe benefits is limited to double the annual remuner-
ation and may not exceed the total remuneration for the
remaining period of the service contract.
The durations of the contracts of service of the members of
the Board of Management correspond to their terms of
appointment.
page 44 f
Early termination of service
2018
244
3,261
2017
Britta Seeger
10,280
282
156
2017
11,270
292
156
2018
Wilfried Porth
2,651
248
the half of the annual bonus paid in 2018 for 2017 at the
value for target achievement of 100%,
2017
257
2018
Ola Källenius
938
245
2017
1,290
251
2018
Renata Jungo Brüngger
2,860
102
2,971
the half of the share-based annual bonus payable in 2019
for 2017 at the value for target achievement of 100%,
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2017 (payable in 2021), and
the retirement pension expense in 2017 (service costs in
2017).
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
the base salary in 2018,
granted in the reporting year
Excluding
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
6,836
6,950 2,243 14,057
239
10,224
10,344
Total limit for components of remuneration
348
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
Benefits granted
In thousands of euros
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
133
Martin Daum
Daimler Trucks & Buses
Renata Jungo Brüngger
Integrity & Legal Affairs
March 1 Dec. 31
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
Total remuneration
46
Retirement pension expense (service costs)
2,653 2,659
(plan period of 4 years)
Long-term variable remuneration
46
0 2,407
1,004 1,024
Deferral (50% of annual bonus, medium-term)
46
0 2,407
1,004 1,024
(50% of annual bonus, short-term)
Annual variable remuneration
2,175 2,243 2,243 2,243
101
9
92
2,048
195
4,661
4,707
0 11,814
92
2017
2018
max.
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min.
2,008
Taxable non-cash benefits and other fringe benefits
Total
Base salary
max.
min.
2018
2017
Jan. 1 Dec. 31
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Jan. 1 Dec. 31 Jan. 1 - Feb. 10
min.
max.
2017 2018
Jan. 1 Dec. 31
Total
Dr. Dieter Zetsche
In thousands of euros
Benefits granted
B.60
the half of the share-based annual bonus payable in 2020 for
2018 at the value for target achievement of 100%,
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2018 (payable in 2022), and
the retirement pension expense in 2018 (service costs in
2018).
the half of the annual bonus payable in 2019 for 2018 at the
value for target achievement of 100%,
the taxable non-cash benefits and other fringe benefits
in 2018,
167
The total of "benefits granted" for financial year 2018
is calculated from
2,048
195
93
2017
2018
Jan. 1 Dec. 31
min.
max.
Base salary
677
832
832
832
812
832
832
832
Taxable non-cash benefits and other fringe benefits
235
121
121
121
108
93
131
2,048
195
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Dr. Dieter Zetsche
Departing Board of Management members are also provided
with a company car, in some cases for a defined period.
2017
2,008
1,978
640
1,978
37,915
2,659
5,987
39,315
2,653
640
8,617
2018
2017
92
90
90
272
Martin Daum²
2018
832
Dr. Wolfgang Bernhard¹
2,048
93
2018
800
800
812
2017
2,397
1,045
14,896
260
260
832
2018
Britta Seeger
3,502
1,090
16,148
800
800
812
2017
€67.49)
Dr. Dieter Zetsche
260
260
14,896
1,045
832
260
260
14,896
1,045
2,397
2017
812
800
800
15,446
1,043
3,455
Wilfried Porth
2018
832
260
260
15,573
1,092
2,444
2018
15,446
Ola Källenius
1,043
2,397
2017
677
667
667
15,446
1,043
3,054
Renata Jungo Brüngger
2018
832
260
260
14,896
1,045
2,397
2017
812
800
800
15,446
3,455
1,043
3,455
Hubertus Troska
164
470
494
366
164
146
88
Wilfried Porth
95
161
Ola Källenius³
108
93
Renata Jungo Brüngger
235
121
Martin Daum²
9
Dr. Wolfgang Bernhard'
167
195
107
2017
Britta Seeger
Total
Departing Board of Management members with pension agree-
ments (pension commitments) modified as of the beginning
of 2006 receive, for the period between the end of the last con-
tract period and reaching the age of 60, payments in the
amounts of the pension commitments granted as described in
the previous section. These payments are made until the age of
60, possibly reduced due to other sources of income, and are
subject to the annual percentage increases described above in
the explanation of these pension agreements.
That amount can increase by up to 30 percentage points
depending on the number of dependent children.
Payments of these retirement pensions start upon request when
the term of service ends at or after the age of 60, or are paid
as disability pensions if the term of service ends before the age
of 60 due to disability. The respective agreements provide for
3.5% annual increases starting when benefits are received (with
the exception that Wilfried Porth's benefits are adjusted in
accordance with applicable law). The agreements include a pro-
vision by which a spouse of a deceased Board of Management
member is entitled to 60% of that member's pension.
Until the end of 2005, the pension agreements of Board of
Management members included a commitment to an annual
retirement pension, calculated as a proportion of the former
base salary and depending on the number of years of service;
an analogous implementation of this commitment for the
corresponding hierarchical level applied to Wilfried Porth for
the period prior to his serving as a member of the Board of
Management. Such pension claims remained in effect after the
conversion to the Pension Capital system but were frozen at
the level reached at the beginning of 2006.
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse/reg-
istered partner or dependent children is/are entitled to the full
committed amount in the case of the Pension Capital system,
and to the credit amount reached plus an imputed amount until
the age of 62 in the case of the Daimler Pensions Plan. If a
Board of Management member passes away after retiring for
reason of age, in the case of payment of twelve annual install-
ments the heirs are entitled to the remaining present value. In
the case of a pension with benefits for surviving dependents,
the spouse/registered partner or dependent children is/are enti-
tled to 60% of the discounted terminal value (Pension Capital),
or the spouse/registered partner is entitled to 60% of the actual
pension (Daimler Pensions Plan).
in twelve annual installments, whereby interest accrues
on each partial amount from the time payments commence
until the payout is complete (Pension Capital 6% or 5%;
Daimler Pensions Plan in accordance with applicable law);
as an annuity with annual increases (Pension Capital 3.5% or
in accordance with applicable law; Daimler Pensions Plan in
accordance with applicable law).
-
- as a single amount;
Payments under the Pension Capital system and the Daimler
Pensions Plan can be made in three ways:
Under this system, each Board of Management member is cred-
ited with a capital component each year. This capital compo-
nent comprises an amount equal to 15% of the sum of the Board
of Management member's fixed base salary and the total
annual bonus for the respective financial year on the balance
sheet date, multiplied by an age factor equivalent to a rate
of return of 6% until 2015 and 5% as of 2016 (Wolfgang Bernhard
and Wilfried Porth: 5% for all years). These contributions to
pension plans are granted only until the age of 60. The benefit
from the pension plan is payable to surviving Board of Man-
agement members at the earliest at the age of 60, irrespective
of their age upon retirement. If a member of the Board of
Management retires due to disability, the benefit is paid as a
disability pension, even before the age of 60.
The Pension Capital system was used from the beginning of 2006
until the end of 2011. The pension agreements of active Board
of Management members that were valid until that time were
modified accordingly. All Board of Management members newly
appointed during that period were subject exclusively to the
Pension Capital system.
The Supervisory Board of Daimler AG has approved the applica-
tion of this system for all members of the Board of Manage-
ment newly appointed since 2012. The amount of the annual
contributions results from a fixed percentage of the base sal-
ary and the total annual bonus for the respective financial year
calculated as of the balance sheet date. This percentage is
15%. This calculation takes into consideration the targeted level
of retirement provision for each Board of Management mem-
ber also according to the period of membership - and the
resulting annual and long-term expense for the Company.
The contributions to the retirement provision are granted until
the age of 62. The benefit from the pension plan is payable to
surviving Board of Management members at the earliest at the
age of 62, irrespective of their age upon retirement. If a member
of the Board of Management retires due to disability, the bene-
fit is paid as a disability pension, even before the age of 62.
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as
for executives: the "Daimler Pensions Plan". This retirement
benefit system features the payment of annual contributions
by Daimler and is oriented toward the capital market. Daimler
makes a commitment to guarantee the total of contributions
paid, which are invested in the capital market according to a
precautionary investment concept.
Retirement provision
Commitments upon termination of service
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
130
4 For the fulfillment of disclosure obligations pursuant to Section
285 No. 9a of the German Commercial Code (HGB), this amount is
reduced by €182,254 for the financial year 2018 (2017: €197,508).
The corresponding fringe benefits were granted and borne by a
subsidiary and are thus not included in the remuneration to be dis-
closed in the annual financial statements of the parent company,
Daimler AG.
1 2017: Board of Management remuneration paid until Feb. 10, 2017.
2 2017: Board of Management remuneration paid from March 1, 2017.
3 Including an anniversary bonus of €69,456.50.
1,703
1,480
Hubertus Troska4
Bodo Uebber
Service costs for pension obligations according to IFRS amounted
to €2.4 million in financial year 2018 (2017: €2.0 million). The
present value of the total defined benefit obligation according
to IFRS amounted to €86.0 million as of December 31, 2018
(December 31, 2017: €82.7 million). Taking age and period of
service into account, the individual entitlements, service
costs and present values are shown in the table. 7 B.59
2018
Taxable non-cash benefits and other fringe benefits
17,807
302
302
967
2018
Bodo Uebber
3,455
1,043
15,446
800
800
812
2017
2,397
1,045
14,896
260
260
(2017: at share price
832
2018
1,249
In thousands of euros
2,820
947
B.58
B.58.
The granting of non-cash benefits in kind, primarily the
reimbursement of expenses for security precautions and the
provision of company cars, resulted in taxable benefits for
the members of the Board of Management in 2018 as shown
'in table
The total remuneration of the Board of Management for the finan-
cial year 2018 amounts to €24.7 million (2017: €35.0 million).
Of that total, €9.5 million was fixed, that is, non-performance-
related remuneration (2017: €9.5 million), €5.0 million (2017:
€15.3 million) was short-term and medium-term variable per-
formance-related remuneration (annual bonus with deferral),
and €10.2 million was variable performance-related remunera-
tion granted in the financial year 2018 with a long-term incen-
tive effect (2017: €10.2 million). 7 B.57
33,322
10,204
23,236
10,225
145,775
151,157
2,502
7,667
2,502
7,667
1 2017: Board of Management remuneration paid until Feb. 10, 2017.
2 2017: Board of Management remuneration paid from March 1, 2017.
8,007
7,784
2017
2018
Total
4,057
1,246
18,464
932
932
2017
Total
Total
953
2017
Jan. 1 Dec. 31
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
In thousands of euros
Benefits granted
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
5,252
5,176
2018
5,252
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in the reporting year
Total limit¹ for components of remuneration
6,276
3,447 1,570
3,375
3,121 1,244 5,950
5,176
Jan. 1 Dec. 31
min.
max.
Base salary
483
473
Deferral (50% of annual bonus, medium-term)
1,136
0
483
473
(50% of annual bonus, short-term)
Annual variable remuneration
1,130 1,130
1,130
1,054
164
164
164
107
Taxable non-cash benefits and other fringe benefits
Total
966
966
966
947
3,155
Total remuneration
244
244
0
416
406
978
0
416
406
Deferral (50% of annual bonus, medium-term)
978
0
416
406
978
0
416
406
(50% of annual bonus, short-term)
Annual variable remuneration
1,326
1,326
1,326
978
0
Long-term variable remuneration
1,043
244
238
248
248
122 248
Retirement pension expense (service costs)
4,706
0
1,855 1,877
4,706
0
1,877
1,855
Total
2,750
0
1,045
1,043
2,750
0
1,045
(plan period of 4 years)
1,136
Long-term variable remuneration
(plan period of 4 years)
6,181
Payment of PPSP 2013
Long-term variable remuneration
892
1,349
2,175
Deferral (50% of annual bonus, medium-term)
90
640
1,978
(50% of annual bonus, short-term)
Annual variable remuneration
101
2,243
2,175
Total
9
195
167
Taxable non-cash benefits and other fringe benefits
92
2,472
2,048
Payment of PPSP 2014
Dividend equivalent PPSP 2014
3,601
8,264
13,043
Total remuneration
3,454
46
Retirement pension expense (service costs)
6,021
10,868
Total
138
Dividend equivalent PPSP 2018
144
128
Dividend equivalent PPSP 2017
149
133
Dividend equivalent PPSP 2016
138
121
Dividend equivalent PPSP 2015
152
3,463
1,282
2,008
Jan. 1 Feb. 10 Jan. 1 Dec. 31
2017
2018
135
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
6,171
6,095
3,936 4,231 2,016 7,576
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in the reporting year
Total limit¹ for components of remuneration
Total remuneration
0 5,560
886 886
886
690
Retirement pension expense (service costs)
2,192 2,215
Total
0 3,288
1,246 1,249
The total of "payments made" for financial year 2017
is calculated from
Base salary
- the base salary in 2017,
the half of the annual bonus paid in 2018 for 2017 at the
value as of the end of the reporting period in financial year
2017,
2018
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2017
Dr. Wolfgang Bernhard
Daimler Trucks & Buses
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
Dr. Dieter Zetsche
In thousands of euros
B.61
Payments made
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for reporting year 2018 are
implemented with the payout of PPSP 2018, which constitutes
the last payment to be made of the components of remunera-
tion granted in financial year 2018. For financial year 2018,
therefore, the possible cap would take place in 2022, the year
that PPSP 2018 is paid out.
the retirement pension expense in 2018 (service costs in
2018).
the dividend equivalent of the current PPSP (2015, 2016,
2017 and 2018) paid in 2018, and
the value of the long-term share-based remuneration (PPSP
2014) paid in 2018,
the half of the share-based annual bonus paid in 2018 for
2016 (deferral),
the half of the annual bonus payable in 2019 for 2018 at
the value as of the end of the reporting period,
the taxable non-cash benefits and other fringe benefits
in 2018,
- the base salary in 2018,
The total of "payments made" for financial year 2018
is calculated from
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for financial year 2017 are
implemented with the payout of PPSP 2017, which constitutes
the last payment to be made of the components of remunera-
tion granted in financial year 2017. For financial year 2017,
therefore, the possible cap would take place in 2021, the year
that PPSP 2017 is paid out.
the retirement pension expense in 2017 (service costs in
2017).
the dividend equivalent of the current PPSP (2014, 2015,
2016 and 2017) paid in 2017, and
the value of the long-term share-based remuneration (PPSP
2013) paid in 2017,
the half of the share-based annual bonus paid in 2017 for
2015 (deferral),
the taxable non-cash benefits and other fringe benefits
in 2017,
912
996
996
Benefits granted
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
5,252
5,176
5,252
4,662
5,882
1,176
In thousands of euros
3,053
3,074 1,197 5,903
2,733
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
Excluding
granted in the reporting year
Total limit¹ for components of remuneration
Total remuneration
251
3,020
Base salary
Taxable non-cash benefits and other fringe benefits
Total
Ola Källenius
Group Research &
Mercedes-Benz Cars Development
161
161
95
832
832
832
812
832
832
832
812
max.
Jan. 1 Dec. 31
min.
2018
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min.
2017
max.
2018
2017
Jan. 1 Dec. 31
HR and Labor Relations Director &
Mercedes-Benz Vans
Wilfried Porth
251
251
245
244
978
0
416
338
Deferral (50% of annual bonus, medium-term)
978
0
416
406
978
0
416
338
(50% of annual bonus, short-term)
Annual variable remuneration
925
925
925
920
953
953
406
161
416
978
244
244
102
Retirement pension expense (service costs)
4,706
0
1,855 1,877
4,706
0
1,719 1,877
Total
2,750
0
1,045
1,043
2,750
0
1,045
1,043
(plan period of 4 years)
Long-term variable remuneration
0
146
88
88
max.
min.
2018
2017
Jan. 1 Dec. 31
Greater China
Hubertus Troska
Mercedes-Benz Cars Marketing & Sales
Britta Seeger
In thousands of euros
Benefits granted
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
134
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit = maximum amount → 1.5 times (Dr. Zetsche)/1.9 times target remuneration
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
Excluding
5,347
5,271
5,252
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
2017
5,176
Jan. 1 Dec. 31
min.
1,178
Total
494
494
494
470
164
164
164
366
Taxable non-cash benefits and other fringe benefits
832
832
832
812
832
832
832
812
Base salary
max.
2018
996
3,136 1,212 6,043
5,956
406
978
0
416
406
978
0
416
406
Deferral (50% of annual bonus, medium-term)
(50% of annual bonus, short-term)
Annual variable remuneration
920
920
920
958
993
993
993
907
88
416
3,142
0
406
3,010 3,127 1,250
granted in the reporting year
Total limit for components of remuneration
Total remuneration
0 4,706
292 292
0 2,750
1,090 1,092
1,902 1,924
282 292
0 4,706
257
257
257
248
Retirement pension expense (service costs)
1,855 1,877
€70.13)
2,750
0
1,043 1,045
(plan period of 4 years)
Long-term variable remuneration
978
0
416
978
(2018: at share price
> 25%
Total
Excellent
Addition or
deduction
Degree of target
achievement
rate
Response
Engaged
employees
deduction
achievement
2.5%
Addition or
B.54
Diversity
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 127
Employee engagement
B.53
A higher degree of transparency will be achieved in the future,
thanks to the increased quantification of the non-financial tar-
gets and the publication of the degree of target achievement in
the Remuneration Report.
A target for the proportion of women in executive positions
(Aspirational Guidelines) was defined at the Group level for a
period of several years on the basis of Daimler's in-house
guidelines for the proportion of women in management posi-
tions (Gender Diversity Aspirational Guidelines), which go
beyond the legally obligatory targets. A comparison of the tar-
get figures with the actual figures at the end of a financial
year is used to derive the degree of target achievement (in %).
71 B.54
The degree of the employees' commitment to the company
(engaged employees) is calculated on the basis of their answers
to certain standardized questions in our global employee
survey. These answers, together with the response rate achieved
in the employee survey, are used to derive the degree of achieve-
ment (in %) of the targets defined at the Group level for the
maintenance and enhancement of a high degree of satisfaction
and motivation among the employees. 7 B.53
Quality and/or customer satisfaction targets (quality KPIs of
all divisions) are defined by the individual divisions for each
financial year. With regard to vehicles, a comparison of the target
number and the actual number of claims during a predefined
period of time (MIS xx) is carried out. With regard to services,
this comparison is carried out by means of a customer satis-
faction index. The relevant degree of target achievement (in %)
at the Group level is derived as a weighted average of the indi-
vidual divisional degrees of target achievement (in %). 7 B.52
Degree of target
> 35%
>70%
Excellent
Target achieved <10%
Gender Diversity
Aspirational Guidelines
-2.5%
Low
1.0%
Average
> 60%
<60%
<25%
-2.5%
Low
1.0%
Average
Target overachieved ≥10%
2.5%
2.0%
Good
> 65%
> 30%
2.0%
Good
Achievement of the Group-level targets regarding the further
development and permanent establishment of integrity is
measured on the basis of certain standardized questions in
our global employee survey. This measurement is based on
the achieved approval rate of any question and the average
approval rate achieved across all questions (integrity indica-
tor). The relevant degree of target achievement at the Group
level (in %) is derived from these figures. 7 B.51
Underperformed
Target not achieved
Specifically:
Non-financial targets
2.5%
Excellent
of all divisions
Quality KPIs
deduction
Addition or
Degree of target
achievement
Integrity Approval rate
indicator of any question
81-100
deduction
Addition or
Degree of target
B.52
Quality
Integrity
B.51
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
126
Number Value when granted
achievement
≥75%
Excellent
2.5%
1 The amount to which the addition or deduction deviates from the
respective target value is defined according to the specific division
and product.
Target not achieved¹
Underperformed¹
Target achieved¹
-2.5%
1.0%
Average
Low
≥60%
61-70
≤60
-2.5%
Low
1.0%
Average
2.0%
Good
≥65%
71-80
2.0%
Target overachieved¹
The non-financial targets, which are oriented toward sustain-
ability and are for the first time uniform at all management
levels, are divided into four categories. Each category is weighted
equally and receives an addition or a deduction of up to 2.5
percentage points to or from the degree of achievement of the
financial target. After the end of the financial year, the degree of
target achievement is calculated by comparing the target value
and the actual value. On this basis, an addition to or a deduc-
tion from the degree of financial target achievement of up to a
total amount of 10 percentage points is possible.
Transformation targets
Good
In order to take into account the implementation of the future-
oriented measures for the technological and sustainable
realignment of the Group, the divisions will annually define key
performance indicators and target values for the future-ori-
ented CASE fields – Connected, Autonomous, Shared & Services,
Electric. After the end of a financial year, a comparison of the
target values and the actual values will be conducted for each
division. The Supervisory Board will derive the Board of Man-
agement's shared degree of target achievement from the divi-
sions' degree of target achievement as well as the strategic,
organizational and structural contribution of the Board of Man-
agement as a whole, taking into account the economic environ-
ment and the competitive situation and positioning of the Group.
It will be possible to add or deduct 25 percentage points to/
from the degree to which the financial target has been achieved.
150
200
Maximum
200%
250
250%
Maximum
300
350
ACTUAL
achievement, the total cap' applies.
400
450
500
The possible upper limits with regard to the annual bonus and
the PPSP are shown in tables 7 B.55 and 7 B.56.
For both of the share-based components - the second 50% of
the annual bonus and the PPSP with a long-term orientation -
the amounts actually paid out can deviate significantly from the
values described depending on the development of the Daimler
share price and on the achievement of the relevant target param-
eters. Upward deviation is possible only as far as the maximum
limits described above. Both components can also be zero.
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2018, and
the taxable non-cash benefits in 2018.
the half of the medium-term share-based component of the
annual bonus for 2018 payable in 2020 with its value at
the end of the reporting period (entitlement depending on the
development of Daimler's share price compared with the
STOXX Europe Auto Index),
the half of the annual bonus for 2018 payable in 2019 and
measured as of the end of the reporting period,
With more than 250% target
ACTUAL
108%
ACTUAL
117%
ACTUAL
126%
Transformation targets will replace the previous shared perfor-
mance value for the Board of Management as a whole, which
was derived from the Board of Management members' individual
target agreements and degrees of target achievement. Espe-
cially during the transformation phase, these transformation
targets will refer to quantitative as well as qualitative aspects
and will be assessed and evaluated correspondingly by the Super-
visory Board.
Long-term variable
remuneration (PPSP)
Medium-term
Short and medium-term variable
remuneration (annual bonus)
Short-term
129
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Base salary
In thousands of euros
Board of Management remuneration in 2018
B.57
Overall target
achievement
final number of
phantom shares
times share price
at end of plan
(amount paid out
in €)
Development of
Daimler share price
from beginning
until end of plan,
maximum 2.5 times
the issue price
(share price in €)
payments of PPSP 2014.
Performance factor
0% - 200% (from
which is derived
the final number of
phantom shares
with the share price
at beginning of plan)
Grant value (from
which is derived
the preliminary
number of phantom
shares with the
share price at
beginning of plan)
0
50
100
100%
the base salary in 2018,
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the Board
of Management of Daimler AG is calculated as the total of the
amounts of
1 Amount paid out including dividend-equivalent
Board of Management remuneration
in financial year 2018
125
150
(deferral)
175 medium-term
50%
200
235
+25% of the base salary
+10% of the base salary
Maximum 235% of the base salary
(short- and medium-term variable remuneration of the
Board of Management members active at year-end)
B.55
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
128
The remainder of the remuneration system, in particular the
composition of the remuneration of the Board of Management
from the non-performance-related base salary, the annual
bonus as a short-term and medium-term variable component
with deferral and the long-term variable component PPSP
also remain unchanged, as does the relationship between the
individual components of the remuneration. The current
design of the PPSP, with the four-year duration of the plan, the
measurement of the success targets compared to a defined
and regularly monitored group of competitors that face the same
strategic challenges, and the linkage with the absolute devel-
opment of the share price, is already oriented toward the long-
term success of the company.
No change in the other components of the
remuneration system
Board of Management remuneration in 2018 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
The description of the transformation criteria and the publication
of target achievement figures in the Remuneration Report will
ensure a higher degree of transparency in the future.
This criteria-based consideration of the future-oriented CASE
fields will be based on assessments of the success of product-
related, technical and economic activities/progress. Further-
more, it should be possible to assess the progress of sustain-
ability/Environment Social Governance (ESG) aspects and the
success of strategic M&A activities. The defined key perfor-
mance indicators are used for measuring the degree to which
the transformation targets have been achieved. They also sup-
port the corresponding activities, corrections or implementation
steps of the Group's sustainability strategy (for example, invest-
ment volume, growth of revenue from digital services, activation
and connectivity rates of digital services, proportion of alterna-
tive drive systems, emission targets, development discipline,
development progress of products and digital services, number
of online contracts, proportion of digital self-services, revenue
from mobility services).
200% of the
100
Annual bonus
75
(long-term variable remuneration 71 B.61)
base salary
of the grant value
PPSP 2014 (paid in 2018)
B.56
1 Positive target achievement of the defined performance criteria “unit-sales
development, revenue development, transformation in future technologies,
change in the corporate culture (Leadership 2020)".
Joint performance
+/- 25%
Non-financial success parameters
+/- 10%
☐ Non-achievement of compliance
targets -25% - 0% (not applied in 2018)
45% of the base salary
Financial success
parameters 0% - 200%
+7.5% of the base salary
+10% of the base salary
50%
50
50% short-term
short-term
25
0
Maximum
theoretically 500%
50% medium-term
(deferral)
ACTUAL 62.5% of the base salary
57
56
62
50
60
53
56
52
59
Dividend equivalent PPSP 2018
54
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
5,580
2,272
Hubertus Troska
Britta Seeger¹
58
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
In thousands of euros
Payments made
Total
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
4,340
282
257
2,662
248
3,427
Total remuneration
Retirement pension expense (service costs)
1,412
2,469
292
3,681
50
145
48
At Group level, risks and opportunities below €500 million are
classified as "Low", between €500 million and €1 billion as
"Medium", and above €1 billion as "High". For the quantification
of each risk and opportunity category in the Management
Report, the individual risks and opportunities are summarized
for each category. The assessment of the dimensions proba-
bility of occurrence and possible impact is based on the levels
shown in table 7 B.63 and is conducted before measures are
implemented. In addition to the quantifiable risks and opportu-
nities, risk management also considers qualitative risks and
opportunities, which primarily comprise those risks connected
with aspects presented in the non-financial report. In the con-
text of describing the risk and opportunity categories, significant
changes in comparison to the prior year are explained.
Mercedes-Benz Cars Marketing & Sales
Risk management is based on the principle of completeness.
This means that at the level of the individual entities, all identi-
fied risks enter the risk management process. The internal
control system (ICS) is responsible for the monitoring of gen-
eral uncertainties without any clear indication of a possible
effect on earnings.
The scope of consolidation for risk and opportunity management
corresponds to the scope of consolidation of the consolidated
financial statements and goes beyond that if necessary. The risks
and opportunities of the divisions and operating units, impor-
tant associated companies, joint ventures, joint operations and
the corporate departments are included.
The tasks of the employees responsible for risk and opportunity
management include, besides the identification and assess-
ment of risks and opportunities, the definition of measures and
the initiation of such measures, if necessary. The objective of
such measures is to avoid, reduce or transfer risks. The utiliza-
tion or enhancement of an opportunity, and its partial or full
implementation, also require measures to be taken. The cost-
effectiveness of a measure is assessed before its implementa-
tion. The possible impact and probability of occurrence of all
identified risks and opportunities of the individual entities and
the related measures that have been initiated are continually
monitored. The management activities take place at the level
of the divisions based on individual risks and opportunities.
The internal control system with regard to the accounting
process has the objective of ensuring the correctness and
effectiveness of accounting and financial reporting. It is
designed in line with the internationally recognized framework
for internal control systems of the Committee of Sponsoring
Organizations of the Treadway Commission (COSO Internal
Control - Integrated Framework), is continually developed fur-
ther, and is an integral part of the accounting and financial
reporting processes in the relevant legal entities and corporate
functions. The system includes principles and procedures as
well as preventive and detective controls. Among other things,
it is regularly checked, if
the Group's uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
transactions within the Group are accounted for and properly
eliminated;
issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
processes are established to guarantee the completeness of
financial reporting;
processes are established for the segregation of duties and
for the "four-eyes principle" (dual accountability) in the con-
text of preparing financial statements, and authorization and
access rules exist for relevant IT accounting systems.
The effectiveness of the internal control system is systematically
assessed with regard to the corporate accounting process.
The first step consists of risk analysis and a definition of control
with the objective of identifying significant risks relating to the
processes of corporate accounting and financial reporting in the
main legal entities and corporate functions. The controls
required are then defined and documented in accordance with
Group-wide guidelines. Random samples are regularly tested
to assess the effectiveness of the controls. Those tests consti-
tute the basis for self-assessment of the appropriate magni-
tude and effectiveness of the controls. The results of this self-
assessment are documented and reported in a Group-wide
IT system. Identified weaknesses are eliminated with consider-
ation of their potential effects. At the end of the annual cycle,
the selected legal entities and corporate functions confirm the
effectiveness of the internal control and risk management
system with regard to the corporate accounting process. The
Board of Management and the Audit Committee of the Super-
visory Board are regularly informed about the main control
weaknesses and the effectiveness of the control mechanisms
installed. However, the internal control and risk management
system for the accounting process cannot ensure with abso-
lute certainty that material false statements in accounting are
avoided.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
The organizational embedding and monitoring of risk and
opportunity management takes place through the risk man-
agement organization established at the Group. In this context,
the divisions, corporate functions and legal entities are
requested to report on concrete risks and opportunities at reg-
ular intervals. This information is passed on to Group Risk
Management, which processes the information and provides it
to the Board of Management and the Supervisory Board as
well as to the Group Risk Management Committee (GRMC). The
GRMC is composed of representatives of Accounting & Financial
Reporting, the Legal Department, Compliance, Technical
Compliance and Group Security, and is chaired by the Board of
Management Member for Finance & Controlling/Daimler
Financial Services. The internal auditing department contributes
material findings on the internal control and risk management
system.
55
Responsibility for operational risk management and for the risk
management processes lies directly with the divisions, corpo-
rate functions and legal entities.
The Audit Committee of the Supervisory Board is responsible for
monitoring the internal control and risk management sys-
tem. The internal auditing department monitors whether the
statutory conditions and the Group's internal guidelines con-
cerning the internal control and risk management system of the
Group are adhered to. If required, measures are initiated in
cooperation with the respective management. External auditors
audit the system for the early identification of risks which is
integrated in the risk management system for its general suit-
ability to identify risks threatening the existence of the Group;
in addition, they report to the Supervisory Board on any signifi-
cant weaknesses that have been recognized in the internal
control and risk management system.
Risks and opportunities
The following section describes risks and opportunities that can
have a significant influence on the profitability, cash flows and
financial position of the Daimler Group. In general, the reporting
of risks and opportunities takes place in relation to the individ-
ual segments. If no segment is explicitly mentioned, the risks and
opportunities described relate to all the automotive divisions.
In addition, risks and opportunities that are not yet known or
classified as not material can influence profitability, cash flows
and financial position.
Industry and business risks and opportunities
The following section describes industry and business risks
and opportunities of the Daimler Group. A quantification of
these risks and opportunities is shown in table 71 B.64.
Economic risks and opportunities
Economic risks and opportunities constitute the framework for
the risks and opportunities listed in the following categories
and are integrated as premises into the quantification of these
risks and opportunities. Overall economic conditions have a
significant influence on vehicle sales markets and thus on the
Group's success.
Like the majority of economic research institutes, Daimler
expects the upswing of the world economy to continue in 2019,
although with less dynamism than in the two previous years.
Economic developments in 2018 are described in detail in the
"Economic Conditions and Business Development" section of
this Management Report; growth assumptions for 2019 are
explained in the "Outlook” section on
pages 79 ff and 158 ff.
Economic risks and opportunities are linked with assumptions
and forecasts concerning general developments. The relation-
ship between risks and opportunities at the beginning of the year
2019 seems to be somewhat less favorable than in the previ-
ous year.
The escalation of the trade conflict between the United States
and China continues to be one of the main risks. But the threat
of US tariffs on vehicles and parts imported from other markets,
including the European Union, could also affect existing global
value chains and have a negative impact on sales opportunities
and economic developments. Furthermore, there is a danger
that countries will implement increasingly protectionist measures
such as specific market-access barriers or industrial policy
instruments. Should these trade tensions spread and massively
affect global trade, there would be significant impacts on infla-
tion, business climate, consumer confidence and ultimately also
on global economic growth. On the other hand, unforeseen
trade facilitations could provide positive impulses and lead to
more trade and higher growth. In that case, the Daimler Group
could also benefit from preferential trade conditions.
64
Dividend equivalent PPSP 2015
Reports regarding the current risk situation and the effectiveness,
functionality and appropriateness of the internal control and
risk management system are regularly presented to the Board
of Management and to the Audit Committee of the Supervisory
Board of Daimler AG. Furthermore, the responsible managers
regularly discuss risks and opportunities out of business oper-
ations with the Board of Management.
Jan. 1 Dec. 31 Jan. 1 Dec. 31
55
2018
2
-
61
Dividend equivalent PPSP 2015
2
3
48
Dividend equivalent PPSP 2016
5
6
53
60
Dividend equivalent PPSP 2017
50
56
50
56
Dividend equivalent PPSP 2018
54
54
Total
982
435
4,330
2,395
Retirement pension expense (service costs)
122
248
Risk assessment takes place on the basis of probability of
occurrence and possible impact according to the levels "Low",
"Medium" and "High". These levels also apply to the possible
impact of opportunities. An analysis of the probability of occur-
rence is not considered here. When assessing the impact of
a risk or opportunity, its effect on EBIT is generally considered.
Dividend equivalent PPSP 2014
1,385
56
Payment of PPSP 2014
Jan. 1 Dec. 31
2017
Greater China
Jan. 1 Dec. 31
2018
Base salary
812
832
812
832
Taxable non-cash benefits and other fringe benefits
366
164
470
494
Total
1,178
2017
996
1,326
Annual variable remuneration
(50% of annual bonus, short-term)
800
260
800
260
Deferral (50% of annual bonus, medium-term)
846
525
Long-term variable remuneration
Payment of PPSP 2013
123
2,472
1,282
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Total remuneration
In the context of operative planning, risks and opportunities -
with consideration of appropriate risk and opportunity catego-
ries are identified and assessed for a two-year planning period.
Furthermore, the discussions for the derivation of mid-term
and strategic targets in the context of strategic planning include
the identification and assessment of risks and opportunities
relating to a longer period. The reporting of risks and opportu-
nities in the Management Report generally relates to a period
of one year. Besides the reporting at specific times, risk and
opportunity management is established as a continuous task
within the Group. In addition to the regular reporting, there is
also an internal reporting obligation within the Group for mate-
rial risks arising unexpectedly. The central Group Risk Manage-
ment regularly reports the identified risks and opportunities to
the Board of Management and the Supervisory Board.
260
525
Payment of PPSP 2014
Dividend equivalent PPSP 2014
Dividend equivalent PPSP 2015
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2018
Total
Retirement pension expense (service costs)
238
488
510
208
22
9
17
20
7
9
19
22
53
60
50
56
50
56
54
800
260
667
Payment of PPSP 2013
136
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Payments made
In thousands of euros
Martin Daum¹
March 1 Dec. 31
2017
Daimler Trucks & Buses
Jan. 1 Dec. 31
2018
Renata Jungo Brüngger¹
Integrity & Legal Affairs
Jan. 1 Dec. 31
2017
Jan. 1 Dec. 31
2018
Base salary
677
832
54
812
Taxable non-cash benefits and other fringe benefits
235
121
108
93
Total
912
953
920
925
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
832
775
922
1,407
Deferral (50% of annual bonus, medium-term)
800
260
800
260
846
525
846
525
Long-term variable remuneration
Payment of PPSP 2013
457
2,472
Payment of PPSP 2014
(50% of annual bonus, short-term)
402
Dividend equivalent PPSP 2014
18
Level
Low
Medium
High
Probability of occurrence
0% Probability of occurrence ≤ 33%
33% Probability of occurrence ≤ 66%
66% Probability of occurrence < 100%
< €500 million
< €1 billion
Level
Low
Medium
High
Possible impact
€0 <
€500 million ≤
Impact
Impact
Impact
≥ €1 billion
Risk and opportunity management system
The risk management system with regard to existence-
threatening and other material risks is integrated into the
value-based management and planning system of the Daimler
Group. It is an integral part of the overall planning, manage-
ment and reporting process in the legal entities, divisions and
corporate functions. The risk management system is intended
to systematically and continually identify, assess, control,
monitor and report risks threatening Daimler's existence and
other material risks, in order to support the achievement of
corporate targets and to enhance risk awareness at the Group.
The opportunity management system at the Daimler Group
is based on the risk management system. The objective of
opportunity management is to recognize the possible opportu-
nities arising in business activities as a result of positive
developments at an early stage, and to use in the best possible
way for the Group by taking appropriate measures. By taking
advantage of opportunities, planned targets should be secured
or overachieved. Opportunity management considers relevant
and realizable opportunities that have not yet been included in
any planning.
1,448
144
Annual variable remuneration
958
102
244
245
1,172
251
1,789
2,119
2,572
2,348
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Payments made
In thousands of euros
Ola Källenius¹
Group Research &
Mercedes-Benz Cars Development
Wilfried Porth
HR and Labor Relations Director &
Mercedes-Benz Vans
920
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2017
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2017
2018
Base salary
812
832
812
832
Taxable non-cash benefits and other fringe benefits
95
161
146
88
Total
907
993
2018
244
164
2,282
230,300
153,900
153,900
40,779
40,779
153,900
153,900
Member of the Supervisory Board
Member of the Supervisory Board (since April 5, 2018)
153,900
113,515
Member of the Supervisory Board (since April 5, 2018)
113,515
Member of the Supervisory Board (until April 5, 2018)
Member of the Supervisory Board and the Audit Committee
Member of the Supervisory Board and the Audit Committee
Member of the Supervisory Board
Member of the Supervisory Board
Member of the Supervisory Board (until April 5, 2018)
Member of the Supervisory Board (until April 5, 2018)
Member of the Supervisory Board
229,200
Member of the Supervisory Board
40,779
214,800
Dr. Sabine Zimmer¹
Roman Zitzelsberger¹
Member of the Supervisory Board
Chairman of the Supervisory Board, the Presidential Committee and the
Nomination Committee
Deputy Chairman of the Supervisory Board, the Presidential Committee
and the Audit Committee
533,800
435,200
Member of the Supervisory Board and the Nomination Committee
Member of the Supervisory Board
183,800
152,800
Member of the Supervisory Board and the Nomination Committee
184,900
Member of the Supervisory Board
153,900
Member of the Supervisory Board and Chairman of the Audit Committee
302,300
Member of the Supervisory Board (since April 5, 2018)
113,515
Member of the Supervisory Board and the Presidential Committee
153,900
Member of the Supervisory Board and the Presidential Committee
1 The employee representatives have stated that their board remuneration is to be transferred to the
Hans-Böckler Foundation, in accordance with the guidelines of the German Trade Union Federation.
2 Mr. Curry has directed that he receive no remuneration whatsoever and that his corresponding board
remuneration is to be paid to the Hans-Böckler Foundation.
3 Mr. Sanches has directed that he receive no fixed component of remuneration and that his corresponding
board remuneration is to be paid to the Hans-Böckler Foundation.
In order to service the debt of the convertible bonds and/or
bonds with warrants issued as a result of the authorization, the
Annual Shareholders' Meeting of April 1, 2015 also approved
a conditional increase in the share capital of up to €500 million
(Conditional Capital 2015).
No use has yet been made of this authorization to issue con-
vertible bonds and/or bonds with warrants.
142
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Material agreements taking effect in the event
of a change of control
Daimler AG has concluded various material agreements, as listed
below, that include clauses regulating the possible event of a
change of control, as can occur as a result of a takeover bid:
- A non-utilized syndicated credit line for a total amount of €11
billion, which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
- Credit agreements with lenders for a total amount of €1.7 bil-
lion, which the lenders are entitled to terminate if Daimler AG
becomes a subsidiary of another company or comes under
the control of one person or several persons acting jointly.
Guarantees and securities for credit agreements of consoli-
dated subsidiaries for a total amount of €15 million, which the
lenders are entitled to terminate if Daimler AG becomes a
subsidiary of another company or comes under the control of
one person or several persons acting jointly.
- A master cooperation agreement on wide-ranging strategic
cooperation with Renault S.A., Renault-Nissan B.V. and Nissan
Motor Co., Ltd. In the case of a change of control of one of
the parties to the agreement, each of the other parties has the
right to terminate the agreement. A change of control as
defined by the master cooperation agreement occurs if a third
party or several third parties acting jointly acquire, legally or
economically, directly or indirectly, at least 50% of the voting
rights in the company in question or are authorized to
appoint a majority of the members of its managing board.
Under the master cooperation agreement, several cooperation
agreements were concluded between Daimler AG on the one
side and Renault and/or Nissan on the other, which provide for
the right of termination for a party to the agreement in the
case of a change of control of another party. These agreements
primarily concern a new architecture for small cars, the
shared use and development of fuel-efficient diesel and gaso-
line engines and transmissions, the development and supply
of a small urban delivery van, the development, production and
supply of pickups, the use of an existing architecture for
compact cars, and the joint production of Infiniti/Nissan and
Mercedes-Benz compact vehicles by a 50-50 joint venture
in Mexico. A change of control is deemed to occur at a thresh-
old of 50% of the voting rights of the company in question
or upon authorization to appoint a majority of the members of
its managing board. In the case of termination of cooperation
in the area of the development of small cars due to a change
of control in the early phase of the cooperation, the party
affected by the change of control would be obliged to bear its
share of the costs of the development of shared components
even if the development were terminated for that party.
- An agreement with BAIC Motor Co., Ltd. related to a jointly held
company for the production and distribution of cars of the
Mercedes-Benz brand in China, by which BAIC Motor Co., Ltd.
is given the right to terminate the agreement or exercise a
put or call option in the case that a third party acquires one
third or more of the voting rights in Daimler AG.
- An agreement related to the establishment of a joint venture
with Beiqi Foton Motor Co., Ltd. for the purpose of producing
and distributing heavy-duty and medium-duty trucks of the
Auman brand. This agreement gives Beiqi Foton Motor Co., Ltd.
the right of termination in the case that one of its competi-
tors acquires more than 25% of the equity or assets of Daimler
AG or becomes able to influence the decisions of its Board of
Management.
-
- An agreement between Daimler and Robert Bosch GmbH
related to the joint establishment and operation of EM-
motive GmbH for the development and production of electric
motors for automotive applications, which gave the Robert
Bosch Group the right to terminate the agreement and to
acquire the shares of the Daimler Group if Daimler should
become controlled by a competitor of Robert Bosch GmbH,
was terminated in January 2019. Robert Bosch GmbH is to
acquire the shares in the joint venture held by Daimler. The
conclusion of the transaction requires the approval of the
competition authorities, which is expected to be granted in
March 2019.
An agreement between Daimler AG, BMW AG and Audi AG
related to the acquisition of the companies of the HERE Group
and the associated establishment of There Holding B.V.
In the event of a change of control of one of the parties to the
agreement, the agreement obligates the party in question
to offer its shares in There Holding B.V. to the other parties to
the agreement (shareholders). A change of control of Daimler
AG occurs if one person gains control over Daimler AG, whereby
control is defined as (i) having control of more than 50% of
the voting rights, (ii) being able to control more than 50% of the
voting rights eligible to vote at the shareholders' meetings
on all or nearly all matters, or (iii) the right to determine the
majority of the members of the Board of Management or
of the Supervisory Board. A change of control also occurs if
competitors of the HERE Group or certain possible com-
petitors of the HERE Group in the technology industry acquire
a shareholding of at least 25% of Daimler AG. If none of the
other parties acquire these shares, the agreement gives them
the right to dissolve There Holding B.V.
An agreement between Daimler AG and BMW AG, which con-
tains basic provisions for six joint ventures between Daimler
Mobility Services GmbH and group companies of BMW AG in
the field of mobility services (car sharing, ride hailing, park-
ing, charging, multimodal and a joint venture holding the com-
mon brand). A change of control is defined as the acquisition
by a third party of more than 50% of the voting rights or shares,
or the conclusion of a control agreement over Daimler AG
by a third party. As a result of a change of control, the other
party may initiate a shoot-out process, which is more pre-
cisely defined in the agreement.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 143
Risk and Opportunity Report
The Daimler Group is exposed to a large number of risks that are
directly linked with the business activities of its divisions or
which result from external influences. A risk is understood as
the danger that events, developments or actions will prevent
the Group or one of its divisions from achieving its targets. At
the same time, it is important for the Daimler Group to identify
opportunities so that they can be utilized in the course of its
business activities, thus safeguarding and enhancing the
Group's competitiveness. An opportunity is understood as the
possibility to safeguard or to surpass the planned targets of
the Group or a division as a result of events, developments or
actions. The divisions have direct responsibility for recogniz-
ing and managing business risks and opportunities at an early
stage. As part of the strategy process, risks related to the
planned long-term development and opportunities for further
profitable growth are identified and integrated into the deci-
sion-making process. In order to identify business risks and
opportunities at an early stage, to assess and manage them
consequently, effective management and control systems, which
are clustered into a risk and opportunity management system,
are applied. Risks and opportunities are not offset. The system
is described below.
B.63
Assessment of probability of occurrence/possible impact
Total remuneration
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the
consent of the Supervisory Board, to exclude shareholders'
subscription rights to the bonds. Subscription rights can,
under these defined conditions, be excluded when bonds are
issued in exchange for non-cash contributions, particularly
within the framework of a merger or acquisition, and when bonds
are issued in exchange for cash contributions, if the issue
price is not significantly below the theoretical market price of
the bonds at the time of the issue.
By resolution of the Annual Shareholders' Meeting held on April
1, 2015, the Board of Management, with the consent of the
Supervisory Board, is authorized to issue during the period until
March 31, 2020 convertible bonds and/or bonds with warrants
or a combination of those instruments (commercial paper) in
a total nominal amount of up to €10 billion with a maximum
term of ten years, and to grant the owners/lenders of those bonds
conversion or option rights to new, registered shares of no par
value in Daimler AG with a corresponding amount of the share
capital of up to €500 million, in accordance with the terms and
conditions of those convertible bonds or bonds with warrants.
The bonds may be issued in exchange for consideration in cash,
but also for consideration in kind, in particular for interests in
other companies. The respective terms and conditions may also
provide for mandatory conversion or an obligation to exercise
the option rights. The bonds can be issued once or several times,
wholly or in installments, or simultaneously in various tranches.
They can also be issued by companies affiliated with Daimler AG
pursuant to Section 15 ff of the German Stock Corporation Act
(AktG).
No use has yet been made of Approved Capital 2018.
within defined limits to exclude shareholders' subscription rights
(Approved Capital 2014). That Approved Capital 2014, of
which no use was made, was canceled by resolution of the Annual
Shareholders' Meeting of April 5, 2018. Also by resolution of
that Annual Shareholders' Meeting, the Board of Management
was authorized with the consent of the Supervisory Board to
increase the share capital of Daimler AG in the period until April
4, 2023, wholly or in partial amounts, on one or several occa-
sions, by up to €1 billion by issuing new registered shares of no
par value in exchange for cash or non-cash contributions, and
with the consent of the Supervisory Board under certain condi-
tions and within defined limits to exclude shareholders' sub-
scription rights (Approved Capital 2018). Subscription rights can,
under these defined conditions, be excluded in the event of a
capital increase through non-cash contributions for the purpose
of an acquisition, and in the case of a capital increase through
cash contributions, if the issue price of new shares is not signif-
icantly below the market price at the time of the issue.
213,700
140
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Takeover-Relevant Information and Explanation
(Report pursuant to Section 315a Subsection 1 and Section 289a Subsection 1 of the German Commercial Code (HGB))
Composition of share capital
The share capital of Daimler AG amounted to approximately
€3,070 million at December 31, 2018. It is divided into
1,069,837,447 registered shares, each of which accounts for
approximately €2.87 of equity capital. Pursuant to Section
67 Subsection 2 of the German Stock Corporation Act (AktG),
only those persons registered as shareholders in the register
of shareholders are considered to be shareholders of the Com-
pany. With the exception of treasury shares, from which the
Company does not have any rights, all shares confer equal rights
to their holders. Each share confers the right to one vote and,
with the possible exception of any new shares that are not yet
entitled to a dividend, to an equal share of the profits in accor-
dance with the dividend payout approved by the Annual Share-
holders' Meeting. The rights and obligations arising from the
shares are derived from the provisions of applicable law, in par-
ticular Sections 12, 53a ff, 118 ff and 186 of the German Stock
Corporation Act. There were no treasury shares at December
31, 2018.
Shares acquired by employees within the context of the employee
share program may not be disposed of until the end of the fol-
lowing year. Eligible participants in the Performance Phantom
Share Plans (PPSPs) of Executive Level 1 and eligible members
of the Board of Management are obliged by the Plans' terms and
conditions and by the Stock Ownership Guidelines to acquire
Daimler shares with a part of their Plan income up to a defined
target volume and to hold them for the duration of their employ-
ment at the Daimler Group. For the other persons eligible for
PPSPs, this obligation no longer applies since payment of PPSP
2013 in February/March 2017.
Provisions of applicable law and of the Articles of Incorpo-
Marie Wieck
ration concerning the appointment and dismissal of
members of the Board of Management and amendments
to the Articles of Incorporation
Pursuant to Section 31 Subsection 2 of the German Codetermi-
nation Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority compris-
ing at least two thirds of its members' votes. If no such majority
is obtained, the Mediation Committee of the Supervisory
Board has to make a suggestion for the appointment within one
month of the vote by the Supervisory Board in which the
required majority was not reached. The Supervisory Board then
appoints the members of the Board of Management with a
majority of its members' votes. If no such majority is obtained,
voting is repeated and the Chairperson of the Supervisory
Board then has two votes. The same procedure applies for dis-
missals of members of the Board of Management.
In accordance with Article 5 of the Articles of Incorporation, the
Board of Management has at least two members. The number
of members is decided by the Supervisory Board. Pursuant to
Section 84 Subsection 2 of the German Stock Corporation
Act (AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required mem-
ber of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German Stock
Corporation Act (AktG). Pursuant to Section 84 Subsection 3
of the German Stock Corporation Act (AktG), the Supervisory
Board can revoke the appointment of a member of the Board
of Management and of the Chairperson of the Board of Manage-
ment if there is an important reason to do so.
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION 141
Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended by
a resolution of an Annual Shareholders' Meeting. Unless other-
wise required by applicable law, resolutions of the Annual
Shareholders' Meeting - with the exception of elections - are
passed pursuant to Section 133 of the German Stock Corpo-
ration Act (AktG) and Article 16 Subsection 1 of the Articles of
Incorporation with a simple majority of the votes cast and if
required with a simple majority of the share capital represented.
Pursuant to Section 179 Subsection 2 of the German Stock
Corporation Act (AktG), any amendment to the purpose of the
Company requires a 75% majority of the share capital repre-
sented at the Shareholders' Meeting; no use is made in the
Articles of Incorporation of the possibility to stipulate a larger
majority of the share capital. In accordance with Article 7
Subsection 2 of the Articles of Incorporation, amendments to
the Articles of Incorporation that only affect the wording can
be decided upon by the Supervisory Board. Pursuant to Section
181 Subsection 3 of the German Stock Corporation Act (AktG),
amendments to the Articles of Incorporation take effect upon
being entered in the Commercial Register.
Authorization of the Board of Management to issue or buy
back shares
By resolution of the Annual Shareholders' Meeting of April 1,
2015, the Company was authorized to acquire its own shares
during the period until March 31, 2020 for all legal purposes in
a volume of up to 10% of the share capital at the time of the
resolution of the Annual Shareholders' Meeting. The shares can
be used, under the exclusion of shareholders' subscription
rights, for, among other things, corporate mergers and acquisi-
tions or else can be sold for cash to third parties at a price
that is not significantly below the market price at the time of the
sale. The shares can also be used to service debt on con-
vertible bonds and/or bonds with warrants, or can be issued
to employees of the Company and employees and members
of executive bodies of affiliated companies pursuant to Section
15 ff of the German Stock Corporation Act (AktG). The Compa-
ny's own shares can also be canceled.
In addition, the Board of Management is authorized under other
defined circumstances and with the consent of the Supervisory
Board to exclude shareholders' subscription rights for shares
they acquire. The Company's own shares in a volume of up to
5% of the share capital existing at the time of the resolution
of the Annual Shareholders' Meeting can also be acquired with
the application of derivative financial instruments (put or call
options, forwards or a combination of these financial instru-
ments), whereby the terms of the derivatives may not exceed
18 months and must be terminated on March 31, 2020, at the
latest.
No use was made of this authorization to acquire the Company's
own shares during the reporting period.
By resolution of the Annual Shareholders' Meeting held on April
9, 2014, the Board of Management was authorized with the
consent of the Supervisory Board to increase the share capital
of Daimler AG in the period until April 8, 2019 by up to €1 bil-
lion by issuing new registered shares of no par value in exchange
for cash or non-cash contributions, and with the consent of the
Supervisory Board under certain conditions and
Members of the Board of Management are appointed and dis-
missed on the basis of Sections 84 and 85 of the German
Stock Corporation Act (AktG) and Section 31 of the German
Codetermination Act (MitbestG). In accordance with Section
84 of the German Stock Corporation Act, the members of the
Board of Management are appointed by the Supervisory
Board for a maximum period of office of five years. However,
the Supervisory Board of Daimler AG has decided generally
to limit the initial appointment of members of the Board of Man-
agement to three years. Reappointment or the extension of
a period of office is permissible, in each case for a maximum
of five years.
Dr. Frank Weber
Restrictions on voting rights and on the transfer of shares
The Company does not have any rights from treasury shares.
In the cases described in Section 136 of the German Stock
Corporation Act (AktG), the voting rights of treasury shares are
nullified by law.
Elke Tönjes-Werner¹
1,005
624
Long-term variable remuneration
Payment of PPSP 2013
2,956
Payment of PPSP 2014
1,656
Dividend equivalent PPSP 2014
73
Dividend equivalent PPSP 2015
58
66
Dividend equivalent PPSP 2016
63
71
Dividend equivalent PPSP 2017
60
67
Dividend equivalent PPSP 2018
302
65
932
(50% of annual bonus, short-term)
1,679
Sibylle Wankel¹
5,850
3,965
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
Payments made
In thousands of euros
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2017
2018
Base salary
947
967
Taxable non-cash benefits and other fringe benefits
107
Total
1,054
1,131
Deferral (50% of annual bonus, medium-term)
Total
Annual variable remuneration
2,851
Function(s) remunerated
In euros
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
139
Total in 2018
Dr. Manfred Bischoff
Michael Brecht¹
Dr. Paul Achleitner
Bader M. Al Saad
Sari Baldauf
Name
Dr. Clemens Börsig
Raymond Curry²
Petraea Heynike
Andrea Jung
Joe Kaeser
Ergun Lümali¹
Wolfgang Nieke¹
Dr. Bernd Pischetsrieder
5,147
Valter Sanches³
Jörg Spies¹
Dr. Jürgen Hambrecht
Supervisory Board remuneration
Michael Bettag¹
No advances or loans were made or abated to members of the
Supervisory Board of Daimler AG in 2018.
886
B.62
Total remuneration
6,891
4,868
137
138
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Remuneration of the Supervisory Board
Retirement pension expense (service costs)
690
The remuneration of the Supervisory Board is determined by the
Annual Shareholders' Meeting of Daimler AG and is governed
by the Company's Articles of Incorporation. The new regulations
for Supervisory Board remuneration approved by the Annual
Shareholders' Meeting in March 2017 and effective for the finan-
cial year beginning on January 1, 2017 specify that the mem-
bers of the Supervisory Board receive, in addition to the refund
of their expenses and the cost of any value-added tax incurred
by them in performance of their office, fixed remuneration of
€144,000 after the conclusion of the financial year. The Chair-
man of the Supervisory Board receives an additional €288,000
and the Deputy Chairman of the Supervisory Board receives
an additional €144,000. The members of the Audit Committee
are paid an additional €72,000, the members of the Presiden-
tial Committee are paid an additional €57,600 and the members
of the other committees of the Supervisory Board are paid an
additional €28,800; an exception is the Chairman of the Audit
Committee, who is paid an additional €144,000. Additional
payments are made for activities in a maximum of three com-
mittees; any persons who are members of more than three
such committees receive additional payments for the three most
highly paid functions. Members of a Supervisory Board com-
mittee are only entitled to remuneration for such membership
in a financial year if the committee has actually convened to
fulfill its duties in this period.
In connection with the remuneration adjustment, all members
of the Supervisory Board have made a self-commitment to
purchase Company shares in the amount of 20% of their gross
annual salary (excluding committee remuneration and the
meeting fee) every year and to hold these shares until the end
of one year after they have left the Company's Supervisory
Board (voluntary obligation in accordance with the "comply or
explain" principle).
This does not apply to Supervisory Board members whose
Supervisory Board remuneration is subject in a mandatory or
voluntary manner to the guidelines of the German Trade Union
Confederation on the transfer of supervisory board remunera-
tion to the Hans Böckler Foundation, or to the same extent is
subject to a transfer to the employer or claim to payment due
to a service or employment contract. In the event that a lower
amount of the Supervisory Board remuneration is transferred
or credited, the voluntary commitment applies to 20% of the
amount not transferred or credited. With this voluntary commit-
ment, the members of the Supervisory Board are expressing
their focus on and commitment to the long-term, sustainable
success of the Company.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend. The meeting
fee is paid only once if several meetings of the Supervisory
Board and/or its committees are held on the same calendar day.
The individual remuneration of the members of the Supervisory
Board is shown in the following table. 7 B.62
In financial year 2018, no remuneration was paid for services
provided personally beyond the aforementioned board and
committee activities, in particular for advisory or agency ser-
vices, except for the remuneration paid to the members of
the Supervisory Board representing the employees in accor-
dance with their contracts of employment.
The remuneration of all the activities of the members of the
Supervisory Board of Daimler AG in the year 2018 was thus
€4.2 million (2017: €4.2 million).
Supervisory Board remuneration in 2018
Loans to members of the Supervisory Board
to capital-market
Opportunities of restricted access
Risks of restricted access
Country opportunities
Low
Low
Low
Credit opportunities
Low
Low
Country risks
repayment obligations
to capital-market
Risks of early credit
Opportunities of early credit
repayment obligations
Low
Low
Risks relating to pension plans
Low
High
High
Credit risks
Opportunities relating to pension plans
High
Low
In addition, the Group is exposed to credit and country-related
risks, risks of restricted access to capital markets and risks
of early credit repayment requirements. As part of the risk man-
agement process, Daimler regularly assesses these risks by
considering changes in key economic indicators and market
information. Pension plan assets to cover retirement and
healthcare benefits (market-sensitive investments including
equities and interest-bearing securities) are not included in
the following analysis.
Low
The remeasurement of an associated company, joint venture
or joint operation in relation to its carrying value can lead to risks
and opportunities for the segment to which it is allocated.
Furthermore, the business activities of an associated company,
joint venture or joint operation, or the disposal or acquisition
of an interest in such an entity, can result in financial obligations
or an additional financing requirement, but can also result in
potential opportunities, in connection with mobility services for
example. Such risks are also generally connected with startups
whose further development is not yet foreseeable. Risks from
associated companies, joint ventures or joint operations exist
in the Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans
and Daimler Financial Services segments, as well as from
the associated companies, joint ventures and joint operations
directly allocated to the Group. All associated companies,
joint ventures and joint operations are subject to a monitoring
process so that, if required, decisions can be made on whether
or not measures can be promptly taken to support or ensure
their profitability. The recoverable value of investments is also
regularly monitored.
Risks from changes in credit ratings
Risks and opportunities related to associated companies, joint
ventures and joint operations are unchanged compared with
the previous year.
Financial risks and opportunities
The following section deals with financial risks and opportunities
of the Daimler Group. Risks and opportunities can have a
negative or positive effect on the profitability, cash flows and
financial position of the Daimler Group. The probability of
occurrence and possible impact of these risks and opportunities
is presented in table 7 B.66. The probability of occurrence
and impact of the financial risks and opportunities are essen-
tially unchanged from the previous year. Only the impact of
risks of limited access to the capital market have increased from
"Medium" to "High".
In principle, the Group's operating and financial risk exposures
underlying its financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. cur-
rency exposures), risks and opportunities exist equally, while
with the asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the opportunities.
Daimler is generally exposed to risks and opportunities from
changes in market prices such as currency exchange rates,
interest rates, commodity prices and share prices. Market price
changes can have a negative or positive influence on the
Group's profitability, cash flows and financial position. Daimler
manages and monitors market price risks and opportunities
primarily in the context of its operational business and financ-
ing activities, and applies derivative financial instruments for
hedging purposes where needed, thus limiting both market price
risks and opportunities.
B.66
Financial risks and opportunities
Risk category
Probability of occurrence
Impact
Exchange rate risks
Low
High
Opportunity category
Exchange rate opportunities
Impact
High
Interest rate risks
Low
Low
Interest rate opportunities
Low
Commodity price risks
Low
Commodity price opportunities
Low
Probability of occurrence
Opportunities from changes in credit ratings Low
155
Several federal and state authorities and other institutions world-
wide have inquired about and/or are conducting investigations
and/or proceedings, and/or have issued administrative orders.
These particularly relate to test results, the emission control
systems used in Mercedes-Benz diesel vehicles and/or Daimler's
interaction with the relevant federal and state authorities as
well as related legal issues and implications, including, but not
limited to, under applicable environmental, securities, criminal
and antitrust laws. These authorities include, amongst others,
the U.S. Department of Justice ("DOJ"), which has requested
that Daimler conduct an internal investigation, the U.S. Environ-
mental Protection Agency ("EPA"), the California Air Resources
Board ("CARB") and other US state authorities, the U.S. Securi-
ties and Exchange Commission ("SEC"), the European Commis-
sion, with which Daimler has filed a leniency application and
which meanwhile has opened a formal investigation into possi-
ble collusion on clean emission technology, as well as national
antitrust authorities and other authorities of various foreign
states as well as the German Federal Financial Supervisory
Authority ("BaFin"), the German Federal Ministry of Transport
and Digital Infrastructure (“BMVI") and the German Federal
Motor Transport Authority ("KBA”). The Stuttgart district attor-
ney's office is conducting criminal investigation proceedings
against Daimler employees on the suspicion of fraud and crimi-
nal advertising, and, in May 2017, searched the premises of
Daimler at several locations in Germany. Further, Daimler com-
prehensively responded to the diesel emissions committee of
inquiry of the German Parliament in the previous legislative
period. Daimler continues to fully cooperate with the authorities
and institutions. Irrespective of such cooperation, it is possible
that further regulatory, criminal and administrative investiga-
tive and enforcement actions and measures relating to Daimler
and/or its employees will be taken or administrative orders will
be issued, such as subpoenas, i.e. legal instructions issued
under penalty of law in the process of taking evidence, or other
requests for documentation, testimony or other information,
further search warrants, a notice of violation or an increased
formalization of the governmental investigations, coordination
or proceedings, including the resolution of proceedings by way
of a settlement. Additionally, further delays in obtaining regula-
tory approvals necessary to introduce new or recertify existing
vehicle models could occur.
In the second and third quarter of 2018, KBA issued adminis-
trative orders holding that certain calibrations of specified
functionalities in certain Mercedes-Benz Diesel vehicles are
to be qualified as impermissible defeat devices and ordered
subsequent auxiliary provisions for the respective EU type
approvals in this respect, including a stop of the first registra-
tion and mandatory recall. Daimler filed timely objections
against such administrative orders in order to have the open
legal issues resolved, if necessary by a court of law. In the
course of its regular market supervision, KBA routinely con-
ducts further reviews of Mercedes-Benz vehicles. It cannot
be ruled out that in the course of further investigations, KBA
will issue additional administrative orders making similar
findings. Daimler has implemented a temporary delivery and
registration stop with respect to certain models and reviews
constantly whether it can lift this delivery and registration
stop in whole or in part. The new calibration requested by KBA
in its administrative order of the second quarter of 2018 has
meanwhile been completed and the relevant software has
been approved by KBA; the related recall has in the meantime
been initiated. It cannot be ruled out, however, that further
delivery and registration stops may be ordered or resolved by
the Company as a precautionary measure under the relevant
circumstances. Daimler has initiated further investigations and
otherwise continues to fully cooperate with the authorities
and institutions.
In January 2019, another vehicle manufacturer reached civil
settlements with US and state authorities, as well as with vehi-
cle customers. Although the manufacturer did not admit liability,
the authorities maintain the position that the manufacturer
included undisclosed Auxiliary Emission Control Devices (AECDs)
in its diesel vehicles, apparently including functionalities that
are common in diesel vehicles, and that certain of these AECDs
are illegal defeat devices. As part of these settlements, the
manufacturer will, among other things, pay civil penalties, under-
take a recall of affected vehicles, provide extended warranties,
undertake a nationwide mitigation project and make other pay-
ments. The manufacturer will furthermore provide payments
to current and former diesel vehicle owners as part of a class
action settlement.
General market opportunities
High
Low
General market risks
Impact
Opportunity category
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Impact
Industry and business risks and opportunities
B.64
In view of the ongoing positive economic situation in many parts
of the world, the opportunity exists that the world economy
will actually grow at a higher rate than hitherto assumed in 2019.
A stronger increase in global demand would also support raw-
material prices and would have positive effects on raw-material
exporters in South America, the Middle East and Africa.
Pressure on the emerging markets could increase if more coun-
tries were affected by massive capital outflows and exchange-
rate losses, or if the currency crises in Argentina and Turkey turn
into significant banking crises. In such cases, global investors
would withdraw capital from emerging markets on a large scale,
which would probably force those countries with large foreign-
trade imbalances to make painful adjustments. Renewed finan-
cial-market turbulences and currency crises are possible con-
sequences and could have a massive impact on the economies
of affected countries. Lower growth in world trade and lower
raw-material prices (e.g. a drop in the oil price) than currently
forecast would also have a negative impact on growth for
exporters of raw materials. As Daimler is already very active in
those countries, or their markets play a strategic role, this
would have negative effects on the Group's prospective unit
sales. However, import-dependent economies such as India
would benefit from lower raw-material prices. An excessive and
sudden rise in oil prices, for example as a result of geopolitical
tension, would increase inflationary pressure and cause central
banks to raise interest rates more rapidly, with negative effects
on sentiment indicators and consumer behavior.
Within China, a slowdown could result in a major increase in non-
performing loans, which would then lead to turbulences in,
the banking sector and financial markets. The aforementioned
risks could result in significant negative effects on units sales,
particularly for the Mercedes-Benz Cars division, for which China
is now the biggest individual sales market by a large margin.
On the other hand, triggered by the stimulus measures
announced by the Chinese government, growth in 2019 could
also turn out stronger than expected. The resulting higher
growth in overall economic consumption would offer additional
opportunities, especially for the Mercedes-Benz Cars division.
Due to China's enormous importance as a growth driver for the
world economy in recent years, a downturn in the Chinese
economy would represent a considerable risk to the global
economy. The enormous rise in debt that has been observed
since the global financial crisis, especially in the corporate
sector, represents a significant risk. If the government's
efforts to restrict credit growth in combination with the nega-
tive impact of US tariffs on imports from China lead to a more
significant growth slowdown than currently expected, this
would result in a perceptible cooling-off for the world economy.
In Europe, the further development of relations between the
European Union and the United Kingdom represents a significant
risk. If the negotiated exit agreement is not approved by the
British parliament and as a result, there are neither further nego-
tiations nor a complete cancellation of Brexit, a disorderly
withdrawal in spring 2019 is at least possible. This would have a
massive impact on the UK economy and, probably to a lesser
extent, on the remaining EU member states, and would make
trading conditions more difficult. Furthermore, if financial-
market participants are not sufficiently prepared, noticeable
market distortions cannot be ruled out, which would have
significant negative effects on the real economy. Besides that,
increased political uncertainty in the euro zone, for example
as a result of developments in Italy, could adversely affect con-
sumption and investment decisions by households and compa-
nies. The European market continues to be very important for
Daimler across all divisions.
In the United States, economic and fiscal policy could turn out
to be more expansive than previously assumed. As the Daimler
Group generates a substantial proportion of its revenue in the
United States, especially in the Mercedes-Benz Cars, Daimler
Trucks and Daimler Financial Services divisions, these develop-
ments would have considerable consequences for the Group's
success. Furthermore, stronger growth in the United States
would also have spillover effects on the rest of the world. The
disadvantages of such an expansionary fiscal policy are the
further worsening of the debt situation in the United States and
the risk that inflation will rise more significantly than currently
expected, due not least to rising wages and a labor market close
to full employment. This would force the Federal Reserve to
raise federal funds rates more sharply than expected by the
market, which would directly weaken domestic demand. As
a further consequence, increasing volatility in the financial
markets could adversely affect investor confidence, leading
to widespread sales of equities and thus triggering a chain
reaction on stock markets, with major market adjustments and
phases of exceptional volatility in global financial markets.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
146
The Daimler Group generally participates in the risks and
opportunities of associated companies, joint ventures and joint
operations in line with its ownership interest.
Risk category
Risks from legal proceedings in connection with diesel
exhaust gas emissions - Governmental proceedings. Cur-
rently, Daimler is subject to governmental information requests,
inquiries, investigations, administrative orders and proceed-
ings relating to environmental, securities, criminal, antitrust and
other laws and regulations in connection with diesel exhaust
emissions.
Risks from legal proceedings in general. Daimler AG and its
subsidiaries are confronted with various legal proceedings,
claims as well as government investigations and orders (legal
proceedings) on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer, sup-
plier and other contractual relationships, intellectual property
rights, warranty claims, environmental matters, antitrust matters
(including actions for damages) as well as shareholder litiga-
tion. Product-related litigation involves claims alleging faults in
vehicles, some of which have been made as class actions. If
the outcome of such legal proceedings is detrimental to Daimler,
the Group may be required to pay substantial compensatory
and punitive damages or to undertake service actions, recall
campaigns, monetary penalties or other costly actions. Some
of these proceedings may have an impact on the Group's repu-
tation.
Regulatory Risks. The automotive industry is subject to
extensive governmental regulations worldwide. Laws in various
jurisdictions regulate occupant safety and the environmental
impact of vehicles, including emissions levels, fuel economy and
noise, as well as the emissions of the plants where vehicles
or parts thereof are produced. In case regulations applicable in
the different regions are not complied with, this could result
in significant penalties and reputational harm or the inability to
certify vehicles in the relevant markets. The cost of compli-
ance with these regulations is significant, and in this context,
Daimler expects a significant increase in such costs.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
153
Exchange rate risks and opportunities
The Daimler Group's global orientation means that its business
operations and financial transactions are connected with risks
and opportunities related to fluctuations in currency exchange
rates. This applies in particular to fluctuations against the
euro of the US dollar, Chinese renminbi, British pound and other
currencies such as those of growth markets. An exchange
rate risk or opportunity arises in business operations primarily
when revenue is generated in a currency different from that
of the related costs (transaction risk). This applies in particular
to the Mercedes-Benz Cars division, as a major portion of its
revenue is generated in foreign currencies while most of its pro-
duction costs are denominated in euros. The Daimler Trucks
division is also exposed to such transaction risks, but to a lesser
degree because of its worldwide production network. Regularly
updated currency risk exposures are successively hedged with
suitable financial instruments (predominantly currency for-
wards and options) in accordance with exchange rate expecta-
tions, which are continually reviewed, whereby both risks
and opportunities are limited. Any overcollateralization caused
by changes in exposure is generally reversed by suitable mea-
sures without delay. Exchange rate risks and opportunities also
exist in connection with the translation into euros of the net
assets, revenues and expenses of the companies of the Group
outside the euro zone (translation risk); these risks are gener-
ally not hedged.
Interest rate risks and opportunities
Changes in interest rates can create risks and opportunities
for business operations as well as for financial transactions.
Daimler employs a variety of interest-rate sensitive financial
instruments to manage the cash requirements of its business
operations on a day-to-day basis. Most of these financial
instruments are held in connection with the financial services
business of Daimler Financial Services. Term-congruent refi-
nancing is generally undertaken for the financial services busi-
ness. However, to a certain extent, the funding does not
match in terms of maturities and interest rates, which gives
rise to the risk of changes in interest rates. The funding activi-
ties of the industrial business and the financial services busi-
ness are coordinated centrally at Group level. Derivative inter-
est rate instruments such as interest rate swaps are used to
achieve the desired interest rate maturities and asset/liability
structures (asset and liability management).
Equity price risks and opportunities
The Group is subject to equity price risks in connection with its
listed associated companies and joint ventures. At December
31, 2018, the shares in listed companies that Daimler AG directly
holds are shares that are classified as long-term investments,
some of which are accounted for in the consolidated financial
statements using the equity method. The Group does not include
these investments in a market price risk analysis. The section
"Risks and opportunities related to associated companies, joint
ventures and joint operations” provides more information on
equity risks and opportunities.
Commodity price risks and opportunities
As already described in the section "Procurement market
risks and opportunities", the Group's business operations are
exposed to changes in the market prices of purchased parts
and raw materials. The Group addresses these procurement
risks by means of concerted commodity and supplier risk
management. Some of the derivative financial instruments are
used to reduce the Group's market price risks related to the
purchase of certain metals.
Credit risks
The Group is exposed to credit risks which result primarily
from its financial services activities and from the operations of
its vehicle business. Credit risks also arise from the Group's
liquid assets. The following statements pertain to risks arising
from the Group's liquid assets; risks related to leasing and
sales financing are addressed on page 148. Should defaults
occur, this would adversely affect the Group's financial posi-
tion, cash flows and profitability. The limit methodology for
liquid funds deposited with financial institutions has been con-
tinually further developed in recent years. In connection with
investment decisions, priority is placed on the borrowers' very
high creditworthiness and on balanced risk diversification.
Most liquid assets are held in investments with an external
rating of "A" or better.
Country risks
Daimler is exposed to country risks that primarily result from
cross-border financing or collateralization for Group compa-
nies or customers, from investments in subsidiaries, joint ven-
tures, and from cross-border trade receivables. Country risks
also arise from cross-border cash deposits with financial insti-
tutions. The Group addresses these risks by setting country
limits (e.g. for cross-border financing of customers and for hard-
currency portfolios from financial services companies) and
through investment-protection insurance against political risks
in high-risk countries. Daimler also has an internal rating
system that divides all countries in which it operates into risk
categories.
Risks of restricted access to capital markets
Daimler covers its refinancing needs, among other things, by
means of borrowing in the capital markets. Access to capital
markets in individual countries may be limited by government
regulations or by a temporary lack of absorption capacity. In
addition, pending legal proceedings as well as Daimler's own
business policy considerations may temporarily prevent the
company from covering any liquidity requirements by means of
borrowing in the capital markets. The increased planned
refinancing volume compared with 2018 has also increased the
possible impact of the risk of limited access to the capital
market in 2019.
154
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Risks of early credit repayment obligations
Daimler may be required to make premature repayment of
special-purpose loans in the case of adverse results of ongo-
ing legal proceedings. It is to be expected that the resulting
refinancing requirement will have to be concluded at a higher
cost.
Further information on financial risks, risk-limiting measures and
the management of these risks is provided in Note 33 of
the Notes to the Consolidated Financial Statements. Information
on the Group's financial instruments is provided in Note 32
of the Notes to the Consolidated Financial Statements.
Risks and opportunities relating to pension plans
Daimler has pension benefit obligations and to a lesser degree
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pension obligations
less plan assets constitutes the carrying amount or funded
status of those employee benefit plans. The measurement
of pension obligations and the calculation of net pension
expense are based on certain assumptions. Even small changes
in those assumptions particularly change in the discount
rate have a negative or positive effect on the funded status
and Group equity in the current financial year, and lead to
changes in the periodic net pension expense in the following
financial year. The fair value of plan assets is determined to
a large degree by developments in the capital markets. Unfa-
vorable or favorable developments, especially relating to
equity prices and fixed-interest securities, reduce or increase
the carrying value of plan assets. A change in the composition
of plan assets can also have a positive or negative impact
on the fair value of plan assets. The broad diversification of
investments, the selection of asset managers on the basis of
quantitative and qualitative analyses, and the ongoing moni-
toring of returns and risks contribute to a reduction in the
investment risk. The structure of pension obligations is taken
into consideration with the determination of the investment
strategy for the plan assets in order to reduce fluctuations of
the funded status. Further information on the pension plans
and their risks is provided in Note 22 of the Notes to the
Consolidated Financial Statements.
Risks and opportunities from changes in credit ratings
Risks and opportunities exist in connection with potential
downgrades or upgrades to credit ratings by the rating agencies,
and thus to Daimler's creditworthiness. Downgrades could
have a negative impact on the Group's financing if such a down-
grade leads to an increase in the costs for external financing or
restricts the Group's ability to obtain financing. A credit rating
downgrade could also discourage investors from investing in
Daimler AG. A risk to the credit rating of the Daimler Group can
also arise if the earnings and cash flows from the anticipated
Group's growth cannot be realized.
Legal and tax risks
The Group continues to be exposed to legal and tax risks.
Provisions are recognized for those risks if and insofar as they
are likely to be utilized and the amounts of the obligations
can be reasonably estimated. No quantitative assessment of
these risks is carried out.
Legal risks
Low
Cooperation with partners in associated companies, joint ven-
tures and joint operations and other types of partnership is of
key importance for Daimler. Along with ensuring better access
to growth markets and new technologies, these shareholdings
and partnerships help to utilize synergies and improve cost
structures in order to successfully respond to the competitive
situation in the automotive industry. Through investments in
startups, Daimler promotes innovative approaches in many
areas of the Group.
In light of these matters and in light of the ongoing governmen-
tal information requests, inquiries, investigations, administrative
orders and proceedings, as well as our own internal investiga-
tions and the technical Compliance Management System (tCMS),
which is and continues to be implemented to address the
specific risks associated with the product development process
throughout the group and is designed particularly to also pro-
vide guidance - taking into account technical and legal aspects -
with regard to the complex interpretation of regulations, it can-
not be ruled out that authorities will reach the conclusion that
other passenger cars and/or commercial vehicles with the brand
name Mercedes-Benz or other brand names of the group have
impermissible functionalities and/or calibrations. Furthermore,
the authorities have increased scrutiny of Daimler's processes
regarding running-change, field-fix and defect reporting as well
as other compliance issues. The inquiries, investigations, legal
actions and proceedings as well as the replies to the governmen-
tal information requests, the objection proceedings against
KBA's administrative orders and our internal investigations are
still ongoing and open; hence, Daimler cannot predict the out-
come at this time. If these or other information requests, inqui-
ries, investigations, administrative orders and proceedings
result in unfavorable findings, an unfavorable outcome or other-
wise develop unfavorably, Daimler could be subject to signifi-
cant monetary penalties, fines, remediation requirements, fur-
ther vehicle recalls, further registration and delivery stops,
process improvements, mitigation measures and the early
termination of promotional loans, and/or other sanctions,
measures and actions, including further investigations and/or
administrative orders by these or other authorities and additional
proceedings. The occurrence of the aforementioned events in
whole or in part could cause significant collateral damage
including reputational harm. Further, due to negative determi-
nations or findings with respect to technical or legal issues
by one of the various governmental agencies, other agencies
could also adopt such determinations or findings, even if such
determinations or findings are not within the scope of such
authority's responsibility or jurisdiction. Thus, a negative deter-
mination or finding in one proceeding carries the risk of being
able to have an adverse effect on other proceedings, also poten-
tially leading to new or expanded investigations or proceedings.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Very demanding regulations for CO2 emissions are also planned
or have been approved for light commercial vehicles, which
will present a challenge for Mercedes-Benz Vans, especially in
the long term. This applies in particular to the markets of the
United States and Europe.
Strict regulations for the reduction of vehicles' emissions and
fuel consumption create potential risks also for the Daimler
Trucks and Daimler Buses divisions, because it will be difficult
to fulfill the statutory requirements in some countries. This
applies above all to the markets of Japan, the United States,
China and Europe. The European Commission has developed
a method for determining the CO2 emissions of heavy commer-
cial vehicles, named VECTO, the application of which will
be mandatory for the most important vehicle categories as of
2019. The prescribed level of ambition cannot be achieved
with conventional technology alone. Daimler Trucks and Daimler
Buses will therefore have to apply the latest technologies in
order to fulfill these requirements.
The EU Commission is currently revising, amending or supple-
menting the framework conditions for the WLTP measurement
method, which was only introduced in September 2018. Some
of these changes are to come into force as early as 2019. This
will result in increased and additional WLTP testing and docu-
mentation costs. In the worst case, recertification could also
become necessary, which in turn could cause supply bottle-
necks.
As the negative headlines on diesel engines and the implemen-
tation of driving bans on diesel vehicles unsettle customers,
this can result in lasting shifts in the drive-system portfolio
(fewer diesel and more gasoline engines). This would require
additional development and production measures in order to
meet the CO2 fleet limits applicable as of 2020.
The Mercedes-Benz Cars segment faces risks with respect to
regulations concerning the average fleet fuel consumption
and CO2 emissions of new vehicles, especially in the markets
of China, Europe and the United States. Daimler gives these
targets due consideration in its product planning. The increas-
ingly ambitious targets require significant proportions of actual
unit sales of plug-in hybrids or cars with other types of electric
drive. The ambitious statutory requirements will be difficult
to fulfill in some countries. The market success of these drive
systems is greatly influenced not only by customer acceptance
but also by regional market conditions, for example the charging
infrastructure and state support.
Many countries and regions have already implemented stricter
regulations to reduce vehicles' emissions and fuel con-
sumption or are currently preparing such laws. They relate for
example to the environmental impact of vehicles, including
emission levels, fuel economy and noise, as well as pollutants
from the emissions caused by the production facilities. Non-
compliance with regulations applicable in the various regions
might result in significant penalties and reputational risks and
might even mean that vehicles could not be or could no longer
be registered in the relevant markets. The cost of compliance
with these regulations is significant, especially for conventional
engines, and Daimler expects a further increase in costs in this
context.
a considerable impact on Daimler's future business success.
Regulations concerning vehicles' emissions, fuel consump-
tion and certification as well as tariff aspects play a partic-
ularly important role. Complying with these varied and often
diverging regulations all over the world requires strenuous efforts
on the part of the automotive industry. In the future, Daimler
expects to spend an even larger proportion of its research and
development budget to ensure compliance with these regula-
tions. The probability of occurrence of risks from the legal and
political framework has increased from "Low" to "Medium".
This is mainly due to risks from more difficult certification pro-
cesses and delays in certification, as well as the threat of
increased tariffs. The potential impact of these risks remains
unchanged at "High". The assessment of the possible impact
of the opportunities is also unchanged at "Low".
The automotive industry is subject to extensive governmental
regulation worldwide. Legal and political framework have
Risks and opportunities relating to the legal
and political framework
149
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
The position of the Daimler Group in key foreign markets could
also be affected by an increase in or changes to free-trade
agreements. If free-trade agreements are concluded without
the involvement of countries where Daimler produces or if
free-trade agreements are amended to make them substantially
stricter, the position of the Daimler Group could be signifi-
cantly impacted. At the same time, new free-trade agreements
could also result in opportunities for the Daimler Group
towards competitors in countries which are not parties to such
agreements or which do not produce in those countries.
Due to the planned electrification of new model series and a
shift in customer demand from diesel to gasoline engines, the
Mercedes-Benz Cars segment in particular is faced with the
risk that Daimler will require changed volumes of components
from suppliers. This could result in over- or underutilization
of production capacities for certain suppliers. If supplier can-
not cover their fixed costs, there is the risk that suppliers
could demand compensation payments. Necessary capacity
expansion at suppliers' plants could also require cost-effective
participation.
Raw-material prices continued to feature significant volatility
in 2018. Due to almost completely unchanged macroeconomic
conditions, price fluctuations are expected with uncertain and
uneven trends in the near future. On the one hand, raw-material
markets can be impacted by political crises and uncertainties -
combined with possible supply bottlenecks - as well as by vol-
atile demand for specific raw materials. Potential tariff increases
for certain raw materials as a result of increasing protectionist
tendencies worldwide can also have a negative impact on price
developments. Generally, the ability to pass on the higher costs
of commodities and other materials in the form of higher prices
for manufactured vehicles is limited because of strong compet-
itive pressure in the international automotive markets.
Procurement market risks and opportunities
Procurement market risks arise for the automotive divisions
in particular from fluctuations in prices of raw materials and
energy. There are also risks of financial bottlenecks of suppli-
ers and of capacity bottlenecks caused by supplier delivery
failures or by insufficient utilization of production capacities
at suppliers. Disagreements with suppliers regarding the agreed
pricing of supplies and the supplied quality can also lead to
procurement market risks. The risk situation relating to the
possible impact has not changed compared with the previous
year. However, the probability of occurrence has risen from
"Low" to "Medium" due to the threat of tariff increases on cer-
tain raw materials. Opportunities in the raw-material markets
continue to exist due to positive price developments for rele-
vant raw materials. Compared with the previous year, the impact
of those opportunities has increased from "Low" to "Medium"
as a result of more optimistic assumptions concerning the future
development of raw-material prices.
The possible impact of the risks and opportunities and the
probability of occurrence of the risks relating to the leasing
and sales-financing business continue to be assessed as
"Low".
Possible residual-value risks for the automotive divisions and
the companies in the Daimler Financial Services division that
operate commercial fleet management and leasing manage-
ment are described in the section "General Market Risks and
Opportunities".
Note 33
An adjustment of credit conditions for customers in the leasing
and sales-financing business caused by higher refinancing
costs could reduce the new business and contract volume of
Daimler Financial Services, also reducing the unit sales of the
automotive divisions. Risks and opportunities also arise from a
lack of matching maturities with refinancing. The risk of mis-
matching maturities is minimized by coordinating refinancing
with the periods of financing agreements, from the perspective
of interest rates as well as liquidity. Any remaining risks from
changes in interest rates are managed by the use of derivative
financial instruments. Further information on credit risks and
the Group's risk-minimizing actions is provided in
of the Notes to the Consolidated Financial Statements.
In connection with the sale of vehicles, Daimler offers its cus-
tomers a wide range of financing possibilities - primarily of
leasing and financing the Group's products. The resulting risks
for the Daimler Financial Services segment are mainly due to
borrowers' worsening creditworthiness, so receivables might
not be recoverable in whole or in part because of customers'
insolvency (default risk or credit risk). Daimler counteracts
credit risks by means of creditworthiness checks on the basis
of standardized scoring and rating methods and the collateral-
ization of receivables, as well as an effective risk management
with a firm focus on monitoring both internal and macroeco-
nomic leading indicators. Other risks associated with the leasing
and sales-financing business involve the possibility of increased
refinancing costs due to changes in interest rates (interest
rate risk).
Risks and opportunities relating to the leasing and sales-
financing business
Across all segments, the assessment of general market risks is
unchanged compared with the previous year. However, due
to increasing political and economic uncertainty, the impact of
market opportunities has decreased from "High" to "Low".
In addition, a residual-value risk from non-Daimler vehicles
exists for the Daimler Financial Services companies that oper-
ate commercial fleet management and leasing management,
because most of those vehicles are not covered by manufac-
turers' residual-value guarantees. Residual-value risk is taken
into account through a high level of diversification with regard
to brands, regions, customers and lease periods. Used-vehicle
prices are continually monitored both locally and centrally, so
that the residual-value risk from a drop in market prices can
be forecast in good time and suitable countermeasures may be
initiated.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Supplier risk management aims to identify potential financial
bottlenecks for suppliers at an early stage and to initiate
suitable countermeasures. Although the crisis of recent years
is over, the situation of some of suppliers remains difficult due
to a high degree of competitive pressure. This has necessi-
tated individual or joint support actions by vehicle manufactur-
ers to safeguard their production and sales. In the context of
supplier risk management, regular reporting dates are set for
suppliers for which we have received early warning signals and
made corresponding internal assessments. On those dates, the
suppliers report their key performance indicators to Daimler
and decisions can be made concerning any required support
actions.
The danger exists that individual countries will attempt to
defend or improve their competitiveness in the world's markets
by resorting to interventionist and protectionist actions.
Industrial policy measures are intended to attract investment
into a country and increase local value creation along the
entire value chain. In addition, attempts are being made to limit
growth in imports through barriers to market access such
as by making certification processes more difficult, delaying
certification and imposing other complicated customs
procedures. These measures generally exacerbate uncertain-
ties in the planning process.
In addition to the described emission and fuel-consumption
regulations, traffic-policy restrictions for the reduction
of traffic jams, noise and emissions are becoming increasingly
important in cities and urban areas worldwide. In China for
example, limited access to vehicle registration is continuing
and is actually worsening. This development can have a
dampening effect on the development of unit sales, especially
in growth markets. Pressure to reduce personal transport
is increasingly being applied in European cities through discus-
sions of bans on vehicles, especially those with diesel engines.
150
Low
Information technology risks
Low
Production and technology opportunities
High
Low
Production and technology risks
Impact
Opportunity category
Impact
Probability of occurrence
Risk category
Company-specific risks and opportunities
B.65
Insufficient availability of vehicle components at the right time,
capacity restrictions in the production of batteries, interrup-
tions in the supply chain and possible interruptions in supply by
energy providers can lead to bottlenecks, especially at the
Mercedes-Benz Cars division. At the Daimler Trucks division,
there are further risks due to high utilization of production
capacity in connection with potential bottlenecks for compo-
nents for heavy-duty trucks. As a result of the expansion of
production in the Mercedes-Benz Vans segment, a temporary
increase in the workforce and additional shifts in the produc-
tion plants could become necessary. In order to avoid such
bottleneck situations, importance is placed upon being able
to compensate for capacity constraints through forward plan-
ning. In addition, supply chains and the availability and quality
In principle, there is a danger that infrastructure problems,
reduced plant availability or the failure of production equip-
ment or production plants may cause internal bottlenecks
that would consequently generate costs. With the parallel fail-
ure of several production plants, the resulting effects could
accumulate. These risks mainly exist for the Mercedes-Benz
Cars segment. The production equipment is continually
maintained and modernized. As a precaution, spare parts are
held available as well as, if required, redundant machines
are purchased for the production plants that might be at risk.
In the context of product launches, the required parts and equip-
ment components have to be available. To avoid restrictions
in this context, the related processes are continually evaluated
and improved. In order to secure and enhance the long-term
future viability of production facilities, modernization, expansion,
construction and restructuring measures are carried out as
required. The execution of modernization activities and the
launch of new products are generally connected with high
investments. For example, stipulations, plant reconstruction
or delays in the ramp-up phase of an innovation or during a
product's lifecycle can lead to inefficiencies in the production
process and as a consequence to a short-term reduction in
production volumes. In addition, the planned increase in bat-
tery production due to the increasing electrification of the
vehicle fleet means that initial technical problems cannot be
ruled out during the production of the various battery types.
Those automotive segments are affected which are currently
launching a new product or have planned a related production
ramp-up. In this context, it is also necessary to consider
dependencies on contractual and cooperation partners, as
well as possible changes in regional conditions, which have
to be included in the local decision-making process.
Production and technology risks and opportunities
Key success factors for achieving the desired level of prices
for the products of the Daimler Group - and hence for the
achievement of corporate targets are brand image, design
and quality, and thus the acceptance of products by custom-
ers, as well as technical features based on innovative research
and development. Convincing solutions, which for example
support accident-free driving or further improve the products'
fuel consumption and emissions, such as hybrid or electric
vehicles, are of key importance for safe and sustainable mobil-
ity. Innovations and technology opportunities for the progres-
sive and future-oriented design of the product range flow into
the strategic product planning of the automotive divisions.
However, due to increasing technical complexity, the continu-
ally rising extent of requirements in terms of emissions, fuel
consumption and safety, as well as meeting and steadily rais-
ing the Daimler Group's quality standards, product launches
and manufacturing in the automotive divisions are also subject
to production and technology risks.
-
The following section describes company-specific risks and
opportunities of the Daimler Group. A quantification of these
risks and opportunities is shown in table 7 B.65.
Company-specific risks and opportunities
Daimler continually monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in
the process of product development. The great challenge of
the coming years will be to offer an appropriate range of
drive systems and the right product portfolio in each market.
In April 2018, the US Department of the Treasury's Office of
Foreign Assets Control announced sanctions against various
individuals and companies. This may affect business activities
of the Daimler Group, in particular with sanctioned business
partners in Russia.
Cities are becoming connected and are increasingly seeking
partnerships with industry in order to cooperate on new
mobility solutions. This can create a demand for vehicles with
alternative drive systems, as well as for new mobility services
including car-sharing services. In order to utilize the resulting
opportunities, Daimler is present in the market with the provi-
sion of innovative mobility services.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
148
Further risks at Mercedes-Benz Cars, Mercedes-Benz Vans and
Daimler Financial Services relate to the development of used
vehicle markets and thus to the residual values of the vehicles
produced. In particular, the uncertainty existing in connection
with diesel vehicles can have a negative impact on residual val-
ues. As part of the established residual-value management
process, certain assumptions are made at local and corporate
levels regarding the expected level of prices, based upon which
the cars to be returned in the leasing business are evaluated.
If changing market developments lead to a negative deviation
from assumptions, there is a risk of lower residual values of
used cars. Depending on the region and the current market sit-
uation, the measures taken generally include continuous mar-
ket monitoring as well as, if required, price-setting strategies or
sales promotion measures designed to regulate vehicle inven-
tories. The quality of market forecasts is verified by periodic
comparisons of internal and external sources, and, if required,
the determination of residual values is adjusted and further
developed with regard to methods, processes and systems. On
the other hand, opportunities can arise from a positive devel-
opment of residual values caused by a favorable market environ-
ment for used vehicles as well as reductions in discounts
granted on new vehicles.
The successful product portfolio of the Daimler Group contrib-
utes to its advantageous positioning compared with the compet-
itors. Possibly rising competitive and price pressure above
all affect the segments Mercedes-Benz Cars and Daimler Trucks.
Aggressive pricing policies, the introduction of new products
by competitors, or pricing pressure in the aftersales business
can make it more difficult to achieve expected prices. This
might result in lower revenue, the failure to achieve the prod-
ucts' planned profitability, or lower market shares. The extent
of such risks is related to the magnitude of a division's sales
volume. Continuous monitoring of competitors is carried out in
order to recognize these risks at an early stage. Depending on
the situation, product-specific and possibly regionally different
measures are taken to support weaker markets. They include
the use of new sales channels, actions designed to strengthen
brand awareness and brand loyalty as well as sales and mar-
keting campaigns. Daimler also applies various programs to
boost sales, which include financial incentives for customers.
Due to the partly difficult financial situation of some dealer-
ships and vehicle importers, support actions might become
necessary to ensure the performance of the business partners.
The sources of these risks lie in the respective risk environment
as well as in the necessary infrastructure investments that
have been made for sales of new products. Supporting actions
can adversely affect the profitability, cash flows and financial
position of the automotive divisions. Further risks may result from
the dependency on certain dealerships. In certain circum-
stances, relationships with new business partners may have to
be developed. The financial situation of strategically relevant
dealerships and vehicle importers is continually monitored. If
required, payment conditions can be adjusted. Risks of this
kind exist for dealerships and vehicle importers of the divisions
Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans.
Medium
Low
Personnel opportunities
Risks related to associated companies,
joint ventures and joint operations
Opportunities related to associated companies,
Low
Medium
joint ventures and joint operations
Low
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 151
of products are continuously monitored within the context of
managing the entire value chain. Supplier management is
undertaken for the prevention of risks with the aim of safeguard-
ing production by securing the quantitative and qualitative
ability to deliver of the suppliers. Furthermore, by sourcing
components from other plants, potential bottlenecks can be
reduced and can lead to opportunities at the Daimler Trucks
division due to rising demand for heavy commercial vehicles.
Warranty and goodwill cases could arise in the Daimler Group
if the quality of the products does not meet the requirements,
regulations are not fully complied with, or support cannot be
provided in the required form in connection with product
problems and product care. Quality problems with components
in vehicles from external suppliers can require technical
adjustments that can lead to considerable expenses. If such risks
occurred possible claims are examined and, if necessary, the
appropriate measures are initiated for the affected products. If
the high technical quality standards of purchased components
are not fulfilled, this can lead to Daimler asserting claims against
the respective supplier.
The probability of occurrence and possible impact of produc-
tion and technology risks are unchanged compared with the
previous year across all segments.
Information technology risks and opportunities
The digitization strategy that is systematically pursued at
Daimler offers new possibilities for enhancing customer bene-
fits and enterprise value. However, it also includes risks from
the increasing IT dependency of products and business and
production processes. In addition, specific risks exist due to
the use and availability of new technologies in connection with
digitization, which amongst others can affect the products,
their use, or business operations. In addition, risks from cyber-
crime and hacker attacks cannot be ruled out.
It is essential for the globally active group like Daimler that
information is available and can be exchanged in an up-to-date,
complete and correct form. Appropriately secured IT systems
and a reliable IT infrastructure must be used to protect informa-
tion. Risks must be identified and evaluated over the entire
lifecycle of applications and IT systems, and managed in line
with their criticality. Particular attention is paid to risks that
could result in the interruption of business processes due to the
failure of IT systems or which could cause the loss or corrup-
tion of data.
Due to growing requirements concerning the confidentiality,
integrity and availability of data, Daimler has defined various
preventive and corrective measures so that the related risks
are minimized and possible damage is limited. These measures
are continually adapted to changing circumstances. For exam-
ple, the Group minimizes potential interruptions of operating
processes in data centers by means of mirrored data sets,
decentralized data storage, outsourced data backups and IT
systems designed for high availability. Emergency plans are
developed, employees are trained and sensitized, and further
technical and organizational precautions are taken in order
to maintain operating capability. Specific threats are analyzed
and countermeasures are coordinated at a central cyber secu-
rity center. The protection of products and services from dan-
ger caused by hacking and cybercrime is continually developed.
Despite all precautionary measures, disturbances in informa-
tion processing and therefore negative impacts on the busi-
ness processes and on IT-based services cannot be completely
ruled out.
Due in particular to the changed risk situation relating to
cybercrime and hacker attacks, the possible impact of infor-
mation-technology risks has increased compared with the pre-
vious year from "Medium" to "High".
Personnel risks and opportunities
The success of the Daimler Group is highly dependent on its
employees and their expertise. They are involved in their
respective activities and working processes with their ideas
and suggestions, and thus make significant contributions to
improvements and innovations every day.
Competition for highly qualified staff and management is still
very intense in the industry and the regions in which Daimler
operates. Future success also depends on the extent to which
the Daimler Group succeeds over the long term in recruiting,
integrating and retaining specialist employees. The established
human resources instruments take such personnel risks into
consideration, while contributing toward the recruitment and
retention of staff with high potential and expertise as well as
transparency with regard to the resources of the Daimler Group.
One focus of human resources management is the targeted
personnel development and further training of the workforce.
Employees benefit for example from the range of courses
offered by the Daimler Corporate Academy and from transpar-
ency in the context of performance management. In order to
remain successful as a company, management culture and
principles are being further developed in a Group-wide project.
Due to demographic developments, the Group has to cope with
changes relating to an aging workforce and has to secure a
sufficient number of qualified young persons with the potential
to become the next generation of highly skilled specialists
and executives. This issue is addressed by measures taken in
the area of generation management, which are intended to
counteract the effects of personnel bottlenecks by exerting an
influence on entrepreneurial activity and consequently on the
earnings of the Daimler Group.
Risks in the context of negotiations on collective bargaining
frameworks and the associated potential loss of production are
not to be expected to a large extent in Germany before 2020.
There is no segment-specific assessment of human-resources
risks because the described risks are not primarily related to
any specific business segment, but are valid for all segments in
the respective regions. Overall, the probability of occurrence
of personnel risks has increased compared to the previous year
from "Low" to "Medium". Their possible impact remains
unchanged.
152
Personnel risks
Risks and opportunities related to associated companies,
joint ventures and joint operations
Information technology opportunities
Low
As the target achievement of the Daimler Financial Services
division is closely connected with the business development in
the automotive divisions, the existing volume risks and
opportunities are reflected in the Daimler Financial Services
segment.
Volatilities with regard to market developments can also lead
to the overall market or regional conditions for the automotive
industry developing better than assumed in the internal fore-
casts and premises, and to business opportunities in the mar-
ket. Opportunities can also arise from an improvement in the
competitive situation or a positive development of demand for
the divisions. However, the existing market opportunities of the
divisions of the Daimler Group can only be utilized if production
can be aligned accordingly, and if this is enabled by regional
conditions. In addition, any gaps between demand and supply
have to be recognized and covered in good time. The measures
that could be initiated by the Daimler Group to utilize potential
opportunities include a combination of local sales and market-
ing activities, as well as central strategic product and capacity
planning.
Potential effects of the risks on the development of unit sales
are included in risk scenarios. The risks can cause changes in
the planned business activities, the related vehicle sales and
inventories, and the aftersales business. In particular, the par-
tially unstable macroeconomic environment as well as political
or economic uncertainty could be causes in this context. A ris-
ing oil price and volatile exchange rates can also lead to market
uncertainty and thus to falling demand. Differences between
the divisions exist due to the partly varying regional focus of
their activities. Discussions about the future of diesel technology
and the related uncertainties may result in a change in cus-
tomer demand which could negative affect on sales of diesel
vehicles and can lead to a possibly drop in earnings. The devel-
opment of markets, unit sales and inventories is continually
analyzed and monitored by the divisions; if necessary, specific
marketing and sales programs are implemented.
The risks and opportunities for the economic development of
automotive markets are strongly affected by the cyclical situa-
tion of the global economy as described above. The assess-
ment of market risks and opportunities is linked to assump-
tions and forecasts about the overall development of markets
in the regions in which the Daimler Group is active. The possi-
bility of markets developing better or worse than assumed in
the planning, or of changing market conditions, generally exists
for all divisions of the Daimler Group.
General market risks and opportunities
Further risks are related to geopolitical tensions, terrorist
attacks or assassinations in Europe or other major economies,
which could adversely affect global trade and international
capital markets for a prolonged period.
147
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Low
Opportunities relating to the legal
and political framework
High
Medium
and political framework
Risks relating to the legal
Medium
Procurement market opportunities
High
Medium
Procurement market risks
Low
Opportunities relating to leasing
and sales financing
Low
Low
and sales financing
Risks relating to leasing
High
Risks arise above all in connection with the public debate about
diesel vehicles and the related fundamental reconsideration
of methods for measuring emissions. Due to the replacement
of the NEDC (New European Driving Cycle) with the new
measuring method WLTP (Worldwide Harmonized Light Vehicles
Test Procedure), the fleet CO2 average has worsened. In light
of today's knowledge, this would make it more difficult to achieve
the CO2 targets as of 2020. Furthermore, there has been
some pressure in the past two years on diesel technology, which
is important for compliance with the challenging CO₂ targets
in the EU, because of NO x levels exceeding the limits at some
measuring stations in cities. The current public focus on
vehicle emissions as well as possible certifications stops and
recalls jeopardize the reputation of the automotive industry
and in particular of the diesel engine, and could result in dam-
age to Daimler's reputation. With the development of a new
generation of diesel engines, Daimler has developed a convinc-
ing technical solution for reducing NOx emissions in real
driving (real driving emissions (RDE)) and will successively intro-
duce this innovation throughout the product range. In general,
legal risks - for example in connection with antitrust investiga-
tions as well as possible legal and social violations by part-
ners and suppliers can have a negative impact on the reputation
of the entire Daimler Group. As one of the fundamental princi-
ples of business activity, Daimler places particular priority -
also in the selection of partners and suppliers - on adherence
to applicable laws and ethical standards.
157
At the beginning of 2019, the world economy is displaying rather
weaker growth than in the previous year, but is generally con-
tinuing its solid development. We assume that this moderate
slowdown will continue as the year progresses. Growth pros-
pects for the industrialized countries in particular are rather less
positive than in the previous year, while the economies of the
emerging markets should develop at a similar rate overall.
Unit sales
160 B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
We expect slight growth in the market volume for buses in the
EU30 region. In Latin America (excluding Mexico), we assume
that the situation will improve due to the slight market recovery
in Brazil. But growth in Latin America continues to be held back
by the economic crisis in Argentina.
In the EU30 region in 2019, we expect a market volume at the
prior-year level in the combined segment of mid-size and large
vans, as well as in the market for small vans and in the segment
of mid-size pickups. In the United States, demand for large vans
should be slightly stronger than in the previous year. The mar-
ket for large vans in Latin America should continue its recovery
in 2019. In China, we expect slight growth in the market we
address there for mid-size vans.
The most important Asian markets from Daimler's perspective
are likely to present a varied picture in 2019. In the Japanese
market for light-, medium- and heavy-duty trucks, we anticipate
a slight market decrease at an ongoing solid level. We expect
a stable development of the Indonesian truck market. In India,
following strong growth in 2018, demand for medium- and
heavy-duty trucks should remain at the same level in 2019. In
the Chinese market, a significant correction is to be expected
following the extremely high volume of the previous year.
Despite a certain weakening of overall economic growth, we
expect demand in the EU30 region (European Union, Switzerland
and Norway) to remain at the high level of 2018. In Brazil, the
market is expected to continue its recovery with a significant
increase in truck sales. However, the Turkish market is likely
to shrink again significantly due to the country's economic
recession. We anticipate a slight increase in demand for trucks
in Russia.
In North America, we assume that the truck market in weight
classes 6 to 8 will maintain the high level of the previous year.
Demand for medium- and heavy-duty trucks should vary in
the regions relevant to us, but we anticipate the continuation
of favorable market conditions.
The US market for cars and light trucks is likely to contract
slightly from a high level. Following the weaker level of the pre-
vious year, the Chinese car market should stabilize in 2019
and maintain its volume at close to the prior-year level. Demand
in India, however, should grow moderately. In Japan, we
expect the market volume to remain more or less unchanged.
In 2019, worldwide demand for cars should remain roughly at
the level of the previous year. The European market is likely
to be of the magnitude of 2018. In Western Europe, we expect
demand to remain more or less stable in view of the above-
average market level that has now returned, and Germany, the
region's largest single market, should also display a stable
development at the prior-year level. The car market of Eastern
Europe is also expected to maintain its prior-year volume.
The Russian market should continue to develop comparatively
favorably with a slight increase, while a sharp decline is
expected in Turkey.
Automotive markets
Overall, the world economy should grow in 2019 by rather less
than 3%. Although this is an ongoing solid rate of expansion, it
is significantly slower growth than in the previous year.
In China, the gradual slowdown in growth of recent years is set
to continue this year. In particular, the uncertainties surround-
ing the trade conflict with the United States should continue
to have a negative impact. On the other hand, the announced
government stimuli should stabilize the economy. Overall, a
still solid increase in gross domestic product of just over 6% is
to be expected. While the economies of Central and Eastern
Europe are unlikely to match their robust growth of 2018, slight
acceleration of growth is anticipated for the South American
economic region. With GDP growth expected to be just below
2%, however, South America remains below its potential. The
ongoing comparatively low level of raw-material prices, espe-
cially of oil, is unlikely to deliver any support for the countries
of the Middle East; their growth rates will probably remain sig-
nificantly below average for this region at less than 2%. Overall,
the emerging markets should achieve economic growth in the
magnitude of 4 to 4.5% in 2019, as in the previous year, thus
developing along their long-term trend.
The growth prospects of the Japanese economy also remain
stable at a low level. A solid outlook for domestic demand
should mitigate external risks, so that growth in gross domes-
tic product (GDP) of just under 1% can again be expected.
B | COMBINED MANAGEMENT REPORT | OUTLOOK 159
Mercedes-Benz Cars aims to continue along its growth path in
2019. We intend to slightly increase our total unit sales, thus
reaching a new record level. The basis for this, and for ongoing
sales success worldwide, is our attractive and innovative
model portfolio.
Mercedes-Benz intends to launch more than a dozen new and
upgraded automobiles in 2019. There should be a positive
impact on unit sales in particular from models such as the new
B-Class, the A-Class sedan and the eighth model in the com-
pact-car segment. We are also well positioned in 2019 in the
growing segment of sports utility vehicles. The new GLE and
the new GLS should make a contribution here, as well as the
popular and upgraded GLC. Mercedes-AMG should guarantee
our success in the high-performance segment once again in the
year 2019: More and more customers are fascinated by the
broad and appealing range of automobiles offered by our sports-
car and high-performance brand, which we are continuously
developing.
We are systematically expanding our worldwide production
network for electric mobility. Under the product and technol-
ogy brand EQ, which stands for "Electric Intelligence," we
will offer not only vehicles but also services in connection with
electric mobility. By the year 2022, we want to electrify the
entire portfolio of Mercedes-Benz Cars. Our goal is to offer our
customers various electrified alternatives in each segment -
from the smart to the compact cars to the large SUVs. We plan
to have a total of more than 130 electrified models in our
portfolio by the year 2022. This will include all-electric vehicles,
plug-in hybrids and models with 48-volt technology. By the
year 2025, depending on the development of the public infra-
structure and on customer preferences, 15 to 25% of the
cars we sell are to be purely electric. To achieve that, we plan
to launch more than ten all-electric cars on the market.
Following the changeover in the United States and Canada, the
smart brand will be based solely on electric drive by the year
2020. The battery-electric smart models are making the entry
into electric mobility more attractive than ever. They combine
the agility of a smart with locally emission-free driving - the ideal
combination for urban mobility.
The individual divisions have the following expectations for
returns in 2019:
On the basis of the market developments we anticipate, the
aforementioned factors and the planning of our divisions,
we assume, however, that Group EBIT in 2019 will be slightly
above the level of the previous year. It will also include signifi-
cant positive effects on assets and earnings that we expect
at the Daimler Financial Services division from the merger of
its mobility services with those of the BMW Group.
page 71
However, earnings will be reduced by the continuation of very
high expenditure: for our model offensive, for innovative
technologies (especially for reducing fuel consumption and for
electrification), for the digitization of our products and pro-
cesses, and for the expansion and modernization of our world-
wide production capacities. Furthermore, rising raw-material
prices are leading to a significant increase in material costs,
and exchange-rate effects are also likely to be negative overall.
Another factor is that for the year 2019, a mid-three-digit
million amount is planned at Group level for the implementation
of the new corporate structure “Project Future".
We are standardizing and modularizing our production pro-
cesses throughout the Group. In this context, we are making
intelligent use of vehicle platforms, allowing us to achieve
further cost advantages. In parallel, we are pushing forward
with digital connectivity in all divisions and at all stages of
the value chain - from development to production to sales and
service. In this way, we are opening up additional scope to
become even faster, more flexible and more efficient - to the
benefit of our customers.
the long-term and structural optimization of our business sys-
tem. At Mercedes-Benz Cars, for example, we aim to achieve
efficiency improvements in the context of the F4L (Fit for Lead-
ership) program in an amount of €4 billion by 2025. Daimler
Trucks is also working continuously on efficiency improvements.
In combination with the cost optimizations we have so far
planned and partially already implemented, we have achieved
profit-effective improvements for Daimler Trucks in an amount
of €1.4 billion, which will become fully effective in the year
2019.
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK 161
In the United States, the leading indicators suggest that the
economy's solid upswing should continue. However, growth
is likely to be somewhat weaker than in the previous year, as
the positive impetus from the tax cuts is coming to an end.
Thanks to stable domestic demand, moderate inflation and low
unemployment, the US Federal Reserve will probably be able
to maintain its course of slightly restrictive monetary policy with
further moderate interest-rate increases. All in all, total eco-
nomic output should grow by just below 2.5%.
The growth in unit sales and revenue that we anticipate should
have a generally positive impact on earnings in 2018. We have
laid the foundations for a lasting high level of earnings with
various programs for improved profitability, which we already
implemented in the years 2013 to 2015. Since then, we have
continuously been taking further measures in all divisions for
We assume that the revenue of the Daimler Group will also
increase slightly in 2019, as a result of the overall positive
development of unit sales in the automotive divisions. Exchange-
rate effects are likely to have a rather negative impact on the
development of revenue in the year 2019. This applies above all
to our business in China, as well as in various emerging mar-
kets and in the United Kingdom.
Revenue and earnings
On the basis of our assumptions concerning the development
of automotive markets and the divisions' planning, we expect the
Daimler Group to slightly increase its total unit sales in 2019.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Daimler Buses assumes it will be able to defend its market
leadership in its most important traditional core markets for
buses above 8 tons. We anticipate significant growth in total
unit sales in 2019. We assume that unit sales will increase
slightly in the EU30 region and significantly in India. Unit sales
in Latin America (excluding Mexico) are expected to be at the
prior-year level.
Mercedes-Benz Vans plans to significantly increase its unit
sales in the year 2019. Growth is expected to be strong in the
United States. We anticipate slight growth in the EU30 region.
Sales growth in the year 2019 should be helped in particular by
the new Sprinter, which was launched in mid-2018.
Daimler Trucks anticipates further growth in total unit sales in
2019, with a slight increase compared with the previous year.
In the NAFTA region, we expect to be able to increase our sales
again slightly compared with the previous year. In Brazil, we
expect our sales volumes to significantly exceed the previous
year's low level. In the EU30 region, our sales should be
slightly above the prior-year level. In India, we once again antici-
pate a significant increase in unit sales for 2019. In Japan
and Indonesia, we expect to achieve approximately the same
sales volumes as in the previous year. After the considerable
economic uncertainty of the past year, we anticipate a slight
decrease in unit sales in Turkey.
Our divisions have very attractive product ranges, which have
been expanded and systematically renewed in recent years. We
assume that Daimler will profit from this fact also under par-
tially difficult market conditions, and will be able to strengthen
or defend its position in major markets. At Mercedes-Benz
Cars, additional revenue growth should be ensured in 2019 above
all by the new A-Class and B-Class, and by the G-Class and
the GLE. On the other hand, expected exchange-rate develop-
ments and lifecycle effects for some car models as well
as a changed sales structure will have a dampening effect on
revenue. Overall, Mercedes-Benz Cars anticipates a slight
increase in revenue in 2019. Due to generally favorable market
conditions and positive sales expectations, the Daimler Trucks,
Mercedes-Benz Vans and Daimler Buses divisions plan to
achieve significant revenue growth. Daimler Financial Services
anticipates a slight increase.
Most economic indicators suggest that the economy of the Euro-
pean Monetary Union will experience a further slowdown in
growth in the year 2019. If domestic demand remains robust, a
lower contribution from foreign trade should lead to a growth
rate of only about 1.5%. Under these conditions, the European
Central Bank will continue to follow its announced course and
is unlikely to raise key interest rates; if it does, then probably not
before the fall of 2019. The outlook for the German economy
is also rather less positive and also here, we expect a further
growth slowdown to less than 1.5%. Because the exact proce-
dure and economic effects of the United Kingdom's imminent
withdrawal from the European Union are still difficult to assess,
the British economy must also be expected to develop rather
moderately in 2019. But despite the high level of uncertainty, the
majority of analysts do not expect an economic slump.
The world economy
Our assessments for the year 2019 are based on the assumption
of generally stable economic conditions and the expectation
that the upward development of the global economy will continue.
We also assume that worldwide demand for motor vehicles
will be roughly of the magnitude of the previous year. The devel-
opment we have outlined is subject to various opportunities
and risks, which are explained in detail in the Risk and Oppor-
tunity Report. O pages 143 ff
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
In addition, Daimler's ability to defend itself in proceedings
could be impaired by unfavorable findings, results or develop-
ments in any of the information requests, inquiries, investiga-
tions, administrative orders, legal actions and/or proceedings
discussed above.
Risks from legal proceedings in connection with diesel
exhaust gas emissions - Court proceedings. A consumer
class-action lawsuit is pending in the United States in which
it is alleged that Daimler AG and MBUSA conspired with Robert
Bosch LLC and Robert Bosch GmbH (collectively, "Bosch")
to deceive US regulators and consumers. A separate lawsuit was
filed in January 2019 by the State of Arizona alleging that
Daimler AG and MBUSA deliberately deceived consumers in
connection with the advertising of Mercedes-Benz diesel
vehicles. Another consumer class-action lawsuit against Daimler
AG and other companies of the Group containing similar
allegations was filed in Canada in April 2016. A similar class
action was filed in the United States in July 2017, but in
December 2017, the parties stipulated to dismiss that lawsuit
without prejudice. It may be filed again under specific con-
ditions. Furthermore, class actions have been filed in the United
States and Canada alleging anticompetitive behavior relating
to vehicle technology, costs, suppliers, markets, and other com-
petitive attributes, including diesel emissions control technol-
ogy. A securities class action lawsuit is pending in the United
States on behalf of investors in Daimler AG American Deposi-
tary Receipts which alleges that the defendants made materially
false and misleading statements about diesel emissions in
Mercedes-Benz vehicles. Daimler AG and the respective other
affected companies of the Group regard these lawsuits as
being without merit and will defend against the claims. Further
details please see Note 30 of the Notes to the Consoli-
dated Financial Statements.
In Germany, lawsuits by customers alleging violations of war-
ranty and tort laws as well as lawsuits by investors alleging the
violation of disclosure requirements are pending. At the end
of December 2018, the regional court of Stuttgart published in
the claims register an investor's motion to initiate a model
proceeding in accordance with the Act on Model Proceedings
in Capital Markets Disputes (KapMuG) alleging the violation
of ad hoc disclosure requirements. Currently, no model pro-
ceeding is pending. Daimler AG also regards these lawsuits
as being without merit and will defend against the claims.
If court proceedings have an unfavorable outcome for Daimler,
this could result in significant damages and punitive damages
payments, remedial works or other cost-intensive measures.
Court proceedings can in part also have an adverse effect on
the reputation of the Group.
Furthermore, Daimler's ability to defend itself in the court pro-
ceedings could be impaired by unfavorable findings, results
or developments in any of the governmental proceedings dis-
cussed above.
Risks from other legal proceedings. Following the settlement
decision by the European Commission adopted on July 19, 2016
concluding the trucks antitrust proceedings, Daimler AG faces
customers' claims for damages to a considerable degree.
Respective legal actions, class actions and other forms of legal
redress have been initiated in various states in and outside
of Europe and should further be expected. Daimler takes appro-
priate legal remedies to defend itself.
156
As legal proceedings are fraught with a large degree of uncer-
tainty, it is possible that after their final resolution, some of
the provisions we have recognized for them could prove to be
insufficient. As a result, substantial additional expenditures
may arise. This also applies to legal proceedings for which the
Group has seen no requirement to recognize a provision.
Although the final result of any such litigation may influence
the Group's earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely to
have a sustained effect on the Group's financial position.
Further information on legal proceedings is provided in
Note 30 of the Notes to the Consolidated Financial State-
ments.
Tax risks
Daimler AG and its subsidiaries operate in many countries
worldwide and are therefore subject to numerous different
statutory provisions and tax audits. Any changes in legislation
and jurisdiction, as well as different interpretations of the law
by the fiscal authorities - especially in the field of cross-border
transactions - may be subject to considerable uncertainty. It
is therefore possible that the provisions recognized will not be
sufficient, which could have negative effects on the Group's
net profit and cash flows.
Any changes or interventions by the fiscal authorities are con-
tinuously monitored by the tax department and measures are
taken if required.
Non-financial risks
It cannot be ruled out that the regulatory risks and risks from
legal proceedings discussed above individually or in the
aggregate may materially adversely impact our profitability and
financial position.
Mercedes-Benz Cars: return on sales of 6% to 8%
Daimler Trucks: return on sales of 7% to 9%
Mercedes-Benz Vans: return on sales of 5% to 7%
Daimler Buses: return on sales of 5% to 7%
EBIT significantly below prior-year level at €0.3 billion
(2017: €1.1 billion)
-
For forecasting the profitability of our divisions, as of Annual
Report 2018, we have changed over to using return on
sales instead of EBIT for the automotive divisions and return on
equity for Daimler Financial Services. This creates a link
between our expectations for the current financial year and our
strategic targets. Divisional return on sales and return on
equity will be forecast with the use of bandwidths. Furthermore,
we have adjusted the sensitivities for forecasting the unit
sales and revenue of the divisions and the Group, and for fore-
casting Group EBIT.
The statements made in the Outlook chapter are based on the
operational planning of Daimler AG as approved by the Board
of Management and the Supervisory Board in December 2018.
That planning is based on the premises we set regarding the
economic situation and the development of automotive markets.
It involves assessments made by Daimler, which are based
on analyses by various renowned economic research institutes,
international organizations and industry associations, as well
as on the internal market analyses of our sales companies. The
prospects for our future business development as presented
here reflect the targets of our divisions as well as the opportuni-
ties and risks presented by the anticipated market conditions
and the competitive situation during the planning period. Against
this backdrop, we adjust our expectations for business devel-
opment to reflect updated forecasts for the development of the
various automotive markets. The statements made below are
based on the facts known to us at the beginning of 2019.
Outlook
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
158
In order to recognize risks and opportunities at an early stage
and to deal successfully with the current risk and opportunity
situation, the established risk and opportunity management
system is continually monitored and further developed.
Compared with the previous year, IT risks have increased from
the changed situation in relation to cyber crime and hacker
attacks. In addition, increasing trade-restrictive and protection-
ist tendencies worldwide have led to a higher probability of
occurrence of risks from political and legal frameworks and,
among other things, to a reduction in market opportunities.
However, the overall view of the Daimler Group's risk and
opportunity situation remains essentially unchanged. No risks
are recognizable - neither on the balance sheet date nor at
the time of preparing the consolidated financial statements -
that either alone or in combination with other risks could
endanger the continued existence of the Group. As consider-
able economic and industry risks still exist, setbacks on the
way to sustainably achieving growth and profitability targets
cannot be ruled out. New competitors in the IT sector for
example and the Group's current strategy, among other things
in connection with electric mobility, pose further challenges
for the Daimler Group and are connected with risks and oppor-
tunities. By effectively and flexibly focusing production and
sales activities on changing conditions, the divisions of the
Daimler Group strive to utilize the opportunities offered so
that they can fulfill or surpass their respective targets and
plans. As far as can be influenced by the Daimler Group and
provided that the required measures are financially viable, the
Group takes appropriate action to realize those opportunities.
177-179
how it succeeds in offering up-to-date and technologically
leading products in the markets, and how business operations
are conducted under the given conditions. Furthermore, the
secure handling of sensitive data is a precondition for main-
taining business relationships with customers and suppliers in
a trusting and cooperative environment.
The overall view of the Group's risk and opportunity situation is
the sum of the described individual risks and opportunities of
all risk and opportunity categories for the divisions, the corpo-
rate functions and the legal entities.
Overall assessment of the risk
and opportunity situation
Market launch of the new Sprinter
World premiere of Vision URBANETIC
New Sprinter plant in the United States
-
Future initiative adVANce in full swing
As well as the risk categories described above, unpredictable
events such as natural disasters, political instability or terrorist
attacks can disturb production and business processes. Emer-
gency plans are therefore prepared to allow the resumption
of business operations as soon as possible. As far as possible,
and commensurate to the level of individual risks, precaution-
ary measures are taken and insurance policies are arranged.
Disruptions of business processes can also occur in connec-
tion with projects as a result of system changes. Risks relating
to compliance are also included in the risk management pro-
cess and are continually monitored. Regular training courses
are carried out to prevent compliance violations. In addition to
the described risks, other risks can occur that adversely affect
the public perception and therefore the reputation of the
Daimler Group. Public interest is focused on Daimler's position
with regard to individual issues in the fields of sustainability,
integrity and social responsibility. Furthermore, customers,
business partners and capital markets are interested in how
the Group reacts to the technological challenges of the future,
Daimler Financial Services: return on equity of 17% to 19%
Daimler Financial Services aims to achieve ongoing growth
in the coming years. In 2019, we expect further growth in contract
volume and a slight increase in new business. We are opening
up new market potential through more flexible leasing and rental
products with the option of moving to new vehicles at shorter
intervals. We intend to generate additional growth by expanding
our online sales channels and with telematics-based products
for insurance and fleet management. We continue to see good
growth opportunities also in the mobility segment.
Daimler Trucks, Mercedes-Benz Vans and Daimler Buses should
profit from rising unit sales and the efficiency-enhancing
measures. A negative impact is likely also in these divisions from
the development of prices in the raw-material markets. Fur-
thermore, earnings at Daimler Trucks are likely to be impacted
by higher expenditure for new technologies and future Products.
First vehicles of the Mercedes-Benz eActros innovation fleet
handed over to customers
Presentation of new electric truck for the North American
market
Renewed growth in contract volume
Daimler Financial Services
At Mercedes-Benz Cars, positive effects will result from the
anticipated growth in unit sales. There will be negative effects,
however, from currency exchange rates and the continuation
of very high expenditure for new technologies and vehicles. In
addition, rising raw-material prices will lead to a significant
increase in material costs.
172 - 176
Significant increase in unit sales
Announcement of cooperation with Californian company
Proterra Inc.
Daimler Trucks
Mercedes-Benz Citaro hybrid wins "Bus of the Year 2019"
Digital service OMNIplus ON
Market leadership defended in most important traditional
core markets above eight tons gross vehicle weight
Positive development of complete-bus business in Europe
New all-electric Mercedes-Benz eCitaro
180-182
Significant growth in unit sales
Daimler Buses
championships for the fifth time in succession
EBIT of €7.2 billion (2017: €8.8 billion)
Mercedes wins drivers' and constructors' Formula 1
EBIT slightly below prior-year level at €265 million
(2017: €281 million)
- World premiere of new Actros with innovative safety systems
New DTB Tech & Data Hub founded in Lisbon
Fleetboard pushes forward with digitization of logistics sec-
tor
eDrive@Vans: eVito and eSprinter
Growth driven by V-Class and Sprinter
Unit sales at record level
Mercedes-Benz Vans
EBIT significantly below prior-year level at €1.4 billion
(2017: €2.0 billion)
Toll Collect settlement
Top positions in employer rankings
Investment in artificial intelligence
Further expansion of fleet-management activities
Investment in used-car platform heycar
Joint venture for premium ride hailing in China
Cooperation with BMW
Expanded offer of innovative mobility services
New name: Daimler Mobility AG
policies brokered
Further increase in number of automotive insurance
183-185
EBIT significantly above prior-year level at €2.8 billion
(2017: €2.4 billion)
Expansion of global production network
Deepened partnership in China
As a company with worldwide activities, Daimler AG is at
the focus of public interest. In this context, the relevant stake-
holders' perception is of crucial importance and can affect
the reputation of the entire Daimler Group see page 202
>>Non-Financial Report«. A key role in the public's current
perception is played by the company's approach to environmen-
tal, employee and social matters, fighting corruption and
bribery, and respecting human rights.
smart focuses on electric mobility
To enable us to react flexibly to the high dynamism of the
environment, markets, new competitors and technologies, we
need a structure that facilitates rapid and agile action. In the
context of Project Future, we aim to further focus Daimler's
divisional structure, thus strengthening the future viability
of the various businesses (COMPANY). With Project Future,
we want to make Daimler even more agile and faster, so
that we can make even better use of market opportunities.
The shareholders' approval for the implementation of the
new structure is to be obtained at the Annual Shareholders'
Meeting on May 22, 2019. With the four strategic areas for
action CORE, CASE, CULTURE and COMPANY - we have
created the right conditions to focus even more consistently
on our customers' requirements. Our goal is to continue to
be one of the leading vehicle manufacturers while evolving into
one of the leading providers of connected mobility. Along
this path, we once again reached some pioneering milestones
also in 2018. We therefore look to the year 2019 with confi-
dence. We expect both unit sales and revenue to be higher
than in the previous year, and should be able to achieve a
slight increase in earnings despite the high volume of expen-
diture to safeguard our future.
- Together with the workforce, we are developing a new lead-
ership culture under the heading of "Leadership 2020" that
will allow us to successfully shape our future. In this way, we
are meeting the challenges of the digital world and creating
the basis for cultural changes at the Group (CULTURE).
We are very well positioned in our markets with innovative
products and services. We are increasingly succeeding in
addressing new target groups, utilizing additional market
potential and strengthening our market position worldwide.
With the efficiency programs that have been implemented
in all divisions in recent years, we have improved our cost
structures on a sustained basis and thus laid the foundations
for a high level of profitability. We are currently taking fur-
ther measures in all divisions for the long-term and struc-
tural optimization of the business system. In this way, we are
strengthening our core business (CORE) and creating the
financial basis to invest in the future of the company.
We have therefore significantly increased our advance
expenditure for new products and technologies in recent
years, and we will maintain this high level in 2019. We there-
fore intend to play a leading role also in the future, especially
in the strategic, future-oriented areas of connectivity, auto-
mated and autonomous driving, flexible use and services,
and electric drive, and by intelligently linking up those areas
(CASE).
-
Overall statement on future development
163
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
Due to the growth in unit sales and revenue we anticipate, pro-
duction volumes are likely to continue rising in 2019. At the
same time, the efficiency-enhancing measures we have imple-
mented in recent years at all divisions are now taking effect.
The medium- and long-term measures we have taken for struc-
tural improvements in our business processes should facilitate
further efficiency progress. Against this backdrop, we assume
that we will be able to achieve our growth targets with only
slight workforce growth. Additional jobs will be created in par-
ticular through the expansion of our international production
network, in the area of research and development, and in con-
nection with the technological areas of the future, especially
electric mobility and digitization. Companies that we operate
together with Chinese partners and whose employees are
not included in the figures for the Daimler Group are also likely
to recruit additional employees.
The workforce
With our research and development activities, our goal is to
further strengthen Daimler's competitive position against
the backdrop of upcoming technological challenges. With new
and attractive products, we want to inspire our customers
and utilize the growth opportunities offered by worldwide auto-
motive markets. We are increasingly focusing on the strategic
areas for the future of connectivity, automated and autonomous
driving, flexible use and services, and electric drive (CASE).
We aim to occupy a leading position in these areas, both indi-
vidually and by linking them up intelligently. In order to achieve
our goals, we will maintain our total expenditure for research
and development in 2019 at the very high level of the previous
year. At Mercedes-Benz Cars, a large part of that expenditure
will flow into the renewal of the product portfolio. The division's
most important projects are the successor models for the
C-Class, the S-Class and the new compact cars, as well as
the expansion of the model range of the EQ product and tech-
nology brand. We are also working hard on new, low-emission
combustion engines, electric mobility, the connectivity of
our vehicles, and innovative safety technologies for automated
and autonomous driving. The topics of electric mobility, con-
nectivity and automated driving will play an important role also
at Daimler Trucks. Other key areas are successor generations
for existing products, fuel efficiency and emission reductions, as
well as tailored products and technologies for important growth
markets. Key projects at Mercedes-Benz Vans are the successor
generation of the Sprinter and the further development of the
Vito and the V-Class. Furthermore, Mercedes-Benz Vans is push-
ing forward with the electrification of its commercial model
series. Another important topic is the connectivity of products
and processes, especially the innovative connectivity solution,
Mercedes PRO. The Daimler Buses division is focusing its
development activities on new products, compliance with future
emission standards and further reductions in fuel consump-
tion. An important role is also played by alternative drive systems,
especially electrification, and additional pioneering projects
relating to automation functions and autonomous driving.
-
Research and development
In order to achieve our ambitious growth targets, we will sys-
tematically expand our product range in the coming years.
At the same time, we want to be able to play a leading role in the
far-reaching technological transformation of the automotive
industry. This applies in particular to the increasing electrifica-
tion of our product portfolio and to the digital connectivity
of our products and processes along the entire value chain. By
intelligently connecting the constantly growing volumes of
data, we will create efficiency advantages, improve our product
quality and facilitate the ongoing flexibilization of the produc-
tion process. Against this background, we intend to maintain our
investment in property, plant and equipment at a very high
level, although there is likely to be a slight decrease in compar-
ison to the year 2018.
Investment
B | COMBINED MANAGEMENT REPORT | OUTLOOK
162
At the Annual Shareholders' Meeting on May 22, 2019, the
Board of Management and the Supervisory Board will propose
the payment of a dividend of €3.25 per share for the year
2018 (prior year: €3.65). This represents a total distribution of
€3.5 billion (prior year: €3.9 billion). In line with a sustainable
dividend policy, Daimler sets the dividend based on a distribution
ratio of 40% of the net profit attributable to Daimler shareholders.
Dividend
For the year 2019, we aim to have liquidity available in a volume
appropriate to the general risk situation in the financial mar-
kets and to Daimler's risk profile. When measuring the level of
liquidity, we give due consideration to possible refinancing
risks caused for example by temporary distortions in the finan-
cial markets. We continue to assume, however, that we will
have very good access to the capital markets and the bank mar-
ket also in the year 2019. We aim to cover our funding needs
in the planning period primarily by means of bonds, commercial
paper, bank loans, customer deposits in the direct banking
business and the securitization of receivables in the financial
services business; the focus will be on bonds and loans from
globally and locally active banks. In view of our strong credit-
worthiness, we anticipate slightly less attractive conditions in
2019, despite the normalization of the liquidity situation on
international capital markets after the end of the central banks'
bond-buying programs in the United States and Europe. An
additional goal is to continue securing a high degree of financial
flexibility.
The generally moderate development of earnings in the auto-
motive divisions will affect the free cash flow of the industrial
business. There will be a negative effect from the continuing
high advance expenditure for new products and technologies.
In addition, there will be costs for Project Future for the imple-
mentation of the new Group structure. Under these conditions,
we assume that the free cash flow of the industrial business
should be slightly higher than in the previous year.
Free cash flow and liquidity
The return on equity expected at Daimler Financial Services on
the one hand takes into consideration significant positive effects
on assets and earnings from the planned merger of the mobil-
ity services of Daimler and BMW. On the other hand, we expect
the division's earnings to be reduced by the normalization of
credit-risk costs and further investment in advancing digitization
and mobility services. Further growth in contract volume
should have a positive impact on earnings.
Investment in property, plant and equipment at Mercedes-
Benz Cars is likely to reach a similarly high level in 2019 as
in the previous year. This is primarily due to the ongoing prod-
uct offensive. The most important projects include the new
models of the compact class, the C-Class and the S-Class, the
new SUVs (GLE and GLS), and new engines and transmissions.
Substantial investment is planned also for the realignment of
our German production sites, for the expansion of our inter-
national production network, and for the worldwide production
network for electric mobility. Furthermore, the division is
making substantial investments in the technological CASE areas
of the future (Connected, Autonomous, Shared & Services,
Electric). Daimler Trucks will mainly invest in 2019 in new prod-
ucts and successor generations for existing products, global
component projects and the optimization of its worldwide pro-
duction network. At Mercedes-Benz Vans, the focus of
capital expenditure will be on production of the new Sprinter
in Düsseldorf, North Charleston and Argentina, and on the
further development of the V-Class and Vito. Key projects at
Daimler Buses are improvements in the production network
and advance expenditure for new models, in particular for an
electrically powered city bus.
Forward-looking statements
Although the conditions for our business at the beginning of 2019
are less favorable than in the previous year, Daimler continues
to be on a stable growth path. In view of the challenging environ-
ment and the expected changes in mobility, we will continue
to implement our strategy consistently in the coming years. We
are focusing even more on our customers and thus creating
the basis for further growth.
S.C 1181
Presentation of new GLE sports utility vehicle
Extensive model upgrade for the C-Class
Mercedes-Benz Cars achieves record unit sales once again
A- and B-Class set new standards
166 - 171
Mercedes-Benz Cars
C | THE DIVISIONS | CONTENTS 165
C | The Divisions
The divisions of the Daimler Group performed very well in their
markets in 2018, despite partially difficult conditions, thanks to
numerous new and innovative products and services. Overall, the
unit sales of our automotive divisions reached a record level, and
the Daimler Financial Services division was also able to increase
its contract volume significantly once again.
The Divisions
15
This document contains forward-looking statements that reflect our current
views about future events. The words "anticipate," "assume," "believe,"
"estimate," "expect," "intend," "may," "can,” “could,” “plan,” “project,” “should”
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline
of demand in our most important markets; a deterioration of our refinancing
possibilities on the credit and financial markets; events of force majeure
including natural disasters, acts of terrorism, political unrest, armed conflicts,
industrial accidents and their effects on our sales, purchasing, production
or financial services activities; changes in currency exchange rates and tariff
regulations; a shift in consumer preferences towards smaller, lower-margin
vehicles; a possible lack of acceptance of our products or services which lim-
its our ability to achieve prices and adequately utilize our production capaci-
ties; price increases for fuel or raw materials; disruption of production due to
shortages of materials, labor strikes or supplier insolvencies; a decline in
resale prices of used vehicles; the effective implementation of cost-reduction
and efficiency-optimization measures; the business outlook for companies
in which we hold a significant equity interest; the successful implementation
of strategic cooperation and joint ventures; changes in laws, regulations
and government policies, particularly those relating to vehicle emissions, fuel
economy and safety; the resolution of pending government investigations
or of investigations requested by governments and the conclusion of pending
or threatened future legal proceedings; and other risks and uncertainties,
some of which we describe under the heading "Risk and Opportunity Report"
in this Annual Report. If any of these risks and uncertainties materialize or
if the assumptions underlying any of our forward-looking statements prove to
be incorrect, the actual results may be materially different from those we
express or imply by such statements. We do not intend or assume any obliga-
tion to update these forward-looking statements since they are based solely
on the circumstances at the date of publication.
United Kingdom
+4
32
165
+4
165
33
Asia
+60
13
NAFTA region
+13
8
9
France
-11
82
9
190
+15
161
140
+15
Latin America (excluding Mexico)
38
31
+25
thereof Brazil
thereof United States
thereof Germany
21
+11
SCHOOL B
The ongoing very positive development of unit sales in the
NAFTA region made a substantial contribution to our growth.
We once again significantly increased our unit sales to a total
of 189,700 trucks (2017:165,000). In classes 6-8, we continued
to be the market leader with a share of 38.4% (2017: 39.8%).
We have already delivered more than 83,200 units of the new
Freightliner Cascadia, our flagship in the North American
market. The medium-duty DD8 engine has been produced in
Detroit since the beginning of 2018, and with the introduction
of this engine, we are systematically continuing our global plat-
form strategy for the powertrain. The engine is also used in
the new Freightliner Econic SD. This special truck for municipal
applications, which in Europe is mainly used by waste dis-
posal companies, has been available also in the North American
market since April 2018.
In Asia, we increased our truck sales by 11% to 164,700 units.
In Japan, our total sales were approximately 44,000 units
(2017: 44,800). Our FUSO brand achieved a share of the over-
all Japanese truck market of 19.3% (2017: 19.6%). In Indonesia,
we increased our unit sales to 64,200 trucks, which is 50% more
than in 2017. Our sales of 9,700 trucks in the Middle East
were significantly lower than the high level of the previous year
(2017: 23,600). In India, our sales benefited from a significant
recovery of demand for medium- and heavy-duty trucks. With
sales of 22,500 units, we sold significantly more trucks
than in the year before (2017: 16,700). Our market share with
the BharatBenz brand was 7.0% (2017: 9.1%). In September
2018, we reached a major milestone with production of the
100,000th truck at the plant in Chennai. Since the start of
production in 2013, we have exported vehicles from Chennai
to more than 60 markets worldwide.
Active in the Chinese truck market
to pedestrians and cyclists even better. The fifth-generation
brake assistant supports the driver with a combination of radar
and camera system if there is a danger of a front-end crash or
a collision with a pedestrian or cyclist, and initiates emergency
braking if necessary. Sideguard Assist, which has been avail-
able for heavy-duty trucks from Mercedes-Benz since 2016,
monitors not only the tractor unit but also the trailer or semi-
trailer and helps to avoid accidents. When there is a person or
object in the area monitored, the driver is warned visually
and also acoustically if there is a danger of a collision. The new
Actros differs from its predecessor also externally. The main
mirrors and wide-angle mirrors have been replaced by the mirror-
cam system as standard equipment in the new Actros. Two
cameras installed on the truck's exterior and two monitors in
the cab not only improve aerodynamics, they also offer a
greatly improved view around the vehicle. The new Actros has
a digital driver's workplace with high levels of operating and
display comfort. Two interactive monitors are standard equip-
ment and serve as central information sources. In addition to
driver-relevant basic information, assistance systems are also
visualized. It goes without saying that smartphones are fully
integrated. The Truck Data Center permanently connects the
vehicle with the Cloud and is the basis for all connectivity
solutions that help with the provision of transport services. Real-
time control of the truck via Fleetboard connected services
and the preventive service product Mercedes-Benz Uptime offer
the truck's operator additional added value, through predictive
maintenance and low down times for example.
The world premiere of the new Actros took place in Berlin in
early September. The new Mercedes-Benz flagship features
many innovations. With Active Drive Assist, we are putting par-
tially automated driving into series production. The system
can support the driver with braking, accelerating and steering.
While the driver continues to be responsible for monitoring
the traffic situation, the system makes his or her work signifi-
cantly easier and delivers an important contribution to enhanc-
ing safety on the roads. The improved Active Brake Assist
helps to monitor the space in front of the vehicle and to react
New Actros with innovative safety systems
In June 2018, the global E-Mobility Group Daimler Trucks &
Buses was founded. It defines the future strategy for our
electric components across brands and divisions, as well as
complete electric vehicles, and is working on a worldwide
uniform architecture. At the IAA Commercial Vehicles trade
fair, we announced our cooperation with the Californian
company, Proterra Inc. Proterra is a leader in the United States
in the business with electric buses for local transportation.
In connection with our equity interest in Proterra, it has been
agreed together to examine the electrification of selected
heavy-duty commercial vehicles from Daimler. As the first coop-
eration project, we are working on possible synergies with the
electrification of school buses from the Daimler brand Thomas
Built Buses, and the option to transfer Proterra's proven bat-
tery technology and drivetrain to the North American school-bus
market.
175
173
C | THE DIVISIONS | DAIMLER TRUCKS
Mercedes-Benz already presented an all-electric heavy-duty
distribution truck in 2016. In 2018, the first vehicles of the
Mercedes-Benz eActros innovation fleet were handed over to
customers. The first customers - Hermes, EDEKA, Transport-
beton and Meyer-Logistik - operate in various segments and
At the Capital Market & Technology Days in Portland, we pre-
sented two new electric trucks for the North American market:
the Freightliner eCascadia as a heavy-duty all-electric truck
for long-distance applications and the Freightliner eM2 106 as
an all-electric version for the medium-duty segment. The
eCascadia is based on our Cascadia for heavy-duty haulage,
which is already successful in North America. The Freightliner
eM2 106 is used for the local distribution of foodstuffs as well
as for deliveries. In December 2018, the first Freightliner
eM2 was handed over to the customer Penske Truck Leasing
Corp. This means that Daimler Trucks is now testing electric
trucks with the first customers in all three segments: light-,
medium- and heavy duty. Together with the Saf-T-Liner C2
electric school bus from Thomas Built Buses, we have there-
fore presented an extensive range of electric commercial
vehicles in North America.
Expansion of our wide-ranging electric portfolio
CASCADIA
Electrifying: The Freightliner eCascadia is in use with the first customers in North America as of 2019.
C | THE DIVISIONS | DAIMLER TRUCKS
174
In China, the world's biggest truck market, Daimler AG holds a
50% equity interest in Beijing Foton Daimler Automotive Co.,
Ltd. (BFDA). The joint venture with Beiqi Foton Motor Co. Ltd.
has been producing medium- and heavy-duty trucks of the
Auman brand since the year 2012. Sales of 103,400 Auman
trucks were below the high prior-year level (2017: 112,400),
which, apart from the favorable economic development, was
influenced above all by regulatory measures for vehicle
replacement. Since the start of the cooperation, 596,700
Auman trucks have been sold.
85
each of them is using an 18- or 25-ton truck based on the
series version in daily operations for test purposes. The German
Federal Ministry for the Environment (BMU) and Federal
Ministry for Economic Affairs and Energy (BMW) are sponsoring
the development and testing of the heavy-duty trucks in
short-radius distribution operations as part of the project Con-
cept ELV² (Concept Electric Truck in Heavy Distribution Trans-
portation). As an alternative to electric trucks, Mercedes-Benz
Trucks also offers trucks powered by natural gas. In addition
to the Econic waste-disposal and delivery truck, the new Actros
NGT with natural-gas drive and automatic transmission has
also been available to order since 2018. Our first all-electric
light-duty truck, the FUSO eCanter, was launched in Tokyo,
New York and Berlin in 2017. Since the year 2018, more of the
FUSO eCanter trucks have been handed over to logistics
and municipalities in Berlin, London, Amsterdam and Lisbon,
so this model is now operating in six metropolises around
the world. The locally emission-free and nearly silent truck is in
series production in Tramagal, Portugal, for markets in Europe
and the United States. The trucks for the Japanese market are
produced at the Mitsubishi FUSO plant in Kawasaki. Our
FUSO brand already presented the all-electric FUSO Vision
One for the heavy-duty segment in 2017.
Daimler Trucks: Well positioned worldwide with six brands - Freightliner, Western Star, Mercedes-Benz, FUSO, BharatBenz
and Thomas Built Buses (from left to right).
C | THE DIVISIONS | DAIMLER TRUCKS
Our sales in Turkey were substantially affected by considerable
economic uncertainty and at 5,000 trucks were 57% lower
than the previous year's level. In Latin America, however, we
once again significantly increased our sales to 38,200 units
(2017: 30,500). There was a significant contribution from growth
in unit sales in Brazil, our main market in the region. With
sales there of 21,400 vehicles, we achieved an increase of 60%,
although from a low level. With our Mercedes-Benz brand
trucks, we increased our market share in the medium- and
heavy-duty segment to 27.9% (2017: 27.6%) and were thus
the market leader in Brazil. Sales in Argentina decreased in
the year under review to 3,500 units (2017: 5,600).
thereof Japan
44
45
-2
Indonesia
64
43
+50
For information purposes:
BFDA (Auman Trucks)
103
112
-8
Total (including BFDA)
621
583
+6
New records for unit sales, revenue and EBIT
Daimler Trucks posted unit sales of 517,300 trucks in 2018,
a new record (2017: 470,700). The markets relevant for Daimler
Trucks generally developed positively. Economic uncertainty
in regions such as the Middle East, Turkey and Argentina had
a negative impact on unit sales. Revenue of €38.3 billion
was also significantly higher than in the previous year (2017:
€35.8 billion). Furthermore, the successful implementation
of our efficiency program helped us to achieve a new EBIT
record of €2.8 billion (2017: €2.4 billion).
Unit sales at new high
Daimler Trucks increased its total sales by 10% to 517,300
units. In the EU30 region (European Union, Switzerland and
Norway), our truck sales increased slightly to 85,400 units.
Our Mercedes-Benz brand maintained its market leadership in
the medium- and heavy-duty segment with a share of 20.6%
(2017: 21.0%). In early September, we presented the new Actros
with a number of new features. In addition to numerous
other innovations, the flagship from Mercedes-Benz puts par-
tially automated driving into series production with Active
Drive Assist, as well as the mirror-cam system, which replaces
the previous exterior mirrors. Sales in Germany also
developed positively with growth of 4% to 32,900 units.
149
EU30
8
471
smart
-22
25
19
Sports cars
+1
823
829
SUVs¹
+6
79
84
S-Class
+9
398
434
E-Class
-3
493
478
C-Class
-3
420
130
136
-4
Mercedes-Benz Cars
thereof China
+7
859
921
Asia
-3
338
327
thereof United States
-3
403
409
393
+1
320
+10
thereof Germany
-3
1,014
983
thereof Europe
+0
2,374
2,383
NAFTA
678
thereof A-/B-Class
2,238
+17
4,843
5,684
and equipment
Investment in property, plant
-18
94,3511
8,843¹
9.41
7.8
Return on sales (in %)
93,103
7,216
EBIT
Revenue
18/17
% change
€ amounts in millions
2017
2018
Mercedes-Benz Cars
C.01
After setting new records in the prior year, Mercedes-Benz Cars performed well overall during
the year under review, despite significantly less favorable conditions. Unit sales reached a record
level once again, revenue was at the high level of the previous year, and EBIT also reached a high
level, despite high advance expenditure for our product offensive and new technologies, as well as
extraordinary expenses. During the year under review, we systematically forged ahead with our
model offensive. Important new models in 2018 were the new A-Class, the G-Class, the CLS and
the upgraded C-Class. We also presented the first production vehicle from our new EQ electric
mobility brand. In order to be able to continue meeting demand for our vehicles quickly and flexibly
in the future, we are systematically further developing our global production network with more
than 30 locations on four continents. The most recent example of that is the pioneering Factory 56
at our site in Sindelfingen.
Mercedes-Benz Cars
C | THE DIVISIONS | MERCEDES-BENZ CARS
166
A good view: In the new Mercedes-Benz Actros, the driver benefits from the cab's new, intuitively operated multimedia cockpit.
Research and development
expenditure
6,962
6,642
2,253
Mercedes-Benz
18/17
% change
2017
2018
in thousands
Unit sales Mercedes-Benz Cars
C.02
1 The prior-year figures have been adjusted due to the effects of
first-time adoption of IFRS 15 and IFRS 9.
+2
142,666
+1
145,436
+0
2,373,527
2,382,791
Unit sales
-1
2,398,270 2,411,378
Production
+5
-5
2,388
2,269
thereof capitalized
Employees (December 31)
619
324
1 Including the GLA
1,028
1,105
plant, and equipment
Investment in property,
+7
+16
35,7551
2,3831
6.7
+10
Return on sales (in %)
38,273
2,753
EBIT
Revenue
18/17
Change in %
€ amounts in millions
2017
2018
Daimler Trucks
C.03
2018 was a successful year for Daimler Trucks. In a mainly positive market environment, we
succeeded in significantly increasing unit sales, revenue and earnings to new record levels. We
increased our unit sales by double-digit rates in the NAFTA region, Indonesia, India and Brazil.
At the IAA Commercial Vehicles trade fair, we presented part of our broad portfolio of vehicles
with alternative drive systems: the all-electric eActros, the FUSO eCanter, the electric school
bus from Thomas Built Buses and the Actros NGT powered by natural gas. The newly launched
Actros is a pioneer for safety with Active Drive Assist, Active Brake Assist 5 and the
mirror-cam system.
Daimler Trucks
C | THE DIVISIONS | DAIMLER TRUCKS
172
The year 2018 was the most successful motorsports year in the
history of Daimler AG. Mercedes-AMG Petronas Motorsport
captured both the World Drivers' Championship and the World
Constructors' Championship in the Formula 1 racing series
for the fifth consecutive year. The team thus once again under-
scored its exceptional status and technical expertise, culmi-
nating in the hybrid drive system used in the Mercedes F1 W09
EQ Power. After announcing that it would pull out of the DTM
series after 30 years, Mercedes-AMG went on to take all three
DTM titles in 2018. With 11 Driver's Championships, seven
Manufacturers' Championships, 14 Team Championships and
190 first-place finishes, Mercedes-AMG is the most success-
ful brand in the history of DTM. Mercedes-AMG Customer Racing
can also look back on a very successful season in 2018, as
customer teams participated in more than 1,100 races and were
able to capture numerous victories and titles. Mercedes will
begin a new chapter in its motorsports history in December
2019, when the brand will join the Formula E electric motor-
sport series with the new Mercedes EQ Formula E team. Partici-
pation in the Formula E series will enable us to demonstrate
the performance capability of our intelligent battery-electric
drive systems in a motorsports setting as well, and it will also
add an emotive component to the EQ brand.
#HIGHFIVE: a year for the history books
+7
Mercedes me services are also available for our EQ models -
or in some cases were developed especially for them. They
include Mercedes me Charge for access to public charging
stations in Europe. In addition, the EQ Ready app helps drivers
decide whether it makes sense for them to switch to an
electric car or a hybrid model.
Research and development
1,295
517
Total
18/17
Change in %
2017
2018
In thousands
Unit sales Daimler Trucks
C.04
1 The amounts have been adjusted due to first-time adoption of
IFRS 15 and IFRS 9.
+4
79,483
82,953
Employees (December 31)
-11
+10
+10
476,325
470,705
517,335
Unit sales
524,846
Production
-2
1,322
45
40
thereof capitalized
expenditure
Mercedes me - digital premium services
Mercedes me is playing an important role in the further
development of the Mercedes-Benz brand, as this digital eco-
system has a direct impact on key factors that ensure success.
Mercedes me is meanwhile live in 44 countries, which means
it covers most of the world's major automotive markets.
Mercedes me connect enables customers generally to connect
to their vehicles from anywhere and at any time. The average
activation rate of the Mercedes me connect service for new
Mercedes-Benz vehicles is over 90%, which shows how impor-
tant it is to Mercedes-Benz drivers that their cars are con-
nected and that drivers expect to enjoy all the digital services
and offerings that such a connection makes possible. High-
lights from the Mercedes me connect range of services include
the Live Traffic Information real-time traffic service (including
car-to-x communication), digital keys stored on smartphones,
and "Hey Mercedes" natural speech recognition with support
from artificial intelligence systems.
7.2
The new Mercedes-Benz CLA Coupe features outstanding design and great automotive intelligence thanks to MBUX and augmented reality.
resolution of 720 x 240 pixels and the MBUX Interior Assistant,
which can recognize individual hand and arm movements
and support personal operating intentions. The exterior design
not only exudes presence and power, but also sets a new
benchmark for aerodynamics in the SUV segment. The models
equipped with the six-cylinder diesel engine are also already
certified in accordance with the Euro 6d standard, which will
not become mandatory until 2020. This was made possible
by, among other things, the use of an additional underfloor SCR
catalytic converter.
Mercedes-Benz GLE: an SUV trendsetter reconceived
The new Mercedes-Benz GLE, which was presented in Septem-
ber 2018, features numerous innovations. The E-ACTIVE BODY
CONTROL active suspension system on a 48-volt basis, for
example, is a world first, and the model's driving assistance
systems take another step forward with Active Stop-and-Go
Assist. The interior offers even more space and comfort, and a
third seat row is available as an option. The infotainment
system has larger screens, a full-color head-up display with a
The G-Class, the luxury off-road vehicle from Mercedes-Benz,
has long been considered a design icon. Its external appearance
has not changed significantly since 1979. Then as now, iconic
elements have very specific functions - and also lend a unique
appearance to the new G-Class, which has been available for
delivery to customers since mid-2018. The new G-Class raises
the bar in all relevant areas, including on- and off-road per-
formance, comfort and telematics. The main goal of the devel-
opment engineers was to redefine handling attributes in both
on- and off-road driving. This goal was achieved, as the new
G-Class displays even better performance off-road, while
on-road it is significantly more agile, dynamic and comfortable
than its predecessor.
The G-Class: an icon reinvents itself
In 2003, the Mercedes-Benz CLS created a new vehicle cate-
gory that for the first time combined the elegance and dynamism
of a coupe with the comfort and functionality of a sedan. With
the third generation of the CLS, which has been available for
delivery to customers since March 2018, Mercedes-Benz
is now building more strongly than ever on the trendsetting
model's charisma and unique character. Like its predecessors,
the third-generation CLS stands for self-assured sportiness
in a highly emotive vehicle that offers impressive long-distance
comfort and thrills customers with its technology.
The new CLS: the third generation of the original
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168
Relaunch of a bestseller: model update for the C-Class
The bestselling Mercedes-Benz model series, the C-Class,
was optimized extensively for its fifth year of production. The
exterior and interior were given a stylish makeover, and the
onboard network is completely new, as are several other fea-
tures and systems. The customer notices this directly with
the User Experience feature, which includes as an option a
fully digital instrument display and multimedia systems that
offer customized information and music. The assistance sys-
tems in the C-Class are also now on par with those featured
in the S-Class. The new C-Class series was launched with a
new generation of four-cylinder gasoline engines. Some of
the models come with an additional 48-volt system that includes
a belt-driven starter motor/generator (EQ Boost). This system
enables the implementation of additional functions that help to
further reduce fuel consumption while also enhancing agility
and comfort.
Thanks in part to an additional underfloor SCR catalytic con-
verter, A- and B-Class models equipped with the OM 654 q
two-liter diesel engine are already certified in accordance with
the Euro 6d standard, which will not become mandatory
until 2020.
The new Mercedes-Benz B-Class was presented in Paris in
October 2018. The model has a more dynamic appearance
than its predecessor and displays greater agility on the road,
while offering more comfort. Its avant-garde interior, which
includes a distinctively designed instrument panel, makes for
a unique feeling of space. The MBUX multimedia system in
the B-Class is also a trailblazing feature - and thanks to state-
of-the-art driving assistance systems, the B-Class boasts
one of the highest levels of active safety in its segment.
The Mercedes-Benz among electric vehicles
Mercedes-Benz first presented its new product and technology
brand for electric mobility at the Paris Motor Show in 2016. A
milestone is set to be achieved in mid-2019, when the EQC (elec-
tricity consumption combined: 22.2 kWh/100 km; CO2 emissions
combined: 0 g/km, provisional figures)¹ will become the first
Mercedes-Benz vehicle to be launched under the EQ brand name.
With its seamless and clear design and color highlights typical
of the brand, the EQC is a trailblazer when it comes to an
avant-garde electric appearance, even as it embodies the design
idiom of progressive luxury. In terms of quality, safety and
comfort, the EQC is the Mercedes-Benz among electric vehicles
and a car that makes a convincing impression in terms of
the sum of its attributes. The model also boasts highly dynamic
performance, thanks to two electric motors at the front and
the rear axle with a combined output of 300 kW. The sophisti-
cated operation strategy utilized for the ECQ enables an electric
range of up to 450 km according to the NEDC (provisional
figure). With Mercedes me, the EQ brand offers comprehensive
services that make electric mobility comfortable and practical
for everyone. To sum up, the EQC symbolizes the start of a new
mobility era at Daimler. Series production of the EQC will begin
in 2019 at the Mercedes-Benz plant in Bremen. Preparations
are already in full swing. The new EQC will be integrated into the
current production operations as an all-electric vehicle.
features and driving assistance systems that were previously
only available in luxury-class vehicles. For example, the car
can, for the first time, drive in partially automated mode in cer-
tain situations.
A- and B-Class set new standards
Our E-Class models were particularly successful in 2018: At
433,600 units (+9%), E-Class sales once again reached a new
record level. Our attractive range of sport-utility vehicles also
performed well in the market again, with sales in this segment
increasing by 1% to 829,200 units. As was the case in the prior
year, this positive development was primarily due to the GLC
models, as well as high demand for our SUVs in China. Due to
the model change, sales of C-Class vehicles decreased by 3%
to 477,700 sedans, wagons, coupes and convertibles. Sales of
A- and B-Class models were also affected by a model change
in the year under review, although the success of the new
A-Class led to total deliveries - including the CLA and CLA
Shooting Brake - of 409,300 units (-3%). The S-Class was
very successful in the market, with sales in this segment increas-
ing by 6% to 83,800 units in 2018. Our Mercedes-Maybach
luxury brand played a major role in this positive development.
With sales of 77,700 units (+7%), the S-Class Sedan continues
to be the world's the bestselling luxury sedan.
brand cars remained high in 2018. The development of unit
sales of certain model series was significantly influenced by
lifecycle effects, however. That includes the model changes in
the compact class and the model upgrade for the high-volume
C-Class. The division also faced higher import duties on
vehicles sold in China but manufactured in the United States,
as well as suspensions of deliveries that were imposed on
some diesel models. Vehicle certification processes also took
longer than usual in some cases, and this had an impact on
availability.
With the "She's Mercedes" initiative, we are working to make the
brand with the star more appealing to women in particular
and to increase the proportion of female customers. Along with
community and inspiration platforms, the initiative also offers
training for sales staff and seeks to increase the number of
women in sales positions. She's Mercedes was launched in 2015
and has since been implemented in more than 60 countries.
167
C | THE DIVISIONS | MERCEDES-BENZ CARS
S MB 2471
At 2,252,800 vehicles (+1%), unit sales by the Mercedes-Benz
brand were once again slightly higher than the record level
of the previous year. C.02 Mercedes-Benz is thus once again
the premium brand with the strongest unit sales in the auto-
motive industry. Mercedes-Benz is number one in the premium
segment in Germany and several other key European markets,
as well as in the United States, South Korea, Canada and Japan.
Furthermore, we significantly improved our position in China
once again in the year under review. Demand for Mercedes-Benz
Mercedes-Benz posts record unit sales for the eighth
consecutive year
Mercedes-Benz Cars sold a total of 982,700 vehicles in Europe
in 2018 (2017: 1,013,800). Sales increases were recorded
in the volume markets Germany (+1%) and Spain (+3%), and the
high level of the prior year was maintained in France, while
unit sales decreased in the United Kingdom (-7%) and Italy (-5%).
The Mercedes-Benz Cars division remained very successful
in China during the year under review, with unit sales rising by
10% to 677,700 vehicles. We set new records for unit sales
also in other Asian markets, for example in India (+1%), South
Korea (+1%) and Thailand (+5%). At 392,600 units, total sales
in the NAFTA region were lower than the high level of the prior
year. Sales decreased in the United States (-3%) and Canada
(-2%), while sales in Mexico increased by 7%.
Ongoing high levels of unit sales, revenue and earnings
The Mercedes-Benz Cars division consists of the Mercedes-
Benz brand with the Mercedes-AMG, Mercedes-Maybach and
Mercedes me sub-brands, as well as the smart brand and
the EQ product and technology brand for electric mobility. The
division performed well in a highly competitive environment
in the year under review, with unit sales totaling 2,382,800
vehicles (2017: 2,373,500). Mercedes-Benz Cars thus set a
new sales record, despite operating under difficult conditions.
Revenue of €93.1 billion was close to the previous year's
high level. C.01 This development was in large part due to
the continued market success of our attractive sport-utility
vehicles, as well as the success of the E-Class. After reaching
a new record level in 2017, EBIT decreased to €7.2 billion in
the year under review (2017: €8,8 billion). This was the result
of various factors, which are described in detail in the Profit-
ability chapter.
pages 85f
The new Mercedes-Benz A-Class, which has been available for
delivery to customers since May 2018, is as young and
dynamic as ever, but also more grown-up and comfortable than
ever before. The vehicle completely redefines modern luxury
in the compact class and revolutionizes interior design. The new
A-Class was the first Mercedes-Benz model to be equipped
with the all-new multimedia system MBUX (Mercedes-Benz User
Experience), which marks the dawn of a new era in Mercedes
me connectivity, featuring natural speech recognition ("Hey
Mercedes") and artificial intelligence, both of which enable
the system to adapt itself to the habits and preferences of the
vehicle's owner. The new A-Class also offers a number of
The new Mercedes-Benz GLE is not only dynamic and comfortable on the road, but is also more competent than ever before off the road.
As a sport tourer, the new Mercedes-Benz B-Class places emphasis on sport: With more agile handling, it also offers more comfort and space.
481551
C | THE DIVISIONS | MERCEDES-BENZ CARS 171
S.MB 5006
"Best Customer Experience" (BCE) is a global sales and
marketing initiative that was launched by the Mercedes-Benz
Cars division in 2014. The initiative focuses on expansion
into new markets and market segments and the development of
innovative products and services. Our goal here is to make the
Mercedes-Benz brand more attractive to new and also younger
target groups while also strengthening the brand loyalty of
established customers. To this end, the sales organization and
marketing activities are to be aligned more closely with cus-
tomer requirements, which are changing at an ever-faster pace
as a result of digitalization. Our “Customer Centricity" philoso-
phy puts the customer at the center of everything. The idea is to
ensure personal communication with the customer for every-
thing from the initial contact to advice, test drives, purchases
and aftersales services. Here, Mercedes-Benz is using the
omnichannel approach to offer customers various possibilities
to establish contact with the brand and flexibly utilize different
sales channels - all in line with customers' personal preferences.
To this end, a variety of sales formats, new digital elements
and job profiles in the retail sector are now being linked. This
approach supplements the physical experience offered by
traditional Mercedes-Benz showrooms.
Best Customer Experience
Expansion of activities in China
The global production network is also being systematically
aligned with electric mobility requirements. For example, elec-
tric vehicles from the EQ product and technology brand will
be manufactured in the future within the framework of normal
series production on the same lines used to produce vehicles
with conventional combustion or hybrid drive systems. At the
same time, we are expanding our global battery production
network, which currently extends across three continents.
Within the framework of its electric offensive, Mercedes-Benz
Cars is not only focusing on locally emission-free vehicles,
it is also consistently applying the emission-free approach to
production: Mercedes-Benz Cars plants in Germany are to
be supplied with CO2-neutral energy by 2022.
utilizes state-of-the-art Industry 4.0 technologies. Factory 56
also creates a new modern world of work that focuses on
employees and takes their individual requirements more strongly
into account. Factory 56 will serve as a blueprint for all future
vehicle assembly operations at Mercedes-Benz Cars worldwide.
It obtains its energy from CO2-neutral sources that include a
photovoltaic system installed on the roof.
Global production network - digital, flexible, green
Within the framework of its growth and modernization strategy,
the Mercedes-Benz Cars division is continuously developing
its flexible and efficient production network of more than 30
locations on four continents - all in line with the philosophy of
"digital," "flexible” and “green." "Factory 56" at the Mercedes-
Benz plant in Sindelfingen is an impressive example of this. A
key feature of Factory 56 involves all-round connectivity along
the entire value chain - from development and design to
suppliers, production and customers. The assembly hall stands
out through a particularly flexible production system that
The smart brand sold a total of 130,000 vehicles in 40 markets
worldwide in 2018.
The range of services offered for the smart brand is being
continuously expanded through the launch of “ready to" digital
services. One example here is “smart ready to drop." This
service, which is linked to various cooperation partners in the
logistics industry, enables parcels to be delivered to the trunk
of a customer's car and also allows for the pick-up of returns
using the same system. “smart ready to share" enables private
car sharing in closed groups - e.g. within a family, between
friends or at small companies - in an extremely user-friendly
manner with the help of an app that eliminates the need to
hand over keys to the next user. A new service here is "smart
ready to pack," which employs a sophisticated algorithm to
tell shoppers while they're still making their purchases whether
and how everything will fit into the smart's trunk. The new
smart EQ control app has been available since August 2018. It
contains a large amount of information on the car, such as
the current charge level, and can control vehicle functions such
as the auxiliary climate control system.
20 years of smart - electric, urban, unconventional
The smart brand celebrated its 20th birthday in 2018. "Reduce
to the max" was the motto of the smart brand when it began
its mission of radically changing the nature of urban mobility
back in 1998. Today, the brand is well on its way to making
the founders' original vision a reality with all-electric drive sys-
tems. This fact is also demonstrated by Daimler's announce-
ment at the Geneva Motor Show in March 2018 that all smart
electric drive models will be sold under the EQ product and
technology brand name in the future. The "smart forease" con-
cept car was presented at the Paris Motor Show in October
2018. This extroverted design without a roof and the systematic
focus on electric mobility clearly show that the electric future
of the smart brand will be extremely attractive.
Sales of Mercedes-Benz brand cars in China totaled more than
658,300 units in the year under review (+11%), which means
China was the brand's largest single market for the fourth con-
secutive year in 2018. More than 70% of the vehicles we sell
there were manufactured locally at facilities operated by Beijing
Benz Automotive Co., Ltd. (BBAC), the joint venture with
our local partner BAIC. In view of the further growth potential
offered by the Chinese market, Daimler and BAIC have
announced plans to jointly invest more than RMB 11.9 billion
(approx. €1.5 billion) in a second BBAC production facility
in Beijing. The expansion of localization will enable Daimler to
respond more effectively to increasing market demand by
offering local models especially tailored to Chinese customers'
needs, including electric vehicles from the Mercedes-Benz
EQ brand. The local presence of the Mercedes-Benz brand in
China is being continuously expanded with the help of a broad
range of products that currently encompasses seven locally
manufactured cars and vans. The all-electric EQC sport-utility
vehicle is to follow in 2019.
C | THE DIVISIONS | MERCEDES-BENZ CARS
Mercedes-AMG: the sports-car and performance brand
The brand claim of "Driving Performance" reflects the two
core competencies of Mercedes-AMG: the ability to provide an
unparalleled driving experience and the ability to serve as a
driving force in the high-performance segment. The Mercedes-
AMG sports-car brand now enhances the fascination of
Mercedes-Benz with 70 models. The brand's dynamic vehicles
especially attract young and sporty customers to the brand
with the three-pointed star. Mercedes-AMG models differ exten-
sively from their series-produced cousins in terms of both
engineering and appearance, thus strengthening the authentic-
ity and distinctive identity of the Mercedes-AMG brand. The
new AMG GT four-door coupe is the third vehicle developed by
Mercedes-AMG on its own. The model combines the impres-
sive racetrack dynamics of the two-door AMG GT sports car with
maximum suitability for everyday use and enough space to
accommodate up to five people.
C❘ THE DIVISIONS | MERCEDES-BENZ CARS 169
The new Mercedes-Benz CLS combines unique design with a luxurious interior and a comprehensive level of standard equipment.
The model is part of a comprehensive electric offensive, as
Daimler plans to offer more than ten all-electric models in
the car segment. In addition, the EQ brand offers a comprehen-
sive electric mobility ecosystem of products, services, tech-
nologies and innovations.
pages 14 ff
The Mercedes-Benz electric vehicle offensive also includes the
GLC F-CELL (hydrogen consumption combined: 0.34 kg/100 km,
CO2 emissions combined: 0 g/km, electricity consumption
combined: 13.7 kWh/100 km)2. This SUV can run on electricity
as well as hydrogen because it is equipped with a lithium-ion
battery with plug-in hybrid technology in addition to its fuel cell.
Intelligent interplay between the battery and the fuel cell, as
well as short refueling times, make the GLC F-CELL a dynamic
and practical vehicle for long-distance travel. The first
Market launch of the world's first electric vehicle with a
fuel cell and plug-in hybrid technology
Mercedes-Maybach: perfection blended with exclusivity
Mercedes-Maybach stands for the highest levels of exclusivity
and individuality. The luxury brand, which was launched in
November 2014, combines the perfection of the Mercedes-Benz
S-Class with the exclusivity of a Maybach. The Mercedes-
Maybach brand's first convertible was launched in the spring
of 2017 in a limited edition of 300 units. A preview of the form
the luxury brand might take in the future is offered by the con-
cept cars Vision Mercedes-Maybach 6 and Vision Mercedes-
Maybach 6 Cabriolet - a sensational coupe and a luxurious
convertible.
1 Figures for electricity consumption and CO2 emissions are provisional,
non-binding figures calculated by an external technical service. Figures for
vehicle range are also provisional and non-binding. An EU type-approval
certificate and a certificate of conformity with official figures are not yet
available. The figures given above may deviate from the official figures.
2 Figures for fuel consumption, electricity consumption and CO2 emissions
are provisional and non-binding. They were determined by an external
technical service for the certification process according to the provisions
of the WLTP test procedure and correlated with the NEDC values. An
EU type-approval certificate and a certificate of conformity with official
figures are not yet available. The figures given above may deviate from
the official figures.
170
GLC F-CELL vehicles were delivered to selected customers in
November 2018.
2018
2017
Contract volume
18/17
% change
Revenue
EBIT
Return on equity (in %)
New business
26,269
1,384
11.1
71,927
154,072
70,721
139,907
+7
1,970
-30
17.7
+2
Daimler Financial Services
+10
24,530¹
€ amounts in millions
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES 183
Further growth in the insurance business
Daimler Financial Services brokered approximately 2.3 million
insurance policies in 2018 - an increase of 8% compared to the
prior year. Business developments were particularly positive in
China, Spain and Russia. More customized insurance solutions
are now needed in view of the trend toward greater flexibility in
vehicle use, for example in the areas of connectivity, telematics,
mobility services and flat rates for leasing contracts.
Investment in property,
Award-winning products from Daimler Buses
The Mercedes-Benz Citaro hybrid, which is available with either
a diesel or a natural gas engine, was named "Bus of the Year
2019" by an independent jury. The selection criteria for the award
included profitability, innovation, quality and user-friendliness.
The Citaro Ü hybrid intercity variant made a big impression in
terms of sustainability and was presented with the "Sustain-
able Bus Award 2019" for inter-city buses. Four of our buses also
captured first place in the 2018 readers' survey conducted
by the EuroTransportMedia (ETM) publishing company. The
awards here were in the categories City Bus (Mercedes-Benz
Citaro K), Inter-City Bus (Mercedes-Benz Citaro LE), Minibus
(Sprinter Minibus) and High-Deck Touring Coach (Setra Top-
Class HDH/DT).
New sales partner in North America
REV Coach LLC became the new sales partner for the Setra
brand in North America at the beginning of 2018. The company
took over from Motor Coach Industries International Inc.
(MCI) as the general sales agent for Daimler Buses in the North
American market. REV has also been responsible for Setra
customer service since July 2018.
BusStore pre-owned bus brand celebrates fifth anniversary
Launched in 2013, the BusStore brand combines and further
professionalizes all Mercedes-Benz and Setra activities in the
area of used buses. BusStore currently sells approximately
2,000 buses each year. During the year under review, we opened
new BusStore locations in Croatia, Hungary, Latvia and
Slovakia, which means that BusStore now operates a total of
19 outlets in Europe. We have also launched a pilot project
with BusStore Mexico in order to expand our international pre-
owned bus sales operations. In addition, plans now call for
BusStore locations to be established in other countries as well.
Numerous major orders for Daimler Buses - including the
first large orders for the all-electric eCitaro
Daimler Buses received a large number of major orders in
the year under review. The cities of Hamburg and Berlin ordered
20 and 15 Mercedes-Benz eCitaro models respectively in 2018.
The order from Berlin also included an option to purchase as
many as 950 Mercedes-Benz city buses. The framework
agreement for the option, which runs for several years, covers
the delivery of up to 600 articulated buses and a maximum
of 350 solo buses. During the year under review, we were also
able to gain major European orders in Poland (150 vehicles
for Kraków, Gdańsk and Bialystok), Spain (EMT Madrid: 270
Citaro buses with natural gas drive to be delivered between
2019 and 2020) and Austria (framework agreement with
Blaguss: 250 Setra touring coaches to be delivered between
2019 and 2022). We also received orders in Brazil, including
one for 121 city buses that will be used to renew the fleets
operated by various bus companies in Curitiba.
C.09
Daimler Financial Services
Half of all Daimler vehicles delivered to customers are
financed or leased
Daimler Financial Services concluded 2.0 million new financing
and leasing contracts worth a total of €71.9 billion in 2018.
The total value of all new contracts was thus slightly above the
prior-year level (+2%). About half of all new-vehicle sales by our
automotive divisions in 2018 were supported by sales financing
from Daimler Financial Services. In total, more than 5.2 million
financed or leased vehicles were on the books at the end of
2018 with a total contract volume of €154.1 billion; this repre-
sents a 10% increase compared with the end of 2017. EBIT
amounted to €1,384 million (2017: €1,970 million). 7 C.09
Moderate increase in new business in Europe
Daimler Financial Services concluded 970,000 new financing
and leasing contracts worth €31.7 billion in the Europe region
(+2%). Especially high rates of growth were recorded in Poland
(+28%) and France (+21%). In Turkey, new business decreased
sharply (-37%) due to the tense political and economic envi-
ronment in that country. In Germany, Mercedes-Benz Bank's
new business increased by 3% to €13.2 billion. Daimler Finan-
cial Services' total contract volume in Europe rose by 8% to
€64.2 billion.
Slight growth in the Americas
Daimler Financial Services brokered 483,000 new financing
and leasing contracts worth €22.5 billion in the Americas
region in 2018 (+3%). The volume of new business developed
very well in Brazil (+25%). Contract volume in the Americas
region of €56.1 billion at December 31, 2018 was clearly higher
than at the end of 2017 (+11%). Adjusted for exchange-rate
effects, contract volume increased by 8%.
Africa & Asia-Pacific region and China:
new business at prior-year level
New business in the Africa & Asia-Pacific region (excluding
China) decreased slightly compared with the previous year, by
3% to €8.2 billion. Business growth was especially strong in
Thailand (+24%). New business decreased significantly in India
(-10%) and South Africa (-13%). At the end of 2018, contract
volume in the Africa & Asia-Pacific region (excluding China)
totaled €18.3 billion, representing a 6% increase over the previ-
ous year. New business increased moderately in China, how-
ever, where 319,000 new leasing and financing contracts worth
€9.6 billion were concluded in 2018 (+2%). At the end of
2018, contract volume in China amounted to €15.4 billion – an
increase of 26% compared with the end of 2017.
The number of cars and commercial vehicles financed or leased by Daimler Financial Services
reached a new all-time high of more than 5.2 million at the end of financial year 2018. Contract
volume developed positively, while EBIT was significantly lower than in the prior year, mainly as a
result of the agreement reached to end the Toll Collect arbitration proceedings. The combination
of sales financing with brokered automotive insurance policies continues to gain importance. The
division's range of innovative mobility services was further expanded. Today, services such as
car2go, moovel and the ride-hailing group with its mytaxi, Beat, Clever Taxi and Chauffeur Privé
brands are used by 31.0 million customers all over the world. In 2018, we also announced plans
to establish a new joint venture for mobility services with BMW.
plant and equipment
3,057
64
mobility services company, Daimler AG and the BMW Group
will make a joint announcement in the first quarter of 2019
regarding the next steps to be taken. The headquarters of the
new joint mobility-services company will be located in Berlin.
Our goal is to jointly create a major global player for seamless
and intelligent connected mobility services. As a hub for
creativity and innovation, Berlin is exactly the right location for
our plans. The 50-50 joint venture will bring together the fol-
lowing services: an on-demand mobility and multimodal mobil-
ity platform, car sharing, ride hailing, parking, and charging
for electric vehicles.
Joint venture for premium ride-hailing services in China
Daimler Mobility Services and Geely Group Company will
establish a premium ride-hailing service in China, subject to the
approval of the regulatory authorities. The new company plans
to begin offering a ride-hailing service with premium vehicles in
several Chinese cities in 2019. The initial fleet will include
Mercedes-Benz S-Class, E-Class, V-Class and Maybach vehicles,
as well as premium models from the Geely electric fleet. The
50-50 joint venture will be headquartered in Hangzhou; each
partner will have an equal number of seats on the company's
board of management.
Expansion of fleet management operations
Daimler Financial Services once again expanded its fleet
management activities in 2018. A total of 395,000 contracts
were on the books at Athlon and Daimler Fleet Management
in Europe at the end of 2018, which represents an increase of
3% compared with the prior year. The total fleet management
contract volume amounted to €6.5 billion. Plans now call for all
fleet management activities to eventually be consolidated
under the Athlon brand name. Athlon gained new interna-
tional customers in 2018 and strengthened its market posi-
tion as a provider of comprehensive fleet management
and mobility solutions for commercial customers. This devel-
opment also had a positive impact on sales of Mercedes-Benz
cars and vans. With "connect business," Mercedes-Benz Con-
nectivity Services also offers cross-brand connectivity ser-
vices for telematics-based car fleet management in several
European countries.
heycar: Daimler invests in a used-vehicle platform
In September 2018, Daimler Financial Services announced it
had signed an agreement on the planned acquisition of an
interest in the heycar used-vehicle platform. This strategic
investment will allow Daimler Financial Services to further
expand a cross-brand platform for manufacturers, dealers,
automotive banks and customers that offers everything
from purchasing to financing and insurance - all from a single
source.
185
Investment in artificial intelligence
Outstanding results in employer rankings
Customer and employee satisfaction is a top priority at Daimler
Financial Services. In 2018, independent surveys once again
showed that the company is a leader in numerous countries
around the world with regard to automobile customers' and
dealers' assessments of our service quality. The Great Place to
Work Institute recognizes global employers for their excep-
tional corporate culture. Last year, Daimler Financial Services
was one of two German companies to rank among the top 10
employers in the world in that survey. A total of approximately
7,000 companies with more than 5,000 employees partici-
pated. In the German survey, Daimler Financial Services finished
first out of about 800 companies, thus earning itself the title
of "Best employer in Germany in 2018” in the category of 2,001
to 5,000 employees.
Toll Collect agreement
In May 2018, Daimler Financial Services reached an agreement
with Deutsche Telekom AG (consortium partner) and the
German government on ending the arbitration proceedings
regarding Toll Collect. page 76
moovel
Xmy taxi
Some 31 million customers worldwide use mobility services from Daimler Financial Services, with products such as car2go, moovel and mytaxi.
Daimler Buses now also offers digital services with its new
OMNIplus ON portal, which integrates existing and new services
into four pillars. OMNIplus On advance ensures maximum
fleet availability for bus operators, and its Uptime feature helps
increase vehicle operating times, for example. OmniPlus On
monitor combines telematics services that ensure efficient fleet
management operations. OMNIplus On drive supports bus
drivers with their departure checks, for example, and OMNIplus
On commerce allows bus companies to buy spare parts
quickly and directly around the clock in an online shop.
Daimler Financial Services has invested in the New Zealand
company Soul Machines in order to implement artificial and
emotional intelligence systems in future sales processes. The
start-up is a pioneer in the field of emotional intelligence
for use in machines and digital avatars. Daimler is the first
premium automobile manufacturer to invest in the develop-
ment of emotional intelligence application scenarios.
Employees (December 31)
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
Cooperation with BMW
14,070
43
+49
13,012
+8
1 This amount has been adjusted due to first-time adoption of
IFRS 15 and IFRS 9. The Group's internal revenue and cost of sales
have been adjusted by the same amount at the Daimler Financial
Services segment. These adjustments have been fully eliminated in
the reconciliation.
184
Daimler AG and the BMW Group are joining forces to offer their
customers sustainable urban mobility services from a single
source in the future. The authorities have now approved the
companies' plan to establish the joint venture. After comple-
tion of the complex transaction on January 31, 2019, the new
C | THE DIVISIONS | DAIMLER FINANCIAL SERVICES
New name: Daimler Mobility AG
Daimler Financial Services AG plans to change its name to
Daimler Mobility AG in the second half of 2019. The Daimler
Financial Services division, which has approximately 14,070
employees, is already well known as the Daimler Group's pro-
vider of mobility services, which include car2go, moovel
and the ride-hailing group with its mytaxi, Beat, Clever Taxi and
Chauffeur Privé brands. The renaming underscores the divi-
sion's transformation into a provider of mobility services and is
one of the components of "Project Future", which is designed
to strengthen the divisional structure of the Daimler Group.
Approximately 31.0 million customers currently make use of the
range of mobility services the division offers. Experts believe
the market for mobility services will generate hundreds of bil-
lions in revenue over the next decade, and Daimler Mobility AG
wants to play a key role in this development.
Mobility services remain on course for success
Daimler Financial Services once again expanded its range of
innovative mobility services in 2018. The number of registered
users of the car2go car-sharing service increased to 3.6 million,
enabling car2go to consolidate its position as a leading com-
pany for flexible car sharing. car2go also continuously further
developed its services during the year under review. For exam-
ple, the company introduced a new pricing model that enables
customers to rent cars at a lower rate on the outskirts of a
city, which also serves to further increase vehicle availability in
cities. In addition, car2go now offers customers greater flexibil-
ity by allowing them to extend their vehicle reservation period if
they need to keep a car longer than planned. car2go opened
its tenth North American location in Chicago in July 2018. During
the same month, the first smart convertibles were added to
the car2go fleet in Rome. At the beginning of 2019, a new Euro-
pean location was opened in Paris, which is served by a fleet
of 400 all-electric smart models.
The moovel app also underwent further development. moovel
enables customers in Germany to compare various mobility
and transport-system options and then choose the best way to
get from point A to point B. The app can also be used to book
and directly pay for services provided by companies such as
car2go, mytaxi and local public transport operators. In
June 2018, moovel and the SSB transport company in Stuttgart
established the "SSB Flex" service, and in November 2018,
moovel and Rheinbahn teamed up to create the "Mobil in Düssel-
dorf" app. moovel is also one of the leading providers of
mobile ticketing solutions for public transport companies in the
United States. All in all, moovel North America offers 19 ser-
vices in 15 US cities. In October 2018, FASTLink DTLA - a non-
profit transportation management initiative - and moovel
North America announced plans to launch a new on-demand
ride-sharing pilot project in Los Angeles. The project, which
has been given the name FlexLA, will supplement the services
offered by the city's public transit network. The number of
registered moovel app users in Germany and the United States
had risen to 6.2 million by the end of 2018 (2017: 3.7 million).
The ride-hailing group behind mytaxi further strengthened
its position as one of the leading providers of taxi apps in
Europe in 2018, among other things, by acquiring a majority
stake in Chauffeur Privé. Ride-hailing group services which
were already available in the United Kingdom, Ireland, Greece,
Romania and France have now been extended to cover a
total of 12 European countries - and have also been launched
in fast-growing markets in Central and South America (Peru,
Columbia and Chile). A total of 390,000 drivers in more than
110 cities have now registered with the ride-hailing group's
companies. The number of registered users of the ride-hailing
group's services increased by 92% to 21.3 million in 2018.
mytaxi has also created its own scooter brand with the "hive"
e-scooter pilot project: Several hundred e-scooters are
available in Portugal's capital, Lisbon, where they offer a genuine
alternative for local transport.
Whether for leasing, financing, insurance or mobility services: The focus is always on the customer at Daimler Financial Services.
Digital service with OMNIplus ON
144
SETRA
29,068
thereof China
+15
33,641
38,779
Asia
+14
16,378
18,735
Latin America
(excluding Mexico)
+13
34,158
23,801
38,741
+13
44,815
50,851
NAFTA
+1
+2
+5
421,401 401,025
278,269 273,297
107,267 105,781
thereof Germany
18/17
% change
2017
2018
thereof United States
+22
Other markets
34,767
C | THE DIVISIONS | DAIMLER BUSES
180
In 2017, the American startup Via and Mercedes-Benz Vans
established a joint venture known as ViaVan, whose ride-sharing
services are a part of sharing@Vans. The company's innovative
technology uses an intelligent algorithm to combine the same or
similar routes and destinations requested by various passen-
gers into a single trip with one vehicle, which makes it possible
to avoid detours and delays for everyone. The app-based,
on-demand ride-sharing service was launched in Amsterdam in
March 2018. It was subsequently introduced successfully in
London, and then later in Berlin in September in cooperation with
the Berliner Verkehrsbetriebe (BVG) transportation company.
The new service is now also being used for the first time to help
optimize individual passenger transport at a company - ViaVan
was launched at the BASF site in Ludwigshafen, Germany, in
the year under review.
With its Vision URBANETIC, Mercedes-Benz Vans has presented
a revolutionary mobility concept under the label autonomous@
Vans that goes far beyond previous ideas of autonomous vehi-
cles. Vision URBANETIC removes the separation between
passenger and goods transport and is set to enable the needs-
based, sustainable and efficient movement of people and
goods. As part of a holistic system solution, Vision URBANETIC
addresses future urban challenges and offers innovative
solutions. This visionary concept is based on an autonomously
driving, electrically powered chassis that can carry various
swap bodies for transporting either passengers or goods.
Daimler, with Mercedes-Benz Vans, is part of the ZUKUNFT.DE
federal model project for electric mobility in Germany.
ZUKUNFT.DE is a German acronym that stands for customer-
friendly delivery operations, sustainability, flexibility and trans-
parency - all brought about by emission-free vehicle operation.
Among other things, the project includes the electrification
of last-mile parcel deliveries in urban environments. We are one
of 11 project partners that are cooperating closely with five
associated partners in this major joint project, which is receiv-
ing assistance from researchers and scientists and support
from the German Federal Ministry of Transport and Digital Infra-
structure. The project is scheduled to be completed by the
end of 2020.
Full speed ahead for the future-oriented "adVANce" initiative
With its future-oriented “adVANce" initiative, Mercedes-Benz
Vans is evolving from a manufacturer of globally successful
vans into a provider of holistic system solutions for the trans-
portation of goods and passengers. The division is thus playing
a pioneering role in its sector. adVANce combines activities
in various areas and currently comprises six innovation fields:
digital@Vans, solutions@Vans, rental@Vans, sharing@Vans,
eDrive@Vans and autonomous@Vans. We are employing a cus-
tomer-oriented co-creation approach to incorporate our cus-
tomers into the development process at an early stage. Here, we
are combining our six innovation fields in order to develop
new business models and tailored solutions that are adapted to
our customers' respective sectors. Mercedes-Benz Vans is
also adopting a new approach with eDrive@Vans, which utilizes
the way a van is used in each specific case as the key factor
for evaluating various drive system options. More specifically,
with eDrive@Vans, the choice of battery-electric drive or a
conventional combustion engine depends solely on which rep-
resents the best solution for a particular application. Fuel
cells will be added to the drive system portfolio over the medium
term. In order to meet as many transport needs as possible
while allowing many different sectors to enter the world of locally
emission-free electric mobility, the eSprinter is now ready to
join the eVito as the second model with battery-electric drive.
The eSprinter will be launched on the market sometime
in 2019. In the future, Mercedes-Benz Vans will expand its
eDrive@VANs strategy to include fuel cells. Based on the
example of a semi-integrated travel van, the Concept Sprinter
F-CELL showcases the full spectrum of typical advantages
of a fuel cell, from long range to locally emission-free mobility.
The Concept Sprinter F-CELL unites fuel cell and battery tech-
nology in a plug-in hybrid. The eDrive@VANs strategy involves
not only the electrification of the vehicle fleet but also a cus-
tomized overall system solution for each individual fleet. This
includes advice on vehicle selection, assistance with tools
such as the eVAN Ready app, and an overview of the total cost
of ownership.
More than 1,700 different variants and comprehensive connectivity make the new Mercedes-Benz Sprinter the perfect vehicle for
diverse transport requirements and sectors.
C | THE DIVISIONS | MERCEDES-BENZ VANS 179
S.SP 9026
The Mercedes-Benz eVito, the first model of the holistic electrification strategy eDrive@VANS, has been available since November 2018.
The new electric Vito
Energined datory
Driving the electric future
SPV 1257E
During the opening ceremony for the plant in South Carolina,
Mercedes-Benz Vans also announced that it will manufacture
Sprinter vans in North Charleston for Amazon's Delivery Ser-
vice Partner program. The program makes it possible for small
business owners to obtain customized delivery vehicles with
special leasing contracts at attractive conditions. The first
Sprinter built in North Charleston was delivered to a participant
in the Delivery Service Partner program. Amazon plans to
add 20,000 Sprinter vans from Mercedes-Benz to its delivery
fleet in the United States within the framework of the new
partnership. The online retailer will thus place the largest single
order ever received by Mercedes-Benz Vans.
In the first quarter of 2018, Mercedes-Benz Vans and the motor
home and travel van manufacturer Hymer announced plans
to establish a new comprehensive supply relationship. To this
end, an agreement was concluded for deliveries of more than
one thousand Sprinters each year, which will eventually make
Hymer the largest single customer for the new Sprinter in the
motor home and travel van sector.
Numerous major contracts
NU 50-532
able to supply our customers in North America even faster and
more flexibly in the future, thus better utilizing the dynamic
potential of the North American market. The new plant in North
Charleston is therefore a central component of the "Mercedes-
Benz Vans goes global" growth strategy.
In preparation for the new generation of the Sprinter, Mercedes
Benz Vans made significant investments in its production
network; the division focused here on manufacturing operations
in the United States and Germany. After a construction period
of approximately two years, our new plant in North Charleston,
South Carolina, opened in September 2018. In view of the
anticipated high market potential for the new Sprinter in North
America, Mercedes-Benz Vans invested roughly $500 million
in the new plant in North Charleston, which includes a body shop,
a paint shop and a final assembly area. With the new ultra-
modern production site, we will be
Investment in the Sprinter production network
As the first integrated connectivity system solution offered
by Mercedes-Benz Vans, the third generation of the Sprinter
represents the division's development from a pure vehicle
manufacturer into a provider of holistic transport and mobility
solutions. With new connectivity services, an electric drive
system and customized hardware solutions for the cargo space,
the large van will make customers' business much more effi-
cient in the connected world of the future. The first Mercedes
PRO fleet solutions were made available to commercial
Sprinter customers when the new model was launched in June
2018. Mercedes PRO is Mercedes-Benz Vans' service brand
that offers services and digital solutions in a total of eight added-
value packages with 18 services. The technical basis for
Mercedes PRO services is a communication module that is
installed as standard in all Sprinter variants.
successively in additional markets. We also expanded our pro-
duction network in September 2018 with the opening of our
new plant in North Charleston and the start of production of
the new Sprinter there. In recent years, we have invested a
total of approximately €2.5 billion worldwide in Sprinter devel-
opment, the global production network for the model, and
sales and aftersales services.
C | THE DIVISIONS | MERCEDES-BENZ VANS
178
+6
32,894
Total
EU30
Daimler Buses
Unit sales Mercedes-Benz Vans
1 The amounts have been adjusted due to the effects of first-time
adoption of IFRS 15 and IFRS 9.
EBIT
Revenue
% change
€ amounts in millions
18/17
2017
2018
Mercedes-Benz Vans
C.05
The new Mercedes-Benz Sprinter had its world premiere in
February 2018; the model then went into production at the
Düsseldorf and Ludwigsfelde plants at the beginning of March.
The new Sprinter was launched in Europe in June and then
World premiere of the new Sprinter
At 206,300 units, global sales of Sprinter models were slightly
higher than in the previous year (2017: 200,500). Sales of
vans in the mid-size segment remained at the prior-year level,
totaling 172,200 units in 2018, whereas sales of Vito models
decreased slightly to 108,300 in the year under review (2017:
111,800). Sales of the V-Class full size MPV rose by 8% to
63,900 units. Meanwhile, sales of the Mercedes-Benz Citan
reached 26,300 units (2017: 26,100). Sales of the X-Class,
which we launched at the end of 2017, totaled 16,700 units
in the year under review (2017: 3,300).
13,626
312
Sales of 278,300 units in the EU30 region, our core market,
were slightly higher than in the previous year (273,300). We
set a new record in Germany, with 107,300 units sold
(2017: 105,800). Mercedes-Benz Vans continued to grow in
the NAFTA region, where sales rose by a significant 13% to
50,900 units. This included a new record of 38,700 units sold
in the United States (2017: 34,200). Mercedes-Benz Vans'
products were also very much in demand in Latin America. Unit
sales in Argentina increased by 14% to 18,700 units, despite
the difficult economic situation in that country. The Mercedes-
Benz Vans division continued its successful development in
China in 2018. Unit sales in China increased significantly, by
22% to the new record of 29,100 vans. This development
was largely due to the success of the Vito and the V-Class.
Continued growth
Mercedes-Benz Vans set a new sales record once again in finan-
cial year 2018, with an increase of 5% to 421,400 units. At
€13.6 billion, revenue was also higher than in the previous year
(2017: €13.2 billion). EBIT reached €312 million and was thus, as
expected, significantly lower than the high level achieved in 2017.
New record for unit sales
Mercedes-Benz Vans continued along its course of growth during the year under review, achieving
a small increase in revenue and setting a new record for unit sales. Growth was mainly driven
by positive developments in the United States, China and Latin America. We also set a new sales
record in Germany. The launch of the new Sprinter and the first full year of availability of the
X-Class in the pickup segment enabled us to consistently forge ahead with our “Mercedes-Benz Vans
goes global" growth strategy. In addition, our future-oriented “adVANce" initiative has allowed
us to systematically move ahead with the transformation of Mercedes-Benz Vans from a vehicle
manufacturer into a supplier of holistic transportation and mobility solutions for cargo and
passengers. EBIT in 2018 was significantly lower than the previous year's high level.
Mercedes-Benz Vans
C | THE DIVISIONS | MERCEDES-BENZ VANS 177
SHE 5855
Since it was launched in 2000, Fleetboard has been ensuring that people and trucks are well connected.
Fleetboard pushes forward with digitization of logistics
At the IAA Commercial Vehicles trade fair in Hannover,
Fleetboard presented its new Fleetboard customer interface.
For trucking companies, the new, intuitive, web-based inter-
face combines all data from the booked Fleetboard services in
a clear format. Fleet managers and dispatchers can summarize
complex information in a tailored manner and while doing so are
helped to identify improvement potential. The system uses
push messages to proactively indicate when there is a need for
action, such as a route adjustment. The digital interface in
trucks has also been further developed. Vehicles with the new
interactive multimedia cockpit can be connected with the
Mercedes-Benz Truck App Portal and thus equipped with effi-
ciency-enhancing apps. The Mercedes-Benz Truck App Portal
offers an open platform on which customers and partners can
install their own apps. One app that will be available in the
portal is Fleetboard Driver. It is also available for smartphone
use in the Apple App Store and the Google Play Store. Fleet-
board Driver informs the truck driver in real time of relevant
vehicle data such as mileage and fuel level. In addition, it
provides a direct insight into driving and rest times as well
as information on optimization potential in relation to the
current driving style.
Close to customers with automated and connected driving
We have further expanded our activities with automated trucks
and buses and established a research and development center
for automated driving in Portland, Oregon. The innovation site
cooperates closely with existing development centers in Stutt-
gart and India. In Brazil, as part of a development partnership
with a local manufacturer of agricultural machinery, Mercedes-
Benz do Brasil configured 18 Mercedes-Benz Axor trucks
specifically for automated use in sugar-cane harvesting. In order
to support the growth of expertise in new technologies as
well as global tech initiatives, a new "Daimler Trucks and Buses
Tech & Data Hub" has been established in Lisbon. The Tech &
Data Hub aims to acquire talented employees in various tech-
nology fields and to focus on new technologies and digital
services for the commercial-vehicle sector. At the plant in São
Bernardo do Campo, Brazil, a completely new type of truck
assembly line for Daimler Trucks for light- to heavy-duty trucks
and the related parts logistics went into operation in 2018.
And at the plant site in Iracemápolis, Brazil, we opened a new
truck and bus test center covering approximately 1.3 million
square meters, where vehicles will be tested on a wide variety
of road profiles.
C | THE DIVISIONS | DAIMLER TRUCKS
176
Mercedes-Benz Vans' products continued to be very successful
in 2018. Our Sprinter, Vito and Citan vans are tailored mainly
to commercial customers, while the V-Class is designed primarily
for private use. The X-Class is targeted at a variety of private
and commercial customers.
Return on sales (in %)
2.3
13,1611
1,1471
8.71
+4
25,255
26,210
+5
401,025
421,401
+9
405,129
440,314
-43
310
176
+18
565
666
Employees (December 31)
Unit sales
Production
thereof capitalized
expenditure
Research and development
-34
710
468
and equipment
Investment in property, plant
+4
-73
C.06
In 2018, business developments at Daimler Buses were strongly influenced by the economic crises
in normally profitable key markets and the associated decrease in demand for buses. This situation
led to a downward adjustment of anticipated earnings during the year under review, with the division's
full-year EBIT decreasing significantly compared with the previous year. At the same time, the
gradual recovery of the Brazilian economy, strong demand in the EU30 region and growth in India
led to a significant increase in global unit sales at Daimler Buses in 2018. As the market leader in
its most important traditional core markets, Daimler Buses focuses on innovative and pioneering city
buses and touring coaches. In 2018, Daimler Buses once again presented itself as a future-oriented
manufacturer with new products such as the eCitaro, digital services, a “future package" for our
production network and the implementation of the CASE strategy.
In addition to the investment in North Charleston, Mercedes-
Benz Vans invested approximately €450 million in the
lead plant of the global Sprinter production network, which
is located in Düsseldorf, Germany, as well as in the Sprinter
facility in Ludwigsfelde, Germany. Mercedes Benz Vans also
invested roughly US$150 million in Sprinter production
operations at the González Catán plant near Buenos Aires in
Argentina.
+7
-5
5.9
Return on sales (in %)
-6
+0
4,5241
2811
265
EBIT
4,529
Revenue
18/17
% change
€ amounts in millions
2017
2018
Daimler Buses
C.07
Sales significantly above the prior-year level
Daimler Buses sold 30,900 buses and bus chassis worldwide in
financial year 2018 (2017: 28,700). The significant increase
was due in particular to the gradual recovery of the economy
in Brazil, high demand in our important EU30 market and
growth in India. At the same time, the market-related decrease
in demand in the normally profitable markets of Argentina and
Turkey had a negative impact on our overall sales. The division
was able to maintain its market leadership in its most important
traditional core markets (EU30, Brazil, Argentina and Mexico).
At €4.5 billion, revenue was at the prior-year level (€4.5 billion),
while EBIT decreased slightly to €265 million (2017: €281 million).
Varied business developments in the core regions
In the EU30 region, the Daimler Buses brands Mercedes-Benz
and Setra offer a complete range of city buses, intercity buses
and touring coaches, as well as bus chassis. Due to continued
high demand for our complete buses, sales in this region
amounted to 9,300 units, which was significantly above the high
number recorded in the prior year (2017: 8,700). Daimler Buses
maintained its leading market position in the EU30 region with
a market share of 29.0% (2017: 28.4%). At 2,900 units, sales
in Germany were 5% lower than in the previous year. Sales of
300 units in Turkey were significantly lower than in the prior
year (2017: 400) due to the country's situation, which remains
difficult. The market situation in Latin America (excluding
Mexico) improved on account of the gradually recovering market
in Brazil, although growth in the region was negatively affected
by the sharp market contraction in Argentina. Sales of Mercedes-
Benz bus chassis in Brazil rose by 22% to 8,800 units. We
were able to maintain our leading market position in Brazil with
a market share of 51.6% (2017: 52.5%). In India, we continued
along our growth path and increased our sales volume to 1,600
units (2017: 900). At 3,200 units, sales in Mexico were
significantly lower than in the previous year (2017: 3,400).
1 The amounts have been adjusted due to first-time adoption of
IFRS 15 and IFRS 9.
C.08
6.21
Investment in property,
plant and equipment
-6
18,292
18,770
Employees (December 31)
+8
28,676
30,888
Unit sales
+10
28,518
31,233
Unit sales Daimler Buses
Production
30
41
thereof capitalized
+3
194
199
expenditure
Research and development
+53
94
+37
+3
2018
Total
1,461
+4
C | THE DIVISIONS | DAIMLER BUSES 181
eCITARO
eCITARO
CITARO
5959
ELYS
E-mobility in series maturity: The Mercedes-Benz eCitaro is not only a city bus, it is part of a complete e-mobility system from Daimler Buses.
New all-electric Mercedes-Benz eCitaro is an important
component of locally emission-free transport in cities
With the new all-electric Mercedes-Benz eCitaro, which had its
world premiere at the IAA Commercial Vehicles trade fair, we
now have in our portfolio a key component of environmentally
friendly local public transport with low-emission and locally
emission-free buses. The bus gets its energy from lithium-ion
batteries, and the charging technology it uses allows it to
adjust to the individual requirements of transport companies.
An innovative thermal management system ensures the
efficient use of energy and provides the basis for a practical
range. The bus can cover about one third of transport
operators' relevant routes without intermediate recharging.
The first models have already been delivered to customers.
The Mercedes-Benz eCitaro also marks the launch of an inno-
vation offensive whose objective is the rapid and practical
electrification of local public transport with buses in cities and
large metropolitan areas. Because battery technology is
developing at a rapid pace, the eCitaro is already designed to
accommodate a transition to future battery technologies such
as more powerful lithium-ion batteries or the optional use of
solid-state batteries. Plans also call for the eCitaro's range
to be increased through the use of a range extender in the form
of a fuel cell that generates electricity.
Holistic eMobility Consulting set to redefine urban bus
transportation
The new all-electric eCitaro city bus is part of Daimler
Buses' overall eMobility system. In order to support our custom-
ers with the transition to electric bus fleets, our eMobility
Consulting team offers advice on request about different use
scenarios, taking into account bus route lengths, passenger
numbers, energy requirements, range calculations, charging
management and other aspects. In addition, our OMNIplus
service brand offers a tailored electric mobility service package
that includes onsite services at customers' maintenance and
repair shops.
Redefining safety with innovative safety and driver assis-
tance systems
With new safety and assistance systems, we are demonstrating
that safety has top priority for our buses. Beginning in 2019,
the Active Brake Assist 4 emergency braking system will become
standard equipment in all Mercedes-Benz and Setra touring
coaches. The system warns the driver of potential collisions with
pedestrians and automatically initiates emergency braking
when it detects stationary or moving obstacles ahead of the
vehicle. Preventive Brake Assist - the first active emergency
braking assistance system for city buses - will be available
as an option for the entire Mercedes-Benz Citaro model
family and the Mercedes-Benz Conecto starting in 2019. The
new assistance system warns of a potential collision with
pedestrians or stationary or moving objects, and automatically
initiates braking if there is an imminent risk of collision.
Sideguard Assist, which is a radar-based turning assistant with
pedestrian detection for buses, supports bus drivers during
right turns, which can be dangerous in certain situations. Side-
guard Assist is available for all variants of the Mercedes-Benz
Citaro and Tourismo and all Setra ComfortClass 500 and Setra
TopClass 500 touring coaches.
182
C | THE DIVISIONS | DAIMLER BUSES
SETOR
Efficiency, variability, comfort and safety, exciting design: The new Setra S 531 DT double-decker bus.
S 531 DT
1,515
Other markets
+35
2,348
30,888
EU30
9,284
28,676
8,687
+8
thereof Germany
2,902
Latin America
(excluding Mexico)
2017
13,681
+7
thereof Brazil
8,778
7,201
+22
Mexico
3,236
3,440
Asia
3,172
12,740
18/17
% change
Keep
D
EQ
11111
145000
110000
100% electric.
Clean, quiet and sustainable.
An innovation fleet for pilot customers. Mercedes-Benz presented its first
all-electric heavy-duty distribution truck back in 2016. Now it's taking the
logical next step by putting the Mercedes-Benz eActros through a practical
use test on the road. Ten near-series-production vehicles are being tested
by a total of twenty customers under real-life conditions to check out their
suitability for daily use and their economy. The initial focus is on intra-urban
goods transport and delivery; the eActros can generally cover the necessary
ranges with ease. The long-term goal is to make quiet and locally emission-
free driving possible in cities with series-produced trucks.
daimler.com/products/trucks/mercedes-benz/eactros.html
=>
D
ACTROS
TROS
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
FOOD
eActros.
FEEL
FutureLab
HEAR
SEE
11
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
SZE 1284E
In cooperation with pilot customers, the near-series-production Mercedes-Benz
eActros is being developed further so that its technology and economics are optimally
adapted to daily use in the logistics sector. These heavy-duty electric trucks are being
tested in urban traffic by an innovation fleet consisting of vehicles ranging in weight
from 18 to 25 tons that are used for the distribution of various categories of goods by
companies in diverse sectors. The first ten pilot customers are testing the vehicles for
one year each in real-life operation. After that, the eActros fleet will be handed over to
ten other customers for further testing in daily use. With this project, Daimler Trucks is
responding to its customers' tremendous interest and gaining comprehensive information.
The goal is to bring cost-efficient electric trucks for heavy-duty inner-city distribution
to series production and market maturity starting in 2021.
eActros - fine tuning in fleet testing
ACTROS
#1
ENA
9
Touch TALK
Efficient.
14555-
daimler.com/case/connectivity/en
Electric.
Intelligent.
daimler.com/products/vans
Fit for many different customers and uses. The new Sprinter is the first
customized complete system solution from Mercedes-Benz Vans to hit the road
for a wide variety of sectors. This large van also rings in the digital age in its
category and epitomizes Mercedes-Benz Vans' evolution from a pure vehicle
manufacturer to a provider of holistic transportation and mobility solutions. Thanks
to its extensive connectivity, the Sprinter enables customers to take full advantage
of the connectivity services of Mercedes PRO as a platform for present and future
services, solutions, and digital services related to daily business. It also offers the
all-new MBUX (Mercedes-Benz User Experience) multimedia system. Thanks to its
more than 1,700 different variants, the third generation of this bestseller in the
van portfolio is equal to just about every transportation task.
C
S.MB 3042
13
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
GN
Electric.
GD-CT 207
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
15
EQ.
Flipping the switch to meet new customer wishes. Intelligent electric
mobility combined with attractive design, outstanding driving pleasure,
great suitability for daily use and exemplary safety - that's what the young
product and technology brand EQ stands for. It represents the Mercedes-Benz
brand's values - emotion and intelligence - and offers all the essential aspects
of customer-oriented electric mobility. Above and beyond the electric vehicles
themselves, EQ offers a comprehensive electric mobility ecosystem of products,
services, technologies and innovations such as wallboxes and charging services.
The EQ brand will start its electric product offensive in mid-2019. By the year
2022, the entire portfolio of Mercedes-Benz Cars will include more than 130
electric variants.
Digital.
Connected.
Sprinter.
Hol
Intuitive.
Emotive.
MBUX.
LAWIN
@
A-Class 2
Sport Sedan
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
7
A unique customer experience for drivers and passengers. The new A-Class
from Mercedes-Benz is the first production model series to offer the MBUX
multimedia system (Mercedes-Benz User Experience), which heralds a new era
of Mercedes me connectivity. The system's special feature is its ability to learn
by means of artificial intelligence. MBUX can be customized and adapts itself to
its user. Thanks to its intuitive operating concept, it creates an emotional bond
between the vehicle, the driver and the passengers. MBUX is standard equipment
also in the A-Class L Sedan, the model variant with a long wheelbase that was
developed exclusively for the Chinese market.
mercedes-benz.com/en/eq/about-eq
#swichto EQ
Meetings and participants
The Audit Committee met six times in financial year 2018. All
of these meetings were also attended by the Chairman of
the Supervisory Board, Dr. Manfred Bischoff, as a permanent
guest. The other permanent participants at the meetings
were the Chairman of the Board of Management, the members
of the Board of Management responsible for Finance and
Controlling and for Integrity and Legal Affairs, and the external
auditors. The heads of specialist departments such as
Accounting, Internal Auditing, Group Compliance and Legal were
also present to report on individual items of the agenda.
Audit Committee Chairman Dr. Clemens Börsig and Joe Kaeser
served as the shareholder representatives on the Audit
Committee in financial year 2018. Both are independent and
have expertise in the field of financial reporting, as well as
special knowledge of and experience in the auditing of financial
statements and the application of methods of internal control.
During financial year 2018, the employees were represented on
the Audit Committee by Michael Brecht as the Deputy Chairman
of the Committee and by Ergun Lümali.
On the basis of applicable law, the German Corporate
Governance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals
primarily with questions of accounting, financial reporting and
non-financial reporting. In addition, it deals with the annual
audit and reviews the qualifications and independence of the
external auditors. Furthermore, it discusses the effectiveness
and functional capabilities of the risk management system, the
internal control system, the internal auditing system and
the compliance management system. After the external auditors
are elected by the Annual Shareholders' Meeting, the Audit
Committee engages the external auditors to conduct the annual
audit and the auditors' review of interim financial statements,
determines the important audit issues and negotiates the audit
fees with the external auditors. The Audit Committee also
commissions the external auditors to carry out a voluntary review
of the non-financial report within the framework of a limited
assurance engagement.
Responsibility
As Chairman of the Audit Committee, I am very pleased to
report to you on the tasks and activities performed by that body
in financial year 2018.
Dear Shareholders,
Report of the Audit Committee
In addition, the Chairman of the Audit Committee held regular
individual discussions, for example with the aforementioned
members of the Board of Management, the external auditors
and, if required, the heads of the relevant specialist depart-
ments. Such individual discussions were mainly held to prepare
for the next committee meetings.
Equal representation
Reporting to the Supervisory Board
As in previous years, the Audit Committee conducted a self-
evaluation of its own activities also in 2018 on the basis of
an extensive company-specific questionnaire. The results of
this efficiency review were once again very positive and were
presented and discussed in the meeting on February 13, 2019.
This did not result in any need for action with regard to the
Committee's tasks, or with regard to the content, frequency or
procedure of its meetings.
Topics in 2018
191
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Dr. Clemens Börsig
Chairman
Милена
The Audit Committee
Stuttgart, February 2019
D❘ CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Efficiency review
In another meeting on February 13, 2019, the Audit Committee
reviewed and discussed in detail the annual financial statements,
the consolidated financial statements and the combined
management report for Daimler AG and the Daimler Group for
financial year 2018, each of which had been issued with an
unqualified auditor's opinion by the external auditors, as well
as the proposal on the appropriation of profits and the non-
financial report, which was issued with a report in accordance
with ISAE 3000. At the meeting, the external auditors
reported on the results of their audit and focused in particular
on the key audit matters and on the audit approach applied in
each case, including the conclusions drawn. They also reported
on the voluntary review of the non-financial report within the
framework of a limited assurance engagement and were available
to answer supplementary questions and to provide additional
information. The audit reports on the annual financial statements
and consolidated financial statements (including the key
audit matters in the audit opinions) and on the internal control
system (ICS), the report concerning the non-financial report
for 2018 and important issues related to financial reporting were
discussed with the external auditors. The Audit Committee
also discussed the risk management system (RMS). Following
an in-depth review and discussion, the Audit Committee
recommended that the Supervisory Board approve the financial
statements, the combined management report, the declaration
on corporate governance included in the corporate governance
report, the non-financial report and the recommendation of
the Board of Management to pay a dividend of €3.25 per share
entitled to a dividend. Furthermore, the Audit Committee
approved the Report of the Audit Committee for financial year
2018.
Company and consolidated financial statements 2018
In the meeting held on February 5, 2019, the Audit Committee
dealt with the preliminary figures of the annual financial
statements and the annual consolidated financial statements
for the year 2018, as well as with the proposal on the appro-
priation of profits made by the Board of Management. Following
an in-depth review, the Audit Committee took positive note of
the presented figures and determined that no objections were
to be made to their proposed publication. The Committee
further recommended that the Supervisory Board, which met
immediately thereafter, adopt the same view. The preliminary
key figures and the proposal on the appropriation of profits were
announced at the Annual Press Conference on February 6,
2019.
In the meeting held in October 2018, the Audit Committee
dealt with the interim financial report for the third quarter of
2018 and the quarterly reports from the Group Compliance
and Legal departments. In addition, the Committee conducted
its annual review of the authorized external auditor services
in accordance with the appendix to the Audit Committee's rules
of procedure and also adopted a resolution to retain for
financial year 2019 the catalog updated at the beginning of 2018.
Finally, the Audit Committee agreed to raise the framework
of approval for engaging the external auditors to provide non-
audit services during the period January 1, 2018 to February
15, 2019.
In the meeting held in July 2018, the Audit Committee dealt
mainly with the second-quarter results, the risk report and
the quarterly reports from the Group Compliance, Legal and
Internal Auditing departments.
In the same meeting in June 2018, the Audit Committee
addressed current financial accounting issues in detail, in
particular new regulations for financial reporting in accor-
dance with IFRS 16 (Leases), the draft paper from the European
Securities and Markets Authority (ESMA) regarding central
electronic reporting and its implications for Daimler AG and
accounting procedures for research and development costs.
The Committee also discussed the approach to be taken for the
creation and examination of the non-financial report for 2018.
Finally, the Audit Committee took note of a report on pension-,
refinancing- and tax-risk management and also discussed
with the Board of Management the annual report produced by
the Group's Data Protection Officer.
further development. It also discussed the methods and
processes of, and possible changes to, the internal control
system, which along with accounting also includes the
internal auditing function and the compliance management
system. In addition, the Committee was informed about
the Group's legal system and the Group's legal risk reporting. In
this meeting, the Committee also defined planning measures
and the key audit issues for the external audit of financial year
2018. The meeting was also used to discuss the results of
the internal quality analysis of the external audit for financial
year 2017.
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
190
In its meeting in June 2018, the Audit Committee was informed
about recent measures taken in connection with the admin-
istrative order issued by the German Federal Motor Transport
Authority for the recall of the Vito OM622 and about the
discussions held in May and June 2018 at the German Federal
Ministry of Transport and Digital Infrastructure. The Audit
Committee then discussed aspects of the Group's risk manage-
ment system and dealt in particular with its changes and
The meeting of the Audit Committee in April 2018 took place
within the framework of the Supervisory Board meeting that
was held abroad in Budapest. Along with the interim financial
report for the first quarter of 2018, the Audit Committee also
dealt with the quarterly reports from the Group Compliance,
Legal and Internal Auditing departments. In addition, as a
result of changes made to the scope of responsibility of the BPO,
the Audit Committee dealt with amendments to be made to
its rules of procedure with regard to the regular report that must
be submitted to it. The Audit Committee also approved the
fees agreed upon with the external auditors for financial year
2018 after the Annual Shareholders' Meeting made its
decision on April 5, 2018 regarding the election of the proposed
external auditors for the annual financial statements and the
consolidated financial statements.
In the meetings during 2018 related to the quarterly results,
the Audit Committee discussed the interim financial reports
before their publication with the Board of Management and
with the external auditors engaged to carry out the auditor's
review of interim financial statements. In addition, the Committee
received reports from the Internal Auditing, Group Compliance
and Legal departments. The Board of Management reported
regularly to the Audit Committee on the current status of the
main legal proceedings, including the inquiries, investigations,
proceedings and administrative orders in connection with
diesel exhaust emissions. In addition, the Audit Committee
regularly dealt with notifications concerning possible
violations of rules submitted by employees and third parties
to the Group's own whistleblower system BPO (Business
Practices Office).
In this meeting, the Audit Committee also discussed the report
on the total fees paid to the external auditors in financial
year 2017 for auditing and non-auditing services and defined
the framework of approval for engaging the external auditors
to provide non-audit services during the period January 1, 2018
to February 15, 2019. In this context, the Audit Committee
also reviewed the authorized external auditor services in accor-
dance with the appendix to the Audit Committee's rules of
procedure and adopted a resolution to update the appendix.
The Audit Committee also decided to recommend to the
Supervisory Board, and subsequently to the Annual Shareholders'
Meeting, that KPMG AG Wirtschaftsprüfungsgesellschaft be
engaged to conduct the annual external audit and the external
auditors' review of interim financial reports for financial year
2018 and also to conduct the external auditor's review of interim
financial reports for financial year 2019 in the period leading
up to the Annual Shareholders' Meeting in 2019. The Audit
Committee based this recommendation on the quality of
the annual audit and the results of the independence review,
for which no indications of partiality or a threat to indepen-
dence were found. Subject to the election of the proposed
external auditors by the Annual Shareholders' Meeting,
the Audit Committee also discussed the proposal to be made
regarding the fees to be agreed upon with the external
auditors for financial year 2018. Finally, within the framework of
its responsibility, the Audit Committee dealt with the draft
agenda for the 2018 Annual Shareholders' Meeting and the
annual audit plan for 2018 of the Internal Auditing department.
and important issues related to accounting were discussed with
the external auditors. In addition, the Audit Committee also
discussed the risk management system (RMS). Following an
in-depth review and discussion, the Audit Committee
recommended that the Supervisory Board approve the financial
statements, the combined management report, the non-
financial report, the proposal on the appropriation of profits, and
the recommendation of the Board of Management to pay a
dividend of €3.65 per share entitled to a dividend. Furthermore,
the Audit Committee approved the Report of the Audit
Committee for the financial year 2017.
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE 189
Dr. Clemens Börsig, Chairman of the Audit Committee
In another meeting held on February 9, 2018, the Audit
Committee dealt with the annual financial statements, the
consolidated financial statements and the combined man-
agement report for Daimler AG and the Daimler Group for the
financial year 2017, each of which had been issued with an
unqualified auditor's opinion by the external auditors, as well
as with the proposal on the appropriation of profits. During
the meeting, the Audit Committee focused in particular on the
key audit matters described in each audit opinion and on the
audit approach applied in each case, including the conclusions
drawn. The Audit Committee also reviewed and discussed
the non-financial report, which was prepared for the first time.
The external auditors reported on the results of their audit
and on the voluntary review of the non-financial report within
the framework of a limited assurance engagement, and
were also available to answer supplementary questions and to
provide additional information. The audit reports on the
annual company and consolidated financial statements (including
the combined management report) and the internal control
system (ICS), the report concerning the non-financial report,
In the meeting held on January 31, 2018, the Audit Committee
dealt with the preliminary figures of the annual financial
statements and the annual consolidated financial statements
for the year 2017, as well as with the proposal on the
appropriation of profits made by the Board of Management.
Following an in-depth review, the Audit Committee took
positive note of the presented figures and determined that no
objections were to be made to their proposed publication.
The Committee further recommended that the Supervisory
Board, which met immediately thereafter, adopt the same
view. The preliminary key figures and the proposal on the appro-
priation of profits were announced at the Annual Press
Conference on February 1, 2018.
The Chairman of the Audit Committee informed the Supervisory
Board about the activities of the Committee and about the
contents of its meetings and discussions in the following
Supervisory Board meetings.
188
Presidential Committee
D | CORPORATE GOVERNANCE | CONTENTS
Guidelines for behaving with integrity
Principles of our actions
German Corporate Governance Code
Corporate government in practice
Supervisory Board
D & O insurance deductible for the
Declaration of compliance with the German
Corporate Governance Code
Corporate Governance Report
Declaration on Corporate Governance,
191-201
- Topics dealt with
Meetings and participants
Responsibilities and composition
188-190
Report of the Audit Committee
D | Corporate Governance
The Board of Management and the Supervisory Board of Daimler AG
are committed to the principles of good corporate governance.
Our actions take place within the framework of responsible, trans-
parent and sustainable corporate governance.
What we expect of our business partners
Risk management at the Group
Accounting principles
Composition and mode of operation of the
Shareholders and the Shareholders' Meeting
Supervisory Board
Board of Management
Board of Management and the Supervisory Board
Overall requirements for the composition of the
in executive positions
Law for the equal participation of woman and men
S.MB 1851
187
Mediation Committee
Nomination Committee
Declaration on Corporate Governance,
Supervisory Board
Composition and mode of operation of the
Supervisory Board and its Committees
Diversity
CASE Steering Committee
Board of Management
Board of Management
Audit Committee
Corporate Governance Report
D.01
Declaration by the Board of Management and the
Supervisory Board of Daimler AG pursuant to
Section 161 of the German Stock Corporation Act
(AktG) regarding the German Corporate Gover-
nance Code
Within the framework of the strategic approach adopted by the
Board of Management, the Steering Committee defines the
management model and the strategic guidelines for CASE. The
Board of Management has defined rules of procedure for the
Steering Committee. The Committee can make changes to these
rules on its own authority, provided such changes do not
affect the steering model.
The Steering Committee consists of the Chairman of the Board
of Management, who is also responsible for Mercedes-Benz
Cars, as well as the members of the Board of Management
responsible for Finance & Controlling/Daimler Financial
Services, Mercedes-Benz Cars Marketing & Sales, and Group
Research & Mercedes-Benz Cars Development. The Chairman
of the Board of Management is also the Chairman of the Steering
Committee. In line with the Committee's structure as described
above, the members of the Steering Committee at December
31, 2018 were Dr. Dieter Zetsche (Chairman), Bodo Uebber,
Britta Seeger and Ola Källenius.
approval, as well as the areas of responsibility of individual
Board members, remain unchanged despite the creation of the
Committee.
The Board of Management has formed a Steering Committee
consisting of Board of Management members to address the
future-oriented CASE topics of connectivity (Connected), auto-
mated and autonomous driving (Autonomous), flexible use
(Shared & Services) and electric drive systems (Electric). The
responsibilities of the Board of Management as a whole, in
particular those regarding the catalog of issues that require its
CASE Steering Committee
The Board of Management has also given itself a set of rules of
procedure, which can be seen on our website at daimler.
com/dai/rop. Those rules describe, for example, the procedure
to be observed when passing resolutions and ways to avoid
conflicts of interest.
For certain types of transactions defined by the Supervisory
Board, the Board of Management requires the prior consent of
the Supervisory Board. At regular intervals, the Board of
Management reports to the Supervisory Board on the strategy
of the business units, corporate planning, profitability, business
development and the situation of the Group, as well as on the
internal control system, the risk management system and the
compliance management system. The Supervisory Board has
specified the information and reporting duties of the Board of
Management.
pages 217 ff of the Annual Report 2018. Such features
include the Company's whistleblower system, the BPO
(Business Practices Office), which enables Daimler employees
and external whistleblowers to report misconduct anywhere
in the world. The tasks of the Board of Management also include
establishing and monitoring an appropriate and efficient risk
management system.
on
The Board of Management prepares the consolidated interim
reports, the annual company financial statements of Daimler
AG, the annual consolidated financial statements, and the
combined management report of the Company and the Group,
as well as the separate combined non-financial report produced
for Daimler AG and the Group. Together with the Supervisory
Board, the Board of Management issues the declaration of
compliance with the German Corporate Governance Code each
year. It ensures that the provisions of applicable law, official
regulations and the Group's internal guidelines are adhered to,
and works to make sure that the companies of the Group
comply with those rules and regulations. The Board of Man-
agement has also established an adequate compliance
management system that takes into account the Company's
risk situation. The main features of this system are described
Irrespective of this overall responsibility, the individual members
of the Board of Management manage their allocated areas
on their own responsibility and within the framework of the
instructions approved by the entire Board of Management.
Specific issues defined by the Board of Management as a whole
are dealt with by the Board as a whole, which must approve all
related decisions. The Chairman of the Board of Management
coordinates the work of the Board of Management.
The Board of Management manages Daimler AG and the
Daimler Group. With the consent of the Supervisory Board, the
Board of Management determines the Group's strategic focus,
defines the corporate goals, and makes decisions concerning
operational planning matters. The members of the Board of
Management must represent the interests of the Company
and share responsibility for managing the Group's entire
business.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
194
In accordance with the Articles of Incorporation of Daimler AG,
the Board of Management has at least two members. The pre-
cise number of Board of Management members is determined
by the Supervisory Board. The Board of Management had eight
members on December 31, 2018. In accordance with German
law on the equal participation of women and men in executive
positions, the Supervisory Board has set a target for the propor-
tion of women on the Board of Management and a deadline
for achieving this target. The details are described in a separate
section: page 197. With regard to the composition of the
Board of Management, the Supervisory Board has also adopted
a diversity concept that is embedded in an overall require-
ments profile. The details of this concept are also described in
a separate section: page 198.
Board of Management
Daimler AG is obliged by the German Stock Corporation Act (AktG)
to apply a dual management system featuring strict personal
and functional separation between the Board of Management
and the Supervisory Board (two-tier board). Accordingly, the
Board of Management manages the company while the Super-
visory Board monitors and advises the Board of Management.
Along with the composition of the Steering Committee, the
responsibilities of its Chairman, the responsibility for the rules
of procedure and the options available for establishing other
CASE bodies below the Steering Committee, the rules of proce-
dure of the Steering Committee also define the structure and
format of Committee meetings and the adoption of resolutions,
as well as the rules on reporting to the Board of Management
of Daimler AG.
Composition and mode of operation of the
Board of Management > D.01
Diversity
Targeted support for women on the basis of the best-mix principle
was a central component of our diversity management activities
even before the legislation on the equal participation of women
and men in executive positions went into effect. Such support
has also included and continues to include flexible working-time
arrangements, company nurseries and special mentoring
programs for women. In order to meet legal requirements, the
Board of Management has defined targets for the proportion
of women at the two management levels below the Board of
Management and a deadline for achieving those targets. The
details are described in a separate section. Independently of the
legal requirements, Daimler continues to affirm the goal it
already set itself in 2006 of increasing the proportion of women
in executive positions at the Group to 20% by 2020. At the end
of 2018, this proportion was 18.8% (2017: 17.6%).
CICABR
In 2018, the Supervisory Board once again commissioned an
external review of the separate combined Non-Financial
Report of Daimler AG and the Group within the framework of a
limited assurance engagement. The external auditors issued
a report concerning their limited assurance engagement on the
Non-Financial Report in accordance with ISAE 3000, which
the Supervisory Board then approved after reviewing the Non-
Financial Report and discussing it with the external auditors.
The Supervisory Board reviews the annual company financial
statements, the annual consolidated financial statements and
the combined management report of the Company and the
Group, as well as the proposal for the appropriation of distrib-
utable profits. Following discussions with the external auditors
and taking into consideration the audit reports of the external
auditors and the results of the review by the Audit Committee,
the Supervisory Board states whether, after the final results of
its own review, any objections are to be raised. If that is not the
case, the Supervisory Board approves the financial statements
and the combined management report. Upon being approved,
the annual financial statements are adopted. The Supervisory
Board reports to the Annual Shareholders' Meeting on the
results of its own review and on the manner and scope of its
supervision of the Board of Management during the previous
financial year. The Report of the Supervisory Board for the year
2018 is available on pages 46 ff of the Annual Report 2018
and on the Internet at ④daimler.com/dai/sb.
on
The Supervisory Board decides on the system of remuneration
for the Board of Management, reviews it regularly, and
determines the total individual remuneration of each member
of the Board of Management with consideration of the ratio
of Board of Management remuneration to the remuneration of
the senior executives and the workforce as a whole, also with
regard to development over time. For this comparison, the Super-
visory Board has defined the senior executives by applying
Daimler's internal terminology for the hierarchical levels and has
defined the workforce of Daimler AG in Germany as the relevant
workforce. Variable components of remuneration are generally
based on an assessment period that lasts several years and
is essentially future-oriented. Multi-year variable remuneration
components are not paid out until they become due. The
Supervisory Board has set upper limits for individual Board of
Management remuneration in total and with regard to its
variable components. Further information on Board of Manage-
ment remuneration can be found in the Remuneration Report
pages 120 ff of the Annual Report 2018.
page 197 of the Annual Report 2018. With regard to the
composition of the Board of Management, the Supervisory
Board has also adopted a diversity concept that is embedded
in an overall requirements profile. The details of this concept
are also described in a separate section:
page 198 of the
Annual Report 2018.
The Supervisory Board's duties include appointing and, if
necessary, recalling the members of the Board of Management.
Initial appointments are usually made for a period of three
years. In accordance with German legislation on equal partici-
pation by women and men in executive positions, the Super-
visory Board has defined a target for the proportion of women
on the Board of Management and a deadline for achieving this
target. The details are described in a separate section:
between the meetings of the Supervisory Board - to the
Chairman of the Supervisory Board.
The Supervisory Board monitors and advises the Board of
Management with regard to its management of the Group. At
regular intervals, the Board of Management reports to the
Supervisory Board on the strategy of the business units, corpo-
rate planning, revenue development, profitability, business
development and the situation of the Group, as well as on the
internal control system, the risk management system, and the
compliance management system. The Supervisory Board has
retained the right of approval for transactions of fundamental
importance. Furthermore, the Supervisory Board has specified
the information and reporting duties of the Board of Manage-
ment to the Supervisory Board, to the Audit Committee and -
The members of the Supervisory Board attend on their own
responsibility courses of training and further training that
might be necessary for the performance of their tasks, and are
supported by the Company in doing so. Such courses may
address corporate governance, changes brought about by new
legislation, or the launch of new products and pioneering tech-
nologies, for example. New members of the Supervisory Board
are offered an “onboarding” program that gives them the
opportunity to exchange views with members of the Board of
Management and other executives on current issues related to
the various areas of responsibility of the Board of Management,
and thus to obtain an overview of important topics at the Group.
The Supervisory Board is to be composed so that its members
together are knowledgeable about the business sector in which
the Company operates and also dispose of the knowledge,
skills and specialist experience that are required for the proper
execution of their tasks. According to the law on the equal
participation of women and men in executive positions, at least
30% of the members of the Supervisory Board of Daimler AG
must be women and at least 30% must be men. The details are
described in a separate section: O page 197 of the Annual
Report 2018. With regard to its composition, the Supervisory
Board has also created an overall requirements profile
consisting of a skills profile and a diversity concept to be applied
to the entire Supervisory Board. Details of the overall
requirements profile are also described in a separate section:
page 199 ff of the Annual Report 2018. Proposals by
the Supervisory Board of candidates for election by the Share-
holders' Meeting as members representing the shareholders
of Daimler AG, for which the Nomination Committee makes
recommendations, aim to fulfill the overall requirements
profile of the Supervisory Board as a whole.
Information on the curricula vitae of the members of the
Supervisory Board are posted on our website at daimler.
com/dai/sb. Information on other mandates held by the
members of the Supervisory Board can also be found on
pages 54 f of the Annual Report 2018.
In accordance with the German Codetermination Act (MitbestG),
the Supervisory Board of Daimler AG comprises 20 members.
Half of them are elected by the shareholders at the Shareholders'
Meeting. The other half comprises members who are elected
by the Group's employees who work in Germany. The members
representing the shareholders and the members representing
the employees are equally obliged by law to act in the Company's
best interests.
Supervisory Board
Composition and mode of operation of the
Supervisory Board and its committees
195
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Diversity management has been part of the corporate strategy
of Daimler since 2005. We rely on the diversity of our employ-
ees and the differences between them because such differ-
ences form the foundation for an effective and successful com-
pany. The aim of our activities is to bring together the right
people to tackle our challenges, create a work culture that pro-
motes the performance, motivation and satisfaction of our
employees and managers, and help attract new target groups to
our products and services. Our activities for shaping diversity
at Daimler focus on three areas: best mix, work culture and cus-
tomer interaction. With our specific measures, activities and
initiatives for everything from training formats for employees
and managers to workshops, conferences, guidelines and target
group-specific communication and awareness-raising measures,
our diversity management system makes a major contribution
to the further development of our corporate culture.
The Declaration on Corporate Governance pursuant to Section 289f and Section 315d of the German
Commercial Code (HGB) has been combined for Daimler AG and the Daimler Group as well as
with the Corporate Governance Report. The following statements thus apply to Daimler AG and
the Daimler Group insofar as not otherwise stated. The Declaration on Corporate Governance,
which is combined with the Corporate Governance Report, can also be viewed on the Internet at
daimler.com/dai/gcgc. Pursuant to Section 317 Subsection 2 Sentence 6 of the German
Commercial Code (HGB), the purpose of the audit of the statements pursuant to Section 289f Sub-
sections 2 and 5 and Section 315d of the HGB is limited to determining whether such statements
have actually been provided.
ratifies
the actions of
Board of Management
We have also reached agreement on "Principles of Social
Responsibility" with the World Employee Committee. These
principles apply at Daimler AG and throughout the Group. In
the Principles of Social Responsibility, Daimler commits itself
to the principles of the UN Global Compact and thus to
internationally recognized human and workers' rights, freedom
of association, sustainable protection of the environment
and the proscription of child labor and forced labor. Daimler
also commits itself to guaranteeing equal opportunities and
adhering to the principle of “equal pay for equal work."
Our Integrity Code is based on a shared understanding of
values, which we developed together in a dialogue with Daimler
employees. The Code defines our principles of behavior in
daily business. This applies to interpersonal conduct within the
company as well as conduct toward customers and business
partners. These central principles include compliance with laws,
as well as fairness and responsibility, for example. In addition
to general principles of behavior, the Code includes requirements
and regulations concerning respect for and the protection of
human rights and dealing with conflicts of interest. It also pro-
hibits all forms of corruption. The Integrity Code applies to
all companies and employees at the Daimler Group worldwide.
The Integrity Code is available on the Internet at daimler.
com/dai/caag.
Integrity Code
Our business conduct is based on Group-wide standards that
go beyond the requirements of relevant legislation and the
German Corporate Governance Code. These standards are
based on our four corporate values integrity, respect, passion
and discipline. In order to achieve viable and thus sustainable
business success on this basis, our goal is to ensure that
our activities are in harmony with the environment and society.
This is due to the fact that we, as one of the world's leading
automakers, also strive to be a leader in sustainability. We have
defined the most important principles in our Integrity Code,
which serves as a frame of reference for compliant and ethical
conduct in everyday activities for all employees at Daimler AG
and the Group.
The principles guiding our conduct
Beyond the legal requirements of German stock corporations,
codetermination and capital market legislation, Daimler AG has
followed and continues to follow the recommendations of the
German Corporate Governance Code ("Code") with the exception
disclosed and justified in the declaration of compliance.
Daimler AG has also followed and continues to follow the sug-
gestions of the Code with just one exception: Deviating
from the suggestion in Clause 2.3.3, which stipulates that
companies should enable shareholders to view the Shareholders'
Meeting with modern communications media such as the
Internet, the Shareholders' Meeting is not transmitted in its
entirety on the Internet, but only until the end of the report
by the Board of Management, in order to protect the character
of the Shareholders' Meeting as a meeting attended by our
shareholders in person. An additional factor is that continuing
the broadcast after that point, in particular broadcasting
comments made by individual shareholders, could impair the
discussion between shareholders and management.
German Corporate Governance Code
The main principles applied in our corporate
governance
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
192
This declaration and previous, no longer applicable, declara-
tions of compliance from the past five years are also available
on our website at ④daimler.com/dai/gcgc.
For the Board of Management
Dr. Dieter Zetsche
Chairman
For the Supervisory Board
Dr. Manfred Bischoff
Chairman
Stuttgart, December 2018
As in previous years, the Directors' & Officers' liability insurance
(D&O insurance) also contains a provision for a deductible for
the members of the Supervisory Board, which is appropriate in
the view of Daimler AG. However, this deductible does not
correspond to the legally required deductible for members of the
Board of Management in the amount of at least 10% of the
damage up to at least one and a half times the fixed annual
remuneration. Since the remuneration structure of the Super-
visory Board is limited to function-related fixed remuneration
without performance bonus components, setting a deductible
for Supervisory Board members in the amount of 1.5 times
the fixed annual remuneration would have a disproportionate
economic impact when compared with the members of the
Board of Management, whose compensation consists of fixed
and performance bonus components.
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3)
Daimler AG satisfies the recommendations of the German
Corporate Governance Code published in the official section of
the German Federal Gazette on April 24, 2017 in the Code
version dated February 7, 2017, with the exception of Clause 3.8
Paragraph 3 (D&O insurance deductible for the Supervisory
Board), and will continue to observe the recommendations with
the aforesaid deviation. Since the issuance of the last
compliance declaration in December 2017, Daimler AG has
observed the recommendations of the German Corporate
Governance Code, with the aforementioned exception.
Expectations for our business partners
8 members
We also require our business partners to adhere to compliance
stipulations because we regard our business partners' integrity
and behavior in conformity with regulations as an indispensable
prerequisite for trusting cooperation. When selecting our
direct business partners, we therefore pay close attention that
they comply with the law and follow ethical principles, and
that they pay the same attention themselves towards other
partners in the supply chain. For the expectations we place
on our business partners, see also ④ daimler.com/sus/obr.
pages 143ff of the Annual Report 2018. The risk manage-
ment system is one component of the overall planning,
controlling and reporting process. Its goal is to enable the
company's management to recognize significant risks at
an early stage and to initiate appropriate countermeasures in a
timely manner. At least once a year, the Audit Committee
discusses the effectiveness and functionality of the risk manage-
ment system with the Board of Management. The Chairman
of the Audit Committee reports to the Supervisory Board on the
committee's work at the latest in the meeting of the Super-
visory Board following each committee meeting. The Supervisory
Board also deals with the risk management system on the
occasion of the approval of the operational planning and the
audit of the annual company and consolidated financial
statements. In addition, the Board of Management regularly
informs the Audit Committee and the Supervisory Board of
the most important risks facing the Company and the Group as
a whole. The Chairman of the Supervisory Board has regular
contacts between Supervisory Board meetings with the Board
of Management, and in particular with the Chairman of the
Board of Management, to discuss not only the Group's strategy
and business development but also the issue of risk man-
agement. The Internal Auditing department monitors adherence
to the legal framework and to Group standards by means of
targeted audits and initiates appropriate actions as required.
appoints,
advises and
monitors
reports
20 members
Supervisory Board
elects members
representing the
shareholders,
ratifies the
actions of
reports
reports
Annual Shareholders' Meeting
Risk management at the Group
Daimler has a risk management system commensurate with
its size and position as a company with global operations,
Governance structure
The Audit Committee instructed the external auditors to imme-
diately inform the Committee Chairman of any indications of
partiality or grounds for exclusion uncovered during the audit or
the auditors' review of interim financial statements, and of all
key findings and events relevant to the tasks of the Supervisory
Board, particularly findings or events related to suspected
irregularities in accounting. The Audit Committee also reached
an agreement with the external auditors stipulating that the
external auditors would inform the Audit Committee, and make
a note in the audit report, of any facts uncovered during the
annual audit that would reveal inaccuracies in the Board of
Management's and the Supervisory Board's declaration of
compliance with the German Corporate Governance Code.
Prior to issuing its recommendation to the Annual Shareholders'
Meeting, the Audit Committee of the Supervisory Board
obtained a declaration from the external auditors under consid-
eration. The external auditors were requested to state whether
any business, financial, personal or other relationships existed
between the external auditors and their bodies and audit
managers on the one hand, and the Company and the members
of its bodies on the other, which could justify concerns
regarding a conflict of interest. This statement also describes
the extent to which other services were performed for the
Daimler Group in the previous year or had been contractually
agreed upon for the following year.
was elected to conduct the audit of the annual company financial
statements and consolidated financial statements, and the
external auditors' review of interim financial reports, for financial
year 2018, as well as the external auditors' review of interim
financial reports for financial year 2019 in the period leading
up to the Shareholders' Meeting in 2019. Since 2014, the
responsible auditor commissioned to carry out the external audit
has been Dr. Axel Thümler. KPMG AG Wirtschaftsprüfungsgesell-
schaft has been conducting the audit of the annual company
financial statements and consolidated financial statements of
Daimler AG since the 1998 financial year.
193
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Based on the recommendation of the Audit Committee, the
Supervisory Board submits a decision proposal to the Share-
holders' Meeting for the election of the external auditors for
the annual company financial statements, for the consolidated
financial statements and for the auditors' review of interim
financial reports. At the Annual Shareholders' Meeting on April
5, 2018, KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin,
Daimler prepares its consolidated financial statements and
interim financial reports in accordance with the International
Financial Reporting Standards (IFRS), as adopted by the Euro-
pean Union. The annual financial statements of Daimler AG are
prepared in accordance with the accounting standards of
the German Commercial Code (HGB). Daimler prepares both half-
yearly and quarterly financial reports. The annual company
financial statements and consolidated financial statements of
Daimler AG are audited by external auditors; interim financial
reports are reviewed by external auditors. The consolidated
financial statements and the Group management reports are
made publicly accessible via the Company's website within 90
days from the end of the reporting year; the interim financial
reports are made publicly accessible in the same manner within
45 days from the end of the reporting period.
Accounting and the external audit
Information on the areas of responsibility and the curricula
vitae of the Board of Management members is posted on the
Daimler AG website at ④ daimler.com/dai/bom. The mem-
bers of the Board of Management and their areas of responsi-
bility are also listed on
pages 44f of the Annual Report
2018.
Corporate
Governance
The Supervisory Board has given itself a set of rules of proce-
dure, which regulate not only its duties and responsibilities and
the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. The rules of procedure
of the Supervisory Board can be viewed on our website at
daimler.com/dai/rop.
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Partnership with the employees
208
Data compliance
221
Mobility services
209
Anti-financial-crime compliance
222
Human-rights compliance
222
Employee Issues
210
210
Statement on the Review of the
Non-Financial Report
224
High attractiveness as an employer
210
A competitive workforce
212
Health management and safety at work
Environmental protection in production
214
221
208
Political dialogue and representation of interests
216
Sustainability management in the supply chain
205
Compliance
217
Environmental Issues
206
Our Compliance Management System
217
Climate protection
206
Anti-corruption compliance
220
Clean air
207
Antitrust compliance
220
Conservation of resources
Technical compliance
The information provided in this report is presented in conformity with the GRI
Standards of the Global Reporting Initiative, insofar as this complies with applicable
law. Some aspects are presented in accordance with internal guidelines and
definitions.
Information on our business model ( page 74 ff of Annual Report 2018) and on
non-financial risks connected with the aspects presented in this report (Risk
and Opportunity Report pages 156, 157 of Annual Report 2018) is provided in
the Combined Management Report in the Annual Report 2018.
- SDG 13 - Climate Change
Through our initiative “The Road to Emission-free Driving"
and the reduction targets it sets for our fleet emissions,
we are helping to protect the planet from the effects of climate
change.
E❘ NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER
205
Sustainable corporate governance
Our sustainability objectives and their management are part
of our corporate governance system and are also included in
the targets of our executives.
The Corporate Sustainability Board (CSB) is our central man-
agement body for all sustainability issues. The CSB is headed by
Renata Jungo Brüngger (the Board of Management member
responsible for Integrity and Legal Affairs) and Ola Källenius
(the Board of Management member responsible for Group
Research & Mercedes-Benz Cars Development). The opera-
tional work is done by the Corporate Sustainability Office
(CSO), which consists of representatives from the specialist
departments and the divisions.
Integrity, compliance and legal responsibility are the corner-
stones of our sustainable corporate governance and serve as
the basis of all our actions. We view integrity and values-based
compliance as firm elements of our corporate culture and our
daily business activities - elements that contribute to our com-
pany's lasting success. The basis for this is our Integrity Code,
which defines guidelines for our everyday business conduct,
offers our employees orientation and helps them make the right
decisions even in difficult business situations. The Integrity
Code is supplemented by other in-house principles and guide-
lines.
The ten principles of the UN Global Compact provide a
fundamental guideline for our business operations. As a found-
ing member and part of the LEAD group, we are strongly
committed to the Global Compact. Our internal principles and
guidelines are founded on this international frame of reference
and other international principles, including the Core Labor
Standards of the International Labour Association (ILO), the
OECD Guidelines for Multinational Enterprises and the UN
Guiding Principles on Business and Human Rights.
Sustainability management in the supply chain
Our Supplier Sustainability Standards, which are an integral
part of our conditions of business, define our requirements for
working conditions, human rights, environmental protection,
safety, business ethics and compliance. We urgently require our
direct suppliers of goods and services all over the world to
comply with these standards.
We expect our suppliers of production materials to operate
with an environmental management system that is certified
according to ISO 14001, EMAS or other comparable standards.
We also expect this of our suppliers of non-production mate-
rials on the basis of our risk assessments. With regard to animal
protection, we require our suppliers to comply with applicable
laws and regulations. We do not tolerate or support the unethi-
cal treatment of animals.
We demand that our direct suppliers commit themselves to
observing our sustainability standards, communicating them
to their employees and to their upstream value chains, and
then checking to ensure that the standards are complied with.
We support them in these activities by providing them with
targeted information and training and qualification measures.
The central information platform for suppliers is our Daimler
Supplier Portal.
Further information is available at: ④supplier.daimler.com
Supplier review
Our employees review new suppliers of production materials
to Global Procurement Trucks & Buses in high-risk countries
by means of sustainability-related on-site assessments. At
Mercedes-Benz Cars, new suppliers in less risk-prone countries
are also investigated by our procurement and quality employ-
ees, with a specific focus on their sustainability performance.
We also conduct a more thorough assessment where this
is necessary. The results of the assessment are discussed in
management committees and flow into decisions on whether
to award a contract.
To ensure that our direct suppliers comply with the sustain-
ability standards, we regularly conduct risk analyses. We
use regular database research and other measures to discover
any violations of our sustainability and compliance rules by
our current suppliers. We systematically follow up all reports of
violations. With the help of an online survey, we also question
our main suppliers about their sustainability management and
their communication of these requirements to their upstream
value chains. On the basis of the results, we define measures
to improve their sustainability performance.
We have established a complaint-management process that
enables individuals to draw attention to possible human rights
violations at suppliers. In this context, we work together
closely with the world employee committee. We bring together
all the available information and take action if the reports
are well-founded. The suppliers are requested to respond to the
accusations; after that, we assess the facts of the case and
take the necessary measures. This can lead to the termination
of a business relationship. However, it is not always productive
to end cooperation with a supplier immediately after a case of
misconduct. It often makes more sense to work together with
the supplier to improve the situation. This approach also bene-
fits the people at the location. In addition to the complaint-
management process, information on misconduct can always
be submitted to the BPO whistleblower system
established by Daimler.
page 217)
SDG 12 - Responsible Consumption and Production
By significantly reducing the use of primary raw materials
for electric drive systems and reinforcing the material cycles
of primary raw materials that are needed for our e-drive
system, we are setting the course for sustainable production
models in line with this SDG.
Sustainable Cities and Communities
Daimler promotes sustainable mobility in urban areas
through its offerings in the areas of car sharing, ride hailing
and the multimodal linking of mobility services (Mobility as a
Service).
SDG 9 Industry, Innovation and Infrastructure
Through the advanced development of automated and
autonomous driving and the expected benefits for safety and
climate protection, we demonstrate the long-term potential
of digital innovations.
SDG 11
-
Further information on our sustainability activities can be found online at
daimler.com/sustainability and in our annual Sustainability Report, which can
be downloaded there as a PDF data file.
204
E❘ NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER
Sustainability at Daimler
Sustainability is one of the basic principles of our corporate strategy as well as a benchmark
for our success as a company. This approach means that we take advantage of the opportunities
associated with sustainability to enhance our business success, while including environmental
and social effects into our considerations.
Our strategy
We believe that a long-term sustainability strategy and effective
sustainability management are the preconditions for ensuring
that we continue to be one of the world's leading automobile
manufacturers in the future. Sustainability is therefore firmly
established as a fundamental principle of our corporate strategy
at the implementation level.
In order to identify and prioritize the sustainability aspects
that are relevant to our strategy, we regularly conduct a multi-
stage materiality analysis. This analysis combines our own
assessments with those of our stakeholders, who include our
shareholders and creditors, employees, customers and
suppliers, as well as governments, environmental and human
rights organizations and other stakeholders from civil society.
Their opinions are also always requested whenever we decide
on measures for expanding and adjusting the sustainability
aspects of our strategy.
205
In the year under review, we conducted a regular internal
assessment of current developments, which confirmed the
prioritization of key areas of action that we had established
in 2017.
Livable cities
Traffic safety
Data responsibility
Human rights
- Integrity, people and partnerships
These focal points determine the structure of our sustainability
management activities and our annual sustainability reporting.
In addition, when we identified the material aspects to be
addressed by this non-financial report, we took the focal topics
of our sustainability strategy as our starting point. However,
in some cases, we emphasize different aspects because of the
divergent requirements set by the standards and laws that
are relevant to this report.
With our strategy, we would like to help achieve the Sustain-
able Development Goals (SDGs) that were approved by the
United Nations in September 2015. Our areas of action and the
sustainability-related activities that underlie them support
the following SDGs in particular:
SDG 8 Decent Work and Economic Growth
By developing and implementing a risk-based management
approach to respecting and upholding human rights in
our own units and our supply chain, we support the imple-
mentation of decent work as defined by SDG 8.
In 2018, we continued to define the concrete details of the
Sustainability Strategy 2030 that we had formulated in the
previous year. As a result, the areas of action that had been
defined in 2017 were even more sharply focused with regard
to comprehensibility and clarity. Our activities related to
sustainability concentrate on the following focal topics:
Climate protection and air quality
Resource conservation
Sustainable corporate governance
Our standards and requirements
Stakeholder engagement
Along with Daimler AG itself, there are other Group companies
subject to codetermination law. These companies have defined
their own targets for the proportion of women on their super-
visory boards, executive management bodies and the two levels
below the board or executive management level, and have also
set deadlines for target achievement. All relevant information
here has been published in accordance with applicable law.
198
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Overall requirements profiles for the
composition of the Board of Management
and the Supervisory Board
In terms of the composition of the Board of Management and
the Supervisory Board, Daimler AG utilizes diversity concepts
that focus on aspects such as age, gender, education and pro-
fessional background. For this reason, the Company is required
to describe these concepts in its declaration on corporate gov-
ernance, and to also explain the aims of the diversity
concepts, the manner in which they are implemented and the
results achieved with them in the financial year. The Super-
visory Board has combined the diversity concepts with the
requirements of German legislation on equal participation
of women and men in executive positions and the specific
targets for the composition of executive management bodies
as defined by the recommendations in the current version of the
German Corporate Governance Code. These combined
requirements are presented in the overall requirements profiles
for the composition of the Board of Management and the
Supervisory Board described below. The requirements profiles
also serve as the basis for long-term succession planning.
They are reviewed each year, also taking into account changes
that may have been made to the German Corporate Gover-
nance Code.
Board of Management
The requirements profile for the Board of Management of
Daimler AG aims for a Board of Management with excellent
leadership skills that is as diverse and mutually supportive
as possible. The Board of Management as a whole should
possess the knowledge, skills and experience required for the
proper execution of its tasks and be composed of members
whose varied personal backgrounds and experiences ensure that
the Board as a whole also embodies the desired management
philosophy. Decisions regarding appointments to specific posi-
tions on the Board of Management are always governed by
the Company's interests under consideration of all circumstances
in each individual case.
The requirements profile for the Board of Management currently
includes in particular the following aspects, which are to be
taken into account to the greatest extent possible when making
decisions on appointments to the Board of Management:
The members of the Board of Management should have
different educational and professional backgrounds, whereby
at least two members should have a technical background.
With Dr. Dieter Zetsche and Wilfried Porth, the Board of Man-
agement currently has two members who are engineers.
Bodo Uebber is an industrial engineer. Since taking over as
Head of Group Research & Mercedes-Benz Cars Development
on January 1, 2017, Ola Källenius has sustainably displayed the
expertise he acquired in various technical management
positions within the Group.
In order to meet legal requirements on the equal representa-
tion of women and men in executive positions, the Super-
visory Board defined on December 8, 2016 a target of 12.5%
for the proportion of women on the Board of Management,
with a deadline of December 31, 2020. This means that of the
eight current members of the Board of Management, at least
one member must be a woman. The Board of Management
currently has two female members, Renata Jungo Brüngger
and Britta Seeger. This means the proportion of women on the
Board of Management is currently 25%.
In accordance with the recommendations contained in the
current version of the German Corporate Governance Code,
the Supervisory Board has set an age limit for members of
the Board of Management. As a rule, 62 years of age serves
as orientation for age-related retirement. When it set this
age limit, the Supervisory Board deliberately decided in favor
of a flexible rule allowing the required scope for the appro-
priate assessment of the circumstances of each individual
case. Seven of the eight Board of Management members
are younger than the age limit. Dr. Dieter Zetsche was older
than the age limit when he began his current term of office
in January 2017. The Supervisory Board nevertheless reap-
pointed Dr. Zetsche as Chairman of the Board of Man-
agement. This decision was taken in the best interest of the
Group in that it enabled the continuation of leadership at
the top executive level that is needed to ensure the sustained
success of the Group.
In addition, a sufficient generational mix among Board of
Management members is to be taken into account in
appointment decisions, whereby if possible at least three
members of the Board of Management should be 57
years of age or younger at the beginning of their respective
term of office. Five members of the Board of Management -
Renata Jungo Brüngger, Ola Källenius, Britta Seeger, Hubertus
Troska and Bodo Uebber - met this requirement as of
December 31, 2018.
Decisions related to the composition of the Board of Man-
agement should also take into account internationality
in terms of varied cultural backgrounds or international
experience through assignments abroad lasting several
years, whereby if possible, at least one member of the Board
of Management should come from a country other than
Germany. Irrespective of the many years of international
experience of a large majority of members of the Board
of Management, this target is currently overachieved due to
the international origins of Renata Jungo Brüngger and Ola
Källenius.
The rules of procedure of the Board of Management stipulate
that no member of the Board of Management may be a
member of more than three supervisory boards of listed
companies outside the Daimler Group or of similar boards
or committees at companies outside the Daimler Group that
have comparable requirements. This stipulation has been
met. The only listed company in which Hubertus Troska is a
member of a supervisory board or similar board outside
the Daimler Group is BAIC Motor Corporation Ltd. His other
board memberships are at joint ventures that fall within
his areas of responsibility.
The aspects described above are to be taken into consideration
when making Board of Management appointments. On the
basis of a target profile that takes into account specific qualifi-
cation requirements and the aforementioned criteria, the
Presidential Committee creates a shortlist of available candidates
whom it interviews. It then recommends a candidate to the
Supervisory Board for its approval and includes an explanation
of its recommendation. Decisions regarding appointments
to the Board of Management are always governed by the Com-
pany's interests under consideration of all circumstances
in each individual case.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 199
Supervisory Board
In accordance with applicable law, the Supervisory Board is to
be composed so that its members together are knowledgeable
about the business sector in which the Company operates.
The requirements profile for the Supervisory Board of Daimler
AG also aims for a Supervisory Board as diverse and mutually
complementary as possible. The Supervisory Board as a whole
shall understand the Company's business model and also
possess the knowledge, skills and experience needed to properly
execute its task of supervising and advising the Board of
Management, in particular, specialized knowledge in the areas
of finance, accounting, annual audits, risk management,
methods of internal control and compliance. In general, the
members of the Supervisory Board should complement
one another with regard to their specialist knowledge and
professional experience in such a manner as to ensure that
the Supervisory Board can utilize the most broadly based wealth
of experience and expertise possible when making decisions.
The Supervisory Board also views the diversity of its members
in terms of age, gender, internationality and other personal
attributes as an important foundation for effective cooperation.
The foundation for Supervisory Board decisions regarding
proposals on candidates for election at the Shareholders'
Meeting is always the Company's interests under consideration
of all circumstances in each individual case.
At December 31, 2018, 30% of the shareholder representatives in
the Supervisory Board of Daimler AG were women (Sari Baldauf,
Petraea Heynike and Marie Wieck), while 70% were men. On that
date, 30% of the employee representatives on the Supervisory
Board were women (Elke Tönjes-Werner, Sibylle Wankel and Dr.
Sabine Zimmer), while 70% were men. In its meeting on
December 12, 2018, the Supervisory Board considered its
nominations for the election at the 2019 Shareholders'
Meeting and decided, upon the recommendation of the Nomi-
nation Committee, to propose at the 2019 Annual Share-
holders' Meeting that Joe Kaeser and Dr. Bernd Pischetsrieder
be elected once again to the Supervisory Board. The legally
required gender ratio will be met both on the shareholder rep-
resentatives' side and for the Supervisory Board as a whole
if these persons are elected to the Supervisory Board, provided
that no other changes occur.
Since 2016, listed companies that have supervisory boards in
which shareholders and employees are equally represented
are required to a have proportion of at least 30% women and
30% men. This requirement has to be fulfilled by the Super-
visory Board as a whole. If the side of the Supervisory Board
representing the shareholders or the side representing the
employees objects to the Chairman of the Supervisory Board
about the application of the ratio to the entire Supervisory
Board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
On November 8, 2016, the Board of Management passed a
resolution stipulating a target of 15% women for both the first
and second management levels below the Board of Manage-
ment, with a deadline of December 31, 2020. At the time of the
resolution, the proportion of women in the first and second
management levels below the Board of Management was 8.0%
and 12.4%, respectively. At December 31, 2018, the proportion
of women at the first management level below the Board of Man-
agement was 11.8%; at the second level it was 14.4%.
On December 8, 2016, the Supervisory Board passed a resolu-
tion stipulating that the target figure for the proportion of
women on the Board of Management of Daimler AG would
be 12.5%, while the deadline would be December 31, 2020.
At December 31, 2018, the eight-member Board of Management
included two women, Renata Jungo Brüngger and Britta
Seeger. This means that women account for 25% of the Board
of Management members.
215
196
Meetings of the Supervisory Board are regularly prepared in
separate discussions of the members representing the
employees and of the members representing the shareholders
with the members of the Board of Management. The Supervisory
Board meetings during the reporting year once again included
so-called executive sessions on a regular basis for discussions
of the Supervisory Board in the absence of the members of
the Board of Management. The Supervisory Board members can
also take part in the meetings by means of conference calls
or video conferences. However, this is not the rule.
The Supervisory Board has formed four committees, which per-
form to the extent legally permissible the tasks assigned to
them in the name of and on behalf of the entire Supervisory
Board. The committee chairpersons report to the entire
Supervisory Board on the committees' work at the latest in the
meeting of the Supervisory Board following each committee
meeting. The Supervisory Board has issued rules of procedure
for each of its committees. Those rules of procedure can be
viewed on our website at daimler.com/dai/rop. Information
on the current composition of these committees can be
viewed at daimler.com/dai/sbc and is also available on
page 55 of the Annual Report 2018.
Presidential Committee
The Presidential Committee is composed of the Chairman of the
Supervisory Board, his Deputy, and two other members, who
are elected by a majority of the votes cast by the members of
the Supervisory Board.
In addition, the Presidential Committee consults and decides
on questions of corporate governance, on which it also makes
recommendations to the Supervisory Board. It supports and
advises the Chairman of the Supervisory Board and his Deputy,
and prepares the meetings of the Supervisory Board within the
limits of its responsibilities.
Nomination Committee
The Nomination Committee is composed of at least three mem-
bers, who are elected by a majority of the votes cast by the
members of the Supervisory Board representing the shareholders.
It consists solely of members representing the shareholders
and makes recommendations to the Supervisory Board concern-
ing persons to be proposed for election as members of the
Supervisory Board representing the shareholders at the Share-
holders' Meeting. In doing so, the Nomination Committee
takes into consideration the requirements of German law on
equal participation of women and men in executive positions,
as well as the recommendations of the German Corporate Gov-
ernance Code. It also strives to ensure the fulfillment of the
overall requirements profile, including the skills profile, for the
entire Supervisory Board.
The requirements profile for the Supervisory Board currently
includes the following aspects in particular:
Audit Committee
Both the Chairman of the Audit Committee, Dr. Clemens Börsig,
and the other shareholder representative on the Audit
Committee, Joe Kaeser, fulfill the criteria for independence and
have expertise in the field of financial reporting, as well as
special knowledge and experience with regard to auditing and
methods of internal control. Furthermore, due to his earlier
work at Robert Bosch GmbH and his long-standing membership
of the Supervisory Board of Daimler AG, Dr. Clemens Börsig
is also very familiar with the automotive industry.
The Audit Committee deals with the supervision of the
accounting and its process as well as with the annual external
audit. At least once a year, it discusses with the Board of
Management the effectiveness and functionality of the internal
control and risk management system, the internal auditing
system and the compliance management system. It regularly
receives reports on the work of the Internal Auditing depart-
ment and the Compliance Organization. At least four times a
year, the Audit Committee receives a report from the whistle-
blower system BPO (Business Practices Office) on complaints
and information about any breaches of regulations or guide-
lines by high-level executives, as well as violations by other
employees of the regulations in a defined catalog of legal
provisions. It regularly receives information about the handling
of these complaints and notifications.
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 197
The Audit Committee discusses with the Board of Management
the interim reports before they are published. On the basis
of the report of the external auditors, the Audit Committee
reviews the annual company financial statements and the
annual consolidated financial statements, as well as the man-
agement report of the Company and the Group, and discusses
them with the external auditors. The Audit Committee makes a
proposal to the Supervisory Board on the adoption of the
annual company financial statements of Daimler AG, on the
approval of the annual consolidated financial statements,
and on the appropriation of profits. The Committee also makes
recommendations for the Supervisory Board's proposal on
the election of external auditors, assesses those auditors'
suitability, qualifications and independence, and, after
the external auditors are elected by the Annual Shareholders'
Meeting, it engages them to conduct the audit of the annual
company and consolidated financial statements and to review
the interim reports, negotiates an audit fee, and determines
the focus of the annual audit. The external auditors report to
the Audit Committee on all accounting matters that might
be regarded as critical and on any material weaknesses of the
internal control and risk management system with regard to
accounting that might be discovered during the audit.
Finally, the Audit Committee approves permitted services
that are not directly related to the annual audit and which are
provided by the firm of external auditors or its affiliates to
Daimler AG or to companies of the Daimler Group.
Mediation Committee
The Mediation Committee is composed of the Chairman of the
Supervisory Board and his Deputy, as well as one member
of the Supervisory Board representing the employees and one
member of the Supervisory Board representing the share-
holders, each elected with a majority of the votes cast of the
shareholders' and employees' representatives, respectively.
It is formed solely to perform the functions laid down in Section
31 Subsection 3 of the German Codetermination Act (MitbestG).
Accordingly, the Mediation Committee has the task of making
proposals on the appointment of members of the Board of
Management if in the first vote the majority required for the
appointment of a Board of Management member of two thirds
of the members of the Supervisory Board is not achieved. As in
previous years, the Mediation Committee did not have to take
any action in 2018.
Germany's law on the equal participation of
women and men in executive positions
In accordance with German legislation on equal participation
by women and men in executive positions in both the private
and the public sector, the supervisory boards of listed companies
or companies subject to Germany's system of codetermination
have to set a target for the proportion of women on their board
of management. The board of management of such a company
has to set a target for the proportion of women at the two man-
agement levels below that of the board of management. If
the proportions of women at the time when these targets are
set by the board of management and the supervisory board
are below 30%, the targets may not be lower than the proportions
already reached. At the same time that the targets are set,
the boards have to set periods for their achievement, which may
not be longer than five years.
The Audit Committee is composed of four members, who are
elected by a majority of the votes cast by the members of the
Supervisory Board. The Chairman of the Supervisory Board is
not simultaneously the Chairman or a member of the Audit
Committee. The Chairman of the Supervisory Board attends
the meetings of the Audit Committee as a guest.
The members of the Supervisory Board should have different
educational and professional backgrounds. At least five
members should have completed a vocational technical training
or education program or possess specific technological
knowledge in fields such as information technology (including
digitization), chemistry, mechanical engineering or electrical
engineering. Decisions related to the composition of the
Supervisory Board should also take into account the fact that
it may be necessary for members to obtain new skills and
knowledge in order to be able to address product and market
developments. Irrespective of the specific knowledge in the
above-mentioned areas acquired by many members of the
Supervisory Board in other functions, Dr. Jürgen Hambrecht,
Dr. Bernd Pischetsrieder, Marie Wieck, Dr. Frank Weber and
Roman Zitzelsberger (three shareholder representatives
and two employee representatives) have relevant university
degrees, while another three employee representatives
have completed vocational training in the above-mentioned
fields or similar areas.
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of the
Board of Management, whereby it takes into account the over-
all requirements profile it has defined to be filled, including
the diversity concept, as well as the Supervisory Board's target
for the proportion of women on the Board of Management.
It submits proposals to the Supervisory Board on the design of
the remuneration system for the Board of Management and
on the appropriate total individual remuneration of its members.
In this context, it follows the relevant recommendations of
the German Corporate Governance Code. The Presidential
Committee is also responsible for the Board of Management
members' contractual affairs. In addition, it decides on the
granting of approval for sideline activities of the members
of the Board of Management, reports to the Supervisory Board
regularly and without delay on consents it has issued, and
once a year submits to the Supervisory Board for its approval a
complete list of the sideline activities of each member of the
Board of Management.
The rules of procedure of the Supervisory Board stipulate that
candidates for election who are to hold the position for a
full term of office should generally not be over the age of 72
at the time of election. In specifying this age limit, the
Supervisory Board has intentionally refrained from stipulating
a strict upper age limit and instead decided in favor of a
flexible general limit that leaves scope to appropriately assess
each individual case, keeps the range of potential Supervisory
Board candidates sufficiently broad, and allows reelection. In
deciding to propose Dr. Manfred Bischoff for reelection as
a shareholder representative on the Supervisory Board at the
Shareholders' Meeting in 2016, it made use of this scope
after careful consideration and proper assessment. All other
members of the Supervisory Board and the candidates Joe
Kaeser and Dr. Bernd Pischetsrieder, who are to be proposed
for reelection at the 2019 Annual Shareholders' Meeting,
will not have reached the age limit at the time of their election.
Shareholders and the Shareholders' Meeting
The shareholders exercise their membership rights, in particular
their information and voting rights, at the Shareholders'
Meeting. Each share in Daimler AG entitles its owner to one vote.
There are no multiple voting rights, preferred voting rights,
or maximum voting rights at Daimler AG. Documents and infor-
mation related to the Shareholders' Meeting can be found on
our website at daimler.com/ir/am. The Annual Shareholders'
Meeting is generally held within four months of the end of a
financial year. The Shareholders' Meeting to be held on May 22,
2019 therefore constitutes an exception, which is necessitated
by the magnitude and complexity of "Project Future", which is to
be presented at the meeting.
The Company facilitates the personal exercise of the share-
holders' rights and proxy voting in a variety of ways, such as by
appointing Company proxies who are strictly bound by the
shareholders' voting instructions and who are available during
the Shareholders' Meeting. Absentee voting is also possible.
It is possible to authorize the Daimler-appointed proxies and
give them voting instructions or to cast absentee votes by
using the e-service for shareholders.
We maintain close contacts with our shareholders in the context
of our comprehensive investor relations and public relations
activities. We regularly and comprehensively inform our share-
holders, financial analysts, shareholder associations, the
media and the interested public about the situation of the Group,
and inform them without delay about any significant changes
in its business. Within reasonable limits, the Chairman of the
Supervisory Board is also prepared to talk to investors about
specific Supervisory Board issues.
In addition to other methods of communication, we also make
extensive use of the Company's website for our investor relations
activities. All of the important information disclosed in 2018,
including annual and interim reports, press releases, voting
rights notifications from major shareholders, presentations,
and audio recordings of analyst and investor events and confer-
ence calls, as well as the financial calendar, can be found at
daimler.com/investors. All the dates of important disclosures
such as annual reports and interim reports and the dates of
the Annual Shareholders' Meeting, the annual press conference
and the analyst conferences are announced in advance in
the financial calendar. The financial calendar can also be found
inside the rear cover of the Annual Report.
Non-
Financial
Report
Citaro hybrid
Proposals by the Supervisory Board of candidates for election
by the Shareholders' Meeting as Supervisory Board members
representing the shareholders of Daimler AG, for which the
Nomination Committee makes recommendations, shall take
into consideration the aspects described above and aim to
fulfill the overall requirements profile for the Supervisory Board
as a whole. On the basis of a target profile that takes into
account specific qualification requirements and the aforemen-
tioned criteria, the Nomination Committee creates a shortlist
of available candidates with whom it conducts structured dis-
cussions in which it also determines whether the candidate
in question will have sufficient time available to perform his or
her duties on the Supervisory Board with due care. The
Nomination Committee then recommends a candidate to the
Supervisory Board for its approval and includes an explanation
of its recommendation. The foundation for Supervisory Board
decisions regarding election proposals to the Shareholders'
Meeting is always the Company's interests under consideration
of all circumstances in each individual case.
eCITARO
E| Non-Financial Report
E | NON-FINANCIAL REPORT | CONTENTS
203
Sustainability at Daimler
Social Issues
215
Our strategy
The gender composition of the Supervisory Board meets
the legal requirement stipulating that at least 30% of the
members of the Supervisory Board must be women and
at least 30% must be men. The Supervisory Board currently
has three women who represent shareholders and three
women who represent employees. The proportion of women
is thus 30% among the shareholder representatives, the
employee representatives and the Supervisory Board as a
whole.
204
On the following pages, we publish the non-financial report in accordance with
Sections 289b- 289e, 315b and c of the German Commercial Code (HGB).
This report applies to Daimler AG and to the Daimler Group. It contains the main
information on the aspects of environmental, employee and social matters,
combating corruption and bribery, and respect for human rights.
In the case of Supervisory Board members who are not also
members of the board of management of a listed company,
the legal limit of membership of ten statutorily constituted
supervisory boards applies firstly, whereby chairmanship
of a supervisory board counts double. In order to ensure that
members of the Supervisory Board have sufficient time to
fulfill their mandate, members of the Supervisory Board of
Daimler AG who are not also members of the board of
management of a listed company shall, however, generally be
permitted membership of a maximum of eight supervisory
boards (including that of Daimler AG), whereby chairmanship
of a supervisory board counts double. This maximum
number was not exceeded by any member of the Supervisory
Board during the reporting year.
204
201
In order to ensure compliance with a current recommendation
in the German Corporate Governance Code, the rules of
procedure stipulate that no member of the Supervisory Board
who is also a member of the board of management of a
listed company may hold more than three memberships of
supervisory boards of listed companies (including his or
her membership of the Supervisory Board of Daimler AG) or
of bodies of other companies with similar requirements
outside of the group of his or her Board of Management
membership. One member of the Supervisory Board, Joe
Kaeser, is a member of the board of management of a listed
company, but has not exceeded the maximum number of
memberships.
At least half of the members of the Supervisory Board
representing the shareholders should have
neither an advisory nor a board function for a customer,
supplier, creditor, or other third party,
whose specific form could cause a conflict of interest.
Under the premise that the performance of Supervisory
Board duties as an employee representative does not by
itself constitute a potential conflict of interest as defined by
the German Corporate Governance Code, the requirements
described here are deemed to be met by at least 15 members
of the Supervisory Board.
200
A sufficient generational mix among Supervisory Board
members is also to be taken into account in appointment
decisions. At least eight members of the Supervisory
Board should be 62 years of age or younger at the time of
their election or reelection. Among the current members
of the Supervisory Board, all except Sari Baldauf, Petraea
Heynike, Dr. Manfred Bischoff, Dr. Clemens Börsig,
Dr. Jürgen Hambrecht and Dr. Bernd Pischetsrieder (i.e. 14
members) were 62 or younger when they were elected
for their current term of office.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
As described in the report of the Supervisory Board on
⚫ nor a business or personal relationship to the Company
or its boards
As a result, in the case of at least half of the shareholder
representatives on the Supervisory Board and at least 15
members of the entire Supervisory Board, there were no
indications of a potential conflict of interest during the
reporting period based on the premise described above.
There were no indications for actual conflicts of interest
in the financial year 2018.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
page 51 of the Annual Report 2018, there were individual
cases concerning two Supervisory Board members in
particular situations during the reporting period where there
might have been the appearance of a potential conflict of
interest at the time when Board of Management reports were
submitted to the Supervisory Board. The Supervisory Board
members in question in these cases refrained from being pres-
ent during the presentation of the Board of Management
report regarding the issue that might have been affected by
a potential conflict of interest.
Candidates for membership of the Supervisory Board and
members of the Supervisory Board must have sufficient time
available to perform their duties. They must also be willing
and able to dedicate themselves to their tasks and to partici-
pate in all courses of training and further training that might
be necessary for the performance of their tasks. Prior to
issuing its election proposals, the Supervisory Board deter-
mines whether the candidates in question will have sufficient
time available to perform their duties on the Supervisory
Board.
The rules of procedure of the Supervisory Board also define
a general time limit for Supervisory Board membership.
As a result, only candidates who have not yet been members
of the Supervisory Board for three full terms of office at
the time of their election should generally be nominated for
membership of the Supervisory Board for a full term of
office. This general length of service on the Supervisory Board
has not been exceeded by any current member, and the
candidates Joe Kaeser and Dr. Bernd Pischetsrieder, who
are nominated for reelection at the Annual Shareholders'
Meeting in 2019, also meet this requirement.
The Chairman of the Supervisory Board, Dr. Manfred
Bischoff, is a former member of the Board of Management.
In order to ensure sufficient internationality, for example
by means of many years of international experience, the
Supervisory Board has set a target of a proportion of at least
30% of international members representing the shareholders,
and the resulting proportion of at least 15% of the entire Super-
visory Board. Irrespective of the many years of international
experience of a large majority of the shareholder represen-
tatives on the Supervisory Board, this target is currently
significantly overachieved with 30% for the entire Supervisory
Board due to the international origins of Bader Al Saad,
Sari Baldauf, Petraea Heynike, Marie Wieck and Dr. Paul
Achleitner on the shareholders' side (50%) and Raymond
Curry on the employees' side.
Under the premise described above, there are, in the view of
the Supervisory Board, no indications at present for any of
the members of the Supervisory Board that relevant relation-
ships or circumstances exist, in particular with the Company,
members of the Board of Management or other Supervisory
Board members, that could be construed as a substantial
and permanent conflict of interest that would compromise
their independence. No member of the Supervisory Board
is a member of a board of, or advises, a significant competitor.
With regard to Supervisory Board member Bader Al Saad,
the Supervisory Board takes the view that his membership
of the Executive Committee of the Board of Directors of
Kuwait Investment Authority does not compromise his inde-
pendence within the meaning of the German Corporate
Governance Code. The German Corporate Governance Code
does not contain a conclusive definition of independence,
but instead presents examples of circumstances that would
call the independence of a Supervisory Board member into
question. Within the meaning of the German Corporate Gov-
ernance Code, a Supervisory Board member is to be
considered non-independent if he or she has a personal or
business relationship with the Company, its governing
bodies, a controlling shareholder or a company affiliated
with a controlling shareholder that may cause a substantial
and not merely temporary conflict of interest. It is the
responsibility of the Supervisory Board to evaluate the
independence of its members on the basis of such criteria.
The Kuwait Investment Authority is not a controlling share-
holder of Daimler AG that could attain an effective majority
at an Annual Shareholders' Meeting. No other discernible
circumstances exist that might call into question the inde-
pendence of Bader Al Saad.
Under the premise that the performance of Supervisory
Board duties as an employee representative does not in itself
call into question the independence of such an employee
representative as defined by the German Corporate Gover-
nance Code, at least 15 members of the Supervisory Board
are also deemed to be independent.
In order to ensure the independent advice to, and supervision
of, the Board of Management by the Supervisory Board,
the rules of procedure of the Supervisory Board stipulate that
more than half of the members of the Supervisory Board
representing the shareholders are to be independent as
defined by the German Corporate Governance Code.
The Supervisory Board may not include more than two former
members of the Board of Management of Daimler AG or
anyone who is a member of a board of, or advises, a significant
competitor of the Daimler Group.
Modern working conditions
Our Group-wide employee survey is a key indicator of where
we currently stand from the point of view of our employees,
and what we need to do to improve the company in the future.
The survey conducted in 2018 was based on a completely
Successful employee survey
Our business is changing at a rapid pace. In order to remain
successful in the future, we are changing our management cul-
ture and the way we cooperate. This is why we launched the
Leadership 2020 initiative in 2016. Employees from more than
23 countries and all levels of management are currently
working on Daimler's future management culture. Guidance is
provided by new management principles that, among other
things, make the company faster and more flexible and boost
its innovative potential. Procedures, processes and struc-
tures are being called into question and changed in eight "game
changers." In its meetings, the Board of Management of
Daimler AG regularly discusses the initiative's progress and
decides which measures need to be taken.
Leadership 2020 - further development of the
management culture
In 2018, around 3,800 employees at Daimler AG availed
themselves of the opportunity to take parental leave. Moreover,
around 400 employees took advantage of the opportunity to
take off work for a prolonged period. At the end of 2018, more
than 250 employees were working in job-sharing positions at
the team, sub-department and departmental levels.
We encourage all employees who take parental leave to sub-
sequently return to their jobs at the company because we
value their knowledge and experience. In Germany, we offer
about 705 places in daycare centers in close proximity to
our company locations as well as about 200 reserved places
at cooperating facilities. In addition, we cooperate with a
third party that assists employees in finding childcare providers.
Furthermore, company agreements at Daimler AG enable
employees to suspend their careers for several years for
a qualification program or a sabbatical or to provide home
care with the promise that they can return to Daimler AG
afterwards.
We also promote job sharing, in which two employees share
the same task or position and work together up to 60 hours per
week. This provides managers in particular with a means of
reconciling the needs of work and family.
We also boost employees' flexibility and self-determination by
giving them the opportunity for mobile working. An associated
company agreement has been in force at Daimler AG since
December 2016. The agreement gives employees the right to
mobile working if the task permits.
Today's living and working conditions require working times to
be flexibly organized in accordance with individual needs. Our
approach is therefore to challenge our employees to achieve
top performance and support their efforts to do so, rather than
focus on their mere presence at work. For this reason, we
also seek to improve performance by helping employees and
managers reconcile their professional and personal respon-
sibilities.
Flexible working arrangements
€3,332 billion on social welfare services (thereof Daimler AG:
€1,849 billion), and
212
Working conditions are being increasingly influenced by
working hours, workplaces, the work environment, the level of
employee empowerment and a state-of-the-art management
culture. The length of our employees' workweek is generally
regulated by the company or by a collective bargaining
agreement. In Germany, overtime is only performed within the
framework of a requirements planning forecast and has to
be approved by the employee representatives. In general, we
allocate working times in such a way that remuneration
remains stable even if the amount of work sometimes fluctuates.
This is made possible by a time-account system.
new concept. In September 2018, nearly 300,000 employees
in more than 50 countries were invited to participate in the
survey and send us their feedback. The Group-wide participation
rate of 80 percent was the highest rate posted to date for a
Group-wide employee survey at Daimler. This outstanding par-
ticipation rate underscores our employees' interest and their
willingness to actively help shape the company's further devel-
opment. 75% of our employees who participated in the survey
reported that they are satisfied or very satisfied with Daimler
as an employer and that they are proud to work at Daimler.
€0.8 billion on retirement benefits for a workforce
numbering 298,465 on average (thereof Daimler AG:
151,879 employees).
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
213
A competitive workforce
We consider it important to engage in a continuous dialog with
all of our interest groups so that we can bring together various
perspectives on our involvement with sustainability issues,
address future trends early on and share experiences. We also
want to engage in constructive discussions of controversial
themes at a very early stage. We always focus on conducting a
dialog that is successful and productive for both sides. In order to
conduct this kind of dialog, we need to identify our stakehold-
ers. We define our stakeholders as individuals and organizations
that have legal, financial, ethical or ecological expectations
regarding Daimler. One of the criteria for identifying and weight-
ing stakeholders is the extent to which a person or group is
affected by our company's decisions or, conversely, is taken
into accout in such decisions. Our primary stakeholders are
our shareholders, creditors, employees, customers and suppli-
ers. However, we also communicate regularly with civil groups
such as NGOs, as well as associations, trade unions, the
media, analysts, municipalities, residents and neighbors in
the communities where we operate and representatives
of science and government. 7 E.06
Stakeholder involvement
Dialog at the Group level
€18,329 billion on wages and salaries (thereof Daimler AG:
€11,569 billion),
In order to implement the dialog with our stakeholders through-
out the Group, we have defined clear areas of responsibility,
communication channels and specific dialog formats. The pro-
active dialog with our stakeholders is initiated by experts
from the Integrity and Legal Affairs department and coordinated
by our corporate sustainability bodies.
One essential tool of the dialog with our stakeholders is the
Daimler Sustainability Dialogue, which has been held annually
in Stuttgart since 2008 and brings various stakeholder groups
together with members of our Board of Management and exec-
utive management. The participants attend a range of work-
shops, where they discuss issues related to sustainability and
work together to address them. The Daimler representatives
responsible for specific themes take up the impulses from the
discussions and work together with the stakeholders to incor-
porate these ideas into their work throughout the year. They
then report at the event in the following year on the progress
made in the interim. We held our eleventh Daimler Sustain-
ability Dialogue in Stuttgart during the year under review. The
evening before the event was devoted to sustainability issues
related to electric mobility. In a creative ideation workshop
called "Smart Cities," experts from various units worked out
sustainable solutions to everyday urban problems. On the
main day of the event, about 200 stakeholders split up into eight
working groups to discuss themes such as data ethics, the
market penetration of electric vehicles and digitalization in the
work environment.
As a global company, we have set ourselves the goal of imple-
menting sustainability standards at our business units and
specialist departments around the world. To this end, we orga-
nize Daimler Sustainability Dialogue events in other countries
as well. Such dialog events have been held in China, Japan, the
United States and Argentina. During the year under review,
more than 200 stakeholders attended the sixth Daimler Sus-
tainability Dialogue in Beijing, where they discussed topics
relating to sustainable production, innovation, artificial intelli-
gence and integrity and legal affairs.
The Advisory Board for Integrity and Corporate Responsi-
bility has been an important source of input for sustainability
activities at Daimler since 2012. The board's members - exter-
nal experts from the fields of science and business, as well
as from civic organizations - utilize an external point of view to
offer critical and constructive support for the integrity and
corporate responsibility process at Daimler. The board meets
at regular intervals and holds discussions with members of
the Board of Management and other Daimler executives. Its
members have extensive experience and possess a variety
of specialized knowledge regarding environmental and social
policy, various human rights and ethical issues, and the devel-
opment of transport, traffic and mobility. During the year under
review, the Advisory Board addressed, among other things,
the further development of our culture of integrity, electric mobil-
ity, mechanisms for dealing with complaints, mobility services
and data responsibility.
Our employees' great loyalty to the company is also expressed
by the amount of time they have worked for Daimler. During
the year under review the average number of years our employ-
ees have worked for Daimler decreased slightly to 15.8 years
(2017: 16.1 years). In Germany, employees had worked for the
Group for an average of 19.4 years at the end of 2018
(2017: 19.5 years). The comparative figure for Daimler AG was
20.2 years (2017: 20.3 years). Daimler employees outside
Germany had worked for the Group for an average of 10.6 years
(2017: 11.0 years). In 2018, our labor turnover rate amounted
to 4.9% worldwide (2017: 5.1%).
We also maintain contact with representatives from civic
organizations and other companies, and we participate in various
associations, committees and sustainability initiatives. The
most important initiatives here are the UN Global Compact and
Econsense a German business forum for sustainable develop-
ment.
Once every quarter, the Board of Management discusses our
diversity management activities and the associated results.
We also hold discussions with external stakeholders as part of
our involvement in the Diversity Charter, of which we are a
founding member.
The age differences at the company will rise in the future due
to the increase in the retirement age and the extension of
people's working lives. The average age of our global workforce
in 2018 was 42.7 years (2017: 42.8). Our employees at Daimler
AG were 44.8 years old on average (2017: 44.7). Demographic
development will cause the average age to continue to rise
in the years ahead. However, the proportion of older employees
will decrease again over the long term because many baby
boomers will retire from the company. We consider this trans-
formation to be an opportunity, and we are adjusting the
framework conditions accordingly. Our generation management
system focuses on measures for maintaining the performance
and health of younger and older employees as well as for pro-
moting cooperation between people of different ages.
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
Our aim is to increase the share of women in management
positions to at least 20% by the year 2020. Currently more than
18% of our executives in middle and upper management are
women. For Daimler AG, we signed a company-wide agreement
for the advancement of women. It stipulates a target corridor
for the proportion of women in the total workforce, in vocational
training and in Level 4 and 5 management positions. In order
to achieve our goals, we have installed an ongoing internal
reporting and planning system.
Daimler's more than 298,000 employees from over 160 coun-
tries provide the Group with a vibrant mixture of cultures and
ways of life. We utilize this diversity to put together optimized
teams. Most of our managers abroad come from the respective
regions. We promote the cultural diversity of our employees
with worldwide staff assignments, mentoring, intercultural skills
training and targeted recruiting measures. International candi-
dates account for more than one third of the people recruited
through our previous CAReer trainee program.
Daimler promotes the diversity and heterogeneity of its
employees, because they serve as the basis of a high-perform-
ing company. As a result, diversity management is included
in our corporate strategy. The various skills and talents of our
workforce enable us as a global company to effectively
reflect the diversity of our customers, suppliers and investors
around the world.
Diversity management
We can only be successful if we have a skilled and high-per-
forming workforce. We therefore aim to continuously develop
our employees and make sure they stay competitive. We are
pursuing this goal by implementing measures in four overarch-
ing areas of action: diversity management, the securing of
young talent, qualification, and health management and occu-
pational safety.
Securing young talent
In 2018 the Group spent:
110100
We remunerate work in accordance with the same principles
at all our affiliates around the world. Our Corporate Compensa-
tion Policy, which is valid for all groups of employees, estab-
lishes the framework conditions and minimum requirements for
the design of the remuneration systems. Internal audits are
conducted on a random basis to make sure these conditions and
requirements are met. In our desire to offer salaries and
benefits that are customary in the industry and the respective
markets, we also give consideration to local market conditions
within the specified framework. The salaries are determined on
the basis of the employees' tasks and performance, and
in line with their qualifications and experience. In setting the
remuneration of the employees we are not guided by gender
or place of origin, but exclusively by the employee's job and
responsibility.
0001
1101
10100 01010
€ 1010
1011 011
101
010
11 00
01 10
11
11
00
01
11
As a global automotive company, we operate in an environment that is subject to a variety of
societal, social and political influencing factors. In order to ensure we can continue operating effec-
tively in the future, we need to make our company's interests understandable to governments
and society, and must also address the concerns of groups within society. We therefore regularly
share information with our stakeholders and communicate our interests in an open and fair dialog
with governments and political representatives.
0
competitiveness
10110
001001
111110
101000101
Attractive and fair remuneration
Our activities and measures for enhancing our attractiveness as
an employer are designed to enable us to recruit and retain
a sufficient number of specialized employees and qualified man-
agers in the competition for talented staff. Our primary
objectives here are to ensure attractive and fair compensation
and to establish and maintain a work culture that enables
outstanding performance and a high level of motivation and
satisfaction among our employees and managers.
High attractiveness as an employer
The expansion of this Safeguarding the Future agreement is
also an integral part of “Project Future" for restructuring
our Group, and it is being implemented in close cooperation
with the employee representatives. If Project Future is imple-
mented, Daimler AG's Safeguarding the Future agreement will
be extended until 2029. As a result, terminations for opera-
tional reasons would be excluded on principle until December
31, 2029 for all employees who are affected by a transition
of operations resulting from the new Group structure and who
do not contest their transfer to the new organization.
One result of the ongoing dialogue between the corporate
management and the employees' association was the renewal
of the company-wide "Safeguarding the Future of Daimler"
agreement in 2015. This accord, which is valid until 2020, en-
ables the company to respond to the "future plan" agreements
that have been reached at many of the locations of Daimler AG
with concrete investment commitments, flexible personnel
assignment models and the possibility of selectively increasing
staffing requirements. As a result, we can make use of market
opportunities and better absorb fluctuations in demand. The
company-wide agreement essentially protects all of the employ-
ees of Daimler AG in Germany from being laid off until the
end of 2020.
In a variety of committees, we regularly inform the employee
representatives about the economic situation and all of the
key changes at Daimler AG and the Group. We conclude agree-
ments with the respective workers' representative bodies
concerning the effects of our decisions on the employees. In
Germany, comprehensive regulations to this effect are
contained in the Works Council Constitution Act. We notify our
employees about far-reaching changes early on.
Our employees also have the right to organize themselves
in labor unions. We also ensure this right in countries in which
freedom of association is not legally protected. We work
together constructively with the employee representatives and
the trade unions. Important partners here include the local
works councils, the European Works Council and the World
Employee Committee (WEC). We have signed collective bar-
gaining agreements for all of the employees at Daimler AG, and
this also applies to the majority of our employees throughout
the Group.
We want to work together with our employees as partners,
respect their interests and get them involved in the company by
continuously providing them with information and enabling
them to participate in decision-making processes. To achieve
these goals, we are guided not only by the International Labour
Organization's (ILO) work and social standards but also by our
Principles of Social Responsibility. In these principles, we com-
mit ourselves, among other things, to respecting key employee
rights - from the provision of equal opportunities to the right
to receive equal pay for equal work. Violations of these princi-
ples can be reported to the whistleblower system BPO, which
addresses further investigations to the pertinent units.
In cases where Daimler AG and its Group companies have
signed collective bargaining agreements, they often also offer
voluntary benefits that are agreed upon with the respective
employees' associations. These benefits primarily consist of
employer-funded retirement contributions as well as profit-
sharing agreements for the respective company. For example,
the eligible employees of Daimler AG will receive a profit
participation of €4,965 for 2018 (2017: €5,700). In addition,
our employees can avail themselves of a wide variety of sports
facilities and social amenities, ranging from daycare centers to
the counseling service for people in extreme situations.
Partnership with the employees
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
Basis
Mission
pillars
Strategic
Mission
Vision
0101111010
211
Social Issues
25.0
E | NON-FINANCIAL REPORT | SOCIAL ISSUES
18.8
17.6
Share of women at the second
management level below that of the
Board of Management (Daimler AG)
14.4
11.9
Share of women at the first management
level below that of the Board of
Management (Daimler AG)
Share of women on the Board of
Management
Share of women on the Supervisory Board
E.05
Accident figures¹
11.8
8.7
25.0
25.0
30.0
Levels 1-3 (worldwide)
2018
Women in senior management positions
19.2
After completing their college degrees, graduates can directly
join our company or launch their careers at Daimler by taking
part in INspire, a series of varied international talent training
programs. Each one of our talent training programs offers
cross-unit insights, first-class training and personal coaching.
For example, "INspire - the Leaders' Lab” is designed for
young professionals with initial practical experience who would
like to specifically prepare for management positions at the
company.
...ensure continuous
Daimler has offered an in-house trainee program called CAReer
since 2007. The talent training program "INspire - the Leaders'
Lab", which replaced CAReer in 2018, is directed at participants
who are more focused on careers in management. In 2018 we
hired 23 trainees through our INspire program. About 48% of the
trainees were women and 40% were international participants.
In addition, 40 participants, including 24 women and 17 inter-
national candidates, began their CAReer program during the
transition period.
In Germany, we recruit most of the young talent we need
through our industrial-technical and commercial apprentice-
ships and the courses of study at the Cooperative State
University, which had more than 180 students in 2018.
E.04
Share of women
In percent
Share of women (worldwide)
2018
2017
19.1
18.5
Share of women (Daimler AG)
16.6
16.1
Share of women in Level 4 management
positions (Daimler AG)
18.0
2017
3,152 2,766
Incidence of accidents
2 Tragically, an employee suffered a fatal work-related accident in
Germany in 2018.
214
E❘ NON-FINANCIAL REPORT | EMPLOYEE ISSUES
We had 8,061 trainees throughout the Group at the end of 2018
(2017: 8,097). Of this number, 4,009 were in a training program
at Daimler AG (2017: 4,409). During the year under review,
1,265 (2017: 1,278) young people began an apprenticeship at
Daimler AG; 1,191 (2017: 1,197) were hired after completing
their apprenticeships. The costs for vocational training for
Daimler AG totaled €124 million in 2018 (2017: €114 million).
Programs such as "Skilled Worker in Focus" and the team
leader development program ensure that employees are exten-
sively qualified according to uniform standards. The partici-
pants are given the opportunity to obtain good career prospects
and plan concrete development goals. Our company's sus-
tained success is closely linked to the high quality of our man-
agers. That's why we focus especially on the development
of talented young managers. We validate the young talents'
leadership potential at our PV44 in-house assessment center
and in the team leader development program, both of which
use a uniform standard for all of our locations. The Board of
Management member responsible for human resources regu-
larly receives reports about the measures and results of our
training activities and the development paths of our trainees.
Qualifications
We provide our staff with training and continuing education
opportunities for their professional and personal development
throughout their careers. At least once a year, employees
discuss qualification topics with their managers and agree on
appropriate measures. The company agreement on qualification
regulates continuing education at Daimler AG. This agreement
also stipulates that employees can leave the company for up
to five years in order to learn additional skills and guarantees
that they can return to the company. In 2018, around 430
employees availed themselves of this opportunity.
Our production locations are responsible for the qualification
of managers and specialized employees in manufacturing.
The Global Training unit safeguards and increases the skills of
our employees at the Mercedes-Benz sales organization. In
2018, more than 800 Mercedes-Benz trainers in over 80 coun-
tries instructed approximately 210,000 participants. A total
of 1.3 million training courses are held each year.
The Daimler Corporate Academy program helps the Group
develop a new management culture and world of work. In
2018, the Corporate Academy enabled a total of 65,800 spe-
cialized employees and managers worldwide to continue
their personal and professional development. At Daimler AG,
we spent €123 million on the training and qualification of
our employees in the year under review (2017: €121 million).
On average, every employee spent 3.2 days on qualification
courses in 2018 (2017: three days).
Health management and safety at
the workplace
We want to maintain our employees' health and physical
well-being for the long term. To this end, the Daimler Group has
uniform preventive healthcare standards in place worldwide.
As part of Daimler AG's health management approach, we
develop and implement anticipatory solutions that range from the
job-related "Daimler GesundheitsCheck" and the ergonomic
design of workstations to the IT system that makes it easier to
permanently reintegrate employees suffering from limitations
imposed by their health.
Our Health & Safety unit is responsible for occupational health
and safety, company health-promotion efforts, ergonomics,
counseling service and integration management. Health man-
agement and occupational safety are also governed by our
risk management systems. Our company health promotion is
aimed at motivating employees to develop healthy lifestyles
and reinforcing their sense of personal responsibility regarding
health issues. This objective is promoted worldwide with
the help of campaigns, counseling and qualification offerings, as
well as therapeutic and rehabilitation measures. All of our
plants in Germany have health centers on their premises or
cooperate with health centers located near the plants.
Occupational safety is firmly embedded at all levels of Daimler
and is addressed by an extensive portfolio of measures for
the prevention of work accidents, work-related illnesses and
occupational diseases. Our Center of Competence Safety
creates the associated Group-wide guidelines. We have stan-
dardized key occupational health and safety processes in
order to enable the creation and advancement of integrated
processes and systems. Every manager at Daimler is respon-
sible for ensuring that all internal guidelines and legal require-
ments for occupational health and safety are complied with.
Every organizational unit within the Daimler Group has to
approve and pursue occupational safety objectives on a regular
basis in accordance with our globally valid occupational health
and safety guidelines and occupational safety strategy and the
results of internal audits and reviews. The content and criteria
of our internal occupational safety management system corre-
spond to the standards of ISO 45001 and are regularly
updated.
The Board of Management receives a Health & Safety report at
regular intervals and is, among other things, given monthly
updates about the frequency of accidents. A Group crisis unit,
in which the Board of Management is also involved, enables
Daimler to respond quickly to various incidents such as serious
accidents and pandemics.
1 Reporting rate of Daimler production locations (Mercedes-Benz
Cars, Daimler Trucks, Daimler Buses, Mercedes-Benz Vans)
worldwide: > 99%.
1
0
as a result of work-related accidents
Number of accidents (worldwide)
Incidence of accidents
(worldwide, number of work-related
accidents that resulted in at least one lost
day per 1 million hours of attendance)
Rate
7.7
7.5
(worldwide, number of lost days per 1 million.
hours of attendance)
215
Accident downtime
113
106
1
1
Number of employee deaths as a result of
work-related accidents²
1
0
Number of deaths of third-party employees
Number of deaths as a result of
work-related accidents
Profitability
Increasing the mobility fund. We have significantly increased
our planned contribution to the "Immediate Action Program
for Clean Air," which was agreed on at the National Forum Diesel
in August 2017. Together with BMW and Volkswagen, we
are now providing the automobile industry's entire share of the
funding.
001111001
The transition from the NEDC to the WLTP as the legally stipu-
lated CO2 emission measurement cycle for individual vehicles
has led to a significant increase in our fleet emission values. At
the same time, the shift of sales from vehicles with diesel
engines to cars powered by gasoline engines, as well as a further
increase in sales of large SUVs and all-wheel-drive vehicles,
have contributed to a higher CO2 value for our fleet.
In the year under review, the average CO2 emissions of the
total fleet of Mercedes-Benz Cars in Europe (EU28 +Iceland)
increased to 132 (2017: 125) g/km (NEDC).
Result
207
= Quality gate
Customer appeal
Series support
measures
Principle suitability
Concept suitability
Series production
suitability
Testworthiness
Functionality
Vehicle-specific integration and validation
vehicle, validation modules
Basic development of the overall
A
B
Because all vehicle models will have been certified in accor-
dance with the WLTP by September 2019, we expect only a
slightly lower CO2 value for our fleet in 2019, in spite of further
progress in reducing our vehicles' fuel consumption. Our vehi-
cle electrification measures are expected to lead to a signifi-
cant decrease in our fleet's CO2 emissions in 2020.
C
The new WLTP test cycle. Since September 2017, all of our
new car types in Europe have been certified according to the
Worldwide Harmonized Light Vehicles Test Procedure (WLTP).
This test procedure includes numerous changes compared to
the previous New European Driving Cycle (NEDC). The changes
include higher average and maximum speeds, more dynamic
handling, gliding inertial masses instead of inertia classes, a
smaller standstill share of total fuel consumption, and con-
sideration of special equipment and the quiescent current re-
quirement. Overall, these changes are leading to more real-
istic, but also higher, fuel economy values.
We continue to work hard to meet all statutory CO2 require-
ments, including the very challenging EU limits for 2021.
However, reaching these fleet targets will depend not only on
offering appealing and highly efficient vehicles with electric
drives, but also on our customers' actually deciding to buy those
models. In order to optimally position ourselves in this respect,
we are systematically changing over our product range to the
latest engine generations, and are also systematically electrify-
ing our portfolio with plug-in hybrids and all-electric vehicles.
Mercedes-Benz vehicles powered by the new diesel engines
(OM 654, OM 656 and OM 608) emit between 40 and 60 milli-
grams of nitrogen oxide (NOx) on average - during thousands
of kilometers of driving on the road and under the conditions
specified by the Real Driving Emissions (RDE) test. These figures
are significantly lower than the current RDE emissions limit of
80 milligrams per kilometer multiplied by the correlation factor
2.1 (Level 1). The correlation factor was determined by an EU
regulation to cover the usually higher nitrogen-oxide emissions
in real operation for new vehicle types until the end of 2019.
Result
In order to assess the effects of modern diesel engines in the
fleet and to factor in possible future driving bans, we have
commissioned a calculation of future air quality scenarios at
Neckartor in Stuttgart, together with the Robert Bosch com-
pany and in close cooperation with the Stuttgart city govern-
ment and the responsible federal state ministries. An advisory
committee of recognized experts and university professors
supported the study, which was conducted by the Aviso com-
pany. According to the scenarios of the study, the limits will
probably not be reached at Neckartor by 2020. But - depending
on the package of measures implemented – the limit of 40
micrograms per cubic meter of ambient air is expected to be
permanently met between 2020 and 2025.
Local measures. With regard to the local measures, Daimler
is focusing in particular on Stuttgart. For example, we are sub-
sidizing our employees' use of public transport, such as the
commuter train, streetcar and bus networks, to get to work.
Thanks to Daimler's coverage of the costs, since January 2018
the Group's employees have been able to use local public
transportation free of charge to travel between their homes and
workplaces in the Stuttgart region on particulate alert days.
Along with technical and commercial apprenticeships and
courses of study at the Cooperative University, we also conduct
various activities that address young talents. We offer
extensive possibilities to personally interact with the company
via social media, hackathons, competitions and internships.
Following the coalition decision, in early October 2018, Daimler
also announced its intention to participate in a hardware retro-
fit program for diesel vehicles in the defined priority regions as
part of the German government's concept for clean air and the
safeguading of individual mobility. Within this context, Daimler
is prepared to cover the cost of a hardware retrofitting up to
a maximum value of €3,000 for Mercedes-Benz customers with
Euro 5 diesel vehicles in the defined priority regions. The
retrofitting must be developed and offered by a third-party
supplier and approved by the German Federal Motor Transport
Authority (KBA). In addition, it must demonstrably authorize
entry into certain cities, including driving on roads affected by
the driving ban. Daimler's aim is to promote the interests of
its customers by creating transparency as to which hardware
solutions third-party suppliers can offer, and when.
Daimler supports the German federal government's concept
for clean air and the safeguarding of individual mobility. By
means of an attractive incentive program in the defined priority
regions, we are accelerating the renewal of the vehicle fleet.
In this way, Daimler is making a significant contribution to the
German government's concept in order to avoid any dis-
advantages for drivers of diesel-powered cars.
After talks with the German Federal Ministry of Transport and
Digital Infrastructure (BMVI) in June 2018 and by order of the
German Federal Motor Transport Authority (KBA), Daimler
is carrying out a mandatory recall of approximately 690,000
vehicles in Europe (including approximately 280,000 in
Germany). The great majority of these vehicles were already
covered by Daimler's program of voluntary service measures
announced in July 2017. These measures are being imple-
mented in close cooperation with Germany's vehicle regis-
tration agencies.
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208
Our plan for the future of diesel engines also includes the
development of software updates for a total of more than three
million vehicles owned by customers - significantly more than
one million of which are in Germany. With the updates, we are
improving the NOx emission performance of our vehicles
under real driving conditions by an average of 25 to 30%. Verifi-
cation is with the use of the measuring cycles approved by
the authorities (WLTC 1, 2, 3).
The introduction of the new diesel engine families consisting
of the OM654, the OM656 and the OM608, as well as the
increasing electrification of drive systems, will greatly help us
to reach the emission targets.
Cutting-edge technologies are enabling us to steadily reduce
the pollutant emissions of our cars and commercial vehicles. In
doing so, we have set our sights not only on conventional
gasoline and diesel engines but also on hybrid vehicles that
combine conventional and electric drive technologies.
Measures
In addition to climate protection, the improvement of inner-city
air quality will continue to be an important environmental con-
sideration in the future. Traffic still accounts for a considerable
share of nitrogen oxide pollution near roads. Our fundamental
goal is to fulfill emission requirements as far in advance as
possible and to reduce potential risks for human beings and the
environment.
Target
Clean air
According to the legal requirements, until 2021 automakers
must calculate the CO2 emissions of their vehicle fleets in
Europe by using a predefined formula to convert the vehicles'
WLTP values back into NEDC values. This explains why every
new vehicle is certified according to the WLTP although the
European CO2 emission value of the automaker's fleet is
still indicated as the NEDC value. The legislators want to ensure
the comparability of the automakers' fleet values in the
period until 2022, when a new limit value will come into force.
The lower values are made possible by an innovative overall
package consisting of the engine and the exhaust aftertreatment
system. This package was launched with the new engine
generation in 2016 and is being continually enhanced. The very
good results have been repeatedly confirmed in road tests
by organizations such as DEKRA and TÜV, as well as by various
trade magazines.
D
F
In a committee situated directly below the Board of Manage-
ment level, the managers responsible for each vehicle model
series evaluate the results of this monitoring process and
decide on any necessary corrective measures. If corrections are
needed, the managing body of the respective division is included
in the decision-making. If the situation continues to escalate,
the responsible member of the Board of Management is also
included.
An environmental protection guideline passed by the Board
of Management formulates our approach: We develop products
that are especially environmentally friendly and energy-efficient
in their respective market segments. A vehicle's environmental
impact is largely decided during the first stages of its devel-
opment. The earlier we integrate environmentally responsible
product development (Design for Environment, DfE) into the
development process, the more efficiently we can minimize the
impact on the environment. That is why continuous improve-
ments in environmental compatibility are a major requirement
in the creation of the product performance specifications. For
every vehicle model and every engine variant, we have require-
ment specifications that define the characteristics and target
values that must be achieved. These specifications include
requirements concerning fuel consumption and emissions limit
values for CO2 and nitrogen oxides. During the development pro-
cess we regularly monitor compliance with these specifications.
Due diligence processes
further efficiency increase through hybridization, and
electric vehicles with battery and fuel-cell drive.
further development of our vehicles equipped with state-
of-the-art combustion engines in order to achieve significant
reductions in consumption and emissions,
-
Our goal is to also safeguard mobility for the generations to
come. That is why we strive to offer our customers safe, efficient
and low-emission vehicles and services. A core element of our
approach here is to achieve a drive-system mix that is tailored
to the market requirements. Our "Road to Emission-free Driv-
ing" initiative defines the primary focal points for developing new,
extremely fuel-efficient and environmentally friendly drive-
system technologies at all of our automotive divisions:
Measures
Our current reduction target for driving operation (tank-to-wheel)
is -44% (2007 - 2021) for cars in the new-vehicle fleet in Europe.
We are steadily continuing our efforts to reach this target.
The Paris accord on climate protection aims to limit global
warming to significantly less than two degrees Celsius compared
with the preindustrial level. It requires a significant intensifi-
cation of measures, in particular more stringent CO2 targets for
all countries and sectors. We are in the process of deriving
specific targets for all of our business divisions regarding the
reduction of our products' CO2 emissions. These targets
refer to the period until 2030 and will be binding on the Daimler
Group worldwide.
Target
Climate protection
Protecting the environment is a primary corporate objective of our Group. Environmental protection
is not separate from other objectives at Daimler, but is an integral component of a corporate strategy
aimed at long-term value creation. The environmental and energy-related guidelines approved by
the Board of Management define the environmental and energy-related policy of the Daimler Group.
They also express our commitment to integrated environmental protection that addresses the
underlying factors with an impact on the environment, assesses the environmental effects of pro-
duction processes and products in advance, and takes these findings into account in corporate
decision-making.
Environmental Issues
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206
In addition to the formally structured dialog, we receive inquiries
from stakeholders concerning various sustainability-related
topics. These inquiries are addressed directly by specific spe-
cialist departments and units in a decentralized manner. This
approach brings our stakeholders closer to our business oper-
ations and enables specialized knowledge to be directly incor-
porated into the dialog. Individual inquiries from stakeholders
are also reported on in the meetings of our sustainability
bodies and committees and are thus taken into consideration in
the strategic decisions made by our sustainability management
organization. Our sustainability bodies also coordinate dialog
with our stakeholders on interdisciplinary issues.
The CO2 process in vehicle development
E
All of the divisions integrate all vehicle-related goals, including
those that are relevant to the environment, into their vehicle
development process according to a similar pattern. The chart
7 E.01 shows the Mercedes-Benz Development System (MDS)
as an example. In many markets there are fleet targets for the
fuel consumption and CO2 emissions of cars and light commer-
cial vehicles - in other words, overall targets for all the new
vehicles sold in a given market. The corresponding controlling
process for reaching the CO2 fleet consumption target for
Cars Europe (EU 28) is shown as an example.
The fleet values for CO2 emissions are calculated on the basis
of the fuel economy numbers of the vehicles available on the
market and the fuel economy specifications and prognoses for
vehicles that are still in the development phase. These values
are combined with the sales forecasts in order to arrive at the
projected fleet values for CO2 emissions.
G
We also utilize online and print media, discussions with
experts, workshops and local and regional dialog events for
our dialog with stakeholders.
H
Job
No. 1
Launch of
Launch of
body-in-white production
production test
Approval of
specifications
tions
tions
Concept Initial
specifica- specifica-
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
start
decision
Architecture Project
Vehicle product creation process for individual vehicles
E.01
The actual values may deviate from the projected target values
because of various external factors such as alterations in the
sales structure, changes in the political framework conditions
or changes in the fuel consumption target values of the vehicles
that are still in the development phase. In case of a deviation,
the CO2 steering committee organizes an assessment of various
options and then decides on the measures to be initiated.
If the need for adjustment is especially urgent, the process is
escalated to the responsible managing body. From a strategic
standpoint, this process takes place over a period of approxi-
mately ten years.
The key factors for determining the target values for fuel con-
sumption and CO2 emissions are the technological possibilities,
the legal requirements including the fleet targets for fuel
consumption, and customer wishes. The body responsible for
complying with these goals and for transparency regarding
the target attainment level is the CO2 steering committee, which
is headed by the Board of Management member responsible
for Group Research and Mercedes-Benz Cars Development.
HR
Conservation of resources
Evaluating the environmental compatibility of a vehicle
requires an analysis of the emissions and use of resources
throughout the entire lifecycle.
011
10
01
00
...foster a diverse, empowering
and inspiring culture
Employer of choice
...enable our management to
shape the framework of the future
Forward-looking,
skilled leadership
We provide innovative & efficient HR solutions to...
the right people
...attract, develop and retain
Competitive
workforce
Daimler-Best Team
HR Strategy 2025
E.03
A professional HR organization and efficient operating
processes form the basis for the implementation of these over-
arching goals, from which we have derived key areas of
action. The main control tool we use is our HR Scorecard, which
uses key performance indicators concerning demographic
development, diversity and sick rates to provide information
about the sustainability of human resources measures and pro-
cesses in the individual areas of action.
In order to recruit, develop and retain highly qualified staff, we
are continuously striving to further improve our attractiveness
as an employer. Because our executives and managers should
motivate their employees to achieve top performance, it is
crucial that we equip them with outstanding leadership skills.
In addition, we want to take on social responsibility and let
diversity flourish in our global company.
110
General figures regarding the development of our workforce
numbers can be found in the Workforce section of the Manage-
ment Report.
pages 113f
100
10
1000001
00011
01111
10100
0101
100
And we act as one team
Operational Excellence in HR
Digitalization
11000010.
011 01
1001 101
0010 1101
110 10
01
0
001 101
0 010
1 111
0100
Target
The success of Daimler AG and its subsidiaries is largely dependent on the skills and commitment
of our employees. More than 298,000 people promote our company's success worldwide by
contributing their concepts and ideas to their tasks and work processes and by helping to make
improvements and create innovations. Trusting relationships with employees are therefore
more than just an ethical and legal requirement for us - without them, we would not be able to
conduct our business successfully.
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
209
E❘ NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
Topic areas
Tours
Interviews
documents
Inspection of
Methodology for assessing environmental risks
E.02
Our commitment to the environment is an integral component
of our corporate strategy. For this reason, we have established
environmental management systems at our manufacturing
locations with the goal of providing safe, efficient, environmen-
tally friendly services of guaranteed high quality that comply
with all legal stipulations. We also carry out environmental risk
assessments at all production locations in which the Group
has a majority interest in the ownership structure. Supported
by the use of Daimler Group standards, we strive to maintain
a high level of air quality control, climate protection and
resource conservation (in terms of water consumption, waste
management and soil conservation).
Target
Production-related environmental protection
the workshop waste disposal system MeRSy (Mercedes-
Benz Recycling System).
the remanufacturing of used parts, and
the resale of tested and certified used parts through the
Mercedes-Benz Used Parts Center (GTC),
During the development process of a vehicle, we prepare a
recycling concept for each vehicle model in which all of its
components and materials are examined with a view to their
suitability for the various stages of the recycling process.
As a result, all Mercedes-Benz car models are 85% recyclable
and 95% recoverable, pursuant to ISO 22 628. The key
aspects of our activities in this area are:
Measures and result
Feedback to plant management and divisional management
Employee Issues
Environmental management
Discharge into bodies of water
210
The joint venture for mobility services planned by Daimler and
BMW is moving forward step by step. The authorities have now
approved the companies' plan to establish the joint venture.
The merger of our on-demand mobility services in the areas of
car sharing, ride hailing, parking, charging and multi-modality
with the mobility services of BMW is intended to give additional
impetus to our activities for the expansion and improvement
of mobility services.
In addition to our products' high level of environmental com-
patibility and our environmentally friendly and efficient produc-
tion processes, we also strive to provide innovative mobility
services on the road to emission-free driving. That is why we
have developed a range of pioneering mobility concepts and
are forging ahead with innovative approaches - from the car-
sharing provider car2go and the mobility platform moovel to
the taxi app mytaxi and our participation in the coach company
FlixBus and the Bus Rapid Transit (BRT) system. Recent addi-
tions to this list in 2018 were ViaVan, an on-demand ride-sharing
service with two locations in the UK; a partnership with
the Chinese ride-hailing service CaoCao, which has more than
17 million registered users; and the acquisition of an interest
in Turo, the US market leader for car sharing with private vehi-
cles, which already has five million users. The merger of
the German peer-to-peer car-sharing platform Croove, in which
Daimler already holds an interest, should ease the US com-
pany's entry into the German market.
Mobility services
In 2018, we evaluated the production locations of the Detroit
Diesel Remanufacturing business area and a number of CKD
plants of MBC. The most important results were in the areas of
explosion protection and the proper storage of hazardous
substances.
In this way, all the production locations are being visited and
assessed in five-year cycles according to well-established and
standardized procedures. The results are reported to the plant
and divisional managements, and the Group annually assesses
the implementation of the recommendations for minimizing
risks at the locations. In this way, we are striving to enforce the
high environmental standards to which we have committed
ourselves at all of our production locations around the world.
Result
The fourth round of environmental risk assessments began in
2014. A number of new risk aspects have been integrated
into the topic areas. Nonetheless, we have not changed the
methods or the tools, because we want these results to
be comparable with the results of the assessments that have
already been carried out. 7 E.02
Emissions into the atmosphere
In 1999, we developed a methodology for assessing environmen-
tal risks (environmental due diligence) as a tool for preventing
risks to the environment and complying with statutory require-
ments. We have applied this methodology throughout the
Group since 2000, both internally and also externally in connec-
tion with our acquisition plans. During this period we have
conducted three complete risk assessments at the Daimler
production plants of Mercedes-Benz Cars, Mercedes-Benz
Vans, Daimler Trucks and Daimler Buses.
The environmental measures are monitored by external audi-
tors (ISO 14001 certification, EMAS validation) and by internal
environmental risk assessments (the due diligence process).
We conduct training sessions through the respective local
organizations. The important content of our training sessions
includes water pollution control, wastewater treatment,
emergency management in case of environmentally relevant
malfunctions and the planning of plants and workplaces in
accordance with environmental protection principles.
Environmental protection measures at our production locations
are coordinated across business units by three regional com-
mittees (Germany/Europe, North and South America and Asia)
that are centrally managed. These measures are regulated
in line with a corporate policy and organizational and technical
standards.
The environmental and energy-related guidelines approved by
the Board of Management define our environmental and
energy-related policy at the Daimler Group. The guidelines also
express our commitment to integrated environmental protec-
tion. That begins with the assessment of the causes of environ-
ment problems and takes into account the environmental
effects of production processes and products as early as the
planning and development phases.
Measures
Implementing
measures at the
plants
Dealing with hazardous materials
Soil/groundwater contamination
Waste management
Due diligence processes
Daimler takes a holistic approach to securing young talent. Our
STEM educational initiative, “Genius", offers many activities
that get children and young people enthusiastic about technol-
ogy topics. Genius also helps teachers make their classes
varied and future-oriented by offering them practice-related
instructional materials, interactive technology workshops
and advanced training courses.
For us, technical compliance means adhering to technical
regulations, standards and laws while taking into account the
fundamental aims of these laws and regulations. In order to
address the specific risks associated with the product develop-
ment process, we combined the existing systems and addi-
tional measures and processes at all divisions of Daimler AG
into a technical Compliance Management System (CMS).
The purpose of the tCMS is to ensure legal and regulatory con-
formity within the product development process and to provide
our employees with orientation and guidance through values,
structures and processes.
Technical compliance
I. Compliance Values
Dialog at the local and regional levels
E❘ NON-FINANCIAL REPORT | SOCIAL ISSUES
216
The technical Compliance Management System is managed
Group-wide by a unit independent of all divisions that consists
of employees with expertise in various fields, such as devel-
opment, legal affairs, integrity and compliance. The head of this
unit - the Vice President Legal Product & Technical Compli-
ance reports directly to the member of the Daimler AG Board
of Management responsible for Integrity and Legal Affairs. Our
divisional structure enables us to optimally support and advise
our divisions. The unit's tasks include the organization of the
technical Compliance Management System and its associated
governance elements and providing legal advice to the divisions.
In order to further strengthen the tCMS, dedicated units with
experts for technical compliance have been created in the
development departments at the Cars, Vans, Trucks and Buses
divisions. In addition, there is a network of technical compli-
ance contact partners within the development departments who
serve as a link between operating units and the compliance
organization. These partners support the development depart-
ments in matters of technical compliance. Complex questions
regarding technical compliance are evaluated and then decided
unanimously in an interdisciplinary process that takes into
account technical and legal criteria. Our "Infopoint Integrity" is
also available as a contact and advice center for topics related
to technical compliance, while our BPO whistleblower system is
available for reporting on technical compliance violations.
The Technical Integrity initiative, as part of the tCMS, aims
to ensure responsible behavior during the product development
process, particularly in situations where legal provisions may
be unclear. Together with the relevant development departments,
so-called commitment statements have been formulated in
order to support the employees in this process. These principles
have been discussed with employees at dialog sessions held
around the world. Various communications measures regarding
the commitment statements have been conveyed to all employ-
ees and anchored in selected training courses.
Development employees at all divisions have been sensitized
to issues relating to integrity, compliance and legal regulations
in the product development process through various commu-
nications measures such as "Tone from the Top" mailings and
posters, as well as through special training courses and dialog
sessions. Dialog sessions have also been held worldwide with
more than 750 managers from development and development-
related departments at the various divisions in order to ensure
that technical compliance and integrity are anchored in the
organization. In addition, more than 19,500 employees from the
development departments of all divisions worldwide took
part in classroom training courses on technical compliance in
the year under review.
We also engage in a dialog with the stakeholders at our loca-
tions. In connection with specific occasions and projects,
we address questions, concerns, criticism and suggestions made
by stakeholders and conduct an open-ended dialog with
them. We also stage proactive dialog and information events
on current topics. The results of all of our dialog measures
are incorporated into decision-making and decision-implemen-
tation processes at the company. A current example of this
approach involves the sustainable further development of the
Rastatt plant. The transformation process here focuses on
electric mobility and the associated need for additional factory
space. Together with officials of the city of Rastatt, we
searched for potential locations for a plant extension in the
vicinity of the current plant and took into account the sugges-
tions and recommendations made by stakeholder groups,
including nature preservation and environmental organizations,
property owners, tenants and leaseholders, neighboring com-
munities and municipal agencies. We also continue to keep the
public up to date with various dialog and information events,
including civic dialogs, meetings with affected individuals and
organizations, and plant tours.
The effectiveness of our tCMS is monitored annually in a
process that also results in the development of measures to
improve the system wherever necessary.
As a consequence of the European Union's new General Data
Protection Regulation (GDPR), which went into effect on
May 25, 2018, we are consolidating all existing data protection
measures, processes and systems throughout the Group into
a single Data Compliance Management System. This system is
based on the Daimler Compliance Management System (CMS),
whose approach helps us meet the company's accountability
requirement and the data controller's obligation to demonstrate
the basis of the processing of personal data as described in
the GDPR.
The establishment of the Data Compliance Management System
was accompanied by the creation of a new Data Compliance
unit within the compliance organization. This unit defines the
program elements and controls their implementation through-
out the Group. At the same time, the Chief Officer Corporate
Data Protection and his team continue to perform the tasks
required by law to ensure compliance with data protection rules.
The Chief Officer Corporate Data Protection is independent
and reports directly to the Board of Management member for
Integrity and Legal Affairs. The Chief Officer Corporate Data
Protection informs and advises the data controllers and the
specialist departments, serves as a contact partner for com-
plaints regarding data protection, monitors compliance with
data protection rules, provides advice on the implementation
of data protection impact assessments and cooperates with
the regulatory authorities. We are currently realigning the exist-
ing network of local data protection coordinators and merging
this network into our compliance network.
Our Corporate Data Protection Policy creates Group-wide
standards for handling the data of employees, customers and
business partners. The internal processes necessitated by
the GDPR and the requirements of the Compliance Management
System are reflected in a new version of the Corporate Data
Protection Policy.
222
E | NON-FINANCIAL REPORT | COMPLIANCE
A key component of the Data Compliance Management System
is the Data Compliance Risk Assessment, which involves a
systematic analysis and evaluation of data protection risks at
all business units. These analyses are based on centrally
compiled information on all business units; specific additional
details are taken into account in line with the given risk assess-
ment. The results of the analyses form the basis of our risk
management and risk minimization activities. The analyses
enable us to adopt a risk-based approach for the further devel-
opment of our Data Compliance Management System.
The results of the annual Data Compliance Risk Assessment
serve as the basis for the formulation of measures that address
possible data protection risks. The elements of our data
compliance program include the provisions of the General Data
Protection Regulation (relating, for example, to information
obligations, the rights of data subjects and concepts for data
erasure), the stipulations of local data protection laws, commu-
nication and training measures and various data protection
consulting services. The responsibility for designing and imple-
menting measures lies with each company's management.
Managers in turn cooperate closely with Integrity and Legal
Affairs, which also provides support with implementation.
Data compliance
A monitoring plan is used to assess the effectiveness and
efficiency of the implementation of the various measures at the
business units. These reviews are used to define improvement
measures, which are implemented by the responsible units and
departments and then monitored on a regular basis.
Political dialog and representation of interests
Our principles for political dialog and communicating our inter-
ests form the basis of responsible, reliable and open action
with the aim of harmonizing the company's interests with the
interests of society at large. This also includes the idea of
maintaining neutrality when dealing with political parties and
representatives of interest groups. The aim of our discussions
with political decision-makers is to achieve greater planning
security and contribute our ideas to processes of social
- Plant tours, receptions, Mercedes-Benz
- Social intranet and internal communication
Blogs and social media
Corporate website
-
- Press and public-relations work
- Environmental declarations by the plants
As a company with global operations, we have to deal with a
wide
range of political changes and decisions that impact our
business activities. In order to safeguard the future of the
Daimler Group, it is therefore important that we represent the
interests of our company in an open and trusting dialog with
governments, associations, organizations and various groups
in society. In line with this philosophy, such a dialog also
allows us to hear their concerns and consider their point of
view in our actions.
- Daimler Sustainability Report as well as
regional reports (such as the Daimler
China Sustainability Report)
Sustainability newsletters and magazines
Examples of instruments of stakeholder dialog
E.06
We regard donations to political parties as an element of our
social responsibility and as a contribution to the democratic
process. We make these donations in strict conformity with
applicable law. All donations to political parties require a Board
of Management resolution. As in previous years, Daimler AG
made donations totaling €320,000 to political parties in 2018.
Of this total, the CDU and SPD each received €100,000,
and the FDP, CSU and Alliance 90/Green Party €40,000 each.
Also through the Group-wide Lobbyists Register, we want
to ensure that our political lobbying is carried out in accordance
with applicable regulations and ethical standards. The
register also helps us meet the registration requirements of
public institutions.
Our central coordinating body for political dialog at the national
and international levels is the External Affairs and Public Policy
department, which falls under the responsibility of the Chairman
of the Board of Management. This department operates a
global network with offices in Berlin, Brussels, Beijing, Singapore,
Stuttgart and Washington and also has corporate represen-
tations in other key markets. In order to ensure that political
lobbying activities are coordinated, and also to avoid political
target groups being addressed in an uncoordinated manner,
employees in the External Affairs and Public Policy department
must be registered.
Our management policy on Lobbying and Political Donations
governs, among other things, the use of lobbying instruments
and other methods for making our interests known in the politi-
cal realm. We represent the company's interests through
dialog with decision-makers, including elected officials or poli-
ticians who have been nominated for office, government
officials, and representatives of political interest groups, trade
organizations, business associations and government agen-
cies. Participation in specialized government committees and
product sales to ministries, government agencies and diplo-
matic missions are part of our business operations and there-
fore not considered a component of lobbying.
change. We focus here on issues such as vehicle safety, emis-
sion regulations, new mobility concepts and electric mobility.
Other important issues include trade policy, location-specific
matters and education and human resources policy.
Information
Museum
Anti-financial crime compliance
An integrated Group-wide compliance approach has been
implemented in the Anti-Financial Crime (AFC) department in
order to link prevention of the circumvention of supranational
and national sanctions with measures to prevent and combat
money laundering, organized crime and other criminal economic
activity and the financing of terrorism. This is important, as
these risks can not only have a negative impact on society; they
can also cause long-term damage to our reputation, as well as
financial damage that can negatively affect our companies and
our shareholders and stakeholders.
Involvement at the executive level
The responsibility for human rights issues lies with the Integ-
rity and Legal Affairs Board of Management function. The
member of the Board of Management responsible for Integrity
and Legal Affairs is regularly informed about human rights
activities. This is supplemented by regular reports submitted
to the Board of Management and the Corporate Sustainability
Board (CSB), as well as to the Procurement Council (PC) within
the framework of our sustainability strategy.
224
E❘ NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
Independent Auditor's Report
Concerning a Limited Assurance Engagement
on the Non-Financial Group Reporting¹
To the Supervisory Board of Daimler AG,
Stuttgart
page 217
We have performed an independent limited assurance
engagement on the separate combined non-financial Report
of Daimler AG, Stuttgart and the Group (further "Daimler")
as well as the by reference qualified parts "Business model",
"The workforce", "Legal risks" and "Non-Financial risks"
(further "Report") according to §§ 315b and 315c in conjunc-
tion with 289b to 289e German Commercial Code (HGB)
for the business year from January 1 to December 31, 2018.
The legal representatives of Daimler are responsible for the
preparation of the Report in accordance with §§ 315b and 315c
in conjunction with 289b to 289e HGB.
This responsibility of the legal representatives includes the selec-
tion and application of appropriate methods to prepare the
Report and the use of assumptions and estimates for individual
sustainability disclosures which are reasonable under the
given circumstances. Furthermore, the responsibility includes
designing, implementing and maintaining systems and pro-
cesses relevant for the preparation of the Report in a way that
is free of intended or unintended - material misstatements.
Independence and quality assurance on the part of the
auditing firm
We are independent from the company in accordance with the
requirements of independence and quality assurance set out
in legal provisions and professional pronouncements and have
fulfilled our additional professional obligations in accordance
with these requirements.
Our audit firm applies the national statutory provisions and
professional pronouncements for quality assurance, in particu-
lar the professional code for German Public Auditors and
Chartered Accountants (in Germany) and the quality assurance
standard of the German Institute of Public Auditors (Institut
der Wirtschaftsprüfer, IDW) regarding quality assurance require-
ments in audit practice (IDW QS 1).
Practitioner's Responsibility
Our responsibility is to express a conclusion on the Report based
on our work performed within a limited assurance engagement.
Management's Responsibility
Money laundering and the financing of terrorism pose con-
siderable sociopolitical risks. For this reason, the prevention
of money laundering and the implementation of anti-money
laundering measures have been defined as central compliance
goals in our Integrity Code. With our core business and our
global production and sale of vehicles, we and companies con-
trolled by the Group are subject to the provisions of the
German Money Laundering Act (GwG), which applies to "com-
mercial sellers of goods." As a result, we are required to
implement Group-wide and thus worldwide measures to prevent
and combat money laundering and the financing of terrorism
(anti-money laundering - AML - and counter terrorist financing -
CTF - policies).
Within our sales organization, we conduct individual audits of
potentially critical transactions in cooperation with the units
that are involved. During our ongoing training sessions, we also
inform our employees and make them aware of their obligation
to respect and safeguard human rights as described in our
Integrity Code. Employees and external parties can use various
channels, such as the BPO (Business Practices Office) whistle-
blower system and the World Employment Committee, to report
suspected human rights violations and obtain "access to rem-
edy" as defined by the third pillar of the UN Guiding Principles
on Business and Human Rights. ④ daimler.com/company/
corporate-governance/compliance/principles.html
During the reporting year, we made adjustments to our risk
assessment methods and also had external stakeholders verify
our risk assessment process. The feedback we receive from
stakeholders is used to further develop and improve the risk
assessment system. We are also currently developing an
effective approach to program implementation, monitoring and
reporting.
The organizational structure of the AFC specialist unit serves as
the central Group organization for promoting compliance
with the GWG across all divisions. This structure also brings
together under one roof our two Centers of Competence for
Preventing and Combating Money Laundering and the Financing
of Terrorism (CoC AML) and the Center of Competence for
Checks against Sanctions Lists (CoC CSL). The objective of the
sanctions compliance process is to ensure the performance of
systematic reviews to determine whether the names of affected
natural or juridical persons or organizations can be found on
any sanctions list around the globe (checks against sanctions
lists CSL). The review thus involves checking supranational
sanctions lists such as those published by the United Nations
(UN) and the European Union (EU), as well as national sanc-
tions lists, in particular those published by the United States,
that may be applicable in certain situations.
As required by law, such reviews are conducted for customers
and business partners, for example in sales and procurement,
as well as for employees and strategic cooperation partners.
The provisions of data protection law are taken into account
when such checks against sanctions lists are performed.
Our integrated compliance approach aims to ensure that we
can effectively prevent and combat money laundering and
the financing of terrorism.
Human rights compliance
For Daimler, respect for human rights is a fundamental compo-
nent of responsible corporate governance. Respect for human
rights is therefore a key component of our Group-wide sustain-
ability strategy. We are committed to ensuring that human
rights are respected and upheld throughout our organization
and by our suppliers.
The following standards and guidelines in particular serve as a
frame of reference for our conduct and are of central impor-
tance for our due diligence obligations as defined by the HRRS:
the UN Global Compact,
the UN Guiding Principles on Business and Human Rights,
the Universal Declaration of Human Rights,
Germany's National Action Plan on Business and Human
Rights, and
the Core Labor Standards of the International Labour
Organization.
Further Group-wide measures
Our expectations, which are based on these standards
and guidelines, are clearly defined and described in our Integ-
rity Code and the Daimler Supplier Sustainability Standards.
The latter define our requirements with regard to working con-
ditions, human rights, environmental protection, safety,
business ethics and compliance, and are also part of our general
terms and conditions. We demand that our direct suppliers
worldwide commit themselves to observing our sustainability
standards, communicating them to their employees and to
upstream value chains, and checking to ensure that the stan-
dards are complied with. As a risk-based measure, we our-
selves perform checks in critical supply chains in order to ver-
ify compliance with our standards by further members of the
supply chain. These audits begin with the tier one supplier and
extend to the critical points in the supply chain, and even
down to the mines if necessary.
We are gradually expanding our Human Rights Respect System
(HRRS) in a process that also includes regular consultations
with external stakeholders. The HRRS, which orientates itself
on our Group-wide Compliance Management System (CMS),
utilizes a risk-based approach in its focus on Daimler majority
holdings (including our production locations) and our supply
chain.
Due diligence with the Human Rights Respect System
As a proactive risk management system, the HRRS is designed
to identify and avoid systemic risks and possible negative
effects of our business activities on human rights early on. The
HRRS thus primarily protects third parties and is aimed at
exerting its effect along our supply chain as well. It consists of
four steps that are to be applied to Daimler majority-owned
companies and the supply chain:
1. identification of potential human rights risks (risk
assessment),
2. definition, implementation and management of preventive
measures and countermeasures (program implementation),
3. monitoring of the effectiveness of the measures, in parti-
cular at higher-risk units and in supply chains that are at a
high risk of human rights violations (monitoring), and
4. periodic internal reporting on relevant issues, compliance
with external reporting requirements (reporting).
The HRRS also involves consultation and exchange with rights
holders (for example our employees and their representatives)
and external third parties such as civil society organizations
and local populations.
Identification of human rights risks at Daimler
majority holdings
The risk assessment is a two-step process. The first step
involves a categorization of the majority holdings on the basis
of predefined criteria, such as the risk situation in specific
countries and risks associated with specific business operations.
In the second step, units that display a heightened human
rights risk are subject to an on-site assessment. The modular
approach we employ here takes into account fundamental
human rights standards such as those defined in the Universal
Declaration of Human Rights and the Core Labour Standards
of the International Labour Organization (ILO).
E❘ NON-FINANCIAL REPORT | COMPLIANCE 223
We conducted our work in accordance with the International
Standard on Assurance Engagements (ISAE) 3000 (Revised):
"Assurance Engagements other than Audits or Reviews of
Historical Financial Information" published by IAASB. This
Standard requires that we plan and perform the assurance
Dialogue
- Local dialog with residents and
municipalities
Every year, we review the adequacy and effectiveness of our
Compliance Management System and adapt it to global devel-
opments, changed risks and new legal requirements. We also
monitor important core processes during the year on the basis
of key performance indicators (KPIs) that include process
duration and quality. To determine these indicators, we check,
among other things, whether formal requirements are met
and all information is complete. In addition, we analyze the
knowledge gained through independent internal and external
assessments and participate in selected benchmark studies.
Monitoring and improvements
In addition to our internal training measures, our training
program also includes special courses on integrity and compli-
ance (including corruption prevention) that are offered to our
business partners in line with their specific risks. The courses
are offered as web-based training or classroom training ses-
sions. Daimler informs its business partners about the courses
and invites them to participate.
Information and qualification measures are also offered to
individuals who perform supervisory and management func-
tions. Within the framework of the onboarding program for
new members of the Supervisory Board of Daimler AG, such
members were provided with information about the antitrust
compliance program and technical compliance management
during the year under review. In addition, the Group's Chief
Compliance Officer reported to the Audit Committee of the
Supervisory Board on the status of the compliance manage-
ment system. In 2018, new members of the supervisory boards
of Daimler holdings were provided with information on various
issues relating to compliance, data protection and integrity. They
also participated in a "Know Your Responsibilities❞ onboarding
program to make them more aware of compliance-related
topics (for example anti-corruption policies) and the importance
of integrity at their companies. New members of executive
bodies at companies in which Daimler is the majority share-
holder are given a compact overview of key aspects of cor-
porate governance via the Corporate Governance Navigator,
which is a target group-focused module that supports them
in their new role by providing information on their tasks and
responsibilities, contact partners and units that deal with
central issues addressed by the Integrity and Legal Affairs
division and adjacent units.
219
E❘ NON-FINANCIAL REPORT | COMPLIANCE
All of these training measures contribute to the permanent
establishment of ethical and compliant behavior at the company
and also help our employees deal with specific issues that
can occur at work. The same is true of the Daimler app for integ-
rity, compliance and legal affairs. The app can be downloaded
and used by all employees with an iOS company-owned device.
Among other things, the app enables mobile access to informa-
tion on corruption prevention and antitrust law, and additional
topics will be added in the coming financial year.
These activities are used to define any required improvement
measures, which are implemented by the responsible units
and departments and then monitored on a regular basis. The
relevant management bodies continuously receive reports
on these monitoring activities.
We also offer our employees in the compliance and legal
organizations target group-specific qualification measures. In
addition, all new employees at these organizations receive a
comprehensive introduction in an onboarding program.
Office employees are required to complete modules relevant to
their role and function. The associated modules are assigned
to them automatically or in a centralized process. These training
modules are assigned when an employee is hired, promoted
or transferred to a position that involves an increased risk. This
approach ensures that personnel changes are properly
addressed. In general, the program must be repeated approxi-
mately every three years. Factory employees can complete
the web-based training program voluntarily.
Every employee who works at a majority-owned Daimler-
controlled company can participate in a web-based and target-
group oriented training program consisting of several mod-
ules a basic module, a module specifically for managers, and
expert modules on antitrust law, data protection, technical
compliance, non-cash rewards for employees and function-
specific topics such as procurement and sales. This program
is being continuously expanded in line with the requirements of
specific target groups.
Our extensive training courses are based on our Integrity Code.
The training program is planned on the basis of an annual
planning cycle that includes everything from a needs analysis
to the evaluation of the entire training process. Among other
things, the program covers the topics of integrity, compliance
(including corruption prevention and technical compliance),
data protection and antitrust law. Depending on the risk and
the target group, we use classroom training or digital learning
techniques such as web-based training courses.
Communication and training
Compliance on the part of our business partners
We also require our business partners to adhere to clear com-
pliance requirements because we regard our business partners'
integrity and behavior in conformity with regulations as a pre-
condition for trusting cooperation. In the selection of our direct
business partners, we therefore ensure that they comply with
the law and observe ethical principles. In financial year 2018,
we completed the implementation of our globally standardized
process for the effective and efficient examination of all new
and existing business partners (Business Partner Due Diligence
Process). Our continuous monitoring here is designed to
ensure we can identify possible integrity violations by our busi-
ness partners. We also reserve the right to terminate cooper-
ation with, or terminate the selection process for, any business
partner who fails to comply with our standards. In addition,
we work with our procurement units to continuously improve our
processes for selecting and cooperating with suppliers; our
global Daimler Supplier Sustainability Standards apply here. On
the basis of these standards and our Integrity Code, a specific
Supplier Compliance Awareness Module was developed. This
module is distributed to our suppliers. It contains provisions
similar to those that can be found in the general Compliance
Awareness Module for sales partners, which was introduced
in 2016 and is designed to increase their awareness of com-
pliance requirements. See also daimler.com/sus/obr.
Personnel measures taken in 2018 included the issuing of
verbal and written warnings and final warnings, as well
as separation agreements and ordinary and extraordinary
terminations.
With regard to those cases that are closed "with merit,"
appropriate response measures are decided in line with the
principles of proportionality and fairness. Fairness, which is
the key principle in the overall process, applies to both whistle-
blowers and affected parties. In other words, affected parties
are not judged in advance and the assumption of innocence
applies until it has been proven that a violation has occurred.
Whistleblowers who contact the BPO are also protected.
They do not need to worry that their report might result in
negative consequences for themselves.
The web-based training courses are supplemented by class-
room training sessions that are conducted by central or local
trainers. We provide our internal trainer network with modular
training documents and materials for methodical implementa-
tion, such as trainer guideline and explanatory videos that can
be used in a target group-specific manner in accordance with
the risks associated with the participants' jobs. In 2018, a
total of approximately 220,000 employees from various levels
of the hierarchy participated in classroom and web-based
training programs.
The BPO process was developed further during the year under
review. A risk-based initial assessment and standardized pro-
cesses enable more rapid identification and effective processing
of high-risk reports submitted to the BPO. The case categories
used by the BPO have been updated and new categories have
been added in order to incorporate the latest social and legal
developments into the BPO process. In the year under review,
89 new BPO cases were opened. A total of 101 cases were
closed, 60 of them "with merit," which means the initial suspicion
was confirmed. Of these latter cases, five were categorized
as "corruption" and seven as “theft, breach of trust and enrich-
ment offenses of a significant magnitude or value." Seven
cases fell under the category "damage exceeding €100,000."
One case was in the category "physical injury."
Involvement of company management
Important non-financial reporting topics
221
E | NON-FINANCIAL REPORT | COMPLIANCE
In order to ensure an independent external assessment of our
Antitrust Compliance Program, KPMG AG Wirtschafts-
prüfungsgesellschaft audited the Compliance Management
System for antitrust law in accordance with the 980 standard
of the Institute of Public Auditors in Germany. This audit, which
was based on the principles of appropriateness and effective
implementation, was successfully completed at the end of 2016.
The results of our annual compliance risk analysis serve as the
basis for the formulation of measures that address antitrust
risks. The responsibility for designing, implementing and moni-
toring measures lies with each company's management.
Managers in turn cooperate closely with Integrity and Legal
Affairs, which also provides information on how to implement
the measures effectively. Units that face a higher potential risk
in particular must also systematically assess the adequacy
and effectiveness of locally implemented antitrust compliance
measures at regular intervals. In addition, our Legal and Cor-
porate Audit departments conduct additional monitoring activi-
ties at our company's units, as well as random audits on the
basis of a predefined audit plan in order to ensure that antitrust
laws are complied with and internal processes are carried out
properly. This helps us continuously improve the effectiveness
of our Antitrust Compliance Program and adapt it to global
developments and new legal requirements. The associated
methods and processes are being constantly refined and
improved.
In addition to Daimler's Legal department and its specialist
advisers, the Group's global units and their employees can turn
to legal advisers in local units, who also ensure that our
standards are consistently upheld. We also utilize a variety of
communication measures to make our employees aware of
the importance of competition and antitrust laws and issues.
By means of an advisory hotline set up by our Legal department,
as well as guidelines and practical support, we help our
employees around the world recognize situations that might be
critical from an antitrust perspective, and also act in compli-
ance with regulations in their daily work, especially when deal-
ing with competitors, cooperating with dealers and general
agencies around the world, and participating in business asso-
ciation committees.
Free and unfettered competition is one of the foundations of
our social and economic system. Such competition creates
growth and jobs and ensures that all of us as consumers have
access to modern products at fair prices. Our Group-wide
Antitrust Compliance Program is oriented to national and inter-
national standards. The program establishes a binding, globally
valid Daimler standard that defines how matters of competi-
tion law are to be assessed. The Daimler standard is based on
the standards of the European antitrust authorities and
courts. The objective of the Daimler standard is a uniform level
of compliance and advice in all countries and thus compliance
with all local and international antitrust laws.
Our divisional and regional compliance managers report to
the Chief Compliance Officer. This guarantees the compliance
managers' independence from the business divisions. The
Chief Compliance Officer, the Group General Counsel and the
Vice President Legal Product & Technical Compliance report
directly to the Member of the Board of Management for Integrity
and Legal Affairs and to the Audit Committee of the Super-
visory Board. They also report regularly to the Board of Manage-
ment of Daimler AG on matters such as the status of the
Compliance Management System and its further development,
the status of the whistleblower system and, if necessary, on
other topics. In addition, the Group General Counsel regularly
reports to the Antitrust Steering Committee and the Group
Risk Management Committee, to which the Chief Compliance
Officer and the Vice President Legal Product & Technical
Compliance also report.
Antitrust compliance
Daimler places the same strict requirements on all of its activ-
ities around the world. In addition, we continuously improve
our methods and processes and use a variety of communication
and training measures to make our employees around the
world more aware of the importance of fighting corruption.
Further information on communication and training:
The responsibility for implementing and monitoring measures
lies with each company's management, which cooperates
closely with the specialist units within Integrity and Legal Affairs.
Daimler has committed itself to fighting corruption in its
own business activities. Along with complying with all applicable
laws, this also involves adhering to the rules of the OECD
Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions (1997) and the United
Nations Convention against Corruption (2003). As a founding
member of the UN Global Compact, Daimler also seeks to
ensure that not only the company itself but also its business
partners act in accordance with the principles of the compact.
The most important goals here are to fight corruption around
the world in order to enable fair competition, eliminate the
damage corruption does to society and thus improve conditions
for everyone. Our anti-corruption compliance program is
based on our comprehensive Compliance Management System.
The program is globally valid and primarily consists of an
integrated risk assessment process that takes into account
internal information such as a unit's business model and
external information such as the Corruption Perceptions Index
from Transparency International, for example. Other program
components include risk-based measures for avoiding corrup-
tion in all business activities (e.g. reviews of business partners
and transactions) and measures to ensure that special care is
taken in contacts with authorities and public officials. Our
risk-minimization measures focus in particular on sales compa-
nies in high-risk countries and business relationships with
wholesalers and general agencies worldwide.
Anti-corruption compliance
E | NON-FINANCIAL REPORT | COMPLIANCE
220
Eliminating corruption, preventing cartel arrangements, ensuring
compliance with technical regulations, preventing money
laundering and the financing of terrorism, and complying with
sanctions we introduced our Compliance Management Sys-
tem (CMS) in order to address exactly these issues, which are
extremely important to us. The Data Compliance Management
System that we are currently setting up is also based on the
Daimler CMS, as is our Group-wide approach to respecting and
upholding human rights.
page 218
- Annual "Daimler Sustainability Dialogue"
(Germany/regions)
reported violations. We also supply information materials
such as country-specific information cards. In addition, we have
produced an instructional video in ten languages and we
repeatedly stage informational and dialog events at our locations
as well.
218
Our Compliance Management System (CMS) consists of
basic principles and measures intended to promote rule-based
behavior throughout the company. The CMS is based on
national and international standards and applies on a global
scale at all Daimler AG units and majority holdings. The
CMS consists of seven elements that build on one another.
71 E.07
Our Compliance Management System
Values-based compliance is an indispensable part of day-to-day business at Daimler, and for us,
means acting in conformance with laws and regulations. Our objective is to ensure that all Daimler
employees worldwide are always able to carry out their work in conformance with applicable
laws, regulations, voluntary commitments and our values, as set out in binding form in our Integrity
Code. Our compliance activities focus on complying with all applicable anti-corruption regulations,
the maintenance and promotion of fair competition, adherence to legal and regulatory stipulations
regarding product development, respect for and the protection of human rights, adherence to
data protection laws, compliance with sanctions lists and the prevention of money laundering.
Compliance
217
E❘ NON-FINANCIAL REPORT | COMPLIANCE
Peer review within the framework of
sustainability initiatives such as the UN
Global Compact
Our compliance values and goals
Advisory Board for Integrity and Corporate
Responsibility
Participation
- Topic- and project-related discussions
New dialog formats on future questions:
think tanks, hackathons, ideation challenge
- Specialist conferences on societal topics
and debates
-Collaboration in the BDI workgroup on
artificial intelligence
- Membership of sustainability initiatives and
networks
- Daimler Supplier Portal
- Internal dialog sessions on integrity and
compliance
Stakeholder consultation in topic-related
workgroups
E | NON-FINANCIAL REPORT | COMPLIANCE
Our Compliance Management System (CMS) is designed
to help Daimler and its employees avoid inappropriate or illegal
behavior, and our culture of integrity serves as the foundation
for this approach. The measures needed for this are defined by
our compliance and legal organizations in a process that
also takes the company's business requirements into account.
page 116
Our compliance and legal organizations have set themselves
the goal of ensuring Group-wide conformance with laws
and regulations. Our compliance organization is structured in a
divisional and regional manner, while our legal organization
is structured regionally and along the value chain. These struc-
tures enable us to provide optimal support and advice to our
divisions. A contact person is made available to each function,
division and region. In addition, a global network of local con-
tact persons makes sure that our standards are met throughout
the Group and also helps local management at Daimler facili-
ties and sales companies implement our compliance program.
Risks
IV. Compliance
III. Compliance
Organization
V. Compliance
Program
& Training
VI. Communication
II. Compliance
Targets
Our compliance organization
& Improvement
Daimler Compliance Management System (CMS)
E.07
The whistleblower system BPO (Business Practices Office)
enables Daimler employees and external whistleblowers to
report misconduct anywhere in the world. The BPO is available
around the clock to receive information that is sent by e-mail
or normal mail, or by filling out a special form. An external toll-
free hotline is also available in Brazil, the United States and
South Africa. Reports can be submitted anonymously if local
laws permit this. In Germany, reports to the BPO can also
be submitted via a neutral intermediary, who in this case is an
independent external attorney. The information provided to
the BPO enables us to learn about potential risks and specific
violations that pose a high risk to the company and its employ-
ees, and this in turn allows us to prevent damage to the company
and its reputation. A globally valid corporate policy aims to
ensure a fair and transparent approach that takes into account
the principle of proportionality for the affected parties,
while also giving protection to whistleblowers. In an effort to
increase trust in our whistleblower system and make it even
better known within the Group, we have established a continuous
communication process that includes the periodic provision
of information to employees about the type and number of
Our compliance program comprises principles and measures
designed to reduce compliance risks and prevent violations
of regulations and laws. The individual measures, which are
based on the knowledge gained through our systematic com-
pliance analyses, focus on the following aspects:
Compliance program
We systematically pursue the goal of minimizing compliance
risks, and we analyze and assess the compliance risks of
all our business units every year. These analyses are based on
centrally compiled information on all business units and take
specific additional details into account as needed. The results
of the analyses form the basis of our risk control.
Compliance risks
VII. Monitoring
E | NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
Identification of human rights risks in our supply chain
Since 2008 we have defined our expectations towards our
suppliers regarding sustainability in our Supplier Sustainability
Standards. Upholding human rights and in particular stipula-
tions concerning working conditions are key components of
these requirements. In order to meet our human rights due
diligence obligations even more systematically, we have devel-
oped risk classifications tailored to various product areas
(such as production materials and services). This enables us to
identify services and raw materials that may pose risks to
human rights, including minerals that are potentially associated
with conflicts. During the year under review, we started using
our analyses here as a basis for defining and implementing
measures that can also be applied beyond the level of our direct
suppliers if necessary.
engagement to obtain limited assurance whether any matters
have come to our attention that cause us to believe that the
Report for the period from January 1 to December 31, 2018, has
not been prepared, in all material respects in accordance
with §§ 315b and 315c in conjunction with 289b to 289e HGB.
We do not, however, provide a separate conclusion for each
disclosure. In a limited assurance engagement the evidence
gathering procedures are more limited than in a reasonable
assurance engagement and therefore significantly less assur-
ance is obtained than in a reasonable assurance engagement.
The choice of audit procedures is subject to the auditor's own
judgement.
225
1 Our engagement applied to the German version of the Report 2018. This
text is a translation of the Independent Assurance Report issued in the
German language, whereas the German text is authoritative.
Wirtschaftsprüfer
(German Public Auditor)
Mokler
Dr. Thümler
Wirtschaftsprüfer
Wirtschaftsprüfungsgesellschaft
(Original German version signed by:)
KPMG AG
Stuttgart, February 13, 2019
Our assignment for the Supervisory Board of Daimler AG,
Stuttgart, and professional liability is governed by the General
Engagement Terms for Wirtschaftsprüfer and Wirtschafts-
prüfungsgesellschaften (Allgemeine Auftragsbedingungen für
Wirtschaftsprüfer und Wirtschaftsprüfungsgesellschaften) in
the version dated January 1, 2017 https://www.kpmg.de/
bescheinigungen/lib/aab_english.pdf. By reading and using
the information contained in this report, each recipient confirms
notice of provisions of the General Engagement Terms (includ-
ing the limitation of our liability for negligence to EUR 4 Mio as
stipulated in No. 9) and accepts the validity of the attached
General Engagement Terms with respect to us.
This report is issued for purposes of the Supervisory Board of
Daimler AG, Stuttgart, only. We assume no responsibility with
regard to any third parties.
Restriction of use/AAB clause
Based on the procedures performed and the evidence obtained,
nothing has come to our attention that causes us to believe
that the Report of Daimler for the business year from January 1
to December 31, 2018 is not prepared, in all material respects,
in accordance with §§ 315b and 315c in conjunction with 289b
to 289e HGB.
(German Public Auditor)
- Assessment of the overall presentation of the information
Conclusion
Inquiries of personnel on group level who are responsible
for the materiality analysis to get an understanding of the
process for identifying material topics and respective report
boundaries for Daimler
- A risk analysis, including a media search, of relevant informa-
tion about the sustainability performance of Daimler in the
reporting period
· Evaluation of the design and implementation of systems and
processes for the collection, processing and monitoring of
information on environmental, employee and social matters,
respect for human rights, and combating corruption and
bribery, including data consolida-tion
-
-
-
Evaluation of selected internal and external documents
- Analytical evaluation of data and trends of quantitative
information which are reported by all sites on group level
Evaluation of local data collection and reporting processes
and reliability of reported data via a sampling survey
in Kawasaki (Japan), Sindelfingen and Düsseldorf (both
Germany).
- Inquiries of personnel on group level who are responsible for
the collection of the infor-mation to concepts, due diligence
processes, results and risks, the conduction of internal con-
trols and the information consolidation
Within the scope of our engagement, we performed amongst
others the following procedures:
9
Deferred tax assets
15
3,204
2,763
16
990
722
Receivables from financial services
51,300
14
Other financial assets
Marketable debt securities and similar investments
4,818
4,860
13
4,021
47,074
46,600
2,844
25,686
Other assets
Cash and cash equivalents
39,454
45,440
14
Receivables from financial services
11,995
12,586
19
17
49,476
18
148,449
160,006
1,203
1,115
Trade receivables
Inventories
Total non-current assets
29,489
12
7,657
Contract and refund liabilities
212
97,952
87,624
Total equity and liabilities
281,619
255,345
1 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CASH FLOWS
231
Consolidated Statement of Cash Flows¹
F.04
Equipment on operating leases
In millions of euros
2018
2017
(adjusted)²
Profit before income taxes
Depreciation and amortization/impairments
Other non-cash expense and income
Gains (-)/losses (+) on disposals of assets
Change in operating assets and liabilities
Total current liabilities
Equity-method investments
Liabilities held for sale
2,346
Other liabilities
823
560
23
7,828
7,620
24
56,240
48,746
25
15,853
6,905
26
1,580
1,528
27
7,081
7,375
28
2,439
12,072
5,014
Deferred income
9
2,370
2,375
25
78,378
88,662
24
7,143
3,762
7,734
1,046
628
Deferred income
Deferred tax liabilities
Other financial liabilities
Financing liabilities
Provisions for other risks
Provisions for income taxes
23
2,347
26
1,612
Inventories
Other financial liabilities
Financing liabilities
Provisions for other risks
Provisions for income taxes
12,451
102,562
117,614
14,185
Trade payables
Total non-current liabilities
10
10
28
3,833
5,438
27
Other liabilities
Contract and refund liabilities
1,668
5,767
Marketable debt securities and similar investments
7,393
65,159
281,619
106,896
121,613
531
Equity and liabilities
Total assets
Total current assets
Assets held for sale
255,345
5,889
17
3,602
2,970
16
Other financial assets
9,073
8,855
15
Other assets
Share capital
Capital reserves
Retained earnings
66,053
20
1,290
1,386
Provisions for pensions and similar obligations
Total equity
Non-controlling interests
63,869
64,667
Equity attributable to shareholders of Daimler AG
1,504
397
47,553
49,490
11,742
11,710
3,070
3,070
Other reserves
22
Trade receivables
38. Remuneration of the members of the Board
Receivables from financial services
translation
instruments
Balance at January 1, 2017
3,070
11,744
40,794
2,842
53
debt
First-time adoption of IFRS 15
First-time adoption of IFRS 9
23
Balance at January 1, 2017 (adjusted)³
3,070
11,744
40,912
2,842
53
95
Currency
Retained
earnings²
reserves
1,091
12,072
10,981
Cash and cash equivalents at end of period
15,853
12,072
1 See Note 29 for other information on Consolidated Statements of Cash Flows.
2 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
232
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Statement of Changes in Equity¹
F.05
In millions of euros
Equity
instruments/
Share
Capital
capital
Net profit
3,781
10,278
before taxes
Balance at December 31, 2017
3,070
11,742
47,553
258
66
Balance at January 1, 2018
3,070
-7
11,742
258
66
First-time adoption of IFRS 9
2
-28
Balance at January 1, 2018 (adjusted)³
3,070
11,742
47,553
Other
5
Changes in ownership interests
in subsidiaries
Deferred taxes on other comprehensive
income
Total comprehensive income/loss
Dividends
Changes in the consolidated group
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
-106
-2,584
16
-19
10,153
-2,584
13
33
-3
-3,477
-35
Other comprehensive income/loss
-868
133
13,129
843
Income taxes paid
-2,858
-3,879
Cash used for/provided by operating activities
343
-1,652
Additions to property, plant and equipment
1,380
-7,534
Additions to intangible assets
-3,167
-3,414
Proceeds from disposals of property, plant and equipment and intangible assets
644
812
Investments in shareholdings
-780
-6,744
Dividends received from equity-method investments
210
877
Vehicles on operating leases
Other operating assets and liabilities
10,595
13,967
6,305
5,676
-872
-1,507
-453
-3,850
-1,455
-884
-1,597
1,694
1,259
-10,257
-11,412
-1,609
-3,304
-1,105
Proceeds from disposals of shareholdings
27,981
363
Cash provided by financing activities
Effect of foreign exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
71,137
63,116
-56,318
-47,073
-3,905
-3,477
-315
-250
118
114
-50
-42
-78
-10
13,226
Acquisition of non-controlling interests in subsidiaries
Trade payables
Acquisition of treasury shares
Dividends paid to non-controlling interests
418
Acquisition of marketable debt securities and similar investments
-5,739
-6,729
Proceeds from sales of marketable debt securities and similar investments
6,210
7,266
Other
82
-22
Cash used for investing activities
-9,921
-9,518
Change in short-term financing liabilities
2,637
751
Additions to long-term financing liabilities
Repayment of long-term financing liabilities
Dividend paid to shareholders of Daimler AG
Proceeds from the issue of share capital
30,948
Equity-method investments
13,735
Changes in Equity
Consolidated Statement of
231
Consolidated Statement of Cash Flows
230
Financial Position
Consolidated Statement of
229
232
Comprehensive Income/Loss
228
Consolidated Statement of Income
F| Consolidated Financial Statements
227
F | CONSOLIDATED FINANCIAL STATEMENTS | CONTENTS
The Consolidated Financial Statements presented as follows have been
prepared in accordance with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU). They also
comply with additional requirements set forth in Section 315e Sub-
section 1 of the German Commercial Code (HGB).
84761
Consolidated
Financial
Statements
Consolidated Statement of
Notes to the Consolidated Financial
Statements
234
285
25. Other financial liabilities
256
4. Revenue
284
24. Financing liabilities
254
3. Consolidated Group
283
23. Provisions for other risks
252
management judgments
277
22. Pensions and similar obligations
2. Accounting estimates and
275
21. Share-based payment
234
1. Significant accounting policies
47,555
5. Functional costs
5
-129,626
8
271
214
8
-793
-582
10,595
13,967
-210
9
-3,350
7,582
10,617
333
339
7,249
10,278
for profit attributable to shareholders of Daimler AG
Basic
-3,013
210
7
1,498
33,067
34,528
5
-13,067
-12,951
5
-4,036
-3,808
5
-6,581
-5,938
6
2,330
2,259
6
-1,462
-1,043
13
656
-134,295
257
26. Deferred income
285
Interest income
Interest expense
Profit before income taxes²
Income taxes
Net profit
thereof profit attributable to non-controlling interests
thereof profit attributable to shareholders of Daimler AG
Earnings per share (in euros)
Note
Other financial income/expense, net
2018
(adjusted)1
4
167,362
164,154
316
37. Related party relationships
270
315
2017
Profit on equity-method investments, net
Other operating expense
Other operating income
272
273
of Management and the Supervisory Board
39. Auditor fees
317
318
274
40. Additional information
318
228
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF INCOME
Consolidated Statement of Income
F.01
In millions of euros
Revenue
Cost of sales
Gross profit
Selling expenses
General administrative expenses
Research and non-capitalized development costs
36. Earnings per share
270
20. Equity
19. Trade receivables
31. Contingent liabilities and other
262
10. Intangible assets
288
30. Legal proceedings
259
9. Income taxes
287
29. Consolidated statement of cash flows
258
8. Interest income and interest expense
286
28. Other liabilities
258
7. Other financial income/expense, net
286
27. Contract and refund liabilities
258
6. Other operating income and expense
11. Property, plant and equipment
Diluted
263
291
18. Inventories
17. Other assets
16. Other financial assets
similar deposits
315
35. Capital management
15. Marketable debt securities and
311
34. Segment reporting
268
14. Receivables from financial services
304
33. Management of financial risks
265
13. Equity-method investments
292
32. Financial instruments
264
12. Equipment on operating leases
financial obligations
11
36
9.61
-1
-1
Actuarial gains/losses
from pensions and similar obligations (pre-tax)
-1,627
-1,625
-2
-108
on equity-method investments (after tax)
-106
Taxes on actuarial gains/losses from pensions
and similar obligations
171
171
-19
-19
Actuarial gains/losses
from pensions and similar obligations (after tax)
-2
Actuarial gains/losses
-1
-1
25
Taxes on unrealized gains/losses
and on reclassifications
-1
-1
Equity-method investments (after tax)
-4
-4
25
25
Items that may be reclassified to profit/loss
-1,059
-1,079
20
-885
-815
-70
Actuarial gains/losses
on equity-method investments (pre-tax)
-1,456
25
-1,454
-127
1 See Note 20 for other information on comprehensive income/loss.
2 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
229
230
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Statement of Financial Position
F.03
267
In millions of euros
2018
At December 31,
2017
(adjusted)1
Assets
Intangible assets
Property, plant and equipment
10
14,801
Note
9,338
9,605
351
-125
-2
Items that will not be reclassified to profit/loss
-1,457
-1,455
-2
-127
-125
-2
Other comprehensive income/loss, net of taxes
-2,516
-2,534
18
-1,012
-940
-72
Total comprehensive income
5,066
4,715
-2
-3
-3
Unrealized gains/losses (pre-tax)
2017
(adjusted)²
Net profit
Currency translation adjustments
7,582
234
7,249
333
10,617
2017
214
-2,652
10,278
-2,584
339
-68
Equity instruments and debt instruments
Unrealized gains/losses (pre-tax)
-45
-44
20
2017
(adjusted)²
2018
2018
6.78
9.61
1 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
2 The reconciliation of Group EBIT to profit before income taxes is presented in Note 34.
The accompanying notes are an integral part of these Consolidated Financial Statements.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS
Consolidated Statement of Comprehensive
Income/Loss¹
F.02
In millions of euros
Daimler
Shareholders
Group
of Daimler AG
Non-
controlling
interests
Daimler
Shareholders
Group
of Daimler AG
Non-
controlling
interests
2018
-1
18
17
1
Reclassifications to profit and loss (pre-tax)
-722
-722
44
2,423
44
-4
Taxes on unrealized gains/losses
and on reclassifications
537
537
Derivative financial instruments (after tax)
-1,265
-1,266
-735
-736
1
1,728
1,731
271
2,419
6.78
1
-1,080
Reclassifications to profit and loss (pre-tax)
-1
-1
Taxes on unrealized gains/losses
and on reclassifications
21
21
-3
-3
Equity instruments and
debt instruments (after tax)
-24
-23
-1
14
13
1
Derivative financial instruments
Unrealized gains/losses (pre-tax)
-1,081
258
-178
Net profit
-3,905
-315
5,066
-4,220
80
80
-50
-50
-50
50
50
-
50
-32
46
-13
1
64,667
1,386
Other comprehensive income/loss
before taxes
Deferred taxes on other comprehensive
income
Total comprehensive income/loss
Dividends
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Changes in ownership interests
-45
in subsidiaries
47
Other
351
66,053
4,715
728
63,869
1,290
65,159
-26
-8
1,171
9
63,843
1,282
-
7,249
333
-34
65,125
7,582
First-time adoption of IFRS 9
Balance at January 1, 2018 (adjusted)³
Net profit
-1,803
-3
-3,262
18
-3,244
537
-1
-1,266
-4
-
-95
5
728
9
Balance at December 31, 2018
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accounting of contract manufacturing. Under a contract manu-
facturing agreement, Daimler sells assets to a third-party
manufacturer from which Daimler buys back the manufactured
products after completion of the commissioned work. If the
sale of the assets is not accompanied by the transfer of control
to the third-party manufacturer, no revenue is recognized
under IFRS 15.
Date of recognition of sales incentives. Under IFRS 15,
obligations from sales transactions are presented by Daimler
as refund liabilities. Obligations from sales transactions
which have previously been accounted for as a provision might
necessitate earlier recognition as refund liabilities under
IFRS 15 due to different recognition principles.
Due to clarifications of IFRS 15 regarding the scope of application
and the accounting of licenses, income from licenses has
been reclassified from other operating income to revenue.
Table 7 F.06 shows the effects of the application of IFRS 15
and IFRS 9 (as far as the effects relate to non-designated com-
ponents of derivatives) on the Consolidated Statement of
Income for the year 2017.
F.06
Effects from the application of IFRS 15 and IFRS 9
on the Consolidated Statement of Income
In millions of euros
Revenue
Cost of sales
Selling expenses
General administrative expenses
Other operating income
Other operating expense
Other financial income/expense, net¹
Income taxes
Net profit
2017
-176
373
14
1
-565
-1
87
-247
1 Exclusively from the first-time adoption of IFRS 9. Resulting from
the deferral of profits and losses relating to non-designated
components of derivatives in other comprehensive income.
38
Sale of vehicles with a residual-value guarantee. Under IFRS 15,
arrangements such as when an entity provides its customer
with a guaranteed minimum resale value that he receives on
resale do not constraint the customer in its ability to direct
the use of, and obtain substantially all of the benefits from the
asset. At contract inception of a sale with a residual-value
guarantee an entity therefore has to recognize revenue. However,
a potential compensation payment to the customer has to
be considered (revenue deferral). Such transactions have so far
been reported as operating leases.
234
Sale of vehicles for which the Group enters into a repurchase
obligation. IFRS 15 differentiates between three forms of
repurchase agreements: a forward (an entity's obligation to
repurchase the asset), a call option (an entity's right to
repurchase the asset) and a put option (an entity's obligation
to repurchase the asset at the customer's request). The
latter can lead to accounting changes since under IFRS 15,
such vehicle sales might necessitate the reporting of a sale
with the right of return. Such transactions have so far been
reported as operating leases.
obligations from sales transactions (especially performance
bonuses, discounts and other price concessions) in the
scope of IFRS 15, and
Notes to the Consolidated Financial Statements
1. Significant accounting policies
General information
The Consolidated Financial Statements of Daimler AG and its
subsidiaries ("Daimler” or “the Group") have been prepared in
accordance with Section 315e of the German Commercial Code
(HGB) and comply with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
Daimler AG is a stock corporation organized under the laws of
the Federal Republic of Germany. The Company is entered in
the Commercial Register of the Stuttgart District Court under No.
HRB 19360 and its registered office is located at Mercedes-
straße 137, 70327 Stuttgart, Germany.
The Consolidated Financial Statements of Daimler AG are
presented in euros (€). Unless otherwise stated, all amounts
are stated in millions of euros. All figures shown are rounded
in accordance with standard business rounding principles.
The Board of Management authorized the Consolidated Financial
Statements for publication on February 13, 2019.
Basis of preparation
Applied IFRSS
The accounting policies applied in the Consolidated Financial
Statements comply with the IFRSS required to be applied in the
EU as of December 31, 2018.
IFRSS issued, EU endorsed and initially adopted in the
reporting period
Application of IFRS 15 Revenue from Contracts with Cus-
tomers. In May 2014, the IASB published the standard IFRS 15.
It replaces existing guidance for revenue recognition, including
IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13
Customer Loyalty Programmes. The new standard lays down
a comprehensive framework for determining in which amount
and at which date revenue is recognized. The new standard
specifies a uniform, five-step model for revenue recognition,
which is generally to be applied to all contracts with customers.
Daimler applies IFRS 15 for the first time for the financial year
beginning on January 1, 2018. First-time adoption has been
conducted retrospectively. The figures reported for the previous
year have been adjusted by the effects arising from the adop-
tion of IFRS 15.
Daimler uses the following practical expedients available under
IFRS 15 for retrospective first-time adoption:
Contracts concluded until December 31, 2016 (in application
of previously relevant accounting standards) were not
reassessed under IFRS 15. Due to the application of this prac-
tical expedient, profit decreased especially in Q1 2017 in
comparison to full retrospective adoption. The impact on the
Group's profitability, liquidity and capital resources or
financial position is assessed to be not material.
Contracts that were modified before January 1, 2017 have
not been reassessed pursuant to the provisions of IFRS 15
for contract modifications. The application of this practical
expedient did not have any major impact on the Group's
profitability, liquidity and capital resources or financial posi-
tion.
At December 31, 2017, the amount of the transaction price
allocated to the remaining performance obligations is
not disclosed and an explanation of when that amount is
expected to be recognized as revenue is not given.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 235
First-time adoption of IFRS 15 particularly affects Daimler in
the following areas:
Contract liabilities. IFRS 15 includes guidance on the presentation
of contract fulfillment and contract obligations. These are
assets and liabilities from contracts with customers which arise
dependent on the relationship between the entity's perfor-
mance and the customer's payment. Therefore, a contract liability
is an entity's obligation to transfer goods or services to a
customer for which the entity has received consideration (or
the amount is due) from the customer.
The guidance led to reclassifications in the Statement of
Financial Position from deferred income and other liabilities
into contract liabilities.
Contract liabilities occur at Daimler especially in the following
circumstances:
deferred revenue for service and maintenance contracts
and for extended warranties, and
advance payments received on contracts in the scope of
IFRS 15.
Refund liabilities. A refund liability occurs if Daimler receives
consideration from a customer and expects to refund some or
all of that consideration to the customer. A refund liability is
measured at the amount of consideration received for which
Daimler does not expect to be entitled and is thus not
included in the transaction price.
This guidance led to reclassifications in the Statement of
Financial Position from provisions for other risks and other
financial liabilities into refund liabilities.
Refund liabilities occur at Daimler especially in the following
circumstances:
sales with a right of return and residual-value guarantees.
1,171
20
Balance at December 31, 2017
2 Retained earnings also include items that will not be reclassified to the Consolidated Statement of Income.
Actuarial losses from pensions and similar obligations amount to 9,017 net of tax in 2018 (2017: €7,562 million net of tax).
3 The prior-year figures have been adjusted due to the effects of the first-time adoption of IFRS 15 and IFRS 9.
Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
The accompanying notes are an integral part of these Consolidated Financial Statements.
Other reserves
items that
may be reclassified
in profit/loss
Share of
investments
accounted
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
233
Derivative
Equity
attributable to
Non-
financial
for using the
instruments equity method
Treasury
share
shareholders
of Daimler AG
controlling
interests
Total
equity
In millions of euros
-537
-16
-23
-
-560
15
-16
472
46
Balance at January 1, 2018
7,249
Other comprehensive income/loss
-1,626
214
-44
Deferred taxes on other comprehensive
income
Total comprehensive income/loss
Dividends
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Changes in ownership interests
in subsidiaries
Other
Balance at December 31, 2018
1 See Note 20 for other information on changes in equity.
3,070
-32
11,710
171
5,794
214
-23
-3,905
ויויויוי|3|
21
49,490
57,950
95
before taxes
59,133
-35
Changes in the consolidated group
56
56
-
Capital increase/Issue of new shares
-42
-42
-42
42
42
42
Acquisition of treasury shares
Issue and disposal of treasury shares
1,171
9
Changes in ownership interests
5
24
29
in subsidiaries
-7
10
3
Other
1,290
1,183
-35
Total comprehensive income/loss
Dividends
63,869
Other comprehensive income/loss
before taxes
95
Deferred taxes on other comprehensive
income
Balance at January 1, 2017
First-time adoption of IFRS 15
First-time adoption of IFRS 9
58,045
1,183
59,228
10,278
339
10,617
Balance at January 1, 2017 (adjusted)³
Net profit
2,467
25
-182
-73
65,159
-736
-255
-250
-3,477
-
9,605
267
-3,727
-757
25
1,731
-758
9,338
1
In addition, further standards and interpretations have been
approved which are not expected to have a material impact on
the Consolidated Financial Statements.
the year 2019, we do not expect the effect on Group EBIT to be
material.
Daimler as lessee will use following practical expedients of
IFRS 16 at the date of initial application:
Hindsight is considered when determining the lease term
if the contract contains options to extend or terminate the
lease.
At the date of initial application, the measurement of a
right-of-use asset excludes the initial direct costs; and
Regardless of their original lease term, leases for which the
lease term ends latest on December 31, 2019 are recognized
as short-term leases;
An impairment review is not performed. Instead, a right-of-use
asset is adjusted by the amount of any provision for onerous
leases recognized in the Statement of Financial Position at
December 31, 2018;
With leases previously classified as operating leases according
to IAS 17 the lease liability will be measured at the present
value of the outstanding lease payments, discounted by the
incremental borrowing rate at January 1, 2019. The respective
right-of-use asset is generally recognized at an amount equal
to the lease liability;
Presentation
IFRSS issued but neither EU endorsed nor yet adopted
In May 2017, the IASB issued IFRS 17 Insurance Contracts.
IFRS 17 replaces the currently applicable IFRS 4. It establishes
more transparency and comparability with regard to the
recognition, measurement, presentation and disclosure of
insurance contracts with the insurer. The application of
IFRS 17 is mandatory for reporting periods beginning on or after
January 1, 2021. Early adoption is permitted. Daimler currently
does not expect any material impacts on the Group's profitability,
liquidity and capital resources or financial position due to the
application of IFRS 17. Early adoption is not currently planned.
Based on the Group-wide preparations for implementation of
IFRS 16, the effect of the first-time application of IFRS 16 will
be that right-of-use assets and lease liabilities will probably be
recognized at an amount of €3.5 billion in the Consolidated
Statement of Financial Position. At the date of initial application,
retained earnings will be adjusted only insignificantly. In
IFRS 16 is to be applied to annual reporting periods beginning
on or after January 1, 2019; early adoption is permitted if
IFRS 15 is already applied. Daimler will apply IFRS 16 for the
first time for the financial year beginning on January 1, 2019.
Lease accounting for lessors has been taken over almost
identically from IAS 17 into IFRS 16.
According to IFRS 16 the depreciation of the right-of-use is
recognized within functional costs. The interest due on the lease
liability is a component of interest expense. The lease expenses
of leases classified according to IAS 17 as operating leases are
fully recognized within functional costs.
241
Presentation in the Consolidated Statement of Financial Position
differentiates between current and non-current assets and
liabilities. Assets and liabilities are classified as current if they
are expected to be realized or settled within one year or
within a longer and normal operating cycle. Deferred tax assets
and liabilities as well as assets and provisions for pensions
and similar obligations are generally presented as non-current
items.
Lease liabilities, which are assigned to financing liabilities are
measured initially at the present value of the lease payments
less any lease payments made before that date. Subsequent
measurement of a lease liability includes the increase of the
carrying amount to reflect interest on the lease liability and
reducing (by not affecting net income) the carrying amount
to reflect the lease payments made.
Right-of-use assets are measured at cost less any accumulated
depreciation and if necessary any accumulated impairment.
The cost of a right-of-use asset comprise the present value of
the outstanding lease payments, any lease payments made
at or before the commencement date less any lease incentives
received, any initial direct costs and an estimate of costs to
be incurred in dismantling or removing the underlying asset. In
this context, Daimler also applies the practical expedient that
the payments for non-lease components are generally recognized
as lease payments. If the lease transfers ownership of the
underlying asset to the lessee at the end of the lease term or if
the cost of the right-of-use asset reflects that the lessee will
exercise a purchase option, the right-of-use asset is depreciated
to the end of the useful life of the underlying asset. Otherwise
the right-of-use asset is depreciated to the end of the lease term.
According to IFRS 16 a lessee may elect, for leases with a lease
term of 12 months or less (short-term leases) and for leases
for which the underlying asset is of low value, not to recognize a
right-of-use asset and a lease liability. Daimler will apply both
recognition exemptions. The lease payments associated with
those leases are recognized as an expense on either a straight-
line basis over the lease term or another systematic basis.
In January 2016, the IASB published IFRS 16 Leases, replacing
IAS 17 Leases and IFRIC 4 Determining Whether an Arrangement
Contains a Lease and other interpretations. IFRS 16 abolishes
for lessees the previous classification of leasing agreements as
either operating or finance leases. Instead, IFRS 16 introduces
a single lessee accounting model, requiring lessees to recognize
assets for the right to use as well as leasing liabilities for the
outstanding lease payments. This means that leases that were
previously not reported in the Statement of Financial Position
will have to be reported in the future - very similar to the current
accounting of finance leases.
IFRSS issued, EU endorsed and not yet adopted
Application of IFRIC 23 Uncertainty over Income Tax
Treatments. In October 2018, IFRIC 23 Uncertainty over Income
Tax Treatments was endorsed by the EU. IFRIC 23 has to be
applied to annual reporting periods beginning on or after Janu-
ary 1, 2019. Early adoption is permitted. Daimler has chosen
to apply IFRIC 23 at December 31, 2018. The application does
not have any material impact on the Group's profitability,
liquidity and capital resources and financial position as the
former Daimler accounting policy was very close to IFRIC 23.
3,357
16
3,341
In compliance with the transition regulations, Daimler will not
adjust the prior-year figures and will present the accumulated
transitional effects in retained earnings.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Structured entities which are controlled also have to be
con-solidated. Accordingly, the assets and liabilities remain in
the Consolidated Statement of Financial Position. Structured
entities are entities which have been designed so that voting or
similar rights are not relevant in deciding who controls the
entity. This is the case for example if voting rights relate to
administrative tasks only and the relevant activities are
directed by means of contractual arrangements.
cost-of-sales method.
Dealers may finance their vehicle inventory by dealer inventory
financing provided by Daimler Financial Services. Furthermore
end-customers may be credit financed by Daimler Financial
Services. Receivables from sales financing with end-customers
and dealers are presented in receivables from financial services.
Further information is provided in Note 14.
Generally, payment from sales of vehicles, service parts
and other related product is made when the customer obtains
control of these products.
227
Revenue from sales of vehicles, service parts and other related
products is recognized when control of the goods is trans-
ferred to the customer. This generally occurs at the time the
customer takes possession of the products.
Revenue recognition
Accounting policies
As a consequence of the assessment that Argentina is in
hyperinflation, we apply IAS 29 to our Argentinian business since
January 1, 2018. This application does not have a material
impact on the Group's profitability, liquidity and capital resources
and financial position.
To determine whether a country is to be considered as in
hyperinflation, the Daimler Group refers to the list published by
the International Practices Task Force (IPTF) of the Center
of the Audit Quality or other relevant international publications.
If a country is in hyperinflation, IAS 29 Financial Reporting in
Hyperinflationary Economies has to be applied from the beginning
of the respective reporting period, i.e. from January 1 of the
respective reporting year.
Hyperinflation
The exchange rates of the US dollar, the British pound, the
Japanese yen and the Chinese renminbi - the most significant
foreign currencies for Daimler - are as shown in table 7 F.11.
Assets and liabilities of foreign companies for which the func-
tional currency is not the euro are translated into euros using
period-end exchange rates. The translation adjustments are
presented in other comprehensive income/loss. The com-
ponents of equity are translated using historical rates. The
statements of income and cash flows are translated into euros
using average exchange rates during the respective periods.
Transactions in foreign currency are translated at the relevant
foreign exchange rates prevailing at the transaction date.
In subsequent periods, assets and liabilities denominated in
foreign currency are translated using period-end exchange
rates; gains and losses from this measurement are recognized
in profit and loss (except for gains and losses resulting from
the translation of equity instruments measured at fair value
through other comprehensive income, which are recognized
in other comprehensive income/loss).
Foreign currency translation
Subsidiaries measured at amortized cost
Subsidiaries, associated companies, joint ventures and joint
operations whose business is non-active or of low volume and
that individually and in sum are not material for the Group
and the fair presentation of financial position, liquidity and
capital resources, and profitability are generally measured
at amortized cost in the Consolidated Financial Statements.
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group's proportionate share of the
results of operations is included in Daimler's Consolidated
Financial Statements with a one to three-month time lag.
Significant events or transactions are accounted for
without a time lag, however (see Note 13).
Joint operations that have no significant impact on the
Consolidated Financial Statements are generally accounted for
using the equity method.
An associated company is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the
investee. Associated companies are generally accounted for
using the equity method.
Investments in associated companies, joint ventures or
joint operations
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler's percentage ownership without change of
control are accounted for as an equity transaction between
owners.
Business combinations are accounted for using the purchase
method.
The financial statements of consolidated subsidiaries which are
included in the Consolidated Financial Statements are
generally prepared as of the reporting date of the Consolidated
Financial Statements. The financial statements of Daimler AG
and its subsidiaries included in the Consolidated Financial
Statements are prepared using uniform recognition and
measurement principles. All intercompany assets and liabilities,
equity, income and expenses as well as cash flows from
transactions between consolidated entities are entirely eliminated
in the course of the consolidation process.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
242
The Consolidated Financial Statements include the financial
statements of Daimler AG and the financial statements of all
subsidiaries, including structured entities which are directly or
indirectly controlled by Daimler AG. Control exists if the parent
company has the power of decision over a subsidiary based on
voting rights or other rights, if it participates in positive and
negative variable returns from a subsidiary, and if it can affect
these returns by its power of decision.
Principles of consolidation
The Consolidated Financial Statements have been prepared on
the historical-cost basis with the exception of certain items
such as financial assets measured at fair value through profit
or loss, derivative financial instruments, hedged items, and
pensions and similar obligations. The measurement models
applied to those exceptions are described below.
Measurement
The Consolidated Statement of Income is presented using the
For entities over which Daimler has joint control together
with a partner (joint arrangements), it is necessary to
differentiate whether a joint operation or a joint venture exists.
In a joint venture, the parties that have joint control of the
arrangement have rights to the net assets of the arrangement.
For joint ventures, the equity method has to be applied. A
joint operation exists when the jointly controlling parties have
direct rights to the assets and obligations for the liabilities.
In this case, the prorated assets and liabilities and the prorated
income and expenses are generally to be recognized
(proportionate consolidation).
200
211
Other receivables and financial assets
200
200
Marketable debt securities and similar investments
12,072
12,072
Cash and cash equivalents
11,999
4
11,995
85,998
-56
3,172
86,054
Receivables from financial services
Financial instruments measured at cost
at Jan. 1, 2018
according to IFRS 9
Carrying amount
Remeasurement
effects
Reclassification
effects
at Dec. 31, 2017
Carrying amount
according to IAS 39
In millions of euros
F.11
Reconciliation of carrying amounts (IAS 39 to IFRS 9)
Trade receivables
16
-4
113,293
3,130
3,130
6,906
173
6,733
6,906
173
6,733
Marketable debt securities and similar investments
Equity instruments and debt instruments
through profit or loss
Financial assets recognized at fair value
Equity instruments
3,168
Marketable debt securities and similar investments
Financial assets recognized at fair value
-10,447
10,447
-384
384
Equity instruments recognized at fair value
-10,063
10,063
Marketable debt securities and similar investments
Available-for-sale financial assets
113,437
-56
through other comprehensive income
Exchange rates
7.7899
243
Interest income and interest expense
Furthermore, income and expenses from equity interests are
included in other financial income/expense, net, if such
income or expenses are not presented under equity-method
investments.
Other financial income/expense, net includes all income
and expense from financial transactions which are not included
in interest income and/or interest expense, and for Daimler
Financial Services are not included in revenue and/or cost of
sales. For example, expense from the compounding of
interest on provisions for other risks is recorded in this line item.
Other financial income/expense, net
This item includes all income and expenses in connection
with investments accounted for using the equity method. In
addition to the prorated profits and losses from financial
investments, it also includes profits and losses resulting from
the sale of equity interests or the remeasurement of equity
interests following a loss of significant influence. Daimler's share
of dilution gains and losses occurring if the Group or other
owners do not participate in capital increases of companies in
which shares are held and accounted for using the equity
method are also included in profit/loss on equity-method
investments. This item also includes losses on the impair-
ment of an investment's carrying amount and/or gains on the
reversal of such impairments.
Profit/loss on equity-method investments
Government grants related to assets are deducted from
the carrying amount of the asset and are recognized in earnings
over the life of a depreciable asset as a reduced depreciation
expense. Government grants which compensate the Group for
expenses are recognized as other operating income in the
same period as the expenses themselves.
Government grants
Borrowing costs are expensed as incurred unless they are
directly attributable to the acquisition, construction or production
of a qualifying asset and are therefore part of the cost of
that asset. Depreciation of the capitalized borrowing costs is
presented within cost of sales.
Borrowing costs
Research and non-capitalized development costs
Expenditure for research and development that does not
meet the conditions for capitalization according to IAS 38
Intangible Assets is expensed as incurred.
If subsidized leasing fees are agreed upon in connection
with finance leases, revenue from the sale of a vehicle is
reduced by the amount of the interest incentive granted.
Interest income and interest expense include interest income
from investments in securities, cash and cash equivalents
as well as interest expense from liabilities. Furthermore,
interest and changes in fair values related to interest rate
hedging activities as well as income and expense resulting
from the allocation of premiums and discounts are included.
The interest components of defined benefit pension obligations
and other similar obligations as well as of the plan assets
available to cover these obligations and interest on supple-
mentary income tax payments or reimbursements are also
presented in this line item.
When loans are issued below market rates, related receivables
are recognized at present value (using market rates) and
revenue is reduced for the interest incentive granted.
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competition
and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates which are
reported as follows:
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services busi-
ness at Daimler Financial Services. The revenue from the
rental and leasing business results from operating leases and
is recognized on a straight-line basis over the periods of the
contracts. In addition, sales revenue is generated at the end of
lease contracts from the subsequent sale of the vehicles.
Revenue from receivables from financial services is recognized
using the effective interest method.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
244
Daimler does not adjust the promised amount of consideration
for the effects of a significant financing component if at
contract inception it is expected that the period between the
transfer of a promised good or service to a customer and
payment by the customer is no longer than one year.
The incremental cost of obtaining contracts is recognized
as an expense when incurred if the amortization period would
be no longer than one year.
Vehicles may be initially sold to non-Group dealers. Subsequently
a customer decides to enter into a leasing contract with
Daimler Financial Services regarding such a vehicle. The vehicle
is therefore sold by the non-Group dealer to Daimler Financial
Services and a leasing contract is entered into with the customer.
When control of the vehicle is transferred to the non-Group
dealer Daimler recognizes revenue from the sale of the vehicle.
For multiple-element arrangements, such as when vehicles
are sold with free or reduced-in-price maintenance programs
or with free online services, the Group allocates revenue to
the various elements based on their estimated relative stand-
alone selling prices. To determine stand-alone selling prices,
Daimler primarily uses price lists with consideration of average
price reductions granted to its customers.
The Group offers extended, separately priced warranties for
certain products as well as service and maintenance
contracts. Revenue from these contracts is deferred insofar as
a customer has made an advance payment and is generally
recognized over the contract period in proportion to the costs
expected to be incurred based on historical information. A
loss on these contracts is recognized in the current period if the
sum of the expected costs for services under the contract
exceeds unearned revenue. Usually those contracts are paid in
advance or in equal instalments over the contract term.
Under a contract manufacturing agreement, Daimler sells
assets to a third-party manufacturer from which Daimler buys
back the manufactured products after completion of the
commissioned work. If the sale of the assets is not accompanied
by the transfer of control to the third-party manufacturer,
no revenue will be recognized under IFRS 15.
Arrangements such as when Daimler provides customers with
a guaranteed minimum resale value that they receive on resale
(residual-value guarantee) do not constraint the customers in
their ability to direct the use of, and obtain substantially all
of the benefits from, the asset. At contract inception of a sale
with a residual-value guarantee, revenue therefore has to be
recognized. However, a potential compensation payment to the
customer has to be considered (revenue deferral).
Sales of vehicles including a put option (an entity's obligation
to repurchase the asset at the customer's request) are
reported as operating leases if the customer has a significant
economic incentive to exercise that right. Otherwise a sale
with a right of return is reported. Daimler considers several
factors when assessing whether the customer has a
significant economic incentive to exercise his right. Amongst
others, these are the relation between repurchase price and
the expected future market value (at the time of repurchase)
of the asset, or historical return rates.
Revenue is recognized net of sales reductions such as
cash discounts and sales incentives granted.
Sales of vehicles in the form of a forward (an entity's
obligation to repurchase the asset) and a call option (an
entity's right to repurchase the asset) are reported as
operating leases.
For the segment Daimler Financial Services interest income
and expense and gains or losses from derivative financial
instruments from financial services business are disclosed
under revenue and cost of sales respectively.
Income taxes are comprised of current income taxes and
deferred taxes.
F.10
3 to 30 years
6 to 25 years
10 to 50 years
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment
Useful lives of property, plant and equipment
F.12
Property, plant and equipment are depreciated over the useful
lives as shown in table 7 F.12.
The costs of internally produced equipment and facilities include
all direct costs and allocable overheads. Acquisition or
manufacturing costs include the estimated costs, if any, of
dismantling and removing the item and restoring the site.
Property, plant and equipment are measured at acquisition or
manufacturing costs less accumulated depreciation. If
necessary, accumulated impairment losses are recognized.
Property, plant and equipment
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree's identifiable assets, which are measured
at fair value.
Income taxes
For acquisitions, goodwill represents the excess of the con-
sideration transferred over the fair values assigned to the iden-
tifiable assets proportionally acquired and liabilities assumed.
Goodwill is accounted for at the subsidiaries in the functional
currency of those subsidiaries.
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS 38 are
met. Subsequent to initial recognition, the asset is carried at
cost less accumulated amortization and accumulated
impairment losses. Capitalized development costs include all
direct costs and allocable overheads and are amortized on
a straight-line basis over the expected product life cycle (a maxi-
mum of ten years). Amortization of capitalized development
costs is an element of manufacturing costs and is allocated to
those vehicles and components by which they were generated
and is included in cost of sales when the inventory (vehicles) is
sold.
Intangible assets other than development costs with finite use-
ful lives are generally amortized on a straight-line basis over
their useful lives (three to ten years). The amortization period
for intangible assets with finite useful lives is reviewed at
least at each year-end. Changes in expected useful lives are
treated as changes in accounting estimates. The amortization
expense on intangible assets with finite useful lives is recorded
in functional costs.
Intangible assets with indefinite useful lives are reviewed annu-
ally to determine whether indefinite-life assessment continues
to be appropriate. If not, the change in the useful-life assessment
from indefinite to finite is made on a prospective basis.
Intangible assets are measured at acquisition or manufacturing
cost less accumulated amortization. If necessary, accumulated
impairment losses are recognized.
Intangible assets
Basic earnings per share are calculated by dividing profit
attributable to shareholders of Daimler AG by the weighted
average number of shares outstanding. As nothing occurred
in the years © 2018 and 2017 that resulted in any dilution, diluted
earnings per share were the same as basic earnings per share
in those years.
Earnings per share
Deferred tax assets or liabilities are calculated on the basis of
temporary differences between the tax basis and the financial
reporting of assets and liabilities including differences from
consolidation, on unused tax loss carryforwards and unused
tax credits. Measurement is based on the tax rates expected
to be effective in the period in which an asset is recognized or
a liability is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the reporting date
or are soon to be enacted. Daimler recognizes a valuation
allowance for deferred tax assets when it is unlikely that a cor-
responding amount of future taxable profit will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be utilized. Deferred tax
liabilities for taxable temporary differences in connection with
investments in subsidiaries, branches, associates and
interests in joint arrangements are not recognized if the Group
is able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Changes in deferred tax assets and liabilities are generally
recognized through profit and loss in deferred taxes in the
Consolidated Statement of Income, except for changes
recognized in other comprehensive income/loss or directly
in equity.
245
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period. In
addition, current income taxes presented for the period include
adjustments for uncertain tax payments or tax refunds for
periods not yet finally assessed, however, excluding interest
expenses and interest refunds and penalties on the under-
payment of taxes. For the case it is probable that amounts
declared as expenses in the tax returns might not be
recognized (uncertain tax positions), a provision for income
taxes is recognized. The amount is based on the best
estimate of the expected tax payment (expected value or
most likely amount). Tax refund claims from uncertain
tax positions are recognized when it is predominantly likely
and thus reasonably expected that they can be realized.
Only in the case of tax loss carryforwards or unused tax credits,
no provision for taxes or tax claim is recognized for these
uncertain tax positions. Instead, the deferred tax assets for the
unused tax loss carryforwards or tax credits are to be
adjusted.
Goodwill
Revenue recognition from the sale of vehicles for which the
Group enters into a repurchase obligation is dependent on the
form of the repurchase agreement:
132.9100
0.8875
First quarter
during the respective period
Average exchange rates
7.8044
135.0100
0.8872
1.1993
7.8751
125.8500
0.8945
1.1450
on December 31
1.2292
Average exchange rate
2017
CNY
JPY
1 € =
1€ =
GBP
USD
1€ =
1 € =
1 € =
2018
CNY
JPY
GBP
1€ =
1 € =
USD
1 € =
0.8834
133.1700
7.8154
1.1776
7.8953
7.8340
130.3500
0.8978
1.1746
7.9151
129.6100
128.8200
0.8867
1.1414
Fourth quarter
0.8924
1.1629
Third quarter
7.5597
122.5800
0.8611
1.1021
7.6035
130.0900
0.8762
1.1918
Second quarter
7.3353
121.0100
0.8601
1.0648
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Recognized at fair value through
other comprehensive income
Table 71 F.10 shows the reconciliation of the carrying amounts
of financial instruments according to IAS 39 at December 31,
2017 to the carrying amounts according to IFRS 9 at January 1,
2018.
First-time adoption effects of IFRS 9 on equity
F.08
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
238
The estimation of these risk parameters incorporates all available
relevant information, not only historical and current loss data,
but also reasonable and supportable forward-looking information
reflected by the future expectation factors. This information
includes macroeconomic factors (e.g., gross domestic product
growth, unemployment rate, cost performance index) and
forecasts of future economic conditions. For receivables from
financial services, these forecasts are performed using a
scenario analysis (base case, adverse and optimistic scenarios).
Expected credit losses are measured as the probability-
weighted present value of all cash shortfalls over the expected
life of each financial asset. For receivables from financial
services, expected credit losses are mainly calculated with
a statistical model using three major risk parameters:
probability of default, loss given default and exposure at default.
Under IAS 39, the amount of the loss on loans and receivables
was the difference between the asset's carrying amount and
the present value of estimated future cash flows (excluding
expected future credit losses not yet incurred), discounted at
the financial asset's original effective interest rate. For
available-for-sale financial assets, an amount previously recog-
nized in other comprehensive income equal to the difference
between cost of acquisition (net of any principal repayments and
amortization) and the current fair value less any impairment
loss on that financial asset previously recognized in profit or loss
was recognized in the statement of income.
c) reasonable and supportable information (if available without
undue cost or effort) at the reporting date about past events,
current conditions and forecasts of future economic conditions.
b) the time value of money; and
a) the unbiased and probability-weighted amount;
Measurement of expected credit losses. Expected credit losses
are measured in a way that reflects:
In stage 1 and 2, the effective interest revenue is calculated
based on gross carrying amounts. If a financial asset becomes
credit impaired in stage 3, the effective interest revenue is
calculated based on its net carrying amount (gross carrying
amount adjusted for any loss allowance).
Daimler applies the low credit risk exception to the stage
allocation to quoted debt instruments with investment-grade
ratings. These debt instruments are always allocated to stage 1.
In millions of euros
A financial asset is migrated to stage 2 if the asset's credit
risk has increased significantly compared to its credit risk at
initial recognition. The credit risk is assessed based on the
probability of default. For trade receivables, the simplified
approach is applied whereby expected credit losses for all
trade receivables are initially measured over the lifetime of
the instrument.
If a financial asset is defined as credit-impaired or in default, it
is transferred to stage 3 and measured at lifetime expected
credit loss. Objective evidence for a credit-impaired financial
asset includes 91 days past due date and other information
about significant financial difficulties of the borrower.
Stage 3: expected credit losses over the lifetime - credit
impaired
If a financial asset has a significant increase in credit risk since
initial recognition but is not yet credit impaired, it is moved to
stage 2 and measured at lifetime expected credit loss, which is
defined as the expected credit loss that results from all possible
default events over the expected life of a financial instrument.
Stage 2: expected credit losses over the lifetime - not credit
impaired
Stage 1 includes all contracts with no significant increase
in credit risk since initial recognition and usually includes new
acquisitions and contracts with fewer than 31 days past due
date. The portion of the lifetime expected credit losses resulting
from default events possible within the next 12 months is
recognized.
Stage 1: expected credit losses within the next twelve months
Impairment model based on expected credit losses. IFRS 9 intro-
duces the expected credit loss impairment approach to be
applied on all financial assets (debt instruments) at amortized
cost or at fair value through other comprehensive income.
Under IAS 39, these instruments were assessed to determine
whether there has been objective evidence of impairment.
Objective evidence may exist for example if a debtor is facing
serious financial difficulties or there is a substantial change
in the debtor's technological, economic, legal or market environ-
ment. For quoted equity instruments, a significant or prolonged
decline in fair value was additional objective evidence of possible
impairment. Incurred losses were recognized as an impairment
of financial assets. Under IFRS 9 the new approach takes projec-
tions of the future into consideration. The expected credit-loss
approach uses three stages for allocating impairment losses:
237
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Marketable debt securities are non-derivative financial
assets that were not classified in any of the other categories
and therefore were categorized as available for sale under
IAS 39 and measured at fair value through other comprehensive
income. Within marketable debt securities and similar invest-
ments, except for interests in money-market funds, marketable
debt securities are categorized as measured at fair value
through other comprehensive income under IFRS 9, while
similar investments are measured at amortized cost.
Trade receivables and receivables from financial services are
non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They were
categorized as loans and receivables under IAS 39 and
therefore measured at amortized cost. All of these instruments
are categorized as measured at amortized cost using the
effective interest rate method.
Financial assets that contain cash flows other than those of
principal and interest, such as interests in money-market
funds or derivatives including separated embedded derivatives,
are measured at fair value through profit or loss. For equity
instruments, IFRS 9 optionally allows measurement at fair value
through other comprehensive income. Daimler elects to
measure equity instruments at fair value through other compre-
hensive income on an instrument by instrument basis. When
these equity instruments are sold or written off, any unrealized
gains and losses on these equity instruments are reclassified
to retained earnings and not presented within profit or loss.
Under IAS 39 equity instruments were classified as available for
sale. Unrealized gains and losses and impairments were
shown in the statement of income when the instruments were
derecognized. These equity instruments are shown within
other financial assets.
The determination of whether a financial asset has experienced
a significant increase in credit risk is based on an assessment
of the probability of default, which is made at least quarterly,
incorporating external credit rating information as well as
internal information on the credit quality of the financial asset.
For debt instruments that are not receivables from financial
services, a significant increase in credit risk is assessed mainly
based on past-due information.
Financial assets that give rise to cash flows consisting only of
payments of principal and interest are classified in accordance
with Daimler's business model for holding these instruments.
Financial assets that are held in a business model with the
objective to hold them until maturity and collect the contractual
cash flows are measured at amortized cost. These business
models are managed principally based on interest-rate structure
and credit risk. If the business model comprises the intention
to hold the financial assets to collect the contractual cash flows
but expects to sell these financial assets if this is necessary,
e.g. to fulfill a specific need for liquidity, then these instruments
are measured at fair value through other comprehensive
income. Financial assets that have only cash flows of principal
and interest but are not held within one of the business
models described above are measured at fair value through
profit or loss.
Retained earnings
Change in credit risk for financial instruments
4
22
Reserves for debt instruments recognized at fair
value through other comprehensive income
Balance at December 31, 2017 according to IAS 39
Reclassification from reserves for available-for-sale
financial assets (after deferred taxes)
Change in credit risk for debt instruments
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
12
6
-38
44
-22
-44
66
Reserves for equity instruments recognized at
fair value through other comprehensive income
Balance at December 31, 2017 according to IAS 39
Reclassification from reserves for available-for-sale
financial assets (after deferred taxes)
Reclassification of impairments of equity instruments
recognized through profit or loss under IAS 39
Balance at December 31, 2017 according to IAS 39
Reclassification in reserve for debt instruments
recognized at fair value through other
comprehensive income (after deferred taxes)
Balance at January 1, 2018 according to IFRS 9
Reserves for available-for-sale financial assets
Balance at December 31, 2017 according to IAS 39
Reclassification in reserve for equity instruments
47,555
-1
1
Other effects from first-time adoption of IFRS 9
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
16
Adjustments from measurement of equity instruments
recognized through profit or loss
38
or loss under IAS 39
instruments recognized through profit
Reclassification of impairments of equity
47,553
-52
recognized at fair value through other
comprehensive income (after deferred taxes)
-220
-260
Total equity and liabilities
-9
Deferred tax assets
14
5
Other financial assets
267
Receivables from financial services
-264
2
5
Trade receivables
-640
Equipment on operating leases
-35
Assets
Dec. 31,
2017
In millions of euros
Effects from the application of IFRS 15 on the Consolidated
Statement of Financial Position
F.07
Financial assets. IFRS 9 introduces a comprehensive classification
model for financial assets that classifies financial assets into
three categories: financial assets at amortized cost, financial
assets at fair value through other comprehensive income and
financial assets at fair value through profit or loss. Under IAS
39, financial assets were classified as loans and receivables,
available-for-sale financial assets and financial assets at fair
value through profit or loss.
Initial application of IFRS 9 leads to the following major
changes:
Application of IFRS 9 Financial Instruments. Daimler applies
IFRS 9 initially for reporting periods beginning on and after
January 1, 2018. Initial application is made retrospectively. In
accordance with the transition requirements, Daimler chose
to present prior periods in accordance with IAS 39. As an excep-
tion, the transition for recognition of fair-value changes of
certain non-designated components of derivatives through other
comprehensive income is to be applied retrospectively to the
comparative figures.
Basic and diluted earnings per share decrease by €0.23 in 2017.
of Financial Position at January 1, 2017 as well as at December 31,
2017 are presented in table 7 F.07.
The effects on the line items of the Consolidated Statement
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
236
Jan. 1,
2017
Other assets
112
63
-208
-233
Other liabilities
10,328
11,208
Contract and refund liabilities
-5,820
-6,274
Deferred income
4
-55
240
-2,663
-1,955
-2,247
Other financial liabilities
-2,481
Provisions for other risks
-1
-23
Trade payables
95
-155
Total equity
Equity and liabilities
Total assets
-220
-260
Other effects from first-time adoption of IFRS 9
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
2
Deferred tax liabilities
26
Financial liabilities
Loans and receivables
123,782
123,822
3,168
3,172
Measured at cost
82
82
Recognized at fair value through
profit or loss
Recognized at fair value through
profit or loss
227
Financing liabilities
211
173
173
200
200
Measured at cost
3,130
3,130
Recognized at fair value through
profit or loss
6,733
6,733
Recognized at fair value through
other comprehensive income
Classified as available-for-sale
instruments
Recognized at fair value through
profit or loss
Classified as available-for-sale
instruments
Trade payables
recognized at fair value through
-2
The original measurement categories and carrying amounts
of financial instruments according to IAS 39 as well as the new
measurement categories and carrying amounts of financial
instruments according to IFRS 9 are summarized in table 71 F.09.
Table 71 F.08 shows the effects on the components of equity
from first-time adoption of IFRS 9.
spread. It was possible to separate the time value of the
options also under IAS 39, but was subject to the recognition
of changes in fair value through profit or loss.
For derivative instruments designated in a hedge relationship,
certain components can be excluded from designation and the
changes in these components' fair value are then deferred
in other comprehensive income under IFRS 9. This applies for
example to the fair value of options or cross currency basis
For other cash flow hedges, the accumulated hedging gains
or losses from hedging instruments are reclassified from the
reserves for derivative financial instruments to the Consoli-
dated Statement of Income when the hedged item affects profit
or loss. The ineffective portions of fair value changes are
recognized directly in profit or loss.
forecast transaction results in the recognition of a non-financial
asset or non-financial liability. No respective adjustment of
initial cost of acquisition was made under IAS 39.
148,154
148,154
8,471
8,468
Measured at cost
Financial liabilities
Measured at cost
111
Recognized at fair value through
profit or loss
Recognized at fair value through
profit or loss
12,451
12,451
127,121
127,124
Measured at cost
Measured at cost
Measured at cost
Other financial liabilities
profit or loss
111
Classified as available-for-sale
instruments
Measured at cost
Classified as available-for-sale
instruments
2018
at Jan. 1,
to IFRS 9
amount
according
Carrying
at Dec. 31,
2017
to IAS 39
Carrying
amount
according
Measurement categories
according to IFRS 9
Measurement categories
according to IAS 39
In millions of euros
Measurement categories of financial instruments
Financial assets
F.09
Under IFRS 9, amounts recognized in other comprehensive
income as effective hedging gains or losses from hedging
instruments are removed from the reserves for derivative
financial instruments and directly included in the initial
cost or carrying amount of the hedged item at initial recognition
if a hedged
Under IFRS 9, for cash flow hedges of volatile prices in highly
probable forecast procurement transactions, designation can
be made for separable risk components of these non-financial
hedged items. Daimler can apply this possibility to facilitate
future hedge accounting and thereby reduce ineffectiveness of
hedge relationships for commodities. The option to separate
risk components for these transactions was not available under
IAS 39.
If the requirements for hedge accounting set out in IFRS 9 are
met, Daimler designates and documents the hedge relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. The documentation of the
hedging relationship includes the objectives and strategy of risk
management, the type of hedging relationship, the nature of
the risk being hedged, the identification of the eligible hedging
instrument and the eligible hedged item, as well as an
assessment of the effectiveness requirements comprising the
risk mitigating economic relationship, the absence of deterio-
rating effects from credit risk and the appropriate hedge ratio.
Under IAS 39, the documentation of the hedging relationship
also included a description of the method used to assess hedge
effectiveness. Furthermore, IAS 39 included requirements
for the retrospective and prospective an assessment of hedge
effectiveness with appropriate compliance with a corridor
for offsetting risks from changes in the fair value or cash flows
with regard to the hedged risk. Hedges were assessed as
highly effective and were regularly assessed as to determine
whether they were highly effective during the entire period
for which they were designated.
Derivative financial instruments and hedge accounting. Embedded
derivatives are principally separated from the host contract
and recognized separately. However, embedded derivatives are
not separated from the host contract, if that host contract is a
financial asset, if Daimler chooses to measure a hybrid contract
at fair value through profit or loss or if an analysis shows
that the economic characteristics and risks of embedded
derivatives are closely related to those of the host contract.
Under IAS 39, embedded derivatives were also separated if the
host contract was a financial asset which was not measured
at fair value through profit or loss, or the economic character-
istics and risks of the embedded derivative were not closely
related to those of the host contract.
Significant modification (e.g., that leads to a change in the
present value of the contractual cash flows of 10%) leads to
derecognition of financial assets. This is estimated to be
rare and immaterial for receivables from financial services. If the
terms of a contract are renegotiated or modified and this does
not result in derecognition of the contract, then the gross car-
rying amount of the contract has to be recalculated and a
modification gain or loss has to be recognized in profit or loss.
A financial instrument is written off when there is no reasonable
expectation of recovery, for example at the end of insolvency
proceedings or after a court decision of uncollectibility.
1,282
3
1,290
-11
Balance at December 31, 2017 according to IAS 39
Change in credit risk for financial instruments
Deferred taxes on first-time adoption effects
Balance at January 1, 2018 according to IFRS 9
Classified as available-for-sale
instruments
Non-controlling interests after taxes
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Receivables from financial services
239
Measured at cost
at fair value through profit or loss
Loans and receivables
Financial assets recognized
at fair value through profit or loss
debt instruments recognized
Equity instruments and
at fair value through other
comprehensive income
Equity instruments recognized
Equity instruments and
Other financial assets
measured at cost
Similar investments
Marketable debt securities
recognized at fair value through
other comprehensive income
Marketable debt securities
recognized at fair value through
profit or loss
debt instruments
12,072
86,054
85,998
Cash and cash equivalents
Marketable debt securities and
similar investments
Trade receivables
Loans and receivables
Measured at cost
11,995
Other receivables and financial assets
Loans and receivables
Measured at cost
12,072
11,999
Recoverable amount of equipment on operating leases
Daimler regularly reviews the factors determining the values of
its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases, which
constitute a substantial part of the expected future cash
flows from leased assets. In this context, assumptions are made
regarding major influencing factors, such as the expected
number of returned vehicles, the latest remarketing results and
future vehicle model changes. Those assumptions are deter-
mined either by qualified estimates or by publications provided
by expert third parties; qualified estimates are based, as
far as publicly available, on external data with consideration of
internally available additional information such as historical
experience of price developments and recent sale prices.
The residual values thus determined serve as a basis for
depreciation; changes in residual values lead either to prospective
adjustments of the depreciation or, in the case of a significant
decline in expected residual values, to impairment. If depreciation
is prospectively adjusted, changes in estimates of residual
values do not have a direct effect but are equally distributed
over the remaining periods of the lease contracts.
When objective evidence of impairment or impairment reversal
is present, estimates and assessments also have to be made
to determine the recoverable amount of an equity method
financial investment. The determination of the recoverable
amount is based on assumptions regarding future business
developments for the determination of the expected future
cash flows of that financial investment. See ①Note 13 for
the presentation of carrying amounts and fair values of
equity-method financial investments in listed companies.
In the context of impairment tests for non-financial assets,
estimates have to be made to determine the recoverable
amounts of cash-generating units. Assumptions have to be
made in particular with regard to future cash inflows and
outflows for the planning period and the following periods. The
estimates include assumptions regarding future market
share and the growth of the respective markets as well as regard-
ing the products' profitability. On the basis of the impairment
tests carried out in 2018, the recoverable amounts are substan-
tially larger than the net assets of the Group's cash-generating
units.
Recoverable amounts of cash-generating units and
equity-method investments
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 253
In the Consolidated Financial Statements, to a certain degree,
estimates and management judgments have to be made which
can affect the amounts and reporting of assets and liabilities,
the reporting of contingent assets and liabilities on the balance
sheet date, and the amounts of income and expense reported
for the period. The major items affected by such estimates and
management judgments are described as follows. Actual
amounts may differ from the estimates. Changes in the estimates
and management judgments can have a material impact on
the Consolidated Financial Statements.
2. Accounting estimates and
management judgments
Liability awards are measured at fair value at each balance sheet
date until settlement and are classified as provisions. The
profit or loss of the period equals the addition to and/or the
reversal of the provision during the reporting period and the
dividend equivalent paid during the period, and is included in
the functional costs.
Presentation in the Consolidated Statement of Cash Flows
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash provided by/used for investing activi-
ties.
Share-based payment comprises cash-settled liability awards.
Share-based payment
obligations from sales transactions (especially performance
bonuses, discounts and other price concessions) in the
scope of IFRS 15, and
circumstances:
Refund liabilities. A refund liability occurs if Daimler receives
consideration from a customer and expects to refund some
or all of that consideration to the customer. A refund liability is
measured at the amount of consideration received for which
Daimler does not expect to be entitled and is thus not included
in the transaction price.
Refund liabilities occur at Daimler especially in the following
sales with the right of return and residual-value guarantees.
Pensions and similar obligations
Product warranties
3. Consolidated Group
advance payments received on contracts in the scope of
IFRS 15.
Composition of the Group
The calculation of income taxes of Daimler AG and its subsidiar-
ies is based on the legislation and regulations applicable in
the various countries. Due to their complexity, the tax items
presented in the Consolidated Financial Statements are
possibly subject to different interpretation by taxpayers on the
one hand and local tax authorities on the other hand. For
the calculation of deferred tax assets, assumptions have to
be made regarding future taxable income and the time of
realization of the deferred tax assets. In this context, Daimler
takes into consideration, among other things, the projected
earnings from business operations, the effects on earnings of
the reversal of taxable temporary differences, and realizable
tax strategies. As future business developments are uncertain
and are sometimes beyond Daimler's control, the assumptions
to be made in connection with accounting for deferred tax assets
are connected with a substantial degree of uncertainty. On
each balance sheet date, Daimler carries out impairment tests
on deferred tax assets on the basis of the planned taxable
income in future financial years; if Daimler assesses that the
probability of future tax advantages being partially or
fully unrealized is more than 50%, the deferred tax assets are
impaired. Further information is provided in Note 9.
Income taxes
The calculation of provisions for pensions and similar obligations
and the related pension cost are based on various actuarial
valuations. The calculations are subject to various assumptions
on matters such as current actuarially developed probabilities
(e.g. discount factors and cost-of-living increases), future fluc-
tuations with regard to age and period of service, and expe-
rience with the probability of occurrence of pension payments,
annuities or lump sums. As a result of changed market or
economic conditions, the probabilities on which the influencing
factors are based, may differ from current developments. The
financial effects of deviations of the main factors are calculated
with the use of sensitivity analyses. See ①Note 22 for
further information.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
254
in
Further information on liability and litigation risks is provided
Note 30.
Various legal proceedings, claims and governmental investiga-
tions are pending against Daimler AG and its subsidiaries on a
wide range of topics. If the outcome of such legal proceedings
is detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages, to undertake
service actions or recall campaigns, to pay fines or to carry
out other costly actions. Litigation and governmental investiga-
tions often involve complex legal issues and are connected
with a high degree of uncertainty. Accordingly, the assessment
of whether an obligation exists on the balance sheet date
as a result of an event in the past, and whether a future cash
outflow is likely and the obligation can be reliably estimated,
largely depends on estimations by the management. Daimler
regularly evaluates the current stage of legal proceedings,
also with the involvement of external legal counsel. It is therefore
possible that the amounts of provisions for pending or
potential litigation will have to be adjusted due to future devel-
opments. Changes in estimates and premises can have a
material effect on the Group's future profitability. It is also
possible that provisions accrued for some legal proceedings
may turn out to be insufficient once such proceedings have
ended. Daimler may also become liable for payments in
legal proceedings no provisions were established for. Although
the final resolution of any such proceedings could have a
material effect on Daimler's operating results and cash flows
for a particular reporting period, Daimler believes that it
should not materially affect the Group's financial position.
Legal proceedings
Further information on provisions for other risks is provided
in Note 23.
The Group provides various types of product warranties
depending on the type of product and market conditions.
Provisions for product warranties are generally recognized
when vehicles are sold or when new warranty programs are
initiated. Based on historical warranty claim experience,
assumptions have to be made on the type and extent of
future warranty claims and customer goodwill, as well as
on possible recall campaigns for each model series. These
assessments are based on experience of the frequency
and extent of vehicle faults and defects in the past. In addition,
the estimates also include assumptions on the amounts
of potential repair costs per vehicle and the effects of possible
time or mileage limits. The provisions are regularly adjusted
to reflect new information.
The recognition and measurement of provisions for product
warranties is generally connected with estimates.
Collectability of receivables from financial services
The Group regularly estimates the risk of default on receivables
from financial services. Many factors are taken into
consideration in this context, including historical loss experience,
the size and composition of certain portfolios, current eco-
nomic events and conditions and the estimated fair values and
adequacy of collaterals. In addition to historical and current
information on losses, appropriate and reliable forward-looking
information on factors is also included. This information
includes macroeconomic factors (e.g. GDP growth, unemploy-
ment rate, cost-performance index) and forecasts of future
economic conditions. For receivables from financial services,
these forecasts are determined using a scenario analysis
(baseline scenario, optimistic and pessimistic scenario). Changes
to the estimation and assessment of these factors influence
the allowance for credit losses with a resulting impact on the
Group's net profit. See also O Notes 14 and 33 for further
information.
deferred revenue for service and maintenance contracts
and for extended warranties, and
Embedded derivatives are principally separated from the host
contract and recognized separately. However, embedded
derivatives are not separated from the host contract if that host
contract is a financial asset, if Daimler chooses to measure
Contract liabilities. A contract liability is an entity's obligation
to transfer goods or services to a customer for which the entity
has received consideration (or the amount is due) from the
customer.
Changes in the fair value of derivative financial instruments that
are designated in a hedge relationship are recognized peri-
odically in either profit or loss or other comprehensive income,
depending on whether the derivative is designated as a hedge
of changes in fair value or cash flows. Changes in fair value of
non-designated derivatives are recognized in profit or loss.
For fair value hedges, changes in the fair value of the hedged
item and the derivative are recognized in profit or loss. For
cash flow hedges, fair value changes in the effective portion of
the hedging instrument are recognized after tax in other
comprehensive income.
If the requirements for hedge accounting set out in IFRS 9 are
met, Daimler designates and documents the hedge relationship
from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the
changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment are hedged. In a cash flow
hedge, the variability of cash flows to be received or paid from
expected transactions related to a recognized asset or
liability or a highly probable forecast transaction is hedged. The
documentation of the hedging relationship includes the
objectives and strategy of risk management, the type of hedging
relationship, the nature of the risk being hedged, the identi-
fication of the eligible hedging instrument and the eligible hedged
item, as well as an assessment of the effectiveness require-
ments comprising the risk mitigating economic relationship, the
absence of deteriorating effects from credit risk and the
appropriate hedge ratio. Hedging transactions are regularly
assessed to determine whether the effectiveness require-
ments are met while they are designated.
251
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Derivative financial instruments are measured at fair value
upon initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive
or negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option pricing models. Deriva-
tives are presented as assets if their fair value is positive
and as liabilities if the fair value is negative.
a hybrid contract at fair value through profit or loss, or if an
analysis shows that the economic characteristics and risks
of embedded derivatives are closely related to those of the host
contract.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or refi-
nancing activities. These are mainly interest rate risks, currency
risks and commodity price risks.
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives (including embedded
derivatives separated from the host contract) which are not
used as hedging instruments in hedge accounting are classified
as held for trading. Gains or losses on liabilities held for trading
are recognized in profit or loss.
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured at
amortized cost using the effective interest method.
Financial liabilities primarily include trade payables,
liabilities to banks, bonds, derivative financial liabilities and
other liabilities.
Financial liabilities
Financial assets and financial liabilities are offset and the net
amount is presented in the Consolidated Statement of
Financial Position provided that an enforceable right currently
exists to offset the amounts involved, and there is an intention
either to carry out the offsetting on a net basis or to settle a
liability when the related asset is sold.
Offsetting of financial instruments
Table 7 F.13 shows the composition of the Group.
Significant modification (e.g., that leads to a change in the
present value of the contractual cash flows of 10%) leads to
derecognition of financial assets. This is estimated to be rare
and immaterial for receivables from financial services. If the
terms of a contract are renegotiated or modified and this
does not result in derecognition of the contract, then the gross
carrying amount of the contract has to be recalculated and a
modification gain or loss has to be recognized in profit or loss.
Under IFRS 9, for cash flow hedges of volatile prices in procure-
ment transactions expected with a high degree of probability,
designation can be made for separable risk components of these
non-financial hedged items. Daimler can apply this possibility
to facilitate future hedge accounting and thereby reduce the inef-
fectiveness of hedge relationships for commodities.
Contract liabilities occur at Daimler especially in the following
circumstances:
Under IFRS 9, with cash flow hedges, amounts recognized in
other comprehensive income as effective hedging gains
or losses from hedging instruments are removed from the
reserves for derivative financial instruments and directly
included in the initial cost or carrying amount of the hedged
item at initial recognition if a hedged forecast transaction
results in the recognition of a non-financial asset or non-finan-
cial liability.
The ineffective portions of fair value changes are recognized
directly in profit or loss.
Contract and refund liabilities
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed by
a segment or business unit or the manner in which business is
conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the
termination of agreements with suppliers and dealers.
Restructuring provisions are recognized when the Group has
a detailed formal plan that has either commenced imple-
mentation or been announced.
A provision for expected warranty costs is recognized when
a product is sold or when a new warranty program is initiated.
Estimates for accrued warranty costs are primarily based on
historical experience.
A provision is recognized when a liability to third parties has
been incurred, an outflow of resources is probable and the
amount of the obligation can be reasonably estimated. The
amount recognized as a provision represents the best
estimate of the obligation at the reporting date. Provisions
with an original maturity of more than one year are dis-
counted to the present value of the expenditures expected to
settle the obligation at the end of the reporting period. If
the criteria of the regulations on recognition and measurement
of provisions are not fulfilled and the possibility of a cash
outflow upon settlement is not unlikely, the item is to be pre-
sented as a contingent liability, insofar as it is adequately
measurable. The amount disclosed as a contingent liability
represents the best estimate of the possible obligation at
the reporting date. Provisions and contingent liabilities are
regularly reviewed and adjusted as further information
becomes available or circumstances change.
Provisions for other risks
Gains or losses on the curtailment or settlement of a
defined benefit plan are recognized in profit or loss when the
curtailment or settlement occurs.
The discount factors used to calculate the present values of
defined benefit pension obligations are to be determined -
with maturities and currencies matching the pension payments.
by reference to market yields at the end of the reporting
period on high-quality corporate bonds in the respective markets.
For very long maturities, there are no high-quality corporate
bonds available as a benchmark. The respective discount factors
are estimated by extrapolating current market rates along the
yield curve.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
252
The balance of defined benefit plans for pensions and other
post-employment benefit obligations and plan assets (net
pension obligation or net pension assets) accrues interest
at the discount rate used as a basis for the measurement of
the gross pension obligation. The resulting net interest
expense or income is recognized in profit and loss under
interest expense or interest income in the Consolidated
Statement of Income. The other expenses resulting from pension
obligations and other post-employment benefit obligations
(medical care), which mainly result from entitlements acquired
during the year under review, are taken into consideration in
the functional costs in the Consolidated Statement of Income.
The measurement of defined benefit plans for pensions and
other post-employment benefit obligations (medical care)
in accordance with IAS 19 Employee Benefits is based on the
projected unit credit method. Plan assets invested to cover
defined benefit pension obligations and other post-employment
benefit obligations (medical care) are measured at fair value
and offset against the corresponding obligations. For the valu-
ation of defined benefit plans, differences between actuarial
assumptions used and actual developments as well as changes
in actuarial assumptions result in actuarial gains and losses,
which have a direct impact on the Consolidated Statement of
Financial Position or on the Consolidated Statement of
Comprehensive Income/Loss.
Pensions and similar obligations
If derivative financial instruments do not or no longer qualify for
hedge accounting because the qualifying criteria for hedge
accounting are not or are no longer met, the derivative financial
instruments are classified as held for trading and are measured
at fair value through profit or loss.
Hedge relationships are to be discontinued prospectively if a
particular hedge relationship ceases to meet the qualifying
criteria for hedge accounting under IFRS 9. Instances that require
discontinuation of hedge accounting are, among others, loss
of the economic relationship between the hedged item and the
hedging instrument, disposal or termination of the hedging
instrument, or a revision of the documented risk management
objective of a particular hedge relationship. Accumulated
hedging gains and losses from cash flow hedges are retained
and are reclassified from equity as described at maturity if
the hedged future cash flows are still expected to occur. Other-
wise, accumulated hedging gains and losses are immediately
reclassified to profit or loss.
For derivative instruments designated in a hedge relationship,
certain components can be excluded from designation and the
changes in these components' fair value are then deferred
in other comprehensive income under IFRS 9. This applies for
example to the time value of options or cross currency basis
spreads.
For other cash flow hedges, the accumulated hedging gains
or losses from hedging instruments are reclassified from
the reserves for derivative financial instruments to the Consoli-
dated Statement of Income when the hedged item affects
profit or loss.
The aggregate balance sheet totals of the subsidiaries,
associated companies, joint ventures and joint operations
accounted for at amortized cost whose business is non-
active or of low volume and which are not material for the Group
and the fair presentation of its profitability, liquidity and
capital resources and financial position would amount to approxi-
mately 1% of the Group's balance sheet total; the aggregate
revenues and the aggregate net profit would amount to approxi-
mately 1% of the Group's revenue and net profit.
4
Structured entities
11
12
International
5
4
Germany
16
16
Joint ventures accounted for
using the equity method
2
2
International
1
1
Germany
Associated companies accounted for
using the equity method
3
16
3
A financial instrument is written off when there is no reasonable
expectation of recovery, for example at the end of insolvency
proceedings or after a court decision of uncollectibility.
548
570
16
19
16
13
32
32
material other investments accounted
for at (amortized) cost
Germany
International
Joint operations, joint ventures,
associated companies and
International
Germany
11
12
14
A detailed list of the companies included in the Consolidated
Financial Statements and of the equity investments of Daimler
Group pursuant to Section 313 of the German Commercial
Code (HGB) is provided in the statement of investments. Further
information is provided in Note 40.
3
1
376
Consolidated subsidiaries
Germany
At December 31,
2017
2018
Composition of the Group
F.13
Following approval by the relevant competition authorities, the
transaction was completed in January 2019. In the first quarter
of 2019, the transaction will produce a significant positive
earnings effect (approximately €0.7 billion) and a cash outflow
(approximately €0.7 billion) at the segment Daimler Financial
Services.
In March 2018, the Daimler Group and the BMW Group signed
an agreement to merge their business units for mobility
services. The partners intend to offer their customers a holistic
ecosystem of intelligent, seamlessly connected mobility
services, available at the tap of a finger. To this end, the partners
will combine and strategically expand their existing on-
demand mobility offering in the areas of car sharing, ride hailing,
parking, charging and multimodality in joint ventures. At
December 31, 2018, the assets and liabilities held for sale are
presented separately in the Consolidated Statement of
Financial Position. The disposal group's assets amounted to
€531 million and its liabilities amounted to €212 million.
Assets and liabilities held for sale
In January 2017, There Holding B.V. sold an equity interest
of 15% in HERE International B.V. to Intel Holdings B.V. and
recognized a gain of €183 million in connection with the
sale. Information on further transactions is explained in
Note 13.
In May 2017, Daimler acquired for a purchase price of €0.3 billion
an interest of 15% in LSH Auto International Limited (LSHAI),
which is responsible for the Mercedes-Benz retail business of
Lei Shing Hong Group. LSHAI, a subsidiary of Lei Shing Hong
Group, is one of the biggest Mercedes-Benz dealers worldwide.
Equity-method investments
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 255
At the reporting date, the Group has business relationships with
18 (2017: 24) controlled structured entities, of which 18 (2017:
22) are fully consolidated. In addition, the Group has relationships
with 7 (2017: 6) non-controlled structured entities. The uncon-
solidated structured entities are not material for the Group's
profitability, liquidity and capital resources and financial
position.
The structured entities of the Group are rental companies,
asset-backed-securities (ABS) companies and special funds. The
purpose of the rental companies primarily is the acquisition,
renting and management of assets. The ABS companies are
primarily used for the Group's refinancing. The assets trans-
ferred to structured entities usually result from the Group's
leasing and sales financing business. Those entities refinance
the purchase price by issuing securities. The special funds are
set up in particular in order to diversify the capital investment
strategy.
363
Joint operations accounted for
using the equity method
70
International
1
Germany
International
1
1
Joint operations accounted for
using proportionate consolidation
78
90
41
36
Germany
International
119
126
Unconsolidated subsidiaries
299
306
64
The estimation of these risk parameters incorporates all
available relevant information, not only historical and current
loss data, but also reasonable and supportable forward-
looking information reflected by the future expectation factors.
This information includes macroeconomic factors (e.g.,
gross domestic product growth, unemployment rate, cost
performance index) and forecasts of future economic
conditions. For receivables from financial services, these fore-
casts are performed using a scenario analysis (base case,
adverse and optimistic scenarios). The impairment amount for
trade receivables is predominantly determined on a collective
basis.
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist
or may be reversed. If this is the case, Daimler records a
partial or entire reversal of the impairment; the carrying amount
is thereby increased to the recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of depre-
ciation) had no impairment loss been recognized in prior years.
Non-current assets held for sale and disposal groups
Daimler reviews on each reporting date whether there is any
objective indication of impairments or impairment reversals of
equity-method investments. If such indications exist, the
Group determines the impairment loss or reversal to be recog-
nized. If the carrying amount exceeds the recoverable amount
of an investment, the carrying amount is written down to the
recoverable amount. The recoverable amount is the greater
of fair value less costs to sell and value in use. An impairment
reversal is carried out if there is objective evidence for an
impairment reversal. If such an assessment is made, the recover-
able amount is remeasured. The amount of an impairment
reversal is limited to the amount by which an asset has been
impaired.
247
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On the date of acquisition, a positive difference between cost
of acquisition and Daimler's share of the fair values of the
identifiable assets and liabilities of the associated company or
joint venture is determined and recognized as investor level
goodwill. The goodwill is included in the carrying amount of the
equity-method investment. If an equity interest in an existing
associated company is increased without change in significant
influence, goodwill is determined only for the additionally
acquired interest; the previous investment is not remeasured
at fair value.
Equity-method investments
In the case of finance leases, the Group presents the
receivables under receivables from financial services in an
amount corresponding to the net investment of the lease
agreements. The net investment of a lease agreement is the
gross investment (future minimum lease payments and non-
guaranteed residual value) discounted at the rate upon which
the lease agreement is based.
Operating leases also relate to vehicles, primarily Group
products that Daimler Financial Services acquires from non-
Group dealers or other third parties and leases to end
customers. These vehicles are presented at (amortized) cost
of acquisition under leased equipment in the Daimler
Financial Services segment. If these vehicles are Group
products and are subsidized, the subsidies are deducted
from the cost of acquisition. After revenue is received from
the sale to independent dealers, these Group products
generate revenue from lease payments and subsequent resale
on the basis of the separate leasing contracts. The revenue
received from the sale of Group products to the dealers is
estimated by the Group as being of the magnitude of the
respective addition to leased equipment at Daimler Financial
Services. In 2018, additions to leased equipment from
these vehicles at Daimler Financial Services amounted to
approximately €13 billion (2017: approximately €13 billion).
In case of accounting as an operating lease these vehicles are
capitalized at (depreciated) cost of production under leased
equipment in the vehicle segments and are depreciated over
the contract term on a straight-line basis with consideration
of the expected residual values. Changes in the expected residual
values lead either to prospective adjustments of the scheduled
depreciation or to an impairment loss if necessary.
Sales of vehicles including a put option (an entity's obligation
to repurchase the asset at the customer's request) are
reported as operating leases if the customer has a significant
economic incentive to exercise that right. Otherwise a sale
with a right of return is reported. Daimler considers several
factors when assessing whether a customer has a significant
economic incentive to exercise his right at contract inception.
Amongst others these are the relation between repurchase
price and the expected future market value (at the time of
repurchase) of the asset or historical return rates.
Sales of vehicles in the form of a forward (an entity's obligation
to repurchase the asset) and a call option (an entity's right
to repurchase the asset) are reported as operating leases.
Operating leases relate to vehicles that the Group produces
itself and leases to third parties. Additionally an operating
lease may have to be reported with sales of vehicles for which
the Group enters into a repurchase obligation:
Daimler as lessor
The same accounting principles apply to assets if Daimler
sells such assets and leases them back from the buyer.
Gains or losses (to be eliminated) from transactions with
companies accounted for using the equity method are recognized
through profit and loss with corresponding adjustments of the
investments' carrying amounts. Deconsolidation effects from
the contribution of interests in subsidiaries to investments
which are measured using the equity method are also subject
to elimination adjustments to the carrying amount of the
investment.
Sale and lease back
Assets carried as finance leases are measured at the beginning
of the (lease) contract at the lower of the present value of
the minimum lease payments and the fair value of the leased
object, and in the following periods less accumulated
depreciation and other accumulated impairment losses.
Depreciation is on a straight-line basis; residual values
In the case of an operating lease, the lease payments or
rental payments are expensed on a straight-line basis in the
Consolidated Statement of Income.
Daimler as lessee
Leasing includes all arrangements that transfer the right to
use a specified asset for a stated period of time in return for a
payment, even if the right to use such asset is not explicitly
described in an arrangement. The Group is a lessee of property,
plant and equipment and a lessor of its products. It is evaluated
on the basis of the risks and rewards of a leased asset whether
the ownership of the leased asset is attributed to the lessee
(finance lease) or to the lessor (operating lease).
Leasing
In stage 1 and 2, the effective interest revenue is calculated
based on gross carrying amounts. If a financial asset becomes
credit impaired in stage 3, the effective interest revenue is
calculated based on its net carrying amount (gross carrying
amount adjusted for any loss allowance).
250
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Measurement of expected credit losses. Expected credit losses
are measured in a way that reflects:
a) the unbiased and probability-weighted amount;
b) the time value of money; and
246 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
c) reasonable and supportable information (if available without
undue cost or effort) at the reporting date about past events,
current conditions and forecasts of future economic conditions.
of the assets are given due consideration. Payment obligations
resulting from future lease payments are discounted and
disclosed under financing liabilities.
Expected credit losses are measured as the probability-weighted
present value of all cash shortfalls over the expected life
of each financial asset. For receivables from financial services,
expected credit losses are mainly calculated with a statistical
model using three major risk parameters: probability of default,
loss given default and exposure at default.
Impairment of non-current non-financial assets
Daimler assesses at each reporting date whether there is an
indication that an asset may be impaired or whether there is an
indication that a previously recognized impairment loss may
be reversed. If such indication exists, Daimler estimates the
recoverable amount of the asset. The recoverable amount is
determined for each individual asset unless the asset generates
cash inflows that are not largely independent of those from
other assets or groups of assets (cash-generating units). Good-
will and other intangible assets with indefinite useful lives
are tested at least annually for impairment; this takes place at
the level of the cash-generating units. If the carrying amount
of an asset or of a cash-generating unit exceeds the recoverable
amount, an impairment loss is recognized for the difference.
Value in use is measured by discounting expected future cash
flows from the continuing use of the cash-generating units
using a risk-adjusted interest rate. Future cash flows are deter-
mined on the basis of the long-term planning, which is
approved by management and which is valid at the date when
the impairment test is conducted. This planning is based
on expectations regarding future market share, the general
development of respective markets as well as the products'
profitability. The multi-year planning comprises a planning
horizon until 2025 and therefore mainly covers the product
life cycles of our automotive business. The rounded risk-adjusted
interest rates used to discount cash flows, which are calculated
for each cash-generating unit, are unchanged from the previous
year at 8% after taxes for the cash-generating units of the
automotive business. For the cash-generating unit Daimler
Financial Services Classic, a risk-adjusted interest rate of
9% after taxes is applied (unchanged from the previous year).
Whereas the discount rate for the cash-generating unit
Daimler Financial Services Classic represents the cost of equity,
the risk-adjusted interest rate for the cash-generating units
of the automotive business is based on the weighted average
cost of capital (WACC). These are calculated based on the
capital asset pricing model (CAPM) taking into account current
market expectations. In calculating the risk-adjusted interest
rate for impairment test purposes, specific peer group informa-
tion is used for beta factors, capital-structure data and
cost of debt. Periods not covered by the forecast are taken into
account by recognizing a residual value (terminal value),
which does not consider any growth rates. In addition, several
sensitivity analyses are conducted. These show that even
in the case of more unfavorable premises for main influencing
factors with respect to the original planning, no need for
impairment exists. If value in use is lower than the carrying
amount, fair value less costs of disposal is additionally
calculated to determine the recoverable amount.
Stage 3: expected credit losses over the lifetime – credit
impaired
If a financial asset has a significant increase in credit risk since
initial recognition but is not yet credit impaired, it is moved
to stage 2 and measured at lifetime expected credit loss, which
is defined as the expected credit loss that results from all
possible default events over the expected life of a financial
instrument.
Stage 2: expected credit losses over the lifetime - not credit
impaired
Stage 1 includes all contracts with no significant increase
in credit risk since initial recognition and usually includes new
acquisitions and contracts with fewer than 31 days past due
date. The portion of the lifetime expected credit losses resulting
from default events possible within the next 12 months is
recognized.
Stage 1: expected credit losses within the next twelve months
At each reporting date, a loss allowance is recognized for
financial assets, loan commitments and financial guarantees
other than those to be measured at fair value through profit
or loss reflecting expected losses for these instruments. The
same method is used for the impairment of non-revocable
loan commitments and financial guarantees. Expected credit
losses are allocated using three stages:
Impairment of financial assets
After initial measurement, financial assets at fair value through
other comprehensive income are measured at fair value,
with unrealized gains or losses being recognized in other com-
prehensive income/loss. Except for equity instruments a
loss allowance is recognized for expected losses in profit or loss.
Upon disposal of financial assets, the accumulated gains
and losses recognized in other comprehensive income/loss
resulting from measurement at fair value are recognized in
profit or loss. Interest earned on financial assets at fair value
through other comprehensive income is generally reported
as interest income using the effective interest method. Changes
in the fair value of equity instruments measured at fair value
through other comprehensive income are not recycled to profit
or loss. Dividends are recognized in profit or loss when the
right of payment has been established.
Financial assets at fair value through other comprehensive income.
Financial assets at fair value through other comprehensive
income are non-derivative financial assets with contractual cash
flows that consist solely of payments of principal and interest
on the nominal amount outstanding which are held to collect the
contractual cash flows as well as sell the financial, e.g. to
achieve a defined liquidity target (business model "hold to collect
and sell"). This category also includes equity instruments not
held for trading for which the option to present changes in the
fair value of the instrument within other comprehensive
income has been applied.
249
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
After initial recognition, financial assets at amortized cost are
subsequently carried at amortized cost using the effective
interest method less any loss allowances. Gains and losses are
recognized in the Consolidated Statement of Income when
the financial assets at amortized cost are impaired or derecog-
nized. Interest effects on the application of the effective
interest method are also recognized in profit or loss as well as
effects from foreign currency translation.
Financial assets at amortized cost. Financial assets at amortized
cost are non-derivative financial assets with contractual cash
flows that consist solely of payments of principal and interest
on the nominal amount outstanding and which are held with
the aim of collecting the contractual cash flows, such as receiv-
ables from financial services, trade receivables or cash and
cash equivalents (business model "hold to collect"). Cash and
cash equivalents consist primarily of cash on hand, checks
and demand deposits at banks, as well as debt instruments and
certificates of deposits with a remaining term when acquired
of up to three months, which are not subject to any material
value fluctuations. Cash and cash equivalents correspond with
the classification in the Consolidated Statement of Cash Flows.
The recoverable amount is the higher of fair value less costs
of disposal and value in use. For cash-generating units, Daimler
in a first step determines the respective recoverable amount
as value in use and compares it with the respective carrying
amount (including goodwill). The cash-generating units are
generally defined as the reporting segments. At Daimler Financial
Services, impairment tests are carried out below the segment
level. There is a differentiation between the two cash-generating
units Daimler Financial Services Classic (typical financial
services business) and Daimler Financial Services Mobility
(innovative mobility services). The material assets of the
cash-generating unit Daimler Financial Services Mobility have
been classified as assets held for sale due their intended
contribution into a joint venture. Therefore, no separate testing
for impairment was necessary.
In addition, derivatives, including embedded derivatives sepa-
rated from the host contract, which are not classified as
hedging instruments in hedge accounting, as well as financial
assets acquired for the purpose of selling in the near term
that are classified as held for trading, are included here. Gains
or losses on these financial assets are recognized in profit
or loss.
The determination of the business model is made at the
portfolio level and is based on management's intention and
past transaction patterns. Assessments of the contractual
cash flows are made on an instrument by instrument basis.
Financial assets primarily comprise receivables from financial
services, trade receivables, receivables from banks, cash
on hand, derivative financial assets, financial investments and
marketable securities and similar investments and financial
investments. The classification of financial instruments is based
on the business model in which these instruments are held
and on their contractual cash flows.
Financial assets
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IFRS 9 Financial Instruments (financial assets
measured at amortized cost, financial assets measured at fair
value through other comprehensive income and financial
assets measured at fair value through profit or loss). Transaction
costs directly attributable to acquisition or issuance are
considered by determining the carrying amount if the financial
instruments are not measured at fair value through profit or
loss.
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument
of another entity. Financial instruments in the form of financial
assets and financial liabilities are generally presented sepa-
rately. Financial instruments are recognized as soon as Daimler
becomes a party to the contractual provisions of the financial
instrument. In the case of purchases or sales of financial assets
through the regular market, Daimler uses the transaction date
as the date of initial recognition or derecognition.
Financial instruments
Inventories are measured at the lower of acquisition or manu-
facturing cost and net realizable value. The net realizable value
is the estimated selling price less estimated costs of comple-
tion and estimated costs to sell. The acquisition or manufacturing
costs of inventories are generally based on the specific
identification method and include costs incurred in acquiring
the inventories and bringing them to their existing location
and condition. Costs for large numbers of inventories that are
interchangeable are allocated under the average cost formula.
In the case of manufactured inventories and work in progress,
acquisition or manufacturing cost also includes production
overheads based on normal capacity.
Inventories
The Group classifies non-current assets or disposal groups as
held for sale if the conditions of IFRS 5 Non-current assets
held for sale and discontinued operations are fulfilled. In this
case, the assets or disposal groups are no longer depreciated
but measured at the lower of carrying amount and fair value
less costs to sell. If fair value less costs to sell subsequently
increases, any impairment loss previously recognized is reversed.
This reversal is restricted to the impairment loss previously
recognized for the assets or disposal group concerned. The
Group generally discloses these assets or disposal groups
separately in the Consolidated Statement of Financial Position.
A financial asset is migrated to stage 2 if the asset's credit risk
has increased significantly compared to its credit risk at initial
recognition. The credit risk is assessed based on the probability
of default. For trade receivables, the simplified approach is
applied whereby all trade receivables are allocated to stage 2
initially. Hence, no determination of significant increases in
credit risk is necessary.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
248
Daimler applies the low credit risk exception to the stage
allocation to quoted debt instruments with investment-grade
ratings. These debt instruments are always allocated to stage 1.
Financial assets at fair value through profit or loss. Financial
assets at fair value through profit or loss include financial
assets with cash flows other than those of principal and interest
on the nominal amount outstanding. Further financial assets
that are held in a business model other "hold to collect" or "hold
to collect and sell" are included here.
If a financial asset is defined as credit-impaired or in default,
it is transferred to stage 3 and measured at lifetime expected
credit loss. Objective evidence for a credit-impaired financial
asset includes 91 days past due date and other information
about significant financial difficulties of the borrower.
The determination of whether a financial asset has experienced
a significant increase in credit risk is based on an assessment
of the probability of default, which is made at least quarterly,
incorporating external credit rating information as well as
internal information on the credit quality of the financial asset.
For debt instruments that are not receivables from financial
services, a significant increase in credit risk is assessed mainly
based on past-due information or the probability of default.
BBAC
19,828
4,384
13,963
At December 31, 2018
Equity investment¹
Equity result¹
At December 31, 2017
Equity investment¹
Equity result¹
1 Including investor-level adjustments.
F.35
Associated
companies
Joint
ventures
Joint
operations
Total
4,230
604
26
4,860
1,050
-397
3
656
4,282
500
9
16
25
1
-31
-714
-432
-282
-
-
3,176
640
2,535
1
22, 197
4,619
36
16,192
-237
-140
-26
-71
-954
-396
-524
-34
-
3,535
755
2,779
1,386
4,818
-42
-1
Key figures on interests in associated companies accounted for using the equity method
1,024
Dividend payment to Daimler4
1,050
11
-101
-107
1,247
Equity result²
4,230
705
522
At December 31, 2017
650
Equity investment²
353
Stock market price¹
29.6
9.6
49.0
Equity interest (in %)
At December 31, 2018
Total
Others
THBV (HERE)
BAIC Motor³
2,353
In millions of euros
Equity interest (in %)
Equity investment²
1,498
1,541
265
5 The dividend from BBAC of €1,134 million was partly paid out in the year 2017 with an amount of €768 million.
The remaining amount of €346 million was paid out in the year 2018.
4 The dividend from BBAC of €1,024 million was partly paid out in the year 2018. The payment was €930 million.
3 The proportionate share of earnings of BAIC Motor Corporation Ltd. (BAIC Motor) is included in Daimler's Consolidated Financial Statements
with a three-month time lag.
29
1,134
1,541
-13
121
290
Stock market price¹
1,143
643
732
777
2,130
832
33.3
10.1
49.0
2 Including investor-level adjustments.
1 Proportionate stock market prices.
Dividend payment to Daimler5
Equity result²
4,282
10
Summarized carrying amounts and profits/losses from equity-method investments
Development costs
Change of deferred tax assets, net
In millions of euros
as of January 1
2018
2017
Deferred tax assets, net
497
363
Deferred tax expense/benefit in the
financial statement of income
-770
659
Change in deferred tax expense/benefit
on equity instruments/debt instruments
included in other comprehensive
income/loss
21
F.27
-3
537
-735
Change in deferred tax expense/benefit
on actuarial gains/losses from defined
benefit pension plans
171
-19
-197
232
Deferred tax assets, net
as of December 31
259
497
1 The other changes primarily relate to effects from
currency translation.
Change in deferred tax expense/benefit
on derivative financial instruments
included in other comprehensive
income/loss
As a result of future adjudications or changes in the opinions of
the fiscal authorities, it cannot be ruled out that Daimler might
receive tax refunds for previous years.
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of juris-
dictions. Daimler believes that it has recognized adequate
provisions for any future income taxes that may be owed for all
open tax
years.
The retained earnings of non-German subsidiaries are largely
intended to be reinvested in those operations. The Group
did not recognize deferred tax liabilities on retained earnings
of non-German subsidiaries of €28,514 million (2017: €28,692
million) which are intended to be reinvested. If those earnings
were paid out as dividends, an amount of 5% would be taxed
under German taxation rules and, if applicable, with non-German
withholding tax. Additionally, income tax consequences might
arise if the dividends first have to be distributed by a non-German
subsidiary to a non-German holding company. Normally, the
distribution would lead to an additional income tax expense. It
is not practicable to estimate the amount of taxable temporary
differences for these undistributed foreign earnings.
-3,352
-3,060
Other intangible assets
-115
-127
Property, plant and equipment
-1,757
-1,575
Equipment on operating leases
-5,092
-4,387
Inventories
-78
36,902
-793
Miscellaneous assets
-321
-55
-721
-382
Provisions for pensions and
similar obligations
Other provisions
Miscellaneous liabilities
-1,572
-233
-316
Deferred tax liabilities, gross
-13,629
-3,082
-150
-307
-13,846
Deferred tax assets, net
259
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 261
Other changes¹
6
F.28
2018
Balance at December 31, 2018
Amortization/impairment
Development
Goodwill
(acquired)
costs
(internally
generated)²
Other
intangible
assets
(acquired)
Total
1,481
Europe
2018
In millions of euros
Group
Other changes¹
ciliation
Buses
Daimler
Recon-
Total
Daimler
Financial
Daimler
Mercedes-
Benz Vans
Daimler
Trucks
Benz Cars
Mercedes-
F.14
Revenue
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
256
Services segments
Disposals
Reclassifications
Other additions
2017
In millions of euros
Income tax expense in the consolidated
financial statement of income
-3,013
-3,350
Income tax expense/benefit recorded
in other reserves
728
-757
-2,285
-4,107
262
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. Intangible assets
Intangible assets developed as shown in table 71 F.29.
At December 31, 2018, goodwill of €433 million (2017: €455
million) relates to the Daimler Financial Services segment,
goodwill of €418 million (2017: €418 million) relates to the
Daimler Trucks segment and goodwill of €168 million (2017:
€180 million) relates to the Mercedes-Benz Cars segment.
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet been
completed (carrying amount at December 31, 2018: €4,029
million; 2017: €5,086 million). In addition, other intangible
assets with a carrying amount of €270 million (2017: €255 mil-
lion) are not amortizable. These non-amortizable intangible
assets are distribution rights in the vehicle segments with
indefinite useful lives as well as trademarks in the Daimler
Trucks segment with indefinite useful lives. The Group plans to
continue to use these assets unchanged.
Table 1 F.30 shows the line items of the Consolidated Statement
of Income in which total amortization expense for intangible
assets is included.
F.29
Intangible assets
In millions of euros
Acquisition or manufacturing costs
Balance at January 1, 2017
Additions due to business combinations
Other additions
Reclassifications
Disposals
Other changes¹
Balance at December 31, 2017
Additions due to business combinations
Tax expense in equity
In millions of euros
57
1,356
-1,273
23,338
17,675
8,915
Balance at December 31, 2018
129
-18
-39
Other changes¹
-540
-558
-175
Disposals
11
-12
72
49,928
Carrying amount at December 31, 2017
8,244
In millions of euros
Equipment on operating leases
F.32
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
264
1 Primarily changes from currency translation.
30,948
1
5,667
9,501
8,741
Carrying amount at December 31, 2018
27,981
4,470
5,933
9,334
7,039
Acquisition or manufacturing costs
Reclassifications
2,273
Reclassifications
3,921
45,836
2,035
1,534
352
Additions
20,618
16,469
8,749
Balance at January 1, 2017
Depreciation/impairment
80,876
5,667
30,377
-1
1
Disposals
-201
1,633
385
Additions
46,838
21,465
16,630
8,743
4,291
Balance at December 31, 2017
-549
-289
-156
Other changes¹
-1,925
-640
-1,084
-994
27,176
Balance at January 1, 2017
Additions due to business acquisitions
8,376
within one year
Maturity
2017
2018
At December 31,
In millions of euros
for equipment on operating leases
Maturity of minimum lease payments
F.33
1 Primarily changes from currency translation.
2 Comprises impairments of €133 million.
47,074
49,476
Carrying amount at December 31, 2018
Carrying amount at December 31, 2017
14,055
7,922
between one and five years
9,898
8,607
F.34
Table 71 F.35 presents key figures on interests in associated
companies accounted for using the equity method in the
Group's Consolidated Financial Statements.
Table 71 F.34 shows the carrying amounts and profits/losses
from equity-method investments.
13. Equity-method investments
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Non-cancelable future lease payments to Daimler for equipment
on operating leases are due as presented in table 71 F.33.
Note 24).
Balance at December 31, 2018
Minimum lease payments
The development of equipment on operating leases is shown in
table F.32.
12. Equipment on operating leases
16,600
18,336
71
62
later than five years
At December 31, 2018, equipment on operating leases with a
carrying amount of €9,804 million were pledged as security
for liabilities from ABS transactions related to a securitization
transaction of future lease payments on leased vehicles
(December 31, 2017: €8,684 million) (see also
57,030
195
-6,431
-21,101
Disposals
Reclassifications
24,854
Other additions
Additions due to business acquisitions
58,798
Balance at December 31, 2017
-3,445
Other changes¹
-19,643
Disposals
Reclassifications
24,856
Other additions
Other changes¹
980
Balance at December 31, 2018
63,531
Disposals
Reclassifications
8,567
Additions²
11,724
Balance at December 31, 2017
-663
Other changes¹
Other changes¹
Disposals
Reclassifications
7,936
Additions
10,353
Balance at January 1, 2017
Depreciation/impairment
-5,902
17,656
Balance at December 31, 2018
322
11,257
1,082
Carrying amount at December 31, 2018
13,735
2,340
10,280
1,115
Carrying amount at December 31, 2017
9,890
2,422
7,194
274
Balance at December 31, 2018
49
40
2,462
14,801
1 Primarily changes from currency translation.
2 Including capitalized borrowing costs on development costs of €41 million (2017: €47 million).
Amortization amounted to €15 million (2017: €13 million).
89
85
Selling expenses
1,585
1,820
2017
2018
6
Cost of sales
Amortization expense for intangible assets
in the Consolidated Statement of Income
F.30
Property, plant and equipment also include buildings, technical
equipment and other equipment under finance lease arrange-
ments and thus deemed to be owned by the Group with a car-
rying amount at December 31, 2018 of €335 million (2017:
€320 million). In 2018, additions to and depreciation expense
on assets under finance lease arrangements amounted to
€17 million (2017: €204 million) and €33 million (2017: €34 mil-
lion), respectively.
In 2018, government grants of €51 million (2017: €50 million)
were deducted from property, plant and equipment.
Property, plant and equipment developed as shown in table
71 F.31.
11. Property, plant and equipment
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 263
In millions of euros
General administrative expenses
3
-373
-521
Disposals
Reclassifications
1,768
445
1,323
7,730
2,301
5,136
293
Additions
Balance at January 1, 2017
24,691
4,884
18,451
-368
-889
Other changes¹
-22
-277
Other changes¹
Disposals
Reclassifications
2,029
476
1,553
-650
Additions
2,279
5,912
271
Balance at December 31, 2017
-147
-99
-26
8,462
57
45
Research and non-capitalized
309
Other additions
Additions due to business acquisitions
74,819
4,470
27,398
25,964
16,987
Balance at December 31, 2017
-1,840
-152
-709
-504
-475
Other changes¹
888
1,932
4,341
7,470
96
172
-30
84
Other changes¹
-1,735
-104
-2,507
-661
-336
Disposals
-3,136
1,536
988
612
Reclassifications
-634
-123
-796
-1,173
Other
equipment,
factory and
office
equipment
Technical
equipment
and machinery
Land, leasehold
improvements and
buildings including
buildings on land
owned by others
Additions due to business acquisitions
Balance at January 1, 2017
Acquisition or manufacturing costs
In millions of euros
Advance payments
relating to plant
and equipment
and construction
in progress
Property, plant and equipment
1,768
2,029
1
1
48
66
development costs
Other operating expense
F.31
32
Total
25,624
-415
-2,347
803
985
559
6,949
3,603
16,756
1,752
562
Disposals
Reclassifications
Other additions
72,217
3,489
26,348
1,032
-1,097
14,343
Non-German companies
Deferred tax assets, gross
14,767
19,721
NAFTA
60,124
-3,582
63,706
3,827
2,861
8,684
10,727
37,607
1,498
Europe
In millions of euros
Daimler
Group
Recon-
ciliation1
Total
segments
Services¹
Financial
Daimler
Buses
Benz Vans
Mercedes-
Daimler
Trucks
Mercedes-
Benz Cars
2017
299
5,229
41,514
4,154
12,052
34,928
91,941
Revenue according to IFRS 15
9,516
-192
9,708
176
835
1,010
3,323
4,364
Other markets
37,577
-20
37,597
218
159
860
6,111
30,249
Asia
40,643
-871
Daimler
9,450
167,362
17,766
Other markets
38,644
-19
38,663
230
227
844
6,503
30,859
Asia
41,494
3,950
-903
5,366
255
1,666
16,622
18,488
NAFTA
59,924
-3,810
63,734
4,269
2,851
42,397
3,661
1,130
777
-3,519
21,285
16,201
26,269 175,800
419
4,529
13,626
38,273
93,103
Total revenue
1,049
712
2,904
Other revenue
149,596
-4,919
154,515
10,068
4,110
12,577
37,561
90,199
Revenue according to IFRS 15
9,534
-187
9,721
203
-8,438
8,937
152,525
147,860
298,465 289,530
10,367
10,852
12,621
13,739
17,978
18,506
24,823
26,223
80,155
82,905
1 Including proportionally 1,856 employees from proportionately
consolidated companies in 2018 (2017: 1,203).
143,586
Daimler Financial Services
Other
Daimler Buses
Mercedes-Benz Vans
Daimler Trucks
Mercedes-Benz Cars¹
2017
2018
Average number of employees
F.16
-5,296
-129,626
-134,295
146,240
258
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.17
2,259
2,330
724
1,108
133
Other miscellaneous income
optimization programs
Income associated with
149
159
Rental income not relating to sales financing
385
140
plant and equipment
Gains on sales of property,
107
102
Government grants and subsidies
761
821
Income from costs recharged to third parties
In millions of euros
2017
2018
Other operating income
-5,091
-4,665
-500
from financial services
Other cost of sales
Revenue by segment > F.100 and region 7 F.102 is presented
in Note 34.
13,888
Revenue that is expected to be recognized within three years
related to performance obligations that are unsatisfied (or
partially unsatisfied) amounted to €7,642 million at December 31,
2018. This revenue is mainly derived from long-term service
and maintenance contracts and extended warranties. It does
not include performance obligations from customer contracts
that have original expected durations of one year or less. Long-
term performance obligations of minor importance to the
overall contract value of a bundled contract are not considered
in assessing the original duration of that bundled contract.
Revenue according to IFRS 15 includes revenue that was
included in the contract liabilities at December 31, 2017 in an
amount of €3,583 million (2017: €2,481 million) and revenue
from performance obligations fully (or partially) satisfied in previ-
ous periods in an amount of €434 million (2017: €458 million).
Other revenue primarily comprises revenue from the rental and
leasing business (IAS 17), interest from the financial services
business at Daimler Financial Services in an amount of €5,188
million (2017: €4,613 million) and effects from currency
hedging.
Revenue from contracts with customers (revenue according
to IFRS 15) is disaggregated by the two categories - type of
products and services and geographical region - and presented
in table 7 F.14. The category type of products and services
corresponds to the reportable segments.
Revenue disclosed in the Consolidated Statement of Income
includes revenue from contracts with customers and other
revenue not in the scope of IFRS 15.
4. Revenue
1 In 2017 at the Daimler Financial Services segment, in addition to the adjustment of prior-year figures due to IFRS 15, the Group's internal revenue
has been adjusted. This adjustment has been fully eliminated in the reconciliation.
164,154
-8,167
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
172,321
4,524
16,294
-3,502
19,796
15,080
370
1,109
13,161
827
35,755
2,410
94,351
Total revenue
Other revenue
24,530
257
5. Functional costs
Cost of sales
Impairment losses on receivables
-2,187
-2,747
Daimler Financial Services
Refinancing costs at
-7,936
-8,567
-113,707
-117,508
Expense of goods sold
Depreciation of equipment
on operating leases
2017
2018
In millions of euros
F.15
Cost of sales
Information on the total remuneration of the current and former
members of the Board of Management and the current
members of the Supervisory Board is provided in Note 38.
Personnel expenses and average number of employees
Personnel expenses included in the Consolidated Statement of
Income amounted to €22,432 million in 2018 (2017: €22,186
million). The personnel expenses are composed of wages and
salaries in the amount of €18,329 million (2017: €18,188 mil-
lion), social contributions in the amount of €3,332 million (2017:
€3,292 million) and expenses from pension obligations in the
amount of €771 million (2017: €706 million). The average num-
bers of people employed are shown in table F.16.
In the year 2018, optimization programs did not result in any
material expenses. In the year 2017, at the Daimler Trucks seg-
ment, expenses of €172 million were incurred in connection
with the optimization of fixed costs, especially at the Mercedes-
Benz brand. The cash outflows occurred mainly in 2018.
Optimization programs
Research and non-capitalized development costs
Research and non-capitalized development costs were €6,581
million in 2018 (2017: €5,938 million) and primarily comprise
personnel expenses and material costs.
General administrative expenses amounted to €4,036 million in
2018 (2017: €3,808 million). They consist of expenses which
are not attributable to production, sales or research and devel-
opment functions, and comprise personnel expenses, deprecia-
tion and amortization of fixed and intangible assets, and other
administrative costs.
General administrative expenses
In 2018, selling expenses amounted to €13,067 million (2017:
€12,951 million). Selling expenses consist of direct selling
costs as well as selling overhead expenses and comprise per-
sonnel expenses, material costs and other selling costs.
Selling expenses
Amortization expense of capitalized development costs in the
amount of €1,538 million (2017: €1,310 million) is presented in
expense of goods sold.
Items included in cost of sales are shown in table F.15.
-382
10,775
Receivables from financial services
Other operating expense
thereof on temporary differences
15,634
-1,291
-1,299
Valuation allowances
15,187
2
Miscellaneous liabilities
878
1,084
Deferred income
1,621
-213
2,092
1,875
1,692
Other provisions
671
-171
Tax-free income and
non-deductible expenses
14
-632
Other
-140
Liabilities
thereof on tax loss carryforwards and
tax credits
-1,086
659
due to temporary differences
due to tax loss carryforwards
and tax credits
-510
1,059
-260
-400
F.24
Reconciliation of expected income tax expense
to actual income tax expense
In millions of euros
2018
2017
Expected income tax expense
-3,160
Foreign tax rate differential
Trade tax rate differential
Tax law changes
326
-4,166
-54
37
52
11
1,585
Change of valuation allowance on
deferred tax assets
obligations
-101
F.18
36
-770
Actual income tax expense
-3,350
Intangible assets
Property, plant and equipment
Equipment on operating leases
Inventories
Receivables from financial services
30
47
154
134
1,808
1,662
At December 31, 2018, the valuation allowance on deferred tax
assets relates, among other things, to corporate income tax
loss carryforwards (€904 million). €35 million of the deferred
tax assets for corporate income tax loss carryforwards
adjusted by a valuation allowance relates to tax loss carryfor-
wards which expire at various dates from 2019 through 2020,
€160 million relates to tax loss carryforwards which expire at
various dates from 2021 through 2023, €50 million relates to
tax loss carryforwards which expire at various dates from 2024
through 2028 and €659 million relates to tax loss carryfor-
wards which can be carried forward indefinitely. Furthermore,
the valuation allowance primarily relates to temporary differ-
ences at non-German companies as well as net operating
losses for state and local taxes at the US-companies. Daimler
believes that it is more likely than not that those deferred
tax assets cannot be utilized. In 2018 and prior years, the Group
had tax losses at several subsidiaries in several countries.
After offsetting the deferred tax assets with deferred tax liabili-
ties, the deferred tax assets not subject to valuation allow-
ances amounted to €127 million for those subsidiaries. Daimler
believes it is more likely than not that future taxable income
will be sufficient to allow utilization of the deferred tax assets.
Daimler's current estimate of the amount of deferred tax
assets that is considered realizable may change in the future,
necessitating higher or lower valuation allowances.
1,017
341
405
Miscellaneous assets, mainly other
financial assets
4,837
5,549
Tax loss carryforwards and
unused tax credits
1,538
1,813
Provisions for pensions and similar
977
In the Consolidated Statement of Financial Position, the
valuation allowances on deferred tax assets, which are mainly
attributable to foreign companies, increased by €8 million
compared to December 31, 2017. This is primarily a result of the
additional valuation allowances of €101 million recognized
in net profit. Furthermore, a decrease in the valuation allowance
was recognized in equity, amongst others due to currency
translation.
Including the items recognized in other comprehensive income/
loss (including items from equity-method investments),
the expense for income taxes is comprised as shown in table
71 F.28.
The development of deferred tax assets, net, is shown in table
71 F.27.
260
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.25
Deferred tax assets and liabilities
In millions of euros
2018
At December 31,
2017
Deferred tax assets
4,021
Deferred tax liabilities
-3,762
2,844
-2,347
Deferred tax assets, net
259
497
F.26
Split of tax assets and liabilities before offset
In millions of euros
At December 31,
2018
2017
2
-194
497
Deferred tax assets and deferred tax liabilities are offset if the
deferred tax assets and liabilities relate to income taxes levied
by the same taxation authority and if there is the right to set
off current tax assets against current tax liabilities. In the pre-
sentation of deferred tax assets and liabilities in the Consoli-
dated Statement of Financial Position, no difference is made
between current and non-current. In the Consolidated State-
ment of Financial Position, deferred tax assets and liabilities
are presented as shown in table 7 F.25.
In respect of each type of temporary difference and in respect of
each type of unutilized tax loss carryforwards and unutilized
tax credits, the deferred tax assets and liabilities before offset
are summarized in table 1 F.26.
-3,013
Deferred taxes
592
2017
-371
-660
Interest and similar expense
-211
-133
Net interest expense on the net obligation
from defined benefit pension plans
Interest expense
214
271
212
268
-793
Interest and similar income
3
defined benefit pension plans
Net interest income on the net assets of
Interest income
2017
2018
In millions of euros
Interest income and interest expense
F.20
-210
210
2
-582
8. Interest income and interest expense
Table 1 F.20 shows the components of interest income and
interest expense.
13,967
10,595
7,484
In millions of euros
7,663
6,483
2,932
German companies
Non-German companies
In millions of euros
2017
2018
Profit before income taxes
F.21
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German compa-
nies and tax-free results of our equity-method investments.
Furthermore, in 2017, the line item also includes tax expenses
in connection with the interpretation of tax laws.
In 2018 and 2017, the Group impaired deferred tax assets of
foreign subsidiaries. The resulting tax expenses are included in
the line item change of valuation allowance on deferred tax
assets.
The law signed in 2017 by the President of the United States of
America for a comprehensive tax reform ("H.R. 1/Tax Cuts
and Jobs Act"), includes the reduction of the nationwide federal
corporate income tax rate for US-companies from 35% to 21%,
starting on January 1, 2018. At year-end 2017, the reduction of
the federal corporate income tax rate required the remeasure-
ment of the deferred tax liabilities and deferred tax assets of the
US-subsidiaries of Daimler. The resulting tax benefit of €1,626
million is included in the line item tax law changes.
Table 71 F.24 shows a reconciliation of expected income tax
expense to actual income tax expense determined using the
unchanged applicable German combined statutory tax rate of
29.825%.
For non-German companies, the deferred taxes at period-end
were calculated using the tax rates of the respective countries.
For German companies, in 2018 and 2017, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
a solidarity tax surcharge of 5.5% on each year's federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes in
both years amounted to 29.825%.
The deferred tax expense/benefit is comprised of the compo-
nents shown in table 7 F.23.
Table 71 F.22 shows the components of income taxes.
Profit before income taxes in Germany includes profit/loss
on equity-method investments if the equity interests in those
companies are held by German companies.
Profit before income taxes is comprised as shown in table
71 F.21.
9. Income taxes
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 259
-149
241
The current tax expense includes tax benefits at German and
foreign companies of €529 million (2017: tax expenses of €268
million) recognized for prior periods.
Miscellaneous other financial
2018
In millions of euros
F.22
Components of income taxes
2018
2017
In millions of euros
Current taxes
German companies
-1,116
-2,024
Non-German companies
-1,127
Deferred taxes
German companies
125
-425
-895
1,084
-3,013
2018
-3,350
income/expense, net
F.23
Components of deferred tax expense
2017
Losses on sales of property,
-1,985
-106
-31
provisions for other risks
and effects from changes in discount rates of
Income and expense from compounding
plant and equipment
In 2018, the measurement at fair value of the minority interest
in Aston Martin Lagonda Global Holdings plc in other financial
assets resulted in a gain of € 111 million, which has been
assigned to the segment earnings of Mercedes-Benz Cars. The
measurement was carried out in connection with the initial
public offering, which took place at the beginning of October
2018.
Table 71 F.19 shows the components of other financial income/
expense, net.
7. Other financial income/expense, net
Other miscellaneous expense primarily comprises changes in
other provisions. Compared with the prior year, it includes
higher expenses related to legal proceedings.
The composition of other operating expense is shown in table
7 F.18.
In the year 2017, gains on sales of property, plant and equipment
included gains of €267 million from the sale of real estate
by Mitsubishi Fuso Truck and Bus Corporation at the Kawasaki
site in Japan.
Government grants and subsidies mainly comprise reimburse-
ments relating to current part-time early retirement contracts
and subsidies for alternative drive systems. In the year 2018,
other miscellaneous income contains insurance compensation
of €219 million.
Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.
-61
-1,356
6. Other operating income and expense
2017
2018
In millions of euros
Other miscellaneous expense
Other financial income/expense, net
F.19
-1,043
-1,462
The composition of other operating income is shown in table
7 F.17.
-117
-926
12,826
115
1
193
3
36
1,351
363
1,315
10,568
112
10,456
116
190
142
2017
215
30 to 59 days
12,463
1,228
less than 30 days
Receivables past due, not impaired individually
7,725
nor impaired individually
Receivables, neither past due
At December 31,
In millions of euros
Credit risks included in trade receivables
(according to IAS 39)
F.52
383
138
245
73
(Stage 3)
F.51
credit
impaired
thereof
Gross carrying amount
In millions of euros
Credit risks included in trade receivables (according to IFRS 9)
2017
In millions of euros
for trade receivables (according to IAS 39)
Development of loss allowances
F.50
Further information on financial risk and types of risk is
provided in O Note 33.
at December 31, 2018 under IFRS 9 is shown in table > F.51
and at December 31, 2017 under IAS 39 in table 7 F.52.
Information on credit risks included in trade receivables
Credit risks
The development of loss allowances due to expected credit
losses for trade receivables at December 31, 2018 under IFRS 9
is shown in table 7 F.49. Changes in the loss allowances
for trade receivables at December 31, 2017 under IAS 39 are
shown in table 7 F.50.
164
not past due
(Stage 2)
past due 30 days and less.
past due 61 to 90 days
not credit
impaired
Total
Lifetime expected credit loss
At December 31, 2018
300
4
Currency translation and other changes
Balance at December 31
-107
Utilization
63
Charged to costs and expenses
340
Balance at January 1
past due more than 180 days
past due 91 to 180 days
past due 31 to 60 days
60 to 89 days
component of
90 to 119 days
Provision
Loss allowances
Medium-term
PPSP
In millions of euros
Effects of share-based payment
F.53
The details shown in table 7 F.54 do not represent any paid or
committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2018 can be found in the
Remuneration Report. Management Report from page 120
Table 71 F.54 shows expenses in the Consolidated Statement
of Income resulting from the rights of current members of the
Board of Management.
The pre-tax effects of share-based payment arrangements for
the executive managers of the Group and the members of
the Board of Management of Daimler AG on the Consolidated
Statement of Income and Consolidated Statement of Financial
Position are shown in table 71 F.53.
Moreover, 50% of the annual bonus of the members of the
Board of Management is paid out after a waiting period of one
year. The actual payout is determined by the development
of Daimler shares compared to an automobile related index
(Auto-STOXX). The fair value of this medium-term annual
bonus, which depends on this development, is measured by
using the intrinsic value at the reporting date.
At December 31, 2018, the Group has the 2015-2018 Perfor-
mance Phantom Share Plans (PPSP) outstanding. The PPSP
are cash-settled share-based payment instruments and are
measured at their respective fair values at the balance sheet
date. The PPSP are paid out at the end of the stipulated hold-
ing period; earlier, pro-rated payoff is possible in the case of
benefits leaving the Group only if certain defined conditions
are met. PPSP 2014 was paid out as planned in the first quarter
of 2018.
21. Share-based payment
Table 71 F.02 shows the details of changes in other reserves in
other comprehensive income/loss.
Other reserves comprise accumulated unrealized gains/losses
from currency translation of the financial statements of the
consolidated foreign companies and accumulated unrealized
gains/losses on financial assets, derivative financial instru-
ments and equity-method investments.
2018
Expense
2017
2018
At December 31,
2017
204
122
-105
-15
13
10
-7
Other reserves
-2
of the Board
the members
annual bonus of
191
112
-98
-13
of Management
61
Under the German Stock Corporation Act (AktG), the dividend
is paid out of the distributable profit reported in the annual
financial statements of Daimler AG (parent company only) in
accordance with the German Commercial Code (HGB). For
the year ended December 31, 2018, the Daimler management
will propose to the shareholders at the Annual Shareholders'
Meeting to pay out €3,477 million of the distributable profit of
Daimler AG as a dividend to the shareholders, equivalent to
€3.25 per no-par-value share entitled to a dividend (2017:
€3,905 million and €3.65 per no-par-value share entitled to a
dividend respectively).
Retained earnings comprise the accumulated net profits and
losses of all companies included in Daimler's Consolidated
Financial Statements, less any profits distributed. In addition,
the effects of remeasuring defined benefit plans as well as
the related deferred taxes are presented within retained earn-
ings. Within the reporting period effects of first time adoption
for hyperinflation in Argentina were included in the line item
"Other" of Consolidated Statement of Changes in Equity.
The share capital (authorized capital) is divided into no-par-value
shares. All shares are fully paid up. Each share confers the
right to one vote at the Annual Shareholders' Meeting of Daimler
AG and, if applicable, with the exception of any new shares
potentially not entitled to dividends, to an equal portion of the
profits as defined by the dividend distribution decided upon
at the Annual Shareholders' Meeting. Each share represents a
proportionate amount of approximately €2.87 of the share
capital.
Share capital
See also the Consolidated Statement of Changes in Equity
7 F.05.
20. Equity
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
274
11,995
Net carrying amount
2,644
Receivables impaired individually
1,626
Total
103
120 days or more
70
Since January 1, 2017, there has been no change in the number
of shares outstanding/issued. The number at December 31,
2018 is 1,070 million, unchanged from December 31, 2017.
Approved capital
The Annual Shareholders' Meeting held on April 5, 2018
authorized the Board of Management, with the consent of the
Supervisory Board, to increase the share capital of Daimler AG
in the period until April 4, 2023 by a total of €1.0 billion in
one lump sum or by separate partial amounts at different times
by issuing new, registered no-par-value shares in exchange
for cash and/or non-cash contributions (Approved Capital 2018).
The new shares are generally to be offered to the shareholders
for subscription (also by way of indirect subscription pursuant
to Section 186 Subsection 5 Sentence 1 of the German Stock
Corporation Act (AktG)). Among other things, the Board of Man-
agement was authorized with the consent of the Supervisory
Board to exclude shareholders' subscription rights under certain
conditions and within defined limits.
Approved Capital 2014, which had not been utilized, was can-
celled when the resolution for a new Approved Capital 2018
took effect. Approved Capital 2018 has not yet been utilized.
Retained earnings
275
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Capital reserves primarily comprise premiums arising on the
issue of shares as well as expenses relating to the exercise of
the up to 2014 exercisable stock option plans and the issue
of employee shares, effects from changes in ownership inter-
ests in consolidated entities and directly attributable related
transaction costs.
Capital reserves
In 2018, 0.7 million Daimler shares representing €2.1 million
or 0.07% of the share capital were purchased for a price of €50
million and reissued to employees (2017: 0.6 million Daimler
shares representing €1.7 million or 0.06% of the share capital
were purchased for a price of €42 million).
Employee share purchase plan
Dividend
As was the case at December 31, 2017, no treasury shares are
held by Daimler AG at December 31, 2018.
The Board of Management is further authorized, with the con-
sent of the Supervisory Board, to exclude shareholders' sub-
scription rights in other defined cases. In a volume up to 5% of
the share capital issued as of the day of the resolution of the
Annual Shareholders' Meeting, the Company was also autho-
rized to acquire treasury shares also by using derivatives (put
options, call options, forward purchases or a combination of
these instruments), whereby the term of a derivative must not
exceed 18 months and must not end later than March 31, 2020.
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Company is authorized until March 31, 2020 to
acquire treasury shares in a volume up to 10% of the share
capital issued as of the day of the resolution to be used
for all legal purposes. The shares can be used, amongst other
things excluding shareholders' subscription rights, for
business combinations or to acquire companies or to be sold
to third parties for cash at a price that is not significantly
lower than the stock-exchange price of the Company's shares.
The acquired shares can also be used to fulfill obligations
from issued convertible bonds and/or bonds with warrants and
to be issued to employees of the Company and employees
and board members of the Company's affiliates pursuant to
Sections 15 et seq. of the German Stock Corporation Act (AktG).
The treasury shares can also be canceled.
Treasury shares
This authorization to issue convertible and/or warrant bonds
has not yet been utilized.
In order to fulfill the conditions of the above-mentioned autho-
rization, the Annual Shareholders' Meeting on April 1, 2015
also resolved to increase the share capital conditionally by an
amount of up to €500 million (Conditional Capital 2015).
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Board of Management is authorized, with the
consent of the Supervisory Board, until March 31, 2020 to
issue convertible and/or warrant bonds or a combination
of these instruments ("bonds") with a total face value of up to
€10.0 billion and a maturity of no more than ten years. The
Board of Management is allowed to grant the holders of these
bonds conversion or warrant rights for new registered no-
par-value shares in Daimler AG with an allocable portion of the
share capital of up to €500 million in accordance with the
details defined in the terms and conditions of the bonds. The
bonds can be offered in exchange for cash and/or non-cash
contributions, in particular for shares in other companies. The
terms and conditions of the bonds can include warranty
obligations or conversion obligations. The bonds can be issued
once or several times, wholly or in installments, or simultane-
ously in various tranches as well by affiliates of the Company
within the meaning of Sections 15 et seq. of the German
Stock Corporation Act (AktG). Among other things, the Board
of Management was authorized to exclude shareholders' sub-
scription rights for the bonds under certain conditions and
within defined constraints with the consent of the Supervisory
Board.
Conditional capital
The authorization to acquire treasury shares was not exercised
in the reporting period.
Trade receivables are receivables from contracts with custom-
ers in scope of IFRS 15.
1
Trade receivables are comprised as shown in table 7 F.48.
2,379
1,144
1,235
Derivative financial instruments used in hedge accounting
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
1,002
1,002
thereof equity instruments carried at cost
171
171
thereof equity instruments recognized at fair value
1,173
1,173
Available-for-sale financial assets
Total
At December 31, 2017
Non-current
Current
In millions of euros
Other financial assets (according to IAS 39)
F.45
5,733
2,763
2,970
3,843
1,488
2,355
54
28
82
2,313
2,832
3,288
136
3,152
Reimbursements due to other tax refunds
Reimbursements due to the Medicare Act (USA)
759
249
510
1,235
254
981
Reimbursements due to income tax refunds
109
Total
Current
Total
At December 31, 2018
Non-current
Current
In millions of euros
Other assets
F.46
6,806
3,204
3,602
3,172
859
At December 31, 2017
Non-current
18
91
1,033
The marketable debt securities and similar investments with a
carrying amount of €9,577 million (2017: €10,063 million) are
part of the Group's liquidity management and comprise financial
instruments recognized at fair value through other comprehen-
sive income, fair value through profit and loss or recognized at
amortized cost.
15. Marketable debt securities and
similar investments
86,054
Net carrying amount
1,935
Receivables impaired individually
2,645
Total
105
120 days or more
43
90 to 119 days
When a short-term liquidity requirement is covered with
quoted securities, those securities are presented as current
assets.
136
315
30 to 59 days
2,046
less than 30 days
individually
Receivables past due, not impaired
81,474
nor impaired individually
Receivables, neither past due
In millions of euros
2017
Credit risks included in receivables from
financial services (according to IAS 39)
60 to 89 days
263
Further information on marketable debt securities and similar
investments is provided in Note 32.
The line item other financial assets presented in the Consoli-
dated Statement of Financial Position at December 31, 2018
according to IFRS 9 is comprised as shown in table 7 F.44.
Table 71 F.45 shows the corresponding amounts at December
31, 2017 according to IAS 39.
509
524
Derivative financial instruments used in hedge accounting
Financial assets recognized at fair value through profit or loss
Other receivables and financial assets
384
384
Recognized at fair value through profit or loss
364
364
Recognized at fair value through other comprehensive income
748
748
Equity instruments and debt instruments
16. Other financial assets
Total
Current
In millions of euros
Other financial assets (according to IFRS 9)
F.44
Other expected reimbursements predominantly relate to
recovery claims from our suppliers in connection with issued
product warranties.
Non-financial other assets are comprised as shown in table
7 F.46.
17. Other assets
271
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Further information on other financial assets is provided in
> Note 32.
At December 31, 2018, receivables with a carrying amount of
€511 million (2017: €511 million) were pledged as collateral for
liabilities (see also
Note 24).
Financial assets measured at fair value through profit or loss
relate exclusively to derivative financial instruments which are
not used in hedge accounting.
At December 31, 2018
Non-current
3,095
27
27
296
128
168
-4
300
(Stage 3)
(Stage 2)
credit
impaired
not credit
impaired
Total
Lifetime expected credit loss
At December 31, 2018
45
Reversals
Change in remeasurement
Balance at January 1 according to IFRS 9
Additions
Effect of initial application of IFRS 9
Balance at December 31 according to IAS 39
In millions of euros
Development of loss allowances for trade receivables
due to expected credit losses (according to IFRS 9)
F.49
The carrying amount of inventories recognized during the period
by taking possession of collateral held as security amounted
to €21 million at December 31, 2018 (December 31, 2017: €51
million). Those assets are utilized in the context of normal
business operations.
In addition, inventories with a carrying amount of €367 million
at December 31, 2018 (December 31, 2017: €419 million)
were pledged as collateral for liabilities from ABS transactions
(see also
Note 24).
As collateral for certain vested employee benefits in Germany,
the value of company cars and demonstration cars at Mercedes-
Benz Cars and Mercedes-Benz Vans included in inventories at
Daimler AG were pledged as collateral to the Daimler Pension
Trust e.V. in an amount of €952 million at December 31, 2018
(December 31, 2017: €1,033 million).
The amount of write-down of inventories to net realizable value
recognized as an expense in cost of sales was €333 million in
2018 (2017: €328 million). Inventories that are expected to be
recovered or settled after more than twelve months amounted
to €1,047 million at December 31, 2018 (December 31, 2017:
€954 million) and are primarily spare parts.
Inventories are comprised as shown in table 7 F.47.
Utilization
18. Inventories
60
1
19. Trade receivables
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 273
240
115
125
Balance at December 31 according to IFRS 9
-37
-23
-14
Currency translation and other changes
-1
Transfer to stage 3
105
-2
Transfer to stage 2
-
-
Change in models/risk parameters
-93
-36
-57
-37
-18
-19
6
5
2
At December 31, 2018, €29 million of the trade receivables
mature after more than one year (December 31, 2017:
€38 million).
-300
11,995
Net carrying amount
7,004
1,115
5,889
1,066
300
766
1,133
318
815
Others
744
112
5,014
632
126
712
Prepaid expenses
485
211
274
483
254
229
Other expected reimbursements
68
68
838
12,586
1,203
272
-240
Loss allowances
12,295
12,826
Gross carrying amount
At December 31,
2018
2017
Trade receivables
F.48
19,361
297
25,686
29,489
334
Advance payments to suppliers
6,217
21,351
Finished goods, parts and
2,655
3,373
4,674
Work in progress
3,130
manufacturing supplies
At December 31,
2018
2017
Raw materials and
In millions of euros
Inventories
F.47
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
products held for resale
In millions of euros
(Stage 3)
414
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of September 30.
3 THBV:
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
Revenue at THBV relates to HERE; revenue for the year 2017 is solely for the month of January until the change in the consolidation of HERE at THBV.
F.37
Summarized aggregated financial information on minor equity-method investments
In millions of euros
Associated companies
Joint ventures
2018
2017
2018
2017
Summarized aggregated financial information (pro rata)
Profit/loss from continuing operations after taxes
Profit/loss from discontinued operations after taxes
33
61
1
-28
-
-
Other comprehensive income/loss
-6
Daimler recognizes its proportionate share of profits or losses of BAIC Motor Corporation Ltd. (BAIC Motor) with a three-month time lag.
Figures for the statement of income relate to the period of October 1 to September 30.
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
1 BBAC:
732
732
Unrealized profit (-)/loss (+) on sales to/purchases from
-107
-93
-8
-9
Equity-method goodwill
-
-
-
-1
70
-1
-1
-80
4
Carrying amount of equity-method investment
2,353
2,130
650
777
522
Other
-1
Total comprehensive income/loss
27
18,452
Sales financing with dealers
Finance-lease contracts
18,549
8,976
Gross carrying amount
45,977
30,029 48,481
3,782 22,331
18,038 27,014
51,849 97,826
16,363
28,635
44,998
Sales financing with customers
16,065
19,126
7,430
15,370
22,800
39,858
47,066
86,924
Loss allowances
Net carrying amount
-537
3,061
522
At December 31, 2017
Total
Total
60
0
-28
268
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. Receivables from financial services
Table 71 F.38 shows the components of receivables from finan-
cial services.
Types of receivables
Receivables from sales financing with customers include
receivables from credit financing for customers who purchased
their vehicle either from a dealer or directly from Daimler.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group's
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily, used vehicles traded
in by dealers' customers or real estate such as dealers' show-
Current Non-current
rooms.
Maturities of the finance-lease contracts are shown in table
71 F.39.
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for operat-
ing activities in the Consolidated Statement of Cash Flows.
Loss allowances
The development of loss allowances for receivables from finan-
cial services due to expected credit losses at December 31,
2018 under IFRS 9 is shown in table 7 F.40. Changes in the
loss allowances for receivables from financial services at
December 31, 2017 under IAS 39 are shown in table > F.41.
The carrying amounts of receivables from financial services
based on modified contracts that are shown in stage 2 and 3,
amounted to €184 million at December 31, 2018. In addition,
carrying amounts of €127 million in connection with contractual
modifications were reclassified from stage 2 and 3 into stage 1.
F.38
Receivables from financial services
In millions of euros
At December 31, 2018
Current Non-current
Receivables from finance-lease contracts consist of receivables
from leasing contracts for which all substantial risks and
rewards incidental to the leasing objects are transferred to the
lessee.
45,440
712
2,224
BBAC1
2018
2017
2018
BAIC Motor²
2017
THBV³ (HERE)
2018
2017
Information on the statement of income
Revenue
17,433
15,373
20,085
18,510
Profit/loss from continuing operations after taxes
2,570
2,350
1,802
1,649
-337
71
In millions of euros
Summarized IFRS financial information on significant associated companies
accounted for using the equity method
F.36
267
266 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BBAC
Beijing Benz Automotive Co., Ltd. (BBAC) produces and distri-
butes Mercedes-Benz passenger cars and spare parts in China.
The investment and the proportionate share in the results of
BBAC are allocated to the Mercedes-Benz Cars segment.
The remainder of the dividend which was approved by the
shareholders of Beijing Benz Automotive Co., Ltd. (BBAC) in the
second quarter of 2017 was paid out in the first quarter of
2018 and led to a cash inflow of €346 million.
In the second quarter of 2018, the shareholders of BBAC
approved the payout of a dividend for the 2017 financial year.
The amount of €1,024 million attributable to Daimler reduced
the carrying amount of the investment accordingly. The first
part of the dividend was paid in the third quarter and led to a
cash inflow of €495 million. A further portion of the dividend
was paid in the fourth quarter of 2018 and led to a cash inflow
of €435 million. Daimler plans to contribute additional equity
of in total €0.4 billion in accordance with its shareholding ratio
in the years 2019 to 2020.
BAIC Motor
BAIC Motor Corporation Ltd. (BAIC Motor) is the passenger car
division of BAIC Group, one of the leading automotive companies
in China. Directly or via subsidiaries, BAIC Motor is engaged
in the business of researching, developing, manufacturing, sell-
ing, marketing and servicing automotive vehicles and related
parts and components and all related services. Due to Daimler's
representation on the board of directors of BAIC Motor and
other contractual arrangements, Daimler classifies this invest-
ment as an investment in an associate, to be accounted for
using the equity method; in the segment reporting, the invest-
ment's carrying amount and its proportionate share of profit or
loss are presented in the reconciliation of total segment's
assets to Group assets and total segments' EBIT to Group EBIT,
respectively.
On May 3, 2018, BAIC Motor issued new shares at the Hong
Kong Stock Exchange. As a result, Daimler's interest in BAIC
Motor was diluted from 10.08% to 9.55%. The dilution did not
lead to any material earnings effects at Daimler. Daimler con-
tinues to exercise significant influence on BAIC Motor.
As a result of the significantly reduced stock-exchange price
of BAIC Motor in 2018, Daimler assessed if there is any objective
indication of an impairment of its investment in BAIC Motor.
This assessment did indicate a need for an impairment in the
amount of €150 million in the fourth quarter of 2018. In the
first quarter of 2017, a gain of €240 million was included due to
the reversal of an impairment. The gain in 2017 was a result
of the increased stock-exchange price. Both the gain and the loss
are included in the line item profit/loss on equity-method
investments, net.
THBV (HERE)
-151
There Holding B.V. (THBV) holds an interest in HERE Interna-
tional B.V. (HERE). HERE is one of the biggest manufacturers of
digital roadmaps for navigation systems worldwide. Future
expected high resolution maps will be one of the fundamentals
for future autonomous driving. THBV is accounted for in the
Consolidated Financial Statements of Daimler AG as an associ-
ated company using the equity method, and is allocated to the
Mercedes-Benz Cars segment.
In December 2017, the former THBV shareholders Daimler,
Audi and BMW signed agreements on the sale of shares in
THBV to Robert Bosch Investment Nederland B.V. and to Conti-
nental Automotive Holding Netherlands B.V. Those transac-
tions were concluded on February 28, 2018. Each of the two
buyers acquired a share of 5.9% of THBV. The sale of shares
was carried out in equal parts by Daimler, Audi and BMW. As a
result, Daimler's equity interest decreased from 33.3% to
29.4%. The effect on earnings was not material for Daimler.
In the first quarter of 2018, the shareholders of THBV decided
on a payback from the capital reserve. The amount of €96
million attributable to Daimler was paid out and decreased the
carrying amount of the investment accordingly.
THBV carried out capital increases in the second and fourth
quarter of 2018. Daimler participated in the capital increases
with in total €62 million, whereby the equity interest attributable
to Daimler gradually increased by 0.2% to 29.6%. The capital
contributions increased the carrying amount of the investment
accordingly.
Table 1 F.36 shows summarized IFRS financial information after
purchase price allocation for the significant associated com-
panies which were the basis for equity-method accounting in
the Group's Consolidated Financial Statements.
Other minor equity-method investments
In the second quarter of 2018, the result of joint ventures
accounted for using the equity method includes an expense of
€418 million for Toll Collect, primarily related to the settle-
ment of the arbitration proceedings. The result is allocated to
the Daimler Financial Services segment. Further information
is provided in Note 30.
The equity-method result of joint ventures in 2017 includes
impairments of investments of €125 million.
Table 71 F.37 shows summarized aggregated financial informa-
tion for the other minor equity-method investments after pur-
chase price allocation and on a pro rata basis.
Further information on equity-method investments is provided
in Notes 3 and 37.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
On January 31, 2017, the sale of a 15% shareholding in HERE
between THBV and Intel Holdings B.V. (Intel) has been com-
pleted. As a result, THBV now only has a significant influence
on its former 100% subsidiary HERE. Therefore, as of Febru-
ary 1, 2017, HERE is no longer fully consolidated in the financial
statements of THBV, but is presented as an associated com-
pany using the equity method. The change in the consolidation
method led to the remeasurement of the HERE shares at fair
value in the first quarter of 2017. The income of €183 million
from this transaction that is attributable to Daimler is included
in profit/loss on equity-method investments in the first quarter
of 2017.
Profit/loss from discontinued operations after taxes
Other comprehensive income/loss
Total comprehensive income/loss
1,906
289
Non-current liabilities
967
741
3,545
3,077
Current liabilities
6,625
6,335
10,663
2
10,954
5,022
4,540
10,370
9,198
1,764
2,195
Equity (including
non-controlling interest)
Equity (excluding non-controlling interests) attributable to the Group
2,461
1
738
10,140
7,058
-
513
7
23
103
-7
2
2,577
2,373
1,802
10,753
1,752
364
Information on the statement of financial position and
reconciliation to equity-method carrying amounts
Non-current assets
5,458
4,558
13,825
13,089
1,763
Current assets
7,156
-344
F.43
-549
51,300
-404
39,454
502
1,086
Credit risks
Information on credit risks included in receivables from finan-
cial services at December 31, 2018 under IFRS 9 is shown in
table 7 F.42 and at December 31, 2017 under IAS 39 in table
7 F.43.
F.41
Development of the loss allowances for receivables
from financial services (according to IAS 39)
In millions of euros
Longer overdue periods regularly lead to higher allowances.
At the beginning of the contracts, collaterals of usually at least
100% of the carrying amounts were agreed, which are backed by
the vehicles based on the underlying contracts. Over the con-
tract terms, the value of the collaterals is comprised in the
calculation of the risk provisioning, so the carrying amounts of
the credit impaired contracts are primarily backed by the
underlying vehicles.
Further information on financial risks and nature of risks is pro-
vided in Note 33.
At December 31, 2018, receivables from financial services with
a carrying amount of €8,106 million (December 31, 2017:
€6,049 million) were pledged as collateral for liabilities from
ABS transactions (see also
Note 24).
2017
Balance at January 1
Additions
1,054
480
Utilization
-265
Reversals
-299
195
389
22
13
-33
-17
-116
-166
-160
-122
-160
-442
-
-
Currency translation and other changes
-
-47
-26
-28
51
-23
-4
-30
34
8
1
73
-100
Balance at December 31
870
770
819
44
1,633
past due 31 to 60 days
8
448
121
577
past due 61 to 90 days
past due 30 days and less
3
84
319
past due 91 to 180 days
3
4
209
216
past due more than 180 days
3
411
232
360
94,667
4,295
270
F❘| CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.42
Credit risks included in receivables from financial services (according to IFRS 9)
In millions of euros
At December 31, 2018
12-month expected
credit loss
Lifetime expected
credit loss
not credit
405
impaired
(Stage 1)
(Stage 2)
Total
Gross carrying amount
thereof
90,754
5,798
1,274
97,826
not past due
89,967
credit
impaired
-1,086
96,740
237
-25
Unearned finance income
-1,117
-1,672
-40
26,409
3,434
29,843
-2,829
7,779
602
8,381
14,050
2,525
16,575
321
12
333
22,150
3,139
25,289
-951
-1,500
-38
-2,489
Gross carrying amount
Loss allowances
Net carrying amount
8,976
17,627
411
451
437
14
16,583
2,716
19,299
10,093
-466
-870
46,600
86,054
F.39
Maturities of the finance lease contracts
In millions of euros
At December 31, 2018
< 1 year
1 year up
to 5 years
27,014
> 5 years
Total
< 1 year
1 year up
to 5 years
> 5 years
Total
Contractual future lease payments
9,389
Unguaranteed residual values
704
Gross investment
At December 31, 2017
7,430
15,075
295
Balance at January 1 according to IFRS 9
Additions
Change in remeasurement
Utilization
Reversals
Change in models/risk parameters
Transfer to stage 1
Transfer to stage 2
Transfer to stage 3
Currency translation and other changes
Effect of initial application of IFRS 9
Balance at December 31 according to IFRS 9
870
56
361
152
413
926
197
59
130
386
Total
148
Balance at December 31 according to IAS 39
(Stage 3)
22,800
-140
8,836
-212
17,415
-2
409
-132
-152
7,298
14,923
-2
293
-286
In millions of euros
22,514
269
At December 31, 2018
F.40
Development of loss allowances for receivables from financial services due to expected credit losses (according to IFRS 9)
12-month expected
credit loss
Lifetime expected
credit loss
not credit
impaired
credit
impaired
(Stage 1)
(Stage 2)
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-354
26,660
276
2,835
F.62
Key data for other post-employment benefits
In millions of euros
2018
2017
Present value of defined benefit
obligations
1,095
1,142
Fair value of
reimbursement rights
27
Funded status
-1,068
68
-1,074
Net periodic cost for other
post-employment benefits
-66
-71
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
283
23. Provisions for other risks
The development of provisions for other risks is summarized in
table 7 F.63.
Product warranties
Daimler issues various types of product warranties, under
which it generally guarantees the performance of products
delivered and services rendered for a certain period. The
provision for these product warranties covers expected costs
for legal and contractual warranty claims as well as expected
costs for goodwill concessions and recall campaigns. The
utilization date of product warranties depends on the incidence
of the warranty claims and can span the entire term of the
product warranties. The cash outflow for non-current product
warranties is principally expected within a period until 2021.
17
Personnel and social costs
16
16
-13
-107
-89
-18
Sensitivity for life expectancy
Sensitivity for life expectancy
+1 year
464
393
71
487
417
70
-417
-345
-72
-437
-366
-71
F.61
Weighted average duration of
the defined benefit obligations
2018
2017
In years
German plans
16
Non-German plans
-82
Provisions for personnel and social costs primarily comprise
expected expenses of the Group for employee anniversary
bonuses, profit sharing arrangements and management bonuses
as well as early retirement and partial retirement plans.
The additions recorded to the provisions for profit sharing and
management bonuses in the reporting year usually result
in cash outflows in the following year. The cash outflow for
non-current provisions for personnel and social costs is
primarily expected within a period until 2029.
Provisions for other risks include in particular expected costs
in connection with liability and litigation risks as well as risks
from legal proceedings. Provisions for other risks also include
expected costs for other taxes, provisions for environmental
protection as well as obligations from outstanding commission,
for example to trade representatives, under the prerequisite
that no revenue has been realized with the recipient of the com-
mission under IFRS 15. They also include provisions for antici-
pated losses on contracts and various other risks which cannot
be allocated to any other class of provision.
1,365
7,143
3,665
2,113
2,141
7,919
-2,931
-2,049
-1,196
-6,176
-420
-113
-362
-895
20
-8
19
31
-7
-107
34
-80
7,043
4,261
4,258
2,216
Other
3,562
2,257
Further information on other provisions for other risks is
provided in Notes 5 and 30.
F.63
Provisions for other risks
In millions of euros
Balance at December 31, 2017
thereof current
thereof non-current
Additions
Utilizations
Reversals
Compounding and effects from changes in discount rates
Currency translation and other changes
Balance at December 31, 2018
thereof current
thereof non-current
Product
warranties
Personnel and
social costs
Other
Total
6,716
4,425
3,622
14,763
3,154
2,209
7,620
-95
- 0.10%
in cost of living
-711
-584
-127
-729
-709
-20
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 281
Pension cost
The components of pension cost included in the Consolidated
Statement of Income are shown in table 7 F.58.
Measurement assumptions
The measurement date for the Group's defined benefit pension
obligations and plan assets is generally December 31. The
measurement date for the Group's net periodic pension cost is
generally January 1. The assumptions used to calculate the
defined benefit obligations vary according to the economic con-
ditions of the countries in which the pension plans are situated.
Calculation of the defined benefit obligation uses life expec-
tancy for the German plans based first on the 2018 G mortality
tables of K. Heubeck as of December 31, 2018. The tables
reflect the latest statistics of the statutory pension insurance
system and of the Federal Statistical Office. The effect
resulting from the change of the mortality tables amounts to
€202 million at December 31, 2018 and is disclosed in the
valuation losses from changes in demographic assumptions.
Comparable country-specific calculation methods are used
for non-German plans.
Table 71 F.59 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
Sensitivity analysis
An increase or decrease in the main actuarial assumptions
would affect the present value of the defined benefit pension
obligations as shown in table 71 F.60.
The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as important.
This means that if there is a simultaneous change in several
parameters, the individual results cannot be summed due to
correlation effects. With a change in the parameters, the
sensitivities shown cannot be used to derive a linear develop-
ment of the defined benefit obligation.
For the calculation of the sensitivity of life expectancy,
by means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
is achieved.
Effect on future cash flows
Daimler currently plans to make contributions of €0.7 billion
to its pension plans for the year 2019; the final amount is
usually set in the fourth quarter of a financial year. In addition,
the Group expects to make pension benefit payments of
€0.9 billion in 2019.
The weighted average duration of the defined benefit
obligations is shown in table 71 F.61.
Defined contribution pension plans
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2018, the total cost from defined contri-
bution plans amounted to €1.6 billion (2017: €1.6 billion). Of
those payments €1.5 billion (2017: €1.5 billion) were related to
governmental pension plans.
Multi-employer plans
Multi-employer pension plans are classified at the Daimler
Group as not material at December 31, 2018.
Until October 2017, a pension plan in the NAFTA region was
included therein, for which the information required to use
accounting for defined benefit plans was available for the first
time in 2017. The company withdrew from the plan at the
end of November 2017. The settlement of the plan resulted in
a gain for Daimler Trucks of €117 million. The EBIT effect
was presented in cost of sales in the Consolidated Statement of
Income. The present value of future financial obligations was
presented in provisions for other risks at December 31, 2017.
2
Other post-employment benefits
2
3
Total
German
Plans
Non-German
Plans
Current service cost
-700
-600
-100
-687
-591
-96
Past service cost,
curtailments and settlements
76
71
5
117
117
Net interest expense
-90
-55
-35
-161
-118
-43
Net interest income
3
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment
health care benefits with defined entitlements, which have to
be accounted for as defined benefit plans. Table 71 F.62
shows key data for other post-employment benefits.
Significant risks in connection with commitments for other
post-employment benefits (medical care) relate to rising
healthcare costs and lower contributions to those costs from
the public sector. In addition, these plans are subject to
the usual risks for defined benefit plans, in particular the risk
of changes in discount rates.
282
-1,174
-1,047
-127
-1,184
-1,045
-139
Sensitivity for discount rates
- 0.25%
1,252
1,115
137
1,308
1,113
195
Sensitivity for expected increases
in cost of living
+ 0.10%
98
83
15
109
20
90
19
Sensitivity for expected increases
+ 0.25%
Sensitivity for discount rates
Plans
December 31, 2017
German Non-German
Plans
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.59
Significant factors for the calculation of pension benefit obligations
German plans
At December 31,
Non-German plans
At December 31,
2018
2017
2018
2017
In percent
Discount rates
15,562
Expected increase in cost of living¹
1.8
1.7
4.4
1 For German plans, expected increases in cost of living may affect - depending on the design of the pension plan - the obligation to the Group's
active employees as well as retirees and their survivors. For most non-German plans, expected increases in cost of living do not have a material
impact on the amount of the obligation.
F.60
Sensitivity analysis for the present value of defined benefit pension obligation
In millions of euros
3.7
Total
December 31, 2018
German Non-German
Plans
Plans
Total
1.8
1.8
Non-German
Plans
3,080
2,777
111
Liabilities from residual value guarantees
1,149
943
2,092
1,091
998
2,089
Liabilities from wages and salaries
1,267
25
1,292
1,292
25
1,317
Accrued interest expenses
1,105
1,105
905
905
Deposits received
504
542
1,046
495
49
539
62
5
Financial liabilities measured at fair value through profit or
loss relate exclusively to derivative financial instruments which
are not used in hedge accounting.
Further information on other financial liabilities is provided
in Note 32.
26. Deferred income
The composition of deferred income is shown in table 7 F.67.
F.66
Other financial liabilities
In millions of euros
Current
At December 31, 2018
Non-current
At December 31, 2017
Total
Current
Non-current
Total
Derivative financial instruments
used in hedge accounting
633
461
1,094
168
528
696
Financial liabilities recognized at fair
value through profit or loss
51
56
The composition of other financial liabilities is shown in
table 7 F.66.
1,034
2,948
584
975
462
671
1,133
Deferral of advance rental payments received
from operating lease arrangements
890
929
1,819
824
900
1,724
Other deferred income
299
99
398
242
97
339
1,580
1,612
3,192
1,528
1,668
3,196
391
Other
Deferral of sales revenue received from sales
with residual-value guarantees
At December 31, 2017
Non-current
399
3,347
2,892
231
3,123
Miscellaneous other financial liabilities
6,973
1,909
8,882
6,675
1,793
8,468
7,657
2,375
10,032
6,905
2,370
9,275
F.67
Deferred income
In millions of euros
Current
At December 31, 2018
Non-current
Total
Current
Total
25. Other financial liabilities
285
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1,045
1,045
Liabilities to financial institutions
21,068
18,332
39,400
17,583
16,972
34,555
Deposits in the direct banking business
9,677
2,097
11,774
9,450
2,010
11,460
Liabilities from ABS transactions
6,782
5,670
12,452
6,214
4,823
11,037
Liabilities from finance leases
27
2,835
Loans, other financing liabilities
Commercial paper
53,288
7,828
3,963
2,290
1,481
7,734
284
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Financing liabilities
The composition of financing liabilities is shown in
table 71 F.64.
Liabilities from finance leases relate to leases of property, plant
and equipment which transfer substantially all risks and
rewards to the Group as lessee. Future minimum lease payments
under finance leases amounted to €477 million at December 31,
2018 (2017: €496 million). The reconciliation of future mini-
mum lease payments from finance lease arrangements to the
corresponding liabilities is shown in table 71 F.65.
F.64
Financing liabilities
In millions of euros
Current
Non-current
At December 31, 2018
Total
Current
At December 31, 2017
Non-current
Total
Notes/bonds
15,090
61,400
76,490
13,785
67,073
761
56,240
320
843
347
39
11
12
27
27
between one and five years
162
150
56
61
106
89
later than five years
277
307
63
71
214
236
477
496
130
144
347
352
38
within one year
Maturity
2017
27
325
352
88,662
1,604
144,902
642
960
1,602
48,746
78,378
127,124
F.65
1,971
Reconciliation of minimum lease payments to liabilities from finance lease arrangements
Liabilities from finance
lease arrangements
at December 31,
Future minimum
lease payments
Interest included in future
minimum lease payments
at December 31,
at December 31,
2018
2017
2018
2017
2018
In millions of euros
German
Plans
-1 year
2017
616
481
135
648
495
153
Contributions by plan participants
60
55
5
58
54
4
Actuarial gains (-)/losses from changes in
demographic assumptions
175
202
-27
-23
-13
-10
Actuarial gains (-)/losses from changes in
financial assumptions
-228
75
Interest cost
-303
4,191
96
687
Plan assets and income from plan assets are used solely to pay
pension benefits and to administer the plans. The composition
of the Group's pension plan assets is shown in table > F.57.
Market prices are available for equities and bonds due to their
listing in active markets. Most of the bonds have investment
grade ratings. They include government bonds of very good
creditworthiness.
The investment strategy is reviewed regularly and adjusted if
deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed of
representatives of the Finance and Human Resources depart-
ments. The pension plan assets are generally oriented towards
the structure of the pension obligations.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
279
F.56
Present value of defined benefit pension obligations and fair value of plan assets
In millions of euros
German
Total
Plans
December 31, 2018
Non-German
Plans
Total
German
Plans
December 31, 2017
Non-German
Plans
Present value of the defined benefit obligation
at January 1
31,744
27,746
3,998
31,173
26,982
Current service cost
700
600
100
591
Composition of plan assets
1,076
657
-744
-229
71
-8
79
-787
17
-804
Present value of the defined benefit obligation
at December 31
31,645
27,852
3,793
31,744
27,746
3,998
Fair value of plan assets
at January 1
Interest income from plan assets
27,215
529
24,197
3,018
23,384
20,315
3,069
426
-973
419
-174
-1,385
Actuarial gains (-)/losses from
experience adjustments
Actuarial gains (-)/losses
-32
-17
-15
2
-55
57
-85
260
-345
1,055
351
704
Past service cost, curtailments
and settlements
Pension benefits paid
Currency exchange-rate changes and
other changes¹
-76
-71
-5
-117
-117
-1,211
The development of the relevant factors is shown in table
71 F.56.
Reconciliation of the net obligation from defined benefit
pension plans
As a general principle, it is the Group's objective to design
new pension plans as defined benefit plans based on capital
components or on annual contributions, or as defined
contribution plans.
2018
Wilfried Porth
2017
Britta Seeger²
2018
2017
-0.1
-1.2
-0.1
-1.6
-0.3
-0.4
PPSP
Medium-term component
-0.2
-0.7
-0.2
-0.7
-0.2
-0.8
of the annual bonus
In millions of euros
Hubertus Troska
Bodo Uebber
2018
2017
2017
2018
2018
-0.7
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.54
Expenses in the Consolidated Statement of Income resulting from share-based payments of current members of the Board of Management
Dr. Dieter Zetsche
2018
2017
2018
Martin Daum¹
2017
Renata Jungo Brüngger
2018
2017
In millions of euros
PPSP
Medium-term component
of the annual bonus
In millions of euros
-0.4
-3.9
-0.2
-0.8
-0.2
-0.8
-0.5
-1.8
-0.2
-0.7
-0.2
Ola Källenius
2017
Dr. Wolfgang Bernhard³
2018
2017
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by funds assets. Contractual
trust arrangements (CTA) exist between Daimler AG as well
as some subsidiaries in Germany and the Daimler Pension Trust
e.V. The Daimler Pension Trust e.V. acts as a collateral trust
fund.
Effective December 13, 2018, Daimler AG transferred certain
defined benefit obligations and plan assets of retired employees
to Daimler Pensionsfonds AG (pension fund), which was estab-
lished in June 2018. The transfer has no impact on the Group's
profitability, liquidity and capital resources or financial posi-
tion. In the future, these benefits will be administrated by that
non-insurance-like pension fund, which falls under the scope
of the Act on the Supervision of Insurance Undertakings and is
therefore subject to the oversight of the Federal Financial
Supervisory Agency (BaFin). Insofar as in the future, BaFin rules
that a deficit has occurred in the pension fund, a supplemen-
tary contribution will be required from Daimler AG.
In Germany, there are normally no statutory or regulatory
minimum funding requirements.
Non-German pension plans and pension plan assets
Significant plans exist primarily in the United States and Japan.
They comprise plans relating to final salaries as well as plans
relating to salary based components. Most of the obligations
outside Germany from defined benefit pension plans are
funded by assets funds.
Risks from defined benefit pension plans and pension
plan assets
The general requirements with regard to retirement benefit
models are laid down in the Pension Plan Design Policy, which
has Group-wide validity. Accordingly, the committed benefits
are intended to contribute to additional financial security
during retirement and in the case of death or invalidity, to be
capable of being planned and fulfilled by the respective
company of the Group and to have a low-risk structure. In
addition, a committee exists that approves new pension
plans and amendments to existing pension plans as well as
guidelines relating to company retirement benefits.
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obliga-
tions result at the Daimler Group in particular from changes in
financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most of
the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
F.55
Composition of provisions for pensions
and similar obligations
In millions of euros
December 31,
2018
Total
Provision for pension benefits
6,298
4,625
Provision for other post-employment
benefits
1,095
1,142
7,393
5,767
278
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value of plan assets is predominantly determined by
the situation on the capital markets. Unfavorable developments,
especially of equity prices and fixed-interest securities, could
reduce that fair value. The diversification of fund assets, the
engagement of asset managers using quantitative and quali-
tative analyses, and the continual monitoring of performance
and risk help to reduce associated investment risk. The
Group regularly makes additional contributions to the plan
assets in order to cover future obligations from defined
benefit pension plans. Furthermore, in 2017, the Group made
an extraordinary contribution of €3.0 billion into the German
pension plan assets, in order to sustainably strengthen them.
As well as the employer-financed pension plans granted
by German companies, the employees of some companies
are also offered various earnings-conversion models.
In addition, previously concluded defined benefit plans exist
which primarily depend on employees' wage-tariff classification
upon transition into the benefit phase and which foresee a
life annuity.
German pension plans and pension plan assets
Most employees in Germany have defined benefit pension
plans; most of the pension plans for the active workforce are
based on individual retirement benefit accounts, to which
the Company makes annual contributions. The amount of the
contributions for employees paid according to wage-tariff
agreements depends on the tariff classification in the respec-
tive year or on their respective income, and for executives
it depends on their respective income. For the commitments
to retirement benefits made until 2011, the contributions
continue to be converted into capital components and credited
to the individual pension account with the application of
fixed factors related to each employee's age. The conversion
factors include a fixed value increase. The pension plans
were newly structured for new entrants in 2011 to reduce the
risks associated with defined benefit plans. New entrants
now benefit from value increases of the contributions through
an investment fund with a special lifecycle model. The Com-
pany guarantees at a minimum the value of the contributions
paid in. Pension payments are made either as a life annuity,
twelve annual installments, or a single lump sum.
The Group's main German and non-German pension plans are
described below.
PPSP
-0.1
-1.6
-0.2
-1.9
Medium-term component
of the annual bonus
-0.2
-0.7
-0.2
-0.9
1 Appointed to the Board of Management as of March 1, 2017.
103
2 Appointed to the Board of Management as of January 1, 2017.
3 Appointment to the Board of Management ended on February 10, 2017. Amounts are included pro rata for 2017.
Performance Phantom Share Plans
In 2018, the Group adopted a Performance Phantom Share
Plan (PPSP), similar to those used in previous years, under
which eligible employees are granted phantom shares entitling
them to receive cash payments after four years. During
the four-year period between the allocation of the preliminary
phantom shares and the payout of the plan at the end of
the term, the phantom shares earn a dividend equivalent in
the amount of the actual dividend paid on ordinary Daimler
shares. The amount of cash paid to eligible employees at the
end of the holding period is based on the number of vested
phantom shares (determined over a three-year performance
period) multiplied by the quoted price of Daimler's ordinary
shares (calculated as an average price over a specified period
at the end of the four-year plan period). The vesting period is
therefore four years. For the existing plans, the quoted price of
Daimler's ordinary shares to be used for the payout is limited
to 2.5 times the Daimler share price at the date of grant. Fur-
thermore, the payout for the members of the Board of Manage-
ment is also limited to 2.5 times the allotment value used to
determine the preliminary number of phantom shares. The limi-
tation of the payout for the members of the Board of Manage-
ment also includes the dividend.
The number of phantom shares that vest of the PPSPs granted
in 2014 to 2018 is based on the relative share performance,
which measures the development of the price of a share price
index based on a competitor group including Daimler, and the
return on sales (ROS) compared with the average RoS of a
competitor group. In addition, beginning with plan PPSP 2018,
the average RoS of the competitor group is revenue-weighted.
Special rules apply for the members of the Board of Manage-
ment: Daimler's RoS must be not equal to but higher than
that of the competitors in order to achieve the same target
achievement as the other plan participants. For the PPSP
granted in 2015 and until 2018, an additional limit on target
achievement was agreed upon for the reference parameter
RoS for the members of the Board of Management. In the case
of target achievement between 195% and 200%, an additional
comparison is made on the basis of the RoS achieved in abso-
lute terms. If the actual RoS for the automotive business is
below the strategic target (currently 9%) in the third year of the
performance period, target achievement is limited to 195%.
The Group recognizes a provisi, on for awarding the PPSP in the
Consolidated Statement of Financial Position. Since payment per
vested phantom share depends on the quoted price of Daimler's
ordinary shares, that quoted price essentially represents the fair
value of each phantom share. The proportionate remuneration
expenses from the PPSP recognized in the individual years are
measured based on the price of Daimler ordinary shares and the
estimated target achievement.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
277
22. Pensions and similar obligations
Table 71 F.55 shows the composition of provisions for pension
benefit plans and similar obligations.
At the Daimler Group, defined benefit pension obligations
exist as well as, to a smaller extent, defined contribution
pension obligations, specific to the various countries.
In addition, healthcare benefit obligations are recognized
outside Germany.
Defined benefit pension plans
Provisions for pension obligations are made for defined
commitments to active and former employees of the Daimler
Group and their survivors. The defined benefit pension plans
provided by Daimler generally vary according to the economic,
tax and legal circumstances of the country concerned. Most
of the defined benefit pension plans also provide benefits in
the case of invalidity and death.
-0.2
489
2017
112
8,924
822
9,485
8,556
929
Securitized bonds
49
29
20
46
30
16
Bonds
14,971
13,261
1,710
14,189
12,430
1,759
Other exchange-traded instruments
19
16
3
5
1
9,746
4
Corporate bonds
3,844
207
Technology and telecommunication
1,082
924
158
1,127
932
195
Others
52
52
46
46
Equities
6,766
5,945
821
7,556
6,612
944
Government bonds
5,176
4,308
868
4,658
814
Total exchange-traded instruments
21,756
19,222
46
Total non-exchange-traded instruments
3,706
3,310
396
5,465
5,154
311
Fair value of plan assets
25,462
22,532
2,930
27,215
24,197
3,018
thereof fair value of own transferable financial
instruments
thereof fair value of self-used plan assets
50
50
1 Including the shares in Renault and Nissan in the amount of €1,528 (in 2017: €2,010) million.
2 Alternative investments mainly comprise private equity.
F.58
Pension cost
In millions of euros
2018
377
3,952
3,998
49
2,322
2,534
21,750
19,043
2,707
498
340
158
512
388
124
Real estate
486
942
388
537
436
101
Other non-exchange-traded instruments
351
260
91
418
378
40
Cash and cash equivalents
2,371
98
1,149
Alternative investments²
855
-1,323
-1,171
-152
-910
-702
-208
Currency exchange-rate changes and
other changes'
66
-9
75
-494
16
-510
Fair value of plan assets
at December 31
25,462
22,532
2,930
27,215
24,197
3,018
Funded status
thereof recognized in other assets
-6,183
115
Pension benefits paid
-5,320
4
58
Actuarial gains / losses (-)
163
-1,781
-1,551
-230
996
541
455
Actual result on plan assets
-1,252
-1,125
-127
1,485
918
Contributions by the employer
696
585
111
3,692
3,596
96
Contributions by plan participants
60
55
5
54
-863
115
567
-3,549
831
128
Financials
1,054
896
158
1,193
1,027
166
Healthcare
542
442
100
547
440
107
Industrials¹
1,983
1,902
81
2,535
2,440
95
Consumer goods
-4,529
959
109
1,018
1,035
96
96
thereof recognized in provisions for pensions
926
and similar obligations
-6,298
-5,320
-4,625
-3,549
-1,076
1 Including reclassifications to provisions for other risks in 2017.
280
-978
-980
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Energy, commodities and utilities
At December 31, 2017
German Non-German
Plans
Plans
Plans
At December 31, 2018
German Non-German
Plans
Total
Total
In millions of euros
Composition of plan assets
F.57
STREET
On course for the future
for our customers and society.
The all-electric Mercedes-Benz eCitaro is locally emission-free and
almost silent. This electric bus combines the platform of the bestselling
Mercedes-Benz city bus with innovative technologies. It is raising
electric mobility in city buses to a whole new level and captivating
customers with pioneering thermal management, energy efficiency,
and very practice-oriented operating ranges. Mercedes-Benz delivered
the first series-production models to customers in late 2018. Orders
for 20 and 15 eCitaros came from Hamburg and Berlin respectively in
2018. Thanks to its outstanding performance, the eCitaro already
complies with many requirements of transportation companies - and
its complete eMobility system is launching an innovation offensive
for electrifying local public transportation.
mercedes-benz.com/en/mercedes-benz/vehicles/buses
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
-
@CITARO
WHAT THE
21
MA EV 1063
«CITARO
Inventive.
Intermodal.
moovel lab.
2
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
21
C
17
19
EQC Starting the future
-
of mobility
Its time has come: The all-electric EQC (electricity consumption
combined: 22.2 kWh/100 km; CO2 emissions combined: 0 g/km,
preliminary figures)' will hit the road in mid-2019. The first
series-produced EQ model is an all-round winner in terms of
comfort, quality, and everyday utility - it's the Mercedes-Benz
of electric vehicles. This progressive crossover SUV is considered
the pioneer of an avant-garde electro-aesthetic, thanks to its
unique combination of design, functionality, and service. That's
in addition to its impressive driving dynamics and an electric
operating range of up to 450 kilometers according to NEDC'.
mercedes-benz.com/en
SN 2931E
1 The figures for electricity consumption and CO2 emissions, which were
calculated by an external technical service, are provisional and non-binding.
The figures for the vehicle's range are also provisional and non-binding.
An EU type-approval certificate and a certificate of conformity with official
figures are not yet available. The figures given above may deviate from the
official figures.
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
A trendsetter for people and urban mobility. The moovel lab promotes
the innovation culture of the moovel Group. This Daimler Group company
aims to partner with cities and transportation operators to simplify mobility
and offer customers access to the right mobility options. The moovel lab
is the professional creative space for this process. The lab's interdisciplinary
team addresses future-oriented issues of mobility in urban environments. It
generates new ideas, product prototypes, and approaches to dialogue among
professionals and the public. What do urban traffic areas look like around the
world? The moovel lab is working to answer this question in its project "The
Mobility Space Report: What the Street!?". The project visualizes driving and
parking areas in 23 major cities on an interactive online platform and shows
how autonomous driving can redistribute these spaces.
Concept EQA - Electrifying the
compact class
The electric offensive at Mercedes-Benz is accelerating. That's
demonstrated by the Concept EQA, the first all-electric EQ concept
car of the Mercedes-Benz brand in the compact segment. It
combines state-of-the-art electro-aesthetics with strong dynamics
and general long-distance capability in everyday use, based on an
architecture that has been exclusively developed for battery-electric
models. This electro-athlete has two electric motors with a system
capacity of more than 200 kW. It can be charged by means of induc-
tion or a wall box and is also prepared for fast-charging systems.
mercedes-benz.com/en
Diverse.
Discerning.
Customers.
C
We focus on our customers, worldwide. Daimler operates all over the
globe, with a broad range of products and services covering all aspects
of mobility. Its portfolio thrills discerning Mercedes-Benz S-Class drivers,
urban owners of a smart fortwo, and Mercedes-AMG customers with
sporty ambitions, as well as the leisure-oriented drivers of a Mercedes-Benz
V-Class Marco Polo. The same goes for commercial customers such as
forwarding agents, bus companies, taxi operators and, last but not least,
the approximately 31 million well-connected users all over the world of our
innovative mobility services such as car2go, mytaxi and moovel. All of our
customers have a wide variety of requirements and opportunities, and Daimler
has the right products for each one of them. To make sure things stay that
way, Daimler aims not only to continue to be a leading automaker, but also
to develop into a leading provider of mobility services. In everything we do,
we focus on our customers' wishes - that's the basis of our future success.
S.N 2931E
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
Urban.
Electric.
eCitaro
lab.moovel.com
FREIGHTLINER
whatthestreet.moovellab.com
moovel-group.com/en
CASCADA
25
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
YAIX 757
25
C
freightliner.com/trucks/new-cascadia
Pioneering work for the logistics sector. Daimler Trucks is taking
truck automation to the next level with the new Freightliner Cascadia.
It's a world premiere, because this is the first partially automated
series-production truck on North American roads. It's also the next step
toward highly automated trucks, which will allow even better safety and
performance. In addition, they will offer huge advantages for transport
companies and a sustainable future for the logistics sector. In the years
ahead, Daimler Trucks will invest €500 million in the development of
highly automated trucks in order to make them market-ready within a
decade. The centerpieces of partial automation are Active Drive Assist
(Mercedes-Benz Actros, FUSO Super Great) and Detroit Assurance 5.0
(Freightliner Cascadia). These systems already allow partially automated
driving in all speed ranges.
Automated.
Trailblazing.
Cascadia.
23
CHARY
Refrigerant
-119
Failure to comply with various obligations under the operating
agreement during the period from April 1, 2018 until the end
of the operating agreement on August 31, 2018 may result in
contract penalties, additional revenue reductions and damage
claims. However, contract penalties and revenue reductions
are capped at €100 million per operating year (increasing by
3% per financial year). At present, no respective facts are
known.
-325
290
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to EU Directive 2006/40/EC, since January 1, 2011,
vehicles only receive new type approvals if their air-condition-
ing units are filled with a refrigerant that meets certain criteria
with regard to climate friendliness. For vehicles produced
on the basis of type approvals granted previously, the directive
allowed a period of transition until December 31, 2016.
Mercedes-Benz vehicles fully comply with the legal requirements
in force since January 1, 2017 through the application of CO2
air-conditioning and the refrigerant R1234yf in combination with
safety devices that are used as necessary depending on each
vehicle's configuration. In December 2016, the EU Commission
initiated infringement proceedings against the Federal Republic
of Germany in the European Court of Justice (ECJ). The Com-
mission saw a contravention by the German authorities of the
European type-approval frame directive and of the directive
on emissions from air-conditioning systems in motor vehicles.
In March 2017, Germany's Federal Motor Transport Authority
issued Daimler AG with an injunction requiring to retrofit such
vehicles in which, in the first half of 2013 and for reasons of
safety, the previously used refrigerant R134a had been used.
Daimler AG considered the request to be unfounded and had
filed an objection to the injunction. On October 4, 2018, the ECJ
ruled in the infringement proceedings that the Federal Republic
of Germany had contravened European Union law, inter alia, by
not ordering the changeover of the relevant vehicles within the
period specified by the Commission. Subsequently, Daimler AG
has withdrawn the objection, and will carry out the requested
retrofit of the affected vehicles. A provision was already recog-
nized in the third quarter of 2018 for the retrofitting of the
vehicles still operating with the previously used refrigerant
R134a. No other significant risks are expected in this respect.
The settlement agreement is composed of different elements.
One material element is a cash payment (hereinafter: settle-
ment payment) by Toll Collect GbR of €1.1 billion that has to be
transferred in three tranches until 2020 and equally divided
between Daimler Financial Services AG and Deutsche Telekom
AG. The first tranche in the amount of €400 million was paid
to the Federal Republic of Germany on August 1, 2018, equally
divided between Daimler Financial Services AG and Deutsche
Telekom. The settlement takes into account claims of Toll Collect
GmbH with regard to the remuneration pursuant to the oper-
ating agreement withheld monthly by the Federal Republic of
Germany since June 2006. It also takes into account penalty
payments for delays already settled by the shareholders of Toll
Collect GbR and related interest. Further elements of the settle-
ment agreement relate to the determination of the purchase
price for the shares in Toll Collect GmbH on August 31, 2018
as well as the obligation to achieve a certain quality regarding
the collection of tolls. Should this quality parameter not be
achieved, the settlement payment to the Federal Republic of
Germany will be increased by €50 million. On November 15,
2018, Daimler Financial Services AG and Deutsche Telekom AG
have received the written confirmation from the Federal Repub-
lic of Germany that the quality parameters have been reached.
Overall, the total settlement payments to the Federal Republic
of Germany amount to €3.2 billion.
In 2002, our subsidiary Daimler Financial Services AG, together
with Deutsche Telekom AG and Compagnie Financière et
Industrielle des Autoroutes S.A. (Cofiroute) entered into a con-
sortium agreement for the purpose of jointly operating a
system for the electronic collection of tolls for commercial
vehicles using German highways under a contract with the
Federal Republic of Germany (operating agreement) through
the project company Toll Collect GmbH. Until August 31,
2018, Daimler Financial Services AG and Deutsche Telekom AG
each held a 45% equity interest in the project company Toll
Collect GmbH, and Cofiroute S.A. held the remaining 10%. The
consortium continues to hold the equity interest in Toll
Collect GbR.
The Federal Republic of Germany declared its acceptance of the
offer to take over all shares in Toll Collect GmbH on August 31,
2018 and acquired the company as scheduled on September 1,
2018. According to the operating agreement, the toll collection
system had to be operational not later than August 31, 2003.
After a delay of the launch date, the system was largely
introduced on January 1, 2005. The final operating permit was
granted on July 4, 2018, in connection with the settlement
of the pending arbitration proceedings. The Federal Republic of
Germany had initiated arbitration proceedings against Daimler
Financial Services AG, Deutsche Telekom AG and Toll Collect
GbR in September 2004. In the first half of 2017, the share-
holders Deutsche Telekom AG and Daimler Financial Services
AG asserted counterclaims relating to breaches of duty by
the Federal Republic of Germany with regard to the delay in the
start of the toll system. Toll Collect GmbH had also initiated
an arbitration proceeding against the Federal Republic of Ger-
many in order to recover the advance payments withheld by
the Federal Republic of Germany of €8 million per month since
June 2006, as well as other remuneration in dispute.
On July 4, 2018, through its subsidiary Daimler Financial
Services AG, Daimler AG together with Deutsche Telekom AG
notarized a settlement agreement (hereinafter: settlement)
with the Federal Republic of Germany which settles all arbitra-
tion proceedings in connection with the involvement in the
Toll Collect consortium, which have been ongoing since 2004.
On July 6, 2018, the arbitral tribunal issued an award on agreed
terms terminating the arbitration proceedings on the basis of
the settlement.
16
In the second quarter of 2018, the profit/loss on equity-method
investments includes expenses of €418 million in connection
with Toll Collect. The EBIT of the Daimler Financial Services seg-
ment is reduced in particular due to the existing 50% obligation
of Daimler Financial Services AG to pay €550 million to Toll
Collect GbR, which is partially offset by provisions recognized
in previous years.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 291
All known and unknown claims from the toll agreement that
arose until March 31, 2018 are settled under the settlement
provided that the related damage occurred before March 31,
2018.
Toll Collect
Fair value changes
Other changes
On January 8, 2019, the Arizona State Attorney General filed
a civil complaint in Arizona state court against Daimler AG and
MBUSA making similar allegations that Arizona consumers
were deliberately deceived in connection with the advertising of
Mercedes-Benz diesel vehicles. The state seeks monetary
penalties for violation of Arizona's consumer protection laws.
Daimler AG and MBUSA view this lawsuit as being without
merit.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As already reported, in August 2016, Mercedes-Benz Canada
(MB Canada) was added as a defendant to a putative nation-
wide class action pending in Ontario Superior Court. The main
allegation in the matter is that MB Canada, along with Takata
entities and many other companies that sold vehicles equipped
with Takata airbag inflators, was allegedly negligent in selling
such vehicles, purportedly not recalling them quickly enough,
and failing to provide an allegedly adequate replacement
airbag inflator. In addition, on June 28, 2017, Takata entities along
with Daimler AG and MBUSA were named as defendants in
a U.S. nation-wide class action, which was filed in New Jersey
federal court and includes allegations that are similar to the
Canadian action. In the third quarter of 2017, the New Jersey
lawsuit was transferred to federal court in the Southern
District of Florida for consolidation with other multi-district
litigation proceedings. Then, on March 14, 2018, Daimler AG
and MBUSA were named as defendants in two additional US
nation-wide class action complaints, one filed in Georgia
federal court, and the other filed into the multi-district litigation
proceedings pending in Florida. The allegations in these new
complaints are similar to those in the Canadian and New Jersey
actions. The U.S. cases have been centralized in one proceed-
ing by the Judicial Panel on Multidistrict Litigation and transferred
to the U.S. District Court for the Southern District of Florida,
which is overseeing litigation against Takata and other manufac-
turers of automobiles. The previously reported lawsuit filed
by the State of New Mexico, which also made similar claims
against MBUSA and many other companies that sold vehicles
equipped with Takata airbag inflators, was dismissed without
prejudice on June 22, 2017. It may, however, be filed again
under specific conditions. Daimler AG continues to regard all
these lawsuits brought with regard to Mercedes-Benz
vehicles as being without merit, and the Daimler Group affili-
ates respectively affected will further defend themselves
against the claims.
Class-action lawsuits Takata airbag inflators
On June 23, 2016, the German Federal Cartel Office carried
out dawn raids at several car manufacturers and suppliers,
including Daimler AG, with regard to steel purchasing. Daimler
is cooperating in full with the authority. In accordance with
IAS 37.92, no further information is disclosed with respect to
whether, or to what extent, provisions have been recognized
and/or contingent liabilities have been disclosed, so as not to
prejudice Daimler AG's position.
Following the settlement decision by the European Commission
adopted on July 19, 2016, concluding the trucks antitrust pro-
ceedings, Daimler AG faces customers' claims for damages to
a considerable degree. Respective legal actions, class actions
and other forms of legal redress have been initiated in various
states in and outside of Europe and should further be expected.
Daimler is taking appropriate legal remedies to defend itself. In
accordance with IAS 37.92, no further information is disclosed
with respect to whether, or to what extent, provisions have been
recognized and/or contingent liabilities have been disclosed,
so as not to prejudice Daimler AG's position.
opened a formal investigation into possible collusion on clean
emission technology. At present, Daimler does not expect this
unquantifiable contingent liability to have any material impact
on its profitability, cash flow and financial situation.
In this context, Daimler AG may disclose that it filed an applica-
tion for immunity from fines (leniency application) with the
European Commission some time ago. In late October 2017, the
European Commission conducted preannounced inspections
with Daimler in Stuttgart (as well as further inspections with
other manufacturers) in order to further clarify the facts of
the case. In the third quarter of 2018, the European Commission
Antitrust law proceedings (including actions for damages)
Starting on July 25, 2017, a number of class actions have
been filed in the United States and Canada against Daimler AG
and other manufacturers of automobiles as well as various
of their North American subsidiaries. Plaintiffs allege to have
suffered damages because defendants engaged in anti-
competitive behavior relating to vehicle technology, costs, sup-
pliers, markets, and other competitive attributes, including
diesel emissions control technology, since the 1990s. On Octo-
ber 4, 2017, all pending US class actions were centralized in
one proceeding by the Judicial Panel on Multidistrict Litigation
and transferred to the U.S. District Court for the Northern
District of California. On March 15, 2018, plaintiffs in the US
class action amended and consolidated their complaints
into two pleadings, one on behalf of consumers and the other
on behalf of dealers. On June 1, 2018, the court dismissed
Mercedes-Benz U.S. International, Inc., Mercedes-Benz Vans,
LLC, and Daimler North America Corp., pursuant to the
parties' stipulation. Daimler AG and MBUSA remain parties in
the case, regard the US and Canadian lawsuits as being
without merit, and will defend against the claims.
In the second and third quarter of 2018, KBA issued adminis-
trative orders holding that certain calibrations of specified
functionalities in certain Mercedes-Benz diesel vehicles are
to be qualified as impermissible defeat devices and ordered
subsequent auxiliary provisions for the respective EU type
approvals in this respect, including a stop of the first registra-
tion and mandatory recall. Daimler filed timely objections
against such administrative orders in order to have the open
legal issues resolved, if necessary, also by a court of law.
In the course of its regular market supervision, KBA routinely
conducts further reviews of Mercedes-Benz vehicles. It
cannot be ruled out that in the course of further investigations
KBA will issue additional administrative orders making similar
findings. Daimler has implemented a temporary delivery and
registration stop with respect to certain models and reviews
constantly whether it can lift this delivery and registration stop
in whole or in part. The new calibration requested by KBA
in its administrative order of the second quarter of 2018 has
meanwhile been completed and the relevant software has
been approved by KBA; the related recall has in the meanwhile
been initiated. It cannot be ruled out, however, that further
delivery and registration stops may be ordered or resolved by
the Company as a precautionary measure under the relevant
circumstances. Daimler has initiated further investigations and
otherwise continues to fully cooperate with the authorities
and institutions. As the aforementioned inquiries, investigations,
administrative proceedings and the replies to these related
information requests, the objection proceedings against the
administrative orders as well as Daimler's internal investiga-
tions are ongoing, we rely on IAS 37.92 in not disclosing any
further information on whether or not, or to what extent,
provisions have been recognized and/or contingent liabilities
have been disclosed.
289
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Diesel emission behavior: Governmental proceedings
Furthermore, several state and federal authorities and other
institutions worldwide have inquired about and/or are conduct-
ing investigations and/or administrative proceedings and/or
have issued administrative orders. These particularly relate to
test results, the emission control systems used in Mercedes-
Benz diesel vehicles and/or Daimler's interaction with the rele-
vant state and federal authorities as well as related legal
issues and implications, including, but not limited to, under
applicable environmental, securities, criminal and antitrust
laws. These authorities and institutions include, among others,
the U.S. Department of Justice (DOJ), which in April 2016
requested that Daimler AG review its certification and admis-
sions processes related to exhaust emissions of diesel
vehicles in the United States by way of an internal investigation
in cooperation with the DOJ, the U.S. Environmental Protection
Agency (EPA), the California Air Resources Board (CARB)
and other US state authorities, the U.S. Securities and Exchange
Commission (SEC), the European Commission, with which
Daimler AG has filed a leniency application and which meanwhile
has opened a formal investigation into possible collusion on
clean emission technology, as well as national antitrust author-
ities and other authorities of various foreign states as well
as the German Federal Financial Supervisory Authority (BaFin),
the German Federal Ministry of Transport and Digital Infra-
structure (BMVI) and the German Federal Motor Transport
Authority (KBA), the diesel emissions committee of inquiry of
the German Parliament of the previous legislative period
and the Stuttgart district attorney's office. The Stuttgart district
attorney's office is conducting criminal investigation proceed-
ings against Daimler employees concerning the suspicion of
fraud and criminal advertising, and, in May 2017, searched the
premises of Daimler at several locations in Germany.
On July 14, 2017, an additional class action was filed in the
Superior Court of California, Los Angeles County, against
Daimler AG and other companies of the Group, alleging claims
similar to the existing US class action. That action was
removed to federal court and, on October 31, 2017, was trans-
ferred to the District of New Jersey. On December 21, 2017
the parties stipulated to dismiss, without prejudice, that lawsuit.
It may be filed again under specific conditions, but Daimler
also regards this lawsuit as being without merit.
Another consumer class-action lawsuit against Daimler AG and
other companies of the Group containing similar allegations
was filed in Canada in April 2016. On June 29, 2017, the court
granted a procedural motion to certify certain issues for
class treatment, and on March 12, 2018 the court ordered the
parties to send a notice to the class by May 18, 2018, inform-
ing class members that the litigation is ongoing and they will
be bound by the outcome. That notice was sent, and class
members had until July 20, 2018 to opt out of the class to avoid
being bound by subsequent rulings in the case. Daimler
also regards this lawsuit as being without merit and will defend
against the claims.
As already reported, several consumer class-action lawsuits
were filed against Mercedes-Benz USA, LLC (MBUSA) in federal
courts in the United States in early 2016. The main allegation
was the use of devices that impermissibly impair the effective-
ness of emission control systems in reducing nitrogen-oxide
(NOx) emissions and which cause excessive emissions from
vehicles with diesel engines. In addition, plaintiffs alleged
that consumers were deliberately deceived in connection with
the advertising of Mercedes-Benz diesel vehicles. Those
consumer class actions were consolidated into one class action
pending against both Daimler AG and MBUSA in the US Dis-
trict Court for the District of New Jersey, in which the plaintiffs
asserted various grounds for monetary relief on behalf of a
nation-wide class of persons or entities who owned or leased
certain models of Mercedes-Benz diesel vehicles as of
February 18, 2016. Daimler AG and MBUSA moved to dismiss
the lawsuit in its entirety. By order dated December 6, 2016,
the court granted Daimler AG's and MBUSA's motion to dismiss
and dismissed the lawsuit without prejudice, based on plain-
tiffs' failure to allege with sufficient specificity the advertising
that they contended had misled them. Plaintiffs subsequently
filed an amended class action complaint in the same court
making similar allegations. The amended complaint also adds
as defendants Robert Bosch LLC and Robert Bosch GmbH
(collectively; "Bosch"), and alleges that Daimler AG and MBUSA
conspired with Bosch to deceive US regulators and consum-
ers. On February 1, 2019, the Court granted in part and denied in
part Daimler AG and MBUSA's subsequent motion to dismiss.
The case is ongoing as the Court's decision merely addressed
certain legal aspects of plaintiffs' claims and did not decide
whether the plaintiffs can ultimately prove their claims, whether
the plaintiffs' allegations are true, or whether their claims
have merit. Daimler AG and MBUSA view the lawsuit as being
without merit and will defend against the claims.
Diesel emission behavior: Class action and other lawsuits
in the United States and Canada
Daimler AG and its subsidiaries are confronted with various
legal proceedings, claims as well as governmental investigations
and orders (legal proceedings) on a large number of topics,
including vehicle safety, emissions, fuel economy, financial ser-
vices, dealer, supplier and other contractual relationships,
intellectual property rights, product warranties, environmental
matters, antitrust matters (including actions for damages)
and shareholder matters. Legal proceedings relating to products
deal with claims on account of alleged vehicle defects. Some
of these claims are asserted by way of class action suits. If the
outcome of such legal proceedings is detrimental to Daimler,
the Group may be required to pay substantial compensatory and
punitive damages or to undertake service actions, recall
campaigns, monetary penalties or other costly actions. Legal
proceedings may have an impact on the Group's reputation.
30. Legal proceedings
288
Irrespective of the settlement, the guarantees relating to the
completion and operation of the toll collection system as
stated in the operating agreement or other additional agree-
ments and the responsibility to fulfill all relevant obligations
from April 1, 2018 until the end of the operating agreement on
August 31, 2018 remain unchanged. At present, no respective
facts are known.
3,009
Guarantee of bank loans. Daimler AG issued a guarantee to
third parties up to a maximum amount of €100 million for
bank loans which could be obtained by Toll Collect GmbH. In
September 2018 Daimler AG was released of this guarantee
obligation.
not later than one year
later than one year and
not later than five years
later than five years
1,645
1,421
1,375
890
3,800
292
698
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Carrying amounts and fair values of financial instruments
Table 71 F.74 and table > F.75 show the carrying amounts and
fair values of the respective classes of the Group's financial
instruments at December 31, 2018 according to IFRS 9 and at
December 31, 2017 according to IAS 39.
The fair value of a financial instrument is the price that would
be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the
measurement date. Given the varying influencing factors,
the reported fair values can only be viewed as indicators of
the prices that may actually be achieved on the market.
The fair values of financial instruments were calculated on
the basis of market information available on the balance sheet
date. The following methods and premises were used:
The fair values of receivables from financial services with
variable interest rates are estimated to be equal to the respec-
tive carrying amounts, because the agreed upon interest rates
and those available in the market do not significantly differ.
The fair values of receivables from financial services with fixed
interest rates are determined on the basis of discounted
expected future cash flows.
-256
Receivables from financial services
32. Financial instruments
780
2017
2018
Equity capitalization. The consortium members have agreed
within the settlement to ensure that Toll Collect GmbH
disposes of a minimum equity of €50 million and a minimum
liquidity of €10 million as of August 31, 2018. The minimum
equity and the minimum liquidity have been confirmed
on December 17, 2018, with the authorization of Toll Collect
GmbH financial statements as of August 31, 2018. Should
damage claims, reductions of compensation or other events
that take place after March 31, 2018 lead subsequently to
a decrease of Toll Collect GmbH's equity below the minimum
contractually agreed, the members of the consortium are
obliged to financially ensure that the minimum equity of Toll
Collect GmbH is achieved anew.
Cofiroute's risks and obligations are limited to €70 million.
Daimler Financial Services AG and Deutsche Telekom AG are
jointly obliged to indemnify Cofiroute for amounts exceeding
this limitation.
Accounting estimates and management judgments
The Group recognizes provisions in connection with pending or
threatened proceedings to the extent a loss is probable and
can be reasonably estimated. Such provisions are recognized in
the Group's consolidated financial statements and are based
on estimates. If quantifiable, contingent liabilities in connection
with legal proceedings are disclosed in the Group's consoli-
dated financial statements. Risks resulting from legal proceed-
ings sometimes cannot be assessed reliably or only to a limited
extent. Consequently, provisions recognized for some legal
proceedings may turn out to be insufficient once such proceed-
ings have ended. The Group may also become liable for pay-
ments in legal proceedings for which no provisions were recog-
nized and/or contingent liabilities were disclosed. Uncertainty
exists with regard to the amounts or due dates of possible
cash outflows. Although the final result of any such proceedings
could materially affect Daimler's operating results and cash
flows for a particular reporting period, Daimler believes that it
should not exert a sustained influence on the Group's financial
position.
31. Contingent liabilities and other
financial obligations
Contingent liabilities
At December 31, 2018, the best estimate for obligations from
contingent liabilities was €761 million (2017: €589 million).
Some contingent liabilities are not quantifiable. This applies in
particular to the assessment of the legal risks arising from
the class-action lawsuits mentioned in Note 30.
Information about the settlement contract of Daimler Financial
Services AG and Deutsche Telekom AG with the Federal
Republic of Germany about the termination of legal disputes in
connection with the involvement in the Toll Collect toll con-
sortium and the guarantees involved is provided in
Other financial obligations
Note 30.
The Group has other financial obligations resulting from
non-cancelable long-term rental agreements and operating
leases for property, plant and equipment; the contracts par-
tially include renewal or purchase options and price-escalation
clauses. In 2018, Daimler recognized as expenses payments
from operating leases of €621 million (2017: €563 million). Table
7 F.73 provides an overview of when future minimum lease
payments under non-cancelable long-term rental and lease
agreements fall due (nominal amounts).
Furthermore, other financial obligations exist from the acqui-
sition of intangible assets, property, plant and equipment
and lease property of €5,048 million (2017: €4,876 million).
In addition, the Group had issued irrevocable loan commit-
ments at December 31, 2018. These loan commitments
had not been utilized as of that date. Further information with
respect to these commitments is disclosed in Note 33.
F.73
Future minimum lease payments under non-cancelable
long-term rental and lease agreements (nominal amounts)
In millions of euros
Maturity
December 31,
Guarantees, which are subject to specific triggering events are
described below:
-7,135
4,931
Obtaining or losing control of subsidiaries
Changes in foreign exchange rates
7,081
7,375
F.69
Other liabilities
In millions of euros
27. Contract and refund liabilities
Table 71 F.68 shows the composition of contract and refund
liabilities.
Obligations from sales transactions should, in principle, be
regarded as short-term. Due to the short maturities of
these financial instruments, it is assumed that their fair values
are equal to the carrying amounts.
28. Other liabilities
Table 71 F.69 shows the composition of other liabilities.
Current
At December 31, 2018
Non-current
At December 31, 2017
Total
Current
Non-current
Total
Income tax liabilities
272
8
280
413
9
422
Other tax liabilities
1,905
1
1,906
thereof short-term
3,833
5,438
thereof long-term
Contract and refund liabilities
The discounting is based on the current interest rates at which
similar loans with identical terms could have been obtained
at December 31, 2018 and December 31, 2017.
F.68
At December 31,
2018
2017
In millions of euros
Service and maintenance contracts
and extended warranties
5,868
5,303
Other contract liabilities
1,167
1,002
Contract liabilities
1,871
7,035
Obligations from
sales transactions
4,489
Other refund
liabilities
553
414
Refund liabilities
5,484
4,903
Contract and
refund liabilities
12,519
11,208
6,305
411
1
Miscellaneous other liabilities
1,763
877
210
F.71
Cash flows included in cash used for/
provided by operating activities
In millions of euros
Interest paid
2018
2017
Interest received
-678
-304
257
187
Dividends received from
equity-method investments
1,380
843
Dividends received from other
shareholdings
49
52
F.72
Changes in liabilities arising from financing activities
2018
2017
In millions of euros
Cash flows
17,456
16,794
171
Miscellaneous other assets and liabilities
-128
-36
169
1
170
155
155
2,346
10
2,356
2,439
10
2,449
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
287
29. Consolidated Statement of Cash Flows
1,872
Cash used for/provided by operating activities
Changes in other operating assets and liabilities are shown in
table 71 F.70.
Table 7 F.71 shows cash flows included in cash used
for/provided by operating activities.
The line item other non-cash expense and income within the
reconciliation of profit before income taxes to cash used
for/provided by operating activities in the reporting year and
in the prior year primarily comprised the Group's share in
the profit/loss of companies accounted for using the equity
method (see Note 13).
Cash provided by financing activities
Cash provided by financing activities includes cash flows from
hedging the currency risks of financial liabilities. In 2018, cash
provided by financing activities included payments for the
reduction of outstanding finance lease liabilities of €37 million
(2017: €39 million).
Table 71 F.72 includes changes in liabilities arising from financ-
ing activities, divided into cash and non-cash components.
F.70
Changes in other operating assets and liabilities
2018
2017
In millions of euros
Provisions
Financial instruments
742
-1,425
The change of provisions in comparison to the prior year pri-
marily resulted from provisions for pensions and similar
obligations in the prior year in connection with an extraordinary
contribution to the German pension plan assets. Opposing
effects were related to provisions for warranties and customer
goodwill obligations as well as provisions for personnel and
welfare expenses. The change of miscellaneous other assets
and liabilities in comparison to the prior year was strongly
influenced by a lower increase in liabilities from service and
maintenance contracts as well as a lower increase in liabilities
from price reductions. An additional decreasing effect was
caused by liabilities from advance payments received. Further-
more, the reporting year was affected by the payment of the
first tranche in connection with the agreement reached to con-
clude the Toll Collect arbitration proceedings.
F.74
696
In millions of euros
-574
-574
568
576
2,461
807
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial assets measured at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments
that are included in hedge accounting and financial liabilities measured at fair value through profit or loss (see Note 25).
-566
-566
1,895
241
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
295
F.77
Measurement hierarchy of financial assets and liabilities measured at fair value (according to IFRS 9)
In millions of euros
Total
At December 31, 2018
Level 11 Level 22
Level 33
Financial assets recognized at fair value
Marketable debt securities
8,914
5,812
3,102
Recognized at fair value through other comprehensive income
5,855
2,753
3,102
Recognized at fair value through profit or loss
3,059
3,059
Equity instruments and debt instruments
748
338
1,142
1,150
Other financial liabilities²
Other financial assets¹
Net amounts
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financing liabilities
The fair values of bonds, loans, commercial paper, deposits
in the direct banking business and liabilities from ABS trans-
actions are calculated as present values of the estimated
future cash flows. Market interest rates for the appropriate
terms are used for discounting.
Trade payables
Due to the short maturities of these financial instruments, it is
assumed that their fair values are equal to the carrying
amounts.
Refund liabilities (IFRS 15)
Refund liabilities include obligations from sales transactions
that qualify as financial instruments. Further information is
provided in Note 27.
Other financial liabilities
Financial liabilities measured at fair value through profit or
loss comprise derivative financial instruments not used in hedge
accounting. For information regarding these financial instru-
ments as well as derivative financial instruments used in hedge
accounting, see the notes above under marketable debt secu-
rities and similar investments, other financial assets.
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
Offsetting of financial instruments
The Group concludes derivative transactions in accordance
with the master netting arrangements (framework agreement) of
the International Swaps and Derivatives Association (ISDA)
and other appropriate national framework agreements. However,
these arrangements do not meet the criteria for netting in
the Consolidated Statement of Financial Position, as they allow
netting only in the case of future events such as default or
insolvency on the part of the Group or the counterparty.
Table 71 F.76 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements as
well as the possible financial effects of netting in accordance
with the master netting arrangements.
Measurement hierarchy
304
Table 71 F.77 and table 7 F.78 provide an overview of the
classification into measurement hierarchies of financial assets
and liabilities measured at fair value (according to IFRS 13)
at December 31, 2018 according to IFRS 9 and at December 31,
2017 according to IAS 39.
The increase in equity and debt instruments recognized at fair
value through profit or loss included in Level 1 relates primarily
to the fair value measurement of the minority interest in Aston
Martin Lagonda Global Holdings plc. Further information is
provided in Note 7.
For the determination of the credit risk from derivative financial
instruments, which are allocated to Level 2 measurement
hierarchy, portfolios managed on basis of net exposure are
applied.
F.76
Disclosure for recognized financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
In millions of euros
At December 31, 2018 (IFRS 9)
Gross and net
amounts of
financial instru-
ments in the
balance sheet
Amounts
subject to a
master netting
arrangement
Net amounts
Gross and net
amounts of
financial instru-
ments in the
balance sheet
At December 31, 2017 (IAS 39)
Amounts
subject to a
master netting
arrangement
At the end of each reporting period, Daimler reviews the
necessity of reclassification between the measurement
hierarchies.
294
106
364
Total
Level 11
At December, 31 2017
Level 22 Level 33
10,234
6,721
3,513
10,063
6,615
3,448
171
106
65
82
82
2,379
2,379
12,695
6,721
5,974
Liabilities measured at fair value
Financial liabilities measured at fair value through profit or loss
111
Derivative financial instruments used in hedge accounting
696
807
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
111
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
696
Financial assets measured at fair value through profit or loss
Derivative financial instruments used in hedge accounting
thereof equity instruments measured at fair value
thereof marketable debt securities
Financial assets available-for-sale
208
128
28
Recognized at fair value through profit or loss
384
130
176
78
Other financial assets recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
109
109
1,033
1,033
10,804
Recognized at fair value through other comprehensive income
6,150
106
Financial liabilities recognized at fair value
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
56
1,094
1,150
56
1,094
1,150
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
F.78
Measurement hierarchy of financial assets and liabilities measured at fair value (according to IAS 39)
In millions of euros
Financial assets measured at fair value
4,548
Carrying amounts and fair values of financial instruments (according to IFRS 9)
150,163
8,468
384
Other financial assets recognized at fair value through profit or loss
109
109
Derivative financial instruments used in hedge accounting
1,033
1,033
Other receivables and financial assets
3,177
3,177
139,823
140,227
Financial liabilities
Financing liabilities
Trade payables
Other financial liabilities
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Miscellaneous other financial liabilities
144,902
144,933
14,185
14,185
56
56
1,094
1,094
8,882
8,882
169,119
384
Recognized at fair value through profit or loss
364
364
At December 31, 2018
Carrying amount
Fair value
Financial assets
Receivables from financial services
Trade receivables
Cash and cash equivalents
96,740
97,144
12,586
12,586
15,853
15,853
Marketable debt securities and similar investments
169,150
9,577
Recognized at fair value through other comprehensive income
5,855
5,855
Recognized at fair value through profit or loss
3,059
3,059
Measured at cost
663
663
Other financial assets
Equity instruments and debt instruments
748
748
Recognized at fair value through other comprehensive income
9,577
148,850
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Trade receivables and cash and cash equivalents
171
thereof equity instruments measured at cost
1,002
1,002
Financial assets recognized at fair value through profit or loss
82
82
Derivative financial instruments used in hedge accounting
2,379
2,379
Other receivables and financial assets
3,172
3,172
126,990
127,479
Financial liabilities
Financing liabilities
Trade payables
Other financial liabilities
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
Miscellaneous other financial liabilities
127,124
128,437
12,451
12,451
111
111
696
8,468
171
thereof equity instruments measured at fair value
1,173
1,173
Due to the short terms of these financial instruments and the
fundamentally lower credit risk, it is assumed that their fair
values are equal to the carrying amounts.
Marketable debt securities and similar investments,
other financial assets
At December 31, 2018, marketable debt securities are measured
at fair value through other comprehensive income or at fair
value through profit or loss. Similar investments are measured
at amortized cost and are not included in the measurement
hierarchy, as their carrying amount is a reasonable approxima-
tion of fair value.
Equity Instruments are measured at fair value through other
comprehensive income or at fair value through profit or loss.
The fair values of the equity instruments measured through
other comprehensive income are included in table 7 F.74 and
comprise BAIC BluePark New Energy Technology Co., Ltd as
well as further investments not material on an individual basis.
Daimler does not generally intend to sell its equity instruments
which are presented at December 31, 2018.
Marketable debt securities and equity instruments measured
at fair value were measured using quoted market prices at
December 31, 2018. If quoted market prices were not available
for these debt and equity instruments, the fair value measure-
ment is based on inputs that are either directly or indirectly
observable in active markets.
Other financial assets measured at fair value through profit or
loss include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
derivative currency hedging contracts; the fair values
of cross currency interest rate swaps are determined on the
basis of the discounted estimated future cash flows using
market interest rates appropriate to the remaining terms of
the financial instruments. The valuation of currency forwards
is based on market quotes of forward curves; currency
options were measured using option pricing models using
market data.
derivative interest rate hedging contracts; the fair values
of interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows using the market interest rates appropriate
to the remaining terms of the financial instruments.
derivative commodity hedging contracts; the fair values of
commodity hedging contracts (e.g. commodity forwards)
are determined on the basis of current reference prices with
consideration of forward premiums and discounts.
Other financial receivables and assets are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
F.75
Carrying amounts and fair values of financial instruments (according to IAS 39)
In millions of euros
Financial assets
Receivables from financial services
293
Trade receivables
Marketable debt securities
Available-for-sale financial assets
Carrying amount
At December 31, 2017
Fair value
86,054
86,543
11,995
11,995
12,072
12,072
10,063
10,063
Other financial assets
Available-for-sale financial assets
Cash and cash equivalents
286
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
807
For hedges that have been
-8
For hedges for which the hedged future cash
flows are no longer expected to occur
from other comprehensive income to the
Statement of Income
Reclassification of hedge effectiveness
Cost of sales
Interest
expense
Cost of sales
Other
financial
income/
expense, net
Cost of sales
Revenues
ineffectiveness is included
in which the hedge
Statement of Income
Line item in the
Statement of Income
Hedge ineffectiveness recognized in the
risk
2018
Interest
rate risk
Commodity
risk
-31
transferred because the hedged
82
53
-40
1
1
Gains and losses recognized in other
comprehensive income¹
-1,072
-70
Foreign
currency
item has affected profit or loss²
Statement of Income
Commodity price risk - inventory purchases
-18
Interest rate risk
-1,023
Foreign currency risk
-1,081
1,171
Changes in fair values (before taxes)
Balance at January 1, 2018
2018
In millions of euros
Reconciliation of reserves for derivative financial instruments
(according to IFRS 9)
F.92
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
302
1 The amount in other financial income/expense, net includes €1 million for hedges of net investments in foreign operations.
2 The amount in other financial income/expense, net includes minus €10 million for hedges of net investments in foreign operations.
expense
in which the reclassification
is included
Revenues
1
-605
72
Line item in the
Cost of sales
55
-63
-73
Cost of sales
Interest
Cost of sales
-91
Other
financial
income/
expense, net
-40
Hedging of currency risks of net investments in foreign operations
F.91
The amounts relating to hedge ineffectiveness for
items designated as fair value hedges at December 31, 2018
according to IFRS 9 are shown in table 7 F.88.
349
-329
underlying transactions
Net gains/losses from
2
hedging instruments
Net gains/losses from
In millions of euros
Interest rate risk
2017
2018
Net gains/losses from fair value hedges (according to IAS 39)
F.89
Interest expense
Cost of sales
In millions of euros
-68
1.751
-180
2018
Interest rate risk
14,217
29,086
-72
Net gains and losses on these hedging instruments and
the changes in the value of the underlying transactions at
December 31, 2017 according to IAS 39 are shown in
table 71 F.89.
100
23
1 Fair value changes of the hedged items used for recognizing hedge
ineffectiveness.
300
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.88
Ineffectiveness of fair value hedges (according to IFRS 9)
-121
Gains and losses on cash flow hedges and hedges of net investments in foreign operations (according to IFRS 9)
Cash flow hedges and hedges of net investments
in foreign operations
Daimler also partially hedges the foreign currency risk of
selected investments with the application of derivative or non-
derivative financial instruments.
1 Fair value changes of the hedged items used for recognizing hedge ineffectiveness.
-270
Thereof hedges of net investments in foreign operations
-4
-311
Discontinued/terminated hedges
4
Thereof hedges of net investments in foreign operations
-4
-91
Continuing hedges
Balance of the reserves for derivative financial instruments (before taxes)
-1
Thereof hedges of net investments in foreign operations
39
83
1,024
The amounts related to items designated as cash flow
hedges and as hedges of net investments in foreign operations
at December 31, 2018 according to IFRS 9 are shown in
table 71 F.90.
The gains and losses on items designated as cash flow
hedges at December 31, 2018 according to IFRS 9 as well as
the amounts relating to hedge ineffectiveness are included
in table F.91.
Net profit at December 31, 2017 according to IAS 39 includes
net losses (before income taxes) of €11 million attributable to
the ineffectiveness of derivative financial instruments entered
into for hedging purposes (hedge ineffectiveness).
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
301
F.90
The Group uses cash flow hedges for hedging currency risks,
interest rate risks and commodity price risks.
Cash flow hedges and hedges of net investments in foreign operations (according to IFRS 9)
2018
Foreign
currency
risk
Interest
rate risk
Commodity
risk
Fair value changes of the hedged items¹
In millions of euros
In millions of euros
-641
Foreign currency risk
Scoring systems are applied for the assessment of the default
risk of retail and small business customers. Corporate custom-
ers are evaluated using internal rating instruments. Both evalu-
ation processes use external credit bureau data if available.
The scoring and rating results as well as the availability of secu-
rity and other risk mitigation instruments, such as advance
payments, guarantees and, to a lower extent, residual debt
insurances, are essential elements for credit decisions.
Following the impairment model expected credit losses from
receivables from financial services (see ①Note 1) are calcu-
lated with a statistical model using three major risk parame-
ters: probability of default, loss given default and exposure at
default.
F.97
Maximum risk positions of financial assets,
irrevocable loan commitments and financial guarantees
In millions of euros
Maximum Maximum
see also risk position risk position
Note
2018
2017
Liquid assets
Receivables from
financial services
Trade receivables
25,430
22,135
14
96,740
86,054
19
12,586
11,995
3,177
16
financial assets
Other receivables and
82
109
With respect to its financing and lease activities, the Group
holds collateral for customer transactions. The value of collat-
eral generally depends on the amount of the financed assets.
The financed vehicles usually serve as collateral. Furthermore,
Daimler Financial Services mitigates the credit risk from
financing and lease activities, for example through advance
payments from customers.
16
Derivative financial
2,379
1,033
16
instruments used in
hedge accounting
(assets only)
Derivative financial
instruments not used in
hedge accounting
(assets only)
3,172
The Daimler Financial Services segment has guidelines setting
the framework for effective risk management at a global as
well as at a local level. In particular, these rules deal with mini-
mum requirements for all risk-relevant credit processes, the
definition of financing products offered, the evaluation of cus-
tomer quality, requests for collateral as well as the treatment
of unsecured loans and non-performing claims. The limitation
of concentration risks is implemented primarily by means of
global limits, which refer to single customer exposures. As of
December 31, 2018, exposure to the biggest 15 customers did
not exceed 3.8% (2017: 4.0%) of the total portfolio.
Daimler's financing and leasing activities are primarily focused
on supporting the sales of the Group's automotive products.
As a consequence of these activities, the Group is exposed to
credit risk, which is monitored and managed based on defined
standards, guidelines and procedures. Daimler manages its credit
risk irrespective of whether it is related to a financing contract
or to an operating lease or a finance lease contract. For this
reason, statements concerning the credit risk of Daimler Finan-
cial Services refer to the entire financing and leasing business,
unless specified otherwise.
Average rate - €
Average rate - USD
Commodity risk
Platinum (in € per troy ounce)
Aluminum (in € per ton)
Palladium (in € per troy ounce)
At December 31, 2018
33. Management of financial risks
General information on financial risks
1.18
8.37
0.88
-0.82%
0.46%
-0.59%
-0.07%
819
1,606
Receivables from financial services
305
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
risk and are allocated to stage 1 of the impairment model
(see Note 1).
Liquid assets consist of cash and cash equivalents and market-
able debt securities and similar investments. With the invest-
ment of liquid assets, banks and issuers of securities are selected
very carefully and diversified in accordance with a limit system.
Liquid assets are mainly held at financial institutions within and
outside Europe with high creditworthiness, as bonds issued
by German federal states and as money market funds. In con-
nection with investment decisions, priority is placed on the
borrower's very high creditworthiness and on balanced risk
diversification. The limits and their utilizations are reassessed
continuously. In this assessment, Daimler also considers the
credit risk assessment of its counterparties by the capital mar-
kets. In line with the Group's risk policy, most liquid assets
are held in investments with an external rating of "A" or better.
Liquid assets are thus not subject to a material credit
Liquid assets
Exposure to credit risk from financing and lease activities
is monitored based on the portfolio subject to credit risk. The
portfolio subject to credit risk is an internal control quantity
that consists of wholesale and retail receivables from financial
services and the portion of the operating lease portfolio that
is subject to credit risk. Receivables from financial services
comprise claims arising from finance lease contracts and
repayment claims from financing loans. The operating lease
portfolio is reported under equipment on operating leases in
the Group's Consolidated Financial Statements. Overdue lease
payments from operating lease contracts are recognized in
receivables from financial services.
The maximum risk positions of financial assets which are gen-
erally subject to credit risk are equal to their carrying amounts
(without consideration of collateral, if available). There is also
a risk of default from irrevocable loan commitments which had
not been utilized as of that date, as well as from financial guar-
antees. The maximum risk position in these cases is equal to the
expected future cash outflows. Table 71 F.97 shows the maxi-
mum risk positions.
Credit risk
Any market sensitive instruments including equity and debt
securities that the plan assets hold to finance pension and
other post-employment healthcare benefits are not included
in the following quantitative and qualitative analysis. See
Note 22 for additional information on Daimler's pension
and other post-employment benefits.
The Group manages and monitors these risks primarily through
its operating and financing activities and, if required, through
the use of derivative financial instruments. Daimler uses deriv-
ative financial instruments exclusively for hedging financial
risks that arise from its operating business or refinancing activi-
ties. Without these derivative financial instruments, the Group
would be exposed to higher financial risks (additional information
on financial instruments and especially on the volumes of the
derivative financial instruments used is included in Note 32).
Daimler regularly evaluates its financial risks with due consider-
ation of changes in key economic indicators and up-to-date
market information.
Daimler has established internal guidelines for risk controlling
procedures and for the use of financial instruments, including
a clear segregation of duties with regard to financial activities,
settlement, accounting and the related controlling. The guide-
lines upon which the Group's risk management processes for
financial risks are based are designed to identify and analyze
these risks throughout the Group, to set appropriate risk limits
and controls and to monitor the risks by means of reliable and
up-to-date administrative and information systems. The guide-
lines and systems are regularly reviewed and adjusted to
changes in markets and products.
As a result of its businesses and the global nature of its opera-
tions, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An
equity price risk results from investments in listed companies.
In addition, the Group is exposed to credit risks from its
leasing and financing activities and from its operating business
(trade receivables). Furthermore, the Group is exposed to
liquidity and country risks relating to its credit and market risks
or a deterioration of its operating business or financial
market disturbances. If these financial risks materialize, they
could adversely affect Daimler's profitability, liquidity and
capital resources and financial position.
688
Credit risk is the risk of economic loss arising from counter-
party's failure to repay or service debt in accordance with the
contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditworthiness
as well as concentration risks.
Irrevocable loan
commitments
2,051
1,894
The maturities of the interest rate hedges and cross currency
interest rate hedges as well as of the commodity hedges
correspond with those of the underlying transactions. The real-
ization of the underlying transactions of the cash flow hedges
is expected to correspond with the maturities of the hedging
transactions shown in table 7 F.94 at December 31, 2018
according to IFRS 9 and in table 71 F.95 at December 31, 2017
according to IAS 39.
Table 71 F.93 provides an overview of the reclassifications
of pre-tax gains/losses from equity to the Consolidated State-
ment of Income in 2017 according to IAS 39.
Unrealized pre-tax gains/losses on the measurement
of derivatives, which are recognized in other comprehensive
income, amounted to €2,525 million at December 31, 2017
according to IAS 39.
The reserves for derivative instruments include reserves
for hedge costs of minus €11 million at December 31, 2018
(minus €34 million at January 1, 2018).
Table F.92 shows the reconciliation of the reserves for
derivative instruments in 2018 according to IFRS 9.
27
-1
34
-6
2017
Interest expense
Interest income
Cost of sales
Revenue
In millions of euros
Reclassifications of pre-tax gains/losses from equity
to the Statement of Income (according to IAS 39)
F.93
-634
Interest rate risk
-7
Reclassification to cost of acquisition
of non-financial assets (before taxes)
Foreign currency risk - procurement
At December 31, 2018, Daimler utilized derivative instruments
with a maximum maturity of 34 months (2017: 39 months)
as hedges for currency risks arising from future transactions.
-81
-63
-18
Other
Taxes on changes in fair values
and reclassifications
Balance at December 31, 2018
537
-95
Commodity price risk - inventory purchases
Nominal values of derivative financial instruments
Table 7F.94 and table 7 F.95 show the nominal values of
derivative financial instruments at December 31, 2018 according
to IFRS 9 and at December 31, 2017 according to IAS 39
entered into for the purpose of hedging currency risks, interest
rate risks and commodity price risks that arise from the
Group's operating and/or financing activities.
The average prices for derivative financial instruments classified
by risk categories for the main risks at December 31, 2018
according to IFRS 9 are included in table
F.96.
thereof cash flow hedges
Cross currency interest rate swaps
thereof cash flow hedges
thereof fair value hedges
Hedging of currency risks from forecasted transactions
Forward exchange contracts and currency options
Forward exchange contracts
Note 14.
The allowance ratio slightly increased compared to the low
level of the previous year.
If, in connection with contracts, a worsening of payment behav-
ior or other causes of a credit risk are recognized, collection
procedures are initiated by claims management to obtain the
overdue payments of the customer, to take possession of
the asset financed or leased or, alternatively, to renegotiate the
impaired contract. Restructuring policies and practices are
based on the indicators or criteria which, in the judgment of
local management, indicate that repayment will probably con-
tinue and that the total proceeds expected to be derived from
the renegotiated contract exceed the expected proceeds to
be derived from repossession and remarketing. For receivables
from financial services, significant modifications of financial
assets only occurred in rare cases and immaterial volume.
In determining expected credit losses, existing collateral is
generally given due consideration. The actual credit risk is
limited by the fair value of collateral (e.g. financed vehicles).
Financial guarantees
667
672
Further details of receivables from financial services and the
balance of the recorded impairments are provided in
from inactive hedges remaining in the statement
of financial position
Hedging of currency risks from receivables/liabilities
Nominal values of derivative financial instruments (according to IAS 39)
Hedging transactions for which the effects from the measure-
ment of the hedging instrument and the underlying transaction
to a large extent offset each other in the Consolidated State-
ment of Income mostly do not classify for hedge accounting.
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments are still
hedging financial risks from the operating business. A hedging
instrument is terminated when the hedged item no longer
exists or is no longer expected to occur.
Explanations of the hedging of exchange rate risks,
interest rate risks and commodity price risks can be found in
Note 33 in the sub-item finance market risk.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
303
In millions of euros
F.94
In millions of euros
Foreign currency risk
Interest rate risk
Fair value hedges
Cash flow hedges
Commodity risk
F.95
Nominal values of derivative financial instruments (according to IFRS 9)
Cash flow hedges
Fair value changes of the hedged items¹
Accumulated amount of hedge adjustments
Financing liabilities current
Financial assets measured at fair value
364
Liabilities
Equity and debt instruments
5,855
and similar investments
Marketable debt securities
82
Financial assets measured at
fair value through profit or loss²
102,359
11,236
Available-for-sale financial assets
3,177
1,173
Other financial assets
10,063
Marketable debt securities
Trade receivables
11,995
Cash and cash equivalents
15,853
Other receivables and financial assets
3,172
Trade payables
Marketable debt securities
Other receivables and
financial assets
Financial assets measured
at (amortized) cost
Loans and receivables
78,707
663
and similar investments
12,586
through other comprehensive income
Financing liabilities³
fair value through profit or loss²
167,498
8,758
14,185
144,555
Financial liabilities measured at
measured at (amortized) cost
Financial liabilities
Other financial liabilities4
Financing liabilities³
Trade payables
Liabilities
3,552
at fair value through profit or loss²
Financial assets measured
109
at fair value through profit or loss
111
Marketable debt securities
Other financial liabilities4
and similar investments
3,059
Financial liabilities measured at (amortized) cost
Equity and debt instruments
6,219
384
Other financial assets measured
fair value through profit or loss²
12,451
126,772
8,327
147,550
Financial liabilities measured at
1 This does not include lease receivables of €26,660 million
Trade receivables
Receivables from financial services¹
13,606
69,941
58,496
128,437
81,972
62,961
76,468 62,862
thereof bonds
144,933
Financing liabilities
measured at cost
Fair values of financial liabilities
86,543
86,543
97,144
97,144
Receivables from financial services
measured at cost
296
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.79
Measurement hierarchy of financial assets and liabilities not measured at fair value
In millions of euros
At December 31, 2018
(IFRS 9)
68,422 57,715
At December 31, 2017
(IAS 39)
Level 11 Level 22 Level 33
Total
Level 11
Level 22
Level 33
Fair values of financial assets
Total
63,540
10,707
thereof other financing liabilities
70,080
Receivables from financial services¹
Assets
Assets
297
At December 31,
2017
In millions of euros
2018
At December 31,
Carrying amounts of financial instruments presented
according to IAS 39 measurement categories
F.81
In millions of euros
Carrying amounts of financial instruments presented
according to IFRS 9 measurement categories
F.80
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The table 71 F.80 and table 7 F.81 do not include the carrying
amounts of derivative financial instruments used in hedge
accounting as these financial instruments are not assigned to
an IFRS 9 or IAS 39 measurement category. In addition table
7 F.81 does not include cash and cash equivalents as these
financial instruments are not assigned to an IAS 39 measure-
ment category.
The carrying amounts of financial instruments presented at
December 31, 2018 according to IFRS 9 measurement
categories and at December 31, 2017 according to IAS 39
measurement categories are shown in table 7 F.80 and
7 F.81.
12,474
55,991
99
12,375
11,081
781
10,300
thereof liabilities from ABS transactions
55,991
48,934
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
Table 7 F.79 shows into which measurement hierarchies
(according to IFRS 13) the fair values of the financial assets and
liabilities are classified which are not measured at fair value
in the Consolidated Statement of Financial Position.
Measurement categories
48,934
as of December 31, 2018 as these are not assigned to an IFRS 9
measurement category.
56
2 Financial instruments classified as held for trading purposes.
These figures comprise financial instruments that are not used in
hedge accounting.
163
15
425
364
59
86
43
57
58
366
Cash flow
hedges¹
Fair Value
hedges²
Cash flow
hedges'
risk
Interest
rate risk
December 31, 2018
Commodity
Foreign
currency risk
Hedges of net
investments
in foreign
operations
See Note 1 for qualitative descriptions of accounting
for and presentation of financial instruments (including
derivative financial instruments).
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
299
F.85
Amounts for the transactions designated as hedging instruments (according to IFRS 9)
In millions of euros
30
Carrying amount of the hedging instrument
Other financial assets non-current
Other financial liabilities current
Other financial liabilities non-current
Financial liabilities current
Fair value changes³
Cash flow
hedges¹
Other financial assets current
Total interest income and total interest expense for financial
assets or financial liabilities that were not measured at
fair value through profit or loss amounted €4,572 million and
€2,415 million respectively at December 31, 2017 according
to IAS 39.
161
237
Financing liabilities current
Financing liabilities non-current
thereof hedge adjustments
Carrying amounts of the hedged items
In millions of euros
Fair value hedges (according to IFRS 9)
F.87
Hedges of net investments
in foreign operations
Cash flow hedges
Fair value hedges
In millions of euros
At December 31, 2017
Fair values of hedging instruments (according to IAS 39)
F.86
F.87.
at December 31, 2018 according to IFRS 9 are included in
table
The amounts of the items hedged with fair value hedges
The Group uses fair value hedges primarily for hedging interest
rate risks.
Fair value hedges
22
25
-1,021
1
-18
122
41
-41
3 Gains and losses from hedging instruments used for recognizing hedge ineffectiveness.
Information on derivative financial instruments
Use of derivatives
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or financing
activities. These are mainly interest rate risks, currency risks
and commodity price risks, which were defined as risk catego-
ries according to IFRS 9. For these hedging purposes, the
Group mainly uses currency forward transactions, cross cur-
rency interest rate swaps, interest rate swaps, options and
commodity forwards.
Table 7 F.85 shows the amounts for the transactions
designated as hedging instruments at December 31, 2018
according to IFRS 9.
Table 71 F.86 shows the fair values of hedging instruments at
December 31, 2017 according to IAS 39.
1 Includes the following instrument types: currency forwards, currency options, currency swaps, commodity forwards.
2 Includes the following instrument types: interest rate swaps, cross currency interest rate swaps.
Total interest income and total interest expense for financial
assets or financial liabilities that are not measured at fair
value through profit or loss at December 31, 2018 according
to IFRS 9 are shown in table 7 F.84.
through other comprehensive income
thereof from financial assets measured at fair value
Financial liabilities measured at (amortized) cost
Loans and receivables
Available-for-sale financial assets
at fair value through profit or loss¹
Financial assets and liabilities recognized
In millions of euros
Net gains/losses (according to IAS 39)
F.83
1 Financial instruments classified as held for trading; these
amounts relate to financial instruments that are not used in
hedge accounting.
105
Financial liabilities measured at (amortized) cost
-469
Financial assets measured at (amortized) cost
-17
Other financial assets recognized at fair value
through other comprehensive income
Equity instruments recognized at fair value
through other comprehensive income
through profit or loss¹
3 This does not include liabilities from finance leases of €347 million
as of December 31, 2018 as these are not assigned to an IFRS 9
measurement category.
4 This does not include liabilities from financial guarantees of
€124 million as of December 31, 2018 as these are not assigned to
an IFRS 9 measurement category.
1 This does not include lease receivables of €22,514 million as of
December 31, 2017 as these are not assigned to an IAS 39 mea-
surement category.
2 Financial instruments classified as held for trading purposes.
These figures comprise financial instruments that are not used in
hedge accounting.
3 This does not include liabilities from finance leases of €352 million
as of December 31, 2017 as these are not assigned to an IAS 39
measurement category.
4 This does not include liabilities from financial guarantees of €141
million as of December 31, 2017 as these are not assigned to an
IAS 39 measurement category.
1 Financial instruments classified as held for trading; these
298
F.82
Net gains/losses (according to IFRS 9)
In millions of euros
Equity and debt instruments recognized
at fair value through profit or loss
Other financial assets and financial
liabilities recognized at fair value
F❘| CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
amounts relate to financial instruments that are not used in
hedge accounting.
F.84
Total interest income and total interest expense
(according to IFRS 9)
Total interest income
5,189
Total interest income and total interest expense
thereof from financial assets and liabilities
measured at (amortized) costs
5,100
Table 7 F.83 shows the net gains/losses on financial
instruments included in the Consolidated Statement of Income
(excluding derivative financial instruments used in hedge
accounting) at December 31, 2017 according to IAS 39.
thereof from financial assets measured at fair value
89
Total interest expense
-3,171
thereof from financial assets and liabilities
measured at (amortized) costs
-3,171
through other comprehensive income
Financing liabilities non-current
Net gains/losses on financial liabilities measured at
(amortized) cost primarily comprise the effects of currency
translation.
Net gains/losses on other financial assets measured at
fair value through other comprehensive income are primarily
attributable to the effects of currency translation.
In millions of euros
Net gains or losses
2018
136
240
2
Net gains/losses on financial assets measured at (amortized)
cost primarily comprise impairment losses (including reversals
of impairment losses) of €407 million that are charged to cost
of sales, selling expenses and other financial income/expense,
net. Foreign currency gains and losses are also included. On
the other hand impairment losses (excluding reversals of
impairment losses) amounted to €630 million at December 31,
2017 according to IAS 39.
2017
-50
2018
Table 71 F.82 shows the net gains/losses on financial
instruments included in the Consolidated Statement of Income
(excluding derivative financial instruments used in hedge
accounting) at December 31, 2018 according to IFRS 9.
Net gains/losses on equity and debt instruments recognized
at fair value through profit or loss primarily comprise gains
and losses attributable to changes in the fair values of these
instruments, among others the fair value change of our
equity interest in Aston Martin Lagonda Global Holdings plc.
Net gains/losses on other financial assets and liabilities
recognized at fair value through profit or loss primarily
comprise gains and losses attributable to changes in their
fair values.
Net gains/losses on equity instruments measured at fair
value through other comprehensive income primarily comprise
dividend payments.
152
27
-542
thereof cash flow hedges
Reclassification to profit and loss (before taxes)
36,474
495
742
35,159
572
35,731
1,485
9,694
47,539
2,395
247
49,934
30,061
45,542
15,490
30,506
45,996
1,315
361
1,676
1,679
15,481
1,559
649
246
Average rate - USD
Average rate - €
Fair value hedges
Interest rate risk
GBP per €
CNY per €
USD per €
Foreign currency risk
Average prices of hedging instruments for the major risks
(according to IFRS 9)
403
F.96
304
933
37,407
25,615
36,888
62,503
66,942
41,808
108,750
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3,238
8,209
2,153
38,998
9,935
29,063
>5 years
Total
1 year up to
5 years
<1 year
At December 31, 2018
Maturity of nominal amounts
thereof fair value hedges
15,926
thereof cash flow hedges
thereof cash flow hedges
Forward commodity contracts
3,658
thereof fair value hedges
thereof cash flow hedges
Interest rate swaps
Hedging of interest rate risks from receivables/liabilities
thereof hedging of net investments in foreign operations
Currency swaps
Total nominal values of derivative financial instruments
36,602
Hedging of commodity price risks from forecasted transactions
64,583
12,055
5,811
3,380
3,380
8
6,267
>1 year
Maturity
≤1 year
At December 31, 2017
Maturity
Nominal values
500
6,259
285
21,592
11,839
9,753
42,991
12,055
24,763
215
6,173
1 Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
2 In 2017 at the Daimler Financial Services segment, in addition to the adjustment of prior-year figures due to IFRS 15, the Group's internal revenue
and cost of sales have been adjusted by the same amount. These adjustments have been fully eliminated in the reconciliation.
1
1,755
thereof depreciation of property,
plant and equipment
2,832
791
3,920
75
24
1
3,921
13,625
314
198
86
1,540
131
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6,718
26
6,744
Depreciation and amortization of
non-current assets
5,326
447
247
5,979
thereof amortization of intangible assets
1,230
291
84
18
13,539
1,754
F.101
Daimler
Financial
In millions of euros
Amortization of capitalized
borrowing costs³
-15
-13
Interest income
271
14,348
214
-793
-582
Profit before income taxes
10,595
13,967
43
Interest expense
11,132
Group EBIT
-44
2018
2017
(adjusted)1
256
Total of segments' profit (EBIT)
11,930
14,624
profit/loss on equity-method
investments²
-88
Other corporate items
-669
-488
Eliminations
-41
Reconciliation to Group figures
94
8,744
1,028
-61
-61
Segment assets
69,978
21,758
Total of segments' assets
-4
3,563
254,032
1,313
255,345
thereof carrying amounts
of equity-method investments
2,930
149,989
-2
-5
-17
-276
14,348
thereof profit/loss on
equity-method investments
1,198
-3
43
3
1
1,242
256
1,498
thereof profit/loss from compounding
and effects from changes in discount rates
of provisions for other risks
-33
491
710
180
148
35,341
thereof investments in
intangible assets
2,668
97
525
23
33
3,413
1
3,414
thereof investments in property,
plant and equipment
4,843
90
35,318
14,896
299
3,758
1,060
4,818
Segment liabilities
44,761
13,897
5,804
2,460
137,610 204,532
-14,346
190,186
Additions to non-current assets
15,815
2,308
2,000
9
278,874
1 Information on adjustments to prior-year figures is disclosed in
Note 1 of the Notes to the Consolidated Financial Statements.
Carrying amount of equity-method
1,764
1,828
167,362
164,154
95,225
88,790
10,227
1 Information on adjustments to prior-year figures is disclosed in Note 1 of the Notes to the Consolidated Financial Statements.
"Net assets" and "value added" represent the basis for capital
management at Daimler. The assets and liabilities of the seg-
ments in accordance with IFRS provide the basis for the deter-
mination of net assets at Group level. The vehicle segments
are accountable for the operational net assets; all assets, lia-
bilities and provisions which they are responsible for in day-to-
day operations are therefore allocated to them. Performance
measurement at Daimler Financial Services is on an equity basis,
in line with the usual practice in the banking business. Net
assets at Group level additionally include assets and liabilities
from income taxes as well as other corporate items and
eliminations.
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are
calculated as an average of the net assets at the beginning and
the end of the quarter and are shown in table 7 F.103.
The cost of capital of the Group's average net assets is reflected
in value added. Value added shows the extent to which the
Group achieves or exceeds the minimum return requirements
of the shareholders and creditors, thus creating additional
value. The required rate of return on net assets, and thus the cost
of capital, are derived from the minimum rates of return that
investors expect on their invested capital. The Group's cost of
capital comprises the cost of equity as well as the costs of
debt and pension obligations unless these are allocated to
Daimler Financial Services; in addition, the expected returns
on liquidity and on the plan assets of the pension funds which
are not allocated to Daimler Financial Services are considered
with the opposite sign. In the reporting period, the cost of
capital used for our internal capital management amounted to
8% after taxes.
The objective of capital management is to increase value added,
among other things, by optimizing the cost of capital. This is
achieved on the one hand by the management of the net assets,
F.103
Average net assets
2018
35. Capital management
2017
10,287
219
47,952
46,528
27,095
25,510
41,152
40,076
166
24,239
40,627
39,090
2,807
2,509
19,790
18,774
22,623
In millions of euros
Daimler Buses
Daimler Financial Services¹
1,707
2,190
Other corporate items and eliminations³
Net assets Daimler Group
-547
-1,435
53,809
Assets and liabilities from income taxes³
48,446
1 Equity.
2 Unless allocated to the segments.
3 Unless allocated to Daimler Financial Services.
for instance by optimizing working capital which is within the
operational responsibility of the segments. In addition, taking
into account legal regulations, Daimler strives to optimize
the costs and risks of its capital structure and, consequently,
the cost of capital, with due consideration of applicable law.
Examples of this include a balanced relationship between
equity and financial liabilities as well as an appropriate level of
liquidity, oriented towards the operational requirements.
36. Earnings per share
The calculation of basic and diluted earnings per share is based
on net profit attributable to shareholders of Daimler AG. Fol-
lowing the expiration of the stock option plan in 2014, dilutive
effects no longer exist. The profit attributable to shareholders
of Daimler AG (basic and diluted) amounts to €7,249 million
(2017: €10,278 million). The weighted average number of shares
outstanding (basic and diluted) amounts to 1,069.8 million
(2017: 1,069.8 million).
Net assets of the segments
941
1,066
Equity-method investments²
Mercedes-Benz Cars
26,289
23,705
Daimler Trucks
8,240
8,417
Mercedes-Benz Vans
3,355
2,358
1,233
1,105
12,466
11,165
51,583
46,750
42,547
45,281
24,311
24,802
Total of segments' liabilities
224,454
204,532
Income tax liabilities
2,556
891
255,345
Unallocated financial liabilities
and similar obligations5
12,041
6,556
Other corporate items and
-21,793
Daimler Buses
and liabilities from pensions
281,619
Group assets
-22,537
investments4
962
1,060
Income tax assets5
4,227
2,657
Unallocated financial assets
(including liquidity) and assets
from pensions and similar
obligations5
21,563
20,133
Other corporate items and
eliminations
-24,007
In the reporting year, there were no significant non-cash issues
at the Daimler Buses segment.
254,032
Daimler Financial Services
Reconciliation
thereof United States
Asia
thereof China
Other markets
Revenue
Non-current assets
NAFTA region
2018
2018
2017
(adjusted)1
68,496
68,309
63,559
58,943
2017
(adjusted)¹
thereof Germany
Europe
In millions of euros
Reconciliation of the segment amounts to the respective items
included in the Consolidated Financial Statements is shown in
table F.101.
In 2018, the line item Other corporate items includes, amongst
other things, higher expenses in connection with "Project
Future".
Revenue and non-current assets by region
Revenue from external customers and non-current assets by
region are shown in table 7 F.102.
eliminations
Group liabilities
-23,485
215,566 190,186
14,624
2 In the year 2018, this mainly comprises the impairment of
Daimler's equity investment in BAIC Motor of €150 million.
In the year 2017, the reversal of the impairment of Daimler's
equity investment in BAIC Motor of €240 million is included.
3 Amortization of capitalized borrowing costs is not considered
in the internal performance measure "EBIT” but is included in
cost of sales.
4 This mainly comprises the carrying amount of the investments in
BAIC Motor and LSHAI.
5 Unless allocated to Daimler Financial Services.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 315
F.102
Revenue and non-current assets by region
In the year 2018, the agreement reached to conclude the Toll
Collect arbitration proceedings reduced earnings at the
Daimler Financial Services segment by €418 million. The inter-
est income and interest expense of Daimler Financial Services
are included in revenue and cost of sales, and are presented in
Notes 4 and 5.
Total
1,970
1,147
308
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
5 The maximum available amounts are stated.
4 The cash outflows of trade payables are undiscounted.
3 The undiscounted sum of the net cash outflows of the derivative financial instruments is shown for the respective year. For individual periods, this
may also include negative cash flows from derivatives with an overall positive fair value.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
(b) The cash flows of floating interest financial instruments are estimated on the basis of forward rates.
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler can be
required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
1 The amounts were calculated as follows:
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20,223
8,778
24,964
36,990
82,627
2,051
672
672
179,291
Financial guarantees
2,051
Services segment and of Daimler AG5
5,709
Irrevocable loan commitments of the Daimler Financial
Finance market risks
Daimler manages market risks to minimize the impact of fluc-
tuations in foreign exchange rates, interest rates and commod-
ity prices on the results of the Group and its segments. The
Group calculates its overall exposure to these market risks to
provide the basis for hedging decisions, which include the
selection of hedging instruments and the determination of hedg-
ing volumes and the corresponding periods. Starting in 2019,
exposure to currency risks will be determined for each segment.
The hedging strategy is specified at the Group level and uni-
formly implemented in the segments. Decisions regarding the
management of market risks resulting from fluctuations in
foreign exchange rates, interest rates (asset-/liability manage-
ment) and commodity prices are regularly made by the rele-
vant Daimler risk management committees. Exposures are the
basis of the hedging strategies and are updated regularly.
In millions of euros
Value at risk for exchange rate risk, interest rate risk and commodity price risk
F.99
309
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Risk Controlling regularly informs the Board of Management of
the actions taken by Corporate Treasury based on the FXCo's
decisions.
In order to mitigate the impact of currency exchange rate fluc-
tuations for the operating business (future transactions), Daimler
continually assesses its exposure to exchange rate risks and
hedges a portion of those risks by using derivative financial
instruments. Daimler's Foreign Exchange Committee (FXCO)
manages the Group's exchange rate risk and its hedging trans-
actions through currency derivatives. The FXCo consists of rep-
resentatives of the relevant segments and central functions.
The Corporate Treasury department aggregates foreign currency
exposures from Daimler's subsidiaries and operative units and
implements the FXCo's decisions concerning foreign currency
hedging through transactions with international financial insti-
tutions. Any over-hedge caused by changes in exposure is gen-
erally reversed by taking suitable measures without delay.
The Group's currency exposure is reduced by natural hedging
to the extent that currency exposures of the operating busi-
nesses of individual segments offset each other partially at
Group level, thereby reducing overall currency exposure. These
natural hedges eliminate the need for hedging to the extent of
the matched exposures. To provide an additional natural hedge
against any remaining transaction risk exposure, Daimler gen-
erally strives to increase cash outflows in the same currencies
in which the Group has a net excess inflow.
Buses
The global nature of its businesses exposes Daimler to signifi-
cant market risks resulting from fluctuations in foreign currency
exchange rates and interest rates. In addition, the Group is
exposed to market risks in terms of commodity price risk asso-
ciated with its business operations, which the Group hedges
for certain metals partially through derivative financial instru-
ments. The Group is also exposed to equity price risk in con-
nection with its investments in listed companies.
Exchange rate risk
risk can be determined based on this distribution as the port-
folio value loss which is reached or exceeded with a probability
of 1%.
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors consistent with current
market volatilities. The changes in market risk factors allow the
calculation of a possible change in the portfolio value over the
holding period. Running multiple iterations of this simulation
leads to a distribution of portfolio value changes. The value at
When calculating the value at risk by using the variance-covari-
ance approach, Daimler first computes the current market
value of the Group's financial instruments portfolio. Then the
sensitivity of the portfolio value to changes in the relevant
market risk factors, such as particular foreign currency exchange
rates or interest rates of specific maturities, is quantified.
Based on volatilities and correlations of these market risk fac-
tors, which are obtained from the Risk MetricsTM dataset, a
statistical distribution of potential changes in the portfolio value
at the end of the holding period is computed. The loss which is
reached or exceeded with a probability of only 1% can be
derived from this calculation and represents the value at risk.
Daimler calculates the value at risk for exchange rate and inter-
est rate risk according to the variance-covariance approach.
The value at risk calculation method for commodity hedging
instruments is based on a Monte Carlo simulation.
assume a 99% confidence level and a holding period of five
days.
express potential losses in fair values, and
-
The value at risk calculations employed:
As part of its risk management system, Daimler employs value
at risk analyses. In performing these analyses, Daimler quantifies
its market risk due to changes in foreign currency exchange
rates and interest rates and certain commodity prices on a
regular basis by predicting the potential loss over a target time
horizon (holding period) and confidence level.
Oriented towards the risk management standards of the inter-
national banking industry, Daimler maintains its financial con-
trolling unit independent of operating Corporate Treasury and
with a separate reporting line.
228
122
242
2022
2021
2020
2019
Total
Liquidity runoff for liabilities and financial guarantees¹
F.98
Daimler manages these risks via country exposure limits
(e.g. for export credits or for hard currency portfolios of financial
services entities) and via insurance of equity investments in
high-risk countries. An internal rating system serves as a basis
for Daimler's risk-oriented country exposure management; it
assigns all countries to risk classes, with consideration of
external ratings and capital market indications of country risks.
Daimler is exposed to country risk mainly resulting from cross-
border funding or collateralization of Group companies and
customers, from investments in subsidiaries, associated com-
panies, joint ventures and joint operations as well as from
cross-border trade receivables. Country risks also arise from
cross-border cash deposits at financial institutions.
2023
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the respec-
tive country, e.g. resulting from sovereign measures such
as expropriation or interdiction of foreign currency transfers.
Information on the Group's financing liabilities is also provided
in Note 24.
Table 71 F.98 provides an overview of how the future liquidity
situation of the Group can be affected by the cash flows from
liabilities, financial guarantees and irrevocable loan commit-
ments as of December 31, 2018.
From an operating point of view, the management of the Group's
liquidity exposures is centralized by a daily cash pooling
process. This process enables Daimler to manage its liquidity
surplus and liquidity requirements according to the actual
needs of the Group and each subsidiary. The Group's short-term
and mid-term liquidity management takes into account the
maturities of financial assets and financial liabilities and esti-
mates of cash flows from the operating business.
At December 31, 2018, liquidity amounted to €25.4 billion
(2017: €22.1 billion). In 2018, significant cash inflows resulted
from the operations of the industrial business. One cash
inflow of €1.3 billion resulted from the dividend distributed by
Beijing Benz Automotive Co. Ltd. Cash outflows resulted in
particular from the portfolio growth of the leasing and sales
finance activities at Daimler Financial Services, from the
intensified investment offensive as well as from income taxes
paid. Cash inflows and outflows in connection with the cash
flow of the financing activities were also effective.
The funds raised are used to finance working capital and capi-
tal expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accor-
dance with internal guidelines, the refunding of the lease
and financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from financial
services.
307
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In addition, customer deposits at Mercedes-Benz Bank are
used as a further source of refinancing.
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending
on funding requirements and market conditions, Daimler issues
commercial paper, bonds and financial instruments secured
by receivables in various currencies. Bank credit facilities are
also used to cover financing requirements. Potential down-
grades of Daimler's credit ratings could have a negative impact
on the Group's financing. In July 2018, Daimler successfully
concluded negotiations with a consortium of international banks
for a new syndicated credit facility with a volume raised from
€9 billion to €11 billion. With a term of five years, it grants Daim-
ler additional financial flexibility until 2023. The term can be
extended to 2025. Daimler does not intend to utilize the credit
facility.
Country risk
≥ 2024
In millions of euros
Financing liabilities²
394
923
5,744
7,653
liabilities from financial guarantees
excluding accrued interest and
Miscellaneous other financial liabilities
1
1
19,934
61
9
-50
5,578
8,585
24,616
-47
35,991
62
14
59,451
540
14,169
14,185
154, 155
575
Trade payables4
Derivative financial instruments³
Period-end
Daimler manages its liquidity by holding adequate volumes of
liquid assets and by maintaining syndicated credit facilities
in addition to the cash inflows generated by its operating busi-
ness. Additionally, the possibility to securitize receivables of
financial services business (ABS transactions) also reduces the
Group's liquidity risk. Liquid assets comprise cash and cash
equivalents and marketable debt securities and similar invest-
ments. The Group can dispose of these liquid assets at short
notice.
High
2018
Average
Reportable segments
34. Segment reporting
Daimler predominantly holds investments in shares of compa-
nies which are classified as long-term investments, some of
which are accounted for using the equity method, such as BAIC
Motor. These investments are not included in a market risk
assessment of the Group.
Equity price risk
- Changes in the timing of the hedged transactions.
Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged commodity price risk.
Hedge accounting. When designating currency derivative finan-
cial instruments, Daimler generally applies a hedge ratio of 1.
The respective volumes and parameters relevant for the valua-
tion of the hedged item and the hedging instrument as well as
maturity dates are matched. The Group ensures an economic
relationship between the hedged item and the hedging instru-
ment by ensuring consistency of volumes, parameters relevant
for valuation and maturity terms. Effectiveness is assessed at
initial designation and during the hedge term. Possible sources
of ineffectiveness of the hedge relationship are:
In 2018, the value at risk of commodity derivatives was close
to the previous year's level due to offsetting developments of
volatilities and hedge volume.
Table 71 F.99 shows the period-end, high, low and average value
at risk figures of the commodity price risk for the 2018 and
2017 portfolio of derivative financial instruments used to hedge
raw material price risk. Average exposure has been computed
on an end-of-quarter basis. The transactions underlying the
derivative financial instruments are not included in the value at
risk presentation. See also table 71 F.94 at December 31, 2018
according to IFRS 9 and table 7 F.95 at December 31, 2017
according to IAS 39 for the nominal values of derivative com-
modity price hedges at the balance sheet date.
The reportable segments of the Group are Mercedes-Benz Cars,
Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and
Daimler Financial Services. The segments are largely organized
and managed separately, according to nature of products and
services provided, brands, distribution channels and profile
of customers.
For precious metals, central commodity management shows
an unhedged position of 39% of the forecasted commodity
purchases at year-end 2018 for calendar year 2019. The corre-
sponding figure at year-end 2017 was 38% for calendar year
2018.
Commodity price risk
311
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Changes in the parameters of the underlying hedged trans-
actions.
Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged interest rate risk.
Hedge accounting. When designating derivative financial instru-
ments, a hedge ratio of 1 is generally applied. The respective
volumes, interest curves and currencies of the hedged item and
the hedging instrument as well as maturity dates are matched.
In the case of combined derivative financial instruments
for interest currency hedges, the cross currency basis spread is
not designated into the hedge relationship, but deferred as a
hedging cost in other comprehensive income and recognized in
profit or loss pro rata over the hedge term. The Group ensures
an economic relationship between the underlying transaction
and the hedging instrument by ensuring consistency of interest
rates, maturity terms and nominal amounts. The effectiveness of
the hedge is assessed at the beginning and during the econo-
mic relationship using the hypothetical derivative method. Pos-
sible sources of ineffectiveness of the hedge relationship are:
In the course of 2018, changes on the value at risk of interest
rate sensitive financial instruments were primarily determined
by the development of interest rate volatilities.
Table 71 F.99 shows the period-end, high, low and average value
at risk figures of the interest rate risk for the 2018 and 2017
portfolios of interest rate sensitive financial instruments and
derivative financial instruments of the Group, including the
financial instruments of the leasing and sales financing business.
In this respect, the table shows the interest rate risk regard-
ing the unhedged position of interest rate sensitive financial
instruments. The average values have been computed on an
end-of-quarter basis.
Derivative financial instruments are also used in conjunction
with the refinancing related to the automotive segments.
Daimler coordinates the funding activities of the automotive
and financial services businesses at the Group level.
Daimler is exposed to the risk of changes in commodity prices
in connection with procuring raw materials and manufacturing
supplies used in production. A small portion of the raw mate-
rial price risk, primarily relating to forecasted procurement of
certain metals, is mitigated with the use of derivative financial
instruments.
An asset/liability committee consisting of members of the
Daimler Financial Services segment and the Corporate Treasury
department manages the interest rate risk relating to Daimler's
leasing and financing activities by setting targets for the interest
rate risk position. The Treasury Risk Management department
and the local Daimler Financial Services companies are jointly
responsible for achieving these targets. As separate functions,
the Treasury Controlling and the Daimler Financial Services
Controlling & Reporting department monitors target achieve-
ment on a monthly basis. In order to achieve the targeted inter-
est rate risk positions in terms of maturities and interest rate
fixing periods, Daimler also uses derivative financial instru-
ments such as interest rate swaps. Daimler assesses its inter-
est rate risk position by comparing assets and liabilities for
corresponding maturities, including the impact of the relevant
derivative financial instruments.
The vehicle segments develop and manufacture passenger cars,
trucks, vans and buses. The Mercedes-Benz Cars segment
comprises premium vehicles of the Mercedes-Benz brand
including the brands Mercedes-AMG and Mercedes-Maybach,
and small cars under the smart brand, as well as the brand
Mercedes me. Electric products will be marketed under the EQ
brand. Daimler Trucks distributes its trucks under the brand
names Mercedes-Benz, Freightliner, Western Star, FUSO and
BharatBenz. Furthermore, buses under the brands Thomas
Built Buses and FUSO are included in the Daimler Trucks range
of products. The vans of the Mercedes-Benz Vans segment
are primarily sold under the brand name Mercedes-Benz and
also under the Freightliner brand. Daimler Buses sells com-
pletely built-up buses under the brand names Mercedes-Benz
and Setra. In addition, Daimler Buses produces and sells bus
chassis. The vehicle segments also sell related spare parts and
accessories.
Management and reporting system
Daimler
Mercedes-
Benz Vans
Daimler
Trucks
Mercedes-
Benz Cars
Segment information
F.100
Reconciliation includes corporate items for which headquar-
ters are responsible. Transactions between the segments are
eliminated in the context of consolidation and the eliminated
amounts are included in the reconciliation.
Reconciliation
Amortization of capitalized borrowing costs is not included in
the amortization of intangible assets or depreciation of prop-
erty, plant and equipment since it is not considered as part of
EBIT.
The Daimler Financial Services segment supports the sales of
the Group's vehicle segments worldwide. Its product portfolio
primarily comprises tailored financing and leasing packages for
end-customers and dealers, brokering of automotive insurance
and banking services. The segment also provides services such
as fleet management in Europe, which primarily takes place
through the Athlon brand. Furthermore, Daimler Financial Ser-
vices is active in the area of innovative mobility services.
Depreciation and amortization may also include impairments
insofar as they do not relate to goodwill impairment according
to IAS 36.
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
The residual value risks associated with the Group's operating
leases and finance lease receivables are generally borne by
the vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Financial Services; the terms
vary by vehicle segment and geographic region.
Daimler Financial Services' performance is measured on the
basis of return on equity, which is the usual procedure in the
banking business.
Segment assets principally comprise all assets. The vehicle
segments' assets exclude income tax assets, assets from
defined benefit pension plans and other post-employment
benefit plans, and certain financial assets (including liquidity).
Segment liabilities principally comprise all liabilities. The
vehicle segments' liabilities exclude income tax liabilities,
liabilities from defined benefit pension plans and other post-
employment benefit plans, and certain financial liabilities
(including financing liabilities).
Intersegment revenue is generally recorded at values that
approximate third-party selling prices.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
312
The Group's management reporting and controlling systems
measure of segment profit or loss is referred to as "EBIT."
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income/expense, and our share of profit/loss
on equity-method investments, net, as well as other financial
income/expense, net. Although amortization of capitalized bor-
rowing costs is included in cost of sales, it is not included
in EBIT.
The Group's management reporting and controlling systems
principally use accounting policies that are the same as those
described in Note 1 in the summary of significant account-
ing policies according to IFRS.
Capital expenditures for intangible assets and property, plant
and equipment reflect the cash-effective additions to these
intangible assets and property, plant and equipment as far as
they do not relate to capitalized borrowing costs, goodwill or
finance leases.
Daimler uses a variety of interest rate sensitive financial instru-
ments to manage the liquidity needs of its day-to-day opera-
tions. A substantial volume of interest rate sensitive assets and
liabilities results from the leasing and sales financing business
operated by the Daimler Financial Services segment. The
Daimler Financial Services companies enter into transactions
with customers that primarily result in fixed-rate receivables.
Daimler's general policy is to match funding in terms of maturi-
ties and interest rates wherever economically feasible. How-
ever, for a limited portion of the receivables portfolio in selected
and developed markets, the Group does not match funding
in terms of maturities in order to take advantage of market
opportunities. As a result, Daimler is exposed to risks due to
changes in interest rates.
Interest rate risk
Effects of currency translation. For purposes of Daimler's Con-
solidated Financial Statements, the income and expenses
and the assets and liabilities of subsidiaries located outside the
euro zone are converted into euros. Therefore, period-to-
period changes in average exchange rates may cause transla-
tion effects that have a significant impact on, for example,
revenue, segment results (EBIT) and assets and liabilities of
the Group. Unlike exchange rate transaction risk, exchange
rate translation risk does not necessarily affect future cash
flows. The Group's equity position reflects changes in book
values caused by exchange rates. In general, Daimler does not
hedge against exchange rate translation risk.
43
36
26
45
26
Interest rate risk
815
779
877
48
779
568
695
568
(from derivative financial instruments)
Exchange rate risk
2017
Average
Low
High
Period-end
633
43
46
Commodity price risk
Since currency risks arising from the Group's investment or
refinancing in foreign currencies and the respective hedging
transactions principally offset each other, these financial
instruments are not included in the value at risk calculation
presented.
The Group's investments in liquid assets or refinancing activities
generally are not allowed to result in currency risk. Transaction
risks arising from liquid assets or payables in foreign currencies
that result from the Group's investment or refinancing on
money and capital markets are generally hedged against cur-
rency risks at the time of investing or refinancing in accor-
dance with Daimler's internal guidelines. The Group uses
appropriate derivative financial instruments (e.g. cross cur-
rency interest rate swaps) to hedge against currency risk.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
310
In 2018, the development of the value at risk from foreign
currency hedging was mainly driven by decreases in foreign
currency rate volatilities and hedge volumes.
In the course of focusing on the divisional perspective the
designation of hedge relationships primarily for foreign currency
risk from future vehicle sales will be subject to a further
differentiation by Mercedes-Benz Cars/Mercedes-Benz Vans
as well as Daimler Trucks/Daimler Buses starting with 2019.
Until year-end 2018, the designation of these hedge relationships
for a specific currency and maturity has no further differentia-
tion in respect of the entire volume of expected vehicle sales by
segments. Accordingly, as of January 1, 2019, the documentation
required under IFRS with regards to this further differentiation
of expected cash flows (i.e. the risk management objectives)
will also be revised for the major part of the already designated
hedge relationships for foreign currency risk although there is
no change in the overall Group risk management strategy. This
results in a formal discontinuation of existing hedge relation-
ships as described in the methods applied in preparation of the
financial statements and immediate redesignation of new hedge
relationships according to the revised differentiation. The accu-
mulated hedging gains/losses in equity as of December 31,
2018, subject to redesignation remain in the other reserves for
derivative financial instruments because the hedged future
cash flows are still expected to occur. Daimler does not expect
any material impacts on the Group's profitability, liquidity and
capital resources or financial position.
Changes in the timing of the hedged transactions.
Effects of the credit risk on the fair value of the used deriva-
tive instrument which is not reflected in the change of the
hedged currency risk.
Hedge accounting. When designating derivative financial instru-
ments, a hedge ratio of 1 is applied. In addition, the respective
volume and currency of the hedge and the underlying transaction
as well as maturity dates are matched. The Group ensures an
economic relationship between the underlying transaction and
the hedging transaction by ensuring consistency of currency,
volume and maturity. In the case of options for currency hedg-
ing, the option premium is not designated into the hedge
relationship, but the hedging costs are deferred in other com-
prehensive income and recognized in profit or loss at the due
date of the underlying transaction. The effectiveness of the hedge
is assessed at the beginning and during the economic relation-
ship. Possible sources of ineffectiveness of the hedge relation-
ship are:
Table 71 F.99 shows the period-end, high, low and average
value at risk figures of the exchange rate risk for the 2018 and
2017 portfolios of derivative financial instruments, which
were entered into primarily in connection with the operative
vehicle businesses. Average exposure has been computed
on an end-of-quarter basis. The offsetting transactions under-
lying the derivative financial instruments are not included in
the following value at risk presentation. See also table 7 F.94
at December 31, 2018 according to IFRS 9 and table 7 F.95
at December 31, 2017 according to IAS 39 for the nominal vol-
umes on the balance sheet date of derivative currency instru-
ments entered into to hedge the currency risk from forecasted
transactions.
The hedged position of the operating vehicle businesses is
influenced by the amount of derivative currency contracts held.
The derivative financial instruments used to cover foreign
currency exposure are primarily forward foreign exchange con-
tracts and currency options. Daimler's guidelines call for a
mixture of these instruments depending on the assessment of
market conditions. Value at risk is used to measure the exchange
rate risk inherent in these derivative financial instruments.
The Group's targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally limited
by uncertainty related to cash flows that lie far in the future;
on the other hand, it may also be limited by the fact that appro-
priate currency contracts are not available. This reference
model aims to limit risks for the Group from unfavorable move-
ments in exchange rates while preserving some flexibility to
participate in favorable developments. Based on this reference
model and depending on the market outlook, the FXCo deter-
mines the hedging horizon, which usually varies from one to five
years, as well as the average hedge ratios. Reflecting the
character of the underlying risks, the hedge ratios decrease with
increasing maturities. At year-end 2018, foreign exchange
management showed an unhedged position in the automotive
business for the underlying forecasted cash flows in US dollars
in calendar year 2019 of 29%, for the underlying forecasted
cash flows in Chinese renminbi in calendar year 2019 of 30%, as
well as for the underlying forecasted cash flows in British
pounds in calendar year 2019 of 33%.
17
14
25
14
18
14
23
14
(from derivative financial instruments)
Low
281
Liquidity risk comprises the risk that a company cannot meet
its financial obligations in full.
The maximum potential obligation resulting from financial
guarantees amounts to €672 million at December 31, 2018
(2017: €667 million) and includes liabilities recognized
at December 31, 2018 in the amount of €124 million (2017:
€141 million). Financial guarantees principally represent
contractual arrangements. These guarantees generally pro-
vide that in the event of default or non-payment by the
primary debtor, the Group will be required to settle such finan-
cial obligations.
1,622
599
235
6,236
14,797
90
14,887
thereof amortization of intangible assets
1,437
6,105
267
20
104
2,013
1
2,014
thereof depreciation of property,
plant and equipment
3,138
798
185
255
non-current assets
7,534
35,500
thereof investments in
intangible assets
2,553
86
368
56
103
3,166
Depreciation and amortization of
1
thereof investments in property,
plant and equipment
5,684
1,105
468
144
64
7,465
69
3,167
75
24
4,290
Services Segments ciliation²
Daimler
Group
In millions of euros
2017 (adjusted)¹
External revenue
Intersegment revenue
Total revenue
90,641
3,710
94,351
34,196
1,559
35,755
Recon-
12,595
4,412
112
4,524
22,310 164,154
2,220
24,530
164,154
8,167
172,321
-8,167
-8,167
164,154
Segment profit/loss (EBIT)
8,843
2,383
566
13,161
Total
Daimler
Financial
Daimler
Buses
1
4,291
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
313
The effects of certain legal proceedings and compliance issues
are excluded from the operating results and liabilities of the
segments if such items are not indicative of the segments' per-
formance, since the related results of operations may be dis-
torted by the amount and the irregular nature of such events.
Reconciliation also includes corporate projects, profits and
losses on derivative financial transactions allocated to head-
quarters and equity interests not allocated to the segments.
Information related to geographic areas
With respect to information about geographical regions, reve-
nue is allocated to countries based on the location of the
customer; non-current assets are presented according to the
physical location of these assets.
Table
F.100 presents segment information as of and for the
years ended December 31, 2018 and 2017.
Mercedes-Benz Cars
In the year 2018, the Mercedes-Benz Cars segment's earnings
include positive effects from the remeasurement at fair value
of €111 million of the investment in Aston Martin Lagonda Global
Holdings plc (Aston Martin). On the other hand,
expenses in connection with ongoing governmental proceed-
ings and measures relating to diesel vehicles affected EBIT
negatively. In addition, impairments of €133 million impacted
EBIT negatively. In the year 2017, EBIT was boosted by income
of €183 million in connection with a new investor in HERE. On
the other hand, EBIT was reduced by expenses totaling €425
million for voluntary service activities for diesel vehicles and a
specific vehicle recall. The optimization programs led to a cash
inflow of €203 million in the year 2017.
Daimler Trucks
In the reporting year, there were in sum no significant non-
cash issues at the Daimler Trucks segment. In 2017, the sale
of real estate by Mitsubishi Fuso Truck and Bus Corporation in
Japan increased earnings by €267 million. On the other hand,
expenses of €172 million for fixed-cost optimizations affected
EBIT negatively. The optimization programs led to a cash out-
flow of €120 million (2017: €17 million).
Mercedes-Benz Vans
In the reporting year, EBIT at the Mercedes-Benz Vans segment
was reduced by expenses in connection with ongoing govern-
mental proceedings and measures relating to diesel vehicles
and by remeasurement of assets in connection with production
capacities.
Mercedes-
Benz Cars
Daimler
Trucks
Mercedes-
Benz Vans
51
Liquidity risk
35,449
431
External revenue
Intersegment revenue
Total revenue
89,467
3,636
93,103
36,456
1,817
38,273
12,842
784
13,626
4,421
108
4,529
24,176 167,362
2,093
26,269
167,362
2018
8,438
175,800
167,362
Segment profit/loss (EBIT)
7,216
2,753
312
265
1,384
11,930
-798
-8,438
-8,438
11,132
In millions of euros
Recon-
ciliation
Financial guarantees
The Daimler Financial Services segment in particular is exposed
to credit risk from irrevocable loan commitments to retailers
and end customers. At December 31, 2018, irrevocable loan
commitments amounted to €2,051 million (2017: €1,894 mil-
lion). These loan commitments had a maturity of less than one
year and are not subject to a material credit risk.
Irrevocable loan commitments
With respect to other receivables and financial assets included
in other financial assets in 2018 and 2017, Daimler is exposed
to credit risk only to a small extent.
Other receivables and financial assets
The Group uses derivative financial instruments exclusively
for hedging financial risks that arise from its operational busi-
ness or refinancing activities. Daimler manages its credit risk
exposure in connection with derivative financial instruments
through a limit system, which is based on the review of each
counterparty's financial strength. This system limits and diver-
sifies the credit risk. As a result, Daimler is exposed to credit
risk only to a small extent with respect to its derivative finan-
cial instruments. In accordance with the Group's risk policy,
most derivatives are contracted with counterparties which
have an external rating of "A" or better.
Derivative financial instruments
Further information on trade receivables and the status of
impairments recognized is provided in Note 19.
In line with the impairment model (see Note 1), the simpli-
fied approach is applied for impairments of trade receivables,
whereby expected credit losses until maturity for these trade
receivables are recognized with the initial recognition.
Daimler
Group
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
first-class bank guarantees and
credit insurances,
Depending on the creditworthiness of the general distribution
companies, Daimler usually establishes credit limits and limits
credit risks with the following types of collateral:
For trade receivables from export business, Daimler also evalu-
ates each general distribution company's creditworthiness by
means of an internal rating process and its country risk. In this
context, the year-end financial statements and other relevant
information on the general distribution companies such as pay-
ment history are used and assessed.
A significant part of the trade receivables from each country's
domestic business is secured by various country-specific types
of collateral. This collateral includes conditional sales, guaran-
tees and sureties as well as mortgages and advance payments
from customers.
Trade receivables are mostly receivables from worldwide sales
activities of vehicles and spare parts. The credit risk from
trade receivables encompasses the default risk of customers,
e.g. dealers and general distribution companies, as well as
other corporate and private customers. In order to identify credit
risks, Daimler assesses the creditworthiness of the custom-
ers. Daimler manages its credit risk from trade receivables using
appropriate IT applications and databases on the basis of
internal guidelines which have to be followed globally.
Trade receivables
306 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Services Segments
letters of credit.
14,431
thereof profit/loss on
1,108
of equity-method investments.
2,928
512
241
8
209
3,898
962
4,860
thereof carrying amounts
Segment liabilities
15,069
6,330
2,502
152,506 224,454
-8,888 215,566
Additions to non-current assets
16,494
2,460
1,633
48,047
equity-method investments
2,745 281,619
3,780
43
44
1
-452
744
-88
656
thereof profit/loss from compounding
and effects from changes in discount rates
of provisions for other risks
165,316 278,874
-7
-11
-2
-3
-32
1
-31
Segment assets
76,352
23,558
9,868
-9
Transaction risk and currency risk management. The global nature
of Daimler's businesses exposes cash flows and earnings to
risks arising from fluctuations in exchange rates. These risks
primarily relate to fluctuations between the euro and the US
dollar, the Chinese renminbi, the British pound and other cur-
rencies such as currencies of growth markets. In the operating
vehicle business, the Group's exchange rate risk primarily
arises when revenue is generated in a currency that is different
from the currency in which the costs of generating the revenue
are incurred (transaction risk). When the revenue is converted
into the currency in which the costs are incurred, it may be
inadequate to cover the costs if the value of the currency in
which the revenue is generated declined in the interim relative
to the value of the currency in which the costs were incurred.
This risk exposure primarily affects the Mercedes-Benz Cars
segment, which generates a major portion of its revenue in for-
eign currencies and incurs manufacturing costs primarily in
euros. The Daimler Trucks segment is also subject to transac-
tion risk, but to a lesser extent because of its global production
network. The Mercedes-Benz Vans and Daimler Buses seg-
ments are also directly exposed to transaction risk, but also
only to a minor degree compared to the Mercedes-Benz Cars
segment. In addition, the Group is indirectly exposed to trans-
action risk from its equity-method investments.
and other expense
2018
and other income
2018
2017
5
Utrecht, Netherlands
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
100.00
Stuttgart, Germany
100.00
Buenos Aires, Argentina
Mercedes-Benz Assuradeuren B.V.
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2016-2
Mercedes-Benz Asia GmbH
100.00
Mercedes-Benz Argentina S.A.
Antwerp, Belgium
Mercedes-Benz Antwerpen N.V.
5
100.00
Stuttgart, Germany
Mercedes-Benz AG
5
100.00
100.00
Melbourne, Australia
100.00
Beijing, China
0.00
Wilmington, USA
3
0.00
Wilmington, USA
Mercedes-Benz Auto Lease Trust 2017-A
Mercedes-Benz Auto Lease Trust 2018-A
Mercedes-Benz Auto Lease Trust 2018-B
Mercedes-Benz Auto Receivables Trust 2015-1
Footnote
Capital share
in %1
Domicile, Country
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
3
0.00
Wilmington, USA
Mercedes-Benz Auto Lease Trust 2016-B
3
0.00
Wilmington, USA
100.00
Stuttgart, Germany
3
Mercedes-Benz Accessories GmbH
Yangzhou, China
5
100.00
Arnstadt, Germany
MDC Technology GmbH
5
100.00
Kölleda, Germany
100.00
Mercedes AMG High Performance Powertrains Ltd
Mississauga, Canada
MBarc Credit Canada Inc.
100.00
Wilmington, USA
100.00
Mississauga, Canada
5
100.00
Kamenz, Germany
MDC Power GmbH
Brixworth, United Kingdom
100.00
Mercedes pay AG
Mercedes-Benz (Yangzhou) Parts Distribution Co., Ltd.
100.00
Bangkok, Thailand
75.00
Beijing, China
Mercedes-Benz (Thailand) Limited
Mercedes-Benz (China) Ltd.
100.00
Mem Martins, Portugal
Mercedes-Benz - Aluguer de Veículos, Unipessoal Lda.
5
100.00
Affalterbach, Germany
Mercedes-AMG GmbH
100.00
Luxembourg, Luxembourg
100.00
Zug, Switzerland
Mercedes pay S.A.
100.00
Mascot Truck Parts USA LLC
Wilmington, USA
3
Mercedes-Benz Compañía Financiera Argentina S.A.
Mercedes-Benz CharterWay S.r.l.
100.00
Montigny-le-Bretonneux, France
100.00
Milton Keynes, United Kingdom
Mercedes-Benz CharterWay S.A.S.
Mercedes-Benz Cars UK Limited
Mercedes-Benz Connectivity Services GmbH
100.00
100.00
Prague, Czech Republic
100.00
Moscow, Russian Federation
100.00
Toronto, Canada
100.00
Milton Keynes, United Kingdom
Utrecht, Netherlands
Mercedes-Benz Corretora de Seguros Ltda
Mercedes-Benz CPH A/S
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
The Hague, Netherlands
100.00
100.00
100.00
99.98
5
100.00
100.00
Buenos Aires, Argentina
100.00
Trent, Italy
Budapest, Hungary
Copenhagen, Denmark
Horsholm, Denmark
São Paulo, Brazil
Stuttgart, Germany
Mercedes-Benz do Brasil Ltda.
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
Mercedes-Benz Dealer Bedrijven B.V.
Mercedes-Benz Danmark A/S
100.00
0.00
Budapest, Hungary
Begles, France
Mercedes-Benz Belgium Luxembourg S.A.
Mercedes-Benz Banking Service GmbH
Mercedes-Benz Bank Service Center GmbH
Mercedes-Benz Bank Rus 000
Mercedes-Benz Bank Polska S.A.
Mercedes-Benz Bank GmbH
Mercedes-Benz Bank AG
3
Mercedes-Benz Bordeaux S.A.S.
0.00
Mercedes-Benz Auto Retail Trust 2018-1
3
0.00
Wilmington, USA
Mercedes-Benz Auto Receivables Trust 2016-1
3
0.00
Wilmington, USA
Wilmington, USA
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Mercedes-Benz Brooklands Limited
Mercedes-Benz Canada Inc.
100.00
Brussels, Belgium
5
100.00
Saarbrücken, Germany
5
100.00
Berlin, Germany
100.00
Moscow, Russian Federation
100.00
Warsaw, Poland
100.00
Salzburg, Austria
100.00
Stuttgart, Germany
Mercedes-Benz Cars Nederland B.V.
Mercedes-Benz Cars Ceská republika s.r.o.
Mercedes-Benz Capital Rus O00
100.00
Mascot Truck Parts Canada Ltd (2017)
Li-Tec Battery GmbH
5
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 2 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 1 OHG
100.00
5,7
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
51.11
Drachten, Netherlands
Friesland Lease B.V.
100.00
Gaffney, USA
Freightliner Custom Chassis Corporation
100.00
5,7
Alpha 3 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 7 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 6 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 5 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Alpha 4 OHG
5,7
100.00
Schönefeld, Germany
100.00
322
Vetlanda, Sweden
Mem Martins, Portugal
100.00
Kloten, Switzerland
5
100.00
Stuttgart, Germany
5
100.00
Kirchheim unter Teck, Germany
Coventry, United Kingdom
100.00
100.00
Toluca, Mexico
100.00
Detroit, USA
100.00
Detroit, USA
100.00
Mexico City, Mexico
San Juan Ixtacala, Mexico
100.00
Wiener Neudorf, Austria
100.00
100.00
Wolica, Poland
100.00
Nijkerk, Netherlands
100.00
Bomporto, Italy
100.00
Sámano, Spain
5
100.00
Stuttgart, Germany
100.00
Sarcelles, France
100.00
Koege, Denmark
100.00
Prague, Czech Republic
100.00
Kobbegem-Asse, Belgium
100.00
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
100.00
Zwartkop, South Africa
LEONIE FS DVB GmbH
LEONIE CORP DVB GmbH
LBBW AM-MBVEXW
LBBW AM - Daimler Re Insurance
Koppieview Property (Pty) Ltd
100.00
Luxembourg, Luxembourg
São Bernardo do Campo, Brazil
100.00
Windhof, Luxembourg
79.35
Hamburg, Germany
100.00
London, United Kingdom
100.00
Madrid, Spain
Invema Assessoria Empresarial Eireli
0.00
3
Stuttgart, Germany
100.00
Stuttgart, Germany
5
100.00
Stuttgart, Germany
5
100.00
Stuttgart, Germany
LEONIE TB DVB GmbH
LEONIE PV DVB GmbH
LEONIE FSM DVB GmbH
5
100.00
Stuttgart, Germany
5
100.00
Stuttgart, Germany
3
0.00
5,7
100.00
Schönefeld, Germany
Interleasing Luxembourg S.A.
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Epsilon OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Delta OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Beta OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
in %1
Footnote
Capital share
Schönefeld, Germany
100.00
100.00
Gamma 1 OHG
Intelligent Apps GmbH
Hailo Network IP Limited
Hailo Network Iberia S.L.
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co. OHG
Gamma 4 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 3 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 2 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
5,7
5
São Paulo, Brazil
São Bernardo do Campo, Brazil
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Service Leasing S.R.L.
Mercedes-Benz Schweiz AG
100.00
Moscow, Russian Federation
Mercedes-Benz Russia AO
100.00
Bucharest, Romania
Schlieren, Switzerland
100.00
100.00
Centurion, South Africa
100.00
Mem Martins, Portugal
100.00
Madrid, Spain
100.00
Milton Keynes, United Kingdom
Rome, Italy
100.00
Bucharest, Romania
100.00
51.00
Taipei, Taiwan
Mercedes-Benz Taiwan Ltd.
100.00
Malmö, Sweden
100.00
Pretoria, South Africa
Mercedes-Benz Sverige AB
Mercedes-Benz South Africa Ltd
100.00
Sosnowiec, Poland
100.00
Istanbul, Turkey
100.00
Petaling Jaya, Malaysia
Mercedes-Benz Sosnowiec Sp. z o.o.
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
100.00
Alcobendas, Spain
100.00
Mercedes-Benz Trucks Ceská republika s.r.o.
Wilmington, USA
Alcobendas, Spain
Prague, Czech Republic
100.00
100.00
100.00
Port-Marly, France
Salzburg, Austria
Auckland, New Zealand
Mercedes-Benz Polska Sp. z o.O.
100.00
Mercedes-Benz Parts Manufacturing & Services Ltd.
Mercedes-Benz Parts Logistics Eastern Europe s.r.o.
Mercedes-Benz Paris SAS
Mercedes-Benz Österreich GmbH
Mercedes-Benz New Zealand Ltd
Footnote
Capital share
in %1
Domicile, Country
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
Mercedes-Benz Parts Logistics UK Limited
Azuqueca de Henares, Spain
100.00
Milton Keynes, United Kingdom
Mercedes-Benz Romania S.R.L.
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Mercedes-Benz Retail, Unipessoal Lda.
Mercedes-Benz Retail, S.A.
Mercedes-Benz Retail Group UK Limited
Mercedes-Benz Research & Development North America, Inc.
Mercedes-Benz Renting, S.A.
100.00
Prague, Czech Republic
100.00
Mem Martins, Portugal
Mercedes-Benz PRAHA s.r.o.
Mercedes-Benz Portugal, S.A.
100.00
Warsaw, Poland
100.00
Shanghai, China
100.00
100.00
Name of the Company
Prague, Czech Republic
Mercedes-Benz Trucks España S.L.U.
thereof BBAC
Joint ventures
Sales of goods
Purchase of goods
and services
and services
325
5
thereof LSHAI¹
100.00
Mercedes-Benz Vertrieb NFZ GmbH
5
100.00
Stuttgart, Germany
100.00
Wilmington, USA
Mercedes-Benz Vans, LLC
Mercedes-Benz Versicherung AG
100.00
Stuttgart, Germany
Associated companies
In millions of euros
Transactions with related parties
37. Related party relationships
Related parties are deemed to be associated companies, joint
ventures and unconsolidated subsidiaries, as well as persons
who exercise a significant influence on the financial and busi-
ness policy of the Daimler Group. The latter category includes
all persons in key positions and their close family members.
At the Daimler Group, those persons are the members of the
Board of Management and of the Supervisory Board.
Most of the goods and services supplied within the ordinary
course of business between the Group and related parties
comprise transactions with associated companies and joint
ventures and are shown in table F.104.
Associated companies
A large proportion of the Group's sales of goods and services
with associated companies as well as of its receivables relates
to business relations with LSH Auto International Limited
(LSHAI) and with Beijing Benz Automotive Co., Ltd. (BBAC),
both allocated to Mercedes-Benz Cars. In 2017, Daimler had
acquired a 15% stake in LSHAI.
The purchases of goods and services shown in table 7 F.104
were primarily from LSHAI as well as from MBtech Group
GmbH & Co. KGaA (MBtech), which is allocated to Mercedes-
Benz Cars. MBtech provides engineering and services for
research and development, production of components, mod-
ules, components systems as well as consulting and planning
along the development process in the automotive sector.
In September 2018, Daimler sold the remaining 35% stake in
MBtech to the technology company AKKA Technologies SA.
Joint ventures
In business relationships with joint ventures, significant sales
of goods and services took place with Fujian Benz Automotive
Co., Ltd. (FBAC), which is allocated to Mercedes-Benz Vans,
and with DAIMLER KAMAZ RUS 000, a company established
with the associated company Kamaz PAO, and allocated to
Daimler Trucks.
Shenzhen DENZA New Energy Automotive Co. Ltd. (DENZA)
is allocated to the Mercedes-Benz Cars segment. Daimler has
provided guarantees in a total amount of RMB 1,115 million
(approximately €142 million) to external banks which provided
two loans to DENZA. At December 31, 2018, loans amounting
to RMB 615 million (approximately €78 million) were utilized.
In addition, Daimler has provided a shareholder loan of RMB
250 million (approximately €32 million) to DENZA, which is
fully utilized. In the second half of 2018, Daimler contributed
capital of RMB 400 million (approximately €50 million) in
accordance with its shareholding ratio. In 2017, there was
already a capital increase of RMB 500 million (approximately
€63 million).
© Note 13 provides details of the business operations of the
significant associated companies and joint ventures, as well as
significant transactions in the years 2018 and 2017.
Contributions to plan assets
In 2018 and 2017, the Group made contributions of €696 mil-
lion and €3,692 million to its external funds to cover pension
and other post-employment benefits. See also Note 22 for
further information.
Board members
Throughout the world, the Group has business relationships with
numerous entities that are customers and/or suppliers of the
Group. Those customers and/or suppliers include companies
that have a connection with some of the members of the Board
of Management or of the Supervisory Board and close family
members of those board members of Daimler AG or of its sub-
sidiaries.
Board of Management and Supervisory Board members and
close family members of those board members may also pur-
chase goods and services from Daimler AG or its subsidiaries as
customers. When such business relationships exist, transactions
are concluded on the basis of customary market conditions.
Note 38 for information on the remuneration of board
See
members.
F.104
Milton Keynes, United Kingdom
100.00
Mercedes-Benz Vans UK Limited
Utrecht, Netherlands
Mercedes-Benz V.I. Paris Ile de France SAS
Mercedes-Benz Vans Australia Pacific Pty. Ltd.
Mercedes-Benz V.I. Lyon SAS
Mercedes-Benz USA, LLC
Mercedes-Benz U.S. International, Inc.
66.91
Istanbul, Turkey
Mercedes-Benz Türk A.S.
100.00
Mercedes-Benz Vans Ceská republika s.r.o
Milton Keynes, United Kingdom
100.00
Utrecht, Netherlands
Mercedes-Benz Trucks Nederland B.V.
100.00
Molsheim, France
Mercedes-Benz Trucks Molsheim
100.00
Alcobendas, Spain
Mercedes-Benz Trucks UK Limited
Mercedes-Benz Vans España, S.L.U.
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Vance, USA
Mercedes-Benz Vans Nederland B.V.
5
100.00
Berlin, Germany
Mercedes-Benz Vans Mobility GmbH
100.00
Madrid, Spain
100.00
Prague, Czech Republic
100.00
Mulgrave, Australia
100.00
Wissous, France
100.00
100.00
100.00
100.00
Genas, France
Warsaw, Poland
Wilmington, USA
100.00
5
100.00
Stuttgart, Germany
Malmö, Sweden
Mercedes-Benz Finans Sverige AB
100.00
Copenhagen, Denmark
100.00
Wilmington, USA
100.00
Milton Keynes, United Kingdom
100.00
100.00
100.00
Centurion, South Africa
75.00
Bratislava, Slovakia
100.00
Schlieren, Switzerland
100.00
Moscow, Russian Federation
Taipei, Taiwan
Mercedes-Benz Finansal Kiralama Türk A.S.
Istanbul, Turkey
100.00
Kifissia, Greece
60.00
Brackley, United Kingdom
Mercedes-Benz India Private Limited
Mercedes-Benz Hong Kong Limited
Mercedes-Benz Hellas S.A.
Mercedes-Benz Grand Prix Ltd.
100.00
Kirchheim unter Teck, Germany
Mercedes-Benz Fuel Cell GmbH
100.00
Montigny-le-Bretonneux, France
Mercedes-Benz France S.A.S.
100.00
Malmö, Sweden
Mercedes-Benz Försäljnings AB
100.00
Istanbul, Turkey
Mercedes-Benz Finansman Türk A.S.
100.00
100.00
Mem Martins, Portugal
Mercedes-Benz Financial Services Portugal -
Sociedade Financeira de Crédito S.A.
Mercedes-Benz Financial Services Rus 000
Mercedes-Benz Financial Services Schweiz AG
Mercedes-Benz Financial Services Slovakia s.r.o.
Mercedes-Benz Financial Services South Africa (Pty) Ltd
Mercedes-Benz Financial Services Taiwan Ltd.
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services USA LLC
Prague, Czech Republic
100.00
100.00
100.00
100.00
95.01
Mississauga, Canada
Melbourne, Australia
Salzburg, Austria
Brussels, Belgium
100.00
Tokyo, Japan
Mercedes-Benz Finance Co., Ltd.
100.00
Alcobendas, Spain
100.00
Drogenbos, Belgium
Mercedes-Benz Espana, S.A.U.
Mercedes-Benz Drogenbos N.V.
100.00
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services Italia SpA
Mercedes-Benz Financial Services Korea Ltd.
Alcobendas, Spain
100.00
Montigny-le-Bretonneux, France
in %1
Footnote
Capital share
Domicile, Country
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
324
323
100.00
Auckland, New Zealand
Mercedes-Benz Financial Services New Zealand Ltd
100.00
80.00
100.00
Rome, Italy
Seoul, South Korea
Utrecht, Netherlands
Mercedes-Benz Financial Services Nederland B.V.
80.00
Hong Kong, China
100.00
Mercedes-Benz Finans Danmark A/S
Hong Kong, China
100.00
Pune, India
100.00
Wilmington, USA
Mercedes-Benz Manhattan, Inc.
51.00
Puchong, Malaysia
Mercedes-Benz Malaysia Sdn. Bhd.
5
100.00
Mercedes-Benz Manufacturing (Thailand) Limited
Ludwigsfelde, Germany
5
100.00
Stuttgart, Germany
100.00
Taipei, Taiwan
100.00
Warsaw, Poland
100.00
Mercedes-Benz Ludwigsfelde GmbH
Bangkok, Thailand
100.00
Mercedes-Benz Manufacturing Hungary Kft.
Mercedes-Benz Manufacturing Poland Sp. z o.o.
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
5
100.00
Dortmund, Germany
Mercedes-Benz Minibus GmbH
100.00
Mexico City, Mexico
Mercedes-Benz Mexico, S. de R.L. de C.V.
100.00
Mechelen, Belgium
Mercedes-Benz Mechelen N.V.
3
0.00
Wilmington, USA
Mercedes-Benz Master Owner Trust
100.00
Liegnitz, Poland
100.00
Kecskemét, Hungary
Budapest, Hungary
Mercedes-Benz Leasing Treuhand GmbH
Mercedes-Benz Leasing Taiwan Ltd.
Mercedes-Benz Leasing Polska Sp. z o.o.
100.00
Tokyo, Japan
Mercedes-Benz Japan Co., Ltd.
100.00
Rome, Italy
Mercedes-Benz Italia S.p.A.
100.00
Wilmington, USA
Mercedes-Benz Investment Company LLC
100.00
Taipei, Taiwan
100.00
Utrecht, Netherlands
100.00
Voluntari, Romania
Mercedes-Benz Insurance Services Taiwan Ltd.
Mercedes-Benz Insurance Services Nederland B.V.
Mercedes-Benz Insurance Broker S.R.L.
100.00
Mercedes-Benz Korea Limited
100.00
Seoul, South Korea
Mercedes-Benz Leasing (Thailand) Co., Ltd.
Mercedes-Benz Leasing Kft.
100.00
Bucharest, Romania
Mercedes-Benz Leasing IFN S.A.
100.00
Zagreb, Croatia
Mercedes-Benz Leasing Hrvatska d.o.o.
5
100.00
Stuttgart, Germany
Mercedes-Benz Leasing GmbH
100.00
Barueri, Brazil
Mercedes-Benz Leasing do Brasil Arrendamento Mercantil S.A.
65.00
Beijing, China
Mercedes-Benz Leasing Co., Ltd.
100.00
Bangkok, Thailand
51.00
100.00
316
5
Stuttgart, Germany
100.00
5
Tokyo, Japan
100.00
Milton Keynes, United Kingdom
100.00
Utrecht, Netherlands
100.00
Utrecht, Netherlands
100.00
Wilmington, USA
100.00
Mexico City, Mexico
100.00
Mexico City, Mexico
100.00
Leinfelden-Echterdingen, Germany
100.00
5
Daimler Motors Investments LLC
Wilmington, USA
100.00
Daimler Nederland B.V.
Utrecht, Netherlands
100.00
Daimler Nederland Holding B.V.
100.00
Daimler North America Corporation
Wilmington, USA
Chennai, India
Centurion, South Africa
65.00
4
Daimler Fleet Management UK Limited
Milton Keynes, United Kingdom
100.00
Daimler Fleet Services A.S.
Istanbul, Turkey
100.00
Daimler FleetBoard GmbH
Stuttgart, Germany
100.00
5
Daimler Greater China Ltd.
Daimler Grund Services GmbH
Berlin, Germany
Daimler India Commercial Vehicles Private Limited
Daimler Insurance Agency LLC
Daimler Insurance Services GmbH
Daimler Insurance Services Japan Co., Ltd.
Daimler Insurance Services UK Limited
Daimler International Finance B.V.
Daimler International Nederland B.V.
Daimler Investments US Corporation
Daimler Manufactura, S. de R.L. de C.V.
Daimler Mexico, S.A. de C.V.
Daimler Mobility Services GmbH
Beijing, China
100.00
Schönefeld, Germany
100.00
5
100.00
Daimler Fleet Management South Africa (Pty.) Ltd.
Daimler North America Finance Corporation
Daimler Parts Brand GmbH
100.00
Singapore, Singapore
100.00
Stuttgart, Germany
100.00
5
Mulgrave, Australia
100.00
Wilmington, USA
100.00
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Footnote
321
Daimler Trucks and Buses (China) Ltd.
Daimler Trucks Canada Ltd.
Daimler Trucks Korea Ltd.
Brooklands Estates Management Limited
Banco Mercedes-Benz do Brasil S.A.
80.00
Irvine, USA
100.00
Daimler Australia/Pacific Pty. Ltd.
100.00
Malmö, Sweden
Mexico City, Mexico
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
100.00
Daimler Trucks & Buses US Holding Inc.
Utrecht, Netherlands
Wilmington, USA
Newark, USA
Beijing, China
100.00
100.00
100.00
100.00
Stuttgart, Germany
100.00
5
Daimler Re Brokers GmbH
Bremen, Germany
74.90
5
Daimler Re Insurance S.A. Luxembourg
Luxembourg, Luxembourg
100.00
Daimler Real Estate GmbH
Berlin, Germany
100.00
5
Daimler Retail Receivables LLC
DAIMLER SERVICIOS CORPORATIVOS MEXICO S. DE R.L. DE C.V.
Daimler South East Asia Pte. Ltd.
Daimler Truck AG
Daimler Truck and Bus Australia Pacific Pty. Ltd.
Farmington Hills, USA
100.00
Singapore, Singapore
Daimler Fleet Management Singapore Pte. Ltd.
100.00
Madrid, Spain
100.00
Leinfelden-Echterdingen, Germany
car2go Iberia S.L.U.
car2go Group GmbH
100.00
Leinfelden-Echterdingen, Germany
100.00
Leinfelden-Echterdingen, Germany
100.00
Beijing, China
100.00
Vancouver, Canada
100.00
Campinas, Brazil
100.00
Milton Keynes, United Kingdom
100.00
São Paulo, Brazil
car2go Europe GmbH
car2go Deutschland GmbH
car2go China Co., Ltd.
car2go Canada Ltd.
100.00
Daimler Brand & IP Management GmbH & Co. KG
Stuttgart, Germany
car2go Italia S.R.L.
100.00
car2go N.A. Holding Inc.
car2go Nederland B.V.
100.00
Wilmington, USA
DAF Investments, Ltd.
100.00
Wilmington, USA
100.00
Wilmington, USA
100.00
Centurion, South Africa
5
100.00
Wiedemar, Germany
DA Investments Co. LLC
Conemaugh Hydroelectric Projects, Inc.
CLIDET NO 1048 (Proprietary) Limited
CARS Technik & Logistik GmbH
100.00
100.00
Vienna, Austria
Utrecht, Netherlands
car2go Österreich GmbH
100.00
Wilmington, USA
100.00
Wilmington, USA
100.00
Milan, Italy
car2go N.A. LLC
5,7
Daimler Brand & IP Management Verwaltung GmbH
Stuttgart, Germany
Berlin, Germany
100.00
5
Daimler Finance North America LLC
Wilmington, USA
100.00
Daimler Financial Services Africa & Asia Pacific Ltd.
Daimler Financial Services AG
Singapore, Singapore
100.00
Stuttgart, Germany
100.00
5
Daimler Financial Services India Private Limited
Daimler Financial Services Investment Company LLC
Daimler Financial Services México, S. de R.L. de C.V.
Chennai, India
100.00
Wilmington, USA
100.00
Mexico City, Mexico
100.00
Daimler Financial Services, S.A. de C.V., S.O.F.O.M., E.N.R.
Mexico City, Mexico
100.00
Daimler Fleet Management GmbH
Stuttgart, Germany
100.00
5
Campo Largo Comercio de Veículos e Peças Ltda.
100.00
Mexico City, Mexico
100.00
Singapore, Singapore
100.00
5
Daimler Buses North America Inc.
Oriskany, USA
100.00
Daimler Canada Finance Inc.
Montreal, Canada
100.00
Daimler Canada Investments Company
Halifax, Canada
100.00
320
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AutoGravity Corporation
Name of the Company
Capital share
Footnote
in %1
Daimler Capital Services LLC
Daimler Ceská republika Holding s.r.o.
Daimler Colombia S. A.
Daimler Commercial Vehicles South East Asia Pte. Ltd.
Daimler Compra y Manufactura Mexico S. de R.L. de C.V.
Daimler Export and Trade Finance GmbH
Wilmington, USA
100.00
Prague, Czech Republic
100.00
Bogota D.C., Colombia
100.00
Domicile, Country
Athlon Switzerland AG
Schlieren, Switzerland
100.00
183
208
75
100
946
997
65
85
1,673
1,571
80
64
3,933
444
4,850
30
1,075
981
298
647
5,177
8,011
253
131
2,827
2,679
703
855
127
115
1 Since the equity interest in LSHAI was acquired in May 2017, business relations with LSHAI are reported from June 2017 onward.
2 After write-downs totaling €53 million (2017: €52 million).
3 Including liabilities from default risks from guarantees for related parties.
1.6
a long-term incentive effect (PPSP)
Post-employment benefits
Mid-term variable remuneration
(50% of annual bonus, "deferral")
Variable remuneration with
7.0
1.9
7.7
2.5
(50% of annual bonus)
Short-term variable
remuneration
(base salary)
9.5
9.5
Fixed remuneration
Remuneration of the Board of
Management
20171
2018
In millions of euros
Remuneration of the members of the Board of Management
and the Supervisory Board
F.105
Information regarding the remuneration of the members of the
Board of Management and of the Supervisory Board is disclosed
on an individual basis in the Remuneration Report, which is
part of the combined Management Report. Management
Report from page 120
The payments made in 2018 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €16.2 million (2017: €19.0 million). The pension provisions
for former members of the Board of Management and their
survivors amounted to €270.2 million as of December 31, 2018
(2017: €270.5 million).
No advance payments or loans were made or abated to
members of the Board of Management or to the members of
the Supervisory Board of Daimler AG in 2018.
The members of the Supervisory Board are solely granted
short-term fixed remuneration for their board and committee
activities, the amounts of which depend on their functions
in the Supervisory Board. With the exception of remuneration
paid to the members representing the employees in accor-
dance with their contracts of employment, no remuneration
was paid in 2018 for services provided personally beyond
board and committee activities, in particular for advisory or
agency services.
According to Section 314 Subsection 1 Number 6a of the Ger-
man Commercial Code (HGB), the overall remuneration
granted to the members of the Board of Management, exclud-
ing service cost resulting from entitlements to post-employ-
ment benefits, amounted to €24.7 million (2017: €35.0 million).
Expenses for variable remuneration of the Board of Manage-
ment with a long-term incentive effect, as shown in table
71 F.105, result from the ongoing measurement at fair value
at each balance sheet date of all rights granted and not yet
due under the Performance Phantom Share Plans (PPSP), i.e.
for the plans of the years 2015-2018. In 2018, the active
members of the Board of Management were granted 145,775
(2017: 151,157) phantom shares in connection with the PPSP;
the fair value of these phantom shares at the grant date was
€10.2 million (2017: €10.2 million). See Note 21 for addi-
tional information on share-based payment of the members of
the Board of Management.
Remuneration granted to the members of the Board of Man-
agement and the Supervisory Board who were active as of
December 31, 2018, affected net profit for the year ended
December 31 as shown in table F.105.
38. Remuneration of the members of the Board
of Management and the Supervisory Board
317
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9,507
12.4
13,475
Payables
At December 31,3
2018
Wilmington, USA
Portland, USA
Wilmington, USA
Farmington Hills, USA
Beijing, China
100.00
Mississauga, Canada
100.00
100.00
100.00
100.00
0.00
3
Seoul, South Korea
100.00
100.00
Farmington Hills, USA
100.00
Milton Keynes, United Kingdom
100.00
Hong Kong, China
67.55
Wilmington, USA
100.00
Mexico City, Mexico
100.00
Schönefeld, Germany
100.00
Wilmington, USA
EvoBus Sverige AB
EvoBus Portugal, S.A.
EvoBus Polska Sp. z o.o.
Receivables
At December 31,2
2018
2017
2017
Daimler Trucks North America LLC
Daimler Trucks Remarketing Corporation
Daimler Trucks Retail Trust 2018-1
Daimler Trust Holdings LLC
Daimler Trust Leasing Conduit LLC
Daimler Trust Leasing LLC
Daimler UK Limited
Daimler Vans Hong Kong Limited
Daimler Vans USA, LLC
Daimler Vehículos Comerciales Mexico S. de R.L. de C.V.
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Daimler Vorsorge und Versicherungsdienst GmbH
Daiprodco Mexico S. de R.L. de C.V.
Detroit Diesel Corporation
Detroit Diesel Remanufacturing LLC
Detroit Diesel Remanufacturing Mexicana, S. de R.L. de C.V.
Detroit Diesel-Allison de Mexico, S. de R.L. de C.V.
Deutsche Accumotive GmbH & Co. KG
EHG Elektroholding GmbH
EvoBus (Schweiz) AG
EvoBus (U.K.) Ltd.
EvoBus Austria GmbH
EvoBus Belgium N.V.
EvoBus Ceská republika s.r.o.
EvoBus Danmark A/S
EvoBus France S.A.S.U.
EvoBus GmbH
EvoBus Ibérica, S.A.U.
EvoBus Italia S.p.A.
EvoBus Nederland B.V.
2017
Athlon Sweden AB
(service cost)
2.0
Oeiras, Portugal
100.00
Warsaw, Poland
100.00
Almere, Netherlands
100.00
Rome, Italy
100.00
Almere, Netherlands
100.00
Machelen, Belgium
100.00
100.00
Almere, Netherlands
Athlon Car Lease Nederland B.V.
Athlon Car Lease Polska Sp. z o.o.
Athlon Car Lease Italy S.R.L.
Athlon Beheer Nederland B.V.
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
100.00
Almere, Netherlands
Athlon Beheer International B.V.
I. Consolidated subsidiaries
319
2.4
Capital share
in %1
Domicile, Country
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Athlon Car Lease Portugal, Ida
Name of the Company
Athlon Car Lease Rental Services B.V.
100.00
Düsseldorf, Germany
100.00
Machelen, Belgium
100.00
Amsterdam, Netherlands
100.00
Düsseldorf, Germany
100.00
Le Bourget, France
Athlon Rental Germany GmbH
Athlon Mobility Consultancy N.V.
Athlon Mobility Consultancy B.V.
Almere, Netherlands
Athlon Germany GmbH
100.00
Almere, Netherlands
Athlon Dealerlease B.V.
100.00
Alcobendas, Spain
Athlon Car Lease Spain, S.A.
100.00
Le Bourget, France
Athlon Car Lease S.A.S.
100.00
Machelen, Belgium
Athlon Car Lease Rental Services Belgium N.V.
Athlon France S.A.S.
F.107
Footnote
Information on investments
thereof KPMG AG
9
10
The statement of investments of the Daimler Group pursuant to
Section 313 Subsection 2 Nos. 1-6 of the German Commercial
Code (HGB) is presented in table 7 F.107 In general coopera-
tions without an equity interest are not reported. Information
on equity and earnings and information on investments pursu-
ant to Section 313 Subsection 2 No. 4 of the German Commer-
cial Code is omitted insofar as, pursuant to Section 313 Sub-
section 3 Sentence 4 of the HGB, such information is of minor
relevance for a fair presentation of the profitability, liquidity
and capital resources or financial position of the Daimler Group.
In addition, the statement of investments indicates which
consolidated companies make use of the exemption pursuant to
Section 264 Subsection 3 of the HGB and/or Section 264b of
the HGB. The Consolidated Financial Statements of Daimler AG
release those subsidiaries from the requirements that would
otherwise apply.
21
23
Wirtschaftsprüfungsgesellschaft
thereof KPMG AG
46
Audit services
In millions of euros
2017
Wirtschaftsprüfungsgesellschaft
2018
F.106
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
318
1 Including the Board of Management remuneration paid to
Dr. Wolfgang Bernhard until February 10, 2017.
42.8
22.1
4.2
4.2
38.6
17.9
Remuneration of the Supervisory Board
Termination benefits
Auditor fees
8
Other attestation services
Tax services
12-2018.pdf.
The Board of Management and the Supervisory Board of Daimler
AG have issued a declaration pursuant to Section 161 of the
German Stock Corporation Act (AktG) and have made it perma-
nently available to their shareholders on Daimler's website at
https://www.daimler.com/documents/company/
corporate-governance/declarations/daimler-declaration-en-
German Corporate Governance Code
40. Additional information
60
66
5
6
Other services were performed mainly for non-accounting-
relevant processes and M&A activities.
7
Tax services primarily relate to value-added tax advisory.
Other attestation services comprise attestation services required
by law or by contractual agreement, or voluntarily assigned
services. In addition to reviews of non-accounting-related IT
systems and processes, they also include audits in connection
with compliance management systems, issuance of comfort
letters, and non-financial disclosures and reports.
Audit services relate to the audit of Daimler Group's Consolidated
Financial Statements and the year-end financial statements,
as well as to all services required for the audit including the
reviews of interim financial statements, the accounting-related
audit of the internal control system, and accounting-related
reviews of the introduction of IT systems and processes.
Melbourne, Australia
44
39. Auditor fees
Wirtschaftsprüfungsgesellschaft
2
thereof KPMG AG
1
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
1
1
Other services
The shareholders of Daimler AG elected KPMG AG Wirtschafts-
prüfungsgesellschaft as the external auditor at the Annual
Shareholders' Meeting held on April 5, 2018. Table 71 F.106
shows the fees for services provided by KPMG AG Wirtschafts-
prüfungsgesellschaft and the companies of the worldwide
KPMG network to Daimler AG and all subsidiaries as well as
joint operations that are included in the Group's Consolidated
Financial Statements for the respective reporting period.
8
6
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Footnote
Mercedes-Benz Venezuela S.A.
Mercedes-Benz.io GmbH
Mercedes-Benz.io Portugal Unipessoal Lda.
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
Monarch Cars (Tamworth) Ltd.
Name of the Company
MercedesService Card Beteiligungsgesellschaft mbH
Zug, Switzerland
mytaxi Austria GmbH
330
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
Footnote
in %1
V. Joint ventures accounted for using the equity method
Beijing Foton Daimler Automotive Co., Ltd
329
Daimler Kamaz Trucks Holding GmbH
50.00
Vienna, Austria
50.00
Enbase Power GmbH
Fujian Benz Automotive Co., Ltd.
Munich, Germany
25.10
Fuzhou, China
50.00
Beijing, China
IONITY Holding GmbH & Co. KG
50.00
50.00
100.00
100.00
Lisbon, Portugal
100.00
London, United Kingdom
100.00
Chemnitz, Germany
100.00
Stuttgart, Germany
Kentwood, USA
100.00
IV. Joint operations accounted for using the equity method
AFCC Automotive Fuel Cell Cooperation Corp.
EM-motive GmbH
North America Fuel Systems Remanufacturing LLC
Aguascalientes, Mexico
54.01
Burnaby, Canada
50.10
Hildesheim, Germany
III. Joint operations accounted for using proportionate consolidation
Cooperation Manufacturing Plant Aguascalientes,
S.A.P.I de C.V.
100.00
MB Service Japan Co., Ltd.
Polomex, S.A. de C.V.
SelecTrucks of Houston LLC
45.00
7
ViaVan Technologies B.V.
Amsterdam, Netherlands
50.00
Wagenplan B.V.
Almere, Netherlands
50.00
VI. Associated companies accounted for using the equity method
Berlin, Germany
BAIC Motor Corporation Ltd.
BlackLane GmbH
Beijing, China
9.55
Beijing, China
Berlin, Germany
49.00
29.64
Munich, Germany
5.62
Beijing Benz Automotive Co., Ltd.
SelecTrucks of Atlanta LLC
60.00
Toll Collect GbR
SelecTrucks of Houston Wholesale LLC
SelecTrucks of Omaha LLC
Munich, Germany
25.00
Hitachi, Japan
33.40
Garcia, Mexico
26.00
McDonough, USA
Stuttgart, Germany
50.00
50.00
Houston, USA
50.00
Council Bluffs, USA
50.00
Shenzhen DENZA New Energy Automotive Co. Ltd.
Shenzhen, China
50.00
TASIAP GmbH
Houston, USA
Istanbul, Turkey
100.00
Lima, Peru
51.00
Vienna, Austria
100.00
100.00
100.00
Milan, Italy
Warsaw, Poland
Lisbon, Portugal
100.00
Stockholm, Sweden
Esparraguera, Spain
100.00
100.00
London, United Kingdom
100.00
New York, USA
100.00
Stuttgart, Germany
100.00
100.00
100.00
Hamburg, Germany
100.00
100.00
100.00
MYTAXI ITALIA S.R.L.
MYTAXI POLSKA SPÓLKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
mytaxi Portugal Unipessoal LDA
mytaxi Sweden AB
myTaxi UG
myTaxi UK Ltd.
myTaxi USA Inc.
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
ogotrac S.A.S.
Milton Keynes, United Kingdom
PABCO Co., Ltd.
Valencia, Venezuela
Stuttgart, Germany
Lisbon, Portugal
100.00
100.00
100.00
Kleinostheim, Germany
51.00
Toyama, Japan
Porcher & Meffert Grundstücksgesellschaft mbH & Co.
Stuttgart OHG
7
Paris, France
R.T.C. Management Company Limited
100.00
Chur, Switzerland
100.00
Stuttgart, Germany
100.00
Mauá, Brazil
100.00
Clinton, USA
0.00
Cunac, France
3
99.50
Cugir, Romania
100.00
Maribor, Slovenia
100.00
Schlieren, Switzerland
51.00
London, United Kingdom
100.00
New Cairo, Egypt
100.00
Manhattan Beach, USA
88.89
RepairSmith, Inc.
Reva SAS
Ring Garage AG Chur
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
SelecTrucks Comércio de Veículos Ltda
SportChassis LLC
Star Egypt For Import LLC
Star Transmission srl
STARKOM d.o.o.
T.O.C (Schweiz) AG
Taxibeat Ltd. UK
Taxibeat Peru S.A.
Taxibeat Teknoloji Hizmetleri A.S.
Transopco GmbH
Transopco Portugal Unipessoal Lda.
Transopco UK Ltd.
trapoFit GmbH
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
Ebina, Japan
Schönefeld, Germany
Banbury, United Kingdom
Montajes y Estampaciones Metálicas, S.L.
Buenos Aires, Argentina
Moscow, Russian Federation
100.00
Starexport Trading S.A.
Sterling Truck Corporation
Sumperská správa majetku k.s.
Thomas Built Buses of Canada Limited
Thomas Built Buses, Inc.
Transcovo SAS
Transopco France SAS
Calgary, Canada
High Point, USA
Paris, France
Paris, France
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Domicile, Country
Capital share
in %1
Footnote
Trona Cogeneration Corporation
Ucafleet S.A.S
Wilmington, USA
100.00
Le Bourget, France
65.00
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
Star Assembly SRL
Special Lease Systems (SLS) B.V
smart Vertriebs gmbh
smart France S.A.S.
0.00
3
Luxembourg, Luxembourg
0.00
3
Hambach, France
100.00
Berlin, Germany
100.00
5
Almere, Netherlands
Sebes, Romania
Stuttgart, Germany
100.00
São Bernardo do Campo, Brazil
100.00
Portland, USA
100.00
Prague, Czech Republic
100.00
7
100.00
100.00
66.84
100.00
100.00
Wilmington, USA
100.00
Western Star Trucks Sales, Inc
Copenhagen, Denmark
100.00
car2go Sverige AB
Stockholm, Sweden
100.00
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Buenos Aires, Argentina
72.85
Clever Tech S.R.L.
Bucharest, Romania
100.00
Clever Tech Sud S.R.L.
Bucharest, Romania
100.00
Cúspide GmbH
Stuttgart, Germany
100.00
Daimler AG & Co. Anlagenverwaltung OHG
Schönefeld, Germany
100.00
7
Daimler Automotive de Venezuela C.A.
Daimler Commercial Vehicles (Thailand) Ltd.
Daimler Commercial Vehicles Africa Ltd.
Daimler Commercial Vehicles MENA FZE
Valencia, Venezuela
car2go Danmark A/S
100.00
Brussels, Belgium
100.00
Zuidlease B.V.
Portland, USA
100.00
Sittard, Netherlands
51.00
327
II. Unconsolidated subsidiaries²
Achtzehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
100.00
AEG Olympia Office GmbH
5
Stuttgart, Germany
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Beat Chile SpA
Berlin, Germany
100.00
Santiago, Chile
100.00
Beat Ride App Colombia Ltda.
Beat Ride App S.A.
car2go Belgium SPRL
Bogota D. C., Colombia
100.00
Mexico City, Mexico
100.00
Silver Arrow S.A.
Silver Arrow Lease Facility Trust
3
MFTA Canada, Inc.
Mitsubishi Fuso Truck and Bus Corporation
Toronto, Canada
100.00
Kawasaki, Japan
89.29
MITSUBISHI FUSO TRUCK EUROPE -
Sociedade Europeia de Automóveis, S.A.
Tramagal, Portugal
100.00
Mitsubishi Fuso Truck of America, Inc.
Logan Township, USA
100.00
moovel Group GmbH
moovel North America Inc.
moovel North America, LLC
Multifleet G.I.E
myTaxi Iberia SL
mytaxi Network Ireland Ltd.
mytaxi Network Ltd.
P.T. Mercedes-Benz Indonesia
PT Daimler Commercial Vehicles Indonesia
PT Mercedes-Benz Distribution Indonesia
Renting del Pacífico S.A.C.
100.00
Wilmington, USA
Mercedes-Benz Wholesale Receivables LLC
100.00
326
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
in %1
Footnote
Mercedes-Benz Vertrieb PKW GmbH
Mercedes-Benz Vietnam Ltd.
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz Waterloo S.A.
Mercedes-Benz Wavre S.A.
Sandown Motor Holdings (Pty) Ltd
Stuttgart, Germany
5
Ho Chi Minh City, Vietnam
70.00
Warsaw, Poland
100.00
Braine-l'Alleud, Belgium
100.00
Wavre, Belgium
100.00
Mercedes-Benz Wemmel N.V.
Wemmel, Belgium
100.00
SelecTrucks of America LLC
Stuttgart, Germany
100.00
Setra of North America, Inc.
Silver Arrow Australia Trust 2017-1
Silver Arrow Canada GP Inc.
Oriskany, USA
100.00
Melbourne, Australia
0.00
3
Mississauga, Canada
100.00
Silver Arrow Canada LP
100.00
Mississauga, Canada
SILVER ARROW CHINA 2017-2 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o CITIC TRUST CO., LTD.
SILVER ARROW CHINA 2018-1 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o FOTIC: China Foreign Economy and Trade Trust
Co., LTD.
SILVER ARROW CHINA 2018-2 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o FOTIC: China Foreign Economy and Trade Trust
Co., LTD.
Beijing, China
0.00
3
Beijing, China
0.00
3
Beijing, China
0.00
100.00
100.00
Mississauga, Canada
100.00
Wilmington, USA
100.00
Wilmington, USA
100.00
Le Bourget, France
50.10
7
Barcelona, Spain
100.00
Dublin, Ireland
100.00
SelecTrucks of Toronto, Inc.
London, United Kingdom
Bogor, Indonesia
100.00
Jakarta, Indonesia
100.00
Jakarta, Indonesia
100.00
Lima, Peru
100.00
Bryanston, South Africa
62.62
Portland, USA
100.00
Bangkok, Thailand
100.00
Nairobi, Kenya
100.00
Mercedes-Benz Energy GmbH
Kamenz, Germany
100.00
Mercedes-Benz Europa NV/SA
Mercedes-Benz Extra LLC
Mercedes-Benz Formula E Limited
Mercedes-Benz G GmbH
Mercedes-Benz Group Services Phils., Inc.
Mercedes-Benz Hungária Kft.
Mercedes-Benz IDC Europe S.A.S.
Woluwe-Saint-Lambert, Belgium
100.00
Wilmington, USA
100.00
Brackley, United Kingdom
100.00
Raaba, Austria
100.00
Cebu City, Philippines
100.00
Budapest, Hungary
100.00
Wilmington, USA
100.00
New Cairo, Egypt
100.00
Stuttgart, Germany
100.00
Neuhausen auf den Fildern, Germany
100.00
Berlin, Germany
100.00
São Bernardo do Campo, Brazil
100.00
Berlin, Germany
100.00
Mercedes-Benz Cars & Vans Brasil -
Valbonne, France
São Bernardo do Campo, Brazil
Indústria e Comércio De Veículos Ltda.
Mercedes-Benz Cars Middle East FZE
Mercedes-Benz Consulting GmbH
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Mercedes-Benz Egypt S.A.E.
Mercedes-Benz Energy Americas LLC
Dubai, United Arab Emirates
100.00
Leinfelden-Echterdingen, Germany
100.00
Maastricht, Netherlands
100.00
100.00
Mercedes-Benz Manufacturing Rus Ltd
Mercedes-Benz Museum GmbH
100.00
4
Wilmington, USA
100.00
Brussels, Belgium
100.00
Sint-Peters-Leeuw, Belgium
100.00
Montigny-le-Bretonneux, France
100.00
Mercedes-Benz Trucks Italia S.r.l.
Novi Beograd, Serbia
Rome, Italy
Mercedes-Benz Trucks MENA Holding GmbH
MERCEDES-BENZ TRUCKS POLSKA SPÓŁKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
Mercedes-Benz Trucks Schweiz AG
Stuttgart, Germany
100.00
Warsaw, Poland
100.00
Schlieren, Switzerland
100.00
Mercedes-Benz Vans Mobility S.L.
Alcobendas, Spain
100.00
100.00
100.00
100.00
Mercedes-Benz Project Consult GmbH
Moscow, Russian Federation
80.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Mercedes-Benz Research & Development Tel Aviv Ltd.
Mercedes-Benz Research and Development India Private Limited
Mercedes-Benz Retail Belgium NV/SA
Mercedes-Benz Slovakia s.r.o.
Milton Keynes, United Kingdom
Mercedes-Benz Solihull Ltd.
Mercedes-Benz Subscription Services USA LLC
Mercedes-Benz Trucks Belgium Luxembourg NV/SA
Mercedes-Benz Trucks Center Sint-Pieters-Leeuw NV/SA
Mercedes-Benz Trucks France S.A.S.U
Tel Aviv, Israel
100.00
Bangalore, India
100.00
Woluwe-Saint-Lambert, Belgium
100.00
Bratislava, Slovakia
Mercedes-Benz Srbija i Crna Gora d.o.o.u likvidaciji
Mercedes-Benz Vehículos Comerciales Argentina SAU
Milton Keynes, United Kingdom
Mercedes-Benz Adm. Consorcios Ltda.
100.00
100.00
Daimler Parts Logistics Australia Pty. Ltd.
Daimler Pensionsfonds AG
Mulgrave, Australia
100.00
Stuttgart, Germany
100.00
6
Daimler Protics GmbH
Leinfelden-Echterdingen, Germany
100.00
Daimler Purchasing Coordination Corp.
Wilmington, USA
100.00
DAIMLER TRUCK AND BUS HOLDING AUSTRALIA PACIFIC PTY LTD
Daimler Trucks and Buses Southern Africa (Pty) Ltd
Daimler Trucks Asia Taiwan Ltd.
Melbourne, Australia
100.00
Zwartkop, South Africa
100.00
Taipei, Taiwan
100.00
Stuttgart, Germany
Sindelfingen, Germany
Wilmington, USA
100.00
Dubai, United Arab Emirates
100.00
DAIMLER FINANCIAL SERVICES AUSTRALIA PTY LTD
Melbourne, Australia
100.00
Daimler Financial Services UK Trustees Ltd.
Milton Keynes, United Kingdom
100.00
Daimler Gastronomie GmbH
Esslingen am Neckar, Germany
51.00
100.00
Berlin, Germany
100.00
Daimler Group Services Madrid, S.A.U.
Daimler Innovation Technology (China) Co., Ltd.
Daimler International Assignment Services USA, LLC
Daimler Ladungsträger GmbH
Daimler Mitarbeiter Wohnfinanz GmbH
San Sebastián de los Reyes, Spain
100.00
Beijing, China
100.00
Daimler Group Services Berlin GmbH
Daimler TSS GmbH
Ulm, Germany
100.00
FLINC GmbH
Fünfte Vermögensverwaltungsgesellschaft Zeus mbH
LAB1886 GmbH
Lab1886 USA LLC
Stuttgart, Germany
Wilmington, USA
Le Port, France
96.00
Kawasaki, Japan
100.00
100.00
Familonet GmbH
Darmstadt, Germany
Stuttgart, Germany
100.00
100.00
100.00
Lapland Car Test Aktiebolag
Arvidsjaur, Sweden
100.00
Legend Investments Ltd.
LEONIE DMS DVB GmbH
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
MBition GmbH
100.00
Mercedes-Benz CarMesh GmbH
EvoBus Russland 000
in %1
Daimler UK Share Trustee Ltd.
Daimler UK Trustees Limited
Daimler Unterstützungskasse GmbH
Deutsche Accumotive Verwaltungs-GmbH
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
100.00
Stuttgart, Germany
100.00
Kirchheim unter Teck, Germany
EvoBus Reunion S. A.
100.00
Stuttgart, Germany
100.00
DTB Tech & Data Hub, Unipessoal Lda
Tramagal, Portugal
100.00
328
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Capital share
Footnote
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
21.67
7
15.00
Bruchsal, Germany
10.17
12.23
19.42
what3words Ltd.
Zonar Systems, Inc.
Hinxworth, United Kingdom
Seattle, USA
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG).
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies we refer to Note 1.
3 Control due to economic circumstances.
11.75
4 In liquidation.
6 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
7 Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability.
Furthermore, Daimler AG or one respectively several consolidated subsidiares are the partners with unlimited liability in MOST Cooperation GbR,
Karlsruhe (Germany).
331
Further
Information
C-Class Sedan
G| Further information
Responsibility Statement
334
5 Qualification for exemption pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB).
Stuttgart, Germany
5.17
San Francisco, USA
33.40
Grand Cayman, Cayman Islands
5.10
Jeddah, Saudi Arabia
26.00
Ohmuta, Japan
33.51
20.00
5.12
New York, USA
12.33
Wilmington, USA
20.00
Bottrop, Germany
50.00
Most, Czech Republic
51.00
Munich, Germany
20.84
Sannoseki, Japan
28.20
Independent Auditor's Report
Taipei, Taiwan
335
336
Brita Roger
Britta Seeger
Bodo Cecco
Bodo Uebber
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
335
Independent Auditor's Report
To: Daimler AG, Stuttgart
Report on the Audit of the Consolidated
Financial Statements and of the Combined
Management Report
Hubertus Troska
Audit opinions
In our opinion, on the basis of the knowledge obtained in the
audit
the accompanying consolidated financial statements comply,
in all material respects, with the IFRSS as adopted by the
EU, and the additional requirements of German commercial
law pursuant to Section 315e paragraph 1 HGB (Handels-
gesetzbuch: German Commercial Code) and, in compliance
with these requirements, give a true and fair view of the
assets, liabilities, and financial position of the Group as of
December 31, 2018, and of its financial performance for
the financial year from January 1 to December 31, 2018, and
the accompanying combined management report as a whole
provides an appropriate view of the Group's position. In all
material respects, this combined management report is con-
sistent with the consolidated financial statements, complies
with German legal requirements and appropriately presents
the opportunities and risks of future development.
Pursuant to Section 322 paragraph 3 sentence 1 HGB, we
declare that our audit has not led to any reservations
relating to the legal compliance of the consolidated financial
statements and of the combined management report.
Basis for the Opinions
We conducted our audit of the consolidated financial state-
ments and of the combined management report in accordance
with Section 317 HGB and the EU Audit Regulation No.
537/2014 (referred to subsequently as "EU Audit Regulation")
and in compliance with German Generally Accepted Standards
for Financial Statement Audits promulgated by the Institut
der Wirtschaftsprüfer (Institute of Public Auditors in Germany;
IDW). We performed the audit of the consolidated financial
statements in supplementary compliance with the International
Standards on Auditing (ISAs). Our responsibilities under
those requirements, principles and standards are further
described in the "Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the Combined
Management Report" section of our auditor's report. We are
independent of the group entities in accordance with the
requirements of European law and German commercial and
professional law, and we have fulfilled our other German
professional responsibilities in accordance with these require-
ments. In addition, in accordance with Article 10 paragraph
2 letter f) of the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under Article 5
paragraph 1 of the EU Audit Regulation. We believe that the
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinions on the consolidated financial
statements and on the combined management report.
Key Audit Matters in the Audit of the
Consolidated Financial Statements
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from January 1
to December 31, 2018. These matters were addressed in the
context of our audit of the consolidated financial statements as
a whole, and in forming our opinion thereon, we do not provide
a separate opinion on these matters.
Naberezhnye Chelny, Russian Federation
We have audited the consolidated financial statements of
Daimler AG, Stuttgart, and its subsidiaries (the Group), which
comprise the consolidated statement of financial position
as of December 31, 2018, and the consolidated statement of
income, consolidated statement of comprehensive income/
loss, consolidated statement of changes in equity and consoli-
dated statement of cashflows for the financial year from
January 1 to December 31, 2018, as well as notes to the con-
solidated financial statements, including a summary of
significant accounting policies. In addition, we have audited
the combined management report of Daimler AG for the
financial year from January 1 to December 31, 2018.
Huberten Diz
Wilfried Porth
Wilfried Past
Glossary
338
Index
339
Daimler Worldwide
340
G | FURTHER INFORMATION | CONTENTS 333
334
G❘ FURTHER INFORMATION | RESPONSIBILITY STATEMENT
Responsibility Statement
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the financial position,
cash flows and profit or loss of the Group, and the Group
management report, which has been combined with the
management report for Daimler AG, includes a fair review of
the development and performance of the business and
the position of the Group, together with a description of the
principal opportunities and risks associated with the
expected development of the Group.
Stuttgart, February 13, 2019
Для
Die A
Dieter Zetsche
кризи ватру
Renata Jungo Brüngger
cle +
Martin Daum
Au Paro
Ola Källenius
Ten-Year Summary
51.00
Hamburg, Germany
50.00
Rijswijk, Netherlands
Berlin, Germany
Toll4Europe GmbH
Verimi GmbH
Via Transportation Inc.
VII. Joint operations, joint ventures, associated companies and substantial other investments accounted
for at (amortized) cost²
Abgaszentrum der Automobilindustrie GbR
BDF IP Holdings Ltd.
Beijing Mercedes-Benz Sales Service Co., Ltd.
Tallinn, Estonia
Weissach, Germany
4,7
Burnaby, Canada
Beijing, China
33.00
51.00
ChargePoint Inc.
COBUS Industries GmbH
Campbell, USA
5.55
25.00
Jakarta, Indonesia
Okayamashi, Japan
Jakarta, Indonesia
There Holding B.V.
Yokohama, Japan
Kleinostheim, Germany
43.83
Hong Kong, China
15.00
50.00
32.28
9.69
29.56
15.00
Frankfurt am Main, Germany
New York, USA
15.15
12.28
FlixMobility GmbH
FUSO LAND TRANSPORT & Co. Ltd.
KAMAZ PAO
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
LSH Auto International Limited
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
P.T. Krama Yudha Tiga Berlian Motors
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
Taxify OÜ
Wiesbaden, Germany
40.82
30.00
Esslingen am Neckar, Germany
PDB Partnership for Dummy Technology and Biomechanics GbR
Proterra Inc.
Rally Bus Corp.
REV Coach LLC
smart-BRABUS GmbH
STARCAM s.r.o.
tiramizoo GmbH
Toyo Kotsu Co., Ltd.
Turo Inc.
VfB Stuttgart 1893 AG
Volocopter GmbH
Ingolstadt, Germany
Burlingame, USA
Capital share
in %1
Footnote
Berlin, Germany
Pontcharra, France
Berlin, Germany
34.59
London, United Kingdom
Esslinger Wohnungsbau GmbH
20.00
Omuta Unso Co., Ltd.
National Automobile Industry Company Ltd.
2.90
MFTB Taiwan Co., Ltd.
26.57
Momenta Global Limited
25.00
Budapest, Hungary
33.33
Gottapark, Inc.
San Francisco, USA
18.09
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
Berlin, Germany
EvoBus Hungária Kereskedelmi Kft.
7
MercedesService Card GmbH & Co. KG
Laureus World Sports Awards Limited
18.37
hap2U SAS
inpro Innovationsgesellschaft für fortgeschrittene
Produktionssysteme in der Fahrzeugindustrie mbH
European Center for Information and Communication Technologies - Berlin, Germany
EICT GmbH
Domicile, Country
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
H2 Mobility Deutschland GmbH & Co. KG
by return on sales. ROS is defined as the quotient of EBIT and
revenue.
Annual Shareholders' Meeting
Bonds
Capital expenditure
CASE
Cash flows
Integrity
Consolidated Group
Corporate governance
Digitization
Dividend
Earnings per share (EPS)
EBIT
Electric mobility
Financial income
Income taxes
The profitability of the industrial divisions is measured
Independent auditor's report
Innovations
CO2 reductions
Connectivity
Compliance
Total assets¹
The profitability of Daimler Financial Services is measured
by return on equity. ROE is defined as the quotient of EBIT and
shareholders' equity.
Equity ratio industrial business (%) 1
Integrity Code
26.3
26.5
24.7
38,742
15,965 17,593 19,180 20,599 21,779 23,182 24,322 26,381
18,532 19,925 22,811 26,058 28,160 33,050 38,942 46,942 47,074 49,476
40,044 41,309 45,023 48,947 48,138 56,258 62,055 67,613 73,394 79,582
12,845 14,544 17,081 17,720 17,349 20,864 23,760 25,384 25,686 29,489
9,800 10,903 9,576 10,996 11,053 9,667 9,936 10,981 12,072 15,853
31,635 31,556 34,461
42,039 46,614 58,151 65,687 69,138 76,271
128,821 135,830 148,132 163,062 168,518 189,635 217,166 242,988 255,345 281,619
31,827 37,953 41,337 39,330 43,363 44,584 54,624 59,133 65,159 66,053
3,045 3,058 3,060 3,063 3,069 3,070 3,070 3,070 3,070 3,070
27,981 30,948
ROS - return on sales
Equity ratio Group (%)¹
Shareholders' equity'
Other current assets
Liquid assets
RDE
Since September 2017, emissions of particulate matter, nitro-
gen oxides and other pollutants have had to be measured using
mobile equipment and the Real Driving Emissions (RDE) test.
page 207
Ride hailing
The app-based provision of rides in cars driven by taxi drivers,
licensed rental car drivers or private drivers.
ROE - return on equity
thereof share capital
64
Value added indicates the extent to which operating profit
exceeds the cost of capital. When value added is positive,
return on net assets is higher than the cost of capital.
pages 89 f
96 ff, 162
68, 107ff
A test method which, compared to the previous NEDC, considers
additional factors such as higher average and top speed,
more dynamic driving behavior etc. Overall, this method leads
to more realistic but also higher figures for fuel consumption.
Investor Relations
Mobility services
Net assets
Net profit
Pension obligations
Portfolio changes
Production
Profitability
Ratings
WLTP - Worldwide Harmonized Light Vehicles Test
Procedure
Remuneration system
Revenue
65
30f, 184f
90
88, 228
91, 277ff
76f
74 ff
85ff, 228
98
42.6
ROE return on equity
ROS return on sales
Segment reporting
Shareholders' equity
Shares
Strategy
Sustainability
Unit sales
Value added
Workforce
65,96f
This measures the potential future loss (related to market
value) for a given portfolio in a certain period and for which
there is a certain probability that it will not be exceeded.
Value added
93ff, 119, 161f, 231
206 ff
12f, 68
116 ff, 217 ff
241f
46ff, 186ff
12 f, 26f, 34f, 66
63,89
62ff, 315
85 ff
8ff, 14 ff, 66, 70, 108
Value at risk
88, 258
335 ff
22f, 32f, 66 ff
116ff, 217
116
Truck weight classes
Europe: up to 6 tons (light-duty)
over 6 tons (medium- and heavy-duty)
NAFTA: classes 6 and 7; 8.9-15 tons (medium-duty)
class 8; over 15 tons (heavy-duty)
88, 259 ff
45.8
37.23 50.73 33.92 41.32 62.90 68.97 77.58
70.72
1,003.8 1,050.8 1,066.0 1,066.8 1,068.8 1,069.8 1,069.8 1,069.8
22.7
39.8
A
A-
A-
A-
A-
BBB+
BBB+
BBB+
S&P
Credit rating, long-term
Ratings
1,069.8 1,069.8
1,069.8 1,069.8 1,069.8
1,067.1 1,069.1
1,003.8 1,051.5 1,067.1
70.80 45.91
1,069.8 1,069.8
120 ff
84,256f
86
A
A
Moody's
A3
A-
A-
A-
A-
A-
A-
BBB+
BBB+
Average diluted shares outstanding
(in millions)
Fitch
A2
A3
A3
A3
A3
A3
A3
A3
A2
Average shares outstanding (in millions)
Share price at year-end (€)
From the stock exchanges
31,778 29,338 31,426
Net assets (average) 1, 3
7,285 11,938 11,981
Net liquidity industrial business
Current liabilities¹
Non-current liabilities¹
42.8
46.4
49,456 44,738 51,940 65,016 66,047 78,077 85,461 99,398 102,562 117,614
47,538 53,139 54,855 58,716 59,108 66,974 77,081 84,457 87,624 97,952
11,508 13,834 16,953 18,580 19,737 16,597 16,288
37,521 40,648 40,779 44,796 47,054 48,446 53,809
44.7
40.8
43.4
22.2
24.0
22.9
23.6
22.1
24.3
44.2
46.4
€ amounts in millions
343
2,423 3,653 4,158 4,827 4,975 4,844 5,075 5,889 6,744 7,534
3,264 3,364 3,575 4,067 4,368 4,999 5,384 5,478 5,676 6,305
8,544 -696 -1,100 3,285 -1,274 222 3,711 -1,652 343
-6,537 -8,864 -6,829 -2,709 -9,722 -14,666 -9,518 -9,921
5,842 11,506 3,855 2,274 9,631 12,009 13,129 13,226
989 1,452 4,842 5,479 3,960 3,874 2,005 2,898
-313
-7,551
5,432
2,706
1,057
-8,950
10,961
Cash provided by (used for) operating activities
Cash provided by (used for) investing activities
Cash provided by (used for) financing activities
Free cash flow of the industrial business
From the statements of cash flows
Investments in property, plant and equipment
Depreciation and amortization
G❘ FURTHER INFORMATION | TEN YEAR-SUMMARY
2018
2016
2015
2014
2013
2012
2011
2010
2009
2017
78, 118, 166, 172, 177, 180
4,674 6,029
62ff, 140f
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report
in this regard.
otherwise appears to be materially misstated.
- is materially inconsistent with the consolidated financial
statements, with the combined management report or our
knowledge obtained in the audit, or
In connection with our audit, our responsibility is to read
the other information and, in so doing, to consider whether the
other information
Our opinions on the consolidated financial statements and on
the combined management report do not cover the other
information, and consequently we do not express an opinion or
any other form of assurance conclusion thereon.
the remaining parts of the annual report, with the exception
of the audited consolidated financial statements and
combined management report and our auditor's report.
- the separate non-financial report included in the annual
report and the corporate governance statement, and
The legal representatives are responsible for the other
information. The other information comprises:
As instructed, we have performed a separate business
management review of the separate non-financial statement.
Please refer with regard to the nature, scope and results of
this business management review to our audit opinion dated
February 13, 2019.
Other Information
Our Observations
339
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
Finally, we evaluated the appropriateness of the description
of the aforementioned legal proceedings in the notes to the
consolidated financial statements.
Our audit procedures comprised firstly an evaluation of the
process established by the Company to ensure the recording,
the estimation of the outcome of the proceedings and the
reflection in the annual financial statements of the legal pro-
ceedings. Secondly, we held discussions with the internal
legal department and with further departments familiar with the
matters under dispute and the Company's external advisors
and attorneys, in order to obtain explanations on the develop-
ments and the reasons that had led to the respective estima-
tions. In addition, we reviewed the underlying documents and
minutes. As of the reporting date, assessments were available
from external attorneys, which support the assessment of the
risks by the legal representatives.
Our Audit Approach
The risk for the consolidated financial statements is that provi-
sions for legal proceedings are not set up or are inadequate.
The recognition and measurement of the provisions set up for
the legal proceedings are based on discretionary assessments
and assumptions by the legal representatives.
The discretionary assessments and assumptions are appro-
priate.
Daimler AG already filed an application for immunity ("leniency
application") some time ago with the European Commission
in this connection. In the third quarter of 2018, the European
Commission instituted a formal investigation into possible
collusion regarding emission reduction systems.
Responsibilities of the Legal Representatives and
the Supervisory Board for the Consolidated Financial
Statements and the Combined Management Report
The legal representatives are responsible for the preparation
of the consolidated financial statements that comply, in all mate-
rial respects, with IFRSS as adopted by the EU and the addi-
tional requirements of German commercial law pursuant to
Section 315e paragraph 1 HGB and that the consolidated
financial statements, in compliance with these requirements,
give a true and fair view of the assets, liabilities, financial
position, and financial performance of the Group. In addition,
the legal representatives are responsible for such internal
control as they have determined necessary to enable the prepa-
ration of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
Furthermore, the legal representatives are responsible for the
preparation of the combined management report that, as a
whole, provides an appropriate view of the Group's position and
is, in all material respects, consistent with the consolidated
financial statements, complies with German legal requirements,
and appropriately presents the opportunities and risks of
future development. In addition, the legal representatives are
responsible for such arrangements and measures (systems)
as they have considered necessary to enable the preparation
of a combined management report that is in accordance with
the applicable German legal requirements, and to be able to
provide sufficient appropriate evidence for the assertions in
the combined management report.
We also provide those charged with governance with a statement
that we have complied with the relevant independence
requirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on
our independence, and where applicable, the related safeguards.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our
audit.
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 341
- perform audit procedures on the prospective information
presented by the legal representatives in the combined
management report. On the basis of sufficient appropriate
audit evidence, we evaluate, in particular, the significant
assumptions used by the legal representatives as a basis for
the prospective information, and evaluate the proper deri-
vation of the prospective information from these assumptions.
We do not express a separate opinion on the prospective
information and on the assumptions used as a basis. There
is a substantial unavoidable risk that future events will
differ materially from the prospective information.
evaluate the consistency of the combined management
report with the consolidated financial statements, its confor-
mity with (German) law, and the view of the Group's
position it provides.
obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and on the combined management
report. We are responsible for the direction, supervision and
performance of the group audit. We remain solely respon-
sible for our opinions.
evaluate the overall presentation, structure and content of
the consolidated financial statements, including the dis-
closures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and fair
view of the assets, liabilities, financial position and financial
performance of the Group in compliance with IFRSS as
adopted by the EU and the additional requirements of German
commercial law pursuant to Section 315e paragraph 1 HGB.
conclude on the appropriateness of the use by the legal
representatives of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may
cast significant doubt on the Group's ability to continue as
a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditor's
report to the related disclosures in the consolidated financial
statements and in the combined management report or,
if such disclosures are inadequate, to modify our respective
opinions. Our conclusions are based on the audit evidence
obtained up to the date of our auditor's report. However,
future events or conditions may cause the Group to cease to
be able to continue as a going concern.
In preparing the consolidated financial statements, the legal
representatives are responsible for assessing the Group's
ability to continue as a going concern. They are also responsible
for disclosing, as applicable, matters related to going concern.
In addition, they are responsible for financial reporting based
on the going concern basis of accounting unless there is
an intention to liquidate the Group or to cease operations, or
there is no realistic alternative but to do so.
evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made
by management and related disclosures.
- identify and assess the risks of material misstatement of
the consolidated financial statements and of the combined
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinions. The risk of not detecting a
material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Section
317 HGB and the EU Audit Regulation and in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer
(IDW) and supplementary compliance with the ISAs will always
detect a material misstatement. Misstatements can arise
from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
these consolidated financial statements and this combined
management report.
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or
error, and whether the combined management report as a whole
provides an appropriate view of the Group's position and, in
all material respects, is consistent with the consolidated finan-
cial statements and the knowledge obtained in the audit,
complies with the German legal requirements and appropriately
presents the opportunities and risks of future development,
as well as to issue an auditor's report that includes our opinions
on the consolidated financial statements and on the combined
management report.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements and of the Combined Management
Report
G| FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
340
The supervisory board is responsible for overseeing the
Group's financial reporting process for the preparation of
the consolidated financial statements and the combined
management report.
obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the audit
of the combined management report in order to design
audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the
effectiveness of these systems.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated financial
statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor's
report unless laws or other legal regulations preclude
public disclosure of the matter.
Since July 25, 2017, several class action suits have been filed
in the USA and in Canada against Daimler AG and other auto-
mobile manufacturers and several of their North American sub-
sidiaries. The plaintiffs claim to have suffered losses because
it is alleged that the defendants have engaged since the nine-
teen-nineties in anticompetitive behavior with regard to motor
vehicle technology, costs, suppliers, markets and other anti-
competitive matters, including diesel exhaust cleansing tech-
nology. On October 4, 2017, all pending U.S. class actions were
centralized in one proceeding. On March 15, 2018, the plain-
tiffs in the U.S. class action suits expanded and consolidated
their claims in two briefs, one of which was in the name
of the consumers and the other in the name of the dealers.
The use of devices that impermissibly impair the effectiveness
of emission control systems in reducing nitrogen-oxide (NOx)
emissions and which are supposed to cause excessive emissions
from vehicles with diesel engines is alleged in consumer class
action suits in the USA and Canada and in a suit of the State of
Arizona. In addition, the plaintiffs claim that consumers
were deliberately misled in connection with the advertising for
Mercedes-Benz diesel vehicles. Furthermore, it is alleged in
one of these class action suits that Daimler had conspired with
a component supplier in order to deceive U.S. supervisory
authorities and consumers.
Our Audit Approach
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 337
The risk for the financial statements is that the credit-
worthiness of customers and future cashflows is misjudged
or that the calculation of the risk provision parameter
is incorrect so that allowances are not recognized or are
insufficient.
The calculation of the loss allowances is based since the finan-
cial year 2018 on expected credit losses and therefore also
includes expectations regarding the future. Recognition of the
expected credit losses is carried out by means of a three-
parameter procedure for the determination of loss allowances.
Hereby, the following is among other things taken into
account: various factors determining the value, such as the
determination of statistical default probabilities and loss
rates, the possible receivable amount on default, the parameter
transfer criteria that are related to a significant change in
the default risk of borrowers, and the calculation of future cash-
flows. Furthermore, macroeconomic scenarios flow into
the calculation, the identification of which to a high degree
includes discretionary judgments and uncertainties.
The Risk for the Consolidated Financial Statements
The receivables from financial services (€96,740 million)
resulting from the financing and leasing activities of the Group
include receivables from sales financing with customers,
receivables from sales financing with dealers and receivables
from finance lease contracts. The allowances on these receiv-
ables amounted at the balance sheet date to € 1,086 million.
in
Note 2 "Accounting estimates and management judge-
ments". Further information on allowances on receivables from
financial services can be found in the notes to the consolidated
financial statements in ①Note 1 “Significant Accounting Poli-
cies", in Note 14 "Receivables from financial services",
Note 33 "Management of financial risks" and in the
comments in the combined management report in the section
entitled "Industry and business risks and opportunities".
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
We obtained a comprehensive understanding of the develop-
ment of the portfolios, the ‘associated counterparty default
risks and the processes for identifying, managing, monitoring
and measuring credit risks by inspecting analyses and risk
reports, interrogations, review of guidelines and working instruc-
tions, checking the defined methods and their implementation
and checking and walking through the validation process and
the validation reports based on samples.
Loss Allowances on Receivables from Financial
Services
Our Observations
We audited the recoverability of the balance sheet caption
"Equipment on operating leases" based on Daimler's internal
portfolio allocation. The main focus of our risk-oriented audit
approach was addressed to those vehicles with an enhanced
impairment risk. We investigated and assessed the indications
assumed by the group for a possible requirement for the
recognition of an impairment loss and checked the calculation
of the write-downs determined by Daimler. We appraised
Daimler's assessment with regard to the residual values that
can be achieved at the end of the term of the leases. We
also included vehicles with diesel technology in this appraisal.
In this connection, we in particular critically reviewed the
main influencing factors, such as the expected number of
returns from leasing, the current marketing results in order
to assess the accuracy of the estimates and future vehicle
model changes. For significant markets we furthermore
also audited the consistency of the assumptions made by
Daimler with residual value forecasts by independent
expect third parties.
Our Audit Approach
The Risk for the Consolidated Financial Statements
The balance sheet caption "Equipment on operating leases"
(€49,476 million) comprises motor vehicles on operating
leases. The impairment risk with regard to these vehicles is
primarily dependent on the residual value achievable at
the end of the lease. These future residual values depend on
the situation in the used-vehicle markets prevailing when
the vehicles are returned. The future-oriented valuation is
based on a number of discretionary assumptions. The risk
for the financial statements is that any impairment losses will
not be recognized or that the amounts recognized will be
inadequate.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Note 1 "Significant accounting policies” and Note 2
"Accounting estimates and management judgments". Further
information on the operating leases can be found in the notes
to the consolidated financial statements in Note 12
"Equipment on operating leases" and in the comments in the
combined management report in the section entitled
"Industry and business risks and opportunities".
Impairment Risk on Operating Leases
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
336
The assumptions and assessments providing the basis for
the assessment of the recoverability of the statement of
financial position caption “equipment on operating leases"
and the recorded impairment losses are appropriate.
c) Antitrust proceedings (including damage suits)
Following the imposition of a fine by the European Commission
against Daimler AG and other truck manufacturers in July 2016,
truck customers have raised damage claims against Daimler AG.
We audited the appropriateness and effectiveness of the
internal control system with regard to the risk classification
process and risk models and the identification of the factors
determining the value and the loss allowances, also by
rechecking the calculations. To this end, we also evaluated the
relevant IT systems and internal procedures. In addition to
the audit by our IT specialists of the propriety of the IT systems
affected and related interfaces to ensure the completeness
and correctness of the data, the audit also included the audit of
automatic controls for data entry and data processing. The
main focus of our audit was the evaluation of the methodical
approach in the determination of risk categories, default prob-
abilities and loss rates that are derived from historical data.
We obtained an understanding of this based on a risk-oriented
selection of credit portfolios. We satisfied ourselves with
regard to the appropriateness of significant risk parameters
based on the results of a validation performed by Daimler
Financial Services and evaluated the adjustments of the param-
eters to the current market situation. In this connection, we
furthermore audited the data supporting the validations on the
basis of samples. In addition, we satisfied ourselves in con-
junction with a conscious sample of audits of individual cases
that the risk classification is correct and that the amount of
the calculated specific allowance is appropriate.
The methodical approach, the procedures and the processes
to calculate the impairment losses and the assumptions and
risk parameters flowing into the measurement are appropriate
to identify the credit risks in good time and to determine the
recognition of adequate impairment losses.
b) Diesel emission behavior - class action and other suits in
USA and Canada
a) Diesel emission behavior - administrative proceedings
Several state and federal authorities and further institutions
worldwide have made inquiries and/or have carried out
investigations and/or proceedings and/or have issued direc-
tives. The inquiries and investigations cover test results,
the emission control systems in Mercedes-Benz diesel vehicles
and/or the interaction of the Company with the relevant
state and federal authorities as well as related legal issues and
implications, including, but not limited to, those under appli-
cable environmental, securities and criminal and antitrust laws.
Whether the recognition of a provision and, if so, in what amount
it is necessary on account of legal proceedings is dependent
to a high degree on discretionary estimates and assumptions by
the legal representatives. In view of this and the monetary
amounts involved with regard to the risks, the following legal
proceedings of Daimler are in our opinion of particular impor-
tance.
The Risk for the Consolidated Financial Statements
Daimler is confronted by various legal proceedings, claims and
governmental investigations and directives (legal proceedings)
on a wide range of topics, including for example vehicle safety,
emissions, fuel economy, financial services, dealer, supplier
and other contractual relationships, intellectual property rights,
product warranties, environmental matters, antitrust matters
(including actions for damages) and shareholder matters. Legal
proceedings relating to products deal with claims on account
of alleged vehicle defects. Some of these claims are asserted by
way of class action suits. If the outcome of such legal proceed-
ings is detrimental to Daimler AG, the Company may be required
to pay substantial compensatory and punitive damages or to
undertake service actions, recall campaigns, monetary penal-
ties or other costly actions.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
in Note 2 "Accounting estimates and management judge-
ments". Further information on the legal proceedings can
be found in the notes to the consolidated financial statements
Note 23 "Provision for other risks" and O Note 30
"Legal proceedings" and in the comments in the combined
management report in the section entitled "Risks from
guarantees, legal and tax risks - legal risks"
Accounting Treatment of Legal Proceedings
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
338
Our Observations
The calculation methods and the assumptions made are
appropriate.
Our audit procedures included among other things the evalua-
tion of the process to calculate the provision for product
warranties and the evaluation of the relevant assumptions and
their derivation for the measurement of the provision. These
include primarily assumptions on expected susceptibility to and
the course of damage, and in addition the monetary value
of the damage per vehicle based on actual warranty, guarantee
and goodwill losses. Based on historical analyses, we assessed
the accuracy of the forecasts of past warranty, guarantee and
goodwill costs. We also checked that updated assessments of
the future repair costs and procedures were taken into account.
We obtained an understanding for the underlying numbers of
vehicles through the actual unit sales.
Our Audit Approach
Significant uncertainty for the calculation of the provision
arises with regard to the future loss event. The risk for the
consolidated financial statements is that the provision is
not properly measured.
Daimler faces various claims under product guarantees, or
grants various kinds of product warranties, which are entered
into for the error-free functioning of a Daimler product sold
or service rendered over a defined period of time. In order to
confirm or reassess future guarantee, warranty and goodwill
expenses, continuously updated information on the nature and
volume and the remedying of faults that have occurred is
recorded and analyzed at the level of the business unit, model
series, damage key and sales year.
The Risk for the Consolidated Financial Statements
The provision for product warranties amounts to €7,043 million
and is included in the provisions for other risks.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
in Note 2 "Accounting estimates and management judge-
ments". Further information on the guarantees and product
warranties can be found in the notes to the consolidated finan-
cial statements Note 23 "Provisions for other risks" and
in the comments in the combined management report in the
section entitled "Company-specific risks and opportunities -
Warranty and goodwill cases".
Product Warranties
Measurement of the Provision for
Our Observations
Other Legal and Regulatory Requirements
Further Information pursuant to Article 10 of the EU Audit
Regulation
We were elected as group auditor by the annual general meet-
ing on April 5, 2018. We were engaged by the supervisory
board on April 26, 2018. We have been the group auditor of the
Daimler AG without interruption since the financial year 1998.
6.51
6.40
6.02
5.31
4.28
1,971
1.85
0
0.00
Dividend per share (€)
Total dividend
7.87
-2.63
6.78
9.61
22.5
14.8
10,617 7,582
19.1
8,784
7.97
7.87
6.51
6.40
6.02
Diluted net profit (loss) per share (€)1
5.32
7.97
6.78
66ff
105 ff, 202ff
81ff, 166, 172, 177, 180
77f, 89f
113ff, 215
Inventories
Other non-current assets¹
Leased equipment
9.61
Property, plant and equipment
3,905 3,477
3.65
3.25
3.25
3.25
2.45
2.25
2.20
2.20
2,346 2,349 2,407 2,621 3,477 3,477
From the statements of financial position
4.28
-2.63
Net profit (loss) per share (€)1
2013
2012
2011
2010
2009
€ amounts in millions
G.01
Ten-Year Summary
2014
G | FURTHER INFORMATION | TEN-YEAR SUMMARY
Dr. Thümler
Wirtschaftsprüfer
Wirtschaftsprüfer
Becker
Wirtschaftsprüfungsgesellschaft
KPMG AG
Stuttgart, February 13, 2019
German Public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is
Dr. Axel Thümler.
We declare that the opinions expressed in this auditor's
report are consistent with the additional report to the audit
committee pursuant to Article 11 of the EU Audit Regulation
(long-form audit report).
342
2015
2016 20174
2018
78,924 97,761 106,540 114,297 117,982 129,872 149,467 153,261 164,154 167,362
13,928 16,454 17,424 18,002 18,753 19,607 20,949 21,141 22,186 22,432
4,181 4,849 5,634 5,644 5,489 5,680 6,564 7,572 8,711 9,107
1,285 1,373 1,460 1,465 1,284 1,148 1,804 2,315 2,773 2,526
-1,513 7,274 8,755 8,820 10,815 10,752 13,186 12,902 14,348 11,132
7.4
8.2
7.7
9.2
8.3
8.8
8.4
8.7
6.7
6,628 8,449 8,116 10,139 10,173 12,744 12,574 13,967 10,595
5,120 6,240 7,302 9,173 7,678 9,007 9,007 10,880 7,963
19.9
19.6 22.6
18.8
20.1
6,830 8,720 7,290 8,711
A-
-2,644
Net profit (loss)¹
17.5
-6.6
as % of net assets (RONA) 1, 3
-2,102
Net operating profit (loss)1
-2,298
Profit (loss) before income taxes¹
-1.9
Operating margin (%) 1
EBIT¹
thereof capitalized
Research and development expenditure²
Personnel expenses¹
Revenue
From the statements of income
311 ff
99 ff, 232
A-
CSR
A (low)
EBIT
Earnings before interest and taxes are the measure
of operating profit before taxes.
Equity method
pages 85 ff
Accounting and valuation method for shareholdings
in associated companies and joint ventures.
EU30
The region EU30 includes the 28 member states of the
European Union plus Norway and Switzerland.
Fair value
The amount for which an asset or liability could be exchanged
in an arm's length transaction between knowledgeable
and willing parties who are independent of each other.
Goodwill
Goodwill represents the excess of the cost of an acquired
business over the fair values assigned to the separately
identifiable assets acquired and liabilities assumed.
Hybrid drive
IFRS - International Financial Reporting Standards
The IFRS are a set of standards and interpretations for compa-
nies' external accounting and financial reporting developed
by an independent private-sector committee, the International
Accounting Standards Board (IASB).
Integrity Code
The "Integrity Code" has been in effect since November 2012.
It defines the principles of behavior and guidelines for every-
day conduct that are applicable at Daimler. Fairness, responsi-
bility and compliance with legislation are key principles in
this context.
INTELLIGENT DRIVE
With this new technology from Mercedes-Benz, thanks to
improved environment sensors, intelligent assistance systems
analyze complex situations and recognize potential dangers
in road traffic even better.
Lithium-ion batteries
They are at the heart of the current gneration of electric
vehicles.Compared with conventional batteries, lithium-ion
batteries are considerably smaller and feature significantly
higher power density, short charging times and long lives.
NEDC - New European Driving Cycle
A measuring method used in Europe for the objective
assessment of vehicles' fuel consumption, which is gradually
being replaced by WLTP since September 2017.
Rating
An assessment of a company's creditworthiness issued
by a rating agency.
G | FURTHER INFORMATION | INDEX
345
Index
DBRS
A collective term for the social responsibility assumed by com-
panies, including economic, environmental and social aspects.
corporate social responsibility
Hybrid drive systems combine internal-combustion engines
with electric motors, which can be operated separately or
together depending on the type of vehicle and driving situation.
Cost of capital
The cost of capital is the product of the average amount
of capital employed and the cost-of-capital rate. The cost-of-
capital rate is derived from the investors' required rate of
return. page 78
A (low) A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
A
A
A
A
Average annual number of employees
258,628 258,120 267,274 274,605 275,384 279,857 284,562 284,957 289,530 298,465
1 The figures for the year 2012 have been adjusted, primarily due to effects arising from application of the amended version of IAS 19.
Scope
Corporate governance
The term corporate governance applies to the proper manage-
ment and supervision of a company. The structure of corporate
governance at Daimler AG is determined by Germany's Stock
Corporation Act (AktG), Codetermination Act (MitbestG) and
capital-market legislation.
2 The figure for the year 2013 has been adjusted due to reclassifications within functional costs.
The consolidated Group is the total of all those companies that
are included in the consolidated financial statements.
Consolidated Group
By the term compliance, we understand adherence to all laws,
rules, regulations and voluntary commitments, as well as
the related internal guidelines and policies in connection with
all activities of the Daimler Group.
Four strategic fields for the future of mobility: connectivity
(Connected), automated and autonomous driving (Autonomous),
flexible use and services (Shared & Services), and electric
drive systems (Electric).
Compliance
Glossary
G | FURTHER INFORMATION | GLOSSARY
344
4 Several figures for the year 2017 have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9.
3 In the context of fine tuning the performance measurement system, the definition of net assets has been adjusted with retroactive effect as of 2015.
CASE
Production locations
Revenue (in millions of euros)
2
252
Sales outlets
Australia/Oceania
Employees
488
47
14,398
3,664
1,593
1,884
746
Interim Report Q1 2019
April 26, 2019
58
292
Employees
251
321
109
35
227
Note: Unconsolidated revenue of each division (segment revenue).
Internet, Information, Financial Calendar
Information on the Internet
Specific information on our shares and earnings development can
be found on our website daimler.com in the "Investors" section.
The Group's annual and interim reports and the company financial
statements of Daimler AG can be accessed there. You can also find
topical reports, presentations, an overview of various key figures,
information on our share price and other services.
daimler.com/investors
Financial Calendar 2019:
2,211
355
227
1
6,522
Production locations
Annual Shareholders' Meeting 2019
Sales outlets
Revenue (in millions of euros)
1,358
984
272
71
Employees
3,948
392
124
57
1
-
354
1
367
162
Asia
Production locations
2
4
2
Sales outlets
2,444
10
Revenue (in millions of euros)
30,845
845
May 22, 2019
The paper used for this Annual Report was
produced from cellulose sourced from
certified forestry companies that operate
responsibly and comply with the regulations
of the Forest Stewardship Council.
July 24, 2019
51
3,830
16,028
22,312
36,020
3,268
9,922
11,435
39,239
126,488
Revenue (in millions of euros)
_16 8 3 7 -
Sales outlets
Production locations
Financial
Services
11,595
9,365
Businesses
Vans
Automotive
Daimler
Daimler Mercedes-Benz
Trucks
Cars
Mercedes-Benz
Daimler
Organization
Sales
Europe
G.02
Daimler Worldwide
G | FURTHER INFORMATION | DAIMLER WORLDWIDE
346
Buses
Interim Report Q2 2019
www.daimler.com
70327 Stuttgart
Interim Report Q3 2019
October 24, 2019
Publications for our shareholders:
Annual Report
(German, English)
Interim Reports for the 1st, 2nd and 3rd quarters
(German, English)
The aforementioned publications can be requested from:
Daimler AG,
Investor Relations, HPC F343
70546 Stuttgart, Germany
Phone +49 711 17 92285
Fax +49 711 17 92287
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Pages 32/33: Copyright Volocopter GmbH
All other pictures: Copyright Daimler AG
333
792
2,091
1,527
23,588
10,293
256
1,711
16,634
19,014
Revenue (in millions of euros)
4
? 14 1 1 1,433
Sales outlets
Production locations
NAFTA region
Employees
1,644
518
11,548
2,099
Employees
Production locations
8,234
Latin America (excluding Mexico)
Employees
256
652
1,964
917
Revenue (in millions of euros)
514
Sales outlets
2
661
3
1
2
1
Thrilling more and more users in a future-oriented market. About 31 million
customers are already using Daimler's mobility services, which include car2go, the
pioneer of free-floating car sharing, as well as the multimodal app-based mobility
platform moovel, the taxi-hailing app mytaxi, the on-demand ride-sharing service
ViaVan, and numerous other services. The ability of these innovative mobility services
to attract new customers all over the world is proven by the significant increase in
user figures in 2018 compared with the prior year. In 2018, our mobility services
were used by customers in more than 130 cities in Europe, China, and North and
South America. Daimler has forged ahead with its transformation into a provider of
integrated mobility services and will continue to systematically expand its portfolio
to create the urban mobility of the future.
mytaxi
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
31
VIA VAN
VIAVAN
mytaxi
daimler.com/sustainability/mobility-services
413ft
moovel.com/en
mytaxi.com/uk
Innovative.
Creative.
Lab1886.
JRNER
Getting ideas quickly to customers and the market. Lab1886 is the global
innovation machine from Daimler. Since 2007, this "company builder" has been
successfully working like a startup to develop and commercialize new business
models. For example, it has created the flexible car-sharing service car2go,
the mobility app moovel, and Mercedes me, the digital entry into the world of
Mercedes-Benz. And it has demonstrated what it's like to leave familiar paths
behind through its involvement with the unconventional idea of vertical mobility.
With its strategic investment in the Volocopter startup, Lab1886 has joined its
partner to open up the new market segment of the third mobility dimension.
In the future, the innovative urban air taxis from Volocopter may help to relieve
the pressure on inner-city traffic.
mercedes-benz.com/en/mercedes-benz/next/lab1886
C
CAR2GO
car2go.com/DE/en
2GO
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
BERLIN
CHONDOMS
Worldwide.
29
BACK
COPTER
THEATER
vision-urbanetic-the-mobility-of-the-future
mercedes-benz.com/en/mercedes-benz/vehicles/transporter/
Innovation for cities, companies and commuters. Vision URBANETIC
from Mercedes-Benz Vans aims to abolish the distinction between
passenger transportation and goods transport. This autonomously driving
platform with battery-electric drive can be flexibly equipped with a cargo
module or the people-mover module. As a result, this revolutionary
concept can fulfill growing mobility demands and varied customer wishes -
sustainably, efficiently, and in line with demand. The fully connected Vision
URBANETIC is also meant to be part of an ecosystem in which logistics
companies, local public transportation operators and private customers
can communicate their mobility wishes digitally. This is how we intend to
reduce traffic flows, relieve the pressure on city centers and help to create
a better quality of life for city dwellers.
CRA
Autonomous.
Modular.
URBANETIC
Fulfilling and surpassing customers' wishes. In early 2018,
Daimler Financial Services and its partner Soul Machines presented
the digital avatar "Sarah”. This machine will be able to support
customers just like a personal concierge in many situations. Through
a combination of artificial and emotional intelligence, Sarah will
respond to a variety of customer wishes by providing the right
information at the right time. This digital avatar is voice-controlled,
multilingual, and available everywhere at any time. It thus provides
an answer to the growing volume of online business, with more
and more purchasing decisions being made on digital platforms.
Sarah has already been used successfully in a pilot project
to answer customers' frequently asked questions at a call center.
27
27
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
LELL
C
Sarah.
Digital.
Interactive.
daimler-financialservices.com/en/future-mobility/innovations/artificial-intelligence
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
Services.
W-LAN
33
youtu.be/mlqYAEnqptQ
Trailblazing.
35
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
Flexible vehicle production, a modern work environment, and Industry 4.0
under one roof. Mercedes-Benz Cars is building the automobile production line
of the future at the Sindelfingen plant. A completely new infrastructure will be
used in Factory 56. The hall will be fully provided with Wi-Fi, it will communicate
with its surroundings, and it will use digital tools. The 360-degree connectivity
will extend far beyond the production halls. It will include the suppliers, the teams
for development, design, and production, and the customers, who can already
use the Mercedes me app to gain insights into the production of their vehicles.
A new type of work organization will take the employees' individual needs into
account. Sustainability and energy efficiency will also play a huge role, for example
through the use of renewable energy sources. At the beginning of the next decade,
Factory 56 will launch its series production of upper-range and luxury-class cars
and electric vehicles, as well as fully automated driverless vehicles.
Connected.
Sustainable.
Factory 56.
110 L Z-2 RO F10
90 LX+100 Y+100 RO FMAX
100 L 270 RO FMAX
LOKALISIERT + VE
VERBUNDEN
COMPANY
Britta Seeger | 49
Mercedes-Benz Cars
Marketing & Sales,
Appointed until December 2024
CULTURE
Hubertus Troska | 58
Finance & Controlling,
Appointed until December 2020
45
Bodo Uebber | 59
CUSTOMER
Daimler Financial Services,
Appointed until December 2019
Greater China,
CASE CORE
Renata Jungo Brüngger | 57
Integrity and Legal Affairs,
Appointed until December 2023
Mercedes-Benz Vans,
of Labor Relations,
Human Resources and Director
Wilfried Porth | 60
Martin Daum | 59
Daimler Trucks and Buses,
Appointed until February 2022
Appointed until December 2022
Cars Development,
Group Research & Mercedes-Benz
Ola Källenius | 49
Chairman of the Board
Dieter Zetsche | 65
Daimler is on the right track and
we are rapidly progressing towards
the future. As one of the leading
vehicle manufacturers, we focus
consistently on our customers.
In order to completely fulfill their
requirements all over the world,
we are utilizing our four strategic
components: CORE, CASE, CULTURE
and COMPANY. In this way, we are
shaping the mobility of tomorrow -
to the benefit of our customers,
employees, partners and investors.
The Board of Management
66
Appointed until April 2022
of Management,
Head of Mercedes-Benz Cars,
Appointed until December 2019
The Supervisory Board
Highlights of 2018
56
Daimler sold more vehicles than ever before in 2018: a total of 3.4 million.
Revenue reached €167.4 billion, which is two percent more than in the previous
year. However, at 11.1 billion euros, EBIT was significantly lower than in 2017.
Net profit amounted to 7.6 billion euros. At the Annual Shareholders' Meeting,
the Board of Management and the Supervisory Board will propose the distribu-
tion of a dividend of 3 euros and 25 cents per share.
But especially in difficult times, it can be seen how good a team is. And we have
proven it: Daimler has a unique team. Together, we faced those headwinds,
while making substantial progress in key areas for the future. On behalf of the
entire Board of Management, I would like to thank each of our nearly 300,000
colleagues for their hard work and dedication last year.
2018 was a year of strong headwinds for the entire automotive industry and
thus also for Daimler. They included the discussion about diesel engines,
the changeover to the new WLTP test method and the global trade dispute.
All of this is reflected in our financial results and our share price.
Dear Thane holders,
CHAIRMAN'S LETTER 39
Stuttgart, February 2019
1 Figures for electricity consumption and CO2 emissions are provisional, non-binding figures calculated by an external technical service.
Figures for vehicle range are also provisional and non-binding. An EU type-approval certificate and a certificate of conformity with official
figures are not yet available. The figures given above may deviate from the official figures.
Mercedes-Benz EQC: electricity consumption combined: 22.2 kWh/100 km; CO2 emissions
combined: 0 g/km, provisional figures¹
Combined power consumption: 22.2 kWh/100 km; combined CO₂ emissions: 0 g/km,
Mercedes-Benz EQC
the customers. We aim to fully meet
their dynamic requirements."
"Daimler is shaping a new era
of mobility that is all about
40
37
COMPANY
CUSTOMER
CULTURE
C
CORE
CASE
DAIMLER ANNUAL REPORT 2018 | THE POWER OF C
Besuchennelding
Valtor Registration
Vaitor Reg
Bescherm
daimler.com/company/project-future.html
Focused, flexible, and even closer to customers. The mobility sector is
changing rapidly, and that's why Daimler is restructuring itself with Project
Future, which is part of its 5C strategy. Three legally independent entities will be
created under the roof of Daimler AG. Mercedes-Benz AG and Daimler Truck AG
will take over the business operations of Mercedes-Benz Cars & Vans and of
Daimler Trucks & Buses respectively. Daimler Financial Services AG, which is
already a legally independent company, will be renamed Daimler Mobility AG.
This structure will sharpen our focus for the business success of the future
by strengthening our entrepreneurial operations and safeguarding synergies.
At the center of all of these changes are our customers' needs. In its new
structure, Daimler will be able to offer its customers individualized mobility
solutions even more effectively all over the world.
DAIMLER
Mercedes-Jellinek-Str.
Shaping.
Future.
Daimler.
How did the individual divisions contribute to these results?
Mercedes-Benz Cars sold 2.4 million cars, setting its eighth consecutive record
for unit sales. Mercedes-Benz maintained its position as the leading premium
brand. Business was particularly good in China: With an increase of eleven
percent, we were able to achieve strong growth there once again, although the
overall market contracted. We strengthened our entire portfolio – from the
compact cars to the SUVs. Our EQC, the first all-electric Mercedes-Benz, also
40
CHAIRMAN'S LETTER
46
54
46
44
Daimler and the Capital Market
Objectives and Strategy
Report of the Supervisory Board
The Board of Management
The automotive industry is undergoing profound
change. We are meeting this challenge -
strategically and structurally. Our goal is clear-
ly defined: We plan to continue to be a leading
vehicle manufacturer while developing into a
leading mobility provider. We are supporting
this transformation with a cultural and organi-
zational realignment. In everything we do,
we focus on the wishes of our customers - this
is the basis of our future success, and in this
way, we also offer excellent prospects for our
investors, partners and employees.
Shareholders
DAIMLER
To Our
ALTO OUR SHAREHOLDERS CONTENTS 43
Dieter Zetsche
Die t
Sincerely yours
62
2019 is a year of change for Daimler: With your approval, we will restructure
our company. We are accelerating into the era of electric mobility. At the same
time, we are entering new dimensions in connectivity, autonomous driving and
mobility services. Each of these fields offers enormous opportunities for Daimler
in the future. Our team has the will and the skills to use them. We will be
delighted if you, our shareholders, continue accompanying us along this path.
CHAIRMAN'S LETTER
42
At Daimler, we have gone all-out on the offensive with electric mobility.
This year, the EQC will be in the dealerships. This car is the start of a new electric
era at Mercedes-Benz. By 2022, we will electrify the entire product range:
A total of 130 electrified passenger car variants are planned. Our goal is clear:
We can build on a strong technological base also with autonomous driving.
We will launch a driverless shuttle service this year in San José, California. The
technology will make urban mobility even more convenient and road traffic
safer overall. Automated driving functions also offer enormous economic advan-
tages for our commercial-vehicle customers. We plan to put highly automated
trucks on the road within the next decade. With the new Actros, we are already
the world's first manufacturer with a semi-automated truck in series production.
In the field of sharing, we will make further progress through the merger of our
mobility services with those of BMW. The new Berlin-based company will start
work this year. We are also expanding our portfolio at Daimler to include a pre-
mium ride-hailing service in China, which we are developing jointly with Geely.
In the area of connectivity, we are continuously developing our MBUX
infotainment system for example. Most recently, we have optimized voice control
and introduced gesture control. New features can be directly experienced
by our customers via over-the-air updates. Connectivity offers enormous future
potential. And with MBUX, we have an excellent basis to utilize it.
What we achieved in Daimler's core business last year – despite the difficult
environment – also gives cause for optimism for this year. The business
environment remains extremely challenging. That's why we are continuing to
work hard on our efficiency. At the same time, we will continue to drive
forward the four key future fields of our industry: connectivity, autonomous
driving, sharing and electric mobility. What are our next steps here?
-
-
CHAIRMAN'S LETTER 41
Daimler Financial Services finances or leases 50 percent of all the vehicles
we sell. The division increased its new business slightly and its contract volume
significantly. For the first time, it had more than five million vehicles on its
books. Our mobility services also developed positively. They are already used by
31 million people worldwide - 13 million more than a year ago.
The eCitaro was the dominant topic at Daimler Buses last year. With this new
model, we are offering an effective solution for improving air quality in cities.
Series production started soon after its world premiere and the first of these buses
are already in use with customers. Overall, our buses' sales curve showed a
clear upward trend last year.
Most of the major commercial-vehicle markets were on the upturn in 2018 -
Daimler Trucks made good use of that. We clearly passed the mark of 500,000
trucks sold and thus posted the best year in our history. Total unit sales rose
by ten percent. In Europe, we recorded a slight increase, and we grew significantly
in North America, Latin America and Asia. The highlight on the product side
was the presentation of the new Mercedes-Benz Actros. Our flagship heavy-duty
truck sets new standards for safety, efficiency and connectivity.
Mercedes-Benz Vans also achieved record unit sales, delivering a total of
421,000 vehicles, which is five percent more than in the prior year. We expect
the new Sprinter in particular to stimulate further growth. This is backed up
by major orders: The response to the Sprinter is extremely good. In the future,
we will deliver several thousand vehicles to Hymer each year. And Amazon
has placed an order for 20,000 of our vans.
had its world premiere. smart will focus entirely on electric drive by 2020,
following the changeover in the United States and Canada. Demand is there:
Sales of our smart electric smart doubled last year.
We want to offer our customers the best overall package also in an electric world.
In the commercial-vehicle segment, our electric portfolio is already unique in
its breadth. The first model series of our vans, trucks and buses with electric drive
are already in production and in use with customers. We have set our roadmap
to deliver electric mobility on a large scale. For example, we will purchase battery
cells worth 20 billion euros in the coming years. We are also expanding our
own global network for the production of batteries.
BI TO OUR SHAREHOLDERS THE BOARD OF MANAGEMENT
In a meeting held on February 5, 2019 attended by the external
auditors, the Supervisory Board discussed, took note of and
approved the preliminary key figures of the annual company and
consolidated financial statements for 2018 and the proposal
on the appropriation of profit to be made at the 2019 Annual
Shareholders' Meeting. The Supervisory Board determined
that no objections were to be made to their publication. The pre-
liminary key figures for the year 2018 as well as the proposal
on the appropriation of profit were announced at the Annual
Press Conference on February 6, 2019.
Chairman of the Board of Management of Siemens AG
Chairman of the Works Council at the Sindelfingen Plant;
Deputy Chairman of the General Works Council of Daimler AG
Wolfgang Nieke*
Stuttgart
until December 31, 2018
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG (until December 31, 2018)
Dr. Bernd Pischetsrieder
Munich
elected until 2019
Chairman of the Supervisory Board of the Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft in München
Other supervisory board memberships/directorships:
Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft
in München - Chairman
Tetra Laval Group
elected until 2023
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD 55
Bremen
elected until 2023
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG
Sibylle Wankel*
Frankfurt am Main
elected until 2023
General Counsel of the German Metalworkers' Union
(IG Metall)
Other supervisory board memberships/directorships:
Siemens AG (until January 31, 2018)
Dr. Frank Weber*
Sindelfingen
Elke Tönjes-Werner*
elected until 2023
Sindelfingen
NXP Semiconductors N.V.
Chairman of the Works Council of the Nuremberg Dealership,
Daimler AG
Dr. Clemens Börsig
Frankfurt am Main
elected until 2022
Former Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Linde AG
Linde Intermediate Holding AG (since September 25, 2018)
Linde plc (since October 22, 2018)
Emerson Electric Co.
Raymond Curry*
Detroit
(since April 5, 2018)
elected until 2023
Secretary-Treasurer United Auto Workers (UAW)
Ergun Lümali*
Dr. Jürgen Hambrecht
Ludwigshafen
Other supervisory board memberships/directorships:
BASF SE - Chairman
Fuchs Petrolub SE - Chairman
Trumpf GmbH + Co. KG - Chairman
Petraea Heynike
Vevey
elected until 2021
Former Executive Vice President of the Executive Board of
Nestlé S.A.
Joe Kaeser
Munich
elected until 2019
Other supervisory board memberships/directorships:
Allianz Deutschland AG
elected until 2023
Director of the Press Shop, Sindelfingen Plant, Daimler AG;
Chairman of the Management Representatives Committee,
Daimler Group
Marie Wieck
Cold Spring/New York
Valter Sanches*
Geneva
retired on April 5, 2018
General Secretary IndustriALL Global Union
Jörg Spies*
Stuttgart
retired on April 5, 2018
Chairman of the Works Council, Headquarters, Daimler AG
Committees of the Supervisory Board:
Committee pursuant to Section 27 Subsection 3
of the German Codetermination Act (MitbestG)
Daimler AG (until December 31, 2018)
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Presidential Committee
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Audit Committee
Dr. Clemens Börsig - Chairman
Michael Brecht*
Joe Kaeser
Ergun Lümali*
Nomination Committee
Dr. Manfred Bischoff - Chairman
Dr. Paul Achleitner
Sari Baldauf
* Representative of the employees
In the meeting held on February 13, 2019, the Supervisory Board
dealt with the annual company financial statements, the annual
consolidated financial statements and the combined management
report for Daimler AG and the Daimler Group, each of which
had been issued with an unqualified audit opinion by the inde-
pendent auditors, as well as with the reports of the Audit Com-
Imittee and the Supervisory Board, the corporate government
statement combined with the corporate governance report,
the remuneration report, the non-financial report issued with a
limited assurance in accordance with ISAE 3000, and the pro-
posal on the appropriation of profit. In preparation, the members
of the Supervisory Board had been provided with comprehen-
sive documentation including the Annual Report with the con-
solidated financial statements according to IFRS, the combined
management report for Daimler AG and the Daimler Group,
the declaration on corporate governance combined with the
corporate governance report, the remuneration report, the
non-financial report, the annual company financial statements
of Daimler AG, the proposal of the Board of Management on
the appropriation of profit, the audit reports of KPMG AG
Wirtschaftsprüfungsgesellschaft on the annual company finan-
cial statements of Daimler AG and the consolidated financial
statements, each including the combined management report,
and the Internal Control System (ICS), as well as drafts of the
reports of the Supervisory Board and of the Audit Committee.
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Chairman of the Works Council, Untertürkheim Plant,
retired on December 31, 2018
Stuttgart
(since April 5, 2018)
elected until 2023
General Manager IBM Blockchain
Dr. Sabine Zimmer*
Stuttgart
(since April 5, 2018)
elected until 2023
Manager Vocational Training Policies,
Germany, Daimler AG
Roman Zitzelsberger*
Stuttgart
elected until 2023
German Metalworkers' Union (IG Metall), District Manager
Baden-Württemberg
Other supervisory board memberships/directorships:
Heidelberger Druckmaschinen AG (until July 25, 2018)
MTU Friedrichshafen GmbH (since March 23, 2018)
Rolls-Royce Power Systems AG (since March 23, 2018)
Elected as substitute member for Wolfgang Nieke,
moved up on January 1, 2019:
Michael Häberle*
Stuttgart
elected until 2023
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG (since January 1, 2019)
Retired from the Supervisory Board:
Andrea Jung
New York
retired on April 5, 2018
President and Chief Executive Officer of Grameen America, Inc.
Wolfgang Nieke*
elected until 2023
Nuremberg
Chairman of the Supervisory Board of BASF SE
Deutsche Telekom AG (until May 17, 2018)
Corporate governance and declaration of compliance
During the year 2018, the Supervisory Board was continually
occupied with standards of good corporate governance.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 51
pages 120 ff
In addition, the Supervisory Board dealt with software documen-
tation, the technical compliance organization and the approval
process in vehicle development, and was provided with informa-
tion on the topic of sales of the future. The Supervisory Board
was also informed about the topic of personnel development and
the implementation of Leadership 2020. Other subjects dis-
cussed at the meeting were matters of corporate governance,
in particular the declaration of compliance with the German
Corporate Governance Code, and the review of the overall
requirement profiles for the Board of Management and the
Supervisory Board, including their fulfilment. Furthermore, the
Supervisory Board looked ahead to the main topics for the
2019 financial year. Finally in this meeting, it dealt with the fur-
ther development of the remuneration system, on the basis
of preparations by the Presidential Committee, and, against the
background of fundamental technological changes in the
automotive industry, decided on changes to the annual bonus
effective as of January 1, 2019. Details of the system of
Board of Management remuneration and changes to the annual
bonus are presented in the Remuneration Report.
The meeting also focused on information on current legal issues,
including inquiries, investigations, proceedings and adminis-
trative orders in connection with diesel exhaust emissions. The
question of possible claims for damages against former or
current members of the Board of Management in connection with
the European Commission's antitrust proceedings against
truck manufacturers was also dealt with once again. The Super-
visory Board decided, after careful discussion of new knowl-
edge gained from the further clarification of the facts of the case
and after renewed consideration of the reasons for and against
the assertion of a claim and taking into account the welfare of the
Company, to maintain its current position that no claims for
compensation are to be made at the present time.
On the day before the meeting in December 2018, the members
of the Supervisory Board had the opportunity to participate in
a product presentation. In the context of the actual meeting on
December 12, 2018, the Supervisory Board dealt with the
proposals to be made at the Annual Shareholders' Meeting in
2019 for the election to the Supervisory Board of two mem-
bers representing the shareholders described on page 52.
In addition, the Supervisory Board discussed key individual
topics of Project Future. During the further course of the meet-
ing, on the basis of comprehensive documentation, the Super-
visory Board discussed in detail and approved the operational
planning for the years 2019 and 2020, and, in this context,
discussed existing opportunities and risks as well as the Group's
risk management.
Meeting on operational planning 2019/2020
In addition to introductory discussions on the Daimler 5C strategy
and the Mercedes-Benz Cars strategy, the focus of the strat-
egy workshop was on three of the four areas of CASE: "Autono-
mous", "Shared & Services” and “Electric." The Supervisory
Board dealt with the electrification of the vehicle fleets and,
among other things, with battery and cell technology. Further-
more, it was informed about the portfolio of mobility services,
particularly in view of growing mobility requirements in urban
areas. In addition, the Supervisory Board was shown current
developments and solutions relating to the automated and
autonomous transportation of people and goods. Various vehicle
exhibits were also presented. In a constructive and open dia-
logue, the members of the Supervisory Board and the Board of
Management discussed with the executives responsible for
the topics presented how Daimler will prepare for new challenges
and what further developments are imminent. The changing
competitive environment was also discussed. In addition, the
Supervisory Board discussed the key financial indicators and
the targets for the Group and the divisions. At the same meet-
ing, the Supervisory Board was informed in detail about cur-
rent legal issues, such as the initiation by the European Com-
mission of a formal investigation into possible collusion on
emission reduction systems. In this respect, the Supervisory
Board dealt with Daimler's internal processing of the matters
and, in consultation with an independent law firm, also with the
consequences for the further clarification and examination of
any Board of Management responsibilities that are closely related
to the progress of the proceedings.
In this meeting, the Supervisory Board also approved the
participation in the package of measures to improve air quality
in Germany. The Supervisory Board also discussed, among
other things, the current status of considerations regarding a
new remuneration model for the Board of Management to
take effect on January 1, 2019
page 125 ff).
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
50
In its meeting in December 2018, the Supervisory Board
approved the 2018 declaration of compliance with the German
Corporate Governance Code pursuant to Section 161 of
the German Stock Corporation Act (AktG). With the exception
explained there, all the recommendations of the Code have
been complied with and continue to be complied with.
At the beginning of the two-day strategy workshop in Böblingen
and Filderstadt in late September, the Supervisory Board dealt
with succession planning and decided on personnel changes.
Since the term of office of the Chairman of the Supervisory
Board is due to expire at the end of the Annual Shareholders'
Meeting in 2021, the Supervisory Board wanted to set the
course for a suitable succession at an early stage, in view of the
challenges of the transformation in the automotive industry,
and therefore passed a resolution announcing its intention to pro-
pose the election of Dr. Dieter Zetsche to the Supervisory
Board at the Annual Shareholders' Meeting in 2021. In the event
of Dr. Dieter Zetsche's election by the 2021 Annual Share-
holders' Meeting, the Chairman of the Supervisory Board,
Dr. Manfred Bischoff, intends to recommend Dr. Dieter Zetsche
as his successor as Chairman of the Supervisory Board. In order
to comply with the two-year cooling-off period, Dr. Dieter
Zetsche will therefore resign from his position on the Board of
Management of Daimler AG and as Head of Mercedes-Benz
Cars at the end of the Annual Shareholders' Meeting in 2019.
As a result, the Supervisory Board decided to appoint Ola Käl-
lenius as Chairman of the Board of Management of Daimler AG
for a new period of office of five years and as Head of Mercedes-
Benz Cars effective at the end of the Annual Shareholders'
Meeting in 2019. Starting at the same time, as successor to
Ola Källenius, Markus Schäfer will assume responsibility for
"Group Research and Mercedes-Benz Cars Development" on
the Board of Management of Daimler AG.
In its meeting in late July 2018, following detailed prior discussion,
including preliminary discussions with shareholders and
employees, the Supervisory Board approved the implementation
of Project Future and thus a new divisional structure for the
Group with legally independent entities. In this meeting, the
Supervisory Board also discussed the course of business and
the results of the first half of the year in detail with the Board of
Management and obtained information on current legal issues.
In addition, the Supervisory Board also dealt with the question
of whether an independent special committee of the Supervi-
sory Board of Daimler AG should be set up to clarify any Board
of Management responsibility in connection with the European
Commission's antitrust proceedings against truck manufacturers.
As the facts of the matter were to be assessed and decisions
were to be made by the Supervisory Board in its entirety, and in
view of the fact that all independent members of the Super-
visory Board had a special role in these discussions and that
advice on this matter was provided by an independent law
firm and another independent legal academic, it saw no reason
to form a special committee. Furthermore, in the opinion of
the Supervisory Board, no member of the Supervisory Board has
concrete indications of relevant circumstances or relationships
that could give rise to a material and not merely temporary
conflict of interest and that would therefore speak against
independence.
In a further meeting in early July 2018, the Supervisory Board
discussed in detail the settlement of the Toll Collect arbitration
proceedings and approved the conclusion of a settlement
agreement between the Federal Republic of Germany, Daimler
Financial Services AG, the other consortium partners (Deutsche
Telekom AG and Cofiroute S. A.), Toll Collect GbR and Toll Collect
GmbH to settle those arbitration proceedings.
In late April 2018, the Supervisory Board convened for a two-day
meeting abroad in Hungary. In addition to discussing current
political conditions in Eastern Europe, the main focus was on
visiting the plant in Kecskemét. A regular meeting of the
Supervisory Board was also held as part of the meeting abroad.
Among other things, the Supervisory Board decided on the
future production of electric Mercedes-Benz vehicles at the
French plant in Hambach. Furthermore, the Supervisory Board
approved the transfer of pension obligations to pensioners
of Daimler AG to Daimler Pensionsfonds AG. On the recommen-
dation of the Audit Committee, the Supervisory Board also
resolved to make adjustments to the rules of procedure of the
Audit Committee with regard to the regular report to the
Audit Committee, which were prompted by the changed respon-
sibilities of the BPO (Business Practices Office) whistleblower
system. In addition, the Supervisory Board was informed about
the status of the review and the initiation of the first prepara-
tory measures to strengthen the divisional structure within the
framework of Project Future. Finally, the Supervisory Board
received detailed reports on current legal issues, also with regard
to inquiries, investigations, proceedings and administrative
orders in connection with diesel exhaust emissions.
Supervisory Board meeting held abroad
In the Annual Shareholders' Meeting on April 5, 2018, the can-
didates nominated by the Supervisory Board, Sari Baldauf and
Dr. Jürgen Hambrecht once again and Marie Wieck for the first
time, were elected to the Supervisory Board as representatives
of the shareholders. In the subsequent meeting of the Supervi-
sory Board, the representatives of the shareholders elected
Sari Baldauf once again as a member of the Nomination Com-
mittee and Dr. Jürgen Hambrecht once again as a member of
the Mediation Committee. Furthermore, the Supervisory Board
elected Dr. Jürgen Hambrecht once again as a member of the
Presidential Committee. Also in this meeting, the Supervisory
Board passed resolutions with regard to the employee repre-
sentatives elected with effect as of April 5, 2018: Michael Brecht
was elected Deputy Chairman of the Supervisory Board, Michael
Brecht and Ergun Lümali were elected as members of the Audit
Committee and Roman Zitzelsberger was elected as a member
of the Presidential Committee. In addition, the employee repre-
sentatives elected Roman Zitzelsberger as a member of the
Mediation Committee and the members of the Audit Committee
elected Michael Brecht as the Deputy Chairman of this
Committee.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 49
In the meeting in late March 2018, the Supervisory Board dealt
with the merger of the mobility services of Daimler with those
of BMW into a joint venture with equal shareholdings in the areas
of carsharing, ride hailing, parking, charging and multimodality,
and approved the plan.
In its meeting on February 9, 2018, the Supervisory Board
approved a number of measures for which its consent was
required, in particular for the expansion of capacities at Beijing
Benz Automotive Co. Ltd for the further development of local
production of Mercedes-Benz vehicles. Furthermore, the Super-
visory Board dealt with matters pertaining to the remuneration
of the members of the Board of Management and, in connection
with the item of the agenda on corporate governance, approved
the memberships in other boards and further external second-
ary employments of the members of the Board of Management
that were presented in the meeting. Finally, the Supervisory
Board addressed current legal issues, in particular including
the question of whether, in connection with the antitrust inves-
tigations of truck manufacturers by the European Commission,
claims for compensation were to be made against former or
current members of the Board of Management. On the basis of
the reviews carried out so far and repeatedly updated by an
independent law firm, a further review by an independent legal
academic, as well as detailed discussions in the Supervisory
Board taking into account the welfare of the Company, the Super-
visory Board maintained its previous resolution, based on the
information available, that no such claims were to be made at
the present time. The Supervisory Board arranged for further
clarification of the facts of the case in order to secure the current
state of knowledge and obtained the expertise of an indepen-
dent legal academic, who came to the conclusion that the Super-
visory Board was fully complying with its obligations under
stock corporation law in this respect. At the end of July 2018, it
also discussed in this context the question of setting up an
independent special committee (①page 49). At the meeting
in December 2018, the Supervisory Board dealt once again
with the matter on the basis of new knowledge gained from fur-
ther clarification of the facts of the case (① page 50).
The Audit Committee and the Supervisory Board dealt with those
documents in detail and discussed them intensively in the
presence of the independent auditors. The independent auditors
reported on the results of their audit and on the key audit
matters and the respective audit procedure including the con-
clusions drawn, as well as on the voluntary review of the
non-financial report within the framework of a limited assurance
engagement, and were available to answer questions and to
provide further information. Following the final results of the
review by the Audit Committee and its own review, the Super-
visory Board declared its agreement with the results of the audit
carried out by the external auditors. It determined that no
objections were to be raised, approved the financial statements
and the combined management report as presented by the
Board of Management, and thus adopted the financial statements
of Daimler AG for the year 2017. On this basis, the Supervisory
Board consented to the proposal made by the Board of Manage-
ment on the appropriation of distributable profit. In addition,
the Supervisory Board approved the non-financial report, the
report of the Supervisory Board, the corporate government
statement combined with the corporate governance report, and
the remuneration report, as well as its proposed decisions
on the items of the agenda for the 2018 Annual Shareholders'
Meeting.
In the Supervisory Board meeting held on February 9, 2018,
the Supervisory Board decided to reappoint Renata Jungo
Brüngger as a member of the Board of Management of Daimler
AG with responsibility for “Integrity and Legal Affairs" for
further five years effective as of January 1, 2019. Subsequently,
it dealt with the annual company financial statements, the
annual consolidated financial statements and the combined
management report for Daimler AG and the Daimler Group
for the year 2017, each of which had been issued with an unquali-
fied audit opinion by the external auditors, as well as with the
reports of the Audit Committee and the Supervisory Board, the
declaration on corporate governance combined with the
corporate governance report, the remuneration report, the non-
financial report, which was issued with the independent
auditor's limited assurance in accordance with ISAE 3000, and
the proposal on the appropriation of profit. In preparation,
the members of the Supervisory Board were provided with
comprehensive documentation.
In its meeting on January 31, 2018, which was attended by the
external auditors, the Supervisory Board discussed, took
note of and approved the preliminary key figures of the annual
company and consolidated financial statements for 2017
and the dividend proposal to be made at the 2018 Annual Share-
holders' Meeting. The Supervisory Board determined that
no objections were to be raised to their publication. The pre-
liminary key figures for the year 2017 and the proposal on
the appropriation of profit were announced at the Annual Press
Conference on February 1, 2018.
Michael Bettag*
In accordance with good corporate governance, the members
of the Supervisory Board of Daimler AG are obliged to disclose
conflicts of interest - especially those that might arise due to
an advisory or board function for a customer, supplier or creditor
of Daimler, or for other third parties - to the entire Supervisory
Board.
There were no indications of any actual conflicts of interest in
the year 2018. In order to avoid individual potential conflicts
of interest, some members of the Supervisory Board did not
participate in discussions of certain items of the agendas in
the
year 2018: Dr. Jürgen Hambrecht and Dr. Bernd Pischets-
rieder left the room during the Supervisory Board meetings for
the legal status reports in particular, when legal proceedings
in connection with diesel exhaust emissions were discussed. As
a result, in compliance with the goals of the Supervisory Board,
there were no potential conflicts of interest during the year
under review for at least half of the members representing the
shareholders and for at least 15 members of the entire Super-
visory Board.
In financial year 2018, as scheduled, the Supervisory Board once
again had an externally moderated efficiency review con-
ducted, thus complying with the requirements of its rules of
procedure and the German Corporate Governance Code for
the regular execution of an efficiency review. The results of the
efficiency review, which the Supervisory Board dealt with
intensively at its meeting on February 13, 2019, confirm the pro-
fessional, very good and very trusting cooperation within the
Supervisory Board and with the Board of Management. There
was no fundamental need for change, but individual sugges-
tions were made and are implemented.
The financial statements of Daimler AG and the combined
management report for the Company and the Group for 2018
were duly audited by KPMG AG, Wirtschaftsprüfungsgesell-
schaft, Berlin, and were given an unqualified audit opinion. The
same applies to the consolidated financial statements for 2018
prepared according to IFRS. On the basis of a voluntary review
of the contents of the non-financial report decided upon by
the Supervisory Board, the non-financial report for financial year
2018 was reviewed by KPMG AG Wirtschaftsprüfungsgesell-
schaft, Berlin, within the framework of a limited assurance
engagement and was issued with a limited assurance in accor-
dance with ISAE 3000.
statements
Audit of the company and consolidated financial
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 53
Furthermore, Britta Seeger was reappointed to the Board of
Management of Daimler AG as the member responsible for
"Mercedes-Benz Cars Marketing and Sales" for a further five
years effective as of January 1, 2020.
In the Supervisory Board meeting on February 13, 2019, Harald
Wilhelm was appointed to the Board of Management of Daimler
AG for a period of 3 years with effect as of April 1, 2019. Bodo
Uebber will resign from the Board of Management of Daimler
AG with effect as of the end of the Annual Meeting 2019 and
with effect as of the same time, Harald Wilhelm will take over
the responsibility for "Finance & Controlling/Daimler Financial
Services".
In its meeting in December 2018, the members of the Super-
visory Board representing the shareholders decided, on the
basis of a recommendation by the Nomination Committee, to
propose the reelection to the Supervisory Board of Joe Kaeser
and Dr. Bernd Pischetsrieder at the Annual Shareholders'
Meeting in 2019.
In October 2018, Bodo Uebber, responsible for "Finance &
Controlling/Daimler Financial Services", stated that he did not
wish to extend his current appointment, which expires in
December 2019.
In the Supervisory Board meeting in September 2018, the Super-
visory Board approved the resignation of Dr. Dieter Zetsche,
in consultation with the Supervisory Board, as a member of the
Board of Management of Daimler AG and as Head of Mercedes-
Benz Cars effective at the end of the Annual Shareholders' Meet-
ing in 2019, as well as the appointment of Ola Källenius as
Chairman of the Board of Management of Daimler AG and as
Head of Mercedes-Benz Cars for a new term of office of five
years starting at the end of the Annual Shareholders' Meeting
in 2019. It was also decided that Markus Schäfer would suc-
ceed Ola Källenius as Head of Group Research and Mercedes-
Benz Cars Development on the Board of Management of Daimler
AG with effect from that date.
In the Supervisory Board meeting on February 9, 2018, Renata
Jungo Brüngger was reappointed as a member of the Board
of Management Member with responsibility for "Integrity and
Legal Affairs," effective as of January 1, 2019 for a period of
further five years.
Following the proposal of the Supervisory Board, the Annual
Shareholders' Meeting on April 5, 2018 elected Sari Baldauf
and Dr. Jürgen Hambrecht once again and Marie Wieck for the
first time as members of the Supervisory Board representing
the shareholders, for the period until the end of the Annual Share-
holders' Meeting that decides on ratification of board mem-
bers' actions for financial year 2022. Effective at the end of the
Annual Shareholders' Meeting on April 5, 2018, Andrea Jung
on the shareholders' side and Valter Sanches and Jörg Spies on
the employees' side stepped down from the Supervisory
Board. In the elections of the employee representatives held
before the Annual Shareholders' Meeting, Raymond Curry
and Dr. Sabine Zimmer were elected as members of the Super-
visory Board for the first time in addition to the reelected
employee representatives. At the end of 2018, Wolfgang Nieke
stepped down from the Supervisory Board on the employees'
side and was replaced by Michael Häberle, a replacement mem-
ber elected for him.
Personnel changes in the Supervisory Board and the
Board of Management
There was no occasion to convene the Mediation Committee
during the reporting period.
The Nomination Committee convened for two meetings in 2018.
In particular, the Committee prepared recommendations for
the Supervisory Board's proposals to be made at the Annual
Shareholders' Meeting in 2019 on the candidates for election
to the Supervisory Board. Among other things, and taking into
consideration all circumstances of each individual case, the
proposals are oriented towards the Daimler Group's interests
and aim to fulfill the overall qualifications profile, including
expertise profile and diversity concept, for the entire Supervi-
sory Board.
The Audit Committee met six times in 2018. Details of those
meetings are provided in a separate report of that committee
on pages 188 ff.
The Presidential Committee convened five times last year. It
dealt primarily with personnel matters of the Board of Manage-
ment, remuneration questions and corporate governance issues.
As in previous years, compliance targets constituted part of
the individual target agreements of the members of the Board
of Management. Once again, additional non-financial targets
were also included as criteria in the target agreements. For the
past financial year, they were the further development and
permanent establishment and consideration of the corporate
values integrity and diversity with regard to increasing the pro-
portion of women in management positions, the maintenance
and enhancement of a high level of employee satisfaction and
of high product quality. Details of the changes to the remuner-
ation system for the Board of Management, which apply as of
January 1, 2019, are presented on
pages 125 ff.
The work of the committees
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
52
Corporate governance at Daimler is described in detail in
the declaration on corporate governance combined with the
corporate governance report on pages 191 ff and in the
remuneration report on pages 120 ff of this Annual Report.
For the composition of the Board of Management, the Supervi-
sory Board set the target in December 2016 of at least 12.5%
women, which is applicable until December 31, 2020.
In its meeting on December 12, 2018, the Supervisory Board dis-
cussed the specific proposals for candidates to be elected at
the 2019 Annual Shareholders' Meeting and decided, upon the
recommendation of the Nomination Committee, to propose
at the 2019 Annual Shareholders' Meeting that Joe Kaeser and
Dr. Bernd Pischetsrieder be once again elected to the Super-
visory Board. If the proposed candidates are elected, the
statutory quota for women will remain fulfilled both on the
shareholder side and for the Supervisory Board as a whole,
provided there are no other changes.
As of December 31, 2018, the shareholders' side of the Super-
visory Board of Daimler AG is composed of 30% women (the
members Sari Baldauf, Petraea Heynike and Marie Wieck) and
70% men. On the employees' side, the proportions as of that
date are 30% women (the members Elke Tönjes-Werner, Sibylle
Wankel and Dr. Sabine Zimmer) and 70% men. The Supervisory
Board as a whole therefore also fulfills the statutory quota.
For supervisory boards of listed companies subject to parity
codetermination, like that of Daimler AG, the German Stock
Corporation Act prescribes a binding gender ratio of at least
30% women. The ratio is to apply to the entire supervisory
board. If the side of the supervisory board representing the
shareholders or the side representing the employees objects
to the chairman of the supervisory board before the election
about the application of the ratio to the entire supervisory
board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
Law for the equal participation of women and men in
management positions
The members of the Supervisory Board independently attend
such courses of training and further training regarded as
necessary for the performance of their tasks, relating for exam-
ple to changes in the legal framework and new, future-
oriented technologies, in which they are supported by the Com-
pany. In a special onboarding program, new members of the
Supervisory Board have the opportunity to meet the members
of the Board of Management and senior executives with spe-
cialist responsibility for a bilateral exchange of opinions and
information on fundamental and current topics of the various
Board of Management areas, allowing them to gain an overview
of the topics relevant to the Daimler Group and of its gover-
nance structure.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Strategy meeting of the Supervisory Board
The members of the Supervisory Board and of the Board of
Management came together for bilateral exchanges of opinions
also outside the regular meetings. The Board of Management
informed the Supervisory Board also with written reports about
the most important indicators of business development and
existing risks, and submitted the interim financial reports to the
Supervisory Board. The Supervisory Board was informed of
special occurrences also between the meetings.
elected until 2021
Chairman of the Supervisory Board of Daimler AG
Other supervisory board memberships/directorships:
SMS Holding GmbH
Michael Brecht*
Gaggenau
elected until 2023
Deputy Chairman of the Supervisory Board of Daimler AG;
Chairman of the General Works Council Daimler Group;
Chairman of the General Works Council Daimler AG;
Chairman of the Works Council, Gaggenau Plant, Daimler AG
Dr. Paul Achleitner
Munich
elected until 2020
Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Deutsche Bank AG - Chairman
Bayer AG
Bader M. Al Saad
Munich
48
Former Chairman and Managing Director of the Executive
Committee of the Board of Directors of Kuwait Investment
Authority
Other supervisory board memberships/directorships:
Kuwait Investment Authority
Kuwait Fund for Economic Development (since March 5, 2018)
Sari Baldauf
Helsinki
elected until 2023
Former Executive Vice President and General Manager of the
Networks Business Group of Nokia Corporation
Other supervisory board memberships/directorships:
Vexve Holding Oy - Chairwoman
Nokia Oyj (since May 30, 2018)
Fortum Oyj Chairwoman (until March 28, 2018)
elected until 2022
Dr. Manfred Bischoff
Kuwait
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD
The Supervisory Board
Working culture and areas of Supervisory Board activity
In the year 2018, the Supervisory Board convened for nine
meetings. Participation in the meetings by the members of
the Supervisory Board was at a high level once again. During
the year under review, all members of the Supervisory Board
participated in significantly more than half of the meetings
of the Supervisory Board and of its committees of which they
are members. The work of the Supervisory Board featured
open and intensive exchanges of information and opinions. The
members of the Supervisory Board regularly prepared for
upcoming resolutions with the use of documentation provided
in advance by the Board of Management. Furthermore, the
members representing the employees and the members repre-
senting the shareholders regularly prepared the Supervisory
Board meetings in separate discussions, which were also attend-
ed by members of the Board of Management. The Supervisory
Board was intensively supported by its committees and the
members of the Supervisory Board discussed the measures and
business matters to be decided upon in detail with the Board
of Management. For the meetings, executive sessions were
regularly arranged so that topics could be discussed also in the
absence of the Board of Management.
To achieve this, the Supervisory Board emphatically supports the
reorganization of the Group, the so-called Project Future.
Daimler is acting proactively with this reorganization for five
main reasons: A sharper focus. The legally independent
business entities that we aim to create with their own decision-
making boards will have greater customer proximity and allow
more precise work in the markets. Strengthening entrepre-
neurial action. The new business entities will have greater
freedom and more scope to manoeuver. Gaining innovation/
cooperation partners. The legally separate business entities
will be attractive cooperation partners. Furthermore, the new
structure will offer greater scope to remain capable of action
in a dynamic competitive environment. There are no plans for
Daimler AG to divest individual business units. Enhancing
attractiveness in the capital market. The realignment will
enhance transparency of the individual parts of the Group and
thus the attractiveness of Daimler AG in the capital market.
Securing synergies. The realignment will preserve economies
of scale in purchasing and financing, for example. The shared
use of intellectual property rights, including the brands, will also
continue to be secured under the new structure.
47
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Dr. Manfred Bischoff, Chairman of the Supervisory Board
Daimler's success is based on a profound and integrative auto-
motive expertise and strategic foresight. The 5C strategy con-
sisting of CORE, CASE, CULTURE, COMPANY and CUSTOMER,
which is explained on pages 67 ff of this Annual Report,
is in the implementation phase. It sets the course for a locally
emission-free and electric future and focuses on employees
and customers. Daimler is making enormous investments in the
transformation of the radically changing automotive industry.
This, as well as global trade disputes, and emission and antitrust
issues, are adversely affecting the Group's results of opera-
tions. The latter issues also affect the credibility of the entire
industry. Daimler feels an obligation to its customers and
shareholders to reshape future mobility with sustainable prod-
ucts and innovative services.
The Board of Management regularly informed the Supervisory
Board about all significant economic developments of the Group
and the divisions. It continually provided information to it on all
fundamental questions of corporate planning, including finance,
investment, sales and personnel planning, current developments
at the companies of the Group, the development of revenue,
the situation of the Company and the divisions, as well as on the
current status and the assessment of significant legal proceed-
ings. Furthermore, the Board of Management reported to the
Supervisory Board continually on return on equity and the
Group's liquidity situation, the development of sales and procure-
ment markets, the overall economic situation, and develop-
ments in the capital markets and the area of financial services.
Additional topics included the further development of the prod-
uct portfolio, securing the Group's long-term competitiveness
and the ongoing implementation of measures for safeguarding
sustainable and future-oriented mobility. The Supervisory Board
also dealt in detail with the shareholder structure, the develop-
ment of the share price and the related background, and the
expected impact of strategic projects on the share price.
The Supervisory Board examined whether the annual company
and consolidated financial statements, the combined
management report and other financial reporting, as well as
the non-financial report for Daimler AG and the Daimler
Group, which was prepared for the first time for financial year
2017, were in conformance with the applicable requirements.
The Supervisory Board of Daimler AG fully performed its tasks as
defined by the law, the Company's Articles of Incorporation
and its own rules of procedure once again in the year 2018.
The Supervisory Board continually advised and supervised
the Board of Management in the management of the Company
and provided support with strategically important issues
relating to the Group's further development.
Supervisory and advisory activities of the
Supervisory Board
Dear Shareholders, Daimler's 2018 financial year reflects our customers' continuing interest in
our vehicles, as well as the upheaval and global challenges of the automotive industry. Digitization,
connectivity, electrification, automated and autonomous driving, changes in customer behavior,
mobility services, but also new regulatory requirements, are all changing the industry fast. Further-
more, burdens from the past, emissions issues and the current global trade disputes adversely
affected our earnings last year. Despite various challenges, Daimler's success is unbroken and it
will pay out an adequate dividend to its shareholders. The technologies of the future and new
mobility models require extremely high investment. Daimler invests, researches and develops a lot,
and is therefore ideally prepared to play an important and leading role in the mobility of the future,
and in shaping it successfully.
Report of the Supervisory Board
In addition, it approved numerous business matters for which
its consent was required following careful reviews and
consultations. As well as approving the implementation of the
divisional structure with the creation of legally independent
entities in the context of "Project Future", this also included
finance and investment planning, major equity measures
at companies of the Group, associated companies and joint
ventures, and the conclusion of contracts with particular
importance for the Group. The Board of Management informed
the Supervisory Board about a large number of further
measures and business transactions, and discussed them with
it intensively and in detail, including the measures in con-
nection with the administrative order of the German Federal
Motor Transport Authority to recall certain Mercedes-Benz
diesel vehicles and the ongoing talks held with the Federal
Ministry of Transport and Digital Infrastructure.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
54
Dr. Manfred Bischoff
Chairman
Мира как
Stuttgart, February 2019
The Supervisory Board also thanks Andrea Jung, Valter Sanches,
Jörg Spies and Wolfgang Nieke, who closely supported the
Daimler Group through their committed work in the Supervisory
Board and who last year stepped down from the Supervisory
Board.
The Supervisory Board
Appreciation
The Audit Committee and the Supervisory Board dealt with those
documents in detail and discussed them intensively in the
presence of the independent auditors, who reported on the
results of their audit and in particular on the key audit matters
and the respective audit procedure including the conclusions
drawn and the voluntary review of the non-financial statement
within the framework of a limited assurance engagement, and
who were available to answer supplementary questions and to
provide additional information. Following the final results of
the review by the Audit Committee and its own review, the Super-
visory Board declared its agreement with the results of the
audit by the external auditors. It determined that no objections
were to be raised and approved the financial statements and
the combined management report as presented by the Board
of Management. The company financial statements of Daimler
AG for the year 2018 were thereby adopted. On this basis, the
Supervisory Board consented to the proposal made by the
Board of Management on the appropriation of distributable profit.
Furthermore, the Supervisory Board approved the non-finan-
cial report and the report of the Supervisory Board, the decla-
ration on corporate governance combined with the corporate
governance report, and the remuneration report. Due to the post-
ponement of the Annual Shareholders' Meeting until May 22,
2019 in connection with Project Future, no proposed decisions
were approved for the items of the agenda of the 2019 Annual
Shareholders' Meeting, apart from the proposal on the appro-
priation of profit.
46
The Supervisory Board thanks all the employees and the man-
agement of the Daimler Group for their committed contributions
in the challenging environment of the year 2018.
New Daimler trainee program secures tomorrow's
executives
SAK 4058
Mobility is changing. In order to actively shape this change,
outstanding talent is needed. "INspire - the Leaders' Lab" is
Daimler's new trainee program for university graduates and
young professionals with their first practical experience. In 24
months, the participants go through at least four - mainly
international-project assignments and numerous training units,
optimally preparing them for later management tasks.
Daimler has a new major shareholder
The Chinese entrepreneur Li Shufu acquires a 9.7% equity
interest in Daimler AG. Daimler is pleased to have gained Li
Shufu as another long-term investor who is convinced of
Daimler's innovative strength, strategy and future potential.
Daimler Trucks revolutionizes truck production in Brazil
A type of truck assembly line that is completely new for the
Brazilian market is put into operation at the São Bernardo
do Campo plant. Hyper connectivity (real-time networking of
individuals, things and devices) and digital technologies for
systems and tools ensure a future-oriented production system.
Mercedes-Benz do Brasil has brought together the assembly
of light to heavy trucks and the associated parts logistics in a
completely new building.
Daimler and BMW Group agree to combine their
mobility services
The A-Class is more mature and comfortable than ever before.
Technologically, it sets itself apart from the competition, and
not only with the new MBUX infotainment system. At the same
time, it offers a range of safety and driver-assistance systems
that were previously reserved for the luxury class. This applies
also to its appearance: the purist design with clear surfaces is
the next step in the design philosophy of sensual clarity.
Factory 56 - laying the foundation stone for one of the
world's most advanced car production facilities
Mercedes-Benz Cars is building the car production of the
future at its Sindelfingen plant - digital, flexible and green: A
completely new infrastructure is to be used in Factory 56.
The hall is equipped with Wi-Fi throughout, communicates with
its surroundings and uses digital tools. A new form of work
organization takes employees' individual needs into account.
Factory 56 also features sustainability and energy efficiency,
for example through the use of energy from renewable sources.
Series production in Factory 56 is to start at the beginning
of the next decade with cars and electric vehicles in the upper
and luxury classes, as well as self-driving cars.
Daimler AG and BMW Group plan to merge their existing
offerings for on-demand mobility in the areas of car sharing,
ride hailing, parking, charging and multimodality, and to
strategically expand them with the aim of becoming one of
the leading providers of mobility services. Each of the two
companies will hold 50% of the shares in the joint venture for
their combined mobility services. After all the involved anti-
trust authorities approve the transaction by December 2018,
it will be completed in January 2019.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018 59
Mercedes-Benz Vans announces the digital age for our large
vans with the new edition of the bestseller. The third genera-
tion of the Sprinter represents the division's development from
a pure vehicle manufacturer into a provider of integrated
transport and mobility solutions. With new connectivity services,
electric drive and individual hardware solutions for the load
compartment, the large van will make customers' business much
more efficient in the future.
World premiere of the new A-Class in Amsterdam
World premiere of the new Sprinter
At the IAA Commercial Vehicles Show in Hanover in September 2018,
Daimler Trucks celebrates the launch of its new Mercedes-Benz Actros
flagship, with the special model “Edition 1” limited to 400 units, whose
numerous extras provide the driver with a very high level of comfort and
safety. Furthermore, selected design elements give the vehicle high
recognition value. The new Actros brings groundbreaking innovations that
pay off immediately. Operators and drivers alike benefit from extremely
levels of efficiency and comfort.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018
58
57
E
SOULLY
S.MB 1863
www
EDITION
EDITION
AI TO OUR SHAREHOLDERS | HIGHLIGHTS 2018
10
Highlights of 2018
Q2
(in billions of euros)
Q1
DAIM LR
49.1
Mercedes-Benz Cars starts the construction of its first fully
flexible plant in Kecskemét, Hungary. The company is investing
a total of €1 billion in the new car plant and creating more
than 2,500 jobs. In this full-flex plant, widely differing vehicle
architectures can be produced flexibly on one assembly line,
from compact models to rear-wheel-drive sedans and with dif-
fering drive systems including electric drive. The plant in
Kecskemét comprises press shop, body shop, surface process-
ing and assembly. It is highly efficient and has CO2-neutral
energy supply.
65
70
75
80
Daimler share price (high/low), 2018
In euros
A.03
Institutional investors hold a total of 60% of our equity capital
while private investors own 21%. Approximately 62% of our
capital is in the hands of European investors and around 16%
is held by US investors.
The aforementioned and all other voting-rights notifications
are published on the Internet at ④ daimler.com/investors/
share/voting-rights.
2018, Bank of America Corporation notified us that its pro-
portion of the voting rights of Daimler shares rose above the
3.0% reporting limit to 3.30% on May 9, 2018.
Daimler continues to have a broad shareholder base of approx-
imately 1.0 million shareholders (2017: 0.9 million). Shareholder
numbers increased slightly during the reporting year, parti-
cularly as a larger number of private investors purchased our
shares. Tenaciou3 Prospect Investment Limited, a company
controlled by the Chinese entrepreneur Li Shufu, who is also
the founder and CEO of Geely, became Daimler AG's largest
individual shareholder in February 2018. Tenaciou3 Prospect
Investment Limited currently owns 9.7% of the company's
shares. The Kuwait Investment Authority (KIA) currently owns
6.8% of the company's stock, making it Daimler AG's second-
largest single shareholder. The Renault-Nissan Alliance continues
to hold 3.1% of Daimler's shares. BlackRock Inc., Wilmington,
continues to holds a stake above the 5% reporting limit pursuant
to Germany's Securities Trading Act (WpHG). In December
2018, BlackRock notified us that its proportion of the voting
rights was 5.12% at December 17, 2018. In October 2018,
Harris Associates L. P., Wilmington, notified us that its proportion
of the voting rights was 4.93% on October 16, 2018. In May
A broad shareholder structure and a new major
shareholder
The Board of Management and the Supervisory Board will
recommend the payment of a dividend of €3.25 per share for
financial year 2018 (2017: €3.65) at the Annual Shareholders'
Meeting on May 22, 2019. The total dividend will thus amount
to €3,477 million (2017: €3,905 million), which in relation to
the current share price, represents a very attractive dividend
yield.
Dividend of €3.25
60
At the end of the year, Daimler had a market capitalization of
€49.1 billion (2017: €75.7 billion). With a fall of 35% during
the year 2018, the development of Daimler's share price was
thus significantly weaker than that of the DAX (-18%) and
the STOXX Europe Auto Index (-29%). In the first few weeks of
2019, increases in share prices were again to be observed
on the world's stock exchanges. Daimler's shares were listed
at €51.66 at the end of January, which is 13% above the
closing price at the end of 2018.
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 63
+3
-24
59.29
45.27
Lowest¹
73.25
75.69
Highest¹
+1
-35
70.80
45.91
Xetra price at year end¹
59.70
ongoing discussions concerning a ban on diesel vehicles
in several German cities, the growing trade conflict and the
possibility of punitive tariffs and retaliatory measures. One
major concern here was the tariffs placed on automobile imports
into the United States and China, which obviously have a
negative impact on earnings in the automotive industry, partic-
ularly in view of the global supplier and production networks
operated by automotive companies. Not even the sustained
positive development of new orders for trucks in the US could
help Daimler shares to gain lasting momentum in this environ-
ment. The temporary decrease in unit sales at Mercedes-Benz
Cars in connection with the certification process for the new
WLTP standard and higher tariffs imposed by the Chinese
government on automobile imports from the US also had a
negative effect on Daimler's shares as the year proceeded.
The downward adjustment of anticipated earnings for 2018 put
further pressure on the Daimler share price during the year
under review. In a very weak stock-market environment, our
shares reached their lowest point of the year 2018 at €45.27
on December 27, and closed the year 2018 at €45.91. Although
investors recognize the long-term opportunities offered by
the industry's high levels of investment in forward-looking
technologies, automotive stocks still remain low compared
with share prices in other sectors.
60.45
55
45
Key figures for Daimler shares
A.05
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
64
DAX
STOXX Europe Auto Index
Daimler AG
12/31/18
6/30/18
12/31/17
60
65
70
50
GGO
80
85
90
95
100
105
110
115
120
Share price index
A.04
1/18 2/18 3/18 4/18 5/18 6/18 7/18 8/18 9/18 10/1811/1812/18
40
75
Share capital
Equity (December 31)
3.65
DAX 30
-35
70.80
45.91
Daimler share price (in euros)
% change
18/17
End of 2018 End of 2017
Development of Daimler's share price and of major indices
A.01
Global stock markets displayed considerably weaker performance in many regions in 2018. The
Daimler share price also decreased throughout 2018 and closed the year significantly lower than at
the end of 2017. In 2018, we continued to inform institutional investors, analysts, rating agencies
and private investors with a wide range of investor relations activities and comprehensive reporting
on the Group's business development and prospects. Our refinancing benefited from a high level
of capital market liquidity and good ratings. The Board of Management and the Supervisory Board
will propose to the Annual Shareholders' Meeting that a dividend of €3.25 (2017: €3.65) per share
be paid for the year 2018.
Daimler and the Capital Market
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
10,559
62
Daimler establishes Germany's biggest corporate
pension fund
Daimler buys battery cells in a total volume of €20 billion
With extensive contracts for battery cells until the year 2030,
Daimler sets another important milestone for the electrification
of the future electric cars of the EQ product and technology
brand, as well as for electric vans, buses and trucks. Together
with the supply partners, this aims to ensure that the global
battery production network is supplied with the latest technol-
ogies today and in the future.
קמח
Daimler and Bosch announce an app-based, fully automated
and driverless (SAE level 4/5) ride-hailing service. In order
to test this service, it is planned that the metropolis of San José,
California, will become a pilot city during the second half of
2019. Daimler and Bosch plan to make the service available to
selected customers with automated Mercedes-Benz S-Class
vehicles. The pilot project will provide valuable insights for
optimally connecting fully automated vehicles with the users of
future mobility services.
Daimler und Bosch: San José is to be a pilot city for
automated ride sharing
Mercedes-Benz delivers the first series-produced model of
the all-electric eCitaro city bus to Hamburg. It is the first bus of
a major order for 20 vehicles from a German transportation
company. The Mercedes-Benz eCitaro is the first fully electric
city bus developed and manufactured in Germany. With its
quiet and locally emission-free operation, it is an important
factor for reducing emissions, especially in urban areas.
Mercedes-Benz delivers the first all-electric eCitaro city
bus to Hamburg
As a result of current developments, Daimler AG reassesses
its earnings potential for the year 2018. This is mainly due to
an increase in expected expenses in connection with ongoing
governmental proceedings and measures in various regions
relating to Mercedes-Benz diesel vehicles. In addition, Mercedes-
Benz Vans has posted lower unit sales due to delivery delays.
Furthermore, a recent ruling by the European Court of Justice
has led to provisions for risks being recognized for the
possible need to retrofit certain vehicles that are still equipped
with the previously used refrigerant R134a.
Daimler adjusts its earnings guidance
For the fifth time in succession, Mercedes-AMG Petronas
Motorsport secures the Constructors' World Championship in
FIA Formula 1 racing. In addition, they are delighted about
a fifth consecutive title double, as Lewis Hamilton wins the
Drivers' Championship. The team has once again proven its
competitiveness and technical expertise, culminating in the
hybrid drive engine used in the Mercedes F1 W09 EQ Power.
#HiFive: Mercedes-AMG Petronas Motorsport wins the
Constructors' Championship in Formula 1
-
Foundation stone for first "full-flex plant"
Daimler AG establishes a pension fund for its retirees. As
of January 2019, approximately 80,000 pensioners will receive
their benefits out of the company pension scheme directly
from Daimler Pensionsfonds AG. For this purpose, Daimler AG
has allocated assets of approximately €8.2 billion to the
pension fund. The pension fund is subject to the German Insur-
ance Supervision Act (Versicherungsaufsichtsgesetz) and is
regulated by the German Federal Financial Supervisory Author-
ity (Bundesanstalt für Finanzdienstleistungsaufsicht).
-29
-11
12,918
3,001
3.25
Dividend
9.61
6.78
Net profit
On January 23, 2018, the Daimler share price reached €75.69,
which was its highest level for the year. Automotive stocks
were able to carry over their momentum from the previous year
at the beginning of 2018, but this changed in early February
in the wake of price corrections on the German stock market.
The Daimler share was significantly impacted by this develop-
ment. Investors were made to feel even more uneasy by the
Daimler share price falls by 35%
The index of the most important equities in the euro zone, the
Euro STOXX 50, fell by 14% in 2018. The development of the
leading German share index, the DAX, was even weaker, with
a decrease of 18%. In Japan, the Nikkei index closed the year
at 20,015, which is 12% lower than a year earlier. In the United
States, the Dow Jones reached an all-time high of 26,774
in October, but was 6% below the prior-year level at the end
of 2018.
The positive sentiment on global stock markets at the beginning
of the year, which was largely a result of the tax reform in the
United States, led to all-time highs being recorded on several
important share indices in January 2018. As the year pro-
gressed, however, stock-market sentiment deteriorated notice-
ably. In particular, the US government's announcement of
possible increases in import tariffs led to a great deal of uncer-
tainty on global markets. Most stock markets did make gains
once again between the end of March and mid-May, as the
expectation of good results for the first quarter of 2018
caused investors to regain confidence. After that, however,
sentiment was once again affected by unrest. In particular,
the worsening trade conflict and the possibility of punitive tar-
iffs led investors to adopt a more reserved position and to
sell off stocks. Investors also continued to monitor the political
situation in Italy. Additional strain was put on the markets
by an interest-rate increase implemented in the United States
by the Federal Reserve in June. Market volatility increased
from the beginning of July until the end of August, in part due
to tension between the United States and Turkey. Financial
markets also suffered further as a result of ongoing discussions
on the possible introduction of punitive tariffs, the high level
of structural government debt in Italy, and the faltering Brexit
negotiations. Concern about the global economy grew again
at the beginning of the fourth quarter, after which global stock
markets came under increasing pressure once again and
share prices decreased substantially across many sectors. Cycli-
cal stocks and not least shares in the automotive and supplier
industries were especially impacted by these developments.
Most global stock markets significantly weaker
% change
18/17
Amounts in euros
Euro STOXX 50
2017
Key figures per share
A.02
-29
615
-18
-14
-6
-12
22,765
20,015
439
STOXX Europe Auto Index
Nikkei
24,719
23,327
Dow Jones Industrial Average
3,504
2018
18/17
1 Closing prices
% change
Weighting in share indices
DAX 30
4.67%
6.79%
Euro STOXX 50
1.93%
2.92%
Long-term credit ratings
S&P
Moody's
Fitch
Scope
DBRS
(in millions)
A.06
A
A
A2
A2
A-
A-
A
A
A
A
ISIN
DE0007100000
German Securities Identification Number
Stock-exchange data for Daimler shares
Number of shareholders
-35
75.7
Annual Shareholders' Meeting approves dividend increase
to €3.65 per share (previous year: €3.25)
Approximately 6,000 shareholders attend the meeting at the
CityCube in Berlin on April 5, 2018. The resolutions proposed
by the management are all adopted by large majorities. The
total dividend payout reaches a new high of €3.9 billion and is
the highest dividend ever paid by a DAX 30 company.
Daimler strengthens its activities for the respect of
human rights
Daimler has developed a systematic approach to respecting
human rights, the Human Rights Respect System. With its
risk-oriented and systematic approach, it increases the effec-
tiveness of previous measures also along complex supply
chains. The company is thus taking another important step
towards making mobility sustainable, which also includes
the responsible procurement of raw materials.
One million world engines for Daimler Trucks
The Mercedes-Benz plant in Mannheim and Detroit Diesel
Corporation, a subsidiary of Daimler Trucks North America
(DTNA), together reach a special milestone in the international
powertrain network: Together, the two plants have produced
a total of 1,000,000 heavy-duty engines, underscoring the suc-
cess of the common platform strategy for the drivetrains of
Daimler Trucks.
Settlement on Toll Collect
Daimler Financial Services AG reaches an agreement with
Deutsche Telekom AG (consortium partner) and the German
Government on terminating the arbitration proceedings
regarding Toll Collect. This will allow a dispute lasting more
than 14 years to be settled. At the same time, Toll Collect
can make a new start without any burdens.
Daimler adjusts its earnings guidance
Daimler AG reassesses its earnings potential for the year 2018.
At Mercedes-Benz Cars, lower SUV sales and higher costs
are to be expected due to higher tariffs on vehicles imported
into the Chinese market from the United States. In addition,
the certification process according to the new WLTP (Worldwide
Harmonized Light Vehicles Test Procedure) standard will lead
to expenses in the second half of the year.
60
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018
Q3
eCITARO
End of 2018 End of 2017
PAEV 1063
World premiere of the all-electric eCitaro
It operates free of local emissions and almost noiselessly. It
combines the tried-and-tested platform of the bestselling
Mercedes-Benz city bus of all time with new technological
solutions and an independent design. The all-electric
Mercedes-Benz eCitaro raises electric mobility with city buses
to a new level and impresses with its innovative thermal
management with outstanding energy efficiency and range
security.
Vision URBANETIC: needs-oriented,
efficient and sustainable
With its Vision URBANETIC, Mercedes-Benz Vans presents a
revolutionary mobility concept that goes far beyond previous
ideas of automated and autonomous vehicles. It removes the
distinction between passenger and goods transport and is
intended to facilitate the sustainable and efficient transport
of persons and goods in line with differing requirements.
Milestone for new corporate structure
The Board of Management and the Supervisory Board approve
the structural further development of the company. Daimler
thus reaches an important milestone along the way to a new
Group structure. Three independent entities under the
umbrella of Daimler AG are to meet future challenges and sys-
tematically utilize the opportunities offered by the mobility
of the future. The shareholders will decide on the new structure
at the Annual Shareholders' Meeting on May 22, 2019. The
separation can then take place in the fall of 2019.
Mercedes-Benz starts in the era of electric mobility
Mercedes-Benz celebrates the world premiere of the new
all-electric EQC in Stockholm (combined power consumption:
22.2 kWh/100 km; combined CO2 emissions: 0 g/km, pre-
liminary figures*). As a purely battery-powered vehicle, the EQC
stands for a convincing combination of comfort, quality and
suitability for everyday use. Visually, the crossover SUV is a
pioneer of avant-garde electric aesthetics.
Figures for electricity consumption and CO2 emissions are provisional and
non-binding and have been determined by an external technical institution.
The range figures are also provisional and non-binding. EC type approval
and a certificate of conformity with official figures are not yet available.
Deviations are possible between the stated figures and the official figures.
Daimler Supervisory Board sets the course for the future
Manfred Bischoff's appointment as Chairman of the Supervisory
Board will terminate at the end of the 2021 Annual Sharehold-
ers' Meeting. The Supervisory Board intends to propose to the
Annual Shareholders' Meeting that Dieter Zetsche be elected
to the Supervisory Board at that time. Manfred Bischoff will
recommend the election of Dieter Zetsche as his successor as
Chairman of the Supervisory Board. In order to comply with
the two-year cooling off period, Dieter Zetsche will resign from
the Board of Management at the end of the 2019 Annual
Shareholders' Meeting. As a result, the Supervisory Board
decides to appoint Ola Källenius as Chairman of the Board
of Management and Head of the Mercedes-Benz Cars division
following the 2019 Annual Shareholders Meeting.
A | TO OUR SHAREHOLDERS | HIGHLIGHTS OF 2018
61
Q4
Daimler DigitalLife Day @IL for lawyers, data-protection
specialists and integrity and compliance managers
How do lawyers, data-protection specialists and integrity and
compliance managers approach digitization? More than 400
participants deal with this question at the Daimler DigitalLife
Day @IL (Integrity and Legal) in Ludwigsburg near Stuttgart.
Experts discuss with the audience issues such as big data, new
working methods, current developments in legal tech, artificial
intelligence and block chains. On three stages, under the
motto "#empower #shape - #protect," Integrity and Legal
Affairs continues its dialogue on the subject of digitization.
Stock exchange symbol
Reuters ticker symbol
World premiere of the new Actros in Berlin
Shortly before the 2018 IAA Commercial Vehicles trade fair,
Daimler Trucks presents the new flagship of the Mercedes-Benz
brand in Berlin. The new Actros raises safety for all road users,
efficiency for the operator and comfort for the driver to very
high levels. The most important and spectacular innovation is
Active Drive Assist. With Active Drive Assist, Daimler Trucks
is putting partially automated driving into series production.
A.07
The Annual Shareholders' Meeting also reelected Sari Baldauf,
the former Chairwoman of the Board of Directors of Fortum
Oyj, Finland, as a shareholder representative in the Supervisory
Board of Daimler AG. Dr. Jürgen Hambrecht, Chairman of the
Supervisory Board of BASF SE, was also reelected as a member
of the Supervisory Board of Daimler AG representing the
shareholders. Sari Baldauf and Jürgen Hambrecht were first
elected to the Supervisory Board of Daimler AG as represen-
tatives of the shareholders in 2008. Marie Wieck, General
Manager of IBM Blockchain, was elected by a large majority
to the Daimler AG Supervisory Board as a shareholder represen-
tative. The terms for the three elected Supervisory Board
members began after the conclusion of the Annual Shareholders'
Meeting in 2018 and will expire at the end of the Annual
Shareholders' Meeting held in 2023. Important documents and
information related to the Annual Shareholders' Meeting can
be found on the Internet at daimler.com/investors/events/
annual-meetings/2018.
In the exhibition areas of the CityCube, Daimler presented
its technological expertise and a broad range of products and
services under the motto “CORE, CASE, CULTURE, COMPANY."
The exhibition highlights showcased future mobility. Along with
the two-seat super sports show car Mercedes-AMG Project
ONE Vision and the elegant Vision Mercedes-Maybach 6 Cabriolet
show car, the presentation also featured electric commercial
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 65
vehicles such as the MB New Electric Truck, the MB Citaro
Hybrid city bus, the FUSO eCanter van, and the Vision Van. Also
on display were several car models featuring alternative
drive system concepts. A 1:2-scale model of the Volocopter
attracted a great deal of attention as well. The Volocopter
is an all-electric air taxi that is locally emission-free and very
quiet. It is equipped with 18 rotors, and plans also call for
automated operation in the medium term. The Volocopter can
be used to transport passengers as required through air
space in cities as an attractive supplement to public transport
services and has already been tested successfully in Dubai.
Daimler Financial Services presented its mobility services at
the Annual Shareholders' Meeting. The presentation of our pro-
gram for the further development of our corporate culture,
Leadership 2020, showed how Daimler is responding to the
changes occurring with regard to products, customer expec-
tations and the working world. Some of our trainees were also
once again at the meeting to provide an insight into their work.
Continuation of comprehensive investor relations
activities
In 2018, we once again provided institutional investors, analysts,
rating agencies and private investors with timely information
regarding the company's business development. We organized
road shows for institutional investors and analysts in the
finance capitals of Europe, North America, Asia and Australia.
We also held many one-on-one meetings at investor confer-
ences. This was especially the case at the international motor
shows in Geneva and Paris. We reported on our quarterly
results in conference calls and webcasts. The presentations are
available on our website at ☺ daimler.com/investors/events/
presentations. The talks with analysts and investors focused on
the latest earnings expectations for 2018, business devel-
opments and profitability in individual divisions and regions,
and our "Project Future." Investors are also now focusing
more strongly on the transformation of the automotive industry
and the development of the technologies which Daimler
embraces in its CASE approach. In June, the top management
team at Daimler Trucks held a capital market event at the
headquarters of Daimler Trucks North America in Portland,
Oregon. During this event, the executives discussed the
strategies and objectives of global truck operations and
also presented two electric trucks for the US market - the
Freightliner eCascadia and the eM2 - at Portland International
Raceway. The audio/video recordings and charts and illustra-
tions from the event are available at daimler.com/investors/
events/capital-market-days.
Awards once again for the Daimler Annual Report
Our 2017 Annual Report and its online version with numerous
additional features won prestigious international awards once
again in 2018 annual report2017.daimler.com.
The Annual Report received a Platinum Vision Award from the
League of American Communications Professionals LLC
(LACP). In addition, we were given a Silver Stevie Award for the
online version of the 2017 Annual Report, which also captured
Silver at the 2017 LACP Professionals Vision Awards.
Website: easier to navigate, now with more service modules
We continued to develop our Investor Relations site at
④daimler.com/investors in 2018. Navigation pages for the
various site sections, information charts and download
modules all ensure more intuitive operation or get users to
their destination page more quickly. Visitors to the site
also no longer need to download several documents in order
to compare figures from different years, as interactive
diagrams now offer an overview directly at the website.
We have also optimized our content for search engines in
order to make it easier to find in web searches. In addition,
brief summaries in the search results make it easier for
users to decide which site they need or want to visit next.
Number of online shareholders reaches 100,000
Our shareholders continue to make good use of our range of
personalized electronic information and communication.
The increase in online shareholders was particularly high in
2018, as a total of 100,000 (2017: 95,000) shareholders
received the invitation to and agenda for the Daimler Annual
Shareholders' Meeting by e-mail rather than by post. We
would like to thank those shareholders for helping to protect
the environment and cut costs. As was the case in the past,
those shareholders once again had the opportunity to win
attractive prizes in a lottery. Access to the e-service for
shareholders and additional information can be found at
https://register.daimler.com.
Refinancing benefits from a high level of capital-market
liquidity and good ratings
The central banks' monetary policy had a major effect on bond
markets in 2018. As a result of the high level of liquidity,
companies with investment-grade ratings saw their risk premiums
remain at a moderate level for the most part.
Annual Shareholders' Meeting in the CityCube in Berlin
Our Annual Shareholders' Meeting was held on April 5, 2018,
in the CityCube in Berlin. Some 6,000 shareholders (2018:
6,200) attended the meeting. A total of 55.71% (2017: 49.18%)
of equity capital was represented at the meeting (actual
attendees and shareholders who voted by absentee ballot).
A large majority of the shareholders approved each of the
items of the agenda proposed by the company's management.
For example, the Annual Shareholders' Meeting approved
the highest dividend payout to date, €3.65 per share (2018:
€3.25), which means the total dividend amounted to €3.9
billion. This was the highest total dividend payout of any DAX
30 company in 2018.
In 2018, the Daimler Group primarily covered its refinancing
needs by issuing bonds. A large proportion of those bonds
were sold as benchmark bond issuances (bonds with high
nominal volumes) in euro and US-dollar markets. In the
US capital market, for example, Daimler Finance North America
LLC issued bonds worth a total of $8.75 billion. In addition,
Daimler International Finance B. V. issued euro bonds in bench-
mark format with a total volume of €6.50 billion. In 2018,
Daimler AG also issued bonds in China (so-called Panda bonds)
worth a total of CNY 16.0 billion. Furthermore, many smaller
bonds were issued by the Daimler Group in a variety of curren-
cies and markets.
During the year under review, Daimler issued asset-backed
securities (ABS) in the United States, Canada, China, Germany
and the United Kingdom. In the United States, the company
generated a refinancing volume of $7.6 billion through six trans-
actions in 2018; in Canada, a volume of CAD 1.0 billion was
generated in two transactions. In addition, Mercedes-Benz Bank
used the Silver Arrow Platform to sell ABS bonds to European
investors in an amount of €0.75 billion. In the United Kingdom,
a volume of GBP 0.4 billion was successfully placed with
investors, while in China, two ABS transactions were conducted
successfully with a total volume of CNY 16 billion.
Market capitalization
0
1,069.8
1,069.8
0
3,070
3,070
(in millions of euros)
+11
0.9
Bloomberg ticker symbol
1.0
At the end of 2018, Daimler Group companies had issued
bonds that were still outstanding in a volume of €76.5 billion
(2017: €67.1 billion). Besides raising funds through the
issuance of bonds, Daimler also issued a small volume of
commercial paper in 2018.
Employee stock purchase plan implemented once again
Staff members entitled to purchase employee stock were able
to do so once again in March 2018. As was the case in the
previous year, price-reduced shares as well as bonus shares
were offered. At 23.5%, the participation rate in the year
under review was once again significantly higher than in the
previous years (2017: 19.8%). A total of 41,900 employees
took part in the program (2017: 36,200), which is the highest
number since 2008. The total number of shares purchased
by employees also increased substantially once again, from
604,000 in 2017 to approximately 717,000 (of which just
under 64,700 were bonus shares) in the year under review. In
connection with the attendance bonus program, approximately
15,000 shares were additionally issued.
Number of shares (in millions)
710000
DAI
DAIGN.DE
DAI:GR
By type of shareholder
With a weighting of 4.67% (2017: 6.79%), Daimler was ranked
eighth in the German share index DAX 30 at the end of 2018.
In the Euro STOXX 50 index, our shares had a weighting of
1.93% (2017: 2.92%), which put Daimler in 19th place. Daimler
shares are listed on the stock exchanges in Frankfurt and
Stuttgart. A total volume of 1,093 million shares were traded
in Germany in 2018 (2017: 942 million). A substantial number of
Daimler shares are also traded on multilateral trading platforms
and in the over-the-counter market.
Tenaciou3 Prospect
Investment Limited
9.7%
Kuwait Investment Authority
Renault-Nissan
Shareholder structure as of December 31, 2018
3.1%
Institutional investors
59.7%
Retail investors
20.7%
A.08
6.8%
Shareholder structure as of December 31, 2018
By region
11.8%
Asia
6.8%
Kuwait
16.4%
Rest of the world
29.2%
Europe, excluding Germany
3.4%
32.4%
Germany
USA
We are also addressing the cultural challenge associated with
the transformation of the automotive industry by adapting
our corporate culture accordingly. Together with our employees,
we have developed a new management culture within the
framework of the Leadership 2020 program. It builds on a value-
support interdisciplinary work that is independent of hier-
archical structures. To this end, we enable new teams to be put
together for limited periods of time in order to work on
specific projects (swarming). We also promote the development
of innovations through the use of modern techniques such as
scrumming and design thinking. We use co-creation approaches
to develop the best solutions together with our customers.
With our Incubator, which is an internal startup concept for
employee ideas, as well as our STARTUP AUTOBAHN initiative,
we are supporting the development and implementation of new
business ideas and innovations from employees and external
partners. We develop digital solutions at the digital units of our
divisions and at our digital hubs. We teach digital skills in order
We plan to continue growing in the business customer segment
as well. Our Mercedes-Benz Vans Mobility GmbH subsidiary is
expanding and fully digitizing its van rental services in Germany
and around the world. With CharterWay, Daimler Trucks has
been offering customized mobility and services for more than
two decades now. And the Mercedes me app allows Mercedes-
Benz Cars customers to share their A-Class with a predefined
group of users.
With car2go, Daimler Financial Services has been operating
a system for flexible car sharing with electric vehicles for about
seven years now. With 2,100 vehicles distributed across four
all-electric fleets in Stuttgart, Amsterdam, Madrid and Paris,
we are a leading provider of flexible car-sharing services with
electric vehicles. In this way, car2go offers millions of urban
residents a simple way to become acquainted with electrically
operated vehicles. Daimler Financial Services also supports easy
access to electric mobility through leasing plans and overall
packages for electric vehicles and accessories.
Daimler Buses is also focusing on the development of electric
drive systems. Its buses CO2 balance can be further improved
with battery operation and the use of other alternative drive
systems. The Citaro hybrid was followed in 2018 by the
eCitaro electric city bus. Plans now call for the production
facility in Mannheim to be expanded into the Daimler Buses
center for electric mobility. In addition, Daimler Buses operates
an eConsulting program that offers customers holistic advice
on converting public transport bus fleets to electric vehicles, and
also provides follow-up services for bus operating companies.
Mercedes-Benz Vans plans to electrify its commercial model
series over the coming years. The eVito has been available
to customers since November 2018 and the eSprinter is to
expand the electric product range starting in 2019. The use
of a standardized "off the rack" electric model for the tradesmen,
parcel delivery companies or passenger transport operators
will not work out over the long term. That is why Mercedes-
Benz Vans is setting its sights on customized holistic system
solutions created on the basis of expert consultations. In a dia-
logue between the customer and experts from Mercedes-
Benz Vans, the operating concepts are individually adapted to
the customer's sector-related needs, vehicle fleet sizes and
driving profiles - or to the architectural requirements for creating
the customer's own charging infrastructure on company
premises.
Daimler Trucks is also focusing more strongly on vehicle
electrification. Increasing restrictions on vehicles with com-
bustion engines in cities, as well as more stringent emission
limits, are promoting the development of alternative drive sys-
tems for commercial vehicles as well. We are a leading truck
manufacturer and we also want to be a leader in truck electrifi-
cation. With the eCanter from FUSO, the FUSO Vision One,
two electric trucks from Freightliner, the Mercedes-Benz eActros
and the Saf-T Liner C2 school bus from Thomas Built Buses,
Daimler Trucks already has a very extensive portfolio of electric
commercial vehicles. The establishment of the E-Mobility
Group maximizes the effectiveness of our investments in this
strategically important technology. We plan to introduce
a globally standardized electric architecture and develop the
best solutions for truck batteries and charging and energy
management systems.
Mercedes-Benz Cars plans to significantly expand its range of
electric vehicles over the coming years. Daimler assumes that
by the year 2025, electric models will account for between 15
and 25% of Mercedes-Benz Cars' unit sales. To that end, we
plan to launch more than 10 all-electric cars in all segments, from
the smart to the large SUV. We are investing approximately
€10 billion in the expansion of our electric fleet and more than
€1 billion in the development of battery production. We are
developing an independent modular and scalable electric-vehicle
platform that will enable us to offer a high degree of flexibility
in terms of variants and models. All of the electric vehicles and
electric mobility services offered to Mercedes-Benz Cars
customers have been consolidated under our new EQ brand,
which stands for "Electric Intelligence." Together with partners,
we are investing in the establishment of a charging infrastructure,
especially on major highways in Europe. We have designed our
production network in a manner that allows us to manufacture
our electric vehicles alongside the corresponding vehicles
equipped with combustion engines on the same production lines
at all of our key plants worldwide. This ensures that we can
react with sufficient flexibility to any changes in demand for
electric vehicles. In line with producing electric vehicles, we
are also expanding the production of batteries.
Electric
Adapting our corporate culture (CULTURE)
Daimler Financial Services plans to use the experience it has
gained as a vehicle fleet operator and a global provider of
mobility services as it moves ahead with the establishment of
automated and autonomous systems. The division will also
continue to play an important role in the design of the customer
interface and business model.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
70
Daimler Financial Services finances and develops shared
mobility. Customers should be able to enjoy mobility instantly
and at all times with mobility services tailored to their needs.
At the same time, mobility systems need to be sustainable in
order to ensure a good quality of life in cities. We continuously
invest in the expansion of a comprehensive mobility ecosystem
and the further development of our mobility services car
sharing, ride hailing and mobility-as-a-service. At the same time,
we are working both independently and with partners to
develop the core expertise for the business with fleets of
automated and autonomous vehicles. car2go is a leading
company for flexible car-sharing services. With regard to ride
hailing, the Daimler subsidiary mytaxi is one of the leading
providers in the app-based taxi service market in Europe, while
moovel offers our customers a platform that enables them to
optimally compare, combine, book and pay for various mobility
services. In order to enable the rapid scaling of on-demand
mobility, all car-sharing, ride-hailing, parking, charging and
multimodal services currently offered by Daimler Mobility
Services and the BMW Group will be merged and strategically
further expanded. Within the framework of a joint venture
known as ViaVan, Mercedes-Benz Vans and its strategic partner
Shared & Services
Connected, Autonomous,
Shared & Services, Electric
With its Mercedes-Benz Future Bus with CityPilot, Daimler
Buses has demonstrated the highly advanced stage its
research has reached in the area of partially automated driving
on a BRT (bus rapid transit) route near Amsterdam. BRT
systems are an important element of future urban mobility and
already enable efficient, fast and cost-effective public
transport in many cities around the world.
Mercedes-Benz Vans is also actively positioning itself in the
area of automated and autonomous driving. With Vision
URBANETIC, Mercedes-Benz Vans has presented a mobility
concept that goes far beyond previous ideas regarding auto-
mated and autonomous vehicles. Vision URBANETIC eliminates
the separation between passenger and goods transport by
offering an autonomous driving platform that enables flexible
use for cargo or passenger transport as needed.
Daimler Trucks is underscoring its leading position in the area
of safety through the further development of tried-and-tested
safety technologies such as the fifth-generation Active Brake
Assist system and Sideguard Assist, which Mercedes-Benz
offers as a fully integrated system. With the new Actros and
the new Freightliner Cascadia, Daimler Trucks is the first
manufacturer to offer partially automated driving in series-
produced trucks.
Leading position in
new future-oriented fields
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 71
Forward-looking
structure
Via are now offering flexible shuttle services and pooling
concepts in several European cities to complement local public-
transport systems. The ViaVan service, which was initially
launched in Amsterdam and then in London and Berlin as well,
generates real-time matches of passengers headed in the
same direction and then offers them transport in a single van.
This sustainably reduces traffic volumes in cities while
increasing mobility capacities.
Investment in property, plant and equipment
14.5
2018 2019-2020
0.5
0.7
0.4
COMPANY
Mercedes-Benz Vans
2.2
1.1
1.0
Daimler Trucks
11.3
5.7
4.8
Mercedes-Benz Cars
7.5
6.7
Daimler Group
With our strategic focus areas of CORE, CASE, CULTURE and
COMPANY, we have established the conditions needed to
ensure we can focus more consistently on the requirements of
the CUSTOMER. The goal of Daimler's 5C strategy is to
prepare the company for the challenges and opportunities
associated with the new age of mobility, and to continue
to be a leading vehicle manufacturer while becoming a leading
provider of mobility services.
With legally independent business entities resulting from Project
Future, we are creating greater proximity to the customers
and facilitating more targeted work in the markets. This will
enable the individual divisions to react faster and more
precisely to new trends, technological leaps and unforeseen
market developments. By assigning greater responsibility
to the management in the new legal entities below Daimler AG,
we are also increasing the scope for entrepreneurial action
and our pace of innovation. At the same time, we want to ease
cooperation in specific areas in order to take account of ever
faster technological change. In addition, the new structure will
enhance transparency on the individual parts of the Group
and thus the attractiveness of Daimler AG in the capital market.
Within the Daimler Group, synergies will continue to be
systematically maintained and utilized.
In order to continue keeping pace with the highly dynamic
development of our business environment, we want to create
an organization and structure that will strengthen our focus
on markets and customers, boost our entrepreneurial activities,
and generate and safeguard synergies (COMPANY). With
Project Future, the Mercedes-Benz Cars and Mercedes-Benz
Vans divisions will be placed into Mercedes-Benz AG, and the
Daimler Trucks and Daimler Buses divisions will be placed into
Daimler Truck AG, making them more independent. Daimler
Financial Services AG, which is already a legally independent
company, is to be renamed as Daimler Mobility AG, probably
in July 2019. The division is already well known as the Group's
provider of mobility services. Daimler AG will remain the
parent company and retain responsibility for governance, strat-
egy and control functions, as well as offering Group-wide
services. Responsibility for Group-wide financing will be retained
by Daimler AG as the Group's management holding company,
which will be the only publicly listed company in the Group. The
next step is to obtain approval to implement the new structure
at the Annual Shareholders' Meeting on May 22, 2019.
Strengthening our divisional structure
(COMPANY)
A.10
to promote our employees' enthusiasm for digital technologies
and to enable them to use such technologies effectively. We
also promote knowledge sharing through new event formats
and platforms such as our Social Intranet, blogs and com-
munities. In addition, we offer hands-on experience with digital
technologies during our DigitalLife Days and roadshows at our
locations. This is how we have cooperated with our employees
to create the foundation for the Daimler Group's cultural
transformation.
Amounts in billions of euros
2017
CASE
Daimler Trucks continues to pursue its proven strategy, which
focuses on leadership in innovation, a global market presence
and global platforms. Here, everything always revolves around
the customer. In the important North American market, we
plan to further safeguard our market leadership in the segment
for heavy-duty Class 6 to 8 trucks, whereby the Freightliner
Cascadia has played a major role in the success we have
achieved so far. With its new Actros, Daimler Trucks is also
underscoring its strong position in the areas of safety, digital
cockpits, connectivity and efficiency, particularly in Europe.
Fuel efficiency is a key selling argument, and we work continu-
ously to improve it. With the new Mercedes-Benz Actros for
example, we have been able to reduce fuel consumption once
again compared with the predecessor model. Since 2017,
Daimler Trucks has been investing in its product program in
Brazil, as well as in vehicle connectivity and the modernization
of the two plants in São Bernardo do Campo and Juiz de Fora.
We are now well established in India with BharatBenz, and
we continue to expand our presence with products that feature
cutting-edge technologies, as well as with the production of
vehicles that are exported from India to more than 60 markets.
Investment in our development and manufacturing operations
in Turkey is geared toward the long term and is proceeding as
planned. Daimler Trucks has succeeded in standardizing major
assemblies and modules in many applications and regions. The
continuous renewal of the product portfolio across all regions
makes it all the more important for us to constantly refine our
platform strategy.
CUSTOMER
Mercedes-Benz Cars will continue to implement its growth
strategy with the goal of further safeguarding its leading
position in the global premium segment. We seek to build trust
with our high quality and safety standards, and our innovative
and outstanding products and services are designed to inspire
our customers. We are pursuing three different technological
approaches as we move ahead on the road to emission-free
driving: the further improvement of ultra-modern combustion
engines, expanded hybridization, and locally emission-free
vehicles with batteries and fuel cells. The most important
lever for improving combustion engines is the full electrification
of the drivetrain with the belt-driven starter-generator or the
integrated starter-generator (ISG) combined with a 48-volt
electrical system. Systematic hybridization is an important
interim solution on the road to emission-free mobility. Our
global development network, technology centers and digital
hubs keep us close to our customers, our markets and new
technologies. Within the framework of our growth strategy,
we have expanded our production network in all regions and
improved our global competitiveness. With our lead plants,
which assume global manufacturing responsibility for specific
product groups, we ensure that we implement uniform
standards and consistently deliver the high quality of "Made by
Mercedes" worldwide. Our goal is to make our production
operations modular, flexible and digital, and greener. These
efforts focus on Factory 56, which is an ultramodern, flexible,
fully digitized and CO2-neutral assembly plant in Sindelfingen.
Plans call for the plant to go into operation early in the next
decade. With regard to sales, we focus on the utilization of direct
interfaces to our customers, as well as offering them the
best possible experience over our entire relationship. Depending
on our customers' needs, we make use of physical and digital
channels for customer contact and communication, and also
combine these channels wherever appropriate. Our market
position in China plays a key role in safeguarding our market
leadership. We have already transformed China into the
biggest market for Mercedes-Benz cars, thanks to products that
are aligned with Chinese customers' requirements and our fur-
ther expansion of local development and manufacturing activities.
Safeguarding the earnings performance of Mercedes-Benz
Cars is an ongoing task. That is why we have refined our "Fit
for Leadership" efficiency program and integrated it into
our organizational structure."Fit for Leadership" is expected to
result in an additional €4 billion in earnings by 2025.
Strengthening our global core business (CORE)
At the center of all our activities is our fifth and most important
C: the customer (CUSTOMER). Our processes and organization
focus on our customers - we work with and for our customers
to ensure we provide them with the best products for their
needs and the best solutions for their mobility requirements.
- Strengthening our customer- and market-focused structure
(COMPANY).
Adapting our corporate culture (CULTURE)
- Leading in new future fields (CASE)
Strengthening our global core business (CORE)
to shape the biggest transformation in our company's history.
Our 5C strategy focuses on
We are utilizing five closely linked strategic components
Five strategic components
The full effect of the cost optimizations at Daimler Trucks
with the target of permanent savings of €1.4 billion is to be
achieved as of the year 2019. The continuous improvement of
efficiency will, however, remain an important lever for ensuring
that Daimler Trucks continues to be financially successful.
67
Our goal is to further develop the Group and make it even more
successful. We seek to recruit the most talented individuals
by further promoting a passion for innovation and encouraging
our employees to take on additional responsibility. We have
adopted an employee-focused culture in order to ensure we
remain an attractive employer that can rely on the best team
in the automotive industry. We improve our employees' skills
and qualifications and offer them opportunities for lifelong
learning. We promote and support diversity and inclusion. Integ-
rity is extremely important for our company, especially as
we are undergoing a phase of fundamental transformation.
Integrity guides our dealings with respect to the Group, its
employees, business partners and customers, and society as a
whole. We are convinced that conducting business responsibly
provides us with orientation, especially in times of major trans-
formation; it makes us more successful over the long term,
and it also benefits our society. pages 116 ff
The best team
We gain and maintain our customers' trust with outstanding
products and services that inspire them. We create added value
with our strong brands, unique range of products and
customized services. Our innovative services and new service-
based business models set us apart from our competitors.
We handle customer data responsibly and we use this data to
anticipate new customer expectations.
Inspiring our customers
We are further expanding our strong portfolio in the field of
mobility services. With our broad customer base and presence
in all of the relevant mobility segments, we have already
established a strong foundation for future success. We remain
on course for growth through innovative mobility services
and strong cooperation partners. We want to offer our customers
the best drive system for their needs - everything from high-
tech combustion engines to hybrid and electric drive systems.
In the field of electric mobility, we are establishing an
ecosystem of products and services in order to make electric
vehicles at least as convenient and pleasant to use as those
with combustion engines. We also plan to become a leader in
the area of electric commercial vehicles. In addition, we con-
tinue to expand our strong position in relation to vehicle safety,
the security of our services and our use of customer data.
and attractive business models for private car customers,
fleet customers, and the public transport and commercial goods
transport sectors.
We are setting the standards for the future-oriented fields of
Connected, Autonomous, Shared & Services and Electric
(CASE). We want to expand vehicle connectivity even further
and thus create added value for our customers. We also
seek to be a leader in the use of digital technologies, both in our
products and services and along the entire value chain. The
digitization of our core processes and the utilization of forward-
looking technologies are creating new business opportunities
that revolve around the mobility requirements of our customers.
We seek to play a leading role in automated and autonomous
driving at all our divisions. This will result in the creation of new
A leader in innovation
The foundation for profitable growth is formed by a forward-
looking product portfolio, strong brands and a global
presence. We want all of our businesses to be the leaders in
their respective segments. Our goal at Mercedes-Benz Cars
is to ensure that we play the leading role in the worldwide pre-
mium segment over the long term. We also aim to enhance
the smart brand's role in urban and electric mobility. Daimler
Trucks seeks to further strengthen its leading position in the
global truck business. Mercedes-Benz Vans is striving to be the
number one brand in the premium van segment. Daimler Buses
plans to further strengthen its leading position in the segment
for buses above eight metric tons gross vehicle weight.
Daimler Financial Services seeks to maintain its position as
one of the leading captive providers of financial and mobility
services; it will continue to expand its mobility services and
continue growing, in part by means of cooperative ventures.
The success of our business operations today creates the finan-
cial foundation for investments in the future of our company.
We intend to achieve a 8 to 9% return on sales (EBIT in relation
to revenue) for the automotive business on a sustained basis.
This overall figure is based on the long-term return targets for
the individual divisions: 8 to 10% for Mercedes-Benz Cars, 8%
for Daimler Trucks, 9% for Mercedes-Benz Vans and 6% for
Daimler Buses. For Daimler Financial Services, we have set
a target of 17% for return on equity. We also want to be a leader
in sustainability, and we will accomplish this by incorporating
the environmental and social effects of our operations into our
business strategy. For us, sustainability means combining
business success with social responsibility, environmentally
compatible products and environmentally compatible
production.
Daimler Buses
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Mercedes-Benz Vans plans to keep growing in the future and
to develop from a vehicle manufacturer into a provider of
holistic transport and mobility services. Mercedes-Benz Vans
is utilizing three strategic components here: market strategies
for global growth, product strategies for the further expansion
of its product portfolio, and the adVANce future initiative
focusing on the development and commercialization of customer-
oriented, holistic transport and mobility solutions. Our new
Sprinter plant in North Charleston, South Carolina, now allows
us to serve the local market even faster and more flexibly.
Market potential in China and the increase in online retail sales
of goods are enabling further growth. Our product pipeline
is in outstanding shape with the new Mercedes-Benz X-Class -
the first premium pickup from Mercedes-Benz Vans - and the
new Sprinter. In order to make production even more efficient
and flexible, Mercedes-Benz Vans plans to completely digitize
its global manufacturing operations by 2025. With its adVANce
initiative, Mercedes-Benz Vans is looking far beyond vehicles
themselves and developing from a vehicle manufacturer into
a provider of holistic transport and mobility solutions for
passenger and goods transport applications. adVANce consists
of six components which in combination with the right van
offer a tailored solution for every sector. Here, Mercedes-Benz
Vans works closely with customers as early as the develop-
ment stage, analyses sector-specific requirements, and delivers
holistic solutions that increase the efficiency of customers'
value chains.
68
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 69
CORE
Innovative
corporate culture
investments in CASE
Financial foundation for
core business
Strengthening our global
The five components of the strategy
A.09
Our approach to autonomous driving is based on the use of
comprehensive driving and safety systems, vehicle connectivity
and real-time digital maps. As we continue to develop auto-
mated and autonomous driving, we are relying on the one hand
on technical assistance systems and on the other on auto-
mated systems for transporting customers from A to B without
a driver. With the S-Class, we have underscored the excellent
position Mercedes-Benz Cars occupies in the area of technical
assistance systems. On the other hand, we are developing
automated systems to be used without a driver exclusively or
to be shared with others. Fully automated and driverless
systems give back to people the time they now need to spend
steering and operating the vehicle. In addition, autonomous
driving technology offers people without a driver's license new
opportunities to enjoy mobility. In order to accelerate the
Autonomous
Daimler Financial Services also aims to expand digital business
models in the area of financing and mobility services in the
context of its balanced STRATEGY, and is using connectivity to
further develop its digital services. The financing business is
becoming more flexible with regard to how vehicles are used,
the application of use-based billing and the utilization of
flat rates for leasing (including insurance and maintenance).
Connectivity at Daimler Buses also offers benefits for everyone
involved - for example, bus operators in terms of fleet
management and maintenance costs, bus drivers on their routes,
and passengers using the e-ticketing service. Daimler Buses
now brings together all of its current and future digital services
for buses on its OMNIplus ON digital portal.
Connectivity is an important component of the adVANce stra-
tegic initiative at Mercedes-Benz Vans. The digital@Vans
program brings together new digital solutions, thus underscoring
the transformation of Mercedes-Benz Vans into a provider
of holistic customer-focused transport and mobility services.
Connectivity will also be a crucial factor for success in the
logistics sector in the future. At Daimler Trucks as well,
connectivity is creating substantial added value and leading to
efficiency gains in the transport chain. Our goal is to create a
seamless transport logistics system with connected trucks and
technologies that ensure that all vehicles are ideally always
fully loaded, with no downtimes or waiting periods. With the
digital cockpit in the new Actros, we are combining our
extensive range of digital services with a convenient and intui-
tive operating concept.
Mercedes-Benz Cars is forging ahead with the intelligent
connectivity of products, services and customers. Our cars are
part of the Internet of things and therefore offer customers
a broad range of services that simplify life and make vehicle
operation more intuitive and convenient. Our outstanding
and intuitive Mercedes-Benz User Experience (MBUX) control
system concept points the way forward in this respect. With
"smart ready to ..." the smart brand is being expanded in order
to offer a range of digital services for urban mobility.
Connected
driving, and digitization and connectivity. More detailed infor-
mation on CASE can be found in the "Innovation, Safety and
Environmental Protection" section in the Management Report.
pages 107 ff
As a pioneer of automotive engineering, we seek to be the leader
in all CASE fields (Connected, Autonomous, Shared & Services,
Electric) and to generate additional potential by linking these
four fields. The individual divisions benefit here from develop-
ments throughout the Group in the areas of electric mobility,
driving and safety systems for automated and autonomous
Leading in new future fields (CASE)
Daimler Financial Services plans to use its balancedSTRATEGY
to strengthen the foundation of its current success - the
financing of mobility - while also continuing to expand its opera-
tions as a provider of mobility services. The future importance
of mobility services will also be underscored when Daimler
Financial Services AG is renamed as Daimler Mobility AG in July
2019. Daimler Financial Services will continue to grow around
the world in its core business areas of financing, leasing and
insurance by offering customized services and by utilizing the
developments associated with increased vehicle connectivity.
About half of all the vehicles delivered by Daimler around the
globe today are either financed or leased by Daimler Financial
Services. At the end of 2018, the division was financing or
leasing more than 5.2 million cars and commercial vehicles
worldwide, and it plans to increase this figure in the future.
Daimler Financial Services supports the sales of Daimler vehicles
in approximately 40 countries. The division also aims to
achieve the highest possible degree of customer satisfaction
and to enhance customer loyalty in line with the motto
"Engaging customers for life." To this end, we have created a
new divisional board of management position for customer
experience. Daimler Financial Services also plans to completely
digitize its business processes in order to become an even
faster and more efficient organization.
Occupying an outstanding position in the area of safety
technology and with highly efficient products, Daimler Buses
aims to offer a convincing holistic package of new and used
vehicles, service and maintenance contracts, financing plans
and new mobility services.
Daimler Buses plans to continue its global growth with the help
of its regional strategies and state-of-the-art products in the
city-bus and touring-coach segments. The new Citaro hybrid city
bus makes a convincing impression with an economical and
practical concept for operation in cities. Our new driver assis-
tance systems underscore our strength in the area of active
safety. Daimler Buses' European production network, which has
manufacturing locations in Germany, France, Spain and the
Czech Republic, is being reorganized to make it more efficient
and more competitive. The Mannheim plant is being trans-
formed into the center of competence for city buses and electric
mobility, while the facility in Neu-Ulm will become the center
of competence for touring coaches and autonomous driving.
Innovations in the coming years will be shaped more by
additional technologies than by the launch of new model series.
For this reason, we are strengthening our development
expertise in the fields of electric mobility, connectivity and
autonomous driving. Through our own regional centers, the
production of school buses and touring coaches in India, and
the use of the Brazilian production facility as a hub for exports
to other countries in South America, Africa and Asia, Daimler
Buses continues to expand its international business operations,
particularly in emerging markets.
CULTURE
0.1
74
0.2
Outlook
104
The world economy
158
Automotive markets
159
Unit sales
160
Revenue and earnings
160
Free cash flow and liquidity
161
Dividend
158
162
162
Research and development
162
The workforce
162
Overall statement on future development
163
74
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Corporate Profile
Business model
Daimler can look back on a tradition covering more than 130
years - a tradition that goes back to Gottlieb Daimler and Carl
Benz, the inventors of the automobile, and features pioneering
achievements in automotive engineering. Today, the Daimler
Group is a globally leading vehicle manufacturer with an unpar-
alleled range of premium automobiles, trucks, vans and buses.
Its product portfolio is rounded out by a range of customized
financial services and mobility services. Daimler's goal is to
continue playing a leading role in the development of products
and services for the future of mobility. The automotive industry
is in the process of a fundamental transformation, and we
intend to play a major role in promoting and shaping that change.
With our strong core business we are creating the financial
foundation for our investments in the future-oriented fields of
Connected (connectivity), Autonomous (automated and auton-
omous driving), Shared & Services (flexible use) and Electric
(electric drive systems) - "CASE" for short. Innovations
from the future-oriented CASE fields enable us to safeguard
the attractiveness and profitability of our core business.
Daimler AG is the parent company of the Daimler Group and
its headquarters are in Stuttgart. The main business of Daimler
AG is the development, production and distribution of cars,
trucks and vans in Germany and the management of the Daimler
Group. The management reports for Daimler AG and for
the Daimler Group are combined in this management report.
Investment
B.01
Outlook
Risks and opportunities
Credit ratings
98
Risk and opportunity management system
143
Risks and opportunities
145
Financial Position
Industry and business risks and opportunities
145
99
Company-specific risks and opportunities
150
Financial risks and opportunities
104
152
Legal and tax risks
154
(condensed version according to HGB)
102
Non-financial risks
156
Overall assessment of the risk
and opportunity situation
157
Profitability
102
Financial position, liquidity and capital resources
103
Daimler AG
96
Consolidated revenue by division
53.5%
Employees
145,436
82,953
26,210
18,770
14,070
Brands
AMG
FREIGHTLINER
FREIGHTLINER
SETRA
MAYBACH
FUSO
€26.3 billion
smart
WESTERN STAR
Mercedes me
hams
BUILT BUSES
EQ
BHARATBENZ
BHARATBENZ
Mercedes-Benz Bank
Mercedes-Benz
Financial Services
Daimler Truck Financial
moovel
CAR
2GO
mytaxi
W
Mercedes-Benz Cars
€4.5 billion
€38.3 billion
Daimler Trucks
21.8%
Mercedes-Benz Vans
7.7%
Daimler Buses
2.6%
Daimler Financial Services
14.4%
With its strong brands, Daimler is active in nearly all the coun-
tries of the world. The company has production facilities in
Europe, North and South America, Asia and Africa. The global
networking of its research and development activities as well
as its production and sales locations gives Daimler considerable
advantages in the international competitive field and also
offers additional growth opportunities.
In 2018, Daimler increased its revenue by 2% to €167.4 billion.
The Group's five divisions contributed to this total as follows:
Mercedes-Benz Cars 53%, Daimler Trucks 22%, Mercedes-Benz
Vans 8%, Daimler Buses 3% and Daimler Financial Services
14%. At the end of 2018, Daimler employed a total workforce of
more than 298,000 people worldwide.
The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium vehicles of the
Mercedes-Benz brand, the Mercedes-AMG high-performance
brand and the Mercedes-Maybach luxury brand. These vehi-
cles range from compact models to a highly varied portfolio of
off-road vehicles, roadsters, coupes and convertibles, and
to the S-Class luxury sedans. The product range is rounded out
by the Mercedes me brand and the high-quality small cars
of the smart brand. In 2016, we introduced the new brand EQ
("Electric Intelligence"), which consolidates all of our activities
related to electric mobility. The most important markets
for Mercedes-Benz Cars in 2018 were China with 28% of unit
sales, the United States (14%), Germany (14%), the other
European markets (28%), Japan (3%) and South Korea (3%). The
Mercedes-Benz Cars division is continuously refining its flexible
production network consisting of more than 30 locations on
four continents. In particular, we are preparing our worldwide
production network to meet the requirements of electric
mobility. We will manufacture our electric vehicles of the EQ
product and technology brand within the framework of normal
series production operations, on the same lines used to pro-
duce vehicles with conventional or hybrid drive systems. In the
future, our sites for the production of electric vehicles will
be our plants in Bremen, Sindelfingen and Rastatt, Germany;
Hambach, France; Tuscaloosa, Alabama, United States and
Beijing, China. In parallel, we will expand our global battery
network to nine plants at seven sites on three continents.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 75
As the world's largest manufacturer of trucks above 6 metric
tons gross vehicle weight, Daimler Trucks develops and pro-
duces vehicles in a global network under the brands Mercedes-
Benz, Freightliner, Western Star, FUSO and BharatBenz.
The division's 26 production facilities are located in the NAFTA
region (14), Europe (7), Asia (3) and South America (2). In
China, Beijing Foton Daimler Automotive Co., Ltd. (BFDA), a
joint venture with our Chinese partner Beiqi Foton Motor Co.,
Ltd., has been producing trucks under the Auman brand name
since 2012. Daimler Trucks' product range includes light,
medium and heavy-duty trucks for long-distance, distribution
and construction-site haulage, as well as special vehicles
that are used mainly in municipal applications. Due to close
links in terms of production technology, the division's
product range also includes buses of the Thomas Built Buses
and FUSO brands. Daimler Trucks sells and is testing locally
emission-free electric drive systems across the entire product
portfolio. Daimler Trucks' most important sales markets in
2018 were the NAFTA region with 37% of unit sales, Asia with
32% and the EU 30 region (European Union, Switzerland and
Norway) with 17%.
€13.6 billion
Mercedes-Benz Vans is a global supplier of a complete range of
vans and related services. The division's products range from
the Citan small van with a gross vehicle weight of 1.8 metric tons
to the Sprinter large van with a gross vehicle weight of up to
5 metric tons. The portfolio of Mercedes-Benz vans in the com-
mercial segment comprises the Sprinter large van, the Vito
mid-size van (marketed as the “Metris” in the United States)
and the Citan urban delivery van. In the segment for
The Daimler Buses division with its Mercedes-Benz and Setra
brands is the industry leader for buses above 8 metric tons
in its most important traditional core markets: the EU 30 region,
Brazil, Argentina and Mexico. The division's product range
comprises city and inter-city buses, touring coaches and bus
chassis. The largest of the division's 14 production plants
are located in Germany, France, Spain, Turkey, Argentina, Brazil,
Mexico and, since 2015, in India as well. In 2018, Daimler
Buses generated 70% of its revenue in the EU 30 region and
14% in Latin America (excluding Mexico). Whereas we mainly
sell fully equipped buses in Europe, our business in Latin
America, Mexico, Africa and Asia focuses on the production
and distribution of bus chassis.
B.02
Daimler Group structure 2018
Mercedes-Benz
Daimler Trucks
Mercedes-Benz
Daimler Buses
Daimler
Cars
Vans
Financial Services
Revenue
€93.1 billion
private customers, Mercedes-Benz Vans offers the V-Class
full-size MPV and the Marco Polo travel vans and recreational
vehicles. With the launch of the Mercedes-Benz X-Class in
2017, we now also have a model series in the segment for mid-
size pickups. The eVito, eSprinter and Concept Sprinter
F-CELL demonstrate how systematically we are progressing with
the development of alternative drive systems. The Mercedes-
Benz Vans division has manufacturing facilities in Germany,
Spain, the United States, Argentina, China and Russia. The divi-
sion is active in the Chinese market through the Fujian Benz
Automotive Ltd. joint venture. The production of the Citan and
the Mercedes-Benz X-Class is part of the strategic alliance
with Renault-Nissan. The most important markets for vans at
present are in the EU 30 region, which accounts for 66% of
unit sales, the NAFTA region (12% of unit sales in the year under
review) and Asia (9%).
Refinancing
143
Risk and Opportunity Report
Extensive investment in the Group's future
In the coming years, we will continue to forge ahead with our
innovation offensive in order to implement our growth strategy
through the introduction of new products, innovative tech-
nologies and modern manufacturing capacities. The future-
oriented CASE fields (Connected, Autonomous, Shared &
Services and Electric) will play a key role here. We will invest
almost €15 billion in property, plant and equipment in 2019
and 2020, as well as more than €18 billion in research and
development projects. With this plan, we continue to
maintain a high level of investment in order to safeguard the
future of the Daimler Group. 71 A.10 and A.11
Investment in property, plant and equipment will mainly be
applied to prepare for the production of our new models.
We will also use our investment to realign our manufacturing
facilities in Germany, to increase local production in the
growth markets and to expand our global production network
for electric vehicles and batteries.
Most of our expenses for research and development flow into
new products. Key projects include the successor generations
of the C-Class and the S-Class and new models in the compact
segment. Other focus areas at all of our automotive divisions
include innovative drive-system and safety technologies, vehicle
connectivity systems and the further development of auto-
mated and autonomous driving technologies. Our plans also call
for substantial funds to be invested in our comprehensive
electric mobility offensive at all of our automotive divisions.
Management
Report
S UV 1672
二4501號
Daimler once again achieved record unit sales and revenue in 2018,
and the Group's EBIT also reached a high level of €11.1 billion despite
difficult economic conditions. On the basis of sound finances and a
strong core business, we are positioning our businesses for the future:
with outstanding vehicles and services, with forward-looking technol-
ogies and business models, with an innovative and flexible corporate
culture, and with an organization appropriate to the markets' growing
dynamics.
B | COMBINED MANAGEMENT REPORT | CONTENTS 73
B | Combined Management Report
Corporate Profile
74
0.4
Sustainability and Integrity
Business model
Sustainable profitable growth
Sustainability at Daimler
105
Portfolio changes and strategic partnerships
76
Research and development
105
Important events
77
Innovation, safety and environmental protection
107
Performance measurement system
105
77
0.2
Daimler Buses
Daimler Financial Services
Corporate
0.04
0.06
0.1
0.0
0.1
0.3
A.11
Research and development expenditure
2017
2018 2019 2020
Amounts in billions of euros
Daimler Group
0.2
8.7
18.3
Mercedes-Benz Cars
6.6
7.0
14.0
Daimler Trucks
1.3
1.3
2.9
Mercedes-Benz Vans
0.6
0.7
0.9
9.1
The workforce
113
Financial performance measures
Value added
80 80 80% 89
85
Further development of the remuneration system
effective as of January 1, 2019
125
87
Board of Management remuneration in
89
financial year 2018
128
89
Commitments upon termination of service
130
Net operating profit
89
138
91
Liquidity and Capital Resources
Principles and objectives of financial management
91
Takeover-Relevant Information
and Explanation
140
Cash flows
93
Contingent liabilities and other financial obligations
95
Investment
96
Remuneration of the Supervisory Board
120
Principles of Board of Management remuneration
95
78
Social responsibility
114
Corporate governance statement
78
Integrity, compliance and legal responsibility
116
Economic Conditions and Business
Overall Assessment of the
Development
79
Economic Situation
118
The world economy
Automotive markets
Business development
Profitability
EBIT
Statement of income
Dividend
28
79
80
Events after the Reporting Period
119
81
Remuneration Report
120
85
0.1
Our objectives
development of autonomous driving, we have launched a number
of partnerships, for example with HERE for high-resolution
digital maps and with Bosch for the joint development of tech-
nology for fully automated driving and driverless vehicles.
Objectives and Strategy
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
66
The automotive industry is undergoing far-reaching changes at a highly dynamic pace. Four future-
oriented fields are set to radically change the nature of mobility: greater vehicle connectivity,
advances in automated and autonomous driving, the development of digital mobility and transport
services, and electric mobility. We are addressing this challenge - both strategically and structurally.
Our objective is clear: We intend to continue to be a leading vehicle manufacturer while developing
into a leading provider of mobility services. We are supporting this transformation by implementing
a cultural and organizational realignment. The measure of our success is always the satisfaction of
our customers, as we seek to inspire them with our products and services and to ensure that we
remain a partner they can trust.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 81
Demand for vans continued to develop positively in the EU30
region in 2018. The market volume for mid-size and large vans
increased by 5% and demand for mid-size pickups rose by 7%.
The market for small vans was at the prior-year level. Also in
Germany, sales in the combined segment for mid-size and
large vans increased by 6%. The market for large vans in the
United States expanded slightly in the year under review.
Demand in the mid-size segment of the van market that we
serve in China increased slightly. Market volume for large vans
in Latin America rose significantly from the low level of the
prior year.
Market volume for buses in the EU30 region was slightly above
the high level of the previous year. The situation in Latin Amer-
ica (excluding Mexico) improved due to the market recovery in
Brazil, although growth in the region was slowed by a sharp
market contraction in Argentina. As a result of the ongoing dif-
ficult economic situation in Turkey, the market volume for
buses there once again decreased significantly compared with
the previous year.
Business development
Unit sales
Daimler increased its total unit sales in the year 2018 by 2%
to 3.4 million vehicles, thus achieving its growth target. The
Daimler Trucks (+10%), Mercedes-Benz Vans (+5%) and Daimler
Buses (+8%) divisions confirmed the forecasts made at the
beginning of the year. With an increase of 0.4%, unit sales at
Mercedes-Benz Cars were slightly higher than in the previous
year. The division therefore did not fully achieve the target
it had set at the beginning of the year.
The Mercedes-Benz Cars division sold a total of 2,382,800
vehicles in 2018 despite difficult overall conditions, thus setting
a new record (2017: 2,373,500). With unit sales of 2,252,800
(2017: 2,238,000) vehicles, the Mercedes-Benz brand was the
strongest-selling premium brand in the automobile industry
for the third year in succession. We are number one in the pre-
mium segment in Germany and several other key European
markets, as well as in the United States, South Korea, Canada
and Japan. In addition, we once again significantly improved
our position in China with a new sales record.
Our E-Class models were particularly successful. At 433,600
units (+9%), E-Class sales once again reached a new record
level. Our attractive range of sport-utility vehicles also per-
formed well on the market once again, with sales increasing
by 1% to 829,200 units. Due to the model change, sales of
C-Class vehicles decreased by 3% to 477,700. Sales of A- and
B-Class models were also affected by a model change in the
year under review, although the success of the new A-Class led
to total deliveries of 409,300 units (-3%). The S-Class was very
successful on the market in 2018. Our total sales in this seg-
ment increased by 6% to 83,800 units. With sales of 77,700
units (+7%), the S-Class Sedan remains the best-selling luxury
sedan in the world. 7 B.07
Mercedes-Benz Cars sold a total of 982,700 vehicles in Europe
in 2018 (2017: 1,013,800). Unit sales increased in the volume
markets of Germany (+1%) and Spain (+3%), remained constant
in France, but decreased in the United Kingdom (-7%) and Italy
(-5%). The Mercedes-Benz Cars division continued its success
in China during the year under review. The division's unit sales
in the country rose by 10% to 677,700 vehicles. We set new
records for unit sales also in other Asian markets - for example
in India (+1%), South Korea (+1%) and Thailand (+5%). At
392,600 units, total sales in the NAFTA region were lower than
the high level of the prior year. Sales decreased in the United
States (-3%) and Canada (-2%), while sales in Mexico increased
by 7%.
The smart brand sold a total of 130,000 vehicles in 40 markets
worldwide in 2018 (2017: 135,500).
B.07
pages 166 ff
Unit sales structure of Mercedes-Benz Cars
A-/B-Class
C-Class
17%
20%
E-Class
18%
S-Class
4%
SUVS*
35%
Developments in Daimler's most important Asian markets
were varied. The Japanese market for light-, medium- and heavy-
duty trucks remained solid, with sales only slightly below
the previous year's level. Demand for trucks in India recovered
from the negative effects of regulatory measures introduced
in the prior year, and the Indian market for medium-duty and
heavy-duty trucks recorded a significant double-digit increase
in sales as a result. The truck market in China developed better
than expected and roughly maintained the extraordinarily
high sales volume of 2017.
Despite the somewhat less dynamic overall economic develop-
ment in the EU30 region (European Union, Switzerland and
Norway), the truck market there remained robust, with sales
increasing moderately. Developments varied among the indi-
vidual markets. Demand for trucks rose slightly in Germany and
substantially in France, for example. However, sales in the
United Kingdom decreased relative to the previous year, as had
been expected. Total truck sales in the EU countries of Central
and Eastern Europe increased significantly. Despite disappoint-
ingly weak economic growth in Brazil, truck sales in that
country increased by nearly 50% from the low level of the pre-
vious year. The Turkish truck market recorded a significant
double-digit decrease in sales, primarily due to the country's
economic difficulties. The Russian truck market lost most
of its momentum as the year progressed; the latest estimates
indicate that sales were only slightly above the prior-year level.
Demand for medium-duty and heavy-duty trucks developed
positively overall in markets relevant to our operations. The
North American market benefited from the strong growth of
the US economy and the vibrant development of corporate
investment. Sales of Class 6 to 8 trucks increased by just over
20%.
Demand for cars in Japan remained more or less at the same
solid level as in the prior year. Sales in India increased slightly,
as the Indian car market continued its expansion of recent
years. The Brazilian car market continued to recover in the year
under review. The initial market volume was low in Brazil,
but the country recorded a double-digit increase in unit sales.
Passenger car sales in the whole of Europe were at about the
prior-year level. Demand in Western Europe also remained at
the level of 2017. This easing up can be attributed in part to the
fact that the market volume had meanwhile regained a high
level. In addition, supply bottlenecks caused by the conversion
to the new test procedure for vehicle certification (Worldwide
Harmonized Light Vehicles Test Procedure - WLTP) had a nega-
tive impact on passenger car sales during the last four months
of the year. Demand in the German car market was no higher
than in the previous year, while demand in France increased by
approximately 3%. The UK car market, however, contracted at
a rate of about 7%. Total car sales in Eastern Europe remained
at about the prior-year level, thanks to a significant increase
in demand in the EU countries of Central and Eastern Europe,
as well as in Russia. Sales in Turkey were down sharply,
however, by more than 30%.
Thanks to a favorable overall economic environment, the market
volume for cars and light trucks in the United States remained
more or less unchanged at a very high level, with unit sales
totaling more than 17 million vehicles. The SUV trend continued
unabated, with sales of such vehicles rising significantly in
the year under review. Sales of traditional sedans, on the other
hand, once again decreased significantly.
B.06
Global automotive markets
Unit sales growth rates 2018 in %
(some numbers are preliminary)
30
25
Passenger cars
Commercial vehicles²
20
15
10
5
0
-5
Total
Europe
NAFTA¹
Asia
South
America¹
1 Cars segment includes light trucks
2 Medium- and heavy-duty trucks
Source: German Association of the
Automotive Industry (VDA),
various institutions
Car sales in China fell slightly for the first time in decades.
This was due on the one hand to the discontinuation of the
government tax incentives that had supported car sales in pre-
vious years. On the other hand, the growing trade dispute
with the United States led to uncertainty among consumers,
causing them to postpone vehicle purchases in some cases.
The second half of the year was particularly weak, and full-year
sales ended up decreasing by approximately 4%.
Sports Cars
1%
5%
Global demand for cars remained at a very high level in the
year under review, but actually decreased slightly by about 1%
compared with the previous year. The traditional sales markets
in Western Europe and the United States have now fully recov-
ered from the considerable volume losses suffered as a result
of the financial crisis and have recently been moving only side-
ways. The Chinese car market weakened noticeably as the year
progressed, with full-year demand declining slightly. The mar-
kets of the other emerging economies as a whole were close to
their prior-year level. 71 B.06
in %
18/17
Change in % points
Mercedes-Benz Cars
European Union
6.2
6.3
thereof Germany
10.5
10.5
-0.1
0.0
United States
1.8
2.0
-0.2
China
2.9
2.6
+0.3
Japan
1.6
1.7
-0.1
Daimler Trucks
2017
2018
Market share¹
B.09
* including GLA
Europe
41%
NAFTA
16%
Asia
39%
Other markets
4%
0
82
smart
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
Unit sales structure of Daimler Trucks
EU30
17%
Latin America
7%
NAFTA
37%
Asia
32%
Other markets
7%
B.08
Automotive markets
80
Medium- and heavy-duty
Performance measurement system
Value-based management
The performance measurement system used at Daimler is
designed to ensure that our investors' interests and expectations
are taken into account within the framework of a value-based
management system. Value added shows the extent to which
the Group and its divisions achieve or exceed the return
requirements of the investors, thus creating additional value.
Calculation of value added
Value
added
Profit
measure
Net assets
×
Cost of
capital (%)
Cost of capital
Value
added
Return
on sales
Net assets
productivity
Cost of
capital (%)
Net
assets
78
B | COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Financial performance measures
Profit measure
The measure of operating profit at the divisional level is EBIT
(earnings before interest and income taxes). EBIT thus reflects
the divisions' responsibility for profit and loss. The measure
of operating profit that is used at Group level is net operating
profit. It comprises EBIT as well as profit and loss effects for
which the divisions are not held responsible. The latter include
income taxes and other reconciliation items. 7 B.19 page 89
Return on sales
As one of the main factors influencing value added, return on
sales is of particular importance for assessing the industrial
divisions' profitability. Return on sales is the quotient of EBIT
and revenue, whereby unit sales are the primary source of
revenue. The measure of profitability for Daimler Financial
Services is not return on sales but return on equity (quotient
of EBIT and equity).
pages 89 f
Net assets
B.03
The required rate of return on net assets, and hence the cost
of capital, is derived from the minimum rates of return that
investors expect on their invested capital. The cost of capital
of the Group and of the industrial divisions comprises the
cost of equity as well as the costs of debt and net pension obli-
gations of the industrial business. The expected returns
on liquidity of the industrial business are considered with the
opposite sign. The cost of equity is calculated according to
the capital asset pricing model (CAPM), using the interest rate
for long-term risk-free securities (such as German government
bonds) plus a risk premium reflecting the specific risk of
an investment in Daimler shares. Whereas the cost of debt is
derived from the required rate of return for obligations the
Group enters into with external lenders, the cost of capital for
net pension obligations is calculated on the basis of discount
rates used in accordance with IFRS. The expected return on
liquidity is based on money market interest rates. The Group's
cost of capital is the weighted average of the individually
required or expected rates of return. During the year under
review, the cost of capital amounted to 8% after taxes. For
the industrial divisions, the cost of capital amounted to 12%
before taxes; for Daimler Financial Services, a cost of equity
of 13% before taxes was applied. 7 B.04
76
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
The Daimler Financial Services division supports the sales
of the Daimler Group's automotive brands in approximately 40
countries. Its product portfolio primarily consists of tailored
financing and leasing packages for customers and dealers. It
also includes the brokering of insurance and credit cards,
the provision of fleet management services and investment
products, as well as various mobility services such as car2go -
a leading provider of flexible car-sharing services, the moovel
mobility platform and the ride-hailing group with the mytaxi,
Beat, Clever Taxi and Chauffeur Privé brands. The total number
of users of our mobility services increased to 31.0 million in
2018. During the year under review, Daimler Financial Services
financed or leased approximately 50% of the vehicles sold by
Daimler. The division's contract volume of €154.1 billion covers
more than 5.2 million vehicles.
Daimler is also active in the global automotive industry and
related sectors through a broad network of subsidiaries,
holdings and partnerships. The statement of investments of
Daimler AG in accordance with Section 313 of the German
Commercial Code (HGB) can be found in Note 40 of the
Notes to the Consolidated Financial Statements.
Portfolio changes and strategic partnerships
By means of targeted investments and future-oriented partner-
ships, we strengthened our core business and made use of
additional growth potential in 2018. We also focused on contin-
uously developing our business portfolio and improving our
competitiveness in our core business areas. Our activities
revolve around the strategic dimensions of Connected, Autono-
mous, Shared & Services and Electric (CASE), all of which
will play a major role in shaping the future of mobility. In order
to strengthen our position in these areas, we forged ahead
with our partnerships and made various investments during the
year under review. The most important projects are briefly
described below.
Daimler AG and the BMW Group combine their
mobility services
The BMW Group and Daimler AG intend to offer their custom-
ers a single source for sustainable urban mobility services
in the future. To this end, the two companies signed an agree-
ment in March 2018 to merge their mobility services business
units. The companies plan to combine and strategically expand
their existing on-demand mobility services in the areas of
ca sharing, ride hailing, parking, charging and multimodality.
Daimler AG and the BMW Group will each hold a 50% stake in
a joint venture comprising both companies' mobility services.
The headquarters of the new, joint mobility services company
will be in Berlin. After the complex transaction has been com-
pleted on January 31, 2019, the new mobility services company
together with Daimler AG and the BMW Group will make a
joint announcement in the first quarter of 2019 regarding the
next steps to be taken. The partners plan to grow the new
business model sustainably and to enable the rapid scaling of
services. At the same time, the two companies will remain
competitors in their respective core businesses.
Electric mobility in China
Daimler and its long-standing partner BAIC Group expanded
their strategic cooperation in the new energy vehicle (NEV)
sector in March 2018. Through its acquisition of a 3.93% stake,
Daimler has become a shareholder in Beijing Electric Vehicle
Co., Ltd., (BJEV), which is a subsidiary of BAIC Group. The
closer cooperation with both BAIC and BJEV will enable Daimler
to gain an even better understanding of the needs of Chinese
customers in the NEV sector. The investment in BJEV marks a
further milestone in the close cooperation between Daimler
and BAIC in China and underscores Daimler's commitment to
the further development of electric mobility in the country.
Settlement reached with the German federal government
to end Toll Collect arbitration proceedings
In 2002, Daimler Financial Services acquired a 45% interest
in the Toll Collect consortium, which operates an electronic
truck-toll system on highways in Germany. Daimler's partners
in the consortium were Deutsche Telekom AG (45%) and
Cofiroute (10%). From the launch of the system to the end of
2017, Toll Collect generated more than €53 billion in revenue
for the German federal government, which used the money to
improve and expand Germany's road infrastructure. A long-
standing arbitration proceeding between the Federal Republic
of Germany, Daimler Financial Services AG and Deutsche
Telekom AG in connection with delays to the system's launch
was concluded through the conclusion of a settlement agree-
ment in July 2018. This settlement will now enable Toll Collect
to make a fresh start. Daimler has announced that it will not
participate in the new bidding process for truck-toll collection
in Germany. The current operating agreement ended on
August 31, 2018 and the Federal Republic of Germany acquired
the shares in Toll Collect GmbH as planned on September 1,
2018.
Acquisition of a stake in electric bus
manufacturer Proterra
Daimler Trucks is investing in the US company Proterra Inc.
The companies agreed to form a strategic partnership in
September 2018. Proterra is a leader in the segment for elec-
tric local-transport buses in the United States. Initial joint
projects will focus on the electrification of commercial vehicles
in general and the exploitation of synergies in the electrifica-
tion of school buses manufactured by Thomas Built Buses. The
cooperation gives both companies the opportunity to offer
reliable and economical new transport options with locally
emission-free electric drive technology in this growing seg-
ment. School buses are also an ideal application for electric
drive technology, since, like public-transit vehicles, most
school buses travel the same route or a similar route every day.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 77
Important events
Board of Management and Supervisory Board of
Daimler AG approve further development of the divisional
structure of the Group
On July 26, 2018, the Board of Management and the Supervisory
Board granted their approval for the implementation of the
new corporate structure for Daimler AG. The related worldwide
audits of the organizational and tax implications have been
successfully completed. With the new structure, Daimler aims
to give its divisions greater entrepreneurial freedom, to
become even more market and customer-focused, and to make
it possible to enter into partnerships more easily and quickly.
Now that approval has been granted by the Board of Manage-
ment and the Supervisory Board, "Project Future" can now
be implemented. As the next step, the measures decided upon
require the approval of the shareholders. A draft proposal
for approval is to be presented to the Annual Shareholders'
Meeting of Daimler AG on May 22, 2019.
Daimler sets the course for the future
The regular term of office for the Chairman of the Supervisory
Board, Dr. Manfred Bischoff, is scheduled to end after the
conclusion of the Annual Shareholders' Meeting in 2021. In
view of the challenges presented by the transformation of
the automotive industry, the Supervisory Board aims to prepare
a suitable process of succession at an early stage. The Super-
visory Board has therefore announced its intention to propose
to the shareholders at the Annual Shareholders' Meeting in
2021 that Dieter Zetsche be elected as a member of the Super-
visory Board. Manfred Bischoff intends to recommend the
election of Dieter Zetsche as his successor as Chairman of the
Supervisory Board at the end of the Annual Shareholders'
Meeting in 2021. In order to ensure compliance with the two-
year cooling-off period, Dieter Zetsche will step down from
his position on the Board of Management of Daimler AG and as
Head of Mercedes-Benz Cars at the conclusion of the Annual
Shareholders' Meeting in 2019. In view of this development,
the Supervisory Board of Daimler AG decided in its meeting on
September 26, 2018, to appoint Ola Källenius as Chairman
of the Board of Management of Daimler AG, effective at the con-
clusion of the 2019 Annual Shareholders' Meeting, and also
to appoint Ola Källenius as the Head of the Mercedes-Benz Cars
division for a new term of five years.
Bodo Uebber, the member of the Board of Management of
Daimler AG with responsibility for Finance & Controlling and
Daimler Financial Services, informed the Chairman of the
Supervisory Board, Manfred Bischoff, on October 7 that he
will not seek an extension to his current term of office,
which expires in December 2019.
Value added is derived from the financial value drivers which,
due to their direct relationship to ongoing business operations,
are utilized as financial performance indicators for the periodic
assessment of the performance of the Group and its divisions.
In this sense, value added can be calculated as the difference
between operating profit and the cost of capital of the average
net assets. Alternatively, the value added of the industrial divi-
sions can be determined using the main value drivers of return
on sales (quotient of EBIT and revenue) and net assets' produc-
tivity (quotient of revenue and net assets). 7 B.03
The combination of return on sales and net assets' productivity
results in the return on net assets (RONA). If RONA exceeds
the cost of capital, value is created for our shareholders. In the
case of Daimler Financial Services, return on equity rather
than return on sales is used to evaluate profitability. Using a
combination of return on sales and net assets' productivity
within the context of a strategy of profitable revenue growth
provides a basis for the positive development of value added.
The quantitative development of value added and the
associated financial performance measures is explained in
the "Profitability" chapter.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
All assets, liabilities and provisions for which the industrial
divisions are responsible in day-to-day operations are allo-
cated to those divisions. Performance measurement at Daimler
Financial Services is implemented on an equity basis. Net
assets at Group level include the net operating assets of the
industrial divisions and the equity of Daimler Financial Ser-
vices, as well as assets and liabilities from income taxes and
other reconciliation items which cannot be allocated to
the divisions. Average annual net assets are calculated on the
basis of average quarterly net assets.
page 90
Key performance indicators
for several periodes during the year, which led to slightly higher
rates of economic growth in the Middle East. Despite all the
regional differences, the emerging markets as a whole recorded
real economic growth of just under 4.5%, thereby almost keep-
ing pace with the growth recorded in the prior year.
Currency exchange rates remained volatile in this heterogeneous
growth environment. Against the US dollar, the euro moved
between $1.25 and $1.12 during the year. At the end of the year,
the euro was approximately 5% weaker than at the end of 2017.
The range of fluctuation of the Japanese yen against the euro
was 137 to 125. By the end of the year, the euro had depreci-
ated against the yen by about 7%. The value of the British pound
against the euro was almost unchanged compared with a year
earlier. The euro appreciated against other key currencies such
as the Russian ruble, the Brazilian real and the Turkish lira
with double-digit increases compared with the end of 2017.
B.05
Economic growth
Gross domestic product, growth rates in %
2017
2018
6
5
4
3
2
1
0
-1
-2
Total
Europe
NAFTA
Asia
South
America
1
Source: IHS Global Insight, own calculations
Economic growth in China slowed somewhat due to lower credit
growth, a sluggish real estate market and the negative effects
of the trade dispute with the United States. Nevertheless, the
Chinese economy achieved the government's growth target
with a rate of 6.6%. Taken together, the economies of all emerg-
ing markets in Asia grew at a rate similar to that of the previ-
ous year. Growth was particularly strong in India. Hopes for
accelerated growth in South America were not fulfilled. Although
the economies of South America began to recover in 2017, the
crisis in Argentina and disappointing developments in Brazil
have since slowed down the region's economic growth. Growth
in Central and Eastern Europe was also weaker than in the
prior year, although this was primarily due to a cooling down of
the Turkish economy in the wake of the crisis in that country.
In aggregate, the large economies of Central Europe lost only a
little of their momentum, and growth of the Russian economy
actually accelerated a little. Oilprices were significantly higher
A change to net assets - for example as a result of invest-
ments - generally leads to the commitment or release of liquid
funds. Along with earnings, net assets thus also have a
direct effect on cash flows and therefore on the Group's finan-
cial strength as well. Of particular importance for the financial
strength of the Daimler Group is the free cash flow of the
industrial business, which comprises the cash flows at the auto-
motive divisions and the cash flows from taxes and other
reconciliation items that cannot be allocated to the divisions.
The industrialized countries as a whole were able to maintain
their dynamic rate of growth. The US economy played a major
role, as fiscal policies helped generate growth of nearly 3%,
which was once again higher than in the previous year. Signifi-
cantly increased investment by companies served as a key
driver of growth, while private consumption remained stable.
The economy of the European Monetary Union, in contrast,
was unable to continue the dynamic development of the previ-
ous year, and grew by just under 2%. This slowdown in growth
was mainly due to decreased foreign trade. Domestic demand,
on the other hand, was robust and continued to be supported
by the expansionary monetary policy of the European Central
Bank. According to preliminary estimates the German econ-
omy recorded growth of only 1.5%. Here as well, a slowdown in
exports and a weak period in the manufacturing sector pre-
vented stronger expansion of the economy. Against the back-
ground of the Brexit negotiations, the economy of the United
Kingdom grew only moderately by about 1.4%. Slower export
growth led to significantly lower growth rates than in the
previous year also in Japan.
The world economy
The most important financial indicators for measuring the
operating financial performance of the Daimler Group, in
addition to EBIT and revenue, are the free cash flow of the
industrial business, investment and expenditure for
research and development.
The most important performance indicator for the profitability
of the automotive divisions is return on sales; the most impor-
tant profitability performance indicator for Daimler Financial
Services is return on equity. The other most important perfor-
mance indicators for the divisions are revenue, investment
and expenditure for research and development.
With the 2018 Annual Report, we began using return on sales
rather than EBIT to forecast the profitability of the automotive
divisions, and return on equity rather than EBIT to forecast the
profitability of Daimler Financial Services. In this way, we have
established a connection between expectations for the current
financial year and the strategic return targets.
Along with the indicators of financial performance, we also use
various non-financial indicators to help us manage the Group.
Of particular importance in this respect are the unit sales of our
automotive divisions, which we use as the basis for our capac-
ity and human resources planning and workforce numbers.
Performance indicators that evaluate the implementation status
of future-oriented measures associated with the sustainable
and technological realignment of the Group, as well as other
non-financial performance indicators, are also used to deter-
mine the remuneration of our Board of Management members.
Important criteria for non-financial performance indicators
in the annual target achievement include integrity and compli-
ance, employee satisfaction and the high quality of our
products.
Details of the development of non-financial performance
indicators can be found in the chapters "Economic Conditions
and Business Development" and "Non-Financial Report."
pages 79 ff and 202 ff
B.04
Cost of capital
In percent
2018
2017
Corporate governance statement
Group, after taxes
8
8
Industrial business, before taxes
12
12
Daimler Financial Services, before taxes
13
13
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 79
Economic Conditions and Business Development
With real growth of more than 3% in the year under review, the
world economy displayed growth performance similar to 2017.
7 B.05 However, regional economic developments were more
heterogeneous compared to the synchronous upturn in 2017.
In addition, growth in global trade slowed noticeably at the
beginning of the year, a development that particularly impacted
export-dependent economies.
trucks EU30
The Declaration on Corporate Governance pursuant to Section
289f and Section 315d of the German Commercial Code (HGB),
combined with the Corporate Governance Report, can be
found in this Annual Report on pages 191ff and can also
be viewed on the Internet at daimler.com/corpgov/de.
Pursuant to Section 317 Subsection 2 Sentence 6 of the German
Commercial Code (HGB), the purpose of the audit of the
statements pursuant to Section 289f Subsections 2 and 5 and
Section 315d of the HGB is limited to determining whether
such statements have actually been provided.
21.0
41,152
40,076
+3
Asia
40,627
39,090
+4
thereof China
19,790
18,774
+5
Other markets
10,287
10,227
+1
1 The amounts have been adjusted due to first-time adoption of
IFRS 15 and IFRS 9.
2 The Group's internal revenue and cost of sales have been adjusted
by the same amount at the Daimler Financial Services segment.
These adjustments have been fully eliminated in the reconciliation.
Profitability
B | COMBINED MANAGEMENT REPORT | PROFITABILITY 85
EBIT
The Daimler Group achieved EBIT of €11.1 billion in 2018
(2017: €14.3 billion) despite difficult general conditions. How-
ever, this did not meet the forecast made in the Management
Report for 2017 of EBIT at the prior-year level. 7 B.12 71 B.13
The significant increase in EBIT at the Daimler Trucks division
was not able to offset the decreases in earnings at the other
divisions. In particular, the Mercedes-Benz Cars division posted
earnings significantly below its prior-year figure. The main
reasons were expenses in connection with ongoing governmen-
tal proceedings and measures relating to diesel vehicles
and advance expenditure for new technologies and vehicles.
At Daimler Trucks, increased unit sales in the NAFTA region
had a positive effect on earnings. Due in particular to the nega-
tive impact on earnings of the agreement to conclude the
Toll Collect arbitration proceedings, EBIT at Daimler Financial
Services was also significantly below the prior-year level.
Exchange-rate effects had an overall negative impact on oper-
ating profit.
The reconciliation of segment earnings to Group EBIT also
resulted in a significantly higher expense than in the previous
year.
thereof United States
In the Management Report for 2017, EBIT at the Mercedes-
Benz Cars division was forecasted to be at the prior-year level.
As the year 2018 progressed, in the context of our capital
market reporting, we adjusted that assessment gradually down-
wards to a forecast of EBIT significantly below the prior-year.
That was mainly caused by expenses in connection with ongoing
governmental proceedings and measures taken in various
regions with regard to Mercedes-Benz diesel vehicles. The
Daimler Trucks division met the forecast made in the Manage-
ment Report for 2017 of EBIT significantly above the prior-
year figure. At the beginning of the year 2018, we anticipated a
slight decrease in earnings for Mercedes-Benz Vans compared
with the previous year. As the year 2018 progressed, we
adjusted that assessment to significantly below the prior-year
level in the context of our capital market reporting. That was
mainly caused by higher expenses in connection with ongoing
governmental proceedings and measures taken with regard
to diesel vehicles and delivery delays. Daimler Buses posted
EBIT slightly below the prior-year level. It therefore did not
meet the forecast made in the Management Report for 2017 of
EBIT significantly above the prior-year level, due in particular
to decreasing demand in several markets. Daimler Financial
+3
47,952
13,161
+4
Daimler Buses
4,529
4,524
+0
Daimler Financial Services
26,269
24,530²
+7
Regions
Germany
Europe
(without
Germany)
'NAFTA region Asia
Europe
68,496
68,309
+0
thereof Germany
24,802
24,311
+2
NAFTA
46,528
13,626
B.12
EBIT by segment
2018
1 The prior-year figures have been adjusted due to the effects
of the first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes of the Consolidated Fi-nancial Statements.
-22
2 EBIT, the indicator of operating performance, comprises earnings
before interest income/expense and corporate income taxes.
The reconciliation of the Daimler Group's EBIT to earnings before
income taxes is included in Note 34 of the Notes to the Con-
solidated Financial Statements.
B.13
Development of earnings
In billions of euros
EBIT
Net profit (loss)
16
14
12
10
8
6
4
2
0
2014
2015
2016
20171
2018
1 The prior-year figures have been adjusted due to the effects of the
first-time adoption of IFRS 15 and IFRS 9. Information on
adjustments to prior-year figures is disclosed in Note 1 of the
Notes to the Consolidated Fi-nancial Statements.
20.6
14,348
In millions of euros
11,132
-189
20171
18/17
% change
Mercedes-Benz Cars
7,216
8,843
-18
Daimler Trucks
2,753
2,383
+16
Mercedes-Benz Vans
312
1,147
-73
Daimler Buses
265
281
-6
1,384
1,970
-30
-798
-276
Daimler Group²
Mercedes-Benz Vans
Daimler Financial Services
Reconciliation
35,755
-2.1
Mercedes-Benz Vans
Mid-size and large vans EU30
15.3
16.7
-1.4
thereof Germany
25.2
27.3
-2.1
Small vans EU30
3.1
3.1
0.0
Large vans United States
8.3
7.5
+0.8
Daimler Buses
Buses over 8 tons EU30
29.0
28.4
+0.6
9.1
thereof Germany
7.0
Medium- and heavy-duty
thereof Germany
+7
36.5
36.4
-0.4
+0.1
Heavy-duty trucks NAFTA
region (Class 8)
38.8
40.0
-1.2
Medium-duty trucks NAFTA
region (Classes 6 and 7)
37.8
39.3
-1.5
Medium- and heavy-duty
trucks Brazil
27.6
+0.3
Trucks Japan
19.3
19.6
-0.3
trucks India
49.3
27.9
-2.3
54233225050
B.11
Revenue by division and region
2014
2015
2016
2018
2017
In millions of euros
Daimler Group
2018
20171
18/17
% change
164,154
+2
Divisions
Mercedes-Benz Cars
93,103
94,351
-1
51.6
Daimler Trucks
38,273
10
15
167,362
Consolidated revenue by region
52.5
51.6
In billions of euros
Buses over 8 tons Brazil
-0.9
1 Based on estimates in certain markets.
Unit sales by Daimler Trucks in 2018 were significantly higher
than in the previous year. In total, we delivered 517,300 heavy-,
medium- and light-duty trucks as well as buses of the Thomas
Built Buses and FUSO brands in the year under review (2017:
470,700). Daimler Trucks continues to be the world's biggest
manufacturer of trucks above 6 tons. 7 B.08 At 85,400 units,
our sales in the EU30 region increased slightly. Our Mercedes-
Benz brand remained the market leader in the medium-duty
and heavy-duty segments, with a share of 20.6% (2017: 21.0%).
Our sales in Turkey were very adversely affected by the con-
siderable economic uncertainty in the country. Unit sales in
Turkey totaled 5,000 trucks, a decrease of 57% from the
prior year. B.09
In Latin America, however, we were able to significantly
increase our sales once again, to 38,200 units in the year under
review (2017: 30,500). The increase in sales in our main
Latin American market, Brazil, made a major contribution to
our improved performance in the region. Truck sales in Brazil
totaled 21,400 units, an increase of 60% from the low level of
the prior year. We were able to expand our market share
to 27.9% (2017: 27.6%) and achieved market leadership in the
medium- and heavy-duty segments with our Mercedes-Benz
trucks. Sales in Argentina decreased to 3,500 units in the year
under review (2017: 5,600).
We increased our sales in Asia by 11% to 164,700 trucks. Sales
in Japan totaled 44,000 units (2017: 44,800). Our FUSO brand
achieved a market share of 19.3% in Japan (2017: 19.6%). Unit
sales in Indonesia increased by 50% compared with the previous
year to 64,200 trucks (2017: 42,700). At 9,700 units, our sales
in the Middle East were substantially lower than the high figure
recorded in the previous year (2017: 23,600). In India, a signif-
icant increase in demand for medium- and heavy-duty trucks
had a positive impact on our sales and we sold 22,500 trucks
in that market in the year under review, an increase of 35%
from the previous year. Our market share with the BharatBenz
brand amounted to 7.0% (2017: 9.1%).
In China, the world's biggest truck market, Daimler AG holds
a 50% interest in Beijing Foton Daimler Automotive Co. Ltd.
(BFDA), a joint venture with Beiqi Foton Motor Co. Ltd. Medium-
and heavy-duty trucks of the Auman brand have been pro-
duced there since 2012. At 103,400 units, sales of Auman trucks
were lower than the high figure recorded in the prior year
(2017: 112,400), which had been influenced by the favorable
economic development and in particular the implementation of
regulatory measures relating to truck fleet renewal. 596,700
Auman trucks have been sold since the joint venture was
launched.
pages 172ff
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 83
The ongoing positive development of sales in the NAFTA
region played a major role in our overall sales growth in 2018.
We once again recorded a significant increase in sales in
the NAFTA region, to 189,700 units (2017: 165,000). We also
remained the market leader in Classes 6-8 with a market
share of 38.4% (2017: 39.8%).
Daimler Buses sold 30,900 buses and bus chassis worldwide
in financial year 2018 (2017: 28,700). The significant increase
was due in particular to the gradual recovery of the economy
in Brazil, high demand in our important EU30 market, and
growth in India. At the same time, the market-related decrease
in demand in the normally profitable markets of Argentina and
Turkey had a negative impact on our overall sales. The division
maintained its market leadership in its most important
traditional markets (EU30, Brazil, Argentina and Mexico). Due
to continued high demand for our fully equipped buses, sales
in the EU30 region amounted to 9,300 units, which was signifi-
cantly above the high figure recorded in the previous year
(8,700). Daimler Buses expanded its leading position in the EU30
region with a market share of 29.0% (2017: 28.4%). At 2,900
units, sales in Germany were 5% lower than in the prior year. At
300 units, sales in Turkey decreased significantly (2017: 400)
due to the ongoing difficult situation in the country. The situation
in Latin America (excluding Mexico) improved due to the
gradual market recovery in Brazil, although growth in the region
was negatively affected by the sharp market contraction in
Argentina. Sales of Mercedes-Benz chassis in Brazil rose by
22% to 8,800 units. We were able to maintain our leading
market position in Brazil with a market share of 51.6% (2017:
52.5%). In India, we continued along our growth path and
increased our sales volume to 1,600 units (2017: 900). In
Mexico, sales of 3,200 units (2017: 3,400) were significantly
lower than in the previous year.
pages 180 ff
B.10
In regional terms, Daimler achieved revenue growth as
follows: Europe (+0% to €68.5 billion), NAFTA region (+3% to
€48.0 billion) and Asia (+4% to €40.6 billion).
In the year 2018, Daimler increased its total revenue by 2% to
€167.4 billion; adjusted for currency-translation effects, revenue
grew by 4%. Our expectations from the beginning of the
year were thus fulfilled. The divisions Daimler Trucks (+7%) and
Daimler Financial Services (+7%) increased their business
volumes by significant margins. In the case of Daimler Trucks,
we had only expected a slight increase in business volume.
The Mercedes-Benz Vans division recorded a slight increase of
4%, whereas we had originally anticipated a significant increase
for this division. Revenue at Mercedes-Benz Cars almost reached
the expected magnitude of the prior year (-1%). Revenue at
Daimler Buses was at the level of the previous year, despite
higher unit sales and our expectation of significant growth.
This was partially due to the European touring coach segment.
Mercedes-Benz Vans achieved record sales once again in 2018.
Unit sales of 421,400 vehicles surpassed the prior-year figure
by 5%. Whereas we mainly focus on commercial customers with
the Sprinter, Vito and Citan models, the V-Class is primarily
designed for private use. With the X-Class, our new mid-size
pickup, we are addressing diverse customers for both private
and commercial applications. In the EU30 countries, which com-
prise our core region, our unit sales of 278,300 vehicles were
slightly above the prior-year level (2017: 273,300), while our
market share in the region in the combined segment for mid-size
and large vans amounted to 15.3% (2017: 16.7%). We set a new
record in Germany with sales of 107,300 units (2017: 105,800).
Sales in the NAFTA region increased substantially, leading to
a new sales record of 38,700 units in the United States (2017:
34,200), where our market share for large vans also increased
to 8.3% (2017: 7.5%). Business development was very favorable
also in Latin America, where sales rose by 14% to 18,700 units
despite the difficult situation in Argentina. Unit sales in China
also increased significantly, by 22% to the new record of
29,100 vans. This development was largely due to the success
of the Vito and the V-Class. At 206,300 units, global sales
of Sprinter models were slightly higher than in the prior year
(2017: 200,500). Vito sales were slightly down from the previ-
ous year at 108,300 units (2017: 111,800). The V-Class full-size
MPV performed successfully on the market; its total sales of
63,900 units exceeded the previous year's figure by 8%. Sales
of the Mercedes-Benz Citan reached 26,300 units (2017:
26,100), while X-Class sales totaled 16,700 units in the year
under review (2017: 3,300).
pages 177 ff
The Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans and Daimler Buses divisions produce vehicles predomi-
nantly to order, in accordance with customers' specifications.
While doing so, we flexibly adjust the production capacities for
the individual models to changing levels of demand. Due in
particular to continued strong demand in China and the Euro-
pean markets, the number of orders placed with Mercedes-
Benz Cars during the year under review was once again at the
high level of orders received in the previous year. This was
driven on the product side primarily by the new E-Class, as
well as the continued strong success of our SUVs. Production
volume in 2018 and our order backlog at the end of the
year were of the prior-year magnitude. At Daimler Trucks, both
orders received and the order backlog at year-end were sig-
nificantly higher than a year earlier. This was primarily due to
strong demand in North America, growth in demand in
the EU30 region, and the market revival in Latin America. We
increased production volumes in response to the higher
demand.
Order situation
Revenue
Business at Daimler Financial Services continued to develop
positively in the year under review. As we had forecast in
Annual Report 2017, worldwide contract volume continued to
grow, reaching the new record level of €154.1 billion in 2018
(+10%). At €71.9 billion, new business remained slightly above
the level of the previous year, which is what we had antici-
pated at the beginning of 2018. Moderate growth was achieved
in Europe (+2%) and in the Americas region (+3%). However,
new business in the Africa and Asia-Pacific region (excluding
China) decreased by 3%, while a slight increase of 2% was
achieved in China. In the insurance business, we brokered
approximately 2.3 million policies in the year under review,
which corresponds to an increase of 8% compared with the
previous year. The total number of registered users of our
mobility services rose to approximately 31.0 million in the year
under review. car2go increased its number of registered
users to around 3.6 million and thus strengthened its position
as a leading company for flexible car sharing. The ride-hailing
group, which manages mytaxi, further expanded its position as
one of Europe's leading provider of taxi apps in 2018, among
other things, by acquiring a majority stake in Chauffeur Privé.
The number of registered users of the ride-hailing group's
services rose to 21.3 million, an increase of 92% from 2017. We
have also further developed the moovel app, with which cus-
tomers can find the best way of traveling using various modes
of transport, and can also directly book and pay for their jour-
neys. The number of registered moovel users in Germany and
the United States had risen to 6.2 million by the end of 2018
(2017: 3.7 million). At the end of 2018, Daimler Financial Services
had 395,000 contracts on the books with its Athlon and
Daimler Fleet Management brands (+3%). Total contract volume
amounted to €6.5 billion in 2018.
pages 183ff
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
84
6.7
Revenue
40,235
EBIT
6.1
2,463
35,755¹
7.2
+5
2,3831
-11
Return on sales (in %)
Daimler Trucks
38,273
2,753
+0
2,388
151,3162
7,518
6,962
Investment in property, plant and equipment
6,642
+8
thereof capitalized
2,904
142,666
2,269
Unit sales
2,385,432
2,382,791
2,373,527
+0
Employees (December 31)
152,048
+28
971
Mercedes-Benz Vans
1,028
79,483
+1
Revenue
14,801
13,626
13,1611
+9
EBIT
-3,085
312
1,1471
Return on sales (in %)
-20.8
Research and development expenditure
2.3
-6
1,105
470,705
83,437
-12
Research and development expenditure
1,490
1,295
1,322
+15
thereof capitalized
53
40
45
+33
MOVE
Unit sales
488,521
Employees (December 31)
517,335
82,676²
-1
1,368
5,684
9,662
9,107
+6
Free cash flow of the industrial business
2,898
-53
EBIT
4,329
11,132
-61
Net profit
2,709
7,582
-64
Earnings per share (in €)
Research and development expenditure
2.22
-4
7,199
8.71
Annual Report 2019
"PERFORM
TRANSFORM
Key Figures
Daimler Group
€ amounts in millions
2019
2018
19/18
% change
Revenue
172,745
167,362
+31
Investment in property, plant and equipment
7,534
4,843
6.78
Dividend per share (in €)
Revenue
93,877
EBIT
3,359
93,103
7,216
94,3511
+1
8,8431
-53
Return on sales (in %)
3.6
7.8
9.41
Investment in property, plant and equipment
5,629
% change
-67
19/18
2018
0.90
3.25
-72
Employees (December 31)
298,655
298,683
-0
1 Adjusted for the effects of currency translation, revenue increased by 2%.
Cover photo
VISION EQS provides a preview of future large electric
luxury sedans. With this vehicle, Mercedes-Benz is
making a clear statement for the continued appeal of
high-quality vehicles and self-determined driving. We
are convinced that perfect craftsmanship, emotive
design, luxurious materials and individual driving plea-
sure will remain desirable in the future. Because the
idea of luxury today and in the future - stands above
all for personal freedom. With the VISION EQS technol-
ogy carrier, Mercedes-Benz is focusing on a completely
new, fully variable battery-electric drive platform. It is
scalable in many respects and can be used across
many models. Thanks to the modular system, wheel-
base and track width as well as all other system com-
ponents, especially the batteries, are variable and thus
suitable for a broad range of vehicle concepts.
Daimler's Divisions >
The Divisions and Brands
€ amounts in millions
Mercedes-Benz Cars
2019
2017
Investment in property, plant and equipment
Mercedes me
468
2 Adjustment of the number of employees in 2018 due to changes in the Group's internal allocation of employees.
3 At the Daimler Financial Services segment, the Group's internal revenue and cost of sales have been adjusted by the same amount.
These adjustments have been fully eliminated in the reconciliation.
Our Brands
Daimler AG is one of the world's most successful automotive companies.
With its Mercedes-Benz Cars & Vans, Daimler Trucks & Buses and Daimler Mobility
divisions, the Group is one of the leading global suppliers of premium cars and one
of the world's largest manufacturer of commercial vehicles. Daimler Mobility offers
financing, leasing, fleet management, investments, credit card and insurance brokerage,
as well as innovative mobility services. For more information:
daimler.com
Further information is provided in Note 1 of the Notes to the Consolidated Financial Statements.
AMG
EQ
smart
FREIGHTLINER
FUSO
BUILT BUSES
BHARATBENZ
MAYBACH
1 The amounts have been adjusted due to first-time adoption of IFRS 15 and IFRS 9.
-10
13,012
Contract volume
162,843
11.1
71,927
154,072
17.7
70,721
139,907
+3
+6
Investment in property, plant and equipment
87
64
43
+36
Employees (December 31)
12,680
14,070
Mercedes-Benz Bank
Mercedes-Benz
Financial Services
ATHLON
And through a corporate culture that creates free space
for creative ideas and reinforces our company's innovative
strength.
That's the foundation of our success. And that's why we
offer outstanding prospects to our investors, partners, and
employees as well.
SUSTAI
Our strategy
for the future
Sustainable mobility products and services, CO 2 reduction, and cutbacks
in our use of resources are highly topical social policy demands - and
at Daimler they are key elements of our new sustainable business strategy.
We accept responsibility for the economic, environmental, and social
effects of our business operations, with the goal of creating value over
the long term for all of our stakeholders.
DAIMLER | MOVE PERFORM TRANSFORM 5
NABLE
That's why Daimler is pressing ahead with sustainable solutions for individ-
ual mobility and the transportation of tomorrow. We're taking this course
so that we can stay on track for success in the future as well. Accordingly,
six sustainability-related themes complement our traditional strategy areas.
The spectrum ranges from climate protection and maintaining air quality to
resource conservation, livable cities and traffic safety, the responsible use
of data, and the promotion of human rights along the value chain.
412
ELECTR
Our electric
drives in
all segments
CO2-neutral mobility is our commitment and our challenge. To supple-
ment its combustion engine vehicles, today Daimler already offers an
extensive portfolio of electrically powered cars, vans, trucks, and buses,
as well as complementary mobility services. We are massively expanding
this range of products and services and making it even more attractive,
with increased profitability, comfort, and driving pleasure, longer ranges,
and an optimized charging infrastructure.
Through a new corporate structure that makes us more
flexible and brings our business operations closer to our
customers.
74,377
Through profitable growth that safeguards our investments
in the future of mobility.
-
W
WESTERN STAR®
SETRA
Daimler Truck Financial
EE
EE
EE
AFT
HOTWAYW
SVV1671
MOVE
PERFORM
TRANSFORM
FEFFEE
Daimler is on the move.
We are moving so that in the future we can continue to move.
the world as a leading provider of sustainable mobility.
In everything we do, we focus on our customers' wishes.
-
Through a sustainable business strategy that is based on
integrity and compliance and focuses on people and the
conservation of our natural resources.
New business
15.3
Return on equity (in %)
21,8102
25,255
-2
Daimler Buses
Revenue
4,733
4,529
EBIT
283
265
2811
47
+5
+7
Return on sales (in %)
21,346
6.0
Employees (December 31)
401,025
710
-49
Research and development expenditure
543
666
565
-18
thereof capitalized
96
176
310
-45
Unit sales
438,386
421,401
+4
240
5.9
Investment in property, plant and equipment
Employees (December 31)
17,960
17,7292
18,292
+1
Daimler Mobility
Revenue
28,646
26,269
EBIT
2,140
1,384
24,5301,3
1,970
+9
+55
+6
6.21
28,676
32,612
134
144
94
-7
Research and development expenditure
203
199
194
+2
thereof capitalized
23
41
30
-44
Unit sales
30,888
DAIMLER
4,524¹
Trade receivables of €12.3 billion are below the prior-year
level of €12.6 billion. The Mercedes-Benz Cars division
accounts for 53% of these receivables (2018: 45%), the Daimler
Trucks division accounts for 23% (2018: 25%) and the
Mercedes-Benz Vans division accounts for 9% (2018: 8%).
Non-current assets increased during the year by €2.1 billion
to €57.2 billion, caused by the €12.9 billion increase in finan-
cial assets, which resulted in particular from corporate restruc-
turing within the framework of "Project Future." The increase
also reflects a capital contribution at the subsidiary LEONIE FS
DVB GmbH and the acquisition within the Group of Mercedes-
Benz Bank AG from Daimler Mobility AG. The decreases of €9.3
billion in property, plant and equipment and of €1.5 billion in
intangible assets are mainly due to corporate restructuring
within the framework of "Project Future."
Receivables, securities and other assets decreased com-
pared with December 31, 2018 by €5.9 billion to €38.9 billion.
This development mainly reflects a decrease of €9.3 billion
from the hive-downs for corporate restructuring within the
framework of "Project Future.” Furthermore, other securities
decreased by €1.1 billion and other assets decreased by €1.1
billion in 2019, primarily due to lower tax-refund claims. On
the other hand, receivables due from subsidiaries increased by
€5.6 billion.
Cash and cash equivalents decreased from €6.4 billion to
€2.9 billion. The decrease includes a transfer of €1.5 billion as
part of corporate restructuring within the framework of
"Project Future."
B | COMBINED MANAGEMENT REPORT | DAIMLER AG 91
Gross liquidity - defined as cash and cash equivalents and
other marketable securities as well as fixed-term deposits pre-
sented under other assets - decreased by €4.7 billion to €9.6
billion on the balance sheet date. The reasons for the decrease
in gross liquidity include the hive-downs for corporate restruc-
turing within the framework of "Project Future" in an amount
of €1.5 billion and the reduction in other securities of €1.1 bil-
lion in 2019.
Cash provided by operating activities amounted to €6.8 bil-
lion in 2019 (2018: €13.8 billion). The decrease resulted in par-
ticular from lower dividend distributions from subsidiaries and
the end of cash flows from operations in the vehicle business.
Another factor is that the amount for the previous year includes
positive effects from trade receivables and payables with Ger-
man and foreign companies of the Group and with external
companies, which are no longer effective at Daimler AG due to
the hive-down.
The balance sheet total of €99.4 billion is €17.8 billion lower
than at the end of 2018. Table 7 B.38 shows the balance sheet
of Daimler AG at December 31, 2019 compared with the
balance sheet before the hive-down to Mercedes-Benz AG and
Daimler Truck AG (December 31, 2018) and after the hive-
down (January 1, 2019).
B.38
in millions of euros
Assets
Dec. 31,
2019
Jan. 1,
20191
Dec. 31,
2018
Non-current assets
Inventories
Balance sheet structure of Daimler AG
resources
Financial position, liquidity and capital
3,477
112,491
-103,232
-7,904
-964
-2,304
-272
-292
-1,176
-1,241
-546
7,318
44
-1,055
-1,678
5,022
2,641
-1,545
963
57,214
50,973
55,092
1
Equity and liabilities
Share capital
3,070
3,070
3,070
(conditional capital €500 mil-
lion)
Capital reserve
11,480
11,480
11,480
Retained earnings
22,541
25,182
25,182
Distributable profit
963
3,477
Provisions decreased compared with December 31, 2019 by
€14.8 billion to €1.6 billion. This was mainly the result of the
transfer of provisions of €14.7 billion from Daimler AG to
Mercedes-Benz AG and Daimler Truck AG as part of the corpo-
rate restructuring within the framework of "Project Future."
On the other hand, additional provisions were recognized of €0.5
billion for internal derivatives in connection with the hive-down.
2,019
-1,959
Equity decreased in 2019 by €5.2 billion to €38.1 billion, pri-
marily reflecting the decrease in distributable profit due to the
dividend payment for 2018. In addition, €2.6 billion was trans-
ferred from retained earnings in 2019. The equity ratio at
December 31, 2019 was 38.3% (December 31, 2018: 36.9%).
Daimler AG holds no treasury shares at December 31, 2019.
Cash flows from investing activities resulted in a net
cash outflow of €7.6 billion in 2019 (2018: €14.7 billion). The
decrease is due in particular to the end of investments by
Daimler AG in intangible assets and property, plant and equip-
ment, caused by the hive-down of business operations to
Mercedes-Benz AG and Daimler Truck AG. Compared with the
previous year, there were also lower cash outflows in the
area of financial assets from corporate restructuring within the
framework of "Project Future." Furthermore, there were
positive effects from acquisitions and disposals of securities
conducted in the context of liquidity management.
10,524
Receivables, securities and
other assets
38,925
35,437
44,784
2,942
4,819
6,354
41,867
40,257
61,662
285
300
99,366
91,530
406
117,160
Cash and cash equivalents
Current assets
Prepaid expenses
Cash flows from financing activities resulted in a net cash
outflow of €2.6 billion (2018: inflow of €5.5 billion). The change
is explained by higher receivables from the financing of subsid-
iaries and the lower increase in liabilities from the Group's
internal transactions in connection with central financial and
liquidity management. On the other hand, a cash inflow resulted
in 2019 from higher external financing liabilities. Cash flows
from financing activities include the payment of the dividend for the
year 2018 in an amount of €3.5 billion.
2018
2019
Distributable profit
Current assets
98
Current liabilities
thereof liquidity
28 25
Current assets account for 42% of the balance sheet total, which
is below the prior-year level (2018: 43%). Current liabilities
amount to 35% of total equity and liabilities, which is at the
prior-year level. Table 71 B.36 shows the structure of the
balance sheet by maturity.
Intangible assets of €16.0 billion (2018: €14.8 billion) include
€12.5 billion of capitalized development costs (2018: €11.3
billion), €1.7 billion of franchises, industrial property and similar
rights (2018: €2.0 billion) and €1.2 billion of goodwill (2018:
€1.1 billion). The Mercedes-Benz Car division accounts for 85%
(2018: 81%) of the development costs while the Mercedes-Benz
Vans division accounts for 8% (2018: 10%) and the Daimler
Trucks division accounts for 6% (2018: 8%). Capitalized develop-
ment costs amount to €3.1 billion in 2019 (2018: €2.5 billion)
and account for 32% of the Group's total research and develop-
ment expenditure (2018: 28%).
Property, plant and equipment increased to €37.1 billion
(2018: €30.9 billion). Due to the application of single lessee
accounting according to IFRS 16 as of January 1, 2019, right-of-
use assets of €4.2 billion are included in property, plant and
equipment. In 2019, €7.2 billion was invested worldwide (2018:
€7.5 billion), in particular at our production and assembly sites
for new products and technologies and for the expansion and
modernization of production facilities. The sites in Germany
accounted for €4.4 billion of the capital expenditure (2018:
€4.4 billion).
Equipment on operating leases and receivables from
financial services rose to a total of €155.1 billion (2018:
€146.2 billion). The increase adjusted for currency-translation
effects of €6.5 billion was primarily caused by the higher level
of new business at Daimler Mobility; contract volume increa-
sed in North and South America, Europe and Asia. The leasing
and sales-financing business as a proportion of 51% of total
assets was below the prior-year level (2018: 52%).
Equity-method investments increased to €5.9 billion (2018:
€4.9 billion). The increase is mainly due to the merger of the
mobility services of Daimler Group and BMW Group and the
resulting first-time consolidation of five operating joint ven-
tures, which were merged into YOUR NOW Holding GmbH at
the end of 2019 (see Note 13 of the Notes to the Consoli-
dated Financial Statements). Furthermore, they mainly com-
prise the carrying amounts of our equity interests in Beijing
Benz Automotive Co., Ltd., BAIC Motor Corporation Ltd. and
There Holding B.V.
Inventories increased slightly from €29.5 billion to €29.8
billion, equivalent to 10% of total assets, and were thus at
the prior-year level. While inventories at the Mercedes-Benz
Cars division increased mainly due to model changes and
the launch of new models, inventories at the Daimler Trucks
and Mercedes-Benz Vans divisions were reduced to below
the prior-year level.
Cash and cash equivalents increased compared with the end
of 2018 by €3.0 billion to €18.9 billion.
Marketable debt securities and similar investments
decreased compared with December 31, 2018 from €9.6 billion
to €8.7 billion. Those assets include the debt instruments that
are allocated to liquidity, most of which are traded in active
markets. They generally have an external rating of A or better.
Other financial assets of €6.1 billion are above the prior-year
level (2018: €5.7 billion). They primarily consist of equity and
debt instruments, investments in non-consolidated subsidiaries,
derivative financial instruments, and loans and other receivab-
les due from third parties.
Other assets of €12.5 billion (2018: €11.0 billion) primarily
comprise deferred tax assets and tax refund claims. The incre-
ase is mainly due to deferred tax assets on tax loss carryfor-
wards.
The Group's equity decreased compared with December 31,
2018 from €66.1 billion to €62.8 billion. Positive effects in
equity resulted from the net profit of €2.7 billion and the effects
of currency translation of €0.5 billion. This was more than off-
set by the dividend of €3.5 billion paid out to Daimler's share-
holders, the effect of remeasurement of derivative financial
instruments not recognized in profit or loss of €0.5 billion, and
actuarial losses from defined-benefit pension plans recognized
in retained earnings of €2.2 billion. Equity attributable to the
shareholders of Daimler AG accordingly decreased to €61.3 bil-
lion (2018: €64.7 billion).
While the balance sheet total increased, equity decreased
compared with the previous year. The Group's equity ratio of
20.5% was therefore below the level at the end of 2018 (22.2%);
the equity ratio for the industrial business was 36.7% (2018:
42.8%). It is necessary to consider the fact that the equity
ratios at the end of 2018 and 2019 are adjusted for the paid
and proposed dividend payments.
105
88
122
-Non-current liabilities
B | COMBINED MANAGEMENT REPORT | FINANCIAL POSITION 87
B.36
Balance sheet structure Daimler Group
In billions of euros
Assets
Non-current assets
2018
2019
302
302
282 282
Equity and liabilities
175
63
Equity
160 66
134
118
128
3,477
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
Financing liabilities of €161.8 billion were above the level of
the previous year (2018: €144.9 billion). The increase, adjusted
for exchange-rates effects, of €14.9 billion was primarily due
to the refinancing of the growing leasing and sales-financing
business and higher leasing liabilities of €3.9 billion caused by
the application of single lessee accounting according to
IFRS 16. 53% of the financing liabilities were accounted for by
bonds, 25% by liabilities to financial institutions, 9% by liabili-
ties from ABS transactions and 8% by deposits in the direct
banking business.
90
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
General administrative expenses amounted to €1.0 billion
(2018: €2.3 billion). They include costs in connection with
"Project Future" amounting to €0.2 billion. The decrease in
general administrative expenses is caused by the hive-down.
Other operating expense amounted to €0.3 billion (2018:
€0.3 billion) and primarily comprises expenses of €0.2 billion
from increases in provisions for Group-external derivatives of
the vehicle business.
Financial income fell by €7.9 billion to a financial expense of
€0.5 billion, primarily due to a decrease of €11.8 billion in
income from investments in subsidiaries and associated com-
panies. This was mainly the result of expenses from the reas-
sessment of risks in connection with ongoing governmental
and legal proceedings and measures relating to Mercedes-
Benz diesel vehicles in various regions and markets, as well as
expenses in connection with an updated risk assessment for
an expanded recall of Takata-Airbags, which led to a loss trans-
fer from the affected company. On the other hand, interest
expense decreased by €4.2 billion, primarily in connection with
company pensions (€3.8 billion). This positive effect was
mainly the result of lower expenses from the change in the dis-
count rate and the compounding of the retirement benefit obli-
gation due to the transfer of pension obligations to Mercedes-
Benz AG and Daimler Truck AG, as well as the increased return
on the special-purpose assets compared with 2018. In addi-
tion, the contribution of pension obligations and special-purpose
assets to Daimler Pensionsfonds AG resulted in a one-time
interest expense in 2018.
The income tax expense amounted to €0.0 billion (2018: €1.1
billion). The decrease is due to the tax-loss situation of the cor-
porate group for tax purposes.
Net loss amounts to €1.7 billion (2018: net profit of €5.0 bil-
lion). This result is thus significantly below the expectation
stated in the Outlook chapter of Annual Report 2018. This
development is primarily due to the stronger than expected
decrease in financial income, which was mainly caused by
the lower income from subsidiaries and associated companies
due to loss transfers from major subsidiaries.
The economic situation of Daimler AG in its management
holding-company function depends mainly on the development
of its subsidiaries. Daimler AG participates in the operating
results of its subsidiaries through dividend distributions and
profit-and-loss transfers. The economic situation of Daimler
AG is therefore fundamentally the same as that of the Daimler
Group, which is described in the chapter Overall Assessment
of the Economic Situation.
B.37
Condensed income statement of Daimler AG
In millions of euros
Revenue
Cost of sales (including R&D expenditure)
Selling expenses
General adminstrative expenses
Other operating expense
Operating profit
Financial expense/income
Income taxes
Net loss (2018: net profit)
Transfer from (2018: transfer to) retained
earnings
Due to the new corporate structure of Daimler AG, no selling
expenses were incurred in 2019 (2018: €7.9 billion).
Provisions increased significantly from €23.0 billion to €30.7
billion; as a proportion of the balance sheet total, they were
above the prior-year level at 10% (2018: 8%). They primarily
comprise provisions for pensions and similar obligations of
€9.7 billion (2018: €7.4 billion), which mainly consist of the
difference between the present value of defined-benefit
pension obligations of €36.2 million (2018: €31.7 billion) and
the fair value of the pension-plan assets applied to finance
those obligations of €27.8 billion (2018: €25.5 billion). The
decrease in discount rates led to an increase in the present
value of the defined-benefit pension obligations. This effect
was only partially offset by a positive interest rate development
for plan assets. Provisions also relate to liabilities for product
warranties of €8.7 billion (2018: €7.0 billion), for personnel
and social costs of €4.2 billion (2018: €4.3 billion), for liability
risks, litigation risks and regulatory proceedings of €4.9 billion
(2018: €2.1 billion), as well as other provisions of €3.1 billion
(2018: €2.1 billion). The reassessment of risks especially at the
Mercedes-Benz Cars and Mercedes-Benz Vans divisions led to
an increase in provisions for product warranties and for liability
risks, litigation risks and regulatory proceedings. The increase
relates to ongoing governmental and legal proceedings and
measures taken with regard to Mercedes-Benz diesel vehicles
in several regions and markets, as well as an updated risk
assessment for an extended recall of Takata airbags. The
increase in other provisions is mainly due to the review and
prioritization of the product portfolio at the Mercedes-Benz
Vans division.
Daimler AG generated revenue of €2.0 billion primarily from
the provision of services to companies of the Group (2018:
€112.5 billion). The decrease in revenue was almost solely the
result of hiving down the business operations to Mercedes-
Benz AG and Daimler Truck AG.
Profitability
Trade payables decreased compared with the prior year to
€12.7 billion (2018: €14.2 billion). The Mercedes-Benz Cars
division accounts for 64% (2018: 60%) of those payables, the
Daimler Trucks division accounts for 20% (2018: 24%) and the
Mercedes-Benz Vans division accounts for 7% (2018: 7%).
Other financial liabilities were nearly unchanged at €9.9 bil-
lion (2018: €10.0 billion) and mainly consist of liabilities from
residual-value guarantees, liabilities from wages and salaries,
deposits received and accrued interest on financing liabilities.
Contract and refund liabilities of €13.6 billion are higher
than a year earlier (2018: €12.5 billion). They mainly comprise
deferred revenue from service and maintenance contracts
as well as extended warranties and obligations from sales in
the scope of IFRS 15. Higher revenues from service and main-
tenance contracts and extended warranties mainly led to the
increase in contract and refund liabilities.
Other liabilities of €11.0 billion (2018: €10.8 billion) primarily
comprise deferred taxes, tax liabilities and deferred income.
Further information on the assets presented in the statement
of financial position and on the Group's equity and liabilities is
provided in the Consolidated Statement of Financial Position
7 F.03, the Consolidated Statement of Changes in Equity
7 F.05 and the related notes in the Notes to the Consolidated
Financial Statements.
Daimler AG
Condensed version according to the German Commercial Code (HGB)
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG 89
In addition to reporting on the Daimler Group, the development
of Daimler AG is also described in this section.
Daimler AG is the parent company of the Daimler Group and its
headquarters are in Stuttgart.
On May 22, 2019, the Annual Shareholders' Meeting of Daimler
AG voted with 99.75% of the votes cast to hive down assets
and liabilities of the Mercedes-Benz Cars and Mercedes-Benz
Vans divisions and of the Daimler Trucks and Daimler Buses
divisions into two legally independent entities within the frame-
work of "Project Future." The hive-down took place in accor-
dance with Section 123 Subsection 3 No. 1 of the German Trans-
formation Act (UmwG) into Mercedes-Benz AG and Daimler
Truck AG. The hive-down is based on the hive-down agreement
concluded between Daimler AG, Mercedes-Benz AG and
Daimler Truck AG on March 25, 2019. The hive-down became
effective upon being entered in the commercial register of
Daimler AG on October 31, 2019 ("completion date"). When
the hive-down became effective, the assets to be hived down
as defined in the hive-down agreement were transferred to
Mercedes-Benz AG and Daimler Truck AG under civil law by way
of partial universal succession at their carrying amounts. The
transfer of assets had a retroactive financial effect as of the
hive-down date of January 1, 2019. In addition, when the hive-
down became effective, further assets and liabilities as defined
by the agreements concluded between Daimler AG and
Mercedes-Benz AG and Daimler Truck AG within the hive-down
agreement were transferred to Mercedes-Benz AG and Daimler
Truck AG, respectively.
As of the hive-down taking effect, Daimler AG acts as an oper-
ational management holding company and provides services to
the Group companies. As the parent company, it also decides
on the Group's strategy, decides on matters of strategic impor-
tance for business operations, and ensures regulatory, legal,
and compliance functions throughout the Group.
Under the existing control and profit-and-loss-transfer agree-
ments, the profits and losses of Mercedes-Benz AG and Daimler
Truck AG are transferred to Daimler AG.
The annual financial statements of Daimler AG are prepared in
accordance with the German Commercial Code (HGB). The
consolidated financial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS),
as adopted by the European Union (EU). This results in some
differences with regard to recognition and measurement, pri-
marily relating to provisions, financial instruments, the leasing
business and deferred taxes.
In view of the new function of Daimler AG as an operational
management holding company, revenue and unit sales are no
longer the most important performance indicators; net profit
or loss is now the main performance indicator.
Due to the significant scope of the hive-down to Mercedes-
Benz AG and Daimler Truck AG, the figures of Daimler AG for
the 2019 financial year are not comparable with the prior-year
figures.
The profitability of Daimler AG in the 2019 financial year was
affected by the hive-down of business operations to Mercedes-
Benz AG and Daimler Truck AG. The change in profitability
resulted in particular from the decrease in financial income of
€7.9 billion to a financial expense of €0.5 billion, as well as by
the lower tax expense of €1.1 billion. 7 B.37
Equity
Cost of sales comprises the services provided to Group com-
panies to generate sales revenue and, due to the new manage-
ment holding-company function, decreased to €2.0 billion
(2018: €103.2 billion).
43,209
+33
Mercedes-Benz Vans
543
666
-18
thereof capitalized
96
176
-45
Daimler Buses
203
199
+2
thereof capitalized
23
41
-44
40
Targeted involvement of the supplier network
53
+15
Daimler Group
9,662
9,107
thereof capitalized
3,076
2,526
+6
+22
Mercedes-Benz Cars
7,518
6,962
thereof capitalized
2,904
2,269
+28
Daimler Trucks
1,490
1,295
thereof capitalized
+8
In order to achieve our ambitious goals, we also cooperate very
closely with the research and development units of our suppli-
ers. Daimler must be closely intermeshed with supplier partners
in order to deal with the rapid pace of technological change
in the automotive industry and the need to quickly bring new
technologies to market maturity. Such cooperation is all the
more important in light of the increasing digitalization of pro-
cesses throughout all stages of the value chain. Strong part-
ners are also essential for our efforts to develop and offer new
concepts for future mobility. As part of our joint research and
development work, we aim to ensure that the Group retains
the key technological expertise it needs in order to maintain
the uniqueness of our brands and to safeguard the future of
the automobile in general.
Without the protection and management of its patents, brands
and designs, Daimler could never have become as successful
as it is today. That is why we seek to effectively protect and
manage the Group's intellectual property and the innovations
that inspire our customers around the globe. In this manner,
we also intend to ensure the successful continuation of our tra-
dition that goes back more than 130 years. We upheld this
tradition in 2019 by registering more than 2,100 new ideas for
patents (2018: 1,900), with an increasing focus on the future-
oriented fields of connectivity, automated and autonomous
driving, and electric drive systems. In addition to industrial
property rights, which safeguard our innovations for future
Mercedes-Benz is forging ahead with the electrification of its
vehicles. We plan to electrify the entire Mercedes-Benz Cars
portfolio as soon as 2022, which means that various electric
alternatives are to be offered in every segment - from compact
cars to SUVs. We expect all-electric vehicles to account for
up to 25% by 2025.
We have also set other goals within the framework of our
"Ambition 2039" strategy. For example, plans call for the
Mercedes-Benz Cars business division to offer a completely
CO2-neutral new vehicle fleet by 2039. In addition, we want
more than half of our vehicle sales in 2030 to consist of vehi-
cles with electric drive systems, i.e. all-electric and plug-in
96 B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
hybrid vehicles. By 2030, nearly all of our production sites in
Germany will use electricity generated exclusively from renew-
able sources. We are also looking to achieve CO2-neutral pro-
duction throughout Europe as of 2022, while our long-term
plans call for the value chain to be transformed into a value
cycle that will incorporate the entire supplier chain. As we
move ahead here, electric mobility will become our core busi-
ness, and future vehicle architectures will be designed for elec-
tric mobility from the very beginning.
The Mercedes-Benz VISION EQS had its world premiere at the
press conference for the 2019 IAA International Motor Show
in Frankfurt. This show car offers a preview of the future of
sustainable modern luxury. It is a premium electric sedan that
emphasizes sustainability as its central theme. That's because
the VISION EQS show car is based on a new and fully variable
electric drive system platform that is scalable in a variety of
ways and can be used in different vehicle models.
Plug-in hybrids offer customers the best of two worlds: they
can be driven in the all-electric mode in cities, while on long
journeys they benefit from the combustion engine's range.
Plug-in hybrid technology makes vehicles more efficient overall
- it allows for braking-energy recovery on the one hand and
the use of the combustion engine at more favorable operating
points on the other.
At the end of 2019, Mercedes-Benz had more than ten plug-in
hybrid models on offer - an attractive portfolio ranging from
compacts to the Mercedes-Benz S-Class flagship model. Our
goal here is to offer our customers well over 20 hybrid model
variants by 2020.
With the A 250 e (fuel consumption combined: 1.6 - 1.4 l/100 km;
CO2 emissions combined: 36-32 g/km; power consumption
combined: 15.3 – 14.6 kWh/100 km)¹, the A 250 e sedan (fuel
consumption combined: 1.5 - 1.3 l/100 km; CO2 emissions
combined: 35-31 g/km; power consumption combined:
15.2-14.5 kWh/100 km)¹ and the B 250 e (fuel consumption
combined: 1.6 1.4 l/100 km; CO2 emissions combined:
36-32 g/km; power consumption combined: 15.4 - 14.7 kWh/
100 km), three compact-family models equipped with the
third-generation hybrid system were unveiled for the first time.
The electric mobility offensive is also being systematically
implemented in the SUV segment. The new GLE 350 de
4MATIC (fuel consumption combined: 1.3 - 1.1 l/100 km; CO2
emissions combined: 34-29 g/km; power consumption
combined: 28.7 - 25.4 kWh/100 km)¹ has a battery with a
capacity of 31.2 kWh, which gives it an all-electric range
of more than 100 kilometers, assuming an appropriate driving
style.
The GLC also enters its new model year with an even more
striking design, the MBUX infotainment system and the latest
driving assistance systems. As an all-wheel drive SUV, the GLC
300 e 4MATIC (fuel consumption combined: 2.5 - 2.2 l/100 km;
CO2 emissions combined: 58-51 g/km; power consumption
combined: 18.3-16.5 kWh/100 km)¹ is also an ideal towing
vehicle.
Solutions for the electric charging infrastructure
Our electric mobility offensive also includes the latest solutions
for the electric charging infrastructure. Studies estimate that
about 70 to 80% of the energy required for charging processes
in the EU and the USA will be covered at home or at the work-
place, and only about 20 to 30% at semi-public or public instal-
lations. We offer the right solutions in all of these areas. Such
solutions include charge@home for fast and safe recharging at
home with the new Mercedes-Benz Wallbox, and Mercedes
me Charge for easy and convenient charging on the road. With
the charge@Daimler project, we are consolidating our activities
relating to the establishment of an intelligent charging infra-
structure at all Daimler locations in Germany, while with
charge@highway we are forging ahead with an adequate infra-
structure for battery charging on long journeys. Through the
joint venture IONITY, we are working together with several
other vehicle manufacturers to establish a powerful fast-charg-
ing network for electric vehicles in Europe. In addition, our
charge@fleet project offers an intelligent charging solution for
companies and fleet operators.
Modern combustion engines remain indispensable
Combustion engines should continue to form the backbone
of global personal mobility for many years to come. This makes
it all the more important to further improve the efficiency
and environmental compatibility of combustion engines.
As planned, we continued and expanded our engine offensive
at Mercedes-Benz in the year under review. Our new highly
efficient four and six-cylinder engines are already available
in diesel or gasoline versions in numerous models. We are
convinced that diesel will continue to be a firm element of the
drive-system mix in the future, not least due to the low CO2
emissions of diesel engines.
Significantly reduced NOx emissions are a characteristic fea-
ture of vehicles that are certified in accordance with the Euro
6d-TEMP standard. All Mercedes-Benz passenger cars that can
be ordered as new vehicles now comply with this standard.
2019: a year of safety anniversaries
Vehicle safety is one of our core areas of expertise and a key
component of our product strategy. Our vision of accident-free
driving will continue to motivate us to make mobility as safe
as possible for everyone in the future. This year we once again
presented an Experimental Safety Vehicle: the ESF 2019.
This new ESF offers an insight into the ideas that our safety-
research experts are currently working on. The vehicle features
more than a dozen innovations including both near-series
developments and developments that look well into the future.
Examples here include the PRE-SAFE® child seat concept
and a new holistic safety concept for the automated drive pro-
gram. The ESF also features a new type of driver airbag and
a unique steering-wheel and pedal system.
1 The stated figures are the measured "NEDC CO₂ figures" within the mean-
ing of Art. 2 No. 1 Commission Implementing Regulation (EU) 2017/1153.
The fuel consumption figures were calculated on the basis of these fig-
ures. The range and the electrical consumption were determined on the
basis of Commission Regulation (EC) No. 692/2008. A different value is
applied in accordance with the German Electric Mobility Act (EmoG). A
higher figure may apply as the basis for calculating the motor vehicle tax.
Further information on official fuel consumption figures and the official
specific CO2 emissions can be found in the guide "Information on the fuel
consumption, CO2 emissions and electric power consumption of new
cars," which is available free of charge at all sales dealerships and from
Deutsche Automobil Treuhand GmbH at www.dat.de.
38,054
Electric mobility offensive - new products and highlights
at IAA 2019
Protecting our brands and patents
Shared & Services: a joint venture with the BMW Group
Daimler AG and the BMW Group are combining their mobility
services in the YOUR NOW joint ventures with the goal of cre-
ating a new global player that will introduce sustainable urban
mobility solutions that consistently focus on customer utility.
Together we are investing more than one billion euros in the
further expansion and close interconnection of existing services
in the areas of ride hailing, multimodal platforms, car sharing,
parking and charging. The products and services of the joint
ventures are being further systematically aligned with customer
requirements and have been consolidated into three units:
1. FREE NOW & REACH NOW. 2. SHARE NOW. 3. PARK NOW &
CHARGE NOW.
We have teamed up with the BMW Group in order to reach a
milestone on the road to automated driving. We plan to work
together with BMW to develop the next generation of technolo-
gies for driving assistance systems, automated driving on high-
ways and automated parking systems. The partnership is open
to other vehicle manufacturers and technology partners. In
addition, the results of the partnership will be offered to other
OEMS for licensing purposes.
mobility over the long term, the unique visual aspects of our
products are protected with more than 7,500 registered
designs (2018: 7,500). Our portfolio of more than 34,500 trade-
mark rights worldwide (2018: 36,300) also serves to protect
the Mercedes-Benz brand, our new EQ brand for electric mobil-
ity, and all of our other product brands in the relevant markets.
In order to safeguard this intellectual property, we established
an IP competence center for all brands and technologies last
year under the name Daimler Brand & IP Management GmbH &
Co. KG. This company registers and manages Daimler's port-
folio of patents, brands, trademarks, designs and domains,
handling everything from the process of invention disclosure to
the granting or registration of the intellectual property right.
In the event of disputes regarding improper use of Daimler's
intellectual property, the team takes over its defense before
the authorities and the courts.
€9.7 billion for research and development
We want to continue helping to shape mobility through our pio-
neering innovations in the coming years, while moving ahead
with digitalization throughout the entire Group. We therefore
slightly increased our very high level of investment in research
and development to €9.7 billion in 2019 (2018: €9.1 billion).
At the beginning of 2019 we assumed that development would
remain at the same level as the previous year. Of that amount,
€3.1 billion (2018: €2.5 billion) was capitalized as development
costs, which represents a capitalization rate of 32% (2018:
28%). The amortization of capitalized research and development
expenditure totaled €1.8 billion during the year under review
(2018: €1.5 billion). With a rate of 5.6% (2018: 5.4%), research
and development expenditure also remained at a high level in
comparison with revenue. Along with the production launches,
research in the year under review focused on the further
development of our platforms and electric and conventional
drivetrains. Digitalization and automated and autonomous
driving are also becoming increasingly important.
Activities at Mercedes-Benz Cars in the year under review were
marked by an increasing focus on digitalization, automated and
autonomous driving, and the further development of electric
drive systems and a new platform for vehicles with all-electric
drive systems.
Automated driving, electromobility and connectivity played an
important role at Daimler Trucks. The subsequent generations
of existing products, fuel efficiency and emissions reduction
were further focal points, along with customized products and
technologies for future growth markets.
Activities at Mercedes-Benz Vans centered around the further
development of the Sprinter, the Vito and the V-Class. How-
ever, Mercedes-Benz Vans is also forging ahead with the elec-
trification of both its commercial and private model series.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 95
Innovation and safety
New mobility is taking shape and is becoming a reality
The automotive industry is undergoing a profound transfor-
mation. As the inventor of the automobile and a provider of
personal mobility solutions ranging from smart vehicles to
the broad range of Mercedes-Benz cars and Mercedes-Benz
vans, we seek to shape and lead this extensive transformation.
Technical challenges still exist with regard to linking the four
key fields that are decisive for the future of mobility - connec-
tivity (Connected), automated and autonomous driving (Auto-
nomous), flexible use and services (Shared & Services) and
electric drive systems (Electric). In the meantime, our electric
mobility offensive in the field of cars is being consolidated
under our EQ technology and product brand, which represents
an important component on the road to emission-free driving
and an effective instrument for achieving ever more ambitious
global CO2 reduction targets.
Connected: MBUX and Mercedes me
The Mercedes-Benz User Experience, MBUX, was expanded
in 2019 to include several new features. In addition, the system
was introduced in numerous new model series for the first
time. The new features include the "In Car Store," which can
be used to order navigation services, digital radio or smart-
phone integration functions. MBUX also makes it possible to
pay street parking fees quickly and easily. Experience with the
A-Class shows that customers like to invest in entertainment
and connectivity features. Two out of every three customers
now order the high-end version of the MBUX system.
Since it launched Mercedes me in 2014, Mercedes-Benz has
developed more than 80 mobility-related digital services. New
services are also constantly being introduced and made avail-
able in more and more markets. Mexico, Malaysia and India
have recently been added, which means that Mercedes me can
now be used in 47 markets. The activation rate for Mercedes
me in new Mercedes-Benz vehicles is over 90%, which translates
into approximately four million active users at the moment.
EQ models equipped with Mercedes me offer important func-
tions for electric mobility today and in the future, including
navigation, the display of the remaining vehicle range, and an
auxiliary climate control system. The features can be pro-
grammed directly via MBUX or the Mercedes me app. The EQ-
specific content in MBUX includes the display of the state of
charge and the energy flow. Drive programs, charging current
and departure time can also be controlled and set via MBUX.
The ENERGIZING comfort control unit connects the various
comfort systems in the vehicle. A new feature that is now avail-
able offers intelligent recommendations via the ENERGIZING
COACH system. This service uses an intelligent algorithm to
recommend one of the ENERGIZING comfort control programs
suited to the given situation. The aim here is for the occupants
to feel comfortable and relaxed even during demanding or
monotonous journeys.
The Bertha tank app allows drivers to quickly and easily locate
the nearest or cheapest service station, or the one best suited
to their needs in the immediate area or at a desired location.
Drivers can also use the app's integrated payment function to
pay for fuel directly at the vehicle.
At the end of 2019, together with the district of Zollernalb, we
announced that we would run a pilot project to determine
how car-to-X communication can be used to enhance safety on
wintry roads and improve the efficiency of municipal winter
services. Car-to-X is a term used to describe communication
between vehicles, as well as communication between vehicles
and the transport infrastructure. Mercedes-Benz passenger
cars that are equipped with car-to-X technology, and whose
owners have activated the Live Traffic Service, are providing
the necessary data for the pilot tests. When the ESPⓇ or ABS
sensors in these vehicles detect slippery road conditions, this
information, including the associated GPS data, is sent to the
Daimler Vehicle Backend in real time via the mobile phone net-
work. The anonymized information is displayed in real time on
digital maps in the Zollernalb district's two road-maintenance
depots.
New forms of automated driving
We are also working with Bosch on the development of an auto-
mated driving system operating at SAE Level 4/5 and designed
especially for urban traffic. In December 2019, we began offer-
ing a select group of users a ridesharing service using auto-
matically driving Mercedes-Benz S-Class vehicles in the Silicon
Valley city of San José. Daimler Mobility AG is operating and
managing the test fleet and the associated app-based mobility
service.
19/18
% change
Daimler Buses primarily focused its development activities
on new products and measures to further reduce fuel consump-
tion. Alternative drive systems, in particular electrification
technology and other forward-looking projects related to auto-
mated and autonomous driving, also played a key role during
the year under review. 7 B.39 7 B.40
2019
0
1,076
99,366
91,530
117,160
Other provisions
Provisions
Trade payables
Other liabilities
Liabilities
Deferred income
1 Amounts following the hive-down. Deviations from the hive-down
balance sheet (published in the hive-down report of May 22, 2019)
are the result of subsequent adjustments in accordance with the
hive-down agreement.
The reduction was also caused by provisions for taxes and per-
sonnel and social provisions. There was an opposing effect from
increases in provisions for derivative financial instruments.
Provisions for pensions and similar obligations amounted to
€0.1 billion at December 31, 2019 (2018: €0.8 billion). The
decrease is almost solely attributable to the transfer of pen-
sion obligations and special-purpose assets to Mercedes-Benz
AG and Daimler Truck AG.
Liabilities increased by €3.3 billion to €59.7 billion. This was
primarily due to the increase of €11.9 billion in liabilities to sub-
sidiaries, which is mainly due to losses transferred from sub-
sidiaries. In addition, bonds and other debt instruments were
issued in an amount of €1.5 billion. On the other hand, liabili-
ties decreased by €10.4 billion due to the hive-downs for cor-
porate restructuring within the framework of "Project Future."
92
B | COMBINED MANAGEMENT REPORT | DAIMLER AG
Risks and opportunities
The business development of Daimler AG as the operational
management holding company mainly depends on the develop-
ment of its worldwide subsidiaries and is therefore - through
the profit and loss contributions from subsidiaries and associ-
ated companies - fundamentally subject to the same risks
and opportunities as the Daimler Group. Daimler AG generally
participates in the risks of its subsidiaries and associated com-
panies in line with the percentage of its respective equity inter-
est. The risks and opportunities are described in the Risk and
Opportunity Report. Risks may additionally arise from relations
with subsidiaries and associated companies in connection with
statutory or contractual obligations (in particular with regard to
financing), as well as from the impairment of investments in
subsidiaries and associated companies.
Furthermore, pursuant to Section 133 Subsections 1 and 3 of
the German Transformation Act (UmwG), Daimler AG is jointly
and severally liable for liabilities of €24.3 billion that were
transferred to Mercedes-Benz AG and Daimler Truck AG within
the framework of "Project Future." According to the current
appraisal, due to the assessment of the creditworthiness of
Mercedes-Benz AG and Daimler Truck AG, an actual cash out-
flow for Daimler AG is considered to be unlikely.
6
Outlook
56,442
59,701
43,209
2018
Provisions for pensions and
similar obligations
94
123
838
1,511
2,136
15,595
1,605
2,259
16,433
227
428
7,210
59,474
49,232
The financial position, cash flows and profitability of Daimler
AG depend on the business development and performance of
its operating subsidiaries, in whose development it participates
through profit-and-loss-transfer agreements and dividend dis-
tributions.
45,634
46,062
In addition, due to the interrelations between Daimler AG and
its subsidiaries, we refer to the statements in the Outlook
chapter, which largely reflect our expectations also for the
parent company.
8
7
6
5
4
3
1
0
2015
2016
2017
2018
'2019
B.40
We expect Daimler AG to achieve significantly improved profit-
ability in 2020 compared with the year 2019. We assume that
the operating performance will improve, due among other things
to cost savings and the end of costs for "Project Future." We
also anticipate a significant improvement in financial income as
a result of improved profit transfers from subsidiaries.
Research and development expenditure by division
In millions of euros
thereof capitalized
total
2
In billions of euros
Sustainability at Daimler
10
9
At Daimler, sustainability means generating economic, environ-
mental and social value added for all of our stakeholders: cus-
tomers, investors, employees, business partners and society as
a whole. We believe that the solutions we offer form a central
component of future mobility systems that will be climate-
neutral and sustainable. Together with players from industry,
government and society we thus create the foundation for
our future business success and value added for all of society.
The basis for all of this is our sustainable business strategy.
Among other things, this strategy formulates our ambitions,
goals and measures for managing the economic, environmental
and social impact of our business activities. This applies not
only to our manufacturing locations but also to our entire
upstream and downstream value chain.
Additional information on “Sustainability at Daimler" can be
found in the "Non-Financial Report" section of this Annual
Report pages 202 ff. The “Non-Financial Report” is also
available on the Internet at daimler.com/nonfinancial-
report. The new Daimler Sustainability Report for financial year
2019 will be available on the Group's website at the beginning
of April 2020. daimler.com/sustainability
Research and development
Research and development as key success factors
Research and development have always played a key role at
Daimler. Gottlieb Daimler and Carl Benz invented the auto-
mobile more than 130 years ago. Today, we are shaping the
future of mobility anew. Our goal is to offer our customers
fascinating products and customized solutions for needs-ori-
ented, safe and sustainable mobility. Our technology portfolio
and our key areas of expertise are focused on this objective.
The expertise, creativity and drive of our employees in research
and development are key factors behind our vehicles' market
success. At the end of 2019, Daimler employed 24,300 men and
women at its research and development units around the world
(2018: 25,600). A total of 16,200 of those employees
(2018: 17,700) worked at Group Research & Mercedes-Benz
Cars Development, 5,600 (2018: 5,300) at Daimler Trucks,
1,200 (2018: 1,300) at Mercedes-Benz Vans and 1,300 (2018:
1,300) at Daimler Buses. Around 5,100 researchers and
development engineers (2018: 5,800) worked outside Germany.
Global research and development network
Sustainability and Integrity
With our global research and development network, we are
present in the key markets with direct proximity to our custom-
ers. Our biggest facilities are in Sindelfingen and Stuttgart-
Untertürkheim in Germany. Our most important research facili-
ties in North America are the US R&D locations in Sunnyvale,
California; Long Beach, California; Portland, Oregon; and Red-
ford, Michigan. Our most important facilities in Asia are in
Bangalore, India; the Global Hybrid Center in Kawasaki, Japan;
and our research and development center in Beijing, China.
Mercedes-Benz Research & Development India (MBRDI, with
headquarters in Bangalore) is Daimler's largest research and
development center outside Germany. Activities at MBRDI
focus on digitalization, simulations and data science. In Nov-
ember 2018, we announced plans to build a further Research
and Development (R&D) Tech Center in China with a total
investment of approximately €145 million. This new center
will further expand our presence in what is now our biggest
single market. It will also be our second major R&D site in
Beijing, following the Mercedes-Benz R&D Center, which was
established in China in 2014. The new R&D Tech Center in
China is scheduled to begin operating in 2020.
Along with our internal activities, we also maintain close con-
tacts with external research institutions. For example, we work
together with various renowned research institutes around
the world and participate in international exchange programs
for next-generation scientists.
We are open to cooperation - worldwide. Our partners include
promising startups such as what3words and Anagog, as well
as suppliers such as Bosch and, in selected fields, competitors
such as BMW. Some of our Chinese partners are Baidu, Alibaba
and Tsinghua University. We operate digital hubs as develop-
ment centers around the world, for example in Berlin, Seattle,
Lisbon and Tel Aviv.
94
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
B.39
Research and development expenditure
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 93
Our employees' individual circumstances require working times
to be flexibly organized. We therefore offer a varied range of
working-time arrangements that include mobile working, part-
time work and job sharing, all of which improve performance
by helping employees reconcile their professional and personal
responsibilities.
Diversity and inclusion
Diversity is one of the five corporate principles at Daimler and
a firmly established part of our culture. We require and encour-
age a working environment featuring equal opportunities and
a culture of appreciation and respect. With "Diversity Shapes
our Future," we are underscoring the importance of diversity
as a strategic factor for success at Daimler. Diversity manage-
ment enables us to reflect the diversity of our customers, sup-
pliers and investors around the world.
In order to fulfill the requirements of legislation in Germany
regarding the equal participation of women and men in man-
agement positions, the Board of Management has set targets
for the proportion of women at the two management levels
below the Board of Management and a deadline for achieving
those targets. In setting all targets, we have taken industry-
specific circumstances into consideration.
103
We have committed ourselves to raising the proportion of
women in senior management positions at the Group to at least
20% by the end of 2020. The proportion of women in such
positions has continually risen in recent years to reach 19.8% at
the end of 2019 (2018: 18.8%). Our instruments for supporting
the targeted promotion of women include mentoring, special
events and training courses, and employee networks.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
maintain a work culture that promotes outstanding perfor-
mance and a high level of motivation and satisfaction among
our employees and management staff.
Daimler's approximately 300,000 employees provide the Group
with a vibrant mixture of cultures and ways of life. We shape
diversity and inclusion with targeted programs and measures
for our employees. With staff from more than 160 countries
and a workforce that spans five generations, our company is
an organization made up of international teams - with mem-
bers of all ages. We provide our employees with the opportu-
nity to express their sexual orientation and identity. We offer
equal opportunities to people with disabilities and also support
their further training and qualification. We expressly promote
equality of opportunity between the genders.
Further details are provided in the “Declaration on Corporate
Governance, Corporate Governance Report" section on
pages 185 ff of this Annual Report.
The number of employees in Germany decreased from 174,663
in 2018 to 173,813 in the year under review. Whereas employee
numbers in 2019 declined in the United States to 25,788 (2018:
26,310), they increased in Brazil to 11,128 (2018: 10,307) and
in Japan to 10,056 (2018: 9,918). 7 B.42 Our consolidated sub-
sidiaries in China had a total of 4,439 employees at the end
of the year (2018: 4,424). At the end of the reporting year, the
parent company Daimler AG employed a total of 6,887 men and
women (2018: 149,797). The decline in workforce numbers at
Daimler AG was due to the implementation of "Project Future,"
which was approved by the 2019 Annual Shareholders' Meet-
ing. Within the framework of this project, the Mercedes-Benz
Cars, Mercedes-Benz Vans, Daimler Trucks and Daimler Buses
divisions were separated from Daimler AG and established as
legally independent units known as Mercedes-Benz AG and
Daimler Truck AG. Following this separation, Daimler AG was
restructured into an operational management holding company
that provides services to the Group companies.
High attractiveness as an employer
The key aims of our human resources strategy are to further
increase our appeal as an employer and to safeguard and further
extend the competitiveness of our workforce. Because our
executives should motivate their employees to achieve top per-
formance and assume more personal responsibility, it is crucial
that we further develop our management culture and establish
outstanding leadership capabilities in our management. In
addition, we want to take on social responsibility and let diver-
sity flourish in our global company.
Human resources strategy
The Group's total workforce also does not include the employees
of companies that we manage together with Chinese partners;
on December 31, 2019, they numbered approximately 22,600
people (2018: 19,900).
Around the world, we have combined in-house services, such
as those for financial processes, human resources (HR), IT and
development tasks, sales functions and certain location-spe-
cific services, into shared service centers. Some of the shared
service centers are not consolidated because they have a neg-
ligible affect on our financial position, cash flow or profitability;
those companies employed approximately 13,400 men and
women at the end of 2019.
On December 31, 2019, the Daimler Group employed a total
of 298,655 men and women (2018: 298,683). Contrary to the
forecast in Annual Report 2018, the number of employees
remained at the prior-year level. 7 B.41
Number of employees at prior-year level
102
Securing young talent
The workforce
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Our activities and measures for enhancing our attractiveness as
an employer are designed to enable us to recruit and retain
specialized employees and qualified managers. In this regard,
we also make use of external communication channels such as
our Careers website ④daimler.com/career and social media
sites (e.g. Instagram and Facebook). We also develop target
group-specific marketing campaigns. The most recent example
of such a campaign is the “Next Big Thing," an international
campaign designed to make IT and artificial intelligence experts
more aware of what Daimler has to offer as an attractive
employer. Our primary objectives for such measures are to
ensure attractive and fair compensation and to establish and
Daimler takes a holistic approach to securing young talent.
This begins with programs for children and teenagers (in our
Genius initiative, for example) and extends to a broad range
of activities such as social media campaigns, hackathons,
competitions and internships that offer young talents the pos-
sibility to get in touch with the company. After university
students graduate, we offer them attractive possibilities to join
our company directly or launch their careers at Daimler by
taking part in our global training programs.
151,316
We provide our staff with training and continuing education
opportunities throughout their entire careers in order to safe-
guard the long-term innovative capability and outstanding
performance of our workforce. The rapid pace of technological
change is making lifelong learning more important, especially
as we must now assume that employees will need to make more
major changes than ever before to their skills profiles through-
out their careers. Our range of qualification measures for safe-
guarding our workforce's employability includes practical
training courses, e-learning courses, seminars, workshops,
specialist conferences and financial support for employees
who participate in a course of study while continuing to work.
In 2019, for example, we offered training courses on new
developments in the fields of electric mobility and robotics.
During the year under review, around 45,000 employees
throughout Germany participated in training programs relating
to electric mobility.
+1
Mercedes-Benz Vans¹
An energy management system has been implemented for the
continual reduction of energy consumption. The workforce in
the plants is being sensitized to this initiative through a variety
of measures. These include generally visible tips for energy
saving and training courses in the production facilities. The
employees make a substantial contribution to energy saving
through their energy awareness and their innovative ideas.
More detailed information can be found in the "Non-Financial
Report" section of this Annual Report.
pages 197 ff
82,676
83,437
Daimler Trucks¹
+0
152,048
Mercedes-Benz Cars¹
-0
Employee qualification
298,683
19/18
% change
Employees (December 31)
2018
2019
Daimler Group
Employees by division
B.41
Further information on employee matters can be found in the
Non-Financial Report on
pages 203 ff.
Healthy and motivated employees are important for our com-
petitiveness. We therefore promote the health and safety of
our employees through numerous programs that focus on work
safety concepts and standards, ergonomics, the provision of
medical care, nutritional advice, individual exercise, measures
to promote mental health and personal resilience, and much
more. Our Health & Safety unit defines, coordinates and moni-
tors measures that promote and ensure occupational health
and safety at the company. The implementation of such mea-
sures at our plants is managed by corresponding experts.
Health management and occupational safety
298,655
In Germany, Mercedes-Benz AG will also in the future obtain
electricity from German wind power facilities whose subsidies
in accordance with Germany's Renewable Energy Act (EEG)
are due to expire after 2020. This will support the long-term
operation of six wind farms in northern Germany. Energy effi-
ciency is already being implemented in production operations
today. Various technical measures such as the optimization
of lighting and ventilation technology (including more efficient
systems and optimized switching times), intelligent control
(including automatic switch-off of consumers during breaks and
production-free periods) and the use of efficient technology in
planning (such as high-efficiency turbo compressors for central
compressed-air generation, energy-efficient pumps) contribute
to further energy saving. The measures are supported by efficient
control of the electric power supply.
99
Environmental protection in production
We continue to work hard on the electrification of our vehicles,
focusing particularly on vehicles that operate in cities. With
the all-electric Mercedes-Benz eCitaro, Daimler Buses has been
offering a locally emission-free city bus since 2018, thereby
contributing to environmentally friendly local public transport
in cities and metropolitan areas. The battery-electric eCitaro
is a series-production model. Products such as the eCitaro
make an important contribution to climate protection and air
quality in cities.
On the move with environmentally friendly public
transport
Buses from the Mercedes-Benz and Setra brands are an indis-
pensable part of local public transport and play a key role world-
wide in reducing the impact of traffic, pollution and nitrogen
oxide pollution close to our roads. Our aim is to enable more
efficient mobility in cities and help reduce the negative impact
caused by traffic in urban areas in particular. At the same time,
we are focusing on keeping the total cost of ownership (TCO)
low and reducing emissions even further. As a result, Daimler
Buses offers a complete range of highly economical and innova-
tive vehicles, all tailored to customer requirements and specific
intended applications. We do this because our goal is to provide
customers with the right solution for every type of public trans-
port system in small towns and large metropolitan areas, and
on smooth or rough terrain.
Efficient passenger transport
Mercedes-Benz Vans is presenting Vision URBANETIC under
autonomous@Vans as a supplement to its electrification
solutions. This is an innovative mobility concept showing how
autonomous mobility might work in the future. Vision
URBANETIC removes the separation between passenger and
goods transport by utilizing an innovative body-switching
approach that enables the needs-based, sustainable and effi-
cient movement of people and goods. In this manner, Vision
URBANETIC meets the requirements of cities, companies from
diverse sectors, urban residents and travelers in an innovative
way. The concept reduces traffic flows, eases the strain on
inner-city infrastructure and helps to improve the quality of life
in cities.
digital@Vans bundles innovative solutions in the field of
digitalization. Under the web-based brand Mercedes PRO,
Mercedes-Benz Vans combines all digital services and
solutions for the daily requirements of its customers, from
small businesses to major clients. For example, Mercedes
PRO optimizes communication between fleet managers, vehi-
cles and drivers. In addition, it enables the online control of
jobs and the retrieval of vehicle information such as location,
fuel level or maintenance intervals almost in real time.
Mercedes-Benz Vans also develops tailored digital solutions
for various sectors, while its VAN2SHARE and In-Van Delivery
& Return services allow customers and the company itself to
employ entirely new business and service models.
The eDrive@VANS strategy involves not only the electrification
of the vehicle fleet but also a customized overall system
solution for each individual fleet. This includes advice on vehi-
cle selection, assistance with tools such as the eVAN Ready
app, and an overview of the total cost of ownership. Equally
decisive for potential electric van users is the analysis of the
organizational and technical circumstances at commercial cus-
tomer sites. Finally, the integration of an intelligent charging
infrastructure lays the foundation for conserving resources with
a commercial fleet while remaining economically competitive.
Well connected: making transport safer and more efficient
Along with personal mobility, the transport of goods also plays
a key role in urban traffic. Mercedes-Benz Vans offers digital
solutions in this area with Mercedes PRO connect. The service
from Mercedes PRO includes providing the responsible fleet
customers with data that they can use to analyze the driving
style of their drivers and its effect on fuel consumption or vehi-
cle wear and tear, for example. Drivers can then receive train-
ing in line with the results of these analyses. Such training
courses can help reduce fuel consumption and the risk of acci-
dents. Mercedes PRO connect is currently available in 19 Euro-
pean countries and in the United States. The web-based ser-
vice benefits fleet operators ranging from small businesses to
major clients.
Mercedes-Benz Vans: vans with electric drive
Mercedes-Benz Vans is systematically forging ahead with the
electrification of its product portfolio with locally emission-
free electric drive systems that help ensure more sustainable
mobility for people and goods in cities. The first step in this
direction was made with the eVito panel van, which was fol-
lowed by the eVito Tourer (electricity consumption in combined
test cycle: 24.2 - 20.2 kWh/100 km; combined CO2 emissions:
0g/km)¹. Production of the eSprinter was launched in Düsseldorf
at the end of 2019. Also in 2019, Mercedes-Benz Vans pre-
sented our first purely battery-electric premium full-size MPV:
the EQV (combined electricity consumption: 27.0 kWh/100 km;
combined CO2 emissions: 0 g/km, preliminary figures).² The
vehicle offers a range of up to 405 km 2 without compromising
the usability of its interior space.
Data-based and networked services also form the foundation
of the latest initiative from Daimler Trucks that is designed
to take service and the customer experience to a new level in
North America. Since June 2019, Daimler Trucks has been
utilizing its new customer experience (CX) organization to ensure
that customer requests and suggestions can be responded
to and implemented in an even faster and more customized
manner. An important role is played here by services that
enable customers to make their core business safer, more effi-
cient and more successful through the use of Daimler Trucks
products in a wide variety of situations. The idea is that the entire
service process - from vehicle reception and maintenance to
post-maintenance pick-up - should be made significantly more
efficient for customers. To this end, Daimler Trucks in North
America has introduced new app-based communication chan-
nels that enable customers to interact intuitively with service
reception and workshops while on the move. The overall objec-
tive here is to guarantee service-order processing within 24
hours in every case.
1 Energy consumption was determined on the basis of Directive 692/2008/EC. Energy
consumption is dependent on the vehicle configuration, and in particular on the selected
maximum speed restriction.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Daimler Trucks: reliable and connected
Reliability is a core brand value at Daimler Trucks. As the world's
largest manufacturer of trucks above 6 metric tons gross
vehicle weight, Daimler Trucks continuously works to reduce
unnecessary vehicle downtimes and thus continuously
increase vehicle availability for customers. This is important
because downtimes impair customers' business success.
In today's digital age, innovative connectivity solutions and
software services have become a part of the core business
of Daimler Trucks as never before. Along with the management
of its current portfolio of services, Fleetboard is also now
working systematically on the development of new digital solu-
tions for its customers. In the first quarter of 2019, for exam-
ple, Fleetboard acquired the habbl logistics application. The
software developed by habbl enables customers to easily inte-
grate Mercedes-Benz trucks into their scheduling processes
and make order data available in order to simplify communica-
tion with drivers.
In order to accelerate this development, in March 2019 Daimler
Trucks entered into a partnership with Torc Robotics, a pio-
neering US company in the field of automated driving. The
partners plan to jointly develop and market highly automated
production trucks (SAE Level 4) in the United States. In June
2019, Daimler Trucks combined all of its global expertise and
activities in the field of automated driving into the Daimler
Trucks Autonomous Technology Group. The new unit is respon-
sible for the formulation and implementation of an overall
strategy for automated driving, including all research and
development activities and the establishment of the required
infrastructure and network for vehicle operation. Daimler
Trucks' goal for the Autonomous Technology Group is to bring
highly automated trucks (SAE Level 4) to market maturity
within a decade. In September 2019, Daimler Trucks and Torc
Robotics began testing highly automated trucks with SAE
Level 4 technology for the first time on selected public roads in
southwest Virginia. The trials on public roads were preceded
by months of extensive testing on closed tracks. Over the long
term Daimler Trucks plans to focus strategically on the opera-
tion of highly automated trucks (SAE Level 4) for long-distance
Hub2Hub haulage between logistics hubs.
as the higher costs of the technologies required for it are not
matched by corresponding benefits in practice.
In the transportation industry, SAE Level 4 is the next logical
step after Level 2 to increase efficiency and productivity for
customers and significantly reduce costs per kilometer.
Daimler Trucks is thus skipping the intermediate step of condi-
tional automation (SAE Level 3). Level 3 does not offer truck
customers any significant advantage over the current situation,
Developing and testing highly automated trucks
(SAE Level 4)
In addition to developing active safety systems, Mercedes-Benz
Trucks is now introducing such systems even more systemati-
cally on a broad basis. For example, starting in January 2020,
the premium truck manufacturer will offer the latest generation
of its emergency braking system (ABA 5) as standard equip-
ment in its heavy-duty model series throughout Europe. The
Sideguard Assist system, which was presented for the first
time in 2016, is now available not only ex works but also as a
comparable retrofit solution. In this manner, Daimler Trucks &
Buses is meeting its social responsibility to prevent accidents
involving commercial vehicles to the greatest possible extent
through the use of active safety systems.
At the beginning of 2019, Daimler Trucks presented the new
Freightliner Cascadia - the first partially automated (SAE Level
2) series production truck for North America - at the Con-
sumer Electronics Show (CES) in Las Vegas. With Detroit Assur-
ance 5.0 featuring Lane Keeping Assist in the new Freightliner
Cascadia and with Active Drive Assist in the Mercedes-Benz
Actros and the FUSO Super Great, Daimler Trucks began offer-
ing partially automated driving features (SAE Level 2) in pro-
duction trucks to customers in the United States, Europe and
Japan in 2019. The new systems can assist the driver with
braking, accelerating and steering the vehicle. Unlike systems
that do not go into action until a certain speed is reached,
Active Drive Assist/Detroit Assurance 5.0 can assist the driver
with partially automated driving functions in all speed ranges
for the first time in a production truck. Since November 2019,
customers in Asia who purchase a new FUSO Super Great
(SAE Level 2) have also been benefiting from our global exper-
tise in the area of automated driving.
The vision of accident-free driving has been guiding the activi-
ties at Daimler Trucks & Buses for decades now. State-of-the-
art active safety systems hold the key to transforming the
vision into a reality, and the company has already done a great
deal of pioneering work in this regard. For example, numerous
safety systems that are now the industry standard were first
introduced in Mercedes-Benz trucks. Close cooperation within
the Group means that these new technologies quickly make
their way into other brands from Daimler Trucks.
21,346
Automated Daimler Trucks: aiming for more safety
As of 2019 anyone who gets behind the wheel of a new
Mercedes-Benz Actros or Arocs with "Multimedia Cockpit inter-
active" is just a click away from an innovative, fully networked
world of vehicles, drivers and logistics. An overview of all the
installed apps can be seen simply by pressing the "Connect"
button on the main screen of the navigation system. In addition,
transport companies can use the new Mercedes-Benz Truck
App Portal to take advantage of new networking opportunities
and equip their trucks with efficiency and comfort-enhancing
apps. The Mercedes-Benz Truck App Portal offers three types
of apps: in-house apps from Daimler, which include apps from
Mercedes-Benz Trucks and Fleetboard; selected apps from
third-party providers - for example for the digital management
of process steps or for processing transport requests; and
apps from customers themselves. These apps make it possible
to effectively integrate trucks into the digital business pro-
cesses of the transport company. The aim here is always to make
the everyday lives of dispatchers, fleet managers and drivers
as easy as possible.
2 Figures for electrical consumption and range are provisional and were determined by the
technical service for the certification according to UN/ECE-regulation 101. EC type
approval and conformity certification with official figures are not yet available. There may
be differences between the stated figures and the official figures.
100
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
the remanufacturing of used parts, and
the workshop waste disposal system MeRSy
(Mercedes-Benz Recycling System).
the resale of tested and certified used parts through the
Mercedes-Benz Used Parts Center (GTC),
In order to evaluate the environmental compatibility of a vehi-
cle, we analyze the use of resources throughout its entire life
cycle. The production of vehicles naturally requires great quan-
tities of materials. Therefore, one of the focal points of our
development tasks is to keep the demand for natural resources
as low as possible. During vehicle development, we also pre-
pare a recycling concept for every one of our Mercedes-Benz
car models. This concept includes an analysis of the suitability
of all components and materials for the various stages of the
recycling process. As a result, all Mercedes-Benz car models
are 85% recyclable and 95% recoverable. The key aspects of
our activities in this area are:
Conserving resources: consistently high recyclability
Raw materials that we require for use in our vehicles are avail-
able in sufficient quantities today. However, we will only be
able to safeguard the supply of these materials in the long term
if they are extracted and recycled in ways that are environ-
mentally friendly and socially responsible and in acceptable
amounts. We therefore seek to establish a completely closed-
loop value and supply chain. This objective is also the driving
force behind our implementation of various measures to lower
resource consumption in all areas - from development all the
way through to recycling. In this manner, we plan to increasingly
decouple resource consumption per vehicle from the compa-
ny's sales growth.
An important role is also being played by the launch of vehicles
that comply with the Euro 6d-TEMP emissions standard. In
the meantime all Mercedes-Benz passenger cars that can be
ordered as new vehicles now comply with this standard at a
minimum.
Overall, Daimler is developing software updates for a majority
of Euro 6b and Euro 5 diesel passenger cars in Europe. These
updates should improve the nitrogen-oxide emissions of the
vehicles in normal operation by 25 to 30 percent on average.
This will be verified with the WLTC 1, 2, 3 measurement cycle.
As early as 2017 Daimler had announced that it would offer vol-
untary service measures that would include software updates
for several millions of diesel vehicles in Europe. The company
has since then extended this update campaign, among other
things to include van models. As is well known, Daimler has in
addition been carrying out obligatory recalls - during which
software updates are also applied - at the order of Germany's
Federal Motor Transport Authority (KBA) since 2018.
A reduction in NOx emissions is made possible by an innovative
overall package consisting of the engine and the exhaust treat-
ment system. This package is being continuously enhanced and
has been comprehensively launched on the market in the new
engine generation encompassing the OM 654, 656 and 608.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY 101
Plans call for our new vehicle fleet to no longer have any rele-
vant impact on NO2 emissions in urban areas by 2025. Another
of our aims is to increase transparency with regard to vehicle-
related particulate emissions and forge ahead with the research
and development of measures for reducing such emissions.
In addition to climate protection, the improvement of inner-city
air quality is an important environmental consideration for
us. That's because road traffic still accounts for a considerable
share of nitrogen dioxide pollution (NO2) near roads.
Inner-city air quality
In the year under review, the average CO2 emissions of our
car fleet in Europe (EU28 plus Iceland and Norway) probably
increased to 137 g/km (NEDC, including vans registered as
passenger cars (M1)) (Mercedes-Benz Cars 135 g/km). This
means that we were unable to reduce our CO2 emissions
from the prior-year level. There were several reasons for this
development. First, the shift of sales from vehicles with diesel
engines to those powered by gasoline engines. In addition,
the certification changeover became fully effective in 2019
with the roll-out of WLTP. We intend to achieve our objective
of reducing our CO2 emissions for 2020, thus continuing to
comply with the valid EU limit values by means of a planned
expansion of our portfolio to include further electric models
and assuming corresponding customer demand. More detailed
information can be found in the Non-Financial Report section
of this Annual Report. pages 197 ff
CO₂ emissions from our car fleet
A vehicle's environmental impact is largely determined during
the first phases of its development. The earlier we integrate
environmentally responsible product development (design for
the environment, DfE) into the development process, the more
efficiently we can reduce the impact on the environment.
pages 200 ff
The environmental and energy-related guidelines approved by
the Board of Management define the environmental and
energy-related policy of the Daimler Group. This expresses our
commitment to integrated environmental protection that
begins with the underlying factors that have an impact on the
environment, assesses the environmental effects of production
processes and products in advance, and takes these findings
into account in corporate decision-making.
Furthermore, in our sustainable business strategy, we have set
ourselves the goal of making our fleet of new cars CO2-neutral
for the vehicles' entire lifecycle by 2039. Daimler Trucks & Buses
aims to offer only new vehicles that are CO2-neutral in driving
operation (tank-to-wheel) in the major markets of Europe, Japan
and the NAFTA region by 2039. Mercedes-Benz Vans is currently
striving to achieve similar reductions in CO2 emissions.
A comprehensive approach to environmental protection
The transition to CO2-neutral mobility is vital if the impact of
climate change is to be limited. We at Daimler are working hard
to make this vision reality. Mercedes-Benz AG has had its cli-
mate protection measures scientifically confirmed by the Sci-
ence Based Targets Initiative (SBTI). By means of these targets,
the company would like to make a contribution to environmen-
tal protection in line with the Paris agreement on global climate
change.
Environmental Protection
The continuous further development of our safety and assistance
systems demonstrates our commitment to moving closer and
closer to this vision. For example, in 2019 the Active Brake Assist
4 emergency braking system became standard equipment in all
Mercedes-Benz and Setra touring coaches. The system warns
the driver of potential collisions with pedestrians and automati-
cally initiates emergency braking when it detects stationary or
moving obstacles ahead of the vehicle. Preventive Brake Assist -
the first active emergency braking assistance system for city
buses - has been available as an option for the entire Mercedes-
Benz Citaro model family and the Mercedes-Benz Conecto since
2019. Sideguard Assist, which is a radar-based turning assistant
with pedestrian detection for buses, supports bus drivers during
right turns, which can be dangerous in certain situations.
Sideguard Assist is available for all variants of the Mercedes-
Benz Citaro, the Tourismo and all Setra ComfortClass 500 and
Setra TopClass 500 touring coaches.
At Daimler Buses, safety does not consist of individual measures.
Instead, it is the result of a comprehensive integral safety con-
cept. Its central component comprises a large number of inno-
vative safety features that are employed in line with the vehicle
in question and the way it is to be used. The general objective
here is to continually improve active and passive safety. This is
supported by additional measures such as driver training pro-
grams that teach drivers how to identify and avoid hazards in
a timely way and react correctly in the event of an accident.
The concept also involves informing passengers on how to use
the onboard safety equipment - starting with putting on their
seat belts. It goes far beyond that, however, and also includes
responsible vehicle maintenance and the use of certified origi-
nal replacement parts when the vehicle is serviced. The objec-
tive of the integral safety concept is to make the vision of acci-
dent-free driving a reality.
Safety at Daimler Buses: the vision of accident-free driving
As a bus pioneer, Daimler Buses has traditionally focused on
the safety of city and intercity buses and touring coaches. We
want to significantly increase safety in road traffic by means
of state-of-the-art driver assistance systems and vehicle-based
protection systems, with the ultimate objective of enabling
accident-free driving. Our pursuit of this goal will also help the
European Union achieve its target of reducing traffic fatalities
to nearly zero by 2050. Our strategy here is also helping to
improve the quality of life in cities. The overall aim of the inte-
gral safety concept is an ambitious one: to make the vision of
accident-free driving a reality.
The eCitaro is part of Daimler Buses' overall eMobility system.
In order to support our customers during their transition to
electric bus fleets, we offer advice on different use scenarios,
taking into account bus route lengths, passenger numbers,
energy requirements, range calculations, charging manage-
ment and other aspects. We also offer an Eco Training program
for bus customers and drivers that promotes an environmen-
tally friendly driving style.
We also continue to develop our environmentally friendly tech-
nologies and expand their use. Beginning in 2020, for example,
we will also be offering the eCitaro as an articulated bus, and
at the end of the same year it will also be available with solid-
state batteries (lithium polymer batteries). The launch of the
eCitaro with the next generation of batteries is scheduled for
2021. In 2022 we plan to begin equipping the battery-electric
bus with a range extender in the form of a fuel cell.
Beginning in 2022, we plan to achieve CO2-neutral production
in all of our Mercedes-Benz car plants in Europe. New plants
are already being planned with this in mind. Factory 56 is
showing the way. This new factory building in the Mercedes-
Benz Sindelfingen plant will already be supplied with CO2-neu-
tral energy when it goes into operation. The plant in Hambach,
France, already covers all of its electricity requirements with
energy from renewable sources (green electricity, biogas). Its
production operations are CO2-neutral. Production at the
Mercedes-Benz plant in Jawor, Poland, will also be CO2-neutral
as of the plant's commissioning. The new plant will be com-
pletely supplied with electricity from renewable resources by a
wind farm. Heating will be provided by a heating plant directly
adjacent to the plant site. This will provide energy from renew-
able resources.
21,810
With a large number of new and innovative products and ser-
vices, we have established a good starting position to meet the
upcoming challenges. We are also very well positioned in the
key technologies that are important for the future of mobility.
Daimler Buses¹
In the opinion of the Board of Management, at the time of pub-
lication of this Annual Report, the Daimler Group is in a phase
of transition, which brings great opportunities but also consid-
erable risks:
Overall Assessment of the Economic Situation
B❘ COMBINED MANAGEMENT REPORT | OVERALL ASSESSMENT OF THE ECONOMIC SITUATION
106
In order to ensure an independent external assessment of our
Antitrust and Anti-Corruption Compliance Program, KPMG AG
Wirtschaftsprüfungsgesellschaft audited the Compliance Man-
agement System for antitrust law and anti-corruption in accor-
dance with Audit Standard 980 of the Institute of Public Audi-
tors in Germany. This audit, which was based on the principles
of appropriateness, implementation and effectiveness, was
already successfully completed at the end of 2016 (antitrust) and
at the end of 2019 (anti-corruption).
More detailed information on the Daimler Compliance Manage-
ment System can be found in the Non-Financial Report section
of this Annual Report. pages 212 ff
Our Compliance Management System (CMS), which has its basis
in our culture of integrity, is designed to support the obser-
vation of laws and policies in the company and by its employees
and to prevent misconduct. The measures needed for this are
defined by our compliance and legal affairs organizations in a
process that also takes business requirements into account
as appropriate. Our CMS consists of basic principles and mea-
sures for the promotion of compliant behavior throughout the
Group. The CMS is based on national and international standards
and is applied on a global scale at Daimler AG and all Group
companies. The systematic minimization of compliance risks is
extremely important here, and for this reason we analyze and
assess the compliance risks of our Group companies every year.
These analyses are based on centrally compiled information
on the Group companies; specific additional details are taken
into account if necessary. The results of the analyses form the
basis of our risk management.
Our Compliance Management System (CMS) serves as
the foundation
Value-based compliance is an indispensable part of our daily
business activities at Daimler. For us, compliance means acting
in accordance with laws and regulations. Our objective here
is to ensure that all of our employees worldwide are always able
to carry out their work in a manner that is in compliance with
applicable laws, regulations, agreements with workers' represen-
tative bodies, voluntary commitments and our values, as set
out in binding form in our Integrity Code. Our compliance activi-
ties focus on complying with anti-corruption regulations, the
maintenance and promotion of fair competition, the compliance
of our products with technical and regulatory stipulations,
respect for and the protection of human rights, adherence to
data protection laws, compliance with sanctions and the pre-
vention of money laundering. Our compliance and legal organi-
zations are designed to ensure that they can advise and sup-
port all of our corporate units worldwide with regard to their
business operations, processes and services in order to mini-
mize legal and business risks.
Compliance and legal responsibility
- We have presented a new sustainable business strategy,
which is designed to lead us into a CO2-neutral future.
Further information can be found in the Non-Financial Report.
pages 211 ff
The task of Integrity Management is to promote the culture of
integrity at the Daimler Group and support its further develop-
ment and to provide the management and the employees with
the necessary tools and knowledge. The unit's goal is to estab-
lish and maintain a common understanding of integrity in order
to reduce risks and help ensure Daimler's sustained success.
As one of our main corporate values, integrity is as much a part
of everyday business conduct at Daimler as compliance and
legal responsibility. The foundation is our Integrity Code, which
was modernized and updated in 2019, and which focuses,
among other topics, on technical compliance. It is binding on
all companies and employees of Daimler AG and all Group
companies worldwide. The Code contains central corporate
principles of behavior that we expect all of our employees
and business partners to adhere to out of a sense of convic-
tion. We expect our executives to serve as role models in
terms of ethical behavior and thus offer employees guidance
in this regard.
Shared values and rules provide orientation in times of techno-
logical transformation and social change. These values and
rules help us make the right decisions and fulfill our responsi-
bility not just for our business success but also for the environ-
ment and the societies we live in.
Integrity, compliance and legal affairs
105
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
Further information on social matters can be found in the
Non-Financial Report of this Annual Report.
pages 208 ff
More information on the projects promoted by the Group and
the activities related to our social commitment can be found in
the Daimler Sustainability Report and on our website under
"Sustainability." daimler.com/sustainability
The Daimler Fund in the Donors' Association focuses on struc-
tural problems related to research and teaching, as well as on
the engineering sciences and international and scientific coop-
eration. Since 1993, it has helped establish 27 endowed pro-
fessorships/assistant professorships in Germany and abroad.
The Daimler and Benz Foundation supports interdisciplinary
scientific dialog and research projects. The purpose of the
foundation is to examine and clarify the interrelationships
between human beings, the environment and technology. The
foundation offers scholarships to outstanding young scien-
tists, and it also designs and implements innovative research
formats and organizes lecture series.
To this end, a large number of communication activities and
measures are carried out. These include dialog events, training
programs and employee surveys that provide employees with
important stimuli and advice related to their daily work and
business decision-making. Our "Infopoint Integrity" is available
to all of our employees as a central point of contact and a
center of advice on integrity-related issues in the daily working
environment. In addition, a network of integrity contact per-
sons supports the divisions in ensuring that all integrity-related
measures are firmly embedded within their organizations. One
of the things we focused on in 2019 was dialog sessions that
addressed the topic of technical integrity in the development
departments of our various business divisions.
After receiving the approval of the Annual Shareholders'
Meeting, we launched a new corporate structure effective
November 1, 2019, which makes us more flexible and focuses
our businesses more closely on our customers.
We are on the threshold of a far-reaching transformation pro-
cess that will change the Daimler Group and the automotive
industry as a whole to an unprecedented extent in the coming
years.
- An additional factor is an environment featuring trade con-
flicts, extremely demanding targets for CO2 reductions, and
economic and political uncertainties.
By the second half of this decade, Daimler Trucks & Buses
plans to extend its range of models to include hydrogen-pow-
ered production vehicles. With this in mind, Daimler Trucks
presented the Vision F-Cell fuel-cell prototype from FUSO at
the Tokyo Motor Show in Japan at the end of October 2019,
thus systematically intensifying its efforts to step up activities
in the area of hydrogen technology.
B❘ COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
97
The year 2019 was a special year for safety milestones as well,
as it marked the 50th year that our experts have been exa-
mining serious accidents involving current vehicles bearing the
three-pointed star. The knowledge gained at Mercedes-Benz
Accident Research is used to improve updated and new models
and their design. Mercedes-Benz Accident Research also
established itself on an international scale several years ago by
bringing together its German experts with colleagues in India
and China. Here, the accident researchers in Asia benefit from
the expertise from Sindelfingen. Augmented reality glasses
enable the colleagues to exchange information with one another
directly and in real time, and thus to conduct joint analyses,
even though the German accident research experts are at a
different location. The first crash test in the brand's history
was conducted 60 years ago, thus ushering in a new era for
safety research at Mercedes-Benz. The Technology Center for
Vehicle Safety (TFS) in Sindelfingen can performs approxi-
mately 900 crash tests each year, as well as about 1,700 sled
tests. In the latter, a test mule (body shell or test assembly)
is mounted on a test sled and subjected to the forces arising
during a real vehicle crash. We have repeatedly set new stan-
dards for crash test procedures and testing facilities that have
been adopted across the industry and have resulted in
improved vehicle safety in the interests of all road users on a
lasting basis. Mercedes-Benz' vehicle safety unit is currently
testing the use of X-ray technology in crash tests in coopera-
tion with the Fraunhofer Institute for High-Speed Dynamics
and the Ernst Mach Institute (EMI) in Freiburg. This method
enables us to investigate the behavior of safety-relevant com-
ponents by taking a look inside the parts.
STARTUP AUTOBAHN begins its seventh program round
Launched in Stuttgart, successful worldwide: STARTUP AUTO-
BAHN was launched on the initiative of Daimler AG, which in
2016 wanted to create an innovative connection between the
world of startups and that of the well-established corporations
in manufacturing sectors such as the automotive industry.
Daimler founded the innovation platform STARTUP AUTOBAHN
in cooperation with the startup accelerator Plug and Play, the
University of Stuttgart, and the research factory ARENA2036.
Daimler organizes two three-month pilot programs annually,
each of which concludes with an EXPO DAY.
In the summer of 2019, STARTUP AUTOBAHN launched its sev-
enth program under the motto “THE NEXT GREEN THING" -
with a clear focus on sustainability. During the round's scout-
ing phase, Daimler examined ideas from more than 500
startups worldwide in the areas of climate protection and air
quality, conservation of resources and livable cities. Around 30
of these ideas were then analyzed in detail by numerous
experts, after which a few were selected for further develop-
ment in specific collaboration projects. The range of topics is
varied, providing an indication of the wealth of ideas available
in the startup scene. One startup, for example, extracts CO2
from the air and uses it to produce polymers that can then be
utilized as either soft or hard foam materials in car seats.
Daimler Trucks & Buses: moving the world - sustainably
Transport is the backbone of our economy and our modern
way of life. Without trucks and buses, factories could not man-
ufacture anything, supermarkets couldn't sell anything and
people's mobility would be severely restricted. In other words,
the world would come to a standstill. Our customers move the
world and our goal at Daimler Trucks & Buses is to offer our
customers the products and services that increase their busi-
ness success. In the future, we will focus in particular on the
CO2-neutral transport of goods and people in driving operation
(tank to wheel) and on accident-free driving. Both of these
fields are part of the sustainable corporate strategy pursued at
Daimler Trucks & Buses, which is one of the world's leading
manufacturers of commercial vehicles. Within the framework
of this strategy, the company is developing vehicles and ser-
vices that move our society forward efficiently and electrically,
automatically, in a reliable network of connected vehicles and
infrastructure.
Daimler Trucks: efficient and electric
Daimler Trucks & Buses aims to offer only new vehicles that are
CO2-neutral in driving operation ("tank-to-wheel") in the major
markets of Europe, Japan and the NAFTA region by 2039. As early
as 2022, the company plans to have a vehicle portfolio com-
prising series-produced vehicles with battery-electric drive
systems in the main sales regions of Europe, the United States
and Japan. Plans also call for all Daimler Trucks & Buses plants
in Europe to be CO2-neutral by 2022. All of the company's
other production facilities will then follow. Light-, medium- and
heavy-duty trucks equipped with battery-electric drive are
already being tested extensively by customers: the light-duty
FUSO eCanter in large cities around the world, the heavy-duty
Mercedes-Benz eActros in Germany and Switzerland, and the
medium-duty Freightliner eM2 and heavy-duty Freightliner
eCascadia in the United States.
All-electric FUSO eCanter distribution trucks have now been
driven for more than one million kilometers in locally emission-
free urban distribution haulage. This figure is rather remark-
able given the fact that a FUSO eCanter generally only clocks
up around 30 to 80 kilometers each day in local distribution
operations. Around 150 vehicles are now being operated by
customers in New York, Tokyo, Berlin, London, Amsterdam,
Paris and Lisbon. In March 2019, Penske Truck Leasing, one of
the biggest fleet operators in the United States, also began
using FUSO eCanter models. The FUSO eCanter is thus the
third electric truck model series from Daimler Trucks in the
Penske fleet (the company already uses the eCascadia and the
eM2 from the Freightliner sister brand).
The Mercedes-Benz eActros all-electric truck has been proving
its worth for customers under tough real operating conditions
since autumn 2018. As part of the eActros "Innovation Fleet,"
Mercedes-Benz Trucks began to hand over a total of ten 18
and 25-ton trucks to customers in Germany and Switzerland in
the fall of 2018 for testing under real conditions. The analysis
of tens of thousands of kilometers driven by customers, as well
as close communication with drivers, dispatchers and fleet
managers, have enabled the experts at Mercedes-Benz Trucks
to obtain extensive knowledge about the trucks and their
operation. The findings are directly incorporated into the further
development of the eActros as it moves toward series produc-
tion, which is scheduled to begin in 2021.
Daimler Trucks is also further expanding its field tests for
medium and heavy-duty electric trucks in the United States.
The Freightliner eCascadia and eM2 are scheduled to be
launched on the market in 2021.
In November 2019, the E-Mobility Group at Daimler Trucks &
Buses introduced a new service for truck customers that offers
a comprehensive ecosystem for launching an electric transport
logistics system. The service includes consulting and the cre-
98
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
The operating profit (EBIT) of the Daimler Group of €4.3 billion
was significantly lower than in the previous year (€11.1 billion).
There were particularly significant decreases at the Mercedes-
Benz Cars and Mercedes-Benz Vans divisions. In the automo-
tive business as a whole, our return on sales of 1.5% was signifi-
cantly below our target, and the free cash flow of the industrial
business of €1.4 billion was also significantly lower than in the
Numerous positive aspects of the Group's current situation are
of benefit to us with regard to the current transformation
process. On the other hand, we have a generally unsatisfactory
development of key financial performance indicators.
In order to further improve our competitiveness and combine
our strengths, we have entered into pioneering partnerships
for mobility services, for the further development of the smart
brand's model portfolio, and for the establishment of a wide-
ranging charging infrastructure for electric vehicles.
In the field of automated driving, we launched a long-term devel-
opment cooperation with BMW in the year under review. We
intend to jointly develop the next generation of technology for
driver assistance systems and automated driving on highways,
as well as automated parking functions. As of 2024, such sys-
tems are to be available for private customers in passenger
cars. Daimler Trucks will initially focus on Hub2Hub operations
in SAE Level 4 automated driving mode on American highways.
The potential elimination of the driver and the associated cost
savings could result in a viable business model. All expertise
and activities for trucks with automated driving functions have
been brought together at the Daimler Trucks Autonomous Tech-
nology Group. Torc Robotics, in which we acquired a majority
interest in 2019, is part of the Autonomous Technology Group.
up to 25%. To this end, we plan to launch more than ten all-
electric automobiles. Mercedes-Benz Vans already offers the
eVito, the eSprinter and our battery-powered multipurpose
vehicle is to follow in 2020. And Mercedes-Benz Vans has also
announced an electric version of the successor model to the
Citan. By 2022, Daimler Trucks will make electric vehicles ready
for series production in all major regions and segments, with
a focus on battery-powered trucks. The range will be supple-
mented in the second half of this decade by fuel-cell and
hydrogen-based systems for trucks. Daimler Buses already
presented the all-electric eCitaro in mid-2018. Buses equipped
with fuel-cell systems are to supplement the product range.
Daimler is pushing ahead with the electrification of the auto-
mobile. The entire Mercedes-Benz car portfolio is to be electri-
fied by 2022. This means that various electrified alternatives
will be offered in each segment - from compact cars to large
SUVs. By 2025, we expect all-electric vehicles to account for
Against this backdrop, our divisions generally performed well
in the market in 2019. In Interbrand's current Best Global
Brands 2019 ranking, the Mercedes-Benz brand is the world's
most successful and most valuable premium automotive
brand. In 2019, the brand set a new record for unit sales for
the ninth consecutive year, although growth was somewhat
weaker than expected. We also increased our unit sales of vans
and buses, and maintained or actually strengthened our
position in key markets. Although our unit sales of trucks were
lower than in the previous year, we continue to be the world's
largest manufacturer of trucks over 6 tons. At Daimler Mobility,
new business and contract volume continued to develop posi-
tively in the year under review.
Our foundations support projects around the world related to
science, research, technology, education and sports. The
Laureus Sport for Good Foundation uses sports to bring people
together. It primarily enables socially disadvantaged children
and teenagers to discover their potential through sports, and
thus creates opportunities for a better future. There are now
around 200 Laureus projects under way in more than 40 coun-
tries. One example is the “Moving the Goalposts" project in
Kenya, in which girls in one of the country's poorest regions are
taught how to become confident young women. The project
offers training and education courses that teach the girls how
to speak effectively in public and better organize their daily
lives.
-2
Funding through foundations
Worldwide
1.5%
3.4%
3.7%
8.6%
14.4%
Europe, excluding Germany
USA
58.2%
Germany
Employees at 12/31/2019
By region
B.42
10.2%
1 Adjustment of the workforce numbers in 2018 due to changes to
the assignment of employees within the Group.
11,184
Functions & Services¹
Group
-10
14,070
12,680
Daimler Mobility
+1
17,729
17,960
11,082
Brazil
Japan
China*
Other
+1
We conduct a wide variety of projects that not only support
social development at our locations but also address specific
challenges that our neighboring communities face. Since 2016,
for example, we have been working with the Stuttgart Civic
Foundation and other companies in the Stuttgart Campus edu-
cation and training project to support the integration of immi-
grants and refugees. In November 2019, Stuttgart Campus was
presented with an integration award after it had been selected
as one of the ten best integration projects in Germany.
For our locations
Social Days, the "Day of Caring" and other hands-on campaigns
such as "Give a Smile" give our employees the opportunity
to participate in socially beneficial projects. During the year
under review, around 2,600 employees participated in the
Social Days alone. All of these activities are for a good cause,
and they also aim to strengthen the motivation and cooperation
of our employees within the company.
B | COMBINED MANAGEMENT REPORT | SUSTAINABILITY AND INTEGRITY
104
donate the cent amounts of their net salaries and Daimler
matches every cent donated. The total amount then goes into
a support fund for socially beneficial projects, which can be
nominated by the employees. As a result, a total of €8.45 million
has been released since the launch of the initiative in December
2011. Donation recipients included the "Verein der Palliativ-
Care-Teams im Kreis Böblingen e. V." palliative care association,
which received laptops equipped with special software.
One of our employees' social commitment initiatives is the
ProCent program, in which Daimler employees voluntarily
With our employees
All of our activities in this area, as well as initiatives such as
"Mobile Kids" and "Genius," form a part of our sustainable
business strategy within the framework of the three pillars
"With our employees," "For our locations" and "Worldwide."
7 B.43 In 2019, we spent around €60 million on donations to
non-profit institutions and the sponsorship of socially benefi-
cial projects. This does not include our foundations or self-
initiated projects.
The goals associated with our social commitment
As one of the world's leading vehicle manufacturers, Daimler
and its numerous brands are well known around the globe.
Our company stands for business success, advanced solutions
and social responsibility. This combination is important for
us because we can only remain successful in the future if the
climate that we operate in is also prospering. A high level of
education among the population, as well as a high degree of
economic and social stability, are crucial for ensuring a society
worth living in - and ultimately the success of our work as well.
This is why we work to achieve sustainable social development
in our markets and in the communities in which we
operate. We also encourage our employees to support our
efforts here. This is important because social commitment
expands one's horizons and also strengthens our own corpo-
rate culture.
Social responsibility
0
1%
5%
13%
4%
77%
Political dialogue
Science & Technology &
Environment
Charity & Community
Arts & Culture
Education
Donations and sponsoring in 2019
B.43
* excluding non-consolidated associated companies and joint ventures
We initiate aid projects worldwide to help people determine the
course of their lives independently, on their own responsibility,
and without material deprivation, and in this manner create a
better future for the generations to come. The "Bon Pasteur"
project, for example, conducts targeted education programs in
order to improve the future prospects of more than 19,000
people from eight villages in cobalt-mining and other mining
regions in the Democratic Republic of the Congo. The project
has also established safe spaces especially for children, girls
and women in order to protect them against the worst forms
of child labor and gender-based violence.
ation of a suitable charging infrastructure for electric trucks.
The modular program covers not only personal and individual
consulting but also digital applications that make it easier to
get started with electric mobility. The first step will focus on
the markets of Europe, North America and Japan.
In times of comprehensive transformation, it is especially
important to align the incentives in the remuneration system
with a responsible prioritization of the allocation of capital.
As a result, the free cash flow of the industrial business will be
included as an additional financial target and have equal
weight to the Daimler Group's operating result (EBIT). In addition
to EBIT, the free cash flow of the industrial business is one
of the most important financial performance indicators for the
Daimler Group's operational financial performance.
107
-10% - +10%
-25% - +25%
Maximally 235% (cap)
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 111
Range of possible target achievement:
Financial target
The range of possible target achievement is between 0% and
200%. The lower limit of this range is 50% of the EBIT target
value; the upper limit is approximately 117% of the EBIT target
value. If the actually achieved EBIT value is at or under the
lower limit of the range, the target achievement degree is always
0%. The total absence of a bonus is therefore possible. If
the EBIT target is achieved, the degree of target achievement
amounts to 150%.
+
If the actually achieved EBIT value is at or above the upper limit
of the range, the degree of target achievement is always the
maximum 200%. The range of target achievement develops
linearly within the range. 7 B.49
The transformation targets represent both quantitative and
qualitative aspects. They can add or deduct up to 25 percentage
points to/from the degree to which the financial target has
been achieved.
In order to take into account the implementation of the future-
oriented measures for the technological and sustainable realign-
ment of the Group, the divisions defined key performance
indicators and target values at the beginning of financial year
2019 for the future-oriented CASE fields - Connected, Auto-
nomous, Shared & Services, Electric.
This criteria-based consideration of the future-oriented CASE
fields was based on assessments of the success of product-
related, technical and economic activities/progress. Further-
more, the Company assessed the progress of sustainability/
Environment Social Governance (ESG) aspects and the success
of strategic M&A activities. The defined key performance
indicators are used for measuring the degree to which the trans-
formation targets have been achieved. They also support the
corresponding activities, corrections or implementation steps
of the Group's sustainability strategy (for example, investment
volume, growth of revenue from digital services, activation and
connectivity rates of digital services, proportion of alternative
drive systems, emission targets, development discipline with
regard to the development progress of products and digital
services, number of online contracts, proportion of digital self-
services, revenue from mobility services).
B.49
Financial target
Achievement of EBIT target results in 150% and is determined by
ROS
target
Transformation targets
0% - 200%
50% payout after one year
50% deferral coupled with
share price perfor-
mance compared to
competitors
- Autonomous driving
Strategic/organizational/
structural contribution of
the Board of Management
comparison of actual EBIT in 2019 with EBIT targeted for
2019.
Amount with 100% target achievement (target annual
bonus):
In 2019, this is equivalent to the respective base salary.
B.48
Overview of the determination of the annual bonus from January 1, 2019
Financial targets
Strategic targets for the
operational result
- EBIT targeted/actual
comparison
Non-financial targets
Employee targets
- Customer targets
Diversity targets
- Integrity targets
Transformation targets
- CASE ecosystem
- Digitalization/
connectivity
- Electric driving/
integrated services
Revenue
base 2018
200%
Target achievement target - actual
In billions of euros
100%
Good
2.0%
71-80%
Average
1.0%
61-70%
Low
-2.5%
≤60%
B.51
Quality
Degree of target Addition or
achievement
deduction
Excellent
2.5%
Good
>80%
Primary reference parameter:
2.5%
+
Actual target achievement.
4.3=0%
0%
6.7
0% for
50% EBIT target
Accumulated growth
factor revenue
EBIT
13.5 15.8
150% for
EBIT target
After the conclusion of financial year 2019, a comparison of the
actual and target values was conducted for the transformation
targets of each division. The Supervisory Board derived the
Board of Management's shared degree of target achievement
from the divisions' degrees of target achievement as well as
the strategic, organizational and structural contribution of the
Board of Management as a whole, taking into account the
economic environment and the competitive situation and posi-
tioning of the Group. For the financial year 2019 this leads to
the addition of 22% to the degree to which the financial target
has been achieved.
112
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.50
Integrity
Degree of target Addition or
achievement
deduction
Integrity
indicator
Excellent
The annual bonus is also impacted by the transformation targets
set by the Supervisory Board as well as by the sustainability-
oriented non-financial targets for the Board of Management as
a whole. These factors can raise or lower the annual bonus by
up to +/-25% and +/-10%, respectively.
The annual bonus is a short and medium-term variable remu-
neration, the level of which during the reporting period is pri-
marily linked to the operating profit of the Daimler Group (EBIT)
in the form of a comparison of actual and target values. For
the past financial year, the Supervisory Board has derived the
target value for the annual bonus from the growth targets
and the especially ambitious level of the medium-term return
that is based on the competition's performance. 7 B.47
1 Depending on the development of the Daimler share price compared with the
STOXX Europe Auto Index.
The remuneration system was approved by the Annual Share-
holders' Meeting in 2019 with an approval ratio of 97.87%.
The system of Board of Management remuneration in 2019
The fixed base salary and the annual bonus each comprise
approximately 30% of the target remuneration, while the vari-
able component of remuneration with a long-term incentive
effect (PPSP) makes up approximately 40% of the target remu-
neration. B.44
As before, only 50% of the annual bonus is paid out in the
March of the following financial year. The other 50% is paid out
a year later (deferral) with the application of a bonus-malus
rule, depending on the development of the Daimler share price
compared with an automotive index (STOXX Europe Auto
Index) page 48 ff, which Daimler AG uses as a benchmark
for the relative share-price development. Both the delayed
payout of the portion of the annual bonus (with the use of the
bonus-malus rule) and the variable component of remunera-
tion from the PPSP with its link to additional, ambitious compar-
ative parameters and to the share price reflect the recommen-
dations of the German Corporate Governance Code as amended
on February 7, 2017 and give due consideration to both posi-
tive and negative business developments.
The maximum amounts of remuneration of Board of Manage-
ment members are limited, both overall and with regard to the
variable components.
As in the prior year, the maximum amounts of remuneration
(cash payments) of the members of the Board of Management
were set for financial year 2019 at 1.9 times the target remu-
neration for its members. It was 1.5 times the target remunera-
tion for its Chairman, who was in office until the end of the
Annual Meeting 2019, and is 1.7 times the target remuneration
for the new Board of Management Chairman. The target remu-
neration consists of the base salary, the target annual bonus and
the grant value of the PPSP, excluding fringe benefits and
retirement benefit commitments. With the inclusion of fringe
benefits and retirement benefit commitments from the
respective financial year, the maximum limit of total remunera-
tion increases by these amounts. The possible cap on the
amount exceeding the maximum limit takes place with the pay-
B.44
Remuneration structure
Target remuneration consists of non-performance-related
and performance-related components:
base salary
(non-performance-related) approx. 30%
short- and medium-term
performance-related
components
long-term performance-related
components
B.45
approx. 30%
approx. 40%
Maximum limit of total remuneration¹ 2019
(cash payments)
Chairman of the Board of Manage-
ment
The amount to be paid out for the long-term variable remunera-
tion component (PPSP) is determined at the end of the four-
year plan period and approved for payment after the Presidential
Committee and the Supervisory Board have been informed.
Other members of the Board of
Management
After the end of each financial year, the amount of the annual
bonus is determined by measuring the achievement of the
financial, non-financial and transformation targets by the Board
of Management as a whole. The Presidential Committee then
calculates the annual bonus and submits its proposal to the
Supervisory Board for its approval.
109
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Remuneration Report
Principles of Board of Management
remuneration
Goals
The remuneration system for the Board of Management mem-
bers aims to promote the Company's business strategy and its
sustainable long-term development. When determining the
total remuneration of the individual Board of Management mem-
bers, Daimler takes the condition of the Company into account
as well as the members' areas of activity and responsibility. This
is done in line with legal requirements and with a clear focus on
the competition. A balanced combination of non-performance-
related (fixed) and performance-related (variable) components
of remuneration that also takes into account suitably ambitious
performance parameters and performance indicators provides
the Board of Management with an incentive to implement the
corporate strategy and ensure the Group's sustained success.
In this way, Daimler reconciles the interests of all stakeholders,
in particular those of the shareholders as the owners of the
Company and those of the employees.
Practical implementation
For each upcoming financial year, the Presidential Committee
at first prepares a review by the Supervisory Board of the system
and level of remuneration on the basis of a comparison with
competitors. The main focus is on checking for appropriateness,
based on a horizontal and a vertical comparison.
In the horizontal comparison, the following aspects are given
particular attention in relation to a group of comparable compa-
nies in Germany:
the effects of the individual fixed and variable components,
that is, the methods behind them and their performance
parameters;
the relative weighting of the components, that is, the relation-
ship between the fixed base salary and the short, medium
and long-term variable components;
and the amount of the target remuneration consisting of a
fixed base remuneration, an annual bonus as a short and
medium-term variable component, and a long-term variable
remuneration, also with consideration of entitlement to a
retirement pension and fringe benefits.
The vertical comparison focuses on the ratio of Board of Man-
agement remuneration to the remuneration of the senior
executives and the entire workforce of Daimler AG in Germany,
also in terms of development over time. The Supervisory Board
has defined the group of senior executives for this purpose. It
consists of the Executive Vice Presidents and the management
level 1 of Daimler AG in Germany.
In the event of significant changes in the relationship between
the remuneration of the Board of Management and the hori-
zontal and vertical comparison groups the Supervisory Board
establishes the causes and in the absence of objective rea-
sons for the deviations adjusts the remuneration of the Board
of Management as necessary.
In carrying out this review of the appropriateness of the remu-
neration system and the remuneration, the Presidential Com-
mittee and the Supervisory Board consult independent external
advisors. This was also done in late 2019. The result confirmed
that the remuneration system for 2019 complied with the require-
ments of applicable law.
If the review results in a need for changes to the remuneration
system for the Board of Management, the Presidential Com-
mittee submits the relevant proposals to the entire Supervisory
Board for its approval.
On the basis of the approved remuneration system, the Super-
visory Board decides at the beginning of the year on the base
and target remuneration for the individual members of the Board
of Management as well as on total remuneration limits. It also
decides on the relevant performance parameters and the respec-
tive targets that are to be used in the bonus calculations (the
short and medium-term variable remuneration components) for
the upcoming financial year. Furthermore, sustainability-based
non-financial targets are drawn up for the Board of Management
as a whole, as are transformation targets oriented toward the
implementation of future-focused measures for the Group's
technological and sustainable realignment. Since the 2019
financial year, the annual bonus for the Board of Management
and for managers has been calculated according to uniform
goals/criteria and a uniform system.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
For the long-term variable component of remuneration, which
is referred to as the Performance Phantom Share Plan (PPSP),
the Supervisory Board sets an amount to be granted for the
upcoming financial year in the form of an absolute amount
in euros and sets the respective performance targets. The uni-
form approach for the targets/criteria and the PPSP system
has been in force for the Board of Management and for manag-
ers since it was introduced in 2005.
2.0%
Base salary in 2019
+ PPSP value when granted for 2019
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.47
Annual bonus - short- and medium-term
performance-related remuneration page 110
short- and medium-term
performance-related
components
approx. 30%
annual bonus 2019 = target bonus × overall target achievement
target bonus
= 100% of
base salary
2019
time of payment of annual bonus 2019
target achievement EBIT
+/- target achievement for the
non-financial targets
+/- target achievement for the
transformation targets
overall target achievement
50% of annual bonus = in March of the year after the reporting year (2020)
50% of annual bonus (deferral) = in March of the second year after the
reporting year (2021)
amount paid out deferral = 50% of annual bonus × "relative share performance"¹
110
+ target bonus = 100% of the 2019 base salary
The base salary is fixed remuneration relating to the entire
year, oriented toward the area of responsibility of each Board
of Management member and paid out in twelve monthly
installments. 7 B.46
ment of the PPSP issued in the relevant financial year, i.e. for
the year 2019, with payment of the PPSP 2019 in 2023. 7 B.45
Target remuneration¹ 2019
Base salary in 2019
+ annual bonus for 2019
(50% paid out in 2020 + 50% in 2021)
+ PPSP payment for 2019 (in 2023)
incl. dividend equivalent payments
Total remuneration' in 2019
1.7 times the target
remuneration¹
1.9 times the target
remuneration¹
The possible cap on the amount exceeding the maximum limit
takes place with the payment of the PPSP for 2019 in 2023.
1 Excluding fringe benefits and retirement benefit commitments in
all cases.
B.46
Base salary - fixed page 109
base salary - fixed - oriented towards the area of responsibility
base salary
(non-performance-related)
paid out in twelve monthly
installments
approx. 30%
C
The individual components of the remuneration system are as
follows:
108
Average
Low
The terms governing the PPSP include a provision that allows
for the partial reduction or complete elimination of the annual
bonus for any member of the Board of Management who
clearly violates the principles laid down in the Company's
Integrity Code or any other professional obligations, prior
to the payout of the plan proceeds. The Supervisory Board
has the final decision on all such bonus reductions.
Policies for share ownership
As a supplement to these three components of remuneration,
"Stock Ownership Policies" exist for the Board of Manage-
ment. These guidelines require the members of the Board of
Management to purchase Daimler shares over several years
and to hold those shares until the end of their Board of Man-
agement membership. The number of shares to be held is
set between 20,000 and 75,000. In fulfillment of the policies,
up to 25% of the gross remuneration out of each Performance
Phantom Share Plan is generally to be used to acquire ordinary
shares in the Company, but the required shares can also be
acquired in other ways.
B.56
Overview of the determination of the annual bonus from January 1, 2020
Financial targets
Strategic objective for both
The value of the phantom shares to be paid out after the con-
clusion of the plan period depends on target achievement mea-
sured according to the criteria described above and on the
share price relevant for the payout. This share price is limited
to 2.5 times the share price at the beginning of the plan. In
addition, the amount to be paid out is limited to 2.5 times the
absolute euro amount specified at the beginning of the plan,
which is relevant for the preliminary number of phantom shares
allocated. This maximum amount also includes the dividend
equivalent paid out during the four-year plan period.
financial targets
parison (50% weighting)
Free cash flow of the
industrial business tar-
geted/actual comparison
(50% weighting)
Non-financial targets
Employee targets
Customer targets
EBIT targeted/actual com-
Value of the phantom shares on payout:
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
Determined annually by the Supervisory Board; for 2019,
approximately 1.4 times the base salary.
Value upon allocation:
Compliance
Agreements have been reached with all the members of the
Board of Management allowing for the partial reduction or
complete elimination of the annual bonus for any member who
violates the duties of Section 93 of the German Stock Cor-
poration Act (AktG) or in particular the principles laid down in
the Company's Integrity Code. If it is not possible to reduce
a future bonus payment or a payment that has yet to be made,
the Board of Management member in question will be required
to pay back the amount of the bonus reduction. The Supervisory
Board has the final decision on all such bonus reductions.
Limit for the annual bonus
The total amount to be paid out from the annual bonus is
limited to 2.35 times the base salary of the respective financial
year.
The Performance Phantom Share Plan (PPSP) is a variable
element of remuneration with long-term incentive effects.
At the beginning of the plan, the Supervisory Board specifies
a grant value (absolute amount in euros) in the context of
setting the individual annual target remuneration. This amount
is divided by the relevant average price of Daimler shares
calculated over a predefined long period of time, which results
in the preliminary number of phantom shares allocated.
Also at the beginning of the plan, performance targets are set
for a period of three years (performance period). Depending
on the achievement of these performance targets with a pos-
sible range of 0% to 200%, after three years the phantom
shares allocated at the beginning of the plan are converted
into the final number of phantom shares allocated. After
another plan year has elapsed (retention period), the amount to
be paid out is calculated from this final number of phantom
shares and the applicable share price at that time. The share
price relevant for the payout under this plan is also relevant
for allocating the preliminary number of phantom shares for the
plan newly issued in the respective year. 7 B.54 7 B.55
114
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
Performance parameters for Plan 2019:
-
50% relates to the Group's return on sales in a three-year
comparison with a group of competitors comprising listed
vehicle manufacturers with an automotive component of
more than 70% by revenue and an investment-grade credit
rating (BMW, Ford, GM, Honda, Hyundai, Isuzu, Kia, Mazda,
Nissan, Paccar, Subaru, Suzuki, Toyota, Volvo and Volkswa-
gen). For the measurement of success, the competitors'
average return on sales is calculated over a period of three
years. Target achievement occurs to the extent to which
Daimler's return on sales deviates by a maximum of +/-2
percentage points from 105% of the calculated average
of the competitors.
-
- Target achievement of 100% only occurs when the average
return on sales of the Daimler Group reaches 105% of the
revenue-weighted average return on sales of the group of
competitors. Maximum target achievement of 200%
occurs if Daimler's return on sales exceeds 105% of the
revenue-weighted average of the competitors by 2
percentage points or more. An additional limitation was
implemented starting with PPSP 2015: If a target achieve-
ment of between 195% and 200% occurs, the maximum
target achievement calculated from the performance
parameter of return on sales compared to the group of
competitors will only be deemed to be 200% if the actual
return on sales for Daimler's automotive business
reaches at least the strategic target for return on sales
in the third year of the performance period. Otherwise,
target achievement will be limited to 195%.
- Target achievement of 0% occurs if Daimler's return on sales
is 2 percentage points or more lower. In the deviation
range of +/- 2 percentage points, target achievement var-
ies in proportion to the deviation.
50% relates to "relative share performance," i.e. the perfor-
mance of Daimler's share in a three-year comparison with
the performance of the defined group of competitors (index).
If the performance of Daimler's share (in percent) is the
same as that of the index (in percent), target achievement is
deemed to be 100%. If the performance of Daimler's share
price (in percent) is 50 percentage points or more below
(above) the performance of the index, target achievement
is deemed to be 0% (200%). In the deviation range of +/- 50
percentage points, target achievement varies in proportion
to the deviation.
Range of possible target achievement:
0 to 200%, that is, the plan has an upper limit. It may also
be zero.
Diversity targets
- Integrity targets
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 115
Transformation targets
- Sustainability
- Digitalization/
connectivity/
150%
100%
50% -
0%
0% for
25% target
150% for
target
200% for
125% target
EBIT/
FCF IB
The free cash flow of the industrial business, which comprises
the cash flows at the automotive business divisions and the
cash flows from taxes and other reconciliation items that can-
not be allocated to the divisions, is of particular importance
for the financial strength of the Daimler Group.
The target value of EBIT for each financial year continues to be
derived on the basis of the desired medium-term return, which
is set by the Supervisory Board and is ambitious and oriented
toward the competitive environment, and derived from the
growth targets. The starting point of the calculation is now the
revenue of the previous financial year. The target value for
the free cash flow of the industrial business in the respective
financial year is based on the defined target EBIT of the seg-
ments of the automobile business (which, in turn, is derived from
the strategic growth and return on sales targets) as well as
on a strategic target for the cash conversion rate. The cash con-
version rate is the proportion of the period's result that is
scheduled to flow into the Group's liquidity after the payments
for the necessary investments in research, development,
tangible fixed assets, and working capital are taken into account
as part of the strategic growth target.
As part of the comparison of target and actual values, the
actually achieved value used in determining the free cash flow
target achievement is adjusted for certain factors that were
already taken into account in the target achievement of the
annual bonus in 2019 or earlier.
The range of possible target achievement for the two financial
targets (EBIT and free cash flow of the industrial business)
is between 0% and 200%. The lower limit of this range is 25% of
the target value; the upper limit is 125% of the target value.
If the actually achieved value is at or under the lower limit of
the range, the target achievement degree is always 0%. The
total absence of a bonus is therefore possible. If the actually
achieved value is at or above the upper limit of the range,
the target achievement degree is 200%, which is the maximum
it can reach. The degree of target achievement develops lin-
early within the range. 7 B.57
The total amount to be paid out from the annual bonus is lim-
ited to 2 times the base salary of the respective financial year.
Non-financial targets
The non-financial targets are uniform at all management levels
and continue to be divided into four equally weighted catego-
ries. Each category receives an addition or a deduction of up to
2.5 percentage points to or from the degree of achievement
of the financial target.
After the end of the financial year, the degree of achievement
of the non-financial targets is calculated by comparing the tar-
get values and the actual values. An addition to or deduction
from the degree of target achievement of the financial targets
of up to a total of 10 percentage points is possible. The rele-
vant target tiers for financial year 2020 can be found in tables
7 B.58, 7 B.59, 7 B.60 and 7 B.61.
200%
1 Maximum of 195% if, in the event of target achievement of 195% -
200%, the strategic return target has not been reached.
Target achievement target - actual
Financial targets:
integrated services
Electric driving/
autonomous driving
50% payout after one year
50% deferral coupled with
share price perfor-
mance compared to
competitors
0% - 200%
+
-10% - +10%
0%-25%
Maximally 200% (cap)
Further refinement of the remuneration system
with effect from January 1, 2020
Change to the annual bonus as a short-term and medium-
term component of the remuneration
B | COMBINED MANAGEMENT REPORT | EVENTS AFTER THE REPORTING PERIOD
At the beginning of 2020, the Act on the Implementation of the
Second Shareholders' Rights Directive (Gesetz zur Umsetzung
der zweiten Aktionärsrechterichtlinie/ARUG II) went into effect.
Subject to the implementation periods specified therein, it will
extensively change the requirements regarding Board of Man-
agement remuneration. The new German Corporate Governance
Code (DCGK), which is expected to come into effect in the
first quarter of 2020, will also contain new recommendations
regarding the remuneration of members of the Board of Man-
agement. The Supervisory Board took this opportunity to reas-
sess the Board of Management remuneration system. In
its meeting in December 2019, the Supervisory Board decided
to further refine the Board of Management remuneration
system as of January 1, 2020. This decision was made on the
basis of the latest conditions, Daimler's in-house corporate
strategy, and the expectations of our shareholders. The changes
only affect the organization of the annual bonus and are
explained below.
Because the Supervisory Board and the Board of Management
continue to consider it important to have a uniform incentive
system, the Board of Management has also decided to make a
corresponding adjustment to the annual bonus for all the other
management levels.
Additional financial target
116
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
B.57
EBIT and free cash flow of the industrial business (FCF IB)
Achievement of EBIT respectively FCF IB target results in 150% target achievement
Share purchase obligation of up to 25% of the gross remuneration
until the defined number of shares (between 20,000 and 75,000) has
been purchased (shares to be held until the end of the term of ser-
vice)
Stock ownership guidelines
2.5 times the amount granted (including dividend equivalent pay-
ments throughout the plan period)
25-30%
Low
-2.5%
≤25%
B.53
Diversity
Degree of target Addition or
achievement
deduction
Excellent
2.5%
Good
2.0%
Average
1.0%
Low
-2.5%
1.0%
rate
>70%
66-70%
61-65%
≤60%
Average
2.0%
-2.5%
B.52
Employee engagement
Degree of target Addition or
Approval rate
of any question
>74%
65-74%
60-64%
≤59%
Quality KPIs
of all divisions
The addition or deduction is dependent
on the respective target value, which is
defined for each specific division and
product.
Employee
Participation
+
achievement
deduction
Excellent
2.5%
engagement
>35%
Good
31-35%
1.0%
Gender Diversity
Aspirational Guidelines
Target overachieved ≥ 10%
Target overachieved <10%
Target achieved
Target not achieved
The non-financial targets, which are oriented toward sustainabil-
ity and cultural aspects and have been uniform at all man-
agement levels since financial year 2019, are divided into four
categories. Each category is weighted equally and receives
an addition or a deduction of up to 2.5 percentage points to or
from the degree of achievement of the financial target. After
the end of the financial year, the degree of target achievement
is calculated by comparing the target value and the actual
value. On this basis, an addition to or a deduction from the
degree of financial target achievement of up to a total amount
of 10 percentage points is possible. The total of the addition
or deduction resulting from the non-financial targets is rounded
to two significant figures. For the financial year 2019 this results
in an addition of +3% (rounded).
Time of payment of Performance Phantom Share Plan 2019
in February of the year 2023
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 113
B.55
PPSP 2019
dependent upon
Development of
the performance factor
Development of the
Daimler share price
- 50% relates to the "return on sales"
achieved in a three-year comparison
with the defined group of competitors
> page 114
Bandwidth of possible target achieve-
ment:
0% - 200%¹
-50% relates to "relative share perfor-
mance," i.e. the performance of Daim-
ler's share in a three-year comparison
with the performance of the defined
group of competitors (index).
Bandwidth of possible target achieve-
ment:
0% - 200%
Price when issued and price at the end of
the plan period Bandwidth of possible price
development:
maximum of 2.5 times the issue price
Maximum performance development (total cap):
final number of phantom shares × Daimler share price at end of plan
= amount paid out
Non-financial targets
after expiry of fourth plan year
preliminary number of phantom shares × performance factor
Specifically:
Achievement of the Group-level targets regarding the further
development and permanent establishment of integrity was
measured on the basis of certain standardized questions in
a global employee survey. This measurement was based
on the achieved approval rate of any question and the average
approval rate achieved across all questions (integrity indica-
tor). This served as the basis for determining that +2.0% of the
target was achieved at the Group level. 7 B.50
Quality and/or customer satisfaction targets (quality KPIs of
all divisions) were defined by the individual divisions for the
financial year. With regard to vehicles, a comparison of the tar-
get number and the actual number of claims during a pre-
defined period of time (MIS xx) was carried out. With regard to
services, this comparison was carried out by means of a cus-
tomer satisfaction index. The degree of target achievement at
the Group level (-2.5%) was derived as a weighted average of
the individual divisional degrees of target achievement. 7 B.51
The degree of the employees' commitment to the Group
(employee engagement) was calculated on the basis of their
answers to certain standardized questions in our global
employee survey. These answers, together with the partici-
pation rate achieved in the employee survey, were used to derive
a +1.0% degree of target achievement at the Group level for
the maintenance and enhancement of a high level of satisfaction
and motivation among the employees. 7 B.52
A target for the proportion of women in executive positions was
defined at the Group level for a period of several years on
the basis of Daimler's in-house guidelines for the proportion of
women in management positions (Gender Diversity Aspira-
tional Guidelines), which go beyond the legally obligatory targets.
A +2.0% degree of target achievement was determined for
this in a comparison of actual and target values that was con-
ducted at the end of the financial year. 7 B.53
B.54
Performance Phantom Share Plan (PPSP) -
long-term performance-related remuneration
long-term performance-related
remuneration
approx. 40%
page 113
amount when granted in euros page 113
price of Daimler shares when issued
preliminary number
of phantom shares
(virtual shares)
three-year dividend entitlement
after expiry of third plan year
= final number of phantom shares, dividend entitlement in fourth year
In December 2019, There Holding B.V. (THBV) and HERE Inter-
national B.V. (HERE) and other companies signed an agreement
on the basis of which 30% of the shares in HERE are to be
sold to a joint venture between Mitsubishi Corporation and
Nippon Telegraph and Telephone Corporation. The transaction
is expected to be completed in the first half of 2020 after
receiving the approval of the relevant authorities. The comple-
tion is expected to lead to a gain of €0.1 billion.
Effective in financial year 2019, the annual bonus was revised
in view of the fundamental technological changes and the
associated changes in the competitive environment in our
industry, as well as changing customer behavior, the need
for significant investments in new technologies, and the expec-
tations of our shareholders. The main focus was on the imple-
mentation of the new corporate strategy and on safeguarding
the Group's future by expanding our business model as an
automaker and a provider of mobility services.
This is true also because we plan to invest approximately €14
billion in property, plant and equipment and nearly €19 billion
in research and development projects in 2020 and 2021. We
are thus maintaining the high level of expenditure necessary to
secure our future - despite the fact that we are applying funds
much more efficiently, focusing even more on the most impor-
tant projects and sharing costs in collaborative projects.
In November 2019, we presented our sustainable business
strategy with its focuses of MOVE, PERFORM and TRANS-
FORM, whose implementation will open up the way to a suc-
cessful future.
pages 52 ff
We aim to offer sustainable solutions for the personal mobility
and the goods transport of the future. We want to inspire
emotionally and convince rationally. With our Mercedes-Benz
automobiles, we take this path with sustainable, modern luxury.
And with innovative and highly efficient commercial vehicles,
we intend to make our customers successful in the transport
and haulage business. Achieving our return targets and a solid
cash flow are currently our top priorities. Because an appropri-
ate rate of return is also the precondition for meeting the justi-
fied demands of our investors, our employees, our suppliers,
and society as a whole.
In order to achieve our goals, we are systematically implement-
ing our sustainable business strategy. Our starting position
on the road to a profitable and at the same time CO2-neutral
future is significantly better than current earnings figures
suggest. There is still a lot to do, but we laid down the decisive
markers in 2019. In doing so, we took into account that the
transformation of the automotive industry not only involves
risks, but also offers considerable opportunities, which we
intend to utilize systematically. For example, the VISION EQS
concept car, which we presented in September 2019, sets
the direction: With such vehicles, we can completely redefine
the automotive luxury segment. But CO2-neutral and auto-
mated driving opens up new market potential also for commer-
cial vehicles, as the success of our eCitaro electric city bus
shows.
All of this gives us great confidence for the coming years and
the challenges that lie ahead.
Events after the
Reporting Period
Personnel measures in production-related and
administrative areas in the years 2020 to 2022
In January 2020, Daimler agreed with the General Works Council
on a general company agreement that, among other things,
regulates voluntary agreements on termination of employment
primarily for employees in indirect areas (i.e. in administration
and production-related areas). Discussions with employees on
voluntary agreements on termination of employment will begin
in the second quarter of 2020.
Establishment of joint venture smart Automobile Co., Ltd.
Mercedes-Benz AG and Zhejiang Geely Holding Group estab-
lished the joint venture smart Automobile Co., Ltd. in December
2019. The two companies are expected to contribute equal
shares of RMB 2.7 billion each to the equity of the joint venture
in the first half of 2020. The equity interest of Mercedes-Benz AG
will mainly consist of the contribution of the smart brand, which
will have a positive impact on earnings before taxes of approxi-
mately €0.1 billion to €0.2 billion at the future Mercedes-Benz
Cars & Vans segment.
Sale of 30% of the shares in HERE
High expenses for the transition to a CO2-neutral future will
continue to reduce our earnings in the coming years. It is
therefore important that we now take the measures that will
enable us to generate adequate returns and cash flows again
in the medium term, even under less favorable conditions.
For that reason, we are initiating comprehensive measures to
increase profitability at all our divisions and at Daimler AG.
They include personnel measures, material-cost savings, prio-
ritization of investments, portfolio and model adjustments,
the implementation of platform strategies and the thorough
digitization of processes at Daimler Mobility.
previous year. Various special factors contributed to this devel-
opment, such as expenses relating to regulatory proceedings
for diesel vehicles. But even if we exclude these special items
and also take into account the ongoing high level of expendi-
ture for new products and technologies, we cannot be satisfied
with our earnings in 2019.
980
Chairman of the Board of Management,
Chairman of the Board of Management of Mercedes-Benz AG
Martin Daum
Ola Källenius²
In thousands of euros
Benefits granted
B.66
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
122
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 121
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for reporting year 2019 are
implemented with the payout of PPSP 2019, which constitutes
the last payment to be made of the components of remu-
neration granted in financial year 2019. For financial year 2019,
therefore, the possible cap would take place in 2023, the year
that PPSP 2019 is paid out.
the retirement pension expense in 2019 (service costs in
2019).
the dividend equivalent of the current PPSP (2016, 2017,
2018 and 2019) paid in 2019, and
the value of the long-term share-based remuneration (PPSP
2015) paid in 2019,
the half of the medium-term annual bonus paid in 2019 for
2017 (deferral),
the half of the annual bonus payable in 2020 for 2019 at the
value as of the end of the reporting period,
2019,
- the taxable non-cash benefits and other fringe benefits in
- the base salary in 2019,
The total of "payments made" for financial year 2019 is calcu-
lated from
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for financial year 2018 are
implemented with the payout of PPSP 2018, which constitutes
the last payment to be made of the components of remu-
neration granted in financial year 2018. For financial year 2018,
therefore, the possible cap would take place in 2022, the year
that PPSP 2018 is paid out.
the retirement pension expense in 2018 (service costs in
2018).
the dividend equivalent of the current PPSP (2015, 2016,
2017 and 2018) paid in 2018, and
the value of the long-term share-based remuneration (PPSP
2014) paid in 2018,
the half of the medium-term annual bonus paid in 2018 for
2016 (deferral),
the half of the annual bonus paid in 2019 for 2018 at the
value as of the end of the reporting period in financial year
2018,
the taxable non-cash benefits and other fringe benefits in
2018,
the base salary in 2018,
The total of "payments made" for financial year 2018 is calcu-
lated from
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2019 (payable in 2023), and
the retirement pension expense in 2019 (service costs in
2019).
Chairman of the Board of Management of
the half of the medium-term annual bonus payable in 2021
for 2019 at the value for target achievement of 100% (defer-
ral),
Daimler Truck AG
2018
2,048
640
640
37,915
2,659
5,987
Total
2019
2018
7,829
8,007
832
1,340
1,340
1,340
832
Deferral (50% of annual bonus,
(50% of annual bonus, short-term)
Annual variable remuneration
Total
and other fringe benefits
Taxable non-cash benefits
Base salary
max.
min.
2019
Jan. 1 Dec. 31
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min.
2018
max.
2019
Jan. 1 Dec. 31
2,502
the half of the annual bonus payable in 2020 for 2019 at the
value for target achievement of 100%,
the base salary in 2019,
Britta Seeger
57
Markus Schäfer²
88
87
Wilfried Porth
93
95
Renata Jungo Brüngger
121
120
Martin Daum
161
90
Ola Källenius¹
In thousands of euros
2018
2019
Taxable non-cash benefits and other fringe benefits
B.65
3 Board of Management remuneration paid from April 1, 2019.
4 Board of Management remuneration paid until May 22, 2019.
1 Board of Management remuneration paid as a member until May 21, 2019; as the Chairman from May 22, 2019.
2 Board of Management remuneration paid from May 22, 2019.
23,236
10,225
145,775
23,094
13,305
266,128
2,502
94
the taxable non-cash benefits and other fringe benefits in
2019,
164
394
The total of "benefits granted" for financial year 2019 is calcu-
lated from
the retirement pension expense in 2018 (service costs in
2018).
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2018 (payable in 2022), and
the half of the medium-term annual bonus payable in 2020
for 2018 at the value for target achievement of 100% (defer-
ral),
980
the taxable non-cash benefits and other fringe benefits in
2018,
the base salary in 2018,
The total of "benefits granted" for financial year 2018 is calcu-
lated from
The following tables show for each individual member of the
Board of Management on the one hand the benefits granted for
the financial year and on the other hand the payments made
in or for the reporting year and the retirement pension expense
in or for the year under review in accordance with the recom-
mendations of Clause 4.2.5 paragraph 3 of the German Corpo-
rate Governance Code as amended on February 7, 2017.
Details of Board of Management remuneration in 2019
pursuant to the requirements of the German Corporate
Governance Code
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
120
5 Board of Management remuneration paid until May 22, 2019.
4 Board of Management remuneration paid from April 1, 2019.
3 For the fulfillment of disclosure obligations pursuant to Section 285
No. 9a of the German Commercial Code (HGB), this amount is
reduced by €149,366 for the financial year 2019 (2018: €182,254).
The corresponding fringe benefits were granted and borne by a
subsidiary and are thus not included in the remuneration to be dis-
closed in the annual financial statements of the parent company,
Daimler AG.
2 Board of Management remuneration paid from May 22, 2019.
1 Board of Management remuneration paid as a member until May 21,
2019; as the Chairman from May 22, 2019 (2018: including an
anniversary bonus of €69,456.50).
1,480
1,108
Total
195
65
Dr. Dieter Zetsche5
164
44
Bodo Uebber5
62
Harald Wilhelm4
494
Hubertus Troska³
the half of the annual bonus paid in 2019 for 2018 at the
value for target achievement of 100%,
804
832
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
Wilfried Porth
Renata Jungo Brüngger
Integrity & Legal Affairs
HR and Labor Relations Director &
Mercedes-Benz Vans
Jan. 1 Dec. 31
granted in the reporting year excluding:
2018
max.
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min.
2018
2019
Jan. 1 Dec. 31
min.
max.
832
2019
832
Total limit¹ for components of remuneration
Retirement pension expense (service costs)
1 Total limit → 1.7 times for Mr. Källenius as of May 22, 2019 (1.5 times for Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
2 Board of Management remuneration paid as a member until May 21, 2019; as the Chairman from May 22, 2019.
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits
and other fringe benefits
Total remuneration
Total
(50% of annual bonus, short-term)
Deferral (50% of annual bonus,
medium-term)
Long-term variable remuneration
(plan period of 4 years)
Total
Annual variable remuneration
5,252
832
832
919
416
416
0
978
416
919
416
978
416
416
0
978
416
0
832
919
927
832
832
832
93
95
95
920
95
87
87
87
925
927
927
88
5,252
7,878
5,252
0
1,575
416
416
0
978
670
medium-term)
670
0
1,575
416
416
0
416
978
416
952
832
832
161
90
90
90
952
121
120
120
993 1,430
1,430 1,430
953
952
120
Long-term variable remuneration
(plan period of 4 years)
1,045
261
261
244
250
250
250
261
Total remuneration
granted in the reporting year excluding:
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
3,127 4,880 1,691 9,429
3,074 3,142 1,202
5,908
Total limit¹ for components of remuneration
257
Retirement pension expense (service costs)
4,706
1,849
0
4,588
1,045
1,108
0
2,750
Total
1,877
3,189
0
7,738
1,877
1,940
0
2018
416
3,828
56,429
50% medium-term]
(deferral) j
25
50% short-term
0
Non-financial success parameters
+/- 10%
Financial success
short-term
parameters 0% - 200%
Transformation targets
+/-25%
B.63
PPSP 2015 (paid in 2019)
(long-term variable remuneration 71 B.67)
With more than 250% target
achievement, the total cap' applies.
ACTUAL 25% of the base salary
+3% of the base salary
+22% of the base salary
0% of the base salary
500
50
75
(short- and medium-term variable remuneration of the
Board of Management members active at year-end)
Maximum 235% of the base salary
+10% of the base salary
235
+25% of the base salary
200
50%
50%
(deferral)
150
125
200% of the
100
base salary
175 medium-term
Annual bonus
450
350
250%
ACTUAL
67%
Maximum
theoretically 500%
of the grant value
Development of
Daimler share price
from beginning
until end of plan,
maximum 2.5 times
the issue price
(share price in €)
ACTUAL
payments of PPSP 2015.
68%
Board of Management remuneration in financial
year 2019
Board of Management remuneration in 2019 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the Board
of Management of Daimler AG is calculated as the total of the
amounts of
the base salary in 2019,
the half of the annual bonus for 2019 payable in 2020 and
measured as of the end of the reporting period,
the half of the medium-term share-based component of the
annual bonus for 2019 payable in 2021 with its value at
the end of the reporting period (entitlement depending on the
development of Daimler's share price compared with the
STOXX Europe Auto Index),
Overall target
achievement
final number of
phantom shares
times share price
at end of plan
€49.62)
400
1 Amount paid out including dividend-equivalent
Maximum
300
250
200
150
ACTUAL
ACTUAL
Performance factor
0% - 200% (from
which is derived
the final number of
phantom shares
with the share price
at beginning of plan)
100%
100
50
0
Maximum
200%
Grant value (from
which is derived
the preliminary
number of phantom
shares with the
share price at
beginning of plan
€74.14)
102%
B.62
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
118
65-74%
Average
1.0%
61-70%
60-64%
-2.5%
71-80%
≤60%
Good
Low
B.59
Quality
Degree of target
achievement
Excellent
Average
Low
Addition or
deduction
2.5%
The addition or deduction is depen-
2.0%
dent on the respective target value,
1.0% which is defined for each specific divi-
sion and product.
-2.5%
≤59%
Quality KPIs
2.0%
Approval rate
of any question
Transformation targets
Effective as of financial year 2019, transformation targets
replaced the previous shared performance value for the Board
of Management as a whole, which was derived from the
Board of Management members' individual target agreements
and degrees of target achievement. Especially during the
transformation phase, these transformation targets refer to
quantitative as well as qualitative aspects and are assessed
and evaluated accordingly by the Supervisory Board. Sustain-
ability/Environment Social Governance (ESG) aspects will
play an even more explicit role for the transformation targets
in the future, because sustainability is an integral part of
our corporate strategy and thus an important factor in our
business activities.
Against this backdrop, other performance continues to be taken
into account in the transformation targets within the context
of the implementation of our sustainability strategy (for exam-
ple, growth of revenue from digital services, activation and
connectivity rates of digital services, proportion of alternative
drive systems, emission targets, development discipline,
development progress of products and digital services, number
of online contracts, proportion of digital self-services, revenue
from mobility services). In order to further reduce the method-
ological complexity of the Board of Management remuneration
system, the target tier of the transformation targets was aligned
so that it can no longer result in a deduction from the degree
of target achievement for the financial targets in the future.
Reduction of the maximum target achievement in the
annual bonus (cap)
The maximum target achievement in the annual bonus (cap) will
be reduced from 235% to 200% of the target bonus. In this
way we are maintaining the current opportunity-risk profile of
the annual bonus while at the same time taking the adjust-
ment of the target tier of the transformation targets into account.
The higher relative weighting of the non-financial targets and
transformation targets in the total target achievement further
underlines their significance.
No change in the other components of the remuneration
system
>74%
The remainder of the remuneration system, in particular the
composition of the remuneration of the Board of Management
from the non-performance-related base salary, the annual
bonus as a short-term and medium-term variable component
with deferral and the long-term variable component PPSP,
also remains unchanged, as does the relationship between the
individual components of the remuneration. The current
design of the PPSP, with the four-year duration of the plan, the
measurement of the success targets compared to a defined
and regularly monitored group of competitors that face the same
strategic challenges, and the linkage with the absolute devel-
opment of the share price, is already oriented toward the long-
term success of the company.
Degree of target
achievement
Excellent
Addition or
deduction
2.5%
Integrity
indicator
>80%
+
B.58
Integrity
of all divisions
Good
B.60
-2.5%
≤25%
≤60%
B.61
Diversity
Degree of target
achievement
Excellent
Good
Addition or
deduction
Low
2.5%
Average
1.0%
Low
-2.5%
Gender Diversity
Aspirational Guidelines
Target overachieved ≥ 10%
Target overachieved <10%
Target achieved
Target not achieved
2.0%
61-65%
25-30%
1.0%
Employee engagement
Degree of target
achievement
Excellent
Addition or
Employee
deduction engagement
Participation
+
rate
2.5%
>35%
>70%
Good
2.0%
31-35%
66-70%
Average
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2019, and
2,822
the taxable non-cash benefits in 2019.
The possible upper limits with regard to the annual bonus and
the PPSP are shown in tables 7 B.62 and 7 B.63.
832
260
260
14,896
1,045
2,397
2018
Hubertus Troska
832
104
104
22,169
1,108
2,148
2019
2018
2,148
22,169
Markus Schäfer²
2019
508
64
64
17,735
1,108
887
2018
Britta Seeger
2019
832
104
104
1,523
2,444
832
260
1,325
1,798
2018
967
302
302
26,502
17,807
2,820
Dr. Dieter Zetsche4
2019
804
101
101
1,249
260
47
379
14,896
1,045
2,397
Harald Wilhelm³
2019
638
47
80
16,627
831
1,629
2018
Bodo Uebber
2019
80
1,092
15,573
260
36,982
1,849
3,525
2018
832
260
168
260
1,045
2,397
Martin Daum
2019
832
104
14,896
104
168
2019
The total remuneration of the Board of Management for the finan-
cial year 2019 amounts to €24.2 million (2018: €24.7 million).
Of that total, €8.9 million was fixed, that is, non-performance-
related remuneration (2018: €9.5 million), €2.0 million (2018:
€5.0 million) was short-term and medium-term variable perfor-
mance-related remuneration (annual bonus with deferral),
and €13.3 million was variable performance-related remunera-
tion granted in the financial year 2019 with a long-term incentive
effect (2018: €10.2 million). 7 B.64
The granting of non-cash benefits in kind, primarily expenses
for security precautions and the provision of company cars,
resulted in taxable benefits for the members of the Board of
Management in 2019 as shown in table 7 B.65.
B.64
Board of Management remuneration in 2019
In thousands of euros
Base salary
1,340
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 119
Short-term
Medium-term
Long-term variable
remuneration (PPSP)
Number Value when granted
(2019: at share price €50.00)
(2018: at share price €70.13)
Total
Ola Källenius¹
Short and medium-term variable
remuneration (annual bonus)
22,169
1,108
2,148
14,896
1,045
2,397
Wilfried Porth
2019
832
260
104
23,177
1,159
2,199
2018
832
260
104
260
832
2018
2018
832
260
260
14,896
1,045
2,397
Renata Jungo Brüngger
2019
832
104
104
22,169
1,108
2,148
For both of the share-based components - the second 50% of
the annual bonus and the PPSP with a long-term orientation -
the amounts actually paid out can deviate significantly from
the values described depending on the development of the
Daimler share price and on the achievement of the relevant
target parameters. Upward deviation is possible only as far
as the maximum limits described above. Both components can
also be zero.
0
2,875
1,045 1,108
3,940
10,344
6,612
1 Total limit → 1.7 times for Mr. Källenius as of May 22, 2019 (1.5 times for Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
B.67
Payments made
In thousands of euros
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
125
Ola Källenius¹
Martin Daum²
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2018
2019
Chairman of the Board of Management, Chairman of the Board of Management
Chairman of the Board of Management of Mercedes-Benz AG
of Daimler Truck AG
Jan. 1 Dec. 31
2019
Jan. 1 Dec. 31
2018
Base salary
832
952
953
1,430
993
Total
」
6,171
120
90
161
Taxable non-cash benefits and other fringe benefits
832
832
1,340
121
9,759
869
4,495
0
3,626
4,707
4,182
0
2,215 1,705
8,890
Total remuneration
Total
7,000
0
2,822
2,659
3,288
Retirement pension expense (service costs)
Annual variable remuneration
886
362
6,950
4,967
785
2,490
4,231
- Retirement pension expense (service costs)
362
- Taxable non-cash benefits and other fringe benefits
Total limit¹ for components of remuneration
0
0
0
0
362
granted in the reporting year excluding:
0
(50% of annual bonus, short-term)
Long-term variable remuneration
1,412
1,905
922
1,174
Retirement pension expense (service costs)
257
261
244
250
Total remuneration³
2,662
3,596
2,119
2,376
1 Payments as a Board of Management member made up to May 21, 2019; as the Chairman from May 22, 2019.
2 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
3 Amount actually paid during the financial year: (The difference pertains
to the annual variable remuneration paid at the beginning of the follow-
ing year compared to the non-cash benefits in kind that were not paid
out and the retirement pension expense).
2,784
2019
Jan. 1 Dec. 31
Jan. 1 Dec. 31
2018
HR and Labor Relations Director &
Mercedes-Benz Vans
Wilfried Porth
Jan. 1 Dec. 31
2018
Total
Renata Jungo Brüngger¹
Integrity & Legal Affairs
Jan. 1 Dec. 31
2019
Payments made
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
126
2,162
2,161
3,337
In thousands of euros
72
120
Dividend equivalent PPSP 2019
Dividend equivalent PPSP 2015
277
751
Payment of PPSP 2015
510
402
55
607
525
104
260
168
260
Payment of PPSP 2014
728
Deferral (50% of annual bonus, medium-term)
-
Dividend equivalent PPSP 2016
48
54
48
54
Dividend equivalent PPSP 2018
50
20
56
56
Dividend equivalent PPSP 2017
16
22
40
60
50
Base salary
1,249 1,325
945
1,476
3,416
3,447
218
218
218
250
250
250
3,563
0
1,469
0 4,706
1,877 1,940
244
2,063
0
831
978
319
0
416
416
0
6,182
978
0
750
1,045
1,108
0
2,750
319
2,387
918
4,481
max.
2018
2019
Jan. 1 - May 22
min.
max.
Base salary
min.
Taxable non-cash benefits
and other fringe benefits
966
379
379
379
2,048
804
Total
0
2019
Jan. 1-May 22 Jan. 1 - Dec. 31
5,252
5,252
3,990
1 Total limit → 1.7 times for Mr. Källenius as of May 22, 2019 (1.5 times for Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
124
2018
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
In thousands of euros
Finance & Controlling,
Daimler Financial Services
Bodo Uebber
Dr. Dieter Zetsche
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
Jan. 1 Dec. 31
Benefits granted
(plan period of 4 years)
416
700
65
65
1,130
423
423
423
2,243
869
869
869
Annual variable remuneration
(50% of annual bonus, short-term)
483
190
0
447
1,024
0
402
1,024
447
117
0
65
190
Long-term variable remuneration
medium-term)
Deferral (50% of annual bonus,
945
0
402
483
195
44
44
638
638
494
394
394
394
638
62
62
1,326
1,226
1,226 1,226
700
700
62
416
832
832
44
164
- Retirement pension expense (service costs)
Hubertus Troska
Greater China
Jan. 1 Dec. 31
2018
832
2019
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min.
2018
2019
Harald Wilhelm
Finance & Controlling,
Daimler Mobility
April 1 - Dec. 31
min.
max.
832
max.
978
832
832
4,706
0
1,877 1,940
3,394
0
1,395
Total
2,750
0
1,108
1,045
2,200
0
887
(plan period of 4 years)
Long-term variable remuneration
978
0
597
416
416
0
978
Retirement pension expense (service costs)
Deferral (50% of annual bonus,
254
0
597
416
416
0
medium-term)
155
155
155
1 Total limit → 1.7 times for Mr. Källenius as of May 22, 2019 (1.5 times for Dr. Zetsche)/1.9 times target remuneration
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
Benefits granted
In thousands of euros
Base salary
Taxable non-cash benefits
and other fringe benefits
- Retirement pension expense (service costs)
Total
(50% of annual bonus, short-term)
Deferral (50% of annual bonus,
medium-term)
Long-term variable remuneration
(plan period of 4 years)
Total
Annual variable remuneration
254
- Taxable non-cash benefits and other fringe benefits
5,252
248
254
254
254
Total remuneration
Total limit for components of remuneration
5,252
granted in the reporting year excluding:
720
4,114
3,121
3,120
1,180 5,886
3,602
2,115
Retirement pension expense (service costs)
(50% of annual bonus, short-term)
926
Taxable non-cash benefits
Base salary
In thousands of euros
Benefits granted
(base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
1 Total limit → 1.7 times for Mr. Källenius as of May 22, 2019 (1.5 times for Dr. Zetsche)/1.9 times target remuneration
5,347
5,347
5,252
5,252
919 5,750
2,910
3,136
3,121 1,181 5,887
3,053
0
0
0
2,750
1,092 1,159
0
804
1,877 1,940
and other fringe benefits
251
0 4,706
254 254
1,924 1,991
0
4,831
292
0
254
Total
B | COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 123
Markus Schäfer
832
57
57
57
164
94
832
94
565
565
565
996
926
926
94
Annual variable remuneration
832
508
Group Research &
Britta Seeger
Mercedes-Benz Cars Development
Mercedes-Benz Cars Marketing & Sales
Jan. 1 Dec. 31
2018
832
2019
May 22 Dec. 31 Jan. 1 - Dec. 31
min.
2018
2019
Jan. 1 Dec. 31
min.
max.
508
508
max.
832
Total remuneration
granted in the reporting year excluding:
62
42
Dividend equivalent PPSP 2017
56
50
59
52
Dividend equivalent PPSP 2018
54
48
57
51
Dividend equivalent PPSP 2019
72
75
Total
1,172
2,150
2,544
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
2 Amount actually paid out during the financial year: (The difference
pertains to the annual variable remuneration paid at the beginning of the
following year compared to the non-cash benefits in kind that were not
paid out and the retirement pension expense).
2,756
3,681
2,343
40
292
251
2,348
Total remuneration²
Retirement pension expense (service costs)
1,837
2,469
1,162
254
60
Dividend equivalent PPSP 2016
58
Deferral (50% of annual bonus, medium-term)
(50% of annual bonus, short-term)
Annual variable remuneration
919
920
927
Long-term variable remuneration
925
87
88
95
93
Taxable non-cash benefits and other fringe benefits
832
Total
3,841
Payment of PPSP 2014
104
9
Dividend equivalent PPSP 2015
785
120
-
Payment of PPSP 2015
260
1,448
728
525
728
525
104
260
208
Total limit for components of remuneration
2,825
In thousands of euros
13
6
4
Dividend equivalent PPSP 2017
17
56
50
Dividend equivalent PPSP 2018
19
54
48
Dividend equivalent PPSP 2019
58
72
Total
171
435
- Taxable non-cash benefits and other fringe benefits
2,031
1,807
615
1 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
2 Amount actually paid out during the financial year: (The difference
pertains to the annual variable remuneration paid at the beginning of the
following year compared to the non-cash benefits in kind that were not
paid out and the retirement pension expense).
2,223
Dividend equivalent PPSP 2016
1,679
Total remuneration²
254
248
155
Retirement pension expense (service costs)
1,043
891
3
Dividend equivalent PPSP 2015
37
Jan. 1 Dec. 31
2018
2019
Jan. 1 Dec. 31 May 22 - Dec. 31
2018
Mercedes-Benz Cars Development
Britta Seeger¹
Markus Schäfer¹
Group Research &
Mercedes-Benz Cars Marketing &
Sales
Jan. 1 Dec. 31
Payment of PPSP 2014
Deferral (50% of annual bonus, medium-term)
(50% of annual bonus, short-term)
Annual variable remuneration
Total
Taxable non-cash benefits and other fringe benefits
Base salary
Long-term variable remuneration
Payments made
2019
832
-
Payment of PPSP 2015
56
728
104
260
508
64
996
565
94
164
57
832
926
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
750
2019
164,833
Member of the Supervisory Board
180,500
Member of the Supervisory Board and the Nomination Committee
Elke Tönjes-Werner²
Dr. Bernd Pischetsrieder¹
Ergun Lümali¹, 2
Joe Kaeser¹
Petraea Heynike¹
Dr. Jürgen Hambrecht'
Michael Häberle 1, 2
Raymond Curry³
Dr. Clemens Börsig¹
Michael Bettag²
Dr. Paul Achleitner
Bader M. Al Saad¹
Sari Baldauf¹
47,925
499,129
Deputy Chairman of the Supervisory Board, the Presidential Committee, the Audit
Committee and the Legal Affairs Committee
Michael Brecht 1, 2
51,638
602,542
Chairman of the Supervisory Board, the Presidential Committee and the Nomination
Committee as well as member of the Legal Affairs Committee
Dr. Manfred Bischoff¹
13,133
thereof remuneration
from subsidiaries
Member of the Supervisory Board and the Nomination Committee
13,133
Member of the Supervisory Board
50,332
279,532
Member of the Supervisory Board and the Audit Committee
14,439
240,339
Member of the Supervisory Board and the Audit Committee
15,539
167,239
Member of the Supervisory Board
20,353
237,353
Member of the Supervisory Board and the Presidential Committee
15,539
185,443
Member of the Supervisory Board and the Legal Affairs Committee
150,600
Member of the Supervisory Board
13,133
331,436
Member of the Supervisory Board and Chairman of the Audit Committee and the
Legal Affairs Committee
152,800
Member of the Supervisory Board
194,733
Total in 2019
131
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
85,954
2,422
1,481
2018
32,856
2,004
156
2019
Total
42,023
1,050
2018
2019
Dr. Dieter Zetsche
18,387
886
275
2018
362
2019
Bodo Uebber4
2018
134
1 The amounts of the present values are primarily due to the low level of the relevant discount rate.
2 Mr. Schäfer pro rata from May 22, 2019.
3 Mr. Wilhelm pro rata from April 1, 2019.
4 Mr Uebber pro rata until May 22, 2019.
130
Function(s) remunerated
In euros
Name
Supervisory Board remuneration
B.69
No advances or loans were made or abated to members of the
Supervisory Board of Daimler AG in 2019.
Loans to members of the Supervisory Board
The total remuneration of all the activities of the members of
the Supervisory Board of Daimler AG in the year 2019 was thus
€4.6 million (2018: €4.2 million).
The individual remuneration of the members of the Supervi-
sory Board is shown in the following table. 7 B.69
In financial year 2019, no remuneration was paid for services
provided personally beyond the aforementioned board and
committee activities, in particular for advisory or agency ser-
vices, except for the remuneration paid to the members of
the Supervisory Board representing the employees in accor-
dance with their contracts of employment.
This does not apply to Supervisory Board members whose
Supervisory Board remuneration is subject in a mandatory or
voluntary manner to the guidelines of the German Trade Union
Confederation on the transfer of supervisory board remunera-
tion to the Hans Böckler Foundation, or to the same extent is
subject to a transfer to the employer or claim to payment due
to a service or employment contract. In the event that a lower
amount of the Supervisory Board remuneration is transferred
or credited, the voluntary commitment applies to 20% of the
amount not transferred or credited. With this voluntary com-
mitment, the members of the Supervisory Board are express-
ing their focus on and commitment to the long-term, sustain-
able success of the Company.
175,559
In connection with the remuneration adjustment in 2017, all
members of the Supervisory Board have made a self-commit-
ment to purchase Company shares in the amount of 20% of
their
gross annual salary (excluding committee remuneration
and the meeting fee) every year and to hold these shares
until the end of one year after they have left the Company's
Supervisory Board (voluntary obligation in accordance with
the "comply or explain" principle).
Committee are paid an additional €72,000, the members of
the Presidential Committee are paid an additional €57,600 and
the members of the other committees of the Supervisory
Board (such as the Legal Affairs Committee formed in 2019)
are paid an additional €28,800; an exception is the Chairman
of the Audit Committee, who is paid an additional €144,000.
Additional payments are made for activities in a maximum
of three committees; any persons who are members of more
than three such committees receive additional payments for
the three most highly paid functions. Members of a Supervisory
Board committee are only entitled to remuneration for such
membership in a financial year if the committee has actually
convened to fulfill its duties in this period.
The remuneration of the Supervisory Board is determined by the
Annual Shareholders' Meeting of Daimler AG and is governed
by the Company's Articles of Incorporation. The new regulations
for Supervisory Board remuneration approved by the Annual
Shareholders' Meeting in March 2017 and effective for the
financial year beginning on January 1, 2017 specify that the
members of the Supervisory Board receive, in addition to
the refund of their expenses and the cost of any value-added
tax incurred by them in performance of their office, fixed remu-
neration of €144,000 after the conclusion of the financial year.
The Chairman of the Supervisory Board receives an additional
€288,000 and the Deputy Chairman of the Supervisory Board
receives an additional €144,000. The members of the Audit
Supervisory Board remuneration in 2019
Remuneration of the Supervisory Board
Payments made in 2019 to former members of the Board of
Management of Daimler AG and their survivors amounted to
€19.5 million (2018: €16.2 million). Pension provisions accord-
ing to IFRS for former members of the Board of Management
and their survivors amounted to €355.8 million as of December
31, 2019 (2018: €270.2 million).
Payments made to former members of the Board of Man-
agement of Daimler AG and their survivors
In 2019, no advances or loans were made or abated to mem-
bers of the Board of Management of Daimler AG.
Loans to members of the Board of Management
Sideline activities of Board of Management members
The members of the Board of Management should accept man-
agement board or supervisory board positions and/or any
other administrative or honorary functions outside the Group
only to a limited extent. Furthermore, they require the consent
of the Supervisory Board before commencing any sideline
activities. This ensures that neither the time required nor the
remuneration paid for such activities leads to any conflict
with the members' duties to the Group. Insofar as such sideline
activities are memberships of statutory supervisory boards or
comparable boards of business enterprises, they are disclosed
in the notes to the annual financial statements of Daimler AG,
which are published on our website. In general, Board of Man-
agement members have no right to separate remuneration
for board positions held at other companies of the Group.
For the period from May 23 to December 31, 2019, Mr. Uebber
received a base salary of €587,166, short-term variable remu-
neration of €146,792 (measured as of the end of the reporting
period, to be paid in 2020), medium-term variable remuneration
of €146,792 (measured as of the end of the reporting period,
to be paid in 2021 subject to the bonus/malus rule) and fringe
benefits of €63,818. The service cost for the pension obliga-
tions to Mr. Uebber amounted to €567,696 (€490,313 pursuant
to Section 285 No. 9a HGB) for the period from May 23 to
December 31,2019. The claims from long-term variable remu-
neration (PPSP) and the company pension scheme are also
paid out in accordance with the respective plan conditions in
this case.
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend. The meeting
fee is paid only once if several meetings of the Supervisory
Board and/or its committees are held on the same calendar day.
218
22,759
152,800
< 33%
≤ 66%
< 100%
Probability of occurrence
Probability of occurrence
Probability of occurrence
66%
33%
0%
Probability of occurrence
Level
Low
Medium
High
Assessment of probability of occurrence/possible impact
B.70
In order to identify business risks and opportunities at an early
stage and to assess and manage them consequently, effec-
tive management and control systems, which are clustered into
a risk and opportunity management system, are applied. Risks
and opportunities are not offset.
The Daimler Group is exposed to a large number of risks that
are directly linked with the business activities of Daimler AG
and its subsidiaries or which result from external influences. A
risk is understood as the danger that events, developments
or actions will prevent the Group or one of its segments from
achieving its targets. This includes financial and non-financial
risks. At the same time, it is important to identify opportunities
in order to safeguard and enhance the competitiveness of the
Daimler Group. An opportunity is understood as the possibility
due to events, developments or actions to safeguard or to
surpass the planned targets of the Group or of a segment.
Risk and Opportunity Report
135
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
- An agreement between Daimler AG and Zhejiang Geely Hold-
ing Group Co., Ltd. for the development, production, sales
and aftersales of smart-brand cars of the next generation. In
the event of a change of control, the party for which no
change of control has occurred can terminate this agreement
after a maximum of three months of fruitless negotiations
in written form and with immediate effect. Furthermore, the
party for which no change of control has occurred has the
possibility to exercise a call option or a put option vis-à-vis
the other party. Change of control is defined as the indirect
or direct acquisition by a third party of (i) more than 50% of
the voting rights in one of the parties, (ii) the right to appoint
a majority of the directors of a board or similar body of one of
the parties, or (iii) the right, either contractual or otherwise,
to manage one of the parties. This agreement has been trans-
ferred by Daimler AG to Mercedes-Benz AG in the context
of the separation of the Cars & Vans division.
An agreement between Daimler AG and BMW AG, which con-
tains basic provisions for six joint ventures between
Daimler Mobility Services GmbH and group companies of
BMW AG in the field of mobility services (car sharing, ride
hailing, parking, charging, multimodal and a joint venture
holding the common brand). A change of control is defined
as the acquisition by a third party of more than 50% of the
voting rights or shares, or the conclusion of a control
agreement over Daimler AG by a third party. As a result of a
change of control, the other party may initiate a shoot-out
process, which is more precisely defined in the agreement.
An agreement between Daimler AG and BMW AG on the
development of technologies for automated driving (Highway-
Pilot) of the second generation (as of 2024). In the event of
a change of control, either party can terminate this contract
in written form at any time without further notice and with
immediate effect. Change of control is defined as the indirect
or direct acquisition by a third party of at least 30% of the
voting rights in one of the parties. This agreement has been
transferred by Daimler AG to Mercedes-Benz AG in the con-
text of the separation of the Cars & Vans division.
- An agreement between Daimler AG, BMW AG and Audi AG
related to the acquisition of the companies of the HERE
Group and the associated establishment of There Holding
B.V. In the event of a change of control of one of the parties
to the agreement, the agreement obligates the party in
question to offer its shares in There Holding B.V. to the other
parties to the agreement (shareholders). A change of control
of Daimler AG occurs if one person gains control over
Daimler AG, whereby control is defined as (i) having control
of more than 50% of the voting rights, (ii) being able to
control more than 50% of the voting rights eligible to vote at
the shareholders' meetings on all or nearly all matters, or
(iii) the right to determine the majority of the members of the
Board of Management or of the Supervisory Board. A change
of control also occurs if competitors of the HERE Group or
certain possible competitors of the HERE Group in the
technology industry acquire a shareholding of at least 25% of
Daimler AG. If none of the other parties acquire these
shares, the agreement gives them the right to dissolve There
Holding B.V.
of Daimler AG or becomes able to influence the decisions of
its Board of Management. This agreement has been trans-
ferred from Daimler AG to Daimler Truck AG in the context of
the separation of the Trucks & Buses division.
-
- An agreement related to the establishment of a joint venture
with Beiqi Foton Motor Co., Ltd. for the purpose of produc-
ing and distributing heavy-duty and medium-duty trucks of
the Auman brand. This agreement gives Beiqi Foton Motor
Co., Ltd. the right of termination in the case that one of its
competitors acquires more than 25% of the equity or assets
- An agreement with BAIC Motor Co., Ltd. related to a jointly
held company for the production and distribution of cars of
the Mercedes-Benz brand in China, by which BAIC Motor Co.,
Ltd. is given the right to terminate the agreement or exercise
a put or call option in the case that a third party acquires
one third or more of the voting rights in Daimler AG.
- A master cooperation agreement on wide-ranging strategic
cooperation with Renault S.A., Renault-Nissan B.V. and
Nissan Motor Co., Ltd. as well as with Mitsubishi Motors Cor-
poration. In the case of a change of control of one of the
parties to the agreement, each of the other parties has the
right to terminate the agreement. A change of control as
defined by the master cooperation agreement occurs if a
third party or several third parties acting jointly acquire,
legally or economically, directly or indirectly, at least 50% of
the voting rights in the company in question or are autho-
rized to appoint a majority of the members of its managing
board. Under the master cooperation agreement, several
cooperation agreements were concluded between Daimler AG
on the one side and Renault and/or Nissan on the other,
which provide for the right of termination for a party to the
agreement in the case of a change of control of another
party. These agreements primarily concern a new architecture
for small cars, the shared use and development of fuel-effi-
cient diesel and gasoline engines and transmissions, the deve-
lopment and supply of a small urban delivery van, the deve-
lopment, production and supply of pickups, the use of an
existing architecture for compact cars, and the joint pro-
duction of Infiniti/Nissan and Mercedes-Benz compact vehi-
cles by a 50-50 joint venture in Mexico. A change of control
is deemed to occur at a threshold of 50% of the voting rights
of the company in question or upon authorization to appoint
a majority of the members of its managing board. In the case
of termination of cooperation in the area of the development
of small cars due to a change of control in the early phase of
the cooperation, the party affected by the change of control
would be obliged to bear its share of the costs of the develop-
ment of shared components even if the development were
terminated for that party; the aforementioned cooperation
agreements (with the exception of the Master Cooperation
Agreement) have been transferred from Daimler AG to
Mercedes-Benz AG.
poses of the credit agreements, a group acting jointly exists
when a group acts jointly on the basis of formal or informal
agreements or other arrangements. Control for the purposes
of the credit agreements means (i) holding or controlling
more than 50% of the voting rights in Daimler AG, (ii) the right
to determine or appoint the majority of the members of
a decision-making body of Daimler AG (e.g. the management,
board of management, advisory board, supervisory board),
(iii) the right to receive more than 50% of the distributable divi-
dends of Daimler AG, or (iv) exercise of an otherwise com-
parable controlling influence on Daimler AG. Control can be
exercised directly or indirectly through share ownership,
contractual arrangement, fiduciary status, economic circum-
stances or otherwise, and through either a single person
or a group acting together.
Level
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Low
Possible impact
€0 <
€500 million ≤
The effectiveness of the internal control system is systematically
assessed with regard to the corporate accounting process.
The first step consists of risk analysis and a definition of control
with the objective of identifying significant risks relating to
the processes of corporate accounting and financial reporting
in the main companies, organizational entities and corporate
functions. The controls required are then defined and docu-
mented in accordance with Group-wide guidelines. Random
samples are regularly tested to assess the effectiveness of the
controls. Those tests constitute the basis for self-assessment
of the appropriate magnitude and effectiveness of the controls.
The results of this self-assessment are documented and
reported in a Group-wide IT system; identified control weak-
nesses are eliminated. At the end of the annual cycle, the
selected companies, organizational entities and corporate
functions confirm the effectiveness of the internal control
system with regard to the corporate accounting process. The
Board of Management and the Audit Committee of the Super-
visory Board are regularly informed about the main control weak-
nesses and the effectiveness of the control mechanisms
installed. However, the internal control and risk management
system for the accounting process cannot ensure with absolute
certainty that materially false statements in accounting are
avoided.
processes are established for the segregation of duties and
for the "four-eyes principle" in the context of preparing
financial statements, and authorization and access rules
exist for relevant IT accounting systems.
processes are established to guarantee the completeness of
financial reporting;
issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
transactions within the Group are accounted for and prop-
erly eliminated;
the Group's uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
The internal control system with regard to the accounting
process has the objective of ensuring the correctness and
effectiveness of accounting and financial reporting. It is designed
in line with the internationally recognized framework for inter-
nal control systems of the Committee of Sponsoring Organiza-
tions of the Treadway Commission (COSO Internal Control -
Integrated Framework), is continually developed further, and
is an integral part of the accounting and financial reporting
processes in the relevant companies, organizational entities
and corporate functions. The system includes principles
and procedures as well as preventive and detective controls.
Among other things, it is regularly checked, if
Furthermore, the employees responsible for risk management
include have the task of defining measures and if necessary,
initiating such measures to avoid, reduce or protect the Group
against risks. Within the context of opportunity management,
measures are to be taken with which opportunities can be
seized, improved and (fully or partially) realized. The cost-effec-
tiveness of a measure is assessed before its implementation.
The feasible impact and probability of occurrence of all risks
and opportunities of the individual entities and the related
measures that have been initiated are continually monitored.
The management activities take place at the level of the
segments based on individual risks and opportunities. As the
parent company of the Daimler Group, Daimler AG monitors
implementation by the segments as part of its duty to manage
the Group.
The scope of consolidation for risk and opportunity management
corresponds to the scope of the consolidated financial state-
ments and goes beyond that if necessary. The risks and oppor-
tunities of the segments and operating units, important
associated companies, joint ventures, joint operations and the
corporate departments are included.
Risk management is based on the principle of completeness.
This means that at the level of the individual entities, all
identified risks enter the risk management process. The inter-
nal control system (ICS) is responsible for the monitoring of
general uncertainties without any clear indication of a possible
effect on earnings.
At Group level, risks and opportunities below €500 million are
classified as "Low", between €500 million and €1 billion as
"Medium" and above €1 billion as "High". For the quantification
of each risk and opportunity category in the Management
Report, the individual risks and opportunities are summarized
for each category. The assessment of the dimensions, proba-
bility of occurrence and possible impact, is based on the levels
shown in table 7 B.70 and is conducted before measures are
planned. In addition to the quantifiable risks and opportunities,
risk management also considers qualitative risks and oppor-
tunities. Qualitative risks include issues that can have a negative
impact on the public's perception and thus on the reputation
of the Daimler Group. They primarily comprise those risks con-
nected with aspects presented in the Non-Financial Report.
Risks in connection with compliance violations are also consid-
ered in the context of risk management. In the context of
describing the risk and opportunity categories, significant
changes in comparison to the prior year are explained.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
136
The reporting of risks and opportunities in the Management
Report generally relates to a period of one year. Risk assessment
takes place on the basis of probability of occurrence and
possible impact according to the levels "Low," "Medium" and
"High." These levels also apply to the possible impact of
opportunities. An analysis of the probability of occurrence is
not considered here. When assessing the impact of a risk
or opportunity, its effect on EBIT is generally considered.
In the context of the operational planning, risks and opportuni-
ties are identified and assessed with the use of appropriate
categories for a two-year planning period. Furthermore, the
discussions for the derivation of mid-term and strategic tar-
gets in the context of strategic planning also include the consid-
eration of risks and opportunities relating to a longer period.
Group Risk Management regularly reports on the identified risks
and opportunities to the Board of Management and the Super-
visory Board. Besides the reporting at specific times, risk and
opportunity management is established as a continuous task
within the Group. In addition to reporting at specific intervals,
risk and opportunity management in established at the Group
as a continuous process. There is an internal reporting obligation
within the Group for material risks arising unexpectedly.
The opportunity management system at the Daimler Group
is based on the risk management system. The objective of
opportunity management is to recognize the possible opportu-
nities arising in business activities as a result of positive
developments at an early stage, and to use them in the best
possible way for the Group by taking appropriate measures.
By taking advantage of opportunities, planned targets should
be met or exceeded. Opportunity management considers
relevant and realizable opportunities that have not yet been
included in any planning.
The risk management system is intended to systematically
and continually identify, assess, control, monitor and report
risks threatening Daimler's existence and other material risks,
in order to support the achievement of corporate targets and
to enhance risk awareness at the Group. The risk management
system is integrated into the value-based management and
planning system of the Daimler Group and is an integral part of
the overall planning, management and reporting process in
the companies, segments and corporate functions.
Risk and opportunity management system
< €500 million
< €1 billion
≥ €1 billion
Impact
High
Impact
Impact
Medium
134
- Credit agreements of Mercedes-Benz AG and Daimler Truck AG
with lenders for an amount totaling €1.2 billion, for the repay-
ment of which Daimler AG is jointly and severally liable, which
provide for a right of termination for the lenders in the event
that natural or legal persons or a group of at least two persons
acting jointly acquire control of Daimler AG. For the pur-
- A non-utilized syndicated credit line for a total amount of €11
billion, which the lenders are entitled to terminate if (i)
Daimler AG becomes a subsidiary of another company, or (ii)
Daimler AG becomes controlled either individually or jointly
by one or more persons acting together. For the purposes of
the syndicated credit line, subsidiary in relation to a com-
pany means another company (i) that is controlled directly or
indirectly by the first-mentioned company, (ii) of which
more than 50% of the subscribed capital (or other equity) is
held directly or indirectly by the first-mentioned company,
or (iii) which is a subsidiary of another subsidiary of the first-
mentioned company. Control for the purposes of the syndi-
cated credit line means (i) the right to determine the affairs
of a company, (ii) the right to control the composition of
the managing board or similar bodies, or (iii) the right to con-
trol the composition of the supervisory board (if elected
by the shareholders).
132
3 Mr. Curry has directed that he receive no remuneration whatsoever and that his corresponding board remuneration is to be
paid to the Hans-Böckler Foundation.
2 The employee representatives have stated that their board remuneration is to be transferred to the Hans-Böckler Foundation,
in accordance with the guidelines of the German Trade Union Federation.
1 Including remuneration as a member of the Supervisory Board of Daimler Truck AG and/or Mercedes-Benz AG.
19,253
236,253
Member of the Supervisory Board and the Presidential Committee
Roman Zitzelsberger 1, 2
152,800
Member of the Supervisory Board
Dr. Sabine Zimmer²
15,539
184,343
Member of the Supervisory Board and the Legal Affairs Committee
Marie Wieck¹
15,539
168,339
Member of the Supervisory Board
Dr. Frank Weber¹
15,539
185,443
Member of the Supervisory Board and the Legal Affairs Committee
Sibylle Wankel1, 2
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Takeover-Relevant Information and Explanation
(Report pursuant to Section 315a Subsection 1 and Section 289a Subsection 1 of the German Commercial Code (HGB))
Composition of share capital
Daimler AG has concluded various material agreements, as
listed below, that include clauses regulating the possible event
of a change of control, as can occur as a result of a takeover
bid:
Material agreements taking effect in the event of a
change of control
No use has yet been made of this authorization to issue con-
vertible bonds and/or bonds with warrants.
In order to service the debt of the convertible bonds and/or
bonds with warrants issued as a result of the authorization, the
Annual Shareholders' Meeting of April 1, 2015 also approved
a conditional increase in the share capital of up to €500 million
(Conditional Capital 2015).
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the con-
sent of the Supervisory Board, to exclude shareholders' sub-
scription rights to the bonds. Subscription rights can, under
these defined conditions, be excluded when bonds are issued
in exchange for non-cash contributions, particularly within
the framework of a merger or acquisition, and when bonds are
issued in exchange for cash contributions, if the issue price
is not significantly below the theoretical market price of the
bonds at the time of the issue.
of ten years, and to grant the owners/lenders of those bonds
conversion or option rights to new, registered shares of no
par value in Daimler AG with a corresponding amount of the
share capital of up to €500 million, in accordance with the
terms and conditions of those convertible bonds or bonds with
warrants. The bonds may be issued in exchange for consider-
ation in cash, but also for consideration in kind, in particular
for interests in other companies. The respective terms and
conditions may also provide for mandatory conversion or an
obligation to exercise the option rights. The bonds can be
issued once or several times, wholly or in installments, or simul-
taneously in various tranches. They can also be issued by
companies affiliated with Daimler AG pursuant to Section 15 ff
of the German Stock Corporation Act (AktG).
By resolution of the Annual Shareholders' Meeting held on April 1,
2015, the Board of Management, with the consent of the Super-
visory Board, is authorized to issue during the period until March
31, 2020 convertible bonds and/or bonds with warrants or a
combination of those instruments (commercial paper) in a total
nominal amount of up to €10 billion with a maximum term
No use has yet been made of Approved Capital 2018.
By resolution of the Annual Shareholders' Meeting of April 5
2018, the Board of Management was authorized with the consent
of the Supervisory Board to increase the share capital of
Daimler AG in the period until April 4, 2023, wholly or in partial
amounts, on one or several occasions, by up to €1 billion by
issuing new registered shares of no par value in exchange for
cash or non-cash contributions, and with the consent of the
Supervisory Board under certain conditions and within defined
limits to exclude shareholders' subscription rights (Approved
Capital 2018). Subscription rights can, under these defined
conditions, be excluded in the event of a capital increase
through non-cash contributions for the purpose of an acqui-
sition, and in the case of a capital increase through cash
contributions, if the issue price of new shares is not significantly
below the market price at the time of issue.
No use was made of this authorization to acquire the Compa-
ny's own shares during the reporting period.
In addition, the Board of Management is authorized under other
defined circumstances and with the consent of the Supervisory
Board to exclude shareholders' subscription rights for shares
they acquire. The Company's own shares in a volume of up to
5% of the share capital existing at the time of the resolution of
the Annual Shareholders' Meeting can also be acquired with
the application of derivative financial instruments (put or call
options, forwards or a combination of these financial instru-
ments), whereby the terms of the derivatives may not exceed
18 months and must be terminated on March 31, 2020, at
the latest.
Member of the Supervisory Board
By resolution of the Annual Shareholders' Meeting of April 1,
2015, the Company was authorized to acquire its own shares
during the period until March 31, 2020 for all legal purposes in
a volume of up to 10% of the share capital at the time of the
resolution of the Annual Shareholders' Meeting. The shares can
be used, under the exclusion of shareholders' subscription
rights, for, among other things, corporate mergers and acquisi-
tions or can be sold for cash to third parties at a price that is
not significantly below the market price at the time of the sale.
The shares can also be used to service debt on convertible
bonds and/or bonds with warrants, or can be issued to employ-
ees of the Company and employees and members of executive
bodies of affiliated companies pursuant to Section 15 ff of the
German Stock Corporation Act (AktG). The Company's own
shares can also be canceled.
In accordance with Article 7 Subsection 2 of the Articles of
Incorporation, amendments to the Articles of Incorporation
that only affect the wording can be decided upon by the Super-
visory Board. Pursuant to Section 181 Subsection 3 of the
German Stock Corporation Act (AktG), amendments to the Arti-
cles of Incorporation take effect upon being entered in the
Commercial Register.
133
B❘ COMBINED MANAGEMENT REPORT | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
In accordance with Article 5 of the Articles of Incorporation, the
Board of Management has at least two members. The number
of members is decided by the Supervisory Board. Pursuant to
Section 84 Subsection 2 of the German Stock Corporation
Act (AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required mem-
ber of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German Stock
Corporation Act (AktG). Pursuant to Section 84 Subsection
3 of the German Stock Corporation Act (AktG), the Supervisory
Board can revoke the appointment of a member of the Board
of Management and of the Chairperson of the Board of Manage-
ment if there is an important reason to do so. Pursuant to
Section 179 of the German Stock Corporation Act (AktG), the
Articles of Incorporation can only be amended by a resolution
of an Annual Shareholders' Meeting. Unless otherwise required
by applicable law, resolutions of the Annual Shareholders'
Meeting - with the exception of elections - are passed pursuant
to Section 133 of the German Stock Corporation Act (AktG)
and Article 16 Subsection 1 of the Articles of Incorporation with
a simple majority of the votes cast and if required with a
simple majority of the share capital represented. Pursuant to
Section 179 Subsection 2 of the German Stock Corporation
Act (AktG), any amendment to the purpose of the Company
requires a 75% majority of the share capital represented at
the Shareholders' Meeting; no use is made in the Articles of
Incorporation of the possibility to stipulate a larger majority
of the share capital.
Pursuant to Section 31 Subsection 2 of the German Codetermi-
nation Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority compris-
ing at least two thirds of its members' votes. If no such majority
is obtained, the Mediation Committee of the Supervisory Board
has to make a suggestion for the appointment within one
month of the vote by the Supervisory Board in which the
required majority was not reached. The Supervisory Board then
appoints the members of the Board of Management with a
majority of its members' votes. If no such majority is obtained,
voting is repeated and the Chairperson of the Supervisory
Board then has two votes. The same procedure applies for dis-
missals of members of the Board of Management.
of procedure of the Supervisory Board of Daimler AG stipulate
that the initial appointment of members of the Board of Manage-
ment should generally be limited to three years. Reappoint-
ment or the extension of a period of office is permissible, in
each case for a maximum of five years.
Members of the Board of Management are appointed and dis-
missed on the basis of Sections 84 and 85 of the German
Stock Corporation Act (AktG) and Section 31 of the German
Codetermination Act (MitbestG). In accordance with Section
84 of the German Stock Corporation Act, the members of the
Board of Management are appointed by the Supervisory Board
for a maximum period of office of five years. However, the rules
Provisions of applicable law and of the Articles of Incorpo-
ration concerning the appointment and dismissal of
members of the Board of Management and amendments
to the Articles of Incorporation
Shares acquired by employees within the context of the employee
share program may not be disposed of until the end of the fol-
lowing year. Eligible participants in the Performance Phantom
Share Plans (PPSPs) of Executive Level 1 and eligible members
of the Board of Management are obliged by the Plans' terms and
conditions and by the Stock Ownership Guidelines to acquire
Daimler shares with a part of their Plan income or out of their
own funds up to a defined target volume and to hold them for
the duration of their employment at the Daimler Group. For the
other persons eligible for PPSPs, this obligation no longer
applies since payment of PPSP 2013 in February/March 2017.
Restrictions on voting rights and on the transfer of shares
The Company does not have any rights from treasury shares.
In the cases described in Section 136 of the German Stock
Corporation Act (AktG), the voting rights of treasury shares are
nullified by law.
The share capital of Daimler AG amounted to approximately
€3,070 million at December 31, 2019. It is divided into
1,069,837,447 registered shares, each of which accounts for
approximately €2.87 of equity capital. Pursuant to Section
67 Subsection 2 of the German Stock Corporation Act (AktG)
in the version of December 31, 2019, only those persons reg-
istered as shareholders in the register of shareholders are con-
sidered to be shareholders of the Company. With the exception
of treasury shares, from which the Company does not have any
rights, all shares confer equal rights to their holders. Each share
confers the right to one vote and, with the possible exception
of any new shares that are not yet entitled to a dividend, to
an equal share of the profits in accordance with the dividend
payout approved by the Annual Shareholders' Meeting. The
rights and obligations arising from the shares are derived from
the provisions of applicable law, in particular Sections 12, 53a
ff, 118 ff and 186 of the German Stock Corporation Act. There
were no treasury shares at December 31, 2019.
Authorization of the Board of Management to issue or buy
back shares
2019
Harald Wilhelm³
5,285
2,048
379
967
Base salary
2019
Head of Mercedes-Benz Cars
Jan. 1 Dec. 31 Jan. 1 - May 22
2018
2018
Jan. 1 Dec. 31 Jan. 1 - May 22
Daimler Financial Services
Dr. Dieter Zetsche
Finance & Controlling, Chairman of the Board of Management,
Bodo Uebber
In thousands of euros
Payments made
692
2,781
3,767
1 Amount actually paid out during the financial year: (The difference
pertains to the annual variable remuneration paid at the beginning of the
following year compared to the non-cash benefits in kind that were not
paid out and the retirement pension expense).
1,052
3,269
3,965
Total remuneration¹
218
804
250
Taxable non-cash benefits and other fringe benefits
44
Dividend equivalent PPSP 2015
Payment of PPSP 2015
1,656
Payment of PPSP 2014
Long-term variable remuneration
1,780
1,349
848
624
101
640
47
302
Deferral (50% of annual bonus, medium-term)
(50% of annual bonus, short-term)
Annual variable remuneration
869
2,243
423
1,131
Total
65
195
164
244
Retirement pension expense (service costs)
134
Deferral (50% of annual bonus, medium-term)
(50% of annual bonus, short-term)
Annual variable remuneration
700
62
638
1,226
1,326
Total
394
494
Taxable non-cash benefits and other fringe benefits
832
832
Base salary
2019
2018
Jan. 1 Dec. 31 April 1 - Dec. 31
Daimler Mobility
Harald Wilhelm
Finance & Controlling,
Hubertus Troska
Greater China
Jan. 1 Dec. 31
2019
Jan. 1 Dec. 31
2018
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 127
260
104
80
525
1,793
2,395
Total
54
72
Dividend equivalent PPSP 2019
48
54
Dividend equivalent PPSP 2018
50
56
Dividend equivalent PPSP 2016
40
-
55
751
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2015
Payment of PPSP 2015
1,385
Payment of PPSP 2014
Long-term variable remuneration
728
60
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2018
3,463
2018
1,655
254
2019
Renata Jungo Brüngger
3,261
244
2018
3,738
250
2019
2,971
257
2018
4,062
261
2019
Martin Daum
Ola Källenius
pension capital and
Daimler Pensions Plan)
Present value¹1 of
obligations (for pension,
Service cost (for pension,
pension capital and
Daimler Pensions Plan)
Annual pension (as regulated until
2005) as of age 60
251
1,290
Wilfried Porth
2019
244
2018
6,028
250
2019
Hubertus Troska
1,467
248
2018
1,995
254
In thousands of euros
2019
2018
3,114
155
2019
Markus Schäfer²
11,270
292
156
2018
12,130
156
Britta Seeger
The organizational embedding and monitoring of risk and
opportunity management takes place through the risk man-
agement organization established at the Group. In this context,
the companies, organizational entities and corporate functions
report on concrete risks and opportunities to the next-higher
entity at regular intervals. Through the segments, this informa-
tion is passed on to Group Risk Management, which processes
it and provides it to the Board of Management and the Super-
visory Board as well as to the Group Risk Management Commit-
tee (GRMC). The GRMC is responsible for the continual improve-
ment of the risk management system and for assessing its
efficiency and effectiveness. It is composed of representa-
tives of Accounting & Financial Reporting, the Legal Depart-
ment, Compliance and Technical Compliance, and the mem-
bers responsible for finance of the Boards of Management
of Mercedes-Benz AG, Daimler Truck AG and Daimler Mobility
AG; it is chaired by the Board of Management members of
Daimler AG responsible Finance & Controlling/Daimler Mobil-
ity and for Integrity and Legal Affairs. The Internal Auditing
department contributes material findings on the internal con-
trol and risk management system.
Individual entitlements, service costs and present values for members of the Board of Management
As part of the mutually agreed early termination of the Board
of Management activities of Dr. Dieter Zetsche and Bodo Uebber
at the conclusion of the Daimler AG Annual Shareholders'
Meeting on May 22, 2019, it was agreed that the Company's
service contract benefits would continue to be provided
until the respective service contracts expired on December 31,
2019. For the period from May 23 to December 31, 2019
Dr. Zetsche thus received a base salary of €1,244,291 and short-
term variable remuneration of €311,073 (measured as of
the end of the reporting period, to be paid in 2020) as well as
medium-term variable remuneration of €311,073 (measured
as of the end of the reporting period, to be paid in 2021 subject
to the bonus/malus rule) and fringe benefits of €142,244.
The claims from long-term variable remuneration (PPSP) and
the company pension scheme are paid out in accordance
with the respective plan conditions.
8,264
2,578
4,868
Total remuneration¹
362
886
Retirement pension expense (service costs)
3,758
6,021
1,793
2,851
Total
Dividend equivalent PPSP 2019
138
65
144
67
149
71
138
66
1,877
898
4,627
1 Amount actually paid out during the financial year: (The difference
pertains to the annual variable remuneration paid at the beginning of the
following year compared to the non-cash benefits in kind that were not
paid out and the retirement pension expense).
4,448
2,679
In the event of an early termination of the service contract,
both the short-term and the delayed medium-term component
(deferral) of the annual bonus, and the proceeds from the long-
term PPSP, are paid out not when the contract is terminated but
instead at the points in time agreed upon in the service con-
tract or in the terms and conditions of the PPSP plan.
In the case of unilateral early termination without an important
reason, Board of Management service contracts include com-
mitments to payment of the base salary and provision of a com-
pany car until the end of the original service period at a maxi-
mum. Such persons are only entitled to payment of the annual
bonus pro rata for the period until the end of the contract of
service or of the Board of Management membership takes effect.
Entitlement to payment of the performance-related compo-
nents of remuneration with a long-term incentive effect (PPSP)
that has already been allocated is defined by the conditions of
the respective plans. To the extent that the payments described
above are subject to the provisions of the severance cap of
the German Corporate Governance Code as amended on Feb-
ruary 7, 2017, their total including fringe benefits is limited
to double the annual remuneration and may not exceed the total
remuneration for the remaining period of the service contract.
The durations of the contracts of service of the members of
the Board of Management correspond to their terms of
appointment.
page 32 f
Early termination of service
Service costs for pension obligations to Board of Management
members in accordance with IFRS amounted to €2.0 million
in financial year 2019 (2018: €2.4 million). The present value of
the total defined benefit obligation according to IFRS amounted
to €32.9 million as of December 31, 2019 (December 31, 2018:
€86.0 million). Taking age and period of service into account,
the individual entitlements, service costs and present values
are shown in the table. 7 B.68
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT 129
Departing Board of Management members are also provided
with a company car, in some cases for a defined period.
That amount can increase by up to 30 percentage points
depending on the number of dependent children.
Payments of these pension claims start upon request when the
term of service ends at or after the age of 60, or are paid as
disability pensions if the term of service ends before the age of
60 due to disability. The respective agreements provide for
3.5% annual increases starting when benefits are received (with
the exception that Wilfried Porth's benefits are adjusted in
accordance with applicable law). The agreements include a
provision by which the spouse/registered civil partner of a
deceased Board of Management member is entitled to 60% of
that member's pension.
Until the end of 2005, the pension agreements of Board of Man-
agement members included a commitment to an annual
retirement pension, calculated as a proportion of the former
base salary and depending on the number of years of service;
an analogous implementation of this commitment for the corre-
sponding hierarchical level applied to Wilfried Porth for the
period prior to his serving as a member of the Board of Man-
agement. Such pension claims remained in effect after the
conversion to the Pension Capital system but were frozen at
the level reached at the beginning of 2006.
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse/
registered civil partner or dependent children is/are entitled to
the full committed amount in the case of the Pension Capital
system, and to the credit amount reached plus an imputed
amount until the age of 62 in the case of the Daimler Pensions
Plan. If a Board of Management member passes away after
retiring for reason of age, in the case of payment of twelve
annual installments the heirs are entitled to the remaining
present value. In the case of a pension with benefits for sur-
viving dependents, the spouse/registered partner or depen-
dent children is/are entitled to 60% of the discounted terminal
value (Pension Capital), or the spouse/registered civil partner
is entitled to 60% of the actual pension (Daimler Pensions Plan).
B.68
in twelve annual installments, whereby interest accrues on
each partial amount from the time payments commence
until the payout is complete (Pension Capital 6% or 5%;
Daimler Pensions Plan in accordance with applicable law);
as an annuity with annual increases (Pension Capital 3.5%
or in accordance with applicable law; Daimler Pensions Plan
in accordance with applicable law).
Payments under the Pension Capital system and the Daimler
Pensions Plan can be made in three ways:
Under this system, each Board of Management member is cred-
ited with a capital component each year. This capital compo-
nent comprises an amount equal to 15% of the sum of the Board
of Management member's fixed base salary and the total
annual bonus for the respective financial year on the balance
sheet date, multiplied by an age factor equivalent to a rate
of return of 6% until 2015 and 5% as of 2016 (Wilfried Porth: 5%
for all years). These contributions to pension plans are
granted only until the age of 60. The benefit from the pension
plan is payable in the committed amount (sum of the capital
components credited including interest) to surviving Board of
Management members at the earliest at the age of 60,
irrespective of their age upon retirement. If a member of the
Board of Management retires due to disability, the benefit
is paid as a disability pension, even before the age of 60.
The Pension Capital system was used from the beginning of
2006 until the end of 2011. The pension agreements of active
Board of Management members that were valid until that
time were modified accordingly. All Board of Management
members newly appointed during that period were subject
exclusively to the Pension Capital system.
The Supervisory Board of Daimler AG has approved the appli-
cation of this system for all members of the Board of Man-
agement newly appointed since 2012. The amount of the annual
contributions results from a fixed percentage of the base salary
and the total annual bonus for the respective financial year
calculated as of the balance sheet date. This percentage is 15%.
This calculation takes into consideration the maximum level
of retirement provision for each Board of Management member -
also according to the period of membership - and the result-
ing annual and long-term expense for the Company. The contri-
butions to the retirement provision are granted until the age
of 62. The benefit from the pension plan is payable to surviving
Board of Management members at the earliest at the age of
62, irrespective of their age upon retirement. If a member of the
Board of Management retires due to disability, the benefit is
paid as a disability pension, even before the age of 62.
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as
for executives: the "Daimler Pensions Plan." This retirement
benefit system features the payment of annual contributions by
Daimler and is oriented toward the capital market. Daimler
makes a commitment to guarantee the total of contributions
paid, which are invested in the capital market according to
a precautionary investment concept.
Retirement provision
Commitments upon termination of service
B❘ COMBINED MANAGEMENT REPORT | REMUNERATION REPORT
128
5,635
9,407
as a single amount;
In thousands of euros
Payments made
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Exchange rate risks and opportunities
The Daimler Group's global orientation means that its business
operations and financial transactions are connected with risks
and opportunities related to fluctuations in currency exchange
rates. This applies in particular to fluctuations of the euro
against the US dollar, Chinese renminbi, British pound and other
currencies such as those of growth markets. An exchange
rate risk or opportunity arises in business operations primarily
when revenue is generated in a currency different from that
of the related costs (transaction risk). This applies in particular
to Mercedes-Benz Cars & Vans. A major portion of its revenue
is generated in foreign currencies while most of its production
costs are denominated in euros. Daimler Trucks & Buses is
also exposed to such transaction risks, but to a lesser degree
because of its worldwide production network. Regularly
updated currency risk exposures are successively hedged with
suitable financial instruments (predominantly currency for-
wards and options) in accordance with exchange rate expecta-
tions, which are continually reviewed, whereby both risks
and opportunities are limited. Any overcollateralization caused
by changes in exposure is generally reversed by suitable
measures without delay. Exchange rate risks and opportunities
also exist in connection with the translation into euros of the
net assets, revenues and expenses of the companies of the
Group outside the euro zone (translation risk); these risks are
not generally hedged.
Interest rate risks and opportunities
Changes in interest rates can create risks and opportunities for
business operations as well as for financial transactions.
Daimler employs a variety of interest-rate sensitive financial
instruments to manage the cash requirements of its business
operations on a day-to-day basis. Most of these financial instru-
ments are held in connection with the financial services busi-
ness of Daimler Mobility. Interest rate risks and opportunities
arise when fixed-interest periods are not congruent between
the asset and liability sides of the balance sheet. By means of
refinancing coordinated with the terms of the financing agree-
ments, the risk of maturity mismatch is minimized from both
an interest-rate and a liquidity perspective. Remaining inter-
est-rate risks are managed with the use of derivative financial
instruments. The funding activities of the industrial business
B.73
Financial risks and opportunities
Risk category
Probability of occurrence
Impact
Exchange rate risks
Low
process, Daimler regularly assesses these risks by considering
changes in key economic indicators and market information.
Pension plan assets to cover retirement and healthcare benefits
(market-sensitive investments including equities and interest-
bearing securities) are not included in the following analysis.
High
Impact
High
Interest rate risks
Low
Low
Interest rate opportunities
Low
Commodity price risks
Low
Low
Commodity price opportunities
Opportunity category
Exchange rate opportunities
Low
In addition, the Group is exposed to credit-, country- and liquid-
ity-related risks, risks of restricted access to capital markets,
risks of early credit repayment requirements and risks from
changes in credit ratings. As part of the risk management
In principle, the Group's operating and financial risk exposures
underlying its financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity profiles.
With the symmetrical risk and opportunity profiles (e.g. cur-
rency exposures), risks and opportunities exist equally, while
with the asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the opportunities.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 143
Information technology risks and opportunities
The systematically pursued digitization strategy enables
Daimler to utilize new opportunities to increase customer ben-
efit and the value of the company. Nonetheless, the high
penetration of information technology (IT) in all segments also
brings risks for their business and production processes, as
well as for their services and products.
The ever-growing threat from cybercrime and the spread of
aggressive malicious code brings risks that can affect the
availability, integrity and confidentiality of information and IT-
supported operating resources. Despite extensive precau-
tions, in the worst-case scenario, this can lead to a temporary
interruption of IT-supported business processes with severe
negative effects on the Group's earnings. In addition, the loss
or misuse of sensitive data may under certain circumstances
lead to a loss of reputation. In particular, stricter regulatory
requirements such as the EU Data Protection Directive may,
among other things, give rise to claims by third parties and result
in costly regulatory requirements and penalties with an impact
on earnings.
It is essential for the globally active Daimler Group and its wide-
ranging business and production processes that information
is available and can be exchanged in an up-to-date, complete
and correct form. The framework for IT security is based on
international standards such as ISO/IEC 2700x and the NIST
Cybersecurity Framework, and its protective measures also
apply industry standards and best practice. Appropriately secure
IT systems and a reliable IT infrastructure must be used to
protect information. Cyber threats must be identified over the
entire lifecycle of applications and IT systems, and dealt with
in line with their seriousness. Particular attention is paid to risks
that could result in the interruption of business processes
due to the failure of IT systems or which could cause the loss
or corruption of data. The advancing digitization and connec-
tivity of production equipment is accompanied by coordinated
technical and organizational security measures.
Due to growing requirements concerning the confidentiality,
integrity and availability of data, Daimler has implemented vari-
ous preventive and corrective measures so that the related
risks are minimized and possible damage is limited. For exam-
ple, the Group reduces potential interruptions of operating
processes in data centers by means of mirrored data sets,
decentralized data storage, outsourced data backups and
IT systems designed for high availability. Emergency plans are
developed and employees are trained and regularly sensitized
in order to maintain operating capability. Specific threats are
analyzed and countermeasures are coordinated at a globally
active Cyber Intelligence & Response Center. The protection of
products and services at the risk of by hacking and cybercrime
is continually developed.
The possible impact and probability of occurrence of informa-
tion-technology risks are unchanged compared to the previous
year.
Personnel risks and opportunities
Competition for highly qualified staff and management is still
very intense in the industry and the regions in which Daimler
operates. The future success of the Daimler Group also depends
on the extent to which it succeeds over the long term in recruit-
ing, integrating and retaining specialist employees. The estab-
lished human resources instruments take such personnel risks
into consideration. One focus of human resources management
is the targeted personnel development and further training
of the workforce. Employees benefit for example from a range
of courses offered by the Daimler Corporate Academy and
from transparency in the context of performance management.
In order to remain successful as a company, management
culture and principles are being further developed in a Group-
wide project.
Daimler is generally exposed to risks and opportunities from
changes in market prices such as currency exchange rates,
interest rates and commodity prices. Market price changes can
have a negative or positive influence on the Group's profit-
ability, cash flows and financial position. Daimler systematically
manages and monitors market price risks and opportunities
primarily in the context of its operational business and financing
activities, and applies derivative financial instruments for
hedging purposes where needed, thus limiting both market price
risks and opportunities.
Due to demographic developments, the Group has to cope with
changes relating to an aging workforce and has to secure a
sufficient number of qualified young persons with the potential
to become the next generation of highly skilled specialists
and executives. This is addressed by measures taken in the
area of generation management that do justice to the scope
of the issue.
Personnel risks have increased from "Low" to "Medium" due to
the upcoming negotiations on collective bargaining conditions
in the metal and electrical industries in Germany and the asso-
ciated potential production losses. The probability of occur-
rence of personnel risks is currently assessed as unchanged
compared with the previous year.
Risks and opportunities related to equity investments and
cooperations
Cooperation with partners in associated companies and joint
ventures is of key importance to Daimler. Along with ensuring
better access to growth markets and new technologies, these
shareholdings help to utilize synergies and improve cost struc-
tures in order to successfully respond to the competitive situa-
tion in the automotive industry. Through investments in start-
ups, Daimler promotes innovative approaches in many areas of
the Group.
The Daimler Group generally participates in the risks and oppor-
tunities of associated companies and joint ventures in line
with its equity interest, and is also subject to share-price risks
and opportunities if such companies are listed on a stock
exchange.
The remeasurement of an associated company or joint venture
in relation to its carrying value can lead to risks and opportuni-
ties for the segment to which it is allocated. Furthermore, the
business activities of an associated company, joint venture
or joint operation, or the disposal or acquisition of an interest
in such an entity, can result in financial obligations or an addi-
tional financing requirement, but can also result in potential
opportunities, in connection with mobility services for exam-
ple. Such risks also exist with investments in startups and in the
context of the restructuring of companies in which a minority
interest is held. Risks from associated companies and joint ven-
tures exist at Mercedes-Benz Cars & Vans, Daimler Trucks
& Buses and Daimler Mobility, as well as at the associated com-
panies and joint ventures directly allocated to the Group.
144
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
The associated companies and joint ventures are subject to a
monitoring process so that, if required, decisions can be made
on whether or not measures can be promptly taken to support
or ensure their profitability. The recoverable value of investments
is also regularly monitored.
The overall assessment of risks and opportunities related to
equity investments and cooperations is unchanged compared
with the previous year.
Financial risks and opportunities
The following section deals with the financial risks and oppor-
tunities of the Daimler Group. Risks and opportunities can
have negative or positive effects on the profitability, cash flows
and financial position of the Daimler Group. The probability
of occurrence and possible impact of these risks and opportu-
nities is presented in table 7 B.73. The probability of occur-
rence and impact of the financial risks and opportunities are
essentially unchanged from the previous year. Only the impact
of country risks has increased from "Low" to "Medium" and
the probability of occurrence of risks from changes in credit
ratings has increased from "Low" to "Medium".
We counter economic, market and competitive fluctuations with
the established time and flexibility instruments to enable us
to react appropriately to the situation. In order to achieve the
long-term reduction in personnel costs necessary for the
transformation, Daimler's management and the General Works
Council have concluded an agreement which includes a staff-
reduction program. As this is based on an agreement that is vol-
untary for both parties, there is a risk that its implementation
may not be able to take place to the full extent planned.
Credit risks
Low
Low
Commodity price risks and opportunities
Daimler is exposed to risks arising from changes in prices
of raw materials in connection with the purchase of production
materials. A small proportion of the raw-material price risks,
primarily from the planned purchase of certain metals, is reduced
through the use of derivative financial instruments.
Credit risks
Credit risk describes the risk of financial loss resulting from a
counterparty failing to meet its contractual payment obliga-
tions. Credit risk includes both the direct risk of default and
the risk of a deterioration in creditworthiness, as well as
concentration risks.
The Group is exposed to credit risks which result primarily from
its financial services activities and from the operations of its
vehicle business. The risks from leasing and sales financing are
dealt with in the "General market risks and opportunities"
section.
Credit risks also arise from the Group's liquid assets. Should
defaults occur, this would adversely affect the Group's financial
position, cash flows and profitability. The limit methodology
for liquid funds deposited with financial institutions has been
continuously further developed in recent years. In connection
with investment decisions, priority is placed on the borrowers'
very high creditworthiness and on balanced risk diversifica-
tion. Most liquid assets are held in investments with an exter-
nal rating of "A" or better.
Country risks
Country risk describes the risk of financial loss resulting from
changes in political, economic, legal or social conditions in the
respective country, for example due to sovereign measures
such as expropriation or a ban on currency transfers. Daimler
is exposed to country risks that primarily result from cross-
border financing or collateralization for Group companies or
customers, from investments in subsidiaries and joint ven-
tures, and from cross-border trade receivables. Country risks
also arise from cross-border cash deposits with financial
institutions. The Group addresses these risks by setting country
limits (e.g. for hard-currency portfolios of Daimler Mobility
companies) and through investment-protection insurance against
political risks in high-risk countries. Daimler also has an inter-
nal rating system that divides all countries in which it operates
into risk categories. The possible impact of country risks
has risen due to the increase in cross-border exposure and a
changed risk situation in various countries.
Risks of restricted access to capital markets
Liquidity risks arise when a company is unable to fully meet its
financial obligations. In the normal course of business, Daimler
uses bonds, commercial paper and securitized transactions, as
well as bank loans in various currencies, primarily with the
aim of refinancing its leasing and sales-financing business. An
increase in the cost of refinancing would have a negative
impact on the competitiveness and profitability of our financial
services business to the extent that the higher refinancing
costs cannot be passed on to customers; a limitation of the
financial services business would also have negative conse-
quences for the vehicle business. Access to capital markets
in individual countries may be limited by government regulations
or by a temporary lack of absorption capacity. In addition,
pending legal proceedings as well as Daimler's own business
policy considerations and developments may temporarily
prevent the company from covering any liquidity requirements
by means of borrowing in the capital markets.
Risks of credit repayment requirements
and the financial services business are coordinated at Group
level. Derivative interest rate instruments such as interest rate
swaps are used to achieve the desired interest rate maturities
and asset/liability structures (asset and liability management).
Daimler may be required to make premature repayment of
special-purpose loans in the case of adverse results of ongoing
legal proceedings. It is to be expected that the resulting refi-
nancing requirement will have to be concluded at a higher cost.
Risks and opportunities relating to pension plans
Daimler has pension benefit obligations and, to a lesser degree,
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pension obligations less
plan assets constitutes the carrying amount or funded status
of those employee benefit plans. The measurement of pension
obligations and the calculation of net pension expense are
based on certain assumptions. Even small changes in those
assumptions such as a change in the discount rate have a
negative or positive effect on the funded status and Group
equity in the current financial year, and lead to changes in
the periodic net pension expense in the following financial year.
The fair value of plan assets is determined to a large degree
by developments in the capital markets. Unfavorable or favor-
able developments, especially relating to equity prices and
fixed-interest securities, reduce or increase the carrying value
of plan assets. A change in the composition of plan assets
can also have a positive or negative impact on the fair value of
plan assets. The broad diversification of investments, the
selection of asset managers on the basis of quantitative and
qualitative analyses, and the ongoing monitoring of returns
and risks contribute to a reduction in the investment risk. The
structure of pension obligations is taken into consideration
with the determination of the investment strategy for the plan
assets in order to reduce fluctuations of the funded status.
Further information on the pension plans and their risks is
provided in Note 22 of the Notes to the Consolidated
Financial Statements.
Further information on financial risks, risk-limiting measures
and the management of these risks is provided in Note 33
of the Notes to the Consolidated Financial Statements. Infor-
mation on the Group's financial instruments is provided in
Note 32 of the Notes to the Consolidated Financial State-
ments.
146
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Legal and tax risks
The Group continues to be exposed to legal and tax risks.
Provisions are recognized for those risks if and insofar as they
are likely to be utilized and the amounts of the obligations
can be reasonably estimated.
Legal risks
Regulatory Risks. The automotive industry is subject to exten-
sive governmental regulations worldwide. Laws in various
jurisdictions regulate occupant safety and the environmental
impact of vehicles, including emissions levels, fuel economy
and noise, as well as the emissions of the plants where vehicles
or parts thereof are produced. In case regulations applicable
in the different regions are not complied with, this could result
in significant penalties and reputational harm or the inability
to certify vehicles in the relevant markets. The cost of compli-
ance with these regulations is significant, and in this context,
Daimler expects a significant increase in such costs.
Risks from legal proceedings in general. Daimler AG and its
subsidiaries are confronted with various legal proceedings,
claims as well as government investigations and orders (legal
proceedings) on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer, sup-
plier and other contractual relationships, intellectual property
rights, warranty claims, environmental matters, antitrust matters
(including actions for damages) as well as shareholder litiga-
tion. Product-related litigation involves claims alleging faults in
vehicles, some of which have been made as class actions.
If the outcome of such legal proceedings is detrimental to
Daimler, the Group may be required to pay substantial
compensatory and punitive damages or to undertake service
actions, recall campaigns, monetary penalties or other costly
actions. Some of these proceedings may have an impact on the
Group's reputation.
Risks and opportunities from changes in credit ratings
Risks and opportunities exist in connection with potential
downgrades or upgrades to credit ratings by the rating agen-
cies, and thus to Daimler's creditworthiness. Downgrades
could have a negative impact on the Group's financing if such
a downgrade leads to an increase in the costs for external
financing or restricts the Group's ability to obtain financing.
A credit rating downgrade could also discourage investors
from investing in Daimler AG.
B | COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 145
High
Opportunities relating to pension plans
Credit opportunities
Country risks
Low
Medium
Country opportunities
Risks of restricted
Opportunities of restricted
capital-market access
Low
High
capital-market access
Risks of credit
Opportunities of credit
repayment requirements
Low
Low
repayment requirements
Risks from changes in credit ratings
Medium
Low
Opportunities from changes in credit ratings
Low
Risks related to pension plans
Low
High
Low
Risks from legal proceedings in connection with diesel
exhaust gas emissions - governmental proceedings.
Daimler is continuously subject to governmental information
requests, inquiries, investigations, administrative orders and
proceedings relating to environmental, criminal, antitrust and
other laws and regulations in connection with diesel exhaust
emissions.
Opportunities related to equity investments and
cooperations
Low
Opportunity category
Impact
Low
High
General market opportunities
Medium
Opportunities relating to the legal
High
and political framework
Medium
High
Impact
Procurement market opportunities
Risk category
General market risks
Risks relating to the legal
and political framework
Medium
Procurement market risks
Medium
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
139
Although oil prices fell significantly last year, if political crises -
especially in the Middle East - and ensuing temporary supply
bottlenecks lead to a significant rise in oil prices that OPEC
countries are unable to offset in the short term, inflation
could rise significantly and adversely affect global growth. More-
over, an escalation of geopolitical conflicts in other regions
of the world could also significantly slow down global economic
growth.
General market risks and opportunities
Medium
The risks and opportunities for the economic development of
automotive markets are strongly affected by the cyclical situa-
tion of the global economy as described above. The assessment
of market risks and opportunities is linked to assumptions
and forecasts about the overall development of markets in the
regions in which the Daimler Group is active. The possibility
of markets developing better or worse than assumed in the plan-
ning, or of changing market conditions, generally exists for all
segments of the Daimler Group.
Probability of occurrence
B.71
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 137
Responsibility for operational risk management and for the
risk management processes lies with the segments, corporate
functions, organizational entities and companies.
Reports regarding the current risk situation and the effective-
ness, functionality and appropriateness of the internal control
and risk management system are regularly presented to the
Board of Management and to the Audit Committee of the Super-
visory Board of Daimler AG, as well as to the Boards of Man-
agement of Mercedes-Benz AG, Daimler Truck AG and Daimler
Mobility AG. Furthermore, the risks and opportunities of busi-
ness operations are regularly discussed by the responsible per-
sons in the Board of Management of the relevant company.
The Audit Committee of the Supervisory Board of Daimler AG
and the committees of the Supervisory Boards of Mercedes-
Benz AG, Daimler Truck AG and Daimler Mobility AG are respon-
sible for monitoring the internal control and risk man-
agement system. The internal auditing department monitors
whether the statutory conditions and the Group's internal
guidelines concerning the internal control and risk management
system of the Group are adhered to. If required, measures
are initiated in cooperation with the respective management.
External auditors audit the system for the early identification
of risks which is integrated in the risk management system for
its general suitability to identify risks threatening the existence
of the Group; in addition, they report to the Supervisory Board
on any significant weaknesses that have been recognized in
the internal control and risk management system.
Risks and opportunities
The following section describes risks and opportunities that
can have a significant influence on the profitability, cash flows
and financial position of the Daimler Group. In general, the
reporting of risks and opportunities takes place in relation to the
individual segments. If no segment is explicitly mentioned, the
risks and opportunities described relate to all the segments.
Reporting on the risks and opportunities takes place in line
with the new corporate structure. As of January 1, 2020, the busi-
ness operations of the Group are managed in the segments
Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks &
Buses and Daimler Mobility. These segments reflect the future
internal reporting and organizational structure. The Mercedes-
Benz Cars and Mercedes-Benz Vans segments are aggregated
in the Mercedes-Benz Cars & Vans reportable segment in line
with the type of products and services offered, their brands,
sales channels and customer profiles.
In addition to the risks and opportunities described below, risks
and opportunities that are not yet known or classified as not
material can influence profitability, cash flows and financial
position.
Industry and business risks and opportunities
The following section describes the industry and business
risks and opportunities of the Daimler Group. A quantification
of these risks and opportunities is shown in table 71 B.71.
Economic risks and opportunities
Economic risks and opportunities constitute the framework for
the risks and opportunities listed in the following categories
and are integrated as premises into the quantification of these
risks and opportunities. Overall economic conditions have a
significant influence on vehicle sales markets and thus on the
Group's success.
Industry and business risks and opportunities
Like the majority of economic research institutes, Daimler
expects the growth of the world economy to continue in 2020
at about the rate of the previous year. At the beginning of
2020, the relationship of risks and opportunities also seems
similar to that in 2019. Economic developments in 2019 are
described in detail in the "Economic Conditions and Business
Development" section of this Management Report; growth
assumptions and forecasts for general developments in 2020
are explained in the "Outlook" section on
and 150 ff.
Although the renewed escalation of the trade conflict between
the United States and China has become less likely with the
conclusion of the "Phase One" partial trade deal, it continues to
be a significant risk for the further development of the world
economy. Furthermore, the threat by the United States to impose
additional tariffs on imported vehicles and parts, including
from the European Union, still exists. These two factors could
significantly affect the development of unit sales and earnings,
especially at Mercedes-Benz Cars & Vans. In addition, there is
a danger that countries will implement increasingly protec-
tionist measures such as specific market-access barriers or
industry-political concepts. This would have significant
impacts on the global value chains at Mercedes-Benz Cars
& Vans and Daimler Trucks and Buses, leading to higher
costs and adversely affecting business developments and
sales possibilities. On the other hand, unforeseen trade
facilitations could provide positive impulses and lead to more
trade and higher growth. In that case, the Daimler Group
could also benefit.
Even without a further escalation of the various trade conflicts,
the ongoing uncertainty could ensure that the global investment
cycle weakens even more than previously assumed. A further
slowdown in investment activity - particularly in North Amer-
ica and Europe - would adversely affect the unit sales of
heavy-duty commercial vehicles in particular and would there-
fore have a particularly negative impact on the unit sales and
profitability of Daimler Trucks & Buses.
If the recession, which has so far been limited to the industrial
sector, spreads more to the service sector and spreads even
more than before to the United States, in addition to the euro
zone and China, this would have noticeable effects on employ-
ment and wages in those regions. This would have a significant
impact on consumer confidence and consumption, one of the
most important drivers of the current economic expansion. The
resulting lower growth or even decline in overall economic
consumption would have a correspondingly negative impact on
the sales prospects of Mercedes-Benz Cars & Vans in parti-
cular. Opportunities would arise, however, if the cyclical down-
turn in the industry ended earlier than expected.
138
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
The European market will continue to be of great importance
for all segments of the Daimler Group in the future, so changes
in investment and consumer behavior will affect the develop-
ment of unit sales in all segments. The risk of a disorderly with-
drawal of the United Kingdom from the European Union
due to the Brexit of January 31, 2020 and the related exit agree-
ment no longer exists. However, uncertainty is now likely to
shift to the negotiations on a future agreement between the UK
and the EU, which according to the transitional agreement
would have to be concluded by the end of 2020 in order to pre-
vent customs duties as of January 2021. These negotiations
are likely to be very difficult and connected with a high degree
of political uncertainty. In extreme cases, renewed distortions
in the European financial markets and corresponding decreases
in economic growth are to be expected. This would signifi-
cantly impact growth above all in the United Kingdom, with an
adverse effect on the development of the Group's unit sales
across all segments. In the euro zone, the risk of political con-
flicts also remains increased. Phases of political uncertainty
could have a negative impact on consumption and investment
decisions by households and companies. On the other hand,
if there is concerted fiscal stimulus in the euro zone or if the
ECB's expansionary measures have a greater impact than
currently assumed, this could lead to a stronger recovery in
growth, with positive effects on companies and households.
In the United States, political uncertainty in the run-up to the
presidential elections and ongoing trade tensions could lead to
a more pronounced reduction in corporate investment than
previously assumed. This would have a particularly negative
effect on the unit sales of the Daimler Trucks & Buses seg-
ment. If, as already mentioned, the overall economic growth
slowdown were to be more pronounced than previously
expected, consumption by private households would also suf-
fer significantly due to negative employment and income
effects. This in turn could have a negative impact on the unit
sales of Mercedes-Benz Cars & Vans. On the opportunities
side, economic and fiscal policy in the run-up to the presidential
election could turn out to be more expansive than previously
assumed. In addition, the US central bank could further reduce
key interest rates, contrary to current expectations. If invest-
ment activity should subsequently become significantly more
dynamic, resulting in stronger growth combined with positive
employment and income effects, demand could benefit in all
automotive segments. As Mercedes-Benz Cars & Vans,
Daimler Trucks & Buses and Daimler Mobility generate substan-
tial proportions of their revenues in the United States, these
developments would have considerable consequences for the
Group's success. Furthermore, stronger economic growth in
the United States would also have spillover effects on the rest
of the world.
In general, public and private debt remains high in many econ-
omies. In the event of a more pronounced economic downturn,
this could limit the scope for governments to take fiscal coun-
termeasures or lead to increased defaults by companies and
households. This would lead to increased instability in the finan-
cial markets and also adversely affect overall economic demand,
with negative effects on the unit sales of the Daimler Group's
segments.
From an economic perspective, the high indebtedness of Chi-
nese companies, especially state-owned enterprises, also
represents a considerable risk. If the government's efforts to
restrict credit growth in combination with the negative impact
of US tariffs on imports from China lead to a more significant
growth slowdown than currently expected, this could result in
an excessive increase in credit defaults, which would then lead
to turbulences in the banking sector and the financial markets.
In particular at the Mercedes-Benz Cars & Vans segment, for
which China is now one of the biggest sales markets, the afore-
mentioned risks could result in significant negative effects on
unit sales. On the other hand, growth in 2020 triggered by
further stimulus measures by the Chinese government could turn
out to be stronger than expected. The resulting stronger growth
in overall economic consumption would offer additional oppor-
tunities, especially for Mercedes-Benz Cars & Vans.
The outbreak of the coronavirus may result in macroeco-
nomic risks that could lead to significant reductions in eco-
nomic growth in China, other Asian economies and also
worldwide. Risks for the Daimler Group may not only affect
the development of unit sales, but may also lead to significant
adverse effects on production, the procurement market and
the supply chain.
Another risk is that the pressure on the emerging markets
could intensify further if underlying sentiment in the financial
markets deteriorates significantly. In such a case, even more
capital would flow out of the emerging markets. Growth in the
emerging markets would then be significantly weaker and
put pressure on global growth. Furthermore, changes in central-
bank policy in the developed and emerging markets to support
economic development (such as currency devaluation) entail a
high risk. Although the risk of a debt crisis in the emerging
markets - triggered by US interest-rate rises and the resulting
higher interest burden due to the predominance of US dollar
debt has recently been reduced by the US Federal Reserve's
shift to a looser monetary policy, it has not been fully resolved.
Possible crises in individual countries would have a noticeable
impact on sales prospects in those markets and possible also
on conditions for the Group's local operations.
pages 65 ff
Potential effects of the risks on the development of unit
sales are included in risk scenarios. Increasing customer
demand for model series with lower profit margins can have
a negative impact on the earnings of the segments concerned.
Causes of declining vehicle sales may result in particular from
the partially unstable economic environment and in the context
of political or economic uncertainties. A rising oil price and
volatile exchange rates can also lead to market uncertainty and
thus to falling demand. Differences between the segments
exist due to the partly varying regional focus of their activities.
The development of markets, unit sales and inventories is
continually analyzed and monitored by the segments; if neces-
sary, specific marketing and sales programs are implemented.
Volatilities with regard to market developments can also lead to
the overall market or regional conditions for the automotive
industry developing better than assumed in the internal fore-
casts and premises, and business opportunities in the market.
Opportunities may also arise from an improvement in the com-
petitive situation or a positive development of demand for
the segments, utilization of which is supported by sales and
marketing campaigns.
Due to the partly difficult financial situation of some dealerships
and vehicle importers, support actions might become nec-
essary to ensure the performance of the business partners. The
financial situation of strategically relevant dealerships and
vehicle importers is continuously monitored; if necessary, alter-
native sales channels are created. Further risks result from
the dependency on certain dealerships, so in certain circum-
stances, relationships with new business partners may have
to be developed. The loss of important dealerships and vehicle
importers can lead to customer demand not being fully served
and lower unit sales. Risks of this kind exist for dealerships and
vehicle importers of Mercedes-Benz Cars & Vans and Daimler
Trucks & Buses.
Production and technology risks and opportunities
Key success factors for achieving the desired level of prices for
the products of the Daimler Group - and hence for the achieve-
ment of corporate targets are brand image, design and quality,
and thus the acceptance of products by customers, as well
as technical features based on innovative research and develop-
ment. Technical solutions, for example support accident-free
driving or further improve the products' fuel consumption and
emissions, such as hybrid or electric vehicles, are of key
importance for safe and sustainable mobility. Innovations and
technology opportunities for the progressive and future-
oriented design of the product range are integrated in the
strategic product planning of the automotive segments.
As a result of increasing technical complexity, the continually
rising extent of requirements in terms of emissions, fuel con-
sumption and safety, as well as meeting and steadily raising
the Daimler Group's quality standards, production and tech-
nology risks exist for product launches and manufacturing in
the automotive segments.
In the context of product launches, the required parts and
equipment components have to be available. To avoid restrictions
in this context, the related processes are continuously evalu-
ated and improved. In order to secure and enhance the long-term
future viability of production facilities, modernization, expan-
sion, construction and restructuring measures are carried out
as required. The execution of modernization activities and
the launch of new products are generally connected with high
investments. For example, delays in the ramp-up phase of an
innovation or during a product's lifecycle can lead to inefficien-
cies in the production process and as a consequence to a
temporary reduction in production volumes. Late design changes
in the development process, for example in connection with
new regulatory requirements, as well as quality or availability
problems of supplied vehicle components can have a negative
impact on production ramp-ups. Furthermore, the planned
increase in battery production due to the increasing electrifica-
tion of the vehicle fleet means that initial problems during
the production of the various battery types and possible tech-
nical limitations on battery lifecycles cannot be ruled out.
Affected are those automotive segments which are currently
launching a new product or have planned a related production
ramp-up. In this context, it is also necessary to consider depen-
dencies on contractual and cooperation partners, as well
as possible changes in regional conditions, which have to be
included in the local decision-making process.
In principle, there is a danger that reduced plant availability or
the failure of production equipment or production plants
may cause internal bottlenecks that would consequently gener-
ate costs. These risks mainly exist for Mercedes-Benz Cars
& Vans. The production equipment is continuously maintained
and modernized. As a precaution, spare parts are held avail-
able or, if required, redundant machines are purchased for the
production plants that might be at risk.
Capacity restrictions in the production of batteries, interrup-
tions in the supply chain and possible interruptions in supply
by energy providers can lead to bottlenecks, especially at
Mercedes-Benz Cars & Vans. Restrictions on certain equipment
components in new vehicle models and the lack of availability
of vehicle parts at the right time also mean that vehicles cannot
be handed over to customers as planned. In order to avoid
such bottleneck situations, importance is placed upon being
able to compensate for capacity constraints through forward
planning. In addition, supply chains and the availability and qual-
ity of products are continuously monitored within the context
of managing the entire value chain. Supplier management is
undertaken for the prevention of risks with the aim of ensuring
the quantity and quality of the components required to
manufacture the vehicles. The lack of availability and quality
problems with certain vehicle parts can lead to production
downtimes and cause costs.
Warranty and goodwill cases could arise in the Daimler
Group if the quality of the products does not meet the require-
ments, regulations are not fully complied with, or support
cannot be provided in the required form in connection with prod-
uct problems and product care. Quality problems both with
components in vehicles from external suppliers and in connec-
tion with technical innovations in vehicles may require adjust-
ments that can lead to considerable expenses. Possible claims
in connection with such risks are examined and, if necessary,
the appropriate measures are initiated for the affected products.
If the high technical quality standards of purchased compo-
nents are not fulfilled, this can lead to Daimler asserting claims
against the respective supplier.
The probability of occurrence and possible impact of production
and technology risks are unchanged compared to the previous
year across all segments.
B.72
Company-specific risks and opportunities
Risk category
Probability of occurrence
Impact
-
Opportunity category
Low
Information technology risks
Low
High
High
Personnel risks
Medium
Medium
Production and technology opportunities
Information technology opportunities
Personnel opportunities
Low
Risks related to equity investments and
cooperations
Impact
The following section describes the company-specific risks
and opportunities of the Daimler Group. A quantification of
these risks and opportunities is shown in table 71 B.72.
Company-specific risks and opportunities
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
The launch of new products by competitors, more aggressive
pricing policies and poorer price enforcement in the aftersales
business can lead to increasing competitive and price pres-
sure in the automotive segments. Continuous monitoring of
competitors is carried out in order to recognize these risks
at an early stage. Depending on the situation, product-specific
and possibly regionally different measures are taken to sup-
port weaker markets. Daimler also applies various programs to
boost sales, which include financial incentives for customers.
In connection with the sale of vehicles, Daimler offers its cus-
tomers a wide range of financing and leasing options. The
resulting risks for the Daimler Mobility segment are mainly due
to borrowers' worsening creditworthiness, so receivables
might not be recoverable in whole or in part because of cus-
tomers' insolvency (default or credit risk). Daimler counter-
acts credit risks by means of creditworthiness checks on the
basis of standardized scoring and rating methods, the collat-
eralization of receivables, as well as an effective risk manage-
ment with a firm focus on monitoring both internal and macro-
economic leading indicators.
In connection with leasing agreements, risks and opportunities
arise if the market value of a leased vehicle at the end of the
agreement term differs from the residual value originally calcu-
lated and forecasted at the time the agreement was con-
cluded and used as a basis for the leasing installments. A resid-
ual-value risk arises if the expected market value of a vehicle
at the end of the contract term is lower than the residual value
calculated and forecasted when the contract was concluded.
Particularly at Mercedes-Benz Cars & Vans and Daimler Mobility,
risks therefore result from the development of the used car
markets and thus from the residual values of the vehicles pro-
duced. Above all, the existing uncertainties in connection
with diesel vehicles can have a negative impact on residual val-
ues. As part of the established residual-value management
process, certain assumptions are made at local and corporate
levels regarding the expected level of prices, based upon
which the cars to be returned in the leasing business are evalu-
ated. If changing market developments lead to a negative
deviation from assumptions, there is a risk of lower residual
values of used cars. This can adversely affect the proceeds
from the sale of used cars. Appropriate measures are defined
to counteract these risks. Depending on the region and the
current market situation, the measures taken generally include
continuous market monitoring as well as, if required, price-
setting strategies or sales promotion measures designed to
regulate vehicle inventories. The quality of market forecasts
is verified by periodic comparisons of internal and external
sources, and, if required, the determination of residual
values is adjusted and further developed with regard to methods,
processes and systems. On the other hand, opportunities can
arise from a positive development of residual values caused by
a favorable market environment for used vehicles as well as
lower price reductions granted on new vehicles.
140
In addition, a residual-value risk from non-Daimler vehicles
exists for the Daimler Mobility companies that operate com-
mercial fleet management and leasing management, because
most of those vehicles are not covered by manufacturers'
residual-value guarantees. The negative development of sale
prices for used cars on stock can adversely affect earnings.
Residual-value risk is taken into account through a high level of
diversification with regard to brands, regions, customers and
lease periods. Used vehicle prices are continually monitored
both locally and centrally, so that the residual-value risk from
a drop in market prices can be forecasted in good time and suit-
able countermeasures may be initiated.
Across all segments, the assessment of general market risks is
unchanged compared to the previous year. However, due to
increasing political and economic uncertainty, the impact of mar-
ket opportunities has increased from "Low" to "Medium"
due to a potential increase in demand in the automotive seg-
ments. The risks and opportunities shown in the previous
year under "Risks and opportunities relating to the leasing and
sales-financing business" have been integrated into the sec-
tion "General market risks and opportunities" for the current
financial year.
Risks and opportunities related to the legal and political
framework
The automotive industry is subject to extensive governmental
regulation worldwide. Risks and opportunities from the legal
and political framework have a considerable impact on Daimler's
future business success. Regulations concerning vehicles'
emissions, fuel consumption, safety and certification, as well
as tariff aspects, play a particularly important role. Complying
with these varied and often diverging regulations all over the
world requires strenuous efforts on the part of the automotive
industry. In the future, Daimler expects to spend an even larger
proportion of its research and development budget to ensure
compliance with these regulations. The possible impact and prob-
ability of occurrence of risks from the legal and political frame-
work is unchanged compared to the previous year. However, the
assessment of the possible impact of the opportunities has
increased from "Low" to "Medium".
Many countries and regions have already implemented stricter
regulations to reduce vehicles' emissions and fuel con-
sumption or are currently preparing such laws. For example,
they relate to the environmental impact of vehicles, including
emission levels, fuel economy and noise, as well as pollutants
from the emissions caused by production facilities. Noncom-
pliance with regulations applicable in the various regions might
result in significant penalties and reputational harm. In case
of violations of regulations concerning vehicles' environmental
compatibility, it might even mean that vehicles could not or
could no longer be registered in the relevant markets. In addi-
tion, the risk exists that vehicles already in the markets will
have to be rectified. The cost of compliance with these regula-
tions is significant, especially for conventional engines, and
Daimler expects a further increase in costs in this context.
Mercedes-Benz Cars & Vans faces risks with respect to regu-
lations on mandatory targets for the average fleet fuel con-
sumption and CO2 emissions of new vehicles. Especially in the
markets of China, Europe and the United States Daimler gives
these targets due consideration in its product planning. The
increasingly ambitious targets require significant proportions
of actual unit sales of plug-in hybrids or cars with other types
of electric drive. The ambitious statutory requirements will
be difficult to fulfill in some countries. The market success of
these drive systems is greatly influenced not only by customer
acceptance but also by regional market conditions, like for exam-
ple the battery-charging infrastructure and state support.
As the negative headlines on diesel engines and the implemen-
tation of driving bans on diesel vehicles unsettle customers, this
can result in lasting shifts in the drive-system portfolio (fewer
diesel and more gasoline engines). This would require additional
cost-intensive development and production measures in order
to meet the CO2 fleet limits applicable as of 2020.
The EU Commission is still revising, and amending or supple-
menting, the framework conditions for the WLTP measurement
method, which has been applicable since September 2018.
This may result in increased and additional WLTP testing and
documentation costs.
Due to a procedural error in the legislation, the Court of the
European Union has at first instance annulled parts of the Real
Driving Emissions (RDE) legislation and has given the legisla-
tors 12 months from the date of the decision on the appeal to
amend the contested parts of the regulation. If the appeal
against the ruling is unsuccessful, the new regulation could pose
significant risks to the eligibility of vehicles for registration,
also of the Daimler Group. In the worst case, the new vehicles
concerned, also of the Daimler Group, would no longer be
allowed to be registered and operated throughout the EU. In
parallel with these proceedings, a solution acceptable to all
sides is being sought in the political process (trilogue).
Strict regulations for the reduction of vehicles' emissions and
fuel consumption also create potential risks for Daimler
Trucks & Buses, because it will be difficult to fulfill the statu-
tory requirements in some countries. Above all this applies
to the markets of Japan, the United States, China and Europe.
The European Commission has developed a method for deter-
mining the CO2 emissions of heavy commercial vehicles, named
VECTO, the application of which has been mandatory for the
most important vehicle categories since January 1, 2019. The
prescribed level of CO2 reduction in Europe of 15% by 2025
and 30% by 2030, in each case compared to the new-vehicle
fleet in the period of July 2019 to June 2020, cannot be achieved
with conventional technology alone. Daimler Trucks & Buses
will therefore have to apply the latest technologies in order to
fulfill these requirements. Achieving the 2025 target will
require significant shares of battery-electric trucks or other
electrified drive systems in the actual market, which may
only be achievable at higher costs.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT 141
The position of the Daimler Group in key foreign markets could
also be affected by an increase in or changes in free-trade
agreements. If free-trade agreements are concluded without
the participation of countries in which Daimler has production
facilities, this could result in a competitive disadvantage for
Daimler compared with competitors that produce in those
countries that participate in the free-trade agreements. In addi-
tion, if the content of the free-trade agreements currently
used by Daimler is made significantly stricter, this could also
significantly impair the position of the Daimler Group, as the
Group could no longer benefit from those free-trade agree-
ments. At the same time, however, the conclusion of new free-
trade agreements could also result in opportunities for the
Daimler Group vis-à-vis its competitors, if the competitors do
not produce in the countries concerned, but Daimler does.
The danger exists that individual countries will attempt to
defend and improve their competitiveness in the world's markets
by resorting to interventionist and protectionist measures.
Furthermore, interruptions in the supply chain due to potential
trade conflicts cannot be ruled out. Industrial policy mea-
sures are intended to attract investment into a country and
increase local value added along the entire value chain. This
can lead to increased costs if production facilities have to be
established or expanded or local purchasing has to be
increased. In addition, attempts are being made to limit growth
in imports through barriers to market access such as by
making certification processes more difficult, delaying certifica-
tion and imposing other complicated customs procedures.
These measures generally exacerbate uncertainties in the plan-
ning process; they can also lead to lower unit sales if importing
is made more difficult.
In addition to the described emission and fuel-consumption
regulations, traffic-policy restrictions for the reduction
of traffic jams, noise and emissions are becoming increasingly
important in cities and urban areas worldwide. This develop-
ment can have a dampening effect on the development of unit
sales, especially in growth markets. Pressure to reduce per-
sonal transport is increasingly being applied in European cities
through discussions of bans on vehicles entering or driving in
inner cities, especially those with diesel engines. These devel-
opments may dampen the development of unit sales, espe-
cially in the growth markets. In European cities, discussions
about driving bans are increasingly intensifying the pressure
to reduce individual transport, especially for vehicles with diesel
engines. This may in turn lead to more demand for vehicles
with alternative drive systems.
Daimler continuously monitors the development of statutory and
political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in the pro-
cess of product development. The great challenge of the com-
ing years will be to offer an appropriate range of drive systems
and the right product portfolio in each market.
Procurement market risks and opportunities
Procurement market risks arise for the automotive divisions
in particular from fluctuations in prices of raw materials and
energy. There are also risks of financial bottlenecks of suppli-
ers, and of capacity bottlenecks caused by supplier delivery fail-
ures or by insufficient utilization of production capacities at
suppliers. Potential claims from suppliers due to the premature
termination of development and production agreements by
the Daimler Group may also lead to decreased earnings. This
risk situation has not changed in terms of probability of occur-
rence and possible impact compared to the previous year. The
impact of the opportunities is also unchanged.
The automotive segments of the Daimler Group require certain
raw materials for the manufacture of vehicle components and
vehicles, which are purchased on the world market. The level of
costs depends on the price development of raw materials.
Due to largely unchanged macroeconomic conditions, price fluc-
tuations are expected with uncertain and inconsistent trends
also for the year 2020. For example, raw-material markets can
be impacted by political crises and uncertainties - combined
with possible supply bottlenecks - as well volatile demand for
specific raw materials. Potential tariff increases for certain
raw materials as a result of increasing protectionist tendencies
worldwide can have a negative impact on price developments.
In general, the ability to pass on the higher costs of commodities
and other materials in form of higher prices for manufactured
vehicles is limited because of strong competitive pressure in the
international automotive markets. Rising raw-material prices
may therefore have a negative impact on the margins on the
vehicles sold and thus lead to lower earnings in the respective
segment.
The financial situation of some suppliers remains tense due to
the gloomy market environment. The resulting possible pro-
duction losses at suppliers may cause an interruption in the
supply chain of the Daimler Group's automotive segments
and prevent vehicles from being completed and delivered to
customers on time. In order to counteract such interruptions
in the supply chain, support measures may be necessary to
ensure production and sales by suppliers. Supplier risk man-
agement aims to identify potential financial bottlenecks for
suppliers at an early stage and to initiate suitable counter-
measures. Specifically, depending on the warning signals
recorded and the internal classification, regular reporting dates
are agreed upon for suppliers at which key performance indi-
cators are reported to Daimler and any support measures can
be determined if necessary.
Due to the planned electrification of new model series and a
shift in customer demand from diesel to gasoline engines,
Mercedes-Benz Cars & Vans in particular is faced with the risk
that Daimler will require changed volumes of components
from suppliers. This could result in over- or under-utilization
of production capacities for certain suppliers. If suppliers
cannot cover their fixed costs, there is the risk that they may
demand compensation payments. Necessary capacity expan-
sion at suppliers' plants could also require cost-effective par-
ticipation.
142
Medium
Several federal and state authorities and other institutions
worldwide have inquired about and/or are/have been conduct-
ing investigations and/or administrative proceedings, and/or
have issued administrative orders or, in the case of the Stuttgart
district attorney's office, a fine notice. These particularly
relate to test results, the emission control systems used in
Mercedes-Benz diesel vehicles and/or Daimler's interaction
with the relevant federal and state authorities as well as related
legal issues and implications, including, but not limited to,
under applicable environmental, criminal and antitrust laws.
These authorities and institutions include, amongst others,
the U.S. Department of Justice ("DOJ"), which has requested
that Daimler conduct an internal investigation, the U.S.
Environmental Protection Agency ("EPA"), the California Air
Resources Board ("CARB") and other US state authorities,
the European Commission, the German Federal Cartel Office
("Bundeskartellamt") as well as national antitrust authorities
and other authorities of various foreign states as well as the
German Federal Ministry of Transport and Digital Infrastruc-
ture ("BMVI") and the German Federal Motor Transport Author-
ity ("KBA"). In the course of its formal investigation into possible
collusion on clean emission technology, the European Com-
mission sent a statement of objections to Daimler and other
automobile manufacturers in April 2019. In this context,
Daimler filed an application for immunity from fines (leniency
application) with the European Commission some time ago.
The Stuttgart district attorney's office is conducting criminal
investigation proceedings against Daimler employees on
the suspicion of fraud and criminal advertising, and, in May 2017,
searched the premises of Daimler at several locations in Ger-
many. In February 2019, the Stuttgart district attorney's office
also initiated a formal investigation proceeding against
Daimler AG with respect to an administrative offense. In Sep-
tember 2019, the Stuttgart district attorney's office issued
a fine notice against Daimler based on a negligent violation of
supervisory duties in the amount of €870 million which has
become legally binding, thereby concluding the administrative
offense proceedings against Daimler. Daimler continues to
fully cooperate with the authorities and institutions. Irrespective
of such cooperation and in light of the recent developments,
it is possible that further regulatory, criminal and administrative
investigative and enforcement actions and measures relating
to Daimler and/or its employees will be taken or administrative
orders will be issued. Such actions, measures and orders may
include subpoenas, that is, legal instructions issued under pen-
alty of law in the process of taking evidence, or other requests
for documentation, testimony or other information, or orders
to recall vehicles, further search warrants, a notice of violation
or an increased formalization of the governmental investigations,
coordination or proceedings, including the resolution of pro-
ceedings by way of a settlement. Additionally, further delays in
obtaining regulatory approvals necessary to introduce new or
recertify existing vehicle models could occur.
Production and technology risks
In a still weak overall economic environment in the EU30
region, we expect demand for heavy-duty trucks to decrease
significantly compared with the robust prior-year level. In
Brazil, sales of heavy trucks are only likely to remain close to
the level of 2019 after the lively recovery of recent years.
At Mercedes-Benz Cars, positive effects will result from a more
favorable sales structure for our cars. There should be support-
ing effects for both cars and vans from measures for efficiency
improvements, especially significant material-cost savings and
improved personnel costs. There will be negative effects, how-
ever, from the continuation of very high expenditure for new
technologies and vehicles, especially the expenses incurred to
meet the CO2 targets.
Daimler Trucks & Buses: adjusted return on sales of 5%
Daimler Mobility: adjusted return on equity of 12%
Mercedes-Benz Cars & Vans: adjusted return on sales
of 4 to 5%
The individual divisions have the following expectations for
adjusted returns in 2020:
For the transparent presentation of the ongoing business, as of
the year 2020, we will calculate and forecast adjusted return
on sales for Mercedes-Benz Cars & Vans and Daimler Trucks &
Buses and adjusted return on equity for Daimler Mobility. For
the two automotive divisions, we will also forecast an adjusted
cash conversion rate, which is derived from the adjusted cash
flow before interest and taxes (CFBIT) and adjusted EBIT. The
adjustments include individual items if they lead to material
effects in a reporting period. These individual items relate in
particular to legal proceedings and related measures, restruc-
turing measures and M&A transactions. Further information on
the management system is provided on
pages 63f.
153
B | COMBINED MANAGEMENT REPORT | OUTLOOK
On the basis of the market developments we anticipate, the
aforementioned factors and the planning of our divisions, we
assume that Group EBIT in 2020 will be significantly above
the level of 2019, which was affected by numerous material
adjustments.
Despite the expectation of unit sales slightly below and revenue
at the prior-year level, we anticipate significant earnings
growth for the Daimler Group in 2020, after EBIT in 2019 was
adversely affected by a number of material adjustments.
This includes the Daimler Trucks & Buses and Daimler Mobility
divisions with decreases in EBIT. The first positive effects on
earnings should already occur in 2020 from the significant effi-
ciency measures that have already been taken at all divisions,
such as savings in personnel and material costs, portfolio and
model adjustments, the ongoing implementation of platform
strategies and the stricter allocation of capital. However, these
measures will only take full effect in subsequent years. On the
other hand, restructuring measures and the job cuts that have
been initiated will have a negative impact on earnings in 2020.
We are standardizing and modularizing our production processes
throughout the Group. In this context, we are making intelli-
gent use of vehicle platforms, allowing us to achieve further cost
advantages. In parallel, we are pushing forward with digital
connectivity in all divisions and at all stages of the value chain
- from development to production to sales and service. In this
way, we are opening up additional scope to become even faster,
more flexible and more efficient to the benefit of our custom-
ers. However, earnings will be reduced by the continuation of
high expenditure: for innovative technologies (especially for
reducing fuel consumption and for electrification), for the digi-
tization of our products and processes, and for the expansion
and modernization of our worldwide production capacities.
We assume that the Daimler Group will generate revenue in
2020 at the level of the previous year. Also Mercedes-Benz
Cars & Vans as well as Daimler Mobililty expect revenue at the
previous year level, while Daimler Trucks & Buses anticipates
a significant revenue decrease.
Revenue and earnings
Daimler Trucks & Buses should also benefit from efficiency-
improving measures, in particular reduced variable costs and
lower personnel costs. Opposing effects will result, however,
from the expected market contractions in the NAFTA and EU30
regions, as well as from the continuation of high expenditure
for new technologies and vehicles.
On the basis of our assumptions concerning the development
of automotive markets and the divisions' planning, we expect
the Daimler Group to achieve unit sales in 2020 slightly below
the level of the previous year.
Daimler Mobility expects a slight decrease in new business
and a contract volume at the prior-year level in 2020. We
aim to utilize new market potential through more flexible leas-
ing and rental products with the option of switching to new
Daimler Buses assumes that it will be able to defend its market
leadership in its most important traditional core markets for
buses above 8 tons. We anticipate slight growth in total unit
sales in 2020.
Following the strong demand of recent years, the normalization
of major truck markets will affect sales at Daimler Trucks
in 2020. The division expects a slight decrease in unit sales in
2020. This development will be primarily influenced by expec-
tations for the North American and European markets.
Unit sales at Mercedes-Benz Vans in 2020 are anticipated to
be slightly below the prior-year level.
The smart brand will change over fully to electric drive in the
year 2020. The battery-electric smart models make entry into
electric mobility more attractive than ever before. They com-
bine the agility of the smart with locally emission-free driving -
an ideal combination for urban mobility. The focus on electric
models only will lead to lower unit sales of the smart brand.
We are systematically expanding our global production net-
work for electric mobility. The product and technology brand
EQ, which stands for electric intelligence, offers vehicles with
all-electric drive. We intend to electrify the entire portfolio of
Mercedes-Benz Cars by 2022. By 2025, we assume that up to
25% will be purely electric cars. By 2030, plug-in hybrids and
all-electric models should account for more than 50%.
While we continue to renew our attractive and innovative model
portfolio at Mercedes-Benz, we plan to launch more than half
a dozen new and upgraded cars in 2020. Above all, the new GLA
should continue to have a positive impact on sales. We are
well positioned also in the strong upper mid-range segment in
2020, due in particular to the new GLE Coupe and the model
update of the E-Class family. Mercedes-AMG should be a guar-
antee for our success in the high-performance segment once
again in 2020. More and more customers are enthusiastic about
the attractive and broad range of vehicles offered by our sports-
car and high-performance brand, which we are continually
developing.
Unit sales at Mercedes-Benz Cars in 2020 are anticipated to
be slightly below the prior-year level. This reflects the complete
change in the business model at smart to focus on electric
models only and a preliminary estimate of possible effects from
the coronavirus outbreak both on the supply chain and the
automotive markets.
Unit sales
B | COMBINED MANAGEMENT REPORT | OUTLOOK
152
vehicles at shorter intervals. And we intend to make use of
additional market opportunities by expanding our online sales
channels and with telematics-based products for insurance
and fleet management. We continue to see good growth oppor-
tunities also in the mobility segment.
We expect the market volume for buses in both the EU30
region and Brazil to be slightly below the level of 2019.
With regard to the adjusted return on equity expected for
Daimler Mobility, there will be positive effects from the fleet-
management business and the focus of our mobility services,
as well as negative effects from the normalization of credit-risk
costs and slightly lower interest income. In addition, a higher
equity ratio due to stricter regulatory requirements will have a
negative impact on the adjusted return on equity.
The free cash flow of the industrial business will continue to
be adversely affected by high advance expenditure for new
products and technologies, although this should have reached
its highest level in 2019. Nonetheless, we expect the free cash
flow of the industrial business to be significantly higher than in
the previous year. This does not take into account possible
expenses relating to legal and governmental proceedings.
Forward-looking statements
In view of the challenging environment and the expected changes
in mobility, we are consistently implementing our sustainable
business strategy and thus shaping the transformation of the
automotive industry from a leading position. Accordingly, our goal
is to continue to be a leading vehicle manufacturer and at the
same time to develop into one of the leading providers of con-
nected mobility. In this way, we again achieved a number of pio-
neering milestones in 2019. And against this backdrop, we look
forward with confidence to a challenging year 2020. While we
expect the Group's unit sales to slightly decrease and Group reve-
nue to be in the magnitude of the previous year, we anticipate a
significant increase in Group EBIT compared with the figure for
2019, which was impacted by numerous material adjustments.
The transformation is a long-term process of adjustment in
which we want to implement our structures and processes
together with our employees. With a workforce that is agile
and willing to learn, we will develop the necessary skills for the
new requirements. Our corporate culture creates the basis for
the outstanding innovative strength of our employees. We live
diversity. Integrity is our inner compass. It guides our actions
and the relationships with our business partners.
The customer is at the center of our considerations, whereby
the further development of our brand plays a decisive role. In
Interbrand's current Best Global Brands 2019 ranking, the
Mercedes-Benz brand is the world's most successful and valu-
able premium automotive brand. We want to make our brand
even more unique in the future and position it in an even more
customer-oriented manner. Especially in times of transforma-
tion, the emotional bond with our customers is more important
than ever. Also with our commercial vehicles, our efforts focus
on the customers and their benefits. We are developing tech-
nologies to further improve the total cost of transport and to
develop safe and efficient solutions for the transportation and
haulage tasks of the future.
As the inventor of the automobile, it is in our nature to con-
stantly reinvent mobility. We aim to offer sustainable solutions
for the mobility and goods transport of the future. We want to
inspire emotionally and convince rationally. With our Mercedes-
Benz automobiles, we are following this path with the goal of
combining sustainability and modern luxury. And in the trans-
portation and haulage business, we want to make our custom-
ers successful with innovative and highly efficient commercial
vehicles.
develop new technologies and share development costs. In this
way, we intend to continue our profitable growth in the
medium term and to strengthen our leading position worldwide
in all divisions.
The conditions for our business at the beginning of 2020 are
less favorable than in the previous year. Financial challenges
are greater than ever due to the necessary transformation for
a CO2-neutral future. This requires high levels of investment in
electric mobility and wide-ranging structural adjustments. We
are therefore systematically implementing our "Ambition 2039"
for CO2-neutral mobility. In this context, we will utilize the
potential offered by automated driving and digital services. The
achievement of an appropriate return and a solid cash flow
have absolute priority. This is the only way for us to play a lead-
ing role in the transformation for a CO2-neutral future. Com-
prehensive efficiency measures have therefore been defined at
all divisions and at Daimler AG. The allocation of financial
resources is managed transparently and stringently at the level
of the parent company. Together with partners, we plan to
Overall statement on future development
The Daimler Trucks & Buses division plans on research and
development expenditure at the prior-year level. The focus will
be on the development of new technologies, among other
things, for the automation and connectivity of trucks and buses
and for a fleet that is CO2-neutral in driving operation (tank-to-
wheel) by means of electric drive (battery power and fuel
cells). In the long term, we anticipate considerable business
potential with highly automated trucks (SAE Level 4) in "Hub-
2Hub" applications on US highways between logistics centers.
Another important area is the development of successor gen-
erations for existing products, with a focus on the segment
of heavy-duty trucks, as well as on tailored products and tech-
nologies for major growth markets.
At Mercedes-Benz Cars & Vans, a large proportion of the
research and development expenditure in 2020 will be for
developing the model range of the EQ product and technology
brand, especially in the related development of a new platform
for vehicles with all-electric drive and in the areas of digitiza-
tion and automated and autonomous driving, which, along with
electric mobility, are increasingly gaining importance. For cars,
expenditure will decrease compared with the previous year for
the successor model to the current S-Class and for the new
compact cars. The Mercedes-Benz Cars & Vans division there-
fore anticipates a slight decrease in research and development
expenditure compared with the prior-year volume.
the continuous increase in recent years, the volume of research
and development expenditure should have reached a plateau in
2019. Against the background of a focused and efficient appli-
cation of funds, research and development expenditure in 2020
should therefore be in the magnitude of the previous year.
Free cash flow and liquidity
With our research and development activities, our goal is to
further strengthen Daimler's competitive position against the
backdrop of upcoming technological challenges. With new
and attractive products, we want to inspire our customers and
utilize the growth opportunities offered by worldwide automo-
tive markets. We are focusing on the strategic areas for the
future of connectivity, automated and autonomous driving, and
in particular the development of electric drive systems. After
Against the backdrop of the technological changes taking
place in the transport industry, a large part of the investment
by Daimler Trucks & Buses in 2020 will be for automated driv-
ing and electric mobility. In addition, the division will invest pri-
marily in new products for specific areas of application, such
as vocational trucks in the North American market, global com-
ponent projects and the optimization of the worldwide produc-
tion and sales network. Overall, we expect a slight increase in
investment in property, plant and equipment at Daimler Trucks
& Buses compared with 2019.
At Mercedes-Benz Cars & Vans, we will invest in 2020, among
other things, in preparations to ramp up production of the vehi-
cles in our EQ family with electric drive and in the new genera-
tion of the C-Class and S-Class. In addition, we will continue to
invest in our production plants and for new engines and trans-
missions. As a result, investment in property, plant, and equip-
ment at Mercedes-Benz Cars & Vans is also expected to be at
the prior-year level.
In order to achieve our ambitious growth targets, we will make
our product range even more attractive in the coming years
and focus it even more on our customers' requirements. At the
same time, we want to be able to play a leading role in the far-
reaching technological transformation of the automotive indus-
try. This applies in particular to the increasing electrification
of our product portfolio and to the digital connectivity of our
products and processes along the entire value chain. Against
this backdrop, investment in property, plant and equipment is
mainly directed at preparations for the production of our new
models. Other main areas are the realignment of our produc-
tion facilities in Germany, local production in growth markets
and the establishment of a global production network for elec-
tric vehicles and batteries. Against the background of an even
more targeted allocation of capital and prioritization of proj-
ects, we plan to invest in property, plant and equipment in
2020 at a level similar to that of 2019.
Investment
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
154
In line with a sustainable dividend policy, Daimler sets the divi-
dend based on a distribution ratio of 40% of the net profit
attributable to Daimler shareholders. We also take into consid-
eration the free cash flow from the industrial business when
setting the dividend.
At the Annual Shareholders' Meeting on April 1, 2020, the
Board of Management and the Supervisory Board will propose
the payment of a dividend of €0.90 per share for the year 2019
(prior year: €3.25). This represents a total distribution of €1.0
billion (prior year: €3.5 billion).
Dividend
For the year 2020, we aim to have liquidity available in a vol-
ume appropriate to the general risk situation in the financial
markets and to Daimler's risk profile. When measuring the
level of liquidity, we give due consideration to possible refi-
nancing risks caused for example by temporary distortions
in the financial markets. We continue to assume, however, that
we will have very good access to the capital markets and the
bank market also in the year 2020. We aim to cover our funding
needs in the planning period primarily by means of bonds,
commercial paper, bank loans, customer deposits in the direct
banking business and the securitization of receivables in the
financial services business; the focus will be on bonds and loans
from globally and locally active banks. In view of our ongoing
strong creditworthiness and in a continuing environment of high
liquidity in the international capital markets, we anticipate sta-
ble refinancing conditions. Furthermore, our goal is to continue
to ensure a high degree of financial flexibility.
We expect the adjusted cash conversion rate for the
Mercedes-Benz Cars & Vans division to be within a corridor of
0.7 to 0.9 in 2020. The adjusted cash conversion rate for
Daimler Trucks & Buses is likely to be between 0.8 and 1.0 in
2020.
Research and development
This document contains forward-looking statements that reflect our current
views about future events. The words "anticipate," "assume,” “believe,” “esti-
mate," "expect," "intend," "may," "can,” “could,” “plan,” “project,” “should”
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline of
demand in our most important markets; a deterioration of our refinancing
possibilities on the credit and financial markets; events of force majeure
including natural disasters, pandemics, acts of terrorism, political unrest,
armed conflicts, industrial accidents and their effects on our sales, purchas-
ing, production or financial services activities; changes in currency exchange
rates and tariff regulations; a shift in consumer preferences towards smaller,
lower-margin vehicles; a possible lack of acceptance of our products or ser-
vices which limits our ability to achieve prices and adequately utilize our pro-
duction capacities; price increases for fuel or raw materials; disruption of
production due to shortages of materials, labor strikes or supplier insolven-
cies; a decline in resale prices of used vehicles; the effective implementation
of cost-reduction and efficiency-optimization measures; the business outlook
for companies in which we hold a significant equity interest; the successful
implementation of strategic cooperations and joint ventures; changes in
laws, regulations and government policies, particularly those relating to vehi-
cle emissions, fuel economy and safety; the resolution of pending govern-
ment investigations or of investigations requested by governments and the
conclusion of pending or threatened future legal proceedings; and other risks
and uncertainties, some of which we describe under the heading "Risk and
Opportunity Report" in this Annual Report. If any of these risks and uncer-
tainties materializes or if the assumptions underlying any of our forward-
looking statements prove to be incorrect, the actual results may be materi-
ally different from those we express or imply by such statements. We do not
intend or assume any obligation to update these forward-looking statements
since they are based solely on the circumstances at the date of publication.
In Japan, we anticipate a significant decrease in demand for
heavy-duty trucks.
For major truck sales markets, we expect generally rather
unfavorable conditions in 2020.
In addition, if future taxable income is not earned or is too low,
there is a risk that the tax benefit from loss carryforwards and
tax-deductible temporary differences may not be recognized or
may no longer be recognized in full, which could have a nega-
tive impact on net profit.
Any changes or interventions by the fiscal authorities are
continuously monitored by the tax department and measures
are taken if required.
Daimler AG and its subsidiaries operate in many countries world-
wide and are therefore subject to numerous different statu-
tory provisions and tax audits. Any changes in legislation and
jurisdiction, as well as different interpretations of the law by
the fiscal authorities - especially in the field of cross-border
transactions, may be subject to considerable uncertainty. It
is therefore possible that the provisions recognized will not be
sufficient, which could have negative effects on the Group's
net profit and cash flows.
Tax risks
ments.
Note 30 of the Notes to the Consolidated Financial State-
Further information on legal proceedings is provided in
Although the final result of any such litigation may influence
the Group's earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely to
have a sustained effect on the Group's financial position.
It cannot be ruled out that the regulatory risks and risks from
legal proceedings discussed above individually or in the aggre-
gate may materially adversely impact our profitability and
financial position.
As legal proceedings are fraught with a large degree of uncer-
tainty, it is possible that after their final resolution, some of
the provisions we have recognized for them could prove to be
insufficient. As a result, substantial additional expenditures
may arise. This also applies to legal proceedings for which the
Group has seen no requirement to recognize a provision.
Risks from other legal proceedings. Following the settlement
decision by the European Commission adopted on July 19, 2016
concluding the trucks antitrust proceedings, Daimler AG and
Daimler Truck AG are facing customers' claims for damages to
a considerable degree. Respective legal actions, class actions
and other forms of legal redress have been initiated in various
states in and outside of Europe and should further be expected.
Daimler takes appropriate legal remedies to defend itself.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
Furthermore, Daimler's ability to defend itself in the court pro-
ceedings could be impaired by unfavorable findings, results
or developments in any of the governmental or other court pro-
ceedings discussed above, in particular the fine notice issued
by the Stuttgart district attorney's office.
In Germany, a multitude of lawsuits by customers alleging claims
under warranty and/or tort laws as well as lawsuits by inves-
tors alleging the violation of disclosure requirements are pend-
ing. In this context, motions to initiate a model proceeding in
accordance with the Act on Model Proceedings in Capital Mar-
kets Disputes (KapMuG) have been filed by investors as well
as by Daimler AG. Currently, no model proceeding is pending.
Daimler AG also regards these lawsuits as being without merit
and will defend against the claims.
Furthermore, class actions have been filed in the United States
and Canada alleging anticompetitive behavior relating to vehicle
technology, costs, suppliers, markets, and other competitive
attributes, including diesel emissions control technology. A secu-
rities class action lawsuit is pending in the United States on
behalf of investors in Daimler AG American Depositary Receipts
which alleges that the defendants made materially false and
misleading statements about diesel emissions in Mercedes-Benz
vehicles. Daimler AG and the respective other affected com-
panies of the Group regard these lawsuits as being without merit
and will defend against the claims.
Risks from legal proceedings in connection with diesel
exhaust gas emissions - court proceedings. A consumer
class-action lawsuit is pending in the United States in which
it is alleged that Daimler AG and MBUSA conspired with Robert
Bosch LLC and Robert Bosch GmbH (collectively, "Bosch")
to deceive US regulators and consumers. A separate lawsuit
was filed in January 2019 by the State of Arizona alleging that
Daimler AG and MBUSA deliberately deceived consumers in
connection with the advertising of Mercedes-Benz diesel
vehicles. Consumer class-action lawsuits containing similar
allegations were filed against Daimler AG and other compa-
nies of the Group in Canada in April 2016, and against
Daimler AG in Israel in February 2019. A similar class action was
filed in the United States in July 2017, but in December 2017,
the parties stipulated to dismiss that lawsuit without prejudice.
It may be filed again under specific conditions.
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
148
In addition, Daimler's ability to defend itself in proceedings
could be impaired by the fine notice issued by the Stuttgart
district attorney's office as well as other unfavorable findings,
results or developments in any of the information requests,
inquiries, investigations, administrative orders, legal actions
and/or proceedings discussed above.
In light of these matters and in light of the ongoing governmen-
tal information requests, inquiries, investigations, administrative
orders and proceedings, as well as our own internal investiga-
tions, it is possible that, besides KBA, one or more regulatory
and/or investigative authorities worldwide will reach the con-
clusion that other passenger cars and/or commercial vehicles
with the brand name Mercedes-Benz or other brand names
of the group are equipped with impermissible defeat devices
and/or that certain functionalities and/or calibrations were
not properly disclosed. Furthermore, the authorities have
increased scrutiny of Daimler's processes regarding running-
change, field-fix and defect reporting as well as other compli-
ance issues. Except for, in particular, the Stuttgart district
attorney's office's administrative offense proceedings, the
other inquiries, investigations, legal actions and proceedings
as well as the replies to the governmental information requests,
the objection proceedings against KBA's administrative
orders and our internal investigations are still ongoing and open;
hence, Daimler cannot predict the outcome at this time. Due
to the outcome of the administrative offense proceedings by the
Stuttgart district attorney's office against Daimler and the
above as well as any potential other information requests, inqui-
ries, investigations, administrative orders and proceedings,
it is possible that Daimler will become subject to significant
additional monetary penalties, fines, disgorgements of profits,
remediation requirements, further vehicle recalls, further
registration and delivery stops, process and compliance improve-
ments, mitigation measures and the early termination of pro-
motional loans, and/or other sanctions, measures and actions
(such as the exclusion from public tenders), including further
investigations and/or administrative orders by these or other
authorities and additional proceedings. The occurrence of
the aforementioned events in whole or in part could cause sig-
nificant collateral damage including reputational harm. Fur-
ther, due to negative determinations or findings with respect to
technical or legal issues by one of the various governmental
agencies, other agencies - or also plaintiffs - could also adopt
such determinations or findings, even if such determinations
or findings are not within the scope of such authority's respon-
sibility or jurisdiction. Thus, a negative determination or
finding in one proceeding, such as the fine notice issued by
the Stuttgart district attorney's office, carries the risk of
being able to have an adverse effect on other proceedings, also
potentially leading to new or expanded investigations or
proceedings, including lawsuits.
In January 2019, another vehicle manufacturer reached civil
settlements with US federal and state authorities, as well
as with vehicle customers. Although the manufacturer did not
admit liability, the authorities maintain the position that the
manufacturer included undisclosed Auxiliary Emission Control
Devices (AECDs) in its diesel vehicles, apparently including
functionalities that are common in diesel vehicles, and that
certain of these AECDs are illegal defeat devices. As part
of these settlements, the manufacturer has agreed to, among
other things, pay civil penalties, undertake a recall of affected
vehicles, provide extended warranties, undertake a nationwide
mitigation project and make other payments. The manufac-
turer has furthermore agreed to provide payments to current
and former diesel vehicle owners as part of a class action
settlement.
In the years 2018 and 2019, the KBA issued various administra-
tive orders holding that certain calibrations of specified func-
tionalities in certain Mercedes-Benz diesel vehicles are to be
qualified as impermissible defeat devices and ordered subse-
quent auxiliary provisions for the respective EC type approvals
in this respect, including stops of the first registration and
mandatory recalls. Daimler filed timely objections against such
administrative orders in order to have the open legal issues
resolved, if necessary by a court of law. In the course of its
regular market supervision, the KBA is routinely conducting
further reviews of Mercedes-Benz vehicles and is asking ques-
tions about technical elements of the vehicles. In light of the
aforementioned administrative orders issued by the KBA, it is
likely that in the course of the ongoing and/or further investi-
gations KBA will issue additional administrative orders holding
that other Mercedes-Benz diesel vehicles are also equipped
with impermissible defeat devices. Daimler has (in view of KBA's
interpretation of the law as a precaution) implemented a
temporary delivery and registration stop with respect to certain
models, also covering the used car, leasing and financing busi-
nesses, and is constantly reviewing whether it can lift this deliv-
ery and registration stop in whole or in part. The new calibra-
tions requested by KBA are being processed, and for a certain
proportion of the vehicles, the relevant software has already
been approved by KBA; the related recalls have insofar been
initiated. It cannot be ruled out that under certain circum-
stances, software updates may have to be reworked or further
delivery and registration stops may be ordered or resolved
by the Company as a precautionary measure, also with regard
to the used car, leasing and financing businesses. Daimler has
initiated further investigations and otherwise continues to fully
cooperate with the authorities and institutions.
147
B❘ COMBINED MANAGEMENT REPORT | RISK AND OPPORTUNITY REPORT
If court proceedings have an unfavorable outcome for Daimler,
this could result in significant damages and punitive damages
payments, remedial works or other cost-intensive measures.
Court proceedings can in part also have an adverse effect
on the reputation of the Group.
In the NAFTA region, we assume that the market for heavy-
duty trucks (class 8) will contract significantly compared with
the very high level of demand in 2019.
149
As a company with worldwide activities, the Daimler Group is
at the focus of public interest. The relevant stakeholders'
perception is therefore of crucial importance and can affect
the reputation of the entire Daimler Group page 196
Non-Financial Report. A key role in the public's current percep-
tion is played by the company's approach to environmental,
employee and social matters, fighting corruption and bribery,
and respecting human rights, and may lead to non-financial
risks.
In the EU30 region (European Union, United Kingdom, Switzer-
land and Norway) in 2020, we anticipate a market volume at the
prior-year level in the combined segment of mid-size and large
vans, as well as in the market for small vans. In the United
States, demand for large vans should be slightly stronger than
in the previous year. We expect the market for large vans in
Latin America to grow significantly in 2020, driven by demand
in Brazil. In China, we anticipate slight growth in the market for
mid-size vans.
Slight contraction is expected in the US market for cars and
light trucks. The anticipated market level remains solid, how-
ever. The Chinese car market should stabilize after the signifi-
cant decline in 2019 and roughly maintain the previous year's
level.
The European market is likely to be of the magnitude of 2019.
We expect demand to remain fairly stable also in Western
Europe. Demand in Germany, the region's largest single market,
is likely to decrease slightly. Slight growth of the car market is
expected in Eastern Europe, following the relatively weak devel-
opment in the previous year.
In 2020, worldwide demand for cars should stabilize and
remain close to the level of the previous year.
Automotive markets
Overall, the world economy should grow in 2020 by approxi-
mately 2.5%, similar to the moderate rate of expansion in the
previous year.
While the development of the Central and Eastern European
economies is expected to be similar to that of the previous
year, slight acceleration of growth is anticipated for the South
American economic area, mainly driven Brazil, the region's
largest market. However, with growth in gross domestic prod-
uct expected to be lower than 2%, South America still remains
below its potential. Despite the still comparatively low level of
commodity prices, especially of oil, the countries of the Middle
East are expected to experience somewhat stronger growth of
about 2%, although with risks of a weaker development. Over-
all, the emerging markets should achieve economic growth in
the magnitude of 4% in 2020, thus developing along their long-
term trend.
We expect economic growth in China to continue to slow
down, as the effects of the trade conflict and the ongoing fight
against structural problems such as industrial overcapacity
and the very high levels of debt of state-owned enterprises will
have a dampening effect. Since the government's stimulus
measures are likely to remain moderate in order to avoid exces-
sive debt and bubble effects, Chinese growth will probably be
below the 6% mark this year.
Growth of the Japanese economy is expected to slow down
noticeably this year and to be only slightly above 0% due to the
effects of increased sales tax and the ongoing weakness of
exports.
Growth of the US economy is likely to fall below the 2% mark
for the first time since 2016. A combination of weaker global
economic growth and continued uncertainty regarding the
various trade disputes is adversely affecting companies and
is likely to lead to a further slowdown in investment activity;
growth in private consumption is also expected to slow down
somewhat, but should remain solid thanks to moderate infla-
tion and low unemployment. In view of these developments,
the US Federal Reserve (Fed) is likely to adopt a wait-and-see
approach for the time being, but will take appropriate counter-
measures in the event of an economic slump or negative
employment effects.
B | COMBINED MANAGEMENT REPORT | OUTLOOK 151
Non-financial risks
The persistent weakness of leading indicators points to con-
tinued weak growth for the economy of the European Mone-
tary Union. In particular, we expect a perceptible slowdown of
investment activity due to the significantly less favorable busi-
ness climate and the weak development of incoming orders.
However, as long as the recessionary trend in the industry sec-
tor does not have a significantly stronger impact on the labor
market than it has done so far, private consumption should
continue to be a solid driver of growth this year. In addition,
although a further easing of monetary policy by the European
Central Bank seems unlikely from today's perspective, it can-
not be ruled out in the event of a further economic slowdown.
Overall, these developments should lead to a growth rate in
the European Monetary Union of only about 1.0%. The outlook
for the German economy is also subdued. Here too, we expect
the continuation of a weak growth rate of between 0.5 and
1.0%. Because the concrete economic effects of the UK's with-
drawal from the EU, which has now taken place, cannot yet be
foreseen in detail, the British economy must also be expected
to develop rather moderately in 2020. Nonetheless, most ana-
lysts do not anticipate an economic slump.
The world economy
Our assessments for the year 2020 are based on the assumption
of generally stable economic conditions and the expectation that
the upward development of the global economy will continue
at a moderate pace. We also assume that worldwide demand
for automobiles will be approximately of the magnitude of the
previous year. The development we have outlined is subject to
various opportunities and risks, which are explained in detail
in the Risk and Opportunity Report.
pages 135 ff.
The statements made in the Outlook chapter are based on the
operational planning of Daimler AG as approved by the Board
of Management and the Supervisory Board. That planning is
based on the premises we set regarding the economic situa-
tion and the development of automotive markets. It involves
assessments made by Daimler, which are based on analyses
by various renowned economic research institutes, interna-
tional organizations and industry associations, as well as on
the internal market analyses of our sales companies. The pros-
pects for our future business development as presented here
reflect the targets of our divisions as well as the opportunities
and risks presented by the anticipated market conditions and
the competitive situation during the planning period. Against
this backdrop, we adjust our expectations for business devel-
opment to reflect updated forecasts for the development of
the various automotive markets. The statements made below
are based on the facts known to us at the beginning of 2020.
Outlook
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK
150
The overall risk and opportunity situation of the Daimler Group
remains essentially unchanged. No risks are recognizable -
neither on the balance sheet date nor at the time of preparing
the consolidated financial statements - that either alone or
in combination with other risks could endanger the continued
existence of the Group.
In addition to the risk categories described above, unforeseeable
events can have a negative impact on the business operations
and thus on the Daimler Group's profitability, cash flows, finan-
cial position and its reputation. In order to recognize risks
and opportunities at an early stage and to deal successfully with
the current risk and opportunity situation, the established
risk and opportunity management system is continuously mon-
itored and further developed.
The overall view of the Group's risk and opportunity situation
is the sum of the described individual risks and opportunities of
all risk and opportunity categories.
Overall assessment of the risk and opportunity
situation
Risks arise above all in connection with the public debate about
diesel vehicles and the related fundamental reconsideration
of methods for measuring emissions. Due to the replacement
of the NEDC (New European Driving Cycle) with the new mea-
suring method WLTP (Worldwide Harmonized Light Vehicles Test
Procedure), the fleet CO2 average has worsened. In the light
of today's knowledge, this makes it more difficult to achieve the
CO2 targets as of 2020. Furthermore, there has been some
pressure in the past two years on diesel technology, which is
important for compliance with the challenging CO₂ targets in
the EU, because of NO x levels exceeding the limits at some mea-
suring stations in cities. The current public focus on vehicle
emissions as well as possible certifications stops and recalls
jeopardize the reputation of the automotive industry and in
particular of the diesel engine, and could result in damage to
Daimler's reputation. With the development of a new genera-
tion of diesel engines and their systematic market launch,
Daimler aims to achieve a reduction in NOx emissions in real
driving conditions (RDE). In general, legal risks - for example
in connection with antitrust investigations - as well as possible
legal and social violations by partners and suppliers can have
a negative impact on the reputation of the entire Daimler Group.
As one of the fundamental principles of business activity,
Daimler places particular priority - also in the selection of
partners and suppliers - on adherence to applicable laws
and ethical standards.
We assume that the moderate rate of growth of the global
economy will continue in 2020 and that there will be no signifi-
cant acceleration in the course of the year. The growth pros-
pects for the industrialized countries are rather weaker than in
the previous year, while the economies of the emerging markets
should grow at a similar or slightly higher rate overall.
References made in this management report
B❘ COMBINED MANAGEMENT REPORT | OUTLOOK 155
C
Daimler's divisions performed well in 2019 despite some difficult market condi-
tions. This was significantly supported by numerous new products and innovative
services. Mercedes-Benz Cars, Mercedes-Benz Vans and Daimler Buses all
surpassed their prior-year unit sales, and Daimler Mobility increased its contract
volume. In order to further improve our competitiveness, we entered into
future-oriented partnerships in key areas such as autonomous driving, mobility
services and the further development of the smart brand.
Insofar as the references made in this Management Report relate to parts of
the Annual Report that were not included in the external audit (components
outside the company and consolidated financial statements and the com-
bined Management Report), or to the Daimler website or other reports or
documents, these were not part of the external audit.
The
Divisions
1,295
+15
thereof capitalized
53
40
+33
Production
481,946
524,846
-8
Unit sales
488,521
517,335
Launch of first Mercedes-Benz EQ model
Employees (December 31)1
83,437
82,676
+1
1 Adjustment of the number of employees in 2018 due to changes in
the Group's internal allocation of employees.
C.04
Unit sales Daimler Trucks
In thousands
2019
2018
19/18
Change in %
Total
489
1,490
-6
expenditure
517
EQ technology brand offers comprehensive ecosystem for
electric mobility
Ongoing high levels of unit sales and revenue
Ninth consecutive record year for Mercedes-Benz Cars
Sustainability at Frankfurt Motor Show 2019
More than a dozen new and upgraded vehicles
Management Report
Contents
The Divisions
157
Combined
174-176
C | THE DIVISIONS | CONTENTS
Daimler Buses
158-165
Mercedes-Benz Cars
C | The Divisions
€ amounts in millions
19/18
Change in %
Revenue
EBIT
40,235
2,463
38,273
2,753
+5
-11
Return on sales (in %)
6.1
7.2
Investment in property,
plant, and equipment
971
1,105
Research and development
-12
EU30
80
135
165
-18
thereof Japan
42
44
Indonesia
39
64
-4
-39
For information purposes:
BFDA (Auman Trucks)
86
103
-17
Total (including BFDA)
575
621
-7
Lower unit sales and EBIT, stable revenue
Daimler Trucks sold 488,500 vehicles in 2019, achieving a vol-
ume slightly below that of the previous year (2018: 517,300).
The markets relevant for Daimler Trucks generally developed
very disparately. In the second half of the year, demand in
North America weakened significantly faster than expected, and
the European truck market contracted in the second half of
the year. These developments already had an impact on the
division's earnings in the fourth quarter. Revenue of €40.2 billion
was above the prior-year level (2018: €38.3 billion). EBIT of
€2.5 billion was lower than last year (2018: €2.8 billion). Return
on sales also decreased to 6.1% (2018: 7.2%).
Unit sales 6% lower than in the previous year
Expanded range of plug-in hybrids
Daimler Trucks achieved sales of 488,500 vehicles in 2019,
which is a slight decrease compared with the previous year
(2018: 517,300).
Over the year as a whole, the truck market in classes 6 to 8 in
the NAFTA region was still slightly above the high prior-year
level, although a weakening of demand was apparent in the
fourth quarter. Our sales of 201,100 trucks in the region were
once again slightly higher than the high prior-year number
(2018: 189,700). In classes 6 to 8, we had a market share of
37.0% (2018: 38.4%). We continued to maintain our market
leadership. The new Freightliner Cascadia with partially auto-
mated driving functions (SAE Level 2) had its world premiere
as a series-produced truck at the Consumer Electronics Show
(CES) in Las Vegas in January 2019. The system can indepen-
dently brake, accelerate and steer, and allows partially auto-
mated driving. In the future, customers in Australia and New
Zealand will also be able to operate the new Freightliner Cas-
cadia. The new model was presented to customers and
media representatives in Sydney in November. And with the
Detroit DD15 Gen 5 at the North American Commercial
Vehicle Show 2019 in Atlanta, Daimler Trucks presented for the
first time the latest generation of the globally applied heavy-
duty engine platform (HDEP). As of 2021, this engine is to be
available in the North American market in the class 8 segment.
On the basis of the global platform strategy, the next-
generation engines are planned to be used also in trucks of
the Mercedes-Benz sister brand.
Daimler Trucks
Asia
+39
21
30
85
-7
thereof Germany
31
33
2018
-4
United Kingdom
6
8
-27
France
9
-6
9
NAFTA region
201
190
+6
thereof United States
174
161
+8
Latin America (excluding Mexico)
43
38
+12
thereof Brazil
-1
- VISION EQS: milestone on the way into the future
C.03
- Strengthened presence in China
940
921
+2
thereof China
694
678
+2
1 Including the GLA and the GLB
Ongoing high levels of unit sales and revenue
The Mercedes-Benz Cars division sold a total of 2,385,400
vehicles in 2019 despite difficult overall conditions (2018:
2,382,800). The division thus surpassed the record level of
unit sales set in the previous year. At €93.9 billion, revenue
also exceeded the previous year's high level (+1%). C.01
This development was in large part due to the extensive mar-
ket success of our new compact-class models and continued
strong demand for the E-Class and our SUVs. EBIT decreased
significantly to €3.4 billion in the year under review as the
result of various factors, which are described in detail in the
Profitability chapter.
page 71
Mercedes-Benz Cars sold a total of 992,200 vehicles in Europe
in 2019 (2018: 982,700). Sales growth in Germany (+4%) was
accompanied by decreases in Italy (-1%) and Spain (-5%). Unit
sales in the volume markets of the United Kingdom and France
remained at the levels of the previous year. The Mercedes-
Benz Cars division remained very successful in China during
the year under review, with unit sales there increasing by 2%
to 694,200 vehicles. We also set new records for unit sales
in other Asian markets, in South Korea for example (+18%). At
368,900 vehicles, unit sales in the NAFTA region were lower
than the high level of the previous year. Decreases were
recorded in the United States (-4%) and in Canada (-12%).
Asia
Ninth consecutive record year for Mercedes-Benz Cars
At 2,278,300 vehicles, unit sales by the Mercedes-Benz brand
surpassed the record level of the previous year by 1%. 71C.02
Mercedes-Benz is thus once again the premium brand with the
strongest unit sales in the automotive industry. Mercedes-Benz
is number one in the premium segment in Germany and sev-
eral other key European markets, as well as in South Korea,
India, Australia, Canada and Japan. Furthermore, we are the
number one in the premium segment also in China, with a new
sales record in that country.
C | THE DIVISIONS | MERCEDES-BENZ CARS
Mercedes-Benz EQC (combined electricity consumption: 20.8 – 19.7 kWh/100 km; combined CO2 emissions: 0 g/km)¹:
The Mercedes-Benz among electric vehicles and a car that makes a convincing impression in terms of the sum of its attributes.
159
160
C | THE DIVISIONS | MERCEDES-BENZ CARS
In total, Mercedes-Benz launched more than a dozen new or
upgraded models in 2019. In particular our new compact mod-
els, including the new B-Class, the A-Class Sedan and the new
GLB, played a major role in our sales growth in the year under
review. However, our AMG models also generated significant
sales momentum. More and more customers are fascinated by
the broad and appealing range of automobiles offered by our
sports-car and high-performance brand, which we are continu-
ously refining.
The A-Class and B-Class models were particularly successful
in the year under review. Unit sales of these models, including
the CLA and CLA Shooting Brake, increased by 29% to a total
of 527,000 vehicles. Sales of C-Class vehicles decreased by 8%
to 439,600 sedans, wagons, coupes and convertibles. The
E-Class continued to perform very well on the market. At
418,100 vehicles, total unit sales of the E-Class did not achieve
the high level of the prior year. With sales of 71,300 units, the
S-Class sedan continues to be the world's best-selling luxury
sedan. In total, we sold 75,400 vehicles in this market segment
in 2019 (2018: 83,800). The Mercedes-Maybach luxury brand
continued to be very successful. Our unit sales in the SUV seg-
ment were impacted by the model changes for the GLE and the
GLS. Demand for the new models was much higher than the
actual number of vehicles available. Unit sales, however,
achieved the very high level of 789,800 vehicles (2018:
829,200). In the summer of 2019, we also implemented a very
successful model upgrade for the GLC and GLC coupe, both of
which remain very popular. Sales of our sports cars rose by
48% to 28,400 units; this increase was largely due to the mar-
ket success of our Mercedes-AMG GT models.
The sales development for the smart brand during the year
under review was largely shaped by measures associated with
the complete conversion of the smart to all-electric drive by
2020. Within the framework of this changeover, the number of
vehicles with combustion engines offered by smart was gradu-
ally reduced throughout the year. All in all, the smart brand
sold a total of 107,100 fortwo and forfour models in approxi-
mately 40 markets worldwide in 2019 (2018: 130,000).
IAA 2019: on the road to an emission-free future
Mercedes-Benz's appearance at the International Motor Show
(IAA) in Frankfurt from September 10 to 22, 2019 was domi-
nated by the presentation of sustainable solutions for the
future of mobility. Numerous world premieres at the event
underscored the intention of the inventor of the automobile to
continue designing and offering intelligent mobility solutions.
The new Vision EQS show car, which celebrated its world pre-
miere at IAA 2019, embodies the flexible and customer-
focused vision of sustainability that the Mercedes-Benz EQ
product and technology brand stands for. Also on display for
the first time were new plug-in hybrid derivatives from
Mercedes-Benz and the first all-electric multipurpose vehicle
from the EQ brand. The GLB also had its auto show premiere,
while smart, a pioneer for urban mobility, presented model
upgrades of its electric city cars for the first time in Frankfurt.
The new Mercedes-Benz GLB - with up to seven seats
The Mercedes-Benz GLB had its world premiere on June 10,
2019 in Utah in the United States. It was then presented for
the first time at an auto show during the IAA in September
2019. The new Mercedes-Benz GLB is a versatile SUV that can
also function as a spacious family car. The GLB's SUV attri-
butes are underscored by powerful proportions with short
overhangs and an off-road-oriented design, as well as the
optional 4MATIC all-wheel drive and a special off-road light
that helps detect obstacles immediately in front of the vehicle
at low speeds. The GLB is the first Mercedes-Benz in this seg-
ment available with seven seats as an option; the two seats in
the third row can be used by people up to 1.68 meters tall.
1 Electricity consumption and range have been calculated on the basis of
Commission Regulation (EC) No. 692/2008. Electricity consumption and
range depend on vehicle configuration.
The new Mercedes-Benz GLA - the entry-level model in
the SUV family
-4
313
Sports cars
28
19
-5
+48
smart
107
130
-18
Mercedes-Benz Cars
2,385
-
2,383
327
+0
992
983
+1
thereof Germany
335
324
+3
NAFTA
369
393
-6
thereof United States
thereof Europe
The new Mercedes-Benz GLA made its world premiere in digi-
tal form on the Mercedes me media platform. With its powerful
and efficient four-cylinder engines, the latest driving assis-
tance systems with cooperative driver support, the intuitive
MBUX (Mercedes-Benz User Experience) infotainment system
and the comprehensive ENERGIZING comfort control system,
the GLA boasts all the outstanding features of the latest gener-
ation of Mercedes-Benz compact vehicles. The model is also
available with the optional 4MATIC permanent all-wheel drive
system that features fully variable torque distribution.
Launch of first Mercedes-Benz model of the EQ brand
Mercedes-Benz first presented its new product and technology
brand for electric mobility at the Paris Motor Show in 2016.
In mid-2019, the EQC (combined electricity consumption:
20.8 -19.7 kWh/100 km; combined CO2 emissions: 0 g/km)1
became the first Mercedes-Benz vehicle to be launched under
the EQ brand name. With its seamless and clear design and
color highlights typical of the brand, the EQC is a trailblazer
when it comes to an avant-garde electric appearance, while it
embodies the design idiom of progressive luxury. In terms
of quality, safety and comfort, the EQC is the Mercedes-Benz
among electric vehicles and a car that makes a convincing
impression in terms of the sum of its attributes. The model
also boasts a highly dynamic performance, thanks to two elec-
tric motors at the front and the rear axle with a combined out-
put of 300 kW. The sophisticated operation strategy utilized for
the EQC enables an electric range of 445 to 471 km according
to the NEDC1. With Mercedes me, the EQ brand offers compre-
hensive services and makes electric mobility comfortable and
practical for everyone. At the same time, the EQC symbolizes the
start of a new mobility era at Daimler.
Series production of the EQC began in May 2019 at the
Mercedes-Benz plant in Bremen. The new EQC is being inte-
grated into current production operations as an all-electric
vehicle. The EQC is also now being produced for the Chinese
market by the German-Chinese production joint venture,
Beijing Benz Automotive Co. Ltd. (BBAC).
S.GE 3380E
ture
Expansion of activities in China
Sales of Mercedes-Benz brand cars in China totaled 694,200
units in the year under review (+2%), which means China was
Mercedes-Benz Cars' largest single market for the fifth consec-
utive year in 2019. Around three fourths of the vehicles we sell
there were manufactured locally at facilities operated by our
Beijing Benz Automotive Co., Ltd (BBAC) joint venture with our
local partner BAIC. In view of the further growth potential
offered by the Chinese market, Daimler and BAIC announced
back in 2018 that they would jointly invest more than RMB 11.9
billion (approximately €1.5 billion) in a second BBAC produc-
tion facility in Beijing. The expansion of localization is to enable
Daimler to respond even more effectively to increasing market
demand by offering local models especially tailored to Chinese
customers' needs, including electric vehicles from the
Mercedes-Benz EQ brand. The local presence of the Mercedes-
Benz brand in China is being continuously expanded with the
help of a broad portfolio that currently encompasses ten
locally manufactured cars and vans. The all-electric Mercedes-
Benz EQC off-road vehicle (power consumption combined:
20.8-19.7 kWh/100 km; CO2 emissions combined: 0 g/km¹,
has been manufactured in Beijing since the end of 2019.
Global production network - smart manufacturing
The Mercedes-Benz Cars division is continuously developing
its production network of more than 30 locations on four conti-
nents by implementing forward-looking smart manufacturing
methods. Here, innovative state-of-the-art technologies are
enhancing and safeguarding production quality, efficiency and
flexibility, while also offering effective support to workers at
our plants. "Factory 56" at the Mercedes-Benz plant in Sin-
delfingen is an impressive example of this. The factory of the
future is already a reality here. A completely new infrastructure
is being implemented in Factory 56. The entire production hall
has a Wi-Fi system and a mobile telephone network and com-
municates with its surroundings. The production hall is distin-
guished by its especially flexible and sustainable production
facilities with state-of-the-art Industry 4.0 technologies. For
example, the hall obtains its energy from CO2-neutral sources
that include a photovoltaic system installed on the roof. Fac-
tory 56 also creates a new modern world of work that focuses
on employees and takes their individual requirements even
more strongly into account than previously. Factory 56 will
serve as a blueprint for all future vehicle assembly operations
at Mercedes-Benz Cars worldwide.
The global production network is also being systematically
aligned with electric mobility. For example, electric vehicles
from the EQ product and technology brand are manufactured
within the framework of normal series production on the same
lines used to produce vehicles with conventional combustion
or hybrid drive systems. Production of the first all-electric vehi-
cle from the EQ product and technology brand is already under
way at the Mercedes-Benz plant in Bremen and at our BBAC
joint venture plant in Beijing. In parallel with this, a global bat-
tery production network is being established. This network
already comprises nine plants at seven locations on three con-
tinents. All in all, the company is investing more than €1 billion
C | THE DIVISIONS | MERCEDES-BENZ CARS
165
Whether with automated driving or new services:
connectivity and digitization play a crucial role.
in a global battery manufacturing network that is part of
Mercedes-Benz Cars' global production network. Local produc-
tion of batteries is an important success factor for the electric
mobility offensive at Mercedes-Benz Cars, and also the crucial
element that enables us to meet the global demand for electric
vehicles flexibly and efficiently. Within the framework of its
electricity offensive, Mercedes-Benz Cars is not only focusing
on locally emission-free vehicles but is also moving ahead to
ensure sustainable and environmentally friendly production
operations worldwide. For example, plans call for production at
Mercedes-Benz Cars plants in Europe to be CO2-neutral by
2022.
POWER
Best Customer Experience 4.0
equipped with the new brand presence. By the end of 2019,
200 of these had already been opened. Plans call for 25 per-
cent of worldwide car sales to be processed by Mercedes-Benz
and its sales partners via online channels by 2025. The
Mercedes me ID is becoming the key component of the cus-
tomer experience, as it allows for very easy access to numer-
ous features and services. Mercedes-Benz created the basis
for the further development of sales operations in line with
current customer requirements back in 2013 when it estab-
lished "Best Customer Experience." Since then, the company
and its retail partners have invested several hundred million
euros each year in its refinement around the globe.
Mercedes me
and beyond
-
digital premium services in the vehicle
The Mercedes me digital ecosystem - a key component for
shaping the future of Mercedes-Benz - is now available in
nearly 50 countries. Mercedes me consists of a wide range of
mobility-related digital services in and around the vehicle.
These services can be digitally accessed at any time using a
personal account, the Mercedes me ID. The average activation
rate of the Mercedes me service for new Mercedes-Benz vehi-
cles is over 90%. This shows how important it is to Mercedes-
Benz drivers that their cars are connected and that drivers
expect to enjoy all the digital services and offerings that such
connection makes possible. Highlights from the Mercedes me
range of services include the On-Street and Off-Street parking
display system with a parking payment service, the Live Traffic
Information real-time traffic service including car-to-x commu-
nication, Mercedes me in Car Store, and "Hey Mercedes" natu-
ral speech recognition with support from artificial intelligence.
Mercedes me services are also available for our EQ models
or in some cases are being developed especially for them. They
include Mercedes me Charge for access to public charging sta-
tions in Europe, China and Japan which will soon be expanded
to other regions. In addition, the EQ Ready app helps drivers
decide whether it makes sense for them to switch to an elec-
tric vehicle or a hybrid model.
#ATeamComeTrue: sixth consecutive double title in the
Formula 1 series
The Mercedes-AMG Petronas Motorsport Formula 1 team cele-
brated another record-setting year in 2019 by becoming the
first racing team in the history of the Formula 1 series to cap-
ture both the World Constructors' Championship and the World
Drivers' Championship for six consecutive years. It takes
more than extraordinary drivers to achieve this type of suc-
cess; you also need to have the right combination of outstand-
ing technology and exceptional team spirit. In another develop-
ment, a new chapter in the 125-year history of motorsports at
Mercedes-Benz began in November 2019, when the Mercedes-
Benz EQ Formula E team made its debut in the Formula E rac-
ing series. Our participation in the all-electric Formula E series
enables us to demonstrate the performance capability of our
intelligent battery-electric drive systems, while also adding an
emotional component to the EQ brand. Mercedes-AMG Cus-
tomer Racing, with its more than 100 customer teams, can also
look back on a very successful season in 2019.
166
C | THE DIVISIONS | DAIMLER TRUCKS
Daimler Trucks
In a generally favorable market environment, Daimler Trucks achieved a return on sales of 6.1% in
the 2019 financial year (2018: 7.2%). This was partially due to lower unit sales and increased costs.
In the short to medium term, Daimler Trucks expects demand in its core markets in Europe and
the United States to continue to normalize, and this trend should continue until 2021. Around the
world, we have outstanding products, strong brands and technologies, and a clear strategy that
focuses on global market presence, global platforms, innovation leadership and sustainability. We
see our challenge in improving profitability while investing in the future, in order to utilize the
potential of truck markets that are changing but which offer long-term growth. We intend to gener-
ate global growth and earnings prospects especially in the market for heavy-duty trucks. In
addition, we see great long-term business potential in highly automated trucks (SAE Level 4) travel-
ing on highways between logistics hubs.
In July 2019, Mercedes-Benz presented the next chapter of its
"Best Customer Experience" global sales strategy. With "Best
Customer Experience 4.0," Mercedes-Benz is systematically
aligning its sales activities with changing customer require-
ments in the digital age. "Best Customer Experience 4.0" is
designed to offer customers a seamless and comfortable expe-
rience of luxury whenever they would like to come into contact
with Mercedes-Benz - across all channels, at all times and
from any location. At the same time, physical sales via its
6,500 partners worldwide will remain indispensable for
Mercedes-Benz. For this reason, Mercedes-Benz is seamlessly
linking the physical sales channel with digital channels and
redesigning the former through the use of innovative store and
dealership concepts. Since the beginning of 2018, some 500
physical sales outlets worldwide have been planned or already
S EQ 4281E
At the end of March 2019, Daimler and the Zhejiang Geely
Holding Group reached an agreement to establish a 50-50
joint venture for the further development of the smart brand.
Under this agreement, the two partners will jointly design and
develop the next generation of smart electric models, which
will be manufactured in China for the world market. Global
sales are scheduled to begin in 2022. The joint venture will
exploit global synergies and economies of scale in order to
offer customers premium products of outstanding quality and
thus strengthen the smart brand's position as a supplier of
electric vehicles.
Joint venture with Geely: further development of the smart
brand as a manufacturer of all-electric vehicles
The EQC is part of a comprehensive electric offensive, as
Daimler plans to offer more than ten all-electric models in the
passenger car segment alone by 2022. In addition, the EQ
brand offers a comprehensive electric mobility ecosystem of
products, services, technologies and innovations.
Broad range of third-generation plug-in hybrid vehicles
Plug-in hybrids are a milestone on the road to zero-emission
driving. Under the label EQ Power, Mercedes-Benz Cars is
consistently forging ahead with the development of its plug-in
hybrid vehicles. The hybrid drive systems in models with a
1 Electricity consumption and range have been calculated on the basis of
Commission Regulation (EC) No. 692/2008. Electricity consumption and
range depend on vehicle configuration.
C | THE DIVISIONS | MERCEDES-BENZ CARS 161
longitudinally installed engine - from the C-Class to the
S-Class and from the GLC to the GLE - represent the third
hybrid generation since the launch of the first hybrid vehicles
in 2009. The current electric motor was redesigned for the
9G-TRONIC plug-in hybrid transmission and operates accord-
ing to the principle of a permanently excited synchronous
motor as an internal rotor. The combination with new and sig-
nificantly improved power electronics here has led to a sub-
stantial increase in power and torque density. The intelligent,
route-based operating-mode strategy employed with the
hybrid systems utilizes the electric drive program that's best
suited for a given route segment. This strategy takes into
account factors including map data, topography, speed limits
and traffic conditions for the entire planned route. In addition,
the ECO Assistant system coaches the driver and helps con-
serve fuel. By the end of 2019, we had launched models from
the compact-car family with the third-generation hybrid drive
system for the first time. The EQ Power for the A-Class- and
B-Class underscores the plug-in offensive launched by
Mercedes-Benz. By the end of 2019, Mercedes-Benz already
had more than ten plug-in hybrid models on offer - an attrac-
tive portfolio ranging from compacts to the Mercedes-Benz
S-Class flagship model. Our goal here is to offer our customers
well over 20 hybrid model variants by 2020.
Technology brand EQ: a comprehensive electric mobility
ecosystem
One of the components of the EQ technology brand is a com-
prehensive electric mobility ecosystem, which includes a holis-
tic range of consulting and other services and encompasses
everything from vehicle functions (e.g. adapted navigation sys-
tem) to the charging infrastructure. Mercedes me Charge
offers customers access to one of the world's largest charging
networks with around 300,000 charging points and over 300
different operators of public charging stations in Europe alone.
Customers also benefit from an integrated payment function
with simple billing features. Mercedes me Charge also allows
customers to access the fast-charging stations operated by
the pan-European IONITY network. The network's short charg-
ing times make for a pleasant journey, especially over long dis-
tances. IONITY plans to build and operate around 400 fast-
charging stations along the main traffic arteries in Europe by
the end of 2020. IONITY was established in November 2017
as a joint venture between the BMW Group, Daimler AG, Ford
Motor Company and the Volkswagen Group with Audi and
Porsche.
The Mercedes-Benz wallbox home unit with a charging capac-
ity of 11 kW makes it possible to charge EQ models much faster
than from a household socket. Mercedes-Benz also works with
market-specific charger installation partners to offer easy and
rapid installation of the Mercedes-Benz wallbox as well as pro-
fessional advice on all aspects of electric mobility. DC charging
via CCS (Combined Charging Systems) is even faster: CCS
charging stations in Europe have a maximum charging capacity
of 110 kW, which enables batteries to be charged from 10 to 80
percent SoC (State of Charge) in less than 45 minutes.
VISION EQS: milestone on the road to the future
At its presentation at the 2019 IAA International Motor Show,
Mercedes-Benz focused on the topic of sustainability as a
key component of its brand philosophy and an important ele-
ment of its corporate strategy. The VISION EQS show car
offers a preview of the large electric luxury sedans of the
future. With the Vision EQS, Mercedes-Benz is making a clear
statement that perfect craftsmanship, emotional design, luxu-
rious materials and individual driving pleasure will continue
to be desirable attributes of automobiles in the future. With its
innovative stretched "one bow" proportion, the VISION EQS
takes the "Progressive Luxury” design philosophy of the EQ
vehicles from Mercedes-Benz to a new level. The flowing yet
powerful sculpture-like effect of the exterior design lends the
show car the appearance of luxurious generosity and aerody-
namic beauty united in perfect harmony.
World's first electric vehicle with fuel cell and plug-in
hybrid technology delivered to selected customers
The Mercedes-Benz electric vehicle offensive also includes the
GLC F-CELL (combined hydrogen consumption: 0.91 kg/100
km, combined CO2 emissions: 0 g/km, combined electricity
consumption: 18 kWh/100 km)². This SUV can run on electric-
ity as well as hydrogen because it is equipped with a lithium-
ion battery with plug-in hybrid technology in addition to its fuel
cell. Intelligent interplay between the battery and the fuel cell,
as well as short refueling times, make the GLC F-CELL a
dynamic and practical vehicle for long-distance travel. The first
GLC F-CELL vehicles were delivered to selected customers in
November 2018. Since the spring of 2019, additional business
and private customers have been able to experience the new
fuel cell technology by renting GLC F-CELL vehicles from
Mercedes-Benz Rent at one of the seven GLC F-CELL outlets
located throughout Germany. The GLC F-CELL is now available
for short-term and long-term rental from the premium rental
service from Mercedes-Benz.
The establishment of a full-coverage charging infrastructure is
crucial for the success of electric mobility in Germany.
Whether at home, at work, on the road, when shopping or at
high speed on the highway - a variety of ways already exist to
supply electric vehicles with power. Things also continue to
move ahead when it comes to hydrogen infrastructure. For
example, Daimler has drawn up a plan of action for hydrogen in
Germany together with its partners in the H2 Mobility joint
venture. During the year 2020, the network of hydrogen filling
stations will probably grow to about 100 stations. The partners'
long-term goal is to establish a network consisting of as many
as 400 hydrogen refueling stations. Similar infrastructure proj-
ects are being implemented in the rest of Europe, the United
States and Japan.
Mercedes-Maybach: perfection blended with exclusivity
Mercedes-Maybach stands for the highest levels of exclusivity
and individuality. The luxury brand, which was launched in
November 2014, combines the perfection of the Mercedes-
Benz S-Class with the exclusivity of a Maybach. The brand's
first convertible was launched in the spring of 2017 in a limited
edition of 300 units. A preview of the form the luxury brand
might take in the future is offered by the concept cars Vision
Mercedes-Maybach 6 and Vision Mercedes-Maybach 6 Cabrio-
let - a sensational coupe and a luxurious convertible. Due to
the market success of our Mercedes-Maybach models, we plan
to make the range even more attractive in the coming years.
2 Figures for hydrogen consumption, CO2 emissions and electricity con-
sumption have been calculated on the basis of Commission Regulation
(EC) No. 692/2008.
162
C | THE DIVISIONS | MERCEDES-BENZ CARS
Mercedes-AMG: the sports-car and high-performance brand
The brand claim of "Driving Performance" reflects the two core
competencies of Mercedes-AMG: the ability to provide an
unparalleled driving experience and the ability to serve as a
driving force in the high-performance segment. With more
than 70 models, the Mercedes-AMG sports-car brand
enhances the fascination of Mercedes-Benz and especially
attracts young and sporty customers to the brand with the
three-pointed star. This is also reflected by the development of
sales of Mercedes-AMG vehicles: In the year under review,
Mercedes-AMG set a new sales record by delivering more
than 132,000 vehicles to customers. This outstanding sales
growth was primarily driven by 13 new compact-vehicle vari-
ants in various output classes. These vehicles have expanded
the product range to include additional attractive entry-level
models for the driving performance segment. An all-new 2.0-
liter turbo engine - the world's most powerful turbocharged
four-cylinder engine for series production vehicles - is used in
AMG's most powerful compact models. The existing portfolio
of vehicles has also been expanded to include updated models
from the successful two-door AMG GT family and the GLC
series. In addition, Mercedes-AMG now offers additional elec-
tric vehicles equipped with integrated EQ Boost technology.
Here, a 16 kW (22 hp) starter-generator supplies power to the
48-volt on-board electrical system, and the unit's boost effect
supports the combustion engine at low revolutions. The
starter-generator was presented for the first time in combina-
tion with the 4.0-liter V8 biturbo engine at the end of 2019.
smart has been offering an all-electric variant for each model-
series generation since 2007. Now smart is switching system-
atically to locally emission-free, battery-electric drive-system
technology. smart is the world's first automobile brand to
switch from combustion engines to electric drive systems
across the board. The all-electric driving experience opens up
a new dimension of driving enjoyment: instantly available
torque, seamless acceleration - and nearly absolute silence as
well. smart offers a comprehensive charging concept for its
new electric models in order to make charging as easy as pos-
sible for drivers. If the optional 22 kW onboard charger with
fast-charging capability is used, the new models can be
recharged from 10% to 80% range in less than 40 minutes.
smart model upgrade: groundbreaking, digital, urban
In September 2019 at the IAA International Motor Show in
Frankfurt smart celebrated the world premiere of its com-
pletely revamped fortwo and forfour models (smart EQ fortwo
with 4.6 kW onboard charger or optional 22 kW onboard char-
ger: combined electricity consumption: 16.5-14.0 kWh/100 km,
combined CO2 emissions: 0 g/km. smart EQ fortwo cabrio
with 4.6 kW onboard charger or optional 22 kW onboard com-
bined charger electricity consumption: 16.8 -14.2 kWh/100 km,
combined CO2 emissions: 0 g/km. smart EQ forfour with
4.6 kW onboard charger or optional 22 kW onboard charger
combined electricity consumption: 17.3 -14.6 kWh/100 km, CO₂
emissions combined: 0 g/km)¹. Here, progressive design
meets intelligent connectivity and pure battery-electric drive
systems. As a result, the new smart fortwo coupe, convertible
and forfour models offer a sustainable and comprehensive
mobility concept. For the first time, the smart fortwo and for-
four have been given different exterior designs that create
a visual distinction between the two model series. In addition,
the future generation of the smart infotainment system will
enable seamless smartphone integration and thus offer custom-
ers their familiar digital user environment in the vehicle.
LAB SENIO
8801218
1 Electricity consumption and range have been calculated on the basis of
Commission Regulation (EC) No. 692/2008. Electricity consumption and
range depend on vehicle configuration.
EQ power: Mercedes-Benz electric, F-CELL and plug-in hybrid models.
SED 427
SE
C | THE DIVISIONS | MERCEDES-BENZ CARS 163
The smart EQ Control app and smart "ready to" services have
also been further developed. In addition, an all-new user guid-
ance makes operating the services child's play and turns any
smart into a true connected car. For example, customers can
use the smart EQ Control app to check their vehicle's status
from any location via a smartphone or Apple Watch. The "ready
to" app also includes the "ready to share" digital service, which
offers private carsharing options and thus makes mobility in
cities more sustainable in general.
829
790
2019
-10
+8
6,962
7,518
expenditure
Research and development
-1
5,684
5,629
and equipment
Investment in property, plant
Return on sales (in %)
EBIT
thereof capitalized
Revenue
3.6
+1
-53
7,216
93,103
93,877
3,359
C-Class
19/18
% change
2018
2019
Mercedes-Benz Cars
C.01
Mercedes-Benz Cars performed well in the market during the year under review, despite difficult
conditions. Unit sales and revenue were above the high levels of the previous year, and Mercedes-
Benz continues to be the premium brand with the strongest unit sales in the automotive industry.
However, EBIT declined significantly in 2019. During the year under review, we systematically
forged ahead with our model offensive. In total, Mercedes-Benz launched more than a dozen new
or upgraded models in 2019, including the new B-Class, the A-Class sedan and the new GLB. We
also launched the EQC (combined electricity consumption: 20.8 – 19.7 kWh/100 km; combined CO2
emissions: 0 g/km)1, the first vehicle of our EQ electric-mobility brand. Mercedes-Benz's stand at
the Frankfurt Motor Show (IAA) was dominated by the presentation of sustainable solutions for the
future of mobility. Our numerous world premieres at the event underscored our firm intention to
continue designing and offering intelligent mobility solutions in the future.
7.8
Mercedes-Benz Cars
2,904
+28
SUVs¹
409
527
+29
thereof A-/B-Class
+1
2,253
2,278
Mercedes-Benz
19/18
% change
2018
2019
2,269
in thousands
C.02
1 Adjustment of the number of employees in 2018 due to changes in
the Group's internal allocation of employees.
+0
151,316
-0
+0
2,382,791
2,385,432
152,048
Employees (December 31)1
Unit sales
2,398,270
2,397,673
Production
Unit sales Mercedes-Benz Cars
C | THE DIVISIONS | MERCEDES-BENZ CARS
€ amounts in millions
Corporate Governance
EBIT slightly above prior-year level at €283 million
(2018: €265 million)
Mercedes-Benz eCitaro wins Sustainable Bus Award 2020
Range extension targeted with fuel cells
Market leadership defended in most important traditional
core markets above eight tons gross vehicle weight
Positive development of complete-bus business in Europe
Online shop started for bus spare parts
Slight growth in unit sales
EBIT lower than in previous year at €2.5 billion
(2018: €2.8 billion)
158
Launch in North America of telematics-based financing
Supply agreement with CATL for global battery modules
Start of tests of highly automated trucks (SAE Level 4)
Heavy-duty trucks available in core markets with partially
automated driving functions (SAE Level 2)
166-170
Decrease in unit sales
Daimler Trucks
-
- Sixth consecutive world championship double in Formula 1
EBIT of €3.4 billion (2018: €7.2 billion)
Presentation of Best Customer Experience 4.0
Joint venture with Geely for further development of smart
Global production network further developed with smart
production
440
478
-8
E-Class
418
434
-4
S-Class
75
84
Daimler Mobility
Renewed growth in contract volume
option Dynamic Lease
Further increase in number of automotive insurance
policies brokered
Non-Financial Report
Financial Statements
Further Information
Consolidated
(2018: €0.3 billion)
177-179
Digitization at full speed
vehicle in the premium segment
World premiere of our first battery-electric multi-purpose
171-173
Start of series production of eSprinter
Focus on eDrive@Vans
Decision on Citan successor
EBIT significantly below prior-year level at minus €3.1 billion
Growth driven by the Sprinter
New name: Daimler Mobility AG
Market launch of the new V-Class
- Mobility "from years to minutes"
- Expansion of e-payment activities
New app for paperless conclusion of insurance contracts
Launch of telematics-based financing option
Expansion of product portfolio for telematics services
Athlon adds e-bike option to leasing app
Launch of short-term insurance for more mobility
- Ongoing growth of mobility joint ventures
- Joint venture established for premium ride hailing in China
EBIT significantly above prior-year level at €2.1 billion
(2018: €1.4 billion)
-
Mercedes-Benz Vans
Unit sales at record level
176
The orders received for the eCitaro already number in the
hundreds, which demonstrates the high level of customer
acceptance of the electric bus. As a result, in 2019, Daimler
Buses received a number of major orders for the Mercedes-
Benz eCitaro, such as those comprising 56 units for Wiesbaden,
48 for Hanover, 27 for Aachen and 25 for Hamburg. The first
orders from European cities outside Germany for the battery-
electric eCitaro buses were also received. Today, eCitaro
buses are already in regular service in cities including not only
Berlin and Hamburg but also Oslo, Ystad (Sweden) and
St. Gallen (Switzerland).
Daimler Buses offers its customers tailor-made solutions for
locally emission-free public transport by providing them with a
complete system for electric mobility that consists of the
Mercedes-Benz eCitaro and a broad range of consulting services.
The battery-electric Mercedes-Benz eCitaro, which has been
manufactured in series production at the Mannheim plant since
2018, offers cities and transport companies the possibility
of converting their fleets to locally emission-free operation. The
battery-powered city bus therefore stands for environmentally
friendly public transport and helps to improve air quality, and
thus the quality of life, in urban areas.
Complete e-mobility system from Daimler Buses offers
practical public transport solutions
C | THE DIVISIONS | DAIMLER BUSES
We plan to continuously refine the eCitaro in order to make
the bus even more practical for regular service operation in cities.
Depending on its intended use, the eCitaro can currently
be ordered with as many as 12 battery packs. This results in a
range of up to 170 kilometers in typical city driving conditions
on a single battery charge. A further model variant of the
eCitaro – an articulated bus that can accommodate up to 145
passengers will be launched in 2020. Plans have already
been made to convert the eCitaro to the use of new technolo-
gies such as powerful lithium-ion batteries and solid-state
batteries in the coming years.
The all-electric Mercedes-Benz eCitaro offers municipalities and transportation
companies the option of changing over their fleets to locally emission-free operation.
2
eCITARO
175
C❘ THE DIVISIONS | DAIMLER BUSES
29,450
eCITARO
12
Because the electrification of bus fleets requires transport
companies to make major changes, Daimler Buses' overall
e-mobility system also includes a comprehensive customer-
advisory approach. More specifically, the e-Mobility Con-
sulting team defines individual operation scenarios by taking
into account route length, passenger volume, energy require-
ments, range calculations and charging management, among
other things. Customers receive service support as well -
in the form of eco-training courses for drivers, for example.
eCITARO
Range extension by means of fuel cells is being funded by
a national innovation program
Two models from Daimler Buses received an ETM Award in the
2019 readers' survey conducted by the EuroTransportMedia
(ETM) commercial vehicles publishing company. The Mercedes-
Benz Citaro and the Mercedes-Benz Citaro LE/Ü/hybrid
captured first place in the electric bus and intercity bus cate-
gories, respectively. The battery-electric Mercedes-Benz
eCitaro, the Mercedes-Benz Citaro hybrid and the Setra Top-
Class S 531 DT double-decker bus were all selected by the
jury for the "internationaler busplaner Nachhaltigkeitspreise"
(International 'Busplaner' Sustainability Awards) as the
best buses in their respective categories. Daimler Buses was
also presented with three awards at the Busworld Europe
international bus show in Brussels. The eCitaro received the
"Sustainable Bus Award 2020 " in the "Urban" category
from an international jury, which also awarded the Setra S 531
DT double-decker bus and the Mercedes-Benz eCitaro
the "Comfort Label." In addition, the Mercedes Benz eCitaro
achieved an outstanding second-place finish in the "BEST
OF mobility 2019 " readers' survey.
Launch of online shop for bus spare parts
E-consulting as an entry into electric mobility
Daimler Trucks & Buses' E-Mobility Group is launching a
comprehensive ecosystem for e-transport logistics to enable
our customers to make the best possible entry into electric
mobility. This includes a comprehensive range of consulting
services and the development of a suitable charging infrastruc-
ture for electric trucks. In addition to personal and individual
advice, the modular service also includes digital applications
that make it easier to get started with e-mobility. The initial
focus will be on the European, North American and Japanese
markets.
Increasing role of data-based and connected services
In 2019, Daimler Trucks made progress with important devel-
opments in the field of data-based and connected services.
At the North American Commercial Vehicle Show 2019, Daimler
Trucks for the first time presented a dynamic leasing solution
that is focused on a truck's operational performance: Dynamic
Lease is a pay-as-you-drive leasing service for trucks. The
leasing installments for a truck are based on the actual use of
the vehicle. In addition to a standard contractual basic fee, the
customer is only charged for the miles actually driven. Cus-
tomers in North America can use this telematics-based financ-
ing option as of the first quarter of 2020, initially for the new
Freightliner Cascadia with an integrated Detroit powertrain.
Together with partners, our developer engineers have been
working to enable trucks to communicate independently with
other machines and to carry out legally binding transactions
such as payments. In a pilot project in 2019, Daimler Trucks
experts created the required conditions for this with the newly
developed digital Truck ID and the related Truck Wallet.
Trucks can identify themselves to other machines with the
Truck ID as if with a built-in identity card, and can sign for pro-
cesses unambiguously. Truck Wallet functions as a platform
technology and central user program for all applications that
access Truck ID and use it for various purposes. Truck ID and
Truck Wallet, which are both still in the prototype stage, are
stored as software programs in a cryptographic processor.
The processor is part of Truck Data Center, the central telemat-
ics control unit of the new Mercedes-Benz Actros.
Anyone who gets behind the wheel of a new Actros or Arocs
with Multimedia Cockpit Interactive is just a click away from
a fully connected world of vehicles, drivers and logistics:
Starting last year, the new Actros and the new Arocs offer an
open platform for the use of apps. When purchasing a truck
with Multimedia Cockpit Interactive, the customer not only
acquires a vehicle, but also gains access to the Mercedes-Benz
Truck App Portal. This can then be used for the customer's
entire fleet, including third-party vehicles. Previously, new hard-
ware and software usually had to be installed in the cab to
put fleet-management or transport-management systems into
a truck.
C | THE DIVISIONS | MERCEDES-BENZ VANS 171
Mercedes-Benz Vans
Mercedes-Benz Vans continued along its growth path during the year under review and set a new
record for unit sales. Revenue was also higher than in the previous year. Growth at the division was
mainly driven by our new Mercedes-Benz Sprinter. Our future-oriented “adVANce” initiative has
allowed us to move ahead with the transformation of Mercedes-Benz Vans from a successful global
van manufacturer into a supplier of holistic system solutions for transportation and mobility. At
minus €3.1 billion, EBIT was significantly lower than the figure for the previous year. This development
was due to numerous special items that had a substantial impact on the division's earnings.
New record for unit sales
Mercedes-Benz Vans set a new sales record once again in
financial year 2019, with an increase of 4% on the previous year's
figure to 438,400 units. At €14.8 billion, revenue was also
higher than in the previous year (2018: €13.6 billion). EBIT was
minus €3,085 million, which was significantly lower than in
the previous year (2018: plus €312 million). This decline was
primarily due to governmental and court proceedings and
measures relating to Mercedes-Benz diesel vehicles, as well as
a review and prioritization of the product portfolio. The return
on sales amounted to -20.8% (2018: +2.3%).
Continued growth
Mercedes-Benz Vans' products continued to be very successful
in 2019. Our Sprinter, Vito and Citan vans are tailored mainly
to commercial customers, while the V-Class is designed primar-
ily for private use. The X-Class is targeted at a variety of both
private and commercial customers.
Sales of 298,100 units in the EU30 region, our core market,
were slightly higher than in the previous year (2018: 278,300).
We sold 121,300 units in Germany in the year under review
(2018: 107,300). Mercedes-Benz Vans continued to grow also in
the NAFTA region, where sales increased by 11% to 56,500 units.
This included a new record of 45,700 vans sold in the United
States (2018: 38,700).
At 18,600 units (2018: 18,700), sales in Latin America were at
the same level as in the previous year. At 29,500 units (2018:
29,100), sales in China were also at the prior-year level. Unit
sales declined significantly from the previous year's figures in
Russia and in the difficult market environment in Turkey.
At 231,500 units, global sales of Sprinter models were signifi-
cantly higher than in the previous year (2018: 206,300). Sales of
vans in the mid-size segment remained at the prior-year level,
totaling 172,400 units in 2019 (2018: 172,200), while sales of
Vito models amounted to 109,300 units in the year under
review (2018: 108,300). We sold 63,100 V-Class multipurpose
vehicles in 2019 (2018: 63,900). Meanwhile, sales of the
Mercedes-Benz Citan reached 20,700 units (2018: 26,300).
X-Class sales totaled 13,800 units in the year under review
(2018: 16,700).
C.05
Mercedes-Benz Vans
2019
2018
19/18
€ amounts in millions
% change
Revenue
EBIT
14,801
-3,085
13,626
+9
Fully electric light trucks are already in customer hands also
in important European markets such as Germany, the United
Kingdom, the Netherlands and Portugal, as well as in Japan.
The FUSO eCanter had its world premiere in September 2017
and has since then been delivered to numerous customers
worldwide. Data is currently being collected together with cus-
tomers and feedback is being given on the daily use of the
vehicle, route profiles and charging behavior. The FUSO eCanter
is produced in Kawasaki, Japan, and Tramagal, Portugal. And
at the 2019 Tokyo Motor Show, we presented the prototype of
the FUSO Vision F-Cell light-duty truck. This is FUSO's con-
cept of an electric truck that uses power from a fuel cell as an
optional range extender. The first heavy-duty Freightliner
eCascadia started trials with customers in 2019. The US cus-
tomers Penske Truck Leasing and NFI Industries are testing
the eCascadia, having already started testing the medium-duty
all-electric Freightliner eM2 in the previous year. Findings
from the global practical tests will flow directly into the ongo-
ing development of the next generation of our worldwide
electric product portfolio.
Return on sales (in %)
Electric trucks from all segments in customer use
The Mercedes-Benz eActros heavy-duty truck has been in
intensive customer use in the context of the eActros Innovation
Fleet since 2018. The aim is to achieve clean and quiet distri-
bution transport in urban areas, even with heavy-duty trucks,
from 2021 onwards. With the FUSO brand, Daimler continued
to gain experience with electric trucks in various markets
in 2019. The FUSO eCanter, for example, is in use with large
commercial customers such as Penske in the United States.
C | THE DIVISIONS | DAIMLER TRUCKS
GIGASPACE
Intelligent Driving Experience Actros.
GER MB 183
The new Mercedes-Benz Actros provides appropriate responses to
issues such as safety, fuel efficiency and availability with innovations
like the multimedia cockpit, mirror cams, further developed safety
systems and partially automated driving functions.
168
C | THE DIVISIONS | DAIMLER TRUCKS
We significantly increased our unit sales in Brazil, achieving
growth there of 39% compared with the previous year to sell
29,700 trucks. The market share of our Mercedes-Benz brand
trucks developed positively. In the medium- and heavy-duty
segment, we increased our market share to 29.2% (2018: 27.9%)
and achieved market leadership. In October 2019, the new
Actros from Brazilian production was presented at Fenatran,
one of the largest commercial-vehicle and transport trade
fairs in Latin America. The heavy-duty truck has been further
developed especially for the Latin American market and uses
technologies and platforms available worldwide, such as mirror
cams that replace rear-view and wide-angle mirrors and
help to enhance safety, vehicle handling and aerodynamics.
The new Actros is scheduled for market launch in 2020 and
will set new standards for efficiency, safety and connectivity.
In the EU30 region (European Union, Switzerland and Norway),
the truck market weakened perceptibly in the second half
of the year following the significant impact of purchases being
brought forward in the first half. Our total sales in the region
decreased slightly to 79,800 units (2018: 85,400). The
Mercedes-Benz brand maintained its market leadership in the
heavy- and medium-duty segment, although our market
share decreased to 20.0% (2018: 20.6%). Production of the new
Mercedes-Benz Actros started at the Wörth plant in May 2019.
One of the major new features of the Actros is Active Drive
Assist, with which Mercedes-Benz puts partially automated
driving in all speed ranges into series production. With the new
Actros, Mercedes-Benz shows the level of safety that is possible
on today's roads. Since January 2020, this heavy-duty truck's
standard equipment in Europe includes Active Brake Assist 5
(ABA 5), the latest generation emergency braking system
with pedestrian recognition. Truck journalists from 24 Euro-
pean countries voted the Mercedes-Benz Actros as "Interna-
tional Truck of the Year." For this award, expert jurors evaluate
both technical innovations and further developments, as
well as innovations that have a direct influence on overall cost-
effectiveness, safety or environmental compatibility. The
award was presented at the international trade fair Road &
Urban Transport Solutions (Solutrans) in Lyon.
In Asia, demand for trucks in Indonesia and India clearly
declined during 2019, and our sales in the region also decreased
significantly to 135,200 units (2018: 164,700). This develop-
ment was particularly pronounced in Indonesia, where our unit
sales fell by to 39,100 vehicles (2018: 64,200). In India, we
sold 14,500 vehicles and were thus also significantly below the
high unit sales of the previous year (2018: 22,500). With the
BharatBenz brand, we achieved a market share of 5.8% (2018:
6.0%). Since the beginning of the export business, more than
25,000 export vehicles have been produced in India. The plant
in Chennai is an integral component of the worldwide produc-
tion network of Daimler Trucks & Buses. In the context of the
planned introduction of the new Bharat Stage VI emissions
standard, the plant is to gain further importance as a global
export hub. Trucks are then to be delivered to countries such
Fully electric with batteries and fuel cells: By the year 2039, Daimler
Trucks & Buses aims only to offer new vehicles that are locally
CO2-neutral in driving operation (tank-to-wheel) in its core markets
of Europe, Japan and the NAFTA region.
SCHOOL BUS
FU
0 0 0
FREIGHTLINER
C | THE DIVISIONS | DAIMLER TRUCKS 169
as Mexico, Chile and Brazil, where comparable emission stan-
dards apply. In the Japanese truck market, we sold 42,200
units in the year 2019, slightly fewer than in the previous year
(2018: 44,000). Since October 2019, the FUSO Super Great
heavy-duty truck has been available with partially automated
driving functions (SAE Level 2).
Sales of 86,200 units of Auman trucks, which are produced
in China by our joint venture Beijing Foton Daimler Automotive
Co., Ltd. (BFDA), were significantly lower than the prior-year
volume (2018: 103,400). In the middle of the year, the new
Auman EST-A heavy-duty truck was launched in the Chinese
market with the locally produced Mercedes-Benz OM457
engine.
First trials of trucks with automated driving on public
roads
Daimler Trucks and Torc Robotics, a pioneer in the field
of autonomous driving, entered into a partnership last year to
market highly automated trucks (SAE Level 4) in the United
States. In this context, we acquired a majority interest in Torc
Robotics that we then placed into Daimler Trucks' Autono-
mous Technology Group, in which all expertise and activities
relating to automated driving were brought together in June
2019. With the new unit, Daimler Trucks intends to bring highly
automated trucks (SAE Level 4) to market maturity within a
decade. The development sites of the global organization cur-
rently include Blacksburg and Portland in the United States
and Stuttgart in Germany. The development of software for
highly automated driving is one of the main areas of activity of
the Autonomous Technology Group. Another is a truck chassis
that is perfectly suited for highly automated driving and which
can contribute to enhanced reliability and safety through
the interaction between various systems. The infrastructure
and network for the operational use of such vehicles, which
will be set up by the Autonomous Technology Group, consists
of a main control center for the vehicles and additional stations
at the logistics nodes. Together with Torc Robotics, the devel-
opment and testing of highly automated trucks (SAE Level 4) on
defined routes on public roads began in Virginia, USA, in 2019.
With Detroit Assurance 5.0 featuring Active Lane Keeping Assist
in the new Freightliner Cascadia and with Active Drive Assist
in the new Mercedes-Benz Actros and the new FUSO Super Great,
we already put semi-automated driving functions into our
production vehicles in 2019. The new system can support the
driver in all speed ranges with braking, accelerating and
steering. This is based on the intelligent combination of radar
and camera information.
Supply agreement for global battery modules for
series-produced trucks
Daimler Trucks & Buses and the battery producer Contemporary
Amperex Technology Co. Limited (CATL) entered into a global
supply agreement for battery modules in 2019. CATL is a world
leader for the development and production of lithium-ion
batteries. The agreement relates to battery modules for trucks
eCITARO
17239
170
including the Mercedes-Benz eActros, Freightliner eCascadia
and Freightliner eM2. Daimler Trucks & Buses is responsible
for developing the battery systems and will also assemble
the battery packs at the Mercedes-Benz plant in Mannheim,
Germany, and at the US plant in Detroit, Michigan.
Daimler Buses is making use of an intelligent combination of
batteries and fuel cells as it continues to develop the battery-
electric Mercedes-Benz eCitaro city bus. This will enable
the vehicle range to be further increased by using a fuel cell to
generate electricity from hydrogen stored onboard the vehicle.
The development of this technology is being funded by the
German Federal Ministry of Transport and Digital Infrastructure
within the framework of the Hydrogen and Fuel Cell Technol-
ogy National Innovation Program. The objective of the program
is to support the market launch of initial products needed
for the implementation of hydrogen and fuel-cell systems in
various application areas.
-20.8
Investment in property,
438,386 421,401
+4
EU30
298,056 278,269
+7
thereof Germany
NAFTA
121,296
107,267
+13
56,470
+11
thereof United States
Latin America
(excluding Mexico)
45,654
38,741
+18
18,638
18,735
-1
Asia
38,562
38,779
-1
thereof China
Award-winning products from Daimler Buses
Daimler Buses received a large number of major orders in the
year under review. In Poland, for example, Daimler Buses
was able to sign contracts for delivery of 48 Mercedes-Benz
Citaro city buses to Gdańsk and 50 Citaro G articulated
buses to Wrocław. A transportation company in Austria took
delivery of 64 Mercedes-Benz city buses for the Vienna
metropolitan area. The EMT Madrid transport company in the
Spanish capital is already successfully operating several
hundred Mercedes-Benz Citaro NGT buses equipped with gas-
eous-fuel drive systems. This number is to be increased
through an additional major order for up to 672 environmen-
tally friendly city buses in 2020. During the year under
review, Daimler also received a major order from Bucharest,
Romania for a total of 130 low-floor Citaro hybrid city
buses. The city of Essen in Germany renewed its city bus fleet
with the purchase of 45 Citaro hybrid buses, while the city
of Trier signed an agreement for delivery of 90 Mercedes-Benz
Citaro city buses. Daimler Buses also began fulfilling a
major order for Hamburg by delivering the first of a total of 60
Capa City L buses to the city. Daimler Buses also obtained
major orders in other markets around the globe, including an
order for 44 Euro VI chassis for delivery to Sydney, Australia.
Daimler Buses is to deliver a total of 147 buses to Montevideo,
the capital city of Uruguay, by the end of 2020. Finally, the
Bus Rapid Transit System in Santiago de Chile placed a major
order with Daimler Buses for delivery of 490 buses to the
Chilean capital.
Numerous major orders received
OMNIplus ON, the digital service portal from Daimler Buses,
has launched its integrated online shop for replacement
bus parts. The new OMNIplus eShop offers the entire range of
parts for the Mercedes-Benz and Setra brands. In addition,
because the system is fully incorporated into the OMNIplus ON
customer portal, it already knows the specific fleet belonging
to the person or company that places an order.
Total
2.3
19/18
% change
2019
plant and equipment
240
468
-49
Research and development
expenditure
543
666
-18
thereof capitalized
96
176
-45
Production
425,887
440,314
-3
438,386
21,346
421,401
+4
21,810
-2
Unit sales
Employees (December 31)1
1 Adjustment of the number of employees in 2018 due to changes in
the Group's internal allocation of employees.
C.06
Unit sales Mercedes-Benz Vans
2018
312
50,851
Mexico
Total
19/18
% change
2018
2019
Unit sales Daimler Buses
C.08
1 Adjustment of the number of employees in 2018 due to changes in
the Group's internal allocation of employees.
+1
17,729
+6
30,888
32,612
17,960
Employees (December 31)1
Unit sales
+3
31,233
Production
-44
41
23
thereof capitalized
+2
199
203
expenditure
Research and development
-7
144
134
32,612
30,888
EU30
9,283
-19
Asia
3,400
3,172
+7
Other markets
1,656
1,515
+9
Slight increase in unit sales
Daimler Buses sold 32,600 buses and bus chassis worldwide
in financial year 2019 (2018: 30,900). The slight increase was due
in particular to the noticeable recovery of the market in Brazil,
ongoing strong demand in our important EU30 market and sub-
stantial sales growth in Argentina. A market-related decrease
in demand in Turkey had a negative impact on our unit sales. The
division was able to maintain its market leadership in its most
important traditional core markets (EU30, Brazil, Argentina and
Mexico). Revenue increased by 5% to €4.7 billion and EBIT
of €283 million was slightly higher than in the previous year
(2018: €265 million). Return on sales was 6.0% (2018: 5.9%).
Varied business development in the core regions
In the EU30 region, the Daimler Buses brands Mercedes-Benz
and Setra offer a complete range of city buses, intercity buses
and touring coaches, as well as bus chassis in certain markets.
Due to continued high demand for our complete buses, sales
in this region amounted to 9,300 units, which equaled the high
figure recorded in the prior year (2018: 9,300). Daimler Buses
defended its leading market position in the EU30 region with a
market share of 27.5% (2018: 29.0%). At 3,000 units, sales in
Germany were 5% higher than in the previous year. However,
sales in Turkey were significantly lower than in the previous
year (2018: 300) due to the country's economic situation, which
remains difficult. The market situation in Latin America
(excluding Mexico) improved further on account of the notice-
able market recovery in Brazil. Sales of Mercedes-Benz bus
chassis in Brazil rose by 30% to 11,400 units. We were able to
strengthen our leading market position in Brazil with a market
share of 53.8% (2018: 51.6%). Sales of 1,600 units in Argentina
were significantly above the prior-year level (2018: 1,300),
despite a significantly contracting market in the country. We
sold 1,600 units in India, thus equaling the previous year's
sales (2018: 1,600). Sales of 2,600 units in Mexico were signifi-
cantly lower than in the previous year (2018: 3,200).
ATION
plant and equipment
S
2,627
+14
+30
8,778
11,394
thereof Brazil
13,681
15,646
(excluding Mexico)
Latin America
+6
-0
+5
2,902
3,041
thereof Germany
9,284
3,236
Investment in property,
32,257
6.0
A revolutionary mobility concept as a response to questions
of the future: At the Consumer Electronics Show (CES) in Las
Vegas in January, Mercedes-Benz Vans presented Vision
URBANETIC, a concept van that opens up new perspectives for
autonomous driving. Vision URBANETIC is designed to
enable the needs-based, sustainable and efficient movement
of people and goods, and it also meets the needs of cities,
companies from a wide range of industries, and travelers and
commuters in innovative ways. This visionary concept is
based on an autonomously driving, electrically powered chassis
that can be fitted with various bodies for transporting either
passengers or goods. The fully connected vehicle is part of an
ecosystem in which the mobility wishes of logistics companies,
local public transport operators and private customers are
transmitted digitally. All of this creates new possibilities for the
efficient utilization of resources.
173
C | THE DIVISIONS | MERCEDES-BENZ VANS
Mercedes-Benz EQV (combined electricity consumption: 27.0 kWh/100 km; combined CO2 emissions: 0 g/km, preliminary figures)¹
SMB 155E
1 Figures for electricity consumption and range are provisional and were
determined by the technical service for certification according to UN/ECE
Regulation 101. EC type approval and certification of conformity with
official figures are not yet available. There may be differences between the
stated figures and the official figures.
For example, Mercedes-Benz Vans presented the Concept EQV
at the Geneva International Motor Show in March. This was
followed in August by the world premiere of our first battery-
electric multipurpose vehicle in the premium segment: the
Mercedes-Benz EQV (combined electricity consumption:
27.0 kWh/100 km; combined CO2 emissions: 0 g/km, prelimi-
nary figures). The second member of the EQ family combines
locally emission-free mobility with impressive driving perfor-
mance, a range suited to today's needs, fast charging, out-
standing functionality and aesthetic design. Technical highlights
include a range of up to 405 kilometers¹ and fast charging
of the vehicle's high-voltage battery from 10 to up to 80% in less
than 45 minutes. The Mercedes-Benz EQV also offers exten-
sive interior comfort and a high degree of flexibility. The EQV is
a series-produced vehicle that is fully integrated into normal
production operations at our plant in Vitoria in northern Spain,
where the V-Class and Vito are also built. This arrangement
allows flexible and synergistic production that can accommo-
date fluctuations in customer demand. One of the components
of the EQ technology brand is a comprehensive electric
mobility ecosystem, which the Mercedes-Benz EQV benefits
from as the youngest member of the EQ family. This ecosystem
includes a holistic range of consulting and other services
and encompasses everything from vehicle functions (e.g. an
adapted navigation system) to an effective charging infra-
structure. Series production of the eSprinter began at the end
of 2019 at the Mercedes-Benz plant in Düsseldorf.
eDrive@Vans played a major role in our activities in 2019.
With its future-oriented "adVANce" initiative, Mercedes-Benz
Vans is evolving from a manufacturer of globally successful
vans into a provider of holistic system solutions for transporta-
tion and mobility. The division is thus a pioneer of its sector.
adVANce combines activities in various areas and comprises
six innovation fields: digital@Vans, solutions@Vans, rental@
Vans, sharing@Vans, eDrive@Vans and autonomous@Vans. We
are employing a customer-oriented co-creation approach to
involve our customers in the development process at an early
stage. Here, we are combining our six innovation fields in order
to develop new business models and tailored solutions that
are adapted to our customers' respective sectors.
Decision on the successor model to the Citan small van
Mercedes-Benz will systematically continue its engagement in
the small-van segment in cooperation with the Renault-Nissan-
Mitsubishi Alliance, and the brand has also now decided on
the successor model to its Citan urban delivery van, which has
been available since 2012. Plans also call for an all-electric
version to be added to the Mercedes-Benz Vans portfolio.
The upgraded V-Class had its world premiere at the beginning
of 2019. The Mercedes-Benz multipurpose vehicle now has
a redesigned front end that is even more stylish and dynamic
than before. With the introduction of the OM654 four-cylinder
diesel engine, the 9G-TRONIC automatic transmission, which
is now available for the first time, and upgraded safety and
assistance systems including Active Brake Assist, the V-Class
is equipped with state-of-the-art technology. The update
has also benefited the camper vans from the Marco Polo family
that are based on the V-Class. We started series production
of the new V-Class at the Mercedes-Benz plant in Vitoria
(Spain) in May 2019.
The new Mercedes-Benz V-Class
C | THE DIVISIONS | MERCEDES-BENZ VANS
172
-23
34,767
26,660
Other markets
+1
29,068
5.9
In addition to manufacturing our products, we create digital
services for and with our customers. We also work continuously
to develop forward-looking innovations that will enable in the
future us to meet increasing transport requirements faster and
more efficiently, and in a more environmentally friendly man-
ner. To this end, the digital@Vans initiative at Mercedes-Benz
Vans has been developing digital solutions for various busi-
ness sectors; Mercedes-Benz Vans presented a range of related
services in October 2019. Here, Mercedes PRO serves as the
umbrella brand for all digital and non-digital services and solu-
tions for daily business operations. Mercedes PRO connect
for vehicle fleets optimizes communication between fleet man-
agers, vehicles and drivers. This connectivity solution makes
it possible to manage assignments online and call up vehicle
status information such as location, fuel levels, and mainte-
nance intervals in nearly real time. A new feature here is the
possibility of integrating the Mercedes PRO adapter into the
system world of Mercedes PRO connect. The Mercedes PRO
adapter is our compact hardware solution that also allows
older fleet vehicles to use Mercedes PRO connect services and
thus benefit from the innovative world of connectivity. Mercedes-
Benz Vans Rental specializes exclusively in vans and offers its
customers maximum flexibility with respect to vehicle changes
and return times at around 120 stations at present. The van
rental fleet covers the entire range of Mercedes-Benz Vans prod-
ucts with a mix of standard and sector-specific vehicles. These
include the all-electric eVito, in addition to a large number of
rental vehicles with special bodies for the transport of passen-
gers and goods. Efficient material logistics is a key success
factor for service technicians in particular. "In-Van Delivery &
Return" allows dispatchers and service technicians to easily
assign material logistics tasks to professional logistics compa-
nies. The latter can then deliver required parts and compo-
nents directly to a van at night for use the next day - and can
also pick up materials that are no longer needed.
Future-oriented "adVANce" initiative
Various major orders received
Return on sales (in %)
With its Onboard Logic Unit (OLU), Mercedes-Benz Vans has
developed an innovative control unit for the transport sector.
The OLU enables effective interaction between hardware
and software. Among other things, it connects vehicles to the
cloud, thereby enabling a high degree of flexibility and the
establishment of links between different functions. This simpli-
fies technical access and the management of live vehicle
data - even for users without any vehicle-specific or technical
expertise. In turn, this makes it possible for third parties to
develop applications more quickly and easily and to implement
them in vehicles. In order to ensure the security of systems
and data, these applications are provided only for specific func-
tions and cannot be used for any other purpose.
+5
+7
265
283
EBIT
4,529
Revenue
19/18
% change
€ amounts in millions
2018
4,733
2 Electricity consumption was determined on the basis of Directive
692/2008/EC. Electricity consumption is dependent on vehicle
configuration, in particular on the selected maximum speed limitation.
Daimler Buses
C.07
In 2019, business developments at Daimler Buses benefited from growing demand and increased
unit sales in key markets. Our unit sales and revenue continued to increase in this environment and
the division's EBIT was slightly above the prior-year level. As the market leader in its most important
traditional core markets, Daimler Buses focuses on future-oriented and sustainable city and intercity
buses and touring coaches, as well as bus chassis. Its portfolio also includes innovative mobility
solutions. In 2019, Daimler Buses was once again well positioned as a future-oriented manufacturer
with technologically leading products such as the eCitaro, new digital services such as OMNIplus
ON, and a strong and enhanced production network. Such products and services make an important
contribution to sustainable passenger transport and the further development of public transporta-
tion systems.
Daimler Buses
C | THE DIVISIONS | DAIMLER BUSES
174
2019
Electric mobility is also becoming increasingly important in
large fleets that are used for passenger transportation. This
fact is confirmed by the various major orders Mercedes-Benz
Vans received in the year under review. In Hamburg, for exam-
ple, the first of 20 eVito series-production vans and eSprinter
pilot vehicles were delivered to Hermes Germany in February
2019. Hermes is Mercedes-Benz Vans' first major business
customer to begin using electric commercial vehicles across
the board. The "BerlKönig" on-demand ride-pooling service,
which is offered by ViaVan and Berlin's BVG public transport
company, has been operating the eVito Tourer in its fleet
since July 2019. Mercedes-Benz Vans also received a major
order from the Netherlands for 80 eVito Tourers (electricity
consumption in the combined test cycle: 24.2 - 20.2 kWh/
100 km; combined CO2 emissions: Og/km)². ISS Communica-
tion Services GmbH ordered 225 Mercedes-Benz Vito vans,
which it will use for maintenance operations on the mobile-
phone network throughout Germany. ROM Technik (Rudolf
Otto Meyer Technik GmbH & Co. KG) will operate a new fleet
of approximately 480 Mercedes-Benz vans all across Germany
in the future. The first of these vehicles were handed over to
the company at the Mercedes-Benz Commercial Vehicles Cen-
ter in Bremen in July. In October 2019, Schlienz-Tours GmbH &
Co. KG, an expert for regular service bus operation and coach
tours, took delivery of the first of what will be a fleet of
105 Mercedes-Benz Vito, Sprinter, V-Class and eVito vehicles.
What we expect of our business partners
Risk management at the Group
Accounting principles
Composition and mode of operation of the
Daimler Mobility brokered approximately 2.4 million insurance
policies in 2019 - an increase of 5% compared to the prior
year. Business developments were particularly positive in China
(+23%), Germany (+2%) and Russia (+13%). The focus of the
insurance sales is on the digitization of the dealer and customer
interfaces and of the operational processes for further growth.
Board of Management
Diversity
Guidelines for behaving with integrity
Declaration by the Board of Management and
the Supervisory Board of Daimler AG pursuant
to Section 161 of the German Stock Corporation
Act (AktG) regarding the German Corporate
Governance Code
Board of Management
The German Corporate Governance Code
Principles of our actions
Chairman
Corporate government in practice
Supervisory Board
D & O insurance deductible for the
185
The Declaration on Corporate Governance pursuant to Section 289f and Section 315d of the
German Commercial Code (HGB) has been combined for Daimler AG and the Daimler Group as well
as with the Corporate Governance Report. The following statements thus apply to Daimler AG
and the Daimler Group insofar as not otherwise stated. The Declaration on Corporate Governance,
which is combined with the Corporate Governance Report, can also be viewed on the Internet at
daimler.com/dai/dcgc. Pursuant to Section 317 Subsection 2 Sentence 6 of the German Com-
mercial Code (HGB), the purpose of the audit of the statements pursuant to Section 289f Sub-
sections 2 and 5 and Section 315d of the HGB is limited to determining whether such statements
have actually been provided.
Declaration on Corporate Governance,
Corporate Governance Report
185
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
Daimler AG satisfies the recommendations of the German
Corporate Governance Code published in the official section of
the German Federal Gazette on April 24, 2017 in the Code ver-
sion dated February 7, 2017, with the exception of Clause 3.8
Paragraph 3 (D&O insurance deductible for the Supervisory
Board) and Clause 5.4.5 Paragraph 1 Sentence 2 (maximum
number of supervisory board memberships for members of the
management board of a listed corporation) and will continue
to observe the recommendations with the aforesaid deviations.
Since the issuance of the updated compliance declaration
in September 2019, Daimler AG has observed the recommen-
dations of the German Corporate Governance Code, with the
two aforementioned exceptions.
Dr. Clemens Börsig
186
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3) As in previous years, the Directors'
& Officers' liability insurance (D&O insurance) also contains
a provision for a deductible for the members of the Supervisory
Board, which is appropriate in the view of Daimler AG. How-
ever, this deductible does not correspond to the legally required
deductible for members of the Board of Management in the
amount of at least 10% of the damage up to at least one and a
half times the fixed annual remuneration. Since the remu-
neration structure of the Supervisory Board is limited to func-
tion-related fixed remuneration without performance bonus
components, setting a deductible for Supervisory Board mem-
bers in the amount of 1.5 times the fixed annual remuneration
would have a disproportionate economic impact when com-
pared with the members of the Board of Management, whose
compensation consists of fixed and performance bonus com-
ponents.
We also require our business partners to adhere to clear
stipulations because we regard our business partners' integrity
and behavior in conformity with regulations as a precondition
for trusting cooperation. When selecting our direct business
partners, we therefore pay close attention to ensure that they
comply with the law and follow ethical principles, and that
they pay the same attention themselves to other partners in
the supply chain. For the expectations we place on our busi-
ness partners, see also ④ daimler.com/sus/obr.
Stuttgart, December 2019
Милиц
Risk management at the Group
Daimler has a risk management system commensurate with its
size and position as a company with global operations
pages 135 ff of the Annual Report 2019. The risk manage-
ment system is one component of the overall planning, control-
ling and reporting process. Its goal is to enable the company's
management to recognize significant risks at an early stage
and to initiate appropriate countermeasures in a timely manner.
At least once a year, the Audit Committee of the Supervisory
Board of Daimler AG discusses the effectiveness and function-
ality of the risk management system with the Board of Man-
agement. The Chairman of the Audit Committee reports to the
Supervisory Board of Daimler AG on the committee's work
at the latest in the meeting of the Supervisory Board following
each committee meeting. The Supervisory Board of Daimler
AG also deals with the risk management system on the occa-
sion of the audit of the annual company and consolidated
financial statements. The Chairman of the Supervisory Board
has regular contacts between Supervisory Board meetings
with the Board of Management, and in particular with the
Chairman of the Board of Management, to discuss not only the
Group's strategy and business development but also the
issue of risk management. In addition, the Board of Manage-
ment of Daimler AG regularly informs the Audit Committee
and the Supervisory Board of the most important risks facing
the company and the Group as a whole. The Legal Affairs
Committee, which was established by the Supervisory Board
during the reporting period to operate until further notice,
supports the Supervisory Board in carrying out its tasks with
respect to the complex proceedings relating to emissions
regulations and antitrust law with which Daimler AG and its
subsidiaries are confronted. The Internal Auditing
department monitors adherence to the legal framework and to
Group standards by means of targeted audits and initiates
appropriate actions as required.
Expectations for our business partners
We have also reached agreement on "Principles of Social
Responsibility" with the World Employee Committee. These
principles apply at Daimler AG and throughout the Group. In
the Principles of Social Responsibility, Daimler commits itself
to the principles of the UN Global Compact and thus to inter-
nationally recognized human and workers' rights, freedom of
association, sustainable protection of the environment and
the proscription of child labor and forced labor. Daimler also
commits itself to guaranteeing equal opportunities and
adhering to the principle of “equal pay for equal work."
Integrity Code includes requirements and regulations concern-
ing respect for and the protection of human rights and dealing
with conflicts of interest. It also prohibits all forms of corrup-
tion. The Integrity Code applies to all companies and employ-
ees of the Daimler Group worldwide. The Integrity Code
is available on the Internet at ☺ daimler.com/dai/caag.
Employees from different departments and units throughout
the Group and around the world helped us develop our
Integrity Code, which was revised in 2019. Our Integrity Code
defines the central corporate principles that guide our behav-
ior in daily business, our interpersonal conduct within the com-
pany and our conduct toward customers and business part-
ners. These corporate principles include compliance with laws,
as well as fairness, transparency, a commitment to diversity,
and responsibility. In addition to the corporate principles, our
Our Integrity Code
Our business conduct is based on Group-wide standards
that go beyond the requirements of relevant legislation and the
German Corporate Governance Code. These standards are
based on our four corporate values integrity, respect, passion
and discipline. In order to achieve long-term and thus sustain-
able business success on this basis, our goal is to ensure that
our activities are in harmony with the environment and society.
This is due to the fact that we, as one of the world's leading
vehicle manufacturers, also strive to be a leader in sustainabil-
ity. We have defined the most important principles in our
Integrity Code, which serves as a frame of reference for all
employees at Daimler AG and the Group and supports them in
making the right decisions even in difficult business situations.
Maximum number of supervisory board memberships for
members of the management board of a listed corporation
(Clause 5.4.5 Paragraph 1 Sentence 2). In accordance
with this recommendation, the management board of a listed
corporation shall not accept more than a total of three super-
visory board memberships in non-group listed corporations or
on supervisory bodies of non-group entities that make similar
requirements. Whether the number of supervisory board mem-
berships held by a member of the management board of a
listed corporation still seems appropriate should, however, be
assessed more appropriately on a case-by-case basis than
with a rigid upper limit. The individual workload expected for a
member of a management board as a result of the total
number of memberships held does not necessarily increase in
proportion to their number.
The principles guiding our conduct
The deviation from Clause 5.4.5 Paragraph 1 Sentence 2 of the
Code relates to Joe Kaeser's exceeding the maximum number
of memberships on supervisory boards recommended therein
for management board members of listed corporations. The
maximum number of memberships was exceeded in this case
when Joe Kaeser became a member of the Supervisory Board
of Mercedes-Benz AG. The Board of Management and the
Supervisory Board are of the opinion that although this addi-
tional membership of a supervisory board within the Daimler
Group does increase the workload associated with the member-
ship of the Supervisory Board of Daimler AG, it does so to
an extent substantially less than would be the case if the addi-
tional membership were to relate to a third-party company.
Beyond the legal requirements of German stock corporation,
codetermination and capital market legislation, Daimler AG has
followed and continues to follow the recommendations of
the German Corporate Governance Code ("Code") in the Code
version dated February 7, 2017, with the exceptions disclosed
and justified in the declaration of compliance.
The German Corporate Governance Code
The main principles applied in our corporate
governance
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
186
This declaration and previous, no longer applicable, declara-
tions of compliance from the past five years are also available
at our website at daimler.com/dai/dcgc.
For the Board of
Management
Ola Källenius
Chairman
Dr. Manfred Bischoff
Chairman
For the Supervisory Board
Daimler AG has followed and continues to follow the sugges-
tions of the Code with just one exception: Deviating from the
suggestion in Clause 2.3.3, which stipulates that companies
should enable shareholders to view the Shareholders' Meeting
with modern communications media such as the Internet,
the Shareholders' Meeting is not transmitted in its entirety on
the Internet, but only until the end of the report by the Board
of Management, in order to protect the character of the Share-
holders' Meeting as a meeting attended by our shareholders in
person. An additional factor is that continuing the broadcast
after that point, in particular broadcasting comments made by
individual shareholders, could impair the discussion between
shareholders and management.
The Audit Committee
Further growth in the insurance business
As in previous years, the Audit Committee conducted a self-
evaluation of its own activities in 2019 on the basis of an
extensive company-specific questionnaire. The results of this
efficiency review were once again very positive and were pre-
sented and discussed in the meeting on February 19, 2020.
This did not result in any need for action with regard to the
Committee's tasks, or with regard to the content, frequency or
procedure of its meetings.
Law for the equal participation of women and men
187
188
in executive positions
191
Overall requirements for the composition of the
Board of Management and the Supervisory Board
191
Board of Management
Supervisory Board
Shareholders and Shareholders' Meetings
185-195
195
D | CORPORATE GOVERNANCE | CONTENTS
Mediation Committee
181
Combined
Further Information
Non-Financial Report
Corporate Governance
The Divisions
Contents
Financial Statements
Management Report
182
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Report of the Audit Committee
Dear Shareholders,
As Chairman of the Audit Committee, I am very pleased to
report to you on the tasks and activities performed by that
body in financial year 2019.
Responsibility
Consolidated
Stuttgart, February 2020
Legal Affairs Committee
Nomination Committee
Efficiency review
In another meeting on February 19, 2020, the Audit Committee
reviewed and discussed in detail the annual financial state-
ments, the consolidated financial statements and the com-
bined management report for Daimler AG and the Daimler
Group for financial year 2019, each of which had been issued
with an unqualified auditor's opinion by the external auditors,
as well as the proposal on the appropriation of profits and the
non-financial report, which was issued with a report in accor-
dance with ISAE 3000. At the meeting, the external auditors
reported on the results of their audit and focused in particular
on the key audit matters and the audit approach applied in
each case, including the conclusions drawn. They also
reported on the voluntary review of the non-financial report
within the framework of a limited assurance engagement and
were available to answer supplementary questions and to pro-
vide additional information. The audit reports on the annual
financial statements and consolidated financial statements
(including the key audit matters in the audit opinions) and on
the internal control system, the report concerning the non-
financial report for 2019 and important issues related to finan-
cial reporting were discussed with the external auditors. In
addition, the Audit Committee also discussed the risk manage-
ment system. Following an in-depth review and discussion, the
Audit Committee recommended that the Supervisory Board
approve the financial statements, the combined management
report, the declaration on corporate governance included in
the corporate governance report, the non-financial report and
the recommendation of the Board of Management to pay a divi-
dend of €0.90 per share entitled to a dividend. Furthermore,
the Audit Committee approved the Report of the Audit Com-
mittee for financial year 2019.
Company and consolidated financial statements 2019
In a meeting held on February 10, 2020, the Audit Committee
dealt with the preliminary figures of the annual financial state-
ments and the annual consolidated financial statements for the
year 2019, as well as with the proposal on the appropriation of
profits made by the Board of Management. Following an in-
depth review, the Audit Committee took positive note of the
presented figures and determined that no objections were to
be made to their proposed publication. The Committee further
recommended that the Supervisory Board, which met immedi-
ately thereafter, adopt the same view. The preliminary key fig-
ures and the proposal on the appropriation of profits were
announced at the Annual Press Conference on February 11,
2020.
In the meeting held in October 2019, the Audit Committee
dealt with the interim financial report for the third quarter of
2019 and the quarterly reports from the Compliance and Legal
departments. In addition, the Committee conducted its annual
review of the authorized non-audit services provided by the
external auditors and also decided to retain the current cata-
logue of authorized non-audit services.
In the meeting held in July 2019, the Audit Committee dealt
mainly with the results of the second quarter of 2019, when the
earnings expectations were readjusted two times. As part of
its risk reporting activities, the Audit Committee mainly
addressed legal proceedings as well as production and tech-
nology-related risks. In addition, the Committee received quar-
terly reports from the Compliance, Internal Auditing and Legal
departments. Finally, the Audit Committee discussed with the
Board of Management the annual report produced by the
Group's Data Protection Officer.
for financial year 2018. Lastly, the Audit Committee learned
about the implementation of the central financial risk manage-
ment system and of the pension management in the new cor-
porate structure. Thereafter, the Committee took note of a
report about current tax-related issues, in particular concern-
ing the punitive tariff risk posed by international trade dis-
putes.
D❘ CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
184
In its meeting in June 2019, the Audit Committee discussed
aspects of the Group's risk management system and dealt in
particular with its changes and further development. It also
discussed the methods and processes of, and changes to, the
internal control system. Adjustments had to be made in partic-
ular due to the decision by the Annual Shareholders' Meeting
on May 22, 2019 to create a new corporate structure ("Project
Future"). In this meeting, the Committee also defined planning
measures and the key audit issues for financial year 2019. In
addition, the Audit Committee extensively investigated current
accounting issues. These include the statements by the Euro-
pean Securities and Markets Authority (ESMA) concerning the
uniform electronic reporting system as well as the methodol-
ogy for evaluating the existing fleet of leased vehicles, includ-
ing diesel-powered ones. The meeting was also used to discuss
the results of the internal quality analysis of the external audit
The meeting of the Audit Committee in April 2019 dealt with
the interim financial report for the first quarter of 2019 and the
quarterly reports from the Compliance and Legal departments.
The Audit Committee also approved the fees agreed upon with
the external auditors for financial year 2019 that had been pro-
posed to the Annual Shareholders' Meeting. However, this was
done subject to the auditors' election on May 22, 2019. More-
over, the Audit Committee decided to propose to the Supervi-
sory Board that it have the contents of the non-financial report
for 2019 voluntarily reviewed again with limited assurance.
with the external auditors engaged to carry out the auditors'
review of interim financial statements. In addition, the Commit-
tee received reports from the Internal Auditing, Compliance
and Legal departments. The Board of Management reported
regularly to the Audit Committee on the current status of the
main legal proceedings, including antitrust proceedings as well
as inquiries, investigations, proceedings and administrative
orders in connection with diesel emissions. In addition, the
Audit Committee regularly dealt with notifications concerning
possible violations of rules submitted by employees and third
parties to the Group's own whistleblower system BPO (Busi-
ness Practices Office).
In the meetings during 2019 related to the quarterly results,
the Audit Committee discussed the interim financial reports
before their publication with the Board of Management and
In this meeting, the Audit Committee also discussed the report
on the total fees paid to the external auditors in financial year
2018 for auditing and non-auditing services and defined the
framework of approval for engaging the external auditors to
provide non-audit services during the period January 1, 2019 to
February 15, 2020. The Audit Committee also decided to rec-
ommend to the Supervisory Board, and subsequently to the
Annual Shareholders' Meeting, that KPMG AG Wirtschaftsprü-
fungsgesellschaft be engaged to conduct the annual external
audit and the external auditors' review of interim financial
reports for financial year 2019 and also to conduct the external
auditors' review of interim financial reports for financial year
2020 in the period leading up to the Annual Shareholders'
Meeting in 2020. The Audit Committee based this recommen-
dation on the quality of the annual audit and the results of the
independence review, for which no indications of partiality or a
threat to independence were found. Subject to the election of
the proposed external auditors by the Annual Shareholders'
Meeting, the Audit Committee also discussed the proposal to
be made regarding the fees to be agreed upon with the exter-
nal auditors for financial year 2019. Finally, within the frame-
work of its responsibility, the Audit Committee dealt with the
agenda for the 2019 Annual Shareholders' Meeting and the
annual audit plan for 2019 of the Internal Auditing department.
with the external auditors. In addition, the Audit Committee
also discussed the risk management system. Following an in-
depth review and discussion, the Audit Committee recom-
mended that the Supervisory Board approve the financial
statements, the combined management report, the declaration
on corporate governance included in the corporate governance
report, the non-financial report, and the Board of Manage-
ment's proposal on the appropriation of profits, which involved
the payment of a dividend of €3.25 per share entitled to a divi-
dend. Furthermore, the Audit Committee approved the Report
of the Audit Committee for the financial year 2018.
Audit Committee
183
Dr. Clemens Börsig, Chairman of the Audit Committee
In another meeting held on February 13, 2019, the Audit Com-
mittee dealt with the annual financial statements, the consoli-
dated financial statements and the combined management
report for Daimler AG and the Daimler Group for financial year
2018, each of which had been issued with an unqualified audi-
tor's opinion by the external auditors, as well as with the pro-
posal on the appropriation of profits. During the meeting, the
Audit Committee focused in particular on the key audit matters
described in each audit opinion and on the audit approach
applied in each case, including the conclusions drawn. The
Audit Committee also reviewed and discussed the non-finan-
cial report, for which an auditor's report was issued in accor-
dance with ISAE 3000. The external auditors reported on the
results of their audit and the voluntary review of the non-finan-
cial report within the framework of a limited assurance engage-
ment, and were also available to answer supplementary ques-
tions and to provide additional information. The audit reports
on the annual company and consolidated financial statements
(including the combined management report) and the internal
control system, the report concerning the non-financial report,
and important issues related to accounting were discussed
In the meeting held on February 5, 2019, the Audit Committee
dealt with the preliminary figures of the annual financial state-
ments and the annual consolidated financial statements for the
year 2018, as well as with the proposal on the appropriation of
profits made by the Board of Management. Following an in-
depth review, the Audit Committee took positive note of the
presented figures and determined that no objections were to
be made to their proposed publication. The Committee further
recommended that the Supervisory Board, which met immedi-
ately thereafter, adopt the same view. The preliminary key fig-
ures and the proposal on the appropriation of profits were
announced at the Annual Press Conference on February 6,
2019.
Topics in 2019
The Chairman of the Audit Committee informed the Supervi-
sory Board about the activities of the Committee and about the
contents of its meetings and discussions in the following
Supervisory Board meetings.
Reporting to the Supervisory Board
In addition, the Chairman of the Audit Committee held regular
individual discussions, for example with the aforementioned
members of the Board of Management, the external auditors,
the Head of Internal Auditing, the Head of Compliance and, if
required, the heads of other specialist departments.
The Audit Committee met six times in financial year 2019. All of
these meetings were also attended by the Chairman of the
Supervisory Board, Dr. Manfred Bischoff, as a permanent
guest. The other permanent participants in the meetings were
the Chairman of the Board of Management, the members of
the Board of Management responsible for Finance and Control-
ling and for Integrity and Legal Affairs, and the external audi-
tors. The heads of specialist departments such as Accounting,
Internal Auditing, Compliance and Legal were also present to
report on individual items of the agenda.
Meetings and participants
Audit Committee Chairman Dr. Clemens Börsig and Joe Kaeser
served as the shareholder representatives on the Audit Com-
mittee in financial year 2019. Both are independent and have
expertise in the field of financial reporting, as well as special
knowledge of and experience in the auditing of financial state-
ments and the application of methods of internal control. Dur-
ing financial year 2019, the employees were represented on the
Audit Committee by Michael Brecht as the Deputy Chairman of
the Committee and by Ergun Lümali.
Composition and mode of operation of the
Supervisory Board and its committees
Supervisory Board
Presidential Committee
D | CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
182-184
Equal representation
Corporate Governance Report
14,070
-10
178
C | THE DIVISIONS | DAIMLER MOBILITY
Daimler Financial Services AG renamed
Daimler Mobility AG
On July 23, 2019, Daimler Financial Services AG began operat-
ing under the name Daimler Mobility AG, acting as the provider
of services in the fields of financing, leasing, insurance and
fleet management for the entire Daimler Group. In addition, the
Daimler Mobility division is a strategic investor in the mobility
services of the YOUR NOW joint venture network such as ride
hailing, multimodal platforms, car sharing, parking and charg-
ing. The mobility ecosystem is rounded out by flexible-use
services from Daimler Mobility such as Mercedes-Benz Rent
(rental vehicles) and Mercedes me Flexperience (a car-on-
demand solution).
Mobility "from years to minutes"
With its three core activities of financial services, fleet
management systems and digital mobility solutions, Daimler
Mobility is able to meet a broad range of customer require-
ments for everything from multi-year financing, leasing, and
insurance contracts to flexible fleet management services
and mobility on demand solutions such as car sharing. Daimler
Mobility offers its customers mobility solutions for a period
of several years or just for a few minutes - "from years to min-
utes" as we put it.
Our range of financial services includes financing, leasing, and
insurance. Our goals are to increase demand for the Group's
brands and to strengthen customer loyalty. During the year
under review, our financial services business focused on the
digitization of the customer experience and the optimization of
structures and processes. To this end, Daimler Mobility
established four regional competence centers (Digital Solution
Centers) in Stuttgart, Beijing, Farmington Hills (United States)
and Singapore. These centers are responsible for meeting the
various requirements of our customers and our automotive
divisions, and for moving ahead with the systematic digitization
of our financial services operations. More than 40 agile project
teams developed approximately 50 new products in 2019. One
project involved the development of a new scalable customer
portal that has already been launched in 12 European markets.
Numerous new digital self-service functions, such as auto-
matic user registration, new contract overviews, and installment
and term reductions have significantly increased both cus-
tomer satisfaction and our own efficiency. Daimler Mobility
also continues to consistently move ahead with the digitization
of business processes in China. For example, the share of
paperless processing of credit applications has now reached
92% in the Chinese market. In addition, the integrated online
self-service portal for WeChat is now being used by as many
as 100,000 customers per month.
Mercedes pay: expansion of e-payment activities
During the year under review, Daimler Mobility's global e-pay-
ment competence center developed additional solutions for
payment processing and also integrated the Daimler Group's
Mercedes pay digital e-payment platform into numerous Group
applications. Mercedes pay manages payments made via the
MBUX multimedia system from Mercedes-Benz. The fee-based
Mercedes me connect services that are integrated into the
MBUX system, such as in-car office functions (including auto-
matic dial-up into conference calls and updating of appoint-
ment calendars), can be purchased using Mercedes pay, which
can also be utilized to renew expired services. Mercedes pay
makes paying parking fees much more convenient as well.
Drivers can launch the parking payment process via the in-car
MBUX system or the Mercedes me app. After the driver leaves
the parking space, the actual parking fee is shown on the
MBUX display and payment is made to the parking garage
operator via Mercedes pay. In addition, drivers can use
the Mercedes-Benz parking card to digitally register their entry
into and exit from selected parking garages throughout Ger-
many by means of an RFID chip. This eliminates the frequent
need to maneuver the vehicle around in order to grasp the
parking ticket, as well as the need to walk to an automated pay
station. Users of Daimler's Bertha app can also compare
fuel prices and pay for fuel at approximately 400 selected fuel
stations in Germany via smartphone. Mercedes pay provides
the integrated payment solution for the app.
CoverOn: new short-term insurance for greater mobility
Daimler Insurance Services has developed a new digital insur-
ance solution that serves as a component of personal mobility.
Cover On allows policyholders to temporarily insure additional
drivers of a vehicle for a short period in a fast and easy way.
The period of cover can range from 30 minutes to 27 days. The
package includes CoverOn roadside assistance, which offers
customers assistance in the event of a breakdown. The insur-
ance purchase and payment processes are completely digital -
all it takes is a smartphone.
New app enables paperless purchase of vehicle insurance
Mercedes-Benz Bank also continues to move ahead with
the digitization of the customer experience. A newly developed
bank app makes it possible for dealerships and licensed
Mercedes-Benz partners to issue insurance policies for
Mercedes-Benz cars and vans in a completely paperless process.
The app takes customers and dealership staff step by step
through the application process, in which customers only have
to provide basic information. The app quickly and conveniently
generates a quote, which also contains a QR code that
Daimler Mobility AG and Geely Technology Group
have started Star Rides, a premium ride-hailing service,
in the Chinese metropolis Hangzhou.
12,680
S-Class
Employees (December 31)
64
On the basis of applicable law, the German Corporate Gover-
nance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals primarily
with questions of accounting, financial reporting and non-
financial reporting. In addition, it deals with the annual audit
and reviews the qualifications and independence of the exter-
nal auditors. Furthermore, it discusses the effectiveness and
functional capabilities of the risk management system, the
internal control system, the internal auditing system and the
compliance management system. After the external auditors
are elected by the Annual Shareholders' Meeting, the Audit
Committee engages the external auditors to conduct the
annual audit and the auditors' review of interim financial state-
ments, determines the important audit issues and negotiates
the audit fees with the external auditors. The Audit Committee
also commissions the external auditors to carry out a voluntary
examination of the non-financial report within the framework
of a limited assurance engagement.
Return on equity (in %)
New business
Contract volume
28,646
2,140
15.3
74,377
162,843
26,269
+9
1,384
+55
11.1
71,927
154,072
+3
+6
Investment in property, plant
and equipment
87
+36
179
C | THE DIVISIONS | DAIMLER MOBILITY
Dynamic Lease: a telematics-based financing option
Daimler Mobility has launched a new truck-leasing solution:
Dynamic Lease makes it possible for the first time to use
telematics systems to record the actual distance driven by a
truck. This in turn enables leasing rates for customers to be
precisely aligned with their actual use of the vehicle. In con-
ventional truck leasing, customers need to estimate their
total mileage over the leasing period before the contract is
signed. If they exceed their estimate, they have to make
an additional payment when the leasing period ends. With
Dynamic Lease, customers are billed monthly for the
kilometers they actually drive, along with a standard basic
fee. The variable leasing rates ("pay-as-you-drive" principle)
are ideal for companies with seasonal business fluctuations.
€ amounts in millions
2018
2019
Daimler Mobility
C.09
C❘ THE DIVISIONS | DAIMLER MOBILITY 177
Daimler Mobility
the dealership and the customer can use to access the policy
information at a later time. If the customer chooses to
purchase insurance, the subsequent transaction is also com-
pletely digital.
The number of cars and commercial vehicles financed or leased by Daimler Mobility reached a new
all-time high of more than 5.4 million at the end of financial year 2019. New business and contract
volume developed positively, while EBIT amounted to €2,140 million. The latter figure includes
effects from the consolidation of the mobility services of the Daimler Group and the BMW Group.
Since they were established, the mobility joint ventures have developed a strong customer base
and had more than 90 million customers at the end of 2019. Daimler Mobility expects the combination
of sales financing with brokered automotive insurance policies to continue gaining importance.
In addition, we aim to utilize new market potential as a result of our greater efficiency in traditional
sales channels and the digitization of customer contact systems and fleet management operations.
Daimler Mobility concluded 2.0 million new financing and leas-
ing contracts worth a total of €74.4 billion in 2019. The total
value of all new contracts was thus slightly above the prior-year
level (+3%). About half of all new-vehicle sales by our auto-
motive divisions in 2019 were supported by sales financing from
Daimler Mobility. In total, more than 5.4 million financed or
leased vehicles were on the books at the end of 2019 with a
total contract volume of €162.8 billion; this represents a 6%
increase compared with the end of 2018. Adjusted for exchange-
rate effects, contract volume increased by 4%. EBIT amounted
to €2,140 million (2018: €1,384 million). The division's return
on equity was 15.3% (2018: 11.1%). 7 C.09
Europe region: new business slightly higher than in 2018
Daimler Mobility concluded 978,000 new financing and leasing
contracts worth €32.5 billion in the Europe region (+2%). New
business developed especially well in Switzerland (+27%) and
Spain (+8%). In Turkey, new business decreased sharply (-50%)
due to the ongoing difficult economic situation in that country.
In Germany, Mercedes-Benz Bank's new business remained
stable at €13.3 billion (+1%). Daimler Mobility's total contract
volume in Europe rose by 5% to €67.2 billion. A total of 425,000
contracts were on the books at Athlon and Daimler Fleet
Management in Europe at the end of 2019. This corresponds to
a contract volume of €7.0 billion.
Significant growth in the Americas region
Daimler Mobility brokered 492,000 new financing and leasing
contracts worth €24.4 billion in the Americas region in 2019
(+9%). The volume of new business developed very positively in
the United States (+9%). Contract volume in the Americas of
€59.6 billion at December 31, 2019 was 6% higher than at the
end of 2018.
Africa & Asia-Pacific region and China: new business at
prior-year level
With a volume of €8.3 billion, new business in the Africa &
Asia-Pacific region (excluding China) remained more or less at
the prior-year level (+2%). Business growth was especially
strong in South Africa (+21%) and Japan (+10%). New business
decreased significantly in Australia (-9%). At the end of 2019,
contract volume in the Africa & Asia-Pacific region (excluding
China) amounted to €19.5 billion, representing a slight increase
of 7% over the previous year. New business decreased moder-
ately in China, however, where we concluded 310,000 new
leasing and financing contracts and financing contracts worth
€9.2 billion in 2019 (-4%). At the end of 2019, contract volume
in China amounted to €16.5 billion - an increase of 7% com-
pared with the end of 2018.
Declaration on Corporate Governance,
Half of all Daimler vehicles delivered to customers are
financed or leased
Revenue
19/18
% change
- Topics dealt with
Expanded product portfolio for telematics services
Mercedes-Benz Connectivity Services GmbH has expanded its
portfolio of products that allow its telematics services to be
used by different brands. The company is offering a hardware
retrofit solution that enables fleet managers to utilize tele-
matics services with any make of car. Along with existing posi-
tioning services, this solution now includes for the first time
new dynamic vehicle data such as fuel consumption and dis-
tance driven. Among other things, the provision of real-time
odometer and diagnostic data can enable anticipatory mainte-
nance scheduling and reduce vehicle downtimes. All of
this translates into big savings potential for fleet operators.
ChangeMyCar: leasing app now with an e-bike option
The fleet management services provider Athlon, which is part
of Daimler Mobility, has expanded its flexible Change MyCar
leasing app to include an e-bike that can be rented along with
each vehicle leased. The app's mobility budget can be used
to combine both modes of transport. The addition of e-bikes to
the app reflects the changing preferences of customers,
who are increasingly demanding more multimodal mobility
solutions.
YOUR NOW: mobility joint ventures continue to grow
Daimler AG and the BMW Group have combined their mobility
services in the YOUR NOW joint ventures. An agreement to
this end was concluded on January 31, 2019. Since their estab-
lishment, the range of mobility services from BMW and
Daimler has built up a strong customer base. At the end of
2019, more than 90 million customers were using the
mobility services provided by the joint ventures for ride hailing,
multimodal platforms, car sharing, parking and battery
charging. As of January 1, 2020, the products and services of
the joint ventures had been further systematically aligned
with customer requirements and consolidated into three pillars:
1. FREE NOW & REACH NOW. 2. SHARE NOW. 3. PARK NOW &
CHARGE NOW.
EBIT
Daimler Mobility AG and Geely Technology Group have estab-
lished a 50:50 joint venture for a premium ride-hailing service
in China. The new company, known as StarRides, has its head-
quarters in Hangzhou, where it started offering a ride-hailing
service with premium automobiles in December 2019. The fleet
consists of 100 vehicles, including Mercedes-Benz S-Class,
E-Class and V-Class models, as well as premium models from
the Geely electric fleet.
SIMS
StarRides: joint venture established for premium
ride-hailing services in China
D
Corporate
Governance
The Board of Management and the Supervisory Board of Daimler AG
are committed to the principles of good corporate governance. Our
actions take place within the framework of responsible, transparent
and sustainable corporate governance.
D | Corporate Governance
Report of the Audit Committee
Responsibilities and composition
Meetings and participants
E-Class Sedan
Declaration of compliance with the German
Corporate Governance Code
INDIVID
IFIED
The path to emission-free mobility is clearly defined in all of our business
divisions. After the production launch of our EQ technology brand, we want
to continue expanding our range of battery-electric cars and hybrid vehicles,
as well as our battery production, step by step. Our van unit is also sys-
tematically electrifying its model range. And we are forging ahead with the
comprehensive electrification of our truck and bus brands. The fuel cell also
continues to be part of our Group-wide drive system strategy.
12
DAIMLER | MOVE PERFORM TRANSFORM 7
Building the world's best vehicles and thrilling customers with sustain-
able luxury- that's what energizes us. We believe that our customers,
especially those in the premium segment, still want to own private
vehicles. That's why individual mobility will remain a central principle
of Daimler's business operations in the foreseeable future. In parallel,
we will fulfill the growing need for flexible mobility on demand by offering
innovative usage models.
UAL
B3504
Our exclusive
mobility has
potential
Through its digital services, Daimler is creating tangible value added for its
customers in all of its business divisions. In the process, Daimler's own offers
can be seamlessly integrated with external services. Our own operating
systems give us optimal access to customers. We intend to use this access to
make sure that customer and vehicle data is handled responsibly.
DAIMLER | MOVE PERFORM TRANSFORM 13
FASCIN
Our focus is on
our customers
With the sustainable modern luxury of our premium cars, we aim to thrill and
win over customers - all over the world. In the latest “Best Global Brands 2019"
ranking of the Interbrand consulting firm, Mercedes-Benz is the world's
Number One premium brand in the automobile sector and one of the world's
most valuable brands. In order to keep Daimler in the lead, we are particularly
strengthening the emotional connection with our customers and aligning
ourselves even more closely with their wishes — by offering a fascinating,
future-oriented portfolio of cars, vans, trucks, buses, and mobility services.
DAIMLER | MOVE PERFORM TRANSFORM 15
ATING
We address our customers' varied needs and possibilities by offering them customized
products and services. Outstanding customer experiences and customer utility are
always our top priorities. We offer special Mercedes-Benz moments and technologies
that spark emotions in our private car drivers and support the success of our com-
mercial customers. Our customer focus is also reinforced by our organization in three
independent units - Mercedes-Benz AG, Daimler Truck AG, and Daimler Mobility AG.
PROFIT
Our goal:
boosting our
performance
Profitability is the key to long-term success. And individual mobility
and transportation will continue to be Daimler's growth drivers over
the long term. At the same time, we are positioning ourselves with
a clear-cut strategy for the transformation of the automotive industry:
through investments in electric mobility, digital platforms, autonomous
driving, and new services. This is necessary, but it will initially put
pressure on our financial results.
S&C 257
SM
At our company, intelligently networked products and processes are the
levers ensuring continued customer orientation, profitability, and efficiency.
Digital platforms and virtual assistants are increasingly becoming part of
work environments and daily lives - including those of our customers. Digital
products and services are therefore a central interface with our customers.
Daimler will continue to intensively press forward with digitalization, with the
goal of maintaining our position as a leading vehicle manufacturer.
That's why we are expanding our range of premium cars. This market will con-
tinue to grow in the medium and long terms, with the luxury segment expected
to expand faster than the other segments. China and the rest of Asia will pri-
marily lead this growth, but the increasing prosperity of Europe and the United
States will also play a role. We intend to take full advantage of this potential
through our fascinating premium vehicles of the Mercedes-Benz brand, the
performance brand Mercedes-AMG, and the Mercedes-Maybach luxury brand.
S MB 2132
In the Daimler Trucks Autonomous Technology Group we consolidate global
expertise and activities related to autonomous trucks as we steadily
approach series production. For this purpose we have acquired a majority
interest in Torc Robotics, a pioneering company in the field of autonomous
driving systems. Together, we are already developing and testing this Level 4
technology on highways in the United States.
Our claim to
leadership in the
digital world
DIGITAL
That's why we're intensifying our efforts in the area of automated driving.
OMOUS
DAIMLER
Shaping Future Transportation. Reducing Accidents. Increasing Freight Efficiency.
TORC
DAIMLER | MOVE PERFORM TRANSFORM 11
Automated vehicles offer wide-ranging opportunities for society and
business. For example, in the future highly automated trucks (SAE Level 4)
can enhance traffic safety, efficiency, and productivity. This technological
leap will enable Hub2Hub operations, primarily on US highways. The fully
automated connection between logistics centers is a promising business
model for US freight companies - and for Daimler Trucks.
mated trucks
Our pioneering
work on auto-
AUTON
9
DAIMLER | MOVE PERFORM TRANSFORM
Daimler Trucks Autonomous Technology Group
Proposals by the Supervisory Board of candidates for election
by the Shareholders' Meeting as Supervisory Board members
representing the shareholders of Daimler AG, for which the
Nomination Committee makes recommendations, shall take
into consideration the aspects described above and aim to ful-
fill the overall requirements profile for the Supervisory Board
as a whole. On the basis of a target profile that takes into
account specific qualification requirements and the aforemen-
tioned criteria, the Nomination Committee creates a shortlist
of available candidates with whom it conducts structured
discussions in which it also determines whether the candidate
in question will have sufficient time available to perform his
or her duties on the Supervisory Board with due care. The
Nomination Committee then recommends a candidate to the
Supervisory Board for its approval and includes an explanation of
its recommendation. The foundation for Supervisory Board
decisions regarding election proposals to the Shareholders'
Meeting is always the Company's interests under consideration
of all circumstances in each individual case.
In order to ensure compliance with a recommendation of
the German Corporate Governance Code in the version dated
February 7, 2017, the rules of procedure stipulate that no
member of the Supervisory Board who is also a member of
the board of management of a listed company may hold
more than three memberships of supervisory boards of listed
companies (including his or her membership of the Super-
visory Board of Daimler AG) or of bodies of other companies
with similar requirements outside of the group of his or
her board of management membership. One member of the
Supervisory Board, Joe Kaeser, is a member of the board
of management of a listed company who has now exceeded
the maximum number of supervisory board memberships
due to his new membership on the Supervisory Board of
Mercedes-Benz AG. In view of this development, the Super-
visory Board has decided for the time being not to take into
account membership on two Supervisory Boards within
the Daimler Group when determining whether the maximum
number of board memberships has been exceeded within
the meaning of the requirements profile and the rules of pro-
cedure. Nevertheless, the Board of Management and the
Supervisory Board also released an intra-year declaration of
compliance in September 2019 that discloses and explains
this deviation from the maximum number of board member-
ships according to the rules of procedure and the require-
ments profile as defined on the basis of the recommendation
of the German Corporate Governance Code in the version
dated February 7, 2017. This deviation is also disclosed and
explained in the regular annual declaration of compliance
from December 2019.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
195
In the case of Supervisory Board members who are not also
members of the board of management of a listed company, the
legal limit of membership of ten statutorily constituted super-
visory boards applies firstly, whereby chairmanship of a super-
visory board counts double. In order to ensure that members
of the Supervisory Board have sufficient time to fulfill their
mandate, members of the Supervisory Board of Daimler AG who
are not also members of the board of management of a listed
company shall, however, generally be permitted membership
of a maximum of eight supervisory boards (including that of
Daimler AG), whereby chairmanship of a supervisory board
counts double. This maximum number was not exceeded
by any member of the Supervisory Board during the reporting
year.
Review of the overall requirements profiles for the Board
of Management and the Supervisory Board
The Supervisory Board shall review the overall requirements
profiles for its own composition and the composition of the
Board of Management, and amend these if necessary, after the
new German Corporate Governance Code goes into effect,
which is expected to be sometime in the first quarter of 2020.
Non-
The shareholders exercise their membership rights, in par-
ticular their information and voting rights, at the Shareholders'
Meeting. Each share in Daimler AG entitles its owner to one
vote. There are no multiple voting rights, preferred voting rights,
or maximum voting rights at Daimler AG. Documents and infor-
mation related to the Shareholders' Meeting can be found on
our website at daimler.com/ir/am. The Annual Shareholders'
Meeting is generally held within four months of the end of a
financial year.
The Company facilitates the personal exercise of the share-
holders' rights and proxy voting in a variety of ways, such as by
appointing Company proxies who are strictly bound by the
shareholders' voting instructions and who are available during
the Shareholders' Meeting. Absentee voting is also possible.
It is possible to authorize the Daimler-appointed proxies and
give them voting instructions or to cast absentee votes by
using the e-service for shareholders.
We maintain close contacts with our shareholders in the
context of our comprehensive investor relations and public rela-
tions activities. We regularly and comprehensively inform our
shareholders, financial analysts, shareholder associations, the
media and the interested public about the situation of the
Group, and inform them without delay about any significant
changes in its business. Within reasonable limits, the Chairman
of the Supervisory Board is also prepared to talk to investors
about specific Supervisory Board issues.
In addition to other methods of communication, we also make
extensive use of the Company's website for our investor
relations activities. All of the important information disclosed
in 2019, including annual and interim reports, press releases,
voting rights notifications from major shareholders, presenta-
tions, and audio recordings of analyst and investor events
and conference calls, as well as the financial calendar, can be
found at daimler.com/investors. All the dates of important
disclosures such as annual reports and interim reports and the
dates of the Annual Shareholders' Meeting, the annual press
conference and the analyst conferences are announced in
advance in the financial calendar. The financial calendar can
also be found inside the rear cover of the Annual Report.
E
Shareholders and the Shareholders' Meeting
Candidates for membership of the Supervisory Board and
members of the Supervisory Board must have sufficient time
available to perform their duties. They must also be willing
and able to dedicate themselves to their tasks and to partici-
pate in all courses of training and further training that might
be necessary for the performance of their tasks. Prior to
issuing its election proposals, the Supervisory Board deter-
mines whether the candidates in question will have sufficient
time available to perform their duties on the Supervisory
Board.
The Chairman of the Supervisory Board, Dr. Manfred Bischoff,
is a former member of the Board of Management.
and not merely temporary conflict of interest. On the one
hand, this is not an executive, but rather a non-executive man-
date. On the other, the Deputy Chairman of the Supervisory
Board of a codetermined company does not have the right of
the Chairman of the Supervisory Board to a casting vote in
the event of a tie and renewed voting even in the absence of
the Chairman.
In accordance with applicable law, the Supervisory Board is to
be composed so that its members together are knowledgeable
about the business sector in which the Company operates.
The requirements profile for the Supervisory Board of Daimler
AG also aims at a Supervisory Board as diverse and mutually
complementary as possible. The Supervisory Board as a whole
shall understand the Company's business model and also pos-
sess the knowledge, skills and experience needed to properly
execute its task of supervising and advising the Board of
Management, in particular specialized knowledge in the areas
of finance, accounting, annual audits, risk management,
methods of internal control and compliance. In general, the
members of the Supervisory Board should complement one
another with regard to their specialist knowledge and profes-
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
193
sional experience in such a manner as to ensure that the
Supervisory Board can utilize the most broadly based wealth
of experience and expertise possible when making decisions.
The Supervisory Board also views the diversity of its members
in terms of age, gender, internationality and other personal
attributes as an important foundation for effective cooperation.
The foundation for Supervisory Board decisions regarding pro-
posals on candidates for election at the Shareholders' Meeting
is always the Company's interests under consideration of all
circumstances in each individual case.
The requirements profile for the Supervisory Board currently
includes the following aspects in particular:
The members of the Supervisory Board should have different
educational and professional backgrounds. At least five
members should have completed a vocational technical
training or education program or possess specific technolog-
ical knowledge in fields such as information technology
(including digitalization), chemistry, mechanical engineering
or electrical engineering. Decisions related to the composi-
tion of the Supervisory Board should also take into account
the fact that it may be necessary for members to obtain new
skills and knowledge in order to be able to address product
and market developments. Irrespective of the specific
knowledge in the above-mentioned areas acquired by many
members of the Supervisory Board in other functions,
Dr. Jürgen Hambrecht, Dr. Bernd Pischetsrieder, Marie Wieck,
Dr. Frank Weber and Roman Zitzelsberger (three shareholder
representatives and two employee representatives) have
relevant university degrees, while another three employee
representatives have completed vocational training in the
above-mentioned fields or similar areas.
The gender composition of the Supervisory Board meets the
legal requirement stipulating that at least 30% of the mem-
bers of the Supervisory Board must be women and at least
30% must be men. The Supervisory Board currently has
three women who represent shareholders and three women
who represent employees. The proportion of women is thus
30% among the shareholder representatives, the employee
representatives and the Supervisory Board as a whole.
The rules of procedure of the Supervisory Board stipulate
that candidates for election who are to hold the position for
a full term of office should generally not be over the age of
72 at the time of the election. In specifying this age limit, the
Supervisory Board has intentionally refrained from stipulat-
ing a strict upper age limit and instead decided in favor of a
flexible general limit that leaves scope to appropriately
assess each individual case, keeps the range of potential
Supervisory Board candidates sufficiently broad and allows
reelection. In deciding to propose Dr. Manfred Bischoff for
reelection as a shareholder representative on the Supervi-
sory Board at the Shareholders' Meeting in 2016, it made
use of this scope after careful consideration and proper
assessment. All other members of the Supervisory Board
and the candidate Timotheus Höttges who is to be proposed
for election at the 2020 Annual Shareholders' Meeting will
not have reached the age limit at the time of their election.
A sufficient generational mix among Supervisory Board
members is also to be taken into account in appointment
decisions. At least eight members of the Supervisory Board
should be 62 years of age or younger at the time of their
election or reelection. Among the current members of the
Supervisory Board, all except Sari Baldauf, Petraea Heynike,
Dr. Manfred Bischoff, Dr. Clemens Börsig, Dr. Jürgen Ham-
brecht and Dr. Bernd Pischetsrieder (i.e. 14 members) were
62 or younger when they were elected to their current term.
In order to ensure sufficient internationality, for example by
means of many years of international experience, the
Supervisory Board has set a target of a proportion of at least
30% of international members representing the sharehold-
ers, and the resulting proportion of at least 15% of the entire
Supervisory Board. Irrespective of the many years of inter-
national experience of a large majority of the shareholder
representatives on the Supervisory Board, this target is cur-
rently significantly overachieved with 30% for the entire
Supervisory Board due to the international origins of Bader
Al Saad, Sari Baldauf, Petraea Heynike, Marie Wieck and
Dr. Paul Achleitner on the shareholders' side (50%) and Ray-
mond Curry on the employees' side.
At least half of the members of the Supervisory Board
representing the shareholders should have
neither an advisory nor a board function for a customer,
supplier, creditor, or other third party,
whose specific form could cause a conflict of interest.
Under the premise that the performance of Supervisory Board
duties as an employee representative does not by itself consti-
tute a potential conflict of interest as defined by the German
Corporate Governance Code, the requirements described here
are deemed to be met by at least 15 members of the entire
Supervisory Board.
Roman Zitzelsberger was elected as a member and as the
Deputy Chairman of the Supervisory Board of ZF Friedrich-
shafen AG, which is a significant supplier to the Daimler Group,
at the end of November 2019. The Supervisory Board of
Daimler AG does not currently regard this non-executive man-
date per se as giving rise to a conflict of interest. In the event
that such a conflict of interest arises in the future, the question
of whether Mr. Zitzelsberger should not participate in corre-
sponding discussions and passing of resolutions by the Super-
visory Board will be considered on a case-by-case basis.
As described in the report of the Supervisory Board on
page 37 of the Annual Report 2019, there were individual
cases concerning two Supervisory Board members in particu-
lar situations during the reporting period where there might
have been the appearance of a potential conflict of interest at
the time when legal status reports were submitted to the
Supervisory Board. In these individual cases the Supervisory
Board members in question did not attend the reporting of the
circumstances that could possibly have given rise to a poten-
tial conflict of interest.
D | CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
As a result, in the case of at least half of the shareholder repre-
sentatives on the Supervisory Board and at least 15 members
of the entire Supervisory Board, there were no indications of a
potential conflict of interest during the reporting period based
on the premise described above. There were no indications of
actual conflicts of interest in the financial year 2019.
-
In order to ensure the independent advice to, and supervi-
sion of, the Board of Management by the Supervisory Board,
the rules of procedure of the Supervisory Board stipulate
that more than half of the members of the Supervisory
Board representing the shareholders are to be independent
as defined by the German Corporate Governance Code.
The Supervisory Board may not include more than two former
members of the Board of Management of Daimler AG or
anyone who is a member of a board of, or advises, a signifi-
cant competitor of the Daimler Group.
Under the premise that the performance of Supervisory Board
duties as an employee representative does not in itself call
into question the independence of such an employee represen-
tative as defined by the German Corporate Governance Code,
at least 15 members of the Supervisory Board are also deemed
to be independent.
The Code in the version dated February 7, 2017 does not con-
tain a conclusive definition of independence, but instead
presents examples of circumstances that would call the inde-
pendence of a Supervisory Board member into question.
Within the meaning of the German Corporate Governance Code,
a Supervisory Board member is to be considered non-inde-
pendent if he or she has a personal or business relationship
with the Company, its governing bodies, a controlling share-
holder or a company affiliated with a controlling shareholder
that may cause a substantial and not merely temporary
conflict of interest. It is the task of the Supervisory Board to
assess the independence of the individual members of
the Supervisory Board on the basis of these indications.
Under the premise described above with regard to the
employee representatives, and within the meaning of the German
Corporate Governance Code in the version dated February 7,
2017, there are, in the view of the Supervisory Board, no indi-
cations at present for any of the members of the Supervisory
Board that relevant relationships or circumstances exist that
could be construed as a substantial and permanent conflict of
interest that would compromise their independence. No mem-
ber of the Supervisory Board is a member of a board of, or
advises, a significant competitor. With regard to Supervisory
Board member Bader Al Saad, the Supervisory Board takes
the view that his membership of the Executive Committee of
the Board of Directors of Kuwait Investment Authority does
not compromise his independence within the meaning of the
German Corporate Governance Code. E The Kuwait Investment
Authority is not a controlling shareholder of Daimler AG that
could attain an effective majority at an Annual Shareholders'
Meeting. No other discernible circumstances exist that might
call into question the independence of Bader Al Saad. With
regard to Supervisory Board member Roman Zitzelsberger, the
Supervisory Board takes the view that his mandate as a mem-
ber and as the Deputy Chairman of the codetermined Super-
visory Board of ZF Friedrichshafen AG, a significant supplier
to the Daimler Group, cannot per se give rise to a substantial
The rules of procedure of the Supervisory Board also define
a general time limit for the duration of Supervisory Board
membership. As a result, only candidates who have not yet
been members of the Supervisory Board for three full terms
of office at the time of their election should generally be
nominated for membership of the Supervisory Board for a
full term of office. This general length of service on the
Supervisory Board has not been exceeded by any current
member, and the candidate Timotheus Höttges nominated
for election at the Annual Shareholders' Meeting in 2020
also meets this requirement.
194
Daimler prepares its consolidated financial statements and
interim financial reports in accordance with the International
Financial Reporting Standards (IFRS), as adopted by the Euro-
pean Union. The annual financial statements of Daimler AG are
prepared in accordance with the accounting standards of the
German Commercial Code (HGB). Daimler prepares both half-
yearly and quarterly financial reports. The annual company
financial statements and consolidated financial statements of
Daimler AG are audited by external auditors; interim financial
reports are reviewed by external auditors. The consolidated
financial statements and the Group management reports
are made publicly accessible via the Company's website within
90 days from the end of the reporting year; the interim finan-
cial reports are made publicly accessible in the same manner
within 45 days from the end of the reporting period.
The aspects described above are to be taken into consider-
ation when making Board of Management appointments. On
the basis of a target profile that takes into account specific
qualification requirements and the aforementioned criteria, the
Presidential Committee creates a shortlist of available candi-
dates whom it interviews. It then recommends a candidate to
the Supervisory Board for its approval and includes an expla-
nation of its recommendation. Decisions regarding appointments
to the Board of Management are always governed by the
Company's interests under consideration of all circumstances
in each individual case.
Supervisory Board
In accordance with the German Codetermination Act (MitbestG),
the Supervisory Board of Daimler AG comprises 20 members.
Half of them are elected by the shareholders at the Sharehold-
ers' Meeting. The other half comprises members who are
elected by the Group's employees who work in Germany. The
members representing the shareholders and the members
representing the employees are equally obliged by law to act in
the Company's best interests.
Information on the curricula vitae of the members of the
Supervisory Board is posted on our website at ②daimler.com/
dai/sb. Information on other supervisory board memberships
held by the members of the Supervisory Board can also
be found on pages 40 ff of the Annual Report 2019.
The Supervisory Board is to be composed so that its members
together are knowledgeable about the business sector in which
the Company operates and also dispose of the knowledge,
skills and specialist experience that are required for the proper
execution of their tasks. According to the law on the equal
participation of women and men in executive positions, at least
30% of the members of the Supervisory Board of Daimler AG
must be women and at least 30% must be men. The details are
D.01
Governance structure
Annual Shareholders' Meeting
reports
reports
elects members
representing the
shareholders,
ratifies the
actions of
Supervisory Board
20 members
reports
appoints,
advises and
monitors
Board of Management
8 members
ratifies
the actions of
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT 189
described in a separate section:
page 191 of the Annual
Report 2019. With regard to its composition, the Supervisory
Board has also created an overall requirements profile consist-
ing of a skills profile and a diversity concept to be applied to
the entire Supervisory Board. Details of the overall requirements
profile are also described in a separate section: pages 192 ff
of the Annual Report 2019. Proposals by the Supervisory
Board of candidates for election by the Shareholders' Meeting
as members representing the shareholders of Daimler AG,
for which the Nomination Committee makes recommendations,
aim to fulfill the overall requirements profile of the Supervisory
Board as a whole.
The members of the Supervisory Board attend on their own
responsibility courses of training and further training that
might be necessary for the performance of their tasks, and are
supported by the Company in doing so. Such courses may
address corporate governance, changes brought about by new
legislation, or the launch of new products and pioneering
technologies, for example. New members of the Supervisory
Board are offered an “onboarding" program that gives them
the opportunity to exchange views with members of the Board
of Management and other executives on current issues related
to the various areas of responsibility of the Board of Manage-
ment, and thus to obtain an overview of important topics at the
Group.
Composition and mode of operation of the
Supervisory Board and its committees
The Supervisory Board monitors and advises the Board of
Management with regard to its management of the Group. At
regular intervals, the Board of Management reports to the
Supervisory Board on the strategy of the business units, corpo-
rate planning, revenue development, profitability, business
development and the situation of the Group, as well as on the
internal control system, the risk management system, and
the compliance management system. The Supervisory Board
has retained the right of approval for transactions of funda-
mental importance. Furthermore, the Supervisory Board has
specified the information and reporting duties of the Board
of Management to the Supervisory Board, to the Audit Com-
mittee and between the meetings of the Supervisory
Board to the Chairman of the Supervisory Board.
continues to affirm the goal it already set itself in 2006 of
increasing the proportion of women in executive positions at
the Group to 20% by 2020. At the end of 2019, this proportion
amounted to 19.8% (2018: 18.8%).
Diversity management has been part of the corporate strategy
of Daimler since 2005. We rely on the diversity of our employ-
ees and the differences between them because such differ-
ences form the foundation for an effective and successful com-
pany. The aim of our activities is to bring together the right
people to tackle our challenges, create a work culture that pro-
motes the performance, motivation and satisfaction of our
employees and managers, and help attract new target groups
to our products and services. Our activities for shaping diver-
sity at Daimler focus on three areas: best mix, work culture
and customer interaction. With our specific measures, activi-
ties and initiatives for everything from training formats for
employees and managers to workshops, conferences, guide-
lines and target group-specific communication and awareness-
raising measures, our diversity management system makes a
major contribution to the further development of our corporate
culture.
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187
Accounting and the external audit
Financial
Report
Based on the recommendation of the Audit Committee, the
Supervisory Board submits a decision proposal to the Share-
holders' Meeting of Daimler AG for the election of the external
auditors for the annual company financial statements, for
the consolidated financial statements and for the auditors'
review of the interim financial reports. At the Annual Share-
holders' Meeting on May 22, 2019, KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin was elected to conduct the audit
of the annual company financial statements and the consoli-
dated financial statements, and the external auditors' review of
interim financial reports, for financial year 2019, as well as
the external auditors' review of interim financial reports for
financial year 2020 in the period leading up to the Share-
holders' Meeting in 2020. KPMG AG Wirtschaftsprüfungsgesell-
schaft has been conducting the audit of the annual company
financial statements and consolidated financial statements of
Daimler AG since the 1998 financial year; since 2014, the
responsible auditor commissioned to carry out the external
audit has been Dr. Axel Thümler.
Prior to issuing its recommendation to the Annual Shareholders'
Meeting, the Audit Committee of the Supervisory Board
obtained a declaration from the external auditors under con-
sideration. The external auditors were requested to state
whether any business, financial, personal or other relationships
existed between the external auditors and their bodies
and audit managers on the one hand, and the Company and
the members of its bodies on the other, which could justify
concerns regarding a conflict of interest. This statement also
describes the extent to which other services were performed
for the Daimler Group in the previous year or had been contrac-
tually agreed upon for the following year.
The Audit Committee instructed the external auditors to
immediately inform the Committee Chairman of any indications
of partiality or grounds for exclusion uncovered during the
audit or the auditors' review of interim financial statements, and
of all key findings and events relevant to the tasks of the
Supervisory Board, particularly findings or events related to sus-
pected irregularities in accounting. The Audit Committee
also reached an agreement with the external auditors stipulat-
ing that the external auditors would inform the Audit Com-
mittee, and make a note in the audit report, of any facts uncov-
ered during the annual audit that would reveal inaccuracies
in the Board of Management's and the Supervisory Board's
declaration of compliance with the German Corporate Gover-
nance Code.
Composition and mode of operation of the
Board of Management > D.01
Daimler AG is obliged by the German Stock Corporation Act
(AktG) to apply a dual management system featuring strict
personal and functional separation between the Board of
Management and the Supervisory Board (two-tier board).
Accordingly, the Board of Management manages the company
while the Supervisory Board monitors and advises the
Board of Management.
Board of Management
In accordance with the Articles of Incorporation of Daimler AG,
the Board of Management has at least two members. The pre-
cise number of Board of Management members is determined
by the Supervisory Board. The Board of Management had
eight members on December 31, 2019. In accordance with Ger-
man law on the equal participation of women and men in
executive positions, the Supervisory Board has set a target for
the proportion of women on the Board of Management and
a deadline for achieving this target. The details are described in
a separate section: page 191. With regard to the com-
position of the Board of Management, the Supervisory Board
has also adopted a diversity concept that is embedded in
an overall requirements profile. The details of this concept are
also described in a separate section:
page 191.
Information on the areas of responsibility and the curricula
vitae of the Board of Management members is posted on
the Daimler AG website at daimler.com/dai/bom. The
members of the Board of Management and their areas of
responsibility are also listed on pages 32 ff of the Annual
Report 2019.
The Board of Management manages Daimler AG and the
Daimler Group. With the consent of the Supervisory Board, the
Board of Management determines the Group's strategic focus,
defines the corporate goals, and makes decisions concerning
operational planning matters. The members of the Board of
Management must represent the interests of the Company and
share responsibility for managing the Group's entire business.
Irrespective of this overall responsibility, the individual members
of the Board of Management manage their allocated areas on
their own responsibility and within the framework of the instruc-
tions approved by the entire Board of Management. Specific
issues defined by the Board of Management as a whole are dealt
with by the Board as a whole, which must approve all related
decisions. The Chairman of the Board of Management coordi-
nates the work of the Board of Management.
The Board of Management prepares the consolidated interim
reports, the annual company financial statements of Daimler AG,
the annual consolidated financial statements, and the com-
bined management report of the Company and the Group, as
well as the separate combined non-financial report produced
for Daimler AG and the Group. Together with the Supervisory
Board, the Board of Management issues the declaration of
compliance with the German Corporate Governance Code
each year. It ensures that the provisions of applicable law,
official regulations and the Group's internal guidelines are
adhered to, and works to make sure that the companies of the
Group comply with those rules and regulations. The Board
of Management has also established an adequate compliance
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management system that takes into account the Company's
risk situation. The main features of this system are described on
O pages 212 ff of the Annual Report 2019. Such features
include the Company's whistleblower system, the BPO (Busi-
ness Practices Office), which enables Daimler employees
and external whistleblowers to report misconduct anywhere
in the world. The tasks of the Board of Management also
include establishing and monitoring an appropriate and effi-
cient risk management system.
For certain types of transactions defined by the Supervisory
Board, the Board of Management requires the prior consent of
the Supervisory Board. At regular intervals, the Board of
Management reports to the Supervisory Board on the strategy
of the business units, corporate planning, profitability, busi-
ness development and the situation of the Group, as well as on
the internal control system, the risk management system and
the compliance management system. The Supervisory Board
has specified the information and reporting duties of the Board
of Management.
No committees of the Board of Management existed during the
reporting period. The CASE Steering Committee of the Board
of Management transferred the future-oriented areas of CASE
to a specialist committee made up of high-level members. The
responsibility of the Board of Management as a whole for spe-
cific matters defined by the Board remains unaffected by this.
The Board of Management has also given itself a set of rules of
procedure, which can be seen on our website at daimler.
com/dai/rop. Those rules describe, for example, the procedure
to be observed when passing resolutions and ways to avoid
conflicts of interest.
Diversity
Targeted support for women on the basis of the best-mix
principle was a central component of our diversity management
activities even before the legislation on the equal participation
of women and men in executive positions went into effect.
Such support has also included and continues to include flexible
working-time arrangements, company nurseries and special
mentoring programs for women. In order to meet legal require-
ments, the Board of Management of Daimler AG has defined
targets for the proportion of women at the two management
levels below the Board of Management and a deadline for
achieving those targets. The details are described in a separate
section. Independently of the legal requirements, Daimler
The Supervisory Board's duties include appointing and, if
necessary, recalling the members of the Board of Management.
Initial appointments are usually made for a period of three
years. In accordance with German legislation on equal partici-
pation by women and men in executive positions, the Super-
visory Board has defined a target for the proportion of women
on the Board of Management and a deadline for achieving
this target. The details are described in a separate section:
page 191 of the Annual Report 2019. With regard to the
composition of the Board of Management, the Supervisory
Board has also adopted a diversity concept that is embedded
in an overall requirements profile. The details of this concept
are also described in a separate section:
page 192 of the
Annual Report 2019.
The Supervisory Board decides on the system of remuneration
for the Board of Management, reviews it regularly, and deter-
mines the total individual remuneration of each member of the
Board of Management with consideration of the ratio of
Board of Management remuneration to the remuneration of the
senior executives and the workforce as a whole, also with
regard to development over time. For this comparison, the
Supervisory Board has defined the senior executives by apply-
The Mediation Committee is composed of the Chairman of the
Supervisory Board and his Deputy, as well as one member
of the Supervisory Board representing the employees and one
member of the Supervisory Board representing the sharehold-
ers, each elected with a majority of the votes cast by the
shareholders' and employees' representatives, respectively. It
is formed solely to perform the functions laid down in Section
31 Subsection 3 of the German Codetermination Act (MitbestG).
Accordingly, the Mediation Committee has the task of making
proposals on the appointment of members of the Board of
Management if in the first vote the majority required for the
appointment of a Board of Management member of two
thirds of the members of the Supervisory Board is not achieved.
As in previous years, the Mediation Committee did not have to
take any action in 2019.
Germany's law on the equal participation of
women and men in executive positions
In accordance with German legislation on equal participation
by women and men in executive positions in both the private
and the public sector, the supervisory boards of listed com-
panies or companies subject to Germany's system of codeter-
mination have to set a target for the proportion of women on
their board of management. The board of management of such
a company has to set a target for the proportion of women at
the two management levels below that of the board of manage-
ment. If the proportions of women at the time when these tar-
gets are set by the board of management and the supervisory
board are below 30%, the targets may not be lower than the
proportions already reached. At the same time that the targets
are set, the boards have to set periods for their achievement,
which may not be longer than five years.
On December 8, 2016, the Supervisory Board of Daimler AG
passed a resolution stipulating that the target figure for the
proportion of women on the Board of Management of Daimler
AG would be 12.5%, while the deadline would be December 31,
2020. At December 31, 2019, the eight-member Board of Man-
agement included two women, Renata Jungo Brüngger and
Britta Seeger. This means that women account for 25% of the
Board of Management members.
On November 8, 2016, the Board of Management passed a
resolution stipulating a target of 15% women for both the first
and second management levels at Daimler AG below the Board
of Management, with a deadline of December 31, 2020. At
the time of the resolution, the proportion of women in the first
and second management levels below the Board of Manage-
ment was 8.0% and 12.4%, respectively. As of December 31, 2019,
the proportion of women at the first management level below
the Board of Management was 12.5%; at the second level it was
23.8%. As a result of the hive-down of the Cars & Vans and
Trucks & Buses divisions to Mercedes-Benz AG and Daimler
Truck AG in the context of "Project Future," the number of
senior executives at Daimler AG at the two management levels
below the Board of Management, upon which the calculation
of the proportion of women as of December 31, 2019 is based,
has decreased significantly.
Since 2016, listed companies that have supervisory boards in
which shareholders and employees are equally represented
are required to a have proportion of at least 30% women and
30% men. This requirement has to be fulfilled by the Super-
visory Board as a whole. If the side of the Supervisory Board
representing the shareholders or the side representing the
employees objects to the Chairman of the Supervisory Board
about the application of the ratio to the entire Supervisory
Board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
At December 31, 2019, 30% of the shareholder representatives
in the Supervisory Board of Daimler AG were women (Sari
Baldauf, Petraea Heynike and Marie Wieck), while 70% were
men. On that date, 30% of the employee representatives on
the Supervisory Board were women (Elke Tönjes-Werner, Sibylle
Wankel and Dr. Sabine Zimmer), while 70% were men. In its
meeting on February 19, 2020, the Supervisory Board consid-
ered its nomination for the election at the 2020 Shareholders'
Meeting and decided, upon the recommendation of the Nomi-
nation Committee, to propose at the 2020 Annual Sharehold-
ers' Meeting that Timotheus Höttges, Chairman of the Board of
Management of Deutsche Telekom AG, be elected to the
Supervisory Board. The legally required gender ratio will be
met both on the shareholder representatives' side and for the
Supervisory Board as a whole if this person is elected to the
Supervisory Board, provided that no other changes occur.
Along with Daimler AG itself, there are other Group companies
subject to codetermination law. These companies have defined
their own targets for the proportion of women on their super-
visory boards, executive management bodies and the two levels
below the board or executive management level, and have also
set deadlines for target achievement. All relevant information
here has been published in accordance with applicable law.
Overall requirements profiles for the
composition of the Board of Management and
the Supervisory Board
In terms of the composition of the Board of Management and
the Supervisory Board, Daimler AG utilizes diversity concepts
that focus on aspects such as age, gender, education and
professional background. For this reason, the Company is
required to describe these concepts in its declaration on corpo-
rate governance, and to also explain the aims of the diversity
concepts, the manner in which they are implemented and the
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results achieved with them in the financial year. The Supervisory
Board has combined the diversity concepts with the require-
ments of German legislation on equal participation of women
and men in executive positions and the specific targets for
the composition of executive management bodies as defined
by the recommendations in the current version of the German
Corporate Governance Code. These combined requirements
are presented in the overall requirements profiles for the com-
position of the Board of Management and the Supervisory
Board described below. The requirements profiles also serve
as the basis for long-term succession planning. They are
reviewed each year, also taking into account changes that may
have been made to the German Corporate Governance Code.
Board of Management
The requirements profile for the Board of Management of
Daimler AG aims for a Board of Management with excellent
leadership skills that is as diverse and mutually supportive as
possible. The Board of Management as a whole should possess
the knowledge, skills and experience required for the proper
execution of its tasks and be composed of members whose
varied personal backgrounds and experiences ensure that the
Board as a whole also embodies the desired management
philosophy. Decisions regarding appointments to specific posi-
tions on the Board of Management are always governed by
the Company's interests under consideration of all circumstan-
ces in each individual case.
The requirements profile for the Board of Management currently
includes in particular the following aspects, which are to be
taken into account to the greatest extent possible when making
decisions on appointments to the Board of Management:
The members of the Board of Management should have dif-
ferent educational and professional backgrounds, whereby
at least two members should have a technical background.
With Markus Schäfer and Wilfried Porth, at December 31,
2019 the Board of Management had two members who are
engineers. Since taking over as Head of Group Research &
Mercedes-Benz Cars Development on January 1, 2017, a
position he held until he was appointed Chairman of the
Board of Management on May 22, 2019, Ola Källenius has
sustainably displayed the expertise he acquired in various
technical management positions throughout the Company.
In order to meet legal requirements on the equal representa-
tion of women and men in executive positions, the Super-
visory Board defined on December 8, 2016 a target of 12.5%
for the proportion of women on the Board of Management,
with a deadline of December 31, 2020. This means that of the
eight current members of the Board of Management, at least
one member must be a woman. The Board of Management
currently has two female members, Renata Jungo Brüngger
and Britta Seeger. This means the proportion of women on
the Board of Management is currently 25%.
In accordance with the recommendations contained in the
German Corporate Governance Code in the version dated
February 7, 2017, the Supervisory Board has set an age limit
for members of the Board of Management. As a rule, 62
years of age serves as orientation for age-related retirement.
When it set this age limit, the Supervisory Board deliberately
decided in favor of a flexible rule allowing the required
scope for the appropriate assessment of the circumstances
of each individual case. With the retirement of Dr. Dieter
Zetsche on May 22, 2019, all members of the Board of Man-
agement are currently below the age limit.
In addition, a sufficient generational mix among Board of
Management members is to be taken into account in appoint-
ment decisions, whereby if possible at least three members
of the Board of Management should be 57 years of age
or younger at the beginning of their respective term of office.
This is the case for all current members of the Board of
Management, with the exception of Wilfried Porth.
Decisions related to the composition of the Board of
Management should also take into account internationality
in the sense of varied cultural backgrounds or international
experience through assignments abroad lasting several
years, whereby if possible, at least one member of the Board
of Management should come from a country other than
Germany. Irrespective of the many years of international
experience of a large majority of members of the Board
of Management, this target is currently overachieved due to
the international origins of Ola Källenius and Renata Jungo
Brüngger.
In accordance with the recommendation of the German
Corporate Governance Code in the version dated February 7,
2017, the rules of procedure of the Board of Management
stipulate that no member of the Board of Management may
be a member of more than three supervisory boards of listed
corporations outside the Daimler Group or of similar boards
or committees at companies outside the Daimler Group that
have comparable requirements. This stipulation has been
met. The only listed company in which Hubertus Troska is a
member of a supervisory board or similar board outside the
Daimler Group is BAIC Motor Corporation Ltd. Hubertus
Troska's other board memberships are at joint ventures that
fall within his areas of responsibility.
Mediation Committee
In accordance with its responsibilities, the Supervisory Board
examines in detail all legal proceedings facing the Group and
its subsidiaries. In view of the complex proceedings relating to
emissions regulations and antitrust law, and in order to ensure
the efficient organization of Supervisory Board activities,
the Supervisory Board decided during the reporting period to
establish a Legal Affairs Committee that will continue to
operate until further notice. This committee coordinates the
exercise and performance of the rights and obligations of
the Supervisory Board with regard to the aforementioned legal
affairs and prepares and recommends associated resolutions
for adoption by the Supervisory Board. The Legal Affairs Com-
mittee is composed of six members, who are elected by a
majority of the votes cast by the members of the Supervisory
Board.
Legal Affairs Committee
191
ing Daimler's internal terminology for the hierarchical levels
and has defined the workforce of Daimler AG in Germany as the
relevant workforce. Variable components of remuneration
are generally based on an assessment period that lasts several
years and is essentially future-oriented. Multi-year variable
remuneration components are not paid out until they come due.
The Supervisory Board has set upper limits for individual Board
of Management remuneration in total and with regard to its
variable components. Further information on Board of Manage-
ment remuneration can be found in the Remuneration Report
pages 108 ff of the Annual Report 2019.
on
The Supervisory Board reviews the annual company financial
statements, the annual consolidated financial statements
and the combined management report of the Company and the
Group, as well as the proposal for the appropriation of distrib-
utable profits. Following discussions with the external auditors
and taking into consideration the audit reports of the external
auditors and the results of the review by the Audit Committee,
the Supervisory Board states whether, after the final results
of its own review, any objections are to be raised. If that is not
the case, the Supervisory Board approves the financial state-
ments and the combined management report. Upon being
approved, the annual financial statements are adopted. The
Supervisory Board reports to the Annual Shareholders' Meet-
ing on the results of its own review and on the manner and
scope of its supervision of the Board of Management during
the previous financial year. The Report of the Supervisory
Board for the year 2019 is available on pages 34 ff of the
Annual Report 2019 and on the Internet at ④ daimler.com/
dai/sb.
In 2019, the Supervisory Board once again commissioned an
external review of the separate combined Non-Financial
Report of Daimler AG and the Group within the framework of a
limited assurance engagement. The external auditors issued
a report concerning their limited assurance engagement on the
Non-Financial Report in accordance with ISAE 3000, which
the Supervisory Board then approved after reviewing the Non-
Financial Report and discussing it with the external auditors.
The Supervisory Board has given itself a set of rules of proce-
dure, which regulate not only its duties and responsibilities
and the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. The rules of procedure of
the Supervisory Board can be viewed on our website at
daimler.com/dai/rop
Meetings of the Supervisory Board are regularly prepared in
separate discussions of the members representing the employ-
ees and of the members representing the shareholders with
the members of the Board of Management. The Supervisory
Board meetings during the reporting year once again included
so-called executive sessions on a regular basis for discussions
of the Supervisory Board in the absence of the members of the
Board of Management. The Supervisory Board members can
also take part in the meetings by means of conference calls or
video conferences. However, this is not the rule.
The Supervisory Board formed a new committee in the report-
ing period. On December 31, 2019, the Supervisory Board
had, in addition to the legally required Mediation Committee,
four additional committees that perform to the extent legally
permissible the tasks assigned to them in the name of and on
190
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behalf of the entire Supervisory Board. The committee
chairpersons report to the entire Supervisory Board on the
committees' work at the latest in the meeting of the Super-
visory Board following each committee meeting. The Supervi-
sory Board has issued rules of procedure for each of its
committees. Those rules of procedure can be viewed on our
website at daimler.com/dai/rop. Information on the
current composition of these committees can be viewed at
④daimler.com/dai/sbc and is also available on
of the Annual Report 2019.
Presidential Committee
Supervisory Board
page 41
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of the
Board of Management, taking into account the overall require-
ments profile the Supervisory Board has defined to be filled,
including the diversity concept, as well as the Supervisory
Board's target for the proportion of women on the Board of
Management. It submits proposals to the Supervisory Board
on the design of the remuneration system for the Board of
Management and on the appropriate total individual remunera-
tion of its members. In this context, it follows the relevant
recommendations of the German Corporate Governance Code.
The Presidential Committee is also responsible for the Board
of Management members' contractual affairs. In addition, it
decides on the granting of approval for sideline activities of the
members of the Board of Management, and once a year
submits to the Supervisory Board for its approval a complete
list of the sideline activities of each member of the Board
of Management.
In addition, the Presidential Committee consults and decides
on questions of corporate governance, on which it also makes
recommendations to the Supervisory Board. It supports and
advises the Chairman of the Supervisory Board and his Deputy,
and prepares the meetings of the Supervisory Board within
the limits of its responsibilities.
Nomination Committee
The Nomination Committee is composed of at least three
members, who are elected by a majority of the votes cast by the
members of the Supervisory Board representing the sharehold-
ers. It is the only Supervisory Board committee that consists
solely of members representing the shareholders. The Nomina-
tion Committee makes recommendations to the Supervisory
Board concerning persons to be proposed for election as mem-
bers of the Supervisory Board representing the shareholders
at the Shareholders' Meeting. In doing so, the Nomination
Committee takes into consideration the requirements of German
law on equal participation of women and men in executive
positions, as well as the recommendations of the German Cor-
porate Governance Code. It also strives to ensure the fulfill-
ment of the overall requirements profile, including the skills
profile, for the entire Supervisory Board.
Audit Committee
The Audit Committee is composed of four members, who are
elected by a majority of the votes cast by the members of
the Supervisory Board. The Chairman of the Supervisory Board
is not simultaneously the Chairman or a member of the Audit
Committee. The Chairman of the Supervisory Board attends
the meetings of the Audit Committee as a guest.
Both the Chairman of the Audit Committee, Dr. Clemens
Börsig, and the other shareholder representative on the Audit
Committee, Joe Kaeser, fulfill the criteria for independence
and have expertise in the field of financial reporting, as well as
special knowledge and experience with regard to auditing and
methods of internal control. Furthermore, due to his earlier
work at Robert Bosch GmbH and his long-standing membership
of the Supervisory Board of Daimler AG, Dr. Clemens Börsig
is also very familiar with the automotive industry.
The Audit Committee deals with the supervision of the
accounting and its process as well as with the annual external
audit. At least once a year, it discusses with the Board of
Management the effectiveness and functionality of the internal
control and risk management system, the internal auditing
system and the compliance management system. It regularly
receives reports on the work of the Internal Auditing depart-
ment and the Compliance Organization. At least four times a
year, the Audit Committee receives a report from the whistle-
blower system BPO (Business Practices Office) on complaints
and information about any breaches of regulations or guide-
lines by high-level executives, as well as violations by other
employees of the regulations in a defined catalog of legal provi-
sions. It regularly receives information about the handling of
these complaints and notifications.
The Audit Committee discusses with the Board of Management
the interim reports before they are published. On the basis
of the report of the external auditors, the Audit Committee
reviews the annual company financial statements and the
annual consolidated financial statements, as well as the manage-
ment report of the Company and the Group, and discusses
them with the external auditors. The Audit Committee makes a
proposal to the Supervisory Board on the adoption of the
annual company financial statements of Daimler AG, on the
approval of the annual consolidated financial statements,
and on the appropriation of profits. The Committee also makes
recommendations for the Supervisory Board's proposal on
the election of external auditors, assesses those auditors' suit-
ability, qualifications and independence, and, after the exter-
nal auditors are elected by the Annual Shareholders' Meeting,
it engages them to conduct the audit of the annual company
and consolidated financial statements and to review the interim
reports, negotiates an audit fee, and determines the focus of
the annual audit. The external auditors report to the Audit
Committee on all accounting matters that might be regarded
as critical and on any material weaknesses of the internal
control and risk management system with regard to accounting
that might be discovered during the audit.
Finally, the Audit Committee approves permitted services that
are not directly related to the annual audit and which are pro-
vided by the firm of external auditors or its affiliates to Daimler
AG or to companies of the Daimler Group.
D❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE, CORPORATE GOVERNANCE REPORT
The Presidential Committee is composed of the Chairman
of the Supervisory Board, his Deputy, and two other members,
who are elected by a majority of the votes cast by the mem-
bers of the Supervisory Board.
On the following pages, we publish the non-financial report in accordance
with Sections 289b - 289e, 315b and c of the German Commercial Code
(HGB). This report applies to Daimler AG and to the Daimler Group. It contains
the main information on the aspects of environmental, employee and social
matters, combating corruption and bribery, and respect for human rights.
• nor a business or personal relationship to the company
or its boards
areas of action. These are derived from our HR Strategy
71 E.02. HR-eData Manager Reports serve as another control
tool. These reports are available to all managers as a self-ser-
vice feature. They contain KPIs and detailed information on
managers' personal areas of responsibility.
Further information on our sustainability activities can be found online at
daimler.com/sustainability and in our annual Sustainability Report, which
can be downloaded there as a PDF data file.
Further Information
Consolidated
Non-Financial Report
Corporate Governance
Financial Statements
Information on our business model ( pages 60 ff of the Annual Report 2019)
and on non-financial risks connected with the aspects presented in this report
(Risk and Opportunity Report page 149 of Annual Report 2019) is provided.
in the Combined Management Report in the Annual Report 2019.
The Divisions
Management Report
Contents
198 E❘ NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER
Sustainability at Daimler
At Daimler, sustainability means creating lasting economic and social value for all stakeholders -
i.e. our customers, employees, investors, business partners, and society as a whole. The foundation
for our approach here is the Daimler sustainable business strategy adopted by the Board of
Management in 2019. O page 52 ff With this strategy, the company assumes responsibility for the
economic, ecological, and social impact of its business activities, not only at its manufacturing
locations but also with regard to the entire upstream and downstream value chain.
Our sustainable business strategy
Combined
Our sustainable business strategy demonstrates our commit-
ment to sustainable business operations at both the Group
level and in the individual business divisions. More specifically,
our strategic objectives involve the following six areas of
action:
The information provided in this report is presented in conformity with the GRI
Standards of the Global Reporting Initiative, insofar as this complies with appli-
cable law. Some aspects are presented in accordance with internal guidelines
and definitions.
Occupational health and safety
Anti-financial-crime compliance
218
Human-rights compliance
219
Employee Issues
203
207
Partnership with the employees
Employer attractiveness
204
A competitive workforce
205
Statement on the Review of the
Non-Financial Report
220
204
217
Climate protection and air pollution control: Plans call for
our new vehicle fleet to be CO2-neutral by 2039, when it will
no longer have any relevant impact on air quality in inner
cities.
Livable cities: We will offer our leading mobility and trans-
port solutions in order to improve the quality of life in cities.
Traffic safety: We are working to make our vision of acci-
dent-free driving a reality as we develop automated driving
systems while also taking social and ethical issues into
account.
Supply chain
Daimler's sustainable business strategy applies to our value
chain and thus also to the purchase of production materials
and the procurement of services. Our three procurement units -
Mercedes-Benz Cars Procurement and Supplier Quality,
Global Procurement Trucks and Buses, and International Pro-
curement Services - are jointly responsible for the Daimler
Supplier Network cooperation model. These units work together
to ensure the responsible procurement of materials and ser-
vices and compliance with the Daimler Supplier Sustainability
Standards in the supply chain. Our Supplier Sustainability
Standards define our requirements for working conditions,
upholding human rights, environmental protection, safety,
business ethics, and compliance page 219, Human rights
compliance. They also serve as the guidelines for our sustain-
able supply chain management system. We demand that our
direct suppliers commit themselves to observing our sustain-
ability standards, communicating them to their employees and
to their upstream value chains, and then checking to ensure
that the standards are complied with. We support them in
these activities by providing them with information and training
and qualification measures. Our service providers also explic-
itly recognize these standards as a contractual component of
their supplier agreements.
Compliance with the standards is systematically reviewed.
For example, the procurement units of Mercedes-Benz Cars
and Daimler Trucks & Buses examines the sustainability poli-
cies of new production material suppliers in on-site inspec-
tions. Such examinations are even more thorough in high-risk
countries, and in particularly critical cases we discuss the
results of the analyses in management committees and take
them into account in decisions on whether to award a contract.
Along with the assessment of new suppliers, we also examine
sustainability risks at our existing direct suppliers within the
framework of risk analyses conducted on a regular basis.
Among other things, we conduct annual database research to
identify any violations of our sustainability and compliance
rules by our current suppliers. This is part of our supplier
screening process. Mercedes-Benz Cars also conducts corpo-
rate social responsibility (CSR) audits and potential analyses
of new suppliers.
We systematically follow up all reports of violations, and
Mercedes-Benz Cars utilizes online surveys here as well. These
surveys require suppliers to provide information about their
sustainability management system and the measures they take
to ensure that their own suppliers comply with sustainability
standards. If the results of such surveys indicate insufficient
sustainability performance, we instruct the supplier in question
to improve the relevant processes. In order to ensure an effec-
tive sustainable supplier management system, it is very im-
portant to us that the results of the surveys can be compared.
For this reason, we work with standardized instruments such
as the industry-wide sustainability Self-Assessment Question-
naire developed by the European Drive Sustainability initiative.
In 2019, we held training courses for suppliers in the focus
countries Brazil, Malaysia, and South Africa in cooperation
with Drive Sustainability - a European sustainability initiative.
In addition, we assisted the econsense - Forum for Sustain-
able Development of German Business network with the
establishment of a platform for further supplier workshops on
sustainability. Our Daimler Supplier Portal offers existing and
potential suppliers a free e-learning program on compliance
awareness that allows suppliers to obtain detailed information
at any time on sustainability standards and their implementation.
The Daimler Group is exposed to a large number of risks that
are directly linked with the business activities of its divisions
or which result from external influences. A risk is understood
as the danger that events, developments or actions will pre-
vent the Group or one of its divisions from achieving its targets.
Risks can be of either a financial or non-financial nature. At
the same time, it is important for the Daimler Group to identify
opportunities for the Group so that they can be utilized in
the course of its business activities, thus safeguarding and
enhancing the Group's competitiveness. An opportunity is
understood as the possibility to safeguard or to surpass the
planned targets of the Group or a division as a result of events,
developments or actions. In particular, the actions taken by
the company with regard to environmental, employee, and
social issues, the battle against corruption and bribery, and
upholding human rights play a key role in the way we are cur-
rently viewed by the public, and can thus potentially result in
non-financial risks as well as opportunities. The divisions have
direct responsibility for recognizing and managing business
risks and opportunities at an early stage. Our Group-wide risk
management system provides the framework for the responsi-
ble management of existence-threatening and other material
risks. The risk management system is integrated into the value-
based management and planning system of the Daimler Group
and is also an integral part of the overall planning, manage-
ment, and reporting process in the legal entities, divisions, and
corporate functions. The risk management system is intended
to systematically and continually identify, assess, control, moni-
tor, and report risks threatening Daimler's existence and other
material risks, in order to support the achievement of corpo-
rate targets and to enhance risk awareness at the Group. See
also the Risk and Opportunity Report,
pages 135 ff.
200
Environmental Issues
Protecting the environment is a primary corporate objective of our Group. Environmental protec-
tion is not separate from other objectives at Daimler, but is an integral component of our sustain-
able business strategy. The central environmental aspects we address are climate protection, air
pollution control, and resource conservation.
Climate protection
The transition to CO2-neutral mobility is vital if the impact of
climate change is to be limited. We at Daimler are working hard
to make this vision a reality. In this connection, we have set
ourselves the goal of making the mobility of the future more
sustainable, and we are employing a holistic approach in order
to achieve this goal. One component of our approach involves
reducing the CO2 emissions of our vehicles.
Within the framework of our sustainable business strategy,
our company has expressed its firm commitment to the Paris
accord on climate protection. Mercedes-Benz AG has had
its climate protection measures scientifically confirmed by the
Science Based Targets Initiative (SBTI). By means of these
targets, the company wants to contribute to environmental
protection in the sense of the Paris Agreement.
In our sustainable business strategy, we have also set ourselves
the goal of making our fleet of new cars CO2-neutral for the
vehicles' entire lifecycle by 2039. Daimler Trucks & Buses aims
to offer only new vehicles that are CO2-neutral in driving
operation ("tank-to-wheel") in the triad of Europe, Japan, and
NAFTA by 2039. Mercedes-Benz Vans is currently striving
to achieve similar reductions in CO2 emissions. In order to
achieve this goal, we want to significantly increase sales
of passenger cars equipped with plug-in hybrid and all-electric
drive systems. In this connection, we want to electrify the
entire portfolio of Mercedes-Benz Cars by 2022, which means
that various electric alternatives are to be offered in every
segment - from compact cars to SUVs. By the year 2025, we
expect all-electric models to account for up to 25%. By 2030,
plug-in hybrids and all-electric models should account for
more than 50%.
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
Conservation of resources: We will decouple resource con-
sumption from business volume growth.
Risk management
E❘ NON-FINANCIAL REPORT | SUSTAINABILITY AT DAIMLER 199
Data responsibility: We conduct sustainable data-based
business operations, anticipate our customers' needs, and
handle all data responsibly.
Human rights: We have assumed responsibility for respect-
ing and upholding human rights along our automotive value
chain.
We have set ourselves the goal of making sustainability an inte-
gral component of our core business and our conduct in gen-
eral. Achieving this goal requires future-oriented cooperation
with our partners in industry, government, and society at large,
as well as with our employees, who will help shape the coming
transformation. The three enablers, or principles, of “Integrity,"
"Employees” and “Partnerships” are crucial for achieving suc-
cess in the six areas of action.
While formulating our strategic goals in the six areas of action,
we focused extensively on the 17 Sustainable Development
Goals (SDGs) defined by the United Nations, and in particular
on the following SDGs and the associated sustainability-
related activities:
SDG 8 Decent Work and Economic Growth
SDG 9 - Industry, Innovation and Infrastructure
SDG 11 Sustainable Cities and Communities
SDG 12 - Responsible Consumption and Production
The ten principles of the UN Global Compact provide a funda-
mental guide for our business operations. As a founding
member and part of the LEAD group, we are strongly commit-
ted to the Global Compact. Our internal principles and policies
are founded on this international frame of reference and other
international principles, including the Core Labor Standards
of the International Labour Organization (ILO), the OECD
Guidelines for Multinational Enterprises, and the UN Guiding
Principles on Business and Human Rights.
-
Climate Action
By adopting the six areas of action and the three enabler top-
ics, we have firmly established the aforementioned SDGs
as a component of our business strategy. We want to make an
effective contribution to sustainable development by imple-
menting this strategy.
Sustainable corporate governance
The short-term and medium-term components of the remunera-
tion the Daimler Company Bonus - have been further devel-
oped for the Board of Management and Level 1-3 managers,
with effect as of January 1, 2019. These components are linked
not only to financial targets but also to sustainability-related
transformation targets and non-financial targets that focus on
employees, customers, integrity, and diversity. The transfor-
mation targets in particular are closely examined within the
framework of the annual review of the Daimler Company Bonus,
whereby the targets for 2020 will be even more closely
aligned with the company's sustainable business strategy.
In accordance with this strategy, we are pursuing our defined
targets in the six areas of action and establishing a continuous
improvement process. Our management and organizational
structures support this process by means of clear lines of
responsibility in all business divisions. The Group Sustainability
Board (GSB) is our central management body for all sustain-
ability issues and reports to the Board of Management. The
GSB is headed by Renata Jungo Brüngger (the Board of Man-
agement member responsible for Integrity and Legal Affairs)
and Markus Schäfer (the Board of Management member
responsible for Group Research & Mercedes-Benz Cars Devel-
opment). The operational work is done by the Sustainability
Competence Office, which consists of representatives from the
units managed by the two Co-chairs.
Integrity, compliance, and legal responsibility are the corner-
stones of our sustainable corporate governance and serve as
the basis of all our actions as defined in our Integrity Code.
The Integrity Code is supplemented by other in-house princi-
ples and policies.
SDG 13
A new average CO2 target value of 95 g/km went into effect in
2020 for the entire fleet of new cars in the EU. The applicable
limit for individual manufacturers is based on the average vehi-
cle weight of the respective vehicle fleet. The limit for our
fleet of new cars will be higher due to the high average weight
of the vehicles in our model range. We take compliance with
this new requirement into account as early as the vehicle
development stage by employing our Design for Environment
approach page 342, Glossary. In order to continuously
improve environmental compatibility, these requirements are
incorporated into our product performance specifications.
These specifications define specific characteristics and target
values for example for fuel economy and CO2 emissions -
that must be achieved for every vehicle model and every
engine variant. During the development process, we regularly
110
216
Forward-looking,
right people
...attract, develop and retain the
Competitive
workforce
Mission
Vision
skilled leadership
We provide innovative & efficient HR solutions to ...
Daimler-Best Team
HR Strategy 2025
E.02
Our Group-wide employee survey is a key indicator of where we
currently stand from the point of view of our employees and
what we need to do to improve the company in the future. The
survey is conducted every two years, with the next one sched-
uled for 2020.
pages 102 ff
E| Non-Financial Report
We want to reach these overarching goals by employing efficient
processes. One of the control tools we use is our HR Score-
card, which uses key performance indicators (KPIs) concerning
e.g. demographic development, diversity, and employer
attractiveness. This enables us to evaluate the sustainability of
human resources measures and processes in the individual
E | NON-FINANCIAL REPORT | CONTENTS 197
Employer of choice
...enable our management to shape ...foster a diverse, empowering, and ...ensure continuous competitive-
the framework of the future
inspiring culture
Training for young people with disabilities is particularly impor-
tant to Daimler. As early as 2006, we began cooperating with
the severely disabled persons' representative to put together
a plan of action for taking on severely disabled trainees. In pre-
vious years Daimler AG already surpassed the legally pre-
scribed share of 5%. Almost 9,000 employees with disabilities
work at Daimler AG, Mercedes-Benz AG, and Daimler Truck
AG. Daimler was presented with the German "Inclusion Award
for the Economy 2019” in April 2019. The award jury honored
the sustainable anchoring of disability inclusion in the company.
Daimler has 12 official Employee Resource Groups that enable
employees with shared interests, experiences, and values to
discuss various issues across all business units and hierarchi-
cal levels.
In 2019, we held the seventh Daimler Diversity Day in coopera-
tion with the Diversity Charter initiative, of which we are a
founding member. The motto of the event was "Changing Per-
spectives. Ready to Be Different."
We offer various training and qualification measures for manag-
ers that are designed to make diversity and inclusion firm
elements of their day-to-day management work. Consequently
this topic area is a component of existing training courses
for managers and staff in human resources units. Among other
things, these courses teach participants how to address ste-
reotypes and prejudices.
The Integrity and Diversity units at Daimler design the frame-
work and processes for such a culture. The Global Diversity
Office is a corporate function that is part of the Group Human
Resources organization. This office defines strategic targets
and areas of action in cooperation with the business units and
initiates group-wide projects, training programs, and aware-
ness promoting measures.
The Board of Management holds regular discussions (on a
quarterly basis over the past few years) of the Group's diversity
management targets, activities, and results. The Diversity
Update contains gender reporting information and if required
information on any Group-wide projects. Our entire workforce
knows that we expect all employees to treat one another with
respect and appreciation. Managers serve as role models here
and thus have a special responsibility for ensuring a corporate
culture marked by fairness.
Profitability
10
10
01
00
Mission
Strategic pillars
ness
011
Data compliance
Sustainability at Daimler
Social Issues
211
Our Compliance Management System
212
Climate protection
200
Anti-corruption compliance
Integrity Management
215
201
Antitrust compliance
215
Resource conservation
201
Technical compliance
Air pollution control
198
200
211
208
Our sustainable business strategy
198
Incorporation of stakeholder
208
Sustainable corporate governance
Environmental Issues
198
209
Risk management
199
Supply chain
199
Integrity and Compliance
Political dialog and representation of interests
monitor compliance with our internal development targets and
the requirements contained in the product performance speci-
fications. In the Energy Efficiency Board (EEB), which includes
Board of Management participation, the managers responsible
for each vehicle model series evaluate the results of this moni-
toring process. In their evaluations, the managers take into
account the increasing degree of vehicle electrification and the
changes that have been made to legal requirements, for exam-
ple those relating to the introduction of the new WLTP test pro-
cedure. If corrective actions are required, the managing body
of the respective business division is included in the decision-
making. The exact level of the CO2 emissions of individual vehi-
cles is determined within the framework of the fuel-economy
certification process.
Nevertheless, the fact remains that the attainment of the EU
limits will greatly depend on the level of customer demand for
all-electric vehicles and plug-in hybrids.
CO₂ emissions from our car fleet
HR
documents
↑↓
11
01 10
11 00
001111001
1011 011
11
01
00
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010
101
10100 01010
1010
1000001
01111
0 010
0100
001 101
0
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00011
011 01
1001 101
1100 0010
Digitalization
Operational excellence in HR
And we act as one team
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0101
10100
0010 1101
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001001
Feedback to plant management and divisional management
Topic areas
Environmental management
Emissions into the atmosphere
Discharge into bodies of water
Waste management
Soil/groundwater contamination
Tours
Dealing with hazardous materials
at the plants
E❘ NON-FINANCIAL REPORT | EMPLOYEE ISSUES
203
Employee Issues
The success of Daimler AG and its subsidiaries is largely dependent on the skills and commitment
of its employees. Almost 300,000 people promote our company's success worldwide by contribut-
ing their concepts and ideas to their respective tasks and work processes and by helping to make
improvements and create innovations. Trusting relationships with employees are therefore more
than just an ethical and legal requirement for us - without them we would not be able to conduct
our business successfully.
In order to be able to recruit, further develop, and retain quali-
fied employees, we seek to present ourselves around the globe
as an attractive employer and to motivate our employees to
achieve top performance in the digital world. Our management
staff play a key role here, so it is crucial that we equip our
managers with outstanding leadership capabilities. In addition,
we want to take on our social responsibility and let diversity
flourish in our global company.
Implementing measures
0001
10110
Interviews
Fair remuneration
111110
110100
101000101
0101111010
Basic
204
We remunerate work in accordance with the same principles
at all Group companies around the world. Our Corporate Com-
pensation Policy, which is valid for all groups of employees,
establishes the framework conditions and minimum require-
ments for the design of the remuneration systems. Internal
audits are conducted on a random basis to make sure these
conditions and requirements are met. In our desire to offer
salaries and benefits that are customary in the industry and
the respective markets, we also give consideration to local
market conditions within the specified framework. The salaries
are determined on the basis of each employee's tasks and
performance and in line with their qualifications and experience.
In setting the remuneration of the employees we are not
guided by gender or origin, but exclusively by the employee's
function and responsibility.
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
We want to work together with our employees as partners,
respect their interests, and get them involved in the company.
An important source of guidance for us here are our Group-
wide Principles of Social Responsibility, which are based on the
International Labour Organization's (ILO) work and social stan-
dards. All of our employees are provided with information about
these principles. Reports of violations of the principles are
received by the whistleblower system BPO (Business Practices
Office), which directs the subsequent investigations according
to the area of responsibility pages 213 ff, Integrity and
Compliance.
We structure our decision-making processes in a manner that
ensures transparency for our employees, and we also enable
our employees to participate in decision-making processes. We
work together with our employees as partners, respect their
interests, and get them actively involved in the company. We
have established how we take on responsibility in our employee
relationships in our policies and company agreements. Our
employees have the right to organize themselves in labor unions.
We also ensure this right in countries in which freedom of
association is not legally protected. We work together construc-
tively with the employee representatives and the trade unions.
Important partners here include the local works councils, the
European Works Council, and the World Employee Committee
(WEC). Collective bargaining agreements apply to the majority
of our employees throughout the Group. Such agreements
apply in particular for all of the employees at Daimler AG,
Mercedes-Benz AG, and Daimler Truck AG.
Various (company-wide) agreements grant our employees spe-
cific rights and define additional rules and regulations. These
agreements address topics such as mobile working, family
leave, reductions in working hours, and home health care.
Within the framework of the ongoing dialog between the corpo-
rate management and the employees' association, employees
at Daimler AG, Mercedes-Benz AG, Daimler Truck AG, and
Daimler Brand & IP Management GmbH & Co. KG have been
given a job-security guarantee for the period until 2029. As a
result, terminations for operational reasons are excluded on
principle until December 31, 2029. This agreement applies to
employees who have remained at Daimler AG, as well as all
employees who were affected by a transition of operations
resulting from the new Group structure and who did not con-
test their transfer to the new organization.
Employer attractiveness
Our activities and measures for enhancing our attractiveness
as an employer are designed to enable us to recruit and retain
a sufficient number of specialized employees and qualified
managers in the competition for talented staff. Our primary
objectives here are to ensure attractive and fair compensation
and to establish and maintain a work culture that enables
outstanding performance and a high level of motivation and
satisfaction among our employees.
Partnership with the employees
1 111
Inspection of
Methodology for assessing environmental risks
We regularly check to ensure that all of our plants comply with
these environmental protection provisions. Any incidents rele-
vant to environmental protection that occur at production loca-
tions that are majority-owned by the Group are documented
within the framework of the plant environmental management
systems. We then take all necessary measures to eliminate any
damage. We also implement measures for improvement wher-
ever this is possible and expedient. The environmental mea-
sures are monitored by external auditors as part of the certifi-
cation process for our environmental management systems
(ISO 14001, EMAS, ISO 50001), as well by internal environmen-
tal risk assessments (71 E.01, Environmental-Due-Diligence-
Process).
202
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES
Since the year 2000, we have been using a Group-wide stan-
dardized method for assessing environmental risks (environ-
mental due diligence process) in order to prevent such risks
and comply with statutory requirements. We employ this
method both internally at all production locations in which the
Group has a majority interest, as well as externally in connec-
tion with our acquisition plans. We also have a standardized
process in place for inspecting and assessing the Group's con-
solidated production sites every five years. The results are
reported to the plants and divisional managements. In 2019,
we evaluated all the production locations that are operated by
the Mercedes-Benz Cars division and majority-owned by the
Group. In addition, we annually assess the extent to which our
recommendations for minimizing risks at the locations have
been put into practice. The objective of all of our environmen-
tal risk assessments is to ensure that we achieve high environ-
mental standards at all of our production locations around the
world.
Daimler has defined its own target for the proportion of women
in executive management positions at the Group level over
a period of several years within the framework of its in-house
guidelines (Gender Diversity Aspirational Guidelines). This
target calls for a proportion of 20% by the end of 2020. The share
of women in such positions stood at 19.8% at the end of 2019.
Women currently account for 19.0% of the total workforce
worldwide.
Beyond the current legal requirements, we have since 2006
been setting clear goals for increasing the proportion of
women in the various business units, and we check every
month or quarter to see how we are progressing. For example,
Our commitment to the environment is an integral component
of our sustainable business strategy. For this reason, we have
established environmental management systems at our manu-
facturing locations. In addition, our Environmental Management
Manual defines a standardized Group-wide framework for our
environmental management systems. The manual describes
our environmental and energy guidelines in detail, as well as key
environmental protection provisions of relevance to the Group.
As a supervisory board of a listed company subject to parity
codetermination, the Daimler AG Supervisory Board is legally
required to have a gender ratio of at least 30% women. The
Supervisory Board fulfills this requirement as a whole and also
in terms of the side of the Supervisory Board representing
the shareholders and the side representing the employees. In
line with a further legal requirement, the Supervisory Board
defined a target of 12.5% for the proportion of women on the
Board of Management, with a deadline of December 31, 2020.
This target has been clearly surpassed, as the proportion of
women on the Board of Management is currently 25%. The Board
of Management defined a target of 15% for the proportion of
women in the first and second management levels of Daimler
AG below the Board of Management, with a deadline of Decem-
ber 31, 2020. As of December 31, 2019, the proportion of
women at the first management level below the Board of Man-
agement was 12.5%; at the second level it was 23.8%. As a
result of the deconsolidation of the Cars & Vans and Trucks &
Buses divisions into Mercedes-Benz AG and Daimler Truck
AG as part of Project Future, the number of executives of
Daimler AG at the two management levels below the Board
of Management and thus the number for determining the pro-
portion of women at these levels decreased significantly on
December 31, 2019.
Diversity
Our STEM education initiative, “Genius," is designed to get
children and young people enthusiastic about technology and
technology topics. Genius also helps teachers make their
classes varied and future-oriented by offering them practice-
related instructional materials, digital education materials,
and interactive advanced training courses.
In Germany, we recruit most of the young talent we need
through our industrial-technical and commercial apprentice-
ships and the programs at the Cooperative State University.
We developed the "Daimler Training System" for technical
apprenticeships in Germany. Daimler also offers dual work-
study programs for 13 internationally recognized bachelor
courses of study at 13 Group locations throughout Germany.
INspire is the name given to a series of international talent
training programs that optimally prepare young professionals
for their careers. Each one of our talent training programs
offers cross-unit insights, training, and personal coaching.
The Global Training unit safeguards and increases the skills of
our employees at the Mercedes-Benz sales organization. In
2019, more than 700 Mercedes-Benz trainers in over 80 coun-
tries worldwide instructed approximately 203,000 partici-
pants. Employees complete 1.8 million training courses each
year.
E❘ NON-FINANCIAL REPORT | EMPLOYEE ISSUES
At Daimler, we encourage equal opportunity and a culture of
appreciation and respect - a culture in which one's ethnicity,
age, gender, individual physical capabilities or sexual identity
or orientation have no bearing whatsoever on one's job or
career. Diversity and inclusion are firm components of our sus-
tainable business strategy, for which we have set ourselves
targets and defined areas of action.
206
Mercedes-Benz Cars is setting the course for green production
in Germany and the rest of Europe in order to reduce the
impact our plants have on the climate. Plans call for all manu-
facturing facilities in Europe to be supplied with CO2-neutral
energy from 2022. Conservation of resources, including every-
thing from water to energy and raw materials, continues to
hold the key to improving the ecological footprint of our manu-
facturing operations. Increasing our energy efficiency not only
reduces our consumption of fuels; it also lowers energy con-
sumption as a whole and thus the CO2 emissions page
200, Climate Protection) produced at our plants. The improve-
ment of recycling processes and reduced consumption of raw
materials at our sites have the potential to reduce waste, while
reductions in our water consumption lower the impact our pro-
duction operations have on natural water resources.
Along with fuel economy and emissions during vehicle opera-
tion, the processes used to manufacture our vehicles also play
a key role in determining their environmental compatibility. For
this reason, we work continuously to make production more
efficient by, for example, reducing waste, utilizing closed-loop
water systems, and recycling batteries from electric vehicles.
For the year under review, it is expected that the average
CO2 emissions of our total passenger car fleet in Europe (EU28
+ Iceland, Norway) will have increased to 137 g/km (NEDC,
including vans registered as passenger cars (M1), Mercedes-
Benz Cars: 135 g/km). This means that we were unable to
reduce our CO2 emissions from the prior-year level. There were
several reasons for this development. The first involves the
shift of sales from vehicles with diesel engines to cars powered
by gasoline engines. Secondly, 2019 was the first year in
which the rollout of the WLTP certification process had its full
impact. We intend to achieve our objective of reducing our
CO2 emissions for 2020 and thus continue to conform to the
currently valid EU limit values by means of a planned expan-
sion of our portfolio to include further electric vehicle models
and accommodate customer demand.
pages 135 ff, Risk
and Opportunity Report
E | NON-FINANCIAL REPORT | ENVIRONMENTAL ISSUES 201
CO₂ fleet emissions of Daimler Trucks & Buses
Daimler Trucks & Buses aims to offer only new vehicles that are
CO2-neutral in driving operation ("tank-to-wheel”) in the triad
of Europe, Japan, and NAFTA by 2039. As early as 2022, the com-
pany plans to have a vehicle portfolio comprising series-pro-
duced vehicles with battery-electric drive systems in these main
sales regions. In order to achieve these targets and meet
future legal stipulations in certain countries regarding the reduc-
tion of vehicle emissions and fuel consumption, Daimler
Trucks & Buses has to employ the latest technology and enhance
its range of battery-electric trucks and vehicles with other
electrified drive systems. pages 135 ff, Risk and Opportu-
nity Report
An important role is also being played by the launch of vehicles
that comply with the Euro 6d-TEMP emissions standard. In
the meantime, all Mercedes-Benz passenger cars that can be
ordered as new vehicles now comply with this standard at a
minimum.
Production
Maintaining the trust of our customers is extremely important
to us. Information about how the Company handles official
inquiries, investigations, requirements, and proceedings relat-
ing to environmental laws and regulations in connection with
diesel exhaust gas emissions can be found in the Risk and
Opportunity Report. pages 135 ff, Risk and Opportunity
Report
In addition to climate protection, the improvement of inner-city
air quality is an important environmental consideration for us.
That's because road traffic still accounts for a considerable
share of nitrogen dioxide pollution (NO2) near roads.
Plans call for our new vehicle fleet to no longer have any rele-
vant impact on NO2 emissions in urban areas by 2025. Another
of our aims is to increase transparency with regard to vehicle-
related particulate emissions and forge ahead with the
research and development of new measures for reducing such
emissions.
Responsibility for ensuring compliance with air pollution con-
trol requirements in the area of exhaust gas emissions is split
between several units and executive divisions. At the vehicle
level, the development departments at the vehicle divisions are
responsible for ensuring such compliance.
A reduction of NOx emissions is made possible by an innovative
overall package consisting of the engine and the exhaust treat-
ment system. This package is being continuously enhanced and
has been comprehensively launched on the market in the new
engine generation encompassing the OM 654, 656, and 608.
Overall, Daimler is developing software updates for a majority
of its fleet of Euro 6b and Euro 5 diesel cars in Europe. These
updates improve the nitrogen oxide emissions of the vehicles
in normal operating status by 25 to 30 percent on average.
This will be verified with the WLTC 1, 2, 3 measurement cycle.
As early as 2017 Daimler announced that it would offer volun-
tary service measures that would include software updates
for several millions of diesel vehicles in Europe. The company
has since then extended this update campaign, among other
things to include van models. Daimler has in addition been car-
rying out obligatory recalls - during which software updates
are also applied - at the order of Germany's Federal Motor
Transport Authority (KBA) since 2018.
Resource conservation
Air pollution control
Programs such as "Skilled Worker in Focus" and the team leader
development program ensure that employees in production
and production-related units also receive non-specialized gen-
eral training and education according to uniform standards.
In 2019, for example, 76 employees used the "Skilled Worker in
Focus" program. We also focus especially on the development
of talented young managers.
The Daimler Corporate Academy helps the Group develop a new
management culture and world of work. The central mission
of the Academy is to safeguard the further development of man-
agers throughout the Group and around the globe within the
framework of a leadership program. Around 150,000 partici-
pants worldwide have received personal and professional train-
ing in 2019 with the programs of the Corporate Academy. The
portfolio includes courses in business skills, as well as initia-
tives that address trends such as the digital transformation of
the Group, agile work methods, and future skills for experts.
The Corporate Academy also offers Daimler Academic Pro-
grams, which enable employees to pursue a course of study
while they continue to work.
The "company-wide agreement on qualification” regulates pro-
fessional training at Daimler AG, Mercedes-Benz AG, Daimler
Truck AG, and Daimler Brand & IP Management GmbH & Co.
KG. This agreement standardizes the qualification process and
makes it more efficient. Our employees should take part in pro-
fessional training and qualification for their professional and
personal development throughout their careers. Employees are
supported by our managers as they proceed along their career
paths. A key focus of our qualification measures in the report-
ing year involved topics relating to electric mobility, for example.
E.01
Environmental protection and resource conservation are coor-
dinated and managed in various units throughout the Group.
Group management is involved when fundamental decisions
regarding vehicle development are made and when targets are
defined for climate protection, air quality, and resource conser-
vation.
In order to evaluate the environmental compatibility of a vehi-
cle, Daimler has for many years now been producing life cycle
assessments and examining environmental effects throughout
the vehicle's entire life cycle - from the extraction of raw mate-
rials and vehicle production to product use and recycling. In
addition to raw material consumption, these examinations take
into account other factors such as the medium-term and long-
term availability of raw materials.
During the development of our Mercedes-Benz car models we
prepare a recycling concept for every vehicle model. This con-
cept includes an analysis of the suitability of all components
and materials for the various stages of the recycling process.
As a result, all Mercedes-Benz car models are 85 percent recy-
clable and 95 percent recoverable, in accordance with
ISO 22 628.
Products
General figures regarding the development of our workforce
numbers can be found in the Workforce section of the Manage-
ment Report.
Employees who have complaints regarding remuneration can
report these to their immediate manager. If the questions can-
not be resolved satisfactorily in this way, employees can con-
tact their HR department or the Works Council. In companies
subject to collective bargaining agreements, such as Daimler
AG, for example, the agreements that have been reached grant
employees additional rights, including the right to object to
their placement in a specific wage/salary group or to the
results of their performance assessment.
Daimler employs people from more than 160 nations, and we
utilize this diversity to put together optimal teams.
- € 18.336 billion on wages and salaries
- € 3.536 billion on social welfare services, and
- € 0.8 billion on retirement benefits for a workforce
numbering 301,839 on average.
We conduct income reviews for employees and managers on
a regular basis. The associated integration rounds with the
managers in question are carried out under the direction of the
human resources units in a manner that ensures salary deci-
sion-making transparency. This is done in order to prevent any
possibility of discrimination. The remuneration guidelines
and tables for employees paid according to collective bargaining
wage tariffs, for example at Daimler AG, can be viewed on the
Social Intranet. We are now providing to employees additional
information relating to the implementation of Germany's
remuneration transparency act. This includes information that
shows employees the various remuneration components of
comparable groups of both genders.
In employment relationships subject to a collective bargaining
agreement Daimler AG and its subsidiaries usually offer addi-
tional voluntary benefits that are agreed upon with the respec-
tive employees' representative bodies. These benefits include
employer-funded contributions to retirement benefits and, in
many cases, profit-sharing agreements for the respective
company as well. For example, the eligible employees of Daimler
AG, Mercedes-Benz AG, and Daimler Truck AG will receive a
profit-sharing participation of €597 for 2019 (for this scope, a
one-time appreciation bonus of up to €500 was also agreed
as a thank you and recognition for the commitment in 2019).
In 2019 the Group spent:
205
Employee development and securing young talent
The goals of our professional training, continuing education, and
qualification programs are to offer our employees opportuni-
ties for lifelong learning and continuous further development,
safeguard the competitiveness of our company, and ensure
that we can recruit and secure young talent. Further aims include
establishing an agile management culture and organization
that is supported by digital systems and ensuring that we keep
pace with the technological transformation of mobility. For
this reason, we offer various programs on a regular basis that
enable our employees to improve their qualifications, become
familiar with changed requirements, and acquire and develop new
skills. Among other things, the approach we employ here
makes use of digital learning formats and qualification measures
that are implemented directly in the workplace. In 2019, we
defined strategic areas of action for professional education.
These areas include the transformation of mobility, agility in
professional education, digital education projects, and interna-
tionalization. The areas apply equally to Daimler AG,
Mercedes-Benz AG, and Daimler Truck AG.
We can only be successful if we have a skilled and high-per-
forming workforce. It is therefore crucial that we continuously
promote the development of our employees in order to remain
competitive.
A competitive workforce
We have also launched a human resources development and
performance process for managers and executives known as
"IMPULSE," in which managers work with their teams to define
the contribution they wish to make to the success of the com-
pany, and then monitor the effectiveness of the associated
measures. We have established the NAVI process for non-pro-
duction employees at Daimler AG, Mercedes-Benz AG, and
Daimler Truck AG. NAVI is a standardized leadership process
consisting of initial leadership discussions, reviews conducted
during the year, and final discussions.
In order to remain successful in the future, we work constantly
to improve our management culture and the way we cooperate.
This is also why we launched the "Leadership 2020" initiative
in 2016. Employees from more than 23 countries and all levels
of the hierarchy, and of all ages and genders, have participated
in the process of shaping our future management culture. The
initiative has led to the definition of the following new manage-
ment principles: Pioneering Spirit, Agility, Purpose, Learning,
Empowerment, Co-creation, Customer Orientation, and "Driven
to Win." Among other things, these principles are intended to
make the company faster and more flexible and boost its inno-
vative potential. We have also set up eight sub-projects within
the framework of our “Leadership 2020" initiative. These game
changers are geared toward questioning and changing proce-
dures and structures that range from decision-making processes
and organizational structures to work methods and tools. The
"Leadership 2020" initiative will continue over the next few
years as "Leadership 20X."
We also offer our employees opportunities to further develop
their skills and qualifications and to integrate new working
methods and learning techniques into their daily activities.
E❘ NON-FINANCIAL REPORT | EMPLOYEE ISSUES
Our generation management focuses on measures for main-
taining the performance and health of younger and older
employees as well as for promoting cooperation between peo-
ple of different ages. Our Senior Experts program offers expe-
rienced retired employees the opportunity to come back to
work and contribute their expertise to various projects for a
We have introduced numerous measures and programs that
allow our employees to organize their working times flexibly
in line with their individual situation and enable them to recon-
cile their professional and personal responsibilities. For exam-
ple, Daimler offers its employees throughout Germany child
care places at 14 company facilities, and additional child care
places are available via partnerships.
Modern forms of living and working now also include new work
models such as mobile work, reductions in working hours,
part-time work, job sharing for managers, and leave of absence
programs for sabbaticals, training, and home health care.
Modern working conditions
The hourly wage we pay temporary workers in the commercial
and industrial units corresponds to the wage offered to newly
hired employees with temporary or permanent contracts in the
same units. This policy, which is based on the master/ERA
collective bargaining agreement for the metalworking industry
in the state of Baden-Württemberg, is adapted in line with the
requirements of the job profile in question.
Our principles regarding diversity and equal opportunity are
described in our Integrity Code and our Group-wide "Fairness
in the Workplace” agreement. Employees who have been
victims of discrimination, bullying or sexual harassment, or who
observe improper behavior by colleagues, can report such
violations of policy to their supervisors, the HR department, our
counseling service, their local medical services organization
or the Works Council. They can also contact our whistleblower
system BPO (Business Practices Office). In this way, all staff
members around the world, as well as external whistleblowers,
can report violations that pose a high risk to the company and
its employees. pages 213 ff, Integrity and Compliance
Our overarching goal is to maintain Daimler employees' health
and physical well-being over the long term. We employ a pre-
ventive approach for maintaining workplace safety and the
health of our employees. This approach is designed to help
prevent work accidents, work-related illnesses, and occupa-
tional diseases to the greatest extent possible.
maximum of six months. More than 800 assignments of senior
experts have taken place since this program was launched in
2013.
207
E | NON-FINANCIAL REPORT | EMPLOYEE ISSUES
Every organizational unit within the Daimler Group defines and
pursues occupational safety objectives on a regular basis. We
utilize a top-down approach for defining our objectives and
programs. Here, the general overarching strategy is developed
by the Chief Group Physician and the Chief Safety Engineer
and then discussed with the Board of Management. This gen-
eral strategy, which is binding for all organizational units at
Group companies, is based on our occupational health and
safety guidelines and occupational safety strategy, as well as
the results of audits and reviews.
We monitor the implementation of the corporate policy on
occupational health and safety internally by means of safety
due diligence audits. These audits address areas such as
safety and accident management, risks arising from dangerous
activities, fire and explosion risks, risks posed by ambient con-
ditions, and risks associated with equipment and machinery.
Our Health & Safety staff notify the responsible unit managers
about any risks that have been identified in the audits, and
then make specific recommendations for eliminating them. By
the end of the reporting period, 20% of all production locations
in which we have majority holdings had been audited in this
manner. We are looking to increase this figure to 100% by
2023.
Occupational health and safety
The principle of equality between men and women has been
set out in binding form at Daimler AG, Mercedes-Benz AG,
Daimler Truck AG, and Daimler Brand & IP Management GmbH
& Co. KG in company-wide agreements on “The Advancement
of Women" and "Equal Opportunity." Daimler also complies
around the globe with relevant international agreements and
principles of social responsibility.
E❘ NON-FINANCIAL REPORT | INTEGRITY AND COMPLIANCE
Daimler AG, Mercedes-Benz AG, and Daimler Truck AG utilize a
cross-site accident documentation system in conjunction with
a standardized statistics system. All sites issue reports on
recent accidents and regularly disclose accident figures for
their facilities. In addition, Corporate Safety annually defines
targeted upper limits for accidents at our various sites and
units. This approach is supplemented by annual agreements on
goals with the respective body responsible for personnel.
These agreements also include the implementation of measures
relating to occupational health and safety. A monthly report
is also produced for each business unit. Group-wide accident
figures are reported to the Human Resources & Labor Rela-
tions Director every three months. 7 E.03
shops, where they discuss issues related to sustainability
and work together to further develop them. The Daimler repre-
sentatives responsible for specific themes take up the
impulses addressed in the discussions and work together with
the stakeholders to incorporate these ideas into their work
throughout the year. They then report at the event in the fol-
lowing year on the progress made in the interim. We held
our 12th Daimler Sustainability Dialogue in Stuttgart during the
year under review. The evening before the event was devoted
to the topic of sustainable mobility in cities. On the main day
of the event, more than 100 stakeholders split up into seven
working groups to discuss themes such as human rights, envi-
ronmental protection, autonomous driving, and artificial intelli-
gence with Daimler representatives.
As a global company, we have set ourselves the goal of imple-
menting sustainability standards at our business units and spe-
cialist units around the world. For this reason, we organize
Daimler Sustainability Dialogue events in other countries and
regions as well. Such dialog events have been held in China,
Japan, the United States, and Argentina. During the year under
review, more than 300 stakeholders attended the seventh
Daimler Sustainability Dialogue in Beijing, where they dis-
cussed topics such as battery recycling, smart cities, and arti-
ficial intelligence. ④ daimler.com/sustainability/
daimler-sustainability-dialogue-2019.html
The Advisory Board for Integrity and Corporate Responsibility
has been an important source of input for sustainability activi-
ties at Daimler since 2012. The board's members - external
experts from the fields of science and business, as well as from
civic organizations - utilize an external point of view to offer us
critically constructive and independent support for the integ-
rity and corporate responsibility process at Daimler. The board
meets at regular intervals and also holds discussions with
members of the Board of Management and responsible per-
sonnel from the respective specialist units. During the year
under review, the Advisory Board also held a joint meeting with
the Supervisory Board. The Advisory Board's members have
extensive experience and possess a variety of specialized
knowledge regarding environmental and social policy, various
human rights and ethical issues, and the development of trans-
port, traffic, and mobility. During the year under review, the
Advisory Board focused in particular on the further develop-
ment of our sustainable business strategy. ④ daimler.com/
sustainability/basics/integrity/the-advisory-board-for-integrity.
html
We also maintain regular contact with representatives from
civic organizations and other companies. In addition to the dia-
logs we initiate, we also participate in various associations,
E | NON-FINANCIAL REPORT | SOCIAL ISSUES
209
committees, and sustainability initiatives. Some of the most
important initiatives here are the UN Global Compact, econ-
sense a German business forum for sustainable development,
and the World Business Council for Sustainable Development.
We also utilize online and print media, discussions with experts,
workshops, and local and regional dialog events for our dialog
with stakeholders. In addition to the formally structured dialog,
we receive inquiries from stakeholders concerning various
sustainability-related topics. These inquiries are addressed
directly by specific specialist units and business units in a
decentralized manner. This approach brings our stakeholders
closer to our business operations and enables specialized
knowledge to be directly incorporated into the dialog. Individ-
ual inquiries from stakeholders are also reported on in the
meetings of our sustainability bodies and committees and are
thus taken into consideration in the strategic decisions made
by our sustainability management organization. Our sustainabil-
ity bodies also coordinate dialog with our stakeholders on
interdisciplinary issues. The topics addressed most extensively
in discussions during the year under review included climate
protection, respect for human rights, livable cities, data
responsibility, and artificial intelligence.
Dialog at the local and regional levels
We also engage in a dialog with the stakeholders at our loca-
tions. In connection with specific occasions and projects, we
address questions, concerns, criticism, and suggestions made
by stakeholders and conduct an open-ended dialog with them.
We also stage proactive dialog and information events on cur-
rent topics. The results of all of our dialog measures are incor-
porated into decision-making and decision-implementation
processes at the company. An example of such a result is the
Urban Mobility Platform (PUM), which is an initiative launched
by nine automotive industry companies and nine German cit-
ies. The platform was created in order to establish a continu-
ous process of dialog and cooperation between cities and the
automotive industry regarding the design of future mobility
systems for urban areas. Daimler is a founding member of the
initiative and also actively participates in its pilot projects.
plattform-urbane-mobilitaet.de
Political dialog and representation of interests
As a company with global operations, we have to deal with a
wide range of political and societal changes and decisions that
have a major impact on our daily business activities. It is there-
fore important for Daimler that we represent the interests of
our company in an open and trusting dialog and develop joint
solutions. The overarching goal of our approach to represent-
ing our interests is to harmonize the company's interests with
the interests of society at large as far as possible. On the one
hand, we bring our ideas into social and political change and
decision-making processes and, on the other hand, integrate
social and political expectations into strategic and operational
corporate decisions.
Political representation of interests means being in constant
dialogue with decision-makers. These decision-makers include
politicians, government officials, and representatives of politi-
cal interest groups, trade organizations, business associations,
and public officials. We conduct discussions with such individ-
uals at various levels, listen to what they have to say, commu-
nicate our interests and concerns to them, and in this manner
assume social responsibility. Our dialog with NGOs and various
social movements is one of our core tasks and is becoming
more and more important.
Our strategy for representing our political interests is system-
atically aligned with our corporate strategy. We focus here on
issues such as climate protection and air quality, livable cities,
vehicle safety, handling data responsibly, human rights, trade
policy, location-specific matters, and labor legislation. In this
context, we hold regular discussions and events in a variety of
formats that allow us to systematically approach decision-mak-
ers and other societal protagonists and exchange ideas not
only on core topics in the automotive industry but also on the
issues that will shape its future. In the process we are open to
constructive dialog with all relevant stakeholders, and we take
other points of view into account in our activities. In addition,
we contribute our knowledge and commitment to many discus-
sions. For example, we participate in the strategic dialog for
the automotive industry in Baden-Württemberg, as well as in
the German government's National Platform Future of Mobility
E.04
Examples of instruments of stakeholder dialog
Information
- Daimler Sustainability Report as well as
regional reports (such as the Daimler China
Sustainability Report)
- Environmental declarations by the plants
- Press and public-relations work
Corporate website
-
One essential tool of the dialog with our stakeholders is the
Daimler Sustainability Dialogue, which has been held annually
in Stuttgart since 2008 and brings various stakeholder groups
together with members of our Board of Management and exec-
utive management. The participants attend a range of work-
Blogs and social media
In order to implement the dialog with our stakeholders through-
out the Group, we have defined clear areas of responsibility,
communication channels, and specific dialog formats. The pro-
active dialog with our stakeholders is initiated by experts
from the Integrity and Legal Affairs division and coordinated by
our corporate sustainability bodies.
We utilize various instruments to identify and select relevant
stakeholders. These instruments comprise, on the one hand,
proactive methods for initiating a dialog with stakeholders.
Examples here include the Daimler Sustainability Dialogue,
stakeholder surveys, the Advisory Board for Integrity and Cor-
porate Responsibility, specialist conferences, and thematic
dialog sessions that can also take the form of workshops. On
the other hand, we employ a monitoring approach that helps
us identify specific developments and the associated expecta-
tions beyond the dialog events that we have initiated. Exam-
ples of this approach include participation in industry-specific
and cross-industry networks and initiatives, consulting studies
and publications, and media analysis.
7.7
Accident downtime
(worldwide, number of lost days per 1 million
hours of attendance)
107
113
Number of deaths as a result of work-
related accidents
Various locations have their occupational safety and health
management systems certified independently by external cer-
tification agencies in accordance with the ISO 45001 (formerly
OHSAS 18001) standard in addition to the safety due diligence
audits. In 2019, approximately 100,000 employees were work-
ing at production locations with a certified management sys-
tem. That corresponds to around 40% of our global workforce.
1
Number of employee deaths as a result of
work-related accidents²
1
1
Number of deaths of third-party employees
as a result of work-related accidents
1
1 Reporting rate of Daimler production locations worldwide: > 99%.
2 Tragically, a Daimler employee and a third-party employee suffered
fatal work-related accidents in Germany in 2019.
0
208
E | NON-FINANCIAL REPORT | SOCIAL ISSUES
Social Issues
As a global automotive company, we operate in an environment that is subject to a variety of soci-
etal, social, and political influencing factors. In order to ensure that we can continue to operate
effectively in the future, we need to make our company's interests understandable to governments
and society, and must also address the concerns of groups within society. We therefore regularly
share information with our stakeholders and communicate our interests in an open and fair dialog
with governments and political representatives.
Incorporation of stakeholders
We consider it important to engage in a continuous dialog
with all of our interest groups so that we can bring together
various perspectives on our involvement with sustainability
issues, identify and address future trends early on, and share
experiences. We also want to engage in constructive discus-
sions of controversial themes at a very early stage. We always
focus on conducting a dialog that is fruitful and productive
for both sides.
In order to conduct this kind of dialog, we need to identify
our stakeholders. We define stakeholders as individuals and
organizations that have legal, financial, ethical or ecological
expectations regarding Daimler. One of the criteria for identify-
ing and weighting stakeholders is the extent to which a person
or group is affected by our company's decisions or, conversely,
can influence such decisions. Our primary stakeholders are
our shareholders, employees, customers, and suppliers. How-
ever, we also communicate regularly with civil groups such
as NGOs, as well as associations, trade unions, the media, ana-
lysts, municipalities, residents in the communities where we
operate, and representatives of science and government.
Dialog at the Group level
6.8
- Social Intranet and internal communication
Mercedes-Benz Museum
211
Integrity and Compliance
Shared values provide orientation in times of technological transformation and societal change.
These values help us make the right decisions and act as a responsible member of society. Integrity
is as much a part of everyday business conduct at Daimler as compliance and legal responsibility.
Integrity management
Our stakeholders, for example our shareholders or other societal
stakeholders such as various associations, government bodies,
our customers, and non-governmental organizations (NGOs),
rightly expect us to act in an ethical manner and comply with
all applicable laws and regulations. Such ethical conduct is
also in our own interest.
We are firmly convinced that we can only be successful over the
long term if we fulfill not only our financial responsibility but
also our responsibility to society and the environment - on both
the local and global levels. For us, this involves more than
just obeying laws, as we also seek to align our activities with
shared principles and values. The concept of integrity plays
a key role here. Integrity is one of the four corporate values that
form the foundation of our business activities and shape the
way we view ourselves.
For Daimler, integrity means doing the right thing by acting on
our values. More specifically, our aspiration is to always
comply with internal and external regulations, act in accordance
with our corporate values, and listen to our inner compass.
This is especially important in situations for which there are no
clear rules, or in which the rules that do exist can be inter-
preted in different ways.
Integrity also plays an important role in the development of new
products and services. That's why our focus on integrity begins
with product-creation and decision-making processes. This
approach helps to reduce legal risks and protect the company's
reputation.
How we make integrity part of our daily business activities
Our Integrity Code defines guidelines for our everyday business
conduct, offers our employees orientation, and helps them
make the right decisions even in difficult business situations.
In doing so, we act in accordance with our corporate princi-
ples, which involves more than just complying with laws and
regulations. We also take responsibility for our actions and
seek to strike a balance between profitability and the needs of
people and the environment. Openness and transparency form
the foundation of our conduct, and our collaboration is based
on trust and respect. We view the diversity of our workforce as
one of our strengths.
Employees from different departments and units throughout
the Group helped us create this policy. The rules contained in
the Code are binding for all employees at Daimler AG and the
Group companies, and we expect all of our employees and
business partners to adhere to the underlying principles out of
a sense of conviction. The Integrity Code has been published in
ten different languages. A separate website for the Integrity
Code has been set up on the Group's intranet. This site offers a
clear overview of all sections of the Code, as well as detailed
information on specific issues and information on contact per-
sons and points of contact for discussing integrity-related
issues.
Our Integrity Code also defines requirements for our manag-
ers: We expect our executives at all levels to serve as role
models in terms of ethical behavior and thus offer employees
guidance in this regard.
The task of Integrity Management is to promote and further
develop the culture of integrity at the Daimler Group. The unit's
goal is to establish and maintain a common understanding of
integrity in order to reduce risks and help ensure Daimler's
sustained success. The unit's experts for change management,
corporate responsibility management, training, and consulting
develop innovative and employee-focused approaches and for-
mats that are designed to strengthen the culture of integrity.
The Head of Integrity Management reports directly on a regular
basis to the member of the Board of Management responsible
for Integrity and Legal Affairs. The Head of Integrity Manage-
ment also participates in all executive-management meetings.
Because of their strategic significance, we have combined the
responsibilities for integrity, compliance, and legal affairs
within a single executive division. This division supports all cor-
porate units in their efforts to ensure that these issues remain
an integral component of daily business conduct over the long
term.
Contacts for integrity-related questions and issues
Our "Infopoint Integrity" is the central contact and advice center
for all employees and managers who need advice on integrity-
related questions and issues. The Infopoint either offers direct
assistance by obtaining the relevant information from the
specialists responsible, or else ensures that inquiries are for-
warded to the appropriate contact partner. In line with this
approach, the Infopoint works together with experts for legal
and HR issues, data protection, compliance, diversity, and
sustainability as well as other specialist units. A worldwide net-
work of local compliance and legal contact persons is also
available to our employees.
212
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Measures for promoting ethical conduct
Whether it's dialog sessions, training courses, consulting or
employee surveys - we employ numerous measures to initiate
discussions on the topic of integrity and promote ethical and
responsible behavior. In this way we provide employees at all
levels of the hierarchy with crucial support in their daily activi-
ties and decision-making.
Input from employees
Our "Big Picture Integrity" survey is an important element for
strengthening and further developing our culture of integrity.
This global employee survey on integrity and compliance was
conducted throughout the Group in the fall of 2019. The survey
results form the basis for strengthening our corporate culture
in this regard, as they reveal areas of action and help us formu-
late appropriate measures for addressing the associated
issues. The results are also used to help define the non-finan-
cial goals relating to "Integrity” and “Diversity” for the manage-
ment remuneration system.
pages 112f
A network of integrity contact persons enables our business
divisions to validate, prioritize, and implement integrity-related
measures in their organizations. Integrity Management sup-
ports such efforts by making contact persons for relevant issues
available and offering an Integrity Tool Kit on the intranet that
can be used by all interested employees. This Tool Kit contains
information, formats for reflection, case studies, and other
tools that can be used by individuals or groups to address the
topic of integrity. A major focus of our work in 2019 involved
dialog sessions that are designed to establish a better under-
standing of integrity at our various business divisions and
the "Speak Up" initiative. We see "Speak Up" as promoting a
culture in which all topics can be addressed in an open man-
ner. In addition, we are providing more support to our business
divisions with regard to the responsible handling of personal
data in connection with the challenges associated with data-
based business models. Here we offer assistance to all
employees via the company intranet.
Communication at all levels
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- Plant tours, receptions,
In addition to direct dialog with political decision-makers, we
are represented via major industrial associations, such as the
German Association of the Automotive Industry (VDA). In these
ways we participate in many political debates concerning air
pollution control in German cities and the promotion of sus-
tainable mobility, for example. We are actively participating in
the development of solutions by means of our know-how and
our technology. We also maintain contact with representatives
from civic organizations and other companies, and we partici-
pate in further associations, committees, and sustainability ini-
tiatives.
The Head of External Affairs and Public Policy is also a perma-
nent member of the Group Sustainability Board and as such is
actively involved in many sustainability-related issues
Dialog
- Annual "Daimler Sustainability
Dialogue" (Germany/regions)
- Local dialog with residents and
municipalities
- Internal dialog sessions on integrity and
compliance
- Daimler Supplier Portal
- Membership of sustainability initiatives and
networks
- Collaboration in the BDI workgroup on artifi-
cial intelligence
- Specialist conferences on societal topics
and debates
- Topic and project-related discussions
- New dialog formats on future questions:
think tanks, hackathons, ideation challenge
Participation
Stakeholder consultation in topic-related
workgroups
Advisory Board for Integrity and Corporate
Responsibility
Peer review within the framework of sustain-
ability initiatives such as the UN Global
Compact
210
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and many other forums. Here we work with government offi-
cials, politically and socially committed groups, opinion lead-
ers, and experts in order to promote the transformation of the
automotive industry.
Daimler has defined principles for political dialog and commu-
nicating our interests. In doing so, we maintain political
restraint and balance and do not allow ourselves to be instru-
mentalised in party politics. With various instruments, we
ensure that our political interests are in line with applicable
regulations and ethical standards. In the association's work
and cooperation with other companies, special attention is
paid to the antitrust requirements. Our internally binding
requirements are, among other things, laid down in a world-
wide policy and in the Group's Integrity Code.
Our policy on "Lobbying and Political Donations" governs grants,
donations to political parties, and the use of other instruments
for representing our interests in the political realm. The Board
of Management of Daimler AG decided not to make donations
to political parties in 2019. This decision was not based on cur-
rent political or economic developments.
As a company that does business worldwide, we encounter
various political and societal changes and decisions that have
a decisive impact on our own business operations. That is why
it is important for Daimler to represent our company's inter-
ests in an open and trust-based dialog and to cooperatively
work out solutions.
We seek to ensure that our political lobbying is carried out in
accordance with applicable regulations and ethical standards.
For this reason, Daimler is listed in the transparency register of
the European Union and also complies with the register's Code
of Conduct. The internal policies mentioned above describe how
we address risks in connection with the political representa-
tion of our interests. These risks are also addressed through
firmly established Group-wide compliance processes. Informa-
tion about misconduct relating to our lobbying activities can
be addressed to the BPO (Business Practices Office) whistle-
blower system.
pages 213 f
Our central coordinating body for political dialog at the national
and international levels is the External Affairs and Public Policy
unit, which is located in Stuttgart and falls under the responsi-
bility of the Chairman of the Board of Management. This unit
operates a global network with offices in Berlin, Brussels, Beijing,
Singapore, Madrid, Stuttgart, and Washington and also has
corporate representations in other key markets. Our objective
is to ensure that our interests are represented by addressing
political target groups in an organized manner using content
which has been coordinated across the group.
page 198. In addition, the External Affairs and Public Policy
department works closely with the specialist units on ques-
tions relating to the representation of the Group's interests.
External Affairs also regularly holds Governmental Affairs Com-
mittees, at which the Head of External Affairs and other offi-
cials from the unit meet with Board of Management members
and Level 1 managers to coordinate important upcoming lobby-
ing decisions. In accordance with our policies, employees at
Group companies of the Daimler Group and Daimler AG who
represent our interests must register with External Affairs.
Rate
2
We conduct an ongoing open dialog with our employees in order
to ensure that integrity will remain embedded in the company's
daily business over the long term. We regularly address integ-
rity issues in our internal media and make a wide range of
materials available to our corporate units - for example bro-
chures, films, and an app that provides information on integrity,
compliance, and legal affairs. We also place great value on
face-to-face discussions. For this reason, we regularly conduct
individually designed dialog events with employees at all levels
of the hierarchy, as well as with external stakeholders. These
events are held both in Germany and at our locations abroad.
Our Group-wide Antitrust Compliance Program is oriented to
national and international standards for ensuring fair competi-
tion. The program establishes a binding, globally valid Daimler
standard that defines how matters of antitrust law are to be
assessed. The Daimler standard is based on the standards of
the underlying European regulations and takes into account
established legal practice at European antitrust authorities, as
well as the rulings of European courts. The objective of the
Daimler standard is a uniform level of compliance and advice
in all countries and thus compliance with all local and interna-
tional antitrust laws.
Antitrust compliance
In order to ensure an independent external assessment of our
Anti-Corruption Compliance Program, KPMG AG Wirtschafts-
prüfungsgesellschaft audited the Compliance Management
System for anti-corruption in accordance with the 980 stan-
dard of the Institute of Public Auditors in Germany. This audit,
which was based on the principles of appropriateness, imple-
mentation and effectiveness, was already successfully com-
pleted at the end of 2019.
page 214
Daimler places the same strict requirements on all of its activi-
ties around the world. In addition, we continuously improve our
methods and processes and use a variety of communication
and training measures to make our employees around the
world more aware of the importance of fighting corruption.
Further information on communication and training:
The responsibility for implementing and monitoring measures
lies with each Group company's management, which cooper-
ates closely with the specialist units within the Integrity and
Legal Affairs division. Companies exposed to a high corruption
risk are supported by an independent Local Compliance Offi-
cer who assists the responsible management team with the
implementation of the anti-corruption compliance program.
taken in contacts with authorities and public officials. Our risk-
minimization measures focus in particular on sales companies
in high-risk countries and business relationships with whole-
salers and general agencies worldwide.
Our anti-corruption compliance program is based on our com-
prehensive Compliance Management System. The program is
globally valid and particularly consists of an integrated risk
assessment process that takes into account internal informa-
tion such as a unit's business model and external information
such as the Corruption Perceptions Index from Transparency
International. The results of our risk assessment analyses form
the basis of risk-based measures for avoiding corruption in all
business activities (e.g. reviews of business partners and
transactions) and measures to ensure that special care is
Daimler has committed itself to fighting corruption in its busi-
ness activities. Along with complying with all applicable laws,
this also involves adhering to the rules of the OECD Convention
on Combating Bribery of Foreign Public Officials in Interna-
tional Business Transactions (1997) and the United Nations
Convention against Corruption (2003). As a founding member
of the UN Global Compact, Daimler also seeks to ensure that
not only the company itself but also its business partners act
in accordance with the principles of the UN Global Compact.
The most important goals here are to fight corruption around
the world in order to enable fair competition, eliminate the
damage corruption does to society, and thus improve condi-
tions for everyone.
Anti-corruption compliance
Eliminating corruption, preventing antitrust violations, ensuring
product compliance with technical regulations and regulatory
provisions, combating money laundering and the financing of
terrorism, ensuring compliance with sanctions, and observing
data protection legislation - we implemented our Compliance
Management System (CMS) in order to address exactly these
issues, which are extremely important to us. Our Group-wide
approach to respecting and upholding human rights is also
based on our CMS.
Main topics for compliance management
We use these activities as a basis for defining any required
improvement measures, which are implemented by the respon-
sible Group companies and then monitored on a regular basis.
The relevant management bodies continuously receive reports
on these monitoring activities.
Every year, we review the adequacy and effectiveness of our
Compliance Management System and adapt it to global devel-
opments, changed risks, and new legal requirements. We also
monitor important core processes during the year on the basis
of key performance indicators (KPIs) that include process dura-
tion and quality. To determine these indicators, we check,
among other things, whether formal requirements are met and
the content is complete. In addition, we analyze the knowledge
gained through independent internal and external assess-
ments.
Monitoring and improvements
Within the framework of our training program, we also offer our
business partners special modules on integrity and compliance
(including corruption prevention). These courses are offered as
web-based training or classroom training sessions. Daimler
informs its business partners about the courses and invites
them to participate.
(worldwide, number of work-related acci-
dents that resulted in at least one lost day
per 1 million hours of attendance)
E | NON-FINANCIAL REPORT | INTEGRITY AND COMPLIANCE
The same is true of the Daimler app for integrity, compliance,
and legal affairs. The app is available to all employees with a
company-owned device. Among other things, the app enables
mobile access to practical information on subjects such as
corruption prevention, antitrust law, technical integrity, and
data protection, with additional topics being added as
required.
All of these training measures contribute to the permanent
establishment of ethical and compliant behavior at the com-
pany and also help our employees deal with specific issues
that can occur at work.
New members of executive bodies of Group companies are
given a compact overview of key aspects of corporate gover-
nance via the Corporate Governance Navigator, which is a
module that provides information on their tasks and responsi-
bilities, contact partners, and points of contact that deal with
central issues addressed by the Integrity and Legal Affairs divi-
sion and adjacent units. The module thus supports such execu-
tives in their new role.
We also offer information and qualification measures to indi-
viduals who perform supervisory and management functions,
including new members of the Supervisory Board of Daimler
AG. Among other things, the onboarding program for new
Supervisory Board members provides information about the
antitrust compliance program and technical compliance man-
agement. In 2019, new members of the supervisory boards of
Group companies were also provided with information on vari-
ous issues relating to compliance, data protection, and integ-
rity. In addition, these new supervisory board members partici-
pated in a "Know Your Responsibilities” onboarding program to
make them more aware of compliance-related topics (for
example anti-corruption policies) and the aspects of integrity
at the Group companies.
We also offer our employees in the compliance and legal orga-
nizations courses that address legal changes and changes to
compliance regulations; these courses are taught by experts in
the respective fields. In addition, new employees at our integ-
rity, compliance, and legal organizations receive a comprehen-
sive introduction in the course of an onboarding program.
By means of an advisory hotline, guidelines, and practical sup-
port, we help our employees around the world recognize situa-
tions that might be critical from an antitrust perspective and
also to act in compliance with all regulations. This is particu-
larly important when employees deal with competitors, coop-
erate with dealers and general agencies, and participate in
trade association committees. In addition to Daimler's Legal
department and its specialist advisers, the Group's global divi-
sions can turn to local legal advisers, who also ensure that our
standards are consistently upheld.
The web-based training courses are supplemented by class-
room training sessions that are conducted by central or local
trainers. We provide our internal trainer network with modular
training documents and materials for methodical implementa-
tion, such as a trainer guideline and explanatory videos that
can be used in a target group-specific manner and in accor-
dance with the risks associated with the participants' jobs. In
2019 a total of approximately 117,600 employees from diverse
levels of the hierarchy participated in classroom-based and
web-based training programs.
The results of our annual compliance risk analysis serve as the
basis for the formulation of measures that address antitrust
risks. The responsibility for designing and implementing mea-
sures lies primarily with each Group company's management,
which is also responsible for monitoring the effectiveness of
the measures employed. Within the framework of its Group
management responsibilities, Daimler AG monitors the execu-
tive management bodies of the respective Group companies.
As a result, the managers at Group companies cooperate
closely with Integrity and Legal Affairs, which also provides
information on how to implement compliance measures effec-
tively. Units that face a higher potential risk in particular must
also systematically assess the adequacy and effectiveness of
locally implemented antitrust compliance measures at regular
intervals. In addition, our Legal and Corporate Audit depart-
ments conduct monitoring activities at our divisions, as well as
random audits, in order to determine whether antitrust laws
and internal standards are complied with. This helps us contin-
uously improve the effectiveness of our Antitrust Compliance
Program and adapt it to global developments and new legal
requirements. The associated methods and processes are
being constantly refined and improved.
Our employees are provided with comprehensive occupational
health advice and can also take advantage of various measures
and services offered by our company health-promotion pro-
gram and counseling service. For many years now our health
management system has focused on forward-looking solutions
that range from the job-related "Daimler GesundheitsCheck"
and the ergonomic design of workstations to an IT system that
makes it easier to permanently reintegrate employees suffer-
ing from limitations imposed by their health.
E.03
Accident figures¹
Incidence of accidents
Number of accidents (worldwide)
2019
2018
2,957 3,152
Incidence of accidents
The effectiveness of our tCMS is monitored in the annual moni-
toring-process. Measures identified by this process will be
considered in the improvement of the tCMS and are addressed
for implementation.
We also conduct in-depth discussions on safeguarding techni-
cal compliance with business partners and selected suppliers.
In October 2019, for example, we held a Supplier Dialog event
with relevant suppliers. This event was attended by executives,
technical compliance managers, and technical project manag-
ers from participating supplier companies. Among other things,
the objective here was to make suppliers more aware of the
regulatory framework, provide them with information on how
Daimler safeguards technical compliance, and explain to them
what we expect from our suppliers in this regard.
courses.
The Technical Integrity initiative, as part of the tCMS, focuses
on strengthening awareness of the importance of responsible
behavior during the product creation process, particularly in
situations where legal provisions may be unclear. Together with
the relevant development departments, we have supplemented
the provisions of the Integrity Code by formulating so-called
commitment statements that support employees and offer them
guidance for ensuring proper conduct in their daily activities.
These principles have been discussed with employees at dialog
sessions held around the world. Various communications mea-
sures regarding the commitment statements have been made
known to all employees and were anchored in selected training
Further information on communication and training:
page 214
We have made use of various communications measures such
as "Tone from the Top" mailings and special training courses
and dialog sessions in order to sensitize employees at develop-
ment and certification units at all divisions to issues relating to
technical integrity, compliance, and legal regulations in the
product creation process.
During the year under review, the Daimler AG Board of Man-
agement adopted the tCMS policy. It describes key tCMS ele-
ments and defines the roles and responsibilities of all relevant
functions. Process descriptions and rules of procedure for
tCMS committees in Group companies in scope of application
of the tCMS have been drawn up for relevant tCMS elements.
The tCMS policy applies to all Group companies worldwide that
conduct relevant development and certification activities.
We have also created dedicated expert units for technical com-
pliance in the development departments at our vehicle-related
divisions. Among other things, these units manage a network
of technical compliance contact persons at development and
certification departments. This network serves as a link
between operating units and the compliance organization and
also supports the development departments in matters of
technical compliance. Complex questions regarding technical
compliance are evaluated and then decided in an interdisciplin-
ary process that takes into account technical, legal, and certifi-
cation-relevant criteria. Our BPO whistleblower system is also
available as a contact partner for reporting technical compli-
ance violations.
The tCMS is managed Group-wide by an independent gover-
nance body whose director reports directly to the Board of
Management member for Integrity and Legal Affairs. This body
consists of employees with expertise in various fields, such as
development, legal affairs, integrity and compliance. In order
to provide optimal support to the divisions, the independent
governance body has a divisional structure. The governance
body's tasks include the design of the technical Compliance
Management System and the provision of legal advice to the
divisions.
For us, technical compliance means adhering to technical and
regulatory requirements, standards, and laws while taking into
account the fundamental spirit of these laws and regulations
as well as adhering to internal development requirements and
processes. In order to address the specific risks associated
with the product creation process, we combined the existing
systems and additional measures and processes at the Daimler
AG automotive divisions into a technical Compliance Manage-
ment System (tCMS). The purpose of the tCMS is to safeguard
legal and regulatory conformity during the entire product
development and certification process and to provide orienta-
tion and guidance for our employees by defining specific val-
ues, principles, structures, and processes.
Technical compliance
In order to ensure an independent external assessment of our
Antitrust Compliance Program, KPMG AG Wirtschaftsprü-
fungsgesellschaft audited the Compliance Management Sys-
tem for antitrust law in accordance with the 980 standard of
the Institute of Public Auditors in Germany. This audit, which
was based on the principles of appropriateness, implementa-
tion and effectiveness, was already successfully completed at
the end of 2016 (antitrust) and at the end of 2019 (anti-corrup-
tion).
Further information on communication and training:
page 214
We utilize a variety of training and communication measures to
make our employees aware of the importance of competition
and antitrust laws and issues. Such measures during the year
under review included both classroom courses and online
training courses; the latter are mandatory for staff above a cer-
tain hierarchical level. Training in 2019 focused on the topics of
"Contact with competitors in general” and “Antitrust coopera-
tions". Training courses held abroad or at international Group
companies are independently organized and conducted by
local legal departments as required.
216
approximately every three years. Factory employees can com-
plete the web-based training program voluntarily.
215
All employees at Group companies can also participate in a
web-based and target group-oriented training program con-
sisting of several modules - a basic module, a module specifi-
cally for managers, and expert modules on subjects such as
antitrust law, data protection, technical compliance, benefits in
kind for employees, and function-specific topics in areas such
as procurement and sales. Our training activities in 2019
focused on, among other things, web-based courses on techni-
cal compliance and antitrust law, expert seminars lasting for
several days on the topic of data compliance, webinar series
on preventing money laundering, and new web-based modules
for suppliers and business partners.
V. Compliance
program
III. Compliance
organization
II. Compliance goals
I. Compliance values
& training
VI. Communication
Office employees are required to complete those modules rele-
vant to their role and function. We assign the associated mod-
ules to them automatically or in a centralized process. These
training modules are assigned when an employee is hired, pro-
moted or transferred to a position that involves an increased
risk. This approach ensures that personnel changes are prop-
erly addressed. In general, the program must be repeated
VII. Monitoring
The Daimler Compliance Management System
E.05
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|
page 211
Further information on integrity at Daimler:
The objective of our CMS is, on the foundation of our culture of
integrity, to promote compliance with applicable laws and
policies within the company and on the part of its employees
and to prevent inappropriate behavior. The measures needed
for this are defined by our compliance and legal organizations
in a process that also takes the company's business require-
ments into account in an appropriate manner.
Compliance values and objectives
Our Compliance Management System (CMS) consists of basic
principles and measures for the promotion of compliant
behavior throughout the Group. The CMS is based on national
and international standards and is applied on a global scale
at Daimler AG and all Group companies. The CMS consists of
seven elements that build on one another.
Our compliance activities focus on complying with anti-corrup-
tion regulations, the maintenance and promotion of fair com-
petition, the compliance of our products with technical and reg-
ulatory stipulations, respect for and the protection of human
rights, adherence to data protection laws, compliance with
sanctions, and the prevention of money laundering.
Value-based compliance is an indispensable part of our daily
business activities at Daimler. For us, compliance means act-
ing in accordance with laws and regulations. Our objective
here is to ensure that all of our employees worldwide are always
able to carry out their work in a manner that is in compliance
with applicable laws, regulations, agreements with workers'
representative bodies, voluntary commitments, and our values,
as set out in binding form in our Integrity Code.
Our Compliance Management System
Our measures for further developing our integrity management
system also include a broad range of training programs that
are continuously expanded and updated. All employees and
managers participate in a web-based integrity training program
at regular intervals. In order to offer participants optimal sup-
port, the training program also contains a management module
that is compulsory for all management staff. It explains in
detail the role of executives and managers with regard to integ-
rity, compliance, and applicable law. Furthermore, selected
seminars designed to enhance the qualifications and skills of
our management staff also include modules that focus on
integrity.
page 214
Training for employees and managers
In the course of these events we provide food for thought,
consider integrity from a range of different perspectives, and
increase the participants' awareness of the importance of
making ethical decisions. For example, we present case stud-
ies that enable employees to experience and discuss the
relevance of integrity to daily business operations from various
viewpoints, and then put what they learn into practice.
IV. Compliance
risks
Compliance organization
& improvement
A contact person is made available to each function, division,
and region. In addition, a global network of local contact per-
sons makes sure that our standards are met throughout the
Group and also helps local management at Group companies
implement our compliance program.
We offer extensive compliance training courses that are based
on our Integrity Code. We conduct a training needs analysis at
regular intervals, adjust and/or expand the training program,
and subsequently carry out an evaluation.
Communication and training
Our compliance and legal organizations have set themselves
the goal of ensuring Group-wide conformance with laws and
regulations. Our compliance organization is structured in a
divisional and regional manner, while our legal organizations
are structured divisionally, regionally, and along the value
chain. These structures enable us to provide optimal support
and advice to our divisions.
Further information on expectations regarding our business
partners: daimler.com/sustainability/human-rights/
Our global Daimler Supplier Sustainability Standards apply in
this area. On the basis of these standards and our Integrity
Code, we make available to each of our suppliers and sales
partners a specific Compliance Awareness Module developed
with their activities in mind. This module also contains provi-
sions similar to those that can be found in the general Compli-
ance Awareness Module for sales partners, which was intro-
duced in 2016 and is designed to increase their awareness of
compliance requirements.
We also require our business partners to adhere to clear com-
pliance requirements because we regard our business part-
ners' integrity and behavior in conformity with regulations as a
precondition for trusting cooperation. In the selection of our
direct business partners, we therefore ensure that they comply
with the law and observe ethical principles. In financial year
2019, we made full use of our globally standardized process for
the effective and efficient examination of all new and existing
business partners (Business Partner Due Diligence Process).
Our continuous monitoring here is designed to ensure that we
can identify possible integrity violations by our business
partners. We also reserve the right to terminate cooperation
with, or terminate the selection process for, any business part-
ner who fails to comply with our standards. In addition, we
work with our procurement units to continuously improve our
processes for selecting and cooperating with suppliers.
Compliance on the part of our business partners
response measures are decided in line with the principles of
proportionality and fairness. Personnel measures taken in the
reporting year 2019 included the issuing of warnings and final
warnings, as well as separation agreements and terminations.
E❘ NON-FINANCIAL REPORT | INTEGRITY AND COMPLIANCE
214
In 2019, 59 new BPO cases were opened. A total of 44 cases
in which 72 individuals were involved were closed "with merit."
In these cases, the initial suspicion was confirmed. Seven of
these cases were in the category "Corruption", while five
related to "Technical compliance" and five concerned "Reputa-
tional damage." Accusations of inappropriate behavior of
employees toward third parties were confirmed in 13 cases.
Four cases were categorized as “Damage exceeding 100,000
euros." The remaining cases fell into other categories. With
regard to those cases that are closed "with merit," appropriate
our-business-relationships.html
A globally valid corporate policy defines BPO procedures and
the responsibilities of the various departments and individuals
in the organization. This policy aims to ensure a fair and trans-
parent approach that takes into account the principle of pro-
portionality for the affected parties, while also giving protec-
tion to whistleblowers. It also defines a standard for evaluating
incidents of misconduct and making decisions about their con-
sequences.
In an effort to increase trust in our whistleblower system and
make it even better known within the Group, we have estab-
lished a continuous communication process that includes the
periodic provision of information to employees about the type
and number of reported violations. We also supply information
materials such as country-specific information cards. In addi-
tion, we have produced an instructional video and stage dialog
events at selected locations as well.
Involvement of company management
They also report regularly to the Board of Management of
Daimler AG on matters such as the status of the Compliance
Management System and its further development, the status
of the whistleblower system and, if necessary, on other topics.
In addition, the Vice President & Group General Counsel
regularly reports to the Antitrust Steering Committee and the
Group Risk Management Committee, to which the Chief Com-
pliance Officer and the Vice President Legal Product & Techni-
cal Compliance also report.
Compliance risks
We systematically pursue the goal of minimizing compliance
risks, and we analyze and assess the compliance risks of our
Group companies every year. These analyses are based on
centrally compiled information on the Group companies and
take specific additional details into account as needed. The
results of the analyses form the basis of our risk control.
Our divisional and regional compliance managers report to
the Chief Compliance Officer. This guarantees the compliance
managers' independence from the business divisions. The
Chief Compliance Officer, the Vice President & Group General
Counsel, and the Vice President Legal Product & Technical
Compliance report directly to the Member of the Board of
Management for Integrity and Legal Affairs and to the Audit
Committee of the Supervisory Board.
Our compliance program comprises principles and measures
designed to reduce compliance risks and prevent violations of
regulations and laws. The individual measures, which are
based on the knowledge gained through our systematic com-
pliance risk analyses, focus on the following aspects:
The whistleblower system BPO
The whistleblower system BPO (Business Practices Office)
enables Daimler employees and external whistleblowers to
report misconduct anywhere in the world. The BPO is available
around the clock to receive information that is sent by e-mail
or normal mail or by filling out a special form. An external toll-
free hotline is also available in Brazil, the United States, Japan,
and South Africa. Reports can be submitted anonymously if
local laws permit this. In Germany, whistleblower reports can
also be submitted to an external neutral intermediary in addi-
tion to the BPO.
The information provided to the BPO whistleblower system
enables us to learn about potential risks and specific violations
that pose a high risk to the company and its employees, and
this in turn allows us to prevent damage to the company and
its reputation. High-risk rule violations include, for example,
offenses relating to corruption, breaches of antitrust law, and
violations of Anti-Money Laundering regulations, as well as
serious violations of binding technical provisions. Employees
who wish to report violations that pose minor risks can approach
their supervisor, their Human Resources department, the Group
Security Office or their local employee representation.
Compliance program
Receivables from financial services
15,853
18,883
Cash and cash equivalents
45,440
50,781
14
12,586
18
19
Trade receivables
29,489
29,757
Inventories
160,006
174,638
12,332
4,715
2,763
1,115
201
18
-2,534
-2,516
18
-3
-1,458
-1,461
1
350
-2,162
-2,176
Total comprehensive income
Other comprehensive income/loss, net of taxes
to profit/loss
be reclassified
Items that will not
-1
-3
-4
1
-2,161
-2,158
551
12
Receivables from financial services
Equity-method investments
351
1 See Note 20 for other information on the Consolidated Statement of Comprehensive Income/Loss.
The accompanying notes are an integral part of these Consolidated Financial Statements.
226
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Statement of Financial Position
F.03
In millions of euros
Note
At December 31,
2019
2018
Assets
Intangible assets
Property, plant and equipment
10
15,978
14,801
11
37,143
30,948
Equipment on operating leases
10
Marketable debt securities and similar investments
11
12
4,860
14
52,880
51,300
Marketable debt securities and similar investments
Other financial assets
15
770
722
5,949
16
5,066
Deferred tax assets
9
5,803
4,021
Other assets
Total non-current assets
17
1,286
3,347
13
49,476
51,482
4
4
Equity instruments (after tax)
and on reclassifications
Taxes on unrealized gains/losses
-1
-15
-16
1
6
7
Unrealized gains/losses (pre-tax)
Equity instruments
-2
-1,454
-1,456
-2,171
-2,171
(after tax)
from pensions and similar obligations
Actuarial gains/losses
12
15
308
8,855
172,745
-143,580 -134,295
167,362
29,165
33,067
5
-12,801
-13,067
5
-4,050
-4,036
5
-6,586
-6,581
5
6
2,330
264
6
-4,469
-1,462
13
479
656
7
-262
210
8
397
2,837
271
4
2019
Total equity and liabilities
Total current liabilities
Liabilities held for sale
Other liabilities
Contract and refund liabilities
Deferred income
Other financial liabilities
Financing liabilities
Provisions for other risks
Trade payables
Total non-current liabilities
Other liabilities
Contract and refund liabilities
2018
Deferred income
Other financial liabilities
Financing liabilities
Provisions for other risks
Provisions for pensions and similar obligations
Total equity
Non-controlling interests
Equity attributable to shareholders of Daimler AG
Other reserves
Retained earnings
Capital reserves
Share capital
Equity and liabilities
Note
Deferred tax liabilities
8
-880
-793
Non-
holders
Non-
Daimler
Group Daimler AG
of controlling
interests
Daimler
Group
of
Daimler AG
controlling
interests
2019
2019
2019
Share-
2018
2018
2,709
2,377
332
7,582
7,249
333
475
458
17
234
214
20
2018
Share-
holders
Reclassifications to profit and loss
(pre-tax)
Unrealized gains/losses (pre-tax)
3,830
10,595
9
-1,121
-3,013
2,709
7,582
332
333
2,377
7,249
36
2.22
6.78
2.22
6.78
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS
225
Consolidated Statement of Comprehensive
Income/Loss¹
F.02
In millions of euros
Net profit
Currency translation adjustments
Debt instruments
Unrealized gains/losses (pre-tax)
Taxes on unrealized gains/losses
and on reclassifications
Debt instruments (after tax)
Derivative financial instruments
The accompanying notes are an integral part of these Consolidated Financial Statements.
6
3,070
11,552
Corporate Governance
The Divisions
Combined
Management Report
Contents
224
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF INCOME
Consolidated Statement of Income
F.01
In millions of euros
Revenue
Cost of sales
Gross profit
Selling expenses
Non-Financial Report
General administrative expenses
Other operating income
Other operating expense
Profit on equity-method investments, net
Other financial income/expense, net
Interest income
Interest expense
Profit before income taxes¹
Income taxes
Net profit
thereof profit attributable to non-controlling interests
thereof profit attributable to shareholders of Daimler AG
Earnings per share (in euros)
for profit attributable to shareholders of Daimler AG
Basic
Research and non-capitalized development costs
Diluted
Financial Statements
Further Information
15. Marketable debt securities and
35. Capital management
311
similar investments
16. Other financial assets
17. Other assets
18. Inventories
19. Trade receivables
20. Equity
267
36. Earnings per share
312
267
Consolidated
37. Related party disclosures
267
38. Remuneration of the members of the Board
268
of Management and the Supervisory Board
313
268
39. Auditor fees
314
270
40. Events after the reporting period
314
41. Additional information
314
312
1 The reconciliation of Group EBIT to profit before income taxes is presented in Note 34.
The accompanying notes are an integral part of these Consolidated Financial Statements.
97,952
281,619
26
3,762
3,935
9
2,375
2,112
25
88,662
99,179
24
7,734
10,597
23
1,598
7,393
22
66,053
62,841
20
1,386
1,497
64,667
61,344
397
393
49,490
46,329
11,710
9,728
1,612
27
6,060
302,438
105,802
212
3,169
3,220
28
7,081
7,571
27
1,580
1,624
26
7,657
7,752
25
56,240
62,601
24
7,828
10,327
23
14,185
12,707
117,614
133,795
638
586
28
5,438
3,070
7,885
6
-1
Wirtschaftsprüfer
Mokler
(German Public Auditor)
Dr. Thümler
Wirtschaftsprüfer
Wirtschaftsprüfungsgesellschaft
(Orginal German version signed by:)
KPMG AG
Stuttgart, Feburary 19, 2020
By reading and using the information contained in this report,
each recipient confirms notice of provisions of the General
Engagement Terms (including the limitation of our liability for
negligence to EUR 4 million as stipulated in No. 9) and
accepts the validity of the General Engagement Terms with
respect to us
https://www.kpmg.de/
Our assignment for the Supervisory Board of Daimler AG,
Stuttgart, and professional liability is governed by the General
Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprü-
fungsgesellschaften (Allgemeine Auftragsbedingungen für
Wirtschaftsprüfer und Wirtschaftsprüfungsgesellschaften) in
the version dated January 1, 2017
bescheinigungen/lib/aab_english.pdf.
Restriction of Use/Clause on General Engagement Terms
This report is issued for purposes of the Supervisory Board of
Daimler AG, Stuttgart, only. We assume no responsibility with
regard to any third parties.
Based on the procedures performed and the evidence
obtained, nothing has come to our attention that causes us to
believe that the Report of for Daimler the business year from
January 1 to December 31, 2019 is not prepared, in all mate-
rial respects, in accordance with §§ 315b and 315c in con-
junction with 289b to 289e HGB.
Conclusion
(German Public Auditor)
- Assessment of the overall presentation of the disclosures
Evaluation of local data collection, validation and reporting
processes as well as the reliability of reported data based on
-
- Analytical evaluation of data and trends of quantitative infor-
mation which are reported by all sites for consolidation on
corporate level
Evaluation of selected internal and external documentation
-
- Inquiries of personnel on corporate level who are responsible
for determining disclosures on concepts, due diligence pro-
cesses, results and risks, for conducting internal controls
and consolidation of the disclosures
Evaluation of the design and implementation of the systems
and processes for determining, processing and monitoring
disclosures relating to environmental, employee and social
matters, respect for human rights, and combating corruption
and bribery, including the consolidation of the data
- Inquiries of personnel on corporate level, who are responsi-
ble for the materiality analysis, in order to gain an under-
standing of the processes for determining material sustain-
ability topics and respective reporting boundaries of Daimler
- A risk analysis, including a media search, to identify relevant
information on Daimler sustainability performance in the
reporting period
Within the scope of our engagement, we performed amongst
others the following assurance procedures:
engagement to obtain limited assurance whether any matters
have come to our attention that cause us to believe that the
Report of the Report for the period from January 1 to Decem-
ber 31, 2019 has not been prepared, in all material respects,
in accordance with §§ 315b and 315c in conjunction with
289b to 289e HGB. We do not, however, provide a separate
conclusion for each disclosure. In a limited assurance
engagement the evidence gathering procedures are more lim-
ited than in a reasonable assurance engagement and there-
fore significantly less assurance is obtained than in a reason-
able assurance engagement. The choice of audit procedures
is subject to the auditor's own judgement.
E | NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT 221
We conducted our work in accordance with the International
Standard on Assurance Engagements (ISAE) 3000 (Revised):
"Assurance Engagements other than Audits or Reviews of His-
torical Financial Information" published by IAASB. This Stan-
dard requires that we plan and perform the assurance
Our responsibility is to express a conclusion on the Report
based on our work performed within our limited assurance
engagement.
a sample of the sites in Tuscaloosa (USA), Bremen and Wörth
(both Germany)
Practitioner's Responsibility
1 Our engagement applied to the German version of the Report 2019.
This text is a translation of the Independent Assurance Report issued in
the German, whereas the German text is authoritative.
Consolidated
management judgments
275
22. Pensions and similar obligations
2. Accounting estimates and
271
21. Share-based payment
230
1. Significant accounting policies
230
Statements
Notes to the Consolidated Financial
F | CONSOLIDATED FINANCIAL STATEMENTS | CONTENTS 223
228
F
Changes in Equity
Consolidated Statement of Cash Flows 227
226
Financial Position
Consolidated Statement of
225
Comprehensive Income/Loss
Consolidated Statement of
224
Consolidated Statement of Income
F| Consolidated Financial Statements
The Consolidated Financial Statements presented as follows have been pre-
pared in accordance with the International Financial Reporting Standards (IFRS)
as adopted by the European Union (EU). They also comply with additional
requirements set forth in Section 315e Subsection 1 of the German Commercial
Code (HGB).
Statements
Financial
Consolidated Statement of
245
Our audit firm applies the national statutory provisions and
professional pronouncements for quality assurance, in partic-
ular the Professional Code for German Public Auditors and
Chartered Accountants (in Germany) and the quality assur-
ance standard of the German Institute of Public Auditors
(Institut der Wirtschaftsprüfer, IDW) regarding quality assur-
ance requirements in audit practice (IDW QS 1).
Independence and quality assurance on the part of the
auditing firm
We document and evaluate the implementation of defined data
compliance measures within the framework of a monitoring
and reporting process. For example, our compliance organiza-
tion conducts an annual evaluation to assess the adequacy and
effectiveness of our Data CMS. We document in our compli-
ance reporting system any areas where action needs to be
taken, and we also monitor the implementation of the associ-
ated measures. If necessary, the compliance organization will
make adjustments to the Data Compliance Management Sys-
tem on the basis of the knowledge gained from the evaluation,
while also taking into account changes to the risk situation and
new legal requirements.
Employees are instructed to report all potential data protection
incidents internally via the Information Security Incident Man-
agement Process. Criminal violations of data protection rules
are addressed by the whistleblower system BPO (Business
Practices Office), which can also be used by external stakehold-
ers who wish to report violations of laws or internal regulations.
A key component of the Data CMS is the Data Compliance Risk
Assessment, which is a systematic process conducted by the
Data Compliance unit each year in order to identify, analyze,
and evaluate data compliance risks at Daimler. The assessment
is performed for both Group companies and corporate depart-
ments. The analyses are based on centrally compiled informa-
tion on all units at the Group; specific additional details are
taken into account in line with the given risk assessment. The
results of the analyses form the basis for managing and mini-
mizing risks in a targeted manner.
Since the end of 2018, we have been realigning the previous
network of local data protection coordinators and merging this
network into our global compliance network. This process will
be completed by the end of 2020. We specifically prepare
Local Compliance Officers and Local Compliance Responsibles
for their new tasks in the field of data compliance and support
them with training courses and consultation.
At the same time, the Chief Officer Corporate Data Protection
performs the tasks required by law to ensure compliance with
data protection rules. Here the Chief Officer Corporate Data
Protection works with a team that monitors compliance with
applicable data protection laws and the Daimler Data Protec-
tion Policy. In addition, the Chief Officer Corporate Data Pro-
tection handles complaints regarding data protection and is
also responsible for issuing mandatory reports to supervisory
authorities and consulting privacy impact assessments. The
Chief Officer Corporate Data Protection is independent and
reports directly to the Board of Management member for Integ-
rity and Legal Affairs.
In 2017, we created the Data Compliance unit to set up the
Data Compliance Management System. This unit defines the
individual elements of the Data CMS and manages its imple-
mentation throughout the Group. To this end, the Chief Compli-
ance Officer submits data compliance reports on a regular
basis to the Board of Management member of Daimler AG for
Integrity and Legal Affairs, and also provides information on
relevant developments in his quarterly reports to the Board of
Management.
The Data CMS, which combines all Group-wide measures, pro-
cesses, and systems for ensuring data protection compliance,
is based on the existing Daimler Compliance Management Sys-
tem (CMS). The Data CMS supports the systematic planning,
implementation, and monitoring of compliance with data pro-
tection requirements. Such measures include programs that
help ensure compliance with the GDPR and local data protec-
tion laws, as well as various communication and training mea-
sures and measures for product-related data protection activi-
ties.
page 214
The regulatory requirements relating to data protection have
become significantly more stringent in recent years, mainly as
a consequence of the implementation of the European Union's
General Data Protection Regulation (GDPR). We are addressing
the increased requirements within the framework of our
Group-wide Data Compliance Management System (Data
CMS), which along with our data vision and our data culture is
a fundamental component of our overarching Data Governance
System. Our new Data Protection Policy EU and our Global
Data and Information Policy form the basis for the handling of
employee, customer, and business-partner data in a sustain-
able manner in accordance with all legal requirements.
Connectivity and digitalization will have a major impact on
mobility in the future. The responsible handling and protection
of data that is created and stored by digital systems is a top
priority at Daimler.
Data compliance
217
E❘ NON-FINANCIAL REPORT | INTEGRITY AND COMPLIANCE
281,619
218
302,438
127,800
Total assets
Total current assets
531
Assets held for sale
5,889
5,426
17
Other assets
2,970
2,736
16
Other financial assets
121,613
We are independent from the entity in accordance with the
requirements of independence and quality assurance set out
in legal provisions and professional pronouncements and
have fulfilled our additional professional obligations in accor-
dance with these requirements.
E❘ NON-FINANCIAL REPORT | INTEGRITY AND COMPLIANCE
Money laundering and the financing of terrorism pose consid-
erable sociopolitical risks. For this reason, the prevention of
money laundering and the implementation of anti-money laun-
dering measures have been defined as central compliance
goals in our Integrity Code. In its core business, the global pro-
duction and sale of vehicles, Daimler AG and its Group compa-
nies conduct their operations in accordance with the provi-
sions of the German Money Laundering Act (GwG), which apply
to "distributors of goods." As a result, we are required to
implement Group-wide and thus worldwide measures to pre-
vent and combat money laundering and the financing of terror-
ism (Anti-Money Laundering - AML - and Counter Terrorist
Financing CTF - policies).
This responsibility of the legal representatives includes the
selection and application of appropriate methods to prepare
the Report and the use of assumptions and estimates for indi-
vidual disclosures which are reasonable under the given cir-
cumstances. Furthermore, this responsibility includes design-
ing, implementing and maintaining systems and processes
relevant for the preparation of the Report in a way that is free
of intended or unintended - material misstatements.
The legal representatives of Daimler are responsible for the
preparation of the Report in accordance with §§ 315b and
315c in conjunction with 289b to 289e HGB.
Management's Responsibility
We have performed an independent limited assurance
engagement on the combined separate non-financial report
of Daimler AG, Stuttgart and the Group (further “Daimler”) as
well as the by reference qualified parts “Business model",
"The workforce", "Legal risks" and "Non-Financial
risks" (further: "Report") according to §§ 315b and 315c in
conjunction with 289b to 289e German Commercial Code
(HGB) for the business year from January 1 to December 31,
2019.
To the Supervisory Board of Daimler AG,
Stuttgart
Limited Assurance Report of the Independent
Auditor regarding the Combined Separate
Non-financial Report¹
E | NON-FINANCIAL REPORT | INDEPENDENT AUDITOR'S REPORT
220
The lead responsibility for the controlling of human rights
issues lies with the Integrity and Legal Affairs executive divi-
sion of Daimler AG. The member of the Board of Management
responsible for Integrity and Legal Affairs works with the pro-
curement units on ensuring human rights compliance and also
receives regular information and the corresponding reports on
human rights activities from the Chief Compliance Officer and
from specialist units in the Social Compliance and Corporate
Responsibility Management departments. Relevant procure-
ment units also provide information on their respective human
rights compliance measures to the Procurement Council (PC)
and the Board of Management members directly responsible
for the units in question. This is supplemented by regular
reports submitted to the entire Board of Management and the
Corporate Sustainability Board (CSB). Cross-functional teams
work closely on the development and implementation of suit-
able preventive activities and countermeasures. The teams
consist of human rights and compliance experts, as well as
staff from the operational procurement units and, if necessary,
from other specialist units as well. The relevant specialist units
and units are responsible for implementing and monitoring the
measures developed in each case.
Within the framework of advance risk assessment activities
that are part of a separate due diligence approach for our sup-
ply chains, we have identified 24 raw materials and 27 services
whose extraction and further processing/provision (services)
pose a potentially critical human rights risk. Various interna-
tional reference documents serve as the basis for these risk
assessments. With regard to raw materials, we use the "Child
and Forced Labor List" from the US Department of Labor, for
example. Extraction and mining methods, and the countries
where raw materials are located, all play an important role in
our analyses. With regard to services, we make use of the Cor-
ruption Perception Index published by Transparency Interna-
tional. This list is compiled on the basis of an assumption that
countries which display a high risk of corruption are also more
likely to pose a risk in terms of human rights.
With regard to Group companies, the risk assessment in the
course of the integration into the Daimler CMS envisages the
regular classification of the Group companies, initially on the
basis of predefined criteria such as the risks associated with
specific countries and specific business operations. Here we
take into account fundamental human rights standards such as
those defined in the Universal Declaration of Human Rights
and those formulated by the International Labour Organization
(ILO). We plan to use the reviews as a basis for performing a
more detailed annual analysis with the help of a human rights
survey conducted by the Group. To this end, we launched a
pilot project in 2019 that initially includes seven Group compa-
nies. We want to use the knowledge gained from the project to
expand our range of systematic risk analyses, which will then
be performed at all remaining Group companies.
As a proactive risk management system, the HRRS is designed
to identify and avoid systemic risks and possible negative
effects of our business activities on human rights early on. The
HRRS thus primarily protects third parties, i.e. rights-holders,
and is aimed at exerting its effect along our supply chain as
well.
ing a separate due diligence approach for ensuring compliance
with human rights in the supply chain. This approach is based
on a foundation of proven compliance management systems.
Anti-financial crime compliance
To ensure that human rights are respected and protected,
Daimler has developed a due diligence approach called the
Daimler Human Rights Respect System (HRRS). It aims to
protect the human rights of our own employees and to ensure
that human rights are respected at our direct suppliers (Tier 1)
and at risk-relevant points of the supply chain beyond Tier 1.
In the spring of 2019, we established a new Social Compliance
department. This department is responsible for leading the
implementation of our HRRS and to this end utilizes tried and
tested methods and processes from our Compliance Manage-
ment System. Plans call for the HRRS for Daimler AG Group
companies to be gradually integrated into the Group-wide
CMS. Within the framework of the HRRS, we are also develop-
and the Daimler Supplier Sustainability Standards.
documents/sustainability/integrity/daimler-integritycode.pdf
The following standards and guidelines in particular serve as
the key frame of reference for our human rights regulations
and our conduct in this regard: the UN Global Compact, the UN
Guiding Principles on Business and Human Rights, the Univer-
sal Declaration of Human Rights (including the relevant provi-
sions from the International Covenant on Civil and Political
Rights and International Covenant on Economic, Social and
Cultural Rights), Germany's National Action Plan on Business
and Human Rights, and the Core Labor Standards of the Inter-
national Labour Organization. The human rights issues we
focus on and which have been derived from these frames of
reference to enable us to fulfill our due diligence obligations
are contained in our Integrity Code www.daimler.com/
For Daimler, respect for human rights is a fundamental compo-
nent of responsible corporate governance. We are committed
to ensuring that human rights are respected and upheld in all
of our Group companies and by our suppliers. Respect for
human rights is therefore a key component of our Group-wide
sustainability strategy and our understanding of integrity and
ethical behavior. The nature of critical human rights issues var-
ies among regions and suppliers and also depends on the raw
materials, services, and supply chains in question. For this rea-
son, when implementing our approach to respecting and
upholding human rights, we not only take into account our own
plants and facilities but also include risk-based analyses of the
entire supply chain.
Public interest in compliance with human rights in the automo-
tive industry is increasing. One important reason for this devel-
opment involves the new challenges associated with the
expansion of electric mobility. More specifically, there are con-
cerns that the raw materials needed to manufacture electric
vehicles might possibly be obtained under conditions that are
critical in terms of human rights. We at Daimler have noticed
an continuing interest in human rights on the part of investors,
which indicates to us that corporate activities related to human
rights are having an increasing influence on investment deci-
sions. Legislation relating to compliance with human rights is
also being expanded. It is conceivable that new laws governing
human rights due diligence obligations could be adopted in
Germany after the federal government's National Action Plan
on Business and Human Rights comes to an end in 2020. At
the EU level, it is possible that legislative initiatives on human
rights could be introduced when Germany assumes the Presi-
dency of the European Council.
Human rights compliance
219
E | NON-FINANCIAL REPORT | INTEGRITY AND COMPLIANCE
Measures to combat money laundering and the financing of
terrorists are defined for Daimler Mobility AG (DMO) and the
Group companies that belong to it by a separate framework
divisional guideline that also serves as a basis for the policies
at DMO companies. An independent network of local Anti-
Money Laundering (AML) Officers has also been established
for the individual Group companies allocated to DMO.
The Daimler AG Sanctions Compliance Program, which is valid
for all Group companies, includes systematic reviews of com-
pliance with sanctions lists by all units, divisions, and compa-
nies worldwide. More specifically, such reviews check whether
the names of affected natural persons or legal entities can
be found on any sanctions list around the globe. We therefore
check both supranational sanctions lists such as those pub-
lished by the United Nations and the European Union and
national sanctions lists from various countries, in particular the
United States. As required by law, such reviews are conducted
for customers and business partners, for example in sales
and procurement, as well as for employees and strategic coop-
eration partners. Checks against sanctions lists, which are
performed in close cooperation with the Export Control
department, take data protection law provisions into account.
The Anti-Financial Crime specialist unit assists the Anti-Money
Laundering Officer by acting as the Group organization for
ensuring that Daimler AG and Group companies comply with
the provisions of the GwG across all divisions in their role as
distributors of goods. The unit is also responsible for the
Group-wide Sanctions Compliance Program. As a central
Group organization, the specialist unit therefore also brings
together under one roof our two Centers of Competence for
Preventing and Combating Money Laundering and the Financ-
ing of Terrorism and the Center of Competence for Sanctions
Compliance.
Daimler AG and its Group companies pursue an integrated
compliance approach in all areas of the Group and around the
world. This approach takes the form of a central Group unit,
"Anti-Financial Crime," and ensures that checks against sanc-
tions lists are always carried out before Anti-Money Launder-
ing measures are implemented. This integrated approach links
prevention of the circumvention of supranational and national
sanctions with measures to prevent and combat money laun-
dering, the financing of terrorism, organized crime, and other
corporate crime. This is important, as these risks can not only
have a negative impact on society; they can also cause long-
term damage to our reputation, as well as financial damage
that can negatively affect our Group companies and our share-
holders and stakeholders.
The Chief Compliance Officer officially serves as the Group
Anti-Money Laundering Officer of Daimler AG in its role as a
distributor of goods. The Chief Compliance Officer reports
directly to the Board of Management and also serves as the
point of contact for regulatory authorities, law enforcement
agencies, authorities responsible for the prevention, investiga-
tion, and elimination of potential threats, and Germany's Finan-
cial Intelligence Unit. In his capacity as the Anti-Money Laun-
dering Officer, the Chief Compliance Officer has sufficient
authority and means to perform his duties.
supplier-portal.daimler.com/docs/DOC-1547
-1
23. Provisions for other risks
3. Consolidated Group
Equity-method investments
(after tax)
Items that may
-26
-26
537
537
-1,265
-1,266
1
-3
-3
-1
and on reclassifications
-1
-4
be reclassified
to profit/loss
3
-14
17
-1,055
-1,076
21
Actuarial gains/losses
on equity-method investments (pre-tax)
-1
-1
-4
Actuarial gains/losses on equity-method investments (after tax)
Taxes on unrealized gains/losses
-26
5
5
-29
-29
9
9
-20
-20
-1,616
-1,615
-1
-1,080
-1,081
-26
1
978
1
-722
-722
Taxes on unrealized gains/losses
and on reclassifications
186
186
Derivative financial instruments (after tax)
-451
-451
Equity-method investments
Unrealized gains/losses (pre-tax)
979
280
-1
-1
10. Intangible assets
285
30. Legal proceedings
251
9. Income taxes
284
29. Consolidated statement of cash flows
251
8. Interest income and interest expense
283
28. Other liabilities
251
7. Other financial income/expense, net
254
283
251
6. Other operating income and expense
282
26. Deferred income
250
5. Functional costs
282
25. Other financial liabilities
249
280
24. Financing liabilities
247
4. Revenue
27. Contract and refund liabilities
-1
31. Contingent liabilities and other
256
-1
-1
-1
Actuarial gains/losses
from pensions and similar obligations
(pre-tax)
-2,403
-2,403
-1,627
-1,625
-2
Taxes on actuarial
gains/losses from pensions
and similar obligations
11. Property, plant and equipment
34. Segment reporting
171
171
14. Receivables from financial services
299
33. Management of financial risks
259
13. Equity-method investments
289
32. Financial instruments
258
12. Equipment on operating leases
288
financial obligations
232
232
10,595
7,751
Cash and cash equivalents at end of period
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
Capital increase/Issue of new shares
-50
-50
-50
Acquisition of treasury shares
50
50
50
Issue and disposal of treasury shares
-
-32
-13
-45
Changes in ownership interests in subsidiaries
-
46
1
47
Other
-95
5
Other comprehensive income/loss before taxes
80
80
-4,220
63,843
1,282
65,125
Balance at January 1, 2018
-
7,249
7,582
Net profit
-1,803
-3
-3,262
64,667
18
537
-1
728
728
-1,266
-4
4,715
351
5,066
-3,905
-315
-3,244
9
1,386
Balance at December 31, 2018
-9
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CASH FLOWS
227
Consolidated Statement of Cash Flows¹
F.04
In millions of euros
Profit before income taxes
Depreciation and amortization/impairments
Other non-cash expense and income
Gains (-)/losses (+) on disposals of assets
Change in operating assets and liabilities
Inventories
Trade receivables
Trade payables
Receivables from financial services
Vehicles on operating leases
Other operating assets and liabilities
Dividends received from equity-method investments
Income taxes paid
Cash provided by operating activities
2019
2018
3,830
Development costs for vehicles and components are recognized
if the conditions for capitalization according to IAS 38 are
met. Subsequent to initial recognition, the asset is carried at
cost less accumulated amortization and accumulated impair-
ment losses. Capitalized development costs include all direct
costs and allocable overheads and are amortized on a straight-
line basis over the expected product life cycle (a maximum
of ten years). Amortization of capitalized development costs is
an element of manufacturing costs and is allocated to those
vehicles and components by which they were generated and is
included in cost of sales when the inventory (vehicles) is sold.
5
-14
Dividends
Total comprehensive income/loss
-95
5
64,667
1,386
2,377
332
-637
-26
-2,597
18
186
66,053
421
-26
201
350
66,053
2,709
-2,579
421
551
Balance at January 1, 2019
Net profit
-3,477
-288
-3,765
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
-451
Intangible assets with indefinite useful lives are reviewed
annually to determine whether indefinite-life assessment con-
tinues to be appropriate. If not, the change in the useful-life
assessment from indefinite to finite is made on a prospective
basis.
1,171
Total
equity
-44
171
21
5,794
214
-23
-3,905
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Changes in ownership interests in subsidiaries
-32
Other
46
Balance at December 31, 2018
3,070
11,710
49,490
472
15
Balance at January 1, 2019
Net profit
Other comprehensive income/loss before taxes
214
-1,626
7,249
38
The accompanying notes are an integral part of these Consolidated Financial Statements.
228
F | CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Statement of Changes in Equity¹
F.05
In millions of euros
Equity
Share
Capital
capital
reserves
Deferred taxes on other comprehensive income
Retained
earnings²
instruments
Balance at January 1, 2018
Net profit
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
3,070
11,742
47,555
258
Currency instruments/debt
translation
In millions of euros
Total comprehensive income/loss
Changes in the consolidated group
30
2 Retained earnings also include items that will not be reclassified to the Consolidated Statement of Income. Actuarial losses from pensions and similar
obligations amount to €11,189 million net of tax in 2019 (2018: €9,017 million net of tax).
The accompanying notes are an integral part of these Consolidated Financial Statements.
Other reserves
items that
may be reclassified
in profit/loss
Share of
F❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
229
investments
Derivative
accounted
Equity
attributable
financial
for using
instruments
the equity
Treasury
method
share
to share-
holders of
Daimler AG
Non-
controlling
interests
930
125
46,329
11,552
-158
3,070
11,710
49,490
472
15
2,377
-2,404
458
12
232
3
Dividends
205
15
-3,477
-14
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Changes in ownership interests in subsidiaries
Other
Balance at December 31, 2019
1 See Note 20 for other information on changes in equity.
3,070
458
1 See Note 29 for other information on Consolidated Statements of Cash Flows.
Intangible assets are measured at acquisition or manufacturing
cost less accumulated amortization. If necessary, accumulated
impairment losses are recognized.
Basic earnings per share are calculated by dividing profit attribut-
able to shareholders of Daimler AG by the weighted average
number of shares outstanding. As nothing occurred in the years
2019 and 2018 that resulted in any dilution, diluted earnings
per share were the same as basic earnings per share in those
years.
3,443
-503
Discounting
3,946
Obligations from operating lease arrangements
(undiscounted)
Others
75
77
256
-36
-226
3,800
Payments related to non-lease components
to extend or terminate a lease
Payments related to options
Exemptions for leases of low-value assets
Exemptions for short-term leases
Other financial obligations resulting from rental
agreements and operating leases in accordance with
IAS 17 at December 31, 2018
In millions of euros
Reconciliation to lease liabilities in accordance with IFRS 16
F.06
In the context of the transition to IFRS 16, right-of-use assets
of €3,777 million (including finance leases of €335 million) and
lease liabilities of €3,790 million were recognized at January 1,
2019. The following reconciliation (see 7 F.06) to the opening
balance for lease liabilities as at January 1, 2019 is based
on the other financial obligations from rental agreements and
operating leases at December 31, 2018.
Current knowledge is given due consideration when
determining the lease term if the contract contains options
to extend or terminate the lease.
Obligations from operating lease arrangements
(discounted)
Carrying amount of liabilities from finance leases
in accordance with IAS 17 at December 31, 2018
Carrying amount of lease liabilities in
accordance with IFRS 16 at January 1, 2019
347
3,790
Subsidiaries measured at amortized cost
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group's proportionate share of the
results of operations is included in Daimler's Consolidated
Financial Statements with a one to three-month time lag. Sig-
nificant events or transactions are accounted for without a
time lag, however (see Note 13).
For entities over which Daimler has joint control together with
a partner (joint arrangements), it is necessary to differentiate
whether a joint operation or a joint venture exists. In a joint
venture, the parties that have joint control of the arrangement
have rights to the net assets of the arrangement. For joint
ventures, the equity method has to be applied. A joint operation
exists when the jointly controlling parties have direct rights
to the assets and obligations for the liabilities. In this case, the
prorated assets and liabilities and the prorated income and
expenses are generally to be recognized (proportionate consol-
idation). Joint operations that have no significant impact on
the Consolidated Financial Statements are generally accounted
for using the equity method.
An associated company is an entity over which the Group
has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of
the investee. Associated companies are generally accounted
for using the equity method.
Investments in associated companies, joint ventures or
joint operations
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler's percentage ownership without change of
control are accounted for as an equity transaction between
owners.
Business combinations are accounted for using the purchase
method.
The financial statements of consolidated subsidiaries which
are included in the Consolidated Financial Statements are gen-
erally prepared as of the reporting date of the Consolidated
Financial Statements. The financial statements of Daimler AG
and its subsidiaries included in the Consolidated Financial
Statements are prepared using uniform recognition and mea-
surement principles. All intercompany assets and liabilities,
equity, income and expenses as well as cash flows from trans-
actions between consolidated entities are entirely eliminated
in the course of the consolidation process.
Structured entities which are controlled also have to be
consolidated. Accordingly, the assets and liabilities remain in
the Consolidated Statement of Financial Position. Structured
entities are entities which have been designed so that voting
or similar rights are not relevant in deciding who controls
the entity. This is the case for example if voting rights relate
to administrative tasks only and the relevant activities are
directed by means of contractual arrangements.
The Consolidated Financial Statements include the financial
statements of Daimler AG and the financial statements of all
subsidiaries, including structured entities, which are directly
or indirectly controlled by Daimler AG. Control exists if the
parent company has the power of decision over a subsidiary
based on voting rights or other rights, if it participates in
positive and negative variable returns from a subsidiary, and
if it can affect these returns by its power of decision.
Principles of consolidation
At the date of initial application, the measurement of a
right-of-use asset excludes the initial direct costs.
The Consolidated Financial Statements have been prepared on
the historical-cost basis with the exception of certain items
such as financial assets measured at fair value through profit or
loss, derivative financial instruments, hedged items, and
pensions and similar obligations. The measurement models
applied to those exceptions are described below.
cost-of-sales method.
The Consolidated Statement of Income is presented using the
Presentation in the Consolidated Statement of Financial
Position differentiates between current and non-current assets
and liabilities. Assets and liabilities are classified as current
if they are expected to be realized or settled within one year or
within a longer and normal operating cycle. Deferred tax assets
and liabilities as well as assets and provisions for pensions
and similar obligations are generally presented as non-current
items.
Presentation
In addition, further standards and interpretations have been
approved which are not expected to have a material impact on
the Consolidated Financial Statements.
IFRS issued but neither EU endorsed nor yet adopted
In May 2017, the IASB issued IFRS 17 Insurance Contracts.
IFRS 17 replaces the currently applicable IFRS 4. It establishes
more transparency and comparability with regard to the recog-
nition, measurement, presentation and disclosure of insurance
contracts with the insurer. The application of IFRS 17 is manda-
tory for reporting periods beginning on or after January 1, 2021.
Early adoption is permitted. Daimler currently does not expect
any material impacts on the Group's profitability, liquidity and
capital resources or financial position due to the application
of IFRS 17. Early adoption is not currently planned.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
232
Application is mandatory for reporting periods beginning on
or after January 1, 2020. Application ends when the uncertainty
arising from the interest benchmark reform is no longer
present with respect to the timing and the amount of the inter-
est rate benchmark-based cash flows of the hedged item and
the hedging instrument. Daimler adopts the amendments early
and avoids the hedge accounting implications that could
have been caused by the replacement of the interest rate bench-
marks in the form of ineffectiveness or de-designation.
Certain interest rate benchmarks such as the London Inter-
bank Offered Rate (for USD, GBP, CHF and JPY) will be globally
reformed and replaced by alternative risk-free interest rates
by the end of 2021. As a reaction to the uncertainty arising from
the transition, the IASB has published amendments to IFRS 9,
IAS 39 and IFRS 7 (Interest Rate Benchmark Reform:
Amendments to IFRS 9, IAS 39 and IFRS 7). These amend-
ments contain exceptions to specific hedge accounting
requirements, which allow the hedge to be continued as if the
reference rates on which the hedged item and hedging instru-
ment are based were not changed by the benchmark reform.
Right-of-use assets and lease liabilities include assets and
liabilities, which were recognized until December 31, 2018 as
finance leases in accordance with IAS 17.
Measurement
Subsidiaries, associated companies, joint ventures and joint
operations whose business is non-active or of low volume and
that individually and in sum are not material for the Group and
the fair presentation of profitability, liquidity and capital
resources, and financial position are generally measured at
amortized cost in the Consolidated Financial Statements.
Regardless of their original lease term, leases for which
the lease term ends at the latest on December 31, 2019 are
recognized as short-term leases.
With leases previously classified as operating leases accord-
ing to IAS 17, the lease liability is measured at the present
value of the outstanding lease payments, discounted by the
incremental borrowing rate at January 1, 2019. The weighted
average incremental borrowing rate was 2.27%. The respec-
tive right-of-use asset is generally recognized at an amount
equal to the lease liability.
61,344
-21
-546
Other
131
6
125
-
-174
-16
-158
-
42
42
42
-42
-42
-42
Capital increase/Issue of new shares
54
54
-
Changes in the consolidated group
1,497
62,841
Acquisition of treasury shares
Issue and disposal of treasury shares
Daimler as lessee uses the following practical expedients of
IFRS 16 at the date of initial application:
Daimler applies IFRS 16 for the first time at January 1, 2019. In
compliance with the transition regulations, Daimler does
not adjust the prior-year figures and presents the not significant
accumulated transitional effects in retained earnings.
Lease accounting for lessors has been taken over almost
identically from IAS 17 into IFRS 16.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 231
With the introduction of lessee accounting, payments of lease
liabilities excluding interest of €701 million are presented in
the Consolidated Statement of Cash Flows under cash flows
from financing activities, while the interest portion is pre-
sented under cash flows from operating activities - as total
lease expenses previously were.
According to IFRS 16, the depreciation of right-of-use assets
is recognized within functional costs. The interest due on the
lease liability is a component of interest expense. The lease
expenses of leases classified according to IAS 17 as operating
leases have been fully recognized within functional costs.
Lease liabilities, which are assigned to financing liabilities, are
measured initially at the present value of the lease payments.
Subsequent measurement of a lease liability includes the
increase of the carrying amount to reflect interest on the lease
liability and reducing (while affecting other comprehensive
income) the carrying amount to reflect the lease payments made.
Right-of-use assets, which are included under property, plant
and equipment, are measured at cost less any accumulated
depreciation and, if necessary, any accumulated impairment.
The cost of a right-of-use asset comprises the present value of
the outstanding lease payments plus any lease payments made
at or before the commencement date less any lease incentives
received, any initial direct costs and an estimate of costs to
be incurred in dismantling or removing the underlying asset. In
this context, Daimler also applies the practical expedient that
the payments for non-lease components are generally recog-
nized as lease payments. If the lease transfers ownership of
the underlying asset to the lessee at the end of the lease term
or if the cost of the right-of-use asset reflects that the lessee
will exercise a purchase option, the right-of-use asset is depre-
ciated to the end of the useful life of the underlying asset.
Otherwise, the right-of-use asset is depreciated to the end of
the lease term.
According to IFRS 16, a lessee may elect, for leases with a
lease term of 12 months or less (short-term leases) and
for leases for which the underlying asset is of low value, not to
recognize a right-of-use asset and a lease liability. Daimler
applies both recognition exemptions. The lease payments
associated with those leases are generally recognized as an
expense on a straight-line basis over the lease term or
another systematic basis if appropriate.
In January 2016, the IASB published IFRS 16 Leases, replacing
IAS 17 Leases and IFRIC 4 Determining Whether an Arrange-
ment Contains a Lease and other interpretations. IFRS 16 abol-
ishes for lessees the previous classification of leasing agree-
ments as either operating or finance leases. Instead, IFRS 16
introduces a single lessee accounting model, requiring lessees
to recognize assets for the right to use as well as leasing
liabilities for the outstanding lease payments. This means that
as of January 1, 2019 all leases have to be reported in the
Consolidated Statement of Financial Position
very similar to
the former accounting of finance leases.
IFRS issued, EU endorsed and initially adopted in the
reporting period
An impairment review is not performed. Instead, a right-
of-use asset is adjusted by the amount of any provision for
onerous leases recognized in the Statement of Financial
Position at December 31, 2018.
The accounting policies applied in the Consolidated Financial
Statements comply with the IFRS required to be applied in the
EU as of December 31, 2019.
Basis of preparation
The Board of Management authorized the Consolidated
Financial Statements for publication on February 19, 2020.
The Consolidated Financial Statements of Daimler AG are pre-
sented in euros (€). Unless otherwise stated, all amounts
are stated in millions of euros. All figures shown are rounded in
accordance with standard business rounding principles.
Daimler AG is a stock corporation organized under the laws
of the Federal Republic of Germany. The Company is entered
in the Commercial Register of the Stuttgart District Court
under No. HRB 19360 and its registered office is located at
Mercedesstraße 120, 70372 Stuttgart, Germany.
The Consolidated Financial Statements of Daimler AG and
its subsidiaries ("Daimler” or “the Group") have been prepared
in accordance with Section 315e of the German Commercial
Code (HGB) and comply with the International Financial Report-
ing Standards (IFRS) as adopted by the European Union (EU).
General information
1. Significant accounting policies
Notes to the Consolidated Financial Statements
230 F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Balance at December 31, 2019
Changes in ownership interests in subsidiaries
Applied IFRS
Intangible assets
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 233
Transactions in foreign currency are translated at the relevant
foreign exchange rates prevailing at the transaction date. In
subsequent periods, assets and liabilities denominated in for-
eign currency are translated using period-end exchange rates;
gains and losses from this measurement are recognized in
profit and loss (except for gains and losses resulting from the
translation of equity instruments measured at fair value
through other comprehensive income, which are recognized
in other comprehensive income/loss).
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 235
Daimler does not adjust the promised amount of consideration
for the effects of a significant financing component if at
contract inception it is expected that the period between the
transfer of a promised good or service to a customer and pay-
ment by the customer is no longer than one year.
The incremental cost of obtaining contracts is recognized
as an expense when incurred if the amortization period would
be no longer than one year.
Vehicles may be initially sold to non-Group dealers. Sub-
sequently a customer decides to enter into a leasing contract
with Daimler Mobility regarding such a vehicle. The vehicle is
therefore sold by the non-Group dealer to Daimler Mobility and
a leasing contract is entered into with the customer. When
control of the vehicle is transferred to the non-Group dealer
Daimler recognizes revenue from the sale of the vehicle.
For multiple-element arrangements, such as when vehicles
are sold with free or reduced-in-price maintenance programs
or with free online services, the Group generally allocates
revenue to the various elements based on their estimated rela-
tive stand-alone selling prices. To determine stand-alone sell-
ing prices, Daimler primarily uses price lists with consideration
of average price reductions granted to its customers.
The Group offers extended, separately priced warranties for
certain products as well as service and maintenance con-
tracts. Revenue from these contracts is deferred insofar as a
customer has made an advance payment and is generally
recognized over the contract period in proportion to the costs
expected to be incurred based on historical information. A
loss on these contracts is recognized in the current period if the
expected costs for outstanding services under the contract
exceed unearned revenue. Usually, those contracts are paid in
advance or in equal instalments over the contract term.
Under a contract manufacturing agreement, Daimler sells
assets to a third-party manufacturer from which Daimler buys
back the manufactured products after completion of the
commissioned work. If the sale of the assets is not accompanied
by the transfer of control to the third-party manufacturer, no
revenue will be recognized under IFRS 15.
in their ability to direct the use of, and obtain substantially all
of the benefits from, the asset. At contract inception of a sale
with a residual-value guarantee, revenue therefore has to be
recognized. However, a potential compensation payment to
the customer has to be considered (revenue deferral).
Arrangements such as when Daimler provides customers with
a guaranteed minimum resale value that they receive on resale
(residual-value guarantee) do not constraint the customers
Sales of vehicles including a put option (an entity's obliga-
tion to repurchase the asset at the customer's request) are
reported as operating leases if the customer has a signifi-
cant economic incentive to exercise that right at contract
inception. Otherwise a sale with a right of return is reported.
Daimler considers several factors when assessing whether
the customer has a significant economic incentive to exercise
his right. Amongst others, these are the relation between
the agreed repurchase price and the expected future market
value (at the time of repurchase) of the asset, or historical
return rates.
Sales of vehicles in the form of a forward (Daimler's obli-
gation to repurchase the asset) and a call option (Daimler's
right to repurchase the asset) are reported as operating
leases.
Revenue recognition from the sale of vehicles for which the
Group enters into a repurchase obligation is dependent on the
form of the repurchase agreement:
Dealers may finance their vehicle inventory by dealer inventory
financing provided by Daimler Mobility (formerly Daimler
Financial Services). Furthermore end-customers may be credit
financed by Daimler Mobility. Receivables from sales financing
with end-customers and dealers are presented in receivables
from financial services. Further information is provided in
Note 14.
Generally, payment from sales of vehicles, service parts
and other related products is made when the customer obtains
control of these products.
Revenue from sales of vehicles, service parts and other related
products is recognized when control of the goods is trans-
ferred to the customer. This generally occurs at the time the
customer takes possession of the products.
Revenue recognition
Accounting policies
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
234
7.8953
0.8867 128.8200
1.1414
7.8012
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services business
at Daimler Mobility. Revenue generated from operating leases
is recognized on a straight-line basis over the periods of the
contracts. In addition, sales revenue is generated at the end of
lease contracts from the subsequent sale of the vehicles.
Revenue from receivables from financial services is recognized
using the effective interest method.
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well
as the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competi-
tion and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates which are reported
as follows:
Revenue is recognized net of sales reductions such as cash
discounts and sales incentives granted.
When loans are issued below market rates, related receiv-
ables are recognized at present value (using market rates)
and revenue is reduced for the interest incentive granted.
Earnings per share
Deferred tax assets or liabilities are calculated on the basis of
temporary differences between the tax basis and the financial
reporting of assets and liabilities including differences from
consolidation, on unused tax loss carryforwards and unused
tax credits. Measurement is based on the tax rates expected
to be effective in the period in which an asset is recognized or
a liability is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the reporting date
or are soon to be enacted. Daimler recognizes a valuation
allowance for deferred tax assets when it is unlikely that a cor-
responding amount of future taxable profit will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be utilized. Deferred tax
liabilities for taxable temporary differences in connection with
investments in subsidiaries, branches, associates and inter-
ests in joint arrangements are not recognized if the Group is
able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
Changes in deferred tax assets and liabilities are generally rec-
ognized through profit and loss in deferred taxes in the Con-
solidated Statement of Income, except for changes recognized
in other comprehensive income/loss or directly in equity.
e year 2019, a clarification regarding the presentation
of income taxes in the statement of financial position was pub-
lished by the IFRIC. As a result of this clarification, the former
provisions for income taxes now have to be shown as income
tax liabilities which are part of the other liabilities. As a result,
the current and non-current provisions for income taxes recog-
nized at December 31, 2018 (€823 million and €628 million)
were reclassified to current and non-current liabilities. The
reclassification has no impact on the Group's profitability
or liquidity and capital resources.
In the
Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period. In addi-
tion, current income taxes presented for the period include
adjustments for uncertain tax payments or tax refunds for
periods not yet finally assessed, however, excluding interest
expenses and interest refunds and penalties on the underpay-
ment of taxes. For the case it is probable that amounts
declared as expenses in the tax returns might not be recognized
(uncertain tax positions), a liability for income taxes is
recognized. The amount is based on the best estimate of the
expected tax payment (expected value or most likely amount).
Tax refund claims from uncertain tax positions are recognized
when it is probable that they can be realized. Only in the case
of tax loss carryforwards or unused tax credits, no liability for
taxes or tax claim is recognized for these uncertain tax posi-
tions. Instead, the deferred tax assets for the unused tax loss
carryforwards or tax credits are to be adjusted.
Income taxes are comprised of current income taxes and
deferred taxes.
Income taxes
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
236
For the segment Daimler Mobility interest income and expense
and gains or losses from derivative financial instruments
from financial services business are disclosed under revenue
and cost of sales respectively.
0.8608 120.3200
Interest income and interest expense include interest income
from investments in securities, cash and cash equivalents as
well as interest expense from liabilities. Furthermore, interest
and changes in fair values related to interest rate hedging
activities as well as income and expense resulting from the
allocation of premiums and discounts are included. The inter-
est components of defined benefit pension obligations and
other similar obligations as well as of the plan assets available
to cover these obligations and interest on supplementary
income tax payments or reimbursements are also presented
in this line item.
Furthermore, income and expenses from equity interests
are included in other financial income/expense, net, if such
in-come or expenses are not presented under equity-method
investments.
Other financial income/expense, net includes all income
and expense from financial transactions which are included
neither in interest income nor in interest expense, and which
for Daimler Mobility are included neither in revenue nor in cost
of sales. For example, expense from the compounding of inter-
est on provisions for other risks is recorded in this line item.
Other financial income/expense, net
This item includes all income and expenses in connection
with investments accounted for using the equity method. In
addition to the prorated profits and losses from financial
investments, it also includes profits and losses resulting from
the sale of equity interests or the remeasurement of equity
interests following a loss of significant influence or joint con-
trol. Daimler's share of dilution gains and losses occurring if
the Group or other owners do not participate in capital increases
of companies in which shares are held and accounted for
using the equity method are also included in profit/loss on
equity-method investments. This item also includes impair-
ment losses and/or gains on the reversal of such impairments
of equity-method investments.
Profit/loss on equity-method investments
Government grants related to assets are deducted from the
carrying amount of the asset and are recognized in earnings
over the life of a depreciable asset as a reduced depreciation
expense. Government grants which compensate the Group for
expenses are recognized as other operating income in the
same period as the expenses themselves.
Government grants
Borrowing costs are expensed as incurred unless they are
directly attributable to the acquisition, construction or produc-
tion of a qualifying asset and are therefore part of the cost
of that asset. Depreciation of the capitalized borrowing costs
is presented within cost of sales.
Borrowing costs
Research and non-capitalized development costs
Expenditure for research and development that does not meet
the conditions for capitalization according to IAS 38 Intangible
Assets is expensed as incurred.
If subsidized leasing fees are agreed upon in connection
with finance leases, revenue from the sale of a vehicle is
reduced by the amount of the interest incentive granted.
Interest income and interest expense
Foreign currency translation
1.1071
0.8924 129.6100
Average exchange rate on December 31
1€ =
CNY
JPY
1€ =
GBP
1€ =
1€ =
1€ =
1€ =
1€ =
USD
CNY
JPY
GBP
USD
1€ =
2018
2019
Exchange rates
F.07
As a consequence of the assessment that Argentina is in
hyperinflation, Daimler applies IAS 29 to our Argentinian busi-
ness since January 1, 2018. This application does not have
a material impact on the Group's profitability, liquidity and
capital resources and financial position.
To determine whether a country is to be considered as in
hyperinflation, Daimler refers to the list published by the Inter-
national Practices Task Force (IPTF) of the Center of the
Audit Quality or other relevant international publications. If a
country is in hyperinflation, IAS 29 Financial Reporting in
Hyperinflationary Economies has to be applied from the begin-
ning of the respective reporting period, i.e. from January 1
of the respective reporting year.
Hyperinflation
The exchange rates of the US dollar, the British pound, the
Japanese yen and the Chinese renminbi - the most significant
foreign currencies for Daimler - are as shown in table 7 F.07.
Assets and liabilities of foreign companies for which the func-
tional currency is not the euro are translated into euros using
period-end exchange rates. The translation adjustments are
presented in other comprehensive income/loss. The components
of equity are translated using historical rates. The statements
of income and cash flows are translated into euros using average
exchange rates during the respective periods.
1.1234
0.8508
121.9400
7.8205
1.1629
7.8000
0.9021 119.3200
1.1119
Fourth quarter
Third quarter
7.6035
7.8154
0.8834 133.1700
0.8762 130.0900
1.1918
7.6721
7.9151
1.2292
0.8725 125.0800
0.8748 123.4700
1.1237
Second quarter
1.1358
First quarter
respective period
Average exchange rates during the
7.8751
125.8500
0.8945
1.1450
7.6635
15,853
333
6,305
343
Additions to property, plant and equipment
-7,199
-7,534
Additions to intangible assets
-3,636
-3,167
-2,858
Proceeds from disposals of property, plant and equipment and intangible assets
644
Investments in shareholdings
-1,619
-780
Proceeds from disposals of shareholdings
394
363
429
-2,107
1,380
1,202
18,883
24
-872
-761
-178
99
-3,850
-346
-884
-1,625
1,694
-4,664
-10,257
-1,156
-1,609
5,641
877
Acquisition of marketable debt securities and similar investments
-5,960
7,888
Proceeds from sales of marketable debt securities and similar investments
Other
85
118
-42
-50
-79
-78
5,628
13,226
Effect of foreign exchange rate changes on cash and cash equivalents
121
133
Net increase in cash and cash equivalents
3,030
3,781
Cash and cash equivalents at beginning of period
-5,739
12,072
-315
-263
15,853
-3,477
-3,905
Cash used for investing activities
6,210
82
-9,921
Change in short-term financing liabilities
Additions to long-term financing liabilities
Repayment of long-term financing liabilities
Dividend paid to shareholders of Daimler AG
Dividends paid to non-controlling interests
Proceeds from the issue of share capital
Acquisition of treasury shares
7,014
-30
-10,607
Cash provided by financing activities
840
2,637
63,607
71,137
-55,043
-56,318
Acquisition of non-controlling interests in subsidiaries
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured at
amortized cost using the effective interest method.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
243
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives (including embedded
derivatives separated from the host contract) which are not
used as hedging instruments in hedge accounting are classi-
fied as held for trading. Gains or losses on liabilities held for
trading are recognized in profit or loss.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or financing
activities or liquidity management. These are mainly currency
risks, interest rate risks and commodity price risks.
The Group provides various types of product warranties depend-
ing on the type of product and market conditions. Provisions
for product warranties are generally recognized when vehicles
are sold or when new warranty programs are initiated. Based
on historical warranty claim experience, assumptions have to
be made on the type and extent of future warranty claims and
customer goodwill, as well as on possible recall campaigns for
each model series. These assessments are based on experi-
ence of the frequency and extent of vehicle faults and defects
in the past. In addition, the estimates also include assumptions
on the amounts of potential repair costs per vehicle and the
effects of possible time or mileage limits. The provisions are
regularly adjusted to reflect new information. Further infor-
mation on provisions for other risks is provided in
Embedded derivatives are principally separated from the host
contract and recognized separately. However, embedded
derivatives are not separated from the host contract if that host
contract is a financial asset, if Daimler chooses to measure
a hybrid contract at fair value through profit or loss, or if the
embedded derivative is closely related to the host contract.
Under IFRS 9, for cash flow hedges in procurement trans-
actions expected with a high degree of probability, designation
can be made for separable risk components of these non-
financial hedged items.
If the requirements for hedge accounting set out in IFRS 9 are
met, Daimler designates and documents the hedge relation-
ship from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the
changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment are hedged. In a cash flow
hedge, the variability of cash flows to be received or paid from
expected transactions related to a recognized asset or
liability or a highly probable forecast transaction is hedged. The
documentation of the hedging relationship includes the objec-
tives and strategy of risk management, the type of hedging
relationship, the nature of the risk being hedged, the identifica-
tion of the eligible hedging instrument and the eligible hedged
item, as well as an assessment of the effectiveness require-
ments comprising the risk mitigating economic relationship, the
absence of deteriorating effects from credit risk and the appro-
priate hedge ratio. Hedging transactions are regularly assessed
to determine whether the effectiveness requirements are met
while they are designated.
Changes in fair value of non-designated derivatives are recog-
nized in profit or loss. For fair value hedges, changes in the
fair value of the hedged item and the derivative are recognized
in profit or loss. For cash flow hedges, fair value changes in
the effective portion of the hedging instrument are recognized
after tax in other comprehensive income.
Under IFRS 9, with cash flow hedges, amounts recognized in
other comprehensive income as effective hedging gains
or losses from hedging instruments are removed from the
reserves for derivative financial instruments and directly
included in the initial cost or carrying amount of the hedged
item at initial recognition if a hedged forecast transaction
results in the recognition of a non-financial asset or non-
financial liability.
For other cash flow hedges, the accumulated hedging gains or
losses from hedging instruments are reclassified from the
reserves for derivative financial instruments to the Consolidated
Statement of Income when the hedged item affects profit or
loss. The ineffective portions of fair value changes are recog-
nized directly in profit or loss.
Liability and litigation risks and regulatory proceedings
Various legal proceedings, claims and governmental investiga-
tions are pending against Daimler AG and its subsidiaries on
a wide range of topics. If the outcome of such legal proceedings
is detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages, to undertake
service actions or recall campaigns, to pay fines or to carry
out other costly actions. Litigation and governmental investiga-
tions often involve complex legal issues and are connected
with a high degree of uncertainty. Accordingly, the assessment
of whether an obligation exists on the balance sheet date as
a result of an event in the past, and whether a future cash out-
flow is likely and the obligation can be reliably estimated,
largely depends on estimations by the management. Daimler
regularly evaluates the current stage of legal proceedings,
also with the involvement of external legal counsel. It is there-
fore possible that the amounts of provisions for pending or
potential litigation will have to be adjusted due to future devel-
opments. Changes in estimates and premises can have a
material effect on the Group's future profitability. It is also pos-
sible that provisions accrued for some legal proceedings
may turn out to be insufficient once such proceedings have
ended. Daimler may also become liable for payments in
legal proceedings no provisions were established for. Although
the final resolution of any such proceedings could have a
material effect on Daimler's operating results and cash flows
for a particular reporting period, Daimler believes that it
should not materially affect the Group's financial position. Fur-
ther information on liability and litigation risks and regulatory
proceedings is provided in Note 30.
Note 23.
Financial liabilities primarily include trade payables, liabilities
to banks, bonds, derivative financial liabilities and other
liabilities.
Derivative financial instruments are measured at fair value
upon initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive
or negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option-pricing models. Deriva-
tives are presented as assets if their fair value is positive and
as liabilities if the fair value is negative.
Financial liabilities
b)
Offsetting of financial instruments
The recognition and measurement of provisions for product
warranties is generally connected with estimates.
If a financial asset has a significant increase in credit risk since
initial recognition but is not yet credit impaired, it is moved
to stage 2 and measured at lifetime expected credit loss, which
is defined as the expected credit loss that results from all
possible default events over the expected life of a financial
instrument.
Stage 3: expected credit losses over the lifetime - credit
impaired
If a financial asset is defined as credit-impaired or in default,
it is transferred to stage 3 and measured at lifetime expected
credit loss. Objective evidence for a credit-impaired financial
asset includes 91 days past due date and other information
about significant financial difficulties of the borrower.
242
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The determination of whether a financial asset has experienced
a significant increase in credit risk is based on an assessment
of the probability of default, which is made at least quarterly,
incorporating external credit rating information as well as
internal information on the credit quality of the financial asset.
For debt instruments that are not receivables from financial
services, a significant increase in credit risk is assessed mainly
based on past-due information or the probability of default.
A financial asset is migrated to stage 2 if the asset's credit
risk has increased significantly compared to its credit risk at
initial recognition. The credit risk is assessed based on
the probability of default. For trade receivables, the simplified
approach is applied whereby all trade receivables are allocated
to stage 2 initially. Hence, no determination of significant
increases in credit risk is necessary.
Daimler applies the low credit risk exception to the stage
allocation to quoted debt instruments with investment-grade
ratings. These debt instruments are always allocated to stage 1.
In stage 1 and 2, the effective interest revenue is calculated
based on gross carrying amounts. If a financial asset becomes
credit impaired in stage 3, the effective interest revenue is
calculated based on its net carrying amount (gross carrying
amount adjusted for any loss allowance).
Measurement of expected credit losses. Expected credit losses
are measured in a way that reflects:
the unbiased and probability-weighted amount;
the time value of money and
c) reasonable and supportable information (if available
without undue cost or effort) at the reporting date about
past events, current conditions and forecasts of future
economic conditions.
Expected credit losses are measured as the probability-
weighted present value of all cash shortfalls over the expected
life of each financial asset. For receivables from financial
services, expected credit losses are mainly calculated with a
statistical model using three major risk parameters: pro-
bability of default, loss given default and exposure at default.
The estimation of these risk parameters incorporates all
available relevant information, not only historical and current
loss data, but also reasonable and supportable forward-look-
ing information reflected by the future expectation factors.
This information includes macroeconomic factors (e.g., gross
domestic product growth, unemployment rate, cost perfor-
mance index) and forecasts of future economic conditions. For
receivables from financial services, these forecasts are
performed using a scenario analysis (basic scenario, optimistic
scenario and pessimistic scenario). The impairment amount
for trade receivables is predominantly determined on a collec-
tive basis.
A financial instrument is written off when there is no reasonable
expectation of recovery, for example at the end of insol-
vency proceedings or after a court decision of uncollectibility.
Significant modification (e.g., that leads to a change in the
present value of the contractual cash flows of 10%) leads
to derecognition of financial assets. This is estimated to be rare
and immaterial for receivables from financial services. If the
terms of a contract are renegotiated or modified and this does
not result in derecognition of the contract, then the gross
carrying amount of the contract has to be recalculated and a
modification gain or loss has to be recognized in profit or loss.
Financial assets and financial liabilities are offset and the net
amount is presented in the Consolidated Statement of Finan-
cial Position provided that an enforceable right currently exists
to offset the amounts involved, and there is an intention either
to carry out the offsetting on a net basis or to settle a liability
when the related asset is sold.
Product warranties
a)
Recoverable amount of equipment on operating leases
Daimler regularly reviews the factors determining the values of
its leased vehicles. In particular, it is necessary to estimate
the residual values of vehicles at the end of their leases, which
constitute a substantial part of the expected future cash flows
from leased assets. In this context, assumptions are made
regarding major influencing factors, such as the expected num-
ber of returned vehicles, the latest remarketing results and
future vehicle model changes. Those assumptions are deter-
mined either by qualified estimates or by publications provided
by expert third parties; qualified estimates are based, as
far as publicly available, on external data with consideration of
internally available additional information such as historical
experience of price developments and recent sale prices. The
residual values thus determined serve as a basis for depre-
ciation; changes in residual values lead either to prospective
adjustments of the depreciation or, in the case of a significant
decline in expected residual values, to an impairment. If depre-
ciation is prospectively adjusted, changes in estimates of
residual values do not have a direct effect but are equally dis-
tributed over the remaining periods of the lease contracts.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Restructuring provisions are set up in connection with programs
that materially change the scope of business performed by
a segment or business unit or the manner in which business is
conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the
termination of agreements with suppliers and dealers.
Restructuring provisions are recognized when the Group has a
detailed formal plan that has either commenced implemen-
tation or been announced.
A provision for expected warranty costs is recognized when
a product is sold or when a new warranty program is initiated.
Estimates for accrued warranty costs are primarily based on
historical experience.
A provision is recognized when a liability to third parties
has been incurred, an outflow of resources is probable and the
amount of the obligation can be reasonably estimated. The
amount recognized as a provision represents the best estimate
of the obligation at the reporting date. Provisions with an
original maturity of more than one year are discounted to the
present value of the expenditures expected to settle the
obligation at the end of the reporting period. If the criteria of
the regulations on recognition and measurement of pro-
visions are not fulfilled and the possibility of a cash outflow
upon settlement is not unlikely, the item is to be presented
as a contingent liability, insofar as it is adequately measurable.
The amount disclosed as a contingent liability represents
the best estimate of the possible obligation at the reporting
date. Provisions and contingent liabilities are regularly
reviewed and adjusted as further information becomes avail-
able or circumstances change.
Provisions for other risks
defined benefit plan are recognized in profit or loss when the
curtailment or settlement occurs.
Gains or losses on the curtailment or settlement of a
The discount factors used to calculate the present values
of defined benefit pension obligations are to be determined -
with maturities and currencies matching the pension pay-
ments - by reference to market yields at the end of the report-
ing period on high-quality corporate bonds in the respective
markets. For very long maturities, there are no high-quality
corporate bonds available as a benchmark. The respective
discount factors are estimated by extrapolating current market
rates along the yield curve.
The balance of defined benefit plans for pensions and other
post-employment benefit obligations and plan assets (net
pension obligation or net pension assets) accrues interest at
the discount rate used as a basis for the measurement of
the gross pension obligation. The resulting net interest expense
or income is recognized in profit and loss under interest
expense or interest income in the Consolidated Statement of
Income. The other expenses resulting from pension obliga-
tions and other post-employment benefit obligations (medical
care), which mainly result from entitlements acquired during
the year under review, are taken into consideration in the func-
tional costs in the Consolidated Statement of Income.
The measurement of defined benefit plans for pensions and
other post-employment benefit obligations (medical care)
in accordance with IAS 19 Employee Benefits is based on the
projected unit credit method. Plan assets invested to cover
defined benefit pension obligations and other post-employment
benefit obligations (medical care) are measured at fair value
and offset against the corresponding obligations. Differences
between the assumptions made and actual developments as
well as changes in actuarial assumptions for the measurement
of defined benefit plans and similar obligations result in
actuarial gains and losses, which have a direct impact on the
Consolidated Statement of Financial Position or on the
Consolidated Statement of Comprehensive Income/Loss.
Pensions and similar obligations
If derivative financial instruments do not or no longer qualify
for hedge accounting because the qualifying criteria for
hedge accounting are not or are no longer met, the derivative
financial instruments are classified as held for trading and
are measured at fair value through profit or loss.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
244
Hedge relationships are to be discontinued prospectively if
a particular hedge relationship ceases to meet the qualifying
criteria for hedge accounting under IFRS 9. Instances that
require discontinuation of hedge accounting are, among others,
loss of the economic relationship between the hedged item
and the hedging instrument, disposal or termination of the
hedging instrument, or a revision of the documented risk man-
agement objective of a particular hedge relationship. Accu-
mulated hedging gains and losses from cash flow hedges are
retained and are reclassified from equity as described at
maturity if the hedged future cash flows are still expected to
occur. Otherwise, accumulated hedging gains and losses
are immediately reclassified to profit or loss.
For derivative instruments designated in a hedge relationship,
certain components can be excluded from designation and the
changes in these components' fair value are then deferred in
other comprehensive income under IFRS 9. This may apply for
example to the time value of options, the forward element of
a forward contract or cross currency basis spreads.
Stage 2: expected credit losses over the lifetime - not credit
impaired
245
Collectability of receivables from financial services
The Group regularly estimates the risk of default on receivables
from financial services. Many factors are taken into consider-
ation in this context, including historical loss experience, the
size and composition of certain portfolios, current economic
events and conditions and the estimated fair values and ade-
quacy of collaterals. In addition to historical and current
information on losses, appropriate and reliable forward-looking
information on factors is also included. This information
includes macroeconomic factors (e.g. GDP growth, unemploy-
ment rate, cost-performance index) and forecasts of future
economic conditions. For receivables from financial services,
these forecasts are determined using a scenario analysis
(baseline scenario, optimistic and pessimistic scenario). Changes
to the estimation and assessment of these factors influence
the allowance for credit losses with a resulting impact on the
Group's net profit. See also Notes 14 and 33 for further
information.
Contract and refund liabilities
Contract liabilities occur at Daimler especially in the following
circumstances:
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
246
When objective evidence of impairment or impairment reversal is
present, estimates and assessments also have to be made to
determine the recoverable amount of an equity-method invest-
ment. The determination of the recoverable amount is based
on assumptions regarding future business developments for the
determination of the expected future cash flows of that finan-
cial investment. See Note 13 for the presentation of carry-
ing amounts and fair values of equity-method investments in
listed companies.
In the context of impairment tests for non-financial assets,
estimates have to be made to determine the recoverable
amounts of cash-generating units. Assumptions have to be
made in particular with regard to future cash inflows and
outflows for the planning period and the following periods.
The estimates include assumptions regarding future market
shares and the growth of the respective markets as well
as regarding the products' profitability. On the basis of the
impairment tests carried out in 2019, the recoverable
amounts are substantially larger than the net assets of the
Group's cash-generating units.
Recoverable amounts of cash-generating units and
equity-method investments
In the Consolidated Financial Statements, to a certain degree,
estimates and management judgments have to be made which
can affect the amounts and reporting of assets and liabilities,
the reporting of contingent assets and liabilities on the balance
sheet date, and the amounts of income and expense reported
for the period. The major items affected by such estimates and
management judgments are described as follows. Actual
amounts may differ from the estimates. Changes in the estimates
and management judgments can have a material impact on
the Consolidated Financial Statements.
2. Accounting estimates and management
judgments
Presentation in the Consolidated Statement of Cash Flows
Interest paid as well as interest and dividends received
are classified as cash provided by/used for operating activities.
The cash flows from short-term marketable debt securities
with high turnover rates and significant amounts are offset and
presented within cash provided by/used for investing activities.
Liability awards are measured at fair value at each balance sheet
date until settlement and are classified as provisions. The
profit or loss of the period equals the addition to and/or the
reversal of the provision during the reporting period and
the dividend equivalent paid during the period, and is included
in the functional costs.
Share-based payment comprises cash-settled liability awards.
Share-based payment
sales with the right of return and residual-value guarantees.
obligations from sales transactions (especially performance
bonuses, discounts and other price concessions) in the
scope of IFRS 15, and
Refund liabilities occur at Daimler especially in the following
circumstances:
Refund liabilities. A refund liability occurs if Daimler receives
consideration from a customer and expects to refund some or
all of that consideration to the customer. A refund liability
is measured at the amount of consideration received for which
Daimler does not expect to be entitled and is thus not included
in the transaction price.
advance payments received on contracts in the scope of
IFRS 15.
- deferred revenue for service and maintenance contracts
and for extended warranties, and
Contract liabilities. A contract liability is an entity's obligation
to transfer goods or services to a customer for which the entity
has received consideration (or the amount is due) from the
customer.
Stage 1 includes all contracts with no significant increase
in credit risk since initial recognition and usually includes new
acquisitions and contracts with fewer than 31 days past
due date. The portion of the lifetime expected credit losses
resulting from default events possible within the next 12
months is recognized.
Daimler assesses at each reporting date whether there is
an indication that an asset may be impaired or whether there is
an indication that a previously recognized impairment loss
may be reversed. If such indication exists, Daimler estimates the
recoverable amount of the asset. The recoverable amount is
determined for each individual asset unless the asset generates
cash inflows that are not largely independent of those from
other assets or groups of assets (cash-generating units). Good-
will and other intangible assets with indefinite useful lives are
tested at least annually for impairment; this takes place at the
level of the cash-generating units. If the carrying amount of
an asset or of a cash-generating unit exceeds the recoverable
amount, an impairment loss is recognized for the difference.
At each reporting date, a loss allowance is recognized for
financial assets, loan commitments and financial guarantees
other than those to be measured at fair value through
profit or loss reflecting expected losses for these instruments.
Expected credit losses are allocated using three stages:
In the case of accounting as an operating lease, these vehicles
are capitalized at (depreciated) cost of production under
leased equipment and are depreciated over the contract term
on a straight-line basis with consideration of the expected
residual values. Changes in the expected residual values lead
either to prospective adjustments of the scheduled deprecia-
tion or to an impairment loss if necessary. The vehicles are
allocated to the segment which bears substantially all of the
residual value risk.
3 to 30 years
5 to 25 years
10 to 50 years
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment
Stage 1: expected credit losses within the next twelve months
Useful lives of property, plant and equipment
As part of the established residual-value management process,
especially for operating lease contracts, certain assumptions
are regularly made at local and corporate levels regarding the
expected level of prices, based upon which the cars to be
returned in the leasing business are evaluated. If changing
market developments lead to a negative deviation from
assumptions, there is a risk of lower residual values of used
cars. Depending on the region and the current market situa-
tion, the measures taken generally include continuous market
monitoring as well as, if required, price-setting strategies or
sales-promotion measures designed to regulate vehicle inven-
tories. The quality of market forecasts is verified by regular
comparisons of internal and external sources, and, if required,
the determination of residual values is adjusted and further
developed with regard to methods, processes and systems.
F.08
Daimler as lessee
Leases include all contracts that transfer the right to use a
specified asset for a stated period of time in exchange for con-
sideration, even if the right to use such asset is not explicitly
described in the contract. The Group is a lessee mainly of real
estate properties and a lessor of its products.
Leasing
Property, plant and equipment are depreciated over the useful
lives as shown in table 7 F.08.
The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisition or
manufacturing costs include the estimated costs, if any,
of dismantling and removing the item and restoring the site.
Property, plant and equipment are measured at acquisition
or manufacturing costs less accumulated depreciation. If nec-
essary, accumulated impairment losses are recognized.
Property, plant and equipment
Until December 31, 2018 it was evaluated on the basis of the
risks and rewards of a leased asset according to IAS 17
whether the ownership of the leased asset is attributed to the
lessee (so-called finance lease) or to the lessor (so-called
operating lease).
Sales of vehicles including a put option (an entity's obliga-
tion to repurchase the asset at the customer's request) are
reported as operating leases if the customer has a signifi-
cant economic incentive to exercise that right. Otherwise a
sale with a right of return is reported. Daimler considers
several factors when assessing whether a customer has a
significant economic incentive to exercise his right at
contract inception. Amongst others these are the relation
between repurchase price and the expected future market
value (at the time of repurchase) of the asset or historical
return rates.
Sales of vehicles in the form of a forward (an entity's obli-
gation to repurchase the asset) and a call option (an entity's
right to repurchase the asset) are reported as operating
leases.
Operating leases, i.e. by which the economic ownership of the
vehicle remains at Daimler, relate to vehicles that the Group
produces itself and leases to third parties. Additionally an
operating lease may have to be reported with sales of vehicles
for which the Group enters into a repurchase obligation:
fixed payments including defacto fixed payments, less lease
incentives receivables from the lessor;
variable lease payments linked to an index or interest rate;
amounts expected to be payable under residual value
guarantees;
the exercise price of purchase options, when exercise is
estimated to be reasonably certain and
contractual penalties for the termination of a lease if
the lease term reflects the exercise of a termination option.
Lease payments are discounted at the rate implicit in the lease
if that rate can readily be determined. Otherwise, discounting
is at the incremental borrowing rate. The incremental borrow-
ing rate, which is mainly applied at Daimler, is based on risk-
adjusted interest rates and determined for the respective lease
terms and currencies. As the cash flow pattern of the refer-
ence interest rates (bullet bonds) does not correspond to the
cash flow pattern of a lease contract (annuity), we use a dura-
tion adjustment in order to account for that difference.
238
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Daimler generally also applies the option for contracts
comprising lease components as well as non-lease components
not to split these components.
Extension and termination options are part of a number
of leases particularly of real estate. Such contract terms offer
Daimler the greatest possible flexibility. In determining
the lease term, all facts and circumstances offering economic
incentives for exercising extension options or not exercising
termination options are taken into account. In determining the
lease term, those options are only considered if they are
reasonably certain.
Sale and leaseback
In a sale and leaseback transaction, the requirements of
IFRS 15 are applied, to ascertain whether the transfer of an
asset has to be accounted for as a sale.
If the transfer of an asset does not satisfy the requirements
of IFRS 15 to be accounted for as a sale of the asset, the trans-
ferred asset is still recognized and a financial liability is recog-
nized equal to the transfer proceeds in accordance with IFRS 9.
If the transfer of an asset is accounted for as a sale, the
lessee accounting principles described above apply to those
sold assets if Daimler leases them back from the buyer.
Daimler as lessor
In the case of an operating lease, the lease payments or
rental payments were expensed on a straight-line basis in the
Consolidated Statement of Income.
Based on the risk and rewards associated with a leased asset,
it is assessed whether economic ownership of the leased
asset is transferred to the lessee (so-called finance leases) or
remains with the lessor (so-called operating leases).
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree's identifiable assets, which are measured
at fair value.
With acquisitions, goodwill represents the excess of the
consideration transferred over the fair values assigned to the
identifiable assets proportionally acquired and liabilities
assumed. Goodwill is accounted for at the subsidiaries in the
functional currency of those subsidiaries.
Operating leases also relate to vehicles, primarily Group prod-
ucts that Daimler Mobility acquires from non-Group dealers
or other third parties and leases to end customers. These vehi-
cles are presented at (amortized) cost of acquisition under
leased equipment in the Daimler Mobility segment. If these
vehicles are Group products and are subsidized, the subsidies
are deducted from the cost of acquisition. After revenue is
received from the sale to independent dealers, these Group
products generate revenue from lease payments and sub-
sequent resale on the basis of the separate leasing contracts.
The revenue received from the sale of Group products to the
dealers is estimated by the Group as being of the magnitude of
the respective addition to leased equipment at Daimler Mobil-
ity. In 2019, additions to leased equipment from these vehicles
at Daimler Mobility amounted to approximately €14 billion
(2018: approximately €13 billion).
Other intangible assets with finite useful lives are generally
amortized on a straight-line basis over their useful lives (three
to ten years). The amortization period for intangible assets
with finite useful lives is reviewed at least at each year-end.
Changes in expected useful lives are treated as changes in
accounting estimates. The amortization expense on intangible
assets with finite useful lives is recorded in functional costs.
Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity. Financial instruments in the
form of financial assets and financial liabilities are generally
presented separately. Financial instruments are recognized
as soon as Daimler becomes a party to the contractual provi-
sions of the financial instrument. In the case of purchases or
sales of financial assets through the regular market, Daimler
uses the transaction date as the date of initial recognition
or derecognition.
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IFRS 9 Financial Instruments (financial assets
measured at amortized cost, financial assets measured at fair
value through other comprehensive income and financial
assets measured at fair value through profit or loss). Transac-
tion costs directly attributable to acquisition or issuance are
considered by determining the carrying amount if the financial
instruments are not measured at fair value through profit
or loss.
Financial assets
Financial assets primarily comprise receivables from financial
services, trade receivables, receivables from banks, cash
on hand, derivative financial assets, marketable securities and
similar investments and financial investments. The classifica-
tion of financial instruments is based on the business model in
which these instruments are held and on their contractual
cash flows.
The determination of the business model is made at the
portfolio level and is based on management's intention and
past transaction patterns. Assessments of the contractual
cash flows are made on an instrument by instrument basis.
Financial assets at fair value through profit or loss.
Financial assets at fair value through profit or loss include
financial assets with cash flows other than those of principal
and interest on the nominal amount outstanding. Furthermore,
financial assets that are held in a business model other than
"hold to collect" or "hold to collect and sell" are included here.
Inventories are measured at the lower of acquisition or manu-
facturing cost and net realizable value. The net realizable value
is the estimated selling price less estimated costs of comple-
tion and estimated costs to sell. The acquisition or manufactur-
ing costs of inventories are generally based on the specific
identification method and include costs incurred in acquiring
the inventories and bringing them to their existing location
and condition. Acquisition or manufacturing costs for large
numbers of inventories that are interchangeable are allocated
under the average cost formula. In the case of manufactured
inventories and work in progress, manufacturing cost also
includes production overheads based on normal capacity.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In addition, derivatives, including embedded derivatives sepa-
rated from the host contract, which are not classified as
hedging instruments in hedge accounting, as well as financial
assets acquired for the purpose of selling in the short term
that are classified as held for trading, are included here. Gains
or losses on these financial assets are recognized in profit or
loss.
Financial assets at amortized cost. Financial assets at amor-
tized cost are non-derivative financial assets with contractual
cash flows that consist solely of payments of principal and
interest on the nominal amount outstanding and which are
held with the aim of collecting the contractual cash flows, such
as receivables from financial services, trade receivables or
cash and cash equivalents (business model "hold to collect").
Cash and cash equivalents consist primarily of cash on hand,
checks and demand deposits at banks, as well as debt instru-
ments and certificates of deposits with a remaining term
when acquired of up to three months, which are not subject to
any material value fluctuations. Cash and cash equivalents
correspond with the classification in the Consolidated State-
ment of Cash Flows.
After initial recognition, financial assets at amortized cost are
subsequently carried at amortized cost using the effective
interest method less any loss allowances. Gains and losses are
recognized in the Consolidated Statement of Income when
the financial assets at amortized cost are impaired or derecog-
nized. Interest effects on the application of the effective
interest method are also recognized in profit or loss as well as
effects from foreign currency translation.
Financial assets at fair value through other comprehensive
income. Financial assets at fair value through other comprehen-
sive income are non-derivative financial assets with contrac-
tual cash flows that consist solely of payments of principal and
interest on the nominal amount outstanding which are held
to collect the contractual cash flows as well as to sell the finan-
cial assets, e.g. to achieve a defined liquidity target (business
model "hold to collect and sell"). This category also includes
equity instruments not held for trading for which the option to
present changes in the fair value of the instrument within
other comprehensive income has been applied.
After initial measurement, financial assets at fair value through
other comprehensive income are measured at fair value,
with unrealized gains or losses being recognized in other com-
prehensive income/loss. Upon disposal of financial assets,
the accumulated gains and losses recognized in other compre-
hensive income/loss resulting from measurement at fair value
are recognized in profit or loss. Interest earned on financial
assets at fair value through other comprehensive income is
generally reported as interest income using the effective inter-
est method. Changes in the fair value of equity instruments
measured at fair value through other comprehensive income
are not recycled to profit or loss. Dividends are recognized in
profit or loss when the right of payment has been established.
Impairment of financial assets
241
Since January 1, 2019 the Group as a lessee has recognized
right-of-use assets and the lease liabilities for the payment
obligations entered into for generally all leases in the state-
ment of financial position at present value. The lease liabilities
include the following lease payments:
Inventories
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that
previously recognized impairment losses may no longer exist
or may be reversed. If this is the case, Daimler records a
partial or entire reversal of the impairment; the carrying amount
is thereby increased to the recoverable amount. However,
the increased carrying amount may not exceed the carrying
amount that would have been determined (net of deprecia-
tion) had no impairment loss been recognized in prior years.
237
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
239
In the case of finance leases, the Group presents the receiv-
ables under receivables from financial services in an amount
corresponding to the net investment of the lease agreements.
The net investment of a lease agreement is the gross invest-
ment (future lease payments and non-guaranteed residual value)
discounted at the rate upon which the lease agreement is
based.
Equity-method investments
Non-current assets held for sale and disposal groups
The Group classifies non-current assets or disposal groups as
held for sale if the carrying amount will be recovered princi-
pally through a sale transaction rather than through continuing
use. In this case, the assets or disposal groups are no longer
depreciated but measured at the lower of carrying amount and
fair value less costs to sell. Immediately before the classifica-
tion, the carrying amount is determined in accordance with the
applicable requirements. If fair value less costs to sell subse-
quently increases, any impairment loss previously recognized
is reversed. This reversal is restricted to the impairment loss
previously recognized for the assets or disposal group con-
cerned. The Group generally discloses these assets or disposal
groups separately in the Consolidated Statement of Financial
Position.
Daimler reviews on each reporting date whether there is any
objective indication of impairments or impairment reversals of
equity-method investments. If such indications exist, the
Group determines the impairment loss or reversal to be recog-
nized. If the carrying amount exceeds the recoverable amount
of an investment, the carrying amount is written down to the
recoverable amount. The recoverable amount is the greater of
fair value less costs to sell and value in use. An impairment
reversal is carried out if there is objective evidence for an impair-
ment reversal. If such an assessment is made, the recoverable
amount is remeasured. An impairment reversal is recognized
to the extent that the recoverable amount has increased sub-
sequent to the impairment and is limited to the amount by
which an asset has been impaired.
On the date of acquisition, a positive difference between cost
of acquisition and Daimler's share of the fair values of the
identifiable assets and liabilities of the associated company or
joint venture is determined and recognized as investor level
goodwill. The goodwill is included in the carrying amount of the
equity-method investment. If an equity interest in an existing
associated company is increased without change in significant
influence, goodwill is determined only for the additionally
acquired interest; the previous investment is not remeasured
at fair value.
Gains or losses (to be eliminated) from transactions with com-
panies accounted for using the equity method are recognized
through profit and loss with corresponding adjustments of the
investments' carrying amounts. Deconsolidation effects from
the contribution of interests in subsidiaries to investments
which are measured using the equity method are also subject
to elimination adjustments to the carrying amount of the
investment.
Impairment of non-current non-financial assets
The recoverable amount is the higher of fair value less costs of
disposal and value in use. For cash-generating units, Daimler
in a first step determines the respective recoverable amount as
value in use and compares it with the respective carrying
amount (including goodwill). The cash-generating units are
generally defined as the reporting segments.
Value in use is measured by discounting expected future cash
flows from the continuing use of the cash-generating units
using a risk-adjusted interest rate. Future cash flows are deter-
mined on the basis of the long-term planning, which is
approved by management and which is valid at the date when
the impairment test is conducted. This planning is based
on expectations regarding future market shares, the general
development of respective markets as well as the products'
profitability. The multi-year planning comprises a planning hori-
zon until 2026 and therefore mainly covers the product life
cycles of the automotive business. The rounded risk-adjusted
interest rates used to discount cash flows, which are calcu-
lated for each cash-generating unit, are unchanged from the
previous year at 8% after taxes for the cash-generating units of
the automotive business. For the cash-generating unit Daimler
Mobility, a risk-adjusted interest rate of 9% after taxes is
applied (unchanged from the previous year). Whereas the dis-
count rate for the cash-generating unit Daimler Mobility
represents the cost of equity, the risk-adjusted interest rate for
the cash-generating units of the automotive business is based
on the weighted average cost of capital (WACC). These are cal-
culated based on the capital asset pricing model (CAPM)
taking into account current market expectations. In calculating
the risk-adjusted interest rate for impairment test purposes,
specific peer group information is used for beta factors, capital-
structure data and cost of debt. Periods not covered by the
forecast are taken into account by recognizing a residual value
(terminal value), which does not consider any growth rates.
In addition, several sensitivity analyses are conducted. These
show that even in the case of more unfavorable premises for
main influencing factors with respect to the original planning,
no need for impairment exists. If value in use is lower than
the carrying amount, fair value less costs of disposal is addi-
tionally calculated to determine the recoverable amount.
240
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Assets carried as finance leases were measured at the begin-
ning of the (lease) contract at the lower of the present value of
the minimum lease payments and the fair value of the leased
object, and in the following periods less accumulated deprecia-
tion and other accumulated impairment losses. Depreciation
was on a straight-line basis; residual values of the assets were
given due consideration. Payment obligations resulting from
future lease payments were discounted and disclosed under
financing liabilities.
2,837
2,330
11
1,097
In 2019, a reassessment of risks relating to ongoing govern-
mental and legal proceedings and measures taken with regard
to Mercedes-Benz diesel vehicles in various regions and
markets as well as expenses in connection with an updated risk
assessment for an expanded recall of vehicles with Takata
airbags adversely affected cost of sales at the Mercedes-Benz
Cars and Mercedes-Benz Vans segments. Cost of sales also
includes expenses in connection with a review and prioritization
of the product portfolio at the Mercedes-Benz Vans segment.
The expenses from the review and prioritization of the product
portfolio are related to the planned discontinuation of pro-
duction of the X-Class at the end of May 2020.
5. Functional costs
In millions of euros
898
Other operating expense
F.14
Other miscellaneous expense primarily comprises changes in
provisions for other risks. Compared with the prior year, it
includes higher expenses in connection with ongoing govern-
mental and legal proceedings and measures taken in the
segments Mercedes-Benz Cars and Mercedes-Benz Vans relat-
ing to Mercedes-Benz diesel vehicles in various regions
and markets.
The composition of other operating expense is shown in table
7 F.14.
Government grants and subsidies mainly comprise reimburse-
ments relating to current early retirement part-time contracts
and subsidies for alternative drive systems. In the year 2018,
other miscellaneous income included insurance compensation
of €219 million.
Income from corporate transactions at consolidated companies
primarily comprises income of €718 million resulting from
the merger of the business units for mobility services of Daimler
Group and BMW Group in the year 2019. See Note 3 for
further information.
Income from costs recharged to third parties includes income
from licenses and patents, shipping costs and other costs
charged to third parties, with related expenses primarily within
the functional costs.
The composition of other operating income is shown in table
7 F.13.
2019
6. Other operating income and expense
Information on the total remuneration in 2019 of the members
of the Board of Management and the Supervisory Board who
were active in 2019 is provided in Note 38.
Personnel expenses and average number of employees
Personnel expenses included in the Consolidated Statement of
Income amounted to €22,657 million in 2019 (2018:
€22,432 million). The personnel expenses comprise wages and
salaries in the amount of €18,336 million (2018: €18,329 million),
social contributions in the amount of €3,536 million (2018:
€3,332 million) and expenses from pension obligations in the
amount of €785 million (2018: €771 million). The average
numbers of people employed are shown in table 7 F.12.
Research and non-capitalized development costs
Research and non-capitalized development costs were
€6,586 million in 2019 (2018: €6,581 million) and primarily
comprise personnel expenses and material costs.
General administrative expenses amounted to €4,050 million
in 2019 (2018: €4,036 million). They consist of expenses which
are not attributable to production, sales or research and
development functions, and comprise personnel expenses,
depreciation and amortization of fixed and intangible assets,
and other administrative costs.
General administrative expenses
In 2019, selling expenses amounted to €12,801 million (2018:
€13,067 million). Selling expenses consist of direct selling
costs as well as selling overhead expenses and comprise per-
sonnel expenses, material costs and other selling costs.
Selling expenses
Amortization expense of capitalized development costs in
the amount of €1,793 million (2018: €1,538 million) is presented
in expense of goods sold.
Items included in cost of sales are shown in table F.11.
Cost of sales
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other miscellaneous income
3,661
at consolidated companies
Mercedes-
Daimler
Mercedes-
Daimler
Benz Cars
Trucks
Benz Vans
Daimler
Buses Mobility
Total
segments
Recon-
ciliation
Daimler
Group
In millions of euros
2018
Europe
36,902
172,745
-9,547
182,292
17,572
11,145 161,118
2018
-5,945
155,173
Other revenue
1,717
646
10,775
Total revenue
40,235
956
14,801
354
4,733
17,501
28,646
21,174
-3,602
93,877
729
8,937
4,269
38,644
2018
75
140
Income from costs recharged to
third parties
Government grants and subsidies
840
122
821
102
Gains on sales of property,
plant and equipment
Rental income
not relating to sales financing
173
159
Income from company transactions
-19
38,663
230
227
63,734
-3,810
59,924
NAFTA
18,488
16,622
1,666
2,851
255
42,397
-903
41,494
Asia
30,859
6,503
844
5,366
Losses on sales of property,
plant and equipment
Deferred taxes
-106
134
Non-German companies
1,127
German companies
4,379
-1,116
-1,127
-2,331
Non-German companies
-51
German companies
Current taxes
2018
2019
In millions of euros
Components of income taxes
F.18
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
252
251
10,595
3,830
7,663
7,943
-1,121
125
-895
-3,013
F.19
Components of deferred tax expense
-3,160
326
347
Foreign tax rate differential
-1,142
Expected income tax expense
2018
2019
In millions of euros
to actual income tax expense
Reconciliation of expected income tax expense
F.20
Non-German companies
-260
and tax credits
due to tax loss carryforwards
-510
-56
due to temporary differences
-770
1,261
Deferred taxes
2018
2019
In millions of euros
1,317
-180
2,932
German companies
In millions of euros
2018
2019
Interest income and interest expense
F.16
210
-262
241
-24
Miscellaneous other financial income/
expense, net
-31
-238
Income and expense from
compounding and effects from
changes in discount rates of
provisions for other risks
In millions of euros
2018
2019
Other financial income/expense, net
F.15
-1,462
-4,469
-1,356
-4,289
Other miscellaneous expense
7. Other financial income/expense, net
Table 71 F.15 shows the components of other financial income/
expense, net.
In 2019, the measurement at fair value of the minority interest
in Aston Martin Lagonda Global Holdings plc resulted in an
expense of €72 million (2018: income of €111 million). After the
initial public offering, which took place at the beginning of
October 2018, the interest was measured at the current stock-
market price of the shares. The expense/income are included
in miscellaneous other financial income/expense, net and have
been assigned to the segment results of Mercedes-Benz Cars.
8. Interest income and interest expense
In millions of euros
2018
2019
Profit before income taxes
F.17
-793
-880
-660
-683
-133
-197
-4,113
Net interest expense on the net obligation
from defined benefit pension plans
Interest and similar expense
271
397
268
393
3
4
Net interest income on the net assets of
defined benefit pension plans
Interest and similar income
Interest income
Profit before income taxes is comprised as shown in table
7 F.17.
9. Income taxes
Table 71 F.16 shows the components of interest income and
interest expense.
Interest expense
13,845
306
92,160
F.13
2 Adjustment of the number of employees in 2018 due to the
changed intercompany allocation of employees.
1 Proportionally including 2,126 (2018: 1,856) employees from
a proportionately consolidated company.
298,465
301,839
153,413
80,720
21,925
17,477
13,739
11,191
11,279
Other²
12,811
Daimler Mobility
17,808
Daimler Buses²
21,796
Mercedes-Benz Vans²
84,392
Daimler Trucks²
153,753
Mercedes-Benz Cars 1, 2
2018
2019
Average number of employees
F.12
-382
-5,091
-134,295
Other operating income
-495
-7,744
-143,580
In millions of euros
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
90
55
36
39
Germany
International
126
94
310
70
65
376
375
Consolidated subsidiaries
Germany
International
Unconsolidated subsidiaries
2018
At December 31,
2019
Composition of the Group
F.09
The calculation of income taxes of Daimler AG and its subsid-
iaries is based on the legislation and regulations applicable in
the various countries. Due to their complexity, the tax items
presented in the Consolidated Financial Statements are possi-
bly subject to different interpretation by taxpayers on the one
hand and local tax authorities on the other hand. Different
interpretations can occur especially in connection with the rec-
ognition and measurement of balance sheet items as well as
in connection with the tax assessment of expenses and income.
For the calculation of deferred tax assets, assumptions have
to be made regarding future taxable income and the time of
realization of the deferred tax assets. In this context, Daimler
takes into consideration, among other things, the projected
earnings from business operations, the effects on earnings of
the reversal of taxable temporary differences, and realizable
tax strategies. As future business developments are uncertain
and are sometimes beyond Daimler's control, the assumptions
to be made in connection with accounting for deferred tax
assets are connected with a substantial degree of uncertainty.
On each balance sheet date, Daimler carries out impairment
tests on deferred tax assets on the basis of the planned taxable
income in future financial years; if Daimler assesses that
the probability of future tax advantages being partially or fully
unrealized is more than 50%, the deferred tax assets are
impaired. Further information is provided in Note 9.
Income taxes
The calculation of provisions for pensions and similar obliga-
tions and the related pension cost are based on various
actuarial valuations. The calculations are subject to various
assumptions on matters such as current actuarially devel-
oped probabilities (e.g. discount factors and cost-of-living
increases), future fluctuations with regard to age and period of
service, and experience with the probability of occurrence
of pension payments, annuities or lump sums. As a result of
changed market or economic conditions, the probabilities
on which the influencing factors are based, may differ from
current developments. The financial effects of deviations
of the main factors are calculated with the use of sensitivity
analyses. See Note 22 for further information.
Pensions and similar obligations
247
2019
Other cost of sales
receivables from financial services
Impairment losses on
419
4,529
1,049
13,626
712
38,273
93,103
Total revenue
2,904
Other revenue
149,596
-4,919
154,515
10,068
4,110
12,577
37,561
90,199
Revenue according to IFRS 15
9,534
-187
9,721
203
777
1,130
Trade tax rate differential
16,201
26,269
21,285
175,800
-3,519
-8,438
17,766
-8,567
-2,747
-3,114
Refinancing costs at Daimler Mobility
-9,047
on operating leases
Depreciation of equipment
-117,508
-123,180
Expense of goods sold
2018
2019
Joint operations accounted for
using proportionate consolidation
In millions of euros
F.11
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
250
Revenue by segment 7 F.91 and region 7 F.93 is presented in
tables in Note 34.
Revenue that is expected to be recognized within three years
related to performance obligations that are unsatisfied (or
partially unsatisfied) amounted to €8,701 million at December 31,
2019 (2018: €7,642 million). This revenue is mainly derived
from long-term service and maintenance contracts and extended
warranties. It does not include performance obligations from
customer contracts that have initial expected durations of one
year or less. Long-term performance obligations of minor
importance to the overall contract value of a bundled contract
are not considered in assessing the initial duration of the
bundled contract.
Revenue according to IFRS 15 includes revenue that was included
in contract liabilities at December 31, 2018 in an amount of
€3,775 million (2018: €3,583 million) and revenue from per-
formance obligations fully (or partially) satisfied in previous
periods in an amount of €309 million (2018: €434 million).
Other revenue primarily comprises revenue from the rental
and leasing business of €12,747 million (2018: €12,085 million),
interest from the financial services business at Daimler Mobility
in an amount of €5,811 million (2018: €5,188 million) and effects
from currency hedging. The interest from financial services
business includes finance income on the net investment in
leases of €1,519 million (2018: €1,242 million).
Revenue from contracts with customers (revenue according to
IFRS 15) is disaggregated by the two categories - type of
products and services and geographical region - and presented
in table 71 F.10. The category type of products and services
corresponds to the reportable segments.
Revenue disclosed in the Consolidated Statement of Income
includes revenue from contracts with customers and other
revenue not in the scope of IFRS 15.
4. Revenue
167,362
Cost of sales
1
Germany
International
Joint operations accounted for
using the equity method
61,078
-4,681
65,759
4,606
2,966
9,818
10,129
38,240
Europe
2019
In millions of euros
Group
Daimler
Recon-
ciliation
Total
segments
Daimler
Mobility
Buses
Daimler
Mercedes-
Benz Vans
Daimler
Trucks
Mercedes-
Benz Cars
249
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NAFTA
19,037
18,982
2,074
Revenue according to IFRS 15
9,675
-190
9,865
150
849
1,132
3,869
3,865
Other markets
38,893
Revenue
-36
145
336
821
6,609
31,018
Asia
45,527
-1,038
46,565
6,244
228
38,929
39,589
F.10
Following approval by the antitrust authorities, the transactions
were completed on January 31, 2019. As a result, 21 consoli-
dated and 24 unconsolidated subsidiaries left the consolidated
group and five operating joint ventures were established. In
the Daimler Mobility segment, those transactions had a positive
impact on other operating income of €718 million. This
resulted in a net cash outflow of €713 million primarily from
capital increases in the joint ventures.
16
16
12
13
4
3
16
16
2
1
1
-
3
1
1
1
Joint operations,
joint ventures,
associated companies
and material other
Associated companies accounted for
using the equity method
Germany
International
International
Germany
Joint ventures accounted for
using the equity method
International
Germany
4
4
12
12
In March 2018, the Daimler Group and the BMW Group signed
an agreement to merge their business units for mobility
services. At December 31, 2018, the assets and liabilities held
for sale were presented separately in the Consolidated
Statement of Financial Position. The disposal group's assets
then amounted to €531 million and its liabilities amounted
to €212 million.
Equity-method investments/assets and
liabilities held for sale
At the reporting date, the Group has business relationships
with 24 (2018: 18) controlled structured entities, of which
24 (2018: 18) are fully consolidated. In addition, the Group has
relationships with 8 (2018: 7) non-controlled structured entities.
The unconsolidated structured entities are not material for
the Group's profitability, liquidity and capital resources and
financial position.
The structured entities of the Group are rental companies,
asset-backed-securities (ABS) companies and special funds.
The purpose of the rental companies primarily is the acquisi-
tion, renting and management of assets. The ABS companies
are primarily used for the Group's refinancing. The assets
transferred to structured entities usually result from the Group's
leasing and sales financing business. Those entities refinance
the purchase price by issuing securities. The special funds are
set up in particular in order to diversify the capital investment
strategy.
Structured entities
As of January 1, 2020, changes have been made in connection
with the internal management and reporting structure and
thus with the reportable segments. As of that date, the Group's
activities are divided into the segments Mercedes-Benz
Cars, Mercedes-Benz Vans, Daimler Trucks & Buses and Daimler
Mobility. For external reporting purposes, the Mercedes-Benz
Cars and Mercedes-Benz Vans segments are combined into
the reportable segment Mercedes-Benz Cars & Vans in accor-
dance with the nature of the products and services offered, as
well as the brands, distribution channels and customer profiles.
New group structure with Daimler AG as parent company
On May 22, 2019, the Annual Shareholders' Meeting of
Daimler AG resolved to hive down the Mercedes-Benz Cars
and Mercedes-Benz Vans divisions and the Daimler Trucks
and Daimler Buses divisions into legally independent entities.
Upon the hive-downs taking effect, the assets to be hived
down as defined in the hive-down agreement and other assets
and liabilities were transferred to Mercedes-Benz AG and
Daimler Truck AG on the basis of the provisions of the hive-down
agreement. These hive-downs did not affect the consolidated
Group. Outside Germany, business activities were hived down
or transferred to newly founded and in the year 2019 for
the first time consolidated companies in the context of "Project
Future."
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
248
A detailed list of the companies included in the Consolidated
Financial Statements and of the equity investments of Daimler
Group pursuant to Section 313 of the German Commercial
Code (HGB) is provided in the statement of investments. Further
information is provided in Note 41.
The aggregate totals in the statement of financial position of
the subsidiaries, associated companies, joint ventures and
joint operations accounted for at amortized cost whose business
is non-active or of low volume and which are not material for
the Group and the fair presentation of its profitability, liquidity
and capital resources, and financial position would amount
to approximately 1% of the Group's total assets; the aggregate
revenues and the aggregate net profit would amount to approx-
imately 1% of the Group's revenue and net profit.
The joint ventures resulting from the transaction are aggregated
under YOUR NOW and are accounted for using the equity
method in the Consolidated Financial Statements. Further infor-
mation is provided in Note 13.
Table 7F.09 shows the composition of the Group.
3. Consolidated Group
570
537
19
21
13
13
32
34
for at (amortized) cost
Germany
International
investments accounted
Composition of the Group
41
-1,044
Tax law changes
2,397
1
1
66
32
Other operating expense
development costs
Research and non-capitalized
57
56
General administrative expenses
85
2,029
50
1,820
2,258
Cost of sales
2018
2019
In millions of euros
Amortization expense for intangible assets in the
Consolidated Statement of Income
F.26
2 Including capitalized borrowing costs on development costs of €31 million (2018: €41 million).
Amortization amounted to €16 million (2018: €15 million).
1 Primarily changes from currency translation.
15,978
2,236
Selling expenses
12,525
256
11. Property, plant and equipment
Reclassifications
Other additions
74,819
4,470
27,398
25,964
16,987
Total
in progress
and construction
equipment,
factory and
office equipment
Technical
equipment and
machinery
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
relating to plant
and equipment
Other
Additions due to business acquisitions
Balance at January 1, 2018
Acquisition or manufacturing costs
In millions of euros
Land, leasehold
improvements and
buildings including
buildings on land
owned by others
Property, plant and equipment
(excluding right-of-use assets)
F.27
At December 31, 2018 property, plant and equipment also
included leased buildings, technical equipment and other
equipment with a total carrying amount of €335 million, which
were assigned to the Group as economic owner due to the
design of the underlying leasing contracts (so called finance
leases). Additions to and depreciation of the leased equipment
in the year 2018 amounted to €17 million and €33 million
respectively.
In 2019, government grants of €52 million (2018: €51 million)
were deducted from property, plant and equipment.
Property, plant and equipment, excluding right-of-use assets,
developed as shown in table 71 F.27.
Property, plant and equipment as shown on the Consolidated
Statement of Financial Position with a carrying amount of
€37,143 million also includes right-of-use assets from lessee
accounting.
Advance payments
1,217
Carrying amount at December 31, 2019
14,801
3
Other changes¹
-650
-373
-277
Disposals
Reclassifications
2,029
476
1,553
8,462
2,279
6
5,912
Additions
26,412
4,765
20,154
1,493
71
45
6
20
-2,176
-790
-1,386
271
40
49
Balance at December 31, 2018
2,462
11,257
1,082
Carrying amount at December 31, 2018
10,434
2,529
7,629
276
-1,891
38
31
5
2
Balance at December 31, 2019
Other changes¹
-512
-1,379
-
Disposals
Reclassifications
2,397
588
1,809
Additions
9,890
2,422
7,194
274
309
888
1,932
4,341
4,692
49,928
23,338
2,540
1,750
402
Additions
17,675
8,915
Balance at December 31, 2018
72
129
-18
Reclassifications
-39
37
-540
-558
-175
Disposals
11
-12
1
Reclassifications
4,291
46,838
2,273
Other changes¹
-
-3
3
1 Primarily changes from currency translation.
32,909
5,073
7,864
10,113
9,859
Carrying amount at December 31, 2019
30,948
5,667
7,039
9,501
8,741
Carrying amount at December 31, 2018
52,859
-45
-1,716
72
25,208
18,570
9,081
Balance at December 31, 2019
50
-167
Other changes¹
-745
-902
-69
Disposals
1,633
3,643
385
21,465
1,096
626
Other additions
Additions due to business acquisitions
322
80,876
5,667
30,377
27,176
17,656
Balance at December 31, 2018
96
172
1,992
-30
Other changes¹
-1,735
-104
-661
-634
-336
Disposals
-3,136
1,536
988
612
7,470
84
3,517
7,231
Reclassifications
16,630
8,743
Balance at January 1, 2018
Depreciation/impairment
85,768
5,073
33,072
28,683
18,940
Balance at December 31, 2019
-153
58
105
61
-377
Other changes¹
-2,204
-170
-881
-1,029
-124
Disposals
18
-3,999
1,479
1,379
1,159
Additions
560
-1,273
183
-1,299
-2,075
15,187
18,902
2
20
1,084
809
2,092
3,564
1,692
1,851
thereof on temporary differences
592
Provisions for pensions and
similar obligations
Other provisions
Liabilities
1,538
3,110
Tax loss carryforwards and
unused tax credits
4,837
5,231
Miscellaneous assets, mainly other
financial assets
Receivables from financial services
341
356
1,017
999
673
-743
-213
thereof on tax loss carryforwards and
Valuation allowances
-321
-361
Miscellaneous assets
-793
-939
Receivables from financial services
-78
-58
-5,092
-5,220
Equipment on operating leases
Inventories
-1,757
-2,879
Property, plant and equipment
-115
-129
Other intangible assets
-3,352
-3,718
Development costs
13,888
16,827
Deferred tax assets, gross
-1,086
-1,332
tax credits
1,808
Provisions for pensions and
similar obligations
Other provisions
1,990
239
-3,762
-3,935
Deferred tax liabilities
4,021
5,803
Deferred tax assets
2018
At December 31,
2019
In millions of euros
Deferred tax assets and liabilities
F.21
-3,013
Deferred tax assets, net
-1,121
14
-140
21
-137
Other
non-deductible expenses
Tax-free income and
-101
-209
deferred tax assets
Change of valuation allowance on
11
-42
3,083
Actual income tax expense
1,868
259
Profit before income taxes in Germany includes profit/loss
on equity-method investments if the equity interests in those
companies are held by German companies.
30
60
2018
At December 31,
2019
Miscellaneous liabilities
Deferred income
Property, plant and equipment
Equipment on operating leases
Inventories
Intangible assets
In millions of euros
Split of deferred tax assets and liabilities before offset
F.22
The Group had tax losses at the German tax group in 2019 and
at several subsidiaries in several countries in 2019 and prior
years. After offsetting the deferred tax assets with deferred tax
liabilities, the deferred tax assets not subject to valuation
allowances amounted to €2,169 million for those entities.
Daimler believes it is more likely than not that future taxable
income will be sufficient to allow utilization of these deferred
tax assets. Daimler's current estimate of the amount of
deferred tax assets that is considered realizable may change in
the future, necessitating higher or lower valuation allowances.
At December 31, 2019, the valuation allowance on deferred tax
assets relates, among other things, to corporate income
tax loss carryforwards (€926 million). €3 million of the deferred
tax assets for corporate income tax loss carryforwards
adjusted by a valuation allowance relates to tax loss carryfor-
wards which expire in 2020, €177 million relates to tax loss
carryforwards which expire at various dates from 2021 through
2024, €47 million relates to tax loss carryforwards which
expire at various dates from 2025 through 2029, €8 million
relates to tax loss carryforwards which expire later than 2035 and
€691 million relates to tax loss carryforwards which can be
carried forward indefinitely. Valuation allowances of €64 million
relate to tax loss carryforwards with regard to capital losses
which can be carried forward indefinitely. With regard to trade
tax loss carryforwards in Germany, valuation allowances of
€190 million relate to loss carryforwards which can be carried
forward indefinitely. Furthermore, a large proportion of the
valuation allowances relates to temporary differences as well
as loss carryforwards for state and local taxes at the US-
companies. Daimler believes that it is more likely than not that
it will not be able to utilize those deferred tax assets or cannot
reliably document that sufficient future taxable income will
be available against which the deductible temporary differences,
tax loss carryforwards and tax credits can be offset. As the
probability of more than 50% required by IAS 12 is therefore not
fulfilled, valuation allowances were recognized on deferred
tax assets also in countries with tax loss carryforwards that can
be carried forward indefinitely.
In the Consolidated Statement of Financial Position, the valuation
allowances on deferred tax assets increased by €776 million
compared to December 31, 2018. This is partially a result of
the additional valuation allowances of €209 million recognized
in net profit. Furthermore, valuation allowances of €530 million
were recognized without an impact on net profit for deferred
tax assets recognized in other comprehensive income/loss in
2019 and prior years. Additionally, the valuation allowance
changed without an impact on net profit, among other things due
to currency translation, tax rate changes in a few countries
and adjustments of prior year tax loss carryforwards.
Including the items recognized in other comprehensive income/
loss (including items from equity-method investments),
the expense for income taxes is comprised as shown in table
71 F.24.
The development of deferred tax assets, net, is shown in table
71 F.23.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 253
In respect of each type of temporary difference and in
respect of each type of unutilized tax loss carryforwards and
unutilized tax credits, the deferred tax assets and liabilities
before offset are summarized in table F.22.
Deferred tax assets and deferred tax liabilities are offset if
the deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority and if there is the right to
set off current tax assets against current tax liabilities. In the
presentation of deferred tax assets and liabilities in the Consol-
idated Statement of Financial Position, no difference is made
between current and non-current. In the Consolidated State-
ment of Financial Position, deferred tax assets and liabilities
are presented as shown in table 71 F.21.
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, for instance tax-free gains
included in net periodic pension costs at the German com-
panies and tax-free results of the equity-method investments.
The Group impaired deferred tax assets in 2019 and 2018.
The resulting tax expenses are included in the line item change
of valuation allowance on deferred tax assets.
Table 71 F.20 shows a reconciliation of expected income
tax expense to actual income tax expense determined using
the unchanged applicable German combined statutory tax
rate of 29.825%.
a solidarity tax surcharge of 5.5% on each year's federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the
tax rate applied for the calculation of German deferred taxes in
both years amounted to 29.825%. For non-German companies,
the deferred taxes at period-end were calculated using the tax
rates of the respective countries.
For German companies, in 2019 and 2018, deferred taxes were
calculated using a federal corporate income tax rate of 15%,
The deferred tax expense/benefit is comprised of the
components shown in table 7 F.19.
The current tax expense includes tax benefits recognized for
prior periods at German and foreign companies of €244 million
(2018: €529 million).
Table 7 F.18 shows the components of income taxes.
154
Miscellaneous liabilities
Deferred tax liabilities, gross
Deferred tax assets, net
3,950
-1,572
Reclassifications
Other additions
Additions due to business combinations
Balance at December 31, 2018
Other changes¹
Disposals
Reclassifications
Other additions
Additions due to business combinations
Balance at January 1, 2018
Acquisition/manufacturing costs
In millions of euros
Disposals
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 255
F.25
Table 71 F.26 shows the line items of the Consolidated
Statement of Income in which total amortization expense for
intangible assets is included.
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet
been completed (carrying amount at December 31, 2019:
€5,634 million; 2018: €4,029 million). In addition, other intan-
gible assets with a carrying amount of €273 million (2018:
€270 million) are not amortizable. These non-amortizable intan-
gible assets are distribution rights in the vehicle segments
with indefinite useful lives as well as trademarks in the Daimler
Trucks segment with indefinite useful lives. The Group plans
to continue to use these assets unchanged.
At December 31, 2019, goodwill of €541 million (2018:
€418 million) relates to the Daimler Trucks segment, goodwill
of €433 million (2018: €433 million) relates to the Daimler
Mobility segment and goodwill of €177 million (2018: €168 mil-
lion) relates to the Mercedes-Benz Cars segment.
Intangible assets developed as shown in table 71 F.25.
10. Intangible assets
728
-2,285
421
-700
-3,013
-1,121
2018
2019
Intangible assets
Other changes¹
Balance at December 31, 2019
Depreciation/impairment
66
Other markets
24,691
4,884
18,451
1,356
117
32
57
6
-31
-714
-432
3,176
640
2,535
1
22,197
4,619
16,192
1,386
Total
assets
(acquired)
Other
intangible
Development
costs (internally
generated)²
(acquired)
Goodwill
Balance at January 1, 2018
in other reserves
expense/benefit recorded
-282
Statement of Income
-770
1,261
Consolidated Statement of Income
Deferred tax expense/benefit in the
497
259
as of January 1
Deferred tax assets, net
As a result of future adjudications or changes in the opinions of
the fiscal authorities, it cannot be ruled out that Daimler might
receive tax refunds for previous years.
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of
jurisdictions. Daimler believes that it has recognized adequate
liabilities for any future income taxes that may be owed for
all open tax years. Nevertheless, it cannot be ruled out that tax
payments might exceed the liabilities recognized in the finan-
cial statements.
As of today, the retained earnings of non-German subsidiaries
are largely intended to be reinvested in those operations.
The Group did not recognize deferred tax liabilities on retained
earnings of non-German subsidiaries of €29,988 million (2018:
€28,514 million) which are intended to be reinvested. If those
earnings were paid out as dividends, an amount of 5% would be
taxed under German taxation rules and, if applicable, with
non-German withholding tax. Additionally, income tax conse-
quences might arise if the dividends first have to be distributed
by a non-German subsidiary to a non-German holding com-
pany. Normally, the distribution would lead to an additional
income tax expense. It is not practicable to estimate the
amount of taxable temporary differences for these undistrib-
uted foreign earnings.
2018
Change of deferred tax
2019
Change of deferred tax assets, net
F.23
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
254
1,868
-13,629
-14,959
-316
-389
-222
Income tax
-233
In millions of euros
assets/liabilities on equity instruments/
259
comprehensive income/loss
In millions of euros
Tax expense in equity
debt instruments included in other
Income tax expense in the Consolidated
F.24
1 The other changes primarily relate to effects from currency
translation.
1,868
as of December 31
Deferred tax assets, net
-197
-73
Other changes¹
171
259
in other comprehensive income/loss
232
assets/liabilities on derivative
21
financial instruments included
186
537
in other comprehensive income/loss
Change of deferred tax
assets/liabilities on actuarial
gains/losses from defined benefit
pension plans included
3
Change of deferred tax
2 The proportionate share of earnings of the YOUR NOW joint ventures is included in Daimler's Consolidated Financial Statements with a one-month
time lag. The figures relate to the period of February 1 to November 30.
604
1 Including investor-level adjustments.
Dividend payment to Daimler
-397
BBAC
-397
604
716
40
-818
1,582
866
50.0
Total
Others
Beijing Benz Automotive Co., Ltd. (BBAC) produces and distrib-
utes Mercedes-Benz passenger cars and spare parts in China.
The investment and the proportionate share in the results
of BBAC are allocated to the Mercedes-Benz Cars segment.
YOUR NOW²
Equity result'
-778
In the second quarter of 2019, the shareholders of BBAC
approved the payout of a dividend for the 2018 financial year.
The amount of €1,137 million attributable to Daimler reduced
the carrying amount of the investment accordingly. The
first part of the dividend was paid in the third quarter of 2019
and led to a cash inflow of €565 million. The remaining part
of the dividend was paid in the fourth quarter of 2019 and led
to a cash inflow of €566 million.
After being approved by the antitrust authorities in December
2018, the transaction was completed on January 31, 2019.
The existing services for on-demand mobility in the fields of
car sharing, ride hailing, parking, charging and the multimodal
mobility platform were combined in five joint ventures,
(REACH NOW (platform for on-demand mobility and multimodal-
ity), CHARGE NOW (charging), FREE NOW (ride hailing),
PARK NOW (parking) and SHARE NOW (car sharing)), which are
equally held by Daimler Group and BMW Group and will be
strategically expanded in the future. Further information is pro-
vided in Note 3.
BAIC Motor
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Equity investment'
262
Further information on equity-method investments is provided
in Notes 3 and 37.
Table 71 F.40 shows summarized aggregated financial infor-
mation for the other minor equity-method investments after
purchase price allocation and on a pro rata basis.
In the second quarter of 2018, the result of joint ventures
accounted for using the equity method includes an expense of
€418 million for Toll Collect, primarily related to the settlement
of the arbitration proceedings. The expense is allocated to the
Daimler Mobility segment. Further information is provided
in Note 30.
Other minor equity-method investments
Table 1 F.39 shows summarized IFRS financial information
after purchase price allocation for the significant joint ventures
which were the basis for equity-method accounting in the
Group's Consolidated Financial Statements.
Because of the similarity of the business models, the joint ven-
ture companies were already managed in combination and
therefore reported on jointly in the interim financial statements
in 2019. The investment in the joint ventures merged into
YOUR NOW is included in the Consolidated Financial Statements
as joint ventures accounted for using the equity method with
a one-month time lag and is allocated to the Daimler Mobility
segment.
Daimler plans to contribute additional equity of in total
€0.5 billion in accordance with its shareholding ratio in the
years 2020 to 2022.
At the end of the year 2019, the joint ventures were merged by
way of contribution to YOUR NOW Holding GmbH (YOUR NOW),
whose shares are also equally held by Daimler Group and BMW
Group. The contribution had no effect on earnings.
In March 2018, Daimler Group and BMW Group signed an
agreement for the merger of their business units for mobility
services, with the goal of offering customers a comprehensive
mobility ecosystem that is intelligent, seamlessly connected
and available at the touch of a fingertip.
YOUR NOW
Table 71 F.38 shows summarized IFRS financial information
after purchase price allocation for the significant associated
companies, which were the basis for equity-method account-
ing in the Group's Consolidated Financial Statements.
THBV carried out a capital increase in the first quarter of 2019.
Daimler participated in the capital increase with a total of
€69 million, whereby the equity interest attributable to Daimler
increased by 0.1% to 29.7%. The capital contribution increased
the carrying amount of the investment accordingly.
There Holding B.V. (THBV) holds an interest in HERE Interna-
tional B.V. (HERE). HERE is one of the biggest manufacturers of
digital roadmaps for navigation systems worldwide. Future
expected high-resolution maps will be one of the fundamentals
for future autonomous driving. THBV is accounted for in the
Consolidated Financial Statements of Daimler AG as an associ-
ated company using the equity method, and is allocated to
the Mercedes-Benz Cars segment.
THBV (HERE)
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 261
As a result of the significantly reduced stock-exchange price
of shares in BAIC Motor in 2018, Daimler assessed if there was
any objective indication of an impairment of its investment in
BAIC Motor. This assessment did indicate a need for an impair-
ment in the amount of €150 million in the fourth quarter
of 2018. The loss is included in the line item profit/loss on
equity-method investments, net.
BAIC Motor Corporation Ltd. (BAIC Motor) is the passenger
car division of BAIC Group, one of the leading automotive com-
panies in China. Directly or via subsidiaries, BAIC Motor is
engaged in the business of researching, developing, manufac-
turing, selling, marketing and servicing automotive vehicles
and related parts and components and all related services.
Due to Daimler's representation on the board of directors of
BAIC Motor and other contractual arrangements, Daimler
classifies this investment as an investment in an associate, to
be accounted for using the equity method; in the segment
reporting, the investment's carrying amount and its proportion-
ate share of profit or loss are presented in the reconciliation
of total segment's assets to Group assets and total segments'
EBIT to Group EBIT, respectively.
In the year 2019, an impairment loss of €261 million on joint
ventures is included, mainly resulting from the adjustment of
earnings forecasts for individual mobility services.
Stock market price
29.6
At December 31, 2018
353
9.6
49.0
2 Including investor-level adjustments.
1 Proportionate stock market prices.
Dividend payment to Daimler5
Equity result²
Equity investment²
Stock market price'
Equity interest (in %)
At December 31, 2018
19
1,137
Dividend payment to Daimler4
1,240
19
-114
40
1,295
Equity result²
F.38
2,353
Equity interest (in %)
650
705
Dividend payment to Daimler
Equity result¹
Equity investment'
Stock market price
Equity interest (in %)
At December 31, 2019
In millions of euros
Key figures on interests in joint ventures accounted for using the equity method
F.37
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
260
5 The dividend from BBAC of €1,024 million was partly paid out in the year 2018 with an amount of €930 million.
4 The dividend from BBAC of €1,137 million was paid out in the year 2019. The payment was €1,131 million.
3 The proportionate share of earnings of BAIC Motor Corporation Ltd. (BAIC Motor) is included in Daimler's Consolidated Financial Statements
with a three-month time lag.
10
1,024
4,230
1,050
11
-101
-107
1,247
522
Summarized IFRS financial information on significant associated companies
accounted for using the equity method
Current liabilities
THBV³
1,764
1,597
10,370
10,688
5,022
5,422
Equity (including non-controlling interests)
1
1
Equity (excluding non-controlling interests) attributable to the Group
10,663
6,625
8,716
4,349
-
3,545
3,194
967
1,008
Non-current liabilities
13,859
2,657
2,461
756
1 BBAC:
522
475
650
665
2,353
2,519
-80
-79
-1
-1
Carrying amount of equity-method investment
Other reconciling items including equity-method goodwill and
impairments on the investment
-8
-12
-107
-137
Unrealized profit (-)/loss (+) on sales to/purchases from
522
475
738
2
467
10,753
13,733
Profit/loss from discontinued operations after taxes
-337
-383
1,802
1,739
2,570
2,702
Profit/loss from continuing operations after taxes
20,085
22,900
17,433
20,177
Revenue
Information on the statement of income
2018
2019
(HERE)
BAIC Motor²
2018
2019
BBAC¹
2018
2019
Other comprehensive income/loss
In millions of euros
Total comprehensive income/loss
7
7,156
8,874
Current assets
1,763
1,131
13,825
14,008
5,458
6,272
Non-current assets
reconciliation to equity-method carrying amounts
Information on the statement of financial position and
-344
-382
1,802
1,605
2,577
2,695
-7
1
-134
-7
690
Carrying amount at December 31, 2019
665
Balance at January 1, 2018
In millions of euros
Acquisition or manufacturing costs
At December 31,
2019
Maturity of undiscounted lease payments for equipment
on operating leases (according to IFRS 16)
F.33
In millions of euros
Equipment on operating leases
F.32
58,798
Non-cancelable future lease payments to Daimler for equip-
ment on operating leases are due as presented in table > F.33
at December 31, 2019, under IFRS 16. Comparison amounts
at December 31, 2018, under IAS 17 are shown in table F.34.
Note 24).
At December 31, 2019, equipment on operating leases with a
carrying amount of €10,874 million were pledged as security
for liabilities from ABS transactions related to a securitization
transaction of future lease payments on leased vehicles
(December 31, 2018: €9,804 million) (see also
The development of equipment on operating leases is shown
in table F.32.
12. Equipment on operating leases
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
258
1,637
in the lease liabilities
Future cash outflows that are not reflected
Leasing payments
Additions due to business acquisitions
Mature in year
Other additions
235
931
2,656
6,529
8,353
26,759
Other additions
2025 and later
Additions due to business acquisitions
2024
63,531
Balance at December 31, 2018
2023
980
Other changes¹
2022
-21,101
Disposals
Reclassifications
2020
24,854
890
73
18,777
Total cash outflow for lease contracts
In millions of euros
Additions and depreciations for right-of-use assets
F.29
4,234
91
office equipment
Other equipment, factory and
187
Technical equipment and machinery
3,956
In millions of euros
and buildings
In millions of euros
December 31,
2019
Right-of-use assets
F.28
Further information on lessee accounting is provided in
Notes 1, 24 and 33.
The tables F.29, 71 F.30and 7 F.31 show additional
disclosures related to lessee accounting.
Table 71 F.28 shows the composition of the right-of-use assets
which are accounted for at January 1, 2019. The right-of-use
assets include finance leases, which were shown in property,
plant and equipment at December 31, 2018.
257
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Land, leasehold improvements
2019
Additions to right-of-use assets
1,075
Cash outflows related to lessee accounting
F.31
47
16
82
98
Interest expense from lease transactions
Expenses from short-term leases
Expenses from leases of low-value assets
Expenses from variable lease payments
2019
In millions of euros
Expenses related to lessee accounting
F.30
678
40
office equipment
Other equipment, factory and
17
Technical equipment and machinery
621
and buildings
Land, leasehold improvements
Depreciation for
2019
Reclassifications
Disposals
-24,824
4,230
5,949
479
17
-778
1,240
18
1,582
4,349
Equity result'
604
Equity investment'
Equity result'
Equity investment'
At December 31, 2019
Total
Joint operations
Joint ventures
Associated
companies
In millions of euros
Summarized carrying amounts and profits/losses from equity-method investments
At December 31, 2018
26
4,860
1,050
2,519
Equity investment²
387
Stock market price¹
29.7
9.6
49.0
Equity interest (in %)
Total
Others
THBV
(HERE)
BAIC Motor³
BBAC
At December 31, 2019
In millions of euros
Key figures on interests in associated companies accounted for using the equity method
F.36
1 Including investor-level adjustments.
656
3
-397
F.35
Table 1 F.37 presents key figures on interests in joint
ventures accounted for using the equity method in the
Group's Consolidated Financial Statements.
ated companies accounted for using the equity method in the
Group's Consolidated Financial Statements.
Table 1 F.36 presents key figures on interests in associ-
14,055
Balance at December 31, 2018
Maturity
195
Other changes¹
-6,431
Disposals
In millions of euros
Reclassifications
2018
At December 31,
11,724
8,567
Additions²
Balance at January 1, 2018
Maturity of minimum lease payments for
equipment on operating leases (according to IAS 17)
Depreciation/impairment
F.34
66,372
Balance at December 31, 2019
906
Other changes¹
within one year
475
8,376
9,047
Table 71 F.35 shows the carrying amounts and profits/losses
from equity-method investments.
13. Equity-method investments
259
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 Comprises impairments of €60 million in 2019 (2018: €133 million).
1 Primarily changes from currency translation.
51,482
49,476
Carrying amount at December 31, 2018
14,890
Balance at December 31, 2019
141
Other changes¹
18,336
-8,353
Disposals
62
later than five years
Reclassifications
9,898
between one and five years
Additions²
2021
Daimler recognizes its proportionate share of profits or losses of BAIC Motor Corporation Ltd. (BAIC Motor) with a three-month time lag.
Figures for the statement of income relate to the period of October 1 to September 30.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of September
30.
Balance at December 31, 2018
22
1
8
Currency translation and other changes
-30
-4
Transfer to stage 3
-23
51
-28
Transfer to stage 2
-26
-47
73
Transfer to stage 1
Change in models/risk parameters
-442
-166
360
386
389
926
195
1,086
Change in models/risk parameters
-450
-199
-72
-179
Reversals
-159
-136
-19
-4
Utilization
333
241
81
11
Change in remeasurement
492
228
60
204
Additions
502
Transfer to stage 1
ུཎྜ་
-122
Lifetime expected credit loss
12-month expected credit loss
Development of loss allowances for receivables from financial services due to expected credit losses
F.44
F❘| CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
266
26,660
409
17,415
8,836
-354
-2
-212
-140
27,014
411
17,627
8,976
-2,829
-40
-1,672
Total
-160
In millions of euros
credit
impaired
-160
Reversals
-116
-17
-33
Utilization
237
148
-25
Change in remeasurement
130
59
197
Additions
413
152
361
Balance at January 1, 2018
(Stage 3)
(Stage 2)
(Stage 1)
not credit
impaired
-1,117
72
-21
405
4,295
89,967
not past due
97,826
1,274
5,798
90,754
Gross carrying amount
thereof
At December 31, 2018
655
655
past due more than 180 days
563
561
2
past due 91 to 180 days
288
71
216
1
94,667
past due 61 to 90 days
past due 30 days and less
819
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
414
411
3
past due more than 180 days
216
209
4
3
past due 91 to 180 days
319
84
232
3
past due 61 to 90 days
577
121
448
8
past due 31 to 60 days
44
770
-51
745
639
At December 31, 2019
In millions of euros
Credit risks included in receivables from financial services
F.45
1,308
627
219
462
Balance at December 31, 2019
6
3
3
Currency translation and other changes
41
-35
-6
Transfer to stage 3
-29
57
-28
Transfer to stage 2
12-month expected credit loss
104
Lifetime expected credit loss
not credit
impaired
2
past due 31 to 60 days
1,846
117
799
930
past due 30 days and less
100,872
346
3,902
96,624
not past due
104,969
1,854
5,558
97,557
Gross carrying amount
thereof
(Stage 3)
(Stage 2)
(Stage 1
credit
impaired
Total
29,843
1,633
19,299
27
-42
-1
-6
-13
-
1
-90
33
-29
Joint ventures
2018
2019
2018
Associated companies
2019
Total comprehensive income/loss
Other comprehensive income/loss
Profit/loss from discontinued operations after taxes
Summarized aggregated financial information (pro rata)
Profit/loss from continuing operations after taxes
In millions of euros
Summarized aggregated financial information on minor equity-method investments
F.40
-90
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of November 30.
264 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table 7 F.41 shows the components of receivables from
financial services.
Current
In millions of euros
Receivables from financial services
F.41
At December 31, 2019, receivables from financial services
with a carrying amount of €8,941 million (December 31, 2018:
€8,106 million) were pledged as collateral for liabilities from
ABS transactions (see also Note 24).
Further information on financial risks and nature of risks is
provided in Note 33.
At the beginning of the contracts, collaterals of usually at
least 100% of the carrying amounts were agreed, which are
backed by the vehicles based on the underlying contracts.
Over the contract terms, the amounts of the collaterals are
included in the calculation of the risk provisioning, so the
carrying amounts of the credit impaired contracts are primarily
backed by the underlying vehicles.
Longer overdue periods regularly lead to higher allowances.
Information on credit risks included in receivables from
financial services is shown in table 7 F.45.
Credit risks
The carrying amounts of receivables from financial services
based on modified contracts that are shown in stage 2 and 3,
amounted to €387 million at December 31, 2019 (December 31,
2018: €184 million). In addition, carrying amounts of €314 mil-
lion (December 31, 2018: €127 million) in connection with
contractual modifications were reclassified from stage 2 and 3
into stage 1.
The development of loss allowances for receivables from
financial services due to expected credit losses is shown in
table 71 F.44.
Loss allowances
In 2019, Daimler recognized a gain of €478 million as the
difference between the additions to receivables from finance
lease contracts and the carrying amounts of the underlying
assets (especially in connection with the delivery of vehicles to
consolidated companies).
Table 71 F.42 shows the maturities of the future contractual
lease payments and the development of lease payments
to the carrying amounts of receivables from finance lease con-
tracts at December 31, 2019, according to IFRS 16. Compar-
ison amounts at December 31, 2018, under IAS 17 are shown
in table F.43.
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for oper-
ating activities in the Consolidated Statement of Cash Flows.
Receivables from finance lease contracts consist of receiv-
ables from leasing contracts for which all substantial risks and
rewards incidental to the leasing objects are transferred to
the lessee.
rooms.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group's
automotive businesses to dealers or loans for assets purchased
by dealers from third parties, primarily, used vehicles traded
in by dealers' customers or real estate such as dealers' show-
Receivables from sales financing with customers include
receivables from credit financing for customers who purchased
their vehicle either from a dealer or directly from Daimler.
Types of receivables
14. Receivables from financial services
At December 31, 2019
Non-current
866
680
-9
-99
459
YOUR NOW1
2019
Total comprehensive income/loss
Other comprehensive income/loss
Profit/loss from discontinued operations after taxes
Profit/loss from continuing operations after taxes
Income taxes
Interest expense
Depreciation and amortization
Revenue
Information on the statement of income
In millions of euros
Summarized IFRS financial information on significant joint ventures accounted for using the equity method
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 263
F.39
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
Figures for the statement of income relate to the period of January 1 to December 31.
3 THBV:
451
9
186
-616
-603
1 Daimler recognizes its proportionate share of profits or losses of the YOUR NOW joint ventures with a one-month time lag.
Figures for the statement of income relate to the period of February 1 to November 30.
Carrying amount of equity-method investment
Other reconciling items including equity-method goodwill and impairments on the investment
Unrealized profit (-)/loss (+) on sales to/purchases from
Equity (excluding non-controlling interests) attributable to the Group
Equity (including non-controlling interests)
thereof current financial liabilities
Current liabilities
thereof non-current financial liabilities
Non-current liabilities
1,376
3
475
259
400
thereof cash and cash equivalents
892
Current assets
1,185
1,066
Information on the statement of financial position and reconciliation to equity-method carrying amounts
Non-current assets
13
Total
Interest income
At December 31, 2018
Non-current
3,049
Unguaranteed residual values
602
2025 and later
1,156
2024
3,338
2023
4,821
2022
8,869
2021
12,021
2020
thereof due in the year
30,807
At December 31,
2019
Contractual future lease payments
In millions of euros
Development of the finance lease contracts
(according to IFRS 16)
F.42
Gross investment
Net carrying amount
33,856
-3,066
10,093
Current
3,434
14
2,716
704
26,409
16,583
9,389
Total
> 5 years
5 years
< 1 year
1 year up to
At December 31, 2018
30,334
-456
Net carrying amount
Loss allowances
30,790
Gross carrying amount
Unearned finance income
Loss allowances
437
Unearned finance income
18,038
8,976
30,790
19,329
11,461
Finance lease contracts
22,331
3,782
18,549
24,589
3,573
21,016
Sales financing with dealers
48,481
30,029
49,590
30,627
Total
18,963
Gross carrying amount
Sales financing with customers
27,014
Gross carrying amount
18,452
Net carrying amount
Loss allowances
Contractual future lease payments
In millions of euros
Maturities of the finance lease contracts (according to IAS 17)
265
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
96,740
-1,086
-549
51,300
-537
45,440
F.43
Gross investment
51,440
-1,308
103,661
53,529
104,969
45,977
Unguaranteed residual values
51,849
97,826
-659
50,781
-649
52,880
2019
Hubertus Troska
-0.2
-0.1
-0.3
-0.6
In millions of euros
-0.1
-0.1
2018
Medium-term component of the annual bonus
-0.4
-0.1
-0.8
PPSP
2018
2019
-0.2
2019
-0.2
2019
Bodo Uebber³
2018
2019
In millions of euros
2018
-0.5
-0.1
-0.1
-0.2
-0.1
Medium-term component of the annual bonus
-0.4
-4.4
-0.1
-0.8
PPSP
2018
2019
Dr. Dieter Zetsche³
Harald Wilhelm²
2018
2018
2019
Renata Jungo Brüngger
Markus Schäfer¹
Ola Källenius
Expenses in the Consolidated Statement of Income resulting from share-based payments of current members of the Board of Management
F.53
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
272
122
127
-15
2019
-71
3
-2
-1
Medium-term compo-
nent of annual bonus
of the members of the
Board of Management
112
PPSP
124
-13
10
2018
2019
Martin Daum
2018
Wilfried Porth
In millions of euros
-0.2
-0.1
-0.2
-0.1
-0.2
-0.1
Medium-term component of the annual bonus
PPSP
-0.2
-0.8
-0.2
-0.6
-0.1
-1.0
In millions of euros
2018
2019
Britta Seeger
Medium-term component of the annual bonus
benefit pension plans
2 Appointed to the Board of Management as of April 1, 2019.
Non-
Non-
German Plans German Plans
Total
At December 31, 2018
At December 31, 2019
In millions of euros
Present value of defined benefit pension obligations and fair value of plan assets
F.55
Total
275
The components of pension cost included in the Consolidated
Statement of Income are shown in table 7 F.57.
Pension cost
The investment strategy is reviewed regularly and adjusted if
deemed necessary. The investment strategy is determined
by Investment Committees, which are generally composed of
representatives of the Finance and Human Resources depart-
ments. The pension plan assets are generally oriented towards
the structure of the pension obligations.
Market prices are available for equities and bonds due to
their listing in active markets. Most of the bonds have invest-
ment grade ratings. They include government bonds of very
good creditworthiness.
Plan assets are used solely to perform pension benefits and
to cover the administration costs of the plan assets. The
composition of the Group's pension plan assets is shown in
table F.56.
Composition of plan assets
7 F.55.
The development of the relevant factors is shown in table
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
German Plans German Plans
Present value of the defined benefit
obligation at January 1
616
-70
157
479
636
Interest cost
100
600
700
105
609
714
Current service cost
3,998
27,746
31,744
3,793
27,852
31,645
Reconciliation of the net obligation from defined
1 Appointed to the Board of Management as of May 22, 2019.
7,393
1,095
In addition, previously concluded defined benefit plans
exist which primarily depend on employees' wage-tariff classi-
fication upon transition into the benefit phase and which
foresee a life annuity.
German pension plans and pension plan assets
Most employees in Germany have defined benefit pension
plans; most of the pension plans for the active workforce are
based on individual retirement benefit accounts, to which
the Company makes annual contributions. The amount of the
contributions for employees paid according to wage-tariff
agreements depends on the tariff classification in the respec-
tive year or on their respective income, and for executives
it depends on their respective income. For the commitments
to retirement benefits made until 2011, the contributions
continue to be converted into capital components and credited
to the individual pension account with the application of fixed
factors related to each employee's age. The conversion factors
include a fixed value increase. The pension plans were newly
structured for new entrants in 2011 to reduce the risks associ-
ated with defined benefit plans. New entrants now benefit
from value increases of the contributions through an invest-
ment fund with a special lifecycle model. The Company
guarantees at a minimum the value of the contributions paid
in. Pension payments are made either as a life annuity,
twelve annual installments, or a single lump sum.
The Group's main German and non-German pension plans are
described below.
Provisions for pension obligations are made for defined com-
mitments to active and former employees of the Daimler Group
and their survivors. The defined benefit pension plans provided
by Daimler generally vary according to the economic, tax
and legal circumstances of the country concerned. Most of the
defined benefit pension plans also provide benefits in the case
of invalidity and death.
Defined benefit pension plans
At the Daimler Group, defined benefit pension obligations
exist as well as, to a smaller extent, defined contribution pen-
sion obligations, specific to the various countries. In addition,
healthcare benefit obligations are recognized outside Germany.
Table 71 F.54 shows the composition of provisions for pension
benefit plans and similar obligations.
22. Pensions and similar obligations
As well as the employer-financed pension plans granted
by German companies, the employees of some companies are
also offered various earnings-conversion models.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 273
Special rules apply for the members of the Board of Manage-
ment: Daimler's RoS must be not equal to but higher than that
of the competitors in order to achieve the same target achieve-
ment as the other plan participants. For the PPSP granted in
2015 and until 2019, an additional limit on target achievement
was agreed upon for the reference parameter RoS for the
members of the Board of Management. In the case of target
achievement between 195% and 200%, an additional com-
parison is made on the basis of the RoS achieved in absolute
terms. If the actual RoS for the automotive business is
below the strategic target (currently 9%) in the third year of the
performance period, target achievement is limited to 195%.
The number of phantom shares that vest of the PPSPs granted
in 2015 to 2019 is based on the relative share performance,
which measures the development of the price of a share price
index based on a competitor group including Daimler, and
the return on sales (ROS) compared with the average RoS of a
competitor group. In addition, beginning with plan PPSP 2018,
the average RoS of the competitor group is revenue-weighted.
In 2019, the Group adopted a Performance Phantom Share
Plan (PPSP), similar to those used in previous years, under
which eligible employees are granted phantom shares entitling
them to receive cash payments after four years. During
the four-year period between the allocation of the preliminary
phantom shares and the payout of the plan at the end of
the term, the phantom shares earn a dividend equivalent in the
amount of the actual dividend paid on ordinary Daimler
shares. The amount of cash paid to eligible employees at the
end of the holding period is based on the number of vested
phantom shares (determined over a three-year performance
period) multiplied by the quoted price of Daimler's ordinary
shares (calculated as an average price over a specified period
at the end of the four-year plan period). The vesting period
is therefore four years. For the existing plans, the quoted price
of Daimler's ordinary shares to be used for the payout is
limited to 2.5 times the Daimler share price at the date of grant.
Furthermore, the payout for the members of the Board of
Management is also limited to 2.5 times the allotment value
used to determine the preliminary number of phantom shares.
The limitation of the payout for the members of the Board of
Management also includes the dividend equivalent.
Performance Phantom Share Plans
3 Appointment to the Board of Management ended on May 22, 2019, service contract benefits continued until the respective service contract expired
on December 31, 2019. Expense in 2019 also includes the complete vesting of granted rights from 2017 to 2019.
-0.2
-0.2
-2.1
The Group recognizes a provision for awarding the PPSP in the
Consolidated Statement of Financial Position. Since payment
per vested phantom share depends on the quoted price of
Daimler's ordinary shares, that quoted price essentially repre-
sents the fair value of each phantom share. The proportionate
remuneration expenses from the PPSP recognized in the
individual years are measured based on the price of Daimler
ordinary shares and the estimated target achievement.
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by investment funds. Con-
tractual trust arrangements (CTA) exist between Daimler AG as
well as some subsidiaries in Germany and the Daimler Pension
Trust e.V. The Daimler Pension Trust e.V. acts as a collateral
trust fund.
In 2018, Daimler AG transferred certain defined benefit
obligations and plan assets of retired employees to Daimler
Pensionsfonds AG (pension fund). These benefits will be
administrated by that non-insurance-like pension fund, which
falls under the scope of the Act on the Supervision of Insur-
ance Undertakings and is therefore subject to the oversight of
the Federal Financial Supervisory Agency (BaFin). Insofar
as in the future, BaFin rules that a deficit has occurred in the
pension fund, a supplementary contribution will be required
from Daimler AG.
In Germany, there are normally no statutory or regulatory
minimum funding requirements.
1,210
post-employment benefits
Provision for other
6,298
8,518
Provision for pension benefits
2018
At December 31,
2019
In millions of euros
Composition of provisions for pensions and similar obligations
F.54
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
274
As a general principle, it is the Group's objective to design
new pension plans as defined benefit plans based on capital
components or on annual contributions, or as defined con-
tribution plans.
The fair value of plan assets is predominantly determined by
the situation on the capital markets. Unfavorable develop-
ments, especially of equity prices and fixed-interest securities,
could reduce that fair value. The diversification of investment
funds, the engagement of asset managers using quantitative and
qualitative analyses, and the continual monitoring of perfor-
mance and risk help to reduce associated investment risk. The
Group regularly makes additional contributions to the plan
assets in order to cover future obligations from defined benefit
pension plans.
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obliga-
tions result at the Daimler Group in particular from changes in
financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most of
the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
The general requirements with regard to retirement benefit
models are laid down in the Pension Plan Design Policy, which
has Group-wide validity. Accordingly, the committed benefits
are intended to contribute to additional financial security
during retirement, and in the case of death or invalidity to be
capable of being planned and fulfilled by the respective
company of the Group and to have a low-risk structure. In
addition, a committee exists that approves new pension
plans and amendments to existing pension plans as well as
guidelines relating to company retirement benefits.
Risks from defined benefit pension plans and
pension plan assets
Non-German pension plans and pension plan assets
Significant plans exist primarily in the United States and
Japan. They comprise plans relating to final salaries as well as
plans relating to salary-based components. Most of the
obligations outside Germany from defined benefit pension
plans are funded by investment funds.
9,728
PPSP
10,058
2018
Balance at December 31, 2019
-2
-1
-1
Currency translation and other changes
1
-1
Transfer to stage 3
98
13
Transfer to stage 2
Change in models/risk parameters
Reversals
-99
-60
-39
-47
-35
-13
145
243
F.51
13
1,407
past due 30 days and less
10,250
192
not past due
12,575
398
12,177
Gross carrying amount
thereof
(Stage 3)
(Stage 2)
credit
impaired
not credit
impaired
Total
Lifetime expected credit loss
At December 31, 2019
In millions of euros
Credit risks included in trade receivables
-12
1,420
Utilization
6
Additions
Change in remeasurement
Utilization
Reversals
168
128
296
45
Change in models/risk parameters
60
1
5
6
-19
-18
-37
-57
481
105
-
-
Transfer to stage 2
1
Change in remeasurement
144
106
38
Additions
240
115
125
Balance at December 31, 2018
-37
-23
-14
Currency translation and other changes
1
-1
Transfer to stage 3
-2
2
7
In millions of euros
past due 31 to 60 days
4
In 2019, as in the previous year without utilizing the authori-
zation to acquire treasury shares granted by the Annual Share-
holders' Meeting on April 1, 2015, 0.8 million Daimler shares
representing €2.4 million or 0.08% of the share capital were
purchased for a price of €42 million and reissued to employees
(2018: 0.7 million Daimler shares representing €2.1 million
or 0.07% of the share capital were purchased for a price of
€50 million).
Employee share purchase plan
As was the case at December 31, 2018, no treasury shares are
held by Daimler AG at December 31, 2019.
The authorization to acquire treasury shares has not yet been
exercised.
The Board of Management is further authorized, with the
consent of the Supervisory Board, to exclude shareholders'
subscription rights in other defined cases. In a volume up
to 5% of the share capital issued as of the day of the resolution
of the Annual Shareholders' Meeting, the Company was also
authorized to acquire treasury shares also by using derivatives
(put options, call options, forward purchases or a combination
of these instruments), whereby the term of a derivative must not
exceed 18 months and must not end later than March 31, 2020.
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Company is authorized until March 31, 2020 to
acquire treasury shares in a volume up to 10% of the share cap-
ital issued as of the day of the resolution to be used for all
legal purposes. The shares can be used, amongst other things
excluding shareholders' subscription rights, for business
combinations or to acquire companies or to be sold to third
parties for cash at a price that is not significantly lower
than the stock-exchange price of the Company's shares. The
acquired shares can also be used to fulfill obligations from
issued convertible bonds and/or bonds with warrants and to
be issued to employees of the Company and employees
and board members of the Company's affiliates pursuant to
Sections 15 et seq. of the German Stock Corporation Act (AktG).
The treasury shares can also be canceled.
Treasury shares
This authorization to issue convertible and/or warrant bonds
has not yet been exercised.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In order to fulfill the conditions of the above-mentioned autho-
rization, the Annual Shareholders' Meeting on April 1, 2015
also resolved to increase the share capital conditionally by an
amount of up to €500 million (Conditional Capital 2015).
Conditional capital
Approved Capital 2018 has not yet been utilized.
The Annual Shareholders' Meeting held on April 5, 2018
authorized the Board of Management, with the consent of the
Supervisory Board, to increase the share capital of Daimler AG
in the period until April 4, 2023 by a total of €1.0 billion in
one lump sum or by separate partial amounts at different times
by issuing new, registered no-par-value shares in exchange
for cash and/or non-cash contributions (Approved Capital 2018).
The new shares are generally to be offered to the shareholders
for subscription (also by way of indirect subscription pursuant
to Section 186 Subsection 5 Sentence 1 of the German Stock
Corporation Act (AktG). Among other things, the Board of Man-
agement was authorized with the consent of the Supervisory
Board to exclude shareholders' subscription rights under certain
conditions and within defined limits.
Approved capital
Since January 1, 2018, there has been no change in the number
of shares outstanding/issued. The number at December 31,
2019 is 1,070 million, unchanged from December 31, 2018.
The share capital (authorized capital) is divided into no-par-value
shares. All shares are fully paid up. Each share confers the
right to one vote at the Annual Shareholders' Meeting of Daimler
AG and, if applicable, with the exception of any new shares
potentially not entitled to dividends, to an equal portion of the
profits as defined by the dividend distribution decided upon
at the Annual Shareholders' Meeting. Each share represents a
proportionate amount of approximately €2.87 of the share
capital.
Share capital
See also the Consolidated Statement of Changes in Equity
7 F.05.
By resolution of the Annual Shareholders' Meeting on April 1,
2015, the Board of Management is authorized, with the
consent of the Supervisory Board, until March 31, 2020 to issue
convertible and/or warrant bonds or a combination of these
instruments ("bonds") with a total face value of up to €10.0 bil-
lion and a maturity of no more than ten years. The Board of
Management is allowed to grant the holders of these bonds con-
version or warrant rights for new registered no-par-value
shares in Daimler AG with an allocable portion of the share
capital of up to €500 million in accordance with the details
defined in the terms and conditions of the bonds. The bonds
can be offered in exchange for cash and/or non-cash con-
tributions, in particular for shares in other companies. The terms
and conditions of the bonds can include warranty obligations or
conversion obligations. The bonds can be issued once or sev-
eral times, wholly or in installments, or simultaneously in various
tranches as well by affiliates of the Company within the mean-
ing of Sections 15 et seq. of the German Stock Corporation Act
(AktG). Among other things, the Board of Management was
authorized to exclude shareholders' subscription rights for the
bonds under certain conditions and within defined constraints
with the consent of the Supervisory Board.
271
Capital reserves
Capital reserves primarily comprise premiums arising on the
issue of shares as well as expenses relating to the exercise
of the up to 2014 exercisable stock option plans and the issue
of employee shares, effects from changes in ownership inter-
ests in consolidated entities and directly attributable related
transaction costs.
At December 31,
2019
Expense
2018
2019
Provision
Effects of share-based payment
F.52
The details shown in table 7 F.53 do not represent any paid or
committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2019 can be found in the
Remuneration Report. Management Report from page 108
Table 7 F.53 shows expenses in the Consolidated Statement
of Income resulting from the rights of current members of the
Board of Management.
The pre-tax effects of share-based payment arrangements for
the executive managers of the Group and the members of
the Board of Management of Daimler AG on the Consolidated
Statement of Income and Consolidated Statement of Financial
Position are shown in table 7 F.52.
Moreover, 50% of the annual bonus of the members of the
Board of Management is paid out after a waiting period of one
year. The actual payout is determined by the development
of Daimler shares compared to an automobile related index
(Auto-STOXX). The fair value of this medium-term annual
bonus, which depends on this development, is measured by
using the intrinsic value at the reporting date.
At December 31, 2019, the Group has the 2016-2019 Perfor-
mance Phantom Share Plans (PPSP) outstanding. The PPSP are
cash-settled share-based payment instruments and are mea-
sured at their respective fair values at the balance sheet date.
The PPSP are paid out at the end of the stipulated holding
period; earlier, pro-rated payoff is possible in the case of bene-
fits leaving the Group only if certain defined conditions are
met. PPSP 2015 was paid out as planned in the first quarter of
2019.
21. Share-based payment
Table 71 F.02 shows the details of changes in other reserves in
other comprehensive income/loss.
Other reserves comprise accumulated unrealized gains/losses
from currency translation of the financial statements of the
consolidated foreign companies and accumulated unrealized
gains/losses on financial assets, derivative financial instru-
ments and equity-method investments.
Other reserves
Under the German Stock Corporation Act (AktG), the dividend
is paid out of the distributable profit reported in the annual
financial statements of Daimler AG (parent company only) in
accordance with the German Commercial Code (HGB). For
the year ended December 31, 2019, the Daimler management
will propose to the shareholders at the Annual Shareholders'
Meeting to pay out €963 million of the distributable profit of
Daimler AG as a dividend to the shareholders, equivalent
to €0.90 per no-par-value share entitled to a dividend (2018:
€3,477 million and €3.25 per no-par-value share entitled
to a dividend respectively).
Dividend
Retained earnings comprise the accumulated net profits and
losses of all companies included in Daimler's Consolidated
Financial Statements, less any profits distributed. In addition,
the effects of remeasuring defined benefit plans as well as
the related deferred taxes are presented within retained earn-
ings. In addition the effects of hyperinflation in Argentina
are included in the line item "Other" of the Consolidated State-
ment of Changes in Equity.
Retained earnings
20. Equity
207
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
383
12,826
363
12,463
Gross carrying amount
thereof
At December 31, 2018
386
148
238
not past due
past due more than 180 days
39
168
past due 91 to 180 days
101
2
99
past due 61 to 90 days.
211
207
10,456
112
10,568
138
245
past due more than 180 days
215
73
142
past due 91 to 180 days
116
1
115
past due 61 to 90 days
193
3
190
past due 31 to 60 days
1,351
36
1,315
past due 30 days and less
270
135
-7,316
52
14,971
1,868
15,293
17,161
Bonds
20
29
49
13,261
16
59
Securitized bonds
822
8,924
9,746
950
10,355
11,305
43
1,710
Other exchange-traded instruments
1
Real estate
158
340
498
170
254
424
Alternative investments²
2,534
19,222
21,756
2,889
21,672
24,561
Total exchange-traded instruments
3
16
19
1
868
488
4,308
902
-6,298
-1,202
-93
F.48
Inventories
In millions of euros
At December 31,
2019
2018
-5,320
Raw materials and manufacturing supplies
3,130
Work in progress
4,290
4,674
Finished goods, parts and products held
for resale
21,922
21,351
3,321
-978
276
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4,895
5,797
821
5,945
6,766
1,020
6,379
7,399
Corporate bonds
Government bonds
Equities¹
Total German Plans German Plans
At December 31, 2018
Non-
Non-
German Plans German Plans
Total
At December 31, 2019
In millions of euros
Composition of plan assets
F.56
5,176
Advance payments to suppliers
380
486
-55
-90
-46
-92
-138
Net interest expense
5
71
-35
76
-
13
Past service cost, curtailments and settlements
-100
-600
-700
-105
-609
13
Net interest income
4
4
The weighted average duration of the defined benefit
obligations is shown in table 7 F.60.
Daimler currently plans to make contributions of €0.8 billion to
its pension plans for the year 2020; the final amount is usually
set in the fourth quarter of a financial year. In addition, the
Group expects to make pension benefit payments of €1.0 billion
in 2020.
Effect on future cash flows
For the calculation of the sensitivity of life expectancy, by
means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower
is arrived at.
The calculations carried out by actuaries were done in isolation
for the evaluation parameters regarded as important. This
means that if there is a simultaneous change in several param-
eters, the individual results cannot be summed due to correla-
tion effects. With a change in the parameters, the sensitivities
shown cannot be used to derive a linear development of the
defined benefit obligation.
An increase or decrease in the main actuarial assumptions
would affect the present value of the defined benefit pension
obligations as shown in table 7 F.59.
Sensitivity analysis
Table 71 F.58 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
Calculation of the defined benefit obligations uses life expec-
tancy for the German plans based on the 2018 G mortality
tables of K. Heubeck. Comparable country-specific calculation
methods are used for non-German plans.
The measurement date for the Group's defined benefit pension
obligations and plan assets is generally December 31. The
measurement date for the Group's net periodic pension cost is
generally January 1. The assumptions used to calculate the
defined benefit obligations vary according to the economic con-
ditions of the countries in which the pension plans are situated.
Measurement assumptions
-127
-584
-711
-134
-701
-835
3
3
-714
108
Current service cost
German Plans
3,199
Total non-exchange-traded instruments
49
2,322
2,371
83
1,638
1,721
2,782
Cash and cash equivalents
260
351
56
510
566
Other non-exchange-traded instruments
98
388
91
417
3,706
3,310
Total
German Plans
German Plans
Total
Non-
2018
2019
In millions of euros
Pension cost
F.57
1 Including the shares in Renault and Nissan in the amount of €1,188 (in 2018: €1,528) million.
2 Alternative investments mainly comprise private equity.
2,930
22,532
25,462
3,306
24,454
27,760
Fair value of plan assets
396
Non-
German Plans
Contributions by plan participants
224
334
29,489
3,793
27,852
31,645
4,425
31,770
36,195
Present value of the defined benefit obligation
at December 31
79
Fair value of plan assets at January 1
-8
110
-65
45
Currency exchange-rate changes and other changes
-174
-1,211
-1,385
-190
71
25,462
22,532
2,930
2,438
Actual result on plan assets
-230
-1,551
-1,781
352
1,584
1,936
Actuarial gains/losses (-)
103
426
529
115
387
502
Interest income from plan assets
3,018
24,197
27,215
-782
1,971
-972
-5
532
3,682
4,214
in financial assumptions
Actuarial gains (-)/losses from changes
-27
202
175
-228
10
11
in demographic assumptions
Actuarial gains (-)/losses from changes
5
55
60
6
46
1
75
-303
Actuarial gains (-)/losses from
-71
-76
-118
-118
Past service cost, curtailments and settlements
-345
260
-85
562
3,631
4,193
Actuarial gains (-)/losses
-15
-17
-32
20
-52
-32
experience adjustments
Pension benefits paid
29,757
467
-1,125
The development of loss allowances due to expected credit
losses for trade receivables is shown in table 7 F.50.
Credit risks
Information on credit risks included in trade receivables is
shown in table > F.51.
Further information on financial risk and types of risk is
provided in
Note 33.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
269
F.50
Loss allowances
Development of loss allowances for trade receivables due to expected credit losses
Lifetime expected credit loss
Total
not credit
impaired
credit
impaired
(Stage 2)
(Stufe 3)
Balance at January 1, 2018
115
In millions of euros
Trade receivables are receivables from contracts with
customers in scope of IFRS 15.
At December 31, 2019, €47 million of the trade receivables
mature after more than one year (December 31, 2018:
€29 million).
Trade receivables are comprised as shown in table 7 F.49.
F.49
Trade receivables
In millions of euros
At December 31,
2019
2018
Gross carrying amount
-8,518
12,575
Loss allowances
-243
Net carrying amount
12,332
12,826
-240
12,586
18. Inventories
Inventories are comprised as shown in table 7 F.48.
The amount of write-down of inventories to net realizable value
recognized as an expense in cost of sales was €413 million in
2019 (2018: €333 million). Inventories that are expected to be
recovered or settled after more than twelve months amounted
to €1,159 million at December 31, 2019 (December 31, 2018:
€1,047 million) and are primarily spare parts.
As collateral for certain vested employee benefits in
Germany, the value of company cars and demonstration cars
at Mercedes-Benz Cars and Mercedes-Benz Vans included
in inventories is pledged as collateral to the Daimler Pension
Trust e.V. in an amount of €1,083 million at December 31,
2019 (December 31, 2018: €952 million).
In addition, inventories with a carrying amount of €302 million
at December 31, 2019 (December 31, 2018: €367 million) were
pledged as collateral for liabilities from ABS transactions (see
also Note 24).
The carrying amount of inventories recognized during the
period by taking possession of collateral held as security
amounted to €48 million at December 31, 2019 (December 31,
2018: €21 million). Those assets are utilized in the context
of normal business operations.
19. Trade receivables
-863
-1,252
-5,320
-1,119
83
-105
-105
Settlements
5
55
60
5
46
Pension benefits paid
51
111
585
696
81
582
663
Contributions by the employer
-127
Contributions by plan participants
-911
-745
-166
83
-7,316
-8,435
thereof recognized in other assets
thereof recognized in provisions
for pensions and similar obligations
Funded status
2,930
22,532
75
-9
-152
-1,171
-1,323
66
25,462
94
3,306
24,454
27,760
Fair value of plan assets at December 31
68
162
Currency exchange-rate changes and other changes
-6,183
115
-36
268
860
1,133
318
815
1,148
351
797
838
126
712
751
69
682
1,286
510
229
457
225
232
3,288
136
3,152
3,358
261
3,097
1,235
254
281
981
6,712
1,115
860
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
267
15. Marketable debt securities and similar
investments
The marketable debt securities and similar investments with a
carrying amount of €8,655 million (2018: €9,577 million) are
part of the Group's liquidity management and comprise financial
instruments recognized at fair value through other compre-
hensive income, fair value through profit and loss or recognized
at amortized cost.
When a short-term liquidity requirement is covered with
quoted securities, those securities are presented as current
assets.
Further information on marketable debt securities and similar
investments is provided in Note 32.
16. Other financial assets
The line item other financial assets presented in the Consoli-
dated Statement of Financial Position is comprised as shown
in table F.46.
Other financial assets recognized at fair value through profit or
loss relate exclusively to derivative financial instruments which
are not used in hedge accounting.
At December 31, 2019, receivables with a carrying amount of
€464 million (2018: €511 million) were pledged as collateral for
liabilities (see also
Note 24).
5,889
Further information on other financial assets is provided in
Note 32.
Non-financial other assets are comprised as shown in table
7 F.47.
Other expected reimbursements predominantly relate to
recovery claims from our suppliers in connection with issued
product warranties.
F.46
Other financial assets
In millions of euros
Equity instruments and debt instruments
Current
At December 31, 2019
Non-current
Total
Current
At December 31, 2018
Non-current
Total
7,004
17. Other assets
998
5,426
618
20
7
financial assets
Other receivables and miscellaneous other
through profit or loss
Other financial assets recognized at fair value
1,033
509
524
1,191
1,006
185
27
Derivative financial instruments used in hedge accounting
384
378
378
Recognized at fair value through profit or loss
364
364
482
482
comprehensive income
Recognized at fair value through other
380
748
384
91
748
109
Total
18
Current
Total
At December 31, 2019
Non-current
Current
Others
Prepaid expenses
Other expected reimbursements
Reimbursements due to other tax refunds
Reimbursements due to income tax refunds
In millions of euros
Other assets
F.47
At December 31, 2018
Non-current
2,763
2,970
6,083
3,347
2,736
3,843
1,488
2,355
4,005
1,461
2,544
5,733
742
Financial instruments
104
-36
170
320
171
5,641
5,217
F.70
Miscellaneous other assets and liabilities
Provisions
F.69
2019
In millions of euros
Changes in other operating assets and liabilities
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
282
3,807
638
3,169
3,806
586
Cash flows included in cash provided by operating activities
3,220
2018
2019
F.71
-725
337
1
In millions of euros
Changes in liabilities arising from financing activities
F.72
Other liabilities
Financial liabilities
297
Other assets
27
Equipment on operating leases
219
Intangible assets
In millions of euros
2019
Assets and liabilities disposed
49
94
Dividends received from other shareholdings
1,380
1,202
equity-method investments
Dividends received from
Interest received
Interest paid
In millions of euros
257
-678
2018
169
Contract and refund liabilities
4
13,631
Contract and refund liabilities
5,484
5,790
Refund liabilities
553
590
Other refund liabilities
4,931
5,200
Obligations from sales transactions
7,035
12,519
7,841
1,167
1,337
Other contract liabilities
5,868
6,504
and extended warranties
Service and maintenance contracts
In millions of euros
2018
At December 31,
2019
140
F.67
Contract liabilities
thereof long-term
6,060
5,438
183
Miscellaneous other liabilities
1,906
1
1,905
1,909
-
1,909
Other tax liabilities
1,731
636
1,095
1,710
582
1,128
Income tax liabilities
Total
Non-current
Current
Total
Non-current
Current
At December 31, 2018
At December 31, 2019
7,081
7,571
thereof short-term
187
79
As a result of the settlement, in the second quarter of 2018,
the profit/loss on equity-method investments in the Daimler
Mobility segment includes expenses of €418 million. The EBIT
of the Daimler Mobility segment was reduced in particular due
to the existing 50% obligation of Daimler Financial Services AG
to pay €550 million to Toll Collect GbR, which is partially offset
by provisions recognized in previous years. In the third quar-
ters of 2019 and 2018, Daimler Mobility AG recorded cash out-
flows of €200 million each. The last tranche of €150 million
will be paid in the third quarter of 2020. All known and unknown
claims from the toll agreement that arose until March 31, 2018
are settled under the settlement provided that the related
damage occurred before March 31, 2018.
2018
Non-
Non-
Total German Plans German Plans
Total
German Plans German Plans
Sensitivity for discount rates
+ 0.25%
-1,412
-1,247
-165
-1,174
-1,047
At December 31, 2018
-127
-0.25%
1,490
1,330
160
1,252
1,115
137
Sensitivity for expected increases
in cost of living
In addition, the Group had issued irrevocable loan commit-
ments at December 31, 2019. These loan commitments
had not been utilized as of that date. Further information with
respect to these commitments is provided in Note 33.
At December 31, 2019, other financial obligations exist
from the acquisition of intangible assets, property, plant
and equipment and lease property of €4,613 million
(2018: €5,048 million).
At December 31, 2018, the Group reported other financial
obligations from non-cancelable rental agreements and
operating leases of €3,800 million according to IAS 17. At Janu-
ary 1, 2019, Daimler applies IFRS 16 for the first time, replacing
IAS 17. The reconciliation to the opening balance for lease lia-
bilities as at January 1, 2019, is based on other financial
obligations from non-cancelable rental agreements and oper-
ating leases at December 31, 2018, as shown in table
7 F.06. Further information on financial liabilities is provided
in Notes 1 and 24.
Other financial obligations
Sensitivity for discount rates
At December 31, 2019
4.4
In millions of euros
+ 0.10%
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
277
Defined contribution pension plans
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2019, the total cost from defined contri-
bution plans amounted to €1.6 billion (2018: €1.6 billion). Of
those payments €1.5 billion (2018: €1.5 billion) were related to
governmental pension plans.
Other post-employment benefits
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment health
care benefits with defined entitlements, which have to be
accounted for as defined benefit plans. Table 71 F.61 shows key
data for other post-employment benefits.
Significant risks in connection with commitments for other
post-employment benefits (medical care) relate to rising
healthcare costs and lower contributions to those costs from
the public sector. In addition, these plans are subject to
the usual risks for defined benefit plans, in particular the risk
of changes in discount rates.
F.58
Significant factors for the calculation of pension benefit obligations
In percent
2019
At December 31,
2018
German Plans
German Plans
2019
Non-
German Plans
At December 31,
2018
Non-
German Plans
Discount rates
Expected increase in cost of living¹
1.0
1.7
1.8
1.8
3.2
1 For German plans, expected increases in cost of living may affect - depending on the design of the pension plan - the obligation to the Group's
active employees as well as retirees and their survivors. For most non-German plans, expected increases in cost of living do not have a material
impact on the amount of the obligation.
F.59
Sensitivity analysis for the present value of defined benefit pension obligation
At December 31, 2019, the best estimate for obligations from
contingent liabilities was €1,600 million (2018: €761 million).
The increase in contingent liabilities results from possible obli-
gations under the Renewable Energies Act in the context of
lease models, as well as from the legal proceedings described
in Note 30.
2019
Contingent liabilities
Accounting estimates and management judgments
The Group recognizes provisions in connection with pending
or threatened proceedings to the extent a loss is probable and
can be reasonably estimated. Such provisions are recognized
in the Group's consolidated financial statements and are based
on estimates. If quantifiable, contingent liabilities in connec-
tion with legal proceedings are disclosed in the Group's con-
solidated financial statements. Risks resulting from legal
proceedings sometimes cannot be assessed reliably or only to
a limited extent. Consequently, provisions recognized for some
legal proceedings may turn out to be insufficient once such
proceedings have ended. The Group may also become liable for
payments in legal proceedings for which no provisions were
recognized and/or contingent liabilities were disclosed. Uncer-
tainty exists with regard to the amounts or due dates of pos-
sible cash outflows. Although the final result of any such pro-
ceedings could materially affect Daimler's operating results
and cash flows for a particular reporting period, Daimler believes
that it should not exert a sustained influence on the Group's
financial position.
283
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash provided by financing activities includes cash flows from
hedging the currency risks of financial liabilities. In 2019,
cash provided by financing activities included payments for the
reduction of outstanding leasing liabilities of €701 million
(2018: €37 million).
Cash provided by financing activities
In addition to the disposal of the assets and liabilities shown in
table 71 F.71 €106 million of cash and cash equivalents were
disposed in connection with establishing the joint ventures due
to the merger of the business units for mobility services.
The table 71 F.71 shows the assets and liabilities disposed of
in connection with the merger of the business units for mobility
services.
Cash used for investing activities
The line item other non-cash expense and income within the
reconciliation of profit before income taxes to cash provided
by operating activities in the reporting year primarily com-
prised the Group's share in the profit/loss of companies
accounted for using the equity method and effects due to the
review and prioritization of the product portfolio at the
Mercedes-Benz Vans segment. In the prior year, the line item
primarily comprised the Group's share in the profit/loss of
companies accounted for using the equity method.
Table 71 F.70 shows cash flows included in cash provided by
operating activities. Furthermore, the cash effect of an off-
balance-sheet ABS transaction carried out in 2019 is shown in
the cash flow provided by operating activities. The transaction
resulted in a cash inflow of €0.9 billion.
The change in provisions in comparison to the prior year pri-
marily resulted from provisions for warranties and customer
goodwill obligations as well as provisions for litigation risks and
regulatory proceedings. The increase relates to ongoing
governmental and legal proceedings and measures taken with
regard to Mercedes-Benz diesel vehicles in several regions,
as well as an updated risk assessment for an expanded recall
of vehicles with Takata airbags. In addition, the other provi-
sions led to an increase especially due to the review and priori-
tization of the product portfolio at the Mercedes-Benz Vans
segment.
Changes in other operating assets and liabilities are shown in
table 71 F.69.
Cash provided by operating activities
Table 7 F.72 includes changes in liabilities arising from financ-
ing activities, divided into cash and non-cash components.
The increase in other changes in comparison to the prior year
primarily resulted from the application of lessee accounting
according to IFRS 16.
At December 31, 2019, cash and cash equivalents included
restricted funds of €64 million (2018: €0 million). The
restricted funds primarily relate to subsidiaries where exchange
controls apply so that the Group has restricted access to
the funds.
29. Consolidated Statement of Cash Flows
16
411
-256
157
5,310
Other changes
Fair value changes
2,130
Changes in foreign exchange rates
Obtaining or losing control of subsidiaries
17,456
9,404
Cash flows
Calculation of funds
30. Legal proceedings
Daimler AG and its subsidiaries are confronted with various
legal proceedings, claims as well as governmental investigations
and orders (legal proceedings) on a large number of topics,
including vehicle safety, emissions, fuel economy, financial ser-
vices, dealer, supplier and other contractual relationships,
intellectual property rights, product warranties, environmental
matters, antitrust matters (including actions for damages) and
shareholder matters. Legal proceedings relating to products
deal with claims on account of alleged vehicle defects. Some
of these claims are asserted by way of class action suits. If the
outcome of such legal proceedings is detrimental to Daimler,
the Group may be required to pay substantial compensatory
and punitive damages or to undertake service actions, recall
campaigns, monetary penalties or other costly actions. Legal
proceedings may have an impact on the Group's reputation.
Diesel emission behavior: class-action and other lawsuits
in the United States, Canada and Germany
Irrespective of the settlement, the guarantees relating to the
operating agreement or other additional agreements remain
unchanged. No guarantee claims have been made so far.
In millions of euros
On July 4, 2018, through its subsidiary Daimler Financial Ser-
vices AG (since July 23, 2019 Daimler Mobility AG), Daimler AG
together with Deutsche Telekom AG notarized a settlement
agreement (hereinafter: settlement) with the Federal Republic
of Germany which settles all arbitration proceedings in con-
nection with the involvement in the Toll Collect consortium,
which have been ongoing since 2004 and on July 6, 2018, the
arbitral tribunal issued an arbitration ruling on agreed terms
terminating the Toll Collect arbitration proceedings on the
basis of the settlement. The final operating permit for the toll
system was granted within the scope of the settlement.
Toll Collect
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
286
As already reported, class actions in connection with Takata
airbags are pending in Canada, the United States and Israel.
The lawsuits are based on the allegation that, along with Takata
entities and many other companies that sold vehicles equipped
with Takata airbag inflators, Daimler entities were allegedly
negligent in selling such vehicles, purportedly not recalling them
quickly enough, and failing to provide an adequate replace-
ment airbag inflator. In detail: In August 2016, Mercedes-Benz
Canada (MB Canada) was added as a defendant to a putative
nationwide class action pending in Ontario Superior Court. In
addition, Daimler AG and MBUSA were named as defendants
along with Takata companies in June 2017, in a US nationwide
class action, which was filed in New Jersey Federal Court.
In the third quarter of 2017, such lawsuit was transferred to
federal court in the Southern District of Florida for consolida-
tion with other multidistrict litigation proceedings. Further
class action lawsuits in the USA were integrated into the multi-
ple district proceedings. In an order entered on June 21, 2019,
the court dismissed all consumer claims against Daimler AG
and some consumer claims against MBUSA. However, one of
the multidistrict litigation complaints has been amended to
assert claims by automotive recyclers who allege injury because
they are not able to re-sell salvaged airbag inflators that are
subject to the Takata recall. The motions to dismiss against
that complaint are still pending. In February 2019, Daimler AG
and its non-subsidiary Israeli distributor (Colmobil) were
named as defendants in an Israel-wide class action alleging
inadequacy of Takata recall efforts in Israel. The previously
reported lawsuit filed by the State of New Mexico against MBUSA
was dismissed without prejudice on June 22, 2017. It may,
however, be filed again under specific conditions. Daimler AG
continues to regard all these lawsuits brought with regard
to Mercedes-Benz vehicles as being without merit, and the
Daimler Group affiliates respectively affected will further
defend themselves against the claims. Contingent liabilities
were disclosed to a low extent for this topic.
Class-action lawsuits Takata airbag inflators
On June 23, 2016, the German Federal Cartel Office carried
out dawn raids at several car manufacturers and suppliers,
including Daimler AG, with regard to steel purchasing. Daimler
cooperated in full with the authority. In the fourth quarter of
2019, the proceedings were terminated by way of a settlement.
Following the settlement decision by the European Commission
adopted on July 19, 2016, concluding the trucks antitrust pro-
ceedings, Daimler AG and Daimler Truck AG facing customers'
claims for damages to a considerable degree. Respective
legal actions, class actions and other forms of legal redress
have been initiated in various states in and outside of Europe
and should further be expected. Daimler is taking appropriate
legal remedies to defend itself. In accordance with IAS 37.92,
no further information is disclosed with respect to whether, or
to what extent, provisions have been recognized and/or con-
tingent liabilities have been disclosed, so as not to prejudice
Daimler's position.
In this context, Daimler AG may disclose that it filed a leniency
application with the European Commission some time ago.
In late October 2017, the European Commission conducted
preannounced inspections with Daimler in Stuttgart (as well as
further inspections with other manufacturers) in order to fur-
ther clarify the facts of the case. In the third quarter of 2018, the
European Commission opened a formal investigation into
possible collusion on clean emission technology. In the course
of such investigation, the European Commission, in April 2019,
sent a statement of objections to Daimler and other auto-
mobile manufacturers to which Daimler responded in good time.
At present, Daimler does not expect this issue to have any
material impact on the Group's profitability, cash flow and
financial situation.
Antitrust law proceedings (including actions for damages)
Starting on July 25, 2017, a number of class actions have
been filed in the United States and Canada against Daimler AG
and other manufacturers of automobiles as well as various
of their North American subsidiaries. Plaintiffs allege to have
suffered damages because defendants engaged in anti-
competitive behavior relating to vehicle technology, costs,
suppliers, markets, and other competitive attributes, including
diesel emissions control technology, since the 1990s. On
October 4, 2017, all pending US class actions were centralized
in one proceeding by the Judicial Panel on multidistrict litiga-
tion and transferred to the U.S. District Court for the Northern
District of California. On March 15, 2018, plaintiffs in the US
class action amended and consolidated their complaints into
two pleadings, one on behalf of consumers and the other
on behalf of dealers. On June 1, 2018, the court dismissed
Mercedes-Benz U.S. International, Inc., Mercedes-Benz Vans,
LLC, and Daimler North America Corp., pursuant to the
parties' stipulation. Daimler AG and Mercedes-Benz USA, LLC
(MBUSA) remain parties in the case. On June 17, 2019, the
court granted motions to dismiss in the consolidated US class
action proceedings, albeit with leave to amend, and on
August 15, 2019, the plaintiffs filed amended complaints making
similar allegations. Daimler AG and MBUSA regard the US
and Canadian lawsuits as being without merit, and will defend
against the claims. This contingent liability cannot currently
be measured.
285
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
With respect to the legal proceedings described in the two
preceding chapters, in accordance with IAS 37.92 no further
information is disclosed with respect to whether, or to what
extent, provisions have been recognized and/or contingent lia-
bilities have been disclosed, so as not to prejudice Daimler's
position.
Accounting assessment of the legal proceedings in
connection with diesel emission behavior
Except for the Stuttgart district attorney's office's administra-
tive offense proceedings, the aforementioned inquiries,
investigations, administrative proceedings and the replies to
these related information requests, the objection proceed-
ings against the administrative orders as well as Daimler's
internal investigations are ongoing.
In the years 2018 and 2019, KBA issued various administrative
orders holding that certain calibrations of specified functional-
ities in certain Mercedes-Benz diesel vehicles are to be quali-
fied as impermissible defeat devices and ordered subsequent
auxiliary provisions for the respective EC type approvals in
this respect, including stops of the first registration and man-
datory recalls. Daimler has filed timely objections against
such administrative orders in order to have the open legal issues
resolved, if necessary, also by a court of law. In the course
of its regular market supervision, KBA is routinely conducting
further reviews of Mercedes-Benz vehicles and is asking
questions about technical elements of the vehicles. In light of
the aforementioned administrative orders issued by KBA, it
is likely that in the course of the ongoing and/or further inves-
tigations, KBA will issue additional administrative orders hold-
ing that other Mercedes-Benz diesel vehicles are also equipped
with impermissible defeat devices. Daimler has (in view of
KBA's interpretation of the law as a precaution) implemented a
temporary delivery and registration stop with respect to cer-
tain models, also covering the used car, leasing and financing
businesses, and is constantly reviewing whether it can lift
this delivery and registration stop in whole or in part. The new
calibrations requested by KBA are being processed, and for
a certain proportion of the vehicles, the relevant software has
already been approved by KBA; the related recalls have insofar
been initiated. It cannot be ruled out that software updates
may be reworked, further delivery and registration stops may
be ordered or resolved by the Company as a precautionary
measure, also with a view to the used car, leasing and financ-
ing businesses, under the relevant circumstances. Daimler
has initiated further investigations and otherwise continues to
fully cooperate with the authorities and institutions.
As reported, several federal and state authorities and other
institutions worldwide have inquired about and/or are/have
been conducting investigations and/or administrative proceed-
ings and/or have issued administrative orders or, in the case
of the Stuttgart district attorney's office, a fine notice. These
particularly relate to test results, the emission control systems
used in Mercedes-Benz diesel vehicles and/or Daimler's inter-
action with the relevant federal and state authorities as well as
related legal issues and implications, including, but not limited
to, under applicable environmental, criminal and antitrust laws.
These authorities and institutions include, amongst others,
the U.S. Department of Justice (DOJ), which in April 2016
requested that Daimler AG review its certification and admis-
sions processes related to exhaust emissions of diesel vehicles
in the United States by way of an internal investigation in
cooperation with the DOJ, the U.S. Environmental Protection
Agency (EPA), the California Air Resources Board (CARB)
and other US state authorities, the European Commission, the
German Federal Cartel Office ("Bundeskartellamt"), as well
as national antitrust authorities and other authorities of various
foreign states as well as the German Federal Ministry of Trans-
port and Digital Infrastructure (BMVI) and the German Federal
Motor Transport Authority (KBA). In the course of its formal
investigation into possible collusion on clean emission technol-
ogy, the European Commission sent a statement of objections
to Daimler and other automobile manufacturers in April 2019.
In this context, Daimler filed an application for immunity from
fines (leniency application) with the European Commission
some time ago. The Stuttgart district attorney's office is con-
ducting criminal investigation proceedings against Daimler
employees concerning the suspicion of fraud and criminal
advertising, and, in May 2017, searched the premises of Daimler
at several locations in Germany. In February 2019, the Stutt-
gart district attorney's office also initiated a formal investigation
proceeding against Daimler AG with respect to an administra-
tive offense. In September 2019, the Stuttgart district attorney's
office issued a fine notice against Daimler based on a negli-
gent violation of supervisory duties in the amount of €870 mil-
lion which has become legally binding, thereby concluding
the administrative offense proceedings against Daimler.
Diesel emission behavior: governmental proceedings
284 F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In Germany, a multitude of lawsuits by investors alleging the
violation of disclosure requirements is pending. Plaintiffs
con-tend that Daimler AG did not immediately disclose inside
in-formation in connection with the emission behavior of its
diesel vehicles and that it had made false and misleading pub-
lic statements. They further claim that the purchase price of
their Daimler shares would have been lower if Daimler had cor-
rectly complied with its disclosure duties. In this context,
both investors as well as Daimler AG have filed motions to initi-
ate a model proceeding in accordance with the Act on Model
Proceedings in Capital Markets Disputes (KapMuG). Currently,
no model proceeding is pending. Daimler AG also regards
these lawsuits as being without merit and will defend against
the claims.
Daimler AG and MBUSA, respectively, regard the foregoing
lawsuits in the United States and Canada as being without
merit and will defend against the claims.
On July 14, 2017, an additional class action was filed in the
Superior Court of California, Los Angeles County, against
Daimler AG and other companies of the Group, alleging claims
similar to the existing US class action. That action was
removed to Federal Court and, on October 31, 2017, was trans-
ferred to the District of New Jersey. On December 21, 2017,
the parties stipulated to dismiss, without prejudice, that lawsuit.
It may be filed again under specific conditions.
Another consumer class-action lawsuit against Daimler AG and
other companies of the Group containing similar allegations
was filed in Canada in April 2016. On June 29, 2017, the court
granted a procedural motion to certify certain issues for class
treatment, and on March 12, 2018, the court ordered the parties
to send a notice to the class by May 18, 2018, informing class
members that the litigation is ongoing and that they will be
bound by the outcome. That notice was sent, and class members
had until July 20, 2018 to opt out of the class to avoid being
bound by subsequent rulings in the case.
On January 8, 2019, the Arizona State Attorney General filed a
civil complaint in Arizona state court against Daimler AG and
MBUSA making similar allegations that Arizona consumers had
been deliberately deceived in connection with the advertising
of Mercedes-Benz diesel vehicles. The state seeks monetary
penalties for violation of Arizona's consumer protection laws.
As already reported, several consumer class-action lawsuits
were filed against Mercedes-Benz USA, LLC (MBUSA) in Federal
Courts in the United States in early 2016. The main allegation
was the use of devices that impermissibly impair the effective-
ness of emission control systems in reducing nitrogen-oxide
(NOx) emissions and which cause excessive emissions from
vehicles with diesel engines. In addition, plaintiffs alleged that
consumers were deliberately deceived in connection with the
advertising of Mercedes-Benz diesel vehicles. Those consumer
class actions were consolidated into one class action pending
against both Daimler AG and MBUSA in the US District Court
for the District of New Jersey, in which the plaintiffs asserted
various grounds for monetary relief on behalf of a nationwide
class of persons or entities who owned or leased certain mod-
els of Mercedes-Benz diesel vehicles as of February 18, 2016.
Daimler AG and MBUSA moved to dismiss the lawsuit in its
entirety. By order dated December 6, 2016, the court granted
Daimler AG's and MBUSA's motion to dismiss and dismissed
the lawsuit without prejudice, based on plaintiffs' failure to
allege with sufficient specificity the advertising that they con-
tended had misled them. Plaintiffs subsequently filed an
amended class action complaint in the same court making sim-
ilar allegations. The amended complaint also adds as defen-
dants Robert Bosch LLC and Robert Bosch GmbH (collectively;
"Bosch"), and alleges that Daimler AG and MBUSA conspired
with Bosch to deceive US regulators and consumers. On Feb-
ruary 1, 2019, the court granted in part and denied in part
Daimler AG's and MBUSA's subsequent motion to dismiss. The
case is ongoing as the court's decision merely addressed
certain legal aspects of plaintiffs' claims and did not decide
whether the plaintiffs can ultimately prove their claims,
whether the plaintiffs' allegations are true, or whether their
claims have merit.
31. Contingent liabilities and other financial
obligations
Other liabilities
113
Table 71 F.68 shows the composition of other liabilities.
-210
-152
-62
F.68
-296
-720
Compounding and effects from changes in discount rates
45
Reversals
155
21
238
Currency translation and other changes
38
100
27
-48
117
17
-6,291
-955
-103
1,971
1,149
1,628
7,828
thereof non-current
3,963
2,290
998
483
7,734
Additions
5,215
1,694
2,876
2,233
12,018
Utilizations
-3,423
-1,810
Balance at December 31, 2019
3,080
8,708
4,902
Non-current
Total
Notes/bonds
17,806
67,819
85,625
15,090
61,400
Current
76,490
3,278
3,278
2,835
2,835
Liabilities to financial institutions
23,043
16,768
39,811
Commercial paper
Total
Non-current
Current
3,066
20,924
thereof current
3,744
1,522
2,498
2,563
10,327
thereof non-current
4,964
2,726
2,404
503
10,597
F.63
Financing liabilities
In millions of euros
At December 31, 2019
At December 31, 2018
4,248
21,068
thereof current
2,111
- 1 year
-505
-405
-100
-417
-345
-72
278
Sensitivity for life expectancy
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Weighted average duration of the defined benefit obligations
2019
2018
In years
17
German plans
Non-German plans
16
F.60
71
393
464
93
20
98
83
15
Sensitivity for expected increases
in cost of living
-0.10%
-112
-93
-19
-95
-82
-13
Sensitivity for life expectancy
+ 1 year
546
463
83
16
16
15,562
F.61
In millions of euros
7 F.63.
Lease liabilities include assets and liabilities which were recog-
nized until December 31, 2018 as finance leases in accordance
with IAS 17. Future minimum lease payments under finance
leases amounted to €477 million at December 31, 2018. The
reconciliation of future minimum lease payments from
finance lease arrangements to the corresponding liabilities at
December 31, 2018 is shown in table 7 F.64.
At December 31, 2019, lease liabilities include effects from
first-time adoption of IFRS 16. Information on the adjustments
is disclosed in Note 1 of the Notes to the Consolidated
Financial Statements. Information on the maturities of lease
liabilities is provided in Note 33.
F.62
Provisions for other risks
In millions of euros
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
279
The composition of financing liabilities is shown in table
Product
Personnel and
social costs
Litigation risks
and regulatory
proceedings
Other
Total
Balance at December 31, 2018
7,043
4,261
2,147
warranties
24. Financing liabilities
Provisions for other risks primarily comprise expected costs
for other taxes, provisions for environmental protection and
obligations from outstanding commission for example to trade
representatives, provided that no revenue has been realized
with the recipient of the commission under IFRS 15. They also
include provisions for anticipated losses on contracts and
various other risks which cannot be allocated to any other class
of provision. The increase in other provisions results in particu-
lar from the review and prioritization of the product portfolio at
the Mercedes-Benz Vans segment.
Other
2019
2018
Present value of defined benefit obligations
Fair value of reimbursement rights
1,210
12
Funded status
-1,198
1,095
27
-1,068
Net periodic cost for other post-employment
benefits
23. Provisions for other risks
-11
-66
The development of provisions for other risks is summarized
in table 7 F.62.
Product warranties
Daimler issues various types of product warranties, under which
it generally guarantees the performance of products delivered
and services rendered for a certain period. The provision for
these product warranties covers expected costs for legal and
contractual warranty claims as well as expected costs for
goodwill concessions and recall campaigns. This also includes
measures relating to Mercedes-Benz diesel vehicles in various
regions as well as recalls, in particular from an updated risk
assessment for an extended recall of Takata airbags. The utili-
zation date of product warranties depends on the incidence
of the warranty claims and can span the entire term of the
product warranties. The cash outflow for non-current product
warranties are primarily expected within a period until 2022.
Personnel and social costs
Provisions for personnel and social costs primarily comprise
expected expenses of the Group for employee anniversary
bonuses, profit sharing arrangements and management bonuses
as well as early retirement and partial retirement plans. The
additions recorded to the provisions for profit sharing and man-
agement bonuses in the reporting year usually result in cash
outflows in the following year. The cash outflow for non-current
provisions for personnel and social costs is primarily expected
within a period until 2030.
Liability and litigation risks and regulatory proceedings
Provisions for liability and litigation risks and regulatory pro-
ceedings comprise costs for various legal proceedings, claims
and governmental investigations, which can lead in particular
to payments of compensation, punitive damages or other costly
actions. Additions in the financial year 2019 mainly resulted
from risks from litigation and regulatory proceedings in relation
to Mercedes-Benz diesel vehicles. The cash outflows in rela-
tion to non-current provisions are primarily expected within a
period until 2022.
Further information on liability and litigation risks and
regulatory proceedings is provided in Note 30.
Key data for other post-employment benefits
18,332
877
Deposits in the direct banking business
Miscellaneous other financial liabilities
3,347
399
2,948
3,151
279
2,872
Other
6,808
1,046
504
1,153
585
568
Deposits received
1,105
1,105
1,065
542
1,818
8,626
6,973
Deferral of sales revenue received from sales
with residual-value guarantees
Total
Non-current
Current
Total
Non-current
Current
At December 31, 2018
At December 31, 2019
In millions of euros
Deferred income
10,032
2,375
7,657
9,864
2,112
7,752
8,882
1,909
1,065
306
Accrued interest expenses
25
1,186
287
899
Total
Non-current
Current
Total
At December 31, 2018
633
At December 31, 2019
Non-current
used in hedge accounting
Derivative financial instruments
In millions of euros
Other financial liabilities
F.65
39,400
The composition of deferred income is shown in table 71 F.66.
26. Deferred income
Current
461
1,094
Financial liabilities recognized
1,267
1,198
33
1,165
Liabilities from wages and salaries
2,092
943
1,149
2,059
921
1,138
Liabilities from residual value guarantees
56
5
51
52
7
45
at fair value through profit or loss
1,292
565
F.66
391
62,601
99,179
1,775
161,780
761
56,240
843
88,662
1,604
871
F.64
Reconciliation of minimum lease payments to liabilities from finance lease arrangements
Future minimum
lease payments
Interest included in future
minimum lease payments
Liabilities from finance
lease arrangements
At December 31, 2018
In millions of euros
Maturity
within one year
38
628
11
1,147
347
9,713
3,406
13,119
9,677
2,097
11,774
Liabilities from ABS transactions
6,911
7,021
13,932
6,782
5,670
12,452
Lease liabilities
703
3,537
4,240
27
320
Loans, other financing liabilities
27
144,902
162
1,624
398
99
299
415
106
309
Other deferred income
1,598
1,819
between one and five years
1,936
927
1,009
Deferral of advance rental payments received
from operating lease arrangements
975
Further information on other financial liabilities is provided in
Note 32.
584
929
3,222
890
1,612
1,580
56
106
later than five years
277
214
477
130
347
280
63
25. Other financial liabilities
The composition of other financial liabilities is shown in
table F.65.
Financial liabilities measured at fair value through profit or
loss relate exclusively to derivative financial instruments which
are not used in hedge accounting.
28. Other liabilities
Table 71 F.67 shows the composition of contract and refund
liabilities.
27. Contract and refund liabilities
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 281
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3,192
Combined
Financial Statements
The Divisions
Corporate Governance
Non-Financial Report
Refers to additional information on the Internet
Further Information
Cross-reference to additional information within the Annual Report
7 Refers to an illustration or a table in the Annual Report
Management Report
Information guidance system
Consolidated
Contents
Finance & Controlling (CFO),
Ola Källenius and Harald Wilhelm
on the 2019 finanicial year and Daimler's
sustainable business strategy
"2019 was a challenging
year in many ways.
But it was also a year in
which we set our course
for a sustainable future.”
Ola Källenius
Chairman of the Board of Management (CEO),
Chairman of the Board of Management
of Mercedes-Benz AG
(on the right)
Harald Wilhelm
Daimler Mobility
(on the left)
INTERV
344
Ten Questions for
the CEO and CFO
Daimler Worldwide
228
Index
The Supervisory Board
185
Corporate Governance Report
34
Report of the Supervisory Board
Declaration on Corporate Governance,
40
32
182
Report of the Audit Committee
26
38
Ten Questions for the CEO and CFO
180
The Board of Management
D Corporate Governance
Highlights of 2019
Daimler and the Capital Market
203
59
Corporate Profile
B Combined Management Report 58
200
Environmental Issues
42
198
52
196
E | Non-Financial Report
42
Objectives and Strategy
48
Sustainability at Daimler
24
A To Our Shareholders
STW1671
Maximizing
COOPE
DriveNow
In all other segments as well, Daimler is setting its course for further regional growth.
The van unit plans to grow in North America in particular, and Daimler Trucks aims
to expand in Europe, NAFTA, Japan, and Latin America. As the market leader in our
most important traditional core markets for buses with a gross vehicle weight over
eight tons, we want to safeguard the market position and develop our business in the
NAFTA region. Our leasing, financing, and insurance services support these growth
strategies by promoting our customers' loyalty and their connection with Daimler.
1020
DAIMLER | MOVE PERFORM TRANSFORM 19
our power
H
Our presence
in important
markets
GROWT
17
Nonetheless, we're focusing on our goal and we want to continue being
profitable in the future. That's why we're counteracting the pressure
by means of comprehensive cost reduction and efficiency-enhancing
measures in all areas of the company. This is the only way that Daimler
can once again earn attractive returns in the medium term and fulfill
the high expectations of its investors, business partners, and employees.
DAIMLER | MOVE PERFORM TRANSFORM
ABLE
Daimler is pursuing the aim of reinforcing and expanding its leading positions
in all of its business divisions. Through sales of our premium cars, we want
to participate in the continuously growing luxury segment in Asia as well
as the United States and Europe. China is not only the world's biggest car
market but also a significant market for new technologies and an important
purchasing market. We plan to continue growing in China together with our
local partners and to intensify our cooperation with them.
Throughout the Group, we are creating pioneering solutions that will shape
the individual mobility and transportation of tomorrow. In the future, addi-
tional crucial factors for developing the best products will be optimal access
to new technologies, global expertise, and the efficient use of capital. In
some situations, cooperation with partners will be a key factor for Daimler
and for the entire automotive industry - enabling faster market launches
and the profitable application of technically complex innovations.
CRA
BERLIN
EE
E EF
Contents
A
23
DAIMLER | MOVE PERFORM TRANSFORM
To speed up its pace of innovation, Daimler is implementing new leadership
principles and working methods through the Leadership 20X program.
And with initiatives such as Lab1886 and the Startup Autobahn we can put new
business models into practice even faster than before. We are also enabling
our employees to use the options offered by digitalization and implement
digital solutions faster. Our state-of-the-art office environments support their
agile cooperation through connectivity, communication, and collaboration.
RE
Daimler relies on the strong motivation of its workforce and promotes its
diversity and integrity. That's because tolerance, openness, trust, and fair-
ness make globally operating work teams strong. Integrity is a fundamental
value of our corporate culture, not only in dynamically changing times. It's
a compass for all of our employees. In addition, our compliance systems for
data and technologies offer support and orientation as we develop innova-
tive products and services.
We are driving
the new era of
CULTUR
21
For example, Daimler and BMW are pooling valuable know-how and resources in the
development of driving assistance systems, automated driving functions on highways,
and automated parking functions of the next technology generation, as well as in the
YOUR NOW joint venture for mobility services. Together with our Chinese joint venture
partner Geely, we are developing our smart cars into an all-electric fleet. And in our
joint venture IONITY, we are expanding the comfortable and digitally payable high-power
charging network for electric vehicles on European highways.
RATIVE
DAIMLER | MOVE PERFORM TRANSFORM
CHONGOING
AMD
Social Issues
208
60
60
G | Further Information
156
C | The Divisions
230
Statements
150
328
Outlook
135
Risk and Opportunity Report
Consolidated Statement of Changes in Equity
132
and Explanation
227
Notes to the Consolidated Financial
Mercedes-Benz Cars
158
Responsibility Statement
177
Daimler Mobility
342
Glossary
174
Daimler Buses
340
Ten-Year Summary
171
Mercedes-Benz Vans
331
Independent Auditor's Report
166
Daimler Trucks
330
Consolidated Statement of Cash Flows
343
Takeover-Relevant Information
Consolidated Statement of Financial Position
86
Financial Position
77
Liquidity and Capital Resources
70
Profitability
F Consolidated Financial
220
65
Development
Statement on the Review of the
Economic Conditions and Business
211
Integrity and Compliance
Non-Financial Report
Daimler AG
Statements
222
108
Remuneration Report
225
Income/Loss
107
Events after the reporting period
Consolidated Statement of Comprehensive
106
Overall Assessment of the Economic Situation
224
Consolidated Statement of Income
93
Sustainability and Integrity
89
(condensed version according to HGB)
226
mobility
Employee Issues
287
3 This does not include liabilities from lease transactions of
€4,240 million (2018: liabilities from finance leases of €347 million)
as these are not assigned to a measurement category.
2 Financial instruments classified as held for trading purposes.
These figures comprise financial instruments that are not used in
hedge accounting.
1 This does not include lease receivables of €30,334 million
(2018: €26,660 million) as these are not assigned to a measure-
ment category.
56
52
4,931
5,200
8,720
8,384
157,540 144,555
14,185
172,391
183,831
12,707
109
27
4 This does not include liabilities from financial guarantees of
€107 million (2018: €124 million) as these are not assigned to a
measurement category.
Obligations from sales transactions
Financial liabilities recognized at fair value
through profit or loss²
292
F.78
2
3
through other comprehensive income
Equity instruments recognized at fair value
240
-150
Other financial assets and financial
liabilities recognized at fair value through
profit or loss¹
136
-79
at fair value through profit or loss
Equity and debt instruments recognized
2018
2019
In millions of euros
Net gains/losses
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other financial assets recognized at fair
Miscellaneous other financial liabilities4
Trade payables
similar investments
Marketable debt securities and
6,219
5,805
through other comprehensive income
Financial assets recognized at fair value
3,177
3,328
other financial assets
Other receivables and miscellaneous
663
474
Marketable debt securities and
similar investments
15,853
18,883
5,323
Financing liabilities³
5,855
482
Financial liabilities measured
at (amortized) cost
Liabilities
at fair value through profit or loss²
Other financial assets recognized
384
378
Equity and debt instruments
3,059
2,858
similar investments
Marketable debt securities and
3,552
3,263
Financial assets recognized at fair value
through profit or loss
364
Equity and debt instruments
value through other comprehensive income
3
-17
Financial liabilities current
Other financial liabilities non-current
Other financial liabilities current
Other financial assets non-current
Other financial assets current
Carrying amount of the hedging instruments
December 31, 2019
In millions of euros
net investments
in foreign
operations
Cash flow
hedges¹
Foreign currency risk
Hedges of
Amounts for the transactions designated as hedging instruments
F.80
293
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Fair value changes³
Table F.80 shows the amounts for the transactions
designated as hedging instruments.
December 31, 2018
Other financial assets current
20
64
37
62
10
76
Cash flow
hedges¹
Fair value
hedges²
Cash flow
hedges¹
Commodity risk
Interest rate risk
Financial liabilities current
Other financial liabilities non-current
Other financial liabilities current
Other financial assets non-current
Carrying amount of the hedging instruments
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or financing
activities or from its liquidity management. These are mainly
interest rate risks, currency risks and commodity price risks,
which were defined as risk categories. For these hedging
purposes, the Group mainly uses currency forward transactions,
cross currency interest rate swaps, interest rate swaps,
options and commodity forwards.
Use of derivatives
Information on derivative financial instruments
Total interest income
2018
2019
In millions of euros
Total interest income and total interest expense
F.79
1 Financial instruments classified as held for trading; these
amounts relate to financial instruments that are not used in
hedge accounting.
105
204
at (amortized) cost
Financial liabilities measured
-469
-493
at (amortized) cost
Financial assets measured
5,876
5,189
thereof from financial assets and liabilities
measured at (amortized) costs
5,719
See Note 1 for qualitative descriptions of accounting for
and presentation of financial instruments (including derivative
financial instruments).
Total interest income and total interest expense for financial
assets or financial liabilities that are not recognized at
fair value through profit or loss are shown in table 7 F.79.
Total interest income and total interest expense
at fair value through other comprehensive
income
thereof from financial assets recognized
-3,171
-3,550
Cash and cash equivalents
thereof from financial assets and liabilities
measured at (amortized) costs
-3,550
Total interest expense
89
157
at fair value through other comprehensive
income
thereof from financial assets recognized
5,100
-3,171
12,586
12,332
Trade receivables
78
176
130
384
196
112
70
378
Recognized at fair value through
profit or loss
28
128
208
364
119
158
Other financial assets recognized
at fair value through profit or loss
205
27
109
Financial liabilities recognized at fair value
106
4,548
6,150
10,804
315
4,415
5,529
1,033
1,033
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1,191
1,191
10,259
Derivative financial instruments
used in hedge accounting
109
27
482
other comprehensive income
Recognized at fair value through
5,323
other comprehensive income
Recognized at fair value through
3,102
5,812
8,914
2,927
5,254
8,181
Marketable debt securities
Financial assets recognized at fair value
In millions of euros
At December 31, 2018
Level 22 Level 33
Level 11
Total
2,396
2,927
5,855
2,753
106
304
338
748
315
270
275
Financial liabilities recognized at fair value
through profit or loss
860
3,059
3,059
2,858
2,858
profit or loss
Recognized at fair value through
3,102
Equity instruments and debt instruments
907
Derivative financial instruments
used in hedge accounting
The carrying amounts of financial instruments according to
measurement categories are shown in table 7 F.77.
Measurement categories
291
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
55,991
55,991
58,125
58,125
thereof other financing liabilities
12,375
99
12,474
13,008
1,016
The table 71 F.77 does not include the carrying amounts
of derivative financial instruments used in hedge accounting as
these financial instruments are not assigned to a measure-
ment category.
14,024
Net gains or losses
Net gains/losses on equity and debt instruments recognized at
fair value through profit or loss primarily comprise gains
and losses attributable to changes in the fair values of these
instruments, among others the fair value change of our
equity interest in Aston Martin Lagonda Global Holdings plc.
73,327 70,080
102,359
108,344
Financial assets measured at (amortized) cost
Receivables from financial services¹
Assets
2018
At December 31,
2019
In millions of euros
Carrying amounts of financial instruments according to mea-
surement categories
F.77
Net gains/losses on financial liabilities measured at (amor-
tized) cost (without the interest income/expense shown below)
primarily comprise the effects of currency translation.
Net gains/losses on financial assets measured at (amortized)
cost (without the interest income/expense shown below)
primarily comprise impairment losses (including reversals of
impairment losses) of €551 million (2018: €407 million)
that are charged to cost of sales, selling expenses and other
financial income/expense, net. Foreign currency gains
and losses are also included.
Net gains/losses on other financial assets recognized at
fair value through other comprehensive income are primarily
attributable to the effects of currency translation.
Net gains/losses on equity instruments recognized at fair
value through other comprehensive income primarily comprise
dividend payments.
Net gains/losses on other financial assets and liabilities
recognized at fair value through profit or loss comprise gains
and losses attributable to changes in their fair values.
Table 71 F.78 shows the net gains/losses on financial
instruments included in the Consolidated Statement of Income
(excluding derivative financial instruments used in hedge
accounting).
thereof liabilities from ABS transactions
13,606
62,862
At December 31, 2018
Level 22 Level 33
Level 11
Total
At December 31, 2019
Level 22 Level 33
Level 11
Total
In millions of euros
Measurement hierarchy of financial assets and liabilities not recognized at fair value
F.76
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e. as prices) or indirectly (i.e. derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
1,094
1,150
1,150
1,094
1,186
1,238
1,186
1,238
Fair values of financial assets
measured at cost
Receivables from financial services
104,930
104,930
76,468
21,952
65,187
87,139
thereof bonds
81,972
62,961
It fair value 52 - 52 -56 56
144,933
66,203
159,288
Financing liabilities
measured at cost
Fair values of financial liabilities
97,144
97,144
93,085
Level 33
15
72
Reclassification to profit and loss (before taxes)
-40
Commodity price risk - inventory purchases
-18
Interest rate risk
-1,023
Foreign currency risk
-1,081
1,171
Changes in fair values (before taxes)
Balance at January 1, 2018
In millions of euros
Reconciliation of reserves for derivative financial instruments
F.85
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-641
296
Foreign currency risk
Interest rate risk
-1,616
Changes in fair values (before taxes)
-95
Balance at December 31, 2018
537
Taxes on changes in fair values and reclassifications
Other
-18
Commodity price risk - inventory purchases
-63
Foreign currency risk - procurement
-81
assets (before taxes)
Reclassification to cost of acquisition of non-financial
-7
-634
Foreign currency risk
1 The amount in other financial income/expense, net includes minus €1 million (2018: €1 million) for hedges of net investments in foreign operations.
2 The amount in other financial income/expense, net includes minus €3 million (2018: minus €10 million) for hedges of net investments in foreign
operations.
-63
54
84
-2
1
43
118
791
13
-1
114
-120
-84
-121
+2
-1,414
-27
Gains and losses recognized in other comprehensive income¹
Hedge ineffectiveness recognized in the Statement of Income
-73
-1,159
82
55
-91
-533
the hedged item has affected profit or loss²
For hedges that have been transferred because
-1
1
-8
are no longer expected to occur
For hedges for which the hedged future cash flows
Reclassification of hedge effectiveness from other comprehensive
income to the Statement of Income
-40
-1
2
53
-70
56
Interest rate risk
-1,533
-197
Commodity price risk - inventory purchases
7,654
20,421
42,215
12,653 29,805
7,768 12,410
259
Commodity risk
Fair value hedges
Cash Flow Hedges
Interest rate risk
38,998
9,935
29,063
37,822
10,877
26,945
Foreign currency risk
Total
>5 years
1 year up to
5 years
70,290
<1 year
15,926
12,055
285
399
140
21,592
11,839
9,753
20,178
-
42,991
12,055
24,763
6,173
50,112
7,654
64,583
36,602
Total
>5 years
1 year up to
5 years
Taxes on changes in fair values and reclassifications
Balance at December 31, 2019
Other
-68
Commodity price risk - inventory purchases
-3
Foreign currency risk - procurement
-71
assets (before taxes)
Reclassification to cost of acquisition of non-financial
128
Interest rate risk
922
Foreign currency risk
1,050
Reclassification to profit and loss (before taxes)
186
-546
F.86
Nominal amounts of derivative financial instruments
<1 year
At December 31, 2018
Maturity of nominal amounts
At December 31, 2019
Maturity of nominal amounts
interest rate risks and commodity price risks can be found in
Note 33 in the sub-item finance market risk.
Explanations of the hedging of exchange rate risks,
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments are still hedg-
ing financial risks from the operating business. A hedging
instrument is terminated when the hedged item no longer exists
or is no longer expected to occur.
Hedging transactions for which the effects from the measure-
ment of the hedging instrument and the underlying transaction
to a large extent offset each other in the Consolidated State-
ment of Income mostly do not classify for hedge accounting.
Cost
of sales
The average prices for derivative financial instruments
classified by risk categories for the main risks are included in
table F.87.
At December 31, 2019, Daimler utilized derivative instruments
with a maximum maturity of 48 months (2018: 34 months)
as hedges for currency risks arising from future transactions.
The maturities of the interest rate hedges and cross currency
interest rate hedges as well as of the commodity hedges
correspond with those of the underlying transactions. The real-
ization of the underlying transactions of the cash flow hedges
is expected to correspond with the maturities of the hedging
transactions shown in table 71 F.86.
At December 31, 2019, the balance of reserves for hedges of
net investments in foreign operations amounted to €189 million
(2018: €187 million).
The reserves for derivative instruments include reserves for
hedge costs of €0 million (2018: minus €11 million).
Table 71 F.85 shows the reconciliation of the reserves for
derivative instruments (excluding reserves for hedges of net
investments in foreign operations).
114
In millions of euros
Nominal values of derivative financial instruments
Table 71 F.86 shows the nominal values of derivative financial
instruments entered into for the purpose of hedging currency
risks, interest rate risks and commodity price risks that arise
from the Group's operating and/or financing activities.
Interest
expense
Cost
of sales
expense,
net
100
478
Financing liabilities non-current
-72
461
Financing liabilities current
thereof hedge adjustments
Financing liabilities non-current
Financing liabilities current
14,217
13,831
28,407 29,086
2018
2019
Interest rate risk
Carrying amounts of the hedged items
Fair value changes of the hedged items¹
In millions of euros
-846
Accumulated amount of hedge adjustments
The Group uses cash flow hedges for hedging currency risks,
interest rate risks and commodity price risks.
Cash flow hedges and hedges of net investments in
foreign operations
The amounts relating to hedge ineffectiveness for items
designated as fair value hedges are shown in table 7 F.82.
The amounts of the items hedged with fair value hedges are
included in table 7 F.81.
The Group uses fair value hedges primarily for hedging interest
rate risks.
Fair value hedges
2018
2019
Interest rate risk
Ineffectiveness of fair value hedges
F.82
1 Fair value changes of the hedged items used for recognizing hedge
ineffectiveness.
23
-40
from inactive hedges remaining in the
statement of financial position
-121
Fair Value Hedges
F.81
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
86
43
57
58
366
113
848
-204
-1
-1,558
46
94
147
2
8
59
364
425
15
294
3 Gains and losses from hedging instruments used for recognizing hedge ineffectiveness.
1 Includes the following instrument types: currency forwards, currency options, currency swaps, commodity forwards.
2 Includes the following instrument types: interest rate swaps, cross currency interest rate swaps.
-41
122
-18
1
Daimler also partially hedges the foreign currency risk of
selected investments with the application of derivative or non-
derivative financial instruments.
-1,021
25
22
237
41
161
30
163
Fair value changes³
817
The amounts related to items designated as cash flow hedges
and as hedges of net investments in foreign operations are
shown in table 7 F.83.
In millions of euros
Line item in the Statement of Income
In millions of euros
Gains and losses on cash flow hedges and hedges of net investments in foreign operations
F.84
295
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2 De-designation and re-designation of hedging instruments at January 1, 2019, differentiated for Mercedes-Benz Cars/Mercedes-Benz Vans and
Daimler Trucks/Daimler Buses. Further information is provided in the section related to exchange rate risk in Note 33.
1 Fair value changes of the hedged items used for recognizing hedge ineffectiveness.
-4
-311
-270
4
-3
-271
-270
Thereof hedges of net investments in foreign operations
Discontinued/terminated hedges
in which the ineffectiveness
Thereof hedges of net investments in foreign operations
and the reclassifications are included
Gains and losses recognized in other comprehensive income¹
Hedge ineffectiveness recognized in the Statement of Income
of sales
Revenues
Cost
financial
income/
Other
risk
Interest rate risk
Foreign currency risk
Commodity
2018
the hedged item has affected profit or loss²
For hedges that have been transferred because
are no longer expected to occur
For hedges for which the hedged future cash flows
Reclassification of hedge effectiveness from other comprehensive
income to the Statement of Income
2019
-
-17
-401
risk currency risk
Interest Commodity
Foreign
Interest Commodity
rate risk
currency risk
Foreign
2018
2019
In millions of euros
Cash flow hedges and hedges of net investments in foreign operations
F.83
2
2
Interest expense
Cost of sales
rate risk
risk
Fair value changes of the hedged items¹
Thereof hedges of net investments in foreign operations
Thereof hedges of currency risks in the automotive business²
9
-4
-91
53
-78
-745
The gains and losses on items designated as cash flow
hedges as well as the amounts relating to hedge ineffective-
ness are included in table 7 F.84.
Continuing hedges
Balance of the reserves for derivative financial instruments
39
83
1,024
-1
-115
204
1,533
1
(before taxes)
Level 2²
215
Total
8,491
8,844
8,844
Contract and refund liabilities
Obligations from sales transactions
5,200
5,200
4,931
4,931
185,176
186,924
174,012
174,043
1,142
1,150
676
696
-542
-542
1,218
1,238
Other financial liabilities²
Other financial assets¹
8,491
Miscellaneous other financial liabilities
1,094
1,094
Financing liabilities
Trade payables
157,540
159,288
144,902
144,933
12,707
12,707
14,185
In millions of euros
14,185
Financial liabilities recognized at fair value through profit or loss
52
52
56
56
Derivative financial instruments used in hedge accounting
1,186
-574
1,186
Other financial liabilities
Financial liabilities
Net amounts
Net amounts Financial Position
Financing liabilities
Other financial receivables and other financial assets are
carried at amortized cost. Because of the predominantly short
maturities of these financial instruments, it is assumed that
the fair values approximate the carrying amounts.
derivative commodity hedging contracts; the fair values
of commodity hedging contracts (e.g. commodity forwards)
are determined on the basis of current reference prices
with consideration of forward premiums and discounts and
default risks.
derivative interest rate hedging contracts; the fair values
of interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows (taking account of credit premiums and
default risks) using the market interest rates appropriate
to the remaining terms of the financial instruments.
derivative currency hedging contracts; the fair values of cross
currency interest rate swaps are determined on the basis
of the discounted estimated future cash flows (taking account
of credit premiums and default risks) using market interest
rates appropriate to the remaining terms of the financial
instruments. The valuation of currency forwards is based on
market quotes of forward curves; currency options are
measured with option-pricing models using market data.
Other financial assets recognized at fair value through profit or
loss include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
Marketable debt securities and equity instruments recognized
at fair value were measured using quoted market prices at
the end of the reporting period. If quoted market prices were
not available for these debt and equity instruments, fair
value measurement is based on inputs that are either directly
or indirectly observable in active markets. Fair values are
calculated using recognized financial valuation models such as
discounted cash-flow models or multiples.
Equity Instruments are recognized at fair value through other
comprehensive income or at fair value through profit or loss.
The fair values of the equity instruments recognized through
other comprehensive income are included in table 7 F.73 and
comprise Sila Nanotechnologies Inc., BAIC BluePark New
Energy Technology Co., Ltd as well as further investments not
material on an individual basis. Daimler does not generally
intend to sell its equity instruments which are presented at
December 31, 2019.
Marketable debt securities are recognized at fair value through
other comprehensive income or at fair value through profit
or loss. Similar investments are measured at amortized cost and
are not included in the measurement hierarchy, as their
carrying amount is a reasonable approximation of fair value
due to the short terms of these financial instruments and
the fundamentally lower credit risk.
Marketable debt securities and similar investments,
other financial assets
500
Due to the short terms of these financial instruments and
the fundamentally lower credit risk, it is assumed that their fair
values are equal to the carrying amounts.
Trade receivables and cash and cash equivalents
The discounting is based on the current interest rates at which
similar loans with identical terms could have been obtained at
December 31, 2019 and December 31, 2018.
The fair values of receivables from financial services with
variable interest rates are estimated to be equal to the respec-
tive carrying amounts, because the agreed upon interest
rates and those available in the market do not significantly differ.
The fair values of receivables from financial services with
fixed interest rates are determined on the basis of discounted
expected future cash flows.
Receivables from financial services
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Level 11
288
The fair values of bonds, loans, commercial paper, deposits in
the direct banking business and liabilities from ABS transac-
tions are calculated as present values of the estimated future
cash flows (taking account of credit premiums and credit
risks). Market interest rates for the appropriate terms are used
for discounting.
Trade payables
Due to the short maturities of these financial instruments,
it is assumed that their fair values are equal to the carrying
amounts.
Contract and refund liabilities
Gross and net
amounts of finan-
cial instruments in
the Consolidated
Statement of
Amounts
subject to a
master netting
arrangement
At December 31, 2019
Gross and net
amounts of finan-
cial instruments in
the Consolidated
Statement of
Financial Position
Disclosure for recognized financial instruments that are subject to an enforceable master netting arrangement or similar agreement
F.74
Table 71 F.76 shows into which measurement hierarchies
(according to IFRS 13) the fair values of the financial assets
and liabilities are classified which are not recognized at
fair value in the Consolidated Statement of Financial Position.
For the determination of the credit risk from derivative finan-
cial instruments which are allocated to Level 2 measurement
hierarchy, portfolios managed on basis of net exposure are
applied.
At the end of each reporting period, Daimler reviews the
necessity of reclassification between the measurement hierar-
chies.
Amounts
subject to a
master netting
arrangement
Table 7 F.75 provides an overview of the classification into
measurement hierarchies of financial assets and liabilities rec-
ognized at fair value (according to IFRS 13).
Table 71 F.74 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements
as well as the possible financial effects of netting in accor-
dance with the master netting arrangements.
The Group concludes derivative transactions in accordance
with the master netting arrangements (framework agreement)
of the International Swaps and Derivatives Association (ISDA)
and comparable national framework agreements. However,
these arrangements do not meet the criteria for netting in the
Consolidated Statement of Financial Position, as they allow
netting only in the case of future events such as default or
insolvency on the part of the Group or the counterparty.
Offsetting of financial instruments
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
Financial liabilities recognized at fair value through profit or loss
comprise derivative financial instruments not used in hedge
accounting. For information regarding these financial instruments
as well as derivative financial instruments used in hedge
accounting, see the notes above under marketable debt securi-
ties and similar investments, other financial assets.
Other financial liabilities
289
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Contract and refund liabilities include obligations from sales
transactions that qualify as financial instruments. Obligations
from sales transactions should generally be regarded as short
term. Due to the short maturities of these financial instru-
ments, it is assumed that their fair values are equal to their
carrying amounts.
Measurement hierarchy
140,227
At December 31, 2018
150,206
103,661
104,930
96,740
97,144
12,332
12,332
12,586
12,586
Cash and cash equivalents
18,883
18,883
15,853
15,853
Marketable debt securities and similar investments
8,655
8,655
9,577
At December 31, 2019
9,577
Trade receivables
Receivables from financial services
Financial assets
Fair value
568
576
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge
accounting and financial assets recognized at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge
accounting and financial liabilities recognized at fair value through profit or loss (see Note 25).
290
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.75
Carrying amounts and fair values of financial instruments
Table 71 F.73 shows the carrying amounts and fair values
of the respective classes of the Group's financial instruments.
Recognized at fair value through other comprehensive income
The fair value of a financial instrument is the price that would
be received to sell an asset or paid to transfer a liability in an
139,823
The fair values of financial instruments were calculated on
the basis of market information available on the balance sheet
date. The following methods and premises were used:
F.73
Carrying amounts and fair values of financial instruments
In millions of euros
At December 31, 2019
Carrying
At December 31, 2018
amount
Fair value Carrying amount
orderly transaction between market participants at the
measurement date. Given the varying influencing factors, the
reported fair values can only be viewed as indicators
of the prices that may actually be achieved on the market.
5,323
5,323
Measurement hierarchy of financial assets and liabilities recognized at fair value
364
378
378
384
384
Other financial assets recognized at fair value through profit or loss
27
27
109
364
109
1,191
1,191
1,033
1,033
3,328
3,328
3,177
3,177
148,937
Derivative financial instruments used in hedge accounting
Other receivables and miscellaneous other financial assets
-574
482
Recognized at fair value through other comprehensive income
Recognized at fair value through profit or loss
5,855
5,855
Recognized at fair value through profit or loss
2,858
2,858
3,059
3,059
482
474
Measured at cost
663
663
Other financial assets
Equity instruments and debt instruments
860
860
748
748
474
32. Financial instruments
Daimler manages market risks to minimize the impact of
fluctuations in foreign exchange rates, interest rates and com-
modity prices on the earnings of the Group and its segments.
The Group calculates its overall exposure to these market risks
to provide the basis for hedging decisions, which include
the selection of hedging instruments and the determination of
hedging volumes and the corresponding periods. The hedging
strategy is specified at Group level and implemented in the
segments according to the respective risk volumes. Decisions
regarding the management of market risks from foreign
exchange rates and commodities, as well as asset-/liability
management (interest rates) are regularly made by the relevant
Daimler risk management committees. Exposures are the
basis for the hedging strategies and are updated regularly.
The global nature of its businesses exposes Daimler to
significant market risks resulting from fluctuations in foreign
currency exchange rates, interest rates and commodity
prices. The Group is also exposed to equity price risk in con-
nection with its investments in listed companies.
1 The amounts were calculated as follows:
Daimler manages these risks via country exposure limits
(e.g. for hard currency portfolios of financial services entities)
and via insurance of equity investments in high-risk countries.
An internal rating system serves as a basis for Daimler's risk-
oriented country exposure management; it assigns all countries
to risk classes, with consideration of capital market indica-
tions of country risks.
5,200
Obligations from sales
234
141
261
377
788
5,653
7,454
interest and liabilities from financial guarantees
Miscellaneous other financial liabilities excluding accrued
1
2
12,704
12,707
Trade payables4
-160
-99
-121
5,200
Irrevocable loan commitments5
2,038
2,038
Daimler is exposed to country risk mainly resulting from cross-
border funding or collateralization of Group companies and
customers, from investments in subsidiaries, associated com-
panies, joint ventures and joint operations as well as from
cross-border trade receivables. Country risks also arise from
cross-border cash deposits at financial institutions.
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the respec-
tive country, e.g. resulting from sovereign measures such as
expropriation or interdiction of foreign currency transfers.
Country risk
301
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
5 The maximum available amounts are stated.
4 The cash outflows of trade payables are undiscounted.
3 The undiscounted sum of the net cash outflows of the derivative financial instruments is shown for the respective year. For individual periods,
this may also include negative cash flows from derivatives with an overall positive fair value.
Finance market risks
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
Certain existing benchmark interest rates including those
of the London Interbank Offer Rate (for USD, GBP, CHF and
JPY) will be comprehensively and internationally reformed
by the end of 2021. As a result, those interest rates will be
gradually abolished and replaced with alternative risk-free
reference rates. Alternative interest rates are being developed
on a national level in the context of the respective legal
systems and currencies; they can therefore vary with regard to
their structure, methodology and period of publication.
25,170
8,899
10,869
22,695
39,531
728
92,957
728
200,121
Financial guarantees
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler
can be required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
(b) The cash flows of floating interest financial instruments are estimated on the basis of forward rates.
The effect of the application of the new interest rates on the
consolidated financial statements is currently being reviewed.
In order to conduct financial transactions based on the new
indices, Daimler is preparing its IT-systems accordingly. Market
uncertainty still exists about when the new interest rates will
be available, how they will be calculated and how their applica-
tion will affect financial transactions. Daimler regularly dis-
cusses current developments of alternative risk-free interest
rates with its international banking partners.
303
The value at risk calculations employed:
rate risks were primarily determined by the development of
interest rate volatilities.
In the course of 2019, changes in the value at risk of interest
Table 71 F.90 shows the period-end, high, low and average value
at risk figures of the interest rate risk for the 2019 and 2018
portfolios of interest rate sensitive financial instruments and
derivative financial instruments of the Group, including the
financial instruments of the leasing and sales financing business.
Lease liabilities are not included in the value at risk of the
interest rate risk. These leasing liabilities have a fixed interest
rate and changes in interest rates therefore have no effect on
the Group's net profit. The average values have been computed
on an end-of-quarter basis.
Derivative financial instruments are also used in conjunction
with the refinancing related to the automotive segments
and liquidity management. Daimler steers the funding activities
of the automotive and financial services businesses at the
Group level.
An asset/liability committee consisting of members of the
Daimler Mobility, Mercedes-Benz Cars and Daimler Trucks
segments and the Corporate Treasury department manages
the interest rate risk by setting targets for the interest rate risk
position. The Treasury Risk Management department and
the local Daimler Mobility companies are jointly responsible for
achieving these targets. As separate functions, the Treasury
Controlling and the Daimler Mobility Controlling & Reporting
department monitors target achievement on a monthly basis.
In order to achieve the targeted interest rate risk positions in
terms of maturities and interest rate fixing periods, Daimler
also uses derivative financial instruments such as interest rate
swaps. Daimler assesses its interest rate risk position by
comparing assets and liabilities for corresponding maturities,
including the impact of the relevant derivative financial
instruments.
Daimler uses a variety of interest rate sensitive financial instru-
ments to manage the liquidity needs of the Group. A sub-
stantial volume of interest rate sensitive assets and liabilities
results from the leasing and sales financing business operated
by the Daimler Mobility segment. The Daimler Mobility com-
panies enter into transactions with customers that primarily
result in fixed-rate receivables. Daimler's general policy is
to match funding in terms of maturities and interest rates wher-
ever economically feasible. However, for a limited portion
of the receivables portfolio in selected and developed markets,
the Group does not match funding in terms of maturities
in order to take advantage of market opportunities. As a result,
Daimler is exposed to risks due to changes in interest rates.
Interest rate risk
Effects of currency translation. For purposes of Daimler's
Consolidated Financial Statements, the income and expenses
and the assets and liabilities of subsidiaries located outside
the euro zone are converted into euros. Therefore, period-to-
period changes in average exchange rates may cause trans-
lation effects that have a significant impact on, for example,
revenue, segment results (EBIT) and assets and liabilities of the
Group. Unlike exchange rate transaction risk, exchange rate
translation risk does not necessarily affect future cash flows.
The Group's equity position reflects changes in book values
caused by exchange rates. In general, Daimler does not hedge
against exchange rate translation risk.
Since currency risks arising from the Group's investment
or refinancing in foreign currencies and the respective hedging
transactions principally offset each other, these financial
instruments are not included in the value at risk calculation
presented.
The Group's investments in liquid assets or refinancing activi-
ties are generally selected so that possible currency risks are
minimized. Transaction risks arising from liquid assets or pay-
ables in foreign currencies that result from the Group's
investment or refinancing on money and capital markets are
generally hedged against currency risks at the time of invest-
ing or refinancing in accordance with Daimler's internal guide-
lines. The Group uses appropriate derivative financial
instruments (e.g. cross-currency interest rate swaps) to hedge
against currency risk.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 305
In 2019, the development of the value at risk from foreign
currency hedging was mainly driven by decreases in foreign
currency rate volatilities and hedge volumes.
304
Until year-end 2018, the designation of hedge relationships
for a specific currency and maturity had no further differentia-
tion in respect of the expected cash flows by segment. In
the context of focusing on the divisional perspective, the des-
ignation of hedge relationships for foreign currency risk
existing from the Group perspective from expected future cash
flows from business operations, primarily from vehicle sales,
have been assigned to Mercedes-Benz Cars/Mercedes-Benz
Vans and to Daimler Trucks/Daimler Buses starting with
2019. Accordingly, the documentation required under IFRS with
regard to this further differentiation of expected cash flows
(i.e. the risk management objectives) has been revised for a
large proportion of the already designated hedge relationships
for foreign currency risk, although there has been no change
in the overall Group risk management strategy for foreign cur-
rency risk. Pursuant to the described methods applied in
preparation of the financial statements, this results in the for-
mal discontinuation and immediate redesignation of existing
hedge relationships according to the revised differentiation. The
accumulated hedging gains/losses subject to redesignation
as of December 31, 2018 remained in the other reserves for
derivative financial instruments because the hedged future
cash flows are still expected to occur. Further information can
be found in table 7 F.83. There were no material effects in
2019.
- Changes in the timing of the hedged transactions.
Effects of the credit risk on the fair value of the used
derivative instrument which is not reflected in the change of
the hedged currency risk.
Hedge accounting. When designating derivative financial
instruments, a hedge ratio of 1 is applied. In addition, the
respective volume and currency of the hedge and the underly-
ing transaction as well as maturity dates are matched. The
Group ensures an economic relationship between the underly-
ing transaction and the hedging transaction by ensuring
consistency of currency, volume and maturity. In the case of
options for currency hedging, the option premium is not
designated into the hedge relationship, but the hedging costs
are deferred in other comprehensive income and recognized
in profit or loss at the due date of the underlying transaction.
The effectiveness of the hedge is assessed at the beginning
and during the economic relationship. Possible sources of inef-
fectiveness of the hedge relationship are:
Table 7F.90 shows the period-end, high, low and average
value at risk figures of the exchange rate risk for the 2019 and
2018 portfolios of derivative financial instruments, which
were entered into primarily in connection with the operative
vehicle businesses. Average exposure has been computed
on an end-of-quarter basis. The offsetting transactions under-
lying the derivative financial instruments are not included in
the following value at risk presentation. See also table 71 F.86.
18
14
23
14
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Hedge accounting. When designating derivative financial
instruments, a hedge ratio of 1 is generally applied. The respec-
tive volumes, interest curves and currencies of the hedged
item and the hedging instrument as well as maturity dates are
matched. In the case of combined derivative financial instru-
ments for interest currency hedges, the cross-currency basis
spread is not designated into the hedge relationship, but
deferred as a hedging cost in other comprehensive income and
recognized in profit or loss over the hedge term. The Group
ensures an economic relationship between the underlying trans-
action and the hedging instrument by ensuring consistency of
interest rates, maturity terms and nominal amounts. The effec-
tiveness of the hedge is assessed at the beginning and during
the economic relationship using the hypothetical derivative
method. Possible sources of ineffectiveness of the hedge rela-
tionship are:
Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged interest rate risk.
- Changes in the parameters of the underlying hedged trans-
actions.
Daimler Mobility's performance is measured on the basis
of return on equity, which is the usual procedure in the banking
business.
Segment assets principally comprise all assets. The vehicle
segments' assets exclude income tax assets, assets from
defined-benefit pension plans and other post-employment
benefit plans, and certain financial assets (including liquidity).
Segment liabilities principally comprise all liabilities. The
vehicle segments' liabilities exclude income tax liabilities,
liabilities from defined benefit pension plans and other post-
employment benefit plans, and certain financial liabilities
(including financing liabilities).
Intersegment revenue is generally recorded at values that
approximate market terms.
The measure of the Group's profit or loss used by Daimler's
management and reporting structure is referred to as "EBIT".
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income/expense, and the profit/loss on equity-
method investments, net, as well as other financial income/
expense, net. Although amortization of capitalized borrowing
costs is included in cost of sales, it is not included in EBIT.
The performance measure used by the Group's internal manage-
ment and reporting structure for the automotive segments
is return on sales.
The internal management and reporting structure at the Daimler
Group principally is based on the accounting policies that are
described in Note 1 in the summary of significant account-
ing policies according to IFRS.
Internal management and reporting structure
The Daimler Mobility segment supports the sales of the Group's
vehicle segments worldwide. Its product portfolio primarily
comprises tailored financing and leasing packages for end-cus-
tomers and dealers, brokering of automotive insurance and
banking services. The segment also provides services such as
fleet management in Europe, which primarily takes place
through the Athlon brand. Furthermore, Daimler Mobility is
active in the area of innovative mobility services.
The vehicle segments develop and manufacture passenger
cars, trucks, vans and buses. The Mercedes-Benz Cars segment
comprises premium vehicles of the Mercedes-Benz brand
including the brands Mercedes-AMG and Mercedes-Maybach,
and small cars under the smart brand, as well as the brand
Mercedes me. Electric products are marketed under the EQ
brand. Daimler Trucks distributes its trucks under the brand
names Mercedes-Benz, Freightliner, FUSO, Western Star and
BharatBenz. Furthermore, buses under the brands Thomas
Built Buses and FUSO are included in the Daimler Trucks range
of products. The vans of the Mercedes-Benz Vans segment
are primarily sold under the brand name Mercedes-Benz and
also under the Freightliner brand. Daimler Buses sells com-
pletely built-up buses under the brand names Mercedes-Benz
and Setra. In addition, Daimler Buses produces and sells
bus chassis. The vehicle segments also sell related spare parts
and accessories.
The reportable segments of the Group are Mercedes-Benz Cars,
Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and
Daimler Mobility (formerly Daimler Financial Services). The
segments are largely organized and managed separately,
according to nature of products and services provided, brands,
distribution channels and profile of customers.
Reportable segments
34. Segment reporting
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
306
Daimler predominantly holds investments in shares of compa-
nies which are classified as long-term investments, some
of which are accounted for using the equity method, such as
BAIC Motor. These investments are not included in a market
risk assessment of the Group.
Equity price risk
- Changes in the timing of the hedged transactions.
Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged commodity price risk.
Hedge accounting. When designating currency derivative finan-
cial instruments, Daimler generally applies a hedge ratio of 1.
The respective volumes and parameters relevant for the valua-
tion of the hedged item and the hedging instrument as well
as maturity dates are matched. The Group ensures an economic
relationship between the hedged item and the hedging instru-
ment by ensuring consistency of volumes, parameters relevant
for valuation and maturity terms. Effectiveness is assessed at
initial designation and during the hedge term. Possible sources
of ineffectiveness of the hedge relationship are:
In 2019, the value at risk of commodity derivatives ranged
close to the previous year's level.
Table F.90 shows the period-end, high, low and average
value at risk figures of the commodity price risk for the 2019
and 2018 portfolio of derivative financial instruments used
to hedge raw material price risk. Average exposure has been
computed on an end-of-quarter basis. The transactions
underlying the derivative financial instruments are not included
in the value at risk presentation. See also table 7 F.86.
For precious metals, central commodity management shows
an unhedged position of 55% of the forecasted commodity
purchases at year-end 2019 for calendar year 2020. The corre-
sponding figure at year-end 2018 was 39% for calendar year
2019.
Daimler is exposed to the risk of changes in commodity prices
in connection with procuring raw materials and manufacturing
supplies used in production. A small portion of the raw mate-
rial price risk, primarily relating to forecasted procurement of
certain metals, is mitigated with the use of derivative financial
instruments.
Commodity price risk
21
As part of its risk management system, Daimler employs
value at risk analyses. In performing these analyses, Daimler
quantifies its market risk due to changes in foreign currency
exchange rates and interest rates and certain commodity prices
on a regular basis by predicting the potential loss over a target
time horizon (holding period) and confidence level.
17
18
Period-end
2019
In millions of euros
Value at risk for exchange rate risk, interest rate risk and commodity price risk
F.90
-191
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The hedged position of the operating vehicle businesses is
influenced by the amount of derivative currency contracts held.
The derivative financial instruments used to cover foreign
currency exposure are primarily forward foreign exchange con-
tracts and currency options. Daimler's guidelines call for a
mixture of these instruments depending on the assessment of
market conditions. Value at risk is used to measure the
exchange rate risk inherent in these derivative financial instru-
ments.
The Group's targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally limited
by uncertainty related to cash flows that lie far in the future;
on the other hand, it may also be limited by the fact that appro-
priate currency contracts are not available. This reference
model aims to limit risks for the Group from unfavorable move-
ments in exchange rates while preserving some flexibility to
participate in favorable developments. Based on this reference
model and depending on the market outlook, the FXCo deter-
mines the hedging horizon, which usually varies from one to five
years, as well as the average hedge ratios. Reflecting the
character of the underlying risks, the hedge ratios decrease with
increasing maturities. At year-end 2019, foreign exchange
management showed an unhedged position in the automotive
business in calendar year 2020 for the underlying forecasted
cash flows in US dollars of 27%, for the underlying forecasted
cash flows in Chinese renminbi of 40% and for the underlying
forecasted cash flows in British pounds of 26%.
Risk Controlling regularly informs the Board of Management of
the actions taken by Corporate Treasury based on the FXCo's
decisions.
High
Benz Cars/Mercedes-Benz Vans and Daimler Trucks/Daimler
Buses. Suitable measures are generally taken without delay
to eliminate any over-hedging at Group level regarding hedging
transactions caused by changes in exposure. In the case of
over hedges at the level of Mercedes-Benz Cars/Mercedes-
Benz Vans or Daimler Trucks/Daimler Buses, designated hedg-
ing relations are reviewed with respect to any requirements
to discontinue hedge accounting.
The Group's overall currency exposure is reduced by natural
hedging, which consists of the currency exposures of the busi-
ness operations of individual segments partially offsetting
each other at Group level. These natural hedges eliminate the
need for hedging to the extent of the matched exposures. To
provide an additional natural hedge against any remaining
transaction risk exposure, Daimler generally strives to increase
cash outflows in the same currencies in which the Group has
a net excess inflow.
Transaction risk and currency risk management. The global
nature of Daimler's businesses exposes cash flows and earnings
to risks arising from fluctuations in exchange rates. These
risks primarily relate to fluctuations between the euro and the
US dollar, the Chinese renminbi, the British pound and other
currencies such as currencies of growth markets. In the oper-
ating vehicle business, the Group's exchange rate risk primarily
arises when revenue is generated in a currency that is different
from the currency in which the costs of revenue is converted
into the currency in which the costs are incurred, it may be
inadequate to cover the costs if the value of the currency in which
the revenue is generated declined in the interim relative to
the value of the currency in which the costs were incurred. This
risk exposure primarily affects Mercedes-Benz Cars/Mercedes-
Benz Vans, which generate a major portion of their revenue in
foreign currencies and incur manufacturing costs primarily
in euros. Daimler Trucks/Daimler Buses are also exposed to
transaction risks, but only to a minor degree because of
their global production network. The exposures of these seg-
ments serve as a basis for analyzing exchange rate risks
at Group level. In addition, the Group is indirectly exposed to
transaction risk from its equity-method investments.
Exchange rate risk
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
302
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors consistent with current
market volatilities. The changes in market risk factors allow
the calculation of a possible change in the portfolio value over
the holding period. Running multiple iterations of this simula-
tion leads to a distribution of portfolio value changes. The value
at risk can be determined based on this distribution as the
portfolio value loss which is reached or exceeded with a proba-
bility of 1%.
When calculating value at risk using the variance-covariance
approach, Daimler first computes the current market value of
the Group's financial instruments portfolio. Then the sensitivity
of the portfolio value to changes in the relevant market risk
factors, such as particular foreign currency exchange rates or
interest rates of specific maturities, is quantified. Based on
volatilities and correlations of these market risk factors, which
are obtained from the RiskMetrics TM dataset, a statistical
distribution of potential changes in the portfolio value at the
end of the holding period is computed. The loss which is
reached or exceeded with a probability of only 1% can be derived
from this calculation and represents the value at risk.
At the Group level, Daimler calculates the value at risk for
exchange rate and interest rate risk according to the variance-
covariance approach. The value at risk calculation method
for commodity hedging instruments is based on a Monte Carlo
simulation.
assume a 99% confidence level and a holding period of five
days.
express potential losses in fair values, and
In order to mitigate the impact of currency exchange rate fluc-
tuations for the operating business (future transactions),
Daimler continually assesses its exposure to exchange rate
risks and hedges a portion of those risks by using derivative
financial instruments. Daimler's Foreign Exchange Committee
(FXCO) manages the Group's exchange rate risk and its hedging
transactions through currency derivatives. The FXCo consists
of representatives of the relevant segments and central func-
tions. The Corporate Treasury department aggregates foreign
currency exposures from Daimler's subsidiaries and operative
units and implements the FXCo's decisions concerning foreign
currency hedging through transactions with international finan-
cial institutions. For reporting purposes and accounting for
hedge relationships, those hedges are allocated to Mercedes-
Low
Average Period-end
High
(from derivative financial instruments)
Commodity price risk
36
26
45
26
94
34
156
131
Interest rate risk
633
568
695
568
422
333
528
333
(from derivative financial instruments)
Exchange rate risk
2018
Average
Low
25
-48
With respect to other receivables and financial assets
included in other financial assets in 2019 and 2018, Daimler
is exposed to credit risk only to a small extent.
90
Maximum
risk
position
2019
see also
Note
irrevocable loan commitments and financial guarantees
Maximum risk positions of financial assets,
F.88
F❘| CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
298
Liquid assets consist of cash and cash equivalents and market-
able debt securities and similar investments. With the invest-
ment of liquid assets, banks and issuers of securities are selected
very carefully and diversified in accordance with a limit sys-
tem. Liquid assets are mainly held at financial institutions
within and outside Europe with high creditworthiness, as bonds
issued by German federal states and as money market funds.
In connection with investment decisions, priority is placed on
the borrower's very high creditworthiness and on balanced risk
diversification. The limits and their utilizations are reassessed
continuously. In this assessment, Daimler also considers the
credit risk assessment of its counterparties by the capital mar-
kets. In line with the Group's risk policy, most liquid assets
are held in investments with an external rating of "A" or better.
Liquid assets are thus not subject to a material credit risk
and are allocated to stage 1 of the impairment model, which is
based on expected credit risk.
Liquid assets
The maximum risk positions of financial assets which are gen-
erally subject to credit risk are equal to their carrying amounts
(without consideration of collateral, if available). There is also
a risk of default from irrevocable loan commitments which had
not been utilized as of that date, as well as from financial
guarantees. The maximum risk position in these cases is equal
to the expected future cash outflows. Table 7 F.88 shows
the maximum risk positions.
1,606
688
1,245
819
814
Maximum
risk
position
2018
In millions of euros
Liquid assets
27,538
not used in hedge accounting
Derivative financial instruments
1,033
1,191
16
(assets only)
used in hedge accounting
Platinum (in € per troy ounce)
Palladium (in € per troy ounce)
Aluminum (in € per ton)
Derivative financial instruments
103,661
12,332
19
Trade receivables
14
financial services
Receivables from
25,430
96,740
12,586
Commodity risk
-0.07%
-0.57%
Foreign currency risk
USD per €
CNY per €
2018
At December 31,
2019
Average prices of hedging instruments for the major risks
F.87
Credit risk is the risk of economic loss arising from counter-
party's failure to repay or service debt in accordance with
the contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditworthi-
ness as well as concentration risks.
Credit risk
1.17
Note 22 for additional information on Daimler's pension
and other post-employment benefits.
The Group manages and monitors these risks primarily
through its operating and financing activities and, if required,
through the use of derivative financial instruments. Daimler
uses derivative financial instruments exclusively for hedging
financial risks that arise from its operating business or
refinancing activities. Without these derivative financial instru-
ments, the Group would be exposed to higher financial risks
(additional information on financial instruments and especially
on the volumes of the derivative financial instruments used is
included in Note 32). Daimler regularly evaluates its finan-
cial risks with due consideration of changes in key economic
indicators and up-to-date market information.
Daimler has established internal guidelines for risk controlling
procedures and for the use of financial instruments, including
a clear segregation of duties with regard to financial activities,
settlement, accounting and the related controlling. The guide-
lines upon which the Group's risk management processes for
financial risks are based are designed to identify and analyze
these risks throughout the Group, to set appropriate risk limits
and controls and to monitor the risks by means of reliable
and up-to-date administrative and information systems. The
guidelines and systems are regularly reviewed and adjusted
to changes in markets and products.
As a result of its businesses and the global nature of its opera-
tions, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An equity
price risk results from investments in listed companies. In
addition, the Group is exposed to credit risks from its leasing
and financing activities and from its operating business (trade
receivables). Furthermore, the Group is exposed to liquidity
and country risks relating to its credit and market risks or a
deterioration of its operating business or financial market
disturbances. If these financial risks materialize, they could
adversely affect Daimler's profitability, liquidity and capital
resources and financial position.
General information on financial risks
33. Management of financial risks
297
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Any market sensitive instruments including equity and debt
securities that the plan assets hold to finance pension and
other post-employment healthcare benefits are not included in
the following quantitative and qualitative analysis. See
(assets only)
1.18
8.37
Average interest rate - USD
-0.59%
-0.84%
Average interest rate - €
Cash flow hedges
0.46%
-0.21%
8.14
Average interest rate - USD
-0.92%
Average interest rate - €
Fair value hedges
Interest rate risk
GBP per €
0.88
0.88
-0.82%
16
27
109
2020
Total
In millions of euros
Liquidity runoff for liabilities and financial guarantees¹
F.89
in
Information on the Group's financing liabilities is also provided
Note 24.
2021
Table 7 F.89 provides an overview of how the future liquidity
situation of the Group can be affected by the cash flows
from liabilities, financial guarantees and irrevocable loan com-
mitments as of December 31, 2019.
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending
on funding requirements and market conditions, Daimler issues
commercial paper, bonds, debt obligations and financial
instruments secured by receivables in various currencies. Bank
credit facilities are also used to cover financing requirements.
Potential downgrades of Daimler's credit ratings could have a
negative impact on the Group's financing. Since July 2018,
Daimler has a syndicated credit facility with a volume of €11 bil-
lion with a consortium of international banks at its disposal.
Exercising an optional extension of one year beyond the original
term grants additional financial flexibility for Daimler until
2024. The term can be extended for another year until 2025.
As of December 31, 2019, the credit line is still not utilized.
From an operating point of view, the management of the
Group's liquidity exposures is centralized by a daily cash-pool-
ing process. This process enables Daimler to manage its
liquidity surplus and liquidity requirements according to the
actual needs of the Group and each subsidiary. The Group's
short-term and mid-term liquidity management takes into
account the maturities of financial assets and financial liabilities
and estimates of cash flows from the operating business.
At December 31, 2019, liquidity amounted to €27.5 billion
(2018: €25.4 billion). In 2019, significant cash inflows resulted
from the operations of the industrial business. Furthermore,
a dividend payment from Beijing Benz Automotive Co., Ltd. had
a positive effect on liquidity. Cash outflows resulted in par-
ticular from investments in intangible assets and property, plant
and equipment, income taxes paid and a fine notice concluding
the administrative offense proceedings against Daimler AG.
At Daimler Mobility, cash outflows mainly resulted from the
portfolio growth of the leasing and sales finance activities
and from the merger of the mobility services of Daimler Group
and BMW Group. Cash inflows and outflows in connection
with the cash flow of the financing activities were also effective.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
300
The funds raised are used to finance working capital and
capital expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accor-
dance with internal guidelines, the refunding of the lease and
financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from financial
services.
Daimler manages its liquidity by holding adequate volumes
of liquid assets and by maintaining syndicated credit facilities
in addition to the cash inflows generated by its operating
business. Additionally, the possibility to securitize receivables
of financial services business (ABS transactions) also reduces
the Group's liquidity risk. Liquid assets comprise cash and
cash equivalents and marketable debt securities and similar
investments. The Group can dispose of these liquid assets
at short notice.
In addition, customer deposits at Mercedes-Benz Bank are
used as a further source of refinancing.
Liquidity risk comprises the risk that a company cannot meet
its financial obligations in full.
2022
2024
Derivative financial instruments³
2,115
382
459
540
661
792
2023
25,096
22,508
38,789
65,925
171,904
4,949
thereof lease liabilities
Financing liabilities²
≥ 2025
10,729
709
Liquidity risk
Financial guarantees
If, in connection with contracts, a worsening of payment behav-
ior or other causes of a credit risk are recognized, collection
procedures are initiated by claims management to obtain the
overdue payments of the customer, to take possession of
the asset financed or leased or, alternatively, to renegotiate the
impaired contract. Restructuring policies and practices are
based on the indicators or criteria which, in the judgment of
local management, indicate that repayment will probably
continue and that the total proceeds expected to be derived
from the renegotiated contract exceed the expected proceeds
to be derived from repossession and remarketing. For receiv-
ables from financial services, significant modifications of finan-
cial assets only occurred in rare cases and immaterial volume.
For information on credit risks included in receivables
from financial services, see Note 14. Information on the
measurement of expected credit losses is provided in
Note 1.
For the assessment of the default risk of retail and small
business customers scoring systems are applied to evaluate
their creditworthiness. Corporate customers are evaluated
using internal rating instruments. Both evaluation processes
use external credit bureau data if available. The scoring and
rating results as well as the availability of security and other
risk mitigation instruments, such as advance payments,
guarantees and, to a lower extent, residual debt insurances,
are essential elements for credit decisions.
With respect to its financing and lease activities, the Group
holds collateral for customer transactions limiting actual credit
risk through its fair value. The value of collateral generally
depends on the amount of the financed assets. The financed
vehicles usually serve as collateral. Furthermore, Daimler
Mobility limits credit risk from financing and lease activities,
for example through advance payments from customers.
The Daimler Mobility segment has guidelines setting the
framework for effective risk management at a global as well as
a local level. In particular, these rules deal with minimum
requirements for all risk-relevant credit processes, the definition
of financing products offered, the evaluation of customer
quality, requests for collateral as well as the treatment of unse-
cured loans and non-performing claims. The limitation of
concentration risks is implemented primarily by means of global
limits, which refer to single customer exposures. As of
December 31, 2019, exposure to the biggest 15 customers did
not exceed 4.4% (2018: 3.8%) of the total portfolio.
Exposure to credit risk from financing and lease activities is
monitored based on the portfolio subject to credit risk. The
portfolio subject to credit risk consists of wholesale and retail
receivables from financial services and the portion of the
operating lease portfolio that is subject to credit risk. Receiv-
ables from financial services comprise claims arising from
finance lease contracts and repayment claims from financing
loans. The operating lease portfolio is reported under equip-
ment on operating leases in the Group's Consolidated Financial
Statements. Overdue lease payments from operating lease
contracts are recognized in receivables from financial services.
Daimler's financing and leasing activities are primarily focused
on supporting the sales of the Group's automotive products.
As a consequence of these activities, the Group is exposed to
credit risk, which is monitored and managed based on defined
standards, guidelines and procedures. Daimler manages its
credit risk irrespective of whether it is related to a financing
contract or to an operating lease or a finance lease contract.
For this reason, statements concerning the credit risk of Daimler
Mobility refer to the entire financing and leasing business,
unless specified otherwise.
The allowance ratio increased compared to the low level of
the previous year.
672
3,177
2,051
2,038
728
Financial guarantees
Irrevocable loan commitments
3,328
16
Other receivables and financial
assets
Receivables from financial services
The maximum potential obligations resulting from financial
guarantees amount to €728 million at December 31, 2019
(2018: €672 million) and include liabilities recognized at Decem-
ber 31, 2019 in the amount of €107 million (2018: €124 million).
Financial guarantees principally represent contractual arrange-
ments. These guarantees generally provide that in the event
of default or non-payment by the primary debtor, the Group will
be required to settle such financial obligations.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Trade receivables
The Daimler Mobility segment in particular is exposed to
credit risk from irrevocable loan commitments to retailers and
end customers. At December 31, 2019, irrevocable loan
commitments amounted to €2,038 million (2018: €2,051 million).
These loan commitments had a maturity of less than one
year and are not subject to a material credit risk.
Irrevocable loan commitments
Other receivables and financial assets
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operational business,
financing activities or liquidity management. Daimler manages
its credit risk exposure in connection with derivative financial
instruments through a limit system, which is based on the
review of each counterparty's financial strength. This system
limits and diversifies the credit risk. As a result, Daimler is
exposed to credit risk only to a small extent with respect to its
derivative financial instruments. In accordance with the
Group's risk policy, most derivatives are contracted with coun-
terparties which have an external rating of "A" or better.
Derivative financial instruments
Further information on trade receivables and the status of
impairments recognized is provided in Note 19.
The residual value risks associated with the Group's operating
leases and finance lease receivables are generally borne by
the vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Mobility; the terms vary by vehicle
segment and geographic region.
299
For impairments of trade receivables, the simplified approach
is applied, whereby these receivables are allocated to stage 2.
Credit losses until maturity for these trade receivables are
recognized upon initial recognition.
first-class bank guarantees and
letters of credit.
credit insurances,
-
Depending on the creditworthiness of the customers,
Daimler usually establishes credit limits and limits credit risks
with the following types of collateral:
For trade receivables from export business, Daimler also evalu-
ates its customers' creditworthiness by means of an internal
rating process under consideration of the respective country
risk. In this context, the year-end financial statements and
other relevant information on the general distribution companies
such as payment history are used and assessed.
A significant part of the trade receivables from each country's
domestic business is secured by various country-specific
types of collateral. This collateral includes conditional sales,
guarantees and sureties as well as mortgages and advance
payments from customers.
Trade receivables are mostly receivables from worldwide sales
activities of vehicles and spare parts. The credit risk from
trade receivables encompasses the default risk of customers,
e.g. dealers and general distribution companies, as well as
other corporate and private customers. In order to identify credit
risks, Daimler assesses the creditworthiness of customers.
Daimler manages its credit risk from trade receivables using
appropriate IT applications and databases on the basis
of internal guidelines which have to be followed globally.
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
8,857
5,684
Capital share
in %1
Footnote
I. Consolidated subsidiaries
Athlon Beheer International B.V.
Schiphol, Netherlands
100.00
Athlon Beheer Nederland B.V.
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
Athlon Car Lease Italy S.R.L.
Athlon Car Lease Nederland B.V.
Athlon Car Lease Polska Sp. z o.O.
Athlon Car Lease Portugal, Ida
Athlon Car Lease Rental Services B.V.
Athlon Car Lease Rental Services Belgium N.V.
Athlon Car Lease S.A.S.
Athlon Car Lease Spain, S.A.
Athlon Dealerlease B.V.
Athlon France S.A.S.
Athlon Germany GmbH
Athlon Mobility Consultancy B.V.
Schiphol, Netherlands
100.00
Machelen, Belgium
100.00
Schiphol, Netherlands
100.00
Domicile, Country
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 315
Name of the Company
F.98
8
thereof KPMG AG Wirtschaftsprüfungs-
gesellschaft
4
6
75
66
39. Auditor fees
The shareholders of Daimler AG elected KPMG AG Wirtschafts-
prüfungsgesellschaft as the external auditor at the Annual
Shareholders' Meeting held on May 22, 2019. Table 71 F.97
shows the fees for services provided by KPMG AG Wirtschafts-
prüfungsgesellschaft and the companies of the worldwide
KPMG network to Daimler AG, the consolidated subsidiaries as
well as joint operations.
Audit services relate to the audit of Daimler Group's Con-
solidated Financial Statements and the year-end financial
statements, as well as to all services required for the audit
including the reviews of interim financial statements, the
accounting-related audit of the internal control system,
and accounting-related reviews of the introduction of IT sys-
tems and processes.
Other attestation services include attestation services
required by law or by contractual agreement, or voluntarily
assigned services. In addition to reviews of non-accounting-
related IT systems and processes, they also include attestation
services in connection with "Project Future." Furthermore,
audits in connection with compliance management systems, the
issuance of comfort letters, and non-financial disclosures
and reports were commissioned.
Tax services primarily relate to value-added tax advisory.
Rome, Italy
Other services mainly relate to non-accounting-relevant IT- and
process consulting and quality assurance.
Personnel measures in production-related and
administrative areas in the years 2020 to 2022
In January 2020, Daimler agreed with the General Works
Council on a general company agreement that, among other
things, regulates voluntary agreements on termination of
employment primarily for employees in indirect areas (i.e. in
administration and production-related areas). Discussions
with employees on voluntary agreements on termination of
employment will begin in the second quarter of 2020.
Establishment of joint venture smart Automobile Co., Ltd.
Mercedes-Benz AG and Zhejiang Geely Holding Group estab-
lished the joint venture smart Automobile Co., Ltd. in December
2019. The two companies are expected to contribute equal
shares of RMB 2.7 billion each to the equity of the joint venture
in the first half of 2020. The equity interest of Mercedes-Benz
AG will mainly consist of the contribution of the smart brand,
which will have a positive impact on earnings before taxes of
approximately €0.1 billion to €0.2 billion at the future Mercedes-
Benz Cars & Vans segment.
Sale of 30% of the shares in HERE
In December 2019, There Holding B.V. (THBV) and HERE Inter-
national B.V. (HERE) and other companies signed an agreement
on the basis of which 30% of the shares in HERE are to be
sold to a joint venture between Mitsubishi Corporation and
Nippon Telegraph and Telephone Corporation. The transaction
is expected to be completed in the first half of 2020 after
receiving the approval of the relevant authorities. The comple-
tion is expected to lead to a gain of €0.1 billion.
41. Additional information
German Corporate Governance Code
The Board of Management and the Supervisory Board of
Daimler AG have issued a declaration pursuant to Section 161
of the German Stock Corporation Act (AktG) and have made
it permanently available to their shareholders on Daimler's
website at https://www.daimler.com/documents/
company/corporate-governance/declarations/daimler-
declaration-en-12-2019.pdf.
Information on investments
The statement of investments of the Daimler Group pursuant to
Section 313 Subsection 2 Nos. 1-6 of the German Commercial
Code (HGB) is presented in table 7 F.98. In general, coopera-
tions without an equity interest are not reported. Information
on equity and earnings and information on investments pursu-
ant to Section 313 Subsection 2 No. 4 of the German Commer-
cial Code is omitted insofar as, pursuant to Section 313 Sub-
section 3 Sentence 4 of the HGB, such information is of minor
relevance for a fair presentation of the profitability, liquidity
and capital resources or financial position of the Daimler Group.
In addition, the statement of investments indicates which
consolidated companies make use of the exemption pursuant to
Section 264 Subsection 3 of the HGB and/or Section 264b of
the HGB. The Consolidated Financial Statements of Daimler AG
release those subsidiaries from the requirements that would
otherwise apply.
40. Events after the reporting period
100.00
Schiphol, Netherlands
100.00
100.00
Athlon Switzerland AG
Schlieren, Switzerland
100.00
AutoGravity Corporation
Irvine, USA
80.00
Banco Mercedes-Benz do Brasil S.A.
São Paulo, Brazil
100.00
Brooklands Estates Management Limited
Malmö, Sweden
Milton Keynes, United Kingdom
Campo Largo Comercio de Veículos e Peças Ltda.
CARS Technik & Logistik GmbH
Campinas, Brazil
100.00
Wiedemar, Germany
100.00
5
CLIDET NO 1048 (Proprietary) Limited
Centurion, South Africa
100.00
Conemaugh Hydroelectric Projects, Inc.
100.00
6
Athlon Sweden AB
Düsseldorf, Germany
Warsaw, Poland
100.00
Oeiras, Portugal
100.00
Schiphol, Netherlands
100.00
Machelen, Belgium
100.00
Le Bourget, France
100.00
Alcobendas, Spain
100.00
100.00
100.00
Le Bourget, France
100.00
Düsseldorf, Germany
100.00
Schiphol, Netherlands
100.00
Athlon Mobility Consultancy N.V.
Machelen, Belgium
100.00
Athlon Rental Germany GmbH
Hoofddorp, Netherlands
Other services
1
1
Total revenue
Intersegment revenue
External revenue
2019
In millions of euros
Group
Daimler
Total
Recon-
Segments ciliation
Daimler
Mobility
Daimler
Buses
Mercedes-
Benz Vans
89,683
Daimler
Trucks
Mercedes-
Segment information
F.91
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
308
In the year 2019, the merger of the mobility services of
Daimler Group and BMW Group affected earnings positively by
€718 million. Effects of €405 million from the realignment
of the YOUR NOW group affected EBIT negatively. In the prior-
year period, the negative effect of €418 million from the
conclusion of the Toll Collect arbitration proceedings reduced
EBIT. The interest income and interest expense of Daimler
Mobility are included in revenue and cost of sales, and are pre-
sented in Notes 4 and 5.
Daimler Mobility
There were no significant non-cash effects on earnings at the
Daimler Buses segment in 2019.
Daimler Buses
In the year 2019, EBIT at the Mercedes-Benz Vans segment
was reduced by a reassessment of risks relating to ongoing
governmental and legal proceedings and measures taken
with regard to Mercedes-Benz diesel vehicles in various regions
and markets (€2,200 million). Furthermore, earnings were
reduced by expenses in connection with the review and priori-
tization of the product portfolio (€828 million) and an updated
risk assessment for an expanded recall of vehicles with Takata
airbags (€341 million).
Mercedes-Benz Vans
Benz Cars
In the reporting year, there were no significant non-cash
effects on earnings at the Daimler Trucks segment.
38,393
4,194
17.9
Remuneration of the Supervisory Board¹
4.6
4.2
29.1
22.1
1 As of the year 2019, including remuneration for the members of the
Supervisory Board of Mercedes-Benz AG and of Daimler Truck AG
according to Section 314 Subsection 1 No. 6a of the German
Commercial Code (HGB).
Business transactions with related companies are carried
out at market terms. Most of the goods and services supplied
between the Group and related companies comprise trans-
actions with associated companies and joint ventures and are
shown in table 7 F.95.
Associated companies
A large proportion of the Group's sales of goods and services
with associated companies as well as of its receivables
relates to business relations with LSH Auto International Limited
(LSHAI) and with Beijing Benz Automotive Co., Ltd. (BBAC),
which is allocated to Mercedes-Benz Cars.
The purchases of goods and services shown in table 7 F.95
were primarily from LSHAI.
13,770
Joint ventures
Note 13 provides further details of the business operations
of the significant associated companies and joint ventures,
as well as significant transactions in the years 2019 and 2018.
9,547
182,292
172,745
172,745
26,337
2,309
28,646
4,562
171
4,733
14,801
40,235
93,877
1,031
1,842
In business relationships with joint ventures, significant sales
of goods and services took place with Fujian Benz Automotive
Co., Ltd. (FBAC), which is allocated to Mercedes-Benz Vans,
and with DAIMLER KAMAZ RUS OOO, which is allocated to
Daimler Trucks.
Wilmington, USA
Daimler Trucks
Mercedes-Benz Cars
314
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.97
Auditor fees
In millions of euros
2019
2018
Audit services
52
46
thereof KPMG AG Wirtschaftsprüfungs-
Information regarding the remuneration of the members
of the Board of Management and of the Supervisory Board is
disclosed on an individual basis in the Remuneration Report,
which is part of the Combined Management Report.
O Management Report from page 108
gesellschaft
23
Other attestation services
15
10
thereof KPMG AG Wirtschaftsprüfungs-
gesellschaft
12
8
Tax services
2
2
thereof KPMG AG Wirtschaftsprüfungs-
gesellschaft
28
In the year 2019, the Mercedes-Benz Cars segment's earnings
include expenses of €1,882 million due to a reassessment
of risks relating to ongoing governmental and legal proceed-
ings and measures taken with regard to Mercedes-Benz
Cars diesel vehicles in various regions and markets. Furthermore,
expenses in connection with an updated risk assessment
for an expanded recall of vehicles with Takata airbags caused a
reduction in earnings of €600 million. In addition, the remea-
surement at fair-value of shares in Aston Martin Lagonda Global
Holdings plc had a negative impact on EBIT.
The payments made in 2019 to former members of the Board
of Management of Daimler AG and their survivors amounted
to €19.5 million (2018: €16.2 million). The pension provisions
for former members of the Board of Management and their
survivors amounted to €355.8 million as of December 31, 2019
(2018: €270.2 million).
The members of the Board of Management do not receive
any remuneration for their board activities in the boards of the
subsidiaries. These activities are compensated by the remu-
neration at Daimler AG.
Table 71 F.91 presents segment information as of and for the
years ended December 31, 2019 and 2018.
With respect to information about geographical regions,
revenue is allocated to countries based on the location of the
customer; non-current assets are presented according to
the physical location of these assets.
Information related to geographic areas
Reconciliation also includes corporate projects, profits and
losses on derivative financial transactions allocated to head-
quarters and equity interests not allocated to the segments.
The effects of certain legal proceedings and compliance issues
are excluded from the operating results and liabilities of the
segments if such items are not indicative of the segments' per-
formance, since the related results of operations may be
distorted by the amount and the irregular nature of such events.
Reconciliation includes corporate items for which headquarters
are responsible. Transactions between the segments are
eliminated in the context of consolidation and the eliminated
amounts are included in the reconciliation.
Reconciliation
Amortization of capitalized borrowing costs is not included in
the amortization of intangible assets or depreciation of
property, plant and equipment since it is not considered as
part of EBIT.
Depreciation and amortization may also include impairments
insofar as they do not relate to goodwill impairment according
to IAS 36.
Capital expenditures for intangible assets and property, plant
and equipment reflect the cash-effective additions to these
intangible assets and property, plant and equipment as far as
they do not relate to capitalized borrowing costs or goodwill.
307
No advance payments or loans were made or abated to
members of the Board of Management or to the members of
the Supervisory Board of Daimler AG in 2019.
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Daimler Pension Trust e. V. manages the plan assets on a
fiduciary basis to cover pension obligations in Germany and is
therefore a related company of the Daimler Group. Another
related company is Daimler Pensionsfonds AG. Daimler AG
bears non-significant expenses and provides services for both
companies. See also Note 22 for further information.
Related persons
Throughout the world, the Group has business relationships
with numerous entities that are customers and/or suppliers of
the Group. Those customers and/or suppliers include com-
panies that have a connection with some of the members of
the Board of Management or of the Supervisory Board and
close family members of those board members of Daimler AG
or of its subsidiaries.
Board of Management and Supervisory Board members and
close family members of those board members may also
purchase goods and services from Daimler AG or its subsidiar-
ies as customers. When such business relationships exist,
transactions are concluded at market terms.
See Note 38 for information on the remuneration of board
members.
38. Remuneration of the members
of the Board of Management and the
Supervisory Board
Remuneration granted in 2019 to the members of the Board
of Management and the Supervisory Board who were active in
2019 is shown in table F.96.
Expenses for variable remuneration of the Board of Manage-
ment with a long-term incentive effect, as shown in table
7 F.96, result from the ongoing measurement at fair value at
each balance sheet date of all rights granted and not yet
due under the Performance Phantom Share Plans (PPSP), i.e.
for the plans of the years 2015 to 2018. In 2019, the active
members of the Board of Management were granted 266,128
(2018: 145,775) phantom shares in connection with the
PPSP; the fair value of these phantom shares at the grant date
was €13.3 million (2018: €10.2 million). See Note 21
for additional information on share-based payment of the
members of the Board of Management.
According to Section 314 Subsection 1 No. 6a of the German
Commercial Code (HGB), the overall remuneration granted to
the members of the Board of Management, excluding service
cost resulting from entitlements to post-employment benefits,
amounted to €24.2 million (2018: €24.7 million).
The members of the Supervisory Board are solely granted
short-term fixed remuneration for their board and committee
activities, the amounts of which depend on their functions
in the Supervisory Board. With the exception of remuneration
paid to the members representing the employees in accor-
dance with their contracts of employment, no remuneration
was paid in 2019 for services provided personally beyond
board and committee activities, in particular for advisory or
agency services.
Contributions to plan assets
24.5
100.00
Wilmington, USA
100.00
Leinfelden-Echterdingen, Germany
100.00
5
Daimler Motors Investments LLC
Daimler Nederland B.V.
Daimler Nederland Holding B.V.
Wilmington, USA
100.00
Utrecht, Netherlands
100.00
Daimler North America Corporation
Daimler North America Finance Corporation
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Daimler Parts Brand GmbH
Utrecht, Netherlands
Wilmington, USA
Newark, USA
Beijing, China
100.00
100.00
100.00
100.00
Stuttgart, Germany
São Bernardo do Campo, Brazil
Daimler Mobility Services GmbH
Daimler Mobility Brasil Holding S.A.
100.00
Milton Keynes, United Kingdom
100.00
Utrecht, Netherlands
100.00
Utrecht, Netherlands
100.00
Wilmington, USA
100.00
Sindelfingen, Germany
100.00
5
100.00
Mexico City, Mexico
Mexico City, Mexico
100.00
Daimler Mobility & Technology Service Co., Ltd.
Beijing, China
100.00
Daimler Mobility AG
DAIMLER MOBILITY AUSTRALIA PTY LTD
Stuttgart, Germany
100.00
5
Melbourne, Australia
100.00
5
Daimler Re Brokers GmbH
Bremen, Germany
DAIMLER TRUCK AND BUS HOLDING AUSTRALIA PACIFIC PTY LTD
Melbourne, Australia
100.00
In millions of euros
Remuneration of the Board of Management
2019
2018
8.9
9.5
37. Related party disclosures
Related parties (persons or companies) are deemed to be
associated companies, joint ventures and unconsolidated sub-
sidiaries, as well as persons who exercise a significant influ-
ence on the financial and business policy of the Daimler Group.
The latter category includes all persons in key positions and
their close family members. At the Daimler Group, those persons
are the members of the Board of Management and of the
Supervisory Board.
100.00
Fixed remuneration (base salary)
(50% of annual bonus)
1.0
2.5
Mid-term variable remuneration
Related companies
(50% of annual bonus, "deferral")
0.9
1.9
Variable remuneration with a long-term
incentive effect (PPSP)
11.7
Short-term variable remuneration
100.00
Mulgrave, Australia
5
74.90
5
Daimler Re Insurance S.A. Luxembourg
Luxembourg, Luxembourg
100.00
Daimler Real Estate GmbH
Berlin, Germany
100.00
5
Daimler Retail Receivables LLC
Farmington Hills, USA
Daimler Truck and Bus Australia Pacific Pty. Ltd.
100.00
Mulgrave, Australia
100.00
DAIMLER SERVICIOS CORPORATIVOS MEXICO S. DE R.L. DE C.V.
Mexico City, Mexico
100.00
Daimler South East Asia Pte. Ltd.
Singapore, Singapore
100.00
Daimler Truck AG
Stuttgart, Germany
100.00
Daimler Securitisation Australia Pty Ltd
Tokyo, Japan
5
100.00
Daimler Finance North America LLC
Prague, Czech Republic
100.00
Bogota D.C., Colombia
100.00
Singapore, Singapore
100.00
Mexico City, Mexico
100.00
Berlin, Germany
100.00
Daimler Export and Trade Finance GmbH
5
100.00
Daimler Financial Services Africa & Asia Pacific Ltd.
Singapore, Singapore
100.00
Daimler Financial Services India Private Limited
Chennai, India
100.00
316
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Domicile, Country
Wilmington, USA
Capital share
Daimler Compra y Manufactura Mexico S. de R.L. de C.V.
Daimler Colombia S. A.
100.00
DAF Investments, Ltd.
Wilmington, USA
100.00
Daimler Australia/Pacific Pty. Ltd.
Melbourne, Australia
100.00
Daimler Brand & IP Management GmbH & Co. KG
Stuttgart, Germany
100.00
5
Daimler Commercial Vehicles South East Asia Pte. Ltd.
Daimler Buses North America Inc.
Daimler Canada Investments Company
Daimler Capital Services LLC
Oriskany, USA
100.00
Montreal, Canada
100.00
Halifax, Canada
100.00
Wilmington, USA
100.00
Daimler Ceská republika Holding s.r.o.
Daimler Canada Finance Inc.
DA Investments Co. LLC
Footnote
Daimler Financial Services Investment Company LLC
5
Daimler Greater China Ltd.
Daimler Grund Services GmbH
Daimler India Commercial Vehicles Private Limited
Daimler Insurance Agency LLC
Daimler Insurance Services GmbH
Daimler Insurance Services Japan Co., Ltd.
Daimler Insurance Services UK Limited
Daimler International Finance B.V.
Daimler International Nederland B.V.
Daimler Investments US Corporation
100.00
Daimler Ladungsträger GmbH
Daimler Mexico, S.A. de C.V.
Beijing, China
100.00
Schönefeld, Germany
100.00
5
Chennai, India
100.00
Wilmington, USA
100.00
Stuttgart, Germany
Daimler Manufactura, S. de R.L. de C.V.
in %1
Stuttgart, Germany
100.00
Wilmington, USA
100.00
Daimler Financial Services México, S. de R.L. de C.V.
Mexico City, Mexico
100.00
Daimler Financial Services, S.A. de C.V., S.O.F.O.M., E.N.R.
Mexico City, Mexico
100.00
Daimler Fleet Management GmbH
Stuttgart, Germany
100.00
Daimler Fleetboard GmbH
5
Singapore, Singapore
100.00
Daimler Fleet Management South Africa (Pty.) Ltd. i. L.
Centurion, South Africa
65.00
4
Daimler Fleet Management UK Limited
Daimler Fleet Services A.S.
Milton Keynes, United Kingdom
100.00
Istanbul, Turkey
Daimler Fleet Management Singapore Pte. Ltd.
Termination benefits
2.4
2.0
16,814
101
16,713
2,381
82
25
350
260
1,664
thereof amortization of intangible assets
6,763
250
856
1,837
7,007
of non-current assets
Depreciation and amortization
7,199
138
7,061
87
134
240
971
2,381
thereof depreciation of property,
plant and equipment
942
36,456
89,467
3,636
93,103
Group
Daimler
Recon-
ciliation
Total
Segments
Daimler
Mobility
Daimler
Buses
Mercedes-
Benz Vans
Daimler
Trucks
Mercedes-
Benz Cars
5,629
309
Total revenue
Intersegment revenue
External revenue
2018
In millions of euros
5,370
8
5,362
72
89
341
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
plant and equipment
thereof investments in property,
38,708
3,636
3,053
thereof carrying amounts of equity-method
investments
278,574
-18,344
296,918
174,821
3,819
9,685
24,187
84,406
Segment assets
527
-238
-3
-6
-19
-65
-145
and effects from changes in discount rates
of provisions for other risks
thereof profit/loss from compounding
479
42
437
-766
-238
12,842
276
1,107
3
38,705
3,636
16,254
103
30
255
113
3,135
thereof investments in intangible assets
363
1,532
2,334
10
18,222
-21,120 216,326
237,446
159,838
2,467
9,092
14,308
51,741
Segment liabilities
5,949
976
4,973
Additions to non-current assets
1,817
784
38,273
3,167
1
3,166
35,500
51
35,449
14,431
103
56
368
86
2,553
thereof investments in property,
thereof investments in intangible assets
1,633
2,460
16,494
Additions to non-current assets
203,525
-20,929
224,454
152,506
2,502
6,330
15,069
431
48,047
thereof depreciation of property,
1
1,105
468
144
64
7,465
69
7,534
Depreciation and amortization
of non-current assets
6,105
1,622
2,014
599
6,236
14,797
90
14,887
thereof amortization of intangible assets
1,437
267
185
20
104
2,013
235
3
Segment liabilities
962
-452
1
44
43
1,108
investments
thereof profit/loss on equity-method
11,132
-798
11,930
1,384
744
265
2,753
7,216
Segment profit/loss (EBIT)
167,362
-8,438
-8,438
8,438
175,800
167,362
167,362
24,176
2,093
26,269
4,421
108
4,529
13,626
312
4,860
-88
thereof profit/loss from compounding
and effects from changes in discount rates
of provisions for other risks
3,898
209
8
241
512
2,928
thereof carrying amounts of equity-method
investments
260,056
-18,818
278,874
165,316
656
3,780
23,558
76,352
Segment assets
-31
1
-32
-3
-2
-11
-9
-7
9,868
54
1,146
investments
12,466
Net assets of the segments
Equity-method investments²
60,505
51,583
980
1,066
Assets and liabilities from income taxes³
Other corporate items and eliminations³
Net assets Daimler Group
2,720
1,707
-459
-547
13,961
63,746
1 Equity.
2 Unless allocated to the segments.
3 Unless allocated to Daimler Mobility.
36. Earnings per share
The calculation of basic and diluted earnings per share is
based on net profit attributable to shareholders of Daimler AG.
Following the expiration of the stock option plan in 2014, dilu-
tive effects no longer exist. The profit attributable to share-
holders of Daimler AG (basic and diluted) amounts to
€2,377 million (2018: €7,249 million). The weighted average
number of shares outstanding (basic and diluted) amounts
to 1,069.8 million (2018: 1,069.8 million).
312
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.95
Transactions with related companies
Sales of goods
and services
Purchase of goods
and services
53,809
and other income
1,233
Daimler Buses
Daimler Mobility'
In 2019, the line item Other corporate items includes, amongst
other things, expenses of €425 million in connection with
ongoing governmental and legal proceedings and measures
taken with regard to Mercedes-Benz diesel vehicles. In the
prior year, the impairment of Daimler's equity investment in BAIC
Motor Corporation Ltd. by €150 million impacted earnings
negatively. Furthermore, expenses in connection with "Project
Future" are included in both years.
Revenue and non-current assets by region
Revenue from external customers and non-current assets by
region are shown in table 7 F.93.
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
311
35. Capital management
Net assets and value added represent the basis for capital
management at Daimler. The assets and liabilities of the
segments in accordance with IFRS provide the basis for the
determination of net assets at Group level. The vehicle
segments are accountable for the operational net assets; all
assets, liabilities and provisions which they are responsible
for in day-to-day operations are therefore allocated to them.
Performance measurement at Daimler Mobility is on an
equity basis, in line with the usual practice in the banking busi-
ness. Net assets at Group level additionally include assets
and liabilities from income taxes as well as other corporate
items and eliminations.
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are
calculated as an average of the net assets at the beginning and
the end of the quarter and are shown in table 71 F.94.
The cost of capital of the Group's average net assets is
reflected in value added. Value added shows the extent to which
the Group achieves or exceeds the minimum return require-
ments of the shareholders and creditors, thus creating additional
value. The required rate of return on net assets, and thus the
cost of capital, are derived from the minimum rates of return
that investors expect on their invested capital. The Group's
cost of capital comprises the cost of equity as well as the costs
of debt and pension obligations unless these are allocated to
Daimler Mobility; in addition, the expected returns on liquidity
and on the plan assets of the pension funds which are not
allocated to Daimler Mobility are considered with the opposite
sign. In the reporting period, the cost of capital used for
our internal capital management amounted to 8% after taxes.
The objective of capital management is to increase value
added, among other things, by optimizing the cost of capital.
This is achieved on the one hand by the management of the net
assets, for instance by optimizing working capital which is
within the operational responsibility of the segments. In addition,
taking into account legal regulations, Daimler strives to
optimize the costs and risks of its capital structure and, con-
sequently, the cost of capital, with due consideration of
applicable law. Examples of this include a balanced relation-
ship between equity and financial liabilities as well as an
appropriate level of liquidity, oriented towards the operational
requirements.
F.94
1,440
Average net assets
2018
In millions of euros
Mercedes-Benz Cars
32,418
26,289
Daimler Trucks
10,274
8,240
Mercedes-Benz Vans
2,412
3,355
2019
Reconciliation of the segment amounts to the respective items
included in the Consolidated Financial Statements is shown in
table 71 F.92.
and other expense
Payables
24
30
5,880
4,850
132
64
1,966
1,571
78
85
884
981
997
100
213
208
78
444
1 After total loss allowances of €66 million (2018: €53 million).
2 Including liabilities from default risks from guarantees for related parties.
F.96
Remuneration of the members of the Board of Management and
the Supervisory Board
1.6
Post-employment benefits (service cost)
187
Receivables
at December 31,1
1,288
476
at December 31,2
2019
2018
2019
2018
2019
2018
2019
2018
In millions of euros
Associated companies
647
thereof LSHAI
Joint ventures
13,505
13,475
628
855
3,324
2,679
116
131
7,230
8,011
thereof BBAC
plant and equipment
Reconciliation
1,764
5,160
profit/loss on equity-method investments
42
11,930
-88
Other corporate items
-850
-669
Eliminations
-23
Group EBIT
4,329
Total of segments' profit (EBIT)
-41
11,132
-16
-15
Interest income
397
271
Interest expense
-880
-793
Profit before income taxes
3,830
10,595
Amortization of capitalized borrowing costs¹
Total of segments' assets
2018
In millions of euros
thereof profit/loss on equity-method
4,329
-831
5,160
2,140
283
-3,085
2,463
3,359
Segment profit/loss (EBIT)
-9,547
-9,547 172,745
2019
plant and equipment
798
255
75
24
4,290
1
4,291
310
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F.92
Reconciliation to Group figures
3,138
95,225
296,918 278,874
Income tax assets³
in the internal performance measure "EBIT" but is included in cost
of sales.
2 This mainly comprises the carrying amount of the investment in
BAIC Motor.
3 Unless allocated to Daimler Mobility.
F.93
Revenue and non-current assets by region
In millions of euros
2019
Revenue
2018
Non-current assets
2019
2018
Europe
1 Amortization of capitalized borrowing costs is not considered
69,541
26,339
NAFTA
52,196
68,496 69,478 63,559
24,802 49,335 45,281
47,952 28,497 27,095
thereof
United States
Asia
thereof China
Other markets
45,422 41,152 25,228 24,239
40,657 40,627 4,565
18,954 19,790
544
10,351 10,287 2,063
172,745 167,362 104,603
2,807
219
thereof Germany
Carrying amount of equity-method
investments²
62,841 66,053
302,438 281,619
Total equity and liabilities Group
Other corporate items and eliminations
976
962
5,658 4,227
-24,978 -24,007
Segment assets Group
278,574
260,056
Unallocated financial assets (including
liquidity) and assets from pensions and
similar obligations³
23,864
21,563
Total assets Group
302,438
281,619
23,271 12,041
Total of segments' liabilities
224,454
Income tax liabilities³
3,099
2,556
Other corporate items and eliminations
-24,219 -23,485
216,326
203,525
Segment liabilities Group
Unallocated financial liabilities and
liabilities from pensions and similar
obligations³
Total equity Group
237,446
3,918
313
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 317
Prague, Czech Republic
100.00
Portland, USA
100.00
Sebes, Romania
100.00
Schiphol, Netherlands
100.00
5
Berlin, Germany
100.00
Hambach, France
3
0.00
Luxembourg, Luxembourg
Sumperská správa majetku k.s.
Sterling Truck Corporation
100.00
7
Thomas Built Buses of Canada Limited
Calgary, Canada
5
100.00
Stuttgart, Germany
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
65.00
Le Bourget, France
Ucafleet S.A.S
100.00
Wilmington, USA
Trona Cogeneration Corporation
75.61
Baltimore, USA
TORC Robotics, Inc.
100.00
High Point, USA
Thomas Built Buses, Inc.
100.00
Star Assembly SRL
Special Lease Systems (SLS) B.V
smart Vertriebs gmbh
smart France S.A.S.
3
0.00
Beijing, China
3
0.00
Beijing, China
SILVER ARROW CHINA 2017-2 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o CITIC TRUST CO., LTD.
100.00
Mississauga, Canada
Silver Arrow Canada LP
100.00
Mississauga, Canada
3
0.00
Melbourne, Australia
3
0.00
SILVER ARROW CHINA 2018-1 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o FOTIC: China Foreign Economy and Trade Trust
Co., LTD.
SILVER ARROW CHINA 2018-2 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o FOTIC: China Foreign Economy and Trade Trust
Co., LTD.
SILVER ARROW CHINA 2019-1 RETAIL AUTO LOAN ASSET BACKED
NOTES TRUST c/o FOTIC: China Foreign Economy and Trade Trust
Co., LTD.
3
Silver Arrow UK Trust 2018-1
3
0.00
Luxembourg, Luxembourg
Silver Arrow S.A.
3
0.00
Milan, Italy
Western Star Trucks Sales, Inc
Silver Arrow Merfina 2019-2 s.r.l.
0.00
Wilmington, USA
Silver Arrow Lease Facility Trust
0.00
3
Beijing, China
0.00
Beijing, China
3
Melbourne, Australia
Portland, USA
Zuidlease B.V.
Daimler Mitarbeiter Wohnfinanz GmbH
Daimler International Assignment Services USA, LLC
Daimler Innovation Technology (China) Co., Ltd.
Daimler Group Services Madrid, S.A.U.
100.00
Berlin, Germany
Daimler Group Services Berlin GmbH
100.00
Esslingen am Neckar, Germany
Daimler Gastronomie GmbH
100.00
Milton Keynes, United Kingdom
Daimler Financial Services UK Trustees Ltd.
100.00
Dubai, United Arab Emirates
Daimler Commercial Vehicles MENA FZE
in %1
Daimler Pensionsfonds AG
Daimler Protics GmbH
Daimler Purchasing Coordination Corp.
Daimler Truck Verwaltungsgesellschaft für Grundbesitz mbH
100.00
Schönefeld, Germany
100.00
Wilmington, USA
100.00
Leinfelden-Echterdingen, Germany
6
100.00
Footnote
Stuttgart, Germany
Stuttgart, Germany
100.00
100.00
100.00
San Sebastián de los Reyes, Spain
Wilmington, USA
Beijing, China
Daimler Trucks Asia Taiwan Ltd.
100.00
100.00
Capital share
Name of the Company
100.00
Menlo Park, USA
73.53
Buenos Aires, Argentina
Circulo Cerrado S.A. de Ahorro para Fines Determinados
COROS Corp.
100.00
Berlin, Germany
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
100.00
Stuttgart, Germany
AEG Olympia Office GmbH
100.00
Stuttgart, Germany
Achtzehnte Vermögensverwaltungsgesellschaft DVB mbH
II. Unconsolidated subsidiaries²
51.00
Sittard, Netherlands
Cúspide GmbH
Stuttgart, Germany
100.00
Daimler AG & Co. Anlagenverwaltung OHG
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
324
323
100.00
Nairobi, Kenya
Daimler Commercial Vehicles Africa Ltd.
100.00
Bangkok, Thailand
Domicile, Country
Daimler Commercial Vehicles (Thailand) Ltd.
Stuttgart, Germany
Daimler Brand & IP Management Verwaltung GmbH
100.00
Valencia, Venezuela
Daimler Automotive de Venezuela C.A.
7
100.00
Schönefeld, Germany
100.00
100.00
Mississauga, Canada
Silver Arrow Canada GP Inc.
Mercedes-Benz V.I. Lyon SAS
Mercedes-Benz USA, LLC
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Mercedes-Benz U.S. International, Inc.
66.91
Istanbul, Turkey
100.00
Milton Keynes, United Kingdom
Mercedes-Benz Türk A.S.
Mercedes-Benz Trucks UK Limited
100.00
Schlieren, Switzerland
100.00
Warsaw, Poland
100.00
Utrecht, Netherlands
100.00
Mercedes-Benz V.I. Paris Ile de France SAS
Molsheim, France
Mercedes-Benz Vans Ceská republika s.r.o
Mercedes-Benz Vans España, S.L.U.
Wilmington, USA
Mercedes-Benz Vans Nederland B.V.
5
100.00
Berlin, Germany
Mercedes-Benz Vans Mobility GmbH
100.00
Madrid, Spain
100.00
Prague, Czech Republic
100.00
Wissous, France
100.00
100.00
100.00
100.00
Vance, USA
Genas, France
Warsaw, Poland
100.00
Rome, Italy
100.00
100.00
Brussels, Belgium
51.00
Taipei, Taiwan
Mercedes-Benz Trucks Center Sint-Pieters-Leeuw NV/SA
Mercedes-Benz Trucks Belgium Luxembourg NV/SA
Mercedes-Benz Taiwan Ltd.
100.00
Malmö, Sweden
100.00
Pretoria, South Africa
100.00
Sosnowiec, Poland
100.00
Istanbul, Turkey
Mercedes-Benz Sverige AB
Mercedes-Benz South Africa Ltd
Sint-Pieters-Leeuw, Belgium
100.00
322
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Montigny-le-Bretonneux, France
100.00
Alcobendas, Spain
100.00
Prague, Czech Republic
Mercedes-Benz Trucks Schweiz AG
ODPOWIEDZIALNOSCIA
MERCEDES-BENZ TRUCKS POLSKA SPÓŁKA Z OGRANICZONA
Utrecht, Netherlands
Mercedes-Benz Trucks Nederland B.V.
Mercedes-Benz Trucks Italia S.r.l.
Mercedes-Benz Trucks France S.A.S.U
Mercedes-Benz Trucks España S.L.U.
Mercedes-Benz Trucks Ceská republika s.r.o.
Footnote
Capital share
in %1
Domicile, Country
Name of the Company
Mercedes-Benz Trucks Molsheim
100.00
Mercedes-Benz Vans UK Limited
Milton Keynes, United Kingdom
50.10
Le Bourget, France
100.00
Logan Township, USA
SelecTrucks of America LLC
Sandown Motor Holdings (Pty) Ltd
Renting del Pacífico S.A.C.
PT Mercedes-Benz Distribution Indonesia
PT Daimler Commercial Vehicles Manufacturing Indonesia
PT Daimler Commercial Vehicles Indonesia
P.T. Mercedes-Benz Indonesia
Multifleet G.I.E
Mitsubishi Fuso Truck of America, Inc.
100.00
Tramagal, Portugal
MITSUBISHI FUSO TRUCK EUROPE - Sociedade Europeia de
Automóveis, S.A.
89.29
7
Bogor, Indonesia
100.00
Jakarta, Indonesia
Silver Arrow Australia Trust 2019-1
Silver Arrow Australia 2019-1
SelecTrucks of Toronto, Inc.
Footnote
Capital share
in %1
Domicile, Country
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
Kawasaki, Japan
100.00
62.62
100.00
Lima, Peru
100.00
Jakarta, Indonesia
100.00
Bogor, Indonesia
100.00
Portland, USA
Taipei, Taiwan
100.00
100.00
Mercedes-Benz Vertrieb PKW GmbH
5
100.00
Stuttgart, Germany
Mercedes-Benz Vertrieb NFZ GmbH
5
100.00
Stuttgart, Germany
Mercedes-Benz Versicherung AG
5
100.00
Stuttgart, Germany
Mercedes-Benz Vermögens- und Beteiligungsgesellschaft mbH
100.00
Wilmington, USA
Mercedes-Benz Vans, LLC
100.00
Stuttgart, Germany
100.00
5
Mercedes-Benz Vietnam Ltd.
Wilmington, USA
100.00
Wemmel, Belgium
100.00
Wavre, Belgium
Mitsubishi Fuso Truck and Bus Corporation
MFTA Canada, Inc.
Mercedes-Benz Wholesale Receivables LLC
Toronto, Canada
Mercedes-Benz Wemmel N.V.
100.00
Braine-l'Alleud, Belgium
Mercedes-Benz Waterloo S.A.
100.00
Warsaw, Poland
Mercedes-Benz Warszawa Sp. z o.o.
70.00
Ho Chi Minh City, Vietnam
Mercedes-Benz Wavre S.A.
51.00
Daimler TSS GmbH
Ulm, Germany
Beijing, China
Beijing Foton Daimler Automotive Co., Ltd
50.00
Kentwood, USA
in %1
Footnote
Capital share
Domicile, Country
V. Joint ventures accounted for using the equity method
IV. Joint operations accounted for using the equity method
North America Fuel Systems Remanufacturing LLC
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
326
325
54.01
Aguascalientes, Mexico
III. Joint operations accounted for using proportionate consolidation
Cooperation Manufacturing Plant Aguascalientes, S.A.P.I de C.V.
50.00
Blitz 18-353 GmbH
Daimler Kamaz Trucks Holding GmbH
Munich, Germany
SelecTrucks of Houston Wholesale LLC
SelecTrucks of Houston LLC
SelecTrucks of Atlanta LLC
Polomex, S.A. de C.V.
MB Service Japan Co., Ltd.
25.00
Munich, Germany
IONITY Holding GmbH & Co. KG
100.00
50.00
Fujian Benz Automotive Co., Ltd.
25.10
Munich, Germany
Enbase Power GmbH
50.00
Vienna, Austria
8
50.00
Fuzhou, China
SelecTrucks of Omaha LLC
Stuttgart, Germany
100.00
88.89
Banbury, United Kingdom
7
100.00
Schönefeld, Germany
100.00
Ebina, Japan
100.00
Stuttgart, Germany
51.00
Esparraguera, Spain
100.00
Toyama, Japan
51.00
Kleinostheim, Germany
100.00
Lisbon, Portugal
El Segundo, USA
100.00
100.00
100.00
Stuttgart, Germany
Zweite Vermögensverwaltung PV GmbH
100.00
Stuttgart, Germany
Vierte Vermögensverwaltung PV GmbH
100.00
Chemnitz, Germany
51.00
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
Schlieren, Switzerland
T.O.C (Schweiz) AG
100.00
Maribor, Slovenia
STARKOM, proizvodnja in trgovina d.o.o.
100.00
Cugir, Romania
3
0.00
trapoFit GmbH
100.00
Shenzhen DENZA New Energy Automotive Co. Ltd.
33.40
Rijswijk, Netherlands
There Holding B.V.
32.28
Jakarta, Indonesia
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
30.00
Jakarta, Indonesia
50.00
Okayamashi, Japan
20.00
Berlin, Germany
15.00
Hong Kong, China
43.83
Yokohama, Japan
15.00
Naberezhnye Chelny, Russian Federation
29.71
Toll4Europe GmbH
Verimi GmbH
Via Transportation Inc.
5.74
Campbell, USA
51.00
Beijing, China
33.00
Burnaby, Canada
50.10
Burnaby, Canada
21.67
Beijing Mercedes-Benz Sales Service Co., Ltd.
ChargePoint Inc.
AFCC Automotive Fuel Cell Cooperation Corp.
VII. Joint operations, joint ventures, associated companies and substantial other investments
accounted for at (amortized) cost²
12.20
New York, USA
14.79
Berlin, Germany
15.00
Berlin, Germany
BDF IP Holdings Ltd.
Hitachi, Japan
Kawasaki, Japan
Tallinn, Estonia
Almere, Netherlands
Wagenplan B.V.
50.00
Amsterdam, Netherlands
ViaVan Technologies B.V.
50.00
Shenzhen, China
50.00
Council Bluffs, USA
50.00
Houston, USA
50.00
Houston, USA
50.00
McDonough, USA
26.00
Garcia, Mexico
50.00
Wei Xing Tech. Co., Ltd.
Hangzhou, China
50.00
P.T. Krama Yudha Tiga Berlian Motors
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
Mobility Trader Holding GmbH
LSH Auto International Limited
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
KAMAZ PAO
FUSO LAND TRANSPORT & Co. Ltd.
Bolt Technology OÜ
9.44
30.57
Blacklane GmbH
49.00
Beijing, China
9.55
Beijing, China
Beijing Benz Automotive Co., Ltd.
BAIC Motor Corporation Ltd.
VI. Associated companies accounted for using the equity method
Berlin, Germany
Mercedes-Benz Sosnowiec Sp. z o.o.
Stuttgart, Germany
Mauá, Brazil
Buenos Aires, Argentina
Mercedes-Benz Camiones y Buses Argentina SAU.
100.00
São Bernardo do Campo, Brazil
Mercedes-Benz Adm. Consorcios Ltda.
66.91
Istanbul, Turkey
Mercedes Benz Otomotiv Ticaret ve Hizmetler A.S.
100.00
Berlin, Germany
100.00
Neuhausen auf den Fildern, Germany
100.00
Stuttgart, Germany
100.00
Arvidsjaur, Sweden
100.00
100.00
Mercedes-Benz CarMesh GmbH
Berlin, Germany
100.00
100.00
Kamenz, Germany
Mercedes-Benz Energy GmbH
100.00
New Cairo, Egypt
100.00
Maastricht, Netherlands
100.00
100.00
Leinfelden-Echterdingen, Germany
Dubai, United Arab Emirates
Mercedes-Benz Egypt S.A.E.
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Mercedes-Benz Consulting GmbH
Mercedes-Benz Cars Middle East FZE
100.00
São Bernardo do Campo, Brazil
Mercedes-Benz Cars & Vans Brasil - Indústria e Comércio De
Veículos Ltda.
100.00
Mercedes-Benz G GmbH
Wilmington, USA
100.00
100.00
Stuttgart, Germany
100.00
Kirchheim unter Teck, Germany
100.00
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
Dritte Vermögensverwaltung PV GmbH
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
Deutsche Accumotive Verwaltungs-GmbH
Daimler Unterstützungskasse GmbH
Daimler UK Trustees Limited
Daimler UK Share Trustee Ltd.
100.00
Stuttgart, Germany
100.00
DTB Tech & Data Hub, Unipessoal Lda
Tramagal, Portugal
Volkach, Germany
100.00
Stuttgart, Germany
100.00
Moscow, Russian Federation
96.00
Le Port, France
MBition GmbH
Stuttgart, Germany
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
Lapland Car Test Aktiebolag
Lab1886 USA LLC
LAB1886 GmbH
Fleetboard Logistics GmbH
EXOKNOX GmbH
EvoBus Russland 000
EvoBus Reunion S. A.
100.00
LEONIE DMS DVB GmbH
Clinton, USA
Raaba, Austria
Mercedes-Benz Group Services Phils., Inc.
Alcobendas, Spain
Mercedes-Benz Vans Mobility S.L.
100.00
Sintra, Portugal
Mercedes-Benz Trucks Portugal S.A.
100.00
Eugendorf, Austria
Mercedes-Benz Trucks Österreich GmbH
100.00
Stuttgart, Germany
Mercedes-Benz Trucks MENA Holding GmbH
100.00
Bucharest, Romania
Mercedes-Benz Trucks & Buses Romania S.R.L.
100.00
Wilmington, USA
Mercedes-Benz Subscription Services USA LLC
100.00
Mercedes-Benz Vehículos Comerciales Argentina SAU i.L.
Buenos Aires, Argentina
100.00
Stuttgart, Germany
Star Transmission srl
SelecTrucks Comércio de Veículos Ltda
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
RepairSmith, Inc.
R.T.C. Management Company Limited
Porcher & Meffert Grundstücksgesellschaft mbH & Co.
Stuttgart OHG
PABCO Co., Ltd.
100.00
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
MercedesService Card Beteiligungsgesellschaft mbH
Mercedes-Benz.io Portugal Unipessoal Lda.
Mercedes-Benz.io GmbH
100.00
Valencia, Venezuela
Mercedes-Benz Venezuela S.A.
4
Montajes y Estampaciones Metálicas, S.L.
100.00
Bratislava, Slovakia
100.00
Mercedes-Benz Manufacturing Rus Ltd
100.00
New Cairo, Egypt
Mercedes-Benz Manufacturing and Import Egypt
100.00
Valbonne, France
Mercedes-Benz IDC Europe S.A.S.
Footnote
Capital share
in %1
Domicile, Country
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
100.00
Budapest, Hungary
Mercedes-Benz Hungária Kft.
100.00
Cebu City, Philippines
Moscow, Russian Federation
80.00
Mercedes-Benz Mobility Korea Ltd.
Mercedes-Benz Museum GmbH
Buenos Aires, Argentina
Mercedes-Benz Servicios S.A.U
100.00
Bangalore, India
Mercedes-Benz Research and Development India Private Limited
100.00
Tel Aviv, Israel
Mercedes-Benz Research & Development Tel Aviv Ltd.
Mercedes-Benz Slovakia s.r.o.
100.00
Mercedes-Benz Project Consult GmbH
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Seoul, South Korea
Mercedes-Benz OD GmbH
Stuttgart, Germany
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
100.00
Petaling Jaya, Malaysia
5
100.00
Kölleda, Germany
MDC Power GmbH
100.00
Mississauga, Canada
MBarc Credit Canada Inc.
100.00
Wilmington, USA
Mascot Truck Parts USA LLC
100.00
Mississauga, Canada
Mascot Truck Parts Canada Ltd (2017)
5
100.00
Kamenz, Germany
Li-Tec Battery GmbH
MDC Technology GmbH
Arnstadt, Germany
100.00
5
Beijing, China
Mercedes-Benz (China) Ltd.
100.00
Mem Martins, Portugal
Mercedes-Benz - Aluguer de Veículos, Lda.
5
100.00
Affalterbach, Germany
5
Mercedes-AMG GmbH
Luxembourg, Luxembourg
Mercedes pay S.A.
100.00
Zug, Switzerland
Mercedes pay AG
100.00
Brixworth, United Kingdom
Mercedes AMG High Performance Powertrains Ltd
100.00
75.00
100.00
5
Koppieview Property (Pty) Ltd
100.00
São Bernardo do Campo, Brazil
Invema Assessoria Empresarial Eireli
100.00
Windhof, Luxembourg
Interleasing Luxembourg S.A.
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co. OHG
Gamma 4 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 3 OHG
LBBW AM - Daimler Re Insurance
LBBW AM-MBVEXW
LEONIE CORP DVB GmbH
LEONIE FS DVB GmbH
100.00
Stuttgart, Germany
5
100.00
Stuttgart, Germany
5
100.00
Stuttgart, Germany
Stuttgart, Germany
3
Stuttgart, Germany
3
0.00
Luxembourg, Luxembourg
100.00
Zwartkop, South Africa
LEONIE TB DVB GmbH
LEONIE FSM DVB GmbH
0.00
5,7
Mercedes-Benz (Thailand) Limited
100.00
3
0.00
3
0.00
Wilmington, USA
Wilmington, USA
Mercedes-Benz Auto Receivables Trust 2019-1
Mercedes-Benz Auto Receivables Trust 2018-1
3
0.00
Wilmington, USA
Mercedes-Benz Auto Receivables Trust 2016-1
3
0.00
Wilmington, USA
3
0.00
Wilmington, USA
Mercedes-Benz Bank AG
Stuttgart, Germany
100.00
Mercedes-Benz Bank GmbH
Moscow, Russian Federation
100.00
Warsaw, Poland
100.00
Eugendorf, Austria
Mercedes-Benz Cars Nederland B.V.
Mercedes-Benz Cars Ceská republika s.r.o.
Mercedes-Benz Capital Rus 000
3
Mercedes-Benz Canada Inc.
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Mercedes-Benz Broker Argentina S.A.
Mercedes-Benz Bordeaux S.A.S.
Mercedes-Benz Belgium Luxembourg S.A.
Mercedes-Benz Banking Service GmbH
Mercedes-Benz Bank Service Center GmbH
Mercedes-Benz Bank Rus 000
Mercedes-Benz Bank Polska S.A.
Mercedes-Benz Brooklands Limited
Bangkok, Thailand
0.00
Mercedes-Benz Auto Lease Trust 2019-A
Mercedes-Benz Auto Lease Trust 2019-B
Mercedes-Benz Auto Receivables Trust 2015-1
Utrecht, Netherlands
5
100.00
Stuttgart, Germany
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Assuradeuren B.V.
Mercedes-Benz Asia GmbH
100.00
Buenos Aires, Argentina
Mercedes-Benz Argentina S.A.U.
100.00
Antwerp, Belgium
Mercedes-Benz Antwerpen N.V.
5
100.00
Stuttgart, Germany
Mercedes-Benz AG
100.00
Melbourne, Australia
100.00
Beijing, China
Footnote
Capital share
in %1
Domicile, Country
319
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
3
0.00
Wilmington, USA
Wilmington, USA
3
0.00
Wilmington, USA
3
0.00
Wilmington, USA
Mercedes-Benz Auto Lease Trust 2017-A
Mercedes-Benz Auto Lease Trust 2018-A
100.00
Mercedes-Benz Auto Lease Trust 2018-B
100.00
100.00
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
3
0.00
100.00
100.00
100.00
100.00
Mississauga, Canada
100.00
Zwartkop, South Africa
100.00
Beijing, China
100.00
Wilmington, USA
100.00
Footnote
Capital share
in %1
Friesland Lease B.V.
0.00
3
100.00
Wilmington, USA
Detroit, USA
5
100.00
Berlin, Germany
5
100.00
Schönefeld, Germany
100.00
Freightliner Custom Chassis Corporation
Mexico City, Mexico
Wilmington, USA
67.55
Hong Kong, China
100.00
Milton Keynes, United Kingdom
100.00
Farmington Hills, USA
100.00
100.00
100.00
EvoBus Sverige AB
EvoBus Polska Sp. z o.o.
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Daimler Vehículos Comerciales Mexico S. de R.L. de C.V.
Daimler Vans USA, LLC
Daimler Vans Hong Kong Limited
Daimler UK Limited
Daimler Trust Leasing LLC
Daimler Trust Leasing Conduit LLC
Daimler Trust Holdings LLC
Daimler Trucks Remarketing Corporation
Daimler Trucks Retail Trust 2018-1
Daimler Trucks Retail Trust 2019-1
Daimler Trucks North America LLC
Daimler Trucks Korea Ltd.
Daimler Trucks Canada Ltd.
Daimler Trucks and Buses Southern Africa (Pty) Ltd
Daimler Trucks and Buses (China) Ltd.
Daimler Trucks & Buses US Holding LLC
Daimler Truck China Limited
Domicile, Country
Daimler Vorsorge und Versicherungsdienst GmbH
Detroit Diesel Corporation
Detroit Diesel Remanufacturing LLC
Deutsche Accumotive GmbH & Co. KG
EvoBus Nederland B.V.
EvoBus Italia S.p.A.
EvoBus Ibérica, S.A.U.
EvoBus GmbH
EvoBus France S.A.S.U.
EvoBus Danmark A/S
EvoBus Ceská republika s.r.o.
EvoBus Belgium N.V.
EvoBus Portugal, S.A.
EvoBus Austria GmbH
Farmington Hills, USA
Wilmington, USA
Portland, USA
Wilmington, USA
Wilmington, USA
Seoul, South Korea
Beijing, China
EvoBus (Schweiz) AG
EHG Elektroholding GmbH
EvoBus (U.K.) Ltd.
Schönefeld, Germany
Detroit, USA
Kirchheim unter Teck, Germany
100.00
5,7
100.00
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 6 OHG Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 7 OHG Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Beta OHG
in %1
Footnote
Capital share
Domicile, Country
Name of the Company
F❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
318
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 1 OHG Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 2 OHG Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 3 OHG Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 4 OHG Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 5 OHG Schönefeld, Germany
5,7
100.00
5,7
100.00
5,7
5,7
Schönefeld, Germany
100.00
5,7
Gamma 2 OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
Gamma 1 OHG
5,7
100.00
100.00
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Epsilon OHG
5,7
100.00
Schönefeld, Germany
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Delta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co.
100.00
5,7
5,7
100.00
Koege, Denmark
100.00
Prague, Czech Republic
100.00
Kobbegem-Asse, Belgium
100.00
Wiener Neudorf, Austria
100.00
Coventry, United Kingdom
100.00
Kloten, Switzerland
5
100.00
Stuttgart, Germany
5
100.00
Sarcelles, France
100.00
Stuttgart, Germany
100.00
100.00
51.11
Drachten, Netherlands
100.00
Gaffney, USA
100.00
Vetlanda, Sweden
100.00
100.00
Mem Martins, Portugal
Wolica, Poland
100.00
Nijkerk, Netherlands
100.00
Bomporto, Italy
100.00
Sámano, Spain
5
100.00
Name of the Company
Berlin, Germany
5
Mercedes-Benz Leasing Treuhand GmbH
Mercedes-Benz Leasing Taiwan Ltd.
321
Footnote
Capital share
in %1
Domicile, Country
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
100.00
Warsaw, Poland
Mercedes-Benz Leasing Polska Sp. z o.o.
100.00
Budapest, Hungary
Mercedes-Benz Leasing Kft.
100.00
Bucharest, Romania
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Ludwigsfelde GmbH
Mercedes-Benz Malaysia Sdn. Bhd.
Mercedes-Benz Manhattan, Inc.
Mercedes-Benz Manufacturing (Thailand) Limited
Mercedes-Benz Manufacturing Hungary Kft.
Mercedes-Benz Manufacturing Poland Sp. z o.0.
Mercedes-Benz Master Owner Trust
Jawor, Poland
100.00
Kecskemét, Hungary
100.00
Bangkok, Thailand
100.00
Wilmington, USA
100.00
100.00
Puchong, Malaysia
100.00
Ludwigsfelde, Germany
5
100.00
Stuttgart, Germany
100.00
Taipei, Taiwan
Mercedes-Benz Mechelen N.V.
5
100.00
Zagreb, Croatia
5
Wilmington, USA
Mercedes-Benz Investment Company LLC
100.00
Taipei, Taiwan
Mercedes-Benz Insurance Services Taiwan Ltd.
100.00
Utrecht, Netherlands
Mercedes-Benz Insurance Services Nederland B.V.
100.00
Voluntari, Romania
100.00
Beijing, China
100.00
Pune, India
Mercedes-Benz Insurance Broker S.R.L.
Mercedes-Benz Insurance Agency (Beijing) Co., Ltd.
Mercedes-Benz India Private Limited
100.00
Mercedes-Benz Italia S.p.A.
Rome, Italy
100.00
100.00
Stuttgart, Germany
Mercedes-Benz Leasing GmbH
100.00
Barueri, Brazil
Mercedes-Benz Leasing do Brasil Arrendamento Mercantil S.A.
65.00
Beijing, China
Mercedes-Benz Leasing Hrvatska d.o.o.
Mercedes-Benz Leasing Co., Ltd.
Bangkok, Thailand
Mercedes-Benz Leasing (Thailand) Co., Ltd.
51.00
Seoul, South Korea
Mercedes-Benz Korea Limited
100.00
Tokyo, Japan
Mercedes-Benz Japan Co., Ltd.
100.00
100.00
Wilmington, USA
3
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Mercedes-Benz Retail, Unipessoal Lda.
100.00
Madrid, Spain
100.00
Milton Keynes, United Kingdom
Mercedes-Benz Retail, S.A.
Mercedes-Benz Retail Group UK Limited
100.00
Woluwe-Saint-Lambert, Belgium
100.00
Wilmington, USA
100.00
Alcobendas, Spain
Mercedes-Benz Retail Belgium NV/SA
Mercedes-Benz Research & Development North America, Inc.
Mercedes-Benz Romania S.R.L.
Mem Martins, Portugal
100.00
Centurion, South Africa
100.00
Alcobendas, Spain
100.00
Bucharest, Romania
100.00
Schlieren, Switzerland
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Renting, S.A.
Mercedes-Benz Service Leasing S.R.L.
100.00
Moscow, Russian Federation
Mercedes-Benz Russia AO
100.00
Bucharest, Romania
100.00
Rome, Italy
100.00
Mercedes-Benz Schweiz AG
0.00
100.00
100.00
Mercedes-Benz Österreich GmbH
100.00
Auckland, New Zealand
Mercedes-Benz New Zealand Ltd
5
100.00
Stuttgart, Germany
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
5
100.00
Dortmund, Germany
Mercedes-Benz Minibus GmbH
100.00
Mexico City, Mexico
Mercedes-Benz Mexico, S. de R.L. de C.V.
100.00
Mechelen, Belgium
Mercedes-Benz Paris SAS
Eugendorf, Austria
100.00
Port-Marly, France
Mem Martins, Portugal
Mercedes-Benz PRAHA s.r.o.
Mercedes-Benz Portugal, S.A.
100.00
Warsaw, Poland
100.00
Shanghai, China
100.00
Prague, Czech Republic
Milton Keynes, United Kingdom
Azuqueca de Henares, Spain
Mercedes-Benz Polska Sp. z o.O.
Mercedes-Benz Parts Manufacturing & Services Ltd.
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
Mercedes-Benz Parts Logistics UK Limited
100.00
Prague, Czech Republic
Mercedes-Benz Parts Logistics Eastern Europe s.r.o.
100.00
100.00
100.00
100.00
Kifissia, Greece
100.00
São Paulo, Brazil
100.00
The Hague, Netherlands
100.00
Copenhagen, Denmark
5
100.00
Stuttgart, Germany
100.00
Budapest, Hungary
100.00
Horsholm, Denmark
99.98
São Paulo, Brazil
5
100.00
São Bernardo do Campo, Brazil
100.00
Mercedes-Benz Drogenbos N.V.
Mercedes-Benz Espana, S.A.U.
Eugendorf, Austria
100.00
Melbourne, Australia
95.01
Tokyo, Japan
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Finance Co., Ltd.
Stuttgart, Germany
100.00
100.00
Woluwe-Saint-Lambert, Belgium
100.00
Alcobendas, Spain
100.00
Drogenbos, Belgium
Mercedes-Benz Extra LLC
Mercedes-Benz Europa NV/SA
Wilmington, USA
100.00
100.00
100.00
100.00
Moscow, Russian Federation
100.00
Toronto, Canada
100.00
Milton Keynes, United Kingdom
100.00
Budapest, Hungary
99.00
Buenos Aires, Argentina
100.00
Begles, France
100.00
Brussels, Belgium
5
100.00
Saarbrücken, Germany
Prague, Czech Republic
100.00
Utrecht, Netherlands
100.00
Trent, Italy
Mercedes-Benz do Brasil Ltda.
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
Mercedes-Benz Dealer Bedrijven B.V.
Mercedes-Benz Danmark A/S
Mercedes-Benz Customer Solutions GmbH
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Mercedes-Benz CPH A/S
Buenos Aires, Argentina
Mercedes-Benz Corretora de Seguros Ltda
Mercedes-Benz Compañía Financiera Argentina S.A.
Mercedes-Benz CharterWay S.r.l.
100.00
Montigny-le-Bretonneux, France
100.00
Milton Keynes, United Kingdom
Mercedes-Benz CharterWay S.A.S.
Mercedes-Benz Cars UK Limited
Mercedes-Benz Connectivity Services GmbH
Hong Kong, China
Brussels, Belgium
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Finansal Kiralama Türk A.S.
100.00
Malmö, Sweden
Mercedes-Benz Finans Sverige AB
100.00
Copenhagen, Denmark
Mercedes-Benz Finans Danmark A/S
100.00
Wilmington, USA
Mercedes-Benz Financial Services USA LLC
100.00
Milton Keynes, United Kingdom
Mercedes-Benz Financial Services UK Limited
100.00
Taipei, Taiwan
Mercedes-Benz Financial Services Taiwan Ltd.
100.00
Istanbul, Turkey
100.00
Mercedes-Benz Finansman Türk A.S.
Istanbul, Turkey
100.00
Brackley, United Kingdom
Mercedes-Benz Hong Kong Limited
Mercedes-Benz Hellas S.A.
Mercedes-Benz Grand Prix Ltd.
100.00
Kirchheim unter Teck, Germany
100.00
Warsaw, Poland
Montigny-le-Bretonneux, France
Mercedes-Benz France S.A.S.
100.00
Malmö, Sweden
Mercedes-Benz Försäljnings AB
100.00
Brackley, United Kingdom
Mercedes-Benz Formula E Limited
100.00
Mercedes-Benz Fuel Cell GmbH
100.00
Mercedes-Benz Financial Services Sp. zo.o.
Centurion, South Africa
Montigny-le-Bretonneux, France
Hong Kong, China
Rome, Italy
100.00
Alcobendas, Spain
Mercedes-Benz Financial Services New Zealand Ltd
Mercedes-Benz Financial Services Nederland B.V.
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services Italia S.p.A.
Mercedes-Benz Financial Services Korea Ltd.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Footnote
Capital share
in %1
Domicile, Country
Name of the Company
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
320
100.00
Prague, Czech Republic
100.00
Mississauga, Canada
100.00
80.00
100.00
Seoul, South Korea
Mercedes-Benz Financial Services South Africa (Pty) Ltd
75.00
Bratislava, Slovakia
Mercedes-Benz Financial Services Slovakia s.r.o.
100.00
Schlieren, Switzerland
Mercedes-Benz Financial Services Schweiz AG
100.00
100.00
Moscow, Russian Federation
100.00
Mem Martins, Portugal
Mercedes-Benz Financial Services Portugal - Sociedade Financeira
de Crédito S.A.
100.00
Auckland, New Zealand
100.00
Utrecht, Netherlands
80.00
Mercedes-Benz Financial Services Rus 000
Bryanston, South Africa
SportChassis LLC
As instructed, we have performed a separate business man-
agement review of the combined separate non-financial state-
ment. Please refer with regard to the nature, scope and results
of this business management review to our audit opinion dated
February 19, 2020.
Munich, Germany
60.00
Stuttgart, Germany
51.00
Most, Czech Republic
50.00
Bottrop, Germany
50.00
Ningbo, China
33.33
Cologne, Germany
11.66
Dover, USA
20.00
Wilmington, USA
15.13
New York, USA
6.22
7
20.00
33.51
Ohmuta, Japan
26.00
Jeddah, Saudi Arabia
5.10
15.95
Sannoseki, Japan
28.20
San Francisco, USA
Glossary
340
Ten-Year Summary
331
Independent Auditor's Report
330
Responsibility Statement
G| Further Information
Further
Information
G
327
8 In January 2020, the company was renamed YOUR NOW Holding GmbH.
Grand Cayman, Cayman Islands
Furthermore, Daimler AG or one respectively several consolidated subsidiaries are the partners with unlimited liability in
MOST Cooperation GbR i.L., Karlsruhe (Germany).
6 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
5 Qualification for exemption pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB)
4 In liquidation
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies we refer to Note 1.
3 Control due to economic circumstances
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG)
10.95
London, United Kingdom
10.17
Bruchsal, Germany
11.75
Stuttgart, Germany
5.17
7 Daimler AG or one respectively several consolidated subsidiaries are the partners with unlimited liability.
33.40
Taipei, Taiwan
51.00
Berlin, Germany
H2 Mobility Deutschland GmbH & Co. KG
7
18.37
Berlin, Germany
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
18.09
San Francisco, USA
Gottapark, Inc.
33.33
Budapest, Hungary
25.00
2.90
Berlin, Germany
Esslingen am Neckar, Germany
40.82
Wiesbaden, Germany
Footnote
Capital share
in %1
Domicile, Country
EvoBus Hungária Kereskedelmi Kft.
European Center for Information and Communication
Technologies EICT GmbH
Esslinger Wohnungsbau GmbH
COBUS Industries GmbH
F | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the Company
26.57
342
hap2U SAS
MercedesService Card GmbH & Co. KG
Kleinostheim, Germany
50.00
London, United Kingdom
34.59
Pontcharra, France
Burlingame, USA
Ingolstadt, Germany
what3words Ltd.
Volocopter GmbH
VfB Stuttgart 1893 AG
Turo Inc.
Toyo Kotsu Co., Ltd.
Laureus World Sports Awards Limited
TASIAP GmbH
smart-BRABUS GmbH
smart Automobile Co., Ltd.
SK Gaming Beteiligungs GmbH
Sila Nanotechnologies Inc.
REV Coach LLC
Rally Bus Corp.
Proterra Inc.
PDB - Partnership for Dummy Technology and Biomechanics GbR
Omuta Unso Co., Ltd.
National Automobile Industry Company Ltd.
Momenta Global Limited
MFTB Taiwan Co., Ltd.
STARCAM s.r.o.
Index
tiramizoo GmbH
Daimler Worldwide
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
in Note 2 "Accounting estimates and management judge-
ments". Further information on the legal proceedings can
be found in the notes to the consolidated financial statements
Note 23 "Provision for other risks" and Note 30
"Legal proceedings" and in the comments in the combined
management report in the section entitled "Risks from
guarantees, legal and tax risks - legal risks"
Accounting Treatment of Legal Proceedings
335
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
The calculation methods and the assumptions made are
appropriate.
Our Observations
Our audit procedures included among other things the evalua-
tion of the process to calculate the provision for product
warranties and the evaluation of the relevant assumptions and
their derivation for the measurement of the provision. These
include primarily assumptions on expected susceptibility
to and the course of damage, and in addition the monetary
value of the damage per vehicle based on actual warranty,
guarantee and goodwill losses. Based on historical analyses,
we assessed the accuracy of the forecasts of past warranty,
guarantee and goodwill costs. We also checked that updated
assessments of the future repair costs and procedures were
taken into account. We obtained an understanding for the
underlying numbers of vehicles through the actual unit sales.
Our Audit Approach
Significant uncertainty for the calculation of the provision
arises with regard to the future loss event. The risk for the
consolidated financial statements is that the provision is not
properly measured.
Daimler faces various claims under product guarantees, or
grants various kinds of product warranties, which are entered
into for the error-free functioning of a Daimler product sold
or service rendered over a defined period of time. In order to
confirm or reassess future guarantee, warranty and goodwill
expenses, continuously updated information on the nature and
volume and the remedying of faults that have occurred is
recorded and analyzed at the level of the business unit, model
series, damage key and sales year.
The Risk for the Consolidated Financial Statements
The provision for product warranties amounts to € 8,708 mil-
lion and is included in the provisions for other risks.
in the comments in the combined management report in the
section entitled "Company-specific risks and opportunities -
Warranty and goodwill cases".
The Risk for the Consolidated Financial Statements
Daimler is confronted by various legal proceedings, claims and
governmental investigations and administrative orders (legal
proceedings) on a wide range of topics, including for example
vehicle safety, emissions, fuel economy, financial services,
dealer, supplier and other contractual relationships, intellectual
property rights, product warranties, environmental matters,
antitrust matters (including actions for damages) and share-
holder matters. Legal proceedings relating to products deal
with claims on account of alleged vehicle defects. Some of
these claims are asserted by way of class action lawsuits.
If the outcome of such legal proceedings is detrimental to
Daimler AG, the Company may be required to pay substantial
compensatory and punitive damages or to undertake service
actions, recall campaigns, monetary penalties or other costly
actions.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
in Note 2 "Accounting estimates and management judge-
ments". Further information on the guarantees and product
warranties can be found in the notes to the consolidated finan-
cial statements Note 23 "Provisions for other risks" and
The methodical approach, the procedures and the processes
to calculate the impairment losses and the assumptions and
risk parameters flowing into the measurement are appropriate
to identify the credit risks in good time and to determine the
recognition of adequate impairment losses.
Our Observations
We audited the appropriateness and effectiveness of the inter-
nal control system with regard to the risk classification
process and risk models and the identification of the factors
determining the value and the loss allowances, also by
rechecking the calculations. To this end, we also evaluated the
relevant IT systems and internal procedures. In addition to
the audit by our IT specialists of the propriety of the IT systems
affected and related interfaces to ensure the completeness
and correctness of the data, the audit also included the audit of
automatic controls for data entry and data processing. The
main focus of our audit was the evaluation of the methodical
approach in the determination of risk categories, default prob-
abilities and loss rates that are derived from historical data.
We obtained an understanding of this based on a risk-oriented
selection of credit portfolios. We satisfied ourselves with
regard to the appropriateness of significant risk parameters
based on the results of a validation performed by Daimler
Mobility and evaluated the adjustments of the parameters to
the current market situation. In this connection, we further-
more audited the data supporting the validations on the basis
of a conscious sample. In addition, we satisfied ourselves in
conjunction with a conscious sample of individual cases that
the risk classification is correct and that the amount of the cal-
culated specific allowance is appropriate.
We obtained a comprehensive understanding of the develop-
ment of the portfolios, the associated counterparty default
risks and the processes for identifying, managing, monitoring
and measuring credit risks by inspecting analyses and risk
reports, interrogations, review of guidelines and working
instructions, checking the defined methods and their imple-
mentation and checking and walking through the validation
process and the validation reports based on samples.
Our Audit Approach
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
334
The risk for the financial statements is that the credit-worthi-
ness of customers and future cash flows is misjudged or
that the calculation of the risk provision parameter is incorrect
so that allowances are not recognized or are insufficient.
The calculation of the loss allowances is based on expected
credit losses and therefore also includes expectations regard-
ing the future. Recognition of the expected credit losses is
carried out by means of a three-parameter procedure for the
determination of loss allowances. The following is among other
things taken into account in this connection: various factors
determining the value, such as the determination of statistical
default probabilities and loss rates, the possible receivable
amount on default, the parameter transfer criteria that are
related to a significant change in the default risk of borrowers,
and the calculation of future cash flows. Furthermore, macro-
economic scenarios flow into the calculation, the identification
of which to a high degree includes discretionary judgments
and uncertainties.
The Risk for the Consolidated Financial Statements
Receivables from financial services (€ 103,661 million) resulting
from the Group's financing and leasing activities include
receivables from sales financing with customers, receivables
from sales financing with dealers and receivables from
finance lease contracts. The allowances on these receivables
amounted at the balance sheet date to € 1,308 million.
in
Note 2 "Accounting estimates and management judge-
ments". Further information on allowances on receivables from
financial services can be found in the notes to the consolidated
financial statements in ①Note 1 “Significant Accounting Poli-
cies", in Note 14 "Receivables from financial services",
Note 33 "Management of financial risks" and in the
comments in the combined management report in the section
entitled "Industry and business risks and opportunities".
Measurement of the Provision for
Product Warranties
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Whether the recognition of a provision and, if so, in what
amount it is necessary on account of legal proceedings is
dependent to a high degree on discretionary estimates
a) Diesel emission behavior: class action and other lawsuits
in the USA, Canada and Germany
343
otherwise appears to be materially misstated.
is materially inconsistent with the consolidated financial
statements, the audited disclosures in the management
report or our knowledge obtained in the audit, or
In connection with our audit, our responsibility is to read
the other information and, in so doing, to consider whether the
other information
Our opinions on the consolidated financial statements and on
the combined management report do not cover the other infor-
mation, and consequently we do not express an opinion or any
other form of assurance conclusion thereon.
The other information does not include the consolidated finan-
cial statements, the audited disclosures in the management
report and our related auditor's report.
The other information also includes the remaining parts of the
annual report.
the combined separate nonfinancial report, which is referred
to in the combined management report.
the combined declaration on corporate management, which
is referred to in the combined management report, and
The legal representatives and the Supervisory Board are
responsible for the other information. The other information
comprises the following elements of the combined manage-
ment report, the content of which we have not audited:
Other Information
The discretionary assessments and assumptions are appro-
priate.
and assumptions by the legal representatives. In view of this
and the monetary amounts involved with regard to the risks,
the following legal proceedings of Daimler are in our opinion
of particular importance.
Our Observations
Our audit procedures comprised firstly an evaluation of the
process established by the Company to ensure the recording,
the estimation of the outcome of the proceedings and the
reflection in the annual financial statements of the legal pro-
ceedings. Secondly, we held discussions with the internal legal
department and with further departments familiar with the
matters under dispute and the Company's external advisors
and attorneys, in order to obtain explanations on the develop-
ments and the reasons that had led to the respective estima-
tions. In addition, we reviewed the underlying documents and
minutes. As of the reporting date, assessments were available
from external attorneys, which support the assessment of the
risks by the legal representatives.
Our Audit Approach
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
336
The risk for the consolidated financial statements is that provi-
sions for legal proceedings are not set up or are inadequate.
The recognition and measurement of the provisions set up for
the legal proceedings are based on discretionary assessments
and assumptions by the legal representatives.
Daimler AG already filed an application for immunity ("leniency
application") some time ago with the European Commission.
In 2018, the European Commission launched a formal investi-
gation into possible collusion regarding emission reduction
systems. In connection with this investigation, the European
Commission forwarded a statement of objections to Daimler
and other automobile manufacturers in April 2019.
Since July 25, 2017, several class action lawsuits have been
filed in the USA and in Canada against Daimler AG and other
automobile manufacturers and several of their North Ameri-
can subsidiaries. The plaintiffs claim to have suffered losses
because it is alleged that the defendants have engaged since
the nineteen-nineties in anticompetitive behavior with regard
to motor vehicle technology, costs, suppliers, markets and
other anticompetitive matters, including diesel exhaust
cleansing technology.
c) Antitrust proceedings (including actions for damages)
Following the imposition of a fine by the European Commission
against Daimler AG and other truck manufacturers in July 2016,
truck customers have raised damage claims against Daimler AG.
b) Diesel emission behavior: administrative proceedings
Various federal and state authorities and further institutions
worldwide have made inquiries and/or have carried out investi-
gations and/or proceedings and/or have issued directives,
or, in the case of the Stuttgart district attorney's office, issued
an administrative order imposing a fine. These relate in partic-
ular to test results and emissions control systems in Mercedes-
Benz diesel vehicles and/or the interaction of the Company
with the relevant state and federal authorities as well as related
legal issues and implications, including those under applicable
environmental, securities and criminal and antitrust laws.
In Germany, a large number of lawsuits from investors are fur-
thermore pending on account of the alleged violation of disclo-
sure requirements. The plaintiffs claim that Daimler failed to
publish insider knowledge immediately in connection with the
emission behavior of its diesel vehicles and in addition issued
erroneous and misleading statements. They furthermore claim
that the purchase price of their Daimler shares would have
been lower if Daimler had reported in accordance with its obli-
gations.
The use of devices that impermissibly impair the effectiveness
of emission control systems in reducing nitrogen-oxide
(NOx) emissions and which are supposed to cause excessive
emissions from vehicles with diesel engines is alleged in
consumer class action lawsuits in the USA and Canada and in
a lawsuit of the State of Arizona. In addition, the plaintiffs
claim that consumers were deliberately misled in connection
with the advertising for Mercedes-Benz diesel vehicles. Fur-
thermore, it is alleged in one of these class action lawsuits
that Daimler had conspired with a component supplier in
order to deceive U.S. supervisory authorities and consumers.
Finally, we evaluated the appropriateness of the description of
the aforementioned legal proceedings in the notes to the con-
solidated financial statements.
Loss Allowances on Receivables from Financial
Services
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in
this regard.
Our Observations
Alle +88
Di
Hubertus Troska
berten
Markus Schäfer
Mefeit
Renata Jungo Brüngger
R.Jug boy
Ola Källenius
Auffaro
Stuttgart, February 19, 2020
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the financial position,
cash flows and profit or loss of the Group, and the Group
management report, which has been combined with the
management report for Daimler AG, includes a fair review of
the development and performance of the business and
the position of the Group, together with a description of the
principal opportunities and risks associated with the
expected development of the Group.
Martin Daum
Responsibility Statement
Contents
Management Report
Financial Statements
The Divisions
Corporate Governance
Non-Financial Report
Further Information
Combined
Consolidated
G | FURTHER INFORMATION | CONTENTS 329
344
The assumptions and assessments providing the basis for the
assessment of the recoverability of the externally purchased
Mercedes-Benz passenger cars in the statement of financial
position caption "Equipment on operating leases" and the
recorded impairment losses are appropriate.
330
Wilfried Pasth
G | FURTHER INFORMATION | RESPONSIBILITY STATEMENT
Зміна ввер
We audited the recoverability of the Mercedes-Benz passenger
cars purchased externally in the balance sheet caption "Equip-
ment on operating leases". We investigated and appraised the
indications assumed by the Group for any need for an impair-
ment loss and where necessary obtained an understanding of
the write-downs calculated by Daimler. We have assessed
Daimler's evaluation with regard to the residual values achiev-
able by the end of the terms of the leases. In this connection,
we in particular critically reviewed the main influencing factors,
such as the expected number of returns from leasing, the
current marketing results in order to assess the accuracy of the
estimates and future vehicle model changes. For significant
markets we furthermore also audited the consistency of the
assumptions made by Daimler with residual value forecasts by
independent expert third parties.
Wilfried Porth
The Risk for the Consolidated Financial Statements
The balance sheet caption "Equipment on operating leases"
(€ 51,482 million) comprises among other things Mercedes-
Benz passenger cars, which are purchased by non-group deal-
ers or other third parties and are the subject of an operating
lease with the Daimler Group. An impairment loss exists with
regard to these vehicles that is primarily dependent on the
residual value achievable at the end of the lease. These future
residual values are dependent on the situation in the used
vehicle markets prevailing when the vehicles are returned. The
future-oriented valuation is based on a number of discretionary
assumptions. The risk for the financial statements is that any
impairment losses will not be recognized or that the amounts
recognized will be inadequate.
Please refer with regard to the accounting policies and methods
applied to the notes to the consolidated financial statements
Note 1 "Significant accounting policies" and Note 2
"Accounting estimates and management judgments". Further
information on the operating leases can be found in the notes
to the consolidated financial statements in Note 12
"Equipment on operating leases" and in the comments in the
combined management report in the section entitled "Indus-
try and business risks and opportunities".
Impairment Risk on Operating Leases
G | FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 333
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from January 1
to December 31, 2019. These matters were addressed in the
context of our audit of the consolidated financial statements
as a whole, and, in forming our opinion thereon, we do not pro-
vide a separate opinion on these matters.
Our Audit Approach
We conducted our audit of the consolidated financial state-
ments and of the combined management report in accordance
with Section 317 HGB and EU Audit Regulation (No. 537/2014;
referred to subsequently as the "EU Audit Regulation") and
in compliance with German Generally Accepted Standards for
Financial Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in Germany]
(IDW). We performed the audit of the consolidated financial
statements in supplementary compliance with the Interna-
tional Standards on Auditing (ISAs). Our responsibilities under
those requirements, principles and standards are further
described in the "Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the Combined
Management Report" section of our auditor's report. We are
independent of the group entities in accordance with the
requirements of European law and German commercial and
professional law, and we have fulfilled our other German pro-
fessional responsibilities in accordance with these require-
ments. In addition, in accordance with Article 10 paragraph 2
letter f) of the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under Article 5
paragraph 1 of the EU Audit Regulation. We believe that the
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinions on the consolidated financial
statements and on the combined management report.
Basis for the Opinions
G | FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
332
Pursuant to Section 322 paragraph 3 sentence 1 HGB, we
declare that our audit has not led to any reservations relating
to the legal compliance of the consolidated financial state-
ments and of the combined management report.
Key Audit Matters in the Audit of the
Consolidated Financial Statements
Independent Auditor's Report
the accompanying consolidated financial statements com-
ply, in all material respects, with the IFRSS as adopted by the
EU, and the additional requirements of German commercial
law pursuant to Section 315e paragraph 1 HGB [Handels-
gesetzbuch: German Commercial Code] and, in compliance
with these requirements, give a true and fair view of the
assets, liabilities and financial position of the Group as of
December 31, 2019, and of its financial performance for the
financial year from January 1 to December 31, 2019, and
Britta Seeger
In our opinion, on the basis of the knowledge obtained in the
audit
The combined management report includes cross-references
not foreseen by law that are marked as unaudited. In accor-
dance with the German legal regulations, we have not audited
the content of these cross-references and the information to
which these cross-references relate.
We have audited the consolidated financial statements of
Daimler AG, Stuttgart, and its subsidiaries (the Group), which
comprise the consolidated statement of financial position
as of December 31, 2019, and the consolidated statement of
income, consolidated statement of comprehensive income/
loss, consolidated statement of changes in equity and consol-
idated statement of cash flows for the financial year from
January 1 to December 31, 2019, as well as notes to the con-
solidated financial statements, including a summary of signifi-
cant accounting policies. In addition, we have audited the
combined management report for the financial year from Jan-
uary 1 to December 31, 2019. In accordance with the German
legal regulations, we have not audited the content of the ele-
ments of the combined management report referred to in the
"Other information" section of our auditor's report.
Audit opinions
Report on the Audit of the Consolidated
Financial Statements and of the Combined
Management Report
To: Daimler AG, Stuttgart
G | FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 331
Harald Wilhelm
Auld lib
the accompanying combined management report as a whole
provides an appropriate view of the Group's position. In all
material respects, the combined management report is con-
sistent with the consolidated financial statements, complies
with German legal requirements and appropriately presents
the opportunities and risks of future development. Our opin-
ion on the combined management report does not cover the
elements of the combined management report referred to in
the "Other information" section of our auditor's report. The
combined management report includes cross-references not
foreseen by law that are marked as unaudited. Our opinion
does not cover these cross-references and the information
to which these cross-references relate.
6.02
5.31
4.28
6.40
Net profit (loss) per share (€)1
5.32
6.51
2.22
7.97
9.61
6.78
Diluted net profit (loss) per share (€)1
4.28
7.87
2,709
97,761 106,540 114,297 117,982 129,872 149,467 153,261 164,154 167,362 172,745
16,454 17,424 18,002 18,753 19,607 20,949 21,141 22,186 22,432 22,657
4,849 5,634 5,644 5,489 5,680 6,564 7,572 8,711 9,107 9,662
1,373 1,460 1,465 1,284 1,148 1,804 2,315 2,773 2,526
8,755 8,820 10,815 10,752 13,186 12,902 14,348 11,132
8.2
7.7
9.2
8.3
8.8
8.4
8.7
6.7
8,116 10,139 10,173 12,744 12,574 13,967 10,595
9,173 7,678 9,007 9,007 10,880 7,963
22.6
18.8
20.1
19.1
8,720 7,290
10,617
6.02
From the statements of income
Revenue
Personnel expenses¹
Research and development expenditure²
3,076
4,329
2.5
3,830
3,068
22.5
14.8
4.8
8,711
8,784
7,582
6.40
Liquid assets
7.87
0.90
From the statements of financial position
Property, plant and equipment
Leased equipment
Other non-current assets¹
Inventories
6,830
Other current assets
Total assets¹
Shareholders' equity'
thereof share capital
Equity ratio Group (%)¹
Equity ratio industrial business (%)¹
Non-current liabilities¹
Current liabilities¹
30,948 37,143
17,593 19,180 20,599
21,779 23,182 24,322 26,381 27,981
19,925 22,811 26,058 28,160 33,050 38,942 46,942 47,074 49,476 51,482
41,309 45,023 48,947 48,138 56,258 62,055 67,613 73,394 79,582 86,013
14,544 17,081 17,720 17,349 20,864 23,760 25,384 25,686 29,489 29,757
10,903 9,576 10,996 11,053 9,667 9,936 10,981 12,072 15,853 18,883
31,556 34,461 38,742 42,039 46,614 58,151 65,687 69,138 76,271 79,160
135,830 148,132 163,062 168,518 189,635 217,166 242,988 255,345 281,619 302,438
3.25
6.51
3.65
3,477
7.97
9.61
6.78
2.22
Total dividend
1,971 2,346
Dividend per share (€)
1.85
2.20
2,349
2.20
2,407
2.25
2,621
2.45
3,477
3.25
3,477 3,905
3.25
963
6,029
Ten-Year Summary
Net profit (loss)¹
evaluate the consistency of the combined management
report with the consolidated financial statements, its confor-
mity with [German] law, and the view of the Group's position
it provides.
perform audit procedures on the prospective information
presented by the legal representatives in the combined man-
agement report. On the basis of sufficient appropriate audit
evidence, we evaluate, in particular, the significant assump-
tions used by the legal representatives as a basis for the pro-
spective information, and evaluate the proper derivation of
the prospective information from these assumptions. We do
not express a separate opinion on the prospective informa-
tion and on the assumptions used as a basis. There is a sub-
stantial unavoidable risk that future events will differ materi-
ally from the prospective information.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficien-
cies in internal control that we identify during our audit.
We also provide those charged with governance with a statement
that we have complied with the relevant independence require-
ments, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our indepen-
dence, and where applicable, the related safeguards.
From the matters communicated with those charged with gov-
ernance, we determine those matters that were of most signifi-
cance in the audit of the consolidated financial statements of
the current period and are therefore the key audit matters.
We describe these matters in our auditor's report unless laws
or other legal regulations preclude public disclosure of the
matter.
obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and on the combined management
report. We are responsible for the direction, supervision
and performance of the group audit. We remain solely
responsible for our opinions.
Other Legal and Regulatory Requirements
We were elected as group auditor by the Annual Shareholders'
Meeting on May 22, 2019. We were engaged by the Supervi-
sory Board on June 24, 2019. We have been the group auditor
of Daimler AG without interruption since the financial
year 1998.
We declare that the opinions expressed in this auditor's report
are consistent with the additional report to the audit commit-
tee pursuant to Article 11 of the EU Audit Regulation (long-form
audit report).
German Public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is
Dr. Axel Thümler.
Stuttgart, February 19, 2020
KPMG AG
Wirtschaftsprüfungsgesellschaft
Further Information pursuant to Article 10 of the EU Audit
Regulation
evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclo-
sures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and
fair view of the assets, liabilities, financial position and finan-
cial performance of the Group in compliance with IFRSS as
adopted by the EU and the additional requirements of Ger-
man commercial law pursuant to Section 315e paragraph 1
HGB.
conclude on the appropriateness of the use by the legal rep-
resentatives of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may
cast significant doubt on the Group's ability to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditor's
report to the related disclosures in the cosolidated financial
statements and in the combined management report or, if
such disclosures are inadequate, to modify our respective
opinions. Our conclusions are based on the audit evidence
obtained up to the date of our auditor's report. However,
future events or conditions may cause the Group to cease to
be able to continue as a going concern.
evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made by
management and related disclosures.
37,953 41,337 39,330 43,363 44,584 54,624 59,133 65,159 66,053 62,841
www.daimler.com
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
337
Responsibilities of the Legal Representatives and
the Supervisory Board for the Consolidated Financial
Statements and the Combined Management Report
The legal representatives are responsible for the preparation of
the consolidated financial statements that comply, in all mate-
rial respects, with IFRSS as adopted by the EU and the addi-
tional requirements of German commercial law pursuant to
Section 315e paragraph 1 HGB and that the consolidated finan-
cial statements, in compliance with these requirements, give a
true and fair view of the assets, liabilities, financial position
and financial performance of the Group. In addition, the legal
representatives are responsible for such internal control as
they have determined necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the legal
representatives are responsible for assessing the Group's abil-
ity to continue as a going concern. They are also responsible
for disclosing, as applicable, matters related to going concern.
In addition, they are responsible for financial reporting based
on the going concern basis of accounting unless there is an
intention to liquidate the Group or to cease operations, or there
is no realistic alternative but to do so.
Furthermore, the legal representatives are responsible for the
preparation of the combined management report that, as a
whole, provides an appropriate view of the Group`s position
and is, in all material respects, consistent with the consoli-
dated financial statements, complies with German legal
requirements, and appropriately presents the opportunities
and risks of future development. In addition, the legal repre-
sentatives are responsible for such arrangements and mea-
sures (systems) as they have considered necessary to enable
the preparation of a combined management report that is in
accordance with the applicable German legal requirements,
and to be able to provide sufficient appropriate evidence for
the assertions in the combined management report.
The Supervisory Board is responsible for overseeing the
Group's financial reporting process for the preparation of
the consolidated financial statements and the combined
management report.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements and of the Combined Management
Report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or
error, and whether the combined management report as a
whole provides an appropriate view of the Group's position
and, in all material respects, is consistent with the consoli-
dated financial statements and the knowledge obtained in the
audit, complies with the German legal requirements and appro-
priately presents the opportunities and risks of future develop-
ment, as well as to issue an auditor's report that includes our
opinions on the consolidated financial statements and on the
combined management report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Section
317 HGB and the EU Audit Regulation and in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer (IDW)
and supplementary compliance with the ISAs will always
detect a material misstatement. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
consolidated financial statements and this combined manage-
ment report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also
- identify and assess the risks of material misstatement of
the consolidated financial statements and of the combined
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinions. The risk of not detecting a
material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the
override of internal control.
obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the audit
of the combined management report in order to design audit
procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effec-
tiveness of these systems.
338
(Original German version signed by:)
4,674
Sailer
(German Public Auditor)
EBIT¹
7,274
Operating margin (%) 1
7.4
Profit (loss) before income taxes¹
6,628
thereof capitalized
8,449
5,120
6,240
as % of net assets (RONA) 1, 3
17.5
19.9
7,302
19.6
Net operating profit (loss)1
2019
20174 2018
2016
Dr. Thümler
Wirtschaftsprüfer
(German Public Auditor)
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
339
340
G❘ FURTHER INFORMATION | TEN-YEAR SUMMARY
G.01
€ amounts in millions
2010
2011
2012
2013
2014
2015
Wirtschaftsprüfer
G❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
Germany
26.3
2,029
19,020
19,127
Revenue (in millions of euros)
? 17 1 1 1,355
Sales outlets
Production locations
NAFTA region
Employees
228
55
12,330
8,511
15,697
3,321
10,827
17,307
35,055
10,743
40,256
132,961
Revenue (in millions of euros)
_16 7 3 7 ¨
Sales outlets
3,706
Production locations
Employees
23,709
308
706
507
2,329
770
Revenue (in millions of euros)
2
642
Sales outlets
10,677
3
2
1
Production locations
Latin America (excluding Mexico)
1,699
13,110
4
452
1,935
1
Employees
Daimler
Mobility
Daimler
Buses
62f
88, 228
91, 277ff
76
31f, 177f
50
20 ff, 52 ff
211 ff
186,105
331 ff
75,250 ff
73, 236 ff
16 ff, 55 ff, 95, 154
60 ff
Segment reporting
Shareholders' equity
Shares
Strategy
Sustainability
Unit sales
Value added
Workforce
Remuneration system
Revenue
Ratings
Profitability
Production
Portfolio changes
Pension obligations
Net profit
Net assets
Mobility services
ROE return on equity
ROS return on sales
Sales
Organization
Automotive
Businesses
70 ff, 89, 224
108 ff
Vans
Mercedes-Benz
Daimler
Trucks
Cars
Mercedes-Benz
Europe
G.02
Daimler Worldwide
G❘ FURTHER INFORMATION | DAIMLER WORLDWIDE
85
344
63,75f
67 ff, 151, 158, 166, 171,174
198 ff, 220 ff
52 ff
48 ff, 132 f
86 ff, 228
308 ff
64, 158, 166, 171, 174
70, 152, 249f
64,72
102 ff, 205
Investor Relations
425
2,011
Interim Reports for the 1st, 2nd and 3rd quarters
(German, English)
(German, English)
Annual Report
Publications for our shareholders:
Interim Report Q3 2020
October 23, 2020
Interim Report Q2 2020
July 23, 2020
April 29, 2020
Interim Report Q1 2020
Annual Shareholders' Meeting 2020
April 1, 2020
The Annual Report can be requested from:
Daimler AG,
Financial Calendar 2020:
Information on the Internet
Internet, Information, Financial Calendar
Note: Unconsolidated revenue of each division (segment revenue).
207
56
349
281
40
322
Specific information on our shares and earnings development can
be found on our website daimler.com in the "Investors" section.
The Group's annual and interim reports and the company financial
statements of Daimler AG can be accessed there. You can also find
topical reports, presentations, an overview of various key figures,
information on our share price and other services.
daimler.com/investors
515
Investor Relations, HPC F343
be ruled out, it is advisable to check on our
website a short time in advance.
④daimler.com/ir/calendar
70372 Stuttgart
Mercedesstraße 120
Daimler AG
The paper used for this Annual Report was
produced from cellulose sourced from
certified forestry companies that operate
responsibly and comply with the regulations
of the Forest Stewardship Council.
Fax
+49 711 17 92285
+49 711 17 95256
+49 711 17 94075
ir.dai@daimler.com
Investor Relations
Phone +49 711 17 95277
www.daimler.com
Fax +49 711 17 22244
As changes to the above dates cannot
Phone +49 711 17 0
FSC® C016368
Paper from
responsible sources
MIX
www.fsc.org
FSC
daimler.com/ir/reports
daimler.com/downloads/en
Fax +49 711 17 92287
order.print@daimler.com
Phone +49 711 17 92262
70546 Stuttgart, Germany
Daimler AG
70546 Stuttgart
9,709
2
1,553
314
134
36
702
3,819
Employees
282
101
301
1,023
Asia
1,450
1
328
Sales outlets
1
1
Production locations
Africa
331
1,408
Revenue (in millions of euros)
244
Production locations
4
Employees
Revenue (in millions of euros)
Sales outlets
Production locations
Australia/Oceania
1,798
403
1
13,913
2
3,852
11
2,335
336
815
6,612
30,614
Revenue (in millions of euros)
2,534
Sales outlets
2
Employees
26.5
45.8
Integrity
Integrity Code
Income taxes
A3
A3
A3
A3
Moody's
A-
A
A
A
A3
A-
A-
A-
BBB+
BBB+
S&P
Credit rating, long-term
Ratings
1,069.8 1,069.8
1,069.8 1,069.8 1,069.8 1,069.8
A-
1,051.5 1,067.1 1,067.1 1,069.1
A3
A2
A (low)
A (low)
A (low)
A (low)
A (low)
A (low)
DBRS
A-
A-
A3
A-
A-
A-
A-
A-
A-
BBB+
Fitch
A3
A2
A-
A (low)
77.58 70.72 70.80 45.91 49.37
1,069.8 1,069.8 1,069.8 1,069.8 1,069.8
Average shares outstanding (in millions)
Average diluted shares outstanding
(in millions)
G | FURTHER INFORMATION | TEN-YEAR SUMMARY 341
€ amounts in millions
18,580 19,737 16,597 16,288 10,997
44,796 47,054 48,446 53,809 63,746
36.7
42.8
46.4
20.5
22.2
24.0
2010
22.1
40.8
44.2
78,077 85,461 99,398 102,562 117,614 133,795
66,974 77,081 84,457 87,624 97,952 105,802
16,953
40,779
Net liquidity industrial business
Net assets (average) 1, 3
44.7
43.4
39.8
46.4
22.9
23.6
24.3
22.7
44,738 51,940 65,016 66,047
53,139 54,855 58,716 59,108
11,938 11,981 11,508 13,834
29,338 31,426 37,521 40,648
50.73 33.92 41.32 62.90 68.97
1,050.8 1,066.0 1,066.8 1,068.8 1,069.8
2011
2013
From the stock exchanges
Share price at year-end (€)
-9,921 -10,607
343 7,888
-1,652
7,751
6,305
5,676
7,199
7,534
2012
3,653 4,158 4,827 4,975 4,844 5,075 5,889 6,744
3,364 3,575 4,067 4,368 4,999 5,384 5,478
-696
-1,100 3,285 -1,274 222 3,711
-6,537 -8,864 -6,829 -2,709 -9,722 -14,666 -9,518
5,842 11,506 3,855 2,274 9,631 12,009 13,129 13,226 5,628
989 1,452 4,842 5,479 3,960 3,874 2,005 2,898 1,368
8,544
-313
Cash provided by (used for) operating activities
Cash provided by (used for) investing activities
Cash provided by (used for) financing activities
Free cash flow of the industrial business
From the statements of cash flows
Investments in property, plant and equipment
Depreciation and amortization
2019
2018
2017
2016
2015
2014
-7,551
5,432
Independent auditor's report
Innovations
A
A
Earnings per share (EPS)
EBIT
Dividend
Consolidated Group
Corporate governance
Digitization
Compliance
Connectivity
Cash flows
CO2 reductions
Capital expenditure
Bonds
Electric mobility
Annual Shareholders' Meeting
by return on sales. ROS is defined as the quotient of EBIT and
The profitability of the industrial divisions is measured
ROS - return on sales
The profitability of Daimler Financial Services is measured
by return on equity. ROE is defined as the quotient of EBIT and
shareholders' equity.
ROE - return on equity
The app-based provision of rides in cars driven by taxi drivers,
licensed rental car drivers or private drivers.
Ride hailing
G | FURTHER INFORMATION | INDEX 343
Since September 2017, emissions of particulate matter, nitro-
gen oxides and other pollutants have had to be measured using
mobile equipment and the Real Driving Emissions (RDE) test.
page 149
revenue.
RDE
Index
51,83f
82ff, 153
Financial income
This measures the potential future loss (related to market
value) for a given portfolio in a certain period and for which
there is a certain probability that it will not be exceeded.
Value at risk
Value added indicates the extent to which operating profit
exceeds the cost of capital. When value added is positive,
return on net assets is higher than the cost of capital.
page 75
Value added
NAFTA: classes 6 and 7; 8.9-15 tons (medium-duty)
class 8; over 15 tons (heavy-duty)
over 6 tons (medium- and heavy-duty)
Europe: up to 6 tons (light-duty)
Truck weight classes
50
0: no automation, 1: driver assistance, 2: partial automation,
3: conditional automation, 4: high automation, 5: full automation.
SAE Levels 0-5
48 ff, 311
70 ff
49, 75
12f, 23, 52
35 ff, 180 ff
247f
105 ff, 212 ff
200 ff
23,55
78ff, 107, 153 f, 227
SAE Levels 0-5 are a classification system defined by SAE
International for the various types of automated driving. The
SAE levels focus, among other things, on the extent to which
human drivers must still be alert and ready to intervene.
The stages of automation are defined as follows:
A
An assessment of a company's creditworthiness issued
by a rating agency.
A measuring method used in Europe for the objective
assessment of vehicles' fuel consumption, which is gradually
being replaced by WLTP since September 2017.
Cost of capital
The term corporate governance applies to the proper manage-
ment and supervision of a company. The structure of corporate
governance at Daimler AG is determined by Germany's Stock
Corporation Act (AktG), Codetermination Act (MitbestG) and
capital-market legislation.
Corporate governance
The consolidated Group is the total of all those companies that
are included in the consolidated financial statements.
Consolidated Group
By the term compliance, we understand adherence to all laws,
rules, regulations and voluntary commitments, as well as
the related internal guidelines and policies in connection with
all activities of the Daimler Group.
Compliance
Glossary
G | FURTHER INFORMATION | GLOSSARY
The cost of capital is the product of the average amount
of capital employed and the cost-of-capital rate. The cost-of-
capital rate is derived from the investors' required rate of
return. page 64
342
3 In the context of fine tuning the performance measurement system, the definition of net assets has been adjusted with retroactive effect as of 2015.
2 The figure for the year 2013 has been adjusted due to reclassifications within functional costs.
1 The figures for the year 2012 have been adjusted, primarily due to effects arising from application of the amended version of IAS 19.
258,120 267,274 274,605 275,384 279,857 284,562 284,957 289,530 298,465 301,839
Average annual number of employees
A
A
A
Scope
4 Several figures for the year 2017 have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9.
Rating
CSR corporate social responsibility
Design for the Environment
NEDC - New European Driving Cycle
They are at the heart of the current generation of electric
vehicles. Compared with conventional batteries, lithium-ion
batteries are considerably smaller and feature significantly
higher power density, short charging times and long lives.
Lithium-ion batteries
With this new technology from Mercedes-Benz, thanks to
improved environment sensors, intelligent assistance systems
analyze complex situations and recognize potential dangers
in road traffic even better.
INTELLIGENT DRIVE
The Integrity Code, which was updated in 2019, defines the
main corporate principles. It makes clear what we understand
by integrity and which values and principles guide us. The
key principles include integrating the environment into our work
and complying with applicable laws and regulations.
Integrity Code
IFRS - International Financial Reporting Standards
The IFRS are a set of standards and interpretations for compa-
nies' external accounting and financial reporting developed
by an independent private-sector committee, the International
Accounting Standards Board (IASB).
Goodwill represents the excess of the cost of an acquired
business over the fair values assigned to the separately
identifiable assets acquired and liabilities assumed.
A collective term for the social responsibility assumed by com-
panies, including economic, environmental and social aspects.
Goodwill
Fair value
The region EU30 includes the 28 member states of the
European Union plus Norway and Switzerland.
EU30
Accounting and valuation method for shareholdings
in associated companies and joint ventures.
pages 70 ff
Equity method
Earnings before interest and taxes are the measure
of operating profit before taxes.
EBIT
Design for the Environment (DfE) is a concept for reducing the
environmental impact of products, processes and services.
The amount for which an asset or liability could be exchanged
in an arm's length transaction between knowledgeable
and willing parties who are independent of each other.
3,058 3,060 3,063 3,069 3,070 3,070 3,070 3,070 3,070 3,070
Dear Shareholders, Mobility and the automotive industry are changing fundamentally. The three
main technological areas of activity - electrification, automation and connectivity - are accompa-
nied by new mobility services, regulations for decarbonization and traffic reduction, and global
trade conflicts. Daimler aims to shape this transformation in a sustainable manner and to assume
social, economic and environmental responsibility. With a consistent commitment to CO2-neutral
mobility, the company is setting the course for a successful future.
Ola Källenius | 50
Chairman of the Board of Manage-
ment, Chairman of the Board of
Management of Mercedes-Benz AG,
appointed until May 2024
Renata Jungo Brüngger | 58
Integrity and Legal Affairs,
appointed until December 2023
135
Harald Wilhelm | 53
Finance & Controlling,
Daimler Mobility,
appointed until March 2022
Markus Schäfer | 54
Group Research &
Mercedes-Benz Cars Development,
appointed until May 2024
Factory 56 is one of the world's most advanced automobile production facilities. The
new assembly hall at the Mercedes-Benz plant in Sindelfingen uses energy from renewable
sources and was planned to be CO2-neutral right from the start. This car factory of the
future applies innovative technologies and processes in the production of our vehicles and
creates a modern working environment that takes individual needs into account.
34
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
Report of the Supervisory Board
168
48-Volt Allrad
Supervisory and advisory activities of the Supervisory
Board
The Supervisory Board examined whether the annual company
and consolidated financial statements, the combined manage-
ment report and other financial reporting, as well as the non-
financial report for Daimler AG and the Daimler Group, were in
conformance with the applicable requirements.
In addition, it approved numerous business matters for which its
consent was required following careful reviews and consulta-
tions. As well as the finance and investment planning, this also
included cooperation plans, major equity measures at compa-
nies of the Group, associated companies and joint ventures,
and the conclusion of contracts with particular importance for
the Group. The Board of Management informed the Supervi-
sory Board about a large number of further measures and busi-
ness transactions, and discussed them with it intensively and
in detail, such as the measures for implementation of the new,
sustainable business strategy including “Ambition 2039," in
which the Group expresses its commitment to CO2-neutral
mobility. Finally, the Board of Management regularly reported
to the Supervisory Board on the current status of implementa-
tion of "Project Future" for the further development of the cor-
porate structure at Daimler.
The Board of Management regularly informed the Supervisory
Board about all significant economic developments of the
Group and the divisions. It continually provided information to
it on all fundamental questions of corporate planning, including
finance, investment, sales and personnel planning, current
developments at the companies of the Group, the development
of revenue, the situation of the Company and the divisions, and
the economic and political environment, as well as on the cur-
rent status and assessment of significant legal proceedings.
Furthermore, the Board of Management reported to the Super-
visory Board continually on return on equity and the Group's
liquidity situation, the development of sales and procurement
markets, the overall economic situation, and developments in
the capital markets and the area of financial services. Addi-
tional topics included the further development of the product
portfolio, securing the Group's long-term competitiveness, and
the ongoing implementation of measures for safeguarding sus-
tainable and future-oriented mobility. The Supervisory Board
also dealt in detail with the shareholder structure, the develop-
ment of the share price and the related background, and the
expected impact of strategic projects on the share price.
Working culture and areas of Supervisory Board activity
In the year 2019, the Supervisory Board convened for eight
meetings. Participation in the meetings by the members of the
Supervisory Board was at a high level once again. During the
year under review, all members of the Supervisory Board par-
ticipated in significantly more than half of the meetings of the
Supervisory Board and of its committees of which they are
members. The work of the Supervisory Board featured open
and intensive exchanges of information and opinions. The
members of the Supervisory Board regularly prepared for
upcoming resolutions with the aid of documentation provided
in advance by the Board of Management. Furthermore, the
members representing the employees and the members repre-
senting the shareholders regularly prepared the Supervisory
Board meetings in separate discussions, which were also
attended by members of the Board of Management. The Super-
visory Board was also intensively supported by its committees.
In the meetings of the Supervisory Board, its members dis-
cussed the measures and business matters to be decided upon
in detail with the Board of Management. Executive sessions
were regularly arranged for the meetings so that topics could
be discussed also in the absence of the Board of Management.
Outside the regular meetings, the Supervisory Board was
informed about special events. In addition, the members of the
Supervisory Board and of the Board of Management came
together for bilateral exchanges of opinions. The Board of Man-
Dr. Manfred Bischoff, Chairman of the Supervisory Board
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 35
agement informed the Supervisory Board also with written
reports about the most important indicators of business devel-
opment and existing risks.
The members of the Supervisory Board independently attend
such courses of training and further training regarded as neces-
sary for the performance of their tasks, relating for example to
changes in the legal framework and new, future-oriented tech-
nologies, in which they are supported by the Company. In a
special onboarding program, new members of the Supervisory
Board have the opportunity to meet the members of the Board
of Management and senior executives with specialist responsi-
bility for a bilateral exchange of opinions and information on
fundamental and current topics of the various Board of Man-
agement areas, allowing them to gain an overview of the topics
relevant to the Daimler Group and of its governance structure.
In its meeting on February 5, 2019, which was attended by the
external auditors, the Supervisory Board discussed, took note
of and approved the preliminary key figures of the annual com-
pany and consolidated financial statements for 2018 and the
dividend proposal to be made at the 2019 Annual Sharehold-
ers' Meeting. The Supervisory Board determined that no objec-
tions were to be raised to their publication. The preliminary key
figures for the year 2018 and the proposal on the appropriation
of profit were announced at the Annual Press Conference on
February 6, 2019.
In the Supervisory Board meeting held on February 13, 2019,
the Supervisory Board decided to appoint Harald Wilhelm as a
member of the Board of Management of Daimler AG for a
period of three years as of April 1, 2019. Bodo Uebber stepped
down from the Board of Management of Daimler AG with effect
as of the end of the 2019 Annual Shareholders' Meeting. At
that time, Harald Wilhelm took over Board of Management
responsibility for "“Finance & Controlling/Daimler Financial
Services," which is now called “Finance & Controlling/Daimler
Mobility" in line with the renaming of "Daimler Financial Ser-
vices" as "Daimler Mobility." Furthermore, the Supervisory
The Supervisory Board of Daimler AG fully performed its tasks
as defined by the law, the Company's Articles of Incorporation
and its own rules of procedure once again in the year 2019.
The Supervisory Board continually advised and supervised the
Board of Management in the management of the Company and
provided support with strategically important issues relating to
the Group's further development.
Board decided to reappoint Britta Seeger as a member of the
Board of Management of Daimler AG with responsibility for
"Mercedes-Benz Cars Marketing and Sales for a further five
years as of January 1, 2020. Subsequently, it dealt with the
annual company financial statements, the annual consolidated
financial statements and the combined management report for
Daimler AG and the Daimler Group for the year 2018, each of
which had been issued with an unqualified audit opinion by the
external auditors, as well as with the reports of the Audit Com-
mittee and the Supervisory Board, the declaration on corporate
governance combined with the corporate governance report,
the remuneration report, the nonfinancial report, which was
issued with the independent auditor's limited assurance in
accordance with ISAE 3000, and the proposal on the appropri-
ation of profit. In preparation, the members of the Supervisory
Board had been provided with comprehensive documentation.
RDK Allrad
T010 LL
T010 LL
48-Volt Allrad
Fondklima Stand
RDK
Allrad
Inertsierung
AN
167
Hubertus Troska | 59
Greater China,
appointed until December 2025
Wilfried Porth | 61
Fondklima Stand
Human Resources and Director
Mercedes-Benz Vans,
appointed until April 2022
Britta Seeger | 50
Mercedes-Benz Cars Marketing
and Sales,
appointed until December 2024
Martin Daum | 60
Daimler Trucks & Buses,
Chairman of the Board of
Management of Daimler Truck AG,
appointed until February 2022
We aim to achieve
CO2-neutral, flexible and digitized
production at all our plants.
ANAGEMENT
URR
002
of Labor Relations,
2848
The Audit Committee and the Supervisory Board dealt with
those documents in detail and discussed them intensively in
the presence of the independent auditors. The independent
auditors reported on the results of their audit and on the key
audit matters and the respective audit procedure including the
conclusions drawn, as well as on the voluntary review of the
non-financial report within the framework of a limited assurance
engagement, and were available to answer questions and to
provide further information. Following the final results of the
review by the Audit Committee and its own review, the Super-
visory Board declared its agreement with the results of the
audit carried out by the external auditors. It determined that
no objections were to be raised, approved the financial state-
ments and the combined management report as presented
by the Board of Management, and thus adopted the financial
statements of Daimler AG for the year 2018. On this basis,
the Supervisory Board consented to the proposal made by the
Board of Management on the appropriation of distributable
profit. In addition, the Supervisory Board approved the non-
financial report, the report of the Supervisory Board, the cor-
porate government statement combined with the corporate
governance report, and the remuneration report.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
How exactly is efficiency to be increased
at Daimler?
Ola Källenius: In the medium to long term, we anti-
cipate a positive growth trend in the automotive
markets. At the same time, we experience high volatil-
ity in the geopolitical and macro-political environment
on a daily basis. So we have to be able to react quickly
and in the best possible way. But we are in a good
position to help shape a lot of these developments. We
have worked out a systematic product plan to comply
with CO2 regulations in Europe. For future technologies
and business models, the customer requirement will
remain a core aspect. And we have introduced mea-
sures to safeguard our profitability during the transition
to climate-neutral mobility.
Looking ahead, what are the biggest challenges
for Daimler?
Ola Källenius: We are already a pioneer for electric
mobility with our trucks, vans and buses. In less than
two years, we will have battery-electric modes in our
portfolio in all our core regions. They will be followed
by series-produced vehicles with hydrogen drive by
the end of the 2020s. And by 2039, we intend to offer
CO2-neutral new vehicles in all segments in our major
markets. Our goal is CO2-neutral transportation by
2050. But even in many years' time, electric trucks
and buses will still cost more than diesel models.
A supportive framework is needed to make electric
mobility more lucrative also for commercial customers.
36
for example through new contract-award criteria.
becoming CO2-neutral. Our holistic approach also
includes the recycling of raw materials, so we are
evolving from the value chain and towards a value
cycle. In addition, we are promoting sustainability
among our business partners and suppliers,
Ola Källenius: We have defined those goals under the
heading of "Ambition 2039.” In ten years' time, we aim
to achieve more than half of our car unit sales with
plug-in hybrids or all-electric vehicles. By 2039, our
new car fleet is to be CO2-neutral. In the coming years,
the focus will be on battery electric drive. But it's not
possible today to predict with certainty the technology
that will best serve the customer needs of tomorrow
and the day after. We therefore remain open for all
types of drive systems. Our production is also gradually
What does that mean for Mercedes-Benz in terms
of climate protection?
Harald Wilhelm: Our cost structure has to be im-
proved sustainably. That's why everything is being
put to the test. We want to reduce material costs
significantly. Personnel costs are to be reduced by
1.4 billion euros by 2022. And we are also going to
make savings in administrative costs. At the same
time, we are systematically prioritizing our invest-
ments. In the longer term, for example, we are
reducing the complexity of our vehicle architectures,
reviewing our product portfolio and focusing on the
most profitable technologies. The key factor here is
speed. We want to achieve tangible effects as soon
as possible.
Harald Wilhelm: In addition to these business
highlights, it was above all exciting to get to know the
company after I started at Daimler last year. I gained a
positive impression: We not only have strong products,
we also have a very committed team. That's why I'm
convinced that we will achieve what we have set out
to do.
What were your highlights last year?
Harald Wilhelm: We cannot be satisfied with the devel-
opment of EBIT and free cash flow in the past year, even
though they include a number of special items. The
transformation that the Group and the entire automo-
tive industry are going through is also reflected in our
figures. The transition to CO2-neutral mobility involves
high investments and initially higher product costs. But
the changes ahead of us also open up many opportu-
nities, and we intend to make the most of them. We
have clearly defined a roadmap to ensure the required
financial strength.
Ola Källenius: Last year shows us that the transforma-
tion is in full swing at Daimler. We have set the course
for the decade - and taken the first important steps.
Overall, 2019 was marked by material adjustments and
a stable core business. We were able to maintain the
Group's unit sales at the strong prior-year level. But
2019 was challenging for Daimler in financial terms.
How would you summarize the 2019 financial year?
A | TO OUR SHAREHOLDERS | INTERVIEW
28
27
A | TO OUR SHAREHOLDERS | INTERVIEW
IEW
Ola Källenius: For me, first of all the products. At
Mercedes-Benz, we set standards with new compact
cars and SUVs. In addition, the market launch of the
EQC, the launch of numerous new plug-in hybrids and
our presence at the Frankfurt Motor Show: Our way
forward is sustainable modern luxury. We also made
progress with the electrification of our trucks, vans and
buses. The latest example of that is the start of series
production of the eSprinter. Electrification is a key
element of our sustainable business strategy, which we
formulated in 2019. It promises sustainable action in a
wide range of areas - from CO₂ reductions and compli-
ance with environmental regulations to data protection
and respect for human rights.
A | TO OUR SHAREHOLDERS | INTERVIEW 29
Commercial vehicles constitute an important
part of Daimler's business. What does our path
to sustainable transportation look like?
A | TO OUR SHAREHOLDERS | INTERVIEW
Also in its meeting on February 13, 2019, the Supervisory
Board discussed the results of the efficiency review carried out
in 2018, which once again confirm the professional, very good
and very trusting cooperation within the Supervisory Board
and with the Board of Management. There was no fundamental
need for change, but individual suggestions were made and
implemented. The Supervisory Board also dealt with matters
pertaining to the remuneration of the members of the Board of
Management and, in connection with the item of the agenda
on corporate governance, approved the memberships of other
boards and further external secondary activities of the mem-
bers of the Board of Management that were presented in the
meeting. In addition, the Supervisory Board discussed the sta-
tus of the spin-off documentation required to strengthen the
divisional structure by forming legally independent entities in
the context of "Project Future." Finally, the Supervisory Board
received detailed reports on current legal issues, among other
things with regard to the antitrust proceedings of the European
Commission against three German car manufacturers con-
cerning possible restrictions of competition with exhaust-gas
cleaning technologies, as well as with regard to requests for
information, inquiries, investigations, administrative orders and
proceedings relating to diesel exhaust emissions.
In its meeting on March 22, 2019, the Supervisory Board
approved a number of measures for which its consent was
required. These included in particular a cooperation project
between Zhejiang Geely Holding Group (Geely Holding) and
Daimler to further develop smart as a leading brand for electric
mobility, as well as the acquisition of a majority interest in the
US company Torc Robotics, a pioneer in the field of autonomous
driving. Furthermore, the Supervisory Board again dealt in detail
with the spin-off documentation for "Project Future" that was to
be submitted to the Annual Shareholders' Meeting and was
informed about the further development of the Group-wide code
of conduct in the context of an integrity update. Finally, the
Supervisory Board approved its proposed resolutions on the
items of the agenda for the 2019 Annual Shareholders' Meeting.
The Supervisory Board convened for another meeting in late
April 2019. One focus of this meeting was dealing with the sus-
tainable business strategy, in particular "Ambition 2039",
which was presented by the Board of Management. The Super-
visory Board was also informed about the status of the HERE
cooperation and the battery-cell strategy. Finally, the Supervi-
sory Board also dealt with current legal issues and with compli-
ance measures in this context, especially relating to the
requests for information, inquiries, investigations, administra-
tive orders and proceedings relating to diesel exhaust emis-
sions. In addition, the Supervisory Board was informed about
the statement of objections from the European Commission
concerning possible restrictions of competition with exhaust-
gas cleaning technologies and the results of the ongoing inves-
tigation of this case by an independent law firm. It also dealt
with the question of whether, in connection with the concluded
antitrust investigations of truck manufacturers by the Euro-
pean Commission, claims for compensation were to be made
against former or current members of the Board of Manage-
ment. On the basis of the reviews carried out so far and repeat-
edly updated by an independent law firm, a further review by
an independent legal academic, as well as detailed discussions
in the Supervisory Board taking into account the welfare of the
Company, the Supervisory Board maintained its previous reso-
lution, based on the information available, that no such claims
were to be made at the present time.
30
In a meeting in late July 2019, the Supervisory Board approved
a series of capital measures at Group companies and resolved
to amend its rules of procedure for the start of the new corpo-
rate structure at the beginning of November 2019. In addition,
the Supervisory Board discussed in detail with the Board of
Management the course of business and the results of the first
half of the year, in which there had been two adjustments of
the earnings guidance for the full year. The Supervisory Board
also received detailed reports on current legal issues, includ-
ing requests for information, inquiries, investigations, adminis-
trative orders and proceedings relating to diesel exhaust emis-
sions, including the proceedings of the Stuttgart District
Attorney's Office. Against the backdrop of the complexity of
the emissions- and antitrust related proceedings and with
regard to the efficient organization of the Supervisory Board's
work, the Supervisory Board resolved to establish a Supervi-
sory Board Committee for Legal Affairs until further notice.
This committee coordinates the exercise of the rights and
duties of the Supervisory Board with regard to the aforemen-
tioned legal issues, prepares the resolutions of the Supervisory
Board and makes appropriate recommendations for resolu-
tions. The committee consists of six members elected by the
members of the Supervisory Board by a majority of the votes
cast and is composed on a parity basis. The members of the
committee elect a committee chairman and a deputy commit-
tee chairman from among their number. The chairman of the
committee is Dr. Clemens Börsig and its deputy chairman is
Michael Brecht. Other members of the committee are Dr. Man-
fred Bischoff and Marie Wieck as shareholder representatives
and Michael Häberle and Sibylle Wankel as employee represen-
tatives.
In a subsequent joint meeting of the Supervisory Board and
the Advisory Board for Integrity and Corporate Responsibility,
the participants discussed the integration of sustainability
and integrity into Daimler Group strategy and the day-to-day
business.
Strategy meeting of the Supervisory Board
On the first day of the two-day strategy workshop in Sindelfin-
gen at the end of September, after careful and intensive dis-
cussion of the relevant aspects and considering the relevant
reasons and taking into account the best interests of the Com-
pany, and after receiving a positive recommendation for a reso-
lution from the Supervisory Board Committee for Legal Affairs,
the Supervisory Board approved the decision of the Board of
Management not to appeal against the fine imposed by the
Stuttgart District Attorney's Office on September 24, 2019 for
negligent violation of supervisory duties during vehicle certifi-
cation in connection with deviations from regulatory require-
ments for certain Mercedes-Benz vehicles. In preparing its
decision, the Supervisory Board had obtained an expert opin-
BOARD OF M
Ola Källenius: There are many good reasons to look
ahead with confidence. Demand for mobility is increas-
ing. We will continue utilizing this growth potential. We
have everything it takes - strong brands and products,
the best minds and the right strategy.
At the Annual Shareholders' Meeting held on May 22, 2019,
the candidates proposed by the Supervisory Board, Joe Kaeser
and Dr. Bernd Pischetsrieder, were reelected as members of
the Supervisory Board representing the shareholders. In the
Supervisory Board meeting held straight after the Annual Share-
holders' Meeting, the members of the Supervisory Board rep-
resenting the shareholders reelected Joe Kaeser as a member
of the Audit Committee. Furthermore, the Supervisory Board
decided to have a voluntary review conducted of the contents
of the 2019 non-financial report by KPMG AG Wirtschaftsprü-
fungsgesellschaft, Berlin, within the framework of a limited
assurance engagement.
What plans do you have for the coming years?
Harald Wilhelm: To justify the trust that our share-
holders place in us. We will do everything in our power
to deliver what we have promised: high financial
strength through sustainable efficiency.
A | TO OUR SHAREHOLDERS | INTERVIEW 31
What does the future of mobility look like for
Daimler?
Ola Källenius: Our business model will be based on
vehicles that enable individual mobility in a sustainable
way. Making one's own Mercedes even more attractive
with a whole range of services. Digitization and con-
nectivity will open up many opportunities for us. China
is a key seismograph for new trends also in this area.
18489
And what do the next steps for autonomous driving
look like?
Ola Källenius: It's important to deliver applications
that are attractive for our customers and profitable for
us. With cars, the focus is initially on automated driving
for certain distances on highways. We are therefore
joining forces with partners, which will enable us to
share costs and accelerate innovation. With fully auto-
mated driving, we see the most promising applications
first for trucks - to be followed by cars.
Which attitude is needed to implement all of these
targets successfully?
Ola Källenius: We need courage and determination,
openness and enthusiasm. All our colleagues are
involved in determining how we work together. We have
significantly developed our corporate culture in recent
years, and we want to build on that.
Harald Wilhelm: We are making customers' access
to our vehicles even easier and more convenient, from
digital purchasing to flexible use, offering mobility
"from years to minutes" for example. Our mobility
services are one component of all this. In this area, we
joined forces with BMW last year. Now it's a matter of
continuing our growth and making our business sus-
tainably profitable, and we will prioritize our resources
for this purpose.
Daimler Financial Services AG now operates under the name
Daimler Mobility AG and provides financing, leasing, insurance
and fleet-management services for the entire Daimler Group.
Daimler Mobility AG is also a strategic investor in mobility
services such as FREE NOW, SHARE NOW and Blacklane. The
mobility ecosystem is completed by flexible service offerings
such as Mercedes-Benz Rent (car rentals) or Mercedes me
Flexperience (car-on-demand solutions).
Daimler Trucks puts first highly automated truck
(SAE Level 4) on the road
Daimler Trucks and Torc Robotics start with the development
and testing of highly automated trucks (SAE Level 4) on defined
public roads. The operation initially takes place in Virginia,
where Torc Robotics has its headquarters. This follows months
of testing on closed roads.
Daimler Trucks & Buses and CATL agree on global supply
of battery modules for electric trucks
Daimler Trucks & Buses and battery manufacturer Contempo-
rary Amperex Technology Co. Limited (CATL) agree to supply
battery modules for series-produced electric trucks worldwide.
CATL will supply lithium-ion battery modules for several
electric trucks in the global portfolio of Daimler Trucks & Buses
that are scheduled to go into series production in 2021.
Mercedes-Benz Vans presented the Concept EQV as a study
vehicle at the Geneva Motor Show in March 2019. The produc-
tion version in August has its premiere as the Mercedes-Benz
EQV (combined electricity consumption: 27.0 kWh/100 km;
combined CO2 emissions: 0 g/km, preliminary figures)¹. As a
member of the Mercedes EQ family, the first battery-powered
premium MPV from Mercedes-Benz combines locally emis-
sion-free mobility with convincing performance, high function-
ality and aesthetic design.
Administrative offence proceedings against Daimler AG
are fully concluded
The public prosecutor's office in Stuttgart issues a fine notice
against Daimler AG due to the negligent violation of supervi-
sory duties in the area of vehicle certification in connection
with deviations from regulatory requirements for certain
Mercedes-Benz vehicles. The negligent breach of supervisory
duty was found to have occurred at the level of department
head. Daimler refrains from taking a legal remedy against the
fine notice. The fine proceedings of the public prosecutor's
office against Daimler AG are thus fully concluded.
Q3
1 Data on electricity consumption and range are provisional and have
been determined by the technical service for the certification procedure
according to UN/ECE Regulation No 101. EC type approval and a certifi-
cate of conformity with official values are not yet available. This data
may deviate from the official values.
Mercedes-Benz EQV: premiere for premium multipurpose
vehicle with electric drive
Development partnership for second-life batteries
Mercedes-Benz AG through its wholly-owned subsidiary
Mercedes-Benz Energy GmbH and Beijing Electric Vehicle Co.
(BJEV), a subsidiary of the BAIC Group, have entered into a
development partnership to develop second life energy-stor-
age systems in China. With a view to the value chain of auto-
motive battery systems, the partner companies are pooling
their expertise and resources and laying the foundation for the
development of a sustainable, renewable-energy industry.
Mercedes-Benz AG (since September 24, 2019)**
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD
There was no occasion to convene the Mediation Committee
during the reporting period.
Changes in the Supervisory Board and the Board of
Management
Following the proposal of the Supervisory Board, the Annual
Shareholders' Meeting on May 22, 2019 reelected Joe Kaeser
und Dr. Bernd Pischetsrieder as members of the Supervisory
Board representing the shareholders for the period until the
end of the Annual Shareholders' Meeting that decides on ratifi-
cation of board members' actions for financial year 2023.
In the Supervisory Board meeting on February 13, 2019, Harald
Wilhelm was appointed to the Board of Management of Daimler
AG for a period of 3 years with effect as of April 1, 2019. Bodo
Uebber resigned from the Board of Management of Daimler AG
with effect as of the end of the Annual Meeting 2019. At the
same time, Harald Wilhelm took over the responsibility for
"Finance & Controlling/Daimler Financial Services," which is
now called "Finance & Controlling/Daimler Mobility." Further-
more, Britta Seeger was reappointed to the Board of Manage-
ment of Daimler AG as the member responsible for "Mercedes-
Benz Cars Marketing and Sales" for a further five years
effective as of January 1, 2020.
In accordance with the resolution of the Supervisory Board of
September 2018, Ola Källenius was reappointed as the Chair-
man of the Board of Management, responsible for Mercedes-
Benz Cars, for a new period of office of five years starting at
the end of the Annual Shareholders' Meeting on May 22, 2019,
after Dr. Dieter Zetsche had resigned as a member of the
Board of Management of Daimler AG and Head of Mercedes-
Benz Cars in consultation with the Supervisory Board effective
at the same time. Also by resolution of the Supervisory Board
of September 2018, Markus Schäfer was appointed as succes-
sor to Ola Källenius as a member of the Board of Management
of Daimler AG with responsibility for "Group Research and
Mercedes-Benz Cars Development" starting at the end of the
Annual Shareholders' Meeting on May 22, 2019.
In the Supervisory Board meeting on February 19, 2020, Huber-
tus Troska was appointed as a member of the Board of Man-
agement of Daimler AG with responsibility for "Greater China”
for a period of a further five years effective as of January 1st,
2021. In addition, the members of the Supervisory Board rep-
resenting the shareholders decided, on the basis of a
recommendation by the Nomination Committee, to propose
the election to the Supervisory Board of Timotheus Höttges at
the Annual Shareholders' Meeting in 2020.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 39
Audit of the company and consolidated financial
statements
The financial statements of Daimler AG and the combined man-
agement report for the Company and the Group for 2019 were
duly audited by KPMG AG, Wirtschaftsprüfungsgesellschaft,
Berlin, and were given an unqualified audit opinion. The same
applies to the consolidated financial statements for 2019 pre-
pared according to IFRS. On the basis of a voluntary review of
the contents of the non-financial report decided upon by the
Supervisory Board, the non-financial report for financial year
2019 was reviewed by KPMG AG Wirtschaftsprüfungsgesell-
schaft, Berlin, within the framework of a limited assurance
engagement and was issued with a limited assurance in accor-
dance with ISAE 3000.
The Nomination Committee convened for one meeting in
2019. The Committee dealt in particular with the recommenda-
tion for the Supervisory Board's proposal to be made at the
Annual Shareholders' Meeting in 2020 on the candidate for
election to the Supervisory Board. Among other things, and
taking into consideration all circumstances of each individual
case, the proposal is oriented towards the Daimler Group's
interests and aims to fulfill the overall qualification profile for
the entire Supervisory Board, including expertise profile and
diversity concept.
In a meeting held on February 10, 2020 attended by the exter-
nal auditors, the Supervisory Board discussed, took note of
and approved the preliminary key figures of the annual com-
pany and consolidated financial statements for 2019 and the
proposal on the appropriation of profit to be made at the 2020
Annual Shareholders' Meeting. The Supervisory Board deter-
mined that no objections were to be made to their publication.
The preliminary key figures for the year 2019 as well as the
proposal on the appropriation of profit were announced at the
Annual Press Conference on February 11, 2020.
The Audit Committee and the Supervisory Board dealt with
those documents in detail and discussed them intensively in
the presence of the independent auditors, who reported on the
results of their audit and in particular on the key audit matters
and the respective audit procedure including the conclusions
drawn, as well as on the voluntary review of the non-financial
statement within the framework of a limited assurance engage-
ment, and who were available to answer supplementary ques-
tions and to provide additional information. Following the final
results of the review by the Audit Committee and its own
review, the Supervisory Board declared its agreement with the
results of the audit by the external auditors. It determined that
no objections were to be raised and approved the financial
statements and the combined management report as pre-
sented by the Board of Management. The company financial
statements of Daimler AG for the year 2019 were thereby
adopted. On this basis, the Supervisory Board consented to
the proposal made by the Board of Management on the appro-
priation of distributable profit. Furthermore, the Supervisory
Board approved the non-financial report and the report of the
Supervisory Board, the declaration on corporate governance
combined with the corporate governance report, and the remu-
neration report, as well as its proposed resolutions on the
items of the agenda for the 2020 Annual Shareholders' Meeting.
Appreciation
The Supervisory Board thanks all the employees and the man-
agement of the Daimler Group for their committed contribu-
tions in the challenging environment of the year 2019.
The Supervisory Board also thanks Dr. Dieter Zetsche and
Bodo Uebber for their committed work in the Company's Board
of Management.
Stuttgart, February 2020
The Supervisory Board
Мира как
Dr. Manfred Bischoff
Chairman
40
In the meeting held on February 19, 2020, the Supervisory
Board dealt with the annual company financial statements, the
annual consolidated financial statements and the combined
management report for Daimler AG and the Daimler Group,
each of which had been issued with an unqualified audit opin-
ion by the independent auditors, as well as with the reports of
the Audit Committee and the Supervisory Board, the corporate
government statement combined with the corporate gover-
nance report, the remuneration report, the non-financial report
issued with a limited assurance in accordance with ISAE 3000,
and the proposal on the appropriation of profit. In preparation,
the members of the Supervisory Board had been provided with
comprehensive documentation including the Annual Report
with the consolidated financial statements according to IFRS,
the combined management report for Daimler AG and the
Daimler Group, the declaration on corporate governance com-
bined with the corporate governance report, the remuneration
report, the non-financial report, the annual company financial
statements of Daimler AG, the proposal of the Board of Man-
agement on the appropriation of profit, the audit reports of
KPMG AG Wirtschaftsprüfungsgesellschaft on the annual com-
pany financial statements of Daimler AG and the consolidated
financial statements, each including the combined manage-
ment report, and the internal control system, as well as drafts
of the reports of the Supervisory Board and of the Audit Com-
mittee.
Daimler Financial Services AG becomes Daimler
Mobility AG
The Committee for Legal Affairs held five meetings in 2019,
including its inaugural meeting. At these meetings, it received
detailed information on legal matters concerning emissions
and antitrust law, as well as the related further development of
the compliance system, and discussed those matters in the
presence of the Supervisory Board's legal advisors. The Com-
mittee regularly reports to the Supervisory Board on its work
and in two cases, after discussing and considering the relevant
aspects and taking into account the best interests of the Com-
pany, made recommendations to the Supervisory Board for
resolutions. This concerned, on the one hand, the resolution of
the Supervisory Board of September 24, 2019 to approve the
decision of the Board of Management not to appeal against the
fine imposed by the Stuttgart District Attorney's Office. On the
other hand, it concerned the resolution of the Supervisory
Board of December 12, 2019 regarding legal matters relating to
antitrust law.
The Audit Committee met six times in 2019. Details of those
meetings are provided in a separate report of that committee
pages 182 ff
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 37
ion from an independent law firm. Both the Supervisory Board
and the Management Board are of the opinion that the conclu-
sion of the fine proceedings was in the interest of the Com-
pany. In this meeting, the Supervisory Board also approved a
capital contribution at the Chinese joint-venture company Bei-
jing Benz Automotive Co, Ltd. for the realization of two vehicle
projects.
The focus of the strategy workshop was on the strategies for
the period until 2030 of Mercedes-Benz AG, Daimler Truck AG
and Daimler Mobility AG, and in particular on the "Move Pro-
grams" as a holistic approach for the required transformation,
and on the "Move Performance Programs" for the improve-
ment of cost structures. The Supervisory Board discussed in
detail the goals and the strategic areas for action of the indi-
vidual divisions. The Supervisory Board dealt with the electrifi-
cation of vehicle fleets, the further development of fuel-cell
technology and autonomous driving. Various vehicle exhibits
were also presented. With the involvement of the executives
responsible for the topics presented, the members of the
Supervisory Board and the Board of Management discussed in
a constructive and open dialog how Daimler will prepare for
new challenges and which further developments lie ahead. The
changing competitive environment was also discussed. The
Supervisory Board also discussed the key financial figures and
the targets for the Group and the divisions.
Meeting on operational planning 2020/2021
In the meeting held on December 12, 2019, the Supervisory
Board discussed business activities in China, in particular the
political and economic aspects of expanding the Group's pres-
ence in China and the significant Chinese investments in our
Company. It also dealt with the report of the Board of Manage-
ment on the development of current acquisitions and coopera-
tions. During the further course of the meeting, on the basis of
comprehensive documentation, the Supervisory Board dis-
cussed and approved the operational planning for the years
2020 and 2021, and in this context discussed existing opportu-
nities and risks.
Furthermore, the Supervisory Board was informed about cur-
rent legal issues, also with regard to the requests for informa-
tion, inquiries, investigations, administrative orders and pro-
ceedings relating to diesel exhaust emissions. Once again, it
also dealt with the question of whether any claims for compen-
sation were to be made against former or present members of
the Board of Management in connection with the concluded
antitrust proceedings against truck manufacturers by the Euro-
pean Commission. In addition, the Supervisory Board dealt
with the results of the ongoing investigations in connection
with the European Commission's antitrust proceedings con-
cerning possible restrictions of competition with exhaust-gas
cleaning technologies. The Supervisory Board decided to dis-
cuss the further procedure on the antitrust matters again in
February 2020, with due consideration of further developments.
Other subjects discussed at the meeting were matters of cor-
porate governance, in particular the declaration of compliance
with the German Corporate Governance Code, and the fulfill-
ment of the qualification profiles for the Board of Management
and the Supervisory Board. Furthermore, the Supervisory
Board looked ahead to the main topics for the 2020 financial
year. Finally, it dealt in this meeting with the further develop-
ment of the Board of Management remuneration system, on
the basis of preparations by the Presidential Committee.
Details of the system of Board of Management remuneration
and changes to the annual bonus are presented in the remu-
neration report on pages 108 ff of this Annual Report.
Corporate governance and declaration of compliance
During the year 2019, the Supervisory Board was continually
occupied with standards of good corporate governance.
In September 2019, the Supervisory Board resolved to update
the declaration of compliance with the German Corporate Gov-
ernance Code due to one of its members taking on another
supervisory board position at Mercedes-Benz AG and the
resulting exceeding of the maximum number of three supervi-
sory board positions recommended by the Code for members
of the boards of management of listed companies. For the pur-
pose of regulating its rules of procedure, which reflect the
Code's recommendation regarding the maximum number of
supervisory positions held by members of the boards of man-
agement of listed companies, the Supervisory Board has
decided, until further notice, not to consider dual positions of
members of the Supervisory Board of Daimler AG in other
supervisory boards within the Daimler Group. In its meeting in
December 2019, the Supervisory Board approved the 2019
declaration of compliance with the German Corporate Gover-
nance Code pursuant to Section 161 of the German Stock Cor-
poration Act (AktG). With the exceptions explained there, all
recommendations of the Code have been and continue to be
complied with.
on
In accordance with good corporate governance, the members
of the Supervisory Board of Daimler AG are obliged to disclose
conflicts of interest - especially those that might arise due to
an advisory or board function for a customer, supplier or credi-
tor of Daimler, or for other third parties - to the entire Super-
visory Board.
Law for the equal participation of women and men in man-
agement positions
For supervisory boards of listed companies subject to parity
codetermination, like that of Daimler AG, the German Stock
Corporation Act prescribes a binding gender ratio of at least
30% women. The ratio is to apply to the entire supervisory
board. If the side of the supervisory board representing the
shareholders or the side representing the employees objects
to the chairman of the supervisory board before the election
about the application of the ratio to the entire supervisory
board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
38
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
As of December 31, 2019, the shareholders' side of the Super-
visory Board of Daimler AG is composed of 30% women (the
members Sari Baldauf, Petraea Heynike and Marie Wieck) and
70% men. On the employees' side, the proportions as of that
date are 30% women (the members Elke Tönjes-Werner, Sibylle
Wankel and Dr. Sabine Zimmer) and 70% men. The Supervisory
Board as a whole therefore also fulfills the statutory quota.
In its meeting on February 19, 2020, the Supervisory Board dis-
cussed the specific proposals for the candidate to be elected
at the 2019 Annual Shareholders' Meeting and decided, upon
the recommendation of the Nomination Committee, to propose
at the 2020 Annual Shareholders' Meeting that, Timotheus
Höttges, Chairman of the Board of Management of Deutsche
Telekom AG, be elected to the Supervisory Board. If the pro-
posed candidate is elected, the statutory quota for women will
remain fulfilled both on the shareholder side and for the Super-
visory Board as a whole, provided there are no other changes.
For the composition of the Board of Management, the Supervi-
sory Board set the target in December 2016 of at least 12.5%
women, which is applicable until December 31, 2020. As of
December 31, 2019, two women are members of the Board of
Management: Renata Jungo Brüngger and Britta Seeger; the
proportion of women is therefore 25% as of that date.
Corporate governance at Daimler is described in detail in the
declaration on corporate governance combined with the corpo-
rate governance report on pages 185 ff and in the remu-
neration report on pages 108 ff of this Annual Report.
The work of the committees
The Presidential Committee convened in the past financial
year for eight meetings, which were partially held in the form
of conference calls. It dealt in particular with personnel mat-
ters and succession planning for the composition of the Board
of Management. In addition, the Presidential Committee dealt
with the acceptance by members of the Board of Management
of board positions at other companies and institutions, with
corporate governance topics and with matters of remunera-
tion. Details of the remuneration of the Board of Management
are presented in the remuneration report on
pages 108 ff
There were no indications of any actual conflicts of interest in
the year 2019. In order to avoid individual potential conflicts of
interest, some members of the Supervisory Board did not par-
ticipate in discussions of certain items of the agendas in the
year 2019. Dr. Bernd Pischetsrieder and Dr. Jürgen Hambrecht
left the room during several meetings for the legal status
reports, in particular when legal proceedings in connection
with diesel exhaust emissions were discussed. As a result, in
compliance with the goals of the Supervisory Board, there
were no potential conflicts of interest during the year under
review for at least half of the members representing the share-
holders and for at least 15 members of the entire Supervisory
Board.
Allianz Deutschland AG
The Beijing Automotive Group Co. Ltd. (BAIC Group) acquires a
five percent equity interest in Daimler AG through an indirect
subsidiary. Daimler and BAIC are linked by a long-standing
strategic partnership that has existed since 2003. Since then,
the two companies have been cooperating on the production,
research and development, and sale of cars, vans and trucks.
Daimler acquired a stake in BAIC Motor, a listed subsidiary of
BAIC, in 2013 and currently holds 9.55 percent of its shares.
Mercedes-Benz EQV (combined electricity consumption: 27.0 kWh/100 km; combined CO2 emissions: 0 g/km, preliminary figures)¹
Dr. Bernd Pischetsrieder
Deputy Chairman of the General Works Council, Daimler Group;
Deputy Chairman of the General Works Council of Daimler AG;
Chairman of the Works Council, Sindelfingen Plant
Other supervisory board memberships/directorships:
Mercedes-Benz AG (since September 24, 2019)**
Daimler Truck AG (since September 24, 2019)**
elected until 2023
Ergun Lümali*
A | TO OUR SHAREHOLDERS | THE SUPERVISORY BOARD 41
NXP Semiconductors N. V.
Dr. Manfred Bischoff
elected until 2021
Chairman of the Supervisory Board of Daimler AG
Other supervisory board memberships/directorships:
Mercedes-Benz AG - Chairman (since September 24, 2019)**
SMS Holding GmbH (until December 31, 2019)
Michael Brecht*
elected until 2023
Deputy Chairman of the Supervisory Board of Daimler AG;
Chairman of the General Works Council, Daimler Group;
Chairman of the General Works Council, Daimler AG;
Chairman of the Works Council, Gaggenau Plant, Daimler AG
Other supervisory board memberships/directorships:
Mercedes-Benz AG (since September 24, 2019)**
Daimler Truck AG (since September 24, 2019)**
Dr. Paul Achleitner
elected until 2020
Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Deutsche Bank AG - Chairman
Bayer AG
Bader M. Al Saad
elected until 2024
Former Chairman of the Supervisory Board of Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft in Munich
Other supervisory board memberships/directorships:
Mercedes-Benz AG (since September 24, 2019)**
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in Munich - Chairman (until April 30, 2019)
Tetra Laval Group
Elke Tönjes-Werner*
elected until 2023
Dr. Sabine Zimmer*
Other supervisory board memberships/directorships:
Mercedes-Benz AG (since November 1, 2019)**
General Manager of IBM Blockchain (until December 31, 2019)
elected until 2023
Marie Wieck
Other supervisory board memberships/directorships:
Mercedes-Benz AG (since November 1, 2019)**
Daimler Group
elected until 2022
Chairman of the Management Representatives Committee,
elected until 2023
Dr. Frank Weber*
Other supervisory board memberships/directorships:
Mercedes-Benz AG (since November 1, 2019)**
General Legal Counsel of the German Metalworkers' Union
(IG Metall)
elected until 2023
Sibylle Wankel*
Deputy Chairwoman of the Works Council, Bremen Plant,
Daimler AG
elected until 2023
Centre manager BodyTEC, Mercedes-Benz AG;
Manager Vocational Training Policies, Germany, Daimler AG
Former Chairman and Managing Director of the Executive
Committee of the Board of Directors of Kuwait Investment
Authority
Kuwait Investment Authority
Chairman of the Supervisory Board of BASF SE
Other supervisory board memberships/directorships:
Daimler Truck AG (since September 24, 2019)**
BASF SE
Chairman
Fuchs Petrolub SE - Chairman (until May 7, 2019)
Trumpf GmbH + Co. KG - Chairman
Michael Häberle*
elected until 2023
Chairman of the Works Council, Untertürkheim Plant,
Daimler AG
Other supervisory board memberships/directorships:
Mercedes-Benz AG (since September 24, 2019)**
Petraea Heynike
elected until 2021
Former Executive Vice President of the Executive Board
of Nestlé S. A.
Other supervisory board memberships/directorships:
Mercedes-Benz AG (since September 24, 2019)**
Joe Kaeser
elected until 2024
Chairman of the Board of Management of Siemens AG
Other supervisory board memberships/directorships:
elected until 2023
Dr. Jürgen Hambrecht
Secretary-Treasurer United Auto Workers (UAW)
elected until 2023
Kuwait Fund for Arab Economic Development
BlackRock Inc. (since May 23, 2019)
Sari Baldauf
elected until 2023
Former Executive Vice President and General Manager of
theNetworks Business Group of Nokia Corporation
Other supervisory board memberships/directorships:
Daimler Truck AG (since September 24, 2019)**
Vexve Armatury Group - Chairwoman
Nokia Oyj
Other supervisory board memberships/directorships:
Daimler Truck AG (since November 1, 2019)**
Michael Bettag*
Chairman of the Works Council of the Nuremberg Dealership,
Daimler AG
Dr. Clemens Börsig
elected until 2022
Former Chairman of the Supervisory Board of Deutsche Bank AG
Other supervisory board memberships/directorships:
Daimler Truck AG (since September 24, 2019)**
Linde AG (until April 8, 2019)
Linde Intermediate Holding AG (until August 7, 2019)
Linde plc
Emerson Electric Co
Raymond Curry*
elected until 2023
Daimler welcomes acquisition of shares by BAIC Group
Roman Zitzelsberger*
elected until 2023
Baden-Württemberg
Daimler Trucks and Torc Robotics, a pioneer in the field of
autonomous driving, enter into a partnership to market highly
automated trucks (SAE Level 4) in the United States. The
companies agree that Daimler Trucks will acquire a majority
stake in Torc Robotics. Torc is one of the world's most ex-
perienced companies in the field of automated vehicles.
Torc offers advanced, road-going technology and years of
experience with heavy-duty commercial vehicles.
Daimler Trucks strengthens its technology leadership for
automated driving
Daimler AG and Zhejiang Geely Holding Group announce that
they are establishing a global 50:50 joint venture. The objec-
tive is to further develop smart, a pioneer of urban mobility,
into a leading brand for electric mobility. According to the
joint-venture agreement, the next generation of electric smart
models will be produced in a new, specially built electric-car
factory in China. Global sales are scheduled to begin in 2022.
Daimler and Geely Holding establish global joint venture
to further develop smart
The BMW Group and Daimler AG are combining their mobility
services in the YOUR NOW joint ventures with the goal of
creating a new global player that will introduce sustainable
urban mobility consistently for the benefit of customers. The
two groups are investing more than €1 billion to further expand
and intermesh their existing services in the areas of ride
hailing, multimodal platforms, car sharing, parking and
charging. The mobility services have been consolidated into
three pillars since January 1, 2020: FREE NOW & REACH NOW,
SHARE NOW, PARK NOW & CHARGE NOW.
BMW Group and Daimler AG invest in joint mobility-ser-
vices provider
In the context of the opening of the Hermes Logistics Center
in Hamburg, the first 20 eVito vans from series production and
the first eSprinter pilot vehicles from Mercedes-Benz Vans
are handed over to Hermes Germany. The eVito vans are to
take over delivery on the last mile in the urban environment.
The vans are also the visible part of a strategic partnership
between Mercedes-Benz Vans and Hermes Germany for the
development of technologies and services for the vehicle fleet
of the retail and logistics service provider.
The first eVito from series production and the first
eSprinter is handed over to Hermes
The first battery-powered Mercedes-Benz eCitaro series-pro-
duction buses are in regular use in public transport in Berlin
and Heidelberg. Further electric buses are to follow in Ger-
many and the first orders have also been received from neigh-
boring European countries. The eCitaro is now in series
production at the Daimler Buses plant in Mannheim and is
being delivered to customers.
Mercedes-Benz eCitaro electrifies European transport
companies
Mercedes-Benz Cars to build a battery factory in Poland
On January 22, we announce that as part of its electric offen-
sive, Mercedes-Benz Cars will build a battery factory in Jawor,
Poland, thus expanding the global battery production network
to nine factories. The battery factory in Jawor is the second
major investment at this new Mercedes-Benz site. A state-of-
the-art engine factory is already being built there to supply the
Mercedes-Benz Cars plants worldwide.
eCITARO
POTARO
eCITARO
Mercedes-Benz
44 A HIGHLIGHTS 2019
43
Q1
S.EQ121E
A HIGHLIGHTS 2019 45
Mercedes-Benz EQC (combined electricity consumption: 20.8 - 19.7 kWh/100 km; combined CO2 emissions: 0 g/km)¹
ctric inteligence
The new Mercedes-Benz EQV
A | HIGHLIGHTS 2019
46
Q2
1 Electricity consumption and range were determined on the basis of
Regulation 692/2008/EC. Electricity consumption and range depend on
vehicle configuration.
Daimler reassesses its earnings expectations for financial year
2019 and the second quarter of 2019. The main reasons for the
initial reassessment are an increase in expected expenses in
connection with various ongoing governmental proceedings
and measures relating to Mercedes-Benz diesel vehicles. A
further adjustment is necessary primarily due to special items
which add up to a total amount of €4.2 billion in the second
quarter.
Daimler adjusts earnings expectations
sustainable luxury. The company also presented nineteen other vehicles to the
global public for the first time. An additional highlight of our presence at the
Frankfurt Motor Show was the completely revised exhibition stand, which featured
digital communication more prominently.
Daimler and the BMW Group start their cooperation in the field
of automated driving. The two companies have signed an
agreement on long-term strategic cooperation in this field.
Daimler and the BMW Group intend to jointly develop the next
technology generation for driver-assistance systems, auto-
mated driving on highways and automated parking functions
(up to SAE Level 4 in each case). In addition, the partners aim
to hold talks on extending the scope of cooperation to higher
levels of automation in urban environments. One objective of
the cooperation is to achieve the rapid market launch of the
technology.
Daimler is pressing ahead with the transformation to emission-
free mobility. Sustainability is a key element of Daimler's corpo-
rate strategy and at the same time a benchmark for corporate
success. By 2039, the new-car fleet of Mercedes-Benz Cars is
to become CO2-neutral and the company aims to achieve more
than 50% of its car sales with plug-in hybrids or all-electric
vehicles. Production operations at all European Mercedes-Benz
car plants are expected to be CO2-neutral as soon as 2022.
Ambition 2039: Daimler puts sustainable business strat-
egy into concrete form
scene.
Lab 1886 at Europe's biggest digital conference
Lab1886, the innovation hub of Daimler AG, is again the main
partner of re:publica 19. With an audience of approximately
20,000 visitors in Berlin, Daimler presents forward-looking
projects, creates knowledge transfer and presents itself as a
potential employer to international talents from the digital
The EQC, the first Mercedes-Benz vehicle of the EQ product
and technology brand (combined electricity consumption:
20.8 19.7 kWh/100 km; combined CO2 emissions: 0 g/km)¹,
is on the road in mid-2019. With its seamless, clear design and
brand-typical color accents, it is a pioneer of avantgarde
electrical aesthetics. In terms of quality, safety and comfort,
the EQC is the Mercedes-Benz among electric vehicles and is
convincing in the sum of its features.
First Mercedes-Benz model of the EQ brand
Mercedes-Benz Cars opens car plant in Russia
Mercedes-Benz Cars starts production at the new Moscovia
car plant with the Mercedes-Benz E-Class sedan for the local
market. The E-Class will be followed by SUV models. The
Mercedes-Benz Moscovia plant features flexible and sustain-
able production and applies modern industry 4.0 technologies.
Daimler shareholders vote in favor of new Group structure
At the Annual Meeting in Berlin on May 22, 2019, the share-
holders of Daimler AG vote by a large majority in favor of
restructuring the Daimler Group. This prepares the way for the
Group to transfer the car and van business as well as the truck
and bus business to two legally independent entities by means
of a spin-off. The new structure, which is to take effect on
November 1, will give the company more scope for action in
a dynamically growing competitive environment.
Daimler AG and BMW Group join forces for automated
driving
German Metalworkers' Union (IG Metall) District Manager
IAA
2019
EQ
Sari Baldauf
Dr. Paul Achleitner
Dr. Manfred Bischoff - Chairman
Nomination Committee
Ergun Lümali*
Joe Kaeser
Michael Brecht*
Dr. Clemens Börsig - Chairman
Audit Committee
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Presidential Committee
Dr. Jürgen Hambrecht
Roman Zitzelsberger*
Dr. Manfred Bischoff - Chairman
Michael Brecht*
Committee pursuant to Section 27 Subsection 3 of the
German Codetermination Act (MitbestG)
Committees of the Supervisory Board:
Other supervisory board memberships/directorships:
Daimler Truck AG (since September 24, 2019)**
ZF Friedrichshafen AG (since November 21, 2019)
MTU Friedrichshafen GmbH (until January 31, 2020)
Rolls-Royce Power Systems AG (until January 31, 2020)
Legal Affairs Committee
Dr. Clemens Börsig - Chairman
Dr. Manfred Bischoff
Michael Brecht*
smart
EQV
A HIGHLIGHTS 2019 43
HTS
Mercedes-Benz's presence at the Frankfurt Motor Show from September 10 to 22,
2019 focused on sustainable solutions for the future of mobility, which are reflected
in the products as well as in the business strategy. At the same time, Mercedes-Benz
continued to position itself as a manufacturer of luxury automobiles. The Mercedes-
Benz VISION EQS show car had its world premiere as an example of our pursuit of
PLUG-IN HYBRID
Vision EQS
ESF A-CLASS
Fortwo
World Premiere
Д
SIL
res
Autonome
Mobilitä
HIGHLIG
* Representative of the employees
**Group Mandate
Marie Wieck
Michael Häberle*
Sibylle Wankel*
Elektrisc
Mobilität
The Supervisory Board
development of the smart brand, generated additional momen-
tum and led to a substantial increase in our share price until
the end of March (+14%). On April 18, the Daimler share price
reached €59.31, which was the highest price for the year.
ACTROS
INTERNATIONAL
TRUCK OF THE YEAR
DAIGN.DE
DAI:GR
710000
DAI
DE0007100000
3.6%
Rest of the world
16.7%
offered. At 25.5%, the participation rate in the year under
review was once again higher than in the previous years (2018:
23.5%). A total of 45,700 employees took part in the program
(2018: 41,900), which is the highest number since 2008. The
total number of shares purchased by employees also increased
substantially once again, from 717,000 in 2018 to approxi-
mately 811,000, of which just under 73,200 were bonus shares
(2018: 64,700) in the year under review. In connection with
the attendance bonus program, approximately 15,600 shares
were additionally purchased and transferred to the beneficia-
ries (2018: 15,000).
Asia
Kuwait
15.4%
USA
A HIGHLIGHTS 2019 47
Europe, excluding Germany
30.2%
6.8%
Daimler Annual Shareholders' Meeting in Berlin
Due to the preparations being made for the new Group struc-
ture, our 2019 Annual Shareholders' Meeting was held on
May 22 at the Messe Berlin exhibition center. Some 5,000 share-
holders (2018: 6,000) attended the meeting. A total of 52.91%
(2018: 55.71%) of equity capital was represented at the meet-
ing (actual attendees and shareholders who voted by absentee
ballot). A large majority of the shareholders approved each
of the agenda points proposed by the company's management.
For example, the Annual Shareholders' Meeting approved a
dividend payout of €3.25 per share (2018: €3.65), which means
the total dividend amounted to €3.5 billion. Important docu-
ments and information related to the Annual Shareholders'
Meeting can be found on the Internet at ④ daimler.com/ir/
am2019.
Daimler shareholders voted in favor of the new Group structure
by an overwhelming majority of 99.75%. This structure
establishes Daimler AG as the parent company of the legally
independent entities Mercedes-Benz AG (for the cars and vans
business) and Daimler Truck AG (for business activities relating
to trucks and buses). In addition, the Annual Shareholders'
Meeting once again elected Joe Kaeser and Bernd Pischetsrie-
der to the Supervisory Board as shareholder representatives.
Joe Kaeser is the CEO of Siemens AG and Bernd Pischetsrieder
is a former CEO of BMW AG and VW AG. Both have been mem-
bers of the Supervisory Board of Daimler AG since 2014. The
terms for both reelected Supervisory Board members will end
when the Annual Shareholders' Meeting is held in 2024.
In 2019, the Daimler Group primarily covered its refinancing
needs by issuing bonds. A large proportion of those bonds were
sold as benchmark bond issuances (bonds with high nominal
volumes) in euro and US-dollar markets. In the US capital mar-
ket, for example, Daimler Finance North America LLC issued
bonds worth a total of $7.00 billion. In addition, Daimler AG and
Daimler International Finance B. V. issued euro bonds in
benchmark format with a total volume of €10.25 billion. In 2019,
Daimler AG also issued bonds in China (so-called Panda bonds)
worth a total of CNY 10.0 billion. Furthermore, many smaller
bonds were issued by the Daimler Group in a variety of curren-
cies and markets.
The central banks' monetary policy had a major effect on bond
markets in 2019. As a result of the high level of liquidity, com-
panies with investment-grade ratings saw their risk premiums
remain at a moderate level for the most part.
Refinancing benefits from a high level of capital-market
liquidity and consistently solid ratings
consent to receive their invitation to the Daimler Annual
Shareholders' Meeting by e-mail rather than by post. Our goal
here was to reduce as much as possible the consumption of
paper and the costs associated with mailing paper documents,
which in 2019 also included the very extensive and complex
Hive-down and Acquisition Agreement between Daimler AG,
Mercedes-Benz AG and Daimler Truck AG. We were very
pleased by our shareholders' positive reaction to the electronic
invitation campaign. Due to this positive response, we were
able to increase the number of e-mail invitations to the Daimler
Annual Shareholders' Meeting from 100,000 to 220,000 - and
reduce CO2 emissions by around 50 tons as a result. We
would like to thank those shareholders for helping to protect
the environment and cut costs. Access to the e-service for
shareholders and additional information can be found at
④https://register.daimler.com.
Number of online shareholders reaches over 200,000
Our shareholders continue to make good use of our range of
personalized electronic information and communication. In
March 2019, we sent a notice to shareholders requesting their
Website: attractive page design, improved user experience
The Investor Relations site at ④daimler.com/investors is
the main source of information for the majority of our share-
holders. With this in mind, we made further improvements to
the site in 2019. For example, our improved page structure
makes it easier for visitors to navigate the site and move more
quickly to the sections they wish to view. We've also made
the site easier to use with mobile terminals. Our news pages,
for example, are always available in HTML format and auto-
matically adapt to any mobile device display. Our IR media
library is an additional service that offers the most important
news, documents and videos at a glance. Our IR website
had nearly one million visitors in 2019 and over two million
page views, which corresponds to approximately 2,600 visitors
and 5,800 page views per day. Our IR site also achieved an
outstanding third-place ranking in a benchmark study by Net
Federation GmbH, an agency for digital corporate communica-
tion, of the websites of the 70 German companies with the
highest market capitalization.
The 2018 Annual Report received a Platinum Vision Award
from the League of American Communications Professionals
LLC (LACP). In addition, we were once again given a Silver
Stevie Award for the online version of the 2018 Annual Report,
which also captured Silver at the 2018 LACP Professionals
Vision Awards.
Our 2018 Annual Report and its online version with numerous
additional features won prestigious international awards once
again. annualreport.daimler.com/2018
Awards once again for the Daimler Annual Report
The talks with analysts and investors focused on the latest earn-
ings expectations for 2019, business developments and
profitability in individual divisions and regions, and our "Project
Future." Investors are also now focusing more strongly on the
transformation of the automotive industry and the shift toward
locally emission-free mobility, as well as the impact that
research and development expenditure on new technologies is
having on profitability. Daimler's top management also held
capital market events in London and New York at which they
provided analysts and investors with an update on the Group's
strategy for all of its business units and a preview of the ROI
roadmap for the coming years. The costs for the electrification
of the complete model range and the impact connected with
the transformation of the automobile sector overall will have a
negative effect on the earnings situation. They will lead to
additional product costs and higher depreciation for the currently
very high investment volumes. We intend to counteract these
impacts by means of comprehensive measures to reduce
costs. The audio/video recordings and charts and illustrations
from the event are available at ④ daimler.com/investors/
events/capital-market-days.
Geneva and Frankfurt. We reported on our quarterly results in
conference calls and webcasts. At the same time, we have fur-
ther developed our methods in order to more specifically
address long-term investors who may be interested in purchas-
ing shares in Daimler. The presentations are available on our
website at daimler.com/investors/events/presentations.
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 51
In 2019, we once again provided institutional investors, ana-
lysts, rating agencies and private investors with timely informa-
tion regarding the company's business development. We orga-
nized roadshows for institutional investors and analysts in the
finance capitals of Europe, North America and Asia. We also
held many one-on-one meetings at investor conferences. This
was especially the case at the international motor shows in
Continuation of comprehensive investor relations
activities
After more than 13 years as Chairman of the Board of Manage-
ment of Daimler AG and Head of Mercedes-Benz Cars,
Dieter Zetsche stepped down from his position at the conclu-
sion of the Annual Meeting 2019. At the conclusion of the
2019 Annual Shareholders' Meeting, Ola Källenius was named
Chairman of the Board of Management of Daimler AG and
Head of Mercedes-Benz Cars. Also at the conclusion of the
2019 Annual Shareholders' Meeting, Bodo Uebber stepped
down as the Board of Management member responsible for
Finance and Controlling and Daimler Financial Services, a posi-
tion he had held since 2005. His successor is Harald Wilhelm,
who has been a member of the Daimler AG Board of Manage-
ment since April 1, 2019.
Germany
At the end of 2019, Daimler Group companies had issued
bonds that were still outstanding in a volume of 85.6 billion
(2018: €76.5 billion). Besides raising funds through the issu-
ance of bonds, Daimler also issued a small volume of commer-
cial paper in 2019.
Shareholder structure as of December 31, 2019
By region
21.3 %
A2
A3
A
A-
1.55% 1.93%
3.95% 4.67%
A-
A.07
Reuters ticker symbol
Stock exchange symbol
German Securities Identification Number
ISIN
Stock-exchange data for Daimler shares
A.06
Bloomberg ticker symbol
A-
A
A
Retail investors
54.1 %
Institutional investors
3.1 %
Renault-Nissan
5.0%
BAIC Group
6.8%
Kuwait Investment Authority
9.7 %
Investment Limited
Tenaciou3 Prospect
Shareholder structure as of December 31, 2019
By type of shareholder
A
A
A.08
DBRS
During the year under review, Daimler issued asset-backed
securities (ABS) in five countries. In the United States, the
company generated a refinancing volume of $8.7 billion through
six transactions in 2019; in Canada, a volume of CAD 1.0 billion
was generated in two transactions. Two transactions with a
total volume of AUD 1.26 billion were executed in Australia in
2019. Such bonds were also successfully sold to investors in
Italy for the first time, in the amount of €0.5 billion. In China,
one ABS transaction was conducted successfully with a total
volume of CNY 8.5 billion.
52
Mercedes me and our digital services are designed to generate
added value for the customer. Activities relating to digital
services for Mercedes-Benz cars are therefore based on the
development of an open software architecture that offers con-
trolled access and interfaces that enable customers also to
utilize third-party services. We are convinced that as a vehicle
manufacturer, we should also have our own operating system
and be able to understand, monitor and control it. This
approach gives us direct access to the customer and enables
us to ensure that customer and vehicle data is handled in a
responsible manner. With MBUX (Mercedes-Benz User Experi-
ence), we have set a new standard for intuitive multimedia
systems that manage communication between the driver and
the vehicle and its surroundings, and which are capable of
adapting and learning. With trucks, the focus has also increas-
ingly shifted to the development of software and electronic
systems in recent years. The Truck Data Center launched by
Daimler Trucks is the brain that allows connectivity between
trucks of different brands. It continuously monitors the status
of vehicle systems and sends and receives data in real time.
Digital services such as Fleetboard, Mercedes Uptime, Detroit
Connect, Virtual Technician and Truckonnect are all based on
this connectivity module and thus help to increase the effi-
ciency of transport operations. With its digital cockpit, the
Mercedes-Benz Actros allows for simple and intuitive opera-
tion and makes it possible for drivers to perform numerous
tasks from the cockpit. Daimler Buses offers its digital services
via the OMNIplus ON platform, while Mercedes PRO is the digi-
tal services brand at Mercedes-Benz Vans. Daimler Mobility
is now looking to completely digitalize its processes and the
customer journey all the way through to the payment process.
Digital services and digital platforms
Over the medium to long term, we plan to reduce the high
degree of complexity of our passenger car models and
engines, as well as the number of platforms we use for passen-
ger cars. Because we believe that new vehicles with combus-
tion engines will continue to play a role in the market for new
cars and vans over the medium term, we are further develop-
ing our conventional engines in line with the next stage of EU
certification. We plan to complete this process over the next
few years, after which we expect to see a significant decrease
in development work and expenditure on combustion engines.
We will compensate for the currently higher costs associated
with electric drive by developing a flexible architecture for
such drive systems and combustion engines in which the inte-
gration of electric-drive components will be given absolute pri-
ority. Our plans for the next few years also call for the cus-
tomer-oriented optimization of both the number of different
truck models and the number of drive types and regional plat-
forms.
Platforms and drivetrains
Mercedes-Benz Vans already offers the eVito; the eSprinter
and our battery-electric full-size MPV is to follow in 2020.
Mercedes-Benz Vans has also announced an electric variant of
the successor model of the Citan. By 2022, Daimler Trucks
plans to have electric vehicles ready for series production in all
of its key regions and segments. The focus here will be on bat-
tery-electric models. The range of vehicles will subsequently
be extended by the inclusion of fuel-cell/hydrogen-based sys-
tems for trucks. Daimler Buses presented the all-electric
eCitaro back in mid-2018. Plans call for the range of bus prod-
ucts to be expanded to include buses equipped with fuel-cell
systems. The E-Mobility Group Trucks & Buses is implementing
the electric strategies for all truck and bus brands and estab-
lishing a globally standardized electric-vehicle architecture.
As we continue along the road to emission-free mobility, we
intend to forge ahead with the electrification of drivetrains in
Mercedes-Benz passenger cars using 48-volt technology. We
will also gradually increase the number of hybrid and battery-
electric models that we offer. Our goal here is to attain a sales
structure in 2030 in which plug-in hybrids and all-electric vehi-
cles account for more than 50% of all the new cars we sell.
Autonomous and automated driving
Electrification of our drive system portfolio
With regard to our commercial vehicles as well, our customers
are at the focus of everything we do. We seek to supply prod-
ucts and services that make them successful. We develop
technologies in order to be able to further reduce the total cost
of transport and to offer safe and efficient solutions for the
goods transport and distribution of the future.
We are intensifying our focus on the customer experience. The
further development of our brand plays a key role in this pro-
cess. According to the current "Best Global Brands 2019" rank-
ing from Interbrand, Mercedes-Benz is the most valuable Ger-
man brand and the world's most valuable premium automotive
brand. We want to make our brand even more distinctive in the
future, and make it more customer-focused as well. Maintain-
ing emotional ties to our customers is more important than
ever, especially in times of transformation. The brand emotions
of LOVE and EASE complement the attributes that have always
been an essential part of our Mercedes-Benz brand's DNA and
will remain so in the future: RESPECT and TRUST. The core of
our brand (THE BEST), and our existing brand values (EMO-
TIONAL and INTELLIGENT), remain unchanged. We create emo-
tional Mercedes-Benz moments for every physical and digital
interaction with the brand. We plan to increase customer satis-
faction with new and flexible usage models and seamless inte-
gration of our products and services.
Customers and brand
The financial challenges we now face are more extensive than
ever before due to the measures we have to implement to help
ensure a CO2-neutral future. Addressing these challenges will
require extensive investment in electric mobility, which has
higher production costs than with combustion engines, and a
comprehensive restructuring plan. The attainment of our prof-
itability targets and the maintenance of a solid cash flow have
top priority here, as this is the only way to ensure that we will
play a leading role in the transformation to a CO2-free society.
Measures to improve efficiency have been defined at all divi-
sions and for Daimler AG as a whole. These measures relate to
our workforce, material-cost reductions, upper limits on
investments, adjustments to our portfolio and vehicle models,
the implementation of platform strategies, and across-the-
board digitization of processes at Daimler Mobility. Plans also
call for an increasing number of Group vehicles financed or
leased by Daimler Mobility to be refinanced in a manner that
does not impact our balance sheet. In addition, the allocation
of financial resources at the parent-company level will be made
transparent and be rigorously monitored.
Efficiency
Daimler Mobility offers mobility services under the motto
"Mobility from years to minutes." With its leasing, financing
and insurance packages, Daimler Mobility supports the growth
of our automotive divisions and the solutions it offers also
increase customer loyalty and identification with the company.
Additional innovative services such as Flexperience, a flexible
vehicle rental model, will further support sales at our automo-
tive divisions. We also plan to continue growing in the fleet
management sector and to increase the share of our vehicles
used in various fleets. In the area of digital mobility solutions,
we plan to safeguard our strong position in the market for pre-
mium driver services over the long term and, as a shareholder
in the YOUR NOW group, we will work with BMW to establish a
relevant new player in the segment for mobility services in
Europe and Latin America.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 55
As we continue to develop automated and autonomous driving,
we are focusing on driver assistance systems on the one hand
and highly automated (SAE Level 4) and fully automated urban
driving on the other.
In order to get automated systems to market more quickly,
while simultaneously easing our cost burden, we have
launched a long-term development partnership with BMW. This
is just one of our cooperation projects in this area. We intend
to work together with BMW to develop the next generation of
technologies for driver assistance systems, automated driving
on highways, and automated parking systems. Such systems
will be made available in cars for private customers starting in
2024. The partnership with BMW is open to other automakers
and technology partners. Furthermore, the results of the part-
nership will be offered to other vehicle manufacturers via
licensing agreements.
56
With our sustainable business strategy, we are shaping
the transformation of the automotive industry from a posi-
tion of leadership in a sustainable, customer-focused and
innovative manner to safeguard our economic success.
Our transformation is a long-term process of adapting the
implementation of our structures and processes in cooperation
with our employees. We have a workforce that is agile and will-
ing to learn, and this facilitates the development of the skills
needed to face new requirements. Our corporate culture cre-
ates the foundation for the outstanding innovative capability
displayed by our employees. We put diversity into practice, and
integrity is our inner compass. The principle of integrity guides
our actions and our relationships with our business partners.
TRANSFORM - Reinvent ourselves
We aim to create value that is sustainable. Our business is
grounded in what we do best - delighting our customers with
fascinating vehicles. Here, the attainment of our profitability
targets and the maintenance of a solid cash flow remain top
priorities for the short and medium term. Together with our
partners, we seek to develop new technologies and share the
costs of development activities. We want to continue to grow
profitably and expand our leading position in all the sectors in
which we operate worldwide.
PERFORM - We create sustainable value
We are working systematically to achieve our "Ambition 2039"
goal of CO2-neutral mobility. To do so, we are also utilizing the
potential offered by automated driving and digital services.
As the inventor of the automobile, it is in our nature to repeat-
edly reinvent mobility. Our aspiration is to offer sustainable
solutions for mobility and the transport of goods in the future.
We want to inspire emotionally and convince rationally. We aim
to bring sustainability and luxury into harmony. Our innovative
and highly efficient commercial vehicles are designed to make
our customers in the haulage and transportation sectors suc-
cessful.
MOVE - Reinvent the invention
The Group's strategic approach can be summarized in
three core statements:
Especially in times of change and upheaval, we need to have
values that offer us guidance. We also need to develop skills
that make us faster and more agile and enable us to speed
up our pace of innovation. The continuation of our "Leadership
2020" program as "Leadership 20x" ensures that we can pro-
mote the development of such skills. We rely on the high
degree of motivation among our employees, with whom we
want to actively drive forward the transformation of our indus-
try. Daimler stands for diversity and promotes integrity. As a
company that operates around the globe, we stand for toler-
ance, openness, trust and fairness. Integrity is one of our key
corporate values and a central element of our corporate cul-
ture. New technologies and business models offer tremendous
opportunities, but at the same time they pose questions - for
example, with regard to ethical and legal topics. Our inner val-
ues and attitudes are put to the test when such issues arise.
The further development of the Technical Compliance System
and the compliance system for data is intended to ensure that
we can provide support with regard to new topics from the
beginning, provide the maximum possible clarity and avoid
mistakes.
Culture and integrity
The competition for the best solutions in the automotive indus-
try will continue to be decided by who has the best access to
the latest technologies and the ability to provide sufficient cap-
ital and resources. As a result, partnerships will hold the key to
leadership for all automakers. We have recently entered into a
variety of partnerships. For example, we are developing auton-
omous driving systems with BMW and systems for automated
trucks with Torc Robotics, and we are also cooperating with
the battery material specialist Sila Nanotechnologies. In addi-
tion, we have teamed up with BMW and Geely to offer mobility
services in China. Geely is a Daimler shareholder from China
with whom we have established a 50:50 joint venture to fur-
ther develop and operate the smart brand globally as a manu-
facturer of all-electric vehicles. In order to more firmly estab-
lish electric mobility on the market, we have teamed up with
several other European manufacturers to create a joint venture
known as IONITY. Through this company, we are moving for-
ward with the creation of a full-coverage, high-power charging
network for European highways.
Partnerships
In the area of automated driving Daimler Trucks initially aims to
focusing on Hub2Hub transport in SAE Level 4 mode on high-
ways in the United States. The possibility of not having to use a
driver will lead to cost savings, which in turn will result in a via-
ble business model. The Daimler Trucks Autonomous Technol-
ogy Group, which brings together all of the expertise and activ-
ities in the field of automated truck operation, is consistently
moving ahead toward series production of automated trucks.
Torc Robotics, a company in which we acquired a majority
interest in 2019, is now part of the Autonomous Technology
Group. Daimler Trucks and Torc Robotics have now begun
developing SAE Level 4 technologies for testing on roads in the
United States.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
With regard to Daimler Trucks & Buses, we plan to improve our
market position in Europe with the help of the new Actros, and
to expand our range of products in the NAFTA region through
the launch of a new vocational truck. In Latin America, we seek
to benefit from the market recovery and to expand our position
in a highly profitable segment by launching a heavy-duty truck
based on our global platform. As the market leader in our most
important traditional core markets for buses over 8 tons gross
vehicle weight, we plan to further safeguard this market posi-
tion and develop our business in the NAFTA region and other
markets.
During the course of the year under review the rating agencies
S&P and Moody's reacted to the worsened earnings situation,
initially with an adjustment of the outlook and, in December
2019, by downgrading the rating of Daimler AG by one notch.
The agencies justified this mainly with the challenges posed by
the electrification of the product portfolio, as well as the
costs for the necessary reduction of CO2 emissions and the
expectation of a more difficult economic climate, which was
also reflected in lower expected returns.
We expect to see further growth in the Vans segment as well.
The ongoing increase in online retail sales in particular will
likely serve as an important foundation for such growth.
Mercedes-Benz Vans plans to further strengthen its position in
specific customer segments and in North America.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Our Strategy: MOVE PERFORM TRANSFORM
A.09
In our view, climate protection will be the biggest challenge
over the coming years. Our "Ambition 2039" strategy for
Mercedes-Benz passenger cars clearly demonstrates our com-
mitment to climate protection. Our goal here is to become
CO2-neutral by 2039. More specifically, this means we plan to
achieve Group-wide CO2-neutral production in Europe as of
2022, attain a sales structure in which plug-in hybrids and all-
electric drive systems account for more than 50% of our port-
folio by 2030, and - within less than three product lifecycles -
offer a CO2-neutral new car fleet to our customers. The new
Factory 56 assembly hall at the Mercedes-Benz plant in Sin-
delfingen was planned as a CO2-neutral facility from the very
beginning. In addition, our new plant in Jawor, Poland, uses
wind power for sustainable manufacturing operations. A holis-
tic view of the CO2-reduction issue also needs to take the
recycling of raw materials into account. Mercedes-Benz cars'
materials are 85% recyclable.
Sustainability is an integral part of our corporate strategy. The
implementation of a sustainable corporate strategy is the only
way we can ensure our continued success over the long term.
In line with this approach, we plan to work towards offering
CO2-neutral mobility over the next 20 years. We also intend to
decouple resource consumption from growth in our business
volumes, provide mobility and traffic management solutions that
make cities more livable, implement measures that increase
safety on the road, continue to utilize data responsibly, and
assume responsibility for upholding human rights along the
entire value chain. Achieving success in all these areas requires
a clear commitment to a culture of integrity, as well as future-
oriented cooperation with our workforce and our partners in
industry, government and society at large. A central sustain-
ability management system enables the effective planning of
ambitious goals and the monitoring of their achievement.
Sustainability and climate protection
We have derived specific goals from our aspiration. We seek to
make mobility and the transport of goods more sustainable,
and we plan to continue growing in our core business. We are
implementing electric drive systems at all of our divisions
as a priority, and we continue to pursue automated and auton-
omous driving and mobility services that benefit customers
and make us more profitable. We are moving forward with digi-
tization measures and exploiting the potential they offer. All
of these activities are geared toward ensuring that we achieve
our financial targets.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 53
We have answered these questions for all of our divisions.
Mercedes-Benz Cars' motto is "First Move the World." Daimler
Trucks & Buses is there "For All Who Keep the World Moving,"
and Daimler Mobility makes it clear that "We Move You."
Daimler itself is the connecting element that holds these busi-
nesses together, as symbolized by the word "move."
Purpose
We firmly believe that individual mobility will be a basic human
need in the coming decade as well, and that the market for
sustainable automobiles in the luxury segment will continue to
grow. Demand for goods transport services remains a key pil-
lar of the economy and our prosperity, and this demand can be
expected to increase even further around the globe for years
to come. The markets for financial services and the demand for
fleet management services and digital mobility solutions are
also likely to develop positively in the future. We are commit-
ted to the principles of sustainability and in particular of cli-
mate protection, and are therefore setting our course for CO2-
neutral mobility.
Our strategy
For more than 130 years, we have been moving people and goods all over the world - safely,
efficiently, comfortably and with innovative technologies that have always kept us a step ahead
of the competition. Building outstanding and fascinating vehicles is what we do best. It's what
drives us, and it will continue to drive us forward into the future. The environment in which we
operate is changing in a highly dynamic way. Sustainability and climate protection in particular
are among the most urgent issues of our time. We accept this responsibility. Our goal is to set
standards for sustainable mobility - now and in the future.
Objectives and Strategy
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
The basis of our strategy is our purpose - the spirit and pur-
pose that guide all of our decisions and actions. What is our
DNA, what makes us who we are, why are we as a company
active in the market?
Culture and integrity
Sustainability
and climate protection
54
Our goal is to safeguard and expand the leading positions that
our divisions occupy in their respective segments. Individual
and self-determined mobility is likely to remain our primary
business model for the car segment over the coming decade.
Although flexible forms of use will continue to spread, our
experience at present shows that such use will augment rather
than replace the use of privately owned passenger cars. Vol-
umes in the premium and luxury segments in particular should
increase further. Growth here is likely to be driven primarily by
China and other Asian markets, although the more established
markets in Europe and the United States will contribute to this
growth as well. We plan to exploit this potential, in particular
with our range of high-quality models such as the G-Class, as
well as through our Mercedes-AMG and Mercedes-Maybach
sub-brands.
Markets and growth
Daimler Trucks & Buses is also committed to climate protec-
tion. The main challenge we face in the truck and bus sector
involves reconciling the higher costs of electric drive systems
with the focus on costs that is prevalent in the transport indus-
try. Daimler Trucks & Buses plans to become CO2-neutral with
regard to driving operation (tank-to-wheel) by launching new
trucks and buses in the major markets of Europe, Japan and
the NAFTA region between now and 2039. Plans also call for
all Daimler Trucks & Buses facilities in Europe to achieve CO2-
neutral production by 2022, at which point all the energy they
use should be generated from renewable sources. The plan-
ning and following up of targets at Daimler are ensured by a
central sustainability management system.
Our goal at Mercedes-Benz Vans is that vans targeted at pri-
vate customers are to be CO2-neutral over the entire lifecycle
by the year 2039. With vans used by commercial customers,
we intend only to offer new vehicles that are CO2-neutral in
driving operation (tank-to-wheel) in the major markets Europe,
Japan and the NAFTA region.
Electrification of our
drive system portfolio
Customers and brand
Efficiency
Markets and growth
Platforms and
drivetrains
digital platforms
Digital services and
MOVE
PERFORM
TRANSFORM
Automated and
autonomous driving
Partnerships
China is now the world's biggest car market, but it is also an
important market for new technologies and procurement. We
plan to continue growing in China together with our partners,
with whom we will also intensify our cooperation.
Scope
27.3%
Moody's
Net profit
Over the first three months of 2019, automotive stocks also
recovered significantly from the low share prices that had
dominated the markets at the end of 2018. This development
was mainly due to the continuation of trade negotiations
between the United States and China, as well as positive sig-
nals from the Federal Reserve, which had significantly
increased interest rates in the preceding years. The announce-
ment of our collaboration with BMW in the areas of mobility
services and automated driving, and with Geely on the further
Daimler share price rises 8% over the year
The index of the most important equities in the euro zone, the
Euro STOXX 50 and the German benchmark index, the DAX,
both rose by 25% in 2019. In Japan, the Nikkei index closed the
year at 23,657, which was 18% higher than a year earlier. In
the United States, the Dow Jones reached an all-time high of
28,645 in December and was 22% above the prior-year level
at the end of 2019.
Global stock markets developed very positively in the first
four months of 2019. The favorable outlook regarding a possible
settlement of the trade war between the United States and
China in order to avoid punitive tariffs, as well as the announce-
ment by the US Federal Reserve bank that it would not be
raising interest rates any time in the near future, led to higher
demand for stocks around the world. In May, however,
stock-market sentiment deteriorated noticeably. Extensive
uncertainty on the market was driven by the escalation of
the trade war, concerns about economic growth in China, and
the resignation of the British Prime Minister in the wake of
the Brexit debate in the UK. Indications from central banks
regarding the implementation of expansionary measures
had a further positive effect on stock markets between June
and the end of July. The markets then consolidated, however,
with the mood overshadowed by declines in the Purchasing
Managers Index and the Business Climate Index. Discussions
relating to the possibility of a hard Brexit, as well as the
ongoing trade war between the United States and China, also
led to more reserved behavior on the part of investors in
August. The second half of the third quarter was once again
marked by renewed positive news relating to the trade war
and Brexit, which led to gains on stock markets. Following a
weak phase at the beginning of the fourth quarter, investors
became more optimistic again. Global stock markets then picked
up, with strong gains made more or less across the board
throughout the rest of the quarter. Cyclical stocks and, in par-
ticular, shares in the automotive and supplier industries
benefited from this development.
Global stock markets significantly stronger
2.22
19/18
% change
2018
2019
Key figures per share
A.02
+25
+25
+22
+18
+16
20,015
439
Amounts in euros
6.78
-67
Dividend
-22
75.69
59.31
Highest¹
+8
45.91
49.37
Xetra price at year end¹
-5
60.45
57.34
Equity (December 31)
-72
3.25
0.90
509
Lowest¹
STOXX Europe Auto Index
Nikkei
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
48
Q4
Daimler Mobility AG and the Geely Technology Group, a sub-
sidiary of the Zhejiang Geely Holding Group, launch StarRides,
a premium limousine service in Hangzhou, China. The Star-
Rides fleet starts with 100 vehicles and comprises models of
the Mercedes-Benz S-Class, E-Class and V-Class series. The
service is to be launched in further major cities in China in 2020.
Daimler Mobility AG and Geely Technology Group launch
StarRides premium limousine service
Daimler and the General Works Council agree on the key
points to streamline the Group structure, thus increasing
efficiency and flexibility. To this end, joint measures have been
agreed to reduce costs and jobs in a socially responsible
manner. Daimler will therefore make use of normal staff
turnover to reduce the size of the workforce as jobs become
vacant. In addition, possibilities for pre-retirement part-time
working will be expanded and a severance program will be
offered in Germany in order to reduce the number of manage-
ment positions.
Daimler and the Capital Market
Daimler decides on key points for streamlining the
company
customers.
The Daimler Trucks & Buses E-Mobility Group, a cross-divi-
sional organization within Daimler Trucks & Buses, launches a
full ecosystem for truck customers for the best possible entry
into electric transport logistics. This includes a comprehensive
range of consulting services and the development of a
charging infrastructure suitable for electric trucks. In addition
to personal and individual advice, the modular range of ser-
vices also includes digital applications that make it easier to
get started with e-mobility. The first step will focus on the
markets of Europe, North America and Japan. The consulting is
already being successively implemented with the first
Comprehensive ecosystem for truck customers' entry into
electric mobility
Daimler cuts costs and sets its course for the future
Daimler presents a new, sustainable business strategy at its
Capital Markets Days in London and New York. With a consis-
tent commitment to CO2-neutral mobility, the company is
setting its course for a successful future. Daimler is positioning
itself for the transformation with a clear strategy for the future.
The costs to be incurred in order to achieve the CO2 targets
require comprehensive measures to increase efficiency in all
areas of the company. This is likely to adversely affect our
earnings in 2020 and 2021.
As planned, the Daimler Group launches its new corporate
structure on November 1, 2019. The hive-down of the car and
van businesses on the one hand and the truck and bus busi-
nesses on the other to two new subsidiaries took effect on
October 31 with the entry for Daimler AG in the commercial
register. Under the umbrella of Daimler AG, the Group's operat-
ing activities will be managed in the new corporate structure in
three divisions instead of five. Mercedes-Benz AG is responsi-
ble for the business of Mercedes-Benz Cars & Vans. Daimler
Truck AG combines the activities of Daimler Trucks & Buses.
Daimler Financial Services, which has been legally indepen-
dent for many years, was renamed as Daimler Mobility AG in
July. With these three subsidiaries, Daimler is strengthening its
customer focus and increasing the Group's agility.
Daimler launches new corporate structure
Mercedes-Benz Actros is "Truck of the Year"
Commercial-vehicle trade journalists from 24 European coun-
tries vote the Mercedes-Benz Actros as best truck of the year
for the fifth time. The success story began with the first Actros
in 1997 and the following generations also won the award. With
nine titles, Mercedes-Benz is now the most successful brand in
the battle for recognition for technological advancement, the
key criterion in the selection process of the international Truck
of the Year jury.
Global stock markets tended to be significantly stronger in many regions in 2019. The Daimler
share price rose by 8% throughout the year. In 2019, we continued to inform institutional investors,
analysts, rating agencies and private investors by means of a wide range of investor relations
activities and comprehensive reporting on the Group's business development and prospects. Our
refinancing benefited from a high level of capital-market liquidity and a consistently solid rating.
The Board of Management and the Supervisory Board will propose to the Annual Shareholders'
Meeting that a dividend of €0.90 (2018: €3.25) per share be paid for 2019.
A.01
Development of Daimler's share price and of major indices
23,327
28,538
Fitch
3,001
3,745
Euro STOXX 50
10,559
13,249
DAX 30
+8
45.91
49.37
Daimler share price (in euros)
19/18
% change
End of 2019 End of 2018
23,657
40.53
Dow Jones Industrial Average
-10
Key figures for Daimler shares
A.05
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
50
DAX
STOXX Europe Auto Index
End of
2019
Daimler AG
6/30/19
12/31/18
80
85
90
95
12/31/19
End of
2018
19/18
% change
3,070 3,070
45.27
S&P
Long-term credit ratings
Euro STOXX 50
DAX 30
Weighting in share indices
0
+8
52.8 49.1
1.0 1.0
Number of shareholders (in millions)
Market capitalization (in billions of euros)
0
1,069.8 1,069.8
Number of shares (in millions)
0
100
105
Share capital (in millions of euros)
115
55
60
65
70
Daimler share price (high/low), 2019
In euros
A.03
50
With a weighting of 3.95% (2018: 4.67%), Daimler was ranked
ninth in the German share index DAX 30 at the end of 2019. In
the Euro STOXX 50 index, our shares had a weighting of 1.55%
(2018: 1.93%), which put Daimler in 29th place. Daimler shares
are listed on the stock exchanges in Frankfurt and Stuttgart.
A total volume of 1,108 million shares were traded in Germany
in 2019 (2018: 1,093 million). A substantial number of Daimler
shares are also now traded on multilateral trading platforms
and in the over-the-counter market.
The Board of Management and the Supervisory Board will
recommend the payment of a dividend of €0.90 per share for
financial year 2019 (2018: €3.25) at the Annual Shareholders'
Meeting on April 1, 2020. The total dividend will thus amount
to €963 million (2018: €3,477 million).
Dividend of €0.90
A profit-taking phase then began on the German stock market,
and this affected the Daimler share as well. Along with the
global trade tensions, there were also increasing concerns
about a possible further economic slowdown, which would
obviously have a negative impact on earnings in the automo-
tive industry, particularly in view of the global supplier and
production networks operated by automotive companies. In
this very weak stock-market environment, our shares reached
their lowest point of the year 2019 at €40.53 on August 15.
Stock prices then began rising significantly again in September
(with a brief temporary interruption) as a result of positive
news about the trade war and Brexit. Automotive shares par-
ticularly benefited from the decision made by the US Depart-
ment of Commerce to refrain for the time being from imposing
punitive tariffs on automobiles imported from Europe and
Asia. In the second half of the fourth quarter, the Daimler
share price lost some of the gains that had been made in the
interim, with the Daimler share closing at €49.37 on December
30. At the end of the year, Daimler had a market capitalization
of €52.8 billion (2018: €49.1 billion). With a total increase of
8% in 2019, the development of Daimler's share price was thus
weaker than that of the DAX (+25%) and the STOXX Europe
Auto Index (+16%).
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 49
110
1 Closing prices
Institutional investors hold a total of 54% of our equity capital,
while private investors own 21%. Approximately 58% of our
capital is in the hands of European investors and around 15% is
held by US investors. Investors from Asia hold around 17% of
our equity capital. 7 A.07 7 A.08
45
Employee stock purchase plan implemented once again
Staff members entitled to purchase employee stock were able
to do so once again in March 2019. As was the case in the pre-
vious year, price-reduced shares as well as bonus shares were
140
130
135
Share price index
A.04
daimler.com/investors/share/
125
120
The aforementioned and all other voting-rights notifications are
published on the Internet at
Daimler continues to have a broad shareholder base of approx-
imately 1.0 million shareholders (2018: 1.0 million). Tenaciou3
Prospect Investment Limited, a company controlled by the
Chinese entrepreneur Li Shufu, who is also the founder and
CEO of Geely, became Daimler AG's largest individual share-
holder in February 2018. Tenaciou3 Prospect Investment
Limited currently owns 9.7% of the company's shares. The
Kuwait Investment Authority (KIA) currently owns 6.8% of the
company's stock, making it Daimler AG's second-largest
single shareholder. In July 2019, we were informed by the Chi-
nese BAIC Group that it had acquired an interest in Daimler AG
via its wholly owned subsidiary Investment Global Co. Ltd.
With approximately 5% of Daimler's equity capital, the BAIC
Group is now Daimler AG's third-largest single shareholder.
The Renault-Nissan Alliance continues to hold 3.1% of
Daimler's shares. In December 2019, Bank of America Corpo-
ration notified us that at 6.17%, its proportion of the voting
rights remained above the 5.0% reporting limit on December
20, 2019. In October 2018, Harris Associates L. P., Wilmington,
notified us that its proportion of the voting rights was 4.93%
on October 16, 2018. BlackRock, Inc., Wilmington, also holds a
stake above the 3% reporting limit pursuant to Germany's
Securities Trading Act (WpHG). In December 2019, BlackRock
notified us that its proportion of the voting rights was 4.47%
on November 27, 2019.
1/19 2/19 3/19 4/19 5/19 6/19 7/198/19 9/19 10/1911/1912/19
30
35
40
voting-rights.
A broad shareholder structure and a new investor with a
long-term focus
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 65
The Declaration on Corporate Governance pursuant to Section
289f and Section 315d of the German Commercial Code
(HGB), combined with the Corporate Governance Report, can
be found in this Annual Report on pages 180 ff and can
also be viewed on the Internet at # daimler.com/corpgov/en.
Pursuant to Section 317 Subsection 2 Sentence 6 of the
German Commercial Code (HGB), the purpose of the audit of
the statements pursuant to Section 289f Subsections 2 and
5 and Section 315d of the HGB is limited to determining whether
such statements have actually been provided.
2018
2019
Details of the development of non-financial performance indi-
cators can be found in the chapters "Economic Conditions and
Business Development" and "Non-Financial Report."
pages 65 ff and pages 196 ff
In addition to the financial indicators, we also use various non-
financial indicators to help us manage the Group. Of particular
importance in this respect are the unit sales of our automotive
divisions, which we use as the basis for our capacity and
human resources planning. The importance of the absolute
number of employees as a performance indicator has been
reduced, particularly in view of the increasing cooperation with
partners in the form of partnerships and joint ventures. For
this reason, the number of employees is no longer considered
to be a key performance indicator.
Economic Conditions and Business Development
The key financial indicators for measuring the operating financial
performance of the Daimler Group, in addition to EBIT and
revenue, are the free cash flow of the industrial business, invest-
ment, and expenditure for research and development. In addi-
tion, return on equity and new business are the key performance
indicators for Daimler Mobility. As of financial year 2020,
adjusted return on equity will replace return on equity as the
key performance indicator for Daimler Mobility.
Corporate governance statement
The world economy
B.05
The industrialized countries were unable to maintain the dynamic
economic growth that they had attained in the two previous
years. This was also the case with the US economy. Following
a robust first quarter, economic growth slowed considerably
later in the year, but remained solid with approximately 2.3%
recorded for 2019 as a whole. While private consumption
continued to be robust, business investment weakened substan-
tially as the year progressed. This was due, in part, to the
fading boost from tax cuts as well as ongoing insecurity regard-
ing further escalation of the trade conflict with China. Economic
development slackened even more in the euro zone. The weak
global demand, especially in China, as well as the trade dispute
between the United States and China and the risk of a no-deal
withdrawal of the UK from the European Union, had an espe-
cially negative impact on the manufacturing sector. As a result,
economic growth in the euro zone dropped to just over 1%, even
though the services sector and private consumption remained
resilient. Because of its pronounced dependence on industrial
production and foreign trade, the German economy only grew
by about 0.6%. The ongoing Brexit uncertainty and its dampening
effect on investments caused the economy of the United King-
dom to slow down to a moderate pace of 1.3%. Slower export
growth and continued low investments are also impacting the
Japanese economy, which grew at approximately 1% or about
the same as in the previous year.
China's economic growth continued to lose momentum last
year as a result of a weakening of both domestic and export
demand. At just 6.1%, growth for the year as a whole was
noticeably lower than in 2018. As expected, the other econo-
mies in Asia were unable to disconnect themselves from the
slowdown in world trade and the weakening of China's eco-
nomic growth. As a result, these economies grew much more
slowly than in the previous year. The slowdown was especially
pronounced in India, where economic growth dropped to
around 5% and thus to the lowest level in ten years. South
America's hopes for a noticeable economic rebound were not
fulfilled. The ongoing and deep-seated crisis in Argentina and
the continued rather disappointing development in Brazil have
slowed down economic growth in the entire region. Growth
was also lower than in the prior year in Central and Eastern
Europe. This was mainly due to the severe economic crisis in
Turkey as well as the substantial decline in the growth of the
Russian economy. The much lower average price of oil over the
year compared to the prior year ensured that economic growth
continued to be rather weak in the Middle East as well. All in
all, the growth of about 4% that was recorded in the emerging
markets was significantly below the prior-year rate.
Currency exchange rates remained volatile in this heteroge-
neous growth environment. Against the US dollar, the euro
moved between $1.08 and $1.16 during the year. At the end of
2019, the euro was around 2% weaker than at the end of 2018.
The range of fluctuation of the Japanese yen against the euro
was 116 to 128. Year-on-year, at the end of 2019, the euro had
depreciated by about 3% against the yen. At the end of 2019,
the value of the British pound was about 5% higher than at the
end of the previous year. The euro rose by almost 2% against
the Brazilian real and by about 10% against the Turkish lira.
However, it depreciated considerably against the ruble, losing
about 12% of its relative value.
Economic growth
Gross domestic product, growth rates in %
Key performance indicators
During the year under review, the world economy achieved real
growth of only slightly above 2.5%. This was much weaker
than in the previous year and was the first time since 2016 that
it dropped below 3%. 71 B.05 The slowdown affected almost
all regions, but to different degrees. Growth in global trade also
slowed down considerably, a development that noticeably
impacted export-dependent economies in particular.
trial business, which comprises the cash flows at the auto-
motive divisions and the cash flows from interest, taxes and
other reconciliation items that cannot be allocated to the divi-
sions. The operating cash flow before interest and taxes
(CFBIT) for the automotive divisions is derived from EBIT and
the change in net assets. The cash conversion rate (CCR)
is the ratio of CFBIT to EBIT over a period of time and is an
important measure for cash-flow management. In order
to provide a more transparent presentation of our ongoing
business, we will additionally calculate and report the
adjusted free cash flow of the industrial business and the
adjusted CFBIT of the automotive divisions from financial
year 2020 onwards. The adjustments include individual items
if they lead to material effects in a reporting period. These
individual items relate in particular to legal proceedings and
related measures, restructuring measures and M&A matters.
On the basis of adjusted CFBIT and adjusted EBIT, we will report
an adjusted cash conversion rate (adjusted CCR) for the auto-
motive divisions from financial year 2020 onwards.
Cash flow
13
6
Return on sales
As one of the main factors influencing value added, return on
sales is of particular importance for assessing the automotive
divisions' profitability. Return on sales is the ratio of EBIT to
revenue, whereby unit sales are the primary source of revenue.
The measure of profitability for Daimler Mobility is not return
on sales but return on equity (the ratio of EBIT to average equity
on a quarterly basis). On the basis of adjusted EBIT, we will
report an adjusted return on sales (ROS) for the automotive
divisions and an adjusted return on equity (ROE) for Daimler
Mobility starting in the 2020 financial year.
Net assets
All assets, liabilities and provisions for which the automotive
divisions are responsible in day-to-day operations are allo-
cated to those divisions. Performance measurement at Daimler
Mobility is implemented on an equity basis. Net assets at the
Group level include the net operating assets of the automotive
divisions and the equity of Daimler Mobility, as well as assets
and liabilities from income taxes and other reconciliation items
which cannot be allocated to the divisions. Average annual net
assets are calculated on the basis of average quarterly net
assets.
page 76
A change in net assets - for example as a result of investments
generally leads to the application or release of liquid funds.
Along with earnings, net assets thus also have a direct effect
on the cash flow. Of outstanding importance for the financial
strength of the Daimler Group is the free cash flow of the indus-
B.04
Cost of capital
13
2019
In percent
Group, after taxes
8
8
Industrial business, before taxes
12
12
Daimler Mobility, before taxes
2018
5
Source: German Association of the
Automotive Industry (VDA),
3
5
0
-5
Passenger cars
Commercial vehicles²
-10
Total
Europe
NAFTA¹
10
Asia
South
America¹
various institutions
The weakness of the Chinese car market continued during the
year under review. The drop in demand of nearly 10% was even
larger than in 2018. This decrease is attributed mainly to the
noticeable slowdown of economic growth, the insecurity of car
buyers due to the ongoing trade dispute with the United
States, and the continued negative aftereffects of the market
stimulus measures of previous years. However, the premium
segment, which is especially relevant for Mercedes-Benz,
proved to be robust and once again grew substantially.
Meanwhile, car demand declined slightly in Japan. The small
drop for the year as a whole was primarily due to the weak
fourth quarter, when sales declined as a result of the sales-tax
increase in early October. The Indian market decreased sharply
due to the unexpectedly weak development of the country's
economy.
Demand for medium-duty and heavy-duty trucks devel-
oped very disparately in the markets relevant to our opera-
tions. Despite the slackening of economic growth, the market
in the NAFTA region, which was already at a very high level,
expanded by another 8% in classes 6 to 8, although this dyna-
mism weakened considerably in the second half of the year.
The truck market in the EU30 region (the European Union,
Switzerland and Norway) remained relatively robust, given the
region's rather weak macroeconomic performance. However,
demand shifted considerably as the year progressed. A regula-
tory change that took effect in mid-June caused earlier-than-
planned purchases in the first half of 2019 and an unusually
large number of new registrations. In contrast, the market
development was much weaker in the second half of the year.
Despite this, the market was at about the prior-year high level
during the year as a whole. Although economic growth was
rather disappointing in Brazil, the dynamic recovery of the
country's truck market continued with expansion of 34%. In
Turkey, the economic crisis caused the truck market to con-
tract significantly at a double-digit rate. Truck demand also
decreased somewhat in Russia due to the weak economic
situation.
The Japanese market for light-, medium- and heavy-duty trucks
was influenced during the year by regulatory changes and
a sales-tax increase in early October. As a result, demand
decreased especially in the last few months of the year. How-
ever, unit sales during the year as a whole were at about
the same level as in 2018. The market in Indonesia declined
substantially in 2019. The Indian market for medium- and
heavy-duty trucks developed very poorly and contracted at a
clear double-digit rate. In China, demand for heavy-duty
trucks remained stable at an unusually high level.
The measure of operating profit at the divisional level is EBIT
(earnings before interest and income taxes). EBIT thus reflects
the divisions' responsibility for profit and loss. EBIT that is
calculated at the Group level takes into account centrally man-
aged matters and eliminations. In order to provide a more
transparent presentation of our ongoing business, we will addi-
tionally calculate and report adjusted EBIT for both the Group
and the divisions from financial year 2020 onwards. The adjust-
ments include individual items if they lead to material effects
in a reporting period. These individual items relate in particular
to legal proceedings and related measures, restructuring mea-
sures and M&A matters. Group EBIT minus the centrally man-
aged income taxes equals net operating profit. 7 B.20 page 75
1 Cars segment includes light trucks
2 Medium- and heavy-duty trucks
4
15
Global automotive markets
2
1
0
-1
-2
Total
Europe
NAFTA
Unit sales growth rates 2019 in %
(some numbers are preliminary)
Asia
Source: IHS Markit, own calculations
66
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
Automotive markets
The global car market contracted by approximately 5% during
the year under review. The Western European sales market
posted stable growth and even the US market almost remained
at the previous year's level, declining by only 1%. Global weak-
ness in demand was mainly due to the continued unfavorable
development of the Chinese market, which contracted by
nearly 10% and was thus much weaker than in 2018. 71 B.06
All in all, car sales were relatively stable in Europe. Within West-
ern Europe, the German market expanded slightly by about 5%.
The small increase of just under 2% that was recorded in France
meant that sales there remained at about the prior-year level.
Demand was rather weak in the UK, however, with sales falling
by about 2%. Sales markets in Central and Eastern Europe were
generally slightly weaker than in the previous year. Whereas
car sales in the Central and Eastern European markets of the
EU remained robust and showed some growth, they declined
slightly in Russia. However, the main reason for the region's
sales decrease was the double-digit drop recorded by the Turk-
ish market.
Thanks to a still comparatively favorable economic environ-
ment, the market volume for cars and light trucks in the United
States once again reached a high level with sales of around
17 million units. In comparison with the previous year, this
corresponds to a slight drop of just over 1%. The segment
shift toward pickups and SUVs continued, while conventional
sedans saw demand decline significantly once again.
B.06
'South
America
Profit measure
2.6%
64 B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Refinancing
83
Risk and opportunity management system
135
Credit ratings
85
Risks and opportunities
137
Industry and business risks and opportunities
137
Financial Position
86
Company-specific risks and opportunities
142
Financial risks and opportunities
144
Legal and tax risks
146
Daimler AG
Non-financial risks
149
(condensed version according to HGB)
89
82
Overall assessment of the risk
Investment
Risk and Opportunity Report
225
70
Principles of Board of Management remuneration
108
74
Board of Management remuneration in
financial year 2019
118
Commitments upon termination of service
128
75
Remuneration of the Supervisory Board
130
Liquidity and Capital Resources
77
Principles and objectives of financial management
77
Takeover-Relevant Information
and Explanation
132
Cash flows
78
Contingent liabilities and other financial obligations
82
135
149
Profitability
Financial position, liquidity and capital resources 90
Risks and opportunities
153
154
154
The Divisions
Combined
Management Report
Contents
60
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
Corporate Profile
Business model
Daimler can look back on a tradition covering more than 130
years a tradition that goes back to Gottlieb Daimler and Carl
Benz, the inventors of the automobile, and features pioneering
achievements in automotive engineering. Today, the Daimler
Group is a globally leading vehicle manufacturer with an out-
standing range of premium cars, trucks, vans and buses. Its
product portfolio is rounded out by a range of customized
financial services and mobility services. Daimler's goal is to con-
tinue playing a leading role in the development of products
and services for the future of mobility. The automotive industry
is in the process of a fundamental transformation, and we
intend to play a major role in actively shaping that change.
Daimler AG is the parent company of the Daimler Group and
its headquarters are in Stuttgart. With the new corporate
structure, effective as of January 1, 2020, the Group's business
operations under the umbrella of Daimler AG are no longer
managed in five divisions, but in three. Mercedes-Benz AG is
responsible for the business of Mercedes-Benz Cars & Vans
and Daimler Truck AG combines the activities of Daimler Trucks
& Buses. Daimler Financial Services, which had already been
legally independent for many years, was renamed as Daimler
Mobility AG in July.
With the new structure, Daimler AG carries out the functions
of steering and governance and provides services for the com-
panies of the Group. As the parent company, it also defines
the Group's strategy, makes strategic decisions for business
operations, and ensures the effectiveness of organizational,
legal, and compliance-related functions throughout the Group.
B.01
Group revenue by division
Mercedes-Benz Cars
51.9%
Daimler Trucks
22.2%
Mercedes-Benz Vans
8.0%
Daimler Buses
Daimler Mobility
153
153
152
151
88N
89
92
Outlook
92
and opportunity situation
Outlook
The world economy
Automotive markets
Unit sales
Revenue and earnings
75
Free cash flow and liquidity
Investment
Research and development
Overall statement on future development
Consolidated
Further Information
Non-Financial Report
Corporate Governance
Financial Statements
150
150
151
Dividend
15.3%
75
Net operating profit
A.11
Research and development expenditure
2018
2019 2020-2021
Amounts in billions of euros
Daimler Group
Financial performance measures
9.7
18.8
Mercedes-Benz Cars & Vans
7.6
8.1
15.5
Daimler Trucks & Buses
1.5
1.7
3.3
B
Management
Report
Daimler once again achieved high levels of unit sales and revenue in 2019 in
challenging environment. Our numerous new products and innovative services
contributed to this. At the same time, however, earnings and the free cash
flow decreased significantly. Within the framework of our sustainable corporate
strategy, we are vigorously pushing forward with the transformation of our
businesses for a CO2-neutral future. To achieve this, the application of substan-
tial funds is required, reducing our earnings in the year under review and also
in the future. Against this background, we have taken comprehensive measures
to strengthen our financial position again.
B | Combined Management Report
B❘ COMBINED MANAGEMENT REPORT | CONTENTS 59
Corporate Profile
0.1
60
0.1
0.1
Extensive investment in the Group's future
In order to utilize the opportunities offered by the international
automotive markets and to help actively shape the coming
transformation of mobility, we will continue to invest substan-
tially in new products, innovative technologies and state-of-
the-art production facilities in the coming years. One focus of
our efforts will be on the future-oriented fields of digitization,
autonomous driving and electric mobility. We plan to invest
approximately €14 billion in property, plant and equipment in
2020 and 2021, as well as nearly €19 billion in research and
development projects. We will therefore continue to maintain a
high level of investment in order to safeguard the future of our
company. The decrease in investment volume from the 2019
figure is in part because we will be making much more efficient
use of our financial resources and will also focus more strongly
on issues that are important for the future of the Group. During
the year under review, we also entered into several partner-
ships in areas that will play a key role in the future of mobility.
This will enable us to limit our own expenditure even as we
ensure our access to new technologies. Over the medium and
long term, we expect investment and expenditure on research
and development to be reduced, step by step, to below the
extraordinarily high levels of recent years. This should be
achieved in part by reducing the number of vehicle architec-
tures and platforms at Mercedes-Benz and a decrease in their
complexity, in addition to lower investment in traditional drive
systems. A.10 7 A.11
Investment in property, plant and equipment will mainly be
applied to prepare for the production of our new models.
Other focal points will be the realignment of our manufacturing
facilities in Germany, increased local production in the growth
markets and the development of a global production network
for electric vehicles and batteries.
Most of our expenditure for research and development will
flow into new products. Key individual projects include the
successor models of the C-Class and the S-Class and new
vehicles from our EQ electric mobility brand. Other key areas
at our automotive divisions include innovative drive-system
and safety technologies, the connectivity of our products and
the further development of automated and autonomous driv-
ing. Our plans also call for substantial funds to be invested in
particular in our comprehensive electric mobility offensive at
all of our automotive divisions.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 57
A.10
Investments in property, plant and equipment
2018
2019 2020-2021
Amounts in billions of euros
Daimler Group
7.5
7.2
13.8
Mercedes-Benz Cars & Vans
Daimler Trucks & Buses
Daimler Mobility
Corporate
6.2
5.9
11.3
1.2
1.1
2.3
0.06
0.09
0.1
60
Business model
Portfolio changes and strategic partnerships
Development
65
50
Overall Assessment of the
Economic Situation
106
The world economy
Automotive markets
Business development
Profitability
Revenue and EBIT
565
65
66
Events after the Reporting Period
107
67
70
Remuneration Report
108
0
Dividend
Statement of income
Economic Conditions and Business
95
93
གླ822
682
60
62
Important events
62
Sustainability and Integrity
Sustainability at Daimler
Research and development
Innovation and safety
93
Performance measurement system
Value added
63
100
Financial performance measures
63
The workforce
102
Corporate governance statement
64
Social responsibility
103
Integrity, compliance and legal responsibility
105
Environmental protection
We have used the previous structure of five divisions in our
report on financial year 2019, analogously to the reports for the
first three quarters of the year. The new reporting structure
with three divisions will be used as of the first quarter of 2020.
9.1
In July 2019, Daimler and BMW Group began to cooperate on
automated driving. The two companies signed an agreement
governing their long-term strategic collaboration in this area.
Daimler and BMW Group plan to jointly develop the next
generation of technology for driving assistance systems and
automated driving on highways, as well as for automated
parking functions. Moreover, the partners intend to conduct
talks concerning a possible expansion of their partnership
to include higher levels of automation in urban environments.
This underscores the long-term, sustainable nature of the
partnership, which will develop into a scalable platform for
automated driving. The partnership is open to other auto-
makers and technology partners. In addition, the results of
the partnership are to be offered to other OEMs for licensing
purposes. Among other things, the partnership aims to quickly
launch the technology on the market. The first systems are
scheduled to become available for privately owned cars in 2024.
Each company will individually implement the results of the
development cooperation in its own products. More than 1,200
experts will probably work in this partnership, some of them
in mixed teams. Their tasks will include the design of a scalable
architecture for driver-assistance systems including sensors,
the creation of a joint computer center for the storage, admin-
istration and processing of data, and the development of
various functions and software.
With its strong brands, Daimler is active in nearly all the coun-
tries of the world. The Group has production facilities in
Europe, North and South America, Asia and Africa. The global
networking of research and development activities as well
as of production and sales locations gives Daimler advantages
in the international competitive field and also offers additional
growth opportunities.
In 2019, Daimler increased its revenue by 3% to €172.7 billion.
The Group's five divisions contributed to this total as follows:
Mercedes-Benz Cars 52%, Daimler Trucks 22%, Mercedes-Benz
Vans 8%, Daimler Buses 3% and Daimler Mobility 15%. At the
end of 2019, Daimler employed a total workforce of more than
298,000 people worldwide.
The products supplied by the Mercedes-Benz Cars division
comprise a broad spectrum of premium vehicles of the
Mercedes-Benz brand, the Mercedes-AMG high-performance
brand and the Mercedes-Maybach luxury brand. These
vehicles range from compact models to a highly varied port-
folio of off-road vehicles, roadsters, coupes and convertibles,
and to the S-Class luxury sedans. The product range is rounded
out by the Mercedes me brand and the high-quality small
cars of the smart brand. In 2016, we launched the new EQ
(Electric Intelligence) brand for all of our activities related to
electric mobility. The most important markets for Mercedes-
Benz Cars in 2019 were China with 29% of unit sales, Germany
(14%), the other European markets (28%), the United States
(13%), South Korea (3%) and Japan (3%). The Mercedes-Benz
Cars division is continuously refining its flexible production
network consisting of a total of more than 30 locations on four
continents. In particular, we are preparing our worldwide pro-
duction network to meet the requirements of electric mobility.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 61
As the world's largest manufacturer of trucks above 6 metric
tons gross vehicle weight, Daimler Trucks develops and pro-
duces vehicles in a global network under the brands Mercedes-
Benz, Freightliner, Western Star, FUSO and BharatBenz. The
division's 30 production facilities are located in the NAFTA region
(17), Europe (7), Asia (4) and South America (2). In China,
Beijing Foton Daimler Automotive Co., Ltd. (BFDA), a joint ven-
ture with our Chinese partner Beiqi Foton Motor Co., Ltd.,
has been producing trucks under the Auman brand name since
2012. Daimler Trucks' product range includes light-, medium-
and heavy-duty trucks for long-distance, distribution and con-
struction-site haulage, as well as special vehicles that are
used mainly in municipal applications. Due to close links in terms
of production technology, the division's product range also
includes buses of the Thomas Built Buses and FUSO brands.
The activities related to electric mobility have been combined
at the E-Mobility Group since 2018. The division offers and tests
locally emission-free electric drive systems across its entire
product range. Daimler Trucks' most important sales markets in
2019 were the NAFTA region with 41% of unit sales, Asia with
28% and the EU30 region (European Union, Switzerland and
Norway) with 16%.
Mercedes-Benz Vans is a global supplier of a complete port-
folio of vans and related services. The division's products
range from the Citan small van with a gross vehicle weight of
1.8 metric tons to the Sprinter large van with a gross vehicle
weight of up to 5.5 metric tons. The models offered in the com-
mercial segment comprises the Sprinter large van, the Vito
mid-size van (marketed as the “Metris” in the United States) and
the Citan urban delivery van. In the segment for private cus-
tomers, Mercedes-Benz Vans offers the V-Class multipurpose
vehicle, the Marco Polo travel vans and recreational vehicles,
and the X-Class mid-size pickup. As a result of the review and
prioritization of the product portfolio, production of the X-Class
is to be discontinued at the end of May 2020. Our eDrive activi-
ties demonstrate how systematically we are progressing with
the development of alternative drive systems in all model series.
The Mercedes-Benz Vans division has manufacturing facilities
in Germany, Spain, the United States, Argentina, China and Rus-
sia. The division is active in the Chinese market through the
joint venture Fujian Benz Automotive Ltd. Production of the Citan
is part of the strategic alliance with Renault-Nissan-Mitsubishi.
The most important markets for vans are the EU30 region, which
accounted for 68% of unit sales in the year under review, the
NAFTA region (13%) and Asia (9%).
The Daimler Buses division with its Mercedes-Benz and Setra
brands is the industry leader for buses above 8 metric tons
in its most important traditional core markets: the EU30 region,
Brazil, Argentina and Mexico. The division's product range
comprises city and intercity buses, touring coaches and bus
chassis. The largest of the division's 14 production plants are
located in Germany, France, Spain, Turkey, Argentina, Brazil,
Mexico and India. In 2019, Daimler Buses generated 68% of
its revenue in the EU30 region and 15% in Latin America (exclud-
ing Mexico). Whereas we mainly sell complete buses in Europe,
our business in Latin America, Mexico, Africa and Asia focuses
on the production and distribution of bus chassis.
The Daimler Mobility division supports the sales of the Daimler
Group's automotive brands with tailored financial services.
These services range from leasing, financing and insurance
solutions to commercial fleet management services. In
addition, the division is a strategic investor in mobility services
for ride hailing, multimodal platforms, car sharing, parking
and charging. The mobility services of the "YOUR NOW" joint
ventures between Daimler and BMW have been consolidated
in three units as of January 1, 2020: FREE NOW & REACH NOW,
SHARE NOW, PARK NOW & CHARGE NOW. The mobility eco-
B.02
Daimler Group structure until 31.12.2019
Mercedes-Benz
Cars
Daimler Trucks
Mercedes-Benz
Daimler Buses
Daimler Mobility
The management reports for Daimler AG and for the Daimler
Group are combined within this annual report.
B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE 63
Important events
A large majority of the Daimler shareholders vote for the
new corporate structure with Daimler AG as the parent
company
Cost of
capital (%)
Cost of capital
x
Net assets
Profit
measure
Value
added
Calculation of value added
B.03
The quantitative development of value added and the related
financial performance measures is explained in the "Profitabil-
ity" chapter.
pages 75f
Vans
The return on net assets (RONA) is calculated from the ratio of
EBIT to net assets. Value is created for our shareholders when
RONA exceeds the cost of capital. The required rate of return
on net assets, and hence the cost of capital rate, is derived
from the minimum rates of return that equity investors and
lenders expect on their invested capital. During the year
under review, the cost of capital rate of the Group remained
unchanged at 8% after taxes. For the automotive divisions,
the cost of capital rate amounted to 12% before taxes; for Daimler
Mobility, a cost of equity of 13% before taxes was applied.
7 B.04
The performance measurement system used at Daimler is
designed to ensure that our investors' interests and expectations
are taken into account within the framework of a value-based
management system. Value added shows the extent to which
the Group and its divisions achieve or exceed the return
requirements of the investors, thus creating additional value.
Value-based management
Performance measurement system
In addition, Harald Wilhelm, who was appointed to the Board
of Management of Daimler AG on April 1, 2019, took over
responsibility for Finance & Controlling and Daimler Financial
Services (Daimler Mobility since July 2019) at the conclusion
of the Annual Shareholders' Meeting. Harald Wilhelm was pre-
viously the Chief Financial Officer of Airbus and a member of
its Executive Committee. He succeeded the long-serving Board
of Management Member for Finance Bodo Uebber, who reques-
ted that his contract not be extended beyond its termination
date of December 2019 and stepped down at the conclusion
of the Annual Meeting.
At the conclusion of the Annual Shareholders' Meeting, Ola
Källenius took over as Chairman of the Board of Management
of Daimler AG and Head of Mercedes-Benz Cars. Ola Källenius
joined the Group in 1995. After holding various management
positions in Germany and abroad, he was appointed to the
Board of Management of Daimler AG with responsibility for
Mercedes-Benz Cars Marketing & Sales effective January 2015.
In January 2017, Ola Källenius took over Group Research and
Mercedes-Benz Cars Development. Markus Schäfer succeeded
him in this position on the Board of Management of Daimler AG
at the conclusion of the Annual Shareholders' Meeting on May
22, 2019. On June 1, 2019, Markus Schäfer also took over
responsibility for Mercedes-Benz Cars global procurement.
After more than 13 years as Chairman of the Board of Manage-
ment of Daimler AG and Head of Mercedes-Benz Cars, Dieter
Zetsche stepped down from his position at the conclusion of
the Annual Shareholders' Meeting in 2019. Following a two-
year cooling-off period, the Supervisory Board intends to nomi-
nate Dieter Zetsche for election to the Supervisory Board at
the Annual Meeting 2021. Manfred Bischoff will recommend that
Dieter Zetsche succeed him as Chairman of the Supervisory
Board of Daimler AG.
Changes in the Board of Management
At the Annual Shareholders' Meeting in Berlin, a large majority
of the shareholders of Daimler AG voted in favor of restruc-
turing of the Daimler Group. The new corporate structure took
effect when the hive-downs were entered in the commercial
register. As of October 31, 2019, today's Mercedes-Benz AG is
responsible for the previous divisions Mercedes-Benz Cars
and Mercedes-Benz Vans, while Daimler Truck AG is responsible
for Daimler Trucks and Daimler Buses. Daimler Financial
Services AG, which was already a legally independent company,
was renamed as Daimler Mobility AG on July 23, 2019. Like
Daimler AG and Daimler Mobility AG, the two new wholly owned
subsidiaries are German stock corporations subject to code-
termination with their headquarters in Stuttgart.
Value added is derived from the financial value drivers which,
due to their direct relationship to ongoing business operations,
are utilized as financial performance indicators for the periodic
assessment of the performance of the Group and its divisions.
In this sense, value added can be calculated as the difference
between the measure of operating profit (EBIT or net operating
profit) and the cost of capital of the average net assets.
71 B.03
Revenue
Daimler AG and BMW Group launch a long-term develop-
ment partnership for automated driving
€40.2 billion
BHARATBENZ
BHARATBENZ
Mercedes-Benz Bank
Mercedes-Benz
Financial Services
Daimler Truck Financial
ATHLON
62 B❘ COMBINED MANAGEMENT REPORT | CORPORATE PROFILE
system is rounded out by flexible-use services from Daimler
Mobility such as Mercedes-Benz Rent (rental vehicles) and
Mercedes me Flexperience (a car-on-demand solution). During
the year under review, Daimler Mobility financed or leased
approximately 50% of the vehicles sold by the Group. The divi-
sion's contract volume of €162.8 billion covers more than
5.4 million vehicles. Daimler Mobility operates in 40 countries
and employs approximately 13,000 people.
Daimler is active in the global automotive industry and related
sectors through a broad network of subsidiaries, associated
companies and partnerships. The statement of investments of
Daimler AG in accordance with Section 313 of the German
Commercial Code (HGB) can be found in Note 41 of the
Notes to the Consolidated Financial Statements.
Portfolio changes and strategic partnerships
By means of targeted investments and future-oriented partner-
ships, we strengthened our core business and made use of
additional growth potential in 2019. The most important projects
are briefly described below.
Daimler and BMW Group are investing more than €1 billion
in a joint mobility-services provider
After the successful closing of the joint venture agreement, the
two companies held a joint press conference in February 2019
where they stated that they plan to invest more than €1 billion
in the expansion and the closer integration of their existing
services in the areas of ride hailing, multimodal platforms, car
sharing, parking and charging. In doing so, they will system-
atically utilize the opportunities offered by digitization, shared
services and customers' increasing mobility needs. In the
period from February until the end of 2019, 588 million trans-
actions were conducted through the YOUR NOW joint-venture
group. The products and services of the joint ventures have
been further systematically focused on customer requirements
and consolidated into three pillars: 1. FREE NOW & REACH
NOW. 2. SHARE NOW. 3. PARK NOW & CHARGE NOW. The
establishment of a new parent company on January 1, 2020
supports the efficient management of these three pillars.
In March 2019, Daimler AG and Zhejiang Geely Holding Group
announced the establishment of a globally oriented 50:50 joint
venture. Its aim is to turn smart, a pioneer of urban mobility,
into one of the leading brands for electric mobility. The joint-
venture agreement stipulates that the next generation of
electric smart models will be manufactured in a new electric
vehicle factory in China that will be especially built for this
purpose. Global sales are scheduled to begin in 2022.
Daimler Trucks acquires a majority interest in Torc
Robotics
In March 2019, Daimler Trucks and Torc Robotics, a pioneer
in the area of autonomous driving systems, announced that they
are to form a partnership for the marketing of automated
trucks in the United States. The two companies agreed that
Daimler Trucks and Buses US Holding LLC, a subsidiary of
Daimler Truck AG, would acquire a majority of the shares in
Torc Robotics in order to link the businesses in a way that
goes far beyond a conventional manufacturer-supplier relation-
ship. Automated trucks have great potential to meet globally
growing transportation needs by improving efficiency and further
increasing safety. Daimler Trucks and Torc Robotics augment
one another perfectly with regard to resources, expertise and
capabilities. The acquisition of the majority interest was con-
cluded in the third quarter of 2019.
€93.9 billion
BUILT BUSES
homast
Daimler and Geely Holding establish a global joint venture
for the further development of smart
Mercedes me
EQ
€4.7 billion
€14.8 billion
Employees 152,048
83,437
21,346
17,960
12,680
Brands
€28.6 billion
FREIGHTLINER
FREIGHTLINER
SETRA
MAYBACH
smart
FUSO
W
AMG
WESTERN STAR
-58
Profit/loss on equity-method investments, net
479
656
1,245
1,108
-262
-452
Other financial income/expense, net
210
-265
218
3
-766
-25
2,137
-4,444
-8
-6,581
-6,586
2,753
Other operating income
2,837
-1,404
2,330
910
193
Other operating
expense
-4,469
-1,462
1,927
Interest income
1,380
271
Income taxes
-1,121
-3,013
-505
-2,615
-616
-6,586
-398
7,582
1,194
6,600
1,515
982
Net profit
2,709
397
2,131
1,699
394
270
3
1
Interest expense
-880
9,215
-793
-788
-12
-5
Profit before income taxes
3,830
10,595
-868
development costs
-143,580
-961
6.2
6.1
1.9
6.0
13.1
1 Adjusted return on sales is the ratio of adjusted EBIT to sales. Adjusted return on equity is the ratio of adjusted EBIT to average equity on a quarterly
basis.
Adjusted return on sales/return on equity (in %)¹
74
Statement of income
The Group's total revenue increased by 3.2% to €172.7 billion
in 2019; adjusted for exchange-rate effects, it increased by
2.2%. The development of revenue was positively affected
primarily by stronger pricing for new vehicles at the Daimler
Trucks division and growth in contract volume at Daimler
Mobility. 7 B.18
Cost of sales amounted to €143.6 billion in 2019, increasing
by 6.9% compared with the previous year. In 2019, a reassess-
ment of risks relating to ongoing governmental and legal pro-
ceedings and measures taken with regard to Mercedes-Benz
diesel vehicles in various regions and markets as well as
expenses in connection with an updated risk assessment for
an expanded recall of vehicles with Takata airbags adversely
affected cost of sales at the Mercedes-Benz Cars and
Mercedes-Benz Vans segments. Cost of sales also include
expenses in connection with a review and prioritization of the
product portfolio at the Mercedes-Benz Vans division. The
increase in cost of sales was also caused by higher business
volumes and consequentially higher material expenses. At
Daimler Mobility, the normalization of credit-risk costs affected
cost of sales. Further information on cost of sales is provided
in Note 5 of the Notes to the Consolidated Financial State-
B.18
thereof profit
Overall, gross profit in relation to revenue decreased
from 19.8% to 16.9%.
Selling expenses decreased by €0.3 billion to €12.8 billion.
As a percentage of revenue, selling expenses decreased from
7.8% to 7.4%. 71 B.18
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
General administrative expenses of €4.1 billion were at prior
year level (2018: €4.0 billion). As a percentage of revenue,
general administrative expenses decreased slightly to 2.3%
(2018: 2.4%). 71 B.18
10,292
1,827
2,482
Restructuring measures
2,541
828
M&A transactions
Adjusted EBIT
425
-406
5,448
1,233
-718
5,841
2,463
284
283
405
-718
Research and non-capitalized
Research and non-capitalized development costs of €6.6
billion in 2019 remained at the prior-year level. They were
mainly related to the development of new models, advance
expenditure for the renewal of existing models, and the fur-
ther development of fuel-efficient and environmentally friendly
drive systems as well as safety technologies, automated and
autonomous driving and the digital connectivity of our prod-
ucts. As a proportion of revenue, research and non-capitalized
development costs decreased from 3.9% to 3.8%. Further
information on the Group's research and development costs
is provided in the Research and Development section of the
Sustainability chapter of this Combined Management Report.
71 B.18
B.18
-134,295
29,165
33,067
-12,801 -13,067
-4,036
25,473
-12,038
144,099 141,093
-118,626 -111,589
29,504
28,646
-24,954
26,269
-22,706
-4,050
3,692
-12,174
-763
-893
-3,139
-3,075
-911
3,563
Other operating income of €2.8 billion (2018: €2.3 billion)
was above the level of the previous year. In 2019, it included
income of €0.7 billion from the merger of the business units
for mobility services of Daimler Group and BMW Group. In
2018, income from insurance compensation of €0.2 billion was
included. Other operating expense increased to €4.5 billion
(2018: €1.5 billion). Compared with the prior year, it included
higher expenses in connection with ongoing governmental and
legal proceedings and measures in the segments Mercedes-
Benz Cars and Mercedes-Benz Vans relating to Mercedes-Benz
diesel vehicles in various regions and markets. Further infor-
mation on the composition of other operating income and
expense is provided in Note 6 of the Notes to the Consoli-
dated Financial Statements. 7 B.18
General administrative expenses
Gross profit
Statement of income
In millions of euros
2019
Consolidated
Industrial Business
Daimler Mobility
Selling expenses
2018
2018
2019
2018
Revenue
Cost of sales
172,745 167,362
2019
ments.
2,463
333
Net assets of the divisions
60,505
51,583
+17
Equity-method investments²
980
1,066
-8
Assets and liabilities from
income taxes³
2,720
+12
1,707
Other reconciliation³
-459
-547
-16
Daimler Group
63,746
53,809
+18
1 Total equity.
2 To the extent not allocated to the segments.
3 To the extent not allocated to Daimler Mobility.
+59
B.23
12,466
Daimler Mobility'
% change
19/18
% change
Value added at Mercedes-Benz Cars of minus €0.5 billion was
significantly below the prior-year amount of €4.1 billion. This
was primarily due to the negative earnings development. An
additional negative impact on value added resulted from the
increase in average net assets to €32.4 billion mainly caused
by higher investments in non-current assets as well as the
first-time capitalization of right-of-use assets from leasing con-
tracts. In addition, average net assets were also impacted by
rising average inventories, partially offset by higher provisions
for other risks.
Daimler Trucks' value added fell by €0.5 billion compared to
previous year as a result of the development of earnings and
the increase in average net assets of €2.0 billion. This increase
resulted from the first-time capitalization of right-of-use assets
from leasing contracts and an increase in average inventories.
At Mercedes-Benz Vans, value added decreased significantly
by €3.3 billion to minus €3.4 billion, reflecting the sharp
decline in earnings. On the other hand, higher provisions for
other risks led to lower average net assets, which partially off-
set the negative development of value added.
The value added of the Daimler Buses division of €110 million
remains nearly unchanged (2018: €117 million). Average net
assets increased slightly to €1.4 billion.
Value added at Daimler Mobility of €0.3 billion was higher than
the prior-year level of minus €0.2 billion. The division's return
on equity amounted to 15.3% (2018: 11.1%). The development of
value added primarily reflects the increase in earnings of €0.8
billion. On the other hand, the rise in average equity of €1.5 bil-
lion had a negative impact on value added.
Mercedes-Benz Cars
32,418
26,289
13,961
+23
10,274
8,240
+25
Mercedes-Benz Vans
2,412
3,355
-28
Daimler Buses
1,440
1,233
+17
Daimler Trucks
19/18
Net assets of the Daimler Group at year-end
2019
+36
Less trade payables
-11,896 -13,395
-11
Less other assets and
liabilities
-33,624
-31,832
+6
Assets and liabilities from
income taxes¹
-14,604
2,559
+53
Total equity of
Daimler Mobility
14,983
12,810
+17
Daimler Group
62,248
56,531
+10
1 To the extent not allocated to Daimler Mobility.
1,671
In millions of euros
-19,865
+5
2018
19/18
% change
Net assets¹
Intangible assets
15,045
13,872
+8
Property, plant and
equipment
36,782
Less provisions for other risks
30,859
Leased assets
18,799
18,509
+2
Inventories
28,420
28,096
+1
Trade receivables
11,045
10,545
+19
In millions of euros
2018
2019
3.65
3.25
0.90
2015
2016
2017
2018
2019
B.20
Reconciliation to net operating profit
2019
3.25
2018
% change
In millions of euros
Mercedes-Benz Cars
3,359
7,216
-53
Daimler Trucks
2,463
2,753
-11
Mercedes-Benz Vans
19/18
-3,085
3.25
1.00
thereof profit
attributable to shareholders of Daimler AG
2,377
7,249
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 75
In 2019, the profit from equity-method investments of €0.5
billion was lower than the prior-year level (2018: €0.7 billion).
Both years include losses from Daimler Mobility companies. In
the year 2019, losses of €0.8 billion from the YOUR NOW group
reduced the profit from equity-method investments. In the year
2018, the agreement to conclude the Toll Collect arbitration
proceedings had a negative effect on earnings of €0.4 billion.
Also in the year 2018, a negative impact resulted from the
impairment by €0.2 billion of the investment in BAIC Motor.
7 B.18
Other financial expense/income worsened from income of
€0.2 billion to an expense of €0.3 billion. Of that decrease,
€0.2 billion is the result of the measurement at fair value of the
interest in Aston Martin. Furthermore, an additional expense
of €0.2 billion occurred from decreasing discount rates for pro-
visions for other risks. 7 B.18
Net interest expense amounted to €0.5 billion (2018: €0.5
billion). 7 B.18
The tax expense of €1.1 billion (2018: €3.0 billion) stated under
income tax expense decreased mainly due to the decline in
profit before income taxes. The effective tax rate for 2019 was
29.3% (2018: 28.4%). 71 B.18
Net profit of €2.7 billion (2018: €7.6 billion) is significantly
below the prior-year figure. Net profit of €0.3 billion is attrib-
utable to non-controlling interests (2018: €0.3 billion).
Net profit attributable to the shareholders of Daimler AG
amounts to €2.4 billion (2018: €7.2 billion), representing
a decrease in earnings per share to €2.22 (2018: €6.78).
7 B.18
The calculation of earnings per share is based on an unchanged
average number of outstanding shares of 1,069.8 million.
0.50
Dividend
Net operating profit
Table
B.20 shows the reconciliation of the EBIT of the divi-
sions to net operating profit. In addition to the EBIT of the divi-
sions, net operating profit also includes earnings effects for
which the divisions are not accountable, such as income taxes
and other reconciliation items.
B.19
Dividend per share
In euros
4.00
3.50
3.00
2.50
2.00
1.50
In line with a sustainable dividend policy, Daimler sets the divi-
dend based on a distribution ratio of 40% of the net profit
attributable to Daimler shareholders. We also take into consid-
eration the free cash flow from the industrial business when
setting the dividend. The Board of Management and the Super-
visory Board will propose to the Annual Shareholders' Meeting
to be held on April 1, 2019 that a dividend of €0.90 per share
be distributed for financial year 2019 (2018: €3.25). This corre-
sponds to a total dividend distribution to our shareholders of
€1.0 billion (2018: €3.5 billion).] 7 B.19
312
Daimler Buses
283
2018
In millions of euros
Daimler Group
-2.032
3.658
Mercedes-Benz Cars
-532
4.062
Daimler Trucks
1.230
1.765
2019
-30
-3.375
-91
Daimler Buses
110
117
-6
Daimler Mobility
325
-236
B.22
Net assets (average)
Mercedes-Benz Vans
Value added
B.21
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY
265
+7
Daimler Mobility
2,140
1,384
+55
EBIT of the divisions
5,160
11,930
-57
Income taxes¹
Other reconciliation
Net operating profit
-1,261
-3,169
-60
-831
-798
+4
3,068
7,963
-61
1 Adjusted for tax effects on interest income/expense and
amortization of capitalized borrowing costs.
Value Added
As described in the Performance Measurement System section
of the Corporate Profile chapter in chart 7 B.03, the cost of
capital is the product of net assets and cost of capital
expressed as a percentage, which is subtracted from earnings
in order to calculate value added. Tables 7 B.21 and 7 B.22
show value added and net assets for the Group and for the
individual divisions. Table 7 B.23 shows how net assets are
derived from the consolidated statement of financial position.
The Group's value added decreased by €5.7 billion to minus
€2.0 billion in 2019, representing a return on net assets of 4.8%
(2018: 14.8%). The minimum required rate of return of 8% was
therefore not achieved in the year under review. The significant
decrease in value added was mainly due to the development of
the divisions' EBIT. In addition, further negative effects on
value added resulted from the sharp increase of €9.9 billion in
average net assets caused by higher investments in non-cur-
rent assets, the first-time capitalization of right-of-use assets
from leasing contracts and increased average inventories.
These effects were partially compensated by higher provisions
for other risks.
76
332
attributable to non-controlling interests
-6,581
4,329
Daimler Buses
pages 166 ff
Sales of Auman trucks, which we produce in China in coopera-
tion with our joint venture Beijing Foton Daimler Automotive
Co., Ltd. (BFDA), were significantly lower than in the prior year
at 86,200 units (2018: 103,400). In mid-2019, we launched
our new Auman EST-A heavy-duty truck in China. The vehicle is
equipped with the locally produced Mercedes-Benz OM457
engine.
In Asia, the truck markets of Indonesia and India contracted
significantly during the year under review. At 135,200 units
(2018: 164,700), our sales in the region decreased consider-
ably. This development was especially pronounced in Indone-
sia, where our sales declined by 39% to 39,100 units. We
sold 14,500 units (2018: 22,500) in India. Unit sales were thus
also substantially below the high level of the previous year.
Our BharatBenz brand achieved a market share of 5.8% (2018:
6.0%). We sold 42,200 units in the Japanese truck market, thus
not quite equaling the previous year's sales (2018: 44,000).
In Latin America, however, we were able to significantly
increase our sales once again, to 42,600 units (2018: 38,200).
The growth was mainly due to the development of the region's
main market, Brazil, where we sold 29,700 trucks. This repre-
sents a 39% increase on the previous year. Our Mercedes-Benz
brand trucks increased their market share. In the heavy- and
medium-duty segment, we expanded our market share to 29.2%
(2018: 27.9%) and remained the market leader. In the NAFTA
region, our sales once again slightly surpassed the previous
year's high level, rising to 201,100 units (2018: 189,700). Our
market share of Class 6 - 8 trucks amounted to 37.0% (2018:
38.4%), which enabled us to remain the market leader.
Unit sales by Daimler Trucks in 2019 were slightly lower than
in the previous year. In total, we delivered 488,500 heavy-,
medium- and light-duty trucks as well as buses of the Thomas
Built Buses and FUSO brands in the year under review (2018:
517,300). Daimler Trucks continues to be the world's biggest
manufacturer of trucks above 6 tons. 7 B.08 In the EU30
region, the truck market weakened significantly in the second
half of the year, following substantial earlier-than-planned
purchases in the first half. Our unit sales decreased slightly to
79,800 trucks (2018: 85,400). Our Mercedes-Benz brand
remained the market leader in the heavy-duty and medium-
duty segments, although our market share declined to 20.0%
(2018: 20.6%). 71 B.09
+0.4
8.4
8.8
Buses over 8 tons EU30
Large vans United States
3.1
2.4
Small vans EU30
+1.8
25.2
27.0
thereof Germany
+1.5
15.2
-0.7
16.7
27.5
-1.5
Revenue by segment and region
B.10
Profitability
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
70
The Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans and Daimler Buses divisions produce vehicles predomi-
nantly to order, in accordance with customers' specifications.
While doing so, we flexibly adjust the production capacities
for individual models to changing levels of demand. Due in
particular to continued strong demand in China and the Euro-
pean markets, the number of orders placed with Mercedes-
Benz Cars during the year under review remained at a high
level despite a slight decrease. This was driven on the prod-
uct side primarily by the A-Class and B-Class models and the
E-Class, as well as by the continued strong success of our
SUVs. With an unchanged high level of production, the order
backlog at the end of the year was below the prior-year level.
At Daimler Trucks, both orders received and the order back-
log at year-end were significantly lower than a year earlier.
This was mainly due to the significant weakening of demand
in the second half of the year in the NAFTA region and also
the EU30 region.
Order situation
Business at Daimler Mobility continued to develop positively
in the year under review. As we had forecast in Annual Report
2018, worldwide contract volume continued to grow, reaching
the new record level of €162.8 billion in 2019 (+6%). At €74.4
billion, new business was also slightly higher than in 2018,
which is what we had anticipated at the beginning of the year.
Whereas new business grew in Europe (+3%), the Americas
(+9%) and Africa & Asia-Pacific (+2%, excluding China), it
decreased slightly in China (-4%). In the insurance business, we
brokered approximately 2.4 million policies in the year under
review, which corresponds with an increase of 5% compared
with the previous year. In total, 588 million transactions were
conducted through the mobility services of the YOUR NOW
joint-venture group in 2019. Daimler Mobility had 425,000 con-
tracts on its books with its Athlon and Daimler Fleet Manage-
ment brands (+8%). Total contract volume amounted to €7.0
billion at the end of 2019. pages 177 ff
Daimler Buses sold 32,600 buses and bus chassis worldwide
in financial year 2019 (2018: 30,900). The slight increase was
due in particular to the noticeable recovery of the market in
Brazil, continued strong demand in our important EU30 market
and substantial sales growth in Argentina. The division main-
tained its market leadership in its most important traditional
core markets (EU30, Brazil, Argentina and Mexico). Due to con-
tinued high demand for our complete buses, sales in the EU30
region amounted to 9,300 units, which equaled the high figure
recorded in the previous year (2018: 9,300). Daimler Buses
defended its leading position in this region with a market share
of 27.5% (2018: 29.0%). At 3,000 units, sales in Germany were
5% higher than in the previous year. At 200 units, sales in Tur-
key decreased significantly due to the ongoing difficult situation
in the country (2018: 300). The market situation in Latin Amer-
ica (excluding Mexico) improved further on account of the
noticeable market recovery in Brazil. Sales of Mercedes-Benz
bus chassis in Brazil rose by 30% to 11,400 units. We were able
to strengthen our leading market position in Brazil with a mar-
ket share of 53.8% (2018: 51.6%). We sold 1,600 units in India,
thus equaling the previous year's result (2018: 1,600). At 2,600
units, sales in Mexico were significantly lower than in the previ-
ous year (2018: 3,200).
pages 174ff
29.0
Mercedes-Benz Vans achieved record unit sales once again
in 2019. At 438,400 vehicles, the previous year's figure was
surpassed by 4%. Whereas we mainly address commercial cus-
tomers with the Sprinter, Vito and Citan models, the V-Class
is primarily designed for private use. With the X-Class, we
address diverse customers for both private and commercial
applications. In the EU30 countries, which are our core region,
our unit sales of 298,100 vehicles in 2019 were slightly above
the prior-year level (2018: 278,300), while our market share in
the combined segment for mid-size and large vans in the
region amounted to 16.7% (2018: 15.2%). We sold 121,300 vans
(2018: 107,300) in Germany. Unit sales in the NAFTA region
continued to grow significantly, with a new record of 45,700
vans sold in the United States (2018: 38,700). Our market
share for large vans increased to 8.8% (2018: 8.4%). Our sales
of 18,600 vans in Latin America were at the prior-year level
(2018: 18,700), as were sales of 29,500 units in China (2018:
29,100). However, unit sales in Russia and in a difficult market
environment in Turkey were significantly lower than in 2018.
At 231,500 units, global sales of Sprinter models were signifi-
cantly higher than in the previous year (2018: 206,300). Sales
of the Vito amounted to 109,300 units and were thus at the
prior-year level (2018: 108,300). Sales of 63,100 V-Class multi-
purpose vehicles were also at the level of the previous year
(2018: 63,900). Meanwhile, sales of the Mercedes-Benz Citan
amounted to 20,700 units (2018: 26,300) and a total of 13,800
X-Class vehicles were sold in the year under review
(2018: 16,700).
pages 171 ff
1 Based on estimates in certain markets.
+2.2
51.6
53.8
Buses over 8 tons Brazil
+1.5
49.3
50.8
thereof Germany
B | COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 69
vans EU30
Mid-size and large
Mercedes-Benz Vans
-0.6
20.6
20.0
trucks EU30
Heavy- and medium-duty
Daimler Trucks
0.0
38.8
38.8
thereof Germany
Japan
0.0
1.6
1.6
+0.4
2.9
3.3
+0.1
1.8
1.9
China
35.2
36.5
-1.3
-0.2
6.0
5.8
trucks India
Heavy- and medium-duty
-0.5
19.3
18.8
Trucks Japan
+1.3
27.9
29.2
trucks Brazil
Heavy- and medium-duty
-4.9
37.8
32.9
NAFTA region (Classes 6 and 7)
Medium-duty trucks
NAFTA region (Class 8)
Heavy-duty trucks
In millions of euros
United States
Daimler Group
2018
Germany
2017
2018
2015
2016
525233225050
10
15
40
45
In billions of euros
Europe
(without
Germany)
Consolidated revenue by region
+1
10,287
10,351
Other markets
-4
19,790
18,954
thereof China
+0
B.11
40,627
NAFTA region Asia
2019
Daimler Trucks
-53
7,216
3,359
Mercedes-Benz Cars
% change
19/18
2018
2019
Revenue and EBIT
In millions of euros
B.12
The Mercedes-Benz Cars and Mercedes-Benz Vans divisions
posted earnings significantly below the prior-year figures.
This mainly resulted from a reassessment of risks relating to
ongoing governmental and legal proceedings and measures
taken with regard to Mercedes-Benz diesel vehicles in various
regions and markets, as well as from an updated risk assess-
ment for an expanded recall of vehicles with Takata airbags.
Earnings at the Mercedes-Benz Vans division were also reduced
by expenses arising from the review and prioritization of the
product portfolio, in connection with the planned discontinua-
tion of production of the X-Class in May 2020. At Daimler
Trucks, volume decreases mainly caused the negative earnings
development. On the other hand, Daimler Buses posted earn-
ings above the prior-year level. Daimler Mobility also surpassed
its prior-year figure significantly. The earnings of the Daimler
Group were reduced by declining discount rates. Exchange-rate
effects in total also had a negative impact on operating profit.
The Daimler Group achieved EBIT of €4.3 billion in 2019,
which is significantly lower than in the previous year (2018:
€11.1 billion). The Daimler Group had expected EBIT to be
slightly above the prior year figure. 7 B.12 7 B.13
EBIT
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 71
The Daimler Group therefore met the forecast made at the
beginning of the year. The Mercedes-Benz Cars division
achieved revenue at the prior-year level; at the beginning of
the year, we had anticipated a slight increase in revenue.
Revenue at Daimler Trucks was slightly above the prior-year
level; we had forecasted a significant increase. The Mercedes-
Benz Vans division had forecasted significant revenue growth
for 2019 and was able to meet this forecast by the end of the
year. The Daimler Buses division achieved a slight increase
in revenue in 2019 and therefore did not meet the forecast of
significant revenue growth in 2019. However, Daimler Mobility
significantly increased its revenue in 2019 and therefore sur-
passed its forecast of slight revenue growth.
The development of revenue was positively affected primarily
by stronger pricing for new vehicles at Daimler Trucks and
growth in contract volume at Daimler Mobility.
In the year 2019, the Daimler Group's revenue of €172.7
billion (2018: €167.4 billion) was slightly above the prior-year
level. Also, adjusted for positive exchange-rate effects,
revenue was slightly higher than in the previous year. 7 B.10
Revenue
EBIT by segment
40,657
Asia
+10
4,529
4,733
Daimler Buses
+9
13,626
14,801
Mercedes-Benz Vans
+1
+5
38,273
+5
40,235
93,103
93,877
Mercedes-Benz Cars
Divisions
To provide a better insight into the Group's profitability, cash
flows and financial position, the statement of income, the
condensed statement of cash flows and the condensed state-
ment of financial position are shown for the Daimler Group
as well as for the "Industrial business" and "Daimler Mobility".
The industrial business and Daimler Mobility columns represent
a business point of view. The industrial business comprises
the vehicle segments Mercedes-Benz Cars, Daimler Trucks,
Mercedes-Benz Vans and Daimler Buses. Daimler Mobility is
identical to the Daimler Mobility segment. Intra-group elimina-
tions between the industrial business and Daimler Mobility are
generally allocated to the industrial business.
+3
19/18
% change
167,362
172,745
Daimler Trucks
Daimler Mobility
28,646
26,269
41,152
45,422
thereof United States
+9
47,952
52,196
NAFTA
+6
24,802
26,339
thereof Germany
+2
68,496
69,541
Europe
Legal proceedings (and related measures)
as well as Takata
-13
-8,438
-9,547
Reconciliation
+9
2019
10.5
Regions
thereof Germany
10
5
0
2015
2016
Mercedes-Benz Daimler
Buses
20171
2018
2019
15
1 The prior-year figures have been adjusted due to the effects of the
first-time adoption of IFRS 15 and IFRS 9.
In particular, higher unit sales in the NAFTA region and positive
exchange-rate effects boosted EBIT. Further positive effects
resulted from better pricing across all brands. Lower volumes,
especially in the EU30 region and Asia, adversely affected
earnings. Additional negative effects resulted from the adjust-
ment of used-vehicle valuation. EBIT was also reduced by
higher expenditures for new technologies as well as by costs in
connection with capacity adjustments.
Due to higher unit sales and a more favorable model mix, the
Mercedes-Benz Vans division's revenue increased in the year
2019 by 9% to €14,801 million (2018: €13,626 million). EBIT
amounted to minus €3,085 million (2018: plus €312 million).
The division's return on sales decreased to minus 20.8% (2018:
plus 2.3%). 7 B.12
EBIT was affected by a reassessment of risks relating to ongoing
governmental and legal proceedings and measures taken with
regard to Mercedes-Benz diesel vehicles in various regions and
markets (€2,200 million). EBIT was also reduced by expenses
in connection with the review and prioritization of the product
portfolio (€828 million) and an updated risk assessment for an
expanded recall of vehicles with Takata airbags (€341 million).
Furthermore, exchange-rate effects adversely affected EBIT.
On the other hand, EBIT was positively affected by higher unit
sales and a more favorable model mix.
Due to the positive development of unit sales, the revenue of
the Daimler Buses division increased by 5% to €4,733 million
in the year 2019 (2018: €4,529 million). The division posted
EBIT of €283 million (2018: €265 million). Its return on sales
was at the prior-year level of 6.0% (2018: 5.9%). 7 B.12
EBIT was positively affected by strong growth in unit sales in
Brazil as well as by exchange-rate effects. Negative effects on
earnings resulted in particular from the lower capitalization of
development costs.
Daimler Mobility achieved EBIT of €2,140 million in 2019
(2018: €1,384 million). The division's return on equity
increased to 15.3% (2018: 11.1%). 7 B.15
Earnings increased by €718 million due to the merger of the
mobility services of Daimler Group and BMW Group in the year
2019. Growth in contract volume also had a positive impact.
The normalization of credit risk costs and expenses of €405
million in connection with the realignment of the YOUR NOW
group affected EBIT negatively. In the year 2018, earnings had
been reduced by €418 million due to effects from the conclu-
sion of the Toll Collect arbitration proceedings.
The reconciliation of the divisions' EBIT to Group EBIT com-
prises gains and/or losses at the corporate level and the
effects on earnings of eliminating intra-Group transactions
between the divisions.
Items at the corporate level resulted in expenses of €808 mil-
lion (2018: €757 million). In the year 2019, expenses of €425
million are included in connection with ongoing governmental
and legal proceedings and measures taken with regard to
Mercedes-Benz diesel vehicles. In the prior year, the impairment
by €150 million of Daimler's equity investment in BAIC Motor
Corporation Ltd. (BAIC Motor) affected earnings negatively.
Furthermore, expenses are included in both years in connec-
tion with the development of the divisional structure ("Project
Future").
The Daimler Trucks division increased its revenue in the year
2019 by 5% to €40,235 million (2018: €38,273 million). The
division achieved EBIT of €2,463 million (2018: €2,753 million).
Its return on sales was below the prior-year figure at 6.1%
(2018: 7.2%). 7 B.12
The elimination of intra-Group transactions resulted in an
expense of €23 million in 2019 (2018: €41 million).
20
Daimler Mobility
72
B | COMBINED MANAGEMENT REPORT | PROFITABILITY
B.14
Return on Sales
In %
2015
2016
2017
2019
2018
12
In %
6 0
-12
-18
-24
Mercedes-Benz 'Daimler
Cars
Trucks
Vans
B.15
Return on Equity
-6
B❘ COMBINED MANAGEMENT REPORT | PROFITABILITY 73
The reconciliation of Group EBIT to profit before income taxes
is shown in table 7 B.16.
Change in the internal management and reporting structure
as of January 1, 2020
In millions of euros
Mercedes-
Benz Cars
Daimler
Mercedes-
Daimler
Trucks
Benz Vans
Daimler
Buses Mobility
Recon-
ciliation
Reconciliation EBIT to adjusted EBIT
Daimler
2019
EBIT
3,359
2,463
-3,085
283
2,140
-831
10.8
Group
B.17
1 Amortization of capitalized borrowing costs is not included in the
internal performance measure EBIT, but is a component of cost of
sales.
Profit before income taxes
As of January 1, 2020, changes have taken place in connection
with the internal management and reporting structure and
thus with the reportable segments. The Group's activities are
now divided into the segments Mercedes-Benz Cars, Mercedes-
Benz Vans, Daimler Trucks & Buses and Daimler Mobility. The
Mercedes-Benz Cars and Mercedes-Benz Vans segments are
combined for external reporting purposes into the reportable
segment Mercedes-Benz Cars & Vans, in line with the type of
products and services offered as well as the brands, distribu-
tion channels and customer profiles.
In addition, as explained in the Corporate Profile section in the
chapter on financial performance measures, we now report
adjusted EBIT in addition to EBIT for the Daimler Group and for
the segments from the year 2020 onwards.
Table B.17 shows the reconciliation from EBIT as booked to
adjusted EBIT for both the Daimler Group and the segments for
the financial year 2019.
The adjustments in connection with legal proceedings comprise
expenses from the reassessment of risks relating to ongoing
governmental and legal proceedings and measures taken with
regard to Mercedes-Benz Cars diesel vehicles in various regions
and markets, as well as expenses in connection with the
updated risk assessment for an extended recall of Takata airbags.
The material adjustments in connection with restructuring
measures comprise expenses from the realignment of the
YOUR NOW group and expenses in connection with the review
and prioritization of the product portfolio. The effects in
connection with M&A transactions comprise income from the
merger of the mobility services of Daimler Group and BMW
Group.
B.16
Reconciliation of Group EBIT to profit before income taxes
In millions of euros
Group EBIT
2019
2018
4,329
11,132
Amortization of
-16
-15
397
271
-880
-793
3,830
10,595
Earnings in 2019 were reduced by €1,882 million due to a reas-
sessment of risks relating to ongoing governmental and legal
proceedings and measures taken with regard to Mercedes-
Benz Cars diesel vehicles in various regions and markets. Fur-
thermore, expenses in connection with an updated risk assess-
ment for an expanded recall of vehicles with Takata airbags
caused a reduction in earnings of €600 million. In addition,
earnings were reduced by advance expenditures for new tech-
nologies and vehicles, as well as by exchange-rate effects.
Furthermore, the measurement at fair value of shares in Aston
Martin Lagonda Global Holdings plc (Aston Martin) had a
negative impact on EBIT. On the other hand, improved pricing
had a positive effect on EBIT.
The revenue of the Mercedes-Benz Cars division in the year
2019 was €93,877 million (2018: €93,103 million) and there-
fore at the prior-year level (+1%). The division posted EBIT of
€3,359 million (2018: €7,216 million). Its return on sales was
3.6% and thus below the prior-year figure (2018: 7.8%). 71 B.12
capitalized borrowing costs'
Interest income
Interest expense
2019
68
0
4%
Other markets
39%
Asia
15%
42%
5%
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT
1%
3%
18%
18%
22%
Europe
NAFTA
* including GLA and GLB
SUVS*
Sports Cars
smart
S-Class
E-Class
33%
A-/B-Class
C-Class
B.08
EU30
6.2
1 The prior-year figures have been adjusted due to the effects of the
first-time adoption of IFRS 15 and IFRS 9.
6.4
European Union
Mercedes-Benz Cars
+0.2
+0.3
19/18
Change
in % points
in %
2018
Unit sales structure of Daimler Trucks
2019
B.09
6%
Other markets
28%
Asia
41%
9%
Latin America
16%
Market share¹
Unit sales structure of Mercedes-Benz Cars
NAFTA
pages 158 ff
-4
4,329
11,132
-61
Daimler Buses
Daimler Mobility
Reconciliation
Daimler Group'
1 EBIT, the indicator of operating performance, comprises earnings
before interest income/expense and corporate income taxes. The
reconciliation of the Daimler Group's EBIT to earnings before in-
come taxes is included in Note 34 of the Notes to the Consolidated
Financial Statements.
B.13
Development of earnings
In billions of euros
15
Net profit (loss)
The reconciliation of segment earnings to Group EBIT resulted
in a higher expense than in the previous year.
In the Management Report for 2018, we had forecasted a return
on sales for the Mercedes-Benz Cars division of between 6%
and 8%. As the year 2019 progressed, in the context of our
capital market reporting, we adjusted this expectation to a
level of between 3% and 5%. The Mercedes-Benz Cars division
met this expectation. For the Mercedes-Benz Vans division,
we had anticipated a return on sales of between 5% and 7%. As
the year 2019 progressed, in the context of our capital market
reporting, we gradually adjusted the expectation downwards
to a forecast of minus 15% to minus 17%. At the end of the year,
the Mercedes-Benz Vans division was not able to meet that
forecast. The downgrading of expectations for both divisions
resulted mainly from a reassessment of risks relating to ongo-
ing governmental and legal proceedings and measures taken
with regard to Mercedes-Benz diesel vehicles in various regions
and markets, as well as from an updated risk assessment for
an expanded recall of vehicles with Takata airbags. For the
Daimler Trucks division, we had originally forecasted a return
on sales of between 7% and 9%. As the year progressed, in the
context of our capital market reporting, we adjusted the fore-
cast to 6% to 8%, which the Daimler Trucks division achieved
at the end of the year. Daimler Buses met the forecast of a
return on sales of between 5% and 7%. The Daimler Mobility
division, however, did not achieve its anticipated return on
equity of between 17% and 19% for the year 2019 due to
expenses related to the realignment of the YOUR NOW group.
10
5
0
2015
2016
B.07
20171
2018
-798
-831
EBIT
1,384
Mercedes-Benz Cars sold a total of 992,200 vehicles in Europe
in 2019 (2018: 982,700). Sales growth in Germany (+4%) was
accompanied by decreases in Italy (-1%) and Spain (-5%). Unit
sales in the volume markets of the United Kingdom and France
remained at the levels of the previous year. The Mercedes-Benz
Cars division continued to be very successful in China during
the year under review, with unit sales there increasing by 2% to
694,200 vehicles. We also set new records for unit sales in
other Asian markets, for example in South Korea (+18%). At
368,900 vehicles, unit sales in the NAFTA region were lower
than the high level of the previous year. Decreases were
recorded in the United States (-4%) as well as in Canada (-12%).
this market segment in 2019 (2018: 83,800). Our unit sales in
the SUV segment were impacted by the model changes for the
GLE and the GLS. Demand for the new models was much
higher than the actual number of vehicles available. Unit sales,
however, were at the very high level of 789,800 (2018:
829,200) vehicles. Sales of our sports cars rose by 48% to
28,400 units; this increase was largely due to the market suc-
cess of our Mercedes-AMG GT models. 7 B.07
+55
The A-Class and B-Class models were particularly successful
in the year under review. Unit sales of these models, including
the CLA and the CLA Shooting Brake, increased by 29% to a
total of 527,000 vehicles. Sales of C-Class models decreased
by 8% to 439,600 sedans, wagons, coupes and convertibles.
The E-Class continued to perform very well on the market. At
418,100 vehicles, total unit sales of the E-Class did not, how-
ever, achieve the high level of the previous year. With sales of
71,300 units, the S-Class sedan continues to be the world's
best-selling luxury sedan. In total, we sold 75,400 vehicles in
The Mercedes-Benz Cars division sold a total of 2,385,400
vehicles in 2019 despite difficult overall conditions, thus once
again slightly exceeding the previous year's record (2018:
2,382,800). With unit sales of 2,278,300 (2018: 2,252,800)
vehicles, the Mercedes-Benz brand was once again the stron-
gest-selling premium brand in the automobile industry. We are
the number one in the premium segment in Germany and sev-
eral other key European markets, as well as in South Korea,
Australia, India, Canada and Japan. In addition, we once again
improved our position in China with a new sales record.
Daimler sold a total of 3.34 million vehicles in 2019 (2018:
3.35 million). As a result, the Group failed to achieve its goal
of slightly increasing its unit sales. Unit sales were slightly
lower than expected at Mercedes-Benz Cars (+0%), Daimler
Trucks (-6%), Mercedes-Benz Vans (+4%) and Daimler Buses
(+6%).
Unit sales
The market volume for buses in the EU30 region was signifi-
cantly above the high level of the previous year. The situation
in Latin America (excluding Mexico) improved considerably due
to the noticeable market recovery in Brazil, although growth in
the region was slowed by a sharp market contraction in Argen-
tina. As a result of the ongoing difficult economic situation in
Turkey, demand for buses once again decreased significantly
there compared with 2018.
Demand for vans continued to develop positively in the EU30
region in 2019. Here, market volume in the combined segment
for mid-size and large vans increased by 4%, while demand for
small vans rose by 6%. The market for mid-size pickups
remained at the prior-year level. In Germany, overall sales in
the combined segment for mid-size and large vans increased
by 8%. Demand for large vans in the United States expanded
significantly. Demand in the market for mid-size vans that we
address in China was slightly lower than in the previous year.
Driven by developments in Brazil, the market volume for large
vans in Latin America rose substantially from the low level
of the previous year.
B❘ COMBINED MANAGEMENT REPORT | ECONOMIC CONDITIONS AND BUSINESS DEVELOPMENT 67
Business development
Mercedes-Benz Vans
-3,085
2,140
The sales development for the smart brand during the year
under review was affected by the complete changeover of the
smart to all-electric drive by the year 2020. The number of cars
with combustion engines offered by the brand was therefore
gradually reduced throughout the year. All in all, the smart brand
sold a total of 107,100 fortwo and forfour models in about 40
markets worldwide in 2019 (2018: 130,000).
312
+7
283
-11
265
8,889
-15
-4,215
-3,725
-4,220
8,567
Dividends paid
2,644
17,456
-5
6,760
-3,740
Other transactions with shareholders
-20
-10
Internal equity and financing transactions
Cash used for/provided by financing activities
5,628
13,226
-26
-2,767
242
-10
10
-5,127
2,767
9,404
5,386
-473
5,127
-36
-614
similar investments
-9,307
-167
-190
13,699
Investments in and disposals of shareholdings
-1,225
-417
-582
14
-643
-431
Acquisitions and sales of marketable debt securities and
1,054
471
883
505
171
-34
Other
Cash used for investing activities
Change in financing liabilities
399
726
358
708
41
18
-10,607
-9,921
-9,986
-621
Effect of foreign exchange rate changes on cash
Reconciliation from CFBIT to the free cash flow of the
Cash and cash equivalents at end of period
-205
+444
Free cash flow of the
industrial business
1,368
2,898
-1,530
80
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
B.26
industrial business
In millions of euros
CFBIT automotive segments
239
Interest paid
Other reconciling items
Free cash flow of the industrial business
2019
3,499
-959
-388
-784
1,368
Other adjustments mainly relate to the acquisitions and dispos-
als of shareholdings within the Group resulting from “Project
Future" and are reversed in the free cash flow of the industrial
business. Furthermore, effects from the financing of dealer-
ships and effects from internal deposits within the Group are
adjusted. In addition, the calculation of the free cash flow
includes the cash flows to be shown under cash provided by
financing activities in connection with the acquisition or
disposal of interests in subsidiaries without loss of control.
The free cash flow of the industrial business amounted to
€1.4 billion in 2019 and was significantly lower than the prior-
year figure of €2.9 billion. The free cash flow of the industrial
business was thus in line with the adjusted forecast made in
the Outlook section of the Interim Report on the second quar-
ter of 2019. However, the target stated in the Outlook section
of Annual Report 2018 that the free cash flow of the industrial
business would probably be slightly higher than in the previous
year was not met.
The decrease of €1.5 billion in the free cash flow of the indus-
trial business to €1.4 billion resulted from a number of factors,
primarily the fine paid in conclusion of the administrative
offense proceedings against Daimler AG. As well as the nega-
tive effects relating to the recognition and measurement of
right-of-use assets, additional effects on the free cash flow of
the industrial business resulted from the negative development
of operating leases and increased investments in intangible
assets. Furthermore, increased cash outflows (net) for the
acquisition and disposal of shareholdings also contributed neg-
atively. On the other hand, the development of working capital
and lower income tax payments had a positive impact.
Apart from derivation on the basis of cash flows from operat-
ing and investing activities, the free cash flow of the industrial
business can be derived from the cash flows before interest
and taxes (CFBIT) of the automotive segments 7 B.26.
The CFBIT of the automotive segments is derived from EBIT
and the change in net assets and includes additions to right-of-
use assets.
-10,534
The reconciliation from the CFBIT of the automotive segments
to the free cash flow of the industrial business also includes
income taxes and interest paid. Other reconciling items include
eliminations between the segments and amounts allocated to
the industrial business but for which the automotive segments
are not accountable.
Income taxes paid
Other adjustments
-987
-987
121
18,883
133
15,853
112
16,152
149
12,799
9
-16
2,731
3,054
The parameter used by Daimler to measure the financial capa-
bility of the Group's industrial business is the free cash flow
of the industrial business 7 B.25, which is derived from the
reported cash flows from operating and investing activities.
The cash flows from the acquisition and sale of marketable
debt securities and similar investments included in cash flows
from investing activities are deducted, as those securities are
allocated to liquidity and changes in them are thus not a part
of the free cash flow of the industrial business. In contrast,
the recognition and measurement of right-of-use assets, which
result from the change in lessee accounting and are largely
non-cash items, are included in the free cash flow of the indus-
trial business.
B.25
Free cash flow of the industrial business
In millions of euros
2019
2018
19/18
Change
Cash provided
by operating activities
Cash used for
12,985
12,915
+70
investing activities
-9,986
-9,307
-679
Change in marketable
debt securities and similar
investments
-883
-505
-378
Right-of-use assets
and cash equivalents
-10,645
Cash and cash equivalents at beginning of period
-10,835
2018
15,853
12,072
12,799
9,515
3,054
2,557
Profit before income taxes
3,830
10,595
1,699
9,215
2,131
2019
1,380
7,751
6,305
7,597
6,177
154
128
Other non-cash expense and income and gains/losses on
disposals of assets
-737
-1,050
-824
-1,557
87
507
Depreciation and amortization/impairments
2018
2019
2018
Starting from financial year 2020, apart from the free cash flow
of the industrial business, the adjusted cash conversion rates
of the automotive segments will also be forecast and reported.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 77
Liquidity and Capital Resources
Principles and objectives of financial
management
Financial management at the Daimler Group consists of capital
structure management, cash and liquidity management, market-
price risk management (foreign exchange rates, interest rates
and commodity prices), as well as pension-asset management
and credit and financial country risk management. Worldwide
financial management is performed within the framework of
legal requirements consistently for all Group entities by the
Treasury department of the Daimler Group. Financial manage-
ment operates within a framework of guidelines, limits and
benchmarks, and on the operational level is organizationally
separate from other financial functions such as settlement,
financial controlling, reporting and accounting.
Capital structure management designs the capital structure
for the Group and its subsidiaries. Decisions regarding the cap-
italization of Daimler's mobility, production, sales or financing
companies are based on the principles of cost-optimized and
risk-optimized liquidity and capital resources.
The purpose of liquidity management is to enable the Group
to meet its payment obligations at any time. For this purpose,
the Group records the cash flows from operating and financial
activities in a rolling plan. The resulting financial requirements
are covered by the use of appropriate instruments for liquidity
management (e.g. bank credit, commercial paper and notes);
liquidity surpluses are invested in the money market or the cap-
ital market taking into account risk and return expectations.
Our goal is to ensure the level of liquidity regarded as neces-
sary at optimal costs. Besides operational liquidity, the Daimler
Group maintains additional liquidity reserves which are avail-
able in the short term. Those additional financial resources
include a pool of receivables from the financial services busi-
ness which are available for securitization in the capital market,
as well as a contractually confirmed syndicated credit facility.
Cash management determines the cash requirements and
surpluses. By means of cash-pooling procedures, liquidity is
centrally concentrated on bank accounts of the Daimler Group
in various currencies. Most of the payments between Group
companies are made through internal clearing accounts, so
that the number of external cash flows is reduced to a mini-
mum. The Daimler Group has established standardized pro-
cesses and systems to manage its bank accounts and internal
cash-clearing accounts, and to execute automated payment
transactions.
Management of market-price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the earnings of the divisions and
the Group. The Group's overall exposure to these market-price
risks is determined to provide a basis for hedging decisions,
which include the definition of hedging volumes and correspond-
ing periods, as well as the selection of hedging instruments.
The hedging strategy is specified at the Group level and uni-
formly implemented in the segments. Decisions regarding the
management of risks resulting from fluctuations in foreign
exchange rates and commodity prices, as well as decisions on
asset/liability management (liquidity and interest rates), are
regularly made by the relevant internal committees.
Management of pension assets (plan assets) includes the
investment of the assets to cover the corresponding pension
obligations. The plan assets are legally separated from the
Group's assets and are invested primarily in funds; they are
not available for general business purposes. The plan assets
are spread across various investment categories such as
equities, fixed-interest securities, alternative investments and
real estate, depending on the expected development of pen-
sion obligations and with the help of risk-return optimization.
The performance of asset management is measured by com-
paring with defined reference indices. Local custodians are
responsible for the risk management of the individual pension
assets. The Global Pension and Healthcare Committee limits
these risks by means of Group-wide binding guidelines. Addi-
tional information on pension plans and similar obligations is
provided in Note 22 of the Notes to the Consolidated
Financial Statements.
78
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
The risk volume that is subject to credit risk management
includes all of the Daimler Group's worldwide creditor posi-
tions with financial institutions, issuers of securities, and cus-
tomers in the financial services business and the automotive
business. Credit risks with financial institutions and issuers of
securities arise primarily from investments executed as part
of our liquidity management and from the application of deriva-
tive financial instruments. The management of these credit
risks is mainly based on an internal limit system that reflects
the creditworthiness of the respective financial institution or
issuer. The credit risk with customers of our automotive busi-
ness results from relationships with contracted dealerships
and general agencies, other corporate customers and retail
customers. In connection with the export business, general
agencies that according to our creditworthiness analyses are
not sufficiently creditworthy are generally required to provide
collateral such as first-class bank guarantees. The credit risk
with end-customers in the financial services business is man-
aged by Daimler Mobility on the basis of a standardized risk
management process. In this process, minimum requirements
are defined for the sales-financing and leasing business and
standards are set for credit processes, as well as for the identi-
fication, measurement and management of risks. Key elements
for the management of credit risks are appropriate creditwor-
thiness assessments supported by statistical risk-classification
methods, as well as structured portfolio analysis and portfolio
monitoring.
Financial country risk management includes various aspects:
the risk from investments in subsidiaries and joint ventures,
the risk from the cross-border financing of Group companies in
risk countries, and the risk from direct sales to customers in
those countries. The Daimler Group has an internal rating sys-
tem that assigns all countries in which it operates to risk cate-
gories. With equity-capital transactions of considerable magni-
tude in risk countries, the Group generally hedges against
political risks with the use of investment protection insurance
such as the German government's investment guarantees.
Risks from cross-border receivables are partially protected with
the use of export credit insurance, letters of credit and bank
guarantees in favor of Daimler AG. In addition, an internal com-
mittee sets and restricts the level of hard-currency credits
granted to Daimler Mobility companies in risk countries.
Further information on the management of market-price risk,
credit risk and liquidity risk is provided in Note 33 of the
Notes to the Consolidated Financial Statements.
Cash flows
Cash provided by operating activities 7 B.24 amounted to
€7.9 billion in 2019 (2018: €0.3 billion). The increase was
primarily due to effects from the leasing and sales-financing
business. Those effects include a cash inflow of €0.9 billion
at Daimler Mobility in connection with an off-balance-sheet
ABS transaction carried out in July. Further overall positive
effects resulted from working-capital management, in particu-
lar due to the positive development of inventories at all auto-
motive segments. While the development of trade receivables
also contributed to the positive development of working capi-
tal, changes in trade payables at all automotive segments had
an opposing effect. Changes in lessee accounting also had a
positive impact on cash provided by operating activities.
The lower profit before income taxes is primarily related to the
non-cash-effective increases in provisions included in other
operating assets and liabilities. Compared to the previous year,
the lower operating profit led to lower income taxes paid, with
a positive effect on the cash flow from operating activities. On
the other hand, the fine of €870 million paid in conclusion of
the administrative offense proceedings against Daimler AG had
a negative effect.
Cash used for investing activities 7 B.24 amounted to
€10.6 billion (2018: €9.9 billion). The change compared with
the previous year primarily reflects cash outflows (net) of
€0.7 billion relating to the merger of the mobility services of
Daimler Group and BMW Group. The main effect resulted from
capital increases at the joint ventures. Furthermore, increased
investments in intangible assets also affected cash used for
investing activities. However, positive effects resulted from the
acquisition and sale of marketable debt securities and similar
investments conducted in the context of liquidity management.
Compared to the previous year, there were higher total cash
inflows (net) in 2019.
Cash provided by financing activities 7 B.24 amounted
to €5.6 billion (2018: €13.2 billion). The decrease was primarily
caused by lower net cash inflows from financing liabilities,
especially in the context of refinancing the leasing and sales-
financing business. There was also an impact from the intro-
duction of lessee accounting and the associated inclusion in the
cash flow from financing activities of payments on outstanding
leasing liabilities.
Cash and cash equivalents increased by €3.0 billion compared
with December 31, 2018, after taking currency-translation
effects into account. Total liquidity, which also includes market-
able debt securities and similar investments, increased by €2.1
billion to €27.5 billion.
B.24
Condensed statement of cash flows
In millions of euros
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 79
Consolidated
Industrial Business
Daimler Mobility
2019
Change in operating assets and liabilities
-10,701
Inventories
99
5,641
877
5,789
1,067
-148
-190
Dividends received from equity-method investments
1,202
1,380
1,201
1,304
1
76
-2,817
Income taxes paid
-2,858
-959
-1,698
-1,148
-1,160
Cash used for/provided by operating activities
7,888
343
12,985
12,915
-5,097
-12,572
Additions to property, plant and equipment and intangible assets
-2,107
-1,706
1,208
550
-3,850
1
-3,738
98
-112
-346
-884
-410
-779
64
-105
Trade payables
Receivables from financial services
Vehicles on operating leases
Other operating assets and liabilities
-1,625
1,694
-1,651
1,723
26
-29
-4,664
-10,257
-8
-7
-4,656
-10,250
-1,156
-1,609
Trade receivables
Table 71 B.27 shows for each of the automotive segments the
reconciliation from CFBIT to adjusted CFBIT, as well as the
adjusted cash conversion rate.
To the extent that the Group's internal refinancing of the finan-
cial services business is provided by the companies of the
industrial business, this amount is deducted in the calculation
of the net debt of the industrial business.
Reconciliation CFBIT to adjusted CFBIT of the automotive segments
888
901
13,913
15,077
14,801
15,978
Intangible assets
At December 31,
2018
2019
2018
2019
2018
2019
At December 31,
At December 31,
Daimler Mobility
Industrial Business
Consolidated
Assets
In millions of euros
financial position
Condensed statement of
B.35
cash and cash equivalents. In addition, the recognition and
measurement of right-of-use assets due to changed lessee
accounting led to an increase in property, plant and equipment
(see Note 11 of the Notes to the Consolidated Financial
Statements). On the liabilities side of the balance sheet, there
were increases primarily in financing liabilities (including liabili-
ties from lease contracts) and provisions, while equity decre-
ased compared with December 31, 2018. Table 7 B.35 shows
the condensed statement of financial position for the Group as
well as for the industrial business and Daimler Mobility.
The increase in total assets primarily reflects the higher
volume of the financial services business as well as increased
The balance sheet total increased compared with December 31,
2018 from €281.6 billion to €302.4 billion; the increase inclu-
des effects from currency translation of €3.1 billion. Adjusted
for the effects of currency translation, the increase amounts
to €17.7 billion. Daimler Mobility accounts for €174.8 billion of
the balance sheet total (2018: €165.3 billion), equivalent to
58% of the Daimler Group's total assets (2018: 59%).
Financial Position
Property, plant and equipment
B❘ COMBINED MANAGEMENT REPORT | FINANCIAL POSITION
37,143
36,782
28,420
29,489
29,757
Inventories
209
1,107
96,830
103,749
-90
4,651
4,842
4,860
5,949
Equity-method investments
-88
96,740
103,661
Receivables from financial services
30,967
32,683
18,509
18,799
49,476
51,482
Equipment on operating leases
89
361
30,859
30,948
28,096
86
Moody's Investors Service (Moody's) downgraded its long-
term credit rating for Daimler AG and its subsidiaries included
in the rating from A2 to A3 on December 13, 2019. The outlook
was changed to "negative." The short-term rating was down-
graded to P-2. Moody's explained this step with Daimler's
reduced earnings guidance for the coming years and the addi-
tionally anticipated restructuring costs from the announced
efficiency program. Moody's also sees challenges in the
changeover of the product portfolio to battery-electric vehi-
cles, as well as from a potential general decline in demand for
light vehicles.
The European rating agency Scope Ratings (Scope) confirmed
its issuer rating of A for Daimler AG and its financing com-
panies on December 17, 2019. Scope assumes that Daimler
will continue to maintain its leading market position with
Mercedes-Benz Cars and Daimler Trucks. The Group's diversi-
fied global presence also supports the rating. Daimler's
financial risk profile in view of the significant surplus liquidity
continues to be a key factor for the rating.
On May 21, 2019, Fitch Ratings (Fitch) affirmed its long-term
issuer default rating for Daimler AG of A- with a stable outlook.
Fitch emphasized Daimler's strong business profile and the
leading positions of its automotive divisions. At the same time,
Fitch upgraded its short-term rating from F2 to F1. This step
was taken with reference to the Group's good financial situa-
tion and financial flexibility.
The credit ratings of Daimler AG changed in 2019 with four of
the agencies we have engaged to provide ratings. Moody's and
S&P downgraded their short-term and long-term ratings by
one notch. Both agencies changed the outlook from "stable" to
"negative." DBRS also changed the trend on the long-term rating
from "stable" to "negative.” With Fitch, our short-term rating
was upgraded by one notch to F1. 7 B.34
Credit ratings
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 85
Note 33 also provides information on the maturities of the
other financial liabilities.
Detailed information on the amounts and terms of the main
items of financing liabilities is provided in Notes 24 and 33
of the Notes to the Consolidated Financial Statements.
At December 31, 2019, the total of financial liabilities shown in
the consolidated statement of financial position amounted to
€161.8 billion (2018: €144.9 billion).
The carrying values of the main refinancing instruments and
the weighted average interest rates are shown in table 7 B.32.
At December 31, 2019, they are mainly denominated in the
following currencies: 42% in euros, 27% in US dollars, 8% in
Chinese renminbi, 4% in British pounds, 3% in Canadian
dollars and 3% in Japanese yen.
At the end of 2019, Daimler had unutilized short- and long-term
credit lines totaling €28.1 billion (2018: €26.8 billion).
Since July 2018, Daimler has had at its disposal a syndicated
credit facility with a volume of €11 billion from a consortium of
international banks. After the exercise of an extension option
of one year beyond the original term, it grants Daimler addi-
tional financial flexibility until 2024. The term can be extended
for another year until 2025. Daimler does not intend to utilize
the credit line.
Bank credit was another important source of refinancing in
2019. Loans were provided by globally active banks as well as
by nationally operating banks. The lenders also included supra-
national banks such as the European Investment Bank and the
Brazilian Development Bank.
In 2019, asset-backed securities (ABS) were issued in five
countries worldwide. In the United States, a total refinancing
volume of USD 8.7 billion was generated in six transactions,
and in Canada, a total volume of CAD 1.0 billion in two transac-
tions. In Australia, two transactions were conducted in a total
volume of AUD 1.26 billion. For the first time, €0.5 billion was
successfully placed with investors in Italy. Furthermore, an
ABS transaction with a volume of CNY 8.5 billion was placed in
China.
Daimler also issued small volumes of commercial paper in
2019.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
84
Daimler AG
Daimler AG
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler International
Finance B.V.
Daimler International
Finance B.V.
Nov. 2031
Mai. 2027
Nov. 2019
Nov. 2019
€1,250 million
€1,000 million
Nov. 2023
Nov. 2019
€1,750 million
Aug. 2029
Aug. 2019
On December 12, 2019, S&P Global Ratings (S&P) lowered its
long-term issuer rating for Daimler AG from A to A-. The out-
look was assessed as “negative." The short-term rating was
altered from A-1 to A-2. S&P explained this action primarily
with Daimler's significantly reduced earnings guidance. In addi-
tion, S&P believes Daimler remains exposed to multiple head-
winds. They include the transition of its product portfolio to
electric vehicles, the challenge of complying with stricter Euro-
pean CO2 targets, geopolitical risks for world trade, intensify-
ing competition and the execution of Daimler's planned
restructuring program.
The Canadian agency DBRS confirmed its long-term rating for
Daimler AG at A in a press release on November 28, 2019.
However, the trend was changed from “stable” to "negative."
DBRS stated that this change reflects Daimler's recently
weaker earnings and the structural headwinds in our core auto-
motive business. The trend on the short-term rating of R-1
(low) was maintained at “stable."
B.34
Long-term credit rating
S&P
Moody's
Fitch
Scope
DBRS
R-1 (low)
R-1 (low)
S-1
S-1
F2
F1
P-1
P-2
A-1
A-2
Short-term credit rating
A
A
A
A
A-
A-
A2
A3
A
A-
End of 2019 End of 2018
Scope
DBRS
Fitch
Moody's
S&P
Credit ratings
US$500 million
1,337
Trade receivables
12,707
Trade payables
62,898
64,672
25,764
34,507
99,179
thereof non-current
77,233
83,819
-20,993
-21,218
56,240
62,601
thereof current
140,131
148,491
4,771
13,289
144,902
161,780
Financing liabilities
1,013
12,810
14,983
1,179
21,942
29,473
14,185
22,955
11,896
811
B.27
174,821
116,303
127,617
281,619
302,438
Total equity and liabilities
212
Liabilities held for sale
392
5,325
4,918
5,638
10,761
10,963
Other liabilities
12,146
13,239
12,519
13,631
Contract and refund liabilities
790
4,144
3,640
5,888
6,224
10,032
9,864
Other financial liabilities
13,395
1,393
30,652
53,243
493
465
8,362
7,420
8,855
7,885
thereof current
1,213
1,133
8,364
7,522
9,577
8,655
Marketable debt securities and similar investments
3,054
2,731
12,799
16,152
15,853
18,883
Cash and cash equivalents
2,041
1,287
10,545
11,045
12,586
12,332
thereof non-current
Provisions
770
6,083
47,858
66,053
62,841
Equity
Equity and liabilities
165,316
174,821
116,303
127,617
281,619
302,438
Total assets
531
9,649
10,166
18,452
19,366
-12,719
1,376
-13,283
2,349
720
668
2
102
722
5,733
11,025
531
Assets held for sale
12,515
Other assets
Other financial assets
Jun. 2024
88,662
US$750 million
579
+2,108
-16,878
-144,902
25,430
-922
9,577
8,655
27,538
-161,780
+3,030
15,853
18,883
19/18
Change
Dec. 31,
2018
Dec. 31,
2019
-5,291
16,288
-7,802
-4,875
-12,677
10,997
+716
-104
612
-8,518
-4,771
-13,289
+2,511
21,163
23,674
-97
-842
+676
-161,201
In millions of euros
Investment in property, plant and
equipment by division
B.31
2019
2018
2017
2016
2015
0
1
2
3
4
5
6
7
8
In billions of euros
Investment in property, plant and equipment
B.30
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES
82
-14,094
-16,202
-144,999
-119,569
-133,663
Net debt
Financing liabilities
(nominal)
2019
8,364
+3,353
284
2,463
5,841
4,634
300
399
2,431
1,135
482
653
3,499
300
-83
2,431
851
EBIT adjusted
CFBIT adjusted
Legal proceedings (and related measures)
CFBIT
Sum
automotive
segments
Daimler
Buses
Mercedes-
Benz Vans
Daimler
Trucks
Mercedes-
Benz Cars
2019
In millions of euros
Aug. 2019
283
7,522
8,871
0.3
12,799
16,152
Change
19/18
2018
2019
Dec. 31,
Dec. 31,
Cash and cash equivalents
Marketable debt securities
and similar investments
Liquidity
Financing liabilities
Market valuation and
currency hedges for
financing liabilities
In millions of euros
Net debt of the Daimler Group
B.29
Cash and cash equivalents
Marketable debt securities
and similar investments
Liquidity
Financing liabilities
Market valuation and
currency hedges for
financing liabilities
Financing liabilities
(nominal)
Net liquidity
In millions of euros
Net liquidity of the industrial business
B.28
Net debt at Group level, which primarily results from refinancing
the leasing and sales-financing business, increased compared
with December 31, 2018 by €14.1 billion to €133.7 billion. The
effect resulting from the introduction of lessee accounting is
€3.4 billion. 7 B.29.
Due to the introduction of lessee accounting according to
IFRS 16 and the associated recognition of leasing liabilities,
the net liquidity of the industrial business decreased by €3.2
billion to €13.1 billion at January 1, 2019. Since the beginning
of the year, net liquidity decreased by a further €2.1 billion to
€11.0 billion. The main driver of the decrease in net liquidity
was the dividend payment to Daimler AG shareholders, which
was only partly offset by the positive free cash flow of the
industrial business.
373
5,843
212
165,316
The net liquidity of the industrial business 71 B.28 is calcu-
lated as the total amount as shown in the statement of finan-
cial position of cash, cash equivalents and the marketable debt
securities and similar investments included in liquidity man-
agement, less the currency-hedged nominal amounts of financ-
ing liabilities.
In 2019, the free cash flow of the Daimler Group led to a cash
outflow of €4.8 billion (2018: €10.2 billion). Besides the effects
of the free cash flow of the industrial business, the free cash
flow of the Daimler Group is mainly affected by the leasing and
sales-financing business of Daimler Mobility. Additional effects
resulted from the cash outflows (net) relating to the merger of
the mobility services of Daimler Group and BMW Group.
The adjustments from legal proceedings include all payments
by the automotive segments in connection with ongoing gov-
ernmental and legal proceedings and related measures taken
with regard to Mercedes-Benz diesel vehicles.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 81
1 Cash conversion rate adjusted is the relationship of CFBIT adjusted to EBIT adjusted.
1.1
1.4
1.0
Cash conversion rate adjusted¹
2018
1,504
% change
Daimler International
Finance B.V.
Maturity
Month of
emission
Volume
Issuer
Daimler AG
Daimler AG
Daimler AG
Daimler AG
Benchmark issuances
B.33
In the Chinese market, Daimler placed four so-called panda
bonds with a total volume of CNY 10.0 billion. In addition, a
large number of smaller bonds were issued in various curren-
cies and markets.
In the year under review, the Group covered its refinancing
requirements mainly through the issuance of bonds. A large
proportion of those bonds were placed in the form of so-called
benchmark issuances (bonds with high nominal volumes) in the
US dollar and euro markets. 7 B.33
The monetary policy of the central banks also affected the situ-
ation in the bond markets significantly in the reporting period.
The high volumes of available liquidity meant that risk premi-
ums for companies with investment-grade credit ratings largely
remained moderate.
Various issuance programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €70 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market pro-
grams exist, which are significantly smaller than the EMTN pro-
gram. Capital-market programs allow flexible, repeated access
to the capital markets.
The funds raised by Daimler in the year 2019 primarily served
to refinance the leasing and sales-financing business. For
that purpose, Daimler made use of a broad spectrum of vari-
ous financing instruments in various currencies and markets.
They include bank loans, commercial paper in the money mar-
ket, bonds with medium and long maturities, promissory-note
loans, customer deposits at Mercedes-Benz Bank, and the
securitization of receivables from customers in the financial
services business (asset-backed securities).
Refinancing
13,119 11,774
0.58
0.50
Deposits in the direct
banking business
39,811 39,400
3.73
2.68
financial institutions
Liabilities to
99,557 88,942
€1,500 million
2.24
Feb. 2019
Daimler International
Finance B.V.
Aug. 2022
19/18
Aug. 2019
US$1,250 million
Feb. 2022
Aug. 2019
US$1,500 million
Aug. 2034
Feb. 2030
Nov. 2026
Feb. 2024
Aug. 2019
Aug. 2019
Aug. 2019
Aug. 2019
Feb. 2019
US$500 million
€750 million
€1,000 million
€750 million
€500 million
Daimler Finance North
America LLC
Feb. 2024
Feb. 2019
US$600 million
Daimler Finance North
America LLC
Feb. 2022
Feb. 2019
US$1,900 million
Daimler Finance North
America LLC
Jun. 2026
Feb. 2031
Feb. 2019
Feb. 2019
€1,000 million
€750 million
Feb. 2023
2.03
Feb. 2029
In millions of euros
144
134
Daimler Buses
3.4
1.6
in % of revenue
-49
468
240
Mercedes-Benz Vans
2.9
2.4
in % of revenue
-7
-12
971
Daimler Trucks
6.1
6.0
in % of revenue
5,684
5,629
7,534
4.5
4.2
in % of revenue
Mercedes-Benz Cars
Daimler Group
Notes/bonds and
liabilities from
ABS transactions
7,199
1,105
in % of revenue
-1
3.2
Carrying values
Dec. 31,
2018
2019
2.8
in %
2018
Dec. 31,
Average interest rates
Dec. 31, Dec. 31,
2019
B.32
Furthermore, we capitalized development costs of €3.1 billion
in 2019 (2018: €2.5 billion); this is presented under intangible
assets in Note 10.
Trucks amounted to €1.0 billion (2018: €1.1 billion). At the
Mercedes-Benz Vans division, the focus of investment was on
the further electrification of the Sprinter, Vito and V-Class
model series. The main investments at Daimler Buses last year
were in new products and the modernization of the production
network.
B❘ COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 83
At Mercedes-Benz Cars, investments in property, plant and
equipment remained at the very high level of €5.6 billion in
2019 (2018: €5.7 billion), primarily due to the ongoing product
offensive. The most important projects included the successor
generation of the current C-Class and the product ramp-up
of the new GLE sports utility vehicle. We also made substantial
investments in the reorganization of our German production
facilities as competence centers, in the expansion of our inter-
national production network, and in the worldwide production
network for electric mobility. The main areas of investment at
Daimler Trucks in 2019 were successor generations for existing
products, new products, global component projects and the
optimization of the worldwide production and sales network.
Total investment in property, plant and equipment at Daimler
At December 31, 2019, financial obligations of €3.7 billion exist
in connection with future investments in property, plant and
equipment (2018: €4.3 billion).
In the context of our strategy of strengthening our core busi-
ness and with the transformation of the automotive industry, we
aim to make good use of the opportunities presented by the
global automotive markets. In this context, we always focus on
the dynamically changing wishes of our customers. We there-
fore aim to play a major role in shaping the fundamental techno-
logical change taking place in the automotive industry. This
applies in particular to the electrification of our product range
and the digital connectivity of our products and processes at all
stages of the value chain. Achieving this goal will continue to
require substantial investments in innovative products and new
technologies, as well as in the expansion of our worldwide pro-
duction network. In 2019, our investments in property, plant and
equipment - as already announced in Annual Report 2018 -
once again reached the very high level of €7.2 billion (2018: €7.5
billion).
Refinancing instruments
+36
87
Investments
in % of revenue
0.3
64
Contingent liabilities and other financial
obligations
0.2
At December 31, 2019, the best estimate for potential obligations
from contingent liabilities is €1.6 billion (2018: €0.8 billion).
In the context of its ordinary business operations, the Group
has also entered into other financial obligations in addition
to the liabilities shown in the consolidated statement of finan-
cial position at December 31, 2019. These financial obligations
result from contractual commitments to acquire intangible
assets, property, plant and equipment and leased property,
and irrevocable loan commitments.
Detailed information on contingent liabilities and other finan-
cial obligations is provided in Note 31 of the Notes to the
Consolidated Financial Statements.
Daimler Mobility
-4
28
Integrity as a guiding principle
our corporate strategy
Economic Conditions and
Sustainability as an integral part of
26
The role of Daimler AG
Mercedes-Benz Cars strategy
26
333727 ±
44
43
43
39
Declaration on Corporate Governance
Financial performance measures
Key performance indicators
Combined
Mercedes-Benz Vans strategy
Performance measurement system
Management Report with
Non-Financial Statement
35
44
Daimler Trucks & Buses strategy 2030
34
22233
58
Liquidity and capital resources
53
Important events
Profitability
52
Capital Resources, Financial Position
Profitability, Liquidity and
50
47
46
45
SRAG
Investment and research activities
Business development
32
Automotive markets
30
The world economy
27
45
Business Development
26
Daimler Mobility strategy 2025
Business model
40
B
AB
09
To Our
Shareholders
ANNUAL REPORT 2020 | CONTENTS 5
Contents
For more information: www.daimler.com
Daimler AG is one of the world's most successful automotive companies. With its Mercedes-Benz Cars & Vans,
Daimler Trucks & Buses and Daimler Mobility divisions, the Group is one of the leading global suppliers of
premium and luxury cars and one of the world's largest manufacturer of commercial vehicles. Daimler Mobility
offers financing, leasing, fleet management, investments and insurance brokerage, as well as innovative
mobility services.
ATHLON
Financial Services
Daimler Truck Financial
Corporate
Governance
Mercedes-Benz
SETRA
WESTERN STAR
FUSO
BUILT BUSES
M
FREIGHTLINER
Mercedes me
Financial position
MERCEDES-EQ
MAYBACH
Mercedes-Benz Bank
21766
Combined
Management Report with
Non-Financial Statement
0312222
14
Daimler and the Capital Market
Objectives and Strategy
Report of the Supervisory Board
The Supervisory Board
The Board of Management
09
Shareholders
To Our
Letter from the CEO
A
ANNUAL REPORT 2020 | CONTENTS
6
Visually impressive, radically easy to operate and extremely eager to learn: The MBUX
Hyperscreen is one of the highlights of the EQS. It epitomizes the emotional intelligence
of the all-electric luxury-class model. The large, curved display unit sweeps across
almost the entire width between the two A-pillars. This aesthetic, high-tech appeal is the
emotional dimension of the MBUX Hyperscreen. Supported by artificial intelligence (AI) and
adaptive software, the display and operating concept completely adapts to its user and
makes personalized suggestions for numerous functions.
Cover photo
Annual Report 2020
DAIMLER
253
Information
Further
E
136 CDT
Consolidated Financial
Statements
35
Corporate Profile
66
Industry and business risks and opportunities
(condensed version according to HGB)
147
Germany's law on the equal participation of
women and men in executive positions
129
opportunity situation
Overall assessment of the risk and
144
Supervisory Board and its committees
125
Legal and tax risks and opportunities
Composition and mode of operation of the
Overall requirement profiles for the
123
143
Composition and mode of operation of the
Board of Management
121
Company-specific risks and opportunities
116
141
corporate governance
116
Risks and opportunities
The main principles and practices of
Financial risks and opportunities
Outlook
The world economy
Automotive markets
8
AMG
134
Overall statement on future development
134
CO2 emissions of the new-car fleet in Europe
134
Investment and research activities
133
Dividend
133
132
132
131
153
148
Shareholders and the Shareholders' Meeting
130
composition of the Board of Management
and the Supervisory Board
130
Free cash flow and liquidity
Revenue and earnings
Unit sales
114
Daimler AG
Risk and opportunity management system
Corporate Governance Code
Economic Situation
Overall Assessment of the
82
80
77
76
72
NNN
72
Integrity and compliance
88
Social issues
Environmental issues
Sustainability at Daimler
Non-Financial Declaration
71
71
Outlook
70
Financial position, liquidity and capital resources
Risks and opportunities
69
Profitability
69
Employee issues
Events after the Reporting Period
88
ANNUAL REPORT 2020 | CONTENTS
Declaration of compliance with the German
114
Risk and Opportunity Report
140
Declaration on Corporate Governance
110
and Explanation
137
Report of the Audit Committee
Takeover-Relevant Information
136
Corporate
Governance
C
108
106
89
80% 0%
Remuneration of the Supervisory Board
Commitments upon termination of service
financial year 2020
Principles of Board of Management remuneration
Board of Management remuneration in
Remuneration Report
7
140
Our Brands
-109
4
Mercedes-Benz Cars & Vans
2020/2019
% change
3
2019
2020
ANNUAL REPORT 2020 | KEY FIGURES FOR THE DIVISIONS
€ amounts in millions
Key Figures for the Divisions.
DAIMLER
1 Adjusted for the effects of currency translation, revenue decreased by 9%.
Unit sales
-3
288,481
Employees (December 31)
-11
9,662
8,614
Research and development expenditure
-20
7,199
5,741
Investment in property, plant and equipment
298,655
Revenue
EBIT
Adjusted EBIT
0.3
1.2
Adjusted cash conversion rate¹
+308
1,939
7,917
598
7,048
5.8
6.9
-0.1
5.2
+11
6,151
6,802
-8
-13
2,823,818
106,897
2,461,884
98,576
5,172
Adjusted CFBIT
CFBIT
Adjusted return on sales (in %)
Return on sales (in %)
+62
Investment in property, plant and equipment
10,997
Net liquidity of the industrial business (December 31)
3,344,951
2,840,402
Dividend per share (in €)
Earnings per share (in €)
Net profit
Adjusted EBIT
EBIT
Revenue
Unit sales
% change
-15
2020/2019
2020
€ amounts in millions
Key Figures for the Daimler Group
ANNUAL REPORT 2020 | KEY FIGURES FOR THE DAIMLER GROUP
2
Annual Report 2020
46
48
DAIMLER
ANNUAL REPORT 2020 | CONTENTS
2019
154,309
172,745
-111
+238
2,709
9,155
Adjusted free cash flow of the industrial business
+504
1,368
8,259
Free cash flow of the industrial business
+50
0.90
1.35
+53
2.22
3.39
+48
2,709
4,009
-16
10,276
8,641
+53
4,313
6,603
17,855
ANNUAL REPORT 2020 | OUR BRANDS
4,862
-17
-3
28,646
27,699
Adjusted return on equity (in %)
Return on equity (in %)
Adjusted EBIT
EBIT
Revenue
Daimler Mobility
-2
1,436
101,639
Employees (December 31)
+41
76
107
thereof capitalized
-12
1,689
1,488
Research and development expenditure
-29
99,640
2,140
-33
1,595
1 The adjusted cash conversion rate is the ratio of adjusted CFBIT to adjusted EBIT.
-8
12,680
11,650
Employees (December 31)
-55
87
39
Investment in property, plant and equipment
-8
162,843
150,553
Contract volume (December 31)
-9
74,377
67,786
New business
13.1
10.9
15.3
9.8
-13
1,827
1,105
5,869
789
1.0
Revenue
-27
521,133
378,518
Unit sales
Daimler Trucks & Buses
-4
177,187
170.515
Employees (December 31)
EBIT
-24
104
CO2 emissions of our total passenger new car fleet in Europe
-20
3,000
2,391
thereof capitalized
-11
8,061
7,199
Research and development expenditure
137
Adjusted EBIT
Return on sales (in %)
Adjusted return on sales (in %)
3.7
Adjusted cash conversion rate¹
-5
2,654
2,513
Adjusted CFBIT
-5
2,654
2,513
CFBIT
6.0
2.0
6.0
1.5
-75
2,672
678
-80
2,672
525
-22
44,429
34,671
Investment in property, plant and equipment
D
BHARATBENZ
Financial
239
36. Earnings per share
239
37. Related-party disclosures
240
38. Remuneration of the members of the Board of
35. Capital management
Management and the Supervisory Board
39. Auditor fees
242
40. Events after the reporting period
242
41. Additional information
242
241
235
34. Segment reporting
226
209
26. Deferred income
209
27. Contract and refund liabilities
210
28. Other liabilities
210
29. Consolidated statement of cash flows
211
30. Legal proceedings
212
31. Contingent liabilities and other financial obligations 215
32. Financial instruments
216
33. Management of financial risks
A | TO OUR SHAREHOLDERS | CONTENTS
25. Other financial liabilities
A
Letter from the CEO
27
28
30
32
34
9
26
10
"We will build
the world's most
desirable cars."
Ola Källenius,
Chairman of the Board of Management
of Daimler AG
Consolidated
A❘ TO OUR SHAREHOLDERS | LETTER FROM THE CEO
22233
Daimler Trucks & Buses strategy 2030
Daimler Mobility strategy 2025
Mercedes-Benz Vans strategy
The Board of Management
Report of the Supervisory Board
The Supervisory Board
Daimler and the Capital Market
Objectives and Strategy
The role of Daimler AG
10
13
14
32222
26
26
Sustainability as an integral part of
our corporate strategy
Integrity as a guiding principle
Mercedes-Benz Cars strategy
To Our
Shareholders
209
@
208
157
Consolidated Statement of Cash Flows
158
Consolidated Statement of Changes
in Equity
159
24. Financing liabilities
Notes to the Consolidated
1. Significant accounting policies
161
161
2. Accounting estimates and management judgments 175
3. Consolidated Group
177
Financial Statements
Consolidated Statement of Financial
264
Ten-Year Overview
Statements
154
E
Further
Information
253
Consolidated Statement of Income
155
Responsibility Statement
254
Consolidated Statement of
Independent Auditor's Report
255
Comprehensive Income/Loss
156
4. Revenue
5. Functional costs
Position
180
16. Other financial assets
197
17. Other assets
197
18. Inventories
198
19. Trade receivables
198
20. Equity
200
21. Share-based payment
201
22. Pensions and similar obligations
203
179
15. Marketable debt securities and similar investments 197
194
23. Provisions for other risks
190
6. Other operating income and expense
181
7. Other financial income/expense, net
182
14. Receivables from financial services
182
9. Income taxes
8. Interest income and expense
182
186
11. Property, plant and equipment
187
12. Equipment on operation leases
189
13. Equity-method investments
10. Intangible assets
ACTUAL
financial
targets
200%
ACTUAL
salary
salary
Maximum
200% of
the base
The granting of non-cash benefits in kind, primarily expenses
for security precautions and the provision of company cars,
resulted in taxable benefits for the members of the Board of
Management in 2020 as shown in table B.53.
Maximum
200% of
175
200
(short- and medium-term variable remuneration of the
Board of Management members active at year-end)
Annual bonus
B.50
122%
the base
Maximum
125
Maximum
50%
FCF IB
50%
EBIT
0
25
44%
50
25% of
ACTUAL
100
150
the base
salary
the base
10% of
75
Taking into account the voluntary agreement on the part of the
Board of Management to forgo 20% of their base salary from
April 1 to December 31, the total remuneration of the Board of
Management for financial year 2020 amounts to €28.1 million
(2019: €24.2 million). Of that total, €7.8 million was fixed, that
is, non-performance-related remuneration (2019: €8.9 million),
€11.1 million (2019: €2.0 million) was short-term and medium-
term variable performance-related remuneration (annual
bonus with deferral), and €9.2 million was variable perfor-
mance-related remuneration granted in the financial year with
a long-term incentive effect (2019: €13.3 million). 7 B.52
Malus/clawback
For both of the share-based components - the second 50% of
the annual bonus and the PPSP with a long-term orientation -
the amounts actually paid out can deviate significantly from
the values described depending on the development of the
Daimler share price and on the achievement of the relevant
target parameters. Upward deviation is possible only as far as
the maximum limits described above. Both components can
also be zero.
Performance parameters for Plan 2020
The terms governing the PPSP include a provision that allows
for the partial reduction or complete elimination of the annual
bonus for any member of the Board of Management who
clearly violates the principles laid down in the Company's
Integrity Code or any other professional obligations, prior to
the payout of the plan proceeds. The Supervisory Board has
the final decision on all such bonus reductions.
The value of the phantom shares to be paid out depends on
target achievement measured according to the criteria
described below and on the share price relevant for the pay-
out. This final amount paid is limited to 2.5 times the value
when granted at the beginning of the plan. This maximum
amount also includes the dividend equivalent paid out during
the four-year plan period.
The value of the phantom shares to be paid out after the con-
clusion of the plan period depends on target achievement mea-
sured according to the criteria described below and on the
share price relevant for the payout. This share price is limited
to 2.5 times the share price at the beginning of the plan. In
addition, the amount to be paid out is limited to 2.5 times the
absolute euro amount specified at the beginning of the plan,
which is relevant for the preliminary number of phantom
shares allocated. This maximum amount also includes the divi-
dend equivalent paid out during the four-year plan period.
During the four-year period between the allocation of the pre-
liminary phantom shares and the payout of the plan proceeds,
the phantom shares earn a dividend equivalent in the amount
of the actual dividend paid on ordinary Daimler shares.
Value of the phantom shares on payout
50% relates to the Group's return on sales in a three-year
comparison with a group of competitors comprising listed
vehicle manufacturers with an automotive component of
more than 70% by revenue and an investment-grade credit
rating (BMW, GM, Honda, Hyundai, Isuzu, Kia, Mazda, Nis-
san, Paccar, PSA Peugeot Citroen, Renault, Subaru, Suzuki,
Toyota, Volvo and Volkswagen). For the measurement of suc-
cess, the competitors' average return on sales is calculated
over a period of three years. Target achievement occurs to
the extent to which Daimler's return on sales deviates by a
maximum of +/-2 percentage points from 105% of the calcu-
lated average of the competitors.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
Determined annually by the Supervisory Board; for 2020,
approximately 1.4 times the base salary.
Value upon allocation
A dividend equivalent is applied for each phantom share held if
a dividend is paid out for Daimler shares in the respective year.
The amount of the dividend equivalent is based on the dividend
that is paid out during the respective year for an actual share
in the Company. During the performance period, it is granted
for the preliminary number of phantom shares that have been
allocated; in the year of the retention period, it is granted for
the final number of phantom shares.
Also at the beginning of the plan, performance targets are set
for a period of three years (performance period). Depending on
the achievement of these performance targets with a possible
range of 0% to 200%, after three years the phantom shares
allocated at the beginning of the plan are converted into the
final number of phantom shares allocated. After another plan
year has elapsed (retention period), the amount to be paid out
is calculated from this final number of phantom shares and the
applicable share price at that time. The share price relevant for
the payout under this plan is also relevant to allocating the pre-
liminary number of phantom shares for the plan newly issued
in the respective year. 7 B.48 7 B.49
The Performance Phantom Share Plan (PPSP) is a variable
element of remuneration with long-term incentive effects. At
the beginning of the plan, the Supervisory Board specifies a
grant value (absolute amount in euros) in the context of setting
the individual annual target remuneration. This amount is
divided by the relevant average price of Daimler shares calcu-
lated over a predefined long period of time, which results in
the preliminary number of phantom shares allocated.
Agreements have been reached with all the members of the
Board of Management allowing for the partial reduction or
complete elimination of the annual bonus for any member who
violates the duties of Section 93 of the German Stock Corpora-
tion Act (AktG) or in particular the principles laid down in the
Company's Integrity Code. If it is not possible to reduce a
future bonus payment or a payment that has yet to be made,
the Board of Management member in question will be required
to pay back the amount of the bonus reduction. The Supervi-
sory Board has the final decision on all such bonus reductions.
96
- Target achievement of 100% only occurs when the average
return on sales of the Daimler Group reaches 105% of the
revenue-weighted average return on sales of the group of
competitors. Maximum target achievement of 200%
occurs if Daimler's return on sales exceeds 105% of the
revenue-weighted average of the competitors by 2 per-
centage points or more. An additional limitation was
implemented starting with PPSP 2015: If a target achieve-
ment of between 195% and 200% occurs, the maximum
target achievement calculated from the performance
parameter of return on sales compared to the group of
competitors will only be deemed to be 200% if the actual
return on sales for Daimler's automotive business reaches
at least the strategic target for return on sales in the third
year of the performance period. Otherwise, target
achievement will be limited to 195%.
- Target achievement of 0% occurs if Daimler's return on
sales is 2 percentage points or more lower. In the devia-
tion range of +/- 2 percentage points, target achievement
varies in proportion to the deviation.
50% relates to "relative share performance," i.e. the perfor-
mance of Daimler's share in a three-year comparison with
the performance of the defined group of competitors (index).
If the performance of Daimler's share (in percent) is the
same as that of the index (in percent), target achievement is
deemed to be 100%. If the performance of Daimler's share
price (in percent) is 50 percentage points or more below
(above) the performance of the index, target achievement is
deemed to be 0% (200%). In the deviation range of +/- 50
percentage points, target achievement varies in proportion
to the deviation.
the taxable non-cash benefits in 2020.
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2020, and
the half of the medium-term share-based component of the
annual bonus for 2020 payable in 2022 with its value at the
end of the reporting period (entitlement depending on the
development of Daimler's share price compared with the
STOXX Europe Auto Index),
the half of the annual bonus for 2020 payable in 2021 and
measured as of the end of the reporting period,
the base salary in 2020,
-
The total remuneration granted by Group companies (excluding
retirement benefit commitments) to the members of the Board
of Management of Daimler AG is calculated as the total of the
amounts of
Board of Management remuneration in 2020 pursuant to
Section 314 Subsection 1 No. 6 of the German Commercial
Code (HGB)
Board of Management remuneration in financial
year 2020
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT 97
As a supplement to these three components of remuneration,
"Stock Ownership Policies" exist for the Board of Manage-
ment. These policies require the members of the Board of
Management to purchase Daimler shares over several years
and to hold those shares until the end of their Board of Man-
agement membership. The number of shares to be held is set
between 20,000 and 75,000. In fulfillment of the policies, up
to 25% of the gross remuneration out of each Performance
Phantom Share Plan is generally to be used to acquire ordinary
shares in the Company, but the required shares can also be
acquired in other ways.
Policies for share ownership
zero.
0 to 200%, that is, the plan has an upper limit. It may also be
Range of possible target achievement
The possible upper limits with regard to the annual bonus and
the PPSP are shown in tables 7 B.50 and 7 B.51
Non-
financial
targets
Performance factor
0% - 200% (from
which is derived
the final number of
phantom shares
with the share price
at beginning of plan)
targets
€42.73)
(2020: at share price
Value when
granted
Number
Medium-term
variable remuneration (PPSP)
(2019: at share price
€50.00)
Total
Short and medium-term variable
remuneration (annual bonus)
Short-term
Base salary1
In thousands of euros
Board of Management remuneration in 2020
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
B.52
Long-term
98
Ola Källenius²
1,415
The total amount to be paid out from the annual bonus is lim-
ited to 2 times the base salary of the respective financial year.
Martin Daum
3,525
1,849
36,982
168
2020
168
2019
5,917
2,038
47,702
1,232
1,232
1,340
1 Amount paid out including dividend-equivalent payments of PPSP 2016.
at end of plan
€46.12)
Overall target
achievement
final number of
phantom shares
times share price
achievement, the total cap' applies.
With more than 250% target
of the grant value
Maximum
theoretically 500%
148%
ment
Maximum
250%
achieve-
ACTUAL
20%
ACTUAL
6%
salary
(long-term variable remuneration 7 B.55)
PPSP 2016 (paid in 2020)
B.51
Actual
total target
500
450
400
Development of
Daimler share price
from beginning
until end of plan,
maximum 2.5 times
the issue price
(share price in €)
200%
Maximum
Grant value (from
which is derived
the preliminary
number of phantom
shares with the
share price at
beginning of plan
€67.34)
0
50
ACTUAL
51%
ACTUAL
68%
ACTUAL
75%
ACTUAL
100%
150
100
200
250
300
350
Trans-
formation
Limit for the annual bonus
deduction
Share purchase obligation of up to 25% of the gross remuneration until the
defined number of shares (between 20,000 and 75,000) has been purchased
(shares to be held until the end of the term of service)
achievement
Addition or
Degree of target
Quality
B.45
≤60%
deduction
-2.5%
61-70%
1.0%
Average
71-80%
2.0%
Good
Low
>80%
Excellent
Good
Participation
Employee
Addition or
The addition or deduction is
2.0% dependent on the respective target value,
which is defined for each
specific division and product.
of all divisions
Quality KPIs
2.5%
Approval rate
of any question
>74%
65-74%
60-64%
≤ 59%
Employee engagement
B.46
-2.5%
Low
1.0%
Average
Degree of target
2.5%
Excellent
+
EBIT 14.36
Target achievement target - actual
In billions of euros
0%
50% -
100% -
150%
FCF IB = 6.06
200%
Financial targets:
B.43
The non-financial targets, which are oriented toward sustain-
ability and cultural aspects and have been uniform at all man-
agement levels since financial year 2019, are divided into four
categories. Each category is weighted equally and receives an
addition or a deduction of up to 2.5 percentage points to or
from the degree of achievement of the financial target. After
the end of the financial year, the degree of target achievement
is calculated by comparing the target value and the actual
value. On this basis, an addition to or a deduction from the
degree of financial target achievement of up to a total amount
of 10 percentage points is possible. The total of the addition or
deduction resulting from the non-financial targets is rounded
to two significant figures. For the financial year 2020 this
results in an addition of +6% (rounded).
Non-financial targets
If the actually achieved value is at or above the upper limit of
the range, the target achievement degree is 200%, which is the
maximum it can reach. The degree of target achievement
develops linearly within the range. 7 B.43
The range of possible target achievement for the two financial
targets (EBIT and free cash flow of the industrial business) is
between 0% and 200%. The lower limit of this range is 25% of
the target value; the upper limit is 125% of the target value. If
the actually achieved value is at or under the lower limit of the
range, the target achievement degree is always 0%. The total
absence of a bonus is therefore possible.
EBIT and free cash flow of the industrial business (FCF IB)
Achievement of EBIT respectively FCF IB target results in 150% target achievement
EBIT = 17.99
FCF IB=7.58
Actual target achievement
EBIT = 6.60
Integrity
indicator
deduction
achievement
Addition or
Degree of target
Integrity
B.44
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
94
200% for
125% target
150% for
target
EBIT/
FCF IB
0% for
25% target
EBIT = 3.48
FCF IB = 1.52
FCF IB 9.18
+
achievement
2020
engagement
preliminary number of phantom shares × performance factor
three-year dividend entitlement
preliminary number of phantom shares
(virtual shares)
approx. 40%
after expiry of third plan year
price of Daimler shares when issued
= final number of phantom shares, dividend entitlement in fourth year
amount when granted in euros
long-term performance-related
Performance Phantom Share Plan (PPSP) -
long-term performance-related remuneration
B.48
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT 95
After the conclusion of financial year 2020, a comparison of
the actual and target values was conducted for the transforma-
tion targets of each division in the topic areas of Sustainabil-
ity/Digitalization/Connectivity/Integrated Service/Electric
Driving/Autonomous Driving. The Supervisory Board derived
the Board of Management's shared degree of target achieve-
ment from the divisions' degree of target achievement as well
as the strategic, organizational and structural contribution of
the Board of Management as a whole, taking into account the
economic environment and the competitive situation and posi-
tioning of the Group. For the financial year 2020 this leads to
the addition of +20% to the degree to which the financial tar-
gets have been achieved.
In order to take into account the implementation of the future-
oriented measures for the technological and sustainable
realignment of the Group, the divisions defined measurable
key performance indicators and target values from the future-
oriented fields at the beginning of financial year 2020. Here, as
an integral part of our corporate strategy, sustainability/Envi-
ronment Social Governance (ESG) aspects have an explicit sig-
nificance for our business dealings.
remuneration
after expiry of fourth plan year
final number of phantom shares x Daimler share price at end of plan
= amount paid out
Time of payment of Performance Phantom Share Plan 2020
(including dividend equivalent payments throughout the plan period)
Stock ownership guidelines
2.5 times the amount granted
Maximum performance development (total cap)
maximum of 2.5 times the issue price
Price when issued and price at the end of the
plan period Bandwidth of possible price devel-
opment:
50% relates to "relative share performance,"
i.e. the performance of Daimler's share in a
three-year comparison with the performance
of the defined group of competitors (index).
Bandwidth of possible target achievement:
0% - 200%
Bandwidth of possible target achievement:
0% - 200%¹
50% relates to the "return on sales” achieved
in a three-year comparison with the defined
group of competitors
Development of the
Daimler share price
the performance factor
Development of
dependent upon
PPSP 2020
B.49
in February of the year 2024
The transformation targets represent both quantitative and
qualitative aspects. They can add up to 25 percentage points
to the degree to which the financial targets have been
achieved.
1 Maximum of 195% if, in the event of target achievement of 195% - 200%, the
strategic return target has not been reached.
Transformation targets
The degree of the employees' commitment to the Group
(employee engagement) was calculated on the basis of their
answers to certain standardized questions in our global
employee survey. These answers, together with the participa-
tion rate achieved in the employee survey, were used to derive
a +1.0% degree of target achievement at the Group level for the
maintenance and enhancement of a high level of satisfaction
and motivation among the employees. 7 B.46
-2.5%
Low
61-65%
25-30%
1.0%
Average
≤25%
66-70%
2.0%
Good
rate
>70%
>35%
2.5%
Excellent
31-35%
≤60%
B.47
Diversity
Quality and/or customer satisfaction targets (quality KPIs of all
divisions) were defined by the individual divisions for the finan-
cial year. With regard to vehicles, a comparison of the target
number and the actual number of claims during a predefined
period of time (MIS xx) was carried out. With regard to ser-
vices, this comparison was carried out by means of a customer
satisfaction index. The degree of target achievement at the
Group level (+1.0%) was derived as a weighted average of the
individual divisional degrees of target achievement. 7 B.45
Achievement of the Group-level targets regarding the further
development and permanent establishment of integrity was
measured on the basis of certain standardized questions in a
global employee survey. This measurement was based on the
achieved approval rate of any question and the average
approval rate achieved across all questions (integrity indica-
tor). This served as the basis for determining that +2.0% of the
target was achieved at the Group level. 7 B.44
Gender Diversity
Aspirational Guidelines
Target overachieved ≥10%
Target overachieved <10%
Target achieved
Target not achieved
Specifically:
-2.5%
Low
1.0%
Average
2.0%
Good
2.5%
Excellent
Addition or
deduction
achievement
Degree of target
A target for the proportion of women in executive positions
was defined at the Group level for a period of several years on
the basis of Daimler's in-house guidelines for the proportion of
women in management positions (Gender Diversity Aspira-
tional Guidelines), which go beyond the legally obligatory tar-
gets. A +2.0% degree of target achievement was determined
for this in a comparison of actual and target values that was
conducted at the end of the financial year. 7 B.47
707
Hubertus Troska
616
-
The total of "payments made" for financial year 2019 is calcu-
lated from
the retirement pension expense in 2020 (service costs in
2020).
at the time when granted in 2020 (payable in 2024), and
the value of the long-term share-based remuneration (PPSP)
the half of the medium-term annual bonus payable in 2022
for 2020 at the value for target achievement of 100% (defer-
ral),
-
the half of the annual bonus payable in 2021 for 2020 at the
value for target achievement of 100%,
the base salary in 2020,
-
-
-
The total of "benefits granted" for financial year 2020 is calcu-
lated from
the retirement pension expense in 2019 (service costs in
2019).
the taxable non-cash benefits and other fringe benefits in
2020,
the value of the long-term share-based remuneration (PPSP)
at the time when granted in 2019 (payable in 2023), and
-
-
the taxable non-cash benefits and other fringe benefits in
2020,
the base salary in 2020,
The total of "payments made" for financial year 2020 is calcu-
lated from
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for financial year 2019 are
implemented with the payout of PPSP 2019, which constitutes
the last payment to be made of the components of remunera-
tion granted in financial year 2019. For financial year 2019,
therefore, the possible cap would take place in 2023, the year
that PPSP 2019 is paid out.
the retirement pension expense in 2019 (service costs in
2019).
2018 and 2019) paid in 2019, and
-
the dividend equivalent of the current PPSP (2016, 2017,
the half of the medium-term annual bonus paid in 2019 for
2017 (deferral),
the half of the annual bonus paid in 2020 for 2019 at the
value as of the end of the reporting period in financial year
2019,
the taxable non-cash benefits and other fringe benefits in
2019,
the base salary in 2019,
-
-
the value of the long-term share-based remuneration (PPSP
2015) paid in 2019,
the half of the medium-term annual bonus payable in 2021
for 2019 at the value for target achievement of 100% (defer-
ral),
the half of the annual bonus paid in 2020 for 2019 at the
value for target achievement of 100%,
the taxable non-cash benefits and other fringe benefits in
2019,
62
77
394
748
94
86
Bodo Uebber5
Harald Wilhelm4
Britta Seeger
57
96
Markus Schäfer²
87
88
Hubertus Troska³
Dr. Dieter Zetsche 5
44
65
the base salary in 2019,
-
-
The total of "benefits granted" for financial year 2019 is calcu-
lated from
The following tables show for each individual member of the
Board of Management on the one hand the benefits granted for
the financial year and on the other hand the payments made in
or for the reporting year and the retirement pension expense in
or for the reporting year in comparison with the prior year. The
tables are based on the previous recommendations of Clause
4.2.5 paragraph 3 of the German Corporate Governance Code
as amended on February 7, 2017.
Further details of Board of Management remuneration
in 2020
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT 99
5 2019: Board of Management remuneration paid until May 22, 2019.
4 2019: Board of Management remuneration paid from April 1, 2019.
3 Hubertus Troska's foreign assignment caused deferred taxable benefits of
€366,300 for the previous years. For the fulfillment of disclosure obliga-
tions pursuant to Section 285 No. 9a of the German Commercial Code
(HGB), the total amount is reduced by €153,814 for the financial year 2020
(2019: €149,366). The corresponding fringe benefits were granted and
borne by a subsidiary and are thus not included in the remuneration to be
disclosed in the annual financial statements of the parent company,
Daimler AG.
2 2019: Board of Management remuneration paid from May 22, 2019.
1 2019: Board of Management remuneration paid as a member until May 21,
2019; as the Chairman from May 22, 2019.
1,108
1,378
Total
the half of the annual bonus payable in 2021 for 2020 at the
value as of the end of the reporting period,
the half of the medium-term annual bonus paid in 2020 for
2018 (deferral),
the value of the long-term share-based remuneration (PPSP
2016) paid in 2020,
the dividend equivalent of the current PPSP (2017, 2018,
2019 and 2020) paid in 2020, and
1,664
0
832
670
(50% of annual bonus, short-term)
822
416
822
952
1,487 1,487
1,487
1,430
115
115
822
416
0
832
0
2,038
1,849
(plan period of 4 years)
Long-term variable remuneration
832
0
416
416
1,664
0
832
670
medium-term)
Deferral (50% of annual bonus,
115
Wilfried Porth
120
72
Chairman of the Board of Management of Daimler AG/
Mercedes-Benz Cars & Vans
Ola Källenius³
Annual variable remuneration
Total
and other fringe benefits
Taxable non-cash benefits
Martin Daum
Daimler Trucks & Buses
Base salary¹
Benefits granted
B.54
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
100
The caps possible to ensure the total maximum amount shown
in the table of benefits granted for reporting year 2020 are
implemented with the payout of PPSP 2020, Which constitutes
the last payment to be made of the components of remunera-
tion granted in financial year 2020. For financial year 2020,
therefore, the possible cap would take place in 2024, the year
that PPSP 2020 is paid out.
the retirement pension expense in 2020 (service costs in
2020).
In thousands of euros
Jan. 1 Dec. 31
2019
2020
72
90
707
707
707
832
1,415 1,415
1,415
1,340
max
min
2020
Jan. 1 Dec. 31
Jan. 1 Dec. 31 Jan. 1 Dec. 31
min
2019
max
72
616
95
Renata Jungo Brüngger
64
508
2019
2,958
1,019
23,851
64
616
707
2020
Markus Schäfer³
2,199
1,159
23,177
616
104
17,735
1,523
1,108
22,169
104
104
832
2019
887
2,958
23,851
616
616
707
2020
Britta Seeger
1,019
104
832
2019
616
707
2020
Renata Jungo Brüngger
2,148
1,108
616
22,169
104
832
2019
2,958
1,019
23,851
104
23,851
1,019
2,958
3,004
1,065
24,935
616
616
707
2020
Wilfried Porth
2,148
1,108
22,169
104
104
832
2019
2,148
- 50% comparison of actual free cash flow of the industrial
business in 2020 with free cash flow of the industrial
business targeted for 2020
2020
707
215,743
266,128
5,557
980
5,557
980
6,380
7,829
2020
2019
Total
9,217
3,828
56,429
101
101
804
2019
2020
2,822
13,305
26,711
23,094
120
115
Martin Daum
90
72
Ola Källenius¹
2019
2020
In thousands of euros
Taxable non-cash benefits and other fringe benefits
B.53
5 2019: Board of Management remuneration paid until May 22, 2019.
4 2019: Board of Management remuneration paid from April 1, 2019.
3 2019: Board of Management remuneration paid from May 22, 2019.
1 Taking into account the voluntary agreement on the part of the Board of Management to forgo 20% of their base salary from April 1 to December 31, 2020.
2 2019: Board of Management remuneration paid as a member until May 21, 2019; as the Chairman from May 22, 2019.
Dr. Dieter Zetsche5
96
1,798
26,502
2020
Harald Wilhelm4
2,148
1,108
22,169
104
723
104
2019
2,958
1,019
23,851
616
616
832
629
629
23,851
47
47
379
2019
2020
Bodo Uebber5
1,629
831
16,627
80
80
638
2019
3,000
1,019
1,325
- 50% comparison of actual EBIT in 2020 with EBIT targeted for
2020
Maximum amount of remuneration
(cash flow cap)
The target value of EBIT for each financial year continues to be
derived on the basis of the desired medium-term return, which
is set by the Supervisory Board and is ambitious and oriented
toward the competitive environment, and derived from the
growth targets. The starting point of the calculation is the rev-
enue of the previous year. The target value for the free cash
flow of the industrial business in the respective financial year
is based on the defined EBIT target of the segments of the
automobile business as well as on a strategic target for the
cash conversion rate. The cash conversion rate is the propor-
tion of the period's result that is scheduled to flow into the
Group's liquidity after the payments for the necessary invest-
ments in research, development, tangible fixed assets and
working capital are taken into account as part of the strategic
growth target. When comparing the target free cash flow of the
industrial business to the actual one, adjustments are made for
certain factors that were taken into account in the target
achievement of the annual bonus in 2019 or earlier.
832
707
707
707
832
707
707
707
95
96
96
96
87
88
88
88
927
803
803
803
919
795
795
795
Total
Annual variable remuneration
(50% of annual bonus, short-term)
and other fringe benefits
416
Taxable non-cash benefits
max
Maximum total remuneration pursuant to Section 87a Subsection 1
Sentence 2 No. 1 German Stock Corporation Act (AktG)
4,880
5,709
2,007
10,835
3,142
2,923
1,072 5,486
7,878
9,399
5,252
5,252
12,000
7,200
1 Taking into account the voluntary agreement on the part of the Board of Management to forgo 20% of their base salary from April 1 to December 31, 2020.
2 Total limit = maximum amount of remuneration (cash flow cap) 1.7 times for Ola Källenius (2019: 1.5 times for Dr. Dieter Zetsche) / 1.9 times target remu-
neration (base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
3 2019: Board of Management remuneration paid as a member until May 21, 2019; as the Chairman from May 22, 2019.
Benefits granted
In thousands of euros
Renata Jungo Brüngger
Integrity & Legal Affairs
Wilfried Porth
HR and Labor Relations Director
Jan. 1 Dec. 31
2019
2020
max
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
min
2019
2020
Jan. 1 Dec. 31
min
Base salary¹
416
0
832
4,539
252
0
0
0
0
Total remuneration
Total limit² for components of remuneration
granted in the reporting year excluding:
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
Maximum total remuneration pursuant to Section 87a Subsection 1
Sentence 2 No. 1 German Stock Corporation Act (AktG)
3,121
2,906 1,055 5,469
2,910 2,692
795
5,334
5,252
5,252
5,347
5,347
7,200
7,200
1 Taking into account the voluntary agreement of the Board of Management to forgo 20% of the base salary from April 1 to December 31, 2020.
2 Total limit = maximum amount of remuneration (cash flow cap) → 1.7 times for Ola Källenius (2019: 1.5 times for Dr. Dieter Zetsche) / 1.9 times target remu-
neration (base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
Reference parameters:
5,500
0
1,991 1,897
4,414
0
252
416
416
0
832
Deferral (50% of annual bonus,
medium-term)
416
416
0
832
416
416
0
- Retirement pension expense (service costs)
832
(plan period of 4 years)
1,108 1,019
0
2,750
1,159 1,065
0
2,875
Total
1,940
1,851
Retirement pension expense (service costs)
254
252
Long-term variable remuneration
- Taxable non-cash benefits and other fringe benefits
1,108
Total limit² for components of remuneration
in March of the year after the reporting year (2021)
50% of annual bonus (deferral) = in March of the second year after the reporting year (2022)
amount paid out deferral = 50% of annual bonus × "relative share performance"¹
overall target achievement (max 200%)
+/- target achievement for the
transformation targets
x overall target achievement
target achievement 50% EBIT / 50% FCF IB
+/- target achievement for the
non-financial targets
0
50% of annual bonus
time of payment of annual bonus 2020
target bonus
=100% of
base salary
2020
target bonus
=
annual bonus 2020
performance-related components approx. 30%
short- and medium-term
Annual bonus - short- and medium-term
performance-related remuneration
B.41
approx. 30%
paid out in twelve monthly
installments
(non-performance-related)
base salary
base salary fixed-oriented towards the area of responsibility
Base salary - fixed
B.40
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
92
The individual components of the remuneration system are as
follows:
Pursuant to Section 87a Subsection 1 Sentence 2 No. 1 of the
German Stock Corporation Act (AktG), the Supervisory Board
has also set a maximum remuneration that was analyzed with
regard to its appropriateness. This remuneration includes
fringe benefits (non-cash benefits: expenses for security pre-
cautions that are mainly borne by the Company and the provi-
sion of company cars) as well as the maximum generally deter-
mined amounts of the retirement pension expense. The
maximum remuneration for one financial year amounts to
€12,000,000 for the Chairman of the Board of Management
and €7,200,000 for an ordinary member of the Board of Man-
agement. The possible cap on the amount exceeding the maxi-
mum total remuneration also takes place with the payment of
the PPSP issued in the relevant financial year.
The possible cap on the amount exceeding the maximum amount of
remuneration and/or the maximum total remuneration² takes place with the
payment of the PPSP for 2020 in 2024.
1 Depending on the development of the Daimler share price compared with
the STOXX Europe Auto Index.
Total remuneration² in 2020
Fixed remuneration components
Fringe benefits are an additional component of the fixed remu-
neration. These are mainly composed of expenses for security
precautions and the provision of company cars. In addition,
special location-based services can be provided for Board of
Management members who work abroad. In exceptional cases,
members who are newly appointed to the Board of Manage-
ment can receive one-time payments to reimburse them for
the loss of remuneration from their immediately previous
employment.
granted in the reporting year excluding:
Financial targets
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT 93
Maximally 200% (cap)
0%-25%
+
-10% - +10%
+
0% - 200%
50% payout after one year
50% deferral coupled
with share price
performance compared
to competitors
autonomous driving
Transformation targets
Sustainability
Digitalization/
connectivity/
integrated services
Electric driving/
- Integrity targets
Diversity targets
- Customer targets
Non-financial targets
Employee targets
industrial business tar-
geted/actual comparison
(50% weighting)
- Free cash flow of the
- EBIT targeted/actual com-
parison (50% weighting)
Financial targets
Strategic objective for both
financial targets
B.42
In 2020, this is equivalent to the respective base salary.
Amount with 100% target achievement (target annual
bonus)
The annual bonus is also impacted by the transformation tar-
gets set by the Supervisory Board as well as by the sustainabil-
ity-oriented non-financial targets for the Board of Management
as a whole. These factors can raise or lower the annual bonus
by up to 0% +25% and +/-10%, respectively.
The annual bonus is a short and medium-term variable remu-
neration that provides an incentive for the contribution made
in the financial year to the operational implementation of our
corporate strategy, in particular the future-proofing expansion
of our business model as a vehicle manufacturer and a pro-
vider of mobility services. The financial performance criteria
are based on the operating result of the Daimler Group (EBIT)
and the free cash flow of the industrial business, each of which
is weighted at 50%. In addition to revenue, EBIT and the free
cash flow of the industrial business are the most important
financial performance indicators for the Daimler Group's oper-
ational financial performance. 7 B.41
Variable remuneration components
The details of the retirement benefit commitments are
described in a separate section in this chapter.
The base salary is fixed remuneration relating to the entire
year, oriented toward the area of responsibility and the experi-
ence of each Board of Management member and paid out in
twelve monthly installments. For financial year 2020, the Board
of Management members have voluntarily agreed to forgo 20%
of their base salary from April 1 to December 31, 2020. 71 B.40
+ Retirement pension commitment 2020
Overview of the determination of the annual bonus from January 1, 2020
Total cash payments¹ 2020
B.38
The maximum amounts of the cash payments to the members
of the Board of Management were set at 1.9 times the sum of
the base salary, the target annual bonus, and the value when
granted of the PPSP for its members. It is 1.7 times for the
Chairman of the Board of Management. The possible cap on
the amount exceeding the maximum limit of the cash pay-
ments takes place with the payment of the PPSP issued in the
relevant financial year, i.e. for the year 2020, with payment of
the PPSP 2020 in 2024. 7 B.39
The maximum amounts of remuneration of Board of Manage-
ment members are limited, not only with regard to the variable
components but also by a maximum amount for the cash pay-
ment and a maximum total remuneration pursuant to Section
87a Subsection 1 Sentence 2 No. 1 of the German Stock Cor-
poration Act (AktG).
As before, only 50% of the annual bonus is paid out in the
March of the following financial year. The other 50% is paid out
a year later (deferral) with the application of a bonus-malus
rule, depending on the development of the Daimler share price
compared with an automotive index (STOXX Europe Auto
Index) Daimler and the Capital Market, which Daimler AG
uses as a benchmark for the relative share-price development.
Both the delayed payout of the portion of the annual bonus
(with the use of the bonus-malus rule) and the variable compo-
nent of remuneration from the PPSP with its link to additional,
ambitious comparative parameters and to the share price
reflect the recommendations of the German Corporate Gover-
nance Code as amended on December 16, 2019, which stipu-
lates that the variable remuneration that results from the
achievement of long-term objectives should exceed that from
short-term objectives.
Additional components of the non-performance-related remu-
neration are the retirement pension commitments and the
fringe benefits (non-cash benefits in kind: mainly expenses for
security precautions that are borne by the Company and the
provision of company cars). The contribution to the pension
plan is currently 15% of the sum of the base salary and the total
annual bonus as determined at the end of the reporting period.
As a rule and on average, the fringe benefits have generally
amounted to 25% of the base salary over the past three years.
The system of Board of Management remuneration in 2020
The fixed base salary and the annual bonus each comprise
approximately 30% of the target remuneration (without the
retirement pension commitments and fringe benefits), while
the variable component of remuneration with a long-term
incentive effect (PPSP) makes up approximately 40% of the tar-
get remuneration. 7 B.38
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT 91
1,019
0
2,750
Total
3,189
3,702
0
8,828
0 4,414
Retirement pension expense (service costs)
261
520
520
520
250
250
+ Fringe benefits 2020
Total remuneration
250
250
Remuneration structure
Target remuneration consists of non-performance-related
and performance-related components:
1,940 1,851
(non-performance-related)
Section 87a Subsection 1 Sentence 2 No. 1 German Stock Corporation Act (AktG)
Maximum total remuneration pursuant to
Base salary in 2020
base salary
+ Annual bonus in 2020 (50% paid out in 2021 + 50% paid out in 2022)
+ PPSP payment for 2020 (in 2024) incl. dividend equivalent payments
Retirement pension commitment
+
Fringe benefits
+
× 1.9
(Chairman of the Board of Management)
= Target remuneration
(= 100% of the base salary)
Value when granted
(Ordinary members of
the Board of Management)
Performance
Phantom Share Plan
long-term performance-related
components
Target bonus
approx. 30%
performance-related
components
approx. 30%
B.39
Calculation of the maximum amount of remuneration (cash flow cap)
and maximum total remuneration 2020
approx. 40%
short- and medium-term
Base salary
Sum of the
monthly payments
× 1.7
Annual bonus
2020
2019
In thousands of euros
520
Ola Källenius
4,378
250
4,062
Martin Daum
2020
3,993
2019
3,738
pension capital and
Daimler Pensions Plan)
250
261
pension capital and
Daimler Pensions Plan)
Until the end of 2005, the pension agreements of Board of
Management members included a commitment to an annual
retirement pension, calculated as a proportion of the former
base salary and depending on the number of years of service;
an analogous implementation of this commitment for the cor-
responding hierarchical level applied to Wilfried Porth for the
period prior to his serving as a member of the Board of Man-
agement. Such pension claims remained in effect after the
conversion to the Pension Capital system but were frozen at
the level reached at the beginning of 2006.
Present value¹ of
obligations
The Supervisory Board of Daimler AG has approved the appli-
cation of this system for all members of the Board of Manage-
ment newly appointed since 2012. The amount of the annual
contributions results from a fixed percentage of the base sal-
ary (2020: without taking into account the voluntary salary
waiver) and the total annual bonus for the respective financial
year calculated as of the balance sheet date. This percentage
is currently 15%. This calculation takes into consideration the
maximum level of retirement provision for each Board of Man-
agement member - also according to the period of member-
ship and the resulting annual and long-term expense for the
Company. The contributions to the retirement provision are
granted until the age of 62. The benefit from the Daimler Pen-
sions Plan is payable in the committed amount (sum of the
capital components credited including interest) to surviving
Board of Management members at the earliest at the age of
62, irrespective of their age upon retirement. If a member of
the Board of Management retires due to disability, the benefit
is paid as a disability pension, even before the age of 62.
Renata Jungo Brüngger
The Pension Capital system was used from the beginning of
2006 until the end of 2011. Existing pension agreements of
active Board of Management members at the beginning of this
period were adjusted correspondingly. All Board of Manage-
ment members newly appointed during that period were sub-
ject exclusively to the Pension Capital system.
Under this system, each Board of Management member is
credited with a capital component each year. This capital com-
ponent comprises an amount equal to 15% of the sum of the
Board of Management member's fixed base salary and the
total annual bonus for the respective financial year on the bal-
ance sheet date, multiplied by an age factor equivalent to a
rate of return of 6% until 2015 and 5% from 2016 (Wilfried
Porth: 5% for all years). These contributions to pension plans
are granted only until the age of 60. The benefit from the pen-
sion capital is payable in the committed amount (sum of the
capital components credited including interest) to surviving
Board of Management members at the earliest at the age of
60, irrespective of their age upon retirement. If a member of
the Board of Management retires due to disability, the benefit
is paid as a disability pension, even before the age of 60.
Payments under the Pension Capital system and the Daimler
Pensions Plan can be made in three ways:
- as a single amount;
in twelve annual installments, whereby interest accrues on
each partial amount from the time payments commence
until the payout is complete (Pension Capital 6% or 5%;
Daimler Pensions Plan in accordance with applicable law);
as an annuity with annual increases (Pension Capital 3.5% or
in accordance with applicable law; Daimler Pensions Plan in
accordance with applicable law).
The contracts specify that if a Board of Management member
passes away before retiring for reason of age, the spouse/reg-
istered civil partner or dependent children is/are entitled to
the full committed amount in the case of the Pension Capital
system, and to the credit amount reached plus an imputed
amount until the age of 62 in the case of the Daimler Pensions
Plan. If a Board of Management member passes away after
retiring for reason of age, in the case of payment of twelve
annual installments the heirs are entitled to the remaining
present value. In the case of a pension with benefits for surviv-
ing dependents, the spouse/registered partner or dependent
children is/are entitled to 60% of the discounted terminal value
(Pension Capital), or the spouse/registered civil partner is enti-
tled to 60% of the actual pension (Daimler Pensions Plan).
(for pension,
Payments of these pension claims start upon request when the
term of service ends at or after the age of 60, or are paid as
disability pensions if the term of service ends before the age of
60 due to disability. The respective agreements provide for
3.5% annual increases starting when benefits are received
(with the exception that Wilfried Porth's benefits are adjusted
in accordance with applicable law). The agreements guarantee
the spouse/registered civil partner of a deceased Board of
Management member 60% of that member's pension.
Departing Board of Management members are also provided
with a company car, in some cases for a defined period.
Service costs for pension obligations to Board of Management
members in accordance with IFRS amounted to €2.1 million in
financial year 2020 (2019: €2.0 million). The present value of
the total defined benefit obligation according to IFRS
amounted to €31.6 million as of December 31, 2020 (2019:
€32.9 million). Taking age and period of service into account,
the individual entitlements, service costs and present values
are shown in the table. 7 B.56
B.56
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT 107
Individual entitlements, service costs and present values for members of the Board of Management
Service cost
Annual pension
(as regulated until 2005)
as of age 60
(for pension,
That amount can increase by up to 30 percentage points
depending on the number of dependent children.
2020
250
1,840
254
1,995
Hubertus Troska
2020
3,383
2019
250
6,028
2019
Harald Wilhelm³
291
325
2019
218
134
Bodo Uebber
2020
In 2012, Daimler introduced a new company retirement benefit
plan for new entrants and new appointments for employees
paid according to collective bargaining wage tariffs as well as
for executives: the "Daimler Pensions Plan." This retirement
benefit system features the payment of annual contributions
by Daimler and is oriented toward the capital market. Daimler
merely makes a commitment to guarantee the total of contri-
butions paid, which are invested in the capital market accord-
ing to a precautionary investment concept.
2020
252
2,231
2020
2019
254
1,655
Wilfried Porth
2020
156
12,684
2019
256
156
Markus Schäfer²
2020
254
2,720
2019
155
2,425
Britta Seeger
12,130
Retirement provision
134
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
21
1,793
1,485
2019
665
250
3,269
250
218
291
3,190
1,052
1,756
1 Taking into account the voluntary agreement on the part of the Board of Management to forgo 20% of their base salary from April 1 to December 31, 2020.
2 Amount actually paid out during the financial year: (The difference pertains to
the annual variable remuneration paid at the beginning of the following year
compared to the non-cash benefits in kind that were not paid out and the retire-
ment pension expense).
2,781
1,680
692
839
21
Payments made
15
20
62
77
1,226
1,455
700
800
༄༞'༄
616
80
629
242
565
50
8
48
13
72
54
In thousands of euros
Base salary
Taxable non-cash benefits and other fringe benefits
Dividend equivalent PPSP 2016
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2018
Dividend equivalent PPSP 2019
Dividend equivalent PPSP 2020
Total
1,793
3,758
Retirement pension expense (service costs)
362
Total remuneration¹
2,578
0
4,627
1 Amount actually paid out during the financial year: (The difference pertains to
the annual variable remuneration paid at the beginning of the following year
compared to the non-cash benefits in kind that were not paid out and the retire-
ment pension expense).
2,679
5,635
106
Payment of PPSP 2016
1,877
898
1,780
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2015
Bodo Uebber
Finance & Controlling,
Daimler Financial Services
Jan. 1-May 22 Jan. 1 - Dec. 31
2019
2020
Commitments upon termination of service
379
423
Dr. Dieter Zetsche
Chairman of the Board of Manage-
ment, Head of Mercedes-Benz Cars
Jan. 1 - May 22 Jan. 1 - Dec. 31
2019
2020
804
65
869
47
101
848
44
362
Michael Häberle 1, 2
Dr. Jürgen Hambrecht'
2020
638
707
832
2020
Jan. 1 Dec. 31
April 1 Dec. 31
2019
Harald Wilhelm
Finance & Controlling/
Daimler Mobility
Hubertus Troska
Greater China
Jan. 1 - Dec. 31
2020
Jan. 1 Dec. 31
2019
Total remuneration²
Retirement pension expense (service costs)
Total
Dividend equivalent PPSP 2020
Dividend equivalent PPSP 2018
Dividend equivalent PPSP 2017
Dividend equivalent PPSP 2016
Payment of PPSP 2016
723
Member of the Supervisory Board
394
Dr. Sabine Zimmer²
Member of the Supervisory Board and the Audit Committee
272,577
77,156
Member of the Supervisory Board and the Audit Committee
448,502
253,081
Dr. Bernd Pischetsrieder¹
Member of the Supervisory Board and the Nomination Committee (since July 9, 2020)
Member of the Supervisory Board
257,425
114,745
130,721
Sibylle Wankel 1,2
Member of the Supervisory Board and the Legal Affairs Committee
234,329
77,156
Marie Wieck¹
Dr. Frank Weber¹
748
Payment of PPSP 2015
Long-term variable remuneration
Deferral (50% of annual bonus, medium-term)
254
155
Retirement pension expense (service costs)
979
1,043
846
171
Total
21
21
Dividend equivalent PPSP 2020
20
72
16
58
Dividend equivalent PPSP 2019
207,877
254
256
Total remuneration³
891
(50% of annual bonus, short-term)
Annual variable remuneration
Total
Taxable non-cash benefits and other fringe benefits
Base salary¹
105
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
In thousands of euros
60,991
Payments made
2,031
1,001
615
3 Amount actually paid out during the financial year: (The difference pertains to
the annual variable remuneration paid at the beginning of the following year
compared to the non-cash benefits in kind that were not paid out and the retire-
ment pension expense).
1 Taking into account the voluntary agreement on the part of the Board of Management to forgo 20% of their base salary from April 1 to December 31, 2020.
2 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
2,028
2,223
1,903
1,174
Member of the Supervisory Board (since July 8, 2020)
77,156
207,877
Supervisory Board remuneration in 2020
The remuneration of the Supervisory Board is determined by
the Annual Shareholders' Meeting of Daimler AG. It is regu-
lated by Article 10 of the Articles of Incorporation of Daimler
AG as a function-related fixed remuneration without perfor-
mance bonus components and takes into account the respon-
sibilities and scope of activity of the Supervisory Board mem-
bers. The new regulations for Supervisory Board remuneration
approved by the Annual Shareholders' Meeting in March 2017
and effective for the financial year beginning on January 1,
2017 specify that the members of the Supervisory Board
receive fixed remuneration of €144,000 after the conclusion of
the financial year. The Chairman of the Supervisory Board
receives an additional €288,000 and the Deputy Chairman of
the Supervisory Board receives an additional €144,000. The
members of the Audit Committee are paid an additional
€72,000, the members of the Presidential Committee are paid
an additional €57,600 and the members of the other commit-
tees of the Supervisory Board are paid an additional €28,800;
an exception is the Chairman of the Audit Committee, who is
paid an additional €144,000. Additional payments are made for
activities in a maximum of three committees; any persons who
are members of more than three such committees receive
additional payments for the three most highly paid functions.
Members of a Supervisory Board committee are only entitled
to remuneration for such membership in a financial year if the
committee has actually convened to fulfill its duties in this
period.
The members of the Supervisory Board and its committees
receive a meeting fee of €1,100 for each Supervisory Board
meeting and committee meeting that they attend. The meeting
fee is paid only once if several meetings of the Supervisory
Board and/or its committees are held on the same calendar
day.
Furthermore the members of the Supervisory Board receive a
refund of their expenses and the cost of any value added tax
incurred by them in performance of their office.
The members of the Supervisory Board were also covered by
consequential loss-liability insurance taken out by the com-
pany in its own interest in an appropriate amount for boards
and specific managers. The company paid the premiums.
In connection with the remuneration adjustment in 2017, all
members of the Supervisory Board have made a self-commit-
ment to purchase Company shares in the amount of 20% of
their gross annual salary (excluding committee remuneration
and the meeting fee) every year and to hold these shares until
the end of one year after they have left the Company's Supervi-
sory Board (voluntary obligation in accordance with the "com-
ply or explain" principle).
This does not apply to Supervisory Board members whose
Supervisory Board remuneration is subject in a mandatory or
voluntary manner to the guidelines of the German Trade Union
Confederation on the transfer of supervisory board remunera-
tion to the Hans Böckler Foundation, or to the same extent is
subject to a transfer to the employer or claim to payment due
to a service or employment contract. In the event that a lower
amount of the Supervisory Board remuneration is transferred
or credited, the voluntary commitment applies to 20% of the
amount not transferred or credited. With this voluntary com-
mitment, the members of the Supervisory Board are express-
ing their focus on and commitment to the long-term, sustain-
able success of the Company.
In financial year 2020, no remuneration was paid for services
provided personally beyond the aforementioned board and
committee activities, in particular for advisory or agency ser-
vices, except for the remuneration paid to the members of the
Supervisory Board representing the employees in accordance
with their contracts of employment.
The individual remuneration of the members of the Supervi-
sory Board is shown in the following table. 7 B.57
Taking into account the voluntary agreement on the part of the
Supervisory Board of Daimler AG to forgo 20% of their fixed
remuneration and their meeting fees from April 1 to December
31, the total remuneration of all the activities of the members
of the Supervisory Board of Daimler AG in the year 2020 was
thus €5.5 million (2019: €4.6 million).
Pursuant to Section 113 Subsection 3 of the German Stock
Corporation Act (AktG) in the revised version of the law for the
implementation of the second shareholders rights directive
(ARUG II) the Annual Shareholders' Meeting of a listed corpora-
tion shall approve the remuneration of the Supervisory Board
members at least every four years, whereby a resolution con-
firming the remuneration is permissible. Such a resolution is
planned for the ordinary Annual Shareholders' Meeting 2021.
The remuneration of the Supervisory Board members accord-
ing to Article 10 of the Articles of Incorporation are to be
amended in the course of this so that the additional function-
related remuneration for the Chair and membership of the
Legal Affairs Committee are adjusted to €115,200 and €57,600
respectively.
Loans to members of the Supervisory Board
No advances or loans were made or abated to members of the
Supervisory Board of Daimler AG in 2020.
B.57
Supervisory Board remuneration
Name
In euros
Remuneration of the Supervisory Board
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
108
Payments made to former members of the Board of Man-
agement of Daimler AG and their survivors
Payments made in 2020 to former members of the Board of
Management of Daimler AG and their survivors amounted to
€26.0 million (2019: €19.5 million). Pension provisions accord-
ing to IFRS for former members of the Board of Management
and their survivors amounted to €362.5 million as of Decem-
ber 31, 2020 (2019: €355.8 million).
2019
Total
2020
2019
156
156
2,073
2,004
31,554
32,167
1 The amounts of the present values are primarily due to the low level of the relevant discount rate.
2 2019: Markus Schäfer pro rata from May 22, 2019.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT 109
3 2019: Harald Wilhelm pro rata from April 1, 2019.
Early termination of service
The durations of the contracts of service of the members of
the Board of Management correspond to their terms of
appointment.
The Board of Management
In the case of unilateral early termination without an important
reason, Board of Management service contracts include com-
mitments to payment of the base salary and provision of a
company car until the end of the original service period at a
maximum. Such persons are only entitled to payment of the
annual bonus pro rata for the period until the end of the mem-
bership in the Board of Management. Entitlement to payment
of the performance-related components of remuneration with
a long-term incentive effect (PPSP) that has already been allo-
cated is defined by the conditions of the respective plans. To
the extent that the payments described above are subject to
the provisions of the severance cap of the German Corporate
Governance Code as amended on December 16, 2019, their
total including fringe benefits is limited to double the annual
remuneration and may not exceed the total remuneration for
the remaining period of the service contract.
In the event of an early termination of the service contract,
both the short-term and the delayed medium-term component
(deferral) of the annual bonus, and the proceeds from the long-
term PPSP, are paid out not when the contract is terminated
but instead at the points in time agreed upon in the service
contract or in the terms and conditions of the PPSP plan. There
are no assurances for cases in which membership in the Board
of Management is terminated early because of a change of
control or assurances for compensation in the case of dismissal.
Sideline activities of Board of Management members
The members of the Board of Management should accept man-
agement board or supervisory board positions and/or any
other administrative or honorary functions outside the Group
only to a limited extent. Furthermore, they require the consent
of the Supervisory Board before commencing any sideline
activities. This ensures that neither the time required nor the
remuneration paid for such activities leads to any conflict with
the members' duties to the Group. Insofar as such sideline
activities are memberships of statutory supervisory boards or
comparable boards of business enterprises, they are disclosed
in the notes to the annual financial statements of Daimler AG,
which are published on our website. In general, Board of Man-
agement members have no right to separate remuneration for
board positions held at other companies of the Group.
Loans to members of the Board of Management
In 2020, no advances or loans were made or abated to mem-
bers of the Board of Management of Daimler AG.
4 2019: Bodo Uebber pro rata until May 22, 2019.
Dr. Dieter Zetsche
Function(s) remunerated
Total in
64,920
Member of the Supervisory Board and the Nomination Committee
221,873
63,820
Member of the Supervisory Board
130,721
Member of the Supervisory Board and Chairman of the Audit Committee and the
Legal Affairs Committee
347,094
64,920
Member of the Supervisory Board
130,821
Member of the Supervisory Board and the Legal Affairs Committee
234,329
77,156
Member of the Supervisory Board and the Presidential Committee
Member of the Supervisory Board
284,153
104,489
195,641
85,637
Member of the Supervisory Board and the Nomination Committee (until July 8, 2020)
Member of the Supervisory Board
Elke Tönjes-Werner²
20204
from
subsidiaries
Dr. Manfred Bischoff¹
Chairman of the Supervisory Board, the Presidential Committee and the Nomination
Committee as well as member of the Legal Affairs Committee
741,948
261,577
Michael Brecht 1, 2
Deputy Chairman of the Supervisory Board, the Presidential Committee, the Audit
Committee and the Legal Affairs Committee
thereof remuneration
637,103
Joe Kaeser¹
Dr. Paul Achleitner
Bader M. Al Saad¹
Sari Baldauf¹
Michael Bettag²
Dr. Clemens Börsig¹
Raymond Curry³
Petraea Heynike¹
Timotheus Höttges
Ergun Lümali¹, 2
242,825
Dividend equivalent PPSP 2019
277
48
max
min
2020
2019
Daimler Mobility
Jan. 1 Dec. 31
Jan. 1 Dec. 31 April 1 - Dec. 31
min
max
2020
2019
Jan. 1 Dec. 31
Harald Wilhelm
Finance & Controlling/
Hubertus Troska
Greater China
Base salary1
In thousands of euros
1 Taking into account the voluntary agreement on the part of the Board of Management to forgo 20% of their base salary from April 1 to December 31, 2020.
2 Total limit = maximum amount of remuneration (cash flow cap) 1.7 times for Ola Källenius (2019: 1.5 times for Dr. Dieter Zetsche) / 1.9 times target remu-
neration (base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
7,200
7,200
5,252
5,252
5,252
3,602
5,463
2,900 1,049
3,120
1,057 5,471
2,908
Benefits granted
2,115
Taxable non-cash benefits
832
0
416
416
(50% of annual bonus, short-term)
Annual variable remuneration
800
800
800
700
1,455 1,455 1,455
1,226
77
and other fringe benefits
Total
77
62
748
748
748
394
723
723
723
638
707
707
707
77
Maximum total remuneration pursuant to Section 87a Subsection 1
Sentence 2 No. 1 German Stock Corporation Act (AktG)
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
416
416
832
0
416
254
medium-term)
Deferral (50% of annual bonus,
832
0
416
416
0
832
416
254
793
793
793
926
803
803
803
565
86
86
0
832
Long-term variable remuneration
(plan period of 4 years)
granted in the reporting year excluding:
Total limit² for components of remuneration
Total remuneration
256
256
256
254
254
254
254
155
Retirement pension expense (service costs)
4,414
0
1,940 1,851
0 4,414
1,851
1,395
Total
2,750
0
1,019
1,108
2,750
0
1,019
887
832
86
319
0
362
Retirement pension expense (service costs)
3,626
1,705
Total
2,822
1,325
(plan period of 4 years)
Long-term variable remuneration
402
190
medium-term)
0
Deferral (50% of annual bonus,
190
(50% of annual bonus, short-term)
Annual variable remuneration
869
65
804
423
44
379
Jan. 1 Dec. 31 Jan. 1 - May 22
min.
max.
min.
402
2020
Total remuneration
granted in the reporting year excluding:
77,156
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2019
Chairman of the Board of Management of Daimler AG/
Mercedes-Benz Cars & Vans
Ola Källenius²
Payment of PPSP 2015
Long-term variable remuneration
Deferral (50% of annual bonus, medium-term)
(50% of annual bonus, short-term)
Annual variable remuneration
Total
Taxable non-cash benefits and other fringe benefits
Base salary¹
Total limit¹ for components of remuneration
103
In thousands of euros
Payments made
B.55
1 Total limit = maximum amount of remuneration (cash flow cap) → 1.7 times for Ola Källenius (2019: 1.5 times for Dr. Dieter Zetsche) / 1.9 times target remu-
neration (base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
6,612
3,940
4,495
2,490
Sentence 2 No. 1 German Stock Corporation Act (AktG)
Maximum total remuneration pursuant to Section 87a Subsection 1
- Retirement pension expense (service costs)
- Taxable non-cash benefits and other fringe benefits
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
2019
Jan. 1 Dec. 31
Chairman of the Board of Management,
Head of Mercedes-Benz Cars
Total remuneration
291
2,750
0 4,450
291
291
218
0
831 1,019
1,469 1,869
0 2,750
0 4,414
250 250
1,108 1,019
1,851
250
250
Retirement pension expense (service costs)
1,940
Total limit² for components of remuneration
Total
Long-term variable remuneration
850
0
425
319
832
0
416
416
medium-term)
Deferral (50% of annual bonus,
850
(plan period of 4 years)
granted in the reporting year excluding:
- Taxable non-cash benefits and other fringe benefits
- Retirement pension expense (service costs)
Dr. Dieter Zetsche
max.
2020
2019
Jan. 1-May 22
Finance & Controlling,
Daimler Financial Services
Bodo Uebber
Total
Taxable non-cash benefits
and other fringe benefits
Base salary
In thousands of euros
Benefits granted
102 B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
1 Taking into account the voluntary agreement on the part of the Board of Management to forgo 20% of their base salary from April 1 to December 31, 2020.
2 Total limit maximum amount of remuneration (cash flow cap) → 1.7 times for Ola Källenius (2019: 1.5 times for Dr. Dieter Zetsche) / 1.9 times target remu-
neration (base salary, target annual bonus, value when granted of PPSP, excluding fringe benefits and retirement pension commitments).
7,200
7,200
5,320
3,990
5,252
5,252
1,091 5,541
2,960
2,387
6,119
3,556 1,705
3,416
Maximum total remuneration pursuant to Section 87a Subsection 1
Sentence 2 No. 1 German Stock Corporation Act (AktG)
425
13
94
96
8
Dividend equivalent PPSP 2018
48
13
51
14
Dividend equivalent PPSP 2019
72
20
75
21
Dividend equivalent PPSP 2020
52
21
Total
1,162
1,485
1,837
1,514
Retirement pension expense (service costs)
Total remuneration³
254
2,343
252
0
0
2,540
22
2,756
8
Dividend equivalent PPSP 2017
832
707
95
96
87
88
927
803
919
795
104
616
50
104
728
242
728
242
120
785
Payment of PPSP 2016
565
591
Dividend equivalent PPSP 2016
40
42
616
2,309
1 Taking into account the voluntary agreement on the part of the Board of Management to forgo 20% of their base salary from April 1 to December 31, 2020.
2 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
3 Amount actually paid out during the financial year: (The difference pertains to
the annual variable remuneration paid at the beginning of the following year
compared to the non-cash benefits in kind that were not paid out and the retire-
ment pension expense).
707
86
793
64
616
104
616
728
242
37
Payment of PPSP 2016
185
「€
-
Dividend equivalent PPSP 2016
13
-
4
Dividend equivalent PPSP 2017
17
3
50
8
Dividend equivalent PPSP 2018
19
5
59
926
803
565
2,150
1,680
2,825
1,709
Payments made
In thousands of euros
Base salary¹
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2015
Markus Schäfer²
Group Research and Mercedes-Benz Cars
Chief Operating Officer
Britta Seeger²
Mercedes-Benz Cars Marketing &
2019
May 22 Dec. 31 Jan. 1 Dec. 31 Jan. 1 - Dec. 31
2020
Sales
Jan. 1 - Dec. 31
2019
2020
508
707
832
57
96
94
707
96
832
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2019
Taxable non-cash benefits
Base salary¹
In thousands of euros
Benefits granted
Martin Daum³
Daimler Trucks & Buses
Jan. 1 Dec. 31
2020
1,340
90
1,415
832
707
72
120
115
and other fringe benefits
Total
1,430
952
822
168
1,232
104
616
728
242
607
242
751
Payment of PPSP 2016
1,487
565
Annual variable remuneration
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
96
57
707
707
707
832
707
707
707
508
max
min
(50% of annual bonus, short-term)
2020
Jan. 1 Dec. 31 Jan. 1 - Dec. 31
2019
max
min
2020
2019
May 22 Dec. 31
Mercedes-Benz Cars Marketing & Sales
Chief Operating Officer
Britta Seeger
Group Research and Mercedes-Benz Cars
101
Markus Schäfer
Jan. 1 Dec. 31
-
225
Dividend equivalent PPSP 2016
4,143
2,376
2,217
1 Taking into account the voluntary agreement on the part of the Board of Management to forgo 20% of their base salary from April 1 to December 31, 2020.
2 2019: Payments as a Board of Management member made up to May 21, 2019; as the Chairman from May 22, 2019.
3 Payments from the long-term variable remuneration also include amounts granted before the Board of Management membership.
4 Amount actually paid during the financial year: (The difference pertains to the
annual variable remuneration paid at the beginning of the following year com-
pared to the non-cash benefits in kind that were not paid out and the retirement
pension expense).
3,337
2,487
2,162
1,340
104 B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | REMUNERATION REPORT
Payments made
250
In thousands of euros
Taxable non-cash benefits and other fringe benefits
Total
Annual variable remuneration
(50% of annual bonus, short-term)
Deferral (50% of annual bonus, medium-term)
Long-term variable remuneration
Payment of PPSP 2015
Renata Jungo Brüngger²
Integrity & Legal Affairs
Jan. 1 Dec. 31 Jan. 1 Dec. 31
2019
2020
Wilfried Porth
HR and Labor Relations Director
Base salary¹
250
520
261
3,596
40
16
Dividend equivalent PPSP 2017
50
8
50
8
Dividend equivalent PPSP 2018
48
13
48
13
Dividend equivalent PPSP 2019
120
33
72
20
Dividend equivalent PPSP 2020
43
21
Total
1,905
2,136
1,174
1,145
Retirement pension expense (service costs)
Total remuneration4
2020
Member of the Supervisory Board and the Legal Affairs Committee
Jan. 1 Dec. 31
2019
77,156
2020
234,329
In accordance with Article 5 of the Articles of Incorporation,
the Board of Management has at least two members. The num-
ber of members is decided by the Supervisory Board. Pursuant
to Section 84 Subsection 2 of the German Stock Corporation
Act (AktG), the Supervisory Board can appoint a member of the
Board of Management as its Chairperson. If a required member
of the Board of Management is lacking, an affected party can
apply in urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the German
Stock Corporation Act (AktG). Pursuant to Section 84 Subsec-
tion 3 of the German Stock Corporation Act (AktG), the Super-
visory Board can revoke the appointment of a member of the
Board of Management and of the Chairperson of the Board of
Management if there is an important reason to do so.
Pursuant to Section 31 Subsection 2 of the German Codeter-
mination Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority com-
prising at least two thirds of its members' votes. If no such
majority is obtained, the Mediation Committee of the Supervi-
sory Board has to make a suggestion for the appointment
within one month of the vote by the Supervisory Board in
which the required majority was not reached. The Supervisory
Board then appoints the members of the Board of Manage-
ment with a majority of its members' votes. If no such majority
is obtained, voting is repeated and the Chair of the Supervisory
Board then has two votes. The same procedure applies for dis-
missals of members of the Board of Management.
Members of the Board of Management are appointed and dis-
missed on the basis of Sections 84 and 85 of the German
Stock Corporation Act (AktG) and Section 31 of the German
Codetermination Act (MitbestG). In accordance with Section
84 of the German Stock Corporation Act, the members of the
Board of Management are appointed by the Supervisory Board
for a maximum period of office of five years. Until December
31, 2020, the rules of procedure of the Supervisory Board of
Daimler AG stipulated that the initial appointment of members
of the Board of Management should generally be limited to
three years. Since January 1, 2021, the rules of procedure stip-
ulate a maximum period of three years for initial appointments.
Reappointment or the extension of a period of office is permis-
sible, in each case for a maximum of five years.
Shares acquired by employees within the context of the
employee share program may not be disposed of until the end
of the following year. Eligible participants in the Performance
Phantom Share Plans (PPSPs) of Executive Level 1 and eligible
members of the Board of Management are obliged by the
Plans' terms and conditions and by the Stock Ownership
Guidelines to acquire Daimler shares with a part of their Plan
income or out of their own funds up to a defined target volume
and to hold them for the duration of their employment at the
Daimler Group. For the other persons eligible for PPSPs, this
obligation no longer applies since payment of PPSP 2013 in
February/March 2017.
Restrictions on voting rights and on the transfer of shares
The Company does not have any rights from treasury shares.
In the cases described in Section 136 of the German Stock
Corporation Act (AktG), the voting rights of treasury shares are
nullified by law.
The issued share capital of Daimler AG amounted to approxi-
mately €3,070 million at December 31, 2020. It is divided into
1,069,837,447 registered shares, each of which accounts for
approximately €2.87 of the share capital. Pursuant to Section
67 Subsection 2 of the German Stock Corporation Act (AktG)
in the version applicable as of December 31, 2020, rights and
duties relating to the Company exist from the shares only for
those persons and entities entered in the register of sharehold-
ers. With the exception of treasury shares, from which the
Company does not have any rights, all shares confer equal
rights to their holders. Each share confers the right to one vote
and, with the possible exception of any new shares that are not
yet entitled to a dividend, to an equal share of the profits in
accordance with the dividend payout approved by the Annual
Shareholders' Meeting. The rights and obligations arising from
the shares are derived from the provisions of applicable law, in
particular Sections 12, 53a ff., 118 ff. and 186 of the German
Stock Corporation Act. There were no treasury shares at
December 31, 2020.
Composition of share capital
(Report pursuant to Sections 315a and 289a of the German Commercial Code (HGB))
Takeover-Relevant Information and Explanation
Provisions of applicable law and of the Articles of Incorpo-
ration concerning the appointment and dismissal of mem-
bers of the Board of Management and amendments to the
Articles of Incorporation
110
B❘ ZUSAMMENGEFASSTER LAGEBERICHT MIT NICHTFINANZIELLER ERKLÄRUNG | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
Member of the Supervisory Board
130,721
Roman Zitzelsberger 1, 2
286,133
Member of the Supervisory Board and the Presidential Committee
104,489
1 Including remuneration as a member of the Supervisory Board of Daimler Truck AG and/or Mercedes-Benz AG.
2 The employee representatives have stated that their board remuneration is to be transferred to the Hans-Böckler Foundation, in accordance with the guide-
lines of the German Trade Union Federation.
3 Raymond Curry has directed that he receive no remuneration whatsoever and that his corresponding board remuneration is to be paid to the Hans-Böckler
Foundation. His corresponding board remuneration is to be paid to the Hans-Böckler Foundation.
4 Taking into account the voluntary agreement on the part of the Supervisory Board to forgo 20% of their fixed remuneration and their meeting fees from
April 1 to December 31, 2020.
The risk management system is intended to systematically
and continually identify, assess, control, monitor and report on
risks threatening the Daimler Group's existence and other
material risks jeopardizing the Group's success, in order to
support the achievement of corporate targets and to enhance
risk awareness at the Group. The risk management system is
integrated into the value-based management and planning sys-
tem of the Daimler Group and is a fixed component of the over-
all planning, management and reporting process in the compa-
nies, segments and corporate functions.
Risk assessment takes place on the basis of probability of
occurrence and possible impact according to the levels "Low,"
"Medium" and "High." These levels also apply to the possible
impact of opportunities. An analysis of the probability of occur-
rence is not considered here. When assessing the impact of a
risk or opportunity, unless otherwise reported, its effect in
relation to EBIT is considered.
In the context of the planning, risks and opportunities are con-
sidered with an observation period of up to five years. The
reporting of risks and opportunities in the Management Report
generally relates to a period of one year.
The opportunity management system at the Daimler Group
is based on the risk management system. The objective of
opportunity management is to recognize the possible opportu-
nities arising in business activities as a result of positive devel-
opments at an early stage, and to use them in the best possi-
ble way for the Group by taking appropriate measures. By
taking advantage of opportunities, planned targets should be
met or exceeded. Opportunity management considers relevant
and realizable opportunities that have not yet been included in
any planning.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION RISK AND OPPORTUNITY REPORT 115
Risk and opportunity management system
Medium
High
Impact
< €500 million
< €1 billion
Impact
€500 million ≤
Impact
At Group level, risks and opportunities below €500 million are
classified as "Low,” between €500 million and €1 billion as
"Medium" and above €1 billion as "High." For the quantification
of each risk and opportunity category in the Management
Report, the individual risks and opportunities are summarized
for each category. The assessment of the dimensions, proba-
bility of occurrence and possible impact is based on the levels
shown in table 7 B.58 and is conducted before measures are
planned. In the context of describing the risk and opportunity
categories, significant changes in comparison to the prior year
are explained.
≥ €1 billion
Sustainability aspects are integrated into the Group-wide risk
management process at Daimler. They are understood to be
conditions, events, or developments involving environmental,
social or governance factors (ESG), the occurrence of which
may have an actual or potential impact on the Daimler Group's
profitability, cash flows and financial position, as well as on its
reputation. ESG-related risks and opportunities that are very
likely to have a serious negative impact on non-financial
aspects in accordance with the CSR Directive Implementation
Act (CSR-RUG) can be found in the respective categories of the
Risk and Opportunity Report according to their cause. Further-
more, Daimler follows the recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD) with regard to
climate-related risks and opportunities.
The effectiveness of the internal control system is systemati-
cally assessed with regard to the corporate accounting pro-
cess. The first step consists of risk analysis and a definition of
control with the objective of identifying significant risks relat-
ing to the processes of corporate accounting and financial
reporting in the main companies, organizational entities and
corporate functions. The controls required are then defined
and documented in accordance with Group-wide guidelines.
Random samples are regularly tested to assess the effective-
ness of the controls. Those tests constitute the basis for self-
assessment of the appropriate magnitude and effectiveness of
the controls. The results of this self-assessment are docu-
The scope of consolidation for risk and opportunity manage-
ment corresponds to the scope of the consolidated financial
statements and goes beyond that if necessary. The risks and
opportunities of the segments and operating units, important
associated companies, joint ventures, joint operations and the
corporate departments are included.
mented and reported in a Group-wide IT system; identified
control weaknesses are eliminated. At the end of the annual
cycle, the selected companies, organizational entities and cor-
porate functions confirm the effectiveness of the internal con-
trol system with regard to the corporate accounting process.
The Board of Management and the Audit Committee of the
Supervisory Board are regularly informed about potential sig-
nificant control weaknesses and the effectiveness of the con-
trol mechanisms installed. However, the internal control and
risk management system for the accounting process cannot
ensure with absolute certainty that material misstatements in
accounting are avoided.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION RISK AND OPPORTUNITY REPORT
116
€0 <
processes are established for the segregation of duties and
for the "four-eyes principle" in the context of preparing
financial statements, and whether authorization and access
rules exist for relevant IT accounting systems.
processes are established to guarantee the completeness of
financial reporting;
Risk management is based on the principle of completeness.
This means that at the level of the individual entities, all identi-
fied risks enter the risk management process.
issues relevant for financial reporting and disclosure from
agreements entered into are recognized and appropriately
presented;
the Group's uniform financial reporting, valuation and
accounting guidelines are continually updated and regularly
taught and adhered to;
-
-
The internal control system with regard to the accounting
process has the objective of ensuring the correctness and
effectiveness of accounting and financial reporting. It is
designed in line with the internationally recognized framework
for internal control systems of the Committee of Sponsoring
Organizations of the Treadway Commission (COSO Internal
Control Integrated Framework), is continually developed fur-
ther, and is an integral part of the accounting and financial
reporting processes in the relevant companies, organizational
units and corporate functions. The system includes principles
and procedures as well as preventive and detective controls.
Among other things, it is regularly checked as to whether
The organizational embedding of risk and opportunity
management takes place through the risk management orga-
nization established at the Group. Responsibility for opera-
tional risk management and for the risk management pro-
cesses lies with the segments, corporate functions,
organizational entities and companies. They report on the spe-
cific risks and opportunities to the next-higher level unit on a
regular basis. Significant, unexpected risks must be reported
on immediately. Through the segments, this information is
passed on to Group Risk Management for reporting to the
Board of Management and the Supervisory Board. The Group
Risk Management Committee (GRMC) is responsible for the
continual improvement of the risk management system and for
assessing its efficiency and effectiveness. The GRMC is com-
posed of representatives of Accounting & Financial Reporting,
the Legal department, Compliance, Technical Compliance, Cor-
porate & Information Security and the members responsible
for finance of the Boards of Management of Mercedes-Benz
AG, Daimler Truck AG and Daimler Mobility AG; it is chaired by
the Board of Management members of Daimler AG responsible
Finance & Controlling / Daimler Mobility and for Integrity and
Legal Affairs. The Internal Auditing department contributes
material findings on the internal control and risk management
system.
Furthermore, the employees responsible for risk management
have the task of defining measures and, if necessary, initiating
such measures to avoid, reduce or protect the Group against
risks. Within the context of opportunity management, mea-
sures are to be taken with which opportunities can be seized,
improved and (fully or partially) realized. The cost-effective-
ness of a measure is assessed before its implementation. The
possible impact and probability of occurrence of all risks and
opportunities of the individual entities and the related mea-
sures that have been initiated are continually monitored. The
management activities take place at the level of the segments
based on individual risks and opportunities. As the parent com-
pany of the Daimler Group, Daimler AG monitors implementa-
tion by the segments as part of its regulatory, legal, and com-
pliance functions.
transactions within the Group are accounted for and prop-
erly eliminated;
Low
Risk and Opportunity Report
Level
B❘ ZUSAMMENGEFASSTER LAGEBERICHT MIT NICHTFINANZIELLER ERKLÄRUNG | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION 113
- Credit agreements of Mercedes-Benz AG and Daimler Truck
AG with lenders for an amount totaling €1.2 billion, for the
repayment of which Daimler AG is jointly and severally liable,
which provide for a right of termination for the lenders in the
event that natural or legal persons or a group of at least two
persons acting jointly acquire control of Daimler AG. For the
purpose of the credit agreements, a group acting jointly
exists when a group acts jointly on the basis of formal or
informal agreements or other arrangements. Control for the
purposes of the credit agreements means (i) holding or con-
trolling more than 50% of the voting rights in Daimler AG, (ii)
the right to determine or appoint the majority of the mem-
bers of a decision-making body of Daimler AG (for example,
the management, board of management, advisory board,
supervisory board), (iii) the right to receive more than 50% of
the distributable dividends of Daimler AG, or (iv) exercise of
an otherwise comparable controlling influence on Daimler
AG. Control can be exercised directly or indirectly through
share ownership, contractual arrangement, fiduciary status,
economic circumstances or otherwise, and through either a
single person or a group acting together.
- A non-utilized syndicated credit line for a total amount of €11
billion and a non-utilized syndicated credit line for a total
amount of €8.8 billion, each of which the lenders are entitled
to terminate if (i) Daimler AG becomes a subsidiary of
another company, or (ii) Daimler AG becomes controlled
either individually or jointly by one or more persons acting
together. For the purposes of each of the syndicated credit
lines, subsidiary in relation to a company means another
company (i) that is controlled directly or indirectly by the
first-mentioned company, (ii) of which more than 50% of the
subscribed share capital (or other equity) is held directly or
indirectly by the first-mentioned company, or (iii) which is a
subsidiary of another subsidiary of the first-mentioned com-
pany. Control for the purposes of each of the syndicated
credit lines means (i) the right to determine the affairs of a
company, (ii) the right to control the composition of the man-
aging board or similar bodies, or (iii) the right to control the
composition of the supervisory board (if elected by the
shareholders).
Daimler AG has concluded various material agreements, as
listed below, that include clauses regulating the possible event
of a change of control, as can occur as a result of a takeover
bid:
Material agreements taking effect in the event of a
change of control
No use was made of this authorization to issue convertible
bonds and/or bonds with warrants during the reporting period.
-
Any issuance of bonds with the exclusion of subscription rights
may only be carried out under the authorization if the arithmet-
ical proportion of the share capital attributable to the total of
the new shares to be issued on the basis of such a bond does
not exceed 10% of the share capital at the time when this
authorization takes effect or if this value is lower - at the time
when it is exercised. If, during the period of the authorization
until it is exercised, use is made of other authorizations to
issue or sell shares in the Company or to issue rights enabling
or requiring subscription to shares in the Company and sub-
scription rights are excluded, this is to be counted towards the
aforementioned 10% limit.
Also by resolution of the Annual Shareholders' Meeting on July
8, 2020, the Board of Management was authorized, with the
consent of the Supervisory Board, to issue during the period
until July 7, 2025, convertible bonds and/or bonds with war-
rants or a combination of those instruments (commercial
paper) in a total nominal amount of up to €10 billion with a
maximum term of ten years, and to grant the owners/lenders
of those bonds conversion or option rights to new, registered
shares of no par value in Daimler AG with a corresponding
amount of the share capital of up to €500 million, in accor-
dance with the terms and conditions of those convertible
bonds or bonds with warrants. The bonds may be issued in
exchange for consideration in cash, but also for consideration
in kind, in particular for interests in other companies. The
respective terms and conditions may also provide for manda-
tory conversion or an obligation to exercise the option rights.
The bonds can be issued once or several times, wholly or in
installments, or simultaneously in various tranches. They can
also be issued by companies affiliated with Daimler AG pursu-
ant to Section 15 ff. of the German Stock Corporation Act
(AktG).
B❘ ZUSAMMENGEFASSTER LAGEBERICHT MIT NICHTFINANZIELLER ERKLÄRUNG | TAKEOVER-RELEVANT INFORMATION AND EXPLANATION
112
The authorization granted by the Annual Shareholders' Meeting
on April 1, 2015 to issue convertible bonds and/or bonds with
warrants was limited until March 31, 2020. No use was made
of the authorization. The corresponding Conditional Capital
2015 was cancelled by resolution of the Annual Shareholders'
Meeting on July 8, 2020.
No use has yet been made of Approved Capital 2018.
The total number of shares issued against cash and/or non-
cash contributions under this authorization with the exclusion
of shareholders' subscription rights may not exceed 10% of the
share capital at the time when this authorization takes effect.
This limit is to include shares which (i) are issued or sold during
the period of this authorization with the exclusion of subscrip-
tion rights in direct or analogous application of Section 186
Subsection 3 Sentence 4 of the German Stock Corporation Act
(AktG) and which (ii) are or can or must be issued to service
bonds with conversion or option rights or conversion or option
obligations, provided that the bonds are issued after this autho-
rization takes effect with the exclusion of shareholders' sub-
scription rights with analogous application of Section 186 Sub-
section 3 Sentence 4 of the German Stock Corporation Act
(AktG).
Inter alia, the Board of Management was also authorized under
certain circumstances, within certain limits and with the con-
sent of the Supervisory Board, to exclude shareholders' sub-
scription rights to the bonds. Subscription rights can, under
these defined conditions, be excluded when bonds are issued
in exchange for non-cash contributions, particularly within the
framework of a merger or acquisition, and when bonds are
issued in exchange for cash contributions, if the issue price is
not significantly below the theoretical market price of the
bonds at the time of the issuance.
Possible impact
A master cooperation agreement on wide-ranging strategic
cooperation with Renault S.A., Renault-Nissan B.V. and Nis-
san Motor Co., Ltd., as well as with Mitsubishi Motors Corpo-
ration. In the case of a change of control of one of the par-
ties to the agreement, each of the other parties has the right
to terminate the agreement. A change of control as defined
by the master cooperation agreement occurs if a third party
or several third parties acting jointly acquire, legally or eco-
nomically, directly or indirectly, at least 50% of the voting
rights in the company in question or are authorized to
appoint a majority of the members of its managing board.
Under the master cooperation agreement, several coopera-
tion agreements were concluded between Daimler AG on the
one side and Renault and/or Nissan on the other, which pro-
vide for the right of termination for a party to the agreement
in the case of a change of control of another party. With the
exception of the master cooperation agreement, the afore-
mentioned cooperation agreements were transferred from
Daimler AG to Mercedes-Benz AG in 2019.
An agreement between Daimler AG, BMW AG and Audi AG
related to the acquisition of the companies of the HERE
Group and the associated establishment of There Holding
B.V. In the event of a change of control of one of the parties
to the agreement, the agreement obligates the party in
question to offer its shares in There Holding B.V. to the other
parties to the agreement (shareholders). A change of control
of Daimler AG occurs if one person gains control over
Daimler AG, whereby control is defined as (i) having control
of more than 50% of the voting rights, (ii) being able to con-
trol more than 50% of the voting rights eligible to vote at the
shareholders' meetings on all or nearly all matters, or (iii)
the right to determine the majority of the members of the
Board of Management or of the Supervisory Board. A change
of control also occurs if competitors of the HERE Group or
certain possible competitors of the HERE Group in the tech-
nology industry acquire a shareholding of at least 25% of
Daimler AG. If none of the other parties acquire these
shares, the agreement gives them the right to dissolve There
Holding B.V.
Probability of occurrence ≤ 33%
Probability of occurrence ≤ 66%
Probability of occurrence < 100%
66%<
33%<
0% <
Probability of occurrence
Level
Low
Medium
High
An agreement with BAIC Motor Co., Ltd. related to a jointly
held company for the production and distribution of cars of
the Mercedes-Benz brand in China, by which BAIC Motor
Co., Ltd. is given the right to terminate the agreement or
exercise a put or call option in the case that a third party
acquires one third or more of the voting rights in Daimler AG.
Assessment of probability of occurrence / possible impact
In order to identify business risks and opportunities at an early
stage and to assess and manage them actively, effective man-
agement and control systems, which have been brought
together in an overall risk and opportunity management sys-
tem, are applied. Risks and opportunities are not offset.
The Daimler Group is exposed to a large number of risks that
are directly linked with the business activities of Daimler AG
and its subsidiaries or which result from external influences.
A risk is understood as the danger that events, developments
or actions will prevent the Group or one of its segments from
achieving its targets. This includes financial and non-financial
risks. At the same time, it is important to identify opportunities
in order to safeguard and enhance the competitiveness of the
Daimler Group. An opportunity is understood as the possibil-
ity due to events, developments or actions to safeguard or to
surpass the planned targets of the Group or of a segment.
The Audit Committee of the Supervisory Board of Daimler AG
and the committees of the Supervisory Boards of Mercedes-
Benz AG, Daimler Truck AG and Daimler Mobility AG are
responsible for monitoring the internal control and risk
management system. The Internal Auditing department moni-
tors whether the statutory conditions and the Group's internal
guidelines concerning the internal control and risk manage-
ment system of the Group are adhered to. If required, mea-
sures are initiated in cooperation with the respective manage-
ment. External auditors audit the system for the early
identification of risks, which is integrated in the risk manage-
ment system, for its general suitability to identify risks threat-
ening the existence of the Group; in addition, they report to the
Audit Committee and the Supervisory Board on any significant
weaknesses that have been recognized in the internal control
and risk management system.
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114
An agreement between Daimler AG and BMW AG which con-
tains basic provisions for six joint ventures between Daimler
Mobility Services GmbH and group companies of BMW AG in
the field of mobility services (car sharing, ride hailing, park-
ing, charging, multimodal and a joint venture holding the
common brand). A change of control is defined as the acqui-
sition by a third party of more than 50% of the voting rights
or shares, or the conclusion of a control agreement over
Daimler AG by a third party. As a result of a change of con-
trol, the other party may initiate a shoot-out process, which
is more precisely defined in the agreement.
B.58
Risks and opportunities
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In addition to the risks and opportunities described below,
risks and opportunities that are not yet known or classified as
not material can also influence profitability, cash flows and
financial position in the future.
Against the background of the covid-19 pandemic, the Daimler
Mobility segment has granted selected customers improved
payment terms in the form of deferrals, and deferrals were
also granted due to government support programs. In order to
take into account the increased credit risks due to the impact
of the pandemic on the global economy, Daimler Mobility has
increased its debt-collection activities as a precautionary mea-
sure and has intensified internal monitoring and reporting by
Risk Management.
In connection with the sale of vehicles, Daimler offers its cus-
tomers a wide range of financing and leasing options. The
resulting risks for the Daimler Mobility segment are mainly due
to borrowers' worsening creditworthiness, so receivables
might not be recoverable in whole or in part because of cus-
tomers' insolvency (default or credit risk). Daimler counteracts
credit risks by means of creditworthiness checks on the basis
of standardized scoring and rating methods, the collateraliza-
tion of receivables, and effective risk management with a firm
focus on monitoring both internal and macroeconomic leading
indicators.
The launch of new products by competitors, more aggressive
pricing policies and poorer effective pricing in the aftersales
business can lead to increasing competitive and price pres-
sure in the automotive segments and have a negative impact
on profitability. Continuous monitoring of competitors is car-
ried out in order to recognize these risks at an early stage.
Depending on the situation, product-specific and possibly
regionally different measures are taken to support weaker mar-
kets. Daimler also applies various programs to boost sales,
including financial incentives for customers.
Due to the partly difficult financial situation of some dealer-
ships and vehicle importers, support actions by Mercedes-
Benz Cars & Vans and Daimler Trucks & Buses might become
necessary to ensure the performance of the business partners.
The financial situation of strategically relevant dealerships and
vehicle importers is continuously monitored. The loss of impor-
tant dealerships and vehicle importers can lead to customer
demand not being fully served and lower unit sales. Taking over
the costs of contract cancellations and of processing outstand-
ing customer contracts cannot be ruled out as a result of
dealer insolvencies and may have a negative impact on earn-
ings.
Volatilities with regard to market developments can also lead
to the overall market or regional conditions for the automotive
industry developing better than assumed in the internal fore-
casts and premises, resulting in business opportunities in the
market. Opportunities may also arise from an improvement in
the competitive situation or a positive development of demand.
The utilization of opportunities is supported by sales and mar-
keting campaigns.
Potential effects of the risks of the development of unit
sales are included in risk scenarios. The lack of market accep-
tance of certain vehicle models in individual regions can have a
negative impact earnings. Causes of declining vehicle sales
may also result in particular from the partially unstable eco-
nomic environment and in the context of political or economic
uncertainties. A rising oil price and volatile exchange rates can
also lead to market uncertainty and thus to falling demand for
vehicles. Differences between the segments exist due to the
partly varying regional focus of their activities. The develop-
ment of markets, unit sales and inventories is continually ana-
lyzed and monitored by the segments; if necessary, specific
marketing and sales programs are implemented.
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The risks and opportunities for the economic development of
automotive markets are strongly affected by the cyclical situa-
tion of the global economy as described above. In particular,
the potential restrictions mentioned under economic risks and
opportunities as a result of the covid-19 pandemic may lead to
sales risks worldwide and negatively impact the aftersales
business. The assessment of market risks and opportunities is
linked to assumptions and forecasts about the overall develop-
ment of markets in the regions in which the Daimler Group is
active. The possibility of markets developing better or worse
than assumed in the planning, or of changing market condi-
tions, generally exists for all segments of the Daimler Group.
Medium
Procurement market opportunities
High
Medium
Procurement market risks
Low
General market risks and opportunities
Opportunities relating to the legal
and political framework
In connection with leasing agreements, risks and opportunities
arise if the market value of a leased vehicle at the end of the
agreement term differs from the residual value that was origi-
nally calculated and forecasted at the time the agreement was
concluded and used as a basis for the leasing installments.
Particularly at Mercedes-Benz Cars & Vans and Daimler Mobil-
ity, risks exist relating to a negative development of used-car
markets with a corresponding impact on vehicles' residual
values. Residual-value management processes are defined to
counteract these risks. Depending on the region and the cur-
rent market situation, the measures taken generally include
continuous market monitoring as well as, if required, price-set-
ting strategies or sales promotion measures designed to regu-
late vehicle inventories. The quality of market forecasts is veri-
fied by periodic comparisons of internal and external sources,
and, if required, the determination of residual values is
adjusted and further developed with regard to methods, pro-
cesses and systems.
Risks and opportunities related to the legal and political
framework
Due to, among other things, the planned electrification of new
model series and the better-than-expected recovery of
demand for vehicles, Mercedes-Benz Cars & Vans in particular
is faced with the risk that Daimler will require changed vol-
umes of components from suppliers. This could result in over-
or under-utilization of production capacities for certain
suppliers, and thus lead to supply-chain disruption. Uncertain-
ties related to the covid-19 pandemic may also lead to supply
bottlenecks and thus production interruptions. If suppliers can-
not cover their fixed costs, there is also the risk that they may
demand compensation payments. Necessary capacity expan-
sion at suppliers' plants could also require cost participation.
The financial situation of some suppliers remains tense due to
the gloomy market environment. The resulting possible pro-
duction losses at suppliers may cause an interruption in the
supply chain of the Daimler Group's automotive segments and
prevent vehicles from being completed and delivered to cus-
tomers on time. In order to counteract such interruptions in
the supply chain, support measures may be necessary to
ensure production and sales by suppliers. Supplier risk man-
agement aims to identify potential financial bottlenecks for
suppliers at an early stage and to initiate suitable counter-
measures. Specifically, depending on the warning signals
recorded and the internal classification, regular reporting
dates are agreed upon for suppliers at which key performance
indicators are reported to Daimler and any support measures
can be determined if necessary.
The automotive segments of the Daimler Group require certain
raw materials for the manufacture of vehicle components and
vehicles, which are purchased on the world market. The level
of costs depends on the price development of raw materi-
als. Due to largely unchanged macroeconomic conditions,
price fluctuations are expected with uncertain and inconsistent
trends also for the year 2021. For example, raw-material mar-
kets can be impacted by uncertainties and political crises -
combined with possible supply bottlenecks - as well as by vol-
atile demand for specific raw materials. In general, the ability
to pass on the higher costs of commodities and other materials
in the form of higher prices for manufactured vehicles is lim-
ited because of strong competitive pressure in the interna-
tional automotive markets. Rising raw-material prices may
therefore have a negative impact on the profit margins of the
vehicles sold and thus lead to lower earnings in the respective
segment.
Procurement market risks and opportunities
Procurement market risks arise for the automotive divisions in
particular from fluctuations in prices of raw materials and
energy. Financial bottlenecks of suppliers, restricted capacity
caused by supplier failures, limited scope for influencing the
prices of supplied parts and excessive or insufficient utilization
of production capacities at suppliers can also lead to lower
earnings. Overall, the risk situation is unchanged compared
with the previous year in terms of probability of occurrence at
"Medium" and possible impact at "High." The impact of the
opportunities is also unchanged at "Medium."
Daimler continuously monitors the development of statutory
and political conditions and attempts to anticipate foreseeable
requirements and long-term targets at an early stage in the
process of product development.
In addition to the described emission and fuel-consumption
regulations, traffic-policy restrictions for the reduction of
traffic jams, noise and emissions are becoming increasingly
important in cities and urban areas worldwide. Although this
may have an adverse impact on the development of unit sales
of conventional vehicles, it may also lead to growing demand
for vehicles with alternative drive systems.
Across all segments, the assessment of general market risks is
unchanged compared to the previous year. The impact of mar-
ket opportunities has increased from "Medium" to "High" due
to the potentially stronger development of demand than
assumed in the planning of the automotive segments.
The danger exists that individual countries will attempt to
defend and improve their competitiveness in the world's mar-
kets by resorting to interventionist and protectionist mea-
sures. The automotive industry is often seen as a key factor to
attract investment into a country and increase local value
added. This can lead to increased costs if production facilities
have to be established or expanded or local purchasing has to
be increased. Cutting technological and economic links
between major markets can also adversely affect earnings if
research and development have to be conducted locally or
value chains have to be adjusted because certain technologies
are not allowed to be used in the final products. In addition,
attempts are being made to limit growth in imports through
barriers to market access such as by making certification pro-
cesses more difficult, delaying certification and imposing
other complicated tariff procedures.
120
Furthermore, the position of the Daimler Group in key foreign
markets could be affected by the conclusion of or changes in
free-trade agreements. If free-trade agreements are con-
cluded without the participation of countries in which Daimler
has production facilities, this could result in a competitive dis-
advantage for Daimler compared with competitors that pro-
duce in the countries that are members of the free-trade
agreements. In addition, if the content of the free-trade agree-
ments currently used by Daimler is made significantly stricter
or the conditions of future free-trade agreements are more
restrictive, this could also significantly impair the position of
the Daimler Group, as the Group could no longer or only par-
tially benefit from those free-trade agreements. At the same
time, however, the conclusion of new free-trade agreements
could also result in opportunities for the Daimler Group vis-à-
vis its competitors, if the competitors do not produce in the
countries concerned, but Daimler does.
The described regulations for the reduction of vehicles' emis-
sions and fuel consumption also create potential risks for
Daimler Trucks & Buses, because it will be difficult to fulfill
the strict statutory requirements in some countries. Above all,
this applies to the markets of Japan, the United States, China
and Europe. The ambitious targets, especially in Europe, can-
not be achieved solely with conventional technology. Daimler
Trucks & Buses will therefore have to apply the latest technolo-
gies in order to fulfill these requirements. Achieving the 2025
target will require significant proportions of battery-electric
trucks or other electrified drive systems in the actual market,
which may only be achievable at higher costs.
Mercedes-Benz Cars & Vans faces the described risks with
respect to regulations on mandatory targets for the average
fleet fuel consumption and CO2 emissions of new vehicles.
Especially in the markets of China, Europe and the United
States, Daimler gives these targets due consideration in its
product planning. The increasingly ambitious targets require
significant proportions of actual unit sales of plug-in hybrids
and cars with other types of electric drive. The ambitious stat-
utory requirements will be difficult to fulfill in some countries.
The market success of alternative drive systems is greatly
influenced not only by customer acceptance but also by
regional market conditions such as the battery-charging infra-
structure and state support.
Many countries and regions have already implemented stricter
regulations to reduce vehicles' emissions and fuel con-
sumption or are currently preparing such laws. They relate, for
example, to the environmental impact of vehicles, including
limits on noise emissions, as well as pollutants from the emis-
sions caused by production facilities. Non-compliance with
regulations applicable in the various regions might result in sig-
nificant penalties and reputational harm, and might even mean
that vehicles could not or could no longer be registered in the
relevant markets. This also includes risks from ongoing activi-
ties relating to legislation on Real Driving Emissions (RDE). In
addition, the risk exists that vehicles already in the markets
will have to be reworked. The cost of compliance with these
regulations is significant, especially for conventional engines.
The automotive industry is subject to extensive governmental
regulation worldwide. Risks and opportunities from the legal
and political framework have a considerable influence on
Daimler's future business success. Regulations concerning
vehicles' emissions, fuel consumption, safety and certification,
as well as tariff aspects, play a particularly important role. The
possible impact of risks from the legal and political framework
remains unchanged at “High” compared to the previous year;
the probability of occurrence of risks has decreased from
"Medium" to "Low." This is due in particular to the lower proba-
bility of occurrence for risks in connection with tariffs. The
assessment of the possible impact of opportunities decreased
from "Medium" to "Low."
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The following section describes risks and opportunities that
can have a significant influence on the profitability, cash flows
and financial position of the Daimler Group. In general, the
reporting of risks and opportunities takes place in relation to
the individual segments. If no segment is explicitly mentioned,
the risks and opportunities described relate to all the seg-
ments.
High
Risks relating to the legal
and political framework
At the country level, those emerging economies (such as Tur-
key, South Africa or Brazil) with high foreign debt and high cur-
rent account deficits could come under pressure, resulting in
significant currency devaluations. Financial-market turbulence
and even currency crises would be possible consequences and
could have a massive negative impact on the economies con-
cerned. Since Daimler is either already very active in these
countries or these markets play a strategic role, this would
have a significantly negative impact on the Group's sales pros-
pects.
The increase in public and private debt resulting from the pan-
demic and the countermeasures required to combat it could
lead to speculation in the capital market due to some coun-
tries' debt situations. This in turn could further increase uncer-
tainty among consumers and investors. In the event of rising
interest rates, this development could worsen further. Further-
more, the premature withdrawal of government support mea-
sures could slow down the economic recovery. Both develop-
ments would result in weaker consumer and investment
activity and would be accompanied by a correspondingly
weaker business developments for all divisions of the Daimler
Group. In addition, the rising burden of interest and principal
payments could restrict companies' scope for future invest-
ment, thus dampening future economic activity. Lower invest-
ment activity would have a particularly negative impact on unit
sales by Daimler Trucks & Buses.
However, the successful containment of the pandemic within
the first months of the year, for example, through more rapid
and widespread deployment of suitable vaccines or the devel-
opment of effective medication for covid-19, could lead to a
significantly more dynamic recovery than assumed in the Out-
look section. Reduced uncertainty about the ongoing pan-
demic and the economic outlook could ensure that household
savings, which rose sharply during the shutdown, are released
more quickly than assumed. This would noticeably boost con-
sumption and have a positive impact on unit sales by
Mercedes-Benz Cars & Vans. In this case, the willingness of
companies to invest could also increase, which could be
reflected in rising demand for commercial vehicles, with corre-
sponding positive effects for unit sales by Daimler Trucks &
Buses.
By resolution of the Annual Shareholders' Meeting of April 5,
2018, the Board of Management was authorized, with the con-
sent of the Supervisory Board, to increase the share capital of
Daimler AG in the period until April 4, 2023, wholly or in partial
amounts, on one or several occasions, by up to €1 billion by
issuing new registered shares of no par value in exchange for
cash or non-cash contributions, and, with the consent of the
Supervisory Board under certain conditions and within defined
limits, to exclude shareholders' subscription rights (Approved
Capital 2018). Subscription rights can, under these defined
conditions, be excluded in the event of a capital increase
through non-cash contributions for the purpose of an acquisi-
tion, and in the case of a capital increase through cash contri-
butions, if the issue price of new shares is not significantly
below the market price at the time of issue.
In addition, if expectations of a recovery are not fulfilled, there
could be a sharp correction on the stock markets, as they have
already priced in a noticeable improvement of the real econ-
omy. Sharply falling share prices could set off a chain reaction
on global stock markets, with sharp market corrections and
phases of extraordinary volatility as a consequence. Such
developments could lead to major asset losses worldwide and
also depress consumer sentiment and the investment climate,
and have a negative impact on the global economy. This would
have significant adverse effects in particular on the sales pros-
pects of all segments and on the Daimler Group's earnings.
If the service sector, which has been particularly hit hard by
the coronavirus pandemic, fails to recover as expected due to
ongoing restrictions or voluntary changes in consumer behav-
ior, this would have a noticeable impact on employment and
wages in this sector. This would significantly reduce consumer
confidence and consumption, one of the most important pillars
of the economic recovery. The resulting lower growth or even
decline in overall economic consumption would have a corre-
spondingly negative impact on sales prospects, in particular of
Mercedes-Benz Cars & Vans.
Despite the Phase One partial trade deal, a renewed escalation
of the trade conflict between the United States and China
would continue to be a significant risk for the further develop-
ment of the world economy. Furthermore, more and more
areas are meanwhile affected by the conflict and there is the
threat of increasing technological and economic disconnection
between the two countries. This could significantly affect the
development of unit sales by Mercedes-Benz Cars & Vans. In
addition, there is a danger that countries will implement
increasingly protectionist measures such as specific market-
access barriers or industry requirements for increased local
value added. This would lead to higher costs at Mercedes-Benz
Cars & Vans and Daimler Trucks & Buses, adversely affecting
business developments and sales possibilities. On the other
hand, unforeseen trade facilitations could provide positive
impulses and lead to more trade and higher growth. In that
case, the Daimler Group could also benefit.
If the restrictions resulting from the pandemic last significantly
longer than the first quarter, this could place an excessive bur-
den on households, companies and governments. Among other
things, this could lead to a noticeable rise in unemployment,
which in turn would have significant adverse effects on private
consumption and would also have a lasting negative impact on
recovery. The already strained situation of many compa-
nies could worsen as a result. A possible wave of insolvencies
resulting from this could jeopardize the stability of the banking
sector and lead to distortions in the financial markets. For the
Daimler Group, the risks arising from the further course of the
pandemic could on the one hand adversely affect both unit
sales and sales processes, and on the other hand could lead to
significant negative effects on production and supply chains.
A significant risk for the development of the global economy is
the further course of the covid-19 pandemic. If the further
course of the infection necessitates even more drastic and
comprehensive containment measures than assumed in the
Outlook section of this Management Report, this would have a
major impact on the economic recovery and international trade
relations. The broader and more comprehensive the lock-
downs, the greater the impact.
Like the majority of economic research institutes, Daimler
expects the world economy to recover noticeably in 2021
from the recession of the previous year. Economic develop-
ments in 2020 are described in detail in the Economic
Conditions and Business Development section of this Manage-
ment Report; growth assumptions and forecasts for general
developments in 2021 are explained in the Outlook.
Economic risks and opportunities constitute the framework for
the risks and opportunities listed in the following categories
and are integrated as premises into the quantification of these
risks and opportunities. Overall economic conditions have a
significant influence on vehicle sales markets and thus on the
Group's success.
Economic risks and opportunities
The following section describes the industry and business risks
and opportunities of the Daimler Group. A quantification of
these risks and opportunities is shown in table 1 B.59.
Industry and business risks and opportunities
the
Low
The European market will continue to be of great importance
for all segments of the Daimler Group in the future, so changes
in investment and consumer behavior will affect the develop-
ment of unit sales in all segments. In the European Union (EU),
the risk of political conflicts remains high. Phases of political
uncertainty could have a negative impact on consumption and
investment decisions by households and companies, and con-
sequently have a negative impact on the economic develop-
ment and sales opportunities of the Daimler Group. If, how-
ever, concerted stimulus measures in the European Union,
above all the EU reconstruction bonds, or the ECB's expansion-
ary measures have a greater impact than currently assumed,
this could lead to a stronger recovery in growth, with positive
effects on companies and households. Although the trade and
cooperation agreement concluded by the EU and the United
Kingdom on December 24, 2020 avoids the feared hard cut
and provides for tariff-free trade, a general condition for this is
that the respective product-specific value-added rules and
rules of origin are complied with. In addition, it will bring about
fundamental changes in relations between the EU and the
United Kingdom, such as time-consuming customs procedures
in the cross-border trade in goods. Long waiting times at the
border could lead to delays in deliveries. In addition, possible
customs payments if the required rules of origin are not com-
plied with could lead to pressure on vehicle prices or margins.
In China, support measures to combat the consequences of
the corona pandemic could exacerbate structural imbalances
such as overcapacity, indebtedness and low productivity. From
an economic perspective, above all the high indebtedness of
Chinese companies, especially state-owned enterprises, also
represents a considerable risk. If the government's expected
efforts to scale back fiscal and monetary support measures
lead to a more significant growth slowdown than currently
expected, this could result in an excessive increase in credit
defaults, which would then lead to turbulences in the banking
sector and the financial markets. In particular at the
Mercedes-Benz Cars & Vans division, for which China is now
one of the biggest sales markets, the aforementioned risks
could result in significant negative effects on unit sales. How-
ever, growth in 2021 could turn out to be stronger than
expected due to ongoing stimulus measures by the Chinese
government. The resulting stronger growth in overall economic
consumption would offer additional opportunities, especially
for Mercedes-Benz Cars & Vans.
High
General market opportunities
High
Low
General market risks
Impact
The fiscal program decided upon in late 2020 and potential fur-
ther stimulus measures by the new administration in the
United States could result in opportunities for economic
developments. If this leads to significantly more dynamic con-
sumption and investment, demand could benefit in all automo-
tive segments. As Mercedes-Benz Cars & Vans, Daimler Trucks
& Buses and Daimler Mobility generate substantial proportions
of their revenues in the United States, these developments
would have considerable consequences for the Group's suc-
cess. Furthermore, stronger economic growth in the United
States would also have spillover effects on the rest of the
world. However, increasing domestic political tension in the
United States could unsettle consumers and investors and
thus dampen economic growth.
Opportunity category
Probability of occurrence
Risk category
Industry and business risks and opportunities
B.59
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118
Impact
No use was made of this authorization to acquire the Compa-
ny's own shares during the reporting period.
In order to service the debt of the convertible bonds and/or
bonds with warrants issued as a result of the authorization, the
Annual Shareholders' Meeting of July 8, 2020 also approved a
conditional increase in the share capital of up to €500 million
(Conditional Capital 2020).
During the period of the authorization, the total of the Compa-
ny's own shares used with the exclusion of shareholders' sub-
scription rights may not exceed 10% of the share capital at the
time when the authorization takes effect or if this amount is
lower - at the time when it is exercised. If, during the period of
the authorization until it is exercised, use is made of other
authorizations to issue or sell shares in the Company or to
issue rights enabling or requiring subscription to shares in the
Company and subscription rights are excluded, this is to be
counted towards the aforementioned 10% limit.
By resolution of the Annual Shareholders' Meeting on July 8,
2020, the Board of Management was once again authorized,
with the consent of the Supervisory Board, to acquire the Com-
pany's own shares until July 7, 2025 for all legal purposes in a
volume of up to 10% of the share capital at the time of the reso-
lution of the Annual Shareholders' Meeting or - if this amount
is lower at the time when the authorization is exercised. With
the consent of the Supervisory Board, the shares can be used,
with the exclusion of shareholders' subscription rights, for,
among other things, corporate mergers and acquisitions, or
can be sold for cash to third parties at a price that is not signif-
icantly below the market price at the time of the sale. The
shares can also be used to service debt on convertible bonds
and/or bonds with warrants, or can be issued to employees of
the Company and employees and members of executive bodies
of affiliated companies pursuant to Section 15 ff. of the German
Stock Corporation Act (AktG). The Company's own shares can
also be canceled.
The authorization granted by resolution of the Annual Share-
holders' Meeting on April 1, 2015 to acquire and use the Com-
pany's own shares expired on March 31, 2020 without being
utilized.
Authorization of the Board of Management to issue or buy
back shares
Pursuant to Section 179 of the German Stock Corporation Act
(AktG), the Articles of Incorporation can only be amended by a
resolution of an Annual Shareholders' Meeting. Unless other-
wise required by the Stock Corporation Act or the Articles of
Incorporation, resolutions of the Annual Shareholders' Meeting
- with the exception of elections - are passed pursuant to Sec-
tion 133 of the German Stock Corporation Act (AktG) and Arti-
cle 16 Sentences 1 and 2 of the Articles of Incorporation with a
simple majority of the votes cast and if required with a simple
majority of the share capital represented. Pursuant to Article
16 Sentence 3 of the Articles of Incorporation, the dismissal of
a member of the Supervisory Board requires a majority of at
least three quarters of the votes cast. Pursuant to Section 179
Subsection 2 of the German Stock Corporation Act (AktG), any
amendment to the purpose of the Company requires a three
quarters majority of the share capital represented at the
Shareholders' Meeting; no use is made in the Articles of Incor-
poration of the possibility to stipulate a larger majority of the
share capital.
-
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In a volume of up to 5% of the share capital existing at the time
of the resolution of the Annual Shareholders' Meeting, the
Board of Management was authorized, with the consent of the
Supervisory Board, to acquire the Company's own shares also
with the application of derivative financial instruments (put or
call options, forwards or a combination of these financial
instruments), whereby the terms of the derivatives may not
exceed 18 months and must be terminated on July 7, 2025, at
the latest.
Information technology risks
Low
Personnel risks
Impact
Risks related to equity investments and coopera-
tions with partners
Probability of occurrence
Low
Medium
Production and technology risks
In the third quarter of 2020, Daimler AG and Mercedes-Benz
USA, LLC (MBUSA) reached agreements with various US
authorities to settle civil and environmental claims regarding
emission control systems of certain Mercedes-Benz diesel
vehicles, which are still subject to final approval by the court.
We refer to our further explanations under Legal and tax
risks and opportunities. If the court approves the settlements
and the settlements become effective, Daimler AG and MBUSA
Company-specific risks and opportunities
B.60
Opportunity category
Warranty and goodwill cases could arise at the Daimler
Group if the quality of products does not meet requirements,
regulations are not fully complied with, or support cannot be
provided in the required form in connection with product prob-
lems and product care. Such warranty and goodwill cases as
well as quality problems both with components in vehicles and
in connection with technical innovations in vehicles require
adjustments that can lead to expenses. Possible claims in con-
nection with such risks are examined and, if necessary, the
appropriate measures are initiated for the affected products.
Capacity restrictions on the availability of batteries for certain
vehicle models, interruptions in the supply chain and possible
interruptions of supply by energy providers can lead to bottle-
necks, especially at Mercedes-Benz Cars & Vans. New techni-
cal requirements could also lead to restrictions on the sale of
vehicles already produced by Daimler Trucks & Buses. Restric-
tions on certain equipment components in new vehicle models
and the lack of availability of vehicle parts at the right time
could also mean that vehicles could not be handed over to cus-
tomers as planned. In order to avoid such bottleneck situa-
tions, importance is placed upon being able to compensate for
capacity constraints through forward planning, with a special
focus on the uncertainty caused by the covid-19 pandemic. In
addition, supply chains and the availability and quality of prod-
ucts are continuously monitored within the context of manag-
ing the entire value chain. Supplier management is undertaken
for the prevention of risks with the aim of ensuring the quantity
and quality of the components required to manufacture the
vehicles. The lack of availability and quality problems with cer-
tain vehicle parts can lead to production downtimes and cause
costs. In connection with possible production increases due to
higher utilization of production capacities than planned, there
are opportunities at Mercedes-Benz Cars & Vans that could
lead to higher sales volumes and thus have a positive impact
on earnings.
In principle, there is a danger that reduced plant availability or
the failure of production equipment or production plants
may cause internal bottlenecks that would consequently gen-
erate costs. These risks mainly exist for Mercedes-Benz Cars &
Vans. Production equipment is continuously maintained and
modernized. As a precaution, spare parts are held available or,
if required, spare machines are purchased for the production
plants that might be at risk.
In the context of product launches in the automotive seg-
ments, the required parts and equipment components have to
be available. To avoid restrictions in this context, the related
processes are continuously evaluated and improved. In order
to secure and enhance the long-term future viability of produc-
tion facilities in the automotive segments, modernization,
expansion, construction and restructuring measures are car-
ried out as required. The execution of modernization activi-
ties and the launch of new products are generally con-
nected with high investments. Inefficiencies in the production
process can occur, and as a consequence, a temporary reduc-
tion in production volumes. Furthermore, the planned increase
in battery production due to the increasing electrification of
the vehicle fleet means that initial problems during the produc-
tion of the various battery types cannot be ruled out, and can
have a negative impact on earnings.
Production and technology risks and opportunities
Technical developments and innovations are of key importance
for the safe and sustainable mobility of the future. Through the
design of the product range, technical innovations are inte-
grated in the strategic product planning of the automotive seg-
ments. Technological risks can arise especially as a result of
increasing technical complexity, the continually rising scope of
requirements to be fulfilled in terms of emissions, fuel con-
sumption and safety, as well as meeting and steadily raising
the Daimler Group's quality standards. These risks exist in the
automotive segments particularly in connection with launching
and manufacturing the products. Risks cannot be ruled out
that could have a negative impact on earnings also in relation
to the increasing automation and connectivity of vehicles and
production facilities.
Risk category
Impact
Medium
High
The possible impact and probability of occurrence of informa-
tion-technology risks are unchanged compared to the previous
Due to growing requirements concerning the confidentiality,
integrity and availability of data, Daimler has implemented vari-
ous preventive and corrective measures so that the related
risks are minimized and possible damage is limited. For exam-
ple, the Group reduces potential interruptions of operating pro-
cesses in data centers by means of mirrored data sets, decen-
tralized data storage, outsourced data backups and IT systems
designed for high availability. Emergency plans are developed
and employees are trained and regularly sensitized in order to
maintain operating capability. Specific threats are analyzed
and countermeasures are coordinated at a globally active
Cyber Intelligence & Response Center. The protection of prod-
ucts and services against the danger of hacking and cyber-
crime is continually developed.
It is essential for the globally active Daimler Group and its
wide-ranging business and production processes that informa-
tion is available and can be exchanged in an up-to-date, com-
plete and correct form. Daimler's internal framework for IT
security is based on international standards and its protective
measures also apply industry standards and good practice.
New regulatory requirements for cyber security and cyber
security management systems are taken into account in the
further development of our processes and policies. Appropri-
ately secure IT systems and a reliable IT infrastructure must be
used to protect information. Cyber threats must be identified
over the entire lifecycle of applications and IT systems, and
dealt with in line with their seriousness. Particular attention is
paid to risks that could result in the interruption of business
processes due to the failure of IT systems or which could
cause the loss or corruption of data. The advancing digitization
and connectivity of production equipment is accompanied by
coordinated technical and organizational security measures.
The ever-growing threat from cybercrime and the spread of
aggressive malicious code brings risks that can affect the
availability, integrity and confidentiality of information and IT-
supported operating resources. Despite extensive precautions,
in the worst-case scenario, this can lead to a temporary inter-
ruption of IT-supported business processes with severe nega-
tive effects on the Group's earnings. In addition, the loss or
misuse of sensitive data may under certain circumstances lead
to a loss of reputation. In particular, stricter regulatory require-
ments such as the EU Data Protection Directive may, among
other things, give rise to claims by third parties and result in
costly regulatory requirements and penalties with an impact on
earnings.
The systematically pursued digitization strategy enables
Daimler to utilize new opportunities to increase customer ben-
efit and the value of the company. Nonetheless, the high pene-
tration of information technology (IT) at all divisions also brings
risks for their business and production processes, as well as
for their services and products.
Information technology risks and opportunities
The probability of occurrence and possible impact of produc-
tion and technology risks are unchanged compared to the pre-
vious year across all segments. Opportunities have increased
from "Low" to "Medium" as a result of better-than-forecast uti-
lization of production capacities.
have agreed to, among other things, pay civil penalties, con-
duct an emission modification program for affected vehicles,
provide extended warranties, undertake a nationwide mitiga-
tion project, take certain corporate compliance measures and
make other payments. If the aforementioned obligations are
not complied with, there will be the risk that cost-intensive
measures will have to be taken and/or significant stipulated
penalties will become due.
High
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cooperations with partners
Low
Low
Opportunities related to equity investments and
Personnel opportunities
High
The following section describes the company-specific risks and
opportunities of the Daimler Group. A quantification of these
risks and opportunities is shown in table 7 B.60.
Production and technology opportunities
Information technology opportunities
Low
Company-specific risks and opportunities
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Legal risks
In Germany, a large number of customers of diesel vehicles
have filed lawsuits for damages or rescission of sales con-
tracts. They assert that the vehicles contained inadmissible
defeat devices and/or showed impermissibly high levels of
emissions or fuel consumption. They refer to, in particular, the
German Federal Motor Transport Authority's recall orders men-
tioned above. Given the current development of case numbers,
we expect a continued high number of lawsuits being filed in
this respect.
Furthermore, class actions have been filed in the United States
and Canada alleging anticompetitive behavior relating to vehi-
cle technology, costs, suppliers, markets and other competi-
tive attributes, including diesel emissions control technology.
Daimler AG and the respective other affected companies of the
Group regard the lawsuits set out above as being without merit
and will except for the US consumer class action settle-
ment defend themselves against the claims.
-
A securities class action lawsuit was pending in the United
States on behalf of investors in Daimler AG American Deposi-
tary Receipts which alleged that the defendants had made
materially false and misleading statements about diesel emis-
sions in Mercedes-Benz vehicles. The parties have agreed to
settle the lawsuit. On December 23, 2020, the court granted
final approval of the settlement. Upon expiry of the appeal
period on January 22, 2021, the proceedings were legally ter-
minated.
In addition, investors have filed lawsuits in Germany alleging
the violation of disclosure requirements. Daimler AG regards
these lawsuits as being without merit and will defend itself
against them. In this context, motions to initiate model pro-
ceedings in accordance with the Act on Model Proceedings in
Capital Markets Disputes (KapMuG) have been filed by inves-
tors as well as by Daimler AG. On January 14, 2021, the Stutt-
gart Regional Court issued an order for reference to com-
mence such model case proceedings before the Stuttgart
Higher Regional Court. Daimler AG will continue to defend
itself against the investors' allegations also in these model
case proceedings.
Daimler's ability to defend itself in the court proceedings could
be impaired by the US consumer class action settlement as
well as unfavorable allegations, findings, results or develop-
ments in any of the governmental or other court proceedings
discussed above, in particular by the fine notice issued by the
Stuttgart district attorney's office and by the civil settlements
with the US authorities.
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129
Risks from other legal proceedings. Following the settle-
ment decision by the European Commission adopted on July
19, 2016 concluding the trucks antitrust proceedings, Daimler
AG and Daimler Truck AG are facing customers' claims for
damages to a considerable degree. Respective legal actions,
class actions and other forms of legal redress have been initi-
ated in various states in and outside of Europe and should fur-
ther be expected. Daimler takes appropriate legal remedies to
defend itself.
As legal proceedings are fraught with a large degree of uncer-
tainty, it is possible that after their final resolution, some of the
provisions we have recognized for them could prove to be
insufficient. As a result, substantial additional expenditures
may arise. This also applies to legal proceedings for which the
Group has seen no requirement to recognize a provision.
It cannot be ruled out that the regulatory risks and risks from
legal proceedings discussed above, individually or in the aggre-
gate, may materially adversely impact the profitability, cash
flows and financial position of the Group or any of its seg-
ments.
Although the final result of any such litigation may influence
the Group's earnings and cash flows in any particular period,
Daimler believes that any resulting obligations are unlikely to
have a sustained effect on the Group's financial position.
Further information on legal proceedings is provided in
Note 30 of the Notes to the Consolidated Financial State-
ments.
Tax risks and opportunities
Daimler AG and its subsidiaries operate in many countries
worldwide and are therefore subject to numerous different
statutory provisions and tax audits. Any changes in legislation
and jurisdiction, as well as different interpretations of the law
by the fiscal authorities - especially in the field of cross-border
transactions may be subject to considerable uncertainty. It is
therefore possible that the provisions recognized will not be
sufficient, which could have negative effects on the Group's
net profit and cash flows.
In a separate lawsuit filed by the State of Arizona in January
2019, the plaintiff claims that, amongst others, Daimler AG and
MBUSA deliberately deceived consumers in connection with
advertising Mercedes-Benz diesel vehicles. Consumer class
actions containing similar allegations were filed against
Daimler AG and further Daimler Group companies in Canada in
April 2016, in the United Kingdom since May 2020, in the Neth-
erlands in June and December 2020 as well as against Daimler
AG in Israel in February 2019. In a separate lawsuit filed by the
Environmental Protection Commission of Hillsborough County,
Florida in September 2020, the plaintiff claims that, amongst
others, Daimler AG and MBUSA violated municipal regulations
prohibiting vehicle tampering and other conduct by using
alleged devices claimed to impair the effectiveness of emis-
sions control systems.
The Group continues to be exposed to legal and tax risks. Pro-
visions are recognized for those risks if and insofar as they are
likely to be utilized and the amounts of the obligations can be
reasonably estimated.
In the third quarter of 2020, Daimler AG and MBUSA reached a
settlement with plaintiffs' counsel of this consumer class
action. As part of the settlement, Daimler AG and MBUSA deny
the material factual allegations and legal claims asserted by
the class action plaintiffs, but have agreed to provide pay-
ments to certain current and former diesel vehicle owners and
lessees. The estimated cost of the class action settlement is
approximately USD 700 million. Daimler expects costs of the
settlements with the US authorities mentioned above in the
amount of approximately USD 1.5 billion. In addition, Daimler
estimates further expenses of a mid three-digit-million euro
amount to fulfill requirements of these settlements. The settle-
ment with the US consumer class action plaintiffs is still sub-
ject to final court approval.
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Regulatory risks. The automotive industry is subject to exten-
sive governmental regulations worldwide. Laws in various juris-
dictions govern occupant safety and the environmental impact
of vehicles, including emissions levels, fuel economy and
noise, as well as the emissions of the plants where vehicles or
parts thereof are produced. In case regulations applicable in
the different regions are not complied with, this could result in
significant penalties and reputational harm or the inability to
certify vehicles in the relevant markets. The cost of compli-
ance with these regulations is considerable, and in this con-
text, Daimler continues to expect a significant increase in such
costs.
year.
Risks from legal proceedings in general. Daimler AG and its
subsidiaries are confronted with various legal proceedings and
claims as well as governmental investigations and orders (legal
proceedings) on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer, sup-
plier and other contractual relationships, intellectual property
rights (especially patent infringement lawsuits), warranty
claims, environmental matters, antitrust matters (including
actions for damages) as well as investor litigation. Product-
related litigation involves claims alleging faults in vehicles.
Some of these claims are asserted by way of class actions. If
the outcome of such legal proceedings is detrimental to
Daimler or such proceedings are settled, the Group may be
required to pay substantial compensatory and punitive dam-
ages or to undertake service actions, recall campaigns, mone-
tary penalties or other costly actions. Some of these proceed-
ings and related settlements may have an impact on the
Group's reputation.
Risks from legal proceedings in connection with diesel
exhaust gas emissions - governmental proceedings.
Daimler is continuously subject to governmental information
requests, inquiries, investigations, administrative orders and
proceedings relating to environmental, criminal, antitrust and
other laws and regulations in connection with diesel exhaust
emissions.
Several authorities and institutions worldwide were, and still
are, active in the form of inquiries, investigations, procedures
and/or orders. These activities particularly relate to test
results, the emission control systems used in Mercedes-Benz
diesel vehicles and/or Daimler's interaction with the relevant
authorities as well as related legal issues and implications,
including, but not limited to, under applicable environmental,
criminal and antitrust laws.
In the United States, Daimler AG and Mercedes-Benz USA, LLC
(MBUSA) reached agreements in the third quarter of 2020 with
various authorities to settle civil and environmental claims
regarding emission control systems of certain diesel vehicles.
The involved US authorities are the environmental agencies
Environmental Protection Agency ("EPA") and California Air
Resources Board ("CARB"), the Environmental and Natural
Resources Division of the U.S. Department of Justice (“DOJ"),
the California Attorney General's Office and the U.S. Customs
and Border Protection ("CBP").
The authorities take the position that Daimler failed to disclose
Auxiliary Emission Control Devices (AECDs) in certain of its US
diesel vehicles and that several of these AECDs are illegal
defeat devices. As part of these settlements, Daimler denies
the allegations by the authorities and does not admit liability,
but has agreed to, among other things, pay civil penalties, con-
duct an emission modification program for affected vehicles,
provide extended warranties, undertake a nationwide mitiga-
tion project, take certain corporate compliance measures and
make other payments. The company has cooperated fully with
the US authorities. The settlements are subject to final court
approval. Upon approval, they will be final and effective.
Daimler expects costs of the settlements with the US authori-
ties of approximately USD 1.5 billion. The estimated cost for
the US consumer class action mentioned below amounts to
around USD 700 million. In addition, Daimler estimates further
expenses of a mid three-digit-million euro amount to fulfill
requirements of these settlements.
As already reported, in April 2016, the DOJ requested that
Daimler conduct an internal investigation. While Daimler has
conducted such internal investigation as part of the DOJ's
investigation, the DOJ's investigation is ongoing. In Canada, the
Canadian environmental regulator Environment and Climate
Change Canada ("ECCC") is conducting an investigation in con-
nection with Diesel exhaust emissions. Daimler continues to
cooperate with the investigating authorities.
In Germany, the Stuttgart district attorney's office is conduct-
ing criminal investigation proceedings against Daimler employ-
ees on the suspicion of fraud and criminal advertising. In Feb-
ruary 2019, the Stuttgart district attorney's office also initiated
a formal investigation proceeding against Daimler AG with
respect to an administrative offense. In September 2019, it
issued a fine notice against Daimler based on a negligent viola-
tion of supervisory duties in the amount of €870 million, which
has become legally binding, thereby concluding the administra-
tive offense proceedings against Daimler.
Since 2018, the German Federal Motor Transport Authority
("KBA") has repeatedly issued subsequent auxiliary provisions
for the EC type approvals of certain Mercedes-Benz diesel
vehicles, and has ordered mandatory recalls as well as, in
some cases, stops of the first registration. In each of those
cases, it held that certain calibrations of specified functional-
ities in certain Mercedes-Benz diesel vehicles are to be quali-
fied as impermissible defeat devices. Daimler has a contrary
legal opinion on this question. Since 2018, however, it has (in
view of the KBA's interpretation of the law as a precautionary
measure) implemented a temporary delivery and registration
stop with respect to certain models, also covering the used-
car, leasing and financing businesses, and is constantly review-
ing whether it can lift this delivery and registration stop in
whole or in part. Daimler has filed timely objections against the
KBA's administrative orders mentioned above. In early 2021,
the KBA issued objection orders ("Widerspruchsbescheide") in
certain of the proceedings not following the arguments
brought forward by Daimler. Since Daimler still does have a dif-
ferent understanding of the relevant legal provisions, it cur-
rently analyzes whether the controversial questions at issue
should be clarified in a court of law. Irrespective of such objec-
tions and possibly following lawsuits, Daimler continues to
cooperate fully with the KBA. The new calibrations requested
by the KBA are being processed, and for a substantial propor-
tion of the vehicles, the relevant software has already been
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127
approved by the KBA; the related recalls have insofar been ini-
tiated. It cannot be ruled out that under certain circumstances,
software updates may have to be reworked, or further delivery
and registration stops may be ordered or resolved by the Com-
pany as a precautionary measure, also with regard to the used-
car, leasing and financing businesses. In the course of its regu-
lar market supervision, the KBA is routinely conducting further
reviews of Mercedes-Benz vehicles and is asking questions
about technical elements of the vehicles. In addition, Daimler
continues to be in a dialogue with the German Ministry for
Transport and Digital Infrastructure (BMVI) to conclude the
analysis of the diesel-related emissions matter and to further
the update of affected customer vehicles. In light of the afore-
mentioned administrative orders issued by the KBA, and con-
tinued discussions with the KBA and the BMVI, it cannot be
ruled out completely that additional administrative orders may
be issued in the course of the ongoing and/or further investi-
gations. Since September 1, 2020, this also applies to respon-
sible authorities of other member states and the European
Commission, which conduct market surveillance under the
new European Type Approval Regulation and can take mea-
sures upon assumed non-compliance, irrespective of the place
of the original type approval.
In the course of its formal investigation into possible collusion
on clean emission technology, the European Commission sent
a statement of objections to Daimler and other automobile
manufacturers in April 2019. In this context, Daimler filed an
application for immunity from fines (leniency application) with
the European Commission some time ago.
In addition to the aforementioned authorities, national cartel
authorities and other authorities of various foreign States, the
South Korean Ministry of Environment, the South Korean com-
petition authority (Korea Fair Trade Commission) and the Seoul
public prosecutor's office (South Korea) are conducting various
investigations and/or procedures in connection with Diesel
exhaust emissions.
Daimler continues to fully cooperate with the authorities and
institutions. Irrespective of such cooperation and in light of the
recent developments, it is possible that further regulatory,
criminal and administrative investigative and enforcement
actions and measures relating to Daimler and/or its employees
will be taken or administrative orders will be issued. Such
actions, measures and orders may include subpoenas, that is,
legal instructions issued under penalty of law in the process of
taking evidence, or other requests for documentation, testi-
mony or other information, or orders to recall vehicles, further
search warrants, a notice of violation or an increased formal-
ization of the governmental investigations, coordination or pro-
ceedings, including the resolution of proceedings by way of a
settlement. Additionally, further delays in obtaining regulatory
approvals necessary to introduce new or recertify existing
vehicle models could occur.
In light of the legal positions taken by EPA, CARB and the KBA,
it is likely that, besides these authorities, one or more regula-
tory and/or investigative authorities worldwide will reach the
conclusion that other passenger cars and/or commercial vehi-
cles with the brand name Mercedes-Benz or other brand
names of the Daimler Group are equipped with impermissible
defeat devices. Likewise, such authorities could take the view
that certain functionalities and/or calibrations are not proper
and/or were not properly disclosed. Furthermore, the authori-
ties have increased scrutiny of Daimler's processes regarding
running-change, field-fix and defect reporting as well as other
compliance issues. As described above, the Stuttgart district
attorney's office's administrative offense proceedings and the
proceedings underlying the civil settlements with the US
authorities have been resolved. The other inquiries, investiga-
tions, legal actions and proceedings as well as the replies to
the governmental information requests and the objection pro-
ceedings against KBA's administrative orders, are in part still
ongoing and open. Hence, Daimler cannot predict the outcome
of these inquiries, investigations and proceedings at this time.
Due to the outcome of the administrative offense proceedings
by the Stuttgart district attorney's office against Daimler and
the civil settlements with the US authorities, as well as the
above and any potential other information requests, inquiries,
investigations, administrative orders and proceedings, it is
possible that Daimler will become subject to, as the case may
be, significant additional monetary penalties, fines, disgorge-
ments of profits, remediation requirements, further vehicle
recalls, further registration and delivery stops, process and
compliance improvements, mitigation measures and the early
termination of promotional loans, and/or other sanctions, mea-
sures and actions (such as the exclusion from public tenders),
including further governmental investigations and/or adminis-
trative orders and additional proceedings. The occurrence of
the aforementioned events in whole or in part could cause sig-
nificant collateral damage including reputational harm. Further,
due to negative allegations, determinations or findings with
respect to technical or legal issues by one of the various gov-
ernmental agencies, other agencies - or also plaintiffs - could
also adopt such allegations, determinations or findings, even if
such allegations, determinations or findings are not within the
scope of such authority's responsibility or jurisdiction. Thus, a
negative allegation, determination or finding in one proceeding,
such as the fine notice issued by the Stuttgart district attor-
ney's office or the allegations underlying the civil settlements
with the US authorities, carries the risk of being able to have
an adverse effect on other proceedings, also potentially lead-
ing to new or expanded investigations or proceedings, includ-
ing lawsuits.
In addition, Daimler's ability to defend itself in proceedings
could be impaired by the fine notice issued by the Stuttgart
district attorney's office, the civil settlements with the US
authorities and by the underlying allegations and other unfa-
vorable allegations, as well as by findings, results or develop-
ments in any of the information requests, inquiries, investiga-
tions, administrative orders, legal actions and/or proceedings
discussed above.
Risks from legal proceedings in connection with diesel
exhaust gas emissions - court proceedings. Since the
beginning of 2016, several consumer class actions in U.S. fed-
eral district courts have become pending in the United States,
which have been consolidated into a consolidated class action
against Daimler AG and MBUSA before the U.S. District Court
for New Jersey. In the class action, plaintiffs alleged that
Daimler AG and MBUSA used devices that impermissibly
impair the effectiveness of emission control systems in reduc-
ing nitrogen-oxide (NOx) emissions and which cause excessive
emissions from vehicles with diesel engines. In addition, plain-
tiffs alleged that consumers were deliberately deceived in con-
nection with the advertising of Mercedes-Benz diesel vehicles.
Personnel risks and opportunities
Risks and opportunities related to equity investments and
cooperation with partners
Due to demographic developments, the Group has to cope with
changes relating to an aging workforce and has to secure a suf-
ficient number of qualified young persons with the potential to
become the next generation of highly skilled specialists and
executives. This is addressed by measures taken in the area of
generation management that do justice to the scope of the
issue. We counter economic, market and competitive fluctua-
tions with the established time and flexibility instruments to
enable us to react appropriately to the situation. In order to
achieve the long-term reduction in personnel costs necessary
for the transformation, Daimler's management and the General
Works Council concluded an agreement in 2019 which includes
a staff-reduction program. Due to the covid-19 pandemic and
the fact that the staff-reduction program is voluntary for both
parties, there is a risk that implementation may not be able to
take place to the full extent planned. Risks also exist in partic-
ular due to upcoming negotiations on wage conditions in the
metal and electrical industry and the associated possible pro-
duction losses.
Opportunities relating to pension plans
High
Low
Risks related to pension plans
Low
Opportunities from changes in credit ratings
Low
Medium
High
Risks from changes in credit ratings
Low
Low
repayment requirements
Opportunities of credit
Risks of credit
capital-market access
High
Medium
repayment requirements
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updated currency risk exposures are successively hedged with
suitable financial instruments (predominantly currency for-
wards and currency options) in accordance with exchange rate
expectations, which are continually reviewed, whereby both
risks and opportunities are limited. Any overcollateralization
caused by changes in exposure is generally reversed by suit-
able measures without delay. Exchange rate risks and opportu-
nities also exist in connection with the translation into euros of
the net assets, revenues and expenses of the companies of the
Group outside the euro zone (translation risk); these risks are
not generally hedged.
Legal and tax risks and opportunities
Further information on the pension plans and their risks is pro-
vided in Note 22 of the Notes to the Consolidated Finan-
cial Statements. Further information on financial risks, risk-lim-
iting measures and the management of these risks is provided
in Note 33 of the Notes to the Consolidated Financial
Statements. Information on the Group's financial instruments
is provided in Note 32 of the Notes to the Consolidated
Financial Statements.
Positive effects on the Group's net profit and cash flows are
also possible as a result of retroactive legislation, future court
rulings or changes in the opinions of the tax authorities.
Risks and opportunities relating to pension plans
Daimler has pension benefit obligations and to a lesser degree,
obligations relating to healthcare benefits, which are largely
covered by plan assets. The balance of pension obligations
less plan assets constitutes the carrying amount or funded sta-
tus of those employee benefit plans. The measurement of pen-
sion obligations and the calculation of net pension expense are
based on certain assumptions. Even small changes in those
assumptions such as a change in the discount rate have a neg-
ative or positive effect on the funded status and Group equity
in the current financial year, and lead to changes in the peri-
odic net pension expense in the following financial year. The
fair value of plan assets is determined to a large degree by
developments in the capital markets. Unfavorable or favorable
developments, especially relating to share prices and fixed-
interest securities, reduce or increase the carrying value of
plan assets. A change in the composition of plan assets can
also have a positive or negative impact on the fair value of plan
assets. The broad diversification of investments, the selection
of asset managers on the basis of quantitative and qualitative
analyses, and the ongoing monitoring of returns and risks con-
tribute to a reduction in the investment risk. The structure of
pension obligations is taken into consideration with the deter-
mination of the investment strategy for the plan assets in order
to reduce fluctuations of the funded status.
Risks and opportunities from changes in credit ratings
Risks and opportunities exist in connection with potential
downgrades or upgrades to credit ratings by the rating agen-
cies, and thus to Daimler's creditworthiness. Downgrades
could have a negative impact on the Group's financing if such a
downgrade leads to an increase in the costs for external
financing or restricts the Group's ability to obtain financing. A
credit rating downgrade could also discourage investors from
investing in Daimler AG.
Risks of premature credit repayment requirements
Daimler may be required to make premature repayment of spe-
cial-purpose loans in the case of adverse results of ongoing
legal proceedings. Any resulting refinancing requirement could
have to be concluded at a higher cost.
Liquidity risks arise when a company is unable to fully meet its
financial obligations. In the normal course of business, Daimler
uses bonds, commercial paper and securitized transactions, as
well as bank loans in various currencies, primarily with the aim
of refinancing its leasing and sales-financing business. An
increase in the cost of refinancing would have a negative
impact on the competitiveness and profitability of our financial
services business to the extent that the higher refinancing
costs cannot be passed on to customers; a limitation of the
financial services business would also have negative conse-
quences for the vehicle business. Access to capital markets in
individual countries may be limited by government regulations
or by a temporary lack of absorption capacity. In addition,
pending legal proceedings as well as Daimler's own business
policy considerations and developments may temporarily pre-
vent the Group from covering any liquidity requirements by
means of borrowing in the capital markets.
Risks of restricted access to capital markets
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | RISK AND OPPORTUNITY REPORT 125
Country risk describes the risk of financial loss resulting from
changes in political, economic, legal or social conditions in the
respective country, for example due to sovereign measures
such as expropriation or a ban on currency transfers. Daimler
is exposed to country risks that primarily result from cross-
border financing or collateralization for Group companies or
customers, from investments in subsidiaries and joint ven-
tures, and from cross-border trade receivables. Country risks
also arise from cross-border cash deposits with financial insti-
tutions. The Group addresses these risks by setting country
limits (e.g., for hard-currency portfolios of Daimler Mobility
companies). Daimler also has an internal rating system that
divides all countries in which it operates into risk categories.
Country risks
Credit risks also arise from the Group's liquid assets. Should
defaults occur, this would adversely affect the Group's finan-
cial position, cash flows and profitability. The limit methodol-
ogy for liquid funds deposited with financial institutions has
been continuously further developed in recent years. In con-
nection with investment decisions, priority is placed on the
borrowers' very high creditworthiness and on balanced risk
diversification. Most liquid assets are held in investments with
an external rating of "A" or better.
The Group is exposed to credit risks which result primarily
from its financial services activities and from the operations of
its vehicle business. The risks from leasing and sales financing
are dealt with in the General market risks and opportuni-
ties section.
Credit risk describes the risk of financial loss resulting from a
counterparty failing to meet its contractual payment obliga-
tions. Credit risk includes both the direct risk of default and
the risk of a deterioration in creditworthiness, as well as con-
centration risks.
Credit risks
As described in the section on procurement market risks and
opportunities, Daimler is exposed to risks arising from changes
in prices of raw materials. A small proportion of the raw-mate-
rial price risks, primarily from the planned purchase of certain
metals, is reduced through the use of derivative financial
instruments.
Commodity price risks and opportunities
Changes in interest rates can create risks and opportunities for
business operations as well as for financial transactions.
Daimler employs a variety of interest-rate sensitive financial
instruments to manage the cash requirements of its business
operations on a day-to-day basis. Most of these financial
instruments are held in connection with the financial services
business of Daimler Mobility. Interest rate risks and opportuni-
ties arise when fixed-interest periods are not congruent
between the asset and liability sides of the balance sheet. By
means of refinancing coordinated with the terms of the financ-
ing agreements, the risk of maturity mismatch is minimized
from both an interest-rate and a liquidity perspective. Remain-
ing interest-rate risks are managed with the use of derivative
financial instruments. The funding activities of the industrial
business and the financial services business are coordinated
at Group level. Derivative interest rate instruments such as
interest rate swaps are used to achieve the desired interest
rate maturities and asset/liability structures (asset and liability
management).
Interest rate risks and opportunities
capital-market access
Opportunities of restricted
Risks of restricted
Country opportunities
Impact
Probability of occurrence
Risk category
Financial risks and opportunities
B.61
The Daimler Group's global orientation means that its business
operations and financial transactions are connected with risks
and opportunities related to fluctuations in currency exchange
rates. This applies in particular to fluctuations of the euro
against the US dollar, Chinese renminbi, British pound and
other currencies such as those of growth markets. An
exchange rate risk or opportunity arises in business operations
primarily when revenue is generated in a currency different
from that of the related costs (transaction risk). This applies in
particular to Mercedes-Benz Cars & Vans. A major portion of
its revenue is generated in foreign currencies while most of its
production costs are denominated in euros. Daimler Trucks &
Buses is also exposed to such transaction risks, but to a lesser
degree because of its worldwide production network. Regularly
Exchange rate risks and opportunities
In addition, the Group is exposed to credit-, country- and
liquidity-related risks, risks of restricted access to capital mar-
kets, risks of early credit repayment requirements and risks
from changes in credit ratings. As part of the risk management
process, Daimler regularly assesses these risks by considering
changes in key economic indicators and market information.
Pension plan assets to cover retirement and healthcare bene-
fits (market-sensitive investments including equities and
interest-bearing securities) are not included in the following
analysis.
Daimler is generally exposed to risks and opportunities from
changes in market prices such as currency exchange rates,
interest rates and commodity prices. Market price changes can
have a negative or positive influence on the Group's profitabil-
ity, cash flows and financial position. Daimler systematically
manages and monitors market price risks and opportunities
primarily in the context of its operational business and financ-
ing activities, and applies derivative financial instruments for
hedging purposes where needed, thus limiting both market
price risks and opportunities.
In principle, the Group's operating and financial risk exposures
underlying its financial risks and opportunities can be divided
into symmetrical and asymmetrical risk and opportunity pro-
files. With the symmetrical risk and opportunity profiles (e.g.,
currency exposures), risks and opportunities exist equally,
while with the asymmetrical risk and opportunity profiles (e.g.,
credit and country exposures), the risks outweigh the opportu-
nities.
The following section deals with the financial risks and oppor-
tunities of the Daimler Group. Risks and opportunities can
have negative or positive effects on the profitability, cash flows
and financial position of the Daimler Group. The probability of
occurrence and possible impact of these risks and opportuni-
ties is presented in table 7 B.61. The probability of occurrence
and impact of the financial risks and opportunities are essen-
tially unchanged from the previous year. Only in the case of
country risks, the possible impact has decreased from
"Medium" to "Low" because of declining risk factors, and with
risks of limited access to capital markets, our assessment of
the probability of occurrence has increased from "Low" to
"Medium" due to the increased volatility of the financial mar-
kets.
Financial risks and opportunities
The possible impact of risks has decreased from "Medium" to
"Low" due to measures already taken in the portfolio of equity
interests. The overall assessment of the probability of occur-
rence of both risks and opportunities remains unchanged com-
pared with the previous year.
The remeasurement of an associated company or joint venture
in relation to its carrying value can lead to risks and opportuni-
ties for the segment to which it is allocated. Furthermore,
ongoing business activities, especially the integration of
employees, technologies and products, can lead to risks. In
addition, further financial obligations or an additional financing
requirement can arise. Risks from associated companies and
joint ventures exist above all at Daimler Trucks & Buses and
Daimler Mobility, as well as at the associated companies and
joint ventures directly allocated to the Group. The associated
companies and joint ventures are subject to a monitoring pro-
cess so that, if required, decisions can be promptly made on
whether or not measures can be taken to support or ensure
their profitability. The recoverable value of investments in
associated companies and joint ventures is also regularly mon-
itored.
The Daimler Group generally participates in the risks and
opportunities of associated companies and joint ventures in
line with its equity interest, and is also subject to share-price
risks and opportunities if such companies are listed on a stock
exchange.
123
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Cooperation with partners in associated companies and joint
ventures is of key importance to Daimler, both in the transfor-
mation toward electric mobility and comprehensive digitization
and in connection with mobility solutions. In particular with
new technologies, these shareholdings help to utilize synergies
and improve cost structures in order to respond successfully
to the competitive situation in the automotive industry.
Due to the ongoing transformation process, the probability of
occurrence of personnel risks has increased from "Medium" to
"High." The possible impact is unchanged compared with the
previous year.
Opportunity category
Competition for highly qualified staff and management is still
very intense in the industry and the regions in which Daimler
operates. The future success of the Daimler Group also
depends on the extent to which it succeeds over the long term
in recruiting, integrating and retaining specialist employees.
The established human resources instruments take such per-
sonnel risks into consideration. One focus of human resources
management is the targeted personnel development and fur-
ther training of the workforce. In order to remain successful as
a company, we continuously develop the way we work together
and our management culture.
Impact
Low
Low
Low
Country risks
Low
Low
Credit risks
Low
Commodity price opportunities
Low
Low
Commodity price risks
Low
Interest rate opportunities
Low
Low
Interest rate risks
High
Exchange rate opportunities
High
Exchange rate risks
Any changes or interventions by the fiscal authorities are con-
tinuously monitored by the tax department and measures are
taken if required.
Credit opportunities
Overall assessment of the risk and opportunity
situation
In addition, if future taxable income is not earned or is too low,
there is a risk that the tax benefit from loss carryforwards and
tax-deductible temporary differences may not be recognized or
may no longer be recognized in full, which could have a nega-
tive impact on net profit. However, there is an accounting
opportunity that tax benefits currently not recognized in full
may be utilized or recognized in future years and could thus
also have a positive impact on the Group's net profit.
We also expect the US economy to grow strongly by about 5%
in 2021, driven primarily by dynamic growth in private con-
sumption and possibly by additional fiscal stimulus. As vacci-
nation rates rise, especially those services sectors should
recover which were severely affected by pandemic-related
restrictions. This should also ensure that unemployment con-
tinues to decline noticeably. The US Federal Reserve (Fed) is
likely to maintain its expansionary monetary policy as
announced and to continue supporting the economic recovery.
The economy of the European Monetary Union is expected to
remain severely impacted by the coronavirus pandemic in
2021, but after a weak start, it should increasingly gain
momentum as the year progresses. This should be supported
both by the recovery in global trade and by improved pros-
pects for domestic demand as restrictions on economic activ-
ity are gradually eased or lifted. In addition, the European Cen-
tral Bank's monetary policy is likely to remain very
expansionary and support the economic recovery. Investment
activity in the euro zone should also benefit from the start of
implementation of the EU Recovery Fund. Overall, these devel-
opments should lead to an economic growth rate in the Euro-
pean Monetary Union of approximately 4%, while develop-
ments within the region will continue to be very
heterogeneous. The German economy should follow a similar
pattern and grow by about 3.5%, primarily because of an
expected strong second half. The UK economy should also
continue to recover, but is likely to suffer noticeably in the first
few months of the year in particular from the stringent mea-
sures taken to combat the covid-19 pandemic and the growth-
dampening impact of the country's exit from the EU single
market effective January 1, 2021.
We assume that the global economy will grow strongly in 2021
following the deep recession of 2020; this applies both to the
industrialized countries and to the emerging markets. However,
especially in the northern hemisphere, containment of the
covid-19 pandemic is likely to affect the first few months of the
year. Along with the expected spread of effective vaccines
through the population, the situation should improve from the
second quarter onwards and the upturn should gain momen-
tum. Over the course of the year, the global economy should
be able to return to its pre-crisis level of the fourth quarter of
2019. Global trade should also increase again significantly after
the deep slump in 2020.
Our assessments for the year 2021 are based on the assump-
tion of a gradual normalization of economic conditions in the
markets that are most important for us. Our expectations for
business developments in 2021 are based in particular on the
assumption that the global economy can recover from the pan-
demic-related weakness of 2020, helped by, among other
things, the increasing availability of effective vaccines. We
expect demand for cars and commercial vehicles to exceed the
prior-year levels significantly in many markets. The develop-
ment we have outlined is subject to various opportunities and
risks, which are explained in detail in the Risk and Oppor-
tunity Report.
The statements made in the Outlook chapter are based on the
business plan of Daimler AG as approved by the Board of Man-
agement and the Supervisory Board. That plan is based on the
premises we set regarding the economic situation and the
development of automotive markets. It involves assessments
made by Daimler, which are based on analyses by various
renowned economic research institutes, international organiza-
tions and industry associations, as well as on the internal mar-
ket analyses of our sales companies. The prospects for our
future business development as presented here reflect the tar-
gets of our divisions as well as the opportunities and risks pre-
sented by the anticipated market conditions and the competi-
tive situation during the planning period. Against this
backdrop, we adjust our expectations for business develop-
ment to reflect updated forecasts for the development of the
various automotive markets. The statements made below are
based on the facts known to us at the beginning of 2021. The
Daimler Business Plan is based on the existing Group struc-
ture, including Daimler Trucks & Buses, and for reasons of
comparability covers the full 2021 financial year. As previously
announced, the Board of Management decided to evaluate a
spin-off of Daimler Trucks & Buses, including significant parts
of the related financial services business (Daimler Truck), and
to begin preparations for a separate listing of Daimler Truck
before the end of 2021. Before the spin-off, we will reclassify
Daimler Truck as discontinued operations. We expect consider-
able positive effects in connection with the spin-off in the sec-
ond half of the year, which cannot be reliably determined at
present.
The world economy
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130
The overall risk and opportunity situation of the Daimler Group
remains essentially unchanged. No risks are recognizable -
neither on the balance sheet date nor at the time of preparing
the consolidated financial statements - that either alone or in
combination with other risks could endanger the continued
existence of the Group.
In addition to the risk categories described above, unforesee-
able events can have a negative impact on the business opera-
tions and thus on the Daimler Group's profitability, cash flows,
financial position and reputation. In particular, legal risks or
social violations by partners and suppliers can have a negative
influence on the reputation of the Daimler Group, the environ-
ment and the employees of partner companies and suppliers.
As one of the basic principles of corporate activity, Daimler
therefore pays particular attention to compliance with legal
and ethical rules - also when selecting partners and suppliers.
In order to recognize risks and opportunities at an early stage
and to deal successfully with the current risk and opportunity
situation, the established risk and opportunity management
system is continuously monitored and further developed.
The overall view of the Group's risk and opportunity situation is
the sum of the described individual risks and opportunities of
all risk and opportunity categories.
Outlook
140
Composition and mode of operation of the
141
corporate governance
The main principles and practices of
Corporate Governance Code
KA
Declaration on Corporate Governance 140
137
Report of the Audit Committee
m
22
Board of Management
Declaration of compliance with the German
143
148
144
As Chairman of the Audit Committee, I am very pleased to
report to you on the tasks and activities performed by that
body in financial year 2020.
Dear Shareholders,
Report of the Audit Committee
137
C❘ CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Governance
Composition and mode of operation of the
Supervisory Board and its committees
Germany's law on the equal participation of
women and men in executive positions
Overall requirement profiles for the
Corporate
Shareholders and Shareholders' Meeting
C❘ CORPORATE GOVERNANCE | CONTENTS
and the Supervisory Board
composition of the Board of Management
147
17
153
136
Against this backdrop and supported by the Group's brand
strengths and innovative capabilities, we look forward with
confidence to the year 2021. Compared with the particularly
difficult previous year, we should be able to significantly
increase our unit sales, revenue and earnings. However, this is
based on the assumption that the covid-19 pandemic is gradu-
ally contained in our most important markets and that further
setbacks for global economic development are avoided.
References made in this management report
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | OUTLOOK
134
For the year 2021, we aim to have liquidity available in a vol-
ume appropriate to the general risk situation in the financial
markets and to Daimler's risk profile. When measuring the
level of liquidity, we give due consideration to possible refi-
nancing risks caused for example by temporary distortions in
the financial markets. We continue to assume, however, that
we will have very good access to the capital markets and the
bank market also in the year 2021. We aim to cover our funding
needs in the planning period primarily by means of bonds,
commercial paper, bank loans, customer deposits in the direct
banking business and the securitization of receivables in the
financial services business; the focus will be on bonds and
loans from globally and locally active banks. In view of our
ongoing strong creditworthiness and in a continuing environ-
ment of high liquidity in the international capital markets, we
anticipate stable refinancing conditions. Furthermore, our goal
is to continue to ensure a high degree of financial flexibility.
We expect the adjusted cash conversion rate for the
Mercedes-Benz Cars & Vans division to be within a corridor of
0.7 to 0.9 in 2021. The adjusted cash conversion rate for
Daimler Trucks & Buses is likely to be between 0.8 and 1.0.
The free cash flow of the industrial business will continue to be
adversely affected by high advance expenditure for new prod-
ucts and technologies. The payments agreed in the third quar-
ter of 2020 in the context of the settlements with US authori-
ties and with plaintiffs' council in the US consumer class
actions relating to diesel emissions are also included in the
forecasted free cash flow. Further possible expenses in con-
nection with legal and regulatory proceedings are not included.
Furthermore, we expect higher tax payments than in the previ-
ous year. An opposing, positive effect will result from the
planned fuel-cell joint venture with Volvo in the amount of the
sale proceeds of probably €0.6 billion, which is to be allocated
proportionately to Mercedes-Benz Cars & Vans and Daimler
Trucks & Buses. This cash inflow will not affect the adjusted
cash conversion rate. In total, we expect the free cash flow of
the industrial business in 2021 to be significantly below the
prior-year level.
Free cash flow and liquidity
Capital expenditure and research activities
In line with a sustainable dividend policy, Daimler sets the divi-
dend based on a distribution ratio of 40% of the net profit
attributable to Daimler shareholders. We also take into consid-
eration the free cash flow from the industrial business when
setting the dividend.
Dividend
Daimler Mobility anticipates positive effects on adjusted return
on equity from lower credit-risk costs and improved operating
profit in its business with mobility services. Opposing effects
are likely to result from expenses for new project investments.
At Daimler Trucks & Buses, the adjusted return on sales will
reflect positive earnings effects from recovering markets, a
more favorable unit-sales structure, further improved pricing,
and the after-sales business. Measures to increase efficiency,
such as material-cost savings, will have a supporting effect.
There will be a negative impact in 2021 from increasing func-
tional costs compared with the previous year, which strict sav-
ings measures.
133
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sures.
At the Annual Shareholders' Meeting on March 31, 2021, the
Board of Management and the Supervisory Board will propose
the payment of a dividend of €1.35 per share for the year 2020
(previous year: €0.90). This represents a total distribution of
€1.4 billion (previous year: €1.0 billion).
Insofar as the references made in this Management Report relate to parts of
the Annual Report that were not included in the external audit (components
outside the company and consolidated financial statements and the com-
bined Management Report), or to the Daimler website or other reports or
documents, these were not part of the external audit.
Investment in property, plant and equipment
A main feature of investment in property, plant and equipment
at Mercedes-Benz Cars & Vans will be the product ramp-ups of
the next-generation C-Class and the battery-electric vehicles
on the EVA2 platform. In addition, we will push ahead with the
development of alternative drive systems and will also con-
tinue to invest in conventional drive systems. Investment in
property, plant and equipment at Mercedes-Benz Cars & Vans
is therefore also expected to be at the prior-year level.
This document contains forward-looking statements that reflect our current
views about future events. The words "anticipate," "assume," "believe," "esti-
mate," "expect," "intend," "may," "can," "could," "plan," "project," "should"
and similar expressions are used to identify forward-looking statements.
These statements are subject to many risks and uncertainties, including an
adverse development of global economic conditions, in particular a decline of
demand in our most important markets; a deterioration of our refinancing
possibilities on the credit and financial markets; events of force majeure
including natural disasters, pandemics, acts of terrorism, political unrest,
armed conflicts, industrial accidents and their effects on our sales, purchas-
ing, production or financial services activities; changes in currency exchange
rates, customs and foreign trade provisions; a shift in consumer preferences
towards smaller, lower-margin vehicles; a possible lack of acceptance of our
products or services which limits our ability to achieve prices and adequately
utilize our production capacities; price increases for fuel or raw materials;
disruption of production due to shortages of materials, labor strikes or sup-
plier insolvencies; a decline in resale prices of used vehicles; the effective
implementation of cost-reduction and efficiency-optimization measures; the
business outlook for companies in which we hold a significant equity interest;
the successful implementation of strategic cooperations and joint ventures;
changes in laws, regulations and government policies, particularly those
relating to vehicle emissions, fuel economy and safety; the resolution of
pending government investigations or of investigations requested by govern-
ments and the conclusion of pending or threatened future legal proceedings;
and other risks and uncertainties, some of which are described under the
heading "Risk and Opportunity Report" in this Annual Report. If any of these
risks and uncertainties materializes or if the assumptions underlying any of
our forward-looking statements prove to be incorrect, the actual results may
be materially different from those we express or imply by such statements.
We do not intend or assume any obligation to update these forward-looking
statements since they are based solely on the circumstances at the date of
publication.
Forward-looking statements
135
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Responsibility
Following the unexpected and extraordinary impact of the
covid-19 pandemic in 2020, financial challenges remain high
for the Daimler Group in 2021. This applies both to the ongoing
impact of the pandemic, the duration of which we cannot pre-
dict, and to the high advance expenditure still required for the
necessary transformation to a CO2-neutral future. Our ambi-
tious CO₂ targets set out in "Ambition 2039" continue to
necessitate high investments in electric mobility and far-reach-
ing structural adjustments. Only in this way will we be able to
play a leading role in the transformation to a CO2-neutral
future. In order to successfully master these challenges, we
will push forward with our measures to improve cost efficiency
and implement our strategic initiatives. Achieving appropriate
returns and a sound cash flow have absolute priority along this
path.
We will continue to invest heavily in the attractiveness and
future viability of our product range and production processes
in 2021. This applies in particular to the increasing electrifica-
tion of our product portfolio and to the digital connectivity of
our products and processes along the entire value chain. At
the same time, we will continue the measures we have initiated
to reduce costs and make more efficient use of resources.
Against this background, we plan to invest in property, plant
and equipment in 2021 at the prior-year level.
Overall statement on future development
CO2 emissions of the new-car fleet in Europe
The Daimler Trucks & Buses division anticipates a slightly
higher volume of research and development expenditure than
in 2020. Its development activities will focus on new technolo-
gies, including for truck automation and connectivity as well as
for electric drive powered by batteries and fuel cells. Another
key area will be the development of successor generations of
existing products, especially in the segment of heavy-duty
trucks, as well as tailored products and technologies for impor-
tant growth markets.
At Mercedes-Benz Cars & Vans, a large proportion of the
research and development expenditure in 2021 will be for the
renewal of the product portfolio. Research and development
expenditure is expected to increase slightly compared with the
previous year, mainly due to the successor series to the
E-Class and the compact cars. The topics of digitization, auto-
mated driving and electric drive remain at the focus of our
activities.
With our research and development activities, our goal is to
further strengthen Daimler's competitive position against the
backdrop of upcoming technological challenges. We are focus-
ing on the strategic areas for the future of connectivity, auto-
mated driving, and especially the development of electric drive
systems. Therefore, we expect our research and development
expenditure in 2021 to be slightly above the prior-year level.
Research and development
Daimler Trucks & Buses anticipates a slight increase in invest-
ment in property, plant and equipment in 2021. Non-product
projects will account for approximately 50% of the total; infra-
structure optimizations will be the main drivers here. The
increase in the share of product projects is partially the result
of strategically relevant activities in the areas of electric mobil-
ity and automated driving. Other key areas include emission
standards and fuel efficiency for our conventional powertrains,
active safety, and the completion of the Freightliner vocational
product portfolio.
In 2020, the average CO2 emissions of our new car fleet in
Europe (European Union, United Kingdom, Norway and Iceland)
probably decreased to 104 g/km with application of the appli-
cable legal regulations for the respective year (NEDC, including
vans registered as passenger cars). We therefore achieved the
CO2 targets in the European Union in 2020. Transition from the
current NEDC to the new WLTP test procedure is foreseen for
the year 2021. This will involve the adjustment of fuel-con-
sumption targets and rising certification figures. On the basis
of WLTP, we expect our fleet average in Europe (European
Union, Norway and Iceland) to decrease again significantly in
2021 compared with the comparable figures for the previous
year calculated according to WLTP (probably between 130 to
140 g/km, based on preliminary figures for fuel consumption in
2020 taking into account the statutory regulations of 2021).
This development will be driven in particular by the rising pro-
portion of battery-electric vehicle models and plug-in hybrids
in our new-car fleet.
On the basis of applicable law, the German Corporate Gover-
nance Code and the Rules of Procedure of the Supervisory
Board and its committees, the Audit Committee deals primarily
with questions of accounting, financial reporting and non-
financial reporting. In addition, it deals with the annual audit
and reviews the qualifications and independence of the exter-
nal auditors. Furthermore, it discusses the effectiveness and
functional capabilities of the risk management system, the
internal control system, the internal auditing system and the
compliance management system. After the external auditors
are elected by the Annual Shareholders' Meeting, the Audit
Committee engages the external auditors to conduct the
annual audit and the auditors' review of interim financial state-
ments. Furthermore, the Audit Committee determines the
important audit issues and negotiates the audit fees with the
external auditors. The Audit Committee also commissions the
external auditors to carry out a voluntary examination of the
non-financial report within the framework of a limited assur-
ance engagement and to audit the non-financial declaration as
part of the Management Report.
C
Audit Committee Chairman Dr. Clemens Börsig and Joe Kaeser
served as the shareholder representatives on the Audit Com-
mittee in financial year 2020. Both are independent and have
expertise in the field of financial reporting, as well as special
knowledge of and experience in the auditing of financial state-
ments and the application of methods of internal control. Dur-
ing financial year 2020, the employees were represented on
the Audit Committee by Michael Brecht as the Deputy Chair-
man of the Committee and by Ergun Lümali.
Mercedes-Benz Vans plans for a slight increase in unit sales
in 2021 compared with the previous year. In the EU30 region,
rising unit sales of our vans with electric drive should offset
the discontinuation of the X-Class. In addition, we anticipate
significant sales growth especially in North America. In China,
we expect slight growth in unit sales.
Following the decline in demand in 2020, a recovery of impor-
tant truck markets is expected this year. This should have a
corresponding positive impact on unit sales by Daimler Trucks
& Buses, which therefore anticipates significant sales growth
in 2021. This development will be mainly driven by our expecta-
tions for the markets in North America, Indonesia, and the
EU30 region.
Daimler Mobility anticipates a slight increase in new business
and a contract volume at the prior-year level in 2021. We aim
to utilize new market potential in the used-vehicle market and
with more flexible leasing and rental products, especially for
electric vehicles. And we intend to make use of additional mar-
ket opportunities and enhance customer satisfaction with the
continuous expansion of our online sales channels.
We see further growth potential in fleet management, the
insurance business and mobility services, especially in the lux-
ury segment.
On the basis of our assumptions concerning the development
of automotive markets and the divisions' planning, we expect
the Daimler Group to achieve total unit sales in 2021 signifi-
cantly above the level of the year 2020.
Revenue and earnings
We continue to systematically expand our global production
network for electric mobility. The sub-brand Mercedes-EQ,
which stands for electric intelligence, offers vehicles with all-
electric drive. We intend to electrify the entire portfolio of
Mercedes-Benz Cars by 2022. By 2025, we assume that up to
25% will be purely electric cars. By 2030, plug-in hybrids and
all-electric models should account for more than 50%.
We assume that the Daimler Group will generate revenue in
2021 at significantly above the level of the previous year. This
applies for both of our automotive divisions: Mercedes-Benz
Cars & Vans and Daimler Trucks & Buses. The Daimler Mobility
division expects its revenue to be slightly below the prior-year
level.
Our ongoing measures to increase efficiency also involve opti-
mizing the utilization of our production facilities. In the context
of the regular review of useful lives, the useful lives of prop-
erty, plant and equipment subject to scheduled depreciation
were reassessed and, in some cases, extended at the end of
2020. These amended estimates will be applied as of January 1,
2021. The expected positive impact on earnings before interest
and taxes (EBIT) amounts to €0.8 billion for 2021 and mainly
relates to Mercedes Benz Cars & Vans.
On the basis of the market developments we anticipate, the
aforementioned factors and the planning of our divisions, we
assume that Group EBIT in 2021 will be significantly above the
level of 2020, which was affected in particular by the covid-19
pandemic. Group EBIT in 2021 will include a positive contribu-
tion from the planned fuel-cell joint venture with Volvo, proba-
bly of between €1.2 billion and €1.3 billion, which is planned to
be allocated equally to the Mercedes-Benz Cars & Vans and
Daimler Trucks & Buses divisions. These transactions will have
no effect on the adjusted earnings of the automotive divisions.
The individual divisions have the following expectations for
adjusted returns in 2021:
Mercedes-Benz Cars & Vans: adjusted return on sales of 8-10%
Daimler Trucks & Buses: adjusted return on sales of 6-7%
Daimler Mobility: adjusted return on equity of 12-13%
At Mercedes-Benz Cars & Vans, positive effects on the
adjusted return on sales will result from rising volumes of unit
sales, a more favorable sales structure, further improved pric-
ing and the extended useful lives of property, plant and equip-
ment. However, earnings in the 2021 financial year will be
adversely impacted by rising functional costs compared with
the previous year, which also featured strict cost-cutting mea-
A parallel recommendation with even stricter requirements can
be found in Clause 5 of the German Corporate Governance
Code in the version dated December 16, 2019.
Based on the expected significant growth in unit sales and rev-
enue, we anticipate a significant increase in earnings for the
Daimler Group in 2021. This development reflects two oppos-
ing effects: EBIT in 2020 was sharply reduced by the effects of
the worldwide covid-19 pandemic; furthermore, there were
costs from the initiated restructuring measures. On the other
hand, we expect positive contributions to EBIT in 2021, in addi-
tion to the stimulus from the economic recovery, also from the
efficiency and cost-cutting measures we have implemented.
They include personnel and material cost savings, portfolio
and model adjustments, the continuing implementation of plat-
form strategies, and more stringent capital allocation.
On the basis of our general assumptions for the development
of the world economy and of the automobile markets impor-
tant to us, Mercedes-Benz Cars assumes that its unit sales in
2021 will be significantly above the level of the previous year.
Unit sales
132 B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | OUTLOOK
Daimler AG satisfies the recommendations of the German Cor-
porate Governance Code published in the official section of the
German Federal Gazette on March 20, 2020, in the Code ver-
sion dated December 16, 2019 ("Code 2019"), with the excep-
tion of the recommendations contained in C. 4 and C. 5 (maxi-
mum number of supervisory board memberships), and will
continue to observe the recommendations with the aforesaid
deviations.
Equal representation
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | OUTLOOK
131
The Japanese economy is expected to recover at a rather mod-
erate rate of approximately 3% this year, driven mainly by
strong export growth in the context of the recovery in global
trade.
We expect strong growth momentum in China as the recovery
in private consumption is steadily gaining pace, while industrial
production and exports continue to rise. Based on a recovery
of the labor market and improved consumer sentiment, con-
sumption is likely to contribute significantly to the expected
growth of more than 8% this year. Against the backdrop of this
robust development, the Chinese government is likely to grad-
ually scale back its fiscal and monetary support measures.
The emerging markets as a whole will also recover noticeably
this year, whereby the positive effects of coronavirus vaccina-
tions are only likely to materialize with a certain delay com-
pared with the industrialized countries. The Asian region is
likely to recover most strongly, even though the growth
momentum in the various countries is likely to remain dispa-
rate. In contrast, the recovery of Latin American and Central
and Eastern European economies is expected to be signifi-
cantly more moderate. The countries of the Middle East are
likely to benefit from a slight recovery of the oil price, but in a
long-term comparison, the oil price will remain moderate
according to current estimates. Taken together, the emerging
economies should achieve overall growth in the region of 6% in
2021.
Overall, the world economy is likely to experience a strong
recovery in 2021 with growth of about 5%, thus expanding at a
pace that is well above average by long-term standards.
Automotive markets
On the basis of the assumed economic recovery, a significant
increase in worldwide demand for cars is to be expected in
2021.
The European market is likely to grow significantly compared to
the very weak level caused by the crisis last year. We expect a
significant increase in car sales also for most of the large indi-
vidual European markets.
Light vehicle demand in the US market is expected to recover
significantly following the sharp decline in the previous year.
The Chinese car market, which developed better than most of
the other major sales markets last year, is expected to expand
slightly this year.
We also expect demand for vans to improve significantly com-
pared with the previous year. In the EU30 region (the European
Union, United Kingdom, Switzerland and Norway), significant
growth is expected in 2021, both in the combined market seg-
ment of mid-size and large vans and in the market for small
vans. In the United States and Brazil, demand for large vans is
also expected to be significantly stronger than in 2020. In
China, we expect the positive development in the mid-size van
segment to continue with further significant market growth.
The economic upturn should also result in a better develop-
ment of demand in key truck markets.
In North America, we assume that the market for heavy-duty
trucks (class 8) will expand significantly. Significant growth in
demand for heavy-duty trucks is anticipated also in the EU30
region. We expect slight expansion in the Brazilian market,
while a market volume at the prior-year level is likely in Japan.
Maximum number of supervisory board memberships for
members of the management board of a listed corporation
(Clause 5.4.5 Paragraph 1 Sentence 2, Corporate Gover-
nance Code, 2017). In accordance with this recommendation,
members of the management board of a listed corporation
shall not accept more than a total of three supervisory board
memberships in non-group listed corporations or on supervi-
sory bodies of non-group entities that make similar require-
ments.
This recommendation is no longer contained in the German
Corporate Governance Code in the version dated December
16, 2019.
This expectation is supported by the ongoing renewal of our
attractive and innovative model portfolio. We intend to launch
more than half a dozen new and revised models in the year
2021. Both the new GLB and the new S-Class should contrib-
ute towards the positive sales development.
Since the issuance of the last compliance declaration in
December 2019, Daimler AG has satisfied all recommendations
of the German Corporate Governance Code published in the
official section of the German Federal Gazette on April 24,
2017 in the Code version dated February 7, 2017 ("Code
2017"), with the exception of Clause 3.8 Paragraph 3 (D&O
insurance deductible for the Supervisory Board) and Clause
5.4.5 Paragraph 1 Sentence 2 (maximum number of supervi-
sory board memberships for members of the management
board of a listed corporation).
In its meeting in June 2020, the Audit Committee discussed
aspects of the Group's risk management system and dealt in
particular with its changes and further development. It also
discussed the methods and processes of, and changes to, the
internal control system. In this meeting, the Committee also
addressed the agreement on the external auditor fees and dis-
cussed planning measures for the annual external audit and
the key audit issues for financial year 2020. In addition, the
Audit Committee extensively investigated current accounting
issues. These included the regulatory statements concerning
SARS-COV-2 that were of key importance for the company as
well as the methodology for evaluating the existing fleet of
leased vehicles. The meeting was also used to discuss the
results of the internal quality analysis of the external audit for
financial year 2019. Lastly, the Audit Committee learned about
liquidity management within the Group and the sub-groups and
the methodological approach used to hedge against raw mate-
rial and currency risks. In conclusion, the Committee took note
of a report about current tax-related issues.
The meeting of the Audit Committee in April 2020 dealt with
the interim financial report for the first quarter of 2020, focus-
ing intensively on the fiscal impact of the covid-19 pandemic.
Moreover, the Audit Committee received reports from the
Internal Auditing, Compliance and Legal departments, which
also addressed the effects of the covid-19 pandemic. Another
item on the agenda was the agreement on the external auditor
fees for financial year 2020.
In the meetings during 2020 related to the quarterly results,
the Audit Committee discussed the interim financial reports
and the results of the auditors' review before their publication
with the Board of Management and with the external auditors.
In addition, the Committee received reports from the Internal
Auditing, Compliance and Legal departments. The Board of
Management reported regularly to the Audit Committee on the
current status of the main legal proceedings, including anti-
trust proceedings as well as inquiries, investigations, proceed-
ings and administrative orders in connection with diesel emis-
sions. In addition, the Audit Committee regularly dealt with
notifications concerning possible violations of rules submitted
by employees and third parties to the Group's own BPO (Busi-
ness Practices Office) whistleblower system.
In this meeting, the Audit Committee also discussed the report
on the total fees paid to the external auditors in financial year
2019 for auditing and non-auditing services and defined the
framework of approval for engaging the external auditors to
provide non-audit services during the period January 1, 2020 to
February 15, 2021. The Audit Committee also decided to rec-
ommend to the Supervisory Board, and subsequently to the
Annual Shareholders' Meeting, that KPMG AG Wirtschaftsprü-
fungsgesellschaft be engaged to conduct the annual external
audit, the audit of the consolidated financial statements and
the external auditors' review of interim financial reports for
financial year 2020 and also to conduct the external auditors'
review of interim financial reports for financial year 2021 in the
period leading up to the Annual Shareholders' Meeting in 2021.
The Audit Committee based this recommendation on the qual-
ity of the annual audit and the results of the independence
review, for which no indications of partiality or a threat to inde-
pendence were found. Moreover, the Audit Committee decided
to propose to the Supervisory Board that it have the contents
of the non-financial report for 2020 voluntarily reviewed again
(with limited assurance). Subject to the election of the pro-
posed external auditors by the Annual Shareholders' Meeting,
the Audit Committee also discussed the proposal to be made
regarding the fees to be agreed upon with the external auditors
for financial year 2020. Finally, the Audit Committee dealt with
the annual audit plan for 2020 of the Internal Auditing depart-
ment and, within the framework of its responsibility, with the
agenda for the 2020 Annual Shareholders' Meeting, which at
this point was still scheduled to take place on April 1, 2020.
financial statements, the combined management report, the
declaration on corporate governance included in the corporate
governance report, the non-financial report, and the Board of
Management's proposal on the appropriation of profits, which
involved the payment of a dividend of €0.90 per share entitled
to a dividend. Furthermore, the Audit Committee approved the
Report of the Audit Committee for financial year 2019.
138
In another meeting held on February 19, 2020, the Audit Com-
mittee dealt with the annual financial statements, the consoli-
dated financial statements and the combined management
report for Daimler AG and the Daimler Group for the financial
year 2019, each of which had been issued with an unqualified
auditor's opinion by the external auditors, as well as with the
proposal on the appropriation of profits. During the meeting,
the Audit Committee focused in particular on the key audit
matters described in each audit opinion and on the audit
approach applied in each case, including the conclusions
drawn. The Audit Committee also reviewed and discussed the
non-financial report, for which an auditor's report was issued
in accordance with ISAE 3000. The external auditors reported
on the results of their audit and the voluntary review of the
non-financial report within the framework of a limited assur-
ance engagement, and were also available to answer supple-
mentary questions and to provide additional information. The
audit reports on the annual company and consolidated finan-
cial statements (including the combined management report)
and the internal control system, the report concerning the
non-financial report, and important issues related to account-
ing were discussed with the external auditors. In addition, the
Audit Committee also discussed the risk management system.
Following an in-depth review and discussion, the Audit Com-
mittee recommended that the Supervisory Board approve the
In the meeting held on February 10, 2020, the Audit Committee
dealt with the preliminary figures of the annual financial state-
ments and the annual consolidated financial statements for the
year 2019, as well as with the proposal on the appropriation of
profits made by the Board of Management. Following an in-
depth review, the Audit Committee took positive note of the
presented figures and determined that no objections were to
be made to their proposed publication. The Committee further
recommended that the Supervisory Board, which met immedi-
ately thereafter, adopt the same view. The preliminary key fig-
ures and the proposal on the appropriation of profits were
announced at the Annual Press Conference on February 11,
2020.
Topics in 2020
The Chairman of the Audit Committee informed the Supervi-
sory Board about the activities of the Committee and about the
contents of its meetings and discussions in the following
Supervisory Board meetings.
Reporting to the Supervisory Board
In addition, the Chairman of the Audit Committee held regular
individual discussions, for example with the aforementioned
members of the Board of Management, the external auditors,
the Head of Internal Auditing, the Head of Compliance, the
Head of Legal Affairs and, if required, the heads of other spe-
cialist departments. Such individual discussions were mainly
held to prepare for the next committee meetings.
D&O insurance deductible for the Supervisory Board
(Clause 3.8, Paragraph 3, Corporate Governance Code,
2017). The Directors' & Officers' insurance contains no provi-
sion for a deductible for the members of the Supervisory Board
that corresponds to the legally required deductible for mem-
bers of the Board of Management. Given the function-related
fixed remuneration without performance bonus components,
setting such a deductible for Supervisory Board members
would not increase the motivation and sense of responsibility
with which its members perform their tasks.
The Audit Committee met six times in financial year 2020. All
of these meetings were also attended by the Chairman of the
Supervisory Board, Dr. Manfred Bischoff, as a permanent
guest. The other permanent participants in the meetings were
the Chairman of the Board of Management, the members of
the Board of Management responsible for Finance and Control-
ling and for Integrity and Legal Affairs, and the external audi-
tors. The heads of specialist departments such as Accounting,
Internal Auditing, Compliance and Legal were also present to
report on individual items of the agenda.
Meetings and participants
In the meeting held in July 2020, the Audit Committee dealt
with the results of the second quarter of 2020. In doing so, it
also addressed the financial implications of the covid-19 pan-
demic. As part of its risk reporting activities, the Audit Com-
mittee mainly addressed legal proceedings as well as sales and
production-related risks. In addition, the Committee received
quarterly reports from the Compliance, Internal Auditing and
Legal departments. Finally, the Audit Committee discussed
with the Board of Management the annual report produced by
the Group's Data Protection Officer.
In October 2020, the Committee dealt with the interim finan-
cial report for the third quarter of 2020. In addition, the Com-
mittee expanded the range of key audit issues for the external
auditors and conducted its annual review of the authorized
non-audit services provided by the external auditors. It also
decided to adjust the current catalog of authorized non-audit
services. Due to the Board of Management's decision to inte-
grate the former non-financial report into the combined man-
agement report as the non-financial declaration, the Audit
Committee resolved to recommend to the Supervisory Board
that the audit of the consolidated financial statements and the
combined management report by the external auditors should
be correspondingly expanded. In response to the current pub-
lic debate concerning escrow accounts, the Audit Committee
obtained in-depth reports about the management of the bank
and escrow accounts within the Daimler Group. In addition, the
Committee received quarterly reports from the Compliance
and Legal departments. Moreover, it obtained reports about
the work and structure of the Post Settlement Audit Team
(PSAT), which is located in the Internal Auditing department.
The PSAT was set up during the reporting year on the basis of a
settlement with the US regulatory authorities in connection
with emission control systems. The team monitors the compa-
ny's fulfillment of the settlement and, within a specified scope,
its compliance with environmental regulations.
C❘ CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Company and consolidated financial statements 2020
In the meeting held on February 17, 2021, the Audit Committee
reviewed and discussed in detail the annual financial state-
ments, the consolidated financial statements and the com-
bined management report including the non-financial declara-
tion for Daimler AG and the Daimler Group for financial year
2020, each of which had been issued with an unqualified audi-
tor's opinion by the external auditors, as well as the declara-
tion on corporate governance and the proposal on the appro-
priation of profits. At the meeting, the external auditors
reported on the results of their audit and focused in particular
on the key audit matters and the audit approach applied in
each case, including the conclusions drawn. They were also
available to answer supplementary questions and to provide
additional information. The audit reports on the annual finan-
cial statements and consolidated financial statements (includ-
ing the key audit matters in the audit opinions) and on the
internal control system and important issues related to finan-
cial reporting were discussed with the external auditors. In
addition, the Audit Committee also discussed the risk manage-
ment system. Following an in-depth review and discussion, the
Audit Committee recommended that the Supervisory Board
approve the financial statements, the combined management
report including the non-financial declaration, the declaration
on corporate governance and the recommendation of the
Board of Management to pay a dividend of €1.35 per share
entitled to a dividend. The Audit Committee also reviewed the
independence of the external auditors (including the non-audit
fee cap) for the financial year 2020. Furthermore, the Audit
Committee approved the Report of the Audit Committee for
financial year 2020.
Declaration by the Board of Management and
the Supervisory Board of Daimler AG pursuant
to Section 161 of the German Stock Corporation
Act (AktG) regarding the German Corporate
Governance Code
Good corporate governance is a precondition for and reflection of the responsible management of
a company. The Board of Management and the Supervisory Board aim to align the Group's manage-
ment and supervision with nationally and internationally recognized standards in order to safeguard
sustainable value creation over the long term. With the discontinuation of the Corporate Gover-
nance Report as stipulated in the new German Corporate Governance Code in the version dated
December 16, 2019, the Declaration on Corporate Governance has, in accordance with Sections
289f, 315 d of the German Commercial Code (HGB), become the central instrument for corporate
governance reporting. The Board of Management and the Supervisory Board jointly issue the Dec-
laration on Corporate Governance and are responsible for the sections of the report that pertain to
them. The Declaration on Corporate Governance has been combined for Daimler AG and the
Daimler Group. The following statements thus apply equally to Daimler AG and the Group insofar as
not otherwise stated. Pursuant to Section 317 Subsection 2 Sentence 6 of the German Commercial
Code (HGB), the purpose of the audit of the statements pursuant to Section 289f Subsections 2
and 5 and Section 315d of the HGB is limited to determining whether such statements have actu-
ally been provided. The Declaration on Corporate Governance can also be viewed on the Internet
at daimler.com/corpgov/en.
Declaration on Corporate Governance
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
140
C❘ CORPORATE GOVERNANCE | REPORT OF THE AUDIT COMMITTEE
Chairman
139
Милено
The Audit Committee
Stuttgart, February 2021
In 2020, the Audit Committee conducted a self-evaluation of
its own activities on the basis of an extensive company-spe-
cific questionnaire. The results of this self-assessment were
once again very positive and were presented and discussed in
the meeting on February 17, 2021. This did not result in any
need for action with regard to the Committee's tasks, the con-
tent, or the procedure of its meetings.
Self-evaluation
Dr. Clemens Börsig
147
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
The Board of Management of Daimler AG has also set itself the
goal for the coming year of further increasing the proportion of
women in top management positions. On November 25, 2020,
the Board of Management therefore passed a resolution stipu-
lating a target of 20% women for the first management level
below the Board of Management and 25% for the second man-
agement level below the Board of Management, with a dead-
line of December 31, 2025.
Germany's law on the equal participation of
women and men in executive positions
In accordance with German legislation on equal participation
by women and men in executive positions in both the private
and the public sector, the supervisory boards of listed compa-
nies or companies subject to Germany's system of codetermi-
nation have to set a target for the proportion of women on
their boards of management. The board of management of
such a company has to set a target for the proportion of
women at the two management levels below that of the board
of management. If the proportions of women at the time when
these targets are set by the board of management and the
supervisory board are below 30%, the targets may not be lower
than the proportions already reached. At the same time that
the targets are set, the boards have to set periods for their
achievement, which may not be longer than five years.
On December 8, 2016, the Supervisory Board of Daimler AG
passed a resolution stipulating that the target figure for the
proportion of women on the Board of Management of Daimler
AG would be 12.5%, while the deadline would be December 31,
2020. As of December 31, 2020, the eight-member Board of
Management included two women, Renata Jungo Brüngger and
Britta Seeger. This means that women account for 25% of the
Board of Management members. On December 3, 2020, the
Supervisory Board of Daimler AG passed a resolution stipulat-
ing that the target figure for the proportion of women on the
Board of Management of Daimler AG would be 25%, while the
deadline would be December 31, 2025.
On November 8, 2016, the Board of Management passed a res-
olution stipulating a target of 15% women for both the first and
second management levels of Daimler AG below the Board of
Management, with a deadline of December 31, 2020. At the
time of the resolution, the proportion of women at the first and
second management levels below the Board of Management
was 8.0% and 12.4%, respectively. As of December 31, 2020,
the proportion of women at the first management level below
the Board of Management was 11.8%; at the second level it was
23.5%. The target for the first management level below the
Board of Management could not be reached by December 31,
2020. At the time the target was set in 2016, the deconsolida-
tion of the Cars & Vans and Trucks & Buses divisions to the
newly established Mercedes-Benz AG and Daimler Truck AG in
financial year 2019 was not yet foreseeable. As a result of the
deconsolidation, many management positions were transferred
from Daimler AG to Mercedes-Benz AG and Daimler Truck AG.
Because of this, Daimler AG has very few management posi-
tions overall at the first level below the Board of Management.
The target could no longer be achieved for these positions in
financial year 2020. However, only a single woman still had to
be appointed to reach the target.
Listed companies that have supervisory boards in which share-
holders and employees are equally represented are required to
have a proportion of at least 30% women and 30% men. This
requirement has to be fulfilled by the Supervisory Board as a
whole. If the side of the Supervisory Board representing the
shareholders or the side representing the employees objects
to the Chairman of the Supervisory Board about the applica-
tion of the ratio to the entire Supervisory Board, the minimum
ratio is to apply separately to the shareholders' side and to the
employees' side for that election.
Overall requirements profiles for the composi-
tion of the Board of Management and the Super-
visory Board
During the reporting period, the requirements profile for the
Board of Management included the following aspects in partic-
ular:
148
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
The requirements profile for the Board of Management of
Daimler AG aims for a Board of Management with excellent
leadership skills that is as diverse and mutually supportive as
possible. The Board of Management as a whole should possess
the knowledge, skills and experience required for the proper
execution of its tasks and be composed of members whose
varied personal backgrounds and experiences ensure that the
Board as a whole also embodies the desired management phi-
losophy. Decisions regarding appointments to specific posi-
tions on the Board of Management are always governed by the
Company's interests under consideration of all circumstances
in each case.
In terms of the composition of the Board of Management and
the Supervisory Board, Daimler AG utilizes diversity concepts
that focus on aspects such as age, gender, education and pro-
fessional background. The Supervisory Board has combined
these diversity concepts with the requirements of German leg-
islation regarding equal participation of women and men in
executive positions and other requirements relating to the
expertise that members of these executive management bod-
ies need to possess. These combined requirements are pre-
sented in the overall requirements profiles for the composition
of the Board of Management and Supervisory Board described
below. The requirements profiles are reviewed each year and
also serve as the basis for long-term succession planning.
Board of Management
As prescribed by law, the Mediation Committee is composed of
the Chairman of the Supervisory Board, Dr. Manfred Bischoff,
and his Deputy, Michael Brecht, as well as one member of the
Supervisory Board representing the employees and one mem-
ber of the Supervisory Board representing the shareholders,
each elected with a majority of the votes cast by the share-
holders' and employees' representatives, respectively. During
the reporting period, these two additional members were Dr.
Jürgen Hambrecht for the shareholders and Roman Zitzels-
berger for the employees. The Mediation Committee is formed
solely to perform the function laid down in Section 31 Subsec-
tion 3 of the German Codetermination Act (MitbestG). As in
previous years, the Mediation Committee did not have to take
any action in financial
year 2020.
As of December 31, 2020, 30% of the shareholder representa-
tives on the Supervisory Board of Daimler AG were women
(Sari Baldauf, Petraea Heynike and Marie Wieck), while 70%
were men. On that date, 30% of the employee representatives
on the Supervisory Board were women (Elke Tönjes-Werner,
Sibylle Wankel and Dr. Sabine Zimmer), while 70% were men. In
its meeting on December 3, 2020, the Supervisory Board con-
sidered its nominations for the election at the 2021 Sharehold-
ers' Meeting and decided, upon the recommendation of the
Nomination Committee, to propose at the 2021 Annual Share-
holders' Meeting that Elizabeth Centoni, Ben van Beurden and
Dr. Martin Brudermüller be elected to the Supervisory Board.
The legally required gender ratio will be met both on the share-
holder representatives' side and for the Supervisory Board as a
whole if these persons are elected to the Supervisory Board,
provided that no other changes occur.
Mediation Committee
The Presidential Committee makes recommendations to the
Supervisory Board on the appointment of members of the
Board of Management, taking into account the overall require-
ments profile the Supervisory Board has defined to be filled,
including the diversity concept, as well as the Supervisory
Board's target for the proportion of women on the Board of
Management. It submits proposals to the Supervisory Board
on the design of the remuneration system for the Board of
Management and on the appropriate total individual remunera-
tion of its members. The Presidential Committee is also
responsible for the Board of Management members' contrac-
tual affairs. In addition, it decides on the granting of approval
for sideline activities of the members of the Board of Manage-
ment, and once a year submits to the Supervisory Board for its
approval a complete list of the sideline activities of each mem-
ber of the Board of Management.
Legal Affairs Committee
On December 31, 2020, the Supervisory Board had, in addition
to the legally required Mediation Committee, four additional
committees that perform to the extent legally permissible the
tasks assigned to them in the name of and on behalf of the
entire Supervisory Board. The committee chairpersons report
to the entire Supervisory Board on the committees' work at
the latest in the meeting of the Supervisory Board following
each committee meeting. The Supervisory Board has issued
rules of procedure for each of its committees. Those rules of
procedure can be viewed on our website at daimler.com/
dai/rop. Information on the current composition of these com-
mittees can be viewed at daimler.com/dai/sbc.
-
Independently of the Supervisory Board's efficiency review, the
Audit Committee also again conducted a self-assessment of its
own activities on the basis of an extensive company-specific
questionnaire in 2020. The results of this self-assessment
were once again very positive and were presented and dis-
cussed in the meeting of the Audit Committee on February 17,
2021. This process did not determine a need for change.
Presidential Committee
The Presidential Committee is composed of the Chairman of
the Supervisory Board, Dr. Manfred Bischoff (who is also the
Committee Chairman), his Deputy, Michael Brecht, and two
other members, who are elected by the Supervisory Board.
During the reporting period, these two additional members
were Dr. Jürgen Hambrecht and Roman Zitzelsberger.
In addition, the Presidential Committee consults and decides
on questions of corporate governance, on which it also makes
recommendations to the Supervisory Board. It supports and
advises the Chairman of the Supervisory Board and his Deputy
and prepares the meetings of the Supervisory Board within the
limits of its responsibilities.
The independent ESG experts of the Advisory Board for Integ-
rity and Corporate Responsibility (O Non-Financial Declara-
tion) communicate with members of the Presidential Commit-
tee. As they come from the fields of science and business, as
well as from civic organizations, these experts utilize an exter-
nal point of view to offer critical and constructive support for
the integrity and corporate responsibility process at Daimler.
They have extensive experience with issues relating to ethical
conduct and transportation and environmental policy. As
important providers of new ideas, they contribute their various
viewpoints to discussions, involving, among other things, the
ethical aspects of autonomous driving, the methods for mea-
suring progress with integrity-related issues, and external per-
spectives concerning the current debate about emissions and
Daimler's approach to protecting human rights.
Nomination Committee
During the reporting period, the Nomination Committee was
composed of three members, who were elected by a majority
of the votes cast by the members of the Supervisory Board
representing the shareholders. With effect from January 1,
2021, the Chairman of the Supervisory Board, by virtue of the
Rules of Procedure, is member and chairman of the Nomina-
tion Committee while two more members are still to be elected
by a majority of the votes cast by the members of the Supervi-
sory Board representing the shareholders. The members in
financial year 2020 were Dr. Manfred Bischoff (Chairman of the
Nomination Committee), Sari Baldauf and, until July 8, 2020,
Dr. Paul Achleitner; Dr. Bernd Pischetsrieder was a member
from July 9, 2020, on. The Nomination Committee is the only
Supervisory Board committee that consists solely of members
representing the shareholders. It makes recommendations to
the Supervisory Board concerning persons to be proposed for
146 C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
election as members of the Supervisory Board representing
the shareholders at the Shareholders' Meeting. In doing so, the
Nomination Committee takes into consideration the require-
ments of German law on equal participation of women and
men in executive positions and also strives to ensure the fulfill-
ment of the overall requirements profile, including the skills
profile, for the entire Supervisory Board.
Audit Committee
The Audit Committee is composed of four members, who are
elected by a majority of the votes cast by the members of the
Supervisory Board. The members of the Audit Committee in
financial year 2020 were shareholder representatives Dr. Clem-
ens Börsig (Chairman of the Audit Committee) and Joe Kaeser
and employee representatives Michael Brecht and Ergun
Lümali.
Both the Chairman of the Audit Committee, Dr. Clemens Bör-
sig, and the other shareholder representative on the Audit
Committee, Joe Kaeser, fulfill the criteria for independence and
have expertise in the field of financial reporting, as well as spe-
cial knowledge and experience with regard to auditing and
methods of internal control.
The Audit Committee deals with the supervision of the
accounting and its process as well as with the annual audit. At
least once a year, it discusses with the Board of Management
the effectiveness and functionality of the internal control and
risk management system, the internal auditing system and the
compliance management system. It regularly receives reports
on the work of the Internal Auditing department and the Com-
pliance Organization. At least four times a year, the Audit Com-
mittee receives a report from the whistleblower system BPO
(Business Practices Office) on complaints and information
about any breaches of regulations or guidelines by high-level
executives, as well as violations by other employees of the reg-
ulations in a defined catalog of legal provisions. It regularly
receives information about the handling of these complaints
and notifications.
The Audit Committee discusses with the Board of Management
the interim reports before they are published. On the basis of
the report of the external auditors, the Audit Committee
reviews the annual company financial statements and the
annual consolidated financial statements, as well as the man-
agement report of the Company and the Group, and discusses
them with the external auditors. The Audit Committee makes a
proposal to the Supervisory Board on the adoption of the
annual company
financial statements of Daimler AG, on the
approval of the annual consolidated financial statements, and
on the appropriation of profits. The Committee also makes rec-
ommendations for the Supervisory Board's proposal on the
election of external auditors, assesses those auditors' suitabil-
ity, qualifications and independence, and, after the external
auditors are elected by the Annual Shareholders' Meeting, it
engages them to conduct the audit of the consolidated finan-
cial statements and the annual financial statements and to
review the interim reports, negotiates an audit fee, and deter-
mines the focus of the annual audit. The external auditors
report to the Audit Committee on all accounting matters that
might be regarded as critical and on any material weaknesses
of the internal control and risk management system with
regard to accounting that might be discovered during the audit.
Finally, the Audit Committee approves in advance permitted
services that are not directly related to the annual audit and
which are provided by the firm of external auditors or its affili-
ates to Daimler AG or to companies of the Daimler Group.
The Legal Affairs Committee is composed of six members, who
are elected by a majority of the votes cast by the members of
the Supervisory Board. The members of the Legal Affairs Com-
mittee during the reporting period were shareholder represen-
tatives Dr. Clemens Börsig (Chairman of the Legal Affairs Com-
mittee), Dr. Manfred Bischoff and Marie Wieck and employee
representatives Michael Brecht, Michael Häberle and Sibylle
Wankel. The committee coordinates the exercise and perfor-
mance of the rights and obligations of the Supervisory Board
with regard to ongoing legal proceedings relating to emissions
regulations and antitrust law with which Daimler AG and Group
companies are confronted. It also prepares and recommends
associated resolutions for adoption by the Supervisory Board.
Within the framework of the agreement in principle reached in
the reporting period with various US authorities concerning the
settlement of civil and environmental law proceedings in con-
nection with the emissions control systems of certain diesel
vehicles, the Committee was assigned additional tasks and
granted expanded decision-making authority with regard to ful-
filling the obligations stipulated in the agreements in principle.
These additional tasks include the control and supervision of
the Post Settlement Audit Team that was set up as part of this
agreement in principle.
The members of the Board of Management should have dif-
ferent educational and professional backgrounds, whereby
at least two members should have a technical background.
With Markus Schäfer and Wilfried Porth, as of December 31,
2020 the Board of Management had two members who are
engineers. Since taking over as Head of Group Research &
Mercedes-Benz Cars Development on January 1, 2017, Ola
Källenius has sustainably displayed his technical expertise.
Under the premise that the performance of Supervisory
Board duties as an employee representative does not by
itself constitute a potential conflict of interest, the require-
ments described here are deemed to be met by at least 15
members of the Supervisory Board.
As a rule, 62 years of age serves as orientation for age-
related retirement. When it set this age limit, the Supervi-
sory Board deliberately decided in favor of a flexible rule
allowing the required scope for the appropriate assessment
of the circumstances of each individual case. As of Decem-
ber 31, 2020, all eight Board of Management members were
younger than the age limit.
150
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
election or reelection. As of December 31, 2020, all mem-
bers of the Supervisory Board except Sari Baldauf, Petraea
Heynike, Dr. Manfred Bischoff, Dr. Clemens Börsig, Dr. Jür-
gen Hambrecht and Dr. Bernd Pischetsrieder (i.e. 14 mem-
bers) were 62 or younger when they were elected to their
current term. None of the three candidates who are to be
proposed for election at the 2021 Annual Shareholders'
Meeting will be older than 62 years of age at the time the
election takes place on March 31, 2021.
-In order to ensure sufficient internationality, for example by
means of many years of international experience, the Super-
visory Board has set a target of a proportion of at least 30%
of international members representing the shareholders and
the resulting proportion of at least 15% of the entire Supervi-
sory Board. Irrespective of the many years of international
experience of a large majority of the shareholder representa-
tives on the Supervisory Board, this target was overachieved
as of December 31, 2020, with 25% for the entire Supervi-
sory Board due to the international origins of Bader Al Saad,
Sari Baldauf, Petraea Heynike and Marie Wieck on the share-
holders' side (40%) and Raymond Curry on the employees'
side.
-
-
At least half of the members of the Supervisory Board repre-
senting the shareholders should have
• neither an advisory nor a board function for a customer,
supplier, creditor or other third party,
• nor a business or personal relationship with the company
or its boards,
whose specific form could cause a conflict of interest.
As described in the Report of the Supervisory Board,
certain individual Supervisory Board members did not par-
ticipate in deliberations on certain specific agenda items
during the reporting period in order to avoid the appearance
of potential conflicts of interest in particular situations. Sari
Baldauf, for example, did not participate in discussions relat-
ing to the patent disputes between Daimler and Nokia. In
addition, Dr. Bernd Pischetsrieder and Dr. Jürgen Hambrecht
took highly precautionary measures to avoid potential con-
flicts of interest by not participating in several meetings that
addressed legal proceedings relating to diesel exhaust gas
emissions. As a result, in the case of at least half of the
shareholder representatives on the Supervisory Board, all of
the employee representatives, and thus at least 15 members
of the entire Supervisory Board, there were no indications of
potential conflicts of interest during the reporting period
based on the premise described above.
In order to ensure the independent advice to, and supervi-
sion of, the Board of Management by the Supervisory Board,
more than half of the members of the Supervisory Board
representing the shareholders are to be independent as
defined by the German Corporate Governance Code. The
Supervisory Board may not include more than two former
members of the Board of Management of Daimler AG or any-
one who is a member of a board of, or advises, a significant
competitor of the Daimler Group. Under the premise that the
performance of Supervisory Board duties as an employee
representative does not in itself call into question the inde-
pendence of such an employee representative in this sense,
at least 15 members of the Supervisory Board are also
deemed to be independent.
The Supervisory Board itself, or the shareholder representa-
tives themselves, are responsible for assessing the indepen-
dence of Supervisory Board members. Based on information
that is known today, there are, in the view of the shareholder
representatives, no indications for any members of the
Supervisory Board representing the shareholders that rele-
vant personal or business relationships or circumstances
exist, in particular with the Company, members of the Board
of Management or other Supervisory Board members, that
could be construed as a substantial and permanent conflict
of interest that would compromise the independence of a
shareholder representative. In the view of the Supervisory
Board and under the premise described above with regard to
employee representatives, this assessment also applies to
all Supervisory Board members representing the employees.
No member of the Supervisory Board is a member of a board
of, or advises, a significant competitor. The Chairman of the
Supervisory Board, Dr. Manfred Bischoff, is a former mem-
ber of the Board of Management.
In the final analysis, the independence of Supervisory Board
member Bader Al Saad is not compromised by his member-
ship of the Executive Committee of the Board of Directors of
the Kuwait Investment Authority. The Kuwait Investment
Authority is not a controlling shareholder of Daimler AG that
could attain an effective majority at an Annual Shareholders'
Meeting. No other discernible circumstances exist that
might call into question the independence of Bader Al Saad.
The mandate of Supervisory Board member Roman Zitzels-
berger as a member and as the Deputy Chairman of the
codetermined Supervisory Board of ZF Friedrichshafen AG, a
significant supplier to the Daimler Group, cannot per se give
rise to a substantial and not merely temporary conflict of
interest. On the one hand, this is not an executive, but rather
a non-executive mandate. On the other, the Deputy Chair-
man of the Supervisory Board of a codetermined company
does not have the right of the Chairman of the Supervisory
Board to a casting vote in the event of a tie and renewed vot-
ing even in the absence of the Chairman.
The Supervisory Board regularly assesses how effectively the
Supervisory Board and its committees perform their tasks. In
financial year 2020 the Supervisory Board conducted an exter-
nally moderated self-assessment. An online survey and supple-
mental interviews that covered all of the main aspects of the
work of the Supervisory Board and its committees were con-
ducted for this process. The results of this self-assessment,
which the Supervisory Board studied in depth at its meeting on
February 17, 2021, confirmed the professional, very good and
very trusting cooperation within the Supervisory Board and
with the Board of Management. It did not reveal any fundamen-
tal need for change.
The new recommendations in the German Corporate Gover-
nance Code in the version dated December 16, 2019 regard-
ing the independence of members of supervisory boards
went into effect on March 20, 2020. According to these rec-
ommendations, the Supervisory Board should, while also
taking the ownership structure into consideration, include
what the shareholder representatives believe to be an ade-
quate number of independent shareholder representatives
as members of the Supervisory Board. Within the meaning of
the German Corporate Governance Code, a Supervisory
Board member is to be considered independent if he or she
is independent of the Company and its Board of Manage-
ment and of any controlling shareholder, whereby Daimler
AG has no controlling shareholder. Another new rule states
that the recommendations contained in Code 2019 regard-
ing the independence of members of codetermined supervi-
sory boards only apply to shareholder representatives.
A sufficient generational mix among Supervisory Board
members is also to be taken into account in appointment
decisions. At least eight members of the Supervisory Board
should be no older than 62 years of age at the time of their
Candidates for election to the Supervisory Board who are to
hold the position for a full term of office should generally not
be over the age of 72 at the time of the election. In specify-
ing this age limit, the Supervisory Board has intentionally
refrained from stipulating a strict upper age limit and instead
decided in favor of a flexible general limit that leaves scope
to appropriately assess each individual case, keeps the
range of potential Supervisory Board candidates sufficiently
broad and allows reelection. In deciding to propose Dr. Man-
fred Bischoff for reelection as a shareholder representative
on the Supervisory Board at the Shareholders' Meeting in
2016, it made use of this scope after careful consideration
and proper assessment. All other members of the Supervi-
sory Board during the reporting period, and the candidates
who are to be proposed for election at the 2021 Annual
Shareholders' Meeting, will not have reached the age limit at
the time of their election.
-
- The gender composition of the Supervisory Board meets the
legal requirement stipulating that at least 30% of the mem-
bers of the Supervisory Board must be women and at least
30% must be men. As of December 31, 2020, the Supervi-
sory Board had three women who represent shareholders
and three women who represent employees. The proportion
of women is thus 30% among the shareholder representa-
tives, the employee representatives and the Supervisory
Board as a whole.
In addition, a sufficient generational mix among Board of
Management members is to be taken into account in
appointment decisions, whereby if possible at least three
members of the Board of Management should be 57 years of
age or younger at the beginning of their respective term of
office. This is the case for all current members of the Board
of Management, with the exception of Wilfried Porth.
Decisions related to the composition of the Board of Man-
agement should also take into account internationality in the
sense of varied cultural backgrounds or international experi-
ence through assignments abroad lasting several years,
whereby if possible, at least one member of the Board of
Management should come from a country other than Ger-
many. Irrespective of the many years of international experi-
ence of a large majority of members of the Board of Manage-
ment, this target was achieved as of December 31, 2020 due
to the international origins of Ola Källenius and Renata Jungo
Brüngger and through Hubertus Troska's focus on activities
in China.
Members of the Board of Management do not hold more
than three memberships of supervisory boards of non-group
listed corporations or of supervisory board committees at
non-Group companies that have comparable requirements.
This stipulation was met as of December 31, 2020. The only
listed company in which Hubertus Troska is a member of a
supervisory board or similar board outside the Daimler
Group is BAIC Motor Corporation Ltd. Hubertus Troska's
other board memberships are at joint ventures that fall
within his areas of responsibility and that do not have com-
parable requirements to a board membership at a listed
company outside the Group. The same applies to the exter-
nal board memberships of Britta Seeger. In spite of this, a
deviation from the new German Corporate Governance
Code's recommendation regarding the maximum number of
board memberships for board members of listed corpora-
tions has been disclosed and explained in the declaration of
compliance for 2020. The new Code 2019 reduces this rec-
ommended maximum number relative to the Code 2017
from three to two supervisory board memberships or similar
positions and further recommends that board members of
listed corporations should not accept a position as chairman
of a supervisory board in a non-group listed corporation.
The Supervisory Board has made adjustments to two aspects
of the requirements profile for members of the Board of Man-
agement, with effect from January 1, 2021:
In the future, the unchanged age limit of 62 for members of
the Board of Management will apply to the beginning of the
term of office of the Board of Management member in ques-
tion.
In view of the recommendations contained in the new Ger-
man Corporate Governance Code in the version dated
December 16, 2019, the members of the Board of Manage-
ment shall generally not accept more than two supervisory
board memberships in listed corporations or assume similar
positions, nor shall they accept a position as chairman of the
supervisory board of a listed corporation, whereby any devi-
ation from this principle shall be disclosed in the annual dec-
laration of compliance. The supervisory board memberships
of Board of Management members in joint ventures that fall
within their areas of responsibility are not considered similar
positions within the meaning of the requirements profile.
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
On December 8, 2016, the Supervisory Board defined a tar-
get of 12.5% for the proportion of women on the Board of
Management, with a deadline of December 31, 2020. The
Board of Management currently has two female members,
Renata Jungo Brüngger and Britta Seeger. This means the
proportion of women on the Board of Management was 25%
on December 31, 2020.
149
In cooperation with the Board of Management, the Supervisory
Board also ensures a long-term succession plan for the Board
of Management, for which it takes the requirements profile and
the individual circumstances into account. The Supervisory
Board's Presidential Committee regularly holds discussions
about the Company's talented and extraordinary leaders. In
doing so, it discusses the duration of the contracts of current
Board of Management members and the possibility of extend-
ing them as well as potential successors. Executives at the
management level below the Board of Management and people
of especially high potential are evaluated on the basis of an
analysis of potential and the criteria of the requirements pro-
file. The next development steps are then discussed and
defined in cooperation with the Board of Management. The
successor planning process also includes a regular report from
the Board of Management regarding the proportion and devel-
opment of the women managers, particularly with regard to
the first and second management levels below that of the
Board of Management. The Board of Management has to rec-
ommend a sufficient number of candidates to the Supervisory
Board. Daimler AG wishes to primarily fill Board of Manage-
ment positions with managers that have risen within the Com-
pany. Despite this, it also evaluates potential external candi-
dates for specific cases with the help of external human
resources consultants and considers them in the selection pro-
cedure.
Supervisory Board
The Supervisory Board is to be composed so that its members
together are knowledgeable about the business sector in which
the Company operates.
The requirements profile for the Supervisory Board of Daimler
AG also aims at a Supervisory Board as diverse and mutually
complementary as possible. The Supervisory Board as a whole
shall understand the Company's business model and also pos-
sess the knowledge, skills and experience needed to properly
execute its task of supervising and advising the Board of Man-
agement, in particular specialized knowledge in the areas of
finance, accounting, annual audits, risk management, methods
of internal control and compliance. In general, the members of
the Supervisory Board should complement one another with
regard to their specialist knowledge and professional experi-
ence in such a manner as to ensure that the Supervisory Board
can utilize the most broadly based wealth of experience and
expertise possible when making decisions. The Supervisory
Board also views the diversity of its members in terms of age,
gender, internationality and other personal attributes as an
important foundation for effective cooperation. The foundation
for Supervisory Board decisions regarding proposals on candi-
dates for election at the Shareholders' Meeting is always the
Company's interests under consideration of all circumstances
in each individual case.
During the reporting period, the requirements profile for the
Supervisory Board included the following aspects in particular:
The members of the Supervisory Board should have different
educational and professional backgrounds. At least five
members should have completed a vocational technical
training or education program or possess specific technolog-
ical knowledge in fields such as information technology
(including digitalization), chemistry, mechanical engineering
or electrical engineering. Decisions related to the composi-
tion of the Supervisory Board should also take into account
the fact that it may be necessary for members to obtain new
skills and knowledge in order to be able to address product
and market developments. Irrespective of the specific
knowledge in the above-mentioned areas acquired by many
members of the Supervisory Board in other functions, as of
December 31, 2020, Marie Wieck, Dr. Jürgen Hambrecht, Dr.
Bernd Pischetsrieder, Dr. Frank Weber and Roman Zitzels-
berger (three shareholder representatives and two employee
representatives) had relevant university degrees, while
another three employee representatives had completed
vocational training in the above-mentioned fields or similar
areas.
The requirements profile for the Board of Management other-
wise remains unchanged. The aspects described above are to
be taken into consideration when making Board of Manage-
ment appointments. On the basis of a target profile that takes
into account specific qualification requirements and the above-
mentioned criteria, the Presidential Committee creates a
shortlist of available candidates whom it interviews. It then
recommends a candidate to the Supervisory Board for its
approval and includes an explanation of its recommendation.
Decisions regarding appointments to the Board of Manage-
ment are always governed by the Company's interests under
consideration of all circumstances in each individual case. In
the Supervisory Board's view, fundamental personal criteria
that make a person suited for a Board of Management position
include, in particular, the individual's personality, integrity,
credible leadership qualities, expertise for the division he or
she will head, previous achievements, knowledge of the Com-
pany, and the ability to adapt business models and processes
in a changing world.
The Supervisory Board meetings during the reporting period
once again included executive sessions on a regular basis for
discussions of individual topics in the absence of the members
of the Board of Management. The Supervisory Board members
can also take part in the meetings by means of conference
calls or video conferences. Due to the covid-19 pandemic,
these participation options had to be used more frequently
during financial year 2020, although this type of participation
would otherwise remain the exception.
Along with Daimler AG itself, there are other Group companies
subject to codetermination law. These companies have defined
their own targets for the proportion of women on their supervi-
sory boards, executive management bodies and the two levels
below the board or executive management level, and have also
set deadlines for target achievement. All relevant information
here has been published in accordance with applicable law.
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE 145
Based on the recommendation of the Audit Committee, the
Supervisory Board submits a proposal to the Shareholders'
Meeting for the election of the external auditors for the annual
company financial statements, for the consolidated financial
statements and for the auditors' review of the interim financial
reports. At the Annual Shareholders' Meeting on July 8, 2020,
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin was elected
to conduct the audit of the annual financial statements and the
consolidated financial statements, and the external auditors'
review of interim financial reports, for financial year 2020, as
well as the external auditors' review of interim financial reports
for financial year 2021 in the period leading up to the Share-
holders' Meeting in 2021. KPMG AG Wirtschaftsprüfungsgesell-
schaft has been conducting the audit of the annual company
financial statements and consolidated financial statements of
Daimler AG since the 1998 financial year; since 2014, the
responsible auditor commissioned to carry out the external
audit has been Dr. Axel Thümler.
Daimler prepares its consolidated financial statements and
interim financial reports in accordance with the International
Financial Reporting Standards (IFRS), as adopted by the Euro-
pean Union. The annual financial statements of Daimler AG are
prepared in accordance with the accounting standards of the
German Commercial Code (HGB). Daimler prepares both half-
yearly and quarterly financial reports. The consolidated finan-
cial statements and annual financial statements of Daimler AG
are audited by external auditors; interim financial reports are
reviewed by external auditors. The consolidated financial state-
ments and the Group management reports are made publicly
accessible via the Company's website within 90 days from the
end of the reporting year; the interim financial reports are
made publicly accessible in the same manner within 45 days
from the end of the reporting period.
Accounting and the external audit
At least once a year, the Audit Committee of the Supervisory
Board of Daimler AG discusses with the Board of Management
the effectiveness and functionality of the internal control and
auditing system, the risk management system and the compli-
ance management system. The Chairman of the Audit Commit-
tee reports to the Supervisory Board on the committee's work
at the latest in the next scheduled meeting of the Supervisory
Board. The Supervisory Board also deals with the risk manage-
ment system on the occasion of the audit of the annual com-
pany and consolidated financial statements. Between Supervi-
sory Board meetings, the Chairman of the Supervisory Board
has regular contact with the Board of Management, and in par-
ticular with the Chairman of the Board of Management, to dis-
cuss not only the Group's strategy and business development
but also issues relating to risk management and compliance. In
addition, the Board of Management regularly informs the Audit
Committee and the Supervisory Board of the most important
risks facing the company and the Group as a whole. The Legal
Affairs Committee supports the Supervisory Board in carrying
out its tasks with respect to the complex proceedings relating
to emissions regulations and antitrust law with which Daimler
AG and its subsidiaries are confronted. The Internal Auditing
department monitors adherence to the legal framework and to
Group standards by means of targeted audits and initiates
appropriate actions as required.
Our Compliance Management System (CMS), which has its
basis in our culture of integrity, is designed to support the
observation of laws and policies in the company and by its
employees and to prevent misconduct and systematically mini-
mize compliance risks. More detailed information on the
Daimler Compliance Management System can be found in the
chapter Integrity and Compliance.
The risk management system is one component of the overall
planning, controlling and reporting process. Its goal is to
enable the company's management to recognize significant
risks at an early stage and to initiate appropriate countermea-
sures in a timely manner. Risk and Opportunity Report
Risk and compliance management at the Group
Daimler has a risk and compliance management system that is
commensurate with its size and global presence and is
designed to ensure the continuous and systematic manage-
ment of business risks and opportunities.
We also require our business partners to adhere to clear stipu-
lations because we regard our business partners' integrity and
behavior in conformity with regulations as a precondition for
trusting cooperation. When selecting our direct business part-
ners, we therefore pay close attention to ensure that they com-
ply with the law and follow ethical principles, and that they pay
the same attention themselves to other partners in the supply
chain. For the expectations we place on our business partners,
see also daimler.com/sus/obr.
Expectations for our business partners
142 C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
We have also reached agreement on "Principles of Social
Responsibility" with the World Employee Committee. These
principles apply at Daimler AG and throughout the Group. In
the Principles of Social Responsibility, Daimler commits itself
to the principles of the UN Global Compact and thus to interna-
tionally recognized human and workers' rights, freedom of
association, sustainable protection of the environment and the
proscription of child labor and forced labor. Daimler also com-
mits itself to guaranteeing equal opportunities and adhering to
the principle of “equal pay for equal work."
Our Integrity Code
Our business conduct is based on Group-wide standards that
go beyond the requirements of relevant legislation and the
German Corporate Governance Code. These standards are
based on our four corporate values integrity, respect, passion
and discipline. In order to achieve long-term and thus sustain-
able business success on this basis, our goal is to ensure that
our activities are in harmony with the environment and society.
This is due to the fact that we as one of the world's leading
automakers also strive to be a leader in sustainability. We have
defined the most important principles in our Integrity Code,
which serves as a frame of reference for all employees at
Daimler AG and the Group and supports them in making the
right decisions even in difficult business situations.
The principles guiding our conduct
Beyond the legal requirements of German stock corporation,
codetermination and capital market legislation, Daimler AG has
followed and continues to follow the recommendations of the
German Corporate Governance Code ("Code"), with the excep-
tions disclosed and justified in the declaration of compliance.
Daimler AG has followed and continues to fully follow the sug-
gestions of the Code. However, due to the covid-19 pandemic,
options for participating in Supervisory Board meetings had to
be expanded to include participation via conference calls or
video conferences (D.8, Code 2019).
The German Corporate Governance Code
The main principles and practices of corporate
governance
This declaration of compliance and previous, no longer applica-
ble, declarations of compliance from the past five years are
also available at our website at ④ daimler.com/corpgov/en.
For the Board of Management
Ola Källenius
Chairman
For the Supervisory Board
Dr. Manfred Bischoff
Chairman
Stuttgart, December 2020
Whether the total number of memberships in non-group listed
corporations and similar positions held by members of the
Board of Management or the Supervisory Board still seems
appropriate should, however, be assessed more appropriately
on a case-by-case basis than with a rigid upper limit. The indi-
vidual workload expected as a result of the total number of
memberships held does not necessarily increase in proportion
to their number.
Maximum number of supervisory board memberships (C.
4 and C. 5, Code 2019). In accordance with the recommenda-
tion contained in C. 4, a supervisory board member who is not
a member of the management board of a listed corporation
shall not serve on more than five supervisory boards of non-
group listed corporations or assume similar positions, whereby
chairmanship of a supervisory board counts double. In accor-
dance with the recommendation contained in C. 5, members of
the management board of a listed corporation shall not accept
more than a total of two supervisory board memberships in
non-group listed corporations or assume similar positions, nor
should they accept a position as chairman of the supervisory
board of a non-group listed corporation.
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE 141
The rules of procedure of the Supervisory Board can be viewed
on our website at daimler.com/dai/rop.
Prior to issuing its recommendation to the Annual Sharehold-
ers' Meeting, the Audit Committee of the Supervisory Board
obtained a declaration from the external auditors under con-
sideration. The external auditors were requested to state
whether any business, financial, personal or other relationships
existed between the external auditors and their bodies and
audit managers on the one hand, and the Company and the
members of its bodies on the other, which could justify con-
cerns regarding a conflict of interest. This statement also
describes the extent to which other services were performed
for the Daimler Group in the previous financial year or had
been contractually agreed upon for the following year.
The Audit Committee instructed the external auditor to imme-
diately inform the Committee Chairman of any indications of
partiality or grounds for exclusion uncovered during the audit
or the auditors' review of interim financial statements, and of
all key findings and events relevant to the tasks of the Supervi-
sory Board, particularly findings or events related to suspected
irregularities in accounting. The Audit Committee also reached
an agreement with the external auditors stipulating that the
external auditors would inform the Audit Committee, and make
a note in the audit report, of any facts uncovered during the
annual audit that would reveal inaccuracies in the Board of
Management's and the Supervisory Board's declaration of
compliance with the German Corporate Governance Code.
Employees from different departments and units throughout
the Group and around the world helped us develop our Integ-
rity Code, which was revised in 2019. Our Integrity Code
defines the central corporate principles that guide our behav-
ior in daily business, our interpersonal conduct within the com-
pany and our conduct toward customers and business part-
ners. These corporate principles include compliance with laws,
as well as fairness, transparency, a commitment to diversity,
and responsibility. In addition to the corporate principles, our
Integrity Code includes requirements and regulations concern-
ing respect for and the protection of human rights and dealing
with conflicts of interest. It also prohibits all forms of corrup-
tion. The Integrity Code applies to all companies and employ-
ees of the Daimler Group worldwide. The Integrity Code is
available on the Internet at daimler.com/dai/caag.
Composition and mode of operation of the
Board of Management > D.01
The Supervisory Board has given itself a set of rules of proce-
dure, which regulate not only its duties and responsibilities and
the personal requirements placed upon its members, but
above all the convening and preparation of its meetings and
the procedure of passing resolutions. These rules of procedure
also contain provisions on how to avoid conflicts of interest.
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE 143
The Supervisory Board reviews the annual financial state-
ments, the consolidated financial statements and the com-
bined management report of the Company and the Group, as
well as the proposal for the appropriation of distributable prof-
its. Following discussions with the external auditors and taking
into consideration the audit reports of the external auditors
and the results of the review by the Audit Committee, the
Supervisory Board states whether, after the final results of its
own review, any objections are to be raised. If that is not the
case, the Supervisory Board approves the financial statements
and the combined management report. Upon being approved,
the annual financial statements are adopted. The Supervisory
Board reports to the Annual Shareholders' Meeting on the
results of its own review and on the manner and scope of its
supervision of the Board of Management during the previous
financial year. The Report of the Supervisory Board for
financial year 2020 is available in this Annual Report and on
the Internet at daimler.com/dai/sb.
The Supervisory Board decides on the system of remuneration
for the Board of Management, reviews it regularly, and on this
basis determines the total individual remuneration of each
member of the Board of Management. In this process, it con-
siders a comparison with an appropriate peer group at other
companies, as well as the ratio of Board of Management remu-
neration to the remuneration of the senior executives and the
workforce as a whole, also with regard to development over
time. For this comparison, the Supervisory Board has defined
the senior executives by applying Daimler's internal terminol-
ogy for the hierarchical levels and has defined the workforce of
Daimler AG in Germany as the relevant workforce. Variable
components of remuneration are generally based on an
assessment period that lasts several years and is essentially
future-oriented. Multi-year variable remuneration components
are not paid out until they come due. The Supervisory Board
has set upper limits for individual Board of Management remu-
neration in total and with regard to its variable components.
The remuneration system for the Board of Management was
approved by the Annual Shareholders' Meeting in 2020 with a
majority of 95.33%. Further information on Board of Manage-
ment remuneration can be found in the Remuneration
Report.
The Supervisory Board's duties include appointing and, if nec-
essary, recalling the members of the Board of Management. In
the past, initial appointments were usually made for a maxi-
mum period of three years. Beginning in 2021, this maximum
term will apply to all initial appointments. In accordance with
German legislation on equal participation by women and men
in executive positions, the Supervisory Board has defined a
target for the proportion of women on the Board of Manage-
ment and a deadline for achieving this target. The details are
described in a separate section in this declaration on corpo-
rate governance. With regard to the composition of the Board
of Management, the Supervisory Board has also adopted a
diversity concept that is embedded in an overall requirements
profile. The details of this concept are also described in a sepa-
rate section in this declaration.
The Supervisory Board monitors and advises the Board of Man-
agement with regard to its management of the Group. At regu-
lar intervals, the Board of Management reports to the Supervi-
sory Board on the strategy of the divisions, corporate planning,
revenue development, profitability, business development and
the situation of the Group, as well as on the internal control
system, the risk management system and compliance matters.
The Supervisory Board has retained the right of approval for
transactions of fundamental importance. Furthermore, the
Supervisory Board has specified the information and reporting
duties of the Board of Management to the Supervisory Board,
to the Audit Committee and – between the meetings of the
Supervisory Board - to the Chairman of the Supervisory
Board.
The members of the Supervisory Board attend on their own
responsibility courses of training and further training that
might be necessary for the performance of their tasks, and are
supported by the Company in doing so. Such courses may
address corporate governance, changes brought about by new
legislation, or the launch of new products and pioneering tech-
nologies, for example. New members of the Supervisory Board
are offered an "onboarding" program that gives them the
opportunity to exchange views with members of the Board of
Management and other executives on current issues related to
the various areas of responsibility of the Board of Manage-
ment, and thus to obtain an overview of important topics at the
Group.
Information on the curricula vitae of the members of the
Supervisory Board and their other memberships is posted on
our website at daimler.com/dai/sb. The Supervisory Board
is to be composed so that its members together are knowl-
edgeable about the business sector in which the Company
operates and also dispose of the knowledge, skills and special-
ist experience that are required for the proper execution of
their tasks. According to the law on the equal participation of
women and men in executive positions, at least 30% of the
members of the Supervisory Board of Daimler AG must be
women and at least 30% must be men. The details are
described in a separate section in this declaration on corpo-
rate governance. With regard to its composition, the Supervi-
sory Board has also created an overall requirements profile
consisting of a skills profile and a diversity concept, including
an age limit, to be applied to the entire Supervisory Board. The
details on the overall requirements profile are also summarized
in a separate section in this declaration. Proposals by the
Supervisory Board of candidates for election by the Sharehold-
ers' Meeting as members representing the shareholders of
Daimler AG, for which the Nomination Committee makes rec-
ommendations, aim to fulfill the overall requirements profile of
the Supervisory Board as a whole.
In accordance with the German Codetermination Act (Mit-
bestG), the Supervisory Board of Daimler AG comprises 20
members. Half of them are elected by the shareholders at the
Shareholders' Meeting. The other half comprises members
who are elected by the Group's employees who work in Ger-
many. The members representing the shareholders and the
members representing the employees are equally obliged by
law to act in the Company's best interests.
Composition and mode of operation of the
Supervisory Board and its committees
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
144
Targeted support for women on the basis of the best-mix prin-
ciple was a central component of our diversity management
activities even before the legislation on the equal participation
of women and men in executive positions went into effect.
Such support has also included and continues to include flexi-
ble working-time arrangements, company nurseries and spe-
cial mentoring programs for women. In order to meet legal
requirements, the Board of Management of Daimler AG has
defined targets for the proportion of women at the two man-
agement levels below the Board of Management and a deadline
for achieving those targets. The details are described in a sep-
arate section. Independently of the legal requirements, Daimler
continues to affirm the goal it already set itself in 2006 of
increasing the proportion of women in executive positions at
the Group (with the exception of Daimler Greater China and
Trucks Asia) to 20% by 2020. We have achieved this goal and
beginning in 2021, we plan to further increase the proportion
of women in executive positions at the Group worldwide by
one percentage point each year.
Supervisory Board
Board of Management
Daimler AG is obliged by the German Stock Corporation Act
(AktG) to apply a dual management system featuring strict per-
sonal and functional separation between the Board of Manage-
ment and the Supervisory Board (two-tier board). Accordingly,
the Board of Management manages the company while the
Supervisory Board monitors and advises the Board of Manage-
ment.
Diversity management has been part of the corporate strategy
of Daimler since 2005. We rely on the diversity of our employ-
ees and the differences between them because such differ-
ences form the foundation for an effective and successful com-
pany. The aim of our activities is to bring together the right
people to tackle our challenges, to create a work culture that
promotes the performance, motivation and satisfaction of our
employees and managers, and to help attract new target
groups to our products and services. Our activities for shaping
diversity at Daimler focus on three areas: best mix, work cul-
ture and customer interaction. With our specific measures,
activities and initiatives for everything from training formats
for employees and managers to workshops, conferences, poli-
cies and target group-specific communication and awareness-
raising measures, our diversity management system makes a
major contribution to the further development of our corporate
culture.
In accordance with the Articles of Incorporation of Daimler AG,
the Board of Management has at least two members. The pre-
cise number of Board of Management members is determined
by the Supervisory Board. The Board of Management had eight
members on December 31, 2020. In accordance with German
law on the equal participation of women and men in executive
positions, the Supervisory Board has set a target for the pro-
portion of women on the Board of Management and a deadline
for achieving this target. The details are described in a sepa-
rate section in this declaration on corporate governance. With
regard to the composition of the Board of Management, the
Supervisory Board has also adopted a diversity concept,
including an age limit, that is embedded in an overall require-
ments profile. The details of this concept are also described in
a separate section in this declaration.
Information on the areas of responsibility and the curricula
vitae of the Board of Management members is posted on the
Daimler AG website at CH daimler.com/dai/bom. The mem-
bers of the Board of Management and their areas of responsi-
bility are also listed in the Board of Management.
The Board of Management manages Daimler AG and the Group
while taking into consideration the interests of shareholders,
employees and other stakeholders, and with the aim of achiev-
ing sustainable value creation. With the consent of the Super-
visory Board, the Board of Management determines the
Group's strategic focus, defines the corporate goals, and
makes decisions concerning corporate planning matters.
The Board of Management prepares the consolidated interim
reports, the annual financial statements of Daimler AG, the
consolidated financial statements, and the combined manage-
ment report of the Company and the Group, including the non-
financial declaration. Together with the Supervisory Board, the
Board of Management issues the declaration of compliance
with the German Corporate Governance Code each
year. It
ensures that the provisions of applicable law, official regula-
tions and the internal policies at the Company are adhered to,
and works to make sure that the companies of the Group com-
ply with those rules and regulations. The Board of Management
has also established an adequate compliance management
system that takes into account the Company's risk situation.
Irrespective of the overall responsibility of the Board of Man-
agement, the individual members of the Board of Management
manage their allocated divisions on their own responsibility
and within the framework of the instructions approved by the
entire Board of Management. Specific issues defined by the
Board of Management as a whole are dealt with by the Board
as a whole, which must approve all related decisions. The
Chairman of the Board of Management coordinates the work of
the Board of Management.
For certain types of transactions defined by the Supervisory
Board, the Board of Management requires the prior consent of
the Supervisory Board. At regular intervals, the Board of Man-
agement reports to the Supervisory Board on the strategy of
the divisions, corporate planning, profitability, business devel-
opment and the situation of the Group, as well as on the inter-
nal control system, the risk management system and compli-
ance matters. The Supervisory Board has specified the
information and reporting duties of the Board of Management.
No committees of the Board of Management existed during the
reporting period.
The Board of Management has also given itself a set of rules of
procedure, which can be seen on our website at ④ daimler.
com/dai/rop. Those rules describe, for example, the procedure
to be observed when passing resolutions and ways to avoid
conflicts of interest.
Diversity
The main features of this system are described in the
Integrity and Compliance chapter. Such features include the
Company's whistleblower system, the BPO (Business Practices
Office), which enables Daimler employees and external whistle-
blowers to report misconduct anywhere in the world. The tasks
of the Board of Management also include establishing and
monitoring an appropriate and efficient risk management sys-
tem.
-3,534
5
Research and non-capitalized development costs
-4,050
5
29,165
-12,801
-11,058
5
-6,116
General administrative expenses
-6,586
thereof profit attributable to non-controlling interests
thereof profit attributable to shareholders of Daimler AG
6
2,022
2,837
Other operating expense
Profit on equity-method investments, net
Other financial income/expense, net
Earnings before interest and taxes (EBIT)
Interest income
Interest expense
Profit before income taxes
Income taxes
Net profit
25,588
Other operating income
-128,721 -143,580
19. Trade receivables
172,745
241
Earnings per share (in euros)
198
39. Auditor fees
242
20. Equity
200
40. Events after the reporting period
242
21. Share-based payment
201
41. Additional information
242
D❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF INCOME
Consolidated Statement of Income
D.01
In millions of euros
155
Note
2020
2019
4
Revenue
Cost of sales
Gross profit
Selling expenses
154,309
5
for profit attributable to shareholders of Daimler AG
Basic
332
6
3.39
2.22
The accompanying notes are an integral part of these Consolidated Financial Statements.
156
D❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/LOSS
Consolidated Statement of Comprehensive
Income/Loss¹
D.02
In millions of euros
Net profit
Currency translation adjustments
Debt instruments
Unrealized gains/losses (pre-tax)
Taxes on unrealized gains/losses and on reclassifications
Debt instruments (after tax)
Derivative financial instruments
Unrealized gains/losses (pre-tax)
Reclassifications to profit and loss (pre-tax)
Taxes on unrealized gains/losses and on reclassifications
Derivative financial instruments (after tax)
Items that may be reclassified to profit/loss
Equity instruments
Unrealized gains/losses (pre-tax)
Taxes on unrealized gains/losses and on reclassifications
Equity instruments (after tax)
Actuarial gains/losses from pensions and similar obligations (pre-tax)
Taxes on actuarial gains/losses from pensions and similar obligations
Actuarial gains/losses from pensions and similar obligations (after tax)
Items that will not be reclassified to profit/loss
Other comprehensive income/loss, net of taxes
thereof income/loss attributable to non-controlling interests, after taxes
thereof income/loss attributable to shareholders of Daimler AG, after taxes
2.22
Diluted
3.39
2,377
-742
-4,469
13
797
479
7
-354
-262
34
6,603
4,313
8
220
397
8
-484
-880
6,339
3,830
9
-2,330
-1,121
4,009
2,709
382
Management and the Supervisory Board
3,627
36
198
186
38. Remuneration of the members of the Board of
The shareholders exercise their membership rights, in particu-
lar their voting rights, at the Shareholders' Meeting. Each share
in Daimler AG entitles its owner to one vote. Documents and
information related to the Shareholders' Meeting can be found
on our website at ④ daimler.com/ir/am.
We maintain close contacts with our shareholders in the con-
text of our comprehensive investor relations and public rela-
tions activities. We regularly and comprehensively inform our
shareholders, financial analysts, shareholder associations, the
media and the interested public about the situation of the
Group, and inform them without delay about any significant
changes in its business. Within reasonable limits, the Chairman
of the Supervisory Board is also prepared to talk to investors
about specific Supervisory Board issues.
In addition to other methods of communication, we also make
extensive use of the Company's website for our investor rela-
tions activities. All of the important information disclosed in
financial year 2020, including annual and interim reports, press
releases, voting rights notifications from major shareholders,
presentations, and audio recordings of analyst and investor
events and conference calls, as well as the financial calendar,
can be found at ④ daimler.com/investors. All the dates of
important disclosures such as annual reports and interim
reports and the dates of the Annual Shareholders' Meeting, the
annual press conference and the analyst conferences are
announced in advance in the financial calendar.
Consolidated
Financial
Statements
154
D❘ CONSOLIDATED FINANCIAL STATEMENTS | CONTENTS
324.9
25786
30
20
20
D
Consolidated Statement of Income
155
Consolidated Statement of
Comprehensive Income/Loss
156
Consolidated Statement of Financial
Position
157
Consolidated Statement of Cash Flows 158
Consolidated Statement of Changes
in Equity
Notes to the Consolidated
Financial Statements
159
161
Shareholders and the Shareholders' Meeting
1. Significant accounting policies
The Supervisory Board's Nomination Committee regularly
determines which memberships end at which time and
whether the respective members come into question for a fur-
ther term in line with the aforementioned criteria and are also
willing to do so. In its search for new candidates, the Nomina-
tion Committee also avails itself of independent external
human resources consulting services.
cer or the Board of Management Chairman of a listed com-
pany. Besides the intended membership in the Supervisory
Board of Daimler AG, neither of them is a member of a supervi-
sory board at a non-Group listed company or holds a similar
position. In addition to being Senior Vice President of the listed
company Cisco Systems Inc., Elizabeth Centoni is a member of
the Board of Directors of the listed company Ingersoll Rand
Inc. However, she does not hold any other comparable posi-
tions beyond the intended membership in the Supervisory
Board of Daimler AG. As a result, all of the candidates have
fewer board memberships than the maximum number given in
the requirements profile. The Supervisory Board has also
determined that all of the candidates for membership in the
Supervisory Board of Daimler AG have sufficient time available
to perform their duties and are willing and able to dedicate
themselves to their tasks and to participate in all courses of
training and further training that might be necessary for the
performance of their tasks.
The new Code recommends that more than half of the mem-
bers of the Supervisory Board representing the shareholders
are to be independent of the Company and its Board of Man-
agement and these members must always include the
Chairman of the Supervisory Board, the Chairman of the
Audit Committee and the Chairman of the committee that
makes decisions regarding remuneration for the Board of
Management. Within the meaning of this recommendation, a
Supervisory Board member is to be considered independent
if he or she has no personal or business relationship with the
Company or its Board of Management that may cause a sub-
stantial and not merely temporary conflict of interest. It is up
to the shareholders' side of the Supervisory Board to assess
the independence of members on the shareholders' side.
Four indicators of a possible lack of independence are to be
considered here: membership of the Board of Management
within a period of two years prior to the appointment as a
member of the Supervisory Board; a material business rela-
tionship with the Company or an enterprise dependent upon
ite.g. as a customer, supplier, creditor or advisor; a close
family relationship with a member of the Board of Manage-
ment; membership in the Supervisory Board for more than
twelve years. All criteria here apply to both Supervisory
Board members themselves and to members of their imme-
diate families. At the same time, the shareholders' side is
expressly granted the right to consider a Supervisory Board
member independent if one or even multiple indicators
apply. However, this view of the Supervisory Board member
as independent must be justified in the Declaration on Cor-
porate Governance.
The shareholder representatives on the Supervisory Board
of Daimler AG have concluded that as of December 31,
2020, all members of the Supervisory Board representing
the shareholders were independent of Daimler AG and its
Board of Management This includes the Chairman of the
Supervisory Board, who is also the Chairman of the Presi-
dential Committee, which at Daimler AG addresses issues
including those relating to remuneration for the Board of
Management, and the Chairman of the Audit Committee.
Even under consideration of the indicators used in the new
Corporate Governance Code 2019, no Supervisory Board
member representing the shareholders has a personal or
business relationship with Daimler AG or its Board of Man-
agement that may cause a substantial and not merely tem-
porary conflict of interest. The patent dispute between
Daimler and Nokia does not represent a set of circum-
stances that might cause a substantial and not merely tem-
porary conflict of interest for Sari Baldauf, nor is this the
case with regard to the past memberships of Dr. Jürgen
Hambrecht or Dr. Bernd Pischetsrieder. Joe Kaeser and Tim-
otheus Höttges, as the CEOs of Siemens AG and Deutsche
Telekom AG, respectively, do not have in their capacity as
CEO any material business relationship with Daimler AG or
an enterprise dependent upon Daimler AG, within the mean-
ing of the German Corporate Governance Code. The volume
of goods/services procured by Daimler from Siemens and
Deutsche Telekom is very low.
The Chairman of the Supervisory Board, Dr. Manfred
Bischoff, and the Chairman of the Audit Committee, Dr. Cle-
mens Börsig, as well as Dr. Jürgen Hambrecht and Sari
Baldauf have been members of the Supervisory Board for
more than 12 years. However, these Supervisory Board
members also consistently maintain the required critical dis-
tance from the Company and its Board of Management and
employ the clear, vigilant and critical approach required for
their supervision of the Board of Management. All four of
these members' administration of their offices has demon-
strated that they perform their duties and carry out their var-
ious functions on the Supervisory Board's committees in an
exemplary manner. In addition, their many years of experi-
ence and expertise are of crucial importance for ensuring
that the Supervisory Board can effectively serve as a critical
monitor of, and key and trusted advisor to, the Board of
Management. This is especially true with regard to Dr. Man-
fred Bischoff in his capacity as Chairman of the Supervisory
Board, and thus the primary contact for the Board of Man-
agement as well, and to Dr. Clemens Börsig in his capacity
as Chairman of the Audit Committee and Chairman of the
Legal Affairs Committee. The experience and knowledge of
the Company they bring to the prominent positions they hold
ensure stability and reliability. The Supervisory Board
believes that the stability and reliability of measures taken to
supervise and advise the Board of Management represent an
important component for ensuring the sustained success of
the Company, particularly in the current economic environ-
ment, which is making the extensive transformation of the
automotive industry an even more difficult process. In con-
clusion, for these reasons, in the view of the shareholder
representatives, all members of the Supervisory Board rep-
resenting the shareholders - i.e. Dr. Manfred Bischoff, Bader
M. Al Saad, Sari Baldauf, Dr. Clemens Börsig, Dr. Jürgen
Hambrecht, Petraea Heynike, Timotheus Höttges, Joe Kae-
ser, Dr. Bernd Pischetsrieder and Marie Wieck - are to be
considered independent.
In accordance with the previous requirements profile, only
candidates who have not yet been members of the Supervi-
sory Board for three full terms of office at the time of their
election should generally be nominated for membership of
the Supervisory Board for a full term of office. This general
length of service on the Supervisory Board has not been
exceeded by any current member. The indicator of a possible
lack of independence due to membership of the Supervisory
Board for more than twelve years that was introduced in the
new German Corporate Governance Code (Code 2019), and
with regard to which the members of the Supervisory Board
representing the shareholders may take a different view, is
taken into account in the updated requirements profile, with
effect from January 1, 2021.
Candidates for membership of the Supervisory Board and
members of the Supervisory Board must have sufficient time
available to perform their duties. They must also be willing
and able to dedicate themselves to their tasks and to partici-
pate in all courses of training and further training that might
be necessary for the performance of their tasks.
In accordance with the previous requirements profile and
the German Corporate Governance Code in the version
dated February 7, 2017, no member of the Supervisory Board
who is also a member of the board of management of a
listed company may hold more than three memberships of
supervisory boards of listed companies (including his or her
membership of the Supervisory Board of Daimler AG) or of
supervisory bodies of other companies with similar require-
ments outside of the group of his or her board of manage-
ment membership. In accordance with the requirements
152
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
profile, membership of two supervisory boards within the
Daimler Group is not taken into account. In light of this, with
regard to the additional memberships of Joe Kaeser, a devia-
tion from the recommendation in the Code (2017) that
serves as the basis for defining the maximum number of
memberships of the requirements profile, as well as a devia-
tion from the stricter maximum number of memberships rec-
ommended in the new Code (2019), were nevertheless dis-
closed and explained in the declaration of compliance from
December 2020. The updated requirements profile, which
went into effect on January 1, 2021, takes into account the
stricter recommendation in the new Code (2019).
In accordance with the previous requirements profile, mem-
bers of the Supervisory Board who are not also members of
the board of management of a listed company shall generally
be permitted membership on a maximum of eight supervi-
sory boards (including that of Daimler AG), whereby chair-
manship of a supervisory board counts double. This maxi-
mum number was not exceeded by any member of the
Supervisory Board during the reporting period. Nonetheless,
a deviation from the maximum number of memberships for
supervisory board members who are not members of the
board of a listed corporation recommended in the new Code
(2019) was disclosed and explained in the declaration of
compliance from December 2020. Pursuant to the Code
(2019) such supervisory board members shall not accept
more than five memberships of supervisory boards of non-
Group listed corporations or comparable positions, whereby
chairmanship of a supervisory board counts double.
The Supervisory Board has made adjustments to three aspects
of the requirements profile for members of the Supervisory
Board, with effect from January 1, 2021:
- Independence: Conditional upon the disclosure of a devia-
tion in the declaration of compliance pursuant to Section 161
of the German Stock Corporation Act (AktG), more than half
of the members of the Supervisory Board representing the
shareholders are to be independent of the Company and its
Board of Management; the provision regarding an adequate
number of members without any potential conflict of interest
no longer applies, nor does the provision regarding an ade-
quate number of independent members in relation to the
Supervisory Board as a whole.
General limit on length of service: Candidates for (re)elec-
tion to the Supervisory Board should generally not have
already served on the Supervisory Board for 12 years.
Maximum number of memberships: Members of the
boards of management of listed companies shall generally
not accept more than a total of two supervisory board mem-
berships in non-group listed corporations (including their
membership of the Supervisory Board of Daimler AG) or sim-
ilar positions, nor should they accept a position as chairman
of the supervisory board of a non-group listed corporation,
whereby any deviation from this principle must be disclosed
in the annual declaration of compliance pursuant to Section
161 of the German Stock Corporation Act (AktG); other
members of the Supervisory Board shall generally not
accept more than a total of five supervisory board member-
ships in non-group listed corporations (including their mem-
bership on the Supervisory Board of Daimler AG) or similar
positions, whereby chairmanship of a supervisory board
counts double. For the purposes of the requirements profile,
membership of Daimler AG Supervisory Board members on
two supervisory bodies within the Daimler Group is still not
taken into account.
The requirements profile otherwise remains unchanged.
Proposals by the Supervisory Board of candidates for election
by the Shareholders' Meeting as Supervisory Board members
representing the shareholders of Daimler AG, for which the
Nomination Committee makes recommendations, shall take
into consideration the aspects described above and aim at ful-
filling the overall requirements profile for the Supervisory
Board as a whole. On the basis of a target profile that takes
into account specific qualification requirements and the above-
mentioned criteria, the Nomination Committee creates a short-
list of available candidates with whom it conducts structured
discussions in which it also determines whether the candidate
in question will have sufficient time available to perform his or
her duties on the Supervisory Board with due care. The Nomi-
nation Committee then recommends a candidate to the Super-
visory Board for its approval and includes an explanation of its
recommendation. The foundation for Supervisory Board deci-
sions regarding proposals on candidates for election at the
Shareholders' Meeting is always the Company's interests
under consideration of all circumstances in each individual
case.
The Supervisory Board candidates Elizabeth Centoni, Ben van
Beurden and Dr. Martin Brudermüller will be nominated for
election at the Annual Shareholders' Meeting 2021 for the first
time. These candidates fulfill and strengthen the requirements
profile of the Supervisory Board.
Elizabeth Centoni, Senior Vice President Strategy and Emerg-
ing Technology & Incubation of Cisco Systems, has a bache-
lor's degree in chemistry as well as many years of experience
with software services, cloud computing and the Internet of
Things. Ben van Beurden, Chief Executive Officer of Royal
Dutch Shell plc, has a master's degree in chemical engineering
and Dr. Martin Brudermüller, Board of Management Chairman
of BASF SE, has a Ph.D. in chemistry. The target of five Super-
visory Board members who have a technical background or
specific technological expertise that has been more than met
to date would thus be exceeded to an even greater extent if
the nominated candidates were elected. Moreover, the election
of Elizabeth Centoni would ensure that the legally required pro-
portion of women (30%) would be met. All of the candidates
are younger than 62 and have many years of international
experience. In addition, Elizabeth Centoni and Ben van Beur-
den come from a country other than Germany. Should the can-
didates be elected, the target of 30% international shareholder
representatives would be exceeded even more than it already
is.
The nominated candidates occupy high-level positions at other
companies. Daimler has relations with almost all of these com-
panies as part of its usual business operations. All of the nomi-
nated candidates are independent of the Company and its
Board of Management. None of them has a personal or busi-
ness relationship with the Company, one of its dependent
enterprises or its Board of Management (e.g. as a customer,
supplier, creditor or consultant) that may cause a substantial
and not merely temporary conflict of interest. Ben van Beurden
and Dr. Martin Brudermüller serve as the Chief Executive Offi-
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE
153
Total comprehensive income
C❘ CORPORATE GOVERNANCE | DECLARATION ON CORPORATE GOVERNANCE 151
The terms of the shareholder representatives on the Supervi-
sory Board of Daimler AG end at different times ("staggered
board"). The Annual Shareholders' Meeting elects one or more
shareholder representatives each year. Having a staggered
board enables the composition of the Supervisory Board to be
more flexibly adapted to a changing environment. Moreover, it
makes it easier to find suitable candidates because all of the
shareholder representatives do not have to be elected during a
single Annual Shareholders' Meeting.
18. Inventories
161
203
10. Intangible assets
31. Contingent liabilities and other financial obligations 215
11. Property, plant and equipment
187
32. Financial instruments
216
12. Equipment on operating leases
189
33. Management of financial risks
226
13. Equity-method investments
190
34. Segment reporting
235
14. Receivables from financial services
194
35. Capital management
239
15. Marketable debt securities and similar investments 197
36. Earnings per share
239
16. Other financial assets
197
37. Related-party disclosures
240
17. Other assets
197
212
22. Pensions and similar obligations
30. Legal proceedings
9. Income taxes
2. Accounting estimates and management judgments 175
23. Provisions for other risks
208
3. Consolidated Group
177
24. Financing liabilities
209
4. Revenue
179
25. Other financial liabilities
209
5. Functional costs
180
26. Deferred income
209
6. Other operating income and expense
181
27. Contract and refund liabilities
210
7. Other financial income/expense, net
182
28. Other liabilities
210
8. Interest income and expense
182
29. Consolidated statement of cash flows
211
182
thereof income/loss attributable to non-controlling interests
-3,756
1 See Note 20 for other information on the Consolidated Statement of Comprehensive Income/Loss.
15,853
Cash and cash equivalents at end of period
23,048
18,883
1 See Note 29 for other information on Consolidated Statement of Cash Flows.
The accompanying notes are an integral part of these Consolidated Financial Statements.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Statement of Changes in Equity¹
D.05
In millions of euros
Balance at January 1, 2019
Net profit
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
Changes in the consolidated group
18,883
159
Cash and cash equivalents at beginning of period
4,165
53,713
63,607
-59,953
-55,043
-963
-3,477
-282
-263
31
85
-30
-42
-79
-10,747
5,628
-999
121
3,030
840
Other reserves
in profit/loss
432
15
-3,477
-14
Capital increase/Issue of new shares
-
Acquisition of treasury shares
-
Issue and disposal of treasury shares
-
Changes in ownership interests in subsidiaries
-158
-
Other
125
Balance at December 31, 2019
3,070
205
items that
may be reclassified
3
12
Equity
instruments/
Share
Capital
capital
reserves
Retained
earnings²
Currency
translation
debt
instruments
3,070
11,710
49,490
477
15
2,377
-2,404
432
232
-3,263
-30
-10,607
-6,421
2020
2019
6,339
3,830
8,957
7,751
-836
24
131
-761
2,039
99
1,339
-346
-299
-1,625
2,397
Cash provided by operating activities
-4,664
Income taxes paid
Other operating assets and liabilities
285,737
302,438
158
D❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CASH FLOWS
Consolidated Statement of Cash Flows¹
D.04
In millions of euros
Profit before income taxes
Depreciation and amortization/impairments
Other non-cash expense and income
Gains (-)/losses (+) on disposals of assets
Change in operating assets and liabilities
Inventories
Trade receivables
Trade payables
Receivables from financial services
Vehicles on operating leases
Dividends received from equity-method investments
1,822
-1,156
653
Acquisition of marketable debt securities and similar investments
-3,792
-5,960
Proceeds from sales of marketable debt securities and similar investments
Other
5,941
7,014
27
Cash used for investing activities
Change in short-term financing liabilities
Additions to long-term financing liabilities
Repayment of long-term financing liabilities
Dividend paid to shareholders of Daimler AG
Dividends paid to non-controlling interests
Proceeds from the issue of share capital
Acquisition of treasury shares
Acquisition of non-controlling interests in subsidiaries
Cash used for/provided by financing activities
Effect of foreign exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
394
259
Proceeds from disposals of shareholdings
-1,619
5,641
1,783
1,202
-1,993
-2,107
22,332
7,888
Additions to property, plant and equipment
11,552
-5,741
Additions to intangible assets
-2,819
-3,636
Proceeds from disposals of property, plant and equipment and intangible assets
365
429
Investments in shareholdings
-661
-7,199
105,802
46,329
30
Acquisition of treasury shares
Issue and disposal of treasury shares
Changes in ownership interests in subsidiaries
Balance at December 31, 2019
-546
61,344
1,497
62,841
Balance at January 1, 2020
3,627
382
1,158
-51
4,009
-3,807
Net profit
-345
454
Changes in the consolidated group
-
Dividends
Deferred taxes on other comprehensive income
-42
-42
42
42
42
-158
-16
-174
125
6
131
Other
-546
61,344
1,497
62,841
Other comprehensive income/loss before taxes
Total comprehensive income/loss
-42
813
331
30
30
Issue and disposal of treasury shares
-
-1
-1
2
69
-4
65
Changes in ownership interests in subsidiaries
Other
269
60,691
1,557
62,248
Balance at December 31, 2020
The accompanying notes are an integral part of these Consolidated Financial Statements.
30
325
Acquisition of treasury shares
Dividends
454
656
-963
-282
-1,245
-83
2
-81
-
13
13
Capital increase/Issue of new shares
-30
-30
-30
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Changes in the consolidated group
Capital increase/Issue of new shares
54
54
-963
-83
Capital increase/Issue of new shares
Acquisition of treasury shares
Issue and disposal of treasury shares
Changes in ownership interests in subsidiaries
Other
Balance at December 31, 2020
1 See Note 20 for other information on changes in equity.
3,070
-1
-
-
-
67
11,551
47,111
176
-1,516
-2,425
-42
Balance at January 1, 2020
Net profit
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Dividends
Changes in the consolidated group
3,070
11,552
46,329
909
30
3,627
-2,707
-2,425
218
841
1,761
206
2 Retained earnings also include items that will not be reclassified to the Consolidated Statement of Income.
The accompanying notes are an integral part of these Consolidated Financial Statements.
-2,597
18
-2,579
186
421
421
-451
201
350
551
-3,477
-288
-3,765
-14
5
-9
-
-637
Net profit
2,709
332
160
D❘ CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
attributable
Derivative
financial
Treasury
instruments
share
909
to share-
holders of
Daimler AG
Total
equity
In millions of euros
-95
thereof income/loss attributable to shareholders of Daimler AG
1,386
66,053
Balance at January 1, 2019
2,377
Non-
controlling
interests
99,809
64,667
-40
6,259
9
Trade receivables
Inventories
Total non-current assets
Other assets
Deferred tax assets
3,347
4,167
16
Other financial assets
770
1,041
15
Marketable debt securities and similar investments
52,880
53,709
14
5,949
5,189
13
Receivables from financial services
Equity-method investments
51,482
47,552
12
37,143
5,803
17
911
1,286
Total current assets
5,426
4,534
17
Other assets
2,736
2,757
16
Other financial assets
7,885
5,356
15
Marketable debt securities and similar investments
35,246
18,883
Cash and cash equivalents
50,781
42,476
14
Receivables from financial services
12,332
10,649
19
29,757
26,444
18
174,638
170,473
23,048
115,264
11
16,399
-451
-1,661
3
213
7
The accompanying notes are an integral part of these Consolidated Financial Statements.
4
173
11
-2,706
-2,404
841
232
-1,865
-2,172
-1,692
-2,161
-3,353
-2,158
-51
18
-3,302
-2,176
656
551
331
350
813
186
-345
979
10
Equipment on operating leases
Property, plant and equipment
Intangible assets
Assets
2019
At December 31,
2020
157
Note
In millions of euros
D.03
Consolidated Statement of Financial Position
D CONSOLIDATED FINANCIAL STATEMENTS | CONSOLIDATED STATEMENT OF FINANCIAL POSITION
15,978
2020
4,009
2,709
-2,477
449
5
6
-2
-1
3
5
1,271
-1,616
-113
2019
127,800
Total assets
285,737
981
28
6,060
5,787
325
1,598
1,567
26
3,935
3,649
9
2,112
1,971
25
99,179
86,539
24
10,597
11,116
586
23
123,680
12,378
3,220
3,404
28
7,571
7,169
27
1,624
1,594
26
7,752
6,627
25
62,601
59,303
24
10,327
9,334
23
12,707
133,795
9,728
27
22
Financing liabilities
Provisions for other risks
Trade payables
Total non-current liabilities
Other liabilities
Contract and refund liabilities
Deferred income
Deferred tax liabilities
Other financial liabilities
Financing liabilities
Provisions for other risks
Provisions for pensions and similar obligations
Total equity
12,070
Equity attributable to shareholders of Daimler AG
Other reserves
Retained earnings
Capital reserves
Share capital
Equity and liabilities
302,438
Other financial liabilities
Deferred income
Non-controlling interests
201
62,841
62,248
20
1,557
61,344
60,691
393
-1,041
46,329
47,111
1,497
11,551
3,070
3,070
The accompanying notes are an integral part of these Consolidated Financial Statements.
Total equity and liabilities
Total current liabilities
Other liabilities
Contract and refund liabilities
11,552
IFRS issued, EU endorsed and initially adopted in the
reporting period
The accounting policies applied in the Consolidated Financial
Statements comply with the IFRS required to be applied in the
EU as of December 31, 2020.
Applied IFRS
Basis of preparation
2021.
The Board of Management of Daimler AG authorized the Con-
solidated Financial Statements for publication on February 17,
The Consolidated Financial Statements of Daimler AG are pre-
sented in euros (€). Unless otherwise stated, all amounts
are stated in millions of euros. All figures shown are rounded in
accordance with standard business rounding principles.
General information
The Consolidated Financial Statements of Daimler AG and its
subsidiaries ("Daimler” or “the Group") have been prepared in
accordance with Section 315e of the German Commercial Code
(HGB) and comply with the International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU).
Daimler AG is a vehicle manufacturer with a worldwide product
range of premium cars and commercial vehicles. Its product
portfolio is rounded out by a range of financial services and
mobility services. Daimler AG is the parent company of the
Daimler Group.
1. Significant accounting policies
Notes to the Consolidated Financial Statements
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 161
In the second quarter of 2020, the International Accounting
Standards Board published an amendment to IFRS 16 ("Covid-
19-Related Rent Concessions"), in which they provide an
accounting policy choice to lessees to apply practical relief for
rent concessions arising because of the covid-19 pandemic.
Daimler does not apply this practical expedient for lessees.
Daimler AG is a stock corporation organized under the laws of
the Federal Republic of Germany. The Company is entered in
the Commercial Register of the Stuttgart District Court under
No. HRB 19360 and its registered office is located at Mercedes-
straße 120, 70372 Stuttgart, Germany.
IFRS issued but neither EU endorsed nor yet adopted
In addition, derivatives, including embedded derivatives sepa-
rated from the host contract, which are not classified as hedg-
ing instruments in hedge accounting, as well as financial
assets acquired for the purpose of selling in the short term
that are classified as held for trading, are included here. Gains
or losses on these financial assets are recognized in profit or
loss.
In August 2020 the IASB published amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16 (Interest Rate Benchmark
Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS
4 and IFRS 16). The amendments address issues related to the
application of the reform and its effects on financial reporting
for lease contracts, hedges and other financial instruments
caused by replacing existing interest-rate benchmarks with
alternative benchmark rates.
Financial assets at fair value through profit or loss. Financial
assets at fair value through profit or loss include financial
assets with cash flows other than those of principal and inter-
est on the nominal amount outstanding. Furthermore, financial
assets that are held in a business model other than "hold to
collect" or "hold to collect and sell" are included here.
In this context, the amortization of capitalized borrowing costs
is included in EBIT as well as in the Group's assets and the
assets of the segments as of January 1, 2020. From the 2020
financial year onwards, EBIT will be presented in the Consoli-
dated Statement of Income as an arithmetical amount.
The figures for 2019 have been adjusted to the new segment
structure to ensure that the figures for 2020 are comparable
with the prior-year figures. The internal supply of goods and
services within the new segments has been taken into account.
Furthermore, in the figures for the previous year, the effects
of certain legal issues and equity investments not previously
allocated to the segments have been reclassified from the rec-
onciliation to the vehicle segments.
Until December 31, 2019, the Group's reportable segments
were Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans, Daimler Buses and Daimler Mobility. Since January 1,
2020, the Group's activities are divided into the segments
Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks &
Buses and Daimler Mobility. This corresponds to the internal
reporting and organizational structure. The segments
Mercedes-Benz Cars and Mercedes-Benz Vans are aggregated
into the reportable segment Mercedes-Benz Cars & Vans in
line with the nature of the products and services offered, as
well as their brands, sales channels and customer profiles.
due to the change in the Group's internal management and
reporting structure as of January 1, 2020
Adjustment of segment figures in the prior-year period
In May 2017, the IASB issued IFRS 17 Insurance Contracts.
IFRS 17 will replace the currently applicable IFRS 4. It estab-
lishes more transparency and comparability with regard to the
recognition, measurement, presentation and disclosure of
insurance contracts with the insurer. The application of IFRS 17
is mandatory for reporting periods beginning on or after Janu-
ary 1, 2023. Early adoption is permitted. Daimler currently
does not expect any material impacts on the Group's profitabil-
ity, liquidity and capital resources or financial position due to
the application of IFRS 17. Early adoption is not currently
planned.
Financial assets at amortized cost. Financial assets at amor-
tized cost are non-derivative financial assets with contractual
cash flows that consist solely of payments of principal and
interest on the nominal amount outstanding and which are
held with the aim of collecting the contractual cash flows, such
as receivables from financial services, trade receivables or
cash and cash equivalents (business model “hold to collect").
Cash and cash equivalents consist primarily of cash on hand,
checks and demand deposits at banks, as well as debt instru-
ments and certificates of deposits with a remaining term when
acquired of up to three months, which are not subject to any
material value fluctuations. Cash and cash equivalents corre-
spond with the classification in the Consolidated Statement of
Cash Flows.
cost-of-sales method.
The Consolidated Statement of Income is presented using the
Presentation in the Consolidated Statement of Financial Posi-
tion differentiates between current and non-current assets
and liabilities. Assets and liabilities are generally classified as
current if they are expected to be realized or settled within
one year. Deferred tax assets and liabilities as well as assets
and provisions for pensions and similar obligations are gener-
ally presented as non-current items.
Presentation
In addition, further standards and interpretations have been
approved which are not expected to have a material impact on
the Group's profitability, liquidity and capital resources and
financial position.
Application is mandatory for reporting periods beginning on or
after January 1, 2021. Daimler has not opted for early adoption
and no significant impact is expected.
162
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisition
or manufacturing costs include the estimated costs, if any,
of dismantling and removing the item and restoring the site.
Financial assets primarily comprise receivables from financial
services, trade receivables, receivables from banks, cash on
hand, derivative financial assets, marketable securities and
similar investments and financial investments. The classifica-
tion of financial instruments is based on the business model in
which these instruments are held and on their contractual cash
flows.
0.9021 119.3200
1.1119
8.0855
0.9050 124.0500
1.1689
Third quarter
7.6721
7.6635
0.8725 125.0800
0.8748 123.4700
1.1237
7.8080
0.8874 118.4100
1.1014
Second quarter
1.1358
7.6956
0.8623 120.1000
1.1027
First quarter
during the respective period
Average exchange rates
7.8000
Fourth quarter
1.1929
0.9033 124.6100
Revenue also includes revenue from the rental and leasing
business as well as interest from the financial services busi-
ness at Daimler Mobility. Revenue generated from operating
leases is recognized on a straight-line basis over the periods
of the contracts. In addition, sales revenue is generated at
the end of lease contracts from the subsequent sale of the
vehicles. Revenue from receivables from financial services is
recognized using the effective interest method.
Daimler does not adjust the promised amount of consideration
for the effects of a significant financing component if at con-
tract inception it is expected that the period between the
transfer of a promised good or service to a customer and pay-
ment by the customer will be no longer than one year.
The incremental cost of obtaining contracts is recognized as
an expense when incurred if the amortization period would be
no longer than one year.
Vehicles may be initially sold to non-Group dealers. Subse-
quently a customer decides to enter into a leasing contract
with Daimler Mobility regarding such a vehicle. The vehicle is
therefore sold by the non-Group dealer to Daimler Mobility
and a leasing contract is entered into with the customer. When
control of the vehicle is transferred to the non-Group dealer
Daimler recognizes revenue from the sale of the vehicle.
For multiple-element arrangements, such as when vehicles are
sold with free or reduced-in-price maintenance programs or
with free online services, the Group generally allocates reve-
nue to the various elements based on their estimated relative
stand-alone selling prices. To determine stand-alone selling
prices, Daimler primarily uses price lists with consideration of
average price reductions granted to its customers.
The Group offers extended, separately priced warranties for
certain products as well as service and maintenance con-
tracts. Revenue from these contracts is deferred insofar as a
customer has made an advance payment and is generally rec-
ognized over the contract period in proportion to the costs
expected to be incurred based on historical information. A loss
on these contracts is recognized in the current period if the
expected costs for outstanding services under the contract
exceed unearned revenue. Usually, those contracts are paid in
advance or in equal installments over the contract term.
Under a contract manufacturing agreement, Daimler sells
assets to a third-party manufacturer from which Daimler buys
back the manufactured products after completion of the com-
missioned work. If the sale of the assets is not accompanied
by the transfer of control to the third-party manufacturer, no
revenue is recognized under IFRS 15.
Arrangements such as when Daimler provides customers with
a guaranteed minimum resale value that they receive on resale
(residual-value guarantee) do not constraint the customers in
their ability to direct the use of, and obtain substantially all of
the benefits from, the asset. At contract inception of a sale
with a residual-value guarantee, revenue therefore has to be
recognized, reduced by a potential compensation payment to
the customer (revenue deferral).
Sales of vehicles including a put option (an entity's obliga-
tion to repurchase the asset at the customer's request) are
reported as operating leases if the customer has a signifi-
cant economic incentive to exercise that right at contract
inception. Otherwise, a sale with a right of return is
reported. Daimler considers several factors when assessing
whether the customer has a significant economic incentive
to exercise his right. Amongst others, these are the relation
between the agreed repurchase price and the expected
future market value (at the time of repurchase) of the asset,
or historical return rates.
Sales of vehicles by which Daimler is obliged to repurchase
the vehicles in the future are accounted for as operating
leases. This also applies to a call option that only grants
Daimler the right to repurchase;
7.8205
Revenue recognition from the sale of vehicles for which the
Group enters into a repurchase obligation is dependent on the
form of the repurchase agreement:
Generally, payment from sales of vehicles, service parts and
other related products is made when the customer obtains
control of these products.
Revenue from sales of vehicles, service parts and other related
products is recognized when control of the goods is trans-
ferred to the customer. This generally occurs at the time the
customer takes possession of the products.
Revenue recognition
Accounting policies
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
164
7.8012
0.8608 120.3200
1.1071
7.9006
Dealers may finance their vehicle inventory by means of dealer
inventory financing provided by Daimler Mobility. Furthermore,
end-customers may be credit financed by Daimler Mobility.
Receivables from sales financing with end-customers and
dealers are presented in receivables from financial services.
Further information is provided in Note 14.
Daimler uses a variety of sales promotion programs dependent
on various market conditions in individual countries as well as
the respective product life cycles and product-related factors
(such as amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market competi-
tion and consumer demand for the products). These programs
comprise cash offers to dealers and customers as well as lease
subsidies or loans at reduced interest rates which are reported
as follows:
121.9400
1.1234
To determine whether a country is to be considered as in
hyperinflation, Daimler refers to the list published by the Inter-
national Practices Task Force (IPTF), the Center of the Audit
Quality and other relevant international publications. If a coun-
try is in hyperinflation, IAS 29 Financial Reporting in Hyperin-
flationary Economies has to be applied from the beginning of
the respective reporting period, i.e., from January 1 of the
respective reporting year.
Hyperinflation
The exchange rates of the US dollar, the British pound, the
Japanese yen and the Chinese renminbi - the most significant
foreign currencies for Daimler - are as shown in table 7 D.06.
Assets and liabilities of foreign companies for which the func-
tional currency is not the euro are translated into euros using
period-end exchange rates. The translation adjustments are
presented in other comprehensive income/loss. The compo-
nents of equity are translated using historical rates. The state-
ments of income and cash flows are translated into euros using
the quarterly average exchange rates during the respective
periods.
Transactions in foreign currency are translated at the relevant
foreign exchange rates prevailing at the transaction date. In
subsequent periods, assets and liabilities denominated in for-
eign currency are translated using period-end exchange rates;
gains and losses from this measurement are recognized in
profit and loss (except for gains and losses resulting from the
translation of equity instruments measured at fair value
through other comprehensive income, which are recognized in
other comprehensive income/loss).
Foreign currency translation
Subsidiaries, associated companies, joint ventures and joint
operations whose business is non-active or of low volume and
that individually and in sum are not material for the Group and
the fair presentation of profitability, liquidity and capital
resources, and financial position are generally measured at
amortized cost in the Consolidated Financial Statements.
Entities measured at amortized cost
163
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
time lag, however (see Note 13).
In the special event that the financial statements of associated
companies, joint ventures or joint operations should not be
available in good time, the Group's proportionate share of the
results of operations is included in Daimler's Consolidated
Financial Statements with a one to three-month time lag. Sig-
nificant events or transactions are accounted for without a
For entities over which Daimler has joint control together with
a partner (joint arrangements), it is necessary to differentiate
whether a joint operation or a joint venture exists. In a joint
venture, the parties that have joint control of the arrangement
have rights to the net assets of the arrangement. For joint ven-
tures, the equity method has to be applied. A joint operation
exists when the jointly controlling parties have direct rights to
the assets and obligations for the liabilities. In this case, the
prorated assets and liabilities and the prorated income and
expenses are generally to be recognized (proportionate consol-
idation). Joint operations that have no significant impact on the
Consolidated Financial Statements are generally accounted for
using the equity method.
An associated company is an entity over which the Group has
significant influence. Significant influence is the power to par-
ticipate in the financial and operating policy decisions of the
investee. Associated companies are generally accounted for
using the equity method.
Investments in associated companies, joint ventures or
joint operations
owners.
Changes in equity interests in Group subsidiaries that reduce
or increase Daimler's percentage ownership without change of
control are accounted for as an equity transaction between
Business combinations are accounted for using the purchase
method.
The financial statements of consolidated subsidiaries which
are included in the Consolidated Financial Statements are gen-
erally prepared as of the reporting date of the Consolidated
Financial Statements. The financial statements of Daimler AG
and its subsidiaries included in the Consolidated Financial
Statements are prepared using uniform recognition and mea-
surement principles. All intra-Group assets and liabilities,
equity, income and expenses as well as cash flows from trans-
actions between consolidated entities are entirely eliminated
in the course of the consolidation process.
Structured entities which are controlled also have to be consoli-
dated. Accordingly, the assets and liabilities are recognized in
the Consolidated Statement of Financial Position. Structured
entities are entities which have been designed so that voting or
similar rights are not relevant in deciding who controls the
entity. This is the case for example if voting rights relate to
administrative tasks only and the relevant activities are directed
by means of contractual arrangements.
The Consolidated Financial Statements include the financial
statements of Daimler AG and the financial statements of all
subsidiaries, including structured entities, which are directly or
indirectly controlled by Daimler AG. Control exists if the parent
company has the power of decision over a subsidiary based on
voting rights or other rights, if it participates in positive and
negative variable returns from a subsidiary, and if it can affect
these returns by its power of decision.
As a consequence of the assessment that Argentina is in
hyperinflation, Daimler applies IAS 29 to our Argentinian busi-
ness since January 1, 2018. This application does not have a
material impact on the Group's profitability, liquidity and capi-
tal resources and financial position. The accounting impact is
included in retained earnings within the line item “Other” of
the Consolidated Statement of Changes in Equity.
D.06
Exchange rates
Average exchange rate
8.0225
0.8990 126.4900
1.2271
€1 =
€1 =
€1 =
€1 =
€1 =
€1 =
€1 =
0.8508
€1 =
JPY
GBP
USD
CNY
JPY
GBP
USD
2019
2020
on December 31
CNY
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
165
Revenue is recognized net of sales reductions such as cash
discounts and sales incentives granted.
Operating leases, i.e., by which economic ownership of the
vehicle remains at Daimler, relate to vehicles that the Group
produces itself and leases to third parties. Additionally an
operating lease may have to be reported with sales of vehicles
for which the Group enters into a repurchase obligation:
Based on the risk and rewards associated with a leased asset,
it is assessed whether economic ownership of the leased asset
is transferred to the lessee (so-called finance leases) or
remains with the lessor (so-called operating leases).
Daimler as lessor
D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
168
If the transfer of an asset is accounted for as a sale, the lessee
accounting principles described above apply to those sold
assets if Daimler leases them back from the buyer. Accordingly,
only the amount of any gain or loss that relates to the rights
transferred to the buyer-lessor is recognized.
If the transfer of an asset does not satisfy the requirements of
IFRS 15 to be accounted for as a sale of the asset, the trans-
ferred asset is still recognized and a financial liability is recog-
nized equal to the transfer proceeds in accordance with IFRS 9.
In a sale and leaseback transaction, the requirements of IFRS
15 are applied to ascertain whether the transfer of an asset
has to be accounted for as a sale.
Sale and leaseback
Extension and termination options are part of a number of
leases particularly of real estate. Such contract terms offer
Daimler the greatest possible flexibility. In determining the
lease term, all facts and circumstances offering economic
incentives for exercising extension options or not exercising
termination options are taken into account. In determining
the lease term, those options are only considered if they are
reasonably certain.
According to IFRS 16, the depreciation of right-of-use assets
is recognized within functional costs. The interest due on the
lease liability is a component of interest expense.
In the subsequent measurement of a lease liability, the carry-
ing amount is increased to reflect interest on the lease liability
and reduced (through other comprehensive income) to reflect
the lease payments made.
A right-of-use asset is subsequently measured at cost less any
accumulated depreciation and, if necessary, any accumulated
impairment. If the lease transfers ownership of the underlying
asset to the lessee at the end of the lease term or if the cost of
the right-of-use asset reflects that the lessee will exercise a
purchase option, the right-of-use asset is depreciated to the
end of the useful life of the underlying asset. Otherwise, the
right-of-use asset is depreciated to the end of the lease term.
Lease payments are discounted at the rate implicit in the lease
if that rate can readily be determined. Otherwise, discounting
is at the incremental borrowing rate. The incremental borrow-
ing rate, which is mainly applied at Daimler, is based on risk-
adjusted interest rates and determined for the respective lease
terms and currencies. As the cash flow pattern of the refer-
ence interest rates (bullet bonds) does not correspond to the
cash flow pattern of a lease contract (annuity), we use a dura-
tion adjustment in order to account for that difference.
Daimler generally also applies the option for contracts com-
prising lease components as well as non-lease components
not to split these components.
- contractual penalties for the termination of a lease if the
lease term reflects the exercise of a termination option.
the exercise price of purchase options, when exercise is
estimated to be reasonably certain and
amounts expected to be payable under residual value
guarantees;
variable lease payments linked to an index or interest rate;
fixed payments including de facto fixed payments, less lease
incentives receivables from the lessor;
-
Sales of vehicles by which Daimler is obliged to repurchase
the vehicles in the future, are accounted for as operating
leases. This also applies to a call option that only grants
Daimler the right to repurchase.
Sales of vehicles including a put option (an entity's obliga-
tion to repurchase the asset at the customer's request) are
reported as operating leases if the customer has a signifi-
cant economic incentive to exercise that right. Otherwise,
a sale with a right of return is reported. Daimler considers
several factors when assessing whether a customer has a
significant economic incentive to exercise his right at con-
tract inception. Amongst others these are the relation
between repurchase price and the expected future market
value (at the time of repurchase) of the asset or historical
return rates.
As part of the residual-value management process, especially
for operating lease contracts, certain assumptions are regu-
larly made at local and corporate levels regarding the expected
level of prices, based upon which the cars to be returned in the
leasing business are evaluated. If changing market develop-
ments lead to a negative deviation from assumptions, there is
a risk of lower residual values of used cars. Depending on the
region and the current market situation, the measures taken
generally include continuous market monitoring as well as, if
required, price-setting strategies or sales-promotion measures
designed to regulate vehicle inventories. The quality of market
forecasts is verified by regular comparisons of internal and
external sources, and, if required, the determination of residual
values is adjusted and further developed with regard to meth-
ods, processes and systems.
In the case of accounting as an operating lease, these vehicles
are capitalized at (depreciated) cost of production under
leased equipment and are depreciated over the contract term
on a straight-line basis with consideration of the expected
residual values. Changes in the expected residual values lead
either to prospective adjustments of the scheduled deprecia-
tion or, if necessary, to an impairment loss. The vehicles are
allocated to the segment which bears substantially all of the
residual-value risk.
Financial assets
Upon initial recognition, financial instruments are measured
at fair value. For the purpose of subsequent measurement,
financial instruments are allocated to one of the categories
mentioned in IFRS 9 Financial Instruments (financial assets
measured at amortized cost, financial assets measured at fair
value through other comprehensive income and financial
assets measured at fair value through profit or loss). Trans-
action costs directly attributable to acquisition or issuance
are considered when determining the carrying amount if the
financial instruments are not measured at fair value through
profit or loss.
A financial instrument is any contract that gives rise to a finan-
cial asset of one entity and a financial liability or equity instru-
ment of another entity. Financial instruments in the form of
financial assets and financial liabilities are generally presented
separately. Financial instruments are recognized as soon as
Daimler becomes a party to the contractual provisions of the
financial instrument. In the case of purchases or sales of finan-
cial assets through the regular market, Daimler uses the trans-
action date as the date of initial recognition or derecognition.
Financial instruments
Inventories are measured at the lower of acquisition or manu-
facturing cost and net realizable value. The net realizable value
is the expected sales price less estimated costs of completion
and estimated costs to sell. The acquisition or manufacturing
costs of inventories are generally based on the specific identifi-
cation method and include costs incurred in acquiring the
inventories and bringing them to their present location and
condition. Acquisition or manufacturing costs for large num-
bers of inventories that are interchangeable are allocated
under the average cost formula. In the case of manufactured
inventories and work in progress, manufacturing cost also
includes production overheads based on normal capacity.
Inventories
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
170
An assessment for assets other than goodwill is made at each
reporting date as to whether there is any indication that previ-
ously recognized impairment losses may no longer exist or may
be reversed. If this is the case, Daimler records a partial or
entire reversal of the impairment; the carrying amount is
thereby increased to the recoverable amount. However, the
increased carrying amount may not exceed the carrying
amount that would have been determined (net of depreciation)
if no impairment loss had been recognized in prior years.
Non-current assets held for sale and disposal groups
The Group classifies non-current assets or disposal groups as
held for sale if the carrying amount will be recovered princi-
pally through a sale transaction rather than through continuing
use. In this case, the assets or disposal groups are no longer
depreciated but measured at the lower of carrying amount and
fair value less costs to sell. Immediately before classification
as held for sale, the carrying amount of the asset is deter-
mined in accordance with the applicable individual require-
ments. If fair value less costs to sell subsequently increases,
any impairment loss previously recognized is reversed. This
reversal is restricted to the impairment loss previously recog-
nized for the assets or disposal group concerned. The Group
generally discloses these assets or disposal groups separately
in the Consolidated Statement of Financial Position.
automotive industry as well as possible regulatory changes,
e.g., in connection with sustainability aspects. In addition, sev-
eral sensitivity analyses are conducted. These show that even
in the case of more unfavorable premises for main influencing
factors with respect to the original planning, no need for impair-
ment exists. If value in use is lower than the carrying amount,
fair value less costs of disposal is additionally calculated to
determine the recoverable amount.
Lease liabilities, which are assigned to financing liabilities, are
measured initially at the present value of the lease payments.
The lease liabilities include the following lease payments:
Value in use is measured by discounting expected future cash
flows from the continuing use of the cash-generating units
using a risk-adjusted interest rate. Future cash flows are deter-
mined on the basis of the long-term planning, which is
approved by management and which is valid at the date when
the impairment test is conducted. This planning, which covers
the period until 2025, is based on expectations regarding
future market shares, the general development of respective
markets as well as the products' profitability, taking into con-
sideration the effects of the transformation of the automotive
industry. Furthermore, in determining value in use, a risk
assessment is performed, which includes for example market
risks and risks related to the legal and political framework. The
planning premises are checked for plausibility with regard to
the historical development as well as external sources of infor-
mation. The rounded risk-adjusted interest rates used to dis-
count cash flows, which are calculated for each cash-generat-
ing unit, are unchanged from the previous year at 8% after
taxes for the cash-generating units of the automotive business.
For the cash-generating unit Daimler Mobility, a risk-adjusted
interest rate of 9% after taxes is applied (unchanged from the
previous year). Whereas the discount rate for the cash-gener-
ating unit Daimler Mobility represents the cost of equity, the
risk-adjusted interest rate for the cash-generating units of the
automotive business is based on the weighted average cost of
capital (WACC). This is calculated based on the capital asset
pricing model (CAPM), taking into account current market
expectations. In calculating the risk-adjusted interest rate for
impairment-test purposes, specific peer group information is
used for beta factors, capital-structure data and cost of debt.
Periods not covered by the forecast are taken into account by
recognizing a residual value (terminal value), which does not
include any growth rates. In line with the detailed planning
period, the derivation of the terminal value also considers
expectations regarding the impacts of the transformation of the
Daimler assesses at each reporting date whether there is an
indication that an asset may be impaired or whether there is
an indication that a previously recognized impairment loss may
be reversed. If such indication exists, Daimler estimates the
recoverable amount of the asset. The recoverable amount is
determined for each individual asset unless the asset gener-
ates cash inflows that are not largely independent of those
from other assets or groups of assets (cash-generating units).
Goodwill and other intangible assets with indefinite useful lives
are tested at least annually for impairment; this takes place at
the level of the cash-generating units. If the carrying amount of
an asset or of a cash-generating unit exceeds the recoverable
amount, an impairment loss is recognized for the difference.
Impairment of non-current non-financial assets
169
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Gains or losses (to be eliminated) from transactions with
companies accounted for using the equity method are recog-
nized through profit and loss with corresponding adjustments
of the investments' carrying amounts. Gains or losses from
the contribution of interests in subsidiaries to investments
which are measured using the equity method are also subject
to elimination adjustments to the carrying amount of the
investment.
Daimler reviews on each reporting date whether there is any
objective indication of impairments or impairment reversals of
equity-method investments. If such indications exist, the
Group determines the impairment loss or reversal to be recog-
nized. If the carrying amount exceeds the recoverable amount
of an investment, the carrying amount is written down to the
recoverable amount. The recoverable amount is the greater of
fair value less costs to sell and value in use. An impairment
reversal is carried out if there is objective evidence for an
impairment reversal. If such an assessment is made, the
recoverable amount is remeasured. An impairment reversal is
recognized to the extent that the recoverable amount has
increased subsequent to the impairment and is limited to the
amount by which an asset has been impaired.
On the date of acquisition, a positive difference between cost
of acquisition and Daimler's share of the fair values of the iden-
tifiable assets and liabilities of the associated company or joint
venture is determined and recognized as investor level good-
will. The goodwill is included in the carrying amount of the
equity-method investment. If an equity interest in an existing
associated company is increased without change in significant
influence, goodwill is determined only for the additionally
acquired interest; the previous investment is not remeasured
at fair value.
Equity-method investments
In the case of finance leases, the Group presents the receiv-
ables under receivables from financial services in an amount
corresponding to the net investment of the lease agreements.
The net investment of a lease agreement is the gross invest-
ment (future lease payments and non-guaranteed residual
value) discounted at the rate upon which the lease agreement
is based.
Operating leases also relate to vehicles, primarily Group prod-
ucts that Daimler Mobility acquires from non-Group dealers or
other third parties and leases to end customers. These vehicles
are presented at (amortized) cost of acquisition under leased
equipment in the Daimler Mobility segment. If these vehicles
are Group products and are subsidized, the subsidies are
deducted from the cost of acquisition. After revenue is received
from the sale to independent dealers, these Group products
generate revenue from lease payments and subsequent resale
on the basis of the separate leasing contracts. The revenue
received from the sale of Group products to the dealers is esti-
mated by the Group as being of the magnitude of the respective
addition to leased equipment at Daimler Mobility. In 2020,
additions to leased equipment from these vehicles at Daimler
Mobility amounted to approximately €11 billion (2019: approxi-
mately €14 billion).
The recoverable amount is the higher of fair value less costs
of disposal and value in use. For cash-generating units,
Daimler in a first step determines the respective recoverable
amount as value in use and compares it with the respective
carrying amount (including goodwill). The cash-generating
units are generally defined as the segments. At Daimler Trucks
& Buses impairment tests are carried out below the segment
level. There is a differentiation between the two cash-generat-
ing units Daimler Trucks and Daimler Buses.
Right-of-use assets, which are included under property, plant
and equipment, are initially measured at cost. The cost of a
right-of-use asset comprises the amount of the initial measure-
ment of the lease liability, any lease payments made at or
before the commencement date less any lease incentives
received from the lessor, any initial direct costs and an esti-
mate of costs to be incurred in dismantling or removing the
underlying asset.
According to IFRS 16, a lessee may elect, for leases with a
lease term of twelve months or less (short-term leases) and
for leases for which the underlying asset is of low value, not
to recognize a right-of-use asset and a lease liability. Daimler
applies both recognition exemptions. The lease payments
associated with those leases are generally recognized as an
expense on a straight-line basis over the lease term or another
systematic basis if appropriate.
Daimler as a lessee recognizes for generally all lease contracts
right-of-use assets as well as leasing liabilities for the out-
standing lease payments.
D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
166
Deferred tax assets or liabilities are calculated on the basis of
temporary differences between the tax basis and the financial
reporting of assets and liabilities including differences from
consolidation, on unused tax loss carryforwards and unused
tax credits. Measurement is based on the tax rates expected
to be effective in the period in which an asset is recognized or
a liability is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the reporting date
or are soon to be enacted. Daimler recognizes a valuation
allowance for deferred tax assets when it is unlikely that a cor-
responding amount of future taxable profit will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be utilized. Deferred tax lia-
bilities for taxable temporary differences in connection with
investments in subsidiaries, branches, associates and interests
in joint arrangements are not recognized if the Group is able
to control the timing of the reversal of the temporary differ-
ence and it is probable that the temporary difference will not
be reversed in the foreseeable future.
Changes in deferred tax assets and liabilities are generally rec-
ognized through profit and loss in deferred taxes in the Consol-
idated Statement of Income, except for changes recognized in
other comprehensive income/loss or directly in equity.
Current income taxes are calculated based on the respective
local taxable income and local tax rules for the period. In addi-
tion, current income taxes presented for the period include
adjustments for uncertain tax payments or tax refunds for peri-
ods not yet finally assessed, however, excluding interest
expenses and interest refunds and penalties on the underpay-
ment of taxes. In cases for which it is probable that amounts
declared as expenses in the tax returns might not be recog-
nized (uncertain tax positions), a liability for income taxes is
recognized. The amount is based on the best estimate of the
expected tax payment (expected value or most likely amount).
Tax refund claims from uncertain tax positions are recognized
when it is probable that they can be realized. Only in the case
of tax loss carryforwards or unused tax credits, no liability for
taxes or tax claim is recognized for these uncertain tax posi-
tions. Instead, the deferred tax assets for the unused tax loss
carryforwards or tax credits are to be adjusted.
Income taxes are comprised of current income taxes and
deferred taxes.
Income taxes
For the Daimler Mobility segment interest income and expense
and gains or losses from derivative financial instruments
related to the financial services business are disclosed under
revenue and cost of sales respectively.
Interest income and interest expense include interest income
from investments in securities and from cash and cash equiva-
lents as well as interest expense from liabilities. Furthermore,
interest and changes in fair values related to interest rate hedg-
ing activities as well as income and expense resulting from the
allocation of premiums and discounts are included. The interest
components of defined benefit pension obligations and other
similar obligations as well as of the plan assets available to
cover these obligations and interest on supplementary income
tax payments or reimbursements are also presented in this line
item.
Interest income and interest expense
D.07
Furthermore, income and expenses from equity interests are
included in other financial income/expense, net, if such in-
come or expenses are not presented under equity-method
investments.
Other financial income/expense, net
This item includes all income and expenses in connection
with investments accounted for using the equity method.
In addition to the prorated profits and losses from financial
investments, it also includes profits and losses resulting from
the sale of equity interests or the remeasurement of equity
interests following a loss of significant influence or joint con-
trol. Daimler's share of dilution gains and losses resulting
from the Group's non-participation or under-proportionate
participation in capital measures of companies in which
shares are held and are accounted for using the equity method
are also included in profit/loss on equity-method investments.
This item also includes impairment losses and/or gains on the
reversal of such impairments of equity-method investments.
Profit/loss on equity-method investments
Government grants related to assets are deducted from the
carrying amount of the asset and are recognized in earnings
over the life of a depreciable asset as a reduced depreciation
expense. Government grants which compensate the Group for
expenses are recognized as other operating income in the
same period as the expenses themselves.
Government grants
Borrowing costs are expensed as incurred unless they are
directly attributable to the acquisition, construction or produc-
tion of a qualifying asset and are therefore part of the cost of
that asset. Depreciation of the capitalized borrowing costs is
presented within cost of sales.
Borrowing costs
Research and non-capitalized development costs
Expenditure for research and development that does not meet
the conditions for capitalization according to IAS 38 Intangible
Assets is expensed as incurred.
If subsidized leasing fees are agreed upon in connection with
finance leases, revenue from the sale of a vehicle is reduced
by the amount of the interest incentive granted.
When loans are issued below market rates, related receiv-
ables are recognized at present value (using market rates)
and revenue is reduced for the interest incentive granted.
Other financial income/expense, net includes all income and
expense from financial transactions which are included neither
in interest income nor in interest expense, and which for
Daimler Mobility are included neither in revenue nor in cost of
sales. For example, expense from the compounding of interest
on provisions for other risks is recorded in this line item.
The determination of the business model is carried out at the
portfolio level and is based on management's intention and
past transaction patterns. Assessments of the contractual
cash flows are made on an instrument-by-instrument basis.
Useful lives of property, plant and equipment
Technical equipment and machinery
Daimler as lessee
167
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Leases include all contracts that transfer the right to use a
specified asset for a stated period of time in exchange for con-
sideration, even if the right to use such asset is not explicitly
described in the contract. The Group is a lessee mainly of real
estate properties and a lessor of its products.
Leasing
The industrial business activities of the Daimler Group have
been confronted with worldwide competitive pressure and
technological changes. Our continuous efforts to increase effi-
ciency include improving the utilization of our production facili-
ties. Within the context of the regular review of useful lives, the
useful lives for scheduled depreciation of property, plant and
equipment were reassessed and partially extended at the end
of 2020. This change in estimates will be applied from January
1, 2021, and is expected to have a positive impact on earnings
before interest and taxes (EBIT) of €0.8 billion and €0.4 billion
in the years 2021 and 2022.
Property, plant and equipment are depreciated over the useful
lives as shown in table 7 D.07.
Measurement
Property, plant and equipment are measured at acquisition or
manufacturing costs less accumulated depreciation. If neces-
sary, accumulated impairment losses are recognized.
Property, plant and equipment
Buildings and site improvements
In connection with obtaining control, non-controlling interest
in the acquiree is principally recognized at the proportionate
share of the acquiree's identifiable assets, which are measured
at fair value.
Other intangible assets with finite useful lives are generally
amortized on a straight-line basis over their useful lives (three
to ten years). The amortization period for intangible assets
with finite useful lives is reviewed at least at each year-end.
Changes in expected useful lives are treated as changes in
accounting estimates. The amortization expense on intangible
assets with finite useful lives is recorded in functional costs.
Development costs for vehicles and components are recog-
nized if the conditions for capitalization according to IAS 38
are met. Subsequent to initial recognition, the asset is carried
at cost less accumulated amortization and accumulated
impairment losses. Capitalized development costs include all
direct costs and allocable overheads and are amortized on a
straight-line basis over the expected product life cycle (a maxi-
mum of ten years). Amortization of capitalized development
costs is an element of manufacturing costs and is allocated to
those vehicles and components by which they were generated
and is included in cost of sales when the inventory (vehicles) is
sold.
Intangible assets with indefinite useful lives are reviewed annu-
ally to determine whether indefinite-life assessment continues
to be appropriate. If not, the change in the useful-life assess-
ment from indefinite to finite is made on a prospective basis.
Intangible assets are measured at acquisition or manufacturing
cost less accumulated amortization. If necessary, accumulated
impairment losses are recognized.
Intangible assets
Basic earnings per share are calculated by dividing profit
attributable to shareholders of Daimler AG by the weighted
average number of shares outstanding. As nothing occurred in
the years 2020 and 2019 that resulted in any dilution, diluted
earnings per share were the same as basic earnings per share
in those years.
Earnings per share
5 to 25 years
3 to 30 years
Other equipment, factory and office equipment
10 to 50 years
With acquisitions of businesses, goodwill represents the
excess of the consideration transferred over the fair values
assigned to the identifiable assets proportionally acquired and
liabilities assumed. Goodwill is accounted for at the subsidiar-
ies in the functional currency of those subsidiaries.
Principles of consolidation
The Consolidated Financial Statements have been prepared
on the historical-cost basis with the exception of certain items
such as financial assets measured at fair value through profit
or loss, derivative financial instruments, hedged items, and
pensions and similar obligations. The measurement models
applied to those exceptions are described below.
31
Daimler
Group
Recon-
ciliation
Total
segments
Daimler
Mobility
Cars & Vans Trucks & Buses
Daimler
Mercedes-Benz
In millions of euros
2019
17,381
154,309
160,946
27,699
34,671
98,576
Total revenue
-3,514
20,895
16,785
-6,637
Europe
North America
Asia
Other markets
38,893
-21
38,914
145
6,930
31,839
45,527
-992
46,519
6,244
19,178
21,097
61,078
-2,595
63,673
4,606
12,777
46,290
978
4,998
3,132
136,928
5,679
13,630
17,598
55,936
-2,563
58,499
4,929
11,063
36,907
42,507
Europe
2020
Daimler
Group
Recon-
ciliation
Total
segments
Daimler
Mobility
Cars & Vans Trucks & Buses
Daimler
North America
-530
36,377
Asia
-3,123
140,051
10,914
33,693
95,444
Revenue according to IFRS 15
6,640
-9
6,649
132
3,049
3,468
Other markets
37,975
-21
37,996
174
5,951
31,871
Other revenue
Mercedes-Benz
4,544
9,692
2020
Average number of employees
D.12
-142
-911
development costs
Research and non-capitalized
-194
General administrative expenses
2019
-239
-336
Cost of sales
2020
In millions of euros
Expenses associated with cost optimization programs
D.11
-495
-7,744
-143,580
-128,721
Selling expenses
Mercedes-Benz Cars & Vans¹
Daimler Trucks & Buses
Daimler Mobility
Information on the total remuneration of the active members in
2020 of the Board of Management and the Supervisory Board
of Daimler AG is provided in O Note 38.
Personnel expenses and average number of employees
Personnel expenses included in the Consolidated Statement
of Income amounted to €21,848 million in 2020 (2019:
€22,657 million). Personnel expenses comprise wages and sal-
aries in the amount of €17,622 million (2019: €18,336 million),
social-security contributions in the amount of €3,523 million
(2019: €3,536 million) and expenses from pension obligations
in the amount of €703 million (2019: €785 million). The aver-
age numbers of people employed are shown in table 7 D.12.
In all functional cost areas, there were expenses from cost-
optimization programs in connection with the measures agreed
with the General Works Council of Daimler AG in December
2019 to reduce costs and reduce jobs in a socially responsible
manner. The expenses were mainly attributable to the
Mercedes-Benz Cars & Vans segment (€605 million) and
Daimler Trucks & Buses segment (€153 million). Table 7 D.11
provides an overview of the composition of these expenses.
Research and non-capitalized development costs
Research and non-capitalized development costs were
€6,116 million in 2020 (2019: €6,586 million) and primarily
comprise personnel expenses and material costs.
General administrative expenses amounted to €3,534 million
in 2020 (2019: €4,050 million). They consist of expenses which
are not attributable to production, sales or research and devel-
opment functions, and comprise personnel expenses, depreci-
ation and amortization of fixed and intangible assets, and other
administrative costs.
General administrative expenses
In 2020, selling expenses amounted to €11,058 million (2019:
€12,801 million). Selling expenses consist of direct selling
costs as well as selling overhead expenses and comprise per-
sonnel expenses, material costs and other selling costs.
Selling expenses
In the prior-year period, a reassessment of risks in connection
with ongoing governmental and court proceedings and mea-
sures taken with regard to Mercedes-Benz diesel vehicles in
various regions and expenses connected with an updated risk
assessment for an expanded recall of Takata airbags in Europe
and other markets had led to significant earnings reductions in
cost of sales.
Cost of sales were affected at the Daimler Mobility segment
by increased expenses for credit-risk provisions and the
impairment of software in the context of streamlining the IT-
architecture.
The expense of goods sold includes, among other expenses,
expenses in connection with restructuring measures. In 2020,
these include expenses in connection with the adjustment and
realignment of capacities within the global production network
in the Mercedes-Benz Cars & Vans segment of €871 million. In
addition, they also include cost optimization programs to
reduce fixed costs (see table 7 D.11). In 2019, expenses in
connection with terminating production of the X-Class had a
negative impact on other cost of sales.
Amortization expense of capitalized development costs in the
amount of €1,920 million (2019: €1,793 million) is presented in
expense of goods sold.
The decrease in cost of sales was primarily caused by produc-
tion and cost adjustments in response to the covid-19 pan-
demic.
Items included in cost of sales are shown in table 7 D.10.
Cost of sales
5. Functional costs
1 Proportionally including 2,340 (2019: 2,126) employees from a proportion-
ately consolidated company.
173,866 179,378
100,404 102,410
12,004 12,811
6,864
7,240
293,138 301,839
Central Functions & Services
-5,238
150
Other cost of sales
from financial services
28,646
44,429
106,897
Total revenue
21,174
17,501
1,000
2,673
179,972
Other revenue
-3,625
158,798
11,145
43,429
104,224
Revenue according to IFRS 15
9,675
-17
155,173
-3,602
-7,227
17,572
172,745
Impairment losses on receivables
-3,114
-2,620
Daimler Mobility
Refinancing costs at
-9,047
-9,181
on operating leases
34
-123,180
-110,916
Expense of goods sold
In millions of euros
2019
2020
Cost of sales
D.10
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
180
-766
In millions of euros
Depreciation of equipment
D.09
Income taxes
The calculation of income taxes of Daimler AG and its subsid-
iaries is based on the legislation and regulations applicable in
the various countries. Due to their complexity, the tax items
presented in the Consolidated Financial Statements are possi-
bly subject to different interpretation by taxpayers on the one
hand and local tax authorities on the other. Different interpre-
tations can occur especially in connection with the recognition
and measurement of balance sheet items as well as in connec-
tion with the tax assessment of expenses and income. For the
calculation of deferred tax assets, assumptions have to be
made regarding future taxable income and the time of realiza-
tion of the deferred tax assets. In this context, Daimler takes
into consideration, among other things, the projected earnings
from business operations, the effects on earnings of the rever-
sal of taxable temporary differences, and realizable tax strate-
gies. As future business developments are uncertain and are
sometimes beyond Daimler's control, the assumptions to be
made in connection with accounting for deferred tax assets
are connected with a substantial degree of uncertainty. On
each balance sheet date, Daimler carries out impairment tests
on deferred tax assets on the basis of the planned taxable
income in future financial years; if Daimler assesses that
the probability of future tax advantages being partially or fully
unrealized is more than 50%, the deferred tax assets are
impaired. Further information is provided in O Note 9.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 177
3. Consolidated Group
Composition of the Group
Table 7 D.08 shows the composition of the Group.
The aggregate totals in the statement of financial position of
the subsidiaries, associated companies, joint ventures and
joint operations accounted for at amortized cost whose busi-
ness is non-active or of low volume and which are not material
for the Group and the fair presentation of its profitability,
liquidity and capital resources, and financial position would
amount to approximately 1% of the Group's total assets; the
aggregate revenue and the aggregate net profit would amount
to approximately 1% of the Group's revenue and net profit.
A detailed list of the companies included in the Consolidated
Financial Statements and of the equity investments of Daimler
Group pursuant to Section 313 of the German Commercial
Code (HGB) is provided in the statement of investments. Fur-
ther information is provided in O Note 41.
The calculation of provisions for pensions and similar obliga-
tions and the related pension cost are based on various actu-
arial valuations. The calculations are subject to various
assumptions on matters such as current actuarially developed
probabilities (e.g., discount factors and cost-of-living
increases), future fluctuations with regard to age and period of
service, and experience with the probability of occurrence of
pension payments, annuities or lump sums. As a result of
changed market or economic conditions, the probabilities on
which the influencing factors are based, may differ from cur-
rent developments. The financial effects of deviations of the
main factors are calculated with the use of sensitivity analy-
ses. See
Note 22 for further information.
Structured entities
At the reporting date, the Group has business relationships
with 27 (2019: 24) controlled structured entities, of which all
are fully consolidated. In addition, the Group has relationships
with 8 (2019: 8) non-controlled structured entities.
D.08
Composition of the Group
At December 31,
2020
2019
International
Consolidated subsidiaries
Germany
The structured entities of the Group are rental companies,
asset-backed-securities (ABS) companies and special funds.
The purpose of the rental companies is primarily the acquisi-
tion, renting-out and management of assets. The ABS compa-
nies are primarily used for the Group's refinancing. The assets
transferred to structured entities usually result from the
Group's leasing and sales financing business. Those entities
refinance the purchase price by issuing securities. The special
funds are set up in particular in order to diversify the capital
investment strategy.
Pensions and similar obligations
Liability and litigation risks and regulatory proceedings
Various legal proceedings, claims and governmental investiga-
tions are pending against Daimler AG and its subsidiaries on a
wide range of topics. If the outcome of such legal proceedings
is detrimental to Daimler, the Group may be required to pay
substantial compensatory and punitive damages, to undertake
service actions or recall campaigns, to pay fines or to carry out
other costly actions. Litigation and governmental investiga-
tions often involve complex legal issues and are connected
with a high degree of uncertainty. Accordingly, the assessment
of whether an obligation exists on the balance sheet date as a
result of an event in the past, and whether a future cash out-
flow is likely and the obligation can be reliably estimated,
largely depends on estimations by the management. Daimler
regularly evaluates the current stage of legal proceedings, also
with the involvement of external legal counsel. It is therefore
possible that the amounts of provisions for pending or poten-
tial litigation will have to be adjusted due to future develop-
ments. Changes in estimates and premises can have a material
effect on the Group's future profitability. It is also possible that
provisions recognized for some legal proceedings may turn out
to be insufficient once such proceedings have ended. Daimler
may also become liable for payments in legal proceedings for
which no provisions were established. Although the final reso-
lution of any such proceedings could have a material effect on
Daimler's operating results and cash flows for a particular
reporting period, Daimler believes that it should not materially
affect the Group's financial position. Further information on lia-
bility and litigation risks and regulatory proceedings is pro-
vided in Note 30.
The Group provides various types of product warranties de-
pending on the type of product and market conditions. Provi-
sions for product warranties are generally recognized when
vehicles are sold or when new warranty programs are initiated.
Based on historical warranty-claim experience, assumptions
have to be made on the type and extent of future warranty
claims and customer goodwill, as well as on possible recall
campaigns for each model series. These assessments are
based on experience of the frequency and extent of vehicle
faults and defects in the past. In addition, the estimates also
include assumptions on the amounts of potential repair costs
per vehicle and the effects of possible time or mileage limits.
The provisions are regularly adjusted to reflect new informa-
tion. Further information on provisions for other risks is pro-
vided in Note 23.
Liability awards are measured at fair value at each balance
sheet date until settlement and are classified as provisions
under consideration of vesting conditions. The profit or loss of
the period equals the addition to and/or the reversal of the
provision during the reporting period and the dividend equiva-
lent paid during the period, and is included in the functional
costs.
Presentation in the Consolidated Statement of Cash Flows
Interest paid as well as interest and dividends received are
classified as cash provided by/used for operating activities. The
cash flows from short-term marketable debt securities with
high turnover rates and significant amounts are offset and pre-
sented within cash provided by/used for investing activities.
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
175
2. Accounting estimates and management
judgments
In the Consolidated Financial Statements, to a certain degree,
estimates and management judgments have to be made which
can affect the amounts and reporting of assets and liabilities,
the reporting of contingent assets and liabilities on the balance
sheet date, and the amounts of income and expense reported
for the period. The major items affected by such estimates and
management judgments are described as follows. Actual
amounts may differ from the estimates. Changes in the esti-
mates and management judgments can have a material impact
on the Consolidated Financial Statements.
Accounting estimates and management judgements due
to the covid-19 pandemic
Due to the still not fully foreseeable global consequences of
the covid-19 pandemic, especially the accounting estimates
and management judgements regarding the reporting of assets
and liabilities are subject to increased uncertainty.
With the update of the accounting estimates and management
judgements, available information on the expected economic
developments and country-specific governmental counter-
measures has been included.
This information was included in the analysis of the recover-
ability and collectability of financial assets, especially of
receivables from financial services and equity-method invest-
ments, as well as in impairment tests for the cash-generating
units. With regard to hedge accounting, estimates were
updated concerning whether forecast transactions can still be
assumed to be highly likely to occur. Furthermore, estimates of
future residual values of leased vehicles, the measurement of
provisions for residual-value guarantees and the measurement
of the net realizable value of inventories have been updated to
include the expected consequences of the covid-19 pandemic.
Recoverable amounts of cash-generating units and equity-
method investments
13
When objective evidence of impairment or impairment reversal
is present, estimates and assessments also have to be made
to determine the recoverable amount of an equity-method
investment. The determination of the recoverable amount is
based on assumptions regarding future business developments
for the determination of the expected future cash flows of that
financial investment. See Note 13 for the presentation of
carrying amounts and fair values of equity-method investments
in listed companies.
Recoverable amount of equipment on operating leases
Daimler regularly reviews the factors determining the values of
its leased vehicles. In particular, it is necessary to estimate the
residual values of vehicles at the end of their leases, which
constitute a substantial part of the expected future cash flows
from leased assets. In this context, assumptions are made
regarding major influencing factors, such as the expected num-
ber of returned vehicles, the latest remarketing results and
future vehicle model changes. Those assumptions are deter-
mined either by qualified estimates or by publications provided
by expert third parties; qualified estimates are based, as far as
publicly available, on external data with consideration of inter-
nally available additional information such as historical experi-
ence of price developments and recent sale prices. The resid-
ual values thus determined serve as a basis for depreciation;
changes in residual values lead either to prospective adjust-
ments of the depreciation or, in the case of a significant
decline in expected residual values, to an impairment. If depre-
ciation is prospectively adjusted, changes in estimates of
residual values do not have a direct effect but are equally dis-
tributed over the remaining periods of the lease contracts.
Collectability of receivables from financial services
The Group regularly estimates the risk of default on receiv-
ables from financial services. Many factors are taken into con-
sideration in this context including historical loss experience,
the size and composition of certain portfolios, current eco-
nomic events and conditions and the estimated fair values and
adequacy of collaterals. In addition to historical and current
information on losses, appropriate and reliable forward-looking
information on factors is also included. This information
includes macroeconomic factors (e.g., GDP growth, unemploy-
ment rate, cost-performance index) and forecasts of future
economic conditions. For receivables from financial services,
these forecasts are determined using a scenario analysis
(baseline scenario, optimistic and pessimistic scenario). Fur-
ther external information, e.g., in connection with the covid-19
pandemic, which cannot be depicted in the scenarios, is - as
far as necessary - included in the assessment through subse-
quent adjustments. Changes to the estimation and assessment
of these factors influence the allowance for credit losses with
a resulting impact on the Group's net profit. See also
Notes 14 and 33 for further information.
176 D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Product warranties
The recognition and measurement of provisions for product
warranties is generally connected with estimates.
381
Share-based payment comprises cash-settled liability awards.
375
65
Germany
4
3
International
11
13
Associated companies accounted for
using the equity method
17
16
16
4
13
12
Germany
International
Joint operations, joint ventures,
associated companies and material other
investments accounted for at (amortized) cost
Germany
International
Revenue
4
15
1
1
319
310
82
94
37
39
45
55
Unconsolidated subsidiaries
Germany
International
Joint operations accounted for
using proportionate consolidation
Germany
International
Joint operations accounted for
using the equity method
Germany
International
Joint ventures accounted for
using the equity method
1
1
1
1
62
Share-based payment
In the context of impairment tests for non-financial assets,
estimates have to be made to determine the recoverable
amounts of cash-generating units. Assumptions have to be
made in particular with regard to future cash inflows and out-
flows for the planning period and the following periods. The
estimates include assumptions regarding future market shares
and the growth of the respective markets, as well as regarding
the products' profitability. On the basis of the impairment tests
carried out in 2020, the recoverable amounts are substantially
larger than the net assets of the Group's cash-generating units.
obligations from sales transactions (especially performance
bonuses, discounts and other price concessions) in the
scope of IFRS 15, and
21
18
13
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 171
After initial recognition, financial assets at amortized cost are
subsequently carried at amortized cost using the effective
interest method less any loss allowances. Gains and losses are
recognized in the Consolidated Statement of Income when the
financial assets at amortized cost are impaired or derecog-
nized. Interest effects on the application of the effective inter-
est method are also recognized in profit or loss as well as
effects from foreign currency translation.
Financial assets at fair value through other comprehensive
income. Financial assets at fair value through other compre-
hensive income are non-derivative financial assets with con-
tractual cash flows that consist solely of payments of principal
and interest on the nominal amount outstanding and which are
held to collect the contractual cash flows as well as to sell the
financial assets, e.g., to achieve a defined liquidity target (busi-
ness model "hold to collect and sell"). This category also
includes equity instruments not held for trading for which the
option to present changes in the fair value of the instrument
within other comprehensive income has been applied.
After initial measurement, financial assets at fair value through
other comprehensive income are measured at fair value, with
unrealized gains or losses being recognized in other compre-
hensive income/loss. Upon disposal of debt instruments, the
accumulated gains and losses recognized in other comprehen-
sive income/loss resulting from measurement at fair value are
recognized in profit or loss. Interest earned on financial assets
at fair value through other comprehensive income is generally
reported as interest income using the effective interest
method. Changes in the fair value of equity instruments mea-
sured at fair value through other comprehensive income are
not recycled to profit or loss, but reclassified to retained earn-
ings upon disposal. Dividends are recognized in profit or loss
when the right to payment has been established.
Impairment of financial assets
528
At each reporting date, a loss allowance is recognized for
financial assets, loan commitments and financial guarantees
other than those to be measured at fair value through profit
or loss reflecting expected losses for these instruments.
Expected credit losses are allocated using three stages:
Stage 1 includes all contracts with no significant increase in
credit risk since initial recognition and usually includes new
acquisitions and contracts with fewer than 31 days past due
date. The portion of the lifetime expected credit losses result-
ing from default events possible within the next 12 months is
recognized.
Stage 2: expected credit losses over the lifetime - not credit
impaired
If a financial asset has a significant increase in credit risk since
initial recognition but is not yet credit impaired, it is moved to
stage 2 and measured at lifetime expected credit loss, which is
defined as the expected credit loss that results from all possible
default events over the expected life of a financial instrument.
Stage 3: expected credit losses over the lifetime - credit
impaired
If a financial asset is defined as credit-impaired or in default, it
is transferred to stage 3 and measured at lifetime expected
credit loss. Objective evidence for a credit-impaired financial
asset includes 91 days past due date and other information
about significant financial difficulties of the borrower.
The determination of whether a financial asset has experi-
enced a significant increase in credit risk is based on an
assessment of the probability of default, which is made at least
quarterly, incorporating external credit rating information as
well as internal information on the credit quality of the financial
asset. For debt instruments that are not receivables from
financial services, a significant increase in credit risk is
assessed mainly based on past-due information or the proba-
bility of default.
A financial asset is migrated to stage 2 if the asset's credit risk
has increased significantly compared to its credit risk at initial
recognition. The credit risk is assessed based on the probabil-
ity of default. For trade receivables, the simplified approach is
applied whereby all trade receivables are allocated to stage 2
initially. Hence, no determination of significant increases in
credit risk is necessary.
Daimler applies the low credit risk exception to the stage allo-
cation to quoted debt instruments with investment-grade rat-
ings. These debt instruments are always allocated to stage 1.
Stage 1: expected credit losses within the next twelve months
537
Assets and liabilities held for sale
Sale of the car plant in Hambach, France
sales with the right of return and residual-value guarantees.
Revenue by segment 7 D.87 and region 7 D.89 is presented
in tables in Note 34.
As a result of the ongoing covid-19 pandemic the Daimler
Group's revenue in the year 2020 was significantly below the
prior-year level.
Revenue that is expected to be recognized within three years
related to performance obligations that are unsatisfied (or par-
tially unsatisfied) amounted to €8,365 million at December 31,
2020 (2019: €8,701 million). This revenue is mainly derived
from long-term service and maintenance contracts and
extended warranties. It does not include performance obliga-
tions from customer contracts that have initial expected dura-
tions of one year or less. Long-term performance obligations of
minor importance to the overall contract value of a bundled
contract are not considered in assessing the initial duration of
the bundled contract.
Revenue according to IFRS 15 includes revenue that was
included in contract liabilities at December 31, 2019 in an
amount of €2,989 million (2019: €3,775 million) and revenue
from performance obligations fully (or partially) satisfied in pre-
vious periods in an amount of €396 million (2019: €309 million).
Other revenue primarily comprises revenue from the rental and
leasing business of €12,468 million (2019: €12,747 million),
interest from the financial services business at Daimler Mobil-
ity in an amount of €5,240 million (2019: €5,811 million) and
effects from currency hedging. Interest from financial services
business includes financial income on the net investment in
leases of €1,518 million (2019: €1,519 million).
Revenue from contracts with customers (revenue according to
IFRS 15) is disaggregated by the two categories - type of prod-
ucts and services and geographical regions - and presented in
table D.09. The category type of products and services cor-
responds to the reportable segments.
Revenue disclosed in the Consolidated Statement of Income
includes revenue from contracts with customers and other rev-
enue not in the scope of IFRS 15.
4. Revenue
179
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2020, Mercedes-Benz Grand Prix Ltd. is clas-
sified as held for sale. Due to its minor importance for the
financial position of the Daimler Group, the assets (€0.3 billion)
and liabilities (€0.2 billion) held for sale are not presented sep-
arately in the Consolidated Statement of Financial Position.
The assets held for sale mainly consist of property, plant and
equipment.
Sale of interests in Mercedes-Benz Grand Prix Ltd.
In December 2020, the Group decided to sell interests in
Mercedes-Benz Grand Prix Ltd. In this context, the Group
assumes that the further contractual agreements will be con-
cluded in the first half of 2021. Mercedes-Benz Grand Prix Ltd.
is currently fully consolidated. It is expected that upon comple-
tion of the transaction, Daimler will no longer have control over
Mercedes-Benz Grand Prix Ltd. and that this will have a positive
effect on earnings in the Mercedes-Benz Cars & Vans segment.
Both the assets of Daimler Truck Fuel Cell GmbH & Co. KG
classified as held for sale and the liabilities classified as held
for sale are well significantly €0.1 billion at December 31,
2020. Due to its minor importance for the financial position of
the Daimler Group, the assets and liabilities held for sale are
not presented separately in the Consolidated Statement of
Financial Position.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
178
The transaction was completed in January 2021. It had no
material impact on earnings, cash flows or financial position.
Due to the minor significance for the financial position of the
Daimler Group, the assets held for sale (€0.1 billion) and liabili-
ties held for sale (€0.1 billion) are not presented separately in
the Consolidated Statement of Financial Position.
In the context of adjusting and realigning capacities within the
global production network, INEOS Automotive Ltd. and
Mercedes-Benz AG signed an agreement in December 2020 on
the sale of the shares in smart France S.A.S in Hambach,
France. The assets and liabilities connected with the car plant
in Hambach are classified as held for sale at December 31,
2020. The valuation of the assets and liabilities resulted in
expenses of €0.5 billion in the Mercedes-Benz Cars & Vans
segment in 2020. This primarily reflects an impairment loss on
property, plant and equipment, which resulted from the mea-
surement at fair value less costs to sell of the disposal group.
In stage 1 and 2, the effective interest revenue is calculated
based on gross carrying amounts. If a financial asset becomes
credit impaired in stage 3, the effective interest revenue is
calculated based on its net carrying amount (gross carrying
amount adjusted for any loss allowance).
172
Joint venture between Volvo Group and Daimler Truck AG
In November 2020, the Volvo Group and Daimler Truck AG
signed a binding agreement on the establishment of a joint
venture for fuel-cell activities. The Volvo Group will acquire
50% of the shares in Daimler Truck Fuel Cell GmbH & Co. KG
for a price of approximately €0.6 billion. In return, the Daimler
Group has placed the assets and liabilities of the Group-wide
fuel-cell activities in the company Daimler Truck Fuel Cell
GmbH & Co. KG, a wholly owned subsidiary of Daimler Truck
AG. When the transaction is completed - probably in the first
half of 2021 a positive effect on earnings of between €1.2 bil-
lion and €1.3 billion is expected for the Daimler Group, which
will be split between the Mercedes-Benz Cars & Vans and
Daimler Trucks & Buses segments. It is planned to include the
joint venture in the Consolidated Financial Statements using
the equity method and to present it in the Daimler Trucks &
Buses segment.
Measurement of expected credit losses. Expected credit losses
are measured in a way that reflects:
For derivative instruments designated in a hedge relationship,
certain components can be excluded from designation and the
changes in these components' fair value are then deferred in
other comprehensive income under IFRS 9. This may apply for
example to the time value of options, the forward element of a
forward contract or cross currency basis spreads.
Hedge relationships are to be discontinued prospectively if a
particular hedge relationship ceases to meet the qualifying cri-
teria for hedge accounting under IFRS 9. Instances that require
discontinuation of hedge accounting are, among others,
changes to the designated hedged item, loss of the economic
relationship between the hedged item and the hedging instru-
ment, disposal or termination of the hedging instrument, or a
revision of the documented risk management objective of a
particular hedge relationship. Accumulated hedging gains and
losses from cash flow hedges are retained and are reclassified
from equity as described at maturity if the hedged future cash
flows are still expected to occur. Otherwise, accumulated
hedging gains and losses are immediately reclassified to profit
or loss.
If derivative financial instruments do not or no longer qualify
for hedge accounting because the qualifying criteria for hedge
accounting are not or are no longer met, the derivative finan-
cial instruments are classified as held for trading and are mea-
sured at fair value through profit or loss.
Pensions and similar obligations
The measurement of defined benefit plans for pensions and
other post-employment benefit obligations (medical care) in
accordance with IAS 19 Employee Benefits is based on the
projected unit credit method. Plan assets invested to cover
defined benefit pension obligations and other post-employ-
ment benefit obligations (medical care) are measured at fair
value and offset against the corresponding obligations.
The balance of defined benefit plans for pensions and other
post-employment benefit obligations and plan assets (net pen-
sion obligation or net pension assets) accrues interest at the
discount rate used as a basis for the measurement of the gross
pension obligation. The resulting net interest expense or
income is recognized in profit and loss under interest expense
or interest income in the Consolidated Statement of Income.
The other expenses resulting from pension obligations and
other post-employment benefit obligations (medical care),
which mainly result from entitlements acquired during the year
under review, are taken into consideration in the functional
costs in the Consolidated Statement of Income. Differences
between the assumptions made and actual developments as
well as changes in actuarial assumptions for the measurement
of defined benefit plans and similar obligations result in actuar-
ial gains and losses, which have a direct impact on the Consoli-
dated Statement of Financial Position.
174
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The discount factors used to calculate the present values of
defined benefit pension obligations are to be determined -
with maturities and currencies matching the pension pay-
ments - by reference to market yields at the end of the report-
ing period on high-quality corporate bonds in the respective
markets. For very long maturities, there are no high-quality
corporate bonds available as a benchmark. The respective dis-
count factors are estimated by extrapolating current market
rates along the yield curve.
Gains or losses on the curtailment or settlement of a defined
benefit plan are recognized in profit or loss when the curtail-
ment or settlement occurs.
A provision is recognized when a liability to third parties has
been incurred, an outflow of resources is probable and the
amount of the obligation can be reasonably estimated. The
amount recognized as a provision represents the best estimate
of the obligation at the reporting date. Provisions with an origi-
nal maturity of more than one year are discounted to the pres-
ent value of the expenditures expected to settle the obligation
at the end of the reporting period. If the criteria of the regula-
tions on recognition and measurement of provisions are not
fulfilled and the possibility of a cash outflow upon settlement
is not unlikely, the item is to be presented as a contingent lia-
bility, insofar as it is adequately measurable. The amount dis-
closed as a contingent liability represents the best estimate of
the possible obligation at the reporting date. Provisions and
contingent liabilities are regularly reviewed and adjusted as
further information becomes available or circumstances
change.
A provision for expected warranty costs is recognized when a
product is sold or when a new warranty program is initiated.
Estimates for accrued warranty costs are primarily based on
historical experience.
Restructuring provisions are set up in connection with pro-
grams that materially change the scope of business performed
by a segment or business unit or the manner in which business
is conducted. In most cases, restructuring expenses include
termination benefits and compensation payments due to the
termination of agreements with suppliers and dealers. Restruc-
turing provisions are recognized when the Group has a detailed
formal plan that has either commenced implementation or
been announced.
Contract and refund liabilities
Contract liabilities. A contract liability is an entity's obligation
to transfer goods or services to a customer for which the entity
has received consideration (or the amount is due) from the
customer.
Contract liabilities occur at Daimler especially from prepaid
service and maintenance contracts and extended warranties.
D CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Refund liabilities occur at Daimler especially in the following
circumstances:
Refund liabilities. A refund liability occurs if Daimler receives
consideration from a customer and expects to refund some or
all of that consideration to the customer. A refund liability is
measured at the amount of consideration received for which
Daimler does not expect to be entitled and is thus not included
in the transaction price.
For other cash flow hedges, the accumulated hedging gains or
losses from hedging instruments are reclassified from the
reserves for derivative financial instruments to the Consoli-
dated Statement of Income when the hedged item affects
profit or loss. The ineffective portions of fair value changes are
recognized directly in profit or loss.
Under IFRS 9, with cash flow hedges, amounts recognized in
other comprehensive income as effective hedging gains or
losses from hedging instruments are removed from the
reserves for derivative financial instruments and directly
included in the initial cost or carrying amount of the hedged
item at initial recognition if the hedged item, e.g., forecast
transaction, results in the recognition of a non-financial asset
or non-financial liability.
Provisions for other risks
Changes in fair value of non-designated derivatives are recog-
nized in profit or loss. For fair value hedges, changes in the fair
value of the hedged item and the derivative are recognized in
profit or loss. For cash flow hedges, fair value changes in the
effective portion of the hedging instrument are recognized
after tax in other comprehensive income.
b) the time value of money and
c) reasonable and supportable information (if available without
undue cost or effort) at the reporting date about past events,
current conditions and forecasts of future economic condi-
tions.
Under IFRS 9, for cash flow hedges in procurement transac-
tions expected with a high degree of probability, designation
can be made for separable risk components of these non-
financial hedged items.
a) the unbiased and probability-weighted amount;
Expected credit losses are measured as the probability-
weighted present value of all cash shortfalls over the expected
life of each financial asset. For receivables from financial ser-
vices, expected credit losses are mainly calculated with a sta-
tistical model using three major risk parameters: probability of
default, loss given default and exposure at default.
The estimation of these risk parameters incorporates all avail-
able relevant information, not only historical and current loss
data, but also reasonable and supportable forward-looking
information reflected by the future expectation factors. This
information includes macroeconomic factors (e.g., gross
domestic product growth, unemployment rate, cost perfor-
mance index) and forecasts of future economic conditions. For
receivables from financial services, these forecasts are per-
formed using a scenario analysis (basic scenario, optimistic
scenario and pessimistic scenario). The impairment amount for
trade receivables is predominantly determined on a collective
basis.
Significant modification of financial assets (e.g., with a change
in the present value of the contractual cash flows of 10%) also
leads to derecognition of the financial assets with a simultane-
ous recognition of new financial assets. This is estimated to be
rare and immaterial for receivables from financial services. If
the terms of a contract are renegotiated or modified and this
does not result in derecognition of the contract, then the gross
carrying amount of the contract has to be recalculated and a
modification gain or loss has to be recognized in profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount is presented in the Consolidated Statement of Finan-
cial Position provided that an enforceable right currently exists
to offset the amounts involved, and there is an intention either
to carry out the offsetting on a net basis or to settle a liability
when the related asset is sold.
Financial liabilities
A financial instrument is written off when there is no reason-
able expectation of recovery, for example, at the end of insol-
vency proceedings or after a court decision of uncollectibility.
Financial liabilities measured at amortized cost. After initial
recognition, financial liabilities are subsequently measured at
amortized cost using the effective interest method.
Financial liabilities at fair value through profit or loss. Financial
liabilities at fair value through profit or loss include financial
liabilities held for trading. Derivatives (including embedded
derivatives separated from the host contract) which are not
used as hedging instruments in hedge accounting are classi-
fied as held for trading. Gains or losses on liabilities held for
trading are recognized in profit or loss.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or financing
activities or liquidity management. These are mainly currency
risks, interest rate risks and commodity price risks.
If the requirements for hedge accounting set out in IFRS 9 are
met, Daimler designates and documents the hedge relation-
ship from the date a derivative contract is entered into as a fair
value hedge, a cash flow hedge or a hedge of a net investment
in a foreign business operation. In a fair value hedge, the
changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment are hedged. In a cash flow
hedge, the variability of cash flows to be received or paid from
expected transactions related to a recognized asset or liability
or a highly probable forecast transaction is hedged. The docu-
mentation of the hedging relationship includes the objectives
and strategy of risk management, the type of hedging relation-
ship, the nature of the risk being hedged, the identification of
the eligible hedging instrument and the eligible hedged item,
as well as an assessment of the effectiveness requirements
comprising the risk mitigating economic relationship, the
absence of deteriorating effects from credit risk and the appro-
priate hedge ratio. Hedging transactions are regularly assessed
to determine whether the effectiveness requirements are met
while they are designated.
Embedded derivatives are principally separated from the host
contract and recognized separately. However, embedded deriv-
atives are not separated from the host contract if that host
contract is a financial asset, if Daimler chooses to measure a
hybrid contract at fair value through profit or loss, or if the
embedded derivative is closely related to the host contract.
173
Derivative financial instruments are measured at fair value
upon initial recognition and at each subsequent reporting date.
The fair value of listed derivatives is equal to their positive or
negative market value. If a market value is not available, fair
value is calculated using standard financial valuation models
such as discounted cash flow or option-pricing models. Deriva-
tives are presented as assets if their fair value is positive and
as liabilities if the fair value is negative.
Financial liabilities primarily include trade payables, liabilities to
banks, bonds, derivative financial liabilities and other liabilities.
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table D.35 presents key figures on interests in associated
companies accounted for using the equity method in the
Group's Consolidated Financial Statements.
At December 31, 2019
Equity result'
Equity investment¹
Summarized carrying amounts and profits/losses from equity-method investments
In millions of euros
D.34
Table 71 D.36 presents key figures on interests in joint
ventures accounted for using the equity method in the
Group's Consolidated Financial Statements.
Table 7 D.34 shows the carrying amounts and profits/losses
from equity-method investments.
Equity investment'
At December 31, 2020
Equity result¹
13
Associated companies
Joint ventures
Joint operations
Total
3,757
1,419
1,073
-280
4
5,189
797
4,349
13. Equity-method investments
1,582
1 Including investor-level adjustments.
D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Within one year
18,777
18
51,482
47,552
2 Includes impairments of €0.3 billion arising in 2020 primarily in connec-
tion with the corona crises (2019: €0.1 billion).
D.33
Maturity of undiscounted lease payments for
equipment on operating leases
In millions of euros
Mature
At December 31,
2020
2019
7,853
8,353
Between one and two years
190
6,083
Between two and three years
2,344
2,656
Between three and four years
840
931
Between four and five years
203
235
Later than five years
60
73
17,383
6,529
5,949
9.6
-778
At December 31, 2019
Equity interest (in %)
Stock-market price'
Equity investment²
Equity result²
Dividend payment to Daimler5
1 Proportionate stock-market prices.
2 Including investor-level adjustments.
49.0
1 Primarily changes from currency translation.
29.7
387
2,519
665
475
690
4,349
1,295
40
-114
19
1,240
1,137
19
3 The proportionate share of earnings of BAIC Motor Corporation Ltd. (BAIC Motor) is included in Daimler's Consolidated Financial Statements with a
three-month time lag.
4 The dividend from BBAC of €1,174 million for 2019 was paid out in the year 2020. The payment was €1,151 million.
The dividend for 2020 of €544 million was also paid out in 2020. The payment was €546 million.
5 The dividend from BBAC of €1,137 million was paid out in the year 2019. The payment was €1,131 million.
16
1,718
Dividend payment to Daimler*
1,073
17
479
D.35
Key figures on interests in associated companies accounted for using the equity method
BBAC
BAIC Motor³
THBV
(HERE)
Others
Total
In millions of euros
At December 31, 2020
Equity interest (in %)
49.0
1,240
9.6
Stock-market price'
231
Equity investment²
2,431
331
361
634
3,757
Equity result²
1,335
-303
61
-20
29.7
Carrying amount at December 31, 2020
Non-cancelable future lease payments to Daimler for equip-
ment on operating leases are due as presented in table
71 D.33.
15,052
40
750
678
D.30
In millions of euros
2020
2019
Interest expense from
lease transactions
88
98
Expenses from
short-term leases
52
82
82
Expenses from leases of
low-value assets
17
16
Expenses from variable
lease payments
46
47
D.31
Cash outflows related to lessee accounting
In millions of euros
43
office equipment
Other equipment, factory and
17
December 31,
2019
Land, leasehold improvements and
buildings
Technical equipment and machinery
3,449
193
3,956
187
Other equipment, factory and
office equipment
D.29
Additions and depreciations for right-of-use assets
In millions of euros
68
2020
91
4,234
2020
2019
Additions to right-of-use assets
658
1,075
Depreciation for
Land, leasehold improvements and
buildings
669
621
Technical equipment and machinery
38
3,710
Carrying amount at December 31, 2019
2019
for lease contracts
Reclassifications
Disposals
-23,024
Other changes
-2,742
Balance at December 31, 2020
62,604
Depreciation/impairment
Balance at January 1, 2019
Additions²
14,055
9,047
Reclassifications
Disposals
-8,353
Other changes'
141
Balance at December 31, 2019
14,890
Additions²
9,181
Reclassifications
Disposals
-8,323
Other changes
Balance at December 31, 2020
-696
21,998
Other additions
Additions due to business acquisitions
66,372
945
890
Future cash outflows that are not
reflected in the lease liabilities
1,638
1,637
Table 71 D.28 shows the composition of the right-of-use
assets.
The tables 7 D.29, 7 D.30 and 7 D.31 show additional disclo-
sures related to lessee accounting.
Further information on lessee accounting is provided in
Notes 1, 24 and 33.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
189
12. Equipment on operating leases
Total cash outflow
The development of equipment on operating leases is shown in
table D.32.
Leasing payments
Note 24).
D.32
Equipment on operating leases
In millions of euros
Acquisition/manufacturing costs
Balance at January 1, 2019
Additions due to business acquisitions
Other additions
Reclassifications
63,531
26,759
Disposals
Other changes
-24,824
906
Balance at December 31, 2019
At December 31, 2020, equipment on operating leases with a
carrying amount of €10,737 million was pledged as security for
liabilities from ABS transactions related to a securitization
transaction of future lease payments on leased vehicles
(December 31, 2019: €10,874 million) (see also
Expenses related to lessee accounting
Other changes¹
2020
-361
Provisions for pensions and
similar obligations
-467
Other provisions
-218
Miscellaneous liabilities
-342
Deferred tax liabilities, gross
-13,595
Deferred tax assets, net
2,610
-1,044
-222
-389
-14,959
1,868
In respect of each type of temporary difference and in respect
of each type of unutilized tax loss carryforwards and unutilized
tax credits, the deferred tax assets and liabilities before offset
are summarized in table 7 D.22.
The development of deferred tax assets, net, is shown in table
71 D.23.
Including the items recognized in other comprehensive in-
come/loss (including items from equity-method investments),
the expense for income taxes is comprised as shown in table
71 D.24.
-58
In the Consolidated Statement of Financial Position, the valua-
tion allowances on deferred tax assets decreased by €77 mil-
lion compared to December 31, 2019. On the one hand, this
decrease is a result of currency translation. Furthermore, valu-
ation allowances of €109 million that had been recognized in
other comprehensive income/loss in 2019 were reversed. On
the other hand, valuation allowances increased due to the rec-
ognition through profit and loss of €326 million. Other neutral
changes in valuation allowances resulted from, among other
things, adjustments to tax-loss carryforwards from previous
years, mainly due to expiration.
At December 31, 2020, the valuation allowance on deferred tax
assets relates, among other things, to corporate income tax
loss carryforwards (€772 million). €3 million of the deferred
tax assets for corporate income tax loss carryforwards
adjusted by a valuation allowance relates to tax loss carryfor-
wards which expire in 2021, €173 million relates to tax loss
carryforwards which expire at various dates from 2022
through 2025, €43 million relates to tax loss carryforwards
which expire at various dates from 2026 through 2030,
€10 million relates to tax loss carryforwards which expire at
various dates from 2036 through 2040 and €543 million
relates to tax loss carryforwards which can be carried forward
indefinitely. Valuation allowances of €46 million relate to tax
loss carryforwards with regard to capital losses which can be
carried forward indefinitely. With regard to trade tax loss car-
ryforwards in Germany, valuation allowances of €162 million
relate to loss carryforwards which can be carried forward
indefinitely. Furthermore, a large proportion of the valuation
allowances relates to temporary differences as well as loss
carryforwards for state and local taxes at the US-companies.
Daimler believes that it is more likely than not that it will not be
able to utilize those deferred tax assets or cannot reliably doc-
ument that sufficient future taxable income will be available
against which the deductible temporary differences, tax loss
carryforwards and tax credits can be offset. As the probability
of more than 50% required by IAS 12 is therefore not fulfilled,
valuation allowances were recognized on deferred tax assets
also in countries with tax loss carryforwards that can be car-
ried forward indefinitely.
-426
Miscellaneous assets
-939
-810
-880
-743
thereof on tax loss carryforwards and
tax credits
-1,118
-1,332
Deferred tax assets, gross
16,205
16,827
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 185
Development costs
Property, plant and equipment
-3,906
-120
-2,666
-3,718
Equipment on operating leases
-4,574
-129
-2,879
-5,220
Inventories
-66
Receivables from financial services
Other intangible assets
thereof on temporary differences
The Group had tax losses at the German tax group in 2020 and
2019 and at several subsidiaries in several countries in 2020
and prior years. After offsetting the deferred tax assets with
deferred tax liabilities, the deferred tax assets not subject to
valuation allowances amounted to €2,197 million for those
entities. Daimler believes it is more likely than not that future
taxable income will be sufficient to allow utilization of these
deferred tax assets. Daimler's current estimate of the amount
of deferred tax assets that is considered realizable may change
in the future, necessitating higher or lower valuation allow-
From the current perspective, the retained earnings of non-
German subsidiaries are largely intended to be reinvested in
those operations. The Group did not recognize deferred tax lia-
bilities on retained earnings of non-German subsidiaries of
€25,122 million (2019: €29,988 million) which are intended to
be reinvested. If those earnings were paid out as dividends, an
amount of 5% would be taxed under German taxation rules
and, if applicable, with non-German withholding tax. Addition-
ally, income tax consequences might arise if the dividends first
have to be distributed by a non-German subsidiary to a non-
German holding company. Normally, the distribution would
lead to an additional income tax expense. It is not practicable
to estimate the amount of taxable temporary differences for
these undistributed foreign earnings.
1,868
2,610
1 The other changes primarily relate to effects from currency translation.
D.24
Tax expense in equity
In millions of euros
Income tax expense in the Consolidated
Statement of Income
Income tax benefit
recorded in other reserves
2020
2019
-2,330
-1,121
454
421
-1,876
-700
186 D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. Intangible assets
-73
82
232
841
The Group has various unresolved issues concerning open
income tax years with the tax authorities in a number of juris-
dictions. Daimler believes that it has recognized adequate lia-
bilities for any future income taxes that may be owed for all
open tax years. Nevertheless, it cannot be ruled out that tax
payments might exceed the liabilities recognized in the finan-
cial statements.
As a result of future adjudications or changes in the opinions of
the fiscal authorities, it cannot be ruled out that Daimler might
receive tax refunds for previous years.
D.23
Change of deferred tax assets, net
In millions of euros
Deferred tax assets, net
as of January 1
Deferred tax benefit in the
Consolidated Statement of Income
Change of deferred tax assets/
liabilities on equity instruments/
debt instruments included in other
comprehensive income/loss
Change of deferred tax assets/
liabilities on derivative financial
instruments included in other
comprehensive income/loss
Change of deferred tax assets/
liabilities on actuarial gains/
losses from defined benefit
pension plans included in other
comprehensive income/loss
Other changes¹
Deferred tax assets, net
ances.
as of December 31
2019
1,868
259
206
1,261
-42
3
-345
186
2020
Intangible assets developed as shown in table 7 D.25.
-2,075
Valuation allowances
-311
21
Other
-217
-137
Actual income tax expense
-2,330
-1,121
D.21
Deferred tax assets and liabilities
In millions of euros
At December 31,
2020
2019
Deferred tax assets
6,259
5,803
Deferred tax liabilities
-3,649
-3,935
Deferred tax assets, net
Tax-free income and
non-deductible expenses
-209
-326
deferred tax assets
Reconciliation of expected income tax expense
to actual income tax expense
In millions of euros
456
-56
-250
1,317
206
1,261
2020
2,610
2019
-377
-1,142
331
347
39
41
45
-42
Change of valuation allowance on
Expected income tax expense
Foreign tax rate differential
Trade tax rate differential
Tax law changes
-1,998
1,868
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Tax loss carryforwards and
unused tax credits
2,629
3,110
Provisions for pensions and similar
obligations
510
Other provisions
1,864
Liabilities
2,949
673
1,851
3,564
Deferred income
Miscellaneous liabilities
798
20
809
20
18,203
18,902
5,231
5,342
61
Miscellaneous assets, mainly other
D.22
Split of deferred tax assets and liabilities before offset
In millions of euros
At December 31,
2020
2019
Intangible assets
396
60
Property, plant and equipment
184
256
Equipment on operating leases
2,020
1,990
Inventories
944
999
Receivables from financial services
475
356
239
D.20
At December 31, 2020, goodwill of €587 million (2019:
€583 million) relates to the Daimler Trucks & Buses segment,
goodwill of €438 million (2019: €433 million) relates to the
Daimler Mobility segment and goodwill of €196 million (2019:
€201 million) relates to the Mercedes-Benz Cars & Vans seg-
ment.
completed (carrying amount at December 31, 2020:
€4,846 million; 2019: €5,634 million). In addition, other intan-
gible assets with a carrying amount of €273 million (2019:
€273 million) are not amortizable. These non-amortizable
intangible assets are distribution rights in the vehicle seg-
ments with indefinite useful lives as well as trademarks in the
Daimler Trucks & Buses segment with indefinite useful lives.
The Group plans to continue to use these assets unchanged.
Property, plant and equipment, excluding right-of-use assets,
developed as shown in table 7 D.27.
In 2020, government grants of €17 million (2019: €52 million)
were deducted from property, plant and equipment.
D.26
Amortization expense for intangible assets
in the Consolidated Statement of Income
In millions of euros
Cost of sales
Selling expenses
2020
2019
2,368
2,258
55
50
General administrative expenses
110
56
Research and non-capitalized
development costs
Other operating expense
31
32
Property, plant and equipment as shown in the Consolidated
Statement of Financial Position with a carrying amount of
€35,246 million (December 31, 2019: €37,143 million) also
includes right-of-use assets from lessee accounting.
11. Property, plant and equipment
187
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-983
-288
-1,271
-13
-12
-73
-98
263
8,559
1
2,807
1,217
12,525
2,236
15,978
1,221
13,107
2,071
16,399
2 Including capitalized borrowing costs on development costs of €43 million (2019: €31 million). Amortization amounted to €5 million (2019: €16 million).
3 At December 31, 2020, after the impairment of software by approximately €0.1 billion at the Daimler Mobility segment.
11,629
2,564
2,564
D.27
Additions due to business acquisitions
Other additions
626
1,096
1,992
3,517
7,231
Reclassifications
1,159
1,379
1,479
-3,999
18
Disposals
-124
-1,029
-881
-170
-2,204
80,876
5,667
30,377
27,176
Property, plant and equipment (excluding right-of-use assets)
In millions of euros
Acquisition/manufacturing costs
Land, leasehold
improvements and
buildings including
buildings on land
owned by others
Other
Technical
equipment
equipment,
factory and
and
machinery
office
2,397
equipment
payments
relating to
plant and
equipment
and
construction
in progress
Total
Balance at January 1, 2019
17,656
Advance
Non-amortizable intangible assets primarily relate to goodwill
and development costs for projects which have not yet been
10,434
1,925
Balance at December 31, 2019
Additions
Reclassifications
Disposals
Other changes¹
Balance at December 31, 2020
Carrying amount at December 31, 2019
Carrying amount at December 31, 2020
1 Primarily changes from currency translation.
Development
Goodwill
(acquired)
costs
(internally
generated)²
Other
intangible
assets
(acquired)³
Total
1,356
18,451
4,884
24,691
Other changes¹
Disposals
Reclassifications
Additions
Table 7 D.26 shows the line items of the Consolidated State-
ment of Income in which total amortization expense for intan-
gible assets is included.
D.25
Intangible assets
In millions of euros
Acquisition/manufacturing costs
Balance at January 1, 2019
Additions due to business combinations
Other additions
Reclassifications
117
Disposals
Balance at December 31, 2019
Additions due to business combinations
Other additions
Reclassifications
Disposals
Other changes¹
Balance at December 31, 2020
Depreciation/impairment
Balance at January 1, 2019
Other changes¹
2,529
639
66
3,083
1,484
21,666
4,878
-1,312
-161
28,028
274
7,194
1,809
2,422
9,890
588
2,397
-1,379
-512
-1,891
2
5
31
38
276
7,629
-91
-14
-56
-323
560
3,643
-1,386
-790
-2,176
20
6
45
71
183
1,493
4,765
26,412
43
43
4
2,515
527
3,046
-989
20,154
Deferred taxes due to temporary differences
Deferred taxes due to tax loss carryforwards and
tax credits
-1,891
2019
1,903
2,022
57
5,541
Reclassifications
781
1,160
855
-2,774
22
Disposals
-116
-1,875
In millions of euros
-252
-3,103
Other changes¹
-188
Additions
49,928
Balance at January 1, 2019
Depreciation/impairment
86,809
3,906
1,080
34,273
19,968
Balance at December 31, 2020
-1,476
-168
-697
-423
28,662
536
Other additions
-153
85,768
The composition of other operating expense is shown in table
71 D.14.
Other miscellaneous expense primarily comprises changes in
provisions for other risks. In the prior year it included signifi-
cantly higher expenses in connection with ongoing governmen-
tal and court proceedings and measures relating to Mercedes-
Benz diesel vehicles in various regions.
D.13
Other operating income
In millions of euros
2020
In the first quarter of 2020, the contribution of the smart brand
to the joint venture smart Automobile Co., Ltd. resulted in
income of €154 million in the Mercedes-Benz Cars & Vans seg-
ment, which is presented in other miscellaneous income. See
Note 13 for further information.
2019
650
840
295
122
79
75
Income from costs recharged to third parties
Government grants and subsidies
Gains on sales of property,
plant and equipment
4,692
Income from corporate transactions at consolidated compa-
nies primarily comprised income of €718 million resulting from
the merger of the business units for mobility services of
Daimler Group and BMW Group in the year 2019 (YOUR NOW).
Income from costs recharged to third parties includes income
from licenses and patents, as well as shipping costs and other
costs charged to third parties, with related expenses primarily
within the functional costs.
5,073
5
37
15
Additions due to business acquisitions
33,072
28,683
Government grants and subsidies mainly comprise reimburse-
ments relating to current early retirement part-time contracts
and subsidies for alternative drive systems. In 2020, the use of
short-time-work in Germany led to claims for the reimburse-
ment of social-security contributions, which are included in
other operating income.
18,940
58
105
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
181
6. Other operating income and expense
The composition of other operating income is shown in table
71 D.13.
Balance at December 31, 2019
Rental income
Reclassifications
17,675
Other changes¹
Balance at December 31, 2020
-64
-1,789
-762
-2,615
31
9,647
-181
18,588
-469
-619
26,815
223
55,273
Carrying amount at December 31, 2019
Carrying amount at December 31, 2020
9,859
10,321
In millions of euros
Right-of-use assets
D.28
D | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
188
2 Comprises impairments in the amount of €0.5 billion connected with the adjustment and realignment of capacities within the global production network at
the Mercedes-Benz Cars & Vans segment.
Disposals
1 Primarily changes from currency translation.
3,683
7,458
32,909
5,073
7,864
10,113
10,074
31,536
-
-
Reclassifications
50
-167
Other changes¹
-1,716
-745
-902
72
-69
3
-3
2,540
1,750
402
23,338
Disposals
8,915
-45
9,081
458
214
103
141
Additions from impairment losses²
5,190
Balance at December 31, 2019
9
1,885
458
Additions
52,859
25,208
18,570
2,838
not relating to sales financing
-860
financial assets
Interest and similar expense
-197
-162
pension plans
on the net obligation
Net interest expense
Interest expense
397
220
393
218
Interest and similar income
4
2
pension plans
defined benefit
on the net assets of
Net interest income
Interest income
2019
2020
-262
-354
-24
-186
In millions of euros
Interest income and interest expense
-322
-683
-484
-880
Non-German companies
-2,178
-51
-2,331
Deferred taxes
German companies
Non-German companies
-261
467
-358
German companies
Current taxes
In millions of euros
2019
2020
D.16
Components of income taxes
3,830
6,339
7,943
5,921
Non-German companies
-4,113
418
German companies
In millions of euros
2019
2020
Profit before income taxes
D.17
D.18
income/expense, net
from defined benefit
-238
at consolidated companies
Income from company transactions
173
139
1,127
134
-2,330
-1,121
7. Other financial income/expense, net
Table 7 D.15 shows the components of other financial
income/expense, net.
8. Interest income and interest expense
Table 7 D.16 shows the components of interest income and
interest expense.
9. Income taxes
Other miscellaneous income
Profit before income taxes is comprised as shown in table
71 D.17.
Table 7 D.18 shows the components of income taxes.
The current tax expense includes tax benefits recognized for
prior periods at German and foreign companies of €81 million
(2019: €244 million).
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
183
The deferred tax benefit is comprised of the components
shown in table 7 D.19.
For German companies, in 2020 and 2019, deferred taxes were
calculated using a federal corporate income tax rate of 15%, a
solidarity tax surcharge of 5.5% on each year's federal corpo-
rate income taxes, and a trade tax rate of 14%. In total, the tax
rate applied for the calculation of German deferred taxes in
both years amounted to 29.825%. For non-German companies,
the deferred taxes at period-end were calculated using the tax
rates of the respective countries.
Table 7 D.20 shows a reconciliation of expected income tax
expense to actual income tax expense determined using the
unchanged applicable German combined statutory tax rate of
29.825%.
Miscellaneous other financial
Tax-free income and non-deductible expenses include all other
effects at foreign and German companies relating to tax-free
income and non-deductible expenses, e.g. tax-free gains
included in net periodic pension costs at the German compa-
nies and tax-free results of the equity-method investments.
Deferred tax assets and deferred tax liabilities are offset if
the deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority and if there is the right
to set off current tax assets against current tax liabilities. In
the presentation of deferred tax assets and liabilities in the
Consolidated Statement of Financial Position, no difference is
made between current and non-current. In the Consolidated
Statement of Financial Position, deferred tax assets and liabili-
ties are presented as shown in table 7 D.21.
D.19
Components of deferred tax benefit
2020
Profit before income taxes in Germany includes profit/loss
on equity-method investments if the equity interests in those
companies are held by German companies.
729
The Group impaired deferred tax assets in 2020 and 2019.
The resulting tax expenses are included in the line item change
of valuation allowance on deferred tax assets.
898
859
-168
provisions for other risks
compounding and effects from
Income and expense from
2019
2020
In millions of euros
Other financial income/expense, net
D.15
D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
182
-4,469
-742
changes in discount rates of
-534
-4,289
2,837
Other operating expense
2020
2019
D.14
Losses on sales of property,
plant and equipment
Other miscellaneous expense
In millions of euros
-180
2,022
-208
In its meeting on December 3, 2020, the Supervisory Board set
a new target of a proportion of at least 25% women as members
of the Board of Management, to be achieved by December 31,
2025.
For the composition of the Board of Management, the Super-
visory Board set the target in December 2016 of at least 12.5%
women, to be achieved by December 31, 2020. As of Decem-
ber 31, 2020, two women are members of the Board of
Management: Renata Jungo Brüngger and Britta Seeger; the
proportion of women is therefore 25% as of that date. The
target was thus exceeded.
A | TO OUR SHAREHOLDERS REPORT OF THE SUPERVISORY BOARD 19
As of December 31, 2020, the shareholders' side of the Super-
visory Board of Daimler AG is composed of 30% women (the
members Sari Baldauf, Petraea Heynike and Marie Wieck) and
70% men. On the employees' side, the proportions as of that
date are 30% women (the members Elke Tönjes-Werner, Sibylle
Wankel and Dr. Sabine Zimmer) and 70% men. The Supervisory
Board as a whole therefore also fulfills the statutory quota.
For supervisory boards of listed companies subject to parity
codetermination, like that of Daimler AG, the German Stock
Corporation Act prescribes a binding gender ratio of at least
30% women. The ratio is to apply to the entire supervisory
board. If the side of the supervisory board representing the
shareholders or the side representing the employees objects
to the chairman of the supervisory board before the election
about the application of the ratio to the entire supervisory
board, the minimum ratio is to apply separately to the share-
holders' side and to the employees' side for that election.
Corporate governance at Daimler is described in detail
Law for the equal participation of women and men in
management positions
Independently of the Supervisory Board's self-assessment,
the Audit Committee again carried out a self-assessment of its
activities in 2020 on the basis of a comprehensive Group-
specific questionnaire. The results of this self-assessment,
which were again very positive, were presented and discussed
in the meeting of the Audit Committee on February 17, 2021.
No need for change was identified.
In order to avoid the appearance of potential conflicts of inter-
est arising from specific situations, some members of the
Supervisory Board did not participate in discussions of certain
items of the agendas in the year 2020. This was the case with
Sari Baldauf in connection with the patent disputes between
Daimler and Nokia. Furthermore, as a highly precautionary
measure to avoid potential conflicts of interest, Dr. Bernd
Pischetsrieder and Dr. Jürgen Hambrecht refrained from
participating in several meetings when legal proceedings in
connection with diesel exhaust emissions were being dealt with.
The Supervisory Board conducted an externally moderated
self-assessment in 2020. It covered all key aspects of the work
of the Supervisory Board including its committees by means of
an online questionnaire and supplementary interviews. The
results of the review, which the Supervisory Board dealt with in
depth at its meeting on February 17, 2021, confirm the pro-
fessional, very good cooperation within the Supervisory Board
and with the Board of Management characterized by a high
degree of trust. No fundamental need for change was shown.
In accordance with good corporate governance, the members
of the Supervisory Board of Daimler AG are obliged to disclose
conflicts of interest - especially those that might arise due to
an advisory or board function for a customer, supplier or credi-
tor of Daimler, or for other third parties to the entire Super-
visory Board.
In its meeting on December 3, 2020, the Supervisory Board
discussed the specific proposals for the candidates to be
elected at the 2021 Annual Shareholders' Meeting and decided,
upon the recommendation of the Nomination Committee, to
propose at the 2021 Annual Shareholders' Meeting that Eliza-
beth Centoni, Ben Van Beurden and Dr. Martin Brudermüller
be elected to the Supervisory Board for the first time. If the
proposed candidates are elected, the statutory quota for
women will remain fulfilled both on the shareholder side and
for the Supervisory Board as a whole, provided there are
no other changes.
Other items on the agenda included matters of corporate gov-
ernance, in particular the declaration of compliance with the
German Corporate Governance Code, the setting of a target
for the proportion of women in the Board of Management, and
the adjustment of the requirements profiles for the Board of
Management and the Supervisory Board. The Supervisory
Board also looked ahead to key topics for the 2021 financial
year. Finally, based on preparations by the Presidential Com-
mittee, it dealt with the further development of the system of
Board of Management remuneration. Details of the system
of Board of Management remuneration and the adjustments
to the annual bonus are explained in the Remuneration
Report.
Corporate governance and declaration of compliance
During the year 2020, the Supervisory Board was continually
occupied with standards of good corporate governance.
At an extraordinary meeting on February 3, 2021, the Supervi-
sory Board granted its approval, after detailed prior discussion,
to evaluate a spin-off of the Truck & Bus business and to begin
preparations for a separate stock-exchange listing of Daimler
Truck. As a result of the spin-off, which requires the approval
of the Annual Shareholders' Meeting, a substantial majority
shareholding in Daimler Truck is to be transferred to Daimler
shareholders.
Fundamental change in the corporate structure
The Supervisory Board also received information on current
legal issues, including requests for information, inquiries,
investigations, official orders and proceedings in connection
with diesel exhaust emissions. At the meeting, the Supervisory
Board received reports from its legal advisers on the progress
of the investigation into responsibilities in connection with
diesel emissions. The question of possible claims for damages
against former or current Board of Management members in
connection with the antitrust issues was also dealt with once
again. The Supervisory Board decided to discuss the further
course of action in the antitrust matters again, taking further
developments into account. In this context, the Supervisory
Board dealt with any risks relating to the statute of limitations
and initiated appropriate precautions.
A❘ TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
18
In the meeting held on December 3, 2020, the Supervisory
Board first decided on the proposals for election to be made at
the 2021 Annual Shareholders' Meeting described in this
report. The Supervisory Board agreed to propose at the meet-
ing of the newly constituted Supervisory Board after the 2021
Annual Shareholders' Meeting that Dr. Bernd Pischetsrieder be
elected as Chairman of the Supervisory Board. In the further
course of the meeting, the Supervisory Board approved a num-
ber of measures requiring its consent and dealt with the report
of the Board of Management on the development of current
and completed acquisitions and cooperations. Furthermore,
the Supervisory Board discussed and approved Daimler's busi-
ness planning on the basis of comprehensive documentation
and, in this context, discussed existing opportunities and risks.
It also approved the establishment of a transformation fund
with a volume of up to €1 billion. On the basis of the Board of
Management's decision to integrate the non-financial report
into the management report, the Supervisory Board also
decided, on the recommendation of the Audit Committee, to
extend the external audit of the consolidated financial
statements and combined management report accordingly.
Meeting on Daimler's business planning
in the Declaration on Corporate Governance and in the
Remuneration Report.
At an extraordinary meeting on November 4, 2020, the Super-
visory Board dealt with M&A, cooperation and battery and
transmission projects. It approved the related funding require-
ments and approved the sale of the car plant in Hambach,
France, by transferring all shares in smart France S.A.S. to
INEOS Automotive.
In its meeting in December 2020, the Supervisory Board
approved the 2020 declaration of compliance with the German
Corporate Governance Code pursuant to Section 161 of the
German Stock Corporation Act (AktG). With the exceptions
explained there, all recommendations of the Code have been
and continue to be complied with.
The work of the committees
20
The Audit Committee met six times in 2020. Details of those
meetings are provided in the Report of the Audit Commit-
tee.
The focus of the meeting was on dealing with the strategies of
the individual divisions. At Mercedes-Benz AG, the focus was
on setting the strategic course for profitable growth in the lux-
ury segment and on efforts to become a leader for electric
drive systems and vehicle software. At Daimler Truck AG, the
strategic focus was on electric mobility, vehicle connectivity
and autonomous driving. At Daimler Mobility AG, the focus was
on financing, leasing, and insurance offerings in close interac-
tion with the mobility offerings. The Supervisory Board dis-
cussed in detail the goals and the strategic areas for action of
the individual divisions. With the involvement of the executives
responsible for the topics presented, the members of the
Supervisory Board and the Board of Management discussed in
a constructive and open dialog how Daimler will prepare for
new challenges and which further developments lie ahead. The
discussion included the geopolitical situation with regard to
tensions between China and the United States, possible politi-
cal developments and their effects on Daimler. The Super-
visory Board also discussed the key financial figures and the
targets for the Group and the divisions. Another item on the
agenda was the Company's involvement in Formula 1 racing.
The Supervisory Board also received information on current
legal issues, including the procedural steps taken with regard
to the settlement of regulatory and civil proceedings in the
United States in connection with diesel exhaust emissions.
Dr. Manfred Bischoff
Chairman
Seated Ride
Мара
The Supervisory Board
Stuttgart, February 2021
The Supervisory Board also thanks Dr. Paul Achleitner, who
closely accompanied the Company through his dedicated work
in the Supervisory Board and stepped down from the Super-
visory Board last year.
The Supervisory Board thanks all the employees and the
management of the Daimler Group for their commitment and
contributions in a financial year 2020 marked by the covid-19
pandemic.
Appreciation
The Audit Committee and the Supervisory Board dealt with
those documents in detail and discussed them intensively in
the presence of the independent auditors, who reported on the
results of their audit and in particular on the key audit matters
and the respective audit procedure including the conclusions
drawn, and who were available to answer supplementary ques-
tions and to provide additional information. Following the final
results of the review by the Audit Committee and its own
review, the Supervisory Board declared its agreement with
the results of the audit by the external auditors. It determined
that no objections were to be raised and approved the financial
statements and the combined management report as pre-
sented by the Board of Management, including the non-financial
declaration. The company financial statements of Daimler AG
for the year 2020 were thereby adopted. On this basis, the
Supervisory Board consented to the proposal made by the Board
of Management on the appropriation of distributable profit.
Furthermore, the Supervisory Board approved the report of the
Supervisory Board, the declaration on corporate governance
and the remuneration report, as well as its proposed resolutions
on the items of the agenda for the 2021 Annual Shareholders'
Meeting.
In the meeting held on February 17, 2021, the Supervisory
Board dealt with the annual company financial statements, the
annual consolidated financial statements and the combined
management report including the non-financial declaration for
Daimler AG and the Daimler Group, each of which had been
issued with an unqualified audit opinion by the independent
auditors, as well as the declaration on corporate governance,
the remuneration report and the proposal on the appropriation
of profit. In preparation, the members of the Supervisory
Board had been provided with comprehensive documentation
including the Annual Report with the consolidated financial
statements according to IFRS, the combined management
report including the non-financial declaration for Daimler AG
and the Daimler Group, as well as the declaration on corporate
governance, the remuneration report, the annual company
financial statements of Daimler AG, the proposal of the Board
of Management on the appropriation of profit, the audit reports
of KPMG AG Wirtschaftsprüfungsgesellschaft on the annual
company financial statements of Daimler AG and the consoli-
dated financial statements, each including the combined man-
agement report, and the internal control system, as well as
drafts of the reports of the Supervisory Board and of the Audit
Committee.
A❘ TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
The financial statements of Daimler AG and the combined
management report for the Company and the Group for 2020
were duly audited by KPMG AG, Wirtschaftsprüfungsgesell-
schaft, Berlin, and were given an unqualified audit opinion. The
same applies to the consolidated financial statements for
2020 prepared according to IFRS.
statements
Audit of the company and consolidated financial
In the Supervisory Board meeting on December 3, 2020, on
the basis of a recommendation by the Nomination Committee,
the members representing the shareholders resolved to pro-
pose to the 2021 Annual Shareholders' Meeting that Elizabeth
Centoni, Ben Van Beurden and Dr. Martin Brudermüller be
elected to the Supervisory Board. At its meeting on December
3, 2020, the Supervisory Board of Daimler AG also agreed to
propose to the newly constituted Supervisory Board at its
meeting following the Annual Shareholders' Meeting on March
31, 2021 that Dr. Bernd Pischetsrieder be elected as Chairman
of the Supervisory Board.
Following the proposal of the Supervisory Board, the Annual
Shareholders' Meeting on July 8, 2020 elected Timotheus
Höttges as a member of the Supervisory Board representing
the shareholders for the period until the end of the Annual
Shareholders' Meeting that decides on ratification of board
members' actions for financial year 2024.
In the Supervisory Board meeting on February 19, 2020,
Hubertus Troska was appointed to the Board of Management
of Daimler AG, responsible for Greater China, for a further
period of five years with effect as of January 1, 2021.
Changes in the Supervisory Board and the Board of
Management
There was no occasion to convene the Mediation Committee
during the reporting period.
The Nomination Committee convened for four meetings in
2020. The Committee dealt in particular with the recommenda-
tion for the Supervisory Board's proposals to be made at the
Annual Shareholders' Meeting in 2021 on the candidates for
election to the Supervisory Board. Among other things, and
taking into consideration all circumstances of each individual
case, the proposal is oriented towards the Daimler Group's
interests and aims to fulfill the overall qualification profile for
the entire Supervisory Board, including expertise profile
and diversity concept. In addition, the Committee dealt with
the succession, due in 2021, to the position of Chairman
of the Supervisory Board.
In addition, the Committee for Legal Affairs dealt intensively
with the antitrust matters that were a subject of the Supervi-
sory Board meetings on February 19, July 23, and December 3,
2020, and in each case after detailed discussion, also with
the legal advisors - made corresponding recommendations for
resolutions, each of which were the subject of further discus-
sions in the Supervisory Board.
obligations and working with the Post Settlement Audit Team
(PSAT) were explained to the Committee. The PSAT was set up
in the reporting year on the basis of the settlement with the
US authorities and audits the company's compliance with the
settlement and environmental regulations within a certain scope.
The Committee for Legal Affairs held five meetings in 2020.
At these meetings, it received detailed information on legal
matters concerning emissions and antitrust law, as well as the
related further development of the compliance system, and
discussed those matters in the presence of the Supervisory
Board's legal advisors. The Committee received reports from
the legal advisors commissioned by the Supervisory Board on
the progress of the examination of responsibilities in connec-
tion with diesel exhaust emissions. The Committee regularly
reported to the Supervisory Board on its work and, after dis-
cussing and considering the relevant aspects and taking into
account the best interests of the Company, made recommen-
dations for resolutions by the Supervisory Board. In particular,
this concerned the resolution of the Supervisory Board of Feb-
ruary 19, 2020, to approve the decision of the Board of Man-
agement on the settlement of a securities class-action lawsuit
in the United States in connection with diesel exhaust emis-
sions, and the Supervisory Board's resolution of August 13,
2020, to approve the decision of the Board of Management on
the settlement of regulatory and civil proceedings in the United
States in connection with diesel emissions. Within the frame-
work of the agreement in principle reached with various US
authorities during the reporting period to end regulatory
proceedings for alleged violations of US and Californian envi-
ronmental laws in connection with diesel exhaust emissions,
the Committee was given further tasks and decision-making
authority with regard to fulfilling the obligations accepted
in the agreement in principle. In several meetings, these
The Presidential Committee convened in the past financial
year for three meetings. It dealt in particular with personnel
matters and succession planning for the composition of the
Board of Management. In addition, the Presidential Committee
dealt with the acceptance by members of the Board of Man-
agement of board positions at other companies and institutions,
corporate governance topics, D&O insurance and matters of
remuneration. Details of the remuneration of the Board of
Management are presented in the Remuneration Report.
At the beginning of the two-day strategy workshop in Sindel-
fingen in late September, the Supervisory Board granted its
consent to cooperation with the Zhejiang Geely Holding Group
on the development of a highly efficient next-generation drive
system for hybrid applications, as well as to a capital measure
to be taken at a company of the Group.
Economic uncertainties are particularly noticeable in the
commercial-vehicle markets. Compared with record year 2019,
unit sales at Daimler Truck AG were down by more than a
quarter in 2020. However, demand in our important US market
picked up again. We were able to extend our market leadership
in almost all of our core markets. At the same time, we set
some important strategic markers: We will produce Mercedes-
Benz trucks in China in a few years' time, enabling us to make
even better use of that market's great potential. We are work-
ing with Volvo in a joint venture to bring hydrogen technology
to production maturity even faster. And we have realigned our
strategy for autonomous driving.
In an extraordinary meeting held on August 13, 2020, following
careful and intensive discussion of the relevant aspects and
consideration of the relevant reasons, while taking into account
the best interests of the Company and a corresponding posi-
tive recommendation on a resolution by the Supervisory Board's
Committee for Legal Affairs, the Supervisory Board approved
the Board of Management's decision on the settlement of gov-
ernmental and civil-law proceedings in the United States relat-
ing to diesel exhaust emissions. In preparation for its decision,
the Supervisory Board was provided with several expert opin-
ions from several independent law firms. Both the Supervisory
Board and the Board of Management are of the opinion that
the settlements were in the interests of the Company.
The Board of Management
Ola Källenius
Chairman of the Board of Management of Daimler AG/
Mercedes-Benz Cars & Vans
Appointed until May 2024
Martin Daum
Daimler Trucks & Buses
Appointed until February 2022
Renata Jungo Brüngger
Integrity and Legal Affairs
Appointed until December 2023
Wilfried Porth
Human Resources and Director of Labor Relations
Appointed until April 2022
Markus Schäfer
The development of automotive markets also had an impact on
the business of Daimler Mobility AG. Contract volume
decreased, but we continue to finance or lease half of the
vehicles we sell.
Appointed until May 2024
Ola Källenius
Britta Seeger
Sincerely yours,
In this way, we want to give our trucks and buses division full
entrepreneurial freedom - and thus the opportunity to lever-
age economies of scale even more effectively, to further
increase profitability, and to make even faster progress on the
road to zero-emission goods transport. At the same time, we
want to further sharpen the profile of Mercedes-Benz: as one
of the leading suppliers of luxury cars and premium vans, with
a strong brand, and with a clear strategic course towards tech-
nology leadership, especially for electric mobility and vehicle
software. With independence comes maximum customer
focus and even greater entrepreneurial responsibility. These
are the best possible ingredients for creating added value for
you, the shareholders, and for unleashing the full potential of
the companies.
Sales of our electric vans also developed positively. In Europe,
we are the market leader in the segments of mid-size and large
electric vans, each with a market share of more than one third.
Mercedes-Benz AG sold 2.5 million cars and vans in 2020. In
view of the challenging environment, we are satisfied with that.
Mercedes-Benz maintained its position as the world's leading
premium manufacturer. Our sustainable business strategy is
increasingly reflected by our unit sales. We tripled the sales of
our cars with alternative drive systems in 2020 and thus
achieved the ambitious CO2 limits in Europe. China continues
to be our biggest market. With a twelve percent increase, we
posted record unit sales there in 2020. The most important
new product of the past year was the new S-Class. Demand for
our flagship is at a high level. The new model drives off the
assembly line in Factory 56. What has long been regarded as
the production of the future is already a reality in this new
factory, which combines flexibility, efficiency, digitization and
sustainability. It is a flagship of the newly defined strategy of
Mercedes-Benz. Our aspiration: We will build the world's most
desirable cars.
How did the individual divisions contribute to these results?
In 2020, a total of 2.8 million customers chose to buy a vehicle
from Daimler. Our revenue amounted to 154.3 billion euros.
EBIT increased by 53 percent to 6.6 billion euros. Our net
liquidity in the industrial business was 17.9 billion euros at the
end of the year. The bottom line was a net profit of 4 billion
euros. At the Annual Shareholders' Meeting, the Board of Man-
agement and the Supervisory Board will propose
the
payment
of a dividend of one euro and 35 cents per share.
We have an extraordinary year behind us. The global pandemic
had a considerable impact on society, politics and the world
economy, and thus also on Daimler. We responded at an early
stage at all our sites and took a number of effective counter-
measures. Our top priority was, and still is, to protect people's
health. At the same time, we secured our liquidity, continued
to push forward with future projects, and set the course for our
long-term development. Our financial results significantly
exceeded expectations in 2020, due in particular to a strong
fourth quarter. Overall, we successfully steered Daimler
through difficult waters. I would like to thank my colleagues for
this for their tireless commitment, their great flexibility, and
their strong cohesion.
A | TO OUR SHAREHOLDERS | LETTER FROM THE CEO 11
Dear Shareholders,
Across all our divisions, we made significant progress with
efficiency in 2020. We will continue along this path with the
same discipline. The pandemic has once again made it clear
that efficiency is a prerequisite for the ability to act effectively.
Looking ahead, we are pursuing two main strategic priorities:
digitization and electrification. We are cooperating with strong
partners in both fields. In this way, we are not only accelerating
technological developments, we are also sharing the costs.
In terms of digitization, the latest generation of our MBUX
infotainment system was launched in 2020. It will be followed
this year by the next milestone, the MBUX Hyperscreen, a dis-
play that extends across almost the entire width of the cockpit.
This allows us to combine design, technology and interaction in
the vehicle in a way that is currently unique. Thanks to artificial
intelligence, the system gets to know the customer better and
better and delivers a personalized infotainment offering adapted
to each situation.
At the same time, we are developing one of the most intelligent
computer architectures for automated driving functions ever
seen in a vehicle. We will roll it out across our car fleet from 2024
onwards. Customers will then always be able to access the
latest software, the latest driver assistance systems or the latest
generation of digital services long after they have bought their
car. The idea is that the purchase of a car is no longer the high
point between the customer and us, but rather a starting point.
12
A TO OUR SHAREHOLDERS | LETTER FROM THE CEO
We took the next step in electrification at the beginning of
the year with the new EQA, the first all-electric Mercedes-EQ
model in the compact segment. We will continue in the spring
with the EQS: Our electric flagship in the S-Class segment
has a range of around 700 kilometers (WLTP) on a single bat-
tery charge. The EQS will also change the way we think about
cars. It is the first all-electric Mercedes-Benz that we have
developed as an electric car right from the start. This opens up
new possibilities, in vehicle design, for example. Next year,
our portfolio will include eight all-electric Mercedes-EQ mod-
els. Production at our own car plants will then be completely
CO2-neutral.
With the vans, we have developed a new platform for the next
generation of the eSprinter. This gives us maximum flexibility,
to implement numerous body variants, for example. Because
whether combustion engine or electric drive, the individual
needs of our customers are at the heart of everything we do.
We are also systematically expanding our range of CO2-neutral
options for trucks. We are pursuing a twin-track strategy here.
Series production of the battery-electric eActros starts this
year. In parallel, we are developing fuel-cell trucks for long dis-
tances and heavier loads. We have provided a glimpse of the
future with our Gen H2 concept truck. This is a heavy-duty
truck with a range of up to 1,000 kilometers, equivalent to that
of a diesel truck. We are leveraging synergies and system-
atically implementing our electrification strategy also at the
Freightliner and FUSO brands.
All of these examples show that market environment and
customer requirements as well as approaches to technologies
and partnerships differ between cars and trucks. The ongoing
transformation is increasingly intensifying these differences.
To shape change successfully, we need speed, agility and full
focus on innovation more than ever. This is why we intend to
propose to you, at an Extraordinary Shareholders' Meeting in
the fall, that a significant majority interest in Daimler Truck be
transferred to the Daimler shareholders by way of a spin-off. In
this case, it is planned that the transaction and the stock-
exchange listing of Daimler Truck will be completed by the end
of 2021.
For the two companies, the future of mobility will be decarbon-
ization and digitization. We set the strategic course for this long
ago. The results can be experienced on the road today and will
become even more visible this year. At the same time, we are
confident that, given stable conditions, we will be able to con-
tinue the positive trend from last year in our business develop-
ment. Because we are convinced that our future will be sus-
tainably fascinating, sustainably climate-neutral, and, last but
not least, sustainably profitable. We are shaping this change
with courage, passion and responsibility. I look forward to you
continuing to accompany us on this path.
Strategy meeting of the Supervisory Board
Mercedes-Benz Cars Marketing and Sales
Hubertus Troska
Working culture and areas of Supervisory Board activity
In the year 2020, the Supervisory Board convened for nine
meetings, some of which took place by telephone or as video
conferences due to the pandemic. Participation in the meet-
ings by the members of the Supervisory Board was at a very
high level once again, as shown in the detailed overview at the
end of this report. The work of the Supervisory Board featured
open and intensive exchanges of information and opinions.
The members of the Supervisory Board regularly prepared for
upcoming resolutions with the aid of documentation provided
in advance by the Board of Management. Furthermore, the
members representing the employees and the members repre-
senting the shareholders regularly prepared the Supervisory
Board meetings in separate discussions, which were also
attended by members of the Board of Management. The Super-
visory Board was also intensively supported by its committees.
In the meetings of the Supervisory Board, its members dis-
cussed in detail with the Board of Management the measures
and business matters to be decided upon. Executive sessions
were regularly arranged for the meetings so that topics could
be discussed also in the absence of the Board of Management.
Outside the regular meetings, the Supervisory Board was
informed about special matters. In addition, the members of
the Supervisory Board and of the Board of Management came
together for bilateral exchanges of opinions. The Board of
Management informed the Supervisory Board also with written
reports about the most important indicators of business
16
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
development and existing risks, in particular in the spring of
2020 during the first peak phase of the covid-19 pandemic.
The Supervisory Board received weekly reports on its impact
as well as on the status of mitigating measures taken.
The members of the Supervisory Board independently attend
such courses of training and further training regarded as nec-
essary for the performance of their tasks, relating for example
to changes in the legal framework and new, future-oriented
technologies, in which they are supported by the Company.
During the reporting period, the Company held information
events on the expansion of the technical compliance manage-
ment system and, together with the external auditors, on
risk-oriented auditing. Furthermore, in a special onboarding
program, new members of the Supervisory Board have the
opportunity to meet the members of the Board of Management
and senior executives with specialist responsibility for a bilat-
eral exchange of opinions and information on fundamental and
current topics of the various Board of Management areas,
allowing them to gain an overview of the topics relevant to the
Daimler Group and of its governance structure.
In its meeting on February 10, 2020, which was attended by
the external auditors, the Supervisory Board discussed, took
note of and approved the preliminary key figures of the annual
company and consolidated financial statements for 2019 and
the dividend proposal to be made at the 2020 Annual Share-
holders' Meeting. The Supervisory Board determined that no
objections were to be raised to their publication. The prelimi-
nary key figures for the year 2019 and the proposal on the
appropriation of profit were announced at the Annual Press
Conference on February 11, 2020.
In the Supervisory Board meeting held on February 19, 2020,
the Supervisory Board decided to appoint Hubertus Troska
as a member of the Board of Management of Daimler AG for a
period of a further five years as of January 1, 2021, with
responsibility for Greater China.
Subsequently, it dealt with the annual company financial state-
ments, the annual consolidated financial statements and the
combined management report for Daimler AG and the Daimler
Group for the year 2019, each of which had been issued with
an unqualified audit opinion by the external auditors, as well as
with the reports of the Audit Committee and the Supervisory
Board, the declaration on corporate governance combined with
the corporate governance report, the remuneration report, the
nonfinancial report, which was issued with the independent
auditor's limited assurance in accordance with ISAE 3000, and
the proposal on the appropriation of profit. In preparation,
the members of the Supervisory Board had been provided with
comprehensive documentation.
The Audit Committee and the Supervisory Board dealt with
those documents in detail and discussed them intensively in
the presence of the independent auditors. The independent
auditors reported on the results of their audit and on the key
audit matters and the respective audit procedure, including the
conclusions drawn, as well as on the voluntary review of the
non-financial report within the framework of a limited assur-
ance engagement, and were available to answer questions and
to provide further information. Following the final results of the
review by the Audit Committee and its own review, the Super-
visory Board declared its agreement with the results of the
audit carried out by the external auditors. It determined that
no objections were to be raised, approved the financial state-
ments and the combined management report as presented by
the Board of Management, and thus adopted the financial
statements of Daimler AG for the year 2019. On this basis, the
Supervisory Board consented to the proposal made by the
Board of Management on the appropriation of distributable
profit. In addition, the Supervisory Board approved the non-
financial report, the report of the Supervisory Board, the
corporate government statement combined with the corporate
governance report, and the remuneration report.
In its meeting on February 19, 2020, the Supervisory Board
also decided on its proposed resolutions for the agenda of the
2020 Annual Shareholders' Meeting, which at that time was
still planned to be held on April 1, 2020, including the propos-
als for election as described in this report. The Supervisory
Board also dealt with matters pertaining to the remuneration
of the members of the Board of Management and, in connec-
tion with the item of the agenda on corporate governance,
approved the memberships of other boards and further exter-
nal secondary activities of the members of the Board of Man-
agement that were presented in the meeting. In addition, the
Supervisory Board decided to have a voluntary review of the
contents of the 2020 non-financial report conducted by KPMG
AG Wirtschaftsprüfungsgesellschaft, Berlin, in the form of a
limited assurance. Another matter dealt with in the meeting
was the court proceedings in connection with diesel exhaust
emissions. Following careful and intensive discussion of the
relevant aspects and consideration of the relevant reasons,
while taking into account the best interests of the Company
and a corresponding positive recommendation on a resolution
by the Supervisory Board's Committee for Legal Affairs, the
Supervisory Board approved the Board of Management's deci-
sion on the settlement of a securities class action relating to
diesel exhaust emissions in the United States. In preparation
for its decision, the Supervisory Board had obtained an expert
opinion from an independent law firm. Both the Supervisory
Board and the Executive Board are of the opinion that the set-
tlement was in the interests of the Company. Once again, the
question of possible claims for compensation against former or
present members of the Board of Management in connection
with antitrust issues, in particular with regard to the European
Commission's concluded antitrust proceedings against truck
manufacturers, and the ongoing investigations relating to the
antitrust proceedings of the European Commission concerning
possible restrictions of competition with exhaust-gas cleaning
technologies was dealt with. On the basis of the reviews car-
ried out so far and repeatedly updated by an independent law
firm, a further review by an independent legal academic, as
well as detailed discussions in the Supervisory Board taking
into account the welfare of the Company, as well as in the
context of further deliberations on these issues in the meetings
on July 23 and December 3, 2020 (in accordance with corre-
sponding recommendations of the Supervisory Board Commit-
tee for Legal Affairs), the Supervisory Board maintained its
previous resolution, based on the information available, that no
such claims were to be made at the present time. In this context,
it dealt with possible risks arising from the statute of limitations
and arranged for appropriate precautions to be taken. Finally,
the Supervisory Board received reports on the external certifi-
cation of selected partial areas of the compliance management
system.
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 17
In the Supervisory Board meeting held on April 29, 2020, the
Board of Management first reported on the measures taken in
connection with the covid-19 pandemic. The Supervisory Board
then approved the release of funds for a number of vehicle
projects. The agenda also included the MOVE transformation
program and the measures initiated to reduce product-related
complexity at Mercedes-Benz Cars. In addition, the Super-
visory Board dealt with the strategic alignment of the Daimler
Mobility division, focusing in particular on mobility services.
The Supervisory Board also received reports on current legal
issues. This related in particular to requests for information,
inquiries, investigations, administrative orders and proceed-
ings in connection with diesel exhaust emissions. Finally, the
meeting dealt with the resolutions required for holding a
virtual Annual Shareholders' Meeting.
During the virtual Annual Shareholders' Meeting on July 8,
2020, the candidate proposed by the Supervisory Board, Timo-
theus Höttges, was elected as a member of the Supervisory
Board representing the shareholders. In the Supervisory Board
meeting held the next day, July 9, 2020, the representatives of
the shareholders elected Dr. Bernd Pischetsrieder as a mem-
ber of the Nomination Committee as successor to Dr. Paul
Achleitner, who had stepped down from the Supervisory Board.
The Supervisory Board convened for another meeting in late
July 2020. One focus of this meeting was the ongoing electrifi-
cation of the product portfolio. In particular, the Supervisory
Board confirmed the Mercedes modular architecture, which
implements the >>electric-first policy<<. Furthermore, the Super-
visory Board discussed in detail with the Board of Management
the course of business and the results for the first half of the
year, which exceeded market expectations. The Board of Man-
agement also provided updates on urban mobility solutions
and the strategy of Daimler Trucks & Buses, which was further
enhanced in view of the transformation of the industry and
with regard to the overarching area of action of creating added
value for the customers.
Within the context of an integrity update, the Supervisory
Board received a report on the activities for the further devel-
opment of the integrity culture in the various areas of the
Group. Finally, the Supervisory Board dealt once again with
the antitrust-related proceedings and received a detailed report
on the requests for information, inquiries, investigations,
administrative orders and proceedings relating to diesel exhaust
emissions.
liquidity situation, the development of sales and procurement
markets, the overall economic situation, and developments in
the capital markets and the area of financial services. Addi-
tional topics included the further development of the product
portfolio, securing the Group's long-term competitiveness, and
the ongoing implementation of measures for safeguarding sus-
tainable and future-oriented mobility. The Supervisory Board
also dealt in detail with political developments and conflicts in
the main sales markets, the shareholder structure, the devel-
opment of the share price and the related background, and the
expected impact of strategic projects on the share price.
Appointed until December 2024
The Board of Management regularly informed the Supervisory
Board about all significant economic developments of the
Group and the divisions. It continually provided information to
it on all fundamental questions of corporate planning, including
finance, investment, sales and personnel planning, current
developments at the companies of the Group, the development
of revenue, the situation of the Company and the divisions,
and the economic and political environment, as well as on the
current status and assessment of significant legal proceed-
ings. Furthermore, the Board of Management reported to the
Supervisory Board continually on profitability and the Group's
The Supervisory Board examined whether the annual company
and consolidated financial statements, the combined manage-
ment report including the non-financial declaration (2020), and
the other financial reporting, as well as the non-financial report
(2019) for Daimler AG and the Daimler Group, were in confor-
mance with the applicable requirements.
Greater China
Appointed until December 2025
Harald Wilhelm
Finance & Controlling/Daimler Mobility
Appointed until March 2022
A | TO OUR SHAREHOLDERS | THE BOARD OF MANAGEMENT 13
Further information on the individual members of the Board of Management of Daimler AG
14
A❘ TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
"The Daimler Group is
extremely well positioned
for the future."
Dr. Manfred Bischoff,
Chairman of the Supervisory Board
of Daimler AG
A | TO OUR SHAREHOLDERS REPORT OF THE SUPERVISORY BOARD 15
Report of the Supervisory Board
Dear Shareholders,
The year 2020 was the most challenging for our Company during my period of office as Chairman
of the Supervisory Board. In addition to the challenges posed by the global covid-19 pandemic, the
transformation towards sustainable emission-free mobility with the main aspects of electrification
and digitization had to be pushed forward at full speed. In addition, expectations for growth rates
in the automotive sector weakened. At the same time, it was necessary to keep an eye on risks
from political conflicts concerning the free movement of goods. Daimler had to revise and, in some
cases, redefine the main points of its strategy. In close consultation with the Supervisory Board,
the Board of Management took timely measures to safeguard liquidity, reduce costs and restructure
the Group, without losing its focus on the technological fields of the future. We therefore have
many good reasons to be confident that our Company will emerge strengthened for the future years
as a result of the measures initiated.
Supervisory and advisory activities of the Supervisory
Board
The Supervisory Board of Daimler AG fully performed its tasks
as defined by the law, the Company's Articles of Incorporation
and its own rules of procedure once again in the year 2020.
The Supervisory Board continually advised and supervised
the Board of Management in the management of the Company
and provided support with strategically important issues
relating to the Group's further development.
In addition, it approved numerous business matters for which
its consent was required following careful reviews and consul-
tations. As well as the finance and investment planning, this
also included cooperation plans, major equity measures at
companies of the Group, and the conclusion of contracts with
particular importance for the Group. The Board of Management
informed the Supervisory Board about a large number of
further measures and business matters, and discussed them
with it intensively and in detail, such as the impact on the
Group of the covid-19 pandemic and the countermeasures taken.
Group Research and Mercedes-Benz Cars Chief Operating
Officer (COO)
Advance payments to suppliers
In a volume up to 5% of the share capital issued as of the day
of the resolution of the Annual Shareholders' Meeting, the
Board of Management is authorized, with the consent of the
Supervisory Board, to acquire treasury shares also by using
derivatives (put options, call options, forward purchases or a
combination of these instruments), whereby the term of a
derivative must not exceed 18 months and must not end later
than July 7, 2025.
21,016
16,872
3,171
13,701
Sales financing with dealers
49,590
30,627
18,963
50,400
32,387
18,013
Sales financing with customers
In millions of euros
Total
At December 31, 2019
Non-current
Current
Total
At December 31, 2020
Non-current
Current
Receivables from financial services
D.40
At December 31, 2020, receivables from financial services with
a carrying amount of €11,463 million (December 31, 2019:
€8,941 million) were pledged mostly as collateral for liabilities
from ABS transactions (see also
Note 24).
Further information on financial risks and the nature of risks is
provided in Note 33.
3,573
24,589
Finance lease contracts
11,446
195
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
103,661
-1,308
-649
52,880
-659
50,781
96,185
-1,598
-914
53,709
-684
42,476
104,969
At the beginning of the contracts, collaterals of usually at least
100% of the carrying amounts were agreed, which are backed
by the vehicles based on the underlying contracts. Over the
contract terms, the amounts of the collaterals are included in
the calculation of the risk provisioning, so the carrying
amounts of the credit-impaired contracts are primarily backed
by the underlying vehicles.
53,529
97,783
54,623
43,160
Net carrying amount
Loss allowances
Gross carrying amount
30,790
19,329
11,461
30,511
19,065
51,440
Longer overdue periods regularly lead to higher allowances.
Information on credit risks included in receivables from finan-
cial services is shown in table 7 D.43.
Credit risks
2019
2020
2019
2020
Joint ventures
Associated companies
Total comprehensive income/loss
Other comprehensive income/loss
Profit/loss from discontinued operations after taxes
Profit/loss from continuing operations after taxes
Summarized aggregated financial information (pro rata)
-11
In millions of euros
D.39
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of November 30.
The figures for the year 2019 have been adjusted due to the application of IFRS 5.
Figures for the statement of income for 2020 relate to the period of December 1, 2019 to November 30, 2020 and the figures for 2019 relate to the period of
February 1, 2019 to November 30, 2019.
1 Daimler recognizes its proportionate share of profits or losses of the YOUR NOW joint ventures with a one-month time lag.
866
544
186
-12
680
556
1,376
Summarized aggregated financial information on minor equity-method investments
D.42
-29
-90
The carrying amounts of receivables from financial services
based on modified contracts that are shown in stages 2 and 3,
amounted to €2,440 million at December 31, 2020 (December
31, 2019: €387 million). In addition, carrying amounts of
€473 million (December 31, 2019: €314 million) in connection
with contractual modifications were reclassified from stages 2
and 3 into stage 1.
At December 31, 2020, €0.4 billion of the loss allowances
relates to the increase in the allowance for credit losses recog-
nized at the Daimler Mobility segment through profit and loss
as a result of the economic development in connection with
the covid-19 pandemic. In addition, the calculation of the
allowance for credit losses considers, among other things, that
customers' current financial solvency is positively affected by
offered national programs and programs of Daimler Mobility.
The development of loss allowances for receivables from finan-
cial services due to expected credit losses is shown in table
71 D.42.
Loss allowances
In 2020, Daimler recognized a gain of €357 million (2019:
€343 million) as the difference between the additions to
receivables from finance lease contracts and the carrying
amounts of the underlying assets (especially in connection
with the delivery of vehicles to consolidated companies).
Table 7 D.41 shows the maturities of the future contractual
lease payments and the development of lease payments to the
carrying amounts of receivables from finance lease contracts.
All cash flow effects attributable to receivables from financial
services are presented within cash provided by/used for oper-
ating activities in the Consolidated Statement of Cash Flows.
Receivables from finance lease contracts consist of receiv-
ables from leasing contracts for which all substantial risks and
rewards incidental to the leasing objects are transferred to the
lessee.
Receivables from sales financing with dealers represent loans
for floor financing programs for vehicles sold by the Group's
automotive businesses to dealers or loans for assets pur-
chased by dealers from third parties, primarily, used vehicles
traded in by dealers' customers or real estate such as dealers'
showrooms.
Receivables from sales financing with customers include
receivables from credit financing for customers who purchased
their vehicle either from a dealer or directly from Daimler.
Types of receivables
86
Table 7 D.40 shows the components of receivables from
financial services.
D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
194
Further information on equity-method investments is provided
in Note 37.
Table 7 D.39 shows summarized aggregated financial informa-
tion for the other minor equity-method investments after pur-
chase price allocation and on a pro rata basis.
Other joint ventures accounted for using the equity-method
In December 2019, Mercedes-Benz AG and Zhejiang Geely Hold-
ing Group founded the joint venture smart Automobile Co., Ltd.
(smart). In the first quarter of 2020, each company contributed
CNY 2.7 billion to the equity of the joint venture. The share of
Mercedes-Benz AG essentially consisted of the contribution of
the smart brand, leading to a positive effect on earnings in the
amount of €154 million in the first quarter of 2020, recognized
in other operating income. The smart joint venture is allocated
to the Mercedes-Benz Cars & Vans segment.
-90
86
-42
-1
-13
10
14. Receivables from financial services
1,111
Development of loss allowances for receivables from financial services
due to expected credit losses
Balance at January 1, 2019
-199
-72
-179
-159
-136
-19
-4
333
241
81
11
492
228
60
204
1,086
502
195
389
(Stage 3)
(Stage 2)
(Stage 1)
credit
impaired
-450
Transfer to stage 1
72
-51
Change in remeasurement
547
277
70
200
Additions
1,308
627
219
462
Balance at December 31, 2019
impaired
6
3
Currency translation and other changes
41
-35
-6
Transfer to stage 3
-29
57
-28
Transfer to stage 2
-21
3
credit
not
Total
between three and four years
5,197
5,694
between two and three years
9,115
8,178
between one and two years
12,021
11,300
within one year
thereof due
2,711
30,807
Contractual future lease payments
2019
At December 31,
2020
In millions of euros
Development of the finance lease contracts
D.41
Change in models/risk parameters
Reversals
Utilization
Change in remeasurement
Additions
29,502
In millions of euros
2,941
1,261
Lifetime expected credit loss
12-month expected credit loss
30,334
29,942
-456
-569
Net carrying amount
Loss allowances
30,790
30,511
Gross carrying amount
between four and five years
-3,066
Unearned finance income
33,856
33,498
Gross investment
3,049
3,996
Unguaranteed residual values
416
358
later than five years
1,117
-2,987
14
3
457
10
-134
-32
-7
3
income/loss
Other comprehensive
Profit/loss from discontinued operations after taxes
-383
206
1,739
1,685
2,702
2,900
Profit/loss from continuing operations after taxes
22,900
22,681
20,177
21,774
Revenue
Information on the statement of income
In millions of euros
2019
Total comprehensive
income/loss
2,903
2,695
2,566
1,008
1,010
1,131
467
24
13,733
11,762
8,874
8,562
1,190
14,008
2020
14,550
6,434
Current liabilities
Non-current liabilities
Current assets
Non-current assets
reconciliation to equity-method carrying amounts
Information on the statement of financial position and
-382
216
1,605
1,653
6,272
2019
2020
2019
Equity interest (in %)
Stock-market price
Equity investment'
Equity result¹
Dividend payment to Daimler
At December 31, 2019
Equity interest (in %)
Stock-market price
Equity investment'
Equity result'
Dividend payment to Daimler
1 Including investor-level adjustments.
50.0
544
At December 31, 2020
875
-317
37
-280
50.0
866
-818
716
40
1,582
-778
2 The proportionate share of earnings of YOUR NOW is included in Daimler's Consolidated Financial Statements with a one-month time lag. The figures for the
equity result relate for 2020 to the period of December 1, 2019 to November 30, 2020 and for 2019 to the period of February 1, 2019 to November 30, 2019.
BBAC
The authorization to acquire treasury shares was not utilized in
the reporting period.
1,419
3,194
Total
YOUR NOW²
2020
THBV³ (HERE)
BAIC Motor²
BBAC¹
Summarized IFRS financial information on significant associated companies accounted for using the equity method
D.37
D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
192
Table 7 D.37 shows summarized IFRS financial information
after purchase price allocation for the significant associated
companies, which was the basis for equity-method accounting
in the Group's Consolidated Financial Statements.
In the year 2020, THBV implemented capital measures which
reduced the carrying amount of the investment by €177 mil-
lion.
In December 2019, THBV and HERE and other companies
signed an agreement on the basis of which 30% of the shares
in HERE are to be sold to a joint venture between Mitsubishi
Corporation and Nippon Telegraph and Telephone Corporation.
The transaction was completed on May 29, 2020 after receiv-
ing the approval of the relevant authorities and led to a gain at
THBV. The amount of €105 million attributable to Daimler is
included in the line item profit/loss on equity-method invest-
ments, net.
Others
There Holding B.V. (THBV) holds an interest in HERE Interna-
tional B.V. (HERE). HERE is one of the biggest manufacturers of
digital roadmaps for navigation systems worldwide. Future
expected high-resolution maps will be one of the fundamentals
for future autonomous driving. THBV is accounted for in the
Consolidated Financial Statements of Daimler AG as an associ-
ated company using the equity method, and is allocated to the
Mercedes-Benz Cars & Vans segment.
In the first quarter of 2020, due to a reassessment of the busi-
ness development in light of the covid-19 pandemic, the Group
recognized an impairment loss of €150 million with respect to
its investment in BAIC Motor. In the third quarter of 2020, an
additional impairment loss of €180 million was recognized. The
losses are included in the line item profit/loss on equity-
method investments, net.
BAIC Motor Corporation Ltd. (BAIC Motor) is the passenger
car division of BAIC Group, one of the leading automotive
companies in China. Directly or via subsidiaries, BAIC Motor is
engaged in the business of researching, developing, manufac-
turing, selling, marketing and servicing automotive vehicles
and related parts and components and all related services.
Due to Daimler's representation on the board of directors of
BAIC Motor and other contractual arrangements, Daimler clas-
sifies this investment as an investment in an associate, to be
accounted for using the equity method; in the segment report-
ing, the investment's carrying amount and its proportionate
share of profit or loss are presented in the reconciliation of
total segment's assets to Group assets and total segments'
EBIT to Group EBIT, respectively.
BAIC Motor
In the year 2020, BBAC carried out capital increases which
increased the carrying amount of the investment by €361 mil-
lion. Daimler plans to contribute additional equity of in total
€0.1 billion in accordance with its shareholding ratio in the
years 2021 and 2022.
In the fourth quarter of 2020, the shareholders of BBAC
approved the payout of a dividend for the 2020 financial year.
The amount of €544 million attributable to Daimler reduced
the carrying amount of the investment accordingly. The divi-
dend was paid out in the fourth quarter of 2020 and led to a
cash inflow of €546 million.
In the second quarter of 2020, the shareholders of BBAC
approved the payout of a dividend for the 2019 financial year.
The amount of €1,174 million attributable to Daimler reduced
the carrying amount of the investment accordingly. The divi-
dend was paid in the third quarter of 2020 and led to a cash
inflow of €1,151 million.
Beijing Benz Automotive Co., Ltd. (BBAC) produces and distrib-
utes Mercedes-Benz passenger cars and spare parts in China.
The investment and the proportionate share in the results of
BBAC are allocated to the Mercedes-Benz Cars & Vans segment.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Key figures on interests in joint ventures accounted for using the equity method
In millions of euros
191
THBV (HERE)
12
8,585
13,047
thereof current financial liabilities
Current liabilities
thereof non-current financial liabilities
Non-current liabilities
thereof cash and cash equivalents
Current assets
Non-current assets
reconciliation to equity-method carrying amounts
Information on the statement of financial position and
income/loss
Total comprehensive
-546
-
-114
333
income/loss
Other comprehensive
Profit/loss from discontinued operations after taxes
Profit/loss from continuing operations after taxes
Income taxes
Interest expense
Interest income
Depreciation and amortization
Equity (including non-controlling interests)
Equity (excluding non-controlling interests)
attributable to the Group
Unrealized profit (-)/loss (+) on sales to/purchases from
395
259
2
418
149
892
373
1,249
1,004
1,002
651
Revenue
-603
13
-91
-597
9
-1
-9
-6
-99
459
Carrying amount of equity-method investment
Other reconciling items including equity-method goodwill
and impairments on the investment
-637
Information on the statement of income
2019
2020
-1
Other reconciling items including equity-method goodwill
and impairments on the investment
-12
-17
-137
-215
Unrealized profit (-)/loss (+) on sales to/purchases from
475
361
756
745
-1
2,657
attributable to the Group
Equity (excluding non-controlling interests)
Equity (including non-controlling interests)
1,597
1,214
10,688
10,699
5,422
5,401
1
13,859
2,647
8,716
-397
Carrying amount of equity-method investment
YOUR NOW¹
In millions of euros
Summarized IFRS financial information on significant joint ventures accounted for using the equity method
193
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D.38
Table 7 D.38 shows summarized IFRS financial information
after purchase price allocation for the significant joint ventures
which were the basis for equity-method accounting in the
Group's Consolidated Financial Statements.
In 2020, the profit/loss on equity-method investments, net of
YOUR NOW includes an impairment loss of €92 million result-
ing from the adjustments of earnings forecasts and the realign-
ment of the YOUR NOW group. In the year 2019, the profit/loss
on equity-method investments, net also included an impair-
ment loss of €261 million, mainly resulting from the adjustment
of earnings forecasts for individual mobility services.
At the end of the year 2019, the joint ventures were merged by
way of contribution to YOUR NOW Holding GmbH (YOUR
NOW), whose shares are also equally held by Daimler Group
and BMW Group. The contribution had no effect on earnings.
YOUR NOW is allocated to the Daimler Mobility segment.
After being approved by the antitrust authorities in December
2018, the transaction was completed on January 31, 2019. The
existing services for on-demand mobility in the fields of car
sharing, ride hailing, parking, charging and the multimodal
mobility platform were combined in five joint ventures, (REACH
NOW (platform for on-demand mobility and multimodality),
CHARGE NOW (charging), FREE NOW (ride hailing), PARK NOW
(parking) and SHARE NOW (car sharing)), which are equally
held by Daimler Group and BMW Group.
In March 2018, Daimler Group and BMW Group signed an
agreement for the merger of their business units for mobility
services, with the goal of offering customers a comprehensive
mobility ecosystem that is intelligent, seamlessly connected
and available at the touch of a fingertip.
-79
YOUR NOW
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date of September 30.
3 THBV:
Daimler recognizes its proportionate share of profits or losses of BAIC Motor Corporation Ltd. (BAIC Motor) with a three-month time lag.
Figures for the statement of income relate to the period of October 1 to September 30.
Figures for the statement of income relate to the period of January 1 to December 31.
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
2 BAIC Motor:
1 BBAC:
475
361
665
331
2,519
2,431
Figures for the statement of financial position and the reconciliation to equity-method carrying amounts relate to the balance sheet date December 31.
144
-19
630
-35
-12
7
6
1
144
106
38
240
115
125
(Stage 3)
(Stage 2)
credit
impaired
impaired
not
credit
Total
Lifetime expected credit loss
Utilization
Change in remeasurement
Additions
Balance at January 1, 2019
In millions of euros
-47
-39
-60
-99
2
8
Change in remeasurement
112
86
26
Additions
243
145
98
Balance at December 31, 2019
Development of loss allowances for trade receivables due to expected credit losses
-2
-1
Currency translation and other changes
1
-1
Transfer to stage 3
13
-13
Transfer to stage 2
-
Change in models/risk parameters
Reversals
-1
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 199
D.48
Note 33.
26,444
130
D.36
21,922
19,675
products held for resale
Finished goods, parts and
4,290
3,629
Work in progress
3,010
224
29,757
manufacturing supplies
In millions of euros
2019
2020
At December 31,
Inventories
D.46
D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
198
6,712
1,286
5,426
Raw materials and
10
D.47
In millions of euros
Further information on financial risk and types of risk is pro-
vided in
Information on credit risks included in trade receivables is
shown in table 7 D.49.
Credit risks
The development of loss allowances due to expected credit
losses for trade receivables is shown in table 7 D.48.
Loss allowances
Trade receivables are receivables from contracts with custom-
ers within the scope of IFRS 15.
At December 31, 2020, €35 million of the trade receivables
mature after more than one year (December 31, 2019: €47 mil-
lion).
Trade receivables are comprised as shown in table 7 D.47.
19. Trade receivables
In addition, inventories with a carrying amount of €275 million
at December 31, 2020 (December 31, 2019: €302 million) were
pledged as collateral for liabilities from ABS transactions (see
also Note 24).
As collateral for certain vested employee benefits in Germany,
the value of company cars and demonstration cars of the
Mercedes-Benz Cars & Vans segment included in inventories is
pledged as collateral to the Daimler Pension Trust e.V. in an
amount of €909 million at December 31, 2020 (December 31,
2019: €1,083 million).
Trade receivables
The amount of write-down of inventories to net realizable value
recognized as an expense in cost of sales was €393 million in
2020 (2019: €413 million). Inventories that are expected to be
recovered or settled after more than twelve months amounted
to €977 million at December 31, 2020 (December 31, 2019:
€1,159 million) and are primarily spare parts.
At December 31,
2020
2019
3,321
18. Inventories
12,332
10,649
Net carrying amount
12,575
-243
-224
Loss allowances
10,873
Gross carrying amount
Inventories are comprised as shown in table 7 D.46.
5,445
Utilization
-9
101
2
99
past due 61 to 90 days
211
4
207
past due 31 to 60 days
1,420
13
1,407
past due 30 days and less
10,250
192
10,058
not past due
12,575
398
12,177
Gross carrying amount
thereof
At December 31, 2019
past due more than 180 days
514
past due 91 to 180 days
168
39
207
By resolution of the Annual Shareholders' Meeting on July 8,
2020, the Board of Management is again authorized, with the
consent of the Supervisory Board, until July 7, 2025 to acquire
treasury shares in a volume up to 10% of the share capital
issued as of the day of the resolution or if this is lower - of
the share capital existing at the time of the authorization being
exercised, to be used for all permissible purposes. The shares
can be used, among other things, with the exclusion of share-
holders' subscription rights, for business combinations or to
acquire companies or to be sold to third parties for cash at a
price that is not significantly lower than the stock-exchange
price of the Company's shares. The acquired shares can also be
used to fulfill obligations from issued convertible bonds and/or
bonds with warrants and to be issued to employees of the Com-
pany and employees and board members of the Company's
subsidiaries pursuant to Sections 15 et seq. of the German
Stock Corporation Act (AktG). The treasury shares can also be
canceled.
472
The authorization granted by Annual Shareholders' Meeting on
April 1, 2015 to acquire and use treasury shares expired on
March 31, 2020 without being utilized.
Treasury shares
The new authorization to issue convertible and/or warrant
bonds was not utilized in the reporting period.
In order to fulfill the conditions of the above-mentioned autho-
rization, the Annual Shareholders' Meeting on July 8, 2020
also resolved to increase the share capital conditionally by an
amount of up to €500 million (Conditional Capital 2020).
Management is authorized with the consent of the Supervi-
sory Board to exclude shareholders' subscription rights for the
bonds under certain conditions and within defined constraints.
Also by resolution of the Annual Shareholders' Meeting on July
8, 2020, the Board of Management is authorized, with the con-
sent of the Supervisory Board, until July 7, 2025 to issue con-
vertible and/or warrant bonds or a combination of these
instruments ("bonds") with a total face value of up to €10.0 bil-
lion and a maturity of no more than ten years. The Board of
Management is allowed to grant the holders of these bonds
conversion or warrant rights for new registered no-par-value
shares in Daimler AG with an allocable portion of the share
capital of up to €500 million in accordance with the details
defined in the terms and conditions of the bonds. The bonds
can be offered in exchange for cash and/or non-cash contribu-
tions, in particular for shares in other companies. The terms
and conditions of the bonds can include warranty obligations
or conversion obligations. The bonds can be issued once or
several times, wholly or in installments, or simultaneously in
various tranches as well as by subsidiaries of the Company
within the meaning of Sections 15 et seq. of the German Stock
Corporation Act (AktG). Among other things, the Board of
The authorization granted by Annual Shareholders' Meeting on
April 1, 2015, to issue convertible and/or warrant bonds was
limited until March 31, 2020. This authorization was not exer-
cised. The corresponding Conditional Capital 2015 was can-
celled by resolution of the Annual Shareholders' Meeting on
July 8, 2020.
Conditional capital
Approved Capital 2018 has not yet been utilized.
135
The Annual Shareholders' Meeting held on April 5, 2018 autho-
rized the Board of Management, with the consent of the Super-
visory Board, to increase the share capital of Daimler AG in the
period until April 4, 2023 by a total of €1.0 billion in one lump
sum or by separate partial amounts at different times by issu-
ing new, registered no-par-value shares in exchange for cash
and/or non-cash contributions (Approved Capital 2018). The
new shares are generally to be offered to the shareholders for
subscription (also by way of indirect subscription pursuant to
Section 186 Subsection 5 Sentence 1 of the German Stock
Corporation Act (AktG)). Among other things, the Board of
Management was authorized with the consent of the Supervi-
sory Board to exclude shareholders' subscription rights under
certain conditions and within defined limits.
Since January 1, 2019, there has been no change in the number
of shares outstanding/issued. The number at December 31,
2020 is 1,070 million, unchanged from December 31, 2019.
The share capital (authorized capital) is divided into no-par-
value shares. All shares are fully paid up. Each share confers
the right to one vote at the Annual Shareholders' Meeting of
Daimler AG and, if applicable, with the exception of any new
shares potentially not entitled to dividends, to an equal portion
of the profits as defined by the dividend distribution decided
upon at the Annual Shareholders' Meeting. Each share repre-
sents a proportionate amount of approximately €2.87 of the
share capital.
Share capital
See also the Consolidated Statement of Changes in Equity
71 D.05.
20. Equity
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
200
386
148
238
past due more than 180 days
Approved capital
379
212
42
At December 31, 2020
In millions of euros
Lifetime expected credit loss
Credit risks included in trade receivables
D.49
224
123
101
-18
-14
-4
Gross carrying amount
thereof
1
-1
1
Balance at December 31, 2020
Currency translation and other changes
Transfer to stage 3
Transfer to stage 2
Change in models/risk parameters
-76
-18
-47
-38
-1
Reversals
not
credit
credit
impaired
170
past due 91 to 180 days
112
1
111
past due 61 to 90 days
202
4
198
past due 31 to 60 days
985
impaired
9
past due 30 days and less
8,848
93
8,755
not past due
10,873
284
10,589
Total
(Stage 3)
(Stage 2)
976
911
-58
1,148
Gross carrying amount
thereof
At December 31, 2019
past due more than 180 days
775
775
past due 91 to 180 days
472
472
past due 61 to 90 days
336
134
97,557
202
702
129
557
16
1,434
97
696
641
past due 30 days and less
94,064
469
past due 31 to 60 days
3,853
5,558
104,969
past due 91 to 180 days
563
561
2
288
71
216
1
past due 61 to 90 days
745
104
1,854
639
past due 31 to 60 days
1,846
117
799
930
past due 30 days and less
100,872
346
3,902
96,624
not past due
2
past due more than 180 days
89,742
2,076
53
-48
-5
Transfer to stage 3
-13
62
-49
Transfer to stage 2
-16
-85
101
Currency translation and other changes
Transfer to stage 1
-572
-285
-70
-217
Reversals
-222
-171
-23
4,534
-28
Utilization
Change in models/risk parameters
97,783
-25
-53
5,308
90,399
Gross carrying amount
thereof
(Stage 3)
(Stage 2)
(Stage 1)
credit
impaired
impaired
not
credit
Total
Lifetime expected credit loss
-15
12-month expected credit loss
In millions of euros
Credit risks included in receivables from financial services
D.43
D CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
196
1,598
891
254
453
Balance at December 31, 2020
-93
At December 31, 2020
655
not past due
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 197
527
Total
At December 31, 2019
Non-current
Current
Total
At December 31, 2020
Non-current
Current
Others
Prepaid expenses
Other expected reimbursements
Reimbursements due to other tax refunds
761
Reimbursements due to income tax refunds
Other assets
D.45
4,005
6,083
3,347
2,736
6,924
4,167
2,757
1,461
2,544
3,394
In millions of euros
1,107
618
998
351
797
922
655
328
594
751
69
682
761
91
380
670
225
232
377
179
198
3,358
261
3,097
2,624
79
2,545
457
2,287
234
Current
1,311
At December 31, 2019
Non-current
Total
Total
At December 31, 2020
Non-current
Current
recognized at fair value through other comprehensive
income
Equity instruments and debt instruments
In millions of euros
When a short-term liquidity requirement is covered with
quoted securities, those securities are presented as current
assets.
Other financial assets
D.44
Other expected reimbursements predominantly relate to
recovery claims from our suppliers in connection with issued
product warranties.
Non-financial other assets are comprised as shown in table
7 D.45.
17. Other assets
Further information on other financial assets is provided in
Note 32.
At December 31, 2020, receivables with a carrying amount of
€529 million (2019: €464 million) were pledged as collateral for
liabilities (see also Note 24).
Other financial assets recognized at fair value through profit or
loss relate exclusively to derivative financial instruments which
are not used in hedge accounting.
The line item other financial assets presented in the Consoli-
dated Statement of Financial Position is comprised as shown
in table D.44.
16. Other financial assets
Further information on marketable debt securities and similar
investments is provided in
Note 32.
15. Marketable debt securities and similar
investments
The marketable debt securities and similar investments with a
carrying amount of €6,397 million (2019: €8,655 million) are
part of the Group's liquidity management and comprise finan-
cial instruments recognized at fair value through other compre-
hensive income, fair value through profit and loss or recog-
nized at amortized cost.
Other receivables and miscellaneous other financial
assets
1,311
860
860
recognized at fair value through profit or loss
27
20
7
74
27
47
at fair value through profit or loss
Other financial assets recognized
1,191
1,006
185
2,145
1,722
used in hedge accounting
Derivative financial instruments
378
378
482
482
369
369
942
942
423
In 2020 asset-backed securities (ABS) with a refinancing vol-
ume of €2.4 billion were issued in Germany. Mercedes-Benz
Bank AG itself acquired €1.1 billion of these securities. These
securities can be used as collateral for open market transac-
tions with the Deutsche Bundesbank. The collateral amounted
to €0.8 billion at December 31, 2020.
2,498
1,522
3,744
thereof current
post-employment benefits
3,066
4,902
4,248
2,563
8,708
20,924
10,327
7,764
4,964
2,726
2,404
503
10,597
Additions
3,929
1,826
449
1,560
Balance at December 31, 2019
Utilizations
thereof non-current
Total
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
proceedings
-3,772
82
Net periodic cost for other
-11
208
23. Provisions for other risks
The development of provisions for other risks is summarized
in table D.60.
Product warranties
Daimler issues various types of product warranties, under
which it generally guarantees the performance of products
delivered and services rendered for a certain period. The pro-
vision for these product warranties covers expected costs for
legal and contractual warranty claims as well as expected
costs for goodwill concessions and recall campaigns. This
also includes measures relating to Mercedes-Benz diesel
vehicles in various regions as well as recalls, in particular for
an extended recall of Takata airbags. The utilization date of
product warranties depends on the incidence of the warranty
claims and can span the entire term of the product warran-
ties. The cash outflow for non-current product warranties are
primarily expected within a period until 2023.
Personnel and social costs
Provisions for personnel and social costs primarily comprise
expected expenses of the Group for employee anniversary
bonuses, profit sharing arrangements and management bonuses
as well as early-retirement and partial-retirement plans. The
additions recorded to the provisions for profit sharing and man-
agement bonuses in the reporting year usually result in cash
outflows in the following year. The cash outflows for non-current
provisions for personnel and social costs are primarily expected
within a period until 2031.
Liability and litigation risks and regulatory proceedings
Provisions for liability and litigation risks and regulatory pro-
ceedings comprise costs for various legal proceedings, claims
and governmental investigations, which can lead in particular
to payments of compensation, punitive damages or other
costly actions. They primarily include risks from litigation and
regulatory proceedings in relation to Mercedes-Benz diesel
vehicles. The cash outflows in relation to non-current provi-
sions are primarily expected within a period until 2023.
Other
Further information on liability and litigation risks and regula-
tory proceedings is provided in Note 30
Provisions for other risks primarily comprise expected costs
for provisions for environmental protection, other taxes and
charges related to income taxes. They also include provisions
for anticipated losses on contracts and various other risks
which cannot be allocated to any other class of provision.
D.60
Provisions for other risks
In millions of euros
Personnel
Litigation
and
Product
social
risks and
regulatory
warranties
costs
Other
-1,339
Financing liabilities
-1,378
thereof non-current
4,481
3,014
3,047
574
11,116
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
209
24. Financing liabilities
The composition of financing liabilities is shown in table
71 D.61.
Information on the maturities of lease liabilities as of Decem-
ber 31, 2020 is provided in
Note 33.
9,334
Financial liabilities measured at fair value through profit or loss
relate exclusively to derivative financial instruments which are
not used in hedge accounting.
25. Other financial liabilities
The composition of other financial liabilities is shown in table
71 D.62.
26. Deferred income
The composition of deferred income is shown in table 7 D.63.
D.61
In millions of euros
Current
At December 31, 2020
Non-current
Total
At December 31, 2019
Non-current
Total
-1,198
Current
Further information on other financial liabilities is provided in
Note 32.
-254
2,137
1,624
-6,743
Reversals
-266
-163
-416
-431
-1,276
Compounding and effects from changes in discount rates
37
118
10
3
1,578
168
-160
-52
-66
-109
-387
Balance at December 31, 2020
8,476
4,638
4,625
20,450
thereof current
3,995
Currency translation and other changes
-1,023
Defined contribution pension plans
12
Expected increase in cost of living¹
0.4
1.8
1.0
1.7
2.5
3.2
1 For German plans, expected increases in cost of living may affect - depending on the design of the pension plan - the obligation to the Group's active
employees as well as to retirees and their survivors. For most non-German plans, expected increases in cost of living do not have a material impact on the
amount of the obligation.
D.57
Sensitivity analysis for the present value of defined benefit pension obligations
In millions of euros
Total
At December 31, 2020
German Non-German
Plans
Discount rates
Plans
At December 31, 2019
German Non-German
Plans
Plans
Sensitivity for discount rates
+ 0.25%
-1,611
-1,448
-163
-1,412
-1,247
-165
Sensitivity for discount rates
-0.25%
1,719
Total
1,549
Non-German
Plans
German
Plans
Calculation of the defined benefit obligations uses life expec-
tancy for the German plans based on the 2018 G Heubeck-
mortality tables. Comparable country-specific calculation
methods are used for non-German plans.
Notes/bonds
Table 7 D.56 shows the significant weighted average measure-
ment factors used to calculate pension benefit obligations.
Sensitivity analysis
An increase or decrease in the main actuarial assumptions
would affect the present value of the defined benefit pension
obligations as shown in table 7 D.57.
The calculations carried out by actuaries were done in isolation
for the evaluation parameters regarded as important. This
means that if there is a simultaneous change in several param-
eters, the individual results cannot be summed due to correla-
tion effects. With a change in the parameters, the sensitivities
shown cannot be used to derive a linear development of the
defined benefit obligation.
For the calculation of the sensitivity of life expectancy, by
means of fixed (non-age-dependent) factors for a reference
person, a life expectancy one year higher or one year lower is
arrived at.
Effect on future cash flows
Daimler currently plans to make contributions of €0.8 billion to
its pension plans for the year 2021; the final amount is usually
set in the fourth quarter of a financial year. In addition, the
Group expects to make pension benefit payments of €1.1 bil-
lion in 2021.
The weighted average duration of the defined benefit obliga-
tions is shown in table 7 D.58.
Under defined contribution pension plans, Daimler makes
defined contributions to external insurance policies or invest-
ment funds. There are fundamentally no further contractual
obligations or risks for Daimler in excess of the defined contri-
butions. The Group also pays contributions to governmental
pension schemes. In 2020, the total cost from defined contri-
bution plans amounted to €1.6 billion (2019: €1.6 billion). Of
those payments, €1.5 billion (2019: €1.5 billion) was related to
governmental pension plans.
Other post-employment benefits
Non-German
Plans
Certain foreign subsidiaries of Daimler, mainly in the United
States, provide their employees with post-employment health
care benefits with defined entitlements, which have to be
accounted for as defined benefit plans. In 2020, future contri-
butions to other post-employment benefits of one plan in the
United States were adjusted. This resulted in a gain of
€147 million, which is presented under functional costs in the
Mercedes-Benz Cars & Vans segment. Table 7 D.59 shows key
data for other post-employment benefits.
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
207
D.56
Significant factors for the calculation of pension benefit obligations
In percent
At December 31,
At December 31,
2020
2019
2020
2019
German
Plans
Significant risks in connection with commitments for other
post-employment benefits (medical care) relate to rising
healthcare costs and lower contributions to those costs from
the public sector. In addition, these plans are subject to the
usual risks for defined benefit plans, in particular the risk of
changes in discount rates.
Funded status
170
1,330
-109
-505
-405
-100
D.58
Weighted average duration of
the defined benefit obligations
In years
German plans
Non-German plans
D.59
Key data for other post-employment benefits
In millions of euros
-454
2020
17
17
16
16
2020
2019
Present value of defined benefit
obligations
1,023
1,210
Fair value of
reimbursement rights
2019
1,490
-563
83
160
Sensitivity for expected increases
in cost of living
+ 0.10%
118
102
16
113
93
20
20
Sensitivity for expected increases
in cost of living
- 1 year
-0.10%
-102
-19
-112
-93
-19
Sensitivity for life expectancy
Sensitivity for life expectancy
+ 1 year
627
522
105
546
463
-121
17,806
Other tax liabilities
76,663
106
415
1,594
1,567
3,161
1,624
1,598
3,222
210
D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D.64
Contract and refund liabilities
309
At December 31,
2020
In millions of euros
27. Contract and refund liabilities
Table 7 D.64 shows the composition of contract and refund
liabilities.
28. Other liabilities
Service and maintenance contracts
and extended warranties
6,166
6,504
Other contract liabilities
1,678
1,337
Table 71 D.65 shows the composition of other liabilities.
2019
Contract liabilities
448
331
9,864
D.63
Deferred income
In millions of euros
Current
At December 31, 2020
Non-current
At December 31, 2019
Total
Current
Non-current
Total
Deferral of sales revenue received from sales
with residual-value guarantees
117
288
848
306
565
871
Deferral of advance rental payments received
from operating lease arrangements
975
890
1,865
1,009
927
1,936
Other deferred income
560
2,112
7,844
Obligations from
Income tax liabilities
1,001
953
1,954
1,128
582
1,710
2,214
1
2,215
1,909
1,909
At December 31, 2019
Total
Miscellaneous other liabilities
27
216
183
4
187
3,404
981
4,385
3,220
586
3,806
The measurement date for the Group's defined benefit pension
obligations and plan assets is generally December 31. The
measurement date for the Group's net periodic pension cost is
generally January 1. The assumptions used to calculate the
defined benefit obligations vary according to the economic con-
ditions of the countries in which the pension plans are situated.
189
7,841
Non-current
Total
sales transactions
Other refund
liabilities
Refund liabilities
4,627
5,200
485
590
5,112
5,790
Contract and refund
liabilities
Current
12,956
thereof non-current
5,787
6,060
thereof current
7,169
7,571
D.65
Other liabilities
In millions of euros
At December 31, 2020
Current
Non-current
13,631
7,752
8,598
1,971
678
3,069
3,747
703
3,537
4,240
Loans, other financing liabilities
765
529
1,294
1,147
628
Lease liabilities
1,775
86,539
145,842
62,601
99,179
161,780
D.62
Other financial liabilities
In millions of euros
At December 31, 2019
At December 31, 2020
Current
Non-current
59,303
Total
13,932
6,911
17,806
67,819
85,625
Commercial paper
664
664
3,278
3,278
Liabilities to financial institutions
19,703
12,688
32,391
7,021
23,043
39,811
Deposits in the direct banking business
10,868
3,648
14,516
9,713
3,406
13,119
Liabilities from ABS transactions
8,819
7,748
16,567
16,768
Current
Non-current
Total
885
885
1,065
1,065
Deposits received
501
511
1,012
568
585
1,153
Other
Accrued interest expenses
2,606
2,938
2,872
279
3,151
Miscellaneous other financial liabilities
6,486
1,705
8,191
6,808
1,818
8,626
6,627
332
1,198
33
1,165
Derivative financial instruments
used in hedge accounting
115
252
367
899
287
1,186
Financial liabilities recognized at fair
value through profit or loss
26
14
40
45
7
52
Liabilities from residual value guarantees
929
820
1,749
1,138
921
2,059
Liabilities from wages and salaries
1,565
42
1,607
58,857
Measurement assumptions
2,711
206
204
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The fair value of plan assets is predominantly determined by
the situation on the capital markets. Unfavorable develop-
ments, especially of equity prices and fixed-interest securities,
could reduce that fair value. The diversification of investment
funds, the engagement of asset managers using quantitative
and qualitative analyses, and the continual monitoring of per-
formance and risk help to reduce the associated investment
risk. The Group regularly makes additional contributions to the
plan assets in order to cover future obligations from defined
benefit pension plans.
As a general principle, it is the Group's objective to design new
pension plans as defined benefit plans based on capital com-
ponents or on annual contributions, or as defined contribution
plans.
Reconciliation of the net obligation from defined benefit
pension plans
The development of the relevant factors is shown in table
71 D.53.
D.53
Present value of defined benefit pension obligations and fair value of plan assets
In millions of euros
Total
Plans
At December 31, 2020
German Non-German
Plans
Total
The obligations from defined benefit pension plans and the
pension plan assets can be subject to fluctuations over time.
This can cause the funded status to be negatively or positively
impacted. Fluctuations in the defined benefit pension obliga-
tions result at the Daimler Group in particular from changes
in financial assumptions such as discount rates and increases
in the cost of living, but also from changes in demographic
assumptions such as adjusted life expectancies. With most of
the German plans, expected long-term wage and salary
increases do not have an impact on the amount of the obligation.
German
Plans
Present value of the defined benefit obligation
at January 1
36,195
31,770
4,425
31,645
27,852
3,793
Current service cost
795
686
109
714
609
At December 31, 2019
Non-German
Plans
105
The general requirements with regard to retirement benefit
models are included in guidelines with Group-wide validity.
Accordingly, the committed benefits are intended to contribute
to additional financial security during retirement, and in the
case of death or invalidity to be capable of being planned and
fulfilled by the respective company of the Group and to have a
low-risk structure. In addition, a committee exists that approves
new pension plans and amendments to existing pension plans
as well as guidelines relating to company retirement benefits.
Non-German pension plans and pension plan assets
Significant plans exist primarily in the United States and Japan.
They comprise plans relating to final salaries as well as plans
relating to salary-based components. Most of the obligations
outside Germany from defined benefit pension plans are
funded by investment funds.
Special rules apply for the members of the Board of Manage-
ment: Daimler's RoS must be not equal to but higher than that
of the competitors in order to achieve the same target achieve-
ment as the other plan participants. For the PPSP granted in
2015 to 2020, an additional limit on target achievement was
agreed upon for the reference parameter RoS for the members
of the Board of Management. In the case of target achievement
between 195% and 200%, an additional comparison is made on
the basis of the RoS achieved in absolute terms. If the actual
RoS for the automotive business is below the strategic target
(currently 9%) in the third year of the performance period, tar-
get achievement is limited to 195%.
The Group recognizes a provision for awarding the PPSP in the
Consolidated Statement of Financial Position. Since payment
per vested phantom share depends on the quoted price of
Daimler's ordinary shares, that quoted price essentially repre-
sents the fair value of each phantom share. The proportionate
remuneration expenses from the PPSP recognized in the indi-
vidual years are measured based on the price of Daimler ordi-
nary shares and the estimated target achievement.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
203
22. Pensions and similar obligations
Table 7 D.52 shows the composition of provisions for pension
benefit plans and similar obligations.
At the Daimler Group, defined benefit pension obligations exist
as well as, to a smaller extent, defined contribution pension
obligations, specific to the various countries. In addition,
healthcare benefit obligations are recognized outside Germany.
Defined benefit pension plans
Provisions for pension obligations are made for defined com-
mitments to active and former employees of the Daimler Group
and their survivors. The defined benefit pension plans provided
by Daimler generally vary according to the economic, tax and
legal circumstances of the country concerned. Most of the
defined benefit pension plans also provide benefits in the case
of invalidity and death.
The Group's main German and non-German pension plans are
described below.
German pension plans and pension plan assets
Most employees in Germany have defined benefit pension
plans; most of the pension plans for the active workforce are
based on individual retirement benefit accounts, to which the
Company makes annual contributions. The amount of the con-
tributions for employees paid according to wage-tariff agree-
ments depends on the tariff classification in the respective
year or on their respective income, and for executives it
depends on their respective income. For the commitments to
retirement benefits made until 2011, the contributions con-
tinue to be converted into capital components and credited to
the individual pension accounts with the application of fixed
factors related to each employee's age. The conversion factors
include a fixed value increase. For the commitments to retire-
ment benefits made as of 2011, the Company guarantees at a
minimum the value of the contributions paid into a cash-bal-
ance plan. Pension payments are made either as a life annuity,
twelve annual installments, or a single lump sum.
In addition, previously concluded defined benefit plans exist
which primarily depend on employees' wage-tariff classifica-
tion upon transition into the benefit phase and which foresee a
life annuity.
As well as the employer-financed pension plans granted by
German companies, the employees of some companies are
also offered various earnings-conversion models.
Risks from defined benefit pension plans and pension plan
assets
Most of the pension obligations in Germany relating to defined
benefit pension plans are funded by investment funds. Con-
tractual trust arrangements (CTA) exist between Daimler AG as
well as some subsidiaries in Germany and the Daimler Pension
Trust e.V. The Daimler Pension Trust e.V. acts as a collateral
trust fund.
Composition of provisions for pensions
and similar obligations
In millions of euros
At December 31,
2020
2019
Provision for pension benefits
Provision for other post-employment
benefits
11,047
8,518
1,023
1,210
12,070
9,728
In 2018, Daimler AG transferred certain defined benefit obliga-
tions and plan assets of retired employees to Daimler Pen-
sionsfonds AG (pension fund). These benefits will be adminis-
trated by that non-insurance-like pension fund, which falls
under the scope of the Act on the Supervision of Insurance
Undertakings and is therefore subject to the oversight of the
Federal Financial Supervisory Agency (BaFin). Insofar as in the
future, BaFin rules that a deficit has occurred in the pension
fund, a supplementary contribution will be required from
Daimler AG.
In Germany, there are normally no statutory or regulatory mini-
mum funding requirements.
D.52
The number of phantom shares that vest of the PPSPs granted
in 2015 to 2020 is based on the relative share performance,
which measures the development of the price of a share-price
index based on a competitor group including Daimler, and the
return on sales (ROS) compared with the average RoS of a
competitor group. In addition, beginning with plan PPSP 2018,
the average RoS of the competitor group is revenue-weighted.
Interest cost
309
-52
Actuarial gains (-)/losses
3,784
3,503
281
4,193
3,631
562
༅༐ སྐྱ 88|
10
Past service cost, curtailments
and settlements
-104
-32
-104
-118
Pension benefits paid
-1,023
-821
-202
-972
-782
-190
Currency exchange-rate changes and
other changes
-275
12
-287
-118
444
5
4
135
636
479
157
Contributions by plan participants
30
25
5
52
46
6
Actuarial gains (-)/losses from changes in
demographic assumptions
-1
-50
-60
11
1
Actuarial gains (-)/losses from changes in
financial assumptions
3,830
3,494
336
4,214
3,682
532
Actuarial gains (-)/losses from
experience adjustments
10
45
In 2020, the Group adopted a Performance Phantom Share
Plan (PPSP), similar to those used in previous years, under
which eligible employees are granted phantom shares entitling
them to receive cash payments after four years. During the
four-year period between the allocation of the preliminary
phantom shares and the payout of the plan at the end of the
term, the phantom shares earn a dividend equivalent to the
amount of the actual dividend paid on ordinary Daimler shares.
The amount of cash paid to eligible employees at the end of
the holding period is based on the number of vested phantom
shares (determined over a three-year performance period)
multiplied by the quoted price of Daimler's ordinary shares
(calculated as an average price over a specified period at the
end of the four-year plan period). The vesting period is there-
fore four years. For the existing plans, the quoted price of
Daimler's ordinary shares to be used for the payout is limited
to 2.5 times the Daimler share price at the date of grant. Fur-
thermore, the payout for the members of the Board of Manage-
ment is also limited to 2.5 times the allotment value used to
determine the preliminary number of phantom shares. The limi-
tation of the payout for the members of the Board of Manage-
ment also includes the dividend equivalent.
-2.1
-70
189
124
Medium-term
component of annual
bonus of the members
of the Board
of Management
-6
-1
7
3
-113
-71
196
127
-107
202
D.51
Expenses in the Consolidated Statement of Income resulting from share-based payments of current members of the Board of Management
Ola Källenius
2020
2019
2020
Martin Daum
2019
Renata Jungo Brüngger
2020
2019
In millions of euros
PPSP
-1.5
-1.0
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-0.9
PPSP
2019
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
201
Employee share purchase plan
In the first quarter of 2020, as in the previous year pursuant to
Section 71 Subsection 1 No. 2, of the German Stock Corporation
Act (AktG) without utilizing the authorization to acquire trea-
sury shares granted by the Annual Shareholders' Meeting on
April 1, 2015, 1.1 million Daimler shares representing €3.0 mil-
lion or 0.10% of the share capital were purchased for a price of
€30 million and reissued to employees (2019: 0.8 million Daimler
shares representing €2.4 million or 0.08% of the share capital
were purchased for a price of €42 million).
Capital reserves
Capital reserves primarily comprise premiums arising on the
issue of shares as well as expenses relating to the exercise of
the up to 2014 exercisable stock option plans and the issue of
employee shares, effects from changes in ownership interests
in consolidated entities and directly attributable related trans-
action costs.
Retained earnings
Retained earnings comprise the accumulated net profits and
losses of all companies included in Daimler's Consolidated
Financial Statements, less any profits distributed. In addition,
the effects of remeasuring defined benefit plans as well as the
related deferred taxes are presented within retained earnings.
Dividend
Under the German Stock Corporation Act (AktG), the dividend
is paid out of the distributable profit reported in the annual
financial statements of Daimler AG (parent company only) in
accordance with the German Commercial Code (HGB). For the
year ended December 31, 2020, the Daimler management will
propose to the shareholders at the Annual Shareholders' Meet-
ing to pay out €1,444 million of the distributable profit of
Daimler AG as a dividend to the shareholders, equivalent to
€1.35 per no-par-value share entitled to a dividend (2019:
€963 million and €0.90 per no-par-value share entitled to a
dividend respectively).
Other reserves
Other reserves comprise accumulated unrealized gains/losses
from currency translation of the financial statements of the
consolidated foreign companies and accumulated unrealized
gains/losses on financial assets, derivative financial instru-
ments and equity-method investments.
In millions of euros
Table 7 D.02 shows the details of changes in other reserves in
other comprehensive income/loss.
At December 31, 2020, the Group has the 2017-2020 Perfor-
mance Phantom Share Plans (PPSP) outstanding. The PPSP
are cash-settled share-based payment instruments and are
measured at their respective fair values at the balance sheet
date. The PPSP are paid out at the end of the stipulated hold-
ing period; earlier, pro-rated payout is possible in the case of
beneficiaries leaving the Group only if certain defined condi-
tions are met. PPSP 2016 was paid out as planned in the first
quarter of 2020.
Moreover, 50% of the annual bonus of the members of the
Board of Management is paid out after a waiting period of one
year. The actual payout is determined by the development
of Daimler shares compared to an automobile-related index
(Auto-STOXX). The fair value of this medium-term annual
bonus, which depends on that development, is measured by
using the intrinsic value at the reporting date.
The pre-tax effects of share-based payment arrangements for
the executives of the Group and the members of the Board of
Management of Daimler AG on the Consolidated Statement of
Income and Consolidated Statement of Financial Position are
shown in table 7 D.50.
Table 7 D.51 shows expenses in the Consolidated Statement
of Income resulting from the rights of current members of the
Board of Management.
The details shown in table 7 D.51 do not represent any paid or
committed remuneration, but refer to expenses calculated
according to IFRS. Details of the remuneration of the members
of the Board of Management in 2020 can be found in the
Remuneration Report. Combined Management Report
with Non-Financial Statement
D.50
Effects of share-based payment
Provision
2020
Expense
2019
At December 31,
2020
21. Share-based payment
Performance Phantom Share Plans
-0.6
-0.8
Hubertus Troska
Harald Wilhelm²
Dr. Dieter Zetsche³
2020
2019
2020
2019
2020
2019
PPSP
-0.9
-0.8
-0.6
In millions of euros
-0.2
-0.6
-0.1
-0.6
-0.1
In millions of euros
-4.4
-0.1
2020
Bodo Uebber³
2019
PPSP
1 Appointed to the Board of Management as of May 22, 2019.
2 Appointed to the Board of Management as of April 1, 2019.
3 Appointment to the Board of Management ended on May 22, 2019, service contract benefits continued until the respective service contract expired on
December 31, 2019. Expense in 2019 also includes the complete vesting of rights granted from 2017 to 2019.
Medium-term component of the annual bonus
-0.9
-0.1
-0.1
Medium-term component of the annual bonus
-1.3
-0.1
-0.6
-0.1
-0.6
-0.1
In millions of euros
Wilfried Porth
Markus Schäfer¹
Britta Seeger
2020
2019
-0.6
2020
2020
2019
PPSP
-0.9
-0.8
-0.7
-0.4
-0.9
-0.6
Medium-term component of the annual bonus
-0.6
-0.1
-0.6
2019
-65
Medium-term component of the annual bonus
Present value of the defined benefit obligation
at December 31
21,906
3,022
24,561
21,672
2,889
Alternative investments²
376
216
160
424
254
170
Real estate
24,928
482
101
488
380
108
Other non-exchange-traded instruments
837
764
73
566
510
56
Cash and cash equivalents
2,247
381
2,133
Exchange-traded instruments
1
747
5,797
4,895
902
11,940
10,759
1,181
11,305
10,355
950
Securitized bonds
70
61
1
9
43
16
Bonds
16,748
14,811
1,937
17,161
15,293
1,868
Other exchange-traded instruments
10
3
7
59
3,991
114
83
-714
-609
-105
Past service cost,
curtailments and settlements
104
104
13
13
Net interest expense
-118
-76
-42
-109
-138
-46
Net interest income
2
2
4
4
-807
-762
-45
-835
-701
110
-134
-92
1,638
-686
Current service cost
Non-exchange-traded instruments
3,942
3,494
448
3,199
2,782
417
Fair value of plan assets
28,870
25,400
3,470
27,760
24,454
-795
3,306
D.55
Pension cost
In millions of euros
2020
2019
Total
German
Plans
Non-German
Plans
Total
German
Plans
Non-German
Plans
1 Including the shares in Renault and Nissan in the amount of €983 (in 2019: €1,188) million.
2 Alternative investments mainly comprise private equity.
4,738
1,721
6,379
467
Contributions by the employer
788
663
125
663
582
81
Contributions by plan participants
30
25
5
51
2,438
46
Settlements
-
-105
-105
Pension benefits paid
-964
-786
-178
-911
-745
-166
Currency exchange-rate changes and
other changes
5
443
1,033
1,476
39,846
35,484
1,020
4,362
36,195
31,770
4,425
Fair value of plan assets
at January 1
Interest income from plan assets
27,760
328
24,454
3,306
233
95
25,462
502
22,532
2,930
387
115
Actuarial gains/
losses (-)
1,148
800
348
1,936
1,584
352
Actual result on plan assets
-220
11
1,971
Pension cost
-11,047
-10,084
-963
-7,316
-1,202
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
205
Composition of plan assets
Plan assets are used solely to provide pension benefits and to
cover the administration costs of the plan assets. The compo-
sition of the Group's pension plan assets is shown in table
71 D.54.
Market prices are usually available for equities and bonds due
to their listing in active markets. Most of the bonds have
investment grade ratings. They include government bonds of
very good creditworthiness.
The investment strategy is reviewed regularly and adjusted if
deemed necessary. The investment strategy is determined by
Investment Committees, which are generally composed of rep-
resentatives of the Finance and Human Resources depart-
ments. The pension plan assets are generally oriented towards
the structure of the pension obligations.
The components of pension cost included in the Consolidated
Statement of Income are shown in table 7 D.55. The gain
shown in 2020 in the line past service cost results mainly from
the freeze of the defined benefit pension plan in the United
States (€105 million). It has been replaced with a defined con-
tribution pension plan. The gain is presented under functional
costs in the Mercedes-Benz Cars & Vans segment.
D.54
thereof recognized in provisions for pensions
and similar obligations
Composition of plan assets
At December 31, 2020
German Non-German
Plans
Plans
Total
German
Plans
At December 31, 2019
Non-German
Plans
In millions of euros
Equities'
Government bonds
Corporate bonds
8,170
-231
7,092
7,399
1,078
Total
83
-8,518
3,306
94
Fair value of plan assets
at December 31
28,870
25,400
3,470
27,760
24,454
83
Funded status
-10,976
-10,084
68
-3
actuarial loss due to asset ceiling
162
-8,435
-7,316
-1,119
Net defined benefit liability
-10,979
-10,084
thereof recognized in other assets
68
-892
-3
-895
68
-1,119
-8,435
-7,316
Derivative financial instruments used in hedge accounting
1,191
2,145
2,145
1,191
378
27
74
74
Other financial assets recognized at fair value through profit or loss
378
Other receivables and miscellaneous other financial assets
27
2,942
Marketable debt securities and similar investments
3,328
3,328
142,751
144,681
148,937
150,206
Financial liabilities
Financing liabilities
Trade payables
Other financial liabilities
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
369
Miscellaneous other financial liabilities
2,942
369
6,397
482
Contract and refund liabilities
18,883
6,397
8,655
8,655
Recognized at fair value through other comprehensive income
3,314
3,314
5,323
5,323
Recognized at fair value through profit or loss
2,657
2,657
2,858
2,858
Measured at cost
426
426
474
474
Other financial assets
Equity instruments and debt instruments
1,311
860
860
Recognized at fair value through other comprehensive income
942
942
482
Recognized at fair value through profit or loss
Obligations from sales transactions
For the determination of the credit risk from derivative finan-
cial instruments which are allocated to Level 2 measurement
hierarchy, portfolios managed on basis of net exposure are
applied.
144,972
Other financial assets recognized at fair value through profit or
loss include derivative financial instruments not used in hedge
accounting. These financial instruments as well as derivative
financial instruments used in hedge accounting comprise:
-
derivative currency hedging contracts; the fair values of
cross currency interest rate swaps are determined on the
basis of the discounted estimated future cash flows (taking
account of credit premiums and default risks) using market
interest rates appropriate to the remaining terms of the
financial instruments. The valuation of currency forwards is
based on market quotes of forward curves; currency options
are measured with option-pricing models using market data.
derivative interest rate hedging contracts; the fair values of
interest rate hedging instruments (e.g. interest rate swaps)
are calculated on the basis of the discounted estimated
future cash flows (taking account of credit premiums and
default risks) using market interest rates appropriate to the
remaining terms of the financial instruments.
derivative commodity hedging contracts; the fair values of
commodity hedging contracts (e.g. commodity forwards) are
determined on the basis of current reference prices with
consideration of forward premiums and discounts and
default risks.
Other financial receivables and other financial assets are car-
ried at amortized cost. Because of the predominantly short
maturities and the fundamentally lower credit risk of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
Financing liabilities
The fair values of bonds, loans, commercial paper, deposits in
the direct banking business and liabilities from ABS transac-
tions are calculated as present values of the estimated future
cash flows (taking account of credit premiums and credit
risks). Market interest rates for the appropriate terms are used
for discounting.
Trade payables
Due to the short maturities of these financial instruments, it is
assumed that their fair values are equal to the carrying
amounts.
Contract and refund liabilities
Contract and refund liabilities include obligations from sales
transactions that qualify as financial instruments.
Obligations from sales transactions should generally be
regarded as short term. Due to the short maturities of these
financial instruments, it is assumed that their fair values are
equal to their carrying amounts.
Marketable debt securities and equity instruments recognized
at fair value were measured using quoted market prices at the
end of the reporting period. If quoted market prices are not
available for these debt and equity instruments, fair value mea-
surement is based on inputs that are either directly or indi-
rectly observable in active markets. Fair values are calculated
using recognized financial valuation models such as discounted
cash-flow models or multiples.
218
Other financial liabilities
Financial liabilities recognized at fair value through profit or loss
comprise derivative financial instruments not used in hedge
accounting. For information regarding these financial instru-
ments as well as derivative financial instruments used in hedge
accounting, see the notes above under marketable debt securi-
ties and similar investments, other financial assets.
Miscellaneous other financial liabilities are carried at amortized
cost. Because of the predominantly short maturities of these
financial instruments, it is assumed that the fair values approx-
imate the carrying amounts.
Offsetting of financial instruments
The Group concludes derivative transactions in accordance
with the master netting arrangements (framework agreement)
of the International Swaps and Derivatives Association (ISDA)
and comparable national framework agreements. However,
these arrangements do not meet the criteria for netting in the
Consolidated Statement of Financial Position, as they allow
netting only in the case of future events such as default
or insolvency on the part of the Group or the counterparty.
Table 7 D.70 shows the carrying amounts of the derivative
financial instruments subject to the described arrangements
as well as the possible financial effects of netting in accor-
dance with the master netting arrangements.
Measurement hierarchy
Table D.71 provides an overview of the classification into
measurement hierarchies of financial assets and liabilities
recognized at fair value (according to IFRS 13).
At the end of each reporting period, Daimler reviews the
necessity of reclassification between the measurement hierar-
chies.
Table 7 D.72 shows into which measurement hierarchies
(according to IFRS 13) the fair values of the financial assets and
liabilities are classified which are not recognized at fair value in
the Consolidated Statement of Financial Position.
D.70
Disclosure for recognized financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
18,883
In millions of euros
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
142,095
12,378
Equity Instruments are recognized at fair value through other
comprehensive income or at fair value through profit or loss.
Equity instruments recognized through other comprehensive
income are included in table 7 D.69 and comprise on the one
hand the part of the investments in Aston Martin Lagonda
Global Holdings plc, which is recognized at fair value through
other comprehensive income, and on the other hand the
investments in Farasis Energy (Ganzhou) Co. Ltd. and BAIC
BluePark New Energy Technology Co. Ltd. The remaining
investments recognized at fair value through other comprehen-
sive income comprise further investments not material on an
individual basis. Daimler does not generally intend to sell its
equity instruments which are presented at December 31,
2020.
Marketable debt securities and similar investments, other
financial assets
157,540
159,288
12,378
12,707
12,707
40
40
52
52
367
367
1,186
1,186
8,065
Marketable debt securities are recognized at fair value through
other comprehensive income or at fair value through profit or
loss. Similar investments are measured at amortized cost and
are not included in the measurement hierarchy, as their carry-
ing amounts are a reasonable approximation of fair value due
to the short terms of these financial instruments and the fun-
damentally lower credit risk.
8,065
8,491
4,627
167,572
4,627
170,449
5,200
5,200
185,176
186,924
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
217
Receivables from financial services
The fair values of receivables from financial services with vari-
able interest rates are estimated to be equal to the respective
carrying amounts, because the agreed upon interest rates and
those available in the market do not significantly differ. The fair
values of receivables from financial services with fixed interest
rates are determined on the basis of discounted expected
future cash flows.
Discounting is based on the current interest rates at which
similar loans with identical terms could have been obtained at
December 31, 2020 and December 31, 2019.
Trade receivables and cash and cash equivalents
Due to the short terms of these financial instruments and the
fundamentally lower credit risk, it is assumed that their fair val-
ues are equal to the carrying amounts.
8,491
23,048
The decrease in provisions in comparison to the prior year
period was significantly related to prior year effects that pri-
marily resulted from provisions for warranties and customer
goodwill obligations as well as provisions for litigation risks and
regulatory proceedings. The increase of the provisions in the
prior year period related to ongoing governmental and legal
proceedings and measures taken with regard to Mercedes-
Benz diesel vehicles, as well as recalls of vehicles especially
related to Takata airbags. In addition, the other provisions led
to an increase especially due to the review and prioritization
of the product portfolio at the Mercedes-Benz Vans segment.
The increase of the miscellaneous other assets and liabilities in
comparison to the prior year period was highly affected by the
worldwide consequences of the covid-19 pandemic. Positive
effects resulted from tax rebates and liabilities in connection
with VAT as well as liabilities related to employees which were
partially offset by negative effects in connection with contract
liabilities.
12,332
2019
-158
-725
179
337
1,783
1,202
25
94
25
Changes in liabilities arising from financing activities
2020
2019
In millions of euros
2020
Cash flows
9,404
Changes in foreign exchange rates
-7,023
2,130
Fair value changes
-584
157
Other changes
997
5,310
Cash used for financing activities
Cash used for financing activities includes cash flows from
hedging the currency risks of financial liabilities. In 2020, cash
used for financing activities included payments for the reduc-
tion of outstanding leasing liabilities of €729 million (2019:
€701 million).
Table 7 D.68 includes changes in liabilities arising from financ-
ing activities, divided into cash and non-cash components. The
decrease in other changes in comparison to the prior year pri-
marily resulted from the initial application of lessee accounting
according to IFRS 16 in the prior year.
212
-9,503
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D.68
Interest received
Other financial assets¹
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
211
29. Consolidated Statement of Cash Flows
Calculation of funds
At December 31, 2020, cash and cash equivalents included
restricted funds of €133 million (2019: €64 million). The
restricted funds primarily relate to subsidiaries where
exchange controls apply so that the Group has restricted
access to the funds.
Cash provided by operating activities
Changes in other operating assets and liabilities are shown in
table 7 D.66.
Table 71 D.67 shows cash flows included in cash provided by
operating activities. In the prior year period the cash effect of a
carried out off-balance-sheet ABS transaction was shown in
the cash flow provided by operating activities. The transaction
resulted in a cash inflow of €0.9 billion.
The line item other non-cash expense and income within the
reconciliation of profit before income taxes to cash provided by
operating activities in the reporting year primarily comprised
the Group's share in the profit/loss of companies accounted for
using the equity method as well as an impairment loss with
respect to its investment in BAIC Motor due to a reassessment
of the business development in light of the covid-19 pandemic.
In the prior year, the line item primarily comprised the Group's
share in the profit/loss of companies accounted for using the
equity method and effects due to the review and prioritization
of the product portfolio at the Mercedes-Benz Vans segment.
D.66
Changes in other operating assets and liabilities
2020
2019
Dividends received from
equity-method investments
Dividends received from other
shareholdings
In millions of euros
Financial instruments
-323
5,217
-31
104
Miscellaneous other assets and liabilities
1,007
320
653
5,641
D.67
Cash flows included in cash provided by operating activities
In millions of euros
Interest paid
Provisions
23,048
30. Legal proceedings
Diesel emission behavior: governmental proceedings
Contingent liabilities
At December 31, 2020, the best estimate for obligations from
contingent liabilities was €2,832 million (2019: €1,600 mil-
lion). The increase in contingent liabilities is related to the legal
proceedings described in Note 30.
Other financial obligations
At December 31, 2020, other financial obligations exist from
the acquisition of intangible assets, property, plant and
equipment and lease property of €3,698 million (2019:
€4,613 million).
In addition, the Group had issued irrevocable loan commit-
ments at December 31, 2020. These loan commitments had
not been utilized as of that date. Further information with
respect to these commitments is provided in
Note 33.
216
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
32. Financial instruments
Carrying amounts and fair values of financial instruments
Table 7 D.69 shows the carrying amounts and fair values of
the respective classes of the Group's financial instruments.
The fair value of a financial instrument is the price that would
be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the mea-
surement date. Given the varying influencing factors, the
reported fair values can only be viewed as indicators of the
prices that may actually be achieved on the market.
The fair values of financial instruments were calculated on the
basis of market information available on the balance sheet
date. The following methods and premises were used:
D.69
31. Contingent liabilities and other financial
obligations
Carrying amounts and fair values of financial instruments
At December 31, 2020
Carrying amount
At December 31, 2019
Fair value Carrying amount
Fair value
Financial assets
Receivables from financial services
Trade receivables
Cash and cash equivalents
96,185
98,115
103,661
104,930
10,649
10,649
12,332
In millions of euros
Daimler AG and its subsidiaries are confronted with various
legal proceedings, claims as well as governmental investiga-
tions and orders (legal proceedings) on a large number of top-
ics, including vehicle safety, emissions, fuel economy, financial
services, dealer, supplier and other contractual relationships,
intellectual property rights (including but not limited to patent
infringement actions), warranty claims, environmental matters,
antitrust matters (including actions for damages) as well as
investor litigation. Product-related litigation involves claims
alleging faults in vehicles. Some of these claims are asserted
by way of class actions. If the outcome of such legal proceed-
ings is detrimental to Daimler or such legal proceedings are
settled, the Group may be required to pay substantial compen-
satory and punitive damages or to undertake service actions,
recall campaigns, monetary penalties or other costly actions.
Legal proceedings and related settlements may have an impact
on the Group's reputation.
The Group recognizes provisions in connection with pending or
threatened proceedings to the extent a loss is probable and
can be reasonably estimated. Such provisions are recognized
in the Group's consolidated financial statements and are based
on estimates. If quantifiable, contingent liabilities in connec-
tion with legal proceedings are disclosed in the Group's consol-
idated financial statements. Risks resulting from legal proceed-
ings sometimes cannot be assessed reliably or only to a limited
extent. Consequently, provisions recognized for some legal
proceedings may turn out to be insufficient once such pro-
ceedings have ended. The Group may also become liable for
payments in legal proceedings for which no provisions were
recognized and/or contingent liabilities were disclosed. Uncer-
tainty exists with regard to the amounts or due dates of possi-
ble cash outflows. Although the final result of any such pro-
ceedings could materially affect Daimler's operating results
and cash flows for a particular reporting period, Daimler
believes that it should not exert a sustained influence on the
Group's financial position.
As already reported, class actions in connection with Takata
airbags are pending in Canada, the United States and Israel,
and a new collective action lawsuit was recently filed in Argen-
tina. The lawsuits are based on the allegation that, along with
Takata entities and many other companies that sold vehicles
equipped with Takata airbag inflators, Daimler entities were
allegedly negligent in selling such vehicles, purportedly not
recalling them quickly enough, and failing to provide an ade-
quate replacement airbag inflator. In detail: In August 2016,
Mercedes-Benz Canada (MB Canada) was added as a defen-
dant to a putative nationwide class action that remains pend-
ing in Ontario Superior Court. In addition, Daimler AG and
MBUSA were named as defendants along with Takata compa-
nies in June 2017, in a US nationwide class action, which was
filed in New Jersey Federal Court. In the third quarter of 2017,
such lawsuit was transferred to federal court in the Southern
District of Florida for consolidation with other multidistrict liti-
gation proceedings. Further class action lawsuits in the USA
were integrated into the multiple district proceedings. One of
the multidistrict litigation complaints also asserts claims by
automotive recyclers who allege injury because they are not
able to re-sell salvaged airbag inflators that are subject to the
Takata recall. In February 2019, Daimler AG and its non-subsid-
iary Israeli distributor (Colmobil) were named as defendants in
an Israel-wide class action alleging inadequacy of Takata recall
efforts in Israel and that action remains pending. In September
2020, Mercedes-Benz Argentina S.A. was named as a defen-
dant in an Argentine class action alleging inadequacy of Takata
recall efforts in Argentina as well as a failure to warn consum-
ers about a potential defect. Daimler AG continues to regard all
these lawsuits brought with regard to Mercedes-Benz vehicles
as being without merit, and the Daimler Group affiliates
respectively affected will further defend themselves against
the claims. Contingent liabilities were disclosed to a low extent
for this topic.
As already reported, several authorities and institutions world-
wide were, and still are, active in the form of inquiries, investi-
gations, procedures and/or orders. These activities particularly
relate to test results, the emission control systems used in
Mercedes-Benz diesel vehicles and/or Daimler's interaction
with the relevant authorities as well as related legal issues and
implications, including, but not limited to, under applicable
environmental, criminal and antitrust laws.
In the United States, Daimler AG and Mercedes-Benz USA, LLC
(MBUSA) reached agreements in the third quarter of 2020 with
various authorities to settle civil and environmental claims
regarding emission control systems of certain diesel vehicles.
The involved US authorities are the environmental agencies
Environmental Protection Agency (»EPA«) and California Air
Resources Board (»>CARB«), the Environmental and Natural
Resources Division of the U.S. Department of Justice (>>DOJ«<),
the California Attorney General's Office as well as the U.S.
Customs and Border Protection (»CBP<<).
The authorities take the position that Daimler failed to disclose
Auxiliary Emission Control Devices (AECDs) in certain of its US
diesel vehicles and that several of these AECDs are illegal
defeat devices. As part of these settlements, Daimler denies
the allegations by the authorities and does not admit liability,
but has agreed to, among other things, pay civil penalties, con-
duct an emission modification program for affected vehicles,
provide extended warranties, undertake a nationwide mitiga-
tion project, take certain corporate compliance measures and
make other payments. The company has cooperated fully with
the US authorities. The settlements are subject to final court
approval. Upon approval, they will be final and effective.
Daimler expects costs of the settlements with the US authori-
ties of approximately USD 1.5 billion. The estimated cost for
the US consumer class action mentioned below amounts to
around USD 700 million. In addition, Daimler estimates further
expenses of a mid three-digit-million Euro amount to fulfill
requirements of these settlements.
As already reported, in April 2016, the DOJ requested that
Daimler conduct an internal investigation. While Daimler has
conducted such internal investigation as part of DOJ's investi-
gation, DOJ's investigation is ongoing. In Canada, the Canadian
environmental regulator Environment and Climate Change Can-
ada (»ECCC) is conducting an investigation in connection with
Diesel exhaust emissions. Daimler continues to cooperate with
the investigating authorities.
In Germany, the Stuttgart district attorney's office is conduct-
ing criminal investigation proceedings against Daimler employ-
ees on the suspicion of fraud and criminal advertising. In Feb-
ruary 2019, the Stuttgart district attorney's office also initiated
a formal investigation proceeding against Daimler AG with
respect to an administrative offense. In September 2019, it
issued a fine notice against Daimler based on a negligent viola-
tion of supervisory duties in the amount of €870 million which
has become legally binding, thereby concluding the administra-
tive offense proceedings against Daimler.
Since 2018, the German Federal Motor Transport Authority
("KBA") has repeatedly issued subsequent auxiliary provisions
for the EC type approvals of certain Mercedes-Benz diesel
vehicles, and has ordered mandatory recalls as well as, in
some cases, stops of the first registration. In each of those
cases, it held that certain calibrations of specified functional-
ities in certain Mercedes-Benz diesel vehicles are to be quali-
fied as impermissible defeat devices. Daimler has a contrary
legal opinion on this question. Since 2018, however, it has (in
view of KBA's interpretation of the law as a precautionary mea-
sure) implemented a temporary delivery and registration stop
with respect to certain models, also covering the used car,
leasing and financing businesses, and is constantly reviewing
whether it can lift this delivery and registration stop in whole
or in part. Daimler has filed timely objections against the KBA's
administrative orders mentioned above. In early 2021, the KBA
issued objection orders (>>Widerspruchsbescheide«) in certain
of the proceedings not following the arguments brought for-
ward by Daimler. Since Daimler still does have a different
understanding of the relevant legal provisions, it currently ana-
lyzes whether the controversial questions at issue should be
clarified in a court of law. Irrespective of such objections and
possibly following lawsuits, Daimler continues to cooperate
fully with the KBA. The new calibrations requested by KBA are
being processed, and for a substantial proportion of the vehi-
cles, the relevant software has already been approved by KBA;
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
213
the related recalls have insofar been initiated. It cannot be
ruled out that under certain circumstances, software updates
may have to be reworked, or further delivery and registration
stops may be ordered or resolved by the Company as a precau-
tionary measure, also with regard to the used car, leasing and
financing businesses. In the course of its regular market super-
vision, the KBA is routinely conducting further reviews of
Mercedes-Benz vehicles and is asking questions about techni-
cal elements of the vehicles. In addition, Daimler continues to
be in a dialogue with the German Ministry for Transport and
Digital Infrastructure (BMVI) to conclude the analysis of the
diesel-related emissions matter and to further the update of
affected customer vehicles. In light of the aforementioned
administrative orders issued by the KBA, and continued discus-
sions with the KBA and the BMVI, it cannot be ruled out com-
pletely that additional administrative orders may be issued in
the course of the ongoing and/or further investigations. Since
September 1, 2020, this also applies to other responsible
authorities of other Member States and the European Commis-
sion which conduct market surveillance under the new Euro-
pean Type Approval Regulation and can take measures upon
assumed non-compliance, irrespective of the place of the origi-
nal type approval.
In the course of its formal investigation into possible collusion
on clean emission technology, the European Commission sent
a statement of objections to Daimler and other automobile
manufacturers in April 2019. In this context, Daimler filed an
application for immunity from fines (leniency application) with
the European Commission some time ago.
In addition to the abovementioned authorities, national cartel
authorities and other authorities of various foreign States, the
South Korean Ministry of Environment, the South Korean com-
petition authority (Korea Fair Trade Commission) and the Seoul
public prosecutor's office (South Korea) are conducting various
investigations and/or procedures in connection with Diesel
exhaust emissions.
Daimler continues to fully cooperate with the authorities and
institutions.
Diesel emission behavior: consumer actions and other
lawsuits in the United States, Canada, Germany and other
States
Since the beginning of 2016, several consumer class actions in
U.S. federal district courts have been pending in the U.S.,
which have been consolidated into a consolidated class action
against Daimler AG and MBUSA before the US District Court
for New Jersey. In the class action, plaintiffs alleged that
Daimler AG and MBUSA used devices that impermissibly
impair the effectiveness of emission control systems in reduc-
ing nitrogen-oxide (NOx) emissions and which cause excessive
emissions from vehicles with diesel engines. In addition, plain-
tiffs alleged that consumers were deliberately deceived in con-
nection with the advertising of Mercedes-Benz diesel vehicles.
Accounting estimates and management judgments relat-
ing to all legal proceedings
In the third quarter of 2020, Daimler AG and MBUSA reached a
settlement with plaintiffs' counsel of this consumer class
action. As part of the settlement, Daimler AG and MBUSA deny
the material factual allegations and legal claims asserted by
the class action plaintiffs, but have agreed to provide pay-
ments to certain current and former diesel vehicle owners and
lessees. The estimated cost of the class action settlement is
approximately USD 700 million. Daimler expects costs of the
settlements with the US authorities mentioned above in the
amount of approximately USD 1.5 billion. In addition, Daimler
estimates further expenses of a mid three-digit-million Euro
amount to fulfill requirements of these settlements. The settle-
ment with the US consumer class action plaintiffs is still sub-
ject to final court approval.
In Germany, a large number of customers of diesel vehicles
have filed lawsuits for damages or rescission of sales con-
tracts. They assert that the vehicles contained inadmissible
defeat devices and/or showed impermissibly high emission or
consumption values. They refer to, in particular, the German
Federal Motor Transport Authority's recall orders (see above).
Given the current development of case numbers, we expect a
continued high number of lawsuits being filed in this respect.
214
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Furthermore, a class action against Daimler AG and other
Group companies was filed in the Netherlands on June 23,
2020. The class action makes allegations comparable to the
aforementioned US and Canadian class actions relating to
all Euro 5 and 6 diesel vehicles sold in the EU between 2009
and 2019. The plaintiff, a foundation under the laws of the
Netherlands, is representing Dutch claimants and seeks certi-
fication of an opt-out Netherlands class (Dutch claimants are
participating in the class action by law). In the course of the
proceedings, other claimants who bought such vehicles in the
EU market have the option to declare participation in the class
action (opt-in). Furthermore, the plaintiff is seeking declara-
tions of law concerning the customers' entitlement to nullify
or rescind their vehicle purchase contracts, to demand
replacement of their vehicle and/or to demand damages. After
the extension of the deadline granted by court, two further
foundations filed statements of claim in court on December
30, 2020. The court has now to determine the lead plaintiff.
Daimler AG and the respective other affected companies of the
Group regard the lawsuits set out before as being without
merit and will - except for the US consumer class action set-
tlement defend against the claims.
In Germany, a multitude of lawsuits by investors alleging the
violation of disclosure requirements is pending against Daimler
AG. In addition, some investors have raised out-of-court claims
for damages. The investors contend that Daimler AG did not
immediately disclose inside information in connection with the
emission behavior of its diesel vehicles and that it had made
false and misleading public statements. They further claim that
the purchase price of the financial instruments acquired by
them (in particular Daimler shares) would have been lower if
Daimler AG had complied with its disclosure duties. Daimler
AG regards these allegations and claims as being without merit
and will defend itself against them. In this context, both inves-
tors as well as Daimler AG have filed motions to initiate model
proceedings in accordance with the Act on Model Proceedings
in Capital Markets Disputes (KapMuG). On January 14, 2021,
the Stuttgart Regional Court issued an order for reference to
commence such model case proceedings before the Stuttgart
Higher Regional Court. Daimler AG will continue to defend
against the investors' allegations also in these model case pro-
ceedings.
Accounting assessment of the legal proceedings in con-
nection with diesel emission behavior
With respect to the legal proceedings described in the two pre-
ceding chapters, in accordance with IAS 37.92 no further infor-
mation is disclosed with respect to whether, or to what extent,
provisions have been recognized and/or contingent liabilities
have been disclosed, so as not to prejudice Daimler's position.
For recognized provisions, this does not apply to the extent a
settlement has been reached or a proceeding has been con-
cluded. A contingent liability from the class actions in the Neth-
erlands cannot currently be measured.
Antitrust law proceedings (including actions for damages)
Starting on July 25, 2017, a number of class actions were filed
in the United States and Canada against Daimler AG and other
manufacturers of automobiles as well as various of their North
American subsidiaries. Plaintiffs allege to have suffered dam-
ages because defendants engaged in anticompetitive behavior
relating to vehicle technology, costs, suppliers, markets, and
other competitive attributes, including diesel emissions control
technology, since the 1990s. On October 4, 2017, all pending
US class actions were centralized in one proceeding by the
Judicial Panel on multidistrict litigation and transferred to the
U.S. District Court for the Northern District of California. On
March 15, 2018, plaintiffs in the US antitrust class action
amended and consolidated their complaints into two plead-
ings, one on behalf of consumers and the other on behalf of
dealers. On June 17, 2019, the court granted motions to dismiss
in the consolidated US class action proceedings, albeit with
leave to amend, and on August 15, 2019, the plaintiffs filed
amended complaints making similar allegations. On March 31,
2020, the court granted motions to dismiss these first
amended US class action complaints, albeit with leave to
amend. On June 26, 2020, the plaintiffs filed second amended
complaints. On October 23, 2020, the court granted motions
to dismiss these second amended complaints in their entirety,
with prejudice, ending the litigation in the US district court.
Plaintiffs have appealed the dismissal. Daimler AG and MBUSA
regard the US and Canadian lawsuits as being without merit,
and will defend against the claims. This contingent liability can-
not currently be measured.
In late October 2017, the European Commission conducted
preannounced inspections with Daimler in Stuttgart (as well as
further inspections with other manufacturers). In this context,
Daimler AG has filed a leniency application with the European
Commission some time ago. In the third quarter of 2018, the
European Commission opened a formal investigation into pos-
sible collusion on clean emission technology. In the course of
such investigation, the European Commission, in April 2019,
sent a statement of objections to Daimler and other automo-
bile manufacturers to which Daimler responded in good time.
At present, Daimler does not expect this issue to have any
material impact on the Group's profitability, cash flow and
financial situation.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
215
Following the settlement decision by the European Commis-
sion adopted on July 19, 2016, concluding the trucks antitrust
proceedings, Daimler AG and Daimler Truck AG are facing cus-
tomers' claims for damages to a considerable degree. Respec-
tive legal actions, class actions and other forms of legal
redress have been initiated in various states in and outside of
Europe and should further be expected. Daimler is taking
appropriate legal remedies to defend itself. In accordance with
IAS 37.92, no further information is disclosed with respect to
whether, or to what extent, provisions have been recognized
and/or contingent liabilities have been disclosed, so as not to
prejudice Daimler's position.
Class-action lawsuits Takata airbag inflators
In a separate lawsuit filed by the State of Arizona in January
2019, the plaintiff claims that, amongst others, Daimler AG and
MBUSA deliberately deceived consumers in connection with
advertising Mercedes-Benz diesel vehicles. Consumer class
actions containing similar allegations were filed against
Daimler AG and further Group companies in Canada in April
2016 and in the United Kingdom since May 2020 as well as
against Daimler AG in Israel in February 2019. In a separate
lawsuit filed by the Environmental Protection Commission of
Hillsborough County, Florida in September 2020, the plaintiff
claims that, amongst others, Daimler AG and MBUSA violated
municipal regulations prohibiting vehicle tampering and other
conduct by using alleged devices claimed to impair the effec-
tiveness of emissions control systems.
Other financial liabilities²
1,311
Gross and net
48,991
58,125
58,125
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e., as prices) or indirectly (i.e., derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
220
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D.73
Carrying amounts of financial instruments
according to measurement categories
In millions of euros
Assets
At December 31,
2020
2019
Financial assets measured
at (amortized) cost
103,308
Receivables from financial services¹
66,243
108,344
73,327
Trade
receivables
10,649
12,332
Cash and
cash equivalents
23,048
18,883
Marketable debt securities
and similar investments
426
48,991
financing liabilities
thereof other
13,008
Fair values of
financial assets
measured at cost
Receivables from
financial services
98,115
98,115
104,930
104,930
Fair values of
financial liabilities
measured at cost
Financing liabilities
thereof bonds
Other receivables and miscellaneous other
144,972 69,468
79,254 69,083
159,288
66,203
93,085
10,171
87,139
65,187
21,952
thereof liabilities from
ABS transactions
16,727
385
16,342
14,024
1,016
75,504
financial assets
2,942
3,328
12,378
142,095
12,707
157,540
Miscellaneous other financial
liabilities4
Obligations from sales transactions
7,966
4,627
8,384
5,200
Financial liabilities recognized at fair value
through profit or loss²
40
52
1 This does not include lease receivables of €29,942 million (2019: €30,334
million) as these are not assigned to a measurement
category.
2 Financial instruments classified as held for trading purposes. These figures
comprise financial instruments that are not used in hedge
accounting.
3 This does not include liabilities from lease transactions of €3,747 million
(2019: €4,240 million) as these are not assigned to a measurement
category.
Financing liabilities³
4 This does not include liabilities from financial guarantees of €99 million
(2019: €107 million) as these are not assigned to a measurement
category.
The carrying amounts of financial instruments according to
measurement categories are shown in table 7 D.73.
The table 7 D.73 does not include the carrying amounts of
derivative financial instruments used in hedge accounting as
these financial instruments are not assigned to a measurement
category.
Net gains or losses
Table 7 D.74 shows the net gains/losses on financial instru-
ments included in the Consolidated Statement of Income
(excluding derivative financial instruments used in hedge
accounting).
Net gains/losses on equity and debt instruments recognized at
fair value through profit or loss primarily comprise gains and
losses attributable to changes in the fair values of these instru-
ments.
Net gains/losses on other financial assets and liabilities recog-
nized at fair value through profit or loss comprise gains and
losses attributable to changes in their fair values.
Net gains/losses on equity instruments recognized at fair
value through other comprehensive income primarily comprise
dividend payments.
Net gains/losses on other financial assets recognized at fair
value through other comprehensive income are primarily
attributable to the effects of currency translation.
Net gains/losses on financial assets measured at (amortized)
cost (excluding the interest income/expense shown below)
primarily comprise impairment losses (including reversals of
impairment losses) of €824 million (2019: €551 million) that
are charged to cost of sales, selling expenses and other finan-
cial income/expense, net. Foreign currency gains and losses
are also included.
Net gains/losses on financial liabilities measured at (amor-
tized) cost (excluding the interest income/expense shown
below) primarily comprise the effects of currency translation.
Total interest income and total interest expense
Total interest income and total interest expense for financial
assets or financial liabilities that are not recognized at fair
value through profit or loss are shown in table 7 D.75.
See Note 1 for qualitative descriptions of accounting for
and presentation of financial instruments (including derivative
financial instruments).
At December 31, 2020
Measurement categories
At December 31, 2019
Level 22 Level 33
payables
183,831
Financial assets recognized at fair value
through other comprehensive income
4,256
5,805
3,314
5,323
942
482
Marketable debt securities
and similar investments
474
Equity and debt instruments
Financial assets recognized
at fair value through profit or loss
Trade
3,100
Marketable debt securities
and similar investments
2,657
Equity and debt instruments
369
378
Other financial assets recognized
at fair value through profit or loss²
74
27
Liabilities
Financial liabilities
measured at (amortized) cost
167,066
3,263
Level 11
2,858
Level 33
In millions of euros
Total
Level 11
At December 31, 2020
Level 22
Level 33
Total
Level 11
At December 31, 2019
Level 22 Level 33
Financial assets recognized at fair value
Marketable debt securities
5,971
4,243
1,728
Measurement hierarchy of financial assets and liabilities
recognized at fair value
8,181
2,927
Recognized at fair value through other
comprehensive income
3,314
1,590
1,724
5,323
2,396
2,927
Recognized at fair value through profit or loss
2,657
2,653
4
2,858
5,254
2,858
D.71
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
amounts of
financial
instruments
Total
in the
Consolidated Amounts subject
Statement of
Financial
Position
Gross and
net amounts
of financial
instruments
At December 31, 2019
in the
Consolidated
to a master
Statement of
netting
arrangement
219
Net
amounts
master netting
Amounts
subject to a
arrangement
Net
amounts
2,219
407
-270
-270
1,949
137
1,238
-542
-542
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge
accounting and financial assets recognized at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge
accounting and financial liabilities recognized at fair value through profit or loss (see Note 25).
676
696
Financial
Position
Equity instruments and debt instruments
1,218
736
1,191
1,191
9,501
4,979
4,222
300
10,259
5,529
4,415
315
Financial liabilities recognized at fair value
Financial liabilities recognized at fair value
through profit or loss
40
40
2,145
52
367 - 367 - 1,186 - 1,186
407
407
1,238
1,238
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on active markets either directly (i.e., as prices) or indirectly (i.e., derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
D.72
Measurement hierarchy of financial assets and liabilities
not recognized at fair value
In millions of euros
Total
1,311
Level 11
At December 31, 2020
Level 22
52
2,145
Derivative financial instruments used in hedge
accounting
27
299
860
Derivative financial instruments used in hedge
accounting
275
270
315
Recognized at fair value through other
comprehensive income
942
156
121
482
205
158
119
Recognized at fair value through profit or loss
665
71
73
1
369
74
through profit or loss
Other financial assets recognized at fair value
276
196
112
70
378
178
27
120
Line item in the
2020
in which the ineffectiveness and the
reclassifications are included
Statement of Income
Hedge ineffectiveness recognized in the
Statement of Income
Gains and losses recognized in other
comprehensive income¹
In millions of euros
-271
D.80
2 De-designation and re-designation of hedging instruments at January 1, 2019, differentiated for Mercedes-Benz Cars & Vans and Daimler Trucks & Buses.
Further information is provided in the section related to exchange rate risk in Note 33.
-270
-3
-17
-401
Reclassification of hedge effectiveness from other
comprehensive income to the Statement of Income
1 Fair value changes of the hedged items used for recognizing hedge ineffectiveness.
-5
Gains and losses on cash flow hedges and hedges of net investments in foreign operations
For hedges for which the hedged future cash
flows are no longer expected to occur
Interest rate risk
transferred because the hedged
income/
sales expense, net
Cost of
sales
-270
Revenues
Cost of
financial
Other
Commodity risk
Foreign currency risk
item has affected profit or loss²
transferred because the hedged
For hedges that have been
For hedges for which the hedged future cash
flows are no longer expected to occur
Reclassification of hedge effectiveness from other
comprehensive income to the Statement of Income
Hedge ineffectiveness recognized in the
Statement of Income
comprehensive income¹
Gains and losses recognized in other
2019
item has affected profit or loss²
For hedges that have been
in foreign operations
Continuing hedges
-270
Foreign
currency
2019
2020
Discontinued/terminated hedges
in the automotive business²
Thereof hedges of currency risks
financial instruments (before taxes)
Balance of the reserves for derivative
in foreign operations
Thereof hedges of net investments
Fair value changes of the hedged items'
In millions of euros
Cash flow hedges and hedges of net investments in foreign operations
D.79
223
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
-3
Interest
expense
Interest rate risk
2019
risk
Thereof hedges of net investments
Interest
rate risk
Foreign
currency
-28
53
-78
-745
38
-124
491
1
-115
204
1,533
-30
-72
-1,192
risk
Commodity
Interest
rate risk
risk
risk
Commodity
Cost of
sales
Commodity price risk - inventory purchases
4
186
-546
Interest rate risk
Foreign currency risk
Changes in fair values (before taxes)
Balance at December 31, 2019
and reclassifications
Taxes on changes in fair values
Other
1,266
-68
-3
Foreign currency risk - procurement
-71
non-financial assets (before taxes)
Reclassification to cost of acquisition of
128
Interest rate risk
922
Commodity price risk - inventory purchases
1,163
72
31
2020
and reclassifications
Taxes on changes in fair values
4
Other
-37
Commodity price risk - inventory purchases
43
Foreign currency risk - procurement
6
non-financial assets (before taxes)
Reclassification to cost of acquisition of
-116
Interest rate risk
-1
Foreign currency risk
-117
(before taxes)
Reclassification to profit and loss
Foreign currency risk
1,050
(before taxes)
Reclassification to profit and loss
-27
114
-120
-84
-121
2
-1,414
-52
-64
-244
221
-1
26
4 -
44
30
19
53
244
13
934
791
118
Commodity price risk - inventory purchases
Interest rate risk
Foreign currency risk
Changes in fair values (before taxes)
-197
114
-1,533
-1,616
-95
Balance at January 1, 2019
In millions of euros
Reconciliation of reserves for derivative financial instruments
D.81
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
224
-2
-1
1 The amount in other financial income/expense, net includes €0 million (2019: minus €1 million) for hedges of net investments in foreign operations.
2 The amount in other financial income/expense, net includes €0 million (2019: minus €3 million) for hedges of net investments in foreign operations.
84
43
--- 1
In 2020, cash flow hedges with a nominal volume of €4,325 mil-
lion were de-designated because the cash flows secured with
these instruments could no longer be classified as highly proba-
ble. The de-designation of these derivatives, which is largely
attributable to the covid-19 pandemic, mainly relates to cash
flows in US dollars, British pounds and Canadian dollars, and
led to reclassification from the reserves for derivative financial
instruments to revenue of €26 million (losses) and to cost of
sales of €2 million (gains).
through other comprehensive income
The amounts related to items designated as cash flow hedges
and as hedges of net investments in foreign operations are
shown in table 7 D.79.
Amounts for the transactions designated as hedging instruments
D.76
1 Financial instruments classified as held for trading; these amounts relate
to financial instruments that are not used in hedge accounting.
204
-103
at (amortized) cost
Financial liabilities measured
-493
In millions of euros
-1,219
other comprehensive income
Financial assets measured
recognized at fair value through
thereof from financial assets
3
-1
Balance at December 31, 2020
recognized at fair value
at (amortized) cost
December 31, 2020
Carrying amount of the hedging instruments
Other financial assets current
23
122
14
264
hedges
Cash flow
Fair value
hedges²
Cash flow
hedges²
investments
in foreign
operations
Cash flow
hedges'
net
Hedges of
Commodity
risk
Interest rate risk
Foreign currency risk
Fair value changes³
Other financial liabilities non-current
Other financial liabilities current
Other financial assets non-current
-3,550
-2,658
measured at (amortized) costs
Other financial assets
-30
5,876
5,261
Total interest income
Equity and debt instruments recognized at fair
value through profit or loss
In millions of euros
2019
2020
2019
2020
Total interest income and total interest expense
D.75
In millions of euros
Net gains/losses
D.74
Table 7 D.76 shows the amounts for the transactions desig-
nated as hedging instruments.
purposes, the Group mainly uses currency forward transac-
tions, cross currency interest rate swaps, interest rate swaps,
options and commodity forwards.
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operating or financing
activities or from its liquidity management. These are mainly
interest rate risks, currency risks and commodity price risks,
which have been defined as risk categories. For these hedging
Use of derivatives
-79
392
thereof from financial assets and liabilities
measured at (amortized) costs
thereof from financial assets and liabilities
3
1
through other comprehensive income
157
-3,550
-2,658
Total interest expense
Equity instruments recognized at fair value
51
other comprehensive income
-150
182
through profit or loss¹
recognized at fair value through
thereof from financial assets
recognized at fair value
and financial liabilities
5,719
5,210
Other financial assets
67
1,249
14
13,831
13,170
2019
2020
Interest rate risk
statement of financial position
from inactive hedges remaining in the
Accumulated amount of hedge adjustments
Fair value changes of the hedged items'
non-current
Financing liabilities
current
Financing liabilities
thereof hedge adjustments
non-current
Financing liabilities
current
Financing liabilities
Carrying amounts of the hedged items
13,921
In millions of euros
28,407
461
Daimler also partially hedges the foreign currency risk of
selected investments with the application of derivative or non-
derivative financial instruments.
The Group uses cash flow hedges for hedging currency risks,
interest rate risks and commodity price risks.
Cash flow hedges and hedges of net investments in for-
eign operations
The amounts relating to hedge ineffectiveness for items desig-
nated as fair value hedges are shown in table 7 D.78.
The amounts of the items hedged with fair value hedges are
included in table 7 D.77.
The Group uses fair value hedges primarily for hedging interest
rate risks.
Fair value hedges
2
-40
Interest expense
Cost of sales
In millions of euros
Ineffectiveness of fair value hedges
D.78
1 Fair value changes of the hedged items used for recognizing hedge
ineffectiveness.
26
-846
478
634
-712
548
The gains and losses on items designated as cash flow
hedges as well as the amounts relating to hedge ineffective-
ness are included in table 7 D.80.
Fair value hedges
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
64
76
Other financial liabilities non-current
Other financial liabilities current
Other financial assets non-current
Other financial assets current
Carrying amount of the hedging instruments
December 31, 2019
29
709
72
1,230
20
125
107
2
11
51
51
817
D.77
147
62
222
3 Gains and losses from hedging instruments used for recognizing hedge ineffectiveness.
2 Includes the following instrument types: interest rate swaps, cross currency interest rate swaps.
1 Includes the following instrument types: currency forwards, currency options, currency swaps, commodity forwards.
113
848
-204
-1
-1,558
Fair value changes³
46
94
2
8
72
15
907
20
37
10
-347
1,980
Table 7 D.81 shows the reconciliation of the reserves for
derivative instruments (excluding reserves for hedges of net
investments in foreign operations).
2025
2024
2023
2022
2021
Total
Liquidity runoff for liabilities and financial guarantees'
D.85
≥ 2026
in
Table D.85 provides an overview of how the future liquidity
situation of the Group can be affected by the cash flows from
liabilities, financial guarantees and irrevocable loan commit-
ments as of December 31, 2020.
In addition, customer deposits at Mercedes-Benz Bank are
used as a further source of refinancing.
of one year grants additional financial flexibility for Daimler
until 2025. As of December 31, 2020, this credit line had not
been utilized. Furthermore, at the beginning of April 2020, an
additional credit line in the amount of €12.0 billion was agreed
upon with an international consortium of banks. After capital-
market transactions were carried out which led to a reduction
of this credit line, the available amount as of December 31,
2020 is € 8.8 billion.
In general, Daimler makes use of a broad spectrum of financial
instruments to cover its funding requirements. Depending on
funding requirements and market conditions, Daimler issues
commercial paper, bonds (including green bonds), debt obliga-
tions and financial instruments secured by receivables in vari-
ous currencies. Bank credit facilities are also used to cover
financing requirements. Potential downgrades of Daimler's
credit ratings could have a negative impact on the Group's
financing. Since July 2018, Daimler has had a syndicated credit
facility with a volume of €11 billion with a consortium of inter-
national banks at its disposal. Exercising an optional extension
From an operating point of view, the management of the
Group's liquidity exposures is centralized by a daily cash-pool-
ing process. This process enables Daimler to manage its liquid-
ity surplus and liquidity requirements according to the actual
needs of the Group and each subsidiary. The Group's short-
term and mid-term liquidity management takes into account
the maturities of financial assets and financial liabilities and
estimates of cash flows from business operations.
229
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2020, liquidity amounted to €29.4 billion
(2019: €27.5 billion). In 2020, significant cash inflows resulted
from the operations of the industrial business. Furthermore,
dividend payments received from Beijing Benz Automotive Co.,
Ltd. had a positive effect on liquidity. Cash outflows resulted in
particular from investments in intangible assets and property,
plant and equipment and income taxes paid. At Daimler Mobil-
ity, net cash inflows of the leasing and sales-financing activi-
ties mainly resulted from the portfolio reduction in the context
of the corona crisis. There were also effects from cash inflows
and outflows in connection with the cash flow from financing
activities.
Information on the Group's financing liabilities is also provided
Note 24.
In millions of euros
Financing liabilities²
thereof lease liabilities
23
16
93
320
457
Derivative financial instruments³
1,603
347
405
497
597
746
23,442
7,313
9,377
18,635
32,742
61,924
153,433
4,195
The funds raised are used to finance working capital and capi-
tal expenditure as well as the cash needs of the lease and
financing business and unexpected liquidity needs. In accor-
dance with internal guidelines, the refunding of the lease and
financing business is generally carried out with matching
maturities so that financing liabilities have the same maturity
profile as the leased assets and the receivables from financial
services.
Daimler manages its liquidity by holding adequate volumes of
liquid assets and by maintaining syndicated credit facilities in
addition to the cash inflows generated by its business opera-
tions. Additionally, the possibility to securitize receivables of
the financial services business (ABS transactions) also reduces
the Group's liquidity risk. Liquid assets comprise cash and
cash equivalents and marketable debt securities and similar
investments. The Group can dispose of these liquid assets at
short notice.
Liquidity risk comprises the risk that a company cannot meet
its financial obligations in full.
Liquidity risk
The allowance ratio increased significantly compared to the
level of the previous year due to increased provisions for credit
risks against the backdrop of the worsened economic outlook
in connection with the covid-19 pandemic and national pro-
grams and programs of Daimler Mobility offered to support the
customers.
At the beginning of the covid-19 pandemic, a crisis guideline
was issued very promptly, specifying how customers can be
supported as flexible as possible, but still risk management
oriented, with extensions of payment terms. Credit risk devel-
opment was discussed at all meetings of the crisis task force
at Daimler Mobility since the beginning of the crisis. Further-
more, a collection task force managed the best possible prepa-
ration of debt collection activities.
If, in connection with contracts, a worsening of payment
behavior or other causes of a credit risk are recognized, collec-
tion procedures are initiated by claims management to obtain
the overdue payments of the customer, to take possession of
the asset financed or leased or, alternatively, to renegotiate the
impaired contract. Restructuring policies and practices are
based on the indicators or criteria which, in the judgment of
local management, indicate that repayment will probably con-
tinue and that the total proceeds expected to be derived from
the renegotiated contract exceed the expected proceeds to be
derived from repossession and remarketing. In 2020, because
of the covid-19 pandemic, there were modifications in some
markets of financial assets for financial receivables in particu-
lar in the context of relief programs offered by governments
and by Daimler Mobility. The design of these programs, how-
ever, led to the modification being assessed as not significant.
For the assessment of the default risk of retail and small busi-
ness customers, scoring systems are applied to evaluate their
creditworthiness. Corporate customers are evaluated using
internal rating instruments. Both evaluation processes use
external credit bureau data if available. The scoring and rating
results as well as the availability of security and other risk miti-
gation instruments, such as advance payments, guarantees
and, to a lower extent, residual debt insurances, are essential
elements for credit decisions.
With respect to its financing and lease activities, the Group
holds collateral for customer transactions limiting actual credit
risk through its fair value. The value of collateral generally
depends on the amount of the financed assets. The financed
vehicles usually serve as collateral. Furthermore, Daimler
Mobility limits credit risk from financing and lease activities,
for example through advance payments from customers.
The Daimler Mobility segment has guidelines setting the frame-
work for effective risk management at a global as well as a
local level. In particular, these rules deal with minimum
requirements for all risk-relevant credit processes, the defini-
tion of financing products offered, the evaluation of customer
quality, requests for collateral and the treatment of unsecured
loans and non-performing claims. The limitation of concentra-
tion risks is implemented primarily by means of global limits,
which refer to single customer exposures. At December 31,
2020, exposure to the biggest 15 customers did not exceed
3.4% of the total portfolio (2019: 4.4%).
Exposure to credit risk from financing and lease activities is
monitored based on the portfolio subject to credit risk. The
portfolio subject to credit risk consists of wholesale and retail
receivables from financial services and the portion of the oper-
ating lease portfolio that is subject to credit risk. Receivables
from financial services comprise claims arising from finance
lease contracts and repayment claims from financing loans.
The operating lease portfolio is reported under equipment on
operating leases in the Group's Consolidated Financial State-
ments. Overdue lease payments from operating lease con-
tracts are recognized in receivables from financial services.
Daimler's financing and leasing activities are primarily focused
on supporting the sales of the Group's automotive products.
As a consequence of these activities, the Group is exposed to
credit risk, which is monitored and managed based on defined
standards, guidelines and procedures. Daimler manages its
credit risk irrespective of whether it is related to a financing
contract or to an operating lease or a finance lease contract.
For this reason, statements concerning the credit risk of
Daimler Mobility refer to the entire financing and leasing busi-
ness, unless otherwise specified.
Receivables from financial services
227
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Liquid assets consist of cash and cash equivalents and market-
able debt securities and similar investments. With the invest-
ment of liquid assets, banks and issuers of securities are
selected very carefully and diversified in accordance with a
limit system. Liquid assets are mainly held at financial institu-
tions within and outside Europe with high creditworthiness,
as bonds issued by German federal states and as money mar-
ket funds. In connection with investment decisions, priority is
placed on the borrower's very high creditworthiness and on
balanced risk diversification. The limits and their utilizations
are reassessed continuously. In this assessment, Daimler also
considers the credit risk assessment of its counterparties by
the capital markets. In line with the Group's risk policy, most
liquid assets are held in investments with an external rating of
"A" or better. Liquid assets are thus not subject to a material
credit risk and are allocated to stage 1 of the impairment
model, which is based on expected credit risk.
Liquid assets
The maximum risk positions of financial assets which are gen-
erally subject to credit risk are equal to their carrying amounts
at the balance sheet date (without consideration of collateral,
if available). There is also a risk of default from irrevocable loan
commitments which had not been utilized as of that date, as
well as from financial guarantees. The maximum risk position
in these cases is equal to the expected future cash outflows.
Table 71 D.84 shows the maximum risk positions at the bal-
ance sheet date.
Credit risk is the risk of economic loss arising from a counter-
party's failure to repay or service debt in accordance with the
contractual terms. Credit risk encompasses both the direct
risk of default and the risk of a deterioration of creditworthi-
ness as well as concentration risks.
Credit risk
The market sensitive instruments, including equity and debt
securities, that the plan assets hold to finance pension and
other post-employment healthcare benefits, are not included
in the following quantitative and qualitative analysis. See
Note 22 for additional information on Daimler's pension
and other post-employment benefits.
The Group manages and monitors these risks primarily through
its operating and financing activities and, if required, through
the use of derivative financial instruments. Daimler uses deriv-
ative financial instruments exclusively for hedging financial
risks that arise from its business operations or refinancing
activities or liquidity management. Without these derivative
financial instruments, the Group would be exposed to higher
financial risks. Additional information on financial instruments
and especially on the volumes of the derivative financial instru-
ments used is included in Note 32. Daimler regularly eval-
uates its financial risks with due consideration of changes in
key economic indicators and up-to-date market information.
728
For information on credit risks included in receivables from
financial services, see Note 14. Information on the mea-
surement of expected credit losses is provided in Note 1.
-2
228
Trade receivables
The maximum potential obligations resulting from financial
guarantees amount to €563 million at December 31, 2020
(2019: €728 million) and include liabilities recognized at
December 31, 2020 in the amount of €99 million (2019:
€107 million). Financial guarantees principally represent con-
tractual arrangements. These guarantees generally provide
that in the event of default or non-payment by the primary
debtor, the Group will be required to settle such financial
obligations generally up to a contractually agreed amount.
Financial guarantees
The Daimler Mobility segment in particular is exposed to credit
risk from irrevocable loan commitments to end customers and
retailers. At December 31, 2020, irrevocable loan commit-
ments amounted to €2,109 million (2019: €2,038 million).
These loan commitments had a maturity of less than one year
and are not subject to a material credit risk.
Irrevocable loan commitments
With respect to other receivables and financial assets included
in other financial assets in 2020 and 2019, Daimler is exposed
to credit risk only to a small extent.
Other receivables and financial assets
The Group uses derivative financial instruments exclusively for
hedging financial risks that arise from its operational business,
financing activities or liquidity management. Daimler manages
its credit risk exposure in connection with derivative financial
instruments through a limit system, which is based on the
review of each counterparty's financial strength. This system
limits and diversifies the credit risk. As a result, Daimler is
exposed to credit risk only to a small extent with respect to its
derivative financial instruments. In accordance with the
Group's risk policy, most derivatives are contracted with coun-
terparties which have an external rating of "A" or better.
Derivative financial instruments
Further information on trade receivables and the status of
impairments recognized is provided in Note 19.
For impairments of trade receivables, the simplified approach
is applied, whereby these receivables are allocated to stage 2.
Credit losses until maturity for these trade receivables are rec-
ognized upon initial recognition.
These procedures are defined in the export credit guidelines,
which have Group-wide validity.
letters of credit.
-
- first-class bank guarantees and
credit insurances,
Depending on the creditworthiness of the customers, Daimler
usually establishes credit limits and limits credit risks with the
following types of collateral:
For trade receivables from the export business, Daimler also
evaluates its customers' creditworthiness by means of an
internal rating process with consideration of the respective
country risk. In this context, the year-end financial statements
and other relevant information on the general distribution com-
panies, such as payment history, are used and assessed.
A significant proportion of the trade receivables from each
country's domestic business is secured by various country-
specific types of collateral. This collateral includes conditional
sales, guarantees and sureties, as well as mortgages and
advance payments from customers.
Trade receivables are mostly receivables from worldwide sales
of vehicles and spare parts. The credit risk from trade receiv-
ables encompasses the default risk of customers, e.g., dealers
and general distribution companies, as well as other corporate
and private customers. In order to identify credit risks, Daimler
assesses the creditworthiness of customers. Daimler manages
its credit risk from trade receivables using appropriate IT appli-
cations and databases on the basis of internal guidelines which
have to be followed globally.
D | CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27
7
289
23,636
7,420
9,706
19,010
33,566
563
87,436
563
180,774
Financial guarantees
1 The amounts were calculated as follows:
2,109
Irrevocable loan commitments5
4,627
4,627
Obligations from sales
187
109
304
354
2,109
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which Daimler can be required to
pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
(b) The cash flows of floating-interest financial instruments are estimated on the basis of forward rates.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
As part of its risk management system, Daimler employs value-
at-risk analyses. In performing these analyses, Daimler quanti-
fies its market risk due to changes in foreign currency
exchange rates and interest rates and certain commodity
prices on a regular basis by predicting the potential loss over a
target time horizon (holding period) and confidence level.
The effect of the application of the new interest rates on the
Consolidated Financial Statements is currently being reviewed.
In order to conduct financial transactions based on the new
indices, Daimler is preparing its IT-systems accordingly. Uncer-
tainty still exists about future market standards with interest
conventions for individual financial products (cash products
and also interest derivatives) that reference the new risk-free
rates.
The nominal values of the affected derivative financial instru-
ments can be found in table 7 D.82.
Daimler expects the conversion of reference rates of hedging
instruments and their underlying transactions to be identical
and without material delay in time. Daimler continues to con-
sider the economic relationship and thus the continuation of
hedge accounting to be still existing as of December 31, 2020.
Despite market uncertainty, the existing benchmark interest
rates are still applied as reference rates in financial markets
and have an impact on the valuation of financial transactions.
This also applies for financial instruments in hedging relation-
ships with a maturity beyond the end of 2021. With EURIBOR
reform already implemented, the material share of interest rate
risk hedging relationships affected by the benchmark reform is
based on the currencies USD and GBP.
Certain existing benchmark interest rates including those of
the London Interbank Offer Rate (for USD, GBP, CHF and JPY)
will be comprehensively and internationally reformed by the
end of 2021. As a result, those interest rates will be gradually
abolished and replaced with alternative risk-free reference
rates. Alternative interest rates are being developed on a
national level in the context of the respective legal systems
and currencies; they can therefore vary with regard to their
structure, methodology and period of publication.
Daimler manages market risks to minimize the impact of fluc-
tuations in foreign exchange rates, interest rates and commod-
ity prices on the earnings of the Group and its segments. The
Group calculates its overall net-exposure to these market risks
to provide the basis for hedging decisions, which include the
selection of hedging instruments and the determination of
hedging volumes and the corresponding periods. The hedging
strategy is specified at Group level and uniformly implemented
in the segments. Decisions regarding the management of mar-
ket risks from foreign exchange rates and commodities, as well
as asset-/liability management (interest rates), are regularly
made by the relevant Daimler risk management committees.
Net-exposures are the basis for the hedging strategies and are
updated regularly.
The global nature of its businesses exposes Daimler to signifi-
cant market risks resulting from fluctuations in foreign cur-
rency exchange rates, interest rates and commodity prices.
The Group is also exposed to equity price risk in connection
with its investments in listed companies.
Finance market risks
Daimler manages these risks via country exposure limits (e.g.,
for hard currency portfolios of financial services entities). An
internal rating system serves as a basis for Daimler's risk-ori-
ented country exposure management; it assigns all countries
to risk classes, with consideration of capital market indications
of country risks.
Daimler is exposed to country risk mainly resulting from cross-
border funding or collateralization of Group companies and
customers, from investments in subsidiaries, associated com-
panies, joint ventures and joint operations as well as from
cross-border trade receivables. Country risks also arise from
cross-border cash deposits at financial institutions.
Country risk is the risk of economic loss arising from changes
of political, economic, legal or social conditions in the respec-
tive country, e.g., resulting from sovereign measures such as
expropriation or interdiction of foreign currency transfers.
Country risk
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
230
6 The maximum potential obligations under the issued guarantees are stated. It is assumed that the amounts are due within the first year.
5 The maximum available amounts are stated.
4 The cash outflows of trade payables are undiscounted.
3 The undiscounted sum of the cash flows of the derivative financial liabilities is shown for the respective year.
728
5,525
7,207
from financial guarantees
-263
-1,768
-12,448
-14,909
Cash inflows
120
-
337
271
1,818
12,652
15,198
Cash outflows
7
-2
22
8
50
204
-315
thereof with gross settlement
-2
thereof with net settlement
excluding accrued interest and liabilities
Miscellaneous other financial liabilities
2
5
3
12,368
12,378
Tradepayables4
1
8
43
116
168
Cash outflows
1
8
43
116
168
-113
74
16
1,191
294
2,002
2,002
in the currency GBP
19,635
1,969
10,058
7,608
2,319
11,914
4,869
5,273
in the currency USD
affected by the reform of the interest rate bench-
mark
thereof major derivative financial instruments
50,112
7,654
29,805
1,772
2,613
Cash Flow Hedges
6,289
2,113
1,612
501
in the currency GBP
10,215
6,655
3,560
10,821
672
7,818
2,331
in the currency USD
thereof major derivative financial instruments
affected by the reform of the interest rate bench-
mark 1
20,178
12,410
7,768
22,918
792
15,837
12,653
33,003
7,457
16,836
>5 years
1 year up to
5 years
<1 year
At December 31, 2019
Maturity of nominal amounts
At December 31, 2020
Maturity of nominal amounts
In millions of euros
Nominal amounts of derivative financial instruments
D.82
225
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Information on derivative financial instruments
Even if derivative financial instruments do not or no longer
qualify for hedge accounting, these instruments still serve to
hedge financial risks from business operations. A hedging
instrument is terminated when the hedged transaction no lon-
ger exists or is no longer expected to occur.
Most of the transactions for which the effects from the mea-
surement of the hedging instrument and the underlying trans-
action to a large extent offset each other in the Consolidated
Statement of Income do not classify for hedge accounting.
The average prices for derivative financial instruments classi-
fied by risk categories for the main risks are included in table
71 D.83.
Nominal values of derivative financial instruments
Table 7 D.82 shows the nominal values of derivative financial
instruments entered into for the purpose of hedging currency
risks, interest rate risks and commodity price risks that arise
from the Group's operating and/or financing activities.
At December 31, 2020, Daimler utilized derivative instruments
with a maximum maturity of 38 months (2019: 48 months) as
hedges for currency risks arising from future transactions.
The maturities of the derivative financial instruments generally
correspond with those of the underlying transactions. The real-
ization of the underlying transactions of the cash flow hedges
is expected to correspond with the maturities of the hedging
transactions shown in table 7 D.82.
At December 31, 2020, the balance of reserves for hedges of
net investments in foreign operations amounted to €189 mil-
lion (2019: €189 million).
The reserves for derivative instruments include reserves for
hedge costs of minus €7 million (2019: €0 million).
Total
217
<1 year
>5 years
8,710
Fair value hedges
70,290
7,654
42,215
20,421
55,921
8,249
32,673
14,999
Interest rate risk
37,822
10,877
26,945
30,334
7,349
22,985
Foreign currency risk
Total
1 year up to
5 years
1,117
1,334
Commodity risk
103,661
96,185
14
financial services
Receivables from
27,538
29,445
Liquid assets
In millions of euros
risk
position
2019
Maximum
Maximum
risk
position
2020
Note
Trade
irrevocable loan commitments and financial guarantees
Maximum risk positions of financial assets,
D.84
Daimler has established internal guidelines for risk controlling
procedures and for the use of financial instruments, including
a clear segregation of duties with regard to financial activities,
settlement, accounting and the related controlling. The guide-
lines upon which the Group's risk management processes for
financial risks are based are designed to identify and analyze
these risks throughout the Group, to set appropriate risk limits
and controls and to monitor the risks by means of reliable and
up-to-date administrative and information systems. The guide-
lines and systems are regularly reviewed and adjusted to
changes in markets and products.
As a result of its businesses and the global nature of its opera-
tions, Daimler is exposed in particular to market risks from
changes in foreign currency exchange rates and interest rates,
while commodity price risks arise from procurement. An equity
price risk results from investments in listed companies. In
addition, the Group is exposed to credit risks from its leasing
and financing activities and from its business operations (trade
receivables). Furthermore, the Group is exposed to liquidity
and country risks relating to its credit and market risks or a
deterioration of its business operations or financial market dis-
turbances. If these financial risks materialize, they could
adversely affect Daimler's profitability, liquidity and capital
resources and financial position.
receivables
General information on financial risks
19
12,332
2,145
16
563
Financial guarantees
3,328
2,038
2,109
Irrevocable loan commitments
2,942
16
financial assets
Other receivables and
(assets only)
hedge accounting
instruments not used in
Derivative financial
(assets only)
hedge accounting
instruments used in
Derivative financial
10,649
266
33. Management of financial risks
226
8.14
8,06
1.17
1,15
2019
At December 31,
2020
GBP per €
CNY per €
USD per €
Foreign currency risk
Average prices of hedging instruments for the major risks
D.83
1 The volumes of risk exposure in cash flow hedges directly affected by the reform of the interest rate benchmark are generally in line with the reported
volumes of the hedging instruments because of the basic hedging ratio of 1. Further information on the reform of the interest rate benchmark is provided in
Note 33.
399
140
259
228
69
159
0,90
D❘ CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
0.88
Fair value hedges
1,245
Palladium (in € per troy ounce)
814
905
Platinum (in € per troy ounce)
Commodity risk
-0.57%
-1.00%
Average interest rate - USD
-0.84%
-0.23%
Average interest rate - €
Cash flow hedges
-0.21%
1.97%
Average interest rate - USD
-0.92%
0.98%
Average interest rate - €
Interest rate risk
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 221
Explanations of the hedging of exchange rate risks, interest
rate risks and commodity price risks can be found in
Note 33 in the sub-item finance market risk.
25,816
1,883
27,699
154,309
6,637
160,946
-6,637
-6,637
154,309
Segment profit/loss (EBIT)
5,172
525
1,436
7,133
154,309
-530
thereof profit/loss
on equity-method
investments
1,410
50
-360
1,100
-303
797
thereof profit/loss from
6,603
34,671
98,576
1,425
Non-current assets consist of intangible assets, property,
plant and equipment and equipment on operating leases.
Capital expenditures for intangible assets and property, plant
and equipment reflect the cash-effective additions to these
intangible assets and property, plant and equipment as far as
they do not relate to capitalized borrowing costs or goodwill.
236
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D.87
Segment information
Mercedes-Benz
Daimler
Cars & Vans Trucks & Buses
Daimler
Mobility
Total
Segments
Recon-
Daimler
ciliation
Group
In millions of euros
2020
External revenue
Intersegment revenue
Total revenue
95,247
33,246
3,329
compounding and effects
from changes in discount
rates of provisions for
other risks
-117
Additions to
non-current assets
15,965
2,104
13,264
31,333
-90
31,243
thereof investments in
intangible assets
2,611
160
49
2,820
-1
2,819
thereof investments in property,
plant and equipment
4,862
789
39
5,690
51
201,670
The residual value risks associated with the Group's operating
leases and finance lease receivables are generally borne by the
vehicle segments that manufactured the leased equipment.
Risk sharing is based on agreements between the respective
vehicle segments and Daimler Mobility; the terms vary by vehi-
cle segment and geographic region.
-22,448
146,950
-49
-2
-168
-168
Segment assets
91,360
24,830
161,265
277,455
-19,681
257,774
thereof carrying amounts
of equity-method
investments
3,586
527
746
4,859
330
5,189
Segment liabilities
60,168
17,000
224,118
5,741
Segment assets principally comprise all assets. The vehicle
segments' assets exclude income tax assets, assets from
defined-benefit pension plans and other post-employment
benefit plans, and certain financial assets (including liquidity).
Segment liabilities principally comprise all liabilities. The vehi-
cle segments' liabilities exclude income tax liabilities, liabilities
from defined benefit pension plans and other post-employment
benefit plans, and certain financial liabilities (including financ-
ing liabilities).
Intersegment revenue is generally recorded at prices that
approximate market terms.
328
897
328
522
333
528
333
422
Interest rate risk
129
(from derivative financial instruments)
368
192
131
156
34
94
Commodity price risk
(from derivative financial instruments)
12
100
12
121
Exchange rate risk
Average
Low
231
The value-at-risk calculations employed:
express potential losses in fair values, and
assume a 99% confidence level and a holding period of five
days.
At the Group level, Daimler calculates the value at risk for
exchange rate and interest rate risk according to the variance-
covariance approach. The value-at-risk calculation method for
commodity hedging instruments is based on a Monte Carlo
simulation.
When calculating value at risk using the variance-covariance
approach, Daimler first computes the current market value of
the Group's financial instruments portfolio. Then the sensitivity
of the portfolio value to changes in the relevant market risk
factors, such as particular foreign currency exchange rates or
interest rates of specific maturities, is quantified. Based on vol-
atilities and correlations of these market risk factors, which
are obtained from the RiskMetrics TM dataset, a statistical dis-
tribution of potential changes in the portfolio value at the end
of the holding period is computed. The loss which is reached or
exceeded with a probability of only 1% can be derived from this
calculation and represents the value at risk.
The Monte Carlo simulation uses random numbers to generate
possible changes in market risk factors consistent with current
market volatilities. The changes in market risk factors allow the
calculation of a possible change in the portfolio value over the
holding period. Running multiple iterations of this simulation
leads to a distribution of portfolio value changes. The value at
risk can be determined based on this distribution as the port-
folio value loss which is reached or exceeded with a probability
of 1%.
Exchange rate risk
Transaction risk and currency risk management. The global
nature of Daimler's businesses exposes cash flows to risks
arising from fluctuations in exchange rates. These risks primar-
ily relate to fluctuations between the euro and the US dollar,
the Chinese renminbi, the British pound and other currencies
such as currencies of growth markets. In the operating vehicle
business, the Group's exchange rate risk primarily arises when
revenue is generated in a currency that is different from the
currency in which the costs of revenue are incurred, it may be
inadequate to cover the costs if the value of the currency in
which the revenue is generated declined in the interim relative
to the value of the currency in which the costs were incurred.
This risk exposure primarily affects Mercedes-Benz Cars &
Vans, which generates a major portion of its revenue in foreign
currencies and incurs manufacturing costs primarily in euros.
Daimler Trucks & Buses is also exposed to transaction risks,
but only to a minor degree because of its global production
network and the overall lower foreign currency volume. The
exposures of these segments serve as a basis for analyzing
exchange rate risks at Group level. In addition, the Group is
indirectly exposed to transaction risk from its equity-method
investments.
The Group's overall currency exposure is reduced by natural
hedging, which consists of the currency exposures of the busi-
ness operations of different entities and segments partially off-
setting each other at Group level. These natural hedges elimi-
nate the need for hedging to the extent of the matched
exposures. To provide an additional natural hedge against any
remaining transaction risk exposure, Daimler generally strives
to increase cash outflows in the same currencies in which the
Group has a net excess inflow.
In order to mitigate the impact of currency exchange rate fluc-
tuations for the business operations (future transactions),
Daimler continually assesses its exposure to exchange rate
risks and hedges a portion of those risks by using derivative
financial instruments. A committee manages the Group's
exchange rate risk and its hedging transactions through cur-
rency derivatives. The committee consists of representatives
of the relevant segments and central functions. The Corporate
Treasury department aggregates foreign currency exposures
from Daimler's subsidiaries and operational units and imple-
ments the committee's decisions concerning foreign currency
hedging through transactions with international financial insti-
tutions. For reporting purposes and accounting for hedge rela-
tionships, those hedges are allocated to Mercedes-Benz Cars
& Vans and Daimler Trucks & Buses. Suitable measures are
generally taken without delay to eliminate any over-hedging at
Group level regarding hedging transactions caused by changes
in exposure. In the case of over hedges at the level of
Mercedes-Benz Cars & Vans or Daimler Trucks & Buses, desig-
nated hedging relations are reviewed with respect to any
requirements to discontinue hedge accounting.
232
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D.86
Value at risk for exchange rate risk, interest rate risk and
commodity price risk
In millions of euros
Period-end
High
Low
2020
Average Period-end
2019
High
38
18
25
17
Daimler is exposed to the risk of changes in commodity prices
in connection with procuring raw materials and manufacturing
supplies used in production. A small portion of the raw mate-
rial price risk, primarily relating to forecasted procurement of
certain metals, is hedged with the use of derivative financial
instruments.
For precious metals, central commodity management shows
an unhedged position of 80% of the forecasted commodity pur-
chases at year-end 2020 for calendar year 2021. The corre-
sponding figure at year-end 2019 was 55% for calendar year
2020.
Table 7 D.86 shows the period-end, high, low and average
value-at-risk figures for the 2020 and 2019 portfolio of deriva-
tive financial instruments used to hedge raw material price
risk. Average exposure has been computed on an end-of-quar-
ter basis. The transactions underlying the derivative financial
instruments are not included in the value-at-risk presentation.
See also table 7 D.82.
In 2020, the development of the value at risk from commodity
hedging was driven in the first quarter by an increase in volatil-
ities and hedging volume. Subsequently, volatilities as well as
the hedging volume decreased gradually and so did the value
at risk.
Hedge accounting. When designating currency derivative finan-
cial instruments, Daimler generally applies a hedge ratio of 1.
The respective volumes and parameters relevant for the valua-
tion of the hedged item and the hedging instrument as well as
maturity dates are matched. The Group ensures an economic
relationship between the hedged item and the hedging instru-
ment by ensuring consistency of volumes, parameters relevant
for valuation and maturity terms. Effectiveness is assessed at
initial designation and during the hedge term. Possible sources
of ineffectiveness of the hedge relationship are:
Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged commodity price risk.
- Changes in the timing of the hedged transactions.
Equity price risk
Daimler predominantly holds investments in shares of compa-
nies which are classified as long-term investments, some of
which are accounted for using the equity method, such as
BAIC Motor. These investments are not included in a market
risk assessment by the Group.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
235
34. Segment reporting
Reportable segments
Until December 31, 2019, the Group's reportable segments
were Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans, Daimler Buses and Daimler Mobility. Since January 1,
2020, the Group's activities are divided into the segments
Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks &
Buses and Daimler Mobility. This corresponds to the internal
reporting and organizational structure. The Mercedes-Benz
Cars and Mercedes-Benz Vans segments are aggregated due
to their comparable long term average return on sales as well
as their comparable revenue development and capital inten-
sity. In addition, both segments are comparable with regard to
the nature of the products and services offered as well as their
brands, sales channels and customer profiles.
In order to ensure that the figures for 2020 are comparable
with the prior-year figures, the figures for 2019 have been
adjusted to the new segment structure. Internal supply rela-
tionships within the new segments have been taken into
account. Furthermore, in the figures for the previous year, the
effects of certain legal issues and equity investments not pre-
viously allocated to the segments have been reclassified from
the reconciliation to the vehicle segments.
The Mercedes-Benz Cars & Vans segment develops, manufac-
tures and sells passenger cars comprising premium and luxury
vehicles of the Mercedes-Benz brand including the brands
Mercedes-AMG, Mercedes-Maybach and Mercedes-EQ as well
as small cars under the smart brand. The Mercedes me brand
comprises the ecosystem of Mercedes-Benz. The vans are
mainly sold under the Mercedes-Benz and Freightliner brands.
The Daimler Trucks & Buses segment develops, manufactures
and sells trucks under the Mercedes-Benz, Freightliner, FUSO,
Western Star and BharatBenz brands. The segment's product
range also includes buses of the Mercedes-Benz, Setra,
Thomas Built Buses and FUSO brands, as well as bus chassis.
The vehicle segments also sell related spare parts and acces-
sories.
The Daimler Mobility segment supports the sales of the
Group's vehicle segments worldwide. Its product portfolio pri-
marily comprises tailored financing and leasing packages for
end-customers and dealers, brokering of automotive insurance
and banking services. The segment also provides services
such as fleet management in Europe, which primarily takes
place through the Athlon brand. Furthermore, Daimler Mobility
is active in the area of innovative mobility services.
Internal management and reporting structure
The internal management and reporting structure at the
Daimler Group is principally based on the accounting policies
that are described in ①Note 1 in the summary of significant
accounting policies according to IFRS.
The measure of the Group's profit or loss used by Daimler's
management and reporting structure is referred to as "EBIT".
EBIT comprises gross profit, selling and general administrative
expenses, research and non-capitalized development costs,
other operating income/expense, and the profit/loss on
equity-method investments, net, as well as other financial
income/expense, net.
As of the 2020 financial year, the effects of capitalized borrow-
ing costs are recognized in EBIT as well as in the Group's assets
and the assets of the segments. To ensure comparability of the
figures for the 2020 financial year with those of the previous
year, the figures reported for 2019 have been adjusted accord-
ingly.
Commodity price risk
Transactions between the segments are generally eliminated in
the reconciliation. The elimination of effects connected with
intra-Group transfers of equity investments takes place in the
segments involved. The effects on earnings at the Group are
recognized upon completion of the external transaction in the
corresponding segment. Some simplifications have been made
in the segment reporting with regard to accounting for leases
in connection with intra-Group transactions.
- Changes in the parameters of the underlying hedged transac-
tions.
Hedge accounting. When designating derivative financial instru-
ments, a hedge ratio of 1 is generally applied. The respective
volumes, interest curves and currencies of the hedged item
and the hedging instrument as well as maturity dates are
matched. In the case of combined derivative financial instru-
ments for interest currency hedges, the cross-currency basis
spread is not designated into the hedge relationship, but
deferred as a hedging cost in other comprehensive income and
recognized in profit or loss over the hedge term. The Group
ensures an economic relationship between the underlying
transaction and the hedging instrument by ensuring consis-
tency of interest rates, maturity terms and nominal amounts.
The effectiveness of the hedge is assessed at the beginning
and during the economic relationship using the hypothetical
derivative method. Possible sources of ineffectiveness of the
hedge relationship are:
21
The Group's targeted hedge ratios for forecasted operating
cash flows in foreign currency are indicated by a reference
model. On the one hand, the hedging horizon is naturally lim-
ited by uncertainty related to cash flows that lie far in the
future; on the other hand, it may also be limited by the fact
that appropriate currency contracts are not available. This ref-
erence model aims to limit risks for the Group from unfavor-
able movements in exchange rates while preserving some flexi-
bility to participate in favorable developments. Based on this
reference model and depending on the market outlook, the
committee determines the hedging horizon, which usually var-
ies from one to five years, as well as the average hedge ratios.
Reflecting the character of the underlying risks, the hedge
ratios decrease with increasing maturities. At year-end 2020,
foreign exchange management showed an unhedged position
in the automotive business in calendar year 2021 for the
underlying forecasted cash flows in US dollars of 44%, for the
underlying forecasted cash flows in Chinese renminbi of 52%
and for the underlying forecasted cash flows in British pounds
of 48%.
To cover foreign currency exposure risks of the vehicle busi-
ness operations forward foreign exchange contracts and cur-
rency options are primarily used. Daimler's guidelines call for
a mixture of these instruments depending on the assessment
of market conditions. Value at risk is used to measure the
exchange rate risk inherent in these derivative financial instru-
ments.
Table 7 D.86 shows the period-end, high, low and average
value-at-risk figures of the exchange rate risk for the 2020 and
2019 portfolios of derivative financial instruments, which were
entered into primarily in connection with the vehicle business
operations. Average exposure has been computed on an end-
of-quarter basis. The offsetting transactions underlying the
derivative financial instruments are not included in the follow-
ing value-at-risk presentation, since they primarily comprise
forecasted cash-flows. See also table 7 D.82.
Hedge accounting. When designating derivative financial instru-
ments, a hedge ratio of 1 is applied. In addition, the respective
volume, interest curves and currency of the hedge and the
underlying transaction as well as maturity dates are matched.
The Group ensures an economic relationship between the
underlying transaction and the hedging transaction by ensuring
consistency of currency, volume and maturity. Option premi-
ums and since mid-2020 for newly designated hedge rela-
tionships also forward components are not designated into
the hedge relationship, but the hedging costs are deferred in
other comprehensive income and recognized in profit or loss at
the due date of the underlying transaction or recognized as
adjustment of acquisition cost of non-financial assets. The
effectiveness of the hedge is assessed at the beginning and
during the economic relationship. Possible sources of ineffec-
tiveness of the hedge relationship are:
-
Effects of the credit risk on the fair value of the used deriva-
tive instrument which are not reflected in the change of the
hedged currency risk.
- Changes in the timing of the hedged transactions.
In the context of focusing on the divisional perspective, the
designation of hedge relationships for foreign currency risk
existing from the Group perspective from expected future cash
flows from business operations, primarily from vehicle sales,
have been assigned to Mercedes-Benz Cars & Vans and to
Daimler Trucks & Buses starting with 2019. Accordingly, the
documentation required under IFRS with regard to this further
differentiation of expected cash flows (i.e. the risk manage-
ment objectives) has been revised for a large proportion of the
already designated hedge relationships for foreign currency
risk, although there has been no change in the overall Group
risk management strategy for foreign currency risk. Pursuant
to the described methods applied in preparation of the finan-
cial statements, this results in the formal discontinuation and
immediate redesignation of existing hedge relationships
according to the revised differentiation. Further information
can be found in table 7 D.79. There were no material effects
on earnings in 2020 and 2019.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
233
In 2020, the development of the value at risk from foreign cur-
rency hedging was mainly driven by a sharp increase in foreign
currency rate volatilities in the first quarter and subsequently
by a gradual decrease.
The Group's investments in liquid assets or refinancing activi-
ties are generally selected so that possible currency risks are
minimized. Transaction risks arising from liquid assets or pay-
ables in foreign currencies that result from the Group's invest-
ment or refinancing on money and capital markets are gener-
ally hedged against currency risks at the time of investing or
refinancing in accordance with Daimler's internal guidelines.
The Group uses appropriate derivative financial instruments
(e.g. cross-currency interest rate swaps) to hedge against cur-
rency risk.
Since currency risks arising from the Group's investment or
refinancing in foreign currencies and the respective hedging
transactions generally offset each other, these financial instru-
ments are not included in the value-at-risk calculation pre-
sented.
Effects of currency translation risk. For purposes of Daimler's
Consolidated Financial Statements, the income and expenses
and the assets and liabilities of subsidiaries located outside
the euro zone are converted into euros. Therefore, period-to-
period changes in average exchange rates may cause transla-
tion effects that have a significant impact on, for example, rev-
enue, segment results (EBIT) and assets and liabilities of the
Group. Unlike exchange rate transaction risk, exchange rate
translation risk does not necessarily affect future cash flows.
The Group's equity position reflects changes in book values
caused by exchange rates. In general, Daimler does not hedge
against exchange rate translation risk.
Interest rate risk
Daimler uses a variety of interest rate sensitive financial instru-
ments to manage the liquidity needs of the Group. A substan-
tial volume of interest rate sensitive assets and liabilities
results from the leasing and sales financing business operated
by the Daimler Mobility segment. The Daimler Mobility compa-
nies enter into transactions with customers that primarily
result in fixed-rate receivables. Daimler's general policy is to
match funding in terms of maturities and interest rates wher-
ever economically feasible. However, for a limited portion of
the receivables portfolio in selected and developed markets,
Daimler Mobility does not match funding in terms of maturities
in order to take advantage of market opportunities. As a result,
the Daimler Group is exposed to risks due to changes in inter-
est rates.
An asset/liability committee consisting of members of the
Daimler Mobility, Mercedes-Benz Cars & Vans and Daimler
Trucks & Buses segments and the Corporate Treasury depart-
ment manages the interest rate risk by setting targets for the
interest rate risk position. The Treasury Risk Management
department and the local Daimler companies are jointly
responsible for achieving these targets. As separate functions,
the Treasury Controlling and the Daimler Mobility Controlling &
Reporting department monitors target achievement on a
monthly basis. In order to achieve the targeted interest rate
risk positions in terms of maturities and interest rate fixing
periods, Daimler also uses derivative financial instruments
such as interest rate swaps. Daimler assesses its interest rate
risk position by comparing assets and liabilities for corre-
sponding maturities, including the impact of the relevant deriv-
ative financial instruments.
Derivative financial instruments are also used in conjunction
with the refinancing related to the automotive segments and
liquidity management. Daimler steers the funding activities of
the automotive and financial services businesses at the Group
level.
Table 7 D.86 shows the period-end, high, low and average
value-at-risk figures of the interest rate risk for the 2020 and
2019 portfolios of interest rate sensitive financial instruments
and derivative financial instruments of the Group, including the
financial instruments of the leasing and sales financing busi-
ness. Lease liabilities are not included in the value at risk of
the interest rate risk. These leasing liabilities have a fixed inter-
est rate and changes in interest rates therefore have no effect
on the Group's net profit. The average values have been com-
puted on an end-of-quarter basis.
During the year, the change in the value at risk of interest rate
sensitive financial instruments was primarily determined by the
development of interest rate volatilities.
234
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Effects of the credit risk on the fair value of the derivative
instrument in use which are not reflected in the change in
the hedged interest rate risk.
Depreciation and amortization of
non-current assets
8,893
2,381
thereof depreciation of property,
plant and equipment
4,259
1,031
72
5,362
8
5,370
238
2,381
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation to Group figures
In millions of euros
2020
2019
40
-29
Reconciliation
Reconciliation of the segments amounts to relevant amounts
for the Group is shown in table 7 D.88.
In 2020, the line item Other corporate items primarily com-
prises expenses of €86 million in connection with ongoing
cost-optimization programs. In the prior year, amongst others,
expenses in connection with "Project Future" were included.
Revenue and non-current assets by region
D.88
82
285
2,014
3,390
143
103
3,636
3,636
thereof investments in property,
plant and equipment
5,869
1,105
87
7,061
138
7,199
Depreciation and amortization of
non-current assets
7,877
2,087
6,763
16,727
87
16,814
thereof amortization
of intangible assets
With respect to information on geographical regions, revenue
is allocated to countries based on the location of the customer;
non-current assets are presented according to the physical
location of these assets.
Revenue from external customers and non-current assets by
region are shown in table 7 D.89.
Total of segments' profit (EBIT)
7,133
278,605
Unallocated financial assets
(including liquidity) and assets
from pensions and similar
obligations³
27,963
23,833
Total assets Group
285,737
302,438
Total of segments' liabilities
224,118
238,583
Income tax liabilities³
3,499
3,099
Other corporate items and
eliminations
-25,947
-25,357
Segment liabilities Group
201,670
216,325
257,774
intangible assets
Segment assets Group
-25,626
4,703
profit/loss on equity-method
investments¹
Other corporate items
-303
-349
-401
Eliminations
Group EBIT
122
6,603
4,313
Total of segments' assets
277,455
297,289
Carrying amount of equity-method
investments²
Income tax assets³
330
5,615
665
5,658
Other corporate items and
eliminations
-25,007
thereof investments in
38,708
-4
External revenue
Intersegment revenue
Total revenue
Segment profit/loss (EBIT)
thereof profit/loss
on equity-method
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 237
Mercedes-Benz
Daimler
Cars & Vans Trucks & Buses
Daimler
Mobility
Total
Segments
Recon-
ciliation
Daimler
Group
103,453
42,955
3,444
1,474
106,897
44,429
26,337
2,309
28,646
172,745
172,745
7,227
2019
-7,227
In millions of euros
Table
2,108
7,204
18,205
-62
18,143
thereof amortization
of intangible assets
2,038
294
227
2,559
2,559
thereof depreciation of property,
plant and equipment
5,265
1,056
77
6,398
6,398
Depreciation and amortization may also include impairments
insofar as they do not relate to goodwill impairment according
to IAS 36.
Amortization of capitalized borrowing costs is not included in
the amortization of intangible assets or depreciation of prop-
erty, plant and equipment.
Reconciliation
The reconciliation includes functions and services provided by
the Group's headquarters as well as by other companies of the
Group not allocated to the segments. In addition, the reconcili-
ation includes projects managed by headquarters.
D.87 presents segment information at and for the
years ended December 31, 2020 and 2019.
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
179,972
172,745
278,605
thereof carrying amounts
of equity-method
investments
3,640
537
1,107
5,284
665
5,949
Segment liabilities
61,192
17,553
159,838
238,583
-22,258
216,325
Additions to
non-current assets
19,761
2,697
16,254
38,712
-18,684
-7,227
297,289
27,978
-109
2,672
2,140
4,703
-390
4,313
investments
1,203
2
-766
439
40
479
thereof profit/loss from
compounding and effects
from changes in discount
rates of provisions for
other risks
-164
-71
-3
-238
-238
Segment assets
94,490
174,821
Unallocated financial liabilities
and liabilities from pensions
4,565
2020
Equity-method
investments²
Net assets of the segments
In millions of euros
Average net assets
D.90
The objective of capital management is to increase value
added, among other things, by optimizing the cost of capital.
This is achieved on the one hand by the management of the net
assets, e.g., by optimizing working capital, which is within the
operational responsibility of the segments. In addition, taking
into account legal regulations, Daimler strives to optimize the
costs and risks of its capital structure and, consequently, the
cost of capital, with due consideration of applicable law. Exam-
ples of this include a balanced relationship between equity and
financial liabilities as well as an appropriate level of liquidity,
oriented towards the operational requirements.
The cost of capital of the Group's average net assets is
reflected in value added. Value added shows the extent to
which the Group achieves or exceeds the minimum return
requirements of the shareholders and creditors, thus creating
additional value. The required rate of return on net assets, and
thus the cost of capital, are derived from the minimum rates of
return that investors expect on their invested capital. The
Group's cost of capital comprises the cost of equity as well as
the costs of debt and pension obligations unless these are allo-
cated to Daimler Mobility; in addition, the expected returns on
liquidity and on the plan assets of the pension funds which are
not allocated to Daimler Mobility are considered with the oppo-
site sign. In the reporting period, the cost of capital used for
our internal capital management amounted to 8% after taxes.
The average annual net assets are calculated from the average
quarterly net assets. The average quarterly net assets are cal-
culated as an average of the net assets at the beginning and
the end of the quarter and are shown in table 7 D.90.
2019
Net assets and value added represent the basis for capital man-
agement at Daimler. The assets and liabilities of the segments in
accordance with IFRS provide the basis for the determination of
net assets at Group level. The vehicle segments are accountable
for the operational net assets; all assets, liabilities and provi-
sions which they are responsible for in day-to-day operations
are therefore allocated to them. Performance measurement at
Daimler Mobility is on an equity basis, in line with the usual
practice in the banking business. Net assets at Group level addi-
tionally include assets and liabilities from income taxes as well
as other corporate items and eliminations.
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 239
2,063
104,603
1,788
99,197
172,745
154,309
10,351
7,202
Other markets
544
35. Capital management
474
Mercedes-Benz Cars & Vans
Daimler Trucks & Buses
Daimler Mobility¹
35,070
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
240
The calculation of basic and diluted earnings per share is
based on net profit attributable to shareholders of Daimler AG.
Following the expiration of the stock option plan in 2014, dilu-
tive effects no longer exist. The profit attributable to share-
holders of Daimler AG (basic and diluted) amounts to
€3,627 million (2019: €2,377 million). The weighted average
number of shares outstanding (basic and diluted) amounts to
1,069.8 million (2019: 1,069.8 million).
36. Earnings per share
3 Unless allocated to Daimler Mobility.
2 Unless allocated to the segments.
1 Equity.
Net assets Daimler Group
Assets and liabilities
from income taxes³
Other corporate items
and eliminations³
32,768
448
63,782
2,720
2,088
662
463
56,882
13,961
14,601
10,921
9,513
436
59,869
18,954
21,343
thereof China
2019
2020
2019
2020
Non-current assets
Revenue
Revenue and non-current assets by region
D.89
3 Unless allocated to Daimler Mobility.
In millions of euros
2 This mainly comprises the carrying amount of the investment in
BAIC Motor.
302,438
285,737
62,841
62,248
23,272
21,819
Total equity and liabilities Group
Total equity Group
and similar obligations³
1 In the year 2020, the impairment of Daimler's equity investment in BAIC
Motor of €330 million is included.
Europe
64,226
69,541
4,189
40,657
39,944
Asia
25,228
21,979
45,422
37,801
thereof United States
28,497
24,764
52,196
42,937
North America
49,335
49,819
26,339
25,262
thereof Germany
69,478
68,456
37. Related party disclosures
Related parties (companies or persons) are deemed to be
associated companies, joint ventures and unconsolidated sub-
sidiaries, as well as persons who exercise a significant influ-
ence on the financial and business policy of the Daimler Group.
The latter category includes all persons in key positions and
their close family members. At the Daimler Group, those per-
sons are the members of the Board of Management and of the
Supervisory Board.
59,952
Business transactions with related companies are generally
carried out at market terms. Most of the goods and services
supplied between the Group and related companies comprise
transactions with associated companies and joint ventures and
are shown in table 7 D.91.
116
thereof LSHAI
6,988
7,230
500
476
713
1,288
17
24
thereof BBAC
6,477
5,880
274
101
132
1,966
76
78
Joint ventures
1,296
884
439
187
273
213
131
78
Related companies
2 Including liabilities from default risks from guarantees for related parties.
2,178
3,324
1 After total loss allowances of €70 million (2018: €66 million).
628
2,946
Associated companies
Joint ventures
In business relationships with joint ventures, significant sales
of goods and services took place with Fujian Benz Automotive
Co., Ltd. (FBAC), which is allocated to the Mercedes-Benz Cars
& Vans segment, and with DAIMLER KAMAZ RUS OOO, which
is allocated to the Daimler Trucks & Buses segment. In addi-
tion, other operating income of €154 million resulted from the
contribution of the smart brand to the joint venture smart
Automobile Co., Ltd. in the year 2020.
Note 13 provides further details of the business operations
of the significant associated companies and joint ventures, as
well as significant transactions in the years 2020 and 2019.
Contributions to plan assets
Daimler Pension Trust e.V. manages the plan assets on a fidu-
ciary basis to cover pension obligations in Germany and is
therefore a related company of the Daimler Group. Another
related company is Daimler Pensionsfonds AG. Daimler AG
bears non-significant expenses and provides services for both
companies. See also Note 22 for further information.
Related persons
Throughout the world, the Group has business relationships
with numerous entities that are customers and/or suppliers of
the Group. Those customers and/or suppliers include compa-
nies that have a connection with some of the members of the
Board of Management or of the Supervisory Board and close
family members of those board members of Daimler AG or of
its subsidiaries.
Board of Management and Supervisory Board members and
close family members of those board members may also pur-
chase goods and services from Daimler AG or its subsidiaries
as customers. When such business relationships exist, trans-
actions are concluded at market terms.
See Note 38 for information on the remuneration of the
board members.
D.91
Transactions with related companies
In millions of euros
Sales of goods
and services
As shown in Table 7 D.91, the business relationships with
associated companies mainly relate to LSH Auto International
Limited (LSHAI) and Beijing Benz Automotive Co., Ltd. (BBAC),
which are allocated to the Mercedes-Benz Cars & Vans seg-
ment.
Payables
791
13,826
Associated companies
at December 31,2
2020
2019
Receivables
at December 31,1
2020
2019
13,505
2019
2019
2020
and other expense
and other income
and services
Purchase of goods
2020
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Tokyo, Japan
Mercedes-Benz Financial Services Italia S.p.A.
Mercedes-Benz Finance Co., Ltd.
95.11
100.00
Drogenbos, Belgium
100.00
Woluwe-Saint-Lambert, Belgium
100.00
Alcobendas, Spain
100.00
Wilmington, USA
Melbourne, Australia
Prague, Czech Republic
Eugendorf, Austria
Brussels, Belgium
Mississauga, Canada
100.00
100.00
100.00
Hong Kong, China
100.00
Alcobendas, Spain
100.00
Montigny-le-Bretonneux, France
100.00
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz ExTra LLC
100.00
Mercedes-Benz Europa NV/SA
Buenos Aires, Argentina
Mercedes-Benz Drogenbos N.V.
100.00
80.00
São Bernardo do Campo, Brazil
100.00
São Paulo, Brazil
100.00
The Hague, Netherlands
100.00
5
100.00
100.00
100.00
100.00
5
Mercedes-Benz Espana, S.A.U.
100.00
100.00
100.00
Trent, Italy
Horsholm, Denmark
Budapest, Hungary
Stuttgart, Germany
Copenhagen, Denmark
São Paulo, Brazil
Mercedes-Benz do Brasil Ltda.
Mercedes-Benz do Brasil Assessoria Comercial Ltda.
Mercedes-Benz Dealer Bedrijven B.V.
Mercedes-Benz Danmark A/S
Mercedes-Benz Customer Solutions GmbH
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Mercedes-Benz CPH A/S
Mercedes-Benz Corretora de Seguros Ltda
5
Stuttgart, Germany
Mercedes-Benz Financial Services Korea Ltd.
Mercedes-Benz Financial Services Nederland B.V.
Mercedes-Benz Financial Services New Zealand Ltd
Zug, Switzerland
Rome, Italy
Seoul, South Korea
Mercedes-Benz Connectivity Services GmbH
Mercedes-Benz Hellas Single-Member S.A.
Mercedes-Benz Hong Kong Limited
Mercedes-Benz India Private Limited
Mercedes-Benz Insurance Agency (Beijing) Co., Ltd.
Mercedes-Benz Insurance Broker S.R.L.
Mercedes-Benz Insurance Services Nederland B.V.
Mercedes-Benz Insurance Services Taiwan Ltd.
Mercedes-Benz Investment Company LLC
Mercedes-Benz Italia S.p.A.
Copenhagen, Denmark
Malmö, Sweden
Istanbul, Turkey
Kifissia, Greece
Hong Kong, China
Pune, India
Mercedes-Benz Grand Prix Ltd.
Warsaw, Poland
Taipei, Taiwan
51.00
Milton Keynes, United Kingdom
100.00
Wilmington, USA
100.00
100.00
100.00
100.00
Istanbul, Turkey
100.00
Brackley, United Kingdom
100.00
Malmö, Sweden
100.00
Mercedes-Benz Financial Services Portugal -
Sociedade Financeira de Crédito S.A.
Mercedes-Benz Fuel Cell GmbH
Mercedes-Benz Försäljnings AB
100.00
80.00
Nieuwegein, Netherlands
100.00
Auckland, New Zealand
100.00
Mem Martins, Portugal
100.00
Mercedes-Benz Financial Services Rus 000
Moscow, Russian Federation
100.00
Mercedes-Benz Financial Services Schweiz AG
Schlieren, Switzerland
100.00
Mercedes-Benz France S.A.S.
Mercedes-Benz Financial Services Slovakia s.r.o.
75.00
Mercedes-Benz Financial Services South Africa (Pty) Ltd
Centurion, South Africa
100.00
Name of the company
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
247
Domicile, country/region
Equity interest
in percent¹
Footnote
Mercedes-Benz Financial Services Sp. zo.o.
Mercedes-Benz Financial Services Taiwan Ltd.
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services USA LLC
Mercedes-Benz Finans Danmark A/S
Mercedes-Benz Finans Sverige AB
Mercedes-Benz Finansal Kiralama Türk A.S.
Mercedes-Benz Finansman Türk A.S.
Mercedes-Benz Formula E Limited
Bratislava, Slovakia
100.00
Mercedes-Benz Compañía Financiera Argentina S.A.
100.00
Drachten, Netherlands
100.00
Gaffney, USA
3
0.00
Beijing, China
51.11
100.00
100.00
Mem Martins, Portugal
100.00
Wolica, Poland
100.00
Nijkerk, Netherlands
Vetlanda, Sweden
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 1 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 2 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 3 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 4 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 5 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 6 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Alpha 7 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Beta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Delta OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Epsilon OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Gamma 1 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Gamma 2 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Gamma 3 OHG
Grundstücksverwaltungsgesellschaft Daimler AG & Co. Gamma 4 OHG
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co. OHG
Interleasing Luxembourg S.A.
Schönefeld, Germany
100.00
100.00
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
5,7
Luxembourg, Luxembourg
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
5,7
100.00
5,7
Bomporto, Italy
Sámano, Spain
EvoBus France S.A.S.U.
EvoBus Danmark A/S
EvoBus Ceská republika s.r.o.
Footnote
Equity interest
in percent¹
Domicile, country/region
EvoBus GmbH
245
Name of the company
100.00
Kobbegem-Asse, Belgium
100.00
Wiener Neudorf, Austria
100.00
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
EvoBus Ibérica, S.A.U.
EvoBus Italia S.p.A.
EvoBus Nederland B.V.
5
100.00
Stuttgart, Germany
100.00
Sarcelles, France
100.00
Koege, Denmark
100.00
Prague, Czech Republic
Friesland Lease B.V.
Freightliner Custom Chassis Corporation
FOTIC - MB Leasing No. 1 Single Fund Trust
EvoBus Sverige AB
EvoBus Portugal, S.A.
EvoBus Polska Sp. z o.o.
100.00
Coventry, United Kingdom
Schönefeld, Germany
5,7
3
0.00
Stuttgart, Germany
3
0.00
Luxembourg, Luxembourg
Stuttgart, Germany
Mercedes-Benz (Thailand) Limited
Mercedes-Benz - Aluguer de Veículos, Lda.
Mercedes-AMG GmbH
Mercedes pay S.A. - in liquidation
Mercedes pay AG
Mercedes Benz Otomotiv Ticaret ve Hizmetler A.S.
Mercedes AMG High Performance Powertrains Ltd
Mercedes-Benz (China) Ltd.
100.00
5
Mississauga, Canada
66.91
Istanbul, Turkey
100.00
Brixworth, United Kingdom
5
100.00
Kölleda, Germany
5
100.00
Stuttgart, Germany
100.00
Mississauga, Canada
100.00
Wilmington, USA
100.00
MDC Power GmbH
100.00
MBLD Mercedes-Benz Leasing Deutschland GmbH
Mascot Truck Parts USA LLC
100.00
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
5,7
5,7
100.00
5,7
100.00
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
Schönefeld, Germany
Schönefeld, Germany
100.00
5,7
Mascot Truck Parts Canada Ltd (2017)
LEONIE FSM DVB GmbH
LBBW AM-MBVEXW
LBBW AM-Daimler Re Insurance
100.00
Zwartkop, South Africa
Koppieview Property (Pty) Ltd.
100.00
Windhof, Luxembourg
5,7
100.00
Schönefeld, Germany
5,7
100.00
Schönefeld, Germany
MBarc Credit Canada Inc.
100.00
Winterthur, Switzerland
5
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Mercedes-Benz Brooklands Limited
Wilmington, USA
Wilmington, USA
0.00
3
0.00
Mercedes-Benz Broker Argentina S.A.
3
100.00
Eugendorf, Austria
100.00
Warsaw, Poland
100.00
Moscow, Russian Federation
Stuttgart, Germany
Mercedes-Benz Bordeaux S.A.S.
Mercedes-Benz Banking Service GmbH
Mercedes-Benz Belgium Luxembourg S.A.
Mercedes-Benz Bank Service Center GmbH
3
Mercedes-Benz Auto Receivables Trust 2018-1
Wilmington, USA
0.00
3
Mercedes-Benz Auto Receivables Trust 2019-1
Wilmington, USA
0.00
3
Mercedes-Benz Auto Receivables Trust 2020-1
Mercedes-Benz Auto Receivables Trust 2020-A
Mercedes-Benz Bank AG
Mercedes-Benz Bank GmbH
Mercedes-Benz Bank Polska S.A.
Mercedes-Benz Bank Rus 000
100.00
0.00
Berlin, Germany
5
Mercedes-Benz Capital Rus O00
Moscow, Russian Federation
100.00
Mercedes-Benz Cars & Vans Brasil - Indústria e Comércio De Veículos Ltda.
São Bernardo do Campo, Brazil
100.00
100.00
Mercedes-Benz Cars Ceská republika s.r.o.
100.00
Mercedes-Benz Cars UK Limited
Milton Keynes, United Kingdom
100.00
Mercedes-Benz CharterWay S.A.S.
Montigny-le-Bretonneux, France
Prague, Czech Republic
Toronto, Canada
Mercedes-Benz Canada Inc.
100.00
Saarbrücken, Germany
100.00
5
Brussels, Belgium
100.00
Begles, France
100.00
Buenos Aires, Argentina
99.00
Budapest, Hungary
100.00
Milton Keynes, United Kingdom
100.00
Mercedes-Benz Camiones y Buses Argentina SAU.
Buenos Aires, Argentina
100.00
Wilmington, USA
Mercedes-Benz Auto Lease Trust 2020-B
3
5
Mem Martins, Portugal
100.00
Beijing, China
75.00
Bangkok, Thailand
100.00
100.00
Mercedes-Benz Antwerpen N.V.
Mercedes-Benz Argentina S.A.U.
Stuttgart, Germany
100.00
5
Antwerp, Belgium
Mercedes-Benz AG
Affalterbach, Germany
4
100.00
100.00
Stuttgart, Germany
5
100.00
100.00
100.00
Stuttgart, Germany
Detroit, USA
Detroit, USA
5
100.00
Berlin, Germany
5
100.00
Schönefeld, Germany
100.00
Buenos Aires, Argentina
100.00
Mercedes-Benz Asia GmbH
0.00
3
Mercedes-Benz Auto Lease Trust 2020-1
Wilmington, USA
0.00
3
246
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Name of the company
Domicile, country/region
Equity interest
in percent¹
Footnote
Mercedes-Benz Auto Lease Trust 2020-A
Wilmington, USA
0.00
Wilmington, USA
Mercedes-Benz CharterWay S.r.l.
Mercedes-Benz Auto Lease Trust 2019-B
0.00
Mercedes-Benz Assuradeuren B.V.
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2018-B
Stuttgart, Germany
100.00
5
Utrecht, Netherlands
100.00
Melbourne, Australia
100.00
Beijing, China
100.00
Wilmington, USA
0.00
3
Mercedes-Benz Auto Lease Trust 2019-A
Wilmington, USA
3
100.00
51.00
100.00
100.00
Schiphol, Netherlands
100.00
Warsaw, Poland
100.00
Oeiras, Portugal
100.00
Schiphol, Netherlands
100.00
Machelen, Belgium
100.00
Le Bourget, France
100.00
Alcobendas, Spain
100.00
Hoofddorp, Netherlands
100.00
Le Bourget, France
100.00
Düsseldorf, Germany
Schiphol, Netherlands
100.00
100.00
Machelen, Belgium
Rome, Italy
100.00
100.00
100.00
Athlon Car Lease Spain, S.A.
Athlon Dealerlease B.V.
Athlon France S.A.S.
Athlon Germany GmbH
Athlon Mobility Consultancy B.V.
Athlon Mobility Consultancy N.V.
Athlon Mobility Services UK Limited
Athlon Rental Germany GmbH
Athlon Sweden AB
Athlon Switzerland AG
Atlantis Foundries (Pty) Ltd.
Banco Mercedes-Benz do Brasil S.A.
Brooklands Estates Management Limited
Campo Largo Comercio de Veículos e Peças Ltda.
CARS Technik & Logistik GmbH
CLIDET NO 1048 (Proprietary) Limited
Kamenz, Germany
100.00
5
Schiphol, Netherlands
100.00
Schiphol, Netherlands
100.00
Machelen, Belgium
Schiphol, Netherlands
Athlon Car Lease S.A.S.
Milton Keynes, United Kingdom
Düsseldorf, Germany
Daimler Brand & IP Management GmbH & Co. KG
Daimler Buses North America Inc.
Oriskany, USA
Montreal, Canada
Halifax, Canada
Wilmington, USA
100.00
Schönefeld, Germany
100.00
5,7
Melbourne, Australia
100.00
Stuttgart, Germany
100.00
5
100.00
100.00
100.00
Wilmington, USA
100.00
Daimler Ceská republika Holding s.r.o.
Daimler Colombia S. A.
Prague, Czech Republic
Daimler Australia/Pacific Pty. Ltd.
100.00
Daimler AG & Co. Anlagenverwaltung OHG
Daimler Capital Services LLC
100.00
Malmö, Sweden
100.00
Schlieren, Switzerland
100.00
Atlantis Industria, South Africa
100.00
São Paulo, Brazil
100.00
Milton Keynes, United Kingdom
100.00
Campinas, Brazil
100.00
Wiedemar, Germany
100.00
5
Centurion, South Africa
100.00
DA Investments Co. LLC
Wilmington, USA
100.00
Daimler Canada Finance Inc.
Daimler Canada Investments Company
DAF Investments, Ltd.
100.00
Athlon Car Lease Rental Services Belgium N.V.
Athlon Car Lease Portugal, Ida
241
D CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7.3
11.7
2.1
2.0
28.3
24.5
5.5
4.6
33.8
29.1
1 With consideration of the voluntary waiver by the Board of Management of
20% of the fixed remuneration from April 1 to December 31, 2020.
2 With consideration of the voluntary waiver by the Supervisory Board of
20% of the fixed remuneration and of the attendance fee from April 1 to
December 31, 2020 and including remuneration for the members of the
Supervisory Boards of Mercedes-Benz AG and of Daimler Truck AG pursu-
ant to Section 314 Subsection 1 No. 6a of the German Commercial Code
(HGB).
242
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D.93
Auditor fees
2020
2019
In millions of euros
Audit services
42
38. Remuneration of the members of the
Board of Management and the
Supervisory Board
thereof KPMG AG
Remuneration granted in 2020 to the members of the Board of
Management and the Supervisory Board who were active in
2020 is shown in table 7 D.92.
According to Section 314 Subsection 1 No. 6a of the German
Commercial Code (HGB), the overall remuneration granted to
the members of the Board of Management, excluding service
cost resulting from entitlements to post-employment benefits,
amounted to €28.1 million (2019: €24.2 million).
1.0
5.6
8.9
7.8
2019
2020
Remuneration of the Supervisory Board²
Termination
benefits
benefits
(service cost)
a long-term incentive effect (PPSP)
Post-employment
(50% of annual bonus, "deferral")
Variable remuneration with
(50% of annual bonus)
Mid-term variable
remuneration
Fixed remuneration
(base salary)1
Short-term variable
remuneration
Management
Remuneration of the Board of
In millions of euros
Remuneration of the members of the Board of Management
and the Supervisory Board
D.92
Information regarding the remuneration of the members of the
Board of Management and of the Supervisory Board is dis-
closed on an individual basis in the Remuneration Report,
which is part of the Combined Management Report.
O Combined Management Report with Non-Financial
Statement
The payments made in 2020 to former members of the Board
of Management of Daimler AG and their survivors amounted to
€26.0 million (2019: €19.5 million). The pension provisions for
former members of the Board of Management and their survi-
vors amounted to €362.5 million as of December 31, 2020
(2019: €355.8 million).
No advance payments or loans were made or abated to mem-
bers of the Board of Management or to the members of the
Supervisory Board of Daimler AG in 2020.
The members of the Board of Management do not receive any
remuneration for their board activities in the boards of the sub-
sidiaries. These activities are compensated by the remunera-
tion at Daimler AG.
The members of the Supervisory Board are solely granted
short-term fixed remuneration for their board and committee
activities, the amounts of which depend on their functions in
the Supervisory Board. With the exception of remuneration
paid to the members representing the employees in accor-
dance with their contracts of employment, no remuneration
was paid in 2020 for services provided personally beyond
board and committee activities, in particular for advisory or
agency services.
Expenses for variable remuneration of the Board of Manage-
ment with a long-term incentive effect, as shown in table
71 D.92, result from the ongoing measurement at fair value at
each balance sheet date of all rights granted and not yet due
under the Performance Phantom Share Plans (PPSP), i.e., for
the plans of the years 2017 to 2020. In 2020, the active mem-
bers of the Board of Management were granted 215,743 (2019:
266,128) phantom shares in connection with the PPSP; the fair
value of these phantom shares at the grant date was €9.2 mil-
lion (2019: €13.3 million). See Note 21 for additional infor-
mation on share-based payment of the members of the Board
of Management.
Athlon Car Lease Rental Services B.V.
Wirtschaftsprüfungsgesellschaft
Other attestation services
Other attestation services were particularly provided for volun-
tary project-supporting audits of IT systems and processes,
audits in connection with compliance management systems, or
the issuance of comfort letters.
Tax services primarily relate to value-added tax advisory.
Other services were mainly commissioned in connection with
IT and process consulting and quality assurance not relevant to
accounting.
The decrease in auditor fees compared to the previous year is
among other things due to the expenses in 2019 in connection
with "Project Future."
40. Events after the reporting period
Examination of a spin-off and separate listing of Daimler
Truck
On February 3, 2021, the Board of Management of Daimler AG
decided, with the consent of the Supervisory Board, to exam-
ine the spin-off of Daimler Trucks & Buses including significant
parts of the related financial services business (Daimler Truck),
and to begin preparations for a separate listing of Daimler
Truck before the end of 2021. Within the framework of the pro-
posed transaction, Daimler intends to transfer a majority inter-
est in Daimler Truck to its shareholders. Shareholder approval
could be granted at an Extraordinary Shareholders' Meeting of
Daimler AG at the end of the third quarter of 2021. Daimler
intends to maintain a minority interest in Daimler Truck.
Subject to the approval of the respective boards, the scope to
be spun off is expected to be allocated to discontinued opera-
tions as of the third quarter of 2021. The amount of income to
be recognized in connection with the spin-off cannot be reli-
ably determined at present.
41. Additional information
German Corporate Governance Code
The Board of Management and the Supervisory Board of
Daimler AG have issued a declaration pursuant to Section 161
of the German Stock Corporation Act (AktG) and have made it
permanently available to their shareholders on Daimler's web-
site at https://www.daimler.com/documents/company/
corporate-governance/declarations/daimler-declaration-
en-12-2020.pdf.
Information on investments
The statement of investments of the Daimler Group pursuant
to Section 313 Subsection 2 Nos. 1-6 of the German Commer-
cial Code (HGB) is presented in table 7 F.94. In general, coop-
erations without an equity interest are not reported. Informa-
tion on equity and earnings and information on investments
pursuant to Section 313 Subsection 2 No. 4 of the German
Commercial Code is omitted insofar as, pursuant to Section
313 Subsection 3 Sentence 4 of the HGB, such information is
of minor relevance for a fair presentation of the profitability,
liquidity and capital resources or financial position of the
Daimler Group. In addition, the statement of investments indi-
cates which consolidated companies make use of the exemp-
tion pursuant to Section 264 Subsection 3 of the HGB and/or
Section 264b of the HGB. The Consolidated Financial State-
ments of Daimler AG release those subsidiaries from the
requirements that would otherwise apply.
D.94
Name of the company
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 243
Domicile, country/region
Equity interest
in percent¹
Footnote
I. Consolidated subsidiaries
Accumotive GmbH & Co. KG
Athlon Beheer International B.V.
Athlon Beheer Nederland B.V.
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
Athlon Car Lease Italy S.R.L.
Athlon Car Lease Nederland B.V.
Athlon Car Lease Polska Sp. z o.O.
cesses.
23
Audit services relate to the audit of Daimler Group's Consoli-
dated Financial Statements and the year-end financial state-
ments, as well as to all services required for the audit including
the reviews of interim financial statements, the accounting-
related audit of the internal control system, and accounting-
related reviews of the introduction of IT systems and pro-
75
7
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Tax services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Other services
5
2
52
28
15
12
2
1
1
6
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
39. Auditor fees
1
4
52
The shareholders of Daimler AG elected KPMG AG Wirtschafts-
prüfungsgesellschaft as the external auditor at the Annual
Shareholders' Meeting held on July 8, 2020. Table 71 D.93
shows the fees for services provided by KPMG AG Wirtschafts-
prüfungsgesellschaft and the companies of the worldwide
KPMG network to Daimler AG, the consolidated subsidiaries as
well as joint operations.
Bogota D.C., Colombia
100.00
Daimler Commercial Vehicles South East Asia Pte. Ltd.
Daimler Compra y Manufactura Mexico S. de R.L. de C.V.
100.00
Berlin, Germany
100.00
5
Farmington Hills, USA
100.00
Mexico City, Mexico
100.00
Singapore, Singapore
Stuttgart, Germany
100.00
100.00
5
Mulgrave, Australia
100.00
Melbourne, Australia
100.00
Beijing, China
100.00
Kirchheim unter Teck, Germany
100.00
5
Stuttgart, Germany
100.00
Luxembourg, Luxembourg
5
Daimler Trucks Canada Ltd.
Daimler Trucks and Buses (China) Ltd.
Newark, USA
Beijing, China
100.00
100.00
100.00
Stuttgart, Germany
100.00
5
Daimler Re Brokers GmbH
Bremen, Germany
74.90
5
Daimler Re Insurance S.A. Luxembourg
Daimler Real Estate GmbH
Daimler Retail Receivables LLC
DAIMLER SERVICIOS CORPORATIVOS MEXICO S. DE R.L. DE C.V.
Daimler South East Asia Pte. Ltd.
Daimler Truck AG
Daimler Truck and Bus Australia Pacific Pty. Ltd.
DAIMLER TRUCK AND BUS HOLDING AUSTRALIA PACIFIC PTY LTD
Daimler Truck China Limited
Daimler Truck Fuel Cell GmbH & Co. KG
Daimler Truck Vermögens- und Beteiligungsgesellschaft mbH
Daimler Trucks & Buses US Holding LLC
Daimler Trucks and Buses Southern Africa (Pty) Ltd
Wilmington, USA
Wilmington, USA
Beijing, China
Daimler UK Limited
Daimler Vans Hong Kong Limited
Daimler Vans USA, LLC
Daimler Vehículos Comerciales Mexico S. de R.L. de C.V.
Daimler Vermögens- und Beteiligungsgesellschaft mbH
Daimler Verwaltungsgesellschaft für Grundbesitz mbH
Daimler Vorsorge und Versicherungsdienst GmbH
Detroit Diesel Corporation
Detroit Diesel Remanufacturing LLC
DTFC Holding GmbH
EHG Elektroholding GmbH
EvoBus (Schweiz) AG
EvoBus (U.K.) Ltd.
EvoBus Austria GmbH
EvoBus Belgium N.V.
Wilmington, USA
Mexico City, Mexico
Wilmington, USA
100.00
Farmington Hills, USA
100.00
Milton Keynes, United Kingdom
100.00
Hong Kong, China
67.55
100.00
100.00
Stuttgart, Germany
Daimler Trust Leasing LLC
100.00
Daimler Trust Leasing Conduit LLC
Farmington Hills, USA
100.00
Zwartkop, South Africa
100.00
Mississauga, Canada
100.00
Daimler Trucks Korea Ltd.
Seoul, South Korea
100.00
Daimler Trucks North America LLC
Portland, USA
100.00
Daimler Trucks Remarketing Corporation
Daimler Trucks Retail Trust 2019-1
Daimler Trucks Retail Trust 2020-1
Daimler Trust Holdings LLC
Portland, USA
100.00
Wilmington, USA
0.00
3
Wilmington, USA
0.00
3
100.00
Daimler Parts Brand GmbH
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Daimler North America Finance Corporation
Daimler Fleet Management Singapore Pte. Ltd.
Singapore, Singapore
100.00
Daimler Fleet Management South Africa (Pty.) Ltd. i. L.
Centurion, South Africal
65.00
4
Daimler Fleet Services A.S.
Istanbul, Turkey
100.00
Daimler Greater China Ltd.
Beijing, China
100.00
Daimler Grund Services GmbH
Daimler India Commercial Vehicles Private Limited
Daimler Insurance Agency LLC
Schönefeld, Germany
100.00
5
Chennai, India
100.00
Wilmington, USA
100.00
244
5
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
100.00
Daimler Fleet Management GmbH
Singapore, Singapore
100.00
Mexico City, Mexico
100.00
Daimler Export and Trade Finance GmbH
Daimler Finance North America LLC
Daimler Financial Services Africa & Asia Pacific Ltd.
Daimler Financial Services India Private Limited
Daimler Financial Services Investment Company LLC
Daimler Financial Services México, S. de R.L. de C.V.
Berlin, Germany
100.00
5
Wilmington, USA
100.00
Singapore, Singapore
100.00
Chennai, India
100.00
Wilmington, USA
100.00
Mexico City, Mexico
100.00
Daimler Financial Services, S.A. de C.V., S.O.F.O.M., E.N.R.
Mexico City, Mexico
100.00
Stuttgart, Germany
Name of the company
Domicile, country/region
Equity interest
in percent¹
5
Mexico City, Mexico
100.00
Mexico City, Mexico
100.00
Beijing, China
100.00
Stuttgart, Germany
100.00
5
Melbourne, Australia
100.00
São Paulo, Brazil
100.00
Leinfelden-Echterdingen, Germany
100.00
5
Utrecht, Netherlands
100.00
Daimler Nederland Holding B.V.
Utrecht, Netherlands
100.00
Daimler North America Corporation
100.00
Böblingen, Germany
Daimler Nederland B.V.
Daimler Mobility Services GmbH
Footnote
Daimler Insurance Services GmbH
Stuttgart, Germany
100.00
5
Daimler Insurance Services UK Limited
Milton Keynes, United Kingdom
100.00
Daimler International Finance B.V.
Daimler International Nederland B.V.
Utrecht, Netherlands
100.00
100.00
100.00
Daimler Investments US LLC
Wilmington, USA
100.00
Daimler Ladungsträger GmbH
Daimler Manufactura, S. de R.L. de C.V.
Daimler Mexico, S.A. de C.V.
Daimler Mobility & Technology Service Co., Ltd.
Daimler Mobility AG
DAIMLER MOBILITY AUSTRALIA PTY LTD
Daimler Mobility Brasil Holding S.A.
Utrecht, Netherlands
Montigny-le-Bretonneux, France
Mercedes-Benz Trucks Österreich GmbH
Kirchheim unter Teck, Germany
Banbury, United Kingdom
7
100.00
Schönefeld, Germany
100.00
Stuttgart, Germany
51.00
88.89
Esparraguera, Spain
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
RepairSmith, Inc.
R.T.C. Management Company Limited
Porcher & Meffert Grundstücksgesellschaft mbH & Co. Stuttgart OHG
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
Montajes y Estampaciones Metálicas, S.L.
51.00
SelecTrucks Comércio de Veículos Ltda
El Segundo, USA
100.00
Stuttgart, Germany
High Point, USA
100.00
Blacksburg, USA
75.61
Le Bourget, France
65.00
Atlantis Industria, South Africa
100.00
Atlantis Industria, South Africa
100.00
100.00
5
100.00
100.00
100.00
Mauá, Brazil
100.00
Kleinostheim, Germany
Mercedes ServiceCard Beteiligungsgesellschaft mbH
100.00
Lisbon, Portugal
Bratislava, Slovakia
100.00
Bangalore, India
100.00
Tel Aviv, Israel
100.00
Stuttgart, Germany
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz Research and Development India Private Limited
Mercedes-Benz Research & Development Tel Aviv Ltd.
Mercedes-Benz Project Consult GmbH
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Brackley, United Kingdom
100.00
100.00
Mercedes-Benz Subscription Services USA LLC
100.00
Mercedes-Benz.io Portugal Unipessoal Lda.
100.00
Stuttgart, Germany
Mercedes-Benz.io GmbH
100.00
Valencia, Venezuela
Mercedes-Benz Venezuela S.A.
4
100.00
Buenos Aires, Argentina
Mercedes-Benz Vehículos Comerciales Argentina SAU i.L.
100.00
Alcobendas, Spain
Mercedes-Benz Vans Mobility S.L.U.
100.00
Stuttgart, Germany
Mercedes-Benz Trucks MENA Holding GmbH
Wilmington, USA
Calgary, Canada
7
100.00
100.00
100.00
Jakarta, Indonesia
100.00
Lima, Peru
100.00
Bryanston, South Africa
62.62
Portland, USA
100.00
Mississauga, Canada
100.00
Melbourne, Australia
0.00
3
Melbourne, Australia
0.00
100.00
3
100.00
50.10
Sterling Truck Corporation
Sumperská správa majetku k.s.
Thomas Built Buses of Canada Limited
Thomas Built Buses, Inc.
TORC Robotics, Inc.
Ucafleet S.A.S
Ukuvela Holdings Proprietary Limited
Ukuvela Properties (Pty.) Ltd.
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
Western Star Trucks Sales, Inc
Zuidlease B.V.
Logan Township, USA
Le Bourget, France
Bogor, Indonesia
Ebina, Japan
Jakarta, Indonesia
Bogor, Indonesia
100.00
7
Mercedes-Benz OD GmbH
Melbourne, Australia
3
0.00
3
Milan, Italy
0.00
3
Luxembourg, Luxembourg
0.00
3
Hambach, France
100.00
Schiphol, Netherlands
100.00
Sebes, Romania
100.00
Portland, USA
100.00
Prague, Czech Republic
Wilmington, USA
0.00
3
Seoul, South Korea
Mississauga, Canada
100.00
Mississauga, Canada
100.00
7
Beijing, China
0.00
3
Beijing, China
0.00
3
Beijing, China
0.00
3
Saint-Denis, France
0.00
3
0.00
Star Assembly SRL
Mercedes-Benz Museum GmbH
80.00
Daimler Pensionsfonds AG
Daimler Mitarbeiter Wohnfinanz GmbH
Daimler International Assignment Services USA, LLC
Footnote
Equity interest
in percent¹
Domicile, country/region
Name of the company
Daimler Protics GmbH
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
100.00
Beijing, China
Daimler Innovation Technology (China) Co., Ltd.
100.00
San Sebastián de los Reyes, Spain
Daimler Group Services Madrid, S.A.U.
100.00
250
Daimler Purchasing Coordination Corp.
Daimler Truck Fuel Cell Canada INC.
Daimler Truck Verwaltungsgesellschaft für Grundbesitz mbH
Taipei, Taiwan
100.00
Schönefeld, Germany
100.00
Vancouver, Canada
100.00
Wilmington, USA
100.00
Leinfelden-Echterdingen, Germany
6
100.00
Stuttgart, Germany
100.00
100.00
Stuttgart, Germany
Wilmington, USA
Daimler Trucks Asia Taiwan Ltd.
100.00
Esslingen am Neckar, Germany
Berlin, Germany
Daimler Group Services Berlin GmbH
Daimler Gastronomie GmbH
Stuttgart, Germany
74.47
Buenos Aires, Argentina
100.00
Berlin, Germany
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Kamenz, Germany
Daimler Automotive de Venezuela C.A.
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Cúspide GmbH
Achtzehnte Vermögensverwaltungsgesellschaft DVB mbH
AEG Olympia Office GmbH
Accumotive Verwaltungs-GmbH
II. Unconsolidated subsidiaries²
Stuttgart, Germany
Portland, USA
Sittard, Netherlands
100.00
51.00
Valencia, Venezuela
Daimler Brand & IP Management Verwaltung GmbH
100.00
Milton Keynes, United Kingdom
Daimler Financial Services UK Trustees Ltd.
100.00
Dubai, United Arab Emirates
Daimler Commercial Vehicles MENA FZE
100.00
Nairobi, Kenya
Daimler Commercial Vehicles Africa Ltd.
100.00
Bangkok, Thailand
Daimler Commercial Vehicles (Thailand) Ltd.
100.00
Wilmington, USA
Daimler Coaches North America LLC
100.00
Stuttgart, Germany
100.00
Daimler TSS GmbH
Ulm, Germany
100.00
100.00
Dubai, United Arab Emirates
100.00
Wilmington, USA
100.00
Berlin, Germany
100.00
Neuhausen auf den Fildern, Germany
100.00
Kamenz, Germany
100.00
Stuttgart, Germany
100.00
Arvidsjaur, Sweden
100.00
Stuttgart, Germany
100.00
Leinfelden-Echterdingen, Germany
Volkach, Germany
100.00
100.00
Moscow, Russian Federation
Mercedes-Benz Manufacturing Rus Ltd
100.00
New Cairo, Egypt
Mercedes-Benz Manufacturing and Import Egypt
100.00
Valbonne, France
100.00
100.00
100.00
Budapest, Hungary
Cebu City, Philippines
Raaba, Austria
100.00
Kamenz, Germany
100.00
New Cairo, Egypt
Maastricht, Netherlands.
Mercedes-Benz Motorsport Limited
100.00
96.00
Mercedes pay USA LLC
MBition GmbH
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
Li-Tec Battery GmbH
LEONIE DMS DVB GmbH
Lapland Car Test Aktiebolag
LAB1886 GmbH
Fleetboard Logistics GmbH
EvoBus Russland 000
EvoBus Reunion S. A.
DTFC Verwaltungsgesellschaft mbH
DTB Tech & Data Hub, Unipessoal Lda
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
Daimler Unterstützungskasse GmbH
Daimler UK Trustees Limited
Daimler UK Share Trustee Ltd.
Mercedes-Benz Hungária Kft.
Mercedes-Benz Cars Middle East FZE
Moscow, Russian Federation
Mercedes-Benz Consulting GmbH
Mercedes-Benz Egypt S.A.E.
Le Port, France
100.00
Kirchheim unter Teck, Germany
100.00
Tramagal, Portugal
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
Mercedes-Benz IDC Europe S.A.S.
Mercedes-Benz Group Services Phils., Inc.
Mercedes-Benz G GmbH
Mercedes-Benz Energy GmbH
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Special Lease Systems (SLS) B.V
0.9
Silver Arrow S.A.
100.00
Prague, Czech Republic
100.00
Mem Martins, Portugal
100.00
Warsaw, Poland
Mercedes-Benz Renting, S.A.
Alcobendas, Spain
Mercedes-Benz PRAHA s.r.o.
Mercedes-Benz Polska Sp. z.o.o
100.00
Shanghai, China
100.00
Milton Keynes, United Kingdom
100.00
Azuqueca de Henares, Spain
Mercedes-Benz Portugal, S.A.
100.00
248
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
100.00
100.00
100.00
Mem Martins, Portugal
Wilmington, USA
Woluwe-Saint-Lambert, Belgium
Milton Keynes, United Kingdom
Madrid, Spain
Mercedes-Benz Romania S.R.L.
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Risk Solutions South Africa (Pty.) Ltd.
Mercedes-Benz Retail, Unipessoal Lda.
Mercedes-Benz Retail, S.A.
Mercedes-Benz Retail Group UK Limited
Mercedes-Benz Retail Belgium NV/SA
Mercedes-Benz Research & Development North America, Inc.
Footnote
Equity interest
in percent¹
Domicile, country/region
Name of the company
100.00
Prague, Czech Republic
100.00
Port-Marly, France
Mercedes-Benz Minibus GmbH
100.00
Mexico City, Mexico
Mercedes-Benz Mexico, S. de R.L. de C.V.
100.00
Mechelen, Belgium
Mercedes-Benz Mechelen N.V.
Mercedes-Benz U.S. International, Inc.
3
0.00
Wilmington, USA
Mercedes-Benz Master Owner Trust
100.00
Jawor, Poland
100.00
Kecskemét, Hungary
Mercedes-Benz Manufacturing Poland sp. z o. o.
Dortmund, Germany
100.00
100.00
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
100.00
Eugendorf, Austria
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
Mercedes-Benz Parts Logistics UK Limited
Mercedes-Benz Parts Manufacturing & Services Ltd.
Mercedes-Benz Parts Logistics Eastern Europe s.r.o.
Mercedes-Benz Paris SAS
Mercedes-Benz Österreich GmbH
100.00
Auckland, New Zealand
Mercedes-Benz New Zealand Ltd
100.00
Mercedes-Benz Nederland B.V.
100.00
Seoul, South Korea
Mercedes-Benz Mobility Korea Ltd.
5
100.00
Stuttgart, Germany
5
100.00
Centurion, South Africa
100.00
100.00
Molsheim, France
100.00
Rome, Italy
Mercedes-Benz Trucks Nederland B.V.
Mercedes-Benz Trucks Molsheim
Mercedes-Benz Trucks Italia S.r.l.
100.00
Montigny-le-Bretonneux, France
100.00
Alcobendas, Spain
100.00
Prague, Czech Republic
100.00
Sint-Pieters-Leeuw, Belgium
100.00
100.00
5.5
51.00
MERCEDES-BENZ TRUCKS POLSKA SPÓŁKA Z OGRANICZONA
ODPOWIEDZIALNOSCIA
Utrecht, Netherlands
smart France S.A.S.
66.91
Istanbul, Turkey
100.00
Milton Keynes, United Kingdom
100.00
Schlieren, Switzerland
Mercedes-Benz Türk A.S.
Mercedes-Benz Trucks UK Limited
Mercedes-Benz Trucks Schweiz AG
100.00
Sintra, Portugal
100.00
100.00
100.00
Warsaw, Poland
Eugendorf, Austria
Mercedes-Benz Trucks Portugal S.A.
Mercedes-Benz Manufacturing Hungary Kft.
Brussels, Belgium
Taipei, Taiwan
Selangor, Malaysia
100.00
100.00
100.00
Schlieren, Switzerland
Bucharest, Romania
Alcobendas, Spain
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Servicios S.A.U
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Service Leasing S.R.L.
Mercedes-Benz Schweiz AG
100.00
Moscow, Russian Federation
Mercedes-Benz Russia AO
100.00
Bucharest, Romania
100.00
Rome, Italy
100.00
Bucharest, Romania
Buenos Aires, Argentina
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
Mercedes-Benz Trucks France S.A.S.U
Mercedes-Benz Trucks España S.L.U.
Mercedes-Benz Trucks Ceská republika s.r.o.
Mercedes-Benz Trucks Belgium Luxembourg NV/SA
Mercedes-Benz Trucks Center Sint-Pieters-Leeuw NV/SA
Mercedes-Benz Trucks & Buses Romania S.R.L.
Mercedes-Benz Taiwan Ltd.
100.00
Malmö, Sweden
Mercedes-Benz Sverige AB
100.00
Pretoria, South Africa
Mercedes-Benz South Africa Ltd
100.00
Sosnowiec, Poland
Mercedes-Benz Sosnowiec Sp. z o.o.
100.00
Istanbul, Turkey
100.00
100.00
Utrecht, Netherlands
100.00
5
Mercedes-Benz Vietnam Ltd.
Ho Chi Minh City, Vietnam
70.00
Mercedes-Benz Warszawa Sp. z o.o.
Warsaw, Poland
Bangkok, Thailand
Mercedes-Benz Waterloo S.A.
Braine-l'Alleud, Belgium
100.00
Mercedes-Benz Wavre S.A.
Wavre, Belgium
100.00
Mercedes-Benz Wemmel N.V.
Wemmel, Belgium
100.00
Mercedes-Benz Wholesale Receivables LLC
100.00
Wilmington, USA
Stuttgart, Germany
5
100.00
Mercedes-Benz Vans Mobility GmbH
Berlin, Germany
100.00
5
Mercedes-Benz Vans Nederland B.V.
Utrecht, Netherlands
100.00
Mercedes-Benz Vans UK Limited
Milton Keynes, United Kingdom
100.00
Mercedes-Benz Vans, LLC
Wilmington, USA
100.00
Mercedes-Benz Vermögens- und Beteiligungsgesellschaft mbH
Stuttgart, Germany
100.00
Mercedes-Benz Versicherung AG
Madrid, Spain
100.00
Toronto, Canada
PT Mercedes-Benz Distribution Indonesia
Renting del Pacífico S.A.C.
Sandown Motor Holdings (Pty) Ltd
SelecTrucks of America LLC
SelecTrucks of Toronto, Inc.
Silver Arrow Australia 2019-1
Silver Arrow Australia Trust 2019-1
Silver Arrow Australia Trust 2020-1
Silver Arrow Canada GP Inc.
Silver Arrow Canada LP
Silver Arrow China 2020-1 Retail Auto Loan Asset Backed Notes Trust
Silver Arrow China 2020-2 Retail Auto Loan Asset Backed Notes Trust
Silver Arrow China Mercedes-Benz Leasing Co., Ltd. 2020-1
Silver Arrow France
Silver Arrow Korea 2020-1
Silver Arrow Lease Facility Trust
Silver Arrow Merfina 2019-1 S.r.l.
PT Daimler Commercial Vehicles Manufacturing Indonesia
MFTA Canada, Inc.
PT Daimler Commercial Vehicles Indonesia
P.T. Mercedes-Benz Indonesia
100.00
Mitsubishi Fuso Bus Manufacturing Co., Ltd.
Toyama, Japan
100.00
Mitsubishi Fuso Truck and Bus Corporation
Kawasaki, Japan
89.29
MITSUBISHI FUSO TRUCK EUROPE - Sociedade Europeia de Automóveis, S.A. Tramagal, Portugal
100.00
Name of the company
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
249
Domicile, country/region
Equity interest
in percent¹
Footnote
Mitsubishi Fuso Truck of America, Inc.
Multifleet G.I.E
PABCO Co., Ltd.
Mercedes-Benz Vans España, S.L.U.
100.00
Prague, Czech Republic
100.00
Bucharest, Romania
100.00
Zagreb, Croatia
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Leasing Kft.
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing Hrvatska d.o.o.
5
100.00
Stuttgart, Germany
100.00
Barueri, Brazil
65.00
Beijing, China
Mercedes-Benz Leasing GmbH
Mercedes-Benz Leasing do Brasil Arrendamento Mercantil S.A.
Budapest, Hungary
Mercedes-Benz Leasing Co., Ltd.
100.00
100.00
Wilmington, USA
Mercedes-Benz Manufacturing (Thailand) Limited
Mercedes-Benz Manhattan, Inc.
100.00
Puchong, Malaysia
5
100.00
Ludwigsfelde, Germany
5
100.00
100.00
100.00
Taipei, Taiwan
Mercedes-Benz Malaysia Sdn. Bhd.
Mercedes-Benz Ludwigsfelde GmbH
Mercedes-Benz Leasing Treuhand GmbH
Mercedes-Benz Leasing Taiwan Ltd.
Warsaw, Poland
100.00
Stuttgart, Germany
51.00
100.00
Brackley, United Kingdom
100.00
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Mercedes-Benz USA, LLC
Mercedes-Benz V.I. Lyon SAS
Mercedes-Benz V.I. Paris Ile de France SAS
Mercedes-Benz Vans Ceská republika s.r.o
Warsaw, Poland
Wilmington, USA
Genas, France
Vance, USA
100.00
100.00
100.00
Wissous, France
Bangkok, Thailand
100.00
100.00
100.00
100.00
Beijing, China
100.00
100.00
Tokyo, Japan
Seoul, South Korea
Mercedes-Benz Korea Limited
Mercedes-Benz Japan Co., Ltd.
100.00
Rome, Italy
100.00
Mercedes-Benz Leasing (Thailand) Co., Ltd.
Wilmington, USA
100.00
Taipei, Taiwan
100.00
Utrecht, Netherlands
100.00
100.00
Voluntari, Romania
Vienna, Austria
50.00
50.00
Garcia, Mexico
Berlin, Germany
54.01
Kentwood, USA
IONITY Holding GmbH & Co. KG
Aguascalientes, Mexico
Polomex, S.A. de C.V.
Movinx GmbH
MB Service Japan Co., Ltd.
Beijing, China
50.00
Hitachi, Japan
25.10
Fuzhou, China
50.00
Munich, Germany
20.00
33.40
50.00
26.00
SelecTrucks of Houston LLC
Houston, USA
50.00
Fujian Benz Automotive Co., Ltd.
SelecTrucks of Houston Wholesale LLC
Munich, Germany
Enbase Power GmbH
Footnote
V. Joint ventures accounted for using the equity method
Beijing Foton Daimler Automotive Co., Ltd
Houston, USA
Name of the company
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
251
Star Transmission srl
STARKOM, proizvodnja in trgovina d.o.o.
T.O.C (Schweiz) AG
trapoFit GmbH
Vierte Vermögensverwaltung PV GmbH
Zweite Vermögensverwaltung PV GmbH
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
Domicile, country/region
Equity interest
in percent¹
Cugir, Romania
Daimler Kamaz Trucks Holding GmbH
100.00
100.00
Schlieren, Switzerland
51.00
Chemnitz, Germany
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
III. Joint operations accounted for using proportionate consolidation
Cooperation Manufacturing Plant Aguascalientes, S.A.P.I de C.V.
IV. Joint operations accounted for using the equity method
North America Fuel Systems Remanufacturing LLC
Maribor, Slovenia
50.00
15.00
Council Bluffs, USA
Britta Seeger
Brita Roger
Wilfried Porth
Wilfried Parth
Martin Daum
Alle +R
fuld tillb
Hubertus Troska
Markus Schäfer
ماتسلسل
Renata Jungo Brüngger
Придвор
Ola Källenius
Auffaro
Huberton Riz
Harald Wilhelm
E❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 255
Independent Auditor's Report
Impairment Risk on Operating Leases
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from January 1
to December 31, 2020. These matters were addressed in the
context of our audit of the consolidated financial statements
as a whole, and, in forming our opinion thereon, we do not pro-
vide a separate opinion on these matters.
Key Audit Matters in the Audit of the Consolidated Finan-
cial Statements
We conducted our audit of the consolidated financial state-
ments and of the combined management report in accordance
with Section 317 HGB and the EU Audit Regulation No.
537/2014 (referred to subsequently as the "EU Audit Regula-
tion") and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated by the
Institut der Wirtschaftsprüfer (Institute of Public Auditors in
Germany) (IDW). We performed the audit of the consolidated
financial statements in supplementary compliance with the
International Standards on Auditing (ISAs). Our responsibilities
under those requirements, principles and standards are further
described in the "Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the Combined Man-
agement Report" section of our auditor's report. We are inde-
pendent of the group entities in accordance with the require-
ments of European law and German commercial and
professional law, and we have fulfilled our other German pro-
fessional responsibilities in accordance with these require-
ments. In addition, in accordance with Article 10 paragraph 2
letter f) of the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under Article 5
paragraph 1 of the EU Audit Regulation. We believe that the evi-
dence we have obtained is sufficient and appropriate to pro-
vide a basis for our opinions on the consolidated financial
statements and on the combined management report.
Basis for the Opinions
256
Pursuant to Section 322 paragraph 3 sentence 1 HGB, we
declare that our audit has not led to any reservations relating
to the legal compliance of the consolidated financial state-
ments and of the combined management report.
the accompanying combined management report as a whole
provides an appropriate view of the Group's position. In all
material respects, the combined management report is con-
sistent with the consolidated financial statements, complies
with German legal requirements and appropriately presents
the opportunities and risks of future development. Our opin-
ion on the combined management report does not cover the
elements of the combined management report referred to in
the "Other information" section of our auditor's report. The
combined management report includes cross-references not
foreseen by law that are marked as unaudited. Our opinion
does not cover these cross-references and the information
to which these cross-references relate.
the accompanying consolidated financial statements com-
ply, in all material respects, with the IFRSS as adopted by the
EU, and the additional requirements of German commercial
law pursuant to Section 315e paragraph 1 HGB and, in com-
pliance with these requirements, give a true and fair view of
the assets, liabilities and financial position of the Group as of
December 31, 2020, and of its financial performance for the
financial year from January 1 to December 31, 2020, and
In our opinion, on the basis of the knowledge obtained in the
audit
The combined management report includes cross-references
not foreseen by law that are marked as unaudited. In accor-
dance with the German legal regulations, we have not audited
the content of these cross-references and the information to
which these cross-references relate.
We have audited the consolidated financial statements of
Daimler AG, Stuttgart, and its subsidiaries (the Group), which
comprise the consolidated statement of financial position as of
December 31, 2020, and the consolidated statement of
income, consolidated statement of comprehensive income/
loss, consolidated statement of changes in equity and consoli-
dated statement of cash flows for the financial year from Janu-
ary 1 to December 31, 2020 as well as notes to the consoli-
dated financial statements, including a summary of significant
accounting policies. In addition, we have audited the group
management report, which is combined with the management
report of Daimler AG (combined management report), including
the combined non-financial declaration pursuant to Sections
289 paragraph 1, 289c, 315b paragraph 1 and 315c HGB
(Handelsgesetzbuch: German Commercial Code) for the finan-
cial I year from January 1 to December 31, 2020. In accordance
with the German legal regulations, we have not audited the
content of the elements of the combined management report
referred to in the "Other information" section of our auditor's
report.
Opinions
Report on the Audit of the Consolidated Finan-
cial Statements and of the Combined Manage-
ment Report
To: Daimler AG, Stuttgart
Stuttgart, 17th February 2021
Please refer with regard to the accounting policies and meth-
ods applied to the notes to the consolidated financial state-
ments in Note 1 >>Significant accounting policies<< and
● Note 2 »Accounting estimates and management judg-
ments<<. Further information on the operating leases can be
found in the notes to the consolidated financial statements in
Note 12 >> Equipment on operating leases« and in the com-
ments in the combined management report in the section enti-
tled >>Industry and business risks and opportunities<<.
To the best of our knowledge, and in accordance with the
applicable reporting principles, the consolidated financial
statements give a true and fair view of the assets, liabilities,
financial position, cash flows and profit or loss of the Group,
and the Group management report, which has been combined
with the management report for Daimler AG, includes a fair
review of the development and performance of the business
and the position of the Group, together with a description of
the principal opportunities and risks associated with the
expected development of the Group.
E❘ FURTHER INFORMATION | RESPONSIBILITY STATEMENT
London, United Kingdom
9.98
8.62
Bruchsal, Germany
11.75
Stuttgart, Germany
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG)
28.20
60.00
Stuttgart, Germany
51.00
Most, Czech Republic
50.00
Bottrop, Germany
Sannoseki, Japan
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies we refer to Note 1.
3 Control due to economic circumstances
4 In liquidation
5 Qualification for exception pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB)
254
253
264
255
254
Independent Auditor's Report
Ten-Year Overview
Responsibility Statement
Information
Further
E
Search
211
E❘ FURTHER INFORMATION | CONTENTS
7 Daimler AG or one or several consolidated subsidiaries, is/are the partner(s) with unlimited liability.
6 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
Responsibility Statement
33.33
The Risk for the Consolidated Financial Statements
The statement of financial position caption »Equipment on
operating leases<< (€ 47,552 million) includes among other
things Mercedes-Benz passenger cars, which are purchased by
non-group dealers or other third parties and are the subject of
an operating lease with the Daimler Group. An impairment loss
exists with regard to these vehicles that is primarily dependent
on the residual value achievable at the end of the lease. These
future residual values are dependent on the situation in the
used vehicle markets prevailing when the vehicles are
returned. The future-oriented valuation is based on a number
of discretionary assumptions. The risk for the financial state-
ments is that any impairment losses will not be recognized or
that the amounts recognized will be inadequate.
We audited the recoverability of the Mercedes-Benz passenger
cars purchased externally in the statement of financial position
caption "Equipment on operating leases". We investigated and
appraised the indications assumed by the Group for any need
for an impairment loss and where necessary obtained an
understanding of the write-downs calculated by Daimler. We
have assessed Daimler's evaluation with regard to the residual
values achievable by the end of the terms of the leases. In this
connection, we in particular critically reviewed the main influ-
encing factors, such as the expected number of returns from
leasing, the current marketing results in order to assess the
accuracy of the estimates and future vehicle model changes.
For significant markets we furthermore also audited the con-
sistency of the assumptions made by Daimler with residual
value forecasts by independent expert third parties.
The other information does not comprise the consolidated
financial statements, the audited disclosures in the manage-
ment report and our related auditor's report.
The other information comprises in addition the remaining
parts of the annual report.
the combined declaration on corporate management, which
is referred to in the combined management report.
The legal representatives and the Supervisory Board are
responsible for the other information. The other information
comprises the following elements of the combined manage-
ment report, the content of which we have not audited:
Other information
The discretionary assessments and assumptions of the legal
representatives are appropriate.
Our opinions on the consolidated financial statements and on
the combined management report do not cover the other infor-
mation, and consequently we do not express an opinion or any
other form of assurance conclusion thereon.
Our Observations
Where agreement has been reached in the meantime regarding
individual matters, we compared the amounts originally esti-
mated with the final obligations and in this way obtained an
impression of the quality of the estimates.
Our audit procedures comprised firstly an evaluation of the
process established by the Company to ensure the recording
of the risks, the estimation of the outcome of the proceedings
and the reflection in the financial statements of the legal pro-
ceedings. Secondly, we held discussions with the internal legal
department and with further departments familiar with the
matters under dispute and the Company's external advisors
and attorneys, in order to obtain explanations on the develop-
ments and the reasons that had led to the respective estima-
tions. In addition, we evaluated the underlying documents and
minutes and the calculations for the respective provisions. The
assessments of the legal representatives regarding the devel-
opments in the areas referred to were made available to us by
the Company in writing. As of the reporting date, assessments
were available from external attorneys on the relevant pro-
ceedings, which support the assessment of the risks by the
legal representatives.
Our Audit Approach
The risk for the consolidated financial statements is that provi-
sions for legal proceedings are not set up or are inadequate.
Daimler recognized provisions for legal proceedings as of
December 31, 2020. The recognition of provisions for legal pro-
ceedings is conditional on the existence of a present external
obligation, which will probably lead to an outflow of resources
embodying economic benefits and can be reliably estimated.
The provision is thereby determined in accordance with the
best possible estimate of the settlement amount. The recogni-
tion and measurement of the recognized provisions for legal
proceedings are based on discretionary assessments and
assumptions of the legal representatives.
Following the imposition of a fine by the European Commission
against Daimler AG and other truck manufacturers in July 2016,
truck customers have raised damage claims against Daimler
AG.
Finally, we evaluated the appropriateness of the description of
the aforementioned legal proceedings in the notes to the con-
solidated financial statements.
In connection with our audit, our responsibility is to read the
other information and, in so doing, to consider whether the
other information
is materially inconsistent with the consolidated financial
statements, the audited disclosures in the management
report or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
evaluate the appropriateness of accounting policies used by
management and the reasonableness of estimates made by
management and related disclosures.
obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the audit
of the combined management report in order to design audit
procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effec-
tiveness of these systems.
- identify and assess the risks of material misstatement of the
consolidated financial statements and of the combined man-
agement report, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinions. The risk of not detecting a
material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forg-
ery, intentional omissions, misrepresentations, or the over-
ride of internal control.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also
Reasonable assurance is a high level of assurance, but is not a
guarantee, that an audit conducted in accordance with Section
317 HGB and the EU Audit Regulation and in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer (IDW)
and supplementary compliance with the ISAs will always
detect a material misstatement. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
consolidated financial statements and this combined manage-
ment report.
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or
error, and whether the combined management report as a
whole provides an appropriate view of the Group's position
and, in all material respects, is consistent with the consoli-
dated financial statements and the knowledge obtained in the
audit, complies with the German legal requirements and appro-
priately presents the opportunities and risks of future develop-
ment, as well as to issue an auditor's report that includes our
opinions on the consolidated financial statements and on the
combined management report.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements and of the Combined Management
Report
The Supervisory Board is responsible for overseeing the
Group's financial reporting process for the preparation of the
consolidated financial statements and the combined manage-
ment report.
Furthermore, the legal representatives are responsible for the
preparation of the combined management report that, as a
whole, provides an appropriate view of the Group's position
and is, in all material respects, consistent with the consoli-
dated financial statements, complies with German legal
requirements, and appropriately presents the opportunities
and risks of future development. In addition, the legal repre-
sentatives are responsible for such arrangements and mea-
sures (systems) as they have considered necessary to enable
the preparation of a combined management report that is in
accordance with the applicable German legal requirements,
and to be able to provide sufficient appropriate evidence for
the assertions in the combined management report.
In preparing the consolidated financial statements, the legal
representatives are responsible for assessing the Group's abil-
ity to continue as a going concern. They are also responsible
for disclosing, as applicable, matters related to going concern.
In addition, they are responsible for financial reporting based
on the going concern basis of accounting unless there is an
intention to liquidate the Group or to cease operations, or
there is no realistic alternative but to do so.
The legal representatives are responsible for the preparation of
the consolidated financial statements that comply, in all mate-
rial respects, with IFRSS as adopted by the EU and the addi-
tional requirements of German commercial law pursuant to
Section 315e paragraph 1 HGB and that the consolidated finan-
cial statements, in compliance with these requirements, give a
true and fair view of the assets, liabilities, financial position
and financial performance of the Group. In addition, the legal
representatives are responsible for such internal control as
they have determined necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Responsibilities of the Legal Representatives and the
Supervisory Board for the Consolidated Financial State-
ments and the Combined Management Report
E❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
260
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in
this regard.
c) Actions for damages in connection with antitrust proceed-
ings in the Trucks division
Our Audit Approach
Various federal and state authorities and further institutions
worldwide are proceeding actively against Daimler in the form
of inquiries, investigations, proceedings and/or directives.
These activities relate in particular to test results and emission
control systems in Mercedes-Benz-diesel vehicles and/or
Daimler's interaction with the relevant authorities and related
legal questions and implications, for instance also under appli-
cable environmental, criminal and antitrust law.
259
258
The methodical approach, the procedures and the processes
to calculate the impairment losses and the assumptions and
risk parameters flowing into the measurement are appropriate
to identify the credit risks in good time and to determine the
recognition of adequate loss allowances.
Our Observations
We audited the appropriateness and effectiveness of the inter-
nal control system with regard to the risk classification pro-
cess and risk models and the identification of the factors
determining the value and the loss allowances, also by
rechecking the calculations. To this end, we also evaluated the
relevant IT systems and internal procedures. In addition to the
audit by our IT specialists of the propriety of the IT systems
affected and related interfaces to ensure the completeness
and correctness of the data, the audit also included the audit
of automatic controls for data entry and data processing. The
main focus of our audit was the evaluation of the methodical
approach in the determination of risk categories, default prob-
abilities and loss rates that are derived from historical data.
We took into account the impact of covid-19 in conjunction
with the audit of the macroeconomic scenarios and the down-
stream adjustments. We obtained an understanding of this
based on a risk-oriented selection of credit portfolios. We sat-
isfied ourselves with regard to the appropriateness of signifi-
cant risk parameters based on the results of a validation per-
formed by Daimler Mobility and evaluated the adjustments of
the parameters to the current market situation. In this connec-
tion, we furthermore audited the data supporting the valida-
tions on the basis of a conscious sample.
We obtained a comprehensive understanding of the develop-
ment of the portfolios, the associated counterparty default
risks and the processes for identifying, managing, monitoring
and measuring credit risks by inspecting analyses and risk
reports, interrogations, review of guidelines and working
instructions, checking the defined methods and their imple-
mentation and checking and walking through the validation
process and the individual validation reports.
Our Audit Approach
E❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
The calculation of the loss allowances is based on expected
credit losses and therefore also includes expectations regard-
ing the future. Recognition of the expected credit losses is car-
ried out by means of a three-parameter procedure for the
determination of loss allowances. At the same time, various
factors determining the value, such as the determination of
statistical default probabilities and loss rates, the possible
receivable amount on default, the parameter transfer criteria
that are related to a significant change in the default risk of
borrowers, and the calculation of future cash flows. Further-
more, macroeconomic scenarios (basis scenarios, optimistic
and pessimistic scenarios) flow into the calculation, which also
include covid-19 effects, the identification of which to a high
degree includes discretionary judgments and uncertainties.
Further external information, for instance in connection with
the covid-19 pandemic which cannot be depicted through the
scenarios, are included in the measurement, to the extent nec-
essary, by downstream adjustments. There is a risk for the
financial statements is that the creditworthiness of customers
and future cash flows is misjudged or that the calculation of
the risk provision parameters is incorrect so that loss allow-
ances are not recognized or are insufficient.
Please refer with regard to the accounting policies and meth-
ods applied to the notes to the consolidated financial state-
ments in Note 2 »>Accounting estimates and management
judgments<<. Further information on allowances on receivables
from financial services can be found in the notes to the consol-
idated financial statements in Note 1 »Significant Account-
ing Policies<<, in ①Note 14 »>Receivables from financial ser-
vices«<, in Note 33 »Management of financial risks<< and in
the comments in the combined management report in the sec-
tion entitled >>Industry and business risks and opportunities<<.
Loss Allowances on Receivables from Financial
Services
257
E❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
The assumptions and assessments providing the basis for the
assessment of the recoverability of the externally purchased
Mercedes-Benz passenger cars in the statement of financial
position caption "Equipment on operating leases" and the
recorded impairment losses are appropriate.
Our Observations
The Risk for the Consolidated Financial Statements
Receivables from financial services (€ 96,185 million) resulting
from the Group's financing and leasing activities include
receivables from sales financing with customers, receivables
from sales financing with dealers and receivables from finance
lease contracts. The loss allowances on these receivables
amounted at the reporting date to € 1,598 million.
Measurement of the Provision for Product War-
ranties
Please refer with regard to the accounting policies and meth-
ods applied to the notes to the consolidated financial state-
ments in Note 1 >>Significant accounting policies<< and in
Note 2 »Accounting estimates and management judg-
ments«. Further information on the guarantees and product
warranties can be found in the notes to the consolidated finan-
cial statements in Note 23 »>Provisions for other risks<< and
in the comments in the combined management report in the
section entitled »Company-specific risks and opportunities -
Warranty and goodwill cases<<.
The Risk for the Consolidated Financial Statements
The provision for product warranties amounts to € 8,476 mil-
lion and is included in the provisions for other risks.
E❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
Furthermore, investors in Germany have filed claims on
account of the alleged violation of disclosure requirements.
The investors contend among other things that Daimler failed
to publish insider knowledge in connection with the emissions
behavior of its Mercedes-Benz diesel vehicles immediately,
with the consequence that the share purchase price would
have been lower if Daimler had reported in accordance with its
obligations.
In Germany, a large number of customers of diesel vehicles
have filed claims for damages or the reversal of purchase
agreements. They contend that the vehicles are equipped with
impermissible defeat devices and/or report impermissibly high
emission or consumptions figures.
The allegation is raised in class actions in various jurisdictions,
including the USA, Canada or the Netherlands, against individ-
ual subsidiaries in the Daimler Group that devices are used in
Mercedes-Benz diesel vehicles that impermissibly impair the
effectiveness of emission control systems in reducing nitro-
gen-oxide (NOx) emissions and cause excessive emissions. In
addition, the plaintiffs contend that consumers were deliber-
ately misled in connection with the advertising for Mercedes-
Benz diesel vehicles.
a) Diesel emission behavior: class action and other lawsuits in
the USA, Canada, the Netherlands and Germany in the Cars/
Vans segment
Whether the recognition of a provision and, if so, in what
amount it is necessary on account of legal proceedings is
dependent to a high degree on discretionary estimates and
assumptions by the legal representatives. In view of this and
the monetary amounts involved with regard to the risks, the
following legal proceedings of Daimler are in our opinion of
particular importance.
The Risk for the Consolidated Financial Statements
Daimler faces various legal proceedings, claims and govern-
mental investigations and administrative orders (legal proceed-
ings) on a wide range of topics, including for example vehicle
safety, emissions, fuel economy, financial services, dealer,
supplier and other contractual relationships, intellectual prop-
erty rights, product warranties, environmental matters, anti-
trust matters (including actions for damages) and shareholder
matters. Legal proceedings relating to products deal with
claims on account of alleged vehicle defects, some of which
are asserted by way of a class action lawsuit. If the outcome of
such legal proceedings is detrimental to Daimler, the Company
may be required to pay substantial compensatory and punitive
damages or to undertake service actions, recall campaigns,
monetary penalties or other costly actions.
Please refer with regard to the accounting policies and meth-
ods applied to the notes to the consolidated financial state-
ments Note 1 »Significant accounting policies << and in
Note 2 »Accounting estimates and management judg-
ments<<. Further information on the legal proceedings can be
found in the notes to the consolidated financial statements in
O Note 23 »Provisions for other risks<<, Note 30 »Legal
proceedings<< and in the combined management report in the
section entitled »Legal and tax risks and opportunities - legal
risks<<.
Accounting Treatment of Legal Proceedings
The calculation methods and the assumptions made are appro-
priate.
Our Observations
Our audit procedures included among other things the evalua-
tion of the process to calculate the provision for product war-
ranties and the evaluation of the relevant assumptions and
their derivation for the measurement of the provision. These
include primarily assumptions on expected susceptibility to
and the course of damage, and in addition the monetary value
of the damage per vehicle based on actual warranty, guarantee
and goodwill losses. Based on historical analyses, we assessed
the accuracy of the forecasts of past warranty, guarantee and
goodwill costs. We also checked that updated assessments of
the future repair costs and procedures were taken into
account. We obtained an understanding for the underlying
numbers of vehicles through the actual unit sales.
Our Audit Approach
Significant uncertainty for the calculation of the provision
arises with regard to the future loss event. The risk for the con-
solidated financial statements is that the provision is not prop-
erly measured.
Daimler faces various claims under product guarantees, or
grants various kinds of product warranties, which are entered
into for the error-free functioning of a Daimler product sold or
service rendered over a defined period of time. In order to con-
firm or reassess future guarantee, warranty and goodwill
expenses, continuously updated information on the nature and
volume and the remedying of faults that have occurred is
recorded and analyzed at the level of the business unit, model
series, damage key and sales year.
b) Diesel emission behavior: administrative proceedings in the
Cars/Vans segment
Cologne, Germany
11.64
Dover, USA
Hong Kong, China
43.83
Yokohama, Japan
Naberezhnye Chelny, Russian Federation
21.67
Kawasaki, Japan
15.00
8.67
49.00
9.55
Esslinger Wohnungsbau GmbH
COBUS Industries GmbH
Beijing Mercedes-Benz Sales Service Co., Ltd.
BDF IP Holdings Ltd.
29.17
11.11
50.00
Jakarta, Indonesia
50.10
Burnaby, Canada
50.00
Almere, Netherlands
9.73
New York, USA
14.79
Berlin, Germany
15.00
Berlin, Germany
29.74
Rijswijk, Netherlands
32.28
Jakarta, Indonesia
30.00
Aston Martin Lagonda Global Holdings Plc
4
AFCC Automotive Fuel Cell Cooperation Corp.
Wagenplan B.V.
Beijing Benz Automotive Co., Ltd.
BAIC Motor Corporation Ltd.
VI. Associated companies accounted for using the equity method
50.00
YOUR NOW Holding GmbH
50.00
Blacklane GmbH
Wei Xing Tech. Co., Ltd.
Ningbo, China
smart Automobile Co., Ltd.
50.00
Shenzhen, China
Shenzhen DENZA New Energy Automotive Co. Ltd.
50.00
50.00
Bolt Technology OÜ
FUSO LAND TRANSPORT & Co. Ltd.
KAMAZ PAO
Via Transportation Inc.
Verimi GmbH
Toll4Europe GmbH
Berlin, Germany
Okayamashi, Japan
Tallinn, Estonia
Beijing, China
Beijing, China
Berlin, Germany
Munich, Germany
Hangzhou, China
There Holding B.V.
P.T. Mitsubishi Krama Yudha Motors and Manufacturing
P.T. Krama Yudha Tiga Berlian Motors
Okayama Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
Mobility Trader Holding GmbH
LSH Auto International Limited
Kanagawa Mitsubishi Fuso Truck & Bus Sales Co., Ltd.
VII. Joint operations, joint ventures, associated companies and substantial
other investments accounted for at (amortized) cost²
Gaydon, United Kingdom
11.85
Burnaby, Canada
34.59
Pontcharra, France
2.90
Berlin, Germany
what3words Ltd.
Volocopter GmbH
Berlin, Germany
VfB Stuttgart 1893 AG
TASIAP GmbH
STARCAM s.r.o.
smart-BRABUS GmbH
SK Gaming Beteiligungs GmbH
Sila Nanotechnologies Inc.
Rally Bus Corp.
Toyo Kotsu Co., Ltd.
5.25
London, United Kingdom
50.00
15.13
Buffalo, USA
6.22
Burlingame, USA
7
20.00
Ingolstadt, Germany
33.51
Ohmuta, Japan
26.00
Jeddah, Saudi Arabia
33.40
Taipei, Taiwan
51.00
Kleinostheim, Germany
Proterra Inc.
PDB - Partnership for Dummy Technology and Biomechanics GbR
Omuta Unso Co., Ltd.
National Automobile Industry Company Ltd.
25.00
European Center for Information and Communication Technologies - EICT GmbH Berlin, Germany
Footnote
Equity interest
in percent¹
Domicile, country/region
Name of the company
D❘ CONSOLIDATED FINANCIAL STATEMENTS | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
252
26.57
Esslingen am Neckar, Germany
40.82
Wiesbaden, Germany
51.00
Beijing, China
33.00
EvoBus Hungária Kereskedelmi Kft.
SelecTrucks of Omaha LLC
Budapest, Hungary
G2VP I, LLC
MFTB Taiwan Co., Ltd.
Mercedes ServiceCard GmbH & Co. KG
Laureus World Sports Awards Limited
IVU Traffic Technologies AG
hap2U SAS
H2 Mobility Deutschland GmbH & Co. KG
7
18.37
Berlin, Germany
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
18.09
San Francisco, USA
5.71
Menlo Park, USA
Gottapark, Inc.
33.33
E❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
1,069.8
E❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT 261
-9,921
-9,518
-2,709 -9,722 -14,666
22,332
7,888
343
-1,652
3,711
222
8,957
7,751
6,305
5,676
5,478
5,741
7,199
7,534
6,744
5,889
5,075
4,844
4,999 5,384
4,067 4,368
-1,100 3,285 -1,274
-6,829
-8,864
-10,607 -6,421
-6,537
5,842
3,855
77.58
68.97
62.90
41.32
33.92
Share price at year-end (€)
From the stock exchanges
8,259
1,368
2,898
2,005
3,874
3,960
5,479
4,842
1,452
989
5,628 -10,747
13,226
13,129
12,009
9,631
2,274
11,506
70.72
Cash provided by (used for) investing activities
Cash provided by (used for) financing activities
Free cash flow of the industrial business
Cash provided by (used for) operating activities
46.4
44.7
40.8
44.2
78,077 85,461
66,974 77,081
16,953 18,580
40,779 44,796
51,940 65,016 66,047
54,855 58,716 59,108
11,981 11,508 13,834
31,426 37,521 40,648
Net assets (average) 1,3
Net liquidity industrial business
Current liabilities'
Non-current liabilities¹
43.4
39.8
46.4
Equity ratio industrial business (%) 1
21.8
20.5
22.2
24.0
22.9
23.6
22.1
24.3
22.7
26.3
Equity ratio Group (%) 1
42.8
-696
36.7
99,398 102,562 117,614 133,795 123,680
3,575
4,975
4,827
4,158
Investments in property, plant and equipment
Depreciation and amortization
From the statements of cash flows
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
265
E❘ FURTHER INFORMATION | TEN-YEAR SUMMARY
€ amounts in millions
63,782 59,869
10,997 17,855
97,952 105,802 99,809
16,288
53,809
84,457 87,624
19,737 16,597
47,054 48,446
38.5
3,070 3,070
45.91
57.79
Information on the Internet
Internet, Information, Financial Calendar
4 Several figures for the year 2017 have been adjusted due to the effects of first-time adoption of IFRS 15 and IFRS 9.
3 In the context of fine tuning the performance measurement system, the definition of net assets has been adjusted with retroactive effect as of
2015.
1 The figures for the year 2012 have been adjusted, primarily due to effects arising from application of the amended version of IAS 19.
2 The figure for the year 2013 has been adjusted due to reclassifications within functional costs.
301,839 293,138
298,465
289,530
284,562 284,957
279,857
275,384
274,605
267,274
Average annual number of employees
Scope
A
A
A
A
A BBB (high)
A
A
A (low)
Specific information on our shares and earnings development
can be found on our website daimler.com in the Investors
section. The Group's annual and interim reports and the com-
pany financial statements of Daimler AG can be accessed
there. You can also find topical reports, presentations, an
overview of various key figures, information on our share
price and other services.
A (low)
④daimler.com/investors
④daimler.com/ir/reports
www.daimler.com
Germany
70372 Stuttgart
Mercedesstraße 120
Daimler AG
Fax +49 711 17 94075
ir.dai@daimler.com
Investor Relations
www.daimler.com
+49 711 17 22244
Fax
Phone +49 711 17 0
Germany
70546 Stuttgart
Daimler AG
daimler.com/ir/calendar
As changes to the above dates cannot be
ruled out, it is advisable to check on our
website a short time in advance.
Interim Report Q3 2021
October 21, 2021
Interim Report Q2 2021
July 21, 2021
April 23, 2021
Interim Report Q1 2021
Annual Shareholders' Meeting 2021
March 31, 2021
Financial Calendar 2021
daimler.com/downloads/en
Daimler AG has ceased printing annual and interim reports and
company financial statements for reasons of sustainability. It is
also no longer possible to order copies of previous years'
reports. Effective immediately, all annual and interim reports
are only available online and as PDF files to download.
49.37
A (low)
A (low)
A
A-
A-
A-
A-
BBB+
S&P
Credit rating, long-term
Ratings
1,069.8 1,069.8 1,069.8 1,069.8 1,069.8
1,069.8
1,067.1 1,069.1
1,067.1
Average diluted shares outstanding
(in millions)
1,069.8 1,069.8 1,069.8
1,069.8 1,069.8
1,069.8
1,069.8
1,068.8
1,066.8
1,066.0
(in millions)
Average shares outstanding
A
A (low)
A
BBB+
A (low)
DBRS
A3
BBB+
A-
A-
A-
A-
A-
A-
A-
A-
A-
Fitch
A3
A2
A2
A3
A3
A3
A3
A3
A3
Moody's
A-
3,070
70.80
3,070
2,773
2,315
1,804
1,148
1,284
1,465
1,460
thereof capitalized
9,662 8,614
9,107
8,711
172,745 154,309
22,657 21,848
149,467 153,261 164,154 167,362
20,949 21,141 22,186 22,432
6,564 7,572
114,297 117,982 129,872
18,002 18,753 19,607
5,644 5,489 5,680
5,634
Research and development expenditure²
17,424
Personnel expenses¹
106,540
Revenue
From the statements of income
2020
2019
2,526
2016
3,076
EBIT¹
10,173
10,139
9,173
7,302
6,240
Net operating profit (loss)'
8,116
8,449
Profit (loss) before income taxes¹
8.3
9.2
7.7
8.2
Operating margin (%) 1
6,603
4,313
11,132
14,348
12,902
13,186
10,752
10,815
8,820
8,755
2,498
7,678
2015
2013
-
-
Our objective is to obtain reasonable assurance about whether
the ESEF documents are free from material intentional or unin-
tentional non-compliance with the requirements of Section
328 (1) HGB. We exercise professional judgement and maintain
professional scepticism throughout the assurance work. We
also:
The supervisory board is responsible for overseeing the prepa-
ration of the ESEF documents as part of the financial reporting
process.
The company's management is also responsible for the sub-
mission of the ESEF documents together with the auditor's
report and the attached audited consolidated financial state-
ments and audited combined management report as well
as other documents to be published to the operator of the
German Federal Gazette (Bundesanzeiger).
In addition, the company's management is responsible for the
internal controls they consider necessary to enable the prepa-
ration of ESEF documents that are free from material inten-
tional or unintentional non-compliance with the requirements
of Section 328 (1) HGB for the electronic reporting format.
The company's management is responsible for the preparation
of the ESEF documents including the electronic reproduction
of the consolidated financial statements and the combined
management report in accordance with Section 328 (1) sen-
tence 4 item 1 HGB and for the tagging of the consolidated
financial statements in accordance with Section 328 (1)
sentence 4 item 2 HGB.
We conducted our assurance work on the reproduction of the
consolidated financial statements and the combined manage-
ment report contained in the above-mentioned electronic
file in accordance with Section 317 (3b) HGB and the Exposure
Draft of the IDW Assurance Standard: Assurance in accordance
with Section 317 (3b) HGB on the Electronic Reproduction of
Financial Statements and Management Reports Prepared for
Publication Purposes (ED IDW ASS 410) and the International
Standard on Assurance Engagements 3000 (Revised). Accord-
ingly, our responsibilities are further described below. Our
audit firm has applied the IDW Standard on Quality Manage-
ment 1: Requirements for Quality Management in Audit
Firms (IDW QS 1).
In our opinion, the reproduction of the consolidated financial
statements and the combined management report contained
in the above-mentioned electronic file and prepared for publi-
cation purposes complies in all material respects with the
requirements of Section 328 (1) HGB for the electronic report-
ing format. We do not express any opinion on the information
contained in this reproduction nor on any other information
contained in the above-mentioned file beyond this reasonable
assurance opinion and our audit opinion on the accompanying
consolidated financial statements and the accompanying com-
bined management report for the financial year from January 1
to December 31, 2020 contained in the >>Report on the Audit of
the Consolidated Financial Statements and the Combined
Management Report<< above.
We have performed assurance work in accordance with
Section 317 (3b) HGB to obtain reasonable assurance about
whether the reproduction of the consolidated financial state-
ments and the combined management report (hereinafter
the >>ESEF documents<<) contained in the file that can be down-
loaded by the issuer from the electronic client portal
with access protection „,,daimlerag.zip" (SHA256-Hashwert:
f5054db4d7965f8018df22676d38cc4454eeaa305ad27e
5691b8e87d5e10817a) and prepared for publication purposes
complies in all material respects with the requirements of
Section 328 (1) HGB for the electronic reporting format (>>ESEF
format<<). In accordance with German legal requirements, this
assurance only extends to the conversion of the information
contained in the consolidated financial statements and the
combined management report into the ESEF format and there-
fore relates neither to the information contained in this
reproduction nor any other information contained in the above-
mentioned electronic file.
Report on the Assurance in accordance with Section 317 (3b)
HGB on the Electronic Reproduction of the Consolidated
Financial Statements and the Combined Management
Report Prepared for Publication Purposes
Other Legal and Regulatory Requirements
E❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
262
From the matters communicated with those charged with gov-
ernance, we determine those matters that were of most signifi-
cance in the audit of the consolidated financial statements of
the current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless laws or
other legal regulations preclude public disclosure of the mat-
ter.
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence
requirements and communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, the related safeguards.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our
audit.
- perform audit procedures on the prospective information
presented by the legal representatives in the combined man-
agement report. On the basis of sufficient appropriate audit
evidence, we evaluate, in particular, the significant assump-
tions used by the legal representatives as a basis for the pro-
spective information and evaluate the proper derivation of
the prospective information from these assumptions. We do
not express a separate opinion on the prospective informa-
tion and on the assumptions used as a basis. There is a sub-
stantial unavoidable risk that future events will differ materi-
ally from the prospective information.
evaluate the consistency of the combined management
report with the consolidated financial statements, its confor-
mity with (German) law, and the view of the Group's position
it provides.
obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express opinions on the consolidated
financial statements and on the combined management
report. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsi-
ble for our opinions.
evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclo-
sures, and whether the consolidated financial statements
present the underlying transactions and events in a manner
that the consolidated financial statements give a true and
fair view of the assets, liabilities, financial position and finan-
cial performance of the Group in compliance with IFRSS as
adopted by the EU and the additional requirements of Ger-
man commercial law pursuant to Section 315e paragraph 1
HGB.
conclude on the appropriateness of the use by the legal rep-
resentatives of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may
cast significant doubt on the Group's ability to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditor's
report to the related disclosures in the consolidated finan-
cial statements and in the combined management report or,
if such disclosures are inadequate, to modify our respective
opinions. Our conclusions are based on the audit evidence
obtained I up to the date of our auditor's report. However,
future events or conditions may cause the Group to cease to
be able to continue as a going concern.
3,070
- identify and assess the risks of material intentional or
unintentional non-compliance with the requirements of
Section 328 (1) HGB, design and perform assurance
procedures responsive to those risks, and obtain assurance
evidence that is sufficient and appropriate to provide a
basis for our assurance opinion.
2014
Obtain an understanding of internal control relevant to the
assurance of the ESEF documents in order to design assur-
ance procedures that are appropriate in the circumstances,
but not for the purpose of expressing an assurance opinion
on the effectiveness of these controls.
Evaluate whether the ESEF documents enable an XHTML
reproduction with content equivalent to the audited con-
solidated financial statements and the audited combined
management report.
2012
2011
€ amounts in millions
E.01
Ten-Year Summary
E❘ FURTHER INFORMATION | TEN-YEAR SUMMARY
264
263
E❘ FURTHER INFORMATION | INDEPENDENT AUDITOR'S REPORT
(German Public Auditor)
Dr. Thümler
Wirtschaftsprüfer
Skúair
(German Public Auditor)
Wirtschaftsprüfer
Sailer
Wirtschaftsprüfungsgesellschaft
(Original German version signed by:)
KPMG AG
Stuttgart, February 17, 2021
German Public Auditor Responsible for the Engagement
The German Public Auditor responsible for the engagement is
Dr. Axel Thümler.
We declare that the opinions expressed in this auditor's report
are consistent with the additional report to the audit commit-
tee pursuant to Article 11 of the EU Audit Regulation (long-form
audit report).
We were elected as group auditor by the Annual Shareholders'
Meeting on July 8, 2020. We were engaged by the Supervisory
Board on July 8, 2020. We have been the group auditor of
Daimler AG without interruption since the financial year 1998.
Further Information pursuant to Article 10 of the EU Audit
Regulation
Evaluate whether the tagging of the ESEF documents with
Inline XBRL technology (iXBRL) enables an appropriate
and complete machine-readable XBRL copy of the XHTML
reproduction.
Evaluate the technical validity of the ESEF documents, i.e.
whether the electronic file containing the ESEF documents
meets the requirements of Commission Delegated Regula-
tion (EU) 2019/815 on the technical specification for this
electronic file.
8.8
12,744
9,007
20174 2018
8.4
12,574
9,007
3.25
3.65
3.25
3.25
2.45
2.25
2.20
2.20
Dividend per share (€)
1,444
963
3,477
3,905
3,477
3,477
2,621
2,407
2,349
2,346
Total dividend
3.39
2.22
6.78
1.35
9.61
From the statements of financial position
Leased equipment
3,070
3,070
3,069
3,063
3,060
thereof share capital
62,841 62,248
148,132 163,062 168,518 189,635 217,166 242,988 255,345 281,619
41,337 39,330 43,363 44,584 54,624 59,133 65,159 66,053
23,048
30,948 37,143 35,246
33,050 38,942 46,942 47,074 49,476 51,482 47,552
79,582 86,013 87,675
29,489 29,757 26,444
15,853 18,883
62,055 67,613 73,394
23,760 25,384 25,686
9,936 10,981 12,072
302,438 285,737
9,576 10,996 11,053
34,461 38,742 42,039 46,614 58,151 65,687 69,138 76,271 79,160 65,772
56,258
20,864
9,667
24,322 26,381 27,981
23,182
19,180
20,599 21,779
22,811 26,058 28,160
45,023 48,947 48,138
17,081 17,720 17,349
Shareholders' equity'
Total assets¹
Other current assets
Liquid assets
Inventories
Other non-current assets¹
Property, plant and equipment
7.97
0.90
19.6
Net profit (loss)¹
7.0
14.8
22.5
19.1
20.1
18.8
22.6
19.9
as % of net assets (RONA) 1, 3
4,199
3,057
7,963
10,880
6,339
3,830
10,595
13,967
4.3
2.5
6.7
7.87
8.7
6,029
6,830
4.8
9.61
6.51
6.40
6.02
5.31
Diluted net profit (loss) per share (€)1
3.39
2.22
6.78
8,720
7.97
7.87
6.51
6.40
6.02
5.32
Net profit (loss) per share (€)1
4,009
2,709
7,582
10,617
8,784
8,711
7,290
3.1%
54.1%
Renault-Nissan
Institutional investors
5.0%
A.05
9.7%
Tenaciou3 Prospect
Investment Limited
Kuwait Investment Authority
BAIC Group
Shareholder structure as of December 31, 2020
By type of shareholder
Retail investors
6.8%
21.3%
Key figures for Daimler shares
Shareholder structure as of December 31, 2020
By region
Germany
33.1%
Europe, excluding Germany
USA
27.0%
13.2%
6.8%
16.0%
Kuwait
+50
Asia
A.06
0.90
Amounts in euros
Dividend per share
Rest of the world
Number of shareholders (in millions)
Number of shares (in millions)
Market capitalization
(in billions of euros)
End of 2020 End of 2019
20/19
% change
1.0
1.0
0
1,069.8
1,069.8
0
61.8
52.8
+17
Equity per share (Dec. 31)
56.73
57.34
-1
Net profit per share
3.39
2.22
+53
1.35
3.9%
Expand
customer base
by growing
sub-brands
Employee stock purchase plan implemented once again
Staff members entitled to purchase employee stock were able
to do so once again in March 2020. As was the case in the
previous year, price-reduced shares as well as bonus shares
were offered. At 28.9%, the participation rate in the year under
review was once again significantly higher than in the previous
years (2019: 25.5%). A total of 52,500 employees took part in
the
program (2019: 45,700), which is the highest number since
the program was launched. The total number of shares pur-
chased by employees also increased substantially once again,
from 811,000 in 2019 to approximately 1,038,000, of which
just under 93,900 were bonus shares (2019: 73,200) in the
year under review. In connection with the attendance bonus
program, approximately 14,400 shares were additionally
purchased and transferred to the beneficiaries (2019: 15,600).
A❘ TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Mercedes-Benz Cars strategy
The basis of our car strategy is our purpose - the spirit and
aspiration that guides all of our decisions and actions. What
makes us who we are, why are we present on the market as a
company? The answer to this question is our purpose: "First
Move the World." We invented the automobile, and we also
want to take a leading role in its reinvention.
Our company's successful transformation to electric mobility
and comprehensive digitalization is crucial for our future com-
petitive position. At Mercedes-Benz, we focus on our
strengths. Our brand originated in the luxury segment, where
we continue to be anchored and outstanding. We will continue
to concentrate on this segment in the future and we think that
it provides us with the greatest growth opportunities. Our goal
is to build the world's most desirable cars.
The Mercedes-Benz strategy encompasses six pillars. The core
aim is to increase structural profitability and enable us to out-
pace our competitors in the transformation to electric mobility
and comprehensive digitalization. Sustainability is a key guid-
ing principle of the Mercedes-Benz strategy and an integral
part of it. Our highly qualified and motivated team forms the
basis for our new strategy's success.
Think and act like a luxury brand
Luxury has always been part of Mercedes-Benz' DNA. How-
ever, the brand will focus even more strongly on luxury in the
future. It will be an integral part of all products, customer inter-
actions and digital technologies. Mercedes-Benz will concen-
trate its product portfolio, brand communication and sales net-
work even more strongly on luxury so as to create a thoroughly
luxurious experience - luxury that is to be holistic, intuitive
and sustainable.
The new S-Class exemplifies our already outstanding range of
products in the luxury segment. To name just a few examples,
it is made more intuitive and smarter by MBUX and a new aug-
mented reality head-up display, safer thanks to 16 airbags and
optional E-ACTIVE BODY CONTROL, and more comfortable and
agile in its suspension and steering system. The new S-Class
will also set a new milestone on our road to automated driving.
Beginning in the second half of 2021, we expect S-Class cars
that are equipped with the new DRIVE PILOT to drive with con-
ditional automation (SAE Level 3) in Germany under certain
preconditions and at speeds of up to the permitted 60 km/h.
This will give drivers more time, comfort and safety.
Focus on profitable growth
We want to grow wherever we can achieve the best results. To
do so, we will initiate measures that will realign our market
strategy. The focus on an optimal balance between sales vol-
ume, price and sales channel mix will help to ensure higher
contribution margins for our current and future product portfo-
lios. At the same time, development resources and funding will
flow into the most profitable market segments in order to
achieve higher structural profitability.
Expand customer base by growing sub-brands
According to Interbrand, Mercedes-Benz is the world's most
valuable luxury automobile brand. This brand will always take
center stage in our array of car brands. In addition, Mercedes-
Benz includes several extraordinary sub-brands: Mercedes-
AMG, Mercedes-Maybach and Mercedes-EQ as well as the
G-Class. We will further strengthen these brands so that we
can address customer groups in an even more targeted man-
ner and thereby contribute substantially to our growth and
earnings. Mercedes-AMG is ready for the next stage, when it
will begin to electrify its portfolio in 2021.
The sub-brand Mercedes-AMG's link with Formula 1 will be
intensified further next year in order to reinforce its identity as
a high-performance brand. Mercedes-Maybach is focusing on
global growth opportunities, intending to double its sales vol-
ume and also to offer electric models.
Mercedes-Benz Cars strategy
We want to build the world's most desirable cars
Think
and act like
a luxury
brand
Focus
on
profitable
growth
Embrace
A.04
28
All of the divisions have formulated strategies or intensified
existing ones on the basis of their earnings and growth targets,
our commitment to sustainability, and CO2-neutral mobility
and integrity as guiding principles.
We are firmly convinced that we can only be successful over
the long term we fulfill not only our economic and environ-
mental responsibilities but also our responsibility to society. In
times of change and upheaval especially, we need to have val-
ues that provide us with orientation. For us, this involves more
than just obeying laws, as we also seek to align our activities
with shared principles and values. For Daimler, integrity means
doing the right thing by acting on our values. New technologies
and business models offer tremendous opportunities, but at
the same time they pose questions – for example, with regard
to ethical and legal topics. Our inner values and attitudes are
put to the test when such issues arise. By means of our techni-
cal Compliance Management System, or tCMS for short, we
want to ensure that our products conform with regulations and
legal requirements. Our Data Compliance Management System
enables us to support new topics from the beginning, provide
the maximum possible clarity and avoid mistakes. The respon-
sible use of data has top priority in these efforts.
Integrity as a guiding principle
First virtual Daimler AG Annual Shareholders' Meeting
The covid-19 pandemic forced us to postpone our Annual
Shareholders' Meeting, which had been scheduled to take
place as a meeting in person on April 1, 2020. The first virtual
Annual Shareholders' Meeting of Daimler AG took place on July
8, 2020 on the basis of a law passed by the legislators at short
notice allowing annual shareholders' meetings to be held
without shareholders or proxies having to be present in person
(virtual Annual Shareholders' Meeting). It was broadcast on the
Internet from a studio in Stuttgart for the shareholders, around
12,000 of whom followed the event. A total of 53.28% (2019:
52.91%) of the equity capital was represented at the meeting.
A large majority of the shareholders approved each of the
agenda points proposed by the company's management. The
majority of shareholders approved the resolution on the
ratification of Board of Management and Supervisory Board
members' actions in the 2019 financial year. The Annual Share-
holders' Meeting approved a dividend payout of €0.90 per
share (2019: €3.25), which means the total dividend amounted
to €1.0 billion. The remuneration system for the Board of Man-
agement members was approved by a large majority (95.33%).
Information on the remuneration system can be found in the
chapter Remuneration report.
In addition, the Annual Shareholders' Meeting elected
Timotheus Höttges, Chief Executive Officer of Deutsche Tele-
kom AG, Bonn, to the Supervisory Board as a shareholder
representative. Mr. Höttges succeeds Dr. Paul Achleitner, who
had been a member of Daimler's Supervisory Board since 2010
and whose term of office ended at the end of the 2020 Annual
Shareholders' Meeting. The term of Timotheus Höttges will end
when the Annual Shareholders' Meeting is held in 2025.
Furthermore, the Annual Shareholders' Meeting authorized
the Board of Management to take various financing measures
such as the acquisition and sale of the company's own shares.
Against the background of the covid-19 pandemic, the Annual
Shareholders' Meeting also resolved amendments to the
Articles of Incorporation which, for example, also permit the
transmission of audio and video of the Annual Shareholders'
Meeting and enable electronic participation by shareholders in
the Annual Shareholders' Meeting in the future.
The convening and the voting results of the Annual Share-
holders' Meeting 2020 are available on the Internet at
④daimler.com/ir/am2020
Our e-service for shareholders, which we have been offering
as a personalized service for many years now, ensured that
we were very well prepared for the first virtual Annual Share-
holders' Meeting. Due to the new requirements, such as
transmitting video and audio feeds of the entire Annual Share-
holders' Meeting via the Internet for the shareholders and
the facility to submit questions electronically in the run-up to
the Annual Shareholders' Meeting, it was necessary to develop
new components and application functions at short notice.
With their agreement, a total of 210,000 (2019: 220,000) share-
holders received the invitation and the agenda for the Daimler
Annual Shareholders' Meeting by e-mail rather than by post
in 2020. We would like to thank those shareholders for helping
to protect the environment and cut costs. Our shareholders
continued to make good use of our range of personalized elec-
tronic information and communication during the reporting year.
Access to the e-service for shareholders and additional
information can be found on the internet at
https://register.daimler.com
Refinancing and rating
Details of our refinancing activities and the development of
our credit ratings in the course of the financial year 2020 can
be found in the Liquidity and Capital Resources section on
Financial Position.
26
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
A | TO OUR SHAREHOLDERS DAIMLER AND THE CAPITAL MARKET 25
Objectives and Strategy
The role of Daimler AG
The transformation of our industry is requiring us to take quick,
agile and customer-focused action. Our implementation of
"Project Future” turned our previous divisions into three legally
separate units (Mercedes-Benz AG, Daimler Truck AG and
Daimler Mobility AG) under the roof of Daimler AG, which is
listed on the stock exchange. In this way, we have strengthened
our entrepreneurial freedom, intensified our market and cus-
tomer orientation, and made it easier for the new divisions to
enter into partnerships. In this new role, Daimler AG serves as
an operational and strategic management holding that per-
forms the governance and steering functions and thus creates
the framework for the new divisions. Some organizations
will be retained at this central level, especially the higher-level
units in the functions Finance and Controlling, Human
Resources, and Integrity and Legal. In this way, Daimler AG
ensures a uniform and centrally managed corporate finance
system, sets the scope for the long-term return and growth
targets, and determines how funds will be allocated. The aim
is to boost the company's value on a sustained basis.
Sustainability as an integral part of our
corporate strategy
Sustainability means harmonizing economic, ecological and
social objectives. Daimler is committed to the United Nations'
Sustainable Development Goals and to the Paris Agreement
on climate change. For our company, sustainability means per-
manently creating value for all stakeholders: customers,
employees, investors, business partners and society as a whole.
For us, sustainability is not an isolated area where we take
action, but an integral part of our corporate strategy. In line
with this approach, we work to achieve CO2-neutral mobility by
2039, reduce our resource consumption despite growth, imple-
ment measures that increase safety on the road, continue to
utilize data responsibly, and assume responsibility for uphold-
ing human rights along the entire value chain.
Achieving success in our areas of action requires a clear com-
mitment to a culture of integrity, as well as future-oriented
cooperation with our workforce and our partners in industry,
government and society at large. A central sustainability man-
agement system enables the effective planning of ambitious
goals and their implementation.
Our "Ambition 2039" strategy for Mercedes-Benz Cars clearly
demonstrates our commitment to climate protection. Our goal
here is to become CO2-neutral by 2039. More specifically, this
means we plan to achieve CO2-neutral production at our own
car plants from 2022, have plug-in hybrids and all-electric drive
systems account for more than 50% of our portfolio by 2030,
and offer a CO2-neutral new car fleet to our customers within
less than three product life cycles. An example of this is the
new Factory 56 at the Sindelfingen plant. This facility, whose
first series-production model is the new S-Class, consumes
less energy than previous vehicle assembly operations for
comparable model series and has a CO2-neutral footprint.
Among other things, this is made possible by the facility's
energy concept, which includes a photovoltaic system, a
direct-current network, and energy storage devices made of
reused vehicle batteries. A holistic view of the CO2-reduction
issue also needs to take the recycling of raw materials into
account. After all, we also want to drive forward the implemen-
tation of our climate neutrality objective at our suppliers and
partners.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 27
At Mercedes-Benz Vans we have set ourselves the goal of
making the new vehicle fleet of our vans for private use
CO2-neutral for their entire life cycle by 2039. For commercially
used vans, the goal is to offer only new vehicles that are CO2-
neutral in driving operation ("tank-to-wheel") in the triad markets
of Europe, Japan and North America by 2039. Production
operations at the Mercedes-Benz Vans plants are scheduled to
become CO2-neutral by 2022.
On its path to achieving CO2-neutral transportation, Daimler
Trucks & Buses aims to offer only new vehicles that are CO2-
neutral in driving operation ("tank-to-wheel”) in the triad
markets of Europe, Japan and North America by 2039. We intend
to offer series-produced trucks and buses with battery-electric
drive systems in the main sales regions Europe, the United
States and Japan by 2022. In the second half of the 2020s,
Daimler Trucks & Buses intends to supplement its portfolio of
series-produced vehicles by adding fuel cell-powered electric
trucks. In cooperation with the Volvo Group we will drive for-
ward the series-ready development, production and marketing
of fuel-cell systems for use in heavy-duty commercial vehicles
and other fields of application. Plans also call for all Daimler
Trucks & Buses plants in Europe to be CO2-neutral by 2022.
Daimler Mobility's sustainability efforts are focusing on
avoiding and reducing CO2 emissions as well as on collecting
knowledge and promoting employee involvement. The aim
is to become climate-neutral by the end of 2022 - not only in
administrative departments but at all locations. New leasing
and financing offers will explicitly serve to promote the sale of
electric vehicles at the divisions.
The issue of the first green bond has further accelerated our
development of CO2-neutral technologies and services. The
proceeds from this bond are used exclusively to fund green
projects. In this way, our financing activities are also helping to
transform us into a carbon-free company and make our indus-
try CO2-neutral.
For more than 130 years we have been moving people and goods all over the world — safely, effi-
ciently and with innovative technologies. Our industry is currently in the midst of its biggest trans-
formation in history. Sustainability (especially climate protection) as well as digitalization, shifts in
global trade, and the impact of the covid-19 pandemic are changing our business and our company.
As the inventor of the automobile, it is in our DNA to repeatedly take the lead in automotive engi-
neering with new technologies. In addition, we will strive to set standards for sustainable mobility
and transport in the future.
With a weighting of 4.49% (2019: 3.95%), Daimler was ranked
seventh in the German share index DAX 30 at the end of 2020.
In the Euro STOXX 50 index, our shares had a weighting of
1.88% (2019: 1.55%), which put Daimler in 21st place. Daimler
shares are listed on the regulated market at the stock exchanges
in Frankfurt and Stuttgart. A total volume of 1,487 million
shares were traded in Germany in 2020 (2019: 1,108 million). A
substantial number of Daimler shares are now also traded on
multilateral trading platforms and in the over-the-counter market.
Secretary-Treasurer, United Auto Workers (UAW)
Voting-rights notifications are published on the Internet at
daimler.com/investors/share/voting-rights
Elected until 2023
Sibylle Wankel*
General Legal Counsel of the German Metalworkers' Union (IG
Metall)
Elected until 2023
Dr. Frank Weber*
Center Manager BodyTEC, Mercedes-Benz AG;
Chairman of the Management Representative Committee,
Daimler Group
Elected until 2023
Marie Wieck
Former General Manager of IBM Blockchain
Elected until 2023
Dr. Sabine Zimmer*
Manager Vocational Training Policies Germany, Daimler Group
Elected until 2023
Roman Zitzelsberger*
District Manager Baden-Württemberg, German Metalworkers'
Union (IG Metall)
Elected until 2023
* Employee representatives
Detailed information on the members of the Supervisory Board, their positions in other supervisory boards or comparable
monitoring boards and their curriculum vitae, and on the committees of the Supervisory Board, can be found on the Internet at:
daimler.com/company/corporate-governance/supervisory-board/
Further information on the individual members of the Supervisory Board of Daimler AG
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET 23
Daimler and the Capital Market
Global stock markets were marked by a high level of volatility due to uncertainties relating to the
covid-19 pandemic. The Daimler share was also subject to sharp fluctuations in 2020, but never-
theless increased by 17% over the course of the year. During the year under review, we continued
to inform institutional investors, sustainability-focused investors, analysts, rating agencies and
private investors by means of a wide range of investor relations activities and comprehensive
reporting on the Group's business development and prospects. The Board of Management and the
Supervisory Board will propose to the Annual Shareholders' Meeting that a dividend of €1.35
(2019: €0.90) per share be paid for 2020.
Deputy Chairwoman of the Works Council, Mercedes-Benz
Plant Bremen
A.02
Elke Tönjes-Werner*
München
Lead
Raymond Curry*
Elected until 2023
Dr. Jürgen Hambrecht
Former Chairman of the Supervisory Board of BASF SE
Elected until 2023
Michael Häberle*
Chairman of the Works Council, Mercedes-Benz Plant
Untertürkheim
Elected until 2023
Petraea Heynike
Former Executive Vice President of the Executive Board
of Nestlé S. A.
Elected until 2021
Timotheus Höttges
Chief Executive Officer of Deutsche Telekom AG
Elected until 2025
(since July 8, 2020)
Joe Kaeser
Chairman of the Supervisory Board of Siemens Energy AG
Elected until 2024
Ergun Lümali⭑*
Deputy Chairman of the General Works Council, Daimler
Group;
Deputy Chairman of the General Works Council, Daimler AG;
Chairman of the Works Council, Mercedes-Benz Plant
Sindelfingen
Elected until 2023
Dr. Bernd Pischetsrieder
Former Chairman of the Supervisory Board of Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft in
Elected until 2024
Development of Daimler's share price and of major indices
End of 2020 End of 2019
20/19
% change
90
80
70
60
60
50
40
40
12/31/19
6/30/20
Daimler AG
STOXX Europe Auto Index
DAX
12/31/20
Daimler share price rises 17% over the year
In view of the ongoing transformation of the automotive indus-
try, investors maintained a reserved position with regard to
automotive stocks up until mid-February. After that, develop-
ments were impacted by growing concerns relating to the
coronavirus, with the mood on stock markets deteriorating
dramatically as a result. Just a few days after we announced
that due to the expanding scope of the covid-19 pandemic we
would be suspending most of our production operations and
the activities in selected administrative departments in Europe
for an initial period of two weeks, the Daimler share price
dropped to its lowest point of the year in a very weak stock-
market environment, falling to €21.84 on March 19.
Stock prices then began rising significantly, mainly as a
response to the implementation of various monetary and fiscal
policy measures. The Daimler share price also recorded a sig-
nificant increase during this period. This positive development
was also due to the Daimler management team's rapid response
to the crisis in the form of immediate measures taken to safe-
guard liquidity, optimize costs, adjust production operations
and ensure a stronger focus on cash flow. Investors were also
encouraged by positive developments on the Chinese auto-
motive market. This momentum was reinforced by various
other strategic initiatives in addition to the announcement that
Daimler Truck AG and the Volvo Group would be establishing
a joint venture for series production of fuel cells, in part to
support the European Green Deal.
Following a brief consolidation phase around the middle of the
year, automotive stocks, which had come under strong pres-
sure throughout the previous course of the year, were able to
rally and post significant gains once again. The Daimler share
benefited here initially from the release of our financial figures
for the second quarter of 2020, which turned out to be more
favorable than most analysts had expected. The announce-
ment of measures for optimizing fixed costs also played a role
in the positive development of the share price. In addition,
agreements in principle regarding the settlement of govern-
ment and civil legal actions in the United States in connection
with diesel emissions, as well as the positive sales figures
recorded by Mercedes-Benz Cars and the presentation of the
new S-Class, led to increased investment in our company.
24
A | TO OUR SHAREHOLDERS | DAIMLER AND THE CAPITAL MARKET
During the Mercedes-Benz Strategy Update online investor and
analyst conference at the beginning of October, management
explained the strategy for the Mercedes-Benz Cars business.
Our objectives and plans were very well received by analysts and
investors. Such plans include enhancing the Mercedes-Benz
brand's status in the luxury segment and the implementation
of measures for achieving further growth for our Mercedes-
AMG, Mercedes-Maybach and Mercedes-EQ sub-brands. Core
elements of these plans include accelerating the development
of electric drive systems and vehicle software for the electrifi-
cation of the entire product portfolio and our intention to make
all of our business operations completely CO2-neutral, as set
out in the Ambition 2039 strategy. We also have further plans
for reducing costs and pursuing more ambitious financial
targets, which are intended to accompany a lowering of our
break-even point. Solid business development at the Group in
the third quarter, including free cash flow that was significantly
higher than market expectations, had a positive effect on
the development of our share price. Hopes regarding the rapid
availability of a covid-19 vaccine, as well as the continued
recovery of the Chinese economy and rising automotive sales
in that country, generated renewed momentum for automotive
stocks toward the end of the year. On December 16, the
Daimler share price reached €58.77, which was the highest
price for the year.
The Daimler share then closed at €57.79 on December 30. At
the end of the year, Daimler had a market capitalization of
€61.8 billion (2019: €52.8 billion). With a total increase of 17%
in 2020, the development of Daimler's share price was thus
better than that of the DAX (+4%) and the STOXX Europe Auto
Index (+4%). When the dividend payout of €0.90 per share is
included, our shareholders saw the value of their investment
increase by 19%. The index of the most important equities in
the euro zone, the Euro STOXX 50, decreased by 5% in 2020.
Broad shareholder structure
Daimler continues to have a broad shareholder base of approx-
imately 1.0 million shareholders (2019: 1.0 million). Tenaciou3
Prospect Investment Limited, a company controlled by the
Chinese entrepreneur Li Shufu, who is also the founder and CEO
of Geely, became Daimler AG's largest individual shareholder
in 2018. Tenaciou3 Prospect Investment Limited currently owns
9.7% of the company's shares. The Kuwait Investment Author-
ity (KIA) currently owns 6.8% of the company's stock, making it
Daimler AG's second-largest single shareholder. The Chinese
BAIC Group acquired an interest in Daimler AG in 2019 via its
wholly owned subsidiary Investment Global Co. Ltd. With
approximately 5% of Daimler's equity capital, the BAIC Group
is Daimler AG's third-largest single shareholder. The Renault-
Nissan Alliance holds 3.1% of Daimler's shares.
100
110
120
Share price index
Daimler share price (in euros)
57.79
49.37
Highest¹
58.77
59.31
Lowest¹
21.84
40.53
+17
-1
-46
DAX 30
Institutional investors hold a total of 54% of our equity capital,
while private investors own 21%. Approximately 60% of our
capital is in the hands of European investors and around 13% is
held by US investors. Investors from Asia hold around 16% of
our equity capital.
13,719
+4
Euro STOXX 50
3,553
3,745
-5
STOXX Europe Auto Index
528
509
+4
1 Closing prices
A.03
13,249
customers
and grow
recurrent
Former Chairman of the Supervisory Board of Deutsche Bank
AG
drive and
car software
3/3
Dr. Manfred Bischoff (Chairman)
Presidential Committee
100
9/9
Roman Zitzelsberger
100
9/9
100
9/9
100
9/9
100
9/9
Dr. Sabine Zimmer
Marie Wieck
Dr. Frank Weber
Sibylle Wankel
100
9/9
Elke Tönjes-Werner
100
89
Michael Brecht
100
Dr. Manfred Bischoff (Chairman)
Nomination Committee
100
6/6
Ergun Lümali
in electric
6/6
Joe Kaeser
100
6/6
Michael Brecht
100
6/6
Dr. Clemens Börsig (Chairman)
Audit Committee
100
3/3
Roman Zitzelsberger
67
2/3
Dr. Jürgen Hambrecht
3/3
8/9
Dr. Bernd Pischetsrieder
100
100
9/9
Michael Bettag
89
8/9
Sari Baldauf
100
9/9
Bader M. Al Saad
100
3/3
Dr. Paul Achleitner (until July 8, 2020)
100
9/9
Dr. Manfred Bischoff (Chairman)
Supervisory Board
Participation Presence (%)
2020
Individualized disclosure of participation in meetings by the members
of the Supervisory Board of Daimler AG in the 2020 financial year
A.01
Elected until 2022
Dr. Clemens Börsig
Michael Brecht
9/9
100
9/9
Ergun Lümali
100
9/9
Joe Kaeser
100
6/6
Timotheus Höttges (since July 8, 2020)
100
9/9
4/4
Petraea Heynike
8/9
Dr. Jürgen Hambrecht
100
9/9
Michael Häberle
100
9/9
Raymond Curry
100
9/9
89
100
100
2/2
Target premium segments
Mercedes-Benz Vans is proud to have greatly shaped the vans
market worldwide since the very beginning and to be part of
the Mercedes-Benz brand family. With our strategic realign-
ment, we are enhancing our profile as premium suppliers of
future-oriented transport solutions for commercial and private
customers. The V-Class and the EQV (combined electricity
consumption: 26.4-26.3 kWh/100 km; combined CO2 emis-
sions: 0 g/km; range: 417-418 km)¹ are already successfully
established in the market for privately used vans. In the future,
Mercedes-Benz Vans will offer the T-Class and its electric vari-
ant to private customers for families and leisure activities. For
commercial customers, the Sprinter, the Vito and the Citan are
premium vans that cover all van segments. In both the com-
mercial and the private sectors, Mercedes-Benz Vans stands
for the highest levels of quality, reliability and sustainability.
Focus on profitable growth
Another key element of the strategy is the increased focus on
high-sales and high-margin markets. In parallel with the expan-
sion of our activities in Europe, we also intend to further inten-
sify our efforts in China, the United States and Canada, and
align our portfolio even more closely with the respective mar-
ket requirements. Among the various important new target
groups that we have identified are up-and-coming sectors with
great future potential such as camper vans. Here we are focus-
ing on reducing complexity, a strategy that includes the contin-
uous review of our product portfolio.
Embrace customers and grow recurrent revenues
Mercedes-Benz Vans will further intensify its cooperation with
customers in order to strengthen and expand its long-term
customer relationships. In order to increase our customers'
satisfaction and loyalty on a lasting basis, we aim to tailor our
products and services precisely to their needs. A focus is here
on co-creation - the joint development of segment-specific
and user-specific solutions so that we can retain customers
over the long term and generate potential revenue throughout
the customer life cycle.
1 Electricity consumption and range have been calculated on the basis
of Commission Regulation (EC) No. 692/2008. Electricity consumption
and range depend on the vehicle configuration. The actual range also
depends on the individual driving style, road and traffic conditions, out-
side temperature, use of air conditioning/heating etc., and may vary.
Mercedes-Benz Vans strategy
We want to exceed customers' expectations with the
most desirable vans and services
Target
Focus
Embrace
Lead
Lower
premium
segments
on
Dr. Paul Achleitner (until July 8, 2020)
customers and
grow recurrent
in electric
drive and digital
operating
costs
revenues
The Mercedes-Benz Vans strategy consists of five pillars:
Our aim is "to exceed customers' expectations by offering
them the most desirable vans and services." Mercedes-Benz
Vans produces premium vehicles that customers consider to
be far more than just capital goods. We want to safeguard this
position and focus our activities on thrilling customers and
making their business more efficient on a lasting basis.
"Moving transportation to the next level" expresses the core
value and the fundamental attitude of Mercedes-Benz Vans.
The word "moving" expresses our personal motivation to take
the lead in the competitive environment, while “transporta-
tion" refers to the core element of our business: the transport
of passengers and goods. Our striving for continuous improve-
ment and further development for boosting the customer util-
ity is expressed by the words "to the next level."
Mercedes-Benz Vans strategy
revenues
Sustainability as a guiding principle
Driven by a highly qualified and motivated team
Lower
cost base
and improve
industrial
footprint
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 29
Demand for the legendary G-Class currently exceeds the avail-
able production capacity. We also want this model series to
grow and be electrified. The Mercedes-EQ sub-brand is using
new high-tech products to address new customer groups.
Embrace customers and grow recurrent revenues
Mercedes-Benz wants to intensify and reinforce its long-term
customer relationships. Stronger customer loyalty enables us
to generate recurring revenue by means of services and spare
parts, for example, as well as with increasing numbers of
over-the-air updates (OTAs) and digital service subscriptions.
We expect this to open up considerable revenue potential
because the Mercedes-Benz car fleet shall encompass a total
of 20 million interconnected vehicles by 2025.
solutions
Lead in electric drive and car software
Mercedes-Benz will shift even more resources into product
development and the accumulation of electric drive system
expertise as well as investing in new technologies and con-
cepts for improving range and efficiency. The next generation
of electric motors is being developed independently by the
brand and will include advanced inverter and high-voltage
technologies. The company is making big leaps in battery tech-
nology by means of its own research and development work as
well as in strategic partnerships with partners such as CATL,
Farasis and Sila Nano. Our goal is to own the entire battery
technology chain and rely on partnerships where we think it is
beneficial.
While plug-in hybrids and purely battery-electric vehicles are
expected to account for more than 50% of global sales in 2030,
we plan to reduce our investments in combustion engines, cut
the number of variants by 70% between now and 2030 and
cease offering manual transmissions in our car portfolio in the
medium term. The elimination of manual transmissions is
to take place in the context of a successive adaptation as we
move to new vehicle generations in the course of specific mod-
els.
In the vehicle software segment, Mercedes-Benz is relying on a
proprietary operating system. It is being developed by us and
is scheduled for market launch in 2024. It will enable us to
respond flexibly and quickly to new customer requirements.
We see this as an important precondition for increasing cus-
tomer utility across a vehicle's entire life cycle and for develop-
ing new digital business models. This software is being devel-
oped for all scalable platforms in order to make development
more cost-efficient.
Lower cost base and improve industrial footprint
Mercedes-Benz intends to further improve its profitability and
cash flow and at the same time safeguard its investments in
the future as well as the accelerated transition to electric drive
systems. To do that, we want to lower the break-even point,
further reduce the cost base, and continue to improve the
industrial footprint between now and 2025.
By 2025, capacity adjustments and lower personnel expenses
are expected to reduce fixed costs by a total of more than 20%
overall compared to the values for 2019. By 2025, we also plan
to reduce capital expenditures and investments in research
and development by more than 20% compared to 2019. Plans
call for the variable costs relative to 2019 to be reduced by 1%
per year until 2025.
As a result of its realignment, the Mercedes-Benz strategy
aims to improve profitability by creating a more advantageous
product mix, improving pricing, enhancing the product portfo-
lio and boosting the amount of recurring revenue. By 2025,
Mercedes-Benz AG intends to achieve a return on sales of at
least between a mid-level and a high single-digit percentage.
However, the company's long-term goal is to achieve a double-
digit return on sales in a competitive market environment.
Our actions are based on our values and principles as well as
on our view of how and with what attitude we want to operate
as a company. We provide orientation even in times of change
with our Leadership 20X program, which defines our leader-
ship and partnership principles, and with integrity as our main
corporate value.
1 Electricity consumption and range have been calculated on the basis
of Commission Regulation (EC) No. 692/2008. Electricity consumption
and range depend on the vehicle configuration. The actual range also
depends on the individual driving style, road and traffic conditions, out-
side temperature, use of air conditioning/heating etc., and may vary.
30
A❘ TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
Mercedes-Benz wants to become the leader for electric mobil-
ity and vehicle software. To this end, we have defined ambi-
tious product development targets and decided to accelerate
the market launch of new technologies. This means that when-
ever we develop a new vehicle architecture, we will first design
the automobile as an all-electric vehicle. We will then plan
modifications such as plug-in hybrid drive systems. Within the
framework of this Electric First strategy, we will begin in 2021
to introduce four new electric models. These will be based on
the Electric Vehicle Architecture (EVA), which is designed
exclusively for battery-electric drive systems. The EQS luxury
sedan will be the first model on this independent new platform
and be launched on the market in 2021. It will be followed by
the EQE, the EQS SUV and the EQE SUV. In addition, Mercedes-
AMG, Mercedes-Maybach and the G-Class will also be electri-
fied. Other models will round out the electric vehicle portfolio
beginning in 2025. Both the new S-Class and the C-Class will
get a plug-in hybrid drive that is expected to have purely elec-
tric ranges of around 100 kilometers (WLTP) as early as 2021.
Compact-class customers can look forward to two all-electric
compact SUVs in 2021 - the EQA (combined electricity con-
sumption: 15.7 kWh/100 km; combined CO2 emissions: 0g/km)1
and the EQB. As a result, we will already offer our customers
more than 25 plug-in hybrids and purely battery-electric mod-
els in 2021. This portfolio will be successively expanded over
various segments by the addition of further attractive electrified
models. In this way we plan to offer more than 40 plug-in hybrid
and purely battery-electric models by 2030.
Sustainability as a guiding principle
profitable
growth
Dr. Clemens Börsig
5/5
100
5/5
100
5/5
Driven by a highly qualified and motivated team
5/5
Marie Wieck
Sibylle Wankel
Michael Häberle
Michael Brecht
Dr. Manfred Bischoff
Dr. Clemens Börsig (Chairman)
Committee for Legal Affairs
100
2/2
Dr. Bernd Pischetsrieder (since July 9, 2020)
100
4/4
Sari Baldauf
100
100
5/5
100
5/5
Elected until 2023
Chairman of the Works Council, Mercedes-Benz AG Dealership
Nürnberg
Michael Bettag*
100
Former Executive Vice President and General Manager of the
Networks Business Group of Nokia Corporation
Sari Baldauf
Elected until 2022
Member of the Executive Committee of the Board of Directors
of Kuwait Investment Authority
Bader M. Al Saad
Chairman of the Supervisory Board of Deutsche Bank AG
Stepped down on July 8, 2020
Dr. Paul Achleitner
Elected until 2023
Gaggenau
Elected until 2023
100
22
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD
A | TO OUR SHAREHOLDERS | REPORT OF THE SUPERVISORY BOARD 21
Dr. Manfred Bischoff
Chairman of the Supervisory Board of Daimler AG
Elected until 2021
Michael Brecht*
Deputy Chairman of the Supervisory Board of Daimler AG;
Chairman of the General Works Council, Daimler Group;
Chairman of the General Works Council, Daimler AG;
Chairman of the Works Council, Mercedes-Benz Plant
The Supervisory Board
88
Board of Management remuneration in
89
89
Remuneration Report
Events after the Reporting Period
Economic Situation
134
CO2 emissions of the new-car fleet in Europe
Overall statement on future development
88
Overall Assessment of the
134
Investment and research activities
133
134
Principles of Board of Management remuneration
20
133
To do so, we are focusing on four areas of action:
Ensuring our customers' utmost satisfaction and loyalty is cru-
cial for our business success. We want to be the best service
provider in the captive leasing and financing business. As a
marketing intermediary, our objective is to continue to finance
or lease one in two of the vehicles sold by the Group. More-
over, we are striving to achieve additional growth with our ser-
vices for the used-car and fleet business as well as for insur-
ance. We will support the market success of our electric
vehicles by customized leasing and financing products. In the
field of digitalization, our goal is to fully digitize all customer
interactions as well as the associated internal processes that
they require.
Our Daimler Mobility 2025 strategy concentrates our activities
on our core business in the areas of financing, leasing and
insurance. Fleet management, rental and subscription solu-
tions, and mobility investments remain important additions to
our portfolio.
The strategic foundation of Daimler Mobility is our ambition to
inspire our customers with best-in-class financial and mobility
services that are intuitive, flexible and digital. No matter
whether we offer financing and leasing services, insurance or
fleet management, our private and commercial customers
should be able to rely on the fact that our products are simple
and self-evident, that they are ideally suitable for their living
conditions or business model, and that they can be accessed
everywhere and at all times by means of smartphones, tablets
or desktop computers.
Daimler Mobility strategy 2025
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
34
Drive transformation
We want our strategy to successfully shape the transformation
of our sector and strengthen the competitiveness of our com-
pany.
In order to strengthen its market position in China, Daimler
Trucks plans to produce heavy-duty semitrailer trucks in China
in the future and tailor them to the requirements of Chinese
customers. These trucks will be produced with the Chinese
partner Beiqi Foton Motor Co., Ltd. in the context of the joint
venture Beijing Foton Daimler Automotive (BFDA).
The cooperation with Luminar Technologies, Inc., a leading
supplier of lidar hardware and software technology, is a further
milestone.
We have recently increased our strength in the area of highly
automated driving (SAE Level 4) by means of a partnership
with Waymo in the United States in addition to the purchase of
a majority holding in Torc Robotics.
We're proud of the things that we've achieved as a company
over the past several years and decades. Looking forward, the
transformation of our sector, our products and our company
requires a substantial input in terms of resources. For this rea-
son we are expressly open to strategically beneficial partner-
ships. By working together with a suitable partner, we can
achieve more in less time, especially when it comes to new
technologies. We want to continue forging ahead with the elec-
trification of commercial vehicles by means of the strategic
partnership with the American company Proterra Inc. Another
good example of this is the fuel-cell partnership that we have
agreed upon with the Volvo Group. Its goal is to fully develop,
produce and market fuel-cell systems. The focus is on use in
heavy-duty trucks; the systems will also be offered for other
applications. Daimler Truck AG plans to consolidate all of its
current fuel-cell activities, which are combined in Daimler
Truck Fuel Cell GmbH & Co. KG, in the new joint venture.
Partnerships
We can only achieve our goals if we work together success-
fully. The basis for this is formed by our shared values, such as
trust and integrity, as well as shared principles such as the way
we operate. We listen carefully to our customers and want to
understand them, because this is the only way we can develop
technologies that really solve problems. We also know that we
will reach our goal faster if we pull together. We don't just pay
lip service to the concept of team work, as it is a part of our
daily life. We learn from one another and work together to
develop new technologies for multiple brands and sectors.
People and culture
At Daimler Buses we are working together with companies
such as IVU Traffic Technologies AG to offer digital services in
the area of electric mobility.
We will consistently develop our online business and promote
the transition to electric mobility and sustainability. Mercedes-
Benz Cars aims to sell 25% of its vehicles online by 2025. We
want to support it in the achievement of this goal and provide a
smooth digital customer experience from a single source.
Among other things, we want to make sure that Daimler Mobil-
ity is climate-neutral by the end of 2022. We are offering an
uncomplicated and flexible entry into the world of electric
mobility in the form of our Mercedes-EQ subscriptions.
Increase efficiency
We will consistently digitize, automate and consolidate the pro-
cedures and loan approval processes throughout the company.
To do so, we will radically reduce the diversity of our products.
We will systematically streamline our organization and thus
make it faster and more powerful.
Strengthen corporate culture
Automate and bundle ops
Simplify product range
Create lean organization
Increase efficiency
Grow user-car portfolio
Push penetration
Accelerate retention
Enhance core business
Speed up e-mobility and sustainability
Offer flexible products
Establish online sales
Drive transformation
WE MOVE YOU! We inspire our customers with
best-in-class financial and mobility services -
intuitive, flexible and fully digital
Daimler Mobility strategy 2025
We intend to use our divisional strategies to shape the
transformation of the automotive industry from a position
of leadership in a sustainable, customer-focused, innova-
tive and efficient manner.
For us, the focus is on our employees and their qualifications
as well as on our management culture and the corporate val-
ues they're based on. That's because in the final analysis you
can only have the best products, leanest processes and most
satisfied customers if you have the best and most highly moti-
vated team. We will therefore continue to strive to be a top
employer in the future.
Strengthen corporate culture
We want to defend and increase our market share of Daimler's
vehicle sales by, for example, expanding the pre-owned vehicle
financing and fleet management activities and by clearly focus-
ing on customer loyalty.
Enhance core business
We need a powerful organization that enables us to implement
our strategy as effectively as possible. For this reason, we pro-
mote personal responsibility, initiative, agile thinking and effi-
cient action. Moreover, we are continuously optimizing our pro-
cesses and structures, for example by increasingly exploiting
the possibilities of digitalization. The improvement of our cost
structures is another one of our continuous tasks.
Lean organization
We know what provides our customers with added value. We
are correspondingly prioritizing the topics into which our engi-
neering abilities and financial resources are flowing. Besides
customer utility, whether an existing or new product or service
makes a positive long-term contribution to our earnings is
another decision criterion.
Focus on core business
Lead globally
Customers have top priority. People will only choose our prod-
ucts and services if we create added value for our customers
and if our products and new technologies enable them to make
money, improve their processes or boost their productivity. In
this respect, it's crucial that we know exactly what our custom-
ers' needs are and that we develop products that are tailored
to these requirements. The new model series of Western Star
offers a current example of how this works in practice. The
new truck for the vocational segment - i.e. commercial vehi-
cles for construction and special applications - enables us to
not only boost our customers' productivity but also to lower
their operating costs.
Add value for customers
In view of the fact that our environment is currently undergoing
a profound change, we have decided to further enhance the
strategy of Daimler Trucks & Buses.
Our goals and strategy are determined by the company's pur-
pose, which defines our obligation to our customers and to
society at large. We're working for "everyone that's moving the
world." Together with our customers, we contribute to prosper-
ity and growth.
Daimler Trucks & Buses strategy 2030
A❘ TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY
32
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 31
1 Electricity consumption and range have been calculated on the basis
of Commission Regulation (EC) No. 692/2008. Electricity consumption
and range depend on the vehicle configuration. The actual range also
depends on the individual driving style, road and traffic conditions, out-
side temperature, use of air conditioning/heating etc., and may vary.
Having highly motivated and committed employees is more
important that ever in times of great change. By means of the
program Leadership 20X, Mercedes-Benz Vans wants to
increase the employees' motivation and individual responsibil-
ity and offer them qualification measures that will make them
fit for the transformation toward electric mobility and exten-
sive digitalization.
Mercedes-Benz Vans is also committed to the sustainability
targets and has firmly anchored them in the strategy.
We also want to substantially reduce costs at Mercedes-Benz
Vans. We intend to continue to improve our processes,
increase flexibility, reduce fixed costs and variable expendi-
tures, and exploit the digitalization opportunities for improving
efficiency and customer orientation. Digitalization also means
connecting the digital services with Mercedes-Benz Cars,
strengthening digital sales activities, and consolidating all digi-
tal customer contacts into a digital customer experience. In
order to safeguard our competitiveness, we are systematically
examining all of our expenditures so that we can significantly
reduce our fixed costs in the long run.
Lower operating costs
We intend to set new standards for sustainable electric mobil-
ity and digital solutions. Our portfolio is now almost completely
electrified. The successful launch of the eVito (combined elec-
tricity consumption: 26.2 kWh/100 km; combined CO2 emis-
sions: 0 g/km; range: 421 km)¹, eSprinter (combined electricity
consumption: 37.1-32.5 kWh/100 km; combined CO2 emis-
sions: 0g/km; range: 120–168 km)¹ and EQV (combined elec-
tricity consumption: 26.4-26.3 kWh/100 km; combined CO2
emissions: 0g/km; range: 417-418 km)¹ shows that we are on
the right track. The successor of the Citan is rounding out the
electrification of all of our van model series. In order to make
our portfolio sustainable and future-proof, we are intensively
studying new vehicle concepts. In doing so, we are focusing on
the consistent further development of high-performing electri-
fied variants. We already have a strong position when it comes
to customer-oriented digital services and we want to further
strengthen this position. We offer Mercedes me connect ser-
vices for individual private use and the service platform
Mercedes PRO for commercial customers. This platform fea-
tures an extensive range of connectivity and vehicle-related
services. In addition, we are continuing to work systematically
on completely networking our vehicles and are creating innova-
tive hardware and software solutions to this end.
Lead in electric drive and digital solutions
116
For us, global leadership is not an end in itself. We need to
have a global presence in order to exploit economies of scale
and to enable more cost-efficient development. Our high devel-
opment expenditures on new technologies in areas such as
electric drive systems, autonomous driving and digitalization
can only be kept as low as possible per vehicle if we develop
our innovations on the basis of universal platforms and utilize
them in as many markets and vehicles as possible. By main-
taining a global presence we make these new technologies
available to customers faster and in a more tried and tested
manner. Finally, our global setup enables us to more easily off-
set regional market cycles.
Ensure people focus
Safeguard best skills
Grow services
To supplement this traditional portfolio of services, we will
establish other services based on software and digitalization.
The aim here is to generate real added value for our custom-
ers, to enable them to operate our trucks and buses more effi-
ciently, and to cut their total transport costs. We are already
achieving this today with digital services such as Fleetboard,
Mercedes-Benz Uptime, Detroit Connect and TruckConnect at
Daimler Trucks, as well as with digital services on the Omni-
plus ON platform at Daimler Buses. Our new Connectivity Ser-
vices Group is now working on developing promising services
for trucks and buses along our customers' value chains.
We are also developing completely new business models for
Daimler Trucks when it comes to autonomous driving. In doing
so, we are pursuing our dual strategy by working together with
two strong partners in order to offer customers the best possi-
ble integrated fully automated SAE Level 4 solutions. To this
end, Torc Robotics became part of the Autonomous Technol-
ogy Group at Daimler Trucks in September 2019. With Torc, we
are focusing on the development of our own SAE Level 4 solu-
tion for operations between two logistics centers (hub-to-hub
operations). As part of the partnership with Waymo we are
developing a variant of the Freightliner Cascadia truck model
that is especially designed for the Level 4 operation of Waymo
technology. This variant will first hit the road in the United
States. North America provides ideal conditions for the testing
and subsequent use of highly automated trucks (SAE Level 4).
We also have a clear vision with regard to traffic safety: acci-
dent-free driving. We will achieve this by means of our safety
assistance systems, which help drivers perform their tasks and
can thereby protect all road users. We want to see important
systems such as the fully integrated Mercedes-Benz Sideguard
Assist S1R for retrofitting heavy-duty trucks in as many vehi-
cles on the road as possible. In 2020, we therefore began to
offer this system as a retrofit solution for many of the common
models of the Actros, Arocs and Econic of model year 2017
and later. Moreover, we are continuously enhancing existing
systems. Active Sideguard Assist no longer just warns the
driver of cyclists and pedestrians standing or moving alongside
the front-passenger side of the vehicle, but also initiates auto-
matic braking at turning speeds of up to 20 km/h in order to
bring the vehicle to a standstill if the driver fails to respond to
the acoustic alert. Mercedes-Benz Trucks is the world's first
truck manufacturer to offer such a system. We are also a pio-
neer at our bus brands Mercedes-Benz and Setra, making us
the first manufacturer to offer such systems as the turning
assistant Sideguard Assist (including pedestrian detection) and
Preventive Brake Assist.
Daimler Buses is already making an important contribution to
accelerating the mobility revolution in urban passenger trans-
portation and thus making cities more livable. The clear objec-
tive here is to ensure sustainable CO2-neutral public passenger
transport. Our Mercedes-Benz eCitaro city bus was put into
mass production in 2018 and it has also been offered with a
solid-state battery since 2020. Due to its greater range, this
bus can easily serve most of the usual urban routes. In addi-
tion, the solid-state batteries have a long service life and do
not contain cobalt or manganese.
portfolio to include series-produced trucks and buses with bat-
tery-electric drive systems in the main sales regions Europe,
the United States and Japan. In the second half of the 2020s,
we will supplement our portfolio of series-produced vehicles
by adding fuel cell-powered electric trucks.
A | TO OUR SHAREHOLDERS | OBJECTIVES AND STRATEGY 33
Partnerships
People &
culture
Focus on
core business
Differentiate
by technologies
Lean
organization
Grow
services
Lead
globally
Add value for customers
Daimler Trucks & Buses strategy 2030
Looking ahead, we can state that we are committed to the
Paris Agreement on climate change and wish to play a major
role in shaping the development of CO2-neutral transportation.
To make this possible, we are focusing on two technologies:
batteries and hydrogen-powered fuel cells. Our Group has
more than 25 years of experience with fuel cells. Thanks to this
experience, we want to offer our customers a truck for flexible
and demanding applications that can compare with diesel-
powered ones as regards traction, range and performance.
Exactly which solution a customer will use will depend on the
case in question. To this end, we are planning to achieve the
following product milestones: By 2022, we want our vehicle
We want to set ourselves apart with technologies that generate
real added value for our customers and society at large. As a
result, we began early on to focus on ways to reduce the diesel
consumption of our commercial vehicles. We have repeatedly
developed innovations for this purpose in order to differentiate
us from the competition.
Differentiate by technologies
In order to increase our profitability on a lasting basis, we
intend to exploit the potential of our service business in a more
targeted manner. To this end, we are expanding our existing
range of aftersales products and creating new services. One
example of this is the introduction of 3D printing for spare
parts at Daimler Buses.
Dividend
Live core values
B
72
Sustainability at Daimler
Non-Financial Statement
B| Combined Management Report
with Non-Financial Statement
36 B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL STATEMENT CONTENTS
71
71
Environmental issues
70
ORFF
Outlook
Financial position, liquidity and capital resources
Risks and opportunities
50
47
46
45
69
Employee issues
Social issues
Integrity and compliance
Free cash flow and liquidity
82
132
Revenue and earnings
80
132
131
130
130
Unit sales
Automotive markets
The world economy
Outlook
77
76
72
2NO%
4440
Investment and research activities
Business development
Automotive markets
39
52
Resources, Financial Position
37
Profitability, Liquidity and Capital
37
3334
Performance measurement system
Important events
Business model
Corporate Profile
Management Report with
Non-Financial Statement
Combined
120
financial year 2020
40
60
Profitability
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL STATEMENT | CONTENTS 35
53
59
The world economy
45
45
Profitability
Business Development
Economic Conditions and
69
(condensed version according to HGB)
Daimler AG
44
Declaration on Corporate Governance
44
Key performance indicators
66
Financial position
43
Financial performance measures
Liquidity and capital resources
97
Company-specific risks and opportunities
106
Daimler Mobility
Revenue: €98.6 billion
Employees: 170,515
Revenue: €34.7 billion
Employees: 99,640
Revenue: €27.7 billion
Employees: 11,650
AMG
MAYBACH MERCEDES-EQ
Mercedes me
FREIGHTLINER
FREIGHTLINER
WESTERN STAR
FUSO
mag
BHARATBENZ
SETRA
Mercedes-Benz Bank
Daimler Trucks & Buses
Mercedes-Benz Cars & Vans
Daimler Group structure
B.01
Business model
Daimler can look back on a tradition covering more than 130
years a tradition that goes back to Gottlieb Daimler and Carl
Benz, the inventors of the automobile, and features pioneering
achievements in automotive engineering. Today, the Daimler
Group is a vehicle manufacturer with an outstanding range of
premium cars, trucks, vans and buses. Its product portfolio is
rounded out by a range of customized financial services and
mobility services. Daimler's goal is to continue playing a lead-
ing role in the development of products and services for the
future of mobility. The automotive industry is in the process of
a fundamental transformation, and we intend to play a major
role in actively shaping that change. Daimler AG is the parent
company of the Daimler Group and its headquarters are in
Stuttgart. As of January 1, 2020 the operational business activ-
ities of the Group have been managed in the business divisions
Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks &
Buses and Daimler Mobility. For the purposes of external
reporting, the segments Mercedes-Benz Cars and Mercedes-
Benz Vans have been combined into the reportable segment
Mercedes-Benz Cars & Vans. Daimler Financial Services AG,
which had already been legally independent for many years,
was renamed as Daimler Mobility AG in July 2019; this was
accompanied by the renaming of the Daimler Financial Ser-
vices division as Daimler Mobility.
With the new structure, Daimler AG carries out the functions of
controlling and governance and provides services for the com-
panies of the Group. As the parent company, it also defines the
Group's strategy, makes key decisions for business operations,
and ensures the effectiveness of organizational, legal, and com-
pliance-related functions throughout the Group. Mercedes-
Benz AG is responsible for the business of Mercedes-Benz Cars
& Vans, and Daimler Truck AG combines the activities of
Daimler Trucks & Buses. Daimler Mobility AG is responsible for
the Group's financing and leasing products.
We have used the new reporting structure with three divisions
in this report for financial year 2020, analogously to the
reports for the first three quarters of the year.
The management reports for Daimler AG and for the Group are
combined within this annual report. We have expanded the
combined management report for the Group with the com-
bined non-financial declaration of Daimler AG and the Group.
With its strong brands, Daimler is active in nearly all the coun-
tries of the world. The Group has production facilities in
Europe, North and South America, Asia and Africa. The global
networking of research and development activities as well as
of production and sales locations gives Daimler advantages in
the international competitive field and also offers additional
growth opportunities.
In 2020, the revenue of the Daimler Group decreased by 11% to
€154.3 billion. Further information on the development of reve-
nue and the respective share of the divisions can be found in the
chapter Profitability. At the end of 2020, Daimler employed
a total workforce of around 288,500 people worldwide.
Mercedes-Benz
Financial Services
The products supplied by Mercedes-Benz Cars comprise an
exclusive offer per segment, ranging from the family of
compact models to a highly varied portfolio of C-Class and
E-Class models, G-Class, SUVs, roadsters, coupes and con-
vertibles, and S-Class luxury sedans. The Mercedes-Benz
umbrella brand is supplemented by the sub-brands Mercedes-
EQ, Mercedes-AMG and Mercedes-Maybach, which are able to
meet individual customer requirements even more precisely.
The product range is rounded out by the Mercedes me brand
for personalized services and connectivity and the high-quality
small cars of the smart brand for an urban environment. The
most important markets for Mercedes-Benz Cars in 2020 were
China with 36% of unit sales, Germany (14%), the other Euro-
pean markets (24%), the United States (12%), South Korea (4%)
and Japan (2%). Mercedes-Benz Cars is continuously refining
its flexible production network. For example, we are systemati-
cally preparing to meet the requirements of electric mobility,
digitalization and CO2-neutral vehicle production.
38
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | CORPORATE PROFILE
ment, Mercedes-Benz Vans offers the V-Class full-size MPV
and Marco Polo camper vans and recreational vehicles. Within
the framework of its eDrive@VANS activities, Mercedes-Benz
Vans is also demonstrating just how systematically it is moving
forward with the electrification of the van model segment with
the eVito, the eVito Tourer (combined electricity consumption:
26.2 kWh/100 km; combined CO2 emissions: 0 g/km)',
the eSprinter and the first all-electric full-size MPV from
Mercedes-Benz - the EQV (combined electricity consumption:
26.4-26.3 kWh/100 km; combined CO2 emissions: 0 g/km) 1.
The division has manufacturing facilities in Germany, Spain, the
United States and Argentina and also produces vehicles in the
Fujian Benz Automotive Co. Ltd. joint venture in China. Produc-
tion of the Citan is part of the strategic alliance with Renault-
Nissan-Mitsubishi. The most important markets for vans are
the EU30 region (European Union, United Kingdom, Switzer-
land, Norway), which accounted for 65% of unit sales in the
year under review, North America (15%) and Asia (10%).
Daimler Trucks & Buses is one of the world's largest manufac-
turer of trucks above 6 metric tons gross vehicle weight.
Daimler Trucks & Buses operates a global network in which it
produces trucks under the brands Mercedes-Benz, Freightliner,
Western Star, FUSO and BharatBenz and buses under the
brands Mercedes-Benz, Setra, Thomas Built Buses and FUSO.
Daimler Trucks & Buses has more than 40 production facilities
that are located in North America, Europe, Asia and Latin
America. In China, Beijing Foton Daimler Automotive Co., Ltd.
(BFDA), a joint venture with our Chinese partner Beiqi Foton
Motor Co., Ltd., has been producing trucks under the Auman
brand name since 2012. Daimler Trucks' product range
includes light-, medium- and heavy-duty trucks for long-dis-
tance, distribution and construction-site haulage, as well as
special vehicles that are used mainly in municipal applications.
Due to close links in terms of production technology, the prod-
uct range of Daimler Trucks also includes buses of the Thomas
Built Buses and FUSO brands. Daimler Trucks' most important
sales markets in 2020 were North America with 39% of unit
sales, Asia with 27% and the EU30 region with 17%. The
Daimler Buses product range comprises city and inter-city
buses, touring coaches and bus chassis. Whereas we mainly
sell complete buses in Europe, our business in Latin America,
Mexico, Africa and Asia focuses on the production and distri-
bution of bus chassis. Daimler Buses' most important sales
markets in 2020 were the EU30 region with 37% and Latin
America with 38% of unit sales.
The Daimler Mobility division supports the sales of the Daimler
Group's automotive brands worldwide with tailored mobility
and financial services. These services range from customized
leasing and financing packages and insurance solutions to flex-
ible subscription and rental models and fleet management ser-
vices for business customers. Daimler Mobility has more than
five million leased and financed vehicles in 39 markets for its
financing, leasing and insurance business alone, which offers
clear proof of its ability to offer outstanding services that meet
a wide range of requirements. The mobility ecosystem is
rounded out by flexible-use services such as Mercedes-Benz
Rent (rental vehicles) as well as investments in companies that
offer mobility services. Along with the services offered by the
YOUR NOW joint ventures, Daimler Mobility also provides pre-
mium ride-hailing services with luxury vehicles via StarRides
and Blacklane. During the year under review, Daimler Mobility
financed or leased approximately 50% of the vehicles sold by
Daimler.
1 Electricity consumption and range have been calculated on the basis of
Commission Regulation (EC) No. 692/2008. Electricity consumption and
range depend on the vehicle configuration. The actual range also depends
on the individual driving style, road and traffic conditions, outside temper-
ature, use of air conditioning/heating etc., and may vary.
Mercedes-Benz Vans is a global supplier of a complete port-
folio of vans and related services. The models offered in the
commercial segment comprise the Sprinter large van, the Vito
mid-size van (marketed as the “Metris” in the United States)
and the Citan urban delivery van. In the private customer seg-
Corporate Profile
Daimler Truck Financial
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | CORPORATE PROFILE 39
Daimler Buses presents new all-electric eCitaro articu-
lated bus for CO2-neutral public transportation
In May 2020 Daimler Buses presented the new Mercedes-Benz
eCitaro articulated bus with new battery technology. This
large-bodied articulated bus offers lots of room to transport up
to 146 passengers. The new solid-state batteries have an espe-
cially high energy density and a total energy capacity of 441
kWh. Due to its greater range, this bus can easily serve most of
the usual urban routes.
Daimler and Rolls-Royce plan cooperation on stationary
fuel cell systems
On May 26, 2020, Daimler Truck AG announced plans to coop-
erate with the British technology company Rolls-Royce plc. The
goal of the partnership is to supply stationary fuel cell genera-
tors as CO2-neutral emergency power generators for safety-
critical facilities such as data centers. They will offer emission-
free alternatives to diesel engines, which are currently used as
emergency power generators or to cover peak loads. The Rolls-
Royce Power Systems business unit wants to equip its emer-
gency power generators with fuel cell systems supplied by the
planned joint venture between Daimler Truck AG and the Volvo
Group.
Mercedes-Benz and NVIDIA plan to create a software plat-
form for automated driving
On June 23, 2020, Daimler AG announced plans by Mercedes-
Benz and NVIDIA to establish a development partnership for an
in-vehicle computing system and an Al computing infrastruc-
ture. NVIDIA is the global leader in GPU-accelerated comput-
ing. The goal of the planned partnership is to develop one of
the most intelligent and advanced computing architectures in
the automotive industry for use in all Mercedes-Benz model
series. Starting in 2024, it will be introduced in all future vehi-
cles as a standard feature that will enable them to be equipped
with upgradable automated driving functions. The Al comput-
ing architecture is intended to further accelerate our journey
toward autonomous driving applications, and the Al and soft-
ware tools will enable us to continuously further develop and
improve all of our vehicles.
Mercedes-Benz announces strategic partnership with bat-
tery cell manufacturer Farasis
On July 3, 2020, we announced that we had launched a strate-
gic partnership with the Chinese battery cell manufacturer Far-
asis Energy that will include an equity stake. The partnership
marks another important step toward CO2 neutrality within the
framework of the "Ambition 2039" program. Key elements of
the agreement include the development and industrialization
of battery cell technologies, as well as measures relating to
cost competitiveness. The agreement expands the supplier set
of Mercedes-Benz AG for the supply of battery cells for the
"Electric First" electrification offensive, while also providing
Farasis with planning security for the expansion of its produc-
tion capacity.
Company management and General Works Council agree
on basic points relating to job security and profitability
On July 28, 2020, Daimler AG announced an agreement on key
points for reducing personnel costs in Germany. The additional
temporary measures that were agreed on aim to take the spe-
cial economic burden of the covid-19 pandemic into account
and also safeguard employment even further. Back in Decem-
ber 2019, Daimler and the General Works Council agreed on
measures to cut costs and reduce jobs in a socially responsible
manner in order to streamline the corporate structure and
increase efficiency and flexibility.
Mercedes-Benz and CATL expand battery technology part-
nership
On August 5, 2020, Daimler AG announced that Mercedes-
Benz and CATL (Contemporary Amperex Technology) planned
to enter the next stage of their strategic partnership and begin
developing innovative battery technologies. The agreement
relates to the provision of battery cells, modules for Mercedes-
Benz Cars and complete batteries for Mercedes-Benz Vans, all
of which will be manufactured in a CO2-neutral manner. CATL
is a technology leader in the production of lithium-ion batter-
ies. Our goal with this partnership is to promote the industrial-
ization of lithium-ion batteries in Germany and accelerate the
electrification of our model portfolio. Plans also call for the
launch of the Mercedes-Benz EQS electric luxury sedan in
2021, which will be equipped with CATL modules.
US authorities approve settlement in civil proceedings
regarding diesel emissions
Daimler AG and Mercedes-Benz USA LLC took another step
toward resolving legal issues relating to diesel emissions on
September 14, 2020, when the US regulatory authorities
approved a settlement of civil and environmental claims. This
ended the regulatory proceedings regarding the emission con-
trol systems of approximately 250,000 diesel vehicles in the
United States. More specifically, US authorities filed the settle-
ment agreements with the United States District Court for the
District of Columbia – a federal court - for final approval. We
also agreed with plaintiff attorneys to amicably settle the con-
sumer class action “In re Mercedes-Benz Emissions Litigation."
By reaching these agreements, Daimler has avoided lengthy lit-
igation and the associated legal and financial risks. In addition
to the payment of civil penalties in the amount of USD 875 mil-
lion, the settlement with the US authorities provides for
Daimler to further strengthen its technical compliance man-
agement system, offer servicing measures for affected vehi-
Commitments upon termination of service
Daimler Truck AG and the Volvo Group share the Green Deal
vision of sustainable transport and a CO2-neutral Europe by
2050. This was announced by the partners on April 21, 2020.
On November 2, 2020, they signed a binding agreement
regarding the joint venture's creation. Volvo Group will pur-
chase 50% of the shares of Daimler Truck Fuel Cell GmbH &
Co. KG for about €0.6 billion on a cash and debt-free basis.
The merger control clearances have been granted, meanwhile.
This transaction is scheduled to be completed in the first half
of 2021. The goal is to develop, manufacture and market fuel
cell systems for heavy-duty commercial vehicle applications
and other areas of application. The concentration of capacities
and expertise will reduce development costs for both compa-
nies and speed up the market launch of fuel cell systems.
Daimler plans to consolidate all of its Group-wide fuel cell
activities in the 50-50 joint venture, which will operate as an
independent autonomous unit.
Daimler and Volvo establish a joint venture for series pro-
duction of fuel cells
buses in its main sales regions as CO2-neutral vehicles in
terms of driving operation ("tank-to-wheel") by 2039. The
global platform strategy can accelerate the development of
this process. The eEconic, for example, is based on the eAc-
tros, which is already in practical use and will go into series
production in 2021.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION CORPORATE PROFILE
Important events
Daimler once again set a strong strategic course in 2020,
strengthened its core business, and exploited additional
growth potential. This was accomplished by means of the
Group's personnel decisions, the resolutions adopted by the
Annual Shareholders' Meeting, the Supervisory Board, the
Works Council and Group management, the targeted expan-
sion of the product portfolio and the establishment of new
partnerships. The following is an overview of the most impor-
tant events and occurrences at the Group.
Reappointment of Board of Management member Huber-
tus Troska
On February 19, 2020, the Supervisory Board decided to
appoint Hubertus Troska to the Board of Management of
Daimler AG, with responsibility for Greater China, for another
five
years, effective January 1, 2021. As CEO and Chairman of
Daimler Greater China Ltd., Hubertus Troska is responsible for
all of Daimler's strategic and operational activities in China.
China will remain the world's biggest growth region over the
medium term, as well as the most important market by far for
Mercedes-Benz passenger cars and an essential market for our
truck and van businesses as well. We also plan to further
strengthen our local activities in China in the areas of research
and development, production and procurement. With his great
dedication, expertise, and effective network, Hubertus Troska
plays a key role in this regard.
Daimler streamlines its organizational structure
On February 20, 2020, Daimler AG announced that effective
April 1, it would begin further developing its organizational
structure with the goal of optimizing development and produc-
tion processes. One of the measures involved the creation of a
new position for Product Strategy and Controlling at
Mercedes-Benz Cars. Ola Källenius, Chairman of the Board of
Management of Daimler AG and Mercedes-Benz AG, also
assumed responsibility for Mercedes-Benz Vans. Markus
Schäfer, member of the Board of Management of both Daimler
AG and Mercedes-Benz AG, with responsibility for Group
Research and Mercedes-Benz Cars Development, Procurement
and Supplier Quality, serves as COO, in which capacity he is
additionally responsible for the technical value creation pro-
cess at Mercedes-Benz Cars. Harald Wilhelm, the Daimler AG
Board of Management member responsible for Finance & Con-
trolling and Daimler Mobility, now also serves as Chief Finan-
cial Officer of Mercedes-Benz AG.
Daimler postpones Annual Shareholders' Meeting
The Board of Management of Daimler AG decided on March 13,
2020, to postpone the Annual Shareholders' Meeting that was
scheduled to take place on April 1. Our decision was taken in
order to safeguard the health of all participants and comply
with the covid-19 orders issued by the responsible health
department. The rescheduling of the meeting also led to a
postponement of the resolution on the allocation of profit and
the dividend payment.
ATHLON
As many as 12,000 people watch the first virtual Daimler
Annual Shareholders' Meeting on the Internet.
Proposals for new appointments to the Supervisory Board
and for its chair
The Supervisory Board of Daimler AG announced after its
meeting on December 3, 2020, that it would be making signifi-
cant personnel changes. The term of office of Dr. Manfred
Bischoff will expire as scheduled at the end of the Annual
Shareholders' Meeting on March 31, 2021, when the long-serv-
ing Chairman of the Supervisory Board will step down. Petraea
Heynike and Jürgen Hambrecht will also step down from the
Supervisory Board at this time. The Supervisory Board will pro-
pose to the 2021 Annual Shareholders' Meeting the election of
the following candidates: Elizabeth Centoni, Senior Vice Presi-
dent Cisco Strategy and Emerging Technology, who has held
senior management positions at the IT company for many
years; Ben van Beurden, CEO of Royal Dutch Shell Plc, and
head of this multinational corporation since 2014; and Dr. Mar-
tin Brudermüller, Chairman of the Board of Management of
BASF SE, Ludwigshafen, since 2018. During the first Supervi-
sory Board meeting after the Annual Shareholders' Meeting of
2021, a proposal will also be submitted to elect Dr. Bernd
Pischetsrieder as Chairman of the Supervisory Board. Bernd
Pischetsrieder is an internationally recognized automotive
expert whose expertise is of outstanding importance for
Daimler. He has closely supported decision-making relating to
the digitalization of the Group and the electrification of the
product portfolio.
Daimler and Geely Holding establish a global joint venture
for the further development of smart
On January 8, 2020, Mercedes-Benz AG and Zhejiang Geely
Holding Group announced the establishment of a 50-50 joint
venture for the smart brand. Our goals here are to further
develop smart into a leading supplier of intelligent premium
electric vehicles and extend the smart portfolio into the fast-
growing B-segment. The new generation of smart vehicles will
be designed in the Mercedes-Benz Design network, developed
in the Geely engineering network and manufactured at a new
electric-vehicle plant in China. Global sales of the first model
of the next-generation smart, an electric SUV, are scheduled to
begin in 2022. All of the sales, marketing and aftersales activi-
ties for Europe of the next smart generation will be managed
by smart Europe GmbH, which is based in the Stuttgart area
and was established on July 27, 2020.
Daimler Trucks ready to launch all-electric Mercedes-Benz
eEconic
As was announced on January 16, 2020, Daimler Trucks has
taken a further step in truck electrification with the battery-
electric eEconic. The low-floor truck is intended as a milestone
in terms of sustainable municipal logistics - an urban waste
collection vehicle that is equipped with an environmentally
friendly and efficient electric drive system. Selected customers
will be able to test the truck's suitability for everyday use in
actual operations starting in 2021. The experience gained will
flow into the series production, which is scheduled to begin in
2022. Daimler Trucks & Buses plans to offer all new trucks and
40
were up for vote. The Annual Shareholders' Meeting elected
Timotheus Höttges to the Supervisory Board as a shareholder
representative. He succeeds Dr. Paul Achleitner, who did not
run again after his term of office expired. Mr. Höttges is Chief
Executive Officer of Deutsche Telekom AG and an expert on
the digitalization of telecommunications systems. These quali-
fications make him a perfect addition to the Supervisory Board
of Daimler AG.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | CORPORATE PROFILE 37
On short notice, the legislator created the opportunity to hold
the meeting without requiring the shareholders or their proxies
to be physically present. On this basis, we held the first virtual
Annual Shareholders' Meeting of Daimler AG on July 8. A large
majority of our shareholders approved all agenda items that
129
Overall assessment of the risk and
opportunity situation
125
Legal and tax risks and opportunities
121
Industry and business risks and opportunities
Risks and opportunities
114
116
114
Risk and Opportunity Report
110
Takeover-Relevant Information
and Explanation
108
Remuneration of the Supervisory Board
Risk and opportunity management system
The adjustments include individual items if they lead to mate-
rial effects in a reporting period. These individual items can
relate in particular to legal proceedings and related measures,
restructuring measures and M&A transactions. On the basis of
adjusted CFBIT and adjusted EBIT, we report an adjusted cash
conversion rate (adjusted CCR) for the automotive divisions.
Cost of
capital (%)
Cost of capital
44
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION CORPORATE PROFILE
Cash flow
A change in net assets – for example as a result of investments
- generally leads to the application or release of liquid funds.
Along with earnings, net assets thus also have a direct effect
on the cash flow. Of outstanding importance for the financial
strength of the Daimler Group is the free cash flow of the
industrial business, which comprises the cash flows at the
automotive divisions and the cash flows from interest, taxes
and other reconciliation items that cannot be allocated to the
divisions. The operating cash flow before interest and taxes
(CFBIT) for the automotive divisions is derived from EBIT and
the change in net assets. The cash conversion rate (CCR) is the
ratio of CFBIT to EBIT over a period of time and is an important
measure for cash-flow management. In order to provide a
more transparent presentation of our ongoing business, we
additionally calculate and report the adjusted free cash flow of
the industrial business and the adjusted CFBIT of the automo-
tive divisions.
Key performance indicators
Around 2.3 million policies were brokered in the insurance
business. This corresponds to a decrease of 2%. Following the
covid-19-related decrease in the first half of the year, the num-
ber of transactions at the mobility services of the YOUR NOW
joint ventures FREE NOW & REACH NOW, SHARE NOW, and
PARK NOW & CHARGE NOW stabilized. Since the beginning of
the second covid-19-wave mid of October the transactions
slightly declined again. At the same time, the joint ventures
consistently expanded their offerings in 2020.
In addition to the financial indicators, we use various non-
financial indicators to help us manage the Group. Of particular
importance in this respect are the unit sales of our automo-
tive divisions, which we use as the basis for our capacity and
human resources planning. In 2021, we will also begin using
the CO2 emissions of our total passenger new car fleet in
Europe (European Union, Norway and Iceland) as a key perfor-
mance indicator in order to take the increased importance of
the indicator - in particular with respect to sustainability – into
account in the controlling of the Group.
Details of the development of non-financial performance indi-
cators can be found in the chapters Economic Conditions
and Business Development and Non-Financial Declaration.
B.03
Cost of capital
In percent
Group, after taxes
Net assets
2020
The key financial indicators for measuring the operating finan-
cial performance of the Daimler Group, in addition to EBIT and
revenue, are the free cash flow of the industrial business,
investment in property, plant and equipment, and expenditure
for research and development. In addition, adjusted return on
equity and new business are the key performance indicators
for Daimler Mobility.
Profit
measure
Calculation of value added
All assets, liabilities and provisions for which the automotive
divisions are responsible in day-to-day operations are allo-
cated to those divisions. Performance measurement at Daimler
Mobility is implemented on an equity basis. Net assets at the
Group level include the net operating assets of the automotive
divisions and the equity of Daimler Mobility, as well as assets
and liabilities from income taxes and other reconciliation items
which cannot be allocated to the divisions. Average annual net
assets are calculated on the basis of average quarterly net
assets. Profitability
Daimler announces next generation of the eSprinter
On December 9, 2020, Mercedes-Benz Vans presented the
newly developed Electric Versatility Platform. It serves as the
basis for the next-generation eSprinter, whose specifications
were defined in close cooperation with customers. It also
offers the right products for markets in the United States and
Canada. Thanks to its three battery variants and numerous
body variants (ranging from a panel van to a people mover) as
well as a chassis for box bodies, the next-generation eSprinter
will ensure reliable locally emission-free freight transport in
nearly every business while also optimizing the total cost of
ownership. The upcoming generation of the eSprinter will
enable Mercedes-Benz Vans to consistently forge ahead with
its electrification strategy. Mercedes-Benz Vans is investing
around €350 million in its Electric Versatility Platform. The
next generation of the eSprinter will be produced in a CO2-neu-
tral manner.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | CORPORATE PROFILE 43
Performance measurement system
Value-based management
The performance measurement system used at Daimler is
designed to ensure that our investors' interests and expecta-
tions are taken into account within the framework of a value-
based management system. Value added shows the extent to
which the Group and its divisions achieve or exceed the return
requirements of the investors, thus creating additional value.
Value added is derived from financial value drivers which, due
to their direct relationship to ongoing business operations, are
utilized as financial performance indicators for the periodic
assessment of the performance of the Group and its divisions.
In this sense, value added can be calculated as the difference
between the measure of operating profit (EBIT or net operating
profit) and the cost of capital of the average net assets.
71 B.02
The return on net assets (RONA) is calculated from the ratio of
EBIT to net assets. Value is created for our shareholders when
RONA exceeds the cost of capital. The required rate of return
on net assets, and hence the cost of capital rate, is derived
from the minimum rates of return that equity investors and
lenders expect on their invested capital. During the year under
review, the cost of capital rate of the Group remained
unchanged at 8% after taxes. For the automotive divisions, the
cost of capital rate remained at 12% before taxes; for Daimler
Mobility, a cost of equity of 12% before taxes was applied
(2019: 13%). 7 B.03
The quantitative development of value added and the related
financial performance measures is explained in the chapter
Profitability.
B.02
2019
Financial performance measures
Profit measure
The measure of operating profit at the divisional level is EBIT
(earnings before interest and income taxes). EBIT thus reflects
the divisions' responsibility for profit and loss. EBIT that is cal-
culated at the Group level takes into account centrally man-
aged matters and eliminations. In order to provide a more
transparent presentation of our ongoing business, we addition-
ally calculate and report adjusted EBIT for both the Group and
the divisions. The adjustments include individual items if they
lead to material effects in a reporting year. These individual
items can relate in particular to legal proceedings and related
measures, restructuring measures and M&A transactions.
Group EBIT minus the centrally managed income taxes equals
net operating profit. 7 B.18 in chapter Profitability
Return on sales
As one of the main factors influencing value added, return on
sales is of particular importance for assessing the automotive
divisions' profitability. Return on sales is the ratio of EBIT to
revenue, whereby unit sales are the primary source of revenue.
The measure of profitability for Daimler Mobility is not return
on sales but return on equity (the ratio of EBIT to average
equity on a quarterly basis). On the basis of adjusted EBIT, we
report an adjusted return on sales (ROS) for the automotive
divisions and an adjusted return on equity (ROE) for Daimler
Mobility.
Net assets
Value
added
8
Economic Conditions and Business Development
Industrial businesses, before taxes
Daimler Mobility, before taxes
0
-2
-4
-6
-8
Total
EMU
Asia
North
America
South
America
Source: IHS Markit, own calculations
46
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | ECONOMIC CONDITIONS
The South American economies were particularly hard hit by
the pandemic. Government budgets and currencies were
already reeling before the crisis occurred, so that the large
numbers of infections and long lockdown measures caused
economic output to drop sharply and recover at only a slow
pace. The decrease was also pronounced in Central and East-
ern Europe, due to large numbers of infections, disrupted
industrial supply chains, and the region's economic depen-
dence on the eurozone. In addition to the pandemic, the econ-
omies of the Middle East were affected by the low oil price,
which temporarily dropped to below US$20 per barrel during
the second quarter and, despite recovering somewhat later in
the year to around US$40 per barrel, was significantly below
the previous year's level. The total economic output of the
emerging markets decreased by around 2.0%.
Currency exchange rates were volatile in this recession-
impacted environment. Against the US dollar, the euro moved
between $1.070 and $1.228 during the year. At the end of the
year, the euro was around 9% stronger than at the end of 2019.
The range of fluctuation of the Japanese yen against the euro
was 114.6 to 127.2. Year-on-year, at the end of 2020, the euro
had appreciated by about 4% against the yen. At the end of
2020, the value of the British pound compared to the euro was
about 6% lower than at the end of the previous year. The euro
rose by almost 40% against the Brazilian real and by around
35% against the Turkish lira. The euro rose considerably
against the ruble, gaining around 30% of its relative value.
Automotive markets
The development of the global car market was also affected
by the covid-19 pandemic during the year under review. Even
though demand already reached its low point in the second
quarter and recovered gradually thereafter, the global market
nevertheless contracted substantially by around 15% during the
year as a whole. 7 B.05
2
8
ווי
4
12
12
12
13
Declaration on Corporate Governance
The Declaration on Corporate Governance combined for the
Company and the Group in accordance with Section 289f and
Section 315d of the German Commercial Code can be found in
the chapter O Declaration on Corporate Governance and can
also be viewed on the Internet at daimler.com/corpgov/en.
Pursuant to Section 317 Subsection 2 Sentence 6 of the Ger-
man Commercial Code (HGB), the purpose of the audit of the
statements pursuant to Section 289f Subsections 2 and 5 and
Section 315d of the HGB by the auditors is limited to determin-
ing whether such statements have actually been provided.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | ECONOMIC CONDITIONS
Mercedes-Benz AG is investing extensively in its electric mobil-
ity offensive and digitalization measures. Such investment also
requires the achievement of efficiency gains. The optimization
of the global production network and the sale of the car plant
in Hambach mark important steps in this direction. With regard
to the latter, Mercedes-Benz announced on December 8, 2020,
that it had signed an agreement to sell the Hambach plant to
INEOS Automotive. INEOS will acquire all shares in smart
France S.A.S. and it took over the Hambach plant in early
2021. Mercedes-Benz AG, INEOS Automotive, and employee
and government representatives all agree that the common
goal here was to safeguard employment at the plant. Produc-
tion of the current two-seat smart EQ fortwo electric vehicle is
to continue at the Hambach plant. The new generation of
smart electric vehicles will be manufactured by a Mercedes-
Benz/Geely joint venture in China.
45
The world economy
During the year under review, the covid-19 pandemic and espe-
cially the measures that were implemented to combat it
caused the global economy to contract by around 4.0% in real
terms, thus leading to the most severe recession since the end
of World War II. As a result, the global gross domestic product
shrank at more than twice the rate as in the financial crisis of
2008/2009. Central banks and governments around the world
have implemented extensive and unusually expansive mea-
sures in order to cushion the impact of this huge drop in eco-
nomic activity on companies and jobs. Thanks to this support,
last year's trough of the crisis was already reached in the sec-
ond quarter, globally, when national lockdowns greatly
restricted large areas of economic activity in almost all of the
world's major economies. The subsequent gradual easing of
these measures initially caused a strong rebound, which, how-
ever, lost considerable momentum in some regions toward the
end of the year due to a renewed rapid rise in the number of
infections. The recession and the pandemic-related restric-
tions also caused global trade to contract substantially, which
hampered growth further, particularly in export-dependent
economies.
The pandemic hit the economies of the industrialized countries
very hard. This was also the case in the United States, where
the economy suffered a major drop in the first half of the year,
accompanied by a huge increase in unemployment. Thanks to
numerous monetary and fiscal measures, as well as the com-
paratively moderate governmental restrictions despite continu-
ously high infection rates, the economy recovered very dynam-
ically in the second half of the year. Nonetheless, the country's
economic output decreased by 3.5% during the year as a
whole, compared to 2019. In the first half of the year, the
covid-19 pandemic and the associated containment measures
also caused the eurozone to plunge into a deep recession that
affected the manufacturing and services sectors equally. How-
ever, this drop varied greatly among the different member
states and was determined not only by the intensity of the pan-
demic but also by a country's dependence on sectors such as
tourism and hospitality, which were particularly hard hit by the
crisis. During the summer, economic activity in Europe also
recovered considerably amid the easing of restrictions. How-
ever, renewed restrictions as a result of an intense second
wave of infections that began in the fall affected the economy
once again and led to a decrease of about 7.0% for the year as
a whole. The impact on the job market was at least mitigated
somewhat by short-time work and other employment-protec-
tion measures. Within this context, the German economy
shrank by an estimated 5.0%.
Although China was the first country to be affected by the pan-
demic, it was also the first to contain the spread of the virus
and return to its pre-crisis level already in the course of the
year despite suffering a major slump in the first quarter. China
was the only major economy in the world to achieve positive
growth in the year as a whole, expanding by 2.3%. The other
Asian economies were also affected by the pandemic to vari-
ous extents, but in some cases were able to benefit from Chi-
na's quick recovery. However, the economic downturn was
especially pronounced in India, which had, in absolute terms,
one of the highest numbers of infections worldwide. As a
result, its gross domestic product dropped by around 7.5%.
B.04
Economic growth
Gross domestic product, growth rates in %
6
2019
2020
INEOS Automotive
On November 20, 2020, Daimler AG announced it would be
establishing another partnership with the Geely Holding Group
and its subsidiary brands. Our goal here is to work together
with Geely on hybrid powertrain solutions in order to
strengthen our global competitiveness and benefit from econo-
mies of scale. The highly efficient next-generation gasoline
engine designed for hybrid applications will be developed in
the global research and development networks operated by
Daimler and Geely and then manufactured at the companies'
own drivetrain plants in Europe and China. Plans call for the
engine to be used by Mercedes-Benz AG together with its
established partners in China and in the Geely Holding Group's
wide-ranging portfolio of brands, which also includes Volvo
Cars. We are already working together with Geely to further
develop the smart brand on a global scale and provide pre-
mium ride-hailing services in the Chinese market.
In its meeting on December 3, 2020, the Supervisory Board of
Daimler AG confirmed its support of the company's strategic
alignment, the associated business plans for the period 2021
to 2025, and the resulting measures for attaining the profitabil-
ity target. As one component of this, the Board also approved
the investment plan for the further transformation of the Com-
pany toward electrification and digitalization. From 2021 to
2025, we expect to invest more than €70 billion in research
and development as well as in property, plant and equipment.
According to our plans, most of the investments will be made
in Mercedes-Benz Cars & Vans.
1,105
789
Daimler Trucks & Buses
5.5
4.9
in % of revenue
-17
-29
5,869
Mercedes-Benz Cars & Vans
7,199
4.2
3.7
in % of revenue
5,741
Daimler Group
In millions of euros
4,862
in % of revenue
2.3
2.5
Order situation
Investments in property, plant and equipment at Daimler
Trucks & Buses amounted to €0.8 billion in 2020 (2019: €1.1
billion). Of this amount, about 55% was dedicated to the opti-
mization of the sales network and to investments in other
infrastructure projects. This high share of non-product proj-
ects is due to a covid-19-related reduction of the product proj-
ects. Despite the efficiency and capacity measures intensified
by the covid-19 pandemic, we retained our key strategic goals:
investments in future-oriented technologies such as electric
mobility and automated driving. Another focus was on global
powertrain projects concerning emission standards and fuel
efficiency, the successor generations of existing products, and
tailored products for key growth markets.
In 2020 the investments in property, plant and equipment at
Mercedes-Benz Cars & Vans focused on production prepara-
tions for the new S-Class and the successor models of the
compact vehicles as well as the preparations for the launch of
the new C-Class. In addition, we continued to invest consider-
able funds in battery production. At €4.9 billion, investments in
property, plant and equipment in 2020 were 17% lower than the
high level of the prior year.
During the year under review our investments in property,
plant and equipment deviated from the forecast in the Annual
Report 2019. They amounted to €5.7 billion (2019: €7.2 billion)
and were thus much lower than in the previous year. This drop
and the associated deviation from the forecast were mainly
due to our measures for cutting costs and safeguarding liquid-
ity, which we implemented in response to the exceptional
financial burdens caused by the unexpected covid-19 pan-
demic.
We intend to use our divisional strategies to shape the trans-
formation of the automotive industry from a position of leader-
ship in a sustainable, customer-focused, innovative and effi-
cient manner. In view of this situation, sustainability and in
particular the electrification of our product range are espe-
cially important, as is the digital networking of our products
and processes along all stages of the value chain. To this end,
we will have to continue to invest extensively in our global pro-
duction network. In doing so, we are prioritizing the projects in
all of our divisions in which we will invest in the future.
Mercedes-Benz Cars, for example, plans to reduce invest-
ments in property, plant and equipment by more than 20% rela-
tive to 2019 by 2025. This focus and the many other measures
throughout our company aim to sustainably reduce our cost
base and to improve our industrial footprint.
Investments in property, plant and equipment
Investment and research activities
-20
% change
20/19
0.3
0.1
-55
87
39
in % of revenue
Daimler Mobility
2019
2020
Investments in property, plant and equipment by division
B.10
cles, conduct a nationwide emission mitigation program for
reducing nitrogen oxide in the environment, and provide fund-
ing for additional projects in the state of California.
Daimler presents fuel-cell concept truck: The GenH2 Truck
On September 16, 2020, Daimler Trucks presented its technol-
ogy strategy for the electrification of our trucks. The presenta-
tion focused on hydrogen-based fuel-cell trucks for the long-
haul transport segment and also featured the world premiere
of the Mercedes-Benz GenH2 Truck concept vehicle. Customer
trials of the GenH2 Truck, whose key attributes are oriented to
those of conventional long-haul trucks, are set to begin in
2023. Series production is scheduled to start in the second
half of the decade. We are benefiting from our experts' exten-
sive experience as we continue to develop the fuel cell truck.
Mercedes-Benz Wörth plant will begin series production of
the eActros in 2021
On September 23, 2020, Mercedes-Benz Trucks presented
new products at the Wörth plant under the motto "Now &
Next" and also offered a preview of the future of sustainable
mobility. Among other things, this consisted of a near-series
prototype of the battery-electric Mercedes-Benz eActros for
heavy-duty distribution transportation. Series production of
this truck is scheduled to begin in Wörth in 2021. Electric truck
models are to be manufactured flexibly alongside trucks with
conventional drive systems on a single production line at the
Wörth plant. The plant is being extensively prepared for this
task. The start of series production will mark an important
milestone for the Wörth plant and the region, as the expansion
of the plant's portfolio in line with our goals relating to CO2-
neutral transport will safeguard jobs and create opportunities
in the form of new tasks and job profiles.
Mercedes-Benz introduces new strategy for increasing
profitability
The Mercedes-Benz Strategy Update online investor and ana-
lyst conference was held on October 6, 2020. Ola Källenius,
Chairman of the Board of Management of Daimler AG and
Mercedes-Benz AG, presented the new strategy for achieving
profitable and sustainable growth. The comprehensive pro-
gram is designed to significantly improve the company's tech-
nological and financial performance, and is based on six pil-
lars: strengthening of the Mercedes-Benz brand in the luxury
segment, a higher-quality product portfolio, a more favorable
product mix, the achievement of significant growth for the
Mercedes-AMG, Mercedes-Maybach and Mercedes-EQ sub-
brands, and accelerated development of electric drive systems
and vehicle software. Additional plans have also been devel-
oped to lower costs by reducing investments in property, plant
and equipment, expenditure on research and development,
and fixed costs, and to improve the brand's industrial footprint.
Daimler and Waymo cooperating on the development of
highly automated trucks
system is to be made available in the United States in the next
few years.
Daimler and Torc establish a strategic partnership with
Luminar for highly automated trucks
On October 30, 2020, Daimler Truck AG and Luminar, the lead-
ing global supplier of lidar hardware and software technology,
announced that they would be collaborating in a future project.
Experts from Daimler Trucks, its Daimler Trucks North America
subsidiary, and Torc Robotics plan to work closely together
with specialists from Luminar to further develop lidar technol-
ogy in order to enable its use at high speeds. Daimler Trucks
has also acquired a minority stake in Luminar in order to
strengthen the partnership.
Daimler and Geely cooperating on drive systems for hybrid
vehicle applications
The Chinese market, which was the first big sales market to be
affected by the pandemic, decreased slightly. However, at
around 6%, this drop was less severe than initially expected.
The US light vehicle market also developed somewhat better
than feared during the early stage of the pandemic. However,
at around 15%, the drop in demand was still very pronounced.
Daimler and Foton launch production of Mercedes-Benz
trucks in China for China
On December 2, 2020, Daimler Truck AG and Beiqi Foton
Motor Co., Ltd. announced plans to jointly manufacture tractor
units from the Mercedes-Benz brand for the upper-range mar-
ket segment in China. China is the world's largest truck market
and is therefore extremely important for Daimler Trucks as one
of its key markets for future growth. The Beijing Foton Daimler
Automotive (BFDA) joint venture is to manufacture the heavy-
duty trucks locally in order to fully exploit the market's poten-
tial. The trucks will be based on the global Daimler Trucks plat-
form strategy and will be adapted to the requirements of
Chinese customers. Production is scheduled to begin in two
years at the new truck plant near Beijing. In addition to selling
imported Mercedes-Benz trucks for special applications and
locally produced Auman trucks for the price-sensitive market
segment, BFDA will thus significantly expand the portfolio in
China.
42
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | CORPORATE PROFILE
Daimler Supervisory Board approves business plans for
2021 to 2025
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | CORPORATE PROFILE 41
Mercedes-Benz sells Hambach car plant to
The Mercedes-Benz Cars, Mercedes-Benz Vans and Daimler
Trucks & Buses divisions produce both preconfigured vehicles
and vehicles built to order, in accordance with customers'
specifications. While doing so, we flexibly adjust the produc-
tion capacities for the individual models to changing levels of
demand. Largely due to the demand in China and the positive
development of the European and North American markets,
the number of incoming orders at Mercedes-Benz Cars recov-
ered more quickly than expected during the reporting year,
despite the big drop caused by the covid-19 pandemic in
March and April. This was driven on the product side primarily
by the A-Class and B-Class models and the E-Class, as well as
by the continued strong success of our off-road vehicles.
Mercedes-Benz Vans also experienced a sharp drop in the
number of new orders in March and April as a result of the
covid-19 pandemic. The order situation recovered in the follow-
ing months, especially due to the high demand in the United
States and the positive development in China and many Euro-
pean markets. This recovery was mainly due to the sales incen-
tives that we initiated as well as to the availability of a broad
range of products and variants, a great demand for the
Sprinter and the positive development of the Vito and the
V-Class during the year as a whole. At the end of 2020, total
orders at Daimler Trucks & Buses were at the same level as in
the previous year. In fact, the order backlog was considerably
higher than at the end of 2019. The main reason for this was
the substantially higher number of orders in North America.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION ECONOMIC CONDITIONS
2020
2019
2018
2017
2016
0
1
2
3
4
5
6
7
8
In billions of euros
Investment in property, plant and equipment
B.09
50
By contrast, the covid-19 pandemic had an especially severe
impact on the European market. Overall car demand decreased
by more than 20% in Europe. Of Europe's three biggest individ-
ual markets, Germany developed best, registering a decrease
of around 19%, while the markets in France and the UK suf-
fered even greater decreases of around 25% and almost 30%
respectively.
On October 27, 2020, Daimler AG announced that Daimler
Trucks and Waymo had signed an agreement to establish an
extensive global strategic partnership in the field of autono-
mous driving technology (SAE Level 4). In the initial phase of
cooperation, Waymo's technology will be installed in a variant
of Daimler's Freightliner Cascadia truck that was developed
especially for this application. Our aim with this highly auto-
mated truck (SAE Level 4) is to enhance road safety for our
fleet customers and help them increase their productivity. The
Freightliner Cascadia truck equipped with the Waymo Driver
The severe economic crisis caused the demand for heavy-
duty trucks to decrease sharply in many of Daimler's key
sales markets. The North American market contracted by 30%.
Demand for heavy-duty trucks also dropped substantially in
the EU30 region, where it decreased by around 28%, according
to latest estimates. By contrast, the decrease in Brazil was less
pronounced than initially expected and amounted to some 10%.
The Japanese market also did better than expected, declining
by around 7%.
Large vans United States
10.5
8.8
+1.7
Daimler Trucks
Heavy- and medium-duty
trucks EU30
19.5
-0.2
20.0
36.5
35.2
-0.5
+1.3
Heavy-duty trucks North America
(Class 8)
40.0
38.8
+1.2
thereof Germany
2.4
2.2
Small vans EU30
+0.6
South Korea
4.7
5.1
-0.4
Japan
1.5
1.6
-0.1
Mercedes-Benz Vans
Mid-size and large
vans EU30
17.1
16.8
+0.3
thereof Germany
27.0
27.0
0.0
Medium-duty trucks North America
(Classes 6 and 7)
32.9
Heavy- and medium-duty
Daimler Buses
Buses over 8 tons EU30
27.6
27.5
+0.1
thereof Germany
49.0
50.8
-1.8
Buses over 8 tons Brazil
46.7
53.8
-7.1
1 Based on estimates in certain markets.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | ECONOMIC CONDITIONS 49
At the end of 2020, the Daimler Mobility division had a con-
tract volume of €150.6 billion (-8%). Adjusted for the effects of
currency translation, contract volume decreased by 3%. The
economic effects of the covid-19 pandemic caused new busi-
ness to decrease considerably in the first half of the year,
although it stabilized in the second half. Daimler Mobility con-
cluded 1.8 million new financing and leasing contracts worth a
total of €67.8 billion in 2020. The total value of all new con-
tracts was therefore significantly below the prior-year level
(-9%, adjusted for exchange-rate effects -7%). As a result of the
pandemic, we were thus unable to meet our original forecast of
a slight decrease in new business. New business decreased in
almost all countries of Europe. In Germany, Mercedes-Benz
Bank's new business decreased to €11.7 billion (-12%). New
business in Europe totaled €27.4 billion, which was signifi-
cantly below the prior year's level. As a result, Daimler Mobili-
ty's contract volume in Europe dropped by 4% to €64.8 billion.
The fleet business, consisting of the brands Athlon and Daimler
Fleet Management, had a total of 402,000 contracts at the end
of the year (-6%). This corresponds to a contract volume of
€6.6 billion (-5%).
The economic impact of the covid-19 pandemic also had a
noticeable effect on demand for vans. In the EU30 region
(European Union, United Kingdom, Norway and Switzerland),
the market was significantly lower than in the previous year.
The market volume for mid-size and large vans was 12% below
that of the prior year, while the decrease in the small van seg-
ment was even more severe, at more than 25%. The US market
for large vans was also substantially lower than in the prior
year, declining by 19%. The demand for large vans also
decreased considerably in Brazil. In China, however, the mar-
ket for mid-size vans was significantly above the level of the
prior year.
Daimler Mobility concluded new financing and leasing con-
tracts worth €21.7 billion in the Americas in 2020 (-11%). New
business decreased substantially in the two biggest countries
of the region, the United States (-7%) and Canada (-14%). Con-
tract volume in the Americas region amounted to €51.2 billion
at the end of December and was thus 14% lower than at the
end of 2019.
At €6.8 billion, new business in the Africa & Asia-Pacific region
(excluding China) was also much lower than the prior-year level
(-19%). At the end of 2020, contract volume in this region
amounted to €16.8 billion, which was 14% lower than in the
previous year. By contrast, new business increased signifi-
cantly in China, where we concluded new leasing and financing
contracts worth €11.9 billion (+29%) in 2020. At the end of
2020, contract volume in China amounted to €17.7 billion - an
increase of 8% compared with the end of the previous year.
Daimler Buses sold 20,200 buses and chassis worldwide in
financial year 2020 (2019: 32,600). The marked decrease was
mainly influenced by the global effects of the covid-19 pan-
demic. In the EU30 region, Daimler Buses sold 7,500 fully
equipped buses and chassis of the Mercedes-Benz and Setra
brands. This was 19% less than in the previous year. Unit sales
decreased especially strongly in the touring coach segment. At
3,000 (2019: 3,000) units, sales in Germany were at the prior-
year level. Our sales dropped substantially in Mexico, where
they decreased to 1,500 units (-43%). We sold 5,600 chassis in
Brazil, which is our main market in Latin America. This repre-
sents a decrease of 50%. Our bus sales in India also dropped
considerably to 500 units (2019: 1,600).
3.3
Due to the strong rise in demand on the Chinese truck market,
sales of Auman trucks, which we produce in China at our joint
venture Beijing Foton Daimler Automotive Co., Ltd. (BFDA),
were significantly higher than in the prior year, at 126,400 units
(2019: 86,200).
Unit sales also decreased in Latin America, where they
dropped to 33,200 trucks (2019: 42,600). Even though the
decrease in our main Latin American market of Brazil was
somewhat less pronounced than in Latin America as a whole, it
was nevertheless significant, with unit sales dropping to
25,300 trucks (2019: 29,700).
trucks Brazil
31.8
29.2
+2.6
Trucks Japan
20.4
18.8
+1.6
Trucks Indonesia
49.0
44.2
+4.8
Heavy- and medium-duty
trucks India
9.1
5.8
-0.5
+3.3
In 2020, unit sales by Daimler Trucks were substantially lower
than in the previous year. This development was largely due to
the strong contraction of our global core markets as a result of
the covid-19 pandemic. The impact was especially severe dur-
ing the first half of the year; markets began to recover in the
second half. In total, we delivered 358,300 heavy-, medium-
and light-duty trucks as well as buses of the Thomas Built
Buses and FUSO brands in the year under review (2019:
488,500). Our sales in North America amounted to 139,400
units (2019: 201,100). Following the high sales figures of the
previous years, this market had been expected to normalize.
The covid-19 pandemic caused demand to decrease somewhat
more than expected. Our sales in the EU30 region amounted to
60,600 trucks (2019: 79,800).
Our sales also decreased in Asia, where they amounted to a
total of 98,200 units (2019: 135,200). The decreases were
especially strong in Indonesia and India. In Indonesia, our sales
sank by 50% to 19,500 units, while they decreased by 34% to
9,600 vehicles in India. The decrease was much less in our
third core market in Asia, Japan. However, our sales of 39,100
units were slightly lower than in the previous year here as well
(2019: 42,200).
3.9
32.4
0.0
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | ECONOMIC CONDITIONS 47
Business development
Daimler sold a total of 2.84 million vehicles in 2020 (2019:
3.34 million). The expectation formulated at the beginning of
the year that unit sales in 2020 would be only slightly lower
than in the prior year thus could not be fulfilled. However, we
had already adjusted our sales forecast correspondingly during
the year in response to the effects of the covid-19 pandemic.
Unit sales were substantially lower than expected at
Mercedes-Benz Cars (-13%), Mercedes-Benz Vans (-15%),
Daimler Trucks (-27%) and Daimler Buses (-38%).
Against the backdrop of the covid-19 pandemic, Mercedes-
Benz Cars unit sales nonetheless surpassed the two million
mark in 2020, totaling 2,087,200 vehicles (2019: 2,385,400).
With unit sales of 2,052,000 (2019: 2,278,300) vehicles,
Mercedes-Benz was once again the strongest-selling luxury
brand in the automobile industry. We remain number one in the
premium segment in Germany and some other key European
markets, as well as in South Korea, Canada, South Africa and
Japan. In addition, we delivered more exclusive vehicles than
any other luxury brand in China, where we once again set a
sales record.
The A-Class and B-Class models, including the CLA and CLA
Shooting Brake, attained unit sales of 449,000 vehicles (-15%).
Sales of C-Class vehicles decreased by 30% to 309,300
sedans, wagons, coupes and convertibles. A total of 332,400
vehicles of the E-Class were delivered to customers (-21%).
Although unit sales decreased to 53,800 vehicles in 2020, the
S-Class sedan continues to be the world's best-selling luxury
sedan. Our unit sales in this market segment dropped to a total
of 56,000 vehicles (2019: 75,400).
The SUV segment developed especially favorably, with unit
sales rising by 12% to 887,500 vehicles. Unit sales of our sports
cars amounted to 17,800 vehicles and were thus 37% lower
than in the previous year.
In Europe, Mercedes-Benz Cars sold 783,800 vehicles, or 21%
less than in 2019. As a result, the drop in sales at Mercedes-
Benz Cars was at least not as pronounced as that of the Euro-
pean market as a whole. However, we registered major
decreases in Germany (-16%), the UK (-35%) and France (-23%).
Mercedes-Benz Cars was once again very successful in China,
where unit sales built on the growth of the previous years by
rising by 9% to 758,100 vehicles. At 286,800 vehicles, unit
sales in North America did not reach the high level of the prior
year (2019: 368.900). Sales decreased in the United States,
our main market there, by 21% to 248.800 units.
B.06
Unit sales structure of Mercedes-Benz Cars
A-/B-Class
C-Class
E-Class
S-Class
SUVS*
Sports Cars
smart
* including GLA and GLB
21%
15%
16%
various institutions
3%
Source: German Association of the
Automotive Industry (VDA),
South
America'
The bus markets were also affected by the covid-19 crisis.
Bus demand in the EU30 region was significantly below the
previous year's level and the market also contracted consider-
ably in Brazil.
B.05
Global automotive markets
Unit sales growth rates 2020 in %
China
15
10
5
0
-5
-10
-15
-20
-25
Passenger cars
Commercial vehicles²
-30
Total
Europe
North
America¹
Asia
1 Cars segment includes light trucks
2 Medium- and heavy-duty trucks
42%
Unit sales
2019
Other markets
Market share¹
in %
8%
0
2020
20/19
Change
in % points
Mercedes-Benz Cars
European Union
27%
6.3
-0.1
thereof Germany
10.9
10.8
+0.1
1%
1.9
USA
1.9
6.4
Asia
B.08
The smart brand sold 35,200 fortwo and forfour vehicles
worldwide (2019: 107,100). This decrease was influenced by the
complete switchover of the models to all-electric drive sys-
tems.
37%
14%
46%
Other markets
3%
39%
Mercedes-Benz Vans finished the 2020 financial year with
unit sales of 374,700 vehicles worldwide (2019: 438,400). This
substantial decrease of 15% was largely due to the conse-
quences of the covid-19 pandemic. At 245,200 units (2019:
298,100), sales in the core region of EU30 were lower than in
the previous year. We sold 109,500 vehicles in Germany during
this period (2019: 121,300). Unit sales also decreased in North
America, where they dropped to 54,400 vehicles (2019:
56,500). However, we achieved a new record of 47,500 vehi-
cles in the United States (2019: 45,700). In Latin America, our
sales decreased to 12,000 vehicles (2019: 18,600). We
achieved a new record in China, with 30,500 units (2019:
29,500).
48
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | ECONOMIC CONDITIONS
B.07
Unit sales structure of Daimler Trucks
EU30
Europe
Latin America
17%
9%
2%
North America
North America
Asia
63,782
59,869
2,720
448
-23
2,088
436
-6
-3
2 To the extent not allocated to the segments.
Net assets (average)
58
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
B.20
Net assets of the Daimler Group at year-end
In millions of euros
2020
2019
-30
Net assets¹
Intangible assets
3 To the extent not allocated to Daimler Mobility.
662
Assets and
59,952
In millions of euros
15,686
Mercedes-Benz Cars & Vans
Daimler Trucks & Buses
Daimler Mobility¹
Net assets
of the segments
Equity-method
investments²
liabilities from
income taxes³
Other reconciliation³
B.19
Daimler Group
1 Total equity.
2020
2019
463
20/19
% change
35,070
-7
9,513
10,921
-13
14,601
13,961
+5
56,882
32,768
15,077
62,280
Property, plant and equipment
-33,624
-2
Assets and liabilities
from income taxes¹
2,116
2,559
-17
Total equity
of Daimler Mobility
-33,092
14,315
-4
Daimler Group
56,104
-10
1 To the extent not allocated to Daimler Mobility.
20/19
% change
Liquidity and capital resources
1 Adjusted for tax effects on interest income/expense.
Principles and objectives of financial management
Financial management at the Daimler Group consists of capital
structure management, cash and liquidity management, mar-
ket-price risk management (foreign exchange rates, interest
rates and commodity prices), as well as pension-asset man-
agement, and credit and country risk management. Worldwide
financial management is performed within the framework of
legal requirements consistently for all Group entities by the
Treasury department of the Daimler Group. Financial manage-
ment operates within a framework of guidelines, limits and
benchmarks, and on the operational level is organizationally
separate from other financial functions such as settlement,
financial controlling, reporting and accounting.
14,983
and liabilities
Less other assets
-2
-2
34,904
36,782
-5
Leased assets
17,949
18,799
-5
Inventories
25,298
28,420
Trade receivables
9,929
11,045
-11
-10
Less provisions
for other risks
-19,396
-19,865
Less trade payables
-11,605
-11,896
+4
+1,142
Restructuring measures
4,199
-718
-718
6,151
2,672
1,827
-374
10,276
-0.1
6.0
1,233
15.3
6.0
13.1
1 Return on sales adjusted is calculated as the ratio of adjusted EBIT to revenue. Adjusted return on equity is determined as the ratio of adjusted EBIT to
average quarterly equity.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
57
Value added
As described in the chapter Performance Measurement
System in chart 7 B.03, value added is calculated as the dif-
ference between the measure of earnings and the cost of capi-
tal. The measure of earnings for the reportable segments is
EBIT and for the Group is net operating profit, which also
includes earnings effects for which the segments are not
accountable, such as income taxes and other reconciliation
items. The cost of capital used in the calculation of value
added is based on average net assets multiplied by the cost-
of-capital rate.
Table 71 B.17 shows value added for the Group and for the indi-
vidual segments. The reconciliation of the segments' EBIT to
net operating profit as well as the average net assets are
shown in tables B.18 and 7 B.19. Table 7 B.20 shows how
net assets are derived from the consolidated statement of
financial position.
The Daimler Group's value added increased by €1.5 billion in
2020 but remained negative at minus €0.6 billion, representing
a return on net assets of 7.0% (2019: 4.8%). The Group's cost-
of-capital rate of 8% was therefore not achieved. The positive
development of value added was mainly due to the increase in
the segments' EBIT by €2.4 billion. In addition, the decrease of
€3.9 billion in average net assets as a result of lower average
inventories and higher average provisions for other risks posi-
tively impacted value added, but was partly offset by increased
capitalized development costs.
5.8
At the Mercedes-Benz Cars & Vans segment, value added of
€1.2 billion was significantly higher than the prior-year amount
of minus €4.3 billion. This was primarily due to the positive
earnings development. An additional positive impact on value
added resulted from the decrease in average net assets by
€2.3 billion, which was mainly caused by lower average inven-
tories and higher average provisions for other risks. This was
partly offset by the increased capitalized development costs.
405
16
Capital structure management designs the capital structure
of the Group and its subsidiaries. Decisions regarding the capi-
talization of Daimler's mobility, production, sales or financing
companies are based on the principles of cost-optimized and
risk-optimized liquidity and capital resources.
2.0
10.9
2019
EBIT
Legal proceedings (and related measures)
as well as Takata
5,432
828
5,448
M&A transactions
Return on sales/return on equity
(in %)
Adjusted return on sales/return on equity
(in %)¹
-109
2,672
2,140
-390
4,313
Adjusted EBIT
Value added at Daimler Trucks & Buses fell sharply by
€2.0 billion to minus €0.6 billion as a result of the EBIT devel-
opment. This development was slightly offset by the significant
decrease in average net assets to €9.5 billion, which was pri-
marily the result of lower average inventories.
At the Daimler Mobility segment, value added of minus
€0.3 billion was significantly below the prior-year level of plus
€0.3 billion. The segment's return on equity amounted to 9.8%
(2019: 15.3%). The development of value added primarily
reflects the decrease in earnings of €0.7 billion.
B.17
Value added
2019
20/19
Change
5,172
-109
+5,281
525
2,672
-2,147
1,436
2020
2,140
7,133
4,703
+2,430
-2,404
-1,256
-1,148
-530
-390
-140
-704
Other reconciliation
Net operating profit
Income taxes¹
Mercedes-Benz Cars & Vans
Daimler Trucks & Buses
Daimler Mobility
EBIT of the segments
2020
2019
In millions of euros
20/19
Change
Daimler Group
-591
-2,046
+1,455
Mercedes-Benz Cars & Vans
Daimler Trucks & Buses
Daimler Mobility
1,239
-4,317
+5,556
-616
1,361
-1,977
-316
325
-641
B.18
Reconciliation to net operating profit
In millions of euros
3,057
The purpose of liquidity management is to enable the Group
to meet its payment obligations at any time. For this purpose,
the Group records the cash flows from operating and financial
activities in a rolling plan. The resulting financial requirements
are covered by the use of appropriate instruments for liquidity
management (e.g., bank credit, commercial paper and notes);
liquidity surpluses are invested in the money market or the
capital market taking into account risk and return expecta-
tions. Our goal is to ensure the level of liquidity regarded as
necessary at optimal costs. Besides operational liquidity, the
Daimler Group maintains additional liquidity reserves which
are available in the short term. Those additional financial
resources include a pool of receivables from the financial ser-
vices business which are available for securitization in the cap-
ital market, a contractually confirmed syndicated credit facility,
as well as a credit facility additionally agreed in 2020 in the
event that capital market transactions cannot be carried out
(bridge facility).
7,966
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
-8,560
-10,835
-8,472
-10,645
-88
-190
Investments in and proceeds from disposals of shareholdings
-402
-1,225
intangible assets
-404
2
-643
Acquisitions and sales of marketable debt securities
and similar investments
2,149
1,054
1,929
883
220
-582
171
Additions to property, plant and equipment and
5,316
-574
-148
1,783
1,202
1,782
1,201
1
1
Income taxes paid
-5,097
-1,993
-806
-959
-1,187
-1,148
Cash used for/provided by operating activities
22,332
7,888
17,016
12,985
-2,107
Other
392
399
1
-36
-12
-26
13
-10
Internal equity and financing transactions
-2,767
Cash used for/provided by financing activities
Other transactions with shareholders
-10,747
-5,322
242
-7,966
-5,425
2,767
5,386
Effect of foreign exchange rate changes on cash
and cash equivalents
-999
Cash and cash equivalents at end of period
6.9
5,628
-15
-14
2,644
338
358
54
41
Cash used for/provided by investing activities
-6,421
-10,607
-6,609
-9,986
188
-621
Change in financing liabilities
Dividends paid
-9,503
9,404
-12,045
-1,245
-3,740
-1,231
6,760
-3,725
2,542
5,789
1,227
5,641
653
2019
Cash and cash equivalents at beginning of period
18,883
15,853
16,152
12,799
2,731
3,054
Profit before income taxes
2020
6,339
4,913
1,699
1,426
2,131
Depreciation and amortization/impairments
8,957
7,751
8,653
7,597
3,830
2019
2020
2019
59
Management of market-price risks aims to minimize the
impact of fluctuations in foreign exchange rates, interest rates
and commodity prices on the earnings of the divisions and the
Group. The Group's overall exposure to these market-price
risks is determined to provide a basis for hedging decisions,
which include the definition of hedging volumes and corre-
sponding periods, as well as the selection of hedging instru-
ments. The hedging strategy is specified at Group level and
uniformly implemented in the segments. Decisions regarding
the management of risks resulting from fluctuations in foreign
exchange rates and commodity prices, as well as decisions on
asset/liability management (liquidity and interest rates), are
regularly made by the relevant internal committees.
Management of pension assets (plan assets) includes the
investment of the assets to cover the corresponding pension
obligations. The plan assets are legally separated from the
Group's assets and are invested primarily in funds; they are not
available for general business purposes. The plan assets are
spread across various investment categories such as equities,
fixed-interest securities, alternative investments and real
estate, depending on the expected development of pension
obligations and with the help of risk-return optimization. The
performance of asset management is measured by comparison
with defined reference indices. The investment risks are lim-
ited via a Group-wide guideline. In addition, there are local reg-
ulations for risk management for the individual plan assets.
Additional information on pension plans and similar obligations
is provided in O Note 22 of the Notes to the Consolidated
Financial Statements.
The risk volume that is subject to credit risk management
includes all of the Daimler Group's worldwide creditor posi-
tions with financial institutions, issuers of securities, and cus-
tomers in the financial services business and the automotive
business. Credit risks with financial institutions and issuers of
securities arise primarily from investments executed as part of
our liquidity management and from the application of deriva-
tive financial instruments. The management of these credit
risks is mainly based on an internal limit system that reflects
the creditworthiness of the respective financial institution or
issuer. The credit risk with customers of our automotive busi-
ness results from relationships with contracted dealerships
and general agencies, other corporate customers and retail
customers. In connection with the export business, general
agencies that according to our creditworthiness analyses are
not sufficiently creditworthy are generally required to provide
collaterals such as first-class bank guarantees. The credit risk
with end-customers in the financial services business is man-
aged by Daimler Mobility on the basis of a standardized risk
management process. In this process, minimum requirements
are defined for the sales-financing and leasing business and
standards are set for credit processes, as well as for the identi-
fication, measurement and management of risks. Key elements
for the management of credit risks are appropriate creditwor-
thiness assessments supported by statistical risk-classification
methods, as well as structured portfolio analysis and portfolio
monitoring.
Financial country risk management includes various
aspects: the risk from investments in subsidiaries and joint
ventures, the risk from the cross-border financing of Group
companies in risk countries, and the risk from direct sales to
customers in those countries. The Daimler Group has an inter-
nal rating system that assigns all countries in which it operates
to risk categories. Risks from cross-border receivables are par-
tially protected with the use of export-credit insurance, letters
of credit and bank guarantees in favor of Daimler AG and other
Group companies. In addition, an internal committee sets and
restricts the level of hard-currency credits granted to Daimler
Mobility companies in risk countries.
Further information on the management of market-price risk,
credit risk and liquidity risk is provided in Note 33 of the
Notes to the Consolidated Financial Statements.
Cash flows
Cash provided by operating activities 7 B.21 amounted to
€22.3 billion in 2020 (2019: €7.9 billion) and was particularly
affected by the worldwide consequences of the covid-19 pan-
demic. Whereas in the prior-year period, the growth of the
leasing and sales-financing portfolio negatively affected cash
provided by operating activities, the current year saw a signifi-
cantly positive cash-flow effect due to the decrease in the
sales-financing business caused by the corona crisis. Tempo-
rary suspensions of production during the second quarter of
2020, a renewed increase in customer demand during the sec-
ond half of the year and active working capital management
were the main factors influencing the development of working
capital. Compared with the previous year, there were positive
effects in all automotive segments. Furthermore, cash pro-
vided by operating activities was affected by increased cash
inflows from dividends received from Beijing Benz Automotive
Co., Ltd., as well as by lower payments than in 2019 in connec-
tion with ongoing governmental and court proceedings and
related measures taken with regard to Mercedes-Benz diesel
vehicles. The prior year was mainly affected by the fine of
€870 million paid in conclusion of the administrative offense
proceedings against Daimler AG.
Opposing effects resulted from the change in cash earnings
before taxes, as the positive business performance in the sec-
ond half of the year could not fully offset the negative conse-
quences of the covid-19 pandemic. Additional effects resulted
from the payments made in the context of reviewing and priori-
tizing the product portfolio for the planned discontinuation of
the X-Class production in the first quarter of 2020.
60
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
Cash used for investing activities 7 B.21 amounted to
€6.4 billion (2019: €10.6 billion). The decrease resulted in par-
ticular from lower investments in property, plant and equip-
ment and intangible assets compared with the previous year,
following the implemented cost-cutting measures. However,
positive effects resulted from the acquisition and sale of mar-
ketable debt securities and similar investments conducted in
the context of liquidity management. Compared to the previ-
ous year, there were higher total cash inflows (net) in 2020.
Furthermore, cash used for investing activities during the first
quarter of 2019 had been affected by the merger of the mobil-
ity services of the Daimler Group and the BMW Group, which
resulted in cash outflows (net) of €0.7 billion. This was mainly
due to capital increases at the joint ventures.
Cash used for/provided by financing activities 7 B.21
amounted to a cash outflow of €10.7 billion (2019: cash inflow
of €5.6 billion). The decrease mainly resulted from the change
in financing liabilities, especially in the context of refinancing
the leasing and sales-financing business. Positive effects
resulted from the lower dividend payment made to the share-
holders of Daimler AG than in the previous year.
Cash and cash equivalents increased by €4.2 billion compared
with December 31, 2019, after taking currency-translation
effects into account. Total liquidity, which also includes mar-
ketable debt securities and similar investments, increased by
€1.9 billion to €29.4 billion.
B.21
Condensed statement of cash flows
In millions of euros
Consolidated
Industrial Business
Daimler Mobility
2020
304
Cash management centrally determines the cash require-
ments and surpluses. By means of cash-pooling procedures,
liquidity is centrally concentrated on bank accounts of the
Daimler Group in various currencies. Most of the payments
between Group companies are made through internal clearing
accounts so that the number of external cash flows is reduced
to a minimum. The Daimler Group has established standard-
ized processes and systems to manage its bank accounts and
internal cash-clearing accounts, and to execute automated
payment transactions.
154
gains/losses on disposals of assets
438
64
-299
-1,625
-285
-1,651
-14
26
2,397
-410
-4,664
-8
2,438
-4,656
1,822
-1,156
-122
550
1,944
-1,706
-41
901
-346
1,339
-705
-737
-1,147
-824
442
87
Change in operating assets and liabilities
Inventories
Trade receivables
Trade payables
Receivables from financial services
Vehicles on operating leases
Other operating assets and liabilities
Dividends received
from equity-method investments
2,039
99
1,941
1
98
98
Other non-cash expense and income and
(in %)¹
-2,517
9.8
18,954
13
Other markets
7,202
10,351
-30
Consolidated
Industrial Business
Daimler Mobility
21,343
2020
2020
2019
2020
2019
Revenue
Cost of sales
Gross profit
Selling expenses
154,309
-128,721
25,588
2019
-11,058
thereof China
40,657
B.14
Condensed statement of income
In millions of euros
Europe
64,226
69,541
-8
thereof Germany
25,262 26,339
-2
-4
42,937
52,196
-18
thereof United States
37,801
45,422
-17
Asia
39,944
North America
172,745 126,610
-143,580 -104,153
29,165 22,457
-12,801
144,099 27,699
-118,626 -24,568
25,473 3,131
28,646
885
Profit/loss on equity-method investments, net
797
479
1,157
1,245
-360
-766
Other financial income/expense, net
161
-354
-323
-265
-31
3
EBIT
6,603
4,313
5,167
2,173
-262
23,048
1,119
-1,632
-24,954
3,692
-10,375
-12,038
-683
-763
General administrative expenses
-3,534
-4,050
-2,752
-3,139
-782
-911
Research and non-capitalized
development costs
-6,116
-6,586
-6,116
-6,586
Other operating income/expense
1,280
8
1,436
-7,227
-3
2020
B.12
Research and development expenditure by division
2020
2019
20/19
% change
In millions of euros
Daimler Group
2017 2018 2019
8,614
-11
thereof capitalized
2,498
3,076
-19
Mercedes-Benz Cars & Vans
7,199
8,061
-11
9,662
2,391
2016
1
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | ECONOMIC CONDITIONS 51
Research and development
Our expenditures for research and development are also
guided by our customers' demands. To enable us to signifi-
cantly play a part in shaping tomorrow's individual mobility and
transportation, we will continue to devote our engineering
skills to the creation of pioneering products and innovations.
As is the case with our investments in property, plant and
equipment, we also want to prioritize our research and devel-
opment costs more strongly in the future in order to boost our
profitability on a lasting basis.
We significantly decreased our expenditures for research and
development to €8.6 billion in 2020 (2019: €9.7 billion). This
sum includes both measures to reduce costs on account of the
covid-19 pandemic and the conclusion of individual develop-
ment projects. At the beginning of 2020 we assumed that
development would remain at the same level as in the previous
year.
€2.5 billion (2019: €3.1 billion) of the development costs were
capitalized, which represents a capitalization rate of 29%
(2019: 32%). The amortization of capitalized research and
development expenditure totaled €1.9 billion during the year
under review (2019: €1.8 billion).
With a rate of 5.6% (2019: 5.6%), research and development
expenditure remained at a high level in comparison with reve-
nue. Along with the production launches, research in the year
under review focused on the further development of our plat-
forms and electric and conventional drivetrains. Other topic
areas were digitalization and automated driving.
Mercedes-Benz Cars & Vans had research and development
expenditures of €7.2 billion (2019: €8.1 billion). The focus was
on topics such as the next generation of electric vehicles and
battery production. In addition, we intensified our research and
development expenditures for digitalization and automated
driving.
In 2020 research and development expenditures at Daimler
Trucks & Buses amounted to €1.5 billion (2019: €1.7 billion).
Despite the covid-19-related reductions of the development
budget, the topics of automated driving, electric mobility
(including the eActros) and connectivity played an important
role. The subsequent generations of existing products, fuel
efficiency and emissions reduction were further focal points,
along with customized products and technologies for key
growth markets.
0
B.11
total
thereof capitalized
10
9
8
7
6
5
4
3
2
Research and development expenditure
In billions of euros
3,000
-20
1,488
Revenue by segment and region
2020
2019
20/19
% change
In millions of euros
Daimler Group
Segments
Mercedes-Benz Cars & Vans
Daimler Trucks & Buses
Daimler Mobility
Reconciliation
B.13
Regions
-11
98,576
106,897
-8
34,671
44,429
-22
27,699
28,646
154,309 172,745
In the prior-year period, a reassessment of risks in connection
with ongoing governmental and court proceedings and mea-
sures taken with regard to Mercedes-Benz diesel vehicles in
various regions had significant negative effects on earnings
through cost of sales. Furthermore, expenses connected with
an updated risk assessment for an expanded recall of Takata
airbags in Europe and other markets and expenses in connec-
tion with terminating production of the X-Class had a negative
impact on cost of sales in the previous year. 7 B.14
Cost of sales amounted to €128.7 billion in 2020, decreasing
by 10.3% compared with the previous year. The decrease in
cost of sales was caused by production and cost adjustments
in response to the covid-19 pandemic. On the other hand,
expenses in connection with the adjustment and realignment
of capacities within the global production network at the
Mercedes-Benz Cars & Vans segment adversely affected cost
of sales. Cost of sales increased at the Daimler Mobility seg-
ment due to higher expenses for credit-risk provisions and the
impairment of software in the context of streamlining the IT-
architecture.
In the 2019 Management Report, we had forecasted revenue at
the prior-year level for the Daimler Group. Due to the major
impact of the covid-19 pandemic in the automotive segments,
we adjusted this forecast in the context of our capital market
reporting during 2020 to an expectation of revenue signifi-
cantly below the prior-year level.
1,689
-12
107
76
+41
thereof capitalized
Daimler Trucks & Buses
thereof capitalized
52
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
Profitability, Liquidity and Capital Resources,
Financial Position
To provide a better insight into the Group's profitability, liquid-
ity and capital resources, and financial position, the condensed
statement of income, the condensed statement of cash flows
and the condensed statement of financial position are shown
for the Daimler Group as well as for the "Industrial Business"
and "Daimler Mobility." The industrial business and Daimler
Mobility columns represent a business point of view. The
industrial business comprises the vehicle segments Mercedes-
Benz Cars & Vans and Daimler Trucks & Buses. Daimler Mobil-
ity is identical to the Daimler Mobility segment. Intra-Group
eliminations between the industrial business and Daimler
Mobility are generally allocated to the industrial business.
Change in the internal management and reporting struc-
ture as of January 1, 2020
Until December 31, 2019, the Group's reportable segments
were Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz
Vans, Daimler Buses and Daimler Mobility. Since January 1,
2020, the Group's activities are divided into the segments
Mercedes-Benz Cars, Mercedes-Benz Vans, Daimler Trucks &
Buses and Daimler Mobility. The Mercedes-Benz Cars and
Mercedes-Benz Vans segments are aggregated due to their
comparable long-term average return on sales as well as their
comparable revenue development and capital intensity. In
addition, both segments are comparable with regard to the
nature of the products and services offered as well as their
brands, sales channels and customer profiles.
In order to provide a more transparent presentation of the
ongoing business, adjusted figures for both the Group and the
segments are also calculated and reported since December 31,
2019. The adjustments include individual items where they
lead to material effects in a reporting year. These individual
items may relate in particular to legal proceedings and associ-
ated measures, restructuring measures and M&A transactions.
Further information on the management system can be found
in the chapter O Corporate Profile section of the Combined
Management Report.
Adjustment of prior-year figures
In order to ensure that the figures for 2020 are comparable
with the prior-year figures, the figures for 2019 have been
adjusted to the new segment structure. Internal supply rela-
tionships within the new segments have been taken into
account. Furthermore, in the figures for the previous year, the
effects of certain legal issues and equity investments not pre-
viously allocated to the segments have been reclassified from
the reconciliation to the vehicle segments.
As of the 2020 financial year, the effects of capitalized borrow-
ing costs are recognized in EBIT and in the Group's assets and
the assets of the segments. As a result, EBIT is reported as an
accounting parameter in the consolidated statement of income
from the 2020 financial year onwards. In order to ensure com-
parability of the figures for the 2020 financial year with those
of the previous year, the reported figures for 2019 have been
adjusted accordingly.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
53
Profitability
Statement of income of the Daimler Group
The Daimler Group's revenue of €154.3 billion in 2020 was sig-
nificantly below the prior-year figure (2019: €172.7 billion). Also
adjusted for negative exchange rate effects, it was significantly
lower than in 2019. 7 B.137 B.14
-6,637
2,140
Interest income/expense
-264
-4,808
-5,061
-1,381
-1,613
73
88
Other income/expense
1,953
-1,537
-6,586
2,595
506
430
-1,148
-826
EBIT
5,167
2,173
5,172
-109
-1,141
525
-6,116
Research and non-capitalized
-196
-389
Selling expenses
-10,375
-12,038
-8,539
-9,963
-2,520
-2,897
development costs
684
General administrative expenses
-2,752
-3,139
-1,458
-1,575
-1,351
-1,479
57
-85
822
2,672
-530
-390
154
10
164
Restructuring measures
1,476
153
159
86
1,874
Legal proceedings (and related measures)
M&A transactions
6,802
678
1,595
-434
8,641
Return on sales/return on equity
(in %)
5.2
1.5
Adjusted EBIT
6,603
-530
1,436
56
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
The business development of the Daimler Mobility segment
stabilized towards the end of the year despite the difficult mar-
ket environment. However, new business was below the prior-
year level and contract volume was therefore also lower than in
2019. The revenue generated by Daimler Mobility was also
slightly lower than in the previous year and thus reached the
level we forecasted after adjusting for the lower contract vol-
ume as a consequence of the covid-19 pandemic; we had origi-
nally forecasted revenue at the prior-year level.
Gross profit in relation to revenue was mainly impacted by an
increase in the allowance for credit defaults against the back-
drop of the economic development in connection with the
covid-19 pandemic, as well as an impairment loss on capital-
ized software development costs in the context of optimizing
the IT architecture. Although functional costs were affected by
expenses of €67 million in connection with personnel cost
optimization programs, positive effects occurred overall in all
functional cost areas as a result of the measures initiated to
improve the cost position. The decrease in other operating
income was due to a positive effect of €718 million in 2019
from the merger of the mobility services of the Daimler Group
and the BMW Group. Income from investments accounted for
using the equity method included in particular the earnings of
YOUR NOW Holding GmbH. Compared with the previous year,
however, there was a €313 million lower adverse effect on
earnings from restructuring measures in 2020.
EBIT amounted to €1,436 million in 2020 (2019: €2,140 million)
and adjusted EBIT amounted to €1,595 million (2019:
€1,827 million). Adjusted return on equity of 10.9% was below
the adjusted prior-year figure of 13.1%. At the beginning of the
year, we forecasted an adjusted return on equity of 12%. We
adjusted this during 2020 in the context of our capital-market
reporting to the expectation of an adjusted return on equity of
9% to 10%. The Daimler Mobility segment exceeded this expec-
tation.
The reconciliation of the divisions' EBIT to Group EBIT com-
prises gains and/or losses at the corporate level and the
effects on earnings of eliminating intra-Group transactions be-
tween the divisions.
Items at the corporate level resulted in expenses of €652 mil-
lion (2019: €361 million), including the impairment of Daimler's
equity investment in BAIC Motor. Furthermore, expenses of
€86 million in connection with cost-optimization programs are
included. In the previous year, mainly expenses in connection
with "Project Future” had a negative impact on EBIT.
The elimination of intra-Group transactions resulted in earn-
ings of €122 million in 2020 (2019: expenses of €29 million).
The reconciliation from EBIT to adjusted EBIT is shown in table
71 B.16.
B.16
Reconciliation EBIT to adjusted EBIT
In millions of euros
Mercedes-Benz
Daimler
Daimler
Mobility
Recon-
ciliation
Daimler
Group
2020
EBIT
5,172
525
8,231
5,271
17,631
6,838
1,515
thereof attributable to non-controlling interests
382
332
thereof attributable to shareholders of Daimler AG
3,627
2,377
Earnings per share (in euros)
for profit attributable to shareholders of Daimler AG
913
Basic
2.22
Diluted
3.39
2.22
54
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
Overall, gross profit in relation to revenue decreased from
16.9% to 16.6%.
The effects of the covid-19 pandemic and the measures taken
in response led to cost reductions also in other functional-cost
areas.
3.39
1,194
3,096
2,709
-483
-254
-474
-10
-9
Profit before income taxes
6,339
3,830
4,913
1,699
1,426
2,131
Income taxes
-2,330
-1,121
-1,817
-505
-513
-616
Net profit
4,009
Selling expenses decreased by €1.7 billion to €11.1 billion. As
a percentage of revenue, selling expenses decreased from 7.4%
to 7.2%. 7 B.14
Adjusted return on sales/return on equity
At €3.5 billion, general administrative expenses decreased
by €0.5 billion. As a percentage of revenue, general adminis-
trative expenses remained at the prior-year level of 2.3% (2019:
2.3%). 7 B.14
Other operating income of €1.3 billion was above the level of
the previous year (2019: expense of €1.6 billion). In 2019, it
included significantly higher expenses in connection with ongo-
ing governmental and court proceedings and measures relating
to Mercedes-Benz diesel vehicles in various regions. Further-
more, the previous year included income of €0.7 billion from
the merger of the business units for mobility services of the
Daimler Group and the BMW Group. 71 B.14
Mercedes-Benz
Cars & Vans
Daimler
Trucks & Buses
Reconciliation
2020
2019
2020
2019
2020
2019
In millions of euros
2020
Revenue
Cost of sales
Gross profit
126,610 144,099 98,576 106,897 34,671
-104,153 -118,626 -81,194 -89,266 -29,400
22,457 25,473 17,382
44,429
-6,637
-7,227
-36,198
6,441
2019
Industrial Business
EBIT of Industrial Business
B.15
In 2020, profit from equity-method investments of €0.8 bil-
lion was above the prior-year level (2019: €0.5 billion). Earnings
were boosted by a €0.5 billion reduction in the negative impact
on earnings from the mobility services of the YOUR NOW group
and a €0.2 billion increase in earnings from There Holding B. V.
This was partially offset by an impairment loss of €0.3 billion
on the equity interest in BAIC Motor Corporation Ltd. (BAIC
Motor) in 2020. 7 B.14
Other financial expense worsened from €0.3 billion to
€0.4 billion. 7 B.14
The Daimler Group achieved earnings before interest and
taxes (EBIT) of €6.6 billion in 2020, which is significantly
higher than in the previous year (2019: €4.3 billion). The
Daimler Group's adjusted EBIT amounted to €8.6 billion (2019:
€10.3 billion). Net exchange rate effects had a positive impact
on operating profit. 7 B.14
The reconciliation from EBIT to adjusted EBIT is shown in table
7 B.16.
We had originally forecasted a significant increase in the EBIT
of the Daimler Group. Due to the ongoing covid-19 pandemic,
we adjusted this forecast in the context of our capital market
reporting during 2020 to an expectation of EBIT at the prior-
year level. Despite the difficult conditions, the Daimler Group
was able to significantly exceed this expectation due to a
strong fourth quarter.
Net interest expense improved by €0.2 billion to €0.3 billion
(2019: €0.5 billion). 7 B.14
The tax expense of €2.3 billion (2019: €1.1 billion) stated
under income taxes increased mainly due to the increased
profit before income taxes. The effective tax rate for 2020 was
36.8% (2019: 29.3%). In 2020, the impairment of deferred tax
assets as well as non-tax-deductible expenses, mainly in con-
nection with our shareholdings, led to an increase in the effec-
tive tax rate. 7 B.14
Net profit of €4.0 billion is significantly above the prior-year
figure (2019: €2.7 billion). Net profit of €0.4 billion is attribut-
able to non-controlling interests (2019: €0.3 billion). Net
profit attributable to the shareholders of Daimler AG
amounts to €3.6 billion (2019: €2.4 billion), representing an
increase in earnings per share to €3.39 (2019: €2.22). 71 B.14
The calculation of earnings per share is based on an un-
changed average number of outstanding shares of 1,069.8 mil-
lion.
Further information on the individual items of the statement of
income is provided in Notes 4 ff. of the Notes to the Con-
solidated Financial Statements.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
55
Revenue and EBIT by segment
Due to the significant decrease in unit sales caused by the
worldwide covid-19 pandemic, the revenue of the Mercedes-
Benz Cars & Vans segment in the year 2020 fell by 8% to
€98,576 million (2019: €106,897 million). The segment's reve-
nue was therefore significantly lower than in the previous year,
in line with our forecast as adjusted during 2020; in the 2019
Management Report, we had originally forecasted revenue at
the prior-year level.
The decline in unit sales, particularly in Europe and North
America, had a major negative impact on gross profit. On the
other hand, there was a positive effect from a more favorable
sales structure and improved pricing. Expenses for enhanced
vehicle equipment and a higher level of depreciation reduced
gross profit in relation to revenue, but this was offset by the
efficiency measures introduced as a consequence of the covid-
19 pandemic. As a result, gross profit in relation to revenue
rose from 16.5% to 17.6%. In addition, the measures introduced,
including the use of short-time working in Germany and contin-
ued successful cost discipline, led to cost reductions in the
other functional cost areas.
The segment's earnings were also reduced by restructuring
expenses of €1,476 million. This includes expenses of
€871 million for the adjustment and realignment of capacities
within the global production network in connection with the
intended sale of the car plant in Hambach (France) as well as
capacity adjustments at the plants in Aguascalientes (Mexico),
Tuscaloosa (USA) and Iracemápolis (Brazil). The restructuring
expenses also included €605 million for personnel-cost optimi-
zation programs. Effects from ongoing governmental and court
proceedings and measures taken relating to Mercedes-Benz
diesel vehicles led to a reduction in earnings of €154 million.
Earnings in the previous year were reduced primarily by indi-
vidual items relating to ongoing governmental and court pro-
ceedings and measures taken relating to Mercedes-Benz diesel
vehicles (€4,491 million) as well as expenses connected with
an updated risk assessment for an expanded recall of Takata
airbags (€941 million). Earnings in 2019 were also reduced by
restructuring expenses in connection with terminating produc-
tion of the X-Class (€828 million).
EBIT amounted to €5,172 million (2019: minus €109 million)
and adjusted EBIT amounted to €6,802 million (2019:
€6,151 million). The adjusted return on sales of 6.9% was above
the adjusted prior-year figure of 5.8%. In the Management
Report on the year 2019, an adjusted return on sales of
between 4% and 5% was forecasted for the segment. Within
the framework of our capital market reporting during 2020, we
adjusted this forecast to the expectation of an adjusted return
on sales of 4.5% to 5.5%. Due to a strong fourth quarter, the
Mercedes-Benz Cars & Vans segment significantly exceeded
this expectation. 7 B.15
Due to the strong decrease in unit sales, the revenue of the
Daimler Trucks & Buses segment decreased in the year 2020
by 22% to €34,671 million (2019: €44,429 million). The seg-
ment achieved revenue significantly below the prior-year fig-
ure, thus confirming the forecast we made at the beginning of
the year.
The development of revenue in 2020 was substantially
adversely affected by declining unit sales in all regions, primar-
ily due to contracting markets caused by the expected cycle as
well as the covid-19 pandemic. There was a negative impact
from a smaller contribution from the aftersales business due to
weaker demand. Cost of sales was therefore significantly lower
than in the previous year, and was also affected by additions to
provisions for warranty claims. Gross profit in relation to reve-
nue decreased from 18.5% to 15.2%. The measures initiated to
adjust costs and capacities in response to the covid-19 pan-
demic, including the use of short-time working in Germany, led
to cost reductions in all functional cost areas. In particular,
there was a positive impact from a significant reduction in
fixed costs, which was achieved through strict cost controls
and the gradual implementation of restructuring measures.
There was an opposing effect from expenses of €153 million
for the optimization of personnel costs in all functional-cost
areas.
EBIT amounted to €525 million (adjusted €678 million; 2019:
€2,672 million). The segment's adjusted return on sales was
below the prior-year figure at 2.0% (2019: 6.0%). Daimler Trucks
& Buses therefore confirmed the forecast as adjusted during
the
year in the context of our capital-market reporting due to
the covid-19 pandemic of an adjusted return on sales of
between 1% and 2%. In the Management Report on the year
2019, we had originally anticipated an adjusted return on sales
for the segment of 5%. 7 B.15
Research and non-capitalized development expenditure of
€6.1 billion in 2020 was below the prior-year level (2019:
€6.6 billion). It is mainly related to the development of new
models, advance expenditure for the renewal of existing mod-
els, and the further development of fuel-efficient and environ-
mentally friendly drive systems as well as safety technologies,
automated and autonomous driving and the digital connectivity
of our products. As a proportion of revenue, research and non-
capitalized development costs increased from 3.8% to 4.0%.
Further information on the Group's research and development
is provided in the chapter Investment and research activi-
ties of this Combined Management Report. 7 B.14
121
18,883
Cars & Vans Trucks & Buses
2,731
9
-106
2,704
112
16,152
-893
20,344
11,896
1,287
720
11,045
9,929
12,332
10,649
Trade receivables
1,337
1,146
28,420
26,444
29,757
Cash and cash equivalents
Inventories
1,107
746
4,842
4,443
5,949
5,189
25,298
23,048
16,152
20,344
2,513
thereof non-current
465
191
7,420
5,165
7,885
5,356
1,133
18,883
929
5,468
8,655
6,397
thereof current
and similar investments
Marketable debt securities
2,731
2,704
Equity-method investments
7,522
103,749
-83
-88
Assets
At December 31,
2020
2019
At December 31,
2020
2019
2019
At December 31,
2020
Daimler Mobility
Industrial Business
Consolidated
In millions of euros
Intangible assets
Condensed statement of financial position
Property, plant and equipment decreased to €35.2 billion
due to, among other things, the adjustment and realignment of
capacities within the global production network (2019:
€37.1 billion). In 2020, €5.7 billion was invested worldwide
(2019: €7.2 billion), primarily at our production and assembly
sites for innovative products and new technologies, as well as
for the modernization of the worldwide production network.
Intangible assets of €16.4 billion (2019: €16.0 billion) include
€13.1 billion of capitalized development costs (2019: €12.5 bil-
lion), €1.6 billion of franchises, industrial property and similar
rights (2019: €1.7 billion) and €1.2 billion of goodwill (2019:
€1.2 billion). The Mercedes-Benz Cars & Vans segment
accounts for 94% (2019: 93%) of the development costs and
the Daimler Trucks & Buses segment accounts for 6% (2019:
7%). Capitalized development costs amounted to €2.5 billion in
2020 (2019: €3.1 billion) and accounted for 29% of the Group's
total research and development expenditure (2019: 32%).
Current assets account for 40% of the balance sheet total,
which is below the prior-year level (2019: 42%). Current liabili-
ties amount to 35% of total equity and liabilities, which is at the
prior-year level. Table 7 B.32 shows the structure of the bal-
ance sheet by maturity.
The global impact of the covid-19 pandemic affected balance
sheet items to varying degrees as of December 31, 2020. The
decrease in total assets primarily reflects the reduced volume
of the financial services business, lower inventories and lower
property, plant and equipment due to, among other things, the
adjustment and realignment of capacities within the global pro-
duction network. Opposing effects came from significantly
higher cash and cash equivalents. On the liabilities side of the
balance sheet, there were decreases in financing liabilities
while provisions for pensions and similar obligations were
above the prior-year level. Table 7 B.31 shows the condensed
statement of financial position for the Group as well as for the
industrial business and Daimler Mobility.
The balance sheet total decreased compared with December
31, 2019 from €302.4 billion to €285.7 billion. The reduction
includes negative effects from currency translation of
€12.5 billion; adjusted for these exchange rate effects, there
was a decrease of €4.2 billion. Daimler Mobility accounts for
€161.3 billion of the balance sheet total (2019: €174.8 billion),
equivalent to 56% of the Daimler Group's total assets (2019:
58%).
Financial position
66 B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
R-1 (low)
R-2 (high)
B.31
16,399
15,978
15,686
598
103,661
96,185
Receivables from financial services
32,683
29,603
18,799
17,949
51,482
47,552
Equipment on operating leases
361
342
36,782
34,904
37,143
35,246
Property, plant and equipment
901
713
15,077
96,268
7,048
2019
2020
47,933
62,841
62,248
Equity
Equity and liabilities
10,166
10,308
161,265 174,821
19,366
17,786
47,858
-10,862 -13,283
12,515
1,396
2,349
302,438 124,472 127,617
11,704
6,083
6,924
668
738
102
303
770
1,041
285,737
Provisions
32,520
30,652
64,672
58,654
34,507
27,885
99,179
86,539
thereof non-current
83,819
78,020
148,491
1,179
14,983
14,315
1,197
136,674
29,473
13,289
9,168
62,601 -18,717 -21,218
59,303
thereof current
161,780
145,842
Financing liabilities
31,323
Total assets
2019
Other assets
1,560
598
2,513
2,654
B.25
Reconciliation to CFBIT adjusted
In millions of euros
CFBIT
Legal proceedings (and related measures)
Restructuring measures
7,048
M&A transactions
EBIT adjusted
Cash conversion rate adjusted¹
1 Cash conversion rate adjusted is the relationship of CFBIT adjusted to EBIT adjusted.
Mercedes-Benz
Daimler
Cars & Vans
Trucks & Buses
2020
S-1
CFBIT adjusted
CFBIT
288
624
-1,916
980
-149
Net financial investments
-301
-314
-77
-138
Net investments in property, plant and equipment and intangible assets
-7,567
-9,834
-888
-1,334
Depreciation and amortization/impairments
7,303
6,289
1,349
1,315
Other
881
6,482
Other financial assets
S-1
P-2
F1
18,883
23,048
20/19
Change
Dec. 31,
2019
Dec. 31,
2020
Net debt
Cash and cash equivalents
Marketable debt securities
and similar investments
Liquidity
Financing liabilities
Market valuation and
currency hedges
for financing liabilities
Financing liabilities
(nominal)
In millions of euros
Net debt of the Daimler Group
+4,165
B.27
10,997
+4,720
-12,677
-7,957
17,855
Financing liabilities
(nominal)
Net liquidity
+599
612
1,211
for financing liabilities
+6,858
6,397
8,655
-2,258
Mar. 2023
Maturity
Month of
emission
Volume
Issuer
Benchmark issuances
B.28
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
64
The situation in the bond markets was significantly influenced
by the covid-19 pandemic in the reporting year. The supporting
measures taken by governments and central banks meant that
risk premiums for companies with an investment-grade rating
returned to a moderate level in the second half of the year.
Various issuance programs are available for raising longer-term
funds in the capital market. They include the Euro Medium
Term Note program (EMTN) with a total volume of €70 billion,
under which Daimler AG and several subsidiaries can issue
bonds in various currencies. Other local capital-market pro-
grams exist, which are significantly smaller than the EMTN pro-
gram. Capital-market programs allow flexible, repeated access
to the capital markets.
-144,618 -161,201 +16,583
-115,173 -133,663 +18,490
+645
579
1,224
+15,938
-161,780
-145,842
+1,907
27,538
29,445
currency hedges
Daimler Finance
North America LLC
Daimler Finance
North America LLC
Daimler Finance
Market valuation and
-13,289
Contingent liabilities and other financial obligations
Net debt at Group level, which primarily results from refinanc-
ing the leasing and sales-financing business, decreased com-
pared with December 31, 2019 by €18.5 billion to €115.2 bil-
lion. 7 B.27.
Compared with December 31, 2019, the net liquidity of the
industrial business increased by €6.9 billion to €17.9 billion.
The increase is mainly due to the positive free cash flow of the
industrial business, which was partially offset by the dividend
payment made to the shareholders of Daimler AG.
The net liquidity of the industrial business 7 B.26 is calcu-
lated as the total amount as shown in the statement of finan-
cial position of cash, cash equivalents and the marketable debt
securities and similar investments included in liquidity man-
agement, less the currency-hedged nominal amounts of financ-
ing liabilities. To the extent that the Group's internal refinanc-
ing of the financial services business is provided by the
companies of the industrial business, this amount is deducted
in the calculation of the net debt of the industrial business.
63
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
1.0
3.7
0.3
At December 31, 2020, the best estimate for potential obliga-
tions from contingent liabilities is €2.8 billion (2019: €1.6 bil-
lion).
1.2
678
6,151
6,802
2,654
2,513
1,939
7,917
-
301
2,672
In the context of its ordinary business operations, the Group
has also entered into other financial obligations in addition
to the liabilities shown in the consolidated statement of finan-
cial position at December 31, 2020. These financial obligations
result from contractual commitments to acquire intangible
assets, property, plant and equipment, and leased property, as
well as irrevocable loan commitments.
Detailed information on contingent liabilities and other finan-
cial obligations is provided in O Note 31 of the Notes to the
Consolidated Financial Statements.
Refinancing
-9,168
Financing liabilities
+2,138
23,674
25,812
-2,054
7,522
5,468
+4,192
16,152
20,344
Change
2,654
20/19
Dec. 31,
2019
Dec. 31,
2020
Cash and cash equivalents
Marketable debt securities
and similar investments
Liquidity
In millions of euros
Net liquidity of the industrial business
B.26
The funds raised by Daimler in the year 2020 primarily served
to refinance the leasing and sales-financing business. For that
purpose, Daimler made use of a broad spectrum of various
financing instruments in various currencies and markets. They
include bank loans, commercial paper in the money market,
bonds with medium and long maturities, promissory-note
loans, customer deposits at Mercedes-Benz Bank, and the
securitization of receivables from customers in the financial
services business (asset-backed securities).
+4,121
F1
US$1,250 million
US$450 million
B.30
Credit ratings
ness.
On January 21, 2021, S&P changed its outlook for our long-
term credit rating from “negative” to “stable." S&P expects
Daimler to increasingly benefit from a stabilization of demand,
cost-cutting measures and a more favorable model mix. Over-
all, S&P assumes that these factors will have a positive impact
on profitability and the free cash flow of the industrial busi-
On March 26, 2020, S&P Global Ratings (S&P) lowered its
long-term rating for Daimler AG from A- to BBB+ and affirmed
its short-term rating of A-2. The outlook was unchanged at
"negative." S&P justified these measures primarily with the
impact of the covid-19 pandemic on Daimler's sales volumes,
which will be lower than originally anticipated. In addition, pro-
duction shutdowns will reduce the Group's revenue and cash
flow in 2020.
The credit ratings of Daimler AG changed in 2020 with three of
the agencies we have engaged to provide ratings. Fitch Ratings
and S&P Global Ratings downgraded their long-term ratings by
one notch. DBRS downgraded its long-term rating by two
notches and lowered its short-term rating from R-1 (low) to R-2
(high). The long-term and short-term credit ratings for Daimler
AG and its finance companies provided by Moody's Investors
Service and Scope Ratings remained unchanged in 2020.
7 B.30
Credit ratings
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
Note 33 also provides information on the maturities of the
other financial liabilities.
Detailed information on the amounts and terms of the main
items of financing liabilities is provided in Notes 24 and 33
of the Notes to the Consolidated Financial Statements.
Long-term credit rating
S&P
At December 31, 2020, the total of financing liabilities shown
in the consolidated statement of financial position amounted
to €145.8 billion (2019: €161.8 billion).
Furthermore, an additional agreed credit facility has been
available to Daimler since the beginning of April 2020 (a bridge
facility). After capital-market transactions were carried out in
2020, the originally agreed amount decreased from €12.0 bil-
lion to €8.8 billion. At December 31, 2020, the credit line was
still available but had not been utilized.
Since July 2018, Daimler has had at its disposal a syndicated
credit facility with a volume of €11 billion from a consortium
of international banks. Following the exercise of an extension
option of one further year, it grants Daimler additional financial
flexibility until 2025. Daimler does not intend to utilize the
credit line.
Bank credit was another important source of refinancing in
2020. Loans were provided by globally active banks as well as
by banks operating nationally. The lenders also included supra-
national banks such as the European Investment Bank and the
Brazilian Development Bank.
In the reporting year, asset-backed securities (ABS) were
issued in eight countries worldwide. In the United States, a
total refinancing volume of USD 8.8 billion was generated in
seven transactions. In addition, two ABS bonds with a refinanc-
ing volume of €2.4 billion were issued in Germany, of which
€1.3 billion was placed on the market. The remaining €1.1 bil-
lion was acquired by Mercedes-Benz Bank AG itself (retained
interests). The securities can be used as collateral for open-
market transactions with the Deutsche Bundesbank. In 2020,
Mercedes-Benz Bank AG received €0.9 billion from these open
market transactions. Furthermore, three ABS transactions with
a total volume of CNY 15.5 billion were placed in China. ABS
transactions were also successfully placed with investors in
Canada, Australia, the United Kingdom, France and South
Korea.
Daimler also issued small volumes of commercial paper in
2020.
In the Chinese market, Daimler International Finance B.V.
placed three so-called panda bonds with a total volume of CNY
6.0 billion. In addition, a large number of smaller bonds were
issued in various currencies and markets.
In the year under review, the Group covered its refinancing
requirements mainly through the issuance of bonds. A large
proportion of those bonds were placed in the form of so-called
benchmark issuances (bonds with high nominal volumes) by
Daimler AG in the euro market and by Daimler Finance North
America LLC in the US-dollar area. This includes a "green
bond" with a volume of €1.0 billion. Further information on this
bond can be found in the chapter Sustainability at Daimler.
7 B.28
13,119
14,516
The carrying values of the main refinancing instruments and
the weighted average interest rates are shown in table 7 B.29.
At December 31, 2020, they are mainly denominated in the fol-
lowing currencies: 46% in euros, 24% in US dollars, 10% in Chi-
nese renminbi, 3% in British pounds, 3% in Canadian dollars
and 3% in Japanese yen.
Moody's
Fitch
Scope
DBRS
Short-term credit rating
S&P
Moody's
Trade payables
P-2
A-2
A-2
A
BBB (high)
A
A
A-
BBB+
A3
A3
A-
BBB+
End of 2020 End of 2019
65
The Canadian agency DBRS downgraded its long-term rating
for Daimler AG and its rated subsidiaries from A to BBB (high)
on August 11, 2020. At the same time, DBRS lowered its short-
term rating from R-1 (low) to R-2 (high). However, the trend was
lifted from "negative" to “stable." DBRS justified the down-
grades with the structural headwinds that have been consider-
ably exacerbated by the global escalation of the covid-19 pan-
demic. This reflects in particular the electrification of Daimler's
product portfolio, ongoing investments in self-driving technolo-
gies and the related expenses at Mercedes-Benz Cars.
On April 14, 2020, Fitch Ratings (Fitch) downgraded Daimler's
long-term issuer default rating from A- to BBB+ with a stable
outlook. Its short-term rating remained unchanged at F1. Fitch
stated that the downgrade reflects the deterioration of the
Group's financial profile. Fitch anticipates only a slow recovery.
Furthermore, Fitch expects a sustained weakened economic
environment and its effect on sales of new cars and heavy
trucks in the next one to two years to exacerbate the underly-
ing fundamental challenges facing the Group.
DBRS
Scope
Fitch
0.50
Mar. 2020
0.40
Deposits in the direct
€1,000 million
Daimler AG
May 2020
€750 million
Daimler AG
May 2020
€1,250 million
Daimler AG
May 2020
Sep. 2020
€1,000 million
Mar. 2030
Apr. 2025
Apr. 2020
€1,500 million
Daimler AG
Mar. 2020
US$450 million
North America LLC
Mar. 2025
Mar. 2020
Daimler AG
Aug. 2023
Aug. 2026
May 2030
Sep. 2030
B.29
Refinancing instruments
39,811
32,391
2.68
2.25
institutions
to financial
99,557
93,230
2.03
1.60
ABS transactions
liabilities from
Notes/bonds and
In millions of euros
Carrying values
Dec. 31,
Dec. 31,
2020
2019
in%
Dec. 31,
2019
2020
Dec. 31,
Average interest rates
Liabilities
banking business
12,378
568
11,605
193
Provisions for pensions and similar obligations
Other provisions
38,054
39,224
Equity
963
1,444
Distributable profit
22,541
23,230
Retained earnings
11,480
11,480
Capital reserve
(conditional capital €500 million)
3,070
3,070
94
1,550
1,511
1,743
-109
525
2,672
Change in working capital
Liabilities decreased by €8.1 billion to €51.6 billion. This was
mainly because of the decrease of €3.5 billion in liabilities to
subsidiaries, which mainly reflects lower losses transferred
from subsidiaries. In addition, bonds and notes of €3.1 billion
were redeemed and liabilities to banks of €1.5 billion were
repaid.
Provisions increased compared with December 31, 2019 by
€0.1 billion to €1.7 billion.
Equity increased in 2020 by €1.2 billion to €39.2 billion, pri-
marily as a result of the net profit for 2020, of which €0.7 bil-
lion was transferred to retained earnings pursuant to Section
58 Subsection 2 of the German Stock Corporation Act (AktG).
The equity ratio at December 31, 2020 was 42.3% (December
31, 2019: 38.3%). Daimler AG holds no treasury shares at
December 31, 2020.
Trade payables
Other liabilities
Liabilities
Deferred income
Equity and liabilities
Share capital
Provisions
6
59,701
51,627
37
92,631
59,474
51,487
227
140
1,605
99,366
99,366
92,631
285
Gross liquidity - defined as cash and cash equivalents and
other marketable securities recognized as current assets, as
well as fixed-term deposits presented under other assets
increased by €3.4 billion to €13.0 billion on the balance sheet
date. The increase in gross liquidity is primarily due to the
increase in cash and cash equivalents of €4.8 billion. There
was an opposing effect from a decrease of €1.3 billion in other
securities held as current assets.
-
Cash and cash equivalents increased from €2.9 billion to
€7.7 billion.
Receivables, securities and other assets decreased com-
pared with December 31, 2019 by €10.4 billion to €28.5 billion.
This development mainly reflects a decrease in receivables due
from subsidiaries of €8.5 billion as a result of lower financial
receivables within the Group, as well as a decrease in receiv-
ables from profit-and-loss-transfer agreements. Furthermore,
lower tax-refund claims in particular led to a decrease in other
assets of €0.6 billion.
Non-current assets decreased during the year 2020 by
€1.0 billion to €56.2 billion, caused by the €1.0 billion decrease
in financial assets, which resulted in particular from a decrease
in loans granted.
The balance sheet total of €92.6 billion is €6.7 billion lower
than at the end of 2019.
capital resources
Financial position, liquidity and
12,707
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG
Net profit/loss
963
1,444
Distributable profit
2,641
-689
Transfer to/from retained earnings
-1,678
70
5,172
Cash flows from investing activities resulted in a net cash
inflow of €2.3 billion in 2020 (2019: outflow of €7.6 billion).
Compared with the previous year, there were lower cash out-
flows in the area of financial assets from the corporate restruc-
turing within the framework of "Project Future." In addition,
there was an effect in 2020 from a capital repayment by the
subsidiary Daimler Nederland B.V. to Daimler AG. There was a
net cash inflow of €1.3 billion from acquisitions and disposals
of securities held as current assets conducted in the context of
liquidity management.
B.35
341
41,867
36,129
2,942
7,658
38,925
28,471
57,214
Cash flows from financing activities resulted in a net cash
outflow of €0.1 billion (2019: €2.6 billion). The change is
explained on the one hand by a lower dividend payment to the
Daimler shareholders. On the other hand, the change is due to
the net positive development of receivables from and liabilities
to subsidiaries from intra-Group transactions in connection
with central financial and liquidity management. The repay-
ment of external financing liabilities resulted in a cash outflow
in 2020, whereas proceeds from financing liabilities resulted in
a cash inflow in the previous year.
56,161
Receivables, securities and other assets
Cash and cash equivalents
Current assets
Non-current assets
Assets
In millions of euros
Dec. 31,
2019
2020
Dec. 31,
Balance sheet structure of Daimler AG
Prepaid expenses
2,133
EBIT
2020
similar investments
-1,929
-883
-1,046
Right-of-use assets
Other adjustments
Free cash flow of the
industrial business
-351
-987
+636
132
239
-107
8,259
1,368
+6,891
Legal proceedings
(and related measures)
Restructuring measures
595
1,341
debt securities and
Change in marketable
+3,377
-9,986
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
61
The parameter used by Daimler to measure the financial capa-
bility of the Group's industrial business is the free cash flow
of the industrial business 7 B.22, which is derived from the
reported cash flows from operating and investing activities.
The cash flows from sales and purchases of marketable debt
securities and similar investments included in cash flows from
investing activities are deducted, as those securities are allo-
cated to liquidity and changes in them are thus not a part of
the free cash flow of the industrial business. On the other
hand, effects in connection with the recognition and measure-
ment of right-of-use assets, which result from the change in
lessee accounting and are largely non-cash items, are included
in the free cash flow of the industrial business.
Other adjustments relate to effects from the financing of the
Group's own dealerships and effects from internal deposits
within the Group. In addition, the calculation of the free cash
flow includes the cash flows to be shown under cash used for/
provided by financing activities in connection with the acquisi-
tion or disposal of shares in subsidiaries without loss of con-
trol. The previous year included effects from acquisitions and
disposals of shareholdings within the Group resulting from
"Project Future." These were included in cash used for/pro-
vided by investing activities and were reversed in the free cash
flow of the industrial business.
The free cash flow of the industrial business amounted to
€8.3 billion in 2020 and was significantly higher than the prior-
year figure of €1.4 billion. The free cash flow of the industrial
business was thus in line with the forecast made in the Outlook
section of the 2019 Annual Report.
The increase of €6.9 billion to €8.3 billion in the free cash flow
of the industrial business was particularly affected by the
worldwide consequences of the covid-19 pandemic. The tem-
porary suspension of production during the second quarter of
2020 and the recovery of customer demand in the second half
of the year, as well as active working-capital management,
were the main drivers of the development of working capital.
Compared with the prior year, the development of working cap-
ital was positive in all automotive segments. Furthermore, the
implemented cost-cutting measures had an impact and
resulted in lower investments in property, plant and equipment
and intangible assets. Positive effects resulted from increased
cash inflows from dividends received from Beijing Benz Auto-
motive Co., Ltd., as well as from lower payments than in 2019
in connection with ongoing governmental and court proceed-
ings and related measures taken with regard to Mercedes-
Benz diesel vehicles. The previous year was mainly affected by
the fine of €870 million paid in conclusion of the administrative
offense proceedings against Daimler AG.
B.22
Free cash flow of the industrial business
-746
In millions of euros
2019
20/19
Change
Cash provided by
operating activities
Cash used for
17,016
12,985
+4,031
investing activities
-6,609
2020
301
+301
M&A transactions
-959
Interest paid/received
21
Other reconciling items
-517
-388
-537
Free cash flow of the industrial business
8,259
-806
1,368
ments of interest and taxes. The other reconciliation items pri-
marily comprise eliminations between the segments and items
that are allocated to the industrial business but for which the
automotive segments are not responsible. Table 7 B.23 shows
the reconciliation of the CFBIT of the automotive segments to
the free cash flow of the industrial business.
The CFBIT of the automotive segments is derived from EBIT
and the change in net assets, and also includes additions to
right-of-use assets. Table 7 B.24 shows the composition of
CFBIT for Mercedes-Benz Cars & Vans and Daimler Trucks &
Buses. Table 7 B.25 shows the reconciliation from CFBIT to
adjusted CFBIT and the adjusted cash conversion rate for
the automotive segments. While the adjusted cash conversion
rate for Mercedes-Benz Cars & Vans of 1.2 was in line with the
adjusted forecast of 1 as set on September 30, 2020, the
adjusted cash conversion rate for Daimler Trucks & Buses of
3.7 significantly surpassed the improved target of 2 as set on
September 30, 2020. In the Management Report as of Decem-
ber 31, 2019, adjusted cash conversion rates were originally
forecasted for Mercedes-Benz Cars & Vans of 0.7 to 0.9 and
for Daimler Trucks & Buses of 0.8 to 1.0.
B.24
CFBIT
In millions of euros
Mercedes-Benz
Cars & Vans
2020
2019
As well as being calculated on the basis of the disclosed cash
flows from operating and investing activities, the free cash
flow of the industrial business can also be calculated on the
basis of the cash flows before interest and taxes (CFBIT) of the
automotive segments. The reconciliation from the CFBIT of
Mercedes-Benz Cars & Vans and Daimler Trucks & Buses to the
free cash flow of the industrial business also includes pay-
Daimler
Trucks & Buses
2019
Income taxes paid/refunded
2,513
Free cash flow of the industrial
business adjusted
9,155
2,709
+6,446
Opposing effects resulted from the change in cash earnings
before taxes, as the positive business performance in the sec-
ond half of the year could not fully offset the negative conse-
quences of the covid-19 pandemic. Additional effects resulted
from the payments made in the context of reviewing and priori-
tizing the product portfolio for the planned discontinuation of
X-Class production in the first quarter of 2020.
In the interest of greater transparency in reporting on the
ongoing business, starting with the first quarter of 2020, we
also report an adjusted free cash flow of the industrial
business 7 B.22. The adjustments for legal proceedings
include payments by the automotive segments in connection
with ongoing governmental and legal proceedings and related
measures taken with regard to Mercedes-Benz diesel vehicles.
The adjustments for restructuring measures include payments
made in connection with the review and prioritization of the
product portfolio. The adjusted free cash flow of the industrial
business led to a cash inflow of €9.2 billion (2019: €2.7 billion).
In 2020, the free cash flow of the Daimler Group resulted in
a cash inflow of €13.4 billion (2019: cash outflow of €4.8 bil-
lion). Besides the effects of the free cash flow of the industrial
business, the free cash flow of the Daimler Group is mainly
affected by the leasing and sales-financing business of Daimler
Mobility. Additional effects in 2019 resulted from the cash out-
flows (net) relating to the merger of the mobility services of the
Daimler Group and the BMW Group.
62
2,654
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
Reconciliation from CFBIT to the free cash flow of the industrial
business
In millions of euros
2020
2019
CFBIT Mercedes-Benz Cars & Vans
7,048
598
CFBIT Daimler Trucks & Buses
B.23
44
Cash provided by operating activities amounted to €2.6 bil-
lion in 2020 (2019: €6.8 billion). The decrease resulted in par-
ticular from lower dividend distributions from subsidiaries.
There was an opposing, positive effect on cash provided by
operating activities from the improved operating profit.
-546
12,598
13,239
3,066
358
811
3,640
Other liabilities
11,195
10,963
Total equity and liabilities
285,737
302,438
6,313
5,638
124,472 127,617
4,882
161,265
392
5,325
174,821
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
67
The decrease was partially due to our measures to reduce
costs and ensure liquidity in response to the unexpected covid-
19 pandemic. The sites in Germany accounted for €3.7 billion
of the capital expenditure (2019: €4.4 billion).
Equipment on operating leases and receivables from
financial services decreased to a total of €143.7 billion (2019:
€155.1 billion). The decrease adjusted for the effects of cur-
rency translation was €4.1 billion. Although new business sta-
bilized in the second half of the year, contract volume was
below the prior-year level, mainly due to lower customer
demand caused by the corona crisis. The leasing and sales-
financing business as a proportion of 50% of total assets was
lower than in the previous year (2019: 51%).
13,631
12,956
Contract and refund liabilities
6,224
B.32
2019
2020
2019
2020
At December 31,
At December 31,
Trucks & Buses
Equity-method investments decreased to €5.2 billion (2019:
€5.9 billion). They mainly comprise the carrying amounts of our
equity interests in Beijing Benz Automotive Co., Ltd., BAIC
Motor Corporation Ltd. (BAIC Motor), There Holding B.V. and
YOUR NOW Holding GmbH (YOUR NOW). The decrease came
primarily from the interests in BAIC Motor and YOUR NOW.
Daimler
In millions of euros
1,341
773
Other financial liabilities
8,598
-141
9,864
5,532
Mercedes-Benz
Cars & Vans
Inventories decreased from €29.8 billion to €26.4 billion; also
as a proportion of total assets, they were below the prior-year
level at 9% (2019: 10%). The decrease of €2.1 billion, adjusted
for exchange rate effects, mainly came from the two automo-
tive segments, and, among other things, is due to the lower
business volume in 2020 resulting from the covid-19 pandemic
and the measures taken for active working-capital manage-
ment.
Trade receivables of €10.6 billion are below the prior-year
level of €12.3 billion. The decrease was partially due to the
sales development and the stronger focus on working capital.
The Mercedes-Benz Cars & Vans segment accounts for 64% of
these receivables (2019: 61%) and the Daimler Trucks & Buses
segment accounts for 29% (2019: 28%).
115
128
Non-current liabilities
124
134
-Equity
62
170 175
106 100
63
286
286
302
302
2019
2020
Non-current assets.
Assets
Balance sheet structure Daimler Group
In billions of euros
Equity and liabilities
13,991
Current assets
thereof liquidity
Cash and cash equivalents increased compared with the end
of 2019 by €4.2 billion to €23.0 billion.
Marketable debt securities and similar investments
decreased compared with December 31, 2019 from €8.7 billion
to €6.4 billion. Those assets include the debt instruments that
are allocated to liquidity, most of which are traded in active
markets. They generally have an external rating of A or better.
Net Assets of the automotive segments
B.33
Table B.33 shows the derivation of net assets for the auto-
motive segments. They relate to the operating assets and lia-
bilities for which the divisions are responsible.
Further information on the assets presented in the statement
of financial position and on the Group's equity and liabilities is
provided in the Consolidated Statement of Financial Position
7 D.03, the Consolidated Statement of Changes in Equity
7 D.05 and the related notes in the Notes to the Consolidated
Financial Statements.
Other liabilities of €11.2 billion (2019: €11.0 billion) primarily
comprise deferred taxes, tax liabilities and deferred income.
Contract and refund liabilities of €13.0 billion are lower than
a year earlier (2019: €13.6 billion). They mainly comprise
deferred revenue from service and maintenance contracts as
well as extended warranties and obligations from sales in the
Scope of IFRS 15.
Current liabilities
Other financial liabilities amounted to €8.6 billion (2019:
€9.9 billion) and mainly consist of liabilities from residual-value
guarantees, wages and salaries, derivative financial instru-
ments, deposits received and accrued interest on financing lia-
bilities. The decrease is partially attributable to lower negative
fair values of derivative financial instruments.
Financing liabilities of €145.8 billion were significantly below
the level of the previous year (2019: €161.8 billion). Adjusted
for exchange rate effects, the decrease of €8.9 billion was pri-
marily due to the lower refinancing requirement of the leasing
and sales-financing business. 53% of the financing liabilities
were accounted for by bonds, 22% by liabilities to financial
institutions, 11% by liabilities from ABS transactions and 10% by
deposits in the direct banking business.
B❘ COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION
PROFITABILITY, LIQUIDITY AND CAPITAL RESOURCES, FINANCIAL POSITION
68
Provisions increased from €30.7 billion to €32.5 billion; as a
proportion of the balance sheet total, they were also above the
prior-year level at 11% (2019: 10%). Provisions for pensions and
similar obligations increased to €12.1 billion (2019: €9.7 bil-
lion). Opposing the significant increase in the present value of
defined-benefit pension obligations to €39.9 billion (2019:
€36.2 billion) was the fair value of the pension-plan assets
applied to finance those obligations of €28.9 billion (2019:
€27.8 billion). Especially the further decrease in discount rates
led to an increase in the present value of defined-benefit pen-
sion obligations. This effect was only partially offset by positive
income from the plan assets. Provisions also relate to liabilities
from product warranties of €8.5 billion (2019: €8.7 billion),
from personnel and social costs of €4.6 billion (2019: €4.2 bil-
lion) and from liability and litigation risks and regulatory pro-
ceedings of €4.6 billion (2019: €4.9 billion), as well as provi-
sions for other risks of €2.7 billion (2019: €3.1 billion).
While the balance sheet total decreased by 6%, equity
decreased by 1% compared with the previous year. The Group's
equity ratio of 21.3% was therefore above the level at the end
of 2019 (20.5%); the equity ratio for the industrial business was
37.3% (2019: 36.7%). It is necessary to consider the fact that
the equity ratios at the end of 2019 and 2020 are adjusted for
the paid and proposed dividend payments.
The Group's equity decreased compared with December 31,
2019 from €62.8 billion to €62.2 billion. Positive effects on
equity resulted from the net profit of €4.0 billion and from the
remeasurement of derivative financial instruments not recog-
nized in profit or loss (€0.8 billion). This was offset by the
effects of currency translation of €2.5 billion, actuarial losses
from defined-benefit pension plans recognized in retained
earnings of €1.9 billion and the dividend of €1.0 billion paid out
to Daimler's shareholders. Equity attributable to the sharehold-
ers of Daimler AG decreased accordingly to €60.7 billion (2019:
€61.3 billion).
Other assets of €11.7 billion (2019: €12.5 billion) primarily
comprise deferred tax assets and tax refund claims. The main
effect here was from lower refund claims in connection with
value added taxes.
29 28
Trade payables decreased compared with December 31, 2019
by €0.3 billion to €12.4 billion. The Mercedes-Benz Cars &
Vans segment accounts for 71% (2019: 71%) of those payables
and the Daimler Trucks & Buses segment accounts for 23%
(2019: 22%).
13,234
Intangible assets
1,828
The profitability of Daimler AG in the 2020 financial year was
affected by significantly higher financial income and improved
operating profit. 7 B.34
Profitability
tion.
The economic situation of Daimler AG in its function as a
management holding company mainly depends on the develop-
ment of its subsidiaries. Daimler AG participates in the operat-
ing results of its subsidiaries through dividend distributions
and profit-and-loss transfers. Its economic situation therefore
corresponds with that of the Daimler Group, which is described
in the chapter Overall Assessment of the Economic Situa-
Net profit amounts to €2.1 billion (2019: net loss of €1.7 bil-
lion) and is thus in line with the expectation stated in the Out-
look chapter of Annual Report 2019.
The income tax expense amounted to €0.1 billion (2019:
€0.0 billion).
Financial income increased by €3.4 billion to €2.9 billion, pri-
marily due to higher income from investments in subsidiaries
and associated companies. This was the result of a positive
development with profit transfers from subsidiaries.
For Daimler AG as an operational and strategic management
holding company, net profit or loss is the main performance
indicator.
Daimler AG generated revenue of €1.7 billion primarily from
the provision of services to companies of the Group (2019:
€2.0 billion). The decrease in revenue was the result of provid-
ing a lower volume of services to the companies of the Group,
due to short-time working and efficiency measures.
The annual financial statements of Daimler AG are prepared in
accordance with the German Commercial Code (HGB). The
consolidated financial statements are prepared in accordance
with the International Financial Reporting Standards (IFRS), as
adopted by the European Union (EU). This results in some dif-
ferences with regard to recognition and measurement, primar-
ily in connection with provisions, financial instruments, the
leasing business and deferred taxes.
Daimler AG is the parent company of the Daimler Group and its
headquarters are in Stuttgart.
In addition to reporting on the Daimler Group, the development
of Daimler AG is also described in this section.
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG 69
Condensed version in accordance with the German Commercial Code (HGB)
Daimler AG
10,425
7,830
33,298
Daimler AG acts as an operational and strategic management
holding company and provides services to the companies of
the Group. As the parent company, it also decides on the
Group's strategy, decides on matters of major importance for
business operations, and ensures regulatory, legal, and compli-
ance functions throughout the Group.
Cost of sales decreased to €1.6 billion (2019: €2.0 billion) and
primarily comprises expenses incurred for the generation of
revenue from services provided to companies of the Group.
General administrative expenses amounted to €0.9 billion
(2019: €1.0 billion), including expenses of €0.1 billion from
ongoing programs for the optimization of personnel costs. The
prior-year figure takes into consideration costs in connection
with "Project Future" of €0.2 billion.
Other operating income amounted to €0.3 billion (2019:
expense of €0.3 billion) and primarily comprises income from
the sale of patents in connection with combining the Group-
wide fuel-cell activities and relating to Group-internal deriva-
tives of the vehicle business.
2,878
-1,176
-604
-272
280
-964
-928
-1,959
-1,641
2,019
1,685
General administrative expenses
Other operating income/expense
Operating profit
Financial income/expense
Income taxes
Cost of sales
Revenue
In millions of euros
2019
2020
Condensed income statement of Daimler AG
B.34
31,192
Net assets
17,553
17,000
1,681
Other segment assets
3,469
3,090
7,556
6,839
Trade receivables
7,615
6,307
20,959
19,117
Inventories
8,569
7,905
27,933
26,661
Property, plant and equipment
24,808
5,847
24,752
Segment assets
61,192
60,168
Segment liabilities
14,706
14,176
52,150
51,416
Other segment liabilities
2,847
2,824
9,042
8,752
Trade payables
27,978
24,830
94,490
91,360
6,497
Other financial assets of €6.9 billion are above the prior-year
level (2019: €6.1 billion). They primarily consist of derivative
financial instruments, equity and debt instruments, invest-
ments in non-consolidated subsidiaries, and loans and other
receivables due from third parties. The increase is mainly
attributable to higher positive fair values of derivative financial
instruments.
- €3.523 billion on social welfare services, and
€0.703 billion on retirement benefits for a workforce num-
bering 293,138 on average.
Training and professional development
Due to electric mobility and digitalization we are currently
experiencing the greatest ever structural change in the history
of the automotive industry. Associated with it is the far-reach-
ing transformation of our company. Job descriptions, tasks and
requirements profiles are also changing as a result. This is
transforming the qualifications required for many positions,
affecting employees as well as managers.
We use various instruments to ensure that our political lobby-
ing is carried out in accordance with applicable regulations and
ethical standards. In our work as a member of sector associa-
tions and in our cooperation with other companies, we pay par-
ticular attention to antitrust regulations. We have also defined
internally binding requirements that are laid down in various
documents including a worldwide policy and the Group's Integ-
rity Code. In addition, our policy for "Lobbying and Political
Donations" governs grants, donations to political parties, and
the use of other instruments for representing our interests in
the political realm. Our employees can find these policies in
the policy database on the intranet. Daimler is also listed in the
transparency register of the European Union and accepts the
register's Code of Conduct.
For example, Daimler AG, Mercedes-Benz AG, Daimler Truck
AG and Daimler Brand & IP Management GmbH & Co. KG in
Germany control training and qualification processes through
an overarching set of rules and regulations. From the Board of
Management to our training and qualification units and the
trainers at the plant level, we pursue the goal of safeguarding
our competitiveness throughout the company.
The global covid-19 pandemic presented companies and
employees with many challenges last year, and it continues to
do so. With this in mind, the Board of Management, in consul-
tation with the General Works Council, decided to issue a spe-
cial one-time "coronavirus bonus" to non-exempt employees
and team leaders of Daimler AG, Mercedes-Benz AG, Daimler
Truck AG, the Daimler Mobility division, and all subsidiaries in
Germany. This special payment is meant to mitigate financial
and personal hardship and honor the great dedication and flex-
ibility displayed by the workforce during the crisis. In some
cases an appreciation bonus was paid to employees outside
Germany.
80
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Social issues
As a global automotive company, we operate in an environment
that is subject to a variety of societal, social and political influ-
encing factors. In order to ensure that we can continue to
operate effectively in the future, we need to make our compa-
ny's interests understandable to governments and society and
also address the concerns of groups within society. We there-
fore regularly share information with our stakeholders and
communicate our interests in an open and fair dialog with gov-
ernments and political representatives.
Human beings can only overcome the major social and envi-
ronmental challenges we face, such as climate change and
increasing urbanization, by working together. We at Daimler
strive to achieve such cooperation by contributing our exper-
tise to the social dialog and by working together with others to
create solutions. We are guided by the vision of utilizing exem-
plary formats for political dialog that allow us to establish our-
selves as a leading corporate citizen in the automotive indus-
try. The overarching goal of our approach is to harmonize the
company's interests with the interests of society at large. The
specific aim of our discussions with political decision-makers
is to achieve greater planning security for Daimler.
Daimler has defined its own principles for political dialog and
the responsible communication of our interests. Among other
things, we maintain political restraint, balance and neutrality in
our dealings with political parties, members of parliament and
government officials. Our central coordinating body for politi-
cal dialog at the national and international levels is the Exter-
nal Affairs and Public Policy unit.
The policies mentioned above also define how we intend to
address risks in connection with the political representation of
our interests. These risks are also addressed through firmly
established Group-wide compliance processes. Complaints
and information relating to our lobbying activities can be
addressed to our whistleblower system BPO (Business Prac-
tices Office) see the chapter Integrity and Compliance.
In accordance with the legal requirements and our in-house
policies, we also regularly conduct training courses. We train
not only employees at Daimler Group companies but also other
employees at Daimler AG who represent our interests and who
are not organizationally under the direction of the External
Affairs unit.
Incorporation of stakeholders
We consider it important to engage in a continuous dialog with
all of our interest groups. This allows us to consider various
perspectives on our involvement with sustainability issues,
identify and address new trends, and share experiences. We
also want to engage in constructive discussions of controver-
sial themes at a very early stage. We always focus on conduct-
ing a dialog that is fruitful and productive for all parties
involved. Our primary stakeholders are our customers, inves-
tors, employees and suppliers. However, we also communicate
regularly with civil groups such as NGOs, as well as associa-
tions, trade unions, the media, analysts, municipalities, resi-
dents in the communities where we operate, and representa-
tives of science and government.
We utilize various instruments to engage in a dialog with our
relevant stakeholders. On the one hand, we use our own dialog
formats, which include the Daimler Sustainability Dialogue and
the virtual Mobility Lab dialog series. We also conduct stake-
holder surveys, specialist conferences and thematic dialog
sessions that can also take the form of workshops or are held
by our Advisory Board for Integrity and Corporate Responsibil-
ity. On the other hand, we keep ourselves up to date on the lat-
est discussions and the associated expectations by participat-
ing in industry-specific and cross-industry networks and
initiatives. We also evaluate studies and other scientific publi-
cations and conduct our own media analyses. These measures
help us to identify developments and the associated expecta-
tions in areas beyond the dialog events we have initiated.
Dialog at the Group level
One essential tool of the dialog with our stakeholders is the
Daimler Sustainability Dialogue, which has been held annually
in Stuttgart since 2008 and brings various stakeholder groups
together with members of the Daimler Board of Management
and executive management. The participants attend a range of
workshops, where they discuss issues related to sustainability
and work together to further develop their approaches. Our
personnel responsible for specific themes take up the
impulses generated by the participants and work together with
the stakeholders to incorporate these ideas into their work.
They then report at the event in the following year on the prog-
ress made in the interim. Due to the covid-19 pandemic, we
held our Daimler Sustainability Dialogue via a digital meeting
platform for the first time in 2020. More than 200 external and
Daimler participants split up into working groups to discuss
themes such as human rights, environmental protection, liv-
able cities and the topic of "Employees and Integrity." Further
information on the Daimler Sustainability Dialogue and the
results from the working groups is available at ④ daimler.
com/documents/sustainability/other/sd2020-overall-plenary-
reports-working-groups-en.pdf
We also developed new workplace rules that include preven-
tive hygiene and safety measures for production units and
offices, company restaurants, and areas in which staff need to
meet with customers. Business travel that was not absolutely
necessary was also reduced to a minimum until the end of
2020. We expanded our IT infrastructure in order to enable
mobile working and ensure the technical functioning of digital
formats such as conference calls and video conferences. Even
after most short-time work arrangements ended at the begin-
ning of July, we encouraged our employees to keep working
from home if at all possible, and we continue to recommend
that they do so. We have also implemented new shift concepts
for departments and units where a physical presence in the
office remains necessary.
In a first step, the Daimler Group had decided to suspend the
majority of its production in Europe, as well as work in selected
administrative departments, for an initial period of two weeks
(23th of March until April 3rd, 2020). As the covid-19 pandemic
worsened, short-time work was then introduced in Germany on
April 6. The Group took this step in response to the wide-rang-
ing effects of the coronavirus and the increasingly negative
impact the pandemic was having on the economy and society.
This Annual Report is being released at a time when people
around the world continue to struggle with the covid-19 pan-
demic. During the reporting year, we at the Daimler Group
implemented numerous measures to slow the spread of the
virus and protect our employees.
The covid-19 pandemic
Our Group's digital transformation is changing the require-
ments profiles of many jobs and making it necessary for staff
in many positions to gain new expertise. We are addressing
this issue by expanding the range of professions in which we
offer training, increasing the number of programs offered by
our dual study programs, and recruiting young talent with
extensive digital expertise.
During the year under review, for example, we offered dual
work-study programs and commercial and technical training
programs in Germany for more than 30 different professions.
We continuously update the programs in order to take into
account future requirements and technological innovations in
each profession.
We support change processes such as the company's digital
transformation by offering suitable qualification measures for
the entire workforce. In 2020 the focus was on IT skills and
professions, high-voltage and battery technology, and the
development and offer of digital learning formats. Among other
things, we implemented a global digitalization qualification
campaign for our IT specialists in 2019 and 2020. In addition,
we prepared the Digital Readiness Program that will be used to
launch a comprehensive range of digital professional training
measures worldwide beginning in January 2021. Among other
things, the Digital Readiness Program covers methodological,
technical and cultural aspects of digitalization.
Diversity and equal opportunity
Our workforce is as diverse as our customers, and Daimler is
convinced that diversity makes us more successful as a com-
pany. That's because diversity helps us to find new viewpoints
and acts as a driving force behind creative ideas and innova-
tions. We promote a working environment in which all of our
employees can develop and make full use of their talent -
regardless of their age, gender, sexual orientation or any other
characteristic that relates to diversity. We therefore need to be
tolerant of one another and remain open-minded, which means
there is no place for discrimination in the workplace.
We expect all of our employees to treat each other in a
respectful, open and fair manner. Managers serve as role mod-
els here and thus have a special responsibility for ensuring a
corporate culture marked by fairness.
The Integrity and Diversity units at Daimler design the frame-
work and processes for such a culture. The Global Diversity
Office is a corporate function that is part of the Group Human
Resources organization. This office defines strategic targets
and areas of action in cooperation with the business units and
initiates Group-wide projects, training programs and measures
to increase awareness of the importance of diversity. For
example, Daimler Diversity Day was once again held in 2020.
Activities were held at various locations worldwide in line with
the motto "Link perspectives – bring the mix alive." As a result
of the covid-19 pandemic, many locations primarily focused on
digital communication offers such as virtual workshops and
discussion rounds.
The knowledge and skills of our employees are the foundation
of Daimler's worldwide success. That's why we invest to a large
extent in their training and professional development and con-
tinue to enhance our HR development program. How will our
workforce develop over the next ten years - and what work-
force structures will we need to have in the future? These are
important questions that we are addressing within the frame-
work of our "Strategic Resource Management” HR planning
program at Mercedes-Benz AG and Daimler Truck AG.
Our goal is to attract the most highly qualified specialists and
managers to our company and support their professional
development, regardless of their age, ethnicity, gender, sexual
orientation and identity, and any physical limitations they may
have.
Occupational health and safety
Ensuring the health and safety of our employees is a very high
priority at Daimler. For example, we design our workplaces in
line with ergonomic criteria and offer health maintenance pro-
grams and occupational safety training. In everything we do,
we focus on the health and safety of our employees. Our over-
arching goal is to prevent health risks and maintain the health
of all Daimler employees over the long term.
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The current covid-19 pandemic isn't the only reason why it's so
important to have a sustainable health and occupational safety
management system in place, as the demographic transforma-
tion and advances in technology are also leading to new chal-
lenges. As a responsible employer, we seek to ensure that our
employees can work in a safe and healthy environment. We uti-
lize a holistic health and occupational safety management sys-
tem in order to prevent work accidents and work-related ill-
nesses. The focus here is mainly on preventive measures that
we continuously review and develop further.
Our occupational safety strategy sets high standards for the
design of workplaces and work processes. Moreover, we are
systematically striving to reduce occupational and health-
related risks. The Daimler Group operates on the basis of glob-
ally uniform guidelines for risk prevention. Our occupational
health and safety policy and our occupational health and safety
guidelines serve as overarching, internationally valid Group
regulations. They are based on international standards and
national laws and emphasize the managers' obligation to act
responsibly. However, they also underscore the employees'
own responsibility. We use internal due diligence audits to gen-
erally check every five years whether safety standards are met
at our production locations. The audits didn't take place during
the reporting year, due to the covid-19 pandemic. Various loca-
tions have their occupational safety and health management
systems certified independently by external certification agen-
cies in accordance with the ISO 45001 (formerly OHSAS
18001) standard in addition to the safety due diligence audits.
Approximately 40% of our employees at production locations
(about 100,000 employees) work with an occupational safety
management system certified according to ISO 45001/OHSAS
18001.
Since 2019 Daimler has also been committed to achieving
Vision Zero. This global campaign aims to prevent job-related
accidents and illnesses while also promoting employees'
health, safety and well-being. In the reporting year 2020 we
introduced a global accident documentation system, for exam-
ple. This system includes an integrated international digital
reporting process that enables the rapid documentation of all
covid-19 cases among the employees and thus the rapid fol-
low-up of possible contacts by the plant medical service. We
also derive standardized accident statistics from our produc-
tion sites while taking all applicable data protection regulations
into account. These statistics are regularly reported.
Occupational health and safety issues throughout the Group
are managed by the Health & Safety unit, which is part of
Human Resources and under the direction of the Chief Group
Physician of Daimler AG, Mercedes-Benz AG and Daimler Truck
AG. All key occupational health and safety issues are discussed
on a regular basis with works council representatives and man-
agement representatives at all levels of the company. All deci-
sions resulting from such discussions are made jointly.
The Daimler AG Supervisory Board is legally required to have a
gender ratio of at least 30% women. The Supervisory Board ful-
fills this requirement as a whole and also in terms of the side
of the Supervisory Board representing the shareholders and
the side representing the employees. At the end of 2020, 25%
of the members of the Board of Management were women.
This means we exceeded the target of 12.5% for the proportion
of women on the Board of Management that the Supervisory
Board defined and whose deadline for achievement was
December 2020. As early as 2006, we had agreed to increase
the share of women in management positions, and we regularly
check to see how we are progressing with regard to our goals.
Additional information about the targets and results can be
found in the chapter Corporate Governance.
Investors and analysts - and governments and societies as
well - are increasingly calling on the automotive industry to
ensure greater sustainability throughout the entire supply
chain. Daimler is convinced that companies that want to be
sustainable must also focus on their supply chain. That's
because we procure raw materials indirectly, and components
and services directly, from all over the world. Our goal is to
combine achieving business success with acting responsibly
toward the environment, people and society - and doing so
along the entire value chain. We correspondingly expect our
direct suppliers to display the same sense of responsibility by
complying with environmental and social standards.
In 2020 for its employees around the world the Group spent:
78
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Materiality
We conducted a comprehensive materiality analysis in 2020 in
order to determine which sustainability issues are particularly
relevant for Daimler and its stakeholders. The analysis
addressed both existing strategic areas of action and funda-
mentals, as well as further potential significant sustainability
issues and trends. The analysis consisted of four components:
a document analysis, a large-scale online stakeholder survey,
interviews with experts and an SDG impact assessment.
In a subsequent step, the sustainability issues that resulted
from this analysis were assessed with regard to assets, finan-
cial position, profitability and business development in order to
define the topics for this non-financial declaration.
Sustainable corporate governance
In accordance with our sustainable business strategies, we are
managing our activities in the six areas of action by means of
an internal reporting process that uses detailed scorecards.
Our management and organizational structures support this
process by means of clear lines of responsibility in all business
divisions.
The Group Sustainability Board (GSB) is our central manage-
ment body for all sustainability issues and reports to the Board
of Management. The GSB is headed by Renata Jungo Brüngger
(the Board of Management member responsible for Integrity
and Legal Affairs) and Markus Schäfer (the Board of Manage-
ment member responsible for Group Research; also Mercedes-
Benz Cars Chief Operating Officer). Besides performing its
other tasks, the GSB also monitors the progress made in the
six areas of action defined in the sustainable business strate-
gies. This progress is reported in the form of detailed score-
cards that the GSB receives at least once a year. The opera-
tional work is done by the Sustainability Competence Office,
which consists of representatives from the units managed by
the two Co-chairs as well as additional representatives from
Corporate Strategy and Corporate Communications.
We also use the ten principles of the UN Global Compact as a
fundamental guide for our business operations. As a founding
member and part of its LEAD group, we are strongly commit-
ted to the UN Global Compact. Our internal principles and poli-
cies are founded on this international frame of reference and
other international principles, including the Core Labor Stan-
dards of the International Labour Organization (ILO), the OECD
Guidelines for Multinational Enterprises, and the UN Guiding
Principles on Business and Human Rights.
The short-term and medium-term components of the remuner-
ation - the Daimler Company Bonus - have been further devel-
oped for the Board of Management and Level 1-3 managers,
with effect as of January 1, 2020. These components are linked
not only to financial targets but also to sustainability-related
transformation targets and non-financial targets that focus on
employees, customers, integrity and diversity. Further informa-
tion can be found in the Remuneration Report.
Sustainable investment
The volume of managed assets relating to investments made
on the basis of sustainability criteria (ESG criteria) has been
increasing steadily over the last few years. This trend is also
reflected by the increasing number of investors who have com-
mitted themselves to the UN Principles for Responsible Invest-
ment (PRI).
Our sustainable business strategies, with their "Ambition
2039" component for Mercedes-Benz Cars, for example, are
the reason why Daimler is viewed as a sustainable investment
object on the capital market. In 2020 we published a reference
table for climate-related reporting for the first time. Our
approach here corresponds to the recommendations issued by
the Task Force on Climate-related Financial Disclosure (TCFD).
Further information can be found at our website. daimler.
com/documents/investors/presentations/daimler-ir-tcfd-
en-20200307.pdf
In 2020, we developed a Group-wide Green Finance Frame-
work in order to more effectively position Daimler as a sustain-
able investment object and enable us to exploit the opportuni-
ties sustainable financing offers for corporate development.
The Green Finance Framework makes it possible for us to
finance investment in sustainable technologies through bonds
and loans, for example. On the basis of the Green Finance
Framework, Daimler issued a green bond with a volume of
€1 billion at the beginning of September 2020. The framework
is also based on the International Capital Market Association's
(ICMA) voluntary process guidelines - the Green Bond Princi-
ples. The Green Finance Framework was presented in a virtual
roadshow and has attracted a great deal of interest among
investors. The framework has also received certification with
the highest rating - "Dark Green" - from the Center for Inter-
national Climate and Environmental Research (CICERO).
Tax information
Daimler views itself as a responsible company that endeavors
to meet all global tax obligations while taking into account its
corporate values and its social and ethical responsibility.
Within the framework of our corporate tax strategy, we espe-
cially pursue the following principles:
-
-
We ensure that Group companies meet all of their tax obliga-
tions and integrity standards through the use of suitable
measures such as efficient, high-quality and reliable exper-
tise, processes, systems, methods and controls.
Establishment of an active risk management system for the
Daimler Group and its relevant employees through the appli-
cation of an adequate Tax Compliance Management System
(Tax CMS).
In line with the principle of being a "good corporate tax citi-
zen", we conduct legal and proactive, but non-aggressive,
tax planning activities on the basis of economic consider-
ations ("tax follows business"). We also strive to work coop-
eratively, transparently and constructively with the tax
authorities, whereby we maintain our legal standpoints and
defend our interests wherever we believe such actions are
appropriate and legitimate.
74
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More detailed information on “Sustainability at Daimler" can
also be found in the new Daimler Sustainability Report for
financial year 2020, which will be available on the Group's web-
site from the end of March 2021. daimler.com/sustainabil-
ity
We work closely together with our partners in industry, govern-
ment and society at large in order to achieve our objectives.
We also rely on the dedication and commitment of our employ-
ees, who are helping to shape the transformation. We have
defined three enablers, or principles, that are crucial for
achieving success in the six areas of action: integrity, people
and partnerships.
Human rights: We have assumed responsibility for respect-
ing and upholding human rights along our automotive value
chain.
Data responsibility: Our future will consist of sustainable,
data-based business models. They will enable us to focus on
our customers' needs and handle all data responsibly.
B❘ COMBINED MANAGEMENT REPORT | DAIMLER AG 71
Risks and opportunities
The business development of Daimler AG as the operational
and strategic management holding company mainly depends
on the development of its worldwide subsidiaries and is there-
fore- through the profit and loss contributions from subsidiar-
ies and associated companies - fundamentally subject to the
same risks and opportunities as the Daimler Group. Daimler
AG generally participates in the risks of its subsidiaries and
associated companies in line with the percentage of its respec-
tive equity interest. The risks and opportunities are described
in the Risk and Opportunity Report. Risks may additionally
arise from relations with subsidiaries and associated compa-
nies in connection with statutory or contractual obligations (in
particular with regard to financing), as well as from the impair-
ment of investments in subsidiaries and associated companies.
Based on the criteria stated in the Risk and Opportunity
Report, the possible impact and probability of occurrence of
the risks are assessed as medium.
Furthermore, pursuant to Section 133 Subsections 1 and 3 of
the German Transformation Act (UmwG), Daimler AG is jointly
and severally liable for liabilities of €14.3 billion that were
transferred to Mercedes-Benz AG and Daimler Truck AG within
the framework of "Project Future." According to the current
appraisal, due to the assessment of the creditworthiness of
Mercedes-Benz AG and Daimler Truck AG, an actual cash out-
flow for Daimler AG is considered to be unlikely.
Outlook
The financial position, cash flows and profitability of Daimler
AG depend on the business development and performance of
its operating subsidiaries, in whose development it participates
through profit-and-loss-transfer agreements and dividend dis-
tributions.
For the year 2021, we expect Daimler AG to post a significantly
higher net profit than for the year 2020. In particular, we antici-
pate improved financial income resulting from higher dividend
distributions and profit transfers from major subsidiaries. Pos-
sible effects from the Daimler Truck spin-off are not included
in the outlook.
In addition, due to the interrelations between Daimler AG and
its subsidiaries, we refer to the statements in the chapter
O Outlook, which largely reflect our expectations also for the
parent company.
72
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Non-Financial Declaration
The corporate tax strategy defines the limits of our actions
here, and this strategy is further specified and implemented by
means of organizational and content-related policies, provi-
sions and instructions.
We publish the non-financial declaration in accordance with
the provisions of the German Commercial Code (HGB). They
apply to Daimler AG (Sections 289b-289e HGB) and the
Daimler Group (Sections 315b, 315c HGB). The non-financial
declaration contains the main information on the aspects of
environmental, employee and social matters, combating cor-
ruption and bribery, and respect for human rights. The informa-
tion provided in this declaration is presented in conformity
with the GRI Standards of the Global Reporting Initiative, inso-
far as this complies with applicable law. Some aspects are pre-
sented in accordance with internal guidelines and definitions.
You can find additional information about our business model
in the chapter O Business Model, while the risks connected
with the aspects in this report can be found in the Risk
and Opportunity Report.
At Daimler, sustainability means generating sustainable eco-
nomic, environmental and social value added for all of our
stakeholders: i.e. our customers, investors, employees, busi-
ness partners, and society as a whole. We therefore design the
solutions we offer today to be central components of mobility
systems that will be climate-neutral and sustainable tomorrow.
Together with players from industry, government and society
we thus create value added for all of society while also laying
the foundation for our future business success. This holistic
strategic approach applies not only to our own products and
manufacturing locations but also to our entire upstream and
downstream value chain.
Our sustainable business strategy
The foundation for our approach here is provided by the sus-
tainable business strategies of our divisions, which were
adopted by the Board of Management in 2019. Since that time,
our sustainability and business strategies have merged and
there is no longer any distinction between them. This means
that rather than being a supplement to our business strategies,
sustainability issues are instead an integral component of
them. Just as relevant as promising business targets are the
ambitions, goals and measures that we are implementing so
that Daimler can increase the positive impact it is having on
society and the environment.
Among other things, we focused extensively on the 17 Sustain-
able Development Goals (SDGs) defined by the United Nations
when we formulated our strategic goals, with special emphasis
placed on SDGs 8, 9 and 11-13.
We also orient ourselves on international frameworks, the
needs of our external and internal stakeholders and global
trends. We used these points of reference to derive Group-
wide areas of action and to define areas of responsibility as
well as business-specific targets, processes and measures.
More specifically, our strategic objectives involve the following
six areas of action:
-
Climate protection and air quality: Plans call for our new
vehicle fleet to be CO2-neutral by 2039, when it should no
longer have any relevant impact on air quality in inner cities.
Resource conservation: We want to decouple resource con-
sumption from business volume growth.
Livable cities: We are improving the quality of life in cities
through our leading mobility and transport solutions.
Traffic safety: We are working to make our vision of acci-
dent-free driving a reality as we develop automated driving
systems while also taking social and ethical issues into
account.
Sustainability at Daimler
The tax policies define responsibilities, tasks and obligations
and also contain specific provisions for ensuring that legal
requirements are met and thus raise the awareness within the
Daimler Group for tax issues. Our Code of Conduct stipulates
that all intentional violations of internal or external tax provi-
sions, as well as any failure to make corrections to procedures
performed in an erroneous manner, are to be reported and
investigated in line with our internally valid rule violation poli-
cies. For further information also see the chapter
and Compliance.
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The corporate tax department has established a Tax CMS in
order to ensure tax compliance. A Tax CMS is a separate sub-
unit of the Compliance Management System. The Tax CMS also
operates an active tax-risk management system and monitors
and checks the fulfillment of tax obligations. The goal of this
consistent Group-wide risk management system is to effec-
tively identify and reduce tax risks at the Daimler Group, and
thus the associated personal risks that may be faced by the
employees active in this area. This comprises numerous mea-
sures that include a tax risk review and the incorporation of
tax risk issues into the internal control system (ICS) and the
Group-wide risk management process in line with our risk
management policies. We did not become aware of any mate-
rial violations of tax laws during the reporting year.
The ultimate goal at Daimler Trucks & Buses is to achieve CO2-
neutral transport on the road by 2050. As early as 2022, we
want our vehicle portfolio to additionally include series-pro-
duced vehicles with battery-electric drive systems in the main
sales regions Europe, the United States and Japan. In the sec-
ond half of the decade, we plan to augment our vehicle portfo-
lio with series-produced fuel cell vehicles that run on hydro-
gen. As it will take about ten years to completely renew a fleet
by 2050, another of our goals is to only offer new vehicles that
are CO2-neutral in driving operation ("tank-to-wheel") in
Europe, Japan and North America by 2039. Daimler's manage-
ment is responsible for setting strategic goals, including tar-
gets for reducing our CO2 emissions, and for monitoring the
progress made in achieving these goals.
We are developing all-electric and electrified model variants
for all of our vehicle models - from cars and vans to trucks and
buses. Our development focus is battery-electric mobility for
cars and all-electric drive systems with batteries or fuel cells
for trucks and buses. The Product Steering Board (PSB) is
responsible for monitoring the development of the CO₂ emis-
sions of the car fleet in markets in which such emissions are
regulated. It is also responsible for providing forecasts. In its
evaluations, the PSB takes into account the increasing degree
of vehicle electrification and the changes that have been made
to legal requirements, for example those related to the intro-
duction of the new WLTP (Worldwide Harmonized Light Vehi-
cles Test Procedure). The Board of Management then decides
which measures need to be implemented. On the market side
of the equation, price and volume control measures can also
affect our ability to achieve our targets over the short term. For
this reason, such measures are discussed with the Board of
Management within the framework of its regular reporting on
the current state of CO 2 fleet compliance.
In the reporting year, the average CO2 emissions of our total
passenger car fleet in Europe (European Union, United King-
dom, Norway and Iceland) decreased to an estimated
104 g/km as measured on the basis of legal regulations
(NEDC, including vans that are registered as passenger cars).
This means that we achieved the CO2 targets in Europe (Euro-
pean Union, United Kingdom, Norway and Iceland) in 2020.
Whereas the CO2 fleet targets were determined on the basis of
the NEDC in 2020, they will be based on the WLTP values in
2021, in accordance with the regulatory requirements. This will
lead to an adjustment of the fuel consumption targets and an
increase of the certification values. Due to their greater rele-
vance, we have for the first time defined the CO2 emissions of
our total passenger new car fleet in Europe as "the most
important" non-financial performance indicator in the report-
ing year 2020. For more information on how we expect the CO₂
emissions of our car fleet in Europe to develop, see the chapter
Outlook.
In the United States, fleet values are regulated by two co-regu-
lating standards for limiting greenhouse gases and fuel con-
sumption in vehicle fleets: the Greenhouse Gas Standard
(GHG) and the Corporate Average Fuel Economy (CAFE) stan-
dards. The GHG fleet figures for the CO2 emissions of Daimler
vehicles in the United States have improved over the last few
years. For the 2020 model year, these figures are 256 g CO2/
mi for the passenger car fleet and 289 g CO2/mi for light
trucks (on the basis of the most recent forecast). Neverthe-
less, we were unable to achieve our average fleet targets of
196 g CO2/mi for the car fleet and 265 g CO2/mi for light
trucks. However, we were able to close the remaining gap by
taking advantage of the flexibility measures specified in the
legislation (including the purchase of external credits).
In China, domestic and imported cars are reported separately
and according to fleet consumption values, unlike in Europe
and the United States. This means the figures for the imported
fleet are the relevant figures for our wholly owned subsidiary
Mercedes-Benz China (MBCL). The target was 6.27 l/100 km;
the figure that was actually achieved was 8.02 1/100 km (pre-
liminary fleet consumption value - the final fleet consumption
value might be better if off-cycle technologies are included).
We will purchase external credits at short notice in order to
close consumption gaps in the fleet's achievement of the tar-
get. We aim to achieve our emission targets in China in the
medium term with our joint venture partner Beijing Benz Auto-
motive (BBAC) by expanding our range of all-electric vehicles
and plug-in hybrids.
The EU has stipulated a 15 percent reduction of the CO2 emis-
sions of new heavy-duty trucks (>16 t) by 2025 and a 30 per-
cent reduction by 2030 (as compared to 2019/2020). To this
end, the European Commission worked with automakers, sci-
entists and other experts to develop a standardized simulation
program known as VECTO (Vehicle Energy Consumption Calcu-
lation Tool) for all of Europe. VECTO also includes associated
procedures for testing and measuring CO2 emissions and fuel
consumption. Data will be collected from all over Europe and
will be made transparent. We have defined a clear technology
roadmap to enable us to meet the EU's requirements.
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Additional information on climate protection, air quality and
resource conservation can be found in the Daimler Sustainabil-
ity Report, which will be made available at the end of March
2021, on our website: ④ sustainabilityreport.daimler.com
Employee issues
Electrification, autonomous driving, connected urban mobility:
It's not just our products that are changing fast - lots of things
in the company are changing too. We are digitalizing our value
creation processes - and thus our work. Our employees will
need to be able to successfully address a variety of challenges
in the digital world of the future, and it is our stated goal to
ensure they will be able to do so. An open attitude regarding
the digital transformation and digital skills, along with a diverse
and inclusive corporate culture, form the basis for achieving
this goal. That's because only in a culture marked by respect
and trust can all employees unlock their full potential - and
that is the prerequisite for a sustainable digital transformation.
Our employees are the key to our Group's success. Around
288,500 people promote this success worldwide by contribut-
ing their expertise and ideas to our work processes and by
helping to make improvements and create innovations. Particu-
larly in times of change as we are experiencing it today,
respectful and trusting cooperation between the workforce
and management is extremely important. This process of
transformation is affecting not only our products but also our
workplaces. In order to ensure that we remain competitive
over the long term, we want to equip our employees with the
skills they need and help them address the challenges associ-
ated with the transformation.
Our Group-wide employee survey is a key indicator of where
we currently stand from the point of view of our employees and
what we need to do to improve the company in the future. We
conduct the survey every two years, most recently in 2018
after it had been fundamentally reworked. We were unable to
carry out the employee survey in 2020 due to the covid-19
pandemic, but we plan it in 2021.
Codetermination
We structure our decision-making processes in a manner that
ensures transparency for our employees, and we also enable
our employees to participate in decision-making processes.
We work together with our employees as partners, respect
their interests, and get them actively involved in the company.
Our policies and company agreements establish rules for how
we take on responsibility in our employee relationships.
We have issued our own Group-wide Principles of Social
Responsibility, which are based on the International Labour
Organization's (ILO) work and social standards. We established
our whistleblower sytem BPO (Business Practices Office) a
number of years ago in order to ensure that we can employ a
fair and adequate approach to investigating reports on inci-
dents, especially those that pose a high risk to the company
and its employees. The BPO receives reports of suspicious
cases and directs the subsequent investigations. High-risk rule
violations include, for example, offenses relating to corruption,
breaches of antitrust law, and violations of Anti-Money Laun-
dering regulations, as well as violations of binding technical
provisions and environmental protection laws. See Integ-
rity and Compliance.
Furthermore, Daimler recognizes its social responsibilities and
the ten principles on which the UN Global Compact (UNGC) is
based. As a participant in the UNGC, we commit ourselves,
among other things, to respecting key employee rights ranging
from the provision of equal opportunities to the right to receive
equal pay for equal work.
Corporate management and the employees' association main-
tain an ongoing dialog. The rights of our employees are defined
in a number of plant and company-wide agreements. These
agreements address topics such as mobile working, family
leave and home health care.
For example, employees at Daimler AG, Mercedes-Benz AG,
Daimler Truck AG and Daimler Brand & IP Management GmbH
& Co. KG have been given a job-security guarantee for the
period until 2029. In addition to this agreement, corporate
management and the employees' association concluded a
company-wide agreement in July 2020 that will make it possi-
ble to reduce labor costs in the period until the end of Decem-
ber 2021. This agreement was concluded in response to the
various challenges associated with both the transformation of
the automotive industry and the covid-19 pandemic. The com-
pany-wide agreement applies to all employees at Daimler AG,
Mercedes-Benz AG, Daimler Truck AG and Daimler Brand & IP
Management GmbH & Co. KG, as well as to staff at Daimler
Gastronomie GmbH in Germany. Further information on the
company-wide agreement can be found at ②daimler.com/
investors/reports-news/financial-news/20200728-secure-
employment-and-profitability.html
Our employees have the right to organize themselves in labor
unions - irrespective the freedom of association is not legally
protected. In this regard, we work together constructively with
the employee representatives and the trade unions. Important
partners here include the local works councils, the European
Works Council and the World Employee Committee (WEC). Col-
lective bargaining agreements exist for the majority of our
employees throughout the Group. Such agreements apply for
all of the non-exempt employees at Daimler AG, Mercedes-
Benz AG, Daimler Truck AG and other units at the Group.
Appropriate remuneration
We remunerate work in accordance with the same principles at
all Group companies around the world. Our Corporate Com-
pensation Policy, which is valid for all groups of employees,
establishes the framework conditions and minimum require-
ments for the design of the remuneration systems. Among
other things, it stipulates that the amount of the remuneration
is determined on the basis of the requirements of the job pro-
file in question (taking into account, for example, the person's
knowledge, expertise, responsibilities and decision-making
authority) and where appropriate performance. It does not
take account of gender, origin or other personal characteris-
tics. During internal audits, we make random annual checks of
selected aspects of the policy and compliance with them. In
doing so, we also take into consideration local market condi-
tions, because we want to offer our employees salaries and
benefits that are customary in the industry and the respective
markets. We did not become aware of any material violations
of the Corporate Compensation Policy during the year under
review.
Integrity
Our goal for Mercedes-Benz Cars & Vans is to make our entire
new car fleet CO2-neutral by 2039. We plan to achieve this goal
using a holistic approach that includes ambitious targets for all
stages of automotive value creation - from the supply chain to
production, the vehicle use phase, and vehicle disposal and
recycling. We plan to offer our customers several electric vari-
ants in all Mercedes-Benz car segments (from the smart to
large SUVs) by 2022 and to have plug-in hybrids or all-electric
vehicles account for more than 50% of our car sales by 2030.
By 2030, we also plan to reduce the greenhouse gas emissions
of the new vehicle fleet during the vehicle use phase ("well-to-
wheel") by more than 40% as compared to 2018. This target
has been confirmed by the Science Based Targets Initiative.
We have set ourselves the goal of making our fleet of new com-
mercial vans in Europe, Japan and North America CO2-neutral
by 2039. This relates to CO2 emissions in driving operation
("tank-to-wheel").
Approximately one fifth of all greenhouse gas emissions in
Europe are produced as a result of the transport of people and
goods on streets and roads - and that share is rising. We are
taking deliberate measures to counteract this trend and have
made climate protection a core element of our business strat-
egy.
Risk and opportunity management
Risk and opportunity management is a firm component of the
Group-wide planning, controlling and reporting process. It is
designed to support the sustained achievement of corporate
targets and to ensure risk awareness at the Group. Sustainabil-
ity aspects are integrated into the Group-wide risk manage-
ment process at Daimler. They are understood as conditions,
events or developments involving environmental, social or gov-
ernance factors (ESG), the occurrence of which may have an
actual or potential impact on the Daimler Group's profitability,
cash flows and financial position, as well as on its reputation.
ESG-related risks and opportunities in accordance with the
CSR Directive Implementation Act (CSR-RUG) can be found in
the respective categories of the Risk and Opportunity Report
according to their cause. In addition, legal risks or social viola-
tions by partners and suppliers can have a negative influence
on the reputation of the Daimler Group, on the environment
and on the employees of partner companies and suppliers. As
one of the basic principles of corporate activity, Daimler there-
fore pays particular attention to compliance with legal and eth-
ical rules - also when selecting partners and suppliers. Further
information can be found in the Risk and Opportunity
Report.
Sustainability in the supply chain
€17.622 billion on wages and salaries
Our vehicles generally contain several thousand parts and
components, and our supply chain is therefore complex. It
comprises around 60,000 direct suppliers for production and
non-production materials, with most of them based in Europe,
North America and Asia. These suppliers in turn have sub-sup-
pliers, and sometimes a supply chain can contain up to seven
or eight sub-levels, with additional sub-suppliers on each level.
With every innovation and every market development, the sup-
ply chain dynamically develops further - and this also occurred
during the reporting period.
We use a variety of measures and concepts in order to ensure
the sustainable management of our supply chain. These
include supplier screenings, audits, risk-based due diligence
analyses, qualification modules for production material suppli-
ers and workshops with selected service providers. Our goal
here is to ensure compliance with social standards and envi-
ronmental regulations on the one hand and greater transpar-
ency in the supply chain on the other.
Our three procurement units - Mercedes-Benz Cars Procure-
ment and Supplier Quality, Global Procurement Trucks and
Buses, and International Procurement Services - work
together to ensure responsible procurement of materials and
services.
For us,
the Paris Agreement represents more than just an obli-
gation, as our commitment to its targets stems from our funda-
mental convictions. We therefore believe that it is our mission
to develop technical innovations that will lead to CO2-neutral
mobility around the world.
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During the year under review, we tightened our sustainability
requirements for suppliers even further and revised our con-
tractual terms accordingly. For example, we now require our
direct suppliers to establish processes that ensure the fulfill-
ment of human rights due diligence obligations in accordance
with the provisions of the UN Guiding Principles on Business
and Human Rights and the relevant OECD guidelines and prin-
ciples. We also reserve the right to examine and audit these
processes. In addition, suppliers are required to inform us of
any human rights risks and countermeasures identified. They
must also disclose to us upon request any risk hotspots that
exist along their supply chain. We have also revised our con-
tractual terms with regard to our specific environmental
requirements. For example, direct suppliers that provide pro-
duction materials to the Mercedes-Benz Cars and Vans division
must now disclose certain environmental figures - including
their CO2 emissions, energy and water consumption, and the
amount of waste they produce, for example.
The Daimler Supplier Sustainability Standards serve as the
guideline for our sustainable supply chain management sys-
tem. The Supplier Sustainability Standards define our require-
ments for working conditions, respecting and upholding human
rights, environmental protection, safety, business ethics and
compliance. We demand that our direct suppliers recognize
these sustainability standards and communicate them to their
employees and to their upstream value chains. We also expect
them to check that the standards are complied with. sup-
plier-portal.daimler.com/docs/DOC-1458
ance.
Environmental issues
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In 2020 a total of 658 on-site inspections were conducted at
suppliers of production materials. By way of exception, virtual
audits were also made, due to the covid-19 pandemic. For fur-
ther information also see the chapter Integrity and Compli-
Since 2018, we have been cooperating with the "Drive Sustain-
ability" initiative on the implementation of measures to make
suppliers in various focus countries such as India and Argen-
tina more aware of the importance of sustainability, and we
also provide such suppliers with helpful information on this
issue. We select the focus countries jointly with the initiative.
However, due to the covid-19 pandemic, no physical training
modules took place in 2020. Instead, we developed a concept
for a new e-learning program.
During the year under review, our on-site inspections at direct
suppliers to Mercedes-Benz Cars & Vans, Daimler Trucks &
Buses and our International Procurement Services unit uncov-
ered no specific suspected cases of child labor or forced labor,
nor were there any indications of violations against the right to
collective bargaining or freedom of association. See the chap-
ter Integrity and Compliance.
76
Our complaint management process enables individuals to
draw attention to possible human rights violations at suppliers.
In this context, we work together closely with the World
Employee Committee. We also investigate specific cases that
NGOs bring to our attention.
In addition, we examine our existing direct suppliers within the
framework of risk analyses conducted on a regular basis.
Among other things, we conduct annual database research to
identify any violations of our sustainability and compliance
rules. This is part of our supplier screening process.
For further information on supplier management, see the
Daimler Sustainability Report, which will be published at the
end of March 2021.
In the area of services, we implement additional measures to
raise awareness of human rights issues in particular. For exam-
ple, a cross-functional team from our procurement units meets
with suppliers in Good Practice Sharing Workshops, which
have also been held online since the spring of 2020. The work-
shops promote an open and constructive exchange of ideas
and experiences among the participants, and they also provide
information on what we expect from our business partners.
We systematically follow up on all reports of violations and
suspected violations in the supply chain. In cases where we
identify a need to take action, we implement the necessary
measures. If we become aware of a suspected violation, we
first bring together all the available information and ask the
suppliers to respond to the allegations. We then assess the
facts of each case and take any necessary measures. This may
mean that we will work with the supplier in question to solve
the problem. However, it may also mean that we will terminate
the business relationship with that supplier.
For the long-term variable component of remuneration (PPSP)
the Supervisory Board sets an amount to be granted for the
upcoming financial year in the form of an absolute amount in
euros and sets the respective performance targets. The uni-
form approach for the targets/criteria and the PPSP system
has been in force for the Board of Management and for manag-
ers since it was introduced in 2005.
After the end of each financial year, the amount of the annual
bonus is determined by measuring the achievement of the
financial, non-financial and transformation targets by the
Board of Management as a whole. The Presidential Committee
then calculates the annual bonus and submits its proposal to
the Supervisory Board for its approval.
The amount to be paid out for the long-term variable remunera-
tion component (PPSP) is determined at the end of the four-
year plan period and approved for payment after the Presiden-
tial Committee and the Supervisory Board have been informed.
IV. Compliance
risks
V. Compliance
program
Our compliance and legal affairs organizations are structured
divisionally, regionally and along the value chain. As a result,
they can provide effective support – for example, by means of
guidelines and advice. Contact persons are available to each
function, division and region. In addition, a global network of
local contact persons makes sure that our compliance stan-
dards are met. The contact persons also help the management
at the Group companies implement our compliance program at
their respective sites.
B.36
In order to ensure an independent external assessment of our
Antitrust Compliance Program, KPMG AG Wirtschaftsprü-
fungsgesellschaft audited the Compliance Management Sys-
tem for antitrust law in accordance with the 980 standard of
the Institute of Public Auditors in Germany. This audit for anti-
trust law, which was based on the principles of appropriate-
ness, implementation, and effectiveness, was successfully
completed at the end of 2016. This program is oriented to
national and international standards as well as the regulations
and the constant evolution of legal practice for ensuring fair
competition. The program establishes a binding, globally valid
Daimler standard that defines how matters of antitrust law are
to be assessed and how compliance with all of the local and
international antitrust laws in force can be ensured. By means
of a variety of communication and training measures, a central
advisory hotline, guidelines and practical support as well as
local legal advisors, we help our employees around the world
to recognize situations that might be critical from an antitrust
perspective and to act in compliance with all regulations. The
results of our annual compliance risk analysis serve as the
basis for the formulation of measures that address antitrust
risks. In addition to monitoring the management activities that
fall within the framework of Group management duties, the
legal department conducts corporate audit monitoring mea-
sures in order to assess and safeguard the implementation of
each respective measure. The assessments make it possible to
continuously improve our Antitrust Compliance Program.
Antitrust compliance
Daimler has committed itself to fighting corruption - because
corruption is harmful to fair competition, society and our
Group. Our anti-corruption measures extend beyond compli-
ance with national laws. We also adhere to the rules of the
OECD Convention on Combating Bribery of Foreign Public Offi-
cials in International Business Transactions (1997) and the
United Nations Convention against Corruption (2003). Our
anti-corruption compliance program is based on our Group-
wide CMS. The CMS Anti-corruption was audited in accor-
dance with the 980 standard of the Institute of Public Auditors
in Germany by KPMG AG Wirtschaftsprufungsgesellschaft. This
audit, which was based on the principles of appropriateness,
implementation and effectiveness was successfully completed
at the end of 2019.
Anti-corruption compliance
If changed risks or new legal requirements call for adjust-
ments, we adapt our CMS accordingly. The Group companies
implement the respective improvement measures on their own
authority. They also regularly monitor these measures to deter-
mine their effectiveness and continually inform the responsible
management committees about the results of their monitoring
process.
We monitor the processes and measures of our CMS annually
and conduct analyses to find out whether our measures are
appropriate and effective. For these activities, we rely on infor-
mation about the Group companies as well as additional locally
gathered information. We also monitor our processes regularly
on the basis of key performance indicators such as the dura-
tion and quality of individual processes. To determine these
indicators, we check, among other things, whether formal
requirements are being met and whether the content is com-
plete. We also take into account the knowledge gained through
internal as well as independent external assessments.
Monitoring and improvements
We offer extensive compliance training courses that are based
on our Integrity Code - for example, courses for employees in
administrative units and in the compliance and legal affairs
departments as well as for members of the Supervisory Board
and the executive management. The contents and topics of the
training courses are tailored to the roles and functions of the
respective target group. We regularly analyze the need for our
training program, expand or adapt it as necessary and conduct
evaluations.
Communication and training
Our global Daimler Sustainability Standards apply in this area.
On the basis of these standards and our Integrity Code, we
make available to each of our suppliers and sales partners a
specific Compliance Awareness Module developed with their
activities in mind. This module is intended to sensitize them to
current integrity and compliance requirements such as those
related to anti-corruption measures and technical Compliance.
Through these measures we also offer our business partners
assistance for dealing with possible compliance risks.
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Compliance on the part of our business partners
We expect not only our employees to comply with laws and
regulations. We also require our sales partners and suppliers
to adhere to clear compliance requirements, because we
regard integrity and conformity with regulations as a precondi-
tion for trusting cooperation. In the selection of our direct
sales partners and in our existing sales partnerships, we there-
fore ensure that our partners comply with laws and regulations
and observe ethical principles. In financial year 2020, we
refined and made full use of our globally standardized process
for the effective and efficient assessment of all new sales part-
ners and the step-by-step re-evaluation of our existing sales
partners (Sales Business Partner Due Diligence Process). Our
continuous monitoring in this area is designed to ensure that
we can identify possible integrity violations by our sales part-
ners. We also reserve the right to terminate cooperation with,
or terminate the selection process for, any sales partner who
fails to comply with our standards. In addition, we work with
our procurement units to continuously improve our processes
for selecting and cooperating with suppliers.
A total of 53 new cases were opened in 2020. Overall, 42
cases, in which 66 individuals were involved, were closed "with
merit." In these cases, the initial suspicion was confirmed. Of
these cases, six were in the category "Corruption," two were in
the category "technical Compliance" and eight were in the cat-
egory "Reputational Damage." In 11 cases, accusations of inap-
propriate behavior of employees toward third parties were con-
firmed. Seven cases were categorized as "Damage over
100,000 €" The remaining cases fell into other categories.
With regard to those cases that are closed "with merit," the
company decides on appropriate response measures in line
with the principles of proportionality and fairness. The person-
nel measures taken in the reporting year 2020 included (writ-
ten) warnings, separation agreements and (extraordinary) ter-
minations.
If the BPO's risk-based initial assessment categorizes an inci-
dent as a high-risk rule violation, the BPO hands the case over
to an investigation unit. The BPO provides support for the sub-
sequent investigation until the case is closed. Examples of
high-risk rule violations include offenses related to corruption,
breaches of antitrust law and violations of anti-money launder-
ing regulations, as well as infringements of binding technical
provisions or environmental protection regulations. In an effort
to constantly increase trust in our whistleblower system and
make it even better known to our employees, we use a variety
of communication measures. For example, we provide informa-
tional materials such as country-specific information cards,
pocket guides and an instructional video. We also regularly
inform employees about the type and number of reported vio-
lations and make case studies available on a quarterly basis.
respective unit investigates the incident and deals with the
case on its own authority. Examples of low-risk rule violations
include theft, breach of trust, and undue enrichment valued at
less than €100,000 - if the violation does not fall into the cate-
gory of corruption.
The Business Practices Office (BPO) whistleblower system
enables all employees, business partners and external whistle-
blowers to report misconduct anywhere in the world. The BPO
is available around the clock to receive information, which can
be sent by e-mail or normal mail or by filling out a special
online form. External toll-free hotlines are also available in Bra-
zil, Japan, South Africa and the United States. Reports can also
be submitted anonymously if local laws permit this. In Ger-
many, whistleblower reports can also be submitted to an exter-
nal neutral intermediary in addition to the BPO. The informa-
tion provided to the whistleblower system BPO enables us to
learn about potential risks to the company and its employees
and thus to prevent damage to the company and its reputation.
A globally valid corporate policy defines BPO procedures and
the corresponding responsibilities. This policy aims to ensure a
fair and transparent process that takes into account the princi-
ple of proportionality for the affected parties, while also giving
protection to whistleblowers. It also defines a standard for
evaluating incidents of misconduct and making decisions
about their consequences. If the initial assessment of an inci-
dent categorizes it as a low-risk rule violation, the BPO hands
the case over to the responsible unit - for example, the HR
department, Corporate Security or Group Data Protection. The
The whistleblower system BPO
Our compliance program comprises principles and measures
that are designed to minimize compliance risks and prevent
violations of laws and regulations. The individual measures are
based on the knowledge gained through our systematic com-
pliance risk analysis. We focus, among other things, on the fol-
lowing aspects: the continuous raising of awareness of compli-
ance issues, the systematic tracking of information received
regarding misconduct and the formulation of clear standards
for the behavior of our business partners. We address all of
these points in greater detail in a later section.
Compliance program
Technical Compliance
For us,
technical Compliance means adhering to technical and
regulatory requirements, standards and laws. In doing so, we
take into account the fundamental spirit of these laws and reg-
ulations and we adhere to internal development requirements
and processes. Our objective is to identify risks within the
product creation process (product development and certifica-
tion) at an early stage and to implement preventive measures.
For this purpose we have established a technical Compliance
Management System (tCMS) in our automotive divisions. Its
objective is to safeguard compliance with all legal and regula-
tory requirements throughout the entire product development
and certification process. The tCMS defines values, principles,
structures and processes in order to provide our employees
with guidance and orientation especially with regard to chal-
lenging questions on how to interpret technical regulations.
Measures such as the Integrity Code, supportive points of con-
tact and the "Speak Up" and "Judgement Calls" commitment
statements that have been specially defined for the develop-
ment units offer support in this area. The commitment state-
ments provide employees with a basis for a common under-
standing of responsible behavior in the product creation
process.
In order to ensure an independent external assessment of our
tCMS, KPMG AG Wirtschaftsprüfungsgesellschaft audited the
tCMS with focus on emissions in accordance with the 980
standard of the Institute of Public Auditors in Germany. This
audit with focus on emissions was based on the principles of
appropriateness, implementation and effectiveness, and was
successfully completed at the end of 2020.
86
By the end of 2020 we had assessed 24% of all high-risk raw
materials.
to:
Within the framework of an advanced risk assessment, we
have identified 27 service areas and 24 raw materials whose
use, extraction and further processing pose potentially critical
human rights risks. Our objective for the period through 2028
is to define and implement appropriate measures for address-
ing 100% of our production raw materials that harbor a higher
risk of human rights violations. By the end of 2020, we had
planned to assess 20 percent of all highest-risk raw materials.
This figure is set to rise to 70 percent by 2025. Improving the
transparency and traceability within our supply chains is funda-
mental to these efforts. Through these improvements we aim
to identify potential risks and negative effects early on. Our
assessment process basically consists of three steps. We want
We want to continue to make recognizable progress on this
important topic. Respect for and protection of human rights is
therefore one of the focal topics of our sustainable business
strategies. We have set measurable goals that we consistently
pursue.
The key human rights risks that we have identified for the sup-
ply chain are reflected in the standards for our suppliers
(Daimler Supplier Sustainability Standards) and, among other
things, encompass child labor, forced labor and employee
rights. In a more in-depth risk analysis, we also further specify
and delimit raw material-specific focal topics. The specific
risks can differ, depending on a product's processing stage
within the supply chain (e.g. mine, refinery, processing plant or
plantation). For example, we have identified child labor, health
and safety as the most urgent human rights risks for cobalt,
while the risks associated with the procurement and process-
ing of lithium are largely related to rights that are affected by
the extensive use of water at the procurement locations. We
are also closely cooperating with relevant stakeholders in raw
material supply chains in order to help improve working condi-
tions and prevent human rights violations in raw material min-
ing operations. Important platforms here include raw material
initiatives such as the Initiative for Responsible Mining Assur-
ance (IRMA), which we joined during the reporting year. They
provide cross-sector mechanisms such as auditing standards
and certification systems that help, among other things, to
make it possible to trace the origins of materials such as
cobalt, iron ore and bauxite, which is necessary for producing
aluminum.
We pay special attention to our upstream supply chain of pro-
duction materials. Here it is especially important to identify
and avoid potential human rights risks and negative effects
early on.
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During the reporting period, this newly developed method was
used for the first time at high-risk Group companies. The local
compliance officers, who are part of our global compliance
network, provide assistance for the human rights survey at the
Group companies. In order to obtain useful insights from the
survey, the compliance experts were trained in advance in an
in-depth online training that was tailored to their needs. This
training enabled them to recognize the human rights risks of
our focal areas. It allowed us to identify the specific local risks
and explore them further in discussions with the compliance
officers of the respective Group companies. The results of this
more in-depth risk analysis are correspondingly documented
and incorporated into the development of targeted measures
for minimizing human rights risks. We plan to continuously
refine this analysis in the years ahead and to expand it to all
Group companies in which we have a majority stake. Coupled
with this is the development of risk-specific packages of mea-
sures that we will supply to the respective Group companies in
line with their risk classification. They provide a systematic
means of preventing human rights risks.
As part of the integration of the HRRS into the Group-wide
Compliance Management System, the Group companies in
which Daimler has a majority share are examined for possible
human rights-related risks, analogously to other compliance
fields such as anti-corruption. In the first step, we classify the
Group companies according to fixed criteria, including country-
specific and business-specific risks. The focus is on the most
important human rights issues that have been identified for the
Group companies, including employee rights, diversity and
safety. In the process, we take into account fundamental
human rights standards such as those defined in the Universal
Declaration of Human Rights and those of the International
Labour Organization (ILO). On this basis we conduct a more
thorough analysis every year with the help of a survey regard-
ing human rights and use the findings to derive packages of
risk-specific measures.
We examine and evaluate our Group companies and corporate
departments systematically each year in order to minimize
compliance risks. In this process we use, for example, centrally
available information about the Group companies and corpo-
rate departments, such as revenue, business models and rela-
tions with business partners. If necessary, other locally
sourced information is supplemented. The results of these
analyses are the foundation of our compliance risk control.
The HRRS encompasses four steps: risk assessment, program
implementation, monitoring and reporting. It is designed to
systematically identify and avoid risks and possible negative
effects of our business activities on human rights early on, to
avoid them and, if necessary, to initiate adequate measures. In
addition to protecting the company, the HRRS thus also primar-
ily protects third parties, the so-called rights holders.. External
stakeholders are regularly involved as we continue to expand
the HRRS step by step. Among other things, we hold talks with
international NGOs concerning the human rights risks arising
from the extraction of certain raw materials, and we also orga-
nize the annual Daimler Sustainability Dialogue daimler.
com/documents/sustainability/other/sd2020-overall-plenary-
reports-working-groups-en.pdf). At this event, we annually dis-
cuss and evaluate our progress as well as the challenges that
arise during the implementation of our management approach.
The respective departments then evaluate the results and the
ideas provided by the stakeholders and incorporate them into
their work processes.
As an internationally operating company, we too bear responsi-
bility for ensuring respect for and safeguarding of human rights
along our entire value chain. We actively proceed here and
conduct risk-based and systematic monitoring to ensure that
human rights are upheld at our own companies and our suppli-
ers. In order to procure raw materials in a responsible manner,
we also work together with associations, organizations and
other companies in multiple various projects and initiatives.
Social compliance
Money laundering and the financing of terrorism cause tremen-
dous damage to the economy and society in equal measure.
Even an accusation of money laundering can compromise our
reputation and have financial consequences for us as well as
our shareholders and stakeholders. For this reason, the pre-
vention of money laundering and the implementation of anti-
money laundering measures have been defined as central com-
pliance goals in our Integrity Code. To this end, we employ an
integrated compliance approach. Before we implement mea-
sures to prevent money laundering, we check against current
sanctions lists. On the one hand, through these measures we
prevent criminals from evading supranational and national
sanctions; on the other, we enhance the effectiveness of our
measures to prevent money laundering, the financing of terror-
ism, organized crime and other types of corporate crime.
-
The Data CMS, which combines all Group-wide measures, pro-
cesses and systems for ensuring data compliance, is based on
the existing Daimler CMS. The Data CMS supports the system-
atic planning, implementation and monitoring of compliance
with data protection requirements.
The regulatory requirements relating to data protection have
become significantly more stringent in recent years. The strict
requirements of the General Data Protection Regulation
(GDPR) are valid not only in the European Union but also
beyond it. Meanwhile, many countries all over the world that
are relevant to Daimler's business operations have tightened
up their local data protection laws. We are addressing the
increased regulatory requirements by means of our Group-
wide Data Compliance Management System (Data CMS), which
along with our Data Vision and our Data Culture is a fundamen-
tal component of our overarching Data Governance System.
Connectivity and digitalization will have a major impact on
mobility in the future. The responsible handling and protection
of data that is created and stored by these digital systems is a
top priority at Daimler.
Data compliance
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To ensure that human rights are respected and safeguarded,
we have developed an in-house due diligence approach called
the Human Rights Respect System (HRRS). We use this system
to monitor human rights risks within our own Group compa-
nies, at our direct suppliers (Tier 1) and at suppliers beyond the
Tier 1 level on the basis of potential risks.
Compliance risks
The structure of the reporting lines safeguards the compliance
officers' independence from the business divisions.
In addition, the Vice President & Group General Counsel regu-
larly reports to the Antitrust Steering Committee and the
Group Risk Management Committee. The Chief Compliance
Officer and the Vice President Legal Product & Technical Com-
pliance also report to the Group Risk Management Committee.
Integrity and compliance
We are convinced that companies stay successful in the long
term only if their actions are ethical and legally responsible.
That is especially the case during times of turmoil and transfor-
mation such as those we are experiencing today. That's why
integrity and compliance are top priorities at Daimler.
Integrity management
The automotive industry is in a state of radical change. New
fields of business are developing, and they are requiring com-
panies to reorient themselves. Meanwhile, new technologies
are raising new questions - ethical as well as legal ones. More-
over, the covid-19 pandemic has led to profound transforma-
tions all over the world. In such times of change and uncer-
tainty, value-based action matters more than ever.
We are always striving to be the best. Our goals are to develop
progressive technologies, build outstanding vehicles and offer
smart mobility solutions. This commitment to excellence also
applies to the way we deal with one another, with our custom-
ers and with our business partners. We also want to live up to
our social responsibilities in ways that set benchmarks.
That's why integrity is a central element of our corporate cul-
ture. For us, this involves more than just obeying laws. We also
align our actions with a shared system of values, which include
fairness, responsibility, respect, openness and transparency as
key elements.
How we make integrity part of our daily business activities
Integrity, compliance and legal affairs are combined in a single
executive division at Daimler. The Integrity and Legal Affairs
division supports all of our corporate units in their efforts to
embed these topics in our daily business activities.
Our Group-wide Integrity Code is our shared standard of val-
ues and defines the guidelines for acting with integrity. It is
binding on all employees of Daimler AG and our controlled
Group companies. Employees from a variety of corporate units
all over the world have helped to formulate the Integrity Code.
It is available in ten languages and includes, among other
things, regulations concerning anti-corruption measures, data
management, product safety and compliance with technical
regulations. We most recently updated our Integrity Code in
2019. Our employees can find all the important information
related to the Integrity Code - such as FAQs, points of contact
and contact persons - on the intranet. The main principles
and practices of corporate governance
In our Integrity Code we have also formulated a special set of
requirements for our managers: We expect them in particular
to serve as role models through their ethical behavior and thus
offer guidance for our employees.
Our expenditure of € 8.6 billion on research and development
includes, among other things, R&D expenditure for our safety
measures and concepts.
Our Integrity Management unit is responsible for promoting
and enhancing integrity within our company and creating a
shared understanding of integrity. The goal is to avoid possible
risks due to unethical behavior and thus contribute to our com-
pany's long-term success.
The Infopoint Integrity is the central point of contact for
employees of Daimler AG and the Group companies when they
have questions concerning integrity. The Infopoint works
together with experts for legal and HR issues, data protection,
compliance, as well as diversity or sustainability. It either pro-
vides direct support or connects employees with the appropri-
ate contact partner.
A worldwide network of local contact persons for inquiries
regarding integrity, compliance and legal issues is also avail-
able to our employees. The network evaluates the inquiries
that are raised and, if necessary, initiates the appropriate mea-
sures.
B.37
The Daimler Compliance Management System
VII. Monitoring &
improvement
VI. Communication &
training
I. Compliance
values
II. Compliance
objectives
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These are our long-term goals:
During the reporting year, the European New Car Assessment
Programme (Euro NCAP) issued ratings for driving assistance
systems in a comparison of various vehicle models for the first
time. The current GLE with its driver assistance package
received a rating of "very good." This means that the experts
at Euro NCAP believe that among the vehicles in the competi-
tive field the GLE offers the system that displays the greatest
balance as well as a very high degree of effectiveness.
Our safety measures establish a bridge between active and
passive safety within these four phases – i.e. between acci-
dent prevention (phases 1 and 2) and protection when an acci-
dent occurs (phases 3 and 4).
The Chief Compliance Officer, the Vice President & Group Gen-
eral Counsel and the Vice President Legal Product & Technical
Compliance report directly to the Member of the Board of
Management for Integrity and Legal Affairs and to the Audit
Committee of the Supervisory Board. They also report regu-
larly to the Board of Management of Daimler AG on matters
such as the status of the CMS and its further development, as
well as the whistleblower system BPO.
Involvement of company management
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84
The Daimler Compliance Board provides guidance regarding
overarching compliance topics and monitors activities to see
whether our compliance measures are effective. The Board's
mission is to react promptly to changes in business models
and the business environment, deal with regulatory develop-
ments and continuously enhance the CMS. The Compliance
Board consists of representatives of the compliance and legal
affairs departments. It generally meets four times a year with
additional meetings for cause and is chaired by the Chief Com-
pliance Officer.
III. Compliance
organization
Compliance organization
Through our CMS we aim to promote compliance with the laws
and policies in these areas at our company, to prevent miscon-
duct and to respond appropriately to any violations. The corre-
sponding measures are defined by our compliance and legal
affairs organizations in a process that appropriately takes our
business requirements into account.
The central objectives of our compliance activities are respect
for and protection of human rights, compliance with anti-cor-
ruption regulations, the maintenance and promotion of fair
competition, the compliance of our products with technical
and regulatory requirements, adherence to data protection
laws, compliance with sanctions and the prevention of money
laundering.
The models from Mercedes-Benz Cars repeatedly earn top
marks in safety tests conducted by independent institutes. Of
particular note in this regard are the marks Mercedes-Benz
regularly receives from the American Insurance Institute for
Highway Safety (IIHS). The IIHS rating assesses crash safety
and accident-prevention and lighting systems. The Mercedes-
Benz C-Class and the GLE received the IIHS "2020 TOP
SAFETY PICK+" award for the 2020 model year.
Compliance values and objectives
Our Compliance Management System (CMS)
Value-based compliance is an indispensable part of our daily
business activities at Daimler, and it is firmly embedded in our
corporate culture. Daimler is strongly committed to responsi-
ble and lawful conduct. We expect our employees to comply
with the laws and regulations as well as voluntary self-commit-
ments and to put our values into practice. We have defined
these expectations in a binding form in our Integrity Code.
The main principles and practices of corporate gover-
In 2020 we particularly focused on direct discussions and once
again conducted a variety of dialog events with employees at
all levels of the hierarchy and with external stakeholders. We
conducted all of these events virtually because of the protec-
tive measures in force due to the covid-19 pandemic.
Our employees can also access the Integrity Toolkit via the
Daimler Social Intranet. The Toolkit contains formats for dialog
events, tools for self-reflection, case studies and further infor-
mation about the topic of integrity.
We conduct ongoing knowledge sharing and an open dialog
with our employees to ensure that integrity will remain embed-
ded in our company's daily business over the long term. For
example, during the reporting year we continued to regularly
inform employees about our Integrity Code and its significance
for our daily business activities. We have also continually
addressed the topics of integrity, compliance and legal affairs
in our internal media, such as brochures and films.
Communication at all levels
To gain an impression of current attitudes toward the culture of
integrity at our company, we conducted an “Integrity and Com-
pliance Pulse Check" in 2020 as a Group-wide random sample
survey providing representative results. The results, which
were positive on the whole, show that we have once again
made progress in the ongoing development of our culture of
integrity.
In 2020 we once again initiated a variety of measures related
to integrity. The starting point was the findings of the online
employee survey "Big Picture Integrity," which we had con-
ducted throughout the Group in 2019. The findings showed that
we have laid a good foundation for a culture of integrity at
Daimler. The survey results have a direct influence on the
remuneration of the management.
In addition, we expanded the Integrity Network during the
reporting year. The Integrity Network consists of employees
from the individual companies, divisions and functional divi-
sions of the Daimler Group. Its members regularly share infor-
mation and develop and implement concrete measures in
order to embed integrity even more firmly in our daily business
activities.
We utilize our holistic "Integral Safety" concept in our vehicle
development activities. We first used this concept in the late
1990s to describe how we had divided the utilization of safety
systems into four phases: "Driving Safely," "Dangerous Situa-
tions," "In the Event of an Accident" and "After an Accident."
nance
-
Anti-financial crime compliance
Our objective for the period through 2025 is to review 70% of
all the high-risk production raw materials we use that pose a
high risk of human rights violations and to define any neces-
sary improvement measures.
As a global company, we have set ourselves the goal of ensur-
ing sustainability at our business units and specialist units
around the world. For this reason, we organize Daimler Sus-
tainability Dialogue events in other countries and regions as
well. During the reporting year, more than 300 stakeholders
attended the eighth Daimler Sustainability Dialogue in China,
which was virtual for the first time as well. At the event, they
discussed topics such as green manufacturing, urban mobility
and social responsibility.
In 2020, we established the Daimler Mobility Lab (DML) in Ber-
lin. This is a new platform for a public dialog with citizens, gov-
ernment, business and industry, and NGOs. At the DML, we
discussed current issues with stakeholders and worked with
them to find answers to social and environmental questions.
The focus was on sustainability, electric mobility, digitalization
and urbanization, and the impact these issues have on society.
Various formats were utilized at different locations in Berlin.
These included an internal series of talks on the topic of
"Transformation in the New Normal," as well as panel discus-
sions on "The Future of Urban Mobility in the New Normal."
The Advisory Board for Integrity and Corporate Responsibility
has been an important source of input for sustainability activi-
ties at Daimler since 2012. The board's members - indepen-
dent external experts from the fields of science and business,
as well as from civic organizations - offer us constructive criti-
cism in questions related to integrity and corporate responsi-
bility at Daimler. The board meets at regular intervals and also
holds discussions with members of the Board of Management
and responsible personnel from the specialist units. During the
year under review, the Advisory Board also held a joint meeting
with representatives from the Supervisory Board. The Advisory
Board's members have extensive experience and possess
diverse specialized knowledge regarding environmental and
social policy, various human rights and ethical issues, and the
development of transport, traffic and mobility. During the
reporting year, the Advisory Board focused in particular on the
transformation of the automotive industry, the further develop-
ment of Daimler's sustainable business strategies and the han-
dling of the covid-19 pandemic.
Daimler also maintains regular contact with representatives
from civic organizations and other companies. In addition to
the dialogs we initiate, we also participate in various associa-
tions, committees and sustainability initiatives. Some of the
In the first step regarding our services supply chains, our
goal is to conduct an initial review in the period through
2021 of 100% of our service product groups that pose a high
risk of human rights violations.
memberships.pdf
Political dialog and representation of interests
The specific aim of our discussions with political decision-mak-
ers is to achieve greater planning security for Daimler. During
the reporting year, we focused on the following issues in par-
ticular:
- Achieving climate targets and improving air quality
- Making cities more livable places
- Peer review within the framework of sustain-
ability initiatives such as the UN Global
Compact
- Improving traffic safety
- Creating transparency with regard to sustainable financing
- Solving location-specific issues through discussions
- Promoting free and fair trade
- Modernizing labor laws
Daimler did not make any financial or non-financial contribu-
tions to political parties during the reporting year. This decision
was not based on current political or economic events.
Traffic safety
Accident-free driving - this vision drives us and is a firm com-
ponent of our sustainable business strategies. Our innovative
driving assistance systems already offer drivers and passen-
gers a high level of safety and comfort today. These systems
can help drivers avoid or safely manage critical situations on
the road in order to protect vehicle occupants and other road
users. System warnings and active brake applications are now
increasingly mitigating the consequences of accidents or even
preventing them altogether.
82
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- Establishing standards for human rights due diligence
We have set ourselves ambitious goals as we continue on our
road to accident-free driving, and we are systematically mov-
ing ahead to achieve them. We are aiming to:
Advisory Board for Integrity and Corporate
Responsibility
- Stakeholder consultation in topic-related
working groups
B COMBINED MANAGEMENT REPORT WITH NON-FINANCIAL DECLARATION | NON-FINANCIAL DECLARATION 81
Examples of instruments of stakeholder dialog
Information
- Daimler Sustainability Report as well as
regional reports (such as the Daimler China
Sustainability Report)
- Environmental declarations by the plants
- Press and public-relations work
Corporate website
-
Blogs and social media
- Social intranet and internal communication
- Plant tours, receptions,
Mercedes-Benz Museum
-
Dialog
Local dialog with residents and municipali-
ties
- Internal dialog sessions on integrity and
compliance
- Daimler Supplier Portal
Membership of sustainability initiatives and
networks
• Collaboration in the BDI workgroup on artifi-
cial intelligence
- Specialist conferences on societal topics
and debates
· Topic- and project-related discussions
- Dialog formats on future-oriented questions:
think tanks, hackathons, ideation challenge
Participation
Annual "Daimler Sustainability Dialogue"
(Germany/regions)
-
most important initiatives here are the UN Global Compact,
econsense - German Business Forum for Sustainable Develop-
ment, and the World Business Council for Sustainable Develop-
ment. Further information on our memberships in various orga-
nizations can be found here: ④ sustainabilityreport.daimler.
com/2019/servicepages/downloads/files/daimler_2019_
Make our vehicles even safer for vehicle occupants both dur-
ing and after an accident - for example with appropriate
vehicle structures, effective restraint systems, and systems
that can engage after an accident.
The remuneration system for the Board of Management mem-
bers that was approved by 95.33% of the votes at the 2020
Annual Shareholders' Meeting aims to promote the Company's
business strategy and its sustainable long-term development.
When determining the total remuneration of the individual
Board of Management members on the basis of the remunera-
tion system that was approved by the Annual Shareholders'
Meeting, Daimler takes the condition of the Company into
account as well as the members' areas of activity and respon-
sibility. This is done in line with legal requirements and with a
clear focus on the competition. A balanced combination of
non-performance-related (fixed) and performance-related
(variable) components of remuneration that also takes into
account suitably ambitious performance parameters and per-
formance indicators provides the Board of Management with
an incentive to implement the corporate strategy and ensure
the Group's sustained success. In this way, Daimler reconciles
the interests of all stakeholders, in particular those of the
shareholders as the owners of the Company and those of the
employees.
Goals
Principles of Board of Management
remuneration
Remuneration Report
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On February 3, 2021, the Board of Management of Daimler AG
decided, with the consent of the Supervisory Board, to evalu-
ate a spin-off of Daimler Trucks & Buses including significant
parts of the related financial services business (Daimler Truck),
and to begin preparations for a separate listing of Daimler
Truck before the end of 2021. Within the framework of the pro-
posed transaction, Daimler intends to transfer a majority inter-
est in Daimler Truck to its shareholders. Shareholder approval
could be granted at an Extraordinary Shareholders' Meeting of
Daimler AG at the end of the third quarter of 2021. Daimler
intends to maintain a minority interest in Daimler Truck.
Events after the Reporting Period
We are confident for the 2021 financial year. This confidence,
however, is based on the assumption that the covid-19 pan-
demic will be gradually contained in our most important mar-
kets and that further setbacks for global economic develop-
ment will be avoided.
With the help of our active operational and financial counter-
measures, we succeeded in meeting the adjusted expectations
for the development of business in the past year.
In addition to the demanding transformation processes that we
have to master in the automotive industry, the development of
our profitability, cash flows and financial position also reflected
the adverse effects of the covid-19 pandemic.
The 2020 financial year held special challenges for the Daimler
Group.
Overall Assessment of the Economic Situation
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88
Further improve our accident-prevention systems - for
example with Active Brake Assist.
2. Identify risk hotspots in these supply chains, and
1. Create transparency along the raw materials supply chains
for certain focus components, such as battery cells,
Further information can be found in the Daimler Sustainability
Report 2020, available from the end of March 2021 at sus-
tainabilityreport.daimler.com
Our objective for the period through 2028 is to define and
implement appropriate measures for addressing 100% of our
production raw materials that harbor a higher risk of human
rights violations.
In addition to ensuring the appropriateness of the remunera-
tion with regard to performance and market conformance
while taking the size, complexity and economic situation of the
Group into account, Daimler strongly focuses on making the
remuneration system of the Board of Management consistent
with that of the management team. The latter aspect ensures
that all of the decision-makers pursue uniform goals while tak-
ing the same financial and sustainability/Environment Social
Governance (ESG) aspects into account and promoting
Daimler's cultural and organizational realignment. Further
information about the remuneration system that was approved
by the Annual Shareholders' Meeting is available on the com-
pany's website at ④daimler.com/company/corporate-gover-
nance/board-of-management/compensation.
3. Define and implement measures that address the risk
hotspots.
For each upcoming financial year, the Presidential Committee
at first prepares a review by the Supervisory Board of the
remuneration system and the level of remuneration and where
necessary prepares suggestions for changes. In the process,
the Presidential Committee and the Supervisory Board can
avail themselves of the advice of external remuneration
experts. This was also done in the year under review.
Make our vehicles safer for others - for example with pedes-
trian recognition systems and systems that protect other
road users.
Practical implementation
Increase traffic safety in general – for example through CSR
safety initiatives such as SAFE ROADS and Mobile Kids.
Contribute to ensuring safety for all road users by sharing
data-for example within the framework of the pilot project
in the Zollernalb district in Baden-Württemberg.
It also decides on the relevant financial performance parame-
ters and the respective targets that are to be used in the bonus
calculations (the short and medium-term variable remunera-
tion components) for the upcoming financial year. Further-
more, sustainability-based non-financial targets are drawn up
for the Board of Management as a whole, as are transforma-
tion targets oriented toward the implementation of future-
focused measures for the Group's technological and sustain-
able realignment. Since the 2019 financial year, the annual
bonus for the Board of Management and for managers has
been calculated according to uniform goals/criteria and a uni-
form system.
The variable performance-related remuneration, in turn, is split
into a short and medium-term variable remuneration (annual
bonus) and a long-term variable remuneration (Performance
Phantom Share Plan (PPSP)). For each financial year, the
Supervisory Board links the variable remuneration components
to targets derived from the strategy. The degree to which these
targets are achieved determines how high the payments actu-
ally are.
The fixed non-performance-related remuneration consists of
the base salary, the fringe benefits (the amount of which can
change each year for each individual and as a result of certain
events) and the retirement benefit commitments of each Board
of Management member. The annual contribution for the retire-
ment pension commitments is determined on the basis of the
sum of the base salary and the total annual bonus as deter-
mined at the end of the reporting period.
The remuneration system fundamentally consists of fixed non-
performance-related and variable performance-related remu-
neration components, the sum of which determines the remu-
neration a Board of Management member receives in total.
The remuneration system enables the Supervisory Board to
take into consideration the function and area of responsibility
of the individual Board of Management member when deter-
mining the amount of the target total remuneration while also
taking into account criteria such as international workplace
and experience as well as the duration of membership of the
Board of Management.
In the event of significant changes in the relationship between
the remuneration of the Board of Management and the hori-
zontal and vertical comparison groups the Supervisory Board
establishes the causes and in the absence of objective reasons
for the deviations adjusts the remuneration of the Board of
Management as necessary.
The Supervisory Board has defined the group of senior execu-
tives as follows: It consists of the two management levels
below the Board of Management at Daimler AG within the
Daimler Group in Germany.
For each financial year, the Supervisory Board also specifies a
target bonus for the annual bonus if target achievement
amounts to 100%. In addition, it sets an amount that is granted
for the PPSP.
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90
and the amount of the target remuneration consisting of a
fixed base remuneration, an annual bonus as a short and
medium-term variable component, and a long-term variable
remuneration, also with consideration of entitlement to a
retirement pension and fringe benefits.
the relative weighting of the components, that is, the rela-
tionship between the fixed base salary and the short,
medium and long-term variable components;
the effects of the individual fixed and variable components,
that is, the methods behind them and their performance
parameters;
The remuneration system agreed upon by the Supervisory
Board is presented to the Annual Shareholders' Meeting for its
approval. The Supervisory Board regularly reviews the Board of
Management remuneration system on the basis of the prepara-
tions and recommendations made by the Presidential Commit-
tee. The Supervisory Board makes any changes that are
deemed necessary. If major changes are made to the remuner-
ation system, or at least at intervals of four years, it is pre-
sented to the Annual Shareholders' Meeting for approval. If the
Annual Shareholders' Meeting does not approve the remunera-
tion system, a revised remuneration system has to be submit-
ted for approval to the next ordinary Annual Shareholders'
Meeting at the very latest.
-
Taking into account Daimler's market position (especially with
regard to sector, size and country), the horizontal (external)
comparison of the target total remuneration draws on a suit-
able group of companies from the DAX and comparable com-
panies in Germany along with a group of international competi-
tors consisting of listed automotive manufacturers. The
following aspects are given particular attention:
In addition to the horizontal comparison, the Supervisory
Board takes into account the development of the Board of
Management remuneration in a vertical - internal - compari-
son with the remuneration of the senior executives and the
total workforce (non-exempt and exempt employees, including
senior executives) of the Daimler Group in Germany. This is
done by comparing the Board of Management remuneration
with the remuneration of the defined group of persons. In addi-
tion, it compares the Board of Management remuneration with
that of the total workforce, including those of companies listed
in the DAX and comparable companies.
On the basis of the approved remuneration system, the Super-
visory Board determines the amount of the target total remu-
neration of the individual Board of Management members for
the upcoming financial year. It is set in an appropriate relation-
ship to the responsibilities and performance of each Board of
Management member and to the situation of the Group. In
addition, the Supervisory Board makes sure that the target
total remuneration is appropriate to the market. To do this, it
makes both a horizontal and a vertical comparison.
Sincerely yours,
We have further weatherproofed our company in the past year, and taken important strategic decisions.
That was the qualifying session. Now the race is starting. I look forward to you continuing with us on this
journey.
In terms of our goal to upgrade the customer experience at Mercedes-Benz to an even higher level, our
focal areas for this year include the continued expansion of direct sales, which offer maximum comfort
and full transparency when buying a car. The planned launch of our own global network of high-power
charging stations shows that we have a holistic concept of electric mobility that takes our customers'
needs into account. The new E-Class will showcase a forerunner of the new MB.OS operating system and
demonstrate what our Mercedes fans can look forward to in terms of software. All of these plans serve
our overarching claim: we want to build the world's most desirable cars.
-
We want to approximately double our unit sales of all-electric vehicles in 2023. To accomplish this, we
are pushing ahead at full throttle with the transformation of our production and powertrain sites. One
important precondition for the further ramp-up of electric mobility is that our supply chains are as stable
and as flexible as possible. We place particular emphasis on supply discipline. on the reliability of our
suppliers and partners as well as on our own efforts to fulfill our customers' wishes as quickly and
completely as possible. We also assign a high priority to the supply of the raw materials and components
that are needed for the smooth ramp-up of electric mobility and further profitable growth.
In order to sustainably optimize our business system, we need to continue strengthening our resilience
against external impacts. We anticipate headwinds in 2023 as well. But our goal remains unchanged:
we want to grow profitably. We have established a good foundation for this in structural and financial
terms. We are determined to continue on this path and to further accelerate the transformation of
Mercedes-Benz. We want to grow even more strongly at the upper end of the segments in which we are
represented.
8
We have clear strategic priorities for 2023 as well. We want to safeguard the optimal “operating point"
of our business system, continue scaling electric mobility, make our worldwide supply chains fit for the
future, raise the customer experience at Mercedes-Benz to the next level and maintain cost discipline.
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
These results were made possible thanks to the untiring commitment of our team. The year 2022 was
marked by many challenges, ranging from the regional measures to combat Covid-19, to the uncertain
and costly supply of energy in Europe and the continuing supply bottlenecks for semiconductors.
We defied all of these challenges, thanks to our high degree of flexibility and immense adaptability.
I would like to express my sincere thanks to all employees for this strong performance.
This course of action was reflected in our company's results. Our revenue amounted to €150.0 billion.
Our EBIT grew by 28 percent to €20.5 billion. Our net liquidity in the industrial business was €26.6 billion.
All in all, net profit amounted to €14.8 billion. The Board of Management and the Supervisory Board will
propose a dividend of €5.20 per share at the Annual General Meeting.
We have sharpened our focus with regard to our business model and our car portfolio. In the future we
will concentrate even more clearly on the strengths of Mercedes-Benz - cutting-edge technology and
our position at the leading edge of the market.
Ola Källenius
We have more than doubled the number of deliveries of all-electric Mercedes-Benz passenger cars to our
customers. We have expanded our portfolio of electric vehicles by adding two electric SUVs. We were
also able to significantly increase the sales of our electric vans. In the area of software we have opened a
new centre of expertise, forged ahead with the development of our own operating system and delivered
the first conditionally automated cars with the Mercedes-Benz star to customers in Germany.
What will we be focusing on specifically?
9
Markus Schäfer
Chief Technology Officer,
Development & Procurement
To Our Shareholders
What had we resolved to achieve in 2022? We wanted to limit the effects of supply bottlenecks and con-
tinue working on our cost efficiency. With regard to our strategy, we set ourselves the goal of scaling up
electric mobility, speeding up software development and reinforcing the positioning of Mercedes-Benz as
a luxury brand.
10
10
→ Further information on the members of the Board of Management of Mercedes-Benz Group AG
Harald Wilhelm
Finance & Controlling/
Mercedes-Benz Mobility
Appointed until March 2027
Hubertus Troska
Greater China
Appointed until
December 2025
Britta Seeger
Marketing & Sales
Appointed until
December 2024
Annual Report 2022 Mercedes-Benz Group
Appointed until May 2024
Sabine Kohleisen
Human Resources &
Integrity & Legal Affairs
Appointed until
December 2024
Renata Jungo Brüngger
Dr Jörg Burzer
Production & Supply
Chain Management
Appointed until
November 2024
of Management
Appointed until May 2024
Ola Källenius
Chairman of the Board
The Board of Management
Labour Director
Appointed until
November 2024
2022 was a year during which we were able to demonstrate our resilience in a challenging environment
and achieve significant business success. At the same time, we systematically advanced the implementa-
tion of our strategy. In addition, the year 2022 marks a historic moment for us: since 1 February the name
of our company has been Mercedes-Benz Group AG.
We have made good progress in all of these areas. In order to minimize the effects of supply bottlenecks,
we concluded contracts with a series of new semiconductor suppliers, for example. To safeguard our
supply of raw materials, we are increasingly relying on direct procurement. For example, we plan to coop-
erate in the future with the Canadian government on the extraction of raw materials from sustainable
sources. We have further increased our cost efficiency throughout the company. That has required clear
prioritization and tremendous discipline.
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
TO OUR
FURTHER INFORMATION
345
CONSOLIDATED FINANCIAL STATEMENTS
193
CORPORATE GOVERNANCE
161
SHAREHOLDERS
MANAGEMENT REPORT WITH
36
TO OUR SHAREHOLDERS
5
Mercedes-Benz Group
SEQ1296E
Annual Report 2022
Dear Shareholders,
COMBINED
Annual Report 2022 Mercedes-Benz Group
NON-FINANCIAL
DECLARATION
7 Letter from the CEO
7
TO OUR SHAREHOLDERS
Chairman of the Board of Management of Mercedes-Benz Group AG
Ola Källenius
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
33 Mercedes-Benz Mobility Strategy
30 Mercedes-Benz Vans Strategy
Mercedes-Benz Cars Strategy
Daimler AG was renamed as Mercedes-Benz Group AG with effect from 1 February 2022. Unless there is a specific historical context for the former
company name in individual cases, the new company name is used in this Annual Report and the name Mercedes-Benz Group is used for the Group.
The same applies to the former Daimler Mobility AG, which was renamed as Mercedes-Benz Mobility AG on 1 February 2022.
are the basis of our conduct
27
26 Sustainability, integrity and diversity
Objectives and Strategy
26
22 The Supervisory Board
10 The Board of Management
11 Report of the Supervisory Board
The Group-wide employee survey is a key indicator of
where the Mercedes-Benz Group stands with regard to
various issues from the point of view of employees, and
where there is still potential for improvement. One of the
topics addressed is corporate culture. The Mercedes-
Benz Group generally conducts the survey at least every
two years; the last survey was carried out in 2021. A
shorter representative sample survey known as the Pulse
Check is conducted between the major surveys. These
surveys ensure that the Group companies receive exten-
sive feedback from their employees. Other channels are
also open for employees and managers to provide feed-
back.
As a participant in the UN Global Compact, the
Mercedes-Benz Group has committed itself, among other
things, to respecting key employee rights.
Reported violations of the Integrity Code or internal regu-
lations, as well as legal regulations, that pose a high risk to
the Mercedes-Benz Group and its employees are followed
up by the whistleblowing system, the Business Practices
Office (BPO). You can find more information about the BPO
in the Integrity and Compliance chapter.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
In 2002, Mercedes-Benz Group AG issued its own Group-
wide Principles of Social Responsibility, which are based
on the International Labour Organization's (ILO) work and
social standards. These principles were completely
96
Measures are derived as part of the follow-up process to
the employee survey. For example, one measure from the
2021 Employee Survey was the introduction of a strength
assessment for all managers at the Group worldwide.
This assessment helps managers identify their individual
strengths and learn how to better understand them. They
can use the lessons learned to develop themselves per-
sonally, strengthen their teams and promote the corpo-
rate culture.
reworked and comprehensively supplemented in 2021
and republished as the Principles of Social Responsibility
and Human Rights.
During the year under review, the Mercedes-Benz Group
also expanded its leadership programme to include ele-
ments that enable managers to identify coming leader-
ship challenges and requirements, and obtain the qualifi-
cations to address them.
The internal auditing department conducts random
annual internal audits to determine whether selected
aspects of the Corporate Compensation Policy are being
complied with. The company did not become aware of
any material violations of the policy during the reporting
year.
-
-
management, as well as between the corporate manage-
ment and the employee representative body, because
this is the only way that viable solutions can be found.
With this in mind, the Mercedes-Benz Group and the
employee representative body succeeded in reaching
long-term agreements in 2022. Among other things, the
new production setup that was agreed on provides for
various assembly plants throughout Europe to begin
manufacturing products with new technologies. This will
safeguard the future of the sites in question as well as
the jobs they offer.
In addition, goals have been set for the plants in Ham-
burg and Berlin. Initial measures have already been
launched and implemented on this basis — in particular,
qualification measures such as the Digital Pioneers initia-
tive.
-
International standards apply at the Mercedes-Benz
Group, such as the principle of equal pay for work of
equal value in the respective company, regardless of gen-
der difference.
In 2022 the expenses for employees in the company
worldwide for a workforce numbering 171,382 on average
(including temporary workers during holidays) amounted
to:
Within the framework of the "Electric only" approach, for
example, a new European production setup for the com-
ing years was agreed on in 2022. The agreement provides
for production operations for the repositioned product
portfolio to be focussed on electric vehicles in the luxury
segment. The focus on next-generation electric platforms
is a decisive step towards securing the future of Euro-
pean vehicle sites and the jobs there.
The transformation of the economy creates challenging
tasks for companies, and the past year was no different
in this regard. It has shown the importance of construc-
tive partnerships between the workforce and the
The results of the ongoing dialogues, and thus the rights
of employees as well, are defined, among other things,
in a number of plant and company-wide agreements that
address a multitude of issues such as mobile working,
family leave and home health care.
"Gear-up
Employee involvement and co-determination
The Mercedes-Benz Group is committed to fulfilling its
social responsibilities and makes every effort to take into
account both the economic interests of the Group and
the interests of its employees. For this reason, the
Mercedes-Benz Group in Germany works with the
employee representative body to get employees actively
involved in the Group's affairs. One of the goals here is to
ensure constructive cooperation between corporate
management and the employee representative body.
Corporate management and the employee representative
body also maintain an ongoing dialogue.
The "Leadership 2020" initiative that was launched back
in 2016 (later known as "Leadership 20X") laid the basis
for the Mercedes-Benz Group's future success. Working
groups with a diverse composition of employees and
managers agreed with the Board of Management of the
Mercedes-Benz Group AG on how good leadership should
be understood and which structural changes and tools
are needed in order to transform the way we currently
work (Game Changer). One of the results of the working
groups was People Principles for cooperation: Pioneering
Spirit, Agility, Purpose, Empowerment, Customer Orienta-
tion, Co-Creation, Learning and Driven to Win. The
initiative was completed in 2021, but the principles are
still used as a basis for leadership and cooperation at the
Mercedes-Benz Group.
The resulting framework, within which the Group is look-
ing to further develop its culture, is an integral part of the
processes for human resources development and deci-
sion-making, as well as the organizational structures and
work methods and tools. The units use the shared basis
of the People Principles to focus on their own specific
areas and develop measures to be taken.
The Group wants to enable managers to perform their
important roles in the technical, strategic and cultural
transformation. The new hybrid world of work poses dif-
ferent challenges for the leadership culture within the
Group. In order to support managers as much as possible
in their roles and their tasks, the Mercedes-Benz Group
offers them in-class and online training courses that
focus on the opportunities and the framework of leader-
ship. The company also continuously further develops
these courses.
€13.684 billion on wages and salaries
increase your leadership impact", for example,
is a digital development programme that addresses in a
targeted manner the new challenges relating to leader-
ship with regard to innovation, cooperation, sustainable
development and personal resilience. Another pro-
gramme known as "Shaping the Future - Leading for
Success" focuses on the topic of strategy implementation
and shaping the transformation. More specifically, this
involves the complex environment and the challenges
that arise from it in terms of management and leadership.
In this programme, internal and external specialists give
lectures that generate momentum and offer space for
discussions and exchanges. Both programmes are offered
to executives who have been nominated in advance by
their division and HR.
Attractive and transparent remuneration
The Mercedes-Benz Group remunerates work in accord-
ance with the same principles at all of its companies
around the world. The Corporate Compensation Policy,
which is valid for all groups of employees, establishes the
framework conditions and minimum requirements for the
design of the remuneration systems. Among other things,
it stipulates that the amount of the remuneration is
determined on the basis of the requirements of the job
profile in question (taking into account, for example, the
person's knowledge, expertise, responsibilities and
95
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
The Mercedes-Benz Group acknowledges its employees'
right to form employee representative bodies and con-
duct collective bargaining in order to regulate working
conditions. It also recognizes their right to strike in
accordance with the applicable laws. Important partners
here include the local works councils, the General Works
Council, the European Works Council and the World
Employee Committee (WEC). Collective bargaining agree-
ments exist for the majority of employees throughout the
Group. Such agreements apply to all non-exempt
employees subject to collective bargaining agreements at
Mercedes-Benz Group AG and Mercedes-Benz AG and at
other units at the Group.
decision-making authority) and, where appropriate, per-
formance. However, it does not take account of gender,
origin or other personal characteristics. The internal
auditing department conducts random annual internal
audits to determine if selected aspects of the policy are
being complied with. Here, the Group also takes into con-
sideration local market conditions and benchmark data,
because the Mercedes-Benz Group wants to offer its
employees salaries and benefits that are customary in
the industry and the respective markets.
Modern working-time arrangements
―
The Mercedes-Benz Group continuously further develops
its working culture and thus its working-time arrange-
ments as well. It will increasingly make use of hybrid
forms of work in the future and thus enable its employ-
ees, depending on their tasks and the work processes
they use, to work either remotely or on site in their
offices.
This common creative freedom should contribute to the
enhancement of the performance. and satisfaction of the
employees at the Mercedes-Benz Group in Germany.
With its comprehensive company-wide agreement on
mobile work that has been in force since 2016, and in a
process of constant dialogue with the works council, the
Group creates the necessary framework for hybrid work-
ing models.
-
In Germany, the Mercedes-Benz Group also offers a wide
range of part-time working arrangements for example,
employees can reduce their working hours and spread
their daily, weekly or monthly hours over a period of one
to five days, or work in a blocked part-time arrangement
(alternation between full-time work and time off).
The Mercedes-Benz Group also promotes job-sharing
arrangements at all levels, especially in Germany. In addi-
tion, employees at Mercedes-Benz Group AG, Mercedes-
Benz AG and Mercedes-Benz Intellectual Property GmbH
& Co. KG can agree to take a sabbatical ranging from
three months to one year. Subsequent reinstatement is
guaranteed. Employees who wish to obtain additional
qualifications - including pursuing a course of study at a
university can also make arrangements to take a three
to five-year leave with guaranteed reinstatement.
-
The variable remuneration of management (managers of
Levels 1-3 and Level 4 executives) is based not only on
financial targets but also on transformation goals and
non-financial targets.
€2.239 billion on social welfare services, and
€0.578 billion on retirement benefits
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
The transformation is changing numerous job profiles,
tasks and requirements profiles. This is transforming the
qualifications needed for many positions. The range of
the portfolio of training professions offered by the
Mercedes-Benz Group in Germany, and the courses of
study offered in dual work-study programmes, is also
changing as a result.
Diversity and equal opportunity
The Mercedes-Benz Group is committed to tolerance,
openness and fairness, and promotes diversity and equal
opportunity. With appropriate measures and activities, it
wants to foster a working environment in which employ-
ees, regardless of their age, ethnic origins and nationality,
gender and gender identity, physical or intellectual
capacity, religion and worldview, sexual orientation and
social origins can freely develop their talents.
This approach is embedded in the Mercedes-Benz
Group's Integrity Code and in the Principles of Social
Responsibility and Human Rights, for example.
Strategic areas of action
Diversity and equal opportunities are parts of the busi-
ness strategy of the Mercedes-Benz Group. Sustainability,
integrity and diversity serve as the foundation of this
strategy. The overarching strategic areas of action for
promoting diversity and equal opportunities involve the
advancement of women, internationality and equal
opportunities. The area of action internationality was
newly developed during the reporting year.
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The Mercedes-Benz Group would like to fill more senior
management positions with qualified women. The target
here is to increase the share of women in such positions
to 30% by 2030.
The Mercedes-Benz Group is firmly convinced that a fair
and appreciative environment makes it possible to har-
ness the full potential of a diverse workforce and this
is why the company promotes equal opportunities.
In order to expand the existing range of qualification pro-
grammes for Mercedes-Benz Group employees, the
employee representative body and corporate manage-
ment concluded a company-wide agreement in 2022 that
governs the use of learning platforms. This has made it
possible for a large number of employees worldwide to
obtain licences to access such external platforms. In the
reporting year, qualification measures continued to focus
on digitalization and electric mobility.
The Mercedes-Benz Group also seeks to promote interna-
tionality, a global way of thinking and the cultural diver-
sity of its workforce in order to go on being an attractive
employer in the future. In doing so, the Group seeks to
bring together various points of view at all levels of the
hierarchy.
The Mercedes-Benz Group expects its employees to treat
one another in a respectful, open and fair manner. Man-
agers serve as role models here and thus have a special
responsibility for ensuring a corporate culture marked by
appreciation. The Mercedes-Benz Group presented its
understanding of diversity and equal opportunity in its
"Uniqueness makes us strong" mission statement, which
was signed by all members of the Board of Management.
The framework and processes here are designed by the
Group-wide functions Integrity and Diversity and Inclu-
sion Management, the latter of which is part of Human
Resources. They define strategic areas of action in coop-
eration with the Board of Management of Mercedes-Benz
Group AG and initiates overarching projects, training pro-
grammes and awareness-raising measures.
The Mercedes-Benz Group also encourages its employees
to take on international assignments. The Global Mobility
Policy, which was developed for the purpose, is used
among other things to adequately support the assignees.
The diversity and inclusion management system is
grounded in the principle of equal opportunity for all
employees. The idea here is to always attract the most
highly qualified specialists and managers to the Group
and support their professional development, regardless
of their age, ethnicity, gender, sexual orientation and
identity, and psychological and physical capability.
Mercedes-Benz Group employees who have been victims
of discrimination, bullying or sexual harassment, or who
observe improper behaviour by colleagues, can report
such violations of policy to their supervisors, the HR
department, the counselling service, their plant medical
services organization, the Works Council or the Manage-
ment Representative Committee. Additional points of
contact include the infopoint integrity and the Group's
Business Practices Office (BPO) whistleblower system.
The BPO is responsible for violations of laws and regula-
tions.
An external online counselling platform was established
in the reporting year to supplement these internal points
of contact in this area. Mercedes-Benz Group employees
in Germany can use the platform to obtain information on
sexual harassment, discrimination and bullying. They can
also use an anonymous chat function to obtain advice.
The platform, which is initially available in Germany, is
intended to support preventive activities at the
Mercedes-Benz Group and help increase awareness of
the various issues among employees.
Awareness-raising and qualification measures for
employees
The Mercedes-Benz Group utilizes various measures to
make employees around the world more aware of issues
relating to diversity and equal opportunities. These
include, among other things, awareness-raising and qual-
ification programmes, information events and special
mentorship programmes for women.
Since 2021, the Mercedes-Benz Group has been using an
e-learning tool that aims to increase awareness of the
need for appreciative interaction as well as possible
obstacles, and to show how each employee can contrib-
ute to this development. This training tool is available to
employees worldwide and is offered in 11 languages.
Active management of diversity and equal opportuni-
ties at the Group
portfolio of professions for its training programmes and
for the Dual University for the period until 2025, and has
also modified the professions, the courses of study and
the recruitment figures for each professional group. The
further development of training content in 2022 also
involved the design and launch at the training locations
of new internal qualification components for trainees that
address topics such as cybersecurity, programming and
data-based decision-making. These components also
include extensive qualification programmes for the train-
ers themselves.
The Mercedes-Benz Group in Germany seeks to ensure
that its professional training and dual work-study pro-
grammes are of high quality. It also wants to make sure it
can offer a modern needs-based range of professions in
both areas. That's why the company has redefined the
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Annual Report 2022 Mercedes-Benz Group
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The Mercedes-Benz Group invests extensively in training
and professional development programmes for its
employees and continuously adjusts its qualification and
HR development programmes. The company has also
launched a worldwide qualification offensive known as
Turn2Learn, whose goal is to maintain the competitive-
ness of the Mercedes-Benz Group over the long term.
Organization and agreements
Mercedes-Benz Group AG, Mercedes-Benz AG and
Mercedes-Benz Intellectual Property GmbH & Co. KG
structure their training and qualification processes
throughout Germany in line with various company-wide
agreements. These are, among others a company-wide
agreement on qualification and the 2022 company-wide
agreement on the integration of external learning plat-
forms into the Mercedes-Benz Group's qualification pro-
grammes. Both of the aforementioned agreements are
designed to strengthen the responsibility managers and
employees share for qualification measures. In addition,
the agreements serve to standardize the qualification
process, structure it more efficiently and integrate exter-
nal training elements into the learning portfolio.
The Mercedes-Benz Group employs a sustainable person-
nel planning and development approach because it
needs highly qualified employees with the right skills,
whether in the field of electric mobility or in one of the
many digital disciplines that are becoming increasingly
important.
What kinds of expertise and skills does Mercedes-
Benz AG need in order to successfully implement the
transformation? Does the company have the right per-
sonnel with the right skills at its disposal? These and
other important questions are being addressed by the
Tech-Academy Production and Supply Chain Management
at Mercedes-Benz Cars, for example.
Trainees and students
-
During the reporting year trainees and participants of
dual work-study programmes began their professional
training at the Mercedes-Benz Group in Germany. Profes-
sional training is carried out in a dual system — i.e. in
plants/offices and at trade schools. The Mercedes-Benz
Group also offers dual work-study programmes for inter-
nationally recognized bachelor courses of study at vari-
ous company sites throughout Germany. The lectures are
supplemented by practical assignments in Germany and
abroad.
The Mercedes-Benz Group has established a Mercedes-
Benz Training System for Germany that standardizes
training content across all sites and divisions. Regular
checks are made to see that the content is user-friendly
and up to date and that duplication does not occur.
Hybrid formats allow for both in-class learning and online
course components. The goal here is to create high-qual-
ity and efficient training programmes that are attractive
to trainees and participants in dual work-study pro-
grammes.
Mercedes-Benz Group training programmes are funda-
mentally needs-based. For example, the Group analysed
the requirements of future IT professions and used this
as a basis for expanding its portfolio to include digital
training professions for IT in the industrial sector, and it
also introduced a course of study that focuses on the
interface between IT and electrical engineering (embed-
ded systems). In 2022, it also tested the use in training
programmes of content relating to artificial intelligence
by offering an additional qualification module, among
other things.
New qualification and learning programmes for
employees
The Mercedes-Benz Group offers its employees an exten-
sive range of professional and personal development
opportunities. It conducts a large number of training pro-
grammes to make sure that its people have the right
skills. It also continuously improves these programmes in
order to ensure that its employees remain employable
over the long term in a changing environment - and that
they never lose their innovative capability. The Mercedes-
Benz Group is now realigning its qualification approach
within the framework of its Turn2Learn initiative, which
puts lifelong learning and the further education of
employees at the centre of its sustainable personnel
development activities. In light of the transformation, the
Mercedes-Benz Group in Germany is placing a focus on
qualifications that are crucial for the digitalization of the
Group and the successful implementation of its sustaina-
ble business strategy. The Turn2Learn initiative addresses
the qualification system throughout the entire Mercedes-
Benz Group. Among other things, the initiative is being
used to combine and optimize existing training and edu-
cation programmes, which are being supplemented by
large-scale opportunities for e-learning via external
learning platforms. Within the framework of this qualifi-
cation system, employees can, for example, define their
own learning paths for targeted and forward-looking
98
The Mercedes-Benz Group believes that the interplay of
strategy and corporate culture offers a key competitive
advantage. The company therefore works constantly to
improve its management culture and the way people
throughout the organization cooperate.
professional further education and training. When select-
ing the formats, the Mercedes-Benz Group seeks to ena-
ble employees to exercise as much self-determination as
possible.
-
The Tech Academy Production and Supply Chain Manage-
ment at Mercedes-Benz Cars analyses current and future
personnel requirements for production areas and inter-
departmental functions for example, in the areas of
quality assurance and production planning, as well as for
logistics at Mercedes-Benz Cars. The Tech Academy uses
the analyses to develop future-oriented qualification and
retraining measures in line with the needs of specific tar-
get groups. Cooperation between the Tech Academy and
representatives from specialist production units at
Mercedes Benz Cars led to the establishment of the
Transformation Hub in mid-2021. This working group man-
ages all qualification and retraining measures across all
units and departments. It also uses personnel require-
ments analyses to develop skills profiles for key functions
that need to be filled.
A Tech Academy that offers needs-based future-oriented
training components has also been established for
employees in the development units at the Mercedes-
Benz Group in Germany.
Within the sales organization of Mercedes-Benz
Group AG, the Mercedes-Benz Global Training business
unit serves as the central pillar for the development and
qualification of employees of the German and interna-
tional retail operations. In addition to the training and
certification of sales and service personnel as well as
dealership management, the unit provides comprehen-
sive advanced training and various product training
courses. Moreover, it focuses, among other things, on
qualification content for electrical systems/electronics
and high voltage. For employees at headquarters and in
its own sales companies, Mercedes-Benz Group AG offers
continuing education programmes that have been com-
prehensively expanded as part of the Turn2Learn initia-
tive for example in the areas of digitalization and data
science.
Training and professional development
Cooperation and management culture
Utilize a globally standardized accident documentation
system and introduce it to the German production sites.
Another goal at the Mercedes-Benz Group is to get
employees on board for the changes that are coming in
the transformation, and also motivate and enable them to
actively participate in the change process. To this end, it
launched the initiative TransformatiON - Gemeinsam auf-
brechen (TransformatiON - Setting off together) in the
Powertrainverbund (powertrain network) in 2022. Trans-
formatiON uses information, interaction, dialogue and
feedback as central elements that are offered in new for-
mats and via new channels. These formats and channels
are being developed with the help of Transformation
Ambassadors employees from various units and func-
tions who are actively participating in the change process
and serve as contacts for their colleagues.
The supply chain plays an important role in efforts to
conserve resources. The Mercedes-Benz Group wants to
decouple resource consumption from economic growth.
To achieve this goal, it is relying on the support of its sup-
pliers. With their help, the Group wants to continuously
increase the proportion of secondary and renewable
materials in its vehicles.
Steel, aluminium and plastics have been identified as
particularly important materials in Mercedes-Benz vehi-
cles. We need large volumes of these materials for the
production of our vehicles, and their extraction and pro-
cessing also consume large amounts of energy and
resources. In 2020, Mercedes-Benz AG defined
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
secondary material targets for these resources for
Mercedes-Benz Cars and Mercedes-Benz Vans and
anchored these in the requirements for all contract
awards.
Suppliers of production materials to Mercedes-Benz Cars
and Mercedes-Benz Vans are expected to operate with
an environmental management system that is certified
according to ISO 14001 or EMAS. Depending on the spe-
cific risks, this also applies to suppliers of non-produc-
tion materials and services.
With its Responsible Sourcing Standards, the Mercedes-
Benz Group has also incorporated other environmental
requirements into its supplier agreements, including stip-
ulations relating to compliance with environmental due
diligence obligations and the use of resource-efficient
production methods.
Mercedes-Benz Cars and Mercedes-Benz Vans are also
cooperating with organizations such as CDP (formerly
Carbon Disclosure Project) so that it can depict the envi-
ronmental impact of its supply chains even more trans-
parently. The suppliers have been reporting on their envi-
ronmental impact and climate change mitigation efforts
within the framework of the CDP Supply Chain Pro-
gramme since 2019. CDP provides the corresponding
tools for recording, assessing and publishing environ-
mental and climate data.
Climate change mitigation in production
The Mercedes-Benz Group formulates the holistic goal of
making the mobility of the future more sustainable in its
sustainable business strategy. One of the most important
targets is the reduction of greenhouse gas emissions.
This applies not only to mobility solutions but also to the
Group's own production plants. By pursuing its goal of
making its own production processes CO2-neutral on the
balance sheet, the Mercedes-Benz Group intends to act
in accordance with the Paris Climate Agreement.
Resource conservation in the supply chain
Thus the CO2 emissions arising from Mercedes-Benz' pro-
duction operations and the energy supply of the brand's
plants will be consistently reduced or, wherever possible,
completely eliminated. In order to accomplish this,
Mercedes-Benz is relying on the purchase of
green elec-
tricity, the expansion of other renewable energy sources
at its locations and the implementation of a sustainable
heating supply system. Production at all manufacturing
locations operated by the Mercedes-Benz Group has
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
been CO2-neutral regarding Scope 1¹ und Scope 22 since
the reporting year.³ Since early 2022, all CO2 emissions
(Scope 1 and Scope 2) at production facilities operated
by the Mercedes-Benz Group that have been as yet una-
voidable have been offset by means of carbon offsets
from qualified climate change mitigation projects.³
Remaining emissions are particularly released by the CHP
facilities that use natural gas to produce electricity and
heat.
For the procurement of green electricity, the Mercedes-
Benz Group in Germany currently relies on a mix of solar,
wind and hydroelectric power for external electricity pur-
chases.
In order to continue to cover the energy requirements in
production with renewable energies, the Mercedes-Benz
Group is, among other things, planning to expand solar
and wind energy at its own locations.
During the reporting year, Mercedes-Benz Cars and
Mercedes-Benz Vans employed a bundle of measures
that enabled them to reduce CO2 emissions in production
(Scope 1 and Scope 2) from 946,038 tons in 2021 to
537,821 tons in the year under review, and thus by 43%
compared to the previous year.³
In the reporting year, the Mercedes-Benz Group already
achieved its target of reducing CO2 emissions at its own
plants (Scope 1 and Scope 2) by 50% by 2030 compared
to 2018.3 It is therefore aiming to save even more CO2
emissions by 2030.
Resource conservation in production
The increasing demand for mobility is also leading to an
increase in the worldwide consumption of resources
with negative consequences for the environment and
society. That's why the goal of the Mercedes-Benz Group
is to increasingly decouple its consumption of resources
from the growth of its production volume. In order to
improve its environmental footprint in production opera-
tions, the Group therefore plans to use less energy and
water and fewer raw materials. Accordingly, the
1 Scope 1 emissions are direct greenhouse gas emissions from sources for which the com-
pany is directly responsible or that it directly controls.
92
Progress on climate change mitigation in the supply chain
is reported at regular intervals in the Group Sustainability
Board (GSB). Further information can be found in the
Managing sustainability section.
Approximately 86%¹ of all suppliers of production mate-
rial for Mercedes-Benz Cars and Mercedes-Benz Vans
registered in the system (as measured on the basis of
annual planning procurement volume that, in turn, is
based on target figures updated bi-weekly) have signed
the ambition letter. CO2 neutrality on the balance sheet is
incorporated into the terms of contract, and the ambition
letter is a key criterion for the awarding of contracts.
-
The Mercedes-Benz Group also uses its internal commu-
nication channels to raise awareness of important issues.
For example, the company launched a communication
campaign in Germany to accompany the introduction of
the new online counselling platform that offers informa-
tion and anonymous support to employees who have
experienced or are aware of cases of sexual harassment,
discrimination or bullying. The campaign used a variety of
in-house media to remind all employees to treat one
another with respect.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Mercedes-Benz reached an important strategic milestone
and now offers an all-electric alternative for every seg-
ment in which Mercedes-Benz is active i.e. the EQA
and EQB for the compact segment, the EQC for the mid-
range segment and the EQE and EQS for the premium
segment. In August 2022, the all-electric model range
was expanded to include the EQS SUV. This was followed
in mid-2022 by the staggered global market launch of the
EQE business saloon. The EQE 350 (WLTP: combined
electrical consumption: 18.8-16.0 kWh/100 km; combined
CO2 emissions: 0 g/km) has an output of up to 300 kW
and a range¹ of up to 645 km (according to WLTP).
Plug-in hybrids are an important transitional technology
on the road to an all-electric future. Mercedes-Benz Cars
offers an efficient drive-system package for this purpose:
since 2021, customers have been able to choose
between more than 20 model variants.
Mercedes-Benz is convinced of the ecological and eco-
nomic advantages of all-electric vans and has firmly
anchored its claim to leadership in electric mobility in its
strategy. As a result, all of its model series are to be sys-
tematically electrified. Even today, body manufacturers
and customers can already choose from a number of bat-
tery electric vans for both commercial and private use.
These include the eVito panel van and eVito Tourer, the
eSprinter and the EQV. From 2023, it is planned that they
will be joined by the eCitan and EQT (WLTP: combined
electrical consumption: 18.99 kWh/km; combined CO2
emissions: 0g/km).1
Electrified vehicles (EV) at Mercedes-Benz Cars
accounted for 16% of the Group's worldwide unit sales in
the year under review. Battery electric models accounted
for 4% of unit sales at Mercedes-Benz Vans.
Development of CO2 emissions in Europe
The Mercedes-Benz Group has defined the CO2 emissions
of its total new passenger car fleet in Europe as one of its
significant non-financial performance indicators. For
more information on how it expects the CO2 emissions of
its car fleet in Europe to develop in 2023, see the Outlook
chapter.
1 Electricity consumption and range were determined on the basis of Commission Regula-
tion (EU) 2017/1151.
In the reporting year, the average CO2 emissions of the
Mercedes-Benz passenger new car fleet in Europe (Euro-
pean Union, Norway and Iceland), applying the statutory
regulations, are expected to amount to 115 g/km (includ-
ing vans registered as passenger cars) and were thus at
the same level as in the previous year. This means that
the figures for Mercedes-Benz achieved the CO2 targets
in Europe in 2022.
In the reporting year, the average CO2 emissions of vehi-
cle category N1 light trucks in Europe (European Union,
Norway and Iceland) as measured on the basis of the
legal regulations are expected to amount to 209 g/km.
This means that the figures for Mercedes-Benz will be
below the CO2 target.
Development of CO2 emissions in the United States
In the United States, fleet values are regulated by two
separate federal standards for limiting greenhouse gases
and fuel consumption in vehicle fleets: the Greenhouse
Gas Protocol (GHG) and the Corporate Average Fuel
Economy (CAFE) standard. For the 2022 model year, the
GHG fleet figure is 244 g CO2/mi for the car fleet and
289 g CO2/mi for the fleet of vans and SUVs registered as
light trucks (on the basis of the most recent forecast).
Because the portfolio of electrified vehicles (EV) in the
United States is still in an early stage of development, the
Mercedes-Benz Group was not able to achieve its aver-
age fleet targets of 195 g CO2/mi for the car fleet and
256 g CO2/mi for the fleet of vans and SUVs registered as
light trucks. However, the Mercedes-Benz Group was able
to offset the remaining difference through the purchase
of external credits.
Development of CO2 emissions in China
In China, domestic and imported cars are reported sepa-
rately and according to fleet consumption values, unlike
in Europe and the United States. This means the figures
for the imported fleet are the relevant figures for our
wholly owned subsidiary Mercedes-Benz China (MBCL).
The target was 7.01 l/100 km; the figure that was actually
achieved was 8,33 l/100 km (8.17 l/100 km including
off-cycle technologies). MBCL plans to purchase external
credits in order to close consumption gaps in the fleet's
target achievement at short notice. The aim of the
Mercedes-Benz Group with regard to the portfolio expan-
sion for all-electric vehicles and plug-in hybrids is to
achieve the emission targets in China in the medium
term, together with the joint-venture partner Beijing Benz
Automotive (BBAC).
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Climate change mitigation in the supply chain
The Mercedes-Benz Group implements various projects
and measures in order to avoid and reduce CO2 emis-
sions in its supply chains for services as well as for pro-
duction and non-production materials.
pro-
For this reason, in 2020, Mercedes-Benz Cars and
Mercedes-Benz Vans already sent out to suppliers of
duction materials the ambition letter, a declaration of
intent on balance sheet carbon-neutral products and
established approval as a prerequisite for awarding con-
tracts. By signing this document, they commit themselves
to supply Mercedes-Benz AG only with products that are
CO2-neutral on the balance sheet by 2039 at the latest
and thus to the Mercedes-Benz Group's "Ambition 2039".
2 Scope 2 emissions are indirect greenhouse gas emissions from purchased energy, such as
electricity, steam, district heating or cooling, fuels that are generated externally but con-
sumed by the company.
However, change requires security more than anything
else. That's why the company signed an agreement that
gives the employees at Mercedes-Benz Group AG,
Mercedes-Benz AG and Mercedes-Benz Intellectual Prop-
erty GmbH & Co. KG a job-security guarantee for the
period until 2029. The agreement excludes the possibility
of business-related layoffs until 31 December 2029.
3 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
For its production sites worldwide, the Mercedes-Benz
Group has set reduction targets for energy and water
consumption, total waste volume and waste volume for
disposal per vehicle. In order to achieve its goals, the
Group uses Group-wide resource management with its
environmental and energy management systems to
ensure that appropriate measures are developed,
adapted to challenges where necessary, and monitored.
Diversity and equal opportunity
Equal opportunity for all employees in the Group
Increase the proportion of women in executive manage-
ment positions¹ to 30%
Occupational health and safety
Ensure employees can work in a healthy and safe
environment
2030
Ongoing
2023
1 Management Level 3 and higher - Mercedes-Benz Group worldwide (headcounts, fully
consolidated companies).
Human resources work in the transformation
Ongoing
The Mercedes-Benz Group is in the midst of a transforma-
tion towards locally emission-free and networked mobil-
ity. This transformation affects not only products, tech-
nologies and business models. Working processes and
structures are changing just as fundamentally as
employee tasks, job profiles and cooperation within the
Mercedes-Benz Group.
Together with them and their essential motivation as well
as willingness to change, this transformation is a huge
opportunity for a sustainably successful company. The
Mercedes-Benz Group's goal here is to shape the neces-
sary changes for its employees in a responsible, socially
acceptable and future-oriented way.
The Mercedes-Benz Group therefore also invests continu-
ously in qualification measures for its employees and
recruits new staff whose qualification profiles will be
needed in the future. In order to attract such employees
and retain them for the long term, the Mercedes-Benz
Group takes measures to create an attractive and
future-oriented working environment for its employees,
among other Iways by offering them modern and flexible
forms of work that it continuously enhances. Particularly
in challenging times such as those we now live in,
respectful and trust-based cooperation between the
workforce and the management is extremely important.
The Mercedes-Benz Group therefore promotes a diverse
and inclusive corporate and management culture. The
Group also wants to make possible a safe and healthy
working environment.
Responsible transformation
Depending on their product portfolio and the size of their
operations, the Mercedes-Benz Group sites, and thus the
company's various groups of employees, are affected to
different degrees by digitalization and the transformation
of the mobility and transport sector into a system of
electric mobility.
For the transformation to be successful, it needs to have
a final destination and a roadmap for getting there. For
this reason, the various sites (currently the major compo-
nent and assembly plants) are developing goals for the
transformation process. The sites are also identifying key
topics that will then be translated into specific measures
and subsequently implemented. Examples of such meas-
ures include qualification and retraining programmes. The
Digital Pioneers initiative is part of this approach. In 2022,
production employees in Berlin and
94
1 Workforce from 31.12.2022 not incl. temporary workers during vacations, integrated master's
degree students, interns, working students, doctoral candidates, senior experts and trainees
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Stuttgart-Untertürkheim were able to undergo custom-
ized retraining able to undergo customized retraining on
digitalization topics. For further information, see Training
and professional development, new qualification and
learning programmes for employees.
A total of 168,797 employees ¹ around the world are using
their skills, innovation and dedication to help ensure that
the Group can successfully overcome the associated
challenges.
Restructure and periodically further develop the
qualification programmes available to our employees
Ongoing
Ensure high quality and a needs-based range of
professions covered by our training programmes and
dual work-study programmes
In order to ensure efficient, high-quality, and environ-
mentally friendly manufacturing operations, the Group
has established environmental management systems in
accordance with EMAS or ISO 14001 at its production
sites around the world. Since 2012, it has also introduced
energy management systems certified in accordance with
the DIN EN ISO 50001 standard at its German production
sites. These energy management systems are certified at
regular intervals. The Mercedes-Benz Group is currently
also implementing ISO 50001 systems at a number of
individual sites outside Germany. In accordance with the
standard, it has embedded environmental and energy
management within its organization.
The effectiveness of the management systems is moni-
tored by external auditors as part of the certification pro-
cess (ISO 14001, EMAS, ISO 50001), as well as in the
environmental sector by internal environmental risk
assessments (environmental due diligence process). The
company also has a standardized process in place for
reviewing and assessing its consolidated production sites
every five years. The results of this process are reported
to the respective plant and company management so that
any necessary optimizations can be carried out.
Travel restrictions and lockdown regulations due to the
Covid-19 pandemic limited the number of site inspections
that could be carried out in 2021. Van production sites
were evaluated during the year under review. The inspec-
tions that had to be cancelled will now be carried out
over the next few years so that the Mercedes-Benz Group
can maintain the five-year cycle for its production sites.
We are continuing the internal reporting process and the
controlling of the improvement measures as before.
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Employee issues
B.31
Target
Human resources work in the transformation
Shape the transformation of the Group in a responsible,
socially acceptable and future-oriented manner for
Mercedes-Benz Group employees
Ensure permanently constructive cooperation between
company and employee representative bodies
Further develop and firmly embed within the Group the
People Principles for cooperation The goal here
Target horizon
Ongoing
Ongoing
is to establish a common understanding of an agile and
innovative management culture in the transformation
Ensure remuneration structures in line with market rates
through compliance with our global Corporate
Compensation Policy
Ongoing
Ongoing
Support and enhance flexible and modern working-time
arrangements
Ongoing
Training and professional development
Mercedes-Benz Group is intensifying its efforts to use
lower volumes of raw materials and other materials at its
sites.
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Results
Corporate website
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Dialogue and events
For the Mercedes-Benz Group, stakeholder engagement
is one of the keys to achieving a sustainable transforma-
tion. Discussions with individuals involved in political
decisions preferrentially focus on finding sustainable
solutions for addressing social challenges.
Within the framework of the responsible political rep-
resentation of its interests, the Mercedes-Benz Group
continuously seeks to establish and maintain a dialogue
with government representatives and politicians at its
locations worldwide, and it continued to do so in the
reporting year. The Mercedes-Benz Group also shares
ideas and information with other interest groups and
individuals, including groups that are active in politics
and society, opinion leaders, experts, citizens, represent-
atives from business and non-governmental organiza-
tions (NGOs). Together with these stakeholders, the
Mercedes-Benz Group supports the opinion-forming pro-
cess at both national and international level in order to
promote the sustainable business goals and the transfor-
mation of the automotive industry. It also addresses
future-oriented questions relevant to the Group that go
beyond the core automotive issues and feeds these back
to the Group management in the context of strategy work.
In order to facilitate open discussions with a wide range
of interest groups, External Affairs also conducts its own
events at regional, national and international levels.
Within the framework of its responsible approach to the
representation of its interests and the forward-looking
handling of risks, the Mercedes-Benz Group engages in a
targeted dialogue with local stakeholders from govern-
ment and society when planning new projects or when
the need arises to address issues relating to its sites.
Board members are also involved in the local dialogue.
Through stakeholder mapping, the positions of relevant
stakeholders are analysed in advance. The main objective
here is to reconcile the interests of the sites in question
with the wishes and concerns of local residents and
establish conditions that benefit all of the parties
involved.
Further information on stakeholders along the supply
chain can be found in the chapter Social Compliance.
The Regional Political Dialogue is a long-standing event
format from External Affairs. The challenges and opportu-
nities associated with the transformation of the
automotive industry, as well as the current corporate
strategy were discussed with representatives of state and
local governments in July 2022.
Along with its own events in connection with the political
representation of its interests, the Mercedes-Benz Group
also participates in external events in order to engage
with various stakeholders. Among other things, the Group
participates in the platform for the state government of
Baden-Württemberg's strategic dialogue for the automo-
tive industry.
In addition to the direct dialogue with politicians and
government representatives and representatives of inter-
est groups that promote sustainable development, the
Mercedes-Benz Group remained active in various sus-
tainability initiatives and networks in 2022. Some of the
most important initiatives here are the UN Global Com-
pact (UNGC), econsense - Forum Nachhaltige Entwick-
lung der Deutschen Wirtschaft e. V. Forum for Sustain-
able Development of German Business, and the World
Business Council for Sustainable Development.
Results
During the reporting year, the Mercedes-Benz Group
achieved its goal of “making lobbying activities compre-
hensible and verifiable on the basis of defined evaluation
criteria". The Group developed a catalogue of criteria that
can be used to assess whether its lobbying positions cor-
respond to its strategy, for example.
The Mercedes-Benz Group also achieved another mile-
stone in 2022 — “continuing stakeholder interviews and
deriving necessary measures for the future political rep-
resentation of its interests". The stakeholder interviews
revealed that the Mercedes-Benz Group is viewed as a
trustworthy discussion partner in the political realm. Nev-
ertheless, the interviews still revealed potential for
improvement. In order to effectively utilize its potential
for improvement here, the Mercedes-Benz Group has
published further information regarding its advocacy
positions on the most important issues affecting the
Group and its stakeholders on the Internet (additional
information group.mercedes-benz.com/company/
advocacy).
107
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Combined Management Report with Non-Financial Declaration
The Mercedes-Benz Group is also continuously further
developing its partnership portfolio in order to achieve
its sustainable business targets. During the Sustainability
Dialogue in 2022, participants in the Partnership work-
shop (including representatives from the Advisory Board
for Integrity and Sustainability and representatives from
government, business and NGOs) defined criteria for
ensuring effective partnerships. These include the fol-
lowing: a clear target for the partnership, a systematic
approach, defining performance measures, building up
mutual trust, an open exchange of knowledge (open
source) and the scalability of the approaches to a solu-
tion.
Sustainability Dialogue
As a globally operating organization, the Mercedes-Benz
Group wants to contribute to the achievement of the Sus-
tainable Development Goals of the United Nations. An
important instrument for implementing these goals is the
communication with stakeholders in the form of the Sus-
tainability Dialogue, which has been held annually in
Stuttgart since 2008 and brings various stakeholder
groups together with members of the Board of Manage-
ment of Mercedes-Benz Group AG and executive man-
agement.
The Mercedes-Benz Group held the Sustainability Dia-
logue as a hybrid event in 2022. More than 200 external
and internal participants in a total of seven working
groups engaged in discussions of various topics both
on-site in Sindelfingen and online and also participated
in a public stakeholder dialogue.
In addition, organizational and thematic preparations
were made for the Sustainability Dialogues in China and
India scheduled for early 2023.
The Advisory Board as an important source of support
The Advisory Board for Integrity and Sustainability has
been providing support for the company's sustainability
work since 2012. The board's members are independent
external specialists from the fields of science and busi-
ness, as well as from civic organizations, and include
experts who possess specialized knowledge regarding
environmental and social policy, the development of
transport, traffic and mobility, and human rights and ethi-
cal issues. The members of the Advisory Board support
the Mercedes-Benz Group with constructive criticism on
questions related to integrity and corporate responsibil-
ity. The Advisory Board convenes several times a year in
meetings that are chaired by the member of the Board of
Management responsible for Integrity and Legal Affairs.
One of these meetings specifically serves to share infor-
mation with other members of the Board of Management
and members of the Supervisory Board. As part of a Sus-
tainable Strategy Week, the responsible managers from
the various specialist units meet with the Advisory Board
members to discuss the areas of action and enablers
identified in the sustainable business strategy and also
talk about targets, strategies, measures and the results
achieved with these. The Advisory Board also holds regu-
lar meetings with managers and other employees to dis-
cuss specific topics. Two new working groups were
established in the reporting year in order to strengthen
this dialogue. The goal here is to promote more extensive
discussions on the topics of "Integrity and employees"
and "Climate change mitigation and resource conserva-
tion". In 2022, the Advisory Board also addressed, among
other things, the new Corporate Citizenship Strategy, the
social dimension of sustainability and its impact on the
Mercedes-Benz Group, and the topic of climate neutrality.
Fellowship programme for young people
"beVisioneers The Mercedes-Benz Fellowship" (addi-
tional information ☺ bevisioneers.world) - this is the
name under which The DO School Fellowships gGmbH
(The DO School) has designed a support programme. It is
funded by Mercedes-Benz AG through donations to The
DO School and implemented by the organization's team
of experts. Mercedes-Benz AG chose The DO School after
a multi-stage selection process and based on the organi-
zation's experience and expertise in designing and imple-
menting global support programmes.
The programme's long-term goal is to build a global com-
munity of people whose sustainability projects have a
positive impact on the environment. The programme is
being funded by the proceeds from the auction of a
Mercedes-Benz 300 SLR Uhlenhaut Coupé from 1955
during the reporting year. The vehicle was sold for
€135 million. Most of the auction proceeds are used to
secure the programme's funding through annual dona-
tions to The DO Fellowship gGmbH.
106
Stakeholder consultation in topic-related
working groups
Participation
- Capital market events: capital market days,
investor conferences, roadshows
As early as 2006, the Mercedes-Benz Group set itself the
target of continuously and sustainably increasing the pro-
portion of women in executive positions (Level 3 and
higher) worldwide to 20% by the end of 2020. This goal
was achieved, and the Board of Management of
Mercedes-Benz Group AG therefore decided during the
reporting year to further increase the proportion of
women in executive positions at the company to 30% by
2030.
The Mercedes-Benz Group uses relevant data from its
human resources reporting systems to review the pro-
gress made in increasing the proportion of women in top
management positions. The results are reported to the
Board of Management of the Mercedes-Benz Group AG in
a standardized form on a regular basis.
Results
Each year,
the Group devotes a day specifically to diver-
sity: the Mercedes-Benz Group's Diversity Day. Con-
sciously experiencing diversity, taking in new perspec-
tives and understanding how all employees can profit
from diversity and equal opportunity these are central
objectives of the Mercedes-Benz Group. Diversity Day
took place for the tenth time in the reporting year. During
the event, employees were invited to discuss various top-
ics and ask questions. Diversity Day was also used as an
occasion to conduct other local diversity-related activi-
ties around the world.
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Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Press and public relations work
Blogs and social media
Plant tours, receptions,
Mercedes-Benz Museum
Environmental declarations by the plants
- Capital market communication
108
- Climate Policy Report
Dialogue
Annual Sustainability Dialogue (Germany/
regions)
- Local dialogue with residents and
-
municipalities
Internal dialogue sessions on integrity and
compliance
- Supplier Portal
-
Membership of sustainability initiatives and
networks
Specialist conferences on societal topics and
debates
Topic- and project-related discussions
Dialogue formats on future-oriented questions:
think tanks, hackathons, ideation challenges
Sustainability Forum
Sustainability rankings and ratings
As of 31 December 2022, women occupied 24.7% of the
senior management positions at the Mercedes-Benz
Group worldwide.¹
Annual Report 2022 Mercedes-Benz Group
Integrity and compliance
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Information, dialogue and training
The Mercedes-Benz Group established its Infopoint
Integrity in 2015 in order to promote a culture of integrity
at the company. Infopoint Integrity is the central point of
contact for questions concerning ethical behaviour. Info-
point Integrity works together with specialists including
experts in the fields of legal and HR issues, data protec-
tion, compliance, diversity and sustainability. It either
provides direct support or connects employees with the
appropriate contact partners.
During the reporting year, the Mercedes-Benz Group
restructured cooperation and activities in the Integrity
Network. The Integrity Network is made up of representa-
tives from the business units and serves as a shared
communication platform, with the aim of embedding
integrity in everyday business life. The focus in 2022 was
on establishing this realignment. The Integrity Manage-
ment controls the Integrity Network and provides the
representatives with content, tools and dialogue formats
as needed.
Employees can also access the Integrity Toolkit via the
employee portal. The Toolkit contains formats for dia-
logue events, tools for self-reflection, case studies and
further information about the topic of integrity.
The Group sets great particular emphasis on direct dis-
cussions, and once again conducted a variety of dialogue
events with employees at all levels of the hierarchy and
with external stakeholders. These dialogue events were
conducted virtually because of the protective measures
in force due to the Covid-19 pandemic.
In addition, the employees in administrative areas at
Mercedes-Benz Group AG and Group companies regularly
complete a mandatory web-based training course about
integrity that is based on the Integrity Code. Because
managers serve as role models, they perform an espe-
cially important task with regard to compliance, integrity,
legal matters and sustainability. In order to help them as
much as possible to carry out this role, the training pro-
gramme also includes a special mandatory management
module.
Employee survey
The results of the 2021 employee survey on Integrity &
Compliance have been incorporated into various fol-
low-up measures. The managers of the Mercedes-Benz
Group are responsible for the implementation. To support
them in their task, the Integrity Management & Corporate
Responsibility unit offered webinars in the reporting year.
These webinars presented the results of the survey, pro-
vided more detailed explanations and featured tools for
possible follow-up activities. The culture of integrity
within the Mercedes-Benz Group is to be reassessed in
2023.
Value-based compliance management
Value-based compliance is an indispensable part of the
Mercedes-Benz Group's daily business activities and is
firmly embedded in its corporate culture. The company is
strongly committed to responsible conduct. It expects its
employees to comply with laws, regulations and volun-
tary self-commitments. The Mercedes-Benz Group has
also laid down these expectations in a binding form in its
Integrity Code.
Through its Compliance Management System (CMS), the
Mercedes-Benz Group aims to promote compliance with
laws and policies at the company. The necessary meas-
ures are defined by the compliance and legal organiza-
tions in a process that also takes the company's business
requirements into account in an appropriate manner.
B.36
The Compliance Management System
VII. Monitoring &
improvement
VI. Communication &
training
I. Compliance values
V. Compliance pro-
gramme
II. Compliance objec-
tives
III. Compliance organ-
ization
IV. Compliance risks
110
HO
Employee portal and internal communication
channels
109
During the reporting year, the Group revised the content
of the Code of Conduct to include topics such as animal
welfare issues. The revised Code of Conduct was com-
municated to employees in early 2023.
The Mercedes-Benz Group has also formulated a special
set of requirements for managers in the Integrity Code.
In particular, it expects managers to serve as role models
through their ethical behaviour and thus offer guidance
for employees.
The Integrity Code is binding on all employees of the
Mercedes-Benz Group and the Group companies.
Employees from a variety of units all over the world
helped to formulate the Integrity Code. It is available in
ten languages and includes, among other things, regula-
tions concerning corruption prevention measures,
upholding human rights, data management and compli-
ance with technical product requirements. Employees
can view the Integrity Code on the employee portal,
along with details on how it should be applied and other
key information such as FAQs, points of contact and con-
tact persons.
B.35
Target
The Mercedes-Benz Group's integrity-related activities are
designed to help the company achieve the following key
targets:
Minimizing risks through knowledge of and compliance
with the Integrity Code
All employees and managers behave and act in an ethical
and responsible manner
- Discussions and dialogue concerning current key integrity
topics
Feedback from integrity analyses is incorporated into
measures designed to strengthen the culture of integrity
The Mercedes-Benz Group's compliance-related activities
are designed to help the company achieve the following key
targets in particular:
Respect for and upholding of human rights
Compliance with corruption prevention regulations
Maintenance and promotion of fair competition
Ensuring product compliance with technical and
Combined Management Report with Non-Financial Declaration
regulatory requirements
Compliance with all applicable embargoes and sanctions
Prevention of money laundering and the financing of
terrorism
Target horizon
Ongoing
Ongoing
Companies only stay successful if their actions are ethi-
cal and legally responsible. This is especially the case
during times of upheaval and change like those that com-
panies are currently experiencing. Hence, integrity and
compliance are very important to the Mercedes-Benz
Group.
A corporate culture of integrity
The automotive industry is in a state of radical change.
New fields of business are developing and new technolo-
gies are raising new questions - both ethical and legal.
Moreover, the Covid-19 pandemic has led to profound
changes all over the world. In such times of change and
uncertainty, value-based action matters more than ever.
That's why integrity is a central element of the Mercedes-
Benz Group corporate culture and an enabler that forms
an integral part of the company's sustainable business
strategy. For the Group, this involves more than just
obeying laws and regulations. The Mercedes-Benz Group
also aligns all its actions with shared principles, which in
particular include fairness, responsibility, respect, open-
ness and transparency.
Integrity in daily business activities
At the Mercedes-Benz Group, integrity, compliance and
legal affairs are combined into a single Board of Manage-
ment division. The Integrity and Legal Affairs division
supports all corporate units in their efforts to embed
these topics in daily business activities.
The Integrity Management & Corporate Responsibility unit
works to promote and enhance integrity within the
Mercedes-Benz Group and create a shared understanding
of integrity. The goal is to avoid possible risks that can
arise due to unethical behaviour and thus to contribute
to the company's long-term success. The Head of Integ-
rity Management & Corporate Responsibility reports
directly to the member of the Board of Management
responsible for Integrity and Legal Affairs.
Corporate principles and the Integrity Code
The Mercedes-Benz Group encourages and enables its
employees to consistently uphold its corporate princi-
ples. The Integrity Code, which is valid throughout the
Group, provides them with guidance because it serves
as the shared standard of values, defines the guidelines
for all conduct and helps the company make the right
decisions.
Adherence to data protection laws
The diversity concepts employed for the Board of Man-
agement and the Supervisory Board are presented in the
Declaration on Corporate Governance according to sec-
tions 289f, 315d of the German Commercial Code (HGB).
Advisory Board for Integrity and Sustainability
Peer review within the framework of
sustainability initiatives such as the UN Global
Compact
The Mercedes-Benz Group wants to ensure its employees
can work in a safe and healthy environment. Whether it's
ergonomic workplace design, health maintenance
Climate change mitigation and resource conservation are
two of the existential challenges of our times. At the
same time, the more ambitious the targets set by govern-
ments become, the less likely it is that they can be
reached through the efforts of the automotive industry
and its companies alone. The political framework is the
key here, so a cooperative dialogue needs to be main-
tained between government, business and industry, and
society at large - and this is exactly what the External
Affairs unit at the Mercedes-Benz Group seeks to accom-
plish.
2022
2022
2039
Ongoing
Target horizon
Milestone: continue stakeholder interviews and derive
necessary measures for future political representation of
interests
Milestone: support sustainable corporate goals with
regard to "Electric only" and locally emission-free produc-
tion through political representation of interests
Make lobbying activities comprehensible and verifiable on
the basis of defined evaluation criteria
Use political advocacy responsibly to achieve sustainable
corporate goals and to facilitate the opinion-forming process
at national and international level
Target
B.33
Responsible and transparent representation of
interests
can switch to conditional driving automation (SAE Level
3) in congested traffic as well as in traffic jams (up to
60 km/h) on selected stretches of German motorways.
As an actor in the transport sector, the Mercedes-Benz
Group supports the Paris Climate Agreement: It is
convinced of the goals of the agreement.
With the DRIVE PILOT, the Mercedes-Benz Group is aim-
ing to take a decisive step toward conditionally auto-
mated driving (SAE Level 3).5 The DRIVE PILOT was
released for sale in Germany in May 2022 after the Ger-
man Federal Motor Transport Authority issued the new
system a licence to operate as an SAE Level 3 system on
the basis of the internationally valid UN-R157 regulation.
Since that time, customers who drive a Mercedes-Benz
S-Class or EQS with corresponding optional equipment
The new T-Class from Mercedes-Benz Vans participated
in the independent Euro NCAP4 safety test in July 2022.
With its performance in the four categories of occupant
safety, child safety, pedestrian protection and assistance
systems it received five out of five stars.
In addition, the Mercedes EQE received top ratings twice:
The maximum rating of five stars in the Euro NCAP² safety
ratings and the overall rating of "very good" for the
optional driving assistance package in the special rating
for assistance systems as well as a special Euro NCAP
Advanced Award³ for its Car-to-X communication system.
The Mercedes-Benz E-Class and GLE-Class received the
2022 TOP SAFETY PICK+ award for the 2022 model year,
while the GLC was given the 2022 TOP SAFETY PICK dis-
tinction.
Models from Mercedes-Benz Cars repeatedly earn top
marks in safety tests conducted by independent insti-
tutes. Of particular note in this regard are the marks
Mercedes-Benz regularly receives from the American
Insurance Institute for Highway Safety (IIHS). The IIHS
rating¹ assesses crash safety and accident-prevention
and lighting systems.
Top marks and an award
ahead or pedestrians crossing the carriageway. Moreover,
the speed limit assistant was integrated into further mod-
els in 2022, and its features have also been expanded.
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Combined Management Report with Non-Financial Declaration
104
Driver assistance systems ensure greater safety
Mercedes-Benz assistance and safety systems aim to
offer a high level of safety. For example, Mercedes-Benz
vehicles equipped with driving assistance systems sup-
port drivers when they steer, brake and accelerate (SAE
Level 2). Driving assistance systems can react differently
to the danger of a collision, depending on the situation.
The Active Brake Assist system, which comes as standard
equipment in Mercedes-Benz cars, is a good example of
this. Active Brake Assist can help reduce the severity of ―
or even entirely prevent accidents involving vehicles
The Group uses an integrated approach to answer the
technical, legal, ethical and certification and safety-rele-
vant questions relating to automated driving at
Mercedes-Benz Cars. An interdisciplinary team assesses
the possible impact of new technologies and develops
and implements balanced solutions to deal with the
effects.
Fewer accidents, greater traffic safety: this is one of the
objectives associated with the utilization of automated
and autonomous vehicle systems. In pursuing these
goals, ethical and legal risks associated with automated
systems must not be disregarded and are therefore
already taken into account by the Mercedes-Benz Group
in product development at Mercedes-Benz Cars. The
company is implementing data protection principles and
standards along the entire value chain in accordance with
the "privacy by design" maxim. The Group is also integrat-
ing ethical considerations into conditionally automated
and highly automated driving systems through the use of
its "ethics by design" principle and continuously further
developing these systems.
Integrated approach
Cooperation to further improve vehicle safety
The goal of increasing safety on the road can only be
achieved through collaboration, and that is why the
Mercedes-Benz Group establishes partnerships and par-
ticipates in research projects. The Mercedes-Benz Group
has been involved in the Tech Center i-protect strategic
cooperation project since 2016. The project includes
partners from business, government and scientific insti-
tutes. Within this cooperation, for example, the
Mercedes-Benz Group is working on projects such as new
restraint systems for future vehicle interiors. It is also uti-
lizing digital accident research methods and trying out
new approaches, such as the use of accident simulations
involving digital models of human beings.
Conditionally automated driving
Accordingly, the Group's political advocacy is clearly
aligned with its sustainable business strategy.
1 More information IIHS:
E-Class
-
Sustainability Report as well as regional
reports
Information
Examples of instruments of stakeholder dialogue
B.34
Mercedes-Benz Group AG did not make any financial or
non-financial contributions to political parties during the
reporting period. This decision was not based on current
political or economic events.
Party donations and political contributions
In addition, the Mercedes-Benz Group's Lobbying, Politi-
cal Contributions and Party Donations policy defines
responsible approaches to be used in connection with
grants, donations to political parties, and other instru-
ments for representing the company's interests in the
political realm. The company also has a Donations and
Sponsorships Policy in place.
The Mercedes-Benz Group conducts mandatory training
courses on a regular basis to ensure the employees com-
ply with statutory requirements and internal guidelines
and policies. The Integrity and Legal Affairs unit is
responsible for such courses. EA supports the courses
when needed by contributing its political expertise. At
the beginning of their employment, employees outside
External Affairs whose positions also require them to rep-
resent Mercedes-Benz in the political environment of
their market (e.g. plant management positions) usually
participate in a special onboarding process (in the form
of an interactive online training module) that prepares
them for their tasks and makes them aware of relevant
policies.
Business Practices Office (BPO) whistleblower system
accepts complaints and reports relating to compliance
issues.
The Mercedes-Benz Group uses Group-wide established
compliance processes to address risks in connection
with the political representation of its interests. The
The External Affairs (EA) unit is the central coordinating
body for political dialogue at the national and interna-
tional levels. It is located in Stuttgart and falls under the
responsibility of the Chairman of the Board of Manage-
ment. The EA unit shapes the Mercedes-Benz Group's
relations via a global network with offices in Berlin, Brus-
sels, Beijing and Washington, as well as corporate rep-
resentations in various markets.
Governance
Here too, it adheres to the principles of transparent rep-
resentation of interests.
mercedes-benz.com/investors/share/esg/) to inform
about its political positions. In addition, the Mercedes-
Benz Group publishes further information regarding its
stance on relevant, strategic issues affecting its stake-
holders on the corporate website (additional information
group.mercedes-benz.com/company/advocacy/).
With the legally required registration in the German
Lobby Register, the Mercedes-Benz Group AG has com-
mitted itself, in addition to its own lobbying principles, to
comply with the Code of Conduct for Interest Represent-
atives under the Lobby Register Act. It has made further
commitments by voluntarily accrediting its political rep-
resentatives in the EU Parliament's transparency register.
The Group also uses its own Mercedes-Benz Group Cli-
mate Policy Report (additional information
group.
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Combined Management Report with Non-Financial Declaration
105
driver must be able to resume all driving tasks at any time when prompted.
5 The system performs all driving tasks in specific circumstances. Even at SAE level 3, the
T-Classeuroncap.com/en/results/mercedes-benz/t-class/46257
4 More information test results according to Euro NCAP;
euro-ncap-advanced-rewards/2022-mercedes-benz-car-to-x-communication/
3 More information Car-2-x communication euroncap.com/en/ratings-rewards/
euroncap.com/en/results/mercedes-benz/eqe/47133
EQE
2 More information test results according to Euro NCAP:
iihs.org/ratings/vehicle/mercedes-benz/glc-4-door-suv/2022,
iihs.org/ratings/vehicle/mercedes-benz/gle-class-4-door-suv/2023
Occupational health and safety
iihs.org/ratings/vehicle/mercedes-benz/e-class-4-door-sedan/2023,
The Mercedes-Benz Group utilizes its holistic Integral
Safety concept in its vehicle development activities. This
concept was first used in the late 1990s to describe how
Mercedes-Benz had divided the utilization of safety sys-
tems into four phases: Assistance during driving, Prepa-
ration for a possible accident, Protection during an acci-
dent and Help after an accident. The Group's safety
measures establish a bridge between active and passive
safety within these four phases - i.e. between accident
prevention (phases 1 and 2) and protection when an acci-
dent occurs (phases 3 and 4). The objectives and deci-
sions in the area of traffic safety are ensured and made
by the Steering Committee Integral Safety (LK IS). It
reports directly to the Research & Development Execu-
tive Committee of Mercedes-Benz Cars.
Holistic safety concept
GLC
GLE
Ongoing
Raising awareness of occupational safety issues
The Mercedes-Benz Group uses media such as videos,
various information portals and online training courses to
increase its employees' awareness of ergonomics and
occupational safety issues. It provides new employees
with initial instruction regarding the safety-relevant
aspects of their workplaces. They are subsequently
required to participate in safety-awareness briefings that
are held on a regular basis.
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102
At the Mercedes-Benz Group, occupational medicine
includes programmes and measures for the prevention of
work-related illnesses and occupational diseases as well
as for the promotion of health in the workplace.
Company health management and mental health
The Mercedes-Benz Group offers their employees in Ger-
many occupational health advice and screening as well
as measures and services from the company's own
health programme and social counselling service. The
Mercedes-Benz Group wants to promote both the mental
and physical health of its employees with its company
health management system in Germany. This objective is
promoted with the help of campaigns, counselling and
qualification offerings, as well as with preventive, thera-
peutic and rehabilitation measures. In 2021, a Group
agreement on mental health in the workplace was
reached for Germany between the works council and the
Group management with the goal of maintaining and pro-
moting the employees' mental health. Internationally, the
Mercedes-Benz Group focuses on medical care and the
coordination of pandemic-related measures and preven-
tion strategies as well as ergonomics.
Risk assessments are an important tool with which the
Mercedes-Benz Group evaluates potential risks. The
Mercedes-Benz Group is digitalizing parts of this risk
management process using an online tool that is being
made available all over the world. The tool is provided by
the European Agency for Safety and Health at Work
(EU-OSHA) and was expanded for the company's pur-
poses. It shows the specific risks that can arise in a par-
ticular area of responsibility. The user then only needs to
decide whether the suggested measures suffice to
reduce the risk to an acceptable level. On this basis, the
user then only needs to decide whether the suggested
measures suffice to reduce the risk to an acceptable
level. This risk assessment is then used as a basis for
automatically generating instruction documents. The
Mercedes-Benz Group also assesses the mental and
ergonomic stress caused by workplaces and the respec-
tive working environment.
In addition, a standardized procedure is used to deter-
mine whether the Group policy regarding occupational
health and safety has been duly implemented throughout
the organization. To this end, each site that employs more
than 500 people or has a corresponding risk level is vis-
ited and evaluated approximately every five years.
The Mercedes-Benz Group wants to prevent its employ-
ees from experiencing accidents or impaired health. The
Health & Safety unit is therefore pursuing a preventive
approach and assesses the potential risks of workplaces
and work processes at an early stage. The Health & Safety
unit operates a safety risk management system at the
Group's own production plants that is aligned with the
Group's Policy on Occupational Health and Safety. Health
& Safety also defines instruments and risk assessment
processes that are implemented at the local level.
Risk management
As early as 2020, the Mercedes-Benz Group expanded its
global accident documentation system to include an
emergency documentation module for recording Covid-19
cases. This module includes an integrated digital report-
ing process for infections that enables the rapid docu-
mentation of all Covid-19 cases among the employees
and thus a fast follow-up of possible contacts by the
plant medical service and managers.
In order to curb the spread of Covid-19, employees at
Mercedes-Benz Group sites were provided with informa-
tion on various measures and rules. In Germany, they
were put into effect in connection with the Infection Pro-
tection Act. During the reporting year, the Group repeat-
edly reviewed and refined its hygiene strategy, which is
based on risk assessment. Among other things, this strat-
egy was modified in response to changes to the legal
framework and pandemic-related developments.
Dealing with Covid-19
Occupational health and safety issues are also discussed
on a regular basis in various committees, such as the
Occupational Safety, Environment and Health Commis-
sion, as well as with works council representatives and
representatives of the Group.
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101
1 Headcounts, fully consolidated companies
programmes or occupational safety training, the Group's
overarching goal is to avoid health risks and maintain its
employees' health over the long term.
Occupational health and safety issues throughout the
Group are managed by the Health & Safety unit, which is
part of Human Resources and under the direction of the
Chief Physician at the Mercedes-Benz Group in Germany.
The Mercedes-Benz Group's occupational safety strategy
includes standards for the design of workplaces and work
processes. The goal here is to systematically reduce
occupational and health-related risks. The Mercedes-
Benz Group operates on the basis of globally uniform
guidelines for risk prevention. The Group's occupational
health and safety policy, which includes the Minimum
Standards for Corporate Health & Safety, as well as the
occupational health and safety guidelines that are
defined in a Group-wide agreement, serve as overarching,
internationally valid regulations. All of these policies, as
well as all applicable laws in each country where the
company operates, must be complied with. The internal
guidelines are all based on international standards and
national laws and emphasize the managers' obligation to
act responsibly. Moreover, they underscore the employ-
ees' own responsibility.
Requirements, policies, organization and
responsibilities
During the year under review, the Mercedes-Benz Group
strategically realigned its occupational health and safety
management system and defined new objectives and tar-
gets. Among other things, well-being was added as an
additional strategic area of action and defined within the
Group for the first time. In line with the definition, the
topic is divided into the areas of emotional, physical,
social and financial well-being.
The Mercedes-Benz Group thus utilizes a holistic occupa-
tional health and safety management system that also
includes a quality management system. The focus here is
mainly on preventive measures that it continuously
reviews and develops further.
Safety is part of the brand essence of Mercedes-Benz.
Accident-free driving - this vision drives the Mercedes-
Benz Group and is a fixed element of its sustainable busi-
ness strategy. The Group's driver assistance systems are
intended to offer drivers and passengers a high level of
safety. These systems can help drivers avoid or safely
manage critical situations on the road in order to protect
both vehicle occupants and other road users.
The Mercedes-Benz Group launched a new project known
as "We Work SAFE!" during the reporting year. The goal
here is to establish a sustainable culture of safety that
will lead to a long-term reduction in the number of work
accidents. Various working groups are developing meas-
ures that will raise employees' awareness of the impor-
tance of this issue. These measures include the Principles
of Safety at Work that apply throughout the Group. The
project also makes intensive use of internal communica-
tion channels and training programmes promoting a cul-
ture of safety. Reporting channels are also being further
standardized and digitalized.
Results
The Mercedes-Benz Group records information about
work accidents and risks by means of its accident docu-
mentation systems.
During the reporting year, the Sindelfingen site obtained
the voluntary ISO 45001 certification of its management
system for the first time. Irrespective of any external cer-
tification audits, the Mercedes-Benz Group reviews the
safety standards at its own production locations about
every five years to check whether they comply with the
standards of the binding corporate policy concerning
occupational health and safety and whether a functioning
occupational health and safety management system
(OHSMS) is in place. During the reporting year, the
Mercedes-Benz Vans production sites in Düsseldorf and
Ludwigsfelde (both in Germany), Vitoria (Spain), Ladson
(United States) and Buenos Aires (Argentina) were evalu-
ated as planned.
Ongoing
Continue the integration of social and ethical aspects into
Level 2-4 automated driving systems
Ongoing
Various measures, which include safety and hygiene rules,
testing strategies and offers of vaccination in connection
with Covid-19, have been implemented in an attempt to
protect employees as well as possible.
Ongoing
Make vehicles even safer for other road users, such as
pedestrians
Ongoing
Make vehicles even safer for occupants during an accident
and afterwards
Further improve accident-prevention systems
Ongoing
Target horizon
Target
Increase overall traffic safety by means of safety initiatives
Expand the automation of driving functions for SAE Level
2-4
Traffic safety
Social issues
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
2 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
An effective reporting procedure helps the Mercedes-
Benz Group achieve its occupational health and safety
targets. In addition to its German accident documenta-
tion system, the Mercedes-Benz Group introduced an
accident documentation system in 2019 that international
sites and subsidiaries can use to report accidents. The
Mercedes-Benz Group uses the figures provided by the
system to produce monthly reports on Group-wide acci-
dent statistics in line with applicable data protection reg-
ulations. During the reporting year, the Mercedes-Benz
Group's production sites had an accident frequency of
4.8.12
B.32
In the year under review, preparations were also made for
the application of the international accident documenta-
tion system at the German sites. The aim is to use a uni-
form system worldwide starting in 2023.
Every accident is analysed in order to determine the
sequence of events. The affected units are also required
to initiate preventive measures. Data on accidents from
which other sites can learn and derive measures is sent
to all occupational safety experts at all locations world-
wide.
103
1 Number of work-related accidents that resulted in at least one lost day per 1 million hours
of attendance
The 24 critical raw materials that were identified during a
preliminary risk assessment will be gradually examined in
more detail between now and 2028. This review basically
consists of three steps:
-
1. Increasing transparency along the raw material supply
chains especially with regard to certain key compo-
nents such as battery cells. To this end, Mercedes-
Benz AG contacts the suppliers of the relevant compo-
nents, for example, and asks them to disclose their
structure of subcontractors.
2. Identification of risk hotspots in these supply chains,
e.g. on the basis of the specific risks in the individual
mining countries.
3. Definition and implementation of measures for the risk
hotspots and review of whether they are effective over
the long term.
examination of the situation. If the supplier does not suf-
ficiently remedy the criticized processes, the company
makes individual decisions regarding the next steps. In
especially serious cases, these decisions can also be
made by management bodies. As a last resort, this can
also lead to the discontinuation of Mercedes-Benz AG's
business relationship with a supplier.
Human rights risks in the supply chains
Production materials. The Mercedes-Benz Group focuses
especially on critical raw materials when assessing human
rights risks in the production-material supply chain.
The Mercedes-Benz AG also continued to conduct audits
at production material suppliers in 2022, when a total of
825 on-site audits were completed. Some of these audits
were conducted virtually due to the Covid-19 pandemic.
Services. The Mercedes-Benz Group also ensures that its
service providers share responsibility for respecting
human rights and for other sustainability-related aspects.
International Procurement Services (IPS) evaluates all
new service providers in risk countries and critical pro-
curement segments to determine whether they fulfil
social and environmental standards, are ethical in their
business operations, and properly implement policies.
The Group used a preliminary risk analysis as a basis for
identifying 27 services that are potentially critical from a
human rights standpoint. In cooperation with a team of
experts, the results of this analysis were then used to
create a list of questions. Service providers are required
to answer these questions. The goal of the Mercedes-
Benz Group here is to identify any increased human
rights risks for certain services and sectors. This gives the
Group a transparent overview of the risks and enables it
to initiate targeted analyses of the status quo and engage
in a productive dialogue with relevant service providers.
The Mercedes-Benz Group also audits its service provid-
ers' due diligence activities. These audits focus on
assessments of service providers in high-risk countries.
The Group supplements its assessments with document
checks and database research in order to ensure the
information is plausible. During the year under review,
the on-site audits and screenings of direct suppliers of
the Mercedes-Benz Group that were conducted by IPS
discovered no specific suspected cases of child labour or
forced labour, nor were there any indications of violations
of the right to collective bargaining or freedom of associ-
ation.
117
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Raising awareness of human rights issues
The Mercedes-Benz Group uses the Integrity Code and
the Principles of Social Responsibility and Human Rights
to provide its employees with information about the topic
of human rights principles and to raise their awareness of
human rights risks. The provisions of the Integrity Code
and the Principles are binding on all employees. During
the reporting year, the Principles were integrated into
existing training concepts, such as the mandatory web-
based basic module Integrity@Work.
Since 2018, the Mercedes-Benz Group has been cooper-
ating with the Drive Sustainability initiative on the imple-
mentation of measures to make production material sup-
pliers in various focus countries more aware of the
importance of sustainability, for example by providing
such suppliers with information on this issue. The Group
selected the respective countries jointly with the initia-
tive. During the reporting year, supplier training courses
that had been scheduled to take place in Mexico and the
United States were held as web-based events due to the
Covid-19 pandemic.
Complaint management
The Procurement department of Mercedes-Benz AG mon-
itors the human rights compliance of direct suppliers of
production materials. Procurement regularly conducts
risk analyses that also include on-site CSR audits and an
annual database research procedure. Its objective here is
to identify possible violations of sustainability and com-
pliance rules an early stage on the basis of the latest
supplier data. Should any red flags be revealed,
Mercedes-Benz Procurement initiates an extensive
The Mercedes-Benz Group uses the Social Compliance
Management System (Social CMS) to identify and
address in particular human rights risks that can arise
among employees in its own Group companies. The
Group has integrated the Social CMS and the topic of
human rights at its Group companies into its central and
systematic compliance risk management process. Within
the framework of this process, the Mercedes-Benz Group
develops packages of risk specific measures that are
then assigned to the affected Group companies and
modified as needed. The Compliance Responsibles in the
global compliance network are also incorporated into the
process. Using the information thus gained as a basis, the
Mercedes-Benz Group produces an overall risk analysis
for the Group companies.
4.
The Mercedes-Benz Group continues to expand the HRRS
step by step and also involves external stakeholders in
this process. The stakeholders include rights holders
such as employees and their representatives, as well as
local residents. The Mercedes-Benz Group also holds
talks with international NGOs and other organizations
concerning the human rights risks arising from the
extraction of certain raw materials.
The Group offers employees and external whistleblowers
various channels through which they can report sus-
pected human rights violations and rule violations and
also request remedy. These channels thus also help the
company identify and assess human rights risks through-
out the organization. Both the company BPO (Business
Practices Office) whistleblower system and the World
Employee Committee are available to receive reports of
suspected human rights violations.
During the reporting year, the Mercedes-Benz Group
resolved for the first time to designate a Human Rights
Officer. The Human Rights Officer is responsible for mon-
itoring compliance with the Principles of Social Responsi-
bility and Human Rights and the HRRS and reports to the
member of the Board of Management responsible for
Integrity and Legal Affairs. The Human Rights Officer is
also a member of the Group Sustainability Board and
reports annually and as needed to the Mercedes-Benz
Group AG Board of Management on particularly relevant
human rights issues and the status of implementation of
the Principles of Social Responsibility and Human Rights.
The Chief Compliance Officer serves as the Human Rights
Officer at the Mercedes-Benz Group.
Examination of human rights risks
The Human Rights Respect System (HRRS) is the
Mercedes-Benz Group's approach to fulfilling its human
rights due diligence obligations. It encompasses the pro-
tection of the Mercedes-Benz Group's own employees via
the Social Compliance Management System (Social CMS)
in Group companies, as well as the processes used to
monitor human rights due diligence in supply chains. The
Mercedes-Benz Group utilizes this human rights due dili-
gence approach to examine Group companies and their
direct suppliers (tier 1) and also, from a risk-based stand-
point, indirect suppliers (beyond tier 1).
The HRRS is to be understood as a due diligence cycle
that basically consists of four steps: 1. Risk assessment,
2. Programme implementation, 3. Monitoring, and
4. Reporting. It is designed to identify risks and possible
and actual negative effects of business activities on
human rights early on, to systematically avoid such
effects and, if necessary, to initiate countermeasures.
B.38 Human Rights Respect System
Policy commitment
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Combined Management Report with Non-Financial Declaration
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
5. Reporting
assessment
HRRS
Due diligence
cycle
The Social Compliance department serves as the centre
of competence for human rights. This department works
closely with the specialist units responsible for opera-
tional implementation of the company's human rights
due diligence obligations, and with the procurement units
in particular. Overarching activities relating to human
rights issues are managed by the Mercedes-Benz
Group AG Board of Management division Integrity and
Legal Affairs. The division is responsible for drawing up
the Principles of Social Responsibility and Human Rights
and it also manages human rights due diligence obliga-
tions within the Mercedes-Benz Group via the Group's
Human Rights Respect System (HRRS). The responsible
member of the Board of Management regularly obtains
information and corresponding reports about the Group's
human rights activities. ④group.mercedes-benz.com/
sustainability/human-rights/hrrs/
3. Monitoring
im Prog
me
116
Remediation
1. Risk
-
Economic activities in certain energy sectors as specified
in the complementary delegated act to climate objectives
exist at Mercedes-Benz Group only to an immaterial
extent and exclusively serve the operation of economic
activity 3.3.
EU taxonomy
Taxonomy alignment
In a further step, taxonomy alignment must be assessed
for taxonomy-eligible economic activities. Only taxono-
my-eligible activities can be considered as environmen-
tally sustainable activities, or as being taxonomy-aligned,
provided they meet certain technical screening criteria.
Here, the fulfilment of certain technical screening criteria
with regard to the relevant economic activities must
make a substantial contribution to an environmental
objective defined by the taxonomy regulation and, on the
basis of defined "do no significant harm” criteria (DNSH
criteria), also exclude the possibility of significant inter-
ference with another environmental objective. It must
also be ensured that minimum standards are met with
regard to issues such as upholding human rights or com-
bating corruption (minimum safeguards).
Fulfilment of a substantial contribution to the climate
change mitigation environmental objective
According to the delegated act, all vehicles complying
with the limit value of 50g CO2/km per vehicle (in accord-
ance with the WLTP) as defined in the technical screening
criteria make a substantial contribution to the climate
change mitigation environmental objective. At Mercedes-
Benz Group all-electric vehicles as well as the majority of
plug-in hybrid vehicles are below this threshold. These
vehicles are hereafter referred to as "low-carbon vehi-
cles".
Exclusion of the possibility of significant interference
on the basis of the “do no significant harm” criteria
Compliance with DNSH criteria is used in a second step
to demonstrate that the economic activities in question
do not significantly interfere with other environmental
objectives.
In connection with economic activity 3.3, the fulfilment of
these criteria was basically assessed at the level of those
consolidated production sites where low-carbon vehicles
or associated components are currently being manufac-
tured or will be manufactured in the future.
In due consideration of a further FAQ document of the EU
Commission (published as a Draft Commission Notice on
December 19, 2022) only tyres corresponding to the two
highest classes for rolling resistance coefficients availa-
ble on the market and at the same time the highest class
for external rolling noise available on the market fulfill
DNSH requirements for the respective vehicles. For the
analysis the time of market placement was used. For the
assessment of the respective classes available on the
market, the data of the European Product Database for
Energy Labelling (EPREL) shall be used. For vans, such an
assessment of tyre classes available on the market for
the respective vehicles according to EPREL database has
been performed. For passenger cars, the theoretical two
For economic activity 6.5, the DNSH criteria refer to com-
pliance with various product-related European regula-
tions and directives on, among other things, emission
limits and rolling resistance coefficients - as well as roll-
ing noise requirements for tyres. Only all-electric vehicles
in the area of application of those EU laws are currently
considered in the taxonomy-aligned scope of economic
activity 6.5.
Pollution prevention and control. With regard to the
DNSH criteria, the EU taxonomy for economic activity 3.3
under Annex C of the delegated act relating to climate
change mitigation refers to the concept of avoiding the
manufacturing, placing on the market or use of restricted
substances subject to current European legislation on
chemicals, as well as of other groups of substances that
go beyond that (defined under sections f) and g) in the
mentioned annex). However these requirements contain
an exemption rule which is applied by Mercedes-Benz
Group. With regard to the regulation of chemicals, the
Group has established internal guidelines and approval
and monitoring procedures for production-related and
product-related activities. The Mercedes-Benz Group has
also defined specifications for substitution analyses, and
thus for the use of less critical hazardous substances.
Economic activity 6.6 mainly comprises the continuing
Daimler Truck portfolio at Mercedes-Benz Mobility.
The Mercedes-Benz Group is intensifying its efforts to
use lower volumes of raw materials and other materials
at its production sites as well. In accordance with the
waste hierarchy, the company's primary goal is to avoid
waste. For its production sites worldwide, the Mercedes-
Benz Group has set reduction targets for factors such as
total waste volume and waste volume for disposal per
vehicle. Waste management is also a component of the
Group's internal environmental risk assessments.
Sustainable use and protection of water and maritime
resources. With regard to the production of low-carbon
vehicles, the Mercedes-Benz Group ensures fulfilment of
the DNSH criteria mainly through the use of established
environmental management systems and internal envi-
ronmental risk assessments (environmental due diligence
process). The company has established environmental
management systems at its production sites around the
world in accordance with EMAS or ISO 14001. These envi-
ronmental management systems are certified at regular
intervals. As part of the internal environmental risk
assessments, consolidated production sites are evalu-
ated according to a number of factors, including those
relating to water quality. Recommendations for minimiz-
ing risks are then drawn up and the progress is appropri-
ately monitored. The Group also uses external data
sources to identify sites that are subject to risks regard-
ing water scarcity.
Climate change adaptation. A climate risk assessment
was conducted for relevant production sites in order to
analyse physical climate risks on the basis of significant
climate-related hazards. Adaptation measures were then
evaluated on the basis of the identified risk exposure.
The analysis took into account recognized scenarios from
the Intergovernmental Panel on Climate Change (IPCC),
including one scenario that depicts the biggest physical
impacts. Various time horizons (e.g. 2040) and a trend
analysis were examined. The verification of the DNSH cri-
teria for economic activity 6.5 is essentially based on the
consideration of relevant conditions of use and the envi-
ronment, such as heat and cold requirements in the con-
text of vehicle development and testing.
Annual Report 2022 Mercedes-Benz Group
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19
119
respective low-carbon vehicles.
Organizational embedding
In connection with economic activity 6.5, the analysis of
the criteria has to be performed on the basis of the
Transition to a circular economy. With regard to eco-
nomic activity 3.3, the EU taxonomy regulation requires
an assessment and, if possible, the application of meas-
ures that promote the transition to a circular economy,
including the use of secondary materials, high durability
of products and waste management in production. When
developing products, the Mercedes-Benz Group consid-
ers the concept of circular economy from the very start
and has set itself the overarching goal of increasing its
use of secondary materials. In line with the relevant pro-
visions, and in accordance with ISO 22628, 85% of the
materials used in Mercedes-Benz cars and light commer-
cial vehicles can be recycled and 95% can be reused or
recovered. Among other things, this complies with the
requirements of economic activity 6.5.
-
Economic activity 6.5 relates to leasing and sales financ-
ing of all vehicles purchased from third parties.
Economic activity 6.5: encompasses leasing and
financing of low-carbon cars and vans
One of the important goals of the Commission Action
Plan on Financing Sustainable Growth in the context of
the European Green Deal is to divert capital flows to sus-
tainable investments. This is also the logic behind the EU
taxonomy regulation (EU 2020/852) that came into force
in mid-2020. This regulation governs the establishment of
a standardized and legally binding classification system
that defines which economic activities in the EU are con-
sidered to be aligned with the taxonomy and thus
environmentally sustainable with regard to the six envi-
ronmental objectives established by the regulation.
Climate change mitigation
Climate change adaptation
-
Sustainable use and protection of water and marine
resources
Transition to a circular economy
Pollution prevention and control
In a final Interpretation Document that the European
Commission published on 6 October 2022, the Commis-
sion stated that the term "low-carbon" only relates to the
assessment of taxonomy alignment within the framework
of the technical screening criteria and is not relevant for
reporting on taxonomy eligibility. With regard to auto-
makers in particular and as an example, the document
shows that the activity "manufacture of low-carbon vehi-
cles" also includes vehicles with combustion engines. For
the Mercedes-Benz Group, this clarification by the Euro-
pean Commission means that the manufacture of all
Group vehicles is reported as taxonomy-eligible.
Protection and restoration of biodiversity and
ecosystems
Taxonomy eligibility
Taxonomy eligibility is assessed in an initial step. For an
economic activity to be taxonomy-eligible, that activity
must be mentioned and explained in further detail in the
delegated acts for the taxonomy regulation. Descriptions
of relevant activities and technical screening criteria are
currently available as delegated act (EU 2021/2139) for
the first two environmental objectives (climate change
mitigation and climate change adaptation). Climate
change mitigation in particular is to be regarded as the
relevant environmental objective for the Mercedes-Benz
Group.
118
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Combined Management Report with Non-Financial Declaration
On the basis of the descriptions contained in the dele-
gated act relating to climate change mitigation, the fol-
lowing taxonomy-eligible economic activities have been
identified for the Group:
Economic activity 3.3: encompasses manufacture of
low-carbon transport technologies in connection with
the production of cars and vans
Companies that are required to publish a Non-Financial
Declaration must also comply with the taxonomy regula-
tion. According to Article 8 of the taxonomy regulation,
the taxonomy-aligned proportions of revenue, capital
expenditure and operating expenditure accounted for by
environmentally sustainable economic activities are to be
reported on an annual basis.
115
Economic activity 6.6: encompasses leasing and
financing of low-carbon trucks
Respect for human rights is a fundamental component of
responsible corporate governance at the Mercedes-Benz
Group. The Mercedes-Benz Group is committed to ensur-
ing that human rights are respected and upheld along the
entire value chain in all Group companies and by partners
and suppliers. The Principles of Social Responsibility and
Human Rights reflect this voluntary self-commitment.
They supplement and specify the principles of human
rights and good working conditions in the Mercedes-Benz
Group's Integrity Code. The Principles of Social Responsi-
bility and Human Rights apply to all employees world-
wide.
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Combined Management Report with Non-Financial Declaration
113
ing technical provisions or environmental protection
If the BPO's risk-based initial assessment categorizes an
incident as a rule violation with a high risk for the
Mercedes-Benz Group or for individuals affected by the
violation, the BPO hands the case over to an investigation
unit. The BPO provides support for the subsequent inves-
tigation until the case is closed. Examples of high-risk
rule violations include offences related to corruption,
breaches of antitrust law and violations of anti-money
laundering regulations, as well as infringements of bind-
If the initial risk-based assessment of an incident catego-
rizes it as a low-risk rule violation for the Mercedes-Benz
Group, the BPO hands the case over to the responsible
unit for example, the HR department, Corporate Secu-
rity or Corporate Data Protection. The respective unit
investigates the incident and deals with the case on its
own authority. Examples of rule violations with a low risk
include theft, breach of trust, and undue enrichment val-
ued at less than €100,000 - if the violation does not fall
into the category of corruption.
-
The information provided to the BPO whistleblower sys-
tem enables the Mercedes-Benz Group to learn about
potential risks and thus to prevent damage to the Group
and its employees and business partners, as well as to
protect individuals who might be harmed by misconduct.
A globally valid corporate policy defines BPO procedures
and the corresponding responsibilities. This policy aims
to ensure a fair and transparent process that takes into
account the principle of proportionality for the affected
parties, while also giving protection to whistleblowers. It
also defines a standard for the Mercedes-Benz Group's
evaluation of incidents of misconduct and decisions
about their consequences.
The Business Practices Office (BPO) whistleblower sys-
tem enables all employees worldwide, as well as busi-
ness partners and third parties, to report violations of the
rules. The BPO is available around the clock to receive
information, which can be sent by e-mail or normal mail
or by filling out a special online form. External toll-free
hotlines are also available in Brazil, Japan, South Africa
and the United States. Reports can also be submitted
anonymously if local laws permit this. In Germany, whis-
tleblower reports can also be submitted to an external
neutral intermediary in addition to the BPO.
The BPO whistleblower system
The compliance programme comprises principles and
measures that are designed to reduce compliance risks
and prevent violations of laws and regulations. The indi-
vidual measures are based on the knowledge gained
through the Group's systematic compliance risk analysis.
The Mercedes-Benz Group focuses, among other things,
on the following aspects: the continuous raising of
awareness of compliance issues, the systematic tracking
of information received regarding misconduct, and the
formulation of clear standards for the behaviour of busi-
ness partners. All of these points are addressed in greater
detail in a later section.
Compliance programme
The Mercedes-Benz Group examines and evaluates its
companies and corporate departments systematically
each year in order to reduce compliance risks. In this pro-
cess, the Mercedes-Benz Group uses, for example, cen-
trally available information about its companies, such as
revenue, business models and relations with business
partners. If necessary, other locally sourced information
is supplemented. The results of these analyses are the
foundation of the Group's compliance risk control.
Compliance risks
In addition, the Chief Compliance Officer and Vice Presi-
dent Legal Product & Technology reports to the Group
Risk Management Committee. From the Mercedes-Benz
Group's perspective, the structure of the reporting lines
safeguards the compliance officers' independence from
the business divisions.
The Chief Compliance Officer and Vice President Legal
Product & Technology reports directly to the member of
the Board of Management for Integrity and Legal Affairs
and to the Audit Committee of the Supervisory Board. He
also reports regularly to the Board of Management of
Mercedes-Benz Group AG at regular intervals and as
needed on matters such as the status of the CMS and its
further development, as well as the BPO whistleblower
system.
legal affairs departments. It meets regularly and as
needed, and is chaired by the Chief Compliance Officer
and Vice President Legal Product & Technology.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
regulations. Personal matters, such as incidents of sexual
harassment or human rights violations, are also consid-
ered high-risk rule violations.
In an effort to constantly increase trust in the BPO whis-
tleblower system and make it even better known to
employees, the Mercedes-Benz Group uses a variety of
communication measures. Here, the company also takes
into account the knowledge gained from the most recent
employee survey. The Group provides informational
materials such as country-specific information cards,
pocket guides and an instructional video that is available
in ten different languages. The Mercedes-Benz Group
also holds dialogue events at which it provides employ-
ees with information about the BPO. In addition, the
company regularly informs employees about the type and
number of reported violations and makes case studies
available on a quarterly basis.
Sales partners and suppliers
The Mercedes-Benz Group expects not only its employ-
ees to comply with laws and regulations. The Group also
requires its sales partners and suppliers to adhere to
clear compliance requirements, because it regards integ-
rity and conformity with regulations as a precondition for
trust-based cooperation. The Business Partner Standards
describe in detail exactly what the Mercedes-Benz Group
expects of its business partners.
2028
Milestone: review 50% of all the production raw materials
used by the Mercedes-Benz Group that pose an increased
risk of human rights violations and define any necessary
remediation measures
Define and implement protective measures for addressing
100% of the Mercedes-Benz Group's production raw materi-
als that pose an increased risk of human rights violations
Milestone: review 70% of all the production raw materials
used by the Mercedes-Benz Group that pose an increased
risk of human rights violations and define any necessary
remediation measures
Target
B.37
Social compliance
The Business Practices Office (BPO) whistleblower sys-
tem enables all employees, as well as business partners
and third parties, to report misconduct anywhere in the
world. A total of 72 new cases were opened during the
reporting year (2021: 33 cases). Overall, 19 cases were
closed "with merit”. In these cases, the initial suspicion
was confirmed. Of these cases, two were in the Environ-
mental Violations category, one was in the Data Protec-
tion category and four were in the Reputational Damage
category. In ten cases, accusations of inappropriate
behaviour of employees toward third parties were con-
firmed ―e.g. racism or sexual harassment. One case fell
into the category of Antitrust Law. Another case fell into
the category of Injury to Physical Integrity. With regard to
those cases that are closed "with merit”, the Mercedes-
Benz Group decides on appropriate response measures
in line with the principles of proportionality and fairness.
The personnel measures in 2022 included admonish-
ments, warnings and terminations without notice.
Reported violations
112
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
If changed risks or new legal requirements call for adjust-
ments, the Mercedes-Benz Group adapts the CMS
accordingly. The Group companies implement the
improvement measures derived from this process. The
companies also regularly monitor these measures to
determine their effectiveness and inform the responsible
management committees about the results of their moni-
toring process.
Each year, the Mercedes-Benz Group checks the pro-
cesses and measures of the CMS and conducts analyses
to find out whether the measures are appropriate and
effective. For these activities, the Mercedes-Benz Group
relies on information about the Group companies as well
as additional locally gathered information. The Group
also monitors their processes regularly on the basis of
key performance indicators such as the duration and
quality of individual processes. To determine these indi-
cators, the Mercedes-Benz Group checks, among other
things, whether formal requirements are being met and
whether the content is complete. It also takes into
account the knowledge gained through both internal and
independent external assessments.
Effectiveness
The contents and topics of the training courses are tai-
lored to the roles and functions of the respective target
group. Mercedes-Benz Group AG regularly analyses the
need for its training programme, expands or adapts it as
necessary and conducts evaluations.
Mercedes-Benz Group offers an extensive range of com-
pliance training courses that are based on its Integrity
Code for example, courses for employees in adminis-
trative areas and for members of the Supervisory Board
and the executive management of Group companies.
Communication and training
The Mercedes-Benz Group's Responsible Sourcing Stand-
ards replaced the Supplier Sustainability Standards in the
reporting year and therefore now apply to the suppliers.
On the basis of these standards and the Integrity Code,
the Mercedes-Benz Group makes a Compliance Aware-
ness Module available to each of its suppliers and sales
partners. These modules are intended to sensitize them
to current integrity and compliance requirements such as
those related to anti-corruption measures and technical
compliance. Through these measures, the Mercedes-Benz
Group also offers its suppliers and sales partners assis-
tance for dealing with possible compliance risks.
In the selection of direct sales partners and in existing
sales partnerships, the Group ensures that its business
partners comply with laws and observe ethical principles.
In order to monitor this, the Mercedes-Benz Group uses a
globally standardized, risk-based Sales Business Partner
Due Diligence Process. During the reporting year, the
Group subjected all of the new sales partners to a due
diligence audit. In addition, it audits the existing sales
partners as part of the monitoring process. Monitoring in
this area is designed to ensure that the company can
identify possible integrity violations by its sales partners.
The Mercedes-Benz Group also reserves the right to ter-
minate cooperation with, or terminate the selection pro-
cess for, any sales partner who fails to comply with the
Group's standards. In addition, the Mercedes-Benz Group
works with its procurement units to continuously improve
processes for selecting and cooperating with suppliers.
114
Moreover, the Compliance Board provides guidance
regarding overarching compliance topics and monitors
activities to see whether the Group's compliance meas-
ures are effective. The Board's mission is to react
promptly to changes in business models and the busi-
ness environment, deal with regulatory developments
and continuously enhance the CMS. The Compliance
Board consists of representatives of the compliance and
133
-
Policy commitment
Respect for human rights has key importance for the
Mercedes-Benz Group and is an obligation as well as a
mission for the Group. The company has therefore made
upholding human rights an area of action of its sustaina-
ble business strategy. The Mercedes-Benz Group also
introduced a corresponding risk-based system to ensure
ongoing human rights due diligence. The measurable tar-
gets and key figures for the system are defined in the
sustainable business strategy.
The compliance organization at the Mercedes-Benz Group
is structured functionally, regionally and along the value
chain. As a result, it can provide effective support for
example, by means of guidelines and advice. Contact
persons are available to each function and region. In
addition, a global network of local contact persons makes
sure that the Group's compliance standards are met. The
contact persons help the management at the companies
implement the Mercedes-Benz Group's compliance pro-
gramme at their respective sites.
The expansion of electric mobility in particular is also
further increasing public interest in respect for human
rights within the automotive supply chain, because the
production of battery cells requires the use of raw mate-
rials such as lithium and cobalt. These raw materials
often come from countries where there is a risk that they
are mined under conditions that could be critical from a
human rights standpoint.
The goal of the Mercedes-Benz Group is to combine
achieving business success with acting responsibly
toward the environment, people and society - and doing
so along the entire value chain.
2026
Review 100% of the merchandise groups from the service
supply chains that we use and which pose a higher risk of
human rights violations
2023
2025
Additional information about requirements along the
supply chain can also be found in the chapter Sustaina-
bility as a driver of change.
120
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Focal points of the Compliance Management System
Combating corruption. The Mercedes-Benz Group has
committed itself to fighting corruption because cor-
ruption undermines fair competition and thereby harms
it and society. The Mercedes-Benz Group's corruption
prevention measures extend beyond compliance with
national laws and also encompass the guidelines from
the OECD Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions
(1997) and the United Nations Convention against Cor-
ruption (2003).
The Corruption Prevention Compliance Programme at the
Mercedes-Benz Group is based on the Group-wide
Content Management System (CMS). In order to ensure
an independent external assessment of the Corruption
Prevention Compliance Programme, the Mercedes-Benz
Group AG commissioned KPMG AG Wirtschaftsprüfungs-
gesellschaft to audit the Compliance Management Sys-
tem for corruption prevention in accordance with Stand-
ard 980 of the Institute of Public Auditors in Germany.
This audit, which was based on the principles of appro-
priateness, implementation and effectiveness, was suc-
cessfully completed at the end of 2019.
In addition to the interest expressed by consumers and
civil organizations, the Mercedes-Benz Group is also
observing increasing interest in human rights issues by
investors and rating agencies. Human rights issues are
increasingly having an influence on investment decisions.
Responsibility for designing and implementing measures
for addressing possible antitrust risks lies primarily with
the respective Group company's management. The
Mercedes-Benz Group monitors the management activi-
ties of the respective company within the framework of
Group management. To supplement this, the Compliance,
Legal Product & Technology and Corporate Audit units
conduct monitoring activities at the company's divisions.
Compliance organization
Promoting fair competition. The Group-wide Antitrust
Compliance Programme is oriented to national and inter-
national standards for ensuring fair competition. The pro-
gramme establishes a binding, globally valid company
standard that defines how matters of antitrust law are to
be assessed. By means of an advisory hotline, guidelines
and practical support, Mercedes-Benz Group AG helps its
employees around the world to recognize situations that
might be critical from an antitrust perspective and to act
in compliance with all regulations.
In order to effectively combat and prevent money laun-
dering, the Mercedes-Benz Group established a two-pillar
model (trade in goods and mobility services) which aims
to take into account the different regulatory requirements
in the area of goods trading on the one hand and the area
of financial services on the other. It uses an integrated
compliance approach to check applicable sanction lists
and restrictions on certain goods and implements meas-
ures for the prevention of money laundering and the
financing of terrorism. On the one hand, these measures
aim to prevent supranational and national sanctions and
embargoes from being evaded; on the other, money laun-
dering, the financing of terrorism, organized crime and
other types of corporate crime are to be combated.
Sanctions compliance, export controls and the pre-
vention of money laundering and the financing of ter-
rorism. Money laundering and the financing of terrorism
cause tremendous damage to the economy and soci-
ety in equal measure. Even an accusation of money laun-
dering can compromise the Group's reputation and have
financial consequences for the Mercedes-Benz Group, as
well as for its shareholders and stakeholders. For this
reason, the prevention of money laundering and the
financing of terrorism, and the implementation of appro-
priate measures to combat both, are defined as central
compliance goals in the Group's Integrity Code.
The Mercedes-Benz Group sets a high standard for the
handling of customers' personal data. Customers use the
Mercedes me Privacy Center, which was introduced in
2021, to obtain an even faster and more straightforward
overview of what personal data of theirs is stored by the
company. They can decide for which purposes Mercedes-
Benz is allowed to use this data. The focus here is on
user-friendliness. The customer can directly navigate to
his or her available choices via three intuitive categories.
This service underlines the principles of choice and trans-
parency as set out in the data vision and stands for the
responsible handling of data. On the basis of its data
vision and the principles of its data vision, the Mercedes-
Benz Group focused on strengthening customers' trust in
the Mercedes-Benz Group's data processing in the year
under review.
The implementation of data governance in the divisions
of the Mercedes-Benz Group is the responsibility of the
various bodies for data and data analytics. Within
Mercedes-Benz Group AG, a Digital Governance Board
that includes members of the Board of Management has
been created. Since the beginning of 2022, this board has
been continuing the work previously conducted by the
former Data Governance Committee. The body defines
the framework for Group-wide core topics of digital gov-
ernance and thus supports the digital transformation of
the Group. The Chief Officer Corporate Data Protection at
the Mercedes-Benz Group performs the tasks required by
law to ensure compliance with data protection rules.
Responsible use of data Data responsibility is more than
data protection. The key aims are the sustainable design
of data-based business models and the responsible
handling of data in the interests of customers, employees
and other stakeholders. In order to achieve these aims,
the Mercedes-Benz Group has introduced measures such
as establishing the Group-wide Data Governance System.
This system primarily consists of the data governance
structure, the data model, the data culture and a data
compliance management system. The Data Compliance
Management System supports the Mercedes-Benz Group
in the systematic risk-based planning, implementation
and continuous monitoring of measures to ensure com-
pliance with the data protection requirements. It takes
into account the existing applicable data-protection reg-
ulations.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
111
In order to ensure an independent external assessment
of the TCMS, Mercedes-Benz Group AG commissioned
KPMG AG Wirtschaftsprüfungsgesellschaft to audit the
tCMS with a focus on relevance to emissions in accord-
ance with Standard 980 of the Institute of Public Auditors
in Germany. This audit, which was based on the princi-
ples of appropriateness, implementation and effective-
ness, was successfully completed at the end of 2020.
The "Speak up" and "Judgement calls" commitment state-
ments jointly formulated by the integrity management
team and the development units provide all employees in
the development and certification units with a basis for a
common understanding of responsible behaviour in the
product creation process and are firmly embedded within
the respective organizations by means of additional
measures within the units.
Target horizon
In order to ensure an independent external assessment
of the Antitrust Compliance Programme, Mercedes-Benz
Group AG commissioned KPMG AG Wirtschaftsprüfungs-
gesellschaft to audit the Compliance Management Sys-
tem for antitrust law in accordance with Standard 980 of
the Institute of Public Auditors in Germany. This audit,
which was based on the principles of appropriateness,
implementation and effectiveness, was successfully
completed for the second time at the end of 2021, after
having also been conducted in 2016.
For Mercedes-Benz Cars and Mercedes-Benz Vans, tech-
nical compliance means adhering to technology-related
laws, regulatory requirements and standards. The objec-
tive here is to identify risks within the product creation
process (product development and certification) at an
early stage and to implement preventive measures. For
this purpose, the Group has established a technical Com-
pliance Management System (tCMS) in its automotive
divisions. The Mercedes-Benz Group's objective is to
ensure that Mercedes-Benz Cars and Mercedes-Benz
Vans comply with all legal and regulatory requirements
throughout the entire product development and certifica-
tion process. The tCMS defines values, principles, struc-
tures and processes in order to provide employees with
guidance and orientation, especially with regard to chal-
lenging questions on how to interpret technical regula-
tions.
Compliance with technical and regulatory
requirements
131,833
123
Capital expenditure
B.40
Capital expenditure¹
Economic activities
A. TAXONOMY ELIGIBLE
ACTIVITIES
A.1 Environmentally sustainable
activities (Taxonomy-aligned)
3.3 Manufacture of low-carbon
technologies for transport
By the end of this decade, the Mercedes-Benz Group
intends to be all-electric wherever market conditions
allow. The strategic step to “Electric only" will accelerate
the transformation of the company to an all-electric and
software-driven future. In line with this strategy and the
associated planned sales figures for low-emission vehi-
cles, the Mercedes-Benz Group expects the share of the
revenue generated by low-carbon vehicles to rise signifi-
cantly in the years ahead. Further information can be
found in the chapter Environmental issues.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Criteria for a
material contribution
Absolute
Proportion
Climate
Capital of Capital
expenditure expenditure
change
mitigation
Climate
change ("do no signifi-
adaptation cant harm")
For the major proportion of the revenue, in particular
from the new and used vehicle business and leasing and
sales financing activities, a direct attribution was made of
the revenue accounted for by low-carbon vehicles. With
regard to other revenue components, especially revenue
from the spare parts business and service and mainte-
nance contracts, or attribution of discounts granted for
large procurement volumes, it is not possible to directly
assign revenue to low-carbon vehicles. In these cases,
suitable allocations were therefore used for the various
revenue components. These classifications are based on
current or historical vehicle sales data for the fleet that is
currently on the market and data on production volumes.
Taxonomy alignment of revenue
88
1
854
88
146,827
98
ACTIVITIES
Revenue of Taxonomy-non-eligible
activities (B)
3,190
2
In order to calculate the taxonomy-aligned proportion of
economic activities (under A1 in the table), revenues were
examined to determine the extent to which they were
generated with low-carbon vehicles in order to assess
whether a substantial contribution had been made to cli-
mate change mitigation. Compliance with DNSH criteria
was also assessed.
Total A + B
100
1 The key figures were audited in order to obtain limited assurance as part of a separate assurance engagement of the sustainability report. An exception to this is the total
(total A + B) which was audited with reasonable assurance as a Group key figure.
2 Only the share attributable to our plug-in hybrid vehicles is a transitional activity.
122
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Taxonomy eligibility of revenue
For the share of taxonomy-eligible revenue (under A in
the table), the taxonomy-eligible revenue is considered in
relation to the total revenue of the Group.
In this process, the denominator takes into account all
the revenue generated at the consolidated companies
that are to be included in the calculations. The revenue,
as disclosed in the consolidated statement of income,
amounted to €150,017 million in the reporting year (see
Note 5 in the Notes to the Consolidated Financial State-
ments).
The numerator was calculated by examining this revenue
to determine how much of it was generated in connec-
tion with manufacturing or the leasing or financing of
vehicles. This applies to almost all of the revenue gener-
ated by the Mercedes-Benz Group. Excluded from this are
in particular revenues from the sale of used vehicles,
which Mercedes-Benz Group has purchased from third
parties.
150,017
10
100
Minimum
safeguards
0
Yes
Yes
20
20
E
325
2
B. TAXONOMY-NON-ELIGIBLE
0
Yes
Yes
2
T2
4,057
222
3.3 Manufacturing of low-carbon
technologies for transport
4,092
22
22
100
20
20
3,732
Capital
expenditure
in 2022
Taxonomy
aligned
proportion of
Category:
Enabling
activity (E)/
Transitional
activity (T)
In millions of
euros
in %
in %
in %
Yes/No
Yes/No
DNSH criteria
in %
6.5 Transport by motorbikes,
passenger cars and light commercial
vehicles
Capital expenditure of
environmentally sustainable
activities
(Taxonomy-aligned) (A.1)
A.2 Taxonomy-eligible but not
environmentally sustainable
activities
(not Taxonomy-aligned activities)
E/T
Total (A.1 + A.2)
passenger cars and light commercial
6.6 Freight transport services by
road
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Criteria for a
material contribution
Climate
Climate DNSH criteria
Taxonomy
aligned
Category:
Enabling
activity (E)/
Absolute
Proportion
Economic activities
revenue
of revenue
change
mitigation
change ("do no signifi-
adaptation cant harm")
Minimum
safeguards
proportion of
Transitional
revenue 2022
activity (T)
In millions of
Revenue¹
B.39
Revenue
121
130
Provisions of applicable law and of the articles of
association concerning the appointment and dis-
missal of members of the Board of Management and
amendments to the articles of association
Members of the Board of Management are appointed and
dismissed on the basis of Sections 84 and 85 of the Ger-
man Stock Corporation Act (AktG) and Section 31 of the
German Codetermination Act (MitbestG). In accordance
with Section 84 of the German Stock Corporation Act
(AktG), the members of the Board of Management are
appointed by the Supervisory Board for a maximum
period of office of five years. The rules of procedure of
the Supervisory Board stipulate that the initial appoint-
ment of members of the Board of Management is gener-
ally limited to three years. Reappointment or the exten-
sion of a period of office is permissible, in each case for a
maximum of five years.
Shares in Mercedes-Benz Group AG acquired by employ-
ees within the context of the employee share programme
may not be disposed of until the end of the following
year. Eligible participants in the Performance Phantom
Share Plans (PPSPs) of Executive Level 1 and eligible
members of the Board of Management are obliged by the
Plans' terms and conditions and by the Stock Ownership
Guidelines to acquire the Company's shares with a part of
their Plan income or out of their own funds up to a
defined target volume and to hold them for the duration
of their employment at the Group.
The Company does not have any rights from treasury
shares. In the cases described in Section 136 of the
German Stock Corporation Act (AktG), the voting rights
of treasury shares are nullified by law.
the transfer of shares
Restrictions on voting rights and on
Each share confers the right to one vote and, if applica-
ble, with the exception of any new shares potentially not
entitled to dividends, to an equal portion of the profits in
accordance with the dividend payout approved by the
Annual General Meeting. The rights and obligations aris-
ing from the shares are derived from the provisions of
applicable law, in particular Sections 12, 53a ff., 118ff. and
186 of the German Stock Corporation Act (AktG). There
were no treasury shares at 31 December 2022.
31 December 2022. It is divided into 1,069,837,447 regis-
tered shares, each of which accounts for approximately
€2.87 of the share capital. Pursuant to Section 67 Sub-
section 2 of the German Stock Corporation Act (AktG),
rights and obligations relating to the Company exist from
the shares only for those persons and entities entered in
the register of shareholders. With the exception of treas-
ury shares, from which the Company does not have any
rights, all shares confer equal rights to their holders.
The issued share capital of Mercedes-Benz Group AG
amounted to approximately €3,070 million as of
Composition of share capital
euros
(Report pursuant to Section 315a and Section 289a of the German Commercial Code (HGB))
highest fuel efficiency classes and the highest external
rolling noise class were analyzed without considering
EPREL data. On this basis, the entire vehicle portfolio of
all-electric vehicles without differentiating between eco-
nomic activities and therefore without differentiating
between sales and leasing vehicles has been analysed
and assessed. Thus a proportionate share of passenger
cars with the respective highest tyre classes has been
determined.
Protection and restoration of biodiversity and ecosys-
tems. To demonstrate the requirements for economic
activity 3.3 with regard to the environmental objective of
biodiversity and ecosystems, ecologically sensitive or
protected areas in the neighbourhood are documented
and taken into account as part of the internal environ-
mental risk assessments. Furthermore, examination of
the surrounding areas is part of the location planning
process.
Fulfilment of minimum safeguards
An economic activity can only be classified as environ-
mentally sustainable within the meaning of the taxonomy
if it is also conducted in accordance with certain mini-
mum standards that are based on international frame-
works. Here, Article 18 of the taxonomy regulation refer-
ences the OECD Guidelines for Multinational Enterprises,
the United Nations Guiding Principles on Business and
Human Rights (including the basic principles and rights
from the eight core conventions defined in the Interna-
tional Labour Organisation's Declaration on Fundamental
Principles and Rights at Work), and the International Bill
of Human Rights. The taxonomy regulation itself does not
further specify the standards.
The report published by the Platform on Sustainable
Finance in October 2022 (Final Report on Minimum Safe-
guards) assists companies with the interpretation of the
scope and application of the minimum standards. This
report forms the foundation for the application of mini-
mum standards and the associated reporting at
Mercedes-Benz Group. Key issue areas here are human
rights and labour rights (see the chapter Social compli-
ance, p. 115 and the chapter Occupational health and
safety, p. 101), the prevention of corruption and the pro-
motion of fair competition (see the chapters Compliance
management system, p. 110 Combating corruption, p. 111
and Promoting fair competition, p. 111), and responsible
tax practices (see the chapter Tax obligation, p. 88). The
verification of compliance here basically involves
demonstrating the existence of suitable due diligence
processes on group level and the fact that no judicial rul-
ings in the final instance have been made due to serious
violations in the aforementioned areas.
Reporting on the taxonomy-aligned proportions of
environmentally sustainable economic activities
The sections below present information on the proportion
of revenue, capital expenditure and operating expendi-
ture accounted for by environmentally sustainable eco-
nomic activities at the Mercedes-Benz Group.
The individual figures for revenue, capital expenditure
and operating expenditure are precisely allocated to a
specific economic activity and environmental objective.
This prevents double counting.
The calculations for the key figures are based on the Con-
solidated Financial Statements in accordance with IFRS.
Due to an exemption granted by the EU, only the propor-
tions of taxonomy-eligible economic activities were
obliged to be reported in the previous year. The provision
of comparative information is not yet legally required in
the reporting year.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Revenue of Taxonomy-eligible but
not environmentally sustainable
activities (not Taxonomy-aligned
activities) (A.2)
in %
in %
Yes
Yes
0
T²
sustainable activities
(Taxonomy-aligned) (A.1)
14,994
10
100
0
A.2 Taxonomy-eligible but not
environmentally sustainable
activities
(not Taxonomy-aligned activities)
3.3 Manufacturing of low-carbon
technologies for transport
108,206
72
6.5 Transport by motorbikes,
passenger cars and light commercial
vehicles
22,773
15
0
100
0
334
Yes/No
Yes/No
in %
E/T
A. TAXONOMY-ELIGIBLE
ACTIVITIES
A.1 Environmentally sustainable
activities (Taxonomy-aligned)
3.3 Manufacture of low-carbon
technologies for transport
in %
6.5 Transport by motorbikes,
vehicles
Revenue of environmentally
14,660
10
100
0
Yes
Yes
10
E
6.5 Transport by motorbikes,
passenger cars and light commercial
vehicles
sustainable activities (not
Taxonomy-aligned activities) (A.2)
Total (A.1 + A.2)
56
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Table B.43 provides an overview of the actual development
of the figures as forecasted in the 2021 Annual Report.
B.43
Comparison between the figures forecast for 2022 and their actual development
Forecast for 2022
In-year adjustments
Actual development in 2022
The Mercedes-Benz Group
Revenue
Slightly higher than
the prior-year level
Q2: Significantly higher than
the prior-year level
Q2: Slightly higher
EBIT
Free cash flow of the industrial business
At the prior-year level
Slightly lower than
the prior-year level
Q3: Significantly higher than
the prior-year level
Q2: At the prior-year level
CO2 emissions of the new car fleet in Europe
At the prior-year level
Mercedes-Benz Cars
€150,017 million (+12%)
Significantly higher than the prior-year level
€20,458 million (+28%)
Significantly higher than the prior-year level
€8,128 million (+3%)
At the prior-year level
115 g/km¹ (+0%)
At the prior-year level
Unit sales
Revenue
128
Adjusted return on sales
Based on internal data.
New business at Mercedes-Benz Mobility was signifi-
cantly lower than in the previous year. The original fore-
cast of a slight decrease in new business could not be
met due to the general increase in interest rates and the
associated higher competitive pressure. Contract volume
was at the same level as the previous year. At the begin-
ning of the reporting year, Mercedes-Benz Mobility had
expected contract volume to decline slightly. The main
reason for the deviation from the forecast was exchange-
rate effects, which were more positive than expected.
6,664
100
B. TAXONOMY-NON-ELIGIBLE
ACTIVITIES
Operating expenditure of
Taxonomy-non-eligible activities
(B)
0
0
Total A + B
6,664
100
1 The key figures were audited in order to obtain limited assurance as part of a separate assurance engagement of the sustainability report.
126
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
For the share of taxonomy-eligible operating expenditure
(under A in the table), the taxonomy-eligible operating
expenditure is considered in relation to the relevant
operating expenditure of the Group.
The operating expenditure to be taken into account in the
denominator corresponds to a figure that was exclusively
calculated within the framework of taxonomy reporting.
These operating expenditure include non-capitalized
research and development expenditure and expenses
from short-term leasing agreements. In addition, expen-
diture from building renovation measures and certain
maintenance and repair expenses (basically labour and
material costs as well as purchased services) relating to
property, plant and equipment in accordance with the
delegated act specifying Article 8 of the taxonomy regu-
lation are included. These components of the relevant
operating expenditure were collated exclusively from our
manufacturing companies on the basis of materiality con-
siderations. The operating expenditure at the Group com-
panies that is to be taken into account is included, with
the exception of companies that have been separately
disclosed as discontinued operations in the statement of
income.
In a manner similar to the approach taken for capital
expenditure, the relevant operating expenditure was also
examined here for the determination of the numerator on
the basis of the materiality considerations mentioned
above to determine whether they are related to the
manufacture of vehicles. This applies to nearly all operat-
ing expenditure.
Taxonomy alignment of operating expenditure
In order to calculate the taxonomy-aligned proportion of
economic activities (under A1 in the table), operating
expenditure was examined to determine the extent to
which it was associated with low-carbon vehicles in order
to assess whether a substantial contribution had been
made to climate change mitigation. Compliance with
DNSH criteria was assessed.
The non-capitalized research and development expendi-
ture can mostly be directly incorporated into the calcula-
tion of the numerator on the basis of its allocation to
all-electric or low-carbon hybrid vehicle projects. Appro-
priate allocations based on anticipated future sales fig-
ures of the low-carbon share of the model series or the
vehicle platform were used for research and develop-
ment expenditure that cannot be directly allocated
(model series or vehicle platforms that include plug-in
hybrids as well as purely combustion engine vehicles). It
was also not possible to directly match the other compo-
nents of relevant operating expenses to low-carbon vehi-
cles. The inclusion in the numerator is based on suitable
allocations of current production volumes.
127
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Overall Assessment
of the Financial Year
The Mercedes-Benz Group had a successful year in 2022
despite continuing bottlenecks in semiconductors and
logistic, regional Covid-19 measures and geopolitical
challenges and consistently continued the transformation
towards an all-electric and software-driven future.
Due to increased unit sales, substantially improved pric-
ing in connection with a more advantageous product mix
and ongoing cost discipline, the Group recorded an
increase in EBIT of 28% compared to the previous year.
In particular, the strong demand for Top-End and electric
models from Mercedes-Benz Cars exceeded supply,
which, as was the case in the previous year, was limited
due to the ongoing shortage of semiconductors as well
as logistics bottlenecks. As a result, the Group already
upwardly adjusted its forecasts for revenue, EBIT and the
Free cash flow of the industrial business in 2022.
In the reporting year, the average CO2 emissions of the
registered Mercedes-Benz passenger new car fleet in
Europe (European Union, Norway and Iceland) as meas-
ured on the basis of legal regulations amounted to 115 g/
km¹ and thus remained at the same level as in the prior
year. The figures for the Group were below the CO2 target
values of 127 g/km in Europe in 2022.
The substantially improved pricing in combination with a
more advantageous product mix led to higher revenue at
Mercedes-Benz Cars than had been anticipated at the
beginning of the reporting year. These developments,
along with solid margins, also led to an upward adjust-
ment during the year of the forecast for adjusted return
on sales. Due to the negative effects that semiconductor
issues in the supply chain had on working capital, the
adjusted cash conversion rate was below the forecast
range. The figures for investments in property, plant and
equipment and research and development expenditure
were expected slightly higher than in the prior year.
Investments in property, plant and equipment were
slightly lower than in 2021 due to a policy of consistent
cost management in product projects. The new-genera-
tion BEV platform and the associated battery concept, as
well as the focus on digitalization and automated driving,
led to a significant increase in expenditure on research
and development compared to the previous year.
Mercedes-Benz Mobility had a successful year in 2022,
despite an increase in credit-risk costs due to the weaker
economic outlook and decreasing interest margins that
resulted from the increase in interest rates. The parts of
the Daimler commercial vehicle business that were to be
transferred in 2022 were sold as planned.
1
Total (A.1+ A.2)
Adjusted cash conversion rate
11.5% -13%
0.8-1.0
11.2%
1.1
€199 million (+1%)
At the prior-year level
€552 million (+13%)
Significantly higher than the prior-year level
Mercedes-Benz Mobility
New business
Contract volume
Revenue
Adjusted return on equity
1 Based on internal data.
Slightly lower than
the prior-year level
Slightly lower than
the prior-year level
Slightly lower than
the prior-year level
16%-18%
Q1: Significantly lower than
the prior-year level
Q2: Slightly lower than
the prior-year level
Q3: At the prior-year level
€58,031 million (-9%)
Significantly lower than the prior-year level
€132,379 million (-1%)
At the prior-year level
€26,954 million (-4%)
Slightly lower than the prior-year level
16.8%
129
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Takeover-Relevant Information
and Explanation
Significantly higher than the prior-year level
Slightly higher than
the prior-year level
Slightly higher than
the prior-year level
€17,217 million (+17%)
415,344 vehicles (+8%)
Q2: Significantly higher than
the prior-year level
Q2: 12% 14%
Q3: 13% 15%
2,040,719 vehicles (+5%)
Slightly higher than the prior-year level
€111,601 million (+15%)
Significantly higher than the prior-year level
Investments in property, plant and equipment
Research and development expenditure
Slightly higher than
the prior-year level
Slightly higher than
the prior-year level
Q1: At the prior-year level
Q2: Significantly lower than
the prior-year level
Q2: Significantly higher than
the prior-year level
14.6%
0.7
€3,265 million (-9%)
Slightly lower than the prior-year level
€7,986 million (+11%)
Significantly higher than the prior-year level
Mercedes-Benz Vans
Unit sales
Revenue
Adjusted return on sales
Adjusted cash conversion rate
Investments in property, plant and equipment
Research and development expenditure
Slightly higher than
the prior-year level
Slightly higher than
the prior-year level
8%-10%
0.6 0.8
Significantly higher than
the prior-year level
Significantly higher than
the prior-year level
Q2: Significantly higher than
the prior-year level
Q3: 9%-11%
Q3: 0.8-1.0
Significantly higher than the prior-year level
65
4,324
activities) (A.2)
euros
In the
denominator
Taxon-
in millions of
euros (total
capital
(taxonomy-
aligned capi-
omy-
aligned
capital
tal expendi-
expendi-
expenditure)
ture)
ture in %1
Property, plant and equipment
Intangible assets
3,421
1,507
44
3,480
1,874
54
Right-of-use assets (IFRS 16)
Equipment on operating leases
923
391
42
10,545
285
3
Total
18,369
4,057
In the
numerator in
millions of
22
Capital expenditure in 2022
The capital expenditure items shown below are included
as an aggregation across the various economic activities:
56
Capital expenditure of taxonomy-
eligible but not environmentally
14,312
78
18,369
100
B. TAXONOMY-NON-ELIGIBLE
ACTIVITIES
Capital expenditure of Taxonomy-
non-eligible activities (B)
Total A + B
0
0
18,369
100
100
0
22
22
1 The key figures were audited in order to obtain limited assurance as part of a separate assurance engagement of the sustainability report. An exception to this is the total
(total A + B) which was audited with reasonable assurance as a Group key figure.
2 Only the share attributable to our plug-in hybrid vehicles is a transitional activity.
124
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Taxonomy eligibility of capital expenditure
For the share of taxonomy-eligible capital expenditure
(under A in the table), the taxonomy-eligible capital
expenditure is considered in relation to the total relevant
capital expenditure of the Group.
Here, the denominator of the key figure for capital
expenditure is calculated by taking into account all addi-
tions to intangible assets, property, plant and equipment,
equipment on operating leases and additions to rights-
of-use assets as defined in IFRS 16, including the addi-
tions to the named assets within the framework of corpo-
rate acquisitions. Equipment on operating leases only
takes into account vehicles acquired by a dealer from
outside the Group. Goodwill acquired is not taken into
account here. If a divestment is planned, capital expendi-
ture on non-current assets is only taken into account
until the point in time at which they were first classified
as available for sale or disbursement in accordance with
IFRS 5. The relevant additions to the assets to be taken
into account amounted to €18,369 million in the 2022
reporting year (see Notes 11, 12 and 13 in the Notes to the
Consolidated Financial Statements).
According to the aforementioned interpretation docu-
ment issued by the European Commission, which was
finally published on 6 October 2022, the definition of an
economic activity is characterized by the achievement of
an output. In line with the Mercedes-Benz Group's busi-
ness model, the numerator was therefore determined by
examining whether capital expenditure is made in con-
nection with the manufacturing of vehicles or the imple-
mentation of transport solutions for people and goods.
This applies to nearly all of our investments.
Taxonomy alignment of capital expenditure
In order to calculate the taxonomy-aligned proportion of
economic activities (under A1 in the table), capital
expenditure was examined to determine the extent to
which it was associated with low-carbon vehicles in order
to assess whether a substantial contribution had been
made to climate change mitigation. Compliance with
DNSH criteria was also assessed.
B.41
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
The size of the share of taxonomy-aligned expenditure of
total capital expenditure is mainly impacted by the addi-
tions to the leased objects. As a result, this share only
partially reflects our investments in sustainable products
for the future.
A separate additional review of the taxonomy-aligned
investments in intangible assets (mainly in capitalized
research and development expenditure) and property,
plant and equipment of the Mercedes-Benz Group shows
much higher shares of taxonomy-eligible investments
(table B.41). On the basis of our "Electric only" strategy,
the Mercedes-Benz Group intends to further increase
these investments in the coming years.
2,340
35
100
0
Yes
Yes
35
E
Operating expenditure of
environmentally sustainable
activities
(Taxonomy-aligned) (A.1)
2,340
35
55
100
0
35
A.2 Taxonomy-eligible but not
environmentally sustainable
activities (not Taxonomy-aligned
activities)
3.3 Manufacturing of low-carbon
technologies for transport
4,324
65
Operating expenditure of
Taxonomy-eligible but not
environmentally sustainable
activities (not Taxonomy-aligned
technologies for transport
3.3 Manufacture of low-carbon
E/T
in %
All of the capital expenditure at the Mercedes-Benz
Group included in the numerator relates to assets or pro-
cesses in the context of already existing technologies and
in connection with already existing taxonomy-aligned
economic activities. For most of the capital expenditure
relating to the industrial business, a direct attribution
was made to all-electric or low-carbon hybrid vehicle
projects. In the case of capital expenditure in assets that
are used to produce both vehicles with combustion
engines and low-carbon vehicles, suitable allocations
based on planned vehicle sales figures for the respective
model series or vehicle platforms were used. Capital
expenditure that is not directly related to the manufac-
turing process was allocated on the basis of the planned
sales figures for low-carbon vehicles. With regard to
financial services, it is possible to match the additions to
the leased products directly to low-carbon vehicles.
125
Operating expenditure
B.42
Operating expenditure¹
Economic activities
A. TAXONOMY ELIGIBLE
ACTIVITIES
A.1 Environmentally sustainable
activities (Taxonomy-aligned)
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Criteria for a
material contribution
Absolute Proportion
operating of operating
expenditure expenditure
Climate
change
10,220
mitigation
DNSH criteria
Minimum
safeguards
Taxono-
my-aligned
proportion of
operating
expenditure
in 2022
Category:
Enabling
activity (E)/
Transitional
activity (T)
In millions of
euros
in %
in %
in %
Yes/No
Yes/No
Climate
change ("do no signifi-
adaptation cant harm")
A continued very high demand for vans resulted in unit
sales significantly above those of the previous year at
Mercedes-Benz Vans. The positive business develop-
ment with considerably improved pricing and a more
advantageous product mix led to significantly higher fig-
ures for revenue, adjusted return on sales and the
adjusted cash conversion rate than had been expected at
the beginning of the year. The figures for investments in
property, plant and equipment and research and devel-
opment expenditure were expected substantially higher
than in the previous year. At the end of the year, invest-
ments in property, plant and equipment were at the prior
year level, because investments planned for 2022 as
expected have been partially transferred in 2023.
Taxonomy eligibility of operating expenditure
In order to service the debt of the convertible bonds and/
or bonds with warrants issued as a result of the authori-
sation, the Annual General Meeting of 8 July 2020 also
approved a conditional increase in the share capital of up
to €500 million (Conditional Capital 2020).
Risk and Opportunity Report
The Mercedes-Benz Group is exposed to a large number
of risks that are directly linked with the business activi-
ties of Mercedes-Benz Group AG and its subsidiaries or
that result from external influences. The Group under-
stands a risk as the danger that events, developments
or actions will prevent the Group or one of its segments
from achieving its targets. This includes monetary and
non-monetary risks. At the same time, it is important to
identify opportunities in order to safeguard and enhance
the competitiveness of the Mercedes-Benz Group. The
Group defines an opportunity as the possibility, due to
events, developments or actions, of safeguarding or sur-
passing the planned targets of the Group or of a segment.
In order to identify business risks and opportunities at an
early stage and to assess and manage them actively, the
Board of Management applies appropriate and effective
management and control systems, which have been
brought together in an overall risk and opportunity man-
agement system. Risks and opportunities are not offset.
B.45
Assessment of the risk and opportunities based on the expected value
for each category
Level
Low
Medium
High
Expected value
<500 million
> €500 million to €1 billion
≥ €1 billion
Risk and opportunity management
system and internal control system
Risk and opportunity management system
The risk management system is intended to systemati-
cally and continually identify, assess, control, monitor
and report on risks threatening the Mercedes-Benz
Group's existence and other material risks jeopardizing
the Group's success, in order to support the achievement
of corporate targets and to enhance risk awareness at the
Group. This also includes risks and opportunities involv-
ing environmental, social and governance factors (ESG).
The opportunity management system at the Mercedes-
Benz Group is based on the risk management system.
The objective of opportunity management is to recognize
the possible opportunities arising in business activities
resulting from positive developments at an early stage,
and to use them in the best possible way for the Group
by taking appropriate measures. By taking advantage of
opportunities, planned targets should be met or
exceeded.
The risk and opportunity management system is inte-
grated into the value-based management and planning
system of the Mercedes-Benz Group and is a fixed com-
ponent of the overall planning, management and report-
ing process in the companies, segments and corporate
functions. The responsibility for operational risk manage-
ment and for the risk management processes is borne by
the segments, corporate functions, organizational units
and companies. They report on the specific risks and
opportunities to the next-higher level unit on a regular
basis. Significant, unexpected risks must be reported
immediately. Risks and opportunities are managed within
the Group by means of measures taken by the units
responsible.
140
An agreement with BAIC Motor Co., Ltd. related to a
jointly held company for the production and distribu-
tion of cars of the Mercedes-Benz brand in China, by
which BAIC Motor Co., Ltd. is given the right to termi-
nate the agreement or exercise a put or call option in
the case that a third party acquires one third or more of
the voting rights in Mercedes-Benz Group AG.
A master cooperation agreement on wide-ranging stra-
tegic cooperation with Renault S.A., Renault-Nissan B.V.
and Nissan Motor Co., Ltd., as well as with Mitsubishi
Motors Corporation. In the case of a change of control
of one of the parties to the agreement, each of the
other parties has the right to terminate the agreement.
A change of control as defined by the master coopera-
tion agreement occurs if a third party or several third
parties acting jointly acquire, legally or economically,
directly or indirectly, at least 50% of the voting rights in
the company in question or are authorized to appoint a
majority of the members of its managing board. Under
the master cooperation agreement, several cooperation
agreements were concluded between Mercedes-Benz
Group AG on the one side and Renault and/or Nissan
on the other, which provide for the right of termination
for a party to the agreement in the case of a change of
control of another party. With the exception of the
master cooperation agreement, the aforementioned
cooperation agreements were transferred from the for-
mer Daimler AG to Mercedes-Benz AG in 2019.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
133
A non-utilized syndicated credit line for a total amount
of €11 billion, which the lenders are entitled to termi-
nate if (i) Mercedes-Benz Group AG becomes a subsidi-
ary of another company, or (ii) Mercedes-Benz
Group AG becomes controlled either individually or
jointly by one or more persons acting together. For the
purposes of the syndicated credit line, subsidiary in
relation to a company means another company (i) that
is controlled directly or indirectly by the first-men-
tioned company, (ii) of which more than 50% of the
subscribed share capital (or other equity) is held
directly or indirectly by the first-mentioned company, or
(iii) which is a subsidiary of another subsidiary of the
first-mentioned company. Control for the purposes of
the syndicated credit line means (i) the right to deter-
mine the affairs of a company, (ii) the right to control
the composition of the managing board or similar bod-
ies, or (iii) the right to control the composition of the
supervisory board (if elected by the shareholders).
Material agreements subject to change of control
Mercedes-Benz Group AG has concluded various material
agreements, as listed below, that include clauses regulat-
ing the possible event of a change of control, as can
occur as a result of a takeover bid:
Combined Management Report with Non-Financial Declaration
-
In a volume of up to 5% of the share capital existing at
the time of the resolution of the Annual General Meeting,
the Board of Management was authorized, with the con-
sent of the Supervisory Board, to acquire the Company's
own shares also with the application of derivative finan-
cial instruments (put or call options, forwards or a combi-
nation of these financial instruments), whereby the terms
of the derivatives may not exceed 18 months and must
be terminated at the latest on 7 July 2025.
During the period of the authorization, the total of the
Company's own shares used with the exclusion of share-
holders' subscription rights may not exceed 10% of the
share capital at the time when the authorization takes
effect or - if this amount is lower at the time when it
is exercised. If, during the period of the authorization
until it is exercised, use is made of other authorizations
to issue or sell shares in the Company or to issue rights
enabling or requiring subscription to shares in the Com-
pany and subscription rights are excluded, this is to be
counted towards the aforementioned 10% limit.
-
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
132
By a further resolution of the Annual General Meeting on
8 July 2020, the Board of Management was authorized,
with the consent of the Supervisory Board, to acquire the
Company's own shares until 7 July 2025 for all legal pur-
poses in a volume of up to 10% of the share capital at the
time of the resolution of the Annual General Meeting or —
if this amount is lower at the time when the authoriza-
tion is exercised. With the consent of the Supervisory
Board, the shares can be used, with the exclusion of
shareholders' subscription rights, for, among other things,
corporate mergers and acquisitions, or can be sold for
cash to third parties at a price that is not significantly
below the market price at the time of the sale. The
acquired shares can also be used to service debt on con-
vertible bonds and/or bonds with warrants, or can be
issued to employees of the Company and employees and
members of executive bodies of subsidiaries pursuant to
Section 15 ff. of the German Stock Corporation Act (AktG).
The Company's own shares can also be cancelled.
No use was made of this authorization to acquire the
Company's own shares during the reporting period.
-
Annual Report 2022 Mercedes-Benz Group
Against this backdrop and supported by the Group's
brand strengths and innovative capabilities, the
Mercedes-Benz Group looks forward with confidence to
the year 2023.
Revenue
Adjusted return on sales
Adjusted cash conversion rate
Investments in property, plant and equipment¹
Research and development expenditure¹
Mercedes-Benz Mobility
New business¹
Contract volume
415,344 vehicles
€17,217 million
11.2%
1.1
€199 million
€552 million
At the prior-year level
Slightly higher than the prior-year level
9%-11%
0.5-0.7
Significantly higher than the prior-year level
Significantly higher than the prior-year level
At Mercedes-Benz Cars, a large proportion of the
research and development expenditure is to flow into
the electrification of the product portfolio, the expansion
of digitalization, and automated driving. In addition, plans
call for investments to be made in the renewal of the
product portfolio. As a result of these investments,
research and development expenditure is expected to
increase slightly in 2023.
The Mercedes-Benz Group will continue to concentrate
on achieving profitable growth in the coming years, par-
ticularly in the market for luxury cars and premium vans,
as well as for sales financing. A frictionless ramp-up of
electromobility has a high priority. High advance expendi-
ture will still be required for the necessary transformation
towards a net CO2-neutral future.
Overall statement on future development
At the Annual General Meeting to take place on 3 May
2023, the Board of Management and the Supervisory
Board will propose the payment of a dividend of €5.20
per share for the year 2022 (previous year: €5.00). The
dividend for the previous year included a portion of the
dividend of €0.70 from the Daimler commercial vehicle
business. In total, this represents a distribution of
€5.6 billion (previous year: €5.3 billion).
In line with a sustainable dividend policy, the Mercedes-
Benz Group sets the dividend based on a distribution
ratio of 40% of the net profit attributable to Mercedes-
Benz Group shareholders. The free cash flow from the
industrial business is also taken into consideration when
setting the dividend.
Dividend
139
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
1 key performance indicator
16.8%
Adjusted return on equity¹
Revenue
Slightly higher than the prior-year level
Slightly lower than the prior-year level
Significantly lower than the prior-year level
12%-14%
€58,031 million
€132,379 million
€26,953 million
138
Unit sales¹
An agreement between Mercedes-Benz Group AG,
BMW AG and Audi AG related to the acquisition of the
companies of the HERE Group and the associated
establishment of There Holding B.V. In the event of a
change of control of one of the parties to the agree-
ment, the agreement obliges the party in question to
offer its shares in There Holding B.V. to the other par-
ties to the agreement (shareholders). A change of con-
trol of Mercedes-Benz Group AG occurs if one person
gains control over Mercedes-Benz Group AG, whereby
control is defined as (i) having control of more than
50% of the voting rights, (ii) being able to control more
than 50% of the voting rights eligible to vote at the
General Meetings on all or nearly all matters, or (iii) the
right to determine the majority of the members of the
Board of Management or of the Supervisory Board. A
change of control also occurs if competitors of the
HERE Group or certain possible competitors of the
HERE Group in the technology industry acquire a share-
holding of at least 25% of Mercedes-Benz Group AG. If
none of the other parties acquire these shares, the
agreement gives them the right to dissolve There Hold-
ing B.V.
134
Pursuant to Section 31 of the German Codetermination
Act (MitbestG), the Supervisory Board appoints the mem-
bers of the Board of Management with a majority com-
prising at least two thirds of its members' votes. If no
such majority is obtained, the Mediation Committee of
the Supervisory Board has to make a suggestion for the
appointment within one month of the vote by the Super-
visory Board in which the required majority was not
reached. The Supervisory Board then appoints the mem-
bers of the Board of Management with a majority of its
own members' votes. If no such majority is obtained, vot-
ing is repeated and the Chair of the Supervisory Board
then has two votes. The same procedure applies for dis-
missals of members of the Board of Management.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
€20,458 million
At the prior-year level
€150,017 million
Forecast for 2023
2022 reporting year
Outlook for key figures for 2023
B.44
key figures
The chart in B.44 provides an overview of the
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
3377
137
CO2 emissions of the new car fleet in Europe
After having fulfilled the CO2 requirements in 2022 as
well, the Mercedes-Benz Group expects that its new car
fleet's average CO2 emissions in Europe (European Union,
Norway and Iceland) will decrease significantly compared
to the previous year in 2023. With the further expansion
of the fleet of electric vehicles, it can be assumed that
the CO2 requirements in Europe will once again be ful-
filled in 2023.
The Mercedes-Benz Group expects the free cash flow of
the industrial business in 2023 to be at the prior year's
level. Although tax payments are expected to be higher
than in the prior year, these payments will likely be signif-
icantly more than offset by the positive contributions
made by Mercedes-Benz Cars.
Based on the development of the different segments, the
Group expects EBIT to be slightly lower than in the previ-
ous year in what will remain be a challenging market
environment.
136
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Mercedes-Benz Vans
Mercedes-Benz Vans expects unit sales in 2023 to con-
tinue at the prior-year level. The proportion of battery
electric vans in total sales can be increased by the new
battery electric models eCitan and EQT (WLTP: combined
electricity consumption: 18.99 kWh/100 km; combined
CO2 emissions: 0 g/km) and the new eSprinter.
The forecast for adjusted return on sales of 9% to 11% at
Mercedes-Benz Vans is based on the forecast of unit
sales and on advantageous pricing, with consideration
also given to the expected high inflation effects.
No use was made of this authorization to issue converti-
ble and/or warrant bonds during the reporting period.
In accordance with Article 5 of the articles of association,
the Board of Management has at least two members. The
number of members is decided by the Supervisory Board.
Pursuant to Section 84 Subsection 2 of the German Stock
Corporation Act (AktG), the Supervisory Board can
appoint a member of the Board of Management as the
Chairperson of the Board of Management. If a required
member of the Board of Management is lacking, an
affected party can apply in urgent cases for that member
to be appointed by the court pursuant to Section 85 Sub-
section 1 of the German Stock Corporation Act (AktG).
Pursuant to Section 84 Subsection 3 of the German Stock
Corporation Act (AktG), the Supervisory Board can revoke
the appointment of a member of the Board of Manage-
ment and of the Chairperson of the Board of Management
if there is an important reason to do so.
The adjusted cash conversion rate for the Mercedes-
Benz Vans division is expected to be within a range of 0.5
to 0.7.
In terms of research and development, Mercedes-Benz
Vans is focusing on electric drive systems, automated
driving and digitalization. Mercedes-Benz Vans expects to
see a significant increase in research and development
expenditure in 2023.
Mercedes-Benz Mobility
Mercedes-Benz Mobility expects a slight decrease in
contract volume and a slight increase in new business
in 2023.
Adjusted return on equity is expected to be within a
range of between 12% and 14% in 2023. Significantly
lower interest income due to rising interest rates is the
main driver of the forecast decrease in comparison to the
previous year.
The Mercedes-Benz Group
The Mercedes-Benz Group expects to generate revenue
in 2023 that is on the level of the previous year. The
Group assumes that revenue at Mercedes-Benz Cars will
also be at the prior-year level. Revenue at Mercedes-Benz
Vans is expected to slightly increase as compared to the
previous year. In contrast, the Group assumes that reve-
nue at Mercedes-Benz Mobility will be significantly lower
than in the previous year.
The Mercedes-Benz Vans division anticipates a significant
increase in investments in property, plant and equip-
ment in 2023. This increase will be primarily driven by
the planned transition to a fully electric Mercedes-Benz
van fleet of the next generation, as well as green invest-
ment within the framework of Ambition 2039 with the
goal of accountable CO2 neutrality.
An agreement between Mercedes-Benz Group AG and
BMW AG which contains basic provisions for joint ven-
tures between Mercedes-Benz Mobility Services GmbH
and group companies of BMW AG in the field of mobil-
ity services (one joint venture each in the areas of ride
hailing and charging as well as a joint venture that is
structured as a holding for the aforementioned joint
ventures). A change of control is defined as the acquisi-
tion by a third party of more than 50% of the voting
rights or shares, or the conclusion of a control agree-
ment over Mercedes-Benz Group AG by a third party. In
the event of a change of control, the contract includes
mechanisms that can lead to sole ownership by one of
the shareholders through a shoot-out process.
Pursuant to Section 179 of the German Stock Corporation
Act (AktG), the articles of association can only be
amended by a resolution of an Annual General Meeting.
Unless otherwise required by applicable law or the arti-
cles of association, resolutions of the Annual General
Meeting are passed pursuant to Section 133 of the Ger-
man Stock Corporation Act (AktG) and pursuant to Article
16 Sentences 1 and 2 of the articles of association with a
simple majority of the votes cast and, if required, with a
simple majority of the share capital represented. Pursu-
ant to Article 16 Sentence 3 of the articles of association,
the dismissal of a shareholder-elected member of the
Supervisory Board requires a majority of at least three
quarters of the votes cast. Pursuant to Section 179 Sub-
section 2 of the German Stock Corporation Act (AktG),
any amendment to the purpose of the Company also
requires a three-quarters majority of the share capital
represented at the Annual General Meeting; no use is
Authorization of the Board of Management to issue or
buy back shares
Outlook
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
The statements made in the Outlook chapter are based
on the plans of the Mercedes-Benz Group for 2023 as
approved by the Board of Management with the agree-
ment of the Supervisory Board. That plan is based on
the premises the Company sets regarding the economic
situation and the development of automotive markets.
It involves assessments made by the Group, which are
based on analyses by various renowned economic
research institutes, international organisations and indus-
try associations, as well as on the internal market analy-
ses of the Mercedes-Benz Group sales companies.
There is a large degree of uncertainty connected with
the premises regarding the economic situation and the
development of automotive markets. The risks and
opportunities that can arise as a result of deviations from
the forecasts of the development of the world economy
and automotive markets that are presented below are
described in the Risk and Opportunity Report.
The continuous planning process makes it possible for
the Group to ensure that available opportunities can be
exploited and that the organization can respond appro-
priately to unexpected risks. This in turn means that
expectations regarding anticipated business develop-
ment can be adjusted in line with the latest forecasts of
the development of automotive markets.
The world economy and
automotive markets
The world economy
The Group expects the world economy to continue to grow
at a noticeably slower pace in 2023. Especially during
the first few months of the year, high inflation is likely to
continue to lead to higher interest rates in most regions
around the world. More unfavourable financing condi-
tions, declining real income and ongoing high prices for
food and energy are expected to dampen consumer
spending and slow down business activity.
In the euro zone, where high inflation rates are likely to
persist, this development should cause the economy
to continue its weakness the beginning of the year, with
the consequence that total economic output for the year
as a whole would then grow only marginally. While the
situation with industry supply chains is expected to
improve gradually, lower demand from abroad and the
ECB's tight monetary policy will likely hold back any
recovery to speak of.
A mild recession is also expected for the US economy in
2023 as a result of aggressive interest rate hikes and their
impact, especially in the all-important real estate sector.
Nevertheless, for the year as a whole the Mercedes-Benz
Group expects the economy to expand slightly, key eco-
nomic figures for the year as a whole to remain more or
less at the same level as in 2022 thanks in part to a
noticeable decrease in inflation and the positive effect
this will have on the purchasing power of private house-
holds.
The Chinese economy is expected to grow at a noticeably
stronger rate in this year due to the relaxation of the
Covid-19 restrictions and government's targeted eco-
nomic support measures. The continuing consolidation of
the property sector and weaker demand from abroad will,
however, dampen this growth somewhat.
In view of all these developments, the global economy is
likely to grow by some 2% in 2023, which means growth
will remain significantly below the long-term trend.
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Combined Management Report with Non-Financial Declaration
Automotive markets
These unfavourable macroeconomic conditions are likely
to have a noticeable negative effect on demand in auto-
motive markets around the world. Conversely, in terms of
supply, disruptions of supply chains, as well as other
supply bottlenecks, are expected to show signs of easing
step by step later in the year. Given the fact that order
backlogs remain high in many places, most markets
should develop somewhat more positively than the eco-
nomic outlook would indicate.
We can therefore expect to see slight growth in the global
car market compared with the previous year. The market
in Europe is also expected to expand slightly following
three consecutive years of contraction. The US light vehi-
cle market is also likely to grow slightly and thus partially
recover from the decrease in unit sales recorded in the
previous year. In China too, market volume is expected to
increase slightly thanks to the lifting of the Covid-19
restrictions and the resulting improved economic pros-
pects.
By resolution of the Annual General Meeting of 5 April
2018, the Board of Management was authorized, with the
consent of the Supervisory Board, to increase the share
capital of the Company in the period until 4 April 2023,
wholly or in partial amounts, on one or several occasions,
by up to €1 billion by issuing new registered shares of no
par value in exchange for cash or non-cash contributions,
and, with the consent of the Supervisory Board under
certain conditions and within defined limits, to exclude
shareholders' subscription rights (Approved Capital 2018).
Subscription rights can, under these defined conditions,
be excluded in the event of a capital increase against
non-cash contributions for the purpose of an acquisition,
and in the case of a capital increase against cash contri-
butions, if the issue price of new shares is not signifi-
cantly below the market price at the time of issue.
The total number of shares issued against cash and/or
non-cash contributions under this authorization with the
exclusion of shareholders' subscription rights may not
exceed 10% of the share capital at the time when this
authorization takes effect. This limit is to include shares
which (i) are issued or sold during the period of this
authorization with the exclusion of subscription rights in
direct or analogous application of Section 186 Subsec-
tion 3 Sentence 4 of the German Stock Corporation Act
(AktG) and which (ii) are or can or must be issued to ser-
vice bonds with conversion or option rights or conversion
or option obligations, provided that the bonds are issued
after this authorization takes effect with the exclusion of
shareholders' subscription rights with analogous applica-
tion of Section 186 Subsection 3 Sentence 4 of the Ger-
man Stock Corporation Act (AktG).
No use has yet been made of Approved Capital 2018.
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made in the articles of association of the possibility to
stipulate a larger majority of the share capital. Amend-
ments to the articles of association that only affect the
wording can be decided upon by the Supervisory Board
in accordance with Article 7 Subsection 2 of the articles
of association. Pursuant to Section 181 Subsection 3 of
the German Stock Corporation Act (AktG), amendments
to the articles of association take effect upon being
entered in the commercial register.
By resolution of the Annual General Meeting on 8 July
2020, the Board of Management was authorized, with the
consent of the Supervisory Board, to issue during the
period until 7 July 2025 convertible bonds and/or bonds
with warrants or a combination of those instruments
(commercial paper) in a total nominal amount of up to
€10 billion with a maximum term of ten years, and to
grant the owners/lenders of those bonds conversion or
option rights to new, registered shares of no par value in
the Company with a corresponding amount of the share
capital of up to €500 million, in accordance with the
terms and conditions of those convertible bonds or
bonds with warrants. The bonds may be issued in
exchange for consideration in cash, but also for consider-
ation in kind, in particular for interests in other compa-
nies. The respective terms and conditions may also pro-
vide for mandatory conversion or an obligation to
exercise the option rights. The bonds can be issued once
or several times, wholly or in instalments, or simultane-
ously in various tranches. They can also be issued by
subsidiaries of the Company pursuant to Section 15ff. of
the German Stock Corporation Act (AktG).
The adjusted cash conversion rate for Mercedes-Benz
Cars is expected to be within a range of between 0.8 and
1.0 for the year 2023.
Given a continued advantageous product mix and effec-
tive pricing, but also additional costs due to inflation and
supply chain issues, Mercedes-Benz Cars expects this
sales development to lead to an adjusted return on
sales of between 12% and 14%.
Mercedes-Benz Cars expects unit sales in 2023 to be at
the level of the previous year. There is a special focus on
the Top-End models this year. In 2023, Mercedes-Benz
Cars also plans to offer battery electric vehicles in all of
the vehicle segments in which the brand is represented.
This will enable the proportion of battery electric vehicles
in all product categories (Top-End, Core and Entry) to be
increased.
Mercedes-Benz Cars
Outlook for key performance indicators
Key van markets are expected to develop more posi-
tively this year than in 2022. In Europe, the market seg-
ment for mid-size and large vans is likely to experience
slight overall growth. The Mercedes-Benz Group also
believes it is likely that unit sales in the European seg-
ment for small vans will increase significantly from the
very low level of sales recorded in 2022. In the United
States, the market segment for large vans should grow
slightly. The Chinese segment for mid-size vans is
expected to show significant growth.
Among other things, the Board of Management was also
authorized under certain circumstances, within certain
limits and with the consent of the Supervisory Board, to
exclude shareholders' subscription rights to the bonds.
Subscription rights can, under these defined conditions,
be excluded when bonds are issued in exchange for non-
cash contributions, particularly within the framework of a
merger or acquisition, and when bonds are issued in
exchange for cash contributions if the issue price is not
significantly below the theoretical market price of the
bonds at the time of the issuance.
Mercedes-Benz Vans
The Company will continue to face strained supply chains
and bottlenecks for key intermediate goods for vehicle
production in the near future. The further macroeconomic
and the geopolitical developments also harbour substan-
tial uncertainties. In order to be able to successfully
overcome these challenges, the Company will continue
to rigorously implement its measures for boosting effi-
ciency and for the related reduction in fixed costs. The
Mercedes-Benz Group and the segments remain commit-
ted to their challenging margin targets.
€7,986 million
Any issuance of bonds with the exclusion of subscription
rights may only be carried out under the authorization if
the arithmetical proportion of the share capital attributa-
ble to the total of the new shares to be issued on the
basis of such a bond does not exceed 10% of the share
capital at the time when this authorization takes effect
or - if this value is lower at the time when it is exer-
cised. If, during the period of the authorization until it is
exercised, use is made of other authorizations to issue or
sell shares in the Company or to issue rights enabling or
requiring subscription to shares in the Company and sub-
scription rights are excluded, this is to be counted
towards the aforementioned 10% limit.
Slightly higher than the prior-year level
Mercedes-Benz Group
Revenue¹
EBIT¹
Free cash flow of the industrial business¹
CO2 emissions of the new car fleet in Europe¹
€8,128 million
115 g/km
Slightly lower than the prior-year level
At the prior-year level
Significantly lower than the prior-year level
Mercedes-Benz Cars
Unit sales¹
Investments in property, plant and equipment at
Mercedes-Benz Cars focus on the new vehicle architec-
tures, with the main drivers here being the new E-Class
and the launch of the MMA architecture. Investments in
property, plant and equipment at Mercedes-Benz Cars
are expected to increase significantly compared to the
previous year.
Adjusted return on sales
Significantly higher than the prior-year level
Research and development expenditure¹
0.8-1.0
12%-14%
At the prior-year level
At the prior-year level
Revenue
2,040,700 vehicles
€3,265 million
Investments in property, plant and equipment¹
0.7
14.6%
€111,601 million
Adjusted cash conversion rate
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Country risks
Credit risks
Low
Commodity-price risks and opportunities
Interest-rate risks and opportunities
Exchange-rate risks and opportunities
Financial risks and opportunities
Low
Low
Low
High
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
143
1 Risks from legal proceedings and tax risks and opportunities are not presented in the table as they are not comparable with other risk categories due to various parameters.
A detailed presentation of risks from legal proceedings is to be found in the section Legal risks.
Medium
Medium
High
High
Low
Risks and opportunities relating to pension plans
Low
Low
Medium
Risks and opportunities from changes in credit ratings
Low
Low
Risks of restricted access to capital markets
High
Low
Low
Low
Risks and opportunities related to equity investments and
cooperations with partnerships
Low
Low
High
Procurement-market risks and opportunities
High
Low
High
Risks and opportunities relating to the legal and political framework
Low
High
High
High
General market risks and opportunities
Industry and business risks and opportunities
Opportunity
Risk
Opportunity
Risk
Medium
Company-specific risks and opportunities
Risks and opportunities from research and development
Production risks and opportunities
Low
Low
Low
The profitability of a measure is assessed before its
implementation. The possible impact and probability of
occurrence of all risks and opportunities relevant to the
individual entities and the related measures that have
been initiated are continually monitored. Through the
segments, this information is passed on to Group Risk
Management for reporting to the Board of Management,
the Audit Committee and the Supervisory Board.
Mercedes-Benz Group AG monitors implementation by
the segments as part of its legal, regulatory and compli-
ance functions.
Low
Low
Low
High
Low
High
Low
Low
Medium
Low
Low
Low
Personnel risks and opportunities
Information technology risks and opportunities
Risks and opportunities from purchasing and logistics
Medium
As part of the planning process, risks and opportunities
are noted within an observation horizon of up to five
years. In addition, strategic risks and opportunities are
also taken into account in the risk management process.
The reporting of risks and opportunities in this report
generally relates to a period of one year. The assessment
of individual risks and opportunities takes place on the
basis of their probability of occurrence and possible
impact on the Mercedes-Benz Group. Multiplying the
probability of occurrence by the possible impact results
in the expected monetary value, which forms the basis
for the classification of the risk and opportunity catego-
ries in the levels Low, Medium or High. The expected
monetary value is also used and reported as an addi-
tional assessment dimension within the framework of
internal risk and opportunity reporting. In principle, the
quantification of risks and opportunities in this report is
carried out by summarizing the expected values of the
individual risks and opportunities in categories (cf. over-
view B.45). The assessment and reporting of the level of
risks and opportunities takes into account both planned
and already effective risk-reducing measures (net view)
and is considered in relation to EBIT, unless otherwise
indicated.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
The scope of consolidation for risk and opportunity man-
agement generally corresponds to the scope of the Con-
solidated Financial Statements. The group of companies
included in the consolidation is being expanded from a
risk perspective. The risks and opportunities of the seg-
ments and operating units, important associated compa-
nies, joint ventures, joint operations and the corporate
departments are included.
The global economic conditions continue to be character-
ized by an exceptional degree of uncertainty. In addition
to unexpected macroeconomic developments, uncertain-
ties for the global economy and the business develop-
ment of the Mercedes-Benz Group may arise in particular
from geopolitical events and trade policy. Besides the
Russia-Ukraine war, examples of this include a further
exacerbation of tensions between the United States and
China and a further deterioration of political relations
between the European Union and China. In addition, as in
the previous year, the further course of the Covid-19 pan-
demic may lead to disruptions in global supply chains.
Other availability bottlenecks, in particular those affect-
ing semiconductors, remain a large source of uncertainty.
Volatile energy and commodity prices, persistently high
or repeatedly rising inflation rates, sharply rising interest
rates and an even more pronounced slowdown in eco-
nomic growth may also have an impact on the risks and
opportunities described in the individual categories.
The economic environment constitutes the framework
conditions for the risks and opportunities listed in the
following categories and is included as a premise in the
quantification of these risks and opportunities.
Like the majority of economic research institutes, the
Mercedes-Benz Group expects the growth of the global
economy to continue to slow down considerably in 2023.
The assumptions regarding the overall economic environ-
ment and the development of the automotive markets
in 2023 are described in detail in the Outlook chapter.
Economic conditions
Procurement-market risks and opportunities
Risks and opportunities relating to procurement arise for
the automotive segments in particular from fluctuations
in prices of commodities, raw materials and energy.
Certain raw materials and components are required for
the manufacture of vehicles and parts and are purchased
on the world market. The level of costs depends on the
price development of commodities, raw materials and
energy. Inflation-related increases in raw-material and
energy prices are expected for 2023 and are associated
with significant cost-side risks. They can also lead to
higher logistics costs. Furthermore, intense competition
for specific raw materials in the course of the introduc-
tion of new technologies can lead to increasing costs or
possible shortages in the supply chain. Moreover,
raw-material markets can be impacted by uncertainties
and political crises combined with possible supply
bottlenecks as well as by volatile demand for specific
raw materials. In general, the ability to pass on the higher
costs of commodities and other materials in the form of
higher prices for manufactured vehicles is limited
because of strong competitive pressure in the interna-
tional automotive markets. Rising raw-material prices
may therefore have a negative impact on the profit mar-
gins of the vehicles sold and thus lead to lower earnings
in the respective segment. In order to counteract possi-
ble loss of revenue, Mercedes-Benz Group continuously
monitors the development of raw-material and energy
prices and enters into negotiations with suppliers.
-
Procurement-market risks are rising from Low to High as
a result of possible inflation-related price increases
among other factors.
Industry and business risks and opportunities
Company-specific risks and opportunities
Technical developments and innovations are of key
importance for the safe and sustainable mobility of the
future. The transformation towards electric mobility and
comprehensive digitalization of vehicles has resulted in
ambitious development targets and the market launch of
new technologies. In addition to the resulting opportuni-
ties, decisions in favour of certain technologies and the
continuously growing scope of emission, consumption
and safety requirements to be met are associated with
risks.
In 2020, Mercedes-Benz Group AG and Mercedes-Benz
USA, LLC (MBUSA) reached agreements with various US
authorities to settle civil and environmental claims
regarding emission control systems of certain diesel vehi-
cles, which have taken legal effect. We refer to our further
explanations under Legal and tax risks and opportunities.
With the settlement reached, Mercedes-Benz Group AG
and MBUSA have agreed to, among other things, pay civil
penalties, conduct an emission modification programme
for affected vehicles, provide extended warranties,
undertake a nationwide mitigation project, take certain
corporate compliance measures and make other pay-
ments. If the aforementioned obligations are not com-
plied with, there will be the risk that cost-intensive meas-
ures will have to be taken and/or significant stipulated
penalties will become due.
Production risks and opportunities
Due to the increasing technical complexity and the goal
of maintaining and constantly enhancing quality stand-
ards for the luxury vehicles of the Mercedes-Benz Group,
both risks and opportunities can arise in the automotive
segments in connection with the launch and manufacture
of products. Production interruptions, for example due to
disruptions in the supply chain or a bottleneck in the
energy supply, cannot be ruled out as a result. In addi-
tion, the further development of the Covid-19 pandemic
may have a negative impact on production. For the
launch of new products — especially in the course of
the transformation toward electric mobility and the inte-
gration of new technologies the necessary compo-
nents and equipment scopes as well as the required pro-
duction capacities must be available. To reduce the
attendant risks, the related processes are continuously
evaluated and improved.
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Combined Management Report with Non-Financial Declaration
Warranty and goodwill cases could arise if the quality
of the products or the parts installed in the products
does not meet requirements despite appropriate quality
assurance processes, if regulations are not fully complied
with, or if support cannot be provided in the required
form in the event of problems and product maintenance.
The Mercedes-Benz Group recognizes appropriate provi-
sions for warranty and goodwill cases. Nevertheless, it
cannot be ruled out that recalls and field measures will
lead to expenses. Possible claims in connection with
such risks are examined and, if necessary, the appropri-
ate measures are initiated for the affected products.
Risks and opportunities from research and
development
Due to existing uncertainties and possible interruptions
in production caused by the impact of potential energy
shortages, production risks have increased from Low to
Medium.
General market risks and opportunities
The risks and opportunities for the economic develop-
ment of automotive markets are strongly affected by the
cyclical situation of the global economy. The assessment
of market risks and opportunities is linked to assump-
tions and forecasts about the overall development of
markets in the regions in which the Mercedes-Benz
Group is active. The economic conditions form the basis
for the assessment of the existing risks and opportunities.
The possibility of markets developing better or worse
than assumed in the planning, or of changing market con-
ditions, generally exists for all segments of the Group.
144
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146
Individual countries may attempt to defend and improve
their competitiveness in the world's markets by increas-
ingly resorting to interventionist and protectionist
measures. For example, setting up or expanding produc-
tion facilities, increasing local purchasing or the require-
ment to carry out local research and development can
result in significantly increased investment or higher run-
ning costs. In addition, barriers to market access such as
more difficult or delayed certification processes or very
complicated tariff procedures can make it more difficult
to import into those countries. Investing in those coun-
tries can limit the impact of protectionist measures.
Political tensions and the associated danger of geopoliti-
cal conflicts have increased and are associated with
far-reaching risks for the business development of the
Mercedes-Benz Group. A further escalation and possible
geographical expansion of the Russia-Ukraine war could
have a negative impact on purchasing and logistics pro-
cesses and on the production and sales programme. A
possible bottleneck in energy supply in the EU could sub-
sequently lead to potential production losses at the
Mercedes-Benz Cars and Mercedes-Benz Vans plants.
Moreover, there is an increasing risk of possible cyberat-
tacks as a result of political tensions. The above-men-
tioned risks are monitored on an ongoing basis and miti-
gation measures, such as substituting other energy
sources for gas or implementing energy-saving measures,
are initiated accordingly; possible scenarios are continu-
ously adjusted to the current geopolitical situation and
analysed.
Mercedes-Benz Cars and Mercedes-Benz Vans face the
described risks with respect to regulations concerning
mandatory targets for the average fleet fuel consumption
and CO2 emissions of new vehicles especially in the mar-
kets of China, Europe and the United States. The
Mercedes-Benz Group gives these targets due considera-
tion in its product and sales planning. We assume that
the ambitious statutory targets can be met. In some mar-
kets, the modalities for target achievement granted by
law, including the acquisition of external credits, will have
to be utilized. The market success of alternative drive
systems is greatly influenced not only by customer
acceptance but also by regional market conditions such
as the battery-charging infrastructure, state support and
tax conditions.
Legal limits on the fuel consumption and/or CO2 emis-
sions of car fleets exist in many markets, although the
target values differ from market to market. Non-compli-
ance with regulations applicable in the various markets
might result in significant penalties and reputational
harm, and might even mean that vehicles with conven-
tional drive systems could not or could no longer be reg-
istered in the relevant markets. The Mercedes-Benz
Group counteracts these risks through the transformation
towards electric mobility and the associated realignment
of its products.
The Mercedes-Benz Group constantly monitors the devel-
opment of the legal and political framework and attempts
to anticipate foreseeable requirements and long-term
objectives at an early stage in the product development
process. In particular, changes in the legal and political
framework at short notice can be associated with addi-
tional costs or higher investments.
Risks and opportunities from the legal and political
framework have a considerable influence on the
Mercedes-Benz Group's future business success. Regula-
tions concerning vehicles' emissions, fuel consumption,
safety and certification, as well as tariff aspects and
taxes in connection with the sale or purchase of vehicles
or vehicle parts, play an important role.
Possible declines in vehicle sales may be caused in par-
ticular by the partially unstable macroeconomic environ-
ment and in the context of political or economic uncer-
tainties. As a result of the Covid-19 pandemic, there are
still risks with a negative impact on the sales develop-
ment of Mercedes-Benz Cars. Rising energy prices, a per-
sistently high inflation rate and volatile exchange rates
may also lead to market uncertainty or a loss of purchas-
ing power and have a negative impact on demand in the
automotive sector. A lower-than-expected market
acceptance of electric vehicles can also lead to risks in
the development of unit sales and have a negative impact
on earnings. This could also endanger the achievement of
specific CO2 targets. Industrial policy measures to
strengthen local value creation in various countries as
well as government purchase incentives for locally pro-
duced electric vehicles can also result in competitive dis-
advantages and declining vehicle sales in the respective
markets. The development of markets, unit sales and
inventories is continually analysed and monitored by the
automotive divisions; if necessary, specific marketing and
sales programmes are implemented.
Risks and opportunities relating to the legal and
political framework
145
The market risks increase from Medium to High compared
with the previous year especially due to the uncertain
macroeconomic environment.
In connection with leasing agreements, risks and oppor-
tunities also arise due to the development of the used
vehicle market. These result when the market value of
leased vehicle at the end of the agreement term differs
from the residual value that was originally calculated and
forecast on the basis of specific assumptions at the time
the agreement was concluded and used as a basis for the
leasing instalments. Residual-value management pro-
cesses have been defined to counteract these risks relat-
ing to vehicles' residual values. Depending on the
region and the current market situation, the measures
taken generally include continuous market monitoring as
well as, if required, price-setting strategies or sales pro-
motion measures designed to regulate vehicle invento-
ries. The quality of market forecasts is verified by peri-
odic comparisons of internal and external sources, and, if
required, the determination of residual values is adjusted
and further developed with regard to methods, processes
and systems.
In connection with the sale of vehicles, the Mercedes-
Benz Group offers customers a wide range of financing
and leasing options. The resulting risks for the
Mercedes-Benz Mobility segment are mainly due to bor-
rowers' worsening creditworthiness, so receivables might
not be recoverable in whole or in part because of cus-
tomers' insolvency (default or credit risk). The Mercedes-
Benz Group counteracts credit risks by means of credit-
worthiness checks on the basis of standardized scoring
and rating methods, the collateralization of receivables,
and effective risk management with a firm focus on
monitoring both internal and macroeconomic leading
indicators.
The launch of new products by competitors, more aggres-
sive pricing policies and poorer effective pricing for prod-
ucts such as electric vehicles can lead to to increasing
competitive and price pressure in the automotive seg-
ments and have a negative impact on profitability. The
discontinuation or reduction of government subsidies for
electric vehicles can also negatively affect their pricing
and cut profit margins. Continuous monitoring is carried
out in order to recognize risks at an early stage. Depend-
ing on the situation, product-specific and possibly
regionally different measures are taken to support weaker
markets. There is also a risk of delayed market introduc-
tion of new technologies in vehicles. Opportunities exist
in particular in the Mercedes-Benz Cars segment due to
better-than-planned effective pricing of vehicles.
The loss of important dealerships and vehicle import-
ers can lead to customer demand not being fully served
and lower unit sales. Due to the tense economic situation
of some dealers and vehicle importers, possible loss of
revenue for Mercedes-Benz Cars cannot be ruled out. To
counter these risks at an early stage, the financial situa-
tion of strategically relevant dealers and vehicle import-
ers is continuously monitored.
Volatilities with regard to market developments can also
lead to the overall market or regional conditions for the
automotive industry developing better than assumed in
the internal forecasts and premises, resulting in business
opportunities in the market. Opportunities may also arise
from an improvement in the competitive situation or
a more positive development of demand. The utilization
of opportunities is supported by sales and marketing
campaigns.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Risks and opportunities from purchasing and logistics
Interruptions in global supply chains, bottlenecks in the
supply of intermediate goods, and production stoppages
or underutilization of suppliers' production capacities can
have a negative impact on business activities in the auto-
motive divisions. The increasing risk of cyberattacks
within the supply chain also means that disruptions in
the supply chain and, as a result, production stoppages
and losses of unit sales cannot be ruled out. Opportuni-
ties could arise, for example due to capacity costs being
lower than planned.
Interruptions in global supply chains, especially those
caused by bottlenecks for electronic components and
other important intermediate goods, as well as possible
failures in supply by energy providers, can cause bottle-
necks at Mercedes-Benz Cars and Mercedes-Benz Vans.
To avoid such bottleneck situations for intermediate
goods, capacity bottlenecks are countered by planning
ahead. Supplier management is undertaken for the pre-
vention of risks with the aim of ensuring the quantity and
quality of the components required to produce the vehi-
cles. Lack of availability and quality problems with cer-
tain vehicle parts can lead to production downtimes and
cause costs that result in negative effects on profitability.
The financial situation of some suppliers remains difficult.
The reasons for this are continuing uncertainties in con-
nection with rising commodity, raw-material and energy
prices, the lack of availability of components, and the fur-
ther impact of the Covid-19 pandemic. The resulting pos-
sible production stoppages or under-utilization of
production capacities at suppliers can also cause dis-
ruption of the supply chain in the automotive segments
and prevent vehicles from being completed and deliv-
ered to customers on time. Supplier risk management
aims to identify potential financial bottlenecks for suppli-
ers at an early stage and to initiate suitable countermeas-
ures. Specifically, depending on the warning signals
recorded and the internal classification, regular reporting
dates on which key performance indicators are reported
to the Mercedes-Benz Group and any support measures
can be determined if necessary are agreed upon with
suppliers. If suppliers cannot cover their fixed costs,
there is also the risk that they may demand compensa-
tion payments. Necessary capacity expansions at suppli-
ers could also require a contribution to cover costs.
Risks and opportunities
Continuous monitoring of the processes and systems of
the internal control and the risk management system is in
effect to resolve identified weaknesses and ensure con-
tinuous improvement of the processes and systems. As a
result of the complex process landscape and the high
rate of change of the legal requirements concerning
non-financial information, in particular the maturity of the
internal control system with regard to the sustainabili-
ty-relevant aspects is not yet on the level of the account-
ing-related internal control system. As of the reporting
date, there are no indications in all material respects of
an overall inappropriateness or ineffectiveness of the
internal control and risk management system.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
142
system.
The Board of Management, Audit Committee and Supervi-
sory Board are informed regularly and as needed about
potential significant control weaknesses, the appropri-
ateness and effectiveness of the control mechanisms and
the risk situation. The Audit Committee and the Supervi-
sory Board of Mercedes-Benz Group AG and the Supervi-
sory Boards of Mercedes-Benz AG and Mercedes-Benz
Mobility AG are responsible for monitoring the internal
control and risk management system including its appro-
priateness and effectiveness. The Internal Auditing
department monitors whether the statutory conditions
and the Group's internal policies concerning the control
and risk management system of the Group are adhered
to. If required, measures are initiated in cooperation with
the respective management. External auditors audit the
system for the early identification of risks, which is inte-
grated in the risk management system, for its general
suitability to identify risks threatening the existence of
the Group. In addition, in the context of the audit of the
consolidated financial statements, they report to the
Audit Committee and the Supervisory Board on any sig-
nificant weaknesses that have been recognized in the
accounting-related internal control and risk management
The Group Risk Management Committee (GRMC) is
responsible for ensuring the continuous improvement of
the risk management system and the internal control sys-
tem (including the compliance management system) and
for assessing their appropriateness and effectiveness
with regard to the Group's risk situation and the scope of
the business activities. As of 31 December 2022, the
GRMC was composed of representatives from Accounting
& Financial Reporting, the Legal Affairs department, Com-
pliance, Corporate & Information Security and the mem-
bers responsible for finance of the Boards of Manage-
ment at Mercedes-Benz Group AG, Mercedes-Benz AG
and Mercedes-Benz Mobility AG. It is chaired by the
Mercedes-Benz Group AG Board of Management mem-
bers who are responsible for Finance & Controlling /
Mercedes-Benz Mobility and for Integrity and Legal
Affairs. The Internal Auditing department contributes
material findings on the internal control and risk manage-
ment system.
The internal control system with regard to the
accounting process has the objective of ensuring the
appropriateness and effectiveness of accounting and
financial reporting. It is designed in line with the interna-
tionally recognized framework for internal control sys-
tems of the Committee of Sponsoring Organizations of
the Treadway Commission (COSO Internal Control
grated Framework), is continually developed further, and
is an integral part of the accounting and financial report-
ing processes in the segments, corporate functions,
organizational units and companies. The system includes
principles and procedures as well as preventive and
detective controls.
The following section describes risks and opportunities
that could have a significant influence on the profitability,
cash flows and financial position of the Mercedes-Benz
Group in the following year. In general, the reporting of
risks and opportunities takes place in relation to the indi-
vidual segments Mercedes-Benz Cars, Mercedes-Benz
Vans and Mercedes-Benz Mobility. If no segment is
explicitly mentioned, the risks and opportunities
described relate to all the segments.
Inte-
The compliance management system, which has an
interface to the risk management system, is aligned with
the risk situation of the Mercedes-Benz Group and aims
to promote rule-compliant behaviour within the company.
The compliance management system makes a significant
contribution to the integration of compliance into our
operating business units and their processes. Further
information on the compliance management system of
the Mercedes-Benz Group can be found in the Non-Fi-
nancial Declaration chapter.
The security risk management of Corporate Security is
integrated into the risk management system of the
Mercedes-Benz Group. The aim is to identify and evaluate
security-relevant risks on the basis of a risk-oriented
view and to control them by means of mitigating meas-
ures. To this end, Corporate Security implemented inter-
nal security controls at its sites worldwide. In addition,
Corporate Security established internal controls for the
use of cloud solutions and the functionality of a holistic
information security management system (ISMS).
The Mercedes-Benz Group's internal control system
includes, in addition to the accounting-related internal
control system, controls for further business processes.
There are also internal controls for Group-wide Corporate
Security processes and the Group-wide compliance
management system. Sustainability-related aspects are
also part of the internal control system. Moreover, the
structure and processes of the internal control system
are independently checked by Internal Auditing.
Internal control system
141
Climate-related risks and opportunities in connection
with the recommendations of the Task Force on Cli-
mate-related Financial Disclosures (TCFD) are part of
the environment area and are thus also identified and
assessed as part of the risk management process.
In identifying sustainability-related risks and opportu-
nities, Mercedes-Benz Group AG is guided by the topics
identified by the materiality analysis and thus includes
the areas of action of the sustainable business strategy,
for which concrete goals have been assigned. Sustaina-
bility-related risks and opportunities are understood to
be conditions, events or developments involving environ-
mental, social or governance factors (ESG), the occur-
rence of which may have an actual or potential impact on
the Mercedes-Benz Group's profitability, cash flows and
financial position, as well as on its reputation. ESG-re-
lated risks associated with business activities, business
relationships and products and services, and which
are very likely to have a serious negative impact on
non-financial aspects in accordance with Section 289c
of the German Commercial Code (HGB), are not currently
apparent.
In order to assess the Group's risk-bearing capacity, the
potential effects of the risks on earnings, with considera-
tion of correlation effects, are analysed using a Monte
Carlo simulation (confidence level: 99%). In the case of
symmetrical risk and opportunity profiles, the potential
effects on earnings of the opportunities are also included.
The aggregated risks and opportunities are compared
with the reported equity of the Mercedes-Benz Group as
a risk cover.
-
In addition to the risks and opportunities described
below, risks and opportunities that are not yet known or
classified as not material can also influence profitability,
cash flows and financial position in the future.
Table B.46 provides an overview of the expected mone-
tary values of the individual categories.
B.46
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Combined Management Report with Non-Financial Declaration
Due to the transformation to electric mobility and the
increasing outsourcing of important components, there is
also a risk that these will not be available on time in the
planned quantity and required quality, thus delaying the
start of production of new series. This could have nega-
tive effects on profitability.
Information technology risks and opportunities
The systematically pursued digitalization strategy enables
the Mercedes-Benz Group to utilize new opportunities to
increase customer utility and the value of the company.
Nonetheless, the high degree of penetration of all busi-
ness units by information technology (IT) also harbours
risks for our business and production processes and the
units' products and services. Extensive changes in the
existing system landscape, for example the focus on stra-
tegic partnerships for the transformation of the IT infra-
structure, can also lead to risks.
The ever-growing threat from cybercrime and the spread
of aggressive malicious code brings risks that can affect
the availability, integrity and confidentiality of informa-
tion and IT-supported operating resources. Despite
extensive precautions, in the worst-case scenario this
can lead to a temporary interruption of IT-supported
business processes with severe negative effects on the
Group's earnings. In addition, the loss or the misuse of
sensitive data may under certain circumstances lead to a
loss of reputation. In particular, stricter regulatory
requirements such as the EU General Data Protection
Regulation and related legislation may, among other
things, give rise to claims by third parties and result in
costly regulatory requirements and penalties with an
impact on earnings. It is essential for the globally active
Mercedes-Benz Group and its wide-ranging business and
production processes that information is available and
can be exchanged in an up-to-date, complete and correct
form. The internal IT security framework is oriented
according to international standards and also draws on
industry standards and good practices for its protective
measures. New regulatory requirements for cybersecurity
and cybersecurity management systems are taken into
account in the further development of processes and
policies. Appropriately secure IT systems and a reliable IT
infrastructure must be used to protect information. Cyber
threats must be identified and dealt with as appropriate
for their criticality over the entire life cycle of the applica-
tions and the IT systems. Special attention is paid to risks
that in the event of their occurrence give rise to an inter-
ruption of business processes due to IT system failures
and to the loss and the falsification of data. The advanc-
ing digitalization and networking of the means of produc-
tion is accompanied by coordinated technical and organi-
zational security measures.
Due to growing requirements concerning the confidenti-
ality, integrity and availability of data, the Mercedes-Benz
Group has implemented various preventive and correc-
tive measures so that the related risks, such as possible
reputational damage, are minimized. For example, the
Group reduces potential disruptions to operational pro-
cesses in computer centres by mirroring data, decentral-
izing data storage, off-site data backups and IT systems
configured for high availability. Emergency plans are
drawn up, employees trained and regularly made aware
in order to remain capable of action. Specific threats are
analysed and countermeasures are coordinated at a
globally active Cyber Intelligence and Response Centre.
The protection of products and services against the dan-
ger of hacking and cybercrime is continually developed.
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Personnel risks and opportunities
Competition for highly qualified staff and management is
still very intense in the industry and the regions in which
the Mercedes-Benz Group operates. The Group's future
success also depends on the extent to which it succeeds
over the long term in recruiting, integrating and retaining
specialist employees. The established human resources
instruments take such personnel risks into consideration.
One focus of human resources management is the tar-
geted personnel development and further training of the
workforce. Among other things, employees benefit from a
wide range of training opportunities and the transparency
created within the framework of performance manage-
ment. In order to remain successful as a company, the
way we work together and our leadership culture undergo
continuous development.
In addition to the demographic development, the digital
transformation also requires that the company continues
to adapt to changes and derives measures such as secur-
ing a qualified next generation of specialists and manag-
ers, especially with regard to technical developments.
This requirement is addressed through various measures,
including targeted qualification. We counter economic,
market and competitive fluctuations by means of estab-
lished time and flexibility instruments so that we can
react to the situation appropriately.
Risks and opportunities related to equity investments
and partnerships
Cooperation with partners in shareholdings and partner-
ships is of key importance to the Mercedes-Benz Group,
both in the transformation towards electric mobility and
comprehensive digitalization, and in connection with
mobility solutions. Especially with new technologies,
these shareholdings help us utilize synergies and improve
cost structures in order to respond successfully to the
competitive situation in the automotive industry.
The Mercedes-Benz Group generally participates in the
risks and opportunities of shareholdings in line with its
equity interest, and is also subject to share-price risks
and opportunities if such companies are listed on a stock
exchange. After the spin-off and hive-down of the
Daimler commercial vehicle business, this also applies to
the Group's remaining minority shareholding in Daimler
Truck Holding AG.
The remeasurement of a holding can lead to risks and
opportunities for the segment to which it is allocated.
Furthermore, ongoing business activities, especially the
integration of employees, technologies and products, can
result in risks. In addition, further financial obligations or
an additional financing requirement can arise. The share-
holdings are subject to a monitoring process so that, if
required, decisions can be promptly made on whether or
not measures can be taken to support or ensure profita-
bility. The recoverable value of investments in sharehold-
ings is also regularly monitored.
150
Expected Value
Category¹
Risk and opportunity management is based on the princi-
ple of completeness. This means that at the level of the
individual entities, all identified risks and opportunities
enter the risk management process.
Appropriateness and effectiveness of the internal
control and risk management system
for 2023
Expected Value
for 2022
The following section deals with the financial risks and
opportunities of the Mercedes-Benz Group. These risks
and opportunities can have negative or positive effects
on the profitability, cash flows and financial position of
the Group.
to pension plans
The companies of the Mercedes-Benz Group grant
defined-benefit pension commitments, which are cov-
ered by plan assets, as well as healthcare commitments
to a small extent. The balance of pension obligations less
plan assets constitutes the carrying amount or funded
status of those employee benefit plans. The measure-
ment of pension obligations and the calculation of net
pension expense are based on certain assumptions. Even
small changes in those assumptions such as a change in
the discount rates or changed inflation assumptions have
a negative or positive effect on funded status and Group
equity in the current financial year, and lead to a change
in the periodic net pension expense in the following
financial year. The fair value of plan assets is determined
to a large degree by developments in the capital markets.
Unfavourable or favourable developments, especially
relating to share prices and fixed-interest securities,
reduce or increase the carrying value of plan assets. A
change in the composition of plan assets can also have a
positive or negative impact on the future development of
the fair value of plan assets. Risk management for the
plan assets takes place through broad diversification of
investments, the selection of various asset managers on
the basis of quantitative and qualitative analyses, and the
ongoing monitoring of returns and risks. The structure of
pension obligations is taken into consideration during the
determination of the investment strategy for the plan
assets in order to reduce fluctuations of the funded sta-
tus. Capital market volatility has risen significantly since
the previous year due to the war in Ukraine and the inter-
est rate policy of the central banks. As a result, the
impact of the risks and opportunities in connection with
pension plans has increased from Medium to High.
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Combined Management Report with Non-Financial Declaration
Legal and tax risks and opportunities
The Group continues to be exposed to legal and tax risks.
Provisions are recognized for those risks if and insofar as
they are likely to be utilized and the amounts of the obli-
gations can be reasonably estimated.
Legal risks
Regulatory risks
The automotive industry is subject to extensive govern-
mental regulations worldwide. Laws in various jurisdic-
tions govern occupant safety and the environmental
impact of vehicles, including emissions levels, fuel econ-
omy and noise, as well as the emissions of the plants
where vehicles or parts thereof are produced. In case
regulations applicable in the different regions are not
complied with, this could result in significant penalties
and reputational harm or the inability to certify vehicles
in the relevant markets. The cost of compliance with
these regulations is considerable, and in this context,
Mercedes-Benz continues to expect a significant level of
Risks and opportunities relating
costs.
Risks from legal proceedings in connection
with diesel exhaust gas emissions - governmental
proceedings
Mercedes-Benz is continuously subject to governmental
information requests, inquiries, investigations, adminis-
trative orders and proceedings relating to various laws
and regulations in connection with diesel exhaust emis-
sions.
The corresponding activities of various authorities world-
wide, which were already reported in the past, are partly
ongoing, as described below. These activities particularly
relate to test results, the emission control systems used
in Mercedes-Benz diesel vehicles and/or the interactions
of Mercedes-Benz with the relevant authorities as well as
related legal issues and implications, including, but not
limited to, under applicable environmental, criminal, con-
sumer protection and antitrust laws.
In the United States, Mercedes-Benz Group AG and
Mercedes-Benz USA, LLC (MBUSA) reached agreements
in the third quarter of 2020 with various authorities to
settle civil environmental claims regarding the emission
control systems of certain diesel vehicles. These agree-
ments have become final and effective. The authorities
take the position that Mercedes-Benz failed to disclose
Auxiliary Emission Control Devices (AECDs) in certain of
its US diesel vehicles and that several of these AECDs are
illegal defeat devices.
As part of these settlements, Mercedes-Benz has denied
the allegations by the authorities and has not admitted
liability, but has agreed to, among other things, pay civil
penalties, conduct an emission modification programme
for the affected vehicles and take certain other measures.
The failure to meet certain of those obligations may trig-
ger additional stipulated penalties. In the first quarter of
2021, Mercedes-Benz paid the civil penalties.
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Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
As already reported, in April 2016, the U.S. Department of
Justice ("DOJ") requested that Mercedes-Benz conduct an
internal investigation. Mercedes-Benz conducted such
internal investigation in cooperation with DOJ's investiga-
tion; DOJ's investigation remains open. In addition, fur-
ther US state authorities have opened investigations pur-
suant to both local environmental and consumer
protection laws and have requested documents and
information.
In Canada, the Canadian environmental regulator Envi-
ronment and Climate Change Canada ("ECCC") is con-
ducting an investigation in connection with Diesel
exhaust emissions based on the suspicion of potential
violations of, amongst others, the Canadian Environmen-
tal Protection Act as well as potential undisclosed AECDS
and defeat devices. Mercedes-Benz continues to cooper-
ate with the investigating authorities.
In Germany, the Stuttgart public prosecutor's office
issued a fine notice against Mercedes-Benz in September
2019 based on a negligent violation of supervisory duties,
thereby concluding the related administrative offense
proceedings against Mercedes-Benz. The Stuttgart public
prosecutor's office is still conducting criminal investiga-
tion proceedings against Mercedes-Benz employees on
the suspicion of, amongst others, fraud. In July 2021, the
local court of Böblingen issued penal orders against
three Mercedes-Benz employees based on, amongst oth-
ers, fraud, which have become final.
Risks from legal proceedings in general
Mercedes-Benz Group AG and its subsidiaries are con-
fronted with various legal proceedings and claims as well
as governmental investigations and orders (legal pro-
ceedings) on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services, dealer,
supplier and other contractual relationships, intellectual
property rights (especially patent infringement lawsuits),
warranty claims, environmental matters, antitrust matters
(including actions for damages) as well as investor litiga-
tion. Product-related litigation involves claims alleging
faults in vehicles. Some of these claims are asserted by
way of class actions. If the outcome of such legal pro-
ceedings is detrimental to Mercedes-Benz or such pro-
ceedings are settled, the Group may encounter substan-
tial financial burdens, e.g. from damages payments or
service actions, recall campaigns, monetary penalties or
other costly actions. Some of these proceedings and
related settlements may also have an impact on the com-
pany's reputation.
Risks and opportunities exist in connection with potential
downgrades or upgrades to credit ratings by the rating
agencies, and thus to the Mercedes-Benz Group's credit-
worthiness. Downgrades could have a negative impact on
the Group's financing if such a downgrade leads to an
increase in the costs for external financing or restricts the
Group's ability to obtain financing. A credit rating down-
grade could also discourage investors from investing in
Mercedes-Benz Group AG or from purchasing bonds
issued by Mercedes-Benz Group AG or another company
of the Group.
Risks and opportunities from changes in
credit ratings
Risks of restricted access to capital markets
Liquidity risks arise when a company is unable to fully
meet its financial obligations. In the normal course of
business, the Mercedes-Benz Group uses bonds, com-
mercial paper and securitized transactions, as well as
bank loans in various currencies, primarily with the aim of
refinancing its leasing and sales-financing business. An
increase in the cost of refinancing would have a negative
impact on the competitiveness and profitability of the
financial services business to the extent that the higher
refinancing costs cannot be passed on to customers; a
limitation of the financial services business would also
have negative consequences for the vehicle business.
Access to capital markets in individual countries may be
limited by government regulations or by a temporary lack
of absorption capacity. In addition, pending legal pro-
ceedings as well as the Group's own business policy con-
siderations and developments may temporarily prevent
the Group from covering any liquidity requirements by
means of borrowing in the capital markets. Contractually
agreed credit lines are available as refinancing instru-
ments. The risk of limited capital market access is
unchanged from the previous year.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Financial risks and opportunities
In principle, the Group's operating and financial risk
exposures underlying its financial risks and opportunities
can be divided into symmetrical and asymmetrical risk
and opportunity profiles. With the symmetrical risk and
opportunity profiles (e.g. currency exposures), risks and
opportunities exist equally, while with the asymmetrical
risk and opportunity profiles (e.g. credit and country
exposures), the risks outweigh the opportunities.
The Mercedes-Benz Group is generally exposed to risks
and opportunities from changes in market prices such as
currency exchange rates, interest rates and commodity
prices. Market price changes can have a negative or posi-
tive influence on the Group's profitability, cash flows and
financial position. The Mercedes-Benz Group systemati-
cally manages and monitors market-price risks and
opportunities primarily directly in the context of its busi-
ness operations and financing activities, and applies
derivative financial instruments for hedging purposes
where needed, thus limiting both market-price risks and
opportunities.
In addition, the Group is exposed to credit-, country- and
liquidity-related risks, risks of restricted access to capital
markets and risks from changes in credit ratings. As part
of the risk management process, the Mercedes-Benz
Group regularly assesses these risks by considering
changes in key economic indicators and market informa-
tion. Consideration of the pension plan assets to cover
retirement and healthcare benefits is included in the sec-
tion "Risks and opportunities relating to pension plans".
Exchange-rate risks and opportunities
The Mercedes-Benz Group's global orientation means that
its business operations and financial transactions are
connected with risks and opportunities related to fluctu-
ations in currency exchange rates. This applies in particu-
lar to fluctuations of the euro against the US dollar, Chi-
nese renminbi, British pound and other currencies such
as those of growth markets. An exchange-rate risk or
opportunity arises in business operations primarily when
revenue is generated in a currency different from that of
the related costs (transaction risk). Regularly updated
currency risk exposures are successively hedged with
suitable financial instruments (predominantly currency
forwards) in accordance with exchange-rate expectations,
which are continually reviewed, whereby both risks and
opportunities are limited. Any over-collateralization
caused by changes in exposure is reversed by suitable
measures without delay. Exchange-rate risks and oppor-
tunities also exist in connection with the translation into
euros of the net assets, revenues and expenses of the
companies of the Group outside the euro zone (transla-
tion risk); these risks are not generally hedged.
Interest-rate risks and opportunities
Changes in interest rates can create risks and opportuni-
ties for business operations as well as for financial trans-
actions. The Mercedes-Benz Group employs a variety of
interest-rate sensitive financial instruments to manage
the cash requirements of its business operations on a
day-to-day basis. Most of these financial instruments are
held in connection with the financial services business of
Mercedes-Benz Mobility. Interest-rate risks and opportu-
nities arise when fixed-interest periods are not congruent
between the asset and liability sides of the balance sheet.
By means of refinancing coordinated with the terms of
the financing agreements, the risk of maturity mismatch
is minimized from both an interest-rate and a liquidity
perspective. Remaining interest-rate risks are managed
with the use of derivative financial instruments. The
funding activities of the industrial business and the finan-
cial services business are coordinated at the Group level.
Derivative interest-rate instruments such as interest-rate
swaps are used to achieve the desired interest-rate
maturities and asset/liability structures (asset and liabil-
ity management).
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Combined Management Report with Non-Financial Declaration
Commodity-price risks and opportunities
As describe in the section on "Procurement-market risks
and opportunities", the Mercedes-Benz Group is exposed
to risks arising from changes in prices of raw materials. A
small part of the commodity-price risks, mainly from the
purchase of precious metals, is reduced by the use of
derivative financial instruments.
Credit risks
Credit risk describes the risk of financial loss resulting
from a counterparty failing to meet its contractual pay-
ment obligations. Credit risk includes both the direct risk
of default and the risk of a deterioration in creditworthi-
ness, as well as concentration risks.
The Group is exposed to credit risks which result primar-
ily from its financial services activities and from the oper-
ations of its vehicle business. The risks from leasing and
sales financing are dealt with in the General market risks
and opportunities section.
Credit risks also arise from the Group's liquid assets.
Should defaults occur, this would adversely affect the
Group's profitability, liquidity and capital resources, and
financial position. The limit methodology for liquid funds
deposited with financial institutions has been continu-
ously further developed in recent years. In connection
with investment decisions, priority is placed on the bor-
rowers' very high creditworthiness and on balanced risk
diversification. Most liquid assets are held in investments
with an external rating of A or better.
Country risks
Country risk describes the risk of financial loss resulting
from changes in political, economic, legal or social condi-
tions in the respective country, for example due to sover-
eign measures such as expropriation or a ban on currency
transfers. The Mercedes-Benz Group is exposed to coun-
try risks that primarily result from cross-border financing
or collateralization for subsidiaries or customers, from
investments in subsidiaries and joint ventures, and from
cross-border trade receivables. Country risks also arise
from cross-border cash deposits with financial institu-
tions. The Group addresses these risks by setting country
limits (e.g. for hard-currency portfolios of Mercedes-Benz
Mobility companies). The Mercedes-Benz Group also has
an internal rating system that divides all countries in
which it operates into risk categories. The value at risk for
the country risk reflects the risk assessments in connec-
tion with the business activities in Russia.
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Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Between 2018 and 2020, the German Federal Motor
Transport Authority ("KBA”) issued subsequent auxiliary
provisions for the EC type approvals of certain Mercedes-
Benz diesel vehicles, and ordered mandatory recalls as
well as, in some cases, stops of the first registration. In
autumn 2022, the KBA issued further decisions regarding
vehicles equipped with an OM607 EU6 or EU5 diesel
engine. In each of those cases, it held that certain cali-
brations of specified functionalities are to be qualified as
impermissible defeat devices. Mercedes-Benz has a con-
trary legal opinion on this question and has filed timely
objections against the KBA's administrative orders and
determinations mentioned above. Insofar as the KBA has
not remedied the objections, Mercedes-Benz has filed
lawsuits with the competent administrative court to have
the controversial questions at issue clarified in a court of
law. Irrespective of such objections and the lawsuits that
are now pending, Mercedes-Benz continues to cooperate
fully with the KBA. The new calibrations requested by the
KBA were developed by Mercedes-Benz and assessed
and approved by the KBA; the related recalls were initi-
ated. It cannot be ruled out that under certain circum-
stances, software updates may have to be reworked, or
further delivery and registration stops may be ordered or
resolved by the company as a precautionary measure,
also with regard to the used-car, leasing and financing
businesses. In the course of its regular market supervi-
sion, the KBA routinely conducts further reviews of
Mercedes-Benz vehicles and asks questions about tech-
nical elements of the vehicles. In addition, Mercedes-
Benz continues to be in a dialogue with the German Min-
istry for Digital and Transport (BMDV) to conclude the
analysis of the diesel-related emissions matter and to
further the update of affected customer vehicles. In light
of the aforementioned administrative orders issued by
the KBA, and continued discussions with the KBA and the
BMDV, it cannot be ruled out completely that additional
administrative orders may be issued in the course of the
ongoing and/or further investigations. Since 1 September
2020, this also applies to responsible authorities of other
member states and the European Commission, which
conduct market surveillance under the new European
Type Approval Regulation and can take measures upon
assumed non-compliance, irrespective of the place of the
original type approval, and also to the British market sur-
veillance authority DVSA (Driver and Vehicle Standards
Agency).
155
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Tax risks and opportunities
Mercedes-Benz Group AG and its subsidiaries operate in
many countries worldwide and are therefore subject to
numerous different statutory provisions and tax audits.
Any changes in legislation and jurisdiction, as well as dif-
ferent interpretations of the law by the fiscal authorities,
especially in the field of cross-border transactions, may
be subject to considerable uncertainty. It is therefore
possible that the provisions recognized will not be suffi-
cient, which could have negative effects on the Group's
net profit and cash flows.
Positive effects on the Group's net profit and cash flows
are also possible as a result of retroactive legislation,
future court rulings or changes in the opinions of the tax
authorities.
Any changes or interventions by the fiscal authorities are
continuously monitored by the tax department and
measures are taken if required. The monitoring, manage-
ment and avoidance of tax risks is supported by a
tax-compliance management system (tax CMS).
In addition, if future taxable income is not earned or is
too low, there is a risk that the tax benefit from loss car-
ryforwards and tax-deductible temporary differences may
not be recognized or may no longer be recognized in full;
this could have a negative impact on net profit. However,
there is an accounting opportunity that tax benefits cur-
rently not recognized in full may be utilized or recognized
in future years and could thus also have a positive impact
on the Group's net profit.
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Combined Management Report with Non-Financial Declaration
Overall assessment of the risk and
opportunity situation
The overall view of the Group's risk and opportunity situa-
tion is the sum of the described individual risks and
opportunities in all risk and opportunity categories.
In addition to the risks described, unforeseeable events
I can have a negative impact on the business activities and
thus on the Mercedes-Benz Group's profitability, liquidity
and capital resources, financial position and reputation,
and non-financial key figures as well as on society and
the environment.
No risks are recognizable - neither on the reporting date
nor at the time of preparing the Consolidated Financial
Statements that either alone or in combination with
other risks could endanger the continued existence of
the Group.
Forward-looking statements
This document contains forward-looking statements that reflect our current views about
future events. The words "anticipate", "assume", "believe", "estimate", "expect", "intend",
"may", "can", "could", "plan", "project", "should" and similar expressions are used to identify
forward-looking statements. These statements are subject to many risks and uncertainties,
including an adverse development of global economic conditions, in particular a decline of
demand in our most important markets; a deterioration of our refinancing possibilities on the
credit and financial markets; events of force majeure including natural disasters, pandemics,
acts of terrorism, political unrest, armed conflicts, industrial accidents and their effects on
our sales, purchasing, production or financial services activities; changes in currency
exchange rates, customs and foreign trade provisions; a shift in consumer preferences
towards smaller, lower-margin vehicles; a possible lack of acceptance of our products or ser-
vices which limits our ability to achieve prices and adequately utilize our production capaci-
ties; price increases for fuel, raw materials or energy; disruption of production due short-
ages of materials or energy, labour strikes or supplier insolvencies; a decline in resale prices
of used vehicles; the effective implementation of cost-reduction and efficiency-optimization
measures; the business outlook for companies in which we hold a significant equity interest;
the successful implementation of strategic cooperations and joint ventures; changes in laws,
regulations and government policies, particularly those relating to vehicle emissions, fuel
consumption and safety; the resolution of pending governmental investigations or of investi-
gations requested by governments and the outcome of pending or threatened future legal
proceedings; and other risks and uncertainties, some of which are described under the head-
ing "Risk and Opportunity Report" in this Annual Report. If any of these risks and uncertain-
ties materializes or if the assumptions underlying any of our forward-looking statements
prove to be incorrect, the actual results may be materially different from those we express or
imply by such statements. We do not intend or assume any obligation to update these for-
ward-looking statements since they are based solely on the circumstances at the date of pub-
lication.
EU taxonomy
The EU taxonomy regulation and the adopted delegated acts along with the supplementary
interpretation documents of the European Commission contain formulations and terms that
are still subject to considerable uncertainties and for which clarifications have not yet been
published in all cases. Among others, this refers to the classification of economic activities,
interpretation of do-no-significant-harm-criteria and to the assessment of the economic sub-
stance of financial investments. Due to the immanent risk that uncertain legal terms could be
differently interpreted, uncertainty is attached to the legal certainty of the interpretation.
Statements regarding electricity and fuel consumption and CO2 emissions
The consumption was determined on the basis of the regulation 2017/1151/EU. Further infor-
mation on official fuel consumption and on the official specific CO2 emissions of new cars
can be taken from "Leitfaden über den Kraftstoffverbrauch, die CO2-Emissionen und den
Stromverbrauch neuer Personenkraftwagen" dat.de/fileadmin/media/Leitfaden CO2/
GuideCO2.pdf
References made in this Management Report
Insofar as the references made in this Management Report relate to parts of the Annual
Report that were not included in the external audit (components outside the Annual Financial
Statements and Consolidated Financial Statements and the Combined Management Report),
or to the Mercedes-Benz Group website or other reports or documents, these were not part of
the external audit.
The disclosures on the appropriateness and effectiveness of the internal control and risk
management system in the Risk and Opportunity Report chapter, which are not part of the
Management Report, were also not included in the audit of the financial statements.
159
In addition to the aforementioned authorities, national
cartel authorities and other authorities of various foreign
States, including the South Korean Ministry of Environ-
ment, the South Korean competition authority (Korea Fair
Trade Commission) and the Seoul public prosecutor's
office (South Korea) are conducting various investigations
and/or procedures in connection with Diesel exhaust
emissions. In this context, South Korean authorities have
made determinations and imposed sanctions against
Mercedes-Benz. Mercedes-Benz has lodged an appeal
against the determinations and the sanctions of the
South Korean administrative authorities (the Ministry of
the Environment and the Korea Fair Trade Commission).
The proceedings described in this paragraph are still
ongoing.
e
Further information on legal proceedings is provided in
the chapter Consolidated Financial Statements in
Note 30 of the Notes to the Consolidated Financial State-
ments.
It cannot be ruled out that the regulatory risks and risks
from legal proceedings discussed above, individually or
in the aggregate, may materially adversely impact the
profitability, cash flows and financial position of the
Group or any of its segments.
Mercedes-Benz continues to fully cooperate with the
authorities and institutions. Irrespective of such coopera-
tion and in light of the past developments, it is possible
that further regulatory, criminal and administrative inves-
tigative and enforcement actions and measures relating
to Mercedes-Benz and/or its employees will be taken or
administrative orders will be issued. Additionally, further
delays in obtaining regulatory approvals necessary to
introduce new or recertify existing vehicle models could
occur.
Regarding the proceedings and processes still in pro-
gress, Mercedes-Benz cannot at this time make any
statement to their outcome. In light of the legal positions
taken by U.S. regulatory authorities and the KBA as well
as the South Korean Ministry of Environment, amongst
others, it cannot be ruled out that, besides these authori-
ties, one or more authorities worldwide will reach the
conclusion that other passenger cars and/or vans with
the brand name Mercedes-Benz or other brand names of
the Mercedes-Benz Group are equipped with impermissi-
ble defeat devices. Likewise, such authorities could take
the view that certain functionalities and/or calibrations
are not proper and/or were not properly disclosed. It
cannot be ruled out that Mercedes-Benz will become
subject to, as the case may be, significant additional
fines and other sanctions, measures and actions. The
occurrence of the aforementioned events in whole or in
part could cause significant collateral damage including
reputational harm. Further, due to negative allegations or
findings with respect to technical or legal issues by one
of the various governmental agencies, other agencies —
or also plaintiffs - could also adopt such allegations or
findings. Thus, a negative allegation or finding in one
proceeding carries the risk of being able to have an
adverse effect on other proceedings, also potentially
leading to new or expanded investigations or proceed-
ings, including lawsuits.
In addition, the ability of Mercedes-Benz to defend itself
in proceedings could be impaired by concluded proceed-
ings and their underlying allegations as well as by results
or developments in any of the information requests,
inquiries, investigations, administrative or criminal orders,
legal actions and/or proceedings discussed above.
-
Risks from legal proceedings in connection with die-
sel exhaust gas emissions civil court proceedings
As previously reported, the State of Arizona filed a law-
suit in January 2019 claiming that, amongst others,
Mercedes-Benz Group AG and MBUSA deliberately
deceived consumers in connection with advertising
Mercedes-Benz diesel vehicles. In the fourth quarter of
2022, Mercedes-Benz Group AG and MBUSA reached a
binding settlement with the State of Arizona. In a sepa-
rate lawsuit filed by the Environmental Protection Com-
mission of Hillsborough County, Florida in September
2020, the plaintiff claims that, amongst others,
Mercedes-Benz Group AG and MBUSA violated municipal
regulations prohibiting vehicle tampering and other con-
duct by using alleged devices claimed to impair the
effectiveness of emissions control systems. The lawsuit
was dismissed in the third quarter of 2022. The plaintiff
has appealed the decision.
Consumer class actions containing allegations similar to
those raised by the State of Arizona were filed against
Mercedes-Benz Group AG in Israel in February 2019 as
well as against Mercedes-Benz Group AG and further
Group companies in the United Kingdom since May 2020,
in the Netherlands, in Portugal as well as in November
2022 in Australia. The plaintiffs assert that Mercedes-
Benz had used devices that impermissibly impair the
effectiveness of emission control systems in reducing
nitrogen-oxide (NOx) emissions and which cause exces-
sive emissions from vehicles with diesel engines.
156
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
In Germany, a large number of customers of diesel vehi-
cles have filed lawsuits for damages or rescission of sales
contracts based on similar allegations. They refer to, in
particular, the KBA's recall orders mentioned above. The
development of case numbers is declining, however an
increase in the future cannot be ruled out. Based on simi-
lar allegations, the Federation of German Consumer
Organisations (Verbraucherzentrale Bundesverband e. V.)
filed a model declaratory action (Musterfeststellungsk-
lage) against Mercedes-Benz Group AG with the Stuttgart
Higher Regional Court in July 2021. Such action seeks a
ruling that certain preconditions of alleged consumer
claims are met. Mercedes-Benz Group AG defends itself
against the federation's allegations.
Furthermore, class actions have been filed in Canada
alleging anticompetitive behaviour relating to vehicle
technology, costs, suppliers, markets and other competi-
tive attributes, including diesel emissions control tech-
nology. In 2022, the proceedings in the United States
were concluded in favour of Mercedes-Benz Group AG
and MBUSA.
Mercedes-Benz Group AG and the respective other
affected companies of the Group regard the pending law-
suits set out above as being without merit and continue
to defend themselves against them.
In addition, investors from Germany and abroad have
filed lawsuits for damages with the Stuttgart Regional
Court alleging the violation of disclosure requirements
(main proceedings) and also raised out-of-court claims
for damages. Mercedes-Benz Group AG regards these
lawsuits and out-of-court claims as being without merit
and will defend itself against them. In December 2021,
the Stuttgart Higher Regional Court initiated model case
proceedings under the German Act on Model Case Pro-
ceedings in Disputes under Capital Markets Law
(KapMuG) (model case proceedings). Multiple investors
have used the possibility to register claims in a consider-
able amount with the model case proceedings in order to
suspend the period of limitation. Mercedes-Benz
Group AG remains of the view to have duly fulfilled its
disclosure obligations under capital markets law and
defends itself against the investors' allegations also in
these model case proceedings.
If court proceedings have an unfavourable outcome for
Mercedes-Benz, the Group may encounter substantial
financial burdens, e.g. from damages payments, remedial
works or other cost-intensive measures. Court proceed-
ings can also have an adverse effect on the reputation of
the Group.
Furthermore, the ability of Mercedes-Benz to defend
itself in the court proceedings could be impaired by the
settlements of the diesel-related lawsuits in the US and
in Canada, as well as by unfavourable allegations, find-
ings, results or developments in any of the governmental
or other court proceedings discussed above.
157
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Risks from other legal proceedings
In September 2021, individual persons associated with
Deutsche Umwelthilfe e.V. ("DUH") filed a lawsuit before
the Stuttgart Regional Court against Mercedes-Benz AG.
They claim injunctive relief, demanding that Mercedes-
Benz AG refrain from distributing passenger cars with
combustion engines after November 2030 and reduce its
respective sales prior to this point in time. In the third
quarter of 2022, the Regional Court of Stuttgart dis-
missed the claim in its entirety. The plaintiffs have
appealed the decision. Mercedes-Benz AG will continue
to defend itself against the plaintiffs' allegations.
As legal proceedings are fraught with a large degree of
uncertainty, it is possible that after their final resolution,
some of the provisions we have recognized for them
could prove to be insufficient. As a result, substantial
additional expenditures may arise. This also applies to
legal proceedings for which the Group has seen no
requirement to recognize a provision.
Although the final result of any such litigation may influ-
ence the Group's earnings and cash flows in any particu-
lar period, Mercedes-Benz believes that any resulting
obligations are unlikely to have a sustained effect on the
Group's financial position.
S EQ 5004E
CORPORATE
170
GOVERNANCE
At least once a year, the Audit Committee of the Supervi-
sory Board of Mercedes-Benz Group AG discusses the
effectiveness and functionality of the internal control and
risk management system, the internal auditing system,
and the Compliance Management System with the Board
of Management. In each case, these systems and pro-
cesses or similar ones are also examined with regard to
the sustainability risks and opportunities they address,
taking into account the areas of action of the sustainable
business strategy as well as the ecological and social
impact of the business activities conducted by
Mercedes-Benz Group AG and the Group. The chairman
of the Audit Committee shall report back to the Supervi-
sory Board about the work of the committee at the latest
at the next meeting of the Supervisory Board. The Super-
visory Board also deals with the risk management system
on the occasion of the audit of the company and Consoli-
dated Financial Statements. The Chairman of the Super-
visory Board maintains contact with the Board of Man-
agement between meetings of the Supervisory Board, in
particular with the Chairman of the Board of Management,
in order to discuss issues of risk management and com-
pliance, in addition to the strategy and business develop-
ment of the Group. In addition, the Board of Management
regularly informs the Audit Committee and the Supervi-
sory Board about significant risks to the Company and
the Group. The Legal Affairs Committee of the Supervi-
sory Board supports the Supervisory Board in the perfor-
mance of its duties with regard to the complex emissions
and antitrust-related proceedings with which Mercedes-
Benz Group AG and its subsidiaries are confronted.
CORPORATE GOVERNANCE
at
This Declaration of Compliance is, in addition to the no
longer current Declarations of Compliance of the past
five years, also available on the website of the company
group.mercedes-benz.com/dcg.
For the Board of Management
Ola Källenius
Chairman
For the Supervisory Board
Dr Bernd Pischetsrieder
Chairman
Stuttgart, December 2022
than a total of five mandates on the supervisory boards
of listed companies outside the Group or comparable
functions, in the course of which the chairmanship of a
supervisory board shall count twice. According to recom-
mendation C.5, members of the board of management of
listed companies should not hold more than two man-
dates on the supervisory boards of listed companies out-
side the Group or comparable functions and should not
chair the supervisory board of a listed company outside
the Group. Whether the total number of mandates held
by members of the Board of Management and the Super-
visory Board in non-Group listed companies and compa-
rable functions is still deemed to be appropriate is to be
assessed more properly on a case-by-case basis rather
than by means of a rigid upper threshold, particularly in
view of the fact that it is not always possible to make a
clear distinction between the mandates to be considered
here. Aside from that, the individual workload to be
expected from the aggregate of the mandates held does
not necessarily increase in proportion to their number.
According to recommendation C.4, a member of the
Supervisory Board who is not a member of the board of
management of a listed company shall not hold more
Maximum number of Supervisory Board mandates
(C.4 and C.5)
Since issuing the last Declaration of Compliance in
December 2021, Mercedes-Benz Group AG has complied
with the recommendations of the German Corporate
Governance Code as amended on 16 December 2019 and
published in the official section of the Federal Gazette
on 20 March 2020, with the exception of recommendations
C.4 and C.5 (maximum number of mandates of Supervi-
sory Board).
Mercedes-Benz Group AG complies with the recommen-
dations of the German Corporate Governance Code as
amended on 28 April 2022 and published in the official
section of the Federal Gazette on 27 June 2022, with the
exception of recommendations C.4 and C.5 (maximum
number of mandates of Supervisory Board). Mercedes-
Benz Group AG shall continue to comply with the recom-
mendations in the future subject to the aforementioned
deviations.
167
Declaration by the Board of Management
and the Supervisory Board of Mercedes-
Benz Group AG pursuant to Section 161 of
the German Stock Corporation Act on the
German Corporate Governance Code
Declaration on Corporate Governance
Corporate Governance
Annual Report 2022 Mercedes-Benz Group
166
Olaf Koch
Chairman
The Audit Committee
Annual Report 2022 Mercedes-Benz Group
The Audit Committee also conducted a self-evaluation of
its activities on the basis of a comprehensive compa-
ny-specific questionnaire in 2022. The positive results of
this self-assessment were presented and discussed in
the meeting on 16 February 2023.
Self-assessment
audit opinions) and on the accounting-related internal
control system, as well as significant accounting matters,
were discussed together with the auditor. Furthermore,
the Audit Committee discussed the effectiveness of the
internal control and risk management system. After inten-
sive review and discussion, the Audit Committee recom-
mended that the Supervisory Board adopt the prepared
financial statements, the Combined Management Report
including the Non-Financial Declaration, the Remunera-
tion report, the Declaration on Corporate Governance
and the proposal of the Board of Management for the
payment of a dividend of € 5.20 per dividend-bearing
no-par-value share.
In the Declaration on Corporate Governance pursuant to Sections 289f, 315d
of the German Commercial Code (HGB), the Board of Management and the
Supervisory Board report on the Corporate Governance of the Company in
2022. The statements are applicable to Mercedes-Benz Group AG and the
Group, unless indicated otherwise below. Pursuant to Section 317 Subsection
2 Sentence 6 HGB, the review of the statements by the auditor is to be limited
to whether the legally required statements were made. This Declaration on
Corporate Governance is, in addition to the no longer current declarations of
the past five years, available at group.mercedes-benz.com/dcg.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
The 2022 remuneration report and the opinion of the
auditor pursuant to Section 162 of the German Stock Cor-
poration Act (AktG) are available at group.mercedes-
benz.com/remuneration-bom. The applicable remunera-
tion system for the members of the Board of Management
for 2022 pursuant to Section 87a Subsections 1 and 2
Sentence 1 of the German Stock Corporation Act (AktG),
which was approved by the Annual General Meeting on
8 July 2020, are also available there. The resolution
adopted by the Annual General Meeting on 31 March 2021
pursuant to Section 113 Subsection 3 of the German
Stock Corporation Act (AktG) on the remuneration of
the members of the Supervisory Board is available at
group.mercedes-benz.com/remuneration-sb.
The aim of the Compliance Management System (CMS)
is to promote compliance with legislation and policies
within the company and among its employees, to prevent
misconduct and to systematically minimize compliance
risks on the basis of the culture of integrity. Detailed
information on the Mercedes-Benz Compliance Manage-
ment System can be found in the Non-Financial Declara-
tion chapter of the 2022 Annual Report.
In addition to the accounting-related internal control sys-
tem, the internal control system also includes in particu-
lar the Compliance Management System as well as an
independent assessment of the structure and processes
of the internal control system by Internal Auditing. Fur-
ther explanations of the internal control system are avail-
able in the Risk and Opportunity Report in the Combined
Management Report 2022.
The risk management system is part of the overall plan-
ning, control and reporting process. This is to ensure that
the executive management recognizes significant risks
at an early stage and can initiate countermeasures in a
timely fashion. Internal Audit monitors compliance with
legal framework conditions and corporate standards by
means of targeted audits and initiates appropriate meas-
ures where necessary. Further information on risk man-
agement can be found in the Risk and Opportunity Report
in the 2022 Annual Report.
The Mercedes-Benz Group has appropriate and effective
internal control, risk and compliance management sys-
tems in place that are commensurate with the size and
global presence of the company, the scope of its busi-
ness operations, and its risk situation, and are geared
towards the continuous and systematic management of
entrepreneurial risks and opportunities. These systems
also take risks and opportunities associated with social
and environmental factors into account. In identifying
sustainability-related risks and opportunities, Mercedes-
Benz Group AG is guided by the topics identified by the
materiality analysis and thus includes the areas of action
of the sustainable business strategy, for which concrete
goals have been assigned. Sustainability-related data are
systematically recorded and social and environmental
impacts of the company's activities are identified and
assessed as part of thematic risk assessments, for exam-
ple in life cycle assessments along the entire life cycle of
vehicles or in the Human Rights Respect System.
Internal control, risk and compliance management
systems within the Group
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
169
Advisory Board for Integrity and Sustainability
The Mercedes-Benz Group established an Advisory Board
for Integrity and Sustainability. The board's members are
independent external experts in the fields of environ-
mental and social policy, transport and mobility develop-
ment, and human rights and ethics and provide the
Mercedes-Benz Group with constructive and critical sup-
port with issues relating to integrity, sustainability and
corporate responsibility. The Advisory Board meets sev-
eral times a year under the direction of the member of
the Board of Management responsible for Integrity and
Legal Affairs. One of these annual meetings specifically
serves to exchange information with other members of
the Board of Management and members of the Supervi-
sory Board. A regular exchange of information and opin-
ions between the Advisory Board and company managers
and employees takes place in other meetings devoted to
specific topics. Two working groups were established in
the reporting year in order to strengthen this dialogue.
Their goal is to promote more extensive discussions on
the topics of "Integrity and employees” and “Climate pro-
tection and resource conservation". In 2022, the Advisory
Board also addressed the new Corporate Citizenship
Strategy, the role the Mercedes-Benz Group plays in soci-
ety and the impact the geopolitical situation is having on
the company.
ness-partners.html.
Expectations regarding business partners
The Mercedes-Benz Group also formulates clear require-
ments for its business partners, because conduct with
integrity and in compliance with the rules is a prerequi-
site for any trust-based cooperative venture. Therefore,
when selecting its direct business partners, the Company
makes sure that they comply with the law, follow ethical
principles, and in this sense also have an impact on the
supply chain. For the Mercedes-Benz Group's expecta-
tions of its business partners, please also see group.
mercedes-benz.com/company/compliance/busi-
Remuneration report,
remuneration system
In addition, the company agreed on the Principles of
Social Responsibility with the International Works Coun-
cil. They are applicable at Mercedes-Benz Group AG as
well as throughout the entire Group. In this agreement,
the Mercedes-Benz Group commits to the principles of
the UN Global Compact, including the internationally
recognized human and labour rights regulated therein,
freedom of association, sustainable environmental
protection and the prohibition of child and forced labour.
In addition, the company is committed to upholding
equal opportunities and the principle of “equal pay for
work of equal value" for employees.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
Employees from various divisions around the world were
involved in the creation of the new Code of Conduct in
2019. The policy sets out the core corporate principles for
conduct in day-to-day business and the way people deal
with each other within the company and with business
partners and customers. In addition to respect for the
law and the legal system, these corporate principles also
include, for example, fairness, transparency, practical
diversity, and responsibility. In addition to the corporate
principles, the Code of Conduct contains, inter alia, regu-
lations regarding the respect and safeguarding of human
rights as well as the handling of conflicts of interests, and
The Code of Conduct
168
The Mercedes-Benz Group conducts its business in
accordance with Group-wide standards that go beyond
the requirements of the law and the German Corporate
Governance Code. Only those who act in an ethically and
legally responsible manner remain successful in the long
term this is especially true in times of upheaval and
change such as those as we are currently experiencing.
Hence, integrity and compliance are very important to the
Mercedes-Benz Group. In order to achieve long-term and
sustainable corporate success on this foundation, it is
the goal of the Mercedes-Benz Group to ensure that its
business operations are in harmony with the interests of
the environment and society. As one of the world's lead-
ing automakers, the Mercedes-Benz Group also wants to
be at the forefront when it comes to sustainability. The
company defines the most important principles in its
Code of Conduct, which provides orientation for all
employees of Mercedes-Benz Group AG and the Group
and assists them in making the right decisions, even in
difficult business situations.
Principles of our business activity
Mercedes-Benz Group AG has fully complied and contin-
ues to comply with the suggestions of the Code.
Beyond the statutory requirements of German stock cor-
poration, co-determination and capital market legislation,
Mercedes-Benz Group AG has complied and continues to
comply with the recommendations of the German Corpo-
rate Governance Code ("Code") subject to the exceptions
stated and justified in the Declaration of Compliance.
German Corporate Governance Code
Essential principles and
practices of corporate governance
prohibits corruption in any form whatsoever. The policy
has binding effect for all companies and employees of
the Mercedes-Benz Group worldwide. It is available on
the internet at group.mercedes-benz.com/compli-
ance/integrity-code.
165
Stuttgart, March 2023
In its meeting on 16 February 2023, the Audit Committee
discussed the preliminary key figures of the company and
the Consolidated Financial Statements for 2022 as well
as the preliminary proposal of the Board of Management
on the appropriation of profits. After careful review, the
Committee took note and approved the figures pre-
sented, determined that there were no objections to the
proposed publication and recommended that the Super-
visory Board, which met afterwards, endorse this view.
The preliminary key figures and the preliminary proposal
for the appropriation of profits were published at the
annual press conference on 17 February 2023.
On the basis of the statutory provisions, the German Cor-
porate Governance Code and the rules of procedure of
the Supervisory Board and its committees, the Audit
Committee deals in particular with issues of accounting,
financial reporting and non-financial reporting. In addi-
tion, it is concerned with the audit of the financial state-
ments and it reviews the quality, qualifications and inde-
pendence of the auditor. It also discusses the
effectiveness and operation of the risk management sys-
tem, the internal control system, the internal audit sys-
tem and the compliance management system. After the
election of the auditor by the Annual General Meeting,
the Audit Committee engages the auditor to conduct the
annual audit and the auditor's review of interim financial
statements. In addition, the Audit Committee agrees the
important audit issues and negotiates the audit fees with
the auditor. The Audit Committee also engages the audi-
tor to conduct the voluntary audit of the Non-Financial
Declaration as part of the management report. Another
focus of the Audit Committee's work and meetings in the
2022 financial year was the preparation and implementa-
tion of the selection and proposal process under the EU
Statutory Audit Regulation to determine a recommenda-
tion and preference for the selection of a new auditor for
the 2024 financial year. The tender process was carried
out at an early stage in order to guarantee a timely and
diligent transfer of the mandate while maintaining the
independence requirements. After careful review of the
shortlisted applicants, the Audit Committee resolved in
its meeting in November to recommend two auditing
firms to the Supervisory Board, with a preference for
PricewaterhouseCoopers GmbH to be appointed auditor
for the audit mandate for the 2024 financial year that was
the subject of the tendering process.
Accountability
As Chairman of the Audit Committee, I am pleased to
report to you on the tasks and activities of this Commit-
tee in the 2022 financial year.
In a further meeting on 13 March 2023, the Committee
reviewed and discussed in detail the Annual Financial
Statements, the Consolidated Financial Statements and
the Combined Management Report, including the Non-Fi-
nancial Declaration for Mercedes-Benz Group AG and the
Group for the 2022 financial year, the Remuneration
report, the Declaration on Corporate Governance and the
proposal for the appropriation of profits, all of which
were issued with an unqualified audit opinion by the
auditor. The representatives of the auditor reported on
the results of the audit and in particular addressed the
key audit matters and the relevant audit procedures,
including the conclusions drawn, and were available to
answer additional questions and provide information. The
audit opinions on the company and Consolidated Finan-
cial Statements (including the key audit matters in the
Report of the Audit Committee
Corporate Governance
Annual Report 2022 Mercedes-Benz Group
191 Shareholders and Annual General Meeting
180 Overall profiles of requirements for the composition of
the Board of Management and the Supervisory Board
Men in Leadership Positions
Equal representation
179 German Act on the Equal Participation of Women and
174 Composition and working method of the Supervisory
Management
172 Composition and working method of the Board of
governance
168 Essential principles and practices of corporate
Remuneration report, remuneration system
168
167 Declaration of compliance with the German Corporate
Governance Code
167 Declaration on Corporate Governance
163 Report of the Audit Committee
Board and its committees
In the 2022 financial year, the shareholder side consisted
of Olaf Koch and Dr Clemens Börsig, who served as
Chairman of the Audit Committee until his departure
from the Supervisory Board at the end of the Annual
General Meeting on 29 April 2022. Timotheus Höttges
was elected to the Audit Committee as the successor to
Dr Clemens Börsig. All those mentioned are independent
and have expertise in the field of accounting and the
auditing of financial statements, including sustainability
reporting and the auditing of such reporting. In the past
financial year, the employees were represented by
Michael Brecht as Deputy Chairman of the Committee
and by Ergun Lümali as a member.
Dear Shareholders,
The Audit Committee met seven times in the 2022 finan-
cial year. The Chairman of the Supervisory Board
attended all meetings as a permanent guest. Other per-
manent participants, in compliance with the statutory
requirements, were the Chairman of the Board of Man-
agement, the members of the Board of Management
responsible for Finance and Controlling and for Integrity
and Legal Affairs, and the representatives of the auditor.
Executive Sessions, in which the Audit Committee dis-
cussed topics with the auditor in the absence of the
Board of Management, were also held on a regular basis.
The heads of specialist departments such as Accounting,
Internal Audit, Compliance and Legal also provided infor-
mation on individual items on the agenda. Regular execu-
tive sessions also took place with the auditor without the
presence of the Board of Management.
Company and Consolidated Financial Statements for
2022
cess.
The Audit Committee held a further meeting in November.
After careful review, the Audit Committee resolved to rec-
ommend two auditing firms to the Supervisory Board,
with a preference for PricewaterhouseCoopers GmbH to
be appointed auditor for the audit mandate for the 2024
financial year that was the subject of the tendering pro-
In October 2022, the Committee dealt with the interim
financial report for the third quarter of 2022. Furthermore,
the Committee carried out the annual review of the
approved non-audit services of the auditor and used
audit quality indicators to analyse the quality of the
audits. The agenda also included a discussion of the
amendments to the German Corporate Governance Code
and a report on asset and credit risks. Finally, the Com-
mittee received the quarterly reports from the Compli-
ance, Internal Audit and Legal departments.
At its meeting in July 2022, the Committee dealt with the
results of the second quarter of 2022 and the risk report.
Furthermore, the Committee received the quarterly
reports from the Compliance, Internal Audit and Legal
departments. In this context, it was informed in detail of
measures relating to human rights and social compliance,
as well as measures in connection with the Act on Corpo-
rate Due Diligence in Supply Chains. In addition, the
Audit Committee discussed the annual report of the
Group Data Protection Officer with the Board of Manage-
ment.
Meetings and participants
private customers. The Audit Committee also received
reports from the Internal Audit and Legal departments
and from the Compliance unit. The report issued by the
Compliance department included an update on the
Human Rights Respect System that focused in particular
on the implementation of measures required by the Act
on Corporate Due Diligence in Supply Chains (LkSG), as
well as the proposal of the European Commission regard-
ing corporate sustainability due diligence.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
164
In April 2022 the Committee initially considered the
interim financial report for the first quarter of 2022. The
agenda then concerned the plans to discontinue the
Mercedes-Benz Bank's deposit banking business with
During 2022, the Audit Committee discussed the interim
financial reports and the results of the audit review with
the Board of Management and the auditor in the quarterly
meetings prior to their publication. In addition, the Com-
mittee received reports from the Internal Audit, Compli-
ance and Legal departments. The Board of Management
also regularly reported to the Committee on the current
status of material legal proceedings, including antitrust
and diesel emissions-related proceedings. In addition,
the Audit Committee received regular reports on possible
violations of rules, which employees and external parties
reported to the BPO (Business Practices Office) whis-
tle-blowing system.
In its meeting in June 2022, the Audit Committee dis-
cussed aspects of the risk management system and par-
ticularly addressed the further integration of ESG topics
and the accompanying training measures to increase ESG
awareness. Methods, processes and adjustments to the
internal control system were also discussed. With regard
to the compliance management system, methods for
more extensive integration of social compliance aspects
were presented, among other things. The meeting also
focused on the report on ESG and sustainability reporting
activities, including the requirements of the EU taxonomy
and the measures taken to ensure these requirements
are met. Furthermore, the Audit Committee received
comprehensive reports from the Treasury and Tax depart-
ments. Another topic of the meeting was a discussion of
the planning of the audit of the financial statements,
including the main audit areas for the 2022 financial year.
In addition, the Committee discussed current accounting
topics.
for the payment of a dividend of €5.00 per divi-
dend-bearing no-par-value share. The Audit Committee
also adopted the report of the Audit Committee on the
2021 financial year.
In this meeting, the Audit Committee also resolved to
recommend to the Supervisory Board, and subsequently
to the Annual General Meeting, that KPMG AG Wirtschaft-
sprüfungsgesellschaft be appointed to audit the financial
statements and the Consolidated Financial Statements,
and to review the interim financial reports for the 2022
financial year as auditor for the audit of interim financial
reports for the 2023 financial year in the period up to the
Annual General Meeting in the 2023 financial year. The
discussion of the quality of the audit and the results of
the independence review, which did not reveal any indi-
cations of bias or threats to independence, were taken
into account. Subject to the election resolution of the
Annual General Meeting, the Committee also discussed
the proposal for the fee agreement to be made with the
auditor for the 2022 financial year. In addition, the Com-
mittee dealt with the report on the total fees paid to the
auditor for audit and non-audit services in the 2022
financial year (including the non-audit fee cap) and set
the approval framework for the engagement of the audi-
tor for non-audit services. Finally, the Audit Committee
discussed the 2022 annual audit plan of the Internal
Audit Department, the reports issued by the Compliance
and Legal departments and the agenda items for the
2022 Annual General Meeting that fall within the scope of
its responsibility.
Particularly in preparation for upcoming meetings, the
Chairman of the Audit Committee held regular discus-
sions with the auditor as well as individual discussions,
for example with the aforementioned members of the
Board of Management, the Head of Internal Auditing, the
Head of Compliance, the Head of Legal Affairs and, if
required, with the heads of other specialist departments.
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Information for the Supervisory Board
-
Topics in the year 2022
In the meeting on 23 February 2022, the Audit Commit-
tee discussed the preliminary key figures of the 2021
Annual Financial Statements, the Consolidated Financial
Statements and the preliminary proposal of the Board of
Management on the appropriation of profits. After careful
review, the Committee took note and approved the fig-
ures presented, determined that there were no objec-
tions to the proposed publication and recommended that
the Supervisory Board, which met afterwards, endorse
this view. Insofar as the preliminary key figures had not
already been the subject of the ad hoc announcement of
11 February 2022 they were published along with the pre-
liminary proposal for the appropriation of profits at the
annual press conference on 24 February 2022.
In its meeting on 10 March 2022, the Committee
reviewed and discussed in detail the Annual Financial
Statements, the Consolidated Financial Statements and
the Combined Management Report, including the Non-Fi-
nancial Declaration for Mercedes-Benz Group AG and the
Group for the 2021 financial year, the Remuneration
report, the Declaration on Corporate Governance and the
proposal for the appropriation of profits, all of which
were issued with an unqualified audit opinion by the
auditor. The representatives of the auditor reported on
the results of the audit and in particular addressed the
key audit matters and the relevant audit procedures,
including the conclusions drawn, and were available to
answer additional questions and provide information. The
audit opinions on the company and Consolidated Finan-
cial Statements (including the key audit matters in the
audit opinions) and on the accounting-related internal
control system, as well as significant accounting matters,
were discussed together with the auditor. Furthermore,
the Audit Committee discussed the effectiveness of the
internal control and risk management system.
After intensive review and discussion, the Audit Commit-
tee recommended that the Supervisory Board adopt the
prepared financial statements, the Combined Manage-
ment Report including the Non-Financial Declaration, the
Remuneration report, the Declaration on Corporate Gov-
ernance and the proposal of the Board of Management
The Chairman of the Audit Committee informed the
Supervisory Board in each of its subsequent meetings of
the activities of the Committee as well as the content of
the meetings and discussions.
Overall profiles of requirements for the
composition of the Board of Management
and the Supervisory Board
With regard to the composition of the Board of Manage-
ment and the Supervisory Board, Mercedes-Benz
Group AG considers competence profiles and diversity
concepts with regard to aspects such as age and gender.
The Supervisory Board has combined these profiles and
concepts in the overall profiles of requirements for the
Board of Management and the Supervisory Board
described below. The profiles of requirements are
reviewed annually and also serve as a basis for long-term
succession planning.
Board of Management
The objective of the profile of requirements for the Board
of Management is to ensure that the composition of the
Board of Management is as diverse and complementary
as possible. The Board of Management as a whole shall
possess the knowledge, skills, and experience necessary
for the proper performance of its duties and at the same
time embody the Company's management philosophy on
the basis of the various personal backgrounds and skills
of its members. The key factor for the decision on filling a
specific board position is always the interest of the Com-
pany, taking any and all circumstances of the individual
case into account.
The profile of requirements for the Board of Management
remained the same in the reporting period as in the pre-
vious year and included the following aspects:
-
The members of the Board of Management shall have
diverse educational and professional backgrounds,
preferably with at least two members with a technical
background. As of 31 December 2022, the Board of
Management comprises two graduate engineers,
Markus Schäfer and Dr Jörg Burzer. Ola Källenius has
demonstrated his technical expertise on a sustained
basis since taking over the Group Research &
Mercedes-Benz Cars Development department on
1 January 2017.
On 3 December 2020, the Supervisory Board set a tar-
get for the proportion of women on the Board of Man-
agement of at least 25% by 31 December 2025. In
August 2022, the previous statutory obligation to set a
target quota for the proportion of women was replaced
by a statutory minimum participation requirement of
one woman (and one man) for boards of management
consisting of more than three persons at listed compa-
nies with equal co-determination. Nevertheless, within
the framework of the overall requirements profile for
appointments to the Board of Management, the Super-
visory Board has decided to go beyond the stipulations
of the minimum proportion requirement and maintain
the target quota for the proportion of women on the
Board of Management that was set in 2020. As of
31 December 2022, three of the eight members of the
Board of Management are women: Renata Jungo Brüng-
ger, Sabine Kohleisen and Britta Seeger. The proportion
of women on the Board of Management is now 37.5%,
which means it exceeds the target that was set.
180
In addition to Mercedes-Benz Group AG itself, other
Group companies are subject to co-determination and
have set their own targets for the proportion of women
on their respective Supervisory Boards and Boards of
Management, and at the two levels below the Board of
Management, as well as a deadline for achieving these
targets, and have published them in accordance with the
statutory requirements.
The targeted promotion of women had already been a
central focus of attention in diversity management before
the German Act on the Equal Participation of Women and
Men in Leadership Positions came into force. In compli-
ance with the statutory requirements, the Board of Man-
agement of Mercedes-Benz Group AG has set targets for
the proportion of women at the two management levels
of the Mercedes-Benz Group AG below the Board of Man-
agement and a deadline for attaining these targets. The
specific details are presented in a separate section of
this Declaration on Corporate Governance. Independently
of the statutory requirements, the Company had already
set itself the goal in 2006 of increasing the proportion of
women in senior management positions within the Group
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
Members of the Board of Management may only perform
ancillary activities if these are approved by the Supervi-
sory Board's Presidential Committee.
The Board of Management has adopted rules of proce-
dure, available on the website of the Company at
group.mercedes-benz.com/company/corporate-gov-
ernance, which among other things govern the procedure
to be followed when adopting resolutions and contain
provisions designed to avoid conflicts of interest.
Diversity and equal opportunities
Diversity management has been part of the corporate
strategy since 2005. The Mercedes-Benz Group relies on
the diversity and variety of its employees because they
form the basis of an efficient and successful company.
Our diversity and inclusion activities aim to bring together
the right people to meet challenges, to create a working
culture that promotes the performance, motivation and
satisfaction of employees and managers, and to contrib-
ute to the development of new target groups for our
products and services. Through appropriate framework
conditions and specific measures — from training for-
mats for employees and managers, workshops, confer-
ences and policies to target group-specific awareness-
raising and communication measures - diversity and
inclusion management thus contributes significantly to
the further development of the corporate culture at the
Mercedes-Benz Group.
13
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Annual Report 2022 Mercedes-Benz Group
Corporate Governance
to at least 20% by 2020. This goal was achieved, and dur-
ing the reporting period the Company set itself the new
goal of appointing women to fill at least 30% of its senior
management positions by 2030. As of 31 December 2022,
the proportion of women in senior management positions
at the Mercedes-Benz Group worldwide was 24.7%
(active workforce without holiday workers).
Composition and working method of the
Supervisory Board and its committees
Supervisory Board
In accordance with the German Co-Determination Act
(MitbestG), the Supervisory Board of Mercedes-Benz
Group AG consists of 20 members. Half of them are
elected by the shareholders at the Annual General Meet-
ing and half by the employees of the German companies
of the Group. Shareholder representatives and employee
representatives are by law equally bound to serve the
interests of the Company.
Management.
Curricula vitae of the individual members of the Supervi-
sory Board and their other mandates are published on
the Internet at group.mercedes-benz.com/company/
The Supervisory Board shall be composed in such manner
that its members as a whole are familiar with the industry
in which the Company operates and have the knowledge,
skills, and professional experience necessary for the
proper performance of their duties. According to the Ger-
man Act on the Equal Participation of Women and Men in
Leadership Positions, the Supervisory Board of
Mercedes-Benz Group AG must be composed of at least
30% women and at least 30% men. The specific details
are presented in a separate section of this Declaration on
Corporate Governance.
In addition, the Supervisory Board has developed an
overall profile of requirements for its own composition,
which includes a competence profile and a diversity con-
cept for the Board as a whole, including an age limit. The
specific details of the overall profile of requirements are
also summarized in a separate section of this Declaration
on Corporate Governance. The proposals of the Supervi-
sory Board for the election of shareholder representa-
tives by the Annual General Meeting, for which the Nomi-
nation Committee submits recommendations, aim to fulfil
the overall profile of requirements for the Supervisory
Board as a whole.
The members of the Supervisory Board assume responsi-
bility for the training and further education measures
required for their tasks, e.g. on topics relating to changes
in the legal framework and forward-looking technologies,
and are supported in this by the Company. New members
of the Supervisory Board have the opportunity to meet
the members of the Board of Management and senior
executives with specialist responsibility in an onboarding
programme for a bilateral exchange on fundamental and
current topics in respect of the relevant areas of the
Board of Management, thus gaining an overview of the
relevant topics of the Group as well as the governance
structure. The key components of this programme
include ESG (environmental, social, governance) and sus-
tainability-related thematic blocks.
The Supervisory Board supervises and advises the Board
of Management in the management of the business. At
regular intervals, the Supervisory Board discusses busi-
ness development, the situation of the Company, and
planning and strategy, including the sustainability strat-
egy and its implementation. The Supervisory Board also
reviews and discusses the internal control and risk man-
agement systems and monitors compliance with statu-
tory provisions, official regulations and internal policies
within the Company.
_
The Supervisory Board has also specified in more detail
the information and reporting duties of the Board of Man-
agement vis-à-vis the Supervisory Board, the Audit Com-
mittee and between meetings of the Supervisory
Board vis-à-vis the Chairman of the Supervisory Board.
The Supervisory Board has reserved the right of approval
for transactions of fundamental importance.
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The Supervisory Board's monitoring and advisory activi-
ties relate in particular to sustainability issues associated
with the ESG dimensions (environmental, social and gov-
ernance factors). At regular intervals, the Supervisory
Board obtains reports from the Board of Management on
the status of implementation of the integrated sustaina-
ble corporate strategy and also examines the risks and
opportunities for the Company that result from social and
environmental factors and, increasingly, the ecological
and social effects of the Company's business activities.
The Supervisory Board also addresses sustainability
reporting in the form of the Non-Financial Declaration in
the Combined Management Report.
The duties of the Supervisory Board include the appoint-
ment and, if necessary, the dismissal of the members of
the Board of Management. Initial appointments have gen-
erally been made in the past, and since 2021 have always
been made, for a maximum of three years.
With regard to the composition of the Board of Manage-
ment, the Supervisory Board observes the statutory
requirements for the equal participation of women and
men. The specific details are presented in a separate
section of this Declaration on Corporate Governance.
Furthermore, with regard to the composition of the Board
of Management, the Supervisory Board adopted a diver-
sity concept embedded in an overall profile of require-
ments. Its specific details are also summarized in a sepa-
rate section of this Declaration on Corporate Governance.
corporate-governance/supervisory-board. This informa-
tion is also updated every year.
personal interest they may have in a particular business
activity conducted by the Company, as well as any and
all other conflicts of interest, and they must also report
such information to all other members of the Board of
Each member of the Board of Management is bound
to serve the interests of the Company and is subject to
a non-competition clause throughout the entire term
of their contract. When making decisions, they may not
pursue personal interests and they may not exploit the
Company's business opportunities for their own benefit.
Members of the Board of Management must disclose
without delay to the Chairman of the Supervisory Board
and the Chairman of the Board of Management any
For certain types of transactions defined by the Supervi-
sory Board, the Board of Management requires the prior
approval of the Supervisory Board.
The Mercedes-Benz Group compiles its Consolidated
Financial Statements and interim financial reports in
accordance with the principles of International Financial
Reporting Standards (IFRS) as applicable in the European
Union. The Annual Financial Statements of Mercedes-
Benz Group AG are compiled in accordance with the
accounting provisions of the German Commercial Code
(HGB). In addition to the half-yearly financial report, the
Mercedes-Benz Group also compiles quarterly financial
reports. The Consolidated Financial Statements and the
Annual Financial Statements of Mercedes-Benz Group AG
are audited by an auditor, and interim financial reports
are subject to review by an auditor. The Consolidated
Financial Statements and the consolidated management
reports are publicly accessible on the website of the
Company within 90 days; the interim financial reports
are publicly accessible within 45 days after the end
of the respective reporting period.
On the basis of the recommendation of the Audit Com-
mittee, the Supervisory Board submits a proposal to the
Annual General Meeting for the appointment of the audi-
tor of the financial statements, the auditor of the Consoli-
dated Financial Statements, and the auditor for the
review of the interim financial reports.
Before submitting its recommendation for the election
proposal to the Annual General Meeting, the Audit Com-
mittee of the Supervisory Board obtains a declaration
from the proposed auditor as to whether and, if so,
which business, financial or personal relationships exist
between the auditor and its boards and committees
and audit managers on the one hand and the Company
and members of its boards and committees on the other
hand that could give rise to concerns of partiality. The
declaration also specifies which other services were pro-
vided to the Group in the previous financial year and
to what extent and which ones have contractually been
stipulated for the following year.
The auditor informs the Chairman of the Audit Committee
without delay of any and all findings and occurrences of
significance for the duties of the Supervisory Board that
come to the attention of the auditor during the perfor-
mance of the audit of the financial statements. Further-
more,
the auditor informs the Audit Committee and anno-
tates in the audit report if, during the performance of the
audit, the auditor discovers facts that reveal an inaccu-
racy in the Declaration of Compliance of the Board of
Management and the Supervisory Board with the German
Corporate Governance Code.
At the Annual General Meeting on 29 April 2022,
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, was
appointed as auditor of the financial statements, auditor
of the Consolidated Financial Statements, and auditor
for the review of interim financial reports for the 2022
financial year and of interim financial reports for the 2023
financial year in the period up to the next Annual General
Meeting in the 2023 financial year. KPMG AG Wirtschafts-
prüfungsgesellschaft has audited the Company and Con-
solidated Financial Statements of Mercedes-Benz Group AG
since the 1998 financial year; Alexander Bock has been
the responsible auditor since the 2021 financial year. To
ensure compliance with the duty to appoint a different
audit firm, a selection and proposal process was con-
ducted in accordance with the EU Statutory Audit Regula-
tion during the reporting period in order appoint an audi-
tor for the 2024 financial year. On the basis of this
process, the recommendation and preference of the
Audit Committee, and its own review, the Supervisory
Board has decided to propose to the 2023 Annual General
Meeting that PricewaterhouseCoopers GmbH Wirtschaft-
sprüfungsgesellschaft be appointed as auditor for the
2024 financial year.
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Composition and working method of the
Board of Management
Under the German Stock Corporation Act (AktG),
Mercedes-Benz Group AG has a dual management sys-
tem that provides for a strict personnel and functional
separation between the Board of Management as the
management body and the Supervisory Board as the
supervisory body (two-tier board). The Board of Manage-
ment manages the Company, whilst the Supervisory
Board supervises and advises the Board of Management.
Board of Management
In accordance with the articles of association of
Mercedes-Benz Group AG, the Board of Management
consists of at least two members. The Supervisory Board
shall determine the exact number. As of 31 December
2022, the Board of Management consisted of eight mem-
bers. In December 2020, the Supervisory Board set a tar-
get for the proportion of women on the Board of Manage-
ment in accordance with the German Act on the Equal
Participation of Women and Men in Leadership Positions
and a deadline for achieving this target. In August 2021,
the German Second Leadership Positions Act (FüPOG II)
came into force. According to the said Act, at least one
woman and at least one man must be a member of the
Board of Management in listed companies with parity
participation and more than three members on the Board
of Management. Compliance with this minimum partici-
pation requirement when appointing individual or multi-
ple members of the Board of Management has been
mandatory since 1 August 2022. Companies that are sub-
ject to the minimum proportion requirement no longer
have to set a target quota for the proportion of women
on the board of management. Nevertheless, the Super-
visory Board has decided that the target quota for 2020
should remain in place as one aspect of the overall pro-
file of requirements for appointments to the Board of
Management.
Details on the overall profile of requirements and the
participation of women on the Board of Management are
presented in separate sections in this Declaration on
Corporate Governance.
Without prejudice to the overall responsibility of the
Board of Management, the individual members of the
Board of Management shall manage their departments
on their own responsibility within the framework of the
guidelines adopted by the Board of Management as a
whole. Certain matters defined by the Board of Manage-
ment as a whole shall nevertheless be dealt with by the
Board of Management as a whole and shall require its
approval. In addition, each member of the Board of Man-
agement has the right to demand that any matter he or
she deems important be discussed by the Board of Man-
agement as a whole or that a decision be made on that
matter by the Board as a whole. The work of the Board of
Management is coordinated by the chairman of the Board
of Management. There were no committees of the Board
of Management during the reporting period.
Information in terms of the areas of responsibility and
the curricula vitae of the members of the Board of Man-
agement is available on the website of Mercedes-Benz
Group AG at group.mercedes-benz.com/company/
corporate-governance/board-of-management.
The Board of Management manages Mercedes-Benz
Group AG and the Group, in consideration of the interests
of the shareholders, the employees and the other stake-
holders, with the goal of sustainable added value. With
the approval of the Supervisory Board, it determines the
strategic orientation of the Company, which also takes
into account long-term financial targets and environmen-
tal and social targets and objectives. The use of this
approach has led to the definition of the strategic areas
of action climate protection and air quality, resource con-
servation, sustainable urban mobility, traffic safety, data
responsibility and human rights as integral components
of the sustainable business strategy. Along with financial
targets, the corporate planning decided on by the Board
of Management with the approval of the Supervisory
Board also includes corresponding sustainability-related
targets.
The internal control and risk management systems estab-
lished by the Board of Management, which are appropri-
ate and effective in relation to the scope of the Compa-
ny's business operations and its risk situation, also
address sustainability-related targets. Further informa-
tion on sustainability can be found on the Company's
website at
group.mercedes-benz.com/sustainability.
172
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The Board of Management ensures compliance with stat-
utory provisions, official regulations, and internal policies
within the Company, and works to ensure that they are
also observed by the Group companies (compliance). It
has established a comprehensive Compliance Manage-
ment System geared to the risk situation of the Company,
the basic features of which are presented in the Non-Fi-
nancial Declaration chapter of the 2022 Annual Report.
The components of the Compliance Management System
include the BPO (Business Practices Office) whistleblow-
ing system, which gives employees and external whistle-
blowers worldwide the opportunity to report violations of
the rules.
The Board of Management compiles the interim financial
reports of the Company, the Annual Financial Statements
of Mercedes-Benz Group AG, the Consolidated Financial
Statements and the Combined Management Report with
Non-Financial Declaration of the Company and the Group.
Together with the Supervisory Board, prepares the
Remuneration report and issues an annual Declaration
of Compliance with the German Corporate Governance
Code.
The Board of Management and the Supervisory Board
work to ensure the well-being of the Company in a rela-
tionship based on trust. The Board of Management
informs the Supervisory Board regularly, comprehensively
and in a timely manner about all strategic issues of rele-
vance to the Company as a whole, including issues relat-
ing to the sustainability strategy, planning, profitability,
business development, the situation of the Company, the
internal control system, the risk management system and
compliance. The Supervisory Board has defined the infor-
mation and reporting duties of the Board of Management
in more detail.
On the basis of a proposal issued by the Presidential
Committee, the Supervisory Board determines the sys-
tem of remuneration for the Board of Management and
on the basis of this system also determines the total indi-
vidual remuneration of the individual members of the
Board of Management. It also defines the targets for vari-
able remuneration components, including non-financial
and sustainability-oriented parameters. Furthermore, the
Supervisory Board regularly reviews both the remunera-
tion system and the total individual remuneration of the
individual members of the Board of Management in order
to ensure that these remain appropriate. The remunera-
tion system for the members of the Board of Manage-
ment, which was approved by a majority of 95.33% at the
Annual General Meeting in 2020, can be viewed at
In the Supervisory Board of Mercedes-Benz Group AG, as
of 31 December 2022, 40% of the members on the share-
holder side (Sari Baldauf, Liz Centoni, Dame Polly Cour-
tice and Professor Dr Helene Svahn) are women and 60%
are men. The situation on the employee side at this time
is 30% women (Nadine Boguslawski, Monika Tielsch and
Elke Tönjes-Werner) and 70% men. As Sari Baldauf will
leave the Supervisory Board by the end of the Annual
General Meeting 2023, the Supervisory Board discussed.
at its meeting on 16 February 2023 the specific election
proposal for her succession and, on the recommendation
of the Nomination Committee, resolved to propose to the
2023 Annual General Meeting that Stefan Pierer be
elected to the Supervisory Board for the first time. In the
event of the election of the proposed candidate, the stat-
utory quota for women remains fulfilled both on the
shareholder side and for the Supervisory Board as a
whole.
group.mercedes-benz.com/remuneration-bom. The
Remuneration report that was prepared jointly by the
Board of Management and the Supervisory Board
The Supervisory Board examines the Annual Financial
Statements, the Consolidated Financial Statements with
Non-Financial Declaration, and the Combined Manage-
ment Report of the Company and the Group as well as
the proposal for the appropriation of the distributable
profits. After discussions with the auditor and in consid-
eration of the audit opinions of the auditor and the audit
results of the Audit Committee, the Supervisory Board
shall declare whether any objections are to be raised
after the final result of its own review. If this is not the
case, the Supervisory Board approves the Annual Finan-
cial Statements and the Combined Management Report;
the financial statements are deemed to have been
adopted with the approval of the Supervisory Board. The
Supervisory Board shall report to the Annual General
Meeting on the results of its own review as well as on the
nature and scope of the supervision of the Board of Man-
agement during the past financial year. The Report of the
Supervisory Board on the 2022 financial year is available
in the Annual Report and at ☺ group.mercedes-benz.
com/company/corporate-governance/supervisory-
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
At least quarterly, the Audit Committee receives the
report of the BPO (Business Practices Office) whistle-
blowing system on complaints and information on possi-
ble violations of the rules by top executives and other
employees according to a defined catalogue of statutory
provisions. It regularly obtains information on the pro-
cessing of the said complaints and information.
The Audit Committee discusses the interim financial
reports and the information provided by the auditor about
the review of the interim financial reports with the Board
of Management and the auditor. On the basis of the opin-
ion of the auditor, the Audit Committee reviews the annual
Company Financial Statements, the annual Consolidated
Financial Statements, and the Management Report with
Non-Financial Declaration of the Company and the Group
and discusses them together with the auditor. The Audit
Committee submits its recommendations regarding the
adoption of the Annual Financial Statements of Mercedes-
Benz Group AG, the approval of the Consolidated Financial
Statements, and the proposal for the appropriation of
profits to the Supervisory Board. The Committee also
makes recommendations on the proposal of the Supervi-
sory Board for the election of the auditor, assesses the
suitability, qualifications, and independence of the auditor,
and, after appointment by the Annual General Meeting,
engages the auditor for the audit of the Consolidated
Financial Statements and the Annual Financial Statements
as well as for the review of interim financial reports. In this
respect, it also agrees on the fee and coordinates the key
areas of the audit with the auditor.
The Chairman of the Audit Committee meets regularly
with the auditor to discuss the progress of the audit and
then reports to the Audit Committee on the results of
these discussions. The Audit Committee also discusses
topics with the auditor even in the absence of the Board
of Management.
The auditor shall report to the Audit Committee on any
and all accounting matters considered critical and on any
material weaknesses in the internal control and risk man-
agement system relating to the accounting process iden-
tified during the audit. The Audit Committee also
addresses reporting on non-financial topics in the Man-
agement Report.
Finally, the Audit Committee approves in advance per-
missible services that the auditors or their subsidiaries
perform for Mercedes-Benz Group AG or its Group
companies and that are not directly related to the audit
of the annual accounts (or the review of interim financial
statements).
Transactions between the Company and related parties
within the meaning of Section 111 b of the German Stock
Corporation Act (AktG) require the prior approval of the
Audit Committee, unless the law or a rule of the Supervi-
sory Board stipulates that the approval of the plenary
Supervisory Board or another committee is required.
Legal Affairs Committee
The Committee is composed of six members elected by
the Supervisory Board by a majority of the votes cast. As
of 31 December 2022, the members of the Committee are
the shareholder representatives Olaf Koch (Chairman), Liz
Centoni and Dame Polly Courtice as well as the employee
representatives Ergun Lümali, Michael Häberle and
Roman Romanowski. The Committee coordinates the
exercising of the rights and obligations of the Supervisory
Board with regard to the ongoing emission and cartel-re-
lated proceedings against the Company and Group com-
panies. It prepares resolutions of the Supervisory Board
in this regard and makes corresponding resolution rec-
ommendations. As part of the agreement in principle
reached in 2020 with various US authorities to terminate
civil and environmental proceedings in connection with
emission control systems of certain diesel vehicles, the
Committee was assigned further tasks and decision-mak-
ing competences with regard to the fulfilment of the obli-
gations assumed in the agreement in principle. The said
other tasks include, inter alia, the steering and monitoring
of the Post Settlement Audit Teams that were set up in
the context of the agreement in principle.
Mediation Committee
177
By law, the Mediation Committee consists of the Chair-
man of the Supervisory Board, Dr Bernd Pischetsrieder,
the Deputy Chairman of the Supervisory Board, Ergun
Lümali, and two members elected by a majority of the
votes cast, one by the employee representatives and one
by the shareholder representatives on the Supervisory
Board. As of 31 December 2022, they are Ben van
Beurden for the shareholder side and Roman Zitzels-
berger for the employee side. The Committee was estab-
lished for the sole purpose of performing the task set out
in Section 31 Subsection 3 of the German Co-Determina-
tion Act (MitbestG). As in previous years, the Mediation
Committee had no reason to take action in the 2022
financial year.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
German Act on the Equal Participation of
Women and Men in Leadership Positions,
as amended by the German Second Act
on Leadership Positions
The requirements of the German Equal Participation of
Women and Men in Leadership Positions Act are to be
fulfilled at the Company level. The following information
therefore relates to the Board of Management of
Mercedes-Benz Group AG, two management levels of
Mercedes-Benz Group AG below its Board of Manage-
ment, and the Supervisory Board of Mercedes-Benz
Group AG.
By resolution of 3 December 2020, the Supervisory Board
of Mercedes-Benz Group AG set a target for the propor-
tion of women on the Board of Management of at least
25% by 31 December 2025. Since August 2022, a legally
mandated minimum participation requirement must be
complied with when appointing members of the Board of
Management. This requirement stipulates that at least
one woman and at least one man must be a member of
the Board of Management in listed companies with parity
participation and more than three members on the Board
of Management. Companies that are subject to the mini-
mum proportion requirement are no longer obliged to set
a target quota for the proportion of women on the board
of management. Nevertheless, within the framework of
the overall requirements profile for appointments to the
Board of Management, the Supervisory Board has
decided to go beyond the stipulations of the minimum
proportion requirement and maintain the target quota for
the proportion of women on the Board of Management
that was set in 2020. As of 31 December 2022, three of
the eight members of the Board of Management are
women: Renata Jungo Brüngger, Sabine Kohleisen and
Britta Seeger. The proportion of women on the Board of
Management is now 37.5%, which means it exceeds the
target that was set.
With 11.8% of women at the first (two women of a total of
17 executives) and 22.5% at the second level of manage-
ment of Mercedes-Benz Group AG (16 women of a total of
71 executives) below the Board of Management at the
time of the resolution, the Board of Management of
Mercedes-Benz Group AG, by a resolution dated
25 November 2020, set a target for the proportion of
women of at least 20% for the first and at least 25% for
the second level below the Board of Management by
31 December 2025. As of 31 December 2022, the first
level of management of Mercedes-Benz Group AG below
the Board of Management consists of 13 executives, of
whom one is a women, corresponding to a percentage of
women of 7.6%. At the second level of management of
Mercedes-Benz Group AG below the Board of Manage-
ment, 17 out of a total of 50 executives are women as of
31 December 2022, corresponding to 34%.
The change in the total number of executives at the rele-
vant management level of Mercedes-Benz Group AG
between 25 November 2020 and 31 December 2022 is
mainly due to the spin-off and hive-down of the Daimler
commercial vehicles business that has meanwhile been
carried out and the associated transfers to Daimler Truck.
Based on the assumption of a total of 13 executives at
management level 1 of Mercedes-Benz Group AG as of
31 December 2025, the set target quota of at least 20%
results in a target of 3 women for this level. Based on the
assumption of a total of 50 executives at management
level 2 of Mercedes-Benz Group AG as of 31 December
2025, the set target quota of 25% results in a target of 13
women for this level.
The Supervisory Boards of listed companies with equal
representation must be composed of at least 30%
women and at least 30% men. The quota is to be met by
the Supervisory Board as a whole. If the representatives
of the shareholders or the representatives of the employ-
ees object to the Chairman of the Supervisory Board prior
to the election then the minimum share for this election
shall be fulfilled separately by the shareholders and the
employees. At the Supervisory Board meeting on 27 April
2022, the shareholder representatives objected to the
overall fulfilment with regard to the election of employee
representatives to the Supervisory Board in 2022/2023.
179
729
178
The Audit Committee is responsible for monitoring the
accounting and the accounting process, and for the audit
of the financial statements, in particular the selection
and independence of the auditor and the quality of the
audit. At least once a year, it discusses the effectiveness
and operation of the internal control and risk manage-
ment system, the internal auditing system and the Com-
pliance Management System with the Board of Manage-
ment. It receives regular reports on the work of internal
auditing and the compliance organization. In addition,
each member of the Audit Committee may obtain infor-
mation directly from the heads of those corporate
departments of the Company that are responsible within
the Company for tasks relating to the Audit Committee in
accordance with its Rules of Procedure via the Chairman
of the Committee. The Chairman of the Committee shall
communicate the information obtained to all members of
the Audit Committee. If such information is obtained, the
Board of Management shall be informed accordingly
without delay.
Both Olaf Koch, the Chairman of the Audit Committee,
and Timotheus Höttges, in his capacity as the other
shareholder representative on the Audit Committee, are
independent. Further information on the evaluation of
the independence of members of the Supervisory Board
is summarised in the section on the overall profile of
requirements for the composition of the Supervisory
Board in this Declaration on Corporate Governance.
Due to the many years he has spent serving in executive
positions in the field of finance, most recently as Chief
Financial Officer of Deutsche Telekom AG and as CEO
since 2014, Timotheus Höttges also has specialized
knowledge and experience with regard to the use of
financial reporting principles and internal control and risk
management systems and the audit of financial state-
ments. This also includes extensive knowledge of sus-
tainability reporting and the audit of sustainability
reports, which he gained in his principal activity as CEO
of Deutsche Telekom AG. He also monitors and contrib-
utes to the development of sustainability reporting and
the audit of sustainability reports and he actively contrib-
utes his expertise to the work conducted by the Audit
Committee.
board.
The Supervisory Board has adopted Rules of Procedure
that, in addition to its duties and responsibilities, specifi-
cally regulate the convening and preparation of its meet-
ings as well as the procedure for the adoption of resolu-
tions and contain provisions that are intended to avoid
conflicts of interest. The Rules of Procedure of the Super-
visory Board are available on the internet at ☺ group.
mercedes-benz.com/company/corporate-governance.
For the meetings of the Supervisory Board during the
reporting period, regular Executive Sessions were again
scheduled in order to be able to discuss topics even in
the absence of the Board of Management. Pursuant to
the German Act on Strengthening Financial Market Integ-
rity (FISG), which entered into force on 1 July 2021, the
Board of Management does not participate in meetings of
the Supervisory Board and its committees to which the
auditor is called in as an expert, unless the Supervisory
Board or the committee deems its participation neces-
sary. Meetings of the Supervisory Board and its commit-
tees should as a rule take place in person. In justified
exceptional cases the meetings can be held in the form
of a video conference or a conference call or with the use
175
175
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
of other comparable means of telecommunication or
individual members can participate in a meeting using
such means. In view of the Covid-19 pandemic, which
continued to be an issue during the reporting period,
more extensive use of such remote formats had once
again to be made in 2022.
Every member of the Supervisory Board must disclose
any conflicts of interest they may have without delay to
the Chairman of the Supervisory Board. Conflicts of inter-
est and the manner in which they are dealt with are dis-
closed in the Report of the Supervisory Board.
The Supervisory Board regularly assesses how effectively
the Supervisory Board and its committees perform their
duties. The next self-assessment is scheduled to be con-
ducted in 2023. Independently of the self-assessment of
the Supervisory Board, the Audit Committee also carried
out a self-evaluation of its activities again in 2022 on the
basis of an extensive Company-specific questionnaire.
The positive results of this self-assessment were pre-
sented and discussed at the Audit Committee meeting on
16 February 2023.
At 31 December 2022, in addition to the Mediation Com-
mittee to be established by law, there are four other
committees of the Supervisory Board that perform the
tasks assigned to them in the name of and on behalf of
the Supervisory Board as a whole, to the extent permit-
ted by law. The relevant committee chairpersons shall
report on the work of the committees to the plenary
meeting of the Supervisory Board at the latest at the next
meeting of the Supervisory Board following the commit-
tee meeting. The Supervisory Board has adopted sepa-
rate rules of procedure for all its committees. They are
available on the internet at ④group.mercedes-benz.
com/company/corporate-governance.
Presidential Committee
The Presidential Committee consists of the Chairman of
the Supervisory Board, the Deputy Chairman of the
Supervisory Board, and two other members elected by
the Supervisory Board. As of 31 December 2022, the
Presidential Committee consisted of Dr Bernd Pischets-
rieder (Chairman), Ergun Lümali (Deputy Chairman), Ben
van Beurden and Roman Zitzelsberger.
The Presidential Committee makes recommendations to
the Supervisory Board for the appointment of members
to the Board of Management, in consideration of the
overall profile of requirements defined by the Supervi-
sory Board with the diversity concept, including the
requirements for the proportion of women on the Board
of Management. It submits proposals to the Supervisory
Board for the structure of the remuneration system for
the Board of Management and for the appropriate indi-
vidual total remuneration of the individual members of
the Board of Management. The Presidential Committee is
responsible for the contractual matters of the members
of the Board of Management and decides on the granting
of approval for ancillary activities of members of the
Board of Management.
In addition, the Presidential Committee advises and
decides on corporate governance issues, on which it also
makes recommendations to the Supervisory Board. It
supports and advises the Chairman of the Supervisory
Board and his Deputy and prepares the meetings of the
Supervisory Board within the scope of its responsibilities.
Nomination Committee
The Nomination Committee consists of the Chairman of
the Supervisory Board and two other members elected to
the Supervisory Board by the shareholder representatives
by a majority of the votes cast. As of 31 December 2022,
they are Dr Bernd Pischetsrieder (Chairman of the Nomi-
nation Committee), Sari Baldauf and Ben van Beurden.
The Nomination Committee is the only committee of the
Supervisory Board composed exclusively of shareholder
representatives. It makes recommendations to the Super-
visory Board for proposals to the Annual General Meeting
for the election of shareholder representatives on the
Supervisory Board. In this respect, it takes the statutory
requirements for the participation of women into account
and strives to fulfil the overall profile of requirements for
the Supervisory Board as a whole.
Audit Committee
The Audit Committee consists of four members elected
by the Supervisory Board by a majority of the votes cast.
As of 31 December 2022, they are the shareholder repre-
sentatives Olaf Koch (Chairman of the Audit Committee)
and Timotheus Höttges as well as the employee repre-
sentatives Michael Brecht (Deputy Chairman) and Ergun
Lümali.
The members of the Audit Committee as a whole are very
familiar with the industry in which the Company operates.
16
176
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
Pursuant to the German Stock Corporation Act (AktG), at
least one member of the Audit Committee must have
expertise in the field of accounting and auditing and at
least one other member must have expertise in the audit
of financial statements. In accordance with the German
Corporate Governance Code, expertise in the field of
accounting shall involve specialized knowledge of and
experience with the use of accounting principles and
internal control and risk management systems, while
expertise in relation to the audit of financial statements
shall also involve specialized knowledge of and experi-
ence with the same. In addition, specialized knowledge of
and experience with financial reporting and financial
statement auditing shall include sustainability reporting
and the audit of sustainability reports. The Chairman of
the Audit Committee shall have expertise as described in
at least one of the aforementioned fields.
Throughout the course of his career, Olaf Koch has held
management positions in the field of finance and con-
trolling in his capacity as a chief financial officer, and he
later served for many years as the Chairman of the Board
of Management of Metro AG and Chairman of the Audit
Committee of Hugo Boss AG. He thus has specialized
knowledge and experience with regard to the use of
financial reporting principles and internal control and risk
management systems and the audit of financial state-
ments. This also includes sound knowledge of sustaina-
bility reporting and the audit of sustainability reports. For
example, Olaf Koch introduced a sustainability target sys-
tem and sustainability reporting at Metro AG, which led
to the company maintaining a top position in the Dow
Jones Sustainability Index for many years. He also moni-
tors and contributes to the development of sustainability
reporting and the audit of sustainability reports and he
actively contributes his expertise to the work conducted
by the Audit Committee.
(including the opinion of the auditor pursuant to Sec-
tion 162 of the German Stock Corporation Act) are also
available there.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
Accounting and auditing
Diversity
1948
Female
Male
Male
Female
Male
✓
✓
2014
✓
1955
✓
2021
2021
2021
2008
Centoni
Liz
Dr Martin
Brudermüller
van Beurden
Baldauf
Ben
✓
Sari
1958
1964
Chemistry/MBA/
software engineering
✓
Chemistry
As a rule, only candidates who have not already been
members of the Supervisory Board for 12 years at the
time of their (re-)election shall be proposed for election
to the Supervisory Board for a full term of office. On
31 December 2022, this requirement was fulfilled for all
members of the Supervisory Board in office.
Chemical
engineering
✓
✓
✓
✓
✓
1961
✓
engineering
Business
Mechanical
✓
✓
US
German
Dutch
Finnish
German
administration
Capital market
Pischetsrieder
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
Diversity
Term limit not breached
Joined board in
Tenure
C.01
186
Ergun Lümali and Michael Brecht, among others, also
possess expertise with regard to capital markets after
having served as members of the Supervisory Board
for many years.
The area of capital markets is extremely well cov-
ered by Dr Bernd Pischetsrieder, Dr Martin Bruder-
müller, Ben van Beurden, Olaf Koch and Timotheus
Höttges in particular, as all of them serve or have
served as chairmen of listed companies.
Dr Bernd Pischetsrieder possesses extensive sec-
tor-specific knowledge in the area of sales/brands,
and Marco Gobbetti contributes his extensive brand
expertise to the work conducted by the Supervisory
Board. Michael Bettag has many years of experience
in sales.
With regard to innovation, research and develop-
ment, the proven expertise of Prof. Dr Helene Svahn
deserves to be especially highlighted. Liz Centoni
also possesses specialized knowledge in this area
due to the many years she has spent in executive
positions at Cisco. Finally, Monika Tielsch and
Michael Häberle, among others, also contribute to
the Supervisory Board the expertise they have gained
in this area throughout their careers.
Gender
In the area of industry, Dr Bernd Pischetsrieder in
particular has extensive sector-specific knowledge
that he has gained as a member of the Supervisory
Board as well as through the many years he served in
executive positions at other companies in the auto-
motive industry. Dr Martin Brudermüller's many years
of experience in the chemical industry also deserves
special mention here. In addition, Ergun Lümali pos-
sesses expertise relevant to the area of industry due
to the many years he has spent as Chairman of the
Works Council at the Mercedes-Benz Sindelfingen
plant.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
185
Sari Baldauf in particular possesses sound knowl-
edge of human resources due to her extensive pre-
vious professional experience in this area, and she
has contributed her knowledge as a Board member,
especially as a member of the Nomination Commit-
tee. Dr Frank Weber also possesses expertise in the
area of human resources, as he has served for many
years as Chairman of the Management Representa-
tive Committee at the Mercedes-Benz Group. The
knowledge and experience of the IG Metall (German
Metalworkers' Union) representatives Nadine
Boguslawski, Roman Romanowski and Roman Zitzels-
berger in the area of human resources has also
proved valuable for the work conducted by the
Supervisory Board.
Dr Martin Brudermüller and Ben van Beurden in par-
ticular have extensive expertise in the area of trans-
formation. Both continue to push ahead with the
process of transformation at the companies where
they serve as chairman of the board of management.
In their capacity as works council chairmen at key
Mercedes-Benz production plants, both Ergun Lümali
and Michael Häberle use their expertise to help man-
age the transformation at the Mercedes-Benz Group.
In the area of digitalization/IT, Liz Centoni and Tim-
otheus Höttges, among others, are able to contribute
expertise and experience gained through their pro-
fessional activities at Cisco and Deutsche Telekom,
respectively. The same can be said for Monika Tielsch
due to her activity as a works council member in the
R&D unit, where the MB.OS operating system is being
developed.
Roman Zitzelsberger due to the mandates
he has held in various supervisory boards and Ergun
Lümali due to the many years he has served on the
Company's Supervisory Board.
-
With regard to strategy, Dr Bernd Pischetsrieder in
particular has proven sector-specific strategy exper-
tise as a result of his previous professional experi-
ence. In terms of the corporate strategy that is
geared towards sustainability and the luxury vehicle
segment, the ESG expertise of Dame Polly Courtice,
as well as Marco Gobbetti's experience in the luxu-
ry-goods industry, deserve special mention. In addi-
tion, Roman Zitzelsberger and Ergun Lümali in par-
ticular have extensive experience with strategy
issues
In the area of finance, Ben van Beurden and Dr
Martin Brudermüller in particular possess special
expertise, as do the two finance experts Olaf Koch
and Timotheus Höttges and the other members of
the Audit Committee Ergun Lümali and Michael
Brecht.
On the basis of the qualification matrix (Figure C.01),
the Supervisory Board as a whole in its current com-
position meets the defined requirements pertaining
to its expertise/experience. More than three mem-
bers of the Supervisory Board have relevant knowl-
edge and/or experience in each of the areas of exper-
tise shown above. The explanations shown below
regarding the members of the Supervisory Board who
are mentioned by name should therefore be viewed
as examples.
In the area of sustainability/ESG, Dame Polly Cour-
tice contributes the expertise she has gained in ESG
matters as a result of having served for many years
as Director of the University of Cambridge Institute
for Sustainability Leadership. Dr Martin Brudermüller,
Ben van Beurden and Timotheus Höttges in particular
contribute to the Supervisory Board their knowledge
of and experience with environmental (E) issues. All
of them deal extensively with sustainability issues (in
particular those relating to climate protection and
decarbonization) at the companies in which they
serve as chairman of the board of management.
Dame Polly Courtice and in particular the employee
representatives on the Supervisory Board possess
expertise in the fields shown above that relate to the
social (S) component of ESG. With regard to govern-
ance (G), Olaf Koch and Roman Romanowski contrib-
ute to the Supervisory Board the expertise they have
gained throughout their professional careers.
Dr Bernd
Year of birth
International experience¹
Sales/brand
technology
Innovation, research & development,
(e.g. production, procurement)
Industry
Sustainability/ESG4
working environment)
(e.g. Personnel management, employee matters,
HR
(e.g. product, working models)
Nationality
Transformation
Digitalization/IT
Strategy
audit, M&A)
(e.g. accounting, controlling, risk management,
Finance
Competencies/experience
Age limit not breached
Independence²
Formal suitability
Educational and professional background
(e.g. software, processes, data protection)
1 Only relevant for shareholder representatives.
2 Within the meaning of the DCGK (German Corporate Governance Code); only relevant for shareholder representatives.
4 Especially: environment: green production and logistics, climate and decarbonization strategy; social: People Plan, sustainable supply chains; governance: sustainable corporate governance,
sustainable finance.
1962
1970
1974
British/South Afri-
can
Italian
German
German
Swedish
History/marketing/ International
sustainability
1958
Business
management/sales administration / MBA administration
Biotechnology/
electrical
engineering
✓
✓
✓
✓
✓ 3
✓ 3
✓
✓
Business
✓
1952
Male
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
Dame Polly
Courtice
Marco
Gobbetti
Timotheus
Höttges
Olaf
Prof. Dr Helene
Koch
Svahn
2022
Female
2022
✓
2020
2021
✓
✓
2021
✓
Female
Male
Male
✓
✓
✓
✓
(e.g. product, working models)
Transformation
(e.g. software, processes, data protection)
Digitalization/IT
Strategy
audit, M&A)
(e.g. accounting, controlling, risk management,
Finance
Competencies/experience
Age limit not breached
HR
Independence²
Educational and professional background
International experience¹
Nationality
Year of birth
Gender
Diversity
Term limit not breached.
Joined board in
Tenure
187
Formal suitability
(e.g. Personnel management, employee matters,
working environment)
Sustainability/ESG4
✓
✓
✓
✓
✓
2 Within the meaning of the German Corporate Governance Code; only relevant for shareholder representatives.
3 Finance expert in accordance with Section 100 Subsection 5 of the German Stock Corporation Act (AktG), Recommendation D.3 DC (German Corporate Governance Code).
4 Especially: environment: green production and logistics, climate and decarbonization strategy; social: people plan, sustainable supply chains; governance: sustainable corporate governance,
sustainable finance.
188
Tenure
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
Ergun
Lümali
Michael
Bettag
Nadine
Boguslawski
Michael
Michael
Sales/brand
technology
Innovation, research & development,
(e.g. production, procurement)
Industry
The specification examples in the parentheses for the
areas shown above are not complete; in addition,
expertise does not have to be demonstrated for
every specified item in the parentheses for each area.
1 Only relevant for shareholder representatives.
- Capital markets
- Industry (e.g. production, procurement)
189
Tenure
Joined board in
Term limit not breached.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
Roman
Romanowski
Monika
Tielsch
Elke
4 Especially: environment: green production and logistics, climate and decarbonization strategy; social: people plan, sustainable supply chains; governance: sustainable corporate governance,
sustainable finance.
Töjnes-Werner
Roman
Zitzelsberger
2021
2021
2013
2013
2015
✓
✓
✓
Dr Frank
Weber
✓
Capital market
✓
German
German
German
German
German
Construction
mechanics /
Mechanical
engineering /
compensation and Business
Automotive fitter/
✓
business
management
Electronics engineer management
administration
✓
✓
✓
✓
✓
✓
✓
service policy
1969
✓
Gender
Age limit not breached
Competencies/experience
Finance
(e.g. accounting, controlling, risk management,
audit, M&A)
Strategy
Digitalization/IT
(e.g. software, processes, data protection)
Transformation
(e.g. product, working models)
Formal suitability
HR
working environment)
Sustainability/ESG4
Industry
(e.g. production, procurement)
Innovation, research & development,
technology
Sales/brand
Capital market
4 Especially: environment: green production and logistics, climate and decarbonization strategy; social: people plan, sustainable supply chains; governance: sustainable corporate governance,
sustainable finance.
190
(e.g. Personnel management, employee matters,
Diversity
ment
Mechanical engi-
Year of birth
Nationality
Male
Female
Female
Male
Male
1974
1967
1963
neering/manage-
1961
German
German
German
German
German
Educational and professional background
Lawyer
Socioeconomics /
mediation
Process manager
Mechanical
engineering/
production
1966
1965
1977
1961
Educational and professional background: The
members of the Supervisory Board should have dif-
ferent educational and professional backgrounds. As
of 31 December 2022, the members of the Supervi-
sory Board display a broad range of educational and
professional backgrounds. Dr Bernd Pischetsrieder,
Ben van Beurden, Dr Martin Brudermüller, Liz Centoni,
Prof. Dr Helene Svahn, Dr Frank Weber and Roman
Zitzelsberger have university degrees in mechanical
engineering, chemistry, biotechnology and/or electri-
cal engineering. Other employee representatives
have completed relevant professional training. On the
shareholder side, Timotheus Höttges, Olaf Koch and
Sari Baldauf have university degrees in economics,
and Michael Bettag on the employee side also holds
such a degree. The diverse range of educational and
-
Internationality: At least 30% of shareholder repre-
sentatives shall be of international origin (non-Ger-
man citizenship) or have international experience. All
shareholder representatives in office on 31 December
2022 have international experience. Moreover, the
target has already been exceeded simply because of
the international background of six shareholder rep-
resentatives Sari Baldauf, Ben van Beurden, Liz
Centoni, Dame Polly Courtice, Marco Gobbetti and
Professor Dr Helene Svahn who together account
for 60% of the shareholder representatives.
Generational mix: In addition, attention shall be
paid to a sufficient generational mix amongst the
members of the Supervisory Board. At least 30% of
the members of the Supervisory Board shall be no
more than 62 years of age at the time of their elec-
tion or re-election. Except for Dr Bernd Pischets-
rieder, Dame Polly Courtice and Marco Gobbetti, all
other members (17 members, or more than 30%) of
the Supervisory Board in office on 31 December 2022
were aged 62 or younger at the time of their election
or re-election for the current term of office.
for the next election in the given case is to be ful-
filled separately by the shareholder side and the
employee side. As of 31 December 2022, there are
four women on the side of the shareholders and
three women on the side of the employees. This puts
the proportion of women on the side of the share-
holders at 40% and on the side of the employees at
30%. The proportion of women for the Supervisory
Board as a whole is 35%.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
182
Gender ratio: By law, at least 30% of the members of
the Supervisory Board must be women and at least
30% must be men. The quota is to be met by the
Supervisory Board as a whole, unless the representa-
tives of the shareholders or the representatives of
the employees object to the overall fulfilment. If such
an objection is made, then the minimum proportion
-
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
professional backgrounds is rounded out on the
shareholder side by Dame Polly Courtice and Marco
Gobbetti, who are proven experts in the areas of sus-
tainability and the luxury goods segment, respec-
tively, while the employee side of the Supervisory
Board includes a lawyer, a social economist and a
process manager.
For the last possible age-related appointment or
reappointment of a member of the Board of Manage-
ment, the completion of the 62nd year of life at the
time of the beginning of a (new) term of office generally
serves as a guideline. When determining this age limit,
the Supervisory Board deliberately opted for a flexible
benchmark in order to preserve the necessary leeway
for appropriate decisions in individual cases. As of
31 December 2022, all eight members of the Board of
Management fall below this standard age limit.
In the composition of the Board of Management, atten-
tion shall also be paid to internationality in the sense
of different cultural backgrounds or international expe-
rience through several years of stays abroad; if possi-
ble, at least one member of the Board of Management
shall be of international origin. Notwithstanding the
many years of international experience of the vast
majority of the members of the Board of Management,
this goal had already been achieved by 31 December
2022, simply because of the international origins of Ola
Källenius and Renata Jungo Brüngger and the focus of
Hubertus Troska's activities in China.
As a rule, and subject to disclosure of a deviation in the
annual Declaration of Compliance with the German
Corporate Governance Code, members of the Board of
Management shall not hold more than two mandates
on Supervisory Boards in non-Group listed compa-
nies or comparable functions and shall not chair a
Supervisory Board of a non-Group listed company. For
the purpose of the profile of requirements, mandates
on Supervisory Boards in joint ventures, the perfor-
mance of which is part of the departmental responsibil-
ity of a member of the Board of Management, are not
considered to be comparable functions.
Of the non-Group memberships of Supervisory Boards
and other Supervisory Bodies held by Hubertus Troska,
only BAIC Motor Corporation Ltd. is listed on the stock
exchange. With the exception of the mandate at Beijing
Brecht
Foton Daimler Automotive Co., Ltd., his other mandates
outside the Group are mandates in non-listed joint ven-
tures within his departmental responsibility. In the
opinion of the Supervisory Board, these mandates, as
well as the mandate at Beijing Foton Daimler Automo-
tive Co., Ltd., which is part of the Daimler Truck Group,
do not pose any requirements comparable to mandates
on supervisory boards of listed companies outside the
Group in terms of the requirements profile. The same
applies to the non-Group mandates of Markus Schäfer
with the exception of the mandate at the listed Farasis
Energy (Ganzhou) Co. Ltd. Markus Schäfer resigned
from the latter mandate during the reporting period.
Of the non-Group memberships of Supervisory Boards
and other Supervisory Bodies held by Britta Seeger,
only Deutsche Lufthansa AG is listed on the stock
exchange. In the opinion of the Supervisory Board, the
other mandates outside the Group are mandates within
the scope of her departmental responsibilities that, in
terms of the profile of requirements, do not pose any
demands comparable to a mandate on the Supervisory
Board of a listed company outside the Group.
Renata Jungo Brüngger and Harald Wilhelm each hold
two mandates on Supervisory Boards in non-Group
listed companies, including Daimler Truck Holding AG.
They are also both members of the Supervisory Board
of the non-listed Daimler Truck AG, a wholly owned
subsidiary of Daimler Truck Holding AG. The share-
holder representatives on the Supervisory Boards of
Daimler Truck Holding AG and Daimler Truck AG are
identical. Against this background, in the opinion of the
Supervisory Board, membership of the Supervisory
Board of Daimler Truck AG does not impose any addi-
tional requirements comparable to the mandate at
Daimler Truck Holding AG in terms of the profile of
requirements. A deviation from the recommendation of
the German Corporate Governance Code that members
of boards of management of listed companies should
not hold more than two mandates on supervisory
boards in non-group listed companies or comparable
functions and should not chair a supervisory board is
stated and justified in the 2022 Declaration of Compli-
ance, notwithstanding the assessments of the Supervi-
sory Board for the purposes of the profile of require-
ments.
181
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
The criteria of the profile of requirements shall be taken
into account when filling positions on the Board of Man-
agement. The Presidential Committee draws up a short-
list of available candidates on the basis of a target profile,
taking the specific qualification requirements and the
requirements profile into account, it conducts interviews
with them, and it then submits a candidate proposal to
the Supervisory Board together with the reasons for its
recommendation for the decision-making. The decisive
factor is always the interest of the Company, in consider-
ation of any and all circumstances of the individual case.
In addition, attention shall be paid to a sufficient gen-
erational mix among the members of the Board of
Management; if possible, at least three members of the
Board of Management shall be 57 years of age or
younger at the beginning of the relevant term of office.
This applies to all members of the Board of Manage-
ment in office as from 31 December 2022, with the
exception of Sabine Kohleisen and Hubertus Troska.
In the view of the Supervisory Board, fundamental indi-
vidual suitability criteria for a position on the Board of
Management are, in particular, personality, integrity, con-
vincing leadership qualities, professional qualifications
for the department to be taken over, past performance,
knowledge of the Company, and the ability to adapt busi-
ness models and processes in a changing world.
Formal suitability
A shareholder representative on the Supervisory
Board shall be independent of the Company and its
Board of Management if he or she has no personal or
business relationship with the Company or its Board
of Management that could give rise to a material and
not merely temporary conflict of interests. The
assessment of independence is incumbent on the
shareholder representatives on the Supervisory
Board themselves. In this respect, four indicators
must be taken into account that may point to a lack
of independence: membership of the Board of Man-
agement within the last two years prior to the
appointment as a member of the Supervisory Board;
a significant business relationship with the Company
or a company dependent on it, e.g. as a customer,
supplier, lender or consultant; a close family relation-
ship to a member of the Board of Management; mem-
bership of the Supervisory Board for more than
twelve years (all criteria relate to both the members
of the Supervisory Board and their close family mem-
bers). However, the shareholder side is expressly at
liberty to regard the member of the Supervisory
Board in question as independent even if one or even
several negative indicators are fulfilled however
this assessment should then be substantiated in the
Declaration on Corporate Governance.
- Sustainability/ESG (in particular: the environment:
green production and logistics, climate and decar-
bonization strategy; social: people plan, sustaina-
ble supply chains; governance: sustainable corpo-
rate governance, sustainable finance)
- Transformation (e.g. products, working models)
Human resources (e.g. human resources manage-
ment, employee issues, world of work)
-
- Digitalization/IT (e.g. software, processes, data
security)
- Strategy
- Finance (e.g. accounting, controlling, risk manage-
ment, auditing, M&A)
Other special areas of expertise: The Supervisory
Board shall, as a whole, possess expertise and expe-
rience in areas of particular relevance to the Com-
pany. At least three members of the Supervisory
Board shall bring knowledge and experience in each
of the following areas:
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
184
ance.
- Independence: In order to ensure independent
advice to and supervision of the Board of Manage-
ment by the Supervisory Board, more than half of the
shareholder representatives on the Supervisory
Board shall be independent of the Company and the
Board of Management, subject to the disclosure of a
deviation from the corresponding recommendation of
the German Corporate Governance Code in the Dec-
laration of Compliance pursuant to Section 161 of the
German Stock Corporation Act (AktG).
Two finance experts: At least one member of the
Audit Committee must have expertise in the field of
accounting and at least one other member must have
expertise in the audit of financial statements. Exper-
tise in the field of accounting should involve special-
ized knowledge of and experience with the use of
accounting principles and internal control and risk
management systems, while expertise in relation to
the audit of financial statements must also involve
specialized knowledge of and experience with the
same. In addition, specialized knowledge of and
experience with financial reporting and financial
statement auditing shall include sustainability report-
ing and the audit of sustainability reports. On the
shareholder side, the Audit Committee has two
finance experts as members Olaf Koch and Timo-
theus Höttges whose current or past relevant
duties at (listed) companies, as well as continuing
education activities, ensure they have specialized
knowledge of and experience with accounting and
the audit of financial statements. The same applies to
their specialized knowledge of and experience with
sustainability reporting and the audit of sustainability
reports. Further details on the expertise of the two
finance experts can be found in the information on
the composition and working method of the Audit
Committee in this Declaration on Corporate Govern-
Expertise and experience
Standard age limit: As a rule, only candidates who
are not older than 72 years at the time of their (re-)
election shall be proposed for election to the Super-
visory Board for a full term of office. Upon the estab-
lishment of this age limit, the Supervisory Board
deliberately decided against a rigid maximum age
limit and in favour of a flexible standard limit that
preserves the necessary leeway for an appropriate
assessment of the circumstances of the individual
case, that defines the group of potential candidates
in a sufficiently broad manner, and that also allows
for re-election. None of the members of the Supervi-
sory Board in office on 31 December 2022 exceeded
the standard age limit at the time of their election.
Pischetsrieder, Sari Baldauf, Ben van Beurden, Dr
Martin Brudermüller, Liz Centoni, Dame Polly Cour-
tice, Marco Gobbetti, Timotheus Höttges, Olaf Koch
and Professor Dr Helene Svahn.
As a result, according to the assessment of the share-
holders' side, at 31 December 2022, all shareholder
representatives on the Supervisory Board were to be
deemed to be independent, namely Dr Bernd
Sari Baldauf has been a member of the Supervisory
Board for more than twelve years. Nevertheless, the
shareholder representatives on the Supervisory
Board are convinced that she has always maintained
the necessary critical distance from the Board of
Management of Mercedes-Benz Group AG during the
reporting period, as well as the required clear, alert
and critical view in her supervision of the Board of
Management. Her conduct in office demonstrates
that she fulfils her office as a member of the Supervi-
sory Board and the Nomination Committee in an
exemplary manner. In addition, her many years of
experience and expertise are essential for the Super-
visory Board to fulfil its role as a critical overseer and
at the same time an authoritative and trustworthy
advisor to the Board of Management.
No other mandates formerly held by Dr Bernd
Pischetsrieder could be seen during the reporting
period as constituting a material and not merely tem-
porary conflict of interest.
On the basis of the information known to the Super-
visory Board, the shareholder representatives are of
the opinion that there are no specific indications of
relevant personal or business relationships or cir-
cumstances, in particular with regard to the Company
or members of the Board of Management or other
members of the Supervisory Board, that could consti-
tute a material and not merely temporary conflict of
interests and therefore argue against the independ-
ence of any member of the Supervisory Board on the
shareholder side. During the reporting period, the
shareholder representatives Ben van Beurden, Dr
Martin Brudermüller, Liz Centoni, and Timotheus
Höttges in particular do not have any such material
business relationship with Mercedes-Benz Group AG
or any company dependent on Mercedes-Benz
Group AG (e.g. as a supplier, customer, lender or con-
sultant) in a responsible function of a company out-
side the Group. No former member of the Board of
Management was a member of the Supervisory Board
during the reporting period. No member of the
Supervisory Board holds board functions or performs
advisory tasks for significant competitors.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
183
―
-
Together with the Board of Management, the Supervisory
Board also ensures long-term succession planning for the
Board of Management, with due consideration of the pro-
file of requirements and the circumstances of the individ-
ual case. The Presidential Committee of the Supervisory
Board regularly discusses talents and exceptional leaders
of the Company. The contract terms and renewal options
of current members of the Board of Management are dis-
cussed, as well as possible successors. On the basis of a
potential analysis and in consideration of the criteria of
the profile of requirements, executives from the manage-
ment level below the Board of Management as well as
special high potentials are assessed and the next devel-
opment steps are discussed and determined together
with the Board of Management. The process of succes-
sion planning also includes regular reporting by the Board
of Management on the proportion and development of
female managers, especially at the first and second man-
agement levels below the Board of Management. The
Board of Management is responsible for proposing a suf-
ficient number of suitable candidates to the Supervisory
Board. Mercedes-Benz Group AG aims to predominantly
fill positions on the Board of Management with managers
developed within the Company. Nevertheless, potential
external candidates are also evaluated and included in
the selection process on a case-by-case basis, with the
support of external recruitment consultancy firms.
Supervisory Board
The Supervisory Board as a whole must be familiar with
the industry in which the Company operates.
(e.g. accounting, controlling, risk management,
audit, M&A)
Strategy
Digitalization/IT
(e.g. software, processes, data protection)
Transformation
(e.g. product, working models)
HR
(e.g. Personnel management, employee matters,
working environment)
Finance
Sustainability/ESG4
(e.g. production, procurement)
Innovation, research & development,
technology
Sales/brand
Male
Male
Female
Male
Male
1962
Industry
Competencies/experience
Age limit not breached
Formal suitability
-
The aim of the profile of requirements for the Supervisory
Board in its entirety is also to ensure that the composi-
tion of the Supervisory Board is as diverse and comple-
mentary as possible. The Supervisory Board shall, as a
whole, understand the business model of the Company
and possess the knowledge, skills, and experience nec-
essary to properly provide qualified supervision and
advice to the Board of Management. The Supervisory
Board has updated and sharpened its profile of require-
ments in line with the recommendations contained in the
most recent version of the German Corporate Govern-
ance Code, among other things with regard to the recom-
mendation that sustainability expertise be fully incorpo-
rated into the competence profile for the Supervisory
Board and that the status of implementation of this com-
petence profile in the form of a qualification matrix be
disclosed in the Declaration on Corporate Governance.
Overall, the members of the Supervisory Board shall
complement one another in terms of their expertise and
professional experience in such a way that the Board as a
whole can draw on the broadest possible pool of experi-
ence and diverse specialist knowledge. Furthermore, the
Supervisory Board considers the diversity of its members
in terms of age, gender, internationality and other per-
sonal characteristics as an important prerequisite for an
effective working relationship. The decision of the Super-
visory Board on the election proposal to the Annual Gen-
eral Meeting shall always be based on the interests of the
Company, taking any and all circumstances of the individ-
ual case into account.
The updated profile of requirements for the Supervisory
Board includes the following aspects:
Standard limit of membership duration
Häberle
2021
2012
2018
✓
✓
Joined board in
2014
2015
Term limit not breached.
✓
✓
✓
Diversity
Gender
Year of birth
Nationality
Educational and professional background
- Innovation, research and development, technology
- Sales/brands
Capital market
Olaf Koch (Chairman)
Dr Ing. e.h. Dipl.-Ing. Bernd Pischetsrieder
Chairman of the Supervisory Board of Mercedes-Benz Group AG
71
Dame Veronica Anne Courtice (since 29 April 2022)
4/4
100
Marco Gobbetti (since 29 April 2022)
4/4
100
Michael Häberle
7/7
5/7
100
6/7
86
Olaf Koch
Ergun Lümali
Roman Romanowski
Prof. Dr Helene Svahn
Monika Tielsch
Elke Tönjes-Werner
Dr Frank Weber
Timotheus Höttges
Liz Centoni
86
6/7
Ben van Beurden
Nadine Boguslawski
Dr Clemens Börsig (until 29 April 2022)
Michael Brecht
7/7
100
3/3
100
6/7
86
7/7
100
4/7
57
6/7
86
3/3
100
7/7
100
Dr Martin Brudermüller
Roman Zitzelsberger
Michael Bettag
7/7
7/7
2/2
100
2/3
67
Audit Committee
7/7
100
Dr Clemens Börsig (former Chairman, until 29 April 2022)
3/3
100
100
7/7
100
Timotheus Höttges (since 29 April 2022)
4/4
100
Ergun Lümali
7/7
100
20
Michael Brecht
1/1
100
3/3
100
7/7
100
7/7
100
7/7
100
7/7
100
7/7
100
6/7
86
Presidential Committee
Dr Bernd Pischetsrieder (Chairman)
Ben van Beurden
Michael Brecht (until 29 April 2022)
Ergun Lümali (since 29 April 2022)
Roman Zitzelsberger
3/3
100
100
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Sari Baldauf
Dr Bernd Pischetsrieder (Chairman)
At its meeting on 23 February 2022, the Supervisory
Board was first briefed on the impact of the escalating
conflict between Russia and Ukraine on the company and
its employees. In the presence of representatives of the
auditor, the Supervisory Board then discussed the pre-
liminary key figures of the 2021 company and Consoli-
dated Financial Statements as well as the preliminary
proposal to the 2022 Annual General Meeting for the
appropriation of profits and noted them with approval.
The Supervisory Board determined that there were no
objections to their publication. Insofar as the preliminary
key figures had not already been the subject of the ad
hoc announcement of 11 February 2022 they were pub-
lished along with the preliminary proposal for the appro-
priation of profits at the annual press conference on
24 February 2022. The Supervisory Board also passed
resolutions relating to a number of other measures sub-
ject to its approval. In addition, the Board of Management
provided information on the status of the fulfilment of
the settlement in connection with diesel emissions
agreed with the US authorities.
At the meeting on 10 March 2022, the Supervisory Board
discussed the Annual Financial Statements, the Consoli-
dated Financial Statements and the Combined Manage-
ment Report, including the Non-Financial Declaration for
the 2021 financial year of Mercedes-Benz Group AG and
the Group, each of which had been issued with an
unqualified audit opinion by the auditor, as well as the
Declaration on Corporate Governance, the Remuneration
report, and the proposal for the appropriation of profits.
The members of the Supervisory Board were provided
with extensive documentation for their preparation.
The Audit Committee and the Supervisory Board reviewed
these documents in detail and discussed them inten-
sively in the presence of the auditor, who reported on the
results of their audit and, in particular, addressed the key
audit matters and the relevant audit procedures, includ-
ing the conclusions drawn, and were available for addi-
tional questions and information. Following the final
result of the review by the Audit Committee and its own
review, the Supervisory Board concurred with the result
of the audit by the auditor. It determined that there were
no objections to be raised and adopted the Annual Finan-
cial Statements prepared by the Board of Management
and the Combined Management Report, including the
Non-Financial Declaration. The 2021 company financial
statements of Mercedes-Benz Group AG were thus
adopted. On this basis, the Supervisory Board endorsed
the proposal of the Board of Management for the appro-
priation of distributable profits. The Supervisory Board
also adopted the Report of the Supervisory Board, the
Declaration on Corporate Governance and the Remunera-
tion report, as well as its proposed resolutions on the
agenda items for the 2022 Annual General Meeting. In
this context, the resolutions required to hold a virtual
General Meeting were also adopted.
In addition, the body dealt with the remuneration of the
Board of Management on the basis of the remuneration
system approved by the Annual General Meeting. Under
the corporate governance agenda item, the other board
positions and sideline activities of the Board of Manage-
ment members that were presented at the meeting were
approved. The meeting also dealt with the resolution on
a product project. In the process, the Supervisory Board
also dealt with the tender procedure as part of a selec-
tion and proposal process in accordance with the EU
Statutory Audit Regulation for the selection of a new
auditor for the 2024 financial year. The Board also dis-
cussed current legal issues.
At its meeting on 27 April 2022, the Supervisory Board
again received reports on the impact of the war between
Russia and Ukraine on the company, the supply situation
for semiconductor components and raw materials, and
the measures taken in each case. The Board of Manage-
ment also provided information on the positive reactions
to the company's ESG conference for investors and ana-
lysts, which was held for the first time on 11 April 2022.
After the Supervisory Board had given its approval to a
product project, the Board of Management provided an
14
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
overview of the current financial status, volumes and
prices of the vehicle clusters in the current Mercedes-
Benz Cars portfolio.
At the virtual Annual General Meeting on 29 April 2022,
the candidates proposed by the Supervisory Board, Dame
Veronica Anne ("Polly") Courtice and Marco Gobbetti,
were elected to the Supervisory Board as shareholder
representatives. In the subsequent Supervisory Board
meeting, Ergun Lümali was elected Deputy Chairman of
the Supervisory Board. In addition, elections were held to
fill vacancies on the committees of the Supervisory
Board.
Board have the opportunity to meet the members of the
Board of Management and senior executives with spe-
cialist responsibility in a specifically designated onboard-
ing programme for a bilateral exchange on fundamental
and current topics in respect of the relevant areas of the
Board of Management, thus gaining an overview of the
topics relevant to the company and of the governance
structure. ESG (environmental, social and governance)
and sustainability-related thematic blocks are also an
integral part of this programme. Furthermore, the mem-
bers of the Supervisory Board are regularly informed
about the regulatory environment relevant to their work
on the Supervisory Board and other legal developments
affecting them.
By way of resolution using other customary means of
communication, the Supervisory Board on 28 June 2022
approved the realignment of the production network to
consistently implement the electric-only strategy.
cybersecurity. The meeting then focused on the compa-
ny's sustainable luxury strategy and its interpretation and
implementation. Amongst the topics discussed were stra-
tegic approaches to further developing the brand and
customer interaction ("selling desire"), to the product
portfolio and technologies ("developing desire") and to
increasing profitability (“monetising desire"). With the
involvement of the responsible executives, the members
of the Supervisory Board and the Board of Management
discussed in a constructive and open dialogue how the
Mercedes-Benz Group will adapt to new challenges and
which opportunities are to be exploited. The car software
activities and the global production network were also
discussed. The Supervisory Board and the Board of Man-
agement also discussed social challenges and corporate
responsibility in the area of social justice. Both bodies
agreed that social responsibility is an important aspect
within the "S" in ESG and Mercedes-Benz can contribute
to solving social problems.
By way of resolution with the aid of other customary
means of communication, in October 2022 the Supervi-
sory Board approved the Board of Management's plans to
sell the company's business activities in Russia.
Also by way of resolution using other customary means of
communication, the Supervisory Board resolved in
November 2022, after carrying out the selection and pro-
posal process in accordance with the EU Statutory Audit
Regulation on the basis of the recommendation and pref-
erence of the Audit Committee and after its own assess-
ment, to propose to the Annual General Meeting 2023
the appointment of PricewaterhouseCoopers GmbH,
Wirtschaftsprüfungsgesellschaft, Frankfurt a. M., as the
new auditor of the annual financial statements, auditor of
the Consolidated Financial Statements and auditor for
the review of interim financial reports for the 2024 finan-
cial year.
15
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Corporate planning meeting (Mercedes-Benz business
planning)
At the meeting on 1 December 2022, the Supervisory
Board discussed and approved the Mercedes-Benz
business planning on the basis of comprehensive docu-
mentation and discussed existing opportunities and risks
in connection therewith. The Supervisory Board then
received an update on the China strategy. The geopoliti-
cal situation between China and the United States,
decoupling risks, and social compliance activities were
also addressed. The Supervisory Board also gave its
approval to a number of product projects and other
measures subject to its approval. It dealt with the report
of the Board of Management on the development of
ongoing and completed acquisitions and partnerships.
The Supervisory Board also learned about the global
scholarship programme beVisioneers The Mercedes-
Benz Fellowship, which offers young people, no matter
what their background may be, training, mentoring, pro-
fessional support and financing to launch their projects
for positive changes to the environment. Other items on
the agenda included remuneration, corporate governance
and legal matters. Finally the body discussed the contin-
uing further development of the technical compliance
management system and the status of the fulfilment of
the settlement agreed with the US authorities in connec-
tion with diesel emissions.
_
Corporate governance and declaration of compliance
During the 2022 financial year, the Supervisory Board
continuously addressed the standards of good corporate
governance.
The Supervisory Board held another meeting at the end of
July 2022. At this meeting, it discussed in detail with the
Board of Management the course of business and the
results of the first half of the year. The Board of Manage-
ment subsequently provided an overview of the current
financial status, volumes and prices of the vehicle archi-
tectures of the future portfolio of Mercedes-Benz Cars as
part of another project report. The Supervisory Board
then approved the funds required for the consistent
implementation of the electric-only strategy. The Super-
visory Board also dealt in detail with the ESG and sus-
tainability issues relevant to Mercedes-Benz and their
embedding in the company. The Board of Management
reported on the ongoing integration of internal reporting,
risk management and decision-making processes, com-
pliance and integrity, and remuneration, among other
things.
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
13
The members of the Supervisory Board assume responsi-
bility for their training and further education measures in
areas such as changes in the legal framework and for-
ward-looking technologies that are required for the per-
formance of their tasks and are supported in this by the
company. In addition, new members of the Supervisory
11
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Report of the
Supervisory Board
Dear Shareholders,
2022 was a year in which Mercedes-Benz Group AG made substantial progress in implementing,
further developing and honing its strategy. The positioning of Mercedes-Benz as a luxury brand
continues to strengthen, and the company is accelerating along the path to an all-electric,
software-driven future. In addition, the intensified activities in the ESG area demonstrate the
company's commitment to society and the environment.
Of course, 2022 will also be remembered for the major challenges it posed, including the
Russia-Ukraine war, increasing energy prices and rising inflation. Whilst we will continue to face
uncertainties, the management team has thus far shown great ability to put countermeasures in
place and offset these risks; I am convinced of its capability to continue to do so.
I look forward to the future with confidence and am sure that the company will continue to be
successful thanks to the excellent Board of Management, executive team and employees.
12
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Supervisory and advisory activities of the
Supervisory Board
In the 2022 financial year, the Supervisory Board of
Mercedes-Benz Group AG again performed, in full, the
duties incumbent upon it by law, the articles of associa-
tion and the rules of procedure.
In this context, the Supervisory Board continuously
advised and monitored the Board of Management in the
management of the company and provided support on
strategically important issues for the further develop-
ment of the company.
The Supervisory Board reviewed whether the individual
company and Consolidated Financial Statements, the
Combined Management Report including the Non-Finan-
cial Declaration and the other financial reporting com-
plied with the applicable requirements.
Furthermore, after careful review and consultation, it
approved numerous business transactions subject to its
consent. This related in particular to the approval of a
Mercedes-Benz high-power charging network in North
America. This also included financial and investment
planning, cooperation projects and the conclusion of
contracts of particular importance to the company. The
Board of Management informed the Supervisory Board
about a large number of other measures and business
transactions and discussed them intensively and in detail
with the Supervisory Board; for example, the effects on
the company of supply bottlenecks for certain semicon-
ductor components and the initiated countermeasures.
The Board of Management regularly informed the Super-
visory Board about all significant business developments
of the Group and the divisions. During the reporting
period, it kept the Supervisory Board continuously
informed about all fundamental issues regarding corpo-
rate planning, including financial, investment, sales and
personnel planning; current developments at Group com-
panies; the development of revenue; the situation of the
company and the divisions; the economic and political
environment; and the current status and assessment of
significant legal proceedings. In addition, the Board of
Management continuously reported to the Supervisory
Board on the profitability and liquidity situation of the
company, the development of sales and procurement
markets, the overall economic situation and develop-
ments on the capital markets and in the financial services
sector. Other topics included the further development of
the product portfolio, securing the long-term competi-
tiveness of the company and the further implementation
of measures to ensure sustainable, future-oriented
mobility. The Supervisory Board also dealt in detail with
the political developments and conflicts in the main sales
markets and the reaction to them in terms of business
policy, the shareholder structure, the share-price devel-
opment and its background, as well as the expected
effects of the strategic projects on the share-price devel-
opment.
Working culture and areas of Supervisory Board
activity
In the 2022 financial year, the Supervisory Board held
seven meetings, which were also held as video confer-
ences due to the pandemic. Four meetings were held in
person, with the option of participation in virtual form or
via telephone, and three meetings were held as video
conferences. Meeting attendance by the members was at
a very high level, as can be seen in the detailed overview
at the end of this report. The work of the Supervisory
Board was characterized by open and intensive dialogue.
The members of the Supervisory Board regularly prepared
for upcoming resolutions using documents provided in
advance by the Board of Management. The employee and
shareholder representatives also regularly prepared the
meetings in separate discussions, which were also
attended by members of the Board of Management. In
addition, the Supervisory Board was supported in depth
by its Committees. At the meetings of the Supervisory
Board, its members discussed the measures and transac-
tions to be resolved in detail with the Board of Manage-
ment. Executive sessions were regularly scheduled for
the meetings so that topics could be discussed also in
the absence of the Board of Management.
The Supervisory Board was informed of special events
outside the regular meetings. In addition, the members
of the Supervisory Board and the Board of Management
held bilateral meetings to exchange views. The Board of
Management also informed the Supervisory Board of the
key indicators of the business development and of exist-
ing risks by means of written reports.
In December 2022, the Supervisory Board adopted the
regular 2022 declaration of compliance. With the excep-
tions explained there, all recommendations of the Code
have been and are being complied with.
Bader M. Al Saad (until 29 April 2022)
In the interests of good corporate governance, the mem-
bers of the Supervisory Board of Mercedes-Benz
Group AG are required to disclose to the Supervisory
Board as a whole any conflicts of interest, in particular
those that could arise as a result of an advisory or
board function with customers, suppliers or lenders of
Mercedes-Benz Group AG or other third parties.
The Supervisory Board regularly assesses how effectively
the Supervisory Board and its committees perform their
tasks. The next self-assessment is planned for 2023.
Independently of the self-assessment of the Supervisory
Board, the Audit Committee conducted a self-evaluation
of its activities in 2022 on the basis of a comprehensive
company-specific questionnaire. The positive results of
this self-assessment were presented and discussed at
the Audit Committee meeting on 16 February 2023.
The members of the Supervisory Board were provided
with extensive documentation for their preparation,
including the Annual Report with the Consolidated Finan-
cial Statements compiled in accordance with IFRS, the
Combined Management Report including the Non-Finan-
cial Declaration for Mercedes-Benz Group AG and the
Group, as well as the Declaration on Corporate Govern-
ance, the Remuneration report, the Annual Financial
Statements of Mercedes-Benz Group AG, the proposal
of the Board of Management for the appropriation of
profits, the audit opinions of KPMG AG Wirtschaftsprü-
fungsgesellschaft for the Annual Financial Statements
of Mercedes-Benz Group AG and the consolidated finan-
cial statements, in each case including the Combined
Management Report and information on the account-
ing-related internal control system, as well as drafts
of the reports of the Supervisory Board and the Audit
Committee.
18
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
The Audit Committee and the Supervisory Board reviewed
these documents in detail and discussed them inten-
sively in the presence of the auditors, who reported on
the results of their audit and, in particular, addressed the
key audit matters and the relevant audit procedures,
including the conclusions drawn, and were available for
additional questions and information. Following the final
result of the review by the Audit Committee and its own
review, the Supervisory Board concurred with the result
of the audit by the auditor. It determined that there were
no objections to be raised and adopted the financial
statements prepared by the Board of Management and
the Combined Management Report, including the Non-Fi-
nancial Declaration. The 2022 Annual Financial State-
ments of Mercedes-Benz Group AG were thus adopted.
On this basis, the Supervisory Board endorsed the pro-
posal of the Board of Management for the appropriation
of distributable profits. The Supervisory Board also
adopted the Report of the Supervisory Board, the Decla-
ration on Corporate Governance and the Remuneration
report, as well as its proposed resolutions on the agenda
items for the 2023 Annual General Meeting.
Appreciation
The Supervisory Board would like to thank all employees
of the Mercedes-Benz Group and the management for
their dedicated contribution to the results of the 2022
financial year, which were achieved in a challenging envi-
ronment.
The Supervisory Board would also like to thank Dr Clem-
ens Börsig and Bader M. Al Saad, who closely supported
the company through their dedicated work on the Super-
visory Board and left the Supervisory Board last year.
Stuttgart, March 2023
The Supervisory Board
At the meeting on 13 March 2023, the Supervisory Board
discussed the Annual Financial Statements, the Consoli-
dated Financial Statements and the Combined Manage-
ment Report, including the Non-Financial Declaration for
Mercedes-Benz Group AG and the Group, each of which
had been issued with an unqualified audit opinion by the
auditor, as well as the Declaration on Corporate Govern-
ance, the Remuneration report, and the proposal for the
appropriation of profits.
Polibido
Chairman
19
A.01
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Individualized disclosure of attendance at meetings by members of the Supervisory Board of Mercedes-Benz Group AG in the 2022 financial year
2022
Meetings attended
Attendance (%)
Plenary Supervisory Board
Dr Bernd Pischetsrieder
In a meeting of the Supervisory Board on 16 February
2023, the preliminary key figures of the 2022 company
and Consolidated Financial Statements as well as the
preliminary proposal to the 2023 Annual General Meeting
for the appropriation of profits were discussed and noted
with approval in the presence of representatives of the
auditor. The Supervisory Board determined that there
were no objections to their publication. The preliminary
key figures for the 2022 financial year and the preliminary
proposal for the appropriation of profits were published
at the annual press conference on 17 February 2023. In
the same meeting, the Supervisory Board also approved
the share buyback programme proposed by the Board of
Management.
The Annual Financial Statements of Mercedes-Benz
Group AG and the Combined Management Report for
Mercedes-Benz Group AG and the Group for 2022 were
duly audited by KPMG AG Wirtschaftsprüfungs-
gesellschaft, Berlin, and issued with an unqualified audit
opinion. This also applies to the 2022 Consolidated
Financial Statements compiled in accordance with IFRS.
Audit of the individual company and Consolidated
Financial Statements
German Act on the Equal Participation of Women and
Men in Leadership Positions
For supervisory boards of listed companies with equal
representation, such as that of Mercedes-Benz Group AG,
the German Stock Corporation Act (AktG) prescribes a
mandatory quota of at least 30% women. The quota is to
be met by the Supervisory Board as a whole. If the repre-
sentatives of the shareholders or the representatives of
the employees object to the overall fulfilment vis-à-vis
the Chairman of the Supervisory Board before an elec-
tion, the minimum proportion for this election is to be
fulfilled separately by the shareholder side and the
employee side. At the Supervisory Board meeting on
27 April 2022, the shareholder representatives objected
to the overall fulfilment with regard to the election of
employee representatives to be held on the Supervisory
Board in 2022/2023.
As at 31 December 2022, on the shareholder side of
the Supervisory Board of Mercedes-Benz Group AG,
Sari Baldauf, Liz Centoni, Dame Polly Courtice and Pro-
fessor Dr Helene Svahn make up 40% women and the
remainder 60% men. On the employee side, Nadine
Boguslawski, Monika Tielsch and Elke Tönjes-Werner
make up 30% women and the remainder 70% men. Thus,
the Supervisory Board as a whole also fulfils the statutory
quota both separately and as a whole.
16
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
At its meeting on 16 February 2023, the Supervisory Board
dealt with the specific election proposals to the 2023
Annual General Meeting and, on the recommendation of
the Nomination Committee, decided to propose to the
2023 Annual General Meeting that Stefan Pierer be elected
to the Supervisory Board for the first time. In the event of
the election of the proposed candidate, the statutory
quota for women remains fulfilled both on the shareholder
side and for the Supervisory Board as a whole.
For the composition of the Board of Management, the
Supervisory Board set a target for the proportion of
women of at least 25% in December 2020 and a dead
line of 31 December 2025. Since August 2022, a legally
mandated minimum participation requirement must be
complied with when appointing members of the Board of
Management. This requirement stipulates that at least
one woman and at least one man must be a member of
the Board of Management in listed companies with parity
participation and more than three members on the Board
of Management. Companies that are subject to the mini-
mum proportion requirement are no longer obliged to set
a target quota for the proportion of women on the board
of management. Nevertheless, within the framework of
the overall requirements profile for appointments to the
Board of Management, the Supervisory Board has
decided to go beyond the stipulations of the minimum
proportion requirement and maintain the target quota for
the proportion of women on the Board of Management
that was set in 2020. As at 31 December 2022, three of
the eight members of the Board of Management are
women: Renata Jungo Brüngger, Sabine Kohleisen and
Britta Seeger. The proportion of women on the Board of
Management is now 37.5%, which means it exceeds the
target that was set.
Corporate governance at the Mercedes-Benz Group is
explained in detail in the Declaration on Corporate Gov-
ernance.
Work in the committees
The Presidential Committee held three meetings in the
past financial year. Two of the meetings were held in per-
son and one meeting was held as a video conference. In
particular, it discussed personnel matters and succession
planning for appointments to the Board of Management.
Furthermore, the Presidential Committee discussed the
acceptance by members of the Board of Management of
board positions at other companies and institutions, cor-
porate governance issues, D&O insurance and remunera-
tion issues.
The Audit Committee held seven meetings in the year
2022. Four meetings were held in person, with the option
of participation in virtual form or via telephone, and three
meetings were held as video conferences. Further details
of the Audit Committee's work can be found in the Report
of the Audit Committee.
The Legal Affairs Committee held three meetings in the
year 2022. Two meetings were held in person, with the
option of participation in virtual form or via telephone,
and one meeting was held as a video conference. In those
meetings, it was informed in detail about legal matters
relating to emissions and cartels and discussed these
matters in the presence of the legal advisers of the Super-
visory Board. It discussed the continuing further develop-
ment of the technical compliance management system,
also with respect to future technologies. The Committee
received reports on the progress of the review of potential
responsibilities in connection with diesel emissions and
anti-trust matters from the legal advisers engaged for this
purpose by the Supervisory Board. The Committee regu-
larly reported to the Supervisory Board on its work and,
after discussing and weighing the relevant aspects, made
recommendations for resolutions to the Supervisory
Board, taking the Group's best interests into account. The
Committee also discussed the risks of a limitation of pos-
sible liability and took appropriate measures in the cases
in point. As part of the settlement reached with the US
authorities in connection with diesel emissions, the Com-
mittee was assigned specific tasks and decision-making
competences with regard to the fulfilment of the obliga-
tions assumed in the settlement. The Committee also ful-
filled these tasks in full and with great care.
The Nomination Committee held two meetings in the
2022 financial year, both of them as video conferences.
The Committee specifically considered the recommenda-
tions for the election proposals of the Supervisory Board
to the Annual General Meeting. In this context, it was
guided by the interests of the company, taking all circum-
stances of the individual case into account, and striving
to fulfil the overall profile of requirements, along with the
diversity concept and competence profile for the entire
Supervisory Board.
17
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
During the reporting period, there was no reason to con-
vene the Mediation Committee.
Changes in the Supervisory Board and the Board of
Management
At the virtual Annual General Meeting on 29 April 2022
the candidates proposed by the Supervisory Board, Dame
Veronica Anne ("Polly") Courtice and Marco Gobbetti,
were elected to the Supervisory Board to succeed Bader
M. Al Saad and Dr Clemens Börsig, who then retired from
the Supervisory Board. In the subsequent Supervisory
Board meeting, Ergun Lümali was elected Deputy Chair-
man of the Supervisory Board and thus Deputy Chairman
of the Mediation and Presidential Committees. Timotheus
Höttges was elected to the Audit Committee and Dame
Polly Courtice to the Legal Affairs Committee to succeed
Dr Clemens Börsig, who left the Supervisory Board at the
end of the Annual General Meeting. In addition, Roman
Romanowski was elected to succeed Michael Brecht on
the Legal Affairs Committee. Subsequently, the members
of the Audit Committee elected Olaf Koch as the new
Chairman of the Audit Committee. Finally, the members
of the Legal Affairs Committee elected Olaf Koch as the
new Chairman and Ergun Lümali as the new Deputy
Chairman of this committee.
At the meeting of the Supervisory Board on 16 February
2023, the shareholder representatives resolved, on the
basis of a corresponding recommendation by the Nomi-
nation Committee, to propose to the 2023 Annual Gen-
eral Meeting that Stefan Pierer be elected to the Super-
visory Board. Furthermore, per the Supervisory Board
guidelines regarding Board of Management appointments,
the Supervisory Board appointed Renata Jungo Brüngger
as a member of the Board of Management of Mercedes-
Benz Group AG with responsibility for Integrity & Legal
Affairs with effect from 1 January 2024 for a further one-
year term.
There were no indications of actual conflicts of interests
during the 2022 financial year. In the course of the
Supervisory Board meeting on 1 December 2022, in which
the approval of the establishment of a Mercedes-Benz
high-power charging network in North America was dis-
cussed, as a precautionary measure only Ben van
Beurden, who at that time was still Chief Executive
Officer of Shell plc, neither took part in the discussion nor
the vote on this agenda item.
Strategy meeting of the Supervisory Board
At the start of the two-day strategy meeting on
28/29 September 2022, the Supervisory Board was
informed about the current situation of the company and
in particular the activities relating to the possible dis-
posal of the Russian business. Following a resolution on a
product project, the Supervisory Board approved the
Board of Management's decision to hold the 2023 Annual
General Meeting on a new legal basis in virtual format.
Furthermore, the Board received reports on current legal
issues and the fulfilment status of the settlement
reached with the US authorities in connection with diesel
exhaust emissions. Another item on the agenda was
21
26
At 31 December
2022
In millions of euros
D.03
Consolidated Statement of
Financial Position
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
197
The accompanying notes are an integral part of these Consolidated Financial Statements.
28,807
2021
18,870
465
276
thereof income/loss attributable to non-controlling interests
29,272
19,146
Total comprehensive income (restated)
5,801
4,369
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG after taxes (restated)
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG (restated)
Assets
Intangible assets
Property, plant and equipment
823
16
Marketable debt securities and similar investments
46,955
48,237
15
Receivables from financial services
13,588
13,530
14
Equity-method investments
44,471
41,552
13
27,859
27,250
12
15,005
15,869
11
Equipment on operating leases
75
-32
thereof income/loss attributable to non-controlling interests after taxes
5,876
-440
2,250
2,130
188
-12
200
-866
1,678
362
-688
537
1,489
-1,765
877
-4
-33
14
-4
-47
3,120
297
64
873
43
-397
73,167
4,337
Other comprehensive income/loss after taxes (restated)
3,626
2,207
Items that will not be reclassified to profit/loss
286
Gains/losses on equity-method investments after tax
-144
Taxes on unrealized gains/losses and on reclassifications
430
Unrealized gains/losses pre-tax
Gains/losses on equity-method investments
3,580
2,318
-1,122
-1,240
4,702
3,558
Actuarial gains/losses from pensions and similar obligations pre-tax
Taxes on actuarial gains/losses from pensions and similar obligations
Actuarial gains/losses from pensions and similar obligations after tax
46
-18
23,396
Other financial assets
4,478
Trade payables
Total non-current liabilities
Other liabilities
Contract and refund liabilities
Deferred income
Deferred tax liabilities
Other financial liabilities
Financing liabilities
Provisions for other risks
Provisions for other risks
Provisions for pensions and similar obligations
Non-controlling interests
Equity attributable to shareholders of Mercedes-Benz Group AG
Treasury shares
Other reserves (restated)
Retained earnings (restated)
Capital reserves
Share capital
Equity and liabilities
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Total equity
Financing liabilities
Other financial liabilities
Deferred income
1,216
1,125
71,951
85,415
1,232
2,932
55,926
67,695
11,723
11,718
3,070
3,070
2021
At 31 December
2022
199
The accompanying notes are an integral part of these Consolidated Financial Statements.
Total equity and liabilities
Total current liabilities
Liabilities held for sale
Other liabilities
Contract and refund liabilities
In millions of euros
198
259,831
260,015
Receivables from financial services
7,673
8,100
20
21,466
25,621
19
Trade receivables
Inventories
156,902
157,141
1,536
1,677
18
3,434
3,725
10
Total non-current assets
Other assets
Deferred tax assets
3,181
15
17
37,312
Cash and cash equivalents
102,929
102,874
Total assets
Total current assets
3,142
3
Assets held for sale
4,073
4,472
18
Other assets
3,079
3,453
17
Other financial assets
6,706
6,237
16
Marketable debt securities and similar investments
23,120
17,679
33,670
37
14,809
2022
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
336 42. Additional information
336 41. Events after the reporting date
335 40. Auditor fees
of Management and the Supervisory Board
334 39. Remuneration of the members of the Board
331 38. Related-party disclosures
330 37. Earnings per share
Consolidated Statement of Income
330 36. Capital management
311 34. Management of financial risks
296 33. Financial instruments
295 32. Contingent liabilities and other financial obligations
290 31. Legal proceedings
288 30. Consolidated Statement of Cash Flows
287 29. Other liabilities
286 28. Contract and refund liabilities
286 27. Deferred income
285 26. Other financial liabilities
324 35. Segment reporting
D.01
In millions of euros
Note
-2,808
-2,584
6
General administrative expenses
-9,194
-9,482
6
Selling expenses
30,675
34,020
Gross profit
86,540
-115,997
6
133,893
150,017
5
Cost of sales
Revenue
2021
2022
284 25. Financing liabilities
282 24. Provisions for other risks
276 23. Pensions and similar obligations
274 22. Share-based payment
Accounting estimates and management judgments
Spin-off and hive-down of Daimler's
233 3.
230 2.
203 Notes to the Consolidated Financial Statements
203 1. Significant accounting policies
201 Consolidated Statement of Changes in Equity
198 Consolidated Statement of Financial Position
200 Consolidated Statement of Cash Flows
Income/Loss
197 Consolidated Statement of Comprehensive
196 Consolidated Statement of Income
CONSOLIDATED FINANCIAL STATEMENTS (1/2)
Annual Report 2022 Mercedes-Benz Group
FINANCIAL STATEMENTS
CONSOLIDATED
1,021
5,359
24
6,438
7,909
25
62,051
73,543
commercial vehicle business
Research and non-capitalised development costs
238 4. Consolidated Group
243 6.
271 21. Equity
268 20. Trade receivables
CONSOLIDATED FINANCIAL STATEMENTS (2/2)
Annual Report 2022 Mercedes-Benz Group
268 19. Inventories
267 18. Other assets
266 17. Other financial assets
266 16. Marketable debt securities and similar investments
262 15. Receivables from financial services
258 14. Equity-method investments
257 13. Equipment on operating leases
254 12. Property, plant and equipment
251 11. Intangible assets
247 10. Income taxes
Interest income and interest expense
246 9.
23
Other operating income and expense
Other financial income/expense
245 8.
244 7.
Functional costs
241 5. Revenue
2021
6
-5,467
11.50
10.00
13.55
21.50
13.55
11.50
10.00
13.55
thereof from discontinued operations
The accompanying notes are an integral part of these Consolidated Financial Statements.
thereof from continuing operations
thereof from continuing operations
thereof from discontinued operations
21.50
13.55
For profit attributable to shareholders of Mercedes-Benz Group AG
Basic
Earnings per share (in euros)
12,311
10,695
14,501
23,006
Diluted
196
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Actuarial gains/losses from pensions and similar obligations
Taxes on unrealized gains/losses and on reclassifications
Equity instruments after tax
Unrealized gains/losses pre-tax
Gains/losses on equity-method investments after tax
Items that may be reclassified to profit/loss (restated)
Equity instruments
Taxes on unrealized gains/losses and on reclassifications
Unrealized gains/losses pre-tax
Gains/losses on equity-method investments
Derivative financial instruments after tax
Taxes on unrealized gains/losses and on reclassifications
Reclassifications to profit and loss pre-tax
Unrealized gains/losses pre-tax
Derivative financial instruments
Debt instruments after tax
Taxes on unrealized gains/losses and on reclassifications
Unrealized gains/losses pre-tax
Debt instruments
Currency translation adjustments (restated)
Net profit
In millions of euros
D.02
Consolidated Statement of
Comprehensive Income/Loss
14,501
390
308
23,396
Interest income
16,028
20,458
35
Earnings before interest and taxes (EBIT)
317
340
8
Other financial income/expense, net
1,352
1,732
14
Gains/losses on equity-method investments, net
-1,735
-1,289
7
Other operating expense
2,888
3,323
7
Other operating income
9
-5,602
273
Interest expense
14,809
thereof from discontinued operations
thereof from continuing operations
thereof profit attributable to shareholders of Mercedes-Benz Group AG
thereof profit attributable to non-controlling interests
Net profit
12,346
11,050
14,809
-4,761
-5,495
10
15,811
20,304
-429
-427
9
Profit/loss from discontinued operations after taxes
Profit from continuing operations
Income taxes
Profit from continuing operations before taxes
212
-103,218
Proposals by the Supervisory Board for the election of
shareholder representatives by the Annual General Meet-
ing, for which the Nomination Committee makes recom-
mendations, shall take the aspects outlined above into
account and aim to fill the profile of requirements for the
Board as a whole. The Nomination Committee shall draw
up a short-list of available candidates on the basis of a
target profile, taking the specific qualification require-
ments and the aforementioned criteria into account, hold
structured discussions with them and, whilst doing so,
also obtain assurances that the proposed candidate has
sufficient time to be able to exercise the mandate with
due diligence. Subsequently, the Nomination Committee
submits a candidate proposal to the Supervisory Board
together with the reasons for its recommendation for
decision-making. The decision of the Supervisory Board
on the election proposal to the Annual General Meeting
shall always be based on the interests of the Company,
taking any and all circumstances of the individual case
into account.
EQE SUV
Trade receivables and trade payables
Receivables from financial services
Vehicles on operating leases
Other operating assets and liabilities
Dividends received from equity-method investments
Income taxes paid
Cash flow from operating activities
Additions to property, plant and equipment
Additions to intangible assets
Proceeds from disposals of property, plant and equipment and intangible assets
Investments in shareholdings
-4,111
-2,561
Inventories
1,029
-5,327
3,879
3,810
1,428
358
-1,261
1,605
1,625
-5,009
-3,812
16,894
24,549
-3,481
1,694
-4,579
Change in operating assets and liabilities
-990
1,486
28
6,898
5,929
29
3,135
3,086
3
169
88,403
260,015
87,675
259,831
Annual Report 2022 Mercedes-Benz Group
-695
Consolidated Financial Statements
D.04
In millions of euros
2022
2021
Profit from continuing operations before taxes (2021: Profit from continuing and discontinued operations before taxes)
Depreciation and amortisation/impairments
20,304
28,775
6,521
6,980
Other non-cash expense and income
-1,296
-11,503
Gains (-)/losses (+) from disposals of assets
Consolidated Statement of Cash Flows
-3,418
-2,741
469
Other
Cash flow from financing activities
Effect of foreign exchange rate changes on cash and cash equivalents
Net increase/decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
-320
-366
-19
-49
-19,032
-19,059
88
870
Dividends paid to non-controlling interests
-5,503
23,182
23,048
Cash and cash equivalents at end of period
17,679
23,182
Less cash and cash equivalents classified as assets held for sale at end of year
62
Cash and cash equivalents at end of period (Consolidated Statement of Financial Position)
17,679
23,120
The accompanying notes are an integral part of these Consolidated Financial Statements.
200
m
134
-1,444
-5,349
-60,859
826
-849
-573
Acquisition of marketable debt securities and similar investments
Proceeds from sales of marketable debt securities and similar investments
Repayment of financing of Daimler's commercial vehicles business
3,337
793
-2,622
-5,694
3,084
4,385
6,853
Cash and cash equivalents disposed of from the deconsolidation of Daimler's commercial vehicles business
Other
-5,489
27
-7
Cash flow from investing activities
Change in short-term financing liabilities
-3,453
-6,226
172
1,463
Additions to long-term financing liabilities
38,429
42,196
Repayment of long-term financing liabilities
Dividend paid to shareholders of Mercedes-Benz Group AG
-51,945
1,391
27
Proceeds from disposals of shareholdings and other business operations
5,404
27
5,997
6,910
10
1,808
2,524
1,234
191
Stefan Pierer who will be proposed to the General Meet-
ing 2023 for election for the first time meets and
strengthens the Supervisory Board's requirement profile.
The Supervisory Board is convinced that Stefan Pierer will
strongly support the Company's transformation with his
in-deph industry know-how and his expertise in product
and brand development.
The terms of office of the shareholder representatives on
the Supervisory Board of Mercedes-Benz Group AG end
at different times ("staggered board"). Every year, the
Annual General Meeting elects one or more shareholder
representatives. The staggered board opens up the pos-
sibility of adapting the composition of the Supervisory
Board more flexibly to a changing environment. In addi-
tion, it facilitates the search for suitable candidates,
because not all seats on the shareholder side have to be
filled at a single Annual General Meeting. The Nomination
Committee of the Supervisory Board regularly reviews
which mandates end at which point in time and whether
the relevant mandate holders are eligible and willing to
serve a further term of office, taking the aforementioned
criteria into account. In the search for new candidates,
the Nomination Committee relies on independent exter-
nal recruitment consultancy services.
Shareholders and
Annual General Meeting
The shareholders exercise their membership rights, in
particular their voting rights, at the Annual General
Meeting. Each share of Mercedes-Benz Group AG entitles
the holder to one vote. Documents and information
about the Annual General Meeting are available at
group.mercedes-benz.com/am.
As part of our comprehensive investor relations and pub-
lic relations work, we are in close contact with our share-
holders. We inform shareholders, financial analysts,
shareholder associations, the media, and the interested
public comprehensively and regularly about the situation
of the Company and inform them immediately of any sig-
nificant changes in the business. The Chairman of the
Supervisory Board is also prepared, within reason, to
hold discussions with investors on topics specific to the
Supervisory Board.
In addition to other communication channels, we make
intensive use of the website of the Company for our
investor relations work. All key information published in
the 2022 financial year, including annual, quarterly and
half-yearly financial reports, press releases, voting rights
notifications by major shareholders, presentations and
audio recordings from analyst and investor events and
conference calls, as well as the financial calendar, are
available at group.mercedes-benz.com/investors.
The dates of important publications, such as the annual
report and interim financial reports, as well as the dates
of the Annual General Meeting, the annual press confer-
ence and analysts' conferences are announced well in
advance in the financial calendar.
Annual Report 2022 Mercedes-Benz Group
Corporate Governance
1,175
4,488
3,656
26
52,300
49,786
25
8,053
9,585
28
10,655
24
12,204
98,989
85,072
727
1,238
29
3,980
-163
-264
in line other
Retrospective adjustment
163
264
56,190
income/loss
Balance at 1 January before
55,926
and in line total comprehensive
in line other comprehensive
income/loss before taxes
-163
-264
Retrospective adjustment
60,691
71,951
retrospective adjustment
47,111
56,190
Balance at 1 January after
Mercedes-Benz Group AG
2021
46,948
retrospective adjustment
264
60,691
163
264
income/loss
and in line total comprehensive
comprehensive income/loss before taxes
71,951
-264
retrospective adjustment
Balance at 31 December after
in line other
Retrospective adjustment in line other
-1,516
1,427
retrospective adjustment
Balance at 1 January before
2022
Retrospective adjustment
taxes and in line total comprehensive
income/loss
Retrospective adjustment in line other
comprehensive income/loss before
71,951
Balance at 31 December before
retrospective adjustment
55,926
-264
71,951
Equity attributable to shareholders of
Retrospective adjustment
Impact on the items of the Consolidated
Statement of Changes in Equity
Besides Argentina, Turkey also considered as in hyper-
inflation since the second quarter of 2022. The effects of
taking into account the devaluation of the monetary
balance sheet items of Turkish subsidiaries will therefore
be recognized in profit or loss starting in the second
quarter of 2022 and are included in the Consolidated
Statement of Income under other operating expenses or
other operating income.
To determine whether a country is to be considered as in
hyperinflation, the Mercedes-Benz Group refers to the
list published by the International Practices Task Force
(IPTF), the Center for Audit Quality and other relevant
international publications. If a country is in hyperinfla-
tion, IAS 29 Financial Reporting in Hyperinflationary
Economies has to be applied from the beginning of the
respective reporting period, i.e., from 1 January of the
respective reporting year.
Hyperinflation and changes of the reported effect of
inflation on equity
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
206
7.3102
1.1435
7.2582
1.0205
Fourth quarter
7.6260
1.1788
6.8982
1.0070
Third quarter
7.7840
1.2058
7.0427
1.0647
Second quarter
7.8080
1.2048
7.1212
1.1217
First quarter
during the respective period
Average exchange rates
With the first-time application of IAS 29 to the Argentine
subsidiaries as of 1 January 2018, the Mercedes-Benz
Group had recognized the effects from the consideration
of the inflation effect on the equity of the subsidiaries
directly in the retained earnings.
In accordance with IAS 29, the inflation effect can be
recognized directly in retained earnings as a separate
effect from the translation effect in accordance with IAS
21. However, if there is a close economic connection,
both effects can also be presented as a currency effect
in accordance with IAS 21. In this case, both effects are
presented on a net basis in other comprehensive income.
In connection with the first-time application of hyperin-
flation accounting also for Turkish subsidiaries and thus
a greater relevance of hyperinflation accounting, the
inflation effect on equity will be netted with the transla-
tion effect from the second quarter of 2022 with no ef-
fect in income reported in the difference amount from
the currency translation. In accordance with IAS 8, the
method is changed retrospectively.
Tables D.07 and D.08 show the changes in the items in
the Consolidated Statement of Changes in Equity as of
1 January and 31 December of the reporting period as a
result of the change in presentation. Table D.07 also
shows the impact on retained earnings and other re-
serves in the Consolidated Statement of Financial Posi-
tion as of 31 December 2021.
D.08
2021
2022
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Recognition of inflation effect
currency translation:
Difference amount from the
Other reserves:
retrospective adjustment
Balance at 31 December after
in line other
Total equity
retrospective adjustment
In millions of euros
Balance at 31 December before
Balance at 1 January after
in line other
Retrospective adjustment
retrospective adjustment
Balance at 1 January before
Derecognition of inflation effect
Retained earnings:
In millions of euros
Statement of Changes in Equity
Impact on the items of the Consolidated
D.07
207
Table D.09 shows the impact on the rows in the Consoli-
dated Statement of Comprehensive Income.
retrospective adjustment
Balance at 1 January after retrospective
adjustment
163
-1,353
27
101
297
3,120
Items that may be reclassified to profit/loss in the Statement of Income
in the future, before retrospective adjustment
Retrospective adjustment
2,103
2,149
27
101
Items that may be reclassified to profit/loss in the Statement of Income
in the future, after retrospective adjustment
2,130
2,250
7.1947
Other comprehensive income/loss after taxes, before retrospective adjustment
4,310
5,775
Retrospective adjustment
27
101
Other comprehensive income/loss after taxes, after retrospective adjustment
4,337
5,876
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG
after taxes, before retrospective adjustment
Retrospective adjustment
3,019
270
2021
2022
retrospective adjustment
73,167
62,248
retrospective adjustment
1,691
Balance at 31 December before
retrospective adjustment
73,167
Retrospective adjustment
in line other comprehensive
income/loss before taxes
and in line total comprehensive
income/loss
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG
after taxes, after retrospective adjustment
264
in line other
-264
208
Balance at 31 December after
retrospective adjustment
73,167
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
D.09
Impact on the lines of the Consolidated Statement of Comprehensive Income/Loss
In millions of euros
Gains/losses from currency translation before retrospective adjustment
Retrospective adjustment
Gains/losses from currency translation after retrospective adjustment
Retrospective adjustment
1,691
Total comprehensive income/loss before retrospective adjustment
Total comprehensive income/loss after retrospective adjustment
Sales of vehicles including a put option (an entity's
obligation to repurchase the asset at the customer's
request) are reported as operating leases if the cus-
tomer has a significant economic incentive to exercise
that right at contract inception. Otherwise, a sale with
a right of return is reported. The Mercedes-Benz Group
considers several factors when assessing whether the
customer has a significant economic incentive to exer-
cise his or her right. Among others, these are the rela-
tion between the agreed repurchase price and the ex-
pected future market value (at the time of repurchase)
of the asset, or historical return rates.
Arrangements such as when the Mercedes-Benz Group
provides customers with a guaranteed minimum resale
value that they receive on resale (residual-value guaran-
tee) do not constraint the customers in their ability to
direct the use of, and obtain substantially all of the
benefits from, the asset. At contract inception of a sale
with a residual-value guarantee, revenue therefore has
to be recognized, reduced by a potential compensation
payment to the customer (revenue deferral).
Under a contract manufacturing agreement, the
Mercedes-Benz Group sells assets to a third-party
manufacturer from which the Mercedes-Benz Group
buys back the manufactured products after completion
of the commissioned work. If the sale of the assets is
not accompanied by the transfer of control to the third-
party manufacturer, no revenue is recognized under
IFRS 15.
For certain products sold by the Group, it offers extend-
ed, separately priced warranties that go beyond the stat-
utory period, as well as service and maintenance con-
tracts. Usual for such contracts is an advance payment
or the payment of constant instalments over the term of
the contract. Revenue from these contracts is deferred
insofar as a customer has made an advance payment and
is generally recognized over the contract period in pro-
portion to the costs expected to be incurred based on
historical information. A future loss on these contracts is
recognized in the current financial year if the expected
costs for outstanding services under the contract exceed
unearned revenue.
210
264
Balance at 1 January after
comprehensive income/loss before taxes
-163
-264
Retrospective adjustment in line other
264
in line total comprehensive income/loss
1,427
in line other comprehensive
income/loss before taxes and
Balance at 31 December after
income/loss
and in line total comprehensive
Retrospective adjustment in line other
retrospective adjustment
Balance at 31 December before
Retrospective adjustment
62,248
73,167
Balance at 1 January before
retrospective adjustment
- Sales of vehicles by which the Mercedes-Benz Group
is obliged to repurchase the vehicles in the future are
accounted for as operating leases. This also applies to
a call option that grants the Mercedes-Benz Group the
right to repurchase.
Revenue recognition from the sale of vehicles for which
the Group enters into a repurchase obligation is depend-
ent on the form of the repurchase agreement:
Dealers may finance their vehicle inventory by means of
dealer inventory financing provided by Mercedes-Benz
Mobility. Furthermore, end customers may be credit
financed by Mercedes-Benz Mobility. Receivables from
sales financing with customers and dealers are present-
ed in receivables from financial services. Further infor-
mation is provided in Note 15.
Generally, payment from sales of vehicles, spare parts
and other related products is made when the customer
obtains control of these products.
4,342
5,700
27
101
4,369
5,801
19,119
29,171
27
101
19,146
29,272
Retrospective adjustment
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG, before retrospective adjustment
28,706
Retrospective adjustment
27
101
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG,
after retrospective adjustment
18,870
28,807
209
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Accounting policies
Revenue recognition
Revenue from sales of vehicles, spare parts and other
related products is recognized when control of the goods
is transferred to the customer. This generally occurs at
the time the customer takes possession of the products.
18,843
1.1326
€1 =
1.0666
Mercedes-Benz
shareholders of
attributable to
Equity
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
financial
instruments
Derivative
67,695
-241
2,161
-9
9
201
The accompanying notes are an integral part of these Consolidated Financial Statements.
11,718
3,070
-5
-5,349
-434
470
17,109
55
-1,383
-489
7.3582
3,991
14,501
202
Non-
Treasury
share
Group AG
(restated)
-502
-16,253
-661
-64
-
-1,810
-366
-1,444
29,272
465
28,807
-866
-778
-778
1,691
362
75
6,579
-1,228
Balance at 1 January 2021 (restated)
Net profit
23,396
390
23,006
62,248
1,557
60,691
269
In millions of euros
Total
equity
(restated)
controlling
interests
6,654
-16,755
55,926
3,070
Retained
Other reserves
Balance at 31 December 2022
Other
Issue and disposal of treasury shares
Acquisition of treasury shares
Changes in the consolidated group
Dividends
Total comprehensive income/loss
Deferred taxes on other comprehensive income
Other comprehensive income/loss before taxes
Net profit
Balance at 1 January 2022 (restated)
Balance at 31 December 2021 (restated)
Other
Changes in ownership interests in subsidiaries
Issue and disposal of treasury shares
Daimler's commercial vehicle business
Changes from the spin-off and hive-down of
Dividends
Total comprehensive income/loss
Deferred taxes on other comprehensive income
Other comprehensive income/loss before taxes
Net profit
Balance at 1 January 2021 (restated)
In millions of euros
D.05
Consolidated Statement of
Changes in Equity
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Currency
Equity
instruments/
Share
capital
Capital
202
1,691
55,926
11,723
3,070
-47
89
172
-16,253
-1,444
43
3,044
26,586
-18
11,723
-1,122
3,044
4,702
23,006
206
-1,353
46,948
11,551
3,070
instruments
(restated)
debt
translation
earnings
(restated)
reserves
61
-48
470
-48
The Consolidated Statement of Income is presented
using the cost-of-sales method.
Presentation in the Consolidated Statement of Financial
Position differentiates between current and non-current
assets and liabilities. Assets and liabilities are generally
classified as current if they are expected to be realized
or settled within one year. Deferred tax assets and liabili-
ties as well as assets and provisions for pensions and
similar obligations are presented as non-current items.
Presentation
In addition, other standards were published which are
not expected to have any significant impact on the Con-
solidated Financial Statements.
In September 2022, the IASB published Lease Liability
in a Sale and Leaseback Transaction (Amendments to
IFRS 16). The amendments specify how the subsequent
measurement of the right-of-use asset and the lease
liability for a seller-lessee in a sale and leaseback trans-
action is to be performed in accordance with IFRS 16.
The changes are mandatory for years beginning on or
after 1 January 2024. Earlier application is permitted,
but not planned in the Mercedes-Benz Group. No signifi-
cant effects on the profitability, liquidity and capital
resources, and financial position are expected.
IFRS issued, not yet EU endorsed and not yet adopted
in the reporting period
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
203
In May 2017, the IASB issued the standard IFRS 17
Insurance Contracts. IFRS 17 replaces the currently
applicable IFRS 4. It establishes more transparency and
comparability with regard to the recognition, measure-
ment, presentation and disclosure of insurance contracts
with the insurer. The application of IFRS 17 is mandatory
for reporting periods beginning on or after 1 January
2023. Early adoption is permitted but the Mercedes-Benz
Group has not done so. The Mercedes-Benz Group cur-
rently does not expect any material impacts on the
Group's profitability, liquidity and capital resources, and
financial position due to the application of IFRS 17.
IFRS issued, EU endorsed and not yet adopted in the
reporting period
New standards and interpretations to be applied in 2022
had no material impact on the Consolidated Financial
Statements in the reporting year.
IFRS issued, EU endorsed and adopted in the
reporting period
The Consolidated Financial Statements of Mercedes-
Benz Group AG and its subsidiaries ("the Mercedes-Benz
Group" or "the Group") as of 31 December 2022 have
been prepared in accordance with Section 315e of the
German Commercial Code (HGB) and comply with the
International Financial Reporting Standards (IFRS) as
adopted by the European Union (EU) as of 31 December
2022.
Applied IFRS
Basis of preparation
The Board of Management of Mercedes-Benz Group AG
authorized the Consolidated Financial Statements for
publication on 13 March 2023.
The Consolidated Financial Statements of Mercedes-
Benz Group AG are presented in euros (€). Unless other-
wise stated, all amounts are stated in millions of euros.
All figures shown are rounded.
Mercedes-Benz Group AG is a stock corporation orga-
nized under the laws of the Federal Republic of Germany.
The Company is entered in the Commercial Register of
the Stuttgart District Court under No. HRB 19360 and its
registered office is located at Mercedesstraße 120, 70372
Stuttgart, Germany.
Following approval by the Extraordinary General Meeting
on 1 October 2021, the former Daimler AG was renamed
Mercedes-Benz Group AG effective 29 January 2022. The
commercial register entry took place on 1 February 2022.
The Mercedes-Benz Group is a vehicle manufacturer with
a worldwide product range of premium cars. Its product
portfolio is rounded off by a range of financial services
and mobility services. Mercedes-Benz Group AG is the
parent company of the Mercedes-Benz Group.
General information
1. Significant accounting policies
Consolidated Financial Statements
Notes to the
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
202
Balance at 31 December 2022
86,540
Principles of consolidation
The Consolidated Financial Statements include the
financial statements of Mercedes-Benz Group AG and
the financial statements of all subsidiaries, including
structured entities, which are directly or indirectly con-
trolled by Mercedes-Benz Group AG. Control exists if the
parent company has the power of decision over a sub-
sidiary based on voting rights or other rights, if it partici-
pates in positive and negative variable returns from a
subsidiary, and if it can affect these returns by its power
of decision.
Structured entities are entities which have been de-
signed so that voting or similar rights are not relevant
in deciding who controls the entity. This is the case for
example if voting rights relate to administrative tasks
only and the relevant activities are directed by means of
contractual arrangements.
The financial statements of consolidated subsidiaries
which are included in the Consolidated Financial State-
ments are generally prepared as of the reporting date of
the Consolidated Financial Statements. The financial
statements of Mercedes-Benz Group AG and its compa-
nies included in the Consolidated Financial Statements
are prepared using uniform recognition and measure-
ment principles. All intra-Group assets and liabilities,
equity, income and expenses as well as cash flows from
transactions between consolidated entities are entirely
eliminated in the course of the consolidation process.
€1 =
€1 =
€1 =
-48
USD
CNY
USD
2021
2022
on 31 December
Average exchange rate
Exchange rates
D.06
D.06.
1,125
The exchange rates of the US dollar and the Chinese
renminbi - the most significant foreign currencies for the
Mercedes-Benz Group - developed as shown in table
Foreign currency translation
Transactions in foreign currency are translated at the
relevant foreign exchange rates prevailing at the trans-
action date. In subsequent periods, assets and liabilities
denominated in foreign currency are translated using
period-end exchange rates; gains and losses from this
measurement are recognized in profit and loss (except
for gains and losses resulting from the translation of
equity instruments measured at fair value through other
comprehensive income, which are recognized in other
comprehensive income/loss).
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
205
Subsidiaries, associated companies, joint ventures and
joint operations whose business is non-active or of low
volume and that individually and in sum are not material
for the Group and the fair presentation of profitability,
liquidity and capital resources, and financial position are
generally measured at amortized cost in the Consolidat-
ed Financial Statements.
Entities measured at amortized cost
If the financial statements of associated companies, joint
ventures or joint operations should not be available in
good time, the Group's proportionate share of the results
of operations is included in the Mercedes-Benz Group's
Consolidated Financial Statements with a one to three-
month time lag taking into account significant events or
transactions.
For entities over which the Mercedes-Benz Group has
joint control together with a partner (joint arrangements),
it is necessary to differentiate between whether a joint
operation or a joint venture exists. In a joint venture, the
parties that have joint control of the arrangement have
rights to the net assets of the arrangement. For joint
ventures, the equity method has to be applied. A joint
operation exists when the jointly controlling parties have
direct rights to the assets and obligations for the liabili-
ties. In this case, the prorated assets and liabilities and
the prorated income and expenses are generally to be
recognized (proportionate consolidation).
An associated company is an entity over which the Group
has significant influence. Significant influence is the
power to participate in the financial and operating policy
decisions of the investee. Associated companies are
generally accounted for using the equity method.
Investments in associated companies, joint ventures
or joint operations
Changes in equity interests in subsidiaries that reduce or
increase the Mercedes-Benz Group's percentage owner-
ship without a change of control are accounted for as
equity transactions between owners. If the Group loses
control of a subsidiary, the difference between the carry-
ing amounts of the transferred assets and liabilities and
the consideration received is generally reported in other
operating income or expense.
Business combinations are accounted for using the pur-
chase method. In connection with obtaining control,
non-controlling interest in the acquiree is in principle
recognized at the proportionate share of the acquiree's
identifiable assets, which are measured at fair value.
Business combinations and changes in equity
interests
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
204
Assets and liabilities of foreign companies for which the
functional currency is not the euro are translated into
euros using period-end exchange rates. The translation
adjustments are presented in other comprehensive in-
come/loss. The components of equity are translated
using historical rates. The statements of income and
cash flows are translated into euros using the quarterly
average exchange rates during the respective periods.
85,415
CNY
Other
Net profit
14,809
308
14,501
Balance at 1 January 2022 (restated)
73,167
1,216
71,951
-661
Acquisition of treasury shares
Changes from the spin-off and hive-down of
Daimler's commercial vehicle business
Dividends
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
Total comprehensive income/loss
Balance at 31 December 2021 (restated)
2,425
73,167
71,951
Other
27
49
-22
Changes in ownership interests in subsidiaries
185
13
172
Issue and disposal of treasury shares
48
48
48
1,012
1,216
6,397
Acquisition of treasury shares
6,365
-32
-57
-52
Issue and disposal of treasury shares
Acquisition of treasury shares
Changes in the consolidated group
48
-
48
48
-48
-48
-48
-29
2
-
-700
-29
-2,028
-2,028
Other comprehensive income/loss before taxes
Deferred taxes on other comprehensive income
1,725
18,870
-55
19,146
Total comprehensive income/loss
-5,349
-340
276
Dividends
-5,689
Sale and leaseback
In a sale and leaseback transaction, the requirements of
IFRS 15 are applied to ascertain whether the transfer of
an asset has to be accounted for as a sale. If the transfer
of an asset does not satisfy the requirements of IFRS 15
to be accounted for as a sale of the asset, the trans-
ferred asset is still recognized and a financial liability is
recognized equal to the transfer proceeds in accordance
with IFRS 9.
If the transfer of an asset is accounted for as a sale, the
lessee accounting principles described above apply to
those sold assets if the Mercedes-Benz Group leases
them back from the buyer. Accordingly, only the amount
of any gain or loss that relates to the rights transferred
to the buyer-lessor is recognized.
The Mercedes-Benz Group as lessor
Sales of vehicles by which the Mercedes-Benz Group is
obliged to repurchase the vehicles in the future are ac-
counted for as operating leases. This also applies to a
call option that only grants the Mercedes-Benz Group
the right to repurchase.
For operating leases the economic ownership of the
vehicle remains at the Mercedes-Benz Group. Additional-
ly, an operating lease may have to be reported with sales
of vehicles for which the Group enters into a repurchase
obligation:
216
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
- Sales of vehicles including a put option (an entity's
obligation to repurchase the asset at the customer's
request) are reported as operating leases if the cus-
tomer has a significant economic incentive to exercise
that right. Otherwise, a sale with a right of return is re-
ported. The Mercedes-Benz Group considers several
factors when assessing whether a customer has a sig-
nificant economic incentive to exercise his or her right
at contract inception. Among others, these are the re-
lation between the repurchase price and the expected
future market value (at the time of repurchase) of the
asset, or historical return rates.
As part of the residual-value management process, es-
pecially for operating lease contracts, certain assump-
tions are regularly made at local and corporate levels
regarding the expected level of prices, based upon which
the cars to be returned in the leasing business are evalu-
ated. If changing market developments lead to a nega-
tive deviation from assumptions, there is a risk of lower
residual values of used cars. Depending on the region
and the current market situation, the risk-mitigation
measures taken generally include continuous market
monitoring as well as, if required, price-setting strategies
or sales-promotion measures designed to regulate vehi-
cle inventories. Market forecasts are verified by regular
comparisons of internal and external sources, and, if
required, the determination of residual values adjusted
and further developed with regard to methods, process-
es and systems.
In the case of accounting as an operating lease, these
vehicles are capitalized at the (amortized) cost of pro-
duction, presented within the line item equipment on
operating leases and depreciated over the contract term
on a straight-line basis with consideration of the ex-
pected residual values. Changes in the expected residual
values lead either to prospective adjustments of the
scheduled depreciation or, if necessary, to an impair-
ment loss. The vehicles are allocated to the segment
which bears substantially all of the residual-value risk.
Based on the risks and rewards associated with a leased
asset, it is assessed whether economic ownership of the
leased asset is transferred to the lessee (so-called fi-
nance leases) or remains with the lessor (so-called oper-
ating leases).
In the subsequent measurement of a lease liability, the
carrying amount is increased to reflect interest on the
lease liability and reduced to reflect the lease payments
made. According to IFRS 16, the depreciation of right-of-
use assets is recognized within functional costs. The
interest due on the lease liability is a component of in-
terest expense. Extension and termination options are
part of a number of leases particularly of real estate.
Such contract terms offer the Group the greatest possi-
ble flexibility. In determining the lease term, all facts and
circumstances offering economic incentives for exercis-
ing extension options or not exercising termination op-
tions are taken into account. In determining the lease
term, those options are only considered if their exercise
is reasonably certain.
Lease payments are discounted at the rate implicit in the
lease if that rate can readily be determined. Otherwise,
discounting is at the incremental borrowing rate. The
Mercedes-Benz Group generally applies the incremental
borrowing rate. This incremental borrowing rate as a risk-
adjusted interest rate is derived on a maturity- and cur-
rency specific basis. As the cash-flow pattern of the
reference interest rates (bullet bonds) does not corre-
spond to the cash-flow pattern of a lease contract (annu-
ity), a duration adjustment is used in order to account for
that difference.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
215
nents.
The Mercedes-Benz Group generally also applies the
option for contracts comprising lease components as
well as non-lease components not to split these compo-
the exercise price of purchase options, when exercise
is estimated to be reasonably certain, and
amounts expected to be payable under residual-value
guarantees;
variable lease payments linked to an index or interest
rate;
fixed payments including de facto fixed payments, less
lease incentives receivables from the lessor;
-
Lease liabilities, which are assigned to financing liabili-
ties, are measured initially at the present value of the
lease payments still to be made. The lease liabilities
include the following lease payments:
Right-of-use assets, which are included under property,
plant and equipment, are initially recognized at cost.
The cost of a right-of-use asset comprises the amount of
the initial measurement of the lease liability, any lease
payments made at or before the commencement date,
any initial direct costs and an estimate of costs to be
incurred in dismantling or removing the underlying asset.
All leasing incentives already received from the lessor
are deducted.
Operating leases also relate to vehicles, primarily Group
products that Mercedes-Benz Mobility acquires from
non-Group dealers or other third parties and leases to
end customers. These vehicles are presented at (amor-
tized) cost of acquisition under leased equipment in the
Mercedes-Benz Mobility segment. If these vehicles are
Group products and are subsidized and these subsidies
are passed on in the lease agreement with the external
customer, the subsidies are deducted from the acquisi-
tion cost. After revenue is received from the sale to in-
dependent dealers, these Group products generate rev-
enue from lease payments and subsequent resale on the
basis of the separate leasing contracts. The revenue
received from the sale of Group products to dealers is
estimated by the Group as being of the magnitude of the
respective addition to leased equipment at Mercedes-
Benz Mobility. In 2022, additions to leased equipment
from these vehicles at Mercedes-Benz Mobility amount-
ed to approximately €9 billion (2021: approximately
€10 billion).
A right-of-use asset is subsequently measured at cost
less any accumulated depreciation and, if necessary, any
accumulated impairment. If the lease transfers owner-
ship of the underlying asset to the lessee at the end of
the lease term or if the cost of the right-of-use asset
reflects that the lessee will exercise a purchase option,
the right-of-use asset is depreciated to the end of the
useful life of the underlying asset. Otherwise, the right-
of-use asset is depreciated to the end of the lease term.
contractual penalties for the termination of a lease if
the lease term reflects the exercise of a termination
option.
Equity-method investments
The leased equipment of the Mercedes-Benz Mobility
segment also includes commercial vehicles (produced
by Daimler Truck) which had been acquired from external
dealers or other third parties not related to the
Mercedes-Benz Group prior to the spin-off and hive-
down of the Daimler commercial vehicle business.
Mercedes-Benz Mobility usually receives a residual-value
guarantee from Daimler Truck for this leased equipment
in connection with the obligation to return the respective
commercial vehicles to Daimler Truck. Such leased
equipment is depreciated over the contractual term on
a straight-line basis to the guaranteed residual value.
The residual-value guarantee does not affect classifica-
tion as an operating lease as Daimler Truck is a related
party to Mercedes-Benz Mobility after the spin-off.
220
The Group classifies non-current assets or disposal
groups as held for distribution if it has committed to
distribute non-current assets or disposal groups and an
active plan for the execution of the sale has been decid-
ed on and started by the responsible management level
and is most likely to result in a sale.
The Mercedes-Benz Group makes use of the option to
disclose the cash flows from discontinued operations not
separately in the Consolidated Statement of Cash Flows,
but in the Notes to the Consolidated Financial State-
ments.
In the case of manufactured inventories and work in
progress, manufacturing cost also includes production
overheads based on normal capacity.
Inventories are measured at the lower of acquisition or
manufacturing cost and net realizable value. The net
realizable value is the expected sales price less estimat-
ed costs of completion and estimated costs to sell. The
acquisition or manufacturing costs of inventories are
generally based on the specific identification method
and include costs incurred in acquiring the inventories
and bringing them to their present location and condi-
tion. Acquisition or manufacturing costs for large num-
bers of inventories that are interchangeable are allocat-
ed under the average-cost formula.
Inventories
The Group classifies non-current assets or disposal
groups as held for sale if the carrying amount will be
recovered principally through an extremely likely sale
transaction rather than through continuing use. In this
case, the assets or disposal groups are no longer depre-
ciated as planned, but are measured at the lower of car-
rying amount and fair value less costs to sell. Immediate-
ly before classification as held for sale, it is assessed if
the assets are impaired based on the applicable individ-
ual regulations. If fair value less costs to sell subse-
quently increases, any impairment loss previously recog-
nized is reversed. This reversal is restricted to the im-
pairment loss previously recognized for the assets or
disposal group concerned.
area.
Discontinued operations and non-current assets held
for distribution or sale and disposal groups
The Group reports discontinued operations if part of a
company is held for distribution or sale or has already
been disposed of and the part of a company represents
a separate significant business or geographical business
Gains or losses (to be eliminated) from transactions with
companies accounted for using the equity method are
recognized through profit and loss with corresponding
adjustments of the investments' carrying amounts. Gains
or losses from the contribution of interests in subsidiar-
ies to investments which are measured using the equity
method are also subject to elimination adjustments to
the carrying amount of the investment.
The Mercedes-Benz Group reviews on each reporting
date whether there is any objective indication of impair-
ments or impairment reversals of equity-method invest-
ments. If such indications exist, the Group determines
the impairment loss or reversal to be recognized. If the
carrying amount exceeds the recoverable amount of an
investment, the carrying amount is written down to the
recoverable amount. The recoverable amount is the
greater of fair value less costs to sell and value in use.
An impairment reversal is carried out if there is objective
evidence for an impairment reversal. If such an assess-
ment is made, the recoverable amount is remeasured. An
impairment reversal is recognized to the extent that the
recoverable amount has increased subsequent to the
impairment and is limited to the amount by which an
asset has been impaired.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
219
In the case of finance leases, the Group presents the
receivables under receivables from financial services in
an amount corresponding to the net investment of the
lease agreements. The net investment of a lease agree-
ment is the gross investment (future lease payments and
non-guaranteed residual value) discounted at the rate
upon which the lease agreement is based.
On the date of acquisition, a positive difference between
cost of acquisition and the Mercedes-Benz Group's share
of the fair values of the identifiable assets and liabilities
of the associated company or joint venture is determined
and recognized as investor level goodwill. The goodwill
is included in the carrying amount of the equity-method
investment. If an equity interest in an existing associated
company is increased without change in significant
influence, goodwill is determined only for the additional-
ly acquired interest; the previous investment is not re-
measured at fair value.
The Mercedes-Benz Group applies both recognition ex-
emptions for leases with a lease term of twelve months
or less (short-term leases) and for leases for which the
underlying asset is of low value, not to recognize a right-
of-use asset and a lease liability. The lease payments
associated with those leases are generally recognized as
an expense on a straight-line basis over the lease term.
In addition, sensitivity analyses are conducted. These
sensitivity analyses show for the cash-generating units
Mercedes-Benz Cars and Mercedes-Benz Vans that
even in the case of reasonably possible changes in key
assumptions (e.g. products' profitability, sales and
weighted average cost of capital) compared to the origi-
nal planning, no need for impairment exists. For the
cash-generating unit Mercedes-Benz Mobility, these
sensitivity analyses show that even in the case of rea-
sonably possible changes in operational key assumptions
(e.g. profitability and portfolio development) compared
to the original planning, no need for impairment exists.
In the event of the cost of equity increasing by around
one percentage point in addition to such a change in
operational key assumptions, the recoverable amount
would correspond to the carrying amount.
Value in use is measured by discounting expected
future cash flows from the continuing use of the cash-
generating units using a risk-adjusted interest rate.
Future cash flows are determined on the basis of the
long-term planning, which is approved by management
and which is valid at the date when the impairment test
is conducted. This planning, which covers the period up
to and including 2027, is based on assumptions, includ-
ing those regarding future market shares, the general
development of respective markets as well as the prod-
ucts' profitability, taking into consideration the effects of
the transformation of the automotive industry. Further-
more, in determining value in use, a risk assessment is
performed, which includes for example market risks and
risks related to the legal and political framework. The
planning assumptions are checked for plausibility with
regard to the historical development as well as external
sources of information. The rounded risk-adjusted inter-
est rates used to discount cash flows, which are calcu-
lated for each cash-generating unit, are 9% (2021: 8%)
after taxes for the cash-generating units of the automo-
tive business. For the cash-generating unit Mercedes-
Benz Mobility, a risk-adjusted interest rate of 10% (2021:
9%) after taxes is applied. Whereas the discount rate for
the cash-generating unit Mercedes-Benz Mobility repre-
sents the cost of equity, the risk-adjusted interest rate
for the cash-generating units of the automotive business
is based on the weighted average cost of capital (WACC).
This is calculated based on the capital asset pricing
model (CAPM), taking into account current market ex-
pectations. In calculating the risk-adjusted interest rate
for impairment-test purposes, specific peer group infor-
mation is used for beta factors, capital-structure data
and cost of debt. Periods not covered by the forecast are
taken into account by recognizing a residual value (ter-
minal value), which does not include any growth rates. In
line with the detailed planning period, the derivation of
the terminal value also considers assumptions regarding
the impacts of the transformation of the automotive
industry as well as possible regulatory changes, e.g. in
connection with sustainability aspects.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
218
The recoverable amount is the higher of fair value less
costs of disposal and value in use. For cash-generating
units, the Mercedes-Benz Group in a first step deter-
mines the respective recoverable amount as value in use
and compares it with the respective carrying amount
(including goodwill). If value in use is lower than the
carrying amount, fair value less costs of disposal is addi-
tionally calculated to determine the recoverable amount.
Goodwill and other intangible assets with indefinite use-
ful lives are tested at least annually for impairment. This
takes place at the level of the cash-generating units,
which basically correspond to the segments. If the carry-
ing amount of an asset or of a cash-generating unit ex-
ceeds the recoverable amount, an impairment loss is
recognized for the difference.
An assessment is made at each reporting date as to
whether there is any indication that previously recog-
nized impairment losses may no longer exist or may be
reversed. If this is the case, the Mercedes-Benz Group
records a partial or entire reversal of the impairment; the
carrying amount is thereby increased to the recoverable
amount. However, the increased carrying amount may
not exceed the carrying amount that would have been
determined (net of scheduled depreciation) if no impair-
ment loss had been recognized in prior years.
Impairment of non-current non-financial assets
The Mercedes-Benz Group assesses at each reporting
date whether there is an indication that an asset may be
impaired or whether there is an indication that a previ-
ously recognized impairment loss may be reversed. If
such indication exists, the Mercedes-Benz Group esti-
mates the recoverable amount of the asset. The recover-
able amount is determined for each individual asset
unless the asset generates cash inflows that are not
largely independent of those from other assets or groups
of assets (cash-generating units).
Accounting for and classification of a sublease depend
on whether the contracts were concluded before or after
the legal spin-off and hive-down of Daimler's commercial
vehicle business. The leases that were concluded before
the legal spin-off and hive-down are continued as oper-
ating leases. The head lease is presented under leased
equipment as a right of use, which was recognized at fair
value at the spin-off date and subsequently depreciated
on a straight-line basis. In addition, a residual-value re-
ceivable from the companies of the Daimler Truck Group
is recognized. However, the leasing contracts concluded
after the legal spin-off and hive-down are classified and
accounted for as finance leases. The net investment in
the lease corresponds to the right-of-use asset from the
head lease. In addition to the finance lease, Mercedes-
Benz Mobility recognizes a residual-value receivable
from the Daimler Truck Group in the amount of the guar-
anteed residual value. The head lease is not recorded
separately.
Additionally, Mercedes-Benz Mobility will continue the
leasing and sales-financing business for Daimler Truck's
commercial vehicles in some markets. To this end,
Mercedes-Benz Mobility acquires these vehicles from
Daimler Truck and leases them to the end customers.
Insofar as a mandatory vehicle return to Daimler Truck
has been agreed, there is a rental contract (head lease)
between Mercedes-Benz Mobility and Daimler Truck.
The contract between Mercedes-Benz Mobility and the
end customer constitutes a sublease in this respect.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
217
The initial recognition of interests in investments ac-
counted for using the equity method is generally made
with their acquisition costs. If the Group loses control
of a subsidiary and subsequently presents it at equity,
the fair value of the retained shares represents the ac-
quisition cost.
The Mercedes-Benz Group as a lessee recognizes for
generally all lease contracts right-of-use assets as well
as lease liabilities for the outstanding lease payments.
Property, plant and equipment are measured at acquisi-
tion or manufacturing costs less accumulated deprecia-
tion. If necessary, accumulated impairment losses are
recognized.
Leases include all contracts that transfer the right to use
a specified asset for a stated period of time in exchange
for consideration, even if the transfer of the right to use
such asset is not explicitly described in the contract. The
Group is a lessee mainly of real estate properties and a
lessor of its products.
212
Expense from the compounding of interest on provisions
for other risks is presented in other financial in-
come/expense.
Interest income and expense and gains or losses from
derivative financial instruments related to the financial
services business are disclosed under revenue and cost
of sales respectively.
Interest income and interest expense include interest
income from investments in securities and from cash and
cash equivalents as well as interest expense from liabili-
ties. Furthermore, interest and changes in fair values
related to interest-rate hedging activities as well as in-
come and expense resulting from the allocation of pre-
miums and discounts are included. The interest com-
ponents of defined benefit pension commitments and
similar obligations, as well as of the plan assets available
to cover these obligations, and interest on supplemen-
tary income-tax payments or reimbursements are also
presented in this line item.
Interest income and interest expense
Furthermore, income and expenses from equity interests
are included in other financial income/expense if such
income or expenses are not presented under gains/
losses on equity-method investments.
Other financial income/expense, includes all income and
expense from financial transactions which are included
neither in interest income nor in interest expense, and
which for Mercedes-Benz Mobility are included neither in
revenue nor in cost of sales.
Other financial income/expense
Gains/losses on equity-method investments
This item includes all income and expenses in connec-
tion with investments accounted for using the equity
method. In addition to the prorated profits and losses
from financial investments, it also includes profits and
losses resulting from the sale of equity interests or the
remeasurement of equity interests following a loss of
significant influence or joint control. The Mercedes-Benz
Group's share of dilution gains and losses resulting from
the Group's non-participation or under-proportionate
participation in capital measures of companies in which
shares are held and are accounted for using the equity
method are also included in gains/losses on equity-
method investments. This item also includes impairment
losses and/or gains on the reversal of such impairments
of equity-method investments.
Government grants related to assets are deducted from
the carrying amount of the asset and are recognized
in earnings over the life of a depreciable asset as a re-
duced depreciation expense. Government grants which
compensate the Group for expenses are recognized as
other operating income in the same period as the ex-
penses themselves. Cash-effective government grants
are shown in cash flow from operating activities.
Government grants
Borrowing costs are expensed as incurred unless they
are directly attributable to the acquisition, construction
or production of a qualifying asset and are therefore part
of the acquisition or manufacturing costs of that asset.
Depreciation of the capitalized borrowing costs is pre-
sented within cost of sales.
Borrowing costs
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
211
Research and non-capitalized development costs
Expenditure for research and development that does
not meet the conditions for capitalization according
to IAS 38 Intangible Assets is expensed as incurred.
- If subsidised leasing fees are agreed upon in connec-
tion with finance leases, revenue from the sale of a ve-
hicle is reduced by the amount of the interest incen-
tive granted.
When loans are issued below market rates, related
receivables are recognized at present value (using
market rates) and revenue is reduced for the interest
incentive granted.
Revenue is recognized net of sales reductions such as
cash discounts and sales incentives granted.
-
The Mercedes-Benz Group uses a variety of sales promo-
tion programmes dependent on various market condi-
tions in individual countries as well as the respective
product life cycles and product-related factors (such as
amounts of discounts offered by competitors, excess
industry production capacity, the intensity of market
competition, and consumer demand for the products).
These programmes comprise cash offers to dealers and
customers as well as lease subsidies or loans at reduced
interest rates which are reported as follows:
Revenue also includes revenue from the rental and leas-
ing business as well as interest from the financial ser-
vices business at Mercedes-Benz Mobility. Revenue gen-
erated from operating leases is recognized on a straight-
line basis over the periods of the contracts. In addition,
sales revenue is generated at the end of lease contracts
from the subsequent sale of the vehicles. Revenue from
receivables from financial services is recognized using
the effective-interest method.
The Mercedes-Benz Group does not adjust the promised
amount of consideration for the effects of a significant
financing component if at contract inception it is ex-
pected that the period between the transfer of a prom-
ised asset or service to a customer and payment by the
customer will be no longer than one year.
The incremental cost of obtaining contracts is recognized
as an expense when incurred if the amortization period
would be no longer than one year.
Depending on the sales model, vehicles may be initially
sold to non-Group dealers. Subsequently an end cus-
tomer can decide to enter into a leasing contract with
Mercedes-Benz Mobility regarding such a vehicle. The
vehicle is therefore sold by the non-Group dealer to
Mercedes-Benz Mobility and, in a separate transaction, a
leasing contract is entered into with the customer. When
control of the vehicle is transferred to the non-Group
dealer, the Mercedes-Benz Group recognizes revenue
from the sale of the vehicle.
For multiple-element arrangements, such as when vehi-
cles are sold with free or reduced-in-price maintenance
contracts or with free online services, the Group general-
ly allocates revenue to the various elements based on
their estimated relative stand-alone selling prices. To
determine stand-alone selling prices, the Mercedes-Benz
Group primarily uses price lists with consideration of
average price reductions granted to its customers.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
The Mercedes-Benz Group as lessee
Income taxes
Changes in deferred tax assets and liabilities are general-
ly recognized through profit and loss in deferred taxes in
the Consolidated Statement of Income, except for
changes recognized in other comprehensive income/loss
or directly in equity.
Leasing
This change in estimate has been applied since 1 January
2021 and led to a positive impact on earnings before
interest and taxes (EBIT) of €0.8 billion in 2021. The
effect is mainly included in cost of sales and is almost
exclusively attributable to the reportable segment
Mercedes-Benz Cars and Mercedes-Benz Vans. The ef-
fect for the year 2022 is €0.3 billion.
The Group's automotive businesses are subject to global
competitive pressure and technological change. Our
continuous efforts to increase efficiency include improv-
ing the utilization of our production facilities. Within the
context of the regular review of useful lives, those for
scheduled depreciation of property, plant and equipment
were reassessed and partially extended at the end of
2020.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
3 to 30 years
5 to 25 years
Technical equipment and machinery
10 to 50 years
Useful lives of property, plant and equipment
Buildings and site improvements
214
D.10
Depreciable property, plant and equipment are written
down by scheduled depreciation over the corresponding
useful life, generally on a straight-line basis. The useful
lives of property, plant and equipment are shown in table
D.10.
The costs of internally produced equipment and facilities
include all direct costs and allocable overheads. Acquisi-
tion or manufacturing costs include the estimated costs,
if any, of dismantling and removing the item and restor-
ing the site.
Property, plant and equipment
With acquisitions of businesses, goodwill represents the
excess of the consideration transferred over the fair
values assigned to the identifiable assets proportionally
acquired and liabilities assumed. Goodwill is accounted
for at the subsidiaries in the functional currency of those
subsidiaries.
As part of the periodic review of the useful lives of intan-
gible assets, the planned transition to fully electric vehi-
cles made it necessary to reassess the useful lives of the
capitalized development expenditure as of year-end
2021 and to adjust them for individual vehicle projects.
This change in estimates has been applied from 1 January
2022. The positive effect on earnings before interest and
taxes (EBIT) amounted to €0.2 billion in 2022. A positive
effect on EBIT of €0.2 billion is also expected for 2023.
Other intangible assets with finite useful lives are gener-
ally amortized on a straight-line basis over their useful
lives (three to ten years). The amortization period
for intangible assets with finite useful lives is reviewed
at least at each year-end. Possible impacts from the
transformation of the automotive industry, such as the
transition to electric drive systems, are also taken into
account. Changes in expected useful lives are treated
as changes in accounting estimates. The amortization
expense on intangible assets with finite useful lives is
recorded in functional costs.
Development costs for vehicles and components are
capitalized if the recognition criteria according to IAS 38
are met. Subsequent to initial recognition, the asset is
carried at acquisition or manufacturing costs less accu-
mulated amortization and accumulated impairment loss-
es. Capitalized development costs include all direct costs
and pro-rata allocable overheads. Capitalized develop-
ment costs for vehicles and vehicle components are
amortized on a straight-line basis over the expected
product life cycle (a maximum of ten years). Amortization
of capitalized development costs is an element of manu-
facturing costs and is allocated to those vehicles and
components by which they were generated and is in-
cluded in cost of sales when the inventory (vehicles) is
sold.
Intangible assets with indefinite useful lives are reviewed
annually to determine whether indefinite-life assessment
continues to be appropriate. If not, the change in the
useful-life assessment from indefinite to finite is made
on a prospective basis.
Intangible assets are measured at acquisition or manu-
facturing cost less accumulated amortization. If neces-
sary, accumulated impairment losses are recognized.
Intangible assets
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
213
Basic earnings per share are calculated by dividing profit
attributable to shareholders of Mercedes-Benz Group AG
by the weighted average number of shares outstanding.
As nothing occurred in the years 2022 and 2021 that
resulted in any dilution, diluted earnings per share were
the same as basic earnings per share in those years.
Earnings per share
For the calculation of deferred tax assets, assumptions
have to be made regarding future taxable income and
the time of realization of the deferred tax assets. In this
context, the Mercedes-Benz Group takes into considera-
tion, among other things, the projected earnings from
business activities, the effects on earnings of the rever-
sal of taxable temporary differences, and realizable tax
strategies. On each reporting date, the Mercedes-Benz
Group carries out impairment tests on deferred tax as-
sets on the basis of the planned taxable income in future
financial years. Deferred tax assets are only recognized if
it is more likely than not that future tax benefits can be
realized.
Deferred tax assets or liabilities are calculated on the
basis of temporary differences between the tax basis
and the financial reporting of assets and liabilities in-
cluding differences from consolidation, on unused tax-
loss carryforwards and unused tax credits. Measurement
is based on the tax rates expected to be effective in the
period in which an asset is recognized or a liability is
settled. For this purpose, the tax rates and tax rules are
used which have been enacted at the reporting date or
are soon to be enacted. Deferred tax assets are recog-
nized to the extent that it is probable that there will be
future taxable income available against which the de-
ductible temporary differences, tax-loss carryforwards
and tax credits can be utilized. Deferred tax liabilities for
taxable temporary differences in connection with in-
vestments in subsidiaries, branches, associates and in-
terests in joint arrangements are not recognized if the
Group is able to control the timing of the reversal of the
temporary difference and it is probable that the tempo-
rary difference will not be reversed in the foreseeable
future.
Current income taxes are calculated based on the re-
spective local taxable income and local tax rules for the
period. In addition, current income taxes presented for
the period include adjustments for uncertain tax pay-
ments or tax refunds for periods not yet finally assessed;
however, excluding interest expenses and interest re-
funds and penalties on the underpayment of taxes. In
cases for which it is probable that amounts declared as
expenses in the tax returns might not be recognized
(uncertain tax positions), a liability for income taxes is
recognized. The amount is based on the best estimate of
the expected tax payment (expected amount or most
likely amount). Tax-refund claims from uncertain tax
positions are recognized when it is probable that they
can be realized. Only in the case of tax-loss carryfor-
wards or unused tax credits, no liability for taxes or tax
claim is recognized for these uncertain tax positions.
Instead, the deferred tax assets for the unused tax-loss
carryforwards or tax credits are adjusted.
Income taxes are comprised of current income taxes and
deferred taxes.
Other equipment, factory and office equipment
If the recognition criteria of the regulations on recogni-
tion and measurement of provisions are not fulfilled and
the possibility of a cash outflow upon settlement is not
unlikely, the item is to be presented as a contingent lia-
bility, insofar as it is adequately measurable. The amount
disclosed as a contingent liability represents the best
estimate of the possible obligation at the reporting date.
Provisions and contingent liabilities are regularly re-
viewed and adjusted as further information becomes
available or circumstances change.
230
The Group regularly estimates the risk of default on re-
ceivables from financial services. Many factors are taken
into consideration in this context including historical loss
experience, the size and composition of certain portfoli-
os, current economic events and conditions and the
current fair values and adequacy of collaterals. In addi-
tion to historical and current information on losses, ap-
propriate and reliable forward-looking information on
factors is also included. This information includes mac-
roeconomic factors (e.g. gross domestic product growth,
unemployment rate, cost performance index) and fore-
casts of future economic conditions. For receivables
from financial services, these forecasts are performed
using a scenario analysis (basic scenario, optimistic sce-
nario and pessimistic scenario).
Collectability of receivables from financial
services
The Mercedes-Benz Group regularly reviews the factors
determining the values of its leased vehicles. In particu-
lar, it is necessary to estimate the residual values of
vehicles at the end of their leases, which constitute a
substantial part of the expected future cash flows from
leased assets. In this context, assumptions are made
regarding major influencing factors, such as the expected
number of returned vehicles, the latest remarketing re-
sults and future vehicle model changes. Those assump-
tions are determined either by qualified estimates or by
publications provided by expert third parties. Qualified
estimates are based, as far as publicly available, on
external data with consideration of internally available
additional information such as historical experience of
price developments and recent sale prices. The residual
values thus determined serve as a basis for depreciation;
changes in residual values lead either to prospective
adjustments of the depreciation or, in the case of a
significant decline in expected residual values, to an
impairment. If depreciation is prospectively adjusted,
changes in estimates of residual values do not have
a direct effect but are equally distributed over the re-
maining term of the lease contract.
Recoverable amount of equipment on
operating leases
When objective evidence of impairment or impairment
reversal is present, estimates and assessments also have
to be made to determine the recoverable amount of an
equity-method investment. The determination of the
recoverable amount is based on assumptions regarding
future business developments for the determination
of the expected future cash flows of that investment.
See Note 14 for the presentation of carrying amounts
and fair values of equity-method investments in listed
companies.
In the context of impairment tests for non-financial as-
sets, estimates have to be made to determine the recov-
erable amounts of cash-generating units. Assumptions
have to be made in particular with regard to future cash
inflows and outflows for the planning period and the
following periods. The estimates mainly refer to future
sales, growth in the respective markets and the profita-
bility of the products, which are also highly dynamic
and thus uncertain as a result of the transition to electric
mobility. Therefore, a risk assessment and sensitivity
analyses are performed when deriving the value in use.
On the basis of the impairment tests carried out in 2022,
the recoverable amounts are substantially larger than
the net assets of the Group's cash-generating units.
Recoverable amounts of cash-generating units and
equity-method investments
In the Consolidated Financial Statements, it is to a cer-
tain degree necessary to make estimates and manage-
ment judgments which can affect the amounts and re-
porting of assets and liabilities, the reporting of contin-
gent assets and liabilities on the balance sheet date, and
the income and expense reported for the period. The
major items affected by such estimates and management
judgments are described as follows. Actual amounts
may differ from the estimates. Changes in the estimates
and management judgments can have a material impact
on the Consolidated Financial Statements.
2. Accounting estimates and
management judgments
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
229
The impairment test on the level of the cash-generating
units is based on the corporate planning of the
Mercedes-Benz Group. The "Electric only" strategy of the
Group taken account of herein provides for a step by
step substitution of vehicles with combustion engines by
electric vehicles. For the purposes of the impairment
test, further sales risks and risks regarding the availabil-
ity and the future price of components and raw materials
were also taken into account. Additional corporate plan-
ning parameters in connection with the transformation
affect the investment requirements and the currently
higher variable costs of all-electric vehicles in compari-
son with vehicles with conventional powertrains. The
simultaneous development, model refinement and pro-
duction of electric and conventionally powered vehicles
results in a higher investment requirement, particularly
in the detail planning period until 2027, in comparison
with focussing on conventionally powered vehicles. No
growth was assumed in the derivation of the terminal
value, due in part to the not yet completely predictable
effects of the competitive situation and customer behav-
iour in the course of the transition to electric mobility.
The impairment test carried out taking account of the
transformation effects described did not result in any
impairment requirement for the cash-generating units.
As of the reporting date, there were no material provi-
sions for payments to authorities that could result from
exceeding local regulations regarding vehicle emission
limits.
The expected proceeds from the disposal of vehicles
pledged as collateral were taken into account in the de-
termination of expected credit losses for receivables
from financial services. The expected proceeds from the
disposal were based on an estimate of the market value
at the expected time of a possible default. There were no
indications of a reduction of these estimated market
values that could be traced to effects of climate change
or of changing customer behaviour as of the reporting
date.
The residual value of leased vehicles that are classified
as operating leases is determined by the value that could
be achieved for an asset that possesses the expected
conditions of the leased asset at the end of the leasing
period on the reporting date. Only developments that
can be observed up to the reporting date are considered.
Due to the transformation to all-electric vehicles, chang-
es to the residual value of both conventionally powered
and all-electric vehicles due to changing customer be-
haviour, new regulatory requirements and further tech-
nological development can result over time. The devel-
opment of the residual values did not give rise to any
indications that the transformation had a negative effect
on the residual values during the financial year.
In the context of controlling and further developing the
production network, efforts are also being made to com-
pensate for potential effects of the transformation at
affected sites. No significant obligations to dismantle or
remove production facilities and plants that would give
rise to a provision existed on the reporting date.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
228
In the same way, the useful lives of property, plant and
equipment assets are regularly reviewed in the light of
the transformation to all-electric vehicles. This did not
require any material adjustments of the useful lives up
to the reporting date as the production facilities of the
Group are basically flexible in use.
The determination and review of the useful lives of the
capitalized development costs are based on the ex-
pected product life cycle. Changes in the originally
envisaged product life cycles can result from the trans-
formation to all-electric vehicles. Due to the resolutions
regarding the accelerated transformation new develop-
ments in the area of conventional powertrains are re-
duced and already capitalized development expenditure
will partly be used for longer. For this reason the useful
lives of specific development expenditures have been
extended with effect from 1 January 2022, which resulted
in a positive effect on EBIT in the amount of €0.2 billion
for 2022. An effect in the same amount is expected for
2023.
Accounting estimates and management judgments in
connection with sustainability-related aspects are taken
into consideration in particular in the accounting of as-
sets and liabilities described below:
223
With "Ambition 2039" the Mercedes-Benz Group has set
itself the target of a CO2-neutrality for the new vehicle
fleet by 2039 in its business strategy. With the strategic
step to "Electric only", the Mercedes-Benz Group is
accelerating its transformation into an all-electric and
software-driven future. Recognition and measurement
of the Group's assets and liabilities take into account
climate-related risks and developments associated
with the transformation, which also include the climate
targets set in the Paris Climate Agreement.
A financial instrument is written off when there is no
reasonable expectation of recovery in whole or in part,
for example, after the end of insolvency proceedings or
after a court decision of uncollectibility.
Expected credit losses are measured as the probability-
weighted present value of all cash shortfalls over the
expected life of each financial asset. For receivables
from financial services, expected credit losses are calcu-
lated using a statistical model with three major risk
parameters: probability of default, loss given default and
exposure at default.
221
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
After initial recognition, these financial assets at amor-
tized cost are subsequently carried at amortized cost
using the effective-interest method less any loss allow-
ances. Gains and losses are recognized in the net profit
when the financial assets at amortized cost are impaired
or derecognized. Interest effects from the application of
the effective-interest method are also recognized in
profit or loss as well as effects from foreign currency
translation.
Financial assets at fair value through other compre-
hensive income. Financial assets at fair value through
other comprehensive income are non-derivative financial
assets with contractual cash flows that consist solely of
payments of principal and interest on the nominal
amount outstanding and which are held to collect the
contractual cash flows as well as to sell the financial
assets, e.g. to achieve a defined liquidity target (business
model "hold to collect and sell"). This category also in-
cludes equity instruments not held for trading for which
the option to recognize changes in the fair value of the
instrument within other comprehensive income has been
applied.
After initial measurement, financial assets at fair value
through other comprehensive income are recognized at
fair value, with unrealized gains or losses being recog-
nized in other comprehensive income/loss. Upon the
disposal of debt instruments, the accumulated gains and
losses recognized in other comprehensive income/loss
resulting from measurement at fair value are recognized
in profit or loss. Interest earned on financial assets at fair
value through other comprehensive income is generally
reported as interest income using the effective-interest
method. Changes in the fair value of equity instruments
measured at fair value through other comprehensive
income are not recycled to profit or loss, but reclassified
to retained earnings upon disposal. Dividends are recog-
nized in profit or loss when the right to payment has
been established.
Impairment of financial assets
At each reporting date, a loss allowance is recognized for
financial assets, loan commitments and financial guaran-
tees other than those to be measured at fair value
through profit or loss reflecting expected losses for
these instruments. Expected credit losses are allocated
using three stages:
Stage 1: expected credit losses within the next twelve
months
Stage 1 includes all contracts with no significant increase
in credit risk since initial recognition and usually includes
new acquisitions and contracts with fewer than 31 days
past due date. The portion of the lifetime expected cred-
it losses resulting from default events possible within the
next 12 months is recognized.
Stage 2: expected credit losses over the lifetime - not
credit impaired
If a financial asset has a significant increase in credit risk
since initial recognition but is not yet credit impaired, it
is moved to stage 2 and measured at lifetime expected
credit loss, which is defined as the expected credit loss
that results from all possible default events over the
expected life of a financial asset.
Stage 3: expected credit losses over the lifetime - credit
impaired
If a financial asset is defined as credit-impaired or in
default, it is transferred to stage 3 and measured at life-
time expected credit loss. Objective evidence for a cred-
it-impaired financial asset includes 91 days past due date
and other information about significant financial difficul-
ties of the debtor.
222
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
The determination of whether a financial asset has expe-
rienced a significant increase in credit risk is based on an
assessment of the probability of default, which is made
at least quarterly, incorporating external credit rating
information as well as internal information on the credit
quality of the financial asset. For debt instruments that
are not receivables from financial services, a significant
increase in credit risk is assessed mainly based on past-
due information or the probability of default.
A financial asset is migrated to stage 2 if the asset's
credit risk has increased significantly compared to its
credit risk at initial recognition. The credit risk is as-
sessed based on the probability of default. For trade
receivables, the simplified approach is applied whereby
all trade receivables are allocated to stage 2 initially.
Hence, no determination of significant increases in credit
risk is necessary.
The Mercedes-Benz Group applies the low-credit-risk
exception to the stage allocation to quoted debt in-
struments with investment-grade ratings. These debt
instruments are always allocated to stage 1.
In stages 1 and 2, the effective interest revenue is calcu-
lated based on gross carrying amounts. If a financial
asset becomes credit impaired in stage 3, the effective
interest revenue is calculated based on its net carrying
amount (gross carrying amount adjusted for any loss
allowance).
Measurement of expected credit losses. Expected
credit losses are measured in a way that reflects:
a) the unbiased and probability-weighted amount;
b) the time value of money,
c) reasonable and supportable information (if available
without undue cost or effort) at the reporting date
about past events, current conditions and forecasts
of future economic conditions.
The estimation of these risk parameters incorporates all
available relevant information, not only historical and
current loss data, but also reasonable and supportable
forward-looking information reflected by future expecta-
tions. This information includes macroeconomic factors
(e.g. gross domestic product growth, unemployment rate,
cost performance index) and forecasts of future eco-
nomic conditions. For receivables from financial services,
these forecasts are performed using a scenario analysis
(basic scenario, optimistic scenario and pessimistic
scenario). The impairment amount for trade receivables
is predominantly determined on a collective basis.
Financial assets at amortized cost. Financial assets at
amortized cost are non-derivative financial assets with
contractual cash flows that consist solely of payments of
principal and interest on the nominal amount outstand-
ing and which are held with the aim of collecting the
contractual cash flows, such as receivables from finan-
cial services, trade receivables or cash and cash equiva-
lents (business model "hold to collect"). Cash and cash
equivalents consist primarily of cash on hand, cheques
and demand deposits at banks, as well as debt instru-
ments and certificates of deposits with a remaining term
when acquired of up to three months, which are not
subject to any material value fluctuations. Cash and cash
equivalents correspond with the classification in the
Consolidated Statement of Cash Flows.
Consideration of sustainability related aspects in
connection with the recognition and measurement of
assets and liabilities
Reported segments
225
of options, the forward element of a forward contract or
cross-currency basis spreads.
For derivative instruments designated in a hedge rela-
tionship, certain components can be excluded from des-
ignation and the changes in these components' fair value
are then deferred in other comprehensive income under
IFRS 9. This may apply for example to the time value
The ineffective portions of fair-value changes are recog-
nized directly in profit or loss.
For other cash-flow hedges, the accumulated hedging
gains or losses from hedging instruments are reclassified
from the reserves for derivative financial instruments to
the Consolidated Statement of Income when the hedged
item affects profit or loss. Insofar as currency translation
effects recognized in profit or loss due to trade receiva-
bles and payables are connected with the underlying
transactions, simultaneously occurring hedging
gains/losses are reclassified in the Consolidated State-
ment of Income.
Under IFRS 9, with cash-flow hedges, amounts recog-
nized in other comprehensive income as effective
hedging gains or losses from hedging instruments are
removed from the reserves for derivative financial in-
struments and directly included in the initial cost or
carrying amount of the hedged item at initial recognition
if the hedged item, e.g. the forecast transaction, results
in the recognition of a non-financial asset or non-
financial liability.
Under IFRS 9, for cash-flow hedges in procurement
transactions expected with a high degree of probability,
designation can be made for separable risk components
of these non-financial hedged items.
Effects from hedging are presented in the item of the
Statement of Income in which the underlying transaction
is effective.
Changes in fair value of non-designated derivatives are
recognized in profit or loss. For fair-value hedges,
changes in the fair value of derivative financial instru-
ments and the hedged item are recognized in profit or
loss. For cash-flow hedges, fair-value changes in the
effective portion of derivative financial instruments are
recognized after tax in other comprehensive income.
If the requirements for hedge accounting set out in IFRS
9 are met, the Mercedes-Benz Group designates and
documents the hedge relationship from the date a deriv-
ative contract is entered into as a fair-value hedge, a
cash-flow hedge or a hedge of a net investment in a
foreign business operation. In a fair-value hedge, the
changes in the fair value of a recognized asset or liability
or an unrecognized firm commitment are hedged. In a
cash-flow hedge, highly probable future cash flows from
expected transactions or variable cash flows to be paid
or received related to a recognized asset or liability are
hedged. The documentation of the hedging relationship
includes the objectives and strategy of risk management,
the type of hedging relationship, the nature of the risk
being hedged, the identification of the eligible hedging
instrument and the eligible hedged item, as well as an
assessment of the effectiveness requirements compris-
ing the risk mitigating economic relationship, the ab-
sence of deteriorating effects from credit risk and the
appropriate hedge ratio. The effectiveness of the hedge
is assessed at the start of and during the hedging rela-
tionship.
Derivative financial instruments are measured at fair
value upon initial recognition and at each subsequent
reporting date. The fair value of listed derivatives is
equal to their positive or negative market value. If a
market value is not available, fair value is calculated
using standard financial valuation models such as
discounted cash flow or option-pricing models. Deriva-
tives are recognized as assets if their fair value is posi-
tive and as liabilities if their fair value is negative.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
224
Embedded derivatives are principally separated from
the host contract and recognized separately. However,
embedded derivatives are not separated from the host
contract if that host contract is a financial asset, if the
Mercedes-Benz Group chooses to measure a hybrid con-
tract at fair value through profit or loss, or if the embed-
ded derivative is closely related to the host contract.
Contracts for the purchase or sale of non-financial items
are regularly qualified as executory contracts and thus
treated as suspended transactions, although they fulfil
the definition of a derivative. If such contracts do not
meet the criteria for executory contracts they are rec-
orded as derivatives. The measurement of these deriva-
tives is recognized at fair value through profit or loss,
where the value is derived from the difference between
the contractually agreed price and the current expecta-
tions for the future market price at the reference date.
These valuation effects are reported in the cost of sales
insofar as they result from procurement contracts rele-
vant to production.
The Group uses derivative financial instruments exclu-
sively for hedging financial risks that arise from its oper-
ating or financing activities or liquidity management.
These are mainly currency risks, interest-rate risks and
commodity price risks.
Derivative financial instruments and hedge
accounting
Financial liabilities at fair value through profit or loss.
Financial liabilities recognized at fair value through profit
or loss include financial liabilities held for trading. Deriv-
atives (including embedded derivatives separated from
the host contract) which are not used as hedging instru-
ments in hedge accounting are classified as held for
trading. Gains or losses on liabilities held for trading are
recognized in profit or loss.
Insofar as the Mercedes-Benz Group enters into reverse
factoring agreements in which trade receivables of a
supplier are transferred to a financial intermediary,
changes in the presentation of the original trade paya-
bles may occur. That would be the case if these liabilities
differed in nature and function from other trade paya-
bles. As a result, these liabilities would be presented
separately.
Financial liabilities measured at amortized cost. After
initial recognition, financial liabilities are subsequently
measured at amortized cost using the effective-interest
method.
Financial liabilities primarily include trade payables, lia-
bilities to financial institutions, bonds, derivative finan-
cial liabilities and other liabilities.
Financial liabilities
Financial assets and financial liabilities are offset and the
net amount is presented in the Consolidated Statement
of Financial Position provided that an enforceable right
currently exists to offset the amounts involved, and
there is an intention either to carry out the offsetting on
a net basis or to settle a liability when the related asset
is sold.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
The Group comprises the segments Mercedes-Benz Cars,
Mercedes-Benz Vans and Mercedes-Benz Mobility.
Until 31 December 2021, the Mercedes-Benz Cars and
Mercedes-Benz Vans segments were aggregated into
one reportable segment due to their comparable long-
term average return on sales as well as their comparable
revenue development and capital intensity. After the
spin-off and hive-down of the Daimler commercial vehi-
cle business in December 2021, the two segments are
reported separately with effect from 1 January 2022.
The comparison periods have been adjusted accordingly.
Hedge relationships are to be discontinued prospectively
if a particular hedge relationship ceases to meet the
qualifying criteria for hedge accounting under IFRS 9.
Instances that require discontinuation of hedge account-
ing are, among others, changes to the designated hedged
item, loss of the economic relationship between the
hedged item and the hedging instrument, disposal
or termination of the hedging instrument, or a revision
of the documented risk-management objective of a par-
ticular hedge relationship. Accumulated hedging gains
and losses from cash-flow hedges are retained and are
reclassified from equity as described at maturity if the
hedged future cash flows are still expected to occur.
Otherwise, accumulated hedging gains and losses are
immediately reclassified to profit or loss.
Pensions and similar obligations
To the extent that the reverse factoring agreements en-
tered into by the Mercedes-Benz Group do not result in a
change in the presentation of the original trade payables,
the cash flows from these agreements are presented in
cash flow from operating activities. Interest paid as well
as interest and dividends received are also classified as
cash flow from operating activities. The cash flows from
short-term marketable debt securities with high turnover
rates and significant amounts are offset and presented
within cash flow from investing activities.
Presentation in the Consolidated Statement of
Cash Flows
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
227
Liability awards are measured at fair value at each bal-
ance sheet date until settlement and are classified as
provisions under consideration of vesting conditions.
The profit or loss of the period equals the addition to
and/or the reversal of the provision during the reporting
period and the dividend equivalent paid during the peri-
od, and is included in functional costs.
Share-based payment comprises cash-settled liability
awards.
Share-based payment
Refund liabilities. A refund liability occurs if the
Mercedes-Benz Group receives consideration from a
customer and expects to refund some or all of that
consideration to the customer. A refund liability is meas-
ured at the amount of consideration received for which
the Mercedes-Benz Group does not expect to be entitled
and is thus not included in the transaction price.
Contract liabilities. A contract liability is an entity's
obligation to transfer goods or services to a customer for
which the entity has received consideration (or the
amount is due) from the customer.
Contract and refund liabilities
Benefits on termination of employment are recognized
when the Group has a detailed formal plan that has ei-
ther commenced implementation or been announced.
Restructuring provisions are set up in connection with
programmes that materially change the scope of busi-
ness performed by a segment or business unit or the
manner in which business is conducted. In most cases,
restructuring expenses include termination benefits
and compensation payments due to the termination of
agreements with suppliers and dealers.
A provision for expected warranty costs is recognized
when a product is sold or when a new warranty pro-
gramme is initiated. Estimates for accrued warranty costs
are particularly based on historical experience. Other
assumptions include, but are not limited to, the amount
of potential repair costs. The provisions are regularly
adjusted to reflect new information.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Provisions are recognized when a liability to third parties
has been incurred, an outflow of resources is probable
and the amount of the obligation can be reasonably es-
timated. The amount recognized as a provision repre-
sents the best estimate of the obligation at the reporting
date. Provisions with an original maturity of more than
one year are discounted to the present value of the ex-
penditures expected to settle the obligation at the end
of the reporting period.
Provisions for other risks
Gains or losses on the curtailment or settlement of a
defined benefit plan are recognized in profit or loss when
the curtailment or settlement occurs.
The discount factors used to calculate the present values
of defined benefit pension obligations are to be deter-
mined with maturities and currencies matching the
pension payments - by reference to market yields at the
end of the reporting period on high-quality fixed-rate
corporate bonds in the respective markets. For very long
maturities, there are no high-quality corporate bonds
available as a benchmark. The respective discount fac-
tors are estimated by extrapolating current market rates
along the yield curve.
-
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
226
The balance of defined benefit commitments for pen-
sions and other post-employment benefit obligations
and plan assets (net pension obligation or net pension
assets) accrues interest at the discount rate used as a
basis for the measurement of the gross pension obliga-
tion. The resulting net interest expense or income is
recognized in profit and loss under interest expense or
interest income in the Consolidated Statement of In-
come. The other expenses resulting from pension com-
mitments and other post-employment benefit obliga-
tions, which mainly result from entitlements acquired
during the year under review, are taken into considera-
tion in functional costs in the Consolidated Statement
of Income. Differences between the assumptions made
and actual developments as well as changes in actuarial
assumptions for the measurement of defined benefit
plans and similar obligations result in actuarial gains
and losses, which are recognized in equity through other
comprehensive income.
The measurement of defined benefit commitments for
pensions and other similar post-employment benefits
(healthcare benefits) in accordance with IAS 19 Employee
Benefits is based on the projected unit-credit method.
Plan assets invested to cover defined benefit pension
commitments and other post-employment benefit obli-
gations are measured at fair value and offset against the
corresponding obligations.
If derivative financial instruments do not or no longer
qualify for hedge accounting because the qualifying cri-
teria for hedge accounting are not or are no longer met,
the derivative financial instruments are classified as held
for trading and are measured at fair value through profit
or loss.
In addition, derivatives, including embedded derivatives
separated from the host contract, which are not classi-
fied as hedging instruments in hedge accounting, as well
as financial assets acquired for the purpose of selling in
the short term that are classified as held for trading, are
included here. Gains or losses on these financial assets
are recognized in profit or loss.
Financial assets at fair value through profit or loss.
Financial assets recognized at fair value through profit or
loss include financial assets with cash flows other than
those of principal and interest on the nominal amount
outstanding. Furthermore, financial assets that are held
in a business model other than "hold to collect" or "hold
to collect and sell" are included here.
The determination of the business model is carried out at
the portfolio level and is based on management's inten-
tion and past transaction patterns. Assessments of the
contractual cash flows are made on an instrument-by-
instrument basis.
Offsetting of financial instruments
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Financial instruments
Significant modification of financial assets (e.g., with a
change in the present value of the contractual cash flows
of 10%) also leads to derecognition of the financial as-
sets with a simultaneous recognition of new financial
assets. This is expected to be rare and immaterial for
receivables from financial services. If the terms of a con-
tract are renegotiated or modified and this does not
result in derecognition of the contract, then the gross
carrying amount of the contract is recalculated and a
modification gain or loss is recognized in profit or loss.
Upon initial recognition, financial instruments are meas-
ured at fair value. For the purpose of subsequent meas-
urement, financial instruments are allocated to one of
the categories mentioned in IFRS 9 Financial Instruments
(financial assets measured at amortized cost, financial
assets measured at fair value through other comprehen-
sive income and financial assets measured at fair value
through profit or loss). Transaction costs directly at-
tributable to acquisition or issuance are considered
when determining the carrying amount if the financial
instruments are not measured at fair value through profit
or loss.
Financial assets primarily comprise receivables from
financial services, trade receivables, receivables from
banks, cash on hand, derivative financial assets, market-
able securities and similar investments and financial
investments. The classification of financial instruments is
based on the business model in which these instruments
are held and on their contractual cash flows.
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Financial instru-
ments in the form of financial assets and financial liabili-
ties are generally presented separately. Financial instru-
ments are recognized as soon as the Mercedes-Benz
Group becomes a party to the contractual provisions of
the financial instrument. In the case of purchases or
sales of financial assets through the regular market, the
Mercedes-Benz Group uses the transaction date as the
date of initial recognition or derecognition.
Financial assets
At 31 December
-744
-6,226
-9,774
3,548
24,549
23,562
987
total
operations operations
Cash flow
discontinued continuing
from
Cash flow Cash flow
from
2021
237
Cash flow from financing activities
Cash flow from investing activities
Cash flow from operating activities
In millions of euros
Cash flow from continuing and discontinued operations
-18,315
2022
-19,059
D.15
Composition of the Group
D.16
Upon completion of the transaction in March 2021, profit
before taxes of €1,215 million, of which €624 million was
accounted for in particular by the remeasurement of the
interest in cellcentric that was held by Mercedes-Benz
Group at that time, and a cash inflow of €634 million
were recognized. An income of €604 million was recog-
nized in other operating income at the Mercedes-Benz
Cars segment. The portion attributable to the Daimler
Trucks & Buses segment reported at that point in time
until spin-off and hive-down of the Daimler commercial
vehicles business of €611 million was reported in profit/
loss from discontinued operations.
In November 2020, the Volvo Group and Daimler Truck
AG signed a binding agreement on the establishment of a
joint venture for fuel-cell activities.
Foundation of the fuel-cell joint venture
cellcentric
With the remaining contractual arrangements coming
into effect in January 2022, the Group lost control over
Mercedes-Benz Grand Prix Ltd. and is including its re-
maining 33.3% equity interest in the Consolidated Finan-
cial Statements using the equity method. The sale
of the shares resulted in a gain of €385 million in the
Mercedes-Benz Cars segment, which is presented in
other operating income.
Sale of interests in Mercedes-Benz Grand Prix Ltd.
In the fourth quarter of 2021, the Mercedes-Benz Group
signed the contractual agreements with Motorsports
Invest Ltd. and INEOS Industries Holdings Ltd. on the
sale of shares of Mercedes-Benz Grand Prix Ltd. Due to
the entry into effect in the year 2021 of a part of the
contractual arrangements that had been previously en-
tered into, the Group had already reported expenses
before taxes of €96 million in the other operating ex-
penses, which were included in the Mercedes-Benz Cars
segment, in the prior year.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
238
were sold in 2022. The sales gave rise to a gain of
€107 million and to cash inflows of €362 million, espe-
cially in the Mercedes-Benz Cars segment.
In addition, other retail activities in various countries
In December 2021, the contractual arrangements on
the sale of the retail activities in Canada were concluded.
The transaction became effective in February 2022
and the Group recognized other operating income
of €514 million, which was mainly allocated to the
Mercedes-Benz Cars segment. The cash inflow amounted
to €608 million and was also mainly allocated to the
Mercedes-Benz Cars segment. Parts of the purchase
price were financed by Mercedes-Benz Financial Ser-
vices in Canada and led to a cash outflow of €393 million
at the Mercedes-Benz Mobility segment.
Sale of retail activities
On 22 March 2022 Mercedes-Benz AG signed an agree-
ment with PSA Automobiles SA, Opel Automobile GmbH
and Saft EV SAS to acquire a 33.33% stake in Automotive
Cells Company SE (ACC) through a capital contribution of
approximately €390 million. The Group also committed
itself to the provision of further funds up to €410 million.
The transaction was completed on 12 May 2022. The
investment in the European battery cell manufacturer
ACC was being made in order to advance the develop-
ment and production of high-performance battery cells
and modules in the course of the transformation to
"Electric only". The shares in the joint venture ACC are
included in the Consolidated Financial Statements using
the equity method and are allocated to the Mercedes-
Benz Cars segment.
Acquisition of a 33.33% stake in ACC
At the reporting date, the Group has business relation-
ships with 33 (2021: 34) controlled structured entities, of
which all are fully consolidated. In addition, as in the
previous year the Group has relationships with one non-
controlled structured entity.
The structured entities of the Group are rental compa-
nies, asset-backed-securities (ABS) companies and spe-
cial funds. The purpose of the rental companies is pri-
marily the acquisition, renting-out and management of
assets. The ABS companies are primarily used for the
Group's refinancing. The receivables transferred to struc-
tured entities usually results from the leasing and sales-
financing business. Those entities refinance the purchase
price by issuing securities. The special funds are set up
in particular in order to diversify the capital-investment
strategy.
Structured entities
The aggregate totals in the statement of financial posi-
tion of the subsidiaries, associated companies, joint ven-
tures and joint operations accounted for at amortized
cost whose business is non-active or of low volume and
which are not material for the Group and the fair presen-
tation of its profitability, liquidity and capital resources,
and financial position would amount to approximately 1%
of the Group's total assets; the aggregate revenue and
the aggregate net profit would amount to approximately
1% of the Group's revenue and net profit.
Table D.16 shows the composition of the Group. A de-
tailed list of the companies included in the Consolidated
Financial Statements and of the equity investments of
the Mercedes-Benz Group pursuant to Section 313 of the
German Commercial Code (HGB) is provided in the
statement of investments. Further information is provid-
ed in Note 42.
Composition of the Group
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
4. Consolidated Group
12,964
Profit/loss from discontinued operations before taxes
Profit from continuing and discontinued operations before
taxes
thereof profit/loss of the ongoing
business of discontinued operations
before taxes²
Profit/loss from discontinued operations
after taxes
Income taxes
-618
12,964
Profit/loss from discontinued operations
before taxes
-77
13,041
Earnings before interest and taxes (EBIT)
Interest income/expense
70
144
-189
10,342
-31,404
34,078
2021
Gains/losses on equity-method investments
Other financial income/expense
Other operating income
Other operating expense
Functional costs
Revenue¹
In millions of euros
Income taxes
2,966
-614
thereof profit/loss of the ongoing
15,811
Profit from continuing operations before taxes
In millions of euros
Reconciliation to profit/loss from continuing and discontinued opera-
tions before taxes
D.14
The individual cash flows are presented in table D.15.
Table D.14 shows the reconciliation of profit/loss before
income taxes from continuing operations in the Consoli-
dated Statement of Income to profit before income taxes
from continuing and discontinued operations in the Con-
solidated Statement of Cash Flows.
The cash flows from discontinued operations in 2021
were calculated as the difference between the consoli-
dated cash flows from continuing and discontinued op-
erations and the consolidated cash flows from continu-
ing operations taking into account all elimination entries
between continuing and discontinued operations in the
discontinued operations.
The Consolidated Statement of Cash Flows presented
consolidated cash flows from continuing and discontin-
ued operations for the prior-year period.
Consolidated Statement of Cash Flows for the
year 2021
28,775
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
2 Contrary to the EBIT of the Daimler commercial vehicle business, the scheduled deprecia-
tion and the equity-method measurement were no longer included in the profit/loss from
the ongoing business of discontinued operations before income taxes.
1 Revenue includes eliminations between continuing and discontinued operations.
The revenue of the Daimler commercial vehicle business amounted to €36,219 million.
9,994
thereof profit from discontinued
operations after taxes
-4
Income taxes
9,998
thereof gain on the spin-off and hive-down,
after transaction costs
2,352
business of discontinued operations
after taxes
236
2021
12,346
Profit/loss from discontinued operations after taxes
of Daimler's commercial vehicle business
In millions of euros
Intangible assets
2022
2021
9
1,773
Property, plant and equipment
21
8,058
Equipment on operating leases
501
3,887
Receivables from financial services
Disposed of assets and liabilities
2,426
Equity-method investments
1,406
Inventories
92
8,132
Trade receivables
60
3,354
Cash and cash equivalents
130
5,489
Marketable debt securities and similar
investments
1
15,759
D.11
The carrying amounts of derecognized consolidated as-
sets and liabilities at the time of disposal are shown in
table D.11. The derecognition was presented as non-cash
transaction in 2021.
The profit attributable to the 35% shareholding in Daim-
ler Truck Holding AG that remained after the spin-off and
hive-down amounted to €3,458 million.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
-
Further external information, e.g. in connection with the
Covid-19 pandemic, which cannot be depicted in the
scenarios, is as far as necessary - included in the as-
sessment through subsequent adjustments. Changes to
the estimation and assessment of these factors influence
the allowance for credit losses with a resulting impact
on the Group's net profit. See also Notes 15 and 34 for
further information.
Product warranties
The recognition and measurement of provisions for
product warranties is generally connected with many
estimates.
The Group provides various types of product warranties,
depending on the type of product and market conditions.
Provisions for product warranties are generally recog-
nized when vehicles are sold or when new warranty pro-
grammes are initiated. In order to determine the extent
of these provisions, assumptions have to be made con-
cerning the type and extent of future warranty claims
and goodwill cases, as well as on possible recall cam-
paigns for each model series. These assessments are
based on experience of the frequency and extent of
vehicle faults and defects in the past. In addition, the
estimates also include assumptions on the amounts of
potential repair costs per vehicle and the effects of pos-
sible time or mileage limits. The provisions are regularly
adjusted to reflect new information.
Further information on provisions for other risks is pro-
Ivided in Note 24.
Liability and litigation risks and regulatory
proceedings
Various legal proceedings, claims and governmental
investigations are pending against Mercedes-Benz Group
AG and its subsidiaries on a wide range of topics. If the
outcome of such legal proceedings is detrimental to the
Mercedes-Benz Group, the Group may be required to pay
substantial compensatory and punitive damages, to un-
dertake service actions or recall campaigns, to pay fines
or to carry out other costly actions. Litigation and gov-
ernmental investigations often involve complex legal
issues and are connected with a high degree of uncer-
tainty. Accordingly, the assessment of whether an obliga-
tion exists on the balance sheet date as a result of an
event in the past, and whether a future cash outflow
is likely and the obligation can be reliably estimated,
largely depends on estimations by the management.
The Mercedes-Benz Group regularly evaluates the cur-
rent stage of legal proceedings, also with the involve-
ment of external legal counsel. It is therefore possible
that the amounts of provisions for pending or threatened
proceedings will have to be restated due to new ex-
pected developments. Changes in estimates and premis-
es can have a material effect on the Group's future prof-
itability. It is also possible that provisions recognized for
some legal proceedings may turn out to be insufficient
once such proceedings have ended. The Mercedes-Benz
Group may also become liable for payments in legal pro-
ceedings for which no provisions were established. Alt-
hough the final resolution of any such proceedings could
have a material effect on the Mercedes-Benz Group's
earnings and cash flows for a particular reporting period,
from the current assessment, the Mercedes-Benz Group
does not expect this to result in any sustained impact on
the Group's financial position. Further information on
liability and litigation risks and regulatory proceedings is
provided in Note 31.
231
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Pensions and similar obligations
The calculation of provisions for pensions and similar
obligations and the related pension cost are based on
various actuarial valuations. The calculations are subject
to various assumptions on matters such as current actu-
arially developed probabilities (e.g. discount factors and
cost-of-living increases), future fluctuations with regard
to age and period of service, and experience with the
probability of occurrence of pension payments, annuities
or lump sums. As a result of changed market or econom-
ic conditions, the probabilities on which the influencing
factors are based may differ from current developments.
The financial effects of deviations of the main factors are
calculated with the use of sensitivity analyses. See Note
23 for further information.
Income taxes
The calculation of income taxes of Mercedes-Benz Group
AG and its subsidiaries is based on the legislation and
regulations applicable in the various countries. Due to
their complexity, the tax items presented in the Consoli-
dated Financial Statements are possibly subject to
different judgments by taxpayers on the one hand and
local tax authorities on the other. Different judgments
can occur especially in connection with the recognition
and measurement of balance sheet items as well as
in connection with the tax assessment of expenses and
income.
232
Annual Report 2022 Mercedes-Benz Group
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
233
The deduction of directly allocable transaction costs of
€132 million and further adjustments of €532 million (in
particular currency and elimination effects) resulted in a
gain from the spin-off and hive-down of €9,216 million.
The profit was allocated based on the allocation of the
fair value of Daimler's commercial vehicle business to
the respective parts of the segments being disposed of.
In 2021, the gain from the spin-off and hive-down of
assets and liabilities of the commercial vehicle business
was included in profit from discontinued operations in
the amount of €9,998 million (after transaction costs).
The loss from the transfers of assets and liabilities of the
Mercedes-Benz Mobility segment of €782 million (after
transaction costs) was included in other operating ex-
penses from continuing operations.
The fair value of 65% of the shares of Daimler Truck
Holding AG (hereinafter: spin-off liabilities) has been
determined by an independent expert third party (level 3
of the hierarchy level of fair values). The fair value of the
spin-off liabilities totals €16,253 million. The 35% of the
shares that remained after the spin-off and hive-down
were measured at €8,752 million. The derecognized net
carrying amounts total €15,125 million. This includes as-
sets and liabilities previously eliminated and now to be
reported due to the deconsolidation.
The scheduled depreciation and amortization and the
equity-method measurement of the non-current assets
classified as held for distribution since 31 July 2021 were
discontinued as of this date.
For substantial parts of the commercial vehicle business,
its equity investments or business operations were al-
ready legally assigned to Daimler Truck AG before the
spin-off and hive-down took effect. As part of the spin-
off and hive-down, the financial services business has
also been split up. With the consent of the Board of
Management and the Supervisory Board for the transac-
tion, these items of the commercial vehicle business and
the parts of the Mercedes-Benz Mobility segment that
had already been legally assigned to Daimler Truck AG,
were classified as held for distribution from 30 July 2021
until the date of the spin-off and hive-down and were
deconsolidated upon completion of the transaction. As
part of the spin-off and hive-down, 136 companies left
the consolidated Group in 2021.
145
Deconsolidation of the major part of Daimler's
commercial vehicle business in 2021
to Mercedes-Benz Pension Trust e.V. (Daimler Pension
Trust e. V. before the company was renamed). The
Mercedes-Benz Group holds a minority interest of about
30% in Daimler Truck Holding AG as of 31 December
2022. For the purposes of the voting rights quota pursu-
ant to the German Securities Trading Act, the approxi-
mately 5% of the shares contributed to the pension-plan
assets are allocated to the Mercedes-Benz Group.
In January 2022, about 5% of the shares of Daimler Truck
Holding AG were transferred via Mercedes-Benz AG
With the completion of the spin-off and hive-down upon
entry into the Commercial Register on December 2021,
the shareholders of the former Daimler AG received 65%
of the shares in the newly founded Daimler Truck Hold-
ing AG. 35% of the shares remained with the Mercedes-
Benz Group. Daimler Truck Holding AG is the parent
company of the Daimler Truck Group (Daimler Truck).
On 30 July 2021, the Board of Management of Daimler
AG, with the approval of the Supervisory Board, decided
on the spin-off and hive-down of substantial parts of the
commercial vehicle business, including the related finan-
cial services business (Daimler's commercial vehicle
business). The majority of the shareholders of Daimler
AG approved the spin-off and hive-down agreement at
the Extraordinary General Meeting on 1 October 2021.
3. Spin-off and hive-down of
Daimler's commercial vehicle
business
Consolidated Financial Statements
On the basis of the contracts concluded in connection
with the transaction, Mercedes-Benz Group AG no longer
has a controlling influence on that company since the
entry of the spin-off and hive-down in the Commercial
Register. The shares are included in the Consolidated
Financial Statements using the equity method and are
presented as an investment allocated in the reconcilia-
tion of the segments to the Group.
Other financial assets
25
1,070
Profit/loss from discontinued operations after taxes
comprised the profit/loss of the ongoing business activi-
ties of the discontinued operations and the gain from the
spin-off and hive-down of the discontinued operations
after directly related transaction costs. Table D.13 shows
the composition of profit from discontinued operations
after taxes.
D.12
Assets and liabilities
of Daimler's commercial vehicle business held for sale
At 31 De-
cember
2021
In millions of euros
Equipment on operating leases
533
Receivables from financial services
2,228
Cash and cash equivalents
62
Other financial assets
179
Other assets
140
D.13
The profit/loss from the disposal of discontinued
operations included the gain from the spin-off and hive-
down of the assets and liabilities of the Daimler com-
mercial vehicle business of €9,998 million, which was
reduced by directly allocable transaction costs of €100
million and by recycling of an other comprehensive loss
of €150 million. The loss from the spin-off and hive-down
of the assets and liabilities of the Mercedes-Benz Mobili-
ty segment was reported in the other operating expense
of continuing operations.
Income taxes were allocated to the taxable entity or in
accordance with the applicable tax apportionment sys-
tem. Income taxes of the ongoing business of discontin-
ued operations essentially comprised the tax expenses
on the pre-tax earnings of the foreign companies. Due to
the applicable income-tax group, the domestic compa-
nies largely did not recognize any tax expense or benefit.
The effective tax rate is 20.7%.
Profit from the ongoing business activities of discon-
tinued operations included income and expenses in
connection with the assets and liabilities of the Daimler
commercial vehicle business that were spun off in 2021
or are classified as held for sale. Expenses also included
costs of €132 million attributable to profit from the
ongoing business of discontinued operations in connec-
tion with the spin-off and hive-down. No amounts
of other segments were included - in particular of
Mercedes-Benz Mobility - as these operations do not
constitute a separate significant business unit.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
235
In 2021, continuing operations were presented in the
Consolidated Statement of Income; the profit or loss
from discontinued operations after tax was shown in a
separate line after the profit from continuing operations.
Eliminations from transactions between continuing and
discontinued operations were allocated to discontinued
operations in 2021. In the case of transfers of fixed as-
sets, the elimination was assigned to the selling activity.
169
107
Liabilities held for sale
Other liabilities
Financial liabilities
3,142
Assets held for sale
62
2021
Profit from discontinued operations in 2021
The Group received €2,355 million from the (partially still
preliminary) purchase prices, including the repayment of
the existing intragroup financing liabilities of the compa-
nies and business activities within the Mercedes-Benz
Group.
Other assets
75
2,868
Provisions for pensions and similar obligations
2,636
Provisions for other risks
11
Financing liabilities
609
4,662
7,801
Trade payables
58
3,879
Other financial liabilities
71
2,724
Contract and refund liabilities
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
234
The carrying amounts of derecognized consolidated as-
sets and liabilities at the time of disposal are shown in
table D.11.
In addition, in individual countries, investments in oper-
ating entities or business operations of the commercial
vehicle business were sold to external third parties.
Assets of €149 million and liabilities of €106 million,
mainly from the Mercedes-Benz Cars segment, were
disposed of.
The remaining financial services activities of the
Daimler commercial vehicles business were sold to
Daimler Truck Holding AG or its subsidiaries in 2022.
At the Mercedes-Benz Mobility segment, assets of
€3,191 million and liabilities of €746 million were dis-
posed of.
Scheduled depreciation and amortization and the equity-
method measurement of the non-current assets classi-
fied as held for sale since 31 July 2021 are discontinued
as of the date of classification.
The valuation and sale of the Mercedes-Benz Mobility
companies resulted in net expenses of €-184 million in
2022 which were reported in the reconciliation in the
segment reporting. Income of €32 million was realized
for the operating investments and business activities
disposed of in the reporting year, in particular in the
Mercedes-Benz Cars segment. In total, expenses from
the realization of the currency reserve of €58 million
were recognized.
If a sale within the next twelve months was highly
probable, the corresponding assets and liabilities were
reported as held for sale according to IFRS 5 as of
31 December 2021. The assets and liabilities held for
sale shown in the Consolidated Statement of Financial
Position at 31 December 2021 are shown in table D.12.
In connection with the deconsolidation, cash and cash
equivalents of €5,489 million were disposed of. This
includes strengthening the liquidity and share capital of
the Daimler Truck Group on the basis of contractual ar-
rangements by way of a capital increase.
1,504
78
Other liabilities
3,344
25
Assets and liabilities sold in 2022
Consolidated subsidiaries
Germany
Associated companies accounted for
using the equity method
281
4
7
7
Germany
International
Joint operations,
joint ventures,
associated companies
accounted
for at (amortized) cost
and substantial other
investments recognized
at fair value
Germany
International
Total
24
24
24
13
12
11
12
370
396
239
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Discontinuation of business activities in Russia and
intended sale of shares in the Russian subsidiaries
On 2 March 2022, the Mercedes-Benz Group decided to
stop exporting cars and vans to Russia and to cease local
production in Russia until further notice.
A degree of discretion has been exercised in the consid-
eration and subsequent derivation of the effects of the
sanctions and counter-sanctions on the business activi-
ties in Russia. The recognition and valuation of the assets
and liabilities as a result of the discontinuation of the
business activities in Russia, in particular the processing
of existing transactions, resulted in expenses of around
€0.7 billion in the automotive segments in 2022. Total
expenses of around €0.2 billion resulted from the meas-
urement of credit default risks and increased refinancing
expenses in the segment Mercedes-Benz Mobility.
The bulk of the expenses is included in cost of sales.
At the end of October 2022, Mercedes-Benz Group
signed contracts with the Russian car dealer Avtodom AO
for the sale of the shares in the Russian subsidiaries.
Completion of the transaction is subject to authorities'
approval, which have not yet been fully granted, and the
implementation of the contractually agreed conditions.
The group expects a loss in the low hundreds of millions
of euros range on the sale becoming effective. No signif-
icant effects are expected on the liquidity and capital
resources.
The Group continuously monitors the sanctions to be
complied with and the resulting consequences in order
to limit risks to the profitability, cash flows and financial
position to the greatest extent possible.
240
262
4
11
The assets of approximately €1.2 billion and liabilities of
around €1.2 billion in connection with the business activi-
ties in Russia reported in the Consolidated Statement of
Financial Position of 31 December 2022 will be sold on
completion of the transaction. These include financing
liabilities to banks of around €0.4 billion. The Group has
provided a global guarantee for these liabilities, which
will expire on completion of the transaction.
214
48
International
48
233
Unconsolidated subsidiaries
64
70
Germany
29
37
41
International
Joint operations accounted for
using proportionate consolidation
Germany
International
27
1
5
Joint ventures accounted for
using the equity method
International
4
3
Germany
5
8
9
1
-
11
1
1
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
-100,385
Expense of goods sold
-88,942
2022
In millions of euros
Cost of sales
D.18
Items included in cost of sales are shown in table D.18.
Cost of sales
6. Functional costs
2021
2022
1 The reconciliation includes eliminations of intra-Group revenues between the segments.
2 In 2021, the reconciliation includes the parts of Daimler's commercial vehicle business remaining in the Mercedes-Benz Group after the spin-off and hive-down which are not presented
under discontinued operations (revenue according to IFRS 15: €438 million).
133,893
-5,495
139,388
27,941
14,735
96,712
16,728
-2,793
19,521
16,490
242
Depreciation of equipment
Selling expenses
-7,360
858
In millions of euros
Expenses associated with cost optimization programmes
D.19
243
In all functional cost areas, there were effects due to
expenses from cost-optimization programmes in connec-
tion with the measures agreed with the General Works
Council of the former Daimler AG in December 2019 to
reduce costs and reduce jobs in a socially responsible
manner. Expenses of €140 million (2021: €436 million)
were mainly attributable to the Mercedes-Benz Cars
segment. Table D.19 provides an overview of the compo-
sition of these expenses.
Research and non-capitalized development costs
Research and non-capitalized development costs were
€5,602 million in 2022 (2021: €5,467 million) and primari-
ly comprise personnel expenses and material costs.
The amortization expense of capitalized development
costs in the amount of €2,052 million (2021: €1,945 mil-
lion) is presented in expense of goods sold.
In 2022, the cost of sales were primarily affected by
significantly increased raw-material prices, one-time
expenses paid to suppliers and additional costs relating
to inflation and supply chains.
General administrative expenses amounted to €2,584
million in 2022 (2021: €2,808 million). They consist of
expenses which are not attributable to production, sales
or research and development functions, and include
personnel expenses, depreciation and amortization of
fixed and intangible assets, and other administrative
costs.
General administrative expenses
on operating leases
In 2022, selling expenses amounted to €9,482 million
(2021: €9,194 million). Selling expenses consist of direct
selling costs as well as selling overhead expenses and
comprise personnel expenses, material costs and other
selling costs.
-115,997
-5,853
-536
Other cost of sales
from financial services
Impairment losses on receivables
-2,009
-1,863
Mercedes-Benz Mobility
Refinancing costs at
-7,448
-188
-4,631
-103,218
2,173
Miscellaneous assets
-2,702
2021
-1,327
-1,549
Receivables from financial services
-28
-29
Inventories
-4,092
-3,413
Equipment on operating leases
-2,252
-2,533
Property, plant and equipment
-84
-78
-3,776
-4,038
13,106
12,810
-222
-191
248
Other intangible assets
Development costs
In respect of each type of temporary difference and in
respect of each type of unutilized tax-loss carryforwards
and unutilized tax credits, the deferred tax assets and
liabilities before offset are summarized in table D.29.
-687
117,165
-670
similar obligations
119,867
11,451
13,877
2022
In millions of euros
Changes in deferred tax assets/deferred tax liabilities, net
D.30
Taking into account the items recognized in other com-
prehensive income/loss (including items from equity-
method investments), the expense for income taxes is
comprised as shown in table D.31.
The development of deferred tax assets and deferred tax
liabilities, net, is shown in table D.30.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
-1,054
-3,185
tax liabilities, net
Deferred tax assets/deferred
-14,160
-15,995
Deferred tax liabilities, gross
-331
-507
Miscellaneous liabilities
-215
-221
Other provisions
-1,385
-2,940
Provisions for pensions and
Cost of sales
D.20
-259
-18
Change in deferred tax assets/liabilities
on equity-method investments included
in other comprehensive income/loss
-156
Change in deferred tax assets/liabilities on
derivative financial instruments included in other
comprehensive income/loss
-688
Change in deferred tax assets/liabilities on
actuarial gains/losses from defined
57
benefit pension plans included in other
-1,240
-1,122
362
In the Consolidated Statement of Financial Position,
unrecognized deferred tax assets attributable mainly to
foreign companies decreased by €49 million compared
to 31 December 2021. This decrease is due in particular
to adjustments to tax-loss carryforwards for previous
years, especially as a result of expiration. This was partly
offset by changes in foreign currency translation with no
impact on profit and loss.
Disposed of deferred tax assets/liabilities of
Daimler's commercial vehicle business
Other changes¹
-1,243
-165
Deferred tax assets/deferred tax liabilities,
net as of 31 December
-3,185
-1,054
comprehensive income/loss
comprehensive income/loss
-6,157
-7,523
Deferred tax assets, gross
D.31
Tax expense in equity
2022
2021
Deferred tax assets/deferred tax liabilities,
In millions of euros
net as of 1 January
-1,054
2,610
Deferred tax expense/benefit from continuing
operations in the Consolidated Statement of
Income
25
-1,477
Deferred tax expense/benefit from discontinued
operations in the Consolidated Statement of
Income
Income tax expense from continuing operations
in the Consolidated Statement of Income
Income tax expense from discontinued opera-
tions in the Consolidated Statement of Income
-5,495
-4,761
-618
2021
-1
Income tax expense/benefit recognized in other
reserves in Group equity
-2,028
-778
Change in deferred tax assets/liabilities on equity
instruments/debt instruments included in other
1 The other changes primarily relate to changes due to the effects of currency translation.
249
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
At 31 December 2022, unrecognized deferred tax assets
in the Consolidated Statement of Financial Position re-
late, among other things, to corporate income-tax-loss
carryforwards of €92 million. €4 million of unrecognized
deferred tax assets relates to corporate income-tax-loss
carryforwards which expire in 2023, €14 million relates
to tax-loss carryforwards which expire at various dates
from 2024 through 2027, €1 million relates to tax-loss
carryforwards which expire at various dates from 2028
through 2042, and €73 million relates to tax-loss carry-
forwards which can be carried forward indefinitely.
1,258
Income from costs recharged
2021
2022
In millions of euros
Other operating income
D.21
The composition of other operating income is shown in
table D.21.
7. Other operating income and
expense
Personnel expenses included in the Consolidated State-
ment of Income for 2022 amounted to €16,501 million in
2022 (2021: €22,888 million for continuing and discon-
tinued operations). Personnel expenses comprise wages
and salaries in the amount of €13,684 million (2021:
€18,528 million), social-security contributions in the
amount of €2,239 million (2021: €3,357 million) and
expenses from pension obligations in the amount of
€578 million (2021: €1,003 million). The average numbers
of people employed are shown in table D.20.
Personnel expenses and average number of
employees
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
-549
-162
-82
-11
development costs
Research and non-capitalized
-105
-24
General administrative expenses
-103
-20
Selling expenses
1,310
-107
Government grants
141
A large proportion of the unrecognized deferred tax as-
sets relates to tax-loss carryforwards for state and local
taxes at the US companies as well as to temporary dif-
ferences. The Mercedes-Benz Group believes that it is
more likely than not that it will be unable to utilize those
deferred tax assets.
The Group had tax losses in 2022 and prior years at
several subsidiaries in a number of countries. After off-
setting the deferred tax assets with deferred tax liabili-
ties, the deferred tax assets recognized for those entities
amounted to €4 million. The Mercedes-Benz Group
believes it is more likely than not that future taxable
income will be sufficient to allow utilization of these
deferred tax assets. The Group's current estimate of
the amount of deferred tax assets that is considered
realizable may change in the future, necessitating higher
or lower unrecognized deferred tax assets.
From the current perspective, the retained earnings of
non-German subsidiaries are largely intended to be rein-
vested in those operations. The Group did not recognize
deferred tax liabilities on retained earnings which are
intended to be reinvested of non-German subsidiaries of
€27,469 million (2021: €24,892 million). If those earnings
were paid out as dividends, an amount of 5% would be
taxed under German taxation rules and, if applicable,
with non-German withholding tax. Additionally, further
income-tax consequences might arise if the dividends
first have to be distributed by a non-German subsidiary
to a non-German holding company. Normally, the distri-
bution would lead to an additional income-tax expense.
Estimating the amount of taxable temporary differences
for these undistributed foreign earnings would require a
disproportionate effort.
The Group has various unresolved issues concerning
open tax years with the tax authorities in a number of
jurisdictions. The Mercedes-Benz Group believes that
it has recognized adequate liabilities for any future in-
come taxes that may be owed for all open tax years.
Nevertheless, it cannot be ruled out that tax payments
might exceed the liabilities recognized in the financial
statements.
As a result of future adjudications or changes in the
opinions of the fiscal authorities, it cannot be ruled out
that the Mercedes-Benz Group might receive tax refunds
for previous years. In particular, from 2012 to 2021,
Mercedes-Benz Group AG incurred currency exchange
rate-related losses from the financing of Group compa-
nies based abroad totalling €2.1 billion, which were
compensated by corresponding hedging instruments.
For the years until 2021, the German tax authorities con-
sider that exchange rate-related losses from the financ-
ing of Group companies are generally not to be recog-
nized, while the compensating profits from the hedging
activities remain taxable. In 2021, the German Moderni-
zation of Corporate Income Tax Act stipulated that such
exchange rate losses are generally deductible. However,
this only applies from 2022 onwards. The Company
does not share the legal opinion represented by the tax
authorities for the years up to 2021. In the meantime, a
lawsuit has also been filed with the Finance Court.
250
572
Other miscellaneous income
141,052
137,942
Mercedes-Benz Cars2
631
576
Income from company transactions
76
83
not relating to sales financing
Rental income
2021
2022
259
771
plant and equipment
Average number of employees¹
Gains on sales of property,
63
and tax credits
2,888
-1,054
from defined benefit
on the net obligation
Net interest expense
Interest expense
212
273
208
261
Interest and similar income
4
12
3,323
pension plans
on the net assets of
Net interest income
Interest income
2021
2022
In millions of euros
Interest income and interest expense
D.24
and interest expense.
Table D.24 shows the components of interest income
9. Interest income and interest
expense
defined benefit
pension plans
-60
-54
-3,284
-5,520
In millions of euros
2021
2022
Deferred taxes
Current taxes
In millions of euros
to actual income-tax expense
2021
2022
Reconciliation of expected income-tax expense
D.27
Components of income tax expense
D.25
Table D.27 shows a reconciliation of expected income-
tax expense to actual income-tax expense. In order
to determine the expected income-tax expense, the
unchanged applicable German combined statutory tax
rate of 29.825% is multiplied by the profit before taxes.
Table D.25 shows the components of income tax
expense.
10. Income taxes
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
246
-429
-427
-375
-367
Interest and similar expenses
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
25
245
See Note 3 (Spin-off and hive-down of the Daimler
commercial vehicle business) and 4 (Mercedes-Benz
Grand Prix) for further information.
In millions of euros
D.23
2021
2022
Other operating expense
D.22
Table D.23 shows the components of other financial
income/expense, net.
8. Other financial income/expense
The composition of other operating expense is shown
in table D.22.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
244
Other financial income/expense, net
In 2022 income from sale of retail activities in Canada,
which is presented in other operating income and mainly
allocated to the Mercedes-Benz Cars segment, amounts
€514 million. It is included in gains on sales of property,
plant and equipment. The sale of shares in Mercedes-
Benz Grand Prix Ltd. resulted in income of €385 million
in the segment Mercedes-Benz Cars. It is included in
income from company transactions. In the income from
company transactions was included in 2021 the effect
from the fuel-cell joint venture cellcentric GmbH & Co.
KG (cellcentric) with €604 million. For further information
see Note 4.
Income from costs recharged to third parties includes
income from licenses and patents, as well as shipping
costs and other costs recharged to third parties, with
related expenses primarily within functional costs.
See Note 38 for further information about the recharged
costs to Daimler Trucks Holdings AG in 2022.
3 Until the spin-off and hive-down of the Daimler commercial vehicle business reported
segment Daimler Trucks & Buses; no employees are included in the fourth quarter 2021.
2 Proportionally including 2,107 (2021: 2,299) employees from a proportionately
consolidated company.
1 Average number for the active workforce. Average number for quarters 1-4.
250,768
171,382
5,375
4,469
74,186
10,524
9,724
In 2022 and 2021, the use of short-time-work in Germany
led to claims for reimbursement, which are included in
other operating income from government grants.
2022
2021
Losses on sales of property,
Other miscellaneous expenses include, among other
things, expenses in connection with ongoing
governmental and court proceedings and measures
taken relating to Mercedes-Benz diesel vehicles,
expenses from hyperinflation accounting and other
operating expenses passed on to third parties. In 2021,
an expense of €96 million resulted from the effective-
ness of parts of the contractual arrangements to sell
shares in Mercedes-Benz Grand Prix Ltd.
In 2021 the higher other operating expenses are mainly
due to the deconsolidation of assets and liabilities of the
Mercedes-Benz Mobility segment in connection with the
spin-off and hive-down of Daimler's commercial vehicle
business of €782 million (including transaction costs of
€32 million). Included in the year 2022 is an expense of
€184 million from the fair-value measurement less trans-
action costs of the Mercedes-Benz Mobility disposal
groups to the Daimler Truck Group.
317
340
222
-205
95
545
provisions for other risks
Miscellaneous other financial
income/expense, net
-1,735
-1,289
changes in discount rates of
-783
-967
Other miscellaneous expense
compounding and effects from
-782
-184
cial vehicle business
Income and expense from
Spin-off and hive-down of the Daimler commer-
-170
-138
plant and equipment
In millions of euros
In the current year, miscellaneous other financial in-
come/expense, net primarily included expenses from the
measurement of other financial assets while the prior-
year period included in particular income in connection
with the measurement of equity instruments at fair
value.
-1,477
-5,495
-4,761
237
178
obligations
Provisions for pensions and similar
662
368
unused tax credits
Tax-loss carryforwards and
4,356
4,615
financial assets
Other provisions
Miscellaneous assets, mainly other
360
Receivables from financial services
1,123
1,326
2,329
2,368
184
201
58
94,539
78
361
802
1,161
Liabilities
-3,185
Deferred tax assets/Deferred tax liabilities, net
-41
-23
thereof on temporary differences
-4,488
-6,910
Deferred tax liabilities
-263
-214
Unrecognized deferred tax assets
3,434
3,725
Deferred tax assets
13,369
13,024
Miscellaneous liabilities
357
359
Deferred income
2021
2022
At 31 December
2,541
2,369
2021
2022
At 31 December
Property, plant and equipment
Equipment on operating leases
Inventories
Central Functions & Services
19,247
19,631
-5,495
-390
-211
-79
208
393
-307
3
Actual income-tax expense
D.26
Change of unrecognized deferred tax assets
including write-down of deferred tax assets
Tax-free income and non-deductible expenses
Tax expense/income due to applicable income
tax group with discontinued operations
Other
The composition of deferred taxes is shown in table
D.26.
The current tax expense includes tax benefits recognized
for prior periods at German and foreign companies of
€504 million (2021: €286 million).
126
87
44
-22
353
311
-4,716
-6,056
Expected income-tax expense
Foreign tax-rate differential
Trade tax-rate differential
Tax-law changes
Daimler Trucks & Buses³
thereof on tax-loss carryforwards
Mercedes-Benz Mobility
471
Intangible assets
In millions of euros
Split of deferred tax assets and liabilities before offset
D.29
In millions of euros
Deferred tax assets and liabilities
D.28
Deferred tax assets and deferred tax liabilities are offset
if the deferred tax assets and liabilities relate to income
taxes levied by the same taxation authority and if there
is the right to set off current tax assets against current
tax liabilities. In the presentation of deferred tax assets
and liabilities in the Consolidated Statement of Financial
Position, no difference is made between current and
non-current. In the Consolidated Statement of Financial
Position, deferred tax assets and liabilities are presented
as shown in table D.28.
The other items include, among other things, effects
from withholding taxes on dividends, patents and
licenses.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
247
Tax-free income and non-deductible expenses include
all reconciling items of foreign and German companies
relating to tax-free income and non-deductible expens-
es, e.g. tax-free results of the equity-method invest-
ments. The increase compared to the prior year is,
among other things, due to the effect from the non-
deductible loss on the spin-off and hive-down of assets
and liabilities of the Mercedes-Benz Mobility segment
that was included in 2021.
The Group did not recognize the total amount of de-
ferred tax assets in 2022 and 2021. The decrease com-
pared with the previous year is due in particular to the
expiry in 2021 of tax-loss carryforwards previously con-
sidered to be recoverable. This resulted in tax expenses
and the non-recognition of deferred tax income. The
respective amounts are included in the line item change
of unrecognized deferred tax assets including write-
down of deferred tax assets.
For German companies, in 2022 and 2021, deferred taxes
were calculated using a federal corporate income tax
rate of 15%, a solidarity tax surcharge of 5.5% on each
year's federal corporate income taxes, and a trade tax
rate of 14%. In total, the tax rate applied for the calcula-
tion of German deferred taxes in both years amounted
to 29.825%. For non-German companies, the deferred
taxes at period-end were calculated using the tax rates
of the respective countries.
-1,080
-1,477
25
-262
287
Deferred taxes due to temporary differences
Deferred taxes due to tax-loss carryforwards
and tax credits
-397
2021
2022
In millions of euros
Composition of deferred taxes
-4,761
Mercedes-Benz Vans
8,866
-129
8,687
10,216
5,219
51,725
-3,146
48,579
25,216
3,594
6,361
35,171
-82
35,089
Asia
42,996
1,091
136
44,223
-9
44,214
Other markets
5,722
1,599
80
7,401
7,401
Revenue according to IFRS 15
36,290
110,224
North America
Group
179
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
5. Revenue
Revenue disclosed in the Consolidated Statement of
Income includes revenue from contracts with customers
and other revenue not in the scope of IFRS 15.
Revenue from contracts with customers (revenue ac-
cording to IFRS 15) is disaggregated by the two catego-
ries type of products and services and geographical
regions and presented in table D.17. The category type
of products and services corresponds to the reported
segments.
Other revenue primarily comprises revenue from the
rental and leasing business of €11,698 million (2021:
€11,915 million), interest from the financial services
business at Mercedes-Benz Mobility in an amount of
€4,533 million (2021: €5,171 million) and effects from
currency hedging. Interest from the financial services
business includes financial income on the net investment
in leases of €783 million (2021: €914 million).
Revenue according to IFRS 15 includes revenue that was
included in contract liabilities at 31 December 2021 in
an amount of €2,965 million (2021: €2,434 million) and
revenue from performance obligations fully (or partially)
satisfied in previous periods in an amount of €442 mil-
lion (2021: €339 million).
Revenue related to performance obligations that were
unsatisfied (or partially unsatisfied) by the end of the
reporting period that is expected to be recognized within
three years amounted to €6,437 million at 31 December
2022 (2021: €6,170 million). This revenue is mainly de-
rived from long-term service and maintenance contracts
and extended warranties. It does not include perfor-
mance obligations from customer contracts that have
initial expected durations of one year or less. The num-
ber of vehicles in the financial year, for which the ex-
pected original delivery time will exceed twelve months,
was immaterial and are therefore not part of the dis-
closed amount. Long-term performance obligations of
minor importance to the overall contract value of a bun-
dled contract are not considered in assessing the initial
duration of the bundled contract.
The increase in revenue was primarily due to the signifi-
cantly improved pricing at the Mercedes-Benz Cars and
Mercedes-Benz Vans segments.
The composition of the revenue in the Consolidated
Statement of Income is shown by segment in table D.90
and by region in table D.94 in Note 35.
241
D.17
Revenue
In millions of euros
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Mercedes-
Benz
Cars
Mercedes-
Benz
Vans
Mercedes-
Mercedes-
Benz
Mobility
Total
segments
Reconci-
liation¹
Benz
2022
16,500
Europe
138,520
Total
segments
Reconci-
liation¹
Benz
Group
32,217
9,190
4,719
46,126
-2,822
43,304
18,386
6,421
27,075
-33
27,042
36,832
956
191
37,979
-26
37,953
7,104
1,463
11,796
120
Benz
Mobility
Mercedes-
2,268
Mercedes-
-3,237
135,283
Other revenue
Total revenue
1,377
111,601
717
15,158
17,252
14,734
17,217
26,954
155,772
-5,755
-2,518
150,017
Mercedes-
Benz
Cars
Total revenue
Other revenue
Other markets
Asia
Revenue according to IFRS 15
Mercedes-
Benz
Vans
Europe
2021 2
In millions of euros
North America
assets.
D.37
Right-of-use assets
D.35
Table D.35 shows the composition of the right-of-use
24,524
255
1 Primarily changes from currency translation. In 2021, there were opposing effects from the deconsolidation of property, plant and equipment at the segment Mercedes-Benz Cars, which
was impaired in 2020. They amounted to approximately €1.0 billion before depreciation and impairment.
6,866
1,500
Expenses related to lessee accounting
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
2022
20
In millions of euros
Interest expense from
At 31 December
2022
2021
lease transactions
54
51
Expenses from
short-term leases
20
In millions of euros
31
25,148
2021
2,195
43,664
8,461
8,170
Expenses from leases of
14,357
22,127
331
1,498
1,637
18
3,484
-
7
-7
-117
-848
-1,024
-1
-1,990
-52
-13
99
-
34
7,342
15,001
22,832
17
45,192
8,225
7,988
6,267
low-value assets
13. Equipment on operating
leases
14
Future cash outflows that are not
reflected in the lease liabilities
1,876
608
Additions to right-of-use assets
923
918
Depreciations for
land, land rights and buildings
482
573
technical equipment and machinery
134
112
other equipment, factory and
office equipment
21
30
637
715
256
Further information on lessee accounting is provided in
Notes 1, 25 and 34.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
7,180
The development of equipment on operating leases is
shown in table D.39.
D.39
Equipment on operating leases
In millions of euros
2021
11
2022
625
Land, land rights and buildings
2,241
2,320
Expenses from variable
Technical equipment and machinery
451
356
lease payments
27
15
Other equipment, factory and
office equipment
34
35
2,726
2,711
D.38
Cash outflows related to
lessee accounting
The tables D.36, D.37 and D.38 show additional disclo-
sures related to lessee accounting.
In millions of euros
D.36
Additions and depreciation for right-of-use assets
In millions of euros
2022
2021
Total cash outflow
for lease contracts
868
-486
972
275
-4,821
-6,704
-6,934
-627
-19,086
Disposals
Other changes¹
Balance at 31 December 2021
Additions
Reclassifications
Disposals
Other changes¹
Balance at 31 December 2022
-282
-836
-1,394
-252
-2,764
-141
-221
357
-172
-177
15,405
22,818
28,394
2,195
vehicle business held for distribution or sale
Reclassification to assets of the Daimler commercial
Reclassifications
-2,462
In 2022, government grants of €96 million (2021:
€69 million) were deducted from the carrying amount of
property, plant and equipment.
254
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
D.34
Property, plant and equipment (excluding right-of-use assets)
In millions of euros
Acquisition/manufacturing costs
Balance at 1 January 2021
Additions
Other Advance
Land, land rights
and buildings,
including buildings
on land owned by others
Technical equipment,
equipment factory and
and
payments
and
68,812
office construction
machinery equipment in progress
19,968
28,662
34,273
3,906
86,809
164
640
1,424
1,802
4,030
517
1,277
668
Total
-215
112
1,375
Disposals
Other changes¹
Balance at 31 December 2022
Carrying amount at 31 December 2021
Carrying amount at 31 December 2022
9,647
18,588
26,815
223
55,273
418
1,657
1,638
2
3,715
3
-3
-2,415
-4,869
-5,375
-10
-179
-767
-1,223
-12,669
-2,169
-291
-255
Reclassifications
Additions
Balance at 31 December 2021
Other changes¹
1,467
3,421
165
893
Acquisition/manufacturing costs
-2,030
-389
-984
-1,165
-130
-2,668
37
-23
467
122
151
15,330
23,171
29,698
1,517
69,716
Depreciation/impairment
Balance at 1 January 2021
Additions
Reclassifications
Reclassification to assets of the Daimler commercial
vehicle business held for distribution or sale
Disposals
15
Balance at 1 January 2021
2,962
Reclassification to assets of the Daimler commercial
Further information is provided in Notes 3 and 38.
BBAC
Beijing Benz Automotive Co., Ltd. (BBAC) produces and
distributes Mercedes-Benz cars and spare parts in China.
The investment and the proportionate share in the re-
sults of BBAC are allocated to the Mercedes-Benz Cars
segment.
In the second quarter of 2022, the shareholders of BBAC
resolved to pay out a dividend of €653 million for the
second half of 2021. The distribution of a further divi-
dend from financial year 2022 of €761 million was ap-
proved in the fourth quarter. The distributions corre-
spondingly reduced the shareholding's carrying amount.
The dividend payments caused a cash inflow of €1,431
million due to the exchange rate. In the previous year,
two dividends totalling €1,533 million were resolved that
led to a cash inflow of €1,523 million as a result of ex-
change rate effects.
The Mercedes-Benz Group plans to contribute additional
equity of approximately €0.2 billion in accordance with
the shareholding ratio at BBAC.
259
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Other associated companies
Due to the business development of BAIC Motor Corpo-
ration Ltd. (BAIC Motor), the Group recognized an im-
pairment of €120 million on the carrying amount of its
investment in BAIC Motor in the fourth quarter of 2021.
The expenses were included in the line item gains/losses
on equity-method investments. The investment is re-
ported in the reconciliation of the reportable segments
of the Group.
In March 2021, Daimler Financial Services Investment
Company LLC sold all its shares in Via Transportation
Inc., United States to external shareholders. The sale
resulted in income before taxes of €89 million, which
was reported in the line item gains/losses on equity-
method investments, net. The company had been allo-
cated to the Mercedes-Benz Mobility segment.
Table D.43 shows summarized aggregated financial in-
formation according to IFRS for the significant associat-
ed companies accounted for using the equity method
after purchase price allocation, which was the basis for
equity-method accounting in the Group's Consolidated
Financial Statements.
D.43
Summarized IFRS financial information on significant associated companies accounted for using the equity method
Daimler Truck¹
BBAC²
2022
2021
2022
2021
In millions of euros
Information on the statement of income
Revenue
Profit/loss after taxes
Other comprehensive income/loss
Total comprehensive income/loss
50,945
28,418
The extraordinary contribution of €1,309 million into
pension plan assets corresponded to the fair value of the
contributed assets at the contribution date. The gain
of €59 million from the contribution was not cash effec-
tive and is shown under gains/losses on equity-method
investments, which are reported in the reconciliation.
24,820
As of 31 December 2021, the Mercedes-Benz Group held
a 35% stake in Daimler Truck Holding AG. In January
2022, about 5% of the shares of Daimler Truck Holding
AG were transferred to Mercedes-Benz Pension Trust
e.V. and contributed to the pension plan assets. As a
result of this transaction, the shareholding in Daimler
Truck for the equity-method inclusion declined to ap-
proximately 30% and thus the equity-method carrying
amount decreased by €1,250 million.
Daimler Truck
Proportionate stock-market prices.
3 Figures for the equity-method gains/losses of Daimler Truck in the year 2021 are for the period of 10 December to 31 December 2021.
258
30.0
49.0
7,149
8,199
2,973
1,367
12,539
226
1,711
-3
1,934
35.0
49.0
9,301
8,762
2,753
1,137
12,652
-1
1,553
-13
1,539
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Associated companies
The Daimler Truck Group is one of the world's largest
commercial vehicle manufacturers. Its product portfolio
comprises light-, medium- and heavy-duty trucks, city
buses and intercity buses, coaches and bus chassis. In
addition financial services aligned to the product portfo-
lio are offered. The investment is reported in the recon-
ciliation of the reportable segments of the Group.
2,763
2,265
3,649
25,153
6,748
6,148
Equity (excluding non-controlling interests) attributable to the Group
8,107
8,579
3,306
3,013
Unrealized profit (-)/loss (+) on sales to/purchases from
-332
-258
Other reconciliation effects including equity-method goodwill and impairments on the investment
92
183
-1
-2
Equity-method carrying amount
8,199
8,762
2,973
2,753
1 Daimler Truck:
Figures for the statement of income relate to the period of 1 January to 31 December.
Figures for the statement of financial position and the reconciliation to the equity-method carrying amounts relate to the balance sheet date of 31 December and include investor level
adjustments.
2 BBAC:
Figures for the statement of income relate to the period of 1 January to 31 December.
Figures for the statement of financial position and the reconciliation to the equity-method carrying amounts relate to the balance sheet date of 31 December and include investor level
adjustments.
260
27,727
8,116
8,592
18,816
21,288
3,205
1,320
1,196
52
-34
4,083
3,461
3,701
3,171
Information on the statement of financial position and reconciliation to the equity-method carrying amounts
Non-current assets
38,957
33,561
2 Including investor-level adjustments.
7,101
Current assets
32,371
28,370
9,361
8,197
Non-current liabilities
22,451
17,962
1,122
1,112
Current liabilities
Equity (including non-controlling interests)
21,150
7,179
Equity-method gains/losses²
Equity-method carrying amount²
Stock-market price¹
Additions
Disposals
Other changes¹
Balance at 31 December 2022
Carrying amount at 31 December 2021
Carrying amount at 31 December 2022
1 Primarily changes from currency translation.
2 The additions include €6,718 million that were not acquired from external dealers.
At 31 December
2022
2021
Maturing
Within one year
7,307
8,092
15,052
Between one and two years
5,390
5,343
8,073
Between two and three years
2,170
Property, plant and equipment, excluding right-of-use
assets, developed as shown in table D.34.
-2,479
Between three and four years
861
1,167
-8,040
Balance at 31 December 2021
Other changes¹
Disposals
vehicle business held for distribution or sale
62,604
20,265
The carrying amount of the equipment on operating
leases includes leased right-of-use assets from recog-
nized head leases with the Daimler Truck Group of
€0.5 billion (2021: €1.1 billion).
At 31 December 2022, equipment on operating leases
with a carrying amount of €9,663 million was pledged as
security for liabilities from ABS transactions (2021:
€12,915 million). These liabilities related to a securitiza-
tion transaction of future lease payments on leased ve-
hicles (see also Note 25).
Leasing payments
Future lease payments to the Mercedes-Benz Group for
equipment on operating leases are due as presented in
table D.40.
vehicle business held for distribution or sale
Disposals
Other changes¹
Balance at 31 December 2021
-6,748
-21,864
3,350
Between four and five years
D.40
Maturity of undiscounted lease payments for
equipment on operating leases
Additions²
Disposals
-20,200
Other changes¹
1,356
In millions of euros
Balance at 31 December 2022
56,026
Depreciation/impairment
Balance at 1 January 2021
Additions
Reclassification to assets of the Daimler commercial
57,607
Additions
222
530
Total
12,539
991
13,530
1,934
-202
1,732
12,652
936
13,588
1,539
-187
1,352
Key figures on interests in associated companies accounted for using the equity method
Daimler
Truck³
BBAC
Others
Total
In millions of euros
At 31 December 2022
Equity interest (in %)
Stock-market price¹
Equity-method carrying amount²
Equity-method gains/losses²
At 31 December 2021
1
Equity interest (in %)
Joint
Associated
companies ventures
D.42
1 Including investor-level adjustments.
Later than five years
122
89
13,136
Total lease payments
16,072
17,899
7,360
-6,341
319
14,474
44,471
41,552
246
257
14. Equity-method investments
Table D.41 shows the carrying amounts and profits/
losses from equity-method investments.
Table D.42 presents key figures on interests in associat-
ed companies accounted for using the equity method in
the Group's Consolidated Financial Statements.
D.41
Summarized carrying amounts and gains/losses on equity-method investments
In millions of euros
At 31 December 2022
Equity-method carrying amount¹
Equity-method gains/losses¹
At 31 December 2021
Equity-method carrying amount¹
Equity-method gains/losses¹
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Property, plant and equipment as shown in the Consoli-
dated Statement of Financial Position with a carrying
amount of €27,250 million (2021: €27,859 million) also
includes right-of-use assets, that the Group received as
lessee.
17,263
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
3,480
497
2,983
23,924
3,875
19,155
894
23
-2
-1
26
-2,465
-347
-2,118
Balance at 31 December 2022
-4
-360
-186
-550
2,073
Additions
11,629
2,807
8,559
263
Balance at 1 January 2021
Other changes¹
Depreciation/impairment
4,196
21,733
876
-49
10
-45
-14
26,805
Disposals
Additions
Balance at 31 December 2021
Goodwill (internally
(acquired) generated)²
intangible
Other
Develop-
ment
costs
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
In millions of euros
assets
(acquired)
Intangible assets
251
Non-amortizable intangible assets primarily relate to
goodwill and development costs for projects which have
not yet been completed (carrying amount at 31 Decem-
ber 2022: €4,496 million; 2021: €4,201 million). In addi-
tion, other intangible assets with a carrying amount of
€190 million (2021: €135 million) are not amortizable.
These non-amortizable intangible assets are distribution
rights in the vehicle segments with indefinite useful
lives. The Group plans to continue to use these assets
unchanged.
At 31 December 2022, goodwill of €389 million (2021:
€389 million) relates to the Mercedes-Benz Mobility
segment, goodwill of €337 million (2021: €352 million)
relates to the Mercedes-Benz Cars segment and goodwill
of €23 million (2021: €23 million) relates to the
Mercedes-Benz Vans segment.
Intangible assets developed as shown in table D.32.
11. Intangible assets
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
12. Property, plant and equipment
D.32
490
Acquisition/manufacturing costs
Additions
Other changes¹
Disposals
-4,566
-1,009
-2,770
-787
vehicle business held for distribution or sale
Balance at 1 January 2021
Reclassification to assets of the Daimler commercial
355
2,378
171
28,028
4,878
21,666
1,484
2,904
2,563
Total
vehicle business held for distribution or sale
Amortisation expense for intangible assets
in the Consolidated Statement of Income¹
D.33
Table D.33 shows the line items of the Consolidated
Statement of Income in which total amortization expense
for intangible assets is included.
The goodwill reported in 2021 in the line items reclassifi-
cation to assets held for distribution or sale of the
Daimler commercial vehicle business comprises the
goodwill of the cash-generating units Daimler Trucks and
Daimler Buses reported until spin-off and hive-down of
Daimler's commercial vehicle business. In addition, parts
of the goodwill of the cash-generating unit Mercedes-
Benz Mobility are allocated, which were determined on
the basis of relative values of the disposed of and re-
maining business operations. Before classification as
held for sale or distribution, all assets and liabilities were
measured in accordance with the applicable IFRS.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
252
2 Including capitalized borrowing costs on development costs of €79 million (2021: €45 million). Amortization amounted to €9 million (2021: €10 million).
In millions of euros
1 Primarily changes from currency translation.
1,583
13,537
749
15,005
1,544
12,697
764
15,869
Carrying amount at 31 December 2022
Cost of sales
General administrative expenses
253
Reclassification to assets of the Daimler commercial
1 The prior year includes the amortization of intangible assets of Daimler's commercial
vehicle business until 31 July 2021.
2,563
2,409
33
21
Selling expenses
75
53
2,402
2,265
2021
2022
development costs
Research and non-capitalised
69
Carrying amount at 31 December 2021
54
2,613
-2
6
-2,384
-278
-2,106
Balance at 31 December 2022
Other changes¹
-6
Disposals
Other changes¹
Disposals
-2,887
-682
-139
10,936
-2,066
Additions
-2
Balance at 31 December 2021
-6
8,196
2
-2
-386
-6
-68
-1
-317
2,409
348
2,061
-
8,919
2,331
6,458
127
130
3,053
78,742
83,890
1,566
368
past due more than 180 days
past due 91 to 180 days
past due 61 to 90 days
2,033
past due 31 to 60 days
past due 30 days and less
79,271
353
430
521
394
93
1,008
8
54
492
194
50
244
not past due
2
81,128
thereof
20
At 31 December 2021¹
86,747
370
not past due
80,192
3,061
268
83,521
past due 30 days and less
631
537
239
1,407
past due 31 to 60 days
464
46
530
past due 61 to 90 days
past due 91 to 180 days
past due more than 180 days
9
215
42
266
425
425
598
598
Gross carrying amount
648
468
1 Including the part of the gross carrying amount that was reclassified to the "Assets held for sale" item of the Consolidated Statement of Financial Position.
665
recognized at fair value through profit or loss
Derivative financial instruments
used in hedge accounting
1,995
2,463
128
892
1,020
Other financial assets recognized
at fair value through profit or loss
442
142
584
38
23
61
Other receivables and miscellaneous other financial assets
2,543
902
3,445
2,913
690
3,603
3,453
4,478
1,618
665
671
671
911
265
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
16. Marketable debt securities and
similar investments
The marketable debt securities and similar investments
with a carrying amount of €7,060 million (2021: €7,579
million) are part of the Group's liquidity management
and comprise financial instruments recognized at fair
value through other comprehensive income, at fair value
through profit or loss, or at amortized cost.
When a short-term liquidity requirement is covered with
quoted securities, those securities are presented as cur-
rent assets.
At 31 December 2022, the Group held marketable debt
securities and similar investments in the amount of
€0.1 billion (2021: €0.4 billion) which can be used as
collateral for open-market transactions with the
Deutsche Bundesbank.
Further information on marketable debt securities and
similar investments is provided in Note 33.
17. Other financial assets
The line item other financial assets presented in the
Consolidated Statement of Financial Position is com-
prised as shown in table D.49.
Other financial assets recognized at fair value through
profit or loss relate exclusively to derivative financial
instruments which are not used in hedge accounting.
At 31 December 2022, other financial assets included
receivables with a carrying amount of €461 million
(2021: €908 million) that were pledged as collateral for
liabilities.
Further information on other financial assets is provided
in Note 33.
D.49
648
Other financial assets
Equity instruments and debt instruments
recognized at fair value through other comprehensive income
At 31 December 2022
Current Non-current
Total
Current Non-current
At 31 December 2021
Total
1,439
1,439
1,576
1,576
768
768
911
In millions of euros
4,277
-5
Gross carrying amount
thereof
-275
-118
-419
-812
Reversals
Transfer to stage 1
135
-89
-46
Transfer to stage 2
-34
59
-25
Transfer to stage 3
7,931
-38
43
Assets of the Daimler commercial vehicle business held for distribution
-91
-33
-269
-393
Currency translation and other changes
19
11
21
51
-249
Balance at 31 December 2021¹
-211
-20
Development of loss allowances for receivables from financial services
due to expected credit losses
In millions of euros
12-month expected
credit loss
Lifetime expected
Total
credit loss
not
credit
impaired
credit
impaired
(Stage 1)
(Stage 2)
(Stage 3)
Balance at 1 January 2021
Additions
Remeasurement changes
Utilisation
453
254
891
1,598
204
46
253
503
-47
68
318
339
-18
80,852
339
556
-25
30
Currency translation and other changes
-27
-3
-77
-107
Balance at 31 December 2022
364
170
664
1,198
1 Including the part of the gross carrying amount that was reclassified to the "Assets held for sale" item of the Consolidated Statement of Financial Position.
264
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
D.48
Credit risks included in receivables from financial services
12-month expected
credit loss
Lifetime expected
Total
credit loss
not
credit
impaired
credit
impaired
(Stage 1)
(Stage 2) (Stage 3)
In millions of euros
At 31 December 2022
-5
142
Transfer to stage 3
41
1,037
158
39
215
412
Additions
Remeasurement changes
39
89
330
458
-2
-14
-104
-120
Utilisation
-174
-58
-250
-482
Reversals
Transfer to stage 1
61
-41
-20
Transfer to stage 2
-25
-16
3,079
2021
6,260
87
119
Additions
Remeasurement changes
2
6
8
Utilisation
Reversals
-4
-21
-25
-16
-38
-54
Transfer to stage 2
Transfer to stage 3
Currency translation and other effects
Balance at 31 December 2022
269
-4
4
4
-7
-3
70
120
32
190
145
56
(Stage 3)
101
123
224
17
44
61
6
6
-15
-14
-29
-19
-46
-65
-4
4
Transfer to stage 2
Transfer to stage 3
Assets of the Daimler commercial vehicle business held for distribution
-26
-28
-54
Currency translation and other effects
2
2
Balance at 31 December 2021
89
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Credit risks
Information on credit risks included in trade
receivables is shown in table D.54.
past due more than 180 days
133
282
415
At 31 December 20211
Gross carrying amount
thereof
not past due
past due 30 days and less
past due 31 to 60 days
7,731
117
7,848
6,788
2
6,790
566
1
567
102
102
past due 61 to 90 days
36
1
37
past due 91 to 180 days.
56
147
39
108
past due 91 to 180 days
D.54
Credit risks included in trade receivables
In millions of euros
At 31 December 2022
Gross carrying amount
thereof
Lifetime expected credit loss
Total
not
credit
impaired
credit
impaired
(Stage 2) (Stage 3)
7,923
367
(Stage 2)
8,290
6,691
41
6,732
past due 30 days and less.
659
5
664
past due 31 to 60 days
224
224
past due 61 to 90 days
108
108
not past due
3,181
credit
impaired
not
credit
187
155
342
Prepaid expenses
451
83
534
445
121
566
Asset from defined benefit pension plans
738
738
608
608
Other
761
264
1,025
568
214
782
4,472
1,677
6,149
4,073
1,536
327
5,609
153
Other expected reimbursements
266
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
18. Other assets
Non-financial other assets are comprised as shown in
table D.50.
Other expected reimbursements predominantly relate to
recovery claims against our suppliers in connection with
issued product warranties.
D.50
Other assets
In millions of euros
Current Non-current
At 31 December 2022
Total
At 31 December 2021
Current Non-current
Total
Reimbursements due to income tax refunds
Reimbursements due to other tax refunds
577
402
979
591
398
989
2,509
37
2,546
2,282
40
2,322
174
267
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
19. Inventories
products held for resale
19,058
14,829
Advance payments to suppliers
163
180
25,621
21,466
Inventories increased significantly compared to 31 De-
cember 2021 as a result of high levels of inventory in-
tended for delivery.
The amount of write-down of inventories to net realiza-
ble value recognized as an expense in cost of sales was
€543 million in 2022 (2021: €231 million). Inventories that
are expected to be recovered or settled after more than
twelve months amounted to €724 million at 31 December
2022 (2021: €755 million) and are primarily spare parts.
To secure obligations from partial retirement and long-
term working accounts, a number of company cars
and demonstration vehicles included in inventories of
Mercedes-Benz AG in the amount of €854 million is
pledged as collateral to Mercedes-Benz Pension Trust
e.V. as of 31 December 2022 (2021: €791 million).
At 31 December 2022, €48 million of the trade receiva-
bles mature after more than one year (2021: €32 million).
Trade receivables are primarily receivables from con-
tracts with customers within the scope of IFRS 15.
Loss allowances
The development of loss allowances due to expected
credit losses for trade receivables is shown in table D.53.
268
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
D.53
Development of loss allowances for trade receivables due to expected credit losses
In millions of euros
Balance at 1 January 2021
Additions
Remeasurement changes
Utilisation
Reversals
Lifetime expected credit loss
Total
Finished goods, spare parts and
7,673
8,100
Net carrying amount
Inventories are comprised as shown in table D.51.
20. Trade receivables
Trade receivables are comprised as shown in table D.52.
D.51
Inventories
In millions of euros
D.52
Trade receivables
At 31 December
At 31 December
2022
2021
2022
impaired
D.47
Raw materials and
Gross carrying amount
8,290
7,818
manufacturing supplies
2,909
2,488
Loss allowances
-190
-145
Work in progress
3,491
3,969
In millions of euros
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Finance-lease contracts
19,185
ances.
Longer overdue periods regularly lead to higher allow-
Information on credit risks included in receivables from
financial services is shown in table D.48.
Credit risks
The carrying amounts of receivables from financial ser-
vices based on modified contracts that are shown in
stages 2 and 3, amounted to €223 million at 31 Decem-
ber 2022 (2021: €392 million). In addition, carrying
amounts of €135 million in connection with contractual
modifications were reclassified at 31 December 2022
from stages 2 and 3 into stage 1 (2021: €210 million).
The development of loss allowances for receivables from
financial services due to expected credit losses is shown
in table D.47.
Loss allowances
At the beginning of the contracts, collaterals of usually
at least 100% of the carrying amounts were agreed,
which are backed by the vehicles based on the underly-
ing contracts. Over the contract terms, the amounts of
the collaterals are included in the calculation of the risk
provisioning, so the net carrying amounts of the credit-
impaired contracts are primarily backed by the underly-
ing vehicles.
In 2022, the Mercedes-Benz Group recognized a gain of
€177 million (2021: €203 million) from the difference
between the additions to receivables from finance-lease
contracts and the carrying amounts of the underlying
assets.
All cash-flow effects attributable to receivables from
financial services are presented within cash flow from
operating activities in the Consolidated Statement of
Cash Flows.
Receivables from finance-lease contracts consist of re-
ceivables from leasing contracts for which all substantial
risks and rewards incidental to the leasing objects are
transferred to the lessee.
Receivables from sales financing with dealers represent
loans for floor financing programmes for vehicles pur-
chased from the Mercedes-Benz Group. In addition,
these receivables also relate to the financing of other
assets that the dealers purchased from third parties, in
particular used vehicles or property.
Receivables from sales financing with customers include
receivables from credit financing for customers who
purchased their vehicle either from a dealer or directly
from the Mercedes-Benz Group.
Types of receivables
Table D.45 shows the components of receivables from
financial services.
15. Receivables from financial
services
Table D.46 shows the maturities of the future contractu-
al lease payments and the development of lease pay-
ments to the carrying amounts of receivables from fi-
nance-lease contracts.
Further information on impairments, financial risks and
types of risks is provided in Note 34.
262
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
50,518
32,055
18,463
51,411
32,223
19,188
Sales financing with customers
Total
Current Non-current
Total
Current Non-current
At 31 December 2021
At 31 December 2022
In millions of euros
Receivables from financial services
D.45
At 31 December 2022, receivables from financial services
with a carrying amount of €11,931 million (2021: €10,378
million) were pledged mostly as collateral for liabilities
from ABS transactions (see also Note 25).
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
-106
-193
D.44
Further information on equity-method investments is
provided in Note 38.
Table D.44 shows summarized aggregated financial
information for the other minor equity-method in-
vestments after purchase-price allocation and on a
pro-rata basis.
In the fourth quarter of 2021, the shareholders Daimler
Greater China Ltd. and BYD Automotive Industry Co.,
Ltd (BYD) signed a contract on the structural realign-
ment of the joint venture Shenzhen DENZA New
Energy Automotive Co. Ltd. (DENZA). In the first
quarter of 2022 the Mercedes-Benz Group contributed
additional equity of €0.1 billion to its investment in
DENZA in accordance with its shareholding of 50% at
that time. At 30 June 2022 the Group transferred 40%
of the shares of DENZA to BYD. After the equity trans-
fer, the Mercedes-Benz Group holds an equity interest
of 10% while BYD holds 90%. Now DENZA is included
in the Consolidated Financial Statements as equity
instrument under IFRS 9. The company is allocated to
the Mercedes-Benz Cars segment. The transaction has
not had material effects on profitability, liquidity and
capital resources and financial position.
The increase of the carrying amount of the joint ven-
tures is mainly due to the completion of the acquisi-
tion of a 33.33% stake in Automotive Cells Company
SE (ACC) in May 2022. Further information is provided
in Note 4.
Joint ventures
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
183
77
260
1 Including the part of allowances that was reclassified to the "Assets held for sale" item of the Consolidated Statement of Financial Position.
Further information on financial risk and types of risk
is provided in Note 34.
270
36
263
past due more than 180 days
Summarized aggregated financial information on minor equity-method investments
Sales financing with dealers
In millions of euros
Profit/loss after taxes
68
-47
3
38
-60
-109
-193
30
13
2021
2022
2021
Joint ventures
Associated companies
2022
261
Total comprehensive income/loss
Other comprehensive income/loss
Summarized aggregated financial information (pro rata)
11,198
92
14,702
1,044
between four and five years
1,733
1,776
between three and four years
2,540
2,699
later than five years
between two and three years
5,168
between one and two years
6,808
6,527
within one year
thereof due
17,060
4,737
212
277
Unguaranteed residual values
3,504
18,851
-259
-454
Net carrying amount
Loss allowances
19,444
19,305
Gross carrying amount
-1,627
-1,784
Unearned finance income
21,071
21,089
Gross investment
4,011
3,663
17,426
Contractual future lease payments
965
At 31 December
2022
550
1,329
890
439
Net carrying amount
Loss allowances
Gross carrying amount
Residual-value receivables
19,444
12,117
7,327
19,305
12,296
7,009
2021
2,432
7,726
914
1,464
10,158
48,913
Development of the receivables from finance-lease contracts
37,834
-522
In millions of euros
80,625
46,955
-959
-563
-396
33,670
85,549
D.46
37,312
-1,198
-676
81,584
47,518
34,066
86,747
48,237
-50
demographic assumptions
Interest cost
Actuarial gains (-)/losses from changes in
22
106
Other exchange-traded instruments
Contributions by plan participants
41
14,623
11,297
Bonds
258
324
-14
31
Exchange-traded instruments
non-exchange-traded instruments
21,769
183
-1,077
-933
Pension benefits paid
Cash and cash equivalents
7
-1
Past service cost, curtailments and settlements
Real estate
-3,618
-7,910
Actuarial gains (-)/losses
-3,604
-7,860
financial assumptions
Alternative investments and other
Actuarial gains (-)/losses from changes in
18,136
140
The fair value of the plan assets is predominantly deter-
mined by the situation on the capital markets. Unfavour-
able developments, especially of equity prices and fixed-
interest securities, could reduce that fair value. The di-
versification of investment funds, the engagement of
asset managers using quantitative and qualitative anal-
yses, and the continual monitoring of performance and
risk help to reduce the associated investment risk.
As long as the commitments of the defined benefit pen-
sion plans remain overfunded by the plan assets, the
Mercedes-Benz Group will only make additional pension
contributions when legally and economically necessary.
823
Composition of plan assets
D.59
In millions of euros
Present value of the defined benefit obligations and fair
value of the plan assets
D.58
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
278
The investment strategy is reviewed regularly and ad-
justed if deemed necessary. The investment strategy is
determined by Investment-Committees, which are gen-
erally composed of representatives of the Finance and
Human Resources departments. The investment strategy
for the pension plan assets is generally oriented towards
the structure of the pension obligations.
Market prices are usually available for equity instruments
and bonds due to their listing in active markets. Most
of the bonds have investment grade ratings. They include
government bonds of very good creditworthiness.
Plan assets are used solely to fulfil pension obligations
and to cover the administration costs of the plan assets.
The composition of the Group's pension plan assets is
shown in table D.59.
Composition of plan assets
The development of the present value of the defined
benefit obligations and of the fair value of plan assets is
shown in table D.58. The development in 2021 includes
effects of the Daimler commercial vehicle business until
the date of deconsolidation and presents continuing and
discontinued operations.
Reconciliation of the net obligation from defined
benefit obligations
As a general principle, it is the Group's objective to de-
sign new pension commitments as defined benefit plans
based on capital components or on contributions, or as
defined contribution plans.
Non-exchange-traded instruments
The obligations from defined benefit pension commit-
ments and the pension plan assets can be subject to
fluctuations over time. This can have a negative or a
positive effect on the funded status. Fluctuations in
the defined benefit pension obligations result at the
Mercedes-Benz Group in particular from changes in fi-
nancial assumptions such as discount rates and increas-
es in the cost of living, but also from changes in demo-
graphic assumptions such as adjusted life expectancies.
With most of the German plans, expected long-term
wage and salary increases do not have an impact on the
amount of the obligation.
The general requirements with regard to retirement ben-
efit models are included in policies with Group-wide
validity. Accordingly, the committed benefits are intend-
ed to contribute to additional financial security during
retirement, and in the case of death or invalidity to be
capable of being planned and fulfilled by the respective
company of the Group and to have a low-risk structure.
In addition, a committee exists that approves new pen-
sion plans and amendments to existing pension plans as
well as policies relating to company retirement benefits.
At 31 December
Securitized bonds
2022
At 31 December
2022
522
Current service cost
10,221
8,588
Corporate bonds
39,846
28,504
obligations at 1 January
4,219
2,569
Government bonds
Present value of the defined benefit
7,124
6,733
Equity instruments¹
In millions of euros
2021
2021
Reduction of the present value of the defined
benefit obligations resulting from the spin-off
-1,014
609
-604
2021
-522
In millions of euros
2022
At 31 December
Pension costs
D.60
The components of pension costs included in the Con-
solidated Statement of Income are shown in table D.60.
In 2021, it encompassed the pension costs for continuing
operations.
Pension costs
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
279
24,212
20,526
Fair value of plan assets at 31 December
328
-68
-9
Currency exchange-rate changes and other
changes
Current service cost
curtailments and settlements
280
Calculation of the sensitivity of life expectancy by means
of fixed (non-age-dependent) factors for a reference
person results in a life expectancy one year higher or one
year lower.
The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as im-
portant. This means that if there is a simultaneous
change in several parameters, the individual results can-
not be summed due to correlation effects. With a change
in the parameters, the sensitivities shown cannot be
used to derive a linear development of the defined bene-
fit obligation.
An increase or decrease in the main actuarial assump-
tions would affect the present value of the defined bene-
fit pension obligations as shown in table D.62.
Sensitivity analysis
Table D.61 shows the significant weighted average meas-
urement factors used to calculate pension benefit obli-
gations.
Calculation of the defined benefit obligations uses life
expectancy for the German plans based on the Heubeck
2018 G mortality tables. Comparable country-specific
calculation methods are used for international plans.
Measurement assumptions
The measurement date for the defined benefit pension
obligations and plan assets is generally 31 December.
The measurement date for the periodic pension cost is
generally 1 January. The assumptions used to calculate
the defined benefit obligations vary according to the
economic conditions of the countries in which the pen-
sion plans are situated.
-650
-554
4
12
Net interest income
-41
-45
Net interest expense
1
Past service cost,
-6,097
commercial vehicle business
resulting from the spin-off of Daimler's
28,504
20,444
Present value of the defined benefit
obligations at 31 December
328
-103
-8,094
of Daimler's commercial vehicle business
Currency exchange-rate changes and other
changes
1 Including the shares in Nissan in the amount of €434 million (2021: €665 million).
24,212
20,526
2,443
2,390
1,281
1,139
570
642
592
Fair value of plan assets at 1 January
24,212
28,870
Interest income from plan assets
Reduction of the fair value of plan assets
Risks from defined benefit pension plans and
pension plan assets
-890
Pension benefits paid
30
40
Contributions by plan participants
852
Fair value of plan assets
1,448
1,243
-4,216
Actual profit/loss on plan assets
1,055
-4,507
Actuarial gains/ losses (-)
188
291
Contributions by the employer
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
1,258
-257
component of annual
bonus of the members
of the Board
of Management
Medium-term
28
43
-20
-17
thereof PPSP of the
members of the Board of
Management
515
654
-427
-233
PPSP
In millions of euros
2021
At 31 December
2022
2021
2022
-8
Provision
-7
12
Commitments specific to various countries for defined
benefit pension plans and defined contribution pension
commitments exist at the Mercedes-Benz Group.
23. Pensions and similar
obligations
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
275
In the case that participants have been transferred from
a company of the Mercedes-Benz Group to a company of
Daimler Truck Group or vice versa, the provision has also
been transferred against a compensation payment to the
extent possible. The PPSP is ultimately paid out by the
new employer company. In the case that the provision
could not be transferred, a reimbursement agreement
is in place for the portion of the PPSP that was earned in
a company of the respective other group prior to the
spin-off.
With the completion of the spin-off and hive-down of
the Daimler commercial vehicle business in 2021, the
outstanding PPSP plans were continued as Group-
specific plans. In this context, the plan conditions for the
PPSP 2019 to PPSP 2021 plans that are still outstanding
have been adjusted in 2021.
The Group recognizes a provision for awarding the PPSP
in the Provisions for other risks in the Consolidated
Statement of Financial Position. Since payment per
vested phantom share depends on the quoted price of
Mercedes-Benz Group AG's share, that quoted price
essentially represents the fair value of each phantom
share at the balance sheet date. The proportionate re-
muneration expenses from the PPSP recognized in the
individual years are measured based on the price of
Mercedes-Benz Group AG shares and the estimated tar-
get achievement.
Special rules apply for the members of the Board of
Management: the Mercedes-Benz Group's RoS must be
not only equal to but higher than that of the competitors
in order to obtain the same target achievement as the
other plan participants. Furthermore, an additional limit
on target achievement was agreed upon for the refer-
ence parameter RoS for the members of the Board of
Management. In the case of target achievement between
195% and 200%, an additional comparison is made on
the basis of the RoS achieved in absolute terms. If the
actual RoS for the automotive business is below the
strategic target in the third year of the performance peri-
od, target achievement is limited to 195%.
For the issued PPSP plans, the degree of target achieve-
ment is determined on the basis of the relative share
performance, which measures the performance devel-
opment of the Mercedes-Benz Group share compared
with the development of a performance index based on a
group of competitors including the Mercedes-Benz
Group, and the return on sales (ROS) of the Mercedes-
Benz Group compared with the average revenue-
weighted RoS of a group of competitors.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
274
In 2022, as in previous years, the Group issued a Perfor-
mance Phantom Share Plan (PPSP), under which eligible
board members and employees of the Mercedes-Benz
Group are granted phantom shares entitling them to
receive cash payments after four years. During the four-
year period between the allocation of the preliminary
phantom shares and the payout of the plan after the end
of the term, the phantom shares earn a dividend equiva-
lent to the amount of the actual dividend paid on real
Mercedes-Benz Group shares in the respective year. The
amount of cash paid after the end of the holding period
is based on the final number of vested phantom shares
(determined after three years according to the degree of
target achievement of specific performance indicators)
multiplied by the quoted price of the Mercedes-Benz
Group's ordinary shares (calculated as an average price
over a specified period after the end of the four-year
plan period). The vesting period is therefore four years.
For the existing plans, the quoted price of the phantom
shares to be used for the payout is limited to 2.5 times
the phantom share price at the date of grant. Further-
more, the payout for the members of the Board of Man-
agement is also limited to 2.5 times the allotment value
used to determine the preliminary number of phantom
shares. The limitation of the payout for the members of
the Board of Management also includes the dividend
equivalents.
Performance Phantom Share Plans
527
669
-434
-241
15
Furthermore, certain foreign subsidiaries, mainly in the
United States, provide their employees with post-
employment healthcare benefits with defined entitle-
ments, which have to be accounted for as defined bene-
fit plans.
Effects of share-based payment from continuing operations
Expense
The details shown in table D.55 do not represent any
paid or committed remuneration, but refer to expenses
calculated according to IFRS.
By resolution of the Annual General Meeting on 8 July
2020, the Board of Management is authorized, with the
consent of the Supervisory Board, until 7 July 2025 to
acquire treasury shares in a volume up to 10% of the
share capital issued as of the day of the resolution or
if this is lower - of the share capital existing at the time
of the authorization being exercized, to be used for all
permissible purposes. The shares can be used, among
other things, with the exclusion of shareholders' sub-
scription rights, for business combinations or to acquire
companies or to be sold to third parties for cash at a
price that is not significantly lower than the stock-
exchange price of the Company's shares. The acquired
shares can also be used to fulfil obligations from issued
convertible bonds and/or bonds with warrants and to be
issued to employees of the Company and employees and
board members of the Company's subsidiaries pursuant
to Sections 15 et seq. of the German Stock Corporation
Act (AktG). The treasury shares can also be cancelled.
Treasury shares
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
271
No use was made of this authorization to issue converti-
ble and/or warrant bonds in the reporting period.
In order to fulfil the conditions of the above-mentioned
authorization, the Annual General Meeting on 8 July 2020
also resolved to increase the share capital conditionally
by an amount of up to €500 million (Conditional Capital
2020).
By resolution of the Annual General Meeting on 8 July
2020, the Board of Management is authorized, with the
consent of the Supervisory Board, until 7 July 2025 to
issue convertible and/or warrant bonds or a combination
of these instruments ("bonds") with a total face value of
up to €10.0 billion and a maturity of no more than ten
years. The Board of Management is allowed to grant the
holders of these bonds conversion or warrant rights for
new registered no-par-value shares in Mercedes-Benz
Group AG with an allocable portion of the share capital
of up to €500 million in accordance with the details de-
fined in the terms and conditions of the bonds. The
bonds can be offered in exchange for cash and/or non-
cash contributions, in particular for shares in other com-
panies. The terms and conditions of the bonds can in-
clude warranty obligations or conversion obligations. The
bonds can be issued once or several times, wholly or in
instalments, or simultaneously in various tranches as
well as by subsidiaries of the Company within the mean-
ing of Sections 15 et seq. of the German Stock Corpora-
tion Act (AktG). Among other things, the Board of Man-
agement is authorized with the consent of the Superviso-
ry Board to exclude shareholders' subscription rights for
the bonds under certain conditions and within defined
constraints.
Conditional capital
Approved Capital 2018 has not yet been utilized.
The Annual General Meeting held on 5 April 2018 author-
ized the Board of Management, with the consent of
the Supervisory Board, to increase the share capital of
Mercedes-Benz Group AG in the period until 4 April
2023, by a total of €1.0 billion in one lump sum or by
separate partial amounts at different times by issuing
new, registered no-par-value shares in exchange for cash
and/or non-cash contributions (Approved Capital 2018).
The new shares are generally to be offered to the share-
holders for subscription (also by way of indirect sub-
scription pursuant to Section 186 Subsection 5 Sentence
1 of the German Stock Corporation Act (AktG)). The Board
of Management was also authorized, among other things,
with the consent of the Supervisory Board to exclude
shareholders' subscription rights under certain condi-
tions and within defined limits.
Approved capital
Since 1 January 2021, there has been no change in the
number of shares outstanding/issued. The number at
31 December 2022 is 1,070 million, unchanged from
31 December 2021.
The share capital (authorized capital) is divided into no-
par-value shares. All shares are fully paid up. Each
no-par-value share confers the right to one vote at the
Annual General Meeting of Mercedes-Benz Group AG
and, if applicable, with the exception of any new shares
potentially not entitled to dividends, to an equal portion
of the profits as defined by the dividend distribution
decided upon at the Annual General Meeting. Each share
represents a proportionate amount of approximately
€2.87 of the share capital.
Share capital
The Consolidated Statement of Changes in Equity is
shown in D.05.
21. Equity
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
In a volume up to 5% of the share capital issued as of
the day of the resolution of the Annual General Meeting,
the Board of Management is authorized, with the consent
of the Supervisory Board, to acquire treasury shares
also by using derivatives (put options, call options, for-
ward purchases or a combination of these instruments),
whereby the term of a derivative must not exceed
18 months and must not end later than 7 July 2025.
D.55
On the basis of the aforementioned authorization, the
Board of Management, with the approval of the Super-
visory Board, resolved a share buyback programme on
16 February 2023. Beginning on 3 March 2023, own
shares worth up to €4 billion (not including incidental
costs) are intended to be acquired on the stock
exchange over a period of up to two years and shall
subsequently be cancelled. Mercedes-Benz Group AG
has separately agreed with Beijing Automotive Group
Co., Ltd. and Geely Group that they will each keep their
shareholdings in Mercedes-Benz Group AG below ten
percent by divesting their shares on a pro-rata basis
concurrently with the share buyback programme.
In the first quarter of 2022, as in the previous year,
Mercedes-Benz Group AG purchased 0.7 million
Mercedes-Benz shares for the employee share purchase
plan pursuant to Section 71 Subsection 1 No. 2, of the
German Stock Corporation Act (AktG). The purchase was
carried out without utilizing the authorization to acquire
treasury shares granted by the Annual General Meeting
on 8 July 2020. The shares, which were reissued to em-
ployees, were purchased for a price of €48 million and
represented €1.9 million or 0.06% of the share capital
(2021: 0.7 million Mercedes-Benz shares representing
€1.9 million or 0.06% of the share capital were purchased
for a price of €48 million).
The pre-tax effects of share-based payment arrange-
ments for the executives of the Group and the members
of the Board of Management of Mercedes-Benz Group
AG on the Consolidated Statement of Income and Con-
solidated Statement of Financial Position are shown in
table D.55.
Moreover, 50% of the annual bonus of the members of
the Board of Management is paid out after a waiting
period of one year. The actual payout is determined by
the development of Mercedes-Benz Group shares com-
pared to an automobile-related index (Auto-STOXX). The
fair value of this medium-term annual bonus, which de-
pends on that development, is measured by using the
intrinsic value at the reporting date.
At 31 December 2022, the Group has the 2019-2022 Per-
formance Phantom Share Plans (PPSP) outstanding. As
instruments of share-based payment with cash settle-
ment, the PPSP are measured at their fair values on the
balance sheet date. They are paid out at the end of their
contractually defined periods; an earlier, proportionate
payout is only possible under certain conditions when a
beneficiary leaves the company. PPSP 2018 was paid out
as planned in the first quarter of 2022.
22. Share-based payment
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
273
Table D.02 shows the details of changes in other
reserves in other comprehensive income/loss.
Other reserves comprise accumulated unrealized
gains/losses from currency translation of the financial
statements of the consolidated foreign companies
and accumulated unrealized gains/losses on financial
assets, derivative financial instruments and equity-
method investments.
Other reserves
Under the German Stock Corporation Act (AktG), the
dividend is paid out of the distributable profit reported
in the Annual Financial Statements of Mercedes-Benz
Group AG (parent company only) in accordance with the
German Commercial Code (HGB). For the year ended
31 December 2022, the management will propose to the
shareholders at the Annual General Meeting the payment
of €5,563 million of the distributable profit of Mercedes-
Benz Group AG as a dividend to the shareholders, equiv-
alent to €5.20 per no-par-value share entitled to a divi-
dend (2021: €5,349 million and €5.00 per no-par-value
share entitled to a dividend). As the dividend resolution
for 2021 at the Annual General Meeting followed the
proposal €5,349 million, equivalent to €5.00 per no-par-
value share have been paid out as a dividend to the
shareholders in 2022.
Dividend
Retained earnings comprise the accumulated net profits
and losses of all companies included in Mercedes-Benz
Group's Consolidated Financial Statements, less any
profits distributed. In addition, the effects of remeasur-
ing defined benefit plans as well as the related deferred
taxes are presented within retained earnings.
Retained earnings
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
272
Capital reserves primarily comprise premiums arising on
the issue of shares as well as expenses relating to the
exercize of the up to 2014 exercizable stock option plans
and the issue of employee shares, effects from changes
in ownership interests in consolidated entities and di-
rectly attributable related transaction costs.
Capital reserves
Employee share purchase plan
Table D.56 shows the composition of provisions for pen-
sions and similar obligations.
D.56
Composition of provisions for pensions and similar obligations
asset ceiling
-14
-14
-27
-27
Actuarial loss due to
Funded status
-104
-4,188
-4,292
-49
131
82
1,820
22,392
24,212
19,268
Net defined benefit liability
20,526
55
-76
-4,657
-4,914
-205
-478
-683
and similar obligations
thereof recognized in Provisions for pensions
139
469
608
129
609
738
thereof recognized in Other assets
-118
-4,188
-4,306
131
Fair value of plan assets
1,924
26,580
In addition, previously concluded defined benefit plans
exist which primarily depend on employees' wage-tariff
classification upon transition into the benefit phase and
which foresee a life annuity.
Most employees in Germany have defined benefit pen-
sion commitments; most of the pension plans for the
active workforce are based on individual retirement ben-
efit accounts, to which the Company makes annual
contributions. The amount of the contributions for non-
exempt employees depends on the tariff classification
in the respective year or on their respective income; for
executives it depends on their respective income. For
the commitments to retirement benefits made prior to
2011, the contributions continue to be converted into
capital components and credited to the individual pen-
sion accounts with the application of fixed factors relat-
ed to each employee's age. The conversion factors in-
clude a fixed value increase. For the commitments to
retirement benefits made as of 2011, the Company guar-
antees at a minimum the value of the contributions paid
into a cash-balance plan. Pension payments are made
either as a life annuity, twelve annual instalments, or a
single lump sum.
Pension plans and pension plan assets
The Group's main pension plans are described below.
Provisions for pension obligations are made for defined
benefit pension commitments to active and former em-
ployees of the Mercedes-Benz Group and their survivors.
The defined benefit pension plans provided by the Group
generally vary according to the economic, tax and legal
circumstances of the country concerned. Most of the
defined benefit pension commitments also provide ben-
efits in the case of invalidity and death.
5,359
1,021
445
338
Defined benefit pension plans
healthcare benefits
Provision for post-employment
4,914
683
2021
At 31 December
2022
In millions of euros
As well as the employer-financed pension plans granted
by German companies, the employees of some
companies are also offered various earnings-conversion
models.
Most of the pension obligations in Germany relating to
defined benefit pension commitments are funded by
investment funds. Contractual trust arrangements (CTA)
exist between Mercedes-Benz Group AG as well as some
subsidiaries in Germany and the Mercedes-Benz Pension
Trust e.V. The Mercedes-Benz Pension Trust e.V. acts as
a collateral trust fund.
276
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
28,504
1,307
19,137
20,444
Present value of the defined benefit obligations
Germany International
Total
Germany International
277
Total
2022
In millions of euros
Development of funded status
D.57
The funded status of pension obligations with the split
between German and international plans is shown in
table D.57.
Outside Germany, there are plans relating to final sala-
ries as well as plans relating to salary-based compo-
nents. Most of the obligations outside Germany from
defined benefit pension commitments are funded by
investment funds.
In Germany, there are normally no statutory or regulatory
minimum funding requirements.
In 2018, Mercedes-Benz Group AG transferred certain
defined benefit obligations and plan assets of retired
employees and their survivors to Mercedes-Benz Pen-
sionsfonds AG (previously Daimler Pensionsfonds AG;
pension fund). These benefits are administrated by that
non-insurance-like pension fund, which falls under the
scope of the Act on the Supervision of Insurance Under-
takings and is therefore subject to the oversight of the
Federal Financial Supervisory Agency (BaFin). Insofar as
in the future, BaFin rules that a deficit has occurred in
the pension fund, a supplementary contribution will be
required from Mercedes-Benz Group AG.
2021
Provision for pension benefits
Other liabilities
2,174
14,897
9,100
23,997
Deposits in the direct banking business
9,529
1,009
10,538
11,559
2,032
13,591
Liabilities from ABS transactions
7,433
9,452
16,885
9,572
8,831
18,403
Lease liabilities
598
2,047
2,645
496
2,066
2,562
Loans, other financing liabilities
460
288
748
578
24,738
7,250
17,488
Liabilities to financial institutions
2,191
538
337
6,438
283
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
25. Financing liabilities.
The composition of financing liabilities is shown in table
D.64.
Information on the maturities of lease liabilities as of
31 December 2022 is provided in Note 34.
D.64
Financing liabilities
In millions of euros
Current Non-current
289
At 31 December 2022
Total
Current Non-current
Total
Notes/bonds
12,104
41,995
54,099
15,141
51,225
66,366
Commercial paper
10
2,184
57
57
At 31 December 2021
867
49,786
62,051
Liabilities from residual value guarantees
475
258
733
653
212
865
Liabilities from wages and salaries
946
6
952
1,045
10
1,055
130
Accrued interest expenses
663
741
741
Deposits received
230
424
654
264
408
672
Other
2,393
79
2,472
663
3,372
26
171
111,837
52,300
73,543
125,843
284
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
26. Other financial liabilities
The composition of other financial liabilities is shown in
table D.65.
Financial liabilities measured at fair value through profit
or loss relate exclusively to derivative financial instru-
ments which are not used in hedge accounting.
Further information on other financial liabilities is
provided in Note 33.
D.65
Other financial liabilities
In millions of euros
Current Non-current
104
At 31 December 2022
Total
At 31 December 2021
Total
Derivative financial instruments
used in hedge accounting
672
1,611
2,283
333
1,087
1,420
Financial liabilities recognized at fair
value through profit or loss
25
25
146
Current Non-current
2,857
thereof non-current
1,742
2021
Inter-
national
Discount rates
3.8
1.1
5.3
2.7
Expected increase in
cost of living¹
2.2
1.8
1 For German plans - depending on the design of the specific plan - expected increases in
cost of living may affect the obligation to the Group's active employees as well as to retir-
ees and their survivors. For most international plans, expected increases in cost of living
do not have a material impact on the amount of the obligation.
281
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
24. Provisions for other risks
The development of provisions for other risks is summa-
rized in table D.63.
Product warranties
The Mercedes-Benz Group issues various types of prod-
uct warranties, under which it generally guarantees the
performance of products delivered and services ren-
dered for a certain period. The provision for these prod-
uct warranties covers expected costs for legal and con-
tractual warranty claims as well as expected costs for
goodwill concessions and recall campaigns. This also
includes measures relating to Mercedes-Benz diesel
vehicles in various regions as well as recalls, in particular
for an extended recall of Takata airbags. The utilization
date of product warranties depends on the incidence of
the warranty claims and can span the entire term of the
product warranties and the goodwill period. The cash
outflows in relation to non-current provisions are primar-
ily expected within a period until 2025.
Personnel and social costs
Provisions for personnel and social costs primarily com-
prise expected expenses of the Group for employee
anniversary bonuses, profit-sharing bonuses for non-
exempt employees and variable remuneration for man-
agement as well as early-retirement and partial-
retirement plans. The additions recorded to the provi-
sions for profit-sharing bonuses and variable remunera-
tion in the reporting year usually result in cash outflows
in the following year. The cash outflows for non-current
provisions for personnel and social costs are primarily
expected within a period until 2033.
Liability and litigation risks and regulatory
proceedings
Provisions for liability and litigation risks and regulatory
proceedings comprise costs for various legal proceed-
ings, claims and governmental investigations, which can
lead in particular to payments of compensation, punitive
damages or other costly actions. They primarily include
risks from litigation and regulatory proceedings in rela-
tion to Mercedes-Benz diesel vehicles. The cash outflows
in relation to non-current provisions are primarily ex-
pected within a period until 2025.
Further information on liability and litigation risks and
regulatory proceedings is provided in Note 31.
Other
Provisions for other risks primarily comprise expected
costs for provisions for environmental protection, other
taxes and charges related to income taxes as well as
obligations from outstanding commission. They also
include provisions for anticipated losses on contracts
and various other risks which cannot be allocated to any
other class of provision.
282
D.63
Provisions for other risks
In millions of euros
At 31 December
2022
Inter-
national
Germany
Germany
2021
In January 2022, around 5% of the shares in Daimler
Truck Holding AG were contributed to the German pen-
sion plan assets, which are held on trust by Mercedes-
Benz Pension Trust e.V. The contribution was a non-cash
transaction and amounted to €1.3 billion. For the year
2023, the Mercedes-Benz Group plans to make contribu-
tions of €0.1 billion; the final amount is usually set in the
fourth quarter of a financial year. The pensions benefits
paid are expected to amount to €1.0 billion in 2023.
The weighted average duration of the defined benefit
obligations amounts to 13 years (2021: 16 years).
Defined contribution pension plans
Under defined contribution pension plans, the
Mercedes-Benz Group makes defined contributions to
external insurance policies or investment funds. There
are fundamentally no further contractual obligations
or risks for the Mercedes-Benz Group in excess of the
defined contributions. The Group also pays contributions
to governmental pension schemes. In 2022, the total
costs from defined contribution plans amounted to
€1.0 billion (2021 from continuing and discontinued
operations: €1.5 billion). Of those payments, €1.0 billion
(2021 from continuing and discontinued operations:
€1.3 billion) was related to state pension plans.
D.62
Sensitivity analysis for the present value of defined benefit obligations
At 31 December
2022
In millions of euros
2021
Sensitivity to discount rates
Sensitivity to discount rates
Sensitivity to expected increases
in cost of living
Sensitivity to expected increases
in cost of living
Sensitivity to life expectancy
Sensitivity to life expectancy
+ 0.25%
-569
-1,046
- 0.25%
597
1,112
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
+ 0.10%
88
-0.10%
-53
-88
+ 1 year
304
467
- 1 year
-271
-411
D.61
Significant factors for the calculation of pension benefit obligations
in %
At 31 December
2022
54
Product
warranties
Personnel
and social
-794
-6,384
Reversals
-277
-93
-223
-298
-891
Compounding and effects from changes in discount rates
-116
-354
-50
-25
-545
-428
Currency translation and other changes
-52
107
-87
-16
Balance at 31 December 2022
6,576
4,613
2,755
2,079
16,023
thereof current
3,204
2,422
2,217
16
9,585
-1,845
Utilization
Litigation
risks and
regulatory
costs proceedings
Others
Total
Balance at 31 December 2021
6,786
4,621
2,638
1,917
15,962
thereof current
3,438
-3,317
1,996
1,480
8,053
thereof non-current
3,348
2,625
1,499
437
7,909
Additions
3,484
2,336
711
1,366
7,897
1,139
Effect on future cash flows
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
5,474
3,855
4,481
Obligations from sales transactions
5,811
5,833
Contract liabilities
1,640
1,672
Other contract liabilities
4,171
Other refund liabilities
4,161
Service and maintenance contracts
In millions of euros
2021
2022
At 31 December
Contract and refund liabilities
D.67
Table D.67 shows the composition of contract and
refund liabilities.
28. Contract and refund liabilities
2,661
and extended warranties
240
243
Refund liabilities
Total
Current Non-current
Total
Current Non-current
At 31 December 2021
At 31 December 2022
In millions of euros
D.68
Table D.68 shows the composition of other liabilities.
29. Other liabilities
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
286
5,929
6,898
thereof current
3,980
3,656
thereof non-current
9,909
10,554
Contract and refund liabilities
4,098
4,721
1,175
1,486
2,625
1,234
Current Non-current
At 31 December 2021
At 31 December 2022
In millions of euros
Deferred income
D.66
table D.66.
The composition of deferred income is shown in
27. Deferred income
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
285
7,805
1,808
5,997
7,928
65
2,922
Miscellaneous other financial liabilities
4,707
767
2,524
5,560
695
Total
Income tax liabilities
Current Non-current
Deferred income resulting from repurchase agreements
1,391
396
128
268
442
131
311
2,089
957
1,132
1,947
962
985
Other deferred income
from operating lease arrangements
Deferral of advance rental payments received
176
90
86
236
141
95
that are accounted for as operating leases
Total
6,255
Other tax liabilities
1,232
2021
2022
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
In millions of euros
Changes in liabilities arising from financing activities
D.71
288
28
130
1,625
Cash flows
1,605
231
-367
-486
2021
2022
Interest received
Dividends received from
equity-method investments.
Dividends received from other
shareholdings
Interest paid
In millions of euros
Cash flows included in Cash flow from operating activities
D.70
154
Change of control in subsidiaries¹
Changes in foreign exchange rates
-13,344
290
As already reported, in April 2016, the U.S. Department
of Justice (DOJ) requested that Mercedes-Benz conduct
an internal investigation. Mercedes-Benz conducted such
internal investigation in cooperation with DOJ's inves-
tigation; DOJ's investigation remains open. In addition,
further US state authorities have opened investigations
pursuant to both local environmental and consumer
protection laws and have requested documents and
information.
As part of these settlements, Mercedes-Benz has denied
the allegations by the authorities and has not admitted
liability, but has agreed to, among other things, pay civil
penalties, conduct an emission modification programme
for the affected vehicles and take certain other
measures. The failure to meet certain of those obliga-
tions may trigger additional stipulated penalties. In the
first quarter of 2021, Mercedes-Benz paid the civil penal-
ties; provisions have been recognized for the emission
modification programme and other measures.
In the United States, Mercedes-Benz Group AG and
Mercedes-Benz USA, LLC (MBUSA) reached agreements
in the third quarter of 2020 with various authorities to
settle civil environmental claims regarding the emission
control systems of certain diesel vehicles. These agree-
ments have become final and effective. The authorities
take the position that Mercedes-Benz failed to disclose
Auxiliary Emission Control Devices (AECDs) in certain of
its US diesel vehicles and that several of these AECDs
are illegal defeat devices.
The corresponding activities of various authorities
worldwide, which were already reported in the past, are
partly ongoing, as described below. These activities par-
ticularly relate to test results, the emission control sys-
tems used in Mercedes-Benz diesel vehicles and/or the
interactions of Mercedes-Benz with the relevant authori-
ties as well as related legal issues and implications, in-
cluding, but not limited to, under applicable environmen-
tal, criminal, consumer protection and antitrust laws.
Mercedes-Benz is continuously subject to governmental
information requests, inquiries, investigations, adminis-
trative orders and proceedings relating to various
laws and regulations in connection with diesel exhaust
emissions.
Diesel emission behaviour: governmental
proceedings
Mercedes-Benz Group AG and its subsidiaries are con-
fronted with various legal proceedings, claims as well as
governmental investigations and orders (legal proceed-
ings) on a large number of topics, including vehicle safe-
ty, emissions, fuel economy, financial services, dealer,
supplier and other contractual relationships, intellectual
property rights (including but not limited to patent in-
fringement actions), warranty claims, environmental
matters, antitrust matters (including actions for damag-
es) as well as investor litigation. Product-related litiga-
tion involves claims alleging faults in vehicles. Some of
these claims are asserted by way of class actions. If the
outcome of such legal proceedings is detrimental to
Mercedes-Benz or such legal proceedings are settled,
the Group may encounter substantial financial burdens,
e.g. from damages payments or service actions, recall
campaigns, monetary penalties or other costly actions,
which would adversely affect the earnings of Mercedes-
Benz Group AG. Legal proceedings and related settle-
ments may also have an impact on the company's repu-
tation.
31. Legal proceedings
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
289
1 In the previous year deconsolidation effect of the Daimler commercial vehicle business.
304
-1,211
Other changes
255
145
Fair value changes
4,634
580
-7,801
-596
-17,200
-1,261
358
-1,132
107
3,813
727
3,086
4,373
1,238
3,135
160
4
156
157
2
155
Miscellaneous other liabilities
1,474
1
1,473
1,568
4
1,564
2,179
722
1,457
2,648
287
1,416
Annual Report 2022 Mercedes-Benz Group
30. Consolidated Statement of
Cash Flows
Miscellaneous other assets and liabilities
-29
-104
-100
355
Financial instruments
Provisions
In millions of euros
2021
2022
Changes in other operating assets and liabilities
D.69
Table D.71 includes changes in liabilities arising from
financing activities, divided into cash and non-cash com-
ponents.
Cash flow from financing activities includes cash flows
from hedging the currency risks of financing liabilities.
Cash flow from financing activities includes payments
for the reduction of outstanding leasing liabilities of
€565 million (2021: €743 million).
Cash flow from financing activities
of the interest in Daimler Truck Fuel Cell GmbH & Co. KG
held by the Mercedes-Benz Group at that time.
The other non-cash expense and income shown in the
reconciliation of income before income taxes to cash
flow from operating activities in the reporting year pri-
marily comprised the Group's share in the profit/loss of
companies accounted for using the equity method, the
result from the fair value measurement of equity instru-
ments and the result of the remeasurement of the shares
of Mercedes-Benz Grand Prix Ltd., that the Mercedes-
Benz Group continues to hold. In addition, the other non-
cash expense and income was impacted by the deprecia-
tion of the remaining financial services volumes of the
Daimler commercial vehicle business, sold to Daimler
Truck Holding AG or its subsidiaries in 2022. In the pre-
vious year, this item was affected in particular by the
deconsolidation result from the spin-off and hive-down
of the Daimler commercial vehicle business, the Group's
share in the profit/loss of companies accounted for using
the equity method and the result of the remeasurement
Table D.70 shows cash flows included in Cash flow from
operating activities.
The increase in miscellaneous other assets and liabilities
compared with the previous year resulted in particular
from financial assets and liabilities. Significant positive
effects resulted from assets in connection with the secu-
ritization of receivables and from contractual liabilities
for price discounts. This was partially offset by lower
negative effects in other financial liabilities and the con-
tract liabilities for service and maintenance agreements.
In the prior year major negative effects resulted from
non-financial claims for reimbursement and liabilities in
connection with VAT. Further major negative effects
were primarily related to financial assets.
Changes in other operating assets and liabilities are
shown in table D.69.
Cash flow from operating activities
At 31 December 2022, cash and cash equivalents includ-
ed restricted funds of €187 million (2021: €36 million).
The restricted funds primarily relate to subsidiaries
where exchange controls apply so that the Group has
restricted access to the funds.
Calculation of funds
Consolidated Financial Statements
5,404
Lead
30
Elected until 2026
(since 29 April 2022)
Michael Häberle*
Deputy Chairman of the Group Works Council of Mercedes-Benz Group AG
Deputy Chairman of the General Works Council of Mercedes-Benz Group AG
Chairman of the Works Council of the Mercedes-Benz Untertürkheim Plant
Elected until 2023
Timotheus Höttges
Chairman of the Board of Management of Deutsche Telekom AG
Elected until 2025
Olaf Koch
Partner and Managing Director of Zintinus GmbH
Elected until 2025
* Employee representatives
Further information on the members of the Supervisory Board of Mercedes-Benz Group AG
23
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Roman Romanowski*
Head of the Executive Legal Department at the Board of Management of IG Metall
Appointed until 2023
Prof. Dr Helene Svahn
Professor of Nanobiotechnology at the Royal Institute of Technology, Sweden
Elected until 2025
Monika Tielsch*
Member of the Works Council of the Mercedes-Benz Sindelfingen Plant (RD)
Appointed until 2023
Lower
Marco Gobbetti
(since 29 April 2022)
Elected until 2026
Sari Baldauf
Chair of the Board of Directors of Nokia Oyj
Elected until 2023
Michael Bettag*
Chairman of the Works Council of the Mercedes-Benz Nuremberg Own Retail Branch
Elected until 2023
Ben van Beurden
Former Chief Executive Officer of Shell plc
Elected until 2025
Nadine Boguslawski*
First Authorized Representative of IG Metall Stuttgart
Appointed until 2023
* Employee representatives
Elke Tönjes-Werner*
Further information on the members of the Supervisory Board of Mercedes-Benz Group AG
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Michael Brecht*
Chairman of the Works Council of the Mercedes-Benz Gaggenau Plant
Elected until 2023
Dr Martin Brudermüller
Chairman of the Board of Executive Directors of BASF SE
Elected until 2025
Liz Centoni
Chief Strategy Officer and GM, Applications Cisco, Inc.
Elected until 2025
Dame Veronica Anne ("Polly") Courtice
Former Director of the University of Cambridge Institute for Sustainability Leadership
22
Elected until 2023
Deputy Chairwoman of the Works Council of the Mercedes-Benz Bremen Plant
Elected until 2023
Center Manager BodyTEC, Mercedes-Benz AG
Chairman of the Management Representatives
Committee, Mercedes-Benz Group
Elected until 2023
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Mercedes-Benz Cars Strategy
Mercedes-Benz Cars' goal is to build the world's most
desirable cars. The company is to further increase its
structural profitability and take the lead in shaping the
successful transformation to an all-electric and soft-
ware-driven future. The customer experience is to be
even more strongly highlighted than before, with the
focus on the core business. In addition, the potential of
digitalization for the customers is to be more extensively
utilized. Sustainability, integrity and diversity are integral
components of the Mercedes-Benz Cars strategy. The
Mercedes-Benz Cars division's ambition is to make the
entire Mercedes-Benz new vehicle fleet balance sheet
carbon-neutral across all stages of the value chain by
2039.
Think and act like a luxury brand
Luxury has always been part of Mercedes-Benz' DNA,
and the company's thoughts and actions will focus even
more strongly on it in the future. Mercedes-Benz' claim
as a luxury brand is to offer the most desirable vehicles
throughout all brands. Here, the understanding of luxury
involves an extraordinary combination of pioneering
technologies, exceptional aesthetics and integrated sus-
tainability. It's very important to reach the target groups
in the specific settings in which they are active and to
then position the brand in these settings in an authentic
and credible manner, create an emotional bond and get
people excited about Mercedes-Benz Cars' brands. To
this end, the division is working hard on strategically rea-
ligning its products and services across all brands. The
complete customer journey remains in view here - from
the first contact with the Mercedes-Benz Cars brands to
the purchase and driving of the vehicles and the use of
the range of services. Collaborations with partners also
help the company to look beyond the automotive indus-
try and thus gain inspiration and develop new ideas.
Focus on profitable growth
Mercedes-Benz Cars wants to make the accelerated
transformation towards an all-electric future profitable
and to continue its growth in the lucrative market seg-
ments. A clear positioning as a luxury brand will help its
A.02
Mercedes-Benz Cars Strategy
Our Goal: We will build the world's most desirable cars
Think
and act like a
luxury brand
Focus
on profitable
growth
Expand
customer base
by growing
Top-End Luxury
Embrace
customers and
grow lifetime
revenues
26
Along with sustainability and integrity, diversity is another
foundation of the sustainable business strategy of the
Mercedes-Benz Group. The company is firmly convinced
that sustained success can only be achieved with diverse
teams. The promotion of women is one of the areas of
action for the Diversity & Inclusion Management function
at the Mercedes-Benz Group, which wants to fill more
senior management positions (Level 3 and above) with
qualified women and in the next step is looking to
increase the share of women in such positions to at least
30% in the year 2030.
The transformation to balance sheet carbon-neutrality is
also changing the world of finance. Green finance and
financial instruments such as green asset-backed securi-
ties and sustainable financial agreements that are linked
to KPIs are becoming increasingly important. In line with
its "Electric only" strategy, the Mercedes-Benz Group
plans to significantly increase its investment in environ-
mentally sustainable activities over the next few years.
The analysis of ESG ratings for the company is an impor-
tant instrument for identifying and correcting gaps in
transparency.
measures as needed, particularly with regard to raw
materials that currently pose an increased risk of human
rights violations. The goal here is to ensure compliance
with the principles of human rights along the entire sup-
ply chain from the mines in which raw materials are
extracted to processing facilities and the company's own
production plants.
Roman Zitzelsberger*
District Manager of IG Metall Baden-Württemberg
Elected until 2023
* Employee representatives
Further information on the members of the Supervisory Board of Mercedes-Benz Group AG
24
24
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Retired from the Supervisory Board
Bader M. Al Saad
Dr Frank Weber*
Chairman of the Board of Directors and Director General of the Arab Fund
for Economic & Social Development
Dr Clemens Börsig
Former Chairman of the Supervisory Board of Deutsche Bank AG
Retired on 29 April 2022
* Employee representatives
25
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Objectives and Strategy
The world is changing at a dynamic rate. Sustainability and environmental and
climate change mitigation are among the most urgent issues of our time. We
are addressing these challenges. With our actions, we want to set benchmarks
for tomorrow's sustainable mobility. We firmly believe that individual mobility
will remain a basic human need. We also assume that the market for sustaina-
ble luxury in the automotive sector will continue to grow and that the transpor-
tation of people and goods will remain a key component of our economy. As a
result, we expect the demand for transport and mobility solutions to continue
to increase around the world. We see additional opportunities for growth and
profit in the areas of financial services, fleet management, and digital net-
worked mobility solutions.
Sustainability, integrity and diversity are
the basis of our conduct
The company assumes responsibility for the economic,
ecological and social effects of its business activities.
In order to live up to this responsibility, the Mercedes-
Benz Group utilizes a holistic ESG (environmental, social
and governance) concept throughout all of its divisions.
The company's goal here is to at least halve CO2 emis-
sions per passenger car over the entire vehicle life cycle
by the end of this decade as compared to 2020 levels.
The most important levers for accomplishing this are the
electrification of the vehicle fleet (“Electric only” strat-
egy), charging with green electricity, improving battery
technology and the comprehensive use of recycling
materials and energy from renewable sources in vehicle
production. Our plans call for more than 70% of the
energy requirement in production to be covered by
energy from renewable sources by 2030, for example.
This is to be achieved by expanding solar and wind power
at our own locations and by concluding additional corre-
sponding power purchase contracts. The transformation
to balance sheet carbon-neutrality of the new vehicle
fleet across all stages of the value chain and the associ-
ated expansion of electric mobility involve numerous
challenges, among other things in connection with supply
chains and the use of raw materials such as cobalt or
lithium. Thanks to the introduction of its Human Rights
Respect System, the Mercedes-Benz Group is continually
increasing the transparency and taking appropriate
Retired on 29 April 2022
Deputy Chairman of the Supervisory Board of Mercedes-Benz Group AG
Chairman of the Group Works Council of Mercedes-Benz Group AG
Chairman of the General Works Council of Mercedes-Benz Group AG
Chairman of the Works Council of the Mercedes-Benz Sindelfingen Plant
Ergun Lümali*
Elected until 2024
The sustainably successful transformation of the com-
pany requires us to systematically forge ahead with the
pursuit of our profitability and cash-flow objectives.
Mercedes-Benz Cars wants to further optimize its break-
even point and take additional steps towards reducing
the cost base and improving the industrial footprint.
To this end, work is also proceeding on further reducing
fixed and variable costs as well as on lowering invest-
ments in property, plant and equipment in relation to
total investment. As we have already stated, by 2025 the
fixed costs are to be reduced by more than 20% relative
to the comparable actual figures for Mercedes-Benz Cars
in 2019. Among other things, this will be accomplished
by consistently reducing complexity along the entire
value chain. By the middle of the decade, plans call for
reducing investments in property, plant and equipment
and in research and development by more than 20%
compared to 2019. With its strategic step to "Electric
only", Mercedes-Benz is also shifting its capital allocation.
The implementation of further cost reductions by stand-
ardizing battery platforms and creating scalable vehicle
architectures is planned. Mercedes-Benz Cars also aims
to play a more active role along its supply chains in order
to safeguard and increase the resilience of these busi-
ness activities. All of these measures are designed to
help us achieve structurally higher profitability while at
the same time lowering the level of volatility.
Lower cost base, improve industrial footprint and
increase supply chain resilence
-
In order to further underscore the claim to leadership
with regard to the digital experience, Mercedes-Benz
Cars plans to introduce its own data-based and updata-
ble Mercedes-Benz Operating System (MB.OS), starting
in the middle of the decade. This will be a proprietary
system in order to meet the customers' needs even bet-
ter in the future. In this way, they will be able to access
a unique brand experience that includes new digital ser-
vices and product features while control of the interface
with customers remains in the Mercedes-Benz ecosys-
tem. MB.OS is intended to create the basis that will ena-
ble an even faster and more flexible response to cus-
tomer requirements in the future, including during a
product's life cycle by means of over-the-air (OTA)
updates, for example. Another aim is to establish smart
connectivity between the vehicle, the cloud and the IoT
world (Internet of Things). Data security and data protec-
tion play a key role for Mercedes-Benz Cars here. Today,
Mercedes-Benz Cars already meets the demanding legal
requirements for an internationally certifiable system
approval for conditional driving automation according to
SAE Level 3 (pursuant to UN R157) — the first automotive
company in the world to do so. With the DRIVE PILOT
system, the customers are offered not only enhanced
ride comfort and safety but also the luxury of reduced
driver stress and the freedom to carry out certain activi-
ties while driving. Further information on this can be
found in the Non-Financial Declaration section of the
Combined Management Report with Non-Financial Dec-
laration.
-
The Plug & Charge and Mercedes me Charge services are
aimed at offering customers a convenient, seamless and
reliable charging experience. At the same time, plans call
for continually expanding the worldwide charging-ser-
vices together with partners. For example, the plans also
include investments in the development of a worldwide
Mercedes-Benz charging network.
time, the preparation of the global manufacturing net-
work for the production of all-electric vehicles is pro-
ceeding at full speed. Eight electric vehicle models from
Mercedes-Benz have been rolling off the assembly lines
at seven locations on three continents since 2022.
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
28
motive Cells Company SE (ACC) in Europe and with the
strategic supplier Envision Automotive Energy Supply
Corporation (AESC) in the United States to build eight
battery cell production plants worldwide. At the same
-
Mercedes-Benz Cars' expertise in the field of electric
mobility is to be extended, and the vertical integration is
also to be increased by insourcing drive-system technol-
ogies for electric vehicles. To ensure more efficient pro-
duction and promote the future development of battery
cells and modules, the division plans to work together
with partners such as in the joint venture with Auto-
Lead in electric drive and digital experience
Mercedes-Benz Cars is endeavouring to become a leader
for electric mobility and the digital experience. The "Elec-
tric only" strategy is intended to set the course for an
all-electric future with ambitious product development
goals and the market launch of new locally emission-free
and software-driven technologies. The division is prepar-
ing to become all-electric wherever market conditions
allow by the end of this decade. Today, all-electric vehi-
cles are already offered in all of the vehicle segments in
which the Mercedes-Benz brand is represented. Begin-
ning in the middle of the decade, customers are to be
offered an all-electric alternative for every model and all
new vehicle architectures launched on the market are to
be exclusively electric. The electrification of the
Mercedes-Benz vehicles is to encompass the entire
brand portfolio.
Embrace customers and grow lifetime revenues
In order to intensify and further boost customer loyalty,
the division is systematically creating unique customer
experiences along its entire customer journey and
addressing customers in an individualized and data-
driven manner within the Mercedes-Benz ecosystem.
The basic precondition for this is, among other things,
the availability of thoroughly digitalized sales processes.
In this way, all channels online and offline, and from
consulting to service are to be flexibly adapted to the
dynamic customer requirements and further developed.
Moreover, customers are to be provided with tailored and
market-specific offers that enthuse them about more
than just the purchase of vehicles. These offers include
such things as after-sales services and spare parts as
well as over-the-air (OTA) updates and subscriptions to
digital services. In this way, Mercedes-Benz Cars intends
to continuously enhance the attractiveness of its prod-
ucts and increase its revenue throughout the product life
cycle.
-
_
Expand customer base by growing Top-End Luxury
In the survey conducted at the end of 2022 by the brand
consulting company Interbrand in the United States,
Mercedes-Benz remained the most valuable luxury auto-
motive brand in the world and was once again the only
European brand in the Top 10 of the "Best Global Brands
2022". Not only the outstanding S-Class luxury saloon
car but also Mercedes-Benz's entire attractive brand
portfolio in particular the exceptional Mercedes-AMG
and Mercedes-Maybach brands, as well as the iconic
G-Class product brand contribute to this success. The
Mercedes-Benz Cars Strategy is to be used to unfold
the full potential of the Mercedes-Benz brand portfolio,
accelerate the development of the Top-End product
category and achieve additional EBIT growth. This is to
be accomplished by creating even stronger interrelation-
ships between the brands in order to exploit synergies
and address the customers even more effectively.
Mercedes-Benz Cars wants the Mercedes-EQ vehicles
to position as a leading technology brand not only in
the upper-range segment but also in all other vehicle
segments.
_
efforts to achieve structurally higher profitability across
all product categories - Entry, Core and Top-End.
Information on this can be found in the Corporate Profile
section of the Combined Management Report with
Non-Financial Declaration. Along with a clear focus on
the customer, the important ways in which this can be
accomplished are focusing and further developing the
portfolio by allocating funds to the most profitable prod-
uct categories, and achieving strong pricing. These means
are also to be employed for the systematic electrification
of our models, with appealing electric vehicles through-
out the entire Mercedes-Benz brand portfolio. Further
profitable growth is also being targeted in the highly prof-
itable Top-End and Core product categories in particular.
The consistent positioning as a luxury brand will also be
used to achieve Mercedes-Benz Cars' goal of sustained
high profitability as a company that can rely on its highly
resilient business system, even in challenging times.
To Our Shareholders
Annual Report 2022 Mercedes-Benz Group
Driven by a highly qualified and motivated team
The global success of Mercedes-Benz is founded on
the commitment of the employees. The Mercedes-Benz
team is successfully driving forward the company's trans-
formation now and in future. That's why it's necessary
to continually invest in the qualifications of the employ-
ees and put lifelong learning and the further education of
employees at the centre of the sustainable personnel
development approach. At the same time, colleagues are
to be provided with a modern, flexible and appreciative
working environment, so that they will remain motivated,
capable and satisfied. Technological change always
requires a cultural change. With the People Principles,
the company puts the focus on the people and defines
how to communicate, lead and collaborate.
29
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
Driven by a highly qualified and motivated team
Accelerated by digitalization and data-driven business
Guided by economic, environmental and social sustainability
total cost base and improve
industrial footprint
in electric drive and digital
experience
revenues
customers and grow lifetime
premium segments and focus
on profitable growth
Lower
Lead
27
Embrace
Our Goal: We offer the world's most desirable vans and services
Mercedes-Benz Vans Strategy
A.03
For commercial customers, Mercedes-Benz Vans offers
premium vehicles in all van segments with the (e)Sprinter,
the (e)Vito and the Citan. The all-electric variant of the
Citan - the eCitan ― is to follow in 2023, so that the
complete portfolio will then also be available as electri-
fied variants. In both the commercial and the private seg-
ment, Mercedes-Benz Vans stands for the highest levels
of quality, reliability and sustainability.
The V-Class and the EQV are already successfully estab-
lished in the segment for privately used vans. The T-Class,
which was launched in 2022 in the small van segment, is
a vehicle for families and leisure-oriented private cus-
tomers. The all-electric variant, the EQT (WLTP: combined
electricity consumption: 18.99 kWh/100 km; combined
CO2 emissions: 0 g/km) is planned for 2023.
Mercedes-Benz Vans has greatly shaped the vans market
worldwide since the very beginning. As part of the
Mercedes-Benz brand family, the division continuously
sharpens its profile as a premium supplier of future-ori-
ented transport solutions for commercial and private
customers. The vans marketed for private customers will
in future be aligned with the luxury-segment positioning
strategy of Mercedes-Benz Cars, while the commercial
vans will be marketed within the framework of a premium
strategy.
Target premium segments and focus on profitable
growth
The strategy is based on four pillars:
The goal of Mercedes-Benz Vans is to offer its customers
the most desirable vans and services worldwide. We
want the vans from Mercedes-Benz to represent far more
than a capital investment to customers, and to continue
arousing their enthusiasm.
Mercedes-Benz Vans Strategy
Target
Sustainability, Integrity and Diversity as our foundation
Driven by a highly qualified and motivated team
increase supply
chain resilience
100
3/3
100
1/1
100
1/1
100
3/3
100
2/2
2/2
100
100
3/3
100
2/2
100
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
The Supervisory Board
Dr Bernd Pischetsrieder
Chairman of the Supervisory Board of Mercedes-Benz Group AG
3/3
in electric drive
and digital
experience
100
100
improve industrial
footprint and
cost base,
2022
Nomination Committee
Dr Bernd Pischetsrieder (Chairman)
Sari Baldauf
Ben van Beurden
Legal Affairs Committee
Olaf Koch (Chairman)
Dr Clemens Börsig (former Chairman, until 29 April 2022)
2/2
Michael Brecht (until 29 April 2022)
Dame Veronica Anne Courtice (since 29 April 2022)
Michael Häberle
Ergun Lümali
Roman Romanowski (since 29 April 2022)
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
ང་
21
Meetings attended
Attendance (%)
2/2
Liz Centoni
Chief Executive Officer of Salvatore Ferragamo S.p.A.
300
148,093
- derivative commodity hedging contracts; the fair val-
ues of commodity hedging contracts (e.g. commodity
forwards) are determined on the basis of current refer-
ence prices with consideration of forward premiums
and discounts and default risks.
Other financial receivables and other financial assets
are carried at amortized cost. Because of the predomi-
nantly short maturities and the fundamentally lower
credit risk of these financial instruments, it is assumed
that the fair values approximate the carrying amounts.
Financing liabilities
Financing liabilities are measured at amortized cost. The
fair values of bonds, loans, commercial paper, deposits
in the direct banking business and liabilities from ABS
transactions are calculated as present values of the es-
timated future cash flows (taking account of credit pre-
miums and credit risks). Market interest rates for the
appropriate terms are used for discounting.
Trade payables
Due to the short maturities of these financial instru-
ments, it is assumed that their fair values are equal to
the carrying amounts.
Reverse factoring agreements did not change the rele-
vant characteristics of a trade payable for the Group for
the liabilities concerned. As a result, there were no re-
classifications of these trade payables to financing lia-
bilities.
Contract and refund liabilities
Contract and refund liabilities include obligations from
sales transactions that qualify as financial instruments.
Obligations from sales transactions should generally be
regarded as current. Due to the short maturities of these
financial instruments, it is assumed that their fair values
are equal to the carrying amounts.
Other financial liabilities
Financial liabilities recognized at fair value through profit
or loss comprise derivative financial instruments not
used in hedge accounting. For information regarding
these financial instruments as well as derivative financial
instruments used in hedge accounting, see the notes
above under marketable debt securities and similar in-
vestments, other financial assets.
Miscellaneous other financial liabilities are carried at
amortized cost. Because of the predominantly short
maturities of these financial instruments, it is assumed
that the fair values approximate the carrying amounts.
Offsetting of financial instruments
The Group concludes derivative transactions in accord-
ance with the master netting arrangements (framework
agreement) of the International Swaps and Derivatives
Association (ISDA) and comparable national framework
agreements. However, these arrangements do not meet
the criteria for netting in the Consolidated Statement of
Financial Position, as they allow netting only in the case
of future events such as default or insolvency on the part
of the Group or the counterparties.
Table D.73 shows the carrying amounts of the derivative
financial instruments subject to the described arrange-
ments as well as the possible financial effects of netting
in accordance with the master netting arrangements.
298
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Measurement hierarchy
Table D.74 provides an overview of the classification into
measurement hierarchies of financial assets and liabili-
ties recognized at fair value (according to IFRS 13).
At the end of the reporting period, the Group reviews the
necessity for reclassification between the fair-value hier-
archies. In 2021, the investment in ChargePoint, Inc.
which is recognized at fair value through profit or loss
was reclassified from Level 2 to Level 1 as a result of the
initial public offering of this company.
For the determination of the credit risk from derivative
financial instruments which are allocated to the Level 2
measurement hierarchy, portfolios managed on the basis
of net exposure are applied.
Table D.75 shows into which measurement hierarchies
(according to IFRS 13) the fair values of the financial
assets and liabilities are classified, which are not recog-
nized at fair value in the Consolidated Statement of
Financial Position.
D.73
Disclosure for recognized derivative financial instruments that are subject to an enforceable
master netting arrangement or similar agreement
In millions of euros
Other financial assets¹
Other financial liabilities²
At 31 December 2022
Gross and
net
amounts of
- derivative interest-rate hedging contracts; the fair
values of interest-rate hedging instruments (e.g. inter-
est-rate swaps) are calculated on the basis of the dis-
counted estimated future cash flows (taking account of
credit premiums and default risks) using the market in-
terest rates appropriate to the remaining terms of the
financial instruments.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
297
derivative currency hedging contracts; the fair values
of cross-currency interest-rate swaps are determined
on the basis of the discounted estimated future cash
flows (taking account of credit premiums and default
risks) using the market interest rates appropriate to
the remaining terms of the financial instruments. The
measurement of currency forwards is based on market
quotes of forward curves. Currency options are meas-
ured with option-pricing models using market data.
2,283
2,283
1,420
1,420
Miscellaneous other financial liabilities
5,454
5,454
6,264
6,264
Contract and refund liabilities
Obligations from sales transactions
296
4,481
4,481
financial
3,860
133,785
132,010
145,699
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
The fair values of financial instruments were calculated
on the basis of market information available on the bal-
ance sheet date. The following methods and premises
were used.
Receivables from financial services
The fair values of receivables from financial services with
variable interest rates are estimated to be equal to the
respective carrying amounts, because the agreed upon
interest rates and those available in the market do not
significantly differ. The fair values of receivables from
financial services with fixed interest rates are deter-
mined on the basis of discounted expected future cash
flows.
Discounting is based on the current interest rates at
which similar loans with identical terms could have been
obtained at 31 December 2022 and 31 December 2021.
Trade receivables and cash and cash equivalents
Due to the short terms and the fundamentally lower
credit risk of these financial instruments, it is assumed
that their fair values are equal to the carrying amounts.
Marketable debt securities and similar investments,
other financial assets
Marketable debt securities are recognized at fair value
through other comprehensive income or at fair value
through profit or loss. Similar investments are measured
at amortized cost and are not included in the measure-
ment hierarchy, as their carrying amounts are a reasona-
ble approximation of fair value due to the short terms of
these financial instruments and the fundamentally low
credit risk.
Equity instruments are recognized at fair value through
other comprehensive income or at fair value through
profit or loss. Equity instruments recognized at fair value
through other comprehensive income are included in
table D.72 and primarily comprise the shares in Sila Nan-
otechnologies Inc., Momenta Global Limited and Farasis
Energy (Ganzhou) Co., Ltd. The remaining investments
recognized at fair value through other comprehensive
income comprise further investments not material on an
individual basis.
Marketable debt securities and equity instruments rec-
ognized at fair value were measured using quoted market
prices at the end of the reporting period. If quoted mar-
ket prices are not available for these debt and equity
instruments, fair value measurement is based on inputs
that are either directly or indirectly observable in active
markets. Fair values are calculated using recognized
financial valuation models such as discounted cash-flow
models or multiples.
Other financial assets recognized at fair value through
profit or loss relate to derivative financial instruments
not used in hedge accounting. These financial instru-
ments as well as derivative financial instruments used in
hedge accounting comprise:
3,860
Derivative financial instruments used in hedge accounting
instruments
Consolidated
At 31 December 2022
At 31 December 2021
Total
Level 11
Level 22
Level 33
Total
Level 11
Level 22
Level 33
Financial assets recognized at fair value
Marketable debt securities
6,101
5,849
252
7,301
6,395
906
Recognized at fair value through other com-
prehensive income
1,641
1,392
249
2,364
1,468
896
Recognized at fair value through profit or loss
4,460
4,457
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
In millions of euros
liabilities recognized at fair value
Measurement hierarchy of financial assets and
Amounts
subject
Statement of to a master
Financial
Position arrangement
At 31 December 2021
Gross and
net amounts
of financial
instruments
in the
Amounts
Consolidated subject to a
Statement of
master
netting
Net
amounts
in the
Financial
Net
amounts
3,047
2,454
-2,045
-2,045
1,002
409
1,081
1,550
-477
-477
604
1,073
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge accounting and financial assets recognized
at fair value through profit or loss (see Note 17).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge accounting and financial liabilities
recognized at fair value through profit or loss (see Note 26).
299
D.74
netting
130
130
171
In addition, the Mercedes-Benz Group issued irrevoca-
ble loan commitments at 31 December 2022. These
loan commitments had not been utilized as of that date.
Further information with respect to these commitments
is provided in Note 34.
295
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
33. Financial instruments
The carrying amounts and fair values of financial instru-
ments presented in the following tables refer to Group
amounts, including assets and liabilities held for sale.
Figures for gains or losses and changes in financial in-
struments in 2021 refer to continuing and discontinued
operations.
Carrying amounts and fair values of financial
instruments
Table D.72 shows the carrying amounts and fair values of
the respective classes of the Group's financial instru-
ments.
D.72
Carrying amounts and fair values of financial instruments
In millions of euros
Financial assets
At 31 December 2022
Carrying
amount
Fair value
At 31 December 2021
Carrying
amount
Fair value
Receivables from financial services
85,549
86,343
82,853
84,386
Trade receivables
8,100
8,100
7,703
7,703
Cash and cash equivalents
17,679
At 31 December 2022, other financial obligations exist
from the acquisition of intangible assets, property,
plant and equipment and lease property of
€5,729 million (2021: €4,098 million).
Other financial obligations
At 31 December 2022, the best estimate for obligations
from contingent liabilities was €4,122 million (2021:
€2,747 million). Compared to the previous year, there
was an increase in contingent liabilities of around
€1,041 million as a result of discontinuing the business
activities in Russia. The other contingent liabilities are
mainly related to the legal proceedings and product
warranties described in Note 31.
Contingent liabilities
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
In Canada, the Canadian environmental regulator Envi-
ronment and Climate Change Canada (ECCC) is conduct-
ing an investigation in connection with diesel exhaust
emissions based on the suspicion of potential violations
of, amongst others, the Canadian Environmental Protec-
tion Act, as well as undisclosed AECDs and defeat devic-
es. Mercedes-Benz continues to cooperate with the in-
vestigating authorities.
In Germany, the Stuttgart public prosecutor's office is-
sued a fine notice against Mercedes-Benz in September
2019 based on a negligent violation of supervisory du-
ties, thereby concluding the related administrative of-
fence proceedings against Mercedes-Benz. The Stuttgart
public prosecutor's office is still conducting criminal
investigation proceedings against Mercedes-Benz
employees on the suspicion of, amongst others, fraud.
In July 2021, the local court of Böblingen issued penal
orders against three Mercedes-Benz employees based
on, amongst others, fraud, which have become final.
Between 2018 and 2020, the German Federal Motor
Transport Authority (KBA) issued subsequent auxiliary
provisions for the EC type approvals of certain
Mercedes-Benz diesel vehicles, and ordered mandatory
recalls as well as, in some cases, stops of the first regis-
tration. In autumn 2022, the KBA issued further decisions
regarding vehicles equipped with an OM607 EU6 or EU5
diesel engine. In each of those cases, it held that certain
calibrations of specified functionalities are to be quali-
fied as impermissible defeat devices. Mercedes-Benz has
a contrary legal opinion on this question and has filed
timely objections against the KBA's administrative orders
and determinations mentioned above. Insofar as the KBA
has not remedied the objections, Mercedes-Benz has
filed lawsuits with the competent administrative court to
have the controversial questions at issue clarified in a
court of law. Irrespective of such objections and the
lawsuits that are now pending, Mercedes-Benz continues
to cooperate fully with the KBA. The new calibrations
requested by the KBA were developed by Mercedes-
Benz and assessed and approved by the KBA; the related
recalls were initiated. It cannot be ruled out that under
certain circumstances, software updates may have to be
reworked, or further delivery and registration stops may
be ordered or resolved by the company as a precaution-
ary measure, also with regard to the used car, leasing
and financing businesses. In the course of its regular
market supervision, the KBA routinely conducts further
reviews of Mercedes-Benz vehicles and asks questions
about technical elements of the vehicles. In addition,
Mercedes-Benz continues to be in a dialogue with the
German Federal Ministry for Digital and Transport
(BMDV) to conclude the analysis of the diesel-related
emissions matter and to further the update of affected
customer vehicles. In light of the aforementioned admin-
istrative orders issued by the KBA, and continued discus-
sions with the KBA and the BMDV, it cannot be ruled out
completely that additional administrative orders may be
issued in the course of the ongoing and/or further inves-
tigations. Since 1 September 2020, this also applies to
other responsible authorities of other member states
and the European Commission, which conduct market
surveillance under the new European Type Approval
Regulation and can take measures upon assumed non-
compliance, irrespective of the place of the original type
approval, and also to the British market surveillance
authority DVSA (Driver and Vehicle Standards Agency).
In addition to the aforementioned authorities, national
cartel authorities and other authorities of various foreign
states, including the South Korean Ministry of Environ-
ment, the South Korean competition authority (Korea
Fair Trade Commission) and the Seoul public prosecu-
tor's office (South Korea) are conducting various investi-
gations and/or procedures in connection with diesel
exhaust emissions. In this context, South Korean authori-
ties have made determinations and imposed sanctions
against Mercedes-Benz. Mercedes-Benz has lodged an
appeal against the determinations and the sanctions of
the South Korean administrative authorities (the Ministry
of Environment and the Korea Fair Trade Commission).
The proceedings described in this paragraph are still
ongoing.
Mercedes-Benz continues to fully cooperate with the
authorities and institutions.
291
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Diesel emission behaviour: Consumer actions and
other lawsuits in the United States, Germany and
other states
As previously reported, the State of Arizona filed a
lawsuit in January 2019 claiming that, amongst others,
Mercedes-Benz Group AG and MBUSA deliberately
deceived consumers in connection with advertising
Mercedes-Benz diesel vehicles. In the fourth quarter of
2022, Mercedes-Benz Group AG and MBUSA reached
a binding settlement with the State of Arizona. In a
separate lawsuit filed by the Environmental Protection
Commission of Hillsborough County, Florida in Septem-
ber 2020, the plaintiff claims that, amongst others,
Mercedes-Benz Group AG and MBUSA violated municipal
regulations prohibiting vehicle tampering and other con-
duct by using alleged devices claimed to impair the ef-
fectiveness of emission control systems. The lawsuit was
dismissed in the third quarter of 2022. The plaintiff has
appealed the decision.
Consumer class actions containing allegations similar to
those raised by the State of Arizona were filed against
Mercedes-Benz Group AG in Israel in February 2019 as
well as against Mercedes-Benz Group AG and further
Group companies in the United Kingdom since May 2020,
in Portugal as well as in November 2022 in Australia. The
plaintiffs assert that Mercedes-Benz had used devices
that impermissibly impair the effectiveness of emission
control systems in reducing nitrogen-oxide (NOx) emis-
sions and which cause excessive emissions from vehicles
with diesel engines.
Furthermore, since June 2020, class actions making simi-
lar allegations have been filed against Mercedes-Benz
Group AG and other Group companies in the Nether-
lands. These have later been consolidated into one class
action. The plaintiffs, foundations under the laws of the
Netherlands, act in the name of Dutch claimants and
base their claim on a law according to which said claim-
ants participate in the class action without taking action
themselves (opt-out). On 22 June 2022, the court ruled in
a partial judgment that claimants must actively register
for the lawsuit (opt-in) and that, due to the applicability
of the previous legal regime, only a determination of
claims can be obtained. In this regard, the decision has
been appealed by the plaintiffs. Furthermore, the court
ruled, that instead of customers from the entire EU area,
only such customers may participate in the lawsuit who
purchased their vehicles in the Netherlands. This part of
the decision is final, which significantly reduces the
number of potential claimants. At the same time, this
development leads to a material reduction of the risk
associated with the class action. Therefore, it no longer
qualifies for separate reporting in the Notes to the Con-
solidated Financial Statements, which is why Mercedes-
Benz will no longer report on this proceeding in the
future.
In Germany, a large number of customers of diesel vehi-
cles have filed lawsuits for damages or rescission of
sales contracts. They assert that the vehicles contained
illegal defeat devices and/or showed impermissibly high
emission or consumption values. They refer to, in partic-
ular, the KBA's recall orders (see above). The develop-
ment of case numbers is declining, however an increase
in the future cannot be ruled out. Based on similar alle-
gations, the Federation of German Consumer Organiza-
tions (Verbraucherzentrale Bundesverband e. V.) filed a
model declaratory action (Musterfeststellungsklage)
against Mercedes-Benz Group AG with the Stuttgart
Higher Regional Court in July 2021. Such action seeks a
ruling that certain preconditions of alleged consumer
claims are met. Mercedes-Benz Group AG defends itself
against the federation's allegations.
17,679
Mercedes-Benz Group AG and the respective other af-
fected companies of the Group regard the lawsuits set
out above as being without merit and continue to defend
themselves against the claims.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
In addition, investors from Germany and abroad have
filed lawsuits for damages with the Stuttgart Regional
Court alleging the violation of disclosure requirements
(main proceedings) and also raised out-of-court claims
for damages. The investors allege that Mercedes-Benz
Group AG did not immediately disclose inside infor-
mation in connection with the emission behaviour of its
diesel vehicles and that it had made false and misleading
public statements. They further claim that the purchase
price of the financial instruments acquired by them (in
particular Mercedes-Benz shares, formerly Daimler AG
shares) would have been lower if Mercedes-Benz Group
AG had complied with its disclosure obligations.
Mercedes-Benz Group AG regards these allegations and
claims as being without merit and will defend itself
against them. In this context, the Stuttgart Higher Re-
gional Court initiated model case proceedings under the
German Act on Model Case Proceedings in Disputes
under Capital Markets Law (KapMuG) in December 2021
(model case proceedings). The purpose of the model
case proceedings is to reach a decision that is binding
for the main proceedings regarding common factual and
legal questions. The main proceedings before the
Stuttgart Regional Court will be suspended until a deci-
sion is reached on the questions submitted, insofar as
they cannot be dismissed independently of the ques-
tions to be decided in the model case proceedings. The
decision in the model case proceedings is binding for
the suspended main proceedings. Multiple investors
have used the possibility to register claims in a consider-
able amount with the model case proceedings in order
to suspend the period of limitation. Mercedes-Benz
Group AG remains of the view to have duly fulfilled its
disclosure obligations under capital markets law and
defends itself against the investors' allegations also in
these model case proceedings.
Accounting assessment of the legal proceedings in
connection with diesel emission behaviour
With respect to the legal proceedings described in the
two preceding chapters, in accordance with IAS 37.92 no
further information is disclosed with respect to whether,
or to what extent, provisions have been recognized
and/or contingent liabilities have been disclosed, so as
not to prejudice Mercedes-Benz's position. For recog-
nized provisions, this does not apply to the extent a set-
tlement has been reached or a proceeding has been
concluded.
Other legal proceedings
Starting in July 2017, a number of class actions were filed
in the United States and Canada against Mercedes-Benz
Group AG and other manufacturers of automobiles as
well as various of their North American subsidiaries.
Plaintiffs allege to have suffered damages because de-
fendants engaged in anticompetitive behaviour relating
to vehicle technology, costs, suppliers, markets, and
other competitive attributes, including diesel emissions
control technology, since the 1990s. In June 2022, the
proceedings in the United States were dismissed with
final effect in favour of Mercedes-Benz. Mercedes-Benz
also regards the remaining lawsuits pending in Canada as
being without merit, and will continue to defend itself
against them. This contingent liability cannot currently
be measured.
293
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
As already reported, class actions in connection with
Takata airbags are pending in the United States and Isra-
el. The lawsuits are based on allegations that, along with
Takata entities and many other companies that sold ve-
hicles equipped with Takata airbag inflators, Mercedes-
Benz entities and others were allegedly negligent in sell-
ing such vehicles, purportedly not recalling them quickly
enough, and failing to warn consumers about a potential
defect and/or to provide an adequate replacement air-
bag inflator. One of the complaints in the United States
also asserts claims by automotive recyclers who allege
injury because they are not able to re-sell salvaged air-
bag inflators that are subject to the Takata recall. Mean-
while, a further class action filed in Argentina was dis-
missed, it may however be refiled. In February 2023,
the class actions in Canada were partially dismissed.
Mercedes-Benz Group AG continues to regard the pend-
ing claims as being without merit, and the affected Group
companies will continue to defend themselves against
the claims. Contingent liabilities were disclosed to a low
extent for this topic.
In October 2021, a number of Australian Mercedes-Benz
dealers lodged a claim against Mercedes-Benz Austral-
ia/Pacific Pty Ltd (MBAUP) with a Federal Court in Aus-
tralia. They allege that MBAUP forced the dealers to ac-
cept a change in their business model from a dealership
model to an agency model and thus deprived them of
the goodwill they created through their investments in
the Australian Mercedes-Benz dealership network. They
seek reinstatement of the dealership model or, alterna-
tively, compensation for the damage they allegedly in-
curred. MBAUP considers those claims to be without
merit and continues to defend itself against the claims.
In May and July 2022, class actions were filed in the
United States alleging claims based on a voluntary recall
of certain Mercedes-Benz ML-, GL- and R-Class vehicles
produced during the 2004-2015 model years for poten-
tially corroded brake boosters. Among other things, the
plaintiffs allege that the brake boosters in such vehicles
could corrode and lead to reduced braking force. They
allege failure to disclose the claimed defect and assert
various claims. A similar class action was filed in Israel.
Mercedes-Benz considers the lawsuits to be without
merit and defends itself against them.
Accounting estimates and management judgments
relating to all legal proceedings
Mercedes-Benz Group AG and its subsidiaries recognize
provisions in connection with pending or threatened
proceedings to the extent an obligation is probable and
can be reasonably estimated. Such provisions are recog-
nized in the Group's Consolidated Financial Statements
and are based on estimates. If quantifiable, contingent
liabilities in connection with legal proceedings are dis-
closed in the Group's Consolidated Financial Statements.
Risks resulting from legal proceedings sometimes cannot
be assessed reliably or only to a limited extent. Conse-
quently, provisions recognized for some legal proceed-
ings may turn out to be insufficient once such proceed-
ings have ended. Mercedes-Benz may also become liable
for payments in legal proceedings for which no provi-
sions were recognized and/or contingent liabilities were
disclosed. Uncertainty exists with regard to the amounts
or due dates of possible cash outflows. Although the
final result of any such proceedings could materially
affect Mercedes-Benz's operating results and cash flows
for a particular reporting period, Mercedes-Benz believes
that it should not exert a sustained influence on the
Group's financial position.
294
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
32. Contingent liabilities and other
financial obligations
292
23,182
23,182
Marketable debt securities and similar investments
665
Other financial assets recognized at fair value through profit or loss
584
584
61
61
Derivative financial instruments used in hedge accounting
Other receivables and miscellaneous other financial assets
2,463
2,463
1,020
1,020
3,113
3,113
3,258
665
3,258
126,781
127,363 128,896
Financial liabilities
Financing liabilities
Trade payables
109,192
12,204
107,417
12,204
123,343
10,682
125,737
10,682
Other financial liabilities
Financial liabilities recognized at fair value through profit or loss
171
125,987
3
671
Recognized at fair value through profit or loss
7,060
7,060
7,579
7,579
Recognized at fair value through other comprehensive income
1,641
1,641
2,364
2,364
Recognized at fair value through profit or loss
4,460
4,460
4,937
4,937
671
Measured at cost
959
278
278
Other financial assets
Equity instruments and debt instruments
1,439
1,439
1,707
1,707
Recognized at fair value through other comprehensive income
768
768
1,042
1,042
959
4,937
Position arrangement
10
1
Derivative financial instruments used in hedge
accounting
2,463
2,463
1,020
10,587
6,306
3,632
649
10,089
7,245
2,213
631
Financial liabilities recognized at fair value
Financial liabilities recognized at fair value
through profit or loss
171
171
130
130
Derivative financial instruments used in hedge
accounting
2,283
2,454
2,283
1,420
2,454
1,550
1,420
1,550
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on an active market either directly (i.e., as prices) or indirectly (i.e., derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
4,927
60
61
1,020
578
212
215
341
6
Recognized at fair value through other com-
prehensive income
630
1,042
227
1,707
643
339
457
1,439
Equity instruments and debt instruments
850
643
768
through profit or loss
584
145
Other financial assets recognized at fair value
376
82
665
207
124
116
671
Recognized at fair value through profit or loss
254
431
Amounts for the transactions designated as hedging instruments
other comprehensive income
D.79
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
In millions of euros
304
recognized at fair value through
-2,279
-2,279
-1,980
measured at (amortized) costs
thereof from financial assets and liabilities
310
-1,980
thereof from financial assets
1,577
1.07%
893
-0.95%
Total interest expense
Average interest rate - USD
-1.46%
2.43%
Cash-flow hedges
Average interest rate - €
2.08%
-0.18%
Average interest rate - USD
1.87%
-0.51%
Commodity price risk
Platinum (in USD per troy ounce)
884
Palladium (in USD per troy ounce)
13
Financial liabilities measured
other comprehensive income
Total interest income and total interest expense of the
continuing and discontinued operations for financial
assets or financial liabilities that are not recognized at
fair value through profit or loss are shown in table D.78.
Total interest income and total interest expense
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
303
1 Amounts relate to derivative financial instruments that are not used in hedge accounting.
152
-172
66
-651
at (amortized) cost
Average interest rate - €
at (amortized) cost
Financial assets measured
-8
-7
See Note 1 for qualitative descriptions of accounting for
and presentation of financial instruments (including de-
rivative financial instruments).
21
D.78
2022
recognized at fair value through
thereof from financial assets
5,093
4,550
measured at (amortized) costs
thereof from financial assets and liabilities
5,106
4,571
Total interest income
In millions of euros
Table D.79 shows the amounts for the transactions
designated as hedging instruments.
The Mercedes-Benz Group uses derivative financial in-
struments exclusively for hedging financial risks that
arise from its operating or refinancing activities or from
its liquidity management. These are mainly interest-rate
risks, currency risks and commodity price risks, which
have been defined as risk categories. For these hedging
purposes, the Group mainly uses currency forward trans-
actions, cross-currency interest-rate swaps, interest-rate
swaps, options and commodity forwards.
Use of derivatives
Information on derivative financial instruments
2021
Total interest income and total interest expense
Fair-value hedges
thereof major hedging instruments affected by
the reform of the interest-rate benchmark¹
0.87
15,229
3,521
22,924
5,113
16,214
3,444
24,771
1,195
2,813
1,336
5,344
2,031
3,775
1,257
7,063
4,174
Cash-flow hedges
47,572
26,944
Interest-rate risk
Fair-value hedges
thereof major hedging instruments affected by
the reform of the interest-rate benchmark
in the currency USD
27,727
27,945
55,672
25,057
11,878
36,935
5,764
30,967
6,857
43,588
13,927
6,701
1,590
15,738
3,336
1
The volumes of risk exposure in cash-flow hedges directly affected by the reform of the interest-rate benchmark are generally in line with the reported nominal values of the hedging
instruments because of the basic hedging ratio of 1. Further information on the reform of the interest-rate benchmark is provided in Note 34.
D.85
Average prices of hedging instruments for the major risks
Currency risk
USD per €
CNY per €
GBP per €
Interest-rate risk
At 31 December
2022
2021
1.10
1.18
7.37
7.90
57
9
48
7
20,664
8,814
10,730
3,257
22,801
through other comprehensive income
in the currency USD
0.87
2,578
3,914
5,236
4,589
1,258
11,083
Commodity price risk
7
1,336
3
109,192
27
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
38,667
38,667
37,910
37,910
financing liabilities
thereof other
17,880
545
18,425
16,839
16,839
ABS transactions
thereof liabilities from
8,488
2 Fair value measurement is based on inputs that are observable on an active market either directly (i.e., as prices) or indirectly (i.e., derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
65,035
301
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
66,698
96,955
96,549
Trade receivables
Receivables from financial services¹
Financial assets measured at (amortized) cost
2021
At 31 December
2022
Assets
In millions of euros
Carrying amounts of financial instruments according to measurement categories
D.76
to measurement categories are shown in table D.76.
The carrying amounts of financial instruments according
Measurement categories
Level 33
62,534
60,702
60,157
13,939
Level 22
Level 11
Total
At 31 December 2022
financial services
Receivables from
measured at cost
Fair values of financial assets
In millions of euros
not recognized at fair value
Measurement hierarchy of financial assets and liabilities
D.75
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Other financial assets current
Currency risk
At 31 December 2021
68,645
Level 33
Level 11
38,729
52,668
125,737
68,688
38,729
107,417
thereof bonds
Financing liabilities
measured at cost
Fair values of financial liabilities
84,386
84,386
86,343
86,343
Level 22
Total
4
8,100
Cash and cash equivalents
Net gains or losses
The table D.76 does not include the carrying amounts of
derivative financial instruments used in hedge account-
ing as these financial instruments are not assigned to a
measurement category.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
130
171
3,860
4,481
6,249
5,447
123,343
10,682
144,134
131,324
12,204
302
3 This does not include liabilities from lease transactions of €2,645 million (2021: €2,562 million) as these are not assigned to a measurement category.
4 This does not include financial guarantees of €7 (2021: €15 million) as these are not assigned to a measurement category.
Table D.77 shows the net gains/losses on financial in-
struments included in the Consolidated Statement of
Income for the continuing and discontinued operations
(excluding derivative financial instruments used in hedge
accounting).
2 These amounts relate to derivative financial instruments that are not included in hedge accounting.
Net gains/losses on equity and debt instruments recog-
nized at fair value through profit or loss primarily com-
prise gains and losses attributable to changes in the fair
values of these instruments.
Net gains/losses on equity instruments recognized at fair
value through other comprehensive income comprise
dividend payments.
94
205
-173
2021
2022
recognized at fair value
Equity instruments recognized at fair value
through other comprehensive income
Other financial assets
Other financial assets
and financial liabilities
recognized at fair value
through profit or loss¹
Equity and debt instruments recognized at fair
value through profit or loss
In millions of euros
Net gains/losses
D.77
Net gains/losses on financial liabilities measured at
(amortized) cost (excluding the interest income/expense
shown below) primarily comprise the effects of currency
translation.
Net gains/losses on financial assets measured at (amor-
tized) cost (excluding the interest income/expense
shown below) primarily comprise impairment losses
(including reversals of impairment losses) of minus
€610 million (2021: minus €157 million) that are charged
to cost of sales, selling expenses and other financial
income/expense, net. Foreign currency gains and losses
are also included.
Net gains/losses on other financial assets recognized at
fair value through other comprehensive income are pri-
marily attributable to the effects of currency translation.
Net gains/losses on other financial assets and liabilities
recognized at fair value through profit or loss comprise
gains and losses attributable to changes in their fair
values.
7,703
1 This does not include lease receivables of €18,851 million (2021: €20,319 million) as these are not assigned to a measurement category.
Obligations from sales transactions
Equity instruments and debt instruments
2,364
1,641
Marketable debt securities and similar investments
3,406
2,409
Financial assets recognized at fair value through other comprehensive income
3,258
3,113
Other receivables and miscellaneous other financial assets
278
959
Marketable debt securities and similar investments
23,182
17,679
768
Financial liabilities recognized at fair value through profit or loss²
1,042
5,715
Miscellaneous other financial liabilities4
Financing liabilities³
Trade payables
Financial liabilities measured at (amortized) cost
Liabilities
61
584
Other financial assets recognized at fair value through profit or loss²
665
671
Equity instruments and debt instruments
4,937
4,460
Marketable debt securities and similar investments
5,663
Financial assets recognized at fair value through profit or loss
In millions of euros
At 31 December 2022
>5 years
D.80
Neither in the current year nor in the previous year were
there any results attributable to the ineffective portion
of the hedge with fair-value hedges.
The amounts of the items hedged with fair-value hedges
are included in table D.80.
The Group uses fair-value hedges primarily for hedging
interest-rate risks.
Fair-value hedges
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
305
3 Gains and losses from hedging instruments used for recognizing hedge ineffectiveness.
2 Includes the following hedging instruments: interest-rate swaps, cross-currency interest-rate swaps.
1 Includes the following hedging instruments: currency forwards, currency options, currency swaps and commodity forwards.
-717
266
-1,763
Fair value changes³
8
37
1,042
10
46
277
1
551
200
140
Fair-value hedges
In millions of euros
2022
Interest-rate risk
2021
717
1,820
Fair-value changes of the hedged items¹
558
-1,192
non-current
Financing liabilities
8
-33
current
Financing liabilities
thereof hedge adjustments
5
20,404
non-current
Financing liabilities
4,433
3,395
current
Financing liabilities
Carrying amounts of the hedged items
The gains and losses on items designated as cash-flow
hedges as well as the amounts relating to hedge ineffec-
tiveness are included in table D.82.
The amounts related to items designated as cash-flow
hedges and as hedges of net investments in foreign
operations are shown in table D.81.
The Group also partially hedges the currency risk of
selected investments with the application of derivative
or non-derivative financial instruments.
The Mercedes-Benz Group uses cash-flow hedges for
hedging currency risks, interest-rate risks and commodi-
ty price risks.
Cash-flow hedges and hedges of net investments in
foreign operations
17,943
Accumulated amount of hedge adjustments
from inactive hedges remaining in the
statement of financial position
24
53
Other financial assets current
Carrying amount of the hedging instruments
At 31 December 2021
Fair value changes³
Other financial liabilities non-current
Other financial liabilities current
Other financial assets non-current
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
D.83
Reconciliation of reserves for derivative financial instruments
In millions of euros
Balance at 1 January 2021
Reserves
for
derivative Thereof
financial reserves for
instruments hedge costs
266
-7
At 31 December 2022, the balance of reserves for hedges
of net investments in foreign operations amounted to
€189 million (2021: €189 million).
The maturities of the derivative financial instruments
generally correspond with those of the underlying trans-
actions. The realization of the underlying transactions
of the cash-flow hedges is expected to correspond with
the maturities of the hedging transactions shown in table
D.84.
Unrealized gains/losses
before tax
-1,711
-227
Currency risk
-1,981
Other financial assets non-current
Other financial liabilities current
Other financial liabilities non-current
Commodity
5
-1,820
1,334
1,321
1,190
45
376
36
7
629
-115
1,654
46
456
-47
72
442
Cash-flow
hedges¹
Fair-value
hedges²
Cash-flow
hedges²
investments
in foreign
operations
Cash-flow
hedges
Hedges of
net
price risk
Interest-rate risk
Currency risk
1
-227
8
1 Fair-value changes of the hedged items used for recognizing hedge ineffectiveness.
Gains and losses recognized in other
2021
item has affected profit or loss
transferred because the hedged
For hedges that have been
flows are no longer expected to occur
For hedges for which the hedged future cash
to the statement of income
for derivative financial instruments
Reclassification of gains and losses from reserves
-2 --
6
1,313
Hedge ineffectiveness recognized in the
Statement of Income
Gains and losses recognized in other
comprehensive income
2022
Cost of
sales
Interest
expense
Cost of
sales
sales expense, net
Revenues
income/
Cost of
financial
Other
comprehensive income
Hedge ineffectiveness recognized in the
Statement of Income
Reclassification of gains and losses from reserves
During 2022, shifts in delivery dates and volumes oc-
curred in various markets making some planned vehicle
sales in specific currencies unlikely, with the conse-
quence that hedge accounting for these sales had to be
terminated. This related in particular to the currency CNY
as a consequence of the Covid-19 pandemic. The reclas-
sification from the reserves for derivative financial in-
struments to the Statement of Income did not result in
any material effects.
42
-14
341
34
-1
-1
-8
164
102
-79
-1,676
price risk
31
5
1,183
152
1,045
-2
6
item has affected profit or loss
transferred because the hedged
For hedges that have been.
For hedges for which the hedged future cash
flows are no longer expected to occur
to the statement of income
for derivative financial instruments
-20
-31
Interest-rate risk
Commodity
-5
-1,334
-1,319
price risk
rate risk
risk
price risk
rate risk
Commodity
2021
Interest-
Currency
Commodity
Interest-
Currency
risk
2022
financial instruments (before taxes)
Balance of the reserves for derivative
thereof hedges of net investments
in foreign operations
Fair-value changes of the hedged items¹
In millions of euros
Cash-flow hedges and hedges of net investments in foreign operations
D.81
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
306
1,755
-266
Continuing hedges
1,339
in which the ineffectiveness and the
reclassifications are included
Line item in the Statement of Income
In millions of euros
Gains and losses on cash-flow hedges and hedges of net investments in foreign operations
D.82
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
-270
307
-270
1 Fair-value changes of the hedged items used for recognizing hedge ineffectiveness.
2 Further information is provided in the section on exchange-rate risk in Note 34.
in foreign operations
thereof hedges of net investments
Currency risk
-10
-4
-229
2
1
Discontinued/terminated hedges
risks in the automotive business²
thereof hedges of commodity price
5
162
-959
1
1,501
-268
Interest-rate risk
270
Reclassification to profit and loss
392
28
Balance at 31 December 2021
-642
-74
Unrealized gains/losses
before tax
Currency risk
Interest-rate risk
878
-446
-1,772
-1,767
1,320
-5
Commodity price risk -
inventory purchases
4
Reclassification to profit and loss
before tax
and reclassifications
Taxes on changes in fair values
1
-2
Currency risk
509
133
Interest-rate risk
28
Reclassification to cost of acquisition of
non-financial assets before tax
-101
-10
1,490
Currency risk - procurement
-10
Commodity price risk -
inventory purchases
-32
Disposal due to spin-off of the Daimler
commercial vehicle business before tax
-23
8
Other changes
-69
Carrying amount of the hedging instruments
428
1,479
Table D.84 shows the nominal values of derivative finan-
cial instruments used in hedge accounting entered into
for the purpose of hedging currency risks, interest-rate
risks and commodity price risks that arise from the
Group's operating and/or financing activities.
The average prices of the hedging instruments classified
by risk categories for the main risks are included in table
D.85.
-42
Most of the transactions for which the effects from the
measurement of the hedging instrument and the under-
lying transaction to a large extent offset each other in
the Consolidated Statement of Income do not classify
for hedge accounting.
Even if derivative financial instruments do not or no
longer qualify for hedge accounting, these instruments
still serve to hedge financial risks from business opera-
tions. A hedging instrument is terminated when the
hedged transaction no longer exists or is no longer ex-
pected to occur.
Explanations of the hedging of exchange-rate risks, in-
terest-rate risks and commodity price risks can be found
in Note 34 in the sub-item finance market risk.
309
D.84
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Nominal amounts of derivative financial instruments used in hedge accounting
At 31 December 2022
Maturity of nominal amounts
At 31 December 2021
Maturity of nominal amounts
<1 year
1 year up to
5 years
1 year up to
>5 years
Total
<1 year
5 years
Nominal values of derivative financial instruments
used in hedge accounting
At 31 December 2022, the Mercedes-Benz Group utilized
derivative financial instruments with a maximum maturity
of 57 months (2021: 35 months) as hedges for currency
risks arising from future transactions.
-1,048
984
428
Interest-rate risk
11
Reclassification to cost of acquisition of
non-financial assets before tax
-83
-42
Currency risk procurement
-74
Currency risk
Commodity price risk -
Other changes
-9
-1
-1
Taxes on changes in fair values
and reclassifications
-658
413
Balance at 31 December 2022
inventory purchases
Table D.83 shows the reconciliation of the reserves for
derivative financial instruments (excluding reserves
for hedges of net investments in foreign operations).
308
Total
before tax
537
133
To cover foreign currency exposure risks of the vehicle
business operations forward foreign exchange contracts
and currency options are primarily used. The Mercedes-
Benz Group's policies call for a mixture of these financial
instruments depending on the assessment of market
conditions. Value at risk used to measure the exchange
rate risk inherent in these derivative financial instru-
ments.
Table D.89 shows the period-end, high, low and average
value-at-risk figures of the exchange rate risks for the
2022 and 2021 portfolios of derivative financial instru-
ments, which were entered into primarily in connection
with the vehicle business operations. Average exposure
has been computed on an end-of-quarter basis. The
offsetting transactions underlying the derivative financial
instruments are not included in the following value-at-
risk presentation, since they primarily comprise fore-
casted cash-flows. See also table D.84.
Hedge accounting. When designating derivative finan-
cial instruments, a hedge ratio of 1 is applied. In addition,
the respective volume and currency of the hedge and the
underlying transaction as well as maturity dates are
matched. The Group ensures an economic relationship
between the underlying transaction and the hedging
instrument by ensuring consistency of currency, volume
and maturity. Option premiums and also forward compo-
nents are not designated into the hedging relationship,
but the hedging costs are deferred in other comprehen-
sive income and recognized in profit or loss at the due
date of the underlying transaction or recognized as ad-
justment of acquisition cost of non-financial assets. The
effectiveness of the hedge is assessed at the start of and
during the hedging relationship. Possible sources of inef-
fectiveness of the hedging relationship are:
- Changes in the credit risk on the measurement of the
used hedging instrument which are not reflected in the
change of the hedged currency risk.
- Changes in the timing of the hedged transactions.
Please refer to table D.81. There were no significant ef-
fects on earnings in 2022 and 2021.
Country risk is the risk of economic loss arising from
changes of political, economic, legal or social conditions
in the respective country, e.g. resulting from sovereign
measures such as expropriation or interdiction of foreign
currency transfers.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Value at risk for exchange rate risk, interest rate risk and
commodity price risk
In millions of euros
2022
Period-end
High
D.89
319
The Group's overall currency exposure is reduced by
natural hedging, which consists of the currency expo-
sures of the business operations of different entities and
segments partially offsetting each other at Group level.
These natural hedges eliminate the need for hedging to
the extent of the matched exposures. To provide an
additional natural hedge against any remaining transac-
tion risk exposure, the Mercedes-Benz Group generally
strives to increase cash outflows in the same currencies
in which the Group has a net excess inflow.
In order to mitigate the impact of currency exchange rate
fluctuations for the business operations (future transac-
tions), the Mercedes-Benz Group continually assesses its
exposure to exchange rate risks and hedges a portion of
those risks by using derivative financial instruments. A
committee manages the Group's exchange rate risk and
its hedging transactions through currency derivatives.
The committee consists of representatives of the rele-
vant segments and corporate functions. The Corporate
Treasury department aggregates foreign currency expo-
sures from the companies of the Group and the opera-
tional units and implements the committee's decisions
concerning foreign currency hedging through transac-
tions with international financial institutions. Suitable
measures are generally taken without delay to eliminate
any over-hedging regarding hedging transactions caused
by changes in exposure. Moreover, designated hedging
relationships are reviewed with respect to any require-
ments to discontinue hedge accounting.
Low
The global nature of the Mercedes-Benz Group's busi-
nesses exposes cash flows to risks arising from fluctua-
tions in exchange rates. These risks primarily relate to
fluctuations between the euro and the US dollar, the
Chinese renminbi, the British pound and other currencies
such as currencies of growth markets. In the operating
vehicle business, the Group's exchange rate risk primari-
ly arises when revenue is generated in a currency that is
different from the currency in which the revenue related
costs are incurred (transaction risk). It may be inade-
quate to cover the costs if the value of the currency in
which the revenue is generated declined in the interim
relative to the value of the currency in which the costs
were incurred. The risk exposures serve as a basis for
analysing exchange rate risks at Group level. In addition,
the Group is indirectly exposed to a transaction risk from
its equity-method investments.
Transaction risk and currency risk management.
Exchange-rate risk
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
318
The Monte Carlo simulation uses random numbers to
generate possible changes in market risk factors con-
sistent with current market volatilities. The changes in
market risk factors allow the calculation of a possible
change in the portfolio value over the holding period.
Running multiple iterations of this simulation leads to a
distribution of portfolio value changes. The value at risk
can be determined based on this distribution as the port-
folio value loss which is reached or exceeded with a
probability of 1%.
When calculating value at risk using the variance-
covariance approach, the Mercedes-Benz Group first
computes the current market value of the Group's finan-
cial instruments portfolio. Then the sensitivity of the
portfolio value to changes in the relevant market risk
factors, such as particular foreign currency exchange
rates or interest rates of specific maturities, is quantified.
Based on volatilities and correlations of these market
risk factors, which are obtained from the RiskMetrics™
dataset, a statistical distribution of potential changes in
the portfolio value at the end of the holding period is
computed. The loss which is reached or exceeded with a
probability of only 1% can be derived from this calcula-
tion and represents the value at risk.
At the Group level, the Mercedes-Benz Group calculates
the value at risk for exchange rate and interest rate risk
according to the variance-covariance approach. The
value-at-risk calculation method for commodity hedging
instruments is based on a Monte Carlo simulation.
assume a 99% confidence level and a holding period
of five days.
-
- Express potential losses in fair values, and
The value-at-risk calculations employed:
The Group's targeted hedge ratios for forecast operating
cash flows in foreign currencies are generally determined
using a step-by-step method. Depending on the nature
of the underlying risks, the hedging rates decrease the
further the expected cash flows are in the future. On the
one hand, the hedging horizon is naturally limited by
uncertainty related to cash flows that lie far in the future;
on the other hand, it may also be limited by the fact that
appropriate currency contracts are not available. This
step-by-step method aims to limit risks for the Group
from unfavourable movements in exchange rates while
preserving sufficient flexibility to participate in favoura-
ble developments. Based on this step-by-step method
and depending on the market outlook, the committee
determines the hedging horizon, which usually varies
from one to five years, as well as the average hedge
ratios. Reflecting the character of the underlying risks,
the hedge ratios decrease with increasing maturities. At
year-end 2022, currency management for calendar year
2023 showed an unhedged position in the automotive
business in calendar year 2023 of 17% of the underlying
forecasted cash flows in US dollars and an unhedged
position of 28% of the underlying forecasted cash flows
in British pounds, while the forecasted cash flows in
Chinese renminbi were almost fully hedged with an un-
hedged position of 1%.
Average Period-end
Low
As part of its risk management system, the Mercedes-
Benz Group employs value-at-risk analyses. In perform-
ing these analyses, the Mercedes-Benz Group quantifies
its market risk due to changes in foreign currency ex-
change rates and interest rates and certain commodity
prices on a regular basis by predicting the potential loss
over a target time horizon (holding period) and confi-
dence level.
320
8
4
12
4
2
0
4
0
(from derivative financial instruments)
Commodity price risk
188
149
217
202
351
275
2021
Average
Exchange rate risk
(from derivative financial instruments)
932
1,598
932
High
1,165
512
326
381
Interest rate risk
275
492
512
The effect of the application of the new interest rates on
the Consolidated Financial Statements is being reviewed
on an ongoing basis. In order to conduct financial trans-
actions based on the new indices, the Mercedes-Benz
Group is preparing its IT-systems accordingly. Uncertain-
ty still exists about future market standards with interest
conventions for individual financial products (cash prod-
ucts and interest derivatives) that reference the new
risk-free rates. Contracts that have not been converted
are shown in table D.88.
18,146
6,986
375
196
96
76
24
Obligations from sales transactions
4,481
4,481
The Mercedes-Benz Group manages these risks via coun-
try exposure limits (e.g., for hard currency portfolios of
financial services entities). An internal rating system
serves as a basis for the Mercedes-Benz Group's risk-
oriented country exposure management; it assigns all
countries to risk classes, with consideration of both ex-
ternal ratings and capital market indications of country
risks.
3,234
3,234
Financial guarantees
551
551
146,321
77,174
26,688
Country risk
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
316
6 The maximum potential obligations under the issued financial guarantees are stated. It is assumed that the amounts are due within the first year.
5 The maximum available amounts are stated.
4 The cash outflows of trade payables are undiscounted.
4,037
3 The undiscounted sum of the cash flows of the derivative financial liabilities is shown for the respective year.
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which the Mercedes-Benz Group can be required to pay. The cus-
tomer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature within the first year.
(b) The cash flows of floating-interest financial instruments are estimated on the basis of forward rates.
1 The amounts were calculated as follows:
16,369
5,597
7,180
13,313
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
4,804
from financial guarantees
excluding accrued interest and liabilities
Despite market uncertainty, the existing benchmark in-
terest rates for USD, for example, are still applied as
reference rates in financial markets and have an impact
on the valuation of financial transactions. This also ap-
plies for financial instruments in hedging relationships
with a maturity beyond the end of 2022. With EURIBOR
as well as GBP, CHF and JPY LIBOR reform already im-
plemented, the contractual adjustment of financial in-
struments was made by means of a corresponding inter-
est rate risk reference by 31 December 2021. The materi-
al share of interest rate risk hedging relationships that is
still affected by the benchmark reform is based on the
USD currency.
317
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
The Mercedes-Benz Group expects the conversion of the
outstanding reference rates of hedging instruments and
their underlying transactions to be identical and without
any material delay. The Mercedes-Benz Group continues
to consider the economic relationship and thus the
continuation of hedge accounting to be still existing as of
31 December 2022.
The nominal values of the affected hedging instruments
that are included in a hedging relationship can be found
in table D.84.
D.88
Certain existing benchmark interest rates including those
of the London Interbank Offered Rate (for USD, GBP,
CHF and JPY) were comprehensively and internationally
reformed. As a result, those interest rates were gradually
abolished and replaced with alternative risk-free refer-
ence rates. Alternative interest rates were developed on
a national level in the context of the respective legal
systems and currencies; they can therefore vary with
regard to their structure, methodology and period of
publication.
Unreformed contracts in the course of the IBOR-reform
Financial assets
USD LIBOR
Total amount of unreformed contracts
At 31 December
2022
2021
4,790
9,258
In millions of euros
The Mercedes-Benz Group is exposed to country risk
mainly resulting from cross-border funding or collaterali-
zation of Group companies and customers, from invest-
ments in subsidiaries, associated companies, joint ven-
tures and joint operations as well as from cross-border
trade receivables. Country risks also arise from cross-
border cash deposits at financial institutions.
The Mercedes-Benz Group manages market risks to min-
imize the impact of fluctuations in foreign exchange rates
and interest rates on the earnings of the Group and its
segments. The Group calculates its overall net-exposure
to these market risks to provide the basis for hedging
decisions, which include the selection of hedging instru-
ments and the determination of hedging volumes and the
corresponding periods. The hedging strategy is specified
at Group level and uniformly implemented in the seg-
ments. Decisions regarding, for example, currencies and
asset-liability management (interest rates) are made by a
committee that meets regularly. Net-exposures are the
basis for the hedging strategies and are updated regular-
ly. The Mercedes-Benz Group usually counteracts the
risk of short-term fluctuations in raw-material prices by
means of price escalation clauses in the supply con-
tracts. Power purchase agreements are also concluded
to reduce electricity price risks. Power purchase agree-
ments are purchase agreements that include fixed pur-
chase prices of the electricity generated by a specific
plant for generating wind or solar power. To a limited
extent, derivative financial instruments are used to
hedge precious metal purchases.
The global nature of its businesses exposes the
Mercedes-Benz Group to significant market risks result-
ing from fluctuations in foreign currency exchange rates,
interest rates and commodity prices. The Group is
Miscellaneous other financial liabilities
2
2
12,200
12,204
payables4
also exposed to equity price risk in connection with its
investments in listed companies.
2
34
66
111
2
9
Finance-market risks
9
Irrevocable loan commitments5
Financial liabilities
Derivatives
-242
33
(assets only)
hedge accounting
instruments not used in
Derivative financial
1,020
2,463
584
33
hedge accounting
instruments used in
Derivative financial
7,703
8,100
20
receivables
(assets only)
61
Other receivables and
financial assets
- credit insurances,
Depending on the creditworthiness of the customers, the
Mercedes-Benz Group establishes credit limits and limits
credit risks with the following types of collateral:
For trade receivables from the export business, the
Mercedes-Benz Group also evaluates its customers' cre-
ditworthiness by means of an internal rating process with
consideration of the respective country risk. In this con-
text, the Annual Financial Statements and other relevant
information on the general distribution companies, such
as payment history, are used and assessed.
A significant proportion of the trade receivables from
each country's domestic business is secured by various
country-specific types of collateral. This collateral in-
cludes conditional sales, guarantees and sureties, as well
as mortgages and advance payments from customers.
Trade receivables are mostly receivables from worldwide
sales of vehicles and spare parts. The credit risk from
trade receivables encompasses the default risk of cus-
tomers, e.g. dealers and general distribution companies,
as well as other corporate and private customers.
In order to identify credit risks, the Mercedes-Benz
Group assesses the creditworthiness of customers.
The Mercedes-Benz Group manages its credit risk from
trade receivables using appropriate IT applications and
databases on the basis of internal policies which have to
be followed globally.
Trade receivables
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
313
829
551
Financial guarantees
3,044
3,234
Irrevocable loan commitments
3,258
3,113
33
Trade
82,853
85,549
15
The Mercedes-Benz Group's financing and leasing activi-
ties are primarily focused on supporting the sales of the
Group's automotive products. As a consequence of these
activities, the Group is exposed to credit risk, which is
monitored and managed based on defined standards,
guidelines and procedures. The Mercedes-Benz Group
manages its credit risk irrespective of whether it is relat-
ed to a financing contract or to an operating lease or a
finance lease contract. For this reason, statements con-
cerning the credit risk of Mercedes-Benz Mobility refer to
the entire financing and leasing business, unless other-
wise specified.
Receivables from financial services
Liquid assets consist of cash and cash equivalents and
marketable debt securities and similar investments. With
the investment of liquid assets, banks and issuers of
securities are selected very carefully and diversified in
accordance with a limit system. Liquid assets are mainly
held at financial institutions within and outside Europe
with high creditworthiness, as bonds issued by German
federal states and as money market funds. In connection
with investment decisions, priority is placed on the bor-
rower's very high creditworthiness and on balanced risk
diversification. The limits and their utilization are reas-
sessed continuously. In this assessment, the Mercedes-
Benz Group also considers the credit risk assessment of
its counterparties by the capital markets. In line with the
Group's risk policy, most liquid assets are held in invest-
ments with an external rating of “A” or better. Liquid
assets are thus not subject to a material credit risk and
are allocated to stage 1 of the impairment model under
IFRS, which is based on expected credit risk.
Liquid assets
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
311
The maximum risk positions of financial assets which are
generally subject to credit risk are equal to their carrying
amounts at the balance sheet date (without considera-
tion of collateral, if available). There is also a risk of de-
fault from irrevocable loan commitments which had not
been utilized as of that date, as well as from financial
guarantees. The maximum risk position in these cases is
equal to the expected future cash outflows. Table D.86
shows the maximum risk positions at the balance sheet
date.
Credit risk describes the risk of financial loss resulting
from a counterparty failing to meet its contractual pay-
ment obligations. Credit risk includes both the direct risk
of default and the risk of a deterioration in creditworthi-
ness as well as concentration risks.
Credit risk
The market sensitive instruments, including equity and
debt securities, that the plan assets hold to finance pen-
sion and other post-employment healthcare benefits, are
not included in the following quantitative and qualitative
analysis. See Note 23 for additional information on the
Mercedes-Benz Group's pension and post-employment
healthcare benefits.
The Group manages and monitors these risks primarily
through its operating and financing activities and, if re-
quired, through the use of derivative financial instru-
ments. The Mercedes-Benz Group uses derivative finan-
cial instruments exclusively for hedging financial risks
that arise from its business operations or refinancing
activities or liquidity management. Without these deriva-
tive financial instruments, the Group would be exposed
to higher financial risks. Additional information on finan-
cial instruments and especially on the volumes of the
derivative financial instruments used is included in Note
33. The Mercedes-Benz Group regularly evaluates its
financial risks with due consideration of changes in key
economic indicators and up-to-date market information.
The Mercedes-Benz Group has established internal poli-
cies for risk controlling procedures and for the use of
financial instruments, including a clear segregation of
duties with regard to financial activities, settlement,
accounting and the related controlling. The guidelines
upon which the Group's risk management processes for
financial risks are based are designed to identify and
analyse these risks throughout the Group, to set appro-
priate risk limits and controls and to monitor the risks by
means of reliable and up-to-date administrative and
information systems. The guidelines and systems are
regularly reviewed and adjusted to changes in markets
and products.
As a result of its businesses and the global nature of its
operations, the Mercedes-Benz Group is exposed to
market risks from changes in foreign currency exchange
rates and interest rates, while commodity price risks
arise from procurement. An equity price risk results from
investments in listed companies. In addition, the Group
is exposed to credit risks from its leasing and financing
activities and from its business operations (trade receiv-
ables). Furthermore, the Group is exposed to liquidity
and country risks relating to its credit and market risks or
a deterioration of its business operations or financial
market disturbances. If these financial risks materialize,
they could adversely affect the Group's profitability,
liquidity and capital resources and financial position.
General information on financial risks
34. Management of financial risks
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
111
Exposure to credit risk from financing and lease activities
is monitored based on the portfolio subject to credit risk.
The portfolio subject to credit risk consists of wholesale
and retail receivables from financial services and the
portion of the operating lease portfolio that is subject to
credit risk. Receivables from financial services comprise
claims arising from finance lease contracts and repay-
ment claims from financing loans. The operating lease
portfolio is reported under equipment on operating leas-
es in the Group's Consolidated Statement of Financial
Position. Lease payments due from operating lease con-
tracts are recognized in receivables from financial ser-
vices.
- first-class bank guarantees and
The Mercedes-Benz Mobility segment has policies set-
ting the framework for effective risk management at a
global as well as a local level. In particular, these policies
deal with minimum requirements for all risk-relevant
credit processes, the definition of financing products
offered, the evaluation of customer quality, requests for
collateral and the treatment of unsecured loans and non-
performing claims. The limitation of concentration risks is
implemented primarily by means of global limits, which
refer to customer exposures. To comply with these lim-
its, Mercedes-Benz Mobility applies approval standards
and measures to avoid concentration risks. Only one
customer was granted a credit line in the form of a large
loan. The Mercedes-Benz Mobility portfolio consists of a
large number of small and medium-sized enterprises and
private customers from more than 30 countries. At 31
December 2022, this segment accounted for 75% of the
portfolio.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
financial services
Receivables from
30,761
24,739
Liquid assets
For information on credit risks included in receivables
from financial services, see Note 15. Information on the
measurement of expected credit losses is provided in
Note 1.
The allowance ratio increased slightly compared to the
previous year due to poorer economic forecasts for 2023
and the sharp increase in provisions for the portfolios of
the Russian Mercedes-Benz Mobility companies. A large-
ly constant default rate in the portfolio continues to have
a stabilizing effect.
If, in connection with contracts, a worsening of payment
behaviour or other causes of a credit risk are recognized,
collection procedures are initiated by claims manage-
ment to obtain the overdue payments of the customer,
to take possession of the asset financed or leased or,
alternatively, to renegotiate the impaired contract. Inter-
nal restructuring policies and practices are based on the
indicators or criteria which, in the judgment of local
management, indicate that repayment will probably con-
tinue and that the total proceeds expected to be derived
from the renegotiated contract exceed the expected
proceeds to be derived from repossession and remarket-
ing. In the case of receivables from financial services,
significant modifications of financial assets were only
made in rare cases and to an insignificant extent.
Maximum risk position
2021
2022
Note
In millions of euros
irrevocable loan commitments and financial guarantees
Maximum risk positions of financial assets,
D.86
For the assessment of the default risk of retail and small
business customers, scoring systems are applied to
evaluate their creditworthiness. Corporate customers are
evaluated using internal rating instruments. Both evalua-
tion processes use external credit bureau data if availa-
ble. The scoring and rating results as well as the availa-
bility of security and other risk mitigation instruments,
such as advance payments, guarantees and, to a lesser
extent, residual debt insurances, are essential elements
for credit decisions.
With respect to its financing and lease activities, the
Group holds collateral for customer transactions limiting
actual credit risk through its fair value. The value of col-
lateral generally depends on the amount of the financed
assets. The financed vehicles usually serve as collateral.
Furthermore, Mercedes-Benz Mobility limits credit risk
from financing and lease activities, for example through
advance payments from customers.
312
· letters of credit.
34
For impairments of trade receivables, the simplified ap-
proach is applied, according to which these receivables
are allocated to stage 2. Credit losses until maturity for
these trade receivables are recognized upon initial
recognition.
310
749
1,180
933
247
298
372
447
647
2,944
16,345
5,506
7,078
13,015
26,001
51,922
119,867
100
≥ 2028
6
1,069
-630
These procedures are defined in the export credit guide-
lines, which have Group-wide validity.
66
-2,523
-9,608
-16,406
-29,409
257
634
2,614
9,884
30,478
15
4
91
276
683
15
2027
17,089
2025
From an operating point of view, the management of the
Group's liquidity exposures is centralized by a daily cash-
pooling process. This process enables the Mercedes-
Benz Group to manage its liquidity surplus and liquidity
requirements according to the actual needs of the Group
and of the companies of the Group. The Group's short-
term and mid-term liquidity management takes into
account the maturities of financial assets and financial
liabilities and estimates of cash flows from business
operations.
At 31 December 2022, liquidity amounted to €24.7 billion
(2021: €30.8 billion). In 2022, significant cash inflows
resulted from the Mercedes-Benz Cars and Mercedes-
Benz Vans segments. Furthermore, sales of sharehold-
ings and other business activities as well as dividends
received from Beijing Benz Automotive Co., Ltd. had a
positive effect on liquidity. Cash outflows resulted in
particular from the repayment of financing liabilities
due to the positive liquidity situation. In addition, the
investments made in intangible assets and property,
plant and equipment and the income taxes paid, as well
as the higher dividend payment to the shareholders of
Mercedes-Benz Group AG compared to the previous
year, had an impact and reduced liquidity. Moreover,
there were negative effects from the leasing and sales
financing business at Mercedes-Benz Mobility.
The funds raised are used to finance working capital and
capital expenditure as well as the cash needs of the
leasing and sales-financing business and unexpected
liquidity needs. In accordance with internal policies, the
refunding of the leasing and sales-financing business is
generally carried out with matching maturities so that
financing liabilities have the same maturity profile as the
leased assets and the receivables from financial services.
Insofar as reverse factoring agreements are entered
into, they have no influence on the liquidity risk of the
Mercedes-Benz Group, as they relate to a large number
of investors and have no impact on the payment terms
of the trade payables concerned.
The Mercedes-Benz Group manages its liquidity by hold-
ing adequate volumes of liquid assets and by maintaining
syndicated credit facilities in addition to the cash inflows
generated by its business operations. Additionally, the
possibility to securitize receivables of the financial
services business (ABS transactions) also reduces the
Group's liquidity risk. Liquid assets comprise cash and
cash equivalents and marketable debt securities and
similar investments. The Group can dispose of these
liquid assets at short notice.
Liquidity risk comprises the risk that a company cannot
meet its financial obligations in full.
Liquidity risk
The maximum potential obligations resulting from finan-
cial guarantees amount to €551 million at 31 December
2022 (2021: €829 million) and include liabilities recog-
nized at 31 December 2022 in the amount of €7 million
(2021: €15 million). Financial guarantees principally
represent contractual arrangements. These guarantees
generally provide that in the event of default or non-
payment by the primary debtor, the Group will be
required to settle such financial obligations generally
up to a contractually agreed amount.
Financial guarantees
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
The Mercedes-Benz Mobility segment in particular is
exposed to credit risk from irrevocable loan commit-
ments to end customers and retailers. At 31 December
2022, irrevocable loan commitments amounted to
€3,234 million (2021: €3,044 million). These loan com-
mitments had a maturity of less than one year and are
not subject to a material credit risk based on the current
state of knowledge.
Irrevocable loan commitments
Other receivables and financial assets
With respect to other receivables and financial assets
included in other financial assets in 2021 and 2022, the
Mercedes-Benz Group is exposed to credit risk only to a
small extent.
The Group uses derivative financial instruments exclu-
sively for hedging financial risks that arise from its op-
erational business, financing activities or liquidity man-
agement. The Mercedes-Benz Group manages its credit
risk exposure in connection with derivative financial
instruments through a limit system, which is based on
the review of each counterparty's financial strength. This
system limits and diversifies the credit risk. As a result,
the Mercedes-Benz Group is exposed to credit risk only
to a small extent with respect to its derivative financial
instruments. In accordance with the Group's risk policy,
most derivatives are contracted with counterparties
which have an external rating of "A" or better.
2026
Further information on trade receivables and the status
of impairments recognized is provided in Note 20.
Derivative financial instruments
315
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
314
In addition, customer deposits at Mercedes-Benz Bank
are used as a further source of refinancing.
Total
In general, the Mercedes-Benz Group makes use of a
broad spectrum of financial instruments to cover its
funding requirements. Depending on funding require-
ments and market conditions, the Mercedes-Benz Group
issues commercial paper, bonds (including green bonds),
debt obligations and financial instruments secured by
receivables in various currencies. Bank credit facilities
are also used to cover financing requirements. Potential
downgrades of the Mercedes-Benz Group's credit ratings
could have a negative impact on the Group's financing.
Since July 2018, the Mercedes-Benz Group has had at its
disposal a syndicated credit facility with a volume of €11
billion from a consortium of international banks, which
was converted into a sustainability-linked loan in Octo-
ber 2022. It grants the Mercedes-Benz Group additional
financial flexibility until 2025. As of 31 December 2022,
this credit line had not been utilized.
2024
Cash outflows
2023
thereof with net settlement
Cash inflows
Cash outflows
thereof with gross settlement
Trade
thereof lease liabilities (undiscounted)
Table D.87 provides an overview of how the future li-
quidity situation of the Group can be affected by the
cash flows from liabilities, financial guarantees and ir-
revocable loan commitments as of 31 December 2022.
Financing liabilities²
In millions of euros
Liquidity runoff for liabilities and financial guarantees¹
Derivative financial instruments³
D.87
Information on the Group's financing liabilities is also
provided in Note 25.
2021
244,468
242,109
Equity-method investment in DTHAG
Other equity-method investments¹
Income-tax assets²
8,762
253
299
3,107
Other reconciling items and
eliminations
2,906
8,199
2022
The reconciliation of segment assets and liabilities to
relevant amounts for the Group is shown in table D.93
In millions of euros
Reconciliation of segment assets and liabilities
to Group figures
D.93
The line item other reconciling items includes expenses
in connection with the sale individual investments and
business activities to Daimler Truck Holding AG or its
subsidiaries (2021: spin-off and hive-down of the Daimler
Trucks & Buses segment reported until this point in
time).
The gains/losses on equity-method investments in-
cludes the positive profit contribution of €226 million
(2021: loss of €1 million) from Daimler Truck Holding AG.
Earnings in the previous year are reduced by impair-
ments of the carrying amount of the investment in BAIC
Motor of €120 million.
Table D.92 shows the reconciliation of EBIT according to
segment reporting to the Consolidated Statement of
Income.
Reconciliation
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
327
1 In 2021, the key figures are presented as continuing operations with the exception of additions to and amortization of non-current assets. The additions to and depreciation on assets
contain the scope of the Daimler commercial vehicle business up to the time of the spin-off and hive-down.
4,430
-19,697
498
Total of segment assets
-20,660
-20,861
236,330
3,932
2022
10,857
-4,172
and similar obligations²
Reconciliation of EBIT to Group figures
and liabilities from pensions
Unallocated financial liabilities
D.92
175,807
177,647
Segment liabilities Group
-19,904
Segment assets Group
eliminations
4,721
7,614
191,947
189,937
Income-tax liabilities²
Total of segment liabilities
Total assets Group
259,831
260,015
26,415
23,685
Unallocated financial assets
(including liquidity) and assets
from pensions and similar
obligations²
233,416
Other reconciling items and
64
27,351
3,593
intangible assets
thereof investments in
29,466
2,115
2021
13,125
1,198
13,028
non-current assets
175,807
-16,140
191,947
131,748
8,669
51,530
Additions to
Segment liabilities
13,588
9,061
4,527
471
323
3,733
investments
of equity-method
thereof carrying amounts
233,416
2,396
60
61
2,517
plant and equipment
thereof depreciation of property,
2,552
161
2,391
79
210
2,102
15,066
1,004
14,062
6,183
670
275
7,209
thereof amortisation
non-current assets
Depreciation and amortisation of
4,579
714
3,865
78
198
3,589
plant and equipment
thereof investments in property,
2,741
224
of intangible assets
Total equity Group
329
73,167
The calculation of basic and diluted earnings per share
is based on net profit attributable to shareholders of
Mercedes-Benz Group AG. Following the expiration of
the stock option plan in 2014, dilutive effects no longer
exist. The profit attributable to shareholders of
Mercedes-Benz Group AG (basic and diluted) amounts
to €14,501 million (2021: €10,695 million). The weighted
average number of shares outstanding (basic and dilut-
ed) amounts to 1,069.8 million (2021: 1,069.8 million).
37. Earnings per share
1,095
8,078
7,625
835
In millions of euros
2021
2022
Average net assets
D.95
The objective of capital management is to increase value
added, among other things, by optimizing the cost of
capital. This is achieved on the one hand by the manage-
ment of the net assets, e.g. by optimizing working capital,
which is within the operational responsibility of the seg-
ments. In addition, taking into account legal regulations,
the Mercedes-Benz Group strives to optimize the costs
and risks of its capital structure and, consequently, the
cost of capital rate. Examples of this include a balanced
relationship between equity and financial liabilities as
well as an appropriate level of liquidity, oriented towards
the operational requirements.
The cost of capital of the Group's average net assets is
reflected in value added. Value added shows the extent
to which the Group achieves or exceeds the minimum
return requirements of the shareholders, thus creating
additional value. The required rate of return on net as-
sets, and thus the cost of capital rate, is derived from the
minimum rates of return that equity investors and lend-
ers expect on their invested capital. In the reporting
period, the cost of capital used for the internal capital
management amounted to 8% after taxes.
Mercedes-Benz Cars
Average annual net assets are calculated on the basis of
average quarterly net assets. The average quarterly net
assets are calculated as an average of the net assets at
the beginning and the end of the quarter and are shown
in table D.95.
36. Capital management
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
87,335
84,671
133,893
150,017
1,436
807
9,618
7,881
564
537
25,173
Net assets and value added represent the basis for capi-
tal management at the Mercedes-Benz Group. The assets
and liabilities of the segments in accordance with IFRS
provide the basis for the determination of net assets at
Group level. Mercedes-Benz Cars and Mercedes-Benz
Vans are accountable for the net operating assets; all
assets, liabilities and provisions for which they are
responsible for in day-to-day operations are therefore
allocated to them. Performance measurement at
Mercedes-Benz Mobility is on an equity basis, in line
with the usual practice in the banking business. Net as-
sets at Group level additionally include assets and liabili-
ties from income taxes as well as other corporate items
and eliminations.
27,324
Mercedes-Benz Vans
33,031
4 To the extent not allocated to the segments.
3 The equity-method investment in DTHAG was taken into account from the fourth quarter
of 2021.
2 Reported segment Daimler Trucks & Buses until spin-off and hive-down of the Daimler
commercial vehicle business. In the fourth quarter of 2021, no amounts have been
considered for the deconsolidated Daimler commercial vehicle business.
58,397
58,525
-362
422
1 Equity.
Net assets of the Mercedes-Benz Group
and eliminations5
Other corporate items
131
-3,818
38,189
from income taxes5
361
303
investments4
Other equity-method
in DTHAG³
Equity-method investment
Daimler commercial verhicle business²
15,681
49,547
53,540
Net assets of the segments
14,466
Mercedes-Benz Mobility'
885
Assets and liabilities
86,540
1,660
40,126
D.94
Revenue from external customers and non-current
assets by region are shown in table D.94.
Revenue and non-current assets by region
With respect to information on geographical regions,
revenue is allocated to countries based on the location
of the customer; non-current assets are presented
according to the physical location of these assets.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
328
16,028
20,458
Statement of Income
EBIT as shown in the Consolidated
-8
18
Eliminations
-212
Revenue and non-current assets by region
-458
-93
233
Gains/losses on equity-method investments
-782
Profit/loss from spin-off and hive-down (after
transaction costs)
1 This mainly comprises the carrying amount of BAIC Motor.
2 Unless these are attributable to Mercedes-Benz Mobility.
17,123
20,665
Total of segments' profit/loss (EBIT)
259,831
260,015
Total equity and liabilities Group
In millions of euros
Other reconciling items
2,159
In millions of euros
thereof Germany
45,558
20,010
17,883
29,284
35,829
22,181
19,722
33,105
40,091
44,421
45,587
20,733
23,085
Europe
62,058
51,044
56,487
Non-current assets
2021
2022
2021
2022
Revenue
-8,693
Other markets
thereof China
Asia
thereof United States
North America
61,983
242,109
1,080
9,418
Segment profit/loss (EBIT)
150,017
-5,755
-5,755
5,755
155,772
26,954
17,217
111,601
Total revenue
723
790
4,242
Intersegment revenue
150,017
150,017
26,231
16,427
107,359
External revenue
Benz
Group
Recon-
ciliation
Total
Segments
Mercedes-
Mercedes-
Benz
Mobility
Benz
Vans
Cars
Benz
2022
16,340
1,897
2,428
20,665
thereof carrying amounts
236,330
-8,138
244,468
142,524
10,036
91,908
Segment assets
545
545
2
86
457
In millions of euros
rates of provisions for
other risks
compounding and effects
thereof profit/loss from
1,732
233
1,499
-209
122
1,586
investments
on equity-method
thereof gains/losses
20,458
-207
from changes in discount
of equity-method
Mercedes- Mercedes-
D.90
- Changes in the timing of the hedged transactions.
- Effects of the credit risk on the fair value of the hedg-
ing instrument in use which are not reflected in the
change in the hedged commodity price risk.
Hedge accounting. When designating derivative hedging
instruments, the Mercedes-Benz Group generally applies
a hedge ratio of 1. The respective volumes and parame-
ters relevant for the valuation of the hedged item and
the hedging instrument as well as maturity dates are
matched. The Group ensures an economic relationship
between the hedged item and the hedging instrument by
ensuring consistency of volumes, parameters relevant
for valuation and maturity terms. The effectiveness of
the hedge is assessed at the start of and during the
hedging relationship. Possible sources of ineffectiveness
of the hedging relationship are:
In 2022, the decrease of the value at risk from commodi-
ty hedging was caused by a decrease in the hedging
volume.
Table D.89 shows the period-end, high, low and average
value-at-risk figures for the 2022 and 2021 portfolio of
derivative financial instruments used to hedge commodi-
ty price risk. Average exposure has been computed on an
end-of-quarter basis. The transactions underlying the
derivative financial instruments are not included in the
value-at-risk presentation. See also table D.84.
The Mercedes-Benz Group is exposed to the risk of
changes in commodity prices in connection with procur-
ing raw materials and manufacturing supplies used in
production. The Mercedes-Benz Group usually counter-
acts the risk of short-term fluctuations in raw-material
prices by means of price escalation clauses in the supply
contracts. The Mercedes-Benz Group also concludes
power purchase agreements for wind and solar energy in
order to protect itself from fluctuations in energy prices
and ensure long-term, sustainable procurement of elec-
tricity. The value of these contracts is based on the
difference between the fixed purchase price and the
future expected electricity prices. A small portion of the
raw-material price risk relating to the forecasted pro-
curement of precious metals is hedged with the use of
derivative financial instruments. The Mercedes-Benz
Group has decided to suspend these hedging strategies
for precious metals until further notice and to phase out
existing hedges.
Commodity-price risk
There were no material effects on earnings in the years
2021 and 2022.
- Premiums on hedging instruments for hedging ABS
transactions.
· No perfect match for individual parameters of the un-
derlying hedged transactions and the hedging instru-
ments used.
– Effects of the credit risk on the fair value of the hedg-
ing instruments in use which are not reflected in the
change in the hedged interest rate risk.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
322
Hedge accounting. When designating derivative hedging
instruments, the Mercedes-Benz Group generally applies
a hedge ratio of 1. The respective volumes, interest
curves, currencies and maturity dates of the underlying
transaction and the hedging instrument are generally
matched. In the case of combined derivative financial
instruments for interest currency hedges, the cross-
currency basis spread is not designated into the hedge
relationship, but deferred as a hedging cost in other
comprehensive income and recognized in profit or loss
over the hedge term. The Group ensures an economic
relationship between the underlying transaction and the
hedging instrument by ensuring consistency of interest
rates, maturity terms and nominal amounts. In the case
of hedging for ABS transactions of private placements,
the risk of the market interest rate component is partly
protected, which historically covers on average more
than 70% of the change in value of the total interest rate.
The effectiveness of the hedge is assessed at the begin-
ning and during the hedging relationship using the hypo-
thetical derivative method. Possible sources of ineffec-
tiveness of the hedging relationship are:
In the course of 2022, changes in the value at risk of
interest rate sensitive financial instruments were primari-
ly determined by the development of interest rate vola-
tilities.
Table D.89 shows the period-end, high, low and average
value-at-risk figures of the interest rate risk for the 2022
and 2021 portfolios of interest rate sensitive primary
financial instruments and derivative financial instruments
of the Group, including the financial instruments of the
financial services business. Liabilities from leasing con-
tratcs for which the Mrecedes-Benz Group acts as a les-
see are not included in the value-at-risk of the interest
rate risk. Average exposure has been computed on an
end-of-quarter basis.
Derivative financial instruments are also used in conjunc-
tion with the refinancing related to the automotive seg-
ments and liquidity management. The Mercedes-Benz
Group steers the funding activities of the automotive
segments and the financial services business at Group
level.
A committee consisting of representatives of the rele-
vant segments and the corporate functions manages the
interest rate risk by setting targets for the interest rate
risk position. The Corporate Treasury department and
the local Mercedes-Benz Group companies are jointly
responsible for achieving these targets. As separate
functions, the Treasury Controlling and the Mercedes-
Benz Mobility Controlling & Reporting department moni-
tor target achievement on a monthly basis. In order to
achieve the targeted interest rate risk positions in terms
of maturities and interest rate fixing periods, the
Mercedes-Benz Group also uses derivative financial in-
struments such as interest rate swaps. The interest rate
risk position is assessed by comparing assets and liabili-
ties for corresponding maturities, including the impact
of the relevant derivative financial instruments.
The Mercedes-Benz Group uses a variety of interest rate
sensitive financial instruments to manage the liquidity
needs of the Group. A substantial volume of interest rate
sensitive assets and liabilities results from the leasing
and sales financing business operated by the Mercedes-
Benz Mobility segment. The Mercedes-Benz Mobility
companies enter into transactions with customers that
primarily result in fixed-rate receivables. The Mercedes-
Benz Group's general policy is to match the refinancing
of interest-bearing assets in terms of maturities and
interest rates wherever economically feasible. However,
for a narrowly limited portion of the receivables portfolio
in selected and developed markets, Mercedes-Benz Mo-
bility does not match refinancing in terms of maturities in
order to take advantage of market opportunities. This
results in the Mercedes-Benz Group being exposed to
interest rate risks.
Interest-rate risk
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
321
Effects of currency translation risk. For purposes of
Mercedes-Benz Group's Consolidated Financial State-
ments, the income and expenses and the assets and
liabilities of subsidiaries located outside the euro zone
are converted into euros. Therefore, period-to-period
changes in average exchange rates may cause translation
effects that have a significant impact on, for example,
revenue, segment profit/loss (EBIT) and assets and liabil-
ities of the Group. Unlike exchange rate transaction risk,
exchange rate translation risk does not necessarily affect
future cash flows. The Group's equity position reflects
changes in carrying amounts caused by exchange rates.
In general, the Mercedes-Benz Group does not hedge
against exchange rate translation risk.
Since currency risks arising from the Group's investment
or refinancing in foreign currencies and the respective
hedging transactions generally offset each other, these
derivative financial instruments are not included in the
value-at-risk calculation presented.
The Group's investments in liquid assets or refinancing
activities are generally selected so that possible curren-
cy risks are minimized. Transaction risks arising from
liquid assets or payables in foreign currencies that result
from the Group's investment or refinancing on money
and capital markets are generally hedged against curren-
cy risks at the time of investing or refinancing in accord-
ance with the Mercedes-Benz Group's internal policies.
The Group uses appropriate derivative financial instru-
ments (e.g. cross-currency interest rate swaps) to hedge
against currency risk.
The development of the value at risk from foreign cur-
rency hedging in 2022 was primarily determined by the
increase in volatilities and the volume of hedging trans-
actions.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
The nominal volumes of hedging instruments not desig-
nated in a hedging relationship, in 2022 amount to
€12 billion (2021: €12 billion) for derivatives used to
hedge interest rate risks and €15 billion (2021: €8 billion)
for derivatives used to hedge exchange rate risks, as well
as €644 million (2021: €17 million) for derivatives used to
hedge commodity price risks.
Equity-price risk
The Mercedes-Benz Group predominantly holds invest-
ments in shares of companies which are classified as
long-term investments, some of which are accounted for
in the Consolidated Financial Statements using the equi-
ty method, such as the share in Daimler Truck Holding
AG and BAIC Motor. These investments are not included
in a market risk assessment by the Group.
323
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
325
Tables D.90 and D.91 present segment information for
the years ended 31 December 2022 and 2021.
Amortization of capitalized borrowing costs is not in-
cluded in the amortization of intangible assets or depre-
ciation of property, plant and equipment.
Depreciation and amortization may also include impair-
ments insofar as they do not relate to goodwill impair-
ment according to IAS 36.
Capital expenditures for intangible assets and property,
plant and equipment reflect the cash-effective additions
to these intangible assets and property, plant and
equipment insofar as they do not relate to capitalized
borrowing costs or goodwill.
Non-current assets consist of intangible assets, property,
plant and equipment, and equipment on operating
leases.
The residual-value risks associated with the Group's
operating leases and receivables from financial services
are generally borne by the segments, which manufac-
tured the leased vehicles. Risk sharing is based on
agreements between Mercedes-Benz Cars, Mercedes-
Benz Vans and Mercedes-Benz Mobility; the terms vary
by vehicle segment and geographic region.
Segment assets principally comprise all assets. The
assets of the Mercedes-Benz Cars and Mercedes-Benz
Vans segments exclude income-tax assets, assets from
defined benefit pension plans and other post-
employment benefit plans, and certain financial instru-
ments (including liquidity). Segment liabilities principally
comprise all liabilities. The Mercedes-Benz Cars and
Mercedes-Benz Vans reporting segments' liabilities ex-
clude income-tax liabilities, liabilities from defined bene-
fit pension plans and other post-employment benefit
plans, and certain financial instruments (including financ-
ing liabilities).
Transactions between the segments are generally elimi-
nated in the reconciliation. The elimination of effects
connected with intra-Group transfers of equity invest-
ments normally takes place in the segments involved.
The effects on earnings at the Group are normally recog-
nized in the corresponding segment upon completion of
the external transaction. Some simplifications have been
made in the segment reporting with regard to accounting
for leasing agreements in connection with intra-Group
transactions.
Intersegment revenue is generally recorded at prices.
that approximate market terms.
In justified individual cases, effects on the Group's Con-
solidated Statement of Income, Consolidated Statement
of Financial Position, and Consolidated Statement of
Cash Flows are not allocated to the corresponding seg-
ment based on a legal point of view, but the segment
report rather follows an economic approach.
Segment information
The measure of the Group's net profit or loss used by
the Mercedes-Benz Group's management and reporting
structure is referred to as "EBIT". EBIT comprises gross
profit, selling and general administrative expenses, re-
search and non-capitalized development costs, other
operating income/expense, and the gains/losses on
equity-method investments, as well as other financial
income/expense.
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
324
The reconciliation includes functions and services pro-
vided by the Group's headquarters as well as by compa-
nies of the Group not allocated to the segments (e. g.
Daimler Truck Holding AG). In addition, the reconciliation
includes items at the corporate level and the effects on
earnings of eliminating intra-Group transactions between
the segments.
Reconciliation
The Mercedes-Benz Mobility segment supports the sales
of the Mercedes-Benz Group's vehicle brands worldwide.
The product range mostly contains made-to-measure
mobility and financial services. These services range
from leasing and financing packages for end customers
and dealers to insurance solutions, flexible subscription
and rental models and fleet management services for
business customers, with the latter primarily offered via
the Athlon brand. Furthermore, Mercedes-Benz Mobility
is active in the area of innovative mobility services.
The vehicle segments develop and manufacture premium
and luxury passenger cars and vans. In addition to
the Mercedes-Benz brand, the brand portfolio of the
Mercedes-Benz Cars segment encompasses the brands
Mercedes-AMG, Mercedes-Maybach and Mercedes-EQ.
The Mercedes me brand provides access to the digital
services of Mercedes-Benz Cars. At Mercedes-Benz
Vans, the vans are sold under the Mercedes-Benz brand.
Corresponding spare parts and accessories are also sold.
The breakdown of segments corresponds to the internal
organizational and reporting structure.
The segment information relates to continuing opera-
tions. The reported segment Daimler Trucks & Buses until
spin-off and hive-down of the Daimler commercial vehi-
cle business is included in the discontinued operations in
2021 and is therefore not part of the segment infor-
mation presented.
The Group comprises the segments Mercedes-Benz Cars,
Mercedes-Benz Vans and Mercedes-Benz Mobility.
Until 31 December 2021, the Mercedes-Benz Cars and
Mercedes-Benz Vans segments were aggregated into
one reportable segment due to their comparable long-
term average return on sales as well as their comparable
revenue development and capital intensity. After the
spin-off and hive-down of the Daimler commercial vehi-
cle business in December 2021, the two segments have
been reported separately from 1 January 2022. The seg-
ment figures for 2021 have been restated accordingly.
Reported segments
35. Segment reporting
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
Internal management and reporting structure
The internal management and reporting structure at the
Mercedes-Benz Group is principally based on the ac-
counting policies according to IFRS that are described in
Note 1.
investments
4,479
328
5,947
139,388
27,941
14,735
96,712
Total revenue
1,039
3,828
Intersegment revenue
133,893
452
133,441
26,902
13,655
92,884
External revenue
20211
Group
Benz
Recon-
ciliation
Total
Segments
Benz
Mobility
Vans
Cars
Benz
Benz
Mercedes-
Mercedes-
-5,947
-5,495
133,893
Segment profit/loss (EBIT)
86,495
Segment assets
95
1
94
-2
7
89
other risks
rates of provisions for
from changes in discount
compounding and effects
thereof profit/loss from
Mercedes- Mercedes-
1,352
1,445
-140
107
1,478
investments
on equity-method
thereof gains/losses
16,028
-1,095
17,123
3,493
1,143
12,487
-93
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
In millions of euros
thereof investments in property,
3,418
-1
3,419
43
179
3,197
intangible assets
thereof investments in
25,086
-173
25,259
11,277
plant and equipment
1,295
non-current assets
177,647
-12,290
189,937
128,948
9,025
51,964
Additions to
Segment liabilities
13,530
8,452
5,078
271
12,687
146,196
3,265
18
D.91
326
4,121
-1
4,122
56
266
3,800
plant and equipment
thereof depreciation of property,
2,400
3
2,397
199
68
of intangible assets
thereof amortization
13,891
-72
13,963
6,130
620
7,213
non-current assets
Depreciation and amortization of
3,481
-1
3,482
186
2,143
330
5 To the extent not allocated to Mercedes-Benz Mobility.
Mercedes-Benz Bank Service Center GmbH
100.00
Le Bourget, France
Epsilon Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
FOTIC - MB Leasing No. 2 Single Fund Trust
Delta Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
EHG Elektroholding GmbH.
Daimler Vermögens- und Beteiligungsgesellschaft mbH
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Daimler Vans USA, LLC
Daimler Mobility & Technology Service Co., Ltd.
Daimler Greater China Ltd.
Daimler Fleet Management South Africa (Pty.) Ltd. i. L.
Daimler Fleet Management GmbH
DAF Investments, Ltd.
CLIDET NO 1048 (Proprietary) Limited
CARS Technik & Logistik GmbH
Brooklands Estates Management Limited
Athlon Sweden AB
Athlon Rental Germany GmbH
Athlon Mobility Services UK Limited
Athlon Mobility Consultancy N.V.
Athlon Germany GmbH
Athlon France S.A.S.
100.00
Alcobendas, Spain
Athlon Car Lease Spain, S.A.
100.00
Le Bourget, France
Athlon Car Lease S.A.S.
100.00
Düsseldorf, Germany
100.00
Machelen, Belgium
100.00
100.00
100.00
Beijing, China
Wilmington, USA
100.00
Beijing, China
100.00
Beijing, China
4
65.00
Pretoria, South Africa
5
100.00
Stuttgart, Germany
Machelen, Belgium
100.00
100.00
Centurion, South Africa
5
100.00
Wiedemar, Germany
100.00
Milton Keynes, United Kingdom
100.00
Malmö, Sweden
100.00
Düsseldorf, Germany
100.00
Milton Keynes, United Kingdom
Wilmington, USA
Athlon Car Lease Rental Services Belgium N.V.
100.00
Schiphol, Netherlands
Mercedes-Benz Vans, LLC
Mercedes-Benz Vans UK Limited
67.55
Hong Kong, China
Mercedes-Benz Vans Hong Kong Limited
100.00
Schiphol, Netherlands
Wilmington, USA
Mercedes-Benz USA, LLC
100.00
Warsaw, Poland
Mercedes-Benz Ubezpieczenia Sp. z o.o.
100.00
Vance, USA
Mercedes-Benz U.S. International, Inc.
100.00
Farmington Hills, USA
Mercedes-Benz Trust Leasing LLC
100.00
Wilmington, USA
Mercedes-Benz Trust Leasing Conduit LLC
100.00
Farmington Hills, USA
Mercedes-Benz Trust Holdings LLC
51.00
Taipei, Taiwan, China
Mercedes-Benz Taiwan Ltd.
Mercedes-Benz Vermögens- und Beteiligungsgesellschaft mbH
Mercedes-Benz Versicherung AG
Mercedes-Benz Versicherungsservice GmbH
Mercedes-Benz Verwaltungsgesellschaft für Grundbesitz mbH
Milton Keynes, United Kingdom
Athlon Car Lease Rental Services B.V.
100.00
Oeiras, Portugal
100.00
Warsaw, Poland
100.00
Schiphol, Netherlands
100.00
Rome, Italy
100.00
Schiphol, Netherlands
100.00
Machelen, Belgium
Stuttgart, Germany
100.00
5
100.00
Schönefeld, Germany
5
100.00
Berlin, Germany
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Wilmington, USA
100.00
340
100.00
5
Schönefeld, Germany
Beijing, China
100.00
Melbourne, Australia
100.00
Utrecht, Netherlands
5
100.00
Stuttgart, Germany
100.00
Buenos Aires, Argentina
note
percent¹
Domicile, country/region
Mercedes-Benz Auto Lease Trust 2020-B
Mercedes-Benz Auto Lease Trust 2021-A
Mercedes-Benz Auto Lease Trust 2021-B
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Argentina S.A.U.
Mercedes-Benz Asia GmbH
Mercedes-Benz Assuradeuren B.V.
Name of the company
Equity
interest in Foot-
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
337
5
100.00
100.00
75.00
Bangkok, Thailand
Stuttgart, Germany
Beijing, China
100.00
Wilmington, USA
0.00
3
Mercedes-Benz Automotive Mobility GmbH
Mercedes-Benz Bank AG
Mercedes-Benz Banking Service GmbH
Mercedes-Benz Bank Rus 000
3
0.00
Wilmington, USA
3
0.00
Wilmington, USA
Mercedes-Benz Auto Receivables Trust 2021-1
Mercedes-Benz Auto Receivables Trust 2022-1
3
0.00
Wilmington, USA
Mercedes-Benz AG
Mercedes-Benz Auto Receivables Trust 2020-A
0.00
Wilmington, USA
Mercedes-Benz Auto Receivables Trust 2020-1
3
0.00
Wilmington, USA
Mercedes-Benz Auto Receivables Trust 2019-1
3
0.00
Wilmington, USA
3
0.00
Wilmington, USA
3
100.00
100.00
5
Mercedes AMG High Performance Powertrains Ltd
MDC Power GmbH
MBarc Credit Canada Inc.
LBBW AM - MBVEXW
LBBW AM - Daimler Re Insurance
Koppieview Property (Pty) Ltd
Interleasing Luxembourg S.A.
FOTIC - MB Leasing No. 5 Single Fund Trust
Friesland Lease B.V.
3
0.00
Beijing, China
3
0.00
Beijing, China
FOTIC - MB Leasing No. 4 Single Fund Trust
FOTIC - MB Leasing No. 3 Single Fund Trust
3
0.00
Beijing, China
5,7
100.00
Schönefeld, Germany
5
100.00
Stuttgart, Germany
5,7
100.00
Mercedes pay GmbH
Mercedes-AMG GmbH
Mercedes-Benz - Aluguer de Veículos, Lda.
Mercedes-Benz (China) Ltd.
100.00
Affalterbach, Germany
5
100.00
Stuttgart, Germany
100.00
Brixworth, United Kingdom
5
100.00
Kölleda, Germany
100.00
Mississauga, Canada
3
Mem Martins, Portugal
0.00
3
0.00
Luxembourg, Luxembourg
100.00
Zwartkop, South Africa
100.00
Windhof, Luxembourg
51.11
Drachten, Netherlands
3
0.00
Beijing, China
Mercedes-Benz (Thailand) Limited
Stuttgart, Germany
Malmö, Sweden
Mercedes-Benz Sverige AB
100.00
48.7
55.3
334
40. Auditor fees
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
D.98
Auditor fees
2022
2021
The shareholders of the Mercedes-Benz Group AG elect-
ed KPMG AG Wirtschaftsprüfungsgesellschaft as the
external auditor at the Annual General Meeting held on
29 April 2022. Table D.98 shows the fees for services
provided by KPMG AG Wirtschaftsprüfungsgesellschaft
and the companies of the worldwide KPMG network to
Mercedes-Benz Group AG, the consolidated subsidiaries
and the proportionately consolidated joint operations.
Audit services relate to the audit of the Mercedes-Benz
Group's Consolidated Financial Statements and the
Annual Financial Statements, as well as to all services
required for the audit including the reviews of interim
financial statements, the accounting-related audit of the
internal control system, and accounting-related audits
of IT systems and processes.
Other attestation services were particularly provided for
reviews of IT systems and processes or in connection
with the issuance of comfort letters. Other services were
mainly commissioned for IT and process consulting not
relevant to accounting and for quality assurance.
The decrease in auditor fees compared to the previous
year is due in part to one-time expenses in connection
with the spin-off and hive-down of the Daimler commer-
cial vehicle business in the prior year. In addition, the
auditor fees of the previous year contained the fees
incurred for the companies of the Daimler Trucks & Bus-
es segment, which was reported until the date of the
spin-off and hive-down.
In millions of euros
Audit services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
38
40
24
25
Other attestation services
6
19
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
4
17
Total
6.2
6.6
Remuneration of the Supervisory Board
D.97
Remuneration of the members of the Board of Management
and the Supervisory Board
In millions of euros
Remuneration of the Board of
Management
Fixed remuneration
(base salary)
Short-term variable
remuneration
(50% of annual bonus)
Mid-term variable
remuneration
(50% of annual bonus, "deferral")
2022
2021
8.9
9.1
2
7.5
8.0
7.5
Variable remuneration with
a long-term incentive effect (PPSP)
Post-employment
15.4
22.9
benefits
(service cost)
2.3
2.1
Termination
benefits
Remuneration of the Board of Management
42.1
49.1
7.5
Individualized information on the remuneration of the
members of the Board of Management and of the Super-
visory Board of Mercedes-Benz Group AG is disclosed in
the Remuneration Report.
Tax services
Wirtschaftsprüfungsgesellschaft
Equity
interest in
Foot-
Domicile, country/region
percent¹
note
Kamenz, Germany
100.00
5
Schönefeld, Germany
100.00
5,7
Schönefeld, Germany
100.00
5,7
Schönefeld, Germany
100.00
5,7
Schönefeld, Germany
100.00
5,7
Schönefeld, Germany
100.00
5,7
Schönefeld, Germany
100.00
5,7
Schönefeld, Germany
Athlon Car Lease Portugal, Ida
Athlon Car Lease Polska Sp. z o.o.
Athlon Car Lease Nederland B.V.
Athlon Car Lease Italy S.R.L.
Other services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
1
2
2
2
1
46
63
335
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
41. Events after the reporting
period
Equity injection into There Holding B.V.
thereof KPMG AG
In the first half of 2023, the Mercedes-Benz Group,
together with other shareholders of There Holding B.V.
(THBV), via Mercedes-Benz AG inject additional equity
into THBV. The funds from the capital injection will be
transferred by THBV to Here International B.V. (HERE) in
order to increase HERE's liquidity. HERE is one of the
world's largest manufacturers of digital road maps for
navigation systems.
42. Additional information
German Corporate Governance Code
The Board of Management and the Supervisory Board of
Mercedes-Benz Group AG have issued a declaration
pursuant to Section 161 of the German Stock Corporation
Act (AktG) and have made it permanently available to
their shareholders on the Mercedes-Benz Group's web-
site.
Information on investments
The statement of investments of the Mercedes-Benz
Group pursuant to Section 313 Subsection 2 Nos. 1-6 of
the German Commercial Code (HGB) is presented in
table D.99. In general, cooperations without an equity
interest are not reported. Information on equity and
earnings and information on investments pursuant to
Section 313 Subsection 2 No. 4 of the German Commer-
cial Code is omitted insofar as, pursuant to Section 313
Subsection 3 Sentence 4 of the HGB, such information
is of minor relevance for a fair presentation of the profit-
ability, liquidity and capital resources, and financial posi-
tion of the Mercedes-Benz Group. In addition, the state-
ment of investments indicates which consolidated com-
panies make use of the exemption pursuant to Section
264 Subsection 3 of the HGB and/or Section 264b of
the HGB. The Consolidated Financial Statements of
Mercedes-Benz Group AG release those subsidiaries
from the requirements that would otherwise apply. On
1 February 2022, Daimler AG was renamed as Mercedes-
Benz Group AG. From that date, further name changes
of Group companies took place. The statement of in-
vestments shows the companies with their company
names as of 31 December 2022.
336
D.99
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Name of the company
I. Consolidated subsidiaries
Accumotive GmbH & Co. KG
Alpha 1 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 2 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 3 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 4 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 5 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 6 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 7 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Athlon Beheer International B.V.
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
The Group's cash outflow is expected to be in the order
of a low nine-digit euro range. The capital increase leads
to a corresponding increase in the carrying amount at
the associated company THBV, which is included in the
Consolidated Financial Statements of Mercedes-Benz
Group AG using the equity method and is allocated to
the Mercedes-Benz Cars segment.
Mercedes-Benz Bank GmbH
Payments made in 2022 to former members of the Board
of Management of Mercedes-Benz Group AG and their
survivors amounted to a total of €21.3 million (2021:
€19.1 million). The pension provisions for former mem-
bers of the Board of Management and their survivors
amounted to €246.1 million as of 31 December 2022
(2021: €334.3 million).
The members of the Board of Management of Mercedes-
Benz Group AG do not receive any remuneration for
their board activities on the boards of the subsidiaries.
These activities are remunerated with the remuneration
at Mercedes-Benz Group AG.
Mem Martins, Portugal
Mercedes-Benz Romania S.R.L.
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Risk Solutions South Africa (Pty) Ltd.
Mercedes-Benz Retail, Unipessoal Lda.
100.00
Farmington Hills, USA
Mercedes-Benz Retail Receivables LLC
100.00
Milton Keynes, United Kingdom
100.00
Woluwe-Saint-Lambert, Belgium
100.00
Wilmington, USA
100.00
Alcobendas, Spain
100.00
Luxembourg, Luxembourg
5
100.00
Berlin, Germany
Mercedes-Benz Retail Group UK Limited
Mercedes-Benz Retail Belgium NV/SA
Mercedes-Benz Research & Development North America, Inc.
Mercedes-Benz Renting, S.A.
Mercedes-Benz Reinsurance S.A. Luxembourg
Mercedes-Benz Real Estate GmbH
100.00
Pretoria, South Africa
100.00
Rome, Italy
Pretoria, South Africa
Mercedes-Benz South Africa Ltd
100.00
Sosnowiec, Poland
Mercedes-Benz Sosnowiec Sp. z o.o.
100.00
Singapore, Singapore
100.00
100.00
100.00
100.00
Bucharest, Romania
100.00
100.00
Schlieren, Switzerland
Selangor, Malaysia
Alcobendas, Spain
Mercedes-Benz Singapore Pte. Ltd.
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Service Leasing S.R.L.
Mercedes-Benz Schweiz AG
100.00
Moscow, Russian Federation
Mercedes-Benz Russia AO
100.00
Bucharest, Romania
100.00
Istanbul, Turkey
No advances or loans were made or abated to members
of the Board of Management or the Supervisory Board of
Mercedes-Benz Group AG in 2022.
Prague, Czech Republic
Sintra, Portugal
21
7,821
6,573
300
294
1,646
2,007
195
168
639
1,737
32
872
93
153
1
139
1 Transactions between the companies disposed of as part of the spin-off and hive-down of the Daimler commercial vehicles business and related parties of the Mercedes-Benz Group are
taken into account up until the time of the spin-off and hive-down in 2021.
2 After total loss allowances of €52 million (31 December 2021: €22 million).
3 Including liabilities from default risks from guarantees for related parties.
333
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
39. Remuneration of the members of
the Board of Management and the
Supervisory Board
Remuneration granted during the financial year to the
members of the Board of Management and the Supervi-
sory Board who were active in 2022 is shown in table
D.97.
Expenses for variable remuneration of the Board of Man-
agement with a long-term incentive effect, as shown in
table D.97, result from the ongoing measurement at fair
value at each balance sheet date of all rights granted and
not yet due under the Performance Phantom Share Plans
(PPSP), i.e., for the plans of the years 2019 to 2022. In
2022, the active members of the Board of Management
were granted 137,655 (2021: 170,670) phantom shares
in connection with the PPSP; the fair value of these
phantom shares at the grant date was €8.3 million (2021:
€11.1 million). See Note 22 for additional information on
share-based payment of the members of the Board of
Management.
In accordance with Section 314 Subsection 1 No. 6a
of the German Commercial Code (HGB), the overall re-
muneration granted to the members of the Board of
Management, excluding service cost resulting from enti-
tlements to post-employment benefits, amounted to
€32.2 million (2021: €35.2 million).
The members of the Supervisory Board are solely grant-
ed short-term fixed remuneration for their board and
committee activities amounted to €6.6 million (2021:
€6.2 million), the amounts of which depend on their
functions in the Supervisory Board. With the exception of
the remuneration paid to the members of the Superviso-
ry Board representing the employees in accordance with
their contracts of employment, no remuneration was
paid to the members of the Supervisory Board for ser-
vices provided personally beyond their board and com-
mittee activities in 2022, in particular for advisory or
agency services.
23
565
Mercedes-Benz Paris SAS
Mercedes-Benz Parts Brand GmbH
Mercedes-Benz PRAHA s.r.o.
Mercedes-Benz Portugal, S.A.
100.00
Warsaw, Poland
100.00
Shanghai, China
100.00
Milton Keynes, United Kingdom
100.00
Azuqueca de Henares, Spain
5
100.00
Stuttgart, Germany
100.00
100.00
100.00
100.00
Newark, USA
100.00
Wilmington, USA
100.00
Auckland, New Zealand
Istanbul, Turkey
Port-Marly, France
Eugendorf, Austria
Mercedes-Benz Polska Sp. z o.o.
Mercedes-Benz Parts Manufacturing & Services Ltd.
Mercedes-Benz Parts Logistics UK Limited
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
66.91
Mercedes-Benz Bank Polska S.A. w likwidacji
5,7
Mercedes-Benz Belgium Luxembourg S.A.
use-assets
Liabilities
2022
2021
2022
2021
At 31 December2
2022
At 31 December³
2021
2022
2021
In millions of euros
Associated companies
thereof Daimler Truck
thereof LSHAI
thereof BBAC
Joint ventures
18,601
15,466
2,653
968
4,842
6,027
Receivables
and right-of-
557
Expense from
purchases of goods
and services
and other expense¹
See Note 39 for information on the remuneration of the
board members.
Additionally, the Mercedes-Benz Group will continue the
leasing and sales-financing business for Daimler Truck's
commercial vehicles in some markets. To this end,
Mercedes-Benz Mobility acquires these vehicles from
Daimler Truck and leases them to the end customers.
Insofar as a mandatory vehicle return to Daimler Truck
has been agreed, a leasing contract (head lease) be-
tween Mercedes-Benz Mobility and Daimler Truck is
shown. The contract between Mercedes-Benz Mobility
and the end customer constitutes a sublease in this re-
spect. The receivables and right-of-use assets shown in
Table D.96 include demands for the repurchase of vehi-
cles of €1,312 million (31 December 2021: €1,617 million)
shown in receivables from financial services and right-of-
use assets of €548 million (31 December 2021: €1,060
million) vis-à-vis Daimler Truck shown in leased assets.
These right-of-use assets were depreciated as planned
by €399 million in 2022. Furthermore, table D.96 shows
right-of-use-assets of Daimler Greater China Ltd. vis-à-
vis BBAC of €94 million (31 December 2021: €103 million)
resulting from a leasing contract.
331
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
As described in Note 3, further sales and transfers of
operating interests and business activities took place in
2022. Effects on earnings from these transactions are
not included in the table D.96.
In addition, the Mercedes-Benz Group holds a minority
interest of €162 million (31 December 2021: €209 million)
in real estate companies controlled by Daimler Truck
Group, which is shown as debt instruments in other fi-
nancial assets.
Off-balance-sheet obligations relate especially to the
Daimler Truck Group and the joint venture Automotive
Cells Company SE. At 31 December 2022, they amounted
to a total of €467 million (31 December 2021: €569 mil-
lion).
Joint ventures
On 1 July 2022 an agreement became effective in favour
of smart Automobile Co., Ltd. (smart), a joint venture of
Mercedes-Benz AG and Zhejiang Geely Holding Group
Co., Ltd. This agreement would require the shareholders
to provide financial support up to a maximum amount
of €612 million each if, and to the extent, that smart is
not able to perform its payment obligations under a
syndicated loan agreement. Smart is allocated to the
Mercedes-Benz Cars segment.
Note 14 provides further details of the business activities
of the significant associated companies and joint ven-
tures, as well as of the significant transactions in the
years 2022 and 2021.
Contributions to plan assets
Mercedes-Benz Pension Trust e.V. manages the plan
assets on a fiduciary basis to cover pension obligations
in Germany and is therefore a related party of the
Mercedes-Benz Group. Another related party is
Mercedes-Benz Pensionsfonds AG. Mercedes-Benz
Group AG bears non-significant expenses and provides
services for both companies. See also Note 23 for
further information.
Subsequent liability
In 2019, Mercedes-Benz Group AG hived down assets
and liabilities of the Mercedes-Benz Cars & Vans seg-
ment at that time into Mercedes-Benz AG and of the
former Daimler Trucks & Buses segment into Daimler
Truck AG. As legal entities involved in the hive-down,
Mercedes-Benz Group AG, Mercedes-Benz AG and
Daimler Truck AG are jointly and severally liable pursuant
to Section 133 Subsections 1 and 3 of the German Trans-
formation Act (UmwG) for the liabilities of Mercedes-
Benz Group AG incurred prior to the effective date of
the hive-down. Those of the aforementioned legal enti-
ties to which the relevant liabilities are not assigned
under the hive-down agreement are, however, only liable
for those liabilities if they fall due within five years of
the announcement of the entry of the hive-down in the
commercial register of Mercedes-Benz Group AG and
claims therefrom are established in court or in another
manner as described in Section 133 of the German Trans-
formation Act (UmwG). The hive-down of the Daimler
commercial vehicle business in 2021 resulted in a subse-
quent liability relationship outside the Group.
332
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
The stipulations existing in this context, in particular on
the procedure for regulating the internal settlements
between the participating legal entities, are laid down in
the hive-down agreement of 25 March 2019.
The aforementioned period is ten years for pension obli-
gations based on the German Company Pensions Act
(BetrAVG) that existed before the hive-down took effect.
Mercedes-Benz Group AG and Mercedes-Benz AG do not
expect any outflow of liquidity from the respective other
legal entity due to the plan assets being available in a
sufficient volume.
According to the current appraisal, an actual claim with
respect to the subsequent liability relationship between
the entities is considered to be unlikely.
Related persons
Throughout the world, the Group has business relation-
ships with numerous entities that are customers and/or
suppliers of the Group. Those customers and/or suppli-
ers include companies that have a connection with some
of the members of the Board of Management or of the
Supervisory Board and close family members of those
board members of Mercedes-Benz Group AG or of its
subsidiaries.
Board of Management and Supervisory Board members
and close family members of those board members may
also purchase goods and services from Mercedes-Benz
Group AG or its subsidiaries as customers. When such
business relationships exist, transactions are concluded
at market terms.
D.96
Transactions with related companies
Income from
sales of goods
and services
and other income¹
The leased equipment of the Mercedes-Benz Mobility
segment include commercial vehicles produced by
Daimler Truck which have been acquired from external
dealers or other third parties not related to the
Mercedes-Benz Group. Mercedes-Benz Mobility usually
receives a residual-value guarantee from Daimler Truck
for this leased equipment in connection with the obliga-
tion to return the respective commercial vehicles to
Daimler Truck. At 31 December 2022 this guarantee was
€383 million (31 December 2021: €685 million).
723
80
100.00
Schönefeld, Germany
100.00
5
Kifissia, Greece
100.00
Milton Keynes, United Kingdom
100.00
Mercedes-Benz Hong Kong Limited
Hong Kong, China
100.00
Mercedes-Benz India Private Limited
Mercedes-Benz Insurance Agency (Beijing) Co., Ltd.
Mercedes-Benz Insurance Agency LLC
Pune, India
100.00
Beijing, China
100.00
Mercedes-Benz Insurance Broker S.R.L.
Mercedes-Benz Insurance Services GmbH
Wilmington, USA
Voluntari, Romania
Stuttgart, Germany
Melbourne, Australia
1,120
100.00
100.00
2,120
123
2,262
3,426
332
533
9,641
8,465
232
535
887
Mercedes-Benz France S.A.S.
Mercedes-Benz Group Australia/Pacific Pty Ltd
Mercedes-Benz Grund Services GmbH
Mercedes-Benz Hellas Single-Member S.A.
Mercedes-Benz Holdings UK Limited
100.00
100.00
Istanbul, Turkey
100.00
Singapore, Singapore
100.00
Malmö, Sweden
Montigny-le-Bretonneux, France
100.00
Upon the spin-off and hive-down taking effect in De-
cember 2021, Daimler Truck Holding AG was reported as
an associated company. There are numerous relation-
ships in the scope of ordinary business between the
Mercedes-Benz Group and Daimler Truck, for example,
the purchase and sale of goods and services and leasing
agreements. In addition, there is an interim provision of
services by corporate functions that are included under
other operating income. These services include in partic-
ular IT (€276 million), logistics (€181 million) and human
resources (€85 million).
Associated companies
Mississauga, Canada
100.00
Prague, Czech Republic
100.00
Alcobendas, Spain
100.00
Montigny-le-Bretonneux, France
100.00
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services India Private Limited
Hong Kong, China
80.00
Chennai, India
100.00
Mercedes-Benz Financial Services Investment Company LLC
Mercedes-Benz Financial Services Italia S.p.A.
Rome, Italy
Wilmington, USA
100.00
100.00
Mercedes-Benz Financial Services Korea Ltd.
Seoul, South Korea
80.00
100.00
Mercedes-Benz Financial Services Nederland B.V.
Brussels, Belgium
Eugendorf, Austria
Budapest, Hungary
100.00
Stuttgart, Germany
100.00
Copenhagen, Denmark
100.00
The Hague, Netherlands
100.00
Alcobendas, Spain
100.00
Woluwe-Saint-Lambert, Belgium
100.00
Wilmington, USA
100.00
Istanbul, Turkey
100.00
Montreal, Canada
100.00
95.11
Wilmington, USA
100.00
Melbourne, Australia
100.00
100.00
As shown in table D.96, the business relationships with
associated companies mainly relate to Daimler Truck
Holding AG (Daimler Truck), which is allocated to the
reconciliation, and to LSH Auto International Limited
(LSHAI) and Beijing Benz Automotive Co., Ltd. (BBAC),
which are allocated to the Mercedes-Benz Cars segment.
Nieuwegein, Netherlands
338
Taipei, Taiwan, China
51.00
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services USA LLC
Mercedes-Benz Finans Danmark A/S
Mercedes-Benz Finans Sverige AB
Milton Keynes, United Kingdom
100.00
Wilmington, USA
100.00
Copenhagen, Denmark
100.00
Malmö, Sweden
100.00
Mercedes-Benz Finansal Kiralama Türk A.S.
Mercedes-Benz Finansman Türk A.S.
Mercedes-Benz Fleet Management Singapore Pte. Ltd.
Mercedes-Benz Försäljnings AB
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
38. Related-party disclosures
Related parties (companies or persons) are deemed to
be associated companies, joint ventures and unconsoli-
dated subsidiaries, as well as persons who exercise a
significant influence on the financial and business policy
of the Mercedes-Benz Group. The latter category in-
cludes all persons in key positions and their close family
members. At the Mercedes-Benz Group, those persons
are the members of the Board of Management and of the
Supervisory Board and their close family members.
Related companies
Business transactions with related companies are gener-
ally carried out at market terms. Most of the goods and
services supplied between the Group and related com-
panies comprise transactions with associated companies
and joint ventures and are shown in table D.96.
100.00
100.00
100.00
100.00
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Name of the company
Mercedes-Benz Financial Services New Zealand Ltd
Mercedes-Benz Financial Services Portugal - Sociedade Financeira de Crédito
S.A.
Mercedes-Benz Financial Services Rus 000
Mercedes-Benz Financial Services Schweiz AG
Mercedes-Benz Financial Services Singapore Ltd.
Mercedes-Benz Financial Services Slovakia s.r.o.
Mercedes-Benz Financial Services South Africa (Pty) Ltd
Mercedes-Benz Financial Services Sp. z o.o.
Mercedes-Benz Financial Services Taiwan Ltd.
Domicile, country/region
Singapore, Singapore
Bratislava, Slovakia
Pretoria, South Africa
Warsaw, Poland
Equity
interest in
Foot-
percent¹
note
Auckland, New Zealand
100.00
Mem Martins, Portugal
100.00
Moscow, Russian Federation
100.00
Schlieren, Switzerland
100.00
75.00
100.00
Istanbul, Turkey
Mercedes-Benz Insurance Services Nederland B.V.
Mercedes-Benz Insurance Services Taiwan Ltd.
Mercedes-Benz Insurance Services UK Limited
Mercedes-Benz Intellectual Property GmbH & Co. KG
Mercedes-Benz Österreich GmbH
Mercedes-Benz Otomotiv Ticaret ve Hizmetler A.S.
100.00
100.00
Horsholm, Denmark
Wilmington, USA
Tokyo, Japan
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Finance North America LLC
Mercedes-Benz Finance Co., Ltd.
Mercedes-Benz North America Finance Corporation
Mercedes-Benz Finance Canada Inc.
Mercedes-Benz ExTra LLC
Mercedes-Benz Europa NV/SA
Mercedes-Benz Espana, S.A.U.
Mercedes-Benz Dealer Bedrijven B.V.
Mercedes-Benz Danmark A/S
Mercedes-Benz Customer Solutions GmbH
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Mercedes-Benz CPH A/S
Mercedes-Benz Corporate Investments, LLC
5
Mercedes-Benz Filo Hizmetleri A.S.
100.00
Mercedes-Benz North America Corporation
100.00
MERCEDES-BENZ MOBILITY AUSTRALIA PTY LTD
Melbourne, Australia
100.00
Mercedes-Benz Mobility Beteiligungsgesellschaft mbH
Stuttgart, Germany
100.00
5
Mercedes-Benz Mobility Korea Ltd.
Seoul, South Korea
100.00
Mercedes-Benz New Zealand Ltd
MERCEDES-BENZ MOBILITY MEXICO, S. DE R.L. DE C.V.
100.00
Mercedes-Benz Mobility Services GmbH
Stuttgart, Germany
100.00
5
Mercedes-Benz Nederland B.V.
Utrecht, Netherlands
100.00
Mercedes-Benz Nederland Holding B.V.
Utrecht, Netherlands
Mexico City, Mexico
Stuttgart, Germany
Mercedes-Benz Connectivity Services GmbH
100.00
100.00
Saarbrücken, Germany
5
100.00
Berlin, Germany
100.00
Moscow, Russian Federation
4
100.00
Warsaw, Poland
5
100.00
100.00
Stuttgart, Germany
5
100.00
Berlin, Germany
Mercedes-Benz Capital Investments B.V.
Mercedes-Benz Canada Inc.
Mercedes-Benz Brooklands Limited
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Mercedes-Benz Bordeaux S.A.S.
Eugendorf, Austria
Brussels, Belgium
100.00
Begles, France
Prague, Czech Republic
100.00
Milton Keynes, United Kingdom
100.00
São Paulo, Brazil
Mercedes-Benz Česká republika s.r.o.
Mercedes-Benz Cars UK Limited
Mercedes-Benz Cars & Vans Brasil Ltda.
100.00
Moscow, Russian Federation
100.00
Utrecht, Netherlands
Mercedes-Benz Capital Rus O00
Mercedes-Benz Capital Nederland B.V.
100.00
Utrecht, Netherlands
100.00
Mississauga, Canada
100.00
Milton Keynes, United Kingdom
100.00
Budapest, Hungary
100.00
5
100.00
100.00
100.00
Mercedes-Benz Leasing Deutschland GmbH
Mercedes-Benz Leasing GmbH
Beijing, China
65.00
Stuttgart, Germany
100.00
5
Stuttgart, Germany
100.00
5
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing Co., Ltd.
Mercedes-Benz Leasing Kft.
Mercedes-Benz Leasing Treuhand GmbH
Bucharest, Romania
100.00
Budapest, Hungary
100.00
Warsaw, Poland
100.00
Stuttgart, Germany
100.00
5
Mercedes-Benz LT GmbH
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Ludwigsfelde Anlagenverwaltung GmbH & Co. OHG
100.00
51.00
Mercedes-Benz International Finance B.V.
Mercedes-Benz Investment Company LLC
Utrecht, Netherlands
100.00
Taipei, Taiwan, China
100.00
Milton Keynes, United Kingdom
100.00
Stuttgart, Germany
100.00
5,7
Trent, Italy
Utrecht, Netherlands
Wilmington, USA
100.00
Mercedes-Benz Korea Limited
Mercedes-Benz Italia S.p.A.
Mercedes-Benz Japan Co., Ltd.
Mercedes-Benz Lease Italia S.r.l.
Stuttgart, Germany
100.00
Tokyo, Japan
100.00
Seoul, South Korea
100.00
Mercedes-Benz Ludwigsfelde GmbH
Rome, Italy
100.00
3
Mercedes-Benz México International, S. de R.L. de C.V.
Mexico City, Mexico
100.00
Mercedes-Benz Mexico, S. de R.L. de C.V.
Mexico City, Mexico
339
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Equity
interest in Foot-
Name of the company
Domicile, country/region
percent¹
note
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
Stuttgart, Germany
100.00
5
Mercedes-Benz Mobility (Thailand) Co., Ltd.
Mercedes-Benz Mobility AG
Bangkok, Thailand
Böblingen, Germany
0.00
Wilmington, USA
100.00
100.00
100.00
5,7
Ludwigsfelde, Germany
100.00
5
Mercedes-Benz Malaysia Sdn. Bhd.
Puchong, Malaysia
Mercedes-Benz Master Owner Trust
Schönefeld, Germany
Mercedes-Benz Manhattan, Inc.
Wilmington, USA
100.00
Mercedes-Benz Manufacturing (Thailand) Limited
5
Jawor, Poland
Mercedes-Benz Manufacturing Poland sp. z o.o.
100.00
Kecskemét, Hungary
Mercedes-Benz Manufacturing Hungary Kft.
Bangkok, Thailand
100.00
100.00
Ho Chi Minh City, Vietnam
Wavre, Belgium
100.00
Warsaw, Poland
70.00
100.00
Wilmington, USA
50.10
Le Bourget, France
Bogor, Indonesia
100.00
Jakarta, Indonesia
100.00
Utrecht, Netherlands
0.00
note
100.00
percent¹
Mercedes-Benz Vietnam Ltd.
SILVER ARROW CHINA 2021-1 RETAIL AUTO LOAN ASSET BACKED NOTES
TRUST
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Equity
interest in Foot-
Name of the company
3
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz Wavre S.A.
Mercedes-Benz Wholesale Receivables LLC
Domicile, country/region
Multifleet G.I.E
PT Mercedes-Benz Distribution Indonesia
Silver Arrow Athlon NL 2021-1
Silver Arrow Australia 2019-1
Silver Arrow Australia Trust 2019-1
Silver Arrow Australia Trust 2020-1
Silver Arrow Canada GP Inc.
Silver Arrow Canada LP
PT Mercedes-Benz Indonesia
Melbourne, Australia
SILVER ARROW CHINA 2022-2 RETAIL AUTO LOAN ASSET BACKED NOTES
TRUST
3
3
Beijing, China
0.00
3
Silver Arrow China Mercedes-Benz Leasing Co., Ltd. 2021-1
Silver Arrow China Mercedes-Benz Leasing Co., Ltd. 2021-2
Beijing, China
0.00
0.00
3
350
The explanatory disclosures on the sale of Russian sub-
sidiaries in the notes to the consolidated financial state-
ments are sufficiently detailed and appropriate.
The classification of the assets and liabilities in connec-
tion with the planned disposal of the interests in Russian
subsidiaries not as assets and liabilities held for sale is
appropriate.
The underlying assumptions regarding the recognition
and measurement of the assets and liabilities and the
reporting of contingent liabilities as a consequence of
the discontinuation of the business activities in Russia
are appropriate.
Our observations
Finally, we assessed whether the disclosures in the notes
to the consolidated financial statements on the disposal
of Russian subsidiaries are sufficiently detailed and
proper.
Leinfelden-Echterdingen, Germany
Beijing, China
0.00
Beijing, China
3
Melbourne, Australia
0.00
3
Melbourne, Australia
0.00
3
Mississauga, Canada
SILVER ARROW CHINA 2022-1 RETAIL AUTO LOAN ASSET BACKED NOTES
TRUST
100.00
100.00
7
Beijing, China
0.00
SILVER ARROW CHINA 2021-2 RETAIL AUTO LOAN ASSET BACKED NOTES
TRUST
Beijing, China
0.00
Mississauga, Canada
7.42
We furthermore evaluated the underlying documents
and minutes and the assessment set out in writing of the
legal representatives on the disposal of Russian subsidi-
aries.
0.00
Key audit matters are those matters that, our profes-
sional judgement, were of most significance in our audit
of the consolidated financial statements for the financial
year from January 1 to December 31, 2022. These matters
were addressed in the context of our audit of the consoli-
dated financial statements as a whole, and, in forming our
opinion thereon, we do not provide a separate opinion on
these matters.
The Impacts on the Financial Statements
and Financial Performance of the Discon-
tinuation of Business Activities in Russia
Please refer for a description of the circumstances to the
notes to the consolidated financial statements in Note 4
"Discontinuation of business activities and intended sale
of shares in the Russian subsidiaries". Please refer with
regard to the accounting policies and methods applied
to the notes to the consolidated financial statements in
Note 2 "Accounting estimates and management judge-
ments”. Disclosures on contingent liabilities can also be
found in the notes to the consolidated financial state-
ments in Note 32 "Contingent liabilities and other finan-
cial obligations".
The recognition and measurement of the assets and
liabilities as a consequence of the discontinuation of
the activities in Russia, especially the processing of exist-
ing transactions, resulted in the financial year 2022 in
costs of approx. EUR 0.7 billion in the automotive
segments as well as of approx. EUR 0.2 billion in the
segment Mercedes-Benz Mobility. In addition, contingent
liabilities of EUR 1.0 billion are reported. The recognition
and measurement of the assets and liabilities and the
assessment of whether contingent liabilities exist and
have to be reported in the notes to the consolidated
financial statements and, if so, in what amount, is
characterised to a high degree by discretionary assess-
ments and assumptions by the legal representatives, and
349
Annual Report 2022 Mercedes-Benz Group
Further Information
is complex. The assessment of the Mercedes-Benz Group
carried out in this connection as to the extent to which
sanctions can be expected is also discretionary.
At the end of October 2022 Mercedes-Benz Group signed
contracts with the Russian car dealer Avtodom AO for the
sale of the shares in the Russian subsidiaries. The com-
pletion of the transaction is subject to authorities'
approval, which have not yet been fully granted, and the
implementation of the contractually agreed conditions.
As of the reporting date, the assets and liabilities
of the Russian subsidiaries were not classified as assets
and liabilities held for sale. The evaluation of the criteria
for the classification is discretionary.
The risk for the financial statements is that the recogni-
tion and measurement of the assets and liabilities and
the contingent liabilities that result from the discontinua-
tion of the business activities in Russia have not been
recorded with the correct amount. There is furthermore
a risk that the classification of the assets and liabilities
in connection with the planned disposal of the interests
in the Russian subsidiaries is incorrect. With regard to
the explanatory disclosures on the disposal of Russian
subsidiaries in the notes to the consolidated financial
statements, there is a risk that the explanations are not
sufficiently detailed and appropriate.
Our audit approach
We first of all evaluated the process for identifying the
impacts of the discontinuation of the business activities
in Russia, including possible sanctions and the assess-
ment of relevant assumptions for the recognition and the
measurement of the assets and liabilities and how they
were arrived at. In addition, we obtained information
from the internal legal department, further employees in
individual departments familiar with the matter and the
lawyers acting for Mercedes-Benz Group AG in this con-
nection. Thereby we inspected the underlying documents
and minutes and evaluated whether these support the
assumptions of the legal representatives with regard to
the probability that they will occur and their impact on
the recognition of liabilities and the reporting of contin-
gent liabilities. We similarly evaluated the professional
competence, objectivity and the results of the work of
the lawyers instructed by the Mercedes-Benz Group. We
consulted our own lawyers in order to assess the
assumptions on possible sanctions.
With regard to the disposal of subsidiaries in Russia,
we have furthermore evaluated whether the classification
of the assets and liabilities of these companies not as
assets and liabilities held for sale is appropriate. To this
end, we interviewed the legal representatives and evalu-
ated the internal and external reporting in the context of
the classification criteria of IFRS 5.
Tallinn, Estonia
30.99
Berlin, Germany
49.00
9.55
50.00
50.00
50.00
Beijing, China
Beijing, China
Munich, Germany
Hangzhou, China
Ningbo, China
Key audit matters in the audit of the consolidated
financial statements
There Holding B.V.
Note on the emphasis of a particular matter
We refer to the comments of the legal representatives
in the section on "EU taxonomy" in the section entitled
"non-financial statement" that is included in the combined
management report in accordance with Sections 289b
paragraph 1, 289c, 315b paragraph 1 and 315c HGB. There
it is stated that the EU taxonomy Regulation and the del-
egated acts promulgated for this includes wording and
terms that are subject to considerable uncertainty with
regard to their interpretation and for which clarifications
have not yet been published in all cases. The legal repre-
sentatives describe how they have carried out the neces-
sary interpretation of the EU taxonomy Regulation and
the delegated acts promulgated for this. On account of
the immanent risk that certain abstract legal terms can
be interpreted in various ways, the conformity of the
interpretation with the law is subject to uncertainty. Our
opinions on the consolidated financial statements and on
the combined management report has not been modified
in this regard.
Basis for the opinions
Sabine Kohleisen
Britta Regi
Britta Seeger
Hubersten Dun
Hubertus Troska
Fuld Lills
Щ
Harald Wilhelm
347
Annual Report 2022 Mercedes-Benz Group
Further Information
Independent Auditor's Report
To Mercedes-Benz Group AG, Stuttgart
Report on the Audit of the Consolidated
Financial Statements and of
the Combined Management Report
Opinions
We have audited the consolidated financial statements
of Mercedes-Benz Group AG, Stuttgart, and its subsidiar-
ies (the Group), which comprise the consolidated state-
ment of financial position as of December 31, 2022, and
the consolidated statement of income, consolidated
statement of comprehensive income/loss, consolidated
statement of changes in equity and consolidated state-
ment of cash flows for the financial year from January 1 to
December 31, 2022 as well as notes to the consolidated
financial statements, including a summary of significant
accounting policies. In addition, we have audited the
report on the situation of the Company and the Group
(hereinafter referred to as “the combined management
report"), of Mercedes-Benz Group AG, including the
combined non-financial declaration pursuant to Sec-
tions 289b to 289e and 315b to 315c HGB [Handels-
gesetzbuch: German Commercial Code] for the financial
year from January 1 to December 31, 2022.
In accordance with the German legal regulations, we have
not audited the content of the elements of the combined
management report referred to in the "Other information"
section of our auditor's report.
The combined management report includes cross-refer-
ences not foreseen by law that are marked as unaudited.
In accordance with the German legal regulations, we have
not audited the content of these cross-references and
the information to which these cross-references relate.
-
In our opinion, on the basis of the knowledge obtained in
the audit
the accompanying consolidated financial statements
comply, in all material respects, with the IFRSS as
adopted by the EU, and the additional requirements
of German commercial law pursuant to Section 315e
paragraph 1 HGB and, in compliance with these require-
ments, give a true and fair view of the assets, liabilities
and financial position of the Group as of December 31,
2022, and of its financial performance for the financial
year from January 1 to December 31, 2022 and
the accompanying combined management report as
a whole provides an appropriate view of the Group's
position. In all material respects, the combined man-
agement report is consistent with the consolidated
financial statements, complies with German legal
requirements and appropriately presents the opportu-
nities and risks of future development. Our opinion
on the combined management report does not cover
the elements of the combined management report
referred to in the "Other information" section of our
auditor's report. The combined management report
includes cross-references not foreseen by law that are
marked as unaudited. Our opinion does not cover
these cross-references and the information to which
these cross-references relate.
Pursuant to Section 322 paragraph 3 sentence 1 HGB,
we declare that our audit has not led to any reservations
relating to the legal compliance of the consolidated
financial statements and of the combined management
report.
348
Annual Report 2022 Mercedes-Benz Group
Further Information
We conducted our audit of the consolidated financial
statements and of the combined management report in
accordance with Section 317 HGB and the EU Audit Regu-
lation (No. 537/2014; referred to subsequently as the
"EU Audit Regulation") and in compliance with German
Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer
[Institute of Public Auditors in Germany] (IDW). We per-
formed the audit of the consolidated financial statements
in supplementary compliance with the International
Standards on Auditing (ISAs). Our responsibilities under
those requirements, principles and standards are further
described in the "Auditor's Responsibilities for the Audit
of the Consolidated Financial Statements and of the
Combined Management Report" section of our auditor's
report. We are independent of the group entities in
accordance with the requirements of European law and
German commercial and professional law, and we have
fulfilled our other German professional responsibilities in
accordance with these requirements. In addition, in
accordance with Article 10 paragraph 2 letter f) of the EU
Audit Regulation, we declare that we have not provided
non-audit services prohibited under Article 5 paragraph 1
of the EU Audit Regulation. We believe that the evidence
we have obtained is sufficient and appropriate to provide
a basis for our opinions on the consolidated financial
statements and on the combined management report.
S.Kolligen
Mobility Trader Holding GmbH
RS Holdings Inc.
IONITY Holding GmbH & Co. KG
Movinx GmbH
MB Service Japan Co., Ltd.
Fujian Benz Automotive Co., Ltd.
Enbase Power GmbH
Automotive Cells Company SE
IV. Joint ventures accounted for using the equity method
Cooperation Manufacturing Plant Aguascalientes, S.A.P.I de C.V.
III. Joint operations accounted for using proportionate consolidation
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
Zweite Vermögensverwaltung PV GmbH
Vierte Vermögensverwaltung PV GmbH
Van Manufacturing Poland sp. z o.o.
STARKOM, proizvodnja in trgovina d.o.o.
Star Transmission srl
SMART MOBILITY PTE. LTD.
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
Porcher & Meffert Grundstücksgesellschaft mbH & Co. Stuttgart OHG
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
Montajes y Estampaciones Metálicas, S.L.
Mercedes-Benz.io Portugal Unipessoal Lda.
Mercedes-Benz.io GmbH
Mercedes-Benz Venezuela S.A.
Mercedes-Benz Vans Mobility, S.L.U.
Mercedes-Benz UK Trustees Limited
Mercedes-Benz UK Share Trustee Ltd.
342
LSH Auto International Limited
Mercedes-Benz Grand Prix Ltd.
Aguascalientes, Mexico
Bruges, France
Daimler Truck Holding AG
Bolt Technology OÜ
Blacklane GmbH
Beijing Benz Automotive Co., Ltd.
BAIC Motor Corporation Ltd.
V. Associated companies accounted for using the equity method
YOUR NOW Holding GmbH
Wei Xing Tech. Co., Ltd.
smart Automobile Co., Ltd.
Name of the company
note
percent¹
Equity
interest in Foot-
Domicile, country/region
Consolidated Financial Statements
Annual Report 2022 Mercedes-Benz Group
50.00
Berlin, Germany
33.40
Hitachi, Japan
50.00
25.10
33.33
Fuzhou, China
Munich, Germany
54.01
Mercedes-Benz Tech Motion GmbH
Dr Jörg Burzer
Markus Schäfer
6.45
Esslinger Wohnungsbau GmbH
Esslingen am Neckar, Germany
26.57
European Center for Information and Communication Technologies - EICT GmbH Berlin, Germany
Factorial Inc.
25.00
Woodbury, USA
9.52
Sila Nanotechnologies Inc.
Gamma 1 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Gamma 2 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co. OHG
hap2U SAS
Kamaz PAO
Momenta Global Limited
Ondine Tech Fund 1 L.P.
PDB - Partnership for Dummy Technology and Biomechanics GbR
Power Supply Systems GmbH
SK Gaming Beteiligungs GmbH
smart-BRABUS GmbH i.L.
STARCAM s.r.o.
The Mobility House AG
VfB Stuttgart 1893 AG
Volocopter GmbH
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG).
Schönefeld, Germany
Berlin, Germany
Schönefeld, Germany
Munich, Germany
George Town, Cayman Islands
Ingolstadt, Germany
Stuttgart, Germany
Dover, USA
Earlybird DWES Fund VI GmbH & Co. KG
Beijing, China
30.00
Munich, Germany
15.12
Hong Kong, China
15.00
Brackley, United Kingdom
33.33
Berlin, Germany
9.17
Wilmington, USA
65.32
Rijswijk, Netherlands
29.74
VI. Joint operations, joint ventures, associated companies accounted for at (amortized) cost and substantial other investments recognized
at fair value²
AFCC Automotive Fuel Cell Cooperation Corp.
Burnaby, Canada
50.10
4
Aston Martin Lagonda Global Holdings Plc
Gaydon, United Kingdom
9.74
BDF IP Holdings Ltd.
Burnaby, Canada
33.00
Beijing Mercedes-Benz Sales Service Co., Ltd.
51.00
سلام
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies, we refer to Note 1.
3 Control due to economic circumstances.
5 Qualification for exemption pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB).
Zurich, Switzerland
11.53
Stuttgart, Germany
11.61
Bruchsal, Germany
5.50
343
FURTHER
INFORMATION
Annual Report 2022 Mercedes-Benz Group
FURTHER INFORMATION
347 Responsibility Statement
of the Legal Representatives
348 Independent Auditor's Report
360 Key Figures Mercedes-Benz Group
361 Key Figures for the Divisions
362
Information on the Internet
Annual Report 2022 Mercedes-Benz Group
Further information
Responsibility Statement
of the Legal Representatives
To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position, cash flows and profit
or loss of the Group, and the Group management report,
which has been combined with the management report
for Mercedes-Benz Group AG, includes a fair review of
the development and performance of the business and
the position of the Group, together with a description of
the principal opportunities and risks associated with the
expected development of the Group.
Stuttgart, 13 March 2023
Auflar
Ola Källenius
В. радоватур
Renata Jungo Brüngger
M.feit
51.00
4 In liquidation.
Most, Czech Republic
50.00
6 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
7 Mercedes-Benz Group AG or one or several consolidated subsidiaries is/are the partner(s) with unlimited liability.
Furthermore, Mercedes-Benz Group AG or one or several consolidated subsidiaries is/are the partner(s) with unlimited liability in:
Gamma 3 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG, Schönefeld (Germany),
Gamma 4 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG, Schönefeld (Germany).
Schönefeld, Germany
10.10
7
10.10
7
18.37
7
10.12
7
Pontcharra, France
34.59
Naberezhnye Chelny, Russian Federation
15.00
Grand Cayman, Cayman Islands
6.34
43.23
20.00
24.90
8.91
Cologne, Germany
24.17
Bottrop, Germany
4
Mercedes-Benz Tech Innovation GmbH
The risk for the consolidated financial statements
The Mercedes-Benz Group decided in March 2022 to
discontinue the export of cars and vans to Russia and
the local production in Russia until further notice.
Wilmington, USA
341
Annual Report 2022 Mercedes-Benz Group
Consolidated Financial Statements
Name of the company
MBition Sofia EOOD
Mercedes pay AG
Mercedes pay S.A. - in liquidation
Mercedes pay USA LLC
Mercedes-Benz Assignment Services Americas, LLC
Mercedes-Benz Cars Middle East FZE
Mercedes-Benz Consulting GmbH
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Mercedes-Benz Egypt S.A.E.
Mercedes-Benz Energy GmbH
Mercedes-Benz Financial Services UK (Trustees) Ltd
Mercedes-Benz G GmbH
100.00
Berlin, Germany
100.00
Neuhausen auf den Fildern, Germany
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
MBition GmbH
Stuttgart, Germany
100.00
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
Stuttgart, Germany
100.00
Wilmington, USA
Mercedes-Benz Group Services Berlin GmbH
Arvidsjaur, Sweden
100.00
Stuttgart, Germany
100.00
Kuppenheim, Germany
100.00
Kamenz, Germany
100.00
100.00
Mercedes-Benz Group Services Phils., Inc.
Mercedes-Benz Hungária Kft.
Mercedes-Benz IDC Europe S.A.S.
100.00
Wilmington, USA
100.00
Dubai, United Arab Emirates
100.00
Leinfelden-Echterdingen, Germany
100.00
4
Maastricht, Netherlands
New Cairo, Egypt
100.00
Kamenz, Germany
100.00
Milton Keynes, United Kingdom
100.00
Raaba, Austria
100.00
Li-Tec Battery GmbH
100.00
100.00
Mercedes-Benz Intellectual Property Management GmbH
Mercedes-Benz Logistics and Distribution Egypt LLC
Mercedes-Benz Manufacturing and Import Egypt
Mercedes-Benz Manufacturing Rus Ltd
Mercedes-Benz Motorsport Limited
Mercedes-Benz Museum GmbH
Mercedes-Benz Parts Logistics Asia Pacific Sdn. Bhd.
100.00
Mercedes-Benz Pensionsfonds AG
Sofia, Bulgaria
Zug, Switzerland
Luxembourg, Luxembourg
Wilmington, USA
Equity
interest in Foot-
percent¹
note
Domicile, country/region
100.00
LICULAR GmbH
Lapland Car Test Aktiebolag
3
Silver Arrow Lease Facility Trust
Wilmington, USA
0.00
3
Silver Arrow Merfina 2021-1 S.r.l.
Silver Arrow S.A.
Star Assembly SRL
Ucafleet S.A.S
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
Wagenplan B.V.
Milan, Italy
Tel Aviv, Israel
Bangalore, India
3
Luxembourg, Luxembourg
0.00
Tokyo, Japan
Silver Arrow Japan 2022-1
3
3
SILVER ARROW CHINA Mercedes-Benz Leasing Co., Ltd. 2022-1 ASSET BACKED
NOTES TRUST
Beijing, China
0.00
3
SILVER ARROW CHINA Mercedes-Benz Leasing Co., Ltd. 2022-2 ASSET BACKED
NOTES TRUST
Beijing, China
0.00
0.00
Silver Arrow France 2020-1
Saint-Denis, France
0.00
3
Silver Arrow Japan 2021-1
Tokyo, Japan
0.00
3
3
Sebes, Romania
100.00
Berlin, Germany
Buenos Aires, Argentina
100.00
100.00
100.00
62.49
Stuttgart, Germany
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Daimler Group Services Madrid, S.A.U.
San Sebastián de los Reyes, Spain
100.00
Daimler Unterstützungskasse GmbH
DriveCo, LLC
Daimler Gastronomie GmbH
LEONIE DMS DVB GmbH
Kamenz, Germany
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Le Bourget, France
65.00
Stuttgart, Germany
100.00
5
Almere, Netherlands
60.00
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Cúspide GmbH
YASA Limited
100.00
Sittard, Netherlands
51.00
Zuidlease B.V.
II. Unconsolidated subsidiaries2
Accumotive Verwaltungs-GmbH
AEG Olympia Office GmbH
Kidlington, United Kingdom
Berlin, Germany
0.00
100.00
Bratislava, Slovakia
100.00
Wilmington, USA
100.00
Ulm, Germany
100.00
100.00
Leinfelden-Echterdingen, Germany
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
100.00
Alcobendas, Spain
100.00
100.00
100.00
100.00
6
100.00
100.00
New Cairo, Egypt
New Cairo, Egypt
100.00
Moscow, Russian Federation
80.00
Brackley, United Kingdom
100.00
Stuttgart, Germany
100.00
Puchong, Malaysia
100.00
100.00
Cebu City, Philippines
Valencia, Venezuela
100.00
100.00
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
Mercedes-Benz Purchasing Coordination Corporation
Mercedes-Benz Research & Development Tel Aviv Ltd.
Mercedes-Benz Research and Development India Private Limited
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz Subscription Services USA LLC
Stuttgart, Germany
100.00
Budapest, Hungary
100.00
Stuttgart, Germany
100.00
Jawor, Poland
Valbonne, France
Stuttgart, Germany
Maribor, Slovenia
100.00
100.00
51.00
Stuttgart, Germany
100.00
Schönefeld, Germany
100.00
Esparraguera, Spain
Stuttgart, Germany
100.00
7
Cugir, Romania
Lisbon, Portugal
100.00
Singapore, Singapore
100.00
17,158
Dividend per share (in euros)
Free cash flow of the industrial business
Adjusted free cash flow of the industrial business
Investments in property, plant and equipment
150,017
133,893
+12
20,458
+28
20,655
Earnings per share (in euros)²
+20
16,028
2022
Adjusted EBIT
Wirtschaftsprüfer
14,809
[German Public Auditor]
359
Annual Report 2022 Mercedes-Benz Group
Further information
Net profit
Key Figures Mercedes-Benz Group
In millions of euros
20211
2022/2021
% change
Revenue
EBIT
E.01
11,050
4,579
13.55
Bock
360
2 Based on net profit attributable to shareholders of Mercedes-Benz Group AG.
3 Active workforce without holiday workers.
1 The key figures, excluding investments in property, plant and equipment as well as research and development expenditure, were presented as continuing activities in 2021. The investments
in property, plant and equipment as well as research and development expenditure are including the figures of Daimler's commercial vehicle business until the time of the spin-off and hive-
down.
-2
172,425
168,797
+0
115
115
CO2 emissions of the new car fleet in Europe in accordance with WLTP (in g/km)
Employees (31 December)³
-6
9,105
8,541
Research and development expenditure
-24
3,481
10.00
+36
5.20
5.00
+4
8,128
+34
7,880
9,294
10,125
-8
26,637
21,005
+27
+3
F. B.R
Net liquidity of the industrial business (31 December)
Wirtschaftsprüfer
Whether the recognition of a provision and, if so, in what
amount it is necessary on account of legal proceedings
is dependent to a high degree on discretionary estimates
and assumptions by the legal representatives. In view
of this and the monetary amounts involved with regard
to the risks, the following legal proceedings of the
Mercedes-Benz Group are in our opinion of particular
importance.
a) Diesel emission behaviour: class action and other
lawsuits in the USA, Germany and other countries in
the Mercedes-Benz Cars and Mercedes-Benz Vans
segments
The allegation is raised in class actions in various juris-
dictions, including the USA or the Netherlands and the
UK, against the Mercedes-Benz Group AG and/or indi-
vidual subsidiaries that devices are used in Mercedes-
Benz diesel vehicles that impermissibly impair the
effectiveness of emission control systems in reducing
nitrogen-oxide (NOx) emissions and cause excessive
emissions. In addition, the plaintiffs contend that con-
sumers were deliberately misled in connection with
the advertising for Mercedes-Benz diesel vehicles.
In Germany, a large number of customers of diesel
vehicles have filed claims for damages or the reversal
of purchase agreements. They contend that the vehi-
cles are equipped with impermissible defeat devices
and/or report impermissibly high emission or consump-
tion figures.
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Furthermore, investors in Germany have filed claims on
account of the alleged violation of disclosure require-
ments. The investors contend that the Mercedes-Benz
Group failed to publish insider knowledge in connec-
tion with the emissions behaviour of its Mercedes-Benz
diesel vehicles immediately, and moreover made erro-
neous and misleading claims. In addition, they allege
that the purchase price of the financial instruments of
Mercedes-Benz Group AG (especially shares) acquired
by them would have been lower if Mercedes-Benz
Group AG had reported in accordance with its obliga-
tions.
b)Diesel emissions behaviour: administrative proceedings
in the Mercedes-Benz Cars und Mercedes-Benz Vans
segments
[German Public Auditor]
The Mercedes-Benz Group recognised provisions for legal
proceedings as of December 31, 2022. The recognition
of provisions for legal proceedings is conditional on the
existence of a present external obligation, which will
probably lead to an outflow of resources embodying
economic benefits and can be reliably estimated. The
amount provided is thereby determined in accordance
with the best possible estimate of the settlement amount.
The recognition and measurement of the recognized pro-
visions for legal proceedings are based on discretionary
assessments and assumptions by the legal representa-
tives.
Our audit approach
Our audit procedures comprised firstly an evaluation
of the process established by the Company to ensure
the recording of the risks, the estimation of the outcome
of the proceedings and the reflection in the financial
statements of the legal proceedings. Secondly, we held
discussions with the internal legal department and with
further departments familiar with the matters under
dispute, and with the Company's external advisors and
attorneys, in order to obtain explanations on the devel-
opments and the reasons that had led to the respective
estimations. In addition, we evaluated the underlying
documents and minutes and the calculations for the
respective provisions. The assessments of the legal rep-
resentatives regarding the developments in the areas
referred to were made available to us by the Company in
writing. In addition, we interviewed the Company's legal
representatives. As of the reporting date, assessments
were available from external attorneys on the relevant
proceedings, which support the assessment of the risks
by the legal representatives.
Where agreement has been reached in the meantime
regarding individual matters, we compared the amounts
originally estimated with the final obligations and in this
way obtained an impression of the quality of the esti-
mates.
The risk for the consolidated financial statements
Mercedes-Benz Group AG and its subsidiaries face various
legal proceedings, claims and governmental investiga-
tions and administrative orders (legal proceedings) on a
wide range of topics, including for example vehicle safety,
emissions, fuel economy, financial services, dealer, sup-
plier and other contractual relationships, intellectual
property rights, product warranties, environmental mat-
ters, antitrust matters (including actions for damages)
and shareholder matters. Legal proceedings relating to
products deal with claims on account of alleged vehicle
defects, some of which are asserted by way of a class
action lawsuit. If the outcome of such legal proceedings
is detrimental to the Mercedes-Benz Group, the Group
may be required to pay substantial compensatory and
punitive damages or fines. In addition, service actions,
recall campaigns or other costly actions may have to be
undertaken.
Finally, we evaluated the appropriateness of the descrip-
tion of the aforementioned legal proceedings in the notes
to the consolidated financial statements and the combined
management report.
The discretionary assessments and assumptions of the
legal representatives are appropriate.
The risk for the consolidated financial statements is that
provisions for legal proceedings are not set up or are
inadequate.
354
Annual Report 2022 Mercedes-Benz Group
Further Information
Other information
The legal representatives and the Supervisory Board are
responsible for the other information. The other informa-
tion comprises the following elements of the combined
management report, the content of which we have not
audited:
the combined declaration of the Company and the
Group on corporate management, which is referred
to in the combined management report, and
the disclosures in the combined management report
on the appropriateness and effectiveness of the overall
internal control system and the risk management sys-
tem pursuant to the German Corporate Governance
Codex marked as extraneous to management reports
and unaudited.
the following disclosures in the combined management
report marked as extraneous to management reports
and unaudited with regard to the:
- proportion of suppliers who have signed the "Ambi-
tion Letter" (Chapter on "Environmental issues"),
- CO2-emissions in production (Chapter on “Environ-
mental issues"),
- frequency of accidents at production locations
(Chapter on "Employee issues"),
EU taxonomy in tables B.39, B.40, B.41 und B.42
(Chapter on "EU taxonomy").
In accordance with our engagement, we have performed
a separate management review of these disclosures. With
regard to the nature, scope and results of this audit, we
refer to our audit opinion dated March 13, 2023.
Our observations
Please refer with regard to the accounting policies and
methods applied to the notes to the consolidated finan-
cial statements in Note 1 "Significant accounting policies"
and Note 2 "Accounting estimates and management
judgements". Further information on the legal proceed-
ings can be found in the notes to the consolidated finan-
cial statements in Note 24 "Provisions for other risks",
Note 31 "Legal proceedings" and in the combined man-
agement report in the section entitled "Legal and tax
risks and opportunities - legal risks”.
Reflection in the Financial Statements of
Legal Proceedings
The calculation methods and the assumptions made are
appropriate.
Annual Report 2022 Mercedes-Benz Group
Further Information
Impairment Risk on Operating Leases
Please refer with regard to the accounting policies and
methods applied to the notes to the consolidated finan-
cial statements in Note 1 "Significant accounting policies"
and Note 2 "Accounting estimates and management
judgements". Further information on the operating leases
can be found in the notes to the consolidated financial
statements in Note 13 “Equipment on operating leases"
and in the comments in the combined management
report in the section entitled "Industry and business risks
and opportunities".
The risk for the consolidated financial statements
The statement of financial position caption "Equipment
on operating leases” (€ 41,552 million) includes among
other things Mercedes-Benz passenger cars, which are
purchased by non-group dealers or other third parties
and are the subject of an operating lease with the
Mercedes-Benz Group. An impairment risk exists with
regard to these vehicles that is primarily dependent
on the residual value achievable at the end of the lease.
These future residual values are dependent on the situ-
ation in the used vehicle markets prevailing when the
vehicles are returned. The future-oriented valuation is
based on a number of discretionary assumptions. The
risk for the financial statements is that any impairment
losses will not be recognised or that the amounts recog-
nised will be inadequate.
Our audit approach
We audited the recoverability of these externally pur-
chased Mercedes-Benz passenger cars in the statement
of financial position caption "Equipment on operating
leases". We investigated and appraised the indications
assumed by the Group for any need for an impairment
loss and where necessary obtained an understanding of
the write-downs calculated by the Mercedes-Benz Group.
We have assessed the Mercedes-Benz Group's evaluation
with regard to the residual values achievable by the end
of the terms of the leases. In this connection, we in par-
ticular critically reviewed the main influencing factors,
such as the expected number of returns from leasing, the
current marketing results in order to assess the accuracy
of the estimates and future vehicle model changes. For
significant markets we furthermore also audited the con-
sistency of the assumptions made by the Mercedes-Benz
Group with residual value forecasts by independent
expert third parties.
Our observations
The assumptions and assessments providing the basis
for the assessment of the recoverability of the externally
purchased Mercedes-Benz passenger cars in the state-
ment of financial position caption "Equipment on operat-
ing leases" and the recorded impairment losses are
appropriate.
Loss Allowances on Receivables from
Financial Services
Please refer with regard to the accounting policies applied
to the notes to the consolidated financial statements in
Note 2 "Accounting estimates and management judge-
ments". Further information on allowances on receivables
from financial services can be found in the notes to the
consolidated financial statements in Note 1 "Significant
Accounting Policies", in Note 15 "Receivables from finan-
cial services", in Note 34 “Management of financial risks"
and in the combined management report in the section
entitled "Financial risks and opportunities"
The risk for the consolidated financial statements
Receivables from financial services (€ 85,549 million)
resulting from the Group's financing and leasing activities
include receivables from sales financing with customers,
receivables from sales financing with dealers and receiv-
ables from finance lease contracts. The loss allowances
on these receivables amounted at the reporting date to
€ 1,198 million.
The calculation of the loss allowances is based on expected
credit losses and therefore also includes expectations
regarding the future. Recognition of the expected credit
losses is carried out by means of a three-parameter pro-
cedure for the determination of loss allowances. At the
same time, various factors determining the value, such as
the determination of statistical default probabilities and
loss rates, the possible amount receivable on default, the
parameter transfer criteria that are related to a significant
change in the default risk of borrowers, and the calcula-
tion of future cash flows. Furthermore, macroeconomic
scenarios (basis scenarios, optimistic and pessimistic
scenarios) flow into the calculation, the identification of
which to a high degree includes discretionary judgements
and uncertainties. The risk for the financial statements is
that the creditworthiness of customers and future cash
551
351
Annual Report 2022 Mercedes-Benz Group
Further Information
flows is misjudged or that the calculation of the risk pro-
vision parameters is incorrect so that loss allowances are
not recognised or are insufficient.
Our audit approach
Our observations
Our audit procedures included among other things the
evaluation of the process to calculate the provision for
product warranties and the evaluation of the relevant
assumptions and their derivation for the measurement
of the provision. These include primarily assumptions on
expected susceptibility to and the course of damage, and
in addition the monetary value of the damage per vehicle
based on actual warranty, guarantee and goodwill losses.
Based on historical analyses, we assessed the accuracy
of the forecasts of past warranty, guarantee and goodwill
costs. We also checked that updated assessments of
the future repair costs and procedures were taken into
account. We obtained an understanding for the underly-
ing numbers of vehicles through the actual unit sales.
Our audit approach
Significant uncertainty for the calculation of the provision
arises with regard to the future loss event. The risk for
the consolidated financial statements is that the provi-
sion is not properly measured.
Annual Report 2022 Mercedes-Benz Group
Further Information
352
The other information also includes the remaining parts
of the annual report. The other information does not
include the annual financial statements, the combined
management report information audited for content
and our auditor's report thereon.
The Mercedes-Benz Group faces various claims under
product guarantees, or grants various kinds of product
warranties, which are entered into for the error-free func-
tioning of a Mercedes-Benz Group product sold or ser-
vice rendered over a defined period of time. In order to
confirm or reassess future guarantee, warranty and good-
will expenses, continuously updated information on the
nature and volume and the remedying of faults that have
occurred is recorded and analysed at the level of the
business unit, model series, damage key and sales year.
Please refer with regard to the accounting policies and
methods applied to the notes to the consolidated finan-
cial statements in Note 1 “Significant accounting policies"
and in Note 2 "Accounting estimates and management
judgements". Further information on the guarantees and
product warranties can be found in the notes to the con-
solidated financial statements in Note 24 "Provisions for
other risks" and in the comments in the combined man-
agement report in the section entitled “Company-specific
risks and opportunities - Warranty and goodwill cases".
Measurement of the Provision for
Product Warranties
The methodical approach, the procedures and the pro-
cesses to calculate the loss allowances and the assump-
tions and risk parameters flowing into the measurement
are appropriate to identify the credit risks in good time.
and to determine the recognition of adequate loss allow-
ances.
Our observations
We audited the appropriateness and effectiveness of the
internal control system with regard to the risk classifica-
tion process and risk models and the identification of the
factors determining the value and the loss allowances,
also by rechecking the calculations. To this end, we also
evaluated the relevant IT systems and internal proce-
dures. In addition to the audit by our IT specialists of the
propriety of the IT systems affected and related inter-
faces to ensure the completeness and correctness of the
data, the audit also included the audit of automatic con-
trols for data entry and data processing. The main focus
of our audit was the evaluation of the methodical
approach in the definition of risk categories and the
determination of default probabilities and loss rates that
are derived from historical data. We took into account
the current economic uncertainties in connection with
the impact of the Russia-Ukraine war in the course of the
audit of the macroeconomic scenarios and the model
assumptions adopted. We satisfied ourselves with regard
to the appropriateness of significant risk parameters
based on the results of a validation performed by
Mercedes-Benz Mobility and evaluated the adjustments
of the parameters to the current market situation. In this
connection, we audited the data supporting the valida-
tions on the basis of a conscious sample.
We obtained a comprehensive understanding of the
development of the portfolios, the associated counter-
party default risks and the processes for identifying,
managing, monitoring and measuring credit risks by
inspecting analyses and risk reports, interrogations,
review of guidelines and working instructions, checking
the defined methods and their implementation and
checking and walking through the validation process and
the individual validation reports.
The risk for the consolidated financial statements
The provision for product warranties amounts to
€ 6,576 million and is included in the provisions for
other risks.
Our opinions on the consolidated financial statements
and on the combined management report do not cover
the other information, and consequently we do not
express an opinion or any other form of assurance con-
clusion thereon.
Various federal and state authorities and further insti-
tutions worldwide are proceeding actively against the
Mercedes-Benz Group in the form of inquiries, investi-
gations, proceedings and/or directives. These activities
relate in particular to test results and emission control
systems in Mercedes-Benz diesel vehicles and/or the
interactions of the Mercedes-Benz Group with the rele-
vant authorities and related legal questions and impli-
cations, for instance also under applicable environmen-
tal, criminal and antitrust law.
is materially inconsistent with the consolidated finan-
cial statements, with the combined management report
information audited for content or our knowledge
obtained in the audit, or
We have performed assurance work in accordance with
Section 317 paragraph 3a HGB to obtain reasonable
assurance about whether the rendering of the annual
financial statements and the combined management
report (hereinafter the "ESEF documents") contained in
the file that can be downloaded by the issuer from the
electronic client portal with access protection
,,mercedesbenzgroupag-2022-12-31-de.zip"
(SHA256-Hashwert: 46f593f465fc01a77b36a7f616d
7d65eb5350e36b61afb75fb3d93def99e1ccb) made avail-
able and prepared for publication purposes complies in
all material respects with the requirements of Sec-
tion 328 (1) HGB for the electronic reporting format
("ESEF format"). In accordance with German legal
requirements, this assurance work extends only to the
conversion of the information contained in the annual
financial statements and the combined management
report into the ESEF format and therefore relates neither
to the information contained in these renderings nor to
any other information contained in the file identified
above.
In our opinion, the rendering of the consolidated finan-
cial statements and the combined management report
contained in the electronic file and made available for
publication purposes complies in all material respects
with the requirements of Section 328 paragraph 1 HGB
for the electronic reporting format. Beyond this assur-
ance opinion and our audit opinion on the accompany-
ing consolidated financial statements and the accompa-
nying combined management report for the financial
year from January 1 to December 31, 2022 contained in
the "Report on the Audit of the Consolidated Financial
Statements and the Combined Management Report"
above, we do not express any assurance opinion on the
information contained within these renderings or on the
other information contained in the file identified above.
We conducted our assurance work on the rendering of
the consolidated financial statements and of the com-
bined management report contained in the file and
identified above in accordance with Section 317 para-
graph 3a HGB and the IDW Assurance Standard:
Assurance Work on the Electronic Rendering of Financial
Statements and Management Reports Prepared for Pub-
lication Purposes in accordance with Section 317 para-
graph 3a HGB (IDW ASS 410 (06.2022)) and the Interna-
tional Standard on Assurance Engagements 3000
(Revised). Our responsibility in accordance therewith is
further described below. Our audit firm applies IDW
Standard on Quality Management 1: Requirements for
Quality Management in Audit Firms (IDW QS 1).
The Company's legal representatives are responsible for
the preparation of the ESEF documents including the
electronic rendering of the consolidated financial state-
ments and the combined management report in accord-
ance with Section 328 paragraph 1 sentence 4 item 1 HGB
and for the tagging of the consolidated financial state-
ments in accordance with Section 328 paragraph 1 sen-
tence 4 item 2 HGB.
In addition, the Company's representatives are respon-
sible for such internal control that they have consid-
ered necessary to enable the preparation of ESEF docu-
ments that are free from material intentional or
unintentional non-compliance with the requirements of
Section 328 paragraph 1 HGB for the electronic report-
ing format.
The Supervisory Board is responsible for overseeing the
process of preparing the ESEF documents as part of the
financial reporting process.
358
Annual Report 2022 Mercedes-Benz Group
Further Information
Our objective is to obtain reasonable assurance about
whether the ESEF documents are free from material
intentional or unintentional non-compliance with the
requirements of Section 328 paragraph 1 HGB. We exer-
cise professional judgement and maintain professional
scepticism throughout the assurance work. We also
Identify and assess the risks of material intentional
or unintentional non-compliance with the requirements
of Section 328 paragraph 1 HGB, design and perform
assurance procedures responsive to those risks, and
obtain assurance evidence that is sufficient and appro-
priate to provide a basis for our assurance opinion.
Obtain an understanding of internal control relevant to
the assurance on the ESEF documents in order to
design assurance procedures that are appropriate in
the circumstances, but not for the purpose of express-
ing an assurance opinion on the effectiveness of these
controls.
Report on the Assurance on the Electronic Rendering
of the Consolidated Financial Statements and the
Combined Management Report Prepared for Publica-
tion Purposes in Accordance with Section 317 (3a)
HGB
Evaluate the technical validity of the ESEF documents,
i.e. whether the file made available containing the ESEF
documents meets the requirements of the Delegated
Regulation (EU) 2019/815, as amended as
Evaluate whether the ESEF documents provide an
XHTML rendering with content equivalent to the
audited consolidated financial statements and the
audited combined management report.
evaluate whether the tagging of the ESEF documents
with Inline XBRL technology (iXBRL) in accordance with
the requirements of Articles 4 and 6 of the Delegated
Regulation (EU) 2019/815, as amended as at the report-
ing date, enables an appropriate and complete machine-
readable XBRL copy of the XHTML rendering.
Further Information pursuant to Article 10 of the
EU Audit Regulation
We were elected as group auditor by the Annual Share-
holders' Meeting on April 29, 2022. We were engaged
by the Supervisory Board on July 1, 2022. We have been
the group auditor of Mercedes-Benz Group AG without
interruption since the financial year 1998.
In connection with our audit, our responsibility is to read
the other information and, in so doing, to consider
whether the other information
Other matter - Use of the Auditor's Report
Our auditor's report must always be read together with
the audited consolidated financial statements and the
audited combined management report as well as the
examined ESEF documents. The consolidated financial
statements and combined management report converted
to the ESEF format - including the versions to be entered
in the company register - are merely electronic render-
ings of the audited consolidated financial statements and
the audited group management report and do not take
their place. In particular, the ESEF report and our assur-
ance opinion contained therein are to be used solely
together with the examined ESEF documents made avail-
able in electronic form.
German Public Auditor responsible for
the engagement
The German Public Auditor responsible for the engage-
ment is Alexander Bock.
Stuttgart, March 13, 2023
KPMG AG
Wirtschaftsprüfungsgesellschaft
[Original German version signed by:]
Sailer
at the reporting date, on the technical specification for
this electronic file.
Other legal and regulatory requirements
We declare that the opinions expressed in this auditor's
report are consistent with the additional report to the
audit committee pursuant to Article 11 of the EU Audit
Regulation (longform audit report).
357
Reasonable assurance is a high level of assurance, but
is not a guarantee, that an audit conducted in accordance
with Section 317 HGB and the EU Audit Regulation and
in compliance with German Generally Accepted Standards
for Financial Statement Audits promulgated by the Insti-
tut der Wirtschaftsprüfer (IDW) and supplementary com-
pliance with the ISAs will always detect a material mis-
statement. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to influ-
ence the economic decisions of users taken on the basis
of these consolidated financial statements and this com-
bined management report.
-
-
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud
or error, and whether the combined management report
as a whole provides an appropriate view of the Group's
position and, in all material respects, is consistent with
the consolidated financial statements and the knowledge
obtained in the audit, complies with the German legal
requirements and appropriately presents the opportuni-
ties and risks of future development, as well as to issue
an auditor's report that includes our opinions on the
consolidated financial statements and on the combined
management report.
Auditor's responsibilities for the audit of the consoli-
dated financial statements and of the combined man-
agement report
The Supervisory Board is responsible for overseeing the
Group's financial reporting process for the preparation
of the consolidated financial statements and the com-
bined management report.
We exercise professional judgement and maintain profes-
sional scepticism throughout the audit. We also
Furthermore, the legal representatives are responsible
for the preparation of the combined management report
that, as a whole, provides an appropriate view of the
Group's position and is, in all material respects, consist-
ent with the consolidated financial statements, complies
with German legal requirements, and appropriately pre-
sents the opportunities and risks of future development.
In addition, the legal representatives are responsible
for such arrangements and measures (systems) as they
have considered necessary to enable the preparation
of a combined management report that is in accordance
with the applicable German legal requirements, and to
be able to provide sufficient appropriate evidence for
the assertions in the combined management report.
In preparing the consolidated financial statements, the
legal representatives are responsible for assessing the
Group's ability to continue as a going concern. They are
also responsible for disclosing, as applicable, matters
related to going concern. In addition, they are responsi-
ble for financial reporting based on the going concern
basis of accounting unless there is an intention to liqui-
date the Group or to cease operations, or there is no
realistic alternative but to do so.
error.
Responsibilities of the legal representatives and the
supervisory board for the consolidated financial
statements and the combined management report
The legal representatives are responsible for the prepara-
tion of the consolidated financial statements that comply,
in all material respects, with IFRSS as adopted by the EU
and the additional requirements of German commercial
law pursuant to Section 315e paragraph 1 HGB and that
the consolidated financial statements, in compliance with
these requirements, give a true and fair view of the assets,
liabilities, financial position and financial performance
of the Group. In addition, the legal representatives are
responsible for such internal control as they have deter-
mined necessary to enable the preparation of consoli-
dated financial statements that are free from material
misstatement, whether due to fraud (i.e., fraudulent
financial reporting and misappropriation of assets) or
If, based on the work we have performed, we conclude
that there is a material misstatement of this other infor-
mation, we are required to report that fact. We have
nothing to report in this regard.
otherwise appears to be materially misstated.
Annual Report 2022 Mercedes-Benz Group
Further Information
Annual Report 2022 Mercedes-Benz Group
Further Information
Identify and assess the risks of material misstatement
of the consolidated financial statements and of the
combined management report, whether due to fraud
or error, design and perform audit procedures respon-
sive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our
opinions. The risk of not detecting a material misstate-
ment resulting from fraud is higher than for one result-
ing from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the over-
ride of internal control.
355
Evaluate the appropriateness of accounting policies
used by management and the reasonableness of esti-
mates made by management and related disclosures.
Obtain an understanding of internal control relevant
to the audit of the consolidated financial statements
and of arrangements and measures (systems) relevant
to the audit of the combined management report in
order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of these
systems.
We also provide those charged with governance with a
statement that we have complied with the relevant inde-
pendence requirements and communicate with them all
relationships and other matters that may reasonably be
thought to bear on our independence, and where appli-
cable, the related safeguards.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we
identify during our audit.
Perform audit procedures on the prospective informa-
tion presented by the legal representatives in the com-
bined management report. On the basis of sufficient
appropriate audit evidence, we evaluate, in particular,
the significant assumptions used by the legal repre-
sentatives as a basis for the prospective information
and evaluate the proper derivation of the prospective
information from these assumptions. We do not express
a separate opinion on the prospective information and
on the assumptions used as a basis. There is a sub-
stantial unavoidable risk that future events will differ
materially from the prospective information.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated finan-
cial statements of the current period and are therefore
the key audit matters. We describe these matters in our
auditor's report unless laws or other legal regulations
preclude public disclosure of the matter.
Evaluate the consistency of the combined management
report with the consolidated financial statements, its
conformity with [German] law, and the view of the
Group's position it provides.
-
Evaluate the overall presentation, structure and con-
tent of the consolidated financial statements, including
the disclosures, and whether the consolidated financial
statements present the underlying transactions and
events in a manner that the consolidated financial
statements give a true and fair view of the assets, lia-
bilities, financial position and financial performance of
the Group in compliance with IFRSS as adopted by the
EU and the additional requirements of German com-
mercial law pursuant to Section 315e paragraph 1 HGB.
concern.
Conclude on the appropriateness of the use by the
legal representatives of the going concern basis of
accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the
Group's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are
required to draw attention in the auditor's report to the
related disclosures in the consolidated financial state-
ments and in the combined management report or, if
such disclosures are inadequate, to modify our respec-
tive opinions. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's
report. However, future events or conditions may cause
the Group to cease to be able to continue as a going
Annual Report 2022 Mercedes-Benz Group
Further Information
356
Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the Group to express opinions on the
consolidated financial statements and on the com-
bined management report. We are responsible for the
direction, supervision and performance of the group
audit. We remain solely responsible for our opinions.
78
18
-77
-1
133,687
132,379
-9
63,631
58,031
-24
-30
16.8
-25
22.3
16.8
3,449
2,428
-30
9,531
2,428
3,493
22.0
+3
70546 Stuttgart
2 Active workforce without holiday workers.
Annual Report 2022 Mercedes-Benz Group
Further information
27,941
Mercedes-Benz Group AG, Mercedesstraße 120, 70372 Stuttgart, Germany
362
ir.mbg@mercedes-benz.com
Fax +49 711 17 94075
Investor Relations
group.mercedes-benz.com/en
Tel. +49 711 17 0
Mercedes-Benz Group AG
1 The adjusted cash conversion rate is the ratio of adjusted CFBIT to adjusted EBIT.
group.mercedes-benz.com/en
group.mercedes-benz.com/investors/reports-news
All annual and interim reports are only available online
to download as PDF files.
Annual and interim reports as well as company financial
statements of Mercedes-Benz Group AG are available there.
In addition, you can find the latest news, the financial
calendar, presentations, various overviews of key figures,
information on the share price and additional services.
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can be found in the Investors section at
Information on the Internet
Further information
Annual Report 2022 Mercedes-Benz Group
361
9,850
Further Information is available at
26,954
-4
19,322
Revenue
EBIT
Adjusted EBIT
Return on equity (in %)
Adjusted return on equity (in %)
New business
Contract volume (31 December)
Investments in property, plant and equipment
Employees (31 December)²
2022
2021
2022/2021
Mercedes-Benz Mobility
% change
1,943,930
+5
96,712
+15
16,340
12,487
+31
16,245
12,689
+28
14.6
12.9
2,040,719
111,601
Employees (31 December)²
thereof capitalized development costs
Research and development expenditure
Key Figures for the Divisions
E.02
In millions of euros
Mercedes-Benz Cars
Unit sales
Revenue
EBIT
Adjusted EBIT
Return on sales (in %)
Adjusted return on sales (in %)
CFBIT
Adjusted CFBIT
Adjusted cash conversion rate¹
Investments in property, plant and equipment
thereof capitalized development costs
Research and development expenditure
Employees (31 December)²
Mercedes-Benz Vans
Unit sales
EBIT
Adjusted EBIT
Return on sales (in %)
Adjusted return on sales (in %)
CFBIT
Adjusted CFBIT
Adjusted cash conversion rate¹
Investments in property, plant and equipment
+13
14.6
13.1
+11
1,229
+57
11.0
7.8
+41
11.2
8.3
+35
1,731
826
+110
2,039
1,581
+29
1.1
1.3
-15
199
198
+1
552
489
+13
137
47
+191
19,137
1,927
-1
+66
1,897
10,718
9,344
+15
11,413
10,714
+7
0.7
0.8
-13
3,265
3,589
-9
7,986
7,207
+11
2,802
2,215
+27
135,388
138,906
-3
415,344
386,239
+8
17,217
14,735
+17
1,143
Revenue
with EV-production with EV-production
143 Risks and opportunities
Overview
Business model
Corporate Profile
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
situation
159 Overall assessment of the risk and opportunity
Lead in electric drive and the digital experience
Today and in future, Mercedes-Benz Vans intends to set
new standards for sustainable electric mobility and digi-
tal solutions. With the eVito, the eVito Tourer, the
eSprinter and the EQV, the Mercedes-Benz Vans portfolio
is almost completely electrified. The electric portfolio is
to be completed by the eCitan and the EQT (WLTP: com-
bined electricity consumption: 18.99 kWh/100 km; com-
bined CO2 emissions: Og/km) in 2023. In order to make
the portfolio sustainable and future-proof, the segment is
focusing on the consistent further development of effi-
cient all-electric vans. The launch of VAN.EA - a new,
electric-only architecture which is intended to provide
the basis for all future Mercedes-Benz vans is planned
for the middle of the decade.
control system
140 Risk and opportunity management system and internal
140 Risk and Opportunity Report
139 Overall statement on future development
139 Dividend
136 Outlook for the key performance indicators
135 The world economy and automotive markets
The Mercedes-Benz Group can look back on a tradition
130 Takeover-Relevant Information and Explanation
135 Outlook
Annual Report 2022 Mercedes-Benz Group
128 Overall Assessment of the Economic Situation
118 EU taxonomy
109 Integrity and compliance
Social issues
104
94 Employee issues
Environmental issues
90
Sustainability as a force of change
84
84 Non-Financial Declaration
according to HGB)
80 Mercedes-Benz Group AG (condensed version
COMBINED MANAGEMENT REPORT WITH
NON-FINANCIAL DECLARATION (2/2)
-
covering more than 135 years a tradition that goes
back to Gottlieb Daimler and Karl Benz, the inventors of
the automobile, and features pioneering achievements in
automotive engineering. Today, the company is a luxury
car manufacturer that operates globally. In its capacity
as a vehicle manufacturer, the Group is one of the largest
suppliers of premium and luxury automobiles and vans.
The Group's range of products and services is supple-
mented by financing and leasing products for end cus-
tomers and dealers, fleet management services and
insurance brokerage, as well as innovative and digital
mobility services.
Table B.01 provides an overview of the Group's brand
world.
Rastatt
Bremen
GERMANY
B.02
1 For the purposes of the voting rights quota pursuant to the German Securities Trading Act,
the approximately 5% of the shares contributed to the pension-plan assets were allocated
to the Mercedes-Benz Group.
The Mercedes-Benz Group sells vehicles and provides
services in nearly every country in the world and has over
30 production facilities in Europe, North America and
South America, Asia and Africa. The Group is continuously
further developing its global production network on
these continents and is aligning it to manufacture its
repositioned product portfolio with a focus on electric
vehicles. The Group is also simultaneously building up a
global battery production network on three continents.
The chart in B.02 provides an overview of Mercedes-Benz
Cars and Mercedes-Benz Vans production locations
around the globe.
The financial services business contained in the Daimler
commercial vehicle business was included as part of
continuing operations in the Consolidated Statement of
Income and the Consolidated Statement of Cash Flows
until the date of its deconsolidation. Until then, it had
been part of the Mercedes-Benz Mobility segment. Fur-
ther information on the accounting method used for the
spin-off and hive-down of the Daimler commercial vehi-
cle business can be found in Note 3 of the Notes to the
Consolidated Financial Statements.
The Daimler Trucks & Buses segment, which was reported
until the date of the spin-off and hive-down of Daimler's
commercial vehicle business, was included in the previ-
ous year's Consolidated Statement of Income and the
Consolidated Statement of Cash Flows under discontin-
ued operations; the profit or loss from discontinued
operations is contained in the reconciliation. Following
the transfer of approximately 5% of the shares to the
pension plan assets in January 2022, the Mercedes-Benz
Group holds a minority interest of approximately 30% in
Daimler Truck Holding AG¹ as of 31 December 2022. This
minority holding of around 30% is included in the Consol-
idated Financial Statements using the equity method and
is also shown in the reconciliation.
The reconciliation of the segments for the Group (recon-
ciliation) presents the functions and services provided by
the Group's headquarters. In addition, the reconciliation
includes equity investments that are not allocated to the
segments, gains and/or losses at the corporate level and
the effects on earnings of eliminating intra-Group trans-
actions between the segments.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
39
Mercedes-Benz Rent
Mercedes me
The Group structure subsequently changed: the
Mercedes-Benz Cars, Mercedes-Benz Vans and
Mercedes-Benz Mobility divisions began managing the
business operations of the Mercedes-Benz Group. For the
purposes of external reporting, and since 1 January 2022,
the Mercedes-Benz Cars and Mercedes-Benz Vans seg-
ments have no longer been combined into the reportable
segment Mercedes-Benz Cars & Vans, but are instead
reported on as independent segments. The prior-year fig-
ures have been restated accordingly.
Mercedes pay
ATHLON
Mercedes-Benz
Financial Services
B.01
The brand world of the Mercedes-Benz Group
Mercedes-Benz Group AG is the parent company of
the Mercedes-Benz Group and has its headquarters in
Stuttgart. Daimler AG was renamed as Mercedes-Benz
Group AG with effect from 1 February 2022. Along with
Mercedes-Benz Group AG, the Mercedes-Benz Group
comprises all subsidiaries over which Mercedes-Benz
Group AG can exercise a controlling influence either
directly or indirectly. Detailed information on this topic
can be found in the statement of investments pursuant
to Section 313 of the German Commercial Code (HGB)
in the Notes to the Consolidated Financial Statements.
Mercedes-Benz Group AG defines the Group strategy,
manages the Group and, as the Group parent company,
ensures the effectiveness of legal, organizational and
compliance-related functions throughout the Group.
The management reports for Mercedes-Benz Group AG
and for the Group are combined within this annual report.
The Combined Management Report includes the com-
bined Non-Financial Declaration of Mercedes-Benz
Group AG and of the Group.
The entry into the commercial register on 9 December
2021 completed the spin-off and hive-down of the
Daimler commercial vehicle business and it was decon-
solidated.
Mercedes-Benz Group
75 Financial position
Mercedes-Benz
Cars
In order to intensify and further boost customer loyalty,
Mercedes-Benz Vans has set itself the goal of systemati-
cally aligning the entire customer journey with the cus-
tomers' sector-specific requirements. This basic principle
is a major part of the positioning as a leading premium
van manufacturer, and consequently Mercedes-Benz
Vans will further develop its business model. This will
involve accelerating the step-by-step transition to direct
and online sales together with trading partners in order
to address customers in a data-driven, direct and individ-
ual manner. Furthermore, Mercedes-Benz Vans has set
itself the objective of generating additional revenue
potentials along the entire customer life cycle. To accom-
plish this, commercial and private customers are already
being offered customer services and spare parts along
with an innovative portfolio of digital services that is
to be continually expanded with further sector-specific
services.
MAYBACH
AMG
MERCEDES-EQ
Mercedes-Benz
Mobility
Mercedes-Benz Bank
Mercedes-Benz
Vans
Sindelfingen
65 Liquidity and capital resources
and Financial Position
33
We are strengthening our high-performance culture
We are developing into a
data-driven company
We are digitalizing our
processes end-to-end,
supported by strategic
partnerships in technology
and operations
Our offerings are 100%
digital and seamlessly
integrated into the world
of Mercedes-Benz
We support the sustainable
transformation to electric
mobility and generate
further service revenues
with our products
Our Goal: By 2025, we will be the number one financial and mobility service
provider for luxurious driving in the electric era.
Mercedes-Benz Mobility Strategy
A.04
The "MBM 2025" strategy is structured with a focus on
the customer and aims to make the transition to the
electric era as simple and convenient as possible. To this
end Mercedes-Benz Mobility is working on seamlessly
and digitally integrating its product range into the
Mercedes-Benz customer experience. The intention is
to improve business efficiency by digitalising and auto-
mating processes and increasing the level of data-driven
business activity. Mercedes-Benz Mobility seeks to be
the employer of choice and aims to offer employees an
exciting corporate culture based on trust, empowerment,
motivation and development opportunities.
-
Mercedes-Benz Mobility has a clear ambition: By 2025,
we will be the number one financial and mobility service
provider for luxurious driving in the electric era.
Mercedes-Benz Mobility wants to be the company of
choice for customers not only for financing and leasing
but also for fleet management and flexible rental and
subscription services, as well as insurance and other
vehicle-related services.
Mercedes-Benz Mobility Strategy
To Our Shareholders
Annual Report 2022 Mercedes-Benz Group
Annual Report 2022 Mercedes-Benz Group
32
Driven by a highly qualified and motivated team
The employees form the basis of Mercedes-Benz Vans'
success. Focussing on their motivation is important,
especially in times of profound change. Mercedes-Benz
Vans uses targeted qualification measures to continually
prepare employees for the challenges of the future, and
in the process creates a working environment in which
individual potentials can be applied in the best possible
way and outstanding results can be achieved.
Digitalization and a business model driven by data are
highly relevant for Mercedes-Benz Vans, and were thus
embedded in the segment's strategy as additional guid-
ing principles. Mercedes-Benz Vans intends to use the
comprehensive digital strategy to exploit the potentials
of the digital transformation as effectively as possible.
Among other things, this includes the optimal design of
the digital customer experience, the expansion of the
digital product and service portfolio as well as the opti-
mization of internal business processes by means of
digital technologies. In all of its activities, Mercedes-Benz
Vans aims for the maximum networking and synergy
effects with Mercedes-Benz Cars.
Accelerated by digitalization and data-driven
business
One of the main goals formulated in Ambition 2039 is
balance sheet carbon-neutrality. Here, efforts are under-
way to make the fleet of new private and commercial
vans (sold by Mercedes-Benz AG or by Mercedes-
Benz AG as the general contractor, including upfitter
solutions) balance sheet carbon-neutral over the entire
life cycle by 2039.
As part of the Mercedes-Benz Group, Mercedes-Benz
Vans has made sustainability an integral part of its strat-
egy. In the process, Mercedes-Benz Vans takes account
of all stakeholders: customers, employees, investors,
business partners and society as a whole. Mercedes-Benz
Vans has set ambitious goals for the sustainability areas
of action.
Guided by economic, environmental and social
sustainability
The strategic actions are guided by three principles:
Annual Report 2022 Mercedes-Benz Group
To Our Shareholders
31
Mercedes-Benz Vans is realigning its European produc-
tion network on the basis of the modular all-electric VAN.
EA platform. To this end, the established Mercedes-
Benz AG site in Jawor, Poland will be integrated into the
Mercedes-Benz Vans production network.
Mercedes-Benz Vans aims to continuously improve its
profitability and cash flow. At the same time, investments
in the future and as the accelerated transformation to
electric mobility are to be safeguarded. Processes are to
be continuously improved, flexibility increased and the
cost base reduced. For example, Mercedes-Benz Vans is
fully exploiting the potential of digitalization in order to
increase efficiency. At the same time, the segment is
focusing on reducing complexity by means of processes
such as the continuous review of our product portfolio
while continuing to keep a close eye on customers'
requirements. In addition, Mercedes-Benz Vans consist-
ently examines its expenditures in order to safeguard
competitiveness.
Lower the total cost base and improve the industrial
footprint
When it comes to customer-oriented and digital services,
Mercedes-Benz Vans wants to further strengthen its
position. The division plans to further expand the broad
range of Mercedes me services for private and commer-
cial customers. For private customers, the goal is to also
guarantee the luxury aspiration in the range of digital ser-
vices. In the commercial segment, the seamless coupling
of vehicle data with the customers' data systems is to be
made possible.
32
To Our Shareholders
Mercedes-Benz Mobility is supporting the transfor-
mation to electric mobility and generating additional
income from services with its products
Even before a leasing contract expires, customers are
actively informed that they can switch to an electric vehi-
cle. Electric car rental and subscription services offer
convenient and flexible options for people to enjoy the
benefits of electric vehicles without committing to long-
term ownership. The switch to electric mobility is even
easier by additional services for vehicle charging. With
Mercedes pay, Mercedes-Benz Mobility has also created
a captive platform for payment services and is enabling
the use of integrated payment processes within the
Mercedes-Benz ecosystem.
57
55 Profitability, Liquidity and Capital Resources,
54 Investment and research activities
Business development
52
50 The world economy and automotive markets
50 Economic Conditions and Business Development
49 Declaration on Corporate Governance
Performance measurement system
47
43 Important events
Business model
39
39 Corporate Profile
COMBINED MANAGEMENT REPORT WITH
NON-FINANCIAL DECLARATION (1/2)
Annual Report 2022 Mercedes-Benz Group
DECLARATION
Mercedes-Benz Mobility is making a seamlessly
integrated customer experience possible
In the years ahead, Mercedes-Benz plans to sell more
and more vehicles online. The mobility services from
Mercedes-Benz Mobility will therefore be completely
integrated into the digital customer journey. As a result,
customers will be able not only to buy their preferred
vehicles online but to obtain financing, leasing and insur-
ance online as well.
Mercedes-Benz Mobility is automating and
digitalizing internal processes
The product landscape is to be harmonized internation-
ally. In addition, internal processes are to be systemati-
cally automated, thereby simplifying and accelerating
them. In doing so, Mercedes-Benz Mobility is prioritizing
information technology partnerships.
Mercedes-Benz Mobility is evolving into a data-driven
company
Profitability
Mobility services for customers in the luxury segment are
planned to be data-based with a strong customer focus.
That's why the necessary teams and skills are being
developed in order to gain an even better understanding
of the customers' needs and align the service offering
with them more precisely.
The employees are the company's greatest strength on
the road to a new era of individual mobility. This is why
Mercedes-Benz Mobility continuously takes steps to pro-
mote and further develop its corporate culture. In the
transformation we are always guided by our values ·
integrity, openness and respect, customer focus, financial
and social responsibility, inspired and diverse employees,
the will to achieve top performance and a commitment to
sustainability.
34
S. EQ 2951E
2 EO SAPTE
COMBINED
MANAGEMENT REPORT
WITH
NON-FINANCIAL
Mercedes-Benz Mobility is enhancing a
high-performance culture
Since the second half of 2022, the division has been
gradually rolling out a sustainable repair concept for
electric vehicles in all van segments to prolong the life
cycles of the high-voltage batteries installed in its vehi-
cles. To the "three Rs" in the circular economy of "reduce",
"reuse", "recycle", a fourth has thus been added: "repair".
Düsseldorf
Ludwigsfelde
Kairo
Pune
40
Cars plant
Vans plant
ROMANIA
Sebeş
Cugir
CHINA
Fuzhou
Beijing
Bangkok
THAILAND/VIETNAM/
INDONESIA/MALAYSIA
Ho Chi Minh City
Jakarta
Pekan
Powertrain plant
Battery plant
Battery-Recyclingplant
Ad
A
Embrace customers and grow revenues during the
life cycle
with EV-components (planned)
grey:
planned
In addition, Mercedes-Benz Vans plans to focus more
strongly on the growing premium segments in the most
profitable sectors and to enter into attractive segments
by offering additional products at the upper end of the
portfolio.
Another key element of the strategy is the increased
focus on high-sales and high-margin markets and seg-
ments. In parallel with the expansion of its activities in
Europe, the segment also intends in future to further
intensify its efforts in China and North America and to
align its portfolio even more closely with the respective
market requirements.
To Our Shareholders
Annual Report 2022 Mercedes-Benz Group
A
INDIA
EGYPT
-
Buenos Aires
East London
Untertürkheim
身高
Hamburg
Berlin
Kölleda/Arnstadt Kamenz
USA/MEXICO
Tuscaloosa
Aguascalientes
Charleston
身高
*) including non-consolidated affiliated
companies, associated companies,
Kuppenheim
Global production network of the Mercedes-Benz Group*
SOUTH AFRICA
joint ventures and joint operations
Vitoria
SPAIN
ARGENTINIEN
Kecskemét
Maribor
Most
Jawor
SLOVENIA
HUNGARY
CZECH REP.
POLAND
Mercedes-Benz Group
On 1 February 2022 Daimler AG became Mercedes-Benz
Group AG. With the change of name, the company is
completing the realignment that began in 2021 with the
spin-off and hive-down of Daimler's commercial vehicle
business.
The new Mercedes-Benz Group is concentrating on its
passenger cars from the Mercedes-Benz, Mercedes-AMG,
Mercedes-Maybach and Mercedes-EQ brands as well as
the vehicles manufactured by Mercedes-Benz Vans with
the objective of thus fully utilizing the economic potential
and making even better use of the competitive strengths
in future.
Parallel to the renaming of Daimler AG, Daimler Mobil-
ity AG was also renamed Mercedes-Benz Mobility AG.
Daimler embarks on a new era as the
New battery plant sets stage for EQS SUV production
in the United States
First Annual General Meeting of
Mercedes-Benz Group AG
Acquisition of a 33.33% stake in ACC
On 22 March 2022 Mercedes-Benz AG signed an agree-
ment with PSA Automobiles SA, Opel Automobile GmbH
and Saft EV SAS to acquire a 33.33% stake in Automotive
Cells Company SE (ACC) through a capital contribution of
approximately €390 million. The Group also committed
itself to the provision of further funds up to €410 million.
The transaction was completed on 12 May 2022. The
investment in the European battery cell manufacturer
ACC is being made in order to advance the development
and production of high-performance battery cells and
modules in the course of the transformation to "Electric
only".
Mercedes-Benz Cars plans to reduce CO2 emissions by
more than 50% by the end of the decade
At the first digital ESG (Environmental, Social and Gov-
ernance) Conference for investors and analysts on 11 April
2022, the Mercedes-Benz Group announced its plan to
implement extensive measures in order to reduce CO2
emissions and thus create lasting value for all stakehold-
ers. The company's goal here is to at least halve CO2
emissions per passenger car relative to 2020 over the
entire vehicle life cycle by the end of this decade. The
most important levers for accomplishing this are the
electrification of the vehicle fleet, charging with green
electricity, improving battery technology and the compre-
hensive use of recycling materials and energy from
renewable sources in vehicle production.
At the first Annual General Meeting of Mercedes-Benz
Group AG in the new Group structure on 29 April 2022,
the shareholders approved a dividend of €5.00 for 2021
(2020: €1.35) per share. This includes a dividend of €0.70
from the Daimler commercial vehicle business. The total
payout was approximately €5.35 billion (2020: €1.4 bil-
lion). The strong results in the 2021 financial year demon-
strate the success of the strategic refocus on electric
vehicles and the expansion of the top-end segment.
Mercedes-Benz Group strengthens the
Supervisory Board with experts for sustainability and
the luxury-goods industry
Important events
On 15 March 2022, Mercedes-Benz Cars opened a new
battery plant in Bibb County, Alabama, a few months
ahead of the start of production of new all-electric
Mercedes-EQ vehicles in the United States. Mercedes-
Benz is manufacturing the EQS SUV and EQE SUV in Ala-
bama. The state-of-the-art battery factory in Bibb County
will supply batteries for these new models.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
The most important markets for Mercedes-Benz Cars in
2022 were China with 37% of unit sales, the United States
(15%), Germany (11%), the other European markets (20%)
and South Korea (4%).
Mercedes-Benz Mobility has around 4.5 million leased
and financed vehicles in 35 markets for its financing,
leasing and insurance business alone. This is clear proof
of its ability to offer outstanding services that meet a
wide range of requirements. The mobility ecosystem is
rounded off by flexible-use services such as Mercedes-
Benz Rent (rental vehicles) as well as by investments in
companies that offer mobility services. The YOUR NOW
joint ventures CHARGE NOW and FREE NOW provide
easy access to charging infrastructure and mobility ser-
vices. With its investments in the premium ride-hailing
providers StarRides and Blacklane, Mercedes-Benz
Mobility also covers the segment of limousine ride ser-
vices with premium and luxury vehicles. In addition,
Mercedes pay, a company-owned platform for technically
linking payment services, is enabling the use of seam-
lessly integrated payment processes for customers.
Mercedes-Benz Cars invests systematically in the devel-
opment of efficient powertrains and is thus setting
the course for an all-electric future. The brand with the
three-pointed star is pursuing the goal of becoming
all-electric by the end of this decade wherever market
conditions allow. The strategic step to "Electric only" will
enable Mercedes-Benz Cars to accelerate the transfor-
mation as we move into an all-electric, software-driven
future. To this end, the electric platform Electric Vehicle
Architecture (EVA), on which the EQS, EQS SUV, EQE
and EQE SUV vehicle models are produced, was intro-
duced in 2021. Beginning in the middle of the decade,
the Mercedes Modular Architecture (MMA) platform,
which is geared towards electric mobility, is to follow in
the compact and mid-size segments. In 2025, Mercedes-
Benz Cars plans to introduce two more all-electric plat-
forms (BEV platform generations): the Mercedes-Benz
Electronic Architecture (MB.EA) and the AMG Electronic
Architecture (AMG.EA).
The segment also continues to move ahead at a fast pace
with the intelligent networking of its vehicles and the
development of autonomous driving systems and new
mobility concepts. Sustainability is a fundamental princi-
ple and a firm component of the Mercedes-Benz Cars
business strategy - a principle that guides all of our
business activities.
At the same time, Mercedes-Benz Cars continues to focus
its business model and product portfolio on the luxury
segment. Mercedes-Benz Cars offers a broad range
of products, and in 2022 the company introduced the
three product categories of Top-End, Core and Entry.
The Top-End¹ portfolio encompasses Mercedes-AMG,
Mercedes-Maybach, the G-Class, the S-Class, the EQS
Sedan, the GLS and the EQS SUV. Core represents the
heart of the brand and comprises the Mercedes-Benz
C-Class and E-Class model ranges and their derivatives.
The Entry A-Class and B-Class models and their deriva-
tives offer customers a point of entry into the compact
vehicle portfolio.
In addition to the Mercedes-Benz brand, the brand port-
folio encompasses the brands Mercedes-AMG,
Mercedes-Maybach and Mercedes-EQ. The Mercedes me
brand provides access to the digital services of
Mercedes-Benz Cars.
Along with its production sites in Germany, Mercedes-
Benz Cars also operates major manufacturing facilities in
the United States, Hungary, Mexico and South Africa. Pro-
duction in China is managed via the associated company
Beijing Benz Automotive Co., Ltd.
Bader M. Al Saad and Prof Dr Clemens Börsig stepped
down from their positions on the Mercedes-Benz
Group AG Supervisory Board at the end of the Annual
General Meeting on 29 April 2022. Dame Veronica Anne
("Polly") Courtice and Marco Gobbetti were elected their
1 The Top-End category comprises all AMG models, including the AMG models of the various
"Class" model ranges as well as their derivatives in the Core and Entry categories.
42
41
Mercedes-Benz Vans
Mercedes-Benz Vans is a global supplier of a complete
portfolio of vans. The models offered in the commercial
segment comprise the Sprinter large van, the Vito mid-
size van (marketed as the Metris in the United States) and
the Citan urban delivery van. The range of Mercedes-Benz
vans in the private-customer segment consists of the
V-Class full-size multi-purpose vehicle, Marco Polo
camper vans and recreational vehicles and, since 2022,
the T-Class.
Mercedes-Benz Vans has embedded its claim to electric
mobility leadership in its strategy and is systematically
electrifying all of its model series. Today, customers can
already choose from four all-electric vans: the eSprinter,
the eVito panel van, the eVito Tourer and the EQV mul-
ti-purpose vehicle. The all-electric variant EQT (WLTP:
combined electricity consumption: 18.99 kWh/100 km;
combined CO2 emissions: 0 g/km) and the eCitan were
presented in 2022. Mercedes-Benz Vans will then be
offering all-electric vans in all segments. The new
eSprinter has already been announced and is expected
to be available in the United States and Canada in the
second half of 2023 and then introduced successively
to the European markets from the end of 2023.
The Mercedes-Benz Vans division has manufacturing
facilities in Germany, Spain, the United States and Argen-
tina and also produces vehicles in the Fujian Benz Auto-
motive Co., Ltd. joint venture in China. The Citan and
T-Class with the respective electric variants are produced
in France through an alliance with Renault-Nissan-Mit-
subishi.
The most important markets for Mercedes-Benz Vans in
2022 were Germany with 27% of unit sales, the other
European markets (35% — European Union, United King-
dom, Switzerland, Norway), the United States (16%) and
China (8%).
Mercedes-Benz Mobility
The Mercedes-Benz Mobility division supports the sale of
the Mercedes-Benz Group's vehicle brands worldwide
with custom mobility and financial services. These ser-
vices range from leasing and financing packages for end
customers and dealers to insurance solutions, flexible
subscription and rental models and fleet management
services for business customers, with the latter primarily
offered via the Athlon brand. Furthermore, Mercedes-
Benz Mobility is active in the area of innovative mobility
services.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
successors.
Another milestone in the ramp-up of all-electric
vehicle production
-
the end of the year. Despite this increase, the US econ-
omy grew by 2.1% in 2022, thanks in large part to robust
domestic demand.
increased its base rate by 425 basis points to 4.5% at
ment that the US central bank — the Fed significantly
Even the United States was unable to escape these
developments. The US economy contracted in the first
two quarters of 2022, for reasons including a record for-
eign trade deficit and the effects of the ongoing supply
chain disruptions. At the same time, private consumption
proved resilient over the year as a whole, despite high
inflation and rising interest rates. The inflation rate
reached its peak in June (9%). It subsequently declined
gradually, but the annual average of 8% was higher than
at any time since the early 1980s. It was in this environ-
In an effort to counteract the rise in inflation, most cen-
tral banks (with the exception of the central bank in
China) significantly increased their base rates throughout
the year. All of the above factors had a noticeable nega-
tive effect on the world economy, causing year-on-year
global economic growth to drop to about 3%. This situa-
tion also had a negative impact on global trade volume,
which only increased by slightly under 4% in 2022 com-
pared to the previous year.
During the year under review, the world economy was
heavily impacted by Russia's war in Ukraine and the rapid
rise in inflation rates around the globe. The war and the
sanctions against Russia that followed led to a further
deterioration of what was already a problematic supply
chain situation, while massive increases in energy,
raw-material and food prices intensified price pressures.
Furthermore, the implementation of repeated series of
far-reaching restrictions in China within the framework of
that country's zero-Covid policy, which in turn repeatedly
affected important segments of the Chinese economy,
contributed to the further disruption of global supply
chains.
The world economy
The impact of the war in Ukraine was particularly noticea-
ble in the euro zone. Nonetheless, the region was able to
record surprisingly strong growth in the first half of the
year. This positive development was primarily driven by
a recovery in the service sector following the lifting of
most Covid-related measures, as well as a dynamic
development in countries such as France, Italy and Spain,
all of which once again experienced an almost normal
tourism season for the first time since the beginning of
the pandemic. However, problems increased significantly
throughout the course of the year as a result of high
energy and food prices. In addition, a high level of inse-
curity regarding energy supplies had an increasingly neg-
ative effect on consumer sentiment and business confi-
dence. This led to a pronounced weakening of growth at
the end of 2022. Nevertheless, the euro zone's economy
grew by 3.5% in 2022 as a whole due to the positive start
to the year. Consumer prices also rose significantly,
increasing by 8.4% on average compared to the prior year,
although the increases differed greatly between the vari-
ous member states. Inflation actually reached dou-
ble-digit levels in the euro zone in the fourth quarter. The
European Central Bank abandoned its zero interest-rate
policy in the second half of the year and increased its
base rate to 2.5% at the end of 2022.
The world economy and
automotive markets
Combined Management Report with Non-Financial Declaration
Annual Report 2022 Mercedes-Benz Group
49
1 Average CO2 emissions of the new car fleet of newly registered Mercedes-Benz cars in
Europe (European Union, Norway and Iceland) in the reporting year as measured on the
basis of the WLTP, i.e. including vans that are registered as passenger cars.
auditor
External rotation of the auditor is required by law for the
audit of the financial statements for 2024 at the latest,
because the current auditor, KPMG AG Wirtschaftsprü-
fungsgesellschaft, will reach the statutory maximum term
when it audits the financial statements for 2023. To
ensure compliance with the duty to appoint a different
audit firm, a selection and proposal process was con-
ducted in accordance with the EU Statutory Audit Regula-
tion during the reporting period in order to appoint an
auditor for 2024.
Based on the recommendation and preference of the
Audit Committee, and on the basis of its own review, the
Supervisory Board of Mercedes-Benz Group AG has
decided to propose to the 2023 Annual General Meeting
that Pricewaterhouse Coopers GmbH Wirtschaftsprü-
fungsgesellschaft be appointed as auditor for 2024.
Economic Conditions and
Business Development
tor
In 2022, the Chinese economy was impacted by the
country's rigorous zero-Covid strategy, slowed growth in
the real estate sector and decreasing demand from
abroad. As a result, the Chinese economy recorded year-
on-year growth of only 3%. Unlike the case in the United
States and Europe, price pressure in China remained very
moderate (2%).
50
-
From 1989, Dame Polly Courtice was the Deputy Direc-
and from 2000 to 2021, the Director of the Uni-
versity of Cambridge Institute for Sustainability Leader-
ship.
Marco Gobbetti has been the CEO of Salvatore Ferrag-
amo S.p.A. since January 2022 and previously served as
the chairman of various companies in the luxury goods
industry, including Moschino, Givenchy and Burberry.
43
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Long-term goals as a luxury car brand
On 19 May 2022, Mercedes-Benz Cars hosted a capital
market day, "The Economics of Desire," during which it
provided further details of its strategic course. The com-
pany will focus the car business even more strongly on
luxury, continue to elevate its product portfolio, acceler-
ate on its path to a fully electric future and target struc-
turally higher profitability and greater financial resilience.
50
Mercedes-Benz Cars aims to grow the unit sales share of
its Top-End vehicles by around 60% by 2026 versus 2019.
In addition, Mercedes-Benz Cars is aiming to achieve a
return on sales of approximately 14% by the middle of the
decade in favourable market conditions. Our strategic
decision to become fully electric by 2030 - wherever
market conditions allow and the ambition to become
net CO2-neutral by 2039 should further enhance the con-
nection between luxury and sustainability.
Mercedes-Benz Cars prepares car production network
for all-electric portfolio
As announced in June 2022, Mercedes-Benz Cars is align-
ing its global production network to manufacture the
repositioned product portfolio with a focus on luxury
electric vehicles.
The Mercedes-Benz plants in Sindelfingen, Bremen, Ras-
tatt and Kecskemét are scheduled to start the production
of new electric models in the Top-End, Core and Entry
product categories from the middle of the decade. The
Mercedes-Benz Sindelfingen site is the lead plant for the
Top-End product category and is scheduled to produce
models based on the electric AMG.EA (AMG Electric
Architecture) platform from 2025. The Mercedes-Benz
plants in Bremen and Kecskemét are scheduled to manu-
facture vehicles in Europe based on the electric MB.EA
(Mercedes-Benz Electric Architecture) platform. It is
planned that the Rastatt and Kecskemét plants will also
produce the repositioned models based on the MMA
(Mercedes Modular Architecture) platform beginning in
the middle of the decade. As part of the implementation
of the Mercedes-Benz 2022 to 2026 Business Plan, the
company is planning to invest more than €2 billion in the
European production sites.
Mercedes-Benz Cars is taking a further step towards an
all-electric future with the development and production
of next-generation high-performance battery cells and
modules. As announced on 12 August 2022, Mercedes-
Benz Cars is further expanding its battery cell partnership
with Contemporary Amperex Technology Co., Ltd. (CATL)
with a new production site in Hungary. The new CATL
plant in Debrecen is scheduled to supply battery cells to
European production sites in Germany and Hungary. It is
an important part of the plan to build a total of eight cell
factories worldwide by the end of the decade. The plants
will have a total production capacity of more than 200
gigawatt hours.
Mercedes-Benz Group signs supply agreement
with Rock Tech Lithium for ramp-up of electric car
production
On 20 October 2022, the Mercedes-Benz Group con-
cluded a supply agreement with the Canadian-German
start-up Rock Tech Lithium Inc. in order to obtain lithium.
The goal of the agreement is to secure the raw material
needed for battery production within the framework of a
strategic direct sourcing approach. The agreement shall
make it possible for the Mercedes-Benz Group to ensure
its battery partners are supplied with lithium hydroxide in
order to rapidly scale up production of all-electric vehi-
cles.
Mercedes-Benz Group initiates rotation of the
-
General economic conditions
12
Pursuant to Section 317 Subsection 2 Sentence 6 of the
German Commercial Code (HGB), the purpose of the
audit of the statements pursuant to Section 289f Subsec-
tions 2 and 5 and Section 315d of the HGB by the audi-
tors is limited to determining whether such statements
have actually been provided.
All assets, liabilities and provisions for which the automo-
tive divisions are responsible in day-to-day operations
are allocated to them. Performance measurement at
Mercedes-Benz Mobility is implemented on an equity
basis. Net assets at the Group level include the net oper-
ating assets of the automotive divisions and the equity of
Mercedes-Benz Mobility, as well as assets and liabilities
from income taxes and other reconciling items which are
not allocated to the divisions. Average annual net assets
are calculated on the basis of average quarterly net
assets.
Cash flow
-
A change in net assets for example as a result of
investments - generally leads to the application or
release of liquid funds. Along with earnings, net assets
thus also have a direct effect on the cash flow. Of out-
standing importance for the financial strength of the
Mercedes-Benz Group is the free cash flow of the indus-
trial business, which comprises the cash flows at the
automotive divisions and the cash flows from interest,
taxes and other reconciling items that cannot be allo-
cated to the divisions. The operating cash flow before
interest and taxes (CFBIT) for the automotive divisions is
derived from EBIT and the change in net assets. The cash
conversion rate (CCR) is the ratio of CFBIT to EBIT over a
period of time and is an important measure for cash-flow
management at the automotive divisions.
In order to provide a more transparent presentation of
our ongoing business, the adjusted free cash flow of
the industrial business and the adjusted CFBIT of the
automotive divisions are also calculated and reported.
An adjusted cash conversion rate (adjusted CCR) on the
basis of adjusted CFBIT and adjusted EBIT is reported
for the automotive divisions. The adjustments include
individual items insofar as they lead to material effects
in a reporting year. These individual items can relate in
particular to legal proceedings and related measures,
restructuring measures and M&A transactions.
48
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Key performance indicators
The following indicators are the key financial performance
indicators used to measure the operating financial per-
formance of the Mercedes-Benz Group:
Revenue
EBIT
Free cash flow of the industrial business
In addition the figure for the CO2 emissions of our fleet of
new cars in Europe¹ is a key non-financial performance
indicator. This takes into account the very important role
sustainability aspects play in the management of the
Group.
The following key financial performance indicators have
an emphasized relevance for the automotive divisions
Mercedes-Benz Cars and Mercedes-Benz Vans:
Investments in property, plant and equipment
Research and development expenditure
Unit sales at Mercedes-Benz Cars and Mercedes-Benz
Vans are used as an additional non-financial indicator for
measuring the performance of the automotive divisions.
Adjusted return on equity and new business are the key
performance indicators for Mercedes-Benz Mobility.
New business here refers to the volume of leasing and
financing contracts capitalized during the reporting
period.
Net assets
As one of the main factors influencing value added,
return on sales is of particular importance for assessing
the profitability of the automotive divisions. Return on
sales is the ratio of EBIT to revenue, whereby vehicle
sales are the primary source of revenue. The measure of
profitability for Mercedes-Benz Mobility is not return on
sales but return on equity (the ratio of EBIT to average
equity on a quarterly basis). On the basis of adjusted
EBIT, an adjusted return on sales is reported for the auto-
motive divisions and an adjusted return on equity is
reported for Mercedes-Benz Mobility.
Return on sales
Group EBIT minus the centrally managed income taxes
equals net operating profit. Table B.12 in the chapter
Profitability shows how net operating profit is calculated.
12
12
12
The quantitative development of value added and the
related financial performance measures are explained in
the chapter Profitability.
B.03
Calculation of value added
Value
added
Profit
measure
Declaration on Corporate Governance
Net assets
Cost of
capital (%)
Cost of capital
47
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Financial performance measures
Profit measure
The measure of operating profit at the divisional level is
EBIT (earnings before interest and income taxes). EBIT
thus reflects the divisions' responsibility for profit and
loss. EBIT that is calculated at the Group level takes into
account centrally managed matters and eliminations.
In order to provide a more transparent presentation of
our ongoing business, adjusted EBIT is also calculated
and reported for both the Group and the divisions. The
adjustments include individual items insofar as they lead
to material effects in a reporting year. These individual
items can relate in particular to legal proceedings and
related measures, restructuring measures and M&A trans-
actions.
X
8
8
2022
In January 2023, Mercedes-Benz AG announced
far-reaching plans to build a global high-power charging
network in North America, Europe, China and other core
markets. Construction of the first charging parks is to
begin in the United States and Canada, followed by other
regions around the globe. The goal is to create a global
charging network by the end of the decade.
Global high-power charging network
Mercedes-Benz Vans and Rivian Automotive, Inc. (Rivian)
signed a memorandum of understanding for a strategic
partnership in the third quarter of 2022. In the agree-
ment, the two companies stated their intention to invest
in and jointly operate a factory in Central or Eastern
Europe as part of a joint venture. The option to expand
the factory further with Rivian in order to include produc-
tion of large all-electric vans has been terminated for
now by Rivian due to its reprioritization of projects in
December 2022.
In December 2022, Mercedes-Benz Vans announced that
it would be restructuring its production network in
Europe, thereby marking a new milestone in its transfor-
mation into a provider of locally emission-free mobility.
Mercedes-Benz Vans will build its first purely electric
vehicle plant in the world at its existing site in Jawor,
Poland. The new plant will focus solely on the production
of all-electric vans. Plans call for the closed-body models
in the segment for large all-electric vans to be produced
in Jawor in the future on the basis of the modular VAN.EA
platform. Through its consistent focus on the production
of all-electric vans, the division is looking to gain a pro-
ductivity edge and thus significantly improve its competi-
tiveness.
The objective is to have all newly launched vans from
Mercedes-Benz be exclusively electric from the middle of
this decade. To this end, Mercedes-Benz Vans is develop-
ing a fundamentally new, modular and fully electric van
architecture called VAN.EA (Van Electric Architecture).
The company plans to invest accordingly in the develop-
ment of this platform.
Mercedes-Benz Vans is accelerating its electric
transformation and restructuring its production
network in Europe
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
45
The battery plants in Kamenz, Brühl (Untertürkheim site)
and Beijing (China) are scheduled to produce batteries for
the new models from the MMA and MB.EA platforms.
Plans also call for the establishment of battery assembly
operations at the Kölleda site, subject to the support of
the state government in Thuringia. The Untertürkheim,
Sebes (Romania) and Beijing plants are to begin produc-
ing electric drive units for the new models from the MMA
and MB.EA platforms in the middle of the decade. At the
same time, the Untertürkheim plant will double its previ-
ously announced target production capacity for electric
drives to one million units. The Mercedes-Benz plants in
Hamburg and Untertürkheim (Mettingen section) are
scheduled to remain the German core plants for the
assembly of electric axles and components. Plans call for
them to supply the production network of Mercedes-Benz
body plants with next-generation systems. Beginning in
the middle of the decade, the Mercedes-Benz plant in
Berlin is to manufacture high-performance electric
motors for the future AMG.EA platform.
In June 2022, Mercedes-Benz Cars announced a realign-
ment of its vehicle production plants in connection with
future vehicle architectures. As of December 2022, the
sites for production of electric drive systems — i.e. bat-
teries, electric drive units and axles have also been
defined, with manufacturing operations scheduled to
begin in 2024. As part of the implementation of the
Mercedes-Benz Business Plan, the company plans to
invest a mid-ten-digit euro sum in its European power-
train production sites.
-
Plans call for plug-in hybrids and all-electric vehicles to
account for approximately half of total unit sales as early
as 2025. Conventional drive assemblies will therefore
remain an important part of the Mercedes-Benz drive
system portfolio over the medium term. As electrification
increases, demand will shift towards electric mobility
components, batteries and electric drive systems.
Mercedes-Benz Cars establishes production setup for
electric drive systems
Mercedes-Benz AG and Hydro have also reached agree-
ment on the gradual supply of very low CO2-emission
aluminium for use in automotive applications. As a result,
the carbon footprint of the aluminium supplied by Hydro
is expected to be nearly 70% lower than the European
average as early as next year.
In December 2022 Mercedes-Benz AG signed a memo-
randum of understanding with the Norwegian aluminium
manufacturer Norsk Hydro ASA that involves the use of a
low-carbon technology roadmap between 2023 and
2030. This marks a key milestone on the road to decar-
bonization and a more environmentally compatible alu-
minium supply chain.
Mercedes-Benz AG and Hydro pool their innovative
capabilities
Mercedes-Benz Cars
Intended sale of shares in the Russian subsidiaries
At the end of October 2022, Mercedes-Benz Group
signed contracts with the Russian car dealer Avtodom AO
for the sale of the shares in the Russian subsidiaries.
Completion of the transaction is subject to authorities'
approval, which have not yet been fully granted, and the
implementation of the contractually agreed conditions.
Mercedes-Benz Group AG resolves share buyback
programme
On 16 February 2023, the Board of Management, with the
approval of the Supervisory Board, resolved a share buy-
back programme. Beginning on 3 March 2023, own shares
worth up to €4 billion (not including incidental costs) are
intended to be acquired on the stock exchange over a
period of up to two years and shall subsequently be can-
celled. The share buyback programme will be based on
the authorization by the Annual General Meeting of the
Group on 8 July 2020, authorizing the Board of Manage-
ment to acquire, with the approval of the Supervisory
Board, own shares up to a maximum of 10% of the share
capital until 7 July 2025.
Automotive divisions, before taxes
Mercedes-Benz Mobility, before taxes
Group, after taxes
The Declaration on Corporate Governance, which is com-
bined for the company and the Group in accordance with
Section 289f and Section 315d of the German Commer-
cial Code, can be found in the chapter Declaration on
Corporate Governance of the Annual Report as well as on
the Internet at group.mercedes-benz.com/dcg.
in %
Cost of capital
B.04
The return on net assets (RONA) is calculated from the
ratio of EBIT to net assets. Value is created for our share-
holders when RONA exceeds the cost of capital. The
required rate of return on net assets, and thus the cost of
capital rate, is derived from the minimum rates of return
that equity investors and lenders expect on their invested
capital. In contrast to cost of capital rates based on peer-
group logic for purposes of the impairment test at the
level of the cash-generating units, when determining the
Group cost of capital rate for deriving the value added,
the focus is on the use of company-specific data (in par-
ticular with respect to the capital structure). For 2022,
this cost of capital rate of the Group remained unchanged
at 8% after taxes. For the automotive divisions, this cost
of capital rate remained unchanged at 12% before taxes;
for Mercedes-Benz Mobility, an unchanged cost of equity
of 12% before taxes was applied. Cost of capital rates are
shown in Table B.04.
As shown in B.03, value added can be calculated as the
difference between the measure of operating profit
(EBIT or net operating profit) and the cost of capital of
the average net assets.
2021
Value added is derived from the financial value drivers
which, due to their direct relationship to ongoing busi-
ness operations, are utilized as financial performance
indicators for the periodic controlling of the performance
of the Group and its divisions.
Value-based financial management
Various targets are defined on the basis of the Mercedes-
Benz Group's corporate strategy and business strategy.
Along with financial targets, these include sustainabili-
ty-related targets particular. The Group's performance
measurement system is designed to help ensure that
these targets can be reached and that permanent value
can thus be created for the stakeholders. The information
provided below primarily relates to the Group's financial
performance measurement system. Information on sus-
tainability targets and the measures being taken to
achieve them can be found in the chapter Non-Financial
Declaration.
Performance measurement system
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
46
As announced on 22 February 2023, Mercedes-Benz
plans to build its own branded navigation MB.OS using
new in-car geospatial data and navigation capabilities
from Google Maps Platform. With this partnership,
Mercedes-Benz plans to be the first automaker to build
its own branded navigation experience based on new
in-car data and navigation capabilities from Google Maps
Platform.
Mercedes-Benz and Google join forces to create next-
generation navigation experience
Mercedes-Benz Group AG has separately agreed with
Beijing Automotive Group Co., Ltd. and Geely Group that
they will each keep their shareholdings in Mercedes-Benz
Group AG below 10% by divesting their shares on a
pro-rata basis concurrently with the share buyback pro-
gramme.
The financial performance measurement system used at
the Mercedes-Benz Group is designed to ensure that our
investors' interests and expectations are taken into
account within the framework of a value-based manage-
ment system. Value added shows the extent to which the
Group and its divisions achieve or exceed the return
requirements of the investors, thus creating additional
value.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
44
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
B.06
-
2,578
1,797
8,472
13,012
23,396
14,809
Net profit
12,346
12,346
Profit/loss from discontinued operations after taxes
11,050
14,809
after taxes
Profit from continuing operations
-907
-627
-3,854
-4,868
-4,761
-5,495
13,012
20,818
1,797
2,578
10.00
13.55
thereof from discontinued operations
thereof from continuing operations
Diluted
thereof from continuing operations
thereof from discontinued operations
21.50
13.55
For profit attributable to shareholders of Mercedes-Benz Group AG
Basic
Earnings per share (in euros)
12,311
thereof from discontinued operations
10,695
14,501
thereof from continuing operations
23,006
14,501
thereof attributable to shareholders of Mercedes-Benz Group AG
390
308
thereof attributable to non-controlling interests
Incoming orders were robust at Mercedes-Benz Cars at
the end of 2022. On the product side, the EQ models, the
new GLC and the SL were the main contributors to this
development.
Orders remained at a high level at Mercedes-Benz Vans
as of 31 December 2022. The demand for battery electric
vans also showed a further increase at the end of 2022.
53
Annual Report 2022 Mercedes-Benz Group
As in the prior year, the calculation of earnings per share
is based on an average number of 1,069.8 million issued
shares.
Further information on the individual items of the Consol-
idated Statement of Income is provided in Notes 5ff. of
the Notes to the Consolidated Financial Statements.
Table B.10 shows the composition of Group EBIT and the
EBIT of the individual segments as well as the reconcilia-
tion and the reconciliation of EBIT to adjusted EBIT.
58
B.09
Condensed statement of income
In millions of euros
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Mercedes-Benz
Mobility
Net profit was thus €14.8 billion (2021: €23.4 billion).
Net profit of €0.3 billion is attributable to non-con-
trolling interests (2021: €0.4 billion). The net profit
attributable to shareholders of Mercedes-Benz Group
AG amounted to €14.5 billion (2021: €23.0 billion), leading
to an increase in earnings per share from continuing
operations to €13.55 (2021: €10.00). Earnings per share
from continuing and dicontinued operations amounted to
€21.50 in 2021.
Mercedes-Benz
Group
2021
Industrial Business
2022
2021
2022
2021
Revenue
Cost of sales
Gross profit
150,017 133,893 123,063
-115,997 -103,218
105,952
2022
11.50
After income taxes profit from discontinued operations
amounted to €12.3 billion in 2021. It essentially com-
prised the profit from the spin-off and hive-down of the
assets and liabilities of the commercial vehicle business
in the amount of €10.0 billion (after deduction of transac-
tion costs). This also included the profit of the ongoing
business activities of discontinued operations after taxes
of €2.3 billion. The portion from the spin-off and hive-
down attributable to Mercedes-Benz Mobility was
reported in other operating income from continuing oper-
ations.
The tax expense of €5.5 billion (2021: €4.8 billion) recog-
nized under income taxes increased mainly due to the
increased profit before income taxes. The effective tax
rate for 2022 was 27.1% (2021: 30.1%). Note 10 of the
Notes to the Consolidated Financial Statements includes
further information on the factors affecting the tax rate.
Combined Management Report with Non-Financial Declaration
Investment and research activities
Investments in property, plant and equipment
During the year under review, investments in property,
plant and equipment at the Mercedes-Benz Group
amounted to €3.5 billion and were thus lower than in the
previous year (2021: €4.6 billion).
In 2022, investments in property, plant and equipment
at Mercedes-Benz Cars focussed on the market launch
of the new GLC, the launch of production of the all-elec-
tric SUVS (EQS SUV and EQE SUV) and production prepa-
rations for the new E-Class. Considerable funds were
also invested in the expansion of our battery production
facilities. At €3.3 billion, investments in property, plant
and equipment in 2022 were around 9% lower than in the
prior year (2021: €3.6 billion).
The investments in property, plant and equipment at
Mercedes-Benz Vans amounted to €0.2 billion in 2022
(2021: €0.2 billion) and were thus at the prior year's level.
The investments at Mercedes-Benz Vans focused on
issues such as the electrification of the van fleet and the
expansion of production operations.
Research and development
Research and development expenditure at the
Mercedes-Benz Group amounted to €8.5 billion in 2022
(2021: €9.1 billion), lower than in the previous year.
€2.9 billion (2021: €2.4 billion) of the research and devel-
opment costs were capitalized, representing a capitaliza-
tion rate of 34% (2021: 27%).
Research and development expenditure at Mercedes-
Benz Cars amounted to €8.0 billion (2021: €7.2 billion).
Expenditure here focused mainly on the development of
the new-generation BEV platform generation and the
associated battery concept. In addition, the company
intensified its research and development expenditure on
digitalization and automated driving.
The profit from continuing operations amounted to
€14.8 billion in 2022, which is significantly higher than the
prior-year value of €11.1 billion.
Cost of sales amounted to €116.0 billion (2021:
€103.2 billion) in 2022, increasing by 12.4% compared
with the previous year. The increase was mainly due to
significantly increased raw-material prices, one-time
expenses paid to suppliers and additional costs relating
to inflation and supply chains.
Selling expenses increased by €0.3 billion to €9.5 billion.
As a proportion of revenue, selling expenses decreased
from 6.9% to 6.3%.
In the past year, general administrative expenses
decreased by €0.2 billion to €2.6 billion. As a proportion
of revenue, general administrative expenses decreased
from 2.1% to 1.7%.
Research and non-capitalized development costs of
€5.6 billion in 2022 were at the prior-year level (2021:
€5.5 billion). They were mainly related to the develop-
ment of new models, advance expenditure for the
renewal of existing models, and the further development
of fuel-efficient and environmentally friendly drive sys-
tems as well as safety technologies, automated and
autonomous driving and the digital connectivity of the
products. As a proportion of revenue, research and
non-capitalized development costs decreased from 4.1%
to 3.7%. Further information on the Group's research and
development expenditure is provided in the Investment
and research activities chapter of this Combined Man-
agement Report.
Other operating income of €2.0 billion (2021: €1.2 bil-
lion) was above the level of the prior year. The earnings
included income of €0.5 billion in connection with the
restructuring of the sales activities in Canada and income
of €0.4 billion (2021: expenses of €0.1 billion) in connec-
tion with the change in the shareholding structure of the
motorsport business. In the prior year, the establishment
of the fuel cell joint venture cellcentric had a positive
effect of €0.6 billion on earnings. By contrast, other oper-
ating income in the prior year was impaired by the result
attributable to the spin-off and hive-down of assets and
liabilities of the Daimler commercial vehicles business of
the Mercedes-Benz Mobility segment. The resulting loss
(after deduction of transaction costs) amounted to
€0.8 billion.
57
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
In 2022, the gains/losses on equity-method invest-
ments amounted to €1.7 billion (2021: €1.4 billion) and
were thus above the prior-year level. In particular, the
higher proportionate earnings of the investments in
Daimler Truck Holding AG (Daimler Truck) and Beijing
Benz Automotive Co., Ltd. (BBAC) led to a substantial
increase in earnings.
As was the case in the prior year, the other financial
income/expense amounted to €0.3 billion.
Earnings before interest and taxes (EBIT) amounted to
€20.5 billion in 2022, which is significantly higher than in
the previous year (2021: €16.0 billion). Exchange-rate
effects had a positive net impact.
Net interest expense amounted to €0.2 billion, as was
the case in the previous year.
Overall, gross profit in relation to revenue increased
from €30.7 billion to €34.0 billion.
13.55
21.50
13.55
2 Including Mercedes-Maybach and Mercedes-AMG derivatives.
1 The Top-End category comprises all AMG models.
Unit sales in the Top-End category accounted for 16% of
total unit sales in 2022 - and at 328,200 units were also
8% higher than in the previous year (2021: 304,600). The
main force driving this development was the S-Class:
Global sales of the S-Class¹ rose to 117,500 units in 2022
(2021: 91,100 units). Sales of Mercedes-Maybach brand
vehicles also rose significantly, to 23,400 units (2021:
16,600 units). Mercedes-AMG sold 137,700 vehicles (2021:
135,100 vehicles). Mercedes-AMG sold 137,700 vehicles
(2021: 135,100) and sales of Mercedes-Maybach brand
vehicles rose significantly, to 23,400 units (2021: 16,600).
A total of 38,600 G-Class² vehicles were sold during the
reporting year (2021: 40,500 vehicles). GLS sales totalled
59,700 units (2021: 61,700 units).
Top-End
14
16
% share of unit sales
+1
+23
+67
271,800
89,500
182,300
149,200
184,300
PHEVS
BEVS
333,500
Electrified vehicles (EV)
thereof
31
29
% share of unit sales
-2
610,300
3 Including Mercedes-AMG derivatives.
Core
Sales of vehicles in the Core category increased by 9% to
1,116,600 units (2021: 1,029,000). As a result, this category
now accounts for 55% of the overall portfolio's unit sales.
Sales of C-Class vehicles³ rose by 27% to 303,000
saloons, estates, coupés and cabriolets (2021: 239,000).
A total of 302,700 E-Class vehicles³ were sold during the
reporting year (2021: 295,100), while sales of the GLC
amounted to 369,200 units (2021: 350,300) and of the
GLE to 200,100 units (2021: 208,200).
Entry
New financing and leasing contracts worth €13.0 billion
(-23%) were concluded in the United States. In this mar-
ket in particular, some of the decrease was due to the
spin-off and hive-down of the Daimler commercial vehi-
cle business. Contract volume in the United States at the
end of December was at roughly the same level as at the
end of 2021 and amounted to €34.6 billion. This was due
to the effects of currency translation.
In China, new business of €11.9 billion (+15%) at year-end
2022 significantly exceeded the level of the previous year,
while contract volume of €19.5 billion (+3%) was slightly
higher.
New business in other markets totalled €23.0 billion
(-14%), while contract volume amounted to €53.0 billion
(-3%).
Order situation
Mercedes-Benz Mobility concluded 1.4 million new
financing and leasing contracts worth a total of €58.0 bil-
lion in the course of 2022. The total value of all new
contracts was thus significantly below the prior-year level
(-9%; -12% after adjusting for the effects of currency
translation). The decisive factor in the decrease was
increased competitive pressure in the financial services
The Mercedes-Benz Mobility division had a contract vol-
ume of €132.4 billion on a level with the previous
year's figure at the end of 2022 (31 December 2021:
€133.7 billion), down by 1% or by 2% after adjusting for
currency-translation effects. The figure for contract vol-
ume shows the total monetary amount of all leasing and
financing contracts on a certain date. The reported con-
tract volume as of 31 December 2021 had already been
adjusted for a large part of the Daimler Trucks & Buses
vehicle business after the spin-off and hive-down of the
Daimler commercial vehicle business on 9 December
2021. The influence on volume of the parts of the Daimler
commercial vehicle business still to be sold in 2022 was
therefore relatively minor.
-
Mercedes-Benz Mobility
Worldwide, it proved possible to increase unit sales of
all-electric vans by 9% (2022: 15,000 units, 2021: 13,800
units). All-electric models thus accounted for a 4% share
of total unit sales.
In China, under the influence of local Covid-19 measures,
34,200 units (2021: 38,500) were sold.
595,900
Mercedes-Benz Vans set a new sales record of 66,400
vehicles in the United States (2021: 48,300).
Mercedes-Benz Vans finished 2022 with unit sales of
415,300 vehicles worldwide (2021: 386,200). Despite
ongoing global challenges in the areas of parts supply
and logistics, unit sales in 2022 were significantly higher
than in the previous year due to the continued very high
demand for Mercedes-Benz vans.
Mercedes-Benz Vans
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
52
Compared to the prior year, unit sales of Mercedes-Benz
Cars increased in the major sales regions. Unit sales in
Europe amounted to 618,900 vehicles (2021: 602,400
vehicles). Sales in Germany recorded a slight decrease of
1% to 215,600 units. In China, the single largest market for
Mercedes-Benz Cars, unit sales totalled 753,900 vehicles
(2021: 734,700). Unit sales in North America surpassed
the previous year's level with 344,200 vehicles (2021:
290,600). In the region's main market, the United States,
sales rose by 20% to 300,800 units.
market
Mercedes-Benz Cars unit sales by region and sales
Electrified vehicles accounted for 16% of Mercedes-Benz
Cars' total unit sales. This corresponds to unit sales of
333,500 vehicles (2021: 271,800) and an increase of 23%.
Sales of battery electric vehicles (BEVS) of the
Mercedes-Benz brand rose by 67% to 149,200 units in
2022 (2021: 89,500). The most important sales drivers
were the EQA, with sales of 33,500 units (2021: 24,800),
the EQB with 26,200 units (2021: 900), the EQE Saloon
with 17,200 units and the EQS Saloon with 23,400 units
(2021: 2,500). Sales of plug-in hybrid vehicles (PHEVS)
totalled 184,300 units in the year under review (2021:
182,300).
Electrified vehicles (EV)
Mercedes-Benz Cars (incl. smart) sold 595,900 units in
the Entry category in the year under review (2021:
610,300). Unit sales of the A-Class³ amounted to 261,000
vehicles (2021: 290,100) and of the B-Class to 29,100
units (2021: 32,700). Unit sales of these models were
negatively affected by the limited availability of parts, as
well as by logistics bottlenecks. Sales of the GLB
amounted to 164,100 units (2021: 144,400) and of the
GLA to 158,100 units (2021: 141,400). A total of 20,500
smart brand vehicles were sold during the reporting year
(2021: 38,400) in the European market.
At 259,400 units, unit sales in the core region Europe
(European Union, United Kingdom, Switzerland and
Norway), were slightly above the figure for the prior year
(2021: 246,000). Unit sales in Germany amounted to
113,200 vehicles (2021: 98,200).
Entry (incl. smart)
53
55
The economic conditions described above also affected
the development of the global automotive market in the
year under review. Sales markets were impacted by con-
tinuous supply chain disruptions and supply bottlenecks
in particular, as well as by sluggish economic develop-
ment throughout the course of the year.
Automotive markets
higher than the price at the end of 2021. At times, prices
for industrial raw materials rose by more than 25% com-
pared to the end of the previous year. However, they then
declined significantly over the year, reaching almost 20%
below their price at the end of 2021.
-
Prices for energy and raw materials rose tremendously
as a consequence of the war in Ukraine and reached new
record levels at certain times during the year. Oil cost
approximately USD 85 per barrel at the end of the year,
or almost 10% more than at the end of 2021. The average
price for the year as a whole was more than 40% higher
than that for the previous year. The European natural gas
price was subject to even higher fluctuations and at one
point stood at more than €300 per MWh. The price at the
end of the year approximately €75 was nearly 10%
Energy and raw-material prices
Currency exchange rates were volatile in this environ-
ment. Against the US dollar, the euro moved between
USD 0.95 and USD 1.15 in the course of the year. At the
end of 2022, the euro was around 6% weaker than at the
end of 2021. The range of fluctuation of the Chinese ren-
minbi against the euro was 6.7 to 7.5. Year-on-year, the
value of the euro increased by just under 2.5% against
the renminbi.
Development of exchange rates
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
sector against a background of rising interest rates. In
addition, it must be taken into account that the new busi-
ness for the year 2021 still included the division's new
business with vehicles from Daimler Trucks & Buses until
the spin-off and hive-down of the Daimler commercial
vehicle business took effect. Whereas the spin-off and
hive-down of the Daimler commercial vehicle business at
the end of 2021 only affected the Americas region and
Africa and Asia-Pacific (excluding China), the parts of the
Daimler commercial vehicle business sold in 2022 mainly
affected Europe.
In this environment, the global car market volume
remained at about the same level as in the previous year,
although developments differed greatly in the various
regions. Unit sales in the European market fell by approx-
imately 4% compared to what was already a low sales
volume in 2021. The US light vehicle market recorded a
decrease in unit sales of around 8%. The ongoing supply
bottlenecks and the sharp increase in interest rates had
the effect of damping market development. The Chinese
market, in contrast, recorded a significant increase in unit
sales. The Covid-19-related restrictions that were repeat-
edly implemented in the country did sometimes have a
detrimental effect on the development of sales. However,
government stimulus measures in the form of lower taxes
on vehicle purchases led to a significant increase in unit
sales compared to the previous year.
60
A substantially higher unit sales increase and a greatly
improved sales structure combined with a more advanta-
geous product mix had a very positive impact on gross
profit. On the other hand, gross profit was impacted by
significantly increased raw-material prices over the
course of the year, one-time expenses paid to suppliers
and additional costs relating to inflation and supply
chains. Overall, gross profit in relation to revenue
increased slightly from 20.4% to 21.3%. Other functional
costs were slightly above the level of the previous year.
The other operating income was positively impacted in
particular by lower expenses in connection with the dis-
counting of non-current provisions.
The Mercedes-Benz Vans segment achieved EBIT of
€1,897 million (2021: €1,143 million); adjusted EBIT was
€1,927 million (2021: €1,229 million), which was also sig-
nificantly higher than in the prior year. The adjusted
return on sales of 11.2% was higher than the adjusted pri-
or-year figure of 8.3%.
In 2022, adjusted EBIT was slightly lower than EBIT.
Expenses in connection with adjustments of the business
activities in Russia in the amount of €658 million, as well
as effects from ongoing governmental and court pro-
ceedings and measures taken relating to Mercedes-Benz
diesel vehicles of €110 million (2021: €274 million), nega-
tively impacted the segment's earnings. In addition,
restructuring expenses for personnel cost optimization
programmes in the amount of €436 million had a nega-
tive impact on the segment result in the previous year.
The M&A transactions, on the other hand, included
income of €478 million in connection with the restructur-
ing of the sales activities in Canada and income of
€385 million (2021: expenses of €96 million) in connec-
tion with the change in the shareholding structure of
the motorsport business. In the prior year, the establish-
ment of the fuel cell joint venture cellcentric had a
positive effect of €604 million on earnings in the M&A
transactions.
Greatly improved pricing combined with a more advanta-
geous product mix and a slight increase in sales volumes
had a strong positive impact on gross profit. On the other
hand, gross profit was impacted by significantly
increased raw-material prices over the course of the year,
one-time expenses paid to suppliers and additional costs
relating to inflation and supply chains. As a result, gross
profit in relation to revenue increased slightly from 23.7%
to 23.9%. Other functional costs increased in 2022, due
in particular to advance expenditure for future technolo-
gies and vehicles. By contrast, lower expenses from the
discounting of non-current provisions contributed to an
increase in earnings.
The EBIT of the Mercedes-Benz Cars segment increased
to €16,340 million (2021: €12,487 million); adjusted EBIT
was €16,245 million (2021: €12,689 million). The adjusted
return on sales of 14.6% was higher than the adjusted pri-
or-year figure of 13.1%.
EBIT by segment
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
59
11.50
10.00
Adjusted EBIT reflected offsetting effects which, as in
the prior year, resulted in slightly higher adjusted EBIT.
Particularly expenses in connection with adjustments of
the business activities in Russia in the amount of €51 mil-
lion, as well as effects from ongoing governmental and
court proceedings and measures taken relating to
Mercedes-Benz diesel vehicles of €15 million (2021:
€59 million), negatively impacted the segment's earnings.
26,954
The factors mentioned above also affected the develop-
ment of key van markets. In Europe, all segments of the
van market relevant for Mercedes-Benz Vans recorded
significant market contractions. The US market for large
vans was slightly below the level of the previous year,
while sales figures for mid-size vans in China were slightly
above the previous year's level.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
% share of unit sales
+9
1,029,000
1,116,600
Core
16
16
% share of unit sales
+8
+5
51
2,040,700 1,943,900
328,200 304,600
2021 % change
2022
Top-End¹
(total, incl. smart)
In units
Mercedes-Benz Cars unit sales
B.05
In 2022, Mercedes-Benz Cars sold a total of 2,040,700
units (2021: 1,943,900) which was slightly higher than in
the previous year. This growth in unit sales was due to the
EQ models and, in particular, the fact that 2022 marked
the first full year of sales for the new C-Class generation.
Mercedes-Benz Cars
Business development
Mercedes-Benz Cars unit sales
Research and development expenditure at Mercedes-
Benz Vans amounted to €0.6 billion in 2022 (2021:
€0.5 billion), which was higher than in the previous year.
Activities relating to the planned electrification of the van
fleet played a major role in 2022. This was mostly due to
the new, modular and all-electric van architecture
(VAN.EA).
27,941
-80,328
The increase in revenue was primarily due to significantly
improved pricing at the Mercedes-Benz Cars and
Mercedes-Benz Vans segments.
In 2022, the Group's revenue amounted to €150.0 billion
(2021: €133.9 billion) and was thus substantially higher
than the prior-year value. Adjusted for positive foreign
exchange effects, revenue was also significantly higher
than in the previous year.
Consolidated Statement of Income of the
Mercedes-Benz Group
Profitability
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
56
In order to provide a more transparent presentation of
the ongoing business, adjusted figures are also calcu-
lated and reported for both the Group and the segments.
The adjustments include individual items insofar as they
lead to material effects in a reporting year. These individ-
ual items can relate in particular to legal proceedings
and related measures, restructuring measures and M&A
transactions. Further information on the performance
measurement system can be found in the Corporate Pro-
file chapter of this Annual Report.
Adjustment of individual items
Detailed information on the spin-off and hive-down of
the commercial vehicle business and the scope of the
discontinued operations, the assets and liabilities spin-
off as part of the deconsolidation, and the assets and lia-
bilities classified as held for sale can be found in Note 3
of the Notes to the Consolidated Financial Statements.
In the Consolidated Statement of Cash Flows, the con-
solidated cash flows from continuing and discontinued
operations are shown for the year 2021.
The scheduled depreciation and the equity-method
measurement of the non-current assets classified as
held for distribution or sale were also reported in the rec-
onciliation in the previous year. In 2021, the segment
earnings of Mercedes-Benz Mobility were thus reported
independently of the effects of the spin-off and hive-
down of the commercial vehicle business in the segment
reporting.
The continuing operations are presented in the Consoli-
dated Statement of Income. Income and expenses
related to assets and liabilities of the commercial vehicle
business that were spun off and hived down or held for
sale were classified as discontinued operations in 2021.
This encompasses the Daimler Trucks & Buses segment
until the date of the spin-off and hive-down. The profit or
loss after taxes of the discontinued operations in 2021 is
presented in a separate line below the profit from contin-
uing operations. The profit or loss form discontinued
operations is contained in the segment reporting in the
reconciliation.
If, on 31 December 2021, a sale was considered very likely
to take place within the next twelve months, the corre-
sponding assets and liabilities as of 31 December 2021
were reported in the Consolidated Statement of Finan-
cial Position as held for sale.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
55
Parts of the financial services business in connection
with the commercial vehicle business were nottsold to
Daimler Truck Holding AG or its subsidiaries until 2022.
In addition, in individual countries, investments in oper-
ating entities or business operations of the commercial
vehicle business were not sold until 2022.
Daimler's commercial vehicle business in 2021
Substantial parts of the operating investments or busi-
ness activities that were assigned to the commercial
vehicle business were already legally assigned to Daimler
Truck AG before the spin-off and hive-down took effect.
As part of the spin-off and hive-down, the financial ser-
vices business has also been split up. With the consent
of the Board of Management and the Supervisory Board
to the transaction, the items of the operating commercial
vehicle business and the parts of the Mercedes-Benz
Mobility segment that had already been legally assigned
to Daimler Truck AG were classified as held for distribu-
tion from 30 July 2021 until the implementation of the
spin-off and hive-down on 9 December 2021 and decon-
solidated upon completion of the transaction.
Spin-off and hive-down of
ness.
To provide a better insight into the Group's profitability,
liquidity and capital resources, and financial position, a
condensed Consolidated Statement of Income, a con-
densed Consolidated Statement of Cash Flows and a
condensed Consolidated Statement of Financial Position
are shown for the industrial business, for the segment
Mercedes-Benz Mobility and the Mercedes-Benz Group.
The industrial business comprises the segments
Mercedes-Benz Cars and Mercedes-Benz Vans. In justi-
fied individual cases, effects on the profitability, liquidity
and capital resources, and financial position of the corre-
sponding segment are presented from an economic
rather than a legal perspective. The effects from intra-
Group eliminations between the industrial business and
Mercedes-Benz Mobility, as well as items at the corpo-
rate level, are generally allocated to the industrial busi-
The Group comprises the segments Mercedes-Benz Cars,
Mercedes-Benz Vans and Mercedes-Benz Mobility. The
segments Mercedes-Benz Cars and Mercedes-Benz Vans
were combined into one reportable segment until
31 December 2021 due to comparable longer-term aver-
age returns on sales and comparable sales development
and capital intensity. After the spin-off and hive-down of
the Daimler commercial vehicle business (commercial
vehicle business) in December 2021, the two segments
have been reported separately since 1 January 2022. The
comparison period has been adjusted accordingly.
B.08
Revenue by segment and region
In millions of euros
2022
-5,755
Reconciliation¹
-4
27,941
26,954
Mercedes-Benz Mobility
17
14,735
17,217
Mercedes-Benz Vans
Profitability, Liquidity and
Capital Resources, Financial Position
15
111,601
Mercedes-Benz Cars
Segments
12
133,893
150,017
Mercedes-Benz Group
% change
22/21
2021
96,712
Combined Management Report with Non-Financial Declaration
Annual Report 2022 Mercedes-Benz Group
1 In 2021, Daimler's commercial vehicle business is included until the time of the spin-off
and hive-down.
3,265
199
-6
9,105
8,541
Group
-24
4,579
3.481
Research and development
expenditure at the Mercedes-Benz
thereof Mercedes-Benz Vans
3,589
198
thereof Mercedes-Benz Cars
In millions of euros
2021 % change
2022
% change
2021¹
2022
Research and development
B.07
In millions of euros
Investments in property, plant and equipment¹
Mercedes-Benz Group²
-5,495
-9
7,986
27
34
Capitalization rate in %
54
+21
2,435
2,939
Capitalized development costs
-16
6,670
thereof Mercedes-Benz Cars
5,602
Research and non-capitalized devel-
2 In 2021, Daimler's commercial vehicle business is included until the time of the spin-off
and hive-down.
1 The investments in property, plant and equipment correspond to additions to property,
plant and equipment in the Consolidated Statement of Cash Flows in the Consolidated
Financial Statements.
+13
489
552
thereof Mercedes-Benz Vans
+1
+11
7,207
opment costs
-93,010
5
Europe
-5,602
-5,467
Other operating income
2,034
1,153
1,925
973
109
180
Gains/losses on equity-method investments
1,732
1,352
1,941
1,492
-209
-140
Other financial income/expense
340
317
328
323
-5,467
-5,602
development costs
Research and non-capitalized
-22,987
-22,890
34,020
30,675
30,053
25,624
3,967
5,051
Selling expenses
-9,482
12
-9,194
-8,502
-722
-692
General administrative expenses
-2,584
-2,808
-1,855
-1,908
-729
-900
-8,760
-6
EBIT
20,458
25,173
27,324
thereof China
14
40,126
45,558
Asia
22
29,284
35,829
9
thereof United States
33,105
40,091
North America
11
20,733
23,085
thereof Germany
11
51,044
56,487
21
Regions
Other markets
9,618
16,028
18,030
12,535
2,428
3,493
Interest expense
-154
-217
-150
-209
7,881
-4
Profit from continuing operations before taxes
20,304
15,811
17,880
12,326
2,424
3,485
Income taxes
1 The reconciliation includes eliminations of intra-Group revenues between the segments.
-18
-8
At €10.2 billion, new business in Germany was slightly
higher than in the previous year (+5%). At €25.3 billion,
contract volume in Germany was at roughly the same
level as at the end of 2021.
1,897
tions¹
143
124
6,837
6,397
6,980
6,521
Depreciation and amortisation/impairments
3,485
2,424
25,290
17,880
28,775
20,304
Profit from continuing operations before taxes (2021: Profit from contin-
uing and discontinued operations before taxes)
2,704
5,148
20,344
18,034
23,048
Other non-cash expense and income and
gains/losses on disposals of assets
-2,286
-12,198
274
59
1
1,696
921
1,694
1,029
Trade receivables and trade liabilities
506
23,182
-8
-4,103
-2,561
-4,111
Inventories
Change in operating assets and liabilities
117
260
-12,315
-2,546
-3,067
Cash and cash equivalents at beginning of period
2021
2022
Liquidity and capital resources
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
64
5 To the extent not allocated to Mercedes-Benz Mobility.
4 To the extent not allocated to the segments.
3 The investment in Daimler Truck Holding AG (DTHAG) was accounted for using the equi-
ty-method from the fourth quarter of 2021.
1 To the extent not allocated to Mercedes-Benz Mobility.
2 Reported segment Daimler Trucks & Buses until the date of the spin-off and hive-down of
the Daimler commercial vehicle business. In the fourth quarter of 2021, no amounts have
been considered for the deconsolidated Daimler commercial vehicle business.
1 Equity.
Principles and objectives of financial management
+2
58,683
Mercedes-Benz Group
+0
58,397
58,525
Mercedes-Benz Group
-6
14,448
13,576
57,609
334
Financial management at the Mercedes-Benz Group con-
sists of capital structure management, cash and liquidity
management, market-price risk management (foreign
exchange rates and interest rates), as well as pension-as-
set management and credit and country risk manage-
ment. Worldwide financial management is performed
within the framework of legal requirements consistently
for all Group entities by the Treasury department of the
Mercedes-Benz Group. Financial management operates
within a framework of guidelines, limits and benchmarks,
and on the operational level is organisationally separate
from other financial functions such as settlement, finan-
cial controlling, reporting and accounting.
Liquidity management ensures the Group can meet its
payment obligations at any time. For this purpose, the
Group records the cash flows from operating and finan-
cial activities in a rolling plan. The resulting financial
requirements are covered by the use of appropriate
instruments for liquidity management (e.g. bank credit,
commercial paper and notes); liquidity surpluses are
invested in the money market or the capital market taking
into account risk and return expectations. Our goal is to
ensure the level of liquidity regarded as necessary at
optimal costs. Besides operational liquidity, the
Mercedes-Benz Group maintains additional liquidity
reserves which are available in the short term. Those
additional financial resources include a pool of receiva-
bles from the financial services business which are avail-
able for securitisation in the capital market and a con-
tractually confirmed syndicated credit facility. Since
December 2021, the Group also has liquidity reserves in
the form of its shareholding in Daimler Truck Holding AG,
which can be sold if the need arises.
2021
2022
2021
Industrial Business Mercedes-Benz Mobility
Mercedes-Benz Group
2022
In millions of euros
Condensed statement of cash flows¹
B.15
Table B.15 shows the condensed statement of cash flows.
Capital structure management designs the capital
structure of the Group and its subsidiaries. Decisions
regarding the capitalisation of the Group's mobility, pro-
duction, sales and financing companies are based on the
principles of cost-optimised and risk-optimised liquidity
and capital resources.
Condensed statement of cash flows
66
Further information on the management of market-price
risk, credit risk and liquidity risk is provided in Note 34 of
the Notes to the Consolidated Financial Statements.
Financial country risk management includes various
aspects: the risk from investments in subsidiaries and
joint ventures, the risk from the cross-border financing of
Group companies in risk countries and the risk from
direct sales to customers in those countries. The Group
has an internal rating system that assigns all countries in
which it operates to risk categories. Risks from cross-bor-
der receivables are partially protected with the use of let-
ters of credit and bank guarantees in favour of Mercedes-
Benz Group AG and other Group companies. In addition,
an internal committee sets and restricts the level of
hard-currency credits granted to Mercedes-Benz Mobility
companies in risk countries.
The risk volume that is subject to credit risk manage-
ment includes all of the Mercedes-Benz Group's world-
wide creditor positions with financial institutions, issuers
of securities, customers in the financial services business,
as well as trade receivables. Credit risks with financial
institutions and issuers of securities arise primarily from
investments executed as part of our liquidity manage-
ment and from the application of derivative financial
instruments. The management of these credit risks is
mainly based on an internal limit system that reflects the
creditworthiness of the respective financial institution or
issuer. The credit risk with customers of the automotive
business results from relationships with contracted deal-
erships and general agencies, other corporate customers
and retail customers. In connection with the export busi-
ness, general agencies that according to the creditworthi-
ness analyses are not sufficiently creditworthy are gener-
ally required to provide collaterals such as first-class
bank guarantees. The credit risk with end-customers in
the financial services business is managed by Mercedes-
Benz Mobility on the basis of a standardised risk-man-
agement process. In this process, minimum requirements
are defined for the sales-financing and leasing business
and standards are set for credit processes, as well as for
the identification, measurement and management of
risks. Key elements for the management of credit risks
are appropriate creditworthiness assessments supported
by statistical risk-classification methods, as well as struc-
tured portfolio analysis and portfolio monitoring.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
65
Management of pension assets (plan assets) includes
the investment of the assets to cover the corresponding
pension obligations. The plan assets are legally separated
from the Group's assets and are invested primarily in
funds; they are not available for general business pur-
poses. The plan assets are spread across a broad range
of investment categories such as equities, fixed-interest
securities, alternative investments and real estate,
depending on the expected development of pension
obligations and with the help of risk-return optimisation.
The performance of the asset management is measured
by comparison with defined benchmark indices. The
investment risks are limited via a Group-wide guideline.
In addition, there are local regulations for risk manage-
ment for the individual plan assets. Additional informa-
tion on pension plans and similar obligations is provided
in Note 23 of the Notes to the Consolidated Financial
Statements.
Management of market-price risks aims to limit the
impact of fluctuations in foreign exchange rates and
interest rates on the earnings of the divisions and the
Group. The Group's overall exposure to these mar-
ket-price risks is determined to provide a basis for hedg-
ing decisions, which include the definition of hedging vol-
umes and corresponding periods, as well as the selection
of hedging instruments. The hedging strategy is specified
at Group level and uniformly implemented. The deci-
sion-making body is the Treasury Risk Management Com-
mittee, which meets regularly.
Cash management centrally determines the cash
requirements and surpluses. By means of cash-pooling
procedures, liquidity is centrally concentrated on bank
accounts of the Mercedes-Benz Group in various curren-
cies. Most of the payments between Group companies
are made through internal clearing accounts so that the
number of external cash flows is reduced to a minimum.
The Mercedes-Benz Group has established standardised
processes and systems to manage its bank accounts and
internal cash-clearing accounts, and to execute auto-
mated payment transactions.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Legal proceedings (and related measures)
-1,095
3,493
Adjusted EBIT
20,655
16,245
1,927
2,428
55
Return on sales/return on equity (in %)
Adjusted return on sales/return on equity (in %)¹
In millions of euros
51
2021
11.0%
11.2%
16.8%
16.8%
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Group
Cars
14.6%
14.6%
Vans
658
Expenses in connection with adjustments of the business activities in
Russia
255
-88
61
EBIT
20,458
16,340
2,428
-207
Legal proceedings (and related measures)
709
119
15
-6
-
-
M&A transactions
-631
-863
-36
268
110
of Mercedes-Benz Mobility
Mobility
Revenue
-2,808
-1,425
-233
-900
-250
Research and non-capitalised development costs
-5,467
-4,992
-442
General administrative expenses
-33
2,822
3,319
104
34
-635
EBIT
16,028
12,487
1,143
Other income/expense
Reconciliation
144
-1,292
Cost of sales
133,893
96,712
14,735
27,941
-5,495
-103,218
-73,773
-11,729
-692
-22,890
Gross profit
30,675
22,939
3,006
5,051
-321
Selling expenses
-9,194
-7,354
5,174
Net assets
Total equity
-217
38,189
33,031
+16
Mercedes-Benz Vans
885
835
+6
Intangible assets¹
15,275
Mercedes-Benz Cars
14,387
Mercedes-Benz Mobility¹
14,466
15,681
-8
Property, plant and equipment¹
26,942
27,496
-2
Net assets
+6
Leased assets¹
% change
2021
-207
-1,094
+887
14,918
23,608
-8,690
63
2 To the extent not allocated to Mercedes-Benz Mobility.
B.13
22/21
Net assets (average)
B.14
Net assets of the Mercedes-Benz Group at year-end
2022
2021
22/21
In millions of euros
% change
In millions of euros
At 31 December
2022
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
-718
14,038
-3
+638
1,095
8,078
DTHAG³
+1
-15,097
-15,179
for other risks¹
Equity-method investment in
Less trade payables¹
Less provisions
7,625
business²
+7
6,875
7,328
Trade receivables¹
Daimler commercial vehicle
+19
20,976
-100
14,400
-11,101
+15
of the segments
53,540
49,547
+8
Inventories¹
24,906
131
-3,818
income taxes5
-9,670
Assets and liabilities from
-14,391
-12,595
and liabilities¹
Less other assets
-16
361
303
investments4
Other equity-method
-12
3,878
-4,822
-12,401
-209
Return on sales/return on equity (in %)
Adjusted return on sales/return on equity (in %)¹
12.9%
7.8%
22.3%
13.1%
8.3%
22.0%
3,449
1 Adjusted return on sales is calculated as the ratio of adjusted EBIT to revenue. The adjusted return on equity is determined as the ratio of adjusted EBIT to the average equity of the quarters.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Value added
As described in the section Performance measurement
system in chart B.03, value added is calculated as the
difference between the measure of earnings and the cost
of capital. The measure of earnings for the segments is
EBIT and for the Group is net operating profit, which in
addition to the EBIT of the segments also includes earn-
ings effects for which the segments are not accountable
or which are attributable to the discontinued operations,
such as income taxes and other reconciliation items. The
cost of capital used in the calculation of value added is
based on average net assets multiplied by the
cost-of-capital rate.
Table B.11 shows value added for the Mercedes-Benz
Group and for the individual segments. The reconciliation
of the segments' EBIT to net operating profit as well as
the average net assets are shown in tables B.12 and B.13.
Table B.14 shows how net assets are derived from the
consolidated statement of financial position.
The Mercedes-Benz Group's value added amounted to
€10.2 billion in 2022, representing a return on net assets
of 25.5% (2021: 40.4%). This was once again substantially
higher than the Group's required cost of capital rate of
8%. Adjusted for the earnings from discontinued opera-
tions before interest and taxes included in the prior year,
the value added of the Mercedes-Benz Group increased,
mainly due to the positive development of EBIT of the
industrial business divisions. The Group's average net
assets were virtually unchanged from the previous year.
At the Mercedes-Benz Cars segment, value added of
€11.8 billion was significantly higher than the prior-year
amount of €8.5 billion, primarily due to the very positive
earnings development. The increase in average net
assets of €5.2 billion had a slightly negative impact on
value added. This was mainly due to higher average
inventories and carrying amounts of equity-method
investments partly offset by increasing average trade
payables.
The value added of the Mercedes-Benz Vans segment
increased substantially to €1.8 billion. This was mainly
due to the very positive earnings development. Here the
average net assets showed only a minor increase to
€0.9 billion which was primarily due to slightly increased
average inventories and decreasing average provisions.
At the Mercedes-Benz Mobility segment, value added
amounted to €0.7 billion (2021: €1.6 billion). The seg-
ment's return on equity reached 16.8% (2021: 22.3%).
The development of the return on equity primarily
reflects the decrease in earnings of €1.1 billion. By con-
trast, the decrease in average total equity had a slightly
positive effect on the return on equity.
B.11
62
Value added
1,229
17,158
-362
422
Other reconciliation5
+148
-1,815
-4,507
from income taxes¹
Assets and liabilities
Restructuring measures
12,689
549
27
45
41
M&A transactions
247
-508
-89
844
Adjusted EBIT
436
-5,540
In millions of euros
2021
12,487
+3,853
1,897
1,143
+754
2,428
3,493
-1,065
EBIT of the segments
16,340
20,665
+3,542
Profit/loss from discontinued opera-
-3,015
Income taxes²
Other reconciliation²
Net operating profit
Mercedes-Benz Group
1 Adjusted for after-tax interest income.
12,401
17,123
2022
Mercedes-Benz Cars
Mercedes-Benz Vans
Mercedes-Benz Mobility
Change
22/21
Change
Mercedes-Benz Group
10,236
18,936
-8,700
Mercedes-Benz Cars
Mercedes-Benz Vans
Mercedes-Benz Mobility
11,757
8,523
+3,234
In millions of euros
1,791
+748
692
1,634
-942
B.12
Reconciliation to net operating profit
2022
2021
22/21
1,043
4,106
Restructuring measures
-3
Cars
Mercedes-Benz
Mercedes-Benz
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
69
In the reporting period, the cash flow from financing
activities (table B.15) resulted in a cash outflow of
€19.0 billion (2021: €19.1 billion). The increase compared
to previous year is due to the lower net-increase in
financing liabilities due to the positive liquidity situation
and was fully offset by the higher dividend payment
made to the shareholders of Mercedes-Benz Group AG.
Cash and cash equivalents decreased by €5.5 billion
compared with 31 December 2021, after taking exchange-
rate effects into account. Total liquidity, which also
includes marketable debt securities and similar invest-
ments, decreased by €6.0 billion to €24.7 billion.
Cash flow from financing activities of the
Mercedes-Benz Group
In 2022, a cash inflow in the amount of €1.3 billion which
related to the payments received from the sale of inter-
company loans in connection with the sale of units of the
truck financing business to Daimler Truck Holding AG or
its subsidiaries and does not legally relate to Mercedes-
Benz Mobility, was economically allocated to the cash
flow from investing activities of Mercedes-Benz
Mobility. An opposing repayment of the financing liabili-
ties in the same amount was recognized in the cash flow
from financing activities of Mercedes-Benz Mobility.
In 2022, the free cash flow of the Mercedes-Benz
Group resulted in a cash inflow of €12.8 billion (2021:
€16.9 billion). Besides the effects of the free cash flow of
the industrial business, the free cash flow of the
Mercedes-Benz Group is mainly affected by the leasing
and sales-financing business of Mercedes-Benz Mobility.
Vans
Free cash flow of the Mercedes-Benz Group
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
68
2 For 2021 the free cash flow of the industrial business is adjusted by €0.7 billion for the free
cash flow of the spin-off Daimler commercial vehicles business.
-831
1 For 2021 the consolidated cash flows from continuing and discontinued operations are
presented.
10,125
9,294
M&A transactions
Free cash flow of the industrial
business adjusted
In the interest of greater transparency in reporting on the
ongoing business, an adjusted free cash flow of the
industrial business is also reported in table B.16. The
adjustments from legal proceedings include payments by
the industrial business in connection with ongoing gov-
ernmental and legal proceedings and related measures
taken with regard to Mercedes-Benz diesel vehicles. The
adjustments from restructuring measures include pay-
ments made in connection with the personnel-cost-opti-
mization programmes in the reporting period. The adjust-
ments from M&A transactions encompass cash inflows
from the restructuring of retail activities in Canada and
the cash outflow from investing in Automotive Cells Com-
pany SE (2021: sale of cellcentric). The adjusted free cash
flow of the industrial business amounted to a total of
€9.3 billion (2021: €10.1 billion).
-55
2022
2022
-167
-684
-2,936
Change in working
capital
1,143
1,897
12,487
16,340
EBIT
2021
2021
In millions of euros
Reconciliation from CFBIT to the free cash flow of the industrial
business
B.17
Net investments in
property, plant
B.18
CFBIT
As well as being calculated on the basis of the disclosed
cash flows from operating and investing activities, the
free cash flow of the industrial business can also be
calculated on the basis of the cash flows before interest
and taxes (CFBIT) of the automotive segments. The rec-
onciliation from the CFBIT of the automotive segments
to the free cash flow of the industrial business includes
payments of taxes and interests of the industrial busi-
ness. The other reconciliation items primarily comprise
eliminations between the segments and items that are
allocated to the industrial business but for which the
automotive segments are not responsible. Table B.17
shows the reconciliation of the CFBIT of automotive seg-
ments to the free cash flow of the industrial business.
CFBIT and cash conversion rate of
the automotive segments
In millions of euros
2021
2022
-20
-31
-241
disposed of in the deconsolidation
of Daimler's commercial vehicles
business
Repayment of financing of Daimler's
commercial vehicles business
Cash and cash equivalents
Right-of-use assets¹
Change in marketable
debt securities and
similar investments¹
-594
15,493
Other income/expense
Cash provided by
operating activities¹
Cash used for
investing activities¹
+505
Other adjustments²
-6,059
22/21
Change
2021
2022
In millions of euros
Free cash flow of the industrial business
B.16
Negative effects resulted in addition from the develop-
ment of working capital, mainly due to the increase in
inventory levels as a result of high inventories in the
course of delivery. Furthermore, income taxes paid
increased in comparison to the prior year, due to the sig-
nificant improvement in the profit from continuing opera-
tions in the reporting period. Also the higher investment
in capital expenditure on property, plant and equipment
and intangible assets affected the free cash flow of the
industrial business negatively.
The slight increase in free cash flow of the industrial busi-
ness of €0.2 billion to €8.1 billion was influenced by a sig-
nificant year-on-year improvement in profit from continu-
ing operations before taxes. Cash inflows from the
restructuring of sales activities in Canada amounting to
€0.6 billion and the sale of dealerships in various coun-
tries amounting to €0.4 billion had a positive impact,
while a cash outflow of €0.4 billion from the investment
in Automotive Cells Company SE had an opposite effect
(2021: cash inflow of €0.3 billion from the sale of cellcen-
tric). In the previous year, the free cash flow was
impacted by higher payments of €0.8 billion mainly
resulting from the settlement of civil and environmental
claims made by several US authorities in 2020 in connec-
tion with emission control systems used in certain diesel
vehicles.
In 2022, the free cash flow of the industrial business
amounted to €8.1 billion and was thus on the same level
as the previous year's figure of €7.9 billion.
-5,554
-86
Free cash flow of the
industrial business
-490
615
374
-783
1,661
878
+248
7,880
8,128
+674
Legal proceedings
(and related measures)
Restructuring measures
-705
-5,254
5,254
+6,853
-6,853
-201
-495
-696
-1,735
1,245
-31
Free cash flow of the industrial business
The free cash flow of the industrial business is regarded
as a key performance indicator for the Mercedes-Benz
Group. The free cash flow of the industrial business is
derived from the reported cash flows from operating and
investing activities in table B.16. The cash flows from
sales and purchases of marketable debt securities and
similar investments included in cash flow from investing
activities are deducted, as those securities are allocated
to liquidity and changes in them are thus not a part of the
free cash flow. On the other hand, effects in connection
with the recognition and measurement of right-of-use
assets, which result from lessee accounting and are
largely non-cash items, are included in the free cash flow
of the industrial business. Other adjustments relate to
effects from the financing of the Group's own dealerships
and effects from internal deposits within the Group. In
addition, the calculation of the free cash flow of the
industrial business includes the cash flows to be shown
under cash flow from financing activities in connection
with the acquisition or disposal of interests in subsidiar-
ies without loss of control.
Net financial
investments
-125
321
M&A transactions
CFBIT adjusted
The CFBIT of the automotive segments is derived from
EBIT and the change in net assets, and also includes
additions to right-of-use assets. Table B.18 shows the
composition of CFBIT for Mercedes-Benz Cars and
Mercedes-Benz Vans. The line Other mainly comprises
the non-cash effective earnings impacts from the equity
investment result from Beijing Benz Automotive Co., Ltd.
(BBAC) and the as adjustments described M&A transac-
tions, as well as payments made for payables and provi-
sions recognized in the previous years. Opposite effects,
include dividends received from BBAC.
702
335
956
549
Legal proceedings
(and related measures)
Restructuring
measures
826
504
1,731
10,718
CFBIT
In millions of euros
2021
2022
2021
2022
Vans
Cars
9,344
Mercedes-Benz
17
-175
10
70
1 Adjusted cash conversion rate is the ratio of adjusted CFBIT to adjusted EBIT.
1.3
1.1
0.8
0.7
version rate¹
Adjusted cash con-
53
1,229
12,689
16,245
EBIT adjusted
1,581
2,040
10,714
11,413
-43
-90
1,927
208
Mercedes-Benz
7,880
-567
-141
-2,156
-2,122
Other
485
452
5,695
5,943
CFBIT
impairments
Depreciation and
-222
-364
-5,873
-6,715
intangible assets
and equipment and
7
54
amortisation/
Reconciliation to CFBIT adjusted
10,718
1,731
8,128
Free cash flow of the industrial business
B.19
-256
71
Other reconciling items
-164
-255
Interests paid/received
9,344
-1,870
Income taxes paid/refunded
826
1,731
CFBIT Mercedes-Benz Vans
9,344
10,718
CFBIT Mercedes-Benz Cars
Table B.19 shows the reconciliation from CFBIT to
adjusted CFBIT and the adjusted cash conversion rate.
Mercedes-Benz Cars achieved an adjusted cash conver-
sion rate of 0.7 (2021: 0.8) and Mercedes-Benz Vans an
adjusted cash conversion rate of 1.1 (2021: 1.3).
826
-4,137
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
14,899
1 In the consolidated statement of cash flows, the consolidated cash flows from continuing and discontinued operations are presented. The cash flows from continuing and discontinued oper-
ations are shown in Note 3 to the Consolidated Financial Statements. A reconciliation from continuing and discontinued operations to profit/loss before income taxes is also included in Note
3 to the Consolidated Financial Statements.
1,428
3,810
Vehicles on operating leases
3,929
-5,329
-50
2
3,879
-5,327
-995
Receivables from financial services
108
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
In 2022, EBIT of the Mercedes-Benz Mobility segment
amounted to €2,428 million (2021: €3,493 million);
adjusted EBIT was €2,428 million (2021: €3,449 million).
Adjusted return on equity of 16.8% was below the
adjusted prior-year figure of 22.0%.
The main reasons for the development of revenue in
2022 were increased credit risk costs due to the weaker
macroeconomic outlook and higher refinancing costs.
The spin-off and hive-down of the commercial vehicle
business and the resulting lower contract volume com-
pared with the previous year also had a reducing effect
on EBIT. On the other hand, exchange-rate effects and
the improvement in operating performance of the fleet
services business had a positive effect on earnings.
Among other things, adjusted EBIT in the prior year
included a positive earnings contribution of €89 million
from the sale of shares in Via Transportation Inc.
The reconciliation of the segments' EBIT to Group EBIT
comprises gains and/or losses at the corporate level and
the effects on earnings of eliminating intra-Group trans-
actions between the segments.
In 2022, items at the corporate level resulted in expenses
of €225 (2021: €1,087 million). This includes the positive
effect on earnings of €226 million from the equi-
ty-method investments in Daimler Truck Holding AG
(2021: expenses of €1 million). Earnings in the previous
year were also impacted by impairment losses of
€120 million on the carrying amount of the investment in
BAIC Motor. Detailed information on the equity-method
measurement of the Daimler Truck Holding AG is pro-
vided in Note 14 of the Notes to the Consolidated Finan-
cial Statements. On the other hand, earnings were
affected by adjustments due to material individual trans-
actions, especially in the previous year. The M&A transac-
tions include expenses of €844 million in connection
with the sale of individual investments and business
activities to Daimler Truck. In 2022, the associated
expenses amounted to €268 million. Further information
on this is provided in Note 3 of the Notes to the Consoli-
dated Financial Statements.
The elimination of intra-Group transactions resulted
in earnings of €18 million in 2022 (2021: expenses of
€8 million).
The reconciliation from EBIT to adjusted EBIT is shown
in table B.10.
-2
61
-1,615
3,043
-1,451
-872
-2,361
-4,137
-3,812
-5,009
Income taxes paid
1,625
1,605
4,805
1,625
from equity-method investments
Dividends received
-714
67
-547
-125
-1,261
358
Other operating assets and liabilities
1,605
Cash flow from operating activities
B.10
In millions of euros
26,674
3,668
3,967
-289
Selling expenses
-9,482
-7,568
-1,359
-722
34,020
167
-2,584
-1,460
-252
-729
-143
Research and non-capitalized development costs
-5,602
-5,184
-415
General administrative expenses
EBIT Mercedes-Benz Group
Gross profit
-22,987
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Group
Cars
Vans
Mobility Reconciliation
5,466
2022
Cost of sales
150,017
111,601
17,217
26,954
-5,755
-115,997
-84,927
-13,549
Revenue
16,894
483
14,899
-19,032
-49
-19
-49
-19
24,549
-119
-1,775
-5,550
-19,059
-1,810
-4,234
-13,455
-9,110
-17,200
-13,344
-5,669
-167
2,101
-6,059
-5,554
-3,745
-6,226
1,305
-13,374
-1,305
-5,658
2 - 62
62
thereof cash and cash equivalents classified as assets held for sale at
end of period
5,148
3,585
18,034
14,094
23,182
17,679
2,746
-12,533
Cash and cash equivalents at end of period
-1
789
89
870
88
and cash equivalents
Effect of foreign exchange rate changes on cash
-6,526
-2,746
81
-3,453
-35
18
and similar investments
Acquisitions and sales of marketable debt securities
254
2,172
-34
316
220
2,488
Investments in and disposals of shareholdings and other business
operations
Repayment of financing of Daimler's commercial vehicles business
-139
-7,181
-6,838
17
-6,899
intangible assets
Additions to property, plant and equipment and
9,056
1,995
15,493
-61
462
-7,320
490
-1,309
802
478
819
-235
-5,254
-5,489
Cash flow from financing activities
Internal equity and financing transactions
Other transactions with shareholders
496
Change in financing liabilities
Cash flow from investing activities
Other
Cash and cash equivalents disposed of from the deconsolidation of
Daimler's commercial vehicles business
6,853
6,853
-64
-28
Dividends paid
-1,245
2022
Graphic B.26 shows the structure of the balance sheet by
maturity.
Before eliminations between segments, Mercedes-Benz
Mobility accounted for €142.5 billion (2021: €146.2 billion)
of the balance sheet total. During the reporting period, all
intra-group eliminations between the industrial business
and Mercedes-Benz Mobility with regard to the balance
sheet were allocated to the industrial business. The
reported size of the industrial business is determined by
generally subtracting the unconsolidated balance sheet
total of Mercedes-Benz Mobility from the consolidated
balance sheet total of the Group. Consequently, intra-
Group matters relating to the relationship between the
industrial business and Mercedes-Benz Mobility are gen-
erally allocated to Mercedes-Benz Mobility and included
in its balance sheet. This method of presentation reduces
the balance sheet total of the industrial business. At the
same time, this means that the share of Mercedes-Benz
Mobility's balance sheet total in the Consolidated State-
ment of Financial Position is shown as being higher than
would be the case if Mercedes-Benz Mobility were pre-
sented on a consolidated basis.
The intangible assets of €15.9 billion (2021: €15.0 billion)
particularly include €13.5 billion of capitalized develop-
ment costs (2021: €12.7 billion). Of the development
costs, a share of €12.7 billion (2021: €11.9 billion) was
attributable to the Mercedes-Benz Cars segment and
€0.8 billion (2021: €0.8 billion) to the Mercedes-Benz
Vans segment. Development costs capitalized in the
reporting year amounted to €2.9 billion (2021: €2.4 bil-
lion) and represent 34% (2021: 27%) of the Group's total
research and development expenditure.
Property, plant and equipment decreased to €27.3 bil-
lion (2021: €27.9 billion), partly as a result of the adjust-
ment and realignment of capacities within the global pro-
duction network. In 2022, €3.5 billion (2021: €4.6 billion)
was invested worldwide, particularly at our production
and assembly sites for innovative products and new
technologies, as well as for the modernization of the
global production network. The German sites, invest-
ments in property, plant and equipment accounted to
€2.3 billion (2021: €2.8 billion).
Equipment on operating leases and receivables from
financial services rose to a total of €127.1 billion (2021:
€125.1 billion). The increase adjusted for currency transla-
tion effects was €1.1 billion. At 49%, the leasing and
sales-financing business as a proportion of total assets
was slightly above the prior year's level of 48%.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Inventories increased significantly from €21.5 billion to
€25.6 billion as a result of higher stocks earmarked for
delivery. As a result, the share of total assets is 10%,
higher than the previous year's level of 8%. The increase
relates in particular to finished goods, spare parts and
products held for resale at €4.2 billion.
76
At €8.1 billion, trade receivables were higher than the
prior-year-figure of €7.7 billion.
Compared to 31 December 2021, cash and cash equiva-
lents decreased by €5.4 billion to €17.7 billion. The
decrease was mainly due to the lower net refinancing and
the dividend payment to the shareholders of Mercedes-
Benz Group AG in the second quarter.
Current assets accounted for 40% of the balance sheet
total, which is at the prior-year level. Current liabilities
accounted for 34% of the total balance sheet totals,
which is also at the prior-year level.
Marketable debt securities and similar investments
decreased compared with 31 December 2021 from
€7.6 billion to €7.1 billion as part of the liquidity manage-
ment. Those assets include the debt instruments that are
allocated to liquidity, most of which are traded in active
markets. They generally have an external rating of A or
better.
Equity-method investments decreased to €13.5 billion
(2021: €13.6 billion). Investments accounted for using the
equity method comprise in particular the carrying
amounts of our investments in Daimler Truck Holding AG
and Beijing Benz Automotive Co., Ltd.
liabilities
103 103
Non-current
liabilities
Other financial assets of €7.9 billion were above the
previous year's level of €6.3 billion. They consist primarily
of derivative financial instruments, equity instruments
and debt instruments, shares in non-consolidated sub-
sidiaries, and loans and other receivables from third par-
ties. The increase is primarily due to higher positive mar-
ket values of derivative financial instruments.
157 157
73
87
99
"
Current
25
88
85
88
2021
Equity and
liabilities
Equity
31
The other assets of €9.9 billion (2021: €9.0 billion) par-
ticularly include deferred taxes and tax refund claims.
thereof liquidity
Equity and liabilities
27,514
14,400
14,038
44,471
41,552
Equipment on operating leases
362
260 260
308
27,497
26,942
27,859
27,250
Property, plant and equipment
619
594
14,386
15,275
15,005
15,869
Intangible assets
Assets
2021
2022
2021
At 31 December
At 31 December
2022
2021
At 31 December
2022
30,071
Mobility
Receivables from financial services
80,625
14,094
23,120
17,679
Cash and cash equivalents
798
772
6,875
7,328
7,673
8,100
Trade receivables
490
715
20,976
24,906
21,466
25,621
Inventories
471
271
13,117
13,259
13,588
13,530
Equity-method investments
80,708
85,615
-83
-66
85,549
18,034
Industrial Business
Mercedes-Benz
A-
A-
A-
End of 2021
End of 2022
Fitch
Moody's
S&P
Short-term credit rating
DBRS
Scope
Fitch
Moody's
S&P
Long-term credit rating
Credit ratings
B.24
At the end of the financial year, S&P Global Ratings, Fitch
Ratings and Scope Ratings changed their outlook for the
long-term credit rating from stable to positive.
Mercedes-Benz Group AG had A ratings with all five agen-
cies at the end of the year 2022. The long-term and
short-term credit ratings for Mercedes-Benz Group AG
and its finance companies remained unchanged in 2022.
Table B.24 provides an overview of the credit ratings.
Credit ratings
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
13,591
10,538
0.25
0.91
banking business
Deposits in the direct
23,997
24,738
A2¹
Group
A3
A
Mercedes-Benz
In millions of euros
Condensed statement of financial position
B.25
Table B.25 shows the condensed statement of financial
position for the Mercedes-Benz Group as well as for the
industrial business and Mercedes-Benz Mobility.
At €260.0 billion, the Group's balance sheet total was at
the same level as in the previous year (2021: €259.8 bil-
lion); the exchange-rate effects amounted to €0.9 billion.
Financial position
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
74
On 24 February 2023, Moody's Investors Service
(Moody's) upgraded its long-term rating for Mercedes-
Benz Group AG from A3 to A2 with a stable outlook. At
the same time, Moody's lifted its short-term rating from
P-2 to P-1. With this upgrade, Moody's is recognizing
Mercedes-Benz Group's track record of improved margins
over the past two years, the company's strategy to focus
on higher margin premium and luxury vehicles while
transforming its product portfolio to all-electric vehicles
and its reduced financial debt.
On 23 December 2022, Scope Ratings (Scope) raised the
outlook for Mercedes-Benz Group AG from stable to
positive and at the same time confirmed the long-term
and short-term ratings at A and S-1. Scope justified this
step with the expectation that the profitability of the
Group in 2023 will improve structurally and show strong
resilience despite the deteriorating market environment
and inflationary pressure.
S&P Global Ratings (S&P) changed its outlook for the
long-term rating from stable to positive on 16 November
2022. At the same time, it confirmed the long-term A-
and short-term A-2 ratings of Mercedes-Benz Group AG
and its subsidiaries included in the rating. S&P believes
the Group's focus on cost reduction and model portfolio
optimization could help mitigate the financial impact of
emerging uncertainties, such as a likely slowdown in
automobile demand, strong input cost inflation, and
potential production stoppages due to component or
energy supply shortages in the 2023-2024 period.
On 24 October 2022, Fitch Ratings (Fitch) raised the
outlook for Mercedes-Benz Group AG from stable to
positive and at the same time confirmed the long-term
and short-term ratings at A- and F-1. Fitch justified this
step with the expectation that the profitability and free
cash flow of Mercedes-Benz Group AG will improve struc-
turally. This should make the Group more resilient overall
to negative macroeconomic developments and weaker
demand, according to Fitch.
R-1 (low)
S-1
F1
P-2
A-2
A (low)
A
Scope
1 As of 24 February 2023
R-1 (low)
DBRS
S-1
F1
P-11
A-2
A (low)
A-
2.54
3,585
Marketable debt securities
Contract and refund liabilities
2,716
2,800
5,089
5,128
7,805
7,928
Other financial liabilities
985
1,103
9,670
11,101
10,655
12,204
Trade payables
51,773
48,932
21,770
13,119
73,543
62,051
thereof non-current
70,193
70,454
-17,893
-20,668
52,300
49,786
thereof current
10,554
121,966
9,909
9,567
Current assets
Non-current assets
Assets
Assets
In billions of euros
Balance sheet structure Mercedes-Benz Group
B.26
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
75
146,196
142,524
113,635
117,491
259,831
260,015
Total equity and liabilities
123
46
169
Liabilities held for sale
4,680
4,506
6,282
9,402
10,962
13,908
Other liabilities
342
320
10,234
5,086
119,386
-7,549
772
9,043
9,874
Other assets
-5,140
6,260
7,931
Other financial assets
571
710
302
113
873
823
thereof non-current
417
267
6,289
5,970
6,706
6,237
988
977
6,591
6,083
7,579
7,060
thereof current
and similar investments
-8,207
-152
3,877
13,071
9,102
125,843
111,837
Financing liabilities
936
833
20,385
16,211
21,321
17,044
Provisions
14,448
13,576
58,719
72,964
73,167
86,540
Equity
Equity and liabilities
146,196
142,524
113,635
259,831 117,491
260,015
Total assets
2,941
201
3,142
Assets held for sale
9,195
14,467
Following the disposals in 2022 of parts of the financial
services business and other activities remaining from the
previous year, the Group no longer reports any assets
held for sale and liabilities held for sale relating to the
commercial vehicle business as of 31 December 2022.
3.03
to financial
Condensed version in accordance with the German Commercial Code (HGB)
Mercedes-Benz Group AG
Combined Management Report with Non-Financial Declaration
Annual Report 2022 Mercedes-Benz Group
749
1,011
34,965
39,944
79
4
Net assets
8,669
9,025
260 260
51,964
Segment liabilities
7,717
7,766
42,882
42,126
Other segment liabilities
952
1,259
8,648
9,838
In addition to reporting on the Mercedes-Benz Group,
the development of Mercedes-Benz Group AG in the
2022 is also described in this section.
Trade payables
year
Mercedes-Benz Group AG is closely linked with
Mercedes-Benz AG and functions as an operating busi-
ness entity that defines the Group's strategy. It also
makes strategic decisions for business operations and, as
the Group's parent company, ensures the effectiveness of
organizational, legal and compliance-related functions
throughout the Group.
22/21
31 Dec.
2021
31 Dec.
2022
Financing liabilities
In millions of euros
Net debt of the Mercedes-Benz Group
B.21
Net debt at Group level, which primarily results from refi-
nancing the leasing and sales-financing business,
decreased compared with 31 December 2021 by €6.7 bil-
lion to €88.1 billion. The derivation of net debt is shown
in table B.21.
Net liquidity of the industrial business
B.20
Compared with 31 December 2021, the net liquidity of the
industrial business increased by €5.6 billion to €26.6 bil-
lion. The increase is mainly due to the positive free cash
flow of the industrial business and positive exchange-
rate effects, which were partially offset by the dividend
payment made to the shareholders of Mercedes-Benz
Group AG.
To the extent that the Group's internal refinancing of the
financial services business is provided by the companies
of the industrial business, this amount is deducted in the
calculation of the net debt of the industrial business.
institutions
Net liquidity and net debt
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
80
Other operating income amounted to €0.3 billion (2021:
€0.1 billion) and primarily comprises income from the sale
of approximately 5% of the shares of Daimler Truck Hold-
ing AG to Mercedes-Benz AG with subsequent transfer to
the Mercedes-Benz Pension Trust e. V. The previous year's
figure included income from the sale of patents and
brands to Daimler Truck AG.
General administrative expenses amounted to
€0.8 billion (2021: €1.2 billion). The previous year's figure
included expenses in the amount of €0.2 billion for Pro-
ject Focus as well as expenses of €0.1 billion in connec-
tion with the transformation of the IT infrastructure.
Cost of sales amounted to €1.4 billion (2021: €1.5 billion)
and primarily comprises expenses incurred for the ser-
vices provided to companies of the Group.
Mercedes-Benz Group AG generated revenue of
€1.4 billion, primarily from the provision of services
to companies of the Group (2021: €1.5 billion).
The profitability of Mercedes-Benz Group AG in the year
2022 was characterized by a significantly higher income
tax expense.
An opposing effect resulted from an
improved operating profit and a higher financial income.
Net profit amounted to €8.9 billion (2021: €9.5 billion)
and was thus below the expected range of the previous
year's Outlook chapter. This is mainly due to financial
income being lower than expected in the previous year's
Outlook chapter.
Profitability
For Mercedes-Benz Group AG net profit or loss is the
main performance indicator.
The Annual Financial Statements of Mercedes-Benz
Group AG are prepared in accordance with the German
Commercial Code (HGB) and the provisions of the Ger-
man Stock Corporation Act (AktG). The Consolidated
Financial Statements are prepared in accordance with the
International Financial Reporting Standards (IFRS), as
adopted by the European Union (EU). This results in some
differences with regard to recognition and measurement
methods, primarily in connection with provisions, finan-
cial instruments, the leasing business and deferred taxes.
Mercedes-Benz Group AG is the parent company of the
Mercedes-Benz Group and has its headquarters in
Stuttgart. In the course of last year's spin-off and hive-
down of large parts of the Daimler commercial vehicles
business (Project Focus), it was resolved to rename
Daimler AG as Mercedes-Benz Group AG. This name
change was entered in the commercial register on
1 February 2022.
9,418
10,036
86,495
Other segment assets
Trade receivables
Inventories
Property, plant and equipment
Intangible assets
In millions of euros
Derivation of net assets of the automotive segments
B.27
Table B.27 shows the derivation of net assets for the
segments Mercedes-Benz Cars and Mercedes-Benz Vans.
They relate to the operating assets and liabilities
for which the automotive segments are responsible.
Net Assets
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
78
Further information on the assets presented in the state-
ment of financial position and on the Group's equity and
liabilities is provided in the Consolidated Statement of
Financial Position, table D.03, the Consolidated State-
ment of Changes in Equity, table D.05 and the related
notes in the Notes to the Consolidated Financial State-
ments.
Other liabilities of €13.9 billion (2021: €11.0 billion) pri-
marily include deferred taxes, tax liabilities and prepaid
expenses. The increase was primarily the result of higher
deferred taxes.
The contract and refund liabilities of €10.6 billion were
higher than the €9.9 billion of the previous year. They
include in particular deferred revenue from service and
maintenance contracts and extended warranties, as well
as obligations from sales transactions that are within the
scope of IFRS 15.
Other financial liabilities amounted to €7.9 billion (2021:
€7.8 billion). They mainly comprise liabilities from residu-
al-value guarantees, from payroll accounting, from deriv-
ative financial instruments, deposits received, and liabili-
ties from accrued interest on financing liabilities.
Trade payables increased compared to 31 December,
2021 from €10.7 billion to €12.2 billion, partly due to
higher costs. The trade payables of the Mercedes-Benz
Cars segment increased by €1.2 billion.
Financing liabilities of €111.8 billion were significantly
below the €125.8 billion of the previous year. The
decrease was due to the lower net refinancing as a result
of the positive cash flow situation. The financing liabili-
ties break down to 48% bonds, 22% liabilities to financial
institutions, 15% liabilities from ABS transactions and 9%
deposits in the direct banking business. The decrease in
deposits from the direct banking business is related to
the discontinuation of the retail deposit business by
2024. The financing liabilities available on 31 December
2022 relate primarily to the refinancing requirements of
the leasing and sales-financing business.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
77
Provisions also relate to liabilities from product warran-
ties of €6.6 billion (2021: €6.8 billion), from personnel
and social costs of €4.6 billion (2021: €4.6 billion) and
from liability and litigation risks and regulatory proceed-
ings of €2.8 billion (2021: €2.6 billion), as well as provi-
sions for other risks of €2.1 billion (2021: €1.9 billion).
The decrease was especially pronounced in the case of
provisions for pensions and similar obligations, which
were down from €5.4 billion to €1.0 billion, primarily due
to the significantly increased discount rate. The funded
status at 31 December 2022 was approximately 100%.
Provisions significantly decreased to €17.0 billion from
the previous year (2021: €21.3 billion). At 7%, they were
also below the prior-year level of 8% of the balance sheet
total.
Whereas the balance sheet total remained at the pri-
or-year level, equity increased by 18% compared with the
previous year. The Group's equity ratio of 31.1% was
accordingly significantly above the level at the end of
2021 (26.1%); the equity ratio for the industrial business
was 57.4% (2021: 47.0%). It is necessary to consider the
fact that the equity ratios at the end of 2021 and 2022
are adjusted for the paid and proposed dividend pay-
ments.
Compared to 31 December 2021, the Group's equity
increased from €73.2 billion to €86.5 billion, mainly as a
result of the positive earnings development. The increase
in equity also resulted from the gains of €2.3 billion
recognized directly in equity in connection with pension
obligations and the gains of €1.7 billion recognized
directly in equity from the measurement of derivative
financial instruments after taxes. Opposing effect arose
from the dividend of €5.3 billion paid to the shareholders
of Mercedes-Benz Group AG. Equity attributable to the
shareholders of Mercedes-Benz Group AG increased
accordingly to €85.4 billion (2021: €72.0 billion).
Segment assets
Mercedes-Benz Cars
Mercedes-Benz Vans
At 31 December
91,908
2,865
3,022
23,171
24,408
1,016
1,244
5,880
6,083
2,300
2,558
18,790
Change
22,419
1,936
25,566
25,010
1,286
1,276
13,088
13,988
2021
2022
2021
2022
At 31 December
1,951
Cash and cash equivalents
Marketable debt securities
and similar investments
As table B.20 shows, the net liquidity of the industrial
business is calculated as the total amount as shown in
the statement of financial position of cash, cash equiva-
lents and the marketable debt securities and similar
investments included in liquidity management, less the
currency-hedged nominal amounts of financing liabilities.
23,182
02.2027
11.2022
USD 750 million
Maturity
issuance
Volume
Month of
Finance Canada Inc.
Mercedes-Benz
Issuer
Benchmark issuances
B.22
17,679
At 31 December 2022, the total of financing liabilities
shown in the consolidated statement of financial position
amounted to €111.8 billion (2021: €125.8 billion).
The carrying amounts of the main refinancing instruments
and the volume-weighted average interest rates are
shown in table B.23. At 31 December 2022, these carrying
amounts are mainly denominated in the following curren-
cies: 46% in euros, 23% in US dollars and 15% in Chinese
renminbi.
In addition, since July 2018, the Mercedes-Benz Group
has had a syndicated credit line of €11 billion, which
was converted into a sustainability-linked loan in October
2022. The credit line had not been utilized as of
31 December 2022.
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
72
Bank credit was another important source of refinancing
in 2022. These loans were provided by globally active
banks as well as by banks operating nationally. The lend-
ers also included supranational banks such as the Euro-
pean Investment Bank.
In the reporting year, asset-backed securities (ABS)
were carried out successfully in Germany, Canada, Aus-
tralia and Japan during the reporting period. ABS transac-
tions with a total volume of CNY 24 billion were carried
out in China. Further one transactions in Great Britain
with a volume of GBP 1 billion was placed. In the United
States the asset-back securities credit line with a volume
of USD 4 billion was extended, as well as further ABS
transactions of USD 1.5 billion were placed.
The Mercedes-Benz Group also issued small volumes of
commercial paper in 2022.
In the Chinese market, Mercedes-Benz International
Finance B.V. placed three so-called panda bonds with a
total volume of CNY 6.5 billion. In addition, a large num-
ber of smaller bonds were issued in various currencies
and markets.
In the reporting period, the Group covered its refinancing
requirements through the issuance of bonds and other
means. As can be seen in table B.22, they include a
so-called benchmark issuance (a bond with a high nomi-
nal volume) by Mercedes-Benz North America LLC in the
US-dollar area and Mercedes-Benz Finance Canada Inc.
The situation in the bond markets in the reporting year
was significantly influenced by factors such as inflation
and interest rate increases, energy supply in Europe,
Covid-19 and supply chain constraints. The supporting
measures taken by governments and central banks meant
that risk premiums for companies with an invest-
ment-grade rating remained at a largely moderate level
during the year.
Various issuance programmes are available for raising
longer-term funds in the capital market. They include the
Euro Medium Term Note programme (EMTN) with a total
volume of €70 billion, under which Mercedes-Benz
Group AG and several subsidiaries can issue bonds in
various currencies. Other local capital-market pro-
grammes exist, which are significantly smaller than the
EMTN programme. Capital-market programmes allow
flexible, repeated access to the capital markets.
Mercedes-Benz Finance
North America LLC
USD 850 million
11.2022
11.2024
73
84,769
70,984
1.56
2.53
In millions of euros
in %
31 Dec.
2021
2022
2021
31 Dec.
31 Dec.
The funds raised by the Mercedes-Benz Group in the year
2022 primarily served to refinance the leasing and
sales-financing business. For that purpose, the
Mercedes-Benz Group made use of a broad spectrum of
various financing instruments in various currencies and
markets. They include bank loans, commercial paper in
the money market, bonds, promissory-note loans, cus-
tomer deposits at Mercedes-Benz Bank, and the securiti-
sation of receivables in the financial services business
(asset-backed securities).
Carrying values
Liabilities
Notes/bonds and
liabilities from
ABS transactions
Refinancing instruments
B.23
11.2027
11.2022
USD 500 million
Mercedes-Benz Finance
North America LLC
11.2025
11.2022
USD 650 million
Mercedes-Benz Finance
North America LLC
Average interest rates
31 Dec.
2022
Refinancing
Detailed information on the amounts and terms of the
main items of financing liabilities is provided in Notes 25
and 34 of the Notes to the Consolidated Financial State-
ments. Note 34 also provides information on the maturi-
ties of the other financial liabilities.
Detailed information on contingent liabilities and other
financial obligations is provided in Note 32 of the Notes
to the Consolidated Financial Statements.
6,591
24,625
20,177
Liquidity
6,083
and similar investments
Marketable debt securities
-3,940
18,034
14,094
Cash and cash equivalents
22/21
Change
31 Dec.
2021
31 Dec.
2022
In millions of euros
-1,375
327
-1,048
-5,503
7,060
7,579
Liquidity
24,739
-111,837
Financing liabilities
-519
30,761 -6,022
-125,905 +14,068
Financing liabilities
(nominal)
Net debt
-112,885
-88,146
-125,578
-94,817
+12,693
+6,671
Market valuation and
currency hedges
for financing liabilities
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
51,530
Financing liabilities
(nominal)
Liabilities from refinancing internal
dealerships
-42
-36
-6
Market valuation and
currency hedges
for financing liabilities
7,549
-508
-4,448
+11,426
Net liquidity
293
-1,340
6,460
26,637
-3,620
21,005
+10,080
+5,632
71
Contingent liabilities and other financial obligations
At 31 December 2022, the best estimate for potential
obligations from contingent liabilities was €4.1 billion
(2021: €2.7 billion).
In the context of its ordinary business activities, the
Group has also entered into other financial obligations
in addition to the liabilities shown in the Consolidated
Statement of Financial Position at 31 December 2022.
These financial obligations result from contractual com-
mitments to acquire intangible assets, property, plant
and equipment, and leased property, as well as irrevoca-
ble loan commitments.
-1,047
-3,877
General administrative expenses
11,271
11,785
Financial income
-1,470
-1,407
Cost of sales
1,488
1,422
Revenue
2021
-1,237
In millions of euros
Mercedes-Benz Group AG
Condensed statement of income of
B.28
The economic situation of Mercedes-Benz Group AG
mainly depends on the development of its subsidiaries.
Mercedes-Benz Group AG participates in the operating
profits and losses of its subsidiaries through dividend
distributions and profit-and-loss transfers. Its economic
situation therefore corresponds with that of the
Mercedes-Benz Group, which is described in the chapter
Overall Assessment of the Financial Year.
The income tax expense amounted to €2.5 billion (2021:
€0.7 billion). The rise is mainly due to the significant
increase in operating profit subject to income tax within
the tax group.
€11.8 billion. The increase in the financial income with
respect to the previous year is primarily due to higher
income from investments in subsidiaries and associated
companies. This was the result in particular of higher
profit transfers from subsidiaries. Despite the increase
compared to the previous year, the financial income
was lower than expected in the previous year's Outlook
chapter due to lower dividends from subsidiaries.
Financial income increased by €0.5 billion to
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Other operating income
293
141
Operating profit/loss
-444
-1,078
-752
2022
As described in the Corporate Profile, the Combined
Management Report includes the combined Non-Finan-
cial Declarations of Mercedes-Benz Group AG and of the
Mercedes-Benz Group. The Mercedes-Benz Group pub-
lishes the Non-Financial Declaration in accordance with
the provisions of sections 315b, 315c in connection with
sections 289b-289e of the German Commercial Code
(HGB). The Non-Financial Declaration contains the main
information on the aspects of environmental, employee
and social matters, combating corruption and bribery,
and respect for human rights. The information provided
in this declaration is presented in conformity with the GRI
Standards of the Global Reporting Initiative, insofar as
this complies with applicable law. Some aspects are pre-
sented in accordance with internal guidelines and defini-
tions.
sustainabilityreport.mercedes-benz.com/2021/servi-
cepages/downloads/files/tcfd-mercedes-benz-sr21.pdf
Risk and opportunity management is a firm component of
the Group-wide planning, controlling and reporting pro-
cess. It is designed to support the sustained achievement
of the corporate targets and to ensure risk awareness at
the Mercedes-Benz Group. In identifying sustainabili-
ty-related risks and opportunities, Mercedes-Benz Group
is guided by the topics identified by the materiality analy-
sis and thus includes the areas of action of the sustaina-
ble business strategy, for which concrete goals have
been assigned. Sustainability-related risks and opportu-
nities are understood to be conditions, events, or devel-
opments involving environmental, social or governance
factors (ESG), the occurrence of which may have an
actual or potential impact on the Mercedes-Benz Group's
profitability, liquidity and capital resources. This further
includes any risks and opportunities whose occurrence
may have a positive or negative impact on the economy,
the environment, or society.
Sustainability aspects as they relate to the environ-
ment include, among other things, the effects of cli-
mate conditions and changes, as well as the impact of
the Group's transformation process as a result of
changed political conditions, technological developments
and changing markets.
Labour law standards, occupational and product safety,
product liability and suppliers' compliance with labour
law standards are examples of circumstances categorized
86
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
as social issues. The area of governance is concerned
with matters such as honesty in tax affairs, measures
taken to prevent corruption, and ensuring data protection.
ESG-related risks and opportunities associated with the
Mercedes-Benz Group's own business activities, business
relationships and products and services, and which are
very likely to have a serious negative impact on the
non-financial aspects in accordance with Sections 315c,
289c of the German Commercial Code (HGB), are not cur-
rently apparent. Climate-related risks and opportunities
in connection with the recommendations of the Task
Force on Climate-Related Financial Disclosures (TCFD)
are environment factors and are thus also identified and
assessed as part of the risk management process. Addi-
tional information is available in the TCFD report
Sustainable investment
The implementation of the Mercedes-Benz Group's sus-
tainable business strategy requires a major amount of
investment. For this reason, one of the Group's goals is to
ensure that its securities are viewed by the capital mar-
ket as a sustainable investment. To this end, the
Mercedes-Benz Group maintains a continuous dialogue
with players on the capital market as representatives of
investors in equity and debt. Various platforms are used
here. In 2022, the Mercedes-Benz Group presented this
approach to investors and analysts at its first digital ESG
(Environmental, Social and Governance) Conference.
The Investor Relations & Treasury unit at Mercedes-Benz
Group AG works closely together with the company's
in-house sustainability departments and is also inte-
grated into the relevant committees. This is how the
Mercedes-Benz Group is responding to the fact that sus-
tainable investment has become a central investment
strategy - in particular for institutional investors, who
set especially high standards of transparency for external
reporting according to ESG criteria.
-
Detailed information on, among other things, the risk and
opportunity management system and the associated pro-
cesses can be found in the Risk and Opportunity Report
of this Annual Report.
In the reporting year, Mercedes-Benz Group AG con-
verted the existing credit line of €11 billion into a sustain-
ability linked loan (SLL). In this way, the company links its
credit line to sustainability achievements in the area of
climate change mitigation for example, the global
share of all-electric vehicles in the Mercedes-Benz fleet.
The arrangement fee for the existing credit line is reduced
if the Mercedes-Benz Group achieves the selected sus-
tainability targets. With this transformation, the company
also continues to implement its "Ambition 2039" in the
area of sustainable financing.
The framework is based on the Green Bond Principles
(the voluntary process guidelines of the International
Capital Market Association - ICMA) and the Green Loan
Principles, which are the joint voluntary process guide-
lines of the Loan Market Association (LMA) and the Asia
Pacific Loan Market Association (APLMA). In addition, the
Mercedes-Benz Group strives for the certification with
the highest rating - Dark Green for the planned 2023
framework update from the respected Centre for Interna-
tional Climate and Environmental Research (CICERO). It is
planned to be developed to be consistent with the signif-
icant contribution to the environmental objective of cli-
mate change mitigation under the technical screening cri-
teria of the EU taxonomy.
The Mercedes-Benz Group operates as an investor itself
when it invests the company's pension assets. ESG crite-
ria are also playing an increasingly important role in this
area.
87
10
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Combined Management Report with Non-Financial Declaration
For German pension assets, the following objectives have
been defined for the consideration of ESG criteria: Crea-
tion of transparency in dealing with sustainability aspects,
exploitation of opportunities from sustainable develop-
ments and the appropriate consideration of sustainability
risks. For the majority of German pension assets the
investments are made by asset managers to whom the
Mercedes-Benz Group issues individual mandates.
In coordination with the Investment Committees, the
Mercedes-Benz Group pays, as part of its sustainability
concept, increased attention to the consideration and
transparency of sustainability aspects in the investment
process. In addition, the risk and return aspects associ-
ated with sustainable investments are also taken into
account. For liquid asset classes of the German pension
assets, the Mercedes-Benz Group only works with invest-
ment managers who have signed the UN Principles for
Responsible Investment. It also uses a negative list to
exclude investing in companies and countries that do not
fulfil the Group's core requirements. Furthermore, the
Mercedes-Benz Group focuses on gradually integrating
sustainability aspects — via benchmarks or sustainability
performance indicators, for example into its mandates.
In 2022, the Mercedes-Benz Group also further expanded
its ESG-themed investments and took its first steps to
create an internal reporting system for various sustaina-
bility metrics for its German pension assets.
Tax obligation
-
-
In 2020, the Group developed a Group-wide Green
Finance Framework in order to position the Mercedes-
Benz Group even more effectively as a sustainable com-
pany worthy of investment and to enable it to utilize ESG-
based capital for its business development. It makes it
possible for the Group to finance investment targeted at
the development, production and customer financing of
all-electric vehicles through bonds and loans, for exam-
ple. The Mercedes-Benz Group has issued green bonds in
September 2020 and March 2021. In November 2022,
Mercedes-Benz Group issued its first green bond outside
the European market as a green panda bond in China.
Risk and opportunity management
The remuneration for the Board of Management and Level
1-3 executives, as well as for Level 4 managers in some
cases, includes both financial and sustainability targets in
the form of the variable components of the company
bonus. These consist primarily of transformation targets
including those involving CO2 emissions, due diligence
obligations in raw material procurement, and traffic
safety in addition to further non-financial targets. These
targets relate to the topics of customers, integrity and
employee commitment and diversity. Further information
can be found in the Remuneration report for 2022
group.mercedes-benz.com/remuneration-bom).
The Mercedes-Benz Group's internal principles and poli-
cies are founded on this international frame of reference
and other international principles, including the Core
Labour Standards of the International Labour Organisa-
tion (ILO), the Organisation for Economic Co-operation
and Development (OECD) Guidelines for Multinational
Enterprises and the UN Guiding Principles on Business
and Human Rights.
Net profit
-655
-2,464
Income taxes
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
The Mercedes-Benz Group has also formulated strategic
ambitions for each of the six areas of action.
Climate protection and air quality: Plans call for the
Mercedes-Benz new vehicle fleet to be CO2-neutral on
the balance sheet across the entire value chain by 2039
and to no longer have any relevant impact on NO2 lev-
els in urban areas by 2025.
Resource conservation: The Mercedes-Benz Group
wants to decouple resource consumption from busi-
ness volume growth.
Sustainable urban mobility: The Mercedes-Benz
Group wants to contribute to the improvement of the
quality of life in cities through its leading mobility and
transport solutions.
Traffic safety: The Mercedes-Benz Group is working to
make its vision of accident-free driving a reality as it
develops automated driving systems while also taking
social and ethical issues into account.
Data responsibility: The future of the Mercedes-Benz
Group consists of sustainable, data-based business
models. With these business models, it focuses on the
needs of its customers and the responsible handling of
data.
Human rights: The Mercedes-Benz Group has
assumed responsibility for respecting and upholding
human rights along its automotive value chain.
The Mercedes-Benz Group has defined three enablers, or
principles, that are crucial for achieving success in the six
areas of action: integrity, people and partnerships.
Materiality analysis
A comprehensive materiality analysis was carried out in
2021 in order to determine which sustainability topics are
particularly relevant for the Mercedes-Benz Group and its
stakeholders. This was completed in 2022.
This materiality analysis addressed the six strategic areas
of action as well as further potentially relevant sustaina-
bility topics and trends. A total of 17 topics were evalu-
ated, and these were further divided into sub-topics.
The basis for assessing the relevance of the sustainability
topics and trends was a comprehensive desk analysis
and an international online survey. The survey queried
approximately 15,000 people from 52 countries who
depicted relevant stakeholder groups such as employees,
private and business customers, interested consumers,
suppliers and business partners, investors, politicians
and government officials, scientists, and representatives
of government administrations and non-governmental
organizations (NGOs). In addition, the Mercedes-Benz
Group conducted around 20 interviews with both internal
and external experts from the aforementioned stake-
holder groups. The goals here were to assess the sustain-
ability performance of the Group to date and identify
sustainability trends in order to gauge the relevance of
the sustainability topics. The Mercedes-Benz Group also
took the first steps to evaluate the effects of its business
activities on the environment and society. In order to
assess topics from an outside-in perspective, the
Mercedes-Benz Group analysed competitors, media
reporting, key NGO positions, regulatory requirements
and information relevant to capital markets.
In a subsequent step, the sustainability topics that
resulted from this analysis were assessed by the
Mercedes-Benz Group with regard to financial position,
liquidity, cash flows, profitability and business develop-
ment in order to define the topics for this Non-Financial
Declaration. Consequently not all the strategic areas of
action are illustrated in this Non-Financial Declaration.
85
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Managing sustainability
The Mercedes-Benz Group manages the work in the stra-
tegic areas of action - alongside other tasks - by means
of an internal reporting process that uses detailed score-
cards. This process is supported by clear lines of respon-
sibility in the management and organizational structures
used at all of the divisions.
The Group Sustainability Board (GSB) is the central man-
agement body for all sustainability topics and reports to
the Board of Management. The GSB is chaired jointly by
Renata Jungo Brüngger (the Board of Management mem-
ber responsible for Integrity and Legal Affairs) and
Markus Schäfer (the Board of Management member
responsible for Development and Procurement, who is
also the Chief Technology Officer). The Chairman of the
Board of Management and all other Board of Manage-
ment members, as well as the managers of all relevant
functions and departments, are members of the GSB.
The operational work is done by the Sustainability Com-
petence Office (SCO), which consists of experts from the
units managed by the two Co-chairs of the GSB as well as
additional specialists from Corporate Strategy, Finance
and Corporate Communications. The SCO provides
advice to the specialist units and helps them complete
the tasks assigned to them by the GSB. The SCO also
monitors the progress made in the six areas of action and
the three enablers defined in the sustainable business
strategy. The results are reported to the GSB and the
Board of Management of Mercedes-Benz Group AG in the
form of detailed scorecards at least twice a year.
The Mercedes-Benz Group also uses the ten principles of
the UN Global Compact (UNGC) as a fundamental guide
for its business activities. As a founding member, it is
strongly committed to the UN Global Compact.
The Mercedes-Benz Group views itself as a responsible
company that endeavours to meet all of its global tax
obligations and use public funding responsibly. In this
way, the Group can also fulfil its social and ethical
responsibilities.
8,877
The Group's tax strategy operates according to the follow-
ing principles in particular:
-
An all-electric alternative is available for every model that
Mercedes-Benz offers
Mercedes-Benz is all-electric wherever market
conditions allow
Reduction of the CO2 emissions per car in the new vehicle
fleet by at least 50% along all stages of the value chain¹2
Reduction of CO2 emissions at Mercedes-Benz plants
(Scope 1 and 2) by 50%³
A fleet of new Mercedes-Benz cars and vans that are
CO2-neutral on the balance sheet along all stages of the
value chain
1 When market conditions allow
2 Compared to 2020, in relation to the entire value chain
3 Compared to 2018
from 2025
2025
By the end of
this decade
By the end of
this decade
All new vehicle architectures are electric
2030
As a player in the transport sector, the Mercedes-Benz
Group supports the Paris Climate Agreement: It is
convinced of the objectives of the agreement. About one
fifth of all greenhouse gas emissions in Europe are pro-
duced as a result of the transport of people and goods
on streets and roads. The Mercedes-Benz Group is taking
deliberate measures to counteract this trend and has
made climate change mitigation a core element of its
business strategy. The Group's ambition is to make the
entire Mercedes-Benz new vehicle fleet CO2-neutral on
the balance sheet across all stages of the value chain by
2039.
In order to achieve this goal, the Mercedes-Benz Group is
transforming the products and services that are at the
heart of its business activities. The company also takes
into account climate change mitigation in all of the life
cycle phases of its automobiles - from the supply chain
and its own manufacturing operations to the use and dis-
posal of the vehicles.
Climate change mitigation with vehicles
The Mercedes-Benz Group believes that the complete
electrification of its product range is the most important
lever for making its entire new vehicle fleet CO2-neutral
on the balance sheet across all stages of the value chain
by 2039. By the end of this decade, the Mercedes-Benz
Group wants to be all-electric wherever market condi-
tions allow. The strategic step to "Electric only" will
accelerate the transformation of Mercedes-Benz to an
all-electric and software-driven future. As early as
November 2021, the Mercedes-Benz Group underscored
its commitment to this transformation during the COP26
UN Climate Change Conference.
Responsibilities
The Board of Management of the Mercedes-Benz
Group AG is responsible for setting strategic goals,
including targets for reducing the CO2 emissions, and for
monitoring the progress made in achieving these goals.
The Product Steering Board (PSB) is responsible for the
car fleet. This body monitors the development of the CO2
emissions of the car fleet in markets in which such emis-
sions are regulated. It is also responsible for providing
forecasts. In its evaluations, the PSB takes into account a
variety of factors, including the increasing degree of vehi-
cle electrification and the changes that have been made
to legal requirements, for example those related to the
introduction of the WLTP certification procedure. The PSB
is assigned to the Committee for Model Policy and Prod-
uct Planning (AMP). The Product Strategy unit ensures
compliance with the CO2 fleet emission limits for vans
and reports on this regularly to the Van Executive Com-
mittee. The Committee for Model Policy and Product
Planning and the Van Executive Committee both inform
the Board of Management of Mercedes-Benz Group AG.
The Board of Management then decides which measures
need to be implemented. On the market side of the equa-
tion, price and volume control measures can also affect
our ability to achieve our CO2 targets over the short term.
For this reason, such measures are also discussed with
the Board of Management within the framework of regular
reporting on the current state of CO2 fleet compliance.
All-electric product range
The Mercedes-Benz Group's goal is to accelerate the pace
of expansion of its range of electric vehicles. Its commit-
ment to research and development work is correspond-
ingly great. Altogether, the Mercedes-Benz Group wants
to invest more than €60 billion between 2022 and 2026
for the transformation towards an all-electric and soft-
ware-driven future.
Since 2018, Mercedes-Benz AG has been offering battery
electric vehicles under the Mercedes-EQ brand. It is con-
tinuously expanding this brand's portfolio through the
addition of more models. During the reporting year,
90
2039
Increase the proportion of plug-in hybrids and
all-electric vehicles to as high as 50%¹
By the middle of
this decade
Mercedes-Benz offers all-electric vehicles (BEVS) in all
segments in which the brand is represented
In line with the principle of being a good corporate tax
citizen (i.e. fulfilling its resonsibility as a taxpayer), the
Mercedes-Benz Group conducts legal, proactive and
non-aggressive tax planning activities on the basis of
economic considerations ("tax follows business"). The
Mercedes-Benz Group also strives to work coopera-
tively, transparently and constructively with the tax
authorities. In this process, it maintains its legal stand-
points and defend its interests wherever it believes
such actions are appropriate and legitimate.
The Group tax strategy drawn up by the board of manage-
ment of the Mercedes-Benz Group AG defines the limits
of action here, and this strategy is further specified and
implemented by means of organizational and content-re-
lated policies, guidelines and instructions. The tax strat-
egy is regularly reviewed for appropriate adjustments.
The tax policies define the responsibilities, tasks and
obligations of those individuals at the Group who deal
with tax issues, and also contain specific provisions for
ensuring that legal requirements are met, thus raising the
awareness of tax issues among employees. Management
is kept informed about relevant tax issues by means of
monthly reports and regular communications, as well as
when required. Moreover, it is involved in compliance
processes:
Regular communication between CFO and Head of
Taxes
Regular information to the Supervisory Board on risks
and opportunities as well as current regulatory issues
The Code of Conduct stipulates that all intentional viola-
tions of external and/or internal tax guidelines must be
reported and investigated. The same applies to any fail-
ure to make corrections to procedures performed in an
erroneous manner, as outlined in our internally valid
Treatment of Violations Policy. Further information can be
found in the Integrity and Compliance chapter.
88
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
The Mercedes-Benz Group has established a Tax Compli-
ance Management System (Tax CMS) in order to ensure
effective tax compliance throughout the Group. The Tax
CMS is a separate sub-unit of the general intra-Group
Compliance Management System. The Tax CMS also
operates an active tax-risk management system that is
consistently applied throughout the Group in order to
monitor and check whether tax obligations are being ful-
filled, and also to support those responsible for ensuring
such fulfilment. Another goal here is to identify and
reduce tax risks at the Group, and thus the associated
personal risks that may be faced by the employees active
in this area. The system includes numerous measures —
for example, continuous monitoring of tax risks and the
incorporation of tax risk issues into the internal control
system and the Group-wide risk management process in
line with the company's risk management policy.
The Mercedes-Benz Group did not become aware of any
criminally relevant material violations of tax laws during
the reporting year.
Sustainability in the supply chain
The Mercedes-Benz Group is committed to the responsi-
ble procurement of production materials, non-production
materials and services.
The Responsible Sourcing Standards (RSS) serve as the
guideline for the sustainable supply chain management
system at the Mercedes-Benz Group. The RSS define
minimum requirements for suppliers, as well as the
expectations we have of them. The Mercedes-Benz Group
requires its direct suppliers to comply with the RSS for
new tenders, communicate the associated provisions to
their employees and to their own direct suppliers, and
ensure the RSS are complied with in all areas in which
they exert an influence. The goal here is to prevent, mini-
mize or, if possible, put a stop to any negative effects on
human rights worldwide.
The RSS also define environmental protection require-
ments that are meant to ensure resource conservation
and prevent environmental damage caused by business
activities, repair any damage that does occur, and com-
pensate for such damage that cannot be avoided or
repaired. Direct suppliers to the Mercedes-Benz Group
must comply with the RSS, communicate the associated
provisions to their employees and to their own direct
suppliers, and ensure the RSS are complied with in all
areas in which they exert an influence.
Measures in the supply chain
The Mercedes-Benz Group uses a variety of measures and
concepts to ensure the fulfilment of its due diligence
obligations in the supply chain. These include supplier
screenings, audits, risk-based due diligence analyses and
qualification modules for production material suppliers.
The Mercedes-Benz Group uses these tools in order to
increase the transparency of the supply chain and ensure
that the internationally recognized human rights are
upheld by business partners as well, and that other social
standards and environmental requirements are met. Pro-
curement units play a key role here. See the Social Com-
pliance and Environmental Issues chapters for further
information.
Complaint management
The Group offers employees and external whistleblowers
various channels through which they can report sus-
pected human rights violations and rule violations and
also request remedy. With regard to supply chains, sus-
pected violations of the Responsible Sourcing Standards
can be reported via the Business Practices Office (BPO).
If the misconduct or problem falls within the supplier's
area of responsibility, the supplier must take measures
to immediately correct or eliminate the problem. Further
information about the Compliance Programme can be
found in the Integrity and Compliance chapter.
89
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
Environmental issues
B.30
2022
Target
Target horizon
With efficient, high-quality and reliable expertise, pro-
cesses, systems, methods and controls, the Mercedes-
Benz Group wants to ensure that the tax obligations of
the Group companies are met and integrity standards
are maintained.
9,538
The analysis consists of several components:
Total assets of €84.3 billion are €1.3 billion higher than in
the previous year.
The Statements of Cash Flows of Mercedes-Benz
Group AG according to the German Commercial Code
(HGB) are drawn up in line with the German accounting
standard DRS 21. In an exception to DRS 21, dividends
from subsidiaries as well as intra-Group offsetting of
services from corporate functions are presented in Cash
Flow from operating activities even when they are offset
by means of cash pooling procedures. The same applies
to capital increases and capital repayments from subsidi-
aries being presented in Cash Flow from investing activi-
ties. An offsetting recognition of cash pooling procedures
takes place in Cash Flow from financing activities.
82,992
21
47,271
47,629
358
84,256
13
44,162
43,940
Financial position, liquidity and capital resources
1,903
3,114
1,775
2,713
401
128
Total equity and liabilities
Deferred income
Liabilities
Other liabilities
payables
Trade
Provisions
Other provisions
obligations
Cash flow from operating activities resulted in a net
cash outflow of €1.9 billion in 2022 (2021: cash inflow of
€3.3 billion). The decrease compared to the previous year
was due in particular to lower distributions from subsidi-
aries. Furthermore tax payments increased by €1.7 billion
compared to the previous year.
Provisions for pensions and similar
Cash flow from investing activities resulted in a net
cash inflow of €1.6 billion in 2022 (2021: cash outflow
of €1.0 billion). The cash inflow was due in particular to
the acquisitions and disposals of securities within the
context of liquidity management (2022: €1.1 billion, 2021:
cash outflow of €1.2 billion). Additionally corporate
restructuring associated with the spin-off and hive-down
of the Daimler commercial vehicle business had nega-
tively impacted the cash flow from investing activities in
2021. Capital repayments and disposals of subsidiaries
had had an opposing, positively effect on the cash flow
in the previous year.
Equity increased by €3.6 billion to €37.0 billion in 2022.
This increase was a result of the net profit amounting to
€8.9 billion, of which €3.3 billion was transferred to
retained earnings pursuant to Section 58 Subsection 2
of the German Stock Corporation Act (AktG). On the other
hand, equity decreased by €5.3 billion due to the divi-
dend payment to the shareholders of Mercedes-Benz
Group AG. The equity ratio as of the reporting date was
43.9% (2021: 40.3%). Mercedes-Benz Group AG held no
treasury shares as of 31 December 2022.
84
The Mercedes-Benz Group has set itself ambitious goals
and defined six strategic areas of action for reaching
these goals. The strategic goals are based on the UN's 17
Sustainable Development Goals (SDGs) — especially
SDGs 8 and 9 and 11 to 13 among other factors. In
addition, they take into account recognized international
frameworks, the requirements of the external and inter-
nal stakeholders and global trends. Group-wide areas of
action and areas of responsibility, as well as busi-
ness-specific targets, processes and measures are
derived from this analysis.
-
Areas of action and the foundations of sustainability
The Mercedes-Benz Group acts in line with the sustaina-
ble business strategy adopted by the Board of Manage-
ment of Mercedes-Benz Group AG in 2019 with the agree-
ment of the Supervisory Board. Sustainability topics are
thus an integral part of the business strategy.
One of the most important transformation goals at the
Mercedes-Benz Group is decarbonization, which the
Group has made a firm component of its sustainable
business strategy. At Mercedes-Benz Group, this goal is
reflected in "Ambition 2039" and the "Electric Only"
approach. By the end of this decade, Mercedes-Benz
intends to be all-electric wherever market conditions
allow.
-
The Mercedes-Benz Group aims to create value that is
sustainable - economically, environmentally and socially.
This is one of the core principles of the Group. It applies
not only to the Group's own products and manufacturing
locations but also to the entire upstream and down-
stream value chain. It has translated this approach into
its sustainable business strategy, with which it firmly
embeds sustainability considerations in the daily busi-
ness activities. In this way, the Mercedes-Benz Group
intends, among other things, to fulfil the demands and
expectations of its stakeholders i.e. customers,
employees, investors, business partners, non-govern-
mental organizations and society as a whole.
Sustainability as a force of change
As was the case in the previous year, the Mercedes-Benz
Group integrates the Non-Financial Declaration into the
Combined Management Report of this Annual Report.
Each year, it examines whether and how the integration
of financial and non-financial key figures should be fur-
ther developed. For the year under review, the Group
Sustainability Board has decided to continue to publish
more in-depth information about sustainability at the
Mercedes-Benz Group in a separate Sustainability Report.
It will be available on the Group's website on the internet
(additional information ④ group.mercedes-benz.com/
sustainability). Information on the business model of the
Mercedes-Benz Group can be found in the Corporate Pro-
file chapter.
Non-Financial Declaration
Combined Management Report with Non-Financial Declaration
Annual Report 2022 Mercedes-Benz Group
83
For the year 2023, Mercedes-Benz Group AG expects to
post a significantly higher net profit than for the year
2022, primarily as a result of significantly improved
financial income to be brought about by higher profit
transfers from major subsidiaries.
Due to the interrelations between Mercedes-Benz
Group AG and the companies of the Group, the state-
ments in the Outlook chapter therefore reflect our
expectations for the parent company as well.
The financial position, cash flows and profitability of
Mercedes-Benz Group AG depend on the business
development and performance of its operating
subsidiaries, in whose development it participates
through profit-and-loss transfer agreements and dividend
distributions.
Outlook
Furthermore, pursuant to Section 133 Subsections 1 and
3 of the German Transformation Act (UmwG), Mercedes-
Benz Group AG is jointly and severally liable for liabilities
of €6.0 billion that were transferred to Mercedes-Benz AG
and Daimler Truck AG in 2019. According to the current
appraisal, due to the assessment of the credit ratings of
Mercedes-Benz AG and Daimler Truck AG, an actual cash
outflow for Mercedes-Benz Group AG is considered to be
unlikely.
The business development of Mercedes-Benz Group AG
mainly depends on the development of its worldwide
subsidiaries and is therefore — through the profit and
loss contributions from subsidiaries and associated
companies fundamentally subject to the same risks
and opportunities as those of the Group. Mercedes-Benz
Group AG generally participates in the risks of its subsidi-
aries and associated companies in line with the percent-
age of its respective equity interest. The risks and oppor-
tunities are described in the Risk and Opportunity Report.
Risks may additionally arise from relations with subsidiar-
ies and associated companies in connection with statu-
tory or contractual liability obligations (in particular with
regard to financing), from impairments of financial assets
and from financial receivables from subsidiaries and
associated companies. Based on the criteria stated in the
Risk and Opportunity Report, the expected value of the
risks (calculated by multiplying the possible impact and
probability of occurrence of the risks) is assessed as
medium.
-
Risks and opportunities
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
82
Liabilities decreased by €3.4 billion to €44.2 billion.
This was mainly due to the decrease of bonds in the
amount of €6.6 billion. However, liabilities to subsidiaries
increased by €3.3 billion.
Provisions increased by €1.2 billion to €3.1 billion. This
was mainly due to the increase in provisions for contin-
gent losses resulting from derivative financial instru-
ments, income taxes and pension obligations.
Cash flow from financing activities resulted in a
net cash outflow of €1.3 billion in the reporting period
(2021: €0.9 billion). The change is explained by the higher
dividend payment to the shareholders of Mercedes-Benz
Group AG and the increased repayment of external
financing liabilities. On the other side the financing pro-
vided to subsidiaries in connection with central financial
and liquidity management resulted in a positive effect on
cash flow from financing activities.
33,439
222
Equity
Receivables, securities and other
41,131
40,001
Non-current assets
31 Dec.2022 31 Dec. 2021
Assets
In millions of euros
Balance sheet structure of
Mercedes-Benz Group AG
B.29
Annual Report 2022 Mercedes-Benz Group
Combined Management Report with Non-Financial Declaration
81
5,349
5,563
Distributable profit
-4,189
36,967
Transfer to other retained earnings
-13,879
Reduction in assets due to the spin-off
13,879
Offset against other retained earnings
Gross liquidity - defined as cash and cash equivalents
and other marketable securities recognized as current
assets, as well as fixed-term deposits presented under
other assets - decreased by €2.1 billion to €13.3 billion
as of the reporting date. The decrease in gross liquidity is
primarily due to the decrease in cash and cash equiva-
lents of €1.5 billion and the decrease in marketable secu-
rities recognized as current assets in the amount of
€1.1 billion.
Cash and cash equivalents decreased from €9.0 billion
to €7.5 billion.
Receivables, securities and other assets increased by
€4.0 billion compared with 31 December 2021 to
€36.6 billion. This was the result of an increase in receiv-
ables from subsidiaries of €5.7 billion, which in turn was
caused by higher receivables from profit-and-loss trans-
fer agreements and higher intra-Group financial receiva-
bles. By contrast, the amount of marketable securities
recognized as current assets decreased by €1.1 billion
and the other assets by €0.6 billion.
Non-current assets decreased during the year 2022 by
€1.1 billion to €40.0 billion. This was caused by the
€1.1 billion decrease in financial assets, which mainly
resulted from capital repayments by Mercedes-Benz
Bank AG and Mercedes-Benz Mobility AG to Mercedes-
Benz Group AG and by impairments of investments in
subsidiaries and associated companies.
assets
36,617
-3,314
Cash and cash equivalents
32,583
5,349
5,563
Distributable profit
13,540
16,854
11,480
11,480
Capital reserve
(conditional capital, €500 million)
3,070
Share capital
Equity and liabilities
Retained earnings
82,992
3,070
Current assets
44,067
7,450
Prepaid expenses
188
9,047
41,630
Total assets
84,256
231
Ola Källenius
The Board of Management
Production, Quality &
Supply Chain Management
Appointed until November 2029
Markus Schäfer
Chief Technology Officer,
Development & Procurement
Dr Jörg Burzer
Appointed until May 2026
Appointed until December 2025
Sabine Kohleisen
Integrity, Governance & Sustainability
Human Relations & Labour Director
Appointed until November 2025
Britta Seeger
Marketing & Sales
Appointed until December 2029
Further Information
Greater China
Appointed until December 2025
Hubertus Troska
Renata Jungo Brüngger
Consolidated Financial Statements
experience with electric vehicles, the charging infra-
structure is crucial. That's why we are building our own
fast-charging network. We want to install more than
10,000 charging points in our core markets by the end
of the decade. The aim of all these measures is to fulfil
our brand promise at all points of contact with our
customers and create special Mercedes moments.
Combined Management Report
Harald Wilhelm
Finance & Controlling/
Mercedes-Benz Mobility
To Our Shareholders
Letter from the CEO
7
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
In our view, our most important task is to build the
world's most desirable vehicles. The focus is on the
upper end of the segments in which we are represented.
That's why we are taking targeted steps to strengthen
our portfolio in 2024. The première of our electric
G-Class will be a highlight. We are also launching the
Maybach version of the EQS SUV in key markets. At
AMG, we are presenting further variants of our new top-
of-the-line AMG GT model. And at Mercedes-Benz, we
are further enhancing the substance of our electric cars
in the luxury segment in areas ranging from efficiency
and comfort to design.
The pace of the transformation to electric mobility is
determined by market conditions and our customers'
requirements. We will be prepared for every kind of
market scenario. The motto for the production of our
vehicles with combustion engines is "tactical flexibility".
When it comes to electric mobility, our strategic course
is to create the preconditions for becoming all-electric.
We have laid the foundations for this course. The devel-
opment of multiple new vehicle platforms is in full
swing. This will take our electric cars and vans to the
next level. We will start in the entry-level segment in
2025 with the new electric CLA. This will set new stand-
ards in terms of range, efficiency and charging speed.
At the same time, our own operating system MB.OS will
celebrate its première. Thus we will also reach an
important milestone in terms of software. Our custom-
ers can now look forward to an even more natural, more
personal and more extensive interaction with their
Mercedes-Benz.
Sincerely yours,
Ola Källenius
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
The Board of Management
8
Corporate Governance
Appointed until March 2027
Chairman of the Board of Management
Appointed until May 2029
Annual Report 2023 | Mercedes-Benz Group
10
To Our Shareholders
Report of the Supervisory Board
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
projects, cooperation projects and the conclusion of
contracts of particular importance to the company.
The Board of Management informed the Supervisory
Board about a large number of other measures and
business transactions and discussed them intensively
and in detail with the Supervisory Board; for example,
the effects on the company of supply bottlenecks for
certain battery systems as well as the initiated counter-
Contents
measures.
them in terms of business policy, the shareholder struc-
ture, the share-price development and its background,
as well as the expected effects of the strategic projects
on the share-price development.
Working culture and areas of
Supervisory Board activity
In the 2023 financial year, the Supervisory Board held
seven meetings. Six meetings were held in person, with
the option of participation in virtual form or via tele-
phone, and one meeting was held as a video confer-
ence. Meeting attendance by the members was at a
very high level, as can be seen in the detailed overview
at the end of this report. The work of the Supervisory
Board was characterized by open and intensive dia-
logue. The members of the Supervisory Board regularly
prepared for upcoming resolutions using documents
provided in advance by the Board of Management. The
employee and shareholder representatives also regu-
larly prepared the meetings in separate discussions,
which were also attended by members of the Board of
Management. In addition, the Supervisory Board was
supported in depth by its Committees. At the meetings
of the Supervisory Board, its members discussed the
measures and transactions to be resolved in detail with
the Board of Management. Executive sessions were
regularly scheduled for the meetings so that topics
could be discussed also in the absence of the Board of
Management.
The Supervisory Board was informed of special events
outside the regular meetings. In addition, some
members of the Supervisory Board and the Board of
Management held bilateral meetings to exchange views.
The Board of Management also informed the Super-
visory Board of the key indicators of the business
development and of existing risks by means of written
reports.
The members of the Supervisory Board assume respon-
sibility for their training and further education measures
in areas such as changes in the legal framework and
new, forward-looking technologies that are required for
the performance of their tasks and are supported in this
by the company. In the reporting period, for example,
the company held information events on sustainable
corporate governance and sustainability reporting as
well as on the Mercedes-Benz operating system MB.OS.
Both internal and external experts were involved in
these events. In addition, new members of the Supervi-
sory Board have the opportunity to meet the members
of the Board of Management and senior executives with
specialist responsibility in a specifically designated
onboarding programme for a bilateral exchange on fun-
damental and current topics in respect of the relevant
areas of the Board of Management, thus gaining an
overview of the topics relevant to the company and of
the governance structure. ESG (environmental, social
and governance) and sustainability-related thematic
blocks are also an integral part of this programme. Fur-
thermore, the members of the Supervisory Board are
regularly informed about the regulatory environment
relevant to their work on the Supervisory Board and
other legal developments affecting them.
Contents
The Board of Management regularly informed the
Supervisory Board about all significant business devel-
opments of the Group and the divisions. During the
reporting period, it kept the Supervisory Board continu-
ously informed about all fundamental issues regarding
corporate planning, including financial, investment,
sales and personnel planning; current developments at
Group companies; the development of revenue; the sit-
uation of the company and the divisions; the economic
and political environment; and the current status and
assessment of significant legal proceedings. In addition,
the Board of Management continuously reported to the
Supervisory Board on the profitability and liquidity situ-
ation of the company, the development of sales and
procurement markets, the overall economic situation
and developments on the capital markets and in the
financial services sector. Other topics included the fur-
ther development of the product portfolio, securing
the long-term competitiveness of the company and the
further implementation of measures to ensure sustaina-
ble, future-oriented mobility. The Supervisory Board
also dealt in detail with the political developments and
conflicts in the main sales markets and the reaction to
Annual Report 2023 | Mercedes-Benz Group
Furthermore, after careful review and consultation, it
approved numerous business transactions subject to its
consent. This related in particular to the approval of
the establishment of a Europe-wide high-performance
charging network under the Mercedes-Benz brand. It
also included financial and investment planning, product
The Supervisory Board reviewed whether the individual
company and Consolidated Financial Statements,
the Combined Management Report including the Non-
Financial Declaration and the other financial reporting
complied with the applicable requirements.
Contents
9
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Report of the Supervisory Board
Report of the Supervisory Board
Dear Shareholders,
Dr Ing. e.h. Dipl.-Ing. Bernd Pischetsrieder
Chairman of the Supervisory Board
of Mercedes-Benz Group AG
2023 was a year full of challenges for Mercedes-Benz
Group and the entire automotive industry. The market
environment was demanding, and a large number of
external factors influenced the economy, presenting
employees with complex tasks.
Against this backdrop, the past year has clearly proven
that the true strength of a team only becomes apparent
when the headwinds increase. The team at Mercedes-
Benz Group has once again proven that it is one of the
best and I would like to take this opportunity to express
my sincere gratitude to all employees for their out-
standing commitment and dedication.
In 2024, the company will continue to drive the trans-
formation in line with its sustainable business strategy.
Whether equipped with a all-electric drivetrain or a
combustion engine - Mercedes-Benz Group is commit-
ted to offering its customers the most desirable cars
in the world. And I am convinced that such cars will
continue to be recognized by the Mercedes star in the
future.
Supervisory and advisory activities
of the Supervisory Board
In the 2023 financial year, the Supervisory Board of
Mercedes-Benz Group AG again performed, in full, the
duties incumbent upon it by law, the articles of associa-
tion and the rules of procedure.
In this context, the Supervisory Board continuously
advised and monitored the Board of Management in
the management of the company and provided support
on strategically important issues for the further devel-
opment of the company.
→ Further information on the members of the Board of Management of Mercedes-Benz Group AG
Annual Report 2023 | Mercedes-Benz Group
In 2023 we made our company even more resilient and
achieved significant strategic progress. In addition,
we can build on an outstanding brand and a powerful
team. All of these are excellent prerequisites for our
ongoing promotion of the profitable, all-electric and
software-driven future of Mercedes-Benz. We would be
delighted to have you accompany us on this journey.
Looking ahead, what topics are on our agenda?
Contents
Annual Report 2023 | Mercedes-Benz Group
SHAREHOLDERS
TO OUR
444
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人人
饅
饅
8
FURTHER INFORMATION
336
194 CONSOLIDATED FINANCIAL STATEMENTS
CORPORATE GOVERNANCE
We want to take our customers' brand experience to
the next level. To this end, we are redesigning our
showrooms all over the world. We are also expanding
our global network of exclusive locations, through
which we want to make our brands even more tangible.
To ensure maximum convenience and full transparency
for car purchasing, we are continuing to roll out our
direct sales model. For an outstanding product
Annual Report 2023
Mercedes-Benz Group
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
To Our Shareholders
Combined Management Report
Consolidated Financial Statements
Further Information
5
TO OUR SHAREHOLDERS
30 COMBINED MANAGEMENT REPORT
162
Corporate Governance
TO OUR SHAREHOLDERS
2
8
These figures are the result of the exceptional commit-
ment of our employees. Without their dedication and
ability the successes of the year 2023 would not have
been possible. The thanks of the entire Board of Man-
agement goes to all of our colleagues.
6 Letter from the CEO
These successful developments are also reflected in our
annual results. Our revenue amounted to €153 billion.
However, EBIT fell by 4% to €19.7 billion. Our net
liquidity in the industrial business was €31.7 billion.
The bottom line was a net profit of €14.5 billion.
The Board of Management and the Supervisory Board
will recommend a dividend of €5.30 per share to the
Annual General Meeting.
Our company has shown that we can achieve solid
financial results even under difficult conditions. In 2023
sales of all-electric cars of the Mercedes-Benz brand
increased by 73%. The proportion of electrified vehicles
in total car sales was 20%. Mercedes-Benz Group AG
has also initiated important projects to expand the
charging infrastructure in our core markets. The direct
sales model was rolled out in additional markets. Fol-
lowing the introduction of our conditionally automated
driver assistance system in the United States, we also
received approval to test the technology for motorway
use in Beijing. Moreover, we were able to achieve
another significant part of our targeted reduction in
fixed costs.
Dear Shareholders,
Chairman of the Board of Management
of Mercedes-Benz Group AG
Ola Källenius
Letter from the CEO
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Letter from the CEO
To Our Shareholders
Contents
the year 2023 was characterized by challenging geo-
political developments and volatile markets. We were
able to assert ourselves strongly in this environment.
This is also reflected in our balance sheet. We also
continued to make progress in the implementation of
our strategy.
24 Mercedes-Benz Vans Strategy
26 Mercedes-Benz Mobility Strategy
Mercedes-Benz Cars Strategy
21
20 Objectives and Strategy
Annual Report 2023 | Mercedes-Benz Group
The Supervisory Board
18
9 Report of the Supervisory Board
The Board of Management
Combined Management Report
Further Information
Consolidated Financial Statements
5
Corporate Governance
A Tech Academy that offers needs-based future-ori-
ented training components has also been established
for employees in the development units at the
Mercedes-Benz AG in Germany. These training compo-
nents are specifically tailored to the requirements of
the development units.
The Group's own specialized Tech Academies, also
organized under the umbrella of Turn2Learn, provide
targeted and needs-oriented training for employees in
research and development and in production-related
areas. For example, the TechAcademy Production and
Supply Chain Management at Mercedes-Benz AG analy-
ses current and future personnel requirements for pro-
duction areas and cross divisional functions
for
example, in quality assurance. The TechAcademy uses
the analyses to develop future-oriented qualification as
well as retraining measures in line with the needs of
specific target groups.
In order to actively promote the digital transformation
in production, the D.SHIFT part-time qualification pro-
gramme was launched in 2021. D.SHIFT is a retraining
programme specifically for production employees at
German sites that focuses on acquiring digital skills and
ultimately involves employees switching to a future-ori-
ented job profile. The programme was continued in
November 2023 and the number of available slots was
expanded.
Within the sales organization of Mercedes-Benz
Group AG, the Mercedes-Benz Global Training business
unit serves as the central pillar for the development and
qualification of employees of the German and interna-
tional sales organization. The focus is on the training
and certification of sales and service personnel as well
as dealer management. In addition, comprehensive fur-
ther training and various product training courses are
offered. The unit also focuses on training content on
electrics/electronics (E/E) and high-voltage, especially
for employees in the repair and service sector.
This approach is embedded in the Mercedes-Benz
Group's Integrity Code and in the Principles of Social
Responsibility and Human Rights, among other things.
Diversity and inclusion.
The Mercedes-Benz Group is committed to tolerance,
openness and fairness, and promotes diversity and
inclusion. With appropriate measures and activities,
it wants to foster a working environment in which
employees, regardless of their age, ethnic origins and
nationality, gender and gender identity, physical or
intellectual capacity, religion and worldview, sexual
orientation and social origins, can freely develop their
talents.
Strategic areas of action
Diversity and inclusion are part of the sustainable busi-
ness strategy of the Mercedes-Benz Group. The strate-
gic areas of action for promoting diversity and inclusion
involve the advancement of women, internationality
and inclusion.
The advancement of women: the Mercedes-Benz
Group would like to fill more senior management
positions (Level 3 and up) with women. The target
here is to increase the share of women in such posi-
tions to 30% by 2030.
In 2023, the emphasis continued to be on qualifications
that are crucial for the successful implementation of
the Group's sustainable business strategy and digitali-
zation.
In 2022, the Group launched the Turn2Learn initiative
worldwide for the qualification of employees. It com-
bines a wide range of learning opportunities via external
learning platforms with customized training and strate-
gic learning paths. This allows employees to combine
different options to suit their needs - digitally and in
person.
94
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group provides future-oriented
training as needed and continuously reviews its portfo-
lio of training professions and courses of study in Ger-
many. In this review process it not only reacts to cur-
rent developments but also anticipates future
requirements and technological innovations. Since 2021,
Mercedes-Benz AG has been increasing the number of
IT trainees, and in autumn of 2022 it also integrated the
additional qualification Artificial Intelligence from the
Chamber of Commerce and Industry. Since the report-
ing year, internally designed qualification modules such
as Data-based action, Programming and Cyber security
have also been taught as part of technical vocational
training. The new dual study programme "Sustainable
Management" will start in 2024.
The Mercedes-Benz Group has established a Mercedes-
Benz Training System for Germany that standardizes
company-related training content across all sites and
divisions. The goal here is to create high-quality and
efficient training programmes that are attractive to train-
ees and participants of dual work-study programmes.
Annual Report 2023 | Mercedes-Benz Group
In Germany, the Mercedes-Benz Group offers profes-
sional training and a dual work-study programme for
internationally recognized bachelor courses of study at
various company sites. The courses are supplemented
by practical assignments, both in Germany and abroad.
Personal and company-related qualification at
Mercedes-Benz Group AG, Mercedes-Benz AG and its
subsidiaries in Germany is regulated, among other
things, by the Voluntary General Works Agreement on
the Qualification of Employees and the General Works
Agreement on the Use of External eLearning Platforms
for Qualification Measures as well as comparable com-
pany and collectively agreed policies. They serve to
standardize the qualification process, structure it more
efficiently and integrate external training elements into
the learning portfolio.
Trainees and students
Qualification and learning programmes
for employees
Contents
The diversity and inclusion management system is
grounded in the principle of inclusion for all employees.
The idea here is to always attract highly qualified spe-
cialists and managers to the Group and support their
professional development.
95
Consolidated Financial Statements
Further Information
Various company and collective-bargaining regulations
form the basis of the Germany-wide training and quali-
fication processes at Mercedes-Benz Group.
Corporate Governance
Combined Management Report
Non-Financial Declaration
96
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1 Headcounts, fully consolidated companies
For Diversity Day 2023, employees were able to
go through four diversity online training courses in
the Global Diversity Community on the employee
portal, which offer specific content for employees
and managers.
The Mercedes-Benz Group utilizes various measures to
make employees around the world more aware of issues
relating to diversity and inclusion. These include, among
other things, qualification programmes, information
events and special mentorship programmes for women.
At the Mercedes-Benz Group's annual Diversity Day,
employees can consciously experience diversity, take in
new perspectives and understand how all employees
can profit from diversity and equal opportunity.
To Our Shareholders
Awareness-raising and qualification measures
for employees
Mercedes-Benz Group employees who have been vic-
tims of discrimination, bullying or sexual harassment, or
who observe improper behaviour by colleagues, can
report such violations of policy to their supervisors, the
HR department, the counselling service, their plant
medical services organization, the Works Council or the
Management Representatives Committee. Additional
points of contact include the Group's Business & People
Protection Office (BPO) whistleblower system and the
Infopoint Integrity.
The framework and processes here are designed by the
Group-wide Integrity function and the Diversity & Inclu-
sion Management function. The latter is part of Human
Relations. It defined the three strategic areas of action
in cooperation with the members of the Board of Man-
agement of Mercedes-Benz Group AG and initiates
overarching projects, training programmes and aware-
ness-raising measures.
special responsibility for ensuring a corporate culture
marked by appreciation. The Mercedes-Benz Group pre-
sented its understanding of diversity and inclusion in its
"Uniqueness makes us strong" mission statement, which
was signed by all members of the Board of Manage-
ment.
The Mercedes-Benz Group expects its employees to
treat one another in a respectful, open and fair manner.
Managers serve as role models here and thus have a
Management of diversity and inclusion at the Group
Inclusion: the Mercedes-Benz Group welcomes and
values the uniqueness of each team member and pro-
motes equal opportunities and an inclusive working
environment.
Internationality: the Mercedes-Benz Group also
seeks to promote internationality, a global way of
thinking and the cultural diversity of its workforce in
order to continue its success as a global company.
Among other things, the Mercedes-Benz Group does
this by encouraging its employees to take on interna-
tional assignments.
As early as 2006, the Mercedes-Benz Group set itself
the target of continuously and sustainably increasing
the proportion of women in executive positions. As of
31 December 2023, women occupied 25.7%¹ of the
senior management positions at the Mercedes-Benz
Group worldwide. The Mercedes-Benz Group uses rel-
evant data from its human resources reporting sys-
tems to review the progress made in increasing the
proportion of women in top management positions.
The results are reported to the Board of Management
of the Mercedes-Benz Group AG in a standardized
form on a regular basis.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
In addition to these internal contact points, there has
been an external online information and advice plat-
form for Mercedes-Benz Group employees in Germany
since 2022. It provides information on the topics of
sexual harassment, discrimination and bullying and
includes the option of anonymous counselling.
Organization and agreements
Consolidated Financial Statements
Training and further qualification
Corporate Governance
Combined Management Report
Non-Financial Declaration
92
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In order to continually improve its leadership and cor-
porate culture and further develop its work culture
within the framework of the transformation process, the
Mercedes-Benz Group conducts an extensive survey of
its employees worldwide every two years. This was
most recently done in 2023. The survey is a key indica-
tor of where the Group stands with regard to various
issues from the point of view of its employees, and
where there is still potential for improvement. Other
channels are also open for employees and managers to
provide feedback.
The hybrid working environment has changed the
demands placed on managers within the Group. In
order to support managers as much as possible in their
roles and their tasks, the Mercedes-Benz Group offers
them training courses that focus on the opportunities
and the framework of leadership. In these courses,
managers learn in a targeted manner about the new
challenges relating to leadership with regard to innova-
tion, cooperation, sustainable development and per-
sonal resilience.
form of Executive Inspiration Talks. It combines exter-
nal suggestions on the topic of leadership culture with
networking and cross-functional exchange.
Managers have a special role and responsibility in the
transformation process. At the Mercedes-Benz Group,
the leadership culture and the way people work
together are therefore constantly evolving. The various
units and departments use the shared basis of the
Group-wide People Principles to focus on their own
specific areas and develop appropriate measures. The
principles serve as a basis for leadership and coopera-
tion at the Mercedes-Benz Group. Current offers and
suggestions support managers in their sustainable fur-
ther development and help them engage in lifelong
learning. Because learning and cultural development
take place at all levels, the Group introduced a format
tailored to top management in the reporting year in the
Leadership culture
The Mercedes-Benz Group in Germany has also made
agreements that will enable it to react flexibly to market
fluctuations and to retain the core workforce and jobs
within the Group. The provisions of the general works
agreement "DMove" have been extended until the end
of 2024 for the Mercedes-Benz Group AG and
Mercedes-Benz AG sites (plants and headquater) in
Germany². At the Mercedes-Benz Group, temporary
workers supplement the core workforce; they do not
replace it.
guarantee for the period until the end of 2029. This
works agreement generally excludes the possibility of
business-related layoffs until 31 December 2029.
2 without logistic center
engines, transmissions, axles and components (major assemblies plants). These include
the Untertürkheim, Hamburg and Berlin locations.
1 The Powertrain Network stands for sites that are responsible for the production of
In addition to courage, commitment and a willingness
to change, successful transformation requires security
above all. That's why the company signed an agreement
in 2017 that gives the employees at Mercedes-Benz
Group AG, Mercedes-Benz AG and Mercedes-Benz
Intellectual Property GmbH & Co. KG a job-security
One focus of HR work at the Mercedes-Benz Group is to
win over, motivate and empower employees for change.
For example, the TransformatiON initiative was
launched in the "Powertrain Network"¹ in 2022. With
this initiative, the company wants to explore new com-
munication channels in order to better inform, involve
and support employees during the transition. Transfor-
matiON focuses increasingly on information, interaction,
dialogue and feedback as central components.
A successful and responsible transformation process
requires goals as well as measures that are geared
towards them. To this end, various sites - primarily the
Powertrain and manufacturing plants, but also the sales
department developed goals for their transformation
process. On the basis of these goals, the sites identified
key topics with corresponding measures. These meas-
ures primarily include training and retraining opportuni-
ties for employees. The company also makes it possible
for employees to move between different sites in order
to take on new jobs or continue to work at the corre-
sponding level of qualification.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
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Annual Report 2023 | Mercedes-Benz Group
Occupational health and safety
The Mercedes-Benz Group employs a sustainable per-
sonnel development and planning approach, because in
times of mobility transition and digitalization it needs
highly qualified employees with the right skills, be it for
electric mobility or for various key digital topics. It
therefore continuously invests in training and profes-
sional development programmes for its employees and
continues to adjust its qualification and HR develop-
ment programmes. The range of training professions
offered by the Mercedes-Benz Group and the courses
of study offered in dual work-study programmes in Ger-
many are also changing as a result, as are the qualifica-
tion and personnel development programmes.
Further Information
The Mercedes-Benz Group remunerates work in accord-
ance with the same principles at all of its companies
around the world. The global Corporate Compensation
Policy, which is valid for all groups of employees, estab-
lishes the framework conditions and minimum require-
ments for the design of the remuneration systems.
Among other things, it stipulates that the amount of the
remuneration is determined on the basis of the require-
ments of the job profile in question (taking into account,
for example, the person's knowledge, expertise, respon-
sibilities and decision-making authority) and, where
appropriate, performance. However, it does not take
account of gender, origin or other personal characteris-
tics. In doing so, the Group also takes into considera-
tion local market conditions and benchmarks.
The interests of trainees and young employees at the
various German sites are looked after specifically by the
local youth and trainee representatives, who in turn
organize themselves across all sites as part of a General
Youth and Trainee Representation (GJAV).
In Germany, the company and employee representative
bodies also maintain an ongoing and structured dia-
logue. The parties make every effort to take into
account both the economic interests of the Group and
the interests of its employees. The results of the ongo-
ing dialogues, and thus the rights of employees as well,
are defined, among other things, in a number of plant
and company-wide agreements. In the reporting year,
company and employee representative bodies reached
various agreements and arrangements. These include
the policy on remote work abroad for personal reasons
and the general works agreement on the Germany-wide
job ticket for public transportation. The parties also
concluded a Group-works agreement on employee par-
ticipation in digitalization. In particular, this includes a
business e-mail address for all employees in the pro-
duction environment of the Mercedes-Benz Group in
Germany.
Group AG, Mercedes-Benz AG and other units at the
Group.
Further Information
Consolidated Financial Statements
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Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group acknowledges its employees'
right to form employee representative bodies and con-
duct collective bargaining in order to regulate working
conditions. It also recognizes their right to strike in
accordance with the applicable laws. Important part-
ners here include the local works councils, the General
Works Council, the Group Works Council, the European
Works Council and the World Employee Committee
(WEC). Collective bargaining agreements exist for the
majority of employees throughout the Group. Such
agreements apply to all employees who are subject to
collective bargaining agreements at Mercedes-Benz
Dialogue with employee representatives
In addition, employees at Mercedes-Benz Group AG,
Mercedes-Benz AG, Mercedes-Benz Mobility AG,
Mercedes-Benz Bank AG and other subsidiaries can
agree to take a sabbatical ranging from three months to
one year. Employees who wish to obtain additional
qualifications including pursuing a course of study at
a university can also make arrangements to take a
three to five-year leave with a reinstatement guarantee.
Depending on local conditions, Mercedes-Benz
Group AG, Mercedes-Benz AG, Mercedes-Benz Mobil-
ity AG and Mercedes-Benz Bank AG offer different
working-time arrangements. These include e.g. part-
time work and job sharing.
Germany have also been able to temporarily work
remotely from abroad for private reasons since March
2023.
The Mercedes-Benz Group continuously further devel-
ops its working culture and thus its working-time
arrangements as well. It is increasingly relying on hybrid
forms of work, a mix of on-site and mobile working
depending on tasks and work processes. The “Remote
Working" general works agreement, valid since 2016,
was converted into a group works agreement at the
beginning of 2023. Thereby, and through the ongoing
exchange with the works council, the Group is creating
the necessary framework conditions for hybrid working
models in Germany and developing them further. For
example, employees of the Mercedes-Benz Group in
-
Flexible working-time models
The internal auditing department conducts random
annual internal audits to determine whether selected
aspects of the Corporate Compensation Policy are
being complied with. As part of these audits, no mate-
rial breach of the guideline was identified in 2023.
To measure the company's success, sustainability
aspects are also be taken into account. Depending on
the results, employees who are covered by collective
wage agreements at Mercedes-Benz Group AG,
Mercedes-Benz AG and Mercedes-Benz Intellectual
Property GmbH & Co. KG and managers at management
level four (Executive) receive a success and profit-shar-
ing bonus since 2023.
but also on transformation goals and non-financial
targets. Since 2023, the long-term component has also
been based on ESG targets.
The variable remuneration for activities in management
positions at levels one to three comprises both a short-
term and, as a rule, a long-term component. The short-
term component is based not only on financial targets
€409 million on retirement benefits
€2,376 million on social welfare services
€13,848 million on wages and salaries
In 2023 the expenses for employees in the company
worldwide for a workforce numbering 168,336 on aver-
age (including temporary workers during holidays)
amounted to:
Attractive and transparent remuneration
The Group utilises a holistic occupational health and
safety management system. It aims to prevent work
accidents, work-related illnesses and occupational dis-
eases to the greatest extent possible and also counter-
act health risks. The Group also wants to maintain the
health and performance of its employees in the long
term and promote their well-being. The focus here is
mainly on preventative measures that the Group contin-
uously reviews and develops further.
A reporting procedure helps the Mercedes-Benz Group
achieve its occupational health and safety targets.
Since 2023, a uniform accident documentation system
has been available to the Group worldwide, from which
standardized key figures can be derived in compliance
with applicable data protection regulations.
The Mercedes-Benz Group's occupational safety strat-
egy includes standards for the design of workplaces
and work processes in order to systematically reduce
occupational and health-related risks. There are inter-
national Group policies on occupational health and
safety as well as uniform principles that must be
adhered to. The internal guidelines are based on inter-
national standards and require compliance with
national laws. They emphasize the responsibility of
managers and the personal responsibility of employees.
Models from Mercedes-Benz Cars repeatedly earn top
marks in safety tests conducted by independent insti-
tutes, such as the holistic testing program NCAP and
the holistic ratings of the U.S. Insurance Institute for
Highway Safety (IIHS) ¹. The latter assesses not only
crash safety but also accident-prevention and lighting
systems.
Ratings and awards
Driving assistance systems can react differently to the
danger of a collision, depending on the situation. The
Active Brake Assist system, which comes as standard
equipment in Mercedes-Benz cars, is a good example of
this. Active Brake Assist can help reduce the severity
of - or entirely prevent accidents involving vehicles
ahead or pedestrians crossing the carriageway. Speed
Limit Assist, for example, notifies the driver of the cur-
rent speed limit. It has been standard equipment in the
Mercedes-Benz A-Class since 2018. Since then, it has
also been integrated into further models and its fea-
tures have been expanded.
assistance systems that can help to prevent accidents
or reduce their severity. For example, Mercedes-Benz
vehicles equipped with driving assistance systems can
support drivers when they steer, brake and accelerate
(SAE Level 2).
3 Availability and use of the DRIVE PILOT functions on motorways depend on equipment,
countries and applicable laws.
Special assessment for assistance systems ④https://www.euroncap.com/en/ratings-re-
wards/assisted-driving-gradings
https://www.euroncap.com/en/results/mercedes-benz/eqe+suv/50192,
EQE SUV
2 Further information: Euro NCAP test results:
https://www.iihs.org/ratings/vehicle/mercedes-benz/gle-class-4-door-
https://www.iihs.org/ratings/vehicle/mercedes-benz/glc-4-door-suv/2023,
https://www.iihs.org/ratings/vehicle/mercedes-benz/c-class-4-door-sedan/2023,
The Mercedes-Benz C-Class, GLC-Class and GLE-Class
received the IIHS 2023 TOP SAFETY PICK+ award for
the 2023 model year.
suv/2024
GLC-Class
Requirements, policies, organization and
responsibilities
1 Further information: IIHS test results:
-
Innovations in assistance and safety systems are evalu-
ated on the basis of the contribution they make to road
safety, both at the vehicle level and for road safety in
general. The Mercedes-Benz Group's specialists are
continuously working on increasing road safety and
equipping vehicles across several SAE levels right up
to automated driving — with ever more powerful
Assistance and safety systems
The Group uses an integrated approach to answer the
technical, legal, ethical and certification and safety-rel-
evant questions relating to automated driving at
Mercedes-Benz Cars. This approach is part of the tech-
nical Compliance Management System. To this end, an
interdisciplinary committee structure has been set up
to deal with issues such as the responsible use of data
and taking into account the needs of all road users who
encounter automated vehicles on the road. The objec-
tive of this approach is to increase both the safety and
the acceptance of the Group's products.
systems through the use of its “ethics by design" princi-
ple and continuously further develops these systems.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
GLE-Class
99
In addition, the Mercedes EQE received top Euro NCAP2
ratings twice: the maximum rating of five stars in the
Euro NCAP safety ratings and the overall rating of "very
good" for the optional driving assistance package in the
special rating for assistance systems. The E-Class also
received an overall rating of "very good" in the special
assessment for assistance systems.
The DRIVE PILOT³ has been available to order in Ger-
many since May 2022. Under certain conditions, the
system enables conditional driving automation on
motorways (SAE Level 3).
At the beginning of their employment, employees out-
side External Affairs whose positions also require them
to represent the Mercedes-Benz Group in the political
environment of their market (e.g. plant management
positions) generally participate in a special onboarding
process that prepares them for their tasks and makes
them aware of relevant policies.
The Mercedes-Benz Group conducts mandatory training
courses on a regular basis to ensure that employees
comply with statutory requirements and internal guide-
lines and policies. The executive division Integrity,
Governance & Sustainability is responsible for the con-
tent of the training courses. EA supports the courses
when needed by contributing its political expertise.
The Mercedes-Benz Group uses Group-wide established
compliance processes to address risks in connection
with the political representation of its interests. The
Business & People Protection Office (BPO) whistle-
blower system accepts complaints and reports relating
to compliance issues.
The Head of External Affairs is a permanent member of
the Group Sustainability Committee (GSC) and supports
the committee's work on political issues. In addition,
External Affairs cooperates closely with the members of
the Board of Management and the specialist depart-
ments on questions related to the representation of our
interests in the political arena. To this end, the unit
organizes the meetings of the Governmental Affairs
Committee for various Board of Management divisions
and specialist departments.
The External Affairs (EA) unit is the central coordinating
body for political dialogue at the national and interna-
tional levels as well as for other politically relevant
interest groups along the value chain. It is located in
Stuttgart (Germany) and falls under the responsibility
of the Chairman of the Board of Management. The EA
unit shapes the Mercedes-Benz Group's relations via a
global network with offices in Berlin (Germany), Brus-
sels (Belgium), Beijing (China) and Washington (USA), as
well as corporate representations in respective markets.
Governance
The Mercedes-Benz Group bases its political advocacy
on principles of transparency and responsibility and is
guided by the Integrity Code, which is valid throughout
the Group (further information on this can be found on
the Group website ④group.mercedes-benz.com/inves-
tors/share/esg).
The Group also uses its own Mercedes-Benz Group
Climate Policy Report to inform about its political
positions. In addition, the Mercedes-Benz Group pub-
lishes further information regarding its stance on rele-
vant and strategic issues as well as issues affecting
its stakeholders on the corporate website (④ group.
mercedes-benz.com/responsibility/advocacy).
being considered and may be made in the near future.
By accrediting its political representatives in the Euro-
pean Parliament's Transparency Register, Mercedes-
Benz Group AG fulfils the transparency requirements
at the EU level.
The legally required registration in the German Lobby
Register, as well as the Group's own lobbying principles,
commit Mercedes-Benz Group AG to comply with the
Code of Conduct for Interest Representatives under the
Lobby Register Act. Mercedes-Benz Group AG is also
entered in the transparency register of the Baden-Würt-
temberg state parliament. Entries in other transparency
registers at the level of German states are currently
As an actor in the transport sector, the Mercedes-Benz
Group supports the Paris Climate Agreement and is
convinced of its goals. That's why the sustainable
business strategy of the Mercedes-Benz Group also
defines the representation of the Group's interests in
the political arena.
There are many challenges associated with the sustain-
able development of the transport sector as well as
climate change mitigation and the conservation of
resources. To overcome these challenges, the
Mercedes-Benz Group attaches great importance to a
partnership-based dialogue between politics, business
and society. This is exactly what the External Affairs unit
at the Mercedes-Benz Group seeks to accomplish.
Assistance and automation functions
Ongoing
Responsible political advocacy regarding the key issues
for achieving sustainable business goals
Target
Responsible and transparent
representation of interests.
Further Information
Consolidated Financial Statements
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Contents
Annual Report 2023 | Mercedes-Benz Group
Mercedes-Benz AG plans to deliver the first vehicles
with DRIVE PILOT at the beginning of 2024. The special
2024 model year EQS sedans and S-Classes will be
available through participating authorized Mercedes-
Benz dealerships in California and Nevada. DRIVE PILOT
takes over the driving task in heavy traffic or in traffic
jam situations on suitable motorway sections at speeds
of up to 40 mph (up to 60 km/h in Germany).
Target horizon
To Our Shareholders
C-Class
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
2 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
1 Mercedes-Benz Group, consolidated and controlled production sites including
selected high-risk development areas and the Global Logistics Center (Scope
corresponds to that of previous years): number of occupational accidents registered
in the system with at least one day of absence per 1 million hours of attendance.
During the reporting year, the Mercedes-Benz Group's
production sites had an accident frequency of 3.81,2
Every accident is analysed in order to determine the
sequence of events and initiate preventative measures.
Data on accidents from which other sites can learn and
derive measures is sent to all occupational safety
experts at all sites worldwide. The Mercedes-Benz
Group uses the information provided by the system
to produce monthly reports on Group-wide accident
statistics.
In 2023, the Group provided its employees with inten-
sive training on six principles of safe working practices
and on how to deal with significant hazards. The focus
was initially on sites in Germany. As part of the initiative,
the Mercedes-Benz Group also assesses risks in coop-
eration with external companies. To further increase
safety in this context, it has stepped up checks on con-
struction sites and introduced a consequences man-
agement system for any incorrect behaviour detected.
Further Information
Consolidated Financial Statements
Contents
Combined Management Report
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97
Contents
Annual Report 2023 | Mercedes-Benz Group
The Group also raises its employees' awareness of ergo-
nomics and occupational safety. In order to create a
sustainable "safety-first culture" and permanently
reduce the number of accidents at work, the Mercedes-
Benz Group launched the "We work SAFE!" initiative in
2022 and continued it in the reporting year.
At various sites, the Mercedes-Benz Group has its man-
agement systems for occupational health and safety
(OHS) voluntarily certified in accordance with the ISO
45001 standard. In 2023, the Jawor site (Poland)
received voluntary certification of its management sys-
tem in accordance with ISO 45001 for the first time.
Every five years, officers from Corporate Safety use the
previously mentioned safety due diligence process to
check the safety standards at the Group-owned pro-
duction sites to ensure they comply with those of the
binding Group policy concerning occupational health
and safety and determine whether a functioning occu-
pational health and safety management system is in
place. The international Mercedes-Benz CKD sites in
India, Vietnam, Thailand and Malaysia as well as the
AMG production plants in the UK and Germany were
evaluated as planned in 2023. The results were com-
municated to and followed up in the relevant commit-
tees.
Management of occupational safety
Mercedes-Benz Group focuses on medical care, preven-
tion strategies and the ergonomic design of workplaces.
The Mercedes-Benz Group offers its employees in Ger-
many occupational health advice and screening as well
as measures and services from the company's own
health programme and social counselling service. The
company health management system in Germany aims
to promote the mental and physical health and well-be-
ing of the employees. Internationally, the
Company health management and mental health
Risk management follows the Group policy on occupa-
tional health and safety and defines instruments and
risk assessment processes that are to be implemented
locally. The Mercedes-Benz Group's Health & Safety unit
takes a preventative approach so that employees do
not have accidents or suffer from impaired health. In
order to identify significant risks at an early stage, an
evaluation (safety due diligence) is carried out every
five years at all consolidated and controlled production
sites with more than 500 employees. Risk assessment
is an important tool for evaluating potential risks and
defining measures. At the Mercedes-Benz Group, this is
done with the help of standardized and globally availa-
ble software, for example. The Mercedes-Benz Group
also assesses the mental and ergonomic stress caused
by workplaces and the working environment.
Risk management
Occupational health and safety issues throughout the
Group are managed by the Health & Safety unit, which
is part of Human Relations. The topics are regularly dis-
cussed and decided on in various committees.
The international Group Occupational Health and Safety
Policy specifies binding tasks, duties, necessary bodies
and communication requirements for all controlled and
consolidated companies. This policy is based on the
ISO 45001 standard. The policy is valid for all employ-
ees as well as temporary workers whose work and/or
workplace is controlled by the organization.
To Our Shareholders
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Corporate Governance
Consolidated Financial Statements
Corporate Governance
Advantages and risks of the new systems
The Mercedes-Benz Group also uses educational pro-
grammes to raise public awareness of vehicle safety
and road safety.
The goal of increasing safety on the road can only be
achieved though collaboration, and that is why the
Mercedes-Benz Group establishes partnerships and
participates in research projects. The Mercedes-Benz
Group has been involved in the "Tech Center i-protect"
strategic cooperation project since 2016. The project
includes partners from business, government and sci-
entific institutes. Within this cooperation the Mercedes-
Benz Group is working on projects such as new restraint
systems for future vehicle interiors. It is also utilizing
digital accident research methods and trying out new
approaches, such as the use of accident simulations
involving digital models of human beings.
Cooperation to further improve vehicle safety
The Mercedes-Benz Group utilizes its holistic Integral
Safety concept in its vehicle development activities.
This concept describes how Mercedes-Benz divides the
utilization of safety systems into four phases: assis-
tance during driving, preparation for a possible acci-
dent, protection during an accident and help after an
accident. The Group's safety measures establish a
bridge between active and passive safety within these
four phases i.e. between accident prevention (phases
1 and 2) and protection when an accident occurs
(phases 3 and 4). The objectives and decisions in the
area of road safety are assured by the Steering Commit-
tee Integral Safety (LK IS) and implemented in conjunc-
tion with the participants of the product projects. The
LK IS reports directly to the Research & Development
Executive Committee of Mercedes-Benz AG.
Real-life safety is the safety philosophy at the
Mercedes-Benz Group. For decades, the Mercedes-Benz
Group's own systematic accident research, which is
integrated into vehicle development, has formed the
basis for new safety systems. This research also analy-
ses real accidents and uses the knowledge gained from
such analyses to assess new technologies from a vehi-
cle safety perspective.
Holistic safety concept
users.
Safety is part of the brand essence of Mercedes-Benz.
Accident-free driving this vision drives the Mercedes-
Benz Group and is a fixed component of its sustainable
business strategy. The Group's driver assistance sys-
tems are intended to offer drivers and other occupants
a high level of safety. These systems can help drivers
avoid or safely manage critical situations on the road in
order to protect both vehicle occupants and other road
Ongoing
Continue the integration of social and ethical aspects
into SAE Level 2-4 automated driving systems
Ongoing
Fewer accidents, greater road safety: this is one of the
objectives associated with the utilization of automated
and autonomous vehicle systems. In pursuing these
goals, the Mercedes-Benz Group also considers ethical
and legal risks associated with automated systems.
Thus they are already taken into account in product
development. The company is implementing data pro-
tection principles and standards along the entire value
chain in accordance with the "privacy by design" maxim.
The Group is also integrating ethical considerations into
conditionally automated and highly automated driving
Ongoing
Expand the automation of driving functions for SAE Lev-
els 2-4
Social issues
Traffic safety
Target
Ongoing
Target horizon
Further Information
Make vehicles even safer for occupants during an acci-
dent and afterwards
Ongoing
Make vehicles even safer for other road users, such as
pedestrians
Ongoing
Further improve accident-prevention systems
Increase overall safety in road traffic by means of safety
initiatives
With regard to the confirmed violations, the Mercedes-
Benz Group decides on appropriate response measures
in line with the principles of proportionality and fair-
ness. The personnel measures in 2023 included
admonishments, warnings and terminations without
notice.
Sales partners and suppliers
The Mercedes-Benz Group expects not only its employ-
ees to comply with laws and regulations. The Group
also places clear compliance requirements on its sales
partners and suppliers, because it regards integrity and
conformity with regulations as a precondition for trust-
based cooperation. The Mercedes-Benz Group formu-
lates in detail what it expects from its business partners
in the Business Partner Standards (BPS) and specifically
for its suppliers in the Responsible Sourcing Standards
(RSS); both documents are publicly available on the
Group website.
On the basis of the BPS and RSS standards and the
Integrity Code, the Mercedes-Benz Group makes web-
based Compliance Awareness Modules (CAMs) avail-
able to both for sales business partners and suppliers.
These modules are intended to sensitize them to rele-
vant integrity and compliance requirements such as
those related to anti-corruption measures and technical
Compliance. Through these measures, the Mercedes-
Benz Group also offers its sales business partners and
suppliers extensive assistance for dealing with possible
relevant compliance risks.
additional specific questionnaires. During the ongoing
cooperation with the sales partners, the existing due
diligence processes are reviewed on an ad hoc or cycli-
cal basis depending on the risks identified. Another
component of the due diligence process is permanent
monitoring, in which the Group continuously checks
existing sales partners in relevant databases and valid
sanctions lists in order to identify potential breaches of
integrity. If a partner fails to comply with the Group
standards or if there are breaches of integrity that can-
not be resolved, the Mercedes-Benz Group reserves the
right to terminate the selection process or the coopera-
tion. In conjunction with the procurement departments,
the Group is constantly enhancing the existing pro-
cesses for the selection of and cooperation with its
suppliers.
Communication and training
The Mercedes-Benz Group offers an extensive range of
compliance training courses that are based on its Integ-
rity Code for example, courses for employees in
administrative areas and for members of the Supervi-
sory Board and the executive management of Group
companies.
The contents and topics of the training courses are tai-
lored to the roles and functions of the respective target
group. The Mercedes-Benz Group regularly analyses the
need for its training programme, expands or adapts it as
necessary and conducts evaluations.
Further Information
In the selection of direct sales partners and in existing
sales partnerships, the Mercedes-Benz Group ensures
that its business partners comply with laws and
observe ethical principles. For this purpose, we use a
globally standardized, risk-based Sales Business Partner
Due Diligence Process. All new sales partners are sub-
jected to a due diligence process. A partnership is only
possible if this process is successfully completed. The
risk-based review takes into account, among other
things, the planned business model, the country risk
and the involvement of third parties and government
contacts. The concrete risks are determined using
Consolidated Financial Statements
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Combined Management Report
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To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In the reporting year, 55 new cases were opened with
75 persons affected by the allegation (previous year:
58 cases/72 persons). In total, 54 persons were proven
to have committed violations with a high risk for the
company, its employees or other persons. Of these, six
violations belonged in the category of passive corrup-
tion. Six violations fell into the category of undue
enrichment or theft in excess of €100,000, seven into
the category of damage over €100,000. 12 violations fell
into the category of reputational damage. In 15 cases of
violations, accusations of inappropriate behaviour of
employees toward other employees were confirmed
e.g. violation of psychological/physical integrity, sexual
harassment or racism. Eight confirmed violations with
high risk referred to other categories.
Reported violations
In an effort to constantly increase trust in the BPO
whistleblower system and make it even better known to
employees, the Mercedes-Benz Group uses various
communication measures to provide extensive informa-
tion materials in a variety of languages. In addition, the
company regularly informs employees about the type
and number of reported violations and makes case
studies available in an anonymous form on a quarterly
basis.
breach of trust, and undue enrichment valued at less
than €100,000 - if the violation does not fall into the
category of corruption.
Annual Report 2023 | Mercedes-Benz Group
The BPO refers information on all other breaches involv-
ing risk to the responsible department - such as HR,
Corporate Security or Data Privacy. The relevant depart-
ments follow up the information and clarify the cases
on their own responsibility. Examples include theft,
Corporate Governance
Contents
The Mercedes-Benz Group's commitment to the respon-
sible use of data is anchored in its data vision. In the
period from November 2022 to May 2023, the
Mercedes-Benz Group focused on revising this guide-
line, which is known as the Mercedes-Benz Data Vision,
and deriving and launching measures to increase cus-
tomer confidence. The key message of the guideline is:
"For the Mercedes-Benz Group, customer trust and the
responsible use of customer data are the basis for sus-
tainable digital products and services."
110
If, following a risk-based initial assessment, the BPO
classifies an incident as a breach of regulations with a
high risk for the Mercedes-Benz Group, its employees or
other persons, it refers the case to an investigation unit.
The BPO accompanies the subsequent investigation
until the case is closed. Examples of high-risk rule vio-
lations include offences related to corruption, breaches
of antitrust law and violations of anti-money laundering
regulations, as well as infringements of binding techni-
cal provisions or environmental protection regulations.
Personal matters, such as incidents of sexual harass-
ment or human rights violations, are also considered
high-risk rule violations.
The Chief Compliance Officer of the Mercedes-Benz
Group is also the Group's Human Rights Officer. He is a
member of the Group Sustainability Committee and
reports to the Board of Management member responsi-
ble for Integrity, Governance & Sustainability. The
Human Rights Officer is responsible for monitoring
compliance with the Principles of Social Responsibility
and Human Rights and the HRRS. He reports annually
and as needed to the Mercedes-Benz Group AG Board
of Management and other bodies on particularly rele-
vant human rights issues and the status of implementa-
tion of the Principles of Social Responsibility and
Human Rights.
Overarching activities relating to human rights issues
are managed by the Mercedes-Benz Group AG execu-
tive division Integrity, Governance & Sustainability. This
division is responsible for the Principles of Social
Responsibility and Human Rights as well as for enhanc-
ing the human rights due diligence obligations within
the Mercedes-Benz Group via the Group's Human Rights
Respect System (HRRS). The responsible member of the
Board of Management continues to develop the topic in
line with the targets set by the Board of Management
and the Supervisory Board. To this end, this member
regularly obtains information and corresponding reports
about the Company's human rights activities.
Organizational embedding
The Mercedes-Benz Group is committed to ensuring
that human rights are respected and upheld along the
entire value chain in all Group companies and by part-
ners, particularly suppliers. The Principles of Social
Responsibility and Human Rights reflect this self-com-
mitment. They supplement and specify the Integrity
Code with respect to the principles of human rights and
good working conditions and are binding for all manag-
ers and employees of the Mercedes-Benz Group AG as
well as the consolidated Group companies worldwide.
Policy commitment
Respect for human rights has key importance for the
Mercedes-Benz Group and is an obligation as well as a
mission for the Group. For this reason, upholding
human rights is an area of action of its sustainable busi-
ness strategy. The Mercedes-Benz Group also intro-
duced a corresponding risk-based system to uphold
ongoing human rights due diligence obligation. The
measurable targets and key figures for the system are
defined in the sustainable business strategy.
In addition to its own commitment to respecting
human rights, the Mercedes-Benz Group is observing
growing interest in the topic of human rights among
consumers, civil society organizations, investors and
rating agencies.
The expansion of electric mobility in particular is also
putting a spotlight on the respect for human rights
within the automotive supply chain, because the pro-
duction of battery cells requires the use of raw materi-
als such as lithium and cobalt. These raw materials
often come from countries where there is a risk that
they are mined under conditions that could be critical
from a human rights standpoint.
2026
The goal of the Mercedes-Benz Group is to combine
achieving business success with acting responsibly
toward the environment, people and society - and
doing so along the entire value chain.
To Our Shareholders
Target achieved
2028
Target horizon
Review of 100% of product groups sourced from service
supply chains posing an increased risk of human rights
violations
Milestone: Assessment of 50% of all production raw
materials used by the Mercedes-Benz Group with an
increased risk of human rights violations and definition
of necessary improvement measures
Define and implement protective measures for 100% of
the Mercedes-Benz Group's production raw materials
which pose an increased risk of human rights violations
Milestone: Assessment of 70% of all production raw
materials used by the Mercedes-Benz Group with an
increased risk of human rights violations and definition
of necessary improvement measures
Target
Social compliance
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
2025
The information provided to the BPO whistleblower sys-
tem enables the Mercedes-Benz Group to learn about
potential risks and thus to prevent damage to the Group
and its employees or to third parties, as well as to pro-
tect individuals who might be harmed by misconduct. A
globally valid Group policy defines BPO procedures and
the corresponding responsibilities. It aims to ensure a
fair and transparent procedure that takes into account
both the protection of the whistleblower and the princi-
ple of proportionality for the persons affected by the
allegation. The policy also defines the standard by
which the Mercedes-Benz Group assesses breaches of
the rules and decides on the consequences.
Corporate Governance
The whistleblower system BPO
Target horizon
- Comply with all applicable embargoes and sanctions
- Prevent money laundering and terrorist financing
- Complying with data protection laws and strengthen-
ing customer trust by handling data responsibly
- Ensure compliance with product requirements
- Preserve and promote fair competition
- Comply with anti-corruption regulations
- Respect and uphold human rights
With its compliance activities, the Mercedes-Benz Group
particularly pursues the following central goals:
- Enhancing the culture of integrity in a targeted manner
through feedback from integrity measurements
- Defining integrity-related priorities and challenges and
provide employees with guidance
- Employees and managers behave and act in an ethical
and responsible manner
- Promoting ethical conduct - within the mandatory
rules and frameworks and beyond
- Minimizing risks through knowledge of and compliance
with the Integrity Code
With its integrity activities, the Mercedes-Benz Group
pursues the following central goals:
Target
Integrity and compliance
Ongoing
Ongoing
The Mercedes-Benz Group is convinced that only those
whose actions are ethical and legally responsible
remain successful in the long term. This is especially
the case during times of upheaval and transformation.
Hence, integrity and compliance are very important to
the Mercedes-Benz Group.
A corporate culture of integrity
Information, dialogue and training
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
104
To Our Shareholders
Contents
Further Information
Annual Report 2023 | Mercedes-Benz Group
The Integrity Code is binding on all employees of
Mercedes-Benz Group AG and all the Group companies
worldwide. It includes, among other things, regulations
concerning corruption prevention measures, respect for
human rights, data management and compliance with
technical product requirements. The Integrity Code that
was revised in 2022 was communicated to employees
at the beginning of the reporting year; it is available on
the employee portal in eleven languages along with all
the key information on its application.
The Mercedes-Benz Group requires and empowers its
employees to consistently uphold its corporate princi-
ples. The Integrity Code, which is valid throughout the
Group, provides them with guidance because it serves
as the shared standard of values, defines the guidelines
for all conduct and helps the company make the right
decisions.
Integrity Code and corporate principles
the Board of Management responsible for Integrity,
Governance & Sustainability.
"Integrity Management & Corporate Responsibility" is
part of this Board of Management division. Among other
things, it works to promote and enhance integrity within
the Mercedes-Benz Group and create a shared under-
standing of integrity. The aim is to assist the business
units in embedding integrity into their day-to-day work
on their own responsibility. The goal is to avoid possible
risks that can arise due to unethical behaviour and thus
to contribute to the long-term success of the Mercedes-
Benz Group. The Head of Integrity Management & Cor-
porate Responsibility reports directly to the member of
At the Mercedes-Benz Group, integrity, compliance and
legal affairs are combined into the executive division
Integrity, Governance & Sustainability. It supports all
corporate units in their efforts to embed these topics in
daily business activities.
Organization and areas of responsibility
Putting integrity into practice contributes to the suc-
cess of the Mercedes-Benz Group. That's why integrity
is a central element of the Mercedes-Benz Group's cor-
porate culture and an enabler that is an integral part of
the company's sustainable business strategy. For the
Group, this involves more than just obeying laws and
regulations. The Mercedes-Benz Group also aligns all its
actions with its corporate principles, which in particular
include fairness, diversity, responsibility, respect, open-
ness and transparency.
The Mercedes-Benz Group has also formulated a special
set of requirements for managers in the Integrity Code.
In particular, it expects managers to serve as role mod-
els through their ethical behaviour.
The Mercedes-Benz Group established its Infopoint
Integrity in order to promote a culture of integrity at the
Company. The Infopoint works with experts for legal
and human resources topics, data protection, compli-
ance as well as diversity and sustainability, among
others, and serves as the central point of contact for
questions concerning ethical behaviour for all of the
Group's employees. It either provides direct support or
connects employees with the appropriate contacts.
Consolidated Financial Statements
Combined Management Report
Non-Financial Declaration
-
-
In order to ensure political discussions with a broad
range of interest groups, representatives from the
Mercedes-Benz Group take part in key events at the
regional, national and international level. Here are a few
examples:
Together with stakeholders, the Mercedes-Benz Group
supports the opinion-forming process at both the
national and international level in order to promote the
sustainable business goals and the transformation of
the automotive industry. The Group also addresses rel-
evant future-oriented questions that go beyond the
issues that are important to the automotive industry
and incorporates the results into its strategy.
Stakeholder dialogue
Mercedes-Benz Group AG did not make any financial or
non-financial donations to political parties during the
reporting period. This decision was not based on cur-
rent political or economic events.
The Mercedes-Benz Group's Lobbying, Political Contri-
butions and Party Donations policy defines responsible
approaches to be used in connection with grants, dona-
tions to political parties, and other instruments for rep-
resenting the company's interests in the political realm.
The company also has a Donations and Sponsorships
Policy in place.
Donations to political parties and other political
organizations
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
101
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Business & People Protection Office (BPO) whistle-
blower system enables all employees worldwide, as
well as external informants, to report violations of the
rules. The BPO is available around the clock to receive
information, which can be sent by e-mail or normal mail
or by filling out a special online form. External toll-free
hotlines are also available in Brazil, Japan, South Africa
and the United States. Reports can also be submitted
anonymously if local laws permit this. In Germany,
whistleblowers have access to additional contact points
such as an external neutral intermediary and other
external reporting channels (e.g. the federal govern-
ment's external reporting office at the Federal Office of
Justice, the Federal Financial Supervisory Authority's
(BaFin's) whistleblower office, and the whistleblower
system of the Bundeskartellamt (federal competition
authority).
As part of External Affairs' Regional Political Dialogue
discussion series in Stuttgart (Germany), Mercedes-
Benz Group Board of Management members came
together with representatives of state and local gov-
ernments to discuss the steps needed to transform
the automotive industry.
At the seventh annual event of the Strategiedialog
Automobilwirtschaft Baden-Württemberg in Berlin
(Germany), politicians and the leaders of Baden-Würt-
temberg's automotive sector discussed the necessary
framework conditions for a successful transformation
of the automotive industry to future-oriented mobility
solutions.
In the reporting year, representatives of the Group
took part in the Urban Future Global Conference in
Stuttgart (Germany). The Conference's agenda
included, among other topics, resource-conserving
consumption, heat-resilient urban districts, cli-
mate-neutral energy supply and social participation.
The Mercedes-Benz Group took part in the European
Round Table of Industry (ERT) in the reporting year.
The aim of the forum is to develop long-term busi-
ness-friendly strategies in cooperation with the Euro-
pean Commission.
103
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further information on the work in associations can be
found in the Mercedes-Benz Group Climate Policy Report.
group.mercedes-benz.com/investors/share/esg)
Association of the Automotive Industry (VDA) are par-
ticularly notable.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The External Affairs unit is responsible for direct discus-
sions with people from the political arena and members
of interest groups and associations that are committed
to sustainable development. Together with the ESG
Stakeholder Management unit, External Affairs is also
involved in various sustainability initiatives and net-
works. Some of the most important initiatives here are
the UN Global Compact (UNGC), econsense - German
Business Forum for Sustainable Development, and the
World Business Council for Sustainable Development.
Among the associations, the memberships in the Euro-
pean Automobile Manufacturers' Association (ACEA),
The Mercedes-Benz Group engages in a targeted dia-
logue with local stakeholders from government and
society when planning new projects or when the need
arises to address issues relating to its sites. Board
members are also involved in the local dialogue. The
aim here is to reconcile the interests of the sites in
question with the wishes and concerns of local resi-
dents and establish conditions that benefit all of the
parties involved.
During the Sustainability Dialogue in Stuttgart (Ger-
many) in 2023, representatives from the Advisory Board
for Integrity and Sustainability and representatives from
government, business and NGOs took part in a work-
shop where they drew up criteria for the development
of partnerships. Partnerships that have a more global
degree of application may be more effective.
a balanced data regulation in order to ensure eco-
nomic growth and technological innovation.
The China Development Forum (CDF) is an annual
international forum organized by the State Council of
China. At the CDF, the CEO of the Mercedes-Benz
Group emphasized the importance of further imple-
menting China's open-door policy and of maintaining
102
The Integrity Network, which is made up of representa-
tives from the business units, aims to embed integrity
in day-to-day business and make it tangible for employ-
ees. The semi-annual member reports also provide
insights into the integrity activities of the business
units. The Integrity Network implemented the package
of measures of the “Integrity Experience”. This was
based on individually combinable modules on various
integrity topics, which were provided by the Integrity
Management department. With the help of these meas-
ures, employees were able to consciously reflect on
their own actions in their day-to-day work.
the Alliance for Automotive Innovation and the German
In addition, the employees in administrative areas at
Mercedes-Benz Group AG and in the consolidated
Group companies regularly have to complete a manda-
tory online training course about integrity that is based
on the Integrity Code. Because managers serve as role
models, they perform an especially important task with
regard to compliance, integrity, legal matters and sus-
tainability. In order to help them as much as possible to
carry out this role, the online training programme also
includes a special mandatory management module.
The Mercedes-Benz Group's Data CMS supports the
Group in the systematic and risk-based implementation
of measures to ensure compliance with the data pro-
tection requirements. It takes into account the existing
applicable data-protection regulations.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
107
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The implementation of data governance in the divisions
of the Mercedes-Benz Group is the responsibility of
the various bodies for data and data analytics. Within
the Mercedes-Benz Group there is also a Digital Gov-
ernance Board that includes members of the Board of
Management. This body defines the framework for
Group-wide core topics of digital governance and thus
supports the digital transformation of the Group. The
Chief Officer Corporate Data Protection at the
Mercedes-Benz Group is responsible for the perfor-
mance of the tasks required by law to ensure compli-
ance with data protection rules.
design of data-based business models and the respon-
sible, ethical and legally compliant use of data in the
interests of customers, employees and other stakehold-
ers. To achieve these strategic goals, the Mercedes-
Benz Group is pursuing a systematic approach. Key ele-
ments are the data governance structure, the data
vision, the data culture and the aforementioned Data
CMS.
Ensuring the protection of personal data (data privacy)
and information security is a top priority at the
Mercedes-Benz Group. The Mercedes-Benz Group
regards the protection of personal data and the security
of IT systems as essential components of comprehen-
sive data governance. The key aims are the sustainable
Responsible handling of data
The "Speak up" and "Judgement calls" commitment
statements provide all employees in the development
and certification units with a basis for a common
understanding of responsible behaviour in the product
creation process. They were drawn up jointly by Integ-
rity Management and R&D departments and are further
embedded by internal departmental measures.
Ensuring compliance with product requirements
For the Mercedes-Benz Group, technical Compliance
means adhering to technical and regulatory require-
ments, laws and standards. The objective here is to
identify risks within the product creation process (prod-
uct development and certification) at an early stage and
to implement preventive measures. For this purpose,
the Group established a technical Compliance Manage-
ment System (tCMS) in its automotive divisions. Its
objective is to ensure that Mercedes-Benz Cars and
Mercedes-Benz Vans comply with all legal and regula-
tory requirements throughout the entire product devel-
opment and certification process. The tCMS defines
values, principles, structures and processes in order to
provide employees with guidance and orientation,
especially with regard to challenging questions on how
to interpret technical regulations.
The Group-wide Antitrust Compliance Programme is ori-
ented to national and international standards for ensur-
ing fair competition. The programme establishes a bind-
ing, globally valid Group standard that defines how
matters of antitrust law are to be assessed. In addition
to Mercedes-Benz Group AG's central Legal and Com-
pliance department, the Group's global divisions can
turn to local legal and compliance advisers. Employees
receive further support through advice hotlines, guide-
lines and practical support.
Promoting fair competition
The Mercedes-Benz Group wants to further strengthen
its customers' trust in Mercedes-Benz's data processing.
To this end, the Mercedes me Privacy Center is con-
stantly being enhanced, with the aim of making the pri-
vacy settings as clear and intuitive as possible. Custom-
ers use the Mercedes me Privacy Center to obtain an
overview of what personal data of theirs is processed
for which purpose. They should be able to easily decide
and set the purposes for which Mercedes-Benz and
certain third parties may use this data. The Privacy
Center already covers various such processing activi-
ties, and more are planned. The portal can be accessed
on the web and via the new version of the Mercedes me
App launched in the year under review.
-
The Mercedes-Benz Group is also working on the further
development and implementation of data sharing solu-
tions. In cooperation with partners such as cities,
municipalities and insurers, it tries to make data availa-
ble in a way that benefits the general public while pro-
tecting privacy for example, by sharing vehicle data
with cities in order to increase road safety. In addition,
the Mercedes-Benz Group is continuously working on
technologies to promote privacy, and it made new
developments available internally in the reporting year.
The aim is to include privacy-enhancing technologies,
Prevention of money laundering and terrorist
financing
accordance with Standard 980 of the Institute of Public
Auditors in Germany. These audits, which were based
on the principles of appropriateness, implementation
and effectiveness, were successfully completed for our
CMS Corruption Prevention in late 2019, for our tCMS
(focus on emissions) in late 2020 and for our CMS Anti-
trust in late 2021. The latter was the second such audit,
the first having been conducted in 2016.
In addition, the Annual Integrity Meeting was held in
May 2023 with members of the Board of Management,
members of the Integrity Network and an external
expert. Under the motto "Integrity meets... TRANSFOR-
MATION", the participants discussed how integrity can
be implemented in one's day-to-day professional life in
times of change.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
108
To Our Shareholders
The Corruption Prevention Compliance Programme at
the Mercedes-Benz Group is based on its CMS.
Contents
In order to ensure an independent external assessment
of the Compliance Programme, Mercedes-Benz
Group AG commissioned KPMG AG Wirtschaftsprü-
fungsgesellschaft to audit the Group's CMS for Corrup-
tion Prevention, Antitrust and technical Compliance in
The compliance programme comprises principles and
measures that are designed to reduce compliance risks
and counteract violations of laws and regulations. The
individual measures are based on the knowledge
gained through the Group's systematic compliance risk
analysis. The Mercedes-Benz Group focuses, among
other things, on the following aspects: the continuous
raising of awareness of compliance issues, preventative
training measures, the systematic tracking of informa-
tion received regarding misconduct, and the formula-
tion of clear standards for the behaviour of business
partners.
Compliance programme
The Mercedes-Benz Group evaluates its companies and
corporate departments systematically each year in
order to reduce compliance risks. In this process, the
Mercedes-Benz Group uses, for example, centrally
available information about its companies, such as rev-
enue, business models and relations with business
partners. If necessary, other locally sourced information
is supplemented. The results of the compliance risk
analysis form the basis of compliance risk management
and are therefore also the basis for defining measures.
Compliance risks
The integrated compliance approach also checks appli-
cable sanction lists and restrictions on certain goods
and implements measures for the prevention of money
laundering and the financing of terrorism. On the one
hand, these measures aim to prevent supranational and
national sanctions and goods-related embargoes from
being violated or evaded. On the other, it seeks to com-
bat third-party activities that are suspected of involving
money laundering, the financing of terrorism, organized
crime and other types of corporate crime.
For this reason, the Mercedes-Benz Group established a
two-pillar model (trade in goods and mobility services)
which takes into account the different regulatory
requirements in the area of goods trading on the one
hand and the area of financial services on the other.
Moreover, the Mercedes-Benz Group defines prevention
and combating of money laundering and the financing
of terrorism as central compliance goals in the Group's
Integrity Code.
Money laundering and the financing of terrorism cause
tremendous damage to the economy and society. Even
an accusation of money laundering can compromise a
company's reputation and could have financial conse-
quences for the Mercedes-Benz Group, as well as for its
stakeholders.
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group has committed itself to fight-
ing corruption because corruption undermines fair
competition and thereby harms all of society. The
Group's corruption prevention measures extend beyond
compliance with national laws and also encompass the
guidelines from the OECD Convention on Combating
Bribery of Foreign Public Officials in International Busi-
ness Transactions (1997) and the United Nations Con-
vention against Corruption (2003).
among others, in the product design process right from
the start.
Main objectives for compliance management
Value-based compliance is an indispensable part of the
Mercedes-Benz Group's daily business activities and is
firmly embedded in its corporate culture. The Group is
strongly committed to responsible conduct. It expects
its employees to comply with laws, regulations and vol-
untary self-commitments, and helps them do so. The
Mercedes-Benz Group has laid down these expecta-
tions in a binding form in its Integrity Code. Through its
Compliance Management System (CMS), the Mercedes-
Benz Group aims to promote compliance with laws and
policies. The necessary measures are defined by the
compliance organization in a process that also takes
the company's business requirements into account in
an appropriate manner. The CMS consists of basic prin-
ciples and measures that promote compliant behaviour.
It is applied worldwide. The CMS encompasses seven
Value-based compliance
management
various specialist units meet with the Advisory Board
members to discuss the areas of action and enablers
identified in the sustainable business strategy and also
to talk about targets, strategies, measures and the
results achieved with these. The Advisory Board also
holds regular meetings with managers and other
employees to discuss specific topics. In 2023, the Advi-
sory Board dealt with topics such as human rights, data
responsibility, the responsible use of artificial intelli-
gence and the further development of the sustainable
business strategy.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Another driving force for the Group's sustainability work
is the Advisory Board for Integrity and Sustainability.
The board's members are independent external special-
ists from the fields of science and business as well as
from civic organizations, and include experts who pos-
sess specialized knowledge regarding environmental
and social policy, the development of traffic and mobil-
ity, and human rights and ethical issues. The members
of the Advisory Board support the Mercedes-Benz
Group with constructive criticism on questions related
to integrity, sustainability and corporate responsibility.
The Advisory Board convenes several times a year in
meetings that are chaired by the member of the Board
of Management responsible for Integrity, Governance &
Sustainability. One of these annual meetings specifically
serves to exchange information with other members of
the Board of Management and members of the Supervi-
sory Board. During the Sustainability Dialogue in Stutt-
gart (Germany), the responsible managers from the
The Advisory Board as an important driving force
Plans call for the culture of integrity within the
Mercedes-Benz Group to be reassessed as part of the
next employee survey, among other things.
All managers and employees can access the Integrity
Toolkit via the employee portal. It includes tools for
possible follow-up activities based on the respective
results of the employee survey.
The survey results have a direct influence on the remu-
neration of the management.
The results of the PULSE23 employee survey showed
that the perception of the culture of integrity among
employees has improved since the last employee sur-
vey. The basis for this is an environment of trust in
which managers are also open to criticism, and unethi-
cal behaviour and mistakes in the working environment
can be openly and constructively addressed. The
results are used in the follow-up process to derive
measures and thus further strengthen the culture of
integrity.
Combating corruption
The Mercedes-Benz Group consistently works on its
understanding of integrity, continually refines it further
and repeatedly reviews itself. In addition to the feed-
back from the Integrity Network, the employee survey
is an important measure for these activities.
Employee survey
elements that build on one another: Compliance Val-
ues; Compliance Targets; Compliance Organization;
Compliance Risks; Compliance Programme; Training;
and Monitoring and Improvement.
Each year, the Mercedes-Benz Group checks the pro-
cesses and measures of the CMS and conducts analy-
ses to find out whether the measures are appropriate
and effective. For these activities, it relies on informa-
tion from the Group companies as well as additional
locally gathered information. The Group also monitors
their processes on the basis of key performance indica-
tors. To determine these indicators, the Mercedes-Benz
Group checks, among other things, whether formal
requirements are being met and whether the content is
complete. It also takes into account the knowledge
gained through both internal and independent external
105
Whenever new legal requirements or findings from risk
analyses call for adjustments, the Mercedes-Benz
Group adapts the CMS accordingly. The Group compa-
nies are required to implement the improvement meas-
ures derived from this process. In addition, the respon-
sible management committees are informed about the
results of their monitoring process.
Consolidated Financial Statements
assessments.
Corporate Governance
Combined Management Report
Non-Financial Declaration
106
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
In addition, the CCO reports to the Group Risk Manage-
ment Committee. From the Mercedes-Benz Group's per-
spective, the structure of the reporting lines safeguards
The CCO reports directly to the member of the Board of
Management responsible for Integrity, Governance &
Sustainability as well as to the Audit Committee of the
Supervisory Board. He or she also reports regularly to
the Board of Management at regular intervals and as
needed on matters such as the status of the CMS and
its further development, as well as the Business & Peo-
ple Protection Office (BPO) whistleblower system. The
CCO is also the Vice President Legal Product & Technol-
ogy and the Human Rights Officer.
The Compliance Board provides guidance regarding
overarching compliance topics and monitors whether
the associated Group measures are effective. The
Board's mission is to react promptly to changes in busi-
ness models and the business environment, deal with
regulatory developments and continuously enhance the
CMS. The Compliance Board consists of representatives
of the compliance, integrity and legal affairs area. It
meets regularly and as needed, and is chaired by the
Chief Compliance Officer (CCO).
advice. Contact persons are available to each function
and region. In addition, a global network of local
officers makes sure that the Group's compliance stand-
ards are met. The contact persons help the manage-
ment at the Group companies implement the compli-
ance programme at their respective sites.
-
The compliance organization at the Mercedes-Benz
Group is structured functionally, regionally and along
the value chain. As a result, it can provide effective
support for example, by means of guidelines and
the independence of the compliance organization from
the business divisions'
Compliance organization
The Mercedes-Benz Group also continued to conduct
audits at Tier 1 suppliers in 2023, when it made 744
on-site inspections. Among other things, anomalies were
detected with regard to working hours, the communica-
tion of our sustainability standards and business ethics.
If on-site inspections reveal deficiencies at a supplier,
the Mercedes-Benz Group calls on the supplier to
improve the relevant processes. If the supplier does
not sufficiently remedy the criticised processes, the
Group makes individual decisions regarding the next
steps. In especially severe cases, these decisions can
be made by management bodies. As a last resort, this
can also lead to the discontinuation of the Mercedes-
Benz Group's business relationship with a supplier.
Raising awareness of human rights issues
Corporate Governance
Contents
Annual Report 2023 | Mercedes-Benz Group
department initiates an extensive examination of the
situation.
113
Combined Management Report
Non-Financial Declaration
The Integrity Code and the Principles of Social Respon-
sibility and Human Rights are binding for all employees
of the Mercedes-Benz Group as well as the consoli-
dated Group companies. Both are the subject of the
mandatory basic online module Integrity@Work, which
also covers topics related to integrity and compliance
and must be completed every three years by all
employees of the administration of Mercedes-Benz
Group AG as well as the consolidated Group companies.
In 2023, human rights compliance training was also
introduced for all managers of Mercedes-Benz
Group AG and consolidated Group companies
To Our Shareholders
The Group has incorporated the guidelines for sustaina-
ble supply chain management into the Responsible
Sourcing Standards (RSS). They define minimum
requirements and expectations for direct suppliers and
contractually oblige them to comply with these require-
ments, to communicate them to their employees and
The Mercedes-Benz Group uses a variety of measures
and concepts to ensure the fulfilment of its due dili-
gence obligations in the supply chain. This includes
training, preventive and corrective measures, risk analy-
ses, documentation for tracking and reporting purposes
and effectiveness checks. With these instruments, the
Mercedes-Benz Group intends to increase transparency
in the supply chain and to ensure that internationally
recognized human rights are upheld by business part-
ners as well, and that other social standards and envi-
ronmental requirements are met. The procurement
units for production materials, non-production materi-
als and services play a key role here.
Measures in the supply chain
The goal here is to prevent, minimize or, if possible,
bring to an end any negative impacts on human rights
worldwide. The RSS are an integral part of all new
orders for Tier 1 suppliers and the key contractual docu-
ment for minimum and sustainability requirements.
They are applied worldwide.
upstream stages of the value chain and to monitor com-
pliance with them in their business processes and
sphere of influence.
The Mercedes-Benz Group is committed to the respon-
sible procurement of production materials, non-produc-
tion materials and services.
Requirements for suppliers
Further Information
In the reporting year, the Mercedes-Benz Group was
able to complete 57% of the process of reviewing all 24
raw materials, thus achieving its target for 2023. The
achievement describes the progress in the overall pro-
cess of assessing all 24 raw materials, which includes
fully complete and partially complete assessments.
The Mercedes-Benz Group also carefully checks the
services it uses. Services that are particularly critical
from a human rights perspective were identified as part
of an impact assessment. The analysis resulted in a list
of 27 services that are potentially critical in terms of
human rights.
Consolidated Financial Statements
We regularly conduct such risk mapping in order to
address current developments and adapt our risk clas-
sification if necessary. The main human rights risks for
the identified services are then determined on a step-
by-step and supply chain-specific basis and appropri-
ate measures are defined.
In addition, Tier 1 suppliers were continuously screened
for human rights violations and breaches of environ-
mental standards in the reporting year. The objective is
to identify possible violations at an early stage on the
basis of the latest supplier data. Should there be any
indication revealed, the responsible procurement
Further Information
Climate change mitigation
Since 2018, Mercedes-Benz AG has been cooperating
with the Drive Sustainability initiative on the implemen-
tation of measures to make production material suppli-
ers in various focus countries more aware of the impor-
tance of sustainability and provide them with
information on this issue. The Group selected the
respective countries jointly with the initiative.
Companies that are required to publish a Non-Financial
Declaration must also comply with the Taxonomy Regu-
lation. According to Article 8 of the Taxonomy Regula-
tion, the Taxonomy-aligned proportions of revenue,
capital expenditure and operating expenditure
accounted for by environmentally sustainable economic
activities are to be reported on an annual basis.
Protection and restoration of biodiversity and
ecosystems
-
Consolidated Financial Statements
- Pollution prevention and control
Transition to a circular economy
Sustainable use and protection of water and marine
resources
Climate change adaptation
One of the important goals of the Commission Action
Plan on Financing Sustainable Growth in the context of
the European Green Deal is to divert capital flows to
sustainable investments. This is also the logic behind
the EU Taxonomy Regulation (EU 2020/852) that came
into force in mid-2020. This regulation governs the
establishment of a standardized and legally binding
classification system that defines the types of eco-
nomic activity in the EU that are considered to be Tax-
onomy-aligned - and thus environmentally sustainable
with regard to six environmental objectives established
by the regulation:
EU Taxonomy
-
-
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
114
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
With regard to supply chains, suspected violations of
the Responsible Sourcing Standards can be reported
via the BPO. If the misconduct or problem falls within
the supplier's area of responsibility, the supplier must
take measures to immediately correct or eliminate the
problem.
The BPO whistleblower system enables employees and
external whistleblowers worldwide to report rules viola-
tions. The Mercedes-Benz Group can thus become
aware of potential human rights risks, can prevent dam-
age to the Group and its employees or to third parties,
and protects individuals who might be harmed by mis-
conduct.
Complaints management
worldwide to familiarize them with the requirements of
human rights due diligence in accordance with their
respective function.
Corporate Governance
Y; N; N/EL³
112
DNSH criteria
Circular
Water economy
Pollution Biodiversity
of Taxono-
my-aligned
(A.1) or
Taxonomy-
("do no signifi- Minimum eligible (A.2)
cant harm") 5 safeguards
Category:
revenue
Category:
enabling transitional
activity
activity
in millions of
euros
in %
Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³
Y/N
Y/N
in %
E
T
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Manufacture of low-carbon technologies for transport
CCM 3.3
20,704
14%
Y
Taxonomy-eligibility
Annual Report 2023 | Mercedes-Benz Group
Combined Management Report
Non-Financial Declaration
Contents
111
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
3. Definition and implementation of measures for the
risk hotspots and review of whether they are effective
over the long term.
2. Identification of risk hotspots in the raw material sup-
ply chains, e.g. on the basis of the specific risks in the
individual mining countries.
1. Increasing transparency along the raw material supply
chains especially with regard to certain compo-
nents in a Mercedes-Benz, such as battery cells. To
this end, Mercedes-Benz AG contacts, among others,
the suppliers of the relevant components and asks
them to disclose their supplier structure.
The Group plans to gradually examine these 24 critical
raw materials in more detail between now and 2028
and to define corresponding measures. This review
consists of three steps:
In order to examine the risks associated with raw mate-
rials, the Mercedes-Benz Group first analysed the raw
materials present in a vehicle and prioritized them on
the basis of various factors. It has identified 24 critical
raw materials. The list is reviewed annually on the basis
of certain criteria, such as the country risk of the main
mining countries, and updated if necessary.
Identification of risk raw materials and services
As part of Supplier Compliance Risk Management
(SCRM), the Mercedes-Benz Group conducts a risk
assessment of its Tier 1 suppliers of its procurement
departments for production materials, non-production
materials and services at least once a year. Following
an initial overarching risk assessment, the specific risks
are determined using specific questionnaires. Should
there be any indication revealed, the responsible pro-
curement department initiates an extensive examina-
tion of the situation.
Supplier compliance risk management
Through the Social CMS, the Mercedes-Benz Group
identifies and addresses in particular those human
rights risks that may arise in the workforces of its own
Group companies. Employee rights are also addressed
systematically and on a risk basis as part of the Social
CMS. With the Social CMS, the Mercedes-Benz Group
has integrated the issue of human rights into the
Group-wide, systematic compliance risk management
process for the Group companies.
Social Compliance Management System
representatives, as well as local residents. For example,
the Mercedes-Benz Group also holds talks with interna-
tional NGOs and other organizations concerning the
human rights risks arising from the extraction of certain
raw materials.
The Mercedes-Benz Group continues to expand the
HRRS step by step and also involves external stake-
holders and experts in this process. The stakeholders
include rights holders such as employees and their
The HRRS should be understood as a due diligence
cycle that basically consists of four steps: 1. Risk
assessment, 2. Programme implementation, 3. Monitor-
ing, and 4. Reporting. It is designed to systematically
identify risks and potential and actual negative impacts
of business activities on the respect for human rights
early on, avoid such effects and, if necessary, to initiate
countermeasures.
The HRRS is the Mercedes-Benz Group's approach to
fulfilling its human rights due diligence obligations. It
encompasses the protection of our own employees
through the Group-wide Social Compliance Manage-
ment System (Social CMS) in Group companies as well
as processes for human rights due diligence in supply
chains as part of Supplier Compliance Risk Manage-
ment (SCRM) for direct suppliers (Tier 1) and, risk-based,
indirect suppliers (beyond Tier 1).
Human Rights Respect System (HRRS)
The Social Compliance department helps with the defi-
nition of human rights due diligence requirements
within the Mercedes-Benz Group and towards suppliers.
Moreover, it works closely with the specialist units
responsible for operational implementation of the com-
pany's human rights due diligence obligations, and with
the procurement units in particular.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
To Our Shareholders
Taxonomy-eligibility is assessed in an initial step. For an
economic activity to be Taxonomy-eligible, that activity
must be mentioned and explained in further detail in
the delegated acts for the Taxonomy Regulation. The EU
delegated acts (Commission Delegated Regulation (EU)
2021/2139 and its supplement, Commission Delegated
Regulation (EU) 2023/2485), which was adopted by the
European Commission in June 2023, contain descrip-
tions of relevant economic activities and technical
screening criteria for the environmental objectives cli-
mate change mitigation and climate change adaptation.
The supplement to the delegated regulation includes
new technical screening criteria that refer to both the
existing economic activities and to new economic activ-
ities. Furthermore, a new EU delegated act (Commis-
sion Delegated Regulation (EU) 2023/2486) containing
economic activities and technical screening criteria rel-
evant for the remaining environmental objectives, was
published in 2023.
Mercedes-Benz Group. Key issue areas here are human
rights and labour rights (see the chapters Social compli-
ance and Occupational health and safety), the preven-
tion of corruption and the promotion of fair competition
(see the chapters Compliance management system,
Combating corruption and Promoting fair competition),
and responsible tax practices (see the chapter Tax obli-
gation). The verification of compliance here basically
involves demonstrating compliance with the existence of
corresponding due diligence processes at the Group
level and the fact that no judicial rulings relating to seri-
ous violations in the aforementioned areas have been
made in the final instance.
-
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
118
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
During the reporting year, an environmental impact
assessment was not required for the charging infra-
structure (economic activity 6.15) that was put into
operation. Furthermore, the locally applicable
To demonstrate the requirements for economic activity
3.3, ecologically sensitive or protected areas in the
neighbourhood of sites are documented and taken into
account as part of the internal environmental risk
assessment (environmental due diligence process). Fur-
thermore, environmental impact assessments or com-
parable audits outside the EU are carried out in the
context of a new site or the extension of an existing site,
if legally required. In addition, the Group has estab-
lished environmental management systems in accord-
ance with ISO 14001 at its production sites.
Protection and restoration of biodiversity and
ecosystems
For economic activity 6.15, the applicable requirements
from the Taxonomy Regulation on noise, vibration, dust
and pollutants must be complied with.
on the market, the data of the European Product Data-
base for Energy Labelling (EPREL) shall be used. The
time of market placement of the vehicles in the leasing
and financing portfolio was used for the analysis, and a
percentage share of the vehicles with the respective
highest tyre classes according to EPREL was deter-
mined on the basis of a representative time period. This
proportion is applied to the leasing and financing port-
folio of all-electric vehicles worldwide wherever the
corresponding data is available.
In due consideration of the applicable legislation and of
a Notice (C/2023/267) published by the EU Commission
on 20 October 2023, only tyres corresponding to the
two highest classes for rolling resistance coefficients
available on the market and at the same time the high-
est class for external rolling noise available on the mar-
ket fulfil DNSH requirements for the respective vehicles.
For the assessment of the respective classes available
With regard to economic activity 6.5, the DNSH criteria
refer to compliance with various product-related Euro-
pean regulations and directives. As a result, all-electric
vehicles are currently considered in the Taxono-
my-aligned scopes of economic activity 6.5.
With regard to the DNSH criteria, for economic activity
3.3 under Appendix C (Annex I) of the delegated act of
the EU (Delegated Regulation (EU) 2021/2139), the Tax-
onomy Regulation refers to the concept of avoiding the
manufacturing, placing on the market or use of
restricted and reportable substances subject to current
European legislation on chemicals. The implementation
of internal processes for specification, approval and
control is intended to ensure compliance with European
regulations (according to Appendix C) and respective
national legislations. The Global Automotive Declarable
Substance List (GADSL) forms the basis for the prohibi-
tion and declaration requirement of substances in
Mercedes-Benz products. The Mercedes-Benz Group
also defines specifications for substitution analyses,
and thus for the use of less critical hazardous sub-
stances.
Pollution prevention and control
For economic activity 6.15, the applicable DNSH criteria
were analysed and checked for adherence. This
includes the verification of the recycling or disposal of
waste generated during construction and demolition.
The Mercedes-Benz Group is intensifying its efforts to
use lower volumes of raw materials and other materials
in its production operations. In accordance with the
waste hierarchy, the company's primary goal is to avoid
waste. For its own production sites worldwide, the
Mercedes-Benz Group has set reduction targets for fac-
tors such as total waste volume and waste volume for
disposal per vehicle. Waste management is also a com-
ponent of the Group's internal environmental risk
assessment.
With regard to economic activity 3.3, the EU Taxonomy
Regulation requires an assessment and, if possible, the
application of measures that promote the transition to a
circular economy, including the use of secondary mate-
rials, high durability of products and waste manage-
ment in production. When developing products, the
Mercedes-Benz Group considers the concept of circular
economy from the very start and has set itself the over-
arching goal of increasing its use of secondary materials
in vehicles. In addition, the DNSH criteria for economic
activity 6.5 are taken into account through the imple-
mentation of the legal requirements on recyclability and
reusability for passenger car models and light commer-
cial vehicles.
Transition to a circular economy
Further Information
Consolidated Financial Statements
requirements in the construction and approval process
according to the DNSH requirements were taken as a
basis.
Corporate Governance
The analysis of the DNSH requirements for economic
activities 3.3 and 6.15 forms the basis for considering
the taxonomy-compliant shares. With regard to eco-
nomic activity 6.5, the reductions due to the DNSH
requirements of the environmental objective pollution
prevention and control were taken into account in the
Taxonomy-alignment of revenues and investments.
An economic activity can only be classified as environ-
mentally sustainable within the meaning of the Taxon-
omy if it is also conducted in accordance with certain
minimum standards that are based on international
frameworks. Here, Article 18 of the Taxonomy Regula-
tion references the OECD Guidelines for Multinational
Enterprises, the United Nations Guiding Principles on
Business and Human Rights (including the basic princi-
ples and rights from the eight core conventions defined
in the International Labour Organization's Declaration
on Fundamental Principles and Rights at Work), and the
International Bill of Human Rights. The Taxonomy Regu-
lation itself does not further specify the standards.
Proportion
Revenue² of revenue²
N/EL
Code¹
Proportion
2022
Criteria for a substantial contribution
2023
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
119
A. TAXONOMY-ELIGIBLE ACTIVITIES
To Our Shareholders
Economic activities
Revenue
Contents
Annual Report 2023 | Mercedes-Benz Group
The calculations for the key figures are based on the
Consolidated Financial Statements in accordance
with IFRS. The provision of comparative information,
except where concerning the economic activities
newly introduced by the delegated acts supplement-
ing the Taxonomy Regulation, was legally required in
the reporting year.
The individual figures for revenue, capital expenditure
and operating expenditure are precisely allocated to a
specific economic activity and environmental objective.
The sections below present information on the propor-
tion of revenue, capital expenditure and operating
expenditure accounted for by environmentally sustaina-
ble economic activities at the Mercedes-Benz Group.
Reporting on the Taxonomy-aligned
proportions of environmentally
sustainable economic activities
The report published by the Platform on Sustainable
Finance in October 2022 (Final Report on Minimum
Safeguards) assists companies with the interpretation
of the scope and application of the minimum standards.
This report forms the foundation for the application of
minimum standards and the associated reporting at the
Fulfilment of minimum safeguards
The economic activities relevant to the Mercedes-Benz
Group in this context are to be found under the envi-
ronmental objectives climate change mitigation, climate
change adaptation and transition to a circular economy.
Combined Management Report
Non-Financial Declaration
To Our Shareholders
in the delegated act relating to the transition to a cir-
cular economy. For the 2023 reporting year, simplified
reporting obligations apply for economic activities
newly introduced by the delegated acts. These stipulate
that only reporting in relation to Taxonomy-eligibility is
required. The Mercedes-Benz Group reports economic
activity 5.4 as Taxonomy-eligible but not environmen-
tally sustainable. An assessment of Taxonomy-align-
ment has not been carried out.
The Taxonomy-eligible economic activity 5.4 that
encompasses the sale of second-hand goods, which
are purchased by the Mercedes-Benz Group from third
parties, was identified on the basis of the descriptions
The economic activities contained in the delegated acts
relating to climate change adaptation are only present
to an immaterial extent at the Mercedes-Benz Group
and are reported exclusively under the environmental
objective climate change mitigation.
The economic activities in specific energy sectors con-
tained in the supplement to the delegated act relating
to the climate goals are only present to an immaterial
extent at the Mercedes-Benz Group and are per-
formed exclusively in support of carrying out eco-
nomic activity 3.3.
Economic activity 6.15 relates to the establishment
and operation of company-owned charging infrastruc-
ture by means of high-power charging stations, which
are a prerequisite for zero tailpipe CO2 operation of
zero-emissions road transport.
Economic activity 6.6 essentially covers the remaining
commercial vehicle portfolio of Mercedes-Benz Mobility
after the spin-off and hive-down of the Daimler com-
mercial vehicle business (see Note 3 of the Notes to the
Consolidated Financial Statements).
Economic activity 6.5 relates to leasing and sales
financing of all cars and vans purchased from third
parties.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
115
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In a Commission Notice (2022/C 385/01) published
by the European Commission on 6 October 2022, the
Commission stated that the term "low-carbon" only
relates to the assessment of Taxonomy-alignment
within the framework of the technical screening crite-
ria and is not relevant for reporting on the Taxono-
my-eligible economic activity 3.3. With regard to car
manufacturer in particular and as an example, the
document shows that the activity "manufacture of
low-carbon vehicles" also includes vehicles with com-
bustion engines. For the Mercedes-Benz Group, this
clarification by the European Commission means that
the manufacture of all Group vehicles is to be classi-
fied as Taxonomy-eligible.
Economic activity 6.15 encompasses infrastructure
enabling low-carbon road transport and public trans-
port (charging infrastructure)
Economic activity 6.6 encompasses leasing and
financing of low-carbon commercial vehicles
financing of low-carbon cars and vans
Economic activity 6.5 encompasses leasing and
Economic activity 3.3 encompasses manufacture of
low-carbon technologies for transport in connection
with the production of cars and vans
On the basis of the descriptions contained in the dele-
gated acts relating to climate change mitigation, the
following Taxonomy-eligible economic activities have
been identified for the Group:
-
The individual economic activities are additionally to be
classified according to enabling activities and transi-
tional activities. An enabling activity is an economic
activity that makes a substantial contribution to one or
more environmental objectives by directly enabling fur-
ther activities to also make a substantial contribution.
At the Mercedes-Benz Group this mostly applies to the
economic activities 3.3 and 6.15. A transitional activity,
in contrast, is an economic activity for which there is no
technological and economically feasible low-carbon
alternative but which makes a substantial contribution
to climate change mitigation by supporting the transi-
tion to a climate-neutral economy.
117
Taxonomy-alignment
Fulfilment of a substantial contribution to the
environmental objective climate change mitigation
According to the delegated act, all vehicles below the
current limit value of 50g CO2/km per vehicle (in
accordance with the WLTP) as defined in the technical
screening criteria make a substantial contribution to the
climate change mitigation environmental objective. At
Mercedes-Benz Group all-electric vehicles as well as
the majority of plug-in hybrid vehicles are below this
threshold. These vehicles are hereafter referred to as
"low-carbon vehicles".
Contents
Annual Report 2023 | Mercedes-Benz Group
With regard to economic activity 6.15, the analysis shall
assess that the use of the charging infrastructure does
not give rise to any significant risk to the water quality
and the water scarcity corresponding to the DNSH cri-
teria.
With regard to economic activity 3.3, fulfilment of the
DNSH criteria according to the Taxonomy Regulation is
intended to be ensured mainly on the basis of estab-
lished environmental management systems and the
internal environmental risk assessment (environmental
due diligence process). The company has established
environmental management systems at its own produc-
tion sites around the world in accordance with ISO
14001. In addition, all German and the two European
manufacturing locations in Kecskemet (Hungary) and
Vitoria (Spain) have also been validated in accordance
with EMAS. As part of the internal environmental risk
assessment, consolidated production sites are evalu-
ated according to a number of factors, including those
relating to water quality, in a five-year cycle. Recom-
mendations for minimizing risks are then drawn up, pri-
oritized and tracked. The Group also uses external data
sources to identify sites that harbour potential risks
relating to water scarcity.
Sustainable use and protection of water
and marine resources
With regard to economic activity 6.15, potential climate
risks according to Appendix A (Annex I) of the delegated
act of the EU (Delegated Regulation (EU) 2021/2139)
were assessed by relevance for the implementation of
the economic activity and manufacturer's specifications
for the charging stations were taken into account.
In addition, the verificiation of the DNSH criteria for
economic activity 6.5 is essentially based on the con-
sideration of use and environmental conditions, such
as heat and cold requirements in the context of vehicle
development and testing.
With regard to economic activity 3.3, the EU Taxonomy
requires a climate risk analysis to be carried out. In
accordance with the DNSH requirements, this analysis
was carried out for taxonomy-relevant production sites
in connection with economic activity 3.3, in order to
assess potential physical climate-related risk factors on
the basis of material climate risks in line with Appendix
A (Annex I) of the delegated act of the EU (Delegated
Regulation (EU) 2021/2139). The analysis took into
account climate scenarios from the Intergovernmental
Panel on Climate Change (IPCC) and different time hori-
zons, including 2040. Adaptation measures were ana-
lysed on the basis of the results.
Climate change adaptation
With regard to economic activity 6.15, the fulfilment of
the DNSH criteria was reviewed at the level of the oper-
ational high-power charging stations.
With regard to economic activity 6.5, the analysis of the
criteria is to be performed on the basis of the low-car-
bon vehicles in the leasing and financing portfolio. In
addition to Group-brand vehicles, the vehicle portfolio
also includes vehicles from other manufacturers. The
latter are reported as Taxonomy-eligible but not Taxon-
omy-aligned, as it is not currently possible to carry out
an adequate DNSH analysis due to the current data
availability.
With regard to economic activity 3.3, the fulfilment of
these criteria was basically assessed at the level of
those consolidated production sites where low-carbon
vehicles or associated components are currently being
manufactured or plans call for them to be manufac-
tured in the future.
In a second step, compliance with the DNSH criteria for
the further environmental objectives for the respective
economic activities was analysed on the basis of the
defined criteria in the reporting year.
Exclusion of the possibility of significant
interference on the basis of the "do no significant
harm" criteria
Furthermore, according to the delegated act, high-
power charging stations that are intended for the oper-
ation of vehicles with zero tailpipe CO2-emissions make
a substantial contribution to the environmental objec-
tive climate change mitigation.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
116
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In a further step, Taxonomy-alignment must be
assessed for Taxonomy-eligible economic activities.
Only Taxonomy-eligible activities can be considered as
environmentally sustainable activities, or as being Tax-
onomy-aligned, provided they meet certain technical
screening criteria. Here, the fulfilment of certain techni-
cal screening criteria with regard to the relevant eco-
nomic activities must make a substantial contribution
to an environmental objective defined by the Taxonomy
Regulation and, on the basis of defined “do no signifi-
cant harm" criteria (DNSH criteria), also exclude the
possibility of significant interference with another envi-
ronmental objective. It must also be ensured that mini-
mum standards are met with regard to issues such as
upholding human rights or combating corruption (mini-
mum safeguards).
N/EL
Y
N/EL
3 Description: Y - Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective, N - No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective, N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
4 Description: EL - Eligible, Taxonomy-eligible activity for the relevant objective, N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
5 A breakdown of the DNSH criteria has not been provided here, as activities may only be designated as Taxonomy-aligned when any significant effect on the other environmental objectives has been ruled out.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
120
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
The following table shows the scope of the Taxonomy-
eligibility and the Taxonomy-alignment for the revenue
by environmental objective:
Revenue proportion/total revenue¹
Taxonomy-
alignment
Taxonomy-
eligibility
per objective
per objective
Climate change mitigation (CCM)
14%
85%
Climate change adaptation (CCA)
0%
0%
Water and marine resources (WTR)
0%
2 The key figures were audited in order to obtain limited assurance as part of a separate assurance engagement of the sustainability report. An exception to this is the total (total A + B), which was audited with reasonable assurance as a Group key figure.
0%
1 The Code constitutes the abbreviation of the relevant environmental objective to which the economic activity is eligible to make a substantial contribution. Climate change mitigation: CCM, climate change adaptation: CCA, water and marine resources: WTR, circular economy: CE, pollution prevention and control: PPC,
biodiversity and ecosystems: BIO.
2%
N/EL
Revenue from Taxonomy-eligible activities that are not
environmentally sustainable (not Taxonomy-aligned) (A.2)
A. Turnover of Taxonomy-eligible activities (A.1 + A.2)
130,737
151,760
85%
99%
100%
100%
0%
0%
0%
0%
0%
88%
0%
0%
0%
0%
0%
98%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
Revenue of Taxonomy non-eligible activities
Total (A + B)
1,458
153,218
1%
100%
100%
N/EL
Circular economy (CE)
0%
revenue¹
in millions of euros in millions of euros
Revenue according to IFRS
20,223
800
136,987
15%
16,231
5%
14,419
575
136,008
11%
14,009
4%
21,023
153,218
14%
14,994
150,017
10%
15
Other revenue
Total
Climate
change
mitigation
revenue¹
0%
revenue
Total Taxonomy-aligned Taxonomy-aligned
Pollution prevention and control (PPC)
0%
0%
Biodiversity and ecosystems (BIO)
0%
0%
Taxonomy-eligibility of revenue
For the share of Taxonomy-eligible revenue (under A. in
the table Revenue), the Taxonomy-eligible revenue is
considered in relation to the total revenue of the Group.
In this process, the denominator takes into account the
consolidated revenue generated by Group companies
that are to be included in the calculations. The revenue,
as disclosed in the consolidated statement of income,
amounted to €153,218 million in the reporting year
(2022: €150,017 million) (see Note 5 in the Notes to the
Consolidated Financial Statements).
The numerator was calculated by examining this reve-
nue to determine how much of it was generated in con-
nection with the manufacturing, the leasing or the
financing of vehicles; the operation of high-power
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
charging stations; or the sale of second hand-goods
which were purchased from third parties by the
Mercedes-Benz Group. This applies to almost all of
the revenue generated by the Mercedes-Benz Group.
In the previous year, the revenues from the sale of
second-hand goods, which Mercedes-Benz Group
purchased from third parties, were assigned to the
revenue from Taxonomy non-eligible activities. Since
the reporting year, this revenue has been assigned to
the economic activity 5.4.
Taxonomy-alignment of revenue
In order to calculate the Taxonomy-aligned proportion
of economic activities (under A.1 in the table Revenue),
revenues were examined to determine whether they
were generated with low-carbon vehicles in order to
assess whether a substantial contribution had been
made to climate change mitigation. Compliance with
the DNSH criteria was also monitored.
Revenue
For the major proportion of the revenue, in particular
from the new and used vehicle business and leasing
and sales financing activities, a direct attribution was
made of the revenue accounted for by low-carbon
vehicles. With regard to other revenue components,
especially revenue from the spare parts business and
service and maintenance contracts, or attribution of
discounts granted for large procurement volumes, it is
not possible to directly assign revenue to low-carbon
vehicles. In these cases, suitable allocations were
therefore used for the various revenue components.
These classifications are based on current or historical
vehicle sales data for the fleet that is currently on the
market and data on production volumes. In the reporting
year, the share of Taxonomy-aligned revenue increased
to 14%¹. The main reasons for this were an increase in
unit sales of all-electric vehicles and the expansion of
the product portfolio for low-carbon vehicles.
The revenues shown below are included as an
aggregation across the various economic activities.
2022
Proportion of
revenue¹
in %
Total Taxonomy-aligned
revenue
in % in millions of euros in millions of euros
2023
Proportion of
Taxonomy-aligned
revenue¹
EL
N/EL
N/EL
Y
Y
E
Revenue from environmentally sustainable activities (Taxono-
my-aligned) (A.1)
of which enabling activity
of which transitional activity
A.2 Taxonomy-eligible activities that are not environmentally sustain-
able (not Taxonomy-aligned activities)
21,023
20,704
14%
100%
0%
0%
0%
0%
0%
Y
Y
10%
14%
100%
0%
0%
0%
N/EL
0%
N/EL
N/EL
N/EL
Y
Y
10%
E
Transport by motorbikes, passenger cars and light commercial
vehicles
Infrastructure enabling low-carbon road transport and public transport
CCM 6.5
319
0%
Y
N/EL
N/EL
N/EL
N/EL
N/EL
Y
Y
0%
CCM 6.15
0%
Y
N/EL
N/EL
0%
Y
CCM 6.5
EL
N/EL
N/EL
N/EL
N/EL
N/EL
15%
Freight transport services by road
CCM 6.6
1,683
1%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
1%
Sale of second-hand goods
CE 5.4
448
0%
N/EL
14%
21,561
Climate
change
adaptation
Transport by motorbikes, passenger cars and light commercial
vehicles
10%
E
0
0%
0%
0%
T
EL; N/EL4
EL; N/EL4
EL; N/EL4
EL; N/EL4
N/EL
EL; N/EL4
Manufacture of low-carbon technologies for transport
CCM 3.3
107,045
70%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
72%
EL; N/EL4
Provisions of applicable law and of the articles of
association concerning the appointment and
dismissal of members of the Board of Management
and amendments to the articles of association
Members of the Board of Management are appointed
and dismissed on the basis of Sections 84 and 85 of
the German Stock Corporation Act (AktG) and Sec-
tion 31 of the German Codetermination Act (MitbestG).
In accordance with Section 84 of the German Stock
Corporation Act (AktG), the members of the Board of
Management are appointed by the Supervisory Board
for a maximum period of office of five years. The rules
of procedure of the Supervisory Board stipulate that the
initial appointment of members of the Board of Man-
agement is generally limited to three years. Reappoint-
ment or the extension of a period of office is permissi-
ble, in each case for a maximum of five years. In 2022,
the Supervisory Board also adopted a flexibly struc-
tured further shortening of the appointment period in
the case of appointments and reappointments of indi-
viduals 58 years of age and older at the time their term
of office begins.
Shares in Mercedes-Benz Group AG acquired by
employees within the context of the employee share
programme may not be disposed of until the end of the
following year. Eligible participants in the Performance
Phantom Share Plans (PPSPs) of Executive Level 1 and
eligible members of the Board of Management are
obliged by the Plans' terms and conditions and by the
Stock Ownership Guidelines to acquire the Company's
shares with a part of their Plan income or out of their
own funds up to a defined target volume. Eligible par-
ticipants from Executive Level 1 are obligated to hold
these shares for the duration of their employment
at the Group. For eligible members of the Board of
Management, the required retention period has been
extended to two years after the end of their contract
(with effect from 1 January 2023).
A. Capital expenditure of Taxonomy-eligible activities (A.1 + A.2)
2023
2022
Taxonomy-aligned
Proportion of
Total
Proportion of
Taxonomy-aligned
Total Taxonomy-aligned Taxonomy-aligned
capital expenditure¹ capital expenditure capital expenditure¹ capital expenditure¹ capital expenditure capital expenditure¹
Intangible assets
Property, plant and equip-
ment
Right-of-use assets
in millions of euros in millions of euros
2,764
4,513
in % in millions of euros in millions of euros
61%
1,874
3,480
in %
54%
Capital expenditure
1,768
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
CapEx plan for economic activity 6.15
For the share of Taxonomy-eligible capital expenditure
(under A. in the table Capital expenditure), the Taxono-
my-eligible capital expenditure is considered in relation
to the total relevant capital expenditure of the Group.
All additions to intangible assets, property, plant and
equipment and right-of-use assets as defined in IFRS 16
in accordance with the statements of changes in
non-current assets as well as additions to equipment on
operating leases, including the additions to the named
assets as part of company acquisitions are taken into
account in the denominator. Equipment on operating
leases only takes into account vehicles acquired by deal-
ers from outside the Group. Goodwill acquired is not
taken into account here. If a divestment is planned, capi-
tal expenditure on non-current assets is only taken into
account until the point in time at which they were first
classified as held for sale in accordance with IFRS 5.
The relevant additions to the assets to be taken into
account amounted to €21,471 million in the reporting
year (2022: €18,369 million) (see Notes 11, 12 and 13 in
the notes to the consolidated financial statements).
Additions that result from a purchase in the context of
a company acquisition are of secondary importance in
the reporting year.
According to the Commission Notice (2022/C 385/01)
that the European Commission published on 6 October
2022, the definition of an economic activity is charac-
terized by the achievement of an output. In line with
the Mercedes-Benz Group's business model, the
numerator was therefore determined by examining
whether capital expenditure is made in connection with
the manufacturing of vehicles, the establishment of the
charging infrastructure or the implementation of trans-
port solutions for people and goods. This applies to
nearly all of our investments.
Taxonomy-alignment of capital expenditure
To calculate the Taxonomy-aligned proportion of eco-
nomic activities (under A.1 in the table Capital expendi-
ture), capital expenditure was examined to determine
the extent to which it was associated with low-carbon
vehicles (economic activities 3.3 and 6.5) and with
high-power charging stations (economic activity 6.15) in
order to assess whether a substantial contribution had
been made to climate change mitigation. Table Capital
expenditure (p. 121) shows the Taxonomy-aligned capi-
tal expenditure, aggregated across all economic activi-
ties. Compliance with the DNSH criteria was
also monitored.
The size of the share of Taxonomy-aligned expenditure
of total capital expenditure is mainly due to the dispro-
portionately low share of Taxonomy-aligned vehicles
in the additions to the equipment on operating leases.
As a result, this share only partially reflects our invest-
ments in sustainable products for the future.
When looking at Taxonomy-aligned investments in
intangible assets (mainly in capitalized development
costs) and property, plant and equipment of the
Mercedes-Benz Group shows much higher shares of
Taxonomy-aligned capital expenditure (table Capital
expenditure).
All of the capital expenditure of the Mercedes-Benz
Group during the reporting year included in the numer-
ator of the economic activities 3.3 and 6.5 relates to
assets or processes in the context of already existing
technologies which are connected to already existing
Taxonomy-aligned economic activities 3.3 and 6.5. For
most of the capital expenditure relating to the industrial
business, a direct attribution was made to all-electric
vehicle projects. In the case of capital expenditure in
low-carbon plug-in hybrids and assets that are used to
produce both vehicles with combustion engines and
low-carbon vehicles, suitable allocations based on
planned vehicle sales figures for the respective model
series or vehicle platforms were used. Capital expendi-
ture that is not directly related to the manufacturing
process was allocated on the basis of the planned unit
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
123
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
sales figures for low-carbon vehicles. With regard to
financial services, it is possible to match the additions
to equipment on operating leases directly to low-car-
bon vehicles. At 24%¹, the percentage of Taxono-
my-aligned capital expenditure was at the prior-year
level. There was a sharp addition to capitalized devel-
opment costs, the effect of which was offset by the
higher total capital expenditure compared to the previ-
ous year.
A capital expenditure (CapEx) plan that has been
adopted by management must exist for capital expendi-
ture that leads to an expansion of Taxonomy-aligned
economic activities or enables the conversion of Taxon-
omy-eligible economic activities into Taxonomy-aligned
economic activities. At the Mercedes-Benz Group this
affects capital expenditure for economic activity 6.15
Infrastructure enabling low-carbon road transport and
public transport (charging infrastructure) that is
expected to fall under the environmental objective cli-
mate change mitigation. The Board of Management of
Mercedes-Benz Group AG has adopted the planned
capital expenditure for the construction of Mercedes-
Benz own high-power charging stations as part of the
corporate planning covering the period 2024 to 2028.
The CapEx plan contains total capital expenditure in the
amount of around €1.4 billion (whereof €30 million are
accounted for in the reporting year).
3,718
48%
1,507
Contents
To Our Shareholders
Operating expenditure
Economic activities
124
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
2023
Criteria for a substantial contribution
2022
Proportion
Operating of operating
Code¹ expenditure²expenditure²
Climate
change
mitigation
Climate
change
adaptation
DNSH criteria
Water
Circular
economy
Annual Report 2023 | Mercedes-Benz Group
22%
18,369
4,057
3,421
44%
130
469
28%
391
923
42%
Equipment on operating
Taxonomy-eligibility of capital expenditure
leases
12,771
4%
285
10,545
3%
Total
5,220
21,471
24%
558
1 The key figures were audited in order to obtain limited assurance as part of a separate assurance engage-
ment of the sustainability report.
0%
Biodiversity and ecosystems (BIO)
57%
EL
N/EL
N/EL
N/EL
N/EL
N/EL
56%
Capital expenditure of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2)
16,251
21,471
76%
100%
100%
100%
0%
0%
0%
0%
0%
78%
0%
12,186
CCM 6.5
Transport by motorbikes, passenger cars and light commercial
vehicles
22%
0%
0%
0%
T
Manufacture of low-carbon technologies for transport
EL; N/EL4
EL; N/EL4
EL; N/EL4
EL; N/EL4
0%
EL; N/EL4
CCM 3.3
4,065
19%
EL
EL
N/EL
N/EL
N/EL
N/EL
EL; N/EL4
Pollution Biodiversity
0%
0%
Proportion of capital expenditure/total capital expenditure¹
Taxonomy-
alignment
per objective
Climate change mitigation (CCM)
24%
Taxonomy-
eligibility
per objective
76%
Climate change adaptation (CCA)
0%
0%
Water and marine resources (WTR)
0%
0%
0%
0%
0%
0%
0%
Circular economy (CE)
Pollution prevention and control (PPC)
The following table shows the scope of the Taxonomy-
eligibility and the Taxonomy-alignment for the capital
expenditure by environmental objective:
Further Information
Consolidated Financial Statements
Corporate Governance
100%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
Capital expenditure of Taxonomy non-eligible activities
Total (A+B)
0
0%
21,471
100%
0%
0%
100%
2 The key figures were audited in order to obtain limited assurance as part of a separate assurance engagement of the sustainability report. An exception to this is the total (total A + B), which was audited with reasonable assurance as a Group key figure.
3 Description: Y - Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective, N - No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective, N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
4 Description: EL - Eligible, Taxonomy-eligible activity for the relevant objective, N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
5
A breakdown of the DNSH criteria has not been provided here, as activities may only be designated as Taxonomy-aligned when any significant effect on the other environmental objectives has been ruled out.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
122
Combined Management Report
Non-Financial Declaration
1 The Code constitutes the abbreviation of the relevant environmental objective to which the economic activity is eligible to make a substantial contribution. Climate change mitigation: CCM, climate change adaptation: CCA, water and marine resources: WTR, circular economy: CE, pollution prevention and control: PPC,
biodiversity and ecosystems: BIO.
("do no signifi-
cant harm") 5 safeguards
Minimum
operating
expenditure
0%
Pollution prevention and control (PPC)
Biodiversity and ecosystems (BIO)
0%
Circular economy (CE)
0%
0%
Water and marine resources (WTR)
0%
0%
Climate change adaptation (CCA)
68%
32%
Climate change mitigation (CCM)
Taxonomy-
eligibility
per objective per objective
Taxonomy-
alignment
Proportion of operating expenditure/total operating expenditure¹
The following table shows the scope of the Taxono-
my-eligibility and the Taxonomy-alignment for the
operating expenditure by environmental objective:
Further Information
Consolidated Financial Statements
0%
0%
0%
0%
Taxonomy-eligibility of operating expenditure
For the share of Taxonomy-eligible operating expendi-
ture (under A. in the table Operating expenditure), the
Taxonomy-eligible operating expenditure is considered
in relation to the relevant operating expenditure of the
Group.
The operating expenditures to be taken into account in
the denominator correspond to a figure that was exclu-
sively calculated within the framework of taxonomy
reporting, as they are elements of the individual func-
tional costs. These operating expenditures include
non-capitalized research and development costs and
costs arising from short-term leasing agreements. In
addition, according to the delegated act relating to Arti-
cle 8 of the Taxonomy Regulation, expenditure from
6,230
2,089
Non-capitalized research
and development costs
Other operating expenditure
Total
in millions of euros in millions of euros
Taxonomy-aligned
operating expendi-
ture¹
in %
in % in millions of euros in millions of euros
ing expenditure¹
Total operating omy-aligned operat-
expenditure
Corporate Governance
Proportion of Taxon-
Total operating omy-aligned operat- operating expendi-
expenditure ing expenditure¹
ture¹
Proportion of Taxon- Taxonomy-aligned
2023
The operating expenditure shown below is included as
an aggregation across the various economic activities:
Taxonomy-alignment of operating expenditure
In order to calculate the Taxonomy-aligned proportion
of economic activities (under A.1 in the table Operating
expenditure), operating expenditure was examined to
determine the extent to which it was associated with
low-carbon vehicles in order to assess whether a sub-
stantial contribution had been made to climate change
mitigation. Compliance with the DNSH criteria was also
monitored.
Operating expenditure
In a manner similar to the approach taken for capital
expenditure, the relevant operating expenditures were
also examined here for the determination of the numer-
ator on the basis of the materiality considerations men-
tioned above to determine whether they are related to
the manufacture of vehicles. This applies to the operat-
ing expenditure described.
building renovation measures and certain maintenance
and repair expenses (basically labour and material
costs as well as purchased services) relating to prop-
erty, plant and equipment are included. These compo-
nents of the relevant operating expenditures were col-
lected exclusively from the manufacturing companies
on the basis of materiality considerations.
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
2022
34%
Combined Management Report
Non-Financial Declaration
To Our Shareholders
0%
0%
0%
0%
100%
100%
100%
7,306
68%
4,970
A. Operating expenditure of Taxonomy-eligible activities (A.1 + A.2)
Operating expenditure of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned activities) (A.2)
N/EL
EL; N/EL4
EL; N/EL4
N/EL
EL; N/EL4
N/EL
EL; N/EL4
N/EL
EL; N/EL4
N/EL
EL
68%
0%
0%
0%
0%
Contents
Annual Report 2023 | Mercedes-Benz Group
5 A breakdown of the DNSH criteria has not been provided here, as activities may only be designated as Taxonomy-aligned when any significant effect on the other environmental objectives has been ruled out.
3 Description: Y - Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective, N - No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective, N/EL- Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
4 Description: EL - Eligible, Taxonomy-eligible activity for the relevant objective; N/EL-Not eligible, Taxonomy non-eligible activity for the relevant environmental objective.
2 The key figures were audited in order to obtain limited assurance as part of a separate assurance engagement of the sustainability report.
The Code constitutes the abbreviation of the relevant environmental objective to which the economic activity is eligible to make a substantial contribution. Climate change mitigation: CCM, climate change adaptation: CCA, water and marine resources: WTR, circular economy: CE, pollution prevention and control: PPC, biodiversity and eco-
systems: BIO.
1
100%
0%
125
100%
65%
100%
7,306
0%
0
Operating expenditure of Taxonomy non-eligible activities
Total (A + B)
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
0%
0%
65%
0
2,149
38%
N/EL
N/EL
N/EL
Y
Y
35%
E
Operating expenditure of environmentally sustainable activities
(Taxonomy-aligned) (A.1)
of which enabling activity
of which transitional activity
2,336
2,336
32%
100%
0%
0%
0%
0%
0%
Y
N/EL
N/EL
Y
32%
Proportion of
Taxono-
my-aligned
(A.1) or Tax-
onomy-eligi-
ble (A.2)
Category:
Category:
enabling transitional
activity
activity
in millions of
euros
in %
Y
Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³
Y/N
in %
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Manufacture of low-carbon technologies for transport
CCM 3.3
2,336
Y/N
5,602
35%
100%
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
126
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
35%
6,664
2,340
32%
7,306
2,336
18%
1,062
191
23%
1,076
247
Further Information
The non-capitalized research and development costs
can mostly be directly incorporated into the calculation
of the numerator on the basis of their allocation to
all-electric vehicle projects. Appropriate allocations
based on anticipated future unit sales figures of the
low-carbon share of the model series or the vehicle
platform were used for research and development
costs that cannot be directly allocated (model series or
vehicle platforms that include plug-in hybrids as well as
purely combustion engine vehicles). It was also not
possible to directly match the other components of rel-
evant operating expenditure to low-carbon vehicles.
The inclusion in the numerator was based on suitable
allocations of current production volumes. The share of
Taxonomy-aligned operating expenditure was 32%¹ in
the reporting year. The reason for the lower proportion
of Taxonomy-aligned operating expenditure is essen-
tially the decrease in non-capitalized research and
development costs attributable to low-carbon vehicles
with a simultaneous increase in the total non-capital-
ized research and development costs.
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
0%
0%
0%
0%
0%
Y
Y
35%
E
32%
0
0%
0%
T
A.2 Taxonomy-eligible activities that are not environmentally sus-
tainable (not Taxonomy-aligned activities)
EL; N/EL4
Manufacture of low-carbon technologies for transport
CCM 3.3
4,970
Annual Report 2023 | Mercedes-Benz Group
0%
E
A.2 Taxonomy-eligible activities that are not environmentally sustain-
able (not Taxonomy-aligned activities)
Y
Consolidated Financial Statements
Further Information
Comparison between the figures forecast for 2023 and their actual development
Mercedes-Benz Group
Revenue
EBIT
Free cash flow of the industrial business
CO2 emissions of the new car fleet in Europe
Forecast for 2023
At the prior-year level
Slightly below the prior-year level
At the prior-year level
Corporate Governance
Significantly below the prior-year level
Actual development in 2023
Q2: At the prior-year level
Q2: Slightly above the prior-year level
€153,218 million (+2%) Slightly above the prior-year level
€19,660 million (-4%) At the prior-year level
€11,316 million (+39%) Significantly above the prior-year level
111 g/km (-3%) excluding smart vehicles¹ slightly below the prior-year level
109 g/km (-5%) including smart vehicles¹ significantly below the prior-year level
Mercedes-Benz Cars
Unit sales
Revenue
Adjusted return on sales
Adjusted cash conversion rate
In-year adjustments
Investments in property, plant and equipment
Research and development expenditure
Combined Management Report
Overall Assessment of the Financial Year
To Our Shareholders
The segment had expected an adjusted return on sales
of between 12 and 14%. Improved pricing, particularly in
the first half of the year, combined with continued high
cost discipline led to an adjusted return on sales of
12.6%. This confirmed the assessment made at the
beginning of the year.
At 0.9, the adjusted cash conversion rate was also
within the forecast range.
Sustained cost discipline enabled investments in prop-
erty, plant and equipment, which at the start of the year
had been expected to be significantly above the pri-
or-year level, to be held at the same level. Research and
development expenditure was also significantly higher
than in the previous year, because the new, electromo-
bility-oriented platform generation and the associated
drive concept, as well as the focus on digitalization and
automated driving, led to a higher-than-expected
increase. The company had expected research and
development expenditure to be slightly above the pri-
or-year level.
1 The Mercedes-Benz CO₂ pool not only includes newly registered Mercedes-Benz cars,
but also vans that were registered as passenger cars and, since 2023, vehicles from
the joint venture smart Automobile Co., Ltd. (smart vehicles). The average CO2 emissions
are determined using the WLTP type test procedure.
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Overall Assessment of the Financial Year
Corporate Governance
129
Consolidated Financial Statements
Thanks to a compelling level of product quality and util-
ity, a significant improvement in pricing, a very favoura-
ble product mix, comprehensive initiatives to reduce
costs on the product, production and company levels
and an increase in productivity, an adjusted return on
sales of 15.1% was achieved. This figure was thus
slightly above the range of between 13% and 15%,
which had already been raised significantly during the
year.
The adjusted cash conversion rate also increased to 1.0
as a result of the business performance being signifi-
cantly better than expected at the beginning of the year.
As expected, investments in property, plant and equip-
ment and research and development expenditure were
significantly higher than in the previous year.
Mercedes-Benz Mobility closed 2023 within the
expected range despite a declining interest margin due
to higher interest rates and increased competition in
the financial services sector. Furthermore, the business
activities in Russia were sold as planned, but nonethe-
less negatively impacted results. The opening of the
first Mercedes-Benz Charging Hubs in the fourth quarter
laid the foundation for the Group's own global high-
power charging network.
Contract volume was slightly above the prior-year level.
At the beginning of the reporting year, Mercedes-Benz
Mobility had expected contract volume to decline
slightly. The main reasons for the deviation from the
forecast were the growth in the area of dealer financing
and higher average financing and leasing volumes for
new contracts.
Revenue at Mercedes-Benz Mobility was on a par with
the previous year. The original forecast of a level signifi-
cantly below the previous year was exceeded due to
higher customer income as a result of passing on
increased interest rates and a higher average financing
and leasing volume for new contracts.
With an adjusted return on equity of 12.3%, the forecast
range was achieved.
128
Further Information
Annual Report 2023 | Mercedes-Benz Group
Contents
Mercedes-Benz Vans can look back on an extraordi-
narily successful year. A continued very high demand for
Mercedes-Benz vans resulted in unit sales and revenue
significantly above those of the previous year. This
underlines the strategy of focussing on profitable
growth in the premium segment. At the beginning of the
year, unit sales were expected to be at the previous
year's level; revenue was expected to be slightly above
the previous year's level.
At the prior-year level
At the prior-year level
12%-14%
0.8-1.0
Adjusted return on equity
Slightly above the prior-year level
Slightly below the prior-year level
Significantly below the prior-year level
12%-14%
Q1: At the prior-year level
Q1: Slightly below the prior-year level
Q3: At the prior-year level
1 The internally calculated value for 2022 did not include vehicles of the joint venture smart Automobile Co., Ltd. (smart vehicles).
€62,014 million (+7%) Slightly above the prior-year level
€135,027 million (+2%) Slightly above the prior-year level
€26,718 million (-1%) At the prior-year level
12.3%
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Revenue
Combined Management Report
Takeover-Relevant Information and
Explanation
Corporate Governance
Consolidated Financial Statements
Further Information
Takeover-Relevant Information and Explanation
Report pursuant to Section 315a and Section 289a of the German Commercial Code (HGB)
Composition of share capital
The issued share capital of Mercedes-Benz Group AG
amounted to approximately €3,070 million as of
31 December 2023. It is divided into 1,069,837,447 reg-
istered no-par-value shares, each of which accounts for
approximately €2.87 of the share capital. Pursuant to
Section 67 Subsection 2 of the German Stock Corpora-
tion Act (AktG), rights and duties relating to the Com-
pany exist from the shares only for those persons and
entities entered in the register of shareholders. With
the exception of treasury shares, from which the Com-
pany does not have any rights, all shares confer equal
rights to their holders.
The rights and obligations arising from the shares are
derived from the provisions of applicable law, in par-
ticular Sections 12, 53a ff., 118ff. and 186 of the German
Stock Corporation Act (AktG). Each share of Mercedes-
Benz Group AG confers the right to one vote and, if
applicable, with the exception of any new shares poten-
tially not entitled to dividends, to an equal portion of
the profits in accordance with the dividend payout
approved by the Annual General Meeting. The only
exceptions here are the treasury shares held by the
Company. There were 28.9 mill. treasury shares held by
the company at 31 December 2023.
Restrictions on voting rights and on the transfer
of shares
The Company does not have any voting rights or other
rights from treasury shares. In the cases described in
Section 136 of the German Stock Corporation Act (AktG),
the voting rights are excluded by law.
130
€351 million (+76%) Significantly above the prior-year level
€873 million (+58%) Significantly above the prior-year level
1.0
15.1%
Significantly above the prior-year level
Slightly above the prior-year level
Q1: Significantly above the prior-year level
2,044,051 vehicles (+0%) At the prior-year level
€112,756 million (+1%) At the prior-year level
12.6%
0.9
€3,345 million (+2%) At the prior-year level
€9,099 million (+14%) Significantly above the prior-year level
Mercedes-Benz Vans
Unit sales
Revenue
At the prior-year level
Slightly above the prior-year level
9%-11%
Q1: Slightly above the prior-year level
Q2: Significantly above the prior-year level
Q1: Significantly above the prior-year level
Q1: 11%-13%
447,790 vehicles (+8%) Significantly above the prior-year level
€20,288 million (+18%) Significantly above the prior-year level
Adjusted return on sales
Adjusted cash conversion rate
Investments in property, plant and equipment
Research and development expenditure
Mercedes-Benz Mobility
New business
Contract volume
0.5-0.7
Significantly above the prior-year level
Significantly above the prior-year level
20%
Q1: 0.6-0.8
Q2: 0.7-0.9
Robust demand for Top-End and all-electric vehicles
from Mercedes-Benz Cars supported the development
in unit sales and revenue, which, as expected, remained
at the previous year's level.
According to internal calculations, the average CO₂
emissions of the Mercedes-Benz CO2 pool¹ in Europe
(European Union, Norway and Iceland) amounted to
109 g/km in the reporting year. The emissions were thus
significantly below the prior-year value of 115 g/km.
It should be noted that the internal calculation of the
value of 109 g/km was the first time that vehicles from
the joint venture smart Automobile Co., Ltd. were
included in the Mercedes-Benz CO2 pool. Excluding
these smart vehicles, the value of 111 g/km was only
slightly below the previous year's figure. This is due to
a more difficult than expected market environment for
electrified vehicles in Europe.
Q2: 13%-15%
In the past year, the Group achieved EBIT on a par with
the previous year. At the beginning of the year, it had
expected EBIT to be slightly below the prior-year figure.
The Group's EBIT forecast was already raised during the
year, primarily due to the positive results performance
in the Mercedes-Benz Vans segment.
N/EL
N/EL
Y
0%
30
CCM 6.15
Infrastructure enabling low-carbon road transport and public transport
2%
Y
Y
N/EL
N/EL
N/EL
N/EL
N/EL
Y
3%
585
CCM 6.5
E
20%
Y
Y
N/EL
N/EL
N/EL
N/EL
Y
The free cash flow of the industrial business even sig-
nificantly exceeded the previous year's figure as a result
of lower working capital than expected. At the begin-
ning of the reporting year, the figure had been expected
to remain at the previous year's level. The forecast was
already raised during the year to a figure slightly above
the previous year's level.
Y
0%
0%
0%
0%
0%
100%
22%
22%
Y
N/EL
Y
0%
0%
0%
100%
24%
5,220
4,635
of which transitional activity
of which enabling activity
Capital expenditure of environmentally sustainable activities
(Taxonomy-aligned) (A.1)
E
Y
0%
N/EL
0%
N
Criteria for a substantial contribution
2023
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
121
Transport by motorbikes, passenger cars and light commercial
vehicles
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Manufacture of low-carbon technologies for transport
A. TAXONOMY-ELIGIBLE ACTIVITIES
Economic activities
2022
Capital expenditure
Contents
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
127
Combined Management Report
Overall Assessment of the Financial Year
Corporate Governance
Consolidated Financial Statements
Further Information
Overall Assessment of the Financial Year
N/EL
The Mercedes-Benz Group successfully held its ground
in a challenging and volatile market environment,
thanks to the normalization of global automobile pro-
duction and the remaining order backlog from the pan-
demic period. As a result, revenue was slightly above
the prior-year figure. This was primarily due to improved
pricing at the automotive segments.
To Our Shareholders
Proportion of
Contents
Proportion
Capital ex- of capital
penditure²expenditure²
Y
21%
4,605
CCM 3.3
T
E
in %
Y/N
Y/N
Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³ Y; N; N/EL³
Code¹
euros
in millions of
in %
enabling transitional
activity
Climate
change
mitigation
Climate
change
adaptation
Water
activity
Pollution Biodiversity
Circular
economy
DNSH criteria
("do no signifi- Minimum
cant harm")5 safeguards
Taxono-
my-aligned
(A.1) or Taxon-
omy-eligible
(A.2) Capital
expenditure
Category:
Category:
Revenue
€62,014 million
€135,027 million
€26,718 million
12.3%
Contract volume
1 Key performance indicator.
Adjusted return on equity¹
2 Replaces the previous key performance indicator, CO2 emissions of the new car fleet in Europe, from 2024.
At the prior-year level
10-12%
At the prior-year level
12-14%
0.6-0.8
Significantly above the prior-year level
Significantly above the prior-year level
Slightly above the prior-year level
At the prior-year level
New business¹
Annual Report 2023 | Mercedes-Benz Group
Contents
Slightly below the prior-year level
6-8%
Mercedes-Benz Mobility
Unit sales¹
€351 million
At the prior-year level
To Our Shareholders
10-12%
0.8-1.0
Significantly above the prior-year level
€9,099 million
At the prior-year level
Mercedes-Benz Vans
447,790 vehicles
Share of electrified vehicles (EV) 1, 2
Revenue
5%
Adjusted return on sales
Adjusted cash conversion rate
Investments in property, plant and equipment¹
Research and development expenditure¹
€20,288 million
15.1%
1.0
€873 million
Overall statement on future
development
They define the corresponding minimum requirements
and standards for methods, processes and systems for
use in the first line and set the framework for coopera-
tion. Their tasks also include regular reporting to the
Board of Management and the Supervisory Board. They
also support the first line in the corresponding imple-
mentation.
Combined Management Report
Outlook
The operating units in the form of the individual seg-
ments, Group functions, organizational units and Group
companies form the first line. Their task is to ensure the
implementation of internal and external guidelines, and
they are responsible for the implementation of controls,
operational risk management and risk management
processes in their respective units.
In the second line, the risk management system, the
accounting-related internal control system, the compli-
ance management system, Group Security and Global
Cyber & Information Security act as governance func-
tions.
In the third line, Corporate Audit monitors the appro-
priateness and effectiveness of the implemented
processes and the governance functions of the first
and second lines through independent and risk-ori-
ented audits. It monitors whether the statutory condi-
tions and the Group's internal policies concerning the
control and risk management system of the Group are
adhered to and the associated processes are appro-
priately designed. If required, measures are initiated in
cooperation with the respective management.
The risks and opportunities that can arise as a result of
deviations from the forecasts of the development of the
world economy and automotive markets that are pre-
sented below are described in the Risk and Opportunity
Report.
Further supply chain disruptions and, in particular,
availability bottlenecks for critical components remain
significant risk factors. Sharp rises in energy and com-
modity prices, higher-than-expected inflation rates and
interest rates, potential disruptions of the financial
market and an even more pronounced slowdown in
economic growth in individual regions or worldwide
may also have an impact on the development of the
world economy and the automotive markets.
The premises regarding the economic situation and the
development of automotive markets continue to be
characterized by an exceptional degree of uncertainty.
In addition to unexpected macroeconomic develop-
ments, uncertainties for the global economy and the
business development of the Mercedes-Benz Group
may arise in particular from geopolitical events and
trade policy. Among them are the current Middle East
conflict, the Russia-Ukraine war and other potential
regional crises. Other uncertainties that are particularly
worth mentioning include an exacerbation of tensions
between the United States and China and a further
deterioration of political relations between the Euro-
pean Union and China.
The statements made in the Outlook chapter are based
on the plans of the Mercedes-Benz Group for 2024 as
approved by the Board of Management with the agree-
ment of the Supervisory Board. These plans are based
on the premises the company sets regarding the eco-
nomic situation and the development of automotive
markets. It involves assessments made by the Group,
which are based on analyses by various renowned eco-
nomic research institutes, international organizations
and industry associations, as well as on the internal
market analyses of the Group sales companies.
The Mercedes-Benz Group as a whole pursues the
three-line model to ensure an integrated control and
monitoring system.
Further Information
Corporate Governance
Combined Management Report
Outlook
135
Outlook
To Our Shareholders
Contents
At the prior-year level
19-21%
Consolidated Financial Statements
Overview of the Mercedes-Benz
Group's control and monitoring
system
Risk and opportunity
management system and
internal control system
In order to identify business risks and opportunities at
an early stage and to assess and manage them actively,
the Board of Management applies appropriate and
effective management and control systems, which have
been brought together in an overall risk and opportunity
management system. Risks and opportunities are not
offset.
Corporate Governance
Consolidated Financial Statements
Further Information
The Mercedes-Benz Group will continue to concentrate
on achieving profitable growth in the coming years in
the market for luxury cars and premium vans, as well as
for sales financing. The Group believes that the focus
on vehicles in the Top-End and Core product categories
will make it possible to achieve sustainable solid
results, even in a challenging market environment.
The Mercedes-Benz Group is consistently moving
ahead with its efficiency measures in order to ensure
it can cover the high level of advance expenditure that
is required for the necessary transformation towards
an all-electric future. Furthermore, the Group believes
that the gradual and sustainable improvement of price
and product positioning, especially with regard to the
electrified vehicle portfolio, will enable it to overcome
the challenges it will face as part of the transformation
towards an all-electric future.
Against this backdrop and supported by the Group's
brand strengths and innovative capabilities, the
Mercedes-Benz Group looks forward with confidence
to the
year 2024.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
140
Combined Management Report
Risk and Opportunity Report
Corporate Governance
Consolidated Financial Statements
Further Information
Risk and Opportunity Report
The Mercedes-Benz Group is exposed to a large number
of risks that are directly linked with the business activi-
ties of Mercedes-Benz Group AG and its subsidiaries or
that result from external influences. The Group under-
stands a risk as the danger that events, developments
or actions will prevent the Group or one of its segments
from achieving its targets. The risks include both mone-
tary and non-monetary risks.
At the same time, it is important to identify opportuni-
ties in order to safeguard and enhance the competitive-
ness of the Mercedes-Benz Group. The Group defines
an opportunity as the possibility, due to events, devel-
opments or actions, of safeguarding or surpassing the
planned targets of the Group or of a segment.
139
€3,345 million
Based on the development of the different segments,
the Group expects EBIT to be slightly lower than in the
previous year in what will remain a challenging market
environment.
€112,756 million
12.6%
Growth in key van markets is expected to slow notice-
ably in 2024. In Europe, the market segment for mid-
size and large vans is likely to remain at the previous
year's level. The segment for small vans in Europe is
expected to expand slightly. The US market for large
vans will likely remain at the same level as in the prior
year. On the other hand, significant growth can be
expected for the mid-size van segment in China.
Outlook for the
key performance indicators
Mercedes-Benz Group
The Mercedes-Benz Group expects to generate revenue
in 2024 that is on the level of the previous year.
The free cash flow of the industrial business reached
a very high level in 2023. The automotive segments are
also planning significantly higher investments in prop-
erty, plant and equipment than in the previous year.
As a result, the Mercedes-Benz Group expects the free
cash flow of the industrial business in 2024 to be
slightly below the prior-year level.
Annual Report 2023 | Mercedes-Benz Group
We can therefore expect to see only slight growth in the
global car market compared with the previous year.
Following a double-digit increase in 2023, a market vol-
ume only slightly above the prior year's level is now
expected for Europe in the current year. Unit sales for
the US light vehicle market are also likely to slightly
exceed the level recorded in the previous year. A slight
increase in market volume is also expected for China.
Contents
137
Combined Management Report
Outlook
Corporate Governance
Consolidated Financial Statements
Further Information
Mercedes-Benz Cars
Mercedes-Benz Cars expects unit sales in 2024 to be
at the level of the previous year. The share of electri-
fied vehicles (XEV) in total unit sales is expected to
range between 19% and 21%.
To Our Shareholders
These restrained macroeconomic conditions are likely
to have an increasingly negative effect on the growth of
automotive markets around the world. Last year, the
normalization of global vehicle production and the
reduction of order backlogs that had accumulated dur-
ing the COVID-19 pandemic had a favourable effect on
sales development in various markets. This year, how-
ever, the impact of weaker consumer demand will likely
become increasingly noticeable on the world's automo-
tive markets.
Automotive markets
In the light of these developments, the growth of the
world economy is expected to be 2 to 2.5% in the cur-
rent year significantly below the long-term average.
This is all the more likely in light of the fact that no posi-
tive effects to speak of can be expected in 2024 as a
result of government stimulus measures or a further fall
in prices for energy and raw materials.
Annual Report 2023 | Mercedes-Benz Group
The continuous planning process makes it possible for
the Group to ensure that available opportunities can be
exploited and that the organization can respond appro-
priately to unexpected risks. This in turn means that
expectations regarding anticipated business develop-
ment can be adjusted in line with the latest forecasts of
the development of automotive markets.
The world economy
and automotive markets
The world economy
The Group expects the world economy to continue to
grow at a slower pace in 2024. This slowdown will mainly
be driven by the major industrial countries, whose eco-
nomic development, at least in the first half of the
year, will likely be affected by persistently high inter-
est rates. In contrast, the monetary easing cycle that
started in numerous emerging markets in 2023, should
serve to support economic growth in those countries.
With regard to the euro zone, the absence of monetary
and fiscal policy stimuli can be expected to lead to
continued economic weakness in the first half of the
year at least. Given the insufficient order situation and
persistently high interest rates, no real recovery to
speak of can be expected for industrial sectors in par-
ticular. Similarly to the situation in 2023, economic out-
put for the year as a whole is expected to increase only
slightly in 2024.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
136
Combined Management Report
Outlook
Corporate Governance
Consolidated Financial Statements
Further Information
The dampening effects of the previous interest rate
hikes in the United States will likely become more
apparent, since they will no longer be cushioned by
positive fiscal measures as had been the case in 2023.
For the year as a whole, the Mercedes-Benz Group
therefore expects the US economy to grow by less than
in 2023.
The Chinese economy is likely to be weighed down
again in 2024 by the continued consolidation of the
country's real estate sector and by less dynamic
demand from abroad. China can therefore be expected
to record lower overall growth this year than in 2023.
-
The development of revenue at Mercedes-Benz Cars is
in line with the sales forecast and is expected to be at
the previous year's level.
With stable pricing and declining raw material prices,
but also inflation- and demand-related additional costs
in the supply chain and a slight decline in the used car
business, Mercedes-Benz Cars anticipates an adjusted
return on sales of between 10% and 12% based on the
expected sales development.
The adjusted cash conversion rate for Mercedes-Benz
Cars is expected to be within a range of between 0.8
and 1.0 for the year 2024.
Mercedes-Benz Cars anticipates a significant increase
in investments in property, plant and equipment in
2024. The key drivers here are primarily investments in
new vehicle architectures, the electrification of the
product portfolio, and the expansion of digitalization.
2023 reporting year
Forecast for 2024
In line with a sustainable dividend policy, the
Mercedes-Benz Group sets the dividend based on a
distribution ratio of 40% of the net profit attributable to
Mercedes-Benz Group shareholders. The free cash flow
from the industrial business is also taken into consider-
ation when setting the dividend.
At the Annual General Meeting to take place on 8 May
2024, the Board of Management and the Supervisory
Board will propose the payment of a dividend of €5.30
per share entitled to a dividend for the year 2023 (2022:
€5.20). Subject to further share buybacks prior to the
Annual General Meeting 2024, this represents a total
distribution of €5.5 billion (2022: €5.6 billion).
Mercedes-Benz Group
Revenue¹
EBIT¹
Free cash flow of the industrial business¹
Mercedes-Benz Cars
Unit sales¹
Share of electrified vehicles (xEV)1, 2
Revenue
Adjusted return on sales
Adjusted cash conversion rate
Investments in property, plant and equipment¹
Research and development expenditure¹
€153,218 million
€19,660 million
€11,316 million
At the prior-year level
Slightly below the prior-year level
Slightly below the prior-year level
2,044,051 vehicles
20%
Outlook for key figures for 2024
0.9
Further Information
Corporate Governance
The transformation towards a sustainable business
strategy means that research and development costs
in 2024 are expected to be at the previous year's level.
Mercedes-Benz Vans
Due to macroeconomic uncertainties, Mercedes-Benz
Vans expects unit sales in 2024 to be slightly below
the prior-year level. The share of electrified vehicles
(XEV) in total unit sales is expected to be increased to
between 6% and 8% by the all-electric models eCitan
and EQT (WLTP: combined energy consumption 100
kWh/km: 20,7-19,3; combined CO2 emissions: 0 g/km;
CO2 class: A) and the new eSprinter.
Due to its focus on profitable growth, Mercedes-Benz
Vans expects revenue in 2024 to be at the prior-year
level.
The continued high level of cost discipline is having
positive effects, while opposing advance expenditure
for the new all-electric van architecture VAN.EA is hav-
ing a negative impact. In total, this results in a planned
adjusted return on sales of between 12% and 14%.
The adjusted cash conversion rate for the Mercedes-
Benz Vans division is expected to be within a range of
0.6 to 0.8.
The Mercedes-Benz Vans division anticipates a signifi-
cant increase in investments in property, plant and
equipment in 2024. This increase will be primarily
driven by the further transition to an all-electric
Mercedes-Benz Vans fleet of the next generation.
Mercedes-Benz Vans also expects a significant
increase in the area of research and development
expenditure in 2024. The focus of research and
development is on electric drive systems, automated
driving and digitalization.
Mercedes-Benz Mobility
Mercedes-Benz Mobility expects a slight increase in
new business in 2024, while contract volume and
revenue will remain at the prior-year level.
Adjusted return on equity is expected to be within a
range of between 10% and 12% in 2024. The forecast
decrease compared to the previous year is mainly due
to an expected drop in interest result and expenses for
the further expansion of charging activities.
Annual Report 2023 | Mercedes-Benz Group
Contents
Dividend
To Our Shareholders
138
Combined Management Report
Outlook
Consolidated Financial Statements
An agreement between Mercedes-Benz Group AG and
BMW AG which contains basic provisions for joint
ventures between Mercedes-Benz Mobility Ser-
vices GmbH and group companies of BMW AG in the
field of mobility services (one joint venture each in
the areas of ride hailing and charging as well as a joint
venture that is structured as a holding for the afore-
mentioned joint ventures). A change of control is
defined as the acquisition by a third party of more
than 50% of the voting rights or shares, or the conclu-
sion of a control agreement over Mercedes-Benz
Group AG by a third party. In the event of a change of
control, the contract includes mechanisms that can
lead to sole ownership by one of the shareholders
(shoot-out process).
Under these defined conditions, subscription rights can,
among others, be excluded in the event of a capital
increase against non-cash contributions for the
An agreement between Mercedes-Benz Group AG,
BMW AG and Audi AG related to the acquisition of the
companies of the HERE Group and the associated
establishment of There Holding B.V. In the event of a
change of control of one of the parties to the agree-
ment, the agreement obliges the party in question to
offer its shares in There Holding B.V. to the other
Approved Capital 2023 was not utilized within the
reporting period.
This limit is to include shares which (i) are issued or
sold during the period of this authorization with the
exclusion of subscription rights in direct or analogous
application of Section 186 Subsection 3 Sentence 4 of
the German Stock Corporation Act (AktG) and which (ii)
are or can or must be issued to service bonds with con-
version or option rights or conversion or option obliga-
tions, provided that the bonds are issued after this
authorization takes effect with the exclusion of share-
holders' subscription rights with analogous application
of Section 186 Subsection 3 Sentence 4 of the German
Stock Corporation Act (AktG).
The total number of shares issued against cash and/or
non-cash contributions under this authorization with
the exclusion of shareholders' subscription rights may
not exceed 10% of the share capital at the time when
this authorization takes effect.
purpose of an acquisition, and in the case of a capital
increase against cash contributions if the issue price of
new shares is not significantly below the market price
at the time of issue.
Further Information
Consolidated Financial Statements
Corporate Governance
132
Combined Management Report
Takeover-Relevant Information and
Explanation
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Annual General Meeting held on 3 May 2023 again
authorized the Board of Management to increase the
share capital by up to a total of €1.0 billion in the period
until 2 May 2028 with the approval of the Supervisory
Board against cash and/or non-cash contributions
(Approved Capital 2023). The authorization enables the
exclusion of shareholders' subscription rights under
certain conditions and within defined limits subject to
the consent of the Supervisory Board.
By resolution of the Annual General Meeting of 5 April
2018, the Board of Management was authorized, with
the consent of the Supervisory Board, to increase the
share capital of the Company in the period until 4 April
2023, wholly or in partial amounts, on one or several
occasions, by up to a total of €1 billion by issuing new
registered shares of no par value in exchange for cash
or non-cash contributions, and, with the consent of the
Supervisory Board under certain conditions and within
defined limits, to exclude shareholders' subscription
rights (Approved Capital 2018). No use was made of the
Approved Capital 2018 up to the time the authorization
period ended on 4 April 2023.
Authorization of the Board of Management to issue
or buy back shares
represented at the General Meeting; no use is made in
the articles of association of the possibility to stipulate
a larger majority of the share capital.
Amendments to the articles of association that only
affect the wording can be decided upon by the Supervi-
sory Board in accordance with Article 7 Subsection 2 of
the articles of association. The General Meeting has
also passed resolutions expressly authorizing the
Supervisory Board to amend the wording of the articles
of association in accordance with the use of the
Approved Capital 2023 and the Conditional Capital
2020, as well as subsequent to the expiration of the
authorization, use, and conversion/option periods in
each case.
Pursuant to Section 179 of the German Stock Corpora-
tion Act (AktG), amendments to the articles of associa-
tion require a resolution of the General Meeting and, in
accordance with Section 181 Subsection 3 of the Ger-
man Stock Corporation Act (AktG), such changes take
effect upon being entered in the commercial register.
In accordance with Article 5 of the articles of associa-
tion, the Board of Management has at least two mem-
bers. The number of members is decided by the Super-
visory Board. Pursuant to Section 84 Subsection 2 of
the German Stock Corporation Act (AktG), the Supervi-
sory Board can appoint a member of the Board of Man-
agement as the Chairperson of the Board of Manage-
ment. If a required member of the Board of
Management is lacking, an affected party can apply in
urgent cases for that member to be appointed by the
court pursuant to Section 85 Subsection 1 of the Ger-
man Stock Corporation Act (AktG). Pursuant to Sec-
tion 84 Subsection 3 of the German Stock Corporation
Act (AktG), the Supervisory Board can revoke the
appointment of a member of the Board of Management
as the Chairperson of the Board of Management if there
is an important reason to do so.
Pursuant to Section 31 of the German Codetermination
Act (MitbestG), the Supervisory Board appoints the
members of the Board of Management with a majority
comprising at least two thirds of its members' votes. If
no such majority is obtained, the Mediation Committee
of the Supervisory Board has to make a suggestion for
the appointment within one month of the vote by the
Supervisory Board in which the required majority was
not reached. The Supervisory Board then appoints the
members of the Board of Management with a majority
of its own members' votes. If no such majority is
obtained, voting is repeated and the Chair of the Super-
visory Board then has two votes. The same procedure
applies for dismissals of members of the Board of Man-
agement.
Further Information
Consolidated Financial Statements
Corporate Governance
131
Combined Management Report
Takeover-Relevant Information and
Explanation
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
parties to the agreement (shareholders). A change of
control of Mercedes-Benz Group AG occurs if one
person gains control over Mercedes-Benz Group AG,
whereby control is defined as (i) having control of
more than 50% of the voting rights, (ii) being able to
control more than 50% of the voting rights eligible to
vote at the General Meetings on all or nearly all mat-
ters, or (iii) the right to determine the majority of the
members of the Board of Management or of the
Supervisory Board. A change of control also occurs if
competitors of the HERE Group or certain possible
competitors of the HERE Group in the technology
industry acquire a shareholding of at least 25% of
Mercedes-Benz Group AG. If none of the other parties
acquire these shares, the agreement gives them the
right to dissolve There Holding B.V.
By resolution of the Annual General Meeting on 8 July
2020, the Board of Management was authorized, with
the consent of the Supervisory Board, to issue during
the period until 7 July 2025 convertible bonds and/or
bonds with warrants or a combination of those instru-
ments (commercial paper) in a total nominal amount of
up to €10 billion with a maximum term of ten years, and
to grant the owners/lenders of those bonds conversion
or option rights to new, registered shares of no par
value in the Company with a corresponding amount of
the share capital of up to €500 million, in accordance
with the terms and conditions of those convertible
bonds or bonds with warrants. The bonds may be
issued in exchange for consideration in cash, but also
for consideration in kind, in particular for interests in
other companies. The respective terms and conditions
may also provide for mandatory conversion or an obli-
gation to exercise the option rights. The bonds can be
issued once or several times, wholly or in instalments,
or simultaneously in various tranches. They can also be
issued by subsidiaries of the Company pursuant to Sec-
tion 15ff. of the German Stock Corporation Act (AktG).
Among other things, the Board of Management was also
authorized under certain circumstances, within certain
limits and with the consent of the Supervisory Board, to
exclude shareholders' subscription rights to the bonds.
Subscription rights can, under these defined conditions,
be excluded when bonds are issued in exchange for
non-cash contributions, particularly within the frame-
work of a merger or acquisition and when bonds are
issued in exchange for cash contributions if the issue
Unless otherwise required by applicable law or the arti-
cles of association, resolutions of the General Meeting
are passed pursuant to Section 133 of the German
Stock Corporation Act (AktG) and pursuant to Article 16
Sentences 1 and 2 of the articles of association with a
simple majority of the votes cast and, if required, with a
simple majority of the share capital represented. Pursu-
ant to Article 16 Sentence 3 of the articles of associa-
tion, the dismissal of a shareholder-elected member of
the Supervisory Board requires a majority of at least
three quarters of the votes cast. Pursuant to Section 179
Subsection 2 of the German Stock Corporation Act
(AktG), any amendment to the purpose of the Company
requires a three-quarters majority of the share capital
Any issuance of bonds with the exclusion of subscrip-
tion rights may only be carried out under the authoriza-
tion if the arithmetical proportion of the share capital
attributable to the total of the new shares to be issued
on the basis of such a bond does not exceed 10% of the
share capital at the time when this authorization takes
effect or - if this value is lower at the time when it is
exercised. If, during the period of the authorization until
it is exercised, use is made of other authorizations to
issue or sell shares in the Company or to issue rights
enabling or requiring subscription to shares in the Com-
pany and subscription rights are excluded, this is to be
counted towards the aforementioned 10% limit.
price is not significantly below the theoretical market
price of the bonds at the time of the issuance.
terminate the agreement. A change of control as
defined by the master cooperation agreement occurs
if a third party or several third parties acting jointly
acquire, legally or economically, directly or indirectly,
at least 50% of the voting rights in the company in
question or are authorized to appoint a majority of
the members of its managing board. Under the master
cooperation agreement, several cooperation agree-
ments were concluded between Mercedes-Benz
Group AG on the one side and Renault and/or Nissan
on the other, which provide for the right of termina-
tion for a party to the agreement in the case of a
change of control of another party. With the excep-
tion of the master cooperation agreement, the afore-
mentioned cooperation agreements were transferred
from the former Daimler AG to Mercedes-Benz AG in
2019.
-
-
Further Information
Consolidated Financial Statements
Corporate Governance
An agreement with BAIC Motor Co., Ltd. related to a
jointly held company for the production and distribu-
tion of cars of the Mercedes-Benz brand in China, by
which BAIC Motor Co., Ltd. is given the right to termi-
nate the agreement or exercise a put or call option in
the case that a third party acquires one third or more
of the voting rights in Mercedes-Benz Group AG.
Combined Management Report
Takeover-Relevant Information and
Explanation
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
A master cooperation agreement on wide-ranging
strategic cooperation with Renault S.A., Renault-Nis-
san B.V. and Nissan Motor Co., Ltd., as well as with
Mitsubishi Motors Corporation. In the case of a
change of control of one of the parties to the agree-
ment, each of the other parties has the right to
A non-utilized syndicated credit line for a total
amount of €11 billion, which the lenders are entitled
to terminate if (i) Mercedes-Benz Group AG becomes
a subsidiary of another company, or (ii) Mercedes-
Benz Group AG becomes controlled either individually
or jointly by one or more persons acting together. For
the purposes of the syndicated credit line, subsidiary
in relation to a company means another company (i)
that is controlled directly or indirectly by the
first-mentioned company, (ii) of which more than 50%
of the subscribed share capital (or other equity) is
held directly or indirectly by the first-mentioned com-
pany, or (iii) which is a subsidiary of another subsidi-
ary of the first-mentioned company. Control for the
purposes of the syndicated credit line means (i) the
right to determine the affairs of a company, (ii) the
right to control the composition of the managing
board or similar bodies, or (iii) the right to control the
composition of the supervisory board (if elected by
the shareholders).
Material agreements subject to change of control
Mercedes-Benz Group AG has concluded various mate-
rial agreements, as listed below, that include clauses
regulating the possible event of a change of control, as
can occur, amoung others, as a result of a takeover bid:
134
In a volume of up to 5% of the share capital existing at
the time of the resolution of the Annual General Meet-
ing, the Board of Management was authorized, with the
consent of the Supervisory Board, to acquire the Com-
pany's own shares also with the application of deriva-
tive financial instruments (put or call options, forwards
or a combination of these financial instruments). The
terms of the derivatives may not exceed 18 months and
must be terminated at the latest on 7 July 2025.
-
This authorization was made use of to acquire the Com-
pany's own shares during the reporting period. With the
approval of the Supervisory Board, the Board of Man-
agement resolved a share buyback programme on
16 February 2023. The acquisition of treasury shares
worth up to €4 billion (not including incidental costs)
on the stock exchange over a period of up to two years
began on 3 March 2023. The repurchased shares are to
be cancelled at a later date. From March to December
2023, as part of the share buyback programme,
28.9 million of the Company's own shares were repur-
chased, representing 2.7% of the share capital.
In order to service the debt of the convertible bonds
and/or bonds with warrants issued as a result of the
authorization, the Annual General Meeting of 8 July
2020 also approved a conditional increase in the share
capital of up to €500 million (Conditional Capital 2020).
No use was made of this authorization to issue convert-
ible and/or warrant bonds during the reporting period.
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
Combined Management Report
Takeover-Relevant Information and
Explanation
Contents
Corporate Governance
Consolidated Financial Statements
Further Information
By a further resolution of the Annual General Meeting
on 8 July 2020, the Board of Management was author-
ized, with the consent of the Supervisory Board, to
acquire the Company's own shares until 7 July 2025 for
all legal purposes in a volume of up to 10% of the share
capital at the time of the resolution of the Annual Gen-
eral Meeting or - if this amount is lower - at the time
when the authorization is exercised. With the consent
of the Supervisory Board, the shares can be used, with
the exclusion of shareholders' subscription rights, for,
among other things, corporate mergers and acquisi-
tions, or can be sold for cash to third parties at a price
that is not significantly below the market price at the
time of the sale. The acquired shares can also be used
to service debt on convertible bonds and/or bonds with
warrants, or can be issued to employees of the Com-
pany and employees and members of executive bodies
of subsidiaries pursuant to Section 15 ff. of the German
Stock Corporation Act (AktG). The Company's own
shares can also be cancelled.
During the period of the authorization, the total of the
Company's own shares used with the exclusion of
shareholders' subscription rights may not exceed 10%
of the share capital at the time when the authorization
takes effect or - if this amount is lower at the time
when it is exercised. If, during the period of the authori-
zation until it is exercised, use is made of other authori-
zations to issue or sell shares in the Company or to
issue rights enabling or requiring subscription to shares
in the Company and subscription rights are excluded,
this is to be counted towards the aforementioned 10%
limit.
133
Low
Low
Low
Medium
Low
Low
High
High
Low
Medium
Low
Low
Low
Low
Medium
Low
High
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Low
Medium
Low
Medium
Low
Low
High
Low
High
Risks and opportunities related to equity investments and cooperations
with partnerships
Risks and opportunities from purchasing and logistics
Information technology risks and opportunities
Personnel risks and opportunities
Risks and opportunities from research and development
Production risks and opportunities
Company-specific risks and opportunities
Risks and opportunities relating to the legal and political framework
Procurement market risks and opportunities
Industry and business risks and opportunities
General market risks and opportunities
Medium
High
Medium
Level
Quantification of the risks and opportunities based on the expected
value for each category
The following section describes risks and opportunities
that could have a significant influence on the profitabil-
ity, cash flows and financial position of the Mercedes-
Benz Group in the year 2024. In general, the reporting
of risks and opportunities not covered in the Outlook
takes place in relation to the individual segments
Mercedes-Benz Cars, Mercedes-Benz Vans and
Mercedes-Benz Mobility. If no segment is explicitly
mentioned, the risks and opportunities described relate
to all the segments. Based on the expected value, the
reported risks and opportunities per category are
aggregated into the levels “low”, “medium” and "high"
for the Mercedes-Benz Group.
Risk and opportunities Mercedes-Benz Group
Category
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
145
Financial risks and opportunities
Exchange-rate risks and opportunities
Expected value
<€500 million
> €500 million to €1 billion
> €1 billion
Interest-rate risks and opportunities
Commodity-price risks and opportunities¹
Credit risks
Low
High
High
High
High
High
Opportunity
Risk
Low
Opportunity
Classification of the expected
value for the year 2023
Classification of the expected
value for the year 2024
Tax risks and opportunities
Legal and tax risks and opportunities²
Legal risks
Risks and opportunities from changes in credit ratings
Risks and opportunities relating to pension plans
Risks of restricted access to capital markets
The following table shows the specific classification of
the aggregated risks and opportunities in the respective
categories based on the above-mentioned interval lim-
its. In addition to the risks and opportunities described
below, risks and opportunities that are not yet known or
classified as not material can also influence profitability,
cash flows and financial position in the future.
Country risks
Risk
High
Cars segment due to better-than-planned effective
pricing of vehicles.
Low
possible supply bottlenecks - as well as by volatile
demand for specific raw materials. The ability to pass
on the higher costs of commodities and other materials
in the form of higher prices for manufactured vehicles is
limited because of strong competitive pressure in the
international automotive markets. Rising raw-material
prices may therefore have a negative impact on the
profit margins of the vehicles sold and thus lead to
lower earnings in the respective segment. In order to
counteract possible loss of revenue, the Mercedes-
Benz Group continuously monitors the development of
raw-material and energy prices and is in close touch
with suppliers.
-
-
For 2024, there are still risks from inflation-related
increases in raw material and energy prices, which
could lead to higher procurement costs. Furthermore,
intense competition for specific raw materials in the
course of the introduction of new technologies can lead
to increasing costs or possible shortages in the supply
chain. Raw-material markets can always be impacted
by uncertainties and political crises · combined with
Procurement market risks and opportunities
Risks and opportunities relating to procurement arise
for the automotive segments in particular from fluctua-
tions in prices of commodities, raw materials and
energy. Certain raw materials and components are
required for the manufacture of vehicles and parts and
are purchased on the world market. The level of costs
depends on the price development of commodities,
raw materials and energy, and can result in both oppor-
tunities and risks for the Mercedes-Benz Group.
Individual countries may attempt to defend and
improve their competitiveness in the world's markets by
increasingly resorting to interventionist and protec-
tionist measures. For example, setting up or expanding
production facilities, increasing local purchasing or
introducing a requirement to carry out local research
and development can result in significantly increased
investment or higher running costs. In addition, barriers
to market access such as more difficult or delayed cer-
tification processes or very complicated tariff proce-
dures can make it more difficult to import into those
countries. Investing in those countries can limit the
impact of protectionist measures.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
148
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Political tensions and the associated danger of geopo-
litical conflicts continue to be high and are associ-
ated with far-reaching risks for the business develop-
ment of the Mercedes-Benz Group. A further
escalation of tensions between China and the United
States and between China and the EU, the possible
further escalation of the war between Russia and
Ukraine and, above all, the conflict in the Middle East,
the flare-up of further regional conflicts and a possible
military or non-military escalation in the entire South
China Sea could lead to renewed tensions in supply
chains, even higher energy prices, renewed pressure
on inflation rates and a further deterioration in the
growth outlook. A further escalation and possible geo-
graphical expansion of the Russia-Ukraine war could
especially have a negative impact on purchasing and
logistics processes and on the production and sales
programme. A possible bottleneck in energy supply in
the EU could also lead to potential production losses
at the Mercedes-Benz Cars and Mercedes-Benz Vans
plants. The above-mentioned risks are monitored on
an ongoing basis and mitigation measures, such as
substituting other energy sources for gas or imple-
menting energy-saving measures, are initiated accord-
ingly; possible scenarios are continuously adjusted to
the current geopolitical situation and analysed.
Legal limits on the fuel consumption and/or CO2 emis-
sions of car fleets exist in many markets, although the
target values differ from market to market. Non-compli-
ance with regulations applicable in the various markets
might result in significant penalties and reputational
harm, and might even mean that vehicles with conven-
tional drive systems could not or could no longer be
registered in the relevant markets. The Mercedes-Benz
Group counteracts this risk through the transformation
towards electric mobility and the associated realign-
ment of its product portfolio. Mercedes-Benz Cars and
Mercedes-Benz Vans face the described risks with
respect to regulations concerning mandatory targets for
the average fleet fuel consumption and CO2 emissions
of new vehicles especially in the markets of China,
Europe and the United States. The Mercedes-Benz
Group gives these targets due consideration in its prod-
uct and sales planning. The market success of alterna-
tive drive systems is greatly influenced not only by cus-
tomer acceptance but also by regional market
conditions such as the battery-charging infrastructure,
state support and tax conditions.
The Mercedes-Benz Group constantly monitors the
development of the legal and political framework and
attempts to anticipate foreseeable requirements and
long-term objectives at an early stage in the product
development process. In particular, changes in the legal
and political framework at short notice can be associ-
ated with additional costs or higher investments.
Company-specific
risks and opportunities
Risks and opportunities from research
and development
Technical developments and innovations are of key
importance for the safe and sustainable mobility of the
future. The transformation towards electric mobility and
the comprehensive digitalization of vehicles has
resulted in ambitious development targets and the mar-
ket launch of new technologies. In addition to the
resulting opportunities, decisions in favour of certain
technologies and the continuously growing scope of
emission, consumption and safety requirements to be
met are associated with risks.
Interruptions in global supply chains, bottlenecks in the
supply of intermediate goods, and production stop-
pages or underutilization of suppliers' production
capacities can have a negative impact on business
activities in the automotive divisions. Opportunities
may arise, for example, through the implementation of
efficiency-enhancing measures in internal logistics pro-
Risks and opportunities from purchasing and
logistics
Possible production interruptions that were still associ-
ated with the Covid-19 pandemic and the related uncer-
tainties have become less likely in the meantime. As a
result, the production risks are reduced from "medium"
to "low".
Warranty and goodwill cases could arise if the quality
of the products or the parts installed in the products
does not meet requirements despite appropriate qual-
ity assurance processes, if regulations are not fully
complied with, or if support cannot be provided in the
required form in the event of problems and product
maintenance. The Mercedes-Benz Group recognizes
appropriate provisions for warranty and goodwill cases.
Nevertheless, it cannot be ruled out that recalls and
field measures will lead to expenses. Possible claims in
connection with such risks are examined and, if neces-
sary, the appropriate measures are initiated for the
affected products.
The launch of new products involves risks with regard
to the availability of required components, the scope of
equipment and the necessary production capacities.
especially in the course of the transformation toward
electric mobility and the integration of new technology.
To reduce the attendant risks, the related processes are
continuously evaluated and improved.
Due to the increasing technical complexity and the goal
of maintaining and constantly enhancing quality stand-
ards for the luxury vehicles of the Mercedes-Benz
Group, both risks and opportunities can arise in the
automotive segments in connection with the launch
and manufacture of products.
Production risks and opportunities
Further Information
Risks and opportunities from the legal and political
framework have a considerable influence on the
Mercedes-Benz Group's future business success. Regu-
lations concerning vehicles' emissions, fuel consump-
tion, safety and certification, as well as tariff aspects
and taxes in connection with the sale or purchase of
vehicles or vehicle parts, play an important role. Geo-
political tensions can also have a significant impact on
the business activities of an international company
such as the Mercedes-Benz Group.
Consolidated Financial Statements
Combined Management Report
Risk and Opportunity Report
149
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The risks from research and development have risen
from "low" to "medium" due to the increasing electrifi-
cation and digitalization of the vehicle portfolio.
In 2020, Mercedes-Benz Group AG and Mercedes-Benz
USA, LLC (MBUSA) reached agreements with various
US authorities to settle civil and environmental claims
regarding emission control systems of certain diesel
vehicles, which have taken legal effect. If the obliga-
tions from the settlements are not complied with, there
will be the risk that cost-intensive measures will have
to be taken and/or significant stipulated penalties will
become due.
There are risks that vehicles cannot be developed
within the planned time frame, in the appropriate qual-
ity or at the specified costs. This is particularly the case
with regard to electric mobility and increasing digitali-
zation as well as software in the vehicle architecture.
There is also a risk that certain digital functions could
be launched on the market later than planned. Supply
chain disruptions can also lead to delays in vehicle
development processes and postpone the launch of
individual model series. The Mercedes-Benz Group
counters these risks by continuously and systematically
monitoring all vehicle projects.
Corporate Governance
Low
Risks and opportunities relating to the legal and
political framework
Further Information
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1 Commodity-price risks and opportunities were reported in the Procurement market risks and opportunities category as of 31 December 2023.
2 The classification of legal risks and tax risks and opportunities is shown in the table for the first time as of 31 December 2023.
Low
Medium
Low
High
High
Medium
High
High
Medium
Medium
Low
Low
Low
Low
146
Combined Management Report
Risk and Opportunity Report
Corporate Governance
Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
147
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In connection with leasing agreements, risks and
opportunities also arise due to the development of the
used vehicle markets. These result when the market
value of a leased vehicle at the end of the agreement
term differs from the residual value that was originally
calculated and forecast on the basis of specific
assumptions at the time the agreement was concluded
and used as a basis for the leasing instalments. Residu-
al-value management processes have been defined to
counteract these risks relating to vehicles' residual
values. Depending on the region and the current mar-
ket situation, the measures taken generally include con-
tinuous market monitoring as well as, if required,
price-setting strategies or sales promotion measures
designed to regulate vehicle inventories. The quality of
market forecasts is verified by comparisons of internal
and external sources, and, if required, the determina-
tion of residual values is adjusted and further devel-
oped with regard to methods, processes and systems.
In connection with the sale of vehicles, the Mercedes-
Benz Group offers customers a wide range of financ-
ing and leasing options. The resulting risks for the
Mercedes-Benz Mobility segment are mainly due to
borrowers' worsening creditworthiness, so receivables
might not be recoverable in whole or in part because
of customers' insolvency (default or credit risk).
The Mercedes-Benz Group counteracts credit risks by
means of creditworthiness checks on the basis of
standardized scoring and rating methods, the collater-
alization of receivables, and effective risk manage-
ment with a firm focus on monitoring both internal
and macroeconomic leading indicators.
The launch of new products by competitors, more
aggressive pricing policies and less effective pricing for
products such as electric vehicles can lead to increas-
ing competitive and price pressure in the automotive
segments and have a negative impact on profitability.
The discontinuation or reduction of government subsi-
dies for electric vehicles can also negatively affect their
pricing and cut profit margins. There is also a risk of
delayed market introduction of new technologies in
vehicles. Continuous monitoring is carried out in order
to recognize risks at an early stage. Depending on the
situation, product-specific and possibly regionally dif-
ferent measures are taken to support weaker markets.
Opportunities exist in particular in the Mercedes-Benz
Volatilities with regard to market developments can
also lead to the overall market or regional conditions for
the automotive industry developing better than
assumed in the internal forecasts and premises, result-
ing in business opportunities in the market. Opportuni-
ties may also arise from an improvement in the compet-
itive situation or a more positive development of
demand. The utilization of opportunities is supported
by sales and marketing campaigns.
incentives for locally produced electric vehicles, can
result in competitive disadvantages and declining vehi-
cle sales in the respective markets. The development of
markets, unit sales and inventories is continually ana-
lysed and monitored by the automotive segments; if
necessary, specific marketing and sales programmes
are implemented.
Possible declines in vehicle sales may be caused in
particular by an unfavourable macroeconomic environ-
ment for the Mercedes-Benz Group and in the context
of political or economic uncertainties. In addition to
weaker economic growth overall, factors such as high
energy prices, high inflation and interest rates, and vol-
atile exchange rates may lead to market uncertainty or
a loss of purchasing power and have a negative impact
on demand in the automotive sector. A lower-than-ex-
pected market acceptance of electric vehicles can also
lead to risks in the development of unit sales and have
a negative impact on earnings. This could also endanger
the achievement of specific CO2 targets. Industrial pol-
icy measures to strengthen local value creation in vari-
ous countries, as well as government purchase
The risks and opportunities for the economic develop-
ment of automotive markets are strongly affected by
the cyclical situation of the global economy. The
assessment of market risks and opportunities is linked
to forecasts about the overall economic conditions and
the development of the automotive markets in which
the Mercedes-Benz Group is active. These assumptions
are described in detail in the "Outlook" section. The
possibility of markets developing better or worse than
in the internal forecasts and assumptions, or of chang-
ing market conditions, generally exists for all segments
of the Group.
General market risks and opportunities
Industry and business risks
and opportunities
Further Information
Risks and opportunities
To Our Shareholders
cesses.
Annual Report 2023 | Mercedes-Benz Group
The opportunity management system at the
Mercedes-Benz Group is based on the risk management
system. The objective of opportunity management is to
recognize the possible opportunities arising in business
activities resulting from positive developments at an
early stage, and to use them in the best possible way
for the Group by taking appropriate measures. By taking
The risk management system is intended to systemati-
cally and continually identify, assess, control, monitor
and report on risks threatening the Mercedes-Benz
Group's existence and other material risks jeopardizing
the Group's success, in order to support the achieve-
ment of corporate targets and to enhance risk aware-
ness at the Group. This also includes risks and opportu-
nities related to environmental and employee issues as
well as social factors (environmental, social and gov-
ernance ESG).
Risk and opportunity
management system
External auditors audit the system for the early identi-
fication of risks, which is integrated in the risk manage-
ment system, for its general suitability to identify risks
threatening the existence of the Group. In addition, in
the context of the audit of the consolidated financial
statements, they report to the Audit Committee and the
Supervisory Board on any significant weaknesses that
have been recognized in the accounting-related internal
control and risk management system.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
Contents
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Performance of
independent audits
Definition of requirements
and support of the 1st line
during implementation
* Internal control system with regard to the accounting process (ICS).
Global Cyber & Information Security
Corporate Security
advantage of opportunities, planned targets should be
met or exceeded.
Corporate Audit
The risk and opportunity management system is inte-
grated into the value-based management and planning
system of the Mercedes-Benz Group and is a fixed com-
ponent of the overall planning, management and
reporting process in the companies, segments and cor-
porate functions.
The possible impact and probability of occurrence of all
risks and opportunities and the related measures that
have been initiated are continually monitored. This
information is passed on to Group Risk Management for
reporting to the Board of Management, the Audit Com-
mittee and the Supervisory Board. Mercedes-Benz
Group AG monitors implementation by the segments as
part of its legal, regulatory and compliance functions.
cess.
Climate-related risks and opportunities in connec-
tion with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD) are associ-
ated with environmental issues and are thus also iden-
tified and assessed as part of the risk management pro-
-
ance
In identifying sustainability-related risks and oppor-
tunities, Mercedes-Benz Group AG is guided by the
topics identified by the materiality assessment and thus
includes the areas of action of the sustainable business
strategy, for which concrete goals have been assigned.
Sustainability-related risks and opportunities are
understood to be conditions, events or developments
related to environmental and employee issues as well
as social factors (environmental, social and govern-
ESG), the occurrence of which may have an
actual or potential impact on the Mercedes-Benz
Group's profitability, cash flows and financial position,
as well as on its reputation. ESG-related risks associ-
ated with business activities, business relationships
and products and services, and which are very likely to
have a serious negative impact on non-financial
aspects in accordance with Section 289c of the German
Commercial Code (HGB), are not currently apparent.
In order to assess the Group's risk-bearing capacity,
the potential effects of the risks on earnings, with con-
sideration of correlation effects, are analysed using a
Monte Carlo simulation (confidence level: 99%). The
risks are compared with the reported equity of the
Mercedes-Benz Group as a risk cover.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
143
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Risk and opportunity management is based on the prin-
ciple of completeness. This means that all identified
risks and opportunities are incorporated into the risk
management process via the operating units of the seg-
ments, the significant associated companies, joint ven-
tures and joint operations as well as the corporate
departments. The scope of consolidation for risk and
opportunity management generally corresponds to the
scope of the Consolidated Financial Statements.
The Risk and Opportunity Report relates to 2024. The
assessment of individual risks and opportunities takes
place on the basis of their probability of occurrence and
possible impact on the Mercedes-Benz Group. Multiply-
ing the probability of occurrence by the possible impact
results in the expected value, which forms the basis for
the classification in risk and opportunity categories. In
principle, the quantification of risks and opportunities in
this report is carried out by summarizing the expected
values of the individual risks and opportunities in cate-
gories. The assessment of the level of risks and oppor-
tunities takes into account both planned and already
effective risk-reducing measures (net view) and is con-
sidered in relation to EBIT, unless otherwise indicated.
As part of the planning process, risks and opportunities
are recorded within an observation horizon of up to five
years. Matters that have already been fully taken into
account in planning or for which a provision has been
recognized are not considered in connection with the
risk management process. In addition, strategic risks
and opportunities are also taken into account in the risk
management process.
The responsibility for operational risk management and
for the risk management processes is borne by the first
line and thus by the segments, corporate functions,
organizational units and companies. They report on the
specific risks and opportunities to the next-higher level
unit on a regular basis. Significant unexpected risks
must be reported immediately. Risks and opportunities
are managed within the Group by means of measures
taken by the units responsible. The profitability of a
measure is assessed before its implementation.
Compliance management system
3rd line:
Independent audit
Internal control system (ICS)*
Segments,
1st line:
Operational units
Group Risk Management Committee (GRMC)
Board of Management
Supervisory Board/Audit Committee
The Board of Management, Audit Committee and
Supervisory Board are informed regularly and as
needed about potential significant control weaknesses,
the appropriateness and effectiveness of the imple-
mented controls and the risk situation. The Audit Com-
mittee and the Supervisory Board of Mercedes-Benz
Group AG and the Supervisory Boards of Mercedes-
Benz AG and Mercedes-Benz Mobility AG are responsi-
ble for monitoring the internal control and risk manage-
ment system, including its appropriateness and
effectiveness.
The Group Risk Management Committee (GRMC) is
responsible for ensuring the continuous improvement
of the risk management system and the internal control
system (including the compliance management system)
and for assessing their appropriateness and effective-
ness with regard to the Group's risk situation and the
scope of the business activities. It is chaired by the
members of the Board of Management of Mercedes-
Benz Group AG responsible for Finance & Controlling/
Mercedes-Benz Mobility and Integrity, Governance &
Sustainability. In addition, the GRMC was composed as
of 31 December 2023 of representatives from
Mercedes-Benz Group Finance, the Legal Affairs depart-
ment, the Compliance unit, Corporate Security, Global
Cyber & Information Security and the member respon-
sible for finance of the Board of Management at
Mercedes-Benz Mobility AG. The Corporate Audit
department contributes material findings on the inter-
nal control and risk management system.
Annual Audit
Further Information
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Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Possible interruptions in global supply chains, espe-
cially those caused by bottlenecks for electronic com-
ponents and other important intermediate goods, can
cause bottlenecks at Mercedes-Benz Cars and
Mercedes-Benz Vans. To avoid such bottleneck situa-
tions for intermediate goods, scarce capacities are
countered by planning ahead. Lack of availability and
quality problems with certain vehicle parts can lead to
production downtimes and cause costs that result in
negative effects on profitability. As a globally operating
company with an international production and sales
network, the Mercedes-Benz Group is dependent on
functioning and efficient logistics processes. In particu-
lar, capacity restrictions or surcharges for the transpor-
tation of vehicles can disrupt logistics processes,
increase their costs and have a negative impact on the
The information technology risks are increasing from
"low" to "medium". The level of digitalization at the
Mercedes-Benz Group and its suppliers is constantly
increasing and is facing an ever greater external threat
situation worldwide. Despite the stringent implementa-
tion of proactive and reactive measures, this leads to
an increased assessment of IT risk.
backups and configuring IT systems for high availability.
Emergency plans are drawn up and employees are
trained and regularly made aware in order to remain
capable of action. Specific threats are analysed and
countermeasures are coordinated at a globally active
Cyber Intelligence and Response Centre. The protection
of products and services against the danger of hacking
and cybercrime is continually further developed.
Due to growing requirements concerning the confiden-
tiality, integrity and availability of data, the Mercedes-
Benz Group has implemented various preventive and
corrective measures so that the related risks, such as
possible reputational damage, are minimized. For exam-
ple, the Group reduces potential disruptions to opera-
tional processes in computer centres by mirroring data,
decentralizing data storage, maintaining off-site data
It is essential for the globally active Mercedes-Benz
Group and its wide-ranging business and production
processes that information is available and can be
exchanged in an up-to-date, complete and correct form.
The internal IT security framework is oriented according
to international standards and also draws on industry
standards and good practices for its protective meas-
ures. New regulatory requirements for cyber security
and cyber security management systems are taken into
account in the further development of processes and
policies. Appropriately secure IT systems and a reliable
IT infrastructure must be used to protect information.
Cyber threats must be identified and dealt with as
appropriate for their criticality over the entire life cycle
of the applications and the IT systems. Special atten-
tion is paid to risks that in the event of their occurrence
give rise to an interruption of business processes due
to IT system failures and to the loss and the falsification
of data. The advancing digitalization and networking of
the means of production is accompanied by coordi-
nated technical and organizational security measures.
Risk management system
2nd line:
Governance functions
Ensuring compliance with external and
internal requirements by
performance of controls
HQ functions,
Organizational units
and entities
company's results. Mercedes-Benz Cars and Mercedes-
Benz Vans analyse these risks on an ongoing basis.
Supplier management is undertaken for the prevention
of risks with the aim of ensuring the quantity and qual-
ity of the components required to produce the vehicles.
The financial situation of some suppliers remains diffi-
cult. The reasons for this are continuing uncertainties in
connection with high commodity, raw-material and
energy prices, as well as the lack of availability of com-
ponents. As a result, production stoppages are possi-
ble along the entire supply chain and could prevent
vehicles from being completed and delivered to cus-
tomers on time. Supplier risk management aims to
identify potential financial bottlenecks at suppliers at
an early stage and to initiate suitable countermeasures.
Specifically, depending on the warning signals recorded
and the internal classification, regular reporting dates
on which key performance indicators are reported to
the Mercedes-Benz Group and any support measures
can be determined if necessary, are agreed upon with
suppliers.
Annual Report 2023 | Mercedes-Benz Group
Contents
Internal control system
To Our Shareholders
Combined Management Report
Risk and Opportunity Report
Corporate Governance
Consolidated Financial Statements
Further Information
Due to the transformation to electric mobility and
the outsourcing of important components, there is also
a risk that these will not be available on time in the
planned quantity and required quality; this could delay
the start of production of new series. Risks may also
arise from uncertainties in the planned quantities. This
could have negative effects on profitability.
Information technology risks and opportunities
The systematically pursued digitalization strategy ena-
bles the Mercedes-Benz Group to utilize new opportu-
nities to increase customer utility and the value of the
company. Nonetheless, the high degree of penetration
of all business units by information technology (IT) also
harbours risks for our business and production pro-
cesses and the units' products and services. Extensive
changes in the existing system landscape, for example
the focus on strategic partnerships for the transforma-
tion of the IT infrastructure, can also lead to risks.
The ever-growing threat from cybercrime and the
spread of aggressive malicious code brings risks that
can affect the availability, integrity and confidentiality
of information and IT-supported operating resources.
Despite extensive precautions, in the worst-case sce-
nario this can lead to a temporary interruption of
IT-supported business processes with severe negative
effects on the Group's earnings. In addition, the loss or
the misuse of sensitive data may under certain circum-
stances lead to a loss of reputation. In particular,
stricter regulatory requirements such as the EU General
Data Protection Regulation and related legislation may,
among other things, give rise to claims by third parties
and result in costly regulatory requirements and penal-
ties with an impact on earnings.
150
The Mercedes-Benz Group's internal control system
encompasses, in addition to the accounting-related
internal control system, controls for further business
processes. There are also internal controls for Group-
wide processes of Corporate Security, Global Cyber &
Information Security, and the Group-wide compliance
management system. Sustainability-related aspects are
also part of the internal control system. Moreover, the
structure and processes of the internal control system
are independently checked by Corporate Audit.
142
Consolidated Financial Statements
The security risk management of Corporate Security is
integrated into the risk management system of the
Mercedes-Benz Group. The aim is to identify and evalu-
ate security-relevant risks at the company's global loca-
tions on the basis of a risk-oriented view and to control
them by means of mitigating measures. To this end,
Corporate Security implemented internal controls for
various security-related issues. These include the areas
of property security, fire protection and crisis manage-
ment and serve to protect the lives and physical integ-
rity of people and to protect company assets, business
processes and company knowledge.
The Mercedes-Benz Group operates an Information
Security Management System (ISMS) with the aim of
adequately protecting important information and criti-
cal IT services. The ISMS is based on internationally
recognized standards and is continuously developed
further. Operationally, the ISMS is supported by proac-
tive and reactive operational measures. Proactive oper-
ational measures include, in particular, training and
measures to inform and raise awareness among
employees and functionaries, a comprehensive set of
information security rules and technical and organiza-
tional measures to secure critical IT infrastructures, IT
systems and applications. One focus of the reactive
operational measures is the Cyber Intelligence &
Response Center, which is staffed around the clock to
defend against cyber attacks and deal with cyber secu-
rity incidents.
Annual Report 2023 | Mercedes-Benz Group
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To Our Shareholders
144
Combined Management Report
Risk and Opportunity Report
Corporate Governance
The compliance management system, which has an
interface to the risk management system, is aligned
with the risk situation of the Mercedes-Benz Group and
aims to promote rule-compliant behaviour within the
company. The compliance management system makes
a significant contribution to the integration of compli-
ance into our operating business units and their pro-
cesses. Further information on the compliance manage-
ment system of the Mercedes-Benz Group can be found
in the Non-Financial Declaration chapter.
Further Information
The internal control system with regard to the
accounting process has the objective of ensuring the
appropriateness and effectiveness of accounting and
financial reporting. It is designed in line with the inter-
nationally recognized framework for internal control
systems of the Committee of Sponsoring Organizations
of the Treadway Commission (COSO Internal Control -
Integrated Framework), is continually developed further,
and is an integral part of the accounting and financial
reporting processes in the segments, corporate func-
tions, organizational units and companies. The system
includes principles and procedures as well as preven-
tive and detective controls.
The effectiveness of the internal control system with
regard to the accounting process is systematically eval-
uated. It begins with a risk analysis and a control defini-
tion with the aim of identifying significant risks for the
accounting and financial reporting processes in the
main legal entities and corporate functions. The neces-
sary controls are then defined and documented in
accordance with Group-wide guidelines. In order to
assess the effectiveness of the controls, tests are car-
ried out regularly on the basis of random samples.
These form the basis for a self-assessment of whether
the controls are appropriately designed and effective.
The results of this self-assessment are documented and
reported in a Group-wide IT system. Identified control
weaknesses are eliminated, taking into account their
potential impact. The selected legal entities and corpo-
rate functions confirm the effectiveness of the internal
control system with regard to the accounting process at
the end of the annual cycle. The Board of Management
and the Audit Committee of the Supervisory Board are
regularly informed about significant control weaknesses
and the effectiveness of the control mechanisms.
Appropriateness and effectiveness
of the internal control
and risk management system
Continuous monitoring of the processes and systems of
the internal control and the risk management system is
in effect to resolve identified weaknesses in the finan-
cial year and ensure continuous improvement of the
processes and systems. As a result of the complex pro-
cess landscape and the high rate of change of the legal
requirements concerning non-financial information, the
maturity of the internal control system with regard to
the sustainability-relevant aspects in particular is not
yet on the level of the accounting-related internal con-
trol system. As of the reporting date, taking into
account the scope of the business operations and the
risk situation of the company, in all material respects
there are no indications of an overall inappropriateness
or ineffectiveness of the internal control and risk man-
agement system.
The effectiveness of any risk management and control
system is subject to inherent limitations. No system
even if it has been assessed as appropriate and effec-
tive ― can guarantee that all risks that actually occur
will be detected in advance or that all process viola-
tions will be excluded under all circumstances.
enforcement of claims (opt-in). The plaintiffs in the con-
sumer class action in England and Wales also allege,
amongst others, anti-competitive behaviour relating to
technology for the treatment of diesel exhaust emis-
sions.
In Germany, a large number of customers of diesel vehi-
cles have filed lawsuits for damages or rescission of
sales contracts based on similar allegations. They refer
in particular to the KBA's recall orders mentioned above.
Although the number of pending lawsuits is declining, a
future increase cannot be ruled out. Based on similar
allegations, the Federation of German Consumer Organ-
izations (Verbraucherzentrale Bundesverband e. V.) filed
a model declaratory action (Musterfeststellungsklage)
against Mercedes-Benz Group AG with the Stuttgart
Higher Regional Court in July 2021. Such an action seeks
a ruling that certain preconditions of alleged consumer
claims are met. Following a decision of the European
Court of Justice in the first quarter of 2023, the German
Federal Court of Justice ruled in the second quarter of
2023 that vehicle purchasers are entitled to claim dam-
ages against the manufacturer if it intentionally or negli-
gently used an inadmissible defeat device.'
Furthermore, class actions have been filed in Canada
alleging anticompetitive behaviour relating to vehicle
technology, costs, suppliers, markets and other com-
petitive attributes, including diesel emissions control
technology. In 2022, the proceedings in the United
States were concluded in favour of Mercedes-Benz
Group AG and MBUSA. In addition, in 2023, several
class actions in Canada were finally dismissed as the
plaintiffs discontinued their claims. The Mercedes-Benz
Group also expects the last lawsuit pending in Canada
to be discontinued and it will continue to defend itself
against it until the discontinuance is final. This develop-
ment leads to a material reduction of the risk associ-
ated with the class actions. They therefore no longer
qualify for separate reporting, which is why the
Mercedes-Benz Group will no longer report on them in
the future.
Mercedes-Benz Group AG and the respective other
affected companies of the Group regard the pending
lawsuits set out above as being without merit and con-
tinue to defend themselves against them.
In addition, investors from Germany and abroad have
filed lawsuits for damages with the Stuttgart Regional
Court alleging the violation of disclosure requirements
(main proceedings) and also raised out-of-court claims
for damages. Mercedes-Benz Group AG regards these
lawsuits and out-of-court claims as being without merit
and will defend itself against them. In December 2021,
the Stuttgart Higher Regional Court initiated model case
proceedings under the German Act on Model Case Pro-
ceedings in Disputes under Capital Markets Law (Kap-
MuG) (model case proceedings). Multiple investors
have used the possibility to register claims in a consid-
erable amount with the model case proceedings in
order to suspend the period of limitation. Mercedes-
Benz Group AG remains of the view to have duly ful-
filled its disclosure obligations under capital markets
law and defends itself against the investors' allegations
also in these model case proceedings.
Annual Report 2023 | Mercedes-Benz Group
Combined Management Report
Risk and Opportunity Report
To Our Shareholders
158
Further Information
Corporate Governance
Consolidated Financial Statements
Consumer class actions were filed against Mercedes-
Benz Group AG in Israel in February 2019 as well as
against Mercedes-Benz Group AG and further Group
companies in the United Kingdom since May 2020, in
the Netherlands, in Portugal as well as since November
2022 in Australia. The plaintiffs inter alia assert that the
Mercedes-Benz Group had used devices that impermis-
sibly impair the effectiveness of emission control sys-
tems in reducing nitrogen oxide (NOx) emissions and
which cause excessive emissions from vehicles with
diesel engines. Furthermore, they claim that Mercedes-
Benz Group AG deceived consumers in connection with
advertising in relation of Mercedes-Benz diesel vehicles.
The proceedings in England and Wales consist of sev-
eral individual lawsuits that have been consolidated
into one class action. A class action lawsuit is also
pending in Scotland. In these proceedings, allegedly
injured parties must actively register for the
Contents
In a lawsuit filed by the Environmental Protection Com-
mission of Hillsborough County, Florida in September
2020, the plaintiff claimed that, amongst others,
Mercedes-Benz Group AG and MBUSA had violated
municipal regulations prohibiting vehicle tampering and
other conduct by using alleged devices claimed to
impair the effectiveness of emission control systems.
The lawsuit was dismissed in the third quarter of 2022.
The plaintiff's appeal to this decision was dismissed in
the third quarter of 2023. The decision is final, and the
proceedings are concluded.
To Our Shareholders
Risks from legal proceedings in connection with
diesel exhaust gas emissions
proceedings
Corporate Governance
Combined Management Report
Risk and Opportunity Report
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To Our Shareholders
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Annual Report 2023 | Mercedes-Benz Group
Annual Report 2023 | Mercedes-Benz Group
Contents
If court proceedings have an unfavourable outcome for
the Mercedes-Benz Group, the Group may encounter
substantial financial burdens, e.g. from damages pay-
ments, remedial works or other cost-intensive meas-
ures. Court proceedings can also have an adverse
effect on the reputation of the Group.
157
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Risk and Opportunity Report
Corporate Governance
Consolidated Financial Statements
Further Information
civil court
-
Furthermore, the ability of the Mercedes-Benz Group to
defend itself in the court proceedings could be
impaired by the settlements of the diesel-related law-
suits in the United States and in Canada, as well as by
unfavourable allegations, findings, results or develop-
ments in any of the governmental or other court pro-
ceedings discussed above.
Any changes in legislation and jurisdiction, as well as
different interpretations of the law by the fiscal authori-
ties, especially in the field of cross-border transactions,
may be subject to considerable uncertainty. It is there-
fore possible that the provisions recognized will not be
sufficient, which could have negative effects on the
Group's net profit and cash flows.
In September 2021, individual persons associated with
Deutsche Umwelthilfe e. V. (DUH) filed a lawsuit before
the Stuttgart Regional Court against Mercedes-Benz AG.
They claim injunctive relief, demanding that Mercedes-
Benz AG refrain from distributing passenger cars with
combustion engines after November 2030 and reduce
its respective sales prior to this point in time. In the
third quarter of 2022, the Regional Court of Stuttgart
dismissed the claim in its entirety. The plaintiffs have
appealed the decision. In the fourth quarter of 2023,
the Higher Regional Court of Stuttgart upheld the deci-
sion and dismissed the plaintiffs' appeal as manifestly
unfounded. The plaintiffs have lodged an appeal to the
German Federal Court of Justice against the denial of
leave to appeal. Mercedes-Benz AG will continue to
defend itself against the plaintiffs' allegations.
The overall view of the Group's risk and opportunity sit-
uation is the sum of the described individual risks and
opportunities in all risk and opportunity categories.
In addition to the risks described, unforeseeable events
Ican have a negative impact on the business activities
and thus on the Mercedes-Benz Group's profitability,
liquidity and capital resources, financial position and
reputation, and non-financial key figures as well as on
society and the environment.
-
No risks are recognizable - neither on the reporting
date nor at the time of preparing the Consolidated
Financial Statements that either alone or in combina-
tion with other risks could endanger the continued
existence of the Group.
EU taxonomy
The EU Taxonomy Regulation and the adopted delegated acts along with the supplemen-
tary interpretation documents of the European Commission contain formulations and
terms that are still subject to considerable uncertainties and for which clarifications have
not yet been published in all cases. Among others, this refers to the interpretation of the
classification of economic activities, the do-no-significant-harm criteria and the assess-
ment of the economic substance of financial investments. On account of the immanent risk
that certain abstract legal terms can be interpreted in various ways, the conformity of the
interpretation with the law is subject to uncertainty.
Components of the Combined Management Report not audited for content
Insofar as the references made in the Management Report relate to parts of the Annual
Report that were not included in the external audit (components outside the company and
Consolidated Financial Statements and the Combined Management Report), or to the
Mercedes-Benz Group website or other reports or documents, these were not part of the
external audit.
The disclosures on the appropriateness and effectiveness of the internal control and risk
management system in the Risk and Opportunity Report chapter, which are not part of the
Management Report, were also not included in the audit of the financial statements.
Key figures that were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report are indicated by a footnote.
0
0
105
S. MM 2961E
or
Overall assessment of the risk
and opportunity situation
Risks from other legal proceedings
In addition, if future taxable income is not earned or is
too low, there is a risk that the tax benefit from loss car-
ryforwards and tax-deductible temporary differences
may not be recognized or may no longer be recognized
in full; this could have a negative impact on net profit.
However, there is an accounting opportunity that tax
benefits currently not recognized in full may be utilized
or recognized in future years and could thus also have a
positive impact on the Group's net profit.
Consolidated Financial Statements
As legal proceedings are fraught with a large degree of
uncertainty, it is possible that after their final resolution,
some of the provisions we have recognized for them
could prove to be insufficient. As a result, substantial
additional expenditures may arise. This also applies to
legal proceedings for which the Group has seen no
requirement to recognize a provision.
It cannot be ruled out that the regulatory risks and risks
from legal proceedings discussed above, individually or
in the aggregate, may materially adversely impact the
profitability, cash flows and financial position of the
Group or any of its segments.
Although the final result of any such litigation may influ-
ence the Group's earnings and cash flows in any par-
ticular period, the Mercedes-Benz Group believes that
any resulting obligations are unlikely to have a sus-
tained effect on the Group's financial position.
Further information on legal proceedings is provided in
Note 30 of the Notes to the Consolidated Financial
Statements.
Tax risks and opportunities
Mercedes-Benz Group AG and its subsidiaries operate
in many countries worldwide and are therefore subject
to numerous different statutory provisions and tax
audits. Tax risks and opportunities can affect the profit-
ability, cash flows and financial position of the Group.
As of 31 December 2023, the quantification of tax risks
and opportunities affecting the net profit will be dis-
closed for the first time in this Risk and Opportunity
Report. Additionally, there are minor tax risks to the
operating result.
Consolidated Financial Statements
Positive effects on the Group's net profit and cash flows
are also possible as a result of retroactive legislation,
future court rulings or changes in the opinions of the
tax authorities.
Any changes or interventions by the fiscal authorities
are continuously monitored by the tax department and
measures are taken if required. The monitoring, man-
agement and avoidance of tax risks is supported by a
tax-compliance management system (tax CMS).
Annual Report 2023 | Mercedes-Benz Group
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To Our Shareholders
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Combined Management Report
Risk and Opportunity Report
Corporate Governance
Further Information
Further Information
-
Competition for highly qualified staff and management
is still very intense in the industry and the regions in
which the Mercedes-Benz Group operates. The Group's
future success also depends on the extent to which it
succeeds over the long term in recruiting, integrating
and retaining specialist employees. The established
human resources instruments take such personnel risks
into consideration. One focus of human resources man-
agement is the targeted personnel development and
further training of the workforce. Among other things,
employees benefit from a wide range of training oppor-
tunities and the transparency created within the frame-
work of performance management. In order to remain
successful as a company, the way we work together and
our leadership culture undergo continuous develop-
ment.
155
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In the United States, Mercedes-Benz Group AG and
Mercedes-Benz USA, LLC (MBUSA) reached agreements
in the third quarter of 2020 with various authorities to
settle civil environmental claims regarding the emission
control systems of certain diesel vehicles. These agree-
ments have become final and effective. The authorities
took the position that the Mercedes-Benz Group had
failed to disclose Auxiliary Emission Control Devices
(AECDs) in certain of its US diesel vehicles and that
several of these AECDs were illegal defeat devices.
The corresponding activities of various authorities
world-wide, which were already reported in the past,
are partly ongoing, as described below. These activities
particularly relate to test results, the emission control
systems used in Mercedes-Benz diesel vehicles and/or
the interactions of the Mercedes-Benz Group with the
relevant authorities as well as related legal issues and
implications, including, but not limited to, under appli-
cable environmental, criminal, consumer protection and
antitrust laws.
The Mercedes-Benz Group is continuously subject to
governmental information requests, inquiries, investiga-
tions, administrative orders and proceedings relating to
various laws and regulations in connection with diesel
exhaust emissions.
Risks from legal proceedings in connection with
diesel exhaust-gas emissions - governmental
proceedings
Risks from legal proceedings in general
Mercedes-Benz Group AG and its subsidiaries are con-
fronted with various legal proceedings and claims as
well as governmental investigations and orders (legal
proceedings) on a large number of topics, including
vehicle safety, emissions, fuel economy, financial ser-
vices, dealer, supplier and other contractual relation-
ships, intellectual property rights (especially patent
infringement lawsuits), warranty claims, environmental
matters, antitrust matters (including actions for dam-
ages) as well as investor litigation. Product-related liti-
gation involves among other things claims alleging
faults in vehicles. Some of these claims are asserted by
way of class actions. If the outcome of such legal pro-
ceedings is detrimental to the Mercedes-Benz Group or
such proceedings are settled, the Group may encounter
substantial financial burdens, e.g. from damages pay-
ments or service actions, recall campaigns, monetary
penalties or other costly actions. Some of these pro-
ceedings and related settlements may also have an
impact on the company's reputation.
The automotive industry is subject to extensive govern-
mental regulations worldwide. Laws in various jurisdic-
tions govern occupant safety and the environmental
impact of vehicles, including emissions levels, fuel
economy and noise, as well as the emissions of the
plants where vehicles or parts thereof are produced.
Furthermore, regulation, particularly in the European
Union, governs the external reporting on ESG topics
(environmental, social or governance topics), whereby
the complexity of such regulation is continuously
increasing. The introduction of certain new regulations
may initially be associated with uncertainties relating to
their interpretation. In case regulations applicable in
the different regions are not complied with, this could
result in significant penalties, damages claims and rep-
utational harm
or,
in case of regulations applicable to
vehicles, the inability to certify vehicles in the relevant
markets. The cost of compliance with these regulations
is considerable, and in this context, Mercedes-Benz
continues to expect a significant level of costs.
Regulatory risks
Legal risks
The Group continues to be exposed to legal and tax
risks. Provisions are recognized for those risks if and
insofar as they are likely to be utilized and the amounts
of the obligations can be reasonably estimated.
Legal and tax risks and opportunities
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
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Consolidated Financial Statements
Further Information
Regarding the proceedings and processes still in pro-
gress, the Mercedes-Benz Group cannot at this time
make any statement to their outcome. In light of the
legal positions taken by U.S. regulatory authorities and
the KBA as well as the South Korean Ministry of Envi-
ronment, amongst others, it cannot be ruled out that,
besides these authorities, one or more authorities
worldwide will reach the conclusion that other passen-
ger cars and/or vans with the brand name Mercedes-
Benz or other brand names of the Mercedes-Benz
Group are equipped with impermissible defeat devices.
Likewise, such authorities could take the view that cer-
tain functionalities and/or calibrations are not proper
and/or were not properly disclosed. It cannot be ruled
out that the Mercedes-Benz Group will become subject
to, as the case may be, significant additional fines and
other sanctions, measures and actions. The occurrence
of the aforementioned events in whole or in part could
cause significant collateral damage including reputa-
tional harm. Further, due to negative allegations or find-
ings with respect to technical or legal issues by one of
the various governmental agencies, other agencies
also plaintiffs could also adopt such allegations or
findings. Thus, a negative allegation or finding in one
proceeding carries the risk of being able to have an
adverse effect on other proceedings, also potentially
leading to new or expanded investigations or proceed-
ings, including lawsuits.
Personnel risks and opportunities
The Mercedes-Benz Group continues to fully cooperate
with the authorities and institutions. Irrespective of
such cooperation and in light of the past developments,
it is possible that further regulatory, criminal and
administrative investigative and enforcement actions
and measures relating to the Mercedes-Benz Group
and/or its employees will be taken or administrative
orders will be issued. Additionally, further delays in
obtaining regulatory approvals necessary to introduce
new or recertify existing vehicle models could occur.
competition authority (Korea Fair Trade Commission)
are conducting various investigations and/or proce-
dures in connection with diesel exhaust emissions. In
this context, these South Korean authorities have made
determinations and imposed sanctions against
Mercedes-Benz which Mercedes-Benz has appealed. In
the same context, national antitrust authorities of vari-
ous countries are also conducting investigations,
including the South Korean antitrust authority, which
has made certain findings and imposed fines on some
car manufacturers. In February 2024, the criminal pro-
ceeding in South Korea was concluded.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
156
To Our Shareholders
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
In addition to the aforementioned authorities, authori-
ties of various foreign states, particularly the South
Korean Ministry of Environment and the South Korean
In addition, the ability of the Mercedes-Benz Group to
defend itself in proceedings could be impaired by con-
cluded proceedings and their underlying allegations as
well as by unfavourable results or developments in any
of the information requests, inquiries, investigations,
administrative or criminal orders, legal actions and/or
proceedings discussed above.
Between 2018 and 2020, the German Federal Motor
Transport Authority (KBA) issued subsequent auxiliary
provisions for the EC type approvals of certain
Mercedes-Benz diesel vehicles, and ordered mandatory
recalls as well as, in some cases, stops of the first regis-
tration. In autumn 2022 and in December 2023, the KBA
issued further decisions regarding vehicles equipped
with various EU6 or EU5 diesel engines. In each of
those cases, it held that certain calibrations of speci-
fied functionalities are to be qualified as impermissible
defeat devices. Mercedes-Benz has a contrary legal
opinion on this question and has filed timely objections
against the KBA's administrative orders and determina-
tions mentioned above. Insofar as the KBA has not rem-
edied the objections, Mercedes-Benz has filed lawsuits
with the competent administrative court to have the
controversial questions at issue clarified in a court of
law. Irrespective of such objections and the lawsuits
that are now pending, the Mercedes-Benz Group con-
tinues to cooperate fully with the KBA. To a large extent,
the remidial actions requested by the KBA were devel-
oped by the Mercedes-Benz Group and assessed and
approved by the KBA; the necessary recalls were initi-
ated. For some of the vehicles affected by the KBA's
offense proceedings against Mercedes-Benz. In July
2021, the local court of Böblingen issued penal orders
against three Mercedes-Benz employees based on,
amongst others, fraud, which have become final. The
criminal investigation proceedings of the Stuttgart pub-
lic prosecutor's office against further Mercedes-Benz
employees on the suspicion of, amongst others, fraud
have meanwhile been discontinued.
In Germany, the Stuttgart public prosecutor's office
issued a fine notice against Mercedes-Benz in Septem-
ber 2019 based on a negligent violation of supervisory
duties, thereby concluding the related administrative
In Canada, the environmental regulator Environment
and Climate Change Canada (ECCC) is conducting an
investigation in connection with Diesel exhaust emis-
sions based on the suspicion of potential violations of,
amongst others, the Canadian Environmental Protection
Act as well as potential undisclosed AECDs and defeat
devices. The Mercedes-Benz Group continues to coop-
erate with the investigating authorities.
As already reported, in April 2016, the U.S. Department
of Justice (DOJ) requested that the Mercedes-Benz
Group conduct an internal investigation. The Mercedes-
Benz Group conducted such an internal investigation in
cooperation with the DOJ's investigation; the DOJ's
investigation remains open. In addition, further US state
authorities have opened investigations pursuant to
both local environmental and consumer protection laws
and have requested documents and information.
As part of these settlements, the Mercedes-Benz Group
has denied the allegations by the authorities and has
not admitted liability, but has agreed to, among other
things, pay civil penalties, conduct an emission modifi-
cation programme for the affected vehicles and take
certain other measures. The failure to meet certain of
those obligations may trigger additional stipulated pen-
alties. In the first quarter of 2021, the Mercedes-Benz
Group paid the civil penalties.
Contents
Contents
decision from December 2023, developments, exami-
nations and approvals of the remidial measures are still
pending. It cannot be ruled out that under certain cir-
cumstances, software updates may have to be
reworked, or further delivery and registration stops may
be ordered or resolved by the company as a precau-
tionary measure, also with regard to the used-car, leas-
ing and financing businesses. In the course of its regular
market supervision, the KBA routinely conducts further
reviews of Mercedes-Benz vehicles and asks questions
about technical elements of the vehicles. In addition,
the Group continues to be in a dialogue with the Ger-
man Federal Ministry for Digital and Transport (BMDV)
to conclude the analysis of the diesel-related emissions
matter and to further the update of affected customer
vehicles. In light of the aforementioned administrative
orders issued by the KBA, and continued discussions
with the KBA and the BMDV, it cannot be ruled out
completely that additional administrative orders may be
issued in the course of the ongoing and/or further
investigations. Since 1 September 2020, this also
applies to responsible authorities of other member
states and the European Commission, which conduct
market surveillance under the new European Type
Approval Regulation and can take measures upon
assumed non-compliance, irrespective of the place of
the original type approval, and also to the British mar-
ket surveillance authority DVSA (Driver and Vehicle
Standards Agency).
certain assumptions. Even small changes in those
assumptions such as a change in the discount rates or
changed inflation assumptions have a negative or posi-
tive effect on funded status and Group equity in the
current year, and lead to a change in the periodic net
pension expense in the following year. The fair value of
plan assets is determined to a large degree by develop-
ments in the capital markets. Unfavourable or favoura-
ble developments, especially relating to share prices
and fixed-interest securities, reduce or increase the
carrying value of plan assets. Risk management for the
plan assets takes place through broad diversification of
investments, the selection of various asset managers
on the basis of quantitative and qualitative analyses,
and the ongoing monitoring of returns and risks. The
structure of pension obligations is taken into considera-
tion during the determination of the investment strat-
egy for the plan assets in order to reduce fluctuations of
the funded status. Risks and opportunities relating to
pension plans have declined, due mainly to lower vola-
tility levels on the capital market.
activities, and applies derivative financial instruments
for hedging purposes where needed, thus limiting both
market price risks and opportunities. Risks and oppor-
tunities arising from a change in commodity prices are
reported in the "Procurement market risks and opportu-
nities" category since 31 December 2023.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Risk and Opportunity Report
152
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group is generally exposed to risks
and opportunities from changes in market prices such
as currency exchange rates, interest rates and com-
modity prices. Market price changes can have a nega-
tive or positive influence on the Group's profitability,
cash flows and financial position. The Mercedes-Benz
Group systematically manages and monitors market
price risks and opportunities, primarily directly in the
context of its business operations and financing
In principle, the Group's operating and financial risk
exposures underlying its financial risks and opportuni-
ties can be divided into symmetrical and asymmetrical
risk and opportunity profiles. With the symmetrical
risk and opportunity profiles (e.g. currency exposures),
risks and opportunities exist equally, while with the
asymmetrical risk and opportunity profiles (e.g. credit
and country exposures), the risks outweigh the oppor-
tunities.
The following section deals with the financial risks and
opportunities of the Mercedes-Benz Group. These risks
and opportunities can have negative or positive effects
on the profitability, cash flows and financial position of
the Group.
Financial risks and
opportunities
ensure profitability. The recoverable value of invest-
ments in shareholdings is also regularly monitored.
The remeasurement of a holding can lead to risks and
opportunities for the segment to which it is allocated.
Furthermore, ongoing business activities, especially the
integration of employees, technologies and products,
can result in risks. In addition, further financial obliga-
tions or an additional financing requirement can arise.
The shareholdings are subject to a monitoring process
so that, if required, decisions can be promptly made on
whether or not measures can be taken to support or
The Mercedes-Benz Group generally participates in the
risks and opportunities of shareholdings in line with its
equity interest, and is also subject to share-price risks
and opportunities if such companies are listed on a
stock exchange. After the spin-off and hive-down of the
Daimler commercial vehicle business, this also applies
to the Group's remaining minority shareholding in
Daimler Truck Holding AG.
Risks exist in particular due to upcoming negotiations
on collective bargaining conditions and the associated
potential loss of production. Besides the demographic
development, the digital transformation also requires
that the company continues to adapt to changes and
derives measures such as securing a qualified next
generation of specialists and managers, especially with
regard to technical developments. This requirement is
addressed through various measures, including tar-
geted qualification. The Mercedes-Benz Group counters
economic, market and competitive fluctuations by
means of established time and flexibility instruments in
order to react appropriately to the situation.
Annual Report 2023 | Mercedes-Benz Group
-
In addition, the Group is exposed to credit-, country-
and liquidity-related risks, risks of restricted access to
capital markets and risks from changes in credit ratings.
As part of the risk management process, the Mercedes-
Benz Group regularly assesses these risks by consider-
ing changes in key economic indicators and market
information. Consideration of the pension plan assets
to cover retirement and healthcare benefits is included
in the section "Risks and opportunities relating to pen-
sion plans".
Exchange-rate risks and opportunities
Risks and opportunities related to equity
investments and cooperations with partnerships
Cooperation with partners in shareholdings and part-
nerships is of key importance to the Mercedes-Benz
Group among other things, in the transformation
towards electric mobility, the associated charging infra-
structure and comprehensive digitalization. Coopera-
tion and investments also make up an important pillar
in connection with the provision of mobility solutions.
Especially with new technologies, these shareholdings
help us utilize synergies and improve cost structures in
order to respond successfully to the competitive situa-
tion in the automotive industry.
reviewed, whereby both risks and opportunities are lim-
ited. Any over-collateralization caused by changes in
exposure is reversed by suitable measures without
delay. Exchange-rate risks and opportunities also exist
in connection with the translation into euros of the net
assets, revenues and expenses of the companies of the
Group outside the euro zone (currency translation risk);
these risks are not generally hedged.
Risks and opportunities from changes in
credit ratings
The Mercedes-Benz Group's global orientation means
that its business operations and financial transactions
are connected with risks and opportunities related to
fluctuations in currency exchange rates. This applies in
particular to fluctuations of the euro against the US dol-
lar, Chinese renminbi, British pound and other curren-
cies such as those of growth markets. An exchange-rate
risk or opportunity arises in business operations pri-
marily when revenue is generated in a currency differ-
ent from that of the related costs (transaction risk).
Regularly updated currency risk exposures are succes-
sively hedged with suitable financial instruments (pre-
dominantly currency forwards) in accordance with
exchange-rate expectations, which are continually
Risks and opportunities relating to pension plans
The companies of the Mercedes-Benz Group grant
defined-benefit pension commitments, which are
largely covered by plan assets, as well as healthcare
commitments to a small extent. The balance of pension
obligations less plan assets constitutes the carrying
amount or funded status of those employee benefit
plans. The measurement of pension obligations and the
calculation of net pension expense are based on
business. Access to capital markets in individual coun-
tries may be limited by government regulations or by a
temporary lack of absorption capacity. In addition,
pending legal proceedings as well as the Group's own
business policy considerations and developments may
temporarily prevent the Group from covering any liquid-
ity requirements by means of borrowing in the capital
markets. Contractually agreed credit lines are available
as refinancing instruments.
Risks of restricted access to capital markets
Liquidity risks arise when a company is unable to fully
meet its financial obligations. In the normal course of
business, the Mercedes-Benz Group uses bonds, com-
mercial paper and securitized transactions, as well as
bank loans in various currencies, primarily with the aim
of refinancing its leasing and sales-financing business.
An increase in the cost of refinancing would have a neg-
ative impact on the competitiveness and profitability of
the financial services business to the extent that the
higher refinancing costs cannot be passed on to cus-
tomers; a limitation of the financial services business
would also have negative consequences for the vehicle
Country risk describes the risk of financial loss resulting
from changes in political, economic, legal or social con-
ditions in the respective country, for example due to
sovereign measures such as expropriation or a ban on
currency transfers. The Mercedes-Benz Group is
exposed to country risks that primarily result from
cross-border financing or collateralization for subsidiar-
ies or customers, from investments in subsidiaries and
joint ventures, and from cross-border trade receivables.
Country risks also arise from cross-border cash depos-
its at financial institutions. The Group addresses these
risks by setting country limits (e.g. for hard-currency
portfolios of Mercedes-Benz Mobility companies). The
Mercedes-Benz Group also has an internal rating sys-
tem that divides all countries in which it operates into
risk categories. Compared to the previous year, the
country risk has fallen from "high" to "medium" due to
the discontinuation of business activities in Russia.
Country risks
Further Information
Consolidated Financial Statements
Corporate Governance
Risks and opportunities exist in connection with poten-
tial downgrades or upgrades to credit ratings by the rat-
ing agencies, and thus to the Mercedes-Benz Group's
creditworthiness. Downgrades could have a negative
impact on the Group's financing if such a downgrade
leads to an increase in the costs for external financing
or restricts the Group's ability to obtain financing. A
credit rating downgrade could also discourage inves-
tors from investing in Mercedes-Benz Group AG or from
purchasing bonds issued by Mercedes-Benz Group AG
or another company of the Group.
153
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Credit risks also arise from the Group's liquid assets.
Should defaults occur, this would adversely affect the
Group's profitability, liquidity and capital resources,
and financial position. The limit methodology for liquid
funds deposited with financial institutions has been
continuously further developed in recent years. In con-
nection with investment decisions, priority is placed on
the borrower's very high creditworthiness and on bal-
anced risk diversification. Most liquid assets are held in
investments with an external rating of A or better.
The Group is exposed to credit risks which result primar-
ily from its financial services activities and from the
operations of its vehicle business. The risks from leasing
and sales financing are dealt with in the General market
risks and opportunities section.
Credit risk describes the risk of financial loss resulting
from a counterparty failing to meet its contractual pay-
ment obligations. Credit risk encompasses both the
direct risk of default and the risk of a deterioration of
creditworthiness as well as concentration risks.
Interest-rate risks and opportunities
Changes in interest rates can create risks and opportu-
nities for business operations as well as for financial
transactions. The Mercedes-Benz Group employs a vari-
ety of interest rate-sensitive financial instruments to
manage the cash requirements of its business opera-
tions on a day-to-day basis. Most of these financial
instruments are held in connection with the financial
services business of Mercedes-Benz Mobility. Inter-
est-rate risks and opportunities arise when fixed-inter-
est periods are not congruent between the asset and
liability sides of the balance sheet. By means of refi-
nancing coordinated with the terms of the financing
agreements, the risk of maturity mismatch is minimized
from both an interest-rate and a liquidity perspective.
Remaining interest-rate risks are managed with the use
of derivative financial instruments. The funding activi-
ties of the industrial business and the financial services
business are coordinated at the Group level. Derivative
interest-rate instruments such as interest-rate swaps
are used to achieve the desired interest-rate maturities
and asset/liability structures (asset and liability man-
agement).
Combined Management Report
Risk and Opportunity Report
Credit risks
After intensive review and discussion, the Audit Com-
mittee recommended that the Supervisory Board adopt
the prepared financial statements, the Combined Man-
agement Report including the Non-Financial Declara-
tion, the Remuneration report, the Declaration on Cor-
porate Governance and the proposal of the Board of
Management for the payment of a dividend of €5.20 per
dividend-bearing no-par-value share. The Audit Com-
mittee also adopted the Report of the Audit Committee
on the 2022 financial year.
In its meeting on 13 March 2023, the Committee
reviewed and discussed in detail the Annual Financial
Statements, the Consolidated Financial Statements
and the Combined Management Report, including the
Non-Financial Declaration for Mercedes-Benz
Group AG and the Group for the 2022 financial year,
the Remuneration report, the Declaration on Corporate
Governance and the proposal for the appropriation of
profits, all of which were issued with an unqualified
audit opinion by the auditor. The representatives of the
auditor reported on the results of the audit and in par-
ticular addressed the key audit matters and the rele-
vant audit procedures, including the conclusions
drawn, and were available to answer additional ques-
tions and provide information. The audit opinions on
the company and Consolidated Financial Statements
(including the key audit matters in the audit opinions)
and on the accounting-related internal control system,
as well as significant accounting matters, were dis-
cussed together with the auditor. Furthermore, the
Audit Committee discussed the effectiveness of the
internal control and risk management system.
In the meeting on 16 February 2023, the Audit Commit-
tee discussed the preliminary key figures of the 2022
Annual Financial Statements, the Consolidated Finan-
cial Statements and the preliminary proposal of the
Board of Management on the appropriation of profits.
After careful review, the Committee took note of and
approved the figures presented, determined that there
were no objections to the proposed publication and
recommended that the Supervisory Board, which met
afterwards, endorse this view. The preliminary key fig-
ures and the preliminary proposal for the appropriation
of profits were published at the annual press confer-
ence on 17 February 2023. During the aforementioned
meeting, the Committee also discussed the results of
the internally conducted quality analysis of the audit of
the financial statements. In addition, the Committee
dealt with the report on the total fees paid to the audi-
tor for audit and non-audit services in the 2022 finan-
cial year (including the non-audit fee cap) and set the
approval framework for the engagement of the auditor
for non-audit services for the period from 1 February
2023 to 31 December 2023. Subject to the election res-
olution of the Annual General Meeting, the Committee
also discussed the proposal for the fee agreement to be
made with the auditor for the 2023 financial year. In
addition, the Audit Committee discussed the 2023
annual audit plan of the Internal Audit Department and
the reports issued by the Compliance and Legal depart-
ments. Finally, the Committee was informed about the
current financial status, volumes and prices of the vehi-
cle clusters in the current and future Mercedes-Benz
Cars portfolio.
Topics in the year 2023
Further Information
Consolidated Financial Statements
To Our Shareholders
Combined Management Report
164
Contents
Annual Report 2023 | Mercedes-Benz Group
The Chairman of the Audit Committee informed the
Supervisory Board in each of its subsequent meetings
of the activities of the Committee as well as the content
of the meetings and discussions.
Information for the Supervisory Board
Particularly in preparation for upcoming meetings, the
Chairman of the Audit Committee held regular discus-
sions with the auditor as well as individual discus-
sions, for example with the aforementioned members
of the Board of Management, the Head of Internal
Auditing, the Head of Compliance, the Head of Legal
Affairs and, if required, with the heads of other spe-
cialist departments.
In this meeting, the Audit Committee also resolved to
recommend to the Supervisory Board, and subse-
quently to the Annual General Meeting, that KPMG AG
Wirtschaftsprüfungsgesellschaft be appointed to audit
the financial statements and the Consolidated Financial
Statements, and to serve as the auditor for the review
of interim financial reports for the 2023 financial year.
The discussion of the quality of the audit and the results
of the independence review, which did not reveal any
indications of bias or threats to independence, were
taken into account.
Corporate Governance
Report of the Audit Committee
representatives of the auditor. The heads of specialist
departments such as Accounting, Internal Audit, Com-
pliance and Legal also provided information on individ-
ual items on the agenda. Regular executive sessions
also took place with the auditor without the presence
of the Board of Management.
Consolidated Financial Statements
In April 2023, the Committee initially considered the
interim financial report for the first quarter of 2023.
The Audit Committee then also received reports from
the Internal Audit and Legal departments and from the
Compliance unit. The report submitted by the Internal
Audit department also included an update on
The Audit Committee met six times in the 2023 finan-
cial year. The Chairman of the Supervisory Board
attended all meetings as a permanent guest. Other
permanent participants, in compliance with the statu-
tory requirements, were the Chairman of the Board of
Management, the members of the Board of Manage-
ment responsible for Finance and Controlling and for
Integrity, Governance & Sustainability, and the
Contents
Annual Report 2023 | Mercedes-Benz Group
In March 2024, the Committee reviewed and discussed
in detail the Annual Financial Statements, the Consoli-
dated Financial Statements and the Combined Manage-
ment Report, including the Non-Financial Declaration
for Mercedes-Benz Group AG and the Group for the
2023 financial year, the Remuneration report, the Dec-
laration on Corporate Governance and the proposal for
the appropriation of profits. The representatives of the
auditor reported on the results of the audit and in par-
ticular addressed the key audit matters and the relevant
audit procedures, including the conclusions drawn, and
were available to answer additional questions and pro-
vide information. The audit opinions on the company
and Consolidated Financial Statements (including the
key audit matters) and on the accounting-related inter-
nal control system, as well as significant accounting
matters, were discussed together with the auditor.
In its meeting on 21 February 2024, the Audit Commit-
tee discussed the preliminary key figures of the com-
pany and the Consolidated Financial Statements for
2023 as well as the preliminary proposal of the Board of
Management on the appropriation of profits. After care-
ful review, the Committee took note of and approved
the figures presented, determined that there were no
objections to the proposed publication and recom-
mended that the Supervisory Board, which met after-
wards, endorse this view. The preliminary key figures
and the preliminary proposal for the appropriation of
profits were published at the annual press conference
on 22 February 2024.
Company and Consolidated Financial Statements
for 2023
In October 2023, the Committee dealt with the interim
financial report for the third quarter of 2023 and the
risk report. Furthermore, the Committee carried out the
annual review of the approved non-audit services of the
auditor and dealt with the quarterly reports from the
Compliance, Internal Audit and Legal departments.
Here, the Audit Committee received extensive informa-
tion on social compliance activities, and in particular on
human rights due diligence processes, in connection
with the Act on Corporate Due Diligence Obligations in
Supply Chains (German Supply Chain Act - LkSG). It
also once again received reports on the status of the
transition in connection with the upcoming rotation of
the auditor.
At its meeting in July 2023, the Committee dealt with
the results of the second quarter of 2023 and the risk
report. Furthermore, the Committee received the quar-
terly reports from the Compliance, Internal Audit and
Legal departments. These reports contained informa-
tion on, among other things, an external quality assess-
ment that had been performed in accordance with the
standards of the Institute of Internal Auditors and in
which Internal Audit was able to achieve an outstanding
result. In addition, the Audit Committee discussed the
annual report of the Group Data Protection Officer with
the Board of Management. The Committee also used
audit quality indicators to analyse the quality of the
audits. The agenda also included the discussion of a
report on the management of currency risks.
In its meeting in June 2023, the Audit Committee dis-
cussed aspects of the risk management system and
considered in particular the methods, processes and
derivations relating to ESG risks and opportunities as
well as digitalization measures. In addition, it received
reporting on the further development of the internal
control system. Subjects presented with respect to the
Compliance Management System included digitalization
initiatives with the possible future use of artificial intel-
ligence. The report on the further measures implement-
ing the new ESG and sustainability reporting require-
ments and the establishment of a uniform business
performance management system for sustainability and
ESG were a focal point of the meeting. In addition, the
Audit Committee received an exhaustive report from
the tax department. Information was provided on the
further development of the tax compliance manage-
ment system and new regulatory requirements related
to ESG and sustainability. Another topic of the meeting
was a discussion of the planning of the audit of the
financial statements, including the main audit areas for
the 2023 financial year. In this context, the committee
also considered the quality of the audit of the financial
statements and the status of the transition in connec-
tion with the upcoming rotation of the auditor. Finally,
the Audit Committee received reporting on current
accounting topics.
examinations and assessments relating to ESG (envi-
ronmental, social and governance) issues.
Further Information
Corporate Governance
Report of the Audit Committee
Combined Management Report
165
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
During 2023, the Audit Committee discussed the
interim financial reports and the results of the audit
review with the Board of Management and the auditor
in the quarterly meetings prior to their publication.
In addition, the Committee received reports from the
Internal Audit, Compliance and Legal departments.
The Board of Management also regularly reported to
the Committee on the current status of material legal
proceedings, including antitrust and diesel emis-
sions-related proceedings. In addition, the Audit Com-
mittee received regular reports on possible violations
of rules, which employees and external parties reported
to the BPO (Business & People Protection Office) whis-
tle-blowing system.
Meetings and participants
180 Overall profiles of requirements for
the composition of the Board of
Management and the Supervisory
Equal representation
171 Composition and working method of
the Board of Management
corporate governance
168 Essential principles and practices of
system
168 Remuneration report, remuneration
167 Declaration of Compliance with the
German Corporate Governance Code
167 Declaration on Corporate
Governance
163 Report of the Audit Committee
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
162
CORPORATE GOVERNANCE
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
174 Composition and working method
of the Supervisory Board and its
committees
In the 2023 financial year, Olaf Koch (Chairman of the
Audit Committee) and Timotheus Höttges served as
members of the Supervisory Board on the shareholder
side. The persons mentioned are independent of the
company and the Board of Management and have
expertise in the field of accounting and the auditing of
financial statements, including sustainability reporting
and the auditing of such reporting. In the past financial
year, the employees were represented by Ergun Lümali
and also by Michael Brecht until his departure from the
Supervisory Board. Roman Romanowski was elected to
succeed Michael Brecht on the Audit Committee and
Ergun Lümali was elected Deputy Chairman of the Audit
Committee.
179 German Act on the Equal
To Our Shareholders
On the basis of the statutory provisions, the German
Corporate Governance Code and the rules of procedure
of the Supervisory Board and its committees, the Audit
Committee deals in particular with issues of accounting,
financial reporting and non-financial reporting. In addi-
tion, it is concerned with the audit of the financial
statements and it reviews the quality, qualifications and
independence of the auditor. It also discusses the
appropriateness, effectiveness and operation of the risk
management system, the internal control system, the
internal audit system and the compliance management
system. After the election of the auditor by the Annual
General Meeting, the Audit Committee engages the
auditor to conduct the annual audit and the auditor's
review of interim financial statements. In addition, the
Audit Committee agrees on the important audit issues
and negotiates the audit fees with the auditor. The
Audit Committee also engages the auditor to conduct
the voluntary audit of the Non-Financial Declaration as
part of the management report.
Accountability
as Chairman of the Audit Committee, I am pleased to
report to you on the tasks and activities of this Commit-
tee in the 2023 financial year.
Dear Shareholders,
Report of the Audit Committee
Report of the Audit Committee
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
163
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Meeting
187 Shareholders and Annual General
Board
Participation of Women and Men in
Leadership Positions
Combined Management Report
In the Declaration on Corporate Governance pursuant
to Sections 289 f, 315d of the German Commercial Code
(HGB), the Board of Management and the Supervisory
Board explain the corporate governance of the com-
pany in the 2023 reporting year. The statements are
applicable to Mercedes-Benz Group AG and the Group,
unless indicated otherwise below. Pursuant to Sec-
tion 317 Subsection 2 Sentence 6 HGB, the review of
the Declaration on Corporate Governance by the auditor
is to be limited to whether the legally required state-
ments were made.
Consolidated Financial Statements
Principles of Social Responsibility and Human Rights
The Principles of Social Responsibility and Human
Rights supplement and specify the principles of human
rights and good working conditions in the Integrity
Code. They apply to all managers and employees of
Mercedes-Benz Group AG and also the consolidated
Group companies worldwide. Through the Principles,
the Mercedes-Benz Group also commits itself to pre-
venting negative effects on human rights within its own
business operations worldwide and at its partner and
supplier companies and to minimizing these negative
effects and, as far as possible, putting an end to them.
The Principles of Social Responsibility and Human
Rights can be viewed in various languages at
mercedes-benz.com/human-rights/principles.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
169
To Our Shareholders
group.
Contents
The Code of Conduct is binding on all managers and
employees of Mercedes-Benz Group AG and also the
consolidated Group companies worldwide. The Code of
Conduct was revised in 2022 and the new version was
communicated to employees in early 2023. The policy
sets out the core corporate principles for conduct in
day-to-day business and the way people deal with each
other within the company and with business partners
and customers. In addition to respect for the law and
the legal system, these corporate principles also
include, for example, fairness, transparency, practical
diversity, and responsibility. In addition to the corpo-
rate principles, the Code of Conduct contains, inter alia,
regulations regarding the respect and safeguarding of
human rights as well as the handling of conflicts of
interest, and prohibits corruption in any form whatso-
ever. It is available on the internet at group.
mercedes-benz.com/compliance/integrity-code.
The Code of Conduct
also wants to be at the forefront when it comes to sus-
tainability. The company defines the most important
principles in its Code of Conduct, which provides orien-
tation for all employees of Mercedes-Benz Group AG
and the Group and assists them in making the right
decisions, even in difficult business situations.
The Mercedes-Benz Group conducts its business in
accordance with Group-wide standards that go beyond
the requirements of the law and the German Corporate
Governance Code. Mercedes-Benz is convinced that
only those who act in an ethically and legally responsi-
ble manner remain successful in the long term - this is
especially true in times of upheaval and change. Hence,
integrity and compliance are very important to the
Mercedes-Benz Group. In order to achieve long-term
and sustainable corporate success on this foundation,
it is the goal of the Mercedes-Benz Group to ensure that
its business operations are in harmony with the inter-
ests of the environment and society. As one of the
world's leading automakers, the Mercedes-Benz Group
Principles of our business activity
Mercedes-Benz Group AG has fully complied and con-
tinues to comply with the suggestions of the Code.
Beyond the statutory requirements of German stock
corporation, co-determination and capital market legis-
lation, Mercedes-Benz Group AG has complied and con-
tinues to comply with the recommendations of the Ger-
man Corporate Governance Code ("Code") subject to
the exceptions stated and justified in the Declaration of
Compliance (pursuant to Section 161 of the German
Stock Corporation Act).
Annual Report 2023 | Mercedes-Benz Group
Expectations regarding business partners
The Mercedes-Benz Group also formulates clear
requirements for its business partners, because con-
duct with integrity and in compliance with the rules is a
prerequisite for any trust-based cooperative venture.
Therefore, when selecting its business partners, the
company makes sure that they comply with the law, fol-
low ethical principles, communicate the associated
requirements to their own suppliers, and work to ensure
compliance with these requirements. For the Mercedes-
Benz Group's expectations of its business partners,
please also see group.mercedes-benz.com/com-
pany/compliance/business-partners.html.
Advisory Board for Integrity and Sustainability
The Mercedes-Benz Group established an Advisory
Board for Integrity and Sustainability. The board's mem-
bers are independent external experts in the fields of
environmental and social policy, transport and mobility
development, and human rights and ethics and provide
the Mercedes-Benz Group with constructive and critical
support with issues relating to integrity, sustainability
and corporate responsibility. The Advisory Board con-
venes several times a year in meetings that are chaired
by the member of the Board of Management responsi-
ble for Integrity, Governance & Sustainability. One of
these annual meetings specifically serves to exchange
information with other members of the Board of Man-
agement and members of the Supervisory Board. Addi-
tionally, a regular exchange of information and opinions
between the Advisory Board and company managers
and employees takes place in other meetings devoted
to specific topics. Such meetings also include working
groups that focus on integrity and employees, climate
change mitigation and resource conservation. Discus-
sions were also held with employees on Employee Day
as part of the 2023 Sustainability Dialogue. In 2023, the
Advisory Board also addressed the topics of human
rights, data responsibility, the responsible use of artifi-
cial intelligence and the further development of the
sustainable business strategy.
On the basis of the recommendation of the Audit Com-
mittee, the Supervisory Board submits a proposal to the
Annual General Meeting for the appointment of the
auditor of the financial statements, the Group auditor of
the Consolidated Financial Statements, and the auditor
for the review of the interim financial reports.
The Mercedes-Benz Group compiles its Consolidated
Financial Statements and interim financial reports in
accordance with the principles of International Finan-
cial Reporting Standards (IFRS) as applicable in the
European Union. The Annual Financial Statements of
Mercedes-Benz Group AG are compiled in accordance
with the accounting provisions of the German Commer-
cial Code (HGB). In addition to the half-yearly financial
report, the Mercedes-Benz Group also compiles quar-
terly financial reports. The Consolidated Financial
Statements and the Annual Financial Statements of
Mercedes-Benz Group AG are audited by an auditor,
and interim financial reports are subject to review by an
auditor. The Consolidated Financial Statements and the
consolidated management reports are publicly accessi-
ble on the website of the company within 90 days; the
interim financial reports are publicly accessible within
45 days after the end of the respective reporting period.
Accounting and auditing
At least once a year, the Audit Committee of the Super-
visory Board of Mercedes-Benz Group AG discusses the
effectiveness and functionality of the internal control
and risk management system, the internal auditing sys-
tem, and the Compliance Management System with the
Board of Management. In each case, these systems and
processes or similar ones are also examined with regard
to the sustainability risks and opportunities they
address, taking into account the areas of action of the
sustainable business strategy as well as the ecological
and social impact of the business activities conducted
by Mercedes-Benz Group AG and the Group. The chair-
man of the Audit Committee shall report back to the
Supervisory Board about the work of the committee at
the latest at the next meeting of the Supervisory Board.
The Supervisory Board also deals with the risk manage-
ment system on the occasion of the audit of the com-
pany and Consolidated Financial Statements. The
Chairman of the Supervisory Board maintains contact
with the Board of Management between meetings of
the Supervisory Board, in particular with the Chairman
of the Board of Management, in order to discuss issues
of risk management and compliance, in addition to the
strategy and business development of the Group. In
addition, the Board of Management regularly informs
the Audit Committee and the Supervisory Board about
significant risks to the company and the Group. The
Legal Affairs Committee of the Supervisory Board sup-
ports the Supervisory Board in the performance of its
duties with regard to the complex proceedings relating
to antitrust matters and questions with respect to emis-
sions with which Mercedes-Benz Group AG and its sub-
sidiaries are confronted.
The aim of the Compliance Management System (CMS)
is to promote compliance with legislation and policies
within the company and among its employees, to pre-
vent misconduct and to systematically minimize com-
pliance risks on the basis of the culture of integrity.
Detailed information on the Mercedes-Benz Compli-
ance Management System can be found in the Non-
Financial Declaration chapter of the 2023 Annual
Report.
In addition to the accounting-related internal control
system, the internal control system also includes in
particular the Compliance Management System and
other similar systems or frameworks such as the Human
Rights Respect System, as well as an independent
assessment of the structure and processes of the inter-
nal control system by Internal Auditing. Further expla-
nations of the internal control system are available in
the Risk and Opportunity Report in the Combined Man-
agement Report 2023.
The risk management system is part of the overall plan-
ning, control and reporting process. This is to ensure
that the executive management recognizes significant
risks at an early stage and can initiate countermeasures
in a timely fashion. Internal Audit monitors compliance
with legal framework conditions and corporate stand-
ards by means of targeted audits and initiates appropri-
ate measures where necessary. Further information on
risk management can be found in the Risk and Opportu-
nity Report in the Combined Management Report 2023.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
170
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group has internal control, risk and
compliance management systems in place that are
commensurate with the size and global presence of the
company, the scope of its business operations, and its
risk situation, and are geared towards the continuous
and systematic management of entrepreneurial risks
and opportunities. These processes and systems are
subject to continual monitoring in order to remedy the
identified weaknesses and continuously improve the
processes and systems. Risks and opportunities associ-
ated with social and environmental factors are also
taken into account. In identifying sustainability-related
risks and opportunities, Mercedes-Benz Group AG is
guided by the topics identified by the materiality
assessment and thus includes the areas of action of the
sustainable business strategy, for which concrete goals
have been assigned. The materiality assessment was
concluded in summer 2022 and after a review of the
areas of action remains valid for the year 2023. Sustain-
ability-related data are also systematically recorded
and social and environmental impacts of the company's
activities are identified and assessed as part of the
materiality assessment and thematic risk assessments,
for example in life cycle assessments along the entire
life cycle of vehicles or in the Human Rights Respect
System.
Internal risk management system and internal
control and compliance management system within
the Group
German Corporate Governance Code
The 2023 remuneration report and the opinion of the
auditor pursuant to Section 162 of the German Stock
Corporation Act (AktG) are available at group.
mercedes-benz.com/remuneration-bom. The applicable
remuneration system for the members of the Board of
Management for 2023 pursuant to Section 87a Subsec-
tions 1 and 2 Sentence 1 of the German Stock Corpora-
tion Act (AktG), which was approved by the Annual Gen-
eral Meeting on 3 May 2023, is also available there. The
resolution also adopted by the Annual General Meeting
on 3 May 2023 pursuant to Section 113 Subsection 3 of
the German Stock Corporation Act (AktG) on the remu-
neration of the members of the Supervisory Board is
available at group.mercedes-benz.com/remunera-
tion-sb.
Remuneration report,
remuneration system
Further Information
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Combined Management Report
167
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
166
Chairman
Olaf Koch
The Audit Committee
Stuttgart, March 2024
The Audit Committee also conducted a self-evaluation
of its activities on the basis of a comprehensive compa-
ny-specific questionnaire in 2023. The positive results
of this self-assessment were presented and discussed
in the meeting on 21 February 2024. There was no fun-
damental need for change. Some individual suggestions
will be taken up.
Self-assessment
Furthermore, the Audit Committee discussed the effec-
tiveness of the internal control and risk management
system. After intensive review and discussion, the Audit
Committee recommended that the Supervisory Board
adopt the prepared financial statements, the Combined
Management Report including the Non-Financial Decla-
ration, the Remuneration report, the Declaration on
Corporate Governance and the proposal of the Board of
Management for the payment of a dividend of €5.30 per
dividend-bearing no-par-value share.
Corporate Governance
Corporate Governance
Report of the Audit Committee
Declaration on Corporate Governance
Declaration of the Board of
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
168
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Ola Källenius
Chairman
For the Board of Management
Dr Bernd Pischetsrieder
Chairman
For the Supervisory Board
Stuttgart, December 2023
board of a listed company shall not accept more than a
total of five Supervisory Board mandates in non-group
listed companies or comparable functions, whereby a
mandate as Supervisory Board Chair counts twice.
According to Recommendation C.5, members of the
Management Board of listed companies shall not have a
total of more than two Supervisory Board mandates in
non-group listed companies or comparable functions,
and shall not accept the Chair of a Supervisory Board in
a non-group listed company. Rather than setting a strict
amount limit, it is more appropriate to assess on a
case-by-case basis whether the number of mandates
held by members of the Management Boards and
Supervisory Boards at non-group listed companies or
comparable functions appears to be appropriate, in
particular because it is not always possible to clearly
define the mandates that should be taken into consid-
eration. Moreover, the individual workload expected as
a result of the total number of mandates held does not
necessarily increase in proportion to their number.
According to Recommendation C.4, Supervisory Board
members who are not members of any management
Maximum number of Supervisory Board mandates
(C. 4 and C. 5)
Mercedes-Benz Group AG maintains compliance with
the recommendations of the German Corporate Gov-
ernance Code in the Code version, dated April 28, 2022
("Code"), published by the Federal Ministry of Justice
and Consumer Protection in the official section of the
German Federal Gazette on June 27, 2022, with the
exception of Recommendations C.4 and C.5 (Maximum
number of Supervisory Board mandates) and will also
continue to observe the recommendations with the
aforesaid deviations in the future. Since the submission
of the last Compliance Declaration in December 2022,
Mercedes-Benz Group AG has maintained compliance
with the recommendations of the German Corporate
Governance Code also with the aforesaid deviations.
Management and Supervisory
Board of Mercedes-Benz Group AG
on the Compliance with the
German Corporate Governance
Code according to Section 161 of
the German Stock Corporation Act
This Declaration on Corporate Governance, as well as
the most recent version of the Declaration of Compli-
ance pursuant to Section 161 of the German Stock Cor-
poration Act on the German Corporate Governance
Code, is, in addition to the no longer current declara-
tions of the past five years, available on the website of
the company group.mercedes-benz.com/dcg.
Essential principles and practices
of corporate governance
CORPORATE
GOVERNANCE
Curricula vitae of the individual members of the Super-
visory Board and their other mandates are published on
the Internet at
In accordance with the German Co-Determination Act
(MitbestG), the Supervisory Board of Mercedes-Benz
Group AG consists of 20 members. Half of them are
elected by the shareholders at the General Meeting and
half by the employees of the German companies of the
Group. Shareholder representatives and employee rep-
resentatives are by law equally bound to serve the
interests of the company.
Supervisory Board
Composition and working method
of the Supervisory Board and its
committees
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
174
group.mercedes-benz.com/company/
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Independently of the statutory requirements, in 2006
the company had already set itself the goal of increas-
ing the proportion of women in senior management
positions within the Group to at least 20% by 2020.
This goal was achieved, and in 2022 the company set
itself the new goal of appointing women to fill at least
30% of its senior management positions by 2030. As of
31 December 2023, the proportion of women in senior
management positions at the Mercedes-Benz Group
worldwide was 25.7% (active workforce of the fully con-
solidated Group companies without holiday workers).
has set targets for the proportion of women at the two
management levels of the Mercedes-Benz Group AG
below the Board of Management and a deadline for
attaining these targets. The specific details are pre-
sented in a separate section of this Declaration on Cor-
porate Governance.
The targeted promotion of women had already been a
central focus of attention in diversity management
before the German Act on the Equal Participation of
Women and Men in Leadership Positions came into
force. In compliance with the statutory requirements,
the Board of Management of Mercedes-Benz Group AG
With respective conditions and measures, the
Mercedes-Benz Group promotes a working environment
in which employees, regardless of their age, ethnic ori-
gins and nationality, gender and gender identity, physi-
cal or intellectual capacity, religion and worldview, sex-
ual orientation and social origins, can freely develop
their talents. Along with the establishment of a frame-
work and processes for ensuring equal opportunities,
and measures to reduce and eliminate subconscious
prejudices, this also includes measures to promote a
work culture marked by appreciation in which individual
lifestyles are respected, as well as the organization of
programmes for employees and managers that provide
information, raise awareness and improve personal
skills in this regard. In this way, diversity and inclusion
management contribute significantly to the further
development of the corporate culture at the Mercedes-
Benz Group.
equal opportunity because these values form the basis
of an efficient and successful company. Diversity is a
firm component of the business strategy of the
Mercedes-Benz Group; activities to promote diversity
focus on the overarching strategic areas of action for
the advancement of women, internationality and equal
opportunities.
The Mercedes-Benz Group is committed to tolerance,
openness and fairness, and promotes diversity and
Diversity and equal opportunity
group.mercedes-benz.com/company/corporate-gov-
ernance, which among other things govern the proce-
dure to be followed when adopting resolutions and con-
tain provisions designed to avoid conflicts of interest.
Contents
The Board of Management has adopted rules of proce-
dure, available on the website of the company at
corporate-governance/supervisory-board. This informa-
tion is also updated every year.
The members of the Supervisory Board assume respon-
sibility for the training and further education measures
required for their tasks, e.g. on topics relating to
changes in the legal framework and new, forward-look-
ing technologies, and are supported in this by the com-
pany. The key components of this programme include
ESG (environmental, social and governance) and sus-
tainability-related thematic blocks. In the reporting
period, for example, the company held information
events on sustainable corporate governance and sus-
tainability reporting as well as on the Mercedes-Benz
operating system MB.OS. Both internal and external
experts were involved in these events. In addition, new
members of the Supervisory Board have the opportu-
nity to meet the members of the Board of Management
and senior executives with specialist responsibility in a
specifically designated onboarding programme for a
bilateral exchange on fundamental and current topics in
respect of the relevant areas of the Board of Manage-
ment, thus gaining an overview of the topics relevant to
the company and of the governance structure.
The Supervisory Board has adopted Rules of Procedure
that, in addition to its duties and responsibilities, spe-
cifically regulate the convening and preparation of its
meetings as well as the procedure for the adoption of
resolutions and contain provisions that are intended to
avoid conflicts of interest. The Rules of Procedure of
the Supervisory Board are available on the internet at
group.mercedes-benz.com/company/corporate-gov-
ernance/supervisory-board.
group.mercedes-benz.com/company/corporate-gov-
The Supervisory Board examines the Annual Financial
Statements, the Consolidated Financial Statements,
and the Combined Management Report with Non-Fi-
nancial Declaration of the company and the Group, as
well as the proposal for the appropriation of the distrib-
utable profits. After discussions with the auditor and in
consideration of the audit opinions of the auditor and
the audit results of the Audit Committee, the Supervi-
sory Board shall declare whether any objections are to
be raised after the final result of its own review. If this
is not the case, the Supervisory Board approves the
Annual Financial Statements and the Combined Man-
agement Report; the financial statements are deemed
to have been adopted with the approval of the Supervi-
sory Board. The Supervisory Board shall report to the
Annual General Meeting on the results of its own review
as well as on the nature and scope of the supervision of
the Board of Management during the past financial year.
The Report of the Supervisory Board on the 2023
reporting year is available in the Annual Report and at
remuneration system and the total individual remunera-
tion of the individual members of the Board of Manage-
ment in order to ensure that these remain appropriate.
The adjusted remuneration system for the members of
the Board of Management, which was approved by a
majority of 91% at the Annual General Meeting in 2023,
can be viewed at group.mercedes-benz.com/remu-
neration-bom. The Remuneration report that was pre-
pared jointly by the Board of Management and the
Supervisory Board (including the opinion of the auditor
pursuant to Section 162 of the German Stock Corpora-
tion Act) is also available there.
On the basis of a proposal issued by the Presidential
Committee, the Supervisory Board determines the sys-
tem of remuneration for the Board of Management and
on the basis of this system also determines the total
individual remuneration of the individual members of
the Board of Management. It also defines the targets for
variable remuneration components, including non-fi-
nancial and sustainability-oriented parameters. Further-
more,
the Supervisory Board regularly reviews both the
With regard to the composition of the Board of Manage-
ment, the Supervisory Board observes the statutory
requirements for the equal participation of women and
men. The specific details are presented in a separate
section of this Declaration on Corporate Governance.
Furthermore, with regard to the composition of the
Board of Management, the Supervisory Board adopted
a diversity concept embedded in an overall profile of
requirements. Its specific details are also summarized
in a separate section of this Declaration on Corporate
Governance.
The duties of the Supervisory Board include the
appointment and, if necessary, the dismissal of the
members of the Board of Management. Prior to 2021,
initial appointments were generally made for a maxi-
mum of three years. Since then, they have always
been made subject to this maximum. In 2022, the
Supervisory Board also adopted a more flexibly struc-
tured further reduction of the appointment period in
the case of appointments and reappointments of indi-
viduals 58 years of age and older at the time their
term of office begins.
Further Information
In addition, the Supervisory Board has developed an
overall profile of requirements for its own composition,
which includes a competence profile and a diversity
concept for the Board as a whole, including an age limit.
The specific details of the overall profile of require-
ments are also summarized in a separate section of this
Declaration on Corporate Governance. The proposals of
the Supervisory Board for the election of shareholder
representatives by the General Meeting, for which the
Nomination Committee submits recommendations, aim
to fulfil the overall profile of requirements for the
Supervisory Board as a whole.
Consolidated Financial Statements
Combined Management Report
175
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Supervisory Board's monitoring and advisory activi-
ties also relate to sustainability issues associated with
the ESG dimensions (environmental, social and govern-
ance factors). At regular intervals, the Supervisory
Board obtains reports from the Board of Management
on the status of implementation of the sustainable cor-
porate strategy and also examines the risks and oppor-
tunities for the company that result from social and
environmental factors and, increasingly, the ecological
and social effects of the company's business activities.
The Supervisory Board also addresses sustainability
reporting in the form of the Non-Financial Declaration
in the Combined Management Report.
-
The Supervisory Board has also specified in more detail
the information and reporting duties of the Board of
Management vis-à-vis the Supervisory Board, the Audit
Committee and — between meetings of the Supervisory
Board vis-à-vis the Chairman of the Supervisory
Board. The Supervisory Board has reserved the right of
approval for transactions of fundamental importance.
The Supervisory Board supervises and advises the
Board of Management in the management of the busi-
ness. Monitoring and advisory activities also relate to
sustainability issues. At regular intervals, the Supervi-
sory Board discusses business development, the situa-
tion of the company, and planning and strategy, includ-
ing the sustainability strategy and its implementation.
The Supervisory Board also reviews and discusses the
internal control and risk management system and moni-
tors compliance with statutory provisions, official regu-
lations and internal policies within the company.
Corporate Governance
Declaration on
Corporate Governance
Members of the Board of Management may only per-
form external ancillary activities if these are approved
by the Supervisory Board's Presidential Committee.
Each member of the Board of Management is bound to
serve the interests of the company and is subject to a
comprehensive restraint of competition throughout the
entire term of their contract. When making decisions,
they may not pursue personal interests and they may
not exploit the company's business opportunities for
their own benefit. Members of the Board of Manage-
ment must disclose without delay to the Chairman of
the Supervisory Board and the Chairman of the Board of
Management any personal interest they may have in a
particular business activity conducted by the company,
as well as any and all other conflicts of interest, and
they must also report such information to all other
members of the Board of Management.
For certain types of transactions defined by the Super-
visory Board, the Board of Management requires the
prior approval of the Supervisory Board.
Contents
Annual Report 2023 | Mercedes-Benz Group
In December 2020, the Supervisory Board set a target
for the proportion of women on the Board of Manage-
ment and a deadline for achieving this target. In August
2021, the German Second Leadership Positions Act
(FÜPOG II) came into force. According to the said Act, at
least one woman and at least one man must be a mem-
ber of the Board of Management in listed companies
that are subject to co-determination and equal rep-
resentation and more than three members on the Board
of Management. Companies that are subject to the
In accordance with the articles of association of
Mercedes-Benz Group AG, the Board of Management
consists of at least two members. The Supervisory
Board shall determine the exact number. As of
31 December 2023, the Board of Management consisted
of eight members.
Board of Management
Under the German Stock Corporation Act (AktG),
Mercedes-Benz Group AG has a dual management sys-
tem that provides for a strict personnel and functional
separation between the Board of Management as
the management body and the Supervisory Board as
the supervisory body (two-tier board). The Board of
Management manages the company, whilst the Super-
visory Board supervises and advises the Board of
Management.
Composition and working method
of the Board of Management
To ensure compliance with the duty to appoint a differ-
ent audit firm, a selection and proposal process for
audits of the 2024 reporting year was conducted in
2022 in accordance with the EU Statutory Audit Regula-
tion. In accordance with the proposal made by the
Supervisory Board on the basis of the recommendation
and preference of the Audit Committee, the Annual
General Meeting on 3 May 2023 resolved that Pricewa-
terhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft, with headquarters in Frankfurt am Main,
be appointed as auditor and Group auditor of the finan-
cial statements and Consolidated Financial Statements
for the 2024 financial year, as well as auditor for the
review of interim financial reports for the 2024 financial
year.
Consolidated Financial Statements of Mercedes-Benz
Group AG since 1998; Alexander Bock has been the
responsible auditor since the 2021 reporting year.
To Our Shareholders
At the Annual General Meeting on 3 May 2023,
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, was
appointed as auditor of the financial statements, Group
auditor of the Consolidated Financial Statements, and
auditor for the review of interim financial reports for the
2023 financial year. KPMG AG Wirtschaftsprüfungs-
gesellschaft has audited the company and
Before submitting its recommendation for the election
proposal to the Annual General Meeting, the Audit
Committee of the Supervisory Board obtains a declara-
tion from the proposed auditor as to whether and, if so,
which business, financial or personal relationships exist
between the auditor and its boards and committees
and audit managers on the one hand and the company
and members of its boards and committees on the
other hand that could give rise to concerns of partiality.
The declaration also specifies which other services
were provided to the Group in the previous year and to
what extent and which ones have contractually been
stipulated for the following year.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
171
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The auditor informs the Supervisory Board without
delay of any and all findings and occurrences of signifi-
cance for the duties of the Supervisory Board that come
to the attention of the auditor during the performance
of the audit. The auditor also informs the Supervisory
Board and annotates in the audit report if, during the
performance of the audit, the auditor discovers facts
that reveal an inaccuracy in the declarations of compli-
ance with the German Corporate Governance Code
issued by the Board of Management and/or the Super-
visory Board.
172
Combined Management Report
Corporate Governance
Declaration on
Corporate Governance
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
173
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Board of Management and the Supervisory Board
work to ensure the well-being of the company in a rela-
tionship based on trust. The Board of Management
informs the Supervisory Board regularly, comprehen-
sively and in a timely manner about all strategic issues
of relevance to the company as a whole, including
issues relating to the sustainability strategy, planning,
profitability, business development, the situation of the
company, the internal control system, the risk manage-
ment system and compliance. The Supervisory Board
has defined the information and reporting duties of the
Board of Management in more detail.
The Board of Management compiles the interim finan-
cial reports of the company, the Annual Financial State-
ments of Mercedes-Benz Group AG, the Consolidated
Financial Statements and the Combined Management
Report with Non-Financial Declaration of the company
and the Group. Together with the Supervisory Board, it
prepares the Remuneration report and issues an annual
Declaration of Compliance with the German Corporate
Governance Code.
Management System geared to the risk situation of the
company, the basic features of which are presented in
the Non-Financial Declaration chapter of the 2023
Annual Report. The components of the Compliance
Management System also include the BPO (Business &
People Protection Office) whistleblowing system, which
gives employees and external whistleblowers world-
wide the opportunity to report violations of the rules.
The Board of Management is responsible for ensuring
compliance with statutory provisions and internal poli-
cies within the company, and works to ensure that they
are also observed by the Group companies (compli-
ance). It has established a comprehensive Compliance
The internal control and risk management system
established by the Board of Management also
addresses sustainability-related targets. Further infor-
mation on sustainability can be found on the company's
website at group.mercedes-benz.com/sustainability.
The Board of Management manages Mercedes-Benz
Group AG and the Group, in consideration of the inter-
ests of the shareholders, the employees and the other
stakeholders, with the goal of sustainable added value.
With the approval of the Supervisory Board, it deter-
mines the strategic orientation of the company, which
also takes into account long-term economic targets and
environmental and social targets and objectives. The
use of this approach has led to the definition of the
strategic areas of action climate change mitigation and
air quality, resource conservation, sustainable urban
mobility, traffic safety, data responsibility and human
rights as components of the sustainable business strat-
egy. Along with financial targets, the corporate planning
decided on by the Board of Management with the
approval of the Supervisory Board also includes corre-
sponding sustainability-related targets.
pany/corporate-governance/board-of-management.
Management is available on the website of Mercedes-
Benz Group AG at group.mercedes-benz.com/com-
Information about the areas of responsibility and the
curricula vitae of the members of the Board of
Without prejudice to the overall responsibility of the
Board of Management, the individual members of the
Board of Management shall manage their divisions on
their own responsibility within the framework of the
guidelines adopted by the Board of Management as a
whole. Certain matters defined by the Board of Man-
agement as a whole shall nevertheless be discussed by
the Board of Management as a whole and shall require
its approval. In addition, each member of the Board of
Management has the right to demand that any matter
he or she deems important be discussed by the Board
of Management as a whole or that a decision be made
on that matter by the Board as a whole. The work of the
Board of Management is coordinated by the chairman
of the Board of Management. No committees of the
Board of Management were established during the
reporting period.
Details on the overall profile of requirements and the
participation of women on the Board of Management
are presented in separate sections in this Declaration
on Corporate Governance.
minimum proportion requirement no longer have to set
a target quota for the proportion of women on the
board of management. Nevertheless, the Supervisory
Board has decided that the target quota set in 2020
should remain in place as one aspect of the overall pro-
file of requirements for appointments to the Board of
Management.
Further Information
Consolidated Financial Statements
ernance.
For the meetings of the Supervisory Board during the
reporting period, regular Executive Sessions were again
scheduled in order to be able to discuss topics in the
absence of the Board of Management. Pursuant to the
German Act on Strengthening Financial Market Integrity
(FISG), which entered into force on 1 July 2021, the
Board of Management does not participate in meetings
of the Supervisory Board and its committees to which
the auditor is called in as an expert, unless the Supervi-
sory Board or the committee deems its participation
necessary. Meetings of the Supervisory Board and its
committees should as a rule take place in person. In
justified exceptional cases the meetings can be held in
the form of a video conference or a conference call or
with the use of other comparable means of telecommu-
nication or individual members can participate in a
meeting using such means.
Further Information
Annual Report 2023 | Mercedes-Benz Group
The change in the total number of executives at the var-
ious management levels of Mercedes-Benz Group AG
By a resolution dated 25 November 2020, the Board of
Management set a 11.8% share of women at the first
(two women of a total of 17 executives) and 22.5% at
the second level of management of Mercedes-Benz
Group AG (16 women of a total of 71 executives) below
the Board of Management at the time of the resolution
and a target for the proportion of women of at least
20% for the first and of at least 25% for the second
level of the Mercedes-Benz Group AG below the Board
of Management by 31 December 2025. As of
31 December 2023, the first level of management of
Mercedes-Benz Group AG below the Board of Manage-
ment consists of 13 executives, of whom 3 are women,
corresponding to a percentage of women of 23%. At the
second level of management of Mercedes-Benz
Group AG below the Board of Management, as of
31 December 2023, 17 out of a total of 50 executives are
women, corresponding to 34%.
overall requirements profile for appointments to the
Board of Management, the Supervisory Board has
decided to go beyond the stipulations of the minimum
proportion requirement and maintain the target quota
for the proportion of women on the Board of Manage-
ment that was set in 2020. As at 31 December 2023,
three of the eight members of the Board of Manage-
ment are women: Renata Jungo Brüngger, Sabine
Kohleisen and Britta Seeger. The proportion of women
on the Board of Management is now 37.5%, which
means it exceeds the target that was set.
By resolution of 3 December 2020, the Supervisory
Board of Mercedes-Benz Group AG set a target for the
proportion of women on the Board of Management of at
least 25% by 31 December 2025. Since August 2022, a
legally mandated minimum participation requirement
must be complied with when appointing members of
the board of management. This requirement stipulates
that at least one woman and at least one man must be
a member of the board of management in a listed com-
pany with co-determination and equal representation
and more than three members on the board of manage-
ment. Companies that are subject to the minimum pro-
portion requirement are no longer obliged to set a tar-
get quota for the proportion of women on the board of
management. Nevertheless, within the framework of the
The requirements of the German Equal Participation of
Women and Men in Leadership Positions Act are to be
fulfilled at the company level. The following information
therefore relates to the Board of Management of
Mercedes-Benz Group AG, two management levels of
Mercedes-Benz Group AG below its Board of Manage-
ment, and the Supervisory Board of Mercedes-Benz
Group AG.
German Act on the Equal
Participation of Women and
Men in Leadership Positions, as
amended by the German Second
Act on Leadership Positions
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
179
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
By law, the Mediation Committee consists of the Chair-
man of the Supervisory Board, Dr Bernd Pischetsrieder;
the Deputy Chairman of the Supervisory Board, Ergun
Lümali; and two members elected by a majority of the
votes cast, one by the employee representatives and
one by the shareholder representatives on the Supervi-
sory Board. As of 31 December 2023, they are Ben van
Beurden for the shareholder side and Roman Zitzels-
berger for the employee side. The Committee was
established for the sole purpose of performing the task
set out in Section 31 Subsection 3 of the German
Co-Determination Act (MitbestG). As in previous years,
the Mediation Committee had no reason to take action
in 2023.
Mediation Committee
against the company and Group companies. It prepares
resolutions of the Supervisory Board in this regard and
makes corresponding resolution recommendations. As
part of the agreement in principle reached in 2020 with
various US authorities to terminate civil and environ-
mental proceedings in connection with emission con-
trol systems of certain diesel vehicles, the Committee
was assigned further tasks and decision-making com-
petences with regard to the fulfilment of the obligations
assumed in the agreement in principle. The said other
tasks include, inter alia, the steering and monitoring of
the Post Settlement Audit Teams that were set up in the
context of the agreement in principle.
The Legal Affairs Committee is composed of six mem-
bers elected by the Supervisory Board by a majority of
the votes cast. As of 31 December 2023, the members
of the Committee are the shareholder representatives
Olaf Koch (Chairman), Liz Centoni and Dame Polly Cour-
tice as well as the employee representatives Ergun
Lümali, Michael Häberle and Roman Romanowski. The
Committee coordinates the exercising of the rights and
obligations of the Supervisory Board with regard to the
ongoing emission and cartel-related proceedings
Legal Affairs Committee
Transactions between the company and related parties
within the meaning of Section 111 b of the German Stock
Corporation Act (AktG) require the prior approval of the
Audit Committee, unless the law or the Supervisory
Board stipulates that the approval of the plenary Super-
visory Board or another committee is required.
Finally, the Audit Committee approves in advance per-
missible services that the auditors or their subsidiaries
perform for Mercedes-Benz Group AG or its Group com-
panies and that are not directly related to the audit of
the annual accounts (or the review of interim financial
statements).
Every member of the Supervisory Board must disclose
any conflicts of interest they may have without delay to
The auditor shall report to the Audit Committee on any
and all accounting matters considered critical and on
any material weaknesses in the internal control and risk
management system relating to the accounting process
that are identified during the audit. The Audit Commit-
tee also addresses reporting on non-financial topics in
the Management Report.
Based on the assumption of a total of 13 executives at
management level 1 of Mercedes-Benz Group AG as of
31 December 2025, the set target quota of at least 20%
results in a target of 3 women for this level. Based on
the assumption of a total of 50 executives at manage-
ment level 2 of Mercedes-Benz Group AG as of
31 December 2025, the set target quota of 25% results
in a target of 13 women for this level.
Annual Report 2023 | Mercedes-Benz Group
31 December 2023, three of the eight members of the
Board of Management are women: Renata Jungo
On 3 December 2020, the Supervisory Board set a
target for the proportion of women on the Board
of Management of at least 25% by 31 December 2025.
In August 2022, the previous statutory obligation to
set a target quota for the proportion of women was
replaced by a statutory minimum participation
requirement of one woman (and one man) for boards
of management consisting of more than three per-
sons at listed companies with co-determination and
equal representation. Nevertheless, within the frame-
work of the overall requirements profile for appoint-
ments to the Board of Management, the Supervisory
Board has decided to go beyond the stipulations of
the minimum proportion requirement and maintain
the target quota for the proportion of women on the
Board of Management that was set in 2020. As of
The members of the Board of Management shall have
diverse educational and professional backgrounds,
preferably with at least two members with a technical
background. As of 31 December 2023, the Board of
Management includes two graduate engineers,
Markus Schäfer and Dr Jörg Burzer. Ola Källenius has
demonstrated his technical expertise on a sustained
basis since taking over the Group Research &
Mercedes-Benz Cars Development department on
1 January 2017.
-
The profile of requirements for the Board of Manage-
ment remained the same in the reporting period as in
the previous year and included the following aspects:
The objective of the profile of requirements for the
Board of Management is to ensure that the Board of
Management has excellent leadership skills and that its
composition is as diverse and complementary as possi-
ble. The Board of Management as a whole shall possess
the knowledge, skills and experience necessary for the
proper performance of its duties and at the same time
embody the company's management philosophy on the
basis of the various personal backgrounds and skills of
its members. The key factor for the decision on filling a
specific board position is always the interest of the
company, taking any and all circumstances of the indi-
vidual case into account.
Board of Management
With regard to the composition of the Board of Manage-
ment and the Supervisory Board, Mercedes-Benz
Group AG considers competence profiles and diversity
concepts with regard to aspects such as age and gen-
der. The Supervisory Board has combined these profiles
and concepts in the overall profiles of requirements for
the Board of Management and the Supervisory Board
described below. The profiles of requirements are
reviewed annually and also serve as a basis for long-
term succession planning.
Overall profiles of requirements
for the composition of the
Board of Management and the
Supervisory Board
In addition to Mercedes-Benz Group AG itself, other
Group companies are subject to co-determination and
have set their own targets for the proportion of women
on their respective Supervisory Boards and Boards of
Management, and at the two levels below the Board of
Management, as well as a deadline for achieving these
targets, and have published them in accordance with
the statutory requirements.
The statutory quota for women for the Supervisory
Board thus remains fulfilled.
As at 31 December 2023, women make up 30% of the
shareholder side of the Supervisory Board of Mercedes-
Benz Group AG (Liz Centoni, Dame Polly Courtice and
Professor Dr Helene Svahn), while the remaining 70%
are men. At that point of time, on the employee side,
Nadine Boguslawski, Gabriela Neher and Monika Tielsch
also make up 30% women and the remaining 70% are
men. If she is elected as a shareholder representative
by the Annual General Meeting 2024, the membership
of Dr. Doris Höpke on the Supervisory Board will
increase the proportion of women on the shareholder
side to 40%.
representative by the Annual General Meeting
on 3 May 2023.
Corporate Governance
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Combined Management Report
180
To Our Shareholders
Contents
The supervisory boards of listed companies subject to
co-determination and equal representation of share-
holders and employees on the supervisory board must
be composed of at least 30% women and at least 30%
men. The quota is to be met by the Supervisory Board
as a whole. If the representatives of the shareholders or
the representatives of the employees object to the
Chairman of the Supervisory Board prior to the election,
then the minimum share for this election shall be ful-
filled separately by the shareholders and the employ-
ees. At the Supervisory Board meeting on 27 April 2022,
the shareholder representatives objected to the overall
fulfilment with regard to the election to the Supervisory
Board of employee representatives whose term of
office began at the end of the Annual General Meeting
on 3 May 2023. There was no objection to the overall
fulfilment with regard to the election of a shareholder
The Chairman of the Audit Committee meets regularly
with the auditor to discuss the progress of the audit
and then reports to the Audit Committee on the results
of these discussions. The Audit Committee also dis-
cusses topics with the auditor in the absence of the
Board of Management.
between 25 November 2020 and 31 December 2023 is
mainly due to the spin-off and hive-down of the Daimler
commercial vehicles business that has meanwhile been
carried out and the associated transfers to Daimler
Truck.
Further Information
Annual Report 2023 | Mercedes-Benz Group
The Audit Committee consists of four members elected
by the Supervisory Board by a majority of the votes
cast. As of 31 December 2023, they are the shareholder
representatives Olaf Koch (Chairman of the Audit Com-
mittee) and Timotheus Höttges as well as the employee
representatives Ergun Lümali and Roman Romanowski.
Audit Committee
The Nomination Committee consists of the Chairman of
the Supervisory Board and two other members elected
by the shareholder representatives in the Supervisory
Board by a majority of the votes cast. As of 31 December
2023, they are Dr Bernd Pischetsrieder (Chairman of the
Nomination Committee), Dr Martin Brudermüller and
Ben van Beurden. The Nomination Committee is the
only committee of the Supervisory Board composed
exclusively of shareholder representatives. It makes
recommendations to the Supervisory Board for propos-
als to the General Meeting for the election of share-
holder representatives on the Supervisory Board. In this
respect, it takes the statutory requirements for the par-
ticipation of women into account and strives to fulfil
the overall profile of requirements for the Supervisory
Board as a whole.
Nomination Committee
In addition, the Presidential Committee advises and
decides on corporate governance issues, on which it
also makes recommendations to the Supervisory Board.
It supports and advises the Chairman of the Supervi-
sory Board and his Deputy and prepares the meetings
of the Supervisory Board within the scope of its respon-
sibilities.
The Presidential Committee makes recommendations to
the Supervisory Board for the appointment of members
to the Board of Management, in consideration of the
overall profile of requirements defined by the Supervi-
sory Board with the diversity concept, including the
requirements for the proportion of women on the Board
of Management. It submits proposals to the Supervi-
sory Board for the structure of the remuneration system
for the Board of Management and for the appropriate
individual total remuneration of the individual members
of the Board of Management. The Presidential Commit-
tee is responsible for the contractual matters of the
members of the Board of Management and decides on
the granting of approval for ancillary activities of mem-
bers of the Board of Management outside the Group.
The Presidential Committee consists of the Chairman of
the Supervisory Board, the Deputy Chairman of the
Supervisory Board, and two other members elected by
the Supervisory Board. As of 31 December 2023, the
Presidential Committee consisted of Dr Bernd Pischets-
rieder (Chairman), Ergun Lümali (Deputy Chairman), Ben
van Beurden and Roman Zitzelsberger.
Presidential Committee
ernance.
Contents
chairpersons shall report on the work of the commit-
tees to the plenary meeting of the Supervisory Board at
the latest at the next meeting of the Supervisory Board
following the committee meeting. The Supervisory
Board has adopted separate rules of procedure for all
its committees. They are available on the internet at
group.mercedes-benz.com/company/corporate-gov-
The Supervisory Board regularly evaluates how effec-
tively it and its committees fulfil their tasks. In the
reporting period, a comprehensive self-assessment of
the Supervisory Board and its committees took place
with the involvement of an external consultant on the
basis of an extensive questionnaire and additional
interviews carried out. The Board of Management's per-
spective was also included in this assessment. The
Supervisory Board addressed the results in detail in its
meeting on February 21st, 2024. The results confirm
very good, professional cooperation characterised by a
high degree of trust within the Supervisory Board and
its committees as well as with the Board of Manage-
ment. In addition, the results attest to the very efficient
organisation and holding of meetings as well as appro-
priate reporting by the Board of Management. There
was no fundamental need for change. Some individual
ideas and recommendations were discussed. Addition-
ally, a further internal and comprehensive evaluation
took place during the reporting period in the Audit
Committee. This was done on the basis of a compre-
hensive questionnaire without external support.
the Chairman of the Supervisory Board. Conflicts of
interest and the manner in which they are dealt with are
disclosed in the Report of the Supervisory Board.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
176
To Our Shareholders
Contents
The Audit Committee discusses the interim financial
reports and the information provided by the auditor
about the review of the interim financial reports with
the Board of Management and the auditor. On the basis
of the opinion of the auditor, the Audit Committee
reviews the annual company Financial Statements, the
annual Consolidated Financial Statements, and the
Management Report with Non-Financial Declaration of
the company and the Group and discusses them
together with the auditor. The Audit Committee submits
its recommendations regarding the adoption of the
Annual Financial Statements of Mercedes-Benz
Group AG, the approval of the Consolidated Financial
Statements, and the proposal for the appropriation of
profits to the Supervisory Board. The Committee also
makes recommendations concerning the proposal of
the Supervisory Board for the election of the auditor,
assesses the suitability, qualifications, and independ-
ence of the auditor, and, after appointment by the
Annual General Meeting, engages the auditor for the
audit of the Consolidated Financial Statements and the
Annual Financial Statements as well as for the review of
interim financial reports. In this respect, it also agrees
on the fee and coordinates the key areas of the audit
with the auditor.
As of 31 December 2023, in addition to the Mediation
Committee to be established by law, there are four
other committees of the Supervisory Board that per-
form the tasks assigned to them in the name of and on
behalf of the Supervisory Board as a whole, to the
extent permitted by law. The relevant committee
To Our Shareholders
The Supervisory Board shall be composed in such man-
ner that its members as a whole are familiar with the
industry in which the company operates and have the
knowledge, skills and professional experience neces-
sary for the proper performance of their duties. In
accordance with applicable law, the Supervisory Board
of Mercedes-Benz Group AG must be composed of at
least 30% women and at least 30% men. The specific
details are presented in a separate section of this Dec-
laration on Corporate Governance.
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
178
To Our Shareholders
Contents
At least quarterly, the Audit Committee receives the
report of the BPO (Business & People Protection Office)
whistleblowing system on complaints and information
on possible violations of rules by top executives and
violations of a defined catalogue of statutory provisions
by other employees. It regularly obtains information on
the processing of the said complaints and information.
The Audit Committee is responsible for monitoring the
accounting and the accounting process, and for the
audit of the financial statements, in particular the
selection and independence of the auditor and the
quality of the audit. At least once a year, it discusses
the effectiveness and operation of the internal control
and risk management system, the internal auditing sys-
tem and the Compliance Management System with the
Board of Management. It receives regular reports on the
work of internal auditing and the compliance organiza-
tion. In addition, each member of the Audit Committee
may obtain information directly from the heads of those
corporate departments that are responsible within the
company for tasks relating to the Audit Committee in
accordance with its Rules of Procedure via the Chair-
man of the Committee. The Chairman of the Committee
shall communicate the information obtained to all
members of the Audit Committee. If such information is
obtained, the Board of Management shall be informed
accordingly without delay.
requirements for the composition of the Supervisory
Board in this Declaration on Corporate Governance.
Both Olaf Koch, the Chairman of the Audit Committee,
and Timotheus Höttges, in his capacity as the other
shareholder representative on the Audit Committee, are
independent of the company and its Board of Manage-
ment. Further information on the evaluation of the inde-
pendence of members of the Supervisory Board is sum-
marized in the section on the overall profile of
Annual Report 2023 | Mercedes-Benz Group
reports. For example, Olaf Koch introduced a sustaina-
bility target system and sustainability reporting at
Metro AG, which led to the company maintaining a top
position in the Dow Jones Sustainability Index for many
years. He also monitors and contributes to the develop-
ment of sustainability reporting and the audit of sus-
tainability reports and he actively contributes his
expertise to the work conducted by the Audit Commit-
tee.
Throughout the course of his career, Olaf Koch has held
management positions in the field of finance and con-
trolling in his capacity as a chief financial officer, and he
later served for many years as the Chairman of the
Board of Management of Metro AG and Chairman of the
Audit Committee of Hugo Boss AG. He thus has special-
ized knowledge and experience with regard to the use
of financial reporting principles and internal control and
risk management systems and the audit of financial
statements. This also includes sound knowledge of sus-
tainability reporting and the audit of sustainability
Pursuant to the German Stock Corporation Act (AktG),
at least one member of the Audit Committee must have
expertise in the field of accounting and at least one
other member must have expertise in the audit of
financial statements. In accordance with the German
Corporate Governance Code, expertise in the field of
accounting shall involve specialized knowledge of and
experience with the use of accounting principles and
internal control and risk management systems, while
expertise in relation to the audit of financial statements
shall also involve specialized knowledge of and experi-
ence with the same. In addition, specialized knowledge
of and experience with financial reporting and financial
statement auditing shall include sustainability reporting
and the audit of sustainability reports. The Chairman of
the Audit Committee shall have expertise as described
in at least one of the aforementioned fields.
The members of the Audit Committee as a whole are
very familiar with the industry in which the company
operates.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
177
Due to the many years he has spent serving in execu-
tive positions in the field of finance, most recently as
Chief Financial Officer of Deutsche Telekom AG and as
CEO since 2014, Timotheus Höttges also has special-
ized knowledge and experience with regard to the use
of financial reporting principles and internal control and
risk management systems and the audit of financial
statements. This also includes extensive knowledge of
sustainability reporting and the audit of sustainability
reports, which he gained in his principal activity as CEO
of Deutsche Telekom AG. He also monitors and contrib-
utes to the development of sustainability reporting and
the audit of sustainability reports and he actively con-
tributes his expertise to the work conducted by the
Audit Committee.
To Our Shareholders
184
Combined Management Report
Corporate Governance
Declaration on
Corporate Governance
Year of birth
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
Nationality
Contents
Consolidated Financial Statements
Annual Report 2023 | Mercedes-Benz Group
Diversity
Formal suitability
Supervisory Board display a broad range of educa-
tional and professional backgrounds. Dr Bernd Pis-
chetsrieder, Ben van Beurden, Dr Martin Bruder-
müller, Liz Centoni, Stefan Pierer, Prof. Dr Helene
Svahn, Dr Frank Weber and Roman Zitzelsberger
have university degrees in mechanical engineering,
chemistry, business and energy management, bio-
technology and/or electrical engineering. Other
employee representatives have completed relevant
professional training. Several members of the
Supervisory Board have university degrees in eco-
nomics, including Timotheus Höttges and Olaf Koch
on the shareholder side and Michael Bettag on the
employee side. The diverse range of educational
and professional backgrounds is rounded out on
the shareholder side by Dame Polly Courtice and
Marco Gobbetti, who are proven experts in the
areas of sustainability and the luxury goods seg-
ment, respectively, while the employee side of the
Supervisory Board includes a lawyer, a social econ-
omist and a production mechanic.
Educational and professional background: The
members of the Supervisory Board should have dif-
ferent educational and professional backgrounds.
As of 31 December 2023, the members of the
_
Internationality: At least 30% of shareholder rep-
resentatives shall be of international origin (interna-
tional citizenship) or have international experience.
All shareholder representatives in office on
31 December 2023 have international experience.
Moreover, the target has already been exceeded
simply because of the international background of
six shareholder representatives Ben van Beurden,
Liz Centoni, Dame Polly Courtice, Marco Gobbetti,
Stefan Pierer and Professor Dr Helene Svahn - who
together account for 60% of the shareholder repre-
sentatives.
Generational mix: In addition, attention shall be
paid to a sufficient generational mix amongst the
members of the Supervisory Board. At least 30% of
the members of the Supervisory Board shall be no
more than 62 years of age at the time of their elec-
tion or re-election. Except for Dr Bernd Pischets-
rieder, Dame Polly Courtice, Marco Gobbetti and
Stefan Pierer, all other members (16 members, or
more than 30%) of the Supervisory Board in office
on 31 December 2023 were aged 62 or younger at
the time of their election or re-election for the cur-
rent term of office.
the election of shareholder representatives by the
Annual General Meeting on May 8, 2024.
31 December 2023, there are three women on both
the side of the shareholders and the side of the
employees. This puts the proportion of women on
the shareholder side, the employee side and for the
Supervisory Board as a whole at 30% If she is
elected by the Annual General Meeting 2024, the
membership of Dr. Doris Höpke on the Supervisory
Board will increase the proportion of women on the
shareholder side to 40%. At the Supervisory Board
meeting on 27 April 2022, the shareholder repre-
sentatives objected to the overall fulfilment with
regard to the election to the Supervisory Board of
employee representatives whose term of office
began at the end of the Annual General Meeting on
3 May 2023. There was no objection to the overall
fulfilment with regard to the election of a share-
holder representative by the Annual General Meet-
ing on 3 May 2023. The same applies with regard to
Gender ratio: By law, at least 30% of the members
of the Supervisory Board must be women and at
least 30% must be men. The quota is to be met by
the Supervisory Board as a whole, unless the repre-
sentatives of the shareholders or the representa-
tives of the employees object to the overall fulfil-
ment. If such an objection is made, then the
minimum proportion for the next election in the
given case is to be fulfilled separately by the share-
holder side and the employee side. As of
Gender
-
· Independence: In order to ensure independent
advice to and supervision of the Board of Manage-
ment by the Supervisory Board, more than half of
the shareholder representatives on the Supervisory
Board shall be independent of the company and the
Board of Management, subject to the disclosure of
a deviation from the corresponding recommenda-
tion of the German Corporate Governance Code in
the Declaration of Compliance pursuant to Sec-
tion 161 of the German Stock Corporation Act (AktG).
Diversity
The shareholders exercise their membership rights, in
particular their voting rights, at the General Meeting.
Each share of Mercedes-Benz Group AG entitles the
holder to one vote. Documents and information about
the General Meeting are available at group.
mercedes-benz.com/am.
Joined board in
The area of capital markets is extremely well cov-
ered by Dr Bernd Pischetsrieder, Dr Martin Bruder-
müller, Ben van Beurden, Olaf Koch and Timotheus
Höttges in particular, as all of them serve or have
served as chairmen of listed companies.
Proposals by the Supervisory Board for the election of
shareholder representatives by the General Meeting, for
which the Nomination Committee makes recommenda-
tions, shall take the aspects outlined above into
account and aim to fulfil the profile of requirements for
the Board as a whole. The Nomination Committee shall
draw up a short-list of available candidates on the basis
of a target profile, taking the specific qualification
requirements and the aforementioned criteria into
account, hold structured discussions with them and,
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
187
Combined Management Report
Corporate Governance
Declaration on
Corporate Governance
Consolidated Financial Statements
Further Information
Term limit not breached
whilst doing so, also obtain assurances that the pro-
posed candidate has sufficient time to be able to exer-
cise the mandate with due diligence. Subsequently, the
Nomination Committee submits a candidate proposal
to the Supervisory Board together with the reasons for
its recommendation for decision-making. The decision
of the Supervisory Board on the election proposal to
the General Meeting shall always be based on the inter-
ests of the company, taking any and all circumstances
of the individual case into account.
Shareholders and General Meeting
Dr Bernd Pischetsrieder possesses extensive sec-
tor-specific knowledge in the area of sales/brands,
and Marco Gobbetti contributes his extensive
brand expertise to the work conducted by the
Supervisory Board. Michael Bettag has many years
of experience in sales.
In the context of comprehensive investor and public
relations, the company is in close contact with its
shareholders. Shareholders, financial analysts, share-
holder associations, the media and interested members
of the public are regularly and comprehensively
informed about the company's situation and are
promptly informed about important business changes.
The Chairman of the Supervisory Board is also prepared,
within appropriate and reasonable limits, to discuss
topics specific to the Supervisory Board with investors,
including topics such as renumeration of the Board of
Management as well as work and the structure of the
Supervisory Board and its committees. Such discus-
sions took place in the run up to the shareholder meet-
ings in 2023 and 2024.
In addition to other channels of communication, the
company makes very good use of the company website
for investor relations. All key information published in
2023, including annual, quarterly and half-yearly finan-
cial reports, press releases, voting rights notifications
by major shareholders, presentations and audio record-
ings from analyst and investor events and conference
calls, as well as the financial calendar, is available at
group.mercedes-benz.com/investors. The dates of
important publications, such as the annual report and
interim financial reports, as well as the dates of the
General Meeting, the annual press conference and ana-
lysts' conferences, are announced well in advance in
the financial calendar.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Qualification matrix of the Supervisory Board members
Tenure
The terms of office of the shareholder representatives
on the Supervisory Board of Mercedes-Benz Group AG
end at different times ("staggered board"). Every year,
on the General Meeting elects one or more shareholder
representatives. The staggered board opens up the
possibility of adapting the composition of the Supervi-
sory Board more flexibly to a changing environment. In
addition, it facilitates the search for suitable candidates,
because not all seats on the shareholder side have to
be filled at a single General Meeting. The Nomination
Committee of the Supervisory Board regularly reviews
which mandates end at which point in time and whether
the relevant mandate holders are eligible and willing to
serve a further term of office, taking the aforemen-
tioned criteria into account. In the search for new can-
didates, the Nomination Committee may rely on inde-
pendent external recruitment consultancy services if it
chooses to do so.
Ergun Lümali and Roman Zitzelsberger, among oth-
ers, also possess expertise with regard to capital
markets after having served as members of the
Supervisory Board for many years.
Further Information
Further Information
Renata Jungo Brüngger is a member of the Supervi-
sory Board of the listed company Münchener
Rückversicherungs-Gesellschaft Aktiengesellschaft
and Harald Wilhelm is a member of the Supervisory
Board of BAIC Motor Corporation Ltd, which is also
listed on the stock exchange. In addition, both are
represented on the Supervisory Board of the non-
group listed Daimler Truck Holding AG as well as on
the Supervisory Board of the non-listed Daimler
Truck AG, a wholly owned subsidiary of Daimler Truck
Holding AG. The shareholder representatives on the
Supervisory Boards of Daimler Truck Holding AG and
Daimler Truck AG are identical. Against this back-
ground, in the opinion of the Supervisory Board,
membership of the Supervisory Board of Daimler
Truck AG does not impose any additional require-
ments comparable to the mandate at Daimler Truck
Of the non-Group memberships of supervisory
boards and other supervisory bodies held by Britta
Seeger, only Deutsche Lufthansa AG is listed on the
stock exchange. In the opinion of the Supervisory
Board, the other mandates outside the Group are
mandates within the scope of her departmental
responsibilities that, in terms of the profile of require-
ments, do not pose any demands comparable to a
mandate on the supervisory board of a listed com-
pany outside the Group.
mandates on supervisory boards of listed companies
outside the Group in terms of the requirements pro-
file. The same applies to the non-Group mandates of
Markus Schäfer.
tive Co., Ltd., which is part of the Daimler Truck Group,
do not pose any requirements comparable to
Of the non-Group memberships of Supervisory
Boards and other supervisory bodies held by Huber-
tus Troska, only BAIC Motor Corporation Ltd. is listed
on the stock exchange. With the exception of the
mandate at Beijing Foton Daimler Automo-
tive Co., Ltd., his other mandates outside the Group
are mandates in non-listed joint ventures within his
departmental responsibility. In the opinion of the
Supervisory Board, these mandates, as well as the
mandate at Beijing Foton Daimler Automo-
As a rule, and subject to disclosure of a deviation in
the annual Declaration of Compliance with the Ger-
man Corporate Governance Code, members of the
Board of Management shall not hold more than two
mandates on supervisory boards in non-Group
listed companies or comparable functions and
shall not chair a supervisory board of a non-Group
listed company. For the purpose of the profile of
requirements, mandates on supervisory boards in
joint ventures, the performance of which is part of the
departmental responsibility of a member of the Board
of Management, are not considered to be comparable
functions.
experience of the vast majority of the members of the
Board of Management, this goal had already been
achieved by 31 December 2023, simply because of
the international origins of Ola Källenius and Renata
Jungo Brüngger and the focus of Hubertus Troska's
activities in China.
In the composition of the Board of Management,
attention shall also be paid to internationality in the
sense of different cultural backgrounds or interna-
tional experience through several years of stays
abroad; if possible, at least one member of the Board
of Management shall be of international origin. Not-
withstanding the many years of international
In addition, attention shall be paid to a sufficient
generational mix among the members of the Board
of Management; if possible, at least three members of
the Board of Management shall be 57 years of age or
younger at the beginning of the relevant term of
office. As of 31 December 2023, this applies to,
among others, Ola Källenius, Britta Seeger and Dr Jörg
Burzer.
For the last possible age-related appointment or
reappointment of a member of the Board of Manage-
ment, the completion of the 62nd year of life at the
time of the beginning of a (new) term of office gener-
ally serves as a guideline. When determining this age
limit, the Supervisory Board deliberately opted for a
flexible benchmark in order to preserve the necessary
leeway for appropriate decisions in individual cases.
With the exception of Renata Jungo Brüngger, all
members of the Board of Management fall below this
standard age limit as of 31 December 2023.
Brüngger, Sabine Kohleisen and Britta Seeger. The
proportion of women on the Board of Management is
now 37.5%, which means it exceeds the target that
was set.
-
-
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
181
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
executive positions at Cisco. Finally, Monika Tielsch
and Michael Häberle, among others, also contribute
to the Supervisory Board the expertise they have
gained in this area throughout their careers.
A shareholder representative on the Supervisory
Board shall be independent of the company and its
Board of Management if he or she has no personal
or business relationship with the company or its
Board of Management that could give rise to a
material and not merely temporary conflict of inter-
ests. The assessment of independence is incum-
bent on the shareholder representatives on the
Supervisory Board themselves. In this respect, four
indicators must be taken into account that may
point to a lack of independence: membership of the
Board of Management within the last two years
prior to the appointment as a member of the Super-
visory Board; a significant business relationship
with the company or a company dependent on it,
e.g. as a customer, supplier, lender or consultant; a
close family relationship to a member of the Board
of Management; membership of the Supervisory
Board for more than twelve years (all criteria relate
to both the members of the Supervisory Board and
their close family members). However, the share-
holder side is expressly at liberty to regard the
member of the Supervisory Board in question as
independent if one or even several negative indica-
tors are fulfilled however, this assessment
should then be substantiated in the Declaration on
Corporate Governance.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
182
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
183
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
As a rule, only candidates who have not already been
members of the Supervisory Board for 12 years at the
time of their (re-)election shall be proposed for elec-
tion to the Supervisory Board for a full term of office.
Standard limit of membership duration
The profile of requirements for the Supervisory Board
includes the following aspects:
Overall, the members of the Supervisory Board shall
complement one another in terms of their expertise and
professional experience in such a way that the Board as
a whole can draw on the broadest possible pool of
experience and diverse specialist knowledge. Further-
more, the Supervisory Board considers the diversity of
its members in terms of age, gender, internationality
and other personal characteristics as an important pre-
requisite for an effective working relationship. The deci-
sion of the Supervisory Board on an election proposal
to the General Meeting shall always be based on the
interests of the company, taking any and all circum-
stances of the individual case into account.
On 31 December 2023, this requirement was fulfilled
for all members of the Supervisory Board in office.
-
The aim of the profile of requirements for the Supervi-
sory Board in its entirety is also to ensure that the com-
position of the Supervisory Board is as diverse and
complementary as possible. The Supervisory Board
shall, as a whole, understand the business model of the
company and possess the knowledge, skills and experi-
- including expertise on the sustainability issues
that are important for the company - necessary to
properly provide qualified supervision and advice to the
Board of Management.
The Supervisory Board as a whole must be familiar with
the industry in which the company operates.
Supervisory Board
Together with the Board of Management, the Supervi-
sory Board also ensures long-term succession planning
for the Board of Management, with due consideration of
the profile of requirements and the circumstances of
the individual case. The Presidential Committee of the
Supervisory Board regularly discusses talents and
exceptional leaders of the company. The contract terms
and renewal options of current members of the Board
of Management are discussed, as well as possible suc-
cessors. On the basis of a potential analysis and in con-
sideration of the criteria of the profile of requirements,
executives from the management level below the Board
of Management as well as special high potentials are
assessed and the next development steps are dis-
cussed and determined together with the Board of
Management. The process of succession planning also
includes regular reporting by the Board of Management
on the proportion and development of female manag-
ers, especially at the first and second management lev-
els below the Board of Management. The Board of Man-
agement is responsible for proposing a sufficient
number of suitable candidates to the Supervisory Board.
Mercedes-Benz Group AG aims to predominantly fill
positions on the Board of Management with managers
developed within the company. Nevertheless, potential
external candidates are also evaluated and included in
the selection process on a case-by-case basis, with the
support of external recruitment consultancy firms.
In the view of the Supervisory Board, fundamental indi-
vidual suitability criteria for a position on the Board of
Management are, in particular, personality, integrity,
convincing leadership qualities, professional qualifica-
tions for the division to be taken over, past perfor-
mance, knowledge of the company, and the ability to
adapt business models and processes in a changing
world.
The criteria of the profile of requirements shall be taken
into account when filling positions on the Board of
Management. The Presidential Committee draws up a
short-list of available candidates on the basis of a tar-
get profile, taking into account the specific qualification
requirements and the requirements profile. It conducts
interviews with these candidates, and it then submits a
candidate proposal to the Supervisory Board together
with the reasons for its recommendation for the deci-
sion-making. The decisive factor is always the interest
of the company, in consideration of any and all circum-
stances of the individual case.
Holding AG in terms of the profile of requirements.
A deviation from the recommendation of the German
Corporate Governance Code that members of boards
of management of listed companies should not hold
more than two mandates on supervisory boards in
non-group listed companies or comparable functions
and should not chair a supervisory board is stated
and justified in the 2023 Declaration of Compliance,
notwithstanding the assessments of the Supervisory
Board for the purposes of the profile of requirements.
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
ence
With respect to innovation, research and devel-
opment, the proven expertise of Professor Dr
Helene Svahn deserves to be especially highlighted.
Liz Centoni also possesses specialized knowledge
in this area due to the many years she has spent in
In the area of industry, Dr Bernd Pischetsrieder in
particular has extensive sector-specific knowledge
that he has gained as a member of the Supervisory
Board as well as through the many years he served
in executive positions at other companies in the
automotive industry. Dr Martin Brudermüller's many
years of experience in the chemical industry also
deserve special mention here. In addition, Ergun
Lümali possesses expertise relevant to the area of
industry due to the many years he has spent as
Chairman of the Works Council at the Mercedes-
Benz Sindelfingen plant.
Board their knowledge of and experience with envi-
ronmental (E) issues. All of them deal or dealt
extensively with sustainability issues (in particular
those relating to climate change mitigation and
decarbonization) at the companies in which they
serve or served as chairman of the board of man-
agement. Dame Polly Courtice and in particular the
employee representatives on the Supervisory Board
possess expertise in the fields shown above that
relate to the social (S) component of ESG. With
regard to governance (G), Olaf Koch and Roman
Romanowski contribute to the Supervisory Board
the expertise they have gained throughout their
professional careers.
>
✓
✓
✓ 3
✓ 3
✓
✓
technology
(e.g. production, procurement)
Industry
Sustainability/ESG4
issues, working environment)
(e.g. personnel management, employee
HR
Innovation, research and development,
✓
✓
Sales/brand
Tenure
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Footnotes are at the bottom of the table
✓
✓
✓
✓
✓
Capital market
✓
✓
✓
✓
(e.g. product, working models)
Transformation
(e.g. software, processes, data protection)
Digitalization/IT
Austrian
German
German
Italian
1956
1970
1962
1958
Male
Male
Male
Male
✓
2023
✓
✓
Joined board in
✓
2021
Strategy
(e.g. accounting, controlling, risk management,
audit, M&A)
Finance
Competencies/experience
Age limit not breached
Independence²
Formal suitability
Educational and professional background International management/sales
Biotechnology/electrical engineering
business and energy management
Business management
Business administration/MBA
Swedish
1974
Female
Integrated master's degree in
engineering -
2021
190
Corporate Governance
Declaration on
Corporate Governance
(e.g. software, processes, data protection)
Digitalization/IT
Strategy
audit, M&A)
(e.g. accounting, controlling, risk management,
Finance
Transformation
Competencies/experience
Formal suitability
Educational and professional background
Nationality
Year of birth
Gender
Diversity
Age limit not breached
(e.g. product, working models)
HR
(e.g. personnel management, employee
>
> >
>
>
>
>
✓
Footnotes are at the bottom of the table
Capital market
Sales/brand
Innovation, research and development,
technology
(e.g. production, procurement)
Industry
Sustainability/ESG4
issues, working environment)
✓
Term limit not breached
Electronics engineer
Business management
2023
✓
2018
✓
2021
✓
2015
2014
Gabriela Neher
Michael Häberle
Nadine Boguslawski
Michael Bettag
Ergun Lümali
Further Information
Consolidated Financial Statements
✓
Combined Management Report
Female
1995
Construction mechanics/
compensation and service policy
German
1969
Male
German
1977
Female
German
1961
German
1962
Male
Male
Production mechanic/
graphic designer
German
Mechanical engineering/
business administration
2020
✓
Competencies/experience
188
On the basis of the information known to the
Supervisory Board, the shareholder representatives
are of the opinion that there are no specific indica-
tions of relevant personal or business relationships
or circumstances, in particular with regard to the
company, members of the Board of Management or
other members of the Supervisory Board, that could
constitute a material and not merely temporary
conflict of interests and therefore argue against the
independence of any member of the Supervisory
Board on the shareholder side. During the reporting
period, the shareholder representatives Dr Martin
Brudermüller, Liz Centoni, and Timotheus Höttges
in particular did not have any such material busi-
ness relationship with Mercedes-Benz Group AG or
any company dependent on Mercedes-Benz
Group AG (e.g. as a supplier, customer, lender or
consultant) in a responsible function of a company
outside the Group. The same applies - also in view
of the information provided in the chapter Consoli-
dated Financial Statements in the note Related
party disclosures - to Stefan Pierer in his role as a
shareholder and board member of companies in the
Pierer and Leoni Groups. No former member of the
Board of Management was a member of the Super-
visory Board during the reporting period. No mem-
ber of the Supervisory Board holds board functions
or performs advisory tasks for significant competi-
tors.
No other mandates formerly held by Dr Bernd Pis-
chetsrieder could be seen during the reporting
period as constituting a material and not merely
temporary conflict of interest.
As a result, according to the assessment of the
shareholders' side, at 31 December 2023, all share-
holder representatives on the Supervisory Board
were to be deemed independent, namely Dr Bernd
Pischetsrieder, Ben van Beurden, Dr Martin Bruder-
müller, Liz Centoni, Dame Polly Courtice, Marco
Gobbetti, Timotheus Höttges, Olaf Koch, Stefan
Pierer and Professor Dr Helene Svahn.
Consolidated Financial Statements
Standard age limit: As a rule, only candidates who
are not older than 72 years at the time of their (re-)
election shall be proposed for election to the
Supervisory Board for a full term of office. Upon the
establishment of this age limit, the Supervisory
Board deliberately decided against a rigid maximum
age limit and in favour of a flexible standard limit
that preserves the necessary leeway for an appro-
priate assessment of the circumstances of the indi-
vidual case, that defines the group of potential can-
didates in a sufficiently broad manner, and that also
allows for re-election. None of the members of the
Supervisory Board in office on 31 December 2023
exceeded the standard age limit at the time of their
election.
Two finance experts: At least one member of the
Audit Committee must have expertise in the field of
accounting and at least one other member must
have expertise in the audit of financial statements.
Expertise in the field of accounting should involve
specialized knowledge of and experience with the
use of accounting principles and internal control
and risk management systems, while expertise in
relation to the audit of financial statements must
also involve specialized knowledge of and
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
185
Combined Management Report
Expertise and experience
Further Information
Dr Bernd Pischetsrieder
Ben van Beurden
Age limit not breached
Independence²
Formal suitability
Educational and professional background
International experience¹
✓
Mechanical engineering
✓
German
1948
Male
2014
Dame Polly Courtice
Liz Centoni
Dr Martin Brudermüller
Corporate Governance
Declaration on
Prof. Dr Helene Svahn
Consolidated Financial Statements
Corporate Governance
With regard to strategy, Dr Bernd Pischetsrieder in
particular has proven sector-specific expertise as a
result of his previous professional experience. In
terms of the corporate strategy that is geared
towards sustainability and the luxury vehicle seg-
ment, the ESG expertise of Dame Polly Courtice, as
well as Marco Gobbetti's experience in the luxu-
ry-goods industry, deserve special mention. In
addition, Roman Zitzelsberger and Ergun Lümali in
particular have extensive experience with strategy
issues
-
Roman Zitzelsberger due to the mandates
he has held in various supervisory boards and
Ergun Lümali due to the many years he has served
on the company's Supervisory Board.
In the area of digitalization/IT, Liz Centoni and
Timotheus Höttges, among others, are able to con-
tribute expertise and experience gained through
their professional activities at Cisco and Deutsche
Telekom, respectively. The same can be said for
Monika Tielsch due to her activity as a Works Coun-
cil member in the R&D unit, where the MB.OS oper-
ating system is being developed.
Dr Martin Brudermüller and Ben van Beurden in
particular have extensive expertise in the area of
Annual Report 2023 | Mercedes-Benz Group
In the area of finance, Ben van Beurden and Dr
Martin Brudermüller in particular possess special
expertise, as do the two finance experts Olaf Koch
and Timotheus Höttges and the other members of
the Audit Committee - Ergun Lümali and Roman
Romanowski.
Contents
186
Combined Management Report
Corporate Governance
Declaration on
Corporate Governance
Consolidated Financial Statements
Further Information
transformation. Both push or pushed ahead with
the process of transformation at the companies
where they serve or served as chairman of the
board of management. In their capacity as works
council chairmen at key Mercedes-Benz production
plants, both Ergun Lümali and Michael Häberle use
their expertise to help manage the transformation
at the Mercedes-Benz Group.
To Our Shareholders
On the basis of the table Qualification matrix of the
Supervisory Board members, the Supervisory Board
as a whole in its current composition meets the
defined requirements pertaining to its expertise/
experience. More than three members of the Super-
visory Board have relevant knowledge and/or expe-
rience in each of the areas of expertise shown
above. The explanations shown below regarding the
members of the Supervisory Board who are men-
tioned by name should therefore be viewed as
examples.
The specification examples in the parentheses for
the areas shown above are not complete; in addi-
tion, expertise does not have to be demonstrated
for every specified item in the parentheses for each
area.
- Capital markets
-
experience with the same. In addition, specialized
knowledge of and experience with financial report-
ing and financial statement auditing shall include
sustainability reporting and the audit of sustainabil-
ity reports. On the shareholder side, the Audit Com-
mittee has two finance experts as members Olaf
Koch and Timotheus Höttges whose current or
past relevant duties at (listed) companies, as well
as continuing education activities, ensure they have
specialized knowledge of and experience with
accounting and the audit of financial statements.
The same applies to their specialized knowledge of
and experience with sustainability reporting and
the audit of sustainability reports. Further details
on the expertise of the two finance experts can be
found in the information on the composition and
working method of the Audit Committee in this
Declaration on Corporate Governance.
- Other special areas of expertise: The Supervisory
Board shall, as a whole, possess expertise and
experience in areas of particular relevance to the
company. At least three members of the Supervi-
sory Board shall bring knowledge and experience in
each of the following areas:
- Finance (e.g. accounting, controlling, risk manage-
ment, auditing, M&A)
- Strategy
- Digitalization/IT (e.g. software, processes, data
security)
-
Transformation (e.g. products, working models)
-
Human resources (e.g. human resources manage-
ment, employee issues, world of work)
ment
-
- Sustainability/ESG (in particular: the environ-
green production and logistics, climate
and decarbonization strategy; social - people
plan, sustainable supply chains; governance
sustainable corporate governance, sustainable
finance)
- Industry (e.g. production, procurement)
- Innovation, research and development,
technology
- Sales/brands
Further Information
Finance
(e.g. accounting, controlling, risk management,
audit, M&A)
Marco Gobbetti
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
✓
✓
Tenure
✓
✓
✓
✓
Chemistry/MBA/ software engineering History/marketing/sustainability
British/South African
1952
✓
Joined board in
2022
Term limit not breached
Stefan Pierer
Olaf Koch
Timotheus Höttges
Corporate Governance
Further Information
Consolidated Financial Statements
Corporate Governance
Declaration on
Combined Management Report
189
International experience¹
Nationality
Year of birth
Gender
Diversity
✓
Female
2022
✓
Chemistry
Capital market
Sales/brand
technology
Innovation, research and development,
(e.g. production, procurement)
Industry
Sustainability/ESG4
issues, working environment)
(e.g. personnel management, employee
HR
(e.g. product, working models)
Transformation
(e.g. software, processes, data protection)
Digitalization/IT
Strategy
Footnotes are at the bottom of the table
Dr Martin Brudermüller in particular possesses
sound knowledge of human resources due to his
extensive previous professional experience in this
area, and he has contributed his knowledge as a
Board member, especially as a member of the Nom-
ination Committee of the Supervisory Board. Dr
Frank Weber also possesses expertise in the area of
human resources, as he has served for many years
as Chairman of the Management Representative
Committee at the Mercedes-Benz Group. The
knowledge and experience of the IG Metall (German
Metalworkers' Union) representatives Nadine
Boguslawski, Roman Romanowski and Roman Zit-
zelsberger in the area of human resources has also
proved valuable for the work conducted by the
Supervisory Board.
2021
1958
✓
✓
US
German
1964
1961
Female
2021
Male
2021
✓
✓
Chemical engineering
✓
Dutch
Male
In the area of sustainability/ESG, Dame Polly
Courtice contributes the expertise she has gained
in ESG matters as a result of having served for many
years as Director of the University of Cambridge
Institute for Sustainability Leadership. Dr Martin
Brudermüller, Ben van Beurden and Timotheus
Höttges in particular contribute to the Supervisory
11
Annual Report 2023 | Mercedes-Benz Group
Contents
Participation in Participation rate
meetings
(in %)
Combined Management Report
The Supervisory Board
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
18
The Supervisory Board
To Our Shareholders
Dr Bernd Pischetsrieder
Contents
2 Chairman of the Audit Committee and the Legal Affairs Committee
1 Chairman of the Presidential Committee and the Nomination Committee
100
4/4
71
5/7
Roman Zitzelsberger
100
Annual Report 2023 | Mercedes-Benz Group
7/7
Chairman of the Supervisory Board
Ben van Beurden
Nadine Boguslawski*
Elected until 2028
Chairman of the Works Council of the Mercedes-Benz
Nuremberg Own Retail Branch
Michael Bettag*
of Mercedes-Benz Sindelfingen Plant
Elected until 2028
of Mercedes-Benz Group AG;
Chairman of the Works Council
Chairman of the General Works Council
of Mercedes-Benz Group AG;
of Mercedes-Benz Group AG
Elected until 2024
Chairman of the Group Works Council
Deputy Chairman of the Supervisory Board
Ergun Lümali*
Elected until 2026
for Sustainability Leadership
Former Director of the University of Cambridge Institute
Dame Veronica Anne ("Polly") Courtice
Elected until 2025
Former Chief Executive Officer Shell plc
of Mercedes-Benz Group AG;
Dr Frank Weber
100
3/3
100
4/4
100
6/6
100
4/4
100
7/7
Gabriela Neher (from 3 May 2023)
Ergun Lümali
4/4
100
6/6
100
7/7
Olaf Koch²
83
5/6
100
4/4
100
Michael Peters (from 3 May 2023)
Elke Tönjes-Werner (until 3 May 2023)
100
7/7
Monika Tielsch
100
7/7
Prof. Dr Helene Svahn
100
4/4
100
3/3
86
6/7
Roman Romanowski
100
4/4
Stefan Pierer (from 3 May 2023)
100
4/4
Head Treasurer of IG Metall
Elected until 2028
100
Dr Martin Brudermüller
Liz Centoni
(since 3 May 2023)
Elected until 2027
Former IG Metall District Manager Baden-Württemberg
Elected until 2028
Roman Zitzelsberger*
Pierer Industrie AG
Chairman of the Board of Management of
Stefan Pierer
Retired on 3 May 2023
* Employee representatives
Mercedes-Benz Bremen Plant
Elke Tönjes-Werner*
Center Manager BodyTEC, Mercedes-Benz AG;
Chairman of the Management Representatives
Committee, Mercedes-Benz Group
Elected until 2028
Dr Frank Weber*
Member of the Works Council at the
Mercedes-Benz Sindelfingen Plant (RD)
Elected until 2028
Monika Tielsch*
(since 3 May 2023)
Elected until 2028
Mercedes-Benz Bremen Plant
Deputy Chairwoman of the Works Council of the
Chairman of the Works Council of
Further information on the members of the Supervisory Board of Mercedes-Benz Group AG
Contents
Diversity is the third foundation of our conduct at the
Mercedes-Benz Group. The Group is convinced that
sustained success can only be achieved with diverse
teams. Through the use of appropriate measures and
activities, the Mercedes-Benz Group seeks to foster a
work environment that offers equal opportunities to all
employees.
The Mercedes-Benz Group is convinced that long-term
success can only be achieved by acting in an ethically
and legally responsible manner. Integrity is therefore
very important to the company. For the Mercedes-Benz
Group, ethical behaviour means doing what is right,
complying with external and internal rules, following our
moral compass and aligning our activities with shared
values.
This holistic ESG approach is accompanied by social
and governance aspects such as the transformation of
the workplace and upholding human rights.
One of the company's goals here is to reduce CO2 emis-
sions per passenger car over the entire vehicle life cycle
by the end of this decade by up to 50% as compared to
2020 levels. In addition to the comprehensive use of
recycling materials and renewable energy in production,
the integration of renewable energy sources for charg-
ing the vehicles and electrification of the vehicle fleet is
an important tool for accomplishing this. This is why the
Mercedes-Benz Group is taking the necessary steps to
go all electric. Customers and market conditions will set
the pace of the transformation. The Mercedes-Benz
Group plans to be in a position to cater to different cus-
tomer needs, whether it's an all-electric drivetrain or a
combustion engine, until well into the 2030s. In addi-
tion, the company's factories are retooled to follow
demand and can capture the tipping point into an
all-electric era. The Mercedes-Benz Group expects its
high power charging network to ease the ramp-up of
electromobility. The Group will expand battery produc-
tion and open a battery recycling factory to close the
loop. The Mercedes-Benz Group's ambition is to make
the entire new vehicle fleet net carbon-neutral¹ across
all stages of the value chain by 2039.
Group utilizes a holistic ESG (environmental, social and
governance) concept throughout all of its divisions.
1 Net carbon-neutral means that no CO2 emissions are caused or that any CO2 emissions
arising are compensated for by certified offset projects.
Sustainability at the Mercedes-Benz Group means
creating permanent value for all of our stakeholders
for our customers, investors and employees and for our
business partners and society as a whole. In this pro-
cess, economic, environmental and social responsibility
belong together - along the entire value chain. In order
to live up to this responsibility, the Mercedes-Benz
_
Annual Report 2023 | Mercedes-Benz Group
Sustainability, integrity and diversity are the basis
of our conduct at the Mercedes-Benz Group
As a pioneer in automobile manufacturing, the
Mercedes-Benz Group has set itself the objective of
shaping the future of mobility in a safe and sustainable
manner. In doing so, the company focuses on innovative
and forward-looking technologies and safe high-quality
vehicles that fascinate and excite.
Objectives and Strategy
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
20
To Our Shareholders
Objectives and Strategy
The Mercedes-Benz Group comprises the automotive
business units Mercedes-Benz Cars and Mercedes-Benz
Vans as well as Mercedes-Benz Mobility. Each business
unit pursues a strategy that is specifically targeted at
the market and customers it serves. The strategy in
question is based on the principles of sustainability,
integrity and diversity and is supported by a highly qual-
ified and motivated team.
Michael Peters*
(since 3 May 2023)
Elected until 2028
Combined Management Report
19
To Our Shareholders
The Supervisory Board
Contents
Annual Report 2023 | Mercedes-Benz Group
Further information on the members of the Supervisory Board of Mercedes-Benz Group AG
* Employee representatives
at the Mercedes-Benz Untertürkheim Plant
Elected until 2028
Corporate Governance
Chairman of the Works Council
Deputy Chairman of the General Works Council
of Mercedes-Benz Group AG;
Deputy Chairman of the Group Works Council
Michael Häberle*
Chief Executive Officer of Salvatore Ferragamo S.p.A.
Elected until 2026
Marco Gobbetti
Chief Strategy Officer and GM,
Applications, Cisco, Inc.
Elected until 2025
Executive Vice President,
of Mercedes-Benz Group AG;
Consolidated Financial Statements
Further Information
Timotheus Höttges
Mercedes-Benz Rastatt Plant
Member of the Works Council at the
Retired on 3 May 2023
Chairman of the Works Council of the Mercedes-Benz
Gaggenau Plant
Michael Brecht*
Chair of the Board of Directors of Nokia Oyj
Retired on 3 May 2023
Sari Baldauf
Retired from the Supervisory Board
Professor in Nanobiotechnology at the
Royal Institute of Technology, Sweden
Elected until 2025
Prof. Dr Helene Svahn
to the Board of Management of IG Metall
Elected until 2028
In-house Legal Conunsel
Roman Romanowski*
Gabriela Neher*
Partner and Managing Director of Zintinus GmbH
Elected until 2025
Olaf Koch
Elected until 2025
of Deutsche Telekom AG
Chairman of the Board of Management
Chairman of the Board of Executive Directors, BASF SE
Elected until 2025
To Our Shareholders
Report of the Supervisory Board
7/7
100
The Legal Affairs Committee held four meetings in the
year 2023. One meeting was held in person, with the
option of participation in virtual form or via telephone,
and three meetings were held as video conferences. In
those meetings, the Committee was informed in detail
about legal matters relating to emissions and cartels
and discussed these matters in the presence of the
legal advisers of the Supervisory Board. It discussed
the continuing further development of the technical
compliance management system, also with respect to
future technologies. The Committee received reports on
the progress of the review of potential responsibilities
in connection with diesel emissions and anti-trust mat-
ters from the legal advisers engaged for this purpose by
the Supervisory Board. The Committee regularly
reported to the Supervisory Board on its work and, after
discussing and weighing the relevant aspects, made
recommendations for resolutions to the Supervisory
Board, taking the Group's best interests into account.
The Committee also discussed the risks of a limitation
of possible liability and took appropriate measures in
the cases in point. As part of the settlement reached
with the US authorities in connection with diesel emis-
sions, the Committee was assigned specific tasks and
decision-making competences with regard to the fulfil-
ment of the obligations assumed in the settlement. The
Committee also fulfilled these tasks in full and with
great care.
The Audit Committee held six meetings in the year
2023. Five meetings were held in person, with the
option of participation in virtual form or via telephone,
and one meeting was held as a video conference. Fur-
ther details of the Audit Committee's work can be found
in the Report of the Audit Committee.
The Presidential Committee held four meetings in the
past financial year. Two of the meetings were held in
person and two meetings were held as video confer-
ences. In particular, the Committee discussed person-
nel matters and succession planning for appointments
to the Board of Management. Furthermore, the Presi-
dential Committee discussed the acceptance by mem-
bers of the Board of Management of board positions at
other companies and institutions, corporate govern-
ance issues, D&O insurance and remuneration issues.
Work in the committees
ernance.
Corporate governance at the Mercedes-Benz Group is
explained in detail in the Declaration on Corporate Gov-
requirement and maintain the target quota for the pro-
portion of women on the Board of Management that
was set in 2020. As at 31 December 2023, three of the
eight members of the Board of Management are
women: Renata Jungo Brüngger, Sabine Kohleisen and
Britta Seeger. The proportion of women on the Board of
Management is now 37.5%, which means it exceeds the
target that was set.
Further Information
The Nomination Committee held two meetings in the
2023 financial year, both of them as video conferences.
The Committee specifically considered the recommen-
dations for the proposals of the Supervisory Board to
Consolidated Financial Statements
Combined Management Report
To Our Shareholders
Report of the Supervisory Board
14
Contents
Annual Report 2023 | Mercedes-Benz Group
On 3 December 2020, the Supervisory Board set a tar-
get for the proportion of women on the Board of Man-
agement of at least 25% by 31 December 2025. Since
August 2022, a legally mandated minimum participation
requirement must be complied with when appointing
members of the Board of Management. This require-
ment stipulates that at least one woman (and at least
one man) must be a member of the Board of Manage-
ment in listed companies with parity participation and
more than three members on the Board of Management.
Companies that are subject to the minimum proportion
requirement are no longer obliged to set a target quota
for the proportion of women on the board of manage-
ment. Nevertheless, within the framework of the overall
requirements profile for appointments to the Board of
Management, the Supervisory Board has decided to go
beyond the stipulations of the minimum proportion
At its meeting on 13 December 2023, the Supervisory
Board decided on the recommendation of the Nomina-
tion Committee, to propose to the 2024 Annual General
Meeting that Dr Doris Höpke be elected to the Supervi-
sory Board for the first time. If the proposed female
candidate is elected, the proportion of women on the
shareholder side will increase to 40%. The statutory
gender quota would remain fulfilled both on the share-
holder side and for the Supervisory Board as a whole.
are men. On the employee side, Nadine Boguslawski,
Gabriela Neher and Monika Tielsch make up 30%
women and the remaining 70% are men. Thus the
Supervisory Board as a whole also fulfils the statutory
quota.
Corporate Governance
As at 31 December 2023, women make up 30% of the
shareholder side of the Supervisory Board of Mercedes-
Benz Group AG (Liz Centoni, Dame Polly Courtice and
Professor Dr Helene Svahn), while the remaining 70%
the Annual General Meeting regarding the election of
shareholder representatives to the Supervisory Board.
In this context, it was guided by the interests of the
company, taking all circumstances of the individual
case into account, and striving to fulfil the overall pro-
file of requirements, along with the diversity concept
and competence profile for the entire Supervisory
Board.
Changes in the Supervisory Board and
the Board of Management
Board also approved the further share buyback pro-
gramme proposed by the Board of Management.
In a meeting of the Supervisory Board on 21 February
2024, the preliminary key figures of the 2023 company
and Consolidated Financial Statements as well as the
preliminary proposal to the 2024 Annual General Meet-
ing for the appropriation of profits were discussed and
noted with approval in the presence of representatives
of the auditor. The Supervisory Board determined that
there were no objections to their publication. The pre-
liminary key figures for the 2023 financial year and the
preliminary proposal for the appropriation of profits
were published at the annual press conference on
22 February 2024. In the same meeting, the Supervisory
The Annual Financial Statements of Mercedes-Benz
Group AG and the Combined Management Report for
Mercedes-Benz Group AG and the Group for 2023 were
duly audited by KPMG AG Wirtschaftsprüfungs-
gesellschaft, Berlin, and issued with an unqualified
audit opinion. This also applies to the 2023 Consoli-
dated Financial Statements compiled in accordance
with IFRS.
Audit of the individual company and Consolidated
Financial Statements
was appointed as a member of the Board of Manage-
ment with responsibility for Marketing & Sales with
effect from 1 January 2025 for a further five-year term
and Renata Jungo Brüngger as a member of the Board
of Management with responsibility for Integrity, Govern-
ance & Sustainability with effect from 1 January 2025 in
line with the Supervisory Board's guidelines on the
appointment and reappointment of members of the
Board of Management for a further one-year term.
At the Supervisory Board meeting on 27 July 2023, Ola
Källenius was reappointed as Chairman of the Board of
Management for a further five years with effect from
22 May 2024 and Markus Schäfer was reappointed as
Chief Technology Officer, Development & Procurement
in line with the Supervisory Board's guidelines on the
appointment and reappointment of members of the
Board of Management for another two years, also with
effect from 22 May 2024. In December 2023, the
Supervisory Board decided to appoint Sabine Kohleisen
as a member of the Board of Management responsible
for Human Resources and Labour Director in line with
the Supervisory Board's guidelines on the appointment
and reappointment of members of the Board of Man-
agement for a further year with effect from 1 December
2024 and Dr Jörg Burzer as a member of the Board of
Management responsible for Production, Quality & Sup-
ply Chain Management for a further five years, also with
effect from 1 December 2024. At the meeting of the
Supervisory Board on 21 February 2024, Britta Seeger
Meeting. In the elections of employee representatives
held prior to the Annual General Meeting, Gabriela
Neher and Michael Peters were elected as members of
the Supervisory Board for the first time, in addition to
the re-elected employee representatives, with effect
from the end of the Annual General Meeting. In the
Supervisory Board meeting that followed the Annual
General Meeting, Ergun Lümali was confirmed as Dep-
uty Chairman of the Supervisory Board and thus Deputy
Chairman of the Mediation and Presidential Commit-
tees. Elections were also held for other committee
appointments.
Further Information
During the reporting period, there was no reason to
convene the Mediation Committee.
Consolidated Financial Statements
Combined Management Report
To Our Shareholders
Report of the Supervisory Board
Contents
15
Annual Report 2023 | Mercedes-Benz Group
At the virtual Annual General Meeting on 3 May 2023,
the candidate proposed by the Supervisory Board on
the recommendation of the Nomination Committee,
Stefan Pierer, was elected to the Supervisory Board.
Sari Baldauf on the shareholder side and Michael Brecht
and Elke Tönjes-Werner on the employee side left the
Supervisory Board at the end of the Annual General
At its meeting on 16 February 2023, the Supervisory
Board appointed Renata Jungo Brüngger as a member
of the Board of Management of Mercedes-Benz
Group AG with effect from 1 January 2024 for a further
one-year term.
Several members of the Board of Management were
reappointed in the course of the financial year. The
reappointment periods are in line with the Supervisory
Board's guidelines on the appointment and reappoint-
ment of members of the Board of Management.
Corporate Governance
For supervisory boards of listed companies subject to
codetermination and equal representation of share-
holders and employees on the supervisory board, such
as that of Mercedes-Benz Group AG, the German Stock
Corporation Act (AktG) prescribes a mandatory gender
quota of at least 30%. The quota is to be met by the
Supervisory Board as a whole.
German Act on the Equal Participation of Women
and Men in Leadership Positions
The Audit Committee also conducted a self-evaluation
of its activities on the basis of a comprehensive compa-
ny-specific questionnaire in 2023. The positive results
of this self-assessment were presented and discussed
at the Audit Committee meeting on 21 February 2024.
At the virtual Annual General Meeting on 3 May 2023,
the candidate proposed by the Supervisory Board, Ste-
fan Pierer, was elected to the Supervisory Board as a
shareholder representative. At the subsequent Supervi-
sory Board meeting, I proposed to the Supervisory
Board, in the interests of long-term, orderly succession
planning, that Dr Martin Brudermüller be elected Chair-
man of the Supervisory Board after my term of office
expires at the end of the Annual General Meeting in
2024. Ergun Lümali was confirmed as Deputy Chairman
of the Supervisory Board. This was done in view of the
election of employee representatives that was held
before the 2023 Annual General Meeting. In addition,
elections were held to fill vacancies on the committees
of the Supervisory Board.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Report of the Supervisory Board
12
Contents
The Supervisory Board held another meeting at the end
of July 2023. At this meeting, the Supervisory Board and
the Board of Management discussed in detail the
course of business and the results of the first half of
the year. In addition, the body decided to adjust the
remuneration of the Board of Management on the basis
of the remuneration system approved by the Annual
General Meeting. Moreover, the Supervisory Board was
informed about current legal issues and the status of
the fulfilment of the settlement in connection with die-
sel emissions agreed with the US authorities.
Annual Report 2023 | Mercedes-Benz Group
for the 2023 Annual General Meeting. In order to meet
the expectations of investors to improve shareholder
participation, it was decided, among other things,
to again publish a letter from the Supervisory Board
Chairman to shareholders concerning a number of gov-
ernance issues in the run-up to the Annual General
Meeting.
The Audit Committee and the Supervisory Board
reviewed these documents in detail and discussed
them intensively in the presence of the auditors, who
reported on the results of their audit and also
addressed the key audit matters and the relevant audit
procedures, including the conclusions drawn, and were
available for additional questions and information.
Following the final result of the review by the Audit
Committee and its own review, the Supervisory Board
concurred with the result of the audit by the auditor.
It determined that there were no objections to be
raised and adopted the Annual Financial Statements
prepared by the Board of Management and the Com-
bined Management Report, including the Non-Financial
Declaration. The 2022 company financial statements of
Mercedes-Benz Group AG were thus adopted. On this
basis, the Supervisory Board endorsed the proposal of
the Board of Management for the appropriation of dis-
tributable profits. The Supervisory Board also adopted
the Report of the Supervisory Board, the Declaration on
Corporate Governance and the Remuneration Report,
as well as its proposed resolutions on the agenda items
Consolidated Financial Statements and the Combined
Management Report, including the Non-Financial Dec-
laration for the 2022 financial year of Mercedes-Benz
Group AG and the Group, each of which had been
issued with an unqualified audit opinion by the auditor,
as well as the Declaration on Corporate Governance,
the Remuneration report, and the proposal for the
appropriation of profits. The members of the Supervi-
sory Board were provided with extensive documenta-
tion for their preparation.
At the meeting on 13 March 2023, the Supervisory
Board discussed the Annual Financial Statements, the
At its meeting on 16 February 2023, the Supervisory
Board was first informed about the current financial
status, volumes and prices of the vehicle clusters in the
current and future Mercedes-Benz Cars portfolio. In the
presence of representatives of the auditor, the Supervi-
sory Board then discussed the preliminary key figures of
the 2022 company and Consolidated Financial State-
ments as well as the preliminary proposal to the 2023
Annual General Meeting for the appropriation of profits
and noted them with approval. The Supervisory Board
determined that there were no objections to their publi-
cation. The preliminary key figures for the 2022 financial
year and the preliminary proposal for the appropriation
of profits were published at the annual press confer-
ence on 17 February 2023. The Supervisory Board also
passed resolutions relating to a number of other meas-
ures subject to its approval. To optimize the capital
structure, the Supervisory Board approved the Board of
Management's plan to buy back up to €4 billion worth
of the company's own shares via the stock exchange
over a period of up to two years and subsequently can-
cel them. This was done on the basis of the authoriza-
tion granted by the Annual General Meeting on 8 July
2020. In addition, the Board of Management provided
information on the status of the fulfilment of the settle-
ment in connection with diesel emissions agreed with
the US authorities. Moreover, the body dealt with the
remuneration of the Board of Management on the basis
of the remuneration system to be approved by the
Annual General Meeting.
Further Information
Consolidated Financial Statements
Corporate Governance
At its meeting on 28 April 2023, the Supervisory Board
received reports on the supply situation for certain bat-
tery systems and the measures that were taken. The
Board of Management also provided information on the
positive reactions to the company's ESG conference for
investors and analysts, which was held on 30 March
2023. The Supervisory Board also received a status
update on vehicle IT security and discussed findings
from cyber incidents at other commercial enterprises.
The Chief Officer Corporate Data Protection also
reported on the Data Compliance Management System,
the opportunities and risks of using artificial intelli-
gence and dealing with digital risks. The Supervisory
Board then discussed ESG management within the
company in detail, in particular the further integration
of sustainability into the company's structures and core
processes. The Supervisory Board subsequently
approved the development of a wind farm project as
part of a power purchase agreement at the test site in
Papenburg in northern Germany. Finally, the Supervi-
sory Board also discussed current legal issues.
Strategy meeting of the Supervisory Board
At the start of the two-day strategy meeting on
27/28 September 2023, the Supervisory Board was
informed about the current situation of the company.
As part of the ESG reporting, the Board of Management
then reported on overarching topics, the latest devel-
opments, objectives and selected key topics related to
"E", "S" and "G". The Supervisory Board also decided on
product projects and an investment project subject to
its approval. The meeting focused on the company's
strategy and, in particular, its implementation. Topics
discussed included the product and innovation strategy,
offering a holistic customer experience along the entire
customer journey, transforming and empowering the
workforce for the future and securing industrial com-
petitiveness. With the involvement of the responsible
executives, the members of the Supervisory Board and
the Board of Management discussed in a constructive
and open dialogue how the Mercedes-Benz Group will
adapt to new challenges and which opportunities are to
be exploited. Sustainability-related aspects, such as
challenges in the implementation of human rights due
diligence in the supply chains for production materials,
were an integral part of the discussions. The capital
market perspective was also taken into account.
By way of resolution with the aid of other customary
means of communication, on 23 October 2023 the
Supervisory Board approved the Board of Manage-
ment's plans to establish a Europe-wide high-perfor-
mance charging network under the Mercedes-Benz
brand.
Corporate planning meeting
(Mercedes-Benz business planning)
perform their duties. In the reporting period, a compre-
hensive self-assessment of the Supervisory Board and
its committees took place with the involvement of an
external consultant on the basis of an extensive ques-
tionnaire and additional interviews carried out. The
Board of Management's perspective was also included
in this assessment. The results of the audit, which the
Supervisory Board dealt with extensively at its meeting
on 21 February 2024, confirm that the members of the
Supervisory Board cooperate very effectively and pro-
fessionally with one another and with the Board of
Management and do so on a basis of great trust.
The Supervisory Board regularly assesses how effec-
tively the Supervisory Board and its committees
There were no indications of actual conflicts of interest
during the 2023 financial year.
In the interests of good corporate governance, the
members of the Supervisory Board of Mercedes-Benz
Group AG are required to disclose to the Supervisory
Board as a whole any conflicts of interest, in particular
those that could arise as a result of an advisory or
board function with customers, suppliers or lenders of
Mercedes-Benz Group AG or other third parties.
In December 2023, the Supervisory Board adopted the
regular 2023 declaration of compliance. With the
exceptions explained there, all recommendations of the
Code have been and are being complied with.
In my function as Chairman of the Supervisory Board,
I held discussions with investors and proxy advisors on
Supervisory Board-specific topics such as Board of
Management remuneration and the work and composi-
tion of the Supervisory Board and its committees as
part of the investor dialogue in the run-up to the Annual
General Meeting.
responsibility for this on 1 August 2023, and her division
has since been designated Integrity, Governance & Sus-
tainability (previously: Integrity & Legal). Responsibility
for the management of division-specific sustainability
issues remains with the respective Board of Manage-
ment divisions.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Report of the Supervisory Board
Contents
13
Annual Report 2023 | Mercedes-Benz Group
In order to take account of the constantly growing com-
plexity and increasing legal relevance of sustainabili-
ty-related issues and to create a central point of con-
tact for all relevant stakeholders, the Supervisory Board
decided in July 2023 to establish a cross-divisional
steering and coordination function for sustainability
management in the company at the Board of Manage-
ment level. Renata Jungo Brüngger took over
During the 2023 financial year, the Supervisory Board
continuously addressed the standards of good corpo-
rate governance.
Corporate governance and declaration
of compliance
At the meeting on 13 December 2023, the Supervisory
Board discussed and approved the Mercedes-Benz
business planning on the basis of comprehensive docu-
mentation and discussed existing opportunities and
risks in connection therewith. The agenda also included
the Board of Management's report on the current finan-
cial status, volumes and prices of the vehicle clusters in
the current and future Mercedes-Benz Cars portfolio
and the Supervisory Board's resolution on several
measures subject to its approval. The body also dis-
cussed the Board of Management's report on the devel-
opment of current and completed acquisitions and
collaborations and was informed about the results of
the employee survey conducted in 2023. Other topics
discussed at the meeting included remuneration issues,
corporate governance matters and legal issues.
In March 2024, the Supervisory Board discussed the
Annual Financial Statements, the Consolidated Finan-
cial Statements and the Combined Management Report,
including the Non-Financial Declaration for Mercedes-
Benz Group AG and the Group as well as the Declara-
tion on Corporate Governance, the Remuneration
report, and the proposal for the appropriation of profits.
Timotheus Höttges
The members of the Supervisory Board were provided
with extensive documentation for their preparation,
including the Annual Report with the Consolidated
Financial Statements compiled in accordance with IFRS,
the Combined Management Report including the
Non-Financial Declaration for Mercedes-Benz Group AG
and the Group, as well as the Declaration on Corporate
Governance, the Remuneration report, the Annual
Financial Statements of Mercedes-Benz Group AG, the
proposal of the Board of Management for the appropri-
ation of profits, the audit opinions of KPMG AG
Wirtschaftsprüfungsgesellschaft for the Annual Finan-
cial Statements of Mercedes-Benz Group AG and the
consolidated financial statements, in each case includ-
ing the Combined Management Report and information
on the accounting-related internal control system, as
well as drafts of the reports of the Supervisory Board
and the Audit Committee.
Annual Report 2023 | Mercedes-Benz Group
7/7
Dr Martin Brudermüller
100
3/3
Michael Brecht (until 3 May 2023)
86
6/7
Nadine Boguslawski
100
100
100
4/4
100
7/7
Ben van Beurden
100
7/7
Michael Bettag
2/2
100
Liz Centoni
86
4/4
100
7/7
Michael Häberle
100
7/7
Marco Gobbetti
100
6/7
4/4
3/4
100
2/2
100
3/3
100
7/7
Dame Veronica Anne ("Polly") Courtice
75
3/3
100
2/2
Contents
17
Annual Report 2023 | Mercedes-Benz Group
Dr Bernd Pischetsrieder
Chairman
The Supervisory Board
Stuttgart, March 2024
The Supervisory Board would also like to thank Sari
Baldauf, Elke Tönjes-Werner and Michael Brecht, who
closely supported the company through their dedicated
work on the Supervisory Board and left the Supervisory
Board last year.
The Supervisory Board would like to thank the Board of
Management members and all employees of the
Mercedes-Benz Group for their dedicated contribution
to the results of the 2023 financial year.
To Our Shareholders
Appreciation
reported on the results of their audit and, in particular,
addressed the key audit matters and the relevant audit
procedures, including the conclusions drawn, and were
available for additional questions and information.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Report of the Supervisory Board
Contents
16
Following the final result of the review by the Audit
Committee and its own review, the Supervisory Board
concurred with the result of the audit by the auditor. It
determined that there were no objections to be raised
and adopted the financial statements prepared by the
Board of Management and the Combined Management
Report, including the Non-Financial Declaration. The
2023 Annual Financial Statements of Mercedes-Benz
Group AG were thus adopted. On this basis, the Super-
visory Board endorsed the proposal of the Board of
Management for the appropriation of distributable prof-
its. The Supervisory Board also adopted the Report of
the Supervisory Board, the Declaration on Corporate
Governance and the Remuneration report, as well as its
proposed resolutions on the agenda items for the 2024
Annual General Meeting.
Combined Management Report
Corporate Governance
Consolidated Financial Statements
100
4/4
100
7/7
Dr Bernd Pischetsrieder¹ (Chairman)
Sari Baldauf (until 3 May 2023)
(in %)
Participation in Participation rate
meetings
Participation in Participation rate
meetings
(in %)
Participation in Participation rate
meetings
(in %)
(in %)
meetings
Legal Affairs
Committee
Nomination Committee
Audit Committee
Presidential Committee
Plenary Supervisory Board
Participation in Participation rate
Individualized disclosure of attendance at meetings by members of the Supervisory Board of Mercedes-Benz Group AG in the 2023 financial year
Report of the Supervisory Board
Further Information
The Audit Committee and the Supervisory Board
reviewed these documents in detail and discussed
them intensively in the presence of the auditors, who
Other cash flows
5,021
15,962
19,660
34
340
108
7
1,732
2,129
13
-1,289
-516
6
3,323
2,206
6
-5,602
20,458
8
678
273
13.46
36
14,501
14,261
308
270
14,809
-6,230
14,531
-5,553
9
20,304
20,084
-427
-254
8
-5,495
13.55
5
-2,688
Net profit
Income taxes
Profit before taxes
Interest expense
Interest income
Earnings before interest and taxes (EBIT)
Other financial income/expense
Gains/losses on equity-method investments
Other operating expense
Other operating income
Research and non-capitalized development costs
General administrative expenses
Selling expenses
Gross profit
Cost of sales
thereof profit attributable to non-controlling interests
thereof profit attributable to shareholders of Mercedes-Benz Group AG
Earnings per share (in euros)
For profit attributable to shareholders of Mercedes-Benz Group AG
Basic
5
-9,482
-9,728
5
34,020
34,379
-115,997
-2,584
-118,839
150,017
153,218
4
2022
2023
Note
Diluted
5
Revenue
13.46
Geschäftsbericht 2023 | Mercedes-Benz Group
4,369
-203
-32
-87
4,337
-290
2,207
267
286
-16
-397
89
2,318
194
2,130
14,241
19,146
183
276
Receivables from financial services
Equity-method investments.
Equipment on operating leases
Property, plant and equipment
Intangible assets
Assets
In millions of euros
-557
Consolidated Statement of Financial Position
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
17,679
14,058
18,870
Consolidated Financial Statements
Consolidated Statement of Financial
Position
13.55
188
1,678
Gains/losses on derivative financial instruments
Gains/losses on debt instruments
Gains/losses on currency translation
Net profit
2022
2023
In millions of euros
Consolidated Statement of Comprehensive Income/Loss
Further Information
196
Consolidated Financial Statements
Consolidated Statement of Comprehensive
Income/Loss
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Gains/losses on equity-method investments
Items that may be reclassified to profit/loss in the Statement of Income in the future
Actuarial gains/losses from pensions and similar obligations
Gains/losses on equity instruments
475
-33
14
297
-795
14,809
14,531
-251
1 For more information on income taxes and reclassifications to profit and loss included in the Consolidated Statement of Income, see notes 9 and 32.
thereof income/loss attributable to non-controlling interests
Total comprehensive income/loss
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG after taxes
thereof income/loss attributable to non-controlling interests after taxes
Other comprehensive income/loss after taxes¹
Items that will not be reclassified to profit/loss in the Statement of Income
Gains/losses on equity-method investments
thereof income/loss attributable to shareholders of Mercedes-Benz Group AG
Marketable debt securities and similar investments
In millions of euros
Further Information
2015
German
1961
Male
✓
2013
Socioeconomics/mediation
German
1967
Female
✓
2021
✓
✓
Strategy
✓
Male
1966
German
technology
Innovation, research and development,
(e.g. production, procurement)
Industry
Sustainability/ESG4
issues, working environment)
(e.g. personnel management, employee
audit, M&A)
HR
Transformation
(e.g. software, processes, data protection)
Digitalization/IT
✓
✓
Mechanical engineering/production ment
Mechanical engineering/ manage-
(e.g. product, working models)
Sales/brand
(e.g. accounting, controlling, risk management,
Competencies/experience
Dr Frank Weber
Monika Tielsch
Roman Romanowski
Michael Peters
Further Information
Consolidated Financial Statements
191
Corporate Governance
Declaration on
Corporate Governance
Combined Management Report
Term limit not breached
Joined board in
Tenure
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Roman Zitzelsberger
2023
✓
2021
Age limit not breached
Formal suitability
Lawyer
Sheet metal processor
Educational and professional background
German
1974
Finance
Male
Nationality
1968
Male
Year of birth
Gender
Diversity
✓
German
Consolidated Statement of Income
Capital market
2 Within the meaning of the German Corporate Governance Code; only relevant for shareholder representatives.
29 Consolidated Statement of Cash Flows
30. Legal proceedings
28. Other liabilities
27. Contract and refund liabilities
26. Deferred income
25. Other financial liabilities
24. Financing liabilities
23. Provisions for other risks
22. Pensions and similar obligations
21. Share-based payment
20. Equity
19. Trade receivables
18. Inventories
17. Other assets
16. Other financial assets
15. Marketable debt securities and similar
investments
31. Contingent liabilities and
other financial obligations
32. Financial instruments
33. Management of financial risks
Consolidated Financial Statements
Consolidated Statement of Income
Corporate Governance
Combined Management Report
195
To Our Shareholders
Contents
Geschäftsbericht 2023 | Mercedes-Benz Group
14. Receivables from financial services
41. Additional information
39. Auditor fees
of Management and the Supervisory Board
38. Remuneration of the members of the Board
37. Related party disclosures
36. Earnings per share
35. Capital management
34. Segment reporting
40. Events after the reporting period
1 Only relevant for shareholder representatives.
11. Property, plant and equipment
12. Equipment on operating leases
13. Equity-method investments
9. Income taxes
Combined Management Report
194
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
FINANCIAL STATEMENTS
CONSOLIDATED
S&MA 9335
✓
> >
4 Especially: environment - green production and logistics, climate and decarbonization strategy; social - people plan, sustainable supply chains; governance - sustainable corporate governance, sustainable finance.
3 Finance expert in accordance with Section 100 Subsection 5 of the German Stock Corporation Act (AktG), Recommendation D.3 DCGK (German Corporate Governance Code).
✓
✓
>
Corporate Governance
Consolidated Financial Statements
Further Information
CONSOLIDATED FINANCIAL STATEMENTS
8. Interest income and interest expense
7.
6. Other operating income and expense
Other financial income/expense
Functional costs
5.
Revenue
4.
10. Intangible assets
3. Consolidated Group
1. Material accounting policies
203 Notes to the Consolidated Financial
Statements
201 Consolidated Statement of
Changes in Equity
199 Consolidated Statement of
Cash Flows
197 Consolidated Statement of
Financial Position
196 Consolidated Statement of
Comprehensive Income/Loss
195 Consolidated Statement of Income
2. Accounting estimates and management
judgements
Other financial assets
Annual Report 2023 | Mercedes-Benz Group
Other assets
Further Information
199
Cash flow from investing activities
Proceeds from sales of marketable debt securities and similar investments
Other cash flows
Acquisition of marketable debt securities and similar investments
Proceeds from disposals of shareholdings and other business operations
Investments in shareholdings
Proceeds from disposals of property, plant and equipment and intangible assets
Additions to intangible assets
Additions to property, plant and equipment
Cash flow from operating activities
Income taxes paid
Dividends received from equity-method investments
Other operating assets and liabilities
Vehicles on operating leases
2023
Receivables from financial services
2022
20,304
1,624
3,810
-640
-5,327
-5,812
1,029
1,310
-4,111
-2,733
-990
-92
-1,296
-2,369
6,521
6,663
20,084
Trade receivables and trade payables
Inventories
Gains (-)/losses (+) from disposals of assets
Change in operating assets and liabilities
Deferred tax assets
27
1,391
1,478
26
5,404
5,476
25
49,786
44,914
24
9,585
7,955
23
12,204
6,898
28
2,682
3,135
Other non-cash expense and income
Depreciation and amortization/impairments
Profit before income taxes
In millions of euros
Consolidated Statement of Cash Flows
Consolidated Financial Statements
Consolidated Statement of Cash Flows
Corporate Governance
358
Combined Management Report
Contents
Annual Report 2023 | Mercedes-Benz Group
88,403
260,015
263,022
82,434
224
3
To Our Shareholders
2,056
1,605
-5,621
-5,349
-5,556
-51,945
-39,473
38,429
39,288
172
-512
2022
2023
Further Information
200
Consolidated Financial Statements
Consolidated Statement of Cash Flows
Cash and cash equivalents at end of year (Consolidated Statement of Financial Position)
Less cash and cash equivalents classified as assets held for sale at end of year
-324
-320
-1,941
-48
10
17,679
15,972
23,120
17,679
62
23,182
Cash and cash equivalents at end of year
17,679
-1,707
88
-471
-19,032
-8,391
29
127
-5,503
12,828
Cash and cash equivalents at beginning of year (Consolidated Statement of Financial Position)
Cash and cash equivalents at beginning of year
-2,622
-4,714
3,337
612
-849
-334
469
285
-3,418
-4,468
-3,481
-3,745
16,894
14,470
-5,009
3,084
28
27
-7,315
Net decrease in cash and cash equivalents
Effect of foreign exchange-rate changes on cash and cash equivalents
Cash flow from financing activities
Acquisition of treasury shares
Dividends paid to non-controlling interests
Dividend paid to shareholders of Mercedes-Benz Group AG
Repayment of long-term financing liabilities
Less cash and cash equivalents classified as assets held for sale at beginning of year
Additions to long-term financing liabilities
Corporate Governance
Combined Management Report
To Our Shareholders
In millions of euros
Contents
Annual Report 2023 | Mercedes-Benz Group
-3,453
Change in short-term financing liabilities
85,072
6,877
1,238
38,469
14
8,100
7,281
19
25,621
27,294
18
157,141
158,990
1,677
1,583
17
3,725
4,127
37,312
9
15,962
15
Annual Report 2023 | Mercedes-Benz Group
260,015
263,022
102,874
104,032
795
3
4,472
4,473
17
3,453
3,599
16
87,772
6,159
17,679
4,478
4,340
16
Note
At 31 December
Further Information
197
Total assets
Total current assets
Assets held for sale
Other assets
Other financial assets
Marketable debt securities and similar investments
Cash and cash equivalents
Receivables from financial services
Trade receivables
Inventories
Total non-current assets
2023
2022
10
17,593
823
699
15
48,237
49,742
14
13,530
Contents
13,104
41,552
41,712
12
27,250
26,090
11
15,869
13
In millions of euros
6,237
Combined Management Report
1,021
1,090
To Our Shareholders
86,540
92,816
20
1,125
23
1,043
91,773
-2,256
2,932
2,571
67,695
76,670
11,718
85,415
11,718
7,345
24
1,520
28
3,656
3,514
27
1,234
1,223
6,438
26
7,714
9
2,524
1,642
25
62,051
63,724
6,910
3,070
22
2022
Deferred tax liabilities
Other financial liabilities
Financing liabilities
Provisions for other risks
Provisions for pensions and similar obligations
Total equity
Non-controlling interests
Equity attributable to shareholders of Mercedes-Benz Group AG
Treasury shares
Other reserves
Retained earnings
Capital reserves
3,070
Equity and liabilities
Corporate Governance
Deferred income
Contract and refund liabilities
Share capital
Total non-current liabilities
At 31 December
Further Information
198
Consolidated Financial Statements
Consolidated Statement of Financial
Position
Total equity and liabilities
Other liabilities
Liabilities held for sale
Total current liabilities
Contract and refund liabilities
Deferred income
Other financial liabilities
Financing liabilities
Provisions for other risks
Trade payables
Other liabilities
2023
2,608
14,809
308
14,501
73,167
55,926
71,951
14,501
-661
202
1,691
470
11,723
1,216
-434
4,337
17,109
3,070
-29
-5,689
-340
-5,349
19,146
1,725
276
-32
4,369
-5,349
1,725
-434
470
18,870
Total
equity
201
to shareholders
of Mercedes-
Benz Group AG
Total comprehensive income/loss
Other comprehensive income/loss after
taxes
Net profit
Balance at 1 January 2022
In millions of euros
Consolidated Statement of Changes in Equity
Dividends
Further Information
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Geschäftsbericht 2023 | Mercedes-Benz Group
-29
Consolidated Financial Statements
Consolidated Statement of Changes
in Equity
Non-
controlling
interests
Changes in the consolidated group
Issue and disposal of treasury shares
Other
attributable
Equity
Treasury
shares
financial
instruments
Equity/debt
instruments
currency
translation
Acquisition of treasury shares
Retained
earnings
Capital
Share
capital
Derivative
Difference of
Other reserves
Balance at 31 December 2022
reserves
-48
Corporate Governance
-48
7.0427
1.0647
7.6441
1.0887
7.1212
1.1217
7.3419
1.0730
7.3582
1.0666
1.1050
€1 =
€1 =
€1 =
€1 =
1.0884
7.8856
1.0070
6.8982
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
For companies that use hyperinflation accounting, the
profit and loss statements and the cash flow state-
ments are converted into euros using the exchange-
rates at the end of the period.
CNY
Due to the close economic relationship, the effects
from the recognition of the inflation effect together
with the conversion effect from the translation are
presented as a currency effect in accordance with IAS
21. Both effects are presented on a net basis in other
comprehensive income or directly in retained earnings.
The effects of taking into account the devaluation of
the monetary balance sheet items of subsidiaries in
countries in hyperinflation are therefore recognized in
profit or loss and are included in the Consolidated
To determine whether a country is to be considered as
in hyperinflation, the Mercedes-Benz Group refers to
the list published by the International Practices Task
Force (IPTF), the Center for Audit Quality or other rele-
vant international publications. If a country is in hyper-
inflation, IAS 29 Financial Reporting in Hyperinflation-
ary Economies has to be applied from the beginning of
the respective reporting period, i.e., from 1 January of
the respective reporting year. Argentina and Turkey are
currently considered as in hyperinflation.
Hyperinflation
7.2582
1.0205
7.7712
1.0751
Statement of Income under other operating expenses
or other operating income.
207
USD
USD
Transactions in foreign currency are translated at the
relevant foreign exchange-rates prevailing at the trans-
action date. In subsequent periods, assets and liabilities
denominated in foreign currency are translated using
period-end exchange-rates; gains and losses from this
measurement are recognized in profit and loss (except
for gains and losses resulting from the translation of
equity instruments measured at fair value through other
comprehensive income, which are recognized in other
comprehensive income/loss).
Foreign currency translation
Subsidiaries, associated companies, joint ventures and
joint operations whose business is non-active or of low
volume and that individually and in sum are not material
for the Group and the fair presentation of profitability,
liquidity and capital resources, and financial position
are generally measured at amortized cost in the Consol-
idated Financial Statements.
Entities measured at amortized cost
If the financial statements of associated companies,
joint ventures or joint operations should not be availa-
ble in good time, the Group's proportionate share of the
results of operations is included in the Mercedes-Benz
Group's Consolidated Financial Statements with up to
three-month time lag taking into account significant
events or transactions.
For entities over which the Mercedes-Benz Group has
joint control together with a partner (joint arrange-
ments), it is necessary to differentiate between whether
a joint operation or a joint venture exists. In a joint ven-
ture, the parties that have joint control of the arrange-
ment have rights to the net assets of the arrangement.
For joint ventures, the equity method has to be applied.
A joint operation exists when the jointly controlling
parties have direct rights to the assets and obligations
for the liabilities. In this case, the prorated assets and
liabilities and the prorated income and expenses are
generally to be recognized (proportionate consolida-
tion).
An associated company is an entity over which the
Group has significant influence. Significant influence is
the power to participate in the financial and operating
policy decisions of the investee. Associated companies
are generally accounted for using the equity method.
Investments in associated companies, joint ventures
or joint operations
loses control of a subsidiary, the difference between
the carrying amounts of the transferred assets and lia-
bilities and the consideration received is generally re-
ported in other operating income or expense. Amounts
that were previously recognized in other comprehensive
income/loss are recognized in other operating income
or expense upon loss of control. If realization is not
permitted, they are reclassified to retained earnings.
Further Information
205
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Assets and liabilities of foreign companies for which the
functional currency is not the euro are translated into
euros using period-end exchange-rates. The translation
adjustments are presented in other comprehensive
income/loss. The components of equity are translated
using historical rates. The statements of income and
cash flows are translated into euros using the quarterly
average exchange-rates during the respective periods.
The exchange-rates providing the basis for the currency
translation of the US dollar and the Chinese renminbi -
the most significant foreign currencies for the Mer-
cedes-Benz Group - developed as shown in the follow-
ing table.
Annual Report 2023 | Mercedes-Benz Group
Contents
2022
2023
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
CNY
206
Third quarter
Second quarter
First quarter
Average exchange-rates during the respective period
Average exchange-rate on 31 December
To Our Shareholders
Exchange-rates
Fourth quarter
Contents
Further Information
Revenue recognition
Income taxes are comprised of current income taxes
and deferred taxes.
Income taxes
Expense from the compounding of interest on provi-
sions for other risks is presented in other financial
income/expense.
Interest income and expense and gains or losses from
derivative financial instruments related to the financial
services business are disclosed under revenue and
cost of sales respectively.
Interest income and interest expense include interest
income from investments in securities and from cash
and cash equivalents as well as interest expense from
liabilities. Furthermore, interest and changes in fair
values related to interest rate hedging activities as well
as income and expense resulting from the allocation of
premiums and discounts are included. The interest
components of defined benefit pension commitments
and similar obligations, as well as of the plan assets
available to cover these obligations and interest on
supplementary income tax payments or reimburse-
ments are also presented in this line item.
Interest income and interest expense
Furthermore, income and expenses from equity inter-
ests are included in other financial income/expense if
such income or expenses are not presented under
gains/losses on equity-method investments.
Other financial income/expense, includes all income
and expense from financial transactions which are
included neither in interest income nor in interest ex-
pense, and which for Mercedes-Benz Mobility are in-
cluded neither in revenue nor in cost of sales.
Other financial income/expense
This item includes all income and expenses in connec-
tion with investments accounted for using the equity
method. In addition to the prorated profits and losses
from financial investments, it also includes profits and
losses resulting from the sale of equity interests or the
remeasurement of equity interests following a loss of
significant influence or joint control. The Mercedes-
Benz Group's share of dilution gains and losses result-
ing from the Group's non-participation or subpropor-
tional participation in capital increases of companies in
which shares are held and are accounted for using the
equity method is also included in gains/losses on equi-
ty-method investments. Non-participation or subpro-
portional participation in capital reductions is recorded
as fictitious acquisition transactions. This item also
includes impairment losses and/or gains on the rever-
sal of such impairments of equity-method investments.
Gains/losses on equity-method investments
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
-48
Combined Management Report
Current income taxes are calculated based on the re-
spective local taxable income and local tax rules for the
period. The calculation of income taxes of
Mercedes-Benz Group AG and its subsidiaries is based
on the legislation and regulations applicable in the
various countries. In addition, current income taxes
presented for the reporting year include adjustments
for uncertain tax payments or tax refunds for periods
not yet finally assessed; however, excluding interest
expenses and interest refunds and penalties on the
underpayment of taxes. In cases for which it is proba-
ble that amounts declared as expenses in the tax re-
turns might not be recognized (uncertain tax positions),
a liability for income taxes is recognized. The amount is
based on the best estimate of the expected tax pay-
ment (expected amount or most likely amount). Tax-
refund claims from uncertain tax positions are recog-
nized when it is probable that they can be realized.
Only in the case of tax-loss carryforwards or unused
tax credits, no liability for taxes or tax claim is recog-
nized for these uncertain tax positions. Instead, the
deferred tax assets for the unused tax-loss carryfor-
wards or tax credits are adjusted.
Changes in deferred tax assets and liabilities are gen-
erally recognized through profit and loss in deferred
taxes in the Consolidated Statement of Income, except
Annual Report 2023 | Mercedes-Benz Group
Contents
Development costs for vehicles and components are
capitalized if the recognition criteria according to IAS
38 are met. Subsequent to initial recognition, the asset
is carried at acquisition or manufacturing costs less
accumulated amortization and accumulated impair-
ment losses. Capitalized development costs include
all direct costs and pro-rata allocable overheads. Capi-
talized development costs for vehicles and vehicle
components are amortized on a straight-line basis over
the expected product life cycle. The planned product
lifespan only exceeds ten years in individual cases.
The assessment also takes into account possible im-
pacts from the transformation of the automotive indus-
try, such as the transition to electric drive systems.
Amortization of capitalized development costs is an
element of manufacturing costs and is allocated to
those vehicles and components by which they were
generated and is included in cost of sales when the
inventory (vehicles) is sold.
Intangible assets with indefinite useful lives are re-
viewed annually to determine whether indefinite-life
assessment continues to be appropriate. If not, the
change in the useful-life assessment from indefinite to
finite is made on a prospective basis.
Intangible assets are measured at acquisition or manu-
facturing cost less accumulated amortization. If neces-
sary, accumulated impairment losses are recognized.
Intangible assets
Basic earnings per share are calculated by dividing
profit attributable to shareholders of Mercedes-Benz
Group AG by the weighted average number of shares
outstanding.
Earnings per share
tax strategies. On each balance sheet date, the
Mercedes-Benz Group carries out impairment tests on
deferred tax assets on the basis of the planned taxable
income in future years. Deferred tax assets are only
recognized if it is more likely than not that future tax
benefits can be realized.
209
For the calculation of deferred tax assets, assumptions
have to be made regarding future taxable income and
the time of realization of the deferred tax assets. In this
context, the Mercedes-Benz Group takes into consider-
ation, among other things, the projected earnings from
business activities, the effects on earnings of the re-
versal of taxable temporary differences, and realizable
for changes recognized in other comprehensive in-
come/loss or directly in equity.
Further Information
210
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Deferred tax assets or liabilities are calculated on the
basis of temporary differences between the tax basis
and the financial reporting of assets and liabilities in-
cluding differences from consolidation, on unused tax-
loss carryforwards and unused tax credits. Measure-
ment is based on the tax rates expected to be effective
in the period in which an asset is recognized or a liabil-
ity is settled. For this purpose, the tax rates and tax
rules are used which have been enacted at the report-
ing date or are soon to be enacted. Deferred tax assets
are recognized to the extent that it is probable that
there will be future taxable income available against
which the deductible temporary differences, tax-loss
carryforwards and tax credits can be utilized. Deferred
tax liabilities for taxable temporary differences in con-
nection with investments in subsidiaries, branches,
associated companies and interests in joint arrange-
ments are not recognized if the Group is able to control
the timing of the reversal of the temporary difference
and it is probable that the temporary difference will not
be reversed in the foreseeable future.
Accounting policies
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Depending on the sales model, vehicles may be initially
sold to non-Group dealers. When control of the vehicle
is transferred to the non-Group dealer, the Mercedes-
Benz Group recognizes revenue from the sale of the
vehicle. Irrespective of this, an end customer can de-
cide to enter into a leasing contract with Mercedes-
Benz Mobility regarding such a vehicle. The vehicle is
then sold by the non-Group dealer to Mercedes-Benz
Mobility.
For multiple-element arrangements, such as when ve-
hicles are sold with free or reduced-in-price mainte-
nance contracts or with free online services, the Group
generally allocates revenue to the various elements
based on their estimated relative stand-alone selling
prices. To determine stand-alone selling prices, the
Mercedes-Benz Group primarily uses price lists with
consideration of average price reductions granted to its
customers.
the term of the contract. If the customer has made an
advance payment, the revenue from these contracts is
deferred as a contract liability and recognized as reve-
nue over the term of the contract in proportion to the
costs expected to be incurred based on historical in-
formation. A future loss on these contracts is recog-
nized in the current reporting year if the expected
costs for outstanding services under the contract ex-
ceed unearned revenue.
For certain products sold by the Group, it offers ex-
tended, separately priced warranties that go beyond
the statutory period, as well as service and mainte-
nance contracts. Usual for such contracts is an advance
payment or the payment of constant instalments over
Under a contract manufacturing agreement, the Mer-
cedes-Benz Group sells assets to a third-party manu-
facturer from which the Mercedes-Benz Group buys
back the manufactured products after completion of
the commissioned work. If the provision of material is
not associated with the transfer of control to the ser-
vice provider, no revenue is recognized.
Arrangements such as when the Mercedes-Benz Group
provides customers with a guaranteed minimum resale
value that they receive on resale (residual-value guar-
antee) do not constrain the customers in their ability to
direct the use of and obtain substantially all of the
benefits from the asset. At contract inception of a sale
with a residual-value guarantee, revenue therefore has
to be recognized, reduced by a potential compensation
payment to the customer (revenue deferral).
with a right of return is reported. The Mercedes-Benz
Group considers several factors when assessing
whether the customer has a significant economic in-
centive to exercise his or her right. Among others,
these are the relation between the agreed repur-
chase price and the expected future market value
(at the time of repurchase) of the asset, or historical
return rates.
- Sales of vehicles including a put option (an entity's
obligation to repurchase the asset at the customer's
request) are reported as operating leases if the cus-
tomer has a significant economic incentive to exer-
cise that right at contract inception. Otherwise, a sale
- Sales of vehicles by which the Mercedes-Benz Group
is obliged to repurchase the vehicles in the future are
accounted for as operating leases. This also applies
to a call option that grants the Mercedes-Benz Group
the right to repurchase.
Revenue recognition from the sale of vehicles for which
the Group enters into a repurchase obligation is de-
pendent on the form of the repurchase agreement.
If a dealer is not classified as a principal but as an
agent and therefore control of vehicles is not trans-
ferred to him, sales revenue is only recorded when
the end customer obtains control. The brokerage com-
missions payable to the dealer are shown in selling
expenses.
Revenue from sales of vehicles, spare parts and other
related products is recognized when control of the
goods is transferred to the customer. This generally
occurs at the time the customer takes possession of
the products.
208
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Government grants related to assets are deducted
from the carrying amount of the asset and are recog-
nized in earnings over the life of a depreciable asset as
a reduced depreciation expense. Government grants
which compensate the Group for expenses are recog-
nized as other operating income in the same period as
the expenses themselves.
Government grants
Borrowing costs are expensed as incurred, unless they
are directly attributable to the acquisition, construction
or production of a qualifying asset and are therefore
part of the acquisition or manufacturing costs of that
asset. Depreciation of the capitalized borrowing costs
is presented within cost of sales.
Borrowing costs
Expenditure for research and development that does
not meet the conditions for capitalization according to
IAS 38 Intangible Assets is expensed as incurred.
Research and non-capitalized development costs
If subsidised leasing fees are agreed upon in connec-
tion with finance leases, revenue from the sale of a
vehicle is reduced by the amount of the interest in-
centive granted.
Contents
When loans are issued below market rates, related
receivables are recognized at present value (using
market rates) and revenue is reduced for the interest
incentive granted.
―
-
The Mercedes-Benz Group uses a variety of sales pro-
motion programmes dependent on various market
conditions in individual countries as well as the respec-
tive product life cycles and product-related factors
(such as amounts of discounts offered by competitors,
excess industry production capacity, the intensity of
market competition and consumer demand for the
products). These programmes comprise cash offers to
dealers and customers as well as lease subsidies or
loans at reduced interest rates which are reported as
follows:
Revenue also includes revenue from the rental and
leasing business as well as interest from the financial
services business at Mercedes-Benz Mobility. Revenue
generated from operating leases is recognized on a
straight-line basis over the periods of the contracts. In
addition, sales revenue is generated at the end of lease
contracts from the subsequent sale of the vehicles.
Revenue from receivables from financial services is
recognized using the effective-interest method.
The Mercedes-Benz Group does not adjust the prom-
ised amount of consideration for the effects of a signif-
icant financing component if at contract inception it is
expected that the period between the transfer of a
promised asset or service to a customer and payment
by the customer will be no longer than one year.
The incremental cost of obtaining contracts is recog-
nized as an expense when incurred if the amortization
period would be no longer than one year.
Further Information
Revenue is recognized net of sales reductions such
as cash discounts and sales incentives granted.
Annual Report 2023 | Mercedes-Benz Group
7.8509
Business combinations are accounted for using the
purchase method. In connection with obtaining control,
non-controlling interest in the acquiree is in principle
recognized at the proportionate share of the acquiree's
identifiable assets, which are measured at fair value.
Total
equity
Non-
controlling
interests
Benz Group AG
of Mercedes-
Treasury
shares
Derivative
financial
instruments
Equity/debt
instruments
currency
translation
Retained
earnings
reserves
Capital
Share
capital
Difference of
Further Information
202
3,070
11,718
67,695
14,261
2,161
76,670
11,718
3,070
1
85
-5,556
476
to shareholders
98
14,446
476
98
-962
185
1,012
-241
-962
1,199
attributable
Other reserves
-241
2,161
67,695
-55
2
-57
-52
-9
9
11,718
3,070
-5
48
48
48
1,012
85,415
1,125
86,540
Consolidated Financial Statements
Consolidated Statement of Changes
in Equity
Corporate Governance
Combined Management Report
Balance at 31 December 2023
Changes in equity interests in subsidiaries that reduce
or increase the Mercedes-Benz Group's percentage
ownership without a change of control are accounted
for as equity transactions between owners. If the Group
Acquisition of treasury shares
Capital increase/Issue of new shares
Equity
Dividends
Other comprehensive income/loss after
taxes
Net profit
Balance at 1 January 2023
To Our Shareholders
In millions of euros
Contents
Annual Report 2023 | Mercedes-Benz Group
Total comprehensive income/loss
-142
Issue and disposal of treasury shares
Other
1,125
In December 2021, the OECD published guidelines for
a new global minimum tax framework aimed at curb-
ing base erosion and profit shifting (BEPS) by multina-
tional corporations. EU member states unanimously
agreed in December 2022 to implement these rules in
the form of a directive (BEPS Pillar 2 regulations). As at
the balance sheet date, this directive was transposed
into German law with the Act to Ensure Global Minimum
In May 2021, the IASB published Deferred taxes relat-
ing to assets and liabilities arising from a single
transaction (amendments to IAS 12). When assets and
liabilities are recorded for the first time, under certain
conditions deferred taxes previously did not have to be
recognized due to an exception. The amendment to IAS
12 has the effect of cancelling this exception, which was
important for the lessee's accounting of finance leases
among other things. The Mercedes-Benz Group applied
the changes for the first time in the financial year that
commenced on 1 January 2023. There were no effects
on the profitability, liquidity and capital resources, and
financial position.
IFRS issued, EU endorsed and adopted in the
reporting period
The Consolidated Financial Statements of Mercedes-
Benz Group AG and its subsidiaries ("Mercedes-Benz
Group" or "the Group") as of 31 December 2023 have
been prepared in accordance with Section 315e of the
German Commercial Code (HGB) (Consolidated Finan-
cial Statements in accordance with International Finan-
cial Reporting Standards) and comply with the Interna-
tional Financial Reporting Standards (IFRS) in the form
in which they must be applied in the European Union
(EU) as of 31 December 2023.
Applied IFRS
Basis of preparation
The Board of Management of Mercedes-Benz Group AG
authorized the Consolidated Financial Statements for
publication on 15 March 2024.
The Consolidated Financial Statements of Mercedes-
Benz Group AG are presented in euros (€). Unless oth-
erwise stated, all amounts are stated in millions of eu-
ros. All figures shown are rounded.
Mercedes-Benz Group AG is a stock corporation orga-
nized under the laws of the Federal Republic of Germa-
ny. The Company is entered in the Commercial Register
of the Stuttgart District Court under No. HRB 19360 and
its registered office is located at Mercedesstraße 120,
70372 Stuttgart, Germany.
Mercedes-Benz Group AG is the parent company of the
Mercedes-Benz Group.
The Mercedes-Benz Group is a vehicle manufacturer
with a worldwide product range of premium cars. Its
product portfolio is rounded off by a range of financial
services, product-related mobility services and the
installation of a charging infrastructure. The Group
comprises the segments Mercedes-Benz Cars, Mer-
cedes-Benz Vans and Mercedes-Benz Mobility.
General information
1. Material accounting policies
Statements
Notes to the Consolidated Financial
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
204
85,415
Business combinations and changes in equity
interests
The financial statements of consolidated subsidiaries
which are included in the Consolidated Financial State-
ments are generally prepared as of the reporting date
of the Consolidated Financial Statements. The financial
statements of Mercedes-Benz Group AG and its compa-
nies included in the Consolidated Financial Statements
are prepared using uniform recognition and measure-
ment principles. Intra-Group assets and liabilities, equi-
ty, income and expenses as well as cash flows from
transactions between consolidated entities are elimi-
nated in the course of the consolidation process.
Structured entities are entities which have been de-
signed so that voting or similar rights are not relevant in
deciding who controls the entity. This is the case for
example if voting rights relate to administrative tasks
only and the relevant activities are directed by means of
contractual arrangements.
The Consolidated Financial Statements include the fi-
nancial statements of Mercedes-Benz Group AG and the
financial statements of all subsidiaries, including struc-
tured entities, which are directly or indirectly controlled
by Mercedes-Benz Group AG. Control exists if the par-
ent company has the power of decision over a subsidi-
ary based on voting rights or other rights, if it partici-
pates in positive and negative variable returns from a
subsidiary, and if it can affect these returns by its power
of decision.
Principles of consolidation
The Consolidated Statement of Income is presented
using the cost-of-sales method.
Notes to the Consolidated Financial Statements
Presentation in the Consolidated Statement of Financial
Position differentiates between current and non-current
assets and liabilities. Assets and liabilities are generally
classified as current if they are expected to be realized
or settled within one year. Deferred tax assets and lia-
bilities as well as assets and provisions for pensions
and similar obligations are presented as non-current
items.
In addition, other standards and interpretations were
published which are not expected to have any signifi-
cant impact on the Consolidated Financial Statements.
In May 2017, the IASB published the standard IFRS 17
Insurance Contracts. IFRS 17 establishes more trans-
parency and comparability with regard to the recogni-
tion, measurement, presentation and disclosure of in-
surance contracts with the insurer. The application of
IFRS 17 is mandatory for reporting periods beginning on
or after 1 January 2023. The first-time application of
IFRS 17 had no impact on the profitability, liquidity and
capital resources and financial position of the Mer-
cedes-Benz Group.
To introduce a mandatory temporary exemption from
the requirements in IAS 12 Income Taxes for the record-
ing and disclosure of information about deferred tax
assets and liabilities, the IASB published International
Tax Reform - Pillar 2 Model Rules (Amendments to
IAS 12) in May 2023. The Mercedes-Benz Group applies
the exception rule according to IAS 12, which stipulates
that no deferred tax assets and liabilities are accounted
for in connection with the income taxes of the second
pillar ("Pillar 2") of the OECD.
Taxation for Groups of Companies (Minimum Tax Act -
MinStG) and is applicable to the Mercedes-Benz Group
from 1 January 2024. As part of an analysis of possible
effects on the Group, no countries were identified as at
the reporting date from which significant effects are to
be expected with regard to the possible payment of a
minimum tax.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Presentation
Further Information
Combined Management Report
Corporate Governance
-
62
62
-5,883
-327
-5,556
14,241
-2,322
14,058
-87
-203
14,531
270
14,261
Consolidated Financial Statements
86,540
-290
-2,322
183
66
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Combined Management Report
92,816
1,043
91,773
203
-2,322
1,514
112
112
26
66
66
-2,256
Further Information
Corporate Governance
Consolidated Financial Statements
Contents
220
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
The estimation of these risk parameters incorporates
all available relevant information, not only historical
and current loss data, but also reasonable and sup-
portable forward-looking information reflected by fu-
ture expectations. This information includes macroeco-
nomic factors (e.g. gross domestic product growth,
unemployment rate, cost performance index) and fore-
casts of future economic conditions. For receivables
from financial services, these forecasts are performed
using a scenario analysis (basic scenario, optimistic
Combined Management Report
Notes to the Consolidated Financial Statements
Financial liabilities
A financial instrument is written off when there is no
reasonable expectation of recovery in whole or in part,
for example, after the end of insolvency proceedings or
after a court decision of uncollectibility.
Significant modification of financial assets (e.g. with a
change in the present value of the contractual cash
flows of 10%) also leads to derecognition of the finan-
cial assets with a simultaneous recognition of new
financial assets. If the terms of a contract are renegoti-
ated or modified and this does not result in derecogni-
tion of the contract, then the gross carrying amount of
the contract is recalculated and a modification gain or
loss is recognized in profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and
the net amount is presented in the Consolidated
Statement of Financial Position provided that an en-
forceable right currently exists to offset the amounts
involved, and there is an intention either to carry out
the offsetting on a net basis or to settle a liability when
the related asset is sold.
Financial liabilities primarily include trade payables,
liabilities to financial institutions, bonds, derivative
financial liabilities and other liabilities.
Financial liabilities measured at amortized cost
After initial recognition, financial liabilities are subse-
quently measured at amortized cost using the effec-
tive-interest method.
Financial liabilities at fair value through
profit or loss
Expected credit losses are measured as the probabil-
ity-weighted present value of all cash shortfalls over
the expected life of each financial asset. For receiva-
bles from financial services, expected credit losses are
calculated using a statistical model with three major
risk parameters: probability of default, loss given de-
fault and exposure at default.
Insofar as the Mercedes-Benz Group enters into re-
verse factoring agreements in which trade receivables
of a supplier are transferred to a financial intermediary,
changes in the presentation of the original trade paya-
bles may occur. That would be the case if these liabili-
ties differed in nature and function from other trade
payables. As a result, these liabilities would be pre-
sented separately.
scenario and pessimistic scenario). The impairment
amount for trade receivables is predominantly deter-
mined on a collective basis.
reasonable and supportable information (if availa-
ble without undue cost or effort) at the reporting
date about past events, current conditions and
forecasts of future economic conditions.
219
b)
Stage 2: expected credit losses over the lifetime - not
credit impaired
Financial liabilities recognized at fair value through
profit or loss include financial liabilities held for trad-
ing. Derivatives (including embedded derivatives sepa-
rated from the host contract) which are not used as
hedging instruments in hedge accounting are classified
as held for trading. Gains or losses on liabilities held for
trading are recognized in profit or loss.
If a financial asset has a significant increase in credit
risk since initial recognition but is not yet credit im-
paired, it is moved to stage 2 and measured at lifetime
expected credit loss, which is defined as the expected
credit loss that results from all possible default events
over the expected life of a financial asset.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
the time value of money;
Further Information
If a financial asset is defined as credit-impaired or in
default, it is transferred to stage 3. The expected credit
loss is recognized as an impairment measured over the
expected lifetime of the financial asset. Objective evi-
dence for a credit-impaired financial asset includes 91
days past due date and other information about signifi-
cant financial difficulties of the debtor.
The determination of whether a financial asset has
experienced a significant increase in credit risk is
based on an assessment of the probability of default,
which is made at least quarterly, incorporating external
credit rating information as well as internal information
on the credit quality of the financial asset. For debt
instruments that are not receivables from financial
services, a significant increase in credit risk is assessed
mainly based on past-due information or the probabil-
ity of default.
A financial asset is migrated to stage 2 if the asset's
credit risk has increased significantly compared to its
credit risk at initial recognition. The credit risk is as-
sessed based on the probability of default. For trade
receivables, the simplified approach is applied whereby
all trade receivables are allocated to stage 2 initially.
Hence, no determination of significant increases in
credit risk is necessary.
The Mercedes-Benz Group applies the low-credit-risk
exception to the stage allocation to quoted debt in-
struments with investment-grade ratings. These debt
instruments are always allocated to stage 1.
In stages 1 and 2, the effective interest revenue is cal-
culated based on gross carrying amounts. If a financial
asset becomes credit impaired in stage 3, the effective
interest revenue is calculated based on its net carrying
amount (gross carrying amount adjusted for any loss
allowance).
Measurement of expected credit losses
Expected credit losses are measured in a way that
reflects:
a)
the unbiased and probability-weighted amount;
Stage 3: expected credit losses over the lifetime -
credit impaired
Derivative financial instruments and hedge
accounting
Other intangible assets with finite useful lives are gen-
erally amortized on a straight-line basis over their use-
ful lives (three to ten years). The amortization period
for intangible assets with finite useful lives is reviewed
at least at the end of each reporting year. Changes in
expected useful lives are treated as changes in ac-
counting estimates. The amortization expense on in-
tangible assets with finite useful lives is recorded in
functional costs.
213
The Mercedes-Benz Group as lessee
Leases include all contracts that transfer the right to
use a specified asset for a stated period of time in
exchange for consideration, even if the transfer of the
right to use such asset is not explicitly described in the
contract. The Group is a lessee mainly of real estate
properties and a lessor of its products.
10 to 50 years
5 to 25 years
3 to 30 years
Leasing
Useful lives of property, plant and equipment
Buildings and site improvements
Technical equipment and machinery
Other equipment, factory and office equipment
Depreciable property, plant and equipment are written
down by scheduled depreciation over the correspond-
ing useful life, generally on a straight-line basis. The
useful lives of property, plant and equipment are
shown in the following table.
The costs of internally produced equipment and facili-
ties include all direct costs and allocable overheads.
Acquisition or manufacturing costs include the esti-
mated costs, if any, of dismantling and removing the
item and restoring the site as well as borrowing costs.
Property, plant and equipment are measured at acqui-
sition or manufacturing costs less accumulated depre-
ciation. If necessary, accumulated impairment losses
are recognized.
Property, plant and equipment
The Mercedes-Benz Group as a lessee recognizes for
generally all lease contracts right-of-use assets as well
as leasing liabilities for the outstanding lease pay-
ments. Variable lease payments that are not included in
the initial recognition of the right-of-use asset are rec-
ognized as an expense for the period.
Emission allowances (e.g. emission permits from the EU
emissions trading system or the vehicle-related emis-
sions regulations in the USA or China) to compensate
for CO2 emissions are also reported under intangible
assets. These certificates and rights are stated at ac-
quisition cost. Derecognition occurs at the time the
certificates or rights are returned or upon sale or expi-
ration. Obligations to surrender emission allowances
are recognized as provisions valued at the acquisition
costs of emission allowances that have already been
purchased. Any excess obligation that may exist is
valued at the market value of the emission allowances
still to be acquired.
Further Information
211
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Stage 1 includes all contracts with no significant in-
crease in credit risk since initial recognition and usually
includes new acquisitions and contracts with fewer
than 31 days past due date. The portion of the lifetime
expected credit losses resulting from default events
possible within the next 12 months is recognized.
With acquisitions of businesses, goodwill represents
the excess of the consideration transferred over the
fair values assigned to the identifiable assets propor-
tionally acquired and liabilities assumed. Goodwill is
accounted for at the subsidiaries in the functional cur-
rency of those subsidiaries.
The Group uses derivative financial instruments exclu-
sively for hedging financial risks that arise from its
operating or financing activities or liquidity manage-
ment. These are mainly currency risks, interest rate
risks and commodity price risks.
The Mercedes-Benz Group applies both recognition
exemptions for leases with a lease term of twelve
months or less (short-term leases) and for leases for
which the underlying asset is of low value, not to rec-
ognize a right-of-use asset and a lease liability. The
lease payments associated with those leases are gen-
erally recognized as an expense on a straight-line basis
over the lease term.
Contents
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In the subsequent measurement of a lease liability, the
carrying amount is increased to reflect interest on the
lease liability and reduced to reflect the lease pay-
ments made. According to IFRS 16, the depreciation of
right-of-use assets is recognized within functional
costs. The interest due on the lease liability is a com-
ponent of interest expense. Extension and termination
options are part of a number of leases particularly of
real estate. In determining the lease term, those op-
tions are only considered if their exercise reasonably
certain. During the term, these options are regularly
checked with regard to their probability of being exer-
cised.
A right-of-use asset is subsequently measured at cost
less any accumulated depreciation and, if necessary,
any accumulated impairment. If the lease transfers
ownership of the underlying asset to the lessee at the
end of the lease term or if the cost of the right-of-use
asset reflects that the lessee will exercise a purchase
option, the right-of-use asset is depreciated to the end
of the useful life of the underlying asset. Otherwise, the
right-of-use asset is depreciated to the end of the
lease term.
Lease payments are discounted at the rate implicit in
the lease if that rate can readily be determined. Other-
wise, discounting is at the incremental borrowing rate.
This incremental borrowing rate as a risk-adjusted in-
terest rate is derived on a maturity- and currency spe-
cific basis. As the cash flow pattern of the reference
interest rates (bullet bonds) does not correspond to
the cash flow pattern of a lease contract (annuity), a
duration adjustment in order to account for that differ-
ence is used.
The Mercedes-Benz Group generally also applies the
option for contracts comprising lease components as
well as non-lease components not to split these com-
ponents.
– contractual penalties for the termination of a lease if
the lease term reflects the exercise of a termination
option.
– the exercise price of purchase options, when exer-
cise is estimated to be reasonably certain, and
Annual Report 2023 | Mercedes-Benz Group
- amounts expected to be payable under residual-
value guarantees;
- fixed payments including de facto fixed payments
less lease incentives receivables from the lessor;
Lease liabilities, which are assigned to financing liabili-
ties, are measured initially at the present value of the
lease payments still to be made. The lease liabilities
include the following lease payments:
Right-of-use assets, which are included under property,
plant and equipment, are initially recognized at cost.
The cost of a right-of-use asset comprises the amount
of the initial measurement of the lease liability, any
lease payments made at or before the commencement
date, any initial direct costs and an estimate of costs to
be incurred in dismantling or removing the underlying
asset. All leasing incentives already received from the
lessor are deducted.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
212
Corporate Governance
Combined Management Report
To Our Shareholders
- variable lease payments linked to an index or interest
rate;
Stage 1: expected credit losses within the next twelve
months
The recoverable amount is the higher of fair value less
costs of disposal and value in use. For cash-generating
units, the Mercedes-Benz Group in a first step deter-
mines the respective recoverable amount as value in
use and compares it with the respective carrying
amount (including goodwill). If value in use is lower
than the carrying amount, fair value less costs of dis-
posal is additionally calculated to determine the recov-
erable amount.
Impairment of financial assets
contract between Mercedes-Benz Mobility and the end
customer constitutes a sublease in this respect.
Accounting for and classification of a sublease depend
on whether the contracts were concluded before or
after the legal spin-off and hive-down of Daimler's
commercial vehicle business. The leases that were
concluded before the legal spin-off and hive-down are
continued as operating leases. The head lease is pre-
sented under equipment on operating leases as a right
of use, which was recognized at fair value at the spin-
off date and subsequently depreciated on a straight-
line basis. In addition, a residual-value receivable from
the companies of the Daimler Truck Group is recog-
nized. However, the leasing contracts concluded after
the legal spin-off and hive-down are classified and
accounted for as finance leases. The net investment in
the lease corresponds to the right-of-use asset from
the head lease. In addition to the finance lease, Mer-
cedes-Benz Mobility recognizes a residual-value re-
ceivable from the Daimler Truck Group in the amount
of the guaranteed residual value. The head lease is not
recorded separately.
Impairment of non-current non-financial assets
The Mercedes-Benz Group assesses at each reporting
date whether there is an indication that an asset may
be impaired or whether there is an indication that a
previously recognized impairment loss may be re-
versed. If such indication exists, the Mercedes-Benz
Group estimates the recoverable amount of the asset.
The recoverable amount is determined for each indi-
vidual asset unless the asset generates cash inflows
that are not largely independent of those from other
assets or other groups of assets (cash-generating
units).
An assessment is made at each reporting date as to
whether there is any indication that previously recog-
nized impairment losses may no longer exist or may be
reversed. If this is the case, the Mercedes-Benz Group
records a partial or entire reversal of the impairment;
the carrying amount is thereby increased to the recov-
erable amount. However, the increased carrying
amount may not exceed the carrying amount that
would have been determined (net of scheduled depre-
ciation) if no impairment loss had been recognized in
prior years.
Goodwill and other intangible assets with indefinite
useful lives are tested at least annually for impairment.
This takes place at the level of the cash-generating
units. The cash-generating units Mercedes-Benz Cars
and Mercedes-Benz Vans basically correspond to the
segments. At Mercedes-Benz Mobility, impairment
testing is carried out below segment level. A distinction
is made between the two cash-generating units Mer-
cedes-Benz Mobility Classic (traditional financial ser-
vices business) and Charging Solutions (development
of a high-power charging network). As the Charging
Solutions cash-generating unit had neither goodwill nor
other intangible assets with indefinite useful lives in
2023 and there was no indication of impairment in
2023, it was not necessary to calculate the recoverable
amount.
If it is determined that the carrying amount of an asset
or of a cash-generating unit exceeds the recoverable
amount, an impairment loss is recognized for the dif-
ference.
Contents
Further Information
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Value in use is measured by discounting expected fu-
ture cash flows from the continuing use of the cash-
generating units using a risk-adjusted interest rate.
Future cash flows are determined on the basis of the
long-term planning, which is approved by management
and which is valid at the date when the impairment test
is conducted. This planning, which covers the period up
to and including 2028, is based on assumptions, in-
cluding those regarding future sales volumes, the gen-
eral development of the respective markets and the
profitability of the products, taking into account the
effects of the transformation of the automotive indus-
try and the expected macroeconomic developments.
In the detailed planning period, an overall moderate
increase in unit sales and revenue is assumed for the
cash-generating units Mercedes-Benz Cars and Mer-
cedes-Benz Vans, with a significant increase in the
proportion of electric vehicles. Based on the sales
planning of the cash-generating units Mercedes-Benz
Cars and Mercedes-Benz Vans, the planning of the
cash-generating unit Mercedes-Benz Mobility Classic
assumes an increase in the portfolio in the detailed
planning period. The assumptions used for planning are
checked for plausibility both against historical devel-
opments and against external sources of information
(e.g. market studies). The rounded, risk-adjusted inter-
est rates determined specifically for the respective
cash-generating unit and used to discount the cash
flows are 9.5% (2022: 9%) after taxes for the Mer-
cedes-Benz Cars and Mercedes-Benz Vans cash-
generating units. A risk-adjusted interest rate of 10%
(2022: 10%) after taxes is used for the Mercedes-Benz
Mobility Classic cash-generating unit. While the dis-
count rate for the Mercedes-Benz Mobility Classic
cash-generating unit represents the cost of equity, the
risk-adjusted interest rate for the Mercedes-Benz Cars
and Mercedes-Benz Vans cash-generating units is
based on the weighted average cost of capital (WACC).
This is calculated based on the capital asset pricing
model (CAPM), taking into account current market ex-
pectations. In calculating the risk-adjusted interest rate
for impairment-test purposes, specific peer group in-
formation is used for beta factors, capital-structure
data and cost of debt. Periods not covered by the fore-
cast are taken into account by recognizing a residual
value (terminal value), which does not include any
growth rates. When deriving the terminal value, as-
sumptions regarding the effects of the transformation
of the automotive industry are also taken into account,
analogous to the detailed planning period. When deriv-
ing the value in use, a risk assessment is also carried
out for both the detailed planning period and the ter-
minal value, which includes, for example, market risks
as well as risks resulting from legal and political
framework conditions (e.g. in connection with sustaina-
bility aspects). This risk assessment shows for the rele-
vant cash-generating units that even in the case of
reasonably possible changes in operational key as-
sumptions (e.g. profitability of the products, unit sales
and portfolio) compared to the original planning, no
need for impairment exists. While the recoverable
amount of the Mercedes-Benz Cars and Mercedes-
Benz Vans cash-generating units significantly exceeds
the carrying amount, the recoverable amount of the
Mercedes-Benz Mobility Classic cash-generating unit is
close to the carrying amount. In addition, sensitivity
analyses are carried out (e.g. with regard to the dis-
count rate). The carrying amount of the Mercedes-Benz
Mobility Classic cash-generating unit would exceed the
recoverable amount if, in addition to a change in opera-
tional key assumptions, the cost of equity were to in-
crease slightly.
Annual Report 2023 | Mercedes-Benz Group
Contents
215
To Our Shareholders
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
At each reporting date, an impairment is recognized for
financial assets, loan commitments and financial guar-
antees other than those to be measured at fair value
through profit or loss reflecting expected credit losses
for these instruments. Impairments are allocated using
a three stage approach to expected credit losses:
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
The Mercedes-Benz Group as lessor (equipment on
operating leases)
Based on the risks and rewards associated with a
leased asset, it is assessed whether economic owner-
ship of the leased asset is transferred to the lessee
(finance leases) or remains with the lessor (operating
leases).
For operating leases the economic ownership of the
vehicle remains at the Mercedes-Benz Group. Addition-
ally, an operating lease may have to be reported with
sales of vehicles for which the Group enters into a
repurchase obligation.
- Sales of vehicles by which the Mercedes-Benz Group
is obliged to repurchase the vehicles in the future are
accounted for as operating leases. This also applies
to a call option that only grants the Mercedes-Benz
Group the right to repurchase.
Corporate Governance
- Sales of vehicles including a put option (an entity's
obligation to repurchase the asset at the customer's
request) are reported as operating leases if the cus-
tomer has a significant economic incentive to exer-
cise that right. Otherwise, a sale with a right of return
is reported. The Mercedes-Benz Group considers
several factors when assessing whether a customer
has a significant economic incentive to exercise his
or her right at contract inception. Among others,
these are the relation between the repurchase price
As part of the residual-value management process,
especially for operating lease contracts, certain as-
sumptions are regularly made regarding the expected
level of prices, based upon which the cars to be re-
turned in the leasing business are evaluated. If chang-
ing market developments at the balance sheet date
lead to a negative deviation from previously estimated
assumptions, the residual value must be adjusted or an
impairment carried out. Depending on the region and
the current market situation, the risk-mitigation
measures taken generally include continuous market
monitoring as well as, if required, price-setting strate-
gies or sales-promotion measures designed to regulate
vehicle inventories. Market forecasts are verified by
regular comparisons of internal and external sources,
and, if required, the determination of residual values is
adjusted and further developed with regard to meth-
ods, processes and systems.
In the case of accounting as an operating lease, these
vehicles are capitalized at the (amortized) cost of pro-
duction under equipment on operating leases and are
depreciated over the contract term on a straight-line
basis with consideration of the expected residual val-
ues. Changes in the expected residual values lead ei-
ther to prospective adjustments of the scheduled de-
preciation or, if necessary, to an impairment loss. The
vehicles are allocated to the segment which bears sub-
stantially all of the residual-value risk.
Operating leases also relate to vehicles, primarily
Group products that Mercedes-Benz Mobility acquires
from non-Group dealers or other third parties and
leases to end customers. These vehicles are presented
at (amortized) cost of acquisition under equipment on
operating leases in the Mercedes-Benz Mobility seg-
ment. If these vehicles are Group products and are
subsidized and these subsidies are passed on in the
lease agreement with the external customer, the subsi-
dies are deducted from the acquisition cost. After rev-
enue is received from the sale to independent dealers,
these Group products generate revenue from lease
payments and subsequent resale on the basis of the
separate leasing contracts.
In the case of finance leases, the Group presents the
receivables under receivables from financial services in
an amount corresponding to the net investment of the
lease agreements. The net investment of a lease
agreement is the gross investment (future lease pay-
ments and non-guaranteed residual value) discounted
at the rate upon which the lease agreement is based.
Mercedes-Benz Mobility continues the leasing and
sales-financing business for Daimler Truck's commer-
cial vehicles in some markets. To this end, Mercedes-
Benz Mobility acquires these vehicles from Daimler
Truck and leases them to the end customers. Insofar as
a mandatory vehicle return to Daimler Truck has been
agreed, a leasing contract (head lease) between Mer-
cedes-Benz Mobility and Daimler Truck is shown. The
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
214
and the expected future market value (at the time of
repurchase) of the asset, or historical return rates.
216
Annual Report 2023 | Mercedes-Benz Group
Corporate Governance
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity. Financial instru-
ments in the form of financial assets and financial lia-
bilities are generally presented separately. Financial
instruments are recognized as soon as the Mercedes-
Benz Group becomes a party to the contractual provi-
sions of the financial instrument. In the case of pur-
chases or sales of financial assets through the regular
market, the Mercedes-Benz Group uses the transaction
date as the date of initial recognition or derecognition.
Financial instruments
In the case of manufactured inventories and work in
progress, manufacturing cost also includes production
overheads based on normal capacity.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
217
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Inventories are measured at the lower of acquisition or
manufacturing cost and net realizable value. The net
realizable value is the expected sales price less esti-
mated costs of completion and estimated costs to sell.
The acquisition or manufacturing costs of inventories
are generally based on the specific identification meth-
od and include costs incurred in acquiring the invento-
ries and bringing them to their present location and
condition. Acquisition or manufacturing costs for large
numbers of inventories that are interchangeable are
allocated under the average-cost formula.
Inventories
The Group classifies non-current assets or disposal
groups as held for sale if the carrying amount will be
recovered principally through an extremely likely sale
transaction rather than through continuing use. In this
case, the assets or disposal groups are no longer de-
preciated as planned, but are measured at the lower of
carrying amount and fair value less costs to sell. Imme-
diately before classification as held for sale, it is as-
sessed if the assets are impaired based on the applica-
ble individual regulations. If fair value less costs to sell
subsequently increases, any impairment loss previously
recognized is reversed. This reversal is restricted to the
impairment loss previously recognized for the assets or
disposal group concerned.
Non-current assets and disposal groups
held for sale
Upon initial recognition, financial instruments are
measured at fair value. For the purpose of subsequent
measurement, financial instruments are allocated to
one of the categories mentioned in IFRS 9 Financial
Instruments (financial assets measured at amortized
cost, financial assets measured at fair value through
other comprehensive income and financial assets
measured at fair value through profit or loss). Transac-
tion costs directly attributable to acquisition or issu-
ance are considered when determining the carrying
amount if the financial instruments are not measured at
fair value through profit or loss.
Financial assets
Financial assets primarily comprise receivables from
financial services, trade receivables, receivables from
banks, cash on hand, derivative financial assets, mar-
ketable securities and similar investments and financial
investments.
The classification of financial instruments is based on
the business model in which these instruments are
held and on their contractual cash flows.
Cash and cash equivalents consist primarily of cash on
hand, cheques and demand deposits at banks, as well
as debt instruments and certificates of deposits with a
remaining term when acquired of up to three months,
which are not subject to any material value fluctua-
tions. Cash and cash equivalents correspond with the
classification in the Consolidated Statement of Cash
Flows.
Financial assets at amortized cost
Financial assets at amortized cost are non-derivative
financial assets with contractual cash flows that consist
solely of payments of principal and interest on the
nominal amount outstanding and which are held with
the aim of collecting the contractual cash flows, such
as receivables from financial services, trade receiva-
bles or cash and cash equivalents (business model
"hold to collect"). After initial recognition, these finan-
cial assets at amortized cost are subsequently carried
at amortized cost using the effective-interest method
less any loss allowances. Gains and losses are recog-
nized in the Consolidated Statement of Income when
the financial assets at amortized cost are impaired or
derecognized. Interest effects from the application of
the effective-interest method are also recognized in
profit or loss as well as effects from foreign currency
translation.
After initial measurement, financial assets at fair value
through other comprehensive income are recognized at
fair value, with unrealized gains or losses being recog-
nized in other comprehensive income/loss. Upon the
disposal of debt instruments, the accumulated gains
and losses recognized in other comprehensive in-
come/loss resulting from measurement at fair value are
recognized in profit or loss. Interest earned on financial
assets at fair value through other comprehensive in-
come is generally reported as interest income using the
effective-interest method. Changes in the fair value of
equity instruments measured at fair value through oth-
er comprehensive income are not recycled to profit or
loss, but reclassified to retained earnings upon dispos-
al. Dividends are recognized in profit or loss when the
right to payment has been established.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
Gains or losses to be eliminated from transactions with
companies accounted for using the equity method are
recognized through profit and loss with corresponding
adjustments of the investments' carrying amounts.
Gains or losses from the contribution of interests in
subsidiaries to investments which are measured using
the equity method are also subject to elimination ad-
justments to the carrying amount of the investment.
218
Combined Management Report
Annual Report 2023 | Mercedes-Benz Group
Financial assets at fair value through other comprehen-
sive income are non-derivative financial assets with
contractual cash flows that consist solely of payments
of principal and interest on the nominal amount out-
standing and which are held to collect the contractual
cash flows as well as to sell the financial assets, e.g. to
achieve a defined liquidity target (business model "hold
to collect and sell"). This category also includes equity
instruments not held for trading for which the option to
recognize changes in the fair value of the instrument
within other comprehensive income has been applied.
Financial assets at fair value through other
comprehensive income
In addition, derivatives, including embedded deriva-
tives separated from the host contract, which are not
classified as hedging instruments in hedge accounting,
as well as shares and marketable debt securities ac-
quired for the purpose of selling in the short term that
are classified as held for trading, are included here.
Gains or losses on these financial assets are recognized
in profit or loss.
Financial assets at fair value through profit or loss
Financial assets recognized at fair value through profit
or loss include financial assets with cash flows other
than those of principal and interest on the nominal
amount outstanding. Furthermore, financial assets that
are held in a business model other than "hold to col-
lect" or "hold to collect and sell" are included here.
The determination of the business model is carried out
at the portfolio level and is based on management's
intention and past transaction patterns. Assessments
of the contractual cash flows are made on an instru-
ment-by-instrument basis.
To Our Shareholders
there is objective evidence for an impairment reversal.
If such an assessment is made, the recoverable amount
is remeasured. An impairment reversal is recognized to
the extent that the recoverable amount has increased
subsequent to the impairment and is limited to the
amount by which an asset has been impaired.
Contents
ue.
On the date of acquisition, a positive difference be-
tween cost of acquisition and the Mercedes-Benz
Group's share of the fair values of the identifiable as-
sets and liabilities of the associated company or joint
venture is determined and recognized as investor level
goodwill. The goodwill is included in the carrying
amount of the equity-method investment. If an equity
interest in an existing associated company is increased
without change in significant influence, goodwill is
determined only for the additionally acquired interest;
the previous investment is not remeasured at fair val-
The initial recognition of interests in investments ac-
counted for using the equity method is generally made
with their acquisition costs. If the Group loses control
of a subsidiary and subsequently presents it at equity,
the fair value of the retained shares represents the
acquisition cost.
Equity-method investments
Further Information
The Mercedes-Benz Group reviews on each reporting
date whether there is any objective indication of im-
pairments or impairment reversals of equity-method
investments. If such indications exist, the Group de-
termines the impairment loss or reversal to be recog-
nized. If the carrying amount exceeds the recoverable
amount of an investment, the carrying amount is writ-
ten down to the recoverable amount. The recoverable
amount is the greater of fair value less costs to sell and
value in use. An impairment reversal is carried out if
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
The Group provides various types of product warran-
ties, depending on the type of product and market
conditions. Provisions for product warranties (carrying
amount as of 31 December 2023: €6,399 million;
31 December 2022: €6,576 million) are generally recog-
nized at the time of vehicle sale. In order to determine
the extent of these provisions, assumptions have to be
made concerning the type and extent of future warran-
ty claims and goodwill cases, as well as on possible
recall campaigns for each model series. These assess-
ments are based on experience of the frequency and
extent of vehicle faults and defects in the past. In addi-
tion, the estimates also include assumptions on the
amounts of potential repair costs per vehicle and the
effects of possible time or mileage limits. The provi-
sions are regularly adjusted to reflect new information.
Liability and litigation risks and governmental
proceedings
Various legal proceedings, claims and governmental
investigations are pending against Mercedes-Benz
Group AG and its subsidiaries on a wide range of top-
ics. If the outcome of such legal proceedings is detri-
mental to the Mercedes-Benz Group, the Group may be
required to pay substantial compensatory and punitive
damages, to undertake service actions or recall cam-
paigns, to pay fines or to carry out other costly actions.
Litigation and governmental investigations often in-
volve complex legal issues and are connected with a
high degree of uncertainty. Accordingly, the assess-
ment of whether an obligation exists on the balance
sheet date as a result of an event in the past, and
whether a future cash outflow is likely and the obliga-
tion can be reliably estimated, largely depends on es-
timations by the management. The Mercedes-Benz
Group regularly evaluates the current stage of legal
proceedings, also with the involvement of external
legal counsel. It is therefore possible that the amounts
of provisions for pending or threatened proceedings
will have to be regularly restated due to new expected
developments. As of 31 December 2023, the carrying
amounts of provisions for liability and litigation risks
are €2,104 million (31 December 2022: €2,755 million).
Changes in estimates and assumptions can have a ma-
terial effect on the Group's future profitability, liquidity
and capial resources and financial position. It is also
possible that provisions recognized for some legal
proceedings may turn out to be insufficient once such
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
228
Combined Management Report
Corporate Governance
Notes to the Consolidated Financial Statements
Further Information
Product warranties
proceedings have ended. The Mercedes-Benz Group
may also become liable for payments in legal proceed-
ings for which no provisions were established. Although
the final resolution of any such proceedings could have
a material effect on the Mercedes-Benz Group's earn-
ings and cash flows for a particular reporting period,
from the current assessment, the Mercedes-Benz
Group does not expect this to result in any sustained
impact on the Group's financial position.
Pensions and similar obligations
The calculation of provisions for pensions and similar
obligations and the related pension cost are based on
various actuarial valuations. The calculations are sub-
ject to various assumptions on matters such as current
actuarially developed probabilities (e.g. discount fac-
tors and cost-of-living increases), future fluctuations
with regard to age and period of service, and experi-
ence with the probability of occurrence of pension
payments, annuities or lump sums. As a result of
changed market or economic conditions, the probabili-
ties caused by the influencing factors may differ from
current developments. The financial effects of devia-
tions of the main factors are calculated with the use of
sensitivity analyses. As of 31 December 2023 provisions
for pensions and similar obligations are €1,090 million
(31 December 2022: €1,021 million).
Income taxes
The calculation of income taxes of Mercedes-Benz
Group AG and its subsidiaries is based on the legisla-
tion and regulations applicable in the various countries.
Due to their complexity, the tax items presented in the
Consolidated Financial Statements are possibly subject
to different judgements by taxpayers on the one hand
and local tax authorities on the other hand. Different
judgements can occur especially in connection with the
recognition and measurement of balance sheet items
as well as in connection with the tax assessment of
expenses and income. Carrying amount of liabilities for
income taxes as of 31 December 2023 are €2,421 mil-
lion (31 December 2022: €2,648 million).
Annual Report 2023 | Mercedes-Benz Group
Consolidated Financial Statements
The Group regularly estimates the risk of default on
receivables from financial services (carrying amount as
of 31 December 2023: €88,211 million; 31 December
2022: €85,549 million). Many factors are taken into
consideration in this context including historical loss
experience, the size and composition of certain portfo-
lios, current economic events and conditions and the
current fair values and adequacy of collaterals. In addi-
tion to historical and current information on losses,
appropriate and reliable forward-looking information
on factors is also included. This information includes
macroeconomic factors (e.g. gross domestic product
growth, unemployment rate, cost performance index)
and forecasts of future economic conditions. For re-
ceivables from financial services, these forecasts are
performed using a scenario analysis (basic scenario,
optimistic scenario and pessimistic scenario). Further
external information which cannot be depicted in the
scenarios, is - as far as necessary - included in the
assessment through subsequent adjustments. Changes
to the estimation and assessment of these factors in-
fluence the allowance for credit losses with a resulting
impact on the Group's net profit.
Further Information
Notes to the Consolidated Financial Statements
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
2. Accounting estimates and
management judgements
In the Consolidated Financial Statements, it is to a
certain degree necessary to make estimates and man-
agement judgements which can affect the amounts and
reporting of assets and liabilities, the reporting of con-
tingent assets and liabilities on the balance sheet date,
and the income and expense reported for the period.
The major items affected by such estimates and man-
agement judgements are described as follows. Actual
amounts may differ from the estimates. Changes in the
estimates and management judgements can have a
material impact on the Consolidated Financial State-
ments.
Recoverable amounts of cash-generating units and
equity-method investments
In the context of impairment tests for non-financial
assets, estimates have to be made to determine the
recoverable amounts of cash-generating units. As-
sumptions have to be made in particular with regard to
future cash inflows and outflows for the planning peri-
od and the following periods. The estimates mainly
refer to future unit sales, growth in the respective mar-
kets and the profitability of the products, which are
also highly dynamic and thus uncertain as a result of
the transition to electric mobility. Therefore, a risk as-
sessment and sensitivity analyses are performed when
deriving the value in use. On the basis of the impair-
ment tests carried out in 2023, the recoverable
amounts are larger than the net assets of the Group's
cash-generating units.
Collectability of receivables from financial services
When objective evidence of impairment or impairment
reversal is present, estimates and assessments also
have to be made to determine the recoverable amount
of an equity-method investment. The determination of
the recoverable amount is based on assumptions re-
garding future business developments for the determi-
nation of the expected future cash flows of that in-
vestment. On the balance sheet date, the carrying
amount of equity-method investments was €13,104
million (31 December 2022: €13,530 million).
The Mercedes-Benz Group regularly reviews the factors
determining the values of its leased vehicles (carrying
amount as of 31 December 2023: €41,712 milllion;
31 December 2022: €41,552 million). In particular, it is
necessary to estimate the residual values of vehicles,
which constitute a substantial part of the expected
future cash flows from equipment on operating leases.
In this context, assumptions are made regarding major
influencing factors, such as the expected number of
returned vehicles, the latest remarketing results and
future vehicle model changes. Those assumptions are
determined either by qualified estimates or by publica-
tions provided by expert third parties. Qualified esti-
mates are based, as far as publicly available, on exter-
nal data with consideration of internally available addi-
tional information such as historical experience of price
developments and sale prices. The residual values thus
determined serve as a basis for depreciation; changes
in residual values lead either to prospective adjust-
ments of the depreciation or, in the case of a signifi-
cant decline in expected residual values, to an impair-
ment. If depreciation is prospectively adjusted, chang-
es in estimates of residual values do not have a direct
effect but are equally distributed over the remaining
term of the lease contract.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
227
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Contents
Recoverable amount of equipment on
operating leases
To Our Shareholders
Corporate Governance
229
27
26
64
63
214
201
48
50
262
251
Consolidated subsidiaries
International
Germany
The aggregate totals in the statement of financial posi-
tion of the subsidiaries, associated companies, joint
ventures and joint operations accounted for at amor-
tized cost whose business is non-active or of low vol-
ume and which are not material for the Group and the
fair presentation of its profitability, liquidity and capital
resources, and financial position would amount at most
1% of the Group's total assets; the aggregate revenue
and the aggregate net profit would amount at most 1%
of the Group's revenue and net profit.
The following table shows the composition of the
Group. A detailed list of the companies included in the
Consolidated Financial Statements and of the equity
investments of the Mercedes-Benz Group pursuant to
Section 313 of the German Commercial Code (HGB) is
provided in the statement of investments. Further in-
formation is provided in Note 41.
Composition of the Group
At the reporting date, the Group has business relation-
ships with 34 (2022: 33) controlled structured entities,
of which all are fully consolidated. In addition, as in the
previous year the Group has relationships with one
non-controlled structured entity.
The structured entities of the Group are mainly asset-
backed-securities (ABS) companies and special funds.
The ABS companies are primarily used for the Group's
refinancing. The receivables transferred to structured
entities usually result from the leasing and sales-
financing business. Those entities refinance the pur-
chase price by issuing securities. The special funds are
set up in particular in order to diversify the capital-
investment strategy.
226
37
37
Unconsolidated subsidiaries
Germany
International
Combined Management Report
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
3. Consolidated Group
Composition of the Group
At 31 December
2023
2022
1
8
The overall number of subsidiaries has decreased
slightly. Consolidated subsidiaries and an equity-
method associated company were established for the
charging activities of electric vehicles. The main dis-
posals are described in the following sections.
7
Joint ventures accounted for
using the equity method
1
1
-
1
International
Germany
Joint operations accounted for
using proportionate consolidation
Structured entities
To Our Shareholders
Provisions are recognized when a obligation to third
parties has been incurred, an outflow of resources is
probable and the amount of the obligation can be rea-
sonably estimated. The amount recognized as a provi-
sion represents the best estimate of the obligation at
the reporting date. Provisions with an original maturity
of more than one year are discounted to the present
value of the expenditures expected to settle the obli-
gation at the end of the reporting period.
Annual Report 2023 | Mercedes-Benz Group
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
value are then deferred in other comprehensive income
under IFRS 9. This may apply for example to the time
value of options, the forward element of a forward
contract or cross-currency basis spreads.
Hedge relationships are to be discontinued prospec-
tively if a particular hedge relationship ceases to meet
the qualifying criteria for hedge accounting under IFRS
9. Instances that require discontinuation of hedge ac-
counting are, among others, changes to the designated
hedged item, loss of the economic relationship be-
tween the hedged item and the hedging instrument,
disposal or termination of the hedging instrument, or a
revision of the documented risk-management objective
of a particular hedge relationship. Accumulated hedg-
ing gains and losses from cash flow hedges are re-
tained and are reclassified from equity as described at
maturity if the hedged future cash flows are still ex-
pected to occur. Otherwise, accumulated hedging gains
and losses are immediately reclassified to profit or
loss.
If derivative financial instruments do not or no longer
qualify for hedge accounting because the qualifying
criteria for hedge accounting are not or are no longer
met, the derivative financial instruments are classified
as held for trading and are measured at fair value
through profit or loss.
Pensions and similar obligations
Germany
The measurement of defined benefit commitments for
pensions and other similar post-employment benefits
(healthcare benefits) in accordance with IAS 19 Em-
ployee Benefits is based on the projected unit-credit
method. Plan assets invested to cover defined benefit
pension commitments and other post-employment
benefit obligations are measured at fair value and off-
set against the corresponding obligations.
The balance of defined benefit commitments for pen-
sions and other post-employment benefit obligations
and plan assets (net pension obligation or net pension
assets) accrues interest at the discount rate used as a
basis for the measurement of the gross pension obliga-
tion. The resulting net interest expense or income is
recognized in profit and loss under interest expense or
interest income in the Consolidated Statement of In-
come. The other expenses resulting from pension
commitments and other post-employment benefit obli-
gations, which mainly result from entitlements acquired
during the year under review, are taken into considera-
tion in functional costs in the Consolidated Statement
of Income. Differences between the assumptions made
and actual developments as well as changes in actuari-
al assumptions for the measurement of defined benefit
plans and similar obligations result in actuarial gains
and losses, which are recognized in equity through
other comprehensive income.
The discount factors used to calculate the present
values of defined benefit pension obligations are to be
determined - with maturities and currencies matching
the pension payments - by reference to market yields
at the end of the reporting period on high-quality fixed-
rate corporate bonds in the respective markets. For
very long maturities, there are no high-quality corpo-
rate bonds available as a benchmark. The respective
discount factors are estimated by extrapolating current
market rates along the yield curve.
Gains or losses on the curtailment or settlement of a
defined benefit plan are recognized in profit or loss
when the curtailment or settlement occurs.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
223
Combined Management Report
Corporate Governance
222
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
221
Further Information
Contracts for the purchase or sale of non-financial
items are regularly qualified as executory contracts and
thus treated as suspended transactions, although they
fulfil the definition of a derivative. If such contracts do
not meet the criteria for executory contracts they are
recorded as derivatives. These derivatives are meas-
ured at fair value through profit or loss. The valuation
effects are reported in the functional costs, in which
the consumption of the procured non-financial items
(e.g. energy) is reported.
Embedded derivatives are principally separated from
the host contract and recognized separately. However,
embedded derivatives are not separated from the host
contract if that host contract is a financial asset, if the
Mercedes-Benz Group chooses to measure a hybrid
contract at fair value through profit or loss, or if the
embedded derivative is closely related to the host
contract.
Derivative financial instruments are measured at fair
value upon initial recognition and at each subsequent
reporting date. The fair value of listed derivatives is
equal to their positive or negative market value. If a
market value is not available, fair value is calculated
using standard financial valuation models such as dis-
counted cash flow or option-pricing models. Deriva-
tives are recognized as assets if their fair value is posi-
tive and as liabilities if their fair value is negative.
If the requirements for hedge accounting set out in
IFRS 9 are met, the Mercedes-Benz Group designates
and documents the hedge relationship from the date a
derivative contract is entered into as a fair-value
hedge, a cash flow hedge or a hedge of a net invest-
ment in a foreign business operation. In a fair-value
hedge, the changes in the fair value of a recognized
asset or liability or an unrecognized firm commitment
are hedged. In a cash flow hedge, highly probable fu-
ture cash flows from expected transactions or variable
cash flows to be paid or received related to a recog-
nized asset or liability are hedged. The documentation
of the hedging relationship includes the objectives and
strategy of risk management, the type of hedging rela-
tionship, the nature of the risk being hedged, the iden-
tification of the eligible hedging instrument and the
eligible hedged item, as well as an assessment of the
effectiveness requirements comprising the risk mitigat-
ing economic relationship, the absence of deteriorating
effects from credit risk and the appropriate hedge ra-
tio. The effectiveness of the hedge is assessed at the
start of and during the hedging relationship.
Changes in fair value of non-designated derivatives are
recognized in profit or loss. For fair-value hedges,
changes in the fair value of derivative financial instru-
ments and the hedged item are recognized in profit or
loss. For cash flow hedges, fair-value changes in the
effective portion of derivative financial instruments are
recognized after tax in other comprehensive income.
Effects from hedging are presented in the item of the
Statement of Income in which the underlying transac-
tion is effective.
Under IFRS 9, for cash flow hedges in procurement
transactions expected with a high degree of probabil-
ity, designation can be made for separable risk compo-
nents of these non-financial hedged items.
Under IFRS 9, with cash flow hedges, amounts recog-
nized in other comprehensive income as effective
hedging gains or losses from hedging instruments are
removed from the reserves for derivative financial in-
struments and directly included in the initial cost or
carrying amount of the hedged item at initial recogni-
tion if the hedged item, e.g. the forecast transaction,
results in the recognition of a non-financial asset or
non-financial liability.
For other cash flow hedges, the accumulated hedging
gains or losses from hedging instruments are reclassi-
fied from the reserves for derivative financial instru-
ments to the Consolidated Statement of Income when
the hedged item affects profit or loss. Insofar as cur-
rency translation effects recognized in profit or loss
due to trade receivables and payables are connected
with the underlying hedged transactions, simultaneous-
ly occurring hedging gains/losses are reclassified in the
Consolidated Statement of Income.
The ineffective portions of fair-value changes are rec-
ognized directly in profit or loss.
For derivative instruments designated in a hedge rela-
tionship, certain components can be excluded from
designation and the changes these components' fair
Contents
Further Information
Provisions for other risks
If the recognition criteria of provisions are not fulfilled
and the possibility of a cash outflow upon settlement is
not unlikely, the item is to be presented as a contingent
liability, insofar as it is adequately measurable. The
amount disclosed as a contingent liability represents
the best estimate of the possible obligation at the re-
porting date. Provisions and contingent liabilities are
regularly reviewed and adjusted as further information
becomes available or circumstances change.
With "Ambition 2039" the Mercedes-Benz Group has
set itself the target of net carbon-neutrality¹ for the
new vehicle fleet by 2039 in its business strategy. The
Mercedes-Benz Group is aiming to shape the transfor-
mation into a software-driven and all-electric future.
The Group is creating the necessary conditions to be-
come all-electric. The pace of the transformation is
determined by market conditions and the wishes of
customers. Recognition and measurement of the
Group's assets and liabilities take into account climate-
related risks and developments associated with the
transformation, which also include the climate targets
set in the Paris Climate Agreement.
Accounting estimates and management judgements in
connection with sustainability-related aspects are tak-
en into consideration in particular in the accounting of
assets and liabilities described below:
The determination and review of the useful lives of the
capitalized development costs are based on the ex-
pected product life cycle. Changes in the originally
envisaged product life cycles can result from the trans-
formation to all-electric vehicles. Due to the resolu-
tions regarding the accelerated transformation new
developments in the area of conventional powertrains
are reduced and already capitalized development ex-
penditure will partly be used for longer.
In the same way, the useful lives of property, plant and
equipment assets are regularly reviewed in the light of
the transformation to all-electric vehicles. This did not
require any material adjustments of the useful lives up
to the reporting date as the production facilities of the
Group are basically flexible in use.
In the context of production network management,
efforts are also being made to secure sites affected by
the transformation by enhancing them. No significant
obligations to dismantle or remove production facilities
and plants that would give rise to a provision existed
on the reporting date.
1 Net carbon-neutral means that no CO2 emissions are created or any resulting CO2
emissions are offset by certified compensation projects.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
The recoverability of leased vehicles classified as oper-
ating leases is reviewed regularly. When determining
recoverability, the expected residual value of the
leased vehicles is particularly relevant. Due to the
transformation to all-electric vehicles, residual values
can be influenced by changing customer behavior, new
regulatory requirements and further technological de-
velopments. Although the currently expected residual
values of all-electric vehicles were lower than originally
expected, no significant impairment losses were re-
quired for conventionally powered or all-electric vehi-
cles in the reporting year.
The expected proceeds from the disposal of vehicles
pledged as collateral were taken into account in the
determination of expected credit losses for receivables
from financial services. The expected proceeds from
the disposal were based on an estimate of the market
value at the expected time of a possible default. There
were no indications of a reduction of these estimated
market values that could be traced to effects of climate
change or of changing customer behaviour as of the
reporting date.
In addition to traditional energy supply contracts,
which are usually only recorded as pending transac-
tions upon delivery, the Group has concluded contracts
to secure purchase quantities and prices for renewable
energies (in particular electricity from wind and solar
energy). These are contracts that provide for a fixed
remuneration per unit of energy and are mainly recog-
nized either as derivatives or leases.
The impairment test on the level of the cash-generating
units is based on the corporate planning and strategy
of the Mercedes-Benz Group. This provides for a step
by step substitution of vehicles with combustion en-
gines by electric vehicles.
For the purposes of the impairment test, further risks
(e.g. sales risks, price risks and risks regarding the fu-
ture price of raw materials) were also taken into ac-
count. Additional corporate planning parameters in
connection with the transformation affect the invest-
ment requirements and the currently higher variable
costs of all-electric vehicles in comparison with vehi-
cles with conventional powertrains. The simultaneous
development, model refinement and production of
electric and conventionally powered vehicles results in
a high investment requirement, particularly in the detail
planning period until 2028. No growth was assumed in
the derivation of the terminal value, due in part to the
not yet completely predictable effects of the competi-
tive situation and customer behaviour in the course of
the transition to electric mobility. The impairment test
carried out taking into account the transformation ef-
fects described did not result in any impairment re-
quirement for the cash-generating units.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
225
Further Information
Consideration of sustainability related aspects in
connection with the recognition and measurement
of assets and liabilities
The cash flows from short-term marketable debt secu-
rities with high turnover rates and significant amounts
are offset and presented within cash flow from invest-
ing activities.
Cash-effective government grants are shown in cash
flow from operating activities. In addition, interest paid
as well as interest and dividends received are allocated
to cash flow from operating activities. To the extent
that the reverse factoring agreements entered into by
the Mercedes-Benz Group do not result in a change in
the presentation of the original trade payables, the
cash flows from these agreements are also presented
in cash flow from operating activities. Furthermore all
cash flows of receivables from financial services in the
Consolidated Statement of Cash Flows are also classi-
fied as cash flow from operating activities.
of Cash Flows
A provision for expected warranty costs is recognized
when a product is sold or when a new warranty pro-
gramme is initiated. Estimates for accrued warranty
costs are particularly based on historical experience.
Other assumptions include, but are not limited to, the
amount of potential repair costs. The provisions are
regularly adjusted to reflect new information.
Annual Report 2023 | Mercedes-Benz Group
Restructuring provisions are set up in connection with
programmes that materially change the scope of busi-
ness performed by a segment or business unit or the
manner in which business is conducted. In most cases,
restructuring expenses include termination benefits
and compensation payments due to the termination of
agreements with suppliers and dealers. Benefits on
termination of employment are recognized when the
Group has a detailed formal plan that has either com-
menced implementation or been announced.
Contract and refund liabilities
Contract liabilities
A contract liability is an entity's obligation to transfer
goods or services to a customer for which the entity
has received consideration (or the amount is due) from
the customer.
Refund liabilities
A refund liability occurs if the Mercedes-Benz Group
receives consideration from a customer and expects to
refund some or all of that consideration to the custom-
er. A refund liability is measured at the amount of con-
sideration received for which the Mercedes-Benz
Group does not expect to be entitled and is thus not
included in the transaction price.
Share-based payment
Contents
Share-based payment comprises cash-settled liability
awards.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
224
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Presentation in the Consolidated Statement
Liability awards are measured at fair value at each
balance sheet date until settlement and are classified
as provisions under consideration of vesting condi-
tions. The profit or loss of the period equals the addi-
tion to and/or the reversal of the provision during the
reporting period and the dividend equivalent paid dur-
ing the period, and is included in functional costs.
2
Further Information
International
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
230
Shares in subsidiaries
Sale of the shares in the Russian subsidiaries
On 2 March 2022, the Mercedes-Benz Group decided
to stop exporting cars and vans to Russia and to cease
local production in Russia until further notice. At the
end of October 2022, the Mercedes-Benz Group signed
contracts with the Russian car dealer Avtodom AO for
the sale of the shares in the Russian subsidiaries.
A degree of discretion has been exercised in the con-
sideration and subsequent derivation of the effects of
the sanctions and counter-sanctions on the business
activities.
The recognition and valuation of the assets and liabili-
ties due to the discontinuation of the business activi-
ties in Russia, in particular the processing of existing
transactions, resulted in expenses of around €0.7 bil-
lion in the automotive segments in 2022. Total expens-
es of around €0.2 billion resulted from the measure-
ment of credit default risks and increased refinancing
expenses in the segment Mercedes-Benz Mobility. The
bulk of the expenses were included in cost of sales.
As of 31 December 2022, completion of the transaction
was still subject to authorities' approval and the im-
plementation of the contractually agreed conditions.
With the closing of the transaction on 19 April 2023, the
shares of Russian subsidiaries were deconsolidated.
The sale of the Russian subsidiaries resulted in no
significant cash inflow. This led to a cash outflow in the
amount of the disposed cash and cash equivalents of
€91 million, which is mainly attributable to the Mer-
cedes-Benz Mobility segment.
The assets of €976 million disposed of with the decon-
solidation essentially include property, plant and
equipment of €290 million and receivables from finan-
cial services of €280 million. In addition, cash and cash
equivalents of €91 million are included. The disposed
liabilities of €1,065 million include in particular provi-
sions of €636 million and financing liabilities of €347
million. The Group had issued a global guarantee for
the financing liabilities to financial institutions, which
ended when the transaction was completed. The con-
tingent liabilities reported as of 31 December 2022 in
connection with the cessation of business activities in
Russia were also derecognized upon completion of the
transaction.
The transaction costs amounted to €3 million. After
realizing the currency reserve of €291 million, a loss on
disposal of €205 million resulted. This was reported in
other operating expenses. Expenses of €276 million
were attributable to the Mercedes-Benz Mobility seg-
ment; the Mercedes-Benz Cars and Mercedes-Benz
Vans segments generated income of €66 million and
€5 million, respectively.
Sale of Daimler's commercial vehicle business
With the completion of the spin-off and hive-down of
the Daimler commercial vehicle business substantial
parts of the former Daimler commercial vehicle busi-
ness including the associated financial services busi-
ness were deconsolidated on 9 December 2021.
The initially remaining financial services of the Daimler
commercial vehicle business were sold to Daimler
Truck Holding AG or its subsidiaries in 2022. At the
Mercedes-Benz Mobility segment, assets of €3,191 mil-
lion and liabilities of €746 million were disposed of on
or before 31 December 2022.
In addition, in individual countries, investments in op-
erating entities or business operations of the former
commercial vehicle business were sold to external third
parties in 2022. Assets of €149 million and liabilities of
€106 million, mainly allocated to the Mercedes-Benz
Cars segment, were disposed of on or before 31 De-
cember 2022.
Contents
The Group received €2,355 million from the (in the
prior year partially still preliminary) purchase prices in
2022, including the repayment of the existing intra-
Group financing liabilities of the companies and busi-
ness activities within the Mercedes-Benz Group.
Annual Report 2023 | Mercedes-Benz Group
361
5
Associated companies accounted for
using the equity method
10
11
3
4
7
7
Germany
International
Joint operations, joint ventures,
associated companies accounted
for at (amortized) cost and
substantial other investments
recognized at fair value
Germany
International
Total
29
24
16
13
13
11
370
The valuation and sale and the transfer of the Mer-
cedes-Benz Mobility companies resulted in net ex-
penses of €184 million in 2022 (excluding transaction
5
3
42,996
39,759
35,089
35,304
-82
-250
35,171
35,554
6,361
5,252
3,594
4,281
25,216
26,021
Other markets
985
1,091
142
136
7,401
6,955
80
86
1,599
1,744
5,722
Asia
5,125
109,795
2,961
Revenue according to IFRS 15
44,214
40,879
-9
-7
44,223
40,886
Other revenue
North America
49,304
53,849
-60
-42
Net interest expense on the net obligation
from defined benefit pension plans
Interest expense
340
108
-142
Interest and similar expense
368
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
231
income/expense, net
6,955
-212
-254
-3,146
-3,737
52,450
57,586
5,219
5,762
10,733
-367
Corporate Governance
237
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Due to the global increase in interest rates, net interest
income/expense improved in 2023.
Miscellaneous other financial income/expense mainly
includes net income (previous year: net expenses) from
the measurement of financial assets and liabilities.
-427
Combined Management Report
7,401
-5,755
19,944
5. Functional costs
Cost of sales
Cost of sales
In millions of euros
2023
2022
-7,022
Further Information
-7,360
2022
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
9. Income taxes
The following table shows the components of income
tax expense.
In millions of euros
Expense of goods sold
Reconciliation of expected income tax expense to actual income tax
expense
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Combined Management Report
-6,544
155,772
159,762
26,954
26,718
17,217
20,288
Corporate Governance
111,601
Total revenue
150,017
1 The reconciliation includes eliminations of intra-Group revenue between the segments.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
234
112,756
153,218
In millions of euros
2022
16,527
18,781
15,158
15,476
200
344
1,169
-2,550
136,008
-3,237
-3,994
139,245
140,981
11,796
11,242
17,017
136,987
2023
-2,518
14,009
Expected income tax expense
-5,990
-6,056
-102,416
Foreign tax-rate differential
238
311
16,231
Trade tax-rate differential
-22
Components of income tax expense
Tax-law changes
27
87
Further Information
2023
12
110,432
costs), which were reported in the reconciliation in the
segment reporting. Income of €32 million was realized
for the operating investments and business activities
disposed of in 2022, in particular in the Mercedes-Benz
Cars segment. In total, expenses from the realization of
the currency reserve of €58 million were recognized.
Sale of foreign retail activities and other
sales companies
4,539
9,724
9,945
19,247
19,179
137,942
134,673
Mercedes-Benz Vans
Mercedes-Benz Mobility
Central Functions & Services
Mercedes-Benz Cars³
2022
2023
Average number of employees 1,2
The average number of people employed in the report-
ing year are shown in the following table.
Personnel expenses included in the Consolidated
Statement of Income for 2023 amounted to
€16,633 million (2022: €16,501 million). Personnel ex-
penses comprise wages and salaries in the amount of
€13,848 million (2022: €13,684 million), social-security
contributions in the amount of €2,376 million (2022:
€2,239 million) and expenses from pension obligations
in the amount of €409 million (2022: €578 million).
Personnel expenses and average
number of employees
Research and non-capitalized development costs were
€6,230 million in 2023 (2022: €5,602 million) and pri-
marily comprise personnel expenses and material
costs.
Research and non-capitalized
development costs
General administrative expenses amounted to €2,688
million in 2023 (2022: €2,584 million). They consist of
expenses which are not attributable to production,
sales or research and development functions, and in-
clude personnel expenses, depreciation and amortiza-
tion of fixed and intangible assets, and other adminis-
trative costs.
General administrative expenses
In 2023, selling expenses amounted to €9,728 million
(2022: €9,482 million). Selling expenses consist of di-
rect selling costs as well as selling overhead expenses
and comprise personnel expenses, material costs and
other selling costs.
Selling expenses
4,469
168,336
171,382
1 Average number for the active workforce including holiday workers.
2 With the implementation of the European Sustainability Reporting Standards as of
2024, the number of employees becomes a further criterion for the inclusion of an
entity within the scope of consolidation. The average number of employees of non-
consolidated subsidiaries is 15,448 employees. They will therefore be included within
the scope of consolidation from the year 2024, but are not included in the above figure.
3 Proportionally including 2,345 (2022: 2,107) employees from a proportionately consoli-
dated company.
1,131
Income from costs recharged
Other operating expense
In 2022, the valuation and disposal of operating invest-
ments and business activities of the Mercedes-Benz
Mobility segment's commercial vehicle business
included net expense of €184 million (excluding
transaction costs), which was reported in the
reconciliation.
The loss of €205 million from the deconsolidation of
the shares in the Russian subsidiaries booked in other
operating expense in 2023 is mainly attributable to the
Mercedes-Benz Mobility segment.
Other miscellaneous expense also includes expenses
from hyperinflation accounting and other operating ex-
pense charged to third parties.
The composition of other operating expense is shown
as follows.
The decrease in other operating income in 2023 was
mainly due to the income from the sale of the retail
activities in Canada (€514 million) reported in the com-
parative period. It is included in gains on sales of prop-
erty, plant and equipment. In addition, income from
corporate transactions in connection with the sale of
the shares in Mercedes-Benz Grand Prix Ltd. was in-
cluded in 2022 (€385 million).
2022
2023
The amortization expense of capitalized development
costs in the amount of €2,139 million (2022: €2,052
million) is presented in expense of goods sold.
In millions of euros
The composition of other operating income is shown
in the following table.
6. Other operating income
and expense
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
235
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Other operating income
1,258
In 2023, the cost of sales were primarily affected by
expenses paid to suppliers due to additional costs
relating to inflation and supply chains. In contrast,
lower raw material prices had a positive impact on the
cost of sales. Refinancing costs at Mercedes-Benz Mo-
bility are rising due to higher interest rates compared
to the previous year. In the prior year, cost of sales
were impacted by expenses in connection with the
discontinuation of the business activities in Russia.
-118,839
2022
2023
Mercedes-Benz Group
Reconciliation¹
Total segments
Mercedes-Benz Mobility
Mercedes-Benz Vans
Mercedes-Benz Cars
Further Information
233
In millions of euros
Revenue
Other revenue primarily comprises revenue from the
rental and leasing business of €10,870 million (2022:
€10,973 million), interest from the financial services
business at Mercedes-Benz Mobility recognized using
the effective-interest method in an amount of €5,161
million (2022: €4,533 million) and effects from currency
hedging. Interest from the financial services business
includes financial income on the net investment in
leases of €1,027 million (2022: €783 million).
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Revenue according to IFRS 15 includes revenue that
was included in contract liabilities at 31 December
2022 in an amount of €2,903 million (2022: €2,965
million) and revenue from performance obligations fully
(or partially) satisfied in previous periods in an amount
of €467 million (2022: €442 million). Revenue related
to performance obligations that were unsatisfied (or
partially unsatisfied) by the end of the reporting period
that is expected to be recognized within three years
amounted to €6,663 million at 31 December 2023
(2022: €6,437 million). This revenue is mainly derived
from long-term service and maintenance contracts and
extended warranties. It does not include performance
obligations from customer contracts that have initial
expected durations of one year or less. The number of
vehicles, for which the expected original delivery time
will exceed twelve months, was immaterial and is
therefore not part of the disclosed amount. Long-term
performance obligations of minor importance to the
overall contract value of a bundled contract are not
considered in assessing the initial duration of the bun-
dled contract.
2023
2022
2023
2022
-5,793
Other cost of sales
-382
from financial services
Impairment losses on receivables
-1,863
-3,226
Mercedes-Benz Mobility
Refinancing costs at
on operating leases
-536
-5,853
-115,997
Depreciation of equipment
12,934
36,498
38,890
Europe
2022
2023
2022
2023
2022
2023
-100,385
2023
2022
Government grants
261
646
Interest and similar income
-255
-106
Expense from equity instruments
12
32
Net interest income on the net assets of
defined benefit pension plans
192
283
Income from equity instruments
545
-437
provisions for other risks
Interest income
changes in discount rates of
compounding and effects from
Income and expense from
In millions of euros
2022
Miscellaneous other financial
678
273
Revenue according to IFRS 15 is disaggregated by the
two categories - type of products and services and
geographical regions. The category type of products
and services corresponds to the reported segments.
Agreements on the sale of further sales activities in
other European countries were concluded in 2023. The
disposals are to take place successively over the
course of 2024. The criteria for classification as assets
and liabilities held for distribution or sale are met as of
31 December 2023. The assets of €0.8 billion and liabil-
ities of €0.2 billion are therefore reported as assets
and liabilities held for sale in the Consolidated State-
ment of Financial Position of 31 December 2023 in
accordance with IFRS 5. Of the assets, €0.7 billion is
attributable to the Mercedes-Benz Cars segment and
€0.1 billion to the Mercedes-Benz Vans segment. As-
sets mainly comprise inventories of €0.3 billion, prop-
erty, plant and equipment of €0.2 billion and trade
receivables of €0.1 billion. The liabilities, which are
almost entirely attributable to the Mercedes-Benz Cars
segment, mainly include financing liabilities to financial
institutions of €0.1 billion.
In January 2024, the Group divested its retail activities
in Italy. There were no significant effects on the profit-
ability, liquidity and capital resources, and financial
position.
The sales company in Greece and other dealers in
Europe were already sold in the course of 2023. The
disposals resulted in income of €186 million. The cash
inflow amounted to a total of €315 million. The effects
are mainly allocated to the Mercedes-Benz Cars seg-
ment.
In addition, further retail activities in various countries,
in particular those allocated to the Mercedes-Benz
Cars segment, were sold in 2022. The disposals result-
ed in income of €107 million and cash inflows of
€362 million.
In December 2021, the contractual arrangements on
the sale of the retail activities in Canada were conclud-
ed. The transaction became effective in February 2022
and the Group recognized other operating income of
€514 million, which was mainly allocated to the Mer-
cedes-Benz Cars segment. The cash inflow amounted
to €608 million and was also mainly allocated to the
Mercedes-Benz Cars segment. Parts of the purchase
price were financed by Mercedes-Benz Financial Ser-
vices in Canada and led to a cash outflow of
€393 million at the Mercedes-Benz Mobility segment.
Sale of Indonesian sales and production entities
The Mercedes-Benz Group sold its subsidiaries in In-
donesia to a local investor with effect from 29 Septem-
ber 2023. The sale of both companies resulted in an
income of €89 million and a cash inflow of €140 million
which are allocated to the Mercedes-Benz Cars seg-
ment. Assets decreased by €141 million and liabilities
by €88 million as a result of deconsolidation.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
2023
232
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Shares in associated companies
Sale of interests in Mercedes-Benz Grand Prix Ltd.
In the fourth quarter of 2021, the Mercedes-Benz
Group signed the contractual agreements with Motor-
sports Invest Ltd. and INEOS Industries Holdings Ltd.
on the sale of shares of Mercedes-Benz Grand Prix Ltd.
Some of the agreements concluded already took effect
in 2021. When the other agreements became effective
in January 2022, the Group lost control over Mercedes-
Benz Grand Prix Ltd. and included the remaining 33.3%
interest in the company in the Consolidated Financial
Statements using the equity method. The sale of the
shares resulted in other operating income of
€385 million in the Mercedes-Benz Cars segment in the
first quarter of 2022. The purchase price payment
agreed for 2023 resulted in a cash inflow of
€144 million.
4. Revenue
Revenue in 2023 was slightly above the previous year's
level. The increase in revenue was primarily due to
higher unit sales and improved pricing at the Mer-
cedes-Benz Vans segment. Revenue in the Mercedes-
Benz Cars segment was also higher, primarily due to a
further improvement in pricing. However, negative
exchange-rate effects had an opposing effect, causing
a reduction in revenue.
Revenue disclosed in the Consolidated Statement of
Income includes revenue from contracts with custom-
ers, which are in the scope of IFRS 15 (revenue accord-
ing to IFRS 15), and other revenue not in the scope of
IFRS 15. The composition of the revenue in the Consol-
idated Statement of Income is shown by region in Note
34.
Combined Management Report
In millions of euros
Interest income and interest expense
2022
Other miscellaneous expense
576
285
Income from company transactions
-214
-207
Loss from deconsolidation
-138
-60
plant and equipment
-249
83
not relating to sales financing
Rental income
Losses on sales of property,
771
29
plant and equipment
Gains on sales of property,
In millions of euros
63
59
139
In 2023 there were no significant effects on the profit-
ability, liquidity and capital resources, and financial
position.
-937
563
2023
Other financial income/expense, net
The following table shows the components of interest
income and interest expense.
The following table shows the components of other
financial income/expense, net.
8. Interest income and
interest expense
7. Other financial income/expense
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Other miscellaneous income
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The decrease in other operating expense was primarily
due to lower expenses in connection with ongoing
official and legal proceedings and measures relating to
Mercedes-Benz diesel vehicles. They are included in
other miscellaneous expense.
Income from costs recharged to third parties includes
IT and logistics costs as well as other costs recharged
to third parties, with related expenses primarily within
functional costs.
3,323
2,206
-1,289
-516
572
236
Change of unrecognized deferred tax assets
including write-down of deferred tax assets
Tax-free income and non-deductible expenses
Unrecognized deferred tax assets
3
886
-2,940
178
-2,832
152
368
386
-687
4,615
-1,583
4,396
-1,549
360
-2,178
795
-29
1,326
-461
-18
802
3,267
-18,718
15,131
Deferred tax assets and liabilities (unbalanced)
-191
-172
thereof on tax-loss carryforwards and tax credits
-23
-29
thereof on temporary differences
-214
-15,995
13,024
-18,718
15,332
-201
-507
2,728
-407
-221
1,379
-3,413
2,368
At 31 December
2023
At 31 December
In millions of euros
Split of deferred tax assets and liabilities
The Mercedes-Benz Group believes that it is more like-
ly than not that it will be unable to utilize those de-
ferred tax assets.
A large proportion of the unrecognized deferred tax
assets relates to tax-loss carryforwards for state and
local taxes at the US companies as well as temporary
differences.
Thereof, €67 million relates to tax-loss carryforwards
which can be carried forward indefinitely, €12 million
relates to tax-loss carryforwards which expire by the
year 2028 and €4 million relates to tax-loss carry-
forwards and tax credits which can be carried forward
by the year 2043.
Further Information
238
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
At 31 December 2023, unrecognized deferred tax as-
sets in the Consolidated Statement of Financial Posi-
tion relate, among other things, to corporate income
tax-loss carryforwards and tax credits of €83 million.
2022
Deferred tax Deferred tax Deferred tax Deferred tax
assets liabilities
assets liabilities
Intangible assets, mainly development costs
Property, plant and equipment
-3,939
3,465
-2,533
201
-2,591
431
-4,116
78
12,810
-4,709
Miscellaneous liabilities, mainly liabilities
Other Provisions
Provisions for pensions and similar obligations
Tax-loss carryforwards and unused tax credits
Miscellaneous assets, mainly other financial assets
Receivables from financial services
Inventories
Equipment on operating leases
175
-15,995
Balance sheet amounts of deferred tax assets and liabilities (balanced)
4,127
Amortisation expense for intangible assets
in the Consolidated Statement of Income
The following table shows the line items of the Consol-
idated Statement of Income in which total amortization
expense for intangible assets is included.
Non-amortizable intangible assets primarily relate to
goodwill and development costs for projects which
have not yet been completed (carrying amount at 31
December 2023: €6,131 million; 2022: €4,496 million).
The increase in capitalized development costs is mainly
due to development services for the new platform
generations geared to electromobility. In addition, oth-
er intangible assets with a carrying amount of €262
million (2022: €190 million) are not amortizable. These
non-amortizable intangible assets are distribution
rights in the vehicle segments with indefinite useful
lives. The Group plans to continue to use these assets
unchanged.
At 31 December 2023, goodwill of €389 million (2022:
€389 million) relates to the Mercedes-Benz Mobility
segment, goodwill of €335 million (2022: €337 million)
relates to the Mercedes-Benz Cars segment and good-
will of €21 million (2022: €23 million) relates to the
Mercedes-Benz Vans segment.
Intangible assets developed as shown on the following
page.
10. Intangible assets
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
As a result of future adjudications or changes in the
opinions of the fiscal authorities, it cannot be ruled out
that the Mercedes-Benz Group might receive tax re-
funds for previous years. In particular, from 2012 to
2021, Mercedes-Benz Group AG incurred currency ex-
change-rate related losses from the financing of Group
companies based abroad totalling €2.1 billion, which
were compensated by corresponding hedging instru-
ments. For the years until 2021, the German tax author-
ities consider that exchange-rate related losses from
the financing of Group companies are generally not to
be recognized, while the compensating profits from the
hedging activities remain taxable. In 2021, the German
Modernization of Corporate Income Tax Act stipulated
that such exchange-rate losses are generally deducti-
ble. However, this only applies from 2022 onwards. The
Company does not share the legal opinion represented
by the tax authorities for the years up to 2021. In the
meantime, a lawsuit has also been filed with the Fi-
nance Court.
The Group has various unresolved issues concerning
open tax years. The Mercedes-Benz Group believes
that it has recognized adequate liabilities for any future
income taxes that may be owed for all open tax years.
Nevertheless, it cannot be ruled out that tax payments
might exceed the liabilities recognized in the financial
statements.
From the current perspective, the retained earnings of
non-German subsidiaries are largely intended to be
reinvested in those operations. The Group did not rec-
ognize deferred tax liabilities on retained earnings
which are intended to be reinvested at non-German
subsidiaries of €27,529 million (2022: €27,469 million).
If those earnings were paid out as dividends, an
amount of 5% would be taxed under German taxation
rules and, if applicable, with non-German withholding
tax. Additionally, other income tax consequences might
arise if the dividends first have to be distributed by a
non-German subsidiary to a non-German holding com-
pany. Normally, the distribution would lead to an addi-
tional income tax expense. Estimating the amount of
taxable temporary differences for these undistributed
foreign earnings would require a disproportionate ef-
fort.
-1,240
-285
1 The other changes primarily relate to changes due to the effects of currency transla-
tion.
-3,185
In millions of euros
Cost of sales
2023
2022
-16
Further Information
240
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
2,409
2,471
21
16
-3,587
development costs
69
67
General administrative expenses
54
49
Selling expenses
2,265
2,339
Research and non-capitalized
In respect of each type of temporary difference and in
respect of each type of unutilized tax-loss carryfor-
wards and unutilized tax credits at 31 December, the
deferred tax assets and liabilities presented in the
Consolidated Statement of Financial Position before
offset are summarized in the following table.
net as of 31 December
-167
2023
Changes in deferred tax assets/deferred tax liabilities, net
The development of deferred tax assets and deferred
tax liabilities, net, is shown in the following table.
Further Information
239
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
-3,185
-3,587
Deferred tax assets/deferred tax liabilities, net
-6,910
3,725
-7,714
In millions of euros
2022
Deferred tax assets/deferred tax liabilities,
net as of 1 January
-3,185
Other changes¹
201
benefit pension plans included in other
comprehensive income/loss
Change in deferred tax assets/liabilities on
actuarial gains/losses from defined
-688
-218
Change in deferred tax assets/liabilities on
derivative financial instruments included in
other comprehensive income/loss
44
Deferred tax assets/deferred tax liabilities,
-6
Change in deferred tax assets/liabilities on
debt instruments included in
13
-3
Change in deferred tax assets/liabilities on
equity instruments included in other
comprehensive income/loss
25
-209
Consolidated Statement of Income
Deferred tax expense/benefit in the
other comprehensive income/loss
Deferred tax assets and deferred tax liabilities are off-
set if the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority and
if there is the right to set off current tax assets against
current tax liabilities. In the presentation of deferred
tax assets and liabilities in the Consolidated Statement
of Financial Position, no difference is made between
current and non-current.
-1,054
carryforwards and tax credits
393
Other
-446
-211
Current taxes
Deferred taxes
-5,344
-209
-5,520
25
Actual income tax expense
-5,553
-5,495
-227
Deferred taxes due to temporary differences
The following table shows a reconciliation of expected
income tax expense to actual income tax expense in
the financial year. In order to determine the expected
income tax expense, the German combined statutory
tax rate of 29.825% applicable in the financial year is
multiplied by the profit before taxes.
Deferred taxes due to tax-loss
18
-5,553
-262
-5,495
The current tax expense includes tax benefits recog-
nized for prior periods at German and foreign compa-
nies of €341 million (2022: €504 million).
622
287
Tax-free income and non-deductible expenses include
all reconciling items of German and foreign companies
relating to tax-free income and non-deductible ex-
penses, e.g. tax-free results of the equity-method in-
vestments. The increase compared to the previous year
is due, among other things, to the increase in tax-free
equity-method earnings in 2023.
The other items include, among other things, effects
from withholding taxes on dividends, patents and li-
censes which increased compared to the prior year.
Further Information
The following table shows the maturities of the future
contractual lease payments and the development of
lease payments to the carrying amounts of receivables
from finance lease contracts.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
In millions of euros
Development of the receivables from finance lease contracts
At 31 December
Corporate Governance
Combined Management Report
250
12,781
19,525
7,009
12,296
19,305
302
836
1,138
439
890
1,329
38,885
-416
50,381
-639
2023
38,469
89,266
-1,055
88,211
37,834
48,913
86,747
-522
-676
-1,198
37,312
48,237
85,549
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
49,742
2022
Between three and four years
The loss allowances for receivables from financial ser-
vices due to expected credit losses are shown in the
table Development of loss allowances for receivables
from financial services due to expected credit losses.
between four and five years
949
1,044
later than five years
223
212
Unguaranteed residual values
3,922
3,663
Gross investment
21,638
Unearned finance income
-2,113
21,089
-1,784
Gross carrying amount
19,525
19,305
1,776
Loss allowances
1,925
2,699
The carrying amounts of receivables from financial
services based on modified contracts that are shown in
stages 2 and 3, amounted to €463 million at 31 Decem-
ber 2023 (2022: €223 million). In addition, carrying
amounts of €86 million in connection with contractual
modifications were reclassified at 31 December 2023
from stages 2 and 3 into stage 1 (2022: €135 million).
At the beginning of the contracts, collaterals of usually
at least 100% of the carrying amounts were agreed,
which are backed by the vehicles based on the under-
lying contracts. Over the contract terms, the amounts
of the collaterals are included in the calculation of the
risk provisioning, so the net carrying amounts of the
credit-impaired contracts are essentially backed by the
underlying vehicles.
Further information on loss allowances, financial risks
and types of risks is provided in Note 33.
6,744
Contractual future lease payments
17,716
17,426
thereof due
within one year
6,455
6,527
between one and two years
5,515
5,168
Credit risks
between two and three years
2,649
between three and four years
14,702
Total
11,198
Total comprehensive income/loss
Unrecognized losses
Associated companies
2023
Joint ventures
2022
2023
2022
2
13
-213
-193
-60
-8
2
-47
-221
-193
Other comprehensive income/loss
-11
Profit/loss after taxes
In millions of euros
2,973
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
248
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Joint ventures
YOUR NOW Holding GmbH
YOUR NOW Holding GmbH (YOUR NOW) is a com-
pany based in Munich, Germany and is assigned to
the Mercedes-Benz Mobility segment. The purpose
of YOUR NOW Holding is to hold shares in mobility
service providers.
In 2023, YOUR NOW's gains/losses on equity-
method investments include impairments of
€117 million (2022: €102 million).
The following table shows summarized aggregated
financial information for the other minor equity-
method investments after purchase-price allocation
and on a pro-rata basis.
Further information on equity-method investments
is provided in Note 37.
Summarized aggregated financial information on minor equity-method investments
Summarized aggregated financial information (pro rata)
3,504
-55
Contents
Net carrying amount
At 31 December
At 31 December
2023
2022
Current Non-current
Loss allowances
Current Non-current
Total
17,578
14,261
31,940
49,518
19,188
32,223
51,411
4,824
19,085
Loss allowances
Annual Report 2023 | Mercedes-Benz Group
Gross carrying amount
Finance lease contracts
To Our Shareholders
Combined Management Report
Corporate Governance
249
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
14. Receivables from financial
services
Types of receivables
Receivables from sales financing with customers in-
clude receivables from credit financing for non-Group
third parties who purchased their vehicle either from a
dealer or directly from the Mercedes-Benz Group.
Receivables from sales financing with dealers repre-
sent loans for floor financing programmes for vehicles
purchased from the Mercedes-Benz Group. In addition,
these receivables also relate to the financing of other
assets that the dealers purchased from third parties, in
particular used vehicles or property.
Receivables from finance lease contracts consist of
receivables from leasing contracts for which all sub-
stantial risks and rewards incidental to the leasing ob-
jects are transferred to the lessee.
In 2023, the Mercedes-Benz Group recognized a gain of
€538 million (2022: €177 million) from the difference
between the additions to receivables from finance
lease contracts and the carrying amounts of the under-
lying assets.
At 31 December 2023, receivables from financial ser-
vices with a carrying amount of €11,139 million (2022:
€11,931 million) were pledged mostly as collateral for
liabilities from ABS transactions (see also Note 24).
Receivables from financial services
In millions of euros
Sales financing with customers
Sales financing with dealers.
Residual-value receivables
Net carrying amount
-291
-454
18,952
Additions
Balance at 1 January 2022
Acquisition/manufacturing costs
from leasing
assets
thereof
right-of-use
Total
in progress
from leasing
assets and construction
right-of-use Advance payments
thereof
factory and
office equipment
from leasing
assets
right-of-use Other equipment,
Technical
equipment
and machinery
from leasing
3,547
23,335
517
28,479
-879
-2,030
972
893
165
Disposals
Reclassifications
923
4,344
on land owned by others
1,467
1,394
228
695
675
788
4,149
72,961
2,195
85
20
thereof
thereof
right-of-use
assets
and buildings,
including buildings
2023
Cash outflows related to lessee accounting
27
24
lease payments
Expenses from variable
11
11
Expenses from leases of
low-value assets
2022
20
54
57
Interest expense from
lease transactions
Expenses from
short-term leases
The following tables show additional disclosures relat-
ed to lessee accounting.
In 2023, government grants of €69 (2022: €96) million
were deducted from the carrying amount of property,
plant and equipment.
Property, plant and equipment as shown in the Consol-
idated Statement of Financial Position with a carrying
amount of € 26,090 (2022: €27,250) million also in-
cludes right-of-use assets, that the Group received as
lessee. Property, plant and equipment, including right-
of-use assets, developed as shown on the following
page.
In millions of euros
11. Property, plant and equipment
2022
17
-490
In millions of euros
for lease contracts
Land, land rights
Further Information
243
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
In millions of euros
Property, plant and equipment
Total cash outflow
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Notes 24 and 33.
Further information on lessee accounting is provided in
1,985
4,144
reflected in the lease liabilities
Future cash outflows that are not
625
765
Contents
2,578
-988
-1,186
30,285
827
23,434
3,605
18,394
Balance at 31 December 2023
-240
-1,365
25
-2
-387
-4
-198
-234
-805
Other changes¹
-322
-2,808
-105
85
2,227
74,340
4,517
19,234
18,851
Information on credit risks included in receivables from
financial services is shown in the table Credit risks
included in receivables from financial services.
Longer overdue periods regularly lead to higher loss
allowances.
1,658
134
1,631
482
814
-16
Additions
45,102
50
22,177
162
14,518
1,226
8,407
Balance at 1 January 2022
Depreciation/impairment
1,438
-797
-7
-1,403
84
29,783
746
23,916
3,689
19,019
Balance at 31 December 2022
-38
113
1,517
15
5
-19
-43
-7
Other changes¹
-515
-3,183
-130
-21
124
-4
74,235
Additions
-299
-503
Disposals
91
91
-1,147
551
91
549
4,519
138
469
4,187
1,937
19
1,135
1
570
449
545
Reclassifications
8,199
6,748
-1
246
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
Associated companies
Daimler Truck
To Our Shareholders
The Daimler Truck Group is one of the world's largest
commercial vehicle manufacturers. Its product portfo-
lio comprises light-, medium- and heavy-duty trucks,
city buses and intercity buses, coaches and bus chas-
sis. In addition financial services aligned to the product
portfolio are offered. The investment is reported in the
reconciliation of the reportable segments of the Group.
With the approval of the Supervisory Board, the Board
of Management of Daimler Truck resolved a share buy-
back programme on 10 July 2023. The acquisition of the
treasury shares on the stock exchange began on 2 Au-
gust 2023. During the share buyback programme, the
Mercedes-Benz Group did not sell any of its Daimler
Truck shares. The shareholding remains unchanged
30.00%, while a shareholding of 30.66% is assumed for
the development of the equity-method carrying
amount as of 31 December 2023. In June 2023, the
Annual General Meeting of Daimler Truck resolved a
dividend of €1.30 per share. The distribution led to a
cash inflow of €321 million and reduced the carrying
amount of the investment accordingly.
Beijing Benz Automotive Co., Ltd.
Beijing Benz Automotive Co., Ltd. (BBAC) produces and
distributes Mercedes-Benz cars and spare parts in
China. The investment and the proportionate share in
the results of BBAC are allocated to the Mercedes-Benz
Cars segment.
In the second quarter of 2023, the shareholders of
BBAC resolved the distribution of a dividend of €903
million. A further distribution of €767 million was re-
solved in the fourth quarter of 2023. The distributions
reduced the shareholding's carrying amount and
caused a cash inflow of €1,595 million.
The Mercedes-Benz Group plans to contribute addi-
tional equity of approximately €0.2 billion in accord-
ance with the shareholding ratio at BBAC.
There Holding B.V.
There Holding B.V. (THBV) owns shares of HERE Inter-
national B.V. (HERE). HERE is one of the world's largest
manufacturers of digital road maps for navigation sys-
tems. The high-resolution maps provide one of the
foundations for autonomous driving. THBV is account-
ed for as an associated company in the Consolidated
Financial Statements of Mercedes-Benz Group AG
using the equity method and is assigned to the
Mercedes-Benz Cars segment.
As part of a strategic realignment and refinancing of
HERE, the Mercedes-Benz Group, along with other
shareholders of the associated company THBV, con-
tributed additional equity of €118 million into THBV
through Mercedes-Benz AG in the first half of 2023.
The capital increases led to a corresponding increase in
the equity-method carrying amount. The funds from
the capital injection were transferred by THBV to HERE
in order to increase HERE's liquidity.
The result in financial year 2023 amounted to
€797 million (2022: €226 million). In 2022, the earnings
included income of €59 million from the contribution of
approximately 5% of the shares in Daimler Truck to the
Mercedes-Benz Pension Trust.
The strategic repositioning led to a reassessment of the
business development of HERE in the second quarter
of 2023. Due to this THBV recognized an impairment on
the carrying amount of HERE. The proportionate ex-
penses attributable to the Group from the impairment
of €92 million are included in the line item gains/losses
on equity-method investments and reported in the
Mercedes-Benz Cars segment.
Contents
1,934
49.0
8,401
7,149
8,425
8,199
2,578
2,973
1,375
Annual Report 2023 | Mercedes-Benz Group
1,367
12,539
797
226
1,457
1,711
17
-3
2,271
12,378
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
1 Figures for the statement of income relate to the period of 1 January to 31 December.
Figures for the statement of financial position and the reconciliation to the equity-method carrying amounts relate to the balance sheet date of 31 December and include investor level adjustments.
2023
Daimler Truck¹
2022
BBAC¹
2023
2022
55,890
Equity-method carrying amount
50,945
24,820
3,971
2,763
2,999
3,649
-622
2,170
2,547
22,484
Other reconciliation effects including equity-method goodwill and impairments on the investment
Unrealized profit (-)/loss (+) on sales to/purchases from
Equity (excluding non-controlling interests) attributable to the Group
247
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
The following table shows summarized aggregated
financial information according to IFRS for the signifi-
cant associated companies accounted for using the
equity method after purchase price allocation, which
was the basis for equity-method accounting in the
Group's Consolidated Financial Statements.
Summarized IFRS financial information on significant associated companies accounted for using the equity method
In millions of euros
Information on the statement of income
Revenue
Profit after taxes
Other comprehensive income/loss
Total comprehensive income/loss
Information on the statement of financial position and reconciliation to the equity-method carrying amounts
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Equity (including non-controlling interests)
49.0
Between two and three years
30.0
2022
-382
13,108
Other changes¹
Other changes¹
Balance at 31 December 2023
Carrying amount at 31 December 2022
Carrying amount at 31 December 2023
41,552
41,712
-8,006
1 Primarily changes from currency translation and in 2023 reclassifications to Assets held
for sale.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
245
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
2 The additions include €8,353 million that were not acquired from external dealers.
Notes to the Consolidated Financial Statements
Disposals
Additions
1,116
861
7,360
Between four and five years
284
222
Disposals
-6,341
7,022
Later than five years
122
Other changes¹
319
Total lease payments
17,092
16,072
Balance at 31 December 2022
14,474
146
13. Equity-method investments
Summarized carrying amounts and gains/losses on equity-method investments
In millions of euros
726
991
1,934
-142
-202
13,104
2,129
13,530
1,732
12,539
Daimler Truck³
2023
2022
2023
2022
2023
Other
2022
Total
2023
BBAC
12,378
2,271
2022
2023
Equity-method carrying amount¹
Equity-method gains/losses¹
1 Including investor-level adjustments.
Key figures on interests in associated companies accounted for using the equity method
In millions of euros
Equity interest (in %)
Stock-market price¹
Equity-method carrying amount²
Equity-method gains/losses²
1 Proportionate stock-market prices.
2 Including investor-level adjustments.
3 The information on the amount of the share (in %) in the year 2023 represents the share relevant for accounting purposes as of the reporting date.
Associated
companies
Joint
ventures
Total
2023
2022
2023
2022
30.7
Depreciation/impairment
Balance at 1 January 2022
Additions
5,390
5,434
295
15,295
1,448
8,791
Balance at 31 December 2022
-14
20
99
22,882
2
-16
-69
Other changes¹
-268
-2,258
-1
-21
-1,045
-10
-3
50
46,985
-13
-722
-7
-1,289
-160
-325
Disposals
665
17
4,204
1,800
196
1,647
2023
450
757
Additions
1,793
19
-851
-244
-361
1,122
22,749
21,150
7,499
8,592
28,029
27,727
5,924
920
13,136
8,107
2,903
3,306
-321
-332
94
92
-4
8,331
22,451
26,275
9,361
Disposals
-7
7
Reclassifications
637
4,121
-2
52
3,349
4,083
2,997
3,701
39,494
38,957
6,504
7,101
37,559
32,371
7,839
-2,336
-180
Other changes¹
Balance at 31 December 2023
17,263
Additions
agreements to be paid by lessees to the Mercedes-
Benz Group in the future, are as follows:
Maturities of lease payments under operating lease
Lease payments
57,607
Balance at 1 January 2022
Acquisition/manufacturing costs
Disposals
Disposals
Equipment on operating leases
At 31 December 2023, equipment on operating leases
with a carrying amount of €8,187 million was pledged
as security for liabilities from ABS transactions (2022:
€9,663 million). These liabilities related to a securitiza-
tion transaction of future lease payments on leased
vehicles (see also Note 24).
The revenue received from the sale of Group products
to external dealers is estimated by the Group as being
of the magnitude of the respective addition to leased
equipment at Mercedes-Benz Mobility. These vehicles
generate revenue from lease payments and subse-
quent resale on the basis of the separate leasing con-
tracts. In 2023, additions to leased equipment from
these vehicles at Mercedes-Benz Mobility amounted
to approximately €10 billion (2022: approximately
€9 billion).
The carrying amount of the equipment on operating
leases includes leased right-of-use assets from recog-
nized head leases with the Daimler Truck Group of
€0.3 billion (2022: €0.5 billion).
The development of equipment on operating leases is
shown in the table Equipment on operating leases.
12. Equipment on operating
leases
Notes to the Consolidated Financial Statements
Further Information
In millions of euros
-20,200
Other changes¹
Maturity of undiscounted lease payments for
Between one and two years
7,307
7,565
Within one year
54,820
Balance at 31 December 2023
Maturing
-563
-21,766
In millions of euros
-1
Reclassifications
2022
At 31 December
2023
21,124
56,026
Balance at 31 December 2022
Additions2
equipment on operating leases
1,356
Consolidated Financial Statements
8,425
Corporate Governance
244
Carrying amount at 31 December 2022
2,199
48,250
58
54
23,691
484
15,536
10,228
1,661
-79
-603
41
-2
-269
-117
-77
-258
8,965
Carrying amount at 31 December 2023
9,429
2,241
1,944
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1 Mainly relates to changes due to currency translations, changes in the scope of consolidation and reclassification to the balance sheet item Assets held for sale.
2,318
26,090
2,169
31
6,594
343
7,898
2,726
27,250
1,500
34
6,901
451
8,621
1,320
Combined Management Report
Expenses related to lessee accounting
18
Further Information
Other changes¹
-14
-45
10
-49
Balance at 31 December 2022
876
21,733
4,196
26,805
3,812
701
4,513
Additions
-2
-776
-331
-1,109
Disposals
Other changes¹
-10
-142
-152
Balance at 31 December 2023
864
24,769
4,424
-550
30,057
-186
-4
Notes to the Consolidated Financial Statements
21
Annual Report 2023 | Mercedes-Benz Group
Contents
Intangible assets
In millions of euros
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
241
Further Information
Goodwill
(acquired)
Development costs
(internally generated)²
Other intangible assets
(acquired)
Total
Acquisition/manufacturing costs
Balance at 1 January 2022
Additions
Disposals
894
19,155
3,875
23,924
497
3,480
-360
Depreciation/impairment
2,983
Additions
-900
-8
-1
-34
-43
119
9,620
2,725
12,464
Carrying amount at 31 December 2022
749
13,537
1,583
Carrying amount at 31 December 2023
745
15,149
1,699
17,593
1 Mainly relates to changes due to currency translations, changes in the scope of consolidation, reclassifications and reclassification to the balance sheet item Assets held for sale.
2 Including capitalized borrowing costs on development costs of €113 million (2022: €79 million). Amortization amounted to €12 million (2022: €9 million).
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
242
Combined Management Report
Corporate Governance
Balance at 1 January 2022
Consolidated Financial Statements
-173
-727
15,869
319
Disposals
Other changes¹
2,471
Balance at 31 December 2022
Additions
Disposals
Other changes¹
Balance at 31 December 2023
130
2,331
8,919
2,061
348
2,409
6,458
-1
2,152
2,613
8,196
-6
2
127
-2
-386
-68
-317
-6
10,936
704
239
20
2
1,407
1,516
631
537
85,767
658
83,521
806
464
52
50
335
756
527
268
598
527
425
425
335
266
365
42
60
215
305
9
530
46
254
Combined Management Report
5,442
Total
Lifetime expected credit loss
Credit impaired
Not credit impaired
12-month expected credit loss
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
252
past due more than 180 days
past due 91 to 180 days
past due 61 to 90 days
past due 31 to 60 days
past due 30 days and less
598
(Stage 1)
3,061
2023
2023
80,192
80,071
86,747
89,266
1,618
1,278
4,277
7,109
80,852
80,879
2022
2023
(Stage 3)
2022
2023
(Stage 2)
2022
2022
Annual Report 2023 | Mercedes-Benz Group
3,445
To Our Shareholders
584
142
442
347
115
232
2,329
2,463
468
2,660
1,622
1,038
768
768
1,995
1,096
3,425
2,543
Corporate Governance
Combined Management Report
254
17. Other assets
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
7,931
4,478
3,453
7,939
4,340
3,599
not past due
902
858
858
671
671
used in hedge accounting
Derivative financial instruments
recognized at fair value through other comprehensive income
recognized at fair value through profit or loss
Equity instruments and debt instruments
In millions of euros
Other financial assets
At 31 December 2023, other financial assets included
receivables with a carrying amount of €450 million
(2022: €461 million) that were pledged as collateral for
liabilities.
The line item other financial assets presented in the
Consolidated Statement of Financial Position is com-
prised as shown in the following table. Further infor-
mation on other financial assets is provided in Note 32.
The marketable debt securities and similar investments
amount to €6,858 million (2022: €7,060 million). When
a short-term liquidity requirement is covered with
quoted securities, those securities are presented as
current assets. Further information on marketable
debt securities and similar investments is provided in
Note 32.
16. Other financial assets
15. Marketable debt securities and
similar investments
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
Other financial assets recognized
Contents
at fair value through profit or loss
253
649
649
1,439
1,439
1,507
1,507
Total
Current Non-current
Total
Current Non-current
2022
2023
At 31 December
At 31 December
Further Information
Other receivables and miscellaneous other financial assets
thereof
-2
In millions of euros
(Stage 2)
2022
2023
2022
2023
(Stage 1)
Credit impaired
(Stage 3)
Not credit impaired
Total
Lifetime expected
In millions of euros
credit loss
12-month expected
Development of loss allowances for receivables from financial services due to expected credit losses
credit loss
2023
2022
2023
1,037
1198
556
664
142
170
339
364
Transfer to stage 1
Reversals
Utilization
Remeasurement changes
Additions
Balance at 1 January
2022
Notes to the Consolidated Financial Statements
141
Further Information
Corporate Governance
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Employee share purchase plan
In the first quarter of 2023, as in the previous year,
Mercedes-Benz Group AG purchased 0.9 million shares
of Mercedes-Benz Group AG for the employee share
purchase plan pursuant to Section 71 Subsection 1 No.
2, of the German Stock Corporation Act (AktG). The
purchase was carried out without utilizing the authori-
zation to acquire treasury shares granted by the Annual
General Meeting on 8 July 2020. The shares, which
were reissued to group employees, were purchased for
a price of €66 million and represented €2.7 million or
0.09% of the share capital (2022: 0.7 million shares of
Mercedes-Benz Group AG representing €1.9 million or
0.06% of the share capital were purchased for a price
of €48 million).
Capital reserves
Combined Management Report
Capital reserves primarily comprise premiums arising
on the issue of shares as well as expenses relating to
the exercise of the up to 2014 exercisable stock option
plans and the issue of employee shares, effects from
changes in ownership interests in consolidated entities
and directly attributable related transaction costs.
Retained earnings comprise the accumulated net prof-
its and losses of all companies included in Mercedes-
Benz Group's Consolidated Financial Statements, less
any profits distributed. In addition, the remeasuring of
defined benefit plans and the corresponding effects
arising from equity-method investments and the re-
spective related deferred taxes are presented within
retained earnings.
In other comprehensive income/loss 2023,
gains/losses on equity-method investments that will
not be reclassified to profit/loss in the statement of
income includes a loss of €10 million (2022: gain of
€289 million) from effects of remeasuring of defined
benefit plans.
Dividend
Under the German Stock Corporation Act (AktG), the
dividend is paid out of the distributable profit reported
in the Annual Financial Statements of Mercedes-Benz
Group AG (parent company only) in accordance with
the German Commercial Code (HGB). The management
will propose to the shareholders at the Annual General
Meeting the payment of €5,517 million of the distribut-
able profit of Mercedes-Benz Group AG for the 2023
financial year as a dividend to the shareholders,
equivalent to €5.30 per no-par-value share entitled to
a dividend and the transfer of €532 million to retained
earnings. A portion of €153 million of the amount pro-
posed for allocation to retained earnings is attributable
to 28.9 million treasury shares not entitled to dividends
held directly or indirectly by the company on 31 De-
cember 2023. As the number of treasury shares held
directly or indirectly by the Company will change be-
fore the Annual General Meeting due to the ongoing
share buyback programme, a proposal for a corre-
spondingly adjusted resolution will be submitted to the
Annual General Meeting. With an unchanged dividend
of €5.30 per no-par-value share entitled to a dividend
the portion of the distributable profit to be transferred
into retained earnings and the total distribution amount
will be adjusted accordingly.
For the 2022 financial year, in accordance with the
adjusted proposal for the appropriation of profits, the
Annual General Meeting resolved that €5,556 million
(€5.20 per no-par-value share entitled to a dividend)
be distributed to the shareholders from the distributa-
ble profit and the portion of €7 million from the distrib-
utable profit attributable to the 1.3 million treasury
shares not entitled to dividends held by Mercedes-
Benz Group AG at the time of the 2023 Annual General
Meeting be allocated to retained earnings.
Retained earnings
260
To Our Shareholders
Contents
Combined Management Report
251
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
By resolution of the Annual General Meeting on 8 July
2020, the Board of Management is authorized, with the
consent of the Supervisory Board, until 7 July 2025 to
acquire treasury shares in a volume up to 10% of the
share capital issued as of the day of the resolution or
- if this is lower of the share capital existing at the
time of the authorization being exercised, to be used
for all permissible purposes. The shares can be used,
among other things, with the exclusion of shareholders'
subscription rights, for business combinations or to
acquire companies or to be sold to third parties for
cash at a price that is not significantly lower than the
stock-exchange price of the Company's shares. The
acquired shares can also be used to fulfil obligations
from issued convertible bonds and/or bonds with war-
rants and to be issued to employees of the Company
and employees and board members of the Company's
subsidiaries pursuant to Sections 15 et seq. of the
German Stock Corporation Act (AktG). The treasury
shares can also be cancelled.
In a volume up to 5% of the share capital issued as of
the day of the resolution of the Annual General Meet-
ing, the Board of Management is authorized, with the
consent of the Supervisory Board, to acquire treasury
shares also by using derivatives (put options, call op-
tions, forward purchases or a combination of these
instruments), whereby the term of a derivative must
not exceed 18 months and must not end later than 7
July 2025.
Share buyback programmes
On the basis of the authorization to acquire the Com-
pany's own shares given by the Annual General Meeting
on 8 July 2020, the Board of Management, with the
approval of the Supervisory Board, resolved a share
buyback programme on 16 February 2023. The acquisi-
tion of treasury shares worth up to €4 billion (not in-
cluding incidental costs) on the stock exchange over a
period of up to two years began on 3 March 2023. The
repurchased shares are to be cancelled at a later date.
Mercedes-Benz Group AG has separately agreed with
Beijing Automotive Group Co., Ltd. and Geely Group
that they will each keep their share in all voting shares
of Mercedes-Benz Group AG below 10% by divesting
their shares on a pro-rata basis concurrently with the
share buyback programme.
From March to December 2023, as part of the share
buyback programme, 29 million of the Company's own
shares were repurchased at a purchase price of €1,887
million, representing €83 million or 2.70% of the share
capital. The purchase price was recorded under treas-
ury shares together with a liability of €369 million for
buyback obligations.
On 21 February 2024, Mercedes-Benz Group AG has
resolved to implement a share buyback policy. Based
on such policy, the future Free Cash Flow from the
industrial business (as available post potential small-
scale M&A) generated beyond the approximately 40%
dividend payout ratio of Group net profit shall be used
to fund share buybacks with the purpose of redeeming
shares.
In this context, Mercedes-Benz Group AG moreover
has resolved to conduct a further share buyback pro-
gramme, through which it is intended to acquire own
shares worth up to €3 billion (not including incidental
costs) on the stock exchange and to then cancel them.
The further share buyback programme will be based on
the authorization by the Annual General Meeting of
Mercedes-Benz Group AG on 8 July 2020, authorizing
the Board of Management to acquire, with the approval
of the Supervisory Board, own shares up to a maximum
of 10% of the share capital until 7 July 2025. It is
scheduled to commence immediately after the conclu-
sion of the ongoing share buyback programme an-
nounced on 16 February 2023, and is expected to be
completed before the expiry of the Annual General
Meeting's above-mentioned authorization.
Future share buyback programmes are subject to the
necessary resolutions of the company's corporate bod-
ies required in each individual case.
Annual Report 2023 | Mercedes-Benz Group
Consolidated Financial Statements
158
48
39
-15
-27
2
Exchange-rate effects and other changes
30
36
-3
-25
-5
-3
Transfer to stage 3
-16
-61
41
-33
-145
-
-77
Credit risks included in receivables from financial services
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1,198
1,055
664
486
170
240
364
329
Balance at 31 December
-107
-158
88
-25
-27
Transfer to stage 2
-19
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
-4
458
308
330
216
89
115
39
-23
412
312
215
123
-14
Gross carrying amount at 31 December
-107
-130
-20
-14
-41
-42
61
56
-482
-475
-250
-226
-58
-72
-174
-177
-120
-104
Further Information
1,583
Other expected reimbursements predominantly relate
to recovery claims against our suppliers in connection
with issued product warranties.
41
2
6,691
5,365
Consolidated Financial Statements
Corporate Governance
5,367
257
Credit risks
Contents
Annual Report 2023 | Mercedes-Benz Group
1 Including the part of the gross carrying amount that was reclassified to the Assets held for sale item of the Consolidated Statement of Financial Position.
190
141
To Our Shareholders
6,732
1,108
659
30
108
159
108
189
1
108
188
224
224
224
224
664
1,108
5
120
104
70
37
-21
-12
-4
-11
8
10
6
9
2
1
119
77
87
51
32
-23
39
-25
-16
-3
-36
-7
-11
4
-25
4
2
-4
-2
-
-54
-77
-38
-55
-22
26
189
405
2022
20231
2022
Gross carrying amount
thereof
not past due
20231
past due 30 days and less
past due 61 to 90 days
past due 91 to 180 days.
past due more than 180 days
7,449
7,923
110
past due 31 to 60 days
2022
20231
At 31 December At 31 December At 31 December
Further Information
Non-financial other assets are comprised as shown in
the following table.
Notes to the Consolidated Financial Statements
Information on credit risks included in trade receivables
is shown in the following table. Further information on
financial risk and types of risk is provided in Note 33.
Credit risks included in trade receivables
In millions of euros
Lifetime expected credit loss
Total
not credit impaired
credit impaired
(Stage 2)
(Stage 3)
At 31 December
At 31 December
At 31 December
367
7,559
8,290
Further Information
20. Equity
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
258
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1 Including the part of allowances that was reclassified to the Assets held for sale item of the Consolidated Statement of Financial Position.
415
482
282
77
133
Share capital
147
The share capital (authorized capital) is €3,070 million
at 31 December 2023, unchanged compared to 31 De-
cember 2022. It is still divided into 1,070 million no-
par-value shares. All shares are fully paid up. Each no-
par-value share confers the right to one vote at the
Annual General Meeting of Mercedes-Benz Group AG
and, if applicable, with the exception of any new shares
potentially not entitled to dividends, to an equal por-
tion of the profits as defined by the dividend distribu-
tion decided upon at the Annual General Meeting. Each
share represents a proportionate amount of approxi-
mately €2.87 of the share capital.
The number of shares outstanding decreased by
29 million shares to 1,041 million shares as at 31 De-
cember 2023, compared to 31 December 2022 (1,070
million shares) due to the share buyback programme
that has been running since March 2023. The number
of shares outstanding had remained unchanged at
1,070 million between 1 January 2022 and 31 December
2022.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
259
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
No use was made of this authorization to issue con-
vertible and/or warrant bonds during the reporting
period.
In order to fulfil the conditions of the above-mentioned
authorization, the Annual General Meeting on 8 July
2020 also resolved to increase the share capital condi-
tionally by an amount of up to €500 million (Condition-
al Capital 2020).
and/or non-cash contributions, in particular for shares
in other companies. The terms and conditions of the
bonds can include warranty obligations or conversion
obligations. The bonds can be issued once or several
times, wholly or in instalments, or simultaneously in
various tranches as well as by subsidiaries of the Com-
pany within the meaning of Sections 15 et seq. of the
German Stock Corporation Act (AktG). Among other
things, the Board of Management was also authorized
to exclude shareholders' subscription rights for the
bonds under certain conditions and within defined
limits subject to the consent of the Supervisory Board.
By resolution of the Annual General Meeting on 8 July
2020, the Board of Management is authorized, with the
consent of the Supervisory Board, until 7 July 2025 to
issue convertible and/or warrant bonds or a combina-
tion of these instruments ("bonds") with a total face
value of up to €10.0 billion and a maturity of no more
than ten years. The Board of Management is allowed to
grant the holders of these bonds conversion or warrant
rights for new registered no-par-value shares in Mer-
cedes-Benz Group AG with an allocable portion of the
share capital of up to €500 million in accordance with
the details defined in the terms and conditions of the
bonds. The bonds can be offered in exchange for cash
Conditional capital
No use has been made of the Approved Capital 2018,
for which the authorization period ended on 4 April
2023, and no use has been made of the Approved Cap-
ital 2023 to date.
The Annual General Meeting held on 3 May 2023 au-
thorized the Board of Management again to increase
the share capital by up to a total of €1.0 billion by
2 May 2028 with the approval of the Supervisory Board
against cash and/or non-cash contributions (Approved
Capital 2023). The authorization enables the exclusion
of shareholders' subscription rights under certain con-
ditions and within defined limits subject to the consent
of the Supervisory Board.
Approved capital
The number of shares issued on 31 December 2023
was 1,070 million, the same as on 31 December 2022
and unchanged since 1 January 2022.
145
Combined Management Report
89
451
83
534
643
643
738
738
425
265
690
761
264
1,025
4,473
190
Treasury shares
6,056
614
Gross carrying amount
169
327
798
318
1,116
577
402
979
2,621
37
2,658
2,509
37
2,546
184
151
335
174
153
445
The amount of write-down of inventories to net realiza-
ble value recognized as an expense in cost of sales was
€620 million in 2023 (2022: €543 million). The carrying
amounts of inventories that are expected to be recov-
Inventories increased compared to 31 December 2022
due to the introduction of the direct sales model in
additional markets and ramp-ups in production due to
new model years. Additionally the finished goods in-
clude, on average, more expensive vehicles.
25,621
To secure obligations from partial retirement and long-
term working accounts, a number of company cars
and demonstration vehicles included in inventories of
Mercedes-Benz AG in the amount of €1,195 million is
pledged as collateral to Mercedes-Benz Pension Trust
e.V. as of 31 December 2023 (2022: €854 million). The
increase in carrying amount is due to the significantly
higher inventory levels as well as the on average more
expensive vehicle prices.
ered or settled after more than twelve months amount-
ed to €812 million at 31 December 2023 (2022:
€724 million) and are related primarily to finished
goods.
2022
At 31 December
2023
In millions of euros
Inventories
Inventories are comprised as shown in the following
table.
18. Inventories
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
255
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
6,149
19. Trade receivables
Trade receivables are primarily receivables from con-
tracts with customers within the scope of IFRS 15 and
are shown in the following table.
Trade receivables
At 31 December
27,294
163
357
Advance payments to suppliers
19,058
21,216
products held for resale
Finished goods, spare parts and
Total
3,491
Work in progress
2,909
2,651
manufacturing supplies
Raw materials and
In millions of euros
2022
2023
3,070
Current Non-current
Total
Current Non-current
not
Total
Lifetime expected credit loss
In millions of euros
Development of loss allowances for trade receivables due to expected credit losses
credit losses for trade receivables is shown in the fol-
lowing table.
The development of loss allowances due to expected
Loss allowances
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
256
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
credit
impaired
credit
impaired
(Stage 2)
(Stage 3)
120
56
70
Balance at 31 December
Exchange-rate effects and other effects
Transfer to stage 3
Transfer to stage 2
Reversals
bles mature after more than one year (2022: €48 mil-
lion).
Utilisation
Additions
Balance at 1 January
2022
2023 1
2022
2023 1
2022
2023 1
Remeasurement changes
1,677
At 31 December 2023, €33 million of the trade receiva-
7,281
2022
2023
At 31 December
At 31 December
Other
Asset from defined benefit pension plans
Prepaid expenses
Other expected reimbursements
Reimbursements due to income tax refunds
Reimbursements due to other tax refunds
7,419
8,100
In millions of euros
4,472
Net carrying amount
-190
-138
Loss allowances
8,290
Other assets
2022
Outside Germany, there are plans relating to final sala-
ries as well as plans relating to salary-based compo-
nents. Most of the international obligations from de-
fined benefit pension commitments are funded by
investment funds.
The funded status of pension obligations with the split
between German and international plans is shown in
the following table.
Development of funded status
20,444
1,332
20,660
20,646
21,890
In millions of euros
21,992
Net defined benefit asset
Actuarial loss due to asset ceiling
Funded status
Fair value of plan assets
At 31 December
Germany International
Total
Germany International
Total
At 31 December
2023
Present value of the defined benefit obligations
1,244
1,307
7,345
Corporate Governance
Combined Management Report
266
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
265
As a general principle, it is the Group's objective to
design new pension commitments as defined benefit
plans based on capital components or on contribu-
tions, or as defined contribution plans.
The fair value of the plan assets is predominantly
determined by the situation on the capital markets.
Unfavourable developments, especially of equity prices
and fixed-interest securities, could reduce that fair
value. The diversification of investment funds, the en-
gagement of asset managers using quantitative and
qualitative analyses, and the continual monitoring of
performance and risk help to reduce the associated
investment risk. As long as the commitments of the
defined benefit pension plans remain overfunded by
the plan assets, the Mercedes-Benz Group will only
make additional pension contributions when legally and
economically necessary.
The obligations from defined benefit pension commit-
ments and the pension plan assets can be subject to
fluctuations over time. This can have a negative or a
positive effect on the funded status. Fluctuations in the
defined benefit pension obligations result at the Mer-
cedes-Benz Group in particular from changes in finan-
cial assumptions such as discount rates and increases
in the cost of living, but also from changes in demo-
graphic assumptions such as adjusted life expectan-
cies. With most of the German plans, expected long-
term wage and salary increases do not have an impact
on the amount of the obligation.
The general requirements with regard to retirement
benefit models are included in policies with Group-
wide validity. Accordingly, the committed benefits are
intended to contribute to additional financial security
during retirement, and in the case of death or invalidity
to be capable of being planned and fulfilled by the
respective company of the Group and to have a low-
risk structure. In addition, a committee exists that ap-
proves new pension plans and amendments to existing
pension plans as well as policies relating to company
retirement benefits.
Risks from defined benefit pension
plans and pension plan assets
405
Corporate Governance
1,429
3,419
In Germany, there are normally no statutory or regula-
tory minimum funding requirements.
-71
-578
-26
-818
6,399
4,672
2,104
2,125
15,300
2,980
2,580
675
1,720
7,955
2,092
19,137
Combined Management Report
Contents
-14
-117
-27
-27
-15
-15
-49
131
82
-88
-14
-102
1,258
19,268
20,526
-103
To Our Shareholders
55
-76
Annual Report 2023 | Mercedes-Benz Group
-205
-478
-683
-233
-527
-760
thereof recognised in provisions for pensions and similar obligations
129
609
738
130
513
643
thereof recognised in other assets
131
Insofar as in the future, BaFin rules that a deficit has
occurred in the pension fund, a supplementary contri-
bution will be required from Mercedes-Benz Group AG.
PPSP
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
669
611
241
256
15
15
8
8
component of annual
bonus of the members
of the Board
of Management
Medium-term
43
36
17
16
thereof PPSP of the
members of the
Board of Manage-
ment
654
596
233
Combined Management Report
Corporate Governance
262
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
At 31 December
20231
In millions of euros
Composition of provisions for pensions and similar obligations
The following table shows the composition of provi-
sions for pensions and similar obligations.
Furthermore, certain foreign subsidiaries, mainly in the
United States, provide their employees with post-
employment healthcare benefits with defined entitle-
ments, which have to be accounted for as defined ben-
efit plans.
Commitments specific to various countries for defined
benefit pension plans and defined contribution pension
plans exist at the Mercedes-Benz Group.
22. Pensions and similar
obligations
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
248
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Group recognizes a provision for awarding the
PPSP in the Provisions for other risks in the Consoli-
dated Statement of Financial Position. Since payment
per vested phantom share depends on the quoted
price of Mercedes-Benz Group's share, that quoted
price essentially represents the fair value of each
phantom share at the balance sheet date. The propor-
tionate remuneration expenses from the PPSP recog-
nized in the individual years are measured based on
the price of Mercedes-Benz Group shares and the es-
timated target achievement.
terms. If the actual RoS for the automotive business is
below the strategic target in the third year of the per-
formance period, target achievement is limited to 195%.
In the case of plans PPSP 2020 to 2022, special rules
apply for the members of the Board of Management:
the Mercedes-Benz Group's RoS must be not only
equal to but higher than that of the competitors in
order to obtain the same target achievement as the
other plan participants. Furthermore, an additional limit
on target achievement was agreed upon for the refer-
ence parameter RoS for the members of the Board of
Management. In the case of target achievement be-
tween 195% and 200%, an additional comparison is
made on the basis of the RoS achieved in absolute
For the issued PPSP 2020 to 2022, the degree of target
achievement is determined on the basis of the relative
share performance, which measures the performance
development of the Mercedes-Benz Group share com-
pared with the development of a performance index
based on a group of competitors including the Mer-
cedes-Benz Group, and the return on sales (ROS) of the
Mercedes-Benz Group compared with the average
revenue-weighted RoS of a group of competitors. PPSP
2023 includes environmental, social and governance
(ESG) targets in the achievement of objectives in order
to promote the sustainable realignment and long-term,
sustainable development of the Group. From PPSP
2023, overall target achievement will be determined
based on the weighted achievement of the financial
targets (relative share performance and RoS) and the
ESG targets over the three-year performance period.
The achievement of the financial targets accounts for
80% and the achievement of the ESG targets for 20%
of the overall target achievement of the PPSP.
In 2023, as in previous years, the Group issued a Per-
formance Phantom Share Plan (PPSP), under which
eligible board members and employees of the Mer-
cedes-Benz Group are granted phantom shares enti-
tling them to receive cash payments after four years.
During the four-year period between the allocation of
the preliminary phantom shares and the payout of the
plan after the end of the term, the phantom shares
earn a dividend equivalent to the amount of the actual
dividend paid on real Mercedes-Benz Group shares in
the respective year. The amount of cash paid after the
end of the holding period is based on the final number
of vested phantom shares (determined after three
years according to the degree of target achievement of
specific performance indicators) multiplied by the
quoted price of the Mercedes-Benz Group's ordinary
shares (calculated as an average price over a specified
period after the end of the four-year plan period). The
vesting period is therefore four years. For the existing
plans, the quoted price of the phantom shares to be
used for the payout is limited to 2.5 times the phantom
share price at the date of grant. Furthermore, in the
case of the plans PPSP 2020 to 2022, the payout for
the members of the Board of Management is also lim-
ited to 2.5 times the allotment value used to determine
the preliminary number of phantom shares. The limita-
tion of the payout for the members of the Board of
Management also includes the dividend equivalents.
Performance Phantom Share Plans
Further Information
263
Further Information
-143
2022
Provisions for post-employment
healthcare benefits
330
338
1,090
1,021
1 Including the part of pension obligations that was reclassified to the balance sheet
item liabilities held for sale.
Defined benefit pension plans
Provisions for pension obligations are made for defined
benefit pension commitments to active and former
employees of the Mercedes-Benz Group and their sur-
vivors. The defined benefit pension plans provided by
the Group generally vary according to the economic,
tax and legal circumstances of the country concerned.
Most of the defined benefit pension commitments also
provide benefits in the case of invalidity and death.
Pension plans and pension.
plan assets
Most employees in Germany have defined benefit pen-
sion commitments; most of the pension commitments
for the active workforce are based on individual retire-
ment benefit accounts, to which the Company makes
annual contributions. The amount of the contributions
for non-exempt employees depends on the tariff clas-
sification in the respective year or on their respective
income; for executives it depends on their respective
income. For the commitments to retirement benefits
made prior to 2011, the contributions continue to be
converted into capital components and credited to the
individual pension accounts with the application of
fixed factors related to each employee's age. The con-
version factors include a fixed value increase. For the
commitments to retirement benefits made as of 2011,
the Company guarantees at a minimum the value of the
contributions paid into a cash-balance plan. Pension
payments are made either as a life annuity, twelve
annual instalments, or a single lump sum.
In addition, previously concluded defined benefit plans
exist which primarily depend on employees' wage-tariff
classification upon transition into the benefit phase
and which foresee a life annuity.
As well as the employer-financed pension plans grant-
ed by German companies, the employees of some
companies are also offered various earnings-
conversion models.
Most of the pension obligations in Germany relating to
defined benefit pension commitments are funded by
investment funds. Contractual trust arrangements
(CTA) exist between Mercedes-Benz Group AG as well
as some subsidiaries in Germany and the Mercedes-
Benz Pension Trust e. V. The Mercedes-Benz Pension
Trust e. V. acts as a collateral trust fund.
In 2018, Mercedes-Benz Group AG transferred certain
pension obligations and plan assets of retired employ-
ees and their survivors to Mercedes-Benz Pen-
sionsfonds AG (previously Daimler Pensionsfonds AG;
pension fund). These benefits are administrated by that
non-insurance-like pension fund, which falls under the
scope of the Act on the Supervision of Insurance Un-
dertakings and is therefore subject to the oversight of
the Federal Financial Supervisory Agency (BaFin).
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
264
Combined Management Report
Corporate Governance
683
760
Annual Report 2023 | Mercedes-Benz Group
Contents
At 31 December
2023
2022
2023
Provision
Expense
Effects of share-based payment
The details shown in the table do not represent any
paid or committed remuneration, but refer to expenses
calculated according to IFRS.
The pre-tax effects of share-based payment arrange-
ments for the executives of the Group and the mem-
bers of the Board of Management of Mercedes-Benz
Group AG on the Consolidated Statement of Income
and Consolidated Statement of Financial Position are
shown in the following table.
Moreover, 50% of the annual bonus of the members of
the Board of Management is paid out after a waiting
period of one year. The actual payout is determined by
the development of Mercedes-Benz Group shares
compared to an automobile-related index (Auto-
STOXX). The fair value of this medium-term annual
bonus, which depends on that development, is meas-
ured by using the intrinsic value at the reporting date.
At 31 December 2023, the Group has the 2020-2023
Performance Phantom Share Plans (PPSP) outstanding.
As instruments of share-based payment with cash set-
tlement, the PPSP are measured at their fair values on
the balance sheet date. They are paid out at the end of
their contractually defined periods; an earlier, propor-
tionate payout is only possible under certain conditions
when a beneficiary leaves the company. PPSP 2019 was
paid out as planned in the first quarter of 2023.
In millions of euros
21. Share-based payment
The changes in other reserves are included in other
comprehensive income/loss and are presented in the
Consolidated Statement of Comprehensive In-
come/Loss.
Other reserves comprise accumulated unrealized
gains/losses from currency translation of the financial
statements of the consolidated foreign companies and
accumulated unrealized gains/losses on financial as-
sets, derivative financial instruments and equity-
method investments.
Other reserves
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
261
To Our Shareholders
In other comprehensive income/loss 2023,
gains/losses on equity-method investments that may
be reclassified to profit/loss in the statement of in-
come in the future includes a loss of €247 million
(2022: gain of €141 million) from accumulated unreal-
ized gains/losses from currency translation.
437
359
68
140
Bonds
12,043
11,297
Other exchange-traded instruments
117
140
106
19,771
18,136
Alternative investments and other
non-exchange-traded instruments
642
609
Exchange-traded instruments
Securitized bonds
8,588
8,729
Composition of plan assets.
Plan assets are used solely to fulfil pension obligations
and to cover the administration costs of the plan as-
sets. The composition of the Group's pension plan
assets is shown in the following table.
Market prices are usually available for equity instru-
ments and bonds due to their listing in active markets.
Most of the bonds have investment grade ratings. They
include government bonds of very good creditworthi-
ness.
Composition of plan assets
In millions of euros
At 31 December
2023
2022
Equity instruments¹
Government bonds
7,611
6,733
3,174
2,569
Corporate bonds
Real estate
Further Information
642
Cash and cash equivalents
-522
Past service cost,
curtailments and settlements
1
Net interest expense
Net interest income
-23
-351
-45
12
-342
-554
Measurement assumptions
The measurement date for the defined benefit pension
obligations and plan assets is generally 31 December.
The measurement date for the periodic pension cost is
generally 1 January. The assumptions used to calculate
the defined benefit obligations vary according to the
economic conditions of the countries in which the pen-
sion plans are situated.
Calculation of the pension obligations uses life expec-
tancy for the German plans based on the Heubeck 2018
G mortality tables. Comparable country-specific calcu-
lation methods are used for international plans.
32
Current service cost
The components of pension costs included in the
Consolidated Statement of Income are shown in the
following table.
Pension costs
835
1,139
Non-exchange-traded instruments
2,119
2,390
Fair value of plan assets
21,890
20,526
1 Including the shares in Daimler Truck in the amount of €1,398 million
(2022: €1,190 million) and in Nissan Motor Co., Ltd. in the amount of €526 million
(2022: €434 million).
Pension costs
2023
2022
In millions of euros
The investment strategy is reviewed regularly and ad-
justed if deemed necessary. The investment strategy is
determined by Investment-Committees, which are
generally composed of representatives of the Finance
and Human Resources departments. The investment
strategy for the pension plan assets is generally orient-
ed towards the structure of the pension obligations.
642
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
-7,860
1,308
-7,910
-1
-937
-933
1,316
45
20,444
Present value of the defined benefit obligations at 1 January
Current service cost
Interest cost
Contributions by plan participants
Actuarial gains (-)/losses from changes in demographic assumptions
-103
-50
-8
41
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Reconciliation of the defined benefit
obligations and the fair value of the
plan assets
Present value of the defined benefit obligations and fair value of the plan assets
In millions of euros
2023
2022
20,444
28,504
351
522
742
324
39
Actuarial gains (-)/losses from changes in financial assumptions
Actuarial gains (-)/losses
Past service cost, curtailments and settlements
Pension benefits paid
-4,216
122
1,448
39
40
-898
-890
70
-68
21,890
20,526
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
267
2,031
Annual Report 2023 | Mercedes-Benz Group
-4,507
291
Currency exchange-rate changes and other changes
Present value of the defined benefit obligations at 31 December
21,992
Fair value of plan assets at 1 January
Interest income from plan assets
Actuarial gains/ losses (-)
Actual profit/loss on plan assets
Contributions by the employer
Contributions by plan participants
Pension benefits paid
Currency exchange-rate changes and other changes
Fair value of plan assets at 31 December
20,526
24,212
751
1,280
Contents
To Our Shareholders
Combined Management Report
In millions of euros
Balance at 31 December 2022
thereof current
thereof non-current
Additions
Utilizations
Provisions for other risks
Reversals
Exchange-rate effects and other changes
Balance at 31 December 2023
thereof current
thereof non-current
Litigation
Personnel
Compounding and effects from changes in discount rates
The development of provisions for other risks is as
follows.
Notes to the Consolidated Financial Statements
Further Information
The Mercedes-Benz Group issues various types of
product warranties, under which it generally guaran-
tees the performance of products delivered and ser-
vices rendered for a certain period. The provision
for these product warranties covers expected costs
for legal and contractual warranty claims as well as
expected costs for goodwill concessions and recall
campaigns. This also includes measures relating to
Mercedes-Benz diesel vehicles in various regions as
well as recalls, in particular for an extended recall of
Takata airbags. The utilization date of product warran-
ties depends on the incidence of the warranty claims
and can span the entire term of the product warranties
and the goodwill period. The cash outflows in relation
to non-current provisions are primarily expected within
a period until 2026.
Personnel and social costs
Provisions for personnel and social costs primarily
comprise expected expenses of the Group for employ-
ee anniversary bonuses, profit-sharing bonuses for
non-exempt employees and variable remuneration for
management as well as early-retirement and partial-
retirement plans. The additions recorded to the provi-
sions for profit-sharing bonuses and variable remuner-
ation in the reporting year usually result in cash out-
flows in the following year. The cash outflows for non-
current provisions for personnel and social costs are
primarily expected within a period until 2032.
Liability and litigation risks and
regulatory proceedings
Provisions for liability and litigation risks and regulatory
proceedings comprise costs for various legal proceed-
ings, claims and governmental investigations, which
can lead in particular to payments of compensation,
punitive damages or other costly actions. They primari-
ly include risks from litigation and regulatory proceed-
ings in relation to Mercedes-Benz diesel vehicles. The
cash outflows in relation to non-current provisions are
primarily expected within a period until 2026.
Further information on liability and litigation risks and
regulatory proceedings is provided in Note 30.
Other
Provisions for other risks primarily comprise expected
costs for provisions for environmental protection, other
taxes and charges related to income taxes as well as
obligations from outstanding commission. They also
include provisions for anticipated losses on pending
transactions and various other risks which cannot be
allocated to any other class of provision.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
270
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Product
warranties
and social
risks and
regulatory
costs proceedings
567
1,454
7,812
-3,377
-2,242
-206
-1,106
-6,931
-357
-78
-502
-286
-1,223
217
142
2,308
Product warranties
3,483
337
Others
Total
6,576
4,613
2,755
2,079
16,023
3,204
2,422
2,217
1,742
9,585
3,372
2,191
538
6,438
10
23. Provisions for other risks
Further Information
2.2
At 31 December
2023
2022
Sensitivity to
Discount rates
3.2
2.2
3.8
5.3
Expected increase
discount rates
discount rates
+ 0.25%
-617
-569
5.0
In millions of euros
2022
Inter-
national
Inter-
national
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
268
Further Information
The following significant weighted average measure-
ment factors are used to calculate pension benefit
obligations.
Significant factors for the calculation of pension benefit obligations
in %
An increase or decrease in the main actuarial assump-
tions would have the following effects on the present
value of the defined benefit pension obligations.
Sensitivity analysis for the present value of defined benefit obliga-
tions
At 31 December
2023
2022
At 31 December
2023
Germany
Germany
- 0.25%
649
597
in cost of living¹
Sensitivity analysis
The calculations carried out by actuaries were done in
isolation for the evaluation parameters regarded as
important. This means that if there is a simultaneous
change in several parameters, the individual results
cannot be summed due to correlation effects. With a
change in the parameters, the sensitivities shown can-
not be used to derive a linear development of the de-
fined benefit obligation.
Calculation of the sensitivity of life expectancy by
means of fixed (non-age-dependent) factors for a ref-
erence person results in a life expectancy one year
higher or one year lower.
Effect on future cash flows
For the year 2024, the Group plans to make contribu-
tions of €0.1 billion to the plan assets; the final amount
is usually set in the fourth quarter of a year. The pen-
sions benefits paid are expected to amount to
€1.1 billion in 2024.
The weighted average duration of the defined benefit
obligations amounts to 13 years (2022: 13 years).
Defined contribution pension plans
Under defined contribution pension plans, the
Mercedes-Benz Group makes defined contributions to
external insurance policies or investment funds. There
are fundamentally no further contractual obligations or
risks for the Mercedes-Benz Group in excess of the
defined contributions. The Group also pays contribu-
tions to governmental pension schemes. In 2023, the
total costs from defined contribution plans amounted
to €1.0 billion (2022: €1.0 billion). Of those payments,
€1.0 billion (2022: €1.0 billion) was related to state
pension plans.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
269
Combined Management Report
Corporate Governance
Consolidated Financial Statements
1 For German plans - depending on the design of the specific plan - expected increases
in cost of living may affect the obligation to the Group's active employees as well as to
retirees and their survivors. For most international plans, expected increases in cost of
living do not have a material impact on the amount of the obligation.
Notes to the Consolidated Financial Statements
-271
- 1 year
expected increases
in cost of living
+ 0.10%
58
54
expected increases
in cost of living
- 0.10%
-58
-53
life expectancy
+ 1 year
2022
304
life expectancy
-320
Provisions for pension benefits
Liabilities from ABS transactions
Contents
1,238
3,135
4,202
1,520
2,682
157
2
155
208
39
4,373
169
4
1,564
1,573
8
1,565
2,648
1,232
1,416
2,421
1,473
1,568
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
2022
2023
Interest paid
Changes in other operating assets and liabilities
In millions of euros
In the previous year, this item was affected in particu-
lar by the Group's share in the gains/losses on equity-
method investments, the result from the fair value
measurement of equity instruments and the result of
the remeasurement of the shares of Mercedes-Benz
Grand Prix Ltd., that the Mercedes-Benz Group contin-
ues to hold. In addition, the other non-cash expense
and income was impacted by the depreciation of the
remaining financial services volumes of the Daimler
commercial vehicle business, sold to Daimler Truck
Holding AG or its subsidiaries in 2022.
The other non-cash expense and income shown in the
reconciliation of profit before income taxes to cash
flow from operating activities in the reporting year
primarily comprised the Group's share of gains/losses
on equity-method investments and the result from the
fair value measurement of debt instruments.
2022
2023
Cash flows included in Cash flow from operating activities
The following cash flows are included in Cash flow from
operating activities.
In the prior year, significant positive effects resulted
from assets in connection with the securitization of
receivables and from contractual liabilities for price
discounts. This was partially offset by lower negative
effects in miscellaneous other financial liabilities and
the contract liabilities for service and maintenance
agreements.
The increase in miscellaneous other assets and liabili-
ties compared with the previous year was primarily
related to miscellaneous other financial assets, liabili-
ties from accrued interest and deferred income.
Other operating assets and liabilities changed as
follows.
Cash flow from operating activities
At 31 December 2023, cash and cash equivalents in-
cluded restricted funds of €91 million (2022: €187 mil-
lion). The restricted funds representing cash and cash
equivalents were related to subsidiaries where foreign
exchange controls apply, so that the Group has re-
stricted access to the funds.
Calculation of funds
29. Consolidated Statement
of Cash Flows
Further Information
276
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
948
Interest received
Total
Total
10,391
Contract and refund liabilities
4,721
4,566
Refund liabilities
240
330
Other refund liabilities
4,481
4,236
10,554
Obligations from sales transactions
5,825
Contract liabilities
1,672
Other contract liabilities
4,161
4,147
and extended warranties
Service and maintenance contracts
In millions of euros
2022
5,833
thereof non-current
3,514
3,656
Current Non-current
2022
2023
At 31 December
At 31 December
Further Information
275
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
Miscellaneous other liabilities
Other tax liabilities
Income tax liabilities
In millions of euros
Other liabilities
Other liabilities are composed as follows.
28. Other liabilities
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
6,898
6,877
thereof current
Current Non-current
At 31 December
2023
-306
630
Combined Management Report
279
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
missible defeat devices. Mercedes-Benz has a contrary
legal opinion on this question and has filed timely ob-
jections against the KBA's administrative orders and
determinations mentioned above. Insofar as the KBA
has not remedied the objections, Mercedes-Benz has
filed lawsuits with the competent administrative court
to have the controversial questions at issue clarified in
a court of law. Irrespective of such objections and the
lawsuits that are now pending, the Mercedes-Benz
Group continues to cooperate fully with the KBA. To a
large extent, the remedial actions requested by the
KBA were developed by the Mercedes-Benz Group and
assessed and approved by the KBA; the necessary
recalls were initiated. For some of the vehicles affected
by the KBA's decision from December 2023, develop-
ments, examinations and approvals of the remedial
measures are still pending. It cannot be ruled out that
under certain circumstances, software updates may
have to be reworked, or further delivery and registra-
tion stops may be ordered or resolved by the company
as a precautionary measure, also with regard to the
used car, leasing and financing businesses. In the
course of its regular market supervision, the KBA rou-
tinely conducts further reviews of Mercedes-Benz ve-
hicles and asks questions about technical elements of
the vehicles. In addition, the Group continues to be in a
dialogue with the German Federal Ministry for Digital
and Transport (BMDV) to conclude the analysis of the
diesel-related emissions matter and to further the up-
date of affected customer vehicles. In light of the
aforementioned administrative orders issued by the
KBA, and continued discussions with the KBA and the
Between 2018 and 2020, the German Federal Motor
Transport Authority (KBA) issued subsequent auxiliary
provisions for the EC type approvals of certain Mer-
cedes-Benz diesel vehicles, and ordered mandatory
recalls as well as, in some cases, stops of the first reg-
istration. In autumn 2022 and in December 2023, the
KBA issued further decisions regarding vehicles
equipped with various EU6 or EU5 diesel engines. In
each of those cases, it held that certain calibrations of
specified functionalities are to be qualified as imper-
In Germany, the Stuttgart public prosecutor's office
issued a fine notice against Mercedes-Benz in Septem-
ber 2019 based on a negligent violation of supervisory
duties, thereby concluding the related administrative
offense proceedings against Mercedes-Benz. In July
2021, the local court of Böblingen issued penal orders
against three Mercedes-Benz employees based on,
amongst others, fraud, which have become final. The
criminal investigation proceedings of the Stuttgart pub-
lic prosecutor's office against further Mercedes-Benz
employees on the suspicion of, amongst others, fraud
have meanwhile been discontinued.
In Canada, the environmental regulator Environment
and Climate Change Canada (ECCC) is conducting an
investigation in connection with diesel exhaust emis-
sions based on the suspicion of potential violations of,
amongst others, the Canadian Environmental Protec-
tion Act, as well as undisclosed AECDs and defeat de-
vices. The Mercedes-Benz Group continues to cooper-
ate with the investigating authorities.
As already reported, in April 2016, the U.S. Department
of Justice (DOJ) requested that the Mercedes-Benz
Group conduct an internal investigation. The Mercedes-
Benz Group conducted such an internal investigation in
cooperation with the DOJ's investigation; the DOJ's
investigation remains open. In addition, further US
state authorities have opened investigations pursuant
to both local environmental and consumer protection
laws and have requested documents and information.
Corporate Governance
As part of these settlements, the Mercedes-Benz Group
has denied the allegations by the authorities and has
not admitted liability, but has agreed to, among other
things, pay civil penalties, conduct an emission modifi-
cation programme for the affected vehicles and take
certain other measures. The failure to meet certain of
those obligations may trigger additional stipulated
penalties. In the first quarter of 2021, the Mercedes-
Benz Group paid the civil penalties; provisions have
been recognized for the emission modification pro-
gramme and other measures.
278
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In the United States, Mercedes-Benz Group AG and
Mercedes-Benz USA, LLC (MBUSA) reached agreements
in the third quarter of 2020 with various authorities to
settle civil environmental claims regarding the emission
control systems of certain diesel vehicles. These
agreements have become final and effective. The au-
thorities took the position that the Mercedes-Benz
Group had failed to disclose Auxiliary Emission Control
Devices (AECDs) in certain of its US diesel vehicles and
that several of these AECDs were illegal defeat devices.
The corresponding activities of various authorities
worldwide, which were already reported in the past, are
partly ongoing, as described below. These activities
particularly relate to test results, the emission control
systems used in Mercedes-Benz diesel vehicles and/or
the interactions of the Mercedes-Benz Group with the
relevant authorities as well as related legal issues and
implications, including, but not limited to, under appli-
cable environmental, criminal, consumer protection
and antitrust laws.
The Mercedes-Benz Group is continuously subject to
governmental information requests, inquiries, investi-
gations, administrative orders and proceedings relating
to various laws and regulations in connection with die-
sel exhaust emissions.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
BMDV, it cannot be ruled out completely that addition-
al administrative orders may be issued in the course of
the ongoing and/or further investigations. Since 1 Sep-
tember 2020, this also applies to other responsible
authorities of other member states and the European
Commission, which conduct market surveillance under
the new European Type Approval Regulation and can
take measures upon assumed non-compliance, irre-
spective of the place of the original type approval, and
also to the British market surveillance authority DVSA
(Driver and Vehicle Standards Agency).
Starting in July 2017, a number of class action suits
were filed in the United States and Canada against
Mercedes-Benz Group AG and other manufacturers of
automobiles as well as a number of their North Ameri-
can subsidiaries. Plaintiffs allege to have suffered dam-
ages because defendants engaged in anticompetitive
behaviour relating to vehicle technology, costs, suppli-
ers, markets, and other competitive attributes, includ-
ing diesel emissions control technology, since the
1990s. In June 2022, the proceedings in the United
States were dismissed with final effect in favour of the
concerned Mercedes-Benz Group companies. Further-
more, in 2023, several class actions in Canada were
finally dismissed as the plaintiffs discontinued their
claims. The Mercedes-Benz Group also expects the
Other legal proceedings
With respect to the legal proceedings described in the
two preceding chapters, in accordance with IAS 37.92
no further information is disclosed with respect to
whether, or to what extent, provisions have been rec-
ognized and/or contingent liabilities have been dis-
closed, so as not to prejudice the Mercedes-Benz
Group's position. For recognized provisions, this does
not apply to the extent that a settlement has been
reached or a proceeding has been concluded.
Accounting assessment of the
legal proceedings in connection with
diesel emission behaviour
in the model case proceedings. The decision in the
model case proceedings is binding for the suspended
main proceedings. Multiple investors have used the
possibility to register claims in a considerable amount
with the model case proceedings in order to suspend
the period of limitation. Mercedes-Benz Group AG re-
mains of the view to have duly fulfilled its disclosure
obligations under capital markets law and defends
itself against the investors' allegations also in these
model case proceedings.
a decision that is binding for the main proceedings
regarding common factual and legal questions. The
main proceedings before the Stuttgart Regional Court
will be suspended until a decision is reached on the
questions submitted, insofar as they cannot be dis-
missed independently of the questions to be decided
In addition, investors from Germany and abroad have
filed lawsuits for damages with the Stuttgart Regional
Court alleging the violation of disclosure requirements
(main proceedings) and also raised out-of-court claims
for damages. The investors allege that Mercedes-Benz
Group AG did not immediately disclose inside infor-
mation in connection with the emission behaviour of its
diesel vehicles and that it had made false and mislead-
ing public statements. They further claim that the pur-
chase price of the financial instruments acquired by
them (in particular Mercedes-Benz Group shares, for-
merly Daimler AG shares) would have been lower if
Mercedes-Benz Group AG had complied with its disclo-
sure obligations. Mercedes-Benz Group AG regards
these allegations and claims as being without merit and
will defend itself against them. In this context, the
Stuttgart Higher Regional Court initiated model case
proceedings under the German Act on Model Case
Proceedings in Disputes under Capital Markets Law
(KapMuG) in December 2021 (model case proceedings).
The purpose of the model case proceedings is to reach
Mercedes-Benz Group AG and the respective other
affected companies of the Group regard the pending
lawsuits set out above as being without merit and con-
tinue to defend themselves against the claims.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
280
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
In Germany, a large number of customers of diesel
vehicles have filed lawsuits for damages or rescission
of sales contracts. They assert that the vehicles con-
tained illegal defeat devices and/or showed impermis-
sibly high emission or consumption values. They refer
in particular to the KBA's recall orders (see above).
Although the number of pending cases is declining, a
future increase cannot be ruled out. Based on similar
allegations, the Federation of German Consumer Or-
ganizations (Verbraucherzentrale Bundesverband e. V.)
filed a model declaratory action (Musterfeststellungs-
klage) against Mercedes-Benz Group AG with the
Stuttgart Higher Regional Court in July 2021. Such an
action seeks a ruling that certain preconditions of al-
leged consumer claims are met. Following a decision of
the European Court of Justice in the first quarter of
2023, the German Federal Court of Justice ruled in the
second quarter of 2023 that vehicle purchasers are
entitled to claim damages against the manufacturer if it
intentionally or negligently used an inadmissible defeat
device.
consist of several individual lawsuits that have been
consolidated into a class action. A class action lawsuit
is also pending in Scotland. In these proceedings, al-
legedly injured parties must actively register for the
enforcement of claims (opt-in). The plaintiffs in the
consumer class action in England and Wales also al-
lege, among other things, anti-competitive behaviour
relating to technology for the treatment of diesel ex-
haust emissions.
Consumer class actions were filed against Mercedes-
Benz Group AG in Israel in February 2019 as well as
against Mercedes-Benz Group AG and further Group
companies in the United Kingdom since May 2020, in
the Netherlands since June 2020, in Portugal as well as
since November 2022 in Australia. The plaintiffs inter
alia assert that the Mercedes-Benz Group had used
devices that impermissibly impair the effectiveness of
emission control systems in reducing nitrogen-oxide
(NOx) emissions and which cause excessive emissions
from vehicles with diesel engines. Furthermore, they
claim that Mercedes-Benz Group AG deceived consum-
ers in connection with advertising Mercedes-Benz die-
sel vehicles. The proceedings in England and Wales
In a lawsuit filed by the Environmental Protection
Commission of Hillsborough County, Florida in Sep-
tember 2020, the plaintiff claimed that, amongst oth-
ers, Mercedes-Benz Group AG and MBUSA had violated
municipal regulations prohibiting vehicle tampering and
other conduct by using alleged devices claimed to im-
pair the effectiveness of emission control systems. The
lawsuit was dismissed in the third quarter of 2022. The
plaintiff's appeal to this decision was dismissed in the
third quarter of 2023. The decision is final, and the
proceedings are concluded.
Diesel emission behaviour:
consumer actions and other lawsuits
in the United States, Germany and
other states
The Mercedes-Benz Group continues to fully cooperate
with the authorities and institutions.
In addition to the aforementioned authorities, authori-
ties of various foreign states, particularly the South
Korean Ministry of Environment and the South Korean
competition authority (Korea Fair Trade Commission)
are conducting various investigations and/or proce-
dures in connection with diesel exhaust emissions. In
this context, these South Korean authorities have made
determinations and imposed sanctions against Mer-
cedes-Benz which Mercedes-Benz has appealed. In the
same context, national antitrust authorities of various
countries are also conducting investigations, including
the South Korean antitrust authority, which has made
certain findings and imposed fines on some car manu-
facturers. In February 2024, the criminal proceeding in
South Korea was concluded.
Diesel emission behaviour:
governmental proceedings.
-486
Mercedes-Benz Group AG and its subsidiaries are con-
fronted with various legal proceedings, claims as well
as governmental investigations and orders (legal pro-
ceedings) on a large number of topics, including vehicle
safety, emissions, fuel economy, financial services,
dealer, supplier and other contractual relationships,
intellectual property rights (including but not limited to
patent infringement actions), warranty claims, envi-
ronmental matters, antitrust matters (including actions
for damages) as well as investor litigation. Product-
related litigation involves, among other things, claims
alleging faults in vehicles. Some of these claims are
asserted by way of class actions. If the outcome of
such legal proceedings is detrimental to the Mercedes-
Benz Group or such legal proceedings are settled, the
Group may encounter substantial financial burdens,
e.g. from damages payments or service actions, recall
campaigns, monetary penalties or other costly actions,
which would adversely affect the earnings of Mer-
cedes-Benz Group AG. Legal proceedings and related
settlements may also have an impact on the company's
reputation.
The lower cash outflow relative to the same period of
the prior year is primarily due to the significantly higher
repayments of liabilities from financing activities in the
prior year.
Annual Report 2023 | Mercedes-Benz Group
358
1,624
107
1,192
Miscellaneous other assets and liabilities
-104
-55
Financial instruments
130
Contents
307
Dividends received from other
355
487
Provisions
1,605
2,056
equity-method investments
Dividends received from
In millions of euros
231
shareholdings
To Our Shareholders
277
Combined Management Report
-1,211
865
Other changes
145
46
Fair value changes
580
-2,787
-13,344
-596
-384
Change of control in subsidiaries
Changes in foreign exchange-rates
-697
Cash flows
2022
2023
In millions of euros
Changes in liabilities arising from financing activities
Liabilities arising from financing activities, divided into
cash and non-cash components, changed as follows.
Cash flow from financing activities includes cash flows
from hedging the currency risks of financing liabilities.
Cash flow from financing activities includes payments
for the reduction of outstanding leasing liabilities of
€640 million (2022: €565 million).
Cash flow from financing activities
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
30. Legal proceedings
Contract and refund liabilities
Following table shows the composition of contract and
refund liabilities.
27. Contract and refund liabilities
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
111,837
62,051
49,786
108,638
63,724
44,914
748
25. Other financial liabilities
288
741
210
531
2,645
2,047
598
2,166
1,713
453
16,885
460
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
317
Total
Current Non-current
Total
Current Non-current
2022
2023
At 31 December
At 31 December
Further Information
272
Miscellaneous other financial liabilities
Other
Deposits received
Accrued interest expenses
Liabilities from wages and salaries
Liabilities from residual value guarantees
Financial liabilities recognized at fair value through profit or loss
Derivative financial instruments used in hedge accounting
In millions of euros
Other financial liabilities
Further information on other financial liabilities is pro-
Ivided in Note 32.
The composition of other financial liabilities is shown in
the following table.
9,452
798
7,433
8,497
2022
2023
At 31 December
At 31 December
Further Information
271
31 December 2023 is provided in Note 33.
Information on the maturities of lease liabilities as of
Loans, other financing liabilities
Lease liabilities
Current Non-current
Deposits in the direct banking business
Commercial paper
Bonds
In millions of euros
Financing liabilities
The composition of financing liabilities is as follows.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
24. Financing liabilities
To Our Shareholders
Liabilities to financial institutions
Total
Current Non-current
Total
7,172
10,538
1,009
9,529
5,759
134
5,625
24,738
7,250
17,488
25,317
9,698
15,619
2,184
10
54,099
41,995
12,104
2,174
3,470
18
55,516
43,454
12,062
3,452
15,669
1,115
672
1,611
1,097
236
141
95
263
138
125
Deferred income resulting from repurchase agreements that are accounted for as operating leases
Deferral of advance rental payments received from operating lease arrangements
Total
Current Non-current
995
Total
2022
2023
At 31 December
At 31 December
Further Information
273
In millions of euros
Deferred income
The composition of deferred income is as follows.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Current Non-current
2,092
985
962
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
274
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
2,625
1,234
1,391
2,701
1,223
1,478
442
131
311
346
90
256
Other deferred income
1,947
Corporate Governance
Combined Management Report
26. Deferred income
To Our Shareholders
663
810
-
810
952
6
946
870
6
864
733
258
475
757
238
519
171
146
25
188
68
120
2,283
663
Annual Report 2023 | Mercedes-Benz Group
248
702
Contents
Annual Report 2023 | Mercedes-Benz Group
7,928
2,524
5,404
7,118
1,642
5,476
5,474
767
4,707
5,815
776
5,039
2,472
79
2,393
2,676
78
2,598
654
424
230
454
1,678
Contents
Corporate Governance
thereof liabilities from ABS transactions
thereof bonds
Financing liabilities
Fair values of financial liabilities measured at cost
Receivables from financial services
Fair values of financial assets measured at cost
In millions of euros
Measurement hierarchy of financial assets and liabilities not recognized at fair value
The following table shows into which measurement
hierarchies (according to IFRS 13) the fair values of the
financial assets and liabilities are classified, which are
not recognized at fair value in the Consolidated State-
ment of Financial Position.
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Net gains/losses on other financial assets and liabilities
recognized at fair value through profit or loss comprise
gains and losses attributable to changes in their fair
values.
Combined Management Report
288
To Our Shareholders
Contents
171
171
Derivative financial instruments used in hedge accounting
1,115
1,115
2,283
thereof other financing liabilities
2,283
1,303
1,303
2,454
2,454
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs, that are observable on an active market either directly (i.e., as prices) or indirectly (i.e., derived from prices).
3 Fair value measurement is based on inputs, for which no observable market data is available.
Annual Report 2023 | Mercedes-Benz Group
Financial liabilities recognized at fair value
1 Fair value measurement is based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2 Fair value measurement is based on inputs that are observable on an active market either directly (i.e., as prices) or indirectly (i.e., derived from prices).
3 Fair value measurement is based on inputs for which no observable market data is available.
At 31 December
38,729
68,688
55,046
49,437
5,609
52,668
107,417
38,729
15,696
15,696
16,839
16,839
35,265
35,265
13,939
188
56,570
106,007
At 31 December
2023
Total
Level 11
Level 22
Level 33
49,437
Total
Level 22
2022
Level 33
89,847
89,847
86,343
86,343
Level 11
37,910
188
649
1,439
684
406
417
1,507
249
1,392
1,641
50
1,105
1,155
3
4,457
4,460
4
5,607
5,611
Total
Level 11
Level 22
2023
Level 33
Total
Level 11
457
Level 22
6,766
6,712
54
6,101
5,849
252
2022
Level 33
339
643
649
584
578
6
2,660
2,660
2,463
8
2,463
7,129
3,459
692
10,587
6,306
3,632
11,280
Financial liabilities recognized at fair value through profit or loss
339
212
59
214
376
671
116
124
347
431
358
192
308
768
341
215
858
37,910
Annual Report 2023 | Mercedes-Benz Group
Contents
-7
at (amortized) cost
Financial assets measured
through other comprehensive income
recognized at fair value
Other financial assets
4
4
through other comprehensive income
Equity instruments recognized at fair value
94
-49
through profit or loss¹
recognized at fair value
-173
-21
2022
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
290
Further Information
Net gains or losses
-760
The following table shows the net gains/losses on
financial instruments included in the Consolidated
Statement of Income (excluding derivative financial
instruments used in hedge accounting).
In millions of euros
Equity and debt instruments recognized at fair
value through profit or loss
Other financial assets
and financial liabilities
2023
Net gains/losses
-651
Financial liabilities measured
at (amortized) cost
thereof from financial assets and liabilities
measured at (amortized) costs
4,571
5,528
Total interest income
In millions of euros
2022
5,458
2023
Total interest income and total interest expense
for financial assets or financial liabilities that are not
recognized at fair value through profit or loss are
shown in the following table.
Total interest income and total
interest expense
Net gains/losses on financial liabilities measured at
(amortized) cost (excluding the interest income/
expense shown below) primarily comprise exchange-
rate effects.
Net gains/losses on financial assets measured at
(amortized) cost (excluding the interest in-
come/expense shown below) primarily comprise im-
pairment losses (including reversals of impairment
losses) of minus €406 million (2022: minus €610 mil-
lion) that are charged to cost of sales, selling expenses
and other financial income/expense, net. Foreign cur-
rency gains and losses are also included.
Net gains/losses on other financial assets recognized
at fair value through other comprehensive income are
primarily attributable to exchange-rate effects.
Net gains/losses on equity instruments recognized at
fair value through other comprehensive income com-
prise dividend payments.
Total interest income and total interest expense
To Our Shareholders
4,550
70
109
-172
1 The amounts relate to derivative financial instruments that are not used in hedge
accounting.
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
thereof from financial assets
recognized at fair value through
other comprehensive income
thereof from financial assets
recognized at fair value through
other comprehensive income
-1,980
measured at (amortized) costs
thereof from financial assets and liabilities
-1,980
-2,936
Total interest expense
21
-2,936
Contents
Annual Report 2023 | Mercedes-Benz Group
171
Equity instruments and debt instruments
Other financial assets recognized at fair value through profit or loss³
Financial liabilities measured at (amortized) cost
Trade payables
Financing liabilities4
Miscellaneous other financial liabilities5
Marketable debt securities and similar investments
Obligations from sales transactions
1 The carrying amounts of derivative financial instruments used in hedge accounting are not included in the table as these financial instruments are not assigned to a measurement category.
2 This does not include lease receivables of €19,235 million (2022: €18,851 million) as these are not assigned to a measurement category.
3 These amounts relate to derivative financial instruments that are not included in hedge accounting.
4 This does not include liabilities from lease transactions of €2,207 million (2022: €2,645 million) as these are not assigned to a measurement category.
5 This does not include financial guarantees of €4 million (2022: €7 million) as these are not assigned to a measurement category.
289
Further Information
Financial liabilities recognized at fair value through profit or loss³
At 31 December
2023
Financial assets recognized at fair value through profit or loss
Marketable debt securities and similar investments
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Measurement categories
Carrying amounts of financial instruments according to measurement categories¹
Equity instruments and debt instruments
In millions of euros
Receivables from financial services²
Trade receivables
Cash and cash equivalents
Marketable debt securities and similar investments
Other receivables and miscellaneous other financial assets
Financial assets recognized at fair value through other comprehensive income
Financial assets measured at (amortized) cost
At 31 December
2022
96,549
5,611
4,460
649
671
347
584
5,715
129,451
12,850
106,517 109,192
12,204
5,848
5,447
4,236
4,481
188
131,324
95,472
6,607
858
68,976
66,698
7,419
8,100
15,972
17,679
768
92
3,013
3,113
2,013
2,409
1,155
1,641
959
At 31 December
Net gains/losses on equity and debt instruments rec-
ognized at fair value through profit or loss primarily
comprise gains and losses attributable to changes in
the fair values of these instruments.
Other financial assets recognized at fair value through profit or loss
Receivables from financial services
2022
Fair value
At 31 December
Further Information
285
Carrying amount
Fair value
2023
At 31 December
Carrying amount
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
In millions of euros
Carrying amounts and fair values of financial instruments
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
See Note 1 for further qualitative descriptions of ac-
counting for and presentation of financial instruments
(including derivative financial instruments).
Miscellaneous other financial liabilities are carried at
amortized cost. Because of the predominantly short
maturities of these financial instruments, it is assumed
that the fair values approximate the carrying amounts.
Financial liabilities recognized at fair value through
profit or loss comprise derivative financial instruments
not used in hedge accounting. For information regard-
ing these financial instruments as well as derivative
financial instruments used in hedge accounting, see the
notes above under Marketable debt securities and
similar investments, other financial assets.
Other financial liabilities
Contract and refund liabilities include obligations from
sales transactions that qualify as financial instruments.
Obligations from sales transactions should generally be
regarded as current. Due to the short maturities of
these financial instruments, it is assumed that their fair
values are equal to the carrying amounts.
Contract and refund liabilities
Reverse factoring agreements did not change the rele-
vant characteristics of a trade payable for the Group
for the liabilities concerned. As a result, there were no
reclassifications of these trade payables to financing
liabilities.
Due to the short maturities of these financial instru-
ments, it is assumed that their fair values are equal to
the carrying amounts.
Trade receivables
Cash and cash equivalents
Marketable debt securities and similar investments
88,211
92
92
Measured at cost
1,641
1,641
1,155
1,155
Recognized at fair value through other comprehensive income
4,460
4,460
5,611
5,611
Recognized at fair value through profit or loss
Trade payables
7,060
6,858
6,858
17,679
17,679
15,972
15,972
8,100
8,100
7,419
7,419
86,343
85,549
89,847
7,060
959
Financing liabilities are measured at amortized cost.
The fair values of bonds, loans, commercial paper,
deposits in the direct banking business and liabilities
from ABS transactions are calculated as present values
of the estimated future cash flows (taking account of
credit premiums and credit risks). Market interest rates
for the appropriate terms are used for discounting.
Other financial receivables and other financial assets
are carried at amortized cost. Because of the predomi-
nantly short maturities and the fundamentally lower
credit risk of these financial instruments, it is assumed
that the fair values approximate the carrying amounts.
Annual Report 2023 | Mercedes-Benz Group
In addition, the Mercedes-Benz Group issued irrevo-
cable loan commitments at 31 December 2023. These
loan commitments had not been utilized as of that
date. Further information with respect to these irrevo-
cable loan commitments is provided in Note 33.
At 31 December 2023, other financial obligations exist
from the acquisition of intangible assets, property,
plant and equipment and lease property of
€5,684 million (2022: €5,729 million).
Other financial obligations
At 31 December 2023, the best estimate for obligations
from contingent liabilities was €2,553 million (2022:
€4,122 million). The other contingent liabilities are
mainly related to the legal proceedings and product
warranties described in Note 30. Compared to the pre-
vious year, the decrease in contingent liabilities is a
result of discontinuing the business activities in Russia
and the disposal of contingent liabilities with the reali-
zation of the transaction.
Contingent liabilities
31. Contingent liabilities and
other financial obligations
Mercedes-Benz Group AG and its subsidiaries recog-
nize provisions in connection with pending or threat-
ened proceedings to the extent an obligation is proba-
ble and can be reasonably estimated. Such provisions
are recognized in the Group's Consolidated Financial
Statements and are based on estimates. If quantifiable,
contingent liabilities in connection with legal proceed-
ings are disclosed in the Group's Consolidated Finan-
cial Statements. Risks resulting from legal proceedings
sometimes cannot be assessed reliably or only to a
limited extent. Consequently, provisions recognized for
some legal proceedings may turn out to be insufficient
once such proceedings have ended. The Mercedes-
Benz Group may also become liable for payments in
legal proceedings for which no provisions were recog-
nized and/or contingent liabilities were disclosed. Un-
certainty exists with regard to the amounts or due
dates of possible cash outflows. Although the final
result of any such proceedings could materially affect
the Group's operating results and cash flows for a par-
ticular reporting period, the Mercedes-Benz Group
believes that it should not exert a sustained influence
on the Group's financial position.
Accounting estimates and manage-
ment judgements relating to all legal
proceedings
Further Information
282
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Since 2022, a class action has been pending in the
United States alleging claims based on a voluntary
recall of certain Mercedes-Benz ML-, GL- and R-Class
vehicles produced during the 2004-2015 model years
for potentially corroded brake boosters. Among other
things, the plaintiffs allege that the brake boosters in
such vehicles can corrode and lead to reduced braking
force. They allege failure to disclose the claimed defect
and assert various claims. A similar class action was
filed in Israel. The Mercedes-Benz Group considers the
lawsuits to be without merit and defends itself against
them.
In October 2021, a number of Australian Mercedes-
Benz dealers lodged a claim against Mercedes-Benz
Australia/Pacific Pty Ltd (MBAUP) with a Federal Court
in Australia. They allege that MBAUP forced the dealers
to accept a change in their business model from a
dealership model to an agency model and thus de-
prived them of the goodwill they created through their
investments in the Australian Mercedes-Benz dealer-
ship network. They seek reinstatement of the dealer-
ship model or, alternatively, compensation for the
damage they allegedly incurred. In August 2023, the
court dismissed the claims in their entirety. In January
2024, the plaintiffs appealed the decision. MBAuP con-
siders those claims to be without merit and continues
to defend itself against the claims.
Group AG continues to regard the pending claims as
being without merit, and the affected Group companies
will continue to defend themselves against the claims.
Contingent liabilities were disclosed to a low extent for
this topic.
As already reported, class actions in connection with
Takata airbags are pending in the United States, Cana-
da and Israel. The lawsuits are based on allegations
that, along with Takata entities and many other compa-
nies that sold vehicles equipped with Takata airbag
inflators, Mercedes-Benz Group companies and others
were allegedly negligent in selling such vehicles, pur-
portedly not recalling them quickly enough, and failing
to warn consumers about a potential defect and/or to
provide an adequate replacement airbag inflator. One
of the lawsuits in the United States also asserted
claims by automotive recyclers who alleged injury be-
cause they were not able to re-sell salvaged airbag
inflators that are subject to the Takata recall. This claim
has since then been finally dismissed. Also, the remain-
ing consumer class action in the United States was
dismissed against Mercedes-Benz Group AG in its en-
tirety, and against MBUSA in part. The plaintiffs have
appealed the dismissal of Mercedes-Benz Group AG
and the proceedings against MBUSA are still pending.
Since February 2023, the class actions in Canada were
discontinued by the plaintiffs; one of the class actions
was finally dismissed and the formal court dismissal for
the other class action is still pending. Mercedes-Benz
remaining lawsuit pending in Canada to be discontin-
ued and it will continue to defend itself against it until
the discontinuance is final. This development leads to a
material reduction of the risk associated with the class
actions. They therefore no longer qualify for separate
reporting, which is why the Mercedes-Benz Group will
no longer report on them in the future.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
281
Contents
To Our Shareholders
283
Combined Management Report
- derivative commodity hedging contracts; the fair
values of commodity hedging contracts (e.g. com-
modity forwards) are determined on the basis of cur-
rent reference prices with consideration of forward
premiums and discounts and default risks.
market interest rates appropriate to the remaining
terms of the financial instruments.
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
284
To Our Shareholders
Derivative financial instruments used in hedge accounting
Financial assets recognized at fair value
Annual Report 2023 | Mercedes-Benz Group
derivative interest rate hedging contracts; the fair
values of interest rate hedging instruments (e.g. in-
terest rate swaps) are calculated on the basis of the
discounted estimated future cash flows (taking ac-
count of credit premiums and default risks) using the
– derivative currency hedging contracts; the fair values
of cross-currency interest rate swaps are determined
on the basis of the discounted estimated future cash
flows (taking account of credit premiums and default
risks) using the market interest rates appropriate to
the remaining terms of the financial instruments. The
measurement of currency forwards is based on mar-
ket quotes of forward curves. Currency options are
measured with option-pricing models using market
data.
Financing liabilities
Other financial assets recognized at fair value through
profit or loss relate to derivative financial instruments
not used in hedge accounting. These financial instru-
ments as well as derivative financial instruments used
in hedge accounting comprise:
Equity instruments are recognized at fair value through
other comprehensive income or at fair value through
profit or loss. Equity instruments recognized at fair
value through other comprehensive income are includ-
ed in the table Carrying amounts and fair values of
financial instruments and primarily comprise the shares
in Sila Nanotechnologies Inc., Momenta Global Limited
and Aston Martin Lagonda Global Holdings Plc. The
remaining investments recognized at fair value through
other comprehensive income comprise further invest-
ments not material on an individual basis.
Marketable debt securities are recognized at fair value
through other comprehensive income or at fair value
through profit or loss. Similar investments are meas-
ured at amortized cost and are not included in the
measurement hierarchy, as their carrying amounts are a
reasonable approximation of fair value due to the short
terms of these financial instruments and the funda-
mentally low credit risk.
Marketable debt securities and similar investments,
other financial assets
Due to the short terms and the fundamentally lower
credit risk of these financial instruments, it is assumed
that their fair values are equal to the carrying amounts.
Trade receivables and cash and cash equivalents
The fair values of receivables from financial services
with variable interest rates are estimated to be equal to
the respective carrying amounts, because the agreed
upon interest rates and those available in the market
do not significantly differ. The fair values of receivables
from financial services with fixed interest rates are
determined on the basis of discounted expected future
cash flows. Discounting is based on the current interest
rates at which similar loans with identical terms could
have been obtained at 31 December 2023 and 31 De-
cember 2022.
Receivables from financial services
The table Carrying amounts and fair values of financial
instruments shows the carrying amounts and fair val-
ues of the respective classes of the Group's financial
instruments and contain the Group amounts, including
assets and liabilities held for sale. The fair values of
financial instruments were calculated on the basis of
market information available on the balance sheet
date. The following methods and assumptions were
used.
Carrying amounts and fair values of
financial instruments
32. Financial instruments
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Marketable debt securities and equity instruments
recognized at fair value were measured using quoted
market prices at the end of the reporting period. If
quoted market prices are not available for these debt
and equity instruments, fair value measurement is
based on inputs that are either directly or indirectly
observable in active markets. Fair values are calculated
using recognized financial valuation models such as
discounted cash flow models or multiples.
959
Contents
Equity instruments and debt instruments
4,481
4,236
4,236
Financial liabilities
Obligations from sales transactions
Contract and refund liabilities
5,454
5,454
-2,045
1,903
1,002
-1,104
199
-2,045
409
1 The other financial assets which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge accounting and financial assets recognized at fair value through profit or loss (see Note 16).
2 The other financial liabilities which are subject to a master netting arrangement comprise derivative financial instruments that are included in hedge accounting and financial liabilities recognized at fair value through profit or loss (see Note 25).
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
287
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Measurement hierarchy
The following table provides an overview of the classi-
fication into measurement hierarchies of financial as-
sets and liabilities recognized at fair value (according to
IFRS 13).
At the end of the reporting period, the Group reviews
whether reclassifications between the measurement
hierarchies are necessary compared to 31 December of
the previous year.
Measurement hierarchy of financial assets and liabilities recognized at fair value
4,481
For the determination of the credit risk from derivative
financial instruments which are allocated to the Level 2
measurement hierarchy, portfolios managed on the
basis of net exposure are applied.
130,758
133,785
2,454
Other financial assets
3,047
3,007
-1,104
Net amounts
Gross and net amounts of financial instruments in the Consolidated Statement of Financial Position
Amounts subject to a master netting arrangement
Other financial liabilities²
2022
2023
2022
Other financial assets¹
2023
At 31 December
At 31 December
In millions of euros
Disclosure for recognized derivative financial instruments that are subject to an enforceable master netting arrangement or similar agreement
The following table shows the carrying amounts of the
derivative financial instruments subject to the de-
scribed arrangements as well as the possible financial
effects of netting in accordance with the master netting
arrangements.
The Group concludes derivative transactions in accord-
ance with the master netting arrangements (framework
agreement) of the International Swaps and Derivatives
Association (ISDA) and comparable national framework
agreements. However, these arrangements do not meet
the criteria for netting in the Consolidated Statement of
Financial Position, as they allow netting only in the case
of future events such as default or insolvency on the
part of the Group or the counterparties.
Offsetting of financial instruments
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Combined Management Report
286
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
132,010
130,248
In millions of euros
Corporate Governance
Recognized at fair value through profit or loss
127,623
125,987
3,113
3,113
3,013
3,013
2,463
2,463
2,660
2,660
Derivative financial instruments used in hedge accounting
Other receivables and miscellaneous other financial assets
Financial assets
584
584
347
347
Other financial assets recognized at fair value through profit or loss
768
1,507
1,507
Marketable debt securities
1,439
1,439
Recognized at fair value through profit or loss
125,987
649
671
671
Recognized at fair value through other comprehensive income
858
858
768
649
126,781
1,303
106,517
171
171
Derivative financial instruments used in hedge accounting
1,115
2,283
2,283
188
Miscellaneous other financial liabilities
5,852
Recognized at fair value through other comprehensive income
Financing liabilities
Equity instruments and debt instruments
Recognized at fair value through other comprehensive income
Recognized at fair value through profit or loss.
5,852
188
1,115
Other financial liabilities
106,007
109,192
12,850
Financial liabilities recognized at fair value through profit or loss
12,204
12,850
Trade payables
107,417
12,204
that are needed to establish a data-driven way of think-
ing throughout the entire organization.
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Electrify our future: Mercedes-Benz Mobility is
supporting the transformation to electric mobility
with tailored products and services
Mercedes-Benz Mobility makes it as easy and conven-
ient as possible for customers to switch to electric
mobility. Various rental and subscription services make
it possible for people to use electric vehicles without
committing to long-term ownership. When a leasing
contract expires, Mercedes-Benz Mobility supports cus-
tomers who decide to switch to an electric vehicle.
Using the existing charging infrastructure as a basis,
Mercedes-Benz Mobility is setting up a high-power
charging network that will provide fast and easy charg-
ing. The high-power charging network will enable cus-
tomers to charge using green electricity. Wherever pos-
sible, the preference is to use power purchase
contracts for green electricity, or to use accredited pro-
viders' green power certificates for charging. Charging
in public areas, at home and for business purposes will
be transformed into a convenient, reliable and seam-
less experience.
Excite our customers: Mercedes-Benz Mobility is
seamlessly integrating itself into the Mercedes-Benz
ecosystem
Mercedes-Benz Mobility is harmonizing internal pro-
cesses and system landscapes to deliver fast and relia-
ble contact with customers in a manner that focuses on
their specific requirements. Here Mercedes-Benz Mobil-
ity also relies on technology partnerships that enable it
to continuously develop its digital services and solu-
tions. Efficient processes and a highly motivated team
form the foundation of the excellent service that
Mercedes-Benz Mobility offers.
At Mercedes-Benz Mobility our customers are our focus.
Mercedes-Benz Mobility supports its customers by
helping them to simply choose their preferred product
and service options with seamlessly integrated prod-
ucts and services. Mercedes-Benz Mobility does all this
by providing an excellent service experience that is
seamless and digital and includes rapid personal con-
sultation in those areas where digital solutions reach
their limits. The goal here is to not merely meet expec-
tations but to exceed them - both online and offline.
Go for data: Mercedes-Benz Mobility is evolving into
a data-driven company
Power up our business: Mercedes-Benz Mobility is
automating and digitalizing internal processes in
order to increase efficiency
27
COMBINED
S EW 2141
The employees at the Mercedes-Benz Group achieve
success together as a highly qualified and motivated
team. Mercedes-Benz Mobility has a high-performance
culture in which the employees speak up, empower
each other, hold each other accountable and continu-
ally learn. All of these aspects are based on an impor-
tant foundation: trust. To enable all employees to iden-
tify with the company, Mercedes-Benz Mobility also
focuses on emotionalizing its strategy through targeted
communication measures.
Imagine it, do it, live it: Mercedes-Benz Mobility is
strengthening a high-performance culture
Mercedes-Benz Mobility is constantly optimizing its
own products and services with the aim of being able
to offer tailored customer solutions at all times.
Mercedes-Benz Mobility uses data analysis and artificial
intelligence to achieve this goal. The top-of-the-line
financial and mobility products and services the com-
pany offers are based on data, because data reflects
the lifestyles and preferences of its customers. Data
security and customer consent for the usage of the data
are paramount for Mercedes-Benz Mobility. Mercedes-
Benz Mobility develops and promotes teams and skills
To Our Shareholders
Objectives and Strategy
We support
the sustainable
transformation to
electric mobility
with tailored prod-
ucts and services
Annual Report 2023 | Mercedes-Benz Group
26
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Mercedes-Benz Mobility Strategy
Mercedes-Benz Mobility has a clear ambition: we are
the number one financial and mobility service provider
for luxurious driving in the all-electric era. The contri-
bution that Mercedes-Benz Mobility makes to the
success of the Mercedes-Benz Group is not only finan-
cial. Mercedes-Benz Mobility also helps to increase
brand loyalty, improve the customer experience, sup-
port the Group's strategic transformation and boost
sales figures.
The basis for this success lies in the fact that Mercedes-
Benz Mobility is present in every phase of the customer
journey and puts customers at the centre of its strategy.
It all begins with the bundling of products such as
financing and leasing contracts including insurance and
extends to offering systems for seamless payment
methods, and the planned expansion of its charging
infrastructure to include more than 10,000 new charg-
ing points by 2030. The goal here is to offer customers
an extraordinary and luxurious brand experience and
to keep them in the Mercedes-Benz ecosystem by
offering customized follow-up contracts and solutions.
Mercedes-Benz Mobility has defined five key areas
within its strategy. These make it possible for the com-
pany to continuously improve its products and services
and remain an attractive employer.
Contents
Mercedes-Benz Mobility Strategy
Electrify our
future
Excite our
customers
Power up our
business
Go for data
Our services are
100% digital and
seamlessly inte-
grated into the world
of Mercedes-Benz
We are digitalising
our processes end-
to-end, supported
by strategic partner-
ships in technology
and operations
We are developing
into a data-driven
company
Imagine it,
do it, live it
We are strengthening
our high-perfor-
mance culture
Our goal: by 2025, we will be the number one financial and mobility service provider
for luxurious driving in the electric era
MANAGEMENT REPORT
35 Important events
Contents
98
103
114
Integrity and compliance
EU Taxonomy
140
Risk and Opportunity Report
140
Risk and opportunity management
system and internal control system
90 Employee issues
127 Overall Assessment of
the Economic Situation
Risks and opportunities
and Explanation
130 Takeover-Relevant Information
To Our Shareholders
Objectives and Strategy
56 Liquidity and capital resources
66 Financial position
48 Profitability, Liquidity and Capital
Resources, and Financial Position
48 Profitability
and opportunity situation
Overall assessment of the risk
159
145
139 Overall statement on future
development
138 Dividend
indicators
To Our Shareholders
30
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
COMBINED MANAGEMENT REPORT
31 Corporate Profile
31
Business model
40 Performance measurement system
42 Declaration on Corporate Governance
43 Economic Conditions and Business
Development
43 The world economy and automotive
markets
45 Business development
47 Investment and research activities
72 Mercedes-Benz Group AG
(Condensed version according
to HGB)
76 Non-Financial Declaration
76 Sustainability as a driver of change
83 Environmental issues
135 Outlook
135 The world economy and automotive
markets
136 Outlook for the key performance
Annual Report 2023 | Mercedes-Benz Group
Social issues
Corporate Governance
The Mercedes-Benz Vans People Principles place peo-
ple and the team at the centre of our transformation.
These principles create the framework for communica-
tion, leadership and collaboration and require the com-
mitment and the innovative power of our employees. In
addition, Mercedes-Benz Vans offers its employees
qualification measures for future-oriented topics.
To Our Shareholders
Objectives and Strategy
Contents
Annual Report 2023 | Mercedes-Benz Group
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Objectives and Strategy
22
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
In this manner, the company also makes a connection
between two essential characteristics
_
its strong roots
as an automaker that has created numerous style-de-
fining icons, and the pioneering spirit with which
Mercedes-Benz Car is driving the further development
of the automobile. Mercedes-Benz underscores its role
here through its standing as the world's most valuable
luxury automotive brand in the latest Best Global
Brands ranking from 2023. With the improvement from
eighth to seventh place in the rankings of the world's
most important brands, the company has once again
boosted the brand value by nine per cent as compared
to the previous year.
-
Our goal for the future is a brand that embodies the
many facets of the lives of our customers from life-
style and technology to the digital realm, mobility and
culture and does this by working together with cul-
tural pioneers in a manner that is as inspired as it is
unexpected. We intend to achieve this goal by creating
an emotional bond with the Mercedes-Benz Cars
brands and getting people excited about them in con-
nection with every product and in every encounter we
have with customers and anyone who is interested in or
is a fan of the brand.
Focus on profitable growth
Mercedes-Benz Cars wants to make the transformation
towards an all-electric future profitable and to continue
its growth in the lucrative market segments. A clear
positioning as a luxury brand helps to maintain higher
profitability across all product categories - Entry, Core
and Top-End. Along with a clear focus on the customer,
the important ways in which this can be accomplished
are focusing and further developing the portfolio,
achieving strong pricing, and securing the margins.
These means will also be employed for the systematic
electrification of our models throughout the entire
Mercedes-Benz brand portfolio. Further profitable
growth is also being targeted in the highly profitable
product categories in particular. The consistent posi-
tioning as a luxury brand will also be used to achieve
Mercedes-Benz Cars' goal of sustainable high profitabil-
ity as a division that can rely on its resilient business
system, even in challenging times.
Expand customer base by growing Top-End Luxury
In the Top-End segment, Mercedes-Benz Cars boasts an
extraordinary brand portfolio that goes beyond the
Mercedes-Benz core brand. This portfolio also includes
the Mercedes-AMG and Mercedes-Maybach brands,
as well as the iconic G-Class product brand. The
Mercedes-Benz Cars Strategy will be used to unfold the
full potential of the Mercedes-Benz brand portfolio,
accelerate the development of the Top-End product
category and achieve additional EBIT growth.
Brand-specific formats and customer experiences are
also to be used to address new target groups. At the
same time, even stronger interrelationships are to be
established between the brands, in order to exploit
synergies in customer communications, for example.
Embrace customers and grow lifetime revenues
In order to intensify and further boost customer loyalty,
the division is systematically creating unique customer
experiences along its entire customer journey and
addressing customers in an individualized and data-
driven manner within the Mercedes-Benz ecosystem.
One of the basic preconditions for this is comprehen-
sively digitalized sales and service processes that, for
example, are enabled by the stepwise transformation of
sales to the agency model. In this way, all channels
online and offline, and from consulting to service are
to be adapted to the dynamic customer requirements
and flexibly developed further. Moreover, customers
are to be provided with tailored and market-specific
offers that enthuse them about more than just the pur-
chase of vehicles. These offers include such things as
after-sales services and spare parts as well as over-the-
air (OTA) updates and digital extras. In this way,
Mercedes-Benz Cars intends to continuously enhance
the attractiveness of its products, safeguard their value
retention and increase the company's revenue through-
out the product life cycle.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Objectives and Strategy
23
21
Combined Management Report
Combined Management Report
Consolidated Financial Statements
increase supply
chain resilience
footprint and
Sustainability, integrity and diversity as our foundation
Driven by a highly qualified and motivated team
cost base,
improve
industrial
Lower
in electric drive
and digital
experience
Lead
revenues
customers and
grow lifetime
Embrace
customer base
by growing
Top-End Luxury
Expand
growth
on profitable
Focus
and act like
a luxury brand
Think
Our goal: we will build the world's most desirable cars
Mercedes-Benz Cars Strategy
Luxury has always been part of Mercedes-Benz' DNA,
and the company's thoughts and actions will focus even
more strongly on it in the future. Mercedes-Benz Cars'
claim is to offer the most desirable vehicles on the
basis of a combination of pioneering technologies,
exceptional aesthetics and integrated sustainability.
Think and act like a luxury brand
Mercedes-Benz Cars' goal is to build the world's most
desirable cars. The division aligns its actions in pursuit
of this goal with six strategic pillars.
Mercedes-Benz Cars Strategy
The commitment of the employees plays a key role in
the Mercedes-Benz Group's global success. Indeed, if
the transformation is to be successfully shaped, a team
that is ready and willing to embrace change and contin-
uously extend its knowledge and skills needs to be in
place. The company therefore puts lifelong learning and
the further education of employees at the centre of its
sustainable personnel development approach. As an
attractive employer, the company also offers flexible
working conditions, varied assignments and a variety of
development opportunities in the context of a culture
of cooperation based on trust. With its People Princi-
ples, the company defines how to communicate, lead
and collaborate.
Successful together with a highly qualified and
motivated team
Further Information
Corporate Governance
Corporate Governance
Consolidated Financial Statements
Further Information
in electric drive and
digital experience
the total cost base
and improve the industrial
footprint
Guided by economic, environmental and social sustainability
Accelerated by digitalization and data-driven business
Driven by a highly qualified and motivated team
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Objectives and Strategy
25
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Lead in electric drive and the digital experience
With the eCitan, EQT (WLTP: combined energy con-
sumption 100 kWh/km: 20,7-19,3; combined CO2 emis-
sions: 0 g/km; CO2 class: A), eVito, eVito Tourer, EQV
and eSprinter, Mercedes-Benz Vans offers each model
also as an all-electric version since 2023. Starting in
2026, the VAN.EA is a new, electric-only architecture
which is intended to provide the basis for all future
mid-size and large vans for both private and commer-
cial use.
-
Mercedes-Benz is currently developing its own operat-
ing system MB.OS a flexible, modular and ser-
vice-based chip-to-cloud architecture that will enable
B2B-specific software solutions. Mercedes-Benz Vans
expects that MB.OS will also enable it to quickly expand
and optimize its digital extras and services. In addition,
the operating system will serve as the foundation for
the development of automated driving functions for
Society of Automotive Engineers (SAE) Level 2 and up.
On the basis of MB.OS and the technical possibilities it
offers, the division plans to achieve conditional driving
automation for private customers in accordance with
SAE Level 3 by the end of the decade. The objective is
to be able to offer partially automated driving in
accordance with SAE Level 2 with the introduction of
vehicles based on VAN.EA. With regard to the commer-
cial segment, Mercedes-Benz Vans is looking to achieve
highly automated driving in accordance with SAE Level
4 by the end of the decade in order to exploit the busi-
ness potential of fully automated (driverless) transport.
Lower the total cost base and improve
the industrial footprint
Mercedes-Benz Vans has launched a comprehensive
cost initiative at company, production and product level
in order to maintain profitability at a high level and to
improve competitiveness. The goals here include signif-
icantly optimizing production processes and lowering
production costs. This is to be achieved mainly by
reducing the complexity of the product portfolio and
focusing on efficiency in core production processes.
Mercedes-Benz Vans is also reorganizing its production
network in order to become more efficient and flexible
and to prepare the network for an electric future. The
first manufacturing plant solely for all-electric vans in
Jawor, Poland, will set new standards worldwide for
productivity, lean processes and sustainability. The
reorganization of the production network will enable
Mercedes-Benz Vans to react quickly to changing mar-
ket conditions in the future while at the same time opti-
mizing its cost structure.
The strategic actions follow three principles:
Guided by economic, environmental
and social sustainability
Mercedes-Benz Vans has also made sustainability an
integral part of its strategy. One of the main goals for-
mulated in Ambition 2039 is to make the fleet of new
private and commercial vans net carbon-neutral over
the entire life cycle by 2039.
Accelerated by digitalization and
data-driven business
Mercedes-Benz Vans intends to use the comprehensive
digital strategy to exploit the potential of the digital
transformation as effectively as possible. Among other
things, this includes the optimal design of the digital
customer experience, the expansion of the digital prod-
uct and service portfolio as well as the digitalization of
internal business processes all while ensuring that
data is used responsibly. In all of its activities,
Mercedes-Benz Vans aims for the maximum networking
and synergy effects with Mercedes-Benz Cars.
We are the key to our success
customers and grow
lifetime revenues
Lower
Lead
Embrace
Lead in electric drive and digital experience
Mercedes-Benz Cars is endeavouring to become a
leader for electric mobility and the digital experience.
The division is creating the essential preconditions for
becoming all-electric, with ambitious product develop-
ment goals and the market launch of new locally emis-
sion-free and software-driven technologies. The,elec-
tric-first' platform MMA which will be launched next
year, marks the next step into the electric future of
Mercedes-Benz Cars. The platforms MB.EA and AMG.EA
will follow. Thus, Mercedes-Benz Cars will offer our
customers an all-electric alternative for each model.
Mercedes-Benz Cars' expertise in the field of electric
mobility is to be extended, and the vertical integration
will also be increased by insourcing drive-system tech-
nologies for electric vehicles. To ensure efficient pro-
duction and promote the future development of battery
cells and modules, the division plans to work together
with partners to build various battery cell production
plants worldwide. Mercedes-Benz also purchases
battery cells from various partners on the world market
to supply its global production network. The company
thus has access to the latest technologies on the
market.
In order to further underscore the claim to leadership
with regard to the digital experience, and to meet cus-
tomers' needs even better in future, Mercedes-Benz
Cars plans to introduce its own data-based and updata-
ble Mercedes-Benz Operating System (MB.OS) when it
launches the MMA platform. In this way, the customers
will be able to access a unique brand experience that
includes special new digital extras and product features
while control of the interface with customers can
remain in the Mercedes-Benz ecosystem. MB.OS will
create the basis for an even faster and more flexible
response to customer requirements in the future,
including during a product's life cycle. Another aim is to
establish smart connectivity between the vehicle, the
cloud and the IoT world (Internet of Things). Data secu-
rity and data protection play a key role for Mercedes-
Benz Cars here.
Mercedes-Benz Cars is also striving to establish leader-
ship in assistance technologies and customer experi-
ence in conditional driving automation. Customers are
offered not only enhanced ride comfort and safety but
also an increasing reduction of driver stress and the
freedom to carry out certain activities while driving.
Today, with DRIVE PILOT, Mercedes-Benz Cars already
meets the demanding legal requirements for condi-
tional driving automation according to SAE Level 3 (pur-
suant to UN R157) - the first automotive company in
the world to do so. Mercedes-Benz Cars has even gone
one step further where parking is concerned: the
INTELLIGENT PARK PILOT preinstallation is a
series-production system that already enables com-
pletely automatic driverless parking (Automated Valet
Parking) according to SAE Level 4 in Germany.
Lower cost base, improve industrial footprint and
increase supply chain resilience
The continued systematic pursuit of our profitability
and cash-flow objectives is a fundamental component
of the successful and sustained transformation of the
company. Mercedes-Benz Cars seeks to further opti-
mize its break-even point and take additional steps
towards reducing the cost base and improving the
industrial footprint. To this end, work is also proceeding
on further reducing fixed and variable costs as well as
on lowering the investments in property, plant and
equipment.
Mercedes-Benz Cars is also shifting its capital alloca-
tion with its sustainable business strategy. The imple-
mentation of further cost reductions by standardizing
battery platforms and creating scalable vehicle archi-
tectures is planned. Mercedes-Benz Cars also aims to
play a more active role along its supply chains in order
to safeguard and increase the resilience of these busi-
ness activities.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Objectives and Strategy
24
Annual Report 2023 | Mercedes-Benz Group
Combined Management Report
Further Information
Mercedes-Benz Vans Strategy
The goal of Mercedes-Benz Vans is to offer the most
desirable vans and services worldwide. We want the
vans from Mercedes-Benz to represent far more than
a capital investment and to continue arousing enthusi-
asm. The strategy is based on four pillars:
Target premium segments and focus
on profitable growth
Mercedes-Benz Vans has extensively shaped the van
market worldwide since the very beginning. As part of
the Mercedes-Benz brand family, the division continu-
ously sharpens its profile as a supplier of future-ori-
ented transport solutions for commercial and private
customers. Vans in the private segment are aligned with
the luxury positioning strategy of Mercedes-Benz Cars,
while commercial vans are marketed within the frame-
work of a premium strategy.
In both the commercial and the private segments,
Mercedes-Benz Vans stands for the highest levels of
quality, reliability and sustainability. A key element of
the strategy is the increased focus on high-sales and
high-margin markets and segments. In parallel with the
expansion of its activities in Europe, the division also
intends in future to further intensify its efforts in China
and North America. In addition, Mercedes-Benz Vans
plans to focus more strongly on the growing premium
segments in the most profitable sectors and to enter
into attractive segments at the upper end of the port-
folio through partnerships with body manufacturers.
Embrace customers and grow lifetime revenues
Mercedes-Benz Vans plans to ensure a high level of
profitability by means of a modified business model for
sales and a customer-focused service portfolio. The
focus here will be on pushing direct sales in order to
reduce selling expenses. With regard to the new-vehicle
business, Mercedes-Benz Vans is increasingly making
Target
use of online sales channels. This involves using the
existing Mercedes-Benz Cars Online Store platform and
expanding it to include van-specific features. One
measure here will make it possible for customers to
place follow-up orders quickly and easily directly online.
Another goal is to generate additional revenue poten-
tials at all points of customer contact: from advice to
sales and after-sales services.
Mercedes-Benz Vans Strategy
Our Goal: we offer the world's most desirable vans and services
premium segments and
focus on profitable growth
Consolidated Financial Statements
Contents
1
For impairments of trade receivables, the simplified
approach is applied, according to which these receiva-
bles are allocated to stage 2. Credit losses until maturi-
ty for these trade receivables are recognized upon
initial recognition.
-20
31
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Fair-value hedges
The Group uses fair-value hedges primarily for hedging
interest rate risks. The amounts of the items hedged
with fair-value hedges are included in the following
table.
Neither in the current year nor in the previous year
were there any results attributable to the ineffective
portion of the hedge with fair-value hedges.
Fair-value hedges
In millions of euros
Carrying amounts of the hedged items
Interest rate risk
2023
2022
Financing liabilities
current
4,203
3,395
Financing liabilities
non-current
14,177
17,943
thereof hedge adjustments
Financing liabilities
current
1,045
-2
6
5
For hedges for which the hedged future cash flows are no longer expected to occur
For hedges that have been transferred because the hedged item has affected profit or loss
2022
Gains and losses recognized in other comprehensive income
Reclassification of gains and losses from reserves for derivative financial instruments to the statement of income
For hedges for which the hedged future cash flows are no longer expected to occur
For hedges that have been transferred because the hedged item has affected profit or loss
Currency risk
Interest rate risk
Commodity
price risk
Revenues
Cost of
sales
Cost of
sales
Interest
expense
-44
Cost of
sales
-100
-100
-528
-70
3
-1
-1,111
-13
29
1,313
6
152
1,183
1,979
Reclassification of gains and losses from reserves for derivative financial instruments to the statement of income
-33
non-current
Reclassification to profit and loss before taxes
Currency risk
Interest rate risk
Reclassification to cost of acquisition of non-financial assets before taxes
Currency risk procurement
Commodity price risk - inventory purchases
Other changes
Taxes on changes in unrealized gains/losses and reclassifications
Balance at 31 December
Reserves for derivative financial
instruments
2023
Thereof
2022
2023
reserves for hedge costs
2022
984
-642
-1,048
-74
1,168
878
-82
-1,772
1,799
-446
-79
-1,767
Commodity price risk - inventory purchases
Interest rate risk
Currency risk
Unrealized gains/losses before taxes
-599
-1,192
Fair-value changes of the hedged items¹
-625
1,820
Accumulated amount of hedge adjustments
from inactive hedges remaining in the
statement of financial position
8
8
1 Fair-value changes of the hedged items used for recognizing hedge ineffectiveness.
294
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Financing liabilities
Further Information
Contents
To Our Shareholders
295
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Reserves for derivative financial instruments
The following table shows the reconciliation of the
reserves for derivative financial instruments (excluding
reserves for hedges of net investments in foreign oper-
ations).
At 31 December 2023, the balance of reserves for
hedges of net investments in foreign operations
amounted to €189 million (2022: €189 million).
Reconciliation of reserves for derivative financial instruments
In millions of euros
Balance at 1 January
Annual Report 2023 | Mercedes-Benz Group
Gains and losses recognized in other comprehensive income
2023
Line item in the Statement of Income in which the reclassifications are included
2023
2022
Commodity price risk
Cash flow hedges¹
At 31 December
Interest rate risk
Fair-value hedges²
At 31 December
2023
2022
2023
2022
2023
At 31 December
At 31 December
Cash flow hedges²
Cash flow hedges¹
Currency risk
Other financial liabilities non-current
Other financial liabilities current
Other financial assets non-current
Other financial assets current
Carrying amount of the hedging instruments
In millions of euros
Amounts for the transactions designated as hedging instruments
Explanations of the hedging of exchange-rate risks,
interest rate risks and commodity price risks can be
found in Note 33 in the sub-item Finance market risk.
Even if derivative financial instruments do not or no
longer qualify for hedge accounting, these instruments
still serve to hedge financial risks from business opera-
tions. A hedging instrument is terminated when the
hedged transaction no longer exists or is no longer
expected to occur.
Most of the transactions for which the effects from the
measurement of the hedging instrument and the un-
derlying transaction to a large extent offset each other
in the Consolidated Statement of Income were mostly
not included in the hedge accounting.
The following table shows the amounts for the trans-
actions designated as hedging instruments.
The Mercedes-Benz Group uses derivative financial
instruments exclusively for hedging financial risks that
arise from its operating or refinancing activities or from
its liquidity management. These are mainly currency
risks; interest rate risks and commodity price risks,
which have been defined as risk categories. For these
hedging purposes, the Group mainly uses currency
forward transactions, cross-currency interest rate
swaps, interest rate swaps, options and commodity
forwards.
Use of derivatives
Information on derivative financial
instruments
2022
904
442
100
-1,820
625
1,334
-628
1,321
1,877
Fair value changes³
1,191
573
44
44
376
181
Further Information
36
7
7
629
265
4
1,539
858
456
760
1
2
33
23
45
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
-5
Balance of the reserves for derivative financial instruments (before taxes)
Continuing hedges
1,858
870
1,339
1,501
Discontinued/terminated hedges
42
-229
-4
thereof hedges of net investments in foreign operations
1 Fair-value changes of the hedged items used for recognizing hedge ineffectiveness.
-270
-1,334
-270
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
293
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
The gains and losses on items designated as cash flow
hedges are shown in the following table.
Expenses of €2 million (2022: income of €2 million)
were attributable to the hedge ineffective portion of the
hedges.
During 2022, shifts in delivery dates and volumes oc-
curred in various markets, making some planned vehicle
sales in specific currencies unlikely, with the conse-
quence that hedge accounting for these sales had to be
terminated.
This particularly affected the currency CNY as a conse-
quence of the Covid-19 pandemic. The reclassification
from the reserves for derivative financial instruments to
the Consolidated Statement of Income did not result in
any material effects.
Gains and losses on cash flow hedges and hedges of net investments in foreign operations
In millions of euros
Annual Report 2023 | Mercedes-Benz Group
-631
-1,319
-1,879
291
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
3 Gains and losses from hedging instruments used for recognizing hedge ineffectiveness.
Annual Report 2023 | Mercedes-Benz Group
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To Our Shareholders
292
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
628
Cash flow hedges and hedges of net investments in
foreign operations
The Group also partially hedges the currency risk of
selected investments with the application of derivative
or non-derivative financial instruments. Neither in the
reporting year nor in the previous year were there any
active hedges of net investments in foreign operations.
Cash flow hedges and hedges of net investments in foreign operations
In millions of euros
2023
Currency
risk
Interest
rate risk
Commodity
price risk
Currency
risk
Interest
rate risk
2022
Commodity
price risk
Fair-value changes of the hedged items¹
The Mercedes-Benz Group uses cash flow hedges for
hedging currency risks, interest rate risks and commod-
ity price risks. The amounts related to items designated
as cash flow hedges are shown in the following table.
Further information on trade receivables and the status
of loss allowances recognized is provided in Note 19.
1,320
-5
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
The market sensitive instruments, including equity and
debt securities, that the plan assets hold to finance
pension and other post-employment healthcare bene-
fits, are not included in the following quantitative and
qualitative analysis. See Note 22 for additional infor-
mation on the Mercedes-Benz Group's pension and
post-employment healthcare benefits.
Credit risk
Credit risk describes the risk of financial loss resulting
from a counterparty failing to meet its contractual
payment obligations. Credit risk encompasses both the
direct risk of default and the risk of a deterioration of
creditworthiness as well as concentration risks.
The maximum risk positions of financial assets which
are generally subject to credit risk are equal to their
carrying amounts at the balance sheet date (without
consideration of collateral, if available). There is also a
risk of default from irrevocable loan commitments
which had not been utilized as of that date, as well as
from financial guarantees. The maximum risk position
in these cases is equal to the expected future cash
outflows.
The following table shows the maximum risk positions
at the balance sheet date.
Maximum risk positions of financial assets,
irrevocable loan commitments and financial guarantees¹
Note
2023
Maximum risk position
2022
In millions of euros
Liquid assets
22,830
24,739
Receivables from
financial services
14
88,211
85,549
Trade
19
7,419
8,100
receivables
Derivative financial
298
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
7.37
1.10
7.29
0.88
0.87
Interest rate risk
Fair-value hedges
Average interest rate - €
-2.95%
-0.95%
Average interest rate - USD
-2.99%
-1.46%
instruments used in
Cash flow hedges
3.72%
Average interest rate - USD
3.21%
Commodity price risk
Platinum (in USD per troy ounce)
2.08%
1.87%
884
33. Management of financial risks
General information on
financial risks
As a result of its businesses and the global nature of its
operations, the Mercedes-Benz Group is exposed to
market risks from changes in foreign currency ex-
change-rates and interest rates, while price risks arise
from the procurement of raw materials and energy, for
example. An equity price risk results from investments
in listed companies. In addition, the Group is exposed
to credit risks from its leasing and mainly financing
activities and from its business operations (trade re-
ceivables). Furthermore, the Group is exposed to coun-
try and liquidity risks relating to its credit and market
risks or a deterioration of its business operations or
financial market disturbances. If these financial risks
materialize, they could adversely affect the Group's
profitability, liquidity and capital resources and finan-
cial position.
The Mercedes-Benz Group has established internal
policies for risk controlling procedures and for the use
of financial instruments, including a clear segregation
of duties with regard to financial activities, settlement,
accounting and the related controlling. The guidelines
upon which the Group's risk management processes for
financial risks are based are designed to identify and
analyse these risks throughout the Group, to set ap-
propriate risk limits and controls and to monitor the
risks by means of reliable and up-to-date administra-
tive and information systems. The guidelines and sys-
tems are regularly reviewed and adjusted to changes in
markets and products.
The Group manages and monitors these risks primarily
through its operating and financing activities and, if
required, through the use of derivative financial in-
struments. The Mercedes-Benz Group uses derivative
financial instruments exclusively for hedging financial
risks that arise from its business operations or refi-
nancing activities or liquidity management. Without
these derivative financial instruments, the Group would
be exposed to higher financial risks. Additional infor-
mation on financial instruments and especially on the
volumes of the derivative financial instruments used is
included in Note 32. The Mercedes-Benz Group regu-
larly evaluates its financial risks with due consideration
of changes in key economic indicators and up-to-date
market information.
Average interest rate - €
1.10
hedge accounting
32
The Mercedes-Benz Group's financing and leasing ac-
tivities are primarily focused on supporting the sales of
the Group's automotive products. As a consequence of
these activities, the Group is exposed to credit risk,
which is monitored and managed based on defined
standards, guidelines and procedures. The Mercedes-
Benz Group manages its credit risk irrespective of
whether it is related to a financing contract or to an
operating lease or a finance lease contract. For this
reason, statements concerning the credit risk of Mer-
cedes-Benz Mobility refer to the entire financing and
leasing business, unless otherwise specified.
Exposure to credit risk from financing and lease activi-
ties is monitored based on the portfolio subject to
credit risk. The portfolio subject to credit risk consists
of wholesale and retail receivables from financial ser-
vices and the portion of the operating lease portfolio
that is subject to credit risk. Receivables from financial
services comprise claims arising from finance lease
contracts and repayment claims from financing loans.
The operating lease portfolio is reported under equip-
ment on operating leases in the Group's Consolidated
Statement of Financial Position. Lease payments due
from operating lease contracts are recognized in re-
ceivables from financial services.
The Mercedes-Benz Mobility segment has policies set-
ting the framework for effective risk management at a
global as well as a local level. In particular, these poli-
cies deal with minimum requirements for all risk-
relevant credit processes, the definition of financing
products offered, the evaluation of customer quality,
requests for collateral and the treatment of unsecured
loans and non-performing claims. The limitation of
concentration risks is implemented primarily by means
of global limits, which refer to customer exposures. To
comply with these limits, Mercedes-Benz Mobility ap-
plies approval standards and measures to avoid con-
centration risks. Only one customer was granted a
credit line in the form of a large loan. The Mercedes-
Benz Mobility portfolio consists of a large number of
small and medium-sized enterprises and private cus-
tomers from more than 30 countries. At 31 December
2023, this segment accounted for 72% of the portfolio.
With respect to its financing and lease activities, the
Group holds collateral for customer transactions limit-
ing actual credit risk through its fair value. The value of
collateral generally depends on the amount of the fi-
nanced assets. The financed vehicles usually serve as
collateral. Furthermore, Mercedes-Benz Mobility limits
credit risk from financing and lease activities, for ex-
ample through deposits from customers.
For the assessment of the default risk of retail and
small business customers, scoring systems are applied
to evaluate their creditworthiness. Corporate custom-
ers are evaluated using internal rating instruments.
Both evaluation processes use external credit bureau
data if available. The scoring and rating results as well
as the availability of security and other risk mitigation
instruments, such as deposits, guarantees and, to a
lesser extent, residual debt insurances, are essential
elements for credit decisions.
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300
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
If, in connection with contracts, a worsening of pay-
ment behaviour or other causes of a credit risk are
recognized, collection procedures are initiated by
claims management to obtain the overdue payments of
the customer, to take possession of the asset financed
or leased or, alternatively, to renegotiate the impaired
contract. Internal restructuring policies and practices
for loan and leasing contracts are based on the indica-
tors or criteria which, in the judgement of local man-
agement, indicate that repayment will probably contin-
ue and that the total proceeds expected to be derived
from the renegotiated contract exceed the expected
proceeds to be derived from immediate repossession
and remarketing. In the case of receivables from finan-
cial services, significant modifications of financial as-
sets were only made in rare cases and to an insignifi-
cant extent.
The allowance ratio decreased compared to the previ-
ous year due to the sale of the Russian Mercedes-Benz
Mobility companies for which very high provisions were
recorded in 2022. The default rate has increased com-
pared to the very low figures in the previous year,
mainly due to a challenging lending environment in the
United States.
For information on credit risks included in receivables
from financial services, see Note 14. Information on the
measurement of expected credit losses is provided in
Note 1.
Trade receivables
Trade receivables are mostly receivables from world-
wide sales of vehicles and spare parts. The credit risk
from trade receivables encompasses the default risk of
customers, e.g. dealers and general distribution com-
panies, as well as other corporate and private custom-
ers. In order to identify credit risks, the Mercedes-Benz
Group assesses the creditworthiness of customers. The
Mercedes-Benz Group manages its credit risk from
trade receivables using appropriate IT applications and
databases on the basis of internal policies which have
to be followed Group-wide.
A significant proportion of the trade receivables from
each country's domestic business is secured by various
country-specific types of collateral. This collateral in-
cludes conditional sales, guarantees and sureties, as
well as mortgages and deposits from customers.
For trade receivables from the export business, the
Mercedes-Benz Group also evaluates its customers'
creditworthiness by means of an internal rating process
with consideration of the respective country risk.
In this context, the Annual Financial Statements and
other relevant information on the general distribution
companies, such as payment history, are used and
assessed.
Depending on the creditworthiness of the customers,
the Mercedes-Benz Group establishes credit limits and
limits credit risks with the following types of collateral:
- credit insurances,
first-class bank guarantees and
- letters of credit.
These procedures are defined in the export credit
guidelines, which have Group-wide validity.
Receivables from financial services
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
299
2,660
2,463
Derivative financial
instruments not used in
hedge accounting
(assets only)
32
347
584
Other receivables and
financial assets
32
3,013
(assets only)
3,113
2,476
3,234
Financial guarantees
284
551
Liquid assets
Liquid assets consist of cash and cash equivalents and
marketable debt securities and similar investments.
With the investment of liquid assets, banks and issuers
of securities are selected very carefully and diversified
in accordance with a limit system. Liquid assets are
mainly held at financial institutions within and outside
Europe with high creditworthiness, as bonds issued by
German federal states and as money market funds. In
connection with investment decisions, priority is placed
on the borrower's very high creditworthiness and on
balanced risk diversification. The limits and their utili-
zation are reassessed continuously. In this assessment,
the Mercedes-Benz Group also considers the credit risk
assessment of its counterparties by the capital mar-
kets. In line with the Group's risk policy, most liquid
assets are held in investments with an external rating
of "A" or better. Liquid assets are thus not subject to a
material credit risk and are allocated to stage 1 of the
impairment model under IFRS, which is based on ex-
pected credit risk.
1 The maximum exposure information presented in the table refers to Group amounts,
including assets and liabilities held for sale.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Irrevocable loan commitments
2022
At 31 December
2023
GBP per €
-658
-1,048
Annual Report 2023 | Mercedes-Benz Group
Contents
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Combined Management Report
Corporate Governance
296
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Nominal values of derivative financial instruments
used in hedge accounting
At 31 December 2023, the Mercedes-Benz Group uti-
lized derivative financial instruments with a maximum
maturity of 71 and 115 months, respectively, (2022: 57
and 127 months) as hedges for currency risks and inter-
est rate risks.
The following table shows the nominal values of de-
rivative financial instruments used in hedge accounting
entered into for the purpose of hedging currency risks,
interest rate risks and commodity price risks that arise
from the Group's operating and/or financing activities.
The maturities of the derivative financial instruments
generally correspond with those of the underlying
transactions. The realization of the underlying transac-
tions is expected to correspond with the maturities of
the hedging transactions shown in the following table.
Nominal amounts of derivative financial instruments used in hedge accounting
In millions of euros
Currency risk
At 31 December
2023
Maturity of nominal amounts
At 31 December
2022
Maturity of nominal amounts
1 year up to
<1 year
1 year up to
5 years
>5 years
984
1,485
413
-166
4
-474
1,490
688
428
-489
1,479
688
428
15
11
35
-83
Total
-51
37
-74
-51
-42
-2
-9
-
-1
-1
1
-1
-227
-658
-42
<1 year
5 years
>5 years
14,817
1,202
20,251
1,590
15,738
3,336
20,664
2,578
1,336
3,914
Commodity price risk
7
7
4,232
1 The volumes of risk exposure in cash flow hedges directly affected by the reform of the interest rate benchmark are generally in line with the reported nominal values of the hedging instruments because of the basic hedging ratio of 1. Further information on the reform of the
interest rate benchmark is provided in Note 33.
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
297
Further Information
Average prices of hedging instruments
The following table shows the average prices of hedg-
ing instruments by risk category for the major risks.
Average prices of hedging instruments for the major risks
Currency risk
USD per €
CNY per €
Annual Report 2023 | Mercedes-Benz Group
-3
thereof major hedging instruments affected by the reform of the interest rate benchmark¹
in the currency USD
5,344
Total
24,200
18,297
50
42,547
27,727
27,945
55,672
Interest rate risk
8,635
Fair-value hedges
4,403
27,961
13,144
Cash flow hedges
2,795
1,593
5,764
30,967
6,857
43,588
19,140
4,174
15,229
3,521
22,924
thereof major hedging instruments affected by the reform of the interest rate benchmark
in the currency USD
1,195
2,813
1,336
39,391
5
1 Includes the following hedging instruments: currency forwards, currency options, currency swaps and commodity forwards.
2 Includes the following hedging instruments: interest rate swaps, cross-currency interest rate swaps.
2026
4,225
305
192
142
87
50
4,236
4,236
Irrevocable loan commitments5
5,001
2,476
Financial guarantees
284
284
143,159
72,524
26,900
16,944
6,746
4,338
2,476
Miscellaneous other financial liabilities excluding accrued interest and liabilities from financial guarantees
Obligations from sales transactions
1
1
-1,123
-614
-226
-51
thereof with net settlement
406
246
86
40
29
5
Cash outflows
406
246
86
40
29
5
Trade payables4
12,828
12,826
15,707
1 The amounts were calculated as follows:
(a) If the counterparty can request payment at different dates, the liability is included on the basis of the earliest date on which the Mercedes-Benz Group can be required to pay. The customer deposits of Mercedes-Benz Bank are mostly considered in this analysis to mature with-
in the first year.
(b) The cash flows of floating-interest financial instruments are estimated on the basis of forward rates.
2 The stated cash flows of financing liabilities consist of their undiscounted principal and interest payments.
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
305
Further Information
The value-at-risk calculations employed:
- Express potential losses in fair values, and
assume a 99% confidence level and a holding period
of five days.
At the Group level, the Mercedes-Benz Group calcu-
lates the value at risk for exchange-rate and interest
rate risk according to the variance-covariance ap-
proach. The value-at-risk calculation method for com-
modity hedging instruments is based on a Monte Carlo
simulation.
When calculating value at risk using the variance-
covariance approach, the Mercedes-Benz Group first
computes the current market value of the Group's fi-
nancial instruments portfolio. Then the sensitivity of
the portfolio value to changes in the relevant market
risk factors, such as particular foreign currency ex-
change-rates or interest rates of specific maturities, is
quantified. Based on volatilities and correlations of
these market risk factors, which are obtained from the
RiskMetricsTM dataset, a statistical distribution of po-
tential changes in the portfolio value at the end of the
holding period is computed. The loss which is reached
or exceeded with a probability of only 1% can be de-
rived from this calculation and represents the value at
risk.
The Monte Carlo simulation uses random numbers to
generate possible changes in market risk factors con-
sistent with current market volatilities. The changes in
market risk factors allow the calculation of a possible
change in the portfolio value over the holding period.
Running multiple iterations of this simulation leads to a
distribution of portfolio value changes. The value at risk
can be determined based on this distribution as the
portfolio value loss which is reached or exceeded with
a probability of 1%.
Exchange-rate risk
Transaction risk and currency risk management
The global nature of the Mercedes-Benz Group's busi-
nesses exposes cash flows to risks arising from fluctua-
tions in exchange-rates. These risks primarily relate to
fluctuations between the euro and the US dollar, the
Chinese renminbi, the British pound and other curren-
cies such as currencies of growth markets. In the oper-
ating vehicle business, the Group's exchange-rate risk
primarily arises when revenue is generated in a curren-
cy that is different from the currency in which the costs
of revenue are incurred (transaction risk). It may be
inadequate to cover the costs if the value of the cur-
rency in which the revenue is generated declined in the
interim relative to the value of the currency in which
the costs were incurred. The risk exposures serve as a
basis for analysing exchange-rate risks at Group level.
In addition, the Group is indirectly exposed to a trans-
action risk from its equity-method investments.
The Group's overall currency exposure is reduced by
natural hedging, which consists of the currency expo-
sures of the business operations of different entities
and segments partially offsetting each other at Group
level. These natural hedges eliminate the need for
hedging to the extent of the matched exposures. To
provide an additional natural hedge against any re-
maining transaction risk exposure, the Mercedes-Benz
Group generally strives to increase cash outflows in the
same currencies in which the Group has a net excess
inflow.
In order to mitigate the impact of currency exchange-
rate fluctuations for the business operations (future
transactions), the Mercedes-Benz Group continually
assesses its exposure to exchange-rate risks and hedg-
es a portion of those risks by using derivative financial
instruments. A committee manages the Group's ex-
change-rate risk and its hedging transactions through
currency derivatives. The committee consists of repre-
sentatives of the relevant segments and corporate
functions. The Corporate Treasury department aggre-
gates foreign currency exposures from the companies
of the Group and the operational units and implements
the committee's decisions concerning foreign currency
hedging through transactions with international finan-
cial institutions. Suitable measures are generally taken
without delay to eliminate any over-hedging regarding
hedging transactions caused by changes in exposure.
Moreover, designated hedging relationships are re-
viewed with respect to any requirements to discon-
tinue hedge accounting.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
306
Combined Management Report
To Our Shareholders
-2,802
Contents
As part of its risk management system, the Mercedes-
Benz Group employs value-at-risk analyses. In per-
forming these analyses, the Mercedes-Benz Group
quantifies its market risk due to changes in foreign
currency exchange-rates and interest rates and certain
commodity prices on a regular basis by predicting the
potential loss over a target time horizon (holding peri-
od) and confidence level.
3 The undiscounted sum of the cash flows of the derivative financial liabilities is shown for the respective year.
4 The cash outflows of trade payables are undiscounted.
5 The maximum available amounts are stated.
6 The maximum potential obligations under the issued financial guarantees are stated. It is assumed that the amounts are due within the first year.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
304
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Finance-market risks
The global nature of its businesses exposes the Mer-
cedes-Benz Group to significant market risks resulting
from fluctuations in foreign currency exchange-rates
and interest rates as well as commodity and energy
prices. The Group is also exposed to equity price risk in
connection with its investments in listed companies.
The Mercedes-Benz Group manages market risks to
minimize the impact of fluctuations in foreign ex-
change-rates and interest rates on the earnings of the
Group and its segments. The Group calculates its over-
all net-exposure to these market risks to provide the
basis for hedging decisions, which include the selection
of hedging instruments and the determination of hedg-
ing volumes and the corresponding periods. The hedg-
ing strategy is specified at Group level and uniformly
implemented in the segments. Decisions regarding, for
example, currencies and asset-liability management
(interest rates) are made by a committee that meets
regularly. Net-exposures are the basis for the hedging
strategies and are updated regularly. The Mercedes-
Benz Group usually counteracts the risk of short-term
fluctuations in raw-material prices by means of price
escalation clauses in the supply contracts. Power pur-
chase agreements are also concluded to reduce elec-
tricity price risks. Power purchase agreements are pur-
chase agreements for energy needs, including fixed
purchase prices of the electricity generated by a spe-
cific plant for generating wind or solar power.
Certain existing benchmark interest rates including
those of the London Interbank Offered Rate (for USD,
GBP, CHF and JPY) were comprehensively and interna-
tionally reformed. As a result, those interest rates were
gradually abolished and replaced with alternative risk-
free reference rates. Alternative interest rates were
developed on a national level in the context of the
respective legal systems and currencies; they can
therefore vary with regard to their structure, method-
ology and period of publication.
As the reform for EURIBOR and USD, GBP, CHF and JPY
LIBOR has already been implemented, the contractual
adjustment of financial instruments has already been
made in line with a corresponding interest rate refer-
ence.
The conversion of the outstanding reference rates of
hedging instruments and their underlying transactions
was identical and without any material delay. The Mer-
cedes-Benz Group considered the economic relation-
ship and thus the continuation of hedge accounting to
be still existing as of 31 December 2022.
The nominal values of those hedging instruments that
were affected in the prior year and are included in a
hedging relationship can be found in table Nominal
amounts of derivative financial instruments used in
hedge accounting in Note 32.
The effect of the application of the new interest rates
on the Consolidated Financial Statements is being re-
viewed on an ongoing basis. In order to conduct finan-
cial transactions based on the new indices, the Mer-
cedes-Benz Group is preparing its relevant IT-systems
accordingly. Uncertainty still exists about future market
standards with interest conventions for individual fi-
nancial products (cash products and interest deriva-
tives) that reference the new risk-free rates. Contracts
not yet converted as part of the IBOR reform in the
previous year (USD LIBOR) amounted to €4,790 million
in financial liabilities and €9,258 million in derivatives
as of 31 December 2022.
Annual Report 2023 | Mercedes-Benz Group
Corporate Governance
-13,768
Cash inflows
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
302
Further Information
Liquidity risk
Liquidity risk comprises the risk that a company cannot
meet its financial obligations in full.
The Mercedes-Benz Group manages its liquidity by
holding adequate volumes of liquid assets and by
maintaining syndicated credit facilities in addition to
the cash inflows generated by its business operations.
Additionally, the possibility to securitize receivables of
the financial services business (ABS transactions) also
reduces the Group's liquidity risk. Liquid assets com-
prise cash and cash equivalents and marketable debt
securities and similar investments. The Group can dis-
pose of these liquid assets at short notice.
Insofar as reverse factoring agreements are entered
into, they have no influence on the liquidity risk of the
Mercedes-Benz Group, as they relate to a large number
of investors and have no impact on the payment terms
of the trade payables concerned.
The funds raised are used to finance working capital
and capital expenditure as well as the cash needs of
the leasing and sales-financing business and unex-
pected liquidity needs. In accordance with internal
policies, the refunding of the leasing and sales-
financing business is generally carried out with match-
ing maturities so that financing liabilities have the same
maturity profile as the equipment on operating leases
and the receivables from financial services.
Combined Management Report
At 31 December 2023, the liquidity of the Mercedes-
Benz Group amounted to €22.8 billion (2022:
€24.7 billion). In 2023, significant cash inflows resulted
from the business of the Mercedes-Benz Cars and Mer-
cedes-Benz Vans segments. Furthermore, dividends
received from Daimler Truck Holding AG and Beijing
Benz Automotive Co., Ltd. in particular had a positive
effect on liquidity. Cash outflows resulted in particular
from investments in intangible assets and property,
plant and equipment, income taxes paid, the dividend
payment to the shareholders of Mercedes-Benz Group
AG and payments made as part of the share buyback
programme. Moreover, there were negative effects
from the leasing and sales financing business at Mer-
cedes-Benz Mobility.
In general, the Mercedes-Benz Group makes use of a
broad spectrum of financial instruments to cover its
funding requirements. Depending on funding require-
ments and market conditions, the Mercedes-Benz
Group issues commercial papers, bonds (including
green bonds), debt obligations and financial instru-
ments secured by receivables in various currencies.
Bank credit facilities are also used to cover financing
requirements. Potential downgrades of the Mercedes-
Benz Group's credit ratings could have a negative im-
pact on the Group's financing. Since July 2018, the
Mercedes-Benz Group has had at its disposal a syndi-
cated credit facility with a volume of €11 billion from a
consortium of international banks. It grants the Mer-
cedes-Benz Group additional financial flexibility until
2025. The credit line was unused as of 31 December
2023. In addition, customer deposits at Mercedes-Benz
Bank are used as a further source of refinancing.
Information on the Group's financing liabilities is also
provided in Note 24.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
From an operating point of view, the management of
the Group's liquidity exposures is centralized by a daily
cash-pooling process. This process enables the Mer-
cedes-Benz Group to manage its liquidity surplus and
liquidity requirements according to the actual needs of
the Group and of the companies of the Group. The
Group's short-term and mid-term liquidity management
takes into account the maturities of financial assets
and financial liabilities and estimates of cash flows
from business operations.
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
301
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
Derivative financial instruments
The Group uses derivative financial instruments exclu-
sively for hedging financial risks that arise from its
operational business, financing activities or liquidity
management. The Mercedes-Benz Group manages its
credit risk exposure in connection with derivative fi-
nancial instruments through a limit system, which is
based on the review of each counterparty's financial
strength. This system limits and diversifies the credit
risk. As a result, the Mercedes-Benz Group is exposed
to credit risk only to a small extent with respect to its
derivative financial instruments. In accordance with the
Group's risk policy, most derivatives are contracted
with counterparties which have an external rating of
"A" or better.
Other receivables and financial assets
The Mercedes-Benz Group is exposed to credit risk
only to a small extent with respect to other receivables
and financial assets included in other financial assets in
2023 and 2022.
Irrevocable loan commitments
The Mercedes-Benz Mobility segment in particular is
exposed to credit risk from irrevocable loan commit-
ments to end customers and retailers. At 31 December
2023, irrevocable loan commitments amounted to
€2,476 million (2022: €3,234 million). These loan com-
mitments had a maturity of less than one year and are
not subject to a material credit risk based on the cur-
rent state of knowledge.
Financial guarantees
The maximum potential obligations resulting from fi-
nancial guarantees amounted to €284 million at 31
December 2023 (2022: €551 million) and included lia-
bilities recognized at 31 December 2023 in the amount
of €4 million (2022: €7 million). Financial guarantees
represent contractual arrangements. These guarantees
generally provide that in the event of default or non-
payment by the primary debtor, the Group will be re-
quired to settle such financial obligations generally up
to a contractually agreed amount.
Country risk
Country risk is the risk of economic loss arising from
changes of political, economic, legal or social condi-
tions in the respective country, e.g. resulting from sov-
ereign measures such as expropriation or interdiction
of foreign currency transfers.
The Mercedes-Benz Group is exposed to country risk
mainly resulting from cross-border funding or collat-
eralization of Group companies and customers, from
investments in Group companies, associated compa-
nies, joint ventures and joint operations as well as from
cross-border trade receivables. Country risks also arise
from cross-border cash deposits at financial institu-
tions.
The Mercedes-Benz Group manages these risks via
country exposure limits (e.g. for hard currency portfoli-
os of financial services entities). An internal rating sys-
tem serves as a basis for the Mercedes-Benz Group's
risk-oriented country exposure management; it assigns
all countries to risk classes, with consideration of both
external ratings and capital market indications of coun-
try risks.
The following liquidity runoff shows how the cash flows
in connection with liabilities, derivative financial in-
struments and irrevocable loan commitments and fi-
nancial guarantees as at 31 December 2023 may affect
the Group's future liquidity situation.
Liquidity runoff for liabilities and financial guarantees¹
In millions of euros
303
951
635
197
78
45
-1
-3
545
389
111
38
16
-6
-3
19,129
14,157
2,913
1,161
630
220
48
681
-18,584
217
341
Further Information
Total
2024
2025
2027
2028
≥ 2029
Financing liabilities²
thereof lease liabilities (undiscounted)
Derivative financial instruments³
thereof with gross settlement
Cash outflows
117,383
26,397
16,673
6,559
4,252
15,660
2,444
500
430
275
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
47,842
The Group's targeted hedge ratios for forecast operat-
ing cash flows in foreign currencies are generally de-
termined using a step-by-step method. Depending on
the nature of the underlying risks, the hedging rates
decrease the further the expected cash flows are in the
future. On the one hand, the hedging horizon is natural-
ly limited by uncertainty related to cash flows that lie
far in the future; on the other hand, it may also be lim-
ited by the fact that appropriate currency contracts are
not available. This step-by-step method aims to limit
risks for the Group from unfavourable movements in
exchange-rates while preserving sufficient flexibility to
participate in favourable developments. Based on this
step-by-step method and depending on the market
outlook, the committee determines the hedging hori-
zon, which usually varies from one to five years, as well
as the average hedge ratios. At the end of 2023, the
currency management for calendar year 2024 showed
an unhedged position in the automotive business of
35% of the underlying forecasted cash flows in US
dollars and an unhedged position of 29% of the under-
lying forecast cash flows in British pounds, while the
forecast cash flows in Chinese renminbi were almost
fully hedged with an unhedged position of 4%.
Commodity-price risk
There were no material effects on earnings in the years
2022 and 2023.
- Premiums on hedging instruments for hedging ABS
transactions.
No perfect match for individual parameters of the
underlying hedged transactions and the hedging in-
struments used.
-
- Effects of the credit risk on the fair value of the
hedging instruments in use which are not reflected in
the change in the hedged interest rate risk.
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
309
To Our Shareholders
The Mercedes-Benz Group is exposed to the risk of
changes in market prices (e.g. for raw materials and
energy) in connection with procuring manufacturing
supplies used in production. The Mercedes-Benz Group
usually counteracts the risk of short-term fluctuations
in market prices by means of short and medium-term
price escalation clauses or fixing of purchase prices in
the supply contracts. The Mercedes-Benz Group con-
cludes e.g. power purchase agreements for wind and
solar energy in order to protect itself from fluctuations
in energy prices and ensure long-term, sustainable
procurement of electricity.
Contents
When designating derivative hedging instruments, the
Mercedes-Benz Group generally applies a hedge ratio
of 1. The respective volumes, interest curves, curren-
cies and maturity dates of the underlying transaction
and the hedging instrument are generally matched. In
the case of combined derivative financial instruments
for interest currency hedges, the cross-currency basis
spread is not designated into the hedge relationship,
but deferred as a hedging cost in other comprehensive
income and recognized in profit or loss over the hedge
term. The Group ensures an economic relationship
between the underlying transaction and the hedging
instrument by ensuring consistency of interest rates,
maturity terms and nominal amounts. In the case of
hedging for ABS transactions of private placements,
the risk of the market interest rate component is partly
protected, which historically covers on average more
than 70% of the change in value of the total interest
rate. The effectiveness of the hedge is assessed at the
beginning and during the hedging relationship using the
hypothetical derivative method. Possible sources of
ineffectiveness of the hedging relationship are:
Hedge accounting
In the course of 2023, changes in the value at risk of
interest rate sensitive financial instruments were pri-
marily determined by the development of interest rate
volatilities.
The table Value at risk for exchange risk, interest rate
risk and commodity price risk shows the period-end,
high, low and average value-at-risk figures of the inter-
est rate risk for the 2023 and 2022 portfolios of inter-
est rate sensitive primary financial instruments and
derivative financial instruments of the Group, including
the financial instruments of the financial services busi-
ness. Liabilities from leasing contracts for which the
Mercedes-Benz Group acts as a lessee are not included
in the value-at-risk of the interest rate risk. Average
exposure has been computed on an end-of-quarter
basis.
Derivative financial instruments are also used in con-
junction with the refinancing related to the automotive
segments and liquidity management. The Mercedes-
Benz Group steers the funding activities of the automo-
tive segments and the financial services business at
Group level.
financial instruments such as interest rate swaps. The
interest rate risk position is assessed by comparing
assets and liabilities for corresponding maturities, in-
cluding the impact of the relevant derivative financial
instruments.
A committee consisting of representatives of the rele-
vant segments and the corporate functions manages
the interest rate risk by setting targets for the interest
rate risk position. The Corporate Treasury department
and the local Mercedes-Benz Group companies are
jointly responsible for achieving these targets. As sepa-
rate functions, the Treasury Controlling and the Mer-
cedes-Benz Mobility Controlling & Reporting depart-
ment monitor target achievement on a monthly basis.
In order to achieve the targeted interest rate risk posi-
tions in terms of maturities and interest rate fixing
periods, the Mercedes-Benz Group also uses derivative
The Mercedes-Benz Group uses a variety of interest
rate sensitive financial instruments to manage the li-
quidity needs of the Group. However, the majority of
interest rate sensitive assets and liabilities results from
the financial services business operated by Mercedes-
Benz Mobility. The Mercedes-Benz Mobility companies
enter into transactions with customers that primarily
result in fixed-rate receivables. The Mercedes-Benz
Group's general policy is to match the refinancing of
interest-bearing assets in terms of maturities and in-
terest rates wherever economically feasible. However,
for a narrowly limited portion of the receivables portfo-
lio in selected and developed markets, Mercedes-Benz
Mobility does not match refinancing in terms of maturi-
ties in order to take advantage of market opportunities.
This results in the Mercedes-Benz Group being ex-
posed to interest rate risks.
Interest rate risk
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Annual Report 2023 | Mercedes-Benz Group
Combined Management Report
A small portion of the raw-material price risk relating to
the forecast procurement of precious metals was
hedged with the use of derivative financial instruments.
The Mercedes-Benz Group has decided to suspend
these hedging strategies for precious metals until fur-
ther notice. The previously existing hedges expired in
2023.
Derivative financial instruments without
hedge accounting
Further Information
Segment assets principally comprise all assets. The
assets of the Mercedes-Benz Cars and Mercedes-Benz
Vans segments exclude income tax assets, assets
from defined benefit pension plans and other post-
employment benefit plans, and certain financial in-
struments (including liquidity).
Transactions between the segments are generally elim-
inated in the reconciliation. The elimination of effects
connected with intra-Group transfers of equity invest-
ments principally takes place in the segments involved.
The effects on earnings at the Group are normally rec-
ognized in the corresponding segment upon comple-
tion of the external transaction. Some simplifications
have been made in the segment reporting with regard
to accounting for leasing agreements in connection
with intra-Group transactions.
Intersegment revenue is principally recorded at prices
that approximate market terms.
In justified individual cases, effects on the Group's
Consolidated Statement of Income, Consolidated
Statement of Financial Position, and Consolidated
Statement of Cash Flows are not allocated to the cor-
responding segment based on a legal point of view,
but the segment report rather follows an economic
approach.
The measure of the Group's net profit or loss used by
the Mercedes-Benz Group's management and reporting
structure is referred to as "EBIT". EBIT comprises gross
profit, selling and general administrative expenses,
research and non-capitalized development costs, other
operating income/expense, and the gains/losses on
equity-method investments, as well as other financial
income/expense.
The internal management and reporting structure at
the Mercedes-Benz Group is principally based on the
accounting policies according to IFRS that are de-
scribed in Note 1.
Internal management and
reporting structure
The reconciliation includes functions and services pro-
vided by the Group's headquarters as well as by equity
investments not allocated to the segments (e.g. Daim-
ler Truck Holding AG). In addition, the reconciliation
includes items at the corporate level and the effects on
earnings of eliminating intra-Group transactions be-
tween the segments.
Reconciliation
active in the area of innovative and digital mobility
services, seamless payment methods and the expan-
sion of the charging infrastructure.
The Mercedes-Benz Mobility segment supports the
sales of the Mercedes-Benz Group's automotive brands
worldwide. The product range primarily includes cus-
tomized mobility and financial services: from leasing
and financing packages for end customers and dealers
to insurance solutions, flexible subscription and rental
models and fleet management services for business
customers, with the latter primarily offered via the
Athlon brand. Furthermore, Mercedes-Benz Mobility is
The table Value at risk for exchange-rate risk, interest
rate risk and commodity price risk shows the period-
end, high, low and average value-at-risk figures for the
2022 portfolio of derivative financial instruments used
to hedge commodity price risk. Average exposure has
been computed on an end-of-quarter basis. The trans-
actions underlying the derivative financial instruments
are not included in the value-at-risk presentation.
The breakdown of the segments corresponds to the
internal organizational and reporting structure. The
vehicle segments develop and manufacture premium
and luxury cars as well as vans. In addition to the Mer-
cedes-Benz brand, the brand portfolio of the Mer-
cedes-Benz Cars segment encompasses the brands
Mercedes-AMG and Mercedes-Maybach, as well as the
G-Class product brand. Mercedes me provides access
to the digital services of Mercedes-Benz Cars. At Mer-
cedes-Benz Vans, the vans are sold under the Mer-
cedes-Benz brand. Corresponding spare parts and
accessories are also sold.
Reported segments
34. Segment reporting
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
310
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Mercedes-Benz Group predominantly holds in-
vestments in shares of companies which are classified
as long-term investments, some of which are account-
ed for in the Consolidated Financial Statements using
the equity method, such as the share in Daimler Truck
Holding AG and BBAC. These investments are not in-
cluded in a market risk assessment by the Group.
Equity-price risk
In 2023, the nominal volumes of hedging instruments
not designated in a hedging relationship, amounted to
€9 billion (2022: €12 billion) for derivatives used to
hedge interest rate risks and €13 billion (2022: €15 bil-
lion) for derivatives used to hedge exchange-rate risks,
as well as €644 million (2022: €644 million) for deriva-
tives used to hedge commodity price risks (energy and
raw materials).
The Group comprises the segments Mercedes-Benz
Cars, Mercedes-Benz Vans and Mercedes-Benz
Mobility.
308
Further Information
Contents
Year-end
2022
2023
Commodity price risk
Interest rate risk
Exchange-rate risk
In millions of euros
Value at risk for exchange-rate risk, interest rate risk and commodity price risk
a net investment in foreign operations in note 32. There
were no material effects on earnings in the years 2022
and 2023.
Please refer to table Cash Flow Hedges and hedges of
Notes to the Consolidated Financial Statements
Further Information
High
Consolidated Financial Statements
Combined Management Report
307
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
- Changes in the timing of the hedged transactions.
- Changes in the credit risk on the measurement of the
used hedging instrument which are not reflected in
the change of the hedged currency risk.
When designating derivative financial instruments, a
hedge ratio of 1 is applied. In addition, the respective
volume and currency of the hedge and the underlying
transaction as well as maturity dates are matched. The
Group ensures an economic relationship between the
underlying transaction and the hedging instrument by
ensuring consistency of currency, volume and maturity.
Option premiums and also forward components are not
designated into the hedging relationship, but the hedg-
ing costs are deferred in other comprehensive income
and recognized in profit or loss at the due date of the
underlying transaction or recognized as adjustment of
acquisition cost of non-financial assets. The effective-
ness of the hedge is assessed at the start of and during
the hedging relationship. Possible sources of ineffec-
tiveness of the hedging relationship are:
Hedge accounting
The following table shows the period-end, high, low
and average value-at-risk figures of the exchange-rate
risks for the 2023 and 2022 portfolios of derivative
financial instruments, which were entered into primari-
ly in connection with the vehicle business operations
and the trade receivables and payables existing at the
end of quarter. Average exposure has been computed
on an end-of-quarter basis. The other transactions
underlying the derivative financial instruments are not
included in the following value-at-risk presentation,
since they comprise forecast cash flows. See also table
Nominal amounts of derivative financial instruments
used in hedge accounting in Note 32.
measure the exchange-rate risk inherent in these de-
rivative financial instruments.
To Our Shareholders
To cover foreign currency exposure risks of the vehicle
business operations forward foreign exchange con-
tracts and currency options are primarily used. The
Mercedes-Benz Group's policies call for a mixture of
these financial instruments depending on the assess-
ment of market conditions. Value at risk is used to
Corporate Governance
Low
Contents
Year-end
For purposes of Mercedes-Benz Group's Consolidated
Financial Statements, the income and expenses and
the assets and liabilities of subsidiaries located outside
the euro zone are converted into euros. Therefore,
period-to-period changes in exchange-rates may cause
translation effects that have a significant impact on, for
example, revenue, segment profit/loss (EBIT) and as-
sets and liabilities of the Group. Unlike exchange-rate
transaction risk, currency translation risk does not nec-
essarily affect future cash flows. The Group's equity
position reflects changes in carrying amounts caused
by exchange-rates. In general, the Mercedes-Benz
Group does not hedge against currency translation risk.
Annual Report 2023 | Mercedes-Benz Group
Average
Effects of currency (translation risk)
Because currency risks from liquidity investments or
liabilities in foreign currencies are generally fully offset
due to the Group's investment or refinancing and the
derivative financial instruments used in this regard,
these financial instruments were not included in the
value-at-risk calculation presented.
The Group's investments in liquid assets or refinancing
activities are generally selected so that possible cur-
rency risks are minimized. Transaction risks arising
from liquid assets or payables in foreign currencies
that result from the Group's investment or refinancing
on money and capital markets are generally hedged
against currency risks at the time of investing or refi-
nancing in accordance with the Mercedes-Benz Group's
internal policies. The Group uses appropriate derivative
financial instruments (e.g. cross-currency interest rate
swaps) to hedge against currency risk.
2
4
351
275
492
275
214
The development of the value at risk from foreign cur-
rency hedging in 2023 was primarily shaped by a de-
crease in the volume of hedging transactions and vola-
tilities.
1,007
Low
175
High
612
189
539
1,109
295
814
1,372
814
711
Average
541
2,337
557
4,842
4,351
943
2,653
2022
16,800
2022
2023
2023
2022
At 31 December
1,120
At 31 December
Liabilities and provisions¹
18,601
1,751
56
1,682
2,400
right-of-use-assets
thereof depreciation of property, plant and
equipment
3,893
3,800
261
266
2,120
50
4,122
-1
4,204
4,121
Annual Report 2023 | Mercedes-Benz Group
Contents
299
2,262
4,204
Receivables and
Contents
2022
Corporate Governance
Combined Management Report
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
The objective of capital management is to increase
value added, among other things, by optimizing the
cost of capital. This is achieved on the one hand by
optimizing the net assets, e.g. working capital, which is
within the operational responsibility of the segments.
In addition, taking into account legal regulations, the
Mercedes-Benz Group strives to optimize the costs and
risks of its capital structure, and consequently, the cost
of capital rate. An example of this is an appropriate
level of liquidity, oriented towards the operational re-
quirements.
The cost of capital of the Group's average net assets is
reflected in value added. Value added shows the extent
to which the Group achieves or exceeds the minimum
return requirements of the shareholders, thus creating
additional value. The required rate of return on net
assets, and thus the cost of capital rate, is derived from
the minimum rates of return that equity investors and
lenders expect on their invested capital. In the report-
ing year, the cost of capital rate used for the internal
capital management amounted to 9% after taxes.
58,525
422
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
-3,818
94
-5,159
303
253
3 To the extent not allocated to Mercedes-Benz Mobility.
2 Unless allocated to the segments.
1 Equity.
2,459
59,843
2023
316
36. Earnings per share
2023
Expense from purchases
of goods and services
and other expense
of goods and services
and other income
Income from sales
1 Including liabilities from default risks from guarantees for related parties.
Companies controlled by related persons
Joint ventures
thereof BBAC
Further Information
thereof LSHAI
Associated companies
In millions of euros
Business transactions with related parties are generally
carried out at market terms.
At the Mercedes-Benz Group, those persons are the
members of the Board of Management and of the
Supervisory Board and their close family members.
Related parties (companies or persons) are deemed to
be associated companies, joint ventures and unconsol-
idated subsidiaries as well as persons who exercise
a significant influence on the financial and business
policy of the Mercedes-Benz Group. The latter category
includes all persons in key positions and their close
family members.
37. Related-party disclosures
Transactions with related parties
The calculation of basic and diluted earnings per share
is based on net profit attributable to shareholders of
Mercedes-Benz Group AG. The profit attributable to
shareholders of Mercedes-Benz Group AG (basic and
diluted) amounts to €14,261 million (2022: €14,501 mil-
lion). The weighted average number of shares out-
standing (basic and diluted) amounts to 1,059.6 million
issued shares (2022: 1,069.8 million issued shares).
The decrease in the weighted average number of
shares outstanding is due to the share buyback pro-
gramme resolved by the Board of Management on
16 February 2023.
thereof Daimler Truck
3
12,687
2,397
-11,813
-12,290
181,130
177,647
Additions to non-current assets
14,939
Net assets of the Mercedes-Benz Group
1,570
189,937
1,295
11,277
thereof investments in intangible assets
4,055
3,197
372
179
50
43
13,541
30,050
4,477
192,943
132,043
thereof carrying amounts of equity-method
investments
3,922
4,479
325
328
208
271
4,455
128,948
5,078
8,452
13,104
13,530
Segment liabilities
51,668
51,964
9,232
9,025
8,649
4
25,259
3,419
-173
608
620
5,778
6,130
13,772
13,963
-75
-72
7,213
13,697
thereof amortization of intangible assets
2,232
2,143
159
186
64
68
2,455
13,891
-225
7,386
Depreciation and amortization of non-current
29,825
25,086
-9
-1
4,468
3,418
thereof investments in property, plant and
equipment
3,345
assets
3,265
199
49
18
3,745
3,482
-1
3,745
3,481
351
and eliminations³
46,511
Assets and liabilities
from income taxes³
18
EBIT as shown in the Consolidated
Statement of Income/Loss
19,660
20,458
The line item Other reconciling items includes further
items at the corporate level. In the prior year, the line
item included expenses in connection with the sale of
individual investments and business activities to Daim-
ler Truck Holding AG or its subsidiaries.
The reconciliation of segment assets and liabilities to
relevant amounts for the Group is shown in the next
table.
Reconciliation of segment assets and liabilities to Group figures
138
2023
In millions of euros
Total of segment assets
248,978
244,468
Equity-method investment in DTHAG
Other equity-method investments¹
8,425
8,199
224
2022
253
Eliminations
55
2 Unless these are attributable to Mercedes-Benz Mobility.
1 This mainly comprises the equity-method carrying amount of BAIC Motor.
260,015
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Reconciliation
The following table shows the reconciliation of EBIT
according to segment reporting to the Consolidated
Statement of Income.
-458
Reconciliation of EBIT to Group figures
2023
2022
Total of segments' profit/loss (EBIT)
18,664
20,665
Gains/losses on equity-method investments
Other reconciling items
803
233
In millions of euros
Annual Report 2023 | Mercedes-Benz Group
Income tax assets²
3,107
236,330
Other reconciling items and
eliminations
-20,039
-19,904
Segment liabilities Group
181,130
177,647
7,614
Unallocated financial instruments
and similar obligations²
-10,924
-4,172
Total equity Group
92,816
86,540
Total equity and liabilities Group
263,022
and liabilities from pensions
3,448
8,226
192,943
Other reconciling items and
eliminations
-20,249
-19,697
Segment assets Group
240,826
236,330
Unallocated financial instruments
(including liquidity) and assets
189,937
from pensions and similar
obligations²
23,685
Total assets Group
To Our Shareholders
263,022 260,015
The gains/losses on equity-method investments
includes the positive profit contribution of €797 million
(2022: €226 million) from Daimler Truck Holding AG.
Total of segment liabilities
Income tax liabilities²
22,196
Other corporate items
Contents
314
35. Capital management
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
315
To Our Shareholders
Average net assets
Contents
1,341
84,671
85,395
150,017
153,218
749
7,881
7,453
537
Annual Report 2023 | Mercedes-Benz Group
507
2023
In millions of euros
Other equity-method
investments²
Average annual net assets are calculated on the basis
of average quarterly net assets. The average quarterly
net assets are calculated as an average of the net as-
sets at the beginning and the end of the quarter.
The assets and liabilities of the segments in accord-
ance with IFRS provide the basis for the determination
of net assets at Group level. Mercedes-Benz Cars and
Mercedes-Benz Vans are accountable for the net oper-
ating assets; all assets, liabilities and provisions for
which they are responsible for in day-to-day operations
are therefore allocated to them. Performance meas-
urement at Mercedes-Benz Mobility is on an equity
basis, in line with the usual practice in the banking
business. Net assets at Group level additionally include
assets and liabilities from income taxes as well as other
corporate items and eliminations.
Net assets and value added represent the basis for
capital management at the Mercedes-Benz Group. Alt-
hough individual companies in the Mercedes-Benz
Mobility segment are subject to the capital require-
ments of the respective banking supervision, Mer-
cedes-Benz Group AG is not subject to external mini-
mum capital requirements.
8,078
8,221
Equity-method investment
in DTHAG
53,540
2022
56,434
885
14,466
13,774
Mercedes-Benz Mobility'
1,253
Mercedes-Benz Vans
38,189
41,407
Mercedes-Benz Cars
Net assets of the segments
To Our Shareholders
27,324
1,625
Non-current assets
Revenue
Other markets
thereof China
Asia
thereof United States
North America
thereof Germany
2023
Europe
Revenue and non-current assets by region
Revenue from external customers and non-current
assets by region are shown in the following table.
With respect to information on geographical regions,
revenue is allocated to countries based on the location
of the customer; non-current assets are presented
according to the physical location of these assets.
Revenue and non-current assets
by region
Further Information
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Corporate Governance
Combined Management Report
In millions of euros
25,284
2022
2022
1,497
45,558
43,382
17,883
16,526
35,829
36,041
19,722
2023
18,430
40,488
45,587
23,085
25,799
61,983
64,719
56,487
61,895
40,091
Combined Management Report
240,826
-8,152
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Subsequent liability
In 2019, Mercedes-Benz Group AG hived down assets
and liabilities of the former Mercedes-Benz Cars &
Vans segment into Mercedes-Benz AG and of the for-
mer Daimler Trucks & Buses segment into Daimler
Truck AG. As legal entities involved in the hive-down,
Mercedes-Benz Group AG, Mercedes-Benz AG and
Daimler Truck AG are jointly and severally liable pursu-
ant to Section 133 Subsections 1 and 3 of the German
Transformation Act (UmwG) for the liabilities of Mer-
cedes-Benz Group AG incurred prior to the effective
date of the hive-down. Those of the aforementioned
legal entities to which the relevant liabilities are not
assigned under the hive-down agreement are, however,
only liable for those liabilities if they fall due within five
years of the announcement of the entry of the hive-
down in the commercial register of Mercedes-Benz
Group AG and claims therefrom are established in court
or in another manner as described in Section 133 of the
German Transformation Act (UmwG). The spin off and
hive-down of the Daimler commercial vehicle business
in 2021 resulted in a subsequent liability relationship
outside the Group.
The stipulations existing in this context, in particular on
the procedure for regulating the internal settlements
between the participating legal entities, are laid down
in the hive-down agreement of 25 March 2019.
The aforementioned period is ten years for pension
obligations based on the German Company Pensions
Act (BetrAVG) that existed before the hive-down took
effect. Mercedes-Benz Group AG and Mercedes-Benz
AG do not expect any outflow of liquidity from the re-
spective other legal entity due to the plan assets being
available in a sufficient volume.
According to the current appraisal, an actual claim with
respect to the subsequent liability relationship be-
tween the entities is considered to be unlikely.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
319
Further Information
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
320
Further Information
38. Remuneration of the members
of the Board of Management and
the Supervisory Board
The table below shows the remuneration granted dur-
ing 2023 to the members of the Board of Management
and the Supervisory Board who were active in 2023.
Remuneration of the members of the Board of Management and
the Supervisory Board in accordance with IAS 24.17
In millions of euros
Remuneration of the Board of
Management
Mercedes-Benz Pension Trust e.V. manages the plan
assets on a fiduciary basis to cover pension obligations
in Germany and is therefore a related party of the Mer-
cedes-Benz Group. Another related party is Mercedes-
Benz Pensionsfonds AG. Mercedes-Benz Group AG
bears non-significant expenses and provides services
for both companies. See also Note 22 for further infor-
mation.
Contributions to plan assets
sons.
Mr. Stefan Pierer has been a member of the Superviso-
ry Board of Mercedes-Benz Group AG and Mercedes-
Benz AG since May 2023. The Mercedes-Benz Group
maintains supply and service relationships with some
companies in the Pierer Group. The Pierer Group in-
cludes the SHW Group, a global automotive supplier, as
well as other companies. In August 2023, Stefan Pierer
also acquired 100% of the shares of Leoni AG, an inter-
national automotive supplier. The table Transactions
with related parties shows the information on the vol-
ume of goods and services supplied by these compa-
nies in the line Companies controlled by related per-
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
Associated companies
The transactions with associated companies mainly
relate to Daimler Truck Holding AG (Daimler Truck),
which is allocated to the reconciliation, and to LSH
Auto International Limited (LSHAI) and Beijing Benz
Automotive Co., Ltd. (BBAC), which are allocated to the
Mercedes-Benz Cars segment.
There are numerous relationships in the scope of ordi-
nary business between the Mercedes-Benz Group and
Daimler Truck, for example, the purchase and sale of
goods and services and leasing agreements. In addi-
tion, there is an interim provision of services by corpo-
rate functions that are included under other operating
income.
The leased equipment of the Mercedes-Benz Mobility
segment includes commercial vehicles produced by
Daimler Truck which have been acquired from external
dealers or other third parties not related to the Mer-
cedes-Benz Group. Mercedes-Benz Mobility usually
receives a residual-value guarantee from Daimler Truck
for this leased equipment in connection with the obli-
gation to return the respective commercial vehicles to
Daimler Truck. At 31 December 2023 this guarantee
was €37 million (31 December 2022: €66 million).
Additionally, the Mercedes-Benz Group will continue
the leasing and sales-financing business for Daimler
Truck's commercial vehicles in some markets. To this
end, Mercedes-Benz Mobility acquires these vehicles
from Daimler Truck and leases them to the end cus-
tomers. Insofar as a mandatory vehicle return to Daim-
ler Truck has been agreed, a leasing contract (head
lease) between Mercedes-Benz Mobility and Daimler
Truck is shown. The contract between Mercedes-Benz
Mobility and the end customer constitutes a sublease
in this respect. The receivables and right-of-use assets
shown in the table include demands for the repurchase
of vehicles of €1,121 million (31 December 2022:
€1,312 million) shown in receivables from financial ser-
vices and right-of-use assets of €268 million (31 De-
cember 2022: €548 million) vis-à-vis Daimler Truck
shown in equipment on operating leases. These right-
of-use assets were depreciated as planned by
€217 million in 2023 (2022: €399 million).
In addition, the Mercedes-Benz Group holds a minority
interest of €207 million (31 December 2022: €162 mil-
lion) in real estate companies controlled by Daimler
Truck Group, which is shown as debt instruments in
other financial assets.
At 31 December 2023, off-balance-sheet obligations to
the Daimler Truck Group amounted to €110 million
(31 December 2022: €310 million).
Joint ventures
On 12 May 2022, Mercedes-Benz AG signed an agree-
ment with PSA Automobiles SA, Opel Automobile
GmbH, Saft EV SAS and Saft Groupe to acquire a
33.33% stake in Automotive Cells Company SE (ACC)
through a capital contribution of approximately
€390 million. The Group also committed itself to the
provision of further funds up to €410 million. The in-
vestment in the European battery cell manufacturer
ACC was made in order to promote the development
and production of high-performance battery cells and
modules in the course of the transformation to a sus-
tainable business strategy. The shares in the joint ven-
ture ACC are included in the Consolidated Financial
Statements using the equity method and are allocated
to the Mercedes-Benz Cars segment.
2023
In the third quarter of 2023, an additional contract with
PSA Automobiles SA, Opel Automobile GmbH, Saft EV
SAS, Saft Groupe and Automotive Cells Company SE
(ACC) was signed in which the Group committed to
providing further funds of up to €457 million to ACC in
addition to the commitments agreed in 2022. The other
shareholders also confirmed that they are obligated to
provide additional funds.
Contents
To Our Shareholders
318
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Further Information
In January 2024, a loan of €110 million issued by the
Mercedes-Benz Group was converted into equity.
Moreover, in March 2024, ACC drew down €105 million
of the total contractually committed funds of €867
million. As a result, the carrying amount of ACC in-
creased accordingly.
As of 31 December 2023, there are off-balance-sheet
obligations of €256 million (31 December 2022:
€157 million).
On 1 July 2022, an agreement became effective in fa-
vour of smart Automobile Co., Ltd. (smart), a joint
venture of Mercedes-Benz AG and Zhejiang Geely Hold-
ing Group Co., Ltd. This agreement obliges the share-
holders to provide financial support up to a maximum
amount of €573 million each in the event that smart is
not able to perform its payment obligations under a
syndicated loan agreement. smart is allocated to the
Mercedes-Benz Cars segment.
Note 13 provides further details of the business activi-
ties of the significant associated companies.
Related persons
Throughout the world, the Group has business relation-
ships with numerous entities that are customers and/or
suppliers of the Group. Those customers and/or sup-
pliers include companies that have a connection with
some of the members of the Board of Management or
of the Supervisory Board and close family members of
those board members of Mercedes-Benz Group AG or
of its subsidiaries. Board of Management and Supervi-
sory Board members and close family members of
those board members may also purchase goods and
services from Mercedes-Benz Group AG or its subsidi-
aries as customers.
Annual Report 2023 | Mercedes-Benz Group
Combined Management Report
10
9
Payments made in 2023 to former members of the
Board of Management of Mercedes-Benz Group AG and
their survivors amounted to a total of €20 million
(2022: €21 million). The pension provisions for former
members of the Board of Management and their
survivors amounted to €265 million as of 31 December
2023 (2022: €246 million).
Individualized information on the remuneration of the
members of the Board of Management and of the Su-
pervisory Board of Mercedes-Benz Group AG is dis-
closed in the Remuneration Report.
Segment information
and 2022 is as follows.
The present segment information for the years 2023
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further Information
311
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Amortization of capitalized borrowing costs is not in-
cluded in the amortization of intangible assets or de-
preciation of property, plant and equipment.
Depreciation and amortization may also include im-
pairments insofar as they do not relate to goodwill
impairment according to IAS 36.
Capital expenditures for intangible assets and property,
plant and equipment reflect the cash-effective addi-
tions to these intangible assets and property, plant and
equipment insofar as they do not relate to capitalized
borrowing costs or goodwill.
Non-current assets consist of intangible assets, prop-
erty, plant and equipment, and equipment on operating
leases.
The residual-value risks associated with the Group's
operating leases and receivables from financial ser-
vices are generally borne by the segments which manu-
factured the leased vehicles. Risk sharing is based on
agreements between Mercedes-Benz Cars, Mercedes-
Benz Vans and Mercedes-Benz Mobility; the terms vary
by segment and geographic region.
Segment liabilities principally comprise all liabilities.
The Mercedes-Benz Cars and Mercedes-Benz Vans
reporting segments' liabilities exclude income tax liabil-
ities, liabilities from pensions and similar obligations
and certain financial instruments (including financing
liabilities).
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
-8,138
No advances or loans were made or abated to mem-
bers of the Board of Management or the Supervisory
Board of Mercedes-Benz Group AG in 2023.
The members of the Board of Management of Mer-
cedes-Benz Group AG do not receive any remuneration
for their board activities on the boards of the subsidiar-
ies. These activities are remunerated with the remuner-
ation at Mercedes-Benz Group AG.
With the exception of the remuneration paid to the
members of the Supervisory Board representing the
employees in accordance with their contracts of em-
ployment, no remuneration was paid to the members of
the Supervisory Board for services provided personally
beyond their board and committee activities in 2023, in
particular for advisory or agency services.
The members of the Supervisory Board are solely
granted short-term fixed remuneration for their board
and committee activities amounted to €6 million (2022:
€7 million), the amounts of which depend on their func-
tions in the Supervisory Board.
8
Fixed remuneration
(base salary)
Short-term variable remuneration
(2023: 100 (2022: 50)% of annual bonus)
16
8
Mid-term variable remuneration
(2022: 50% of annual bonus, "deferral")
Variable remuneration with
a long-term incentive effect (PPSP)
Post-employment
benefits (service cost)
2022
2
Remuneration of the Board of Management
44
42
Remuneration of the Supervisory Board
6
7
Total
50
49
16
15
Expenses for variable remuneration of the Board of
Management with a long-term incentive effect, as
shown in the following table, result from the ongoing
measurement at fair value at each balance sheet date
of all rights granted and not yet due under the stock-
based Performance Phantom Share Plans (PPSP), i.e.,
for the plans of the years 2020 to 2023 with the fair
value at the respective balance sheet date. In 2023, the
active members of the Board of Management were
granted 181,341 (2022: 137,655) phantom shares in
connection with the PPSP; the fair value of these phan-
tom shares at the grant date was €13 million (2022: €8
million). See Note 21 for additional information on
share-based payment of the members of the Board of
Management.
In accordance with Section 314 Subsection 1 No. 6a of
the German Commercial Code (HGB), the overall remu-
neration granted to the members of the Board of Man-
agement (excluding service cost resulting from entitle-
ments to post-employment benefits) amounted to €39
million (2022: €32 million), including the stock-based
remuneration with a fair value of €13 million (2022: €8
million).
2
317
313
Contents
126
1,586
1,355
investments
thereof gains/losses on equity-method
20,458
19,660
-207
996
20,665
18,664
2,428
1,302
1,897
3,138
16,340
14,224
Segment profit/loss (EBIT)
150,017
153,218
-5,755
-5,755
-6,544
-6,544
5,755
155,772
150,017
153,218
150,017
153,218
6,544
159,762
122
-155
-209
1,326
244,468
To Our Shareholders
248,978
142,524
145,057
10,036
10,486
91,908
93,435
Segment assets
545
-437
545
26,231
723
26,954
-436
86
-98
457
-338
provisions for other risks
from changes in discount rates of
fects
thereof profit/loss from compounding and ef-
1,732
2,129
233
803
1,499
2
26,718
-1
20,288
332
9,257
9,641
287
232
1,227
887
12
23
6,581
7,821
298
300
In millions of euros
1,396
221
195
469
639
31
223
93
17
1
185
Annual Report 2023 | Mercedes-Benz Group
17,217
65
1,646
312
32
Mercedes-Benz Cars
498
627
Further Information
25,752
966
4,534
111,601
4,951
112,756
Intersegment revenue
16,719
19,661
107,067
107,805
External revenue
2022
2023
Total revenue
2023
2022
Mercedes-Benz Group
Total Segments
2022
2023
2022
2023
2023
2022
2023
2022
Mercedes-Benz Vans Mercedes-Benz Mobility
Reconciliation
Stuttgart, Germany
100.00
62.49
Buenos Aires, Argentina
100.00
Berlin, Germany
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
Arvidsjaur, Sweden
MB GTC GmbH Mercedes-Benz Gebrauchtteile Center
Li-Tec Battery GmbH
LICULAR GmbH
LEONIE DMS DVB GmbH
Lapland Car Test Aktiebolag
Dreizehnte Vermögensverwaltungsgesellschaft DVB mbH
Daimler Unterstützungskasse GmbH
Stuttgart, Germany
Anota Fahrzeug Service- und Vertriebsgesellschaft mbH
Circulo Cerrado S.A. de Ahorro para Fines Determinados
Cúspide GmbH
AEG Olympia Office GmbH
Kamenz, Germany
100.00
To Our Shareholders
100.00
Mercedes-Benz Customer Assistance Center Maastricht N.V.
Accumotive Verwaltungs-GmbH
Mercedes-Benz Consulting GmbH
Mercedes-Benz Cars Middle East FZE
Mercedes-Benz Business Services Sdn Bhd
Mercedes-Benz Assignment Services Americas, LLC
Mercedes pay USA LLC
Mercedes pay S.A. - in liquidation
Mercedes pay AG
MBition Sofia EOOD
100.00
MBition GmbH
Contents
Annual Report 2023 | Mercedes-Benz Group
100.00
Neuhausen auf den Fildern, Germany
100.00
Kamenz, Germany
100.00
Kuppenheim, Germany
100.00
Stuttgart, Germany
Name of the company
II. Unconsolidated subsidiaries²
3
Sittard, Netherlands
0.00
Beijing, China
3
0.00
Beijing, China
0.00
Beijing, China
0.00
Beijing, China
3
Beijing, China
0.00
0.00
Beijing, China
3
0.00
Beijing, China
3
0.00
Beijing, China
7
Mercedes-Benz Digital Tech Ltd.
Beijing, China
0.00
3
Beijing, China
100.00
Kidlington, United Kingdom
60.00
Almere, Netherlands
5
100.00
Stuttgart, Germany
65.00
Le Bourget, France
100.00
Sebes, Romania
3
0.00
Luxembourg, Luxembourg
0.00
Milan, Italy
0.00
Wilmington, USA
3
0.00
Tokyo, Japan
3
0.00
51.00
Mercedes-Benz Egypt S.A.E.
Budapest, Hungary
Mercedes-Benz Financial Services UK (Trustees) Ltd
100.00
100.00
100.00
100.00
Stuttgart, Germany
100.00
Brackley, United Kingdom
100.00
New Cairo, Egypt
100.00
100.00
New Cairo, Egypt
Stuttgart, Germany
100.00
Montigny-le-Bretonneux, France
100.00
100.00
100.00
Cebu City, Philippines
100.00
San Sebastián de los Reyes, Spain
100.00
100.00
Berlin, Germany
100.00
100.00
Mercedes-Benz UK Share Trustee Ltd.
Mercedes-Benz Tech Motion GmbH
Mercedes-Benz Tech Innovation GmbH
Tel Aviv, Israel
Bangalore, India
Wilmington, USA
Bratislava, Slovakia
Stuttgart, Germany
Wilmington, USA
Puchong, Malaysia
Mercedes-Benz Slovakia s.r.o.
Mercedes-Benz Research and Development India Private Limited
Mercedes-Benz Second Life Solutions LLC
Mercedes-Benz Research & Development Tel Aviv Ltd.
Mercedes-Benz Purchasing Coordination Corporation
100.00
Mercedes-Benz Pensionsfonds AG
100.00
Jawor, Poland
100.00
Milton Keynes, United Kingdom
100.00
Milton Keynes, United Kingdom
100.00
Böblingen, Germany
100.00
Ulm, Germany
Mercedes-Benz Parts Logistics Asia Pacific Sdn. Bhd.
100.00
Stuttgart, Germany
100.00
Berlin, Germany
Footnote
Equity interest in
percent¹
Domicile, country/region
Further Information
330
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Sofia, Bulgaria
Mercedes-Benz Heritage GmbH
Mercedes-Benz Manufacturing and Import Egypt
Mercedes-Benz Logistics and Distribution Egypt LLC
Mercedes-Benz Intellectual Property Management GmbH
Mercedes-Benz IDC Europe S.A.S.
Mercedes-Benz Hungária Kft.
Mercedes-Benz Group Services Phils., Inc.
Mercedes-Benz Group Services Madrid, S.A.U.
Mercedes-Benz Group Services Berlin GmbH
Mercedes-Benz Gastronomie GmbH
Mercedes-Benz G GmbH
Mercedes-Benz Motorsport Limited
100.00
100.00
Zug, Switzerland
Raaba, Austria
100.00
Milton Keynes, United Kingdom
100.00
Kamenz, Germany
100.00
New Cairo, Egypt
100.00
Shanghai, China
100.00
Maastricht, Netherlands
100.00
Leinfelden-Echterdingen, Germany
100.00
Dubai, United Arab Emirates
100.00
Puchong, Malaysia
100.00
100.00
100.00
100.00
Wilmington, USA
Luxembourg, Luxembourg
Wilmington, USA
Mercedes-Benz Energy GmbH
Mississauga, Canada
Berlin, Germany
Mississauga, Canada
Mercedes-Benz USA, LLC
Mercedes-Benz Ubezpieczenia Sp. z o.o.
Mercedes-Benz U.S. International, Inc.
Mercedes-Benz Trust Leasing LLC
Mercedes-Benz Trust Leasing Conduit LLC
Mercedes-Benz Trust Holdings LLC
Mercedes-Benz Taiwan Ltd.
Mercedes-Benz Sverige AB
Mercedes-Benz South Africa Ltd
Mercedes-Benz Sosnowiec Sp. z o.o.
Mercedes-Benz Vans Hong Kong Limited
Mercedes-Benz Singapore Pte. Ltd.
Mercedes-Benz Services Correduria de Seguros, S.A.
Mercedes-Benz Service Leasing S.R.L.
Mercedes-Benz Schweiz AG
Mercedes-Benz Romania S.R.L.
Mercedes-Benz Roma S.p.A.
Mercedes-Benz Retail, Unipessoal Lda.
Mercedes-Benz Retail Receivables LLC
Mercedes-Benz Retail Group UK Limited
Mercedes-Benz Research & Development North America, Inc.
Name of the company
Mercedes-Benz Services Malaysia Sdn Bhd
Mercedes-Benz Sigorta Aracilik Hizmetleri A.S.
Further Information
Mercedes-Benz Vans UK Limited
Mercedes-Benz Vermögens- und Beteiligungsgesellschaft mbH
100.00
Footnote
Equity interest in
percent¹
Istanbul, Turkey
Singapore, Singapore
Rome, Italy
Bucharest, Romania
Mem Martins, Portugal
Farmington Hills, USA
Milton Keynes, United Kingdom
Wilmington, USA
Mercedes-Benz Vans, LLC
Domicile, country/region
Silver Arrow Athlon NL 2021-1
Multifleet G.I.E.
Movinx UK Ltd.
Movinx GmbH
Movinx Americas Company, Inc.
Mercedes-Benz Warszawa Sp. z o.o.
Mercedes-Benz Vietnam Ltd.
Mercedes-Benz Verwaltungsgesellschaft für Grundbesitz mbH
Mercedes-Benz Versicherungsservice GmbH
Mercedes-Benz Versicherung AG
Silver Arrow Australia 2019-1
100.00
328
Consolidated Financial Statements
Port-Marly, France
Istanbul, Turkey
Salzburg, Austria
100.00
Newark, USA
100.00
Wilmington, USA
100.00
Auckland, New Zealand
100.00
100.00
Utrecht, Netherlands
Utrecht, Netherlands
100.00
Beijing, China
100.00
Stuttgart, Germany
100.00
Mexico City, Mexico
100.00
Seoul, South Korea
100.00
100.00
Notes to the Consolidated Financial Statements
66.91
Stuttgart, Germany
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
100.00
Alcobendas, Spain
100.00
Luxembourg, Luxembourg
100.00
100.00
Berlin, Germany
Sintra, Portugal
100.00
Warsaw, Poland
100.00
Shanghai, China
100.00
Milton Keynes, United Kingdom
100.00
Azuqueca de Henares, Spain
100.00
100.00
100.00
100.00
100.00
Silver Arrow Australia Trust 2020-1
Silver Arrow Australia Trust 2019-1
Name of the company
Notes to the Consolidated Financial Statements
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Silver Arrow Canada GP Inc.
Utrecht, Netherlands
Melbourne, Australia
3
0.00
0.00
50.10
Le Bourget, France
100.00
London, United Kingdom
100.00
Berlin, Germany
100.00
Stuttgart, Germany
Schaumburg, USA
Silver Arrow Canada LP
Silver Arrow China Mercedes-Benz Leasing Co., Ltd. 2021-2
3
0.00
Melbourne, Australia
0.00
Melbourne, Australia
Footnote
Equity interest in
percent¹
Domicile, country/region
Further Information
329
SILVER ARROW CHINA 2021-2 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
SILVER ARROW CHINA 2022-1 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
SILVER ARROW CHINA 2022-2 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
Silver Arrow China Mercedes-Benz Leasing Co., Ltd. 2021-1
Zuidlease B.V.
Wagenplan B.V.
Vierzehnte Vermögensverwaltungsgesellschaft DVB mbH
Ucafleet S.A.S.
Star Assembly SRL
Silver Arrow S.A.
Silver Arrow Merfina 2021-1 S.r.l.
Silver Arrow Lease Facility Trust
Silver Arrow Japan 2022-1
SILVER ARROW CHINA 2023-1 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
SILVER ARROW CHINA 2023-2 RETAIL AUTO LOAN ASSET BACKED NOTES TRUST
SILVER ARROW CHINA Mercedes-Benz Leasing Co., Ltd. 2022-1 ASSET BACKED NOTES TRUST
SILVER ARROW CHINA Mercedes-Benz Leasing Co., Ltd. 2022-2 ASSET BACKED NOTES TRUST
Silver Arrow China Mercedes-Benz Leasing Co., Ltd. 2023-1
YASA Limited
100.00
100.00
100.00
Wilmington, USA
100.00
Farmington Hills, USA
51.00
Taipei, Taiwan, China
100.00
Malmö, Sweden
100.00
Pretoria, South Africa
100.00
100.00
Sosnowiec, Poland
100.00
100.00
Selangor, Malaysia
100.00
Alcobendas, Spain
100.00
Bucharest, Romania
100.00
Schlieren, Switzerland
100.00
100.00
Wilmington, USA
Farmington Hills, USA
Vance, USA
Warsaw, Poland
70.00
Ho Chi Minh City, Vietnam
5
100.00
Schönefeld, Germany
100.00
100.00
5
100.00
100.00
Stuttgart, Germany
Wilmington, USA
100.00
Milton Keynes, United Kingdom
67.55
Hong Kong, China
100.00
Wilmington, USA
100.00
Warsaw, Poland
100.00
100.00
Mercedes-Benz Wholesale Receivables LLC
Alcobendas, Spain
Stuttgart, Germany
100.00
5
Schönefeld, Germany
100.00
5,7
Beijing, China
0.00
Stuttgart, Germany
3
Contents
To Our Shareholders
Name of the company
FOTIC - MB Leasing No. 3 Single Fund Trust
FOTIC - MB Leasing No. 4 Single Fund Trust
FOTIC - MB Leasing No. 5 Single Fund Trust
FOTIC - MB Leasing No. 6 Single Fund Trust
Friesland Lease B.V.
Interleasing Luxembourg S.A.
Koppieview Property (Pty) Ltd
LBBW AM - Daimler Re Insurance
Annual Report 2023 | Mercedes-Benz Group
LBBW AM - MBVEXW
5,7
Schönefeld, Germany
Daimler Fleet Management South Africa (Pty.) Ltd. i. L.
Pretoria, South Africa
65.00
4
Daimler Northeast Asia Parts Trading and Services Co., Ltd.
Daimler Vans USA, LLC
Daimler Vermögens- und Beteiligungsgesellschaft mbH
100.00
Delta Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
EHG Elektroholding GmbH
Beijing, China
100.00
Wilmington, USA
100.00
Stuttgart, Germany
100.00
5
Epsilon Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
FOTIC - MB Leasing No. 2 Single Fund Trust
100.00
MBarc Credit Canada Inc.
Mercedes AMG High Performance Powertrains Ltd
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
324
Further Information
Domicile, country/region
Equity interest in
percent¹
Combined Management Report
Footnote
3
Beijing, China
Beijing, China
Beijing, China
0.00
0.00
0.00
Beijing, China
MDC Power GmbH
Mercedes-Benz Broker Biztositási Alkusz Hungary Kft.
Mercedes-Benz Banking Service GmbH
Mercedes pay GmbH
Mercedes-AMG GmbH
Mercedes-Benz - Aluguer de Veículos, Lda.
Mercedes-Benz (China) Ltd.
Mercedes-Benz (Thailand) Limited
Mercedes-Benz AG
Mercedes-Benz Argentina S.A.U.
Mercedes-Benz Belgium Luxembourg S.A.
Mercedes-Benz Asia GmbH
Mercedes-Benz Australia/Pacific Pty Ltd
Mercedes-Benz Auto Finance Ltd.
Mercedes-Benz Auto Lease Trust 2021-B
Mercedes-Benz Auto Lease Trust 2023-A
Mercedes-Benz Auto Receivables Trust 2020-1
Mercedes-Benz Auto Receivables Trust 2021-1
Mercedes-Benz Auto Receivables Trust 2022-1
Mercedes-Benz Auto Receivables Trust 2023-1
Mercedes-Benz Auto Receivables Trust 2023-2
Mercedes-Benz Automotive Mobility GmbH
Mercedes-Benz Bank AG
Mercedes-Benz Bank GmbH
Mercedes-Benz Bank Polska S.A. w likwidacji
Mercedes-Benz Bank Service Center GmbH
Mercedes-Benz Assuradeuren B.V.
Stuttgart, Germany
100.00
Wilmington, USA
Athlon Car Lease Nederland B.V.
Athlon Car Lease Polska Sp. z o.o.
Athlon Car Lease Portugal, Ida
Athlon Car Lease Rental Services B.V.
Athlon Car Lease Rental Services Belgium N.V.
Athlon Car Lease S.A.S.
Athlon Car Lease Spain, S.A.
Athlon Car Lease Italy S.R.L.
Athlon France S.A.S.
Athlon Mobility Consultancy N.V.
Athlon Mobility Services UK Limited
Athlon Rental Germany GmbH
Athlon Sweden AB
CARS Technik & Logistik GmbH
DAF Investments, Ltd.
Daimler Fleet Management GmbH
Athlon Germany GmbH
Schönefeld, Germany
Athlon Car Lease Belgium N.V.
Athlon Car Lease International B.V.
Alpha 7 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
AssetCo, LLC
100.00
5,7
Schönefeld, Germany
100.00
5,7
Schönefeld, Germany
100.00
Athlon Beheer International B.V.
5,7
Schönefeld, Germany
100.00
5,7
Alpha 6 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Schönefeld, Germany
100.00
5,7
Alpha 5 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
100.00
5,7
Wilmington, USA
100.00
100.00
Le Bourget, France
Düsseldorf, Germany
100.00
100.00
Machelen, Belgium
100.00
Le Bourget, France
Alcobendas, Spain
Milton Keynes, United Kingdom
Düsseldorf, Germany
100.00
Malmö, Sweden
100.00
Wiedemar, Germany
100.00
5
100.00
100.00
Machelen, Belgium
100.00
20.00
3
Schiphol, Netherlands
100.00
Machelen, Belgium
100.00
Schiphol, Netherlands
100.00
Rome, Italy
100.00
Schiphol, Netherlands
100.00
Warsaw, Poland
100.00
Sintra, Portugal
100.00
Schiphol, Netherlands
0.00
Schönefeld, Germany
3
51.11
Mercedes-Benz Financial Services España, E.F.C., S.A.
Mercedes-Benz Financial Services France S.A.
Mercedes-Benz Financial Services Hong Kong Ltd.
Mercedes-Benz Financial Services India Private Limited
Domicile, country/region
Equity interest in
percent¹
Footnote
Mercedes-Benz Financial Services Canada Corporation
Mercedes-Benz Financial Services Ceská republika s.r.o.
Milton Keynes, United Kingdom
Mississauga, Canada
100.00
Utrecht, Netherlands
100.00
São Paulo, Brazil
100.00
Milton Keynes, United Kingdom
100.00
100.00
Mercedes-Benz Financial Services Australia Pty. Ltd.
Mercedes-Benz Financial Services Austria GmbH
Mercedes-Benz Financial Services BeLux NV
Mercedes-Benz Finance Co., Ltd.
Name of the company
Mercedes-Benz Brooklands Limited
Mercedes-Benz Canada Inc.
Mercedes-Benz Capital Investments B.V.
Mercedes-Benz Cars & Vans Brasil Ltda.
Mercedes-Benz Cars UK Limited
Mercedes-Benz Česká republika s.r.o.
Mercedes-Benz Finance North America LLC
Mercedes-Benz Connectivity Services GmbH
Mercedes-Benz Corporate Investments, LLC
Mercedes-Benz CPH A/S
Mercedes-Benz Customer Solutions GmbH
Mercedes-Benz Danmark A/S
Mercedes-Benz Dealer Bedrijven B.V.
Mercedes-Benz Espana, S.A.U.
Mercedes-Benz ExTra LLC
Mercedes-Benz Filo Hizmetleri A.S.
Mercedes-Benz Finance Canada Inc.
Mercedes-Benz Credit Pénzügyi Szolgáltató Hungary Zrt.
Notes to the Consolidated Financial Statements
Prague, Czech Republic
Stuttgart, Germany
100.00
100.00
Tokyo, Japan
95.11
Wilmington, USA
100.00
Melbourne, Australia
100.00
100.00
100.00
Brussels, Belgium
100.00
Mississauga, Canada
100.00
Prague, Czech Republic
100.00
Eugendorf, Austria
100.00
Montreal, Canada
Wilmington, USA
100.00
Wilmington, USA
100.00
Horsholm, Denmark
100.00
Budapest, Hungary
100.00
Istanbul, Turkey
Stuttgart, Germany
5
Copenhagen, Denmark
100.00
The Hague, Netherlands
100.00
Alcobendas, Spain
100.00
100.00
Further Information
Consolidated Financial Statements
Corporate Governance
Bangkok, Thailand
100.00
75.00
100.00
Stuttgart, Germany
100.00
5
Mem Martins, Portugal
Beijing, China
Buenos Aires, Argentina
Stuttgart, Germany
100.00
Utrecht, Netherlands
100.00
Melbourne, Australia
100.00
Beijing, China
100.00
100.00
100.00
100.00
Windhof, Luxembourg
100.00
Pretoria, South Africal
100.00
Luxembourg, Luxembourg
0.00
Stuttgart, Germany
Affalterbach, Germany
0.00
100.00
Kölleda, Germany
100.00
5
Brixworth, United Kingdom
100.00
Stuttgart, Germany
Mississauga, Canada
Wilmington, USA
0.00
Wilmington, USA
100.00
100.00
100.00
Berlin, Germany
100.00
Saarbrücken, Germany
100.00
Warsaw, Poland
Brussels, Belgium
Budapest, Hungary
100.00
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
325
Combined Management Report
100.00
Eugendorf, Austria
Stuttgart, Germany
5
0.00
3
Wilmington, USA
0.00
3
Wilmington, USA
0.00
Wilmington, USA
0.00
3
Wilmington, USA
0.00
3
Wilmington, USA
0.00
Berlin, Germany
100.00
Drachten, Netherlands
100.00
5,7
Schönefeld, Germany
Seoul, South Korea
100.00
Tokyo, Japan
100.00
Rome, Italy
100.00
Wilmington, USA
51.00
100.00
5
100.00
Stuttgart, Germany
100.00
Milton Keynes, United Kingdom
51.00
Taipei, Taiwan, China
Utrecht, Netherlands
100.00
Trent, Italy
Beijing, China
Combined Management Report
327
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
100.00
Warsaw, Poland
100.00
100.00
100.00
Bucharest, Romania
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
65.00
Budapest, Hungary
Corporate Governance
Utrecht, Netherlands
Stuttgart, Germany
Singapore, Singapore
100.00
Istanbul, Turkey
100.00
Istanbul, Turkey
100.00
Malmö, Sweden
100.00
100.00
100.00
Wilmington, USA
100.00
Milton Keynes, United Kingdom
51.00
Taipei, Taiwan, China
100.00
Copenhagen, Denmark
100.00
Malmö, Sweden
Montigny-le-Bretonneux, France
100.00
100.00
100.00
80.00
100.00
100.00
Milton Keynes, United Kingdom
100.00
100.00
100.00
Schönefeld, Germany
100.00
Beijing, China
100.00
Melbourne, Australia
100.00
Stuttgart, Germany
Consolidated Financial Statements
Further Information
Notes to the Consolidated Financial Statements
100.00
New York, USA
100.00
Puchong, Malaysia
5
100.00
Ludwigsfelde, Germany
Bangkok, Thailand
5,7
Schönefeld, Germany
5
100.00
Böblingen, Germany
5
100.00
Stuttgart, Germany
100.00
Footnote
100.00
100.00
100.00
Melbourne, Australia
100.00
Stuttgart, Germany
100.00
Bangkok, Thailand
100.00
Kecskemét, Hungary
Stuttgart, Germany
Mexico City, Mexico
100.00
Mexico City, Mexico
0.00
Wilmington, USA
100.00
Jawor, Poland
100.00
Equity interest in
percent¹
Domicile, country/region
Mercedes-Benz Reinsurance S.A. Luxembourg
Mercedes-Benz Renting, S.A.
Mercedes-Benz Mobility AG
Mercedes-Benz Mobility (Thailand) Co., Ltd.
Mercedes-Benz Mitarbeiter-Fahrzeuge Leasing GmbH
Mercedes-Benz Mexico, S. de R.L. de C.V.
Mercedes-Benz México International, S. de R.L. de C.V.
Mercedes-Benz Master Owner Trust
Mercedes-Benz Manufacturing Poland sp. z O.O.
MERCEDES-BENZ MOBILITY AUSTRALIA PTY LTD
Mercedes-Benz Manufacturing Hungary Kft.
Mercedes-Benz Manhattan, Inc.
Mercedes-Benz Malaysia Sdn. Bhd.
Mercedes-Benz Ludwigsfelde GmbH
Mercedes-Benz Ludwigsfelde Anlagenverwaltung GmbH & Co. OHG
Mercedes-Benz LT GmbH
Mercedes-Benz Leasing Treuhand GmbH
Name of the company
Mercedes-Benz Manufacturing (Thailand) Limited
Mercedes-Benz Mobility Beteiligungsgesellschaft mbH
Mercedes-Benz Mobility Korea Ltd.
MERCEDES-BENZ MOBILITY MEXICO, S. DE R.L. DE C.V.
Mercedes-Benz Real Estate GmbH
Mercedes-Benz Portugal, S.A.
Mercedes-Benz Polska Sp. z o.o.
Mercedes-Benz Parts Manufacturing & Services Ltd.
Mercedes-Benz Parts Logistics UK Limited
Mercedes-Benz Parts Logistics Ibérica, S.L.U.
Mercedes-Benz Parts Brand GmbH
Mercedes-Benz Paris SAS
Mercedes-Benz Otomotiv Ticaret ve Hizmetler A.S.
Mercedes-Benz Österreich GmbH
Mercedes-Benz North America Finance Corporation
Mercedes-Benz North America Corporation
Mercedes-Benz New Zealand Ltd
Mercedes-Benz Nederland Holding B.V.
Mercedes-Benz Nederland B.V.
Mercedes-Benz Mobility & Technology Service (Beijing) Co., Ltd.
Mercedes-Benz Mobility Services GmbH
Warsaw, Poland
100.00
Footnote
Domicile, country/region
8
6
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Tax services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
Other attestation services
Other services
4
3
2
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
2
2
7
50
24
38
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
39. Auditor fees
The shareholders of Mercedes-Benz Group AG elected
KPMG AG Wirtschaftsprüfungsgesellschaft as the ex-
ternal auditor at the Annual General Meeting held on 3
May 2023. The following table shows the fees for ser-
vices provided by KPMG AG Wirtschaftsprüfungsgesell-
schaft and the companies of the worldwide KPMG net-
work to Mercedes-Benz Group AG, the consolidated
subsidiaries and the proportionately consolidated joint
operations.
Audit services relate to the audit of the Mercedes-Benz
Group's Consolidated Financial Statements and the
Annual Financial Statements, as well as to all services
required for the audit including the reviews of interim
financial statements, the accounting-related audit of
the internal control system and accounting-related
audits of IT systems and processes.
25
Other attestation services were particularly provided
for certifications and reviews of IT systems or in con-
nection with the issuance of comfort letters. Other
services were mainly commissioned for process con-
sulting not relevant to accounting and for quality as-
Auditor fees
In millions of euros
Audit services
thereof KPMG AG
Wirtschaftsprüfungsgesellschaft
2023
2022
39
surance.
Annual Report 2023 | Mercedes-Benz Group
46
321
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
323
Further Information
Name of the company
To Our Shareholders
I. Consolidated subsidiaries
Alpha 1 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 2 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 3 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Alpha 4 Mercedes-Benz Grundstücksverwaltung GmbH & Co. OHG
Domicile, country/region
Equity interest in
percent¹
Footnote
Kamenz, Germany
100.00
5
Accumotive GmbH & Co. KG
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
Contents
Further Information
Further Information
Montigny-le-Bretonneux, France
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
40. Events after the
reporting period
Annual Report 2023 | Mercedes-Benz Group
41. Additional information
On 19 January 2024, the Mercedes-Benz Group an-
nounced a comprehensive review of the structures of
the Group's Own Retail in Germany. The review is open-
ended as regards its outcome and will be conducted
individually and step-by-step at each retail location.
The Company expects the transformation process to
take several years. Contract negotiations with potential
buyers had not yet taken place as of the balance sheet
date. At the present time, it is not possible to reliably
estimate the effects on the profitability, financial posi-
tion and liquidity and capital resources.
German Corporate Governance Code
The Board of Management and the Supervisory Board
of Mercedes-Benz Group AG have issued a declaration
pursuant to Section 161 of the German Stock Corpora-
tion Act (AktG) and have made it permanently available
to their shareholders on the Group's website.
Information on investments
The statement of investments of the Group pursuant to
Section 313 Subsection 2 Nos. 1-6 of the German Com-
mercial Code (HGB) is presented in the following table.
In general, cooperations without an equity interest are
not reported. Information on equity and earnings and
information on investments pursuant to Section 313
Subsection 2 No. 4 of the German Commercial Code
(HGB) is omitted insofar as, pursuant to Section 313
Subsection 3 Sentence 4 of the HGB, such information
is of minor relevance for a fair presentation of the prof-
itability, liquidity and capital resources and financial
position of the Group. In addition, the statement of
investments indicates which consolidated companies
make use of the exemption pursuant to Section 264
Subsection 3 of the HGB and/or Section 264b of the
HGB. The Consolidated Financial Statements of Mer-
cedes-Benz Group AG release those subsidiaries from
the requirements that would otherwise apply.
Consolidated Financial Statements
Notes to the Consolidated Financial Statements
322
Review of future structure of Own Retail in Germany
100.00
Hong Kong, China
80.00
Mercedes-Benz HPC North America LLC
Mercedes-Benz Hong Kong Limited
Mercedes-Benz Holdings UK Limited
Mercedes-Benz High Power Charging Europe GmbH
Mercedes-Benz Grund Services GmbH
Mercedes-Benz Group China Ltd.
Mercedes-Benz Group Australia/Pacific Pty Ltd
Mercedes-Benz India Private Limited
Mercedes-Benz France S.A.S.
Mercedes-Benz Fleet Management Singapore Pte. Ltd.
Mercedes-Benz Finansman Türk A.S.
Mercedes-Benz Finansal Kiralama Türk A.S.
Mercedes-Benz Finans Sverige AB
Notes to the Consolidated Financial Statements
Further Information
Consolidated Financial Statements
Mercedes-Benz Försäljnings AB
Corporate Governance
Mercedes-Benz Insurance Agency LLC
Mercedes-Benz Insurance Services GmbH
Mercedes-Benz Leasing Polska Sp. z o.o.
Mercedes-Benz Leasing Kft.
Mercedes-Benz Leasing IFN S.A.
Mercedes-Benz Leasing GmbH
Mercedes-Benz Leasing Deutschland GmbH
Mercedes-Benz Leasing Co., Ltd.
Mercedes-Benz Lease Italia S.r.l.
Mercedes-Benz Insurance Broker S.R.L.
Mercedes-Benz Korea Limited
Mercedes-Benz Italia S.p.A.
Mercedes-Benz Investment Company LLC
Mercedes-Benz Intellectual Property GmbH & Co. KG
Mercedes-Benz International Finance B.V.
Mercedes-Benz Insurance Services Taiwan Ltd.
Mercedes-Benz Insurance Services UK Limited
Mercedes-Benz Insurance Services Nederland B.V.
Wilmington, USA
Voluntari, Romania
Hong Kong, China
Wilmington, USA
Pune, India
Mercedes-Benz Japan Co., Ltd.
Combined Management Report
326
Mercedes-Benz Finans Danmark A/S
Auckland, New Zealand
Mercedes-Benz Financial Services New Zealand Ltd
100.00
Nieuwegein, Netherlands
Mercedes-Benz Financial Services Nederland B.V.
80.00
Seoul, South Korea
100.00
Mercedes-Benz Financial Services Korea Ltd.
100.00
Rome, Italy
Wilmington, USA
Mercedes-Benz Financial Services Italia S.p.A.
Mercedes-Benz Financial Services Investment Company LLC
100.00
Chennai, India
100.00
Mercedes-Benz Financial Services Portugal - Sociedade Financeira de Crédito S.A.
Mem Martins, Portugal
100.00
Mercedes-Benz Financial Services Sp. z o.o.
Mercedes-Benz Financial Services Taiwan Ltd.
Mercedes-Benz Financial Services UK Limited
Mercedes-Benz Financial Services USA LLC
Name of the company
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
100.00
Pretoria, South Africa
Mercedes-Benz Financial Services South Africa (Pty) Ltd
75.00
Bratislava, Slovakia
Mercedes-Benz Financial Services Slovakia s.r.o.
100.00
Singapore, Singapore
Mercedes-Benz Financial Services Singapore Ltd.
100.00
Schlieren, Switzerland
Mercedes-Benz Financial Services Schweiz AG
Equity interest in
percent¹
Annual Report 2023 | Mercedes-Benz Group
Mercedes-Benz UK Trustees Limited
Mercedes-Benz Vans Manufacturing Poland sp. z o.o.
Contents
Ola Källenius
Stuttgart, 15 March 2024
The Board of Management
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
333
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Dr. Jörg Burzer
Renata Jungo Brüngger
Sabine Kohleisen
Markus Schäfer
336
352 Further Information
349 Key Figures
338 Independent Auditor's Report
of the Legal Representatives
337 Responsibility Statement
FURTHER INFORMATION
Notes to the Consolidated Financial Statements
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
INFORMATION
FURTHER
ONE ELEMEN
Harald Wilhelm
Hubertus Troska
Britta Seeger
Contents
331
Further Information
Name of the company
YOUR NOW Holding GmbH
V. Associated companies accounted for using the equity method
BAIC Motor Corporation Ltd.
Beijing Benz Automotive Co., Ltd.
Blacklane GmbH
Bolt Technology OÜ
Daimler Truck Holding AG
Wei Xing Tech. Co., Ltd.
IONITY Holding GmbH & Co. KG
LSH Auto International Limited
Mercedes-Benz Grand Prix Ltd.
There Holding B.V.
Equity interest in
percent¹
Footnote
Alcobendas, Spain
Valencia, Venezuela
100.00
100.00
Ionna LLC
Combined Management Report
SMART MOBILITY PTE. LTD.
Fujian Benz Automotive Co., Ltd.
Mercedes-Benz Vans Mobility, S.L.U.
Mercedes-Benz Venezuela S.A.
Mercedes-Benz.io GmbH
Mercedes-Benz.io Portugal Unipessoal Lda.
Montajes y Estampaciones Metálicas, S.L.
NAG Nationale Automobil-Gesellschaft Aktiengesellschaft
Porcher & Meffert Grundstücksgesellschaft mbH & Co. Stuttgart OHG
MB Service Japan Co., Ltd.
PT Mercedes-Benz Consulting Services Indonesia
Star Transmission srl
STARKOM, proizvodnja in trgovina d.o.o.
Zweite Vermögensverwaltung PV GmbH
Zweite Vermögensverwaltungsgesellschaft Zeus mbH
III. Joint operations accounted for using proportionate consolidation
Cooperation Manufacturing Plant Aguascalientes, S.A.P.I de C.V.
IV. Joint ventures accounted for using the equity method
Automotive Cells Company SE
Enbase Power GmbH
Sechste Vermögensverwaltungsgesellschaft Zeus mbH
Corporate Governance
Consolidated Financial Statements
Further Information
Annual Report 2023 | Mercedes-Benz Group
The risk for the consolidated financial statements
The statement of financial position caption "Equipment
on operating leases” (€ 41,712 million) includes among
other things Mercedes-Benz passenger cars, which are
purchased by non-group dealers or other third parties
and are the subject of an operating lease with the
Mercedes-Benz Group. An impairment risk exists with
regard to these vehicles that is primarily dependent on
the residual value achievable at the end of the lease.
These future residual values are dependent on the situ-
ation in the used vehicle markets prevailing when the
vehicles are returned. The future-oriented valuation is
based on a number of discretionary assumptions. The
risk for the financial statements is that any impairment
losses will not be recognised or that the amounts rec-
ognised will be inadequate.
Please refer with regard to the accounting policies and
methods applied to the notes to the consolidated finan-
cial statements in Note 1 "Significant accounting poli-
cies" and Note 2 "Accounting estimates and manage-
ment judgements". Further information on the operating
leases can be found in the notes to the consolidated
financial statements in Note 12 "Equipment on operat-
ing leases" and in the comments in the combined man-
agement report in the section entitled “Industry and
business risks and opportunities".
Impairment Risk on Operating Leases
Key audit matters are those matters that, in our profes-
sional judgement, were of most significance in our audit
of the consolidated financial statements for the finan-
cial year from January 1 to December 31, 2023. These
matters were addressed in the context of our audit
of the consolidated financial statements as a whole,
and, in forming our opinion thereon, we do not provide
a separate opinion on these matters.
Key audit matters in the audit of the consolidated
financial statements
Note on the emphasis of a particular matter
We refer to the comments of the legal representatives
in the section on "EU taxonomy" in the section entitled
"non-financial statement" that is included in the com-
bined management report in accordance with Sec-
tions 289b paragraph 1, 289c, 315b paragraph 1 and
315c HGB. There it is stated that the EU taxonomy Regu-
lation and the delegated acts promulgated for this
includes wording and terms that are subject to consid-
erable uncertainty with regard to their interpretation
and for which clarifications have not yet been pub-
lished in all cases. The legal representatives describe
how they have carried out the necessary interpretation
of the EU taxonomy Regulation and the delegated acts
promulgated for this. On account of the immanent risk
that certain abstract legal terms can be interpreted in
various ways, the conformity of the interpretation with
the law is subject to uncertainty. Our opinions on the
on the consolidated financial statements and on the
combined management report has not been modified in
this regard.
We conducted our audit of the consolidated financial
statements and of the combined management report in
accordance with Section 317 HGB and the EU Audit Reg-
ulation (No. 537/2014; referred to subsequently as the
"EU Audit Regulation") and in compliance with German
Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschafts-
prüfer [Institute of Public Auditors in Germany] (IDW).
We performed the audit of the consolidated financial
statements in supplementary compliance with the
International Standards on Auditing (ISAs). Our respon-
sibilities under those requirements, principles and
standards are further described in the "Auditor's
Responsibilities for the Audit of the Consolidated Finan-
cial Statements and of the Combined Management
Report" section of our auditor's report. We are inde-
pendent of the group entities in accordance with the
requirements of European law and German commercial
and professional law, and we have fulfilled our other
German professional responsibilities in accordance with
these requirements. In addition, in accordance with
Article 10 paragraph 2 letter f) of the EU Audit Regula-
tion, we declare that we have not provided non-audit
services prohibited under Article 5 paragraph 1 of the
EU Audit Regulation. We believe that the evidence we
have obtained is sufficient and appropriate to provide a
basis for our opinions on the consolidated financial
statements and on the combined management report.
Basis for the opinions
Further Information
Independent Auditor's Report
339
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Annual Report 2023 | Mercedes-Benz Group
We audited the appropriateness and effectiveness of
the internal control system in relation to the risk models
as well as the determination of the value-determining
factors and the valuation allowances, also in part
through recalculation. We also assessed the relevant IT
systems and internal processes. In addition to the cor-
rectness of the relevant IT systems and associated
interfaces to ensure the completeness and accuracy of
the data using our IT special lists, the audit also
We obtained a comprehensive understanding of the
development of the portfolios, the associated counter-
party default risks and the processes for identifying,
managing, monitoring and measuring credit risks by
inspecting analyses and risk reports, interrogations,
review of guidelines and working instructions, checking
the defined methods and their implementation and
checking and walking through the validation process
and the individual validation reports.
Our audit approach
possible amount receivable on default, the parameter
transfer criteria that are related to a significant change
in the default risk of borrowers, and the calculation of
future cash flows. Furthermore, macroeconomic sce-
narios (basis scenarios, optimistic and pessimistic sce-
narios) flow into the calculation, the identification of
which to a high degree includes discretionary judge-
ments and uncertainties. The risk for the financial state-
ments is that the creditworthiness of customers and
future cash flows is misjudged or that the calculation of
the risk provision parameters is incorrect so that loss
allowances are not recognised or are insufficient.
The calculation of the loss allowances is based on
expected credit losses and therefore also includes
expectations regarding the future. Recognition of the
expected credit losses is carried out by means of a
three-parameter procedure for the determination of
loss allowances. At the same time, various factors
determining the value, such as the determination of
statistical default probabilities and loss rates, the
The risk for the consolidated financial statements
Receivables from financial services (€ 88,211 million)
resulting from the Group's financing and leasing activi-
ties include receivables from sales financing with cus-
tomers, receivables from sales financing with dealers
and receivables from finance lease contracts. The loss
allowances on these receivables amounted at the
reporting date to € 1,055 million.
Contents
Please refer with regard to the accounting policies
applied to the notes to the consolidated financial state-
ments in Note 2 "Accounting estimates and manage-
ment judgements". Further information on allowances
on receivables from financial services can be found in
the notes to the consolidated financial statements in
Note 1 "Significant Accounting Policies", in Note 14
"Receivables from financial services", in Note 33 "Man-
agement of financial risks" and in the combined man-
agement report in the section entitled "Financial risks
and opportunities".
The assumptions and assessments providing the basis
for the assessment of the recoverability of the exter-
nally purchased Mercedes-Benz passenger cars in the
statement of financial position caption "Equipment on
operating leases" and the recorded impairment losses
are appropriate.
Our observations
We audited the recoverability of these externally pur-
chased Mercedes-Benz passenger cars in the statement
of financial position caption "Equipment on operating
leases". We investigated and appraised the indications
assumed by the Group for any need for an impairment
loss and where necessary obtained an understanding of
the write-downs calculated by the Mercedes-Benz
Group. We have assessed the Mercedes-Benz Group's
evaluation with regard to the residual values achievable
by the end of the terms of the leases. In this connec-
tion, we in particular critically reviewed the main influ-
encing factors, such as the expected number of returns
from leasing, the current marketing results in order to
assess the accuracy of the estimates and future vehicle
model changes. For the significant US-market we fur-
thermore also audited the consistency of the assump-
tions made by the Mercedes-Benz Group with residual
value forecasts by independent expert third parties.
Our audit approach
Further Information
Independent Auditor's Report
340
Consolidated Financial Statements
Valuation Allowances on Receivables
from Financial Services
Annual Report 2023 | Mercedes-Benz Group
Pursuant to Section 322 paragraph 3 sentence 1 HGB,
we declare that our audit has not led to any reserva-
tions relating to the legal compliance of the consoli-
dated financial statements and of the combined man-
agement report.
the accompanying combined management report as a
whole provides an appropriate view of the Group's
position. In all material respects, the combined man-
agement report is consistent with the consolidated
financial statements, complies with German legal
requirements and appropriately presents the oppor-
tunities and risks of future development. Our opinion
on the combined management report does not cover
the elements of the combined management report
referred to in the "Other information" section of our
auditor's report. The combined management report
includes cross-references not foreseen by law that
are marked as unaudited. Our opinion does not cover
these cross-references and the information to which
these cross-references relate.
Hubertus Troska
Britta Seeger
Sabine Kohleisen
Dr Jörg Burzer
Markus Schäfer
Renata Jungo Brüngger
Ola Källenius
Harald Wilhelm
Stuttgart, 15 March 2024
Responsibility Statement
of the Legal Representatives
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position, cash flows and
profit or loss of the Group, and the Group management
report, which has been combined with the management
report for Mercedes-Benz Group AG, includes a fair
review of the development and performance of the
business and the position of the Group, together with
a description of the principal opportunities and risks
associated with the expected development of the Group.
Stuttgart, Germany
337
Annual Report 2023 | Mercedes-Benz Group
the accompanying consolidated financial statements
comply, in all material respects, with the IFRSS as
adopted by the EU, and the additional requirements
of German commercial law pursuant to Section 315e
paragraph 1 HGB and, in compliance with these
requirements, give a true and fair view of the assets,
liabilities and financial position of the Group as of
December 31, 2023, and of its financial performance
for the financial year from January 1 to December 31,
2023 and
In our opinion, on the basis of the knowledge obtained
in the audit
The combined management report includes cross-refer-
ences not foreseen by law that are marked as unau-
dited. In accordance with the German legal regulations,
we have not audited the content of these cross-refer-
ences and the information to which these cross-refer-
ences relate.
In accordance with the German legal regulations, we
have not audited the content of the elements of the
combined management report referred to in the "Other
information" section of our auditor's report.
We have audited the consolidated financial statements
of Mercedes-Benz Group AG, Stuttgart, and its subsidi-
aries (the Group), which comprise the consolidated
statement of financial position as of December 31, 2023,
and the consolidated statement of income, consoli-
dated statement of comprehensive income/loss, con-
solidated statement of changes in equity and consoli-
dated statement of cash flows for the financial year
from January 1 to December 31, 2023 as well as notes to
the consolidated financial statements, including a sum-
mary of significant accounting policies. In addition, we
have audited the report on the situation of the Com-
pany and the Group (hereinafter referred to as "the
combined management report”), of Mercedes-Benz
Group AG for the financial year from January 1 to
December 31, 2023.
Opinions
Report on the Audit of the Consoli-
dated Financial Statements and of
the Combined Management Report
Further Information
Responsibility Statement
of the Legal Representatives
To Mercedes-Benz Group AG,
Stuttgart
Further Information
Independent Auditor's Report
338
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Independent Auditor's Report
100.00
Domicile, country/region
100.00
33.00
Beijing, China
51.00
Unna, Germany
40.00
Campbell, USA
2.40
Burnaby, Canada
Munich, Germany
Esslingen am Neckar, Germany
26.57
Berlin, Germany
25.00
Woodbury, USA
9.44
Schönefeld, Germany
6.45
10.10
8.90
0.00
PDB - Partnership for Dummy Technology and Biomechanics GbR
Power Supply Systems GmbH
Sila Nanotechnologies Inc.
SK Gaming Beteiligungs GmbH
Lisbon, Portugal
STARCAM s.r.o.
The Mobility House AG
Gaydon, United Kingdom
VfB Stuttgart 1893 AG
1 Shareholding pursuant to Section 16 of the German Stock Corporation Act (AktG).
2 For the accounting of unconsolidated subsidiaries, joint operations, joint ventures and associated companies, we refer to Note 1.
3 Control due to economic circumstances.
4 In liquidation.
5 Qualification for exemption pursuant to Section 264 Subsection 3 and Section 264b of the German Commercial Code (HGB).
6 Control over the investment of the assets. No consolidation of the assets due to the contractual situation.
7 Mercedes-Benz Group AG or one or several consolidated subsidiaries is/are the partner(s) with unlimited liability.
Vitoria, Spain
Volocopter GmbH
Ondine Tech Fund 1 L.P.
Schönefeld, Germany
7
Stuttgart, Germany
Dover, USA
24.90
8.90
Cologne, Germany
24.17
Bottrop, Germany
20.00
50.00
51.00
Zurich, Switzerland
11.53
Stuttgart, Germany
Bruchsal, Germany
11.61
5.40
Most, Czech Republic
10.10
Ingolstadt, Germany
George Town, Cayman Islands
Schönefeld, Germany
10.10
7
Schönefeld, Germany
10.10
Berlin, Germany
18.37
43.23
Schönefeld, Germany
7
Pontcharra, France
34.59
Naberezhnye Chelny, Russian Federation
15.00
Grand Cayman, Cayman Islands
5.57
10.12
Momenta Global Limited
smart-BRABUS GmbH i.L.
hap2U SAS
33.33
25.10
50.00
Hitachi, Japan
33.40
Singapore, Singapore
50.00
Bruges, France
Munich, Germany
Fuzhou, China
Hangzhou, China
50.00
Kamaz PAO
Beijing, China
Beijing, China
Berlin, Germany
9.55
49.00
30.03
50.00
Tallinn, Estonia
54.01
100.00
Esparraguera, Spain
51.00
Stuttgart, Germany
100.00
Schönefeld, Germany
100.00
Bogor, Indonesia
Stuttgart, Germany
Aguascalientes, Mexico
100.00
Cugir, Romania
100.00
Maribor, Slovenia
100.00
Stuttgart, Germany
100.00
Stuttgart, Germany
100.00
7.41
Munich, Germany
30.00
Domicile, country/region
Equity interest in
percent¹
Footnote
VI. Joint operations, joint ventures, associated companies accounted for at (amortized) cost and substantial other investments
recognized at fair value²
ASOCIACIÓN VASCA PARA EL DESARROLLO DE TECNOLOGÍAS DE FABRICACIÓN AVANZADA EN AUTOMOCIÓN
Leinfelden-Echterdingen, Germany
BDF IP Holdings Ltd.
Name of the company
Beijing Mercedes-Benz Sales Service Co., Ltd.
ChargePoint Holdings Inc.
Earlybird DWES Fund VI GmbH & Co. KG
Esslinger Wohnungsbau GmbH
European Center for Information and Communication Technologies -EICT GmbH
Factorial Inc.
Gamma 1 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Gamma 2 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Gamma 3 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Gamma 4 Daimler Truck Grundstücksverwaltung GmbH & Co. OHG
Grundstücksgesellschaft Schlossplatz 1 mbH & Co. KG
Grundstücksverwaltungsgesellschaft EvoBus GmbH & Co. OHG
BTV technologies GmbH
Notes to the Consolidated Financial Statements
Aston Martin Lagonda Global Holdings Plc
Consolidated Financial Statements
Munich, Germany
Further Information
Torrance, USA
16.67
Hong Kong, China
15.00
Brackley, United Kingdom
33.33
15.12
30.59
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
332
Combined Management Report
Corporate Governance
Rijswijk, Netherlands
The risk for the consolidated financial statements
The provision for product warranties amounts to
€ 6,399 million and is included in the provisions for
other risks.
Please refer with regard to the accounting policies and
methods applied to the notes to the consolidated finan-
cial statements in Note 1 “Significant accounting poli-
cies" and in Note 2 "Accounting estimates and manage-
ment judgements". Further information on the
guarantees and product warranties can be found in the
notes to the consolidated financial statements in
Note 23 "Provisions for other risks" and in the com-
ments in the combined management report in the sec-
tion entitled "Company-specific risks and opportuni-
ties - Warranty and goodwill cases".
Measurement of the Provision
for Product Warranties
The methodical approach, the procedures and the pro-
cesses to calculate the loss allowances and the
assumptions and risk parameters flowing into the
measurement are appropriate to identify the credit risks
in good time and to determine the recognition of ade-
quate loss allowances.
Our observations
included the testing of automated controls for data
entry and data processing. Our audit focused on
assessing the methodology used to determine and to
calculate the probabilities of default and loss given
default, which are derived from historical data. We took
into account the current economic uncertainties in con-
nection with the effects of several geopolitical hotspots
when testing the macroeconomic scenarios and the
model assumptions made. Based on the results of a
validation performed by Mercedes-Benz Mobility, we
satisfied ourselves of the appropriateness of key risk
provisioning parameters and assessed the parameter
adjustments made to reflect current market conditions.
In this context, we examined the data underlying the
validations.
Further Information
Independent Auditor's Report
Combined Management Report
Consolidated Financial Statements
Corporate Governance
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Mercedes-Benz Group is exposed to claims arising from
various types of product warranty claims or grants vari-
ous types of product guarantees under which it
vouches for the defect-free functioning of a Mercedes-
Benz Group product sold or a service provided for a
certain period of time. In order to confirm or reassess
future warranty, guarantee and goodwill expenses, con-
tinuously updated information on the type and volume
of damage that has occurred and its rectification is
recorded and analysed at the level of division, model
series, damage code and sales year.
341
Significant uncertainty for the calculation of the provi-
sion arises with regard to the future loss event. The risk
for the consolidated financial statements is that the
provision is not properly measured.
evaluate the appropriateness of accounting policies
used by management and the reasonableness of esti-
mates made by management and related disclosures.
Our audit procedures included among other things the
evaluation of the process to calculate the provision for
product warranties and the evaluation of the relevant
assumptions and their derivation for the measurement
of the provision. These include primarily assumptions
on expected susceptibility to and the course of damage,
and in addition the monetary value of the damage per
vehicle based on actual warranty, guarantee and good-
will losses. Based on historical analyses, we assessed
the accuracy of the forecasts of past warranty, guaran-
tee and goodwill costs. We also checked that updated
assessments of the future repair costs and procedures
were taken into account. We obtained an understanding
for the underlying numbers of vehicles through the
actual unit sales.
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Key Figures
Financial Key Figures for the Segments
In millions of euros
2023
2022
Mercedes-Benz Cars
23/22
% change
Mercedes-Benz Vans
2023
2022
23/22
% change
Revenue
EBIT
Adjusted EBIT
Return on sales (in %)
Adjusted return on sales (in %)
CFBIT
112,756
14,224
111,601
1
350
20,288
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
14,809
-2
13.46
13.55
-1
5.30
5.20
2
11,316
8,128
39
11,720
9,294
26
31,659
26,637
19
3,745
3,481
8
9,996
8,541
17
Contents
17,217
18
16,340
3,018
2,039
48
Adjusted cash conversion rate¹
0.9
0.7
29
1.0
1.1
-9
Investments in property, plant and equipment
3,345
3,265
2
351
199
76
Research and development expenditure
9,099
7,986
14
873
552
10
11,413
12,535
Adjusted CFBIT
-13
3,138
1,897
65
14,252
16,245
-12
3,063
1,927
59
12.6
14,531
14.6
11.0
12.6
14.6
15.1
11.2
12,336
10,718
15
2,817
1,731
63
15.5
58
-3
20,004
Corporate Governance
Consolidated Financial Statements
347
Further Information
Independent Auditor's Report
contained in the electronic file and made available for
publication purposes complies in all material respects
with the requirements of Section 328 paragraph 1 HGB
for the electronic reporting format. Beyond this assur-
ance opinion and our audit opinion on the accompany-
ing consolidated financial statements and the accom-
panying combined management report for the financial
year from January 1 to December 31, 2023 contained in
the "Report on the Audit of the Consolidated Financial
Statements and the Combined Management Report"
above, we do not express any assurance opinion on the
information contained within these renderings or on the
other information contained in the file identified above.
We conducted our assurance work on the rendering of
the consolidated financial statements and of the com-
bined management report contained in the file and
identified above in accordance with Section 317 para-
graph 3a HGB and the IDW Assurance Standard: Assur-
ance Work on the Electronic Rendering of Financial
Statements and Management Reports Prepared for
Publication Purposes in accordance with Section 317
paragraph 3a HGB (IDW ASS 410 (06.2022)) and the
International Standard on Assurance Engagements
3000 (Revised). Our responsibility in accordance there-
with is further described below. Our audit firm applies
IDW Standard on Quality Management 1: Requirements
for Quality Management in Audit Firms (IDW QMS 1
(09.2022)).
The Company's legal representatives are responsible for
the preparation of the ESEF documents including the
electronic rendering of the consolidated financial state-
ments and the combined management report in accord-
ance with Section 328 paragraph 1 sentence 4 item 1
HGB and for the tagging of the consolidated financial
statements in accordance with Section 328 paragraph 1
sentence 4 item 2 HGB.
In addition, the Company's representatives are respon-
sible for such internal control that they have considered
necessary to enable the preparation of ESEF documents
that are free from material intentional or unintentional
non-compliance with the requirements of Section 328
paragraph 1 HGB for the electronic reporting format.
The Supervisory Board is responsible for overseeing the
process of preparing the ESEF documents as part of the
financial reporting process.
Our objective is to obtain reasonable assurance about
whether the ESEF documents are free from material
intentional or unintentional non-compliance with the
requirements of Section 328 paragraph 1 HGB. We exer-
cise professional judgement and maintain professional
scepticism throughout the assurance work. We also
- identify and assess the risks of material intentional or
unintentional non-compliance with the requirements
of Section 328 paragraph 1 HGB, design and perform
assurance procedures responsive to those risks, and
obtain assurance evidence that is sufficient and appro-
priate to provide a basis for our assurance opinion.
-
obtain an understanding of internal control relevant
to the assurance on the ESEF documents in order to
design assurance procedures that are appropriate in
the circumstances, but not for the purpose of
expressing an assurance opinion on the effectiveness
of these controls.
evaluate the technical validity of the ESEF documents,
i.e. whether the file made available containing the
ESEF documents meets the requirements of the Dele-
gated Regulation (EU) 2019/815, as amended as at the
reporting date, on the technical specification for this
electronic file.
evaluate whether the ESEF documents provide an
XHTML rendering with content equivalent to the
audited consolidated financial statements and the
audited combined management report.
evaluate whether the tagging of the ESEF documents
with Inline XBRL technology (iXBRL) in accordance
with the requirements of Articles 4 and 6 of the Dele-
gated Regulation (EU) 2019/815, as amended as at the
reporting date, enables an appropriate and complete
machine-readable XBRL copy of the XHTML rendering.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information pursuant to Article 10
of the EU Audit Regulation
Combined Management Report
We were elected as group auditor by the Annual Share-
holders' Meeting on May 3, 2023. We were engaged by
the Supervisory Board on June 21, 2023. We have been
the group auditor of Mercedes-Benz Group AG without
interruption since the financial year 1998.
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
conclude on the appropriateness of the use by the
legal representatives of the going concern basis of
accounting and, based on the audit evidence
obtained, whether a material uncertainty exists
related to events or conditions that may cast
significant doubt on the Group's ability to continue as
a going concern. If we conclude that a material uncer-
tainty exists, we are required to draw attention in the
auditor's report to the related disclosures in the con-
solidated financial statements and in the combined
management report or, if such disclosures are inade-
quate, to modify our respective opinions. Our conclu-
sions are based on the audit evidence obtained up to
the date of our auditor's report. However, future
events or conditions may cause the Group to cease to
be able to continue as a going concern.
evaluate the overall presentation, structure and con-
tent of the consolidated financial statements, includ-
ing the disclosures, and whether the consolidated
financial statements present the underlying transac-
tions and events in a manner that the consolidated
financial statements give a true and fair view of the
assets, liabilities, financial position and financial per-
formance of the Group in compliance with IFRSs as
adopted by the EU and the additional requirements of
German commercial law pursuant to Section 315e
paragraph 1 HGB.
obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the Group to express opinions on the
consolidated financial statements and on the com-
bined management report. We are responsible for the
direction, supervision and performance of the group
audit. We remain solely responsible for our opinions.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
346
Further Information
Independent Auditor's Report
evaluate the consistency of the combined manage-
ment report with the consolidated financial state-
ments, its conformity with [German] law, and the view
of the Group's position it provides.
- perform audit procedures on the prospective infor-
mation presented by the legal representatives in the
combined management report. On the basis of suffi-
cient appropriate audit evidence, we evaluate, in par-
ticular, the significant assumptions used by the legal
representatives as a basis for the prospective infor-
mation and evaluate the proper derivation of the pro-
spective information from these assumptions. We do
not express a separate opinion on the prospective
information and on the assumptions used as a basis.
There is a substantial unavoidable risk that future
events will differ materially from the prospective
information.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, includ-
ing any significant deficiencies in internal control that
we identify during our audit.
We also provide those charged with governance with a
statement that we have complied with the relevant
independence requirements and communicate with
them all relationships and other matters that may rea-
sonably be thought to bear on our independence, and
where applicable, the related safeguards.
From the matters communicated with those charged
with governance, we determine those matters that were
of most significance in the audit of the consolidated
financial statements of the current period and are
therefore the key audit matters. We describe these
matters in our auditor's report unless laws or other legal
regulations preclude public disclosure of the matter.
Other legal and regulatory
requirements
Report on the Assurance on the Electronic
Rendering of the Consolidated Financial Statements
and the Combined Management Report Prepared for
Publication Purposes in Accordance with
Section 317 (3a) HGB
We have performed assurance work in accordance with
Section 317 paragraph 3a HGB to obtain reasonable
assurance about whether the rendering of the annual
financial statements and the combined management
report (hereinafter the "ESEF documents") contained in
the file that can be downloaded by the issuer from the
electronic client portal with access protection
,,mercedesbenzgroupag-2023-12-31-de.zip"
(SHA256-Hashwert: 0a45a843dc53847d4a97e63ad2c
cf5b0abbf926a0de13ea0facc21bca504529b) made
available and prepared for publication purposes com-
plies in all material respects with the requirements of
Section 328 (1) HGB for the electronic reporting format
("ESEF format"). In accordance with German legal
requirements, this assurance work extends only to the
conversion of the information contained in the annual
financial statements and the combined management
report into the ESEF format and therefore relates nei-
ther to the information contained in these renderings
nor to any other information contained in the file identi-
fied above.
In our opinion, the rendering of the consolidated finan-
cial statements and the combined management report
Contents
We declare that the opinions expressed in this auditor's
report are consistent with the additional report to the
audit committee pursuant to Article 11 of the EU Audit
Regulation (longform audit report).
German Public Auditor responsible
for the engagement
Revenue
EBIT
Adjusted EBIT
Net profit
Earnings per share (in euros)1
Dividend per share (in euros)
Free cash flow of the industrial business
Adjusted free cash flow of the industrial business
Net liquidity of the industrial business (31 December)
Investments in property, plant and equipment
Research and development expenditure
obtain an understanding of internal control relevant
to the audit of the consolidated financial statements
and of arrangements and measures (systems) rele-
vant to the audit of the combined management report
in order to design audit procedures that are appropri-
ate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of these
systems.
1 Based on net profit attributable to shareholders of Mercedes-Benz Group AG.
2023
2022
23/22
% change
153,218
150,017
2
19,660
20,458
-4
In millions of euros
Financial Key Figures for the Mercedes-Benz Group
Key Figures
Further Information
The German Public Auditor responsible for the
engagement is Alexander Bock.
Stuttgart, March 15, 2024
KPMG AG
Wirtschaftsprüfungsgesellschaft
Original German version signed by:
Other matter -
Use of the Auditor's Report
Our auditor's report must always be read together with
the audited consolidated financial statements and the
audited combined management report as well as the
examined ESEF documents. The consolidated financial
statements and combined management report con-
verted to the ESEF format - including the versions to be
entered in the company register - are merely electronic
renderings of the audited consolidated financial state-
ments and the audited group management report and
do not take their place. In particular, the ESEF report
and our assurance opinion contained therein are to be
used solely together with the examined ESEF docu-
ments made available in electronic form.
Sailer
Wirtschaftsprüfer
Bock
20,655
Wirtschaftsprüfer
348
Further Information
Independent Auditor's Report
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Key Figures
349
Combined Management Report
Corporate Governance
Consolidated Financial Statements
[German Public Auditor] [German Public Auditor]
Our audit approach
thereof capitalized development costs
2,802
The Mercedes-Benz Group has recognized provisions for
legal proceedings as at December 31, 2023. The prereq-
uisite for the recognition of provisions for legal pro-
ceedings is that a current external obligation exists that
is likely to lead to an outflow of resources embodying
economic benefits and can be reliably estimated. The
amount of the provisions is determined on the basis of
the best possible estimate of the obligation by the legal
representatives as at the balance sheet date. The rec-
ognition and measurement of the recognized provisions
for the legal proceedings are based on discretionary
estimates and assumptions by the legal representatives.
There is a risk for the financial statements that the pro-
visions for the legal proceedings are not recognized or
not recognized to a sufficient extent.
Our audit approach
Our audit procedures included, on the one hand, an
assessment of the process established by the company
to ensure the identification of risks, the assessment of
the outcome of the proceedings and the presentation of
the legal proceedings in the financial statements. Sec-
ondly, we held discussions with the internal legal
department and other departments familiar with the
matters, external advisors and lawyers of the company
in order to obtain an explanation of the developments
and the reasons that led to the corresponding assess-
ments. In addition, we assessed the underlying docu-
ments and minutes as well as the calculations for the
respective provisions. We were provided with the legal
representatives' assessment of the developments in the
aforementioned areas in written form by the company.
We also interviewed the legal representatives of the
company. As at the balance sheet date, assessments by
external lawyers were available on the material pro-
ceedings, which support the risk assessment made by
the legal representatives.
Where agreement has since been reached on individual
matters, we compared the amounts originally estimated
with the final obligations to obtain an understanding of
the quality of the estimates.
Finally, we assessed the appropriateness of the disclo-
sures on the aforementioned legal proceedings in the
notes to the consolidated financial statements and in
the combined management report.
Our observations
The judgement-based estimates and assumptions of the
legal representatives are appropriate.
Other information
The legal representatives and the Supervisory Board are
responsible for the other information. The other infor-
mation comprises the following elements of the com-
bined management report, the content of which we
have not audited:
the combined declaration of the Company and the
Group on corporate management, which is referred to
in the combined management report, and
the disclosures in the combined management report
on the appropriateness and effectiveness of the over-
all internal control system and the risk management
system pursuant to the German Corporate Govern-
ance Codex marked as extraneous to management
reports and unaudited,
the following disclosures in the combined manage-
ment report marked as extraneous to management
reports and unaudited with regard to the:
- Energy consumption, CO2 emissions, waste vol-
umes and water consumption in production (chap-
ter "Environmental concerns"),
accident frequency at production sites (chapter
"Employee matters"),
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Corporate Governance
Consolidated Financial Statements
344
Further Information
Independent Auditor's Report
-
the key figures on the EU taxonomy in the body
text and in the tables in the "EU taxonomy" chapter.
Further Information
Independent Auditor's Report
In accordance with our engagement, we have per-
formed a separate financial audit of these disclosures.
With regard to the nature, scope and results of this
assurance engagement, we draw attention to our assur-
ance report dated March 14, 2024.
343
Corporate Governance
Consumer lawsuits, some of which have been consol-
idated into a class action, and other lawsuits in vari-
ous jurisdictions, including the United Kingdom,
allege that Mercedes-Benz Group AG and/or individ-
ual subsidiaries have used devices that improperly
reduce the effectiveness of emission control systems
to reduce nitrogen oxide (NOx) emissions and cause
excessive emissions from diesel vehicles. In addition,
the plaintiffs allege that consumers were deceived in
connection with advertising claims for Mercedes-Benz
diesel vehicles.
a) Diesel emission behaviour: class action and other
lawsuits in Germany, United Kingdom and other coun-
tries in the Mercedes-Benz Cars and Mercedes-Benz
Vans segments
Whether the recognition of a provision and, if so, in
what amount it is necessary on account of legal pro-
ceedings is dependent to a high degree on discretion-
ary estimates and assumptions by the legal representa-
tives. In view of this and the monetary amounts
involved with regard to the risks, the following legal
proceedings of the Mercedes-Benz Group are in our
opinion of particular importance.
The risk for the consolidated financial statements
Mercedes-Benz Group AG and its subsidiaries face vari-
ous legal proceedings, claims and governmental inves-
tigations and administrative orders (legal proceedings)
on a wide range of topics, including for example vehicle
safety, emissions, fuel economy, financial services,
dealer, supplier and other contractual relationships,
intellectual property rights, product warranties, envi-
ronmental matters, antitrust matters (including actions
for damages) and shareholder matters. Product-related
proceedings involve, among other things, claims
asserted in part by way of a class action due to possi-
ble vehicle defects. If the outcome of such legal pro-
ceedings is detrimental to the Mercedes-Benz Group,
the Group may be required to pay substantial compen-
satory and punitive damages or fines. In addition, ser-
vice actions, recall campaigns or other costly actions
Imay have to be undertaken.
Please refer to Note 1 "Significant accounting policies"
and Note 2 "Accounting estimates and judgments made
by management" in the notes to the consolidated finan-
cial statements for information on the accounting poli-
cies applied. Further information on legal proceedings
can be found in Note 23 "Provisions for other risks", in
Note 30 "Legal proceedings" in the notes to the consol-
idated financial statements and in the combined man-
agement report in the section "Legal and tax risks and
opportunities - Legal risks".
3,417
The Accounting Treatment
of Legal Proceedings
Further Information
Independent Auditor's Report
342
Consolidated Financial Statements
Corporate Governance
Combined Management Report
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The calculation methods and the assumptions made are
appropriate.
Our observations
In Germany, a large number of customers of diesel
vehicles are suing for damages or cancellation of pur-
chase contracts. They claim that the diesel vehicles
were equipped with unauthorised defeat devices and/
or had unacceptably high emission or consumption
values.
In addition, investors have filed claims for damages in
Germany due to the alleged violation of capital market
disclosure regulations and have also claimed dam-
ages out of court. The investors allege that the
Mercedes-Benz Group did not immediately publish
insider information in connection with the emissions
behaviour of its Mercedes-Benz diesel vehicles and
also made false and misleading public statements.
They also claim that the purchase price of the finan-
cial instruments they acquired (in particular
Mercedes-Benz Group shares; formerly Daimler
shares) would have been lower if the Mercedes-Benz
Group had reported as required.
b)Diesel emissions behaviour: Regulatory proceedings
in the Mercedes-Benz Cars und Mercedes-Benz Vans
segments
The Mercedes-Benz Group is subject to ongoing gov-
ernmental inquiries, investigations, examinations,
orders and proceedings relating to various laws and
regulations in connection with diesel exhaust emis-
sions. The activities of various authorities worldwide
relate in particular to test results and emission con-
trol systems in Mercedes-Benz diesel vehicles and/or
the Mercedes-Benz Group's interactions with the rele-
vant authorities as well as related legal issues and
implications, for example under applicable environ-
mental, criminal, consumer protection and antitrust
laws.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Consolidated Financial Statements
The other information also includes the remaining parts
of the annual report. The other information does not
include the annual financial statements, the combined
management report information audited for content
and our auditor's report thereon.
-
Our opinions on the consolidated financial statements
and on the combined management report do not cover
the other information, and consequently we do not
express an opinion or any other form of assurance con-
clusion thereon.
12.3
16.8
9.5
-30
2,428
1,695
-46
2,428
1,302
-1
26,954
26,718
Mercedes-Benz Mobility
1 The adjusted cash conversion rate is the ratio of adjusted CFBIT to adjusted EBIT.
Contract volume (31 December)
New business
Adjusted return on equity (in %)
Return on equity (in %)
-
EBIT
Revenue
155
137
349
22
16.8
62,014
Adjusted EBIT
7
58,031
is materially inconsistent with the consolidated finan-
cial statements, with the combined management
report information audited for content or our knowl-
edge obtained in the audit, or
In connection with our audit, our responsibility is to
read the other information and, in so doing, to consider
whether the other information
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude
that there is a material misstatement of this other infor-
mation, we are required to report that fact. We have
nothing to report in this regard.
The legal representatives are responsible for the prepa-
ration of the consolidated financial statements that
comply, in all material respects, with IFRSS as adopted
by the EU and the additional requirements of German
commercial law pursuant to Section 315e paragraph 1
HGB and that the consolidated financial statements, in
compliance with these requirements, give a true and
fair view of the assets, liabilities, financial position and
financial performance of the Group. In addition, the
legal representatives are responsible for such internal
control as they have determined necessary to enable
the preparation of consolidated financial statements
that are free from material misstatement, whether due
to fraud (i.e., fraudulent financial reporting and misap-
propriation of assets) or error.
In preparing the consolidated financial statements, the
legal representatives are responsible for assessing the
Group's ability to continue as a going concern. They are
also responsible for disclosing, as applicable, matters
related to going concern. In addition, they are responsi-
ble for financial reporting based on the going concern
basis of accounting unless there is an intention to liqui-
date the Group or to cease operations, or there is no
realistic alternative but to do so.
Furthermore, the legal representatives are responsible
for the preparation of the combined management
report that, as a whole, provides an appropriate view of
the Group's position and is, in all material respects,
consistent with the consolidated financial statements,
complies with German legal requirements, and appro-
priately presents the opportunities and risks of future
development. In addition, the legal representatives are
responsible for such arrangements and measures (sys-
tems) as they have considered necessary to enable the
preparation of a combined management report that is
in accordance with the applicable German legal require-
ments, and to be able to provide sufficient appropriate
evidence for the assertions in the combined manage-
ment report.
The Supervisory Board is responsible for overseeing the
Group's financial reporting process for the preparation
of the consolidated financial statements and the com-
bined management report.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Responsibilities of the Legal Representatives and
the Supervisory Board for the Consolidated
Financial Statements and the Combined
Management Report
Consolidated Financial Statements
132,379
Corporate Governance
2
We exercise professional judgement and maintain pro-
fessional scepticism throughout the audit. We also
Reasonable assurance is a high level of assurance, but
is not a guarantee, that an audit conducted in accord-
ance with Section 317 HGB and the EU Audit Regulation
and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer (IDW) and supple-
mentary compliance with the ISAs will always detect a
material misstatement. Misstatements can arise from
fraud or error and are considered material if, individu-
ally or in the aggregate, they could reasonably be
expected to influence the economic decisions of users
taken on the basis of these consolidated financial state-
ments and this combined management report.
identify and assess the risks of material misstatement
of the consolidated financial statements and of the
combined management report, whether due to fraud
or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis
for our opinions. The risk of not detecting a material
misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collu-
sion, forgery, intentional omissions, misrepresenta-
tions, or the override of internal control.
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements as
a whole are free from material misstatement, whether
due to fraud or error, and whether the combined man-
agement report as a whole provides an appropriate
view of the Group's position and, in all material
respects, is consistent with the consolidated financial
statements and the knowledge obtained in the audit,
complies with the German legal requirements and
appropriately presents the opportunities and risks of
future development, as well as to issue an auditor's
report that includes our opinions on the consolidated
financial statements and on the combined management
report.
Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the
Combined Management Report
Further Information
Independent Auditor's Report
345
135,027
Waste volume in production (in 1,000 t)6
CO2 emissions of the new car fleet in the United States (in g CO2/mi)
Energy consumption in production (in GWh)6
CO2 emissions in production (Scope 1 and Scope 2) (in 1,000 t)6
CO2 emissions of the light duty truck fleet in the United States (in g CO2/mi)
CO2 emissions of the light commercial vehicle fleet in Europe (in g/km)³
Fuel consumption of the new car fleet in China (in l/100km) 5
Water consumption in production (in 1,000 m³)6,7
Environmental issues
Share of electrified vehicles, Mercedes-Benz Vans (in %)¹
Share of electrified vehicles, Mercedes-Benz Cars (in %)
Share of all-electric vehicles, Mercedes-Benz Cars (in %)
Mercedes-Benz Vans unit sales
Key Figures
Further Information
Consolidated Financial Statements
Corporate Governance
Employee issues
Combined Management Report
CO2 emissions of the new car fleet in Europe in accordance with WLTP (in g/km)², 3
Employees, Mercedes-Benz Group
5.1
Employees, Mercedes-Benz Vans
351
209
204
8.24
8.53
2414
1703
115
109
Employees, Mercedes-Benz Cars
3.6
447,790
16.3
7.3
11.8
19.7
2,040,719
2,044,051
2022
2023
Employees, Mercedes-Benz Mobility
415,344
Non-Financial Key Figures
For sustainability reasons, the Annual and Interim
Reports are not printed in hard copy. We make all
Contents
41
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
352
Combined Management Report
Corporate Governance
Consolidated Financial Statements
Further Information
Further Information
Further Information
Further information about the
Mercedes-Benz Group-share can be found at
9 The Mercedes-Benz Group has prioritized 24 high-risk materials that have been reviewed in a raw material assessment. The key figure shows the overall progress of the evaluation process across all 24 raw materials.
group.mercedes-benz.com/investors
The reports are published in German and English. The
German version is binding.
Annual and Interim Reports available online and as PDF
files to download.
group.mercedes-benz.com/investors/reports-news
Forward-looking statements
This document contains forward-looking statements that reflect our current views about
future events. The words "anticipate", "assume", "believe", "estimate", "expect", "intend",
"may", "can", "could", "plan", "project", "should" and similar expressions are used to identify
forward-looking statements. These statements are subject to many risks and uncertainties,
including an adverse development of global economic conditions, in particular a negative
change in market conditions in our most important markets; a deterioration of our refi-
nancing possibilities on the credit and financial markets; events of force majeure including
natural disasters, pandemics, acts of terrorism, political unrest, armed conflicts, industrial
accidents and their effects on our sales, purchasing, production or financial services activ-
ities; changes in currency exchange rates, customs and foreign trade provisions; changes
in laws, regulations and government policies (or changes in their interpretation), particu-
larly those relating to vehicle emissions, fuel economy and safety or to ESG reporting
(environmental, social or governance topics); price increases for fuel, raw materials or
energy; disruption of production due to shortages of materials or energy, labour strikes
or supplier insolvencies; a shift in consumer preferences towards smaller, lower-margin
vehicles; a limited demand for all-electric vehicles; a possible lack of acceptance of our
products or services which limits our ability to achieve prices and adequately utilize our
production capacities; a decline in resale prices of used vehicles; the effective implemen-
tation of cost-reduction and efficiency-optimization measures; the business outlook for
companies in which we hold a significant equity interest; the successful implementation of
strategic cooperations and joint ventures; the resolution of pending governmental investi-
gations or of investigations requested by governments and the outcome of pending or
threatened future legal proceedings; and other risks and uncertainties, some of which are
described under the heading "Risk and Opportunity Report" in this Annual Report. If any of
these risks and uncertainties materializes or if the assumptions underlying any of our for-
ward-looking statements prove to be incorrect, the actual results may be materially differ-
ent from those we express or imply by such statements. We do not intend or assume any
obligation to update these forward-looking statements since they are based solely on the
circumstances at the date of publication.
Statements regarding electricity and fuel consumption and CO2 emissions
Further information on official fuel consumption and on the official specific CO2 emissions
of new cars can be taken from "Leitfaden über den Kraftstoffverbrauch, die CO2-Emis-
sionen und den Stromverbrauch neuer Personenkraftwagen" dat.de/fileadmin/media/
Leitfaden CO2/Guide CO2.pdf
Mercedes-Benz Group AG
70546 Stuttgart
Tel.: +49711 17 0
group.mercedes-benz.com/en
Mercedes-Benz Group AG, Mercedesstraße 120, 70372 Stuttgart, Germany
The Mercedes-Benz Group AG Annual and Interim
Reports and company financial statements are also
available there. In addition, you can find the latest
news, the financial calendar, presentations, various
overviews of key figures, information on the share price
and additional services.
To Our Shareholders
8 Number of active employees including holiday workers as of 31 December 2023. With the implementation of the European Sustainability Reporting Standards as of 2024, the number of employees becomes a further criterion for the inclusion of an entity in the scope of
consolidation. The number of active employees of non-consolidated subsidiaries, who will thus be included in the scope of consolidation from 2024, is not included in the above figure.
6 In addition to the production sites of the consolidated subsidiaries, the production sites of the following non-consolidated subsidiaries are included: Star Transmission srl (Cugir, Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and STARCAM s.r.o. (Most,
Czech Republic).
Annual Report 2023 | Mercedes-Benz Group
511
539
4,943
5,294
565
584
1,913
166,056
168,815
132,560
135,400
7 This key figure is determined based on the standards of the Global Reporting Initiative and CDP starting from 2023. There is no corresponding figure for the year 2022.
19,132
9,768
9,850
25.7
24.7
Share of women in management positions, Mercedes-Benz Group Level 1 - Level 3 (in %)
Social issues
Review of critical raw materials (in %)⁹
1 This figure refers exclusively to all-electric vehicles.
57
2 Average CO2 emissions of the new car fleet (CO2 pool) of newly registered Mercedes-Benz cars in Europe (European Union, Norway and Iceland) in the reporting year as measured on the basis of the WLTP type approval procedure. The Mercedes-Benz CO₂ pool also includes vans
that were registered as passenger cars and, since 2023, vehicles from the joint venture smart Automobile Co., Ltd. based on internal data.
3 Internal values.
4 Value confirmed by authorities.
5 Calculation includes off-cycle technologies (technologies for real reductions in CO2 emissions, the effect of which cannot be measured in the standard cycle).
19,137
Mercedes-Benz Cars unit sales
2964
2593
ROMANIA
Contents
Annual Report 2023 | Mercedes-Benz Group
4 In comparison to 2018.
and district heating that are generated externally but consumed by the company.
3 Scope 2 emissions are indirect CO2 emissions from purchased energy such as electricity
2 Scope 1 emissions are direct CO2 emissions from sources for which the company is
directly responsible or that it directly controls.
1 Net carbon-neutral means that no CO2 emissions are created or any resulting
CO2 emissions are offset by certified compensation projects.
Further information on this is provided in Note 3 of the
Notes to the Consolidated Financial Statements.
As of 31 December 2022, completion of the transaction
was still subject to authorities' approval and the imple-
mentation of the contractually agreed conditions. With
the closing of the transaction on 19 April 2023, the
shares of Russian subsidiaries were deconsolidated.
Sale of shares in the Russian subsidiaries
The Group's intention to withdraw from the Russian
market and sell its shares in the Russian subsidiaries to
the local investor Avtodom AO was reported in the
Annual Report 2022. In March 2022, the Mercedes-Benz
Group had already stopped exporting cars and vans to
Russia and ceased local production in Russia.
The Mercedes-Benz Group engaged CICERO Shades of
Green, now part of S&P Global, an assessor, to review
the Mercedes-Benz Group Green Finance Framework.
The Mercedes-Benz Group framework received the
highest rating of "Dark Green" from CICERO.
The participation of Supervisory Board member Dame
Veronica Anne ("Polly") Courtice reinforces the embed-
ding of sustainability in the company's strategy, busi-
ness processes and remuneration system.
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
37
Combined Management Report
Corporate Profile
Corporate Governance
On 5 January 2023, the Mercedes-Benz Group had
already announced the development of its own global
high-power charging network with around 400 charging
stations and more than 2,500 charging points in North
America. In addition, the Mercedes-Benz Group
announced on 7 July 2023 that Mercedes-Benz custom-
ers will be able to use Tesla Superchargers in North
America starting in 2024.
Access to Tesla Superchargers in North America for
Mercedes-Benz customers
On 14 September 2023, the Mercedes-Benz Group
signed a supply contract with Steel Dynamics, Inc. for
delivery of CO2-reduced steel to the production plant in
Tuscaloosa, Alabama (USA). In this way, the company
wants to set another milestone on the path to decar-
bonizing the global steel supply chain.
Following the investment in H2GS in 2021, the new sup-
ply agreement will enable Mercedes-Benz to use virtu-
ally CO2-free steel in series production. The strategic
partner plans to start production in 2025.
The Mercedes-Benz Group announced on 7 June 2023
that it had signed a supply agreement with the Swedish
startup H2 Green Steel AB (H2GS) for approximately
50,000 metric tons of nearly CO2-free steel per year for
European stamping plants. At the same time, the two
companies are deepening their partnership with a
memorandum of understanding to jointly establish a
sustainable steel supply chain in North America.
CO₂ reduction in the steel supply chain
At the Strategy Update on 16 May 2023, Mercedes-Benz
Vans unveiled its strategy, which is geared towards
profitable growth in both the private and commercial
van segments. Key objectives include further strength-
ening the brand's position in the upper market seg-
ments, increasing competitiveness in terms of costs,
and leading the way in electric mobility and digital
experiences.
Mercedes-Benz Vans: Strategy Update
Following the completion of the successful test phase
for the low CO2-emission aluminium, the Mercedes-
Benz Group is now bringing sophisticated structural
castings for the body-in-white made from the more sus-
tainable material into series production.
As a next milestone, the Group announced on 9 May
2023 that Hydro is to supply even more CO2-reduced
aluminium to the foundry at the Mercedes-Benz plant in
Untertürkheim. With a minimum of 25% recycled mate-
rial in Hydro's tested aluminium, the CO2 footprint is to
be reduced.
CO2 reduction in the aluminium supply chain
The Mercedes-Benz Group is working with its partners
to decarbonize the aluminium supply chain. As pre-
sented in the Annual Report 2022, Mercedes-Benz AG
and the Norwegian aluminium producer Norsk Hydro
ASA (Hydro) signed a memorandum of understanding in
December 2022 for a low-CO₂ technology roadmap
between 2023 and 2030.
At Mercedes-Benz Group AG, a position on the Supervi-
sory Board was also newly filled: Sari Baldauf stepped
down from the Board after 15 years at the end of the
Annual General Meeting of Mercedes-Benz Group AG on
3 May 2023. Stefan Pierer was elected as Baldauf's suc-
cessor on the Supervisory Board.
Annual General Meeting of Mercedes-Benz Group AG
At the Annual General Meeting of Mercedes-Benz
Group AG on 3 May 2023, the shareholders approved a
dividend of €5.20 per share for the 2022 year (2021:
€5.00). The total payout for 2022 was €5.6 billion (2021:
€5.3 billion).
Further Information
Consolidated Financial Statements
Contents
To Our Shareholders
31
Combined Management Report
Corporate Profile
Mercedes-Benz Bank
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Financial Services
MAYBACH
AMG
Mercedes-Benz
Mobility
Mercedes me
1 Study by the US brand consulting company Interbrand in November 2023.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
32
Combined Management Report
Corporate Profile
ATHLON
-
Mercedes-Benz
Vans
The brand world of the Mercedes-Benz Group
Mercedes-Benz Group
Corporate Governance
Consolidated Financial Statements
Further Information
Corporate Profile
Business model
Overview
Mercedes-Benz
Cars
-
The Mercedes-Benz Cars, Mercedes-Benz Vans and
Mercedes-Benz Mobility divisions manage the business
operations of the Mercedes-Benz Group.
The reconciliation of the segments to the Group (recon-
ciliation) presents the functions and services provided
by the Group's headquarters. In addition, the reconcilia-
tion includes equity investments that are not allocated
to the segments, gains and/or losses at the corporate
level and the effects of eliminating intra-Group transac-
tions between the segments.
Mercedes-Benz Group AG is the parent company of the
Mercedes-Benz Group and has its headquarters in
Stuttgart. Along with Mercedes-Benz Group AG, the
Mercedes-Benz Group comprises all subsidiaries over
which Mercedes-Benz Group AG can exercise a con-
trolling influence either directly or indirectly. Detailed
information on this topic can be found in the statement
of investments pursuant to Section 313 of the German
Commercial Code (HGB) in the Notes to the Consoli-
dated Financial Statements. Mercedes-Benz Group AG
defines the Group strategy, manages the Group and, as
the Group parent company, ensures the effectiveness
of legal, organizational and compliance-related func-
tions throughout the Group.
The management reports for Mercedes-Benz Group AG
and for the Group are combined within this annual
report. The Combined Management Report includes the
combined Non-Financial Declaration of Mercedes-Benz
Group AG and of the Group.
The Mercedes-Benz brand is one of the most valuable
brands in the world¹. The diagram below provides an
overview of the Group's brand world.
The Mercedes-Benz Group can look back on a tradition
covering more than 135 years a tradition that goes
back to Gottlieb Daimler and Karl Benz, the inventors of
the automobile and features pioneering achieve-
ments in automotive engineering. Today, the company
is a car manufacturer that operates globally and is one
of the largest suppliers of luxury vehicles and commer-
cial vans in the premium segment. The Group's range of
products and services is supplemented by financing
and leasing products for end customers and dealers,
fleet management services, insurance brokerage, inno-
vative and digital mobility services, charging infrastruc-
ture and systems for seamless payment.
Creation of a joint high-power charging network
with several automakers in North America
On 19 October 2023, seven automakers the BMW
Group, General Motors, the Honda Motor, the Hyundai
Motor, Kia Motors, Mercedes-Benz Group and Stellantis
established a joint venture to accelerate the transition
to electric vehicles in North America. The new joint ven-
ture, which is known as Ionna LLC, is to establish a
charging network with at least 30,000 charging points.
The first stations are expected to open in the United
States in 2024 and in Canada at a later stage. In line
with the sustainability strategies of all seven automak-
ers, Ionna LLC has set itself the objective of powering
the charging network with renewable energy.
Annual Report 2023 | Mercedes-Benz Group
The information provided below primarily relates to the
Group's financial performance measurement system.
Information on the sustainability targets and the meas-
ures being taken to achieve them can be found in the
chapter Non-Financial Declaration.
Various targets are defined on the basis of the
Mercedes-Benz Group's corporate strategy and busi-
ness strategy. The Group's performance measurement
system is oriented towards the achievement of these
targets. Along with financial aspects, they include sus-
tainability-related targets in particular.
in %
2022
2023
Cost of capital rates
Objective
Value added can be calculated as the difference
between the measure of operating profit (EBIT or net
operating profit) and the cost of capital of the average
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Corporate Profile
40
To Our Shareholders
Performance measurement system
Contents
The financial performance measurement system used at
the Mercedes-Benz Group is designed to ensure that
our investors' interests and expectations are taken into
account within the framework of a value-based man-
agement system. The value added is based on this prin-
ciple. It shows the extent to which the Group and its
divisions achieve or exceed the return requirements of
the investors. Due to the only indirect relationship of
value added to ongoing business operations, the value
drivers of the value added are utilized as financial per-
formance indicators for the periodic controlling of the
Group and its divisions.
Calculation of value added
The quantitative development of value added and the
related financial performance measures are explained
in the chapter Profitability.
12
13
12
13
8
net assets.
9
Group, after taxes
The return on net assets (RONA) is calculated from the
ratio of EBIT to net assets. Value is created for our
shareholders when RONA exceeds the cost of capital.
The required rate of return on net assets, and thus the
cost of capital rate, is derived from the minimum rates
of return that equity investors and lenders expect on
their invested capital. In contrast to cost of capital rates
based on peer-group logic for purposes of the impair-
ment test at the level of the cash-generating units,
when determining the Group cost of capital rate for
deriving the value added, the focus is on the use of
company-specific data (in particular with respect to the
capital structure). For 2023, the Group's cost of capital
rate amounted to 9% after taxes. For the automotive
divisions, this cost of capital rate stood at 13% before
taxes; for Mercedes-Benz Mobility, a cost of equity of
13% before taxes was applied.
Cost of capital
Cost of
capital (%)
Net assets
Profit
measure
Automotive divisions, before taxes
Mercedes-Benz Mobility, before taxes
Annual Report 2023 | Mercedes-Benz Group
Future share buyback programmes are subject to the
necessary resolutions of the company's corporate
bodies required in each individual case.
of 10% of the share capital until 7 July 2025. It is sched-
uled to commence immediately after the conclusion
of the ongoing share buyback programme announced
on 16 February 2023, and is expected to be completed
before the expiry of the Annual General Meeting's
above-mentioned authorization.
Sabine Kohleisen's division was renamed Human Rela-
tions (previously: Human Resources). This was done in
order to show that human resources work in the
Mercedes-Benz Group focuses on cooperation with and
between people.
division's comprehensive responsibility for quality as
well as this topic's great importance for the Mercedes-
Benz brand.
At its meeting, the Supervisory Board also resolved to
change the name of Dr Jörg Burzer's division to Produc-
tion, Quality & Supply Chain Management (previously:
Production & Supply Chain Management). As a result of
this change, the division's name will also express the
The Supervisory Board also resolved to establish a
cross-divisional steering and coordination function for
sustainability management in the company at the Board
of Management level. On 1 August 2023, Renata Jungo
Brüngger took over responsibility for this function as
part of the Integrity, Governance & Sustainability divi-
sion (previously: Integrity & Legal Affairs). With this
step, the Mercedes-Benz Group is taking into account
the steadily increasing complexity and growing legal
significance of this multi-faceted topic. Responsibility
for the management of division-specific sustainability
issues remains with the respective Board of Manage-
ment divisions.
At its meeting on 27 July 2023, the Supervisory Board
reappointed Ola Källenius as Chairman of the Board of
Management of Mercedes-Benz Group AG for the
period until 21 May 2029 and Markus Schäfer for the
period until 21 May 2026. As Chief Technology Officer,
Markus Schäfer is responsible for Development & Pro-
curement on the Board of Management.
of Mercedes-Benz Group AG
In the Supervisory Board meeting of 13 December
2023, the Supervisory Board decided to reappoint
Sabine Kohleisen as the member of the Board of Man-
agement responsible for Human Relations and Labour
Director until 30 November 2025 and Dr Jörg Burzer as
the member of the Board of Management responsible
for Production, Quality & Supply Chain Management
until 30 November 2029.
Decisions by the Supervisory Board
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Corporate Profile
38
To Our Shareholders
Contents
Further Information
At the meeting on 21 February 2024, the Supervisory
Board reappointed Renata Jungo Brüngger until the end
of 2025 and Britta Seeger until the end of 2029.
Renata Jungo Brüngger is responsible for Integrity, Gov-
ernance & Sustainability and Britta Seeger is responsi-
ble for Marketing & Sales on the Board of Management.
Creation of a joint high-power charging network
with BMW Brilliance Automotive in China
On 30 November 2023, Mercedes-Benz Group
China Ltd. and BMW Brilliance Automotive Ltd. agreed
to set up a joint venture for the establishment and
operation of a joint high-power charging network in
China in order to provide Chinese customers with pre-
mium charging services. The joint venture aims to pro-
cure electricity directly from renewable sources wher-
ever this is possible.
The joint venture plans to establish a charging network
of at least 1,000 stations with around 7,000 high-power
charging points between the year 2024 and the end of
2026.
In this context, Mercedes-Benz Group AG moreover
has resolved to conduct a further share buyback
programme, through which it is intended to acquire own
shares worth up to €3 billion (not including incidental
costs) on the stock exchange and to then cancel them.
The further share buyback programme will be based on
the authorization by the Annual General Meeting of
Mercedes-Benz Group AG on 8 July 2020, authorizing
the Board of Management to acquire, with the approval
of the Supervisory Board, own shares up to a maximum
On 21 February 2024, Mercedes-Benz Group AG has
resolved to implement a share buyback policy. Based
on such policy, the future Free Cash Flow from the
industrial business (as available post potential smalls-
cale M&A) generated beyond the approx. 40% dividend
payout ratio of Group net profi shall be used to fund
share buybacks with the purpose of redeeming shares.
Share buyback policy and further share
buyback programme
Review of future structure of Own Retail in Germany
On 19 January 2024, the Mercedes-Benz Group
announced a comprehensive review of the structures
of the Group's Own Retail in Germany. The review is
open-ended as regards its outcome and will be con-
ducted individually and step-by-step at each retail
location. The company expects the transformation pro-
cess to take several years. Contract negotiations with
potential buyers had not yet taken place as of the bal-
ance sheet date. At the present time, it is not possible
to reliably estimate the effects on the profitability,
liquidity and capital resources, and financial position.
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Corporate Profile
39
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
1 In accordance with China National Standard GB/T 40429-2021 "Taxonomy of driving
automation for vehicles", published in 2021 by the National Technical Committee of
Auto Standardization.
On 16 December 2023, the Mercedes-Benz Group
became one of the first automakers to receive approval
to test conditionally automated driving Level 31 in Bei-
jing. The Mercedes-Benz Group will begin testing condi-
tionally automated driving systems on designated high-
ways in Beijing. The company is working with the
responsible authorities on the development of Level 3
systems for the Chinese market in order to be able to
offer Chinese customers a safe and reliable automated
driving experience.
Approval to test conditionally automated
driving in Beijing
Corporate Governance
Consolidated Financial Statements
Further Information
The Mercedes-Benz Group sells vehicles and provides
services in nearly every country in the world and has
over 30 production facilities in Europe, North America
and South America, Asia and Africa.
Corporate Governance
Combined Management Report
Corporate Profile
34
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Consolidated Financial Statements
Mercedes-Benz Vans has anchored its aim to lead in
electric drive in its strategy and has systematically elec-
trified the complete product portfolio. Mercedes-Benz
Vans already offers an electric version of each model
today i.e. the eSprinter, the eVito and the eCitan in
the commercial van segment. In addition, the EQV full-
size multi-purpose vehicle and the all-electric EQT
(WLTP: combined energy consumption 100 kWh/km:
Mercedes-Benz Vans
The most important markets for Mercedes-Benz Cars in
2023 were China with 36% of unit sales, the United
States with 15%, Germany with 11% and the other Euro-
pean markets (European Union, United Kingdom, Swit-
zerland and Norway) with 21%.
Along with its production sites in Germany, Mercedes-
Benz Cars also operates major manufacturing facilities
in the United States, Hungary, Mexico and South Africa.
Production operations in China are carried out by the
associated company Beijing Benz Automotive Co., Ltd.
(BBAC).
The division also continues to move ahead at a fast
pace with the intelligent networking of its vehicles and
the development of autonomous driving systems. In
order to further underscore the claim to leadership with
regard to the digital experience, Mercedes-Benz Cars
plans to introduce its own data-based and updatable
Mercedes-Benz Operating System (MB.OS) when it
launches the MMA platform.
In addition to the Mercedes-Benz brand, the brand
portfolio encompasses the brands Mercedes-AMG and
Mercedes-Maybach, as well as the G-Class product
brand. Mercedes me provides access to the digital ser-
vices of Mercedes-Benz Cars.
encompasses Mercedes-AMG, Mercedes-Maybach, the
G-Class, the S-Class, the EQS Sedan, the GLS and the
EQS SUV. Core represents the heart of the brand and
comprises the Mercedes-Benz C-Class and E-Class
model ranges and their derivatives. The Entry A-Class
and B-Class models and their derivatives offer custom-
ers a point of entry into the compact vehicle portfolio.
Mercedes-Benz Vans is a global manufacturer of a com-
prehensive van portfolio. The models offered in the
commercial segment comprise the large van Sprinter,
the mid-size van Vito and the small van Citan. The range
of Mercedes-Benz' vans in the private segment consists
of the V-Class full-size multi-purpose vehicle, the
V-Class Marco Polo camper and the T-Class. The small
vans are offered in Europe (European Union, the UK,
Switzerland, Norway), while the mid-size vans are
offered in Europe and China and the large vans are sold
in Europe and the United States. Vans are also offered
in specific segments in other markets.
2 The Top-End category comprises all AMG models, including the AMG models of the
various class model ranges and their derivatives in the Core and Entry segments.
Further Information
Starting in 2026, all newly developed vans from
Mercedes-Benz will be based on just one all-electric
architecture: the innovative, modular and scalable Van
Electric Architecture (VAN.EA).
Corporate Governance
Combined Management Report
Corporate Profile
35
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
20,7-19,3; combined CO2 emissions: 0 g/km; CO2 class:
A) are now available for the private segment.
Mercedes-Benz Mobility is also integrating its
Mercedes pay digital electronic payment platform into
numerous applications at the Mercedes-Benz Group.
The product range is rounded out by flexible subscrip-
tion and rental models such as Mercedes-Benz Rent as
well as investments in companies that offer mobility
services, for example the premium chauffeur services
platform Blacklane.
These services range from leasing and financing con-
tracts for end customers and dealers to insurance
solutions and fleet management services for business
customers, with the latter primarily offered via the
Athlon brand. Mercedes-Benz Mobility has around
4.3 million leased and financed vehicles in 34 markets,
which is clear proof of its ability to offer outstanding
services that meet a wide range of requirements.
The Mercedes-Benz Mobility division supports the sales
of the Mercedes-Benz Group's vehicle brands world-
wide with custom financial and mobility services.
Mercedes-Benz Mobility
The most important markets for Mercedes-Benz Vans in
2023 were Germany with 25% of unit sales, the other
European markets (European Union, United Kingdom,
Switzerland and Norway) with 37%, the United States
with 17% and China with 7%.
The Mercedes-Benz Vans business unit has manufactur-
ing facilities in Germany, Spain, the United States and
Argentina. Production in China is managed via the
Fujian Benz Automotive Co., Ltd joint venture. The Citan
and T-Class with the respective electric variants are
produced in France through an alliance with
Renault-Nissan-Mitsubishi. The planned facility in Jawor,
Poland, will be Mercedes-Benz Vans' first purely electric
vehicle plant in the world.
Like Mercedes-Benz Cars, Mercedes-Benz Vans also
uses the modular MB.OS architecture in order to further
develop and connect its digital services.
Mercedes-Benz Mobility also brings together all activi-
ties relating to electric vehicle charging. The Group's
own charging service Mercedes me Charge enables
easy and convenient access to more than 1.5 million
public charging points within the Mercedes me Charge
network. In addition, the Mercedes-Benz Group is
continuing to extend the existing range of charging pos-
sibilities by building its own global Mercedes-Benz
charging network and expanding high-power charging
networks that are operated jointly with different con-
tractual partners.
Consolidated Financial Statements
1 Net carbon-neutral means that no CO2 emissions are caused or that any CO₂ emissions
arising are compensated for by certified offset projects.
To this end, the electric platform Electric Vehicle Archi-
tecture (EVA) was introduced in 2021. Beginning in the
middle of the decade, the Mercedes Modular Architec-
ture (MMA) platform, which is primarily focussed on
electric mobility with vehicles starting with the Entry
segment, is to follow. In 2026, Mercedes-Benz Cars
plans to introduce two more all-electric platforms (BEV
platform generations) in the Top-End and Core seg-
ments: the Mercedes-Benz Electronic Architecture
(MB.EA) and the AMG Electronic Architecture (AMG.EA).
Ho Chi Minh City
Pekan
Bangkok
Pune
Kairo
INDIA
Cars plant
EGYPT
THAILAND/VIETNAM/
Fuzhou
Beijing
CHINA
Cugir
Sebeş
MALAYSIA
Mercedes-Benz Cars offers a broad range of products
that are spread out among the three product categories
of Top-End, Core and Entry. The Top-End² portfolio
Powertrain plant
Battery-Recyclingplant
As a luxury automobile manufacturer, Mercedes-Benz
Cars seeks to produce the most desirable vehicles in
the world. Sustainability is a fundamental principle and
a firm component of the Mercedes-Benz Cars business
strategy a principle that characterizes all of our busi-
ness activities. The Mercedes-Benz Group believes that
the complete electrification of its product range is the
most important means of making its entire new vehicle
fleet net carbon-neutral¹ across all stages of the value
chain by 2039. Mercedes-Benz Cars is creating the
essential preconditions for complete electrification and
accelerating the transformation into a software-driven
and all-electric future.
Mercedes-Benz Cars
Further Information
Consolidated Financial Statements
Combined Management Report
Corporate Profile
33
Battery plant
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
grey:
planned
HD D.
Vans plant
with EV-production with EV-production with EV-components
(planned)
O
Contents
Further Information
Important events
Launch of a Mercedes-Benz high-power
charging network
HUNGARY
SLOVENIA
Jawor
Most
Kecskemét
Maribor
CZECH REP.
SPAIN
Vitoria
Affalterbach
USA/MEXICO
Tuscaloosa
Aguascalientes
Charleston
A
身高
POLAND
0
The Group is continuously further developing its global
production network on those continents and is aligning
it to manufacture the portfolio of all-electric vehicles.
A total of 12 electric vehicle models from Mercedes-
Benz have been rolling off the assembly lines on three
continents since 2023. The Group is also simultane-
ously building up a global battery production network
on three continents. The "Mercedes-Benz Group Global
Production Network" graphic shows the Mercedes-Benz
Cars and Mercedes-Benz Vans production sites around
the world as of 31 December 2023.
As part of the gradual realignment of sales operations
through the implementation of an agency model, the
Retail of the Future concept was launched in Germany
and the UK in 2023. The new system has already been
implemented in Sweden and Austria, which means that
the new sales model is now being used for approxi-
mately 50% of total unit sales generated in Europe.
Plans call for the agency model to be introduced in
other regions as well over the next few years. As of the
reporting date, six other countries, including Turkey,
India and Australia, had switched over to direct sales.
In addition, within the framework of the optimization
of the sales model, it was possible to sell off retail
activities in certain countries and regions during the
reporting year.
GERMANY
Rastatt
Bremen
Sindelfingen
Global production network of the Mercedes-Benz Group*
Düsseldorf
Untertürkheim
身高
Hamburg
Berlin
Kölleda/Arnstadt Kamenz
Kuppenheim
Ludwigsfelde
*) including non-consolidated affiliated
companies, associated companies,
joint ventures and joint operations
ARGENTINIA
SOUTH AFRICA
With this partnership, the Group plans to become the
first automaker to develop its own navigation experi-
ence based on a new concept that combines new in-ve-
hicle geospatial data and navigation features from the
Google Maps platform.
As announced on 22 February 2023, the Mercedes-Benz
Group plans to integrate innovative vehicle-related geo-
spatial data and route planning capabilities from the
Google Maps platform into the Mercedes-Benz Operat-
ing System (MB.OS).
Partnership for vehicle navigation between
Mercedes-Benz and Google
Further information on this is provided in Note 20 of the
Notes to the Consolidated Financial Statements.
worth up to €4 billion (excluding incidental costs) are to
be purchased over a period of up to two years and sub-
sequently cancelled.
On 16 February 2023, the Board of Management, with
the approval of the Supervisory Board, resolved a share
buyback programme on the basis of the authorization
given by the Annual Shareholders' Meeting on 8 July
2020. The acquisition of treasury shares on the stock
exchange began on 3 March 2023. Treasury shares
The system is to be introduced in the middle of the dec-
ade. MB.OS was designed and developed in-house at
Mercedes-Benz. The company's objective here is to
retain complete control over the customer relationship
while also ensuring data privacy and the unparalleled
integration of all vehicle functions.
Share buyback programme at
Mercedes-Benz Group AG
The Mercedes-Benz Group subsequently introduced the
production-ready version of DRIVE PILOT with a small
fleet of SAE Level 3¹ EQS Sedans in the states of Cali-
fornia and Nevada in late 2023.
On 26 January 2023, the Mercedes-Benz Group became
the world's first automaker to receive SAE Level 31
certification for conditionally automated driving on
US roads in the state of Nevada. In June 2023, it also
received the certification for the state of California.
Certification for the SAE Level 3 system and sales
approval for DRIVE PILOT
With its own charging network, the Mercedes-Benz
Group is seeking to establish new standards for the fast,
convenient and reliable charging of electric vehicles.
The first Mercedes-Benz charging hub was opened in
Chengdu, China, in October 2023. It was followed by
the opening of a further Mercedes-Benz charging hub at
the headquarters of Mercedes-Benz USA in Atlanta,
Georgia in November 2023. The first German charging
hub started operation at the Mercedes-Benz dealership
in Mannheim at the end of November 2023. Plans call
for more than 2,000 charging stations with over 10,000
high-power charging points to be built worldwide by
the end of the decade.
On 5 January 2023, the Mercedes-Benz Group
announced far-reaching plans to build its own global
high-power charging network in China, North America,
Europe and other core markets.
DRIVE PILOT was released for sale in Germany in May
2022 after the German Federal Motor Transport Author-
ity issued the SAE Level 3 system a licence to operate
on the basis of the internationally valid regulation
UN-R157.
1 Society of Automotive Engineers (SAE).
The automated driving system takes over certain driving tasks. Nevertheless, a driver is
still necessary. The driver must be ready to take control of the vehicle at any time when
prompted by the vehicle to intervene.
Annual Report 2023 | Mercedes-Benz Group
East London
Alongside other measures such as investments in social
commitment and the environment, the company has
added additional ESG metrics to the variable compo-
nent of executive compensation and indicated the gov-
ernance structures that were implemented.
The key measures are to accelerate electrification with
a growing portfolio and Mercedes-Benz' high-power
charging network, to promote supply chain decarboni-
zation and resource conservation through the use of
renewable energy sources and responsible sourcing of
raw materials, and to forge ahead with the creation of a
circular economy and the direct sourcing of raw materi-
als. The company also aims to reduce CO2 emissions in
production (scope 12 and 23) by 80% by 20304.
At the ESG (Environmental, Social and Governance)
Conference on 30 March 2023, the Board of Manage-
ment of the Mercedes-Benz Group emphasized to
investors and analysts its measures for reducing its
CO2 footprint and creating sustainable value for all
stakeholders.
Confirmation of the ESG commitment
at the ESG Conference
The Group plans to invest an eight-digit euro sum in the
construction of the net carbon-neutral¹ plant. Construc-
tion of the plant sections for mechanical dismantling
has already begun and preparations for commissioning
are under way. Once the sections for hydrometallurgical
processing have been completed, the entire recycling
facility will go into operation in mid-2024.
On 3 March 2023, the Mercedes-Benz Group laid the
symbolic foundation stone for a battery recycling fac-
tory at the Kuppenheim site. The company is thus
underpinning the goal of ensuring a sustainable closure
of the recycling loop for batteries and significantly
reducing resource consumption.
Foundation laid for sustainable battery
recycling factory
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Corporate Profile
36
To Our Shareholders
Contents
Buenos Aires
Corporate Governance
Value
added
2,939
1 Average CO2 emissions of the new car fleet (CO₂ pool) of newly registered Mercedes-
Benz cars in Europe (European Union, Norway and Iceland) in the reporting year as
measured on the basis of the WLTP type approval procedure. The Mercedes-Benz CO₂
pool also includes vans that were registered as passenger cars and, since 2023, vehicles
from the joint venture smart Automobile Co., Ltd.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
43
Combined Management Report
Economic Conditions
and Business Development
Pursuant to Section 317 Subsection 2 Sentence 6 of the
German Commercial Code (HGB), the purpose of the
audit of the statements pursuant to Section 289f Sub-
sections 2 and 5 and Section 315d of the HGB by the
auditors is limited to determining whether such state-
ments have actually been provided.
Corporate Governance
Further Information
Economic Conditions
and Business Development
The world economy and
automotive markets
The world economy
General economic conditions
The world economy performed better throughout the
reporting year than had been expected at the beginning
of the year and although global growth of 2.7% was
somewhat lower than in the previous year (3%), it was
only slightly below the long-term trend. The adverse
effects on growth that resulted from the steep and syn-
chronized tightening of monetary policy by many cen-
tral banks was offset to some degree by supportive fis-
cal policies and lower prices for energy and raw
materials. At the same time, major differences were
observed between regions, and even within regions in
some cases. The main reason for the positive develop-
ment of the world economy overall was the unexpected
resilience of the US economy in the face of an
extremely restrictive monetary policy, although major
emerging markets such as India and Brazil were also
able to exceed expectations in this regard. On the other
Consolidated Financial Statements
The Declaration on Corporate Governance, which is
combined for the company and the Group in accord-
ance with Section 289f and Section 315d of the German
Commercial Code, can be found in the chapter Declara-
tion on Corporate Governance of the Annual Report as
well as on the Internet at ④ group.mercedes-benz.
com/dcg.
Corporate Governance
Declaration on
Further Information
-
-
Key performance indicators
Key financial performance indicators
The following indicators are the key financial perfor-
mance indicators used to measure the operating finan-
cial performance of the Mercedes-Benz Group:
Revenue
EBIT
Free cash flow of the industrial business
The following key financial performance indicators have
an emphasized relevance for the automotive divisions
Mercedes-Benz Cars and Mercedes-Benz Vans:
Investments in property, plant and equipment
Research and development expenditure
Adjusted return on equity and new business are the key
financial performance indicators for Mercedes-Benz
Mobility. New business here refers to the volume of
leasing and financing contracts capitalized during the
reporting year.
Key non-financial performance indicators
Unit sales at Mercedes-Benz Cars and Mercedes-Benz
Vans are used as an additional non-financial indicator
for measuring the performance of the automotive divi-
sions.
The figure for the CO2 emissions of the new car fleet in
Europe¹ represented a key performance indicator until
31 December 2023. As of the year 2024, the share of
electrified vehicles (EV) from Mercedes-Benz Cars and
from Mercedes-Benz Vans respectively, measured on
the basis of the unit vehicle sales of these divisions, will
be used as key non-financial performance indicators.
They are replacing the value of the CO2 emissions of the
new car fleet in Europe as a key non-financial perfor-
mance indicator because they provide a more compre-
hensive picture of the global activities of the Mercedes-
Benz Group in the area of electromobility.
hand, the European and the Chinese economies dis-
played relatively weak development during the year
under review. Given these circumstances, global trade
volume not only slowed but also contracted by around
2% in 2023 as compared to the previous year.
-
The US economy successfully defied recession risks
during the reporting year. Growth remained strong
despite the fact that the country's central bank
― the
Fed raised its policy rate throughout the course of
the year by a further 100 basis points to 5.5%. Private
consumption in particular developed dynamically and
was supported by generous fiscal programmes and
pandemic-era excess savings. Inflation also continued
to decline · at an average of 4.1%, it was significantly
lower than in the prior year, but it still remained above
the Fed's target. This development, along with substan-
tial wage increases, had a positive effect on disposable
income. Thanks to robust domestic demand, the US
economy recorded growth of 2.5% for the year as a
whole in 2023.
The economy in the euro zone developed much less
dynamically, although the burden caused by high
energy prices was noticeably less pronounced in 2023
Automotive markets
The economic conditions described above also affected
the development of the global automotive market in the
year under review. Nevertheless, sales markets were
able to partially buck the trend of the overall economic
slowdown. In particular, the normalization of global
vehicle production, as well as the order backlog that
still existed in some cases in the aftermath of the pan-
demic, boosted the development of sales last year.
Customer demand, in contrast, weakened in many auto-
motive markets throughout the year.
Against this background, the global car market volume
overall was significantly higher than in the previous
year. Several different regions contributed to this global
increase in volume. The European market recovered
noticeably, with market volume increasing significantly
by 14% from the low level recorded in the prior year.
The US market for light vehicles also registered
significant growth of 12% compared to the previous
year, while the Chinese market recorded a slight
increase of approximately 6%.
The factors mentioned above also affected the develop-
ment of key van sales markets. In Europe, the com-
bined segment for mid-size and large vans, as well as
the segment for small vans, recorded a significant
increase. The US market for large vans also increased
significantly in volume compared to the previous year.
Sales figures for mid-size vans in China were also signif-
icantly higher than in the previous year, although
growth in that market was largely a result of the intro-
duction of new vehicle models by relevant competitors.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Economic Conditions
and Business Development
45
Corporate Governance
Consolidated Financial Statements
Further Information
Business development
Mercedes-Benz Group
Despite bottlenecks in the supply chain, the Mercedes-
Benz Group increased unit sales by 1.5% to 2,491,600
vehicles in 2023.
-
Consolidated Financial Statements
Prices for oil and gas declined significantly from their
record levels in 2022, but they remained very volatile
nevertheless. The oil price fell below USD 80 per barrel
at the end of the year, which was almost 9% lower than
at the end of 2022. The average price for the year as a
whole was about 17% lower than in the previous year.
Gas prices in Europe also fell noticeably. The price at
the end of the year approximately €32 - was almost
60% lower than the price at the end of 2022 but still
higher than the price before the pandemic. Prices for
industrial raw materials also tended to decrease further
over the year and at the end of the year were a little
less than 3% below the prices recorded at the end of
2022.
Exchange rates were volatile in this environment.
Against the US dollar, the euro moved between USD
1.05 and USD 1.13 in the course of the year. At the end of
2023, the euro was around 3% stronger than at the end
of 2022. The range of fluctuation of the Chinese ren-
minbi against the euro was 7.2 to 8.1. Year-on-year, the
value of the euro increased by around 6% against the
renminbi.
than it was in the prior year. Still, the industrial sector
remained under extreme pressure and shrank signifi-
cantly over the year as a whole. Private consumption
stagnated across many sectors due to ongoing high,
albeit decreasing, inflation and rising interest rates.
Inflation in the euro zone averaged 5.4% for the year as
a whole, which was still much higher than the central
bank target of approximately 2%. The European Central
Bank thus continued its tight monetary policy, raising
the main refinancing rate throughout the course of the
year by a further 200 basis points to 4.5%. Economic
activity in the euro zone advanced slightly during the
first half of the year, due, among other things, to the
ongoing post-pandemic recovery and fewer supply
chain disruptions. However, output then declined mar-
ginally during the second half of the year, with the
result that the economy in the euro zone recorded
growth of only 0.5% for 2023 as a whole.
Following the end of the zero-COVID policy in China,
the Chinese economy started the year with a strong
recovery that it was unable to maintain. The recovery
was ultimately curbed by the pronounced weakness of
the Chinese real estate sector and the associated crisis
of confidence among consumers. Nevertheless, thanks
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
44
Combined Management Report
Economic Conditions
Corporate Governance
Consolidated Financial Statements
Further Information
and Business Development
to government support measures and an easing in mon-
etary policy, China was able to achieve its growth target,
with GDP up by 5.2% on the year. Unlike the case in the
United States and Europe, the Chinese economy was
faced with slight deflationary tendencies.
prices rose by only 0.2% in the country for the year as a
whole.
Development of exchange rates
-
consumer
Energy and raw material prices
Mercedes-Benz Cars
Corporate Governance
42
26,954
26,718
Mercedes-Benz Mobility
18
17,217
20,288
-1
Mercedes-Benz Vans
111,601
112,756
Mercedes-Benz Cars
Segments
2
150,017
1
Reconciliation¹
-6,544
-5,755
thereof United States
1
40,091
40,488
North America
12
23,085
25,799
thereof Germany
10
56,487
61,895
Europe
Regions
14
153,218
Mercedes-Benz Group
In millions of euros
% change
The measure of operating profit at the divisional level
is EBIT (earnings before interest and income taxes).
EBIT thus reflects the divisions' responsibility for profit
and loss. EBIT that is calculated at the Group level
takes into account centrally managed matters and elim-
inations.
In order to provide a more transparent presentation of
our ongoing business, adjusted EBIT is also calculated
and reported for both the Group and the divisions. The
adjustments include individual items insofar as they
lead to material effects in a reporting year. These indi-
vidual items can relate in particular to legal proceedings
and related measures, restructuring measures and M&A
transactions.
Group EBIT minus the centrally managed income taxes
equals net operating profit. The chapter Profitability
shows how net operating profit is calculated.
Return on sales
As one of the main factors influencing value added,
return on sales is of particular importance for assessing
the profitability of the automotive divisions. Return on
sales is the ratio of EBIT to revenue, and vehicle sales
are the primary source of revenue. The measure of prof-
itability for Mercedes-Benz Mobility is not return on
sales but return on equity (the ratio of EBIT to average
equity on a quarterly basis). On the basis of adjusted
EBIT, an adjusted return on sales is reported for the
automotive divisions and an adjusted return on equity
is reported for Mercedes-Benz Mobility.
Net assets
All assets, liabilities and provisions for which the auto-
motive divisions are responsible in day-to-day opera-
tions are allocated to them. Performance measurement
at Mercedes-Benz Mobility is implemented on an equity
basis. Net assets at the Group level include the net
operating assets of the automotive divisions and the
equity of Mercedes-Benz Mobility, as well as assets and
liabilities from income taxes and other reconciling items
which are not allocated to the divisions. The average
annual net assets are calculated on the basis of the
average quarterly net assets.
Cash flow
_
A change in net assets for example as a result of
investments - generally leads to the application or
release of liquid funds. Along with earnings, net assets
thus also have a direct effect on the cash flow. Of out-
standing importance for the financial strength of the
Mercedes-Benz Group is the free cash flow of the
industrial business, which comprises the cash flows at
the automotive divisions and the cash flows from inter-
est, taxes and other reconciling items that cannot be
allocated to the divisions. The operating cash flow
before interest and taxes (CFBIT) for the automotive
divisions is derived from EBIT and the change in net
assets. The cash conversion rate (CCR) is the ratio of
CFBIT to EBIT over a period of time and is an important
measure for cash-flow management at the automotive
divisions.
In order to provide a more transparent presentation of
our ongoing business, the adjusted free cash flow of
the industrial business and the adjusted CFBIT of the
automotive divisions are also calculated and reported.
An adjusted cash conversion rate (adjusted CCR) on the
basis of adjusted CFBIT and adjusted EBIT is presented
for the automotive divisions. The adjustments include
individual items insofar as they lead to material effects
in a reporting year. These individual items can relate in
particular to legal proceedings and related measures,
restructuring measures and M&A transactions.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Profit measure
Combined Management Report
Corporate Profile
Financial performance measures
Consolidated Financial Statements
23/22
2022
2023
Revenue by segment and region
Cost of sales amounted to €118.8 billion (2022:
€116.0 billion) in 2023, increased by 2.4% compared
with the previous year. The increase was mainly due
to expenses to suppliers because of additional costs
relating to inflation and supply chains.
In 2023, the revenue amounted to €153.2 billion (2022:
€150.0 billion) and was thus slightly higher than in the
prior-year. The increase was primarily due to higher unit
sales and improved pricing at the Mercedes-Benz Vans
segment. Revenue in the Mercedes-Benz Cars segment
was also higher, primarily due to a further improvement
in pricing. Negative exchange-rate effects caused reve-
nue to decline.
Consolidated Statement of Income
Profitability
particular to legal proceedings and related measures,
restructuring measures and M&A transactions. Further
information on the performance measurement system
can be found in the Corporate Profile chapter.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
41
Combined Management Report
Corporate Profile
Corporate Governance
Further Information
due to supply bottlenecks, sales of the GLC3 amounted
to 297,400 units and of the GLE3 to 219,100 units.
Entry
The Entry category represented 30% of the entire port-
folio. Sales of the A-Class³ totalled 245,100 units. Sales
of the B-Class amounted to 21,600 vehicles. The GLB3
reached 191,900 units sold, and the GLA³ 175,500 units.
A total of 18,100 smart vehicles were sold in the Euro-
pean market.
3,745
3,481
8
thereof Mercedes-Benz Cars
3,345
3,265
Mercedes-Benz Group
2
351
199
76
Research and development
Research and development expenditure at
Mercedes-Benz Cars amounted to €9.1 billion (2022:
€8.0 billion). Expenditure here focused mainly on the
development of the new platform generations, which
are designed for electromobility. In addition, the com-
pany intensified its research and development expendi-
ture on digitalization and automated driving.
Research and development expenditure at
Mercedes-Benz Vans amounted to €0.9 billion in 2023
(2022: €0.6 billion), which was significantly higher than
in the previous year. Activities relating to the planned
electrification of the van fleet played a major role in
2023. This was mostly due to the new eSprinter and
the all-electric, modular and scalable van architecture
(VAN.EA).
thereof Mercedes-Benz Vans
Research and development expenditure at the
Mercedes-Benz Group amounted to €10.0 billion in
2023 (2022: €8.5 billion), higher than in the previous
year. €3.8 billion (2022: €2.9 billion) of the research and
development costs were capitalized, representing a
capitalization rate of 38% (2022: 34%).
Research and development
The investments in property, plant and equipment at
Mercedes-Benz Vans amounted to €0.4 billion in 2023
(2022: €0.2 billion) and were thus significantly higher
than in the prior year. This was mainly driven by the
planned transition to an all-electric Mercedes-Benz van
fleet and investments for the transformation of produc-
tion operations.
To Our Shareholders
47
Combined Management Report
Economic Conditions
and Business Development
Corporate Governance
Consolidated Financial Statements
Further Information
Investment and research activities
Investments in property, plant and equipment
During the year under review, investments in property,
plant and equipment at the Mercedes-Benz Group
amounted to €3.7 billion and were thus higher than in
the previous year (2022: €3.5 billion).
Investments in property, plant
and equipment¹
In millions of euros
2023
2022
23/22
% change
1 The investments in property, plant and equipment correspond to additions to property,
plant and equipment in the Consolidated Statement of Cash Flows in the Consolidated
Financial Statements.
In millions of euros
In 2023, investments in property, plant and equipment
at Mercedes-Benz Cars focused on production prepa-
rations and the initial introductions of the MMA and
MB.EA platforms. Considerable funds were also
invested in the expansion of our battery production
facilities. At €3.3 billion, investments in property, plant
and equipment in 2023 were at the previous year's
level.
2023
38
34
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
48
Corporate Governance
Consolidated Financial Statements
Further Information
Profitability, Liquidity and
Capital Resources, and Financial Position
To provide a better insight into the Group's profitability,
liquidity and capital resources, and financial position, in
addition to the figures for the Mercedes-Benz Group, a
Condensed Consolidated Statement of Income, a Con-
densed Consolidated Statement of Cash Flows and a
Condensed Consolidated Statement of Financial Posi-
tion are shown for each of the industrial business and
the segment Mercedes-Benz Mobility. The industrial
business comprises the automotive segments
Mercedes-Benz Cars and Mercedes-Benz Vans. The
effects from intra-Group eliminations between the
industrial business and Mercedes-Benz Mobility, as well
as items at the corporate level, are generally allocated
to the industrial business. In justified individual cases,
effects on the profitability, liquidity and capital
resources, and financial position of the corresponding
segment are presented from an economic rather than a
legal perspective.
In order to provide a more transparent presentation of
the ongoing business, adjusted figures are also calcu-
lated and reported for both the Group and the seg-
ments. The adjustments generally include individual
items insofar as they lead to material effects in a
reporting year. These individual items can relate in
Capitalization rate in %
Contents
28
11
2022
23/22
% change
Research and development
expenditure
9,996
8,541
17
thereof Mercedes-Benz Cars
thereof Mercedes-Benz Vans
Research and non-capitalized
development costs
Capitalized development costs
9,099
7,986
14
873
552
58
6,230
5,602
3,766
Annual Report 2023 | Mercedes-Benz Group
The volume of incoming orders at Mercedes-Benz Vans
at the end of 2023 was lower than in the previous year;
this was due in particular to the overall economic situa-
tion. The order situation is thus at a normal level after
several previous years that were marked by positive
one-off effects.
Incoming orders at Mercedes-Benz Cars at the end of
2023 were at the same level as in 2022. The new
E-Class in particular made a positive contribution to the
order situation.
54
55
618,900
595,900
4
% share of unit sales
30
29
Core
The Core category accounted for 54% of the overall
portfolio's unit sales. Unit sales of C-Class³ vehicles
rose by 10% to 334,400 saloons, estates, coupés and
cabriolets. E-Class³ sales reached 309,100 units - an
increase of 2% - despite the model change. Meanwhile,
thereof
Electrified vehicles (EV)
401,900 333,500
240,600 149,200
161,300 184,300
21
61
% share of unit sales
Entry (incl. smart)
-12
-2
1,096,900
23/22
Mercedes-Benz Cars unit sales
2023
2022
% change
Top-End
Unit sales in the Top-End¹ category accounted for 16%
of total unit sales in 2023. In 2023, Mercedes-Maybach
was able to increase unit sales by 19% to 27,900 units.
At 143,200 units, Mercedes-AMG achieved a 4%
increase in unit sales. At 42,700 units, sales of the
G-Class² were 11% above the prior-year figure. GLS²
sales increased by 30% to 77,900 units. The S-Class²
maintained its leadership in the major sales markets
with 93,300 vehicles sold.
In units
Total unit sales
Top-End
2,044,100
328,300
2,040,700
328,200
% share of unit sales
Core
16
16
1,116,600
36,041
BEVS
Share of electrified vehicles
in % of unit sales
Further Information
and Business Development
In China, sales amounted to 737,200 units (2022:
753,900). This figure includes the unit sales recorded by
the associated company Beijing Benz Automo-
tive Co., Ltd. (BBAC), which is an equity-method invest-
ment. A total of 339,500 vehicles were sold in North
America (2022: 344,200). Unit sales in the region's main
market, the United States, amounted to 298,000 vehi-
cles and were thus at the prior-year level (2022:
300,800).
Mercedes-Benz Vans
All model series contributed to the growth in sales here.
The large vans (Sprinter/eSprinter) recorded a signifi-
cant increase in sales to 237,400 units (2022: 217,400).
Sales of mid-size vans (Vito/eVito, V-Class/EQV)
totalled 178,900 units (2022: 175,500). Sales of small
vans (Citan/eCitan, T-Class/EQT¹) amounted to 31,500
units (2022: 22,500).
Worldwide, it proved possible to significantly increase
unit sales of electrified vans to 22,700 units (2022:
15,000 units). These were exclusively all-electric mod-
els. The share of electrified vehicles thus accounted
for a 5% share of total unit sales (2022: 4%).
1 WLTP: combined energy consumption: 20.7-19.3 kWh/100 km; combined CO2 emissions:
0 g/km; CO2 class: A.
At 279,400 units, sales in Europe (European Union,
United Kingdom, Switzerland and Norway) were signifi-
cantly above the prior-year level (2022: 259,400). Unit
sales in Germany amounted to 114,000 vehicles (2022:
113,200). Mercedes-Benz Vans also set a new sales
record in the United States with unit sales of 75,100
vehicles (2022: 66,400). In China, unit sales totalled
33,400 vehicles (2022: 34,200).
Mercedes-Benz Mobility
The Mercedes-Benz Mobility division had a contract vol-
ume of €135.0 billion - slightly above the previous
year's figure at the end of 2023 (31 December 2022:
€132.4 billion, +2%; +4% after adjusting for exchange-
rate effects). The figure for contract volume shows the
total monetary amount of all leasing and financing con-
tracts on a certain date.
Mercedes-Benz Mobility concluded 1.4 million new
financing and leasing contracts worth a total of
€62.0 billion in the course of 2023. The total value of all
new contracts was thus slightly higher than in the prior
year (31 December 2022: €58.0 billion, +7%; +10% after
adjusting for exchange-rate effects). The main reason
for the positive development was the higher average
financing and leasing volume per contract, driven by
improved pricing on the sales side and a higher propor-
tion of electrified and Top-End vehicles in the new busi-
ness.
In the German market, new business was roughly on a
par with the previous year at €10.4 billion (+2%).
Contract volume amounted to €24.5 billion (-3%). The
US market benefited from a higher average financing
and leasing volume per contract and a significant
increase in the penetration rate. The penetration rate
indicates the proportion of leased and financed vehi-
cles in the Group's unit sales. At €16.2 billion (+25%),
the volume of new business at the end of 2023 was
considerably higher than the figure recorded in the prior
year. At €35.7 billion, contract volume at the end of
December 2023 was slightly higher than at the end of
2022 (+3%). In China, on the other hand, increased
competition in the financial services sector caused new
business to decrease by 18% compared to the prior year
to €9.8 billion. At €16.7 billion, contract volume was also
significantly lower than in the previous year (-15%). New
business in other markets totalled €25.6 billion (+11%),
while contract volume amounted to €58.1 billion (+10%).
Order situation
Consolidated Financial Statements
PHEVS
Corporate Governance
46
20
16
Electrified vehicles (EV)
The share of electrified vehicles accounted for 20% of
Mercedes-Benz Cars' total unit sales (2022: 16%). This
corresponds to unit sales of 401,900 vehicles (2022:
333,500) and an increase of 21% on the previous year.
Sales of all-electric vehicles (BEVS) of the Mercedes-
Benz brand rose by 61% to 240,600 units in 2023 (2022:
149,200). All-electric vehicles thus accounted for a 12%
share of total unit sales (2022: 7%). The most important
sales drivers were the EQA, with sales of 52,500 units
and the EQB with 54,800 units. The EQE Saloon
achieved sales of 37,700 units and the newly introduced
EQE SUV 32,100 units. Sales of the EQS Saloon
amounted to 14,100 units, and of the EQS SUV4 18,500
units.
Sales of plug-in hybrid vehicles (PHEVS) totalled
161,300 units in the year under review (2022: 184,300),
which corresponds to an 8% share of total sales (2022:
9%).
Mercedes-Benz Cars unit sales by region
Compared to the prior year, unit sales of Mercedes-
Benz Cars increased in Europe (European Union, United
Kingdom, Switzerland and Norway) and remained stable
in the other major sales markets. In Europe, it sold
659,600 vehicles (2022: 618,900). Sales growth of 9%
to 234,300 units was recorded in Germany in the
reporting year (2022: 215,600).
1 The Top-End category includes all AMG models.
2 Including Mercedes-Maybach and Mercedes AMG derivatives.
3 Including Mercedes AMG derivatives.
4 Including Mercedes-Maybach.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Economic Conditions
35,829
Mercedes-Benz Vans sold 447,800 vehicles worldwide
in 2023 (2022: 415,300), thus setting a new record.
Asia
-722
General administrative expenses
-2,688
-2,584
-1,895
-1,855
-793
-729
Research and non-capitalized development costs
-6,230
-5,602
-685
-6,230
Other operating income/expense
1,690
2,034
1,838
1,925
-148
109
Gains/losses on equity-method investments
2,129
2,284
1,941
-5,602
-8,760
-9,043
-9,482
2023
2022
Revenue
Cost of sales
Gross profit
153,218
150,017
126,500
123,063
26,718
26,954
-118,839
-115,997
-95,209
-93,010
-23,630
-22,987
34,379
34,020
31,291
30,053
3,088
3,967
Selling expenses
-9,728
-155
-209
Other financial income/expense
EBIT
-5,495
-4,975
-4,868
-578
-627
14,531
14,809
13,817
13,012
714
1,797
thereof profit attributable to non-controlling interests
270
308
thereof attributable to shareholders of Mercedes-Benz Group AG
14,261
14,501
Earnings per share (in euros)
For profit attributable to shareholders of Mercedes-Benz Group AG
Basic
Diluted
13.46
13.55
13.46
13.55
1
-5,553
2022
2,424
17,880
Interest income/expense
Profit before income taxes
Income taxes
Net profit
108
340
113
328
-5
12
19,660
20,458
18,358
18,030
1,302
2,428
424
-154
434
-150
-10
-4
20,084
20,304
18,792
1,292
2023
1,732
Mercedes-Benz Mobility
Research and non-capitalized development costs of
€6.2 billion in 2023 were above the prior-year level
(2022: €5.6 billion). The increase was mainly due to
higher expenses in connection with advance expendi-
ture for the renewal of existing models and the further
development of fuel-efficient and environmentally
friendly drive systems as well as the digital connectivity
of the products. As a proportion of revenue, research
and non-capitalized development costs increased from
3.7% to 4.1%. Further information on this topic is pro-
vided in the Investment and research activities chapter
of this Combined Management Report.
Other operating income of €1.7 billion (2022: €2.0 bil-
lion) was below the level of the prior year. The figure
included expenses in the amount of €0.2 billion in con-
nection with the discontinuation of business activities
in Russia. The prior-year earnings included total income
of €0.9 billion in connection with the restructuring of
the sales activities in Canada and the change in the
shareholding structure of the motorsport business. By
contrast, other operating income in the prior year was
impaired by the result attributable to the spin-off and
hive-down of assets and liabilities of the Daimler com-
mercial vehicles business of the Mercedes-Benz Mobil-
ity segment. The resulting loss (before deduction of
transaction costs) amounted to €0.2 billion.
In 2023, the gains/losses on equity-method invest-
ments amounted to €2.1 billion (2022: €1.7 billion) and
were thus above the prior-year level. The positive
development was mainly due to the higher proportion-
ate earning of the investment in Daimler Truck Hold-
ing AG. In financial year 2023, earnings totalled
€0.8 billion (2022: €0.2 billion). In addition to higher
current earnings, the increase compared to the previ-
ous year is partly due to lower negative adjustments at
the Group from an investor's perspective. In 2022, the
earnings included income of €59 million from the con-
tribution of approximately 5% of the shares in Daimler
Truck to the Mercedes-Benz Pension Trust. In contrast,
the result of Beijing Automotive Co., Ltd. decreased to
€1.5 billion (2022: €1.7 billion).
The other financial income/expense was below the
previous year's level at €0.1 billion (2022: €0.3 billion),
mainly due to higher expenses from the discounting of
non-current provisions.
Earnings before interest and taxes (EBIT) amounted
to €19.7 billion in 2023, which is slightly lower than in
the previous year (2022: €20.5 billion).
Due to the global increase in interest rates, net interest
income/expense improved to an income of €0.4 billion
(2022: expense of €0.2 billion) in 2023.
The tax expense of €5.6 billion (2022: €5.5 billion)
remained at the prior-year level. The effective tax rate
for the reporting year was 27.6% (2022: 27.1%).
Net profit was thus €14.5 billion (2022: €14.8 billion).
Net profit of €0.3 billion is attributable to non-con-
trolling interests (2022: €0.3 billion). The net profit
attributable to shareholders of Mercedes-Benz
Group AG amounted to €14.3 billion (2022: €14.5 bil-
lion), leading to a decrease in earnings per share to
€13.46 (2022: €13.55). The calculation of earnings per
share is based on an average number of 1,059.6 million
issued shares (2022: 1,069.8 million issued shares). The
decrease in the weighted average number of shares in
circulation is due to the share buyback programme
resolved by the Board of Management on 16 February
2023.
In the past year, general administrative expenses
increased by €0.1 billion to €2.7 billion. As a proportion
of revenue, general administrative expenses increased
from 1.7% to 1.8%.
Further information on the individual items of the Con-
solidated Statement of Income is provided in Notes 4 ff.
of the Notes to the Consolidated Financial Statements.
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
Condensed consolidated statement of income/loss
In millions of euros
50
Corporate Governance
Consolidated Financial Statements
Further Information
Annual Report 2023 | Mercedes-Benz Group
Mercedes-Benz Group
Selling expenses increased by €0.2 billion to €9.7 bil-
lion. As a proportion of revenue, selling expenses
remained unchanged at 6.3%.
By contrast, lower raw material prices had a positive
impact on the cost of sales. Moreover, refinancing costs
at Mercedes-Benz Mobility rose due to higher interest
rates. In the prior year, cost of sales was negatively
impacted by expenses in connection with the discon-
tinuation of the business activities in Russia.
43,382
45,558
-5
2022
25,284
27,324
-7
Other markets
7,453
Overall, gross profit in relation to revenue increased
from €34.0 billion to €34.4 billion.
7,881
1 The reconciliation includes eliminations of intra-Group revenue between the segments.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
49
Corporate Governance
Consolidated Financial Statements
Further Information
-5
2023
thereof China
Industrial Business
6,397
Mercedes-Benz Group
-1
-12,595
-12,409
and liabilities¹
Net assets
Other assets
-78
422
94
Other reconciliation³
+5
-11,101
-11,625
Trade payables¹
+35
-3,818
1 Equity.
2 To the extent not allocated to the segments.
3 To the extent not allocated to Mercedes-Benz Mobility.
59,843
1 To the extent not allocated to Mercedes-Benz Mobility.
+2
58,683
59,696
Mercedes-Benz Group
-4
13,576
13,014
of Mercedes-Benz Mobility
Total equity
+6
-4,507
-4,778
from income taxes¹
Assets and liabilities
+2
58,525
-5,159
-5
-15,179
-14,481
+5
24,906
26,126
Inventories¹
+2
8,078
8,221
DTHAG
Other reconciliation
+3
14,445
Equipment on operating leases¹
Equity-method investment in
+110
-5,540
-5,430
Income taxes¹
-2,001
14,038
Annual Report 2023 | Mercedes-Benz Group
996
+1,203
for other risks¹
Assets and liabilities from income
taxes³
1 Adjusted for after-tax interest income.
Provisions
-688
14,918
14,230
Mercedes-Benz Group
-207
-17
253
investments²
Net operating profit
-10
7,328
6,585
Trade receivables¹
Other equity-method
303
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
1,292
17,880
18,792
20,304
20,084
Profit before income taxes
5,148
62
62
thereof cash and cash equivalents classified as assets held for sale at beginning of year
3,585
18,034
14,094
23,182
17,679
Cash and cash equivalents at beginning of year
2022
2023
2,424
Depreciation and amortization/impairments
6,663
6,521
114
124
Other non-cash expense and income and gains/losses from disposals of assets
Change in operating assets and liabilities
20,665
-2,461
-2,286
-2,944
-2,546
2022
483
Inventories
Trade receivables and trade payables
Receivables from financial services
Vehicles on operating leases
Other operating assets and liabilities
Dividends received from equity-method investments
Income taxes paid
Cash flow from operating activities
260
6,549
2023
2023
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Management of market-price risks aims to limit the
impact of fluctuations in foreign exchange-rates and
interest rates on the earnings of the divisions and the
Group. The Group's overall exposure to these mar-
ket-price risks is initially determined in order to provide
a basis for hedging decisions. These include the volume
to be hedged, the period to be hedged and the choice
of hedging instruments. The hedging strategy is speci-
fied at Group level and uniformly implemented. The
decision-making body is the Treasury Risk Management
Committee, which meets regularly.
ment transactions.
Cash management centrally determines the cash
requirements and surpluses. By means of cash-pooling
procedures, liquidity is in general centrally concen-
trated on bank accounts of the Mercedes-Benz Group in
various currencies. Most of the payments between
companies of the Group are made through internal
clearing accounts so that the number of external cash
flows is reduced to a minimum. The Mercedes-Benz
Group has established standardized processes and sys-
tems to manage its bank accounts and internal
cash-clearing accounts, and to execute automated pay-
Liquidity management aims to ensure the Group can
meet its payment obligations at any time. For this pur-
pose, the Group records the cash flows from operating
and financial activities in a rolling plan. The resulting
financial requirements are covered by the use of appro-
priate instruments for liquidity management (e.g. bank
credit, commercial paper and notes); liquidity surpluses
are invested in the money market or the capital market
taking into account risk and return expectations. Our
goal is to ensure the level of liquidity regarded as nec-
essary at optimal costs. Besides operational liquidity,
the Mercedes-Benz Group maintains additional sources
of liquidity which are available in the short term. Those
additional financial resources include a pool of receiva-
bles from the financial services business which are
available for securitization in the capital market and a
contractually confirmed syndicated credit facility. Since
December 2021, the Group also has liquidity reserves in
the form of its shareholding in Daimler Truck Hold-
ing AG, which can only be sold with the consent of
Daimler Truck Holding AG until the end of 2024. Con-
sent to the sale is not required in the event of a crisis or
after December 2024.
resources.
Capital structure management designs the capital
structure of the Group and its subsidiaries. Decisions
regarding the capitalization of the Mercedes-Benz
Group companies are based on the principles of
cost-optimized and risk-optimized liquidity and capital
Financial management at the Mercedes-Benz Group
consists of capital structure management, cash and
liquidity management, market-price risk management
(foreign exchange-rates and interest rates), as well as
pension-asset management and credit and country risk
management. Worldwide financial management is per-
formed within the framework of legal requirements con-
sistently for the Group entities by the Treasury depart-
ment of the Mercedes-Benz Group. Financial
management operates within a framework of guidelines,
limits and benchmarks, and on the operational level is
organizationally separate from other financial functions
such as settlement, financial controlling, reporting and
accounting.
Principles and objectives of financial management
Liquidity and capital resources
Further Information
Consolidated Financial Statements
Corporate Governance
56
57
Corporate Governance
Consolidated Financial Statements
Further Information
Mercedes-Benz Mobility
Industrial Business
Mercedes-Benz Group
Further Information
Consolidated Financial Statements
Corporate Governance
58
In millions of euros
2022
Condensed Consolidated Statement of Cash flows
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Further information on the management of market-price
risk, credit risk and liquidity risk is provided in Note 33
of the Notes to the Consolidated Financial Statements.
tries.
Financial country risk management includes various
aspects: the risk from investments in subsidiaries and
joint ventures, the risk from the cross-border financing
of Group companies in high-risk countries and the risk
from direct sales to customers in those countries. The
Group has an internal rating system that assigns the
countries in which it operates to risk categories. Risks
from cross-border receivables are partially protected
with the use of letters of credit and bank guarantees in
favour of Mercedes-Benz Group AG and other Group
companies. In addition, an internal committee sets and
restricts the level of hard-currency credits granted to
Mercedes-Benz Mobility companies in high-risk coun-
The risk volume that is subject to credit risk manage-
ment includes the Mercedes-Benz Group's worldwide
creditor positions with financial institutions, issuers of
securities and customers in the financial services busi-
ness, as well as trade receivables. Credit risks with
financial institutions and issuers of securities arise pri-
marily from investments executed as part of our liquid-
ity management and from the application of derivative
financial instruments. The management of these credit
risks is mainly based on an internal limit system that
reflects the creditworthiness of the respective financial
institution or issuer. The credit risk with customers of
the automotive business results from relationships with
contracted dealerships and general agencies, other cor-
porate customers and retail customers. In connection
with the export business, general agencies that accord-
ing to the creditworthiness analyses are not sufficiently
creditworthy are generally required to provide collater-
als such as first-class bank guarantees. The credit risk
with end customers in the financial services business is
managed by Mercedes-Benz Mobility on the basis of a
standardized risk-management process. In this process,
minimum requirements are defined for the sales-financ-
ing and leasing business and standards are set for
credit processes, as well as for the identification, meas-
urement and management of risks. Key elements for the
management of credit risks are appropriate creditwor-
thiness assessments supported by statistical risk-clas-
sification methods, as well as structured portfolio anal-
ysis and portfolio monitoring.
Management of pension assets (plan assets) includes
the investment of the assets to cover the corresponding
pension obligations. The plan assets are legally sepa-
rated from the Group's assets and are invested primarily
in funds; they are not available for general business
purposes. The plan assets are spread across a broad
range of investment categories such as equities,
fixed-interest securities, alternative investments and
real estate, depending on the expected development of
pension obligations and with the help of risk-return
optimization. The performance of the asset manage-
ment is measured by comparison with defined bench-
mark indices. The investment risks are limited via a
Group-wide policy. In addition, there are local regula-
tions for risk management for the individual plan assets.
Additional information on pension plans and similar
obligations is provided in Note 22 of the Notes to the
Consolidated Financial Statements.
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
18,664
23/22
Change
26,942
Return on sales/return on equity (in %)
55
994
2,428
1,695
1,927
3,063
16,245
276
51
-5
658
-66
14,252
20,655
20,004
Adjusted EBIT
709
12.6%
14.6%
15.5%
11.0%
Further Information
Consolidated Financial Statements
Corporate Governance
54
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
205
1 Adjusted return on sales is calculated as the ratio of adjusted EBIT to revenue. The adjusted return on equity is determined as the ratio of adjusted EBIT to the average equity of the quarters.
12.3%
11.2%
15.1%
14.6%
12.6%
Adjusted return on sales/return on equity (in %)¹
16.8%
9.5%
16.8%
Income/expenses in connection with adjustments of the business
activities in Russia
268
117
14,224
20,458
19,660
EBIT
61
1,060
-88
-308
16,340
255
3,878
2,794
4,106
3,927
Other income/expense
-3
-24
-415
381
Value added and return on net assets
3,138
1,302
-36
-863
-631
117
M&A transactions
Restructuring measures
-6
-2
1,897
15
110
94
119
22
Legal proceedings (and related measures)
-207
996
2,428
-70
-4
As described in the section Performance measurement
system, value added is calculated as the difference
between the measure of earnings and the cost of capi-
tal. The cost of capital used in the calculation of value
added is based on average net assets multiplied by the
cost of capital rate. The ratio of earnings to net assets
results in the profitability of net assets, i.e. the return
on capital employed (return on net assets, RONA).
The following table shows value added for the
Mercedes-Benz Group and for the individual segments.
3,138
Mercedes-Benz Vans
+42
885
1,253
Mercedes-Benz Vans
-2,116
16,340
14,224
Mercedes-Benz Cars
In millions of euros
+8
38,189
41,407
Mercedes-Benz Cars
23/22
% change
2022
1,897
+1,241
Mercedes-Benz Mobility¹
13,774
25,797
Property, plant and equipment¹
+5
53,540
56,434
of the segments
EBIT of the segments
Net assets
At 31 December
2023
-1,126
1,302
Mercedes-Benz Mobility
+11
15,275
17,022
Intangible assets¹
-5
14,466
2,428
% change
In millions of euros
23/22
Change
At the Mercedes-Benz Cars segment, value added of
€8.8 billion was below the prior-year amount of
€11.8 billion. RONA amounted to 34.4% (2022: 42.8%).
This was primarily due to the negative earnings devel-
opment. The segment's average net assets, which at
€3.2 billion, were higher than in the previous year,
increased the negative effect on the value added. This
was mainly due to higher average inventories and
decreasing average provisions for other risks.
The value added of the Mercedes-Benz Group in the
reporting year amounted to €8.8 billion (2022: €10.2 bil-
lion), representing a return on net assets of 23.8%
(2022: 25.5%). This was once again significantly higher
than the Group's required cost of capital rate of 9%
(2022: 8%). The value added of the Mercedes-Benz
Group decreased, mainly due to the negative develop-
ment of EBIT of the segments Mercedes-Benz Cars and
Mercedes-Benz Mobility. The €1.3 billion increase in
average net assets also had a slightly negative effect
on value added. This was partly offset by the positive
development of EBIT at Mercedes-Benz Vans.
-2,916
+1,184
-1,180
1,791
692
-488
2,975
11,757
8,841
The value added of the Mercedes-Benz Vans segment
increased significantly from €1.8 billion to €3.0 billion.
RONA amounted to 250.4% (2022: 214.4%). This was
mainly due to the very positive earnings development.
The average net assets showed an opposing increase to
€1.3 billion, which was primarily due to increased aver-
age inventories and decreasing average provisions for
other risks.
Mercedes-Benz Cars
Mercedes-Benz Vans
Mercedes-Benz Mobility
10,236
8,844
Mercedes-Benz Group
-2,733
In millions of euros
2022
2023
Value added
-1,392
The measure of earnings for the segments is EBIT and
for the Group is net operating profit, which in addition
to the EBIT of the segments also includes earnings
effects for which the segments are not accountable,
such as income taxes and other reconciling items.
At the Mercedes-Benz Mobility segment, value added
amounted to minus €0.5 billion (2022: €0.7 billion). The
segment's return on equity was 9.5% (2022: 16.8%). The
development of the return on equity primarily reflects
the decrease in earnings. By contrast, the decrease in
average total equity had a slightly positive effect on the
return on equity.
Contents
2022
Net assets of the Mercedes-Benz Group at year-end
23/22
2022
2023
Net assets (average)
The following table shows the derivation of net assets
on 31 December from the Consolidated Statement of
Financial Position.
The following table shows the average net assets.
Annual Report 2023 | Mercedes-Benz Group
Further Information
Corporate Governance
55
2023
In millions of euros
Reconciliation of the segments< EBIT to net operating profit
The following table shows the reconciliation of the seg-
ments' EBIT to net operating profit of the Mercedes-
Benz Group.
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Consolidated Financial Statements
-4,111
-5,554
-4,103
-118,839
-5,755
-6,544
26,954
26,718
-524
17,217
20,288
111,601
112,756
150,017
153,218
Cost of sales
Revenue
2022
2023
Reconciliation
-115,997
-86,366
-84,927
-15,299
-9,728
Selling expenses
-289
-88
3,967
3,088
3,668
4,989
Mercedes-Benz Mobility
2023
2022
26,674
34,020
34,379
Gross profit
5,466
6,456
-22,987
-23,630
-13,549
26,390
-9,482
Mercedes-Benz Vans
2022
2022
Consolidated Financial Statements
Corporate Governance
2
52
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The main reasons for the development of EBIT in 2023
were an decreased interest margin due to higher inter-
est rates and increased competition in the financial
services sector. Falling used car prices reduced Athlon's
remarketing result. Exchange-rate effects and expenses
for the expansion of the charging activities also reduced
EBIT. The equity-method gains of the mobility invest-
ments improved due to a better operating business
result and restructuring measures. Despite a challeng-
ing macroeconomic environment, credit risk costs were
slightly below the previous year's level.
In 2023, EBIT of the Mercedes-Benz Mobility segment
amounted to €1,302 million (2022: €2,428 million);
adjusted EBIT was €1,695 million (2022: €2,428 million).
Revenue amounted to €26,718 million (2022:
€26,954 million). Adjusted return on equity of 12.3% was
below the adjusted prior-year figure of 16.8%.
Adjusted EBIT was slightly lower than EBIT in the year
2023. Effects in connection with ongoing governmental
and court proceedings and measures taken relating
to Mercedes-Benz diesel vehicles led to an impact in
the amount of €70 million (2022: expense of €15 mil-
lion) on earnings. In addition, income in the amount of
€5 million (2022: expense of €51 million) resulted in
connection with the discontinuation of business activi-
ties in Russia. In the prior year, M&A transactions in
connection with the restructuring of the sales activities
in Canada contributed €36 million to earnings.
The substantial rise in unit sales as well as improved
pricing had a very positive impact on gross profit. How-
ever, the result was impacted by higher material costs
and expenses for higher transportation costs to global
sales markets. Furthermore, earnings reflected the
highly inflationary macroeconomic situation, particu-
larly the hyperinflation in Argentina. Overall, gross profit
in relation to revenue increased from 21.3% to 24.6%.
Other functional costs were slightly above the level of
the previous year.
The Mercedes-Benz Vans segment achieved an EBIT of
€3,138 million (2022: €1,897 million); adjusted EBIT was
€3,063 million (2022: €1,927 million). With a revenue
of €20,288 million (2022: €17,217 million), the adjusted
return on sales of 15.1% was higher than the adjusted
prior-year figure of 11.2%.
Adjusted EBIT was slightly higher than EBIT in the year
2023. Effects from ongoing regulatory and legal pro-
ceedings and measures relating to Mercedes-Benz die-
sel vehicles of €94 million (2022: €110 million) nega-
tively impacted the segment's earnings. Earnings in
connection with the discontinuation of the business
activities in Russia in the amount of €66 million (2022:
expense of €658 million) had a positive impact. In addi-
tion, in the prior year, M&A transactions in the amount
of €863 million had a positive effect on the profit due
to the €478 million from the restructuring of the sales
activities in Canada and the €385 million from the
change in the shareholding structure of the motorsport
business.
Improved pricing and lower raw material prices had a
positive impact on gross profit. On the other hand,
gross profit was impacted by expenses paid to suppli-
ers due to additional costs relating to inflation and sup-
ply chains over the course of the year. In addition,
exchange-rate effects had a negative impact on earn-
ings. Gross profit in relation to revenue decreased from
23.9% to 23.4% as a result. Other functional costs
increased in 2023. This was mainly due to advance
expenditure for the renewal of existing models and the
further development of fuel-efficient and environmen-
tally friendly drive systems as well as the digital con-
nectivity of the products. In addition, increased
expenses from the discounting of non-current provi-
sions as well as lower equity-method gains of the stake
in Beijing Benz Automotive Co., Ltd. contributed to a
decrease in earnings.
The EBIT of the Mercedes-Benz Cars segment
decreased to €14,224 million (2022: €16,340 million);
adjusted EBIT was €14,252 million (2022: €16,245 mil-
lion). With a revenue of €112,756 million (2022:
€111,601 million), the adjusted return on sales of 12.6%
was lower than the adjusted prior-year figure of 14.6%.
EBIT by segment
Further Information
Adjusted EBIT in 2023 was above the reported EBIT.
Expenses of €276 million in connection with the discon-
tinuation of the business activities in Russia had a neg-
ative effect on earnings. In addition, the equity-method
gains/losses were negatively impacted by an impair-
ment (€117 million).
The reconciliation of the segments' EBIT to Group EBIT
comprises items at the corporate level and the effects
on earnings of eliminating intra-Group transactions
between the segments.
In 2023, items at the corporate level resulted in earn-
ings of €858 million (2022: expense of €225 million).
This includes the positive effect on earnings of
€797 million (2022: €226 million) from the equi-
ty-method investments in Daimler Truck Holding AG.
On the other hand, in the previous year, earnings were
affected by adjustments in connection with the sale
of individual investments and business activities to
Daimler Truck (€268 million after subtracting transac-
tion costs). Further information on this is provided
in Note 3 of the Notes to the Consolidated Financial
Statements.
2023
2022
Mercedes-Benz Cars
2023
Mercedes-Benz Group
In millions of euros
EBIT of the Mercedes-Benz Group
Capital Resources, Financial Position
2023
Further Information
Corporate Governance
53
53
Combined Management Report
Profitability, Liquidity and
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The elimination of intra-Group transactions resulted in
earnings of €138 million in 2023 (2022: €18 million).
Consolidated Financial Statements
-7,740
-7,568
-1,466
11,720
industrial business
Adjusted free cash flow of the
-86
-144
M&A transactions
-273
374
101
Restructuring measures
-431
878
447
measures)
Legal proceedings (and related
+3,188
8,128
9,294
-58
+2,426
The cash flows from acquisitions and sales of marketa-
ble debt securities and similar investments included in
cash flows from investing activities are deducted, as
those securities are allocated to liquidity and changes
in them are thus not a part of the free cash flow of the
industrial business. On the other hand, effects in con-
nection with the recognition and measurement of right-
of-use assets, which result from lessee accounting and
are largely non-cash items, are included in the free cash
flow of the industrial business. Other adjustments
relate to effects from the financing of the Group's own
dealerships and effects from internal deposits within
the Group. In addition, the calculation of the free cash
flow of the industrial business includes the cash flows
to be shown under cash flow from financing activities in
connection with the acquisition or disposal of interests
in subsidiaries without loss of control.
A cash outflow of €8.4 billion (2022: €19.0 billion)
resulted from the cash flow from financing activities
(see condensed statement of cash flows) during the
reporting period. The lower cash outflow relative to
the same period of the prior year is primarily due to
the significantly lower net refinancing in the prior
year. This was offset during the reporting period by
the payments of €1.9 billion made in connection with
the share buyback programme. Taking account of
exchange-rate effects, cash and cash equivalents
decreased by €1.7 billion since 31 December 2022.
Total liquidity, which also includes marketable debt
securities and similar investments, decreased by
€1.9 billion to €22.8 billion.
Cash flow from financing activities of the
Mercedes-Benz Group
In 2022, a cash inflow in the amount of €1.3 billion
which related to the payments received from the sale
of intercompany loans in connection with the sale of
units of the truck financing business and does not
legally relate to Mercedes-Benz Mobility, was economi-
cally allocated to the cash flow from investing activi-
ties of Mercedes-Benz Mobility. An opposing repay-
ment of the financing liabilities in the same amount
was recognized in the cash flow from financing activi-
ties of Mercedes-Benz Mobility. In 2023, there were no
reclassifications of cash flows between the cash flows
from investing activities of the industrial business and
Mercedes-Benz Mobility.
In 2023, the free cash flow of the Mercedes-Benz
Group resulted in a cash inflow of €6.7 billion (2022:
€12.8 billion). The decrease in the free cash flow of the
Mercedes-Benz Group was mainly due to the higher
leasing and sales-financing business of Mercedes-Benz
Mobility compared to the previous year. This was offset
by a year-on-year increase in the free cash flow of the
industrial business.
Free cash flow of the Mercedes-Benz Group
The adjustments from legal proceedings include pay-
ments by the industrial business in connection with
ongoing governmental and legal proceedings and
related measures taken with regard to Mercedes-Benz
diesel vehicles. The adjustments from restructuring
measures include payments made in connection with
the personnel-cost-optimization programmes in the
reporting period. The adjustments from M&A transac-
tions encompass the cash inflow from the purchase
price payment for the sale of shares in Mercedes-Benz
Grand Prix Ltd. (2022: cash inflows from the restructur-
ing of retail activities in Canada, opposing cash out-
flows from investment in Automotive Cells Company
SE). The adjusted free cash flow of the industrial
business amounted to a total of €11.7 billion (2022:
€9.3 billion).
Further Information
Consolidated Financial Statements
11,316
Corporate Governance
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
There was an increase in income taxes paid in compari-
son to the prior year, which resulted from the improve-
ment in earnings before taxes in the industrial business.
In addition to payments to the tax authorities, income
tax payments also include intra-Group payments and
refunds based on contractual arrangements within the
tax groups. A further negative effect on the free cash
flow of the industrial business resulted from the higher
investment in intangible assets and capital expenditure
on property, plant and equipment.
In the previous year,
the free cash flow was also
impacted by higher payments resulting from the settle-
ment of civil and environmental claims made by several
US authorities in 2020 in connection with emission
control systems used in certain diesel vehicles as well
as higher payments in connection with restructuring
measures. Another positive effect resulted from a lower
increase in the number of leased vehicles compared to
the previous year. Moreover, higher dividend payments
were received during the reporting period from equi-
ty-method investments, in particular Daimler Truck
Holding AG and Beijing Benz Automotive Co., Ltd.
Investments in and disposals of shareholdings and
other business operations resulted in slightly higher
cash inflows in the reporting period than in the previ-
ous year.
The increase in the free cash flow of the industrial busi-
ness by €3.2 billion to €11.3 billion compared to the pre-
vious year is characterized by an improvement in profit
before income taxes of the industrial business. During
the reporting period, a positive effect resulted from the
development of the working capital, mainly due to a
lower inventory build-up and a decrease in the trade
receivables compared to the previous year. A smaller
increase in trade payables compared to the previous
year had an opposing effect.
In 2023, the free cash flow of the industrial business
amounted to €11.3 billion and was thus higher than the
previous year's figure of €8.1 billion.
60
industrial business
Free cash flow of the
+261
+368
-168
-6,230
Research and non-capitalized development costs
-143
-115
-729
-793
-252
-242
-5,602
-1,460
-2,584
-2,688
General administrative expenses
167
163
-722
-685
-1,359
-1,538
Further Information
Cash flow from
19,101
-31
-199
Other adjustments
-696
-328
Right-of-use assets
-490
-229
operating activities
similar investments
Change in marketable
-1,475
-5,554
-7,029
investing activities
Cash flow from
+4,202
14,899
debt securities and
Consolidated Financial Statements
Corporate Governance
51
490
229
462
307
Acquisitions and sales of marketable debt securities and similar investments
Other cash flows
2,172
-229
316
507
2,488
278
Investments in and disposals of shareholdings and other business operations
-61
-99
-6,838
-8,114
-6,899
78
-28
313
496
-13,344
-697
2,101
-286
-7,029
-3,453
-7,315
Cash flow from financing activities
-8,213
Internal equity and financing transactions
Acquisition of treasury shares
Dividends paid
Change in financing liabilities
Cash flow from investing activities
18
-36
478
349
Other cash flows
Additions to property, plant and equipment and intangible assets
1,995
-4,631
-995
-502
3,810
-640
-5,329
-6,034
2
222
-138
-5,327
108
164
921
1,146
1,029
1,310
-8
-143
-5,812
2,320
4,805
358
14,899
19,101
16,894
14,470
-872
-814
-4,137
-4,807
1,624
-5,009
1,605
2,056
1,605
2,056
483
445
-125
1,179
-5,621
-2,590
-9,110
-4,234
17,679
13,117
14,094
2,855
3,585
thereof cash and cash equivalents classified as assets held for sale at end of year
10
10
Annual Report 2023 | Mercedes-Benz Group
-3,017
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
59
15,972
Corporate Governance
Further Information
Free cash flow of the industrial business
The free cash flow of the industrial business is regarded
as a key performance indicator for the Mercedes-Benz
Group. The free cash flow of the industrial business is
derived from the cash flows from operating and invest-
ing activities. The following table also shows the recon-
ciliation to the adjusted free cash flow of the industrial
business.
Free cash flow of the industrial business
In millions of euros
2023
2022
23/22
Change
-5,682
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
Consolidated Financial Statements
Cash and cash equivalents at end of year
Contents
-76
-5,880
-5,669
-5,758
-5,550
-122
-119
-1
-1,941
-48
-1,941
-48
127
29
65
-5,184
62
-12,654
-395
29
88
-19,032
4,263
-5,658
-13,374
-8,391
-471
Effect of foreign exchange-rate changes on cash and cash equivalents
-1,305
7,340
1,305
-7,340
89
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
61
Corporate Governance
Consolidated Financial Statements
Further Information
Mercedes-Benz
Reconciliation from EBIT to adjusted CFBIT
Mercedes-Benz
2023
Cars
2022
Vans
2023
2022
In millions of euros
EBIT
16,340
3,138
1,897
CFBIT and cash conversion rate of the automotive
segments
14,224
17,593
Inventories
108,638
111,837
-13,575
-7,549
122,213
119,386
44,914
49,786
-23,343
-20,668
68,257
70,454
63,724
62,051
833
9,768
53,956
48,932
12,828
12,204
11,625
11,101
1,203
1,103
7,118
7,928
4,146
5,128
2,972
2,800
13,119
825
16,211
15,565
Corporate Governance
Consolidated Financial Statements
Further Information
Mercedes-Benz Group
Industrial Business
Mercedes-Benz Mobility
At 31 December
At 31 December
At 31 December
2023
2022
2023
2022
2023
2022
Equity and liabilities
Equity
17,044
16,390
13,576
13,014
72,964
79,802
Contract and refund liabilities
86,540
Other financial liabilities
Trade payables
thereof non-current
thereof current
Financing liabilities
Provisions
92,816
Change in working
capital
Capital Resources, Financial Position
To Our Shareholders
6,237
6,159
thereof current
977
910
6,083
5,948
7,060
6,858
Marketable debt securities and similar investments
3,585
2,855
14,094
13,107
5,879
17,679
Cash and cash equivalents
772
696
7,328
6,585
8,100
7,281
Trade receivables
715
1,168
24,906
26,126
25,621
27,294
15,962
5,970
280
267
Contents
Annual Report 2023 | Mercedes-Benz Group
142,524
145,057
117,491
117,965
260,015
263,022
9,102
9,178
13,071
13,619
-5,140
772
1,005
795
795
9,874
10,183
thereof non-current
699
823
69
113
630
Combined Management Report
Profitability, Liquidity and
710
7,939
7,931
-5,680
Other assets
Assets held for sale.
Total assets
Other financial assets
-1,095
14,094
-340
Financial position
Capital Resources, Financial Position
Combined Management Report
Profitability, Liquidity and
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
On 23 December 2023, the European rating agency
Scope Ratings (Scope) upgraded the long-term issuer
rating of Mercedes-Benz Group AG and its financing
companies included in the rating from A to A+ with a
stable outlook and concurrently increased the short-
term rating from S-1 to S-1+. Scope justified this
upgrade with the Group's improved business risk profile,
which can be attributed to structurally higher operating
profitability through the strategic shift into the luxury
space and the continuous streamlining of the fixed cost
base.
On 16 November 2023, the Canadian agency DBRS
Morningstar (DBRS) raised the long-term rating of
Mercedes-Benz Group AG and its subsidiaries incorpo-
rated in the rating from A (low) to A with a stable out-
look. At the same time, the corresponding short-term
rating was confirmed as R-1 (low). DBRS explained this
assessment with the continuing solid development of
the company's earnings regardless of various significant
headwinds, including interest rate and inflationary pres-
sures, geopolitical uncertainty and continuing supply
chain bottlenecks.
comparison with the Fitch "A"-rating median and sup-
ported by the generation of free cash flow above the
historical average values.
On 27 July 2023, Fitch Ratings (Fitch) raised the long-
term issuer rating for Mercedes-Benz Group AG from A-
to A with a stable outlook. At the same time, the short-
term rating was raised from F1 to F1+. Fitch explained
this step with the structural improvement of the finan-
cial profile of the Mercedes-Benz Group, which was
underlined by a significantly higher return on sales in
S&P Global Ratings (S&P) raised the long-term corpo-
rate rating of Mercedes-Benz Group AG from A- to A
with stable outlook on 5 May 2023. The short-term rat-
ing was also raised, from A-2 to A-1. S&P considers the
Mercedes-Benz Group's cash flow generation to be the
best in its class among the traditional automakers. S&P
also considers that the Group will continue to success-
fully manage the pricing, the model mix, the costs and
the investments in the event of weaker conditions for
the sector. After the conclusion of the rating review, S&P
confirmed the long-term and short-term ratings for the
Mercedes-Benz Group according to the new criteria for
issuers with captive financial services businesses on
23 November 2023.
On 24 February 2023, Moody's Investors Service
(Moody's) raised the long-term credit rating of
Mercedes-Benz Group AG from A3 to A2 with a stable
outlook. At the same time, Moody's raised its short-
term rating from P-2 to P-1. With this upgrade, Moody's
recognized Mercedes-Benz Group's improved margins
over the past two years, the company's strategy of
focusing on higher margin premium and luxury vehicles
while transforming its product portfolio to all-electric
vehicles and its reduced financial indebtedness.
R-1 (low)
DBRS
R-1 (low)
S-1
S-1+
Scope
F1
F1+
Fitch
P-2
P-1
Moody's
A-2
At €263.0 billion, the Group's balance sheet total was
at the same level as in the previous year (2022:
€260.0 billion); the exchange-rate effects amounted to
minus €4.7 billion.
Condensed Consolidated Statement of Financial Position
In millions of euros
320
307
10,234
10,084
10,554
10,391
In millions of euros
-2,936
Intangible assets
Assets
2022
2023
A-1
2022
2022
2023
At 31 December
At 31 December
At 31 December
Mercedes-Benz Mobility
Industrial Business
Mercedes-Benz Group
Further Information
Consolidated Financial Statements
Corporate Governance
66
2023
S&P
Short-term credit rating
A (low)
10,538
5,759
0.91
2.19
the direct banking
business
Deposits in
24,738
25,317
3.03
4.57
70,984
71,185
Detailed information on the amounts and terms of the
main items of financing liabilities is provided in
Notes 24 and 33 of the Notes to the Consolidated
Financial Statements. Note 33 of the Notes to the Con-
solidated Financial Statements also provides informa-
tion on the maturities of the other financial liabilities.
2.53
In millions of euros
in %
31 Dec.
2022
31 Dec.
2023
31 Dec.
2022
Carrying amounts
Average interest rates
31 Dec.
2023
to financial
institutions
Liabilities
ABS transactions
Notes/bonds and
liabilities from
Refinancing instruments
3.46
Other liabilities
64
Annual Report 2023 | Mercedes-Benz Group
A
A
A+
A-
A
A3
A2
A
A-
End of 2023 End of 2022
DBRS
Scope
Further Information
Fitch
S&P
Long-term credit rating
Credit ratings
Mercedes-Benz Group AG had long-term A ratings with
all five rating agencies at the end of the year 2023. In
the course of the year, all five agencies raised the long-
term credit ratings for the Group by one notch. Four of
them also raised their short-term credit ratings by one
notch at the same time.
Credit ratings
Further Information
Consolidated Financial Statements
Corporate Governance
65
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Moody's
Liabilities held for sale
Total equity and liabilities
14,617
13,908
208
271
Further information on the assets presented in the
statement of financial position and on the Group's
equity and liabilities is provided in the Consolidated
Statement of Financial Position, the Consolidated State-
ment of Changes in Equity, and the related notes in the
Notes to the Consolidated Financial Statements.
Other liabilities of €14.6 billion (2022: €13.9 billion)
primarily include deferred taxes, tax liabilities and pre-
paid expenses. The increase was primarily attributable
to higher deferred tax liabilities.
The contract and refund liabilities of €10.4 billion
were below the €10.6 billion of the previous year. They
include in particular deferred revenue from service
and maintenance contracts and extended warranties,
as well as obligations from sales transactions that are
within the scope of IFRS 15.
Other financial liabilities amounted to €7.1 billion
(2022: €7.9 billion). They mainly comprise liabilities from
residual-value guarantees, from payroll accounting,
from derivative financial instruments, deposits received,
and liabilities from accrued interest on financing liabili-
ties. The decrease in other financial liabilities is mainly
attributable to lower liabilities from derivative financial
instruments, the carrying amount of which declined due
to interest and exchange-rate developments.
Trade payables increased compared to 31 December
2022 from €12.2 billion to €12.8 billion.
Financing liabilities of €108.6 billion were below the
€111.8 billion of the previous year. The decrease was
due to the lower net refinancing as a result of the posi-
tive cash flow situation. The financing liabilities break
down to 51% bonds, 23% liabilities to financial institu-
tions, 14% liabilities from ABS transactions and 5%
deposits in the direct banking business. The decrease
in deposits from the direct banking business is related
to the planned discontinuation of the retail deposit
business by the end of 2024. The financing liabilities
available on 31 December 2023 relate primarily to the
refinancing requirements of the leasing and sales-fi-
nancing business.
Provisions decreased to €16.4 billion from the previous
year (2022: €17.0 billion). At 6%, they were also below
the prior-year level of 7% of the balance sheet total. The
decrease is mainly due to lower provisions for liability
and litigation risks and regulatory proceedings.
Further Information
Consolidated Financial Statements
Corporate Governance
13,259
70
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Whereas the balance sheet total remained at the pri-
or-year level, equity increased by 7% compared with the
previous year. The Group's equity ratio of 35.3% was
accordingly above the level at the end of 2022 (31.1%);
the equity ratio for the industrial business was 67.6%
(2022: 57.4%). It is necessary to take into account the
fact that the equity ratios at the end of 2022 and 2023
have been adjusted for the paid and proposed dividend
payments respectively.
Compared to 31 December 2022, the Group's equity
increased from €86.5 billion to €92.8 billion, mainly as a
result of the positive earnings development. Addition-
ally gains of €0.5 billion are recognized directly in equity
from the measurement of derivative financial instru-
ments after tax. An opposing effect arose from the divi-
dend of €5.6 billion paid to the shareholders of
Mercedes-Benz Group AG and the aquisition of treasury
shares of €2.3 billion as part of the share buyback pro-
gramme. Equity attributable to the shareholders of
Mercedes-Benz Group AG increased accordingly to
€91.8 billion (2022: €85.4 billion).
Equity and liabilities
In connection with the planned disposal of sales com-
panies in other European countries, the Group is show-
ing assets held for sale of €0.8 billion and liabilities
held for sale of €0.2 billion as of 31 December 2023.
The other assets of €10.2 billion (2022: €9.9 billion)
particularly include deferred taxes and tax refund
claims.
Other financial assets of €7.9 billion were at the pri-
or-year level. They consist primarily of derivative finan-
cial instruments, equity and debt instruments, shares in
non-consolidated subsidiaries, and loans and other
receivables from third parties.
Marketable debt securities and similar investments
decreased compared with 31 December 2022 from
€7.1 billion to €6.9 billion as part of the liquidity man-
agement. Those assets include the debt instruments
that are allocated to liquidity, most of which are traded
in active markets. They generally have an external rating
of A or better.
Compared to 31 December 2022, cash and cash equiv-
alents decreased by €1.7 billion to €16.0 billion.
At €7.3 billion, trade receivables were lower than the
prior-year-figure of €8.1 billion.
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
Inventories increased from €25.6 billion to €27.3 bil-
lion. As a result the share of total assets remains at the
prior year level of 10%. The increase relates in particular
to finished goods, spare parts and products held for
resale at €2.2 billion as a result of the introduction of
the direct sales model in additional markets and model
year-related production ramp-ups. Furthermore, the fin-
ished goods include higher-value vehicles on average.
12,896
13,104
15,869
17,022
15,275
571
594
26,090
27,250
25,797
26,942
293
308
Equipment on operating leases
13,530
Receivables from financial services
41,552
14,445
14,038
27,267
27,514
88,211
85,549
-81
-66
88,292
85,615
Equity-method investments
41,712
At 31 December 2023, the total of financing liabilities
shown in the Consolidated Statement of Financial Posi-
tion amounted to €108.6 billion (2022: €111.8 billion).
Equity-method investments decreased to €13.1 billion
(2022: €13.5 billion). Investments accounted for using
the equity method comprise in particular the carrying
amounts of our investments in Daimler Truck Hold-
ing AG and Beijing Benz Automotive Co., Ltd.
Further Information
263 260
Non-current assets
Assets
In billions of euros
Balance sheet structure Mercedes-Benz Group
Current assets accounted for 40% of the balance sheet
total, which is at the prior-year level. Current liabilities
accounted for 31% of the balance sheet total, which is
below the prior-year level of 34%.
Further Information
Consolidated Financial Statements
Corporate Governance
68
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
260 263
Contents
142,524
145,057
117,491
117,965
260,015
263,022
224
224
4,506
4,523
9,402
10,094
Annual Report 2023 | Mercedes-Benz Group
Equipment on operating leases and receivables from
financial services rose to a total of €129.9 billion (2022:
€127.1 billion) due to the increase in sales financing,
mainly in North America. The increase adjusted for cur-
rency translation effects was €5.8 billion. At 49%, the
leasing and sales-financing business as a proportion of
total assets was at prior year level.
159
157
Consolidated Financial Statements
Corporate Governance
69
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
Property, plant and equipment decreased to
€26.1 billion (2022: €27.3 billion). In addition to nega-
tive exchange-rate effects, the deconsolidation
of the Russian companies in 2023 and the reclassifica-
tion of property, plant and equipment to assets held
for sale in connection with the planned divestment
of sales companies in European countries other than
Germany had a negative effect on the balance sheet
total.
The intangible assets of €17.6 billion (2022: €15.9 bil-
lion) particularly include €15.1 billion of capitalized
development costs (2022: €13.5 billion). Of the devel-
opment costs, a share of €14.0 billion (2022: €12.6 bil-
lion) was attributable to the Mercedes-Benz Cars seg-
ment and €1.1 billion (2022: €0.8 billion) to the
Mercedes-Benz Vans segment. Development costs cap-
italized in the reporting year amounted to €3.8 billion
(2022: €2.9 billion) and represent 38% (2022: 34%) of
the Group's total research and development expendi-
ture. The increase in capitalized development costs is
mainly attributable to development work for the new
platform generations geared towards electric mobility.
Assets
Before eliminations between segments, Mercedes-Benz
Mobility accounted for €145.1 billion (2022: €142.5 bil-
lion) of the balance sheet total. During the reporting
year, all intra-Group eliminations between the industrial
business and Mercedes-Benz Mobility regarding the
balance sheet were allocated to the industrial business.
The reported size of the industrial business is deter-
mined by generally subtracting the unconsolidated bal-
ance sheet total of Mercedes-Benz Mobility from the
consolidated balance sheet total of the Group. Conse-
quently, intra-Group matters relating to the relationship
between the industrial business and Mercedes-Benz
Mobility are generally allocated to Mercedes-Benz
Mobility and included in its balance sheet. This method
of presentation reduces the balance sheet total of the
industrial business. At the same time, this means that
the share of Mercedes-Benz Mobility's balance sheet
total in the Consolidated Statement of Financial Posi-
tion is shown as being higher than would be the case if
Mercedes-Benz Mobility were presented on a consoli-
dated basis.
2023
93
Current
liabilities
Equity
Equity and
liabilities
2022
23 25
thereof liquidity
82
88
Current assets
104 103
89
85
87
Non-current
liabilities
At 31 December 2023, these carrying amounts are
mainly denominated in the following currencies: 42% in
euros, 28% in US dollars and 13% in Chinese renminbi.
67
The syndicated credit line in the amount of €11 billion
in existence since July 2018 had not been utilized as of
the balance sheet date.
-141
10,718
2,817
1,731
Legal proceedings
(and related
As well as being calculated on the basis of the dis-
closed cash flows from operating and investing activi-
ties, the free cash flow of the industrial business can
also be calculated on the basis of the cash flows before
interest and taxes (CFBIT) of the automotive segments.
The reconciliation from the CFBIT of the automotive
segments to the free cash flow of the industrial busi-
ness includes the sum of receipts and payments of
taxes and interest of the industrial business. The other
reconciling items primarily comprise eliminations
between the segments and items that are allocated to
the industrial business but for which the automotive
segments are not responsible. The year-on-year
increase was mainly due to the dividend of Daimler
Truck Holding AG, which was included in the other rec-
onciliation items in the reporting period.
Reconciliation from CFBIT to the free cash flow of the
industrial business
251
549
353
198
2023
2022
In millions of euros
92
321
3
17
-144
-175
-
335
-2,122
21
452
-167
The CFBIT of the automotive segments is derived
from the EBIT and the change in net assets, and also
includes additions to the right-of-use assets. The line
Other was primarily affected by dividend payments
from equity-method investments, payments for the set-
tlement of payables and provisions recognized in previ-
ous years through profit or loss, and, in particular in the
year 2022, by the elimination of non-cash income
included in EBIT in connection with the sale of shares
in Mercedes-Benz Grand Prix Ltd.
The following table shows the reconciliation from EBIT
for Mercedes-Benz Cars and Mercedes-Benz Vans to
the CFBIT of the corresponding segment. The reconcili-
ation from CFBIT to adjusted CFBIT and the adjusted
cash conversion rate are also shown.
Mercedes-Benz Cars achieved an adjusted cash conver-
sion rate of 0.9 (2022: 0.7) and Mercedes-Benz Vans an
adjusted cash conversion rate of 1.0 (2022: 1.1).
Net financial
investments
ments
Other
CFBIT
measures)
Restructuring
measures
M&A transactions
514
208
-29
54
Net investments in
property, plant and
equipment and
intangible assets
Depreciation and
amortization/impair-
-7,453
-6,715
-725
-364
6,125
5,943
420
-43
At 31 December
2023
CFBIT Mercedes-Benz Cars
10,718
71
1 The adjusted cash conversion rate is the ratio of adjusted CFBIT to adjusted EBIT.
Free cash flow of the industrial business
11,316
8,128
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
62
646
Corporate Governance
Further Information
Net liquidity and net debt
As the following table shows, the net liquidity of the
industrial business is calculated as the total amount
as shown in the statement of financial position of cash,
cash equivalents and the marketable debt securities
and similar investments included in liquidity manage-
ment, less the nominal amounts of financing liabilities.
Net liquidity of the industrial business
To the extent that the Group's internal refinancing of the
financial services business is provided by the compa-
nies of the industrial business, this amount is deducted
by an elimination in the financing liabilities in the calcu-
lation of the net debt of the industrial business.
Since 31 December 2022, the net liquidity of the indus-
trial business increased by €5.0 billion to €31.7 billion.
The increase is mainly due to the positive free cash flow
of the industrial business, which was partially offset by
the dividend payment made to the shareholders of
Mercedes-Benz Group AG.
Net debt at Group level, which primarily results from
refinancing the leasing and sales-financing business,
decreased compared with 31 December 2022 by
€1.5 billion to €86.6 billion. The derivation of net debt is
shown in the following table.
Net debt of the Mercedes-Benz Group
The carrying amounts of the main refinancing instru-
ments and the volume-weighted average interest rates
are shown in the following table.
In millions of euros
Consolidated Financial Statements
Other reconciling items
-255
324
Adjusted CFBIT
12,535
11,413
3,018
2,040
CFBIT Mercedes-Benz Vans
2,817
1,731
Adjusted EBIT
14,252
16,245
3,063
1,927
Income taxes paid/refunded
-4,807
-4,137
Adjusted cash
conversion rate¹
0.9
0.7
1.0
1.1
Interest paid/received
12,336
2022
12,336
In millions of euros
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
+1,532
-88,146
-86,614
+3,441
-109,444 -112,885
+328
-1,048
-720
Net debt
for financing liabilities
Financing liabilities
(nominal)
Market valuation and
currency hedges
-1,909
+3,113
-111,837
-108,724
Financing liabilities
24,739
22,830
Liquidity
-202
7,060
6,858
Marketable debt securities
and similar investments
-1,707
17,679
15,972
Cash and cash equivalents
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
63
Corporate Governance
Consolidated Financial Statements
Bank credit was another important source of refinanc-
ing in 2023. These loans were provided by globally
active banks as well as by banks operating nationally.
In the reporting period, asset-backed securities (ABS)
transactions with a volume of €1.4 billion were carried
out successfully in Germany. ABS transactions with a
total volume of CNY 17.4 billion were carried out in
China. In the United States the asset-back securities
credit line with a volume of USD 4.0 billion was
extended and further ABS transactions of USD 3.5 bil-
lion were placed.
The Mercedes-Benz Group also issued commercial
paper in 2023.
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
05/2023 05/2026
05/2023 05/2031
EUR 1,000 million
EUR 1,000 million
03/2023 03/2025
03/2023 03/2026
03/2023 03/2028
08/2023 08/2025
08/2023 08/2026
08/2023 08/2028
08/2023 08/2033
USD 1,000 million
USD 1,000 million
USD 1,000 million.
USD 1,100 million
USD 750 million
USD 900 million
USD 750 million
Maturity
+5,022
Month of
issuance
Mercedes-Benz
International Finance B.V.
Mercedes-Benz Finance
North America LLC
Issuer
Benchmark issuances
In the reporting period, the Group covered its refinanc-
ing requirements through the issuance of bonds and
other means. As can be seen in the following table they
include so-called benchmark issuances (bonds with a
high nominal volume) by Mercedes-Benz Finance North
America LLC in the US-dollar area and Mercedes-Benz
International Finance B.V. in the euro area.
23/22
Change
Various issuance programmes are available for raising
longer-term funds in the capital market. They include
the Euro Medium Term Note programme (EMTN) with a
total volume of €70 billion, under which Mercedes-Benz
Group AG and several subsidiaries can issue bonds in
various currencies. Other local capital-market pro-
grammes exist, which are significantly smaller than the
EMTN programme. Capital-market programmes allow
flexible, repeated access to the capital markets.
The funds raised by the Mercedes-Benz Group in the
year 2023 primarily served to refinance the leasing and
sales-financing business. For that purpose, the
Mercedes-Benz Group made use of a broad spectrum of
various financing instruments in various currencies and
markets. They include bank loans, commercial paper in
the money market, bonds, promissory-note loans and
the securitization of receivables in the financial services
business (asset-backed securities).
Refinancing
Detailed information on contingent liabilities and other
financial obligations is provided in Note 31 of the Notes
to the Consolidated Financial Statements.
In the context of its ordinary business activities, the
Group has also entered into other financial obliga-
tions in addition to the liabilities shown in the Consoli-
dated Statement of Financial Position at 31 December
2023. These financial obligations result from contrac-
tual commitments to acquire intangible assets; prop-
erty, plant and equipment; equipment on operating
leases and irrevocable loan commitments.
At 31 December 2023, the best estimate for contingent
liabilities was €2.6 billion (2022: €4.1 billion). The
decrease is mainly a result of discontinuing the busi-
ness activities in Russia and the disposal of the contin-
gent liabilities upon completion of the transaction.
Contingent liabilities and other financial obligations
Further Information
Volume
26,637
The situation in the bond markets in the reporting year
was significantly influenced by factors such as inflation
and the volatility of interest rates as well as decisions
by central bank.
Net liquidity
nal dealerships
Liabilities from refinancing inter-
+5,940
7,549
Financing liabilities
-1,112
20,177
19,065
Liquidity
-135
-169
6,083
and similar investments
Marketable debt securities
-977
Property, plant and equipment
13,117
Cash and cash equivalents
23/22
Change
2022
At 31 December
2023
31,659
5,948
-42
13,489
+321
Financing liabilities
6,460
-1,047
-726
for financing liabilities
currency hedges
Market valuation and
-127
(nominal)
+6,134
12,594
6,083
1,476
1,276
23,894
98
25,010
1,907
1,936
23,226
22,419
0
5,504
657
10,486
91,908
93,435
3,022
3,011
24,408
2,558
25,274
1,244
1,080
10,036
3,012
0
18
102
9,025
9,232
51,964
51,668
7,766
7,853
42,126
41,421
1,259
1,379
9,838
0
10,247
39,944
1,254
1,011
Annual Report 2023 | Mercedes-Benz Group
Contents
13,988
To Our Shareholders
72
Combined Management Report
Mercedes-Benz Group AG
Corporate Governance
Consolidated Financial Statements
Further Information
41,767
15,537
Segment assets
2023
During the year under review, the Group updated its
Green Finance Framework from 2020 in order to posi-
tion the Mercedes-Benz Group even more effectively as
a company worthy of sustainable investment and to
enable it to utilize ESG-based capital for its business
development. This framework makes it possible for the
Group to finance investment targeted at the develop-
ment, production and customer financing of all-electric
vehicles through bonds and loans, for example. It was
on this basis that the Mercedes-Benz Group once again
issued bonds with terms of three and eight years in May
2023.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
80
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
The framework is based on the Green Bond Principles
(the voluntary process guidelines of the International
Capital Market Association - ICMA) and the Green
Loan Principles, which are the joint voluntary process
guidelines of the Loan Market Association (LMA) and
the Asia Pacific Loan Market Association (APLMA). The
updated framework has also received certification with
the highest rating "Dark Green" - from the Centre for
International Climate and Environmental Research
(CICERO), which also issued an “Excellent” rating for the
governance structure defined in the framework.
-
The Mercedes-Benz Group operates as an investor itself
when it invests the company's pension assets. ESG
criteria are also playing an increasingly important role
in this area.
For German pension assets, the following objectives
have been defined for the consideration of ESG criteria:
creation of transparency in dealing with sustainability
aspects, utilization of opportunities from sustainable
developments and the appropriate consideration of
sustainability risks. For the majority of German pension
assets the investments are made by asset managers to
whom the Group issues individual mandates.
In coordination with the Investment Committees, the
Mercedes-Benz Group pays, as part of its sustainability
concept, increased attention to the consideration and
transparency of sustainability aspects in the investment
process. When the company makes sustainable invest-
ments, it also takes the associated risk and return
aspects into account. For liquid asset classes, the
-
-
Mercedes-Benz Group only works with investment man-
agers who have signed the UN Principles for Responsi-
ble Investment (PRI). The use of a negative list is
intended to exclude investing in companies and coun-
tries that do not fulfil the Group's core requirements. By
implementing ESG-themed investments, the Mercedes-
Benz Group utilizes the opportunities offered by sus-
tainable developments. Furthermore, the Mercedes-
Benz Group focuses on gradually integrating
sustainability aspects via benchmarks or sustainabil-
ity performance indicators, for example into its man-
dates. To this end, the Group included sustainability
targets in some of its mandates with external asset
managers in 2023 and also firmly incorporated these
goals and targets into its investment guidelines. Taking
into account the available data coverage, the Group
was thus able to achieve a lower carbon footprint for its
asset classes equities and corporate bonds of the
German pension assets compared to the aggregated
benchmark. Whereas the aggregated benchmark is
determined by the indices awarded to the asset manag-
ers, the carbon footprint is calculated based on exter-
nally bought ESG data. In addition, the Mercedes-Benz
Group also established an internal reporting system for
various sustainability metrics for its German pension
assets.
The measures we have implemented as part of our sus-
tainability concept are regularly assessed and adapted
to current developments. Mercedes-Benz Pensions-
fonds AG takes into account adverse effects on sustain-
ability factors within the framework of the Sustainable
Finance Disclosure Regulation. For investing foreign
pension assets, country-specific requirements regard-
ing consideration of ESG criteria apply.
Tax obligation
The Mercedes-Benz Group views itself as a responsible
company that endeavours to meet all of its global tax
obligations and use public funding responsibly. In this
way, the Group can also fulfil its social and ethical
responsibilities.
The Group's tax strategy operates according to the
following principles in particular:
By qualified and experienced experts and, if possible,
efficient and reliable processes, systems, methods
and controls the Mercedes-Benz Group wants to
ensure that the tax obligations by the Group compa-
nies are met and integrity standards are maintained.
In line with the principle of being a good corporate
tax citizen (i.e. fulfilling its responsibility as a tax-
payer), the Mercedes-Benz Group conducts legal,
proactive and non-aggressive tax planning activities
on the basis of operational considerations ("tax
follows business"). The Mercedes-Benz Group also
strives to work even more cooperatively, transpar-
ently and constructively with the tax authorities.
In this process, it maintains its legal standpoints
and defends its interests wherever it believes such
actions are appropriate and legitimate.
Mercedes-Benz Group AG
With regard to ESG communication, the Investor Rela-
tions & Treasury unit at Mercedes-Benz Group AG
works closely together with the company's in-house
sustainability departments and is also integrated into
the relevant committees (e.g. the GSC). This is how
the company is responding to the fact that sustainable
investment has become a central investment strat-
egy in particular for institutional investors, who set
especially high standards of transparency for external
reporting according to ESG criteria.
analysts on the latest developments relating to its sus-
tainable business strategy.
Contents
To Our Shareholders
2022
2023
At 31 December
At 31 December
Mercedes-Benz Vans
Mercedes-Benz Cars
Further Information
Consolidated Financial Statements
Corporate Governance
71
Net assets
thereof liabilities held for sale
2022
Segment liabilities
Trade payables
thereof assets held for sale
Other segment assets
Trade receivables
Inventories
Property, plant and equipment
Intangible assets
In millions of euros
Derivation of net assets of the automotive segments
The following table shows the derivation of net
assets for the segments Mercedes-Benz Cars and
Mercedes-Benz Vans. They relate to the operating
assets and liabilities for which the automotive
segments are responsible.
Net assets
Combined Management Report
Profitability, Liquidity and
Capital Resources, Financial Position
Other segment liabilities
Condensed version in accordance with the German Commercial Code (HGB)
Annual Report 2023 | Mercedes-Benz Group
Mercedes-Benz Group AG is closely linked with
Mercedes-Benz AG and functions as an operating busi-
ness entity that defines the Group's strategy. It also
makes strategic decisions for business operations and,
as the Group's parent company, ensures the effective-
ness of organizational, legal and compliance-related
functions throughout the Group.
Mercedes-Benz Group AG generally participates in the
risks of its subsidiaries and associated companies in
line with the percentage of its respective equity inter-
est. The risks and opportunities are described in the
Risk and Opportunity Report.
Risks may additionally arise from relations with subsidi-
aries and associated companies in connection with
statutory or contractual liability obligations (in particu-
lar with regard to financing), from impairments of finan-
cial assets and from financial receivables from subsidi-
aries and associated companies.
Furthermore, pursuant to Section 133 Subsections 1 and
3 of the German Transformation Act (UmwG), Mercedes-
Benz Group AG is jointly and severally liable for liabili-
ties of €4.7 billion that were transferred to Mercedes-
Benz AG and Daimler Truck AG in 2019. According to the
current appraisal, due to the assessment of the credit
ratings of Mercedes-Benz AG and Daimler Truck AG, an
actual cash outflow for Mercedes-Benz Group AG is
considered to be unlikely.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
76
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
-
Non-Financial Declaration
1 Net carbon-neutral means that no CO2 emissions are created or any resulting
CO2 emissions are offset by certified compensation projects.
The Mercedes-Benz Group integrates the Non-Financial
Declaration into the Combined Management Report of
this Annual Report. Each year, it examines whether and
how the integration of financial and non-financial key
figures should be further developed. For the year under
review, it was decided to continue to publish more
in-depth information about sustainability at the
Mercedes-Benz Group in a separate Sustainability
Report for the previous reporting year. It will be availa-
ble on the Group's website on the Internet (additional
information group.mercedes-benz.com/sustainabil-
ity). Further information on the business model of the
Mercedes-Benz Group can be found in the chapter Cor-
porate Profile.
Sustainability as a driver of change
-
The Mercedes-Benz Group aims to create value that is
sustainable economically, environmentally and
socially. This is one of the core principles of the Group.
It applies not only to the Group's own products and
production sites but also to its entire upstream and
downstream value chain. The Mercedes-Benz Group
translates this approach into its sustainable business
strategy and thus firmly embeds its sustainability issues
into its daily business. Among other things, the goal is
to fulfil the demands and expectations of the stake-
holders i.e. customers, investors, employees, busi-
ness partners, non-governmental organizations (NGOs)
and society as a whole.
-
One of the most important goals at the Mercedes-Benz
Group is decarbonization, which the Group has made a
firm component of its sustainable business strategy.
The Group's strategy includes the Ambition 2039 target,
which aims to make the entire Mercedes-Benz new
vehicle fleet net carbon-neutral¹ across all stages of the
value chain by 2039. Mercedes-Benz Cars and
Mercedes-Benz Vans are creating the necessary condi-
tions to become all-electric. The pace of transformation
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
77
As described in the Corporate Profile, the Combined
Management Report includes the combined Non-Finan-
cial Declarations of Mercedes-Benz Group AG and of
the Mercedes-Benz Group. The Mercedes-Benz Group
publishes the Non-Financial Declaration in accordance
with the provisions of Sections 315b, 315c in connection
with Sections 289b-289e of the German Commercial
Code (HGB). The Non-Financial Declaration contains the
main information on the aspects of environmental,
employee and social issues, combating corruption and
bribery, and respect for human rights. The information
provided in this declaration is presented in conformity
with the GRI Standards of the Global Reporting Initia-
tive, insofar as this complies with applicable law. Some
aspects are presented in accordance with internal
guidelines and definitions. Insofar as not otherwise
specified, all information concerning the Mercedes-
Benz Group refers to the Consolidated Group in the
context of the Consolidated Financial Statements.
Combined Management Report
Non-Financial Declaration
The business development of Mercedes-Benz Group AG
mainly depends on the development of its worldwide
subsidiaries and is therefore - through the profit and
loss contributions from subsidiaries and associated
companies fundamentally subject to the same risks
and opportunities as is the business development of
the Group.
For the year 2024, Mercedes-Benz Group AG expects to
post a significantly higher net profit than for the year
2023, primarily as a result of significantly improved
financial income to be brought about by higher profit
transfers from major subsidiaries.
35,904
222
43,940
Liabilities
36,150
44,162
Deferred income
7
13
Total equity and liabilities
80,384
84,256
Risks and opportunities
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
75
Combined Management Report
Mercedes-Benz Group AG
Corporate Governance
Consolidated Financial Statements
Further Information
Cash flow from investing activities resulted in a cash
outflow of €0.1 billion in 2023 (2022: cash inflow of
€1.6 billion). On the one hand, the change was due to
lower net cash inflows from the acquisition and dis-
posal of securities within the context of liquidity man-
agement (2023: €0.1 billion; 2022: €1.1 billion). On the
other, capital repayments from subsidiaries resulted in
higher cash inflows in the previous year.
Cash flow from financing activities resulted in a cash
outflow of €0.1 billion in the reporting period (2022:
€1.3 billion). The decreasing cash outflow compared to
the previous year was mainly due to the lower repay-
ment of external financing liabilities. However, a lower
cash inflow compared to the previous year resulted
from the financing provided to subsidiaries in connec-
tion with central financial and liquidity management.
Alongside this, the cash outflows increased as a result
of the share buyback transactions in the reporting year
as well as the dividend payment to shareholders of
Mercedes-Benz Group AG.
Outlook
The financial position, cash flows and profitability of
Mercedes-Benz Group AG depend on the business
developments and the performance of its operating
subsidiaries, in whose development it participates
through profit-and-loss transfer agreements and divi-
dend distributions.
Due to the interrelations between Mercedes-Benz
Group AG and the companies of the Group, the state-
ments in the Outlook chapter therefore reflect our
expectations for the parent company as well.
Contents
Corporate Governance
Consolidated Financial Statements
Further Information
At the end of July 2023, the Supervisory Board decided
to establish at the Board of Management level a
cross-divisional steering and coordination function for
sustainability management throughout the Group.
Renata Jungo Brüngger then took over this function of
Sustainability Coordinator on 1 August 2023. Her execu-
tive division was renamed Integrity, Governance & Sus-
tainability (previously Integrity and Legal).
The previous central management body for sustainabil-
ity the Group Sustainability Board (GSB) — was
replaced by the Group Sustainability Committee (GSC)
during the year under review. This new body meets on a
quarterly basis and is chaired by Renata Jungo Brüngger
in her capacity as Sustainability Coordinator. The com-
mittee, which is made up of representatives from top
management, is responsible for the holistic manage-
ment of ESG topics across all functions, divisions and
regions in line with goals and targets, KPIs and areas of
responsibility. The members of the GSC are also
responsible for addressing sustainability topics in the
functions they manage.
1 Further information on sales of plug-in hybrids and all-electric vehicles can be found in
the chapter Environmental Issues, Electrified Product Range
In addition, Sustainability Coordination Meetings
(SCMs) are held in which the GSC discusses sustainabil-
ity topics and issues with representatives from all rele-
vant divisions and specialist units. SCMs are conducted
regularly every 14 days and are chaired by the Sustaina-
bility Competence Office (SCO). The SCO itself provides
advice to the specialist units and helps them complete
the tasks assigned to them by the Board of Manage-
ment or the GSC. The SCO also monitors the progress
made in the six areas of action and the three enablers
defined in the sustainable business strategy. The
results of these analyses during the year are reported
to the GSC and the Board of Management of Mercedes-
Benz Group AG in the form of detailed scorecards at
least twice a year.
The Mercedes-Benz Group also uses the ten principles
of the UN Global Compact (UNGC) as a fundamental
guide for its business activities. As a founding member,
it is strongly committed to the UN Global Compact.
The Mercedes-Benz Group's internal principles and poli-
cies are founded on this international frame of refer-
ence and other international principles, including the
Core Labour Standards of the International Labour
Organization (ILO), the Organisation for Economic
Co-operation and Development (OECD) Guidelines for
Multinational Enterprises and the UN Guiding Principles
on Business and Human Rights.
Remuneration for the Board of Management and execu-
tives was adjusted in 2023. The changes were made in
order to reduce the complexity of the remuneration
system, create transparency and ensure an integrated
approach with regard to the incentives used to promote
sustainable business operations at the Group. In addi-
tion to financial targets, the variable remuneration for
members of the Board of Management and Level 1-3
executives, as well as for certain Level 4 managers,
contains short-term transformation targets relating to
CO2 emissions, safety innovations and ESG stakeholder
management. In 2023, the variable components also
included long-term sustainability targets relating to the
share of unit sales accounted for by plug-in hybrid elec-
tric vehicles (PHEVS) and all-electric vehicles (BEVS)¹,
the inspection of high-risk production materials and
measures for ensuring diversity and inclusion. The vari-
able remuneration components also continue to include
non-financial targets relating to customers, employees
and integrity. (Further information group.mercedes-
benz.com/remuneration-bom)
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
The Mercedes-Benz Group manages the work in the
strategic areas of action alongside other tasks -
by means of an internal reporting process that uses
detailed scorecards. This process shall be supported
by clear lines of responsibility in the management and
organizational structures used at all of the divisions.
79
Corporate Governance
Consolidated Financial Statements
Further Information
Risk and opportunity management
Detailed information on, among other things, the risk
and opportunity management system and the associ-
ated processes can be found in the Risk and Opportu-
nity Report chapter of this Annual Report.
Sustainability-related risks and opportunities are an
integral component of the Group-wide risk and oppor-
tunity management system. In identifying these risks
and opportunities, the Mercedes-Benz Group is guided
by the topics identified by the materiality assessment
and thus includes the areas of action of the sustainable
business strategy, for which concrete goals have been
assigned. These risks and opportunities are understood
to be conditions, events or developments involving ESG
factors, the occurrence of which may have an actual or
potential impact on the Mercedes-Benz Group's profita-
bility, liquidity, capital resources, financial position and
reputation. This further includes any risks and opportu-
nities whose occurrence may have a positive or nega-
tive impact on the economy, the environment or society.
ESG topics as they relate to the environment
include, among other things, the effects of climate con-
ditions and changes. Risks can arise for the Group's
transformation process as a result of changed political
conditions, technological developments and changing
markets. Labour law standards, occupational and prod-
uct safety, product liability and suppliers' compliance
with labour law standards are examples of circum-
stances categorized as social issues that can harbour
risks. The area of governance is concerned with matters
such as stipulations arising from competition law and
measures to prevent corruption, for example, which can
lead to risks.
ESG-related risks and opportunities associated with the
Mercedes-Benz Group's own business activities, busi-
ness relationships and products and services, and
which are very likely to have a serious negative impact
on the non-financial aspects in accordance with Sec-
tions 315c and 289c of the German Commercial Code
(HGB), are not currently apparent. Risks and opportuni-
ties in connection with the recommendations of the
Task Force on Climate-Related Financial Disclosures
(TCFD) are environment factors and are thus also iden-
tified and assessed as part of the risk management pro-
cess. (Further information group.mercedes-benz.
com/investors/share/esg)
Sustainable investment
The implementation of the Mercedes-Benz Group's sus-
tainable business strategy requires massive amounts of
investment. For this reason, one of the Group's goals is
to ensure that its securities are viewed even more
strongly by the capital market as a sustainable invest-
ment. To this end, the Mercedes-Benz Group maintains
a continuous dialogue with players on the capital mar-
ket as representatives of investors in equity and debt.
Various platforms are used here. For example, the sec-
ond digital ESG Conference was one of the formats
used by the Mercedes-Benz Group in the 2023 report-
ing year to provide information to investors and
Combined Management Report
Non-Financial Declaration
-
Managing sustainability
Further Information
is determined by market conditions and customer
requirements. Mercedes-Benz Cars and Mercedes-Benz
Vans are getting ready to be able to meet the various
customer requirements, be it an all-electric drivetrain or
an combustion engine into the 2030s if necessary.
-
Areas of action and the foundations of sustainability
The Mercedes-Benz Group acts in line with the sustain-
able business strategy adopted by the Board of
Management of Mercedes-Benz Group AG in 2019 with
the agreement of the Supervisory Board. Sustainability
issues are an integral part of the business strategy.
The Mercedes-Benz Group's sustainable business strat-
egy takes into account the regulatory requirements that
are relevant to its business operations, as well as rec-
ognized international frameworks, the expectations of
external and internal stakeholders, and global trends.
The Mercedes-Benz Group also conducts materiality
assessments on a regular basis in order to identify stra-
tegic areas of action. Here the Mercedes-Benz Group
bases its activities on the United Nation's (UN) 17 Sus-
tainable Development Goals (SDGs) — especially SDGs
8 and 9 and 11 to 13 among other factors, and in the
process concentrates on the areas where it can create
value added. It discusses the material areas of action
with the involvement of relevant stakeholder groups.
During the year under review, the Group confirmed the
six strategic areas of action shown below and, where
necessary, further specified the strategic ambitions
associated with these areas of action.
Climate Change mitigation and air quality: Plans
call for the Mercedes-Benz new vehicle fleet to be net
carbon-neutral across the entire value chain by 2039
and to no longer have any impact on NO2 levels in
urban areas by 2025.
Resource conservation: The Mercedes-Benz Group
wants to decouple resource consumption from busi-
ness volume growth.
More sustainable urban mobility: The Mercedes-
Benz Group wants to contribute to the improvement
of the quality of life in cities through mobility and
transport solutions.
Traffic safety: The Mercedes-Benz Group is working
to make its vision of accident-free driving a reality as
it develops automated driving systems while also tak-
ing social and ethical issues into account.
Data responsibility: Customer trust and the respon-
sible handling of customer data are the basis for sus-
tainable digital products and services.
Human rights: The Mercedes-Benz Group assumes
responsibility and is committed to safeguarding
human rights along its own automotive value chain.
The Mercedes-Benz Group has defined three principles,
or enablers, that are crucial for achieving success in the
six areas of action: integrity, people and partnerships.
Materiality assessment
The Group conducted a comprehensive materiality
assessment in 2021 in order to determine which sus-
tainability topics are particularly relevant for the
Mercedes-Benz Group and its stakeholders. The analy-
sis was completed in summer 2022 and, following a
review of the areas of action, is applicable for the year
2023
This materiality assessment addressed the six strategic
areas of action as well as further potentially relevant
sustainability topics and trends. A total of 17 topics
were evaluated, and these were further divided into
sub-topics.
The analysis consists of several components: a desk
analysis, an international online survey as well as inter-
views with internal and external experts, an assessment
of the impact of the Mercedes-Benz Group's business
activities on the environment and society (inside-out)
as well as an analysis of the external influences on the
Mercedes-Benz Group's business activities (out-
side-in-dimension).
In addition, the sustainability issues resulting from the
analysis were reviewed with regard to their impact on
financial position, profitability and business develop-
ment. On this basis, the topics for the Non-financial
Declaration were defined. For this reason, not all strate-
gic areas of action are reflected in this Non-financial
Declaration.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Mercedes-Benz Group AG is the parent company of
the Mercedes-Benz Group and has its headquarters in
Stuttgart. In addition to reporting on the Mercedes-
Benz Group, the development of Mercedes-Benz
Group AG in the year 2023 is also described in this
section.
78
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
246
Other liabilities
Condensed statement of income of
Mercedes-Benz Group AG
Provisions
1,415
1,422
-1,400
-1,407
-779
-752
20
-744
293
-444
15,630
Net profit
11,785
12,098
Transfer to other retained earnings
-6,049
-3,314
Distributable profit
6,049
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
74
-2,788
Mercedes-Benz Group AG generated revenue of
€1.4 billion, primarily from the provision of services to
companies of the Group (2022: €1.4 billion).
Cost of sales amounted to €1.4 billion (2022: €1.4 bil-
lion) and primarily comprises expenses incurred for the
services provided to companies of the Group.
General administrative expenses amounted to
€0.8 billion (2022: €0.8 billion).
General administrative expenses
Other operating income
Operating profit/loss
Financial income
Income taxes
Trade
payables
Cost of sales
Revenue
In millions of euros
The income tax expense amounted to €2.8 billion
(2022: €2.5 billion). The rise despite a decrease in taxa-
ble operating profit within the tax group is mainly expli-
cable by the last use of tax-loss carryforwards in 2022.
Financial income increased by €3.8 billion to €15.6 bil-
lion. The increase in the financial income with respect
to the previous year is primarily due to higher income
from investments in subsidiaries and associated com-
panies. This was the result in particular of higher profit
transfers from subsidiaries, lower impairments of sub-
sidiaries and investments and higher income from asso-
ciated companies. Moreover, the rise in interest rates
led to an increase in financial income.
Other operating income totalled €0.02 billion (2022:
€0.3 billion). Other operating income from the previous
year included income from the sale of approximately 5%
of the shares of Daimler Truck Holding AG to Mercedes-
Benz AG and their subsequent transfer to the
Mercedes-Benz Pension Trust e. V.
Receivables, securities and other assets decreased
compared with 31 December 2022 by €3.7 billion to
€32.9 billion. This is the result of the decrease in receiv-
ables from subsidiaries of €2.7 billion, which in turn was
caused by lower intra-Group financial receivables. In
addition, the other assets decreased by €0.8 billion, in
particular due to the maturity of fixed-term deposits.
Non-current assets increased by €0.6 billion to
€40.6 billion in the course of the year. This was due to
the increase of €0.6 billion in financial assets.
Total assets of €80.4 billion were below the level of the
previous year (2022: €84.2 billion).
Financial position
5,563
-2,464
8,877
2022
2023
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Mercedes-Benz Group AG
73
To Our Shareholders
Annual Report 2023 | Mercedes-Benz Group
Combined Management Report
Mercedes-Benz Group AG
Corporate Governance
Contents
Further Information
11,480
Retained earnings
Net profit amounted to €12.1 billion, which was signifi-
cantly higher than the figure of €8.9 billion recorded in
the previous year and corresponds to the expected
range of the previous year's Outlook chapter. The earn-
ings of Mercedes-Benz Group AG in the year under
review were particularly affected by a higher level of
financial income.
Profitability
Net profit or loss is the key performance indicator for
Mercedes-Benz Group AG.
The economic situation of Mercedes-Benz Group AG
mainly depends on the development of its subsidiaries.
Mercedes-Benz Group AG participates in the operating
profits and losses of its subsidiaries through dividend
distributions and profit-and-loss transfers. Its eco-
nomic situation therefore corresponds with that of the
Mercedes-Benz Group, which is described in the chap-
ter Overall Assessment of the Financial Year.
news/annual-reports/2023.
The financial statements of Mercedes-Benz Group AG,
for which KPMG AG Wirtschaftsprüfungsgesellschaft
has issued an unqualified audit opinion, are transmitted
electronically to the body responsible for managing the
company register so that the statements can be
entered into the company register. The financial state-
ments can be viewed on the website of the company
register as well as on the Mercedes-Benz Group web-
site at group.mercedes-benz.com/investors/reports-
The Annual Financial Statements of Mercedes-Benz
Group AG are compiled in accordance with the provi-
sions of the German Commercial Code (HGB) and the
provisions of the German Stock Corporation Act (AktG).
The Consolidated Financial Statements are prepared in
accordance with the International Financial Reporting
Standards (IFRS), as adopted by the European Union
(EU). This results in some differences with regard to
recognition and measurement methods, primarily in
connection with provisions, financial instruments, the
leasing business and deferred taxes.
21,106
6,049
Equity
41,622
16,854
5,563
36,967
Provisions for pensions and similar
obligations
330
Other provisions
2,275
401
2,713
Consolidated Financial Statements
3,114
2,605
3,070
3,070
-83
Distributable profit
Equity and liabilities
Share capital
11,480
Calculated value of treasury shares
Capital reserve
40,001
Liquidity and capital resources
The Statements of Cash Flows of Mercedes-Benz
Group AG according to HGB include the following
exceptions, which deviate from DRS 21: dividends from
subsidiaries as well as intra-Group offsetting of ser-
vices from corporate functions are presented in Cash
Flow from operating activities even when they are off-
set by means of cash pooling procedures. The same
applies to capital increases and capital repayments
from subsidiaries being presented in Cash Flow from
investing activities. An offsetting recognition of cash
pooling procedures takes place in Cash Flow from
financing activities.
Cash and cash equivalents decreased by €7.5 billion
to €6.6 billion. The decrease in cash and cash equiva-
lents of €0.9 billion was influenced by the following
developments:
Cash flow from operating activities resulted in a net
cash outflow of €0.7 billion in the reporting year (2022:
€1.9 billion). The cash outflow primarily resulted from
income tax payments, which increased by €0.9 billion
compared to the previous year. The lower cash outflow
relative to the preceding year can mainly be attributed
to the maturity of short-term time deposits and higher
distributions to subsidiaries and associated companies.
Provisions decreased by €0.5 billion to €2.6 billion.
This was mainly due to lower provisions for taxes and
the decrease in provisions for contingent losses result-
ing from derivative financial instruments.
Liabilities decreased by €8.0 billion to €36.2 billion.
This change is primarily the result of the decrease in
liabilities to subsidiaries of €7.2 billion, which in turn
was caused by lower intra-Group financial liabilities.
In addition, bonds amounting to €0.5 billion were
redeemed.
Condensed statement of financial position
of Mercedes-Benz Group AG
In millions of euros
Assets
Equity increased by €4.6 billion to €41.6 billion in the
reporting year. This increase was a result of the net
profit amounting to €12.1 billion, of which €6.0 billion
was transferred to retained earnings pursuant to Sec-
tion 58 Subsection 2 of the German Stock Corporation
Act (AktG). Equity, in contrast, decreased due to the
dividend payment of €5.6 billion to the shareholders of
Mercedes-Benz Group AG and the ongoing share buy-
back programme. The equity ratio as of 31 December
2023 was 51.8% (31 December 2022: 43.9%). Mercedes-
Benz Group AG held treasury shares of €1.9 billion as of
31 December 2023. Disclosures pursuant to Section 160
Subsection 1 No. 2 of the German Stock Corporation Act
(AktG) are contained in the Annual Financial Statements
of Mercedes-Benz Group AG in accordance with the
statutory requirements.
Non-current assets
40,630
Receivables, securities and other
assets
32,945
Cash and cash equivalents
Current assets
6,592
39,537
217
36,617
7,450
44,067
188
80,384
84,256
31 Decem- 31 Decem-
ber 2023 ber 2022
Prepaid expenses
Total assets
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
85
Combined Management Report
Non-Financial Declaration
Further Information
Consolidated Financial Statements
Development of CO2 emissions in the United States
In the reporting year, the average CO2 emissions of
vehicle category N1 light trucks (GVW of up to 3.5 tons)
in Europe (European Union, Norway and Iceland) as
measured on the basis of the legal regulations on the
basis of internal data amount to 204 g/km. This means
that the figures for Mercedes-Benz will be below the
CO2 target. The Mercedes-Benz Group expects that
increased unit sales of all-electric vehicles will lead to
a further reduction of CO2 emissions in 2024.
The Mercedes-Benz Group has defined the CO2 emis-
sions of its new passenger car fleet in Europe as one of
its most important non-financial performance indica-
tors. In the reporting year, the average CO2 emissions of
the Mercedes-Benz new vehicle fleet in Europe (Euro-
pean Union, Norway and Iceland), applying the statu-
tory regulations, on the basis of internal data amount to
111g/km (including vans registered as passenger cars)
and were thus lower than in the previous year. Taking
the vehicles of the joint venture smart Automo-
bile Co., Ltd. into account in the Mercedes-Benz CO2
pool, the average CO2 emissions in Europe (European
Union, Norway and Island) amounted to 109 g/km
according to internal calculations. This means that the
CO2-emission figures for the Mercedes-Benz Group
were significantly below the CO2 targets in Europe in
2023. The Mercedes-Benz Group also expects that the
average CO2 emissions of the Mercedes-Benz fleet in
Europe (European Union, Norway and Iceland) will be
further reduced in 2024. This development will be
especially favoured by the fact that the share of total
car sales accounted for by all-electric and plug-in
hybrid vehicles will continue to increase. Further infor-
mation can be found in the Outlook chapter.
Corporate Governance
Development of CO2 emissions in Europe
The Board of Management of the Mercedes-Benz Group
is responsible for setting strategic goals, including tar-
gets for reducing the CO2 emissions, and for monitoring
the progress made in achieving these goals. The Prod-
uct Steering Board (PSB) at Mercedes-Benz Cars is
responsible for the car fleet. In particular, this body
monitors the development of CO2 emissions of the
Mercedes-Benz car fleet by comparing them with the
legally defined targets in markets subject to CO2-emis-
sion regulations. The PSB is assigned to the Committee
for Model Policy and Product Planning (AMP).
-
In the van segment as well, the Mercedes-Benz Group
is convinced of the ecological and economic advan-
tages of all-electric vehicles and has firmly anchored its
claim to leadership in electric mobility in its strategy. In
this way, Mercedes-Benz Vans is also setting the course
for an all-electric future, and beginning in 2026 all new
vans are to be developed as all-electric models exclu-
sively. All model series have already been systemati-
cally electrified, and today body manufacturers and
customers can choose an all-electric van in every seg-
ment for both commercial and private use. The mod-
els here include the eVito, the EQV, the eSprinter, the
eCitan and the EQT. (WLTP: combined energy consump-
tion: 20.7-19.3 kWh/100 km; combined CO2 emissions:
Og/km; CO2 class: A).
Electrified vehicles (EV) at Mercedes-Benz Cars
accounted for 20% of the Group's worldwide unit sales
in the year under review. All-electric models (BEVs)
accounted for 12% of the Group's worldwide unit sales
in the year under review.
The Mercedes-Benz Group has been offering all-electric
vehicles since 2018. During the year under review, the
Group presented the Mercedes-Maybach EQS SUV,
which brought the number of all-electric models in the
Mercedes-Benz Cars portfolio to nine in 2023. Plug-in
hybrids are also an important transitional technology
on the road to an all-electric future. Customers could
choose between more than 25 plug-in hybrid model
variants in the reporting year.
The Mercedes-Benz Group's goal is to further expand its
range of electric vehicles. The Group's commitment to
research and development is correspondingly strong.
Electrified product range
The Committee for Model Policy and Product Planning
and the Van Executive Committee regularly report to
the Board of Management of Mercedes-Benz Group AG
about the development of CO2 emissions. The Board of
Management then decides which measures need to be
implemented. On the market side of the equation, price
and volume control measures can also affect our ability
to achieve our CO2 targets.
The Division and Product Strategy unit at Mercedes-
Benz Vans ensures compliance with the CO2 fleet emis-
sion limits and reports on this regularly to the Van Exec-
utive Committee.
Responsibilities
Further Information
Consolidated Financial Statements
In the United States, fleet values are regulated by two
separate federal standards for limiting greenhouse
gases and fuel consumption in vehicle fleets: the
Greenhouse Gas Protocol (GHG) and the Corporate
Average Fuel Economy (CAFE) standard. For the 2023
model year, the GHG fleet figure is 170 g CO2/mi for the
car fleet and 259 g CO2/mi for the light duty truck (LDT)
fleet (vans and SUVs - based on latest forecast). Due to
an increase in the share of the total fleet in the United
States accounted for by electrified vehicles (EV), the
Mercedes-Benz Group came in below its average fleet
target of 179 g CO2/mi for the car fleet. The target
value of 233 g CO2/mi for the light duty truck (LDT) fleet
(vans and SUVs) could not be reached. However, the
Mercedes-Benz Group was able to offset the remaining
difference through the purchase of external credits.
Corporate Governance
Electrified vehicles from Mercedes-Benz Vans
accounted for 5% of the Group's worldwide unit sales
in the year under review.
The models of the Mercedes-Benz Sprinter are subject
to the GHG regulation for Classes 2b and 3 with a gross
vehicle weight (GVW) of between 3.86 tons and 6.35
tons. The CO2 targets in these classes depend on the
payload, the towing capacity and the drive type of the
vehicles. In the reporting year, the CO2 emissions of
Mercedes-Benz medium duty vehicles (MDV) were
436 g CO2/mi, which is lower than the target value of
476 g CO2/mi. The Group expects its figures to also be
lower than the CO2 target values in the years ahead.
Combined Management Report
Non-Financial Declaration
In China, domestic and imported cars are reported sep-
arately and according to fleet consumption values,
unlike in Europe and the United States. This means the
figures for the imported fleet are the relevant figures for
Mercedes-Benz China (MBCL)¹, which does not manu-
facture vehicles in the country. The target was
Combined Management Report
Non-Financial Declaration
The supply chain also plays an important role in efforts to
conserve resources. The Mercedes-Benz Group wants to
decouple resource consumption from economic growth.
To achieve this goal, it is relying on the support of its sup-
pliers. With their help, the Group wants to continuously
increase the proportion of secondary and renewable
materials in its vehicles.
Resource conservation
in the supply chain
"Ambition 2039". As a milestone, for example, contracts
were signed with two steel suppliers from Europe and
America in the year under review, which provide for
deliveries of CO2-reduced steel for current and future
model series. Progress on climate protection in the sup-
ply chain is reported at regular intervals in the Group
Sustainability Committee (GSC).
Further Information
Consolidated Financial Statements
Corporate Governance
86
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
CO2 emissions are offset by certified compensation projects.
2 Net carbon-neutral means that no CO2 emissions are created or any resulting
which is the importer and general sales company for imported finished vehicles in China.
1 Mercedes-benz China Ltd. (MBCL) is a joint venture between MB and Lei Shing Hong,
The Mercedes-Benz Group implements various projects
and measures in order to avoid and reduce CO2 emis-
sions in its supply chains for services as well as for pro-
duction and non-production materials. This is why in
the future the Group intends to work only with partners
that share its view of sustainability with regard to the
climate, the environment and human rights and has
also incorporated net carbon neutrality2 into the terms
of its contracts. As early as 2020, Mercedes-Benz Cars
and Mercedes-Benz Vans sent out to suppliers of pro-
duction materials the ambition letter, which is a decla-
ration of intent regarding net carbon-neutral products.
Signing the ambition letter is today a key criterion for
the awarding of contracts. By signing this document,
supplier companies commit themselves to supply
Mercedes-Benz cars and Mercedes-Benz vans only with
production material that is net carbon-neutral by 2039
at the latest and thus to the Mercedes-Benz Group's
2039
1 Measured on the basis of the annual procurement volume that, in turn, is based on
target figures updated monthly; guaranteed by means of signatures.
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
81
Combined Management Report
Non-Financial Declaration
Target horizon
Climate protection in the supply chain
All production materials procured by Mercedes-Benz
Cars and Mercedes-Benz Vans are net carbon-neutral¹
Target
in the supply chain.
Climate protection
6.95 l/100 km; the figure that was actually achieved was
8.46 l/100 km taking into account off-cycle technolo-
gies (8.52 l/100 km not taking into account off-cycle
technologies). MBCL plans to purchase external credits
in order to close consumption gaps in the fleet's target
achievement at short notice.
Development of CO2 emissions in China
84
The Group has incorporated the guidelines for sustain-
able supply chain management into the Responsible
Sourcing Standards (RSS). These are contractually stip-
ulated with direct suppliers and are applied worldwide.
The goal here is to prevent, minimize or, if possible, put
Contents
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
The Business & People Protection Office (BPO) whistle-
blower system makes it possible for employees and
external whistleblowers around the world to report
rules violations. With regard to supply chains, sus-
pected violations of the Responsible Sourcing Stand-
ards can be reported via the BPO. If the misconduct or
problem falls within the supplier's area of responsibility,
the supplier must take measures to immediately correct
or eliminate the problem. Further information about the
Compliance Programme can be found in the Integrity
and Compliance chapter.
Complaint management
Further Information
Consolidated Financial Statements
Corporate Governance
Combined Management Report
Non-Financial Declaration
82
To Our Shareholders
Contents
Annual Report 2023 | Mercedes-Benz Group
83
The Mercedes-Benz Group uses a variety of measures
and concepts to ensure the fulfilment of its due dili-
gence obligations in the supply chain. This includes
training, preventive and corrective measures, risk analy-
ses, documentation for tracking and reporting purposes
and effectiveness checks. The Mercedes-Benz Group
uses these tools in order to increase the transparency
of the supply chain and ensures that the internationally
recognized human rights are upheld by business part-
ners as well, and that other social standards and envi-
ronmental requirements are met. The procurement
units for production materials, non-production materi-
als and services play a key role here. Further informa-
tion in the chapters Social Compliance and Environ-
mental Issues.
a stop to any negative effects on human rights world-
wide. The RSS define the minimum requirements for
suppliers. They are already used as a basis for the ten-
dering process for suppliers of production materials.
The RSS require direct suppliers to communicate the
RSS provisions to their own employees and to their
direct suppliers, and ensure that the RSS are complied
with in their business processes and in the areas in
which they exert an influence. Suppliers are to conserve
natural resources and avoid environmental damage,
repair any damage that does occur, and compensate for
such damage that cannot be avoided or repaired.
Plastics, steel and aluminium have been identified as par-
ticularly important such materials in Mercedes-Benz vehi-
cles. We need large volumes of these materials for the
production of our vehicles, and their extraction and pro-
cessing also consume large amounts of energy and
The Mercedes-Benz Group is committed to the respon-
sible procurement of production materials, non-produc-
tion materials and services.
Sustainability in the supply chain
The Mercedes-Benz Group has established a Tax Com-
pliance Management System (Tax CMS) in order to
ensure effective tax compliance throughout the Group.
The Tax CMS is a separate sub-unit of the general intra-
Group Compliance Management System. The Tax CMS
also operates an active tax-risk management system
that is consistently applied throughout the Group in
order to monitor and check whether tax obligations are
being fulfilled, and also to support those responsible
for ensuring such fulfilment. Another goal here is to
identify and reduce tax risks at the Group, and thus the
associated personal risks that may be faced by the
employees active in this area. The system includes
numerous measures - for example, continuous moni-
toring of tax risks and the incorporation of tax risk
issues into the internal control system and the Group-
wide risk management process in line with the compa-
ny's risk management policy. Based on the Code of
Conduct the Mercedes-Benz Group did not become
aware of any material violations during the reporting
year.
The Code of Conduct stipulates that all intentional vio-
lations of external and/or internal tax guidelines must
be reported and investigated. The same applies to any
failure to make corrections to procedures performed in
an erroneous manner, as outlined in our internally valid
Treatment of Violations Policy. Further information can
be found in the Integrity and Compliance chapter.
Regular information to the Supervisory Board on risks
and opportunities as well as current regulatory issues
Regular communication between CFO and
Head of Taxes
The tax policies define the responsibilities, tasks and
obligations of those individuals in the Group who deal
with tax issues and also contain specific provisions for
ensuring that legal requirements are met. Management
is kept informed about relevant tax issues by means of
monthly reports and regular communications, as well as
when required. Moreover, it is involved in compliance
processes:
The Group tax strategy drawn up by the Board of Man-
agement of Mercedes-Benz Group AG defines the
framework of action here, and this strategy is further
specified and implemented by means of organizational
and content-related policies, guidelines and instruc-
tions. The tax strategy is regularly reviewed for appro-
priate adjustments.
Further Information
Consolidated Financial Statements
Corporate Governance
Measures in the supply chain
To Our Shareholders
Combined Management Report
Non-Financial Declaration
Consolidated Financial Statements
Annual Report 2023 | Mercedes-Benz Group
1 Net carbon-neutral means that no CO2 emissions are created or any resulting
CO2 emissions are offset by certified compensation projects.
4 All-electric vehicles
3 Plug-in hybrids and all-electric vehicles
1 The pace of transformation is determined by market conditions and customers.
2 Compared to 2020 (value chain stages: procured goods, production, logistics, fuel and
energy generation, driving operation, disassembly and treatment processes)
By the end of
the decade
Target achieved
In the second half
of the decade
In the second half
of the decade
In the second half
of the decade
By the end
of the decade
2039
Target horizon
Corporate Governance
Increase the proportion of electrified vehicles in the
fleet of new vehicles at Mercedes-Benz Vans to more
than 50%¹
Electrify all new vehicle architectures¹,3
Offer an electrified³ variant for every model from
Mercedes-Benz Cars¹
Increase the proportion of electrified³ vehicles in the
fleet of new vehicles at Mercedes-Benz Cars to as
high as 50%¹
Reduction of the CO2 emissions per car in the new
vehicle fleet up to 50% along all stages of the value
chain1,2
A fleet of new Mercedes-Benz vehicles that is net
carbon-neutral along all stages of the value chain
Climate protection for vehicles
Climate protection
Target
Mercedes-Benz Cars and Mercedes-Benz Vans are tak-
ing the necessary steps to go all-electric. The pace of
transformation is determined by market conditions and
customers. Mercedes-Benz Cars and Mercedes-Benz
Vans plan to be in a position to cater to different cus-
tomer needs, whether it's an all-electric drivetrain or a
combustion engine, until well into the 2030s. Climate
protection is a key cornerstone of the Mercedes-Benz
Group's sustainable business strategy. As early as
November 2021, the Mercedes-Benz Group under-
scored its commitment to this transformation during
the COP26 UN Climate Change Conference.
The Mercedes-Benz Group believes that the complete
electrification of its product range is the most impor-
tant lever of making its entire new vehicle fleet net car-
bon-neutral across all stages of the value chain by 2039.
The Mercedes-Benz Group is continuing to seek to
shape the transformation to an all-electric and soft-
ware-driven future. The Mercedes-Benz Group remains
focused and tactically flexible in terms of its strategy.
Accordingly, the Mercedes-Benz Group has adjusted
some of its electrification targets and target corridors
based on market conditions and customer require-
ments.
Climate protection for vehicles
In order to achieve this goal, the Mercedes-Benz Group
is transforming the products and services that are at
the heart of its business activities. The company also
takes into account climate protection in all of the life
cycle phases of its automobiles from the supply
chain and its own manufacturing operations to the use
and disposal of the vehicles.
As a player in the transport sector, the Mercedes-Benz
Group supports the Paris Climate Agreement. It is
convinced of the goals of the agreement and is working
to implement them in all of its divisions. About one fifth
of all greenhouse gas emissions in Europe are produced
as a result of the transport of people and goods on
streets and roads. The Mercedes-Benz Group is taking
deliberate measures to counteract this trend and has
made climate protection a core element of its business
strategy. The Group's ambition is to make the entire
Mercedes-Benz new vehicle fleet net carbon-neutral¹
across all stages of the value chain by 2039.
Environmental issues
Further Information
Offer an electrified 4 alternative for every model from
Mercedes-Benz Vans
resources.
from qualified climate protection projects¹. Remaining
emissions are released in particular by the combined
heat and power facilities that use natural gas to pro-
duce electricity and heat.
materials, as well as recyclability. Mercedes-Benz Group
requirement specifications already define a minimum pro-
portion of recycled material for each component in new
Mercedes-Benz cars. This proportion varies depending on
the vehicle model and series in question. As part of its
sustainable business strategy, the Mercedes-Benz Group
also relies on the use of natural fibres and textiles as a
means of replacing conventional plastics with renewable
raw materials.
cesses.
The Mercedes-Benz Group also works with some suppli-
ers in order to avoid waste. For example, load carriers
and the materials used for securing loads and cargo are
now, where possible, reused in a closed cycle, as are
steel barrels (e.g. for thermal conductive paste, adhe-
sives and lubricants).
In the reporting year, Mercedes-Benz Cars reduced the
total amount of waste per vehicle by 9%¹ and the
amount of waste for disposal per vehicle by 42%¹ com-
pared to 2022. At Mercedes-Benz Vans, total waste per
vehicle increased by 16%¹ as compared to 2022, while
waste volume for disposal per vehicle fell by 21%¹ dur-
ing the reporting year².
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
2 In addition to the production sites of the consolidated subsidiaries, the production
sites of the following non-consolidated subsidiaries are included: Star Transmission srl
(Cugir, Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and
STARCAM s.r.o. (Most, Czech Republic).
Annual Report 2023 | Mercedes-Benz Group
In order to reduce total waste, it is important to ensure
transparency concerning the waste value streams
and to correctly separate the various types of waste.
The Mercedes-Benz Group generally works with
licensed and regularly certified waste disposal compa-
nies to ensure the professional disposal of our waste
materials in accordance with legal requirements.
Furthermore, it continues to reduce waste such as clip-
pings, sands, filter media and slurries through the
implementation of new or optimized production pro-
Contents
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Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
Employee issues
Target
To Our Shareholders
Target
horizon
The goal of the Mercedes-Benz Group is to keep the
waste volumes generated in its production operations
as low as possible. To this end, the Group seeks to
continuously reduce overall waste, including waste for
disposal. As it does so, the Mercedes-Benz Group's top
priority is to prevent waste.
For years now, the Mercedes-Benz Group has been
using its own accounting method, which focuses in par-
ticular on fresh water, to monitor and assess its water
consumption. On this account, water consumption per
vehicle at Mercedes-Benz Cars decreased 8%¹ as com-
pared to 2022. Mercedes-Benz Vans was able to reduce
water consumption per vehicle by 6%¹ compared to the
previous year².
The optimization of energy efficiency enables the
Mercedes-Benz Group to decrease its energy consump-
tion and conserve resources, while reducing the CO2
emissions of its production processes.
The Mercedes-Benz Group regularly measures and
assesses essential energy consumption in order to
identify and take advantage of savings potential in the
areas of production and infrastructure. An innovative
energy management software system has been intro-
duced at Mercedes-Benz Cars and Mercedes-Benz Vans
in order to create transparency with regard to energy
procurement and energy consumption.
In its effort to save energy, the Mercedes-Benz Group
relies on the efficient management of energy supply
and building technology systems for example by
means of needs-based management of local lighting, air
volume flow regulation in ventilation and exhaust air
-
Annual Report 2023 | Mercedes-Benz Group
Contents
To Our Shareholders
Less waste
89
Consolidated Financial Statements
Further Information
systems and load-dependent volume control of the air
supply in paint dryer units.
As a result of the implementation of these and other
energy efficiency measures, energy consumption
(incl. electricity, natural gas, district heat, heating oil
and liquefied petroleum gas) per vehicle at Mercedes-
Benz Cars in the reporting year was 12%¹ lower than in
2022. Due to similar effects, energy consumption per
vehicle at Mercedes-Benz Vans fell by 8%¹ compared to
the previous year².
Efficient water utilization
The Mercedes-Benz Group developed the "Storm Water
Protection Pollutant Discharge Elimination" standard
all the way back in 2014 so that its sites could initiate
targeted water protection measures. It contains guide-
lines on how rainwater management at production sites,
branches and workshops can prevent and reduce
potential pollution from previously contaminated rain-
water. In 2022, the Mercedes-Benz Group adopted a
Water Policy so that it might continue to effectively
contribute to the creation of a more sustainable water
management system. In addition, the Group set itself
the goal of no longer using drinking water in production
operations at any Mercedes-Benz manufacturing loca-
tions worldwide. In order to further minimize fresh
water consumption, the Mercedes-Benz Group also
intends to use hybrid cooling systems. The Group
launched an initial project in this area in Sindelfingen,
Germany, in June 2023 in cooperation with the munici-
pal wastewater management and disposal company.
The goal here is to employ a closed cycle to largely
replace the fresh water used in production with treated
municipal wastewater.
Combined Management Report
Non-Financial Declaration
Reduction of energy consumption
HR work in the transformation
Ongoing
Enable employees to work in a healthy and safe environment
Strengthen a sustainable safety culture by developing and com-
municating binding rules of conduct
Ongoing
Use a globally uniform accident documentation system and
introduce it at the German production sites
Ongoing
Target
achieved
1 Management Level 3 and up - Mercedes-Benz Group worldwide (headcounts, fully con-
solidated companies).
HR work in the transformation
As a result of electrification, digitalization and the
increasing use of powerful artificial intelligence (AI)
systems, the job profiles of employees are also chang-
ing. Working processes and structures are changing just
as fundamentally as employee tasks and cooperation
within the Mercedes-Benz Group.
Occupational health and safety
The aim of the Mercedes-Benz Group is to manage the
upcoming changes for its total of 166,056¹ employees
worldwide in a responsible, socially compatible and
future-oriented way. It meets the challenges and
requirements of the personnel transformation with a
corresponding personnel strategy, among other things.
Depending on their product portfolio and the size of
their operations, the Mercedes-Benz Group sites, and
thus the company's various groups of employees, are
affected to different degrees by digitalization and the
electrification of the automotive industry.
Responsible transformation
Reported violations of the Integrity Code or other inter-
nal Group regulations, as well as legal regulations, that
pose a high risk to the Mercedes-Benz Group and its
employees or to other people are followed up by the
whistleblowing system BPO (Business & People Protec-
tion Office).
The Mercedes-Benz Group is committed to fulfilling its
social responsibilities. As a participant in the UN Global
Compact, the Mercedes-Benz Group AG has committed
itself, among other things, to respecting key employee
rights. Based on the labour and social standards of the
International Labour Organization (ILO), Mercedes-Benz
Group AG revised and supplemented its own Group-
wide principles of social responsibility in 2021 and pub-
lished them as the Principles of Social Responsibility
and Human Rights.
Firmly establishing work and social standards
culture. At the same time, the Group also wants to
provide its employees with a healthy and safe working
environment.
1 Status 31 December 2023: active employees (employees including holiday workers,
without thesis writers, interns, working students, PhD students, senior experts and
trainees) of Mercedes-Benz Group
The Mercedes-Benz Group continuously invests in the
qualification of its employees, is constantly expanding
its range of further qualification courses and at the
same time recruits new talent with appropriate skills
profiles. In order to attract such employees and retain
them for the long term, the Mercedes-Benz Group takes
measures to create and further enhance an attractive
and future-oriented working environment for its
employees, among other ways by offering them flexible
forms of work. Particularly in challenging times,
respectful and trust-based cooperation between the
workforce and the management is extremely important.
The Mercedes-Benz Group therefore promotes a diverse
and inclusive corporate, leadership and cooperative
Shape the transformation of the Mercedes-Benz Group for its
employees in a responsible, socially acceptable and future-ori-
ented manner
2030
Ongoing
Ensure lasting constructive cooperation between company and
employee representatives
Ongoing
Further develop the "People Principles" and embed them in the
Group; create a common understanding of an agile and innova-
tive leadership culture in the transformation process
Ongoing
Ensure market-conformant salary structures through compliance
with the Corporate Compensation Policy
Ongoing
Support and further develop flexible and modern working time
models
Increase the proportion of women in senior management posi-
tions¹ to 30%
Ongoing
Ensure a high-quality and a needs-based professional portfolio
for training and dual study programmes
Ongoing
Continuously develop the qualification programme for employ-
ees
Ongoing
Diversity and inclusion
Improve inclusion for all employees in the Group
Training and further education
Plastics and recyclates: throughout their entire life
cycles, vehicles from the Mercedes-Benz brand are in
future to be more environmentally friendly and less
resource-intensive than before. The cornerstones of this
approach involve the use of recyclates and lightweight
The effectiveness of the management systems is moni-
tored by external auditors as part of the certification
process (ISO 14001, EMAS, ISO 50001), as well as in the
environmental sector by internal environmental risk
assessments (environmental due diligence process).
The Group also has a standardized process in place for
reviewing and assessing its consolidated production
sites every five years. The results of this process are
reported to the respective plant and company manage-
ment so that any necessary optimizations can be car-
ried out.
In order to achieve its goals, the Group uses Group-
wide resource management with its environmental and
energy management systems to ensure that appropriate
measures are developed, adapted to challenges where
necessary, and monitored.
Increase the share of energy from renewable sources
to cover 100% of energy consumption
Milestone: increase the share of energy from renew-
able sources to cover energy consumption
- Cars: 70%
- Vans: 80%
Target horizon
2030
Reduction of CO2 emissions (Scope 12 and 23) by 80%4
2039
1 In addition to the production sites of the consolidated subsidiaries, the production sites
of the following non-consolidated subsidiaries are included: Star Transmission srl (Cugir,
Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and STARCAM
s.r.o. (Most, Czech Republic).
2 Scope 1 emissions are direct CO2 emissions from sources for which the company is
directly responsible or that it directly controls.
3 Scope 2 emissions are indirect CO2 emissions from purchased energy such as electricity
and district heating that are generated externally but consumed by the company.
4 Compared to 2018.
The Mercedes-Benz Group formulates the holistic goal
of making the mobility of the future more sustainable in
its sustainable business strategy. One of the most
important targets is the reduction of greenhouse gas
emissions. The Mercedes-Benz Group's goal is to
achieve carbon-neutral production at its own produc-
tion plants by 2039. This is to be achieved by covering
energy consumption with 100% renewable energies.
In this way, the Mercedes-Benz Group intends to act in
accordance with the Paris Agreement on climate
change.
As it moves towards achieving this goal, CO2 emissions
are to be consistently reduced or, wherever possible,
completely eliminated. In order to accomplish this, the
Mercedes-Benz Group is relying on the purchase of
green electricity, the expansion of renewable energy
sources at its locations and the implementation of a
sustainable heating supply system. The Mercedes-Benz
Group plans to reduce CO2 emissions at its own plants
(Scope 1 and Scope 2) by 80% by 2030 compared to
2018. Production at all manufacturing locations oper-
ated by the Mercedes-Benz Group has been net car-
bon-neutral regarding Scope 1 and Scope 2 since 20221.
Since 2022, all CO2 emissions (Scope 1 and Scope 2) at
these production facilities that have been as yet una-
voidable have been offset by means of carbon offsets
For the procurement of green electricity, the Mercedes-
Benz Group in Germany currently relies on a mix of
solar, wind and hydroelectric power for external elec-
tricity purchases. The Mercedes-Benz Group is also tak-
ing measures to expand the use of energy from renewa-
ble sources at its locations.
In 2022, the Mercedes-Benz Group already achieved
the goal of reducing CO2 emissions at its own plants
(Scope 1 and 2) by 50% by 2030 compared to 2018 (tar-
get confirmed by the Science Based Targets initiative,
an initiative to set science-based climate targets)².
During the reporting year, Mercedes-Benz Cars and
Mercedes-Benz Vans employed various measures that
enabled them to reduce CO2 emissions in production
(Scope 1 and Scope 2) from 5391 thousand tons in 2022
to 511¹ thousand tons in the year under review³, and
thus by 5%¹
2030
1 The key figures were audited in order to obtain limited assurance as part of a separate
assurance engagement of the sustainability report.
Climate protection in production¹
Climate protection in production
Steel: The use of secondary materials such as steel scrap
can reduce primary resource requirements in line with a
circular economy. For example, Mercedes-Benz AG and its
partner therefore ensure the recycling of scrap steel from
the Mercedes-Benz Cars plant in Sindelfingen, Germany.
Aluminium: Mercedes-Benz Cars and Mercedes-Benz
Vans already use recycled materials, including recycled
aluminium, in numerous series-production vehicles. Alu-
minium is a light metal that can be recycled without any
loss of quality, and the recycling process for aluminium
uses less energy than would be required to produce new
aluminium. In order to continue increasing its use of recy-
cled materials, Mercedes-Benz AG is working with its sup-
pliers to develop aluminium alloys with high end-of-life
scrap potential from old vehicles or packaging, for
example. In addition, by amending existing supply agree-
ments, Mercedes-Benz AG and its suppliers continued to
work on the decarbonization of the aluminium supply
chain for all of their production operations in Europe. At
least one third of the primary aluminium that will be used
for new electric models in Europe is to be produced using
energy from renewable sources.
-
In 2020, secondary material targets were defined for
Mercedes-Benz Cars and Mercedes-Benz Vans, and these
were then firmly incorporated into the requirements for
contract awards. In the reporting year, the Company car-
ried out a model series-specific analysis at component
level in order to realize further potential for increasing
secondary materials. Project milestones and the status of
projects with regard to the use of secondary materials are
presented on a quarterly basis in the executive bodies for
the various model series. The responsible member of the
Board of Management of Mercedes-Benz Cars and the
responsible executive management team member of
Mercedes-Benz Vans are also provided with information
on a regular basis within the framework of the activities of
a committee that manages strategic sustainability matters.
With its Responsible Sourcing Standards, the Mercedes-
Benz Group has also defined other environmental require-
ments in its supplier agreements. Further information can
be found in the "Sustainability in the supply chain" section.
Suppliers of production materials to Mercedes-Benz Cars
and Mercedes-Benz Vans are expected to operate with an
environmental management system that is certified
according to ISO 14001 or EMAS. Depending on the spe-
cific risks, this also applies to suppliers of non-production
materials and services.
Mercedes-Benz Cars and Mercedes-Benz Vans are also
cooperating with organizations such as CDP (formerly Car-
bon Disclosure Project) so that they can depict the envi-
ronmental impact of their supply chains even more trans-
parently. The suppliers have been reporting on their
Target
Annual Report 2023 | Mercedes-Benz Group
To Our Shareholders
87
Combined Management Report
Non-Financial Declaration
Corporate Governance
Consolidated Financial Statements
Further Information
environmental impact and climate protection efforts
within the framework of the CDP Supply Chain Programme
since 2019. CDP provides the corresponding tools for
recording, assessing and publishing environmental and
climate data.
Contents
In order to ensure efficient, high-quality, and environ-
mentally friendly manufacturing operations, the Group
has established an environmental management system
certified in accordance with ISO 14001 at its production
sites around the world. All German manufacturing loca-
tions and the two European production sites in
Kecskemét, Hungary, and Vitoria, Spain, have also been
validated in accordance with EMAS. In addition, the
German production sites have had energy management
systems conforming to DIN EN ISO 50001 in place since
2012, and the Group has these systems certified every
three years. The Mercedes-Benz Group is currently also
implementing ISO 50001 systems at a number of indi-
vidual sites outside Germany, for example in Kecskemét
in Hungary, Jawor in Poland and Vitoria in Spain. In
addition, during the year under review the Mercedes-
Benz Group also moved ahead with the introduction on
an international scale of energy management systems
certified in accordance with ISO 50001. New manage-
ment systems were implemented in Pune, India, and
Sebes, Romania, for example.
2 In 2018 the Scope 1 emissions amounted to 650,000 tons of CO2, while the
3 In addition to the production sites of the consolidated subsidiaries, the production sites
- Cars: -82%
- Vans: -85%
Reduce total waste volume per vehicle³
- Cars: -35%
- Vans: -30%
Target horizon
2030
Reduce waste volume for disposal per vehicle³
2030
2030
1 In addition to the production sites of the consolidated subsidiaries, the production sites
of the following non-consolidated subsidiaries are included: Star Transmission srl (Cugir,
Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and STARCAM
s.r.o. (Most, Czech Republic).
2 As compared to the average for 2013/2014.
3 As compared to 2018.
The increasing demand for mobility is also leading to an
increase in the worldwide consumption of resources
with effects on the environment and society. That's why
the goal of the Mercedes-Benz Group is to increasingly
decouple its consumption of resources from the growth
of its production volume.
The consumption of resources in production plays an
important role in the environmental compatibility of
vehicles. For this reason, the Mercedes-Benz Group is
working continuously to make production more efficient
and more environmentally compatible. In order to
improve its environmental footprint in production
operations, the Group has set reduction targets for
energy, water and waste at all of its production sites
worldwide.
2030
Scope 2 emissions totalled 1,040,000 tons of CO2.
- Vans: -28%
Reduce water consumption per vehicle²
of the following non-consolidated subsidiaries are included: Star Transmission srl
(Cugir, Romania), STARKOM, proizvodnja in trgovina d.o.o. (Maribor, Slovenia) and
STARCAM s.r.o. (Most, Czech Republic).
Annual Report 2023 | Mercedes-Benz Group
Contents
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88
Combined Management Report
Non-Financial Declaration
- Cars: -33%
Corporate Governance
Further Information
Resource conservation in production
Target
Resource conservation in production¹
Reduce energy consumption per vehicle²
- Cars: -43%
- Vans: -25%
Consolidated Financial Statements
Corporate Governance